SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-K
FOR ANNUAL AND TRANSITION REPORTS
PURSUANT TO SECTIONS 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
(Mark One)
[X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1997
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OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ----------- to -------------
Commission file number 1-12289
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SEACOR SMIT INC.
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(Exact name of Registrant as Specified in Its Charter)
Delaware 13-3542736
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(State or Other Jurisdiction of
Incorporation or Organization) (I.R.S. Employer Identification No.)
11200 Westheimer, Suite 850, Houston, Texas 77042
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (713) 782-5990
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Securities registered pursuant to Section 12 (b) of the Act:
Title of Each Class Name of Each Exchange on Which Registered
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Common Stock, par value
$.01 per share New York Stock Exchange
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Securities registered pursuant to Section 12 (g) of the Act:
None
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(Title of Class)
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 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. [X} Yes [ }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. [X}
The aggregate market value of the voting stock of the registrant held by
non-affiliates as of March 25, 1998, was approximately $743,124,000. The
total number of shares of Common Stock issued and outstanding as of March
25, 1998, was 13,206,143.
DOCUMENTS INCORPORATED BY REFERENCE
The Registrant's definitive proxy statement to be filed with the
Commission pursuant to Regulation 14A within 120 days after the end of
the Registrant's last fiscal year is incorporated by reference into Items
10 through 13, Part III of this Annual Report on Form 10-K.
<PAGE>
SEACOR SMIT INC.
FORM 10-K
TABLE OF CONTENTS
PART I
Page
Item 1. Business................................................... 1
Offshore Marine Services................................... 3
Environmental Services..................................... 8
Employees.................................................. 9
Glossary of Selected Offshore Marine Industry Terms........ 10
Item 2. Properties................................................. 11
Item 3. Legal Proceedings.......................................... 11
Item 4. Submission of Matters to a Vote of Security Holders........ 11
Item 4A. Executive Officers of the Registrant....................... 11
PART II
Item 5. Market for Registrant's Common Equity and Related
Stockholder Matters.................................... 13
Item 6. Selected Financial Data.................................... 14
Item 7. Management's Discussion and Analysis of
Financial Condition and Results of Operations........... 15
Offshore Marine Services................................... 15
Environmental Services..................................... 17
Results of Operations...................................... 18
Liquidity and Capital Resources............................ 21
Item 8. Financial Statements and Supplementary Data................ 24
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure.................... 24
PART III
Item 10. Directors and Executive Officers of the Registrant......... 25
Item 11. Executive Compensation..................................... 25
Item 12. Security Ownership of Certain Beneficial Owners and
Management............................................ 25
Item 13. Certain Relationships and Related Transactions............. 25
PART IV
Item 14. Exhibits, Financial Statement Schedules,
and Reports on Form 8-K............................... 26
<PAGE>
When included in this Annual Report on Form 10-K or in documents
incorporated herein by reference, the words "expects," "intends,"
"anticipates," "believes," "estimates," and analogous expressions are
intended to identify forward-looking statements. Such statements
inherently are subject to a variety of risks and uncertainties that could
cause actual results to differ materially from those projected. Such risk
and uncertainties include, among others, general economic and business
conditions, industry fleet capacity, changes in foreign and domestic oil
and gas exploration and production activity, competition, changes in
foreign political, social and economic conditions, regulatory initiatives
and compliance with governmental regulations, customer preferences and
various other matters, many of which are beyond the Company's control.
These forward-looking statements speak only as of the date of this Annual
Report on Form 10-K. The Company expressly disclaims any obligation or
undertaking to release publicly any updates or any change in the
Company's expectations with regard thereto or any change in events,
conditions or circumstances on which any statement is based.
ITEM 1. BUSINESS
GENERAL
The Company is a major provider of offshore marine services to the oil
and gas exploration and production industry and is one of the leading
providers of oil spill response services to owners of tank vessels and
oil storage, processing and handling facilities. The Company operates a
diversified fleet of vessels, 316 as of March 1, 1998, primarily
dedicated to servicing offshore oil and gas exploration and production
facilities primarily in the U.S. Gulf of Mexico, offshore West Africa,
the North Sea, the Far East, Latin America and the Mediterranean. The
Company's offshore service vessels deliver cargo and personnel to
offshore installations, handle anchors for drilling rigs and other marine
equipment, support offshore construction and maintenance work, and
provide standby safety support and oil spill response services. The
Company also furnishes vessels for special projects such as well
stimulation, seismic data gathering, salvage, freight hauling, and line
handling. In connection with its offshore marine services, the Company
also offers logistics services for the offshore industry including the
coordination and provision of marine, air and land transportation,
materials handling and storage, inventory control and "just-in-time"
procurement.
The Company's environmental services business provides contractual oil
spill response and other professional services to those who store,
transport, produce or handle petroleum and certain non-petroleum oils as
required by the Oil Pollution Act of 1990, as amended ("OPA 90"), and
various state regulations. The Company's services, provided primarily
through its wholly owned subsidiaries, National Response Corporation
("NRC") and ERST/O'Brien's Inc. ("ERST"), include training, consulting
and supervision for emergency preparedness, response and crisis
management associated with oil or hazardous material spills, fires, and
natural disasters, and the maintenance of specialized equipment for
immediate deployment in response to spills and other events. NRC has
acted as the principal oil spill response contractor on several of the
largest oil spills that have occurred in the United States since the
enactment of OPA 90.
SEACOR was incorporated in Delaware in December 1989 and conducts its
business principally through wholly owned subsidiaries, many of which
have been organized to facilitate vessel acquisitions and various
financing transactions in connection therewith and to satisfy foreign and
domestic vessel certification requirements. SEACOR's principal executive
offices are located at 11200 Westheimer, Suite 850, Houston, Texas 77042,
where its telephone number is (713) 782-5990.
Unless the context indicates otherwise, any reference in this Annual
Report on Form 10-K, to the "Company" refers to SEACOR SMIT Inc. and its
consolidated subsidiaries, "SEACOR" refers to SEACOR SMIT Inc., and
"Common Stock" refers to par value $.01 per share common stock of SEACOR
SMIT Inc. Certain industry terms used in the description of the Company's
business are defined or described under "Glossary of Selected Offshore
Marine Industry Terms" appearing at the end of this Item 1.
Financial information with regard to the Company's revenues, operating
profits or losses, and identifiable assets for each business segment and
respective geographical area of operation is set forth in Note 18 to the
Consolidated Financial Statements of the Company.
1
<PAGE>
RECENT DEVELOPMENTS
On January 3, 1997, the Company acquired substantially all of the
offshore marine assets, including vessels, owned by Galaxie Marine
Service, Inc., Moonmaid Marine, Inc., Waveland Marine Service, Inc. and
Triangle Marine, Inc. (collectively, "Galaxie"), for an aggregate
consideration of approximately $23.4 million, consisting of approximately
$20.6 million in cash and 50,000 shares of SEACOR's Common Stock. The
primary assets acquired were 24 vessels dedicated to serving the oil and
gas industry in the U.S. Gulf of Mexico.
At the annual meeting of stockholders on April 17, 1997, the holders of
SEACOR's Common Stock approved an amendment to SEACOR's Restated
Certificate of Incorporation changing SEACOR's corporate name from
"SEACOR Holdings, Inc." to "SEACOR SMIT Inc." The name change became
effective on May 1, 1997.
On June 30, 1997, the Company entered into an agreement for an unsecured
reducing revolving credit facility (the "Credit Facility") with Den
norske Bank ASA ("DnB") as agent for itself and other lenders named
therein. This facility replaced the prior revolving credit facility with
DnB. Under the terms of the Credit Facility, the Company may borrow up to
$100.0 million aggregate principal amount.
In August 1997, SEACOR Offshore Rigs Inc. ("SEACOR Rigs"), a wholly owned
subsidiary of SEACOR, invested $8.85 million in exchange for a 50%
membership interest in Chiles Offshore LLC ("Chiles"), a joint venture
and strategic alliance created to construct, own, and operate premium
jackup drilling rigs. SEACOR Rigs subsequently made several interest
bearing (at 10% per annum) bridge loans to Chiles and, on December 16,
1997, in connection with the sale by Chiles of $20.0 million of
membership interests to third parties, contributed the aggregate amount
outstanding under such bridge loans of approximately $14.0 million and
approximately $12.2 million in cash to Chiles as capital. Through the
foregoing transactions, SEACOR Rigs invested an aggregate of $35.0
million in Chiles and, as a result, owns an approximate 55.4% membership
interest in Chiles. Chiles has contracted for the construction of two
premium jackup drilling rigs for aggregate expected costs of
approximately $178.0 million. The equity raised by Chiles is intended to
fund a portion of such construction costs and serve as working capital,
and it is anticipated that the balance of such construction costs and
other working capital needs will be funded through debt financing. Chiles
has also obtained options from a U.S. shipyard to construct additional
premium jackup drilling rigs. Any such additional rig construction
projects are contingent upon the preparation, negotiation, and execution
of definitive documentation with the shipyard and Chiles obtaining
financing therefor. SEACOR does not presently intend to fund any
additional portion of Chiles' rig construction costs.
On September 22, 1997, the Company completed the sale of $150.0 million
aggregate principal amount of its 7.2% Senior Notes Due 2009 (the "7.2%
Notes") which will mature on September 15, 2009. The offering was made to
qualified institutional buyers and a limited number of institutional
accredited investors and in offshore transactions exempt from
registration under U.S. federal securities laws.
In 1997, SEACOR's Board of Directors approved the repurchase, from time
to time, of up to $50.0 million of its Common Stock. During February
1998, SEACOR's Board of Directors increased its authorization to
repurchase, from time to time, up to $40.0 million of SEACOR's Common
Stock or 5 3/8% Convertible Subordinated Notes due November 15, 2006 (the
"5 3/8% Notes"). The repurchase of either the Common Stock or the 5 3/8%
Notes will be conducted through open market purchases or privately
negotiated transactions and, subject to applicable law, will be conducted
at such times for such amounts and at such prices determined to be
appropriate under the circumstances.
On March 3, 1998, the Company repurchased from SMIT International
Overseas B.V. ("SMIT Overseas"), a subsidiary of SMIT Internationale N.V.
("SMIT"), 712,000 shares of SEACOR's Common Stock for approximately $37.0
million. The Common Stock was issued to SMIT Overseas as part of the
purchase consideration paid for the Company's acquisition of SMIT's
offshore supply vessel fleet in December 1996. The Company also satisfied
its obligation to pay up to an additional $47.2 million of purchase
consideration that would otherwise be payable to SMIT in 1999 through the
payment to SMIT of $20.88 million in cash and, through the commitment to
issue in January 1999, $23.2 million principal amount of five-year
unsecured promissory notes that will bear interest at 90 basis points
above the comparable rate for five year U.S. Treasury Notes. As part of
this transaction, the Company and SMIT also have agreed to extend the
three year term of the salvage and maritime contracting and non-compete
agreements first established in December 1996 through December 2001.
2
<PAGE>
OFFSHORE MARINE SERVICES
GEOGRAPHIC MARKETS SERVED
The operations of the Company's offshore marine services business are
concentrated in five geographic regions of the world. The table below
sets forth, at the dates indicated, the number of vessels operated
directly by the Company or through its joint ventures and pooling
arrangements in each of those regions.
<TABLE>
<CAPTION>
At December 31, At March 1,
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Geographic Market 1995 1996 1997 1998
- ---------------------------------------------
---------------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C>
Domestic, principally the U.S. Gulf of 194 175 195 192
Mexico
---------------- ---------------- ---------------- ----------------
Foreign:
Offshore West Africa................... 27 34 31 36
North Sea.............................. 15 34 31 29
Far East............................... - 19 17 16
Latin America.......................... 10 12 20 21
Other................................... 3 12 12 11
---------------- ---------------- ---------------- ----------------
Total Foreign....................... 55 111 111 113
================ ================ ================ ================
Total Fleet(1)................... 249 286 306 305
================ ================ ================ ================
</TABLE>
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(1) Excludes oil spill response vessels.
DOMESTIC. The Company is a major provider of offshore marine services to
the oil and gas exploration and production industry that operates
primarily in the U.S. Gulf of Mexico. Exploration activity, which has
expanded into deeper water regions of the U.S. Gulf of Mexico, is
generally supported by larger supply, towing supply and anchor handling
towing supply vessels. At December 31, 1997, the Company operated 33 of
approximately 300 of these larger vessels currently in the U.S. Gulf of
Mexico. Production activity is supported by similar vessels as well as
smaller crew and utility vessels. At December 31, 1997, the Company
operated 156 of approximately 400 estimated crew and utility vessels in
the U.S. Gulf of Mexico. The Company also operated or bareboat
chartered-out 6 specially equipped vessels that provide well stimulation,
seismic data gathering, oil spill response, and freight services from
shore bases primarily in the U.S. Gulf of Mexico region.
Exploration and drilling activity in the U.S. Gulf of Mexico, which
affects the demand for vessels, is largely a function of the short-term
and long-term trends in the levels of oil and gas prices. Demand for
vessels in the U.S. Gulf of Mexico has increased due to greater drilling
activity associated with natural gas exploration and production,
deepwater drilling, offshore construction, and rig workover projects.
There can be no assurance that this trend will continue.
OFFSHORE WEST AFRICA. The Company is one of the largest operators serving
the West African coast. At December 31, 1997, the Company and its joint
venture partners operated 31 vessels of the approximately 215 offshore
support vessels working in this market. The number of operators is more
concentrated in this market as compared to the U.S. Gulf of Mexico in
that 4 companies operate almost 90% of the vessels currently active in
the region. The need for offshore support vessels in this market is
primarily dependent upon multi-year offshore oil and gas exploration and
development projects and production support. The demand for vessels
offshore West Africa has increased over the past year.
NORTH SEA. The Company provides standby safety, supply, towing supply and
anchor handling towing supply services to customers in the North Sea. At
December 31, 1997, there were approximately 155 vessels certified to
provide standby safety services in the North Sea and the Company owns and
operates 10 of these vessels. Twelve additional standby safety vessels
are marketed by the Company or its managing agent under pooling
arrangements with U.K. companies. See "Joint Ventures and Pooling
Arrangements." Demand in this market for standby safety service developed
in 1992 after the United Kingdom promulgated increased safety legislation
requiring offshore operations to maintain higher specification standby
safety vessels. The legislation generally requires a vessel to "stand by"
to provide a means of evacuation and rescue for platform and rig
personnel in the event of an emergency at an offshore installation. The
Company believes that it was one of the first companies to convert its
existing vessels for use as standby safety service vessels. Demand for
standby safety vessels in the North Sea declined steadily in 1994 and
early 1995 as drilling activity was scaled back due to a decline in oil
prices, tax law changes, and a surplus of certified vessels. Since
mid-1995, however, demand improved with increased exploration activity,
stimulated in part by updated exploration technology and the development
of new drilling areas west of the Shetland Islands. Also, at December 31,
1997, 9 of the approximately 201 offshore support vessels working in the
North Sea were owned by the Company. Five vessels were working on the
3
<PAGE>
Netherlands' Continental Shelf and 4 were operating in the U.K. sector.
In 1998, drilling activity in the North Sea is forecasted to increase and
85 mobile drilling rigs are projected to be operating. Presently, there
are estimated to be 58 offshore support vessels under construction in the
region that are expected to add significant vessel capacity to the North
Sea market in 1999. It is not certain if these new vessels will
negatively affect existing rates per day worked and utilization in the
North Sea or possibly stimulate the migration of older offshore support
vessels to other regions.
FAR EAST. At December 31, 1997, 11 vessels owned by the Company and 6
vessels owned by a joint venture corporation in which the Company has an
equity interest (14 anchor handling towing supply and 3 towing supply
vessels) operated in this region. See "Joint Ventures and Pooling
Arrangements." At December 31, 1997, there were approximately 280
offshore support vessels owned by 10 companies supporting exploration,
production, and construction activities in approximately 16 countries in
the Far East. Exploration activity has increased in deep water areas of
the region increasing demand and rates per day worked for the more
powerful towing and anchor handling towing supply type vessels.
LATIN AMERICA. The Company provides offshore marine services in Latin
America for both exploration and production activities. At December
31, 1997, 13 of the Company's 20 vessels operating in this region were
based in Mexican ports, and the remaining 7 vessels were based in
ports in Chile, Venezuela, and Argentina. Nineteen of the Company's
vessels working in Latin America were operated by joint ventures. See
"Joint Ventures and Pooling Arrangements."
A significant portion of the Company's Latin American fleet is operating
in Mexico. While operating conditions in Mexico are, in many respects,
similar to those in the U.S. Gulf of Mexico, demand for offshore support
vessels in Mexico historically has been affected to a significant degree
by Mexican government policies, particularly those relating to Petroleos
Mexicanos ("PEMEX"), the Mexican national oil company. Offshore
exploration and production activity increased in 1997 as a result of
steady oil prices and a more stable political climate. PEMEX undertook
several large infrastructure projects during 1997 that had been
previously deferred due to currency and political problems. At December
31, 1997, there were approximately 90 offshore support vessels operating
in the Mexican offshore market.
FLEET
The offshore marine service industry supplies vessels to owners and
operators of offshore drilling rigs and production platforms. Two of the
largest groups of offshore support vessels which the Company operates are
crew boats, which transport personnel and small loads of cargo when
expedited deliveries are required, and utility boats, which support
offshore production by delivering general cargo and facilitating infield
transportation of personnel and materials. Two other significant classes
of vessels operated by the Company are towing supply and anchor handling
towing supply vessels. These vessels have more powerful engines, a deck
mounted winch and are capable of towing and positioning offshore drilling
rigs as well as providing supply vessel services. The Company also
operates supply vessels, which transport drill pipe, drilling fluids and
construction materials, and special service vessels which include well
stimulation, seismic data gathering, line handling, freight, oil spill
response, salvage, and standby safety vessels. As of December 31, 1997,
the average age of the Company's owned offshore marine fleet was
approximately 14.6 years.
The following table sets forth, at the dates indicated, certain summary
fleet information for the Company. For a description of these types of
vessels, see "Glossary of Selected Offshore Marine Industry Terms" at the
end of this Item 1.
<TABLE>
<CAPTION>
At December 31, At March 1,
-----------------------------------------------------------
Type of Vessels 1995 1996 1997 1998
- --------------------------------------------- ------------- ------------- -------------- ----------------
<S> <C> <C> <C> <C>
Crew....................................... 77 77 83 84
Utility and Line Handling.................. 86 70 86 84
Supply and Towing Supply................... 52 70 75 77
Anchor Handling Towing Supply.............. 10 37 37 35
Standby Safety............................. 15 22 22 22
Geophysical, Freight and Other............. 9 10 3 3
============= ============= =============== ================
Total Fleet................................ 249 286 306 305(1)
============= ============= =============== ================
</TABLE>
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(1) Excludes 11 oil spill response but includes 245 offshore
marine service vessels owned by the Company and 60 offshore
marine service vessels that are not owned by the Company. Of
the 60 offshore marine service vessels that are not Company
owned, 31 are owned joint venture corporations in which the
Company has an equity interest, 12 are operated under pooling
arrangements with Company owned vessels, 14 are chartered-in
or managed by the Company, and 3 are chartered-in by the TMM
Joint Venture, as hereinafter defined, for use in their
operations.
4
<PAGE>
Since 1994, vessel acquisition transactions and investments in joint
ventures that have significantly increased the size of the Company's
fleet include (i) 127 utility, crew, and supply vessels acquired in a
1995 transaction (the "Graham Transaction") with John E. Graham & Sons
and certain of its affiliated companies (collectively "Graham"), (ii) 11
towing and anchor handling towing supply vessels acquired pursuant to
transactions in 1995 and 1996 (the "1995 and 1996 CNN Transactions") with
Compagnie Nationale de Navigation ("CNN"), a French corporation, (iii) 41
crew and utility vessels acquired in a 1996 transaction (the "McCall
Transaction") with McCall Enterprises, Inc. and its affiliated companies
(the "McCall Companies"), (iv) 28 anchor handling towing supply, supply,
and towing supply vessels acquired and equity investments in joint
ventures that owned 21 anchor handling towing supply and towing supply
vessels pursuant to a 1996 transaction (the "SMIT Transaction") with
SMIT, and (v) 24 utility, crew, and supply vessels acquired in a 1997
transaction (the "Galaxie Transaction") with Galaxie. The vessels
acquired in the Graham Transaction, the McCall Transaction, and the
Galaxie Transaction primarily support the oil and gas exploration and
production industry in the U.S. Gulf of Mexico, whereas, vessels acquired
in the 1995 and 1996 CNN Transactions and the SMIT Transaction are
employed in foreign offshore support markets.
The Company actively monitors opportunities to buy and sell vessels that
will maximize the overall utility and flexibility of its fleet. Since
1994, the Company has sold 65 vessels that include (i) 6 utility, 4
supply, 1 crew, and 1 anchor handling towing supply in 1995, (ii) 16
utility in 1996, and (iii) 15 supply (7 of which have been bareboat
chartered-in by the Company), 7 utility, 6 towing supply, 5 anchor
handling towing supply (1 of which has been bareboat chartered-in by the
Company), 2 crew, 1 freight, and 1 seismic in 1997. Furthermore, during
the fourth quarter of 1997 and the first quarter of 1998, the Company
entered into Memoranda of Agreement for the sale and leaseback in 1998 of
10 vessels.
The Company is also committed to the construction of 21 vessels over the
next two years that include 7 crew, 7 anchor handling towing supply, 5
supply, and 2 utility vessels.
JOINT VENTURES AND POOLING ARRANGEMENTS
The Company has formed or acquired interests in joint ventures and
entered into pooling arrangements with various third parties to enter new
markets, enhance its marketing capabilities, and facilitate operations in
certain foreign markets. These arrangements allow the Company to expand
its fleet and minimize the risks and capital outlays associated with
independent fleet expansion. The principal joint venture and pooling
arrangements in which the Company participates are described below:
VEESEA JOINT VENTURE. Standby safety vessels operated by the Company in
the North Sea are owned by a subsidiary of the Company, VEESEA Holdings,
Inc. ("VEESEA Holdings") and its subsidiaries (collectively, "VEESEA").
All standby safety vessels operated by the Company in the North Sea are
managed under an arrangement with Vector Offshore Limited, a U.K. company
("Vector"), which owns a 9% interest in VEESEA Holdings (the "Veesea
Joint Venture"). The Veesea Joint Venture enabled the Company, beginning
in 1991, to enter a niche market using local management and an existing
infrastructure. At December 31, 1997, ten vessels owned by the Company
were operating in standby safety service pursuant to the Veesea Joint
Venture.
SEAVEC POOL. In January 1995, the Company entered into a pooling
arrangement with Toisa Ltd., a U.K. offshore marine transportation and
services company ("Toisa"). Under this pooling arrangement (the "SEAVEC
Pool"), the Company and Toisa jointly market their standby safety vessels
in the North Sea market, with operating revenues pooled and allocated to
the respective companies pursuant to a formula based on the class of
vessels each company contributes to the pool. At December 31, 1997, the
SEAVEC Pool was comprised of 15 vessels of which 5 were owned by Toisa.
SAINT FLEET POOL. In November 1996, Vector entered into bareboat charters
for seven standby safety vessels which provide for VEESEA Holdings,
Toisa, and the owners of the vessels to share in net operating profits
after certain adjustments for maintenance and management expenses (the
"Saint Fleet Pool"). Vector assumed management control of these vessels
in December 1996 and markets the vessels in coordination with the SEAVEC
Pool.
TMM JOINT VENTURE. During 1994, the Company and Transportacion Maritima
Mexicana S.A. de C.V., a Mexican corporation ("TMM"), organized a joint
venture to serve the Mexican offshore market (the "TMM Joint Venture").
The TMM Joint Venture is comprised of two corporations, Maritima
Mexicana, S.A. and SEAMEX International, Ltd., in each of which the
Company owns a 40% equity interest. The TMM Joint Venture enabled the
Company to expand into a market contiguous to the U.S. Gulf of Mexico and
provides greater marketing flexibility for the Company's fleet in the
region. At December 31, 1997, the TMM Joint Venture owned and operated 13
vessels.
5
<PAGE>
SMIT JOINT VENTURES. Pursuant to the SMIT Transaction, the Company
acquired certain joint venture interests owned by SMIT (the "SMIT Joint
Ventures") which increased the Company's presence in international
markets. At December 31, 1997, 20 vessels operating in the Far East,
Latin America, the Middle East, the Mediterranean and offshore West
Africa were owned by the SMIT Joint Ventures.
CUSTOMERS
The Company offers offshore marine services to over 150 customers who are
primarily major integrated oil companies and large independent oil and
gas exploration and production companies. The Company has enjoyed
long-standing relationships with several of its customers with whom the
Company has sought to establish alliances. The percentage of revenues
attributable to an individual customer varies from time to time,
depending on the level of oil and gas exploration undertaken by a
particular customer, the suitability of the Company's vessels for the
customer's projects and other factors, many of which are beyond the
Company's control. For the fiscal year ended December 31, 1997,
approximately 13% of the Company's marine operating revenue was received
from Mobil Oil Corporation.
CHARTER TERMS
Customers for offshore vessels generally award charters based on
suitability and availability of equipment, price and reputation for
quality service and duration of employment. Charter terms may vary from
several days to several years.
COMPETITION
The offshore marine services industry is highly competitive. In addition
to price, service, and reputation, the principal competitive factors for
offshore supply fleets include the existence of national flag preference,
operating conditions and intended use (all of which determine the
suitability of vessel types), complexity of maintaining logistical
support, and the cost of transferring equipment from one market to
another.
Although there are many suppliers of marine offshore services, management
believes there is only one company, Tidewater, Inc., which operates in
all geographic markets and has a substantial percentage of the domestic
and foreign offshore marine market in relation to that of the Company and
its other competitors.
GOVERNMENT REGULATION
DOMESTIC REGULATION. The Company's operations are subject to significant
federal, state and local regulations, as well as international
conventions. The Company's domestically registered vessels are subject to
the jurisdiction of the United States Coast Guard (the "Coast Guard"),
the National Transportation Safety Board, the U.S. Customs Service and
the U.S. Maritime Administration, as well as subject to rules of private
industry organizations such as the American Bureau of Shipping. These
agencies and organizations establish safety standards, are authorized to
investigate vessels and accidents and to recommend improved maritime
safety standards. Moreover, to ensure compliance with applicable safety
regulations, the Coast Guard is authorized to inspect vessels at will.
The Company is also subject to the Shipping Act, 1916, as amended (the
"Shipping Act") and the Merchant Marine Act of 1920, as amended (the
"1920 Act," and together with the Shipping Act, the "Acts") which govern,
among other things, the ownership and operation of vessels used to carry
cargo between U.S. ports. The Acts require that vessels engaged in the
U.S. coastwise trade be owned by U.S. citizens and built in the United
States. For a corporation engaged in the U.S. coastwise trade to be
deemed a citizen of the U.S., (a) the corporation must be organized under
the laws of the U.S. or of a state, territory or possession thereof, (b)
each of the president or other chief executive officer and the chairman
of the board of directors of such corporation must be U.S. citizens, (c)
no more than a minority of the number of directors of such corporation
necessary to constitute a quorum for the transaction of business can be
non-U.S. citizens, and (d) at least 75% of the interest in such
corporation must be owned by U.S. "Citizens" (as defined in the Acts).
Should the Company fail to comply with the U.S. citizenship requirements
of the Acts, it would be prohibited from operating its vessels in the
U.S. coastwise trade during the period of such non-compliance.
6
<PAGE>
To facilitate compliance with the Acts, the Company's Restated
Certificate of Incorporation: (i) contains provisions limiting the
aggregate percentage ownership by Foreigners of any class of the
Company's capital stock (including the Common Stock) to 22.5% of the
outstanding shares of each such class to ensure that such foreign
ownership will not exceed the maximum percentage permitted by applicable
maritime law (presently 25.0%), and authorizes the Board of Directors,
under certain circumstances, to increase the foregoing percentage to
24.0%, (ii) requires institution of a dual stock certification system to
help determine such ownership and (iii) permits the Board of Directors to
make such determinations as reasonably may be necessary to ascertain such
ownership and implement such limitations. In addition, the Company's
Amended and Restated By-Laws provide that the number of foreign directors
shall not exceed a minority of the number necessary to constitute a
quorum for the transaction of business and restrict any officer who is
not a U.S. citizen from acting in the absence or disability of the
Chairman of the Board of Directors and Chief Executive Officer and the
President, all of whom must be U.S. citizens.
FOREIGN REGULATION. The Company, through its subsidiaries, joint ventures
and pooling arrangements, operates vessels registered in the following
foreign jurisdictions: St. Vincent and the Grenadines, Vanuatu, the
Cayman Islands, France, Chile, Egypt, the Netherlands, Bahamas, Greece,
and Mexico. The Company's vessels registered in these jurisdictions are
subject to the laws of the applicable jurisdiction as to ownership,
registration, manning and safety of vessels. In addition, the vessels are
subject to the requirements of a number of international conventions to
which the jurisdiction of registration of the vessels is a party. Among
the more significant of these conventions are: (i) the 1978 Protocol
Relating to the International Convention for the Prevention of Pollution
from Ships; (ii) the International Convention on the Safety of Life at
Sea, 1974 and 1978 Protocols; and (iii) the International Convention on
Standards of Training, Certification and Watchkeeping for Seafarers,
1978. The Company believes that its vessels registered in these foreign
jurisdictions are in compliance with all applicable material regulations
and have all licenses necessary to conduct their business. In addition,
vessels operated as standby safety vessels in the North Sea are subject
to the requirements of the Department of Transport of the U.K. pursuant
to the U.K. Safety Act.
ENVIRONMENTAL REGULATION. The Company's vessels routinely transport
diesel fuel to offshore rigs and platforms and carry diesel fuel for
their own use, transport certain bulk chemical materials used in drilling
activities, transport rig-generated wastes to shore for delivery to waste
disposal contractors, and transport liquid mud which contains oil and oil
by-products. These operations are subject to a variety of federal and
analogous state statutes concerning matters of environmental protection.
Statutes and regulations that govern the discharge of oil and other
pollutants onto navigable waters include OPA 90 and the Clean Water Act
of 1972, as amended (the "Clean Water Act"). The Clean Water Act imposes
substantial potential liability for the costs of remediating releases of
petroleum and other substances in reportable quantities. State laws
analogous to the Clean Water Act also specifically address the accidental
release of petroleum in reportable quantities.
Although OPA 90, which amended the Clean Water Act, increased the limits
on liability for oil discharges at sea, such limits do not apply in
certain listed circumstances. In addition, some states have enacted
legislation providing for unlimited liability under state law for oil
spills occurring within their boundaries. Other environmental statutes
and regulations governing Company operations include, among other things,
the Resource Conservation and Recovery Act, as amended, which regulates
the generation, transportation, storage and disposal of on-shore
hazardous and non-hazardous wastes; the Comprehensive Environmental
Response, Compensation and Liability Act, as amended, which imposes
strict, joint and several liability for the costs of remediating
historical environmental contamination; and the Outer Continental Shelf
Lands Act, as amended ("OCSLA"), which regulates oil and gas exploration
and production activities on the Outer Continental Shelf.
OCSLA provides the federal government with broad discretion in regulating
the leasing of offshore resources for the production of oil and gas.
Because the Company's operations rely on offshore oil and gas exploration
and production, the government's exercise of OCSLA authority to restrict
the availability of offshore oil and gas leases could have a material
adverse effect on the Company's financial condition and results of
operations.
In addition to these federal and state laws, state and local laws and
regulations and certain international treaties to which the U.S. is a
signatory, such as MARPOL 73/78, subject the Company to various
requirements governing waste disposal and water and air pollution.
7
<PAGE>
ENVIRONMENTAL SERVICES
MARKET
The Company's environmental services business is operated primarily
through NRC and ERST and provides contractual oil spill response and
other related training and consulting services. The market for these
services has grown substantially since 1990 when the United States
Congress passed OPA 90 after the Exxon Valdez spill in Alaska. OPA 90
requires that all tank vessels operating within the Exclusive Economic
Zone of the United States and all facilities and pipelines handling oil
that could have a spill impacting the navigable waters of the United
States, develop a plan to respond to a "worst case" oil spill and ensure
by contract or other approved means the ability to respond to such a
spill.
EQUIPMENT AND SERVICES
OIL SPILL RESPONSE SERVICES. The Company owns and maintains specialized
equipment which is positioned in designated areas to comply with
regulations promulgated by the Coast Guard, and also has personnel
trained to respond to oil spills as required by customers and
regulations. The Company provides these services on the East, Gulf, and
West Coasts of the United States as well as parts of the Caribbean. West
Coast coverage is provided through Clean Pacific Alliance ("CPA"), a
joint venture between NRC and Crowley Marine Services.
When an oil spill occurs, the Company mobilizes specialized oil spill
response equipment, using either its own personnel or personnel under
contract, to provide emergency response services for both land and marine
oil spills. The Company has established a network of approximately 50
independent oil spill response contractors that may assist it with the
provisioning of equipment and personnel. NRC has acted as the principal
contractor on several of the largest oil spills that have occurred in the
United States after the enactment of OPA 90.
TRAINING, DRILL AND OTHER PROFESSIONAL SERVICES. The Company has
developed customized training programs for industrial companies which
educate personnel on the risks associated with and the prevention of and
response to oil spills, handling of hazardous materials, fire fighting,
and other crisis related events. The Company also plans for and
participates in customer oil spill response drill programs, vessel
response plans, and response exercises. The Company's drill services and
training programs are offered both on a stand-alone basis and as part of
its base retainer services.
INTERNATIONAL. The Company has also established International Response
Corporation ("IRC"), a wholly owned subsidiary, to evaluate international
opportunities with respect to its environmental services business. IRC is
currently providing consulting services in connection with oil spill
response, pollution control, and the evaluation of the feasibility of
constructing waste oil, waste water and sludge reception facilities.
CUSTOMERS AND CONTRACT ARRANGEMENTS
The Company offers its retainer services and oil spill response services
primarily to the domestic and international shipping community and to
owners of facilities such as refineries, pipelines, exploration and
production platforms and tank terminals. In addition to its retainer
customers, the Company also provides oil spill response services to
others, including, under certain circumstances, the Coast Guard. The
Company presently has approximately 325 customers. The Company's retainer
arrangements with these customers include both short-term contracts (one
year or less) and long-term agreements, in some cases as long as seven
years from inception. For the fiscal year ended December 31, 1997,
approximately 28% of the Company's environmental retainer revenue was
received from Coastal Refining and Marketing, Inc.
The Company also generates revenue from the supervision of activities in
response to oil spill emergencies. The Company's environmental services
revenue can be dramatically impacted by the level of spill activity. A
single large spill can contribute significantly to overall revenues and
to operating income. However, the Company is unable to predict revenues
from oil spills.
COMPETITION
The principal competitive factors in the environmental services business
are price, service, reputation, experience, and operating capabilities.
Management believes that the lack of uniform regulatory development and
enforcement on a federal and state level has created a lower barrier to
entry in several market segments, which has increased the number of
competitors. The Company's oil spill response business faces competition
primarily from the Marine Spill Response Corporation, a non-profit
corporation funded by the major integrated oil companies,
8
<PAGE>
other industry cooperatives and also from smaller contractors who
target specific market niches. The Company's environmental consulting
business faces competition from a number of relatively small privately
held spill management companies.
GOVERNMENT REGULATION
NRC is "classified" by the Coast Guard as an Oil Spill Removal
Organization ("OSRO"). The OSRO classification process is strictly
voluntary and plan holders who utilize classified OSROs are exempt from
the requirement to list their response resources in their plans. The
classification process represents standard guidelines by which the Coast
Guard and plan holders can evaluate an OSRO's potential to respond to and
recover oil spills of various types and sizes in different operating
environments and geographic locations. NRC and CPA, in combination, hold
OSRO classification under the current Coast Guard guidelines for every
port in the continental United States and Hawaii and Puerto Rico.
In addition to the Coast Guard, the Environmental Protection Agency, the
Office of Pipeline Safety, the Minerals Management Service division of
the Department of Interior and individual states regulate vessels,
facilities and pipelines in accordance with the requirements of OPA 90 or
under analogous state law. There is currently little uniformity among the
regulations issued by these agencies.
When responding to third-party oil spills, the Company enjoys immunity
from imposition of liability under federal law and some state laws for
any spills arising from the Company's response efforts, except if the
Company is found to be grossly negligent or to have engaged in willful
misconduct. The Company maintains insurance coverage against such claims
arising from its response operations. It considers the limits of
liability adequate, although there can be no assurance that such coverage
will be sufficient to cover future claims that may arise.
EMPLOYEES
As of December 31, 1997, the Company directly employed 1,890 persons,
which included 1,620 operating personnel that primarily crew vessels, and
270 administrative and managerial personnel. West Africa Offshore, Ltd.,
a Nigerian corporation in which the Company owns a 40% equity interest,
assists with the management of the Company's vessels operating in Nigeria
and employs approximately 300 crew and shore based support personnel. The
Company has, on occasion, experienced work stoppages at its facilities in
Nigeria. Although there can be no assurance that such stoppages will not
recur, the Company does not presently anticipate recurrences and, should
they recur, there can be no assurance that the effect would not have a
material adverse effect on the Company's financial condition and results
of operations. The shipboard personnel for the Company's North Sea
standby safety vessels, approximately 258 at December 31, 1997, were
provided by Celtic Pacific Ship Management Overseas, Ltd. ("Celtic"). At
December 31, 1997, shipboard personnel provided to the Company pursuant
to an agreement with SMIT approximated 360.
9
<PAGE>
GLOSSARY OF SELECTED OFFSHORE MARINE INDUSTRY TERMS
ANCHOR HANDLING TOWING SUPPLY VESSELS. Anchor handling towing supply
vessels are equipped with winches capable of towing drilling rigs and
lifting and positioning their anchors and other marine equipment. They
range in size and capacity and are usually characterized in terms of
horsepower and towing capacity. For Gulf of Mexico service, anchor
handling towing supply vessels typically require 6,000 horsepower or more
to position and service semi-submersible rigs drilling in deep water
areas.
BAREBOAT CHARTER. This is a lease arrangement under which the lessee
(charterer) is responsible for all crewing, insurance and other operating
expenses, as well as the payment of bareboat charter hire to the vessel
owner.
CREW BOATS. Crew boats transport personnel and cargo to and from
production platforms and rigs. Older crew boats, early 1980's built, are
generally 100 to 110 ft. in length and are generally designed for speed
to transport personnel. Newer crew boat designs are generally larger, 130
to 180 ft. in length, and have greater cargo carrying capacities. They
are used primarily to transport cargo on a time sensitive basis.
FREIGHT VESSELS. Freight vessels have a substantial amount of clear deck
space for cargo and adequate stability to handle tiers of containers or
overdimensional cargo. Speed and fuel consumption are also important
factors in this vessel category.
LINE HANDLING VESSELS. Line handling vessels are outfitted with special
equipment to assist tankers while they are loading at single buoy
moorings. They have a high degree of maneuverability, are well fendered
and include pollution dispersal capability.
OIL SPILL RESPONSE VESSELS. Oil spill response vessels are specially
equipped to respond to oil spill emergencies and are certified as such by
the U.S. Coast Guard.
OVERALL UTILIZATION. For any vessel with respect to any period, the ratio
of aggregate number of days worked by such vessel to total calendar days
available during such period.
PROJECT AND GEOPHYSICAL VESSELS. These vessels generally have special
features to meet the requirements of specific jobs. The special features
include large deck spaces, high electrical generating capacities, slow
controlled speed and unique thrusters, extra berthing facilities and long
range capabilities. These vessels are primarily used for well stimulation
and for the deployment of seismic data gathering equipment.
RATE PER DAY WORKED. For any vessel with respect to any period, the ratio
of total charter revenue of such vessel to the aggregate number of days
worked of such vessel for such period.
STANDBY SAFETY VESSELS. Standby safety vessels operate in the U.K. sector
of the North Sea. They typically remain on station to provide a safety
backup to offshore rigs and production facilities, carry special
equipment to rescue personnel, are equipped to provide first aid and
shelter and, in some cases, also function as supply vessels.
SUPPLY VESSELS. Supply vessels serve drilling and production facilities
and support offshore construction and maintenance work. They are
differentiated from other vessels by cargo flexibility and capacity. The
size of a vessel typically determines deck capacity, although vessels
constructed after 1979 with exhaust stacks forward have better
configurations for cargo stowage and handling. In addition to deck cargo,
such as pipe or drummed materials on pallets, supply vessels transport
liquid mud, potable and drill water, diesel fuel and dry bulk cement.
Generally, customers prefer vessels with large liquid mud and bulk cement
capacity and large areas of clear deck space. For certain jobs, other
characteristics such as maneuverability, fuel efficiency or firefighting
capability may also be important.
TOWING SUPPLY VESSELS. These vessels perform the same functions as supply
vessels but are equipped with more powerful engines (3,000 to 5,000
horsepower) and a deck mounted winch, giving them the added capability to
perform general towing duties, buoy setting and limited anchor handling
work. Towing supply vessels are primarily used in international
operations, which require the additional versatility that these vessels
offer relative to supply vessels.
UTILITY VESSELS. These vessels provide service to offshore production
facilities and also support offshore maintenance and construction work.
Their capabilities include the transportation of fuel, water, deck cargo
and personnel. They range in length from 96 feet to 135 feet and can,
depending on the vessel design, have enhanced features such as
firefighting and pollution response capabilities.
10
<PAGE>
ITEM 2. PROPERTIES
The Company's primary facilities are located in Texas, Louisiana and New
York. Executive offices, approximating 5,000 square feet, are rented in
Houston, Texas, pursuant to a five year lease expiring in 2000. Morgan
City, Louisiana is the largest base for the Company's offshore marine
service business that includes administrative offices and warehouse
facilities, aggregating 15,000 square feet, and a waterfront site for
vessel dockage. This facility is rented pursuant to a ten-year lease that
contains renewal options. Calverton, New York is the largest facility for
the Company's environmental service business that includes executive and
administrative offices that approximate 9,000 square feet. This facility
is rented pursuant to a five year lease that also contains renewal
options.
The Company also maintains other facilities in support of its offshore
marine and environmental service operations. Domestically, offshore
marine service operation sites are located primarily in Louisiana cities
that both serve as ports-of-call for many customers and represent
strategically disbursed operating bases along the U.S. Gulf of Mexico.
The Company's offshore marine service operation also maintains offices in
Rotterdam, the Netherlands, Paris, France, Great Yarmouth and Aberdeen,
United Kingdom, Dubai, United Arab Emirates, and Singapore in support of
its widely disbursed international fleet and many of these offices arose
pursuant to the SMIT Transaction. The environmental service business
maintains small marketing offices in Florida, Texas, Tennessee,
California, Louisiana, New Jersey, and Puerto Rico.
The Company believes that its facilities, including waterfront locations
that provide for vessel dockage to allow the undertaking of certain
vessel repair work, provide an adequate base of operations for the
foreseeable future. Information regarding the Company's fleet is included
in Item 1 of this Form 10-K.
ITEM 3. LEGAL PROCEEDINGS
The Company is involved in various legal and other proceedings which are
incidental to the conduct of its business. The Company believes that none
of these proceedings, if adversely determined, would have a material
adverse effect on its financial condition or results of operations.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of security holders during the fourth
quarter of 1997.
ITEM 4A. EXECUTIVE OFFICERS OF THE REGISTRANT
The name, age, and offices held by each of the executive officers of the
Company at December 31, 1997 were as follows:
<TABLE>
<CAPTION>
NAME AGE POSITION
- --------------------------- --------------- -------------------------------------------------------
<S> <C> <C>
Charles Fabrikant 53 Chairman of the Board of Directors,
President and Chief Executive Officer
Randall Blank 47 Executive Vice President, Chief Financial
Officer and Secretary
Milton Rose 53 Vice President
Mark Miller 36 Vice President
Andrew Strachan 50 Vice President
Lenny P. Dantin 45 Vice President and Treasurer
</TABLE>
Charles Fabrikant has been Chairman of the Board and Chief Executive
Officer of SEACOR since December 1989, and has served as a director of
SEACOR's subsidiaries since December 1989. He has been President of
SEACOR since October 1992. For more than the past five years, Mr.
Fabrikant has been the Chairman of the Board and Chief Executive Officer
of SCF Corporation ("SCF") and President of Fabrikant International
Corporation ("FIC"), each a privately owned corporation engaged in marine
operations and investments. Since January 1992, Mr. Fabrikant has been
Chairman of the Board of NRC. Each of SCF and FIC may be deemed to be an
affiliate of the Company. Mr. Fabrikant is a licensed attorney admitted
to practice in the State of New York and in the District of Columbia.
11
<PAGE>
Randall Blank has been Executive Vice President and Chief Financial
Officer of SEACOR since December 1989 and has been the Secretary since
October 1992. Since June 1994, Mr. Blank has been Chief Financial Officer
and Vice President of NRC. From December 1989 to October 1992, Mr. Blank
was Treasurer of SEACOR. In addition, Mr. Blank has been a director of
certain of SEACOR's subsidiaries since January 1990. Since 1986, Mr.
Blank has served as President and Chief Operating Officer of SCF.
Milton Rose has been Vice President of SEACOR and President and Chief
Operating Officer of SEACOR Marine, Inc. since January 1993. In addition,
since January 1993, Mr. Rose has been a director of certain of SEACOR's
subsidiaries. Since 1994, he has been a director of one of the companies
comprising the TMM Joint Venture. From 1985 to January 1993, Mr. Rose was
Vice President-Marine Division for Bay Houston Towing Company.
Mark Miller has been Vice President of SEACOR since November 1995, and
President and Chief Operating Officer of NRC since November 1992. Since
1992, Mr. Miller has been a director of certain of NRC's subsidiaries,
and since 1996, he has been a director of CPA.
Andrew Strachan has been a Vice President of SEACOR since April 1997 and
a director of certain SEACOR subsidiaries since December 1996. Prior to
joining SEACOR, Mr. Strachan held various positions at SMIT from 1967
through 1996, and most recently, Mr. Strachan served as Group Director
for SMIT's offshore shipping business.
Lenny P. Dantin has been Vice President of SEACOR since March 1991,
Treasurer since October 1992, and has been Vice President and the
Secretary, Treasurer and a director of certain of SEACOR's subsidiaries
since January 1990. Also, since 1994, Mr. Dantin has been a director of
one of the companies comprising the TMM Joint Venture.
12
<PAGE>
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
On October 23, 1996, SEACOR's Common Stock, commenced trading on the New
York Stock Exchange, Inc. (the "NYSE") under the trading symbol "CKH."
Prior to October 23, 1996, SEACOR's Common Stock was traded on the Nasdaq
Stock Market's National Market under the trading symbol "CKOR." Set forth
in the tables below for the periods presented are the high and low sale
prices for SEACOR's Common Stock as reported on the Nasdaq Stock Market's
National Market through and including October 22, 1996 and as reported on
the NYSE Composite Tape for the period commencing October 23, 1996
through and including March 25, 1998:
<TABLE>
<CAPTION>
NASDAQ STOCK MARKET'S NATIONAL MARKET (1)
HIGH LOW
------------------- ------------------
Fiscal 1996 (ending December 31, 1996):
<S> <C> <C>
First Quarter............................................... 37 1/4 26 3/8
Second Quarter.............................................. 51 36 1/4
Third Quarter............................................... 54 1/8 40 1/2
Fourth Quarter (through October 22, 1996)................... 59 1/4 49
NEW YORK STOCK EXCHANGE
Fiscal 1996 (ending December 31, 1996)
Fourth Quarter (October 23, 1996 through December 31, 1996). 66 3/8 52 1/8
Fiscal 1997 (ending December 31, 1997):
First Quarter............................................... 67 1/4 44 3/4
Second Quarter.............................................. 66 3/4 51 7/8
Third Quarter............................................... 58 1/2 39 5/8
Fourth Quarter.............................................. 73 5/8 53 7/8
Fiscal 1998 (ending December 31, 1998):
First Quarter (through March 25, 1998)...................... 61 1/8 50 1/4
</TABLE>
-----------
(1) Prices reflect inter-dealer prices, without any retail
mark-ups, mark-downs or commissions and may not necessarily
represent actual sale transactions.
The closing sale price of SEACOR's Common Stock, as reported on the NYSE
Composite Tape on March 25, 1998, was $ 59 1/8 per share. As of March 25
1998, there were approximately 283 holders of record of the Common Stock.
SEACOR has not paid any cash dividends in respect of its Common Stock
since its inception in December 1989 and has no present intention to pay
any such dividends in the foreseeable future. Instead, SEACOR intends to
retain earnings for working capital and to finance the expansion of its
business. Pursuant to the terms of the Company's Credit Facility with
DnB, SEACOR may declare and pay dividends if it is in full compliance
with the covenants contained in the DnB Facility and no Events of
Default, as defined, have occurred and are continuing or will occur after
giving effect to any declaration or distribution to shareholders. In
addition to any contractual restrictions, as a holding company, SEACOR's
ability to pay any cash dividends is dependent on the earnings and cash
flows of its operating subsidiaries and their ability to make funds
available to SEACOR. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations - Liquidity and Capital
Resources."
