AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 6, 1996
REGISTRATION NO. 33-78166
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-------------------
AMENDMENT NO. 4
TO
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
-------------------
HVIDE MARINE INCORPORATED
(Exact name of Registrant as specified in its charter)
<TABLE>
<S> <C> <C>
FLORIDA 4424 65-0524593
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code No.) Identification No.)
</TABLE>
-------------------
2200 ELLER DRIVE, P.O. BOX 13038
FORT LAUDERDALE, FL 33316
(954) 523-2200
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
-------------------
J. ERIK HVIDE, CHAIRMAN, PRESIDENT, AND CHIEF EXECUTIVE OFFICER
2200 ELLER DRIVE, P.O. BOX 13038
FORT LAUDERDALE, FLORIDA 33316
(954) 523-2200
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
-------------------
COPIES OF COMMUNICATIONS TO:
<TABLE>
<S> <C>
MICHAEL JOSEPH, ESQ. SETH R. MOLAY, P.C.
DYER ELLIS & JOSEPH AKIN, GUMP, STRAUSS, HAUER & FELD, L.L.P.
600 NEW HAMPSHIRE AVENUE, N.W. 1700 PACIFIC AVENUE, SUITE 4100
WASHINGTON, D.C. 20037 DALLAS, TEXAS 75201
(202) 944-3000 (214) 969-2800
</TABLE>
-------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after this Registration Statement becomes effective. If any of the
securities being registered on this Form are to be offered on a delayed or
continuous basis pursuant to Rule 415 under the Securities Act of 1933, check
the following box. / /
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / /
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /
If delivery of the prospectus is expected to be made pursuant to rule 434,
please check the following box. / /
-------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION ACTING PURSUANT TO SAID SECTION 8(A)
MAY DETERMINE.
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<PAGE>
HVIDE MARINE INCORPORATED
CROSS REFERENCE SHEET
FURNISHED PURSUANT TO ITEM 501(B) OF REGULATION S-K
<TABLE>
<CAPTION>
ITEM NUMBER AND CAPTION LOCATION IN PROSPECTUS
- ------------------------------------------------ ------------------------------------------
<C> <S> <C>
1. Forepart of the Registration Statement and
Outside Front Cover Page of Prospectus.... Outside Front Cover Page
2. Inside Front and Outside Back Cover Pages
of Prospectus............................ Inside Front Cover Page; Outside Back
Cover Page
3. Summary Information, Risk Factors and
Ratio of Earnings to Fixed Charges....... Prospectus Summary; Risk Factors; The
Company
4. Use of Proceeds........................... Use of Proceeds
5. Determination of Offering Price........... Outside Front Cover Page; Underwriting
6. Dilution.................................. Dilution
7. Selling Security Holders.................. *
8. Plan of Distribution...................... Outside Front Cover Page; Prospectus
Summary; Underwriting
9. Description of Securities to be
Registered............................... Outside Front Cover Page; Prospectus
Summary; Dividend Policy; Description of
Capital Stock
10. Interests of Named Experts and Counsel.... *
11. Information with Respect to the
Registrant............................... Outside Front Cover Page; Prospectus
Summary; Risk Factors; The Company;
Dividend Policy; Selected Historical and
Pro Forma Consolidated Financial Data;
Management's Discussion and Analysis of
Financial Condition and Results of
Operations; Business; Certain
Transactions; Security Ownership of
Principal Stockholders and Management;
Management; Description of Certain
Indebtedness; Description of Capital
Stock; Financial Statements
12. Disclosure of Commission Position on
Indemnification for Securities Act
Liabilities............................. *
</TABLE>
- -----------------------
* Not applicable or answer thereto is negative.
<PAGE>
SUBJECT TO COMPLETION, DATED JULY 24, 1996
PROSPECTUS
, 1996
7,000,000 SHARES
CLASS A COMMON STOCK
All of the shares of Class A Common Stock offered hereby are being sold by
the Company. Prior to this offering (the "Offering"), there has been no public
market for the Class A Common Stock. It is currently estimated that the initial
public offering price will be between $12.00 and $14.00 per share. See
"Underwriting" for information relating to the factors considered in determining
the initial public offering price.
After the Offering, the Company's issued and outstanding capital stock will
consist of Class A Common Stock and Class B Common Stock. Each holder of Class A
Common Stock is entitled to one vote per share and each holder of Class B Common
Stock is entitled to ten votes per share on all matters submitted to a vote of
stockholders. Except as required by law and the Company's Articles of
Incorporation, holders of the Class A Common Stock and the Class B Common Stock
vote together as a single class. Each share of Class A Common Stock and Class B
Common Stock will share ratably in any dividends or other distributions,
including upon the liquidation, dissolution, or winding up of the Company.
Ownership and control of the Class A Common Stock by persons not citizens of the
United States are limited by the terms of the Company's Articles of
Incorporation. See "Description of Capital Stock."
The Class A Common Stock has been approved for listing on the Nasdaq
National Market under the symbol "HMAR."
SEE "RISK FACTORS" BEGINNING ON PAGE 8 FOR INFORMATION THAT SHOULD BE
CONSIDERED BY PROSPECTIVE INVESTORS.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
PRICE UNDERWRITING PROCEEDS
TO THE DISCOUNTS AND TO THE
PUBLIC COMMISSIONS(1) COMPANY(2)
<S> <C> <C> <C>
Per Share.............................................. $ $ $
Total(3)............................................... $ $ $
</TABLE>
(1) See "Underwriting" for indemnification arrangements with the Underwriters.
(2) Before deduction of expenses payable by the Company estimated at $ .
(3) The Company has granted the Underwriters a 30-day option to purchase up to
1,050,000 additional shares of Class A Common Stock at the Price to the
Public less Underwriting Discounts and Commissions, solely to cover
over-allotments, if any. See "Underwriting." If such option is exercised in
full, the total Price to the Public, Underwriting Discounts and Commissions,
and Proceeds to the Company will be $ , $ , and $ ,
respectively.
The shares are being offered by the several Underwriters when, as and if
delivered to and accepted by the Underwriters and subject to various prior
conditions, including their right to reject orders in whole or in part. It is
expected that delivery of the share certificates will be made in New York, New
York, on or about , 1996.
DONALDSON, LUFKIN & JENRETTE HOWARD, WEIL, LABOUISSE, FRIEDRICHS
SECURITIES CORPORATION INCORPORATED
<PAGE>
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
<PAGE>
Description of Picture: Description of Picture:
The Seabulk California The OMI Hudson and the tug Broward
Caption: Caption:
One of Hvide's 180-foot supply The offshore tug Paragon fills many
boats, the Seabulk Alabama, in roles in exploration, production,
transit to an offshore production construction and transportation.
platform.
Description of Picture:
The Seabulk Texas at an offshore location.
Caption:
The Seabulk Texas, a 180-foot supply boat, servicing an offshore drilling rig in
the Gulf of Mexico.
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE CLASS A COMMON
STOCK OF THE COMPANY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE
OPEN MARKET. SUCH TRANSACTIONS MAY BE EFFECTED ON THE NASDAQ NATIONAL MARKET OR
OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
2
<PAGE>
Description of Picture: Description of Picture:
The Seabulk Georgia supply boat A sideview of a crew boat
carrying a crew boat
Caption: Caption:
The Seabulk Georgia supply boat One of the Company's 110-foot crew
carrying one of the Company's crew boats en route to a drilling
boats to an international location.
destination.
Description of Picture:
The Seabulk America at sea
Caption:
The 46,300 dwt capacity Seabulk America is the only chemical carrier to enter
service in the domestic trade since 1984.
<PAGE>
Description of Picture: Description of Description of Picture:
The OMI Hudson Picture: The OMI Dynachem
<TABLE>
<S> <C> <C>
Caption: Caption: Caption:
The multi-directional tractor tug The OMI Dynachem (pictured) and The OMI Star, a 260,000 barrel,
Broward moves astern as fast OMI Hudson are 360,000 barrel, 37,500 dwt capacity chemical
ahead. 50,900 dwt capacity chemical carrier.
carriers.
</TABLE>
<PAGE>
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by, and should be read in
conjunction with, the more detailed information and consolidated financial
statements (including the notes thereto) appearing elsewhere in this Prospectus.
Except as otherwise indicated, all information in this Prospectus (i) gives
effect to a 1.584274-for-1 stock split to be consummated immediately prior to
the Offering, (ii) reflects the consummation of the Acquisitions (as defined and
described in "Business--The Acquisitions"), (iii) gives effect to the exchange
of certain outstanding indebtedness of the Company for shares of Class A Common
Stock and Class B Common Stock and the exchange of all shares of Class C Common
Stock for Class A Common Stock and Class B Common Stock as described in "The
Company," (iv) assumes no exercise of the Underwriters' over-allotment option,
and (v) assumes an initial public offering price of $13.00. Unless the context
otherwise requires, all references in the Prospectus to the "Company" or "Hvide"
include Hvide Marine Incorporated, its predecessors, and its consolidated
subsidiaries. See "Glossary" for definitions of certain terms used herein.
THE COMPANY
Hvide (pronounced "vee-dah") provides marine support and transportation
services primarily in the U.S. domestic trade and principally to the energy and
chemical industries. The Company is the third largest operator of supply and
crew boats in the Gulf of Mexico. In addition, the Company is the sole provider
of commercial tug services in Port Everglades and Port Canaveral, Florida, and a
leading provider of such services in Mobile, Alabama. The Company also
transports petroleum products and specialty chemicals in the U.S. domestic
trade, a market insulated from international competition under the Jones Act.
The total capacity of the Company's five chemical carriers, pro forma for the
Acquisitions, represents approximately 44% of the capacity of the domestic
specialty chemical carrier fleet. In addition, the Company has options to
acquire up to a 75% interest in five double-hull petroleum product carriers
currently under construction for delivery during 1998.
The Company has grown rapidly through a series of strategic acquisitions,
increasing its marine support fleet from 20 vessels in 1993 to 74 vessels
currently and its marine transportation fleet from three vessels in 1993 to 29
vessels currently, in each case on a pro forma basis. As a result, the Company's
revenues increased 198% from $41.5 million in 1993 to $123.8 million in 1995, on
a pro forma basis. Over the same period, the Company's EBITDA increased 181%
from $11.3 million to $31.7 million, on a pro forma basis, and its income from
operations increased 188% from $6.6 million to $19.0 million, on a pro forma
basis. For other measures of the Company's operating results as determined under
generally accepted accounting principles and its pro forma operating results,
see "Selected Historical and Pro Forma Consolidated Financial Data" and the
Company's consolidated financial statements.
The Company's strategy is to realize the benefits presented by the
integration of its recent and pending acquisitions with its existing operations
and to continue to grow through selected acquisitions that further consolidate
the marine support and transportation services markets in which the Company
operates. The Company believes it has numerous opportunities to make further
accretive acquisitions in its core businesses. Critical elements of the
Company's strategy include continuing to (i) utilize its demonstrated expertise
in acquiring and consolidating diverse marine operations, (ii) focus its
operations in the U.S. domestic trade, (iii) develop and apply marine technology
to meet its customers' needs in an innovative and cost-effective manner, (iv)
maintain and pursue long-term customer relationships that limit the risk
associated with the investments required for new vessels and mitigate the
effects of industry cyclicality, and (v) enhance its record of quality service
and safety.
MARINE SUPPORT SERVICES
Offshore Energy Support. The Company's fleet of 64 offshore energy support
vessels, pro forma for the Acquisitions, consists of 24 supply boats, 37 crew
boats, and two utility boats that transport supplies and personnel and provide
towing and other support services to offshore oil and natural gas exploration
and production operations, primarily in the Gulf of Mexico. The offshore energy
support
3
<PAGE>
industry in the Gulf of Mexico has experienced substantial consolidation and
vessel attrition during the past decade. As a result, the Company believes that
industry fundamentals have improved, resulting in increasing day rates and
utilization, and expects this trend to continue through further consolidation.
The Acquisitions strengthen the Company's position as the third largest operator
of supply and crew boats in the Gulf of Mexico. This strengthened position will
make the Company's operations more susceptible to fluctuations in oil and gas
prices, which affect the level of offshore exploration and development activity
and thus the demand for the services provided by the Company's offshore energy
support vessels. In the past, the Company has sought to mitigate the adverse
effect of reduced demand through cost reduction and relocation of support
vessels to other markets. See "Risk Factors -- Cyclical Industry Conditions" and
"Business--The Industry--Marine Support Services."
Offshore and Harbor Towing. The Company's 11 tugs provide offshore towing
services and harbor assistance to tankers, barges, containerships, other cargo
vessels, and cruise ships calling at Port Everglades and Port Canaveral,
Florida, and Mobile, Alabama. Port Everglades and Mobile are among the fastest
growing ports in the United States. In Port Everglades and Port Canaveral, the
Company is the sole franchisee providing commercial tug services. The Company
recently directed the design and construction of a technologically advanced
5,100-hp tractor tug, the Broward, delivered in 1995, designed to provide escort
services to tankers and other large vessels and specialized services to the
offshore energy industry, such as deepwater facilities installation support.
Through the combination of the distinctive underwater shape of its hull and its
omni-directional propulsion system, a tractor tug can control the direction of
an assisted vessel more effectively and can develop greater relative pulling
power than a conventional tug.
MARINE TRANSPORTATION SERVICES
Chemical Transportation. The total capacity of the Company's five chemical
carriers, pro forma for the Acquisitions, represents approximately 44% of the
capacity of the domestic specialty chemical carrier fleet, and four of the five
vessels are among the most recently built and the only independently owned,
diesel-powered chemical carriers with full double-bottom hulls operating in the
U.S. domestic trade. Two of the carriers currently transport industrial
chemicals in bulk parcel lots and the other three carriers currently transport
petroleum products and petrochemicals, primarily for major oil companies. The
Company believes that domestic energy and chemical transportation freight rates
will increase within the next three to five years and continue thereafter, as
the supply of vessels eligible to carry petroleum products diminishes as a
result of mandatory retirement imposed by the Oil Pollution Act of 1990 ("OPA
90").
Petroleum Product Transportation. The Company's petroleum product
transportation fleet is currently comprised of the Seabulk Challenger, a 39,300
dwt product carrier, and a fleet of ten towboats and 13 fuel barges. The Seabulk
Challenger has since 1975 operated under successive charters to Shell Oil
Company ("Shell") (extending to January 2000) carrying refined petroleum
products from Shell's refineries in Texas and Louisiana to various U.S. Gulf of
Mexico and Atlantic coast ports. The towboat and barge fleet is engaged in the
transportation of residual and diesel fuels along the Atlantic intracoastal
waterway and in the St. Johns River in Florida, primarily for a major Florida
utility.
The Company also owns a minority interest in five 45,300 dwt double-hull
petroleum product carriers currently under construction for delivery during
1998. The product carriers are intended to serve the domestic market currently
served by single-hull tankers whose retirement is mandated by OPA 90. The
Company, whose ownership is currently 2.4%, has options to purchase up to an
additional 72.6% ownership interest in the vessels for a total estimated cost of
up to $32.0 million (assuming exercise of the options before January 1, 1998).
The Company is supervising the construction of the vessels and will provide
operational management following delivery.
OPA 90. OPA 90 requires, among other things, that existing single-hull
vessels must be retired from domestic transportation of petroleum products
between 1995 and 2015 unless retrofitted with double hulls. The Company's
chemical carriers and its petroleum product carrier will be required to cease
transporting petroleum products at various dates from 2003 to 2015, and its fuel
barges will cease transporting fuel in 2015. See "Risk Factors -- Mandated
Removal of Vessels from Jones Act Trade." The Company currently has no specific
plans concerning the retrofitting or replacement of such vessels.
4
<PAGE>
THE OFFERING
<TABLE>
<S> <C>
Class A Common Stock Offered......... 7,000,000 shares
Common Stock to be Outstanding
After the Offering:
Class A Common Stock............. 7,452,413 shares(1)
Class B Common Stock............. 3,316,817 shares(2)
Total........................ 10,769,230 shares
Voting Rights........................ After the Offering, the Company's outstanding capital
stock will consist of Class A Common Stock and Class
B Common Stock (together, the "Common Stock"). Each
holder of Class A Common Stock is entitled to one
vote per share and each holder of Class B Common
Stock is entitled to ten votes per share on all
matters submitted to a vote of stockholders. Except
as required by law and the Company's Articles of
Incorporation, holders of the Class A Common Stock
and the Class B Common Stock vote together as a
single class. After the Offering, the holders of the
Class A Common Stock and the Class B Common Stock
will have 18.3% and 81.7% of the voting power of the
Common Stock, respectively. See "Description of
Capital Stock."
Upon completion of the Offering, J. Erik Hvide, the
Company's Chairman, together with certain trusts of
which he is the trustee (the "Hvide Trusts"), and a
group of investors (the "Investor Group") that in
September 1994 purchased shares of Common Stock,
Common Stock Contingent Share Issuances, and the
Company's Junior Notes and Senior Notes (each as
defined herein), will own shares that will represent
16.4% and 17.6%, respectively, of the outstanding
shares of Common Stock (16.4% and 7.8%, respectively,
if the Underwriters' over-allotment option is
exercised in full) and 43.6% and 38.9%, respectively,
of the voting power of all Common Stock (56.2% and
17.9%, respectively, if the Underwriters'
over-allotment option is exercised in full). In
addition, Mr. Hvide and the Investor Group have
entered into an agreement to vote their shares
together to nominate eight and three persons,
respectively, to the Company's 11-member Board of
Directors. The Company's Articles of Incorporation
require that certain significant transactions be
approved by 95% of the holders of the Class B Common
Stock, which is held entirely by members of the Hvide
Family (as defined herein) and the Investor Group.
See "Description of Capital Stock-- Certain
Provisions of Articles of Incorporation and By-Laws"
and "--Shareholders Agreement" and "Risk Factors--
Control by Current Stockholders."
Use of Proceeds...................... To pay a portion of the cash purchase price of the
Acquisitions and to repay a portion of the Company's
indebtedness.
Conditions to Closing................ The Offering is conditioned upon the simultaneous
consummation of the acquisition of the OMI Chemical
Carriers and the Seal Fleet Vessels (as defined and
described in "Business--The Acquisitions").
Nasdaq National Market Symbol........ HMAR
</TABLE>
- -----------------------
(1) Excludes 835,000 shares of Class A Common Stock reserved for issuance upon
exercise of options to be granted prior to or shortly after completion of
the Offering and includes (i) 39,205 shares of Class A Common Stock to be
issued following the Offering in exchange for a portion of the principal of
the Junior Notes (as defined herein) remaining outstanding upon consummation
of the Offering (see "Use of Proceeds" and "The Company"), (ii) 85,750
shares of Class A Common Stock to be issued in payment for services, and
(iii) 23,692 shares of Class A Common Stock to be issued in exchange for
certain outstanding indebtedness upon consummation of the Offering. See
"Management--Equity Ownership Plans," "Certain Transactions," and
"Description of Capital Stock--Recapitalization Agreement."
(2) Includes 1,085,742 shares of Class B Common Stock to be issued following the
Offering in exchange for the remainder of the principal remaining
outstanding on the Junior Notes. The Class B Common Stock is held entirely
by members of the Hvide Family and the Investor Group. See "Security
Ownership of Principal Stockholders and Management," "Description of Certain
Indebtedness--Acquisition Notes and Assumed Debt," and "Description of
Capital Stock--Recapitalization Agreement."
5
<PAGE>
SUMMARY CONSOLIDATED HISTORICAL AND
PRO FORMA FINANCIAL AND OPERATING DATA
The summary consolidated financial data presented below should be read in
conjunction with the consolidated financial statements and notes thereto of the
Company, the financial statements and notes thereto of the OMI Chemical Carrier
Group (the "OMI Chemical Carriers"), the Seal Fleet Vessels (as defined herein),
and Gulf Boat Marine Services, Inc. and E&D Boat Rentals, Inc. (together,
"GBMS"), "Selected Historical and Pro Forma Consolidated Financial Data,"
"Management's Discussion and Analysis of Financial Condition and Results of
Operations," and "Pro Forma Condensed Consolidated Financial Statements"
included elsewhere in this Prospectus. The summary unaudited pro forma statement
of operations data for the year ended December 31, 1995 and the three months
ended March 31, 1996 give effect to the pending acquisitions of the OMI Chemical
Carriers and the Seal Fleet Vessels, the acquisition of eight crew boats from
GBMS in January 1996, the acquisition of one vessel in February 1996, the
Offering, the repayment of certain indebtedness, and the conversion of the
Junior Notes into shares of Common Stock as if all such transactions had
occurred on January 1, 1995 and January 1, 1996, respectively. The summary
unaudited pro forma balance sheet and vessel data give effect to the foregoing
transactions, except for the vessels acquired in January and February 1996, and
to the acquisition of four additional vessels as if all such transactions had
occurred on March 31, 1996. Such pro forma data are presented for illustrative
purposes only and do not purport to represent what the Company's results
actually would have been if such events had occurred at the dates indicated, nor
do such data purport to project the financial position or results of operations
for any future period or as of any future date. The results for the three months
ended March 31, 1996 are not necessarily indicative of the results to be
expected for the full year.
<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
--------------------------------------- ------------------------------
PRO FORMA PRO FORMA
1993 1994 1995 1995 1995 1996 1996
(IN THOUSANDS, EXCEPT PER SHARE, VESSEL, AND OPERATING DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenue............................... $41,527 $49,792 $70,562 $ 122,985 $15,780 $20,211 $32,332
Income from operations................ 6,584 5,838 11,072 18,969 2,318 2,705 5,066
Interest expense, net................. 3,412 5,302 11,460 11,531 2,716 2,882 2,691
Income (loss) before provision for
income taxes and cumulative effect
of a change in accounting
principle........................... 3,691 547 (362) 7,628 (609) -- 2,552
Income (loss) before cumulative effect
of a change in accounting
principle........................... 1,818 358 (360) 4,882 (609) (35) 1,633
Cumulative effect of a change in
accounting principle................ 1,491 -- -- -- -- -- --
Net income (loss)..................... 3,309 358 (360) 4,882 (609) (35) 1,633
------- ------- ------- --------- ------- ------- ---------
------- ------- ------- --------- ------- ------- ---------
EARNINGS (LOSS) PER COMMON SHARE:
Income (loss) before cumulative effect
of a change in accounting
principle(1)........................ $ 0.26 $ 0.03 $ (0.14) $ 0.45 $ (0.24) $ (0.01) $ 0.15
Net income (loss)(1).................. 0.50 0.03 (0.14) 0.45 (0.24) (0.01) 0.15
------- ------- ------- --------- ------- ------- ---------
------- ------- ------- --------- ------- ------- ---------
Weighted average number of common
shares and common share equivalents
outstanding(2)...................... 6,268 5,302 2,535 10,769 2,535 2,535 10,769
------- ------- ------- --------- ------- ------- ---------
------- ------- ------- --------- ------- ------- ---------
OTHER FINANCIAL DATA:
EBITDA(3)............................. $11,319 $10,338 $17,380 $ 31,655 $ 3,797 $ 4,382 $ 8,341
------- ------- ------- --------- ------- ------- ---------
------- ------- ------- --------- ------- ------- ---------
NET CASH PROVIDED BY (USED IN):
Operating activities.................. 6,956 2,858 3,948 3,204 4,164
Investing activities.................. (2,247) (39,815) (8,066) (3,419) (2,464)
Financing activities.................. (6,158) 41,249 805 (1,435) 1,263
VESSEL DATA (AT END OF PERIOD):
Marine Support Services
Supply boats.......................... 10 14 14 14 14 24
Crew boats(4)......................... -- 21 28 28 37 39
Tugs.................................. 10 10 11 10 11 11
Marine Transportation Services
Chemical carriers................... 2 2 2 2 2 5
Product carriers.................... 1 1 1 1 1 1
Towboats and barges................. -- 18 23 18 23 23
------- ------- ------- ------- ------- ---------
Total............................. 23 66 79 73 88 103
------- ------- ------- ------- ------- ---------
------- ------- ------- ------- ------- ---------
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
--------------------------- ------------------
1993 1994 1995 1995 1996
<S> <C> <C> <C> <C> <C>
OPERATING DATA:
Supply boats:
Average vessel day rates(5)........................... $ 2,696 $ 3,195 $ 3,023 $ 2,888 $ 3,468
Average vessel utilization rates(6)................... 98% 84% 81% 71% 92%
Crew boats:
Average vessel day rates(5)........................... -- $ 1,421 $ 1,434 $ 1,444 $ 1,469
Average vessel utilization rates(6)................... -- 88% 85% 79% 89%
Tugs:
Total offshore and ship docking tug revenue
(in thousands)...................................... $10,585 $11,140 $12,582 $ 2,887 $ 3,625
Total ship docking tug jobs........................... 8,178 8,740 9,233 2,232 2,458
Chemical and product carriers:
Time charter equivalents(7)........................... $24,765 $24,898 $26,034 $25,459 $25,532
</TABLE>
<TABLE>
<CAPTION>
AT MARCH 31, 1996
---------------------
ACTUAL PRO FORMA
(IN THOUSANDS)
<S> <C> <C>
BALANCE SHEET DATA:
Working capital.......................................................... $ 448 $ (3,463)
Total assets............................................................. 154,020 254,509
Total debt............................................................... 115,778 131,272
Stockholders' and minority partners' equity.............................. 13,798 102,294
</TABLE>
- -----------------------
(1) For the purpose of calculating earnings per share for the years 1993 and
1994, historical income available to common stockholders has been reduced
for dividends on Class A Preferred Stock of $203,000 and $222,000,
respectively. The Class A Preferred Stock was redeemed on September 30,
1994. See "Certain Transactions."
(2) For the years 1993 and 1994, the weighted average number of common shares
and common share equivalents assumes the conversion of the Class B Preferred
Stock into shares of Common Stock. The Class B Preferred Stock was redeemed
on September 30, 1994. Pro forma shares reflect the weighted average number
of common shares giving effect to the issuance of 7,000,000 shares of Class
A Common Stock in the Offering, 85,750 shares of Class A Common Stock in
payment of services, 23,692 shares of Class A Common Stock in exchange for
certain outstanding indebtedness, 39,205 shares of Class A Common Stock and
1,085,742 shares of Class B Common Stock in exchange for the principal
amount of the Junior Notes remaining outstanding after the application of
the proceeds of the Offering and exclude 835,000 shares of Class A Common
Stock reserved for issuance upon exercise of options to be granted prior to
or shortly after the consummation of the Offering. See "Management--Equity
Ownership Plans," "Certain Transactions," and "Description of Certain
Indebtedness-- Acquisition Notes and Assumed Debt."
(3) EBITDA (net income from continuing operations before interest expense,
income tax expense, depreciation expense, amortization expense, minority
interests, and other non-operating income) is frequently used by securities
analysts and is presented here to provide additional information about the
Company's operations. EBITDA is not required by generally accepted
accounting principles and should not be considered as an alternative to net
income as an indicator of the Company's operating performance or as an
alternative to cash flows from operations as a measure of liquidity.
(4) For the years 1994, 1995, and pro forma 1995, and the three months ended
March 31, 1995 and 1996 and pro forma three months ended March 31, 1996, the
number of crew boats includes two utility boats.
(5) Average day rates are calculated by dividing total vessel revenue by the
total number of vessel days utilized.
(6) Utilization rates are average rates based on a 365-day year. Vessels are
considered utilized when they are generating charter revenue.
(7) Time charter equivalents are calculated by deducting total voyage expenses
from total voyage revenue and dividing the result by the total days per
voyage.
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RISK FACTORS
In addition to other information contained in this Prospectus, prospective
purchasers of the Class A Common Stock should carefully consider the following
factors in evaluating an investment in the Company.
POTENTIAL LOSS OF JONES ACT PROTECTION
Most of the Company's operations are conducted in the U.S. domestic trade,
which, by virtue of the U.S. coastwise laws (often referred to as the "Jones
Act"), is restricted to vessels built in the United States, owned and crewed by
U.S. citizens, and registered under U.S. law. There have been repeated attempts
to repeal the coastwise laws, and efforts to effect such repeal are underway and
are expected to continue in the future. The Company is already subject to
vigorous competition and potential additional competition in all aspects of its
operations, including competition by companies with financial resources greater
than those of the Company which could be committed to the construction of new
vessels in excess of market requirements. Repeal of the coastwise laws would
result in additional competition from vessels built in lower-cost foreign
shipyards and manned by foreign nationals accepting lower wages than U.S.
citizens and could have a material adverse effect on the Company.
HAZARDOUS ACTIVITIES
The operation of ocean-going vessels carries an inherent risk of
catastrophic marine disasters and property losses caused by adverse weather
conditions, mechanical failures, human error, and other circumstances or events.
In addition, the transportation of petroleum and toxic chemicals is subject to
the risk of spills and environmental damage. Any such event could have a
material adverse effect on the Company. While the Company carries insurance to
protect against most of the accident-related risks involved in the conduct of
its business, including environmental damage and pollution insurance coverage,
there can be no assurance that all risks are adequately insured against, that
any particular claim will be paid, or that the Company will be able to procure
adequate insurance coverage at commercially reasonable rates in the future. In
particular, more stringent environmental regulations may result in increased
costs for, or the lack of availability of, insurance against the risks of
environmental damage or pollution.
CYCLICAL INDUSTRY CONDITIONS
Historically, the marine support and transportation services industry has
been cyclical, with corresponding volatility in profitability and vessel values.
This industry cyclicality has been due to changes in the level of general
economic growth as well as changes in the supply of and demand for vessel
capacity, which impact charter rates and vessel values. The supply of vessels is
influenced by the numbers of vessels constructed and retired and by government
and industry regulation of maritime transportation practices. The Company's
offshore energy support services and offshore and harbor towing services are
dependent upon the levels of activity in offshore oil and natural gas
exploration, development, and production. Such activity levels are affected by
both short- and long-term trends in world oil and natural gas prices.
Utilization of the Company's towboat and fuel barge fleet is also partly
dependent on such prices as well as energy utilization, which is partly a
function of the weather. In recent years, oil and natural gas prices, and
therefore the level of offshore drilling and exploration activity, have been
extremely volatile. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations." Any future prolonged decline in natural
gas or oil prices will, in all likelihood, depress the level of offshore
exploration and development activity and result in a corresponding decline in
the demand for the services provided by the Company's offshore energy support
vessels, and any sustained reduction in such activity could have a material
adverse effect on the Company. See "Business--The Industry--Marine Support
Services--Offshore Energy Support." In addition, marine support and
transportation services are dependent on general economic conditions. Any
general economic slowdown could have an adverse effect on the level of the
provision of those services and therefore upon the Company.
ENVIRONMENTAL RISK AND REGULATIONS
Current laws and regulations could impose substantial liability on the
Company for damages, remediation costs, and penalties associated with oil or
hazardous-substance spills or other discharge into
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the environment involving the Company's vessel operations. Shoreside industrial
operations, including a small marine maintenance and drydocking facility owned
and operated by the Company, are also subject to federal, state, and local
environmental laws and regulations. Amendment of these laws and regulations to
impose more stringent requirements would likely result in increased maintenance
and operating expenses. In addition, OPA 90 requires tanker owners and operators
to establish and maintain with the U.S. Coast Guard evidence of financial
responsibility, as demonstrated by a certificate of financial responsibility
("COFR"), with respect to potential oil spill liability, which the Company and
most of its competitors currently satisfy by virtue of self-insurance or
third-party insurance. Additional laws and regulations may be adopted that could
limit the ability of the Company to do business or increase the cost of its
doing business and could have a material adverse effect on its operations. See
"Business--Environmental and Other Regulation."
HIGH LEVERAGE AND DEBT SERVICE; CERTAIN RESTRICTIONS ON CAPITAL EXPENDITURES
Upon completion of the Offering, the Company will continue to have
substantial indebtedness. Giving pro forma effect to the Offering and the
Acquisitions, the Company's total outstanding indebtedness would have been
$131.3 million as of March 31, 1996. In addition, the Company has a minority
interest, and options to acquire a majority interest, in five vessels currently
under construction that are being financed, in substantial part, with
non-recourse indebtedness. See "Business--Company Operations--Marine
Transportation Services--Petroleum Product Transportation." Such leverage poses
certain risks for the Company, including the risks that the Company may not
generate sufficient cash flow to service its indebtedness; that the Company will
be unable to renegotiate the terms of its indebtedness; that it may be unable to
obtain additional financing in the future; that, to the extent it is
significantly more leveraged than its competitors, it may be placed at a
competitive disadvantage; and that the Company's capacity to respond to market
conditions and other factors may be adversely affected. The Company's ability to
service its debt will depend on its future performance, which will be subject to
prevailing economic and competitive conditions and other specific factors
discussed herein, as well as developments in capital markets generally.
The terms of certain of the Company's indebtedness (i) require the Company
to maintain minimum levels of working capital and net worth and to meet
specified financial ratios, (ii) limit the issuance of debt by the Company and
of debt or preferred stock by the Company's subsidiaries, (iii) restrict the
ability of its subsidiaries to pay dividends or make distributions to the
Company, (iv) restrict the Company's ability to pay dividends, redeem capital
stock or subordinated debt, make certain investments or issue capital stock,
place additional liens on its or its subsidiaries' property, incur additional
long-term indebtedness, make capital expenditures in excess of specified
limitations, and enter into mergers or similar transactions, (v) limit certain
corporate acts and transactions by the Company, and (vi) provide that upon a
Change in Control (as defined), holders of the Senior Notes have the right to
require the Company to repurchase such indebtedness. In addition, the amount
available under the Company's vessel acquisition line of credit will be reduced
dollar-for-dollar to the extent that gross proceeds from the Offering are less
than $91.0 million. Such provisions could adversely affect the Company's ability
to pursue its strategy of growth through acquisitions. See "Management's
Discussion and Analysis of Financial Condition and Results of
Operations--Liquidity and Financial Resources" and "Description of Certain
Indebtedness--Bank Debt."
MANDATED REMOVAL OF VESSELS FROM JONES ACT TRADE
OPA 90 establishes a phase-out schedule for single-hull vessels carrying
crude oil and petroleum products which, in the case of the Company's product
carrier (Seabulk Challenger) and two chemical carriers (Seabulk Magnachem and
Seabulk America), are the years 2003, 2007, and 2015, respectively; in the case
of its fuel barges is the year 2015; and in the case of the three OMI Chemical
Carriers (OMI Hudson, OMI Dynachem, and OMI Star) are the years 2011, 2011, and
2000, respectively. As a result of this requirement, these vessels will be
prohibited from transporting petroleum products in U.S. waters after their
respective phase-out dates. There can be no assurance that future tanker market
rates will be sufficient to support construction of replacement vessels.
Although the Company's remaining vessels are not subject to mandatory
retirement, and the Company employs what it believes to be a
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rigorous maintenance program for all its vessels, there can be no assurance that
the Company will be able to maintain its fleet by extending the economic lives
of existing vessels or acquiring new or used vessels. See "Business--Company
Operations--Marine Transportation Services" and "--Environmental and Other
Regulation."
RELIANCE ON SIGNIFICANT CUSTOMERS
Shell, the Company's largest single customer and the long-term charterer of
the Company's product carrier, accounted for between 10% and 15% of the
Company's 1995 revenues (less than 10% on a pro forma basis assuming the
Acquisitions had occurred on January 1, 1995). Florida Power & Light Company
("FPL"), the Company's second largest customer, accounted for between 5% and 10%
of the Company's 1995 revenues (less than 5% on a pro forma basis assuming the
Acquisitions had occurred on January 1, 1995). The loss of either of these
customers could have a material adverse effect on the Company. See
"Business--Company Operations--Customers and Charter Terms."
RISK OF LOSS AND INSURANCE
The business of the Company is affected by a number of risks, including the
mechanical failure of its vessels, collisions, vessel loss or damage, cargo loss
or damage, hostilities, and labor strikes. In addition, the operation of any
vessel is subject to the inherent possibility of a catastrophic marine disaster,
including oil, fuel, or chemical spills and other environmental mishaps, as well
as other liabilities arising from owning and operating vessels. Any such event
may result in loss of revenues and increased costs and other liabilities.
Although the Company's losses from such hazards have not historically exceeded
its insurance coverage, there can be no assurance that this will continue to be
the case.
OPA 90, by imposing virtually unlimited liability upon vessel owners,
operators, and certain charterers for certain oil pollution accidents in the
United States, has made liability insurance more expensive and has also prompted
insurers to consider reducing available liability coverage. See
"Business--Environmental and Other Regulation." While the Company maintains
insurance, there can be no assurance that all risks are adequately insured
against particularly in light of the virtually unlimited liability imposed by
OPA 90, that any particular claim will be paid, or that the Company will be able
to procure adequate insurance coverage at commercially reasonable rates in the
future. Because it maintains mutual insurance, the Company is subject to funding
requirements and coverage shortfalls in the event claims exceed available funds
and reinsurance and to premium increases based on prior loss experience. Any
such shortfalls could have a material adverse impact on the Company.
RESTRICTION ON FOREIGN OWNERSHIP
In order to maintain the eligibility of the Company's vessels to be operated
in the U.S. domestic trade, 75% of the outstanding capital stock and voting
power of the Company is required to be held by U.S. citizens. See
"Business--Environmental and Other Regulation." Although the Company's Articles
of Incorporation contain provisions limiting non-citizen ownership of its
capital stock (see "Description of Capital Stock--Foreign Ownership
Restrictions"), the Company could lose its ability to conduct operations in the
U.S. domestic trade if such provisions prove unsuccessful in maintaining the
required level of citizen ownership. Such loss would have a material adverse
effect on the Company.
ACQUISITION STRATEGY
One element of the Company's strategy is to continue to grow through
selected acquisitions that further consolidate the marine support and
transportation markets in which the Company operates. There can be no assurance
that the Acquisitions or any additional acquisitions will be successful in
enhancing the operations or profitability of the Company; that the Company will
be able to identify suitable additional acquisition candidates; that it will
have the financial ability to consummate additional acquisitions; or that it
will be able to consummate such additional acquisitions on terms favorable to
the Company. The amount available under the Company's vessel acquisition line of
credit will be reduced dollar-for-dollar to the extent that gross proceeds from
the Offering are less than $91.0 million. Such provisions could adversely affect
the Company's ability to pursue its strategy of growth through acquisitions. See
"Management's Discussion and Analysis of Financial Condition and Results
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of Operations--Liquidity and Financial Resources" and "Description of Certain
Indebtedness--Bank Debt."
LEGAL PROCEEDINGS
The Company's chemical carrier Seabulk America is the subject of two pending
legal proceedings, one involving the eligibility of the vessel to operate in the
U.S. domestic trade and the other involving the cost of its completion, either
of which, if determined adversely to the Company, could have a material adverse
effect on the Company. In addition, although the Federal Trade Commission
("FTC") granted early termination of the waiting period under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), with respect to the Company's proposed acquisition of the OMI Chemical
Carriers, by letter dated June 26, 1996, a shipper of chemicals advised the FTC
and the Department of Justice ("DOJ") that it opposed the acquisition and urged
their inquiry into the acquisition. Accordingly, although the Company believes
that neither the FTC nor the DOJ will initiate any formal action with respect to
such acquisition by the Company, there can be no assurance that the FTC or the
DOJ will not file suit pursuant to the federal antitrust laws to enjoin the
consummation of the acquisition or to seek divestiture of one or more of the OMI
Chemical Carriers by the Company following the consummation of the acquisition.
Any such divestiture, if required, could have a material adverse effect on the
Company. See "Business--Legal Proceedings."
INTERNATIONAL MARINE OPERATIONS
The Company currently operates an aggregate of three offshore supply boats
in the Arabian Sea and Southeast Asia, and of the supply boats to be acquired in
the Acquisitions, two will be operated in the North Sea and one in Southeast
Asia. Such operations are subject to risks inherent in conducting business in
foreign countries, including political changes, possible vessel seizure and
asset nationalization, or other government actions, all of which are beyond the
control of the Company and the occurrence of any of which could have a material
adverse affect on the Company.
KEY PERSONNEL
The Company is materially dependent upon the continued services of key
members of its management, including its Chairman, President, and Chief
Executive Officer, J. Erik Hvide. The loss of one or more key members of
management could have a material adverse effect on the Company. See
"Management."
NO PRIOR MARKET FOR CLASS A COMMON STOCK
Prior to the Offering, there has been no public market for the Class A
Common Stock or any other securities of the Company. The initial public offering
price for the shares of Class A Common Stock has been determined through
negotiations between the Company and the Representatives of the Underwriters.
See "Underwriting." Although the Class A Common Stock has been approved for
listing on the Nasdaq National Market, there can be no assurance that an active
trading market will develop or be sustained or that investors in shares of the
Class A Common Stock will be able to resell their shares at or above the initial
public offering price, if at all.
CONTROL BY CURRENT STOCKHOLDERS; SHAREHOLDERS AGREEMENT; RESTRICTIONS ON
CORPORATE ACTIONS; ANTI-TAKEOVER EFFECT OF DUAL CLASSES OF STOCK AND CERTAIN
OTHER PROVISIONS
The Company's Common Stock is divided into Class A Common Stock, of which
each share is entitled to one vote with respect to all matters submitted to
stockholder vote, and Class B Common Stock, of which each share is entitled to
ten votes with respect to such matters. Upon completion of the Offering, J. Erik
Hvide and the Hvide Trusts will beneficially own 1,769,107 shares of Class B
Common Stock, and the Investor Group will beneficially own 342,971 shares of
Class A Common Stock and 1,547,710 shares of Class B Common Stock. Upon
completion of the Offering, Mr. Hvide (together with the Hvide Trusts) and the
Investor Group will therefore own shares that will represent 16.4% and 17.6%,
respectively, of the outstanding shares of Common Stock (16.4% and 7.8%,
respectively, if the Underwriters' over-allotment option is exercised in full)
and 43.6% and 38.9%, respectively, of the voting power of all Common Stock
(56.2% and 17.9%, respectively, if the Underwriters' over-allotment option is
exercised in full). See "Use of Proceeds," "The Company," and "Description of
Capital Stock--Recapitalization Agreement." Accordingly, Mr. Hvide and the
Investor Group will be able to
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elect a majority of the Company's directors and to determine the disposition of
all matters submitted to a vote of the Company's stockholders. In addition, Mr.
Hvide and the Investor Group have entered into an agreement giving them the
right to nominate eight and three persons, respectively, to the Company's
11-member Board of Directors. Each share of Class B Common Stock is convertible
by its holder into one share of Class A Common Stock at any time, and
automatically converts into Class A Common Stock following the Offering if held
by persons other than the Hvide Family and members of the Investor Group. See
"Management," "Security Ownership of Principal Stockholders and Management," and
"Description of Capital Stock--Shareholders Agreement." Pursuant to certain
agreements, Mr. Hvide and the Hvide Trusts will be required to transfer shares
of Common Stock to the Company upon its issuance of shares of Common Stock to
the Investor Group 300 days after the date of this Prospectus. See "Description
of Capital Stock--Contingent Share Issuance Agreement." In addition, so long as
the Investor Group owns specified percentages of the outstanding Class B Common
Stock, certain significant transactions will require the approval of 95%, and
the appointment of a new chief executive officer will require approval of 75%,
of the holders of the Class B Common Stock. See "Description of Capital
Stock--Certain Provisions of Articles of Incorporation and Bylaws."
Such control by Mr. Hvide and the Investor Group may also have the effect of
discouraging certain types of transactions involving an actual or potential
change of control of the Company, including transactions in which the holders of
Class A Common Stock might otherwise receive a premium for their shares over
then-current market prices. In addition, pursuant to the Company's Articles of
Incorporation, the Board of Directors is divided into three classes of directors
serving staggered three-year terms and, consequently, it would likely require
two annual meetings rather than one for the stockholders to replace a majority
of the Board of Directors.
SHARES ELIGIBLE FOR FUTURE SALE
Sales of substantial amounts of Class A Common Stock in the public market
following the Offering, or the perception that such sales may occur, could have
an adverse effect on the market price of the stock. Subject to an agreement that
restricts their sale without the prior approval of the Representatives of the
Underwriters for 180 days following the date of this Prospectus, all 1,769,107
of the shares of Class B Common Stock owned by Mr. Hvide will be eligible for
public sale (Class B Common Stock is freely convertible, share for share, into
Class A Common Stock), subject to volume and other limitations of Rule 144 under
the Securities Act of 1933, as amended (the "Securities Act"). Also subject to
the 180-day lock-up, 765,734 shares of Common Stock owned by the Investor Group
will also be eligible for public sale under Rule 144. Pursuant to the
Shareholders Agreement and CSI Agreement (each as defined herein). Mr. Hvide and
the Hvide Trusts will be required to transfer shares of Common Stock to the
Company upon its issuance of shares of Common Stock to the Investor Group 300
days after the date of this Prospectus. The Company has granted the Investor
Group certain registration rights under the Securities Act with respect to the
Common Stock owned by them. Prior to or shortly after the consummation of the
Offering, certain directors, officers, and employees of the Company will be
granted options to purchase 835,000, shares of Class A Common Stock at an
exercise price equal to the offering price of the shares offered hereby. The
shares acquired upon exercise of these options will also be eligible for public
sale subject to Rule 144 under the Securities Act. See "Shares Eligible for
Future Sale." Moreover, the Company may issue shares of Common Stock in
connection with future acquisitions. See "Management's Discussion and Analysis
of Financial Condition and Results of Operations--Liquidity and Capital
Resources," "Business--Strategy," and "Description of Capital
Stock--Shareholders Agreement" and "--Contingent Share Issuance Agreement."
FORWARD-LOOKING INFORMATION
The Prospectus Summary, the "Strategy" and "The Industry" sections of
"Business," and the "Cyclical Industry Conditions," "Mandated Removal of Vessels
from Jones Act Trade," and "Acquisition Strategy" paragraphs of "Risk Factors"
contain one or more forward-looking statements or statements based upon the
Company's beliefs, by which the Company attempts to measure activity in, and to
analyze the factors affecting, the markets for its services. There can be no
assurance that (i) the Company has correctly measured or identified all of the
factors affecting these markets or the extent of their likely impact, (ii) the
publicly available information with respect to these factors on which the
Company's analysis is based is complete or accurate, (iii) the Company's
analysis is correct, or (iv) the Company's strategy, which is based in part on
this analysis, will be successful.
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THE COMPANY
Hvide Marine Incorporated was incorporated in the state of Florida in 1994
as Hvide Corp., the holding company for its principal operating subsidiary.
Immediately prior to the Offering, the principal operating subsidiary will be
merged with and into Hvide Corp. and Hvide Corp., the surviving entity, will be
renamed Hvide Marine Incorporated. The Company's principal operating subsidiary
began operations in 1958 as a harbor tug operator and in 1975 acquired its first
petroleum product carrier. It began transporting specialty chemicals in 1977 and
expanded into the operation of offshore energy support vessels with the
acquisition of eight supply boats in 1989.
In 1994, the Company substantially expanded its fleet, adding 20 crew boats,
six supply boats, and two utility boats to its offshore energy support fleet and
an 18-vessel tug and barge fleet to its petroleum product transportation
operations. This expansion also included the acquisition of the remaining
minority interests in certain vessels that were majority owned by the Company,
and the redemption of preferred stock held by the Company's founder.
The 1994 expansion was financed primarily through borrowings under the
Credit Facility (as defined herein) and the issuance to the Investor Group of
$25.0 million aggregate principal amount of senior subordinated notes (the
"Senior Notes") and $25.0 million aggregate principal amount of junior
subordinated notes (the "Junior Notes") at discounts, resulting in aggregate
proceeds to the Company of approximately $40.6 million. In connection with the
issuance of the Junior Notes, the Company issued to members of the Investor
Group, for aggregate consideration of $9.4 million, 452,518 shares of Class B
Common Stock and 313,215 shares of Class C Common Stock, and agreed to issue to
them up to 554,495 additional shares of Common Stock (to be contributed to the
Company by J. Erik Hvide and the Hvide Trusts) to the extent necessary to earn a
specified return on their investment. In addition, J. Erik Hvide (together with
the Hvide Trusts) and the Investor Group are entering into an agreement,
replacing a similar agreement entered into in 1994, granting them certain voting
and approval rights, including the right to nominate eight and three members,
respectively, of the Company's 11-member Board of Directors. See "Management's
Discussion and Analysis of Financial Condition and Results of
Operations--Liquidity and Capital Resources," "Certain Transactions,"
"Description of Certain Indebtedness," "Description of Capital
Stock--Shareholders Agreement," and "--Contingent Share Issuance Agreement."