The payment of future cash dividends, if any, would be made only from
assets legally available therefor, and would also depend on the Company's
financial condition, results of operations, current and anticipated
capital requirements, plans for expansion, restrictions under then
existing indebtedness and other factors deemed relevant by the Company's
Board of Directors in its sole discretion.
13
<PAGE>
ITEM 6. SELECTED FINANCIAL DATA
SELECTED HISTORICAL FINANCIAL INFORMATION
The following table sets forth, for the periods and at the dates
indicated, selected historical and consolidated financial data for the
Company. Such financial data should be read in conjunction with
"Management's Discussion and Analysis of Financial Condition and Results
of Operations" and the Consolidated Financial Statements of the Company
included in Parts II and IV, respectively, of this Annual Report on Form
10-K.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------------------------------------
1993 1994 1995 1996 1997
---------- ---------- ----------- ----------- ----------
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Operating revenue:
Marine...................................$ 92,168 $ 93,985 $ 104,894 $ 193,557 $ 325,009
Oil spill and emergency response.......... - - 8,927 12,466 4,763
Environmentral retainer and other service - - 12,838 18,421 17,176
---------- ---------- ----------- ----------- ----------
92,168 93,985 126,659 224,444 346,948
Costs and Expenses:
Costs of oil spill and emergency response... - - 7,643 10,398 3,916
Operating expenses -
Marine.................................... 53,958 55,860 66,205 108,043 158,175
Environmental............................. - - 4,580 6,227 5,402
Administrative and general.................. 7,187 7,278 13,953 22,304 28,299
Depreciation and amortization............... 12,107 14,108 18,842 24,967 36,538
---------- ---------- ----------- ----------- ----------
Operating Income............................... 18,916 16,739 15,436 52,505 114,618
Net interest expense........................... 3,719 3,548 4,098 2,155 1,412
(Gain)/loss from equipment sales or requirements 8 388 (4,076) (2,264) (61,928)
Other (income) expense......................... (122) 267 (228) 104 (569)
McCall acquisition costs....................... - - - 542 -
---------- ---------- ----------- ----------- ----------
Income before income taxes, minority interest,
equity in net earnings of 50% or less owned 15,311 12,536 15,642 51,968 175,703
companies, and extraordinary item...........
Income tax expense............................. 5,339 4,368 5,510 18,535 61,384
---------- ---------- ----------- ----------- ----------
Income before minority interest, equity in
net earnings of 50% or less owned
companies, and extraordinary item........... 9,972 8,168 10,132 33,433 114,319
Minority interest in (income) loss of subsidiaries (51) 184 321 244 (301)
Equity in net earnings of 50% or less owned 287 975 872 1,283 5,575
companies......................................
---------- ---------- ----------- ----------- ----------
Income before extraordinary item............... 10,208 9,327 11,325 34,960 119,593
Extraordinary item - loss on extinguishment of
debt, net (less applicable income taxes).... 1,093 - - 807 439
========== ========== =========== =========== ==========
Net income....................................$ 9,115 $ 9,327 $ 11,325 $ 34,153 $ 119,154
========== ========== =========== =========== ==========
Net income per common share:(1)
Basic earnings per common share..........$ 1.28 $ 1.31 $ 1.50 $ 2.97 $ 8.61
Diluted earnings per common share......... 1.23 1.22 1.37 2.74 7.47
STATEMENT OF CASH FLOWS DATA:
Cash provided by operating activities......$ 23,416 $ 21,150 $ 9,939 $ 58,737 $ 102,548
Cash provided by (used in) investing actvities (24,251) (4,855) (78,695) (100,120) (212,087)
Cash provided by (used in) financing activities 17,657 (7,714) 53,291 161,482 135,468
OTHER FINANCIAL DATA:
EBITDA (2).................................$ 32,366 $ 32,923 $ 35,964 $ 79,730 $ 157,341
BALANCE SHEET DATA (AT PERIOD END):
Cash and temporary investments.............$ 36,008 $ 44,637 $ 28,786 $ 149,053 $ 175,381
Total assets................................ 233,511 238,145 350,883 636,455 1,019,801
Total long-term debt, including current
portion .................................. 87,959 79,517 111,095 220,452 360,639
Stockholders' equity........................ 100,532 111,482 183,464 351,071 474,014
</TABLE>
(1) In 1997, the Company adopted Statement of Financial Accounting
Standards No. 128, "Earnings Per Share" effective December 15,
1997, and all prior periods earnings per share data have been
restated to conform with the provisions of that statement.
(2) As used herein, "EBITDA" is operating income plus depreciation
and amortization, amortization of deferred mobilization costs,
which is included in marine operating expenses, minority
interest in (income) loss of subsidiaries and equity in net
earnings of 50% or less owned companies, before applicable
income taxes. EBITDA should not be considered by an investor as
an alternative to net income as an indicator of the Company's
operating performance or as an alternative to cash flows as a
better measure of liquidity.
14
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
OFFSHORE MARINE SERVICES
The Company provides marine transportation and related services largely
dedicated to supporting offshore oil and gas exploration and production
through the operation, domestically and internationally, of offshore
support vessels. The Company's vessels deliver cargo and personnel to
offshore installations, tow and handle the anchors of drilling rigs and
other marine equipment, support offshore construction and maintenance
work and provide standby safety support. The Company's vessels also are
used for special projects, such as well stimulation, seismic data
gathering, freight hauling, line handling, salvage, and oil spill
emergencies.
Operating revenues are affected primarily by the number of vessels owned,
average rates per day worked and utilization of the Company's fleet, and
the number of vessels bareboat and time chartered-in.
Since 1994, acquisition transactions and investments in joint ventures
that have significantly increased the size of the Company's fleet include
(i) 127 utility, crew, and supply vessels acquired in the 1995 Graham
Transaction, (ii) 11 towing and anchor handling towing supply vessels
acquired in the 1995 and 1996 CNN Transactions, (iii) 41 crew and utility
vessels acquired in the 1996 McCall Transaction, (iv) 28 anchor handling
towing supply, supply, and towing supply vessels acquired and equity
investments in joint ventures that owned 21 anchor handling towing supply
and towing supply vessels pursuant to the 1996 SMIT Transaction, and (v)
24 utility, crew, and supply vessels acquired in the 1997 Galaxie
Transaction. The vessels acquired in the Graham Transaction, the McCall
Transaction, and the Galaxie Transaction primarily support the oil and
gas exploration and production industry in the U.S. Gulf of Mexico,
whereas, vessels acquired in the 1995 and 1996 CNN Transactions and the
SMIT Transaction are employed in foreign offshore support markets. The
Company also actively monitors opportunities to buy and sell vessels that
will maximize the overall utility and flexibility of its fleet. Since
1994, the Company has sold 65 vessels: (i) 29 utility, (ii) 19 supply,
(iii) 6 towing, (iv) 6 anchor handling towing supply, (v) 3 crew, (vi) 1
freight, and (vii) 1 seismic. Eight of the vessels sold have been
bareboat chartered-in by the Company.
The Company is also committed to the construction of 21 vessels over the
next two years that include 7 crew, 7 anchor handling towing supply, 5
supply, and 2 utility vessels.
Rates per day worked and utilization of the Company's fleet are a
function of demand for and availability of marine vessels that is closely
aligned with the level of exploration and development of offshore areas.
The level of exploration and development of offshore areas is affected by
both short-term and long-term trends in oil and gas prices which, in
turn, are related to the demand for petroleum products and the current
availability of oil and gas resources. The table below sets forth rates
per day worked and utilization data for the Company during the periods
indicated.
Year Ended December 31,
-------------------------------------
1995 1996 1997
------------ ------------ -----------
Rates per Day Worked ($):(1)(2)
Supply/Towing supply................ 3,198 4,479 6,283
Anchor handling towing supply....... 4,960 6,482 10,176
Crew................................ 1,529 1,726 2,291
Standby safety...................... 4,378 4,884 6,033
Utility/Line handling............... 1,126 1,152 1,381
Geophysical, Freight and Other...... 4,010 4,289 4,586
Overall fleet.................... 2,376 2,565 3,598
Overall Utilization (%):(1)
Supply/Towing supply................ 83.9 94.5 92.3
Anchor handling towing supply....... 80.1 93.1 84.4
Crew................................ 96.9 97.8 97.5
Standby safety...................... 82.1 85.8 94.0
Utility/Line handling............... 73.0 81.4 97.9
Geophysical, Freight and Other...... 89.2 99.1 97.7
Overall fleet.................... 86.1 90.8 95.2
------------
(1) Rates per day worked is the ratio of total charter revenue to the total
number of vessel days worked. Rates per day worked and overall utilization
figures exclude owned vessels that are bareboat chartered-out, vessels
owned by corporations that participate in pooling arrangements with the
Company, joint venture vessels and managed/operated vessels and include
vessels bareboat and time chartered-in by the Company.
(2) Revenues for certain of the Company's vessels, primarily its standby safety
vessels, are earned in foreign currencies, primarily British pounds
sterling, and have been converted to U.S. dollars at the weighted average
exchange rate for the periods indicated.
15
<PAGE>
From time-to-time, the Company bareboat or time charters-in vessels. A
bareboat charter is a vessel lease under which the lessee ("charterer")
is responsible for all crewing, insurance, and other operating expenses,
as well as the payment of bareboat charter hire to the providing entity.
A time charter is a lease under which the entity providing the vessel is
responsible for all crewing, insurance, and other operating expenses and
the charterer only pays a time charter hire fee to the providing entity.
Operating revenues for vessels owned and bareboat or time chartered-in
are incurred at similar rates. However, operating expenses associated
with vessels bareboat and time chartered-in include charter hire expenses
that, in turn, are included in vessel expenses, but exclude depreciation
expense.
The Company also bareboat charters-out vessels. Operating revenues for
these vessels are lower than for vessels owned and operated or bareboat
chartered-in by the Company, because vessel expenses, normally recovered
through charter revenue, are the burden of the charterer. Operating
expenses include depreciation expense if the vessels which are
chartered-out are owned. At December 31, 1997, the Company had six
vessels bareboat chartered-out.
The table below sets forth the Company's fleet structure at the dates
indicated.
At December 31,
-------------------------------------------
Fleet Structure 1995 1996 1997
- -------------------------------- --------------- --------------- -----------
Owned........................... 232 242 248
Bareboat and Time Chartered-in.. 2 2 11
Managed......................... - - 1
Joint venture vessels(1)........ 10 30 34
Pool vessels(2)................. 5 12 12
=============== =============== ===========
Overall Fleet............... 249 286 306
=============== =============== ===========
------------
(1) 1995, 1996, and 1997 include 10, 9, and 13 vessels, respectively, operated
by the TMM Joint Venture and 1996 and 1997 additionally include 21 vessels
operated by the SMIT Joint Ventures. See "Business - Joint Ventures and
Pooling Arrangements."
(2) 1995, 1996, and 1997 include 5 SEAVEC Pool vessels and 1996 and 1997
additionally include 7 Saint Fleet Pool vessels. See "Business - Joint
Ventures and Pooling Arrangements."
Vessel operating expenses are primarily a function of fleet size and
utilization levels. The most significant vessel operating expense items
are wages paid to marine personnel, maintenance and repairs and marine
insurance. In addition to variable vessel operating expenses, the
offshore marine segment also incurs fixed charges related to the
depreciation of property and equipment. Depreciation is a significant
operating cost, and the amount related to vessels is the most significant
component.
A portion of the Company's revenues and expenses are paid in foreign
currencies. For financial statement reporting purposes, these amounts are
translated into U.S. dollars at the weighted average exchange rates
during the relevant period. The foregoing applies primarily to the
Company's North Sea operations. Overall, the percentage of the Company's
offshore marine revenues derived from foreign operations, whether in U.S.
dollars or foreign currencies, approximated 40% for the fiscal year ended
December 31, 1997.
The Company's foreign offshore marine operations are subject to various
risks inherent in conducting business in foreign nations. These risks
include, among others, political instability, potential vessel seizure,
nationalization of assets, currency restrictions and exchange rate
fluctuations, import-export quotas and other forms of public and
governmental regulation, all of which are beyond the control of the
Company. Although, historically, the Company's operations have not been
affected materially by such conditions or events, it is not possible to
predict whether any such conditions or events might develop in the
future. The occurrence of any one or more of such conditions or events
could have a material adverse effect on the Company's financial condition
and results of operations.
Regulatory drydockings, which are a substantial component of marine
maintenance and repair costs, are expensed when incurred. Under
applicable maritime regulations, vessels must be drydocked twice in a
five-year period for inspection and routine maintenance and repair. The
Company follows an asset management strategy pursuant to which it defers
required drydocking of selected marine vessels and voluntarily removes
these marine vessels from operation during periods of weak market
conditions and low rates per day worked. Should the Company undertake a
large number of drydockings in a particular fiscal quarter or fiscal
year, or put through survey a disproportionate number of older vessels,
which typically have higher drydocking costs, comparative results may be
affected. For the year ended December 31, 1997, the Company completed the
drydocking of 109 marine vessels at an aggregate cost of $11.6 million as
compared with 108 marine vessels drydocked at an aggregate cost of $8.5
million in 1996 and 51 marine vessels drydocked at an aggregate cost of
16
<PAGE>
$3.3 million in 1995. Drydock activity in 1995 reflects a low number of
vessels repaired in direct response to weak market conditions and low
rates per day worked in the U.S. Gulf of Mexico.
As of December 31, 1997, the average age of the Company's owned offshore
marine service fleet was approximately 14.6 years. The Company believes
that after offshore marine service vessels have been in service for
approximately 25 years, the amount of expenditures (which typically
increase with vessel age) necessary to satisfy required marine
certification standards may not be economically justifiable. There can be
no assurance that the Company will be able to maintain its fleet by
extending the economic life of existing vessels or acquiring new or used
vessels, or that the Company's financial resources will be sufficient to
enable it to make capital expenditures for such purposes.
Operating results are also affected by the Company's participation in the
following joint ventures: (i) the Veesea Joint Venture which operated ten
standby safety vessels in the North Sea at December 31, 1997; (ii) the
SEAVEC and Saint Fleet Pools which coordinate the marketing of 22 standby
safety vessels in the North Sea, of which 10 are owned by the Veesea
Joint Venture; (iii) the TMM Joint Venture which operated 13 vessels in
Mexico at December 31, 1997; and (iv) the SMIT Joint Ventures which
operated 20 vessels in the Far East, Latin America, the Middle East, the
Mediterranean and offshore West Africa at December 31, 1997. See
"Business - Joint Ventures and Pooling Arrangements."
To date, the recent instability in Asian financial markets has had no
material effect on the Company's operations in this region.
ENVIRONMENTAL SERVICES
The Company's environmental services business provides contractual oil
spill response and other related training and consulting services. The
Company's clients include tank vessel owner/operators, refiners and
terminal operators, exploration and production facility operators and
pipeline operators. The Company charges a retainer fee to its customers
for ensuring by contract the availability (at predetermined rates) of its
response services and equipment. Retainer services include employing a
staff to supervise response to an oil spill emergency and maintaining
specialized equipment, including marine equipment, in a ready state for
emergency and spill response as contemplated by response plans filed by
the Company's customers in accordance with OPA 90 and various state
regulations. The Company maintains relationships with numerous
environmental sub-contractors to assist with response operations,
equipment maintenance, and provide trained personnel for deploying
equipment in a spill response.
Pursuant to retainer agreements entered into with the Company, certain
vessel owners pay in advance to the Company an annual retainer fee based
upon the number and size of vessels in each such owner's fleet and in
some circumstances pay the Company additional fees based upon the level
of each vessel owner's voyage activity in the U.S. The Company recognizes
the greater of revenue earned by voyage activity or the portion of the
retainer earned in each accounting period. Certain vessel and facility
owners pay a fixed fee or a fee based on volume of petroleum product
transported for the Company's retainer services and such fee is
recognized ratably throughout the year. The Company's retainer agreements
with vessel owners generally range from one to three years while retainer
arrangements with facility owners are as long as seven years.
Spill response revenue is dependent on the magnitude of any one spill
response and the number of spill responses within a given fiscal period.
Consequently, spill response revenue can vary greatly between comparable
periods and the revenue from any one period is not indicative of a trend
or of anticipated results in future periods. Costs of oil spill response
activities relate primarily to (i) payments to sub-contractors for labor,
equipment and materials, (ii) direct charges to the Company for equipment
and materials, (iii) participation interests of others in gross profits
from oil spill response, and (iv) training and exercises related to spill
response preparedness.
The principal components of the Company's operating costs are salaries
and related benefits for operating personnel, payments to
sub-contractors, equipment maintenance and depreciation. These expenses
are primarily a function of regulatory requirements and the level of
retainer business. Operating results are also affected by NRC's
participation in CPA on the West Coast of the United States.
17
<PAGE>
RESULTS OF OPERATIONS
The following table sets forth operating revenue and operating profit by
segment for the periods indicated. The offshore marine services segment
data is provided by geographic area of operation. The environmental
business segment's principal operations are in the United States.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------------------
1997 1996 1995
------------- ------------- -------------
<S> <C> <C> <C>
OPERATING REVENUE:
Marine:
United States...................................... $ 195,266 $ 134,106 $ 72,964
North Sea.......................................... 53,415 14,173 13,523
West Africa........................................ 44,194 37,312 14,637
Other Foreign...................................... 32,134 7,966 3,770
----------- ------------- ------------
325,009 193,557 104,894
Environmental........................................ 21,939 30,887 21,765
============= ============= =============
346,948 224,444 126,659
============= ============= =============
OPERATING PROFIT:
Marine:
United States...................................... 125,650 43,640 17,529
North Sea.......................................... 16,047 (2,545) (2,952)
West Africa........................................ 18,054 8,317 3,840
Other Foreign...................................... 17,384 3,616 1,630
------------- ------------- -----------
177,135 53,028 20,047
Environmental........................................ 3,285 5,009 1,626
------------- ------------- -----------
180,420 58,037 21,673
Other income (expense)(1).......................... (27) (548) 190
General corporate administration................... (3,278) (3,366) (2,123)
Net interest expense............................... (1,412) (2,155) (4,098)
Minority interest in (income) loss of subsidiaries. (301) 244 321
Equity in earnings of 50% or less owned
companies, net of tax............................. 5,575 1,283 872
Income tax expense................................. (61,384) (18,535) (5,510)
============= ============= =============
Income before extraordinary item................... $ 119,593 $ 34,960 $ 11,325
============= ============= =============
</TABLE>
----------
(1) Excludes gain/(loss) from equipment sales or retirement of
property and certain other expenses that were reclassified to
operating profit in geographical areas of the Marine segment.
COMPARISON OF YEAR END 1997 TO YEAR END 1996
The marine business segment's operating revenue increased $131.5 million
in the twelve month period ended December 31, 1997, compared to the
twelve month period ended December 31, 1996 due primarily to a net
increase in the number of owned vessels and a significant improvement in
rates per day worked for the Company's offshore vessels operating in the
U.S. Gulf of Mexico. Significant offshore vessel acquisitions included 24
vessels purchased from SMIT during December 1996 that operate in the
North Sea, offshore West Africa, and in Other Foreign regions and 24
vessels purchased from Galaxie during January 1997 that operate in the
U.S. Gulf of Mexico. Anchor handling towing supply, towing, and supply
vessels were acquired from SMIT, and utility, crew and supply vessels
were acquired from Galaxie. Strong demand in the U.S. Gulf of Mexico
resulted in rates per day worked increasing between comparable periods
for all offshore vessels owned by the Company. Additionally, rates per
day worked for the Company's vessels operating in the North Sea, offshore
West Africa, and in Other Foreign regions also increased between
comparable periods.
The environmental business segment's operating revenue decreased $8.9
million in the twelve month period ended December 31, 1997, compared to
the twelve month period ended December 31, 1996 due primarily to a
decline in the severity of oil spills managed by the Company. Retainer
fees and other service revenues also declined between comparable periods
due primarily to a decline in voyage and other service activities.
The marine business segment's operating profit increased $124.1 million
in the twelve month period ended December 31, 1997, compared to the
twelve month period ended December 31, 1996. The increase was due
primarily to significant increases in gains from the sale of equipment,
mainly vessels, and factors affecting operating revenue as outlined
above. During the twelve months ended December 31, 1997, gains from the
sale of equipment aggregated $61.9 million, primarily from the sale of 37
vessels: 14 U.S. Gulf of Mexico (7 of which were bareboat chartered-in by
the Company) and 1 North Sea supply, 4 U.S. Gulf of Mexico and 2 West
18
<PAGE>
African towing supply, 3 West African, 1 North Sea, and 1 U.S. Gulf of
Mexico (bareboat chartered-in by the Company) anchor handling towing
supply, 7 U.S. Gulf of Mexico utility, 2 U.S. Gulf of Mexico crew, 1 U.S.
freight, and 1 Far East seismic. These increases in operating profit were
partially offset by higher wage, repair, insurance, charter, food
provision, and administrative costs (see discussion below). Wage costs
increased for seaman working in the U.S. Gulf of Mexico region in
response to strong demand for personnel resulting from very active market
conditions. Repair costs increased for the Company's fleet operating in
the U.S. Gulf of Mexico due primarily to an increase in (i) the number of
scheduled engine overhauls, (ii) other engine maintenance resulting from
greater running time by the Company`s smaller vessels, and (iii) drydock
expenses that resulted from rising shipyard costs and more stringent
regulatory inspections. Health insurance costs in the United States
increased due to higher per average employee claim costs. Charter cost
increased due to the sale and leaseback of eight vessels during 1997. The
food provision per diem for vessels operating domestically was increased
in 1997.
The environmental business segment's operating profit declined $1.7
million in the twelve month period ended December 31, 1997 compared to
the twelve month period ended December 31, 1996 due primarily to the
factors affecting operating revenue as outlined above. These declines in
operating profit were partially offset by decreases in both operating and
general and administrative expenses.
The Company's overall administrative and general expenses, relating
primarily to operating activities, increased $6.0 million in the twelve
month period ended December 31, 1997 compared to the twelve month period
ended December 31, 1996, and related primarily to an increase in
managerial staff and other administrative costs necessary to support
fleet growth that includes the recent vessel acquisitions from SMIT and
Galaxie. Also during 1997, the Company's marine services business
increased its reserve for doubtful foreign trade accounts receivable. The
environmental business segment's administrative and general expenses
decreased in response to reduced voyage and other service activities.
Administrative and general expenses primarily include costs associated
with personnel, professional services, travel, communications, facility
rental and maintenance, general insurance, and franchise taxes.
The Company's overall depreciation and amortization expense, which
related primarily to operating activities, increased $11.6 million in the
twelve month period ended December 31, 1997 compared to the twelve month
period ended December 31, 1996. This increase was due primarily to a net
increase in the number of owned offshore marine vessels that were
acquired from SMIT and Galaxie.
Net interest expense decreased $0.7 million in the twelve month period
ended December 31, 1997 compared to the twelve month period ended
December 31, 1996. Interest income rose due primarily to greater invested
cash balances that resulted from improved operating results and the sale
of the Company's 5 3/8% Notes and 7.2% Notes. Interest expense also
increased between comparable periods due to an increase in the Company's
outstanding indebtedness but was partially offset by the capitalization
in 1997 of certain interest costs associated with the construction of
vessels.
In the twelve month period ended December 31, 1997, equity in the
earnings of 50% or less owned companies, net of applicable income taxes,
resulted primarily from the Company's investment in the SMIT Joint
Ventures, the TMM Joint Venture, and CPA. In the comparable period of
1996, equity earnings were realized from the Company's participation in
the TMM Joint Venture and CPA.
COMPARISON OF YEAR ENDED 1996 TO YEAR ENDED 1995
The marine business segment's operating revenue increased $88.7 million
in the twelve month period ended December 31, 1996, compared to the
twelve month period ended December 31, 1995, due primarily to a net
increase in the number of owned vessels, higher rates per day worked and
greater utilization, the termination of bareboat charter-out arrangements
for nine Company owned vessels and the charter-in of two additional
vessels. Operating revenue earned by 162 vessels acquired in the fourth
quarter of 1995 and in 1996 and two newly constructed vessels accounted
for $50.8 million or 57% of the increase. Improved rates per day worked
and greater utilization of the Company's vessels accounted for an
additional $24.8 million or 28% of the increase due primarily to improved
market conditions in the U.S. Gulf of Mexico and North Sea. The remaining
increase in operating revenue between comparable years was due primarily
to the Company's termination of bareboat charter-out arrangements in the
fourth quarter of 1995 of nine Company owned vessels operating offshore
West Africa and the charter-in of two additional vessels that also
operated offshore West Africa in 1996.
19
<PAGE>
The environmental business segment's operating revenue increased $9.1
million in the twelve month period ended December 31, 1996 compared to
the twelve month period ended December 31, 1995, due primarily to the
consolidation of the financial results of the environmental subsidiaries
and higher oil spill response and retainer revenue. The Company's
environmental subsidiaries became wholly owned on March 14, 1995;
whereas, prior to that date, they were reported in the financial
statements under the equity method of accounting. Oil spill response
revenue increased due to higher response activity. Retainer revenue
increased due to the addition of two significant customers and greater
voyage activity.
The marine business segment's operating profit increased $33.0 million in
the twelve month period ended December 31, 1996, compared to the twelve
month period ended December 31, 1995. The increase was due primarily to
the factors affecting operating revenue as outlined in the preceding
paragraph; however, operating and administrative expenses also increased.
Operating expenses increased primarily due to an increase in (i) the
number of vessels drydocked and repaired, (ii) crew wage and related
benefit costs in the U.S., and (iii) engine repairs. Administrative
expenses increased primarily due to an increase in (i) wage and related
benefit costs, (ii) bad debt provisions for trade accounts receivable,
(iii) cost resulting from the consolidation of certain U.S. operations,
and (iv) commitment fees paid a bank under a revolving credit loan
facility established in late 1995. Gains from the sale of vessels
declined as the Company sold less marketable equipment in the current
year. Four supply, six utility, one crew, and one anchor handling towing
supply vessels were sold in the U.S. in 1995; whereas, during 1996,
sixteen utility vessels were sold in the U.S.
The environmental business segment's operating profit increased $3.4
million in the twelve month period ended December 31, 1996 compared to
the twelve-month period ended December 31, 1995, due primarily to the
factors affecting operating revenue mentioned in the discussion above.
In the twelve month period ended December 31, 1996, other expense
includes $0.5 million of cost to complete the McCall Transaction. In the
twelve month period ended December 31, 1995, other income related
primarily to a $0.2 million gain recognized in conjunction with the
Company's purchase of $2.3 million principal amount of its outstanding
6.0% Convertible Subordinated Notes Due July 1, 2003 (the "6.0% Notes").
The gain represented the difference between the amount paid to acquire
the 6.0% Notes and their carrying amount, net after giving effect to a
write-off of certain unamortized deferred financing costs associated with
the original sale of such securities.
Overall administrative and general expenses, related primarily to
operating activities, but including corporate expenses, increased $8.4
million in the twelve month period ended December 31, 1996, compared to
the twelve month period ended December 31, 1995. The marine business
segment accounted for $7.5 million of the increase between comparable
years and related primarily to an increase in managerial staff and other
administrative costs necessary to support fleet growth and other factors
as mentioned in the discussion above of the marine business segment's
operating profit. Corporate administrative and general expenses increased
$1.2 million between comparable years due primarily to greater salary
expense and costs associated with listing the Common Stock on the NYSE.
The environmental business segment's administrative costs increased
between comparable years due primarily to the consolidation of the
financial results of the environmental subsidiaries. The Company's
administrative and general expenses primarily include costs associated
with personnel, professional services, travel, communications, facility
rental and maintenance, general insurance and franchise taxes.
Overall depreciation and amortization expense, which related primarily to
operating activities, increased $6.1 million in the twelve month period
ended December 31, 1996, compared to the twelve month period ended
December 31, 1995. The marine business segment accounted for $5.6 million
of this increase between comparable periods and related primarily to
fleet growth. The remainder of the increase between comparable periods
was due primarily to the consolidation of the financial results of the
environmental subsidiaries.
Net interest expense decreased $1.9 million between comparable years.
Interest expense decreased primarily due to a decrease in outstanding
indebtedness that was caused primarily by the conversion in July 1996 of
all of the then outstanding $55.25 million principal amount of the
Company's 6.0% Notes and normal and accelerated principal repayments.
This decrease was partially offset by additional interest expense related
primarily to borrowings in November 5, 1996 under the Company's 5 3/8%
Notes and borrowings under a revolving credit facility with DnB that was
established in September 1995 in connection with the Graham Transaction.
Interest income increased between comparable years due primarily to
greater invested cash balances resulting from improved operating results
and net proceeds received from the issuance of the 5 3/8% Notes.
20
<PAGE>
In the twelve month period ended December 31, 1996, equity in the
earnings of 50% or less owned companies, net of applicable income taxes,
resulted from the Company's investment in the TMM Joint Venture, FISH,
and CPA. In the comparable periods of 1995, equity earnings were realized
exclusively from the Company's participation in the TMM Joint Venture.
LIQUIDITY AND CAPITAL RESOURCES
The Company's ongoing liquidity requirements arise primarily from its
need to service debt, fund working capital, acquire, construct, or
improve equipment and make other investments. Management believes that
cash flow from operations will provide sufficient working capital to fund
the Company's operating needs. The Company may, from time to time, issue
shares of Common Stock, debt or a combination thereof, or sell vessels to
finance the acquisition of equipment and businesses or make improvements
to existing equipment.
The Company's cash flow levels and operating revenues are determined
primarily by the size of the Company's fleet, vessels' rates per day
worked, overall vessel utilization, and the level of spill response
activity. Factors relating to the marine service business are affected
directly by the volatility of oil and gas prices, the level of offshore
production and exploration activity and other factors beyond the
Company's control.
Operating results for 1997 generated $102.5 million in cash that reflect
a significant improvement over the prior year primarily due to a net
increase in the number of owned offshore marine service vessels and
substantially higher rates per day earned by the Company's worldwide
marine fleet. Trade accounts receivable and payable have also increased
significantly from 1996 to 1997 due primarily to the same factors
affecting operating results.
During 1997, the Company had a net use of cash in investing activities
resulting primarily from (i) $62.6 million expended for 16 vessels under
construction, (ii) the acquisition of 35 vessels for aggregate
consideration of $40.1 million that included the Galaxie Transaction, the
acquisition of 4 vessels pursuant to a letter of intent initiated during
the SMIT Transaction, and various other purchase transactions, (iii) the
new construction of 5 vessels and capital improvements to another vessel
for $29.4 million, (iv) the purchase of investment securities for $160.5
million, and (v) $47.0 million being set aside in escrow as restricted
cash. In connection with certain vessel sales during 1997, the Company
has directed the sale proceeds to be deposited into escrow accounts
pursuant to certain exchange and escrow agreements. Under the terms of
those agreements, for a period of six months, the funds held in escrow
are restricted to be used toward the purchase of replacement vessels.
Should replacement vessels not be delivered prior to expiration of their
applicable six month escrow period, funds then remaining in the escrow
accounts will be released to the Company for general use. The use of cash
in investing activities during 1997 was offset principally by cash
generated from the sale of 37 vessels and other equipment aggregating
$139.8 million. Eight of the vessels sold were pursuant to sale and
leaseback transactions, and an additional 3 vessels sold were to equity
investees. Certain of the gains realized from these transactions have
been deferred and will be amortized to income over the lease term or
depreciable lives of the applicable vessel. Furthermore, during the
fourth quarter of 1997 and the first quarter of 1998, the Company entered
into Memoranda of Agreement for the sale and leaseback in 1998 of an
additional 10 vessels at an aggregate sale price of $73.65 million.
The Company generated cash from financing activities during 1997
primarily from the sale of its 7.2% Notes for net proceeds of $148.0
million. This increase was offset primarily by the repayment of $8.4
million of indebtedness outstanding under the Credit Facility with DnB,
the repayment of other indebtedness, and the repurchase of 110,200 shares
of Common Stock for $4.7 million.
Under the terms of the 1997 Credit Facility with DnB, the Company may
borrow up to $100.0 million which amount decreases semi-annually by 6
1/4% and a commitment fee is payable on a quarterly basis at rates
ranging from 0.15 to 0.45 percent per annum on the average unfunded
portion of the Credit Facility. The commitment fee rate varies based upon
the percentage the Company's funded debt bears to earnings before
interest, taxes, depreciation, and amortization ("EBITDA"). The aggregate
principal amount (the "Maximum Committed Amount") of unsecured reducing
revolving credit loans mature on June 29, 2002. The Maximum Committed
Amount will automatically decrease semiannually by 6 1/4% beginning June
30, 1998, with the balance payable at maturity. Outstanding borrowings
will bear interest at annual rates ranging from 70 to 160 basis points
(the "Margin") above LIBOR. The Margin is determined quarterly and varies
based upon the percentage the Company's funded debt bears to EBITDA, as
defined. The Credit Facility requires the Company, on a consolidated
basis, to maintain a minimum ratio of indebtedness to vessel value, as
21
<PAGE>
defined, a minimum cash and cash equivalent level, a specified interest
coverage ratio, specified debt to capitalization ratios and a minimum net
worth. The Credit Facility limits the amount of secured indebtedness
which the Company and its subsidiaries may incur, provides for a negative
pledge with respect to the Company's and its subsidiaries' assets, and
restricts the payment of dividends. There were no borrowings outstanding
under the Credit Facility at December 31, 1997.
The 7.2% Notes sold in 1997 require interest payments semiannually on
March 15 and September 15 of each year commencing March 15, 1998. The
7.2% Notes may be redeemed at any time at the option of the Company, in
whole or from time to time in part, at a price equal to 100% of the
principal amount thereof plus accrued and unpaid interest, if any, to the
date of redemption plus a Make-Whole Premium, if any, relating to the
then prevailing Treasury Yield and the remaining life of the 7.2% Notes.
On December 8, 1997, the Company completed an exchange offer through
which it exchanged all of the 7.2% Notes for a series of 7.2% Senior
Notes (the "7.2% Exchange Notes") which are identical in all material
respects to the 7.2% Notes, except that the 7.2% Exchange Notes are
registered under the Securities Act of 1933, as amended. The 7.2% Notes
and the 7.2% Exchange Notes were issued under an indenture (the "1997
Indenture") between the Company and First Trust National Association, as
trustee. The 1997 Indenture contains covenants including, among others,
limitations on liens and sale and leasebacks of certain Principal
Properties, as defined in the 1997 Indenture, and certain restrictions on
the Company consolidating with or merging into any other Person, as
defined in the 1997 Indenture.
At December 31, 1997, the Company had outstanding $186.75 million
aggregate principal amount of its 5 3/8% Notes that were issued pursuant
to a private placement and the SMIT Transaction in 1996. The 5 3/8% Notes
were issued under an Indenture dated as of November 1, 1996, (the "1996
Indenture"), between the Company and First Trust National Association, as
trustee. The 5 3/8% Notes are convertible, in whole or part, at the
option of the holder at any time prior to the close of business on the
business day next preceding November 15, 2006, unless previously redeemed
into shares of Common Stock at a conversion price of $66.00 per share
(equivalent to a conversion rate of 15.1515 shares of Common Stock per
$1,000 principal amount of the 5 3/8% Notes), subject to adjustment in
certain circumstances. The 5 3/8% Notes are redeemable at the Company's
option at any time on or after November 24, 1999 at the redemption prices
specified therein, together with accrued and unpaid interest to the date
of repurchase. The 5 3/8% Notes are general unsecured obligations of the
Company, subordinated in right of payment to all "Senior Indebtedness"
(as defined in the 1996 Indenture) of the Company and effectively
subordinated in right of payment to all indebtedness and other
obligations and liabilities and any preferred stock of the Company's
subsidiaries. Also, pursuant to the SMIT Transaction, the Company entered
into certain lease purchase agreements which obligate the Company to
purchase two vessels from SMIT with cash and $6.75 million principal
amount of the 5 3/8% Notes in 2001.
During 1997, minority interest in subsidiaries of the Company increased
significantly, resulting primarily from the establishment of two new
joint ventures. Pursuant to the sale by Chiles in December 1997 of
membership interests to third parties, the Company made certain
additional capital contributions to Chiles that resulted in an aggregate
investment of $35.0 million and ownership of a 55.4% membership interest.
Also during 1997, the Company completed the structuring of a limited
liability company (the "LLC"), pursuant to a Memorandum of Agreement
dated September 25, 1996, with a wholly owned subsidiary of TMM. This
LLC, which owns and operates a newly constructed anchor handling towing
supply vessel, is 25% owned by the TMM subsidiary and 75% owned by the
Company.
The Company issued 136,578 shares of Common Stock during 1997 for
aggregate value of approximately $8.0 million pursuant the Galaxie
Transaction, the SMIT Transaction, and the acquisition of ERST.
Additionally in 1997, in recognition of a commitment to the continued
growth and financial success of the Company, the Executive Compensation
and Stock Option Committee of the Board of Directors granted 24 officers
and key employees 18,510 restricted shares at a market value on date of
issue of approximately $1.1 million.
In February 1997, the Board of Directors authorized the repurchase, from
time to time, of up to $50.0 million of the Company's Common Stock or its
5 3/8% Notes. In February 1998, the Board of Directors increased its
authorization to repurchase, from time to time, up to an additional $40.0
million of the Company's Common Stock or its 5 3/8% Notes. The repurchase
of the Common Stock or 5 3/8% Notes will be conducted through open market
purchases or privately negotiated transactions and, subject to applicable
law, will be conducted at such times for such amounts and at such prices
determined to be appropriate under the circumstances. During 1997, SEACOR
repurchased 110,200 of its shares for approximate aggregate cost of $4.7
million. In the first quarter of 1998, SEACOR repurchased an additional
737,500 of its shares for approximate aggregate cost of $38.4 million.
22
<PAGE>
On March 3, 1998, the Company repurchased from SMIT Overseas 712,000
shares of SEACOR's Common Stock for $37.024 million. The Common Stock was
issued to SMIT Overseas, as part of the purchase consideration paid for
the Company's acquisition of SMIT's offshore supply vessel fleet in
December 1996. The Company also satisfied its obligation to pay up to an
additional $47.2 million of purchase consideration that would otherwise
be payable to SMIT in 1999 through the payment to SMIT of $20.88 million
in cash and, through the commitment to issue in January 1999, $23.2
million principal amount of five-year unsecured promissory notes that
will bear interest at 90 basis points above the rate for comparable
five-year U.S. Treasury Notes. As part of this transaction, the Company
and SMIT also have agreed to extend the three-year term of the salvage
and maritime contracting and non-compete agreements first established in
December 1996 through December 2001.
During 1997, the Company entered into forward exchange contracts to
manage certain foreign exchange risks associated with its net investment
in a foreign subsidiary using pounds sterling as its functional currency.
The total notional value of those forward exchange contracts at December
31, 1997 was approximately $7.5 million, all of which expire at various
dates through January 1999.
The Company is currently in the process of evaluating its information
technology infrastructure for Year 2000 compliance. The Company does not
expect the costs to modify its information technology infrastructure to
be Year 2000 compliant will be material to its financial condition or
results of operations. The Company does not anticipate any material
disruption in its operations as a result of any failure by the Company to
be in compliance. At present, the Company does not have but expects to
solicit information concerning the Year 2000 compliance status of its
suppliers and customers. In the event that any of the Company's
significant suppliers or customers does not successfully and timely
achieve Year 2000 compliance, the Company's business or operations could
be adversely affected.
CAPITAL EXPENDITURES
The Company may make selective acquisitions of marine vessels or fleets
of marine vessels and oil spill response equipment or expand the scope
and nature of its environmental services. The Company also may upgrade or
enhance its marine vessels or construct marine vessels to remain
competitive in the marketplace. Management anticipates that such
expenditures would be funded through a combination of existing cash
balances, cash flow provided by operations, sale of existing equipment
and, potentially, through the issuance of additional indebtedness or
shares of Common Stock.
As of March 1, 1998, the Company has commitments to build 21 marine
offshore service vessels at an approximate aggregate cost of $238.0
million of which $71.0 million has been funded, and its majority owned
subsidiary, Chiles, has commitments to build 2 premium jackup drilling
rigs for an approximate aggregate cost of $178.0 million of which $36.5
million has been funded. These construction projects are expected to be
completed over the next two years. Pursuant to Memoranda of Agreement
between the Company and TMM, two joint venture corporations will be
structured to each own an offshore marine service vessel currently being
constructed by the Company. TMM is expected to make an approximate $6.0
million aggregate capital contribution for a 12.5% equity interest in
each joint venture, and the Company will own all remaining equity
interests in these joint venture corporations. Expenditures for
environmental compliance to modify marine segment vessels have not been a
significant component of the Company's capital budget.
RECENT ACCOUNTING PRONOUNCEMENTS
In June 1997, the Financial Accounting Standards Board issued Statement
No. 130 ("SFAS 130"), "Reporting Comprehensive Income" and Statement No.
131 ("SFAS 131"), "Disclosures About Segments of an Enterprise and
Related Information." SFAS 130 establishes standards for reporting
comprehensive income (defined as net income and all other non-owner
changes in equity) in the financial statements. SFAS 131 requires
companies to disclose segment data based on how management makes
decisions about allocating resources to segments and measuring their
performance. In February 1998, the Financial Accounting Standards Board
issued Statement No. 132 ("SFAS 132"), "Employers' Disclosures about
Pensions and Other Postretirement Benefits." SFAS 130, 131, and 132 are
effective for 1998. Adoption of SFAS 130 and 131 is expected to result in
additional disclosure by the Company but will not have any effect on its
reported financial position or results of operations. SFAS 132 is not
expected to have any impact on the Company's financial statements.
23
<PAGE>
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The consolidated financial statements and related notes are included in
Part IV of this Form 10-K on pages 28 through 50.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
None.
24
<PAGE>
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
As permitted by General Instruction G. to this Form 10-K, other than
information with respect to the Company's executive officers which is set
forth in Item 4A of Part I of this Form 10-K, the information required to
be disclosed pursuant to this Item 10 is incorporated in its entirety
herein by reference to the Company's definitive proxy statement to be
filed with the Commission pursuant to Regulation 14A within 120 days
after the end of the Company's last fiscal year.
ITEM 11. EXECUTIVE COMPENSATION
As permitted by General Instruction G. to this Form 10-K, the information
required to be disclosed pursuant to this Item 11 is incorporated in its
entirety herein by reference to the Company's definitive proxy statement
to be filed with the Commission pursuant to Regulation 14A within 120
days after the end of the Company's last fiscal year.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
As permitted by General Instruction G. to this Form 10-K, the information
required to be disclosed pursuant to this Item 12 is incorporated in its
entirety herein by reference to the Company's definitive proxy statement
to be filed with the Commission pursuant to Regulation 14A within 120
days after the end of the Company's last fiscal year.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
As permitted by General Instruction G. to this Form 10-K, the information
required to be disclosed pursuant to this Item 13 is incorporated in its
entirety herein by reference to the Company's definitive proxy statement
to be filed with the Commission pursuant to Regulation 14A within 120
days after the end of the Company's last fiscal year.
25
<PAGE>
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON
FORM 8-K
(a) Documents filed as part of this report:
1. and 2. Financial Statements and Financial Statement
Schedules.
See Index to Consolidated Financial Statements and Financial
Statement Schedules on page 28 of this Form 10-K.
3. Exhibits:
See Index to Exhibits on pages 53 - 59 of this Form 10-K.
(b) Reports on Form 8-K:
None.
26
<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.
SEACOR SMIT INC.
(Registrant)
By: /s/ Charles Fabrikant
---------------------------
Charles Fabrikant,
Chairman of the Board,
President and Chief
Executive Officer
Date: March 31, 1998
Pursuant to the requirements of the Securities and Exchange Act of 1934,
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/ Charles Fabrikant Chairman of the Board, President March 31, 1998
--------------------------
Charles Fabrikant President and Chief Executive
Officer (Principal Executive Officer)
/s/ Randall Blank Executive Vice President, Chief March 31, 1998
--------------------------
Randall Blank Financial Officer and Secretary
(Principal Financial Officer)
/s/ Lenny P. Dantin Vice President and March 31, 1998
--------------------------
Lenny P. Dantin Treasurer (Principal Accounting
Officer and Controller)
/s/ Granville E. Conway Director March 31, 1998
-----------------------
Granville E. Conway
/s/ Michael E. Gellert Director March 31, 1998
--------------------------
Michael E. Gellert
/s/ Antoon Kienhuis Director March 31, 1998
--------------------------
Antoon Kienhuis
/s/ Stephen Stamas Director March 31, 1998
--------------------------
Stephen Stamas
/s/ Richard M. Fairbanks Director March 31, 1998
------------------------
Richard M. Fairbanks III
/s/ Pierre de Demandolx Director March 31, 1998
-----------------------
Pierre de Demandolx
</TABLE>
27
<PAGE>
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND
FINANCIAL STATEMENT SCHEDULE
Financial Statements:
Page
Report of Independent Public Accountants.......................... 29
Consolidated Balance Sheets - December 31, 1997 and 1996.......... 30
Consolidated Statements of Income for each of the three years
ended December 31, 1997........................................ 31
Consolidated Statements of Changes in Equity for each of the
three years ended December 31, 1997............................ 32
Consolidated Statements of Cash Flows for each of the three years
ended December 31, 1997........................................ 33
Notes to Consolidated Financial Statements........................ 34
Financial Schedules:
Reports of Independent Public Accountants on Financial
Statement Schedule............................................. 51
Valuation and Qualifying Accounts for each of the three
years ended December 31, 1997 52
All Financial Schedules, except those set forth above, have been omitted since
the information required is included in the financial statements or notes or
have been omitted as not applicable or required.
28
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To SEACOR SMIT Inc.:
We have audited the accompanying consolidated balance sheets of SEACOR
SMIT Inc. (a Delaware corporation) and subsidiaries as of December 31,
1997 and 1996 and the related consolidated statements of income, changes
in equity and cash flows for each of the three years in the period ended
December 31, 1997. 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 did not audit the 1995
financial statements of CRN Holdings Inc. and subsidiaries, which
statements reflect total assets and total revenues of 9 percent and 17
percent, respectively, in 1995 of the consolidated totals. Those
statements were audited by other auditors whose report has been furnished
to us and our opinion, insofar as it relates to the amounts included for
those entities, is based solely on the report of the other auditors.
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
and the report of other auditors provide a reasonable basis for our
opinion.
In our opinion, based on our audits and the report of other auditors, the
financial statements referred to above present fairly, in all material
respects, the financial position of SEACOR SMIT Inc. and subsidiaries as
of December 31, 1997 and 1996 and the results of their operations and
their cash flows for each of the three years in the period ended December
31, 1997, in conformity with generally accepted accounting principles.
Arthur Andersen LLP
New Orleans, Louisiana
February 11, 1998
(except with respect to the matters
discussed in Notes 19 and 20, as
to which the date is March 3, 1998)
29
<PAGE>
SEACOR SMIT INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1997 AND 1996
(IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
ASSETS 1997 1996
--------------- -------------
<S> <C> <C>
Current Assets:
Cash and cash equivalents.................................................... $ 175,381 $ 149,053
Held-to-maturity securities.................................................. 33,020 311
Trade and other receivables, net of allowance for
doubtful accounts of $1,626 and $475, respectively......................... 84,087 48,693
Inventories.................................................................. 2,149 1,559
Prepaid expenses and other................................................... 1,422 1,865
--------------- -------------
Total current assets..................................................... 296,059 201,481
--------------- -------------
Investments, at Equity and Receivables from 50% or Less Owned Companies......... 38,370 21,316
Available-for-Sale Securities................................................... 127,420 -
Property and Equipment:
Vessels and equipment........................................................ 447,620 475,566
Vessels and rigs under construction.......................................... 108,592 13,081
Other........................................................................ 36,671 10,252
--------------- -------------
592,883 498,899
Less-accumulated depreciation................................................ 109,949 101,123
--------------- -------------
482,934 397,776
--------------- -------------
Restricted Cash................................................................. 46,983 -
Other Assets.................................................................... 28,035 15,882
=============== =============
$ 1,019,801 $ 636,455
=============== =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Current portion of long-term debt............................................ $ 1,925 $ 1,793
Accounts payable and accrued expenses........................................ 34,304 15,424
Accrued interest............................................................. 4,616 1,450
Accrued wages................................................................ 3,658 3,377
Accrued income taxes......................................................... 8,739 2,182
Other current liabilities.................................................... 6,279 5,057
--------------- -------------
Total current liabilities................................................ 59,521 29,283
--------------- -------------
Long-Term Debt ................................................................. 358,714 218,659
Deferred Income Taxes........................................................... 59,681 33,749
Deferred Gain and Other Liabilities............................................. 34,168 2,719
Minority Interest in Subsidiaries............................................... 33,703 974
Stockholders' Equity:
Common stock, $.01 par value, 40,000,000 shares authorized; 14,064,221 and
13,888,133 shares issued in 1997 and 1996, respectively.................... 140 139
Additional paid-in capital................................................... 268,728 258,904
Retained earnings............................................................ 211,159 92,005
Less 166,968 and 56,768 shares held
in treasury in 1997 and 1996, respectively, at cost ...................... (5,365) (622)
Unamortized restricted stock................................................. (986) (279)
Net unrealized gain (loss) on available-for-sale securities, net of tax...... (16) -
Currency translation adjustments............................................. 354 924
--------------- -------------
Total stockholders' equity............................................... 474,014 351,071
=============== =============
$ 1,019,801 $ 636,455
=============== =============
</TABLE>
The accompanying notes are an integral part of these financial
statements and should be read in conjunction herewith.