Since September 1994, the Company has continued to grow through strategic
acquisitions. In addition, the Company has entered into purchase agreements with
five different sellers to acquire title to an aggregate of 15 vessels. The
purchase of these vessels, which constitute the Acquisitions, will be funded
with a combination of (i) a portion of the proceeds from the Offering, (ii)
general corporate funds, and (iii) the assumption or issuance of debt and lease
obligations. See "Use of Proceeds" and "Business--The Acquisitions."
Immediately prior to the Offering, 74,704 shares of the 452,518 shares of
Class B Common Stock owned by the Investor Group will be converted into 74,704
shares of Class A Common Stock, the 313,215 shares of Class C Common Stock owned
by the Investor Group will be converted into 229,062 shares of Class A Common
Stock and 84,153 shares of Class B Common Stock, and the 663,415 shares of Class
C Common Stock owned by the Hvide Family will be converted into 663,415 shares
of Class B Common Stock. In addition, $13.6 million of principal of the Junior
Notes remaining outstanding after application of a portion of the proceeds from
the Offering will be converted into 1,085,742 shares of Class B Common Stock and
39,205 shares of Class A Common Stock within 30 days after the consummation of
the Offering if the Underwriters' over-allotment option is not exercised, 85,750
shares of Class A Common Stock will be issued in payment for services, and
$308,000 of outstanding principal and accrued interest of certain other
indebtedness will be converted into 23,692 shares of Class A Common Stock upon
or following consummation of the Offering. To the extent that the Underwriters'
over-allotment option is exercised, the net proceeds therefrom will be used to
repay an equal principal
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amount of the Junior Notes and any then remaining principal amount of the Junior
Notes will be converted into shares of Class A Common Stock and Class B Common
Stock on the same proportionate basis as if the Underwriters' over-allotment
option was not exercised. See "Description of Certain Indebtedness" and
"Description of Capital Stock--Recapitalization Agreement."
The Company's principal office is located at 2200 Eller Drive, Fort
Lauderdale, Florida 33316, and its telephone number is (954) 523-2200.
USE OF PROCEEDS
The net proceeds to the Company from the sale of the Class A Common Stock
offered hereby, based on an assumed initial offering price of $13.00 per share
and after deducting underwriting discounts and commissions and estimated
offering expenses, are estimated to be approximately $82.9 million. Of such net
proceeds, (i) approximately $35.9 million will be used to fund part of the cash
portion of the aggregate purchase price of the Acquisitions and (ii)
approximately $47.0 million will be used to repay certain outstanding
indebtedness as described below. The aggregate purchase price of the
Acquisitions is $99.7 million, of which $37.7 million is payable in cash. The
Offering is conditioned upon the simultaneous consummation of the acquisition of
the OMI Chemical Carriers and the Seal Fleet Vessels. See "Business--The
Acquisitions."
Of the $47.0 million to be used to repay outstanding indebtedness, (i) $20.8
million will be used to repay $0.8 million of accrued interest on and $20.0
million of principal of the Senior Notes, which mature in two equal installments
in September 2003 and 2004 and bear interest at the rate of 12% per annum; (ii)
$15.1 million will be used to repay accrued interest on and a portion of the
principal amount of Junior Notes, which mature in September 2014 and bear
interest at the rate of 8% per annum; (iii) $6.8 million will be used to repay a
portion of the revolving line of credit under the Credit Facility, which line is
due in March 1997 and bears interest at a fluctuating rate (8.2% per annum on
March 31, 1996); (iv) $2.4 million will be applied to reduce the $3.0 million
principal amount of the Vessel Acquisition Note (as defined herein), which is
payable in four equal annual installments commencing October 1995 and bears
interest at the lesser of 10% per annum or prime plus 2% (10% per annum at March
31, 1996); (v) $1.6 million will be applied to reduce the $3.6 million principal
amount of the Founder's Note (as defined herein), which is due in 2000 and bears
interest at the greater of 12% per annum or prime plus 3% (12% per annum at
March 31, 1996); and (vi) $0.3 million will be applied to reduce the $2.1
million aggregate principal amount of the HOS Notes and the HCL Notes (each as
defined herein), which notes are due in full in 2004 and bear interest at a rate
of 12% per annum. To the extent that the net proceeds of the Offering are less
than $82.9 million (gross proceeds less than $91.0 million), there will be a
dollar-for-dollar reduction in the principal amount of Senior Notes repaid. For
additional information concerning the indebtedness that is being repaid with a
portion of the proceeds from the Offering, see "Management's Discussion and
Analysis of Financial Condition and Results of Operations--Liquidity and Capital
Resources" and "Description of Certain Indebtedness."
To the extent that the Underwriters' over-allotment option is exercised, the
net proceeds thereof will be used to repay an equal principal amount of the
remaining $5.0 million of outstanding Senior Notes and, to the extent that such
net proceeds exceed $5.0 million, an equal principal amount of the Junior Notes
and any then-remaining principal amount of the Junior Notes will be converted
into shares of Common Stock. See "The Company" and "Description of Capital
Stock--Recapitalization Agreement."
Pending the use of proceeds as described above, the Company intends to
invest such proceeds in short-term, interest-bearing, investment-grade
securities.
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<PAGE>
DIVIDEND POLICY
The Company has not paid any cash dividends on its Common Stock since its
formation. It presently intends to retain its earnings for use in its business
and therefore does not anticipate paying any cash dividends in the foreseeable
future. The payment of any future dividends will be determined by the Board of
Directors in light of conditions then existing, including the Company's
earnings, financial condition and requirements, restrictions in financing
agreements, business conditions, and other factors. The Company's ability to pay
dividends also is dependent upon the earnings of its subsidiaries and the
distribution of those earnings to the Company and loans or advances by the
subsidiaries to the Company. The ability of the subsidiaries to pay dividends or
to make distributions is restricted by the terms of the Credit Facility. Due to
such restrictions, the Company is not expected to have access to the cash flow
generated by the subsidiaries for the foreseeable future. In addition, the
Company's ability to pay dividends or make distributions to its stockholders is
also restricted by the terms of the Credit Facility. See "Description of Certain
Indebtedness--Bank Debt."
DILUTION
After giving effect to the Acquisitions and to the sale of the shares of
Class A Common Stock offered hereby (at an assumed initial public offering price
of $13.00 per share) and the application of the estimated net proceeds therefrom
as described in "Use of Proceeds," the pro forma net tangible book value of the
Company as of March 31, 1996 would have been approximately $91.8 million, or
$8.53 per share of Common Stock. This represents an immediate increase in pro
forma net tangible book value of $7.22 per share to existing stockholders and an
immediate dilution in pro forma net tangible book value per share of Common
Stock of $4.47 after completion of the Offering from the per share price paid by
purchasers of Class A Common Stock in the Offering. The following table
illustrates this per share dilution:
<TABLE>
<CAPTION>
<S> <C> <C>
Initial public offering price............................................... $13.00
Net tangible book value per share before the Offering(1).................... $1.31
Increase in net tangible book value attributable to new investors........... 7.22
-----
Pro forma net tangible book value after giving effect to the Offering....... 8.53
------
Dilution per share to new investors......................................... $ 4.47
------
------
</TABLE>
The following table summarizes, on a pro forma basis as of March 31, 1996,
the total shares purchased and the total consideration and average price per
share paid by existing stockholders and paid by the new investors purchasing the
shares offered hereby, assuming the sale of the 7,000,000 shares in the Offering
at an assumed initial public offering price of $13.00 per share.
<TABLE>
<CAPTION>
SHARES PURCHASED TOTAL CONSIDERATION AVERAGE
--------------------- ----------------------- PRICE
NUMBER PERCENT AMOUNT PERCENT PER SHARE
<S> <C> <C> <C> <C> <C>
New investors........................... 7,000,000 65% $ 91,000,000 82% $ 13.00
Investor Group.......................... 1,890,681 18 13,040,579 12 6.90
Other existing stockholders............. 1,878,549 17 6,341,000 6 3.38
---------- ------- ------------ ------- ---------
Total................................... 10,769,230 100% $110,381,579 100%
---------- ------- ------------ -------
---------- ------- ------------ -------
</TABLE>
- -----------------------
(1) Excludes 835,000 shares of Class A Common Stock reserved for issuance upon
exercise of options to be granted prior to or shortly after the consummation
of the Offering and includes 85,750 shares of Class A Common Stock to be
issued in payment for services, 23,692 shares of Class A Common Stock to be
issued in exchange for certain outstanding indebtedness, and 39,205 shares
of Class A Common Stock and 1,085,742 shares of Class B Common Stock to be
issued following the Offering in exchange for the principal amount of the
Junior Notes remaining outstanding after application of the proceeds of the
Offering. See "Use of Proceeds," "The Company," "Management--Equity
Ownership Plans," "Certain Transactions," "Description of Certain
Indebtedness--Acquisition Notes and Assumed Debt," and "Description of
Capital Stock-- Recapitalization Agreement."
15
<PAGE>
CAPITALIZATION
The following table sets forth the actual consolidated capitalization of the
Company as of March 31, 1996 and as adjusted to give effect to the Offering and
the application of the net proceeds therefrom, the Acquisitions, the conversion
of the outstanding principal of the Junior Notes into shares of Class A Common
Stock and Class B Common Stock following application of the net proceeds, the
exchange of certain other indebtedness for shares of Class A Common Stock, and
the exchange of all shares of Class C Common Stock for Class A Common Stock and
Class B Common Stock. The information presented below should be read in
conjunction with the Company's consolidated financial statements and the Pro
Forma Condensed Consolidated Financial Statements included elsewhere in this
Prospectus.
<TABLE>
<CAPTION>
MARCH 31, 1996
-----------------------
ACTUAL AS ADJUSTED
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Current portion of long-term debt..................................... $ 12,292 $ 18,969
-------- -----------
-------- -----------
Long-term debt (excluding current portion)(1)......................... $103,486 $ 112,303
Minority partners' equity in subsidiaries............................. 1,488 1,488
Stockholders' equity:
Class A Common Stock, par value $0.001; 100,000,000 shares
authorized; none issued and outstanding: 7,452,413 shares to be
issued and outstanding(2)......................................... -- 7
Class B Common Stock, par value $0.001; 5,000,000 shares authorized;
1,558,210 shares issued and outstanding and 3,316,817 shares to be
issued and outstanding(2)......................................... 1 3
Class C Common Stock, par value $0.001; 2,500,000 shares authorized;
976,630 shares issued and outstanding; no shares to be issued and
outstanding(3).................................................... 1 --
Additional paid-in capital............................................ 6,341 102,563
Retained earnings (accumulated deficit)(4)............................ 5,967 (1,767)
-------- -----------
Total stockholders equity........................................... 12,310 100,806
-------- -----------
Total minority partners' equity in subsidiaries and stockholders'
equity............................................................ 13,798 102,294
-------- -----------
Total capitalization.............................................. $117,284 $ 214,597
-------- -----------
-------- -----------
</TABLE>
- -----------------------
(1) See "Description of Certain Indebtedness" and Note 3 to the Company's
consolidated financial statements for a description of long-term debt. To
the extent that the net proceeds from the Offering are less than $82.9
million, there will be a dollar-for-dollar reduction in the principal amount
of Senior Notes repaid. See "Use of Proceeds."
(2) See "Description of Capital Stock" for a description of the relative rights
of the Class A Common Stock and Class B Common Stock. Shares to be issued
and outstanding exclude 835,000 shares of Class A Common Stock reserved for
issuance upon exercise of options to be granted prior to or shortly after
consummation of the Offering and include 85,750 shares of Class A Common
Stock to be issued in payment for services, 23,692 shares of Class A Common
Stock to be issued in exchange for certain outstanding indebtedness upon
consummation of the Offering, and 39,205 shares of Class A Common Stock and
1,085,742 shares of Class B Common Stock to be issued following the Offering
in exchange for the principal and accrued interest on the Junior Notes
remaining outstanding upon consummation of the Offering. See "Management--
Equity Ownership Plans," "Certain Transactions," "Description of Certain
Indebtedness--Acquisition Notes and Assumed Debt," and "Description of
Capital Stock--Recapitalization Agreement."
(3) The Class C Common Stock outstanding at March 31, 1996 will be exchanged for
Class A Common Stock and Class B Common Stock immediately prior to the
consummation of the Offering on a one-for-one basis. See "The Company."
(4) The adjusted amount reflects an extraordinary loss on the extinguishment of
the Senior Notes, the Junior Notes, and certain other notes. See "Note 2(c)
to Notes to Pro Forma Condensed Consolidated Financial Statements."
16
<PAGE>
SELECTED HISTORICAL AND PRO FORMA CONSOLIDATED FINANCIAL DATA
The selected consolidated financial data presented below should be read in
conjunction with the consolidated financial statements and notes thereto of the
Company, the financial statements and notes thereto of the OMI Chemical
Carriers, the Seal Fleet Vessels, and GBMS, "Pro Forma Condensed Consolidated
Financial Statements," "Summary Consolidated Historical and Pro Forma Financial
and Operating Data," and "Management's Discussion and Analysis of Financial
Condition and Results of Operations" included elsewhere in this Prospectus. The
selected unaudited pro forma statement of operations data for the year ended
December 31, 1995 and the three months ended March 31, 1996 give effect to the
pending acquisitions of the OMI Chemical Carriers and the Seal Fleet Vessels,
the acquisition of certain vessels from GBMS in January 1996, the acquisition of
one vessel in February 1996, the Offering, the repayment of certain
indebtedness, and the conversion of the Junior Notes into shares of Common Stock
as if all such transactions had occurred on January 1, 1995 and January 1, 1996,
respectively. The selected unaudited pro forma balance sheet and vessel data
give effect to the foregoing transactions, except for the vessels acquired in
January and February 1996, and to the acquisition of four additional vessels as
if all such transactions had occurred on March 31, 1996. Such pro forma data are
presented for illustrative purposes only and do not purport to represent what
the Company's results actually would have been if such events had occurred at
the dates indicated, nor do such data purport to project the financial position
or results of operations for any future period or as of any future date. The
results for the three months ended March 31, 1996 are not necessarily indicative
of the results to be expected for the full year.
<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
-------------------------------------------------------- -----------------------------
PRO FORMA PRO FORMA
1991 1992 1993 1994 1995 1995 1995 1996 1996
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS
DATA:
Revenue.................... $45,120 $39,639 $41,527 $ 49,792 $ 70,562 $122,985 $ 15,780 $ 20,211 $ 32,332
Operating expenses......... 28,165 24,602 24,032 29,873 40,664 76,311 9,265 12,216 19,810
Overhead expenses.......... 7,150 6,778 6,176 9,581 12,518 15,019 2,718 3,613 4,181
Depreciation and
amortization................ 3,829 4,106 4,735 4,500 6,308 12,686 1,479 1,677 3,275
------- ------- ------- -------- -------- --------- -------- -------- ---------
Income from operations..... 5,976 4,153 6,584 5,838 11,072 18,969 2,318 2,705 5,066
Interest expense, net...... 5,024 3,993 3,412 5,302 11,460 11,531 2,716 2,882 2,691
Other income (expense)..... 601 8 519 11 26 190 (211) 177 177
------- ------- ------- -------- -------- --------- -------- -------- ---------
Income (loss) before
provision for (benefit
from) income taxes and
cumulative effect of a
change in accounting
principle................ 1,553 168 3,691 547 (362) 7,628 (609) -- 2,552
Provision for (benefit
from) income taxes....... 601 158 1,873 189 (2) 2,746 -- 35 919
------- ------- ------- -------- -------- --------- -------- -------- ---------
Income (loss) before
cumulative effect of a
change in accounting
principle................ 952 10 1,818 358 (360) 4,882 (609) (35) 1,633
Cumulative effect of a
change in accounting
principle................ -- -- 1,491 -- -- -- -- -- --
------- ------- ------- -------- -------- --------- -------- -------- ---------
Net income (loss).......... $ 952 $ 10 $ 3,309 $ 358 $ (360) $ 4,882 $ (609) $ (35) $ 1,633
------- ------- ------- -------- -------- --------- -------- -------- ---------
------- ------- ------- -------- -------- --------- -------- -------- ---------
Earnings (loss) per common
share:
Income (loss) before
cumulative effect of a
change in accounting
principle(1)............. $ 0.14 $ (0.01) $ 0.26 $ 0.03 $ (0.14) $ 0.45 $ (0.24) $ (0.01) $ 0.15
Net income (loss)(1)....... 0.14 (0.01) 0.50 0.03 (0.14) 0.45 (0.24) (0.01) 0.15
Weighted average number of
common shares and common
share equivalents
outstanding (in
thousands)(2)............. 6,268 6,268 6,268 5,302 2,535 10,769 2,535 2,535 10,769
OTHER FINANCIAL DATA:
EBITDA(3).................. $ 9,805 $ 8,259 $11,319 $ 10,338 $ 17,380 $ 31,655 $ 3,797 $ 4,382 $ 8,341
NET CASH PROVIDED BY (USED
IN):
Operating activities....... 8,584 (930) 6,956 2,858 3,948 3,204 4,164
Investing activities....... (3,633) (1,592) (2,247) (39,815) (8,066) (3,419) (2,464)
Financing activities....... 440 (2,473) (6,158) 41,249 805 (1,435) 1,263
BALANCE SHEET DATA: (AT
PERIOD END)
Working capital............ $ 3,330 $ 847 $ 2,640 $ 7,793 $ 4,315 $ 2,788 $ 448 $ (3,463 )
Total assets............... 90,916 83,718 82,373 135,471 143,683 139,637 154,020 254,509
Total debt................. 59,394 57,011 51,273 104,281 109,051 105,894 115,778 131,272
Stockholders' and minority
partners' equity......... 15,755 15,858 19,926 14,903 13,999 14,107 13,798 102,294
</TABLE>
(Footnotes on following page)
17
<PAGE>
- -----------------------
(1) For the purposes of calculating earnings per share for the years 1991, 1992,
1993, and 1994, historical income available to common stockholders has been
reduced for dividends on Class A Preferred Stock of $69,000, $50,000,
$203,000, and $222,000, respectively. The Class A Preferred Stock was
redeemed on September 30, 1994. See "Certain Transactions."
(2) For the years 1991, 1992, 1993, and 1994, the weighted average number of
common shares and common share equivalents assumes the conversion of the
Class B Preferred Stock into shares of Common Stock. The Class B Preferred
Stock was redeemed on September 30, 1994. Pro forma shares reflect the
weighted average number of common shares giving effect to the issuance of
7,000,000 shares of Class A Common Stock in the Offering, 85,750 shares of
Class A Common Stock in payment for services, 23,692 shares in exchange for
certain outstanding indebtedness upon consummation of the Offering, 39,205
shares of Class A Common Stock and 1,085,742 shares of Class B Common Stock
in exchange for the principal and accrued interest on the Junior Notes
remaining outstanding upon completion of the Offering and excludes 835,000
shares of Class A Common Stock reserved for issuance upon exercise of
options to be granted prior to or shortly after the consummation of the
Offering. See "Management--Equity Ownership Plans," "Certain Transactions,"
and "Description of Certain Indebtedness--Acquisition Notes and Assumed
Debt."
(3) EBITDA (net income from continuing operations before interest expense,
income tax expense, depreciation expense, amortization expense, minority
interests, and other non-operating income) is frequently used by securities
analysts and is presented here to provide additional information about the
Company's operations. EBITDA is not required by generally accepted
accounting principles and should not be considered as an alternative to net
income as an indicator of the Company's operating performance or as an
alternative to cash flows from operations as a measure of liquidity.
18
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
This discussion and analysis of the Company's financial condition and
historical results of operations should be read in conjunction with the
Company's consolidated historical financial statements, the Company's unaudited
pro forma condensed consolidated financial statements, and the financial
statements of the OMI Chemical Carriers, the Seal Fleet Vessels, and the GBMS
vessels and the related notes thereto included elsewhere in this Prospectus.
RECENT AND PENDING ACQUISITIONS
The Company's results of operations have been and will be significantly
affected by a series of acquisitions, aggregating 84 vessels and certain
partnership interests, since September 1994 as summarized in the following
table.
<TABLE>
<CAPTION>
NUMBER OF ASSETS AGGREGATE
PERIOD TRANSACTIONS ACQUIRED INVESTMENT
------- ------------ -------------------- -------------
<S> <C> <C> <C> <C>
Offshore Energy Support............ 1994 5 6 supply boats $19.6 million
20 crew boats
2 utility boats
1995 1 7 crew boats 5.9 million
1996(1) 6 10 supply boats
11 crew boats 40.6 million
Offshore and Harbor Towing......... 1994 1 1 tug $ 1.8 million
1995 1 1 tractor tug 6.4 million
Chemical Transportation............ 1996(1) 1 3 chemical carriers $64.7 million
Petroleum Product Transportation... 1994 1 10 tugs $13.9 million
8 barges
1995 1 5 barges 0.1 million
</TABLE>
- -----------------------
(1) 1996 transactions include the Acquisitions.
19
<PAGE>
AREA OF OPERATIONS OVERVIEW
The financial information presented below represents historical results by
major areas of operations. The historical financial data presented below should
be read in conjunction with the Company's consolidated financial statements and
notes thereto included elsewhere in this Prospectus.
<TABLE>
<CAPTION>
THREE MONTHS
YEAR ENDED DECEMBER 31, ENDED MARCH 31,
----------------------------- ------------------
1993 1994 1995 1995 1996
<S> <C> <C> <C> <C> <C>
Revenue:
Marine support services:
Offshore energy support................. $ 4,518 $11,317 $23,217 $ 4,804 $ 7,367
Offshore and harbor towing.............. 10,585 11,140 12,582 2,887 3,625
------- ------- ------- ------- -------
15,103 22,457 35,799 7,691 10,992
Marine transportation services:
Chemical transportation................. 17,337 16,886 18,632 4,482 4,556
Petroleum product transportation........ 9,087 10,449 16,131 3,607 4,663
------- ------- ------- ------- -------
26,424 27,335 34,763 8,089 9,219
------- ------- ------- ------- -------
Total revenues........................ 41,527 49,792 70,562 15,780 20,211
------- ------- ------- ------- -------
Operating expenses:
Marine support services:
Offshore energy support................. 1,719 7,017 13,335 2,891 4,503
Offshore and harbor towing.............. 5,748 5,568 6,001 1,316 1,815
------- ------- ------- ------- -------
7,467 12,585 19,336 4,207 6,318
Marine transportation services:
Chemical transportation................. 10,678 10,698 11,105 2,703 2,800
Petroleum product transportation........ 5,887 6,590 10,223 2,355 3,098
------- ------- ------- ------- -------
16,565 17,288 21,328 5,058 5,898
------- ------- ------- ------- -------
Total operating expenses.............. 24,032 29,873 40,664 9,265 12,216
------- ------- ------- ------- -------
Fleet operating income before overhead,
depreciation and amortization expenses:
Marine support services:
Offshore energy support................. 2,799 4,300 9,882 1,913 2,864
Offshore and harbor towing.............. 4,837 5,572 6,581 1,571 1,810
------- ------- ------- ------- -------
7,636 9,872 16,463 3,484 4,674
Marine transportation services:
Chemical transportation................. 6,659 6,188 7,527 1,779 1,756
Petroleum product transportation........ 3,200 3,859 5,908 1,252 1,565
------- ------- ------- ------- -------
9,859 10,047 13,435 3,031 3,321
------- ------- ------- ------- -------
Total fleet operating income before
overhead, depreciation and
amortization expenses............... 17,495 19,919 29,898 6,515 7,995
------- ------- ------- ------- -------
Overhead expenses........................... 6,176 9,581 12,518 2,718 3,613
Depreciation and amortization expense....... 4,735 4,500 6,308 1,479 1,677
------- ------- ------- ------- -------
Income from operations...................... $ 6,584 $ 5,838 $11,072 $ 2,318 $ 2,705
------- ------- ------- ------- -------
------- ------- ------- ------- -------
</TABLE>
REVENUE OVERVIEW
MARINE SUPPORT SERVICES
Revenue derived from vessels providing marine support services is
attributable to the Company's offshore energy support fleet and its offshore and
harbor towing operations.