30
<PAGE>
SEACOR SMIT INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
FOR THE YEARS ENDED DECEMBER 31, 1997, 1996, AND 1995
(IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
1997 1996 1995
--------------- --------------- ---------------
<S> <C> <C> <C>
Operating Revenue:
Marine........................................................ $ 325,009 $ 193,557 $ 104,894
Environmental -
Oil spill and emergency response............................ 4,763 12,466 8,927
Retainer and other services................................. 17,176 18,421 12,838
--------------- --------------- ---------------
346,948 224,444 126,659
--------------- --------------- ---------------
Costs and Expenses:
Cost of spill and emergency response.......................... 3,916 10,398 7,643
Operating expenses -
Marine...................................................... 158,175 108,043 66,205
Environmental............................................... 5,402 6,227 4,580
Administrative and general.................................... 28,299 22,304 13,953
Depreciation and amortization................................. 36,538 24,967 18,842
--------------- --------------- ---------------
232,330 171,939 111,223
--------------- --------------- ---------------
Operating Income................................................. 114,618 52,505 15,436
--------------- --------------- ---------------
Other Income (Expense):
Interest income............................................... 12,756 3,558 2,583
Other......................................................... 569 (104) 228
Gain/(loss) from equipment sales or retirements............... 61,928 2,264 4,076
McCall acquisition costs...................................... - (542) -
Interest expense.............................................. (14,168) (5,713) (6,681)
--------------- --------------- ---------------
61,085 (537) 206
--------------- --------------- ---------------
Income Before Income Taxes, Minority Interest, Equity in Earnings
Extraordinary Item of 50% or Less Owned Companies, and
Extraordinary Item 175,703 51,968 15,642
--------------- --------------- ---------------
Income Tax Expense:
Current....................................................... 36,317 15,215 5,175
Deferred...................................................... 25,067 3,320 335
--------------- --------------- ---------------
61,384 18,535 5,510
--------------- --------------- ---------------
Income Before Minority Interest, Equity in Earnings of 50% or
Less Owned Companies and Extraordinary Item................... 114,319 33,433 10,132
Minority Interest in (Income) Loss of Subsidiaries............... (301) 244 321
Equity in Net Earnings of 50% or Less Owned Companies............ 5,575 1,283 872
--------------- --------------- ---------------
Income Before Extraordinary Item................................. 119,593 34,960 11,325
Extraordinary Item - Loss on Extinguishment of Debt, net of tax.. 439 807 -
--------------- -------------- --------------
Net Income....................................................... $ 119,154 $ 34,153 $ 11,325
=============== =============== ===============
Basic Earnings Per Common Share:
Income before extraordinary item.............................. $ 8.64 $ 3.04 $ 1.50
Extraordinary item............................................ (0.03) (0.07) -
--------------- --------------- ---------------
Net income.................................................... $ 8.61 $ 2.97 $ 1.50
=============== =============== ===============
Diluted Earnings Per Common Share:
Income before extraordinary item.............................. $ 7.50 $ 2.80 $ 1.37
Extraordinary item............................................ (0.03) (0.06) -
--------------- --------------- ---------------
Net income.................................................... $ 7.47 $ 2.74 $ 1.37
=============== =============== ===============
Weighted Average Common Shares:
Basic......................................................... 13,840,205 11,480,929 7,547,330
Diluted....................................................... 16,845,001 13,256,291 9,955,040
</TABLE>
The accompanying notes are an integral part of these financial statements and
should be read in conjunction herewith.
31
<PAGE>
SEACOR SMIT INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1997, 1996, AND 1995
(IN THOUSANDS)
<TABLE>
<CAPTION>
Net Unrealized
Gains(Losses)
Unamortized on Available Currency
Common Additional Retained Treasury Restricted Sale Securities Translation
Stock Paid-in Capital Earnings Stock Stock Net of Tax Adjustments
-------- ------------ -------------------- --------------------------------------------
-------------------------------------------
1997
-------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance, December 31, 1996 $ 139 $ 258,904 $ 92,005 $ (622)$ (279) $ - $ 924
Add - Net income for the year
Ended December 31, 1997 - - 119,154 - - - -
- Issuance of common stock: -
Galaxie transaction 1 2,787 - - - - -
SMIT transaction - 1,554 - - - - -
ERST/O'Brien's Inc acquisition - 3,614 - - - - -
Exercise of stock options - 656 - - - - -
Issuance of restricted stock - 1,213 - - (1,146) - -
- Amortization of restricted stock - - - - 439 - -
- Net currency translation
adjustments - - - - - - (570)
Deduct - Change in unrealized gains (losses) - - - - - (16) -
on Available-for-Sale
Securities
- Purchase of Treasury shares - - - (4,743) - - -
-------- ------------ --------- ----------- ------------ ------------ ------------
Balance, December 31, 1997 $ 140 $ 268,728 $ 211,159 $ (5,365)$ (986) $ (16)$ 354
============================================================================================================================
1996
-------------------------------------------
Balance, December 31, 1995 $ 99 $ 127,317 $ 57,852 $ (576)$ (159) $ - $ (1,069)
Add - Net income for the year
Ended December 31, 1996 - - 34,153 - - - -
- Issuance of common stock:
Public offering 9 37,670 - - - - -
2 5% note conversion 2 3,939 - - - - -
6% note conversion 21 53,764 - - - - -
SMIT transaction 7 33,635 - - - - -
Exercise of stock options 1 2,452 - - - - -
Issuance of restricted stock - 575 - - (575) - -
- Cancellation of restricted stock - - - (46) 46 - -
- Amortization of restricted stock - - - - 409 - -
- Net currency translation
adjustments - - - - - - 1,993
Deduct - Public offering costs - (448) - - - - -
-------- ------------ --------- ----------- ------------ ------------ ------------
Balance, December 31, 1996 $ 139 $ 258,904 $ 92,005 $ (622)$ (279) $ - $ 924
====================================================================================================================================
1995
-------------------------------------------
Balance, December 31, 1994 $ 72 $ 66,319 $ 46,528 $ (576)$ - $ - $ (861)
Add - Net income for the year
Ended December 31,1995 - - 11,325 - - - -
- Issuance of common stock:
NRC merger 3 5,704 - - - - -
CNN acquisition 5 11,295 - - - - -
Public offering 16 36,926 - - - - -
Coastal/Phibro transaction 3 7,497 - - - - -
Other - 4 - - - - -
- Issuance of restricted stock - 216 - - (216) - -
- Amortization of restricted stock - - - - 57 - -
Deduct - Public offering costs - (644) - - - - -
- Dividends paid - - (1) - - - -
- Net currency translation
adjustments - - - - - - (208)
======== ============ ==================== ======================== ============
Balance, December 31, 1995 $ 99 $ 127,317 $ 57,852 $ (576)$ (159) $ - $ (1,069)
================================================================================
</TABLE>
The accompanying notes are an integral part of these financial statements and
should be read in conjunction herewith.
32
<PAGE>
SEACOR SMIT INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1997, 1996, AND 1995
(IN THOUSANDS)
<TABLE>
<CAPTION>
1997 1996 1995
-------------- ------------- -------------
<S> <C> <C> <C>
Cash Flows from Operating Activities:
Net Income......................................................... $119,154 $ 34,153 $ 11,325
Depreciation and amortization...................................... 36,538 24,967 18,842
Restricted stock amortization................................... 439 409 57
Bad debt expense................................................ 1,155 238 100
Deferred income taxes........................................... 25,067 3,320 335
Equity in net earnings of 50% or less owned companies........... (5,575) (1,283) (872)
Extraordinary loss, extinguishment of debt...................... 439 807 -
(Gain)/loss from equipment sales or retirements................ (60,674) (2,264) (4,076)
Minority interest in income (loss) of subsidiaries.............. 301 (244) (321)
Other, net...................................................... 204 416 379
Changes in operating assets and liabilities -
Decrease in restricted cash.................................. - - 308
(Increase) in receivables.................................... (35,976) (14,819) (14,807)
(Increase) decrease in inventories........................... (602) 69 (79)
(Increase) decrease in prepaid expenses and other assets..... (3,998) 609 (1,620)
Increase in accounts payable, accrued and other liabilities.. 26,076 12,359 368
-------------- ------------- -------------
Net cash provided by operations............................. 102,548 58,737 9,939
-------------- ------------- -------------
Cash Flows from Investing Activities:
Purchases of property and equipment............................ (136,097) (50,794) (87,997)
Proceeds from the sale of marine vessels and equipment 139,828 3,441 7,522
Investments in and advances to 50% or less owned companies (7,075) (65) (916)
Principal payments on notes due from 50% or less owned companies 723 942 431
Deposits into restricted cash accounts (46,983) - -
Purchase of investment securities (160,486) (330) (28)
Proceeds from maturity of investment securities 311 642 -
Acquisition of vessels and joint venture interests from SMIT
Internationale N V -- (54,427) -
Other, net (2,308) 471 2,293
-------------- ------------- -------------
Net cash (used in) investing activities (212,087) (100,120) (78,695)
-------------- ------------- -------------
Cash Flows from Financing Activities:
Payments of long-term debt and stockholder loans (10,383) (52,743) (66,609)
Proceeds from issuance of long-term debt and stockholder loans 1,125 7,711 87,283
Net proceeds from sale of common stock and capital contribution - 37,231 36,302
Payments on capital lease obligations (1,844) (172) (1,037)
Net proceeds from sale of 5 3/8% Convertible Subordinated Notes - 168,189 -
Net proceeds from sale of 7 2% Subordinated Notes 148,049 - -
Proceeds from sale of minority interest 4,096 - -
Common stock acquired for Treasury (4,743) - -
Other, net (832) 1,266 (2,648)
-------------- ------------- -------------
Net cash provided by financing activities 135,468 161,482 53,291
-------------- ------------- -------------
Effects of Exchange Rate Changes on Cash and Cash Equivalents 399 168 (81)
-------------- ------------- -------------
Net Increase (Decrease) in Cash and Cash Equivalents 26,328 120,267 (15,546)
Cash and Cash Equivalents, beginning of period 149,053 28,786 44,332
-------------- ------------- -------------
Cash and Cash Equivalents, end of period $ 175,381 $ 149,053 $ 28,786
============== ============= =============
</TABLE>
The accompanying notes are an integral part of these financial statements and
should be read in conjunction herewith.
33
<PAGE>
SEACOR SMIT INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. NATURE OF OPERATIONS AND ACCOUNTING POLICIES:
NATURE OF OPERATIONS. SEACOR SMIT Inc. ("SEACOR") and its subsidiaries
(the "Company") furnish vessel support to the offshore oil and gas
exploration and production industry and provide contractual oil spill
response and related training and consulting services to companies who
store, transport, produce, or handle petroleum and certain non-petroleum
oils as required by the Oil Pollution Act of 1990 ("OPA 90"). The Company
operates principally in the United States, offshore West Africa, the
North Sea, the Far East, and Latin America.
BASIS OF CONSOLIDATION. The consolidated financial statements include the
accounts of SEACOR and all majority-owned subsidiaries. Intercompany
balances and transactions have been eliminated. The equity method of
accounting is used by the Company when it has a 20% to 50% ownership
interest in other entities and the ability to exercise significant
influence over their operating and financial policies.
USE OF ESTIMATES. The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from
those estimates.
CASH AND CASH EQUIVALENTS. Cash equivalents refer to securities with
original maturities of three months or less.
ACCOUNTS RECEIVABLE. Customers of vessel support services are primarily
major and large independent oil and gas exploration and production
companies; whereas, customers of oil spill and emergency response
services include tank vessel owner/operators, refiners, terminals,
exploration and production facilities and pipeline operators. The
Company's customers are granted credit on a short-term basis and related
credit risks are considered minimal.
INVENTORIES. Inventories consist of vessel spare parts, fuel, and
supplies that are recorded at cost and charged to vessel expenses as
consumed.
PROPERTY AND EQUIPMENT. Property and equipment are recorded at historical
cost and depreciated over the estimated useful lives of the related
assets. Depreciation is computed on the straight line method for
financial reporting purposes. Maintenance and repair costs, including
routine drydock inspections on vessels in accordance with maritime
regulations, are charged to operating expense as incurred. Expenditures
that extend the useful life or improve the marketing and commercial
characteristics of vessels and major renewals or improvements to other
properties are capitalized.
Vessels and related equipment are depreciated over 20-25 years; all other
property and equipment are depreciated and amortized over two to ten
years.
Interest cost incurred during the construction of vessels is capitalized
as part of the carrying value of the assets and amortized to expense over
their estimated useful lives. In 1997, $1,516,000 of interest was
capitalized, and in 1996 and 1995, no interest was capitalized.
OTHER ASSETS. Other assets consist primarily of goodwill, a net
investment in a sale-type lease, debt issue costs, and costs relating to
non-compete agreements. These intangible assets, carried at cost less
accumulated amortization, are amortized to operations primarily on a
straight line basis over their estimated period of benefit, ranging from
three to twenty years. Amortization expense for the years ended December
31, 1997, 1996, and 1995 was $947,000, $1,369,000, and $729,000,
respectively. Accumulated amortization was $3,907,000 and $1,536,000 as
of December 31, 1997 and 1996, respectively.
INCOME TAXES. Deferred income tax assets and liabilities have been
provided in recognition of the income tax effect attributable to the
difference between assets and liabilities reported in the tax return and
financial statements. Deferred tax assets or liabilities are provided
using the enacted tax rates expected to apply to taxable income in the
periods in which the deferred tax assets and liabilities are expected to
be settled or realized.
34
<PAGE>
DEFERRED GAIN. The Company has entered into vessel sale and leaseback
transactions and other vessel sale transactions with joint venture
corporations in which the Company has a 50% or less ownership interest.
Certain gains realized from these transactions were not immediately
recognized in income but were deferred in the consolidated balance sheet
of the Company. For the sale and leaseback transactions, gains were
deferred to the extent of the present value of minimum lease payments and
are being amortized to income as reductions in rental expense over the
applicable lease terms. For other sale transactions with joint venture
corporations, gains were deferred to the extent of the Company's
ownership interest and are being amortized to income over the applicable
vessels' depreciable lives.
FOREIGN CURRENCY TRANSLATION. The assets, liabilities, and results of
operations of certain SEACOR subsidiaries are measured using the currency
of the primary foreign economic environment within which they operate,
their functional currency. For purpose of consolidating these
subsidiaries with SEACOR, the assets and liabilities of these foreign
operations are translated to U.S. dollars at currency exchange rates as
of the balance sheet date and for revenue and expenses at the weighted
average currency exchange rates during the applicable reporting periods.
Translation adjustments resulting from the process of translating these
subsidiaries' financial statements are included in stockholders' equity.
Certain SEACOR subsidiaries also enter into transactions denominated in
currencies other than their functional currency. Changes in currency
exchange rates between the functional currency and the currency in which
a transaction is denominated is included in the determination of net
income in the period in which the currency exchange rates change. Foreign
currency exchange gains or losses included in determining net income have
not been material. Gains and losses on foreign currency transactions that
are designated as, and effective as, economic hedges of a net investment
in a foreign entity (such as debt denominated in a foreign currency or
forward exchange contracts) are not included in determining net income
but are included in stockholders' equity as translation adjustments.
Gains or losses on foreign currency transactions that do not hedge an
exposure are included in determining net income in accordance with the
requirements for other foreign currency transactions as described above.
REVENUE RECOGNITION. The Company's marine transportation business earns
revenue primarily from time or bareboat charter of vessels to customers
based upon daily rates of hire. Rates of hire earned under time and
bareboat charters vary substantially in direct proportion to the
operating expenses incurred in conjunction with each type of charter.
Typically, under time charter arrangements, the vessels' operating
expenses are the responsibility of the Company; whereas, under bareboat
charters, the vessels' operating expenses are paid by the charterer.
Vessel charters may range from several days to several years.
Environmental customers are charged retainer fees for ensuring by
contract the availability (at predetermined rates) of the Company's
response services and equipment. Retainer services include employing a
staff to supervise response to an oil spill emergency and maintaining
specialized equipment, including marine equipment, in a ready state for
other emergency and spill response as contemplated by response plans
filed by the Company's customers. Certain vessel owners pay in advance a
minimum annual retainer fee based upon the number and size of vessels in
each such owner's fleet and in some circumstances pay the Company
additional fees based upon the level of each vessel owner's voyage
activity in the U.S. The Company recognizes the greater of revenue earned
by voyage activity or the portion of the retainer earned in each
accounting period. Certain other vessel owners pay a fixed fee for the
Company's retainer service and such fee is recognized ratably throughout
the year. Facility owners generally pay a quarterly fee based on a
formula that defines and measures petroleum products transported to or
processed at the facility. Some facility owners pay an annual fixed fee
and such fee is recognized ratably throughout the year. Retainer
agreements with vessel owners generally range from one to three years
while retainer arrangements with facility owners are as long as seven
years.
Spill response revenue is dependent on the magnitude of any one spill
response and the number of spill responses within a given fiscal year.
Consequently, spill response revenue can vary greatly between comparable
periods.
35
<PAGE>
EARNINGS PER SHARE. In the fourth quarter of 1997, the Company adopted
Statement of Financial Accounting Standards ("SFAS") No. 128, "Earnings
per Share," effective December 15, 1997, and all prior period earnings
per share data have been restated to conform with the provisions of that
Statement. Basic earnings per common share were computed by dividing
income available to common stockholders by the weighted-average number of
common shares outstanding for the relevant periods. Diluted earnings per
common share further gives effect for all potentially dilutive common
shares that would have been outstanding in the relevant periods assuming
the removal of certain stock restrictions and the issuance of common
shares for stock options and convertible subordinated notes through the
application of the treasury stock and if-converted methods.
<TABLE>
<CAPTION>
Per
Income Shares Share
---------------------------- -------
<S> <C> <C> <C>
FOR THE YEAR ENDED 1997-
BASIC EARNINGS PER SHARE:
Income Before Extraordinary Item................ $ 119,593,000 13,840,205 $ 8.64
=======
EFFECT OF DILUTIVE SECURITIES:
Options and Restricted Stock.................... - 163,930
Convertible Securities.......................... 6,787,000 2,840,866
-------------- --------------
DILUTED EARNINGS PER SHARE:
Income Available to Common Stockholders
Plus Assumed Conversions..................... $ 126,380,000 16,845,001 $ 7.50
============== ============== =======
FOR THE YEAR ENDED 1996-
BASIC EARNINGS PER SHARE:
Income Before Extraordinary Item................ $ 34,960,000 11,480,929 $ 3.04
=======
EFFECT OF DILUTIVE SECURITIES:
Options and Restricted Stock.................... - 177,529
Convertible Securities.......................... 2,122,000 1,597,833
----------------------------
DILUTED EARNINGS PER SHARE:
Income Available to Common Stockholders
Plus Assumed Conversions...................... $ 37,082,000 13,256,291 $ 2.80
============= ============== =======
FOR THE YEAR ENDED 1995-
BASIC EARNINGS PER SHARE:
Income Before Extraordinary Item................ $ 11,325,000 7,547,330 $ 1.50
=======
EFFECT OF DILUTIVE SECURITIES:
Options and Restricted Stock.................... - 84,008
Convertible Securities.......................... 2,348,000 2,323,702
----------------------------
DILUTED EARNINGS PER SHARE:
Income Available to Common Stockholders
Plus Assumed Conversions...................... $ 13,673,000 9,955,040 $ 1.37
============== ============== =======
</TABLE>
The effect of adopting the accounting change as required by SFAS No. 128
on previously reported earnings per share data was as follows:
1996 1995
--------- ----------
Earnings Per Share - $ 3.03 $ 1.50
Assuming No Dilution
Effect of SFAS No. 128 0.01 -
--------- ---------
Basic Earnings Per Share, as $ 3.04 $ 1.50
restated
========= =========
Earnings Per Share - $ 2.73 $ 1.36
Assuming Full Dilution
Effect of SFAS No. 128 0.07 0.01
--------- ---------
Diluted Earnings Per Share, $ 2.80 $ 1.37
as restated
========= =========
RELIANCE ON FOREIGN OPERATIONS. For the years ended December 31, 1997,
1996, and 1995, approximately 40%, 31%, and 30%, respectively, of the
Company's offshore marine revenues were derived from foreign operations,
and results in 1997 increased in comparison to prior periods due
primarily to the SMIT Transaction (see Note 5). The Company's foreign
marine operations are subject to various risks inherent in conducting
business in foreign nations. These risks include, among others, political
instability, potential vessel seizure, nationalization of assets,
currency restrictions and exchange rate fluctuations, import-export
quotas and other forms of public and governmental regulations, all of
which are beyond the control of the Company. Although, historically, the
Company's operations have not been affected materially by such conditions
or events, it is not possible to predict whether any such conditions or
events might develop in the future. The occurrence of any one or more of
such conditions or events could have a material adverse effect on the
Company's financial condition and results of operations.
36
<PAGE>
RECENT ACCOUNTING PRONOUNCEMENTS. In June 1997, the Financial Accounting
Standards Board issued Statement No. 130 ("SFAS 130"), "Reporting
Comprehensive Income" and Statement No. 131 ("SFAS 131"), "Disclosures
About Segments of an Enterprise and Related Information." SFAS 130
establishes standards for reporting comprehensive income (defined as net
income and all other non-owner changes in equity) in the financial
statements. SFAS 131 requires companies to disclose segment data based on
how management makes decisions about allocating resources to segments and
measuring their performance. In February 1998, the Financial Accounting
Standards Board issued Statement No. 132 ("SFAS 132"), "Employers'
Disclosures about Pensions and Other Postretirement Benefits." SFAS 130,
131, and 132 are effective for 1998. Adoption of SFAS 130 and 131 is
expected to result in additional disclosure by the Company but will not
have any effect on its reported financial position or results of
operations. SFAS 132 is not expected to have any impact on the Company's
financial statements.
RECLASSIFICATIONS. Certain reclassifications of prior year information
have been made to conform with the current year presentation.
2. FINANCIAL INSTRUMENTS:
The estimated fair value amounts of the Company's financial instruments
have been determined using available market information and appropriate
valuation methodologies. Considerable judgment was required in developing
the estimates of fair value, and accordingly, the estimates presented
herein, in thousands of dollars, are not necessarily indicative of the
amounts realizable in a current market exchange.
<TABLE>
<CAPTION>
1997 1996
------------------------- ------------------------
Carrying Estimated Carrying Estimated
Amount Fair Value Amount Fair Value
------------ ------------ ----------- -----------
<S> <C> <C> <C> <C>
ASSETS:
Cash and temporary cash investments.....................$ 175,381 $ 175,381 $ 149,053 $ 149,053
Marketable securities................................... 160,465 158,921 311 311
Notes receivable, primarily from equity investees....... 9,312 9,312 2,021 2,021
Restricted cash......................................... 46,983 46,983 - -
LIABILITIES:
Long-term debt, including current portion............... 360,639 388,157 220,452 249,553
Indebtedness to a minority shareholder of a subsidiary.. 1,175 1,169 1,093 1,230
Foreign currency forward contracts...................... 7,319 7,481 - -
</TABLE>
The carrying value of cash and temporary cash investments and restricted
cash approximated fair values due to the short-term maturities of these
instruments. Marketable securities were estimated using quoted market
prices. Notes receivable approximated fair value since they bear interest
at current market rates. The fair market value of long-term debt,
indebtedness to a minority stockholder, and forward contracts was
determined based upon quoted market prices or by discounting the future
cash flows using market information as to borrowing rates for debt of
similar terms and maturity.
During 1997, the Company entered into forward exchange contracts to
manage certain foreign exchange risks associated with its net investment
in a foreign subsidiary using pounds sterling as its functional currency.
The forward exchange contracts expire at various dates through January
1999.
3. MARKETABLE SECURITIES:
The Company's marketable securities are categorized as held-to-maturity
or available-for-sale, as defined by the Statement of Financial
Accounting Standards No. 115, "Accounting for Certain Investments in Debt
and Equity Securities." Held-to-maturity securities are measured at
amortized cost, and available-for-sale securities are measured at fair
values with unrealized holding gains and losses excluded from earnings
and reported as a net amount in a separate component of stockholders'
equity.
37
<PAGE>
The amortized cost and fair value of marketable securities at December 31, 1997
were as follows, in thousands:
<TABLE>
<CAPTION>
Gross Unrealized Holding
--------------- ------------------------
Type of Securities Amortized Cost Gains Losses Fair Value
- ------------------------------------- --------------- ---------- ---------- ---------------
<S> <C> <C> <C> <C>
1997
HELD-TO-MATURITY:
Corporate Debt Securities...... $ 33,020 $ - $ (1,519) $ 31,501
AVAILABLE-FOR-SALE:
U.S. Government and Agencies .. 122,444 48 (72) 122,420
Corporate Debt Securities...... 5,001 - (1) 5,000
--------------- ---------- ---------- ---------------
$ 160,465 $ 48 $ (1,592) $ 158,921
=============== ========== ========== ===============
1996
HELD-TO-MATURITY
U.S. Government and Agencies... $ 311 $ - $ - $ 311
=============== ========== ========== ===============
</TABLE>
The contractual maturities of marketable securities at December 31, 1997 were as
follows, in thousands:
Amortized Fair
Type and Maturity Cost Value
- ---------------------------------------------- ----------- ------------
HELD-TO-MATURITY:
Mature in One Year or Less.................. $ 33,020 $ 31,501
AVAILABLE-FOR-SALE:
Mature in One Year or Less.................. - -
Mature After One Year Through Five Years.... 127,445 127,420
----------- ------------
$ 160,465 $ 158,921
=========== ============
There were no available-for-sale securities sold during 1997.
4. NRC MERGER:
On March 14, 1995, SEACOR acquired the remaining 57.1% of the outstanding
common stock of NRC Holdings that it did not already own through a merger
(the "NRC Merger") of NRC Holdings with and into CRN Holdings Inc.
("CRN"), a wholly owned subsidiary of SEACOR. Following the NRC Merger,
the financial condition, results of operations, and cash flows of these
acquired environmental subsidiaries, primarily operating through the
National Response Corporation ("NRC"), were reflected in the Company's
consolidated financial statements. Prior to March 14, 1995, the Company
reported its equity interest in NRC Holdings as an investment in 50% or
less owned company that was accounted for by the equity method.
CRN, the surviving corporation of the NRC Merger, primarily through its
wholly owned subsidiary, NRC, is engaged in the business of responding to
marine oil spills and planning for environmental emergencies. SEACOR
issued 292,965 shares of its common stock pursuant to the transaction
that were valued at $5,707,000. The Company already owned 42.9% of NRC
Holdings which was carried on the Company's books at a value net of
deferred taxes of $995,000. The purchase method was used to account for
this business combination. The excess of cost over estimated fair value
of the net assets acquired, including $138,000 in direct costs incurred
in conjunction with the transaction, of $3,447,000 will be amortized to
expense over 20 years using the straight line method. The estimated fair
values of assets and liabilities of NRC Holdings at the date of the NRC
Merger are as follows, in thousands of dollars:
Caption Amount
---------------
- -------------------------------------------
Current Assets............................. $ 6,008
Property and Equipment..................... 21,219
Capitalized Lease.......................... 1,807
Other Assets............................... 100
Goodwill................................... 3,447
Deferred Income Taxes...................... 404
Current Liabilities........................ (5,741)
Capital Lease Obligations.................. (1,577)
Bank Loan Payable.......................... (12,500)
Deferred Revenue........................... (6,327)
---------------
$ 6,840
===============
38
<PAGE>
The following unaudited pro forma information has been prepared as if the
merger had occurred at the beginning of December 31, 1995, in thousands
of dollars, except per share data. This pro forma information has been
prepared for comparative purposes only and is not necessarily indicative
of what would have occurred had the merger taken place on the dates
indicated, nor does it purport to be indicative of the future operating
results of the Company.
Caption 1995
- --------------------------------------------- --------------
Revenues..................................... $ 130,735
Net Income................................... 11,477
Basic Earnings Per Common Share.............. 1.52
5. VESSEL ACQUISITIONS AND DISPOSITIONS:
GRAHAM ACQUISITION. On September 15, 1995, the Company acquired
substantially all the assets of John E. Graham & Sons and certain of its
affiliated companies (collectively, "Graham") for $72,854,000 in cash
(the "Graham Acquisition"). The purchased assets included 127 marine
vessels used to support the offshore oil and gas exploration and
production industry in the U.S. Gulf of Mexico, real estate, capital
equipment and inventory associated with the operation of these vessels.
The acquisition was financed with $74,000,000 of borrowings under a
revolving credit facility (the "DnB Facility") entered into with Den
norske Bank ASA ("DnB"). The difference between the amount borrowed and
paid to Graham to acquire the assets was used to defray debt issue and
acquisition costs, totaling $1,208,000.
1995 CNN ACQUISITION. On November 14, 1995, the Company acquired three
towing supply vessels from CNN and entered into an agreement to acquire
two anchor handling towing supply vessels and certain other vessel
related assets for aggregate consideration of $21,550,000. Of such
consideration, $11,300,000 was paid for by issuing 459,948 shares of
SEACOR's common stock to CNN and $10,250,000 was paid for in cash on
December 14, 1995 when the two anchor handling towing supply vessels were
delivered to the Company (the "1995 CNN Acquisition"). The Company
borrowed $11,000,000 from the DnB Facility to finance the cash portion of
the consideration and pay acquisition costs. Pursuant to the 1995 CNN
Acquisition, the Company and CNN agreed to (i) terminate CNN's bareboat
charters covering ten vessels owned by the Company, effective October 1,
1995, (ii) terminate the SEAFISH Pooling arrangement, effective October
1, 1995, (iii) bareboat charter to the Company, effective October 1,
1995, one vessel owned by CNN with an option to purchase, (iv) provide
the Company a right of first refusal until December 31, 1999, under which
terms CNN shall not sell or transfer all or part of its interest in any
of three additional vessels owned by CNN, (v) permit SEACOR to acquire
50% of the outstanding shares of Feronia International Shipping S.A.
("FISH"), a French corporation owned by CNN, for a cost of $60,000,
effective January 1, 1996, (vi) allow CNN to sell to SEACOR all of CNN's
right, title, and interest in and to all of the shares owned by CNN in
SEAFISH Ltd. for a purchase price of $5,000, effective January 1, 1996,
(vii) reimburse CNN for certain costs associated with CNN's early
termination of employment contracts for officers and crews that worked
aboard seven of the Company's vessels which were previously bareboat
chartered to CNN (at December 31, 1995, the Company recorded a liability
of $700,000 regarding these contract termination costs and has included
such cost in the purchase price of the five vessels acquired), and (viii)
designate FISH as manager, for a fee, of the Company's vessels operating
offshore West Africa and in the Arabian Gulf and certain other additional
vessels owned by CNN. During 1997, the Company acquired the remaining 50%
of the outstanding common stock of FISH that it did not already own.
MCCALL ACQUISITION. During May 1996, the Company acquired McCall
Enterprises, Inc. ("McCall") and affiliated companies (collectively, the
"McCall Companies") which operated 36 crew boats and 5 utility boats
dedicated to serving the oil and gas industry primarily in the U.S. Gulf
of Mexico. In consideration for such acquisition (the "McCall
Acquisition"), which was accomplished pursuant to a series of merger and
share exchange agreements involving the Company, certain subsidiaries of
the Company, the McCall Companies and the former stockholders of the
McCall Companies, the former stockholders of the McCall Companies
received an aggregate of 1,306,550 shares of SEACOR's common stock. The
McCall Acquisition was accounted for as a pooling of interests, and all
costs related to effecting this business combination were expensed.
1996 CNN TRANSACTION. Pursuant to an agreement entered into by the
Company and CNN in June 1996 (the "1996 CNN Agreement"), the Company
consummated a transaction providing for the acquisition from CNN of six
vessels for $22,650,000 in cash (the "1996 CNN Transaction"). At closing,
the Company prepaid $9,600,000 aggregate principal amount of the
indebtedness outstanding under promissory notes previously issued to CNN
by the Company. In addition, CNN converted $4,750,000 principal amount of
the Company's 2.5% Notes into 156,650 shares of SEACOR's common stock (in
39
<PAGE>
accordance with the terms of the 2.5% Notes), and subsequently sold all
616,598 shares of SEACOR's common stock then owned by it (including the
shares of SEACOR's common stock received by CNN upon such conversion) in
the Company's July 3, 1996 underwritten public offering.
SEACOR's common stock issued in July 1996 upon conversion of the 2.5%
Notes was recorded at $3,941,000, the net carrying value of the 2.5%
Notes that includes $4,750,000 of the then outstanding principal amount
and $809,000 of related debt discount. The difference between the
$9,600,000 paid to extinguish certain promissory notes due CNN and their
$8,358,000 net carrying value was recorded as an $807,000 extraordinary
loss (net of income taxes).
SMIT TRANSACTION. On December 19, 1996, the Company acquired
substantially all of the offshore vessel assets, vessel spare parts, and
certain related joint venture interests owned by SMIT Internationale N.V.
("SMIT") and its subsidiaries (the "SMIT Transaction"). The aggregate
consideration, including amounts payable under certain lease purchase
agreements for two vessels, consisted of: (i) approximately $71,449,000
in cash (including approximately $357,000 for certain vessel spare
parts), (ii) 712,000 shares of SEACOR's common stock of which 31,517
shares were issued subsequent to December 31, 1996, and (iii) up to
$22,000,000 principal amount of the Company's Series A 5 3/8% Convertible
Subordinated Notes Due November 15, 2006 (the "SMIT Convertible Notes")
of which $15,250,000 principal amount were issued at close. In addition,
the definitive agreements for the SMIT Transaction provide for the
payment by the Company, in combination of cash and non-convertible notes,
of up to $47,200,000 of additional consideration based upon the earnings
performance during 1997 and 1998 by certain of the assets acquired from
SMIT (see Note 20). The acquired assets included a 100% interest in 24
vessels, a 50% interest in nine vessels sold by SMIT directly, and SMIT's
interest in joint ventures that own and operate 12 vessels.
Pursuant to a letter of intent dated December 19, 1996, between the
Company and SMIT that provided for the Company to acquire an additional
four vessels (the "Malaysian Purchase") that were owned by a Malaysian
joint venture in which SMIT had an interest, the Company completed the
Malaysian Purchase for aggregate consideration of $12,909,000 in 1997.
GALAXIE TRANSACTION. On January 3, 1997, the Company acquired
substantially all of the offshore marine assets, including vessels, owned
by Galaxie Marine Service, Inc., Moonmaid Marine, Inc., Waveland Marine
Service, Inc. and Triangle Marine, Inc. (collectively, "Galaxie"), for
aggregate consideration of $23,354,000, consisting of $20,567,000 in cash
and 50,000 shares of SEACOR's common stock. The primary assets acquired
were 24 vessels. At the date of acquisition, the Galaxie vessels were
dedicated to serving the oil and gas industry in the U.S. Gulf of Mexico.
VESSEL DISPOSITIONS. In 1995, the gain from equipment sales resulted
primarily from the Company's sale of 4 supply, 6 utility, 1 crew and 1
anchor handling towing supply vessels. This gain was offset by a loss
from the retirement of certain previously capitalized costs that also
related to a vessel which was withdrawn from standby safety service in
the North Sea and relocated to the U.S. Gulf of Mexico for well
stimulation service. During 1996, 16 utility vessels were sold, and
during 1997, 15 supply, 7 utility, 6 towing supply, 5 anchor handling
towing supply, 2 crew, 1 freight and 1 seismic vessels were sold.
6. INVESTMENTS IN AND RECEIVABLES FROM 50% OR LESS OWNED COMPANIES:
Investments, carried at equity, and advances to 50% or less owned
companies at December 31, 1997 and 1996 were as follows, in thousands:
Percentage
50% or Less Owned Entities Ownership 1997 1996
------------------------------------------------------ -------- ----------
SEACOR-Smit (Aquitaine) Ltd............... 50.0% $ 10,385 $ 7,186
SEAMEX International, Ltd................. 40.0% 9,499 5,104
Smit Swire Shilbaya Egypt Ltd............. 33.3% 6,197 5,360
Patagonia Offshore Services S.A........... 50.0% 4,874 -
Ultragas Smit Lloyd Ltda.................. 49.0% 2,014 -
Maritima Mexicana, S.A.................... 40.0% 1,739 1,682
Clean Pacific Alliance, L.L.C............. 50.0% 1,219 415
Others.................................... 25.7%-50.0% 2,443 1,569
--------- ------------
$ 38,370 $ 21,316
========== ============
40
<PAGE>
Pursuant to the SMIT Transaction, the Company acquired joint venture
interests of SMIT in Smit Swire Shilbaya Egypt Ltd. ("SSS"), an Egyptian
corporation, and Ultragas Smit Lloyd Ltda. ("Ultragas-Smit"), a Chilean
corporation, and structured another joint venture, SEACOR-Smit
(Aquitaine) Ltd. ("Aquitaine"), a Bahamian corporation. At December 31,
1997, SSS owned six vessels that were operating offshore Egypt;
Ultragas-Smit owned four vessels that were operating offshore Chile; and
Aquitaine owned seven vessels that were operating in the Far East, Latin
America and offshore West Africa.
During 1997, the Company and a subsidiary of Sociedad Naviera Ultragas
Ltda., the Company's joint venture partner in Ultragas-Smit, formed
Patagonia Offshore Services S.A. ("Patagonia"), a Panamanian corporation,
to operate vessels in support of the Argentine and adjacent offshore
markets. At December 31, 1997, Patagonia owned one vessel that was
acquired from the Company. The Company realized a gain from the vessel
sale that has been deferred to the extent of its ownership interest in
Patagonia and is being amortized to income over the vessel's depreciable
life. At December 31, 1997, the Company's advances to Patagonia totaled
$3,400,000.
During 1994, the Company and Transportacion Maritima Mexicana S.A. de
C.V. ("TMM"), a Mexican corporation, structured a joint venture to serve
the Mexican offshore market (the "TMM Joint Venture") that is comprised
of two corporations, Maritima Mexicana, S.A. and SEAMEX International,
Ltd. Since 1994, the Company has sold five vessels to the TMM Joint
Venture. The Company realized gains from the vessel sales that have been
deferred to the extent of the Company's ownership interest in the TMM
Joint Venture and are being amortized to income over the vessels'
depreciable lives. The Company has also entered into a sale-type lease
for one of its vessels with the TMM Joint Venture that expires in 2002
and contains options to purchase the vessel at various dates during the
lease term. At December 31, 1997, the TMM Joint Venture owed the Company
$ 5,138,000 related primarily to advances for the purchase of vessels.
In 1996, NRC expanded its spill response coverage to include the West
Coast of the United States through Clean Pacific Alliance, L.L.C.
("CPA"), a joint venture between NRC and Crowley Marine Services Inc. CPA
has established dedicated oil spill response capabilities including two
response vessels, response depots, a contractually available Marine
Response Network, and a client service center.
The amount of consolidated retained earnings that represents
undistributed earnings of 50% or less owned companies accounted for by
the equity method was $8,119,000 at December 31, 1997 of which $3,994,000
represented earnings for which deferred taxes have not been provided.
7. RESTRICTED CASH:
In connection with certain vessel sales during 1997, the Company has
directed the sale proceeds to be deposited into escrow accounts pursuant
to certain exchange and escrow agreements. Under the terms of those
agreements, for a period of six months, the funds held in escrow are
restricted to be used toward the purchase of replacement vessels that
have been identified. Should replacement vessels not be delivered prior
to expiration of their applicable six month escrow period, funds then
remaining in the escrow accounts will be released to the Company for
general use.
8. COASTAL AND PHIBRO AGREEMENT:
On October 27, 1995, SEACOR and its primary environmental subsidiary,
NRC, amended certain existing agreements with two of its customers,
Coastal Refining and Marketing, Inc. ("Coastal") and Phibro Energy USA,
Inc. ("Phibro"). Those agreements provided, among other things, for a
reduction in, and subsequent elimination of, Coastal and Phibro's
participating interest in certain operating results, a reduction in their
retainer fees, and an elimination of certain options held by each of
those customers to purchase up to 20% of the fully diluted common stock
of NRC. NRC will continue to provide one customer through December 31,
2001 and the other customer through December 31, 1998 various oil spill
response services mandated by the OPA 90. In addition, Coastal's
agreements, among other things, called for SEACOR to issue them 311,357
shares of its Common Stock (having a value at time of issuance of
$7,500,000) in exchange for the cancellation of their stock options in
NRC. Phibro also agreed to cancel a similar option in return for
amendments to its agreement which related primarily to the reduction of
its retainer payments for OPA 90 services. SEACOR has accounted for its
share issuance as a repurchase of a minority interest. The difference
between the value of the Common Stock issued and the previously recorded
carrying value of certain deferred revenue, net of income tax effect,
which approximated 40% of NRC's net book value, totaled $4,558,000 and
was recorded as goodwill.
41
<PAGE>
9. INCOME TAXES:
Income (loss) before income taxes, minority interest, equity in net
earnings of 50% or less owned companies, and extraordinary item derived
from the United States and foreign operations for the years ended
December 31, are as follows, in thousands of dollars:
1997 1996 1995
---------- ---------- ----------
United States...... $ 141,979 $ 53,952 $ 18,318
Foreign............ 33,724 (1,984) (2,676)
---------- ---------- ----------
$ 175,703 $ 51,968 $ 15,642
========== ========== ==========
The Company files a consolidated U.S. federal tax return. Income tax
expense (benefit) consisted of the following components for the years
ended December 31, in thousands of dollars:
1997 1996 1995
--------- ------------- -------------
Current:
$ 295 $ 316 $ 111
State...............
Federal............. 33,303 12,648 4,622
2,719 2,251 442
Foreign.............
Deferred:
25,067 3,574 859
Federal.............
Foreign............. - (254) (524)
------------- ---------- -------------
$ 61,384 $ 18,535 $ 5,510
============= ============ =============
The following table reconciles the difference between the statutory federal
income tax rate for the Company to the effective income tax rate:
1997 1996 1995
------------ ------------- -------------
Statutory Rate................. 35.0% 35.0% 34.0 %
Foreign and State Taxes........ 0.2% 0.7% 1.2%
Other.......................... (0.3)% - -
------------ ------------- -------------
34.9 % 35.7% 35.2%
============ ============= =============
The components of the net deferred income tax liability were as follows, for the
years ended December 31, in thousands of dollars:
1997 1996
------------ -------------
Deferred tax assets:
Foreign Tax Credit Carryforwards....... $ - $ 1,414
Alternative Minimum Tax Credit
Carryforwards........................ 71 317
Subpart F Loss......................... 2,064 2,696
Nondeductible Accruals................. 614 278
Other.................................. 94 126
------------ -------------
Total deferred tax assets......... 2,843 4,831
------------ -------------
Deferred tax liabilities:
Property and equipment................. 60,214 37,451
Investment in Subsidiaries............. 1,787 1,129
Other.................................. 278 -
------------ -------------
Total deferred tax liabilities.... 62,279 38,580
------------ -------------
Net deferred tax liabilities. $ 59,436 $ 33,749
============ =============
The Company has not recognized a deferred tax liability of $2,472,000 for
undistributed earnings of certain non-U.S. subsidiaries and joint venture
corporations because it considers those earnings to be indefinitely
reinvested abroad. As of December 31, 1997, the undistributed earnings of
these subsidiaries and joint venture corporations were $7,062,000.
10. MINORITY INTEREST:
In December 1991, the managing agent of the Company's vessels operating
in the North Sea invested approximately $1,278,000 of cash in VEESEA
Holdings, Inc. and its subsidiaries (collectively "VEESEA"). In return
for this investment and for services rendered to VEESEA, the agent
received 9% of the equity of VEESEA, and SEACOR, through another
subsidiary, assigned to the agent a $679,000 participation in debt due to
the SEACOR subsidiary from VEESEA. A fee is paid the minority stockholder
for managing the Company's vessels in the North Sea. The U.S. dollar
equivalent of fees paid in pounds sterling under this arrangement
approximated $1,015,000 in the year ended December 31, 1997 and $960,000
in each of the years ended December 31, 1996 and 1995.
42
<PAGE>
In August 1997, SEACOR Offshore Rigs Inc. ("SEACOR Rigs"), a wholly owned
subsidiary of SEACOR, invested $8,850,000 in exchange for a 50%
membership interest in Chiles Offshore LLC ("Chiles"), a joint venture
and strategic alliance created to construct, own, and operate premium
jackup drilling rigs. SEACOR Rigs subsequently made several interest
bearing (at 10% per annum) bridge loans to Chiles and, on December 16,
1997, in connection with the sale by Chiles of $20,000,000 of membership
interests to third parties, contributed the aggregate amount outstanding
under such bridge loans of $13,990,000 and $12,160,000 in cash to Chiles
as capital. Through the foregoing transactions, SEACOR Rigs invested an
aggregate of $35,000,000 in Chiles and, as a result, owns an approximate
55.4% membership interest in Chiles. Prior to December 16, 1997, the
Company did not own a controlling interest in Chiles and therefore
accounted for the investment under the equity method. Beginning December
16, 1997, the financial position and results of operations of Chiles are
included in the consolidated financial statements of the Company. Chiles
has contracted for the construction of two premium jackup drilling rigs
for aggregate expected costs of approximately $178,000,000. The equity
raised by Chiles is intended to fund a portion of such construction costs
and serve as working capital, and it is anticipated that the balance of
such construction costs and other working capital needs will be funded
through debt financing. Chiles has also obtained options from a U.S.
shipyard to construct additional premium jackup drilling rigs. Any such
additional rig construction projects are contingent upon the preparation,
negotiation, and execution of definitive documentation with the shipyard
and Chiles obtaining financing therefor. SEACOR does not presently intend
to fund any additional portion of Chiles' rig construction costs.
Also during 1997, the Company completed the structuring of a limited
liability company (the "LLC"), pursuant to a Memorandum of Agreement
dated September 25, 1996, with a wholly owned subsidiary of TMM. The TMM
subsidiary contributed approximately $4,000,000 to the LLC which owns and
operates a recently constructed anchor handling towing supply vessel for
a 25% membership interest, and the Company owns all of the remaining
membership interest in the LLC.
11. LONG-TERM DEBT:
Long-term debt balances, maturities, and interest rates are as follows
for the years ended December 31, in thousands of dollars:
<TABLE>
<CAPTION>
1997 1996
-------------- --------------
<S> <C> <C>
5 3/8% Convertible Subordinated Notes due 2006, interest payable
semi-annually commencing 1997..................................... $ 186,750 $187,750
DnB Revolving Credit Facility, U.S. dollar equivalent of pounds
sterling 5,000,000, interest payable based upon an interest option
period at LIBOR plus 1.25%(7.625% at December 31, 1996)............. - 8,563
7.2% Senior Notes Due 2009, interest payable semiannually............ 150,000 -
Capital Lease Obligations (see Note 12).............................. 22,296 24,139
Promissory Note due a vessel charterer, payable in equal monthly
installments from from February 1998 through June 2002, bearing
interest at 10%, secured by mortgage on a vessel with book value
of $1,735,000 at December 31, 1997 1,125 -
Promissory Note due a stockholder, payable in equal annual
installments from January 1998 through January 2001,
bearing interest at 7.5%........ 1,000 -
---------- -----------
361,171 220,452
Less - Portion due within one year................................... (1,925) (1,793)
- Debt discount, 7.2% Senior Notes Due 2009..................... (532) -
---------- -----------
$ 358,714 $ 218,659
========== ===========
</TABLE>
Annual maturities of long-term debt for the five years following December 31,
1997, are as follows, in thousands of dollars.
Year 1998 1999 2000 2001 2002
- --------------- ----------- ---------- ----------- ---------- -----------
Amount..... $ 1,925 $ 2,061 $ 2,190 $ 18,091(1) $ 154
=========== ========== =========== =========== ===========
(1) Six million seven hundred and fifty thousand dollars of the debt maturing in
2001 is payable in convertible subordinated notes in accordance with the
terms of a lease between the Company and SMIT, see Note 12.