20
<PAGE>
Offshore Energy Support. Revenue derived from the Company's offshore energy
support services is primarily a function of the size of the Company's fleet,
vessel day rates or charter rates, and fleet utilization. Rates and utilization
are primarily a function of offshore drilling, production, and construction
activities. Levels of offshore drilling, production, and construction have
increased recently as a result of fundamental changes in the Gulf of Mexico
energy industry, including (i) improvements in exploration technologies, such as
computer-aided exploration and 3-D seismic, that have increased drilling success
rates in the region; (ii) improvements in subsea completion and production
technologies that have led to increased deepwater drilling and development; and
(iii) expansion of the region's production infrastructure that has improved the
economics of developing smaller oil and gas fields. In addition, the short
reserve life characteristics of Gulf of Mexico gas production require continuous
drilling to replace reserves and maintain production. These higher overall
activity levels have led to increased demand for the Company's offshore energy
support services and higher overall vessel utilization and day rates in the Gulf
of Mexico. Crew boats generally have higher utilization rates than supply boats
because, unlike supply boats, which are used primarily in connection with
exploration activities, crew boats are utilized in connection with both
exploration and production activities. Contracts for the utilization of offshore
service vessels commonly include termination provisions with three- to five-day
notice requirements and no termination penalty. As a result, the operations of
companies engaged in the offshore energy service market are particularly
sensitive to market demand. See "Business--The Industry--Marine Support
Services--Offshore Energy Support."
The following table sets forth average day rates achieved by the offshore
supply boats and crew boats owned or operated by the Company in the Gulf of
Mexico and their average utilization for the periods indicated.
<TABLE>
<CAPTION>
1993 1994 1995
--------------------------------- --------------------------------- ----------------------------
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Number of supply
boats at end of
period........... 3 3 3 3 5 7 7 8 10 10 10
Average supply
boat
day rates(1)..... $2,325 $2,400 $2,852 $3,209 $3,433 $3,035 $3,200 $3,060 $2,886 $2,843 $3,113
Average supply
boat
utilization
rates(2)......... 100% 100% 100% 94% 94% 73% 80% 90% 71% 76% 84%
Number of crew
boats at end of
period(3)(4)..... -- -- -- -- -- -- 20 19 26 26 26
Crew boat day
rates(1)(3)...... -- -- -- -- -- -- $1,405 $1,435 $1,444 $1,412 $1,422
Average crew boat
utilization
rates(2)(3)...... -- -- -- -- -- -- 87% 88% 79% 81% 90%
<CAPTION>
1996
------
Q4 Q1
<S> <C<C> <C>
Number of supply
boats at end of
period........... 10 10
Average supply
boat
day rates(1)..... $3,244 $3,468
Average supply
boat
utilization
rates(2)......... 93% 92%
Number of crew
boats at end of
period(3)(4)..... 26 35
Crew boat day
rates(1)(3)...... $1,458 $1,460
Average crew boat
utilization
rates(2)(3)...... 91% 89%
</TABLE>
- -----------------------
(1) Average day rates are calculated by dividing total vessel revenue by the
total number of days the vessel worked.
(2) Utilization rates are calculated by dividing the fleet average number of
days worked by 365.
(3) Excludes utility boats.
(4) The Company first began operating crew boats in July 1994.
21
<PAGE>
During the past five years, utilization and day rates in the Gulf of Mexico
were at their lowest during the summer of 1992 when the Company estimates
average offshore supply vessel day rates were $1,300 to $1,400. As a result, in
the summer of 1992, a number of operators relocated supply boats from the Gulf
of Mexico to West Africa, the Arabian Gulf, and Southeast Asia. The Company
relocated five supply boats to the Arabian Gulf (four of which have been
returned to the Gulf of Mexico) and two to Southeast Asia in September 1992.
Utilization and day rates in the Gulf of Mexico increased through the end of
1993 as a result of (i) Hurricane Andrew in the fall of 1992, which caused
substantial damage to rigs and greater demand for supply boats, (ii) higher
natural gas prices and increased drilling activity for natural gas, and (iii)
the reduced supply of immediately available vessels. Relocation of vessels to
the Gulf of Mexico in early 1994 depressed rates and utilization until the end
of the second quarter of 1994. Industry utilization and day rates were lower in
the first half of 1995 because of weak natural gas prices, primarily due to the
warm winter in North America and Europe.
Increased activity in the Gulf of Mexico since the second quarter of 1995
has been primarily attributable to improved technology in the seismic industry
and an approximate balance in the supply of and demand for offshore service
vessels. Deepwater activity is also currently a positive factor in the market,
and management believes further deepwater exploration and production will likely
increase demand for available vessels, resulting in higher day rates and
utilization. Domestic inventories of energy reserves are currently closer to
demand levels and, as a result, management believes that exploration and
development activity will continue at an aggressive pace in order for oil
companies to maintain inventories, thereby resulting in a more disciplined
market without the dramatic fluctuations historically experienced. As a result,
management believes the offshore energy support sector should be subject to less
market fluctuation in the future.
Day rates in the Arabian Gulf, where the Company currently operates one
supply boat, decreased during 1995, and that market continues to be depressed.
Rates in Southeast Asia increased slightly, although utilization was lower than
anticipated by the Company.
Offshore and Harbor Towing. Revenue derived from the Company's tug
operations is primarily a function of the number of tugs available to provide
services, the rates charged for their services, and the volume of vessel traffic
requiring docking and other ship-assist services. Vessel traffic, in turn, is
largely a function of the general trade activity in the region served by the
port. The Company generally has maintained four to five tugs in Port Everglades,
and three each in Port Canaveral and Mobile, although it has shifted tugs among
ports depending upon demand. With the delivery of the tractor tug Broward, the
Company has operated up to five tugs in Port Everglades with one of the tugs
available to provide offshore towing services. The Company's tug revenue
increased 5% from 1993 to 1994 and 13% from 1994 to 1995, primarily as a result
of higher port activity levels and, to a lesser extent, rate increases to cover
cost inflation.
The following table summarizes certain operating information for the
Company's tugs.
<TABLE>
<CAPTION>
THREE MONTHS
YEAR ENDED DECEMBER 31, ENDED MARCH 31,
----------------------------- ----------------
1993 1994 1995 1995 1996
<S> <C> <C> <C> <C> <C>
Number of tugs at end of period(1)............ 10 10 11 10 11
Total ship docking tug jobs(2)................ 8,178 8,740 9,233 2,232 2,458
Total offshore and harbor towing revenue (in
thousands)................................... $10,585 $11,140 $12,582 $2,887 $3,625
</TABLE>
- -----------------------
(1) The Company's eleventh tug was delivered in August 1995.
(2) Excludes offshore towing jobs.
22
<PAGE>
MARINE TRANSPORTATION SERVICES
Chemical Transportation. Generally, demand for industrial chemical
transportation services coincides with general economic activity. Since 1989,
revenue derived from chemical transportation operations has been entirely
attributable to the operations of Ocean Specialty Tankers Corporation ("OSTC"),
a company owned equally by OMI Corp. ("OMI") and the Company. The Company's two
chemical carriers, together with the three OMI Chemical Carriers to be acquired
by the Company, have been chartered to OSTC, which has marketed the five vessels
under a pool arrangement. The Company has derived efficiencies in overhead and
utilization by participating in the pool arrangement. The Company's revenue from
industrial chemical transportation operations has consisted of distributions
from OSTC based upon a formula that takes into account individual vessel
performance characteristics applied to OSTC's revenues (net of fuel costs, port
charges, and overhead). Under the formula, the Company has received
approximately 40% of OSTC's net revenue since September 1990. Following the
acquisition by the Company of the OMI Chemical Carriers and the remaining 50%
interest in OSTC, the Company intends to continue to have OSTC market the
Company's five chemical carriers. See "Business--Company Operations--Marine
Transportation Services--Chemical Transportation-- OSTC."
Petroleum Product Transportation. Since entering service in 1975, the
product carrier Seabulk Challenger has derived all of its revenue from
successive voyage and time charters to Shell. Under the current charter, fuel
and port costs are for the account of the charterer, charter hire escalates
based upon changes in the consumer price index, and charter hire is suspended
while the vessel is unavailable to transport cargo, as when it is undergoing
repairs or regularly scheduled maintenance. The charter extends to January 2000,
with the charterer retaining the right to early termination upon the payment to
the Company of a significant penalty. Revenue from the Company's towboats and
fuel barges has been derived primarily from contracts of affreightment with FPL
and Steuart Petroleum Co. that require the Company to transport fuel as needed
by those two customers, with the FPL contract having a guaranteed minimum
utilization.
The following table sets forth the average time charter equivalents for the
Company's chemical and product carriers, including the three OMI Chemical
Carriers to be acquired.
<TABLE>
<CAPTION>
THREE MONTHS
YEAR ENDED DECEMBER 31, ENDED MARCH 31,
----------------------------- ------------------
1993 1994 1995 1995 1996
<S> <C> <C> <C> <C> <C>
Number of vessels........................... 6 6 6 6 6
Time charter equivalents(1)................. $24,566 $24,751 $25,626 $25,549 $25,532
</TABLE>
- -----------------------
(1) Time charter equivalents are calculated by deducting total voyage expenses
from total voyage revenue and dividing the result by the total days per
voyage.
OVERVIEW OF OPERATING EXPENSES AND CAPITAL EXPENDITURES
The Company's operating expenses are primarily a function of fleet size and
utilization levels. The most significant expense categories are crew payroll and
benefits, depreciation and amortization, charter hire, maintenance and repairs,
fuel, and insurance.
The crews of the Company's chemical and product carriers are paid on a
time-for-time basis by which they receive paid leave in proportion to time
served aboard a vessel. The crews of certain tugs, towboats, and offshore energy
support vessels are paid only for days worked.
The Company capitalizes expenditures exceeding $5,000 for product and
chemical tankers and $3,000 for all other vessels, where the item acquired has a
useful life of three years or greater. Vessel improvements and vessel
maintenance and repair are capitalized only if they also extend the useful life
of the vessel or increase its value. The Company overhauls main engines and key
auxiliary equipment in
23
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accordance with a continuous planned maintenance program. Under applicable
regulations, the Company's chemical and product carriers, offshore service
vessels, and its four largest tugs are required to be drydocked twice in a
five-year period for inspection and routine maintenance and repairs. These
vessels are also required to undergo special surveys every five years involving
comprehensive inspection and corrective measures to insure their structural
integrity and proper functioning of their cargo and ballast piping systems,
critical machinery and equipment, and coatings. The Company's fuel barges,
because they are operated in fresh water, are required to be drydocked only
twice in each ten-year period. The Company's harbor tugs and towboats generally
are not required to be drydocked on a specific schedule. During the years ended
December 31, 1993, 1994, and 1995, the Company drydocked five, 13, and 42
vessels, respectively, at an aggregate cost (exclusive of lost revenue) of $0.9
million, $1.6 million, and $2.0 million, respectively. See "--Liquidity and
Capital Resources--Capital Expenditures" for information regarding anticipated
maintenance and improvement expense, including drydocking expense. Effective
January 1, 1993, the Company changed its method of accounting for drydocking
costs from the accrual method to the deferral method. Under the deferral method,
capitalized drydocking costs are expensed over the period preceding the next
scheduled drydocking. The Company believes the deferral method better matches
costs with revenue and minimizes any significant changes in estimates associated
with the accrual method. See Note 1 of the Company's consolidated financial
statements. In addition to variable expenses associated with vessel operations,
the Company incurs fixed charges to depreciate its marine assets. The Company
calculates depreciation based on a useful life ranging from 25 years for its
steel-hull offshore energy support vessels to 30 years for aluminum-hull
vessels, the lesser of any applicable lease term life or the OPA 90 life for its
product and chemical carriers, ten years for its fuel barges, and 40 years for
its towboats and tugs.
Charter hire consists primarily of payments made with respect to the
bareboat charters of the Seabulk Challenger and Seabulk Magnachem, which were
acquired pursuant to leveraged lease transactions (see "Description of Certain
Indebtedness--Long-Term Charter Obligations--Title XI Bonds"). The Company
intends to enter into a sale/leaseback arrangement for the OMI Star. The Company
also pays charter hire when it charters harbor tugs to meet requirements in
excess of its own tugs' availability. This typically occurs in Mobile when the
Company charters one or two tugs to assist with the docking or undocking of a
particular vessel.
Insurance costs consist primarily of premiums paid for (i) protection and
indemnity insurance for the Company's marine liability risks, which are insured
by a mutual insurance association of which the Company is a member and through
the commercial insurance markets; (ii) hull and machinery insurance and other
maritime-related insurance, which are provided through the commercial marine
insurance markets; and (iii) general liability and other traditional insurance,
which is provided through the commercial insurance markets. Insurance costs,
particularly costs of marine insurance, are directly related to overall
insurance market conditions and industry and individual loss records, which vary
from year to year.
RESULTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1996 COMPARED WITH THREE MONTHS ENDED MARCH 31,
1995
Revenue. Revenue increased 28% to $20.2 million for the three months ended
March 31, 1996 from $15.8 million for the three months ended March 31, 1995
primarily due to increased revenue in the Company's offshore energy support,
petroleum product transportation, and offshore and harbor tug operations.
Revenue from offshore energy operations increased 53% for the three months
ended March 31, 1996 primarily due to acquisitions and greater utilization of
supply and crew boats and higher day rates resulting from a colder winter which
served to strengthen natural gas prices and thereby increased offshore
exploration and production activity. Utilization of supply boats increased to
92% for the 1996 period from 71% for the 1995 period, and utilization of crew
boats increased to 89% for the 1996 period
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<PAGE>
from 79% for the 1995 period. During the 1996 period, day rates for supply boats
owned, operated, or managed by the Company increased 20% from the 1995 period,
and day rates for crew boats owned, operated, or managed by the Company
increased 1% from the 1995 period.
Petroleum product transportation revenue increased 29% to $4.7 million for
the three months ended March 31, 1996 from $3.6 million for the three months
ended March 31, 1995 primarily due to increased movements of product by the
Company's towboat and barge fleet as a result of the cold winter and higher
natural gas prices.
Revenue from offshore and harbor tug operations increased 26% to $3.6
million for the three months ended March 31, 1996 from $2.9 million for the
three months ended March 31, 1995 primarily as a result of increased tanker and
freighter traffic in Port Everglades. Revenue also increased in the port of
Mobile due to a tariff increase and an increase in port traffic.
Operating Expenses. Operating expenses increased 32% to $12.2 million for
the three months ended March 31, 1996 from $9.3 million for the three months
ended March 31, 1995 primarily due to increases in crew payroll and benefits,
maintenance and repair, and supplies and consumables resulting from acquisitions
and increased business activity. As a percentage of revenue, operating expenses
increased to 60% for the three months ended March 31, 1996 from 59% for the
three months ended March 31, 1995.
Overhead Expenses. Overhead expenses increased 33% to $3.6 million, or 18%
of revenues, for the three months ended March 31, 1996 from $2.7 million, or 17%
of revenues, for the three months ended March 31, 1995 primarily due to an
increase in professional fees relating to pending litigation. Additionally,
salaries and benefits increased as a result of an increase in staffing
requirements due to acquisitions.
Depreciation and Amortization. Depreciation and amortization expense
increased 13% to $1.7 million for the three months ended March 31, 1996 compared
with $1.5 million, for the three months ended March 31, 1995 as a result of an
increase in fleet size due to acquisitions.
Income from Operations. Income from operations increased 17% to $2.7
million, or 13% of revenue, for the three months ended March 31, 1996 from $2.3
million, or 15% of revenue, for the three months ended March 31, 1995 as a
result of the factors noted above.
Interest. Net interest expense increased 6% to $2.9 million, or 14% of
revenue, for the three months ended March 31, 1996 from $2.7 million, or 17% of
revenue, for the three months ended March 31, 1995 primarily as a result of debt
incurred in connection with acquisitions.
Other Income (Expense). Other income increased to $0.2 million for the three
months ended March 31, 1996 from other expense of ($0.2) million for the three
months ended March 31, 1995 primarily due to an increase in minority interest
income in 1996 and a write off in 1995 of prior year repairs.
Net Income (Loss). The Company was near break-even for the three months
ended March 31, 1996 after incurring a net loss of $0.6 million for the three
months ended March 31, 1995 primarily as a result of the factors noted above.
YEAR ENDED DECEMBER 31, 1995 COMPARED WITH YEAR ENDED DECEMBER 31, 1994
Revenue. Revenue increased 42% to $70.6 million in 1995 compared with $49.8
million in 1994 primarily due to the Company's purchase of new businesses and
additional vessels.
Offshore energy operations showed a 105% increase in revenue in 1995
primarily due to the acquisition of additional supply and crew boats. Although
revenue increased, the utilization of supply boats decreased to 81% in 1995 from
84% in 1994 and the utilization of crew boats decreased to 85% in 1995 from 88%
in 1994 due primarily to the relatively warm winter in early 1995, which caused
a decline in oil and gas prices thereby reducing exploration and production
activities. There was a 5%
25
<PAGE>
decrease in average day rates for the Company's supply boats in 1995 from 1994,
while average day rates for the Company's crew boats remained relatively stable.
Chemical transportation revenue increased 10% in 1995 primarily due to fewer
off-hire (out-of-service) days incurred by the Seabulk Magnachem in 1995
following its regularly scheduled drydocking in 1994.
Revenue from petroleum product transportation increased 54% in 1995
primarily due to a full year of operating results for the Sun State tug and
barge fleet, which was acquired in September 1994.
Revenue from offshore and harbor tug operations increased 13% to $12.6
million in 1995 from $11.1 million in 1994 primarily due to an increase in
overall traffic in the ports served by the Company.
Operating Expenses. Operating expenses increased 36% to $40.7 million in
1995 from $29.9 million in 1994 primarily due to increased operating expenses
associated with acquisitions, although operating expenses decreased as a
percentage of revenues to 58% in 1995 from 60% in 1994.
Overhead Expenses. Overhead expenses increased 31% to $12.5 million in 1995
compared with $9.6 million in 1994 primarily due to increases in staffing,
certain benefits, and insurance expenses directly related to new business
acquisitions. Also, in addition to paying discretionary performance bonuses in
April 1995 which were, in part, related to prior periods, an accrual of $400,000
was made at year end for 1995 performance bonuses. As a percentage of revenues,
overhead expenses decreased to 18% in 1995 from 19% in 1994.
Depreciation and Amortization. Depreciation and amortization expense
increased 40% to $6.3 million in 1995 compared with $4.5 million in 1994
primarily due to an increase in fleet size as a result of acquisitions.
Income from Operations. Income from operations increased 90% to $11.1
million, or 16% of revenue, in 1995 compared with $5.8 million, or 12% of
revenue, in 1994. This increase was a result of a substantial increase in income
from operations from the Company's offshore energy segment and an increase in
the Company's fuel energy segment that were mainly the result of acquisitions.
Harbor towing achieved an increase in income from operations of 25% over 1994 as
a result of an overall increase in traffic in Mobile, Port Canaveral, and Port
Everglades.
Interest. Net interest expense increased 116% to $11.5 million, or 16% of
revenue, in 1995 compared with $5.3 million, or 11% of revenue, in 1994
primarily due to interest on debt incurred in the last quarter of 1994 to
finance acquisitions.
Net Income (Loss). The Company had a net loss of $(0.4) million in 1995
compared with net income of $0.4 million in 1994, primarily due to an increase
in financing costs incurred in connection with acquisitions completed in 1994
and the other factors noted above.
YEAR ENDED DECEMBER 31, 1994 COMPARED WITH YEAR ENDED DECEMBER 31, 1993
Revenue. Revenue increased 20% to $49.8 million for the year ended December
31, 1994 compared with $41.5 million for the year ended December 31, 1993
primarily due to the addition of revenue from acquisitions completed in 1994.
Revenue from offshore energy support services increased 150% primarily due to
revenue from such acquisitions. In addition, the Company's average Gulf of
Mexico supply boat day rates increased 19% in 1994 from an average of $2,696 per
day in 1993 to $3,195 per day in 1994, although supply boat fleet utilization
decreased from 98% to 84% due to the drydocking of two boats and the addition of
two boats with relatively low utilization rates in 1994. Revenue from chemical
transportation decreased 3% due to the Seabulk Magnachem having greater off-hire
time due to a regularly scheduled drydocking in April 1994. Revenue from
petroleum product transportation increased 15% primarily due to the Sun State
acquisition in September 1994. Offshore and harbor tug towing revenues increased
5% due to a general increase in vessel traffic in the ports served by the
Company.
26
<PAGE>
Operating Expenses. Operating expenses increased 24% to $29.9 million, or
60% of revenue, for the year ended December 31, 1994 compared with $24.0
million, or 58% of revenue, for the year ended December 31, 1993 primarily due
to the increased operating expenses associated with the acquisitions completed
in 1994. Charter hire expense increased due to the Company's chartering in May
and June of 1994 of certain supply and crew boats that were acquired in
September 1994, partly offset by a decrease in charter hire expense due to the
acquisition in September 1994 of the interests in the limited partnership that
owned the tug Hollywood (formerly the Cape Canaveral), which was previously
chartered to the Company.
Overhead Expenses. Overhead expenses increased 55% to $9.6 million, or 19%
of revenue, for the year ended December 31, 1994 compared with $6.2 million, or
15% of revenue, for the year ended December 31, 1993 primarily due to increased
corporate staffing and other greater infrastructure costs associated with the
acquisitions completed in 1994, greater litigation expenses relating to the
Seabulk America (see "Business--Legal Proceedings"), and expenses incurred to
prepare an initial public offering which was postponed due to market conditions.
Bonuses of approximately $280,000 were paid to Company management personnel in
October 1994 (no bonuses to management personnel were paid in 1993).
Depreciation and Amortization. Depreciation and amortization expense
decreased 5% to $4.5 million for the year ended December 31, 1994 compared with
$4.7 million for the year ended December 31, 1993 primarily due to the
amortization of expenses incurred in 1993 to transport four offshore supply
boats from the Gulf of Mexico to the Arabian Gulf.
Income from Operations. Income from operations decreased 11% to $5.8
million, or 12% of revenue, for the year ended December 31, 1994 compared with
$6.6 million, or 16% of revenue, for the year ended December 31, 1993 primarily
as a result of the factors described above.
Interest. Net interest expense increased 55% to $5.3 million, or 11% of
revenue, for the year ended December 31, 1994 compared with $3.4 million, or 8%
of revenue, for the year ended December 31, 1993 primarily due to interest due
on the debt incurred to finance the acquisitions completed in 1994.
Net Income. Net income decreased to $0.4 million for the year ended December
31, 1994 compared with $3.3 million for the year ended December 31, 1993
primarily due to the factors described above and an approximate $1.5 million
gain in 1993 resulting from a change in the Company's method of accounting for
drydocking.
SEASONALITY
The Company has experienced some slight seasonality in its overall
operations. The first half of the year is generally not as strong as the second
half due to lower activity in offshore energy support activity and petroleum
transportation during the months of February, March, and April.
LIQUIDITY AND CAPITAL RESOURCES
The Company's liquidity requirements historically have arisen primarily from
its debt service requirements, working capital needs, preferred stock dividends,
and vessel acquisitions and improvements. During 1994, the Company's primary
capital requirements included an aggregate of $56.8 million for debt service
requirements (including $50.8 million of refinancings) and a total of $33.6
million for acquisitions. In 1995, debt service requirements totalled $15.0
million and the cash portion of the acquisition costs were $2.9 million.
The Company's principal sources of cash have been proceeds from borrowings
and cash provided by operating activities. In September 1994, the Company
entered into the Credit Facility with certain banks which, as amended in March
1996, currently provides for a $45.5 million term loan, $15.0 million of
revolving lines of credit, and a $5.6 million letter of credit. At December 31,
1994 and 1995, aggregate borrowings under the Credit Facility were $50.0 million
and $53.5 million, respectively. Also in September 1994, the Company issued
$25.0 million of Senior Notes and $25.0 million of Junior
27
<PAGE>
Notes at discounts resulting in proceeds of $23.1 million and $17.5 million,
respectively. Borrowings under the Credit Facility, the Senior Notes, and the
Junior Notes were utilized primarily to repay other indebtedness and to fund
vessel acquisitions. See "--Recent and Pending Acquisitions" and "Description of
Certain Indebtedness." A portion of the proceeds from the Offering will be used
to repay $6.8 million under the Credit Facility, $0.8 million of accrued
interest on and $20.0 million of principal of the Senior Notes, and $15.1
million of principal under the Junior Notes. See "Use of Proceeds." The balance
of the outstanding principal under the Junior Notes will be converted into Class
A and Class B Common Stock. See "The Company."
The Credit Facility has been amended (effective upon the consummation of the
Offering) to increase the term loan to $60.5 million, decrease the lines of
credit to $10.0 million, and establish a $25.0 million vessel acquisition credit
line which decreases to $11.5 million over a four-year period. To the extent
that the gross proceeds of the Offering are less than $91.0 million, the initial
amount available under the vessel acquisition credit line will be reduced by the
amount of such shortfall. Advances under the vessel acquisition credit line may
not exceed either (i) 70% of the lesser of the purchase price or appraised value
of the vessel being acquired, or (ii) a multiple of six times EBITDA of the
acquisition. After giving effect to (i) consummation of the Offering and
application of the net proceeds therefrom and (ii) completion of the
Acquisitions, the Company will, under such amended Credit Facility, have $60.5
million outstanding under the term loan, $4.2 million outstanding under the
vessel acquisition credit line, and $4.3 million outstanding under the lines of
credit. Borrowings under the Credit Facility bear interest at prime or LIBOR, at
the Company's option, plus a margin based on the Company's compliance with
certain financial ratios. See "Description of Certain Indebtedness-- Bank Debt"
for additional information concerning the Credit Facility.
The Company's future capital needs are expected to relate primarily to debt
service obligations, maintenance and improvement of its fleet, and acquisitions.
The Company's outstanding indebtedness at March 31, 1996, on a pro forma basis
after giving effect to the Offering and the Acquisitions, would have been
approximately $131.3 million. Following the Offering and consummation of the
Acquisitions, debt service requirements for all of 1996 will include principal
and interest payments of approximately $12.6 million and $9.6 million,
respectively (assuming interest rates remain steady), and operating lease
obligations for 1996 will total approximately $3.8 million. The Company's
principal and interest payment obligations increase to $14.9 and $9.0 million,
respectively, in 1997 and operating lease obligations increase slightly in 1997
to approximately $3.9 million.
Capital requirements for vessel maintenance and improvement are estimated to
be $8.0 million for 1996, of which $2.0 million had been expended as of March
31, 1996, and $10.0 million for 1997.
Since 1993, the Company has grown primarily through a series of strategic
acquisitions. See "--Recent and Pending Acquisitions." Pursuant to the
Acquisitions, the Company expects to acquire title to 15 vessels. The aggregate
purchase price of the Acquisitions is $99.7 million, consisting of approximately
$37.7 million in cash and the assumption or issuance of $62.0 million of debt
obligations. The cash portion of the purchase price of the Acquisitions will be
funded with a portion of the proceeds from the Offering. See "Use of Proceeds"
and "Business--The Acquisitions."
The Company has a 2.4% equity interest in five 45,300 dwt petroleum product
carriers currently under construction. The aggregate cost of the five carriers
is estimated to be $255.0 million, of which approximately $40.0 million will
constitute equity investment and $215.0 million will be financed with the
proceeds of government-guaranteed Title XI ship financing bonds issued in March
1996. Subject to certain conditions, the Company has an option, exercisable
through 2002, to purchase a 49.3% interest at a price equal to (i) the
investor's equity investment plus a stated annual return, or (ii) if exercised
after December 31, 1997, the greater of the fair market value of the interest or
the amount set forth in (i). The Company also has an option, exercisable on
January 15, 1998, to purchase an additional 23.4% interest at a price equal to
the investor's equity investment plus a stated return. Should the Company fail
to exercise the latter option, the investor has the option to acquire 1.6% of
the ownership interest from the Company for nominal consideration. The total
estimated cost of exercising the
28
<PAGE>
Company's options is up to $32.0 million (assuming the options are exercised
prior to January 1, 1998). The Company currently has no understandings or
agreements with respect to the financing that it would require if it were to
exercise any or all of these options, and there can be no assurance that such
financing will be available.
The Company's existing indebtedness restricts the Company's subsidiaries
from paying dividends or making other distributions to the Company. The Company
does not believe that this restriction has had or will have a material effect
upon its ability to meet its cash obligations because a substantial portion of
those obligations are payable by its subsidiaries.
The Company is the defendant in litigation in which one of the shipyards
that completed the Seabulk America is seeking additional payments aggregating
$8.5 million for its work. See "Business-- Legal Proceedings." Although the
Company believes the shipyard's claims are without merit and has asserted
counterclaims aggregating $5.6 million, the Company has obtained a bank letter
of credit to finance up to $5.6 million of any additional payment that it might
ultimately be required to make pursuant to this litigation. See "Description of
Certain Indebtedness--Bank Debt."
At March 31, 1996, pro forma for the Acquisitions and the Offering, the
Company would have had a working capital deficit of $3.5 million. The Company
believes that cash generated from operations and amounts available under the
Credit Facility will be sufficient to fund debt service requirements, planned
capital expenditures, and working capital requirements for the foreseeable
future. The Company also believes that such resources, together with the
potential use of equity financing, will allow the Company to pursue its strategy
of growth through acquisitions. As future cash flows are subject to a number of
uncertainties, including the condition of the markets served by the Company,
there can be no assurance that these resources will continue to be sufficient to
fund the Company's cash requirements.
EFFECT OF INFLATION
The Company does not consider inflation a significant business risk in the
current and foreseeable future although the Company has experienced some cost
increases. In some cases, these increases have been offset by charter hire
escalation clauses.
NEW ACCOUNTING STANDARDS
In March 1995, the FASB issued Statement of Financial Accounting Standards
No. 121, Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to Be Disposed Of, ("FASB Statement No. 121") which requires impairment
losses to be recorded on long-lived assets used in operations when indicators of
impairment are present and the undiscounted cash flows estimated to be generated
by those assets are less than the assets' carrying amount. FASB Statement No.
121 also addresses the accounting for long-lived assets that are expected to be
disposed of. The Company adopted FASB Statement No. 121 in the first quarter of
1996 and the effect of adoption was not material.
29
<PAGE>
BUSINESS
GENERAL
The Company provides marine support and transportation services primarily in
the U.S. domestic trade and principally to the energy and chemical industries.
The Company is the third largest operator of supply and crew boats in the Gulf
of Mexico. In addition, the Company is the sole provider of commercial tug
services in Port Everglades and Port Canaveral, Florida, and a leading provider
of such services in Mobile, Alabama. The Company also transports petroleum
products and specialty chemicals in the U.S. domestic trade, a market insulated
from international competition under the Jones Act. The total capacity of the
Company's five chemical carriers, pro forma for the Acquisitions, represents
approximately 44% of the capacity of the independent domestic specialty chemical
carrier fleet, and four of the five vessels are among the most recently built
and the only independently owned, diesel-powered chemical carriers with full
double-bottom hulls operating in the U.S. domestic trade.
The Company has grown rapidly through a series of strategic acquisitions,
increasing its marine support fleet from 20 vessels in 1993 to 74 vessels
currently and its marine transportation fleet from three vessels in 1993 to 29
vessels currently, in each case on a pro forma basis. As a result, the Company's
revenues increased approximately 198% from $41.5 million in 1993 to $123.8
million in 1995, on a pro forma basis. Over the same period, the Company's
EBITDA increased approximately 181% from $11.3 million to $31.7 million, on a
pro forma basis, and its income from operations increased 188% from $6.6 million
to $19.0 million, on a pro forma basis. For other measures of the Company's
operating results as determined under generally accepted accounting principles
and its pro forma operating results, see "Selected Historical and Pro Forma
Consolidated Financial Data" and the Company's consolidated financial
statements.
The Company has been operating in the marine support services industry since
its founding in 1958 and has been engaged in the transportation of petroleum
products and chemicals for 21 and 19 years, respectively. The Company's
executive officers have an average of over 18 years of experience in the marine
transportation industry, including an average of over 13 years with the Company.
The Company emphasizes promotion from within, regular training, and permanent
vessel assignments, which it believes results in a comparatively low rate of
personnel turnover. As a result, the Company believes that its employees are
among the most efficient in the marine transportation industry and that it has
had favorable experience with respect to employee turnover and employee injury
claims. The Company's employees are predominantly non-union. See "--Employees."
STRATEGY
The Company's strategy is to realize the benefits presented by the
integration of its recent and pending acquisitions with its existing operations
and to continue to grow through selected acquisitions that further consolidate
the marine support and transportation services markets in which the Company
operates. The Company believes it has significant opportunities to make further
accretive acquisitions in its core businesses. Critical elements of the
Company's strategy include continuing to (i) utilize its demonstrated expertise
in acquiring and consolidating diverse marine operations, (ii) focus its
operations in the U.S. domestic trade, (iii) develop and apply marine technology
to meet its customers' needs in an innovative and cost-effective manner, (iv)
maintain and pursue long-term customer relationships that limit the risk
associated with the investments required for new vessels and mitigate the
effects of industry cyclicality, and (v) enhance its record of quality service
and safety.
Demonstrated Expertise in Acquiring and Consolidating Diverse Marine
Operations. Many domestic maritime transportation markets, including offshore
energy support and towing, are undergoing consolidation. Small, privately owned
companies face increasing difficulty competing for market share, obtaining
adequate insurance coverage at economically viable rates, and meeting
increasingly more stringent customer and regulatory safety and environmental
requirements. The Company believes it is well positioned to take advantage of
this consolidation trend. The Company's recent acquisitions have substantially
increased the size of its fleet, established it as one of the leading operators
in the
30
<PAGE>
offshore energy market, and given it a reputation as a successful consolidator
in its niche markets. See "--The Acquisitions" and "Management's Discussion and
Analysis of Financial Conditions and Results of Operations--Recent and Pending
Acquisitions."
U.S. Domestic Market Focus. The Company intends to continue to concentrate
its operations in markets protected by the Jones Act against competition from
foreign-built, foreign-crewed vessels. As a result, most of the Company's
vessels are, and will continue to be, built and maintained to U.S. standards and
registered under the U.S. flag. The Company believes that domestic energy and
chemical transportation freight rates will increase within the next three to
five years and continue to rise thereafter, as the supply of vessels eligible to
carry petroleum and other hazardous substances diminishes as a result of
mandatory retirement imposed by OPA 90.
Technological Leadership and Business Innovation. The Company believes it
has been a leader in developing and applying marine technology to meet its
customers' needs in a cost-effective manner. Principals of the Company designed,
engineered, and developed the CATUG(R) integrated tug/barge ("ITB"), in which a
catamaran-hull tug is married to the stern section of a dedicated barge to
achieve construction cost savings and operating efficiencies, such as lower
manning requirements. The Seabulk Challenger, the Company's petroleum product
carrier, was the first of 12 CATUG(R)s constructed in the world. The Company's
Seabulk America is an innovative combination of the stern portion of a wrecked
oil tanker with the forebody of the chemical barge portion of a former ITB. By
combining this stern and forebody, the Company obtained the most recently
constructed chemical carrier in the U.S. domestic trade at a cost substantially
lower than that of a newly constructed vessel. The Company has demonstrated its
business innovation in the formation of the only pool of chemical carriers in
the U.S. domestic trade and most recently in the formation of the entities that
will own five new petroleum product carriers currently under construction. See
"--Company Operations--Marine Transportation Services."
Long-term Relationships. The Company currently maintains and continues to
pursue long-term customer relationships. Long-term contracts can both minimize
the risk associated with the substantial investments frequently required for new
vessels and mitigate the effects of any cyclical downturns in the industry. This
element of the strategy began with the Company's long-term charter of its
petroleum product carrier to Shell and continued with the acquisition of the
towboat and fuel barge fleet in September 1994, which has a long-term contract
with FPL.
Quality Service and Safety. Over a span of nearly 38 years, the Company
believes it has built a reputation for providing its customers with the highest
quality service and safety in terms of timeliness, dependability, and technical
expertise. The Company continuously seeks to improve the quality of its service
both by upgrading the capabilities of its vessels and by increasing the skill
levels of its employees. It believes, for example, that its chemical carriers
have experienced a particularly low level of cargo degradation claims relative
to its competitors; that its emphasis on preventive maintenance minimizes vessel
time out of service and repair expenses; and that its reputation provides an
advantage in retaining customer loyalty (particularly in times of excess
capacity) and in entering new markets.
As part of its continuing effort to maintain high standards of quality and
safety, the Company has implemented a program intended to qualify it for
certification under quality assurance, safety, and environmental standards
established under ISO 9002, which are voluntary, and the International Ship
Management Code, which become mandatory in July 1998. The Company was recently
audited as part of the certification process for both sets of standards, and on
May 15, 1996 was awarded its certification of compliance with ISO 9002. The
Company's success in establishing high levels of quality and safety are further
reflected by its receipt of Shell's offshore safety award for the last three
years and a 69% reduction in the rate of recordable safety incidents per manhour
from 1991 to 1995, a period during which total manhours increased 68%.
31
<PAGE>
THE ACQUISITIONS
The Company has entered into purchase agreements with five different sellers
to acquire (i) title to an aggregate of 15 vessels and (ii) bareboat charter
rights to one additional vessel (collectively, the "Acquisitions"). The
Acquisitions include the purchase of (i) the three OMI Chemical Carriers and the
remaining 50% interest in OSTC from OMI; (ii) eight offshore supply boats (the
"Seal Fleet Vessels") from Seal Fleet, Inc. and certain partnerships
(collectively, "Seal Fleet"); (iii) a 152-foot crew/supply boat, to be named the
Seabulk St. Francis, currently under construction, from Mr. J. Erik Hvide,
Chairman of the Board of the Company, and the Investor Group; (iv) an existing
120-foot crew boat to be named the Carol from Leppaluoto Offshore Marine, Inc.
("Leppaluoto"); and (v) two 175-foot offshore supply boats from IMI Marine
Operations, Inc. ("IMI Marine"). The Offering is conditioned upon the
simultaneous consummation of the acquisition of the OMI Chemical Carriers and
the Seal Fleet Vessels. The other transactions are expected to be completed as
soon as practicable after consummation of the Offering.
The aggregate purchase price of the Acquisitions is $99.7 million,
consisting of approximately $37.7 million in cash and the assumption or issuance
of $62.0 million of debt obligations. The cash portion of the purchase price
will be funded with a portion of the proceeds from the Offering and from general
corporate funds. Additional information concerning the acquisitions from OMI,
Seal Fleet, Leppaluoto, and IMI Marine is set forth below and additional
information concerning the purchase from Mr. Hvide and the Investor Group is set
forth in "Certain Transactions."
OMI. The Company and OMI entered into a stock purchase agreement, dated as
of October 12, 1995, as amended (the "OMI Agreement"), pursuant to which the
Company has agreed to purchase from OMI the three OMI Chemical Carriers and
OMI's 50% interest in OSTC for an aggregate purchase price of approximately
$64.7 million, consisting of approximately $30.0 million in cash and the
assumption of approximately $34.7 million in mortgage obligations related to two
of the OMI Chemical Carriers. The cash portion of the purchase price will be
funded with $15.5 million from the proceeds of the Offering, $7.5 million
provided by bank financing for one of the vessels, and $7.0 million through
additional borrowings under the Credit Facility. See "Management's Discussion
and Analysis of Financial Condition and Results of Operations--Liquidity and
Capital Resources." For additional information concerning the OMI Chemical
Carriers, see "--Marine Transportation Services--Chemical Transportation."
Seal Fleet. The Company and Seal Fleet have entered into asset purchase
agreements, dated as of March 29, 1996 and amended as of July 23, 1996 (the
"Seal Fleet Agreements"), pursuant to which the Company has agreed to purchase
three offshore supply boats from Seal Fleet, Inc., and five supply boats
currently managed by Seal Fleet, Inc. from certain partnerships. The aggregate
purchase price is $26.1 million in cash, of which $16.8 million will be funded
with a portion of the proceeds of the Offering and $9.3 million will be financed
with borrowings under the Credit Facility.
The Seal Fleet acquisition is subject to certain customary conditions,
including the approval of the shareholders of Seal Fleet, Inc., a publicly held
company, which approval has been obtained. In connection with the Seal Fleet
acquisition, the Company has agreed to indemnify certain affiliates of Seal
Fleet, Inc. against certain liabilities to its creditors. Seal Fleet, Inc. is
expected to have limited net worth following the acquisition and its ability to
fully service its obligations will be dependent on its ability to complete a
successful business combination. The Company's maximum liability pursuant to the
indemnity agreement relating to liabilities to creditors of Seal Fleet, Inc. is
$7.0 million. The Company has also agreed to indemnify Seal Fleet, Inc., the
members of its Board of Directors, and such affiliates for certain liabilities
they may incur as a result of the Board's approval of the Seal Fleet
acquisition.
32
<PAGE>
The Company acquired 96,000 shares of Class A Common Stock of Seal Fleet,
Inc. in July 1996. In connection with the Seal Fleet acquisition, the Company
has also agreed to acquire, for nominal consideration, 212,655 shares, or
approximately 11%, of the outstanding shares of Class A Common Stock, and 50,000
shares, or 100%, of the outstanding shares of Class B Common Stock, of Seal
Fleet, Inc. The Company has agreed to the simultaneous transfer, for nominal
consideration, of 37,600 Class A shares and all of the Class B shares to an
entity controlled by Thomas M. Ferguson, the principal of a consulting firm
engaged by the Company. The holder of the Seal Fleet Class B Common Stock is
entitled to elect a majority of the Board of Directors of Seal Fleet, Inc.
Following the Seal Fleet acquisition, the Company will hold approximately 13.7%
of the outstanding shares of Class A Common Stock of Seal Fleet, Inc., and two
individuals who are officers and directors of the Company will be members of the
Seal Fleet, Inc. board of directors. Mr. Ferguson has agreed to indemnify the
Company against any liability it incurs under the indemnification it undertakes
in connection with the Seal Fleet acquisition. See "Certain Transactions" for
additional information including security being provided by Mr. Ferguson for his
obligations to the Company.
Leppaluoto. On January 8, 1996, the Company entered into an agreement with
Leppaluoto to purchase the Carol, a 120-foot crew boat for $825,000, consisting
of $150,000 in cash and a $675,000 promissory note.
IMI Marine. On July 17, 1996 the Company entered into an agreement to
purchase two U.S.-flag, 175-foot supply boats built in 1983 from IMI Marine for
a total purchase price of $6.0 million, of which $4.2 million will be borrowed
under the vessel acquisition credit line of the Credit Facility. Both boats are
currently operating in the Arabian Gulf and will be relocated to the Gulf of
Mexico following consummation of the acquisition.
THE INDUSTRY
All marine transportation between points in the United States, including
drilling rigs affixed to the U.S. outer continental shelf, is restricted by law
to vessels built and registered in the United States and owned and manned by
U.S. citizens. The U.S. domestic trade includes a number of market segments,
including the servicing of domestic offshore oil and gas drilling and production
platforms, the providing of offshore and harbor towing services to the offshore
energy industry, tankers and other vessels, and the transportation of fuels,
petroleum products, and chemicals along and between U.S. coasts. Approximately
40,000 vessels participate in the U.S. domestic trade. All of the Company's
vessels are eligible to participate in the U.S. domestic trade except for two
Panamanian-flag offshore supply boats operating in Southeast Asia pursuant to
contracts expiring in 1998.
MARINE SUPPORT SERVICES
Offshore Energy Support. Marine support vessels serving offshore energy
exploration and production operations are used primarily to transport materials,
supplies, equipment, and personnel to drilling rigs and to support the
construction, positioning, and ongoing operation of oil and gas production
platforms. Offshore energy support vessels are hired by oil companies and others
engaged in offshore exploration activities, generally on a short-term (less than
six months) basis at varying day rates. See "--Customers and Charter Terms." The
types of vessels primarily utilized in these activities are supply boats, crew
boats, and anchor handling vessels.
Supply boats (also called workboats) are generally at least 150 feet in
length and serve exploration and production facilities and support offshore
construction and maintenance activities. Supply boats are differentiated from
other vessel types by cargo flexibility and capacity. In addition to
transporting deck cargo, such as drill pipe and heavy equipment, supply boats
transport liquid mud, potable and drilling water, diesel fuel, dry bulk cement,
and dry bulk mud. With their relatively large liquid mud and dry bulk cement
capacity and large areas of open deck space, they are generally in greater
demand than other types of support vessels for exploration and workover drilling
activities.
33
<PAGE>
Crew boats (also called crew/supply boats) are faster and smaller than
supply boats and are utilized primarily to transport light cargo, including food
and supplies, and personnel to and among production platforms, rigs, and other
offshore installations. They can be chartered together with supply boats to
support drilling or construction operations or separately to serve the various
requirements of offshore production platforms. Crew boats are typically
constructed of aluminum and generally have longer useful lives than steel-hull
supply boats. Crew boats also provide a cost-effective alternative to helicopter
transportation services and can operate reliably in all but the most severe
weather conditions. Because crew boats support a wider range of offshore
activities than other vessel types, their utilization and day rates are
generally more stable than those of other types.
Anchor handling vessels, which include anchor handling tug/supply vessels
and some tugs, are more powerful than supply boats and are capable of towing and
positioning drilling rigs, production facilities, and construction barges. Some
are specially equipped to assist tankers while they are loading from
single-point buoy mooring systems.
There has been little new construction of offshore supply boats since the
early 1980s, resulting in substantial worldwide vessel attrition over the past
ten years as many vessels have reached the end of their useful lives. The number
of offshore supply boats available for service in the Gulf of Mexico decreased
from a peak of approximately 700 in 1985 to approximately 275 in March 1996.
During the same period, the number of companies operating supply boats of at
least 150 feet in length decreased from approximately 40 to 19. Day rates
declined in the mid-1980s and have since improved from an average of $1,730 in
1987 to an average of $3,793 in the first quarter of 1996. Although some supply
boats were redeployed from the Gulf of Mexico to overseas locations, management
believes that existing regulations, mobilization costs, and overseas
opportunities will limit the number of such vessels returning to the Gulf of
Mexico in the foreseeable future. Management believes that day rates have not
reached a level that will support significant new construction and estimates
that new construction of offshore supply vessels likely will be of larger, more
capable vessels of approximately 220 feet which would require sustained average
day of rates of at least $7,500.
The Company estimates that there are currently approximately 31 crew boat
operators in the Gulf of Mexico, with a total fleet of 248 vessels of at least
100 feet in length. There are approximately 12 crew boats greater than 120 feet
in length currently under construction, including one such vessel the Company
intends to acquire, and the Company believes that current demand created by
exploration for oil in the deeper waters of the Gulf of Mexico may support
construction of a limited number of additional crew/supply boats.
The following table sets forth as of July 1, 1996, the Company's estimate of
the number of crew boats and supply boats operating in the Gulf of Mexico.
SUPPLY BOATS
COMPANY TOTAL BOATS
Tidewater, Inc................................................ 130
Seacor Marine, Inc............................................ 33
Ensco, Inc.................................................... 28
Trico Marine Services, Inc.................................... 20
HVIDE MARINE.................................................. 19(1)(2)
Others........................................................ 53
CREW BOATS
COMPANY TOTAL BOATS
Seacor Marine, Inc............................................ 72
HVIDE MARINE.................................................. 37(1)(3)
Tidewater, Inc................................................ 30
Trico Marine Services, Inc.................................... 16
Others........................................................ 93
- -----------------------
(1) Pro forma for the Acquisitions.
(2) Includes three vessels of which the Company is bareboat charterer and
operator and three vessels that will be returned from the Arabian Gulf to
the Gulf of Mexico in the third quarter of 1996.
(3) Includes ten vessels of which the Company is bareboat charterer and
operator.
34
<PAGE>
While offshore energy support vessels service existing exploration and
production activities, incremental vessel demand depends primarily upon the
level of drilling activity, which in turn depends on oil and gas prices. As a
result, utilization and day rates generally correlate with oil and gas prices,
which are highly cyclical. The relationship since 1993 between natural gas
prices and drilling rig utilization in the Gulf of Mexico and, similarly,
average vessel utilization, is displayed in the following table.