On November 5, 1996, the Company completed the private placement of
$172,500,000 aggregate principal amount of its 5 3/8% Convertible
Subordinated Notes due November 15, 2006 (the "Convertible Notes"). The
Convertible Notes and the SMIT Convertible Notes (collectively the "5
3/8% Notes") were issued under an Indenture dated as of November 1, 1996,
(the "1996 Indenture"), between the Company and First Trust National
Association, as trustee. The 5 3/8% Notes are convertible, in whole or
part, at the option of the holder at any time prior to the close of
business on the business day next preceding November 15, 2006, unless
previously redeemed into shares of SEACOR's common stock at a conversion
price of $66.00 per share (equivalent to a conversion rate of 15.1515
shares of SEACOR's common stock per $1,000 principal amount of the 5 3/8%
43
<PAGE>
Notes), subject to adjustment in certain circumstances. The 5 3/8% Notes
are redeemable at the Company's option at any time on or after November
24, 1999 at the redemption prices specified therein, together with
accrued and unpaid interest to the date of repurchase. The Company
incurred $4,311,000 in costs associated with the sale of the Convertible
Notes including $3,881,000 of underwriters discount. The debt issue costs
are reported in other assets and are being amortized to expense over ten
years. The 5 3/8% Notes are general unsecured obligations of the Company,
subordinated in right of payment to all "Senior Indebtedness" (as defined
in the 1996 Indenture) of the Company and effectively subordinated in
right of payment to all indebtedness and other obligations and
liabilities and any preferred stock of the Company's subsidiaries. The 5
3/8% Notes will mature on November 15, 2006 and bear interest at a rate
of 5 3/8% per annum from November 5, 1996, in the case of the Convertible
Notes, and December 19, 1996, in the case of the SMIT Convertible Notes,
or in each case, from the most recent interest payment date on which
interest has been paid or provided for, payable on May 15 and November 15
of each year, commencing on May 15, 1997 to the holders thereof on May 1
and November 1, respectively, preceding such interest payment date.
On December 19, 1996, pursuant to the SMIT Transaction, the Company
issued $15,250,000 principal amount of its SMIT Convertible Notes. The
SMIT Convertible Notes were issued under the 1996 Indenture discussed
above. Also, pursuant to the SMIT Transaction, the Company entered into
certain lease purchase agreements which obligate the Company to purchase
two vessels from SMIT with cash and $6,750,000 principal amount of
additional SMIT Convertible Notes.
During October 1997, the Company purchased $1,000,000 of the then
outstanding $187,500,000 principal amount of its Convertible Notes in the
open market. The write-off of certain deferred financing costs associated
with the Convertible Notes acquired and the difference between the amount
paid to acquire the Convertible Notes and their carrying value resulted
in the Company recognizing an extraordinary loss of $114,000 or $.01 per
share.
On June 30, 1997, the Company entered into an agreement for an unsecured
reducing revolving credit facility (the "Credit Facility") with DnB as
agent for itself and other lenders named therein. This facility replaced
the prior revolving credit facility with DnB. Until termination of the
Credit Facility, a commitment fee is payable on a quarterly basis, at
rates ranging from 0.15 to 0.45 percent per annum on the average unfunded
portion of the Credit Facility. The commitment fee rate varies based upon
the percentage the Company's funded debt bears to earnings before
interest, taxes, depreciation, and amortization ("EBITDA"), as defined.
An extraordinary loss of $325,000 or $0.02 per share was recognized in
connection with the termination of the prior revolving credit facility
with DnB that resulted from the write-off of unamortized debt issue
costs.
Under the terms of the Credit Facility, the Company may borrow up to
$100,000,000 aggregate principal amount (the "Maximum Committed Amount")
of unsecured reducing revolving credit loans maturing on June 29, 2002.
The Maximum Committed Amount will automatically decrease semiannually by
6 1/4% beginning June 30, 1998, with the balance payable at maturity.
Outstanding borrowings will bear interest at annual rates ranging from 70
to 160 basis points (the "Margin") above LIBOR. The Margin is determined
quarterly and varies based upon the percentage the Company's funded debt
bears to EBITDA, as defined.
The Credit Facility requires the Company, on a consolidated basis, to
maintain a minimum ratio of indebtedness to vessel value, as defined, a
minimum cash and cash equivalent level, a specified interest coverage
ratio, specified debt to capitalization ratios and a minimum net worth.
The Credit Facility limits the amount of secured indebtedness which the
Company and its subsidiaries may incur, provides for a negative pledge
with respect to the Company's and its subsidiaries' assets and restricts
the payment of dividends.
On September 22, 1997, the Company completed the sale of $150,000,000
aggregate principal amount of its 7.2% Senior Notes Due 2009 (the "7.2%
Notes") which will mature on September 15, 2009. The offering was made to
qualified institutional buyers and a limited number of institutional
accredited investors and in offshore transactions exempt from
registration under U.S. federal securities laws. Interest on the 7.2%
Notes is payable semiannually on March 15 and September 15 of each year
commencing March 15, 1998. The 7.2% Notes may be redeemed at any time at
the option of the Company, in whole or from time to time in part, at a
price equal to 100% of the principal amount thereof plus accrued and
unpaid interest, if any, to the date of redemption plus a Make-Whole
Premium, if any, relating to the then prevailing Treasury Yield and the
remaining life of the 7.2% Notes. On December 8, 1997, the Company
completed an exchange offer through which it exchanged all of the 7.2%
Notes for a series of 7.2% Senior Notes (the "7.2% Exchange Notes") which
44
<PAGE>
are identical in all material respects to the 7.2% Notes, except that the
7.2% Exchange Notes are registered under the Securities Act of 1933, as
amended. The 7.2% Notes and the 7.2% Exchange Notes were issued under an
indenture (the "1997 Indenture") between the Company and First Trust
National Association, as trustee. The 1997 Indenture contains covenants
including, among others, limitations on liens and sale and leasebacks of
certain Principal Properties, as defined in the 1997 Indenture, and
certain restrictions on the Company consolidating with or merging into
any other Person, as defined in the 1997 Indenture. The Company incurred
approximately $1,412,500 in costs associated with the sale of the 7.2%
Notes including $1,012,500 of underwriters discount. The debt issue costs
are reported in other assets of the condensed consolidated balance sheet
and will be amortized to expense over the life of the 7.2% Notes.
12. LEASES:
From December 1993 through September 30, 1995, the Company was the lessor
of ten offshore towing supply vessels under bareboat charter agreements
with CNN. Pursuant to the CNN Acquisition, the Company and CNN agreed to
terminate CNN's bareboat charter of these vessels. Operating revenue
earned from the bareboat charter of these vessels totaled $3,795,000 in
the year ended December 31, 1995.
During 1995, the Company entered into a sale-type lease with the TMM
Joint Venture for one anchor handling towing supply vessel. The lease
expires in 2002 and contains options which permit the TMM Joint Venture
to purchase the vessel at various dates during the term of the lease. The
amortization of unearned income in the years ended December 31, 1997,
1996, and 1995, totaled $448,000, $485,000, and $387,000, respectively.
The net investment in the sale-type lease at December 31, 1997 is
comprised of minimum lease payment receivables, totaling $2,827,000, an
estimated residual value of $781,000, and unearned income of $1,283,000.
As of December 31, 1997, $263,000 and $2,062,000 of the net investment in
the sale-type lease was reported in current and noncurrent other assets,
respectively. Minimum rental receivables due from the sale-type lease are
$667,000 in each of the fiscal years ended December 31, 1998 through 2001
and $159,000 due in 2002.
In December 1996, pursuant to the SMIT Transaction, the Company leased
two vessels under capital leases with gross costs of $21,239,000 that are
being depreciated over an estimated useful life of 23 years. At December
31, 1997 and 1996, accumulated depreciation totaled $867,000 and $31,000,
respectively. At December 31, 1997, $1,507,000 and $20,789,000 in
obligations under these capital leases are reported as current and
long-term debt, respectively. Minimum lease payments of $2,667,000 are
due in 1998 and 1999, $2,675,000 in 2000, and $18,385,000 in 2001. The
amount to be paid in 2001 will include cash and the issuance of
$6,750,000 in 5 3/8% Notes. Minimum lease payments include interest of
$4,098,000.
During 1997, the Company completed transactions for the sale and
leaseback of eight vessels, and the leases have been classified as
operating leases in accordance with SFAS No. 13 "Accounting for Leases."
The leases contain purchase and lease renewal options at fair market
value or rights of first refusal with respect to the sale or lease of the
vessels and range in duration from two to three years. Net book value of
the eight vessels sold totaled $15,261,000, and gains realized from those
sales, totaling $26,986,000, have been deferred and are being credited to
income as reductions in rental expense over the lease terms. Rental
expense in 1997 totaled $504,000. Future minimum lease payments are
$9,691,000 in 1998, $8,466,000 in 1999, and $10,583,000 in 2000.
13. COMMON STOCK:
In December 1995, SEACOR sold in an underwritten public offering
1,612,500 shares of its common stock at $24.25 per share. The proceeds
received from this sale, net of underwriting discount, totaled
$36,942,000. SEACOR incurred $644,000 in expenses associated with this
stock offering (other than underwriting discount) which was charged
against additional paid-in capital arising from the sale. The public
offering also included 1,550,000 shares of SEACOR's common stock sold by
certain of SEACOR's stockholders.
In July 1996, SEACOR sold in an underwritten public offering 909,235
shares of its common stock at $43.50 per share. The proceeds received
from this sale, net of underwriting discount, totaled $37,679,000. SEACOR
incurred $448,000 in expenses associated with this stock offering (other
than underwriting discount) which was charged against additional paid-in
capital arising from the sale. The public offering also included 842,355
shares of SEACOR's common stock sold by certain of SEACOR's stockholders.
45
<PAGE>
On February 24, 1997, SEACOR's Board of Directors authorized the
repurchase, from time to time, of up to $50,000,000 of SEACOR's common
stock or 5 3/8% Notes. During 1997, SEACOR repurchased 110,200 shares of
its common stock at an aggregate cost of $4,743,000. Also during 1997,
SEACOR issued 136,578 shares of its common stock for aggregate value of
$7,956,000 pursuant to the Galaxie Transaction, the SMIT Transaction, and
the acquisition of ERST/O'Brien's Inc. During February 1998, SEACOR's
Board of Directors increased its authorization to repurchase up to an
additional $40,000,000 of SEACOR's common stock or 5 3/8% Notes.
14. BENEFIT PLANS:
STOCK PLANS. On November 22, 1992, and April 18, 1996, SEACOR's
stockholders adopted the 1992 Non-Qualified Stock Option Plan (the "Stock
Option Plan") and the 1996 Share Incentive Plan (the "Share Incentive
Plan"), respectively, (collectively, the "Plans"). The Plans provide for
the grant of options to purchase shares of SEACOR's common stock, and the
Share Incentive Plan additionally provides for the grant of stock
appreciation rights, restricted stock awards, performance awards, and
stock units to key officers and employees of the Company. The Plans are
administered by the Stock Option and Executive Compensation Committee of
the Board of Directors (the "Compensation Committee"). Five hundred
thousand shares of SEACOR's common stock have been reserved for issuance
under each of the Stock Option Plan and the Share Incentive Plan.
STOCK OPTIONS. In October 1995, Statement of Financial Accounting
Standards No. 123 ("SFAS 123"), "Accounting for Stock Based
Compensation," was issued effective in 1996 for the Company. Under SFAS
123, companies could either adopt a "fair valued based method" of
accounting for an employee stock option, as defined, or may continue to
use accounting methods as prescribed by APB Opinion No. 25. The Company
has elected to continue accounting for its plan under APB Opinion No 25.
Had compensation costs for the plan been determined consistent with SFAS
123, the Company's net income and earnings per share would have been
reduced to the following pro forma amounts for the years ended December
31, 1997, 1996, and 1995.
<TABLE>
<CAPTION>
1997 1996 1995
-------------------------- --------------------------- ---------------------------
As Reported Pro forma As Reported Pro forma As Reported Pro forma
------------ ------------ ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Net Income...................$ 119,154 $ 119,051 $ 34,153 $ 33,844 $ 11,325 $ 11,110
Earnings per common share:
Basic.....................$ 8.61 $ 8.60 $ 2.97 $ 2.95 $ 1.50 $ 1.47
Diluted.................... 7.47 7.47 2.74 2.71 1.37 1.35
</TABLE>
The effects of applying SFAS 123 in this pro forma disclosure are not indicative
of future events, and additional awards in the future are anticipated.
The following transactions have occurred in the Stock Option Plan during the
periods ended December 31:
<TABLE>
<CAPTION>
1997 1996 1995
------------------------- ------------------------- ------------------------
Number of Wt'ed Avg. Number of Wt'ed Avg. Number of Wt'ed Avg.
Options Exer. Price Options Exer. Price Options Exer. Price
----------- ------------ ----------- ------------ ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
Outstanding, at beginning of year 346,112 $ 16.92 425,197 $ 16.28 309,250 $ 15.83
Granted.......................... - - 7,300 30.75 117,747 17.55
Exercised........................ (21,000) 15.05 (85,039) 14.90 - -
Canceled......................... - - (1,346) 18.75 (1,800) 21.00
----------- ----------- ----------
Outstanding, at end of year...... 325,112 17.04 346,112 16.92 425,197 16.28
Options exercisable at year end.. 317,812 16.72 222,411 16.14 264,950 14.93
Options available for future
grant............................ 68,849 68,849 74,803
Weighted average fair value of
Options granted...............$ - $ 18.86 $ 11.54
</TABLE>
The fair value of each option granted during the periods presented is estimated
on the date of grant using the Black-Scholes option-pricing model with the
following assumptions: (a) no dividend yield, (b) weighted average expected
volatility of 25.38% and 25.99% in the years 1996 and 1995, respectively, (c)
risk-free interest rates of 6.21% and 5.38% in the years 1996 and 1995,
respectively, and (d) expected lives of five years.
46
<PAGE>
The following table summarizes information about the options outstanding
at December 31, 1997 grouped into three exercise price ranges:
Exercise Price Range
----------------------------------------------------
<TABLE>
<CAPTION>
$9.64 - $14.75 $18.75 - $21.25 $30.75
----------------- ---------------- -----------------
<S> <C> <C> <C>
Options outstanding at December 31, 1997..... 170,066 147,746 7,300
Weighted-average exercise price............. $ 14.28 $ 19.54 $ 30.75
Weighted-average remaining contractual life.. 5.2 years 6.8 years 8.1 years
Options exercisable at December 31, 1997..... 170,066 147,746 -
Weighted average exercise price of $ 14.28 $ 19.54 $ -
exercisable options.........................
</TABLE>
On March 14, 1995, the Compensation Committee granted two officers of
SEACOR and three key employees of NRC options to purchase a total of
102,192 shares of SEACOR's common stock at an exercise price of $18.75
per share. Furthermore, as part of the NRC Merger, the Company assumed
the obligations of the NRC Holdings 1994 Non-Qualified Stock Option Plan.
As a result, the Company converted existing options for shares of NRC
Holdings into options for 15,555 shares of SEACOR's common stock at an
exercise price of $9.64 per share. During February 1996 and January 1998,
the Compensation Committee granted certain officers and employees options
to purchase a total of 7,300 and 18,150 shares, respectively. Under the
Plans, the exercise price per share of options granted under the Plans
cannot be less than 75% or greater than 100% of the "Fair Market Value,"
as defined in the Plans. Options granted under the Plans expire no later
than the tenth anniversary of the date of grant.
EMPLOYEE RESTRICTED STOCK AWARDS. In 1997, 1996, and 1995, in recognition
of a commitment to the continued growth and financial success of the
Company, the Compensation Committee granted certain officers and key
employees 18,510, 14,250, and 11,500 restricted shares, respectively, of
SEACOR's common stock pursuant to the Share Incentive Plan. The market
value of the restricted shares in 1997, 1996, and 1995, amounting to
$1,146,000, $575,000 and $216,000, respectively, was recorded as
unamortized restricted stock in a separate component of stockholders'
equity and is being amortized to expense over three year vesting periods.
On January 23, 1998, an additional 22,290 restricted shares with a market
value of $1,188,000 were granted by the Compensation Committee to certain
officers and key employees and 11,468 of these shares vest in one year
and 10,822 of these shares vest over a three year period.
SEACOR SAVINGS PLAN. SEACOR, through a wholly owned subsidiary,
introduced a defined contribution plan (the "SEACOR Plan"), effective
July 1, 1994. Furthermore, in connection with the NRC Merger and McCall
Acquisition, the Company assumed the obligations of certain deferred
benefit plans that were implemented by those companies in 1993 and 1995,
respectively. Effective January 1, 1998, the Company merged the defined
contribution plans previously assumed in the NRC Merger and the McCall
Acquisition into the SEACOR Plan. Requirements for eligibility in the
SEACOR Plan include, (i) one year of full time employment, (ii)
attainment of 21 years of age, and (iii) residency in the United States.
Participants may contribute up to 15% of their pre-tax annual
compensation, and contributions are funded monthly. Participants are
fully vested in the Company's contribution upon (i) attaining the age of
65, (ii) death, (iii) becoming disabled, or (iv) completing five years of
employment service. Contribution forfeitures for non-vested terminated
employees are used to reduce future contributions of the Company or pay
administrative expenses. The Company's contribution is limited to 50% of
the employee's first 6% of wages invested in the SEACOR Plan and is
subject to annual review by the Board of Directors.
The Company's contributions to the plans were $614,000, $599,000, and
$215,000 for the years ended December 31, 1997, 1996, and 1995,
respectively.
15. RELATED PARTY TRANSACTIONS:
Miller Environmental Group ("MEG"), an environmental contractor based in
Calverton, New York, maintains and stores spill response equipment owned
by NRC and provides labor, equipment and materials to assist in spill
response activities, and provides other services to NRC. In fiscal 1997,
1996, and 1995, NRC paid approximately $446,000, $2,379,000 and
$1,750,000, respectively, to MEG for these services. The father of a
SEACOR corporate officer is Vice President, Secretary and Treasurer of
MEG.
NRC also contracts with James Miller Marine Services ("JMMS"), an
environmental contractor based in Staten Island, New York, for services
similar to those provided by MEG. In fiscal 1997, 1996, and 1995, NRC
paid approximately $612,000, $591,000 and $600,000, respectively, to JMMS
for these services. The brother of a SEACOR corporate officer is Vice
President of JMMS.
47
<PAGE>
16. SUPPLEMENTAL INFORMATION FOR STATEMENTS OF CASH FLOWS:
<TABLE>
<CAPTION>
1997 1996 1995
---------- ---------- ----------
(in thousands)
<S> <C> <C> <C>
Cash income taxes paid...................................................$ 29,160 $ 12,043 $ 4,942
Cash interest paid....................................................... 12,022 4,037 6,132
Schedule of Non-Cash Investing and Financing Activities:
Property exchanged for investment in and notes
receivable from 50% or less owned company.......................... 2,240 - -
Common stock issued in exchange for stock options in NRC................. - - 7,500
Conversion of 6% Notes to SEACOR's common stock.......................... - 53,785 -
Conversion of 2.5% Notes, net of discount, to SEACOR's common stock...... - 3,941 -
Acquisition of ERST/O'Brien's Inc. with SEACOR's common stock............ 3,614
Purchase of vessels with - SEACOR's common stock.............. 4,342 33,642 11,300
- 5 3/8% Notes....................... - 15,250 -
- capital lease obligations.......... - 23,771 -
</TABLE>
17. QUARTERLY FINANCIAL INFORMATION (UNAUDITED):
Selected financial information for interim periods are presented below.
Earnings per share is computed independently for each of the quarters
presented; therefore, the sum of the quarterly earnings per share do not
necessarily equal the total for the year. During the fourth quarter ended
December 31, 1997, the Company adopted SFAS No. 128, "Earnings per
Share," and all prior period earnings per share data have been restated
to conform with the provisions of that Statement.
<TABLE>
<CAPTION>
Quarter Ended
----------------------------------------------------------------
Dec. 31, Sept. 30, June 30, March 31,
------------ ------------ ------------- ------------
(in thousands, except per share data)
1997:
<S> <C> <C> <C> <C>
Revenue..................................... $ 94,262 $ 88,259 $ 85,248 $ 79,179
Gross profit................................ 40,371 34,719 33,359 34,468
Income before extraordinary item............ 24,954 27,453 38,424 28,762
Basic earnings per common share -
Income before extraordinary item......... 1.80 1.99 2.78 2.07
Extraordinary item....................... (0.01) - (0.02) -
------------ ------------ ------------- ------------
Net Income............................... $ 1.79 $ 1.99 $ 2.76 $ 2.07
============ ============ ============= ============
Diluted earnings common per share -
Income before extraordinary item......... 1.58 1.74 2.38 1.80
Extraordinary item....................... - - (0.02) -
------------ ------------ ------------- ------------
Net Income............................... $ 1.58 $ 1.74 $ 2.36 $ 1.80
============ ============ ============= ============
1996:
Revenue..................................... $ 64,151 $ 57,545 $ 52,653 $ 50,095
Gross profit................................ 21,610 20,176 17,345 15,678
Income before extraordinary items........... 11,466 10,255 6,916 6,323
Basic earnings per common share -
Income before extraordinary item......... 0.87 0.79 0.70 0.64
Extraordinary item....................... - (0.06) - -
------------ ------------ ------------- ------------
Net Income............................... $ 0.87 $ 0.73 $ 0.70 $ 0.64
============ ============ ============= ============
Diluted earnings per common share -
Income before extraordinary item......... 0.82 0.77 0.61 0.56
Extraordinary item....................... - (0.06) - -
------------ ------------ ------------- ------------
Net Income............................... $ 0.82 $ 0.71 $ 0.61 $ 0.56
============ ============ ============= ============
</TABLE>
18. MAJOR CUSTOMERS AND SEGMENT DATA:
One customer accounted for approximately 12% of revenues in each of the
years ended December 31, 1997 and 1996, and two customers accounted for
approximately 16% and 10%, respectively, of revenues in the year ended
December 31, 1995.
48
<PAGE>
Operations are conducted through two business segments, offshore vessel
and environmental services. The Company's offshore service vessel segment
operates in different geographical areas; whereas, the environmental
segment's primary operations are in the United States. Information by
business segment and geographical area is as follows for the years ended
December 31, in thousands of dollars:
<TABLE>
<CAPTION>
1997 1996 1995
------------- ------------- -------------
<S> <C> <C> <C>
OPERATING REVENUE:
MARINE
United States $ 195,266 $ 134,106 $ 72,964
West Africa 44,194 37,312 14,637
North Sea 53,415 14,173 13,523
Other Foreign 32,134 7,966 3,770
------------- ------------- -------------
325,009 193,557 104,894
ENVIRONMENTAL 21,939 30,887 21,765
------------- ------------- -------------
$ 346,948 $ 224,444 $ 126,659
============= ============= =============
OPERATING PROFIT:
MARINE-(A)
United States $ 125,650 $ 43,640 $ 17,529
West Africa 18,054 8,317 3,840
North Sea 16,047 (2,545) (2,952)
Other Foreign 17,384 3,616 1,630
------------- ------------- -------------
177,135 53,028 20,047
ENVIRONMENTAL 3,285 5,009 1,626
------------- ------------- -------------
180,420 58,037 21,673
Other income (expense)(a) (27) (548) 190
General corporate administration (3,278) (3,366) (2,123)
Net interest expense (1,412) (2,155) (4,098)
Minority interest in (income) loss of subsidiaries (301) 244 321
Equity in earnings of 50% or less owned companies 5,575 1,283 872
Income tax expense (61,384) (18,535) (5,510)
------------- ------------- -------------
Income before extraordinary item $ 119,593 $ 34,960 $ 11,325
============= ============= =============
IDENTIFIABLE ASSETS:
MARINE-
United States $ 666,656 $ 333,748 $ 208,424
West Africa 104,168 91,353 68,720
North Sea 115,792 113,538 24,105
Other Foreign 61,378 52,443 9,850
------------- ------------- -------------
947,994 591,082 311,099
ENVIRONMENTAL 33,436 23,489 32,652
CORPORATE(b) 38,371 21,884 7,132
------------- ------------- -------------
$ 1,019,801 $ 636,455 $ 350,883
============= ============= =============
PROVISION FOR DEPRECIATION AND AMORTIZATION:
MARINE-
United States $ 14,498 $ 12,340 $ 8,623
West Africa 5,775 4,393 2,931
North Sea 7,880 3,258 3,621
Other Foreign 4,767 1,451 664
------------- ------------- -------------
32,920 21,442 15,839
ENVIRONMENTAL 3,563 3,379 2,875
CORPORATE 55 146 128
------------- ------------- -------------
$ 36,538 $ 24,967 $ 18,842
============= ============= =============
CAPITAL EXPENDITURES:
MARINE-
United States $ 144,535 $ 24,400 $ 75,782
West Africa 6,388 9,066 21,722
North Sea 6,022 4,104 45
Other Foreign 13,460 119,529 38
------------- ------------- -------------
170,405 157,099 97,587
ENVIRONMENTAL 838 707 688
CORPORATE 46 50 75
------------- ------------- --------------
$ 171,289 $ 157,856 $ 98,350
============= ============= =============
</TABLE>
(a) Other income (expense) excludes gain/(loss) from equipment sales or
retirements of property and certain other expenses that were reclassified to
operating profit in geographical areas of the Marine segment. Other expense
in 1996 includes $542,000 of McCall Acquisition costs.
(b) The Company's corporate assets include investments in 50% or less owned
companies.
49
<PAGE>
19. COMMITMENT AND CONTINGENCY:
As of March 1, 1998, the Company has commitments to build 21 marine
offshore service vessels at an approximate aggregate cost of $238,000,000
of which $71,000,000 has been funded, and its majority owned subsidiary,
Chiles, has commitments to build 2 premium jackup drilling rigs for
$178,000,000 of which $36,500,000 has been funded. These construction
projects are expected to be completed over the next two years. Pursuant
to Memoranda of Agreement between the Company and TMM, two joint venture
corporations will be structured to each own an offshore marine service
vessel currently being constructed by the Company. TMM is expected to
make an approximate $6,000,000 aggregate capital contribution for a 12.5%
equity interest in each joint venture and the Company will own all
remaining equity interests in these joint venture corporations.
During the fourth quarter of 1997 and first quarter of 1998, the Company
entered into Memoranda of Agreement for the sale and leaseback in 1998 of
10 vessels at an aggregate sale price of $73,650,000.
20. SUBSEQUENT EVENTS:
On March 3, 1998, the Company repurchased from SMIT International
Overseas B.V. ("SMIT Overseas"), a subsidiary of SMIT, 712,000 shares of
SEACOR's common stock for $37,024,000. This stock was issued to SMIT
Overseas as part of the purchase consideration paid for the Company's
acquisition of SMIT's offshore supply vessel fleet in December 1996. The
Company also satisfied its obligation to pay up to an additional
$47,200,000 of purchase consideration that would otherwise be payable to
SMIT in 1999 through the payment to SMIT of $20,880,000 in cash and,
through the commitment to issue in January 1999, $23,200,000 principal
amount of five-year unsecured promissory notes that will bear interest at
90 basis points above the comparable rate for five year U.S. Treasury
Notes. As part of this transaction, the Company and SMIT also have agreed
to extend the three year term of the salvage and maritime contracting and
non-compete agreements first established in December 1996 through
December 2001.
50
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
ON FINANCIAL STATEMENT SCHEDULE
To SEACOR SMIT Inc.:
We have audited, in accordance with generally accepted auditing
standards, the consolidated financial statements of SEACOR SMIT Inc. and
its subsidiaries and have issued our report thereon dated February 11,
1998 (except with respect to the matters discussed in Notes 19 and 20, as
to which the date is March 3, 1998). Our audit was made for the purpose
of forming an opinion on the basic financial statements taken as a whole.
The schedule listed in the index above is the responsibility of the
Company's management and is presented for the purpose of complying with
the Securities and Exchange Commission's rules and is not part of the
basic financial statements. This schedule has been subjected to the
auditing procedures applied in the audit of the basic financial
statements and, in our opinion, fairly states in all material respects
the financial data required to be set forth therein in relation to the
basic financial statements taken as a whole.
Arthur Andersen LLP
New Orleans, Louisiana
February 11, 1998
51
<PAGE>
SEACOR SMIT INC. AND SUBSIDIARIES
SCHEDULE II
VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEARS ENDED DECEMBER 31, 1997, 1996, AND 1995
(IN THOUSANDS)
<TABLE>
<CAPTION>
Balance Charged to (a) Balance
Beginning Cost and NRC (b) End
Description of Year Expenses Merger Deductions of Year
- --------------------------------------- ----------- ----------- ------------ ----------- -----------
<S> <C> <C> <C> <C> <C>
Year Ended December 31, 1997
Allowance for doubtful accounts
(deducted from accounts $ 475 $ 1,155 $ - $ 4 $ 1,626
receivable)..........................
=========== =========== ============ ============ ===========
Year Ended December 31, 1996
Allowance for doubtful accounts
(deducted from accounts $ 380 $ 238 $ - $ 143 $ 475
receivable)..........................
=========== =========== ============ ============ ===========
Year Ended December 31, 1995
Allowance for doubtful accounts
(deducted from accounts $ 108 $ 100 $ 469 $ 297 $ 380
receivable)..........................
=========== =========== ============ ============ ===========
</TABLE>
(a) Increase in allowance for doubtful accounts resulting from the NRC Merger.
(b) Recovery of accounts receivable which had been previously reserved
as uncollectible or accounts receivable amounts deemed uncollectible
and removed from accounts receivable and allowance for doubtful accounts.
52
<PAGE>
INDEX TO EXHIBITS
Exhibit
Number Description
- ------ -----------
2.1* Asset Purchase Agreement, dated as of December 19, 1996, by
and among SEACOR Holdings, Inc. and certain of its
subsidiaries, and Smit Internationale N.V. and certain of its
subsidiaries (incorporated herein by reference to Exhibit 2.0
to the Company's Current Report on Form 8-K dated December 19,
1996 and filed with the Commission on December 24, 1996).
2.2* Purchase Agreement, dated as of December 3, 1996, among SEACOR
Holdings, Inc., Acadian Offshore Services, Inc., Galaxie
Marine Service, Inc., Moonmaid Marine, Inc., Triangle Marine,
Inc., F.C. Felterman, Ernest Felterman, D. Lee Felterman and
Daniel C. Felterman (incorporated herein by reference to
Exhibit 2.1 to the Company's Registration Statement on Form
S-3 (No. 333-20921) filed with the Commission on January 31,
1997).
2.3* Purchase Agreement, dated as of December 3, 1996, among SEACOR
Holdings, Inc., Waveland Marine Service, Inc., F.C. Felterman,
Ernest Felterman, D. Lee Felterman and Daniel C. Felterman
(incorporated herein, by reference to Exhibit 2.2 to the
Company's Registration Statement on Form S-3 (No. 333-20921)
filed with the Commission on January 31, 1997).
2.4* Definitive Purchase Agreement, dated September 5, 1995, by and
among Graham Marine Inc., Edgar L. Graham, J. Clark Graham,
and Glenn A. Graham (incorporated herein by reference to
Exhibit 2.0 to the Company's Current Report on Form 8-K dated
September 15, 1995).
2.5* Global Agreement, dated as of November 14, 1995, by and among
Compagnie Nationale de Navigation and Feronia International
Shipping, SA and SEACOR Holdings, Inc. and the subsidiaries
listed in said agreement (incorporated herein by reference to
Exhibit 2.2 of the Company's Registration Statement on Form
S-3 (No. 33-97868) filed with the Commission on November 17,
1995).
2.6* Agreement and Plan of Merger, dated as of May 31, 1996, by and
among SEACOR Holdings, Inc., SEACOR Enterprises, Inc. and
McCall Enterprises, Inc. (incorporated herein by reference to
Exhibit 2.1 to the Company's Current Report on Form 8-K dated
May 31, 1996 and filed with Commission on June 7, 1996).
2.7* Agreement and Plan of Merger, dated as of May 31, 1996, by and
among SEACOR Holdings, Inc., SEACOR Support Services, Inc. and
McCall Support Vessels, Inc. (incorporated herein by reference
to Exhibit 2.2 to the Company's Current Report on Form 8-K
dated May 31, 1996 and filed with Commission on June 7, 1996).
2.8* Agreement and Plan of Merger, dated as of May 31, 1996, by and
among SEACOR Holdings, Inc., SEACOR N.F., Inc. and N.F. McCall
Crews, Inc. (incorporated herein by reference to Exhibit 2.3
to the Company's Current Report on Form 8-K dated May 31, 1996
and filed with Commission on June 7, 1996).
2.9* Exchange Agreement relating to McCall Crewboats, L.L.C., dated
as of May 31, 1996, by and among SEACOR Holdings, Inc. and the
persons listed on the signature pages thereto (incorporated
herein by reference to Exhibit 2.4 to the Company's Current
Report on Form 8-K dated May 31, 1996 and filed with
Commission on June 7, 1996).
2.10* Share Exchange Agreement and Plan of Reorganization relating
to Cameron Boat Rentals, Inc., dated as of May 31, 1996, by
and among SEACOR Holdings, Inc., McCall Enterprises, Inc. and
the persons listed on the signature pages thereto
(incorporated herein by reference to Exhibit 2.5 to the
Company's Current Report on Form 8-K dated May 31, 1996 and
filed with Commission on June 7, 1996).
53
<PAGE>
2.11* Share Exchange Agreement and Plan of Reorganization relating
to Philip A. McCall, Inc., dated as of May 31, 1996, by and
among SEACOR Holdings, Inc., McCall Enterprises, Inc. and the
persons listed on the signature pages thereto (incorporated
herein by reference to Exhibit 2.6 to the Company's Current
Report on Form 8-K dated May 31, 1996 and filed with
Commission on June 7, 1996).
2.12* Share Exchange Agreement and Plan of Reorganization relating
to Cameron Crews, Inc., dated as of May 31, 1996, by and among
SEACOR Holdings, Inc., McCall Enterprises, Inc. and the
persons listed on the signature pages thereto (incorporated
herein by reference to Exhibit 2.7 to the Company's Current
Report on Form 8-K dated May 31, 1996 and filed with
Commission on June 7, 1996).
3.1* Restated Certificate of Incorporation of SEACOR SMIT Inc.
(incorporated herein by reference to Exhibit 3.1(a) to the
Company's Quarterly Report on Form 10-Q for the fiscal quarter
ended June 30, 1997 and filed with the Commission on August
14, 1997).
3.2* Certificate of Amendment to the Restated Certificate of
Incorporation of SEACOR SMIT Inc. (incorporated herein by
reference to Exhibit 3.1(b) to the Company's Quarterly Report
on Form 10-Q for the fiscal quarter ended June 30, 1997 and
filed with the Commission on August 14, 1997).
3.3* Amended and Restated By-laws of SEACOR Holdings, Inc.
(incorporated herein by reference to Exhibit 4.2 to the
Company's Registration Statement on Form S-8 (No. 333-12637)
of SEACOR Holdings, Inc. filed with the Commission on
September 25, 1996).
4.1* Indenture, dated as of November 1, 1996, between First Trust
National Association, as trustee, and SEACOR Holdings, Inc.
(including therein forms of 5-3/8% Convertible Subordinated
Notes due November 15, 2006 of SEACOR Holdings, Inc.)
(incorporated herein by reference to Exhibit 4.0 to the
Company's Quarterly Report on Form 10-Q for the fiscal quarter
ended September 30, 1996 and filed with the Commission on
November 14, 1996).
4.2* Indenture, dated as of September 22, 1997, between SEACOR SMIT
Inc. and First Trust National Association, as trustee
(including therein form of Exchange Note 7.20% Senior Notes
Due 2009)(incorporated herein by reference to Exhibit 4.1 to
the Company's Registration Statement on Form S-4 (No.
333-38841) filed with the Commission on October 27, 1997).
4.3* Investment and Registration Rights Agreement, dated as of
March 14, 1995, by and among SEACOR Holdings, Inc., Miller
Family Holdings, Inc., Charles Fabrikant, Mark Miller, Donald
Toenshoff, Alvin Wood, Granville Conway and Michael Gellert
(incorporated herein by reference to Exhibit 4.0 of the
Company's Current Report on Form 8-K dated March 14, 1995, as
amended).
4.4* Investment and Registration Rights Agreement, dated as of May
31, 1996, among SEACOR Holdings, Inc. and the persons listed
on the signature pages thereto (incorporated herein by
reference to Exhibit 10.8 to the Company's Current Report on
Form 8-K dated May 31, 1996 and filed with the Commission on
June 7, 1996).
4.5* Registration Rights Agreement, dated November 5, 1996, between
SEACOR Holdings, Inc. and Credit Suisse First Boston
Corporation, Salomon Brothers Inc and Wasserstein Perella
Securities, Inc. (incorporated herein by reference to Exhibit
4.1 to the Company's Quarterly Report on Form 10-Q for the
fiscal quarter ended September 30, 1996 and filed with the
Commission on November 14, 1996).
4.6* Investment and Registration Rights Agreement, dated as of
December 19, 1996, by and between SEACOR Holdings, Inc. and
Smit International Overseas B.V. (incorporated herein by
reference to Exhibit 4.0 to the Company's Current Report on
Form 8-K dated December 19, 1996 and filed with the Commission
on December 24, 1996).
54
<PAGE>
4.7* Investment and Registration Rights Agreement, dated as of
January 3, 1997, among SEACOR Holdings, Inc., Acadian Offshore
Services, Inc., Galaxie Marine Service, Inc., Moonmaid Marine,
Inc. and Triangle Marine, Inc. (incorporated herein by
reference to Exhibit 4.6 to the Company's Registration
Statement on Form S-3 (No. 333-20921) filed with the
Commission on January 31, 1997).
4.8* Investment and Registration Rights Agreement, dated October
27, 1995, by and between SEACOR Holdings, Inc. and Coastal
Refining and Marketing, Inc. (incorporated herein by reference
to Exhibit 4.2 of the Company's Registration Statement on Form
S-3 (No. 33-97868) filed with the Commission on November 17,
1995).
4.9* Investment and Registration Rights Agreement, dated November
14, 1995, by and between SEACOR Holdings, Inc. and Compagnie
Nationale de Navigation (incorporated herein by reference to
Exhibit 4.3 of the Company's Registration Statement on Form
S-3 (No. 33-97868) filed with the Commission on November 17,
1995).
4.10* Registration Agreement, dated as of September 22, 1997,
between the Company and the Initial Purchasers (as defined
therein)(incorporated herein by reference to Exhibit 4.3 to
the Company's Registration Statement on Form S-4 (No.
333-38841) filed with the Commission on October 27, 1997).
4.11* Restated Stockholders' Agreement dated December 16, 1992
(incorporated herein by reference to Exhibit 10.12 to the
Annual Report on Form 10-K of SEACOR Holdings, Inc. for the
fiscal year ended December 31, 1992).
10.1* Indemnification Agreement, dated as of May 31, 1996, among all
of the stockholders of McCall Enterprises, Inc., Norman
McCall, as representative of such stockholders, and SEACOR
Holdings, Inc. (incorporated herein by reference to Exhibit
10.1 to the Company's Current Report on Form 8-K dated May 31,
1996 and filed with Commission on June 7, 1996).
10.2* Indemnification Agreement, dated as of May 31, 1996, among all
of the stockholders of McCall Support Vessels, Inc., Norman
McCall, as representative of such stockholders, and SEACOR
Holdings, Inc. (incorporated herein by reference to Exhibit
10.2 to the Company's Current Report on Form 8-K dated May 31,
1996 and filed with Commission on June 7, 1996).
10.3* Indemnification Agreement, dated as of May 31, 1996, among all
of the stockholders of N.F. McCall Crews, Inc., Norman McCall,
as representative of such stockholders, and SEACOR Holdings,
Inc. (incorporated herein by reference to Exhibit 10.3 to the
Company's Current Report on Form 8-K dated May 31, 1996 and
filed with Commission on June 7, 1996).
10.4* Indemnification Agreement, dated as of May 31, 1996, among all
of the members of McCall Crewboats, L.L.C., Norman McCall, as
representative of such members, and SEACOR Holdings, Inc.
(incorporated herein by reference to Exhibit 10.4 to the
Company's Current Report on Form 8-K dated May 31, 1996 and
filed with Commission on June 7, 1996).
10.5* Indemnification Agreement, dated as of May 31, 1996, among all
of the stockholders of Cameron Boat Rentals, Inc., Norman
McCall, as representative of such stockholders, and SEACOR
Holdings, Inc. (incorporated herein by reference to Exhibit
10.5 to the Company's Current Report on Form 8-K dated May 31,
1996 and filed with Commission on June 7, 1996).
10.6* Indemnification Agreement, dated as of May 31, 1996, among all
of the stockholders of Philip A. McCall, Inc. and SEACOR
Holdings, Inc. (incorporated herein by reference to Exhibit
10.6 to the Company's Current Report on Form 8-K dated May 31,
1996 and filed with Commission on June 7, 1996).
55
<PAGE>
10.7* Indemnification Agreement, dated as of May 31, 1996, among all
of the stockholders of Cameron Crews, Inc., Norman McCall, as
representative of such stockholders, and SEACOR Holdings, Inc.
(incorporated herein by reference to Exhibit 10.7 to the
Company's Current Report on Form 8-K dated May 31, 1996 and
filed with Commission on June 7, 1996).
10.8* The Master Agreement, dated as of June 6, 1996, by and among
Compagnie Nationale de Navigation, SEACOR Holdings, Inc. and
SEACOR Worldwide Inc. (incorporated herein by reference to
Exhibit 10.9 to the Company's Quarterly Report on Form 10-Q
for the period ended June 30, 1996).
10.9* Management and Administrative Services Agreement, dated
January 1, 1990, between SCF Corporation and SEACOR Holdings,
Inc. (incorporated herein by reference to Exhibit 10.32 to the
Company's Registration Statement on Form S-1 (No. 33-53244)
filed with the Commission on November 10, 1992).
10.10* Amendment No. 1 to the Management and Services Agreement,
dated as of January 1, 1993, between SCF Corporation and
SEACOR Holdings, Inc. (incorporated herein by reference to
Exhibit 10.34 to the Annual Report on Form 10-K of SEACOR
Holdings, Inc. for the fiscal year ended December 31, 1992).
10.11* Lease Agreement, dated September 1, 1989, between The Morgan
City Fund and NICOR Marine Inc. (SEACOR Marine Inc., as
successor lessee) (incorporated herein by reference to Exhibit
10.33 to the Company's Registration Statement on Form S-1 (No.
33-53244) filed with the Commission on November 10, 1992).
10.12*,** SEACOR Holdings, Inc. 1992 Non-Qualified Stock Option Plan
(incorporated herein by reference to Exhibit 10.45 to the
Company's Registration Statement on Form S-1 (No. 33-53244)
filed with the Commission on November 10, 1992).
10.13*,** SEACOR Holdings, Inc. 1996 Share Incentive Plan (incorporated
herein by reference to SEACOR Holdings, Inc.'s Proxy Statement
dated March 18, 1996 relating to the Annual Meeting of
Stockholders held on April 18, 1996).
10.14*,** Stock Option Grant Agreement, dated as of January 5, 1993,
between SEACOR Holdings, Inc. and Charles Fabrikant
(incorporated herein by reference to Exhibit 10.48 to the
Annual Report on Form 10-K of SEACOR Holdings, Inc. for the
fiscal year ended December 31, 1992).
10.15*,** Stock Option Grant Agreement, dated as of January 5, 1993,
between SEACOR Holdings, Inc. and Randall Blank (incorporated
herein by reference to Exhibit 10.49 to the Annual Report on
Form 10-K of SEACOR Holdings, Inc. for the fiscal year ended
December 31, 1992).
10.16*,** Stock Option Grant Agreement, dated as of January 5, 1993,
between SEACOR Holdings, Inc. and Milton Rose (incorporated
herein by reference to Exhibit 10.50 to the Annual Report on
Form 10-K of SEACOR Holdings, Inc. for the fiscal year ended
December 31, 1992).
10.17*,** Benefit Agreement, dated May 1, 1989, between NICOR Marine
Inc. and Lenny P. Dantin (assumed by SEACOR Holdings, Inc.)
(incorporated herein by reference to Exhibit 10.51 to the
Company's Registration Statement on Form S-1 (No. 33-53244)
filed with the Commission on November 10, 1992).
10.18*,** Employment Agreement, dated December 24, 1992, between SEACOR
Holdings, Inc. and Milton Rose (incorporated herein by
reference to Exhibit 10.61 to the Annual Report on Form 10-K
of SEACOR Holdings, Inc. for the fiscal year ended December
31, 1992).
10.19* Management and Services Agreement, dated January 1, 1985,
between NICOR Marine (Nigeria) Inc. and West Africa Offshore
Limited (assumed by SEACOR Holdings, Inc.) (incorporated
herein by reference to Exhibit 10.55 to the Company's
Registration Statement on Form S-1 (No. 33-53244) filed with
the Commission on November 10, 1992).
56
<PAGE>
10.20* Bareboat Charter Agreement, dated December 19, 1996, between
SEACOR-SMIT Offshore (International) B.V. and Smit-Lloyd B.V.
(incorporated herein by reference to Exhibit 10.1 to the
Company's Current Report on Form 8-K dated December 19, 1996
and filed with the Commission on December 24, 1996).
10.21* Bareboat Charter Agreement, dated December 19, 1996, between
SEACOR-SMIT Offshore (International) B.V. and Smit-Lloyd B.V.
(incorporated herein by reference to Exhibit 10.2 to the
Company's Current Report on Form 8-K dated December 19, 1996
and filed with the Commission on December 24, 1996).
10.22* Joint Venture Agreement, dated December 19, 1996, between
SEACOR Holdings, Inc. and Smit-Lloyd (Antillen) N.V.
(incorporated herein by reference to Exhibit 10.0 to the
Company's Current Report on Form 8-K dated December 19, 1996
and filed with the Commission on December 24, 1996).
10.23* Form of Management Agreement (incorporated herein by reference
to Exhibit 10.4 to the Company's Current Report on Form 8-K
dated December 19, 1996 and filed with the Commission on
December 24, 1996).
10.24* Malaysian Side Letter, dated December 19, 1996, between SEACOR
Holdings, Inc. and Smit Internationale N.V. (incorporated
herein by reference to Exhibit 10.3 to the Company's Current
Report on Form 8-K dated December 19, 1996 and filed with the
Commission on December 24, 1996).
10.25* Salvage and Maritime Contracting Agreement, dated December 19,
1996, between SEACOR Holdings, Inc. and Smit Internationale
N.V. (incorporated herein by reference to Exhibit 10.5 to the
Company's Current Report on Form 8-K dated December 19, 1996
and filed with the Commission on December 24, 1996).
10.26* License Agreement, dated December 19, 1996, between SEACOR
Holdings, Inc., certain subsidiaries of SEACOR Holdings, Inc.
and Smit Internationale N.V. (incorporated herein by reference
to Exhibit 10.6 to the Company's Current Report on Form 8-K
dated December 19, 1996 and filed with the Commission on
December 24, 1996).
10.27 Amended and Restated Operating Agreement of Chiles Offshore
LLC, dated as of December 16, 1997, between SEACOR Offshore
Rigs Inc., COI, LLC and the other Members identified therein.
10.28* Letter Agreement, dated February 26, 1998, between SEACOR SMIT
Inc. and certain of its subsidiaries and SMIT International
N.V. and certain of its subsidiaries (incorporated herein by
reference to Exhibit 99.1 of the Company's Current Report on
Form 8-K filed with the Commission of March 11, 1998).
10.29* Purchase Agreement, dated as of September 15, 1997, between
the Company and Salomon Brothers Inc, individually and as
representative of the Initial Purchasers (as defined
therein)(incorporated herein by reference to Exhibit 4.2 to
the Company's Registration Statement on Form S-4 (No.
333-38841) filed with the Commission on October 27, 1997).
10.28*,** Restricted Stock Grant Agreement, dated as of March 14, 1995,
between SEACOR Holdings, Inc. and Charles Fabrikant
(incorporated herein by reference to Exhibit 10.0 of the
Company's Quarterly Report on Form 10-Q for the fiscal quarter
ended March 31, 1995)
10.29*,** Restricted Stock Grant Agreement, dated as of May 7, 1996,
between SEACOR Holdings, Inc. and Charles Fabrikant
(incorporated herein by reference to Exhibit 10.1 of the
Company's Quarterly Report on Form 10-Q for the fiscal quarter
ended March 31, 1996).
10.30*,** Restricted Stock Grant Agreement, dated as of May 7, 1996,
between SEACOR Holdings, Inc. and Randall Blank (incorporated
herein by reference to Exhibit 10.2 of the Company's Quarterly
Report on Form 10-Q for the fiscal quarter ended March 31,
1996).
57
<PAGE>
10.31*,** Restricted Stock Grant Agreement, dated as of May 7, 1996,
between SEACOR Holdings, Inc. and Milton Rose (incorporated
herein by reference to Exhibit 10.3 of the Company's Quarterly
Report on Form 10-Q for the fiscal quarter ended March 31,
1996).