<TABLE>
<CAPTION>
1993 1994 1995
--------------------------------- --------------------------------- ---------------------------------
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Natural gas
prices(1)............. $ 1.92 $ 2.16 $ 2.20 $ 2.21 $ 2.42 $ 1.95 $ 1.70 $ 1.60 $ 1.51 $ 1.63 $ 1.54 $ 2.06
Competitive mobile rig
utilization(2)........ 71.6% 75.9% 78.5% 81.0% 75.5% 76.6% 76.7% 80.6% 70.3% 73.6% 81.8% 85.2%
Offshore service
vessels(3)
Utilization......... 83.9% 88.6% 89.0% 91.2% 88.6% 83.9% 91.6% 94.6% 84.2% 89.7% 91.7% 94.8%
Day rates........... $3,050 $3,233 $3,700 $4,050 $3,717 $3,200 $3,033 $3,258 $2,917 $2,975 $3,307 $3,543
Anchor handling
tug/supply vessels
utilization(4)........ 71.0% 82.6% 82.6% 88.6% 85.0% 74.7% 76.3% 92.3% 86.0% 81.5% 92.6% 92.5%
<CAPTION>
1996
------
Q1
<S> <C>
Natural gas
prices(1)............. $ 3.44
Competitive mobile rig
utilization(2)......... 83.3%
Offshore service
vessels(3)
Utilization......... 95.3%
Day rates........... $3,793
Anchor handling
tug/supply vessels
utilization(4)........ 94.9%
</TABLE>
- -----------------------
(1) Average monthly natural gas cash price delivered at Henry Hub in $/MMBtu, as
reported in Natural Gas Week.
(2) Includes all jack-up rigs, semi-submersible rigs, submersible rigs,
drillships, and other mobile rig units operating in the Gulf of Mexico, as
compiled by Offshore Data Services.
(3) Includes all supply boats, crew boats, and other offshore service vessels
greater than or equal to 150 feet in length operating in the Gulf of Mexico,
as compiled by Offshore Data Services.
(4) Includes all anchor handling tug/supply vessels operating in the Gulf of
Mexico, as compiled by Offshore Data Services. Day rates are not included as
they are not considered meaningful (i.e., tugs work on a per-job basis, not
a daily basis).
During the fourth quarter of 1995 and continuing into the first quarter of
1996, both oil and natural gas prices increased as a result of strong demand for
energy.
Offshore and Harbor Towing. Offshore and harbor towing services are provided
by tugs to vessels utilizing the ports in which the tugs operate and to vessels
at sea to the extent required by environmental regulations, casualty, or other
emergency. The Company's anchor handling tug/supply boats and offshore
towing-equipped tugs have been engaged in towing a wide variety of barges
carrying heavy equipment, refinery modules, and petroleum products for the
energy industry in the Gulf of Mexico, the Atlantic Ocean, and the Mediterranean
Sea. In the case of docking services, charges are based on a fixed rate per job,
and in the case of towing services, on hourly or daily rates. In most ports,
competition is unregulated, although a few port authorities--including Port
Canaveral and Port Everglades, Florida where a majority of the Company's tugs
operate--grant non-exclusive franchises to harbor tug operators. Rates are
unregulated in franchised ports served by the Company. See "--Customers and
Charter Terms." Each port is generally a distinct market for harbor tugs, even
though harbor tugs can be moved from port to port. Demand for towing services
depends on vessel traffic, which is in turn generally dependent on local and
national economic conditions. OPA 90 and current state legislation require oil
tankers to be escorted in and around certain ports located in Alaska and the
U.S. Pacific coast. The Company anticipates that such regulatory requirements
will be expanded, increasing the demand for specially designed tractor tugs,
such as the Broward, to perform active escort services.
MARINE TRANSPORTATION SERVICES
Chemical Transportation. In the domestic chemical transportation trade,
vessels carry chemicals primarily from chemical manufacturing plants and storage
tank facilities along the Gulf of Mexico coast to industrial users in and around
the Atlantic and Pacific coast ports and along inland rivers and waterways. The
chemicals primarily transported are caustic soda, alcohols, chlorinated
solvents, paraxyzlene, alkylates, toluene, methyl tertiary butyl ether (MTBE),
phosphoric acid, and lubricating oils. Since 1989, coastwise chemical tonnage
demand has increased as a result of the general expansion of the U.S. economy
and as gasoline additives have begun to move coastwise. Certain of the chemicals
transported must be carried in vessels with specially coated or stainless steel
cargo tanks. Many are very sensitive to contamination and require special
cargo-handling equipment.
35
<PAGE>
The Company estimates that approximately 11% (in terms of tonnage) of bulk
domestic chemical transportation is waterborne, with the remainder transported
by rail. The Company also estimates that approximately 60% of that waterborne
trade is in specialty chemicals, such as caustic soda, which can be transported
only by specially designed vessels. Although chemical carriers and petroleum
product carriers are similar in design, vessels engaged in the transportation of
petroleum products generally lack the large number of small tanks, special tank
coatings, and sophisticated cargo-handling capability necessary to operate in
the parcel or specialty chemical trade. Parcel shipments are usually carried
pursuant to contracts of affreightment by which a shipper contracts for the use
of a portion of a vessel's cargo capacity. See "--Customers and Charter Terms."
Vessels engaged in domestic chemical transportation that are owned by major
chemical or other companies that use the vessels to transport cargoes for their
own accounts are referred to as "captive" or proprietary vessels. Management
believes that there are 13 specialty chemical carriers active in the domestic
trade, of which nine are non-proprietary, or independently operated, and four
are proprietary. Some of these vessels also transport petroleum products, and
all but one of them will be ineligible to do so after the year 2015 in
accordance with OPA 90 double-hull requirements. See "--Environmental and Other
Regulation--Clean Water Regulations." The Seabulk America is the only chemical
carrier to enter service in the domestic trade since 1984, and no new specialty
chemical carriers are currently under construction. In addition to the specialty
chemical tankers, there are 44 tankers and 90 barges in the U.S.-flag domestic
fleet over 10,000 gross tons that are capable of carrying some so-called "easy
chemicals," such as gasoline additives (e.g. MTBE), and that compete with
specialty chemical carriers for the transportation of those chemicals.
The following tables set forth certain information concerning mandatory OPA
90 retirement dates (from transportation of petroleum products) for the 13
active specialty chemical carriers eligible to participate in the U.S. domestic
trade. The Company believes that certain of these vessels will be retired once
they are no longer able to augment their cargoes with petroleum products and
that some may be retired in advance of their OPA 90 retirement dates as required
capital investments may not be economically justifiable over the remaining lives
of the vessels.
<TABLE>
<CAPTION>
OPA 90
YEAR BUILT/ RETIREMENT DEADWEIGHT
VESSEL NAME OWNER/OPERATOR REBUILT DATE TONS (000'S)
<S> <C> <C> <C> <C>
Keystone Georgia(1)......... Keystone Shipping Co. 1964 1998 26.3
OMI STAR.................... HVIDE MARINE(2) 1970 2000 37.5
Marine Chemist.............. Marine Transport Lines 1970 2000 35.9
Guadalupe................... Sabine/Kirby Corp. 1945/1978 2003 30.4
Chilbar..................... Keystone Shipping Co. 1959/1981 2006 39.4
SEABULK MAGNACHEM........... HVIDE MARINE 1977 2007 39.3
OMI DYNACHEM................ HVIDE MARINE(2) 1981 2011 50.9
OMI HUDSON.................. HVIDE MARINE(2) 1981 2011 50.9
SeaRiver Charleston(1)...... SeaRiver Maritime 1983 2011 48.1
SeaRiver Wilmington(1)...... SeaRiver Maritime 1984 2012 48.0
Sea Venture................. Atlantic Tankships 1972/1983 2013 18.7
SEABULK AMERICA............. HVIDE MARINE 1975/1990 2015 46.3
Chemical Pioneer(1)......... Marine Transport Lines 1968/1983 n/a(3) 34.9
-----
Total capacity...... 508.2
-----
-----
</TABLE>
- -----------------------
Source: Lloyd's Maritime Directory 1994 (for owner/operators, year
built/rebuilt, and deadweight tons); U.S. Maritime Administration (for
OPA 90 retirement dates)
(1) Proprietary.
(2) One of the OMI Chemical Carriers to be acquired. See "--The Acquisitions."
(3) Double-hull vessel.
36
<PAGE>
Although single-hull chemical carriers may be permitted to continue to carry
chemicals in the U.S. domestic and foreign trade after their OPA 90 retirement
dates, the Company believes that the inability of single-hull carriers to
augment chemical cargoes with petroleum products (such as lubricating oils)
after such dates will, in light of the current near balance between supply and
demand and increasing chemical shipment volume as a result of improvements in
the economy, result in increased charter rates for the Company's chemical
carriers.
Petroleum Product Transportation. In the domestic energy transportation
trade, oceangoing and inland-waterway vessels transport fuel and other petroleum
products, primarily from the Gulf of Mexico coast refineries and storage
facilities, to utilities, waterfront industrial facilities, and distribution
facilities along the Gulf of Mexico, the Atlantic and Pacific coasts, and inland
rivers. The inventory of U.S.-flag oceangoing vessels eligible to participate in
the U.S. domestic trade and capable of transporting fuel or petroleum products
has steadily decreased since 1980 as vessels have reached the end of their
useful lives and the cost of constructing a vessel in the United States (a
requirement for U.S. domestic trade participation) has exceeded the level at
which it was economically feasible to order a new vessel.
The following graph sets forth the projected number of U.S.-flag chemical
and product tankers from 20,000 dwt to 55,000 dwt remaining eligible to
transport crude oil and petroleum products in the U.S. domestic trade as of the
dates indicated:
OPA 90 RETIREMENT OF JONES ACT TANKERS
[LOGO]
- -----------------------
Source: Keith Chartering
(1) Assumes delivery of twelve vessels from 1997 through 2004, including
delivery in 1998 of the five petroleum product carriers in which the Company
has an interest, and scrap dates one year in advance of OPA 90 mandated
retirement dates.
As a result of the retirement dates for single-hull tankers mandated by OPA
90, the Company believes that, of the 71 U.S.-flag product and chemical carriers
and product and chemical barges from 20,000 dwt to 55,000 dwt currently
operating, 19 will have to be retired by the end of year 2000. See
"--Environmental and Other Regulation--Clean Water Regulations." Replacement
vessels currently under construction consist of four late 1950s-built
steam-powered single-hull product carriers being converted to double-hull
vessels for delivery in 1996 and 1997 and the five new diesel-powered double-
hull product carriers in which the Company has an interest. See "--Company
Operations--Marine Transportation Services--Petroleum Product
Transportation--New Product Carriers." The Company believes that the mandatory
replacement of single-hull carriers by environmentally safer double-hull vessels
will result in a gradual increase in charter rates for product carriers over the
next few years.
37
<PAGE>
COMPANY OPERATIONS
MARINE SUPPORT SERVICES
Offshore Energy Support. The Company has provided services to the oil and
gas drilling industry since 1989, when it acquired its first eight offshore
supply boats. In September 1994, March 1995, and January and February 1996, the
Company expanded its offshore energy support service fleet by acquiring an
aggregate of six supply boats and two utility boats (seven of which it was
previously operating or managing) and 36 crew boats. The Acquisitions will add
eight supply boats and two crew boats.
____Supply Boats. The Company's 24 supply boats, including those to be acquired
following completion of the Offering as part of the Acquisitions, are as
follows:
<TABLE>
<CAPTION>
LENGTH YEAR BUILT/ AREA OF
SUPPLY BOAT NAME (FEET) REBUILT HORSEPOWER OPERATION
<S> <C> <C> <C> <C>
Baltic Seal(1)................................. 205 1976/1994 2,250 U.S. Gulf
Indian Seal(1)(2).............................. 205 1974/1994 5,350 U.S. Gulf
Seabulk North Carolina(2)(3)................... 190 1979/1993 4,000 U.S. Gulf
Baffin Seal(1)................................. 185 1982/1994 2,250 U.S. Gulf
Pegasus Seal(1)................................ 185 1982 2,250 U.S. Gulf
Hawke Seal(1).................................. 185 1982 2,250 U.S. Gulf
Bengal Seal(1)................................. 185 1979 2,250 North Sea
Seabulk Hawaii................................. 180 1979/1995 3,000 U.S. Gulf
Seabulk Georgia(4)............................. 180 1984 3,000 U.S. Gulf
Seamark South Carolina(2)(5)................... 180 1983 3,000 SE Asia
Seabulk California............................. 180 1982 2,250 U.S. Gulf
Seabulk Florida................................ 180 1982 2,250 U.S. Gulf
Seabulk Alabama................................ 180 1982 2,250 U.S. Gulf
Seamark Mississippi(5)......................... 180 1982 2,250 SE Asia
Seabulk Texas.................................. 180 1982 2,250 U.S. Gulf
Seabulk Louisiana.............................. 180 1982 2,250 U.S. Gulf
Ross Seal(1)................................... 176 1977/1987 1,700 SE Asia
China Seal(1).................................. 176 1977 1,700 North Sea
Intersurf(6)................................... 175 1983 2,400 U.S. Gulf
Big Orange XXII(6)............................. 175 1983 2,400 U.S. Gulf
Seabulk Oregon................................. 175 1979 2,250 U.S. Gulf
Seabulk Washington............................. 175 1978 2,250 U.S. Gulf
Seabulk Maryland(3)............................ 165 1980 1,860 U.S. Gulf
Seabulk Virginia(3)............................ 165 1979 1,860 U.S. Gulf
</TABLE>
- -----------------------
(1) To be acquired from Seal Fleet. See "--The Acquisitions."
(2) Anchor handling tug/supply vessel.
(3) The Company is bareboat charterer and operator with an option to purchase
the vessel at the end of the bareboat charter for a nominal amount.
(4) Owned by the Company and operated in the United Arab Emirates pursuant to an
arrangement with a local company. To be returned to the U.S. Gulf in late
July 1996.
(5) These offshore supply boats are currently chartered to a joint venture in
which the Company has a 49% interest and are operated by the joint venture
in Southeast Asia. The Company receives bareboat charter hire, which is at a
rate that is approximately equivalent to the capital costs of the vessels,
and the right to receive a 49% share of net income from the venture. The
joint venture has the right to purchase each vessel for $300,000 upon
expiration of the charters in 1998.
(6) To be acquired from IMI Marine. See "The Acquisitions."
38
<PAGE>
____Crew boats. The 37 crew and two utility boats currently owned, operated, or
to be acquired in the Acquisitions by the Company, all of which are operated in
the Gulf of Mexico, are as follows:
<TABLE>
<CAPTION>
LENGTH YEAR BUILT/
CREW BOAT NAME (FEET) REBUILT HORSEPOWER
<S> <C> <C> <C>
Seabulk St. Francis(1)....................................... 152 1996 4,400
Seabulk St. Charles(2)....................................... 152 1993 3,820
Seabulk Winn................................................. 135 1991 3,056
Big Blue..................................................... 135 1990 3,056
Storm Runner................................................. 135 1990 3,056
Sea Robin III................................................ 135 1978 2,250
Seabulk LaFourche............................................ 130 1991 2,040
Carol(1)..................................................... 125 1985 2,600
Thunderuniverse.............................................. 125 1985 2,040
Seabulk Starr................................................ 120 1984 2,040
ThunderU.S.A................................................. 120 1984 2,040
Nautic Runner................................................ 120 1980 2,040
Seabulk Liberty.............................................. 110 1985 2,040
Thunderplanet................................................ 110 1982 2,040
Seabulk Mobile............................................... 110 1982 2,040
Thunderroad.................................................. 110 1981 2,040
Thunderwar................................................... 110 1981 2,040
Thunderworld................................................. 110 1980 2,040
Seabulk Bay.................................................. 110 1980 2,040
Seabulk Beauregard........................................... 110 1980 2,040
Seabulk Jackson.............................................. 110 1980 2,100
David Jr.(3)................................................. 110 1980 2,820
Jillian(3)................................................... 110 1980 2,820
Seabulk Nassau............................................... 110 1979 2,040
Seabulk Aransas.............................................. 110 1978 2,100
Ralph Thompson(3)............................................ 110 1978 2,820
Buster Thompson(3)........................................... 110 1978 2,820
Seabulk Austin(4)............................................ 110 1978 1,080
Billy Jay(3)................................................. 110 1976 2,400
Judy L.(3)................................................... 110 1975 2,400
Seabulk Baton Rouge(3)(4).................................... 100 1981 910
Thundereagle................................................. 100 1977/1995 1,530
Seabulk Cameron.............................................. 100 1976/1995 1,530
Thundercat................................................... 100 1976/1995 1,530
Seabulk Sabine............................................... 100 1976/1995 1,530
Gulf Runner II............................................... 100 1981 1,530
Seabulk Iberia............................................... 100 1981 1,530
Rig Runner(3)................................................ 90 1974 1,650
Cheryl....................................................... 85 1976 1,200
</TABLE>
- -----------------------
(1) Vessel to be acquired. See "--The Acquisitions."
(2) The Company is bareboat charterer and operator with an option to purchase
the Seabulk St. Charles, formerly the Royal Runner, at the end of the
bareboat charter for $400,000.
(3) The Company is bareboat charterer and operator with an option to purchase
the vessel at the end of the bareboat charter for a nominal amount.
(4) Utility vessel.
39
<PAGE>
Offshore and Harbor Towing. The Company's 11 tugs serve Port Everglades and
Port Canaveral, Florida and Mobile, Alabama, where they primarily assist product
carriers, barges, other cargo vessels, and cruise ships in docking and undocking
and in proceeding in confined waters.
____Port Everglades. Port Everglades has the third largest petroleum storage
tank farm in the United States, providing substantially all of the petroleum
products for South Florida. Since 1958, when the Company's tug operations were
established, the Company has enjoyed a franchise as the sole provider of docking
services in the port. That franchise specifies, among other things, that three
tugs serving the port be less than 90 feet in length, because of the narrowness
of slips in the port, and that tugs have firefighting capability. The franchise
is not exclusive and another operator could be granted an additional franchise.
Although a significantly larger potential competitor sought a franchise in 1992,
the Company won unanimous endorsement from the Port Authority to continue its
sole-franchise relationship with the port when that competitor failed to make
the requisite showing of public need and necessity. The current franchise
expires in 2001, and there can be no assurance that it will be renewed.
In 1995, the Company took delivery of a new 5,100 hp tractor tug, the
Broward, which has been operated in Port Everglades. The Broward was built at a
cost of approximately $6.4 million. Company personnel, working in conjunction
with consulting marine engineers and architects, prepared the conceptual design,
including the tug's distinctive hull form, prepared detailed specifications, and
supervised the construction of the tug.
Tractor tugs have forward-mounted, omni-directional propulsion units, giving
them a high degree of maneuverability and control over the operation of an
escorted oil tanker or other vessel, and are generally considered superior for
tanker escort service. The Broward has twin 2,550 hp diesel engines and twin
propeller nozzles capable of turning 360 degrees. Although all of the Company's
harbor tugs are equipped for firefighting and their crews trained to respond to
fires and oil-spill emergencies, the Broward has significantly enhanced
firefighting capabilities, with two large water cannons capable of producing
6,000 gallons per minute for spraying water or foam. Although a number of
tractor tugs are in operation around the world, there are no others in
commercial service in the southeastern United States. As a result of the
delivery of the Broward, the Company intends to offer tanker escort services and
specialized offshore energy support services.
____Port Canaveral. The Company expanded its services in the early 1960s to Port
Canaveral, Florida where, like Port Everglades, it also has the sole franchise
from the port authority to provide harbor docking services. Port Canaveral is
the smallest of the Company's harbor tug operations, providing docking and
undocking services for commercial cargo vessels serving central Florida and for
cruise ships visiting the Disney World/Kennedy Space Center attractions. The
Company's franchise is a month-to-month arrangement and, although there can be
no assurance that the Company will be able to retain its franchise in Port
Canaveral, there has been no challenge to the franchise since 1984.
____Mobile. In 1988, the Company purchased a division of a towing company
operating in the port of Mobile, Alabama. The port provides docking and
undocking services primarily for commercial cargo vessels, including vessels
transporting coal and other bulk exports. At the time, that division operated
three harbor tugs in Mobile and had an approximate 30% market share. The Company
added additional equipment and believes it significantly upgraded the quality
and performance of the tug service, thus enabling the Company to increase its
market share to approximately 50% of the harbor tug business in that port since
commencing operations.
____Offshore Towing. Three of the Company's 11 tugs are offshore towing equipped
and conduct a wide variety of offshore towing activities in the Atlantic Ocean
and Gulf of Mexico.
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<PAGE>
The Company currently owns and operates the following tugs engaged in
providing towing services:
<TABLE>
<CAPTION>
LENGTH YEAR BUILT/ CURRENT
VESSEL NAME HORSEPOWER (FEET) REBUILT PORT SERVED
<S> <C> <C> <C> <C>
Broward(1).................................. 5,100 100 1995 Everglades
Ft. Lauderdale.............................. 4,200 90 1971/1996 Everglades
Hollywood................................... 4,200 106 1985 Mobile
Mobile Power................................ 4,100 98 1957/1986 Mobile
Mobile Pride(1)............................. 3,300 107 1969/1989 Mobile
Paragon(1).................................. 3,300 105 1978/1989/1996 Offshore
Mobile Persistence.......................... 3,000 98 1940/1975 Canaveral
Brevard..................................... 2,400 88 1945/1986/1996 Canaveral
Captain Brinn............................... 2,145 88 1960/1986 Canaveral
Everglades.................................. 2,145 88 1956/1984 Everglades
Manatee..................................... 2,145 88 1959/1982 Everglades
</TABLE>
- -----------------------
(1) Equipped for offshore towing.
MARINE TRANSPORTATION SERVICES
Chemical Transportation.
____Existing Vessels. The Company's two existing chemical carriers, the
298,000-barrel, 39,300 dwt Seabulk Magnachem and the 297,000-barrel, 46,300 dwt
Seabulk America, are primarily engaged in the U.S. domestic chemical parcel
trade. The Company operates the Seabulk Magnachem pursuant to a long-term
bareboat charter. See "Description of Certain Indebtedness--Long-Term Charter
Obligations--Title XI Bonds." The Company owns a 67% economic interest in the
Seabulk America and Stolt Tankers (U.S.A.), Inc. owns a 33% economic interest in
the Seabulk America.
The Seabulk Magnachem and the Seabulk America have full double bottoms (as
distinct from double hulls) and 16 and 24 cargo segregations, respectively,
enabling each vessel to carry a variety of different chemical products on a
particular voyage. Many of the chemicals transported by the Company are
hazardous substances. Voyages are currently generally conducted from the Houston
and Corpus Christi, Texas, and Lake Charles, Louisiana areas to such ports as
New York, Philadelphia, Baltimore, Norfolk, Wilmington, North Carolina, and
Charleston, South Carolina.
Delivered in 1977, the Seabulk Magnachem is a CATUG(R) ITB, which requires
fewer personnel to operate than a conventional carrier of equivalent size and
has a higher level of dependability, propulsion efficiency, and performance than
an ordinary tug and barge. Delivered in 1990, the Seabulk America is the only
vessel in the U.S. domestic trade capable of carrying large cargoes of acid, as
a result of its large high-grade alloy stainless steel tanks, and the only such
vessel strengthened to carry relatively heavy cargoes such as phosphoric and
other acids. The Seabulk America's stainless steel tanks were constructed
without internal structure, which greatly reduces cargo residue from
transportation and results in less cargo degradation. Stainless steel tanks,
unlike epoxy-coated tanks, also do not require periodic sandblasting and
recoating. The Seabulk America was one of the first U.S.-flag carriers to be
equipped with state-of-the-art integrated navigation, cargo control monitoring,
and automated engine room equipment.
Pursuant to the requirements of OPA 90, the Seabulk America and Seabulk
Magnachem, which were built with full double bottoms but not double sides,
cannot be utilized to transport petroleum and petroleum products in U.S.
commerce after 2015 and 2007, respectively. See "--Environmental and Other
Regulation--Clean Water Regulations." They may, however, be permitted to
continue to carry
41
<PAGE>
certain chemicals in U.S. commerce and may be redocumented in another country
and transport chemicals in non-U.S. trades. Although it has no current plans to
do so, the ITB design of the Seabulk Magnachem would allow the Company to
replace only the cargo-carrying portion of the vessel with a double-hull barge,
which the Company anticipates would be substantially less expensive than
constructing an entirely new double-hull conventional tank vessel.