10.32*,** Restricted Stock Grant Agreement, dated as of May 7, 1996,
between SEACOR Holdings, Inc. and Mark Miller (incorporated
herein by reference to Exhibit 10.4 of the Company's Quarterly
Report on Form 10-Q for the fiscal quarter ended March 31,
1996).
10.33*,** Restricted Stock Grant Agreement, dated as of May 7, 1996,
between SEACOR Holdings, Inc. and Timothy McKeand
(incorporated herein by reference to Exhibit 10.5 of the
Company's Quarterly Report on Form 10-Q for the fiscal quarter
ended March 31, 1996).
10.34*,** Restricted Stock Grant Agreement, dated as of January 27,
1997, between SEACOR Holdings, Inc. and Charles Fabrikant.
(incorporated herein by reference to Exhibit 10.36 to the
Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1996).
10.35*,** Restricted Stock Grant Agreement, dated as of January 27,
1997, between SEACOR Holdings, Inc. and Randall Blank.
(incorporated herein by reference to Exhibit 10.37 to the
Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1996).
10.36*,** Restricted Stock Grant Agreement, dated as of January 27,
1997, between SEACOR Holdings, Inc. and Milton Rose.
(incorporated herein by reference to Exhibit 10.38 to the
Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1996).
10.37*,** Restricted Stock Grant Agreement, dated as of January 27,
1997, between SEACOR Holdings, Inc. and Mark Miller.
(incorporated herein by reference to Exhibit 10.39 to the
Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1996).
10.38*,** Restricted Stock Grant Agreement, dated as of January 27,
1997, between SEACOR Holdings, Inc. and Timothy McKeand.
(incorporated herein by reference to Exhibit 10.40 to the
Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1996).
10.39** Restricted Stock Grant Agreement, dated February 5, 1998,
between SEACOR SMIT Inc. and Charles Fabrikant.
10.40** Restricted Stock Grant Agreement, dated February 5, 1998,
between SEACOR SMIT Inc. and Charles Fabrikant.
10.41** Restricted Stock Grant Agreement, dated February 5, 1998,
between SEACOR SMIT Inc. and Randall Blank.
10.42** Restricted Stock Grant Agreement, dated February 5, 1998,
between SEACOR SMIT Inc. and Randall Blank.
10.43** Restricted Stock Grant Agreement, dated February 5, 1998,
between SEACOR SMIT Inc. and Milton Rose.
10.44** Restricted Stock Grant Agreement, dated February 5, 1998,
between SEACOR SMIT Inc. and Milton Rose.
10.45** Restricted Stock Grant Agreement, dated February 5, 1998,
between SEACOR SMIT Inc. and Andrew Strachan.
58
<PAGE>
10.46* Revolving Credit Facility Agreement dated as of June 30, 1997
among SEACOR SMIT Inc., Den norske Bank ASA, as agent, and the
other banks and financial institutions named therein
(incorporated herein by reference to Exhibit 10.1 to the
Company's Quarterly Report on Form 10-Q for the fiscal quarter
ended June 30, 1997 and filed with the Commission on August
14, 1997).
10.47* Agreement, dated October 27, 1995, by and among SEACOR
Holdings, Inc., NRC Holdings, Inc., Coastal Refining and
Marketing, Inc., and Phibro Energy USA, Inc. (incorporated
herein by reference to Exhibit 10.1 of the Company's
Registration Statement on Form S-3 (No. 33-97868) filed with
the Commission on November 15, 1995).
10.48*,** Employment Agreement, dated March 14, 1995, by and between
National Response Corporation and Mark Miller (incorporated
herein by reference to Exhibit 10.3 of the Company's
Registration Statement on Form S-3 (No. 33-97868) filed with
the Commission on November 15, 1995).
10.49*, ** Employment Agreement, dated March 14, 1995, by and between
National Response Corporation and James Miller (incorporated
herein by reference to Exhibit 10.4 of the Company's
Registration Statement on Form S-3 (No. 33-97868) filed with
the Commission on November 15, 1995).
10.50*,** Stock Option Grant Agreement dated as of February 8, 1994
between SEACOR Holdings, Inc. and Charles Fabrikant
(incorporated herein by reference to Exhibit 10.100 to the
Annual Report on Form 10-K of SEACOR Holdings, Inc. for the
fiscal year ended December 31, 1995).
10.51*,** Stock Option Grant Agreement dated as of February 8, 1994
between SEACOR Holdings, Inc. and Randall Blank (incorporated
herein by reference to Exhibit 10.101 to the Annual Report on
Form 10-K of SEACOR Holdings, Inc. for the fiscal year ended
December 31, 1995).
10.52*,** Stock Option Grant Agreement dated as of March 14, 1995
between SEACOR Holdings, Inc. and Charles Fabrikant
(incorporated herein by reference to Exhibit 10.102 of the
Annual Report on Form 10-K of SEACOR Holdings, Inc. for the
fiscal year ended December 31, 1995).
10.53*,** Stock Option Grant Agreement dated as of March 14, 1995
between SEACOR Holdings, Inc. and Randall Blank (incorporated
herein by reference to Exhibit 10.103 of the Annual Report on
Form 10-K of SEACOR Holdings, Inc. for the fiscal year ended
December 31, 1995).
21.1 List of Registrant's Subsidiaries.
23.1 Consent of Arthur Andersen LLP.
27.1 Financial Data Schedule.
- --------------
* Incorporated herein by reference as indicated.
** Management contracts or compensatory plans or arrangements required
to be filed as an exhibit pursuant to Item 14 (c) of the rules
governing the preparation of this report.
59
Exhibit 10.27
CONFORMED COPY
- ------------------------------------------------------------------------------
AMENDED AND RESTATED OPERATING AGREEMENT
OF
CHILES OFFSHORE LLC
DATED AS OF DECEMBER 16, 1997
- ------------------------------------------------------------------------------
NYFS11...:\93\73293\0016\1915\AGRN107L.48E
<PAGE>
TABLE OF CONTENTS
Page
----
"ARTICLE 1
DEFINITIONS................................................................ 2
ARTICLE 2
FORMATION AND OFFICES...................................................... 11
2.1 Formation.................................................. 11
2.2 Principal Office........................................... 11
2.3 Registered Office and Registered Agent..................... 11
2.4 Purpose of Company......................................... 11
2.5 Date of Dissolution........................................ 11
2.6 Qualification.............................................. 12
ARTICLE 3
CAPITALIZATION OF THE COMPANY.............................................. 12
3.1 Certain Additional and Initial Capital
Contributions.............................................. 12
3.2 Additional Capital Contributions........................... 12
3.3 Loans...................................................... 14
3.4 Maintenance of Capital Accounts............................ 14
3.5 Capital Withdrawal Rights, Interest and
Priority................................................... 15
3.6 Preemptive Rights.......................................... 15
3.7 Certain SEACOR Transactions................................ 17
ARTICLE 4
DISTRIBUTIONS.............................................................. 18
4.1 Distributions of Net Cash Flow............................. 18
4.2 Persons Entitled to Distributions.......................... 18
4.3 Limitations on Distributions............................... 19
ARTICLE 5
ALLOCATIONS................................................................ 19
5.1 Profits.................................................... 19
5.2 Losses..................................................... 19
5.3 Special Allocations........................................ 19
5.4 Curative Allocations....................................... 21
5.5 Loss Limitation............................................ 21
5.6 Tax Allocations: Code Section 704(c)...................... 22
5.7 Change in Percentage Interests............................. 23
5.8 Withholding................................................ 23
ARTICLE 6
MEMBERS' MEETINGS.......................................................... 23
6.1 Meetings of Members; Place of Meetings..................... 23
6.2 Quorum; Voting Requirement................................. 24
6.3 Proxies.................................................... 24
6.4 Action Without Meeting..................................... 24
6.5 Notice..................................................... 24
6.6 Waiver of Notice........................................... 24
6.7 No Authority............................................... 25
i
<PAGE>
ARTICLE 7
MANAGEMENT AND CONTROL..................................................... 25
7.1 Management Committee....................................... 25
7.2 Management Committee Meetings; Quorum;
Proxies.................................................... 26
7.3 Management Committee's Authority; Certain
Limitations................................................ 27
7.4 Officers; Agents........................................... 28
7.5 Resignation of a Manager................................... 28
7.6 Compensation............................................... 28
ARTICLE 8
LIABILITY AND INDEMNIFICATION.............................................. 29
8.1 Liability of Members....................................... 29
8.2 Indemnification............................................ 29
ARTICLE 9
TRANSFERS OF MEMBERSHIP INTERESTS.......................................... 31
9.1 General Restrictions....................................... 31
9.2 Permitted Transferees...................................... 32
9.3 Substitute Members......................................... 33
9.4 Effect of Admission as a Substitute Member................. 34
9.5 Consent.................................................... 34
9.6 No Dissolution............................................. 34
9.7 Additional Members; Certain Representations
of Members................................................. 34
9.8 Right of First Offer....................................... 34
9.9 Tag-Along Rights........................................... 36
9.10 Drag-Along Rights.......................................... 38
9.11 Piggyback Registration..................................... 40
9.12 Additional Members; Certain Representations
of Members................................................. 42
ARTICLE 10
DISSOLUTION AND TERMINATION................................................ 43
10.1 Events Causing Dissolution................................. 43
10.2 Notices to Secretary of State.............................. 43
10.3 Cash Distributions Upon Dissolution........................ 43
10.4 In-Kind.................................................... 44
10.5 No Action for Dissolution.................................. 44
ARTICLE 11
TAX MATTERS MEMBER......................................................... 45
11.1 Tax Matters Member......................................... 45
11.2 Certain Authorizations..................................... 45
11.3 Indemnity of Tax Matters Member............................ 46
11.4 Information Furnished...................................... 46
11.5 Notice of Proceedings, etc................................. 47
11.6 Notices to Tax Matters Member.............................. 47
11.7 Preparation of Tax Returns................................. 47
11.8 Tax Elections.............................................. 47
11.9 Taxation as a Partnership.................................. 47
ii
<PAGE>
ARTICLE 12
ACCOUNTING AND BANK ACCOUNTS............................................... 48
12.1 Fiscal Year and Accounting Method.......................... 48
12.2 Books and Records.......................................... 48
12.3 Delivery to Members; Inspection............................ 49
12.4 Financial Statements....................................... 49
12.5 Filings.................................................... 49
12.6 Non-Disclosure............................................. 50
12.7 Bank Accounts.............................................. 50
ARTICLE 13
MISCELLANEOUS.............................................................. 50
13.1 Title to Property.......................................... 50
13.2 Waiver of Default.......................................... 51
13.3 Amendment.................................................. 51
13.4 No Third Party Rights...................................... 51
13.5 Severability............................................... 51
13.6 Nature of Interest in the Company.......................... 52
13.7 Binding Agreement.......................................... 52
13.8 Headings................................................... 52
13.9 Word Meanings.............................................. 52
13.10 Counterparts............................................... 52
13.11 Entire Agreement........................................... 52
13.12 Partition.................................................. 52
13.13 Governing Law; Consent to Jurisdiction and
Venue...................................................... 53
13.14 Discretion................................................. 53
SCHEDULE 1................................................................. 65
SCHEDULE 2................................................................. 75
SCHEDULE 7.4............................................................... 76
iii
<PAGE>
AMENDED AND RESTATED
OPERATING AGREEMENT
OF
CHILES OFFSHORE LLC
THIS AMENDED AND RESTATED OPERATING AGREEMENT (this "AGREEMENT") of
CHILES OFFSHORE LLC (the "COMPANY"), is made and entered into as of the 16th day
of December, 1997 by and among the Persons executing this Agreement on the
signature pages hereto as a member (together with such other Persons that may
hereafter become members as provided herein, referred to collectively as the
"MEMBERS" or, individually, as a "MEMBER").
WHEREAS, the Company was formed as a limited liability company under the
Delaware Limited Liability Company Act (the "ACT") by the filing on August 1,
1997 of a certificate of formation of the Company with the Delaware Secretary of
State and, thereafter, on August 5, 1997, SEACOR Offshore Rigs Inc., a Delaware
corporation ("SEACOR"), as the Group A Member, and COI, LLC, a Delaware limited
liability company ("COI"), as the Group B Member, adopted an Operating Agreement
of Chiles Offshore LLC (the "ORIGINAL OPERATING AGREEMENT") as the limited
liability company agreement of the Company pursuant to Section 18-201(d) of the
Act effective as of such date; and
WHEREAS, as the date hereof, each of the Members (other than SEACOR and
COI) are parties to a Subscription Agreement dated as of December 11, 1997 (the
"SUBSCRIPTION AGREEMENT") among the Company and such Members pursuant to which
each such Member has subscribed for and agreed to purchase certain membership
interests in the Company in exchange for the making by such Member of certain
cash capital contributions to the Company; and
WHEREAS, effective as of the date hereof, SEACOR, COI and the other
Members desire to adopt this Agreement as the amended and restated limited
liability company agreement of the Company in order to provide for (i) the
waiver by SEACOR and COI of certain of their rights under the Original Operating
Agreement relating to the sale of additional membership interests by the Company
pursuant to the Subscription Agreement, (ii) the making of certain additional
contributions by SEACOR to the Company, (iii) the admission of the Members
(other than SEACOR and COI) upon the making of certain capital contributions,
and (iv) the restatement and amendment of the Original Operating
<PAGE>
Agreement in its entirety, all subject to the terms and conditions hereinafter
set forth.
NOW, THEREFORE, in consideration of the foregoing premises and the
mutual agreements contained herein, the parties hereto, intending to be legally
bound, hereby agree as follows:
WAIVER; AMENDMENT AND RESTATEMENT. Each of SEACOR and COI hereby
expressly waive any and all rights it may have under the Original Operating
Agreement relating to, or arising out of, the admission of the other Members and
the sale of Membership Interests to such Members pursuant to the Subscription
Agreement, including, without limitation, any rights under Section 3.7 of the
Original Operating Agreement. SEACOR and COI hereby agree to amend and restate
the Original Operating Agreement in its entirety and adopt this Agreement, and
the other Members hereby agree to adopt this Agreement, as the limited liability
company agreement of the Company, which Agreement will henceforth be substituted
in its entirety for the Original Operating Agreement by deleting in its entirety
the Original Operating Agreement and substituting therefor the above preambles
and the following:
"ARTICLE 1
DEFINITIONS
As used herein, the following terms shall have the following meanings,
unless the context otherwise requires:
"ACT" means the Delaware Limited Liability Company Act,
6 Del. L. ss. 18-101, et seq., as amended from time to time.
"ADJUSTED CAPITAL ACCOUNT DEFICIT" means, with respect to a Member, the
deficit balance, if any, in such Member's Capital Account as of the end of the
relevant Taxable Year, after giving effect to the following adjustments:
(a) Credit to such Capital Account any amounts which such Member
is obligated to restore pursuant to any provision of this Agreement or
is deemed to be obligated to restore pursuant to the penultimate
sentences of Regulation Sections 1.704- 2(g)(1) and 1.704-2(i)(5); and
(b) Debit to such Capital Account the items described in
Regulation Sections
2
<PAGE>
1.704-1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5),
and 1.704-1(b)(2)(ii)(d)(6).
The foregoing definition of Adjusted Capital Account Deficit is intended to
comply with the provisions of Regulation Section 1.704-1(b)(2)(ii)(d) and shall
be interpreted consistently therewith.
"AFFILIATE" of a specified Person means any Person who directly or
indirectly controls, is controlled by, or is under common control with, such
Person.
"AGREEMENT" means this Amended and Restated Operating Agreement, which
shall constitute the limited liability company agreement of the Company for
purposes of the Act, as amended from time to time.
"BUSINESS DAY" means any day (other than a day which is a Saturday,
Sunday or legal holiday in the state of New York) on which banks are open for
business in New York City.
"CAPITAL ACCOUNT" means, with respect to any Member, a separate account
established by the Company and maintained for each Member in accordance with
Section 3.4 hereof.
"CAPITAL CONTRIBUTION" means, with respect to any Member, the amount of
money and the initial Gross Asset Value of any Property (other than money)
contributed to the Company with respect to the interests purchased by such
Member pursuant to the terms of this Agreement, in return for which the Member
contributing such capital shall receive a Membership Interest.
"CERTIFICATE" means the Certificate of Formation of the Company as filed
on August 1, 1997 with the Secretary of State of Delaware, as amended or
restated from time to time.
"CODE" means the United States Internal Revenue Code of 1986, as
amended.
"COI" means COI, LLC, a Delaware limited liability company.
"COMPANY" means Chiles Offshore LLC.
"COMPANY AFFILIATE" shall have the meaning set forth in Section 8.2.
3
<PAGE>
"COMPANY MINIMUM GAIN" shall have the meaning set forth for "partnership
minimum gain" in Regulation Section 1.704- 2(b)(2) and shall be determined in
accordance with the provisions of Regulation Section 1.704-2(d).
"DEPRECIATION" means, for each Taxable Year or other period, an amount
equal to the depreciation, amortization or other cost recovery deduction
allowable with respect to an asset for such Taxable Year, except that if the
Gross Asset Value of an asset differs from its adjusted basis for federal income
tax purposes at the beginning of such Taxable Year, Depreciation shall be an
amount which bears the same ratio to such beginning Gross Asset Value as the
federal income tax depreciation, amortization or other cost recovery deduction
for such Taxable Year bears to such beginning adjusted tax basis; provided,
however, that if the adjusted basis for federal income tax purposes of an asset
at the beginning of such Taxable Year is zero, Depreciation shall be determined
with reference to such beginning Gross Asset Value using any reasonable method
selected by the Management Committee.
"GROSS ASSET VALUE" means with respect to any asset, the asset's
adjusted basis for federal income tax purposes, except as follows and as
otherwise provided in clause (ii) of Section 3.2(b):
(a) The initial Gross Asset Value of any asset contributed by a
Member to the Company shall be the gross fair market value of such
asset, as reasonably determined by the Management Committee; provided,
however, that the initial Gross Asset Values of the assets contributed
to the Company pursuant to, or as described in, Section 3.1 hereof shall
be as set forth in such section or the schedule referred to therein;
(b) The Gross Asset Values of all Company assets shall be
adjusted to equal their respective gross fair market values (taking Code
Section 7701(g) into account), as reasonably determined by the
Management Committee as of the following times: (i) the acquisition of
an additional interest in the Company by any new or existing Member in
exchange for more than a de minimis Capital Contribution; (ii) the
distribution by the Company to a Member of more than a de minimis amount
of Company property as consideration for an interest in the Company; and
(iii) the liquidation of the Company within the
4
<PAGE>
meaning of Regulation Section 1.704-1(b)(2)(ii)(g); provided, however,
that an adjustment described in clauses (i) and (ii) of this paragraph
shall be made only if the Management Committee reasonably determines
that such adjustment is necessary to reflect the relative economic
interests of the Members in the Company; and
(c) The Gross Asset Value of any item of Company assets
distributed to any Member shall be adjusted to equal the gross fair
market value (taking Code Section 7701(g) into account) of such asset on
the date of distribution as reasonably determined by the Management
Committee.
If the Gross Asset Value of an asset has been determined or adjusted pursuant to
subparagraph (b), such Gross Asset Value shall thereafter be adjusted by the
Depreciation taken into account with respect to such asset, for purposes of
computing Profits and Losses.
"GROUP A MEMBERS" means the Persons listed on Schedule 1 as Group A
members and their respective permitted successors or assigns.
"GROUP B MEMBERS" means, the Persons listed on Schedule 1 as Group B
members and their respective permitted successors or assigns.
"GROUP C MEMBERS" means, the Persons listed on Schedule 1 as Group C
members and their respective permitted successors or assigns.
"IMMEDIATE FAMILY MEMBER" shall mean with respect to any Member that is
a natural Person, such Member's spouse, mother, father, brother, sister or
child, a trust established solely for the benefit of one or more Immediate
Family Members or the estate or personal representative of a deceased Member.
"INITIAL TAG-ALONG NOTICE" shall have the meaning set forth in Section
9.9(a).
"LOSSES" has the meaning set forth in the definition of "Profits" and
"Losses".
"MAJORITY IN INTEREST" means, with respect to the Members or to any
specified group or class of Members, Members owning more than fifty percent
(50%) of the total
5
<PAGE>
Percentage Interests held by all Members or such specified group or class of
Members, as applicable.
"MANAGEMENT COMMITTEE" means the management committee of the Company
established pursuant to Section 7.1.
"MANAGERS" means, collectively, the Persons designated and serving in
accordance with Article 7 as members of the Management Committee.
"MEMBER" or "MEMBERS" shall have the meaning set forth in the preamble
hereof.
"MEMBER NONRECOURSE DEBT" has the meaning set forth for "partner
nonrecourse debt" in Regulation Section 1.704- 2(i)(4).
"MEMBER NONRECOURSE DEBT MINIMUM GAIN" means an amount, with respect to
each Member Nonrecourse Debt, equal to the Company Minimum Gain that would
result if such Member Nonrecourse Debt were treated as a Nonrecourse Liability,
determined in accordance with Regulation Section 1.704- 2(i)(3).
"MEMBER NONRECOURSE DEDUCTIONS" has the meaning set forth for "partner
nonrecourse deductions" in Regulation Sections 1.704-2(i)(1) and 1.704-2(i)(2).
"MEMBERSHIP INTEREST" means a Member's limited liability company
interest in the Company which refers to all of a Member's rights and interests
in the Company in such Member's capacity as a Member, all as provided in this
Agreement and the Act.
"NET CASH FLOW" shall mean the gross cash proceeds from the Company's
operations and any distributions received from its subsidiaries (excluding the
proceeds of Company borrowings and capital contributions) and from all sales and
other dispositions of the Company's Property and any amount released by the
Management Committee from Reserves, less the portion of gross proceeds (other
than the proceeds of the Company's borrowings and capital contributions) used to
pay or establish Reserves for all the Company's expenses, debt payments
(including principal, interest and required redemption payments), capital
improvements, replacements and contingencies, all as reasonably determined by
the Management Committee. Net Cash Flow shall not be reduced by Depreciation or
similar allowances and shall include the net cash proceeds of all principal and
interest payments
6
<PAGE>
actually received by the Company with respect to any promissory note or other
deferred payment obligation held by the Company in connection with sales and
other dispositions of the Company's Property.
"NONRECOURSE DEDUCTIONS" has the meaning set forth in Regulation Section
1.704-2(b)(1).
"NONRECOURSE LIABILITY" has the meaning set forth in Regulation Section
1.704-2(b)(3).
"NOTICE" means a writing, containing the information required by this
Agreement to be communicated to a party, and shall be deemed to have been
received (a) when personally delivered or sent by telecopy, (b) one day
following delivery by overnight delivery courier, with all delivery charges
pre-paid, or (c) on the third Business Day following the date on which it was
sent by United States mail, postage prepaid, to such party at the address or fax
number, as the case may be, of such party as shown on the records of the
Company.
"PERCENTAGE INTEREST" of a Member means the aggregate limited liability
company percentage interest set forth on Schedule 1 hereto, as the same may be
modified from time to time as provided herein.
"PERMITTED TRANSFEREE" means a Person who becomes a transferee in
accordance with Section 9.2.
"PERSON" means any individual, partnership, limited liability company,
corporation, cooperative, trust, estate or other entity.
"PROFITS" and "LOSSES" means, for each Taxable Year, an amount equal to
the Company's taxable income or loss for a taxable year, determined in
accordance with Section 703(a) of the Code (for this purpose, all items of
income, gain, loss or deduction required to be stated separately pursuant to
Section 703(a)(1) of the Code shall be included in taxable income or loss), with
the following adjustments:
(a) Any income of the Company that is exempt from federal income
tax and not otherwise taken into account in computing Profits or Losses
shall be added to such taxable income or loss;
(b) Any expenditures of the Company described in Section
705(a)(2)(B) of the Code or
7
<PAGE>
treated as Code Section 705(a)(2)(B) expenditures pursuant to Regulation
Section 1.704-1(b)(2)(iv)(i), and not otherwise taken into account in
computing Profits or Losses, shall be subtracted from such taxable
income or loss;
(c) In the event the Gross Asset Value of any Company asset is
adjusted pursuant to subparagraphs (b) or (c) of the definition of Gross
Asset Value, the amount of such adjustment shall be treated as an item
of gain (if the adjustment increases the Gross Asset Value of the asset)
or an item of loss (if the adjustment decreases the Gross Asset Value of
the asset) from the disposition of such asset and shall be taken into
account for purposes of computing Profits or Losses;
(d) Gain or loss resulting from any disposition of Property with
respect to which gain or loss is recognized for federal income tax
purposes shall be computed by reference to the Gross Asset Value of the
Property disposed of, notwithstanding that the adjusted tax basis of
such Property differs from its Gross Asset Value;
(e) In lieu of the depreciation, amortization, and other cost
recovery deductions taken into account in computing such taxable income
or loss, there shall be taken into account Depreciation for such Taxable
Year, computed in accordance with the definition of Depreciation; and
(f) Notwithstanding any other provision of this definition, any
items which are specially allocated pursuant to Section 5.3 or Section
5.4 hereof shall not be taken into account in computing Profits or
Losses. The amounts of the items of the Company income, gain, loss or
deduction available to be specially allocated pursuant to Sections 5.3
and 5.4 hereof shall be determined by applying rules analogous to those
set forth in subparagraphs (a) through (e) above.
"PROPERTY" means all assets, real or intangible, that the Company may
own or otherwise have an interest in from time to time.
"REGULATIONS" means the regulations, including temporary regulations,
promulgated by the United States Department of
8
<PAGE>
Treasury with respect to the Code, as such regulations are amended from time to
time, or corresponding provisions of future regulations.
"RESERVES" means the cash reserves established by the Management
Committee to provide for working capital, future investments, debt service and
such other purposes as may be deemed reasonably necessary or advisable by the
Management Committee.
"SEACOR" means SEACOR Offshore Rigs Inc., a Delaware corporation.
"SEACOR GROUP" shall have the meaning set forth in Section 3.7(a).
"SEACOR SMIT" means SEACOR SMIT Inc., a Delaware corporation and, as of
the date hereof, the parent of SEACOR.
"SEC" means the Securities and Exchange Commission.
"SECRETARY" shall mean the Secretary of the Treasury or his/her delegate
or the Internal Revenue Service.
"SECURITIES ACT" shall mean the Securities Act of 1933, as amended.
"SECTION 9.8 OFFEREE" shall have the meaning set forth in Section
9.8(a).
"SECTION 9.8 PROPOSED PURCHASER" shall have the meaning set forth in
Section 9.8(a).
"SECTION 9.8 SELLING MEMBER" shall have the meaning set forth in Section
9.8(a).
"SECTION 9.9 PARTICIPATING TAGGED MEMBERS" shall have the meaning set
forth in Section 9.9(a).
"SECTION 9.9 PROPOSED PURCHASER" shall have the meaning set forth in
Section 9.9(a).
"SECTION 9.9 TAG-ALONG MEMBERSHIP INTEREST" shall have the meaning set
forth in Section 9.9(a).
"SECTION 9.9 TAGGED MEMBERS" shall have the meaning set forth in Section
9.9(a).
9
<PAGE>
"SECTION 9.10 DRAG-ALONG MEMBERSHIP INTEREST" shall have the meaning set
forth in Section 9.10(a).
"SECTION 9.10 DRAGGED MEMBERS" shall have the meaning set forth in
Section 9.10(a).
"SECTION 9.10 PROPOSED PURCHASER" shall have the meaning set forth in
Section 9.10(a).
"SECTION 9.10 SELLING MEMBER" shall have the meaning set forth in
Section 9.10(a).
"TAG-ALONG RIGHT" shall have the meaning set forth in Section 9.9(a).
"TAG-ALONG NOTICE" shall have the meaning set forth in Section 9.9(a).
"TAXABLE YEAR" shall mean the taxable year of the Company in accordance
with the provisions of Section 706 of the Code.
"TAX DISTRIBUTION" means an amount equal (i) to the taxable income of
the Company allocated to the Members for a Taxable Year multiplied by the sum of
(x) the highest federal income tax rate applicable to individuals for such
Taxable Year and (y) 6%, divided by (ii) the lowest aggregate Percentage
Interests held by the Group B Members during such Taxable Year. Cash
Distributions in respect of the Tax Distribution shall be made quarterly as
provided in Section 4.1 hereof, based on a reasonable estimate of the amount of
Tax Distribution for such Taxable Year. The amount of Tax Distribution shall be
computed by the Company's regular independent public accounting firm.
"TAX MATTERS MEMBER" shall have the meaning set forth in
Article 11.
"TRANSFER" or "TRANSFERRED" means (a) when used as a verb, to give,
sell, exchange, assign, transfer, pledge, hypothecate, bequeath, devise or
otherwise dispose of or encumber, and (b) when used as a noun, the nouns
corresponding to such verbs, in either case voluntarily or involuntarily, by
operation of law or otherwise. When referring to a Membership Interest,
"TRANSFER" shall mean the Transfer of such Membership Interest whether of
record, beneficially, by participation or otherwise.
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"UNAFFILIATED MEMBERS" shall have the meaning set forth in Section 3.2.
ARTICLE 2
FORMATION AND OFFICES
2.1 FORMATION. Pursuant to the Act, the Company has been formed as a Delaware
limited liability company effective upon the filing of the Certificate of the
Company with the Secretary of State of Delaware. To the extent that the rights
or obligations of any Member are different by reason of any provision of this
Agreement than they would be in the absence of such provision, to the extent
permitted by the Act, this Agreement shall control.
2.2 PRINCIPAL OFFICE. The principal office of the Company shall be located at
11200 Westheimer, Suite 410, Houston, Texas 77042-3227 or at such other place(s)
as the Management Committee may determine from time to time.
2.3 REGISTERED OFFICE AND REGISTERED AGENT. The location of the registered
office and the name of the registered agent of the Company in the State of
Delaware shall be as stated in the Certificate, as determined from time to time
by the Management Committee.
2.4 PURPOSE OF COMPANY. The Company's purposes, and the nature of the
business to be conducted and promoted by the Company are (a) to manage and
supervise either directly or through one or more other Persons owned and
controlled directly or indirectly by the Company, all aspects of the
construction of premium jackup rigs, and, upon their completion, manage all
aspects of their operation and receive therefor certain construction supervision
fees and management fees, (b) to form and act as managing general partner of any
such Person that is a partnership, (c) to engage in any other lawful act or
activity for which limited liability companies may be formed under the Act, and
(d) to engage in any and all activities necessary, advisable, convenient or
incidental to the foregoing.
2.5 DATE OF DISSOLUTION. The term of the Company shall continue until the
close of business on August 1, 2032 or until the earlier dissolution under
Article 10 hereof. The existence of the Company as a separate legal entity shall
continue until cancellation of the Certificate in the manner required by the
Act.
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2.6 QUALIFICATION. The execution, delivery and filing of the Certificate on
August 1, 1997 by David E. Zeltner, in his capacity as an authorized person,
within the meaning of the Act, is hereby ratified, approved and confirmed in all
respects. The President and Chief Executive Officer, any Vice President, the
Secretary and any Assistant Secretary of the Company are hereby authorized to
qualify the Company to do business as a foreign limited liability company in any
state or territory in the United States in which the Company may wish to conduct
business and each is hereby designated as an authorized person, within the
meaning of the Act, to execute, deliver and file any amendments or restatements
of the Certificate and any other certificates and any amendments or restatements
thereof necessary for the Company to so qualify to do business in any such state
or territory.
ARTICLE 3
CAPITALIZATION OF THE COMPANY
3.1 CERTAIN ADDITIONAL AND INITIAL CAPITAL CONTRIBUTIONS. Each of the Members
hereby acknowledges that each of SEACOR and COI made certain Capital
Contributions to the Company on August 5, 1997 as specified and as set forth
opposite its respective name on Schedule 1. On the date hereof, (i) SEACOR shall
make additional Capital Contributions to the capital of the Company consisting
of cash or the contribution of certain indebtedness as set forth on Schedule 1,
(ii) each Member (other than SEACOR and COI) shall make initial Capital
Contributions to the capital of the Company consisting of cash, all as specified
and as set forth opposite such Member's name (including SEACOR) on Schedule 1
hereto. The Percentage Interest of each Member following such Capital
Contributions on the date hereof, is likewise set forth on Schedule 1.
3.2 ADDITIONAL CAPITAL CONTRIBUTIONS.
(a) Except as otherwise expressly provided in this Agreement, no Member shall
be required to make any additional Capital Contribution. No Member shall be
permitted to make any additional Capital Contribution without the approval of
the Management Committee.
(b) Subject to the rights of each Member to purchase its proportionate share
of additional Membership Interests issued by the Company in accordance with
Section 3.6, the Company may offer additional Membership Interests to:
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(i) any Person that is not an Affiliate or Immediate Family Member
of a Member, as the case may be, with the approval of the Management Committee;
or
(ii) any Person that is a Member or is an Affiliate of a Member or
Immediate Family Member of a Member, as the case may be, with the approval of
(A) the Management Committee, and (B) a Majority in Interest of the Members
other than (1) any Member purchasing such additional Membership Interests and
(2) any Member whose Affiliate(s) or Immediate Family Member(s) is purchasing
such additional Membership Interests (such Members, other than those referred to
in clauses (1) and (2) above being referred to as the "UNAFFILIATED MEMBERS"),
it being expressly understood that such approval of the Members shall also
include their approval of any related valuations of Gross Asset Value by the
Management Committee and, if such Members approve the Transfer without approving
said valuation, Gross Asset Value shall be determined by a third Person familiar
with the valuation of such transactions selected jointly by the Management
Committee and a Majority in Interest of the Unaffiliated Members not later than
ten (10) days after their approval of the Transfer or, if the Management
Committee and such Members fail to so select a third Person, then such third
Person will be selected in accordance with the rules and procedures of the
American Arbitration Association in New York, New York.
If after the date hereof, any additional Capital Contributions are
made by Members but not in proportion to their respective Percentage Interests,
the Percentage Interest of each Member shall be adjusted such that each Member's
revised Percentage Interest determined immediately following the additional
Capital Contributions shall be equal to a fraction (1) the numerator of which is
the sum of (a) the positive Capital Account balance of the Member determined
immediately preceding the date the additional Capital Contribution is made (such
Capital Account to be computed by adjusting the book value for Capital Account
purposes of each Company asset to equal its Gross Asset Value as of such date,
as provided in subparagraph (b) of the definition herein of "Gross Asset
Value"), and (b) the additional Capital Contribution, if any, made by such
Member, and (2) the denominator of which is the sum of the positive Capital
Account balances and additional Capital Contributions of all Members, including
any new Members (in each case calculated as provided in Section 3.2(b)(ii)(l)).
The names, addresses and Capital Contributions of the
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Members shall be reflected in the books and records of the Company.
3.3 LOANS. (a) No Member shall be obligated to loan funds to the Company.
Loans by a Member to the Company shall not be considered Capital Contributions.
The amount of any such loans shall be a debt of the Company owed to such Member
in accordance with the terms and conditions upon which such loans are made.
(b) A Member may (but shall not be obligated to) guarantee a loan made to the
Company. If a Member guarantees a loan made to the Company and is required to
make payment pursuant to such guarantee to the maker of the loan, then the
amounts so paid to the maker of the loan shall be treated as a loan by such
Member to the Company and not as an additional capital contribution.
3.4 MAINTENANCE OF CAPITAL ACCOUNTS.
(a) The Company shall maintain for each Member, a separate Capital Account
with respect to the Membership Interest owned by such Member in accordance with
the following provisions:
(i) To each Member's Capital Account there shall be credited (A)
such Member's Capital Contributions, (B) such Member's distributive share of
Profits and any items in the nature of income or gain which are specially
allocated pursuant to Section 5.3 or Section 5.4 hereof, and (C) the amount
of any Company liabilities assumed by such Member or which are secured by any
Property distributed to such Member. The principal amount of a promissory
note which is not readily traded on an established securities market and
which is contributed to the Company by the maker of the note (or a Member
related to the maker of the note within the meaning of Regulation Section
1.704-1(b)(2)(ii)(c)) shall not be included in the Capital Account of any
Member until the Company makes a taxable disposition of the note or until
(and only to the extent) principal payments are made on the note, all in
accordance with Regulation Section 1.704-1(b)(2)(iv)(d)(2);
(ii) To each Member's Capital Account there shall be debited (A) the
amount of money and the Gross Asset Value of any Property distributed or
treated as an advance distribution to such Member pursuant to any
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provision of this Agreement (including without limitation any distributions
pursuant to Section 4.1(a)), (B) such Member's distributive share of Losses
and any items in the nature of expenses or losses which are specially
allocated pursuant to Section 5.3 or Section 5.4 hereof, and (C) the amount
of any liabilities of such Member assumed by the Company or which are secured
by any Property contributed by such Member to the Company;
(iii) In the event Membership Interests are Transferred in
accordance with the terms of this Agreement, the transferee shall succeed to
the Capital Account of the transferor to the extent it relates to the
Transferred Membership Interests; and
(iv) In determining the amount of any liability for purposes of
Sections 3.4(a)(i) and 3.4(a)(ii) there shall be taken into account Code
Section 752(c) and any other applicable provisions of the Code and
Regulations.
(b) The foregoing Section 3.4(a) and the other provisions of this Agreement
relating to the maintenance of Capital Accounts are intended to comply with
Regulation Section 1.704-1(b) and, to the greatest extent practicable, shall be
interpreted and applied in a manner consistent with such Regulation. The
Management Committee in its discretion and to the extent otherwise consistent
with this Agreement shall (i) make any adjustments that are necessary or
appropriate to maintain equality between the Capital Accounts of the Members and
the amount of capital reflected on the Company's balance sheet, as computed for
book purposes, in accordance with Regulation Section 1.704- 1(b)(2)(iv)(q), and
(ii) make any appropriate modifications in the event unanticipated events might
otherwise cause this Agreement not to comply with Regulation Section 1.704-1(b).
3.5 CAPITAL WITHDRAWAL RIGHTS, INTEREST AND PRIORITY. Except as expressly
provided in this Agreement, no Member shall be entitled (a) to withdraw or
reduce such Member's Capital Contribution or to receive any distributions from
the Company, or (b) to receive or be credited with any interest on the balance
of such Member's Capital Contribution at any time.
3.6 PREEMPTIVE RIGHTS. Subject to Section 3.2, if the Company elects to offer
and sell Membership Interests other than the Membership Interests set forth on
Schedule 1 and
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Excluded Sales (as hereinafter defined), such additional Membership Interests
shall be in the form of Membership Interests having such Percentage Interest,
designations and such rights and provisions, including, but not limited to,
provisions relating to distributions and allocations of Profits and Losses, as
shall be reasonably determined by the Management Committee to be in the best
interest of the Company; provided, however, that the Company may not offer and
sell any Membership Interests having preferences to the rights of the Members
with respect to distributions, allocations or rights upon liquidation, without
the prior written consent of Members owning more than two-thirds of the total
percentage interest held by all Members (it being understood that no such
consent shall be required for the offering or sale of Membership Interests that
are entitled to distributions, allocations and rights upon liquidation that are
pari passu to the rights of the existing Members). Prior to the consummation of
any sale of additional Membership Interests (other than Excluded Sales), the
Company shall offer the additional Membership Interests to the Members, on the
terms and conditions set forth below:
(a) The Company shall give Notice to each Member, setting forth the
price, terms and conditions of the proposed sale of the additional Membership
Interests.
(b) Each Member shall have the option to acquire all or a portion of
such Member's pro rata portion (which shall be in proportion to the
Percentage Interest of all the Members) at the time of the offering of the
additional Membership Interests proposed to be sold, on the same terms and
conditions as are set forth in the Notice. The option of Members to purchase
all or a portion of their pro rata portions of the additional Membership
Interests shall be exercised by delivery of a Notice to the Company of
exercise within ten (10) Business Days following receipt of the Company's
Notice of the price, terms and conditions of the sale of the additional
Membership Interests. If less than all the Membership Interests to be sold by
the Company are purchased by the Members, the Company may within sixty (60)
calendar days from the expiration of said option, sell such Membership
Interests as shall not have been purchased by the Members upon terms and
conditions no less favorable to the Company than those set forth in the
Notice.
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(c) The sale of additional Membership Interests to Members who
exercise their options to purchase additional Membership Interests shall
occur on the date set forth in a Notice from the Company to such Members,
which date shall not be earlier than thirty (30) days after the date of
expiration of the offer to Members under Section 3.6(b).
(d) For purposes of this Section 3.6, the term "Excluded Sales"
shall mean (i) any shares of the capital stock of the Company issued upon
conversion of the Company into a corporation, (ii) following any such
conversion, any shares of the capital stock of the Company issued pursuant to
a public offering and sale of equity securities of the Company pursuant to an
effective registration statement under the Securities Act, (iii) membership
interests issued pursuant to the acquisition of another Person by the
Company, by merger, purchase of all or substantially all of such other
Person's securities or assets or otherwise pursuant to which the Company
shall become the owner of more than fifty percent (50%) of the voting power
of such other Person, and (iv) Membership Interests Transferred to or options
to purchase Membership Interest granted to, employees, directors, advisors or
consultants to the Company under a Company membership interest option or
similar equity incentive plan; provided however, that the Company will not
Transfer Membership Interests, or grant options, under any such plan,
aggregating more than five percent (5%) of the Membership Interests of the
Company on a fully diluted basis (assuming the exercise of such options);
and, provided further, the exercise price for Membership Interests under each
such option shall not be less than the price for an equivalent percentage
Membership Interest acquired on the date hereof by the Group C Members.
3.7 CERTAIN SEACOR TRANSACTIONS.
(a) Except as otherwise provided in Section 3.7(b), in the event
SEACOR or its parent SEACOR SMIT, or any other consolidated subsidiary of
SEACOR SMIT (collectively, the "SEACOR GROUP") provides management,
administrative, financial or investment-banking type services to the Company
or any of its subsidiaries with the respect to any rig transactions or
otherwise, such member of the SEACOR Group shall be entitled to receive
reasonable fees and reimbursement for expenses incurred
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in connection with the provision of such services so long as such fees are
not in excess of fees charged by unrelated Persons for comparable services.
(b) The Company shall pay SEACOR SMIT a management fee for financial
and other services provided to the Company and its subsidiaries by Dick H.
Fagerstal, Vice President, Finance of SEACOR SMIT. Such management fee to be
determined based on the value of the services provided by Mr. Fagerstal to
the Company and its subsidiaries, including reimbursement of any related
out-of-pocket expenses incurred by SEACOR SMIT, after taking into account the
compensation typically paid for such services and the percentage of Mr.
Fagerstal's time allocated to activities relating to the Company and its
subsidiaries.
ARTICLE 4
DISTRIBUTIONS
4.1 DISTRIBUTIONS OF NET CASH FLOW. Distributions of Net Cash Flow to the
Members shall be made as follows:
(a) quarterly, to the Members in proportion to and to the extent of
their relative Percentage Interests, an amount not in excess of the Tax
Distribution for the Taxable Year; provided, however, that distributions
under this Section 4.1(a) shall be treated as advance distributions under
Section 4.1(b), with the result that distributions otherwise made under
Section 4.1(b) to such Member shall be reduced by the amount of advances made
pursuant to this Section 4.1(a); and
(b) upon the approval of and in the amount so approved by the
Management Committee acting in its sole discretion, to the Members in
proportion to their relative Percentage Interests.
4.2 PERSONS ENTITLED TO DISTRIBUTIONS. All distributions of Net Cash Flow to
the Members under this Article 4 shall be made to the Persons shown on the
records of the Company to be entitled thereto as of the last day of the fiscal
period prior to the time for which such distribution is to be made, unless the
transferor and transferee of any Membership Interest otherwise agree in writing
to a different distribution and such distribution is consented to in writing by
the Management Committee.
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4.3 LIMITATIONS ON DISTRIBUTIONS. Notwithstanding anything to the contrary
herein provided, no distribution hereunder shall be permitted to the extent
prohibited by Section 18-607 of the Act.
ARTICLE 5
ALLOCATIONS
5.1 PROFITS. After giving effect to the special allocations set forth in
Sections 5.3 and 5.4 hereof and subject to Section 5.7 hereof, Profits for any
Taxable Year shall be allocated to the Members in proportion to their Percentage
Interests.
5.2 LOSSES. After giving effect to the special allocations set forth in
Sections 5.3 and 5.4, subject to the limitation in Section 5.5 hereof and
subject to Section 5.7 hereof, Losses for any Taxable Year shall be allocated to
the Members in proportion to their Percentage Interests.
5.3 SPECIAL ALLOCATIONS. The following special allocations shall be made in
the following order:
(a) Minimum Gain Chargeback. Except as otherwise provided in Section
1.704-2(f) of the Regulations, notwithstanding any other provision of this
Article 5, if there is a net decrease in Company Minimum Gain during any
Taxable Year, each Member shall be specially allocated items of Company
income and gain for such year (and, if necessary for subsequent years) in
proportion to, and to the extent of, an amount equal to each Member's share
of the net decrease in Company Minimum Gain during such taxable year as
determined in accordance with the provisions of Regulation Section
1.704-2(g). Allocations pursuant to the previous sentence shall be made in
proportion to the respective amounts required to be allocated to each Member
pursuant thereto. The items to be so allocated shall be determined in
accordance with Sections 1.704-2(f) (6) and 1.704-2(j) (2) of the
Regulations. This Section 5.3(a) is intended to comply with the minimum gain
chargeback requirement in Section 1.704-2(f) of the Regulations and shall be
interpreted consistently therewith.
(b) Member Minimum Gain Chargeback. Except as otherwise provided in
Section 1.704-2(i) (4) of the Regulations, notwithstanding any other provision
of
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this Section 5, if there is a net decrease in Member Nonrecourse Debt Minimum
Gain attributable to a Member Nonrecourse Debt during any Taxable Year, each
Member who has a share of the Member Nonrecourse Debt Minimum Gain
attributable to such Member Nonrecourse Debt, determined in accordance with
Section 1.704-2(i) (5) of the Regulations, shall be specially allocated items
of Company income and gain for such Taxable Year (and, if necessary,
subsequent Taxable Years) in an amount equal to such Member's share of the
net decrease in Member Nonrecourse Debt, determined in accordance with
Regulation Section 1.704-2(i) (4). Allocations pursuant to the previous
sentence shall be made in proportion to the respective amounts required to be
allocated to each Member pursuant thereto. The items to be so allocated shall
be determined in accordance with Sections 1.704-2(i) (4) and 1.704-2(j) (2)
of the Regulations. This Section 5.3(b) is intended to comply with the
minimum gain chargeback requirement in Section 1.704-2(i) (4) of the
Regulations and shall be interpreted consistently therewith.
(c) Qualified Income Offset. In the event any Member unexpectedly
receives any adjustments, allocations, or distributions described in Sections
1.704-1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5), or 1.704-1(b)(2)(ii)(d)(6)
of the Regulations, items of Company income and gain shall be specially
allocated to such Member in an amount and manner sufficient to eliminate, to
the extent required by the Regulations, the Adjusted Capital Account Deficit
of the Member as quickly as possible, provided that an allocation pursuant to
this Section 5.3(c) shall be made only if and to the extent that the Member
would have an Adjusted Capital Account Deficit after all other allocations
provided for in this Section 5 have been tentatively made.
(d) Gross Income Allocation. In the event any Member has a deficit
Capital Account at the end of any Taxable Year which is in excess of the sum
of (i) the amount such Member is obligated to restore pursuant to any
provision of this Agreement and (ii) the amount such Member is obligated to
restore pursuant to the penultimate sentences of Regulations Sections 1.704-
2(g)(1) and 1.704-2(i)(5), each such Member shall be specially allocated
items of Company income and gain in the amount of such excess as quickly as
possible; provided, however, that an allocation pursuant to this
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Section 5.3(d) shall be made only if and to the extent that such Member would
have a deficit Capital Account in excess of such sum after all other
allocations provided for in this Section 5 have been made other than those
allocations pursuant to Section 5.3(c) and this Section 5.3(d).
(e) Nonrecourse Deductions. Nonrecourse Deductions for any Taxable
Year shall be specially allocated to the Members in proportion to their
respective Percentage Interests.
(f) Member Nonrecourse Deductions. Any Member Nonrecourse Deductions
for any Taxable Year shall be specially allocated to the Member who bears the
economic risk of loss with respect to the Member Nonrecourse Debt to which
such Member Nonrecourse Deductions are attributable in accordance with
Regulation Section 1.704-2(i) (1).
5.4 CURATIVE ALLOCATIONS. The allocations set forth in Sections 5.3(a),
5.3(b), 5.3(c), 5.3(d), 5.3(e), 5.3(f) and 5.5 (the "REGULATORY ALLOCATIONS")
are intended to comply with certain requirements of the Regulations. It is the
intent of the Members that, to the extent possible, all Regulatory Allocations
shall be offset either with other Regulatory Allocations or with special
allocations of other items of Company income, gain, loss or deduction pursuant
to this Section 5.4. Therefore, notwithstanding any other provision of this
Section 5 (other than the Regulatory Allocations), following any Regulatory
Allocation, the Management Committee shall use its best efforts to make such
offsetting special allocations of Company income, gain, loss or deduction in
whatever reasonable manner it determines so that, after such offsetting
allocations are made, each Member's Capital Account balance is, to the extent
possible, equal to the Capital Account balance such Member would have had if the
Regulatory Allocations had not been made and all Company items were allocated
pursuant to Sections 5.1 and 5.2.
5.5 LOSS LIMITATION. Losses allocated pursuant to Section 5.2 hereof shall
not exceed the maximum amount of Losses that can be allocated without causing
any Member to have an Adjusted Capital Account Deficit at the end of any Taxable
Year. In the event some but not all the Members would have Adjusted Capital
Account Deficits as a consequence of an allocation of Losses pursuant to Section
5.2 hereof, the limitation set forth in this Section 5.5
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shall be applied on a Member by Member basis and Losses not allocable to any
Member as a result of such limitation shall be allocated to the other Members
pro rata in accordance with the positive balances in such Members' Capital
Accounts so as to allocate the maximum permissible Losses to each Member under
Section 1.704-1(b)(2)(ii)(d) of the Regulations.
5.6 TAX ALLOCATIONS: CODE SECTION 704(C).
(a) In accordance with Code Section 704(c) and the Regulations thereunder,
income, gain, loss and deduction with respect to any Property contributed to the
capital of the Company shall, solely for tax purposes, be allocated among the
Members so as to take account of any variation between the adjusted basis of
such Property to the Company for federal income tax purposes and its initial
Gross Asset Value (computed in accordance with the definition of Gross Asset
Value).
(b) In the event the Gross Asset Value of any Company asset is adjusted
pursuant to subparagraph (b) of the definition of Gross Asset Value, subsequent
allocations of income, gain, loss and deduction with respect to such asset shall
take account of any variation between the adjusted basis of such asset for
federal income tax purposes and its Gross Asset Value in the same manner as
under Code Section 704(c) and the Regulations thereunder.
(c) Any elections or other decisions relating to such allocations shall be
made by the Management Committee in any manner that reasonably reflects the
purpose and intention of this Agreement; provided, that the Company, in the
discretion of the Management Committee, may make, or not make, "curative" or
"remedial" allocations (within the meaning of the Regulations under Code Section
704(c)) including, but not limited to, "curative" allocations which offset the
effect of the "ceiling rule" for a prior Taxable Year (within the meaning of
Regulation Section 1.704- 3(c)(3)(ii) and "curative" allocations from
disposition of contributed property (within the meaning of Regulation Section
1.704-3(c)(3)(iii)(B). Allocations pursuant to this Section 5.6 are solely for
purposes of federal, state, and local taxes and shall not affect, or in any way
be taken into account in computing, any Member's Capital Account or share of
Profits, Losses, other items, or distributions (other than Tax Distributions)
pursuant to any provision of this Agreement.
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5.7 CHANGE IN PERCENTAGE INTERESTS. In the event that the Members' Percentage
Interests change during a Taxable Year, Profits and Losses shall be allocated
taking into account the Members' varying Percentage Interests for such Taxable
Year, determined on a daily, monthly or other basis as determined by the
Management Committee, using any permissible method under Code Section 706 and
the Regulations thereunder.
5.8 WITHHOLDING. Each Member hereby authorizes the Company to withhold and to
pay over any taxes payable by the Company or any of its Affiliates as a result
of such Member's participation in the Company; if and to the extent that the
Company shall be required to withhold any such taxes, such Member shall be
deemed for all purposes of this Agreement to have received a payment from the
Membership as of the time such withholding is required to be paid, which payment
shall be deemed to be a distribution to such Member to the extent that the
Member is then entitled to receive a distribution. To the extent that the
aggregate of such payments in respect of a Member for any period exceeds the
distributions to which such Member is entitled for such period, the amount of
such excess shall be considered a demand loan from the Company to such Member,
with interest at 8% per annum, which interest shall be treated as an item of
Company income, until discharged by such Member by repayment, which may be made
in the sole discretion of the Management Committee out of distributions to which
such Member would otherwise be subsequently entitled. The withholdings referred
to in this Section 5.8 shall be made at the maximum applicable statutory rate
under the applicable tax law unless the Management Committee shall have received
an opinion of counsel or other evidence, satisfactory to the Management
Committee, to the effect that a lower rate is applicable, or that no withholding
is applicable.
ARTICLE 6
MEMBERS' MEETINGS
6.1 MEETINGS OF MEMBERS; PLACE OF MEETINGS. Regular meetings of the Members
may be held on an annual basis or more frequently as determined by a Majority in
Interest of the Members. All meetings of the Members shall be held in New York,
New York or Houston, Texas as designated from time to time by the Management
Committee and stated in the Notice of the meeting or in a duly executed waiver
of the Notice thereof. Special meetings of the Members may be held for
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any purpose or purposes, unless otherwise prohibited by law, and may be called
by the Management Committee or by Members owning not less than twenty-five
percent (25%) of the Percentage Interests. Members may participate in a meeting
of the Members by means of conference telephone or other similar communication
equipment whereby all Members participating in the meeting can hear each other.
Participation in a meeting in this manner shall constitute presence in person at
the meeting.
6.2 QUORUM; VOTING REQUIREMENT. The presence, in person, by telephone or by
proxy, of a Majority in Interest of the Members shall constitute a quorum for
the transaction of business by the Members. The affirmative vote of a Majority
in Interest of the Members present, in person, by telephone or by proxy, at any
meeting shall constitute a valid decision of the Members, except where a larger
vote is required by the Act.
6.3 PROXIES. At any meeting of the Members, every Member having the right to
vote thereat shall be entitled to vote in person or by proxy appointed by an
instrument in writing signed by such Member and bearing a date not more than one
year prior to such meeting.
6.4 ACTION WITHOUT MEETING. Any action required or permitted to be taken at
any meeting of Members of the Company may be taken without a meeting, without
prior notice and without a vote if a consent in writing setting forth the action
so taken is signed by Members having not less than the minimum Percentage
Interests that would be necessary to authorize or take such action at a meeting
of the Members. Prompt Notice of the taking of any action taken pursuant to this
Section 6.4 by less than the unanimous written consent of the Members shall be
given to those Members who have not consented in writing.
6.5 NOTICE. Notice stating the place, day and hour of the meeting and the
purpose for which the meeting is called shall be delivered personally or sent by
mail or by telecopier not less than five (5) days nor more than sixty (60) days
before the date of the meeting by or at the direction of the Management
Committee or other persons calling the meeting, to each Member entitled to vote
at such meeting.
6.6 WAIVER OF NOTICE. When any Notice is required to be given to any Member
hereunder, a waiver thereof in writing signed by the Member, whether before, at
or after
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the time stated therein, shall be equivalent to the giving of such Notice.
6.7 NO AUTHORITY. Unless expressly authorized herein or by action of the
Members or the Management Committee in accordance herewith and the Act, no
Member shall have any authority to act on behalf of the Company or bind the
Company in any manner whatsoever, including, without limitation, entering into
any agreement on behalf of the Company.
ARTICLE 7
MANAGEMENT AND CONTROL
7.1 MANAGEMENT COMMITTEE; MANAGERS.
(a) Except as otherwise provided hereunder, the business and affairs of the
Company shall be managed by a Management Committee comprised of up to a total of
up to seven (7) Managers, (i) up to four (4) of whom shall be designated in
writing by a Majority in Interest of the Group A Members (the four individuals
designated pursuant to this clause (i) being referred to herein collectively as
the "GROUP A MANAGERS" and, individually, as a "GROUP A MANAGER", (ii) up to two
(2) individuals designated in writing by a Majority in Interest of the GROUP B
MEMBERS (the two individuals designated pursuant to this clause (ii) being
referred to herein collectively as the "GROUP B MANAGERS" and individually as a
"GROUP B MANAGER, and (iii) one (1) individual designated in writing by a
Majority in Interest of the Group C Members (the one individual designated by a
Majority in Interest of the Group C Members pursuant to this clause (iii) being
referred to as a "GROUP C MANAGER"). As of the date hereof, (i) the Group A
Managers designated by the Group A Member are Charles Fabrikant, Randall Bank,
Dick H. Fagerstal and Timothy J. McKeand, (ii) the Group B Managers designated
by the Group B Member are William E. Chiles and Jonathan B. Fairbanks and (iii)
the Group C Manager designated by the Group C Members is Robert Pierot, Jr.
Anything herein to the contrary notwithstanding, so long as William E. Chiles
continues to be employed as the Chief Executive Officer of the Company, one of
the Managers designated by the Group B Members as provided in clause (ii) of the
first sentence of this Section 7.1(a) shall be deemed to be William E. Chiles.
(b) After the date hereof, (i) a Majority in Interest of the Group A Members
shall be entitled at any time, with
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or without cause, to designate any Group A Manager for removal as a Manager,
(ii) a Majority in Interest of the Group B Members shall be entitled at any time
with or without cause to designate any Group B Manager for removal as a Manager
except that if William E. Chiles is serving as Chief Executive Officer of the
Company, the Group B Members shall only be entitled at any time with or without
cause to designate the other Group B Manager for removal as a Manager, and (iii)
a Majority in Interest of the Group C Members shall be entitled at any time,
with or without cause to designate the Group C Manager as removal as a Manager.
Any Manager designated for removal pursuant to this Section 7.1(b) shall be
deemed removed as a Manager upon receipt by the Company of the Notice from the
appropriate Member or Members designating said Manager for removal.
(c) If at any time a vacancy is created on the Management Committee by reason
of the death, removal or resignation of any Manager, the person to fill such
vacancy, shall be designated as a Manager (i) by a Majority in Interest of the
Group A Members, if the person who has ceased to be a Manager was a Group A
Manager, (ii) by a Majority in Interest of the Group B Members, if the person
who has ceased to be a Manager was a Group B Manager or (iii) by a Majority in
Interest of the Group C Managers, if the person who has ceased to be a Manager
was the Group C Manager.
(d) Except as otherwise expressly provided herein, the power and authority
granted to the Management Committee hereunder shall include all those necessary
or convenient for the furtherance of the purposes of the Company and shall
include the power to make all decisions with regard to the management,
operations, assets, financing and capitalization of the Company.
(e) Anything to the contrary herein notwithstanding, no Manager shall have
any authority to bind the Company or the Management Committee in his individual
capacity in any manner whatsoever, except for such authority as shall be
expressly delegated to a Manager in this Agreement or by the Management
Committee.
(f) The board of directors (or similar governing body) of any subsidiary of
the Company shall be comprised of such members as may be approved by the
Management Committee of the Company.
7.2 MANAGEMENT COMMITTEE MEETINGS; QUORUM; PROXIES.
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(a) The Management Committee will establish a regular meeting schedule, and
will use its reasonable best efforts to meet at least once every quarter. Unless
otherwise agreed by a majority of the Managers, meetings of the Management
Committee shall be held in New York, New York or Houston, Texas. Meetings may be
conducted in person, by telephone or in any other manner agreed to by the
Management Committee. Any two (2) Managers may call a meeting of the Management
Committee upon delivery of written or telephonic Notice at least three (3)
Business Days prior to the date of such meeting, which Notice shall be
accompanied by a proposed agenda or statement of purpose and by copies of all
documents, agreements and information to be considered at such meeting;
provided, however, at any such meeting, the Managers may address any and all
business matters which may come before it, whether or not such items were
provided for in the proposed agenda.
(b) A quorum shall exist when at least four (4) of the Managers are present
in person, by telephone or by proxy. Each Manager is entitled to vote at any
meeting of the Management Committee. The vote of a majority of the Managers
present in person, by telephone or by proxy at any meeting of the Management
Committee shall be required for action by the Management Committee.
(c) At each meeting of the Management Committee, every Manager shall be
entitled to vote in person, by telephone or by proxy appointed by instrument in
writing, subscribed by such Manager.
7.3 MANAGEMENT COMMITTEE'S AUTHORITY; CERTAIN LIMITATIONS. (a) Except as
expressly set forth herein, the Management Committee shall have the maximum
power and authority with respect to the business and operations of the Company
permitted by law, including, without limitation, the right to cause the Company
to merge or consolidate with, or sell all, or substantially all, of its asset to
any Person.
(b) Notwithstanding the grant of authority to the Management Committee
pursuant to Section 7.3(a) and except as otherwise contemplated in Sections
10.1(a), (b) and (c), the Management Committee shall not authorize the Company
to merge or consolidate with, or sell all, or substantially all, of its assets
to, a Member or an Affiliate or Immediate Family Member of a Member without the
prior written consent of a Majority in Interest of the Members other than the
Member or the Member whose Affiliate(s) or Immediate Family Member(s) is a party
to such transaction.
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7.4 OFFICERS; AGENTS. The Management Committee shall have the power to
appoint any Person or Persons as agents (who may be referred to as officers) to
act for the Company with such titles, if any, as the Management Committee deems
appropriate and to delegate to such officers or agents such of the powers as are
granted to the Management Committee hereunder, provided, however, that without
the express approval of the Management Committee, no officer or agent shall have
the authority to take any action (i) outside the ordinary course of business of
the Company or (ii) material to the Company and its subsidiaries taken as a
whole. Any decision or act of an officer appointed under this Section 7.4 within
the scope of the officer's designated or delegated authority shall control and
shall bind the Company. The officers or agents so appointed may have such titles
as the Management Committee shall deem appropriate, which may include (but need
not be limited to) President and Chief Executive Officer, Senior Vice President,
Vice President, Chief Operating Officer, Chief Financial Officer, Treasurer,
Controller or Secretary. The officers of the Company as of the date hereof are
set forth on Schedule 7.4. Unless the authority of the agent designated as the
officer in question is limited by the Management Committee, any officer so
appointed shall have the same authority to act for the Company as a
corresponding officer of a Delaware corporation would have to act for a Delaware
corporation in the absence of a specific delegation of authority; provided,
however, that without the express approval of the Management Committee, no
officer or agent shall have the authority to take any action (i) outside the
ordinary course of business of the Company or (ii) material to the Company and
its subsidiaries taken as a whole. The Management Committee, in its sole
discretion, may by vote, resolution or otherwise ratify any act previously taken
by an officer or agent acting on behalf of the Company.
7.5 RESIGNATION OF A MANAGER. A Manager may resign from such position at any
time upon giving Notice to the Management Committee.
7.6 COMPENSATION Except as otherwise provided herein, each Manager shall be
entitled to reimbursement from the Company for all reasonable direct
out-of-pocket expenses incurred on behalf of the Company, including
reimbursement for such expenses incurred by such Manager in connection with
attending meetings of the Management Committee, and shall not be entitled to
further compensation except as may be approved by the Management Committee.
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ARTICLE 8
LIABILITY AND INDEMNIFICATION
8.1 LIABILITY OF MEMBERS. A Member shall only be liable to make the payment
of its Capital Contribution. No Member, except as otherwise specifically
provided in the Act, shall be obligated to pay any distribution to or for the
account of the Company or any creditor of the Company.
8.2 INDEMNIFICATION.
(a) The Company shall indemnify and hold harmless each Manager and Member and
their respective Affiliates and all officers, directors, members, partners,
stockholders, managers and employees thereof, and each officer of the Company
and any Person serving in any similar capacity for another Person affiliated
with the Company at the request of the Company (solely for purposes of this
Section 8.2, each such Person being referred to as, a "COMPANY AFFILIATE"), from
and against any and all losses, claims, demands, costs, damages, liabilities,
expenses of any nature (including reasonable attorneys' fees and disbursements),
judgments, fines, settlements and other amounts arising from any and all claims,
demands, actions, suits or proceedings, whether civil, criminal, administrative
or investigative, in which a Company Affiliate may be involved, or threatened to
be involved, as a party or otherwise, arising out of or incidental to the
business of the Company, including, without limitation, liabilities under the
Federal and state securities laws, regardless of whether a Company Affiliate
continues to be a Company Affiliate, at the time any such liability or expense
is paid or incurred, if (i) the Company Affiliate acted in good faith and in a
manner it or he reasonably believed to be in, or not opposed to, the interests
of the Company and, with respect to any criminal proceeding, had no reason to
believe its or his conduct was unlawful, and (ii) the Company Affiliate's
conduct did not constitute actual fraud, gross negligence or willful or wanton
misconduct. The termination of any action, suit or proceeding by judgment,
order, settlement, conviction, or upon a plea of nolo contendere, or its
equivalent, shall not, in and of itself, create a presumption or otherwise
constitute evidence that the Company Affiliate acted in a manner contrary to
that specified in (i) or (ii) above.
(b) Expenses (including reasonable legal fees and expenses) incurred in
defending any proceeding subject to subsection (a) of this Section 8.2 shall be
paid by the Company in advance of the final disposition of such
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proceeding upon receipt of a written affirmation by the Company Affiliate of his
or its good faith belief that he or it has met the standard of conduct necessary
for indemnification under this Section 8.2 and a written undertaking (which need
not be secured) by or on behalf of the Company Affiliate to repay such amount if
it shall ultimately be determined, by a court of competent jurisdiction or
otherwise, that the Company Affiliate is not entitled to be indemnified by the
Company as authorized hereunder.
(c) The indemnification provided by this Section 8.2 shall be in addition to
any other rights to which each Company Affiliate may be entitled under any
agreement or vote of the Management Committee by the vote of Managers that are
disinterested and unaffiliated with such Company Affiliate, as a matter of law
or otherwise, both as to action in the Company Affiliate's capacity as a Company
Affiliate or as a Person serving at the request of the Company and shall
continue as to a Company Affiliate who has ceased to serve in such capacity and
shall inure to the benefit of the heirs, successors, assigns, administrators and
personal representatives of such Company Affiliate.
(d) The Company may purchase and maintain directors and officers insurance
or, similar coverage, for its Managers and its officers in such amounts and with
such deductibles or self-insured retentions as are customary for Persons engaged
in businesses similar in size and type to those engaged in by the Company.
(e) Except as provided in Section 3.4, any indemnification hereunder shall be
satisfied only out of the assets of the Company and the Members shall not be
subject to personal liability by reason of these indemnification provisions. To
the extent the Company does not have adequate cash available to satisfy its
obligations under this Article 8, the Company shall pay its obligations under
this Article 8 out of Net Cash Flow prior to making any distributions (other
than distributions under Section 4.1(a) hereof) to the Members.
(f) A Company Affiliate shall not be denied indemnification in whole or in
part under this Section 8.2 because the Company Affiliate had an interest in the
transaction with respect to which the indemnification applies if the transaction
was otherwise permitted by the terms of this Agreement and all material facts
relating to such indemnitee's interest were adequately disclosed to the
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Management Committee at the time the transaction was consummated.
(g) The provisions of this Section 8.2 are for the benefit of the Company
Affiliates and the heirs, successors, assigns, administrators and personal
representatives of the Company Affiliates and shall not be deemed to create any
rights for the benefit of any other Persons.
(h) Any repeal or amendment of any provisions of this Section 8.2 shall be
prospective only and shall not adversely affect any Company Affiliates's right
existing at the time of such repeal or amendment.
ARTICLE 9
TRANSFERS OF MEMBERSHIP INTERESTS
9.1 GENERAL RESTRICTIONS.
(a) No Member may Transfer all or any part of such Member's Membership
Interest, except as provided in this Agreement. Any purported Transfer or
purported purchase of a Membership Interest or a portion thereof in violation of
the terms of this Agreement shall be null and void and of no effect. A permitted
Transfer shall be effective as of the date specified in the instruments relating
thereto. Any transferee desiring to make a further Transfer shall become subject
to all the provisions of this Article 9 to the same extent and in the same
manner as any Member desiring to make any Transfer. No Member shall have the
right to withdraw as a Member of the Company.
(b) In the event that the Membership Interests (or securities issued in
exchange for Membership Interests upon conversion of the Company into a
corporation) are registered under the Securities Act, the Transfer restrictions
set forth in this Article 9 shall terminate.
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9.2 PERMITTED TRANSFEREES.
(a) Notwithstanding the provisions of Section 9.8 and 9.9, each Member that
is a natural person shall have the right to Transfer (but not to substitute the
transferee as a substitute Member in such Member's place, except in accordance
with Section 9.3), by a written instrument, all or any part of such Member's
Membership Interest, to an Immediate Family Member; it being understood that any
such Permitted Transferee shall be deemed to be an additional or substitute
Member as of the date of such Transfer and each Member agrees to take such
action and execute such documents as such transferee may deem reasonably
necessary and appropriate for such transferee to become a substitute or
additional Member.
(b) Notwithstanding the provisions of Sections 9.8 and 9.9, each Member that
is not a natural Person (other than COI) shall have the right to Transfer (but
not to substitute the transferee as a substitute Member in such Member's place,
except in accordance with Section 9.3), by a written instrument, all or any part
of a Member's Membership Interest, to any of its Affiliates; it being understood
that any such Permitted Transferee shall be deemed to be an additional or
substitute Member as of the date of such Transfer and each Member agrees to take
such action and execute such documents as such transferee may deem reasonably
necessary and appropriate for such transferee to become a substitute or
additional Member.
(c) Notwithstanding the provisions of Sections 9.8 and 9.9, COI shall have
the right to Transfer (but not to substitute the transferee as a substitute
Member in COI's place, except in accordance with Section 9.3), by a written
instrument, all of its Membership Interest, to its members pro rata in
accordance with their percentages of membership interests set forth on Schedule
2; it being understood that each such Permitted Transferee shall be deemed an
additional or substitute Member as of the date of such Transfer and each Member
agrees to take such action and execute such documents as such transferee may
deem reasonably necessary and appropriate for such transferee to become a
substitute or additional Member.
(d) Notwithstanding the provisions of Sections 9.8 and 9.9, a Member shall
have the right to pledge such Member's Membership Interest, in whole or in part,
to a financial institution as collateral security for a loan to such Member by
such financial institution so long as the Management
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Committee has given its prior written consent to said pledge, which consent
shall not be unreasonably withheld; provided, however, that no such pledge shall
be made for the purpose of effecting a disguised sale to the pledgee and;
provided further, that any such pledgee or a transferee of such pledgee, as
appropriate, shall agree in a writing delivered to the Company to be bound by
all of the terms and conditions of this Agreement.
(e) Unless and until admitted as a substitute Member pursuant to Section 9.3,
a transferee of a Member's Membership Interest in whole or in part shall be an
assignee with respect to such Transferred Membership Interest and shall not be
entitled to participate in the management of the business and affairs of the
Company or to become or to exercise the rights of a Member, including the right
to vote, the right to require any information or accounting of the Company's
business or the right to inspect the Company's books and records. Such
transferee shall only be entitled to receive, to the extent of the Membership
Interest transferred to such transferee, the share of distributions and profits,
including distributions representing the return of Capital Contributions, to
which the transferor would otherwise be entitled with respect to the Transferred
Interest. The transferror shall have the right to vote such Transferred Interest
until the transferee is admitted to the Company as a substituted Member with
respect to the Transferred Interest.
9.3 SUBSTITUTE MEMBERS. No transferee of all or part of a Member's Membership
Interest shall become a substitute Member in place of the transferor unless and
until:
(a) the transferee has executed an instrument in form and substance
reasonably satisfactory to the Management Committee accepting and adopting
the terms and provisions of the Certificate and this Agreement; and
(b) the transferee has caused to be paid all reasonable expenses of
the Company in connection with the admission of the transferee as a
substitute Member.
Upon satisfaction of all the foregoing conditions with respect to a
particular transferee, the President and Chief Executive Officer shall cause the
books and records of the Company to reflect the admission of the transferee as a
substitute Member to the extent of the Transferred Interest held by the
transferee.
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9.4 EFFECT OF ADMISSION AS A SUBSTITUTE MEMBER. A transferee who has become a
substitute Member has, to the extent of the transferred Membership Interest, all
the rights, powers and benefits of, and is subject to the restrictions and
liabilities of a Member under the Certificate, this Agreement and the Act. Upon
admission of a transferee as a substitute Member, the transferor of the
Membership Interest so held by the substitute Member shall cease to be a Member
of the Company to the extent of such transferred Membership Interest.
9.5 CONSENT. Each Member hereby agrees that upon satisfaction of the terms
and conditions of this Article 9 with respect to any proposed Transfer, the
Person proposed to be such transferee may be admitted as a Member.
9.6 NO DISSOLUTION. If a Member transfers all of its Membership Interest
pursuant to this Article 9 and the transferee of such Membership Interest is
admitted as a Member pursuant to Section 9.3, such Person shall be admitted to
the Company as a Member effective on the effective date of the Transfer or such
other date as may be specified when the Member is admitted. In such event, the
Company shall not dissolve if the business of the Company is continued without
dissolution in accordance with clause (c) of Section 10.1 hereof.
9.7 ADDITIONAL MEMBERS; CERTAIN REPRESENTATIONS OF MEMBERS. Subject to
Section 3.6, from and after the date hereof, any Person acceptable to the
Management Committee may become an additional Member of the Company for such
consideration as the Management Committee shall determine, provided that such
additional Member complies with all the requirements of a transferee under
Sections 9.3(a) and (b).
9.8 RIGHT OF FIRST OFFER.
(a) If at any time any Member (hereinafter for purposes of this Section 9.8,
the "SECTION 9.8 SELLING MEMBERS") proposes to Transfer to any Person other than
a Permitted Transferee (hereinafter for purposes of this Section 9.8, the
"SECTION 9.8 PROPOSED PURCHASER") its Membership Interest (or any portion
thereof), such Section 9.8 Selling Member shall provide Notice of the proposed
Transfer to the other Members (hereinafter for purposes of Section 9.8, the
"SECTION 9.8 OFFEREES") setting forth the price, terms and conditions of the
proposed sale of the Membership Interest. Each of the Section 9.8 Offerees shall
have the option to acquire such Member's pro rata portion (which shall be in
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proportion to the Percentage Interests of all Section 9.8 Offerees) at the time
of such Notice on the terms and conditions set forth in such Notice. The option
of Section 9.8 Offerees to purchase their pro rata portions of the Membership
Interest shall be exercised by delivery of a Notice to the Section 9.8 Selling
Member and the Company of exercise within twenty (20) days following receipt of
the Section 9.8 Selling Member's Notice of the price, terms and conditions of
the sale. A Section 9.8 Offeree may exercise such Member's option to purchase
such Membership Interest only as to the entire portion thereof that such Member
is entitled to purchase. If any Section 9.8 Offeree fails or declines to
purchase such Member's pro rata portion of such Membership Interest, then such
Member's portion of such Membership Interest shall be offered to the Section 9.8
Offerees who have exercised their options to purchase their pro rata portions.
This procedure shall continue until such time as the entire Membership Interest
offered hereby has been purchased by such Section 9.8 Offerees or until no such
Member desires to purchase any additional Membership Interest hereunder. Each
Section 9.8 Offeree shall have the right to offer to acquire such Membership
Interest by delivering to the Section 9.8 Selling Member and the Company such
Member's Notice of acceptance within five (5) Business Days following receipt of
the Company's Notice that additional portions are available. If less than the
entire Membership Interest to be sold by the Section 9.8 Selling Member is to be
purchased by the Section 9.8 Offerees, the Section 9.8 Selling Member may sell
the entire Membership Interest to be sold within sixty (60) days from the Notice
referred in the preceding sentence, upon terms and conditions no less favorable
to the Section 9.8 Selling Member than were set forth in the initial Notice (it
being understood that such terms may include the receipt by the Selling Member
of consideration consisting of only cash and/or securities with a readily
ascertainable market value).
(b) The sale of any Membership Interest to Section 9.8 Offerees who exercise
their options to purchase any Membership Interest shall occur twenty-one (21)
days after the expiration of the last option to expire under Section 9.8(a)
above. At the closing, each of the Section 9.8 Offerees shall deliver a
certified or bank cashier's check in, or wire transfer immediately available
funds in the appropriate amount to the Section 9.8 Selling Member against the
simultaneous delivery of an assignment in form and substance reasonably
satisfactory to each Section 9.8 Offeree of the Member Interest (or portion
thereof) being
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transferred to such Section 9.8 Offeree, such assignment shall be made free and
clear of all liens, claims and encumbrances, except as provided by this
Agreement or as otherwise agreed to by such Section 9.8 Offeree; provided,
however, that each such Section 9.8 Selling Member shall not be required to make
any other representations or warranties in connection with such sale except that
it has the authority to sell its Membership Interest, is the sole owner of such
Membership Interest and has good and valid title to such Membership Interest and
that the sale of its Membership Interest does not violate any agreement to which
it is a party or by which it is bound.
9.9 TAG-ALONG RIGHTS. (a) In the event of any proposed Transfer in any one
transaction or in a series of related transactions by any Member or Members
(hereinafter for purposes of this Section 9.9, collectively, the "SECTION 9.9
SELLING MEMBER") of its or their Membership Interests constituting in the
aggregate twenty percent (20%) or more of all the Membership Interests to any
Person (such Person being hereinafter referred to as the "SECTION 9.9 PROPOSED
PURCHASER"), other than to a Permitted Transferee or in a bona fide public
distribution pursuant to an effective Registration Statement under the
Securities Act, each of the other Members (hereinafter for purposes of this
Section 9.9, the "SECTION 9.9 TAGGED MEMBERS") shall have the irrevocable and
exclusive right, but not the obligation (the "TAG-ALONG RIGHT"), to require the
Section 9.9 Proposed Purchaser to purchase from each of them such Section 9.9
Tagged Member's pro rata portion (i.e., such Tagged Member's Percentage
Interest) of the Membership Interests proposed to be sold by the Section 9.9
Selling Members to the Section 9.9 Proposed Purchaser (collectively, the
"SECTION 9.9 TAG-ALONG MEMBERSHIP INTEREST"). The Section 9.9 Selling Members
shall give Notice (the "INITIAL TAG-ALONG NOTICE") to the Section 9.9 Tagged
Members at least thirty (30) days prior to the date of the proposed Transfer and
at least three (3) Business Days after the expiration of the last option to
expire under Section 9.8(a) above, stating:
(i) the name and address of the Section 9.9
Proposed Purchaser;
(ii) the proposed amount of consideration and terms and conditions
of payment offered by such Section 9.9 Proposed Purchaser (if the proposed
consideration is not cash, the Notice shall describe the terms of the
proposed consideration) and any other material terms and conditions of the
Section 9.9 Proposed Purchaser's offer;
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(iii) the Membership Interest proposed to be transferred; and
(iv) that the Section 9.9 Proposed Purchaser has been informed of
the Tag-Along Right and has agreed to purchase Membership Interests in
accordance with the terms hereof.
The Tag-Along Right shall be exercised by any or all of the Section 9.9
Tagged Members by giving Notice to the Company ("TAG-ALONG NOTICE") with a copy
to each Section 9.9 Selling Member, within five (5) days following receipt of
the Initial Tag-Along Notice, indicating its election to exercise the Tag-Along
Right (hereinafter referred to for purposes of this Section 9.9, the "SECTION
9.9 PARTICIPATING TAGGED MEMBERS"). The Tag-Along Notice shall state the amount
of Membership Interests that such Section 9.9 Participating Tagged Member
proposes to include in such transfer to the Section 9.9 Proposed Purchaser.
Failure by any Section 9.9 Tagged Member to give such Tag-Along Notice within
such 5 day period shall be deemed an election by such Section 9.9 Tagged Member
not to sell its Membership Interests pursuant to the Initial Tag-Along Notice.
The closing with respect to any sale to a Section 9.9 Proposed Purchaser
pursuant to this Section shall be held at the time and place specified in the
Initial Tag-Along Notice but in any event within sixty (60) days of the date the
Initial Tag-Along Notice is given. Consummation of the sale of Membership
Interests by any Section 9.9 Selling Member to a Section 9.9 Proposed Purchaser
shall be conditioned upon consummation of the sale by each Section 9.9
Participating Tagged Member to such Section 9.9 Proposed Purchaser of the
Section 9.9 Tag-Along Membership Interest, if any.
(b) In the event that the Section 9.9 Proposed Purchaser does not purchase
the Section 9.9 Tag-Along Membership Interest from the Section 9.9 Participating
Tagged Members on the same terms and conditions as purchased from the Section
9.9 Selling Member, then the Section 9.9 Selling Member making such Transfer
shall purchase on such terms and conditions such Section 9.9 Tag-Along
Membership Interest if the Transfer occurs.
(c) The Section 9.9 Selling Members who are parties to a sale to a Section
9.9 Proposed Purchaser shall arrange for payment (by bank cashier's check or
certified check or by wire transfer of immediately available funds) directly by
the Section 9.9 Proposed Purchaser to each Section 9.9 Participating Tagged
Member, upon delivery of an appropriate
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assignment in form and substance reasonably satisfactory to the Section 9.9
Proposed Purchaser, which assignment shall be made free and clear of all liens,
claims and encumbrances except as provided by this Agreement or as otherwise
agreed to by such Section 9.9 Proposed Purchaser; provided, however, that each
such Section 9.9 Participating Tagged Member shall not be required to make any
other representations or warranties in connection with such sale except that it
has the authority to sell its Membership Interest, is the sole owner of such
Membership Interest and has good and valid title to such Membership Interest and
that the sale of its Membership Interest does not violate any agreement to which
it is a party or by which it is bound.
(d) If at the end of 60 days following the date on which an Initial Tag-Along
Notice was given, the sale of Membership Interests by the Section 9.9 Selling
Members and the sale of the Section 9.9 Tag-Along Membership Interests have not
been completed in accordance with the terms of the Section 9.9 Proposed
Purchaser's offer, all the restrictions on sale, transfer or assignment
contained in this Agreement with respect to Membership Interests owned by the
Members shall again be in effect.
9.10 DRAG-ALONG RIGHTS.
(a) In the event of any proposed Transfer of Membership Interest constituting
a majority of all Membership Interests by any Member or Members (hereinafter for
purposes of this Section 9.10, collectively a "SECTION 9.10 SELLING MEMBERS") of
all of its or their Membership Interest to a Person (such Person being
hereinafter referred to as the "SECTION 9.10 PROPOSED PURCHASER"), other than a
Permitted Transferee or in a bona fide public distribution pursuant to an
effective Registration Statement under the Securities Act, such Section 9.10
Selling Members shall have the right (the "DRAG-ALONG RIGHT"), to require each
other Member (hereinafter for purposes of this Section 9.10, the "SECTION 9.10
DRAGGED MEMBERS") to Transfer to the Section 9.10 Proposed Purchaser each such
Section 9.10 Dragged Member's entire Membership Interest (such Membership
Interests as may be required to be so Transferred being hereinafter referred to
as the "SECTION 9.10 DRAG-ALONG MEMBERSHIP INTERESTS"). The Section 9.10 Selling
Members shall exercise their Drag-Along Right by giving Notice (the "DRAG-ALONG
NOTICE") to each Section 9.10 Dragged Member at least twenty (20) days prior to
the date of the proposed Transfer and at least
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three (3) Business Days after the expiration of the last option to expire under
Section 9.8(a) above, stating:
(i) the name and address of the Section 9.10
Proposed Purchaser;
(ii) the proposed amount of consideration and terms and conditions
of payment offered by such Section 9.10 Proposed Purchaser (if the proposed
consideration is not cash, the notice shall describe the terms of the
proposed consideration);
(iii) the Membership Interests proposed to be
transferred; and
(iv) that the Section 9.10 Proposed Purchaser has been informed of
the Drag-Along Right and has agreed to purchase Membership Interests in
accordance with the terms hereof.
The closing with respect to any sale to a Section 9.10 Proposed Purchaser
pursuant to this Section shall be held at the time and place specified in the
Drag-Along Notice but in any event within sixty (60) days of the date the
Drag-Along Notice is given. Consummation of the sale of Membership Interests by
any Member to a Section 9.10 Proposed Purchaser shall be conditioned upon
consummation of the sale by each Section 9.10 Selling Member to such Section
9.10 Proposed Purchaser of the Membership Interests proposed to be sold by the
Section 9.10 Selling Members.
(b) In the event that the Section 9.10 Proposed Purchaser does not purchase
the Section 9.10 Drag-Along Membership Interests from the Section 9.10 Dragged
Members on the same terms and conditions as purchased from the Section 9.10
Selling Members, then such Section 9.10 Dragged Members shall have the right to
require the Company to cause the Section 9.10 Selling Members making such
Transfer to purchase on such terms and conditions such Section 9.10 Drag-Along
Membership Interests if the Transfer occurs.
(c) The Section 9.10 Selling Members who are parties to a sale to a Section
9.10 Proposed Purchaser shall arrange for payment directly by the Section 9.10
Proposed Purchaser to each Section 9.10 Dragged Member, upon delivery of the an
appropriate assignment in form and substance reasonably satisfactory to the
Section 9.10 Proposed Purchaser, which assignment shall be made free and clear
of all liens, claims and encumbrances, except as provided by this Agreement or
as
39
<PAGE>
otherwise agreed to by such Section 9.10 Proposed Purchaser; provided, however,
that each such Dragged Stockholder shall not be required to make any other
representations or warranties in connection with such sale except that it has
the authority to sell its Membership Interest, is the sole owner of such Shares
and has good and valid title to such Membership Interest, and that the sale of
such Membership Interest does not violate any agreement to which it is a party
or by which it is bound.
(d) If at the end of 60 days following the date on which a Drag-Along Notice
was given, the sale of Membership Interests by the Section 9.10 Selling Members
and the sale of the Section 9.10 Drag-Along Membership Interests have not been
completed in accordance with the terms of the Drag-Along Notice, all the
restrictions on sale, transfer or assignment contained in this Agreement with
respect to Membership Interests owned by the Section 9.10 Selling Members shall
again be in effect.
9.11 PIGGYBACK REGISTRATION.
(a) For the purposes of this Section 9.11, the following capitalized terms
shall have the following meanings:
(i) "COMMON STOCK" shall mean the common stock of the Company issued
upon conversion of the Company to a corporation;
(ii) "OTHER SHARES" shall mean at any time those shares of Common
Stock or other securities of the Company which do not constitute Primary
Shares or Registrable Shares;
(iii) "PRIMARY SHARES" shall mean at any time authorized but unissued
shares of Common Stock or shares of Common Stock held by the Company in
its treasury;
(iv) "REGISTRABLE SHARES" shall mean the shares of Common Stock held
by the Members in the Company which constitute Restricted Shares and which
are not then eligible for sale to the public pursuant to Rule 144 (other
than Rule 144(k)) in a single transaction (and including Membership
Interests held by Members prior to the conversion of the Company to a
corporation).
(v) "RESTRICTED SHARES" shall mean any Membership Interests, shares
of Common Stock or other securities
40
<PAGE>
received in respect thereof held or which may be acquired from the Company
by the Members as of the applicable date, and which theretofore have not
been sold to the public pursuant to a registration statement under the
Securities Act or pursuant to Rule 144; and
(vi) "RULE 144" shall mean Rule 144 promulgated under the Securities
Act or any successor rule thereto or any complementary rule thereto (such
as Rule 144A).
(b) If the Company at any time proposes for any reason to register Primary
Shares or Other Shares under the Securities Act (other than on Form S-4 or Form
S-8 promulgated under the Securities Act or any successor forms thereto), it
shall promptly give Notice to the Members of its intention so to register the
Primary Shares or Other Shares and, upon the written request, given within 30
days after delivery of any such Notice by the Company, of the Members to include
in such registration Registrable Shares (which request shall specify the number
of Registrable Shares proposed to be included in such registration), the Company
shall use its best efforts to cause all such Registrable Shares to be included
in such registration on the same terms and conditions as the securities
otherwise being sold in such registration; provided, however, that if the
managing underwriter advises the Company that the inclusion of all Registrable
Shares or Other Shares proposed to be included in such registration would
interfere with the successful marketing (including pricing) of Primary Shares
proposed to be registered by the Company, then the number of Primary Shares,
Registrable Shares and Other Shares proposed to be included in such registration
shall be included in the following order:
(i) first, the Primary Shares; and
(ii) second, the Registrable Shares and Other Shares requested to be
included in such registration pro rata, based upon the respective numbers
of Restricted Shares owned at the time by each Member and the respective
numbers of Other Shares owned at the time by each holder of Other Shares.
(c) If at any time after giving Notice pursuant to this Section 9.11 of
its intention to register any securities and prior to the effective date of the
registration statement filed in connection with such registration, the Company
shall determine for any reason either not to register or to delay registration
of such
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securities, the Company may, at its election, give Notice of such determination
to the Members and, thereupon, (i) in the case of a determination not to
register, shall be relieved of its obligation to register any Registrable
Securities in connection with such registration and (ii) in the case of a
determination to delay registering, shall be permitted to delay registering any
Registerable Securities, for the same period as the delay in registering such
other securities.
(d) If a registration under this Section 9.11 involves an underwritten
offering, the underwriter or underwriters and any additional investment bankers
and managers to be used in connection with such registration shall be selected
by the Company, and any Member desiring to have Registrable Shares included in
such registration, and any such Investor shall be required to sign an
underwriting agreement in customary form with such underwriter or underwriters.
9.12 ADDITIONAL MEMBERS; CERTAIN REPRESENTATIONS
OF MEMBERS.
(a) Subject to Section 3.6, any Person acceptable to the Management
Committee may become an additional Member of the Company for such consideration
as the Management Committee shall determine, provided that such additional
Member complies with all the requirements of a transferee under Section 9.3.
(b) Each of COI and SEACOR hereby represents to the Company that, as of
the date hereof, its outstanding membership interests or issued and outstanding
shares of capital stock, as the case may be, are as set forth on Schedule 2 and
such membership interests or shares, as the case may be, are owned beneficially
and of record by the Persons identified on such Schedule.
(c) In order to prevent any direct transfer of interests in the Company,
each of COI and SEACOR acknowledge and confirms that each of its members or
stockholders, as the case may be, agreed to certain transfer restrictions with
respect to the transfer of such Person's membership interests or shares of COI
or SEACOR, as the case may be, by executing and delivering to the Company a
letter agreement dated August 5, 1997.
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ARTICLE 10
DISSOLUTION AND TERMINATION
10.1 EVENTS CAUSING DISSOLUTION. The Company shall be dissolved and its
affairs wound up upon the first to occur of the following events:
(a) The vote to dissolve Members holding not less than ninety
percent (90%) of the Membership Interests;
(b) The sale, Transfer or other disposition of substantially all of
the assets of the Company and the receipt and distribution of all the
proceeds therefrom;
(c) The death, retirement, resignation, insanity, expulsion,
bankruptcy or dissolution of a Member, or any other event which terminates
the continued membership of a Member in the Company, unless there is at
least one remaining Member;
(d) The entry of a decree of judicial dissolution pursuant to
Section 18-802 of the Act; or
(e) The expiration of the term of the Company as provided in Section
2.5.
10.2 NOTICES TO SECRETARY OF STATE. When all the remaining property and
assets of the Company have been distributed, the Certificate shall be cancelled
by filing a certificate of cancellation with the Secretary of State of Delaware.
10.3 CASH DISTRIBUTIONS UPON DISSOLUTION. Upon the dissolution of the
Company as a result of the occurrence of any of the events set forth in Section
10.1, the Management Committee shall proceed to wind up the affairs of and
liquidate the Company and any cash and proceeds therefrom shall be applied and
distributed in the following order of priority:
(a) First, to the payment (or the making of reasonable provision for
payment) of debts and liabilities of the Company in the order of priority
as provided by law (including any loans or advances that may have been
made by any of the Members to the Company) and the expenses of
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liquidation including the establishment of any Reserves which the
Management Committee may reasonably deem necessary for any contingent,
conditional or unasserted claims or obligations of the Company. Such
Reserves may be paid over by the Company to an escrow agent to be held for
disbursement in payment of any of the aforementioned liabilities and, at
the expiration of such period as shall be reasonably deemed advisable by
the Management Committee, for distribution of the balance in the manner
provided in this Article 10;
(b) Finally, the remaining balance, if any, to the Members in
proportion to their respective positive Capital Accounts, after giving
effect to all contributions, distributions and allocations for all
periods, in accordance with the requirements of Regulation Section 1.704-
1(b)(2)(ii)(b)(2).
10.4 IN-KIND. Notwithstanding the foregoing but subject to Section
18-804(a)(1) of the Act, in the event the Management Committee shall determine
that an immediate sale of part of or all the Property would cause undue loss to
the Members, or the Management Committee determines that it would be in the best
interest of the Members to distribute the Property to the Members in-kind (which
distributions do not, as to the in-kind portions, have to be in the same
proportions as they would be if cash were distributed, but all such in-kind
distributions shall be equalized, to the extent necessary, with cash), then the
Management Committee may either defer liquidation of, and withhold from
distribution for a reasonable time, any of the Property except that necessary to
satisfy the Company's debts and obligations, or distribute the Property to the
Members in-kind.
10.5 NO ACTION FOR DISSOLUTION. The Members acknowledge that irreparable
damage would be done to the goodwill and reputation of the Company if any Member
should bring an action in court to dissolve the Company under circumstances
where dissolution is not required by Section 10.1. Accordingly, except where the
Managers have failed to liquidate the Company as required by Section 10.1 and
except as specifically provided in Section 18-802 and Section 18-803(a) of the
Act, each Member hereby to the fullest extent permitted by law waives and
renounces his right to initiate legal action to seek dissolution of the Company
or
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<PAGE>
to seek the appointment of a receiver or trustee to wind up the affairs of the
Company, except in the cases of fraud, violation of law, bad faith, gross
negligence, willful misconduct or willful violation of this Agreement.
ARTICLE 11
TAX MATTERS MEMBER
11.1 TAX MATTERS MEMBER. SEACOR shall be the initial Tax Matters Member of
the Company as provided in the Regulations under Section 6231 of the Code and
analogous provisions of state law. The Management Committee shall have the
authority to remove or replace (following death or resignation) the Tax Matters
Member of the Company and designate its successor.
11.2 CERTAIN AUTHORIZATIONS. The Tax Matters Member shall represent the
Company, at the Company's expense, in connection with all examinations of the
Company's affairs by tax authorities including any resulting administrative or
judicial proceedings. Without limiting the generality of the foregoing, and
subject to the restrictions set forth herein, the Tax Matters Member, but only
with the consent or approval or at the director of the Management Committee, is
hereby authorized:
(a) to enter into any settlement with the Secretary with respect to
any tax audit or judicial review, in which agreement the Tax Matters
Member may expressly state that such agreement shall bind the other
Members except that such settlement agreement shall not bind any Member
that has not approved such settlement agreement in writing;
(b) if a notice of a final administrative adjustment at the Company
level of any item required to be taken into account by a Member for tax
purposes is mailed to the Tax Matters Member, to seek judicial review of
such final adjustment, including the filing of a petition for readjustment
with the Tax Court, the District Court of the United States for the
district in which the Company's principal place of business is located, or
elsewhere as allowed by law, or the United States Claims Court;
45
<PAGE>
(c) to intervene in any action brought by any other Member for
judicial review of a final adjustment;
(d) to file a request for an administrative adjustment with the
Secretary at any time and, if any part of such request is not allowed by
the Secretary, to file a petition for judicial review with respect to such
request;
(e) to enter into an agreement with the Internal Revenue Service to
extend the period for assessing any tax that is attributable to any item
required to be taken into account by a Member for tax purposes, or an item
affected by such item; and
(f) to take any other action on behalf of the Members (with respect
to the Company) or the Company in connection with any administrative or
judicial tax proceeding to the extent permitted by applicable law or the
Regulations.
Each Member shall have the right to participate in any such actions and
proceedings to the extent provided for under the Code and Regulations.
11.3 INDEMNITY OF TAX MATTERS MEMBER. To the maximum extent permitted by
applicable law and without limiting Article 8, the Company shall indemnify and
reimburse the Tax Matters Member for all expenses (including reasonable legal
and accounting fees) incurred as Tax Matters Member pursuant to this Article 11
in connection with any administrative or judicial proceeding with respect to the
tax liability of the Members as long as the Tax Matters Member has determined in
good faith that the Tax Matters Member's course of conduct was in, or not
opposed to, the best interest of the Company. The taking of any action and the
incurring of any expense by the Tax Matters Member in connection with any such
proceeding, except to the extent provided herein or required by law, is a matter
in the sole discretion of the Tax Matters Member.
11.4 INFORMATION FURNISHED. To the extent and in the manner provided by
applicable law and Regulations, the Tax Matters Member shall furnish the name,
address, profits and loss interest, and taxpayer identification number of each
Member to the Internal Revenue Service.
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11.5 NOTICE OF PROCEEDINGS, ETC. The Tax Matters Member shall use best
efforts to keep each Member informed of any administrative and judicial
proceedings for the adjustment at the Company level of any item required to be
taken into account by a Member for income tax purposes or any extension of the
period of limitations for making assessments of any tax against a Member with
respect to any Company item, or of any agreement with the Internal Revenue
Service that would result in any material change either in Income or Loss as
previously reported.