____The OMI Chemical Carriers. The three OMI Chemical Carriers, the
360,000-barrel, 50,900 dwt OMI Dynachem, the 360,000-barrel, 50,900 dwt OMI
Hudson, and the 260,000-barrel, 37,100 dwt OMI Star, have from 13 to 24
individual cargo tanks configured, strengthened, and coated to handle various
sized parcels of a wide variety of industrial chemical and petroleum products
giving them the ability to handle a broader range of chemicals than
chemical-capable product carriers. The OMI Dynachem and the OMI Hudson have full
double bottoms and are diesel powered; the OMI Star has a partial double bottom
and is steam powered. Double bottoms provide increased protection over single
hull vessels from a spill in the event of mishap. The OMI Dynachem, the OMI
Hudson, and the OMI Star cannot transport petroleum and petroleum products in
U.S. commerce after 2011, 2011, and 2000, respectively, although like the
Seabulk Magnachem and Seabulk America, they may thereafter transport certain
chemicals in U.S. and non-U.S. commerce.
Unlike the Company's existing fleet, the OMI Chemical Carriers are manned by
members of national maritime labor unions pursuant to collective bargaining
agreements. The Company's crewing agent has reached agreement with the unions on
a new collective bargaining agreement on terms comparable to the terms of the
existing agreement.
____OSTC. OSTC is currently 50% owned by each of the Company and OMI. The
Seabulk America and Seabulk Magnachem, along with the three OMI Chemical
Carriers, are currently time chartered to and marketed by OSTC. Under the pool
arrangement, the Company receives charter hire from OSTC based upon a formula
which takes into account the speed and carrying capacity of the vessels and
other factors applied to OSTC's revenues (net of fuel costs, port charges, and
overhead). Through application of this formula, the Company has received
approximately 40% of OSTC's net revenues since the fifth vessel (the Seabulk
America) joined the pool in September 1990.
Following its acquisition of the OMI Chemical Carriers and OMI's 50%
interest in OSTC, the Company intends to continue to market the five chemical
carriers through OSTC. The total capacity of the five carriers operated under
the OSTC pool arrangement represents approximately 44% of the capacity of the
independent domestic specialty chemical carrier fleet, and four of the five
chemical carriers marketed by OSTC are among the most recently built and the
only independently owned, diesel-powered carriers with full double bottoms
operating in the U.S. domestic trade. See "--The Industry--Marine Transportation
Services--Chemical Transportation."
OSTC books cargoes either on a spot (movement-by-movement) or time basis.
Approximately 75% of contracts for cargo are committed on a 12- to 18-month
basis, with minimum and maximum cargo tonnages specified over the period at
fixed rates per ton. The OMI Hudson and OMI Star are currently chartered to
major oil companies under charters that expire in August 1997 and November 1996,
respectively, assuming charter extension options are not exercised (November
1998 for the OMI Star if certain options are exercised). Due to the flexibility
of the pool, OSTC is often able to generate additional revenues by chartering
cargo space on competitors' vessels and by expanding the pool carriers' backhaul
(return voyage) opportunities.
42
<PAGE>
Petroleum Product Transportation.
____Seabulk Challenger. The 320,000-barrel, 39,300 dwt CATUG(R) ITB Seabulk
Challenger is engaged in the transportation of fuel and other petroleum products
from Shell's refineries in Texas and Louisiana to tank farms and industrial
sites primarily in Port Everglades, Tampa, and Jacksonville, Florida. Delivered
in 1975, the Seabulk Challenger has six cargo segregations and was the first
CATUG(R) ITB constructed in the world. Like the Seabulk Magnachem, it enjoys
certain manning and other advantages over conventional tank vessels. In 1989 and
1991, the vessel had extensive steel renewals and tank recoatings. In addition,
in 1991 the vessel was outfitted with an inert-gas system at the expense of the
charterer.
The Seabulk Challenger has been under continuous contract to Shell since its
delivery in 1975 and to date has performed over 600 voyages for Shell. In
January 1990, Shell renewed the charter for a ten-year period ending in January
2000. Under the charter, the Company is responsible for operating costs such as
crew, maintenance, and insurance, and Shell pays for voyage costs such as fuel
and port charges. The charter hire rate is adjusted annually for inflation. The
charter may be canceled by Shell in January 1997 and each subsequent January
upon payment of a percentage of the charter hire due over the remaining term of
the charter. Shell has in the past repeatedly renewed its charter of the Seabulk
Challenger, and continues to fully utilize the vessel. Because the termination
penalties are substantial, and Shell has provided significant capital
enhancement to the vessel, the Company believes that Shell will continue to
charter the vessel until January 2000, although there can be no assurance that
it will do so.
The Seabulk Challenger, like the Company's chemical carriers and single-hull
barges, cannot be operated in U.S. waters after its January 2003 phase-out date
under OPA 90. As with the Seabulk Magnachem, the Company could, but has no
current plans to, replace the barge portion of the Seabulk Challenger with a
double-hull barge, which the Company anticipates would be substantially less
expensive than constructing an entirely new double-hull conventional tank
vessel.
____Sun State. In September 1994, the Company acquired the marine assets of Sun
State Marine, Inc. ("Sun State"), which then owned and operated an energy
transportation fleet of ten towboats and eight fuel barges (one small barge was
acquired in April 1995 and four small barges were acquired in December 1995),
all of which are engaged in fuel transportation along the Atlantic intracoastal
waterway and in the St. Johns River in Florida. Sun State has been in operation
for over 50 years, and the Company continues to operate it as a wholly-owned
subsidiary.
A majority of Sun State's revenue for the year ended December 31, 1995 was
derived from a fuel transportation contract with FPL. The remainder of its
revenue was derived from a fuel transportation contract with another customer
and its marine maintenance, repair, and drydocking facility. See "--Other
Services." Under its contract with FPL, which has a term extending to September
1998, Sun State has agreed to transport fuel oil from Port Canaveral and
Jacksonville to certain FPL electric power generating facilities at specified
rates (a combination of per diem and variable rates based upon barrels
transported) with an escalation provision. The FPL contract has a specified
guaranteed minimum utilization provision.
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<PAGE>
The Sun State towboats are as follows:
<TABLE>
<CAPTION>
HORSE- LENGTH YEAR BUILT/
VESSEL NAME POWER (FEET) REBUILT
<S> <C> <C> <C>
Sun River City................................................... 1,000 72 1994
Sun Commander.................................................... 1,000 70 1968/1990
Sun Chief........................................................ 1,000 72 1971/1990
Sun Merchant..................................................... 1,000 65 1966/1994
Sun Trader....................................................... 850 56 1972/1980
Sun St. Johns.................................................... 850 58 1961/1990
Sun Explorer..................................................... 800 57 1980
Sun Gypsy........................................................ 800 53 1976/1992
Sun Rebel........................................................ 800 60 1957/1991
Sun Venture...................................................... 800 66 1956/1986
</TABLE>
The Sun State barges are as follows:
<TABLE>
<CAPTION>
BARGE LENGTH YEAR BUILT/
VESSEL NAME CAPACITY (FEET) REBUILT
<S> <C> <C> <C> <C>
Sun State No. 1............................................ 25,684 bbls 290 1952/1994
Sun State No. 2............................................ 25,684 bbls 290 1952/1979
Sun State No. 3............................................ 25,974 bbls 290 1962/1986
Sun State No. 4............................................ 25,974 bbls 290 1962/1984
Sun State No. 6............................................ 21,408 bbls 264 1950/1982
Sun State No. 7............................................ 20,700 bbls 264 1967/1990
Sun State No. 8............................................ 23,000 bbls 272 1970
Sun State No. 9............................................ 23,000 bbls 272 1970
Sun State 501.............................................. 4,880 bbls 126 1966
Sun State 701.............................................. 7,000 bbls 175 1942
Sun State 901.............................................. 9,000 bbls 177 1948
Sun State 902.............................................. 9,500 bbls 195 1947
Sun State 1101............................................. 11,000 bbls 200 1963
</TABLE>
OPA 90 requires all single-hull barges, including the Sun State barges, to
discontinue transporting fuel and other petroleum products in 2015.
____New Product Carriers. The Company has a 2.4% equity interest in five 45,300
dwt petroleum product carriers currently under construction by Newport News
Shipbuilding and Drydock Co. for delivery during 1998. The aggregate cost of the
five carriers is estimated to be $255.0 million, of which approximately $40.0
million will constitute equity investment and $215.0 million will be financed
with the proceeds of government-guaranteed Title XI ship financing bonds issued
in March 1996. In addition to the Company's interest, 25% of the equity interest
in the vessels is held by Van Ommeren International BV and 49.3% and 23.4%,
respectively, by two other investors. Subject to certain conditions, the Company
has an option, exercisable through 2002, to purchase the 49.3% interest at a
price equal to (i) the investor's equity investment plus a stated annual return,
or (ii) if exercised after December 31, 1997, the greater of the fair market
value of the interest or the amount set forth in (i). The Company also has an
option, exercisable on January 15, 1998, to purchase the additional 23.4%
interest at a price equal to the investor's equity investment plus a stated
return. Should the Company fail to exercise the latter option, the investor has
the option to acquire 1.6% of the ownership interest from the Company for
nominal consideration. The total estimated cost of exercising the Company's
options is up to $32.0 million (assuming the options are exercised prior to
January 1, 1998). The Company currently has no understandings or agreements with
respect to the financing that it would require if it were to exercise any or all
of these options, and there can be no assurance that such financing will be
available.
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<PAGE>
The five product carriers, the operations of which will be managed by the
Company, are double-hull carriers intended to serve the market currently served
by single-hull product carriers whose retirement is mandated by OPA 90. The
vessels, scheduled for delivery in 1998, will operate in the U.S. domestic trade
and may be operated pursuant to long- or short-term charters, depending upon
market conditions during the period prior to their delivery and thereafter. The
Company is serving as the construction supervisor during the construction
period. The construction project is currently the subject of litigation. See
"--Legal Proceedings."
OTHER SERVICES
As part of the Sun State acquisition, the Company also acquired a small
marine maintenance, repair, and drydocking facility in Green Cove Springs,
Florida, which is engaged principally in the maintenance of tugs and barges,
offshore support vessels, and other small vessels. The lease for the facility,
including options, expires in 2000. The towboat Sun River City was constructed
in the Green Cove Springs facility, which is capable of drydocking vessels up to
300 feet in length for repair and can make dockside repairs on vessels up to 320
feet in length. Since October 1994, the Green Cove Springs facility has been
utilized to overhaul or rebuild a number of the Company's harbor tugs and
offshore energy support vessels. The facility (originally a U.S. government
naval repair and operations station) has covered steel fabrication facilities,
workshops, and office spaces adjacent to a 1,840-foot finger pier and mooring
basins, where the facility's three floating drydocks are located. The drydocks
are 60, 80, and 108 feet in length, and are capable of lifting 350, 200, and 500
tons, respectively. The 60 and 108 foot drydocks are capable of being joined
together for lifting a vessel or barge with a nominal capacity of 1,175 long
tons.
CUSTOMERS AND CHARTER TERMS
The Company offers its offshore energy support services primarily to oil
companies and large drilling companies. Consistent with industry practice, the
Company's Gulf of Mexico operations are conducted primarily in the "term" market
pursuant to short-term (less than six months) charters at varying day rates.
Generally, such short-term charters can be terminated by either the Company or
its customer upon notice of five days or less.
The Company offers its offshore and harbor towing services to vessel owners
and operators and their agents. The Company's rates for harbor towing services
are set forth in the Company's published tariffs and are subject to modification
by the Company at any time, limited by competitive factors. The Company also
grants volume discounts to major users of harbor services. Offshore towing
services are priced based upon the service required on an ad hoc basis.
The primary purchasers of chemical transportation services are chemical and
oil companies. The primary purchasers of petroleum product transportation
services are utilities, oil companies, and large industrial consumers of fuel
with waterfront facilities. Both services are generally contracted for on the
basis of short-term or long-term time charters, voyage charters, contracts of
affreightment, or other transportation agreements tailored to the shipper's
requirements. Shell, the Company's largest single customer and the long-term
charterer of the Company's product carrier, accounted for between 10% and 15% of
the Company's 1995 revenues (less than 10% on a pro forma basis assuming the
Acquisitions had occurred on January 1, 1995). FPL, the Company's second largest
customer, accounted for between 5% and 10% of the Company's 1995 revenues (less
than 5% on a pro forma basis assuming the Acquisitions had occurred on January
1, 1995). The loss of either of these customers could have a material adverse
effect on the Company. See "Business--Customers and Charter Terms."
COMPETITION
The Company operates in a highly competitive environment in all its
operations. The principal competitive factors in each of the markets in which
the Company operates are suitability of equipment, personnel, price, service,
and reputation. The Company's vessels that provide chemical and petroleum
products transportation services compete with both other vessel operators and,
in some areas and
45
<PAGE>
markets, with alternative modes of transportation, such as pipelines, rail tank
cars, and tank trucks. Moreover, the users of such services are placing
increased emphasis on safety, the environment, and quality, partly due to
heightened liability for the cargo owner in addition to the vessel
owner/operator under OPA 90. See "--Environmental and Other Regulation--Clean
Water Regulations." With respect to towing services, the Company's vessels
compete not only with other providers of tug services, but with the providers of
tug services in nearby ports. Many of the companies with which the Company
competes have substantially greater financial and other resources than the
Company. Additional competitors may enter the Company's markets in the future.
Moreover, should U.S. coastwise laws be repealed, foreign-built, foreign-manned,
and foreign-owned vessels could be eligible to compete with the Company's
vessels. See "--Environmental and Other Regulation--Coastwise Laws."
ENVIRONMENTAL AND OTHER REGULATION
The Company's operations are subject to significant federal, state, and
local regulation, the principal provisions of which are described below.
Clean Water Regulations. OPA 90 established an extensive regulatory and
liability regime for the protection of the environment from oil spills. OPA 90
affects all owners and operators of vessels in United States waters, which
include the United States territorial sea and the 200-mile exclusive economic
zone of the United States. Although it applies in general to all vessels, for
purposes of its liability limits and financial-responsibility and
response-planning requirements, OPA 90 differentiates between tank vessels
(which include the Company's chemical carriers, product carrier, and fuel
barges) and "other vessels" (which include the Company's tugs and offshore
energy service vessels).
Under OPA 90, owners, operators, and certain charterers of vessels are
"responsible parties" and are jointly, severally, and strictly liable for
containment and cleanup costs and other damages arising from oil spills relating
to their vessels, unless the spill results solely from the act or omission of a
third party, an act of God, or an act of war. Such "other damages" are defined
broadly to include (i) natural resources damages and the costs of assessment
thereof; (ii) damages for injury to, or economic losses resulting from the
destruction of, real and personal property; (iii) net loss of taxes, royalties,
rents, fees, and other lost revenues by the U.S. government, a state, or
political subdivision thereof; (iv) lost profits or impairment of earning
capacity due to property or natural resources damage; (v) net cost of public
services necessitated by a spill response, such as protection from fire or other
hazards; and (vi) loss of subsistence use of natural resources.
For tank vessels, the statutory liability of responsible parties is limited
to the greater of $1,200 per gross ton or $10 million ($2 million for a vessel
of 3,000 gross tons or less) per vessel; for "other vessels," such liability is
limited to the greater of $600 per gross ton or $500,000 per vessel. Such
liability limits do not apply, however, to an incident proximately caused by
violation of federal safety, construction, or operating regulations or by the
responsible party's gross negligence or willful misconduct, or if the
responsible party fails to report the incident or to cooperate and assist in
connection with oil removal activities. Although the Company currently maintains
pollution liability insurance with coverage of $700 million per incident for its
tank vessels ($500 million per incident for its fuel barges), a catastrophic
spill could result in liability in excess of available insurance coverage,
resulting in a material adverse effect on the Company.
Under OPA 90, with certain limited exceptions, all newly built or converted
tankers operating in U.S. waters must be built with double hulls, and existing
single-hull vessels must be phased out at some point, depending upon their size,
age and place of discharge, between 1995 and 2015 unless retrofitted with double
hulls. As a result of this phase-out requirement, as interpreted by the U.S
Coast Guard, the Company's chemical carriers and its petroleum product carrier
will be required to cease transporting petroleum products over the next 19
years, and its fuel barges will cease transporting fuel in 2015.
OPA 90 expanded pre-existing financial responsibility requirements and
requires vessel owners and operators to establish and maintain with the United
States Coast Guard evidence of insurance or qualification as a self-insurer or
other evidence of financial responsibility sufficient to meet their
46
<PAGE>
potential liabilities under OPA 90. U.S. Coast Guard regulations require
evidence of financial responsibility demonstrated by insurance, surety bond,
self-insurance, or guaranty. The regulations also implement the financial
responsibility requirements of the Comprehensive Environmental Response,
Compensation and Liability Act of 1980 ("CERCLA"), which imposes liability for
discharges of hazardous substances such as chemicals, by increasing the amount
of financial responsibility from $1,200 to $1,500 per gross ton. The Company has
obtained COFRs pursuant to the Coast Guard regulations for its product carrier
and for its chemical carriers through self-insurance and commercial insurance
and for the fuel barges through insurance purchased from the Water Quality
Insurance Syndicate, a syndicate of American insurance companies that insures
oil pollution liability risks. The Company intends to obtain COFRs for the OMI
Chemical Carriers in the same fashion as the existing product carrier's COFR.
OPA 90 also amended the Federal Water Pollution Control Act to require the
owner or operator of a tank vessel to prepare vessel response plans and to
contract with oil spill response organizations to remove to the maximum extent
practicable a worst-case discharge (loss of all cargo). The Company has complied
with both requirements. As is customary, the Company's oil spill response
contracts are executory in nature and are not activated unless required. Once
activated, the Company's pollution liability insurance covers the cost of spill
removal subject to overall coverage limitations and deductibles.
OPA 90 expressly permits individual states to impose their own liability
regimes with respect to oil pollution incidents occurring within their
boundaries, and many states have enacted legislation providing for unlimited
liability for oil spills. Some states that have enacted such legislation have
not yet issued implementing regulations defining tanker owners' responsibilities
under the legislation. The Company does not anticipate that such legislation or
regulations will have any material impact on its operations.
The Company manages its exposure to losses from potential discharges of
pollutants through the use of well-maintained and well-equipped vessels, safety
and environmental programs, and its insurance program, and believes that it will
be able to accommodate reasonably foreseeable environmental regulatory changes.
There can be no assurance, however, that any new regulations or requirements or
any discharge of pollutants by the Company will not have an adverse effect on
the Company.
Clean Air Regulations. The federal Clean Air Act of 1970, as amended by the
Clean Air Act Amendments of 1990, requires the Environmental Protection Agency
to promulgate standards applicable to the emission of volatile organic compounds
and other air pollutants. These standards are designed to reduce hydrocarbon
emissions released in the atmosphere and are implemented by the states through
State Implementation Plans for areas that are not in compliance with those
standards. The Company's vessels are subject to vapor control and recovery
requirements when loading petroleum cargoes in Louisiana and when loading,
unloading, ballasting, cleaning, and conducting other operations in certain
ports in Texas. The Company's chemical and petroleum product carriers, as well
as the OMI Chemical Carriers, are equipped with vapor control systems that
satisfy the state requirements. The fuel barges are not equipped with, and are
not operated in areas that require, such systems.
Coastwise Laws. Most of the Company's operations are conducted in the U.S.
domestic trade, which is governed by the coastwise laws of the United States
(principally, the Jones Act). The coastwise laws reserve marine transportation
(including harbor tug services) between points in the United States (including
drilling rigs fixed to the ocean floor in U.S. territorial waters) to vessels
built in and documented under the laws of the United States (U.S. flag) and
owned and manned by U.S. citizens. A corporation is deemed a citizen for these
purposes so long as (i) it is organized under the laws of the U.S. or a state,
(ii) each of its president or other chief executive officer and the chairman of
its board of directors is a citizen, (iii) no more than a minority of the number
of its directors necessary to constitute a quorum for the transaction of
business are non-citizens, and (iv) 75% of the interest and voting power in the
corporation are held by citizens. Because the Company would lose its privilege
of operating its vessels in the U.S. domestic trade if non-citizens were to own
or control in excess of 25% of the
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<PAGE>
Company's outstanding capital stock, the Company's Articles of Incorporation
contain restrictions concerning foreign ownership of its stock. See "Description
of Capital Stock--Foreign Ownership Restrictions." A coalition of shipper
interests opposed to the Jones Act announced in the summer of 1995 its intention
to seek changes to the Jones Act. Although the Company believes that it is
unlikely that the Jones Act will be substantially modified or repealed, there
can be no assurance that Congress will not substantially modify the Jones Act or
repeal it. Such changes could have a material adverse effect on the Company's
operations and financial condition.
Occupational Health Regulations. The Company's vessel operations are subject
to occupational safety and health regulations issued by the Coast Guard. Such
regulations currently require the Company to perform extensive monitoring,
medical testing, and record keeping with respect to seamen engaged in the
handling of the various cargoes transported by the Company's chemical and
petroleum products carriers.
Vessel Condition. The Company's chemical and petroleum product carriers,
offshore energy support vessels, four of its tugs, and the fuel barges are
subject to periodic inspection and survey by, and drydocking and maintenance
requirements of, the Coast Guard and/or the American Bureau of Shipping, a
marine classification society whose periodic certification as to the
construction and maintenance of certain vessels is required in order to maintain
insurance coverage. All of the Company's vessels requiring certification to
maintain insurance coverage are certified.
Oil Tanker Escort Requirements. Implementation of oil tanker escort
requirements of OPA 90 and pending state legislation are expected to introduce
certain performance or engineering standards on tugs to be employed as tanker
escorts. The Company believes its tractor tug will be able to comply with any
existing or currently anticipated requirements for escort tugs. Adoption of such
new standards could require modification or refitting of the tugs currently
operated by the Company to the extent such tugs are employed as tanker escorts.
The Company does not anticipate OPA 90 or state requirements to require
modification of tugs, such as the Company's, involved in harbor tug operations.
The Company believes that it is currently in compliance in all material
respects with the environmental and other laws and regulations, including OSHA
shipyard requirements, to which its operations are subject and is unaware of any
pending or threatened litigation or other judicial, administrative or arbitral
proceedings against it occasioned by any alleged non-compliance with such laws
or regulations. The risks of substantial costs, liabilities, and penalties are,
however, inherent in marine operations, and there can be no assurance that
significant costs, liabilities, or penalties will not be incurred by or imposed
on the Company in the future.
INSURANCE
The Company's marine transportation services operations are subject to the
normal hazards associated with operating vessels carrying large volumes of cargo
or rendering services in a marine environment. These hazards include the risk of
loss of or damage to the Company's vessels, damage to third parties as a result
of collision, loss, or contamination of cargo, personal injury of employees,
pollution, and other environmental damages. The Company maintains insurance
coverage against these hazards. Risk of loss of or damage to the Company's
vessels is insured through hull insurance policies currently insuring
approximately $174 million in hull values, and approximately $262 million in
hull values upon completion of the Offering, which approximates fair market
value. Vessel operating liabilities, such as collision, cargo, environmental,
and personal injury, are insured primarily through the Company's participation
in the Steamship Mutual Underwriting Association (Bermuda Limited), a mutual
insurance association under which the coverage against such hazards is currently
unlimited for each incident except in the case of pollution, which is limited to
$700 million (the maximum amount available) for each incident involving the
Company's chemical and petroleum product carriers and $500 million with respect
to its other vessels. Because it maintains mutual insurance, the Company is
subject to funding requirements and coverage shortfalls in the event claims
exceed available funds and reinsurance and to premium increases based on prior
loss experience.
48
<PAGE>
LEGAL PROCEEDINGS
The Company is party to two legal proceedings involving its chemical carrier
Seabulk America, one involving the Company's continued ability to operate the
vessel in the U.S. domestic trade, the other involving the cost of completing
the vessel.