11.6 NOTICES TO TAX MATTERS MEMBER. Any Member that receives a notice of
an administrative proceeding under Section 6233 of the Code relating to the
Company shall promptly provide Notice to the Tax Matters Member of the treatment
of any Company item on such Member's Federal income tax return that is or may be
inconsistent with the treatment of that item on the Company's return. Any Member
that enters into a settlement agreement with the Internal Revenue Service or any
other government agency or official with respect to any Company item shall
provide Notice to the Tax Matters Member of such agreement and its terms within
sixty (60) days after its date.
11.7 PREPARATION OF TAX RETURNS. The Tax Matters Member shall arrange for
the preparation and timely filing of all returns of Company income, gains,
deductions, losses and other items necessary for Federal, state and local income
tax purposes and shall use all reasonable efforts to furnish to the Members
within ninety (90) days of the close of the taxable year a Schedule K-1 and such
other tax information reasonably required for Federal, state and local income
tax reporting purposes. The classification, realization and recognition of
income, gain, losses and deductions and other items shall be on the cash or
accrual method of accounting for Federal income tax purposes, as the Management
Committee shall determine in its sole discretion in accordance with applicable
law.
11.8 TAX ELECTIONS. The Management Committee shall, in its sole
discretion, determine whether to make any available election.
11.9 TAXATION AS A PARTNERSHIP. The Members hereby agree that the Company
shall be treated as a partnership for tax purposes under United States federal,
state and local income tax laws or other laws, and further agree not to take any
position or take any action inconsistent therewith, in a tax return or
otherwise. No
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election shall be made by the Company or any Member for the Company to be
excluded from the application of any of the provisions of Subchapter K, Chapter
I of Subtitle A of the Code or from any similar provisions of any state tax laws
or to be treated as a corporation for federal tax purposes.
ARTICLE 12
ACCOUNTING AND BANK ACCOUNTS
12.1 FISCAL YEAR AND ACCOUNTING METHOD. The fiscal year and taxable year
of the Company shall be as designated by the Management Committee in accordance
with the Code. The Company shall use an accrual method of accounting.
12.2 BOOKS AND RECORDS. The Company shall maintain at its principal
office, or such other office as may be determined by the Management Committee,
all the following:
(a) A current list of the full name and last known business or
residence address of each Member together with information regarding the
amount of cash and a description and statement of the agreed value of any
other property or services contributed by each Member and which each
Member has agreed to contribute in the future, and the date on which each
Member became a Member of the Company;
(b) A copy of the Certificate and this Agreement, including any and
all amendments to either thereof, together with executed copies of any
powers of attorney pursuant to which the Certificate, this Agreement, or
any amendments have been executed;
(c) Copies of the Company's Federal, state, and local income tax or
information returns and reports, if any, which shall be retained for at
least six fiscal years;
(d) The financial statements of the Company, which shall be retained
for at least six fiscal years; and
(e) The Company's books and records, which shall be retained for at
least six fiscal years.
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12.3 DELIVERY TO MEMBERS; INSPECTION. Upon the request of any Member, for
any purpose reasonably related to such Member's interest as a member of the
Company, the Management Committee shall cause to be made available to the
requesting Member the information required to be maintained by clauses (a)
through (d) of Section 12.2 and such other information regarding the business
and affairs of the Company as any Member may reasonably request. Upon the giving
of ten (10) days' prior Notice to the Company, any Member or its authorized
representatives and advisors shall have the right to inspect the books and
records of the Company at the offices of the Company during normal business
hours.
12.4 FINANCIAL STATEMENTS. The Management Committee shall cause to be
prepared for the Members at least annually, at the Company's expense, financial
statements of the Company, and its subsidiaries, prepared in accordance with
generally accepted accounting principles and audited by Arthur Andersen & Co.,
LLP, or another nationally recognized accounting firm. The financial statements
so furnished shall include a balance sheet, statement of income or loss,
statement of cash flows, and statement of Members' equity. In addition, the
Management Committee shall provide on a timely basis to the Members quarterly
financials, statements of cash flow, any available internal budgets or forecast
or other available financial reports, as well as any reports or notices as are
provided by the Company, or any of its subsidiaries to any financial
institution.
12.5 FILINGS. At the Company's expense, the Management Committee shall
cause the income tax returns for the Company to be prepared and timely filed
with the appropriate authorities and to have prepared and to furnish to each
Member such information with respect to the Company as is necessary (or as may
be reasonably requested by a Member) to enable the Members to prepare their
Federal, state and local income tax returns. The Management Committee, at the
Company's expense, shall also cause to be prepared and timely filed, with
appropriate Federal, state and local regulatory and administrative bodies, all
reports required to be filed by the Company with those entities under then
current applicable laws, rules, and regulations. The reports shall be prepared
on the accounting or reporting basis required by the regulatory bodies.
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12.6 NON-DISCLOSURE. Each Member agrees that, except as otherwise
consented to by the Management Committee in writing, all non-public and
confidential information furnished to it pursuant to this Agreement will be kept
confidential and will not be disclosed by such Member, or by any of its agents,
representatives, or employees, in any manner whatsoever, in whole or in part,
except that (a) each Member shall be permitted to disclose such information to
those of its agents, representatives, and employees who need to be familiar with
such information in connection with such Member's investment in the Company, so
long as such agents, representatives and employees agree to keep such
information confidential on the terms set forth herein, (b) each Member shall be
permitted to disclose such information to its partners, stockholders and
affiliates so long as they agree to keep such information confidential on the
terms set forth herein, (c) each Member shall be permitted to disclose
information to the extent required by law, legal process or regulatory
requirements, so long as such Member shall have used its reasonable efforts to
first afford the Company with a reasonable opportunity to contest the necessity
of disclosing such information, (d) each Member shall be permitted to disclose
such information to possible purchasers of all or a portion of the Member's
Interest, provided that such prospective purchaser shall execute a suitable
confidentiality agreement containing terms not less restrictive than the terms
set forth herein, and (e) each Member shall be permitted to disclose information
to the extent necessary for the enforcement of any right of such Member arising
under this Agreement.
12.7 BANK ACCOUNTS. All funds of the Company shall be deposited in a
separate bank, money market or similar account(s) approved by the Management
Committee and in the Company's name. Withdrawals therefrom shall be made only by
Persons authorized to do so by the Management Committee.
ARTICLE 13
MISCELLANEOUS
13.1 TITLE TO PROPERTY. Title to the Property shall be held in the name of
the Company. No Member shall individually have any ownership interest or rights
in the Property except indirectly by virtue of such Member's ownership of a
Membership Interest.
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13.2 WAIVER OF DEFAULT. No consent or waiver, express or implied, by the
Company or a Member with respect to any breach or default by the Company or a
Member hereunder shall be deemed or construed to be a consent or waiver with
respect to any other breach or default by any party of the same provision or any
other provision of this Agreement. Failure on the part of the Company or a
Member to complain of any act or failure to act of the Company or a Member or to
declare such party in default shall not be deemed or constitute a waiver by the
Company or the Member of any rights hereunder.
13.3 AMENDMENT.
(a) Except as otherwise expressly provided elsewhere in this Agreement,
this Agreement shall not be altered, modified or changed except by an amendment
approved by Members holding not less than ninety percent (90%) of the Membership
Interests.
(b) In addition to any amendments otherwise authorized herein, the Manager
or Management Committee may make any amendments to any of the Schedules to this
Agreement from time to time to reflect transfers of Membership Interests and
issuances of additional Membership Interests. Copies of such amendments shall be
delivered to the Members upon execution thereof.
(c) The Managers shall cause to be prepared and filed any amendment to the
Certificate that may be required to be filed under the Act as a consequence of
any amendment to this Agreement.
(d) Any modification or amendment to this Agreement or the Certificate
made in accordance with this Section 13.3 shall be binding on all Members and
the Managers.
13.4 NO THIRD PARTY RIGHTS. Except as provided in Article 8, none of the
provisions contained in this Agreement shall be for the benefit of or
enforceable by any third parties, including creditors of the Company. Subject to
Article 8, the parties to this Agreement expressly retain any and all rights to
amend this Agreement as herein provided, notwithstanding any interest in this
Agreement or in any party to this Agreement held by any other Person.
13.5 SEVERABILITY. In the event any provision of this Agreement is held to
be illegal, invalid or unenforceable to any extent, the legality, validity and
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enforceability of the remainder of this Agreement shall not be affected thereby
and shall remain in full force and effect and shall be enforced to the greatest
extent permitted by law.
13.6 NATURE OF INTEREST IN THE COMPANY. A Member's Membership Interest
shall be personal property for all purposes.
13.7 BINDING AGREEMENT. Subject to the restrictions on the disposition of
Membership Interests herein contained, the provisions of this Agreement shall be
binding upon, and inure to the benefit of, the parties hereto and their
respective heirs, personal representatives, successors and permitted assigns.
13.8 HEADINGS. The headings of the Certificate and sections of this
Agreement are for convenience only and shall not be considered in construing or
interpreting any of the terms or provisions hereof.
13.9 WORD MEANINGS. The words such as "herein", "hereinafter", "hereof",
and "hereunder" refer to this Agreement as a whole and not merely to a
subdivision in which such words appear unless the context otherwise requires.
The singular shall include the plural, and vice versa, unless the context
otherwise requires.
13.10 COUNTERPARTS. This Agreement may be executed in several
counterparts, all of which together shall constitute one agreement binding on
all parties hereto, notwithstanding that all the parties have not signed the
same counterpart.
13.11 ENTIRE AGREEMENT. This Agreement contains the entire agreement
between the parties hereto and thereto and supersedes all prior writings or
agreements with respect to the subject matter hereof.
13.12 PARTITION. The Members agree that the Property is not and will not
be suitable for partition. Accordingly, each of the Members hereby irrevocably
waives any and all right such Member may have to maintain any action for
partition of any of the Property. No Member shall have any right to any specific
assets of the Company upon the liquidation of, or any distribution from, the
Company.
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13.13 GOVERNING LAW; CONSENT TO JURISDICTION AND VENUE. This Agreement
shall be construed according to and governed by the laws of the State of
Delaware without regard to principles of conflict of laws. The parties hereby
submit to the exclusive jurisdiction and venue of the state courts of New York
County, New York or to the Court of Chancery of the State of Delaware and the
United States District Court for the Southern District of New York and of the
United States District Court for the District of Delaware, as the case may be,
and agree that the Company or Members may, at their option, enforce their rights
hereunder in such courts.
13.14 DISCRETION. Whenever a Manager shall have discretion to act
hereunder, such Person agrees to act in a reasonable manner on behalf of the
Company and its Affiliates."
[INTENTIONALLY LEFT BLANK]
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[SIGNATURE PAGE TO OPERATING AGREEMENT OF
CHILES OFFSHORE LLC]
GROUP A MEMBERS
SEACOR OFFSHORE RIGS INC.
By: /s/RANDALL BLANK
------------------------------
Name: Randall Blank
Title: Vice-President
GROUP B MEMBERS
COI, LLC
By: /s/WILLIAM E. CHILES
-------------------------------
Name: William E. Chiles
Title: President
54
<PAGE>
[SIGNATURE PAGE TO OPERATING AGREEMENT OF
CHILES OFFSHORE LLC]
GROUP C MEMBERS
/s/IRA ALPERT
-------------------------------
Name: Ira Alpert
ASHTON GROUP INC.
By:/s/GEORGE ASCH
-------------------------------
Name: George Asch
Title: President
/s/ALLEN J. BECKER
-------------------------------
Name: Allen J. Becker
/s/JACK BENJAMIN/EMILY S. BENJAMIN
-------------------------------
Name: Jack and Emily S. Benjamin,
as tenants in common
/s/JOHN U. BEUSCH
-------------------------------
Name: John U. Beusch
/s/GAY BLOCK
-------------------------------
Name: Gay Block
55
<PAGE>
[SIGNATURE PAGE TO OPERATING AGREEMENT OF
CHILES OFFSHORE LLC]
/s/ALLEN H. BRILL
-------------------------------
Name: Allen H. Brill
/s/JESSE BRILL/LAREN BRILL
-------------------------------
Name: Jesse and Laren Brill, as
tenants in common
/s/JOHN L. COLTON
-------------------------------
Name: John L. Colton
/s/ROBERT E. ETTLE/MARY VANDERGRIFT ETTLE
------------------------------------------------
Name: Robert E. and Mary Vandergrift Ettle,
as joint tenants with rights of
survivorship
/s/CHARLES FABRIKANT
-------------------------------
Name: Charles Fabrikant
/s/MARY FACCIO
-------------------------------
Name: Mary Faccio
/s/MARTHA M. FARKOUH
-------------------------------
Name: Martha M. Farkouh
56
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[SIGNATURE PAGE TO OPERATING AGREEMENT OF
CHILES OFFSHORE LLC]
/s/BROOKE FINGERHUT
-------------------------------
Name: Brooke Fingerhut
/s/ANDREW FINGERHUT
-------------------------------
Name: Andrew Fingerhut
/s/KAREN FLEISS
-------------------------------
Name: Karen Fleiss
/s/CHARLENE FURMAN
-------------------------------
Name: Charlene Furman
/s/GORDON T. HALL
-------------------------------
Name: Gordon T. Hall
/s/JOHN M. HENNESSEY
-------------------------------
Name: John M. Hennessey
/s/BARRY LEWIS
-------------------------------
Name: Barry Lewis
/s/SETH A. LIEBER
-------------------------------
Name: Seth A. Lieber
57
<PAGE>
[SIGNATURE PAGE TO OPERATING AGREEMENT OF
CHILES OFFSHORE LLC]
/s/IRWIN LIEBER
-------------------------------
Name: Irwin Lieber
/s/JONATHAN C. LIEBER
-------------------------------
Name: Jonathan C. Lieber
/s/JAN LOEB
-------------------------------
Name: Jan Loeb
/s/NORMAN McCALL
-------------------------------
Name: Norman McCall
/s/ITZHAK PERLMAN
-------------------------------
Name: Itzhak Perlman
/s/TOBY PERLMAN
-------------------------------
Name: Toby Perlman
/s/ALBERT SIBONY/JENNIFER SIBONY
----------------------------------
Name: Albert and Jennifer Sibony,
as joint tenants with rights
of survivorship
58
<PAGE>
[SIGNATURE PAGE TO OPERATING AGREEMENT OF
CHILES OFFSHORE LLC]
/s/JOSEPH STEIN, JR.
-------------------------------
Name: Joseph Stein, Jr.
/s/JAY STEIN
-------------------------------
Name: Jay Stein
/s/WALTER WEADOCK
-------------------------------
Name: Walter Weadock
A.R.E. INVESTMENT PARTNERSHIP
By:/s/LARRY ROCHLIN
-------------------------------
Name: Larry Rochlin
Title: Partner
ABRAHAM ROCHLIN ENTERPRISES
By:/s/LARRY ROCHLIN
-------------------------------
Name: Larry Rochlin
Title: President
/s/BARRY K. FINGERHUT
-------------------------------
Name: Barry K. Fingerhut
59
<PAGE>
[SIGNATURE PAGE TO OPERATING AGREEMENT OF
CHILES OFFSHORE LLC]
BARRY K. FINGERHUT FOR JOINT
ACCOUNT OF BARRY K. FINGERHUT/
MIKE MAROCCO AND ANDREW SENCHAK
By:/s/BARRY K. FINGERHUT
-------------------------------
Name: Barry K. Fingerhut
Title: Authorized Signatory
BASSOE RIG PARTNERS, LTD.
By:/s/JONATHAN B. FAIRBANKS
-------------------------------
Name: Jonathan B. Fairbanks
Title: Vice President
/s/RICHARD FAIRBANKS III/SHANNON FAIRBANKS
----------------------------------------------
Name: Richard and Shannon Fairbanks III,
as joint tenants with rights of
survivorship
/s/ALAN N. LOCKER
-------------------------------
Name: Alan N. Locker
BOSCHWITZ FAMILTY TRUST
By:/s/FRANZ L. BOSCHWITZ
-------------------------------
Name: Franz L. Boschwitz
Title: Trustee
60
<PAGE>
[SIGNATURE PAGE TO OPERATING AGREEMENT OF
CHILES OFFSHORE LLC]
/s/ROME ARNOLD
-------------------------------
Name: Rome Arnold
BOVA TRADING, INC.
By:/s/CHARLES H. BAUDOIN
-------------------------------
Name: Charles H. Baudoin
Title: President
/s/NORMAN BENZAQUEN
-------------------------------
Name: Norman Benzaquen
/s/MARTIN R. GOLD
-------------------------------
Name: Martin R. Gold
/s/SUSAN W. COHEN
-------------------------------
Name: Susan W. Cohen
LARRY ROCHLIN REVOCABLE TRUST,
DATED 11/3/89
By:/s/LARRY ROCHLIN
-------------------------------
Name: Larry Rochlin
Title: Trustee
61
<PAGE>
[SIGNATURE PAGE TO OPERATING AGREEMENT OF
CHILES OFFSHORE LLC]
OPPENHEIMER-CLOSE INVESTMENT
PARTNERSHIP, LP
By:/s/PHILIP V. OPPENHEIMER
-------------------------------
Name: Philip V. Oppenheimer
Title: Managing Member
P. OPPENHEIMER INVESTMENT
PARTNERSHIP, L.P.
By:/s/PHILIP V. OPPENHEIMER
-------------------------------
Name: Philip V. Oppenheimer
Title: Managing Member
PIEROT ENTERPRISES, INC.
By:/s/ROBERT J. PIEROT, JR.
-------------------------------
Name: Robert J. Pierot, Jr.
Title: President
RUBENSTEIN FAMILY LTD. PARTNERSHIP
By:/s/BARRY RUBENSTEIN
-------------------------------
Name: Barry Rubenstein
Title: General Partner
62
<PAGE>
[SIGNATURE PAGE TO OPERATING AGREEMENT OF
CHILES OFFSHORE LLC]
/s/ANTHONY R. JONES/SUSAN F. JONES
----------------------------------------
Name: Anthony R and Susan F. Jones,
as joint tenants with rights
of survivorship
/s/TIMOTHY J. McKEAND/FREDA B. McKEAND
----------------------------------------
Name: Timothy J. and Freda B. McKeand,
as tenants in common
/s/ANDREW H. RICHARDS
----------------------------------------
Name: Andrew H. Richards
/s/MILTON R. ROSE/JILL O. ROSE
----------------------------------------
Name: Milton R. and Jill O. Rose,
as tenants in common
/s/ANDREW STRACHAN
----------------------------------------
Name: Andrew Strachan
/s/RANDALL BLANK
----------------------------------------
Name: Randall Blank
/s/CHRISTINE BLANK
----------------------------------------
Name: Christine Blank
63
<PAGE>
[SIGNATURE PAGE TO OPERATING AGREEMENT OF
CHILES OFFSHORE LLC]
SOUTH STREET CAPITAL, L.P.
By SOUTH STREET INVESTMENTS, INC.,
as General Partner
By:/s/CHRISTINE W. JENKINS
----------------------------------------
Name: Christine W. Jenkins
Title: Secretary
/s/MATTHEW WEBER
----------------------------------------
Name: Matthew Weber
WHEATLEY FOREIGN PARTNERS L.P.
By WHEATLEY PARTNERS, LLC, as
General Partner
By:/s/BARRY K. FINGERHUT
----------------------------------------
Name: Barry K. Fingerhut
Title: Executive Vice President
WHEATLEY PARTNERS L.P.
By WHEATLEY PARTNERS, LLC, as
General Partner
By:/s/BARRY K. FINGERHUT
----------------------------------------
Name: Barry K. Fingerhut
Title: Executive Vice President
64
<PAGE>
[SIGNATURE PAGE TO OPERATING AGREEMENT OF
CHILES OFFSHORE LLC]
WINDCREST PARTNERS
By:/s/ROBERT J. GELLERT
----------------------------------------
Name: Robert J. Gellert
Title: General Partner
WOODLAND PARTNERS
By:/s/BARRY RUBENSTEIN
----------------------------------------
Name: Barry Rubenstein
Title: General Partner
/s/LEO ARNABOLDI JR.
----------------------------------------
Name: Leo Arnaboldi, by Leo
Arnaboldi Jr. as Attorney-
in-fact
65
Exhibit 10.39
SEACOR SMIT INC.
RESTRICTED STOCK GRANT AGREEMENT
RESTRICTED STOCK GRANT AGREEMENT (the "Agreement"), dated this day
February 5, 1998 between SEACOR SMIT Inc., a Delaware corporation (the
"Company"), and Charles Fabrikant, residing at 40 East 78th Street Apt. # 4-H
New York, NY 10021 (the "Grantee").
W I T N E S S E T H :
WHEREAS, Grantee is an officer or key employee of the Company; and
WHEREAS, the Company desires to issue and grant to the Grantee, and the
Grantee desires to accept, shares of the Company's Common Stock, $0.01 par value
("Common Shares"), upon the terms and subject to the conditions herein set
forth;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the parties hereto, intending to be legally bound,
hereby agree as follows:
1. Grant of Restricted Stock. In recognition of the Grantee's commitment to the
continued growth and financial success of the Company, the Company hereby grants
to the Grantee 3,510 (restricted) Common Shares (the "Restricted Stock").
Simultaneously with the execution and delivery of this Agreement by the parties
hereto, the Company shall deliver to the Grantee a stock certificate (or
certificates) representing the shares of the Restricted Stock, which
certificate(s) shall (a) be registered on the Company's stock transfer books in
the name of the Grantee and (b) bear (in addition to any other legends required
by applicable law) the following legend (or a legend substantially similar
thereto):
"This certificate and the shares represented hereby are
subject to, and shall be transferable only in accordance with,
the provisions of a certain Restricted Stock Grant Agreement
dated February 5, 1998 between Charles Fabrikant and SEACOR
SMIT Inc."
2. Removal of Restricted Stock Legend. Promptly after shares of the Restricted
Stock issued to the Grantee hereunder have become vested, the Company shall
cause the transfer agent for the Common Shares to issue separate Certificates
representing a) the Common Shares which are free of restrictions and without the
legend referred to above and b) the remaining unvested Common Shares bearing the
legend referred to above.
3. Vesting.
(a) Beneficial ownership of the restricted stock shall vest in the Grantee
as follows:
Date Number of shares
------------------------------- ----------------------------------
January 31, 1999 1,170
January 31, 2000 1,170
January 31, 2001 1,170
Notwithstanding the foregoing, 100% beneficial ownership of the aforementioned
shares of Restricted Stock shall vest immediately, without any action on the
part of the Company (or its successor as applicable) or the Grantee, if any of
the following events occur:
<PAGE>
(i) the death of the Grantee;
(ii) the "Disability" (as hereinafter defined) of the
Grantee;
(iii) the termination of the Grantee's employment with the
Company or any of its subsidiaries without "Cause"
(as hereinafter defined); and
(iv) the occurrence of a "Change-in-Control" of the
Company (as hereinafter defined).
(b) For all purposes of this Agreement, the following terms shall have
the following respective meanings:
(i) "Disability" shall mean the Grantee's inability to
perform substantially all of his duties and
responsibilities to the Company and/or any of its
subsidiaries by reason of a physical or mental
disability or infirmity (A) for a continuous period
of six (6) months or (B) at such earlier time as the
Grantee submits medical evidence satisfactory to the
Company that the Grantee has a physical or mental
disability or infirmity that will likely prevent the
Grantee from substantially performing his duties and
responsibilities for six (6) months or longer;
(ii) "Cause" shall mean (A) the Grantee shall have
willfully failed to perform any of his material
obligations or duties required to be performed by
him pursuant to the terms of his employment as an
officer or key employee of the Company; or (B) the
Grantee shall have committed an act of fraud, theft
or dishonesty which is reasonably likely to result
in financial harm to the Company and/or any of its
subsidiaries; or (C) the Grantee shall be convicted
of (or plead nolo contendere to) any felony or
misdemeanor involving moral turpitude, which
misdemeanor might, in the reasonable judgment of a
majority of the Board of Directors of the Company,
cause embarrassment to the Company; provided,
however, that the Grantee shall not be deemed to
have been terminated for Cause unless and until
there shall have been delivered to him a copy of a
resolution duly adopted by a majority of the Board
of Directors of the Company at a meeting of such
Board of Directors duly called and held for the
purpose of determining whether, in the good faith
judgment of a majority of the Board of Directors of
the Company, the Company has "cause" to terminate
the Grantee's employment pursuant to these
provisions; and
(iii) "Change-in-Control" of the Company shall be deemed
to have occurred if (A) a change in control of the
direction and administration of the Company's
businesses of a nature that would be required to be
reported in response to Item 6(e) of Schedule 14A of
Regulation 14A (or any successor rule or regulation)
promulgated under the Securities Exchange Act of
1934, as amended (the "Exchange Act"); (B) any
"person", (as such term is used in Sections 13(d)
and 14(d)(2) of the Exchange Act (but excluding any
employee benefit plan of the Company), is or becomes
the "beneficial owner" (as defined in Rule 13d-3
under the Exchange Act), directly or indirectly, of
securities of the Company representing 50% or more
of the combined voting power of the Company's
outstanding securities then entitled ordinarily (and
apart from rights accruing under special
circumstances) to vote generally for the election of
directors; (C) during any period of two consecutive
years, the individuals who at the beginning of such
period constitute the Board of Directors (the
"Board") cease for any reason to constitute at least
a majority thereof; (D) the Board shall approve a
sale of all or substantially all of the assets of
the Company and its subsidiaries (taken as a whole);
<PAGE>
or (E) the Board shall approve any merger,
consolidation, or like business combination
transaction or reorganization of the Company, the
consummation of which would result in the occurrence
of any event described in clauses (A) through (D)
above.
4. Non-Transferability of Restricted Stock. Except as expressly provided in
Section 3 hereof, prior to the applicable Vesting Dates, none of the then
unvested shares of the Restricted Stock (nor any interest therein) may be sold,
assigned, transferred, pledged, hypothecated or otherwise disposed of, shall not
be assignable by operation of law and shall not be subject to execution,
attachment or similar process. Any attempted sale, assignment, transfer, pledge,
hypothecation or other disposition of any unvested shares of the Restricted
Stock contrary to the provisions hereof shall be null and void and without
effect.
5. Forfeiture.
(a) Upon the Grantee's voluntary termination of his employment with the
Company or any of its subsidiaries, or upon the termination of the Grantee's
employment with the Company or any of its subsidiaries for Cause, which event
occurs, in either case, on a date prior to the Vesting Dates, beneficial
ownership of the remaining unvested shares of the Restricted Stock shall not
vest in the Grantee and all such unvested shares of the Restricted Stock shall
be deemed to have been forfeited by the Grantee to the Company (a "Forfeiture")
without any consideration therefor. A termination of employment shall not be
deemed to occur by reason of the transfer of an employee from employment by the
Company to employment by a subsidiary thereof (or a transfer of employment from
one subsidiary of the Company to another subsidiary of the Company), or the
relocation of the Grantee's employment with the Company (or a subsidiary of the
Company) to a location which is more than 50 miles from the Grantee's current
residence.
(b) Upon the occurrence of a Forfeiture, the Grantee shall, within ten
(10) business days thereafter, transfer and deliver to the Company all stock
certificates representing all shares of the Restricted Stock, together with
stock powers duly executed in blank by the Grantee. From and after the
occurrence of such Forfeiture, the Grantee shall have no rights to or interests
in any shares of the forfeited Restricted Stock or under this Agreement (other
than the obligation to transfer and deliver all stock certificates representing
all shares of the Restricted Stock pursuant to this Section 5(b)).
6. Representations and Warranties of Grantee. The Grantee hereby
represents and warrants to the Company as follows:
(a) The Grantee has the legal right and capacity to enter into this
Agreement and he fully understands the terms and conditions of this Agreement.
(b) The Grantee is acquiring the Restricted Stock for investment
purposes only and not with a view to, or in connection with, the public
distribution thereof in violation of the Securities Act.
(c) The Grantee understands that none of the shares of the Restricted
Stock has been registered under the Securities Act and agrees that none of the
shares of the Restricted Stock may be offered, sold, assigned, transferred,
pledged, hypothecated or otherwise disposed of except in compliance with this
Agreement and the Securities Act or an applicable exemption from the
registration requirements of the Securities Act and applicable state securities
or "blue sky" laws; and he understands that the Company has no obligation to
cause or to refrain from causing any of the shares of the Restricted Stock or
any other shares of its capital stock to be registered under the Securities Act
or to comply with any exemption under the Securities Act which would permit the
shares of the Restricted Stock to be sold or otherwise transferred by the
Grantee.
<PAGE>
7. Notices. Any notice required or permitted hereunder shall be deemed given
only when delivered personally or when deposited in a United States Post Office
as certified mail, postage prepaid, addressed, as appropriate, if to the
Grantee, at his address set forth above or such other address as he may
designate in writing to the Company, and, if to the Company, at 11200
Westheimer, Suite 850, Houston, Texas 77042 or such other address as the Company
may designate in writing to the Grantee.
8. Failure to Enforce Not a Waiver. The failure of the Company to enforce at any
time any provision of this Agreement shall in no way be construed to be a waiver
of such provision or of any other provision hereof.
9. Amendment: Termination. This Agreement may not be amended or terminated
unless such amendment or termination is in writing and duly executed by each of
the parties hereto.
10. Counterparts. This Agreement may be executed in counterparts, each of which
shall be deemed to be an original, but all of which together shall constitute
but one and the same instrument.
11. Benefit and Binding Effect. This Agreement shall be binding upon and shall
inure to the benefit of the Company, its successors and assigns, and the
Grantee, his executors, administrators, personal representatives and heirs. In
the event that any part of this Agreement shall be held to be invalid or
unenforceable, the remaining parts hereof shall nevertheless continue to be
valid and enforceable as though the invalid portions were not a part hereof.
12. Entire Agreement. This Agreement contains the entire understanding of the
parties hereto with respect to the subject matter hereof and supersedes all
prior agreements, discussions and understandings with respect to such subject
matter.
13. Governing Law. This Agreement shall be governed by, and construed and
enforced in accordance with, the laws of the State of New York, without giving
effect to principles and provisions thereof relating to conflict or choice of
laws.
IN WITNESS WHEREOF, each of the parties hereto have duly executed this
Agreement on the date and year first above written.
SEACOR SMIT INC.
By: /s/ Randall Blank
----------------------------
Name: Randall Blank
Title: Executive Vice President
GRANTEE
/s/ Charles Fabrikant
--------------------------------
Charles Fabrikant
Exhibit 10.40
SEACOR SMIT INC.
RESTRICTED STOCK GRANT AGREEMENT
RESTRICTED STOCK GRANT AGREEMENT (the "Agreement"), dated this day,
February 5, 1998 between SEACOR SMIT Inc., a Delaware corporation (the
"Company"), and Charles Fabrikant, residing at 40 East 78th Street Apt. # 4-H
New York, NY 10021 (the "Grantee").
W I T N E S S E T H :
WHEREAS, Grantee is an officer or key employee of the Company; and
WHEREAS, the Company desires to issue and grant to the Grantee, and the
Grantee desires to accept, shares of the Company's Common Stock, $0.01 par value
("Common Shares"), upon the terms and subject to the conditions herein set
forth;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the parties hereto, intending to be legally bound,
hereby agree as follows:
1. Grant of Restricted Stock. In recognition of the Grantee's commitment to the
continued growth and financial success of the Company, the Company hereby grants
to the Grantee 2,193 (restricted) Common Shares (the "Restricted Stock").
Simultaneously with the execution and delivery of this Agreement by the parties
hereto, the Company shall deliver to the Grantee a stock certificate (or
certificates) representing the shares of the Restricted Stock, which
certificate(s) shall (a) be registered on the Company's stock transfer books in
the name of the Grantee and (b) bear (in addition to any other legends required
by applicable law) the following legend (or a legend substantially similar
thereto):
"This certificate and the shares represented hereby are
subject to, and shall be transferable only in accordance with,
the provisions of a certain Restricted Stock Grant Agreement
dated February 5, 1998 between Charles Fabrikant and SEACOR
SMIT Inc."
2. Removal of Restricted Stock Legend. Promptly after shares of the Restricted
Stock issued to the Grantee hereunder have become vested, the Company shall
cause the transfer agent for the Common Shares to issue separate Certificates
representing a) the Common Shares which are free of restrictions and without the
legend referred to above and b) the remaining unvested Common Shares bearing the
legend referred to above.
3. Vesting.
(a) Beneficial ownership of the restricted stock shall vest on January
31, 1999.
Notwithstanding the foregoing, 100% beneficial ownership of the aforementioned
shares of Restricted Stock shall vest immediately, without any action on the
part of the Company (or its successor as applicable) or the Grantee, if any of
the following events occur:
(i) the death of the Grantee;
(ii) the "Disability" (as hereinafter defined) of the
Grantee;
(iii) the termination of the Grantee's employment with the
Company or any of its subsidiaries without "Cause"
(as hereinafter defined); and
(iv) the occurrence of a "Change-in-Control" of the
Company (as hereinafter defined).
<PAGE>
(b) For all purposes of this Agreement, the following terms shall have
the following respective meanings:
(i) "Disability" shall mean the Grantee's inability to
perform substantially all of his duties and
responsibilities to the Company and/or any of its
subsidiaries by reason of a physical or mental
disability or infirmity (A) for a continuous period
of six (6) months or (B) at such earlier time as the
Grantee submits medical evidence satisfactory to the
Company that the Grantee has a physical or mental
disability or infirmity that will likely prevent the
Grantee from substantially performing his duties and
responsibilities for six (6) months or longer;
(ii) "Cause" shall mean (A) the Grantee shall have
willfully failed to perform any of his material
obligations or duties required to be performed by
him pursuant to the terms of his employment as an
officer or key employee of the Company; or (B) the
Grantee shall have committed an act of fraud, theft
or dishonesty which is reasonably likely to result
in financial harm to the Company and/or any of its
subsidiaries; or (C) the Grantee shall be convicted
of (or plead nolo contendere to) any felony or
misdemeanor involving moral turpitude, which
misdemeanor might, in the reasonable judgment of a
majority of the Board of Directors of the Company,
cause embarrassment to the Company; provided,
however, that the Grantee shall not be deemed to
have been terminated for Cause unless and until
there shall have been delivered to him a copy of a
resolution duly adopted by a majority of the Board
of Directors of the Company at a meeting of such
Board of Directors duly called and held for the
purpose of determining whether, in the good faith
judgment of a majority of the Board of Directors of
the Company, the Company has "cause" to terminate
the Grantee's employment pursuant to these
provisions; and
(iii) "Change-in-Control" of the Company shall be deemed
to have occurred if (A) a change in control of the
direction and administration of the Company's
businesses of a nature that would be required to be
reported in response to Item 6(e) of Schedule 14A of
Regulation 14A (or any successor rule or regulation)
promulgated under the Securities Exchange Act of
1934, as amended (the "Exchange Act"); (B) any
"person", (as such term is used in Sections 13(d)
and 14(d)(2) of the Exchange Act (but excluding any
employee benefit plan of the Company), is or becomes
the "beneficial owner" (as defined in Rule 13d-3
under the Exchange Act), directly or indirectly, of
securities of the Company representing 50% or more
of the combined voting power of the Company's
outstanding securities then entitled ordinarily (and
apart from rights accruing under special
circumstances) to vote generally for the election of
directors; (C) during any period of two consecutive
years, the individuals who at the beginning of such
period constitute the Board of Directors (the
"Board") cease for any reason to constitute at least
a majority thereof; (D) the Board shall approve a
sale of all or substantially all of the assets of
the Company and its subsidiaries (taken as a whole);
or (E) the Board shall approve any merger,
consolidation, or like business combination
transaction or reorganization of the Company, the
consummation of which would result in the occurrence
of any event described in clauses (A) through (D)
above.
4. Non-Transferability of Restricted Stock. Except as expressly provided in
Section 3 hereof, prior to the applicable Vesting Dates, none of the then
unvested shares of the Restricted Stock (nor any interest therein) may be sold,
assigned, transferred, pledged, hypothecated or otherwise disposed of, shall not
<PAGE>
be assignable by operation of law and shall not be subject to execution,
attachment or similar process. Any attempted sale, assignment, transfer, pledge,
hypothecation or other disposition of any unvested shares of the Restricted
Stock contrary to the provisions hereof shall be null and void and without
effect.
5. Forfeiture.
(a) Upon the Grantee's voluntary termination of his employment with the
Company or any of its subsidiaries, or upon the termination of the Grantee's
employment with the Company or any of its subsidiaries for Cause, which event
occurs, in either case, on a date prior to the Vesting Dates, beneficial
ownership of the remaining unvested shares of the Restricted Stock shall not
vest in the Grantee and all such unvested shares of the Restricted Stock shall
be deemed to have been forfeited by the Grantee to the Company (a "Forfeiture")
without any consideration therefor. A termination of employment shall not be
deemed to occur by reason of the transfer of an employee from employment by the
Company to employment by a subsidiary thereof (or a transfer of employment from
one subsidiary of the Company to another subsidiary of the Company), or the
relocation of the Grantee's employment with the Company (or a subsidiary of the
Company) to a location which is more than 50 miles from the Grantee's current
residence.
(b) Upon the occurrence of a Forfeiture, the Grantee shall, within ten
(10) business days thereafter, transfer and deliver to the Company all stock
certificates representing all shares of the Restricted Stock, together with
stock powers duly executed in blank by the Grantee. From and after the
occurrence of such Forfeiture, the Grantee shall have no rights to or interests
in any shares of the forfeited Restricted Stock or under this Agreement (other
than the obligation to transfer and deliver all stock certificates representing
all shares of the Restricted Stock pursuant to this Section 5(b)).
6. Representations and Warranties of Grantee. The Grantee hereby
represents and warrants to the Company as follows:
(a) The Grantee has the legal right and capacity to enter into this
Agreement and he fully understands the terms and conditions of this Agreement.
(b) The Grantee is acquiring the Restricted Stock for investment
purposes only and not with a view to, or in connection with, the public
distribution thereof in violation of the Securities Act.
(c) The Grantee understands that none of the shares of the Restricted
Stock has been registered under the Securities Act and agrees that none of the
shares of the Restricted Stock may be offered, sold, assigned, transferred,
pledged, hypothecated or otherwise disposed of except in compliance with this
Agreement and the Securities Act or an applicable exemption from the
registration requirements of the Securities Act and applicable state securities
or "blue sky" laws; and he understands that the Company has no obligation to
cause or to refrain from causing any of the shares of the Restricted Stock or
any other shares of its capital stock to be registered under the Securities Act
or to comply with any exemption under the Securities Act which would permit the
shares of the Restricted Stock to be sold or otherwise transferred by the
Grantee.
7. Notices. Any notice required or permitted hereunder shall be deemed given
only when delivered personally or when deposited in a United States Post Office
as certified mail, postage prepaid, addressed, as appropriate, if to the
Grantee, at his address set forth above or such other address as he may
designate in writing to the Company, and, if to the Company, at 11200
Westheimer, Suite 850, Houston, Texas 77042 or such other address as the Company
may designate in writing to the Grantee.
<PAGE>
8. Failure to Enforce Not a Waiver. The failure of the Company to enforce at any
time any provision of this Agreement shall in no way be construed to be a waiver
of such provision or of any other provision hereof.
9. Amendment: Termination. This Agreement may not be amended or terminated
unless such amendment or termination is in writing and duly executed by each of
the parties hereto.
10. Counterparts. This Agreement may be executed in counterparts, each of which
shall be deemed to be an original, but all of which together shall constitute
but one and the same instrument.
11. Benefit and Binding Effect. This Agreement shall be binding upon and shall
inure to the benefit of the Company, its successors and assigns, and the
Grantee, his executors, administrators, personal representatives and heirs. In
the event that any part of this Agreement shall be held to be invalid or
unenforceable, the remaining parts hereof shall nevertheless continue to be
valid and enforceable as though the invalid portions were not a part hereof.
12. Entire Agreement. This Agreement contains the entire understanding of the
parties hereto with respect to the subject matter hereof and supersedes all
prior agreements, discussions and understandings with respect to such subject
matter.
13. Governing Law. This Agreement shall be governed by, and construed and
enforced in accordance with, the laws of the State of New York, without giving
effect to principles and provisions thereof relating to conflict or choice of
laws.
IN WITNESS WHEREOF, each of the parties hereto have duly executed this
Agreement on the date and year first above written.
SEACOR SMIT INC.
By: /s/ Randall Blank
------------------------------
Name: Randall Blank
Title: Executive Vice President
GRANTEE
/s/ Charles Fabrikant
----------------------------------
Charles Fabrikant
Exhibit 10.41
SEACOR SMIT INC.
RESTRICTED STOCK GRANT AGREEMENT
RESTRICTED STOCK GRANT AGREEMENT (the "Agreement"), dated this day
February 5, 1998 between SEACOR SMIT Inc., a Delaware corporation (the
"Company"), and Randall Blank, residing at 400 Pelham Manor Road Pelham Manor,
NY 10803 (the "Grantee").
W I T N E S S E T H :
WHEREAS, Grantee is an officer or key employee of the Company; and
WHEREAS, the Company desires to issue and grant to the Grantee, and the
Grantee desires to accept, shares of the Company's Common Stock, $0.01 par value
("Common Shares"), upon the terms and subject to the conditions herein set
forth;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the parties hereto, intending to be legally bound,
hereby agree as follows:
1. Grant of Restricted Stock. In recognition of the Grantee's commitment to the
continued growth and financial success of the Company, the Company hereby grants
to the Grantee 1,755 (restricted) Common Shares (the "Restricted Stock").
Simultaneously with the execution and delivery of this Agreement by the parties
hereto, the Company shall deliver to the Grantee a stock certificate (or
certificates) representing the shares of the Restricted Stock, which
certificate(s) shall (a) be registered on the Company's stock transfer books in
the name of the Grantee and (b) bear (in addition to any other legends required
by applicable law) the following legend (or a legend substantially similar
thereto):
"This certificate and the shares represented hereby are
subject to, and shall be transferable only in accordance with,
the provisions of a certain Restricted Stock Grant Agreement
dated February 5, 1998 between Randall Blank and SEACOR SMIT
Inc."
2. Removal of Restricted Stock Legend. Promptly after shares of the Restricted
Stock issued to the Grantee hereunder have become vested, the Company shall
cause the transfer agent for the Common Shares to issue separate Certificates
representing a) the Common Shares which are free of restrictions and without the
legend referred to above and b) the remaining unvested Common Shares bearing the
legend referred to above.
3. Vesting.
(a) Beneficial ownership of the restricted stock shall vest in the Grantee
as follows:
Date Number of shares
------------------------------- ----------------------------------
January 31, 1999 585
January 31, 2000 585
January 31, 2001 585
Notwithstanding the foregoing, 100% beneficial ownership of the aforementioned
shares of Restricted Stock shall vest immediately, without any action on the
part of the Company (or its successor as applicable) or the Grantee, if any of
the following events occur:
(i) the death of the Grantee;
(ii) the "Disability" (as hereinafter defined) of the
Grantee;
<PAGE>
(iii) the termination of the Grantee's employment with the
Company or any of its subsidiaries without "Cause"
(as hereinafter defined); and
(iv) the occurrence of a "Change-in-Control" of the
Company (as hereinafter defined).
(b) For all purposes of this Agreement, the following terms shall have
the following respective meanings:
(i) "Disability" shall mean the Grantee's inability to
perform substantially all of his duties and
responsibilities to the Company and/or any of its
subsidiaries by reason of a physical or mental
disability or infirmity (A) for a continuous period
of six (6) months or (B) at such earlier time as the
Grantee submits medical evidence satisfactory to the
Company that the Grantee has a physical or mental
disability or infirmity that will likely prevent the
Grantee from substantially performing his duties and
responsibilities for six (6) months or longer;
(ii) "Cause" shall mean (A) the Grantee shall have
willfully failed to perform any of his material
obligations or duties required to be performed by
him pursuant to the terms of his employment as an
officer or key employee of the Company; or (B) the
Grantee shall have committed an act of fraud, theft
or dishonesty which is reasonably likely to result
in financial harm to the Company and/or any of its
subsidiaries; or (C) the Grantee shall be convicted
of (or plead nolo contendere to) any felony or
misdemeanor involving moral turpitude, which
misdemeanor might, in the reasonable judgment of a
majority of the Board of Directors of the Company,
cause embarrassment to the Company; provided,
however, that the Grantee shall not be deemed to
have been terminated for Cause unless and until
there shall have been delivered to him a copy of a
resolution duly adopted by a majority of the Board
of Directors of the Company at a meeting of such
Board of Directors duly called and held for the
purpose of determining whether, in the good faith
judgment of a majority of the Board of Directors of
the Company, the Company has "cause" to terminate
the Grantee's employment pursuant to these
provisions; and
(iii) "Change-in-Control" of the Company shall be deemed
to have occurred if (A) a change in control of the
direction and administration of the Company's
businesses of a nature that would be required to be
reported in response to Item 6(e) of Schedule 14A of
Regulation 14A (or any successor rule or regulation)
promulgated under the Securities Exchange Act of
1934, as amended (the "Exchange Act"); (B) any
"person", (as such term is used in Sections 13(d)
and 14(d)(2) of the Exchange Act (but excluding any
employee benefit plan of the Company), is or becomes
the "beneficial owner" (as defined in Rule 13d-3
under the Exchange Act), directly or indirectly, of
securities of the Company representing 50% or more
of the combined voting power of the Company's
outstanding securities then entitled ordinarily (and
apart from rights accruing under special
circumstances) to vote generally for the election of
directors; (C) during any period of two consecutive
years, the individuals who at the beginning of such
period constitute the Board of Directors (the
"Board") cease for any reason to constitute at least
a majority thereof; (D) the Board shall approve a
sale of all or substantially all of the assets of
the Company and its subsidiaries (taken as a whole);
or (E) the Board shall approve any merger,
consolidation, or like business combination
transaction or reorganization of the Company, the
consummation of which would result in the occurrence
of any event described in clauses (A) through (D)
above.
4. Non-Transferability of Restricted Stock. Except as expressly provided in
Section 3 hereof, prior to the applicable Vesting Dates, none of the then
unvested shares of the Restricted Stock (nor any interest therein) may be sold,
assigned, transferred, pledged, hypothecated or otherwise disposed of, shall not
<PAGE>
be assignable by operation of law and shall not be subject to execution,
attachment or similar process. Any attempted sale, assignment, transfer, pledge,
hypothecation or other disposition of any unvested shares of the Restricted
Stock contrary to the provisions hereof shall be null and void and without
effect.
5. Forfeiture.
(a) Upon the Grantee's voluntary termination of his employment with the
Company or any of its subsidiaries, or upon the termination of the Grantee's
employment with the Company or any of its subsidiaries for Cause, which event
occurs, in either case, on a date prior to the Vesting Dates, beneficial
ownership of the remaining unvested shares of the Restricted Stock shall not
vest in the Grantee and all such unvested shares of the Restricted Stock shall
be deemed to have been forfeited by the Grantee to the Company (a "Forfeiture")
without any consideration therefor. A termination of employment shall not be
deemed to occur by reason of the transfer of an employee from employment by the
Company to employment by a subsidiary thereof (or a transfer of employment from
one subsidiary of the Company to another subsidiary of the Company), or the
relocation of the Grantee's employment with the Company (or a subsidiary of the
Company) to a location which is more than 50 miles from the Grantee's current
residence.
(b) Upon the occurrence of a Forfeiture, the Grantee shall, within ten
(10) business days thereafter, transfer and deliver to the Company all stock
certificates representing all shares of the Restricted Stock, together with
stock powers duly executed in blank by the Grantee. From and after the
occurrence of such Forfeiture, the Grantee shall have no rights to or interests
in any shares of the forfeited Restricted Stock or under this Agreement (other
than the obligation to transfer and deliver all stock certificates representing
all shares of the Restricted Stock pursuant to this Section 5(b)).
6. Representations and Warranties of Grantee. The Grantee hereby represents and
warrants to the Company as follows:
(a) The Grantee has the legal right and capacity to enter into this
Agreement and he fully understands the terms and conditions of this Agreement.
(b) The Grantee is acquiring the Restricted Stock for investment
purposes only and not with a view to, or in connection with, the public
distribution thereof in violation of the Securities Act.
(c) The Grantee understands that none of the shares of the Restricted
Stock has been registered under the Securities Act and agrees that none of the
shares of the Restricted Stock may be offered, sold, assigned, transferred,
pledged, hypothecated or otherwise disposed of except in compliance with this
Agreement and the Securities Act or an applicable exemption from the
registration requirements of the Securities Act and applicable state securities
or "blue sky" laws; and he understands that the Company has no obligation to
cause or to refrain from causing any of the shares of the Restricted Stock or
any other shares of its capital stock to be registered under the Securities Act
or to comply with any exemption under the Securities Act which would permit the
shares of the Restricted Stock to be sold or otherwise transferred by the
Grantee.
7. Notices. Any notice required or permitted hereunder shall be deemed given
only when delivered personally or when deposited in a United States Post Office
as certified mail, postage prepaid, addressed, as appropriate, if to the
Grantee, at his address set forth above or such other address as he may
designate in writing to the Company, and, if to the Company, at 11200
Westheimer, Suite 850, Houston, Texas 77042 or such other address as the Company
may designate in writing to the Grantee.
8. Failure to Enforce Not a Waiver. The failure of the Company to enforce at any
time any provision of this Agreement shall in no way be construed to be a waiver
of such provision or of any other provision hereof.
9. Amendment: Termination. This Agreement may not be amended or terminated
unless such amendment or termination is in writing and duly executed by each of
the parties hereto.
<PAGE>
10. Counterparts. This Agreement may be executed in counterparts, each of which
shall be deemed to be an original, but all of which together shall constitute
but one and the same instrument.
11. Benefit and Binding Effect. This Agreement shall be binding upon and shall
inure to the benefit of the Company, its successors and assigns, and the
Grantee, his executors, administrators, personal representatives and heirs. In
the event that any part of this Agreement shall be held to be invalid or
unenforceable, the remaining parts hereof shall nevertheless continue to be
valid and enforceable as though the invalid portions were not a part hereof.
12. Entire Agreement. This Agreement contains the entire understanding of the
parties hereto with respect to the subject matter hereof and supersedes all
prior agreements, discussions and understandings with respect to such subject
matter.
13. Governing Law. This Agreement shall be governed by, and construed and
enforced in accordance with, the laws of the State of New York, without giving
effect to principles and provisions thereof relating to conflict or choice of
laws.
IN WITNESS WHEREOF, each of the parties hereto have duly executed this
Agreement on the date and year first above written.
SEACOR SMIT INC.
By: /s/ Charles Fabrikant
-----------------------------
Name: Charles Fabrikant
Title: President
GRANTEE
/s/ Randall Blank
---------------------------------
Randall Blank
Exhibit 10.42
SEACOR SMIT INC.
RESTRICTED STOCK GRANT AGREEMENT
RESTRICTED STOCK GRANT AGREEMENT (the "Agreement"), dated this day,
February 5, 1998 between SEACOR SMIT Inc., a Delaware corporation (the
"Company"), and Randall Blank, residing at 400 Pelham Manor Road Pelham Manor,
NY 10803 (the "Grantee").
W I T N E S S E T H :
WHEREAS, Grantee is an officer or key employee of the Company; and
WHEREAS, the Company desires to issue and grant to the Grantee, and the
Grantee desires to accept, shares of the Company's Common Stock, $0.01 par value
("Common Shares"), upon the terms and subject to the conditions herein set
forth;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the parties hereto, intending to be legally bound,
hereby agree as follows:
1. Grant of Restricted Stock. In recognition of the Grantee's commitment to the
continued growth and financial success of the Company, the Company hereby grants
to the Grantee 1,425 (restricted) Common Shares (the "Restricted Stock").
Simultaneously with the execution and delivery of this Agreement by the parties
hereto, the Company shall deliver to the Grantee a stock certificate (or
certificates) representing the shares of the Restricted Stock, which
certificate(s) shall (a) be registered on the Company's stock transfer books in
the name of the Grantee and (b) bear (in addition to any other legends required
by applicable law) the following legend (or a legend substantially similar
thereto):
"This certificate and the shares represented hereby are
subject to, and shall be transferable only in accordance with,
the provisions of a certain Restricted Stock Grant Agreement
dated February 5, 1998 between Randall Blank and SEACOR SMIT
Inc."
2. Removal of Restricted Stock Legend. Promptly after shares of the Restricted
Stock issued to the Grantee hereunder have become vested, the Company shall
cause the transfer agent for the Common Shares to issue separate Certificates
representing a) the Common Shares which are free of restrictions and without the
legend referred to above and b) the remaining unvested Common Shares bearing the
legend referred to above.
3. Vesting.
(a) Beneficial ownership of the restricted stock shall vest on January
31, 1999.
Notwithstanding the foregoing, 100% beneficial ownership of the aforementioned
shares of Restricted Stock shall vest immediately, without any action on the
part of the Company (or its successor as applicable) or the Grantee, if any of
the following events occur:
(i) the death of the Grantee;
(ii) the "Disability" (as hereinafter defined) of the
Grantee;
(iii) the termination of the Grantee's employment with the
Company or any of its subsidiaries without "Cause"
(as hereinafter defined); and
(iv) the occurrence of a "Change-in-Control" of the
Company (as hereinafter defined).
<PAGE>
(b) For all purposes of this Agreement, the following terms shall have
the following respective meanings:
(i) "Disability" shall mean the Grantee's inability to
perform substantially all of his duties and
responsibilities to the Company and/or any of its
subsidiaries by reason of a physical or mental
disability or infirmity (A) for a continuous period
of six (6) months or (B) at such earlier time as the
Grantee submits medical evidence satisfactory to the
Company that the Grantee has a physical or mental
disability or infirmity that will likely prevent the
Grantee from substantially performing his duties and
responsibilities for six (6) months or longer;
(ii) "Cause" shall mean (A) the Grantee shall have
willfully failed to perform any of his material
obligations or duties required to be performed by
him pursuant to the terms of his employment as an
officer or key employee of the Company; or (B) the
Grantee shall have committed an act of fraud, theft
or dishonesty which is reasonably likely to result
in financial harm to the Company and/or any of its
subsidiaries; or (C) the Grantee shall be convicted
of (or plead nolo contendere to) any felony or
misdemeanor involving moral turpitude, which
misdemeanor might, in the reasonable judgment of a
majority of the Board of Directors of the Company,
cause embarrassment to the Company; provided,
however, that the Grantee shall not be deemed to
have been terminated for Cause unless and until
there shall have been delivered to him a copy of a
resolution duly adopted by a majority of the Board
of Directors of the Company at a meeting of such
Board of Directors duly called and held for the
purpose of determining whether, in the good faith
judgment of a majority of the Board of Directors of
the Company, the Company has "cause" to terminate
the Grantee's employment pursuant to these
provisions; and
(iii) "Change-in-Control" of the Company shall be deemed
to have occurred if (A) a change in control of the
direction and administration of the Company's
businesses of a nature that would be required to be
reported in response to Item 6(e) of Schedule 14A of
Regulation 14A (or any successor rule or regulation)
promulgated under the Securities Exchange Act of
1934, as amended (the "Exchange Act"); (B) any
"person", (as such term is used in Sections 13(d)
and 14(d)(2) of the Exchange Act (but excluding any
employee benefit plan of the Company), is or becomes
the "beneficial owner" (as defined in Rule 13d-3
under the Exchange Act), directly or indirectly, of
securities of the Company representing 50% or more
of the combined voting power of the Company's
outstanding securities then entitled ordinarily (and
apart from rights accruing under special
circumstances) to vote generally for the election of
directors; (C) during any period of two consecutive
years, the individuals who at the beginning of such
period constitute the Board of Directors (the
"Board") cease for any reason to constitute at least
a majority thereof; (D) the Board shall approve a
sale of all or substantially all of the assets of
the Company and its subsidiaries (taken as a whole);
or (E) the Board shall approve any merger,
consolidation, or like business combination
transaction or reorganization of the Company, the
consummation of which would result in the occurrence
of any event described in clauses (A) through (D)
above.
4. Non-Transferability of Restricted Stock. Except as expressly provided in
Section 3 hereof, prior to the applicable Vesting Dates, none of the then
unvested shares of the Restricted Stock (nor any interest therein) may be sold,
assigned, transferred, pledged, hypothecated or otherwise disposed of, shall not
<PAGE>
be assignable by operation of law and shall not be subject to execution,
attachment or similar process. Any attempted sale, assignment, transfer, pledge,
hypothecation or other disposition of any unvested shares of the Restricted
Stock contrary to the provisions hereof shall be null and void and without
effect.
5. Forfeiture.
(a) Upon the Grantee's voluntary termination of his employment with the
Company or any of its subsidiaries, or upon the termination of the Grantee's
employment with the Company or any of its subsidiaries for Cause, which event
occurs, in either case, on a date prior to the Vesting Dates, beneficial
ownership of the remaining unvested shares of the Restricted Stock shall not
vest in the Grantee and all such unvested shares of the Restricted Stock shall
be deemed to have been forfeited by the Grantee to the Company (a "Forfeiture")
without any consideration therefor. A termination of employment shall not be
deemed to occur by reason of the transfer of an employee from employment by the
Company to employment by a subsidiary thereof (or a transfer of employment from
one subsidiary of the Company to another subsidiary of the Company), or the
relocation of the Grantee's employment with the Company (or a subsidiary of the
Company) to a location which is more than 50 miles from the Grantee's current
residence.
(b) Upon the occurrence of a Forfeiture, the Grantee shall, within ten
(10) business days thereafter, transfer and deliver to the Company all stock
certificates representing all shares of the Restricted Stock, together with
stock powers duly executed in blank by the Grantee. From and after the
occurrence of such Forfeiture, the Grantee shall have no rights to or interests
in any shares of the forfeited Restricted Stock or under this Agreement (other
than the obligation to transfer and deliver all stock certificates representing
all shares of the Restricted Stock pursuant to this Section 5(b)).
6. Representations and Warranties of Grantee. The Grantee hereby represents and
warrants to the Company as follows:
(a) The Grantee has the legal right and capacity to enter into this
Agreement and he fully understands the terms and conditions of this Agreement.
(b) The Grantee is acquiring the Restricted Stock for investment
purposes only and not with a view to, or in connection with, the public
distribution thereof in violation of the Securities Act.
(c) The Grantee understands that none of the shares of the Restricted
Stock has been registered under the Securities Act and agrees that none of the
shares of the Restricted Stock may be offered, sold, assigned, transferred,
pledged, hypothecated or otherwise disposed of except in compliance with this
Agreement and the Securities Act or an applicable exemption from the
registration requirements of the Securities Act and applicable state securities
or "blue sky" laws; and he understands that the Company has no obligation to
cause or to refrain from causing any of the shares of the Restricted Stock or
any other shares of its capital stock to be registered under the Securities Act
or to comply with any exemption under the Securities Act which would permit the
shares of the Restricted Stock to be sold or otherwise transferred by the
Grantee.
7. Notices. Any notice required or permitted hereunder shall be deemed given
only when delivered personally or when deposited in a United States Post Office
as certified mail, postage prepaid, addressed, as appropriate, if to the
Grantee, at his address set forth above or such other address as he may
designate in writing to the Company, and, if to the Company, at 11200
Westheimer, Suite 850, Houston, Texas 77042 or such other address as the Company
may designate in writing to the Grantee.
<PAGE>
8. Failure to Enforce Not a Waiver. The failure of the Company to enforce at any
time any provision of this Agreement shall in no way be construed to be a waiver
of such provision or of any other provision hereof.
9. Amendment: Termination. This Agreement may not be amended or terminated
unless such amendment or termination is in writing and duly executed by each of
the parties hereto.
10. Counterparts. This Agreement may be executed in counterparts, each of which
shall be deemed to be an original, but all of which together shall constitute
but one and the same instrument.
11. Benefit and Binding Effect. This Agreement shall be binding upon and shall
inure to the benefit of the Company, its successors and assigns, and the
Grantee, his executors, administrators, personal representatives and heirs. In
the event that any part of this Agreement shall be held to be invalid or
unenforceable, the remaining parts hereof shall nevertheless continue to be
valid and enforceable as though the invalid portions were not a part hereof.
12. Entire Agreement. This Agreement contains the entire understanding of the
parties hereto with respect to the subject matter hereof and supersedes all
prior agreements, discussions and understandings with respect to such subject
matter.
13. Governing Law. This Agreement shall be governed by, and construed and
enforced in accordance with, the laws of the State of New York, without giving
effect to principles and provisions thereof relating to conflict or choice of
laws.
IN WITNESS WHEREOF, each of the parties hereto have duly executed this
Agreement on the date and year first above written.
SEACOR SMIT INC.
By: /s/ Charles Fabrikant
---------------------------
Name: Charles Fabrikant
Title: President
GRANTEE
/s/ Randall Blank
-------------------------------
Randall Blank
Exhibit 10.43
SEACOR SMIT INC.
RESTRICTED STOCK GRANT AGREEMENT
RESTRICTED STOCK GRANT AGREEMENT (the "Agreement"), dated this day
February 5, 1998 between SEACOR SMIT Inc., a Delaware corporation (the
"Company"), and Milt Rose, residing at 12722 Pebblebrook Houston, TX 77024 (the
"Grantee").
W I T N E S S E T H :
WHEREAS, Grantee is an officer or key employee of the Company; and
WHEREAS, the Company desires to issue and grant to the Grantee, and the
Grantee desires to accept, shares of the Company's Common Stock, $0.01 par value
("Common Shares"), upon the terms and subject to the conditions herein set
forth;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the parties hereto, intending to be legally bound,
hereby agree as follows:
1. Grant of Restricted Stock. In recognition of the Grantee's commitment to the
continued growth and financial success of the Company, the Company hereby grants
to the Grantee 423 (restricted) Common Shares (the "Restricted Stock").
Simultaneously with the execution and delivery of this Agreement by the parties
hereto, the Company shall deliver to the Grantee a stock certificate (or
certificates) representing the shares of the Restricted Stock, which
certificate(s) shall (a) be registered on the Company's stock transfer books in
the name of the Grantee and (b) bear (in addition to any other legends required
by applicable law) the following legend (or a legend substantially similar
thereto):
"This certificate and the shares represented hereby are
subject to, and shall be transferable only in accordance with,
the provisions of a certain Restricted Stock Grant Agreement
dated February 5, 1998 between Milt Rose and SEACOR SMIT Inc."
2. Removal of Restricted Stock Legend. Promptly after shares of the Restricted
Stock issued to the Grantee hereunder have become vested, the Company shall
cause the transfer agent for the Common Shares to issue separate Certificates
representing a) the Common Shares which are free of restrictions and without the
legend referred to above and b) the remaining unvested Common Shares bearing the
legend referred to above.
3. Vesting.
(a) Beneficial ownership of the restricted stock shall vest in the Grantee
as follows:
Date Number of shares
------------------------------- ----------------------------------
January 31, 1999 141
January 31, 2000 141
January 31, 2001 141
Notwithstanding the foregoing, 100% beneficial ownership of the aforementioned
shares of Restricted Stock shall vest immediately, without any action on the
part of the Company (or its successor as applicable) or the Grantee, if any of
the following events occur:
(i) the death of the Grantee;
<PAGE>
(ii) the "Disability" (as hereinafter defined) of the
Grantee;
(iii) the termination of the Grantee's employment with the
Company or any of its subsidiaries without "Cause"
(as hereinafter defined); and
(iv) the occurrence of a "Change-in-Control" of the
Company (as hereinafter defined).
(b) For all purposes of this Agreement, the following terms shall have
the following respective meanings:
(i) "Disability" shall mean the Grantee's inability to
perform substantially all of his duties and
responsibilities to the Company and/or any of its
subsidiaries by reason of a physical or mental
disability or infirmity (A) for a continuous period
of six (6) months or (B) at such earlier time as the
Grantee submits medical evidence satisfactory to the
Company that the Grantee has a physical or mental
disability or infirmity that will likely prevent the
Grantee from substantially performing his duties and
responsibilities for six (6) months or longer;
(ii) "Cause" shall mean (A) the Grantee shall have
willfully failed to perform any of his material
obligations or duties required to be performed by
him pursuant to the terms of his employment as an
officer or key employee of the Company; or (B) the
Grantee shall have committed an act of fraud, theft
or dishonesty which is reasonably likely to result
in financial harm to the Company and/or any of its
subsidiaries; or (C) the Grantee shall be convicted
of (or plead nolo contendere to) any felony or
misdemeanor involving moral turpitude, which
misdemeanor might, in the reasonable judgment of a
majority of the Board of Directors of the Company,
cause embarrassment to the Company; provided,
however, that the Grantee shall not be deemed to
have been terminated for Cause unless and until
there shall have been delivered to him a copy of a
resolution duly adopted by a majority of the Board
of Directors of the Company at a meeting of such
Board of Directors duly called and held for the
purpose of determining whether, in the good faith
judgment of a majority of the Board of Directors of
the Company, the Company has "cause" to terminate
the Grantee's employment pursuant to these
provisions; and
(iii) "Change-in-Control" of the Company shall be deemed
to have occurred if (A) a change in control of the
direction and administration of the Company's
businesses of a nature that would be required to be
reported in response to Item 6(e) of Schedule 14A of
Regulation 14A (or any successor rule or regulation)
promulgated under the Securities Exchange Act of
1934, as amended (the "Exchange Act"); (B) any
"person", (as such term is used in Sections 13(d)
and 14(d)(2) of the Exchange Act (but excluding any
employee benefit plan of the Company), is or becomes
the "beneficial owner" (as defined in Rule 13d-3
under the Exchange Act), directly or indirectly, of
securities of the Company representing 50% or more
of the combined voting power of the Company's
outstanding securities then entitled ordinarily (and
apart from rights accruing under special
circumstances) to vote generally for the election of
directors; (C) during any period of two consecutive
years, the individuals who at the beginning of such
period constitute the Board of Directors (the
"Board") cease for any reason to constitute at least
a majority thereof; (D) the Board shall approve a
sale of all or substantially all of the assets of
the Company and its subsidiaries (taken as a whole);
or (E) the Board shall approve any merger,
consolidation, or like business combination
<PAGE>
transaction or reorganization of the Company, the
consummation of which would result in the occurrence
of any event described in clauses (A) through (D)
above.
4. Non-Transferability of Restricted Stock. Except as expressly provided
in Section 3 hereof, prior to the applicable Vesting Dates, none of the then
unvested shares of the Restricted Stock (nor any interest therein) may be sold,
assigned, transferred, pledged, hypothecated or otherwise disposed of, shall not
be assignable by operation of law and shall not be subject to execution,
attachment or similar process. Any attempted sale, assignment, transfer, pledge,
hypothecation or other disposition of any unvested shares of the Restricted
Stock contrary to the provisions hereof shall be null and void and without
effect.
5. Forfeiture.
(a) Upon the Grantee's voluntary termination of his employment with the
Company or any of its subsidiaries, or upon the termination of the Grantee's
employment with the Company or any of its subsidiaries for Cause, which event
occurs, in either case, on a date prior to the Vesting Dates, beneficial
ownership of the remaining unvested shares of the Restricted Stock shall not
vest in the Grantee and all such unvested shares of the Restricted Stock shall
be deemed to have been forfeited by the Grantee to the Company (a "Forfeiture")
without any consideration therefor. A termination of employment shall not be
deemed to occur by reason of the transfer of an employee from employment by the
Company to employment by a subsidiary thereof (or a transfer of employment from
one subsidiary of the Company to another subsidiary of the Company), or the
relocation of the Grantee's employment with the Company (or a subsidiary of the
Company) to a location which is more than 50 miles from the Grantee's current
residence.
(b) Upon the occurrence of a Forfeiture, the Grantee shall, within ten
(10) business days thereafter, transfer and deliver to the Company all stock
certificates representing all shares of the Restricted Stock, together with
stock powers duly executed in blank by the Grantee. From and after the
occurrence of such Forfeiture, the Grantee shall have no rights to or interests
in any shares of the forfeited Restricted Stock or under this Agreement (other
than the obligation to transfer and deliver all stock certificates representing
all shares of the Restricted Stock pursuant to this Section 5(b)).
6. Representations and Warranties of Grantee. The Grantee hereby
represents and warrants to the Company as follows:
(a) The Grantee has the legal right and capacity to enter into this
Agreement and he fully understands the terms and conditions of this Agreement.
(b) The Grantee is acquiring the Restricted Stock for investment
purposes only and not with a view to, or in connection with, the public
distribution thereof in violation of the Securities Act.
(c) The Grantee understands that none of the shares of the Restricted
Stock has been registered under the Securities Act and agrees that none of the
shares of the Restricted Stock may be offered, sold, assigned, transferred,
pledged, hypothecated or otherwise disposed of except in compliance with this
Agreement and the Securities Act or an applicable exemption from the
registration requirements of the Securities Act and applicable state securities
or "blue sky" laws; and he understands that the Company has no obligation to
cause or to refrain from causing any of the shares of the Restricted Stock or
any other shares of its capital stock to be registered under the Securities Act
or to comply with any exemption under the Securities Act which would permit the
shares of the Restricted Stock to be sold or otherwise transferred by the
Grantee.
7. Notices. Any notice required or permitted hereunder shall be deemed
given only when delivered personally or when deposited in a United States Post
Office as certified mail, postage prepaid, addressed, as appropriate, if to the
Grantee, at his address set forth above or such other address as he may
designate in writing to the Company, and, if to the Company, at 11200
Westheimer, Suite 850, Houston, Texas 77042 or such other address as the Company
may designate in writing to the Grantee.
<PAGE>
8. Failure to Enforce Not a Waiver. The failure of the Company to enforce
at any time any provision of this Agreement shall in no way be construed to be a
waiver of such provision or of any other provision hereof.
9. Amendment: Termination. This Agreement may not be amended or terminated
unless such amendment or termination is in writing and duly executed by each of
the parties hereto.
10. Counterparts. This Agreement may be executed in counterparts, each of which
shall be deemed to be an original, but all of which together shall constitute
but one and the same instrument.
11. Benefit and Binding Effect. This Agreement shall be binding upon and shall
inure to the benefit of the Company, its successors and assigns, and the
Grantee, his executors, administrators, personal representatives and heirs. In
the event that any part of this Agreement shall be held to be invalid or
unenforceable, the remaining parts hereof shall nevertheless continue to be
valid and enforceable as though the invalid portions were not a part hereof.
12. Entire Agreement. This Agreement contains the entire understanding of the
parties hereto with respect to the subject matter hereof and supersedes all
prior agreements, discussions and understandings with respect to such subject
matter.
13. Governing Law. This Agreement shall be governed by, and construed and
enforced in accordance with, the laws of the State of New York, without giving
effect to principles and provisions thereof relating to conflict or choice of
laws.
IN WITNESS WHEREOF, each of the parties hereto have duly executed this
Agreement on the date and year first above written.
SEACOR SMIT INC.
By: /s/ Randall Blank
-------------------------------
Name: Randall Blank
Title: Executive Vice President
GRANTEE
/s/ Milt Rose
-----------------------------------
Milt Rose
Exhibit 10.44
SEACOR SMIT INC.
RESTRICTED STOCK GRANT AGREEMENT
RESTRICTED STOCK GRANT AGREEMENT (the "Agreement"), dated this day,
February 5, 1998 between SEACOR SMIT Inc., a Delaware corporation (the
"Company"), and Milt Rose, residing at 12722 Pebblebrook Houston, TX 77024 (the
"Grantee").
W I T N E S S E T H :
WHEREAS, Grantee is an officer or key employee of the Company; and
WHEREAS, the Company desires to issue and grant to the Grantee, and the
Grantee desires to accept, shares of the Company's Common Stock, $0.01 par value
("Common Shares"), upon the terms and subject to the conditions herein set
forth;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the parties hereto, intending to be legally bound,
hereby agree as follows:
1. Grant of Restricted Stock. In recognition of the Grantee's commitment to the
continued growth and financial success of the Company, the Company hereby grants
to the Grantee 1,000 (restricted) Common Shares (the "Restricted Stock").
Simultaneously with the execution and delivery of this Agreement by the parties
hereto, the Company shall deliver to the Grantee a stock certificate (or
certificates) representing the shares of the Restricted Stock, which
certificate(s) shall (a) be registered on the Company's stock transfer books in
the name of the Grantee and (b) bear (in addition to any other legends required
by applicable law) the following legend (or a legend substantially similar
thereto):
"This certificate and the shares represented hereby are
subject to, and shall be transferable only in accordance with,
the provisions of a certain Restricted Stock Grant Agreement
dated February 5, 1998 between Milt Rose and SEACOR SMIT Inc."
2. Removal of Restricted Stock Legend. Promptly after shares of the Restricted
Stock issued to the Grantee hereunder have become vested, the Company shall
cause the transfer agent for the Common Shares to issue separate Certificates
representing a) the Common Shares which are free of restrictions and without the
legend referred to above and b) the remaining unvested Common Shares bearing the
legend referred to above.
3. Vesting.
(a) Beneficial ownership of the restricted stock shall vest on January
31, 1999.
Notwithstanding the foregoing, 100% beneficial ownership of the aforementioned
shares of Restricted Stock shall vest immediately, without any action on the
part of the Company (or its successor as applicable) or the Grantee, if any of
the following events occur:
(i) the death of the Grantee;
(ii) the "Disability" (as hereinafter defined) of the
Grantee;
(iii) the termination of the Grantee's employment with the
Company or any of its subsidiaries without "Cause"
(as hereinafter defined); and
(iv) the occurrence of a "Change-in-Control" of the
Company (as hereinafter defined).
(b) For all purposes of this Agreement, the following terms shall have
the following respective meanings:
<PAGE>
(i) "Disability" shall mean the Grantee's inability to
perform substantially all of his duties and
responsibilities to the Company and/or any of its
subsidiaries by reason of a physical or mental
disability or infirmity (A) for a continuous period
of six (6) months or (B) at such earlier time as the
Grantee submits medical evidence satisfactory to the
Company that the Grantee has a physical or mental
disability or infirmity that will likely prevent the
Grantee from substantially performing his duties and
responsibilities for six (6) months or longer;
(ii) "Cause" shall mean (A) the Grantee shall have
willfully failed to perform any of his material
obligations or duties required to be performed by
him pursuant to the terms of his employment as an
officer or key employee of the Company; or (B) the
Grantee shall have committed an act of fraud, theft
or dishonesty which is reasonably likely to result
in financial harm to the Company and/or any of its
subsidiaries; or (C) the Grantee shall be convicted
of (or plead nolo contendere to) any felony or
misdemeanor involving moral turpitude, which
misdemeanor might, in the reasonable judgment of a
majority of the Board of Directors of the Company,
cause embarrassment to the Company; provided,
however, that the Grantee shall not be deemed to
have been terminated for Cause unless and until
there shall have been delivered to him a copy of a
resolution duly adopted by a majority of the Board
of Directors of the Company at a meeting of such
Board of Directors duly called and held for the
purpose of determining whether, in the good faith
judgment of a majority of the Board of Directors of
the Company, the Company has "cause" to terminate
the Grantee's employment pursuant to these
provisions; and
(iii) "Change-in-Control" of the Company shall be deemed
to have occurred if (A) a change in control of the
direction and administration of the Company's
businesses of a nature that would be required to be
reported in response to Item 6(e) of Schedule 14A of
Regulation 14A (or any successor rule or regulation)
promulgated under the Securities Exchange Act of
1934, as amended (the "Exchange Act"); (B) any
"person", (as such term is used in Sections 13(d)
and 14(d)(2) of the Exchange Act (but excluding any
employee benefit plan of the Company), is or becomes
the "beneficial owner" (as defined in Rule 13d-3
under the Exchange Act), directly or indirectly, of
securities of the Company representing 50% or more
of the combined voting power of the Company's
outstanding securities then entitled ordinarily (and
apart from rights accruing under special
circumstances) to vote generally for the election of
directors; (C) during any period of two consecutive
years, the individuals who at the beginning of such
period constitute the Board of Directors (the
"Board") cease for any reason to constitute at least
a majority thereof; (D) the Board shall approve a
sale of all or substantially all of the assets of
the Company and its subsidiaries (taken as a whole);
or (E) the Board shall approve any merger,
consolidation, or like business combination
transaction or reorganization of the Company, the
consummation of which would result in the occurrence
of any event described in clauses (A) through (D)
above.
4. Non-Transferability of Restricted Stock. Except as expressly provided in
Section 3 hereof, prior to the applicable Vesting Dates, none of the then
unvested shares of the Restricted Stock (nor any interest therein) may be sold,
assigned, transferred, pledged, hypothecated or otherwise disposed of, shall not
be assignable by operation of law and shall not be subject to execution,
attachment or similar process. Any attempted sale, assignment, transfer, pledge,
hypothecation or other disposition of any unvested shares of the Restricted
Stock contrary to the provisions hereof shall be null and void and without
effect.
<PAGE>
5. Forfeiture.
(a) Upon the Grantee's voluntary termination of his employment with the
Company or any of its subsidiaries, or upon the termination of the Grantee's
employment with the Company or any of its subsidiaries for Cause, which event
occurs, in either case, on a date prior to the Vesting Dates, beneficial
ownership of the remaining unvested shares of the Restricted Stock shall not
vest in the Grantee and all such unvested shares of the Restricted Stock shall
be deemed to have been forfeited by the Grantee to the Company (a "Forfeiture")
without any consideration therefor. A termination of employment shall not be
deemed to occur by reason of the transfer of an employee from employment by the
Company to employment by a subsidiary thereof (or a transfer of employment from
one subsidiary of the Company to another subsidiary of the Company), or the
relocation of the Grantee's employment with the Company (or a subsidiary of the
Company) to a location which is more than 50 miles from the Grantee's current
residence.
(b) Upon the occurrence of a Forfeiture, the Grantee shall, within ten
(10) business days thereafter, transfer and deliver to the Company all stock
certificates representing all shares of the Restricted Stock, together with
stock powers duly executed in blank by the Grantee. From and after the
occurrence of such Forfeiture, the Grantee shall have no rights to or interests
in any shares of the forfeited Restricted Stock or under this Agreement (other
than the obligation to transfer and deliver all stock certificates representing
all shares of the Restricted Stock pursuant to this Section 5(b)).
6. Representations and Warranties of Grantee. The Grantee hereby represents and
warrants to the Company as follows:
(a) The Grantee has the legal right and capacity to enter into this
Agreement and he fully understands the terms and conditions of this Agreement.
(b) The Grantee is acquiring the Restricted Stock for investment
purposes only and not with a view to, or in connection with, the public
distribution thereof in violation of the Securities Act.
(c) The Grantee understands that none of the shares of the Restricted
Stock has been registered under the Securities Act and agrees that none of the
shares of the Restricted Stock may be offered, sold, assigned, transferred,
pledged, hypothecated or otherwise disposed of except in compliance with this
Agreement and the Securities Act or an applicable exemption from the
registration requirements of the Securities Act and applicable state securities
or "blue sky" laws; and he understands that the Company has no obligation to
cause or to refrain from causing any of the shares of the Restricted Stock or
any other shares of its capital stock to be registered under the Securities Act
or to comply with any exemption under the Securities Act which would permit the
shares of the Restricted Stock to be sold or otherwise transferred by the
Grantee.
7. Notices. Any notice required or permitted hereunder shall be deemed given
only when delivered personally or when deposited in a United States Post Office
as certified mail, postage prepaid, addressed, as appropriate, if to the
Grantee, at his address set forth above or such other address as he may
designate in writing to the Company, and, if to the Company, at 11200
Westheimer, Suite 850, Houston, Texas 77042 or such other address as the Company
may designate in writing to the Grantee.
8. Failure to Enforce Not a Waiver. The failure of the Company to enforce at any
time any provision of this Agreement shall in no way be construed to be a waiver
of such provision or of any other provision hereof.
<PAGE>
9. Amendment: Termination. This Agreement may not be amended or terminated
unless such amendment or termination is in writing and duly executed by each of
the parties hereto.
10. Counterparts. This Agreement may be executed in counterparts, each of which
shall be deemed to be an original, but all of which together shall constitute
but one and the same instrument.
11. Benefit and Binding Effect. This Agreement shall be binding upon and shall
inure to the benefit of the Company, its successors and assigns, and the
Grantee, his executors, administrators, personal representatives and heirs. In
the event that any part of this Agreement shall be held to be invalid or
unenforceable, the remaining parts hereof shall nevertheless continue to be
valid and enforceable as though the invalid portions were not a part hereof.
12. Entire Agreement. This Agreement contains the entire understanding of the
parties hereto with respect to the subject matter hereof and supersedes all
prior agreements, discussions and understandings with respect to such subject
matter.
13. Governing Law. This Agreement shall be governed by, and construed and
enforced in accordance with, the laws of the State of New York, without giving
effect to principles and provisions thereof relating to conflict or choice of
laws.
IN WITNESS WHEREOF, each of the parties hereto have duly executed this
Agreement on the date and year first above written.
SEACOR SMIT INC.
By: /s/ Randall Blank
---------------------------------------
Name: Randall Blank
Title: Executive Vice President
GRANTEE
/s/Milt Rose
-------------------------------------------
Milt Rose
Exhibit 10.45
SEACOR SMIT INC.
RESTRICTED STOCK GRANT AGREEMENT
RESTRICTED STOCK GRANT AGREEMENT (the "Agreement"), dated this day
February 5, 1998 between SEACOR SMIT Inc., a Delaware corporation (the
"Company"), and Andrew Strachan, residing at Brugestraat 95 Den Haag 258 7XR The
Netherlands (the "Grantee").
W I T N E S S E T H :
WHEREAS, Grantee is an officer or key employee of the Company; and
WHEREAS, the Company desires to issue and grant to the Grantee, and the
Grantee desires to accept, shares of the Company's Common Stock, $0.01 par value
("Common Shares"), upon the terms and subject to the conditions herein set
forth;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the parties hereto, intending to be legally bound,
hereby agree as follows:
1. Grant of Restricted Stock. In recognition of the Grantee's commitment to the
continued growth and financial success of the Company, the Company hereby grants
to the Grantee 228 (restricted) Common Shares (the "Restricted Stock").
Simultaneously with the execution and delivery of this Agreement by the parties
hereto, the Company shall deliver to the Grantee a stock certificate (or
certificates) representing the shares of the Restricted Stock, which
certificate(s) shall (a) be registered on the Company's stock transfer books in
the name of the Grantee and (b) bear (in addition to any other legends required
by applicable law) the following legend (or a legend substantially similar
thereto):
"This certificate and the shares represented hereby are
subject to, and shall be transferable only in accordance with,
the provisions of a certain Restricted Stock Grant Agreement
dated February 5, 1998 between Andrew Strachan and SEACOR SMIT Inc."
2. Removal of Restricted Stock Legend. Promptly after shares of the Restricted
Stock issued to the Grantee hereunder have become vested, the Company shall
cause the transfer agent for the Common Shares to issue separate Certificates
representing a) the Common Shares which are free of restrictions and without the
legend referred to above and b) the remaining unvested Common Shares bearing the
legend referred to above.
3. Vesting.
(a) Beneficial ownership of the restricted stock shall vest in the Grantee
as follows:
Date Number of shares
------------------------------- ----------------------------------
January 31, 1999 76
January 31, 2000 76
January 31, 2001 76
Notwithstanding the foregoing, 100% beneficial ownership of the aforementioned
shares of Restricted Stock shall vest immediately, without any action on the
part of the Company (or its successor as applicable) or the Grantee, if any of
the following events occur:
<PAGE>
(i) the death of the Grantee;
(ii) the "Disability" (as hereinafter defined) of the
Grantee;
(iii) the termination of the Grantee's employment with the
Company or any of its subsidiaries without "Cause"
(as hereinafter defined); and
(iv) the occurrence of a "Change-in-Control" of the
Company (as hereinafter defined).
(b) For all purposes of this Agreement, the following terms shall have
the following respective meanings:
(i) "Disability" shall mean the Grantee's inability to
perform substantially all of his duties and
responsibilities to the Company and/or any of its
subsidiaries by reason of a physical or mental
disability or infirmity (A) for a continuous period
of six (6) months or (B) at such earlier time as the
Grantee submits medical evidence satisfactory to the
Company that the Grantee has a physical or mental
disability or infirmity that will likely prevent the
Grantee from substantially performing his duties and
responsibilities for six (6) months or longer;
(ii) "Cause" shall mean (A) the Grantee shall have
willfully failed to perform any of his material
obligations or duties required to be performed by
him pursuant to the terms of his employment as an
officer or key employee of the Company; or (B) the
Grantee shall have committed an act of fraud, theft
or dishonesty which is reasonably likely to result
in financial harm to the Company and/or any of its
subsidiaries; or (C) the Grantee shall be convicted
of (or plead nolo contendere to) any felony or
misdemeanor involving moral turpitude, which
misdemeanor might, in the reasonable judgment of a
majority of the Board of Directors of the Company,
cause embarrassment to the Company; provided,
however, that the Grantee shall not be deemed to
have been terminated for Cause unless and until
there shall have been delivered to him a copy of a
resolution duly adopted by a majority of the Board
of Directors of the Company at a meeting of such
Board of Directors duly called and held for the
purpose of determining whether, in the good faith
judgment of a majority of the Board of Directors of
the Company, the Company has "cause" to terminate
the Grantee's employment pursuant to these
provisions; and
(iii) "Change-in-Control" of the Company shall be deemed
to have occurred if (A) a change in control of the
direction and administration of the Company's
businesses of a nature that would be required to be
reported in response to Item 6(e) of Schedule 14A of
Regulation 14A (or any successor rule or regulation)
promulgated under the Securities Exchange Act of
1934, as amended (the "Exchange Act"); (B) any
"person", (as such term is used in Sections 13(d)
and 14(d)(2) of the Exchange Act (but excluding any
employee benefit plan of the Company), is or becomes
the "beneficial owner" (as defined in Rule 13d-3
under the Exchange Act), directly or indirectly, of
securities of the Company representing 50% or more
of the combined voting power of the Company's
outstanding securities then entitled ordinarily (and
apart from rights accruing under special
circumstances) to vote generally for the election of
directors; (C) during any period of two consecutive
years, the individuals who at the beginning of such
period constitute the Board of Directors (the
"Board") cease for any reason to constitute at least
a majority thereof; (D) the Board shall approve a
sale of all or substantially all of the assets of
the Company and its subsidiaries (taken as a whole);
<PAGE>
or (E) the Board shall approve any merger,
consolidation, or like business combination
transaction or reorganization of the Company, the
consummation of which would result in the occurrence
of any event described in clauses (A) through (D)
above.
4. Non-Transferability of Restricted Stock. Except as expressly provided in
Section 3 hereof, prior to the applicable Vesting Dates, none of the then
unvested shares of the Restricted Stock (nor any interest therein) may be sold,
assigned, transferred, pledged, hypothecated or otherwise disposed of, shall not
be assignable by operation of law and shall not be subject to execution,
attachment or similar process. Any attempted sale, assignment, transfer, pledge,
hypothecation or other disposition of any unvested shares of the Restricted
Stock contrary to the provisions hereof shall be null and void and without
effect.
5. Forfeiture.
(a) Upon the Grantee's voluntary termination of his employment with the
Company or any of its subsidiaries, or upon the termination of the Grantee's
employment with the Company or any of its subsidiaries for Cause, which event
occurs, in either case, on a date prior to the Vesting Dates, beneficial
ownership of the remaining unvested shares of the Restricted Stock shall not
vest in the Grantee and all such unvested shares of the Restricted Stock shall
be deemed to have been forfeited by the Grantee to the Company (a "Forfeiture")
without any consideration therefor. A termination of employment shall not be
deemed to occur by reason of the transfer of an employee from employment by the
Company to employment by a subsidiary thereof (or a transfer of employment from
one subsidiary of the Company to another subsidiary of the Company), or the
relocation of the Grantee's employment with the Company (or a subsidiary of the
Company) to a location which is more than 50 miles from the Grantee's current
residence.
(b) Upon the occurrence of a Forfeiture, the Grantee shall, within ten
(10) business days thereafter, transfer and deliver to the Company all stock
certificates representing all shares of the Restricted Stock, together with
stock powers duly executed in blank by the Grantee. From and after the
occurrence of such Forfeiture, the Grantee shall have no rights to or interests
in any shares of the forfeited Restricted Stock or under this Agreement (other
than the obligation to transfer and deliver all stock certificates representing
all shares of the Restricted Stock pursuant to this Section 5(b)).
6. Representations and Warranties of Grantee. The Grantee hereby
represents and warrants to the Company as follows:
(a) The Grantee has the legal right and capacity to enter into this
Agreement and he fully understands the terms and conditions of this Agreement.
(b) The Grantee is acquiring the Restricted Stock for investment
purposes only and not with a view to, or in connection with, the public
distribution thereof in violation of the Securities Act.
(c) The Grantee understands that none of the shares of the Restricted
Stock has been registered under the Securities Act and agrees that none of the
shares of the Restricted Stock may be offered, sold, assigned, transferred,
pledged, hypothecated or otherwise disposed of except in compliance with this
Agreement and the Securities Act or an applicable exemption from the
registration requirements of the Securities Act and applicable state securities
or "blue sky" laws; and he understands that the Company has no obligation to
cause or to refrain from causing any of the shares of the Restricted Stock or
any other shares of its capital stock to be registered under the Securities Act
or to comply with any exemption under the Securities Act which would permit the
shares of the Restricted Stock to be sold or otherwise transferred by the
Grantee.
<PAGE>
7. Notices. Any notice required or permitted hereunder shall be deemed given
only when delivered personally or when deposited in a United States Post Office
as certified mail, postage prepaid, addressed, as appropriate, if to the
Grantee, at his address set forth above or such other address as he may
designate in writing to the Company, and, if to the Company, at 11200
Westheimer, Suite 850, Houston, Texas 77042 or such other address as the Company
may designate in writing to the Grantee.
8. Failure to Enforce Not a Waiver. The failure of the Company to enforce at any
time any provision of this Agreement shall in no way be construed to be a waiver
of such provision or of any other provision hereof.
9. Amendment: Termination. This Agreement may not be amended or terminated
unless such amendment or termination is in writing and duly executed by each of
the parties hereto.
10. Counterparts. This Agreement may be executed in counterparts, each of which
shall be deemed to be an original, but all of which together shall constitute
but one and the same instrument.
11. Benefit and Binding Effect. This Agreement shall be binding upon and shall
inure to the benefit of the Company, its successors and assigns, and the
Grantee, his executors, administrators, personal representatives and heirs. In
the event that any part of this Agreement shall be held to be invalid or
unenforceable, the remaining parts hereof shall nevertheless continue to be
valid and enforceable as though the invalid portions were not a part hereof.
12. Entire Agreement. This Agreement contains the entire understanding of the
parties hereto with respect to the subject matter hereof and supersedes all
prior agreements, discussions and understandings with respect to such subject
matter.
13. Governing Law. This Agreement shall be governed by, and construed and
enforced in accordance with, the laws of the State of New York, without giving
effect to principles and provisions thereof relating to conflict or choice of
laws.
IN WITNESS WHEREOF, each of the parties hereto have duly executed this
Agreement on the date and year first above written.
SEACOR SMIT INC.
By: /s/ Randall Blank
------------------------------------
Name: Randall Blank
Title: Executive Vice President
GRANTEE
/s/ Andrew Strachan
----------------------------------------
Andrew Strachan
Exhibit 21.1
SEACOR SMIT INC.
LIST OF SUBSIDIARIES AT DECEMBER 31, 1997
Jurisdiction of
Incorporation
-------------
Sea-Aker L.L.C. Louisiana
Arthur Levy Enterprises, Inc. Louisiana
Cameron Boat Rentals, Inc. Louisiana
Glady's McCall, Inc. Louisiana
Gulf Marine Transportation, Inc. Louisiana
McCall Marine Services, Inc. Louisiana
Cameron Crews, Inc. Louisiana
Philip A. McCall, Inc. Louisiana
McCall Boat Rentals, Inc. Louisiana
Carroll McCall, Inc. Louisiana
McCall Crewboats, L.L.C. Louisiana
McCall Enterprises, Inc. Louisiana
SEACOR Marine (Nigeria) Inc. Louisiana
SEAMAC Offshore L.L.C. Louisiana
McCall Support Vessels, Inc. Louisiana
O'Brien's Oil Pollution Services, Inc. Louisiana
SEACOR Marine (Mexico) Inc. Louisiana
SEACOR Ocean Support Services Inc. Louisiana
SEACOR Ocean Lines Inc. Louisiana
Galaxie Offshore Inc. Louisiana
SEACOR Supply Ships Associates Inc. Louisiana
N.F. McCall Crews, Inc. Louisiana
SEACOR Marine International Inc. Delaware
SEACOR Capital Corporation Delaware
SEACOR Deepwater 1, Inc. Delaware
SEACOR Deepwater 2, Inc. Delaware
SEACOR Deepwater 3, Inc. Delaware
VEESEA Holdings Inc. Delaware
Storm Shipping Inc. Delaware
Gem Shipping Inc. Delaware
SEACOR-SMIT Offshore (International) Inc. Delaware
SEACOR-SMIT Offshore I Inc. Delaware
National Response Corporation Delaware
National Response Corporation of Puerto Rico Delaware
NRC Services, Inc. Delaware
CRN Holdings Inc. Delaware
International Response Corporation Delaware
OSRV Holdings, Inc. Delaware
Vision Offshore, Inc. Delaware
SEACOR Vision L.L.C. Delaware
ERST/O'Brien's, Inc. Delaware
ERST, Inc. Delaware
SEACOR Offshore Rigs Inc. Delaware
Chiles Offshore L.L.C. Delaware
SEACOR Management Services Inc. Delaware
SEACOR Offshore Inc. Delaware
Acadian Supply Ships Inc. Delaware
SEACOR Worldwide Inc. Delaware
SMIT Holdings Inc. Delaware
Graham Marine Inc. Delaware
Graham Offshore Inc. Delaware
Graham Boats Inc. Delaware
SEACOR Marine Inc. Delaware
SEACOR Ocean Boats Inc. Delaware
<PAGE>
Anna Offshore Inc. Alabama
SEACOR Marine (Bahamas) Inc. Bahamas
SEAFISH Ltd. Bahamas
SEACOR-SMIT Offshore (Worldwide) Ltd. Bahamas
SEACOR-SMIT Offshore (International) Ltd. Bahamas
SEACOR Marine (Europe) B.V. Netherlands
SEACOR-SMIT Offshore I B.V. Netherlands
SEACOR-SMIT Offshore II B.V. Netherlands
SEACOR-SMIT Holdings B.V. Netherlands
SEACOR Marine (Asia) Pte. Ltd. Singapore
Gem Shipping Ltd. Cayman Islands
SEACOR Marine (UK) Ltd. United Kingdom
Vector-Seacor Ltd. United Kingdom
Feronia International Shipping S.A. France
SEACOR Marine (Isle of Man) Isle of Man
SEACOR Marine (Middle East) United Arab Emirates
SEACOR Offshore Investments Ltd. Bahamas
<PAGE>
SEACOR SMIT INC.
50% OR LESS COMPANIES AT DECEMBER 31, 1997
Jurisdiction of
Incorporation
-------------
West Africa Offshore LTD. Nigeria
Maritime Mexicana, S.A. de C.V. Mexico
Seamex International Ltd. Liberia
Energy Logistics, Inc. Delaware
Clean Pacific Alliance, L.L.C. Nevada
Supplylink UK Ltd. United Kingdom
Supplylink International B.V. Netherlands
Minvest S.A. Argentina
Smit-Lloyd Mainport Ltd. Ireland
South Atlantic Offshore Services S.A. Panama
Red Dragon Marine Services Ltd. China
SMIT Swire Shilbaya Egypt Ltd. Egypt
Smit Lloyd Matsas (Hellas) Greece
Seacor-Smit (Aquitaine) Ltd. Bahamas
Ultragas Smit-Lloyd Ltda. Chile
Patagonia Offshore Services SA Argentina
Octo Marine Limited Isle of Man
Sarost S.A. Tunisia
Exhibit 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation of our
reports dated February 11, 1998 (except with respect to the matters discussed in
Notes 19 and 20, as to which the date is March 3, 1998), included in this Form
10-K for the year ended December 31, 1997, into the Company's previously filed
Registration Statements File Nos. 333-03534, 333-11705, 333-12637, 333-22249,
and 333-20921.
ARTHUR ANDERSEN LLP
New Orleans, Louisiana
March 30, 1998
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS CONTAINED IN THE BODY OF THE ACCOMPANYING FORM 10-K AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> DEC-31-1997
<CASH> 175,381
<SECURITIES> 33,020
<RECEIVABLES> 85,713
<ALLOWANCES> 1,626
<INVENTORY> 2,149
<CURRENT-ASSETS> 296,059
<PP&E> 592,883
<DEPRECIATION> 109,949
<TOTAL-ASSETS> 1,019,801
<CURRENT-LIABILITIES> 59,521
<BONDS> 358,714
0
0
<COMMON> 140
<OTHER-SE> 473,874
<TOTAL-LIABILITY-AND-EQUITY> 1,019,801
<SALES> 0
<TOTAL-REVENUES> 346,948
<CGS> 0
<TOTAL-COSTS> 3,916
<OTHER-EXPENSES> 163,577
<LOSS-PROVISION> 1,155
<INTEREST-EXPENSE> 14,168
<INCOME-PRETAX> 175,703
<INCOME-TAX> 61,384
<INCOME-CONTINUING> 119,593
<DISCONTINUED> 0
<EXTRAORDINARY> 439
<CHANGES> 0
<NET-INCOME> 119,154
<EPS-PRIMARY> 8.61
<EPS-DILUTED> 7.47
</TABLE>