The Seabulk America was completed in 1990 by combining the stern portion of
the wrecked oil tanker Fuji with the forebody of the chemical barge portion of
the former integrated tug/barge Oxy Producer/Oxy 4102. The Company purchased the
stern portion of the Fuji in 1985 after the tanker had broken apart following an
explosion at sea, and had previously purchased the barge portion of the Oxy
Producer/Oxy 4102 after the tug portion separated from the barge and was lost at
sea. At the time of their respective acquisitions by the Company, neither vessel
was qualified to operate in the U.S. domestic trade. The Fuji was not qualified
because it was built in Japan and the U.S. coastwise laws generally exclude
foreign-built vessels from the U.S. domestic trade. The barge was not qualified
because (i) the Oxy Producer/Oxy 4102, although built in the United States, was
built with the assistance of federal subsidy, (ii) the barge was purchased by
the Company with certain tax-deferred funds, and (iii) the provisions of the
Merchant Marine Act, 1936, as amended, authorizing the subsidy and tax-deferral
programs involved exclude vessels that have been the subject of the programs
from operating in the U.S. domestic trade.
An exception to the coastwise laws' exclusion of foreign-built vessels from
the U.S. domestic trade is the Wrecked Vessel Act, which provides that a
foreign-built vessel wrecked on the coast of the United States may become
qualified for the U.S. domestic trade if it is repaired in the United States at
a cost of at least three times its appraised salvaged value. In a series of
rulings between 1985 and 1987, the Coast Guard, which administers the Wrecked
Vessel Act, determined that the Fuji would qualify for domestic operation under
the Act if it were repaired in the United States, by combining it with the barge
portion of the Oxy Producer/Oxy 4102, at a cost of at least $11.5 million. Also
in 1987, the Maritime Administration, which administers the Merchant Marine Act,
determined that once the barge was incorporated into the rebuilt Fuji, the barge
would have lost its character as a vessel and the domestic-trading restrictions
applicable to vessels built with subsidy assistance and purchased with
tax-deferred funds would no longer be operative. In 1990, following the
Company's completion of the repair project, the Coast Guard determined that the
value of the repairs exceeded $20 million and that the repaired vessel was the
rebuilt Fuji, renamed Seabulk America, eligible to operate in the U.S. domestic
trade.
In Keystone Shipping Co. v. United States, pending in the U.S. District
Court for the District of Columbia (Civil Action No. 90-2762), the plaintiffs,
competitors of the Company, in 1990 asked the court to invalidate the foregoing
Coast Guard and Maritime Administration determinations that the Seabulk America
is qualified to operate in the U.S. domestic trade. The Company, as the sole
beneficiary of those determinations, has intervened as a defendant in the suit.
In September 1992, the court upheld certain aspects of the Coast Guard
determinations, concluded that the agencies had provided insufficient
explanation to enable the court to determine the validity of the Maritime
Administration determinations and the remaining aspects of the Coast Guard
determinations, and remanded the matter to each agency for further explanation
of its respective determinations. Those explanations were provided by August
1994, and the plaintiffs have to date not renewed their requests for an order
declaring the agency determinations unlawful. Should plaintiffs renew such
requests and obtain such an order, the Seabulk America would be limited to
operations in the foreign trades, where, although it would be less competitive
than in the U.S. domestic trade, it would be eligible to receive
operating-differential subsidy under a currently inactive subsidy contract held
by the Company. The Company believes that plaintiffs' suit was without merit
and, should it be renewed, intends to continue vigorously to support the
government's defense of the agency determinations.
In Norfolk Shipbuilding and Dry Dock Corporation v. Seabulk Transmarine
Partnership, Ltd., pending in the U.S. District Court for the Eastern District
of Louisiana (Civil Action No. 93-1312), one of the shipyards that contracted to
complete the Seabulk America for the Company is seeking to
49
<PAGE>
recover from the Company approximately $6.1 million for alleged additions and
changes to the contract work and costs of alleged delay and disruption, in
addition to $2.4 million of the $5.9 million contract price that the Company has
withheld. In addition, the shipyard is seeking $10.0 million of punitive
damages. The Company has asserted counterclaims aggregating $5.6 million for
contract deletions, unfinished and defective work, and liquidated damages for
late delivery. In 1993, when this suit was filed, the Company was required to
obtain a $5.6 million letter of credit in order to furnish a bond to obtain the
release of the Seabulk America, which had been arrested pursuant to customary
procedures in litigation involving vessels. The suit, which involves numerous
complex factual issues, is currently in the pre-trial discovery stage. While the
Company believes that the plaintiff's claims are without merit and that its
counterclaims are meritorious, there can be no assurance that the ultimate
resolution of the suit will not require some payment by the Company in addition
to the $3.6 million previously paid.
The Company is also a defendant in a suit relating to certain of its
offshore supply boats pending in the Circuit Court of the 17th Judicial Circuit
of Florida, U.S. Offshore, Inc. v. Seabulk Offshore, Ltd. (No. 93-32963(09)).
The suit involves a claim by a former limited partner in the partnership that
owns eight of the supply boats seeking an unspecified amount of damages for
alleged breach of a contract by which the Company agreed to pay the plaintiff 5%
of the revenues (not to exceed $1.3 million) earned from the operation of the
boats during the 40 months ended March 31, 1994. The Company has paid the
plaintiff approximately $700,000 pursuant to the contract and believes that the
claim for any additional amount is without merit.
Affiliates of the Company have intervened in two parallel legal actions
brought by Kirby Corporation ("Kirby"), an operator of vessels with which the
five new product carriers in which the Company has an interest will compete,
seeking to have the construction project stopped. Kirby's actions allege that
the U.S. Maritime Administration acted unlawfully in guaranteeing, pursuant to
Title XI of the Merchant Marine Act, 1936, as amended ("Title XI"), the $215
million of ship financing bonds issued to finance the project, specifically
asserting that the Maritime Administration erroneously determined that the
project is economically sound and that the entities that will own the vessels
are U.S. citizens qualified to operate the vessels in the coastwise trade. The
Company believes the actions are without merit, has supported the U.S.
Department of Justice in obtaining dismissal of one of the actions, is
continuing to support the Department in defending against Kirby's appeal from
that dismissal and in seeking dismissal of the remaining action. Both actions
are currently pending in the United States Court of Appeals for the Fifth
Circuit, as Kirby Corporation vs. United States (No. 96-60154) and Kirby
Corporation vs. Pena (No. 96-20582).
By letter dated June 26, 1996, Occidental Chemical Corporation, a shipper of
liquid caustic soda, advised the FTC and the DOJ that it opposes the Company's
acquisition of the OMI Chemical Carriers and urged their inquiry into the
acquisition. As a result, the FTC, which on November 14, 1995 granted early
termination of the waiting period under the HSR Act with respect to the proposed
acquisition, has requested the voluntary submission by the Company of certain
information related to the acquisition. The Company believes that neither the
FTC nor the DOJ will initiate any formal action with respect to the acquisition
that would be adverse to the Company; provided, however, as with any such
acquisition, there can be no assurance that the FTC or the DOJ will not file
suit pursuant to the federal antitrust laws to enjoin the consummation of the
acquisition or to seek divestiture of one or more of the OMI Chemical Carriers
by the Company following the consummation of the acquisition. The Company cannot
predict the ultimate outcome of any such action if it were to be initiated.
From time to time the Company is also party to litigation arising in the
ordinary course of its business, most of which is covered by insurance.
PROPERTIES
The Company's principal offices are located in Fort Lauderdale, Florida,
where the Company leases approximately 36,000 square feet of office and shop
space under a lease that expires in 2009. In
50
<PAGE>
addition, the Company leases facilities in Houston, Texas, Lafayette, Louisiana,
and Green Cove Springs, Florida, to support its operations.
EMPLOYEES
As of June 15, 1996, the Company had approximately 820 employees. Management
considers relations with employees to be satisfactory. The Company is not a
party to any collective bargaining agreement with a national labor union with
respect to any of its current fleet. The officers and crew of the Seabulk
America, Seabulk Challenger, and Seabulk Magnachem are, however, subject to
collective bargaining arrangements. Unlike the Company's existing fleet, the OMI
Chemical Carriers are manned by members of national maritime labor unions
pursuant to collective bargaining agreements. The Company's crewing agent has
reached agreement with the unions on a new collective bargaining agreement on
terms comparable to the terms of the existing agreement.
51
<PAGE>
MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
The directors and executive officers of the Company are:
<TABLE>
<CAPTION>
NAME AGE CURRENT POSITIONS
<S> <C> <C>
J. Erik Hvide(1).................. 47 Chairman of the Board, President, Chief Executive
Officer, and Director
John H. Blankley(1)............... 48 Executive Vice President, Chief Financial Officer,
Treasurer, and Director
Donald L. Caldera................. 61 Executive Vice President--Development and Director
Eugene F. Sweeney(1).............. 53 Executive Vice President--Operations and Director
Arthur E. Bailey.................. 48 Vice President--Human Resources and Strategic
Quality Planning
Andrew W. Brauninger.............. 49 Vice President--Offshore Division and President--
Seabulk Offshore, Ltd.
Gene Douglas...................... 48 Vice President--Legal & General Counsel and
Secretary
William R. Ludt................... 48 Vice President--Inland Services Division and
President--Sun State Marine Services, Inc.
Robert A. Santos.................. 64 Vice President--Offshore and Harbor Towing
Operations
Robert B. Calhoun, Jr.(3)......... 53 Director
Gerald Farmer(2)(3)............... 50 Director
Jean Fitzgerald(1)(2)............. 70 Director
John Lee(2)....................... 59 Director
Walter C. Mink(3)................. 69 Director
Robert Rice(3).................... 73 Director
Raymond B. Vickers(2)............. 46 Director
</TABLE>
- -----------------------
(1) Member of the Executive Committee.
(2) Member of the Compensation Committee.
(3) Member of the Audit and Financial Committee.
MR. HVIDE has been the Company's Chairman since September 1994 and its
President and Chief Executive Officer since January 1991. He has been a director
of the Company since 1973. From 1981 until 1991, Mr. Hvide was President and
Chief Operating Officer of the Company. From January 1991 to September 1994, he
was also Vice Chairman. He has been employed by the Company in various
capacities since 1970 and became Vice President in 1973. He is also a director
of the American Waterways Operators, a participant on the Transportation
Committee of the American Petroleum Institute, a member of the American Bureau
of Shipping, a past Chairman of the Board of the American Institute of Merchant
Shipping and a past appointee to the U.S. Coast Guard's Towing Safety Advisory
Committee. Mr. Hvide is the son of Hans J. Hvide, the founder of the Company.
MR. BLANKLEY has been a director of the Company since September 1991 and has
been Executive Vice President--Chief Financial Officer and Treasurer since
September 1995. He previously served as a director and Chief Financial Officer
of Harris Chemical Group Inc., a chemical manufacturing company, from April 1993
to August 1994. Mr. Blankley is the owner of Seafirst Capital, a ship finance
consulting business he founded in 1994. He served as Executive Vice
President--Finance and Chief Financial Officer of Stolt-Nielsen, Inc., a
publicly traded international operator of specialty chemical
52
<PAGE>
tankers, from 1985 to 1991; and from 1983 until 1985, Mr. Blankley was a
director, Senior Vice President, and Chief Financial Officer of BP North America
Inc. Mr. Blankley is also a director of MC Shipping, a publicly traded operator
of container feeder vessels.
MR. CALDERA has been Executive Vice President--Development of the Company
since September 1994. Mr. Caldera became a director of the Company in April
1994. From November 1990 to January 1992, he was Chief Executive Officer of
Global Sovcruise Lines, a joint Swiss-Soviet shipping venture. Between 1985 and
June 1990 he was Chairman and Chief Executive of Norex-America, Inc. (formerly
Bermuda Star Lines, Inc.), a publicly traded cruise ship line. Between 1980 and
1985 Mr. Caldera served as Senior Vice President--Marketing and Sales of Midland
Enterprises, Inc., a diversified inland waterways company. From 1976 to 1980 he
was Executive Vice President and Chief Operating Officer of Interocean
Management Corporation, a firm managing foreign-flag and U.S.-flag tankers.
MR. SWEENEY has been Executive Vice President--Operations of the Company
since September 1994 and a director since 1984. He was Senior Vice
President--Operations of the Company from 1991 to September 1994. He joined the
Company in 1981 as Vice President--Ship Management. Prior to joining the
Company, Mr. Sweeney was employed for 17 years by Texaco, Inc., where he served
in sea-going and shore management positions, including operations manager of
Texaco's U.S. tanker fleet. Mr. Sweeney is past President of the Chemical
Carriers Association, a member of the Society of Naval Architects and Marine
Engineers and served as a member of a National Academy of Sciences Committee to
study marine navigation and pilotage.
MR. BAILEY has been Vice President--Human Resources and Strategic Quality
Planning since December 1994. From November 1993 to December 1994, he was
President of Advantage Training Associates, a consulting company he founded.
From September 1983 to November 1993, he was employed by Florida Power & Light
Company.
MR. BRAUNINGER has been Vice President--Offshore Division since March 1990
and the President of Seabulk Offshore, Ltd., the Company's offshore energy
support services subsidiary, since September 1994. He was Vice President of
Offshore Operations from May 1990 to September 1994 and Vice
President--Development from April 1989 to May 1990. From 1987 to 1989, Mr.
Brauninger was President of OMI Offshore Services, Inc., an operator of offshore
service vessels. Previously, he was employed by Sabine Towing and Transportation
Company, where he held a variety of posts including Vice President--Harbor
Division.
MR. DOUGLAS has been Vice President--Legal, General Counsel and Secretary of
the Company since 1975. He was an attorney with the Fort Lauderdale, Florida law
firm of Spear and Deuschle, P.A. prior to joining the Company. He has been
admitted to the Florida Bar since 1972 and is admitted to practice before
various federal courts. He is also a member of the American Bar Association, the
Maritime Law Association of the United States and other professional
organizations.
MR. LUDT has been Vice President--Inland Services Division since January
1995 and the President of Sun State Marine Services, Inc., the Company's energy
tug and barge subsidiary, since September 1994. He was director--Fleet
Operations of the Company from July 1982 to September 1994. Since joining the
Company in 1979, he has also served as Fleet Manager and Port Engineer. He
served as the President of the Chemical Carriers Association from 1989 to 1990
and as Vice President of that association from 1990 to 1992. Mr. Ludt has also
served on various working groups within the U.S. Coast Guard's Chemical
Transportation Advisory Committee concerning issues such as vapor control and
marine occupational safety and health. Mr. Ludt holds a dual license as a Third
Mate and Third Assistant Engineer, Steam and Motor Vessels.
MR. SANTOS has been Vice President--Towing Operations of the Company since
1983. Mr. Santos joined the Company as its towing operations manager in 1962. He
has served as a Commissioner of Florida's Board of Pilot Commissioners, Chairman
of the Escort Vessel Subcommittee of the American Waterways Operators and as a
member of various marine-related trade associations and boards.
53
<PAGE>
MR. CALHOUN has been a director of the Company since September 1994. Mr.
Calhoun has been President of Clipper Asset Management Corporation, the sole
general partner of The Clipper Group, L.P., a private investment firm, since
1991. From 1975 to 1991, Mr. Calhoun was a Managing Director of CS First Boston
Corporation, an investment banking firm. Mr. Calhoun serves as a director of
Highway Master Communications, the operator of a wireless services network, and
Interstate Bakeries Corporation, a national distributor of baked goods. He also
serves as a director of several privately held companies.
MR. FARMER has served as a director of the Company since 1975. He was
Executive Vice President--Chief Financial Officer and Treasurer of the Company
from September 1994 until September 1, 1995. In May 1995 Mr. Farmer, for reasons
unrelated to the Company or his responsibilities, retired effective as of
September 1, 1995 as Chief Financial Officer and Treasurer. He continued as an
Executive Vice President of the Company through December 15, 1995. He was Senior
Vice President-- Finance and Administration from January 1991 to September 1994,
having joined the Company in 1973 as Vice President--Finance.
MR. FITZGERALD has been a director of the Company since March 1994. Since
1992, he has served as the Chairman of Florida Alliance, Inc., a consortium of
maritime interests. From 1990 to 1992, he was Executive Vice President of NDE
Testing & Equipment, Inc., a nationwide storage-tank testing company. From 1988
to 1990, he was with Frederic R. Harris, Inc., an international consulting
engineering firm. Mr. Fitzgerald was a cofounder and the President of American
Tank Testing Service, Inc., a firm that was subsequently acquired by NDE
Environmental Corporation, from 1986 to 1987. In 1982 and 1983, he served as the
Company's Vice President for Governmental Affairs. His other business experience
includes service as President of Tracor Marine, Inc. from 1976 to 1979 and
Director of Engineering of Tracor's Systems Technology Division from 1974 to
1976. Mr. Fitzgerald retired from the U.S. Navy in 1974 in the rank of Captain.
During his naval career he commanded major fleet units at sea and served in the
offices of the Chief of Naval Operations and the Secretary of Defense. He is a
past Commissioner and Chairman of the Port Everglades Authority.
MR. LEE has been a director of the Company since September 1994 and is
Chairman and Chief Executive Officer of Hexcel Corporation, an advanced
materials manufacturer. Mr. Lee joined the Board of Hexcel Corporation in May of
1993 as an outside independent director. In August 1993, Mr. Lee was asked to
become the Chairman and Co-Chief Executive Officer of Hexcel Corporation, which
was experiencing financial difficulties, in order to effect a consensual
reorganization. In December 1993, having concluded that a consensual
reorganization could not be accomplished, Hexcel Corporation filed for
protection under Chapter 11 of the Federal Bankruptcy Code and appointed Mr. Lee
sole Chief Executive Officer to effect a Plan of Reorganization. The
reorganization was completed in February 1995 and Hexcel emerged from Chapter
11. Mr. Lee has been a Director of Aviva Petroleum, Inc. since August 1993, and
has been Chairman, President and Chief Executive Officer of Lee Development
Corporation, a corporation providing investment and merchant banking services,
since 1987. He was a director of XTRA Corporation, a Massachusetts-based
transportation and equipment leasing company, from 1990 through January 1996.
Mr. Lee also served as Chairman and Chief Executive Officer of Seminole
Corporation, a fertilizer manufacturer, from July 1989 through April 1993 and
director of Tosco Corporation, a refiner, from April 1988 through April 1993 and
was President and Chief Operating Officer of Tosco Corporation from April 1990
through April 1993. Mr. Lee is an advisor to The Clipper Group, L.P., a private
investment firm, and is a trustee of Yale University.
MR. MINK has been a director of the Company since October 1990. He is
President of Walter C. Mink & Associates, a maritime advisory and consulting
firm in Las Vegas, Nevada. From 1978 to 1986, Mr. Mink was President of Mobil
Shipping and Transportation Company. Previously, he was President of Seabrokers,
Inc., a marine brokerage firm, and was earlier employed by Lago Oil, Esso
Tankers, and Mobil Oil Transport. Mr. Mink is a director of First Olsen Tankers,
Ltd. He served on the Board of Managers of the American Bureau of Shipping and
is a member of the Society of Naval Architects and Marine Engineers.
54
<PAGE>
MR. RICE has been a director of the Company since January 1992. A financial
consultant, he was Senior Vice President of Citibank, N.A. from 1954 to his
retirement in 1983. Mr. Rice is a director of ATCO Ltd., First Olsen Tankers
Ltd., Pride Refining Inc., and Atcor Resources Ltd.
DR. VICKERS has been a director of the Company since March 1994. An attorney
in private practice in Florida, he has represented more than a hundred financial
institutions. He is the author of Panic in Paradise: Florida's Banking Crash of
1926 and an adjunct professor of U.S. economic and business history at Florida
State University. From 1975 to 1979, he served as Assistant Comptroller of the
State of Florida.
Upon consummation of the Offering, the Company's Board of Directors will be
divided into three classes, one class of which is elected each year to hold
office for a three-year term and until successors are elected and qualified. The
three classes of the Board of Directors are as follows: Class I, comprised of
Messrs. Caldera, Vickers, and Rice, who will serve for a term expiring in 1997;
Class II, comprised of Messrs. Sweeney, Mink, Blankley, and Lee, who will serve
for a term expiring in 1998; and Class III, comprised of Messrs. Hvide,
Fitzgerald, Farmer, and Calhoun, who will serve for a term expiring in 1999.
Under the terms of the Shareholders Agreement, the Investor Group will nominate
three persons to the Company's 11-member Board of Directors and Mr. Hvide will
nominate eight persons to the Board. See "Description of Capital
Stock--Shareholders Agreement" and "--Common Stock." Messrs. Calhoun, Lee, and
Rice are currently the Investor Group's nominees.
BOARD COMMITTEES
The Company's Board of Directors has three committees: (i) the Executive
Committee; (ii) the Compensation Committee; and (iii) the Audit and Financial
Committee.
The Executive Committee exercises the powers of the Board of Directors in
the management of the business and affairs of the Company between Board meetings
to the extent permitted by Florida law and as limited by the Company's bylaws.
Its current members are Messrs. Hvide (Chairman), Blankley, Fitzgerald, and
Sweeney.
The Compensation Committee reviews and recommends to the Board of Directors
the compensation and benefits of all executive officers of the Company and
reviews general policy matters relating to compensation and benefits of
employees of the Company. The Compensation Committee also administers the
Company's bonus and stock option plans. Its current members are Messrs.
Fitzgerald (Chairman), Vickers, Lee, and Farmer.
The Audit and Financial Committee is authorized by the Board to review, with
the Company's independent public accountants, the annual financial statements of
the Company prior to publication; to review the work of, and approve audit
services performed by, such independent accountants; to make annual
recommendations to the Board for the appointment of independent public
accountants for the ensuing year; and to administer the Company's policy with
respect to transactions with affiliated persons. See "Certain Transactions." Its
current members are Messrs. Farmer (Chairman), Calhoun, Mink, and Rice.
EXECUTIVE COMPENSATION
The following table sets forth the compensation for the Chief Executive
Officer and each of the five most highly compensated executive officers whose
individual remuneration exceeded $100,000 for the year ended December 31, 1995
(the "Named Executives").
55
<PAGE>
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION
---------------------------------------------------
OTHER ALL
NAME AND ANNUAL OTHER
PRINCIPAL POSITION SALARY BONUS COMPENSATION(1) COMPENSATION(2)
<S> <C> <C> <C> <C>
J. Erik Hvide.............................. $462,000 $100,000 $ 4,286 $56,238
Chief Executive Officer
Gerald Farmer(3)........................... 153,939 15,000 3,399 18,782
Former Executive Vice President
Eugene F. Sweeney.......................... 150,000 50,000 2,676 16,470
Executive Vice President--Operations
Donald L. Caldera.......................... 152,625 35,000 709 15,572
Executive Vice President--Development
Gene Douglas............................... 115,000 20,000 -- 9,871
Vice President--Legal and General Counsel
Andrew W. Brauninger....................... 110,000 20,000 659 10,674
Vice President--Offshore Division
</TABLE>
- -----------------------
(1) Includes personal use of Company automobiles in the amounts of $4,286,
$3,399, $2,676, $709, and $659 for Messrs. Hvide, Farmer, Sweeney, Caldera,
and Brauninger, respectively.
(2) Consists of Company 401(k) contributions of $10,500 for each of Messrs.
Hvide, Farmer, Sweeney, and Caldera, and $8,890 for Mr. Douglas, and Company
life insurance premium payments of $1,091, $576, $540, $1,404, $66, and $174
for Messrs. Hvide, Farmer, Sweeney, Caldera, Douglas, and Brauninger,
respectively, and club and professional membership payments of $13,357,
$430, $180, $1,568, and $915 for Messrs. Hvide, Farmer, Sweeney, Caldera,
and Douglas, respectively, and additional benefits of $31,290, $7,276,
$5,250, and $2,100, for Messrs. Hvide, Farmer, Sweeney, and Caldera,
respectively.
(3) Chief Financial Officer until September 1, 1995 and Executive Vice President
until December 15, 1995.
The following table contains information concerning stock options to be
granted to each of the Named Executives (other than Mr. Farmer) and Mr. Blankley
prior to the consummation of the Offering. All options will be granted pursuant
to the Hvide Marine Incorporated Equity Ownership Plan.
<TABLE>
<CAPTION>
OPTIONS TO BE GRANTED PRIOR TO OFFERING
INDIVIDUAL GRANTS
----------------------------------------------------------------
POTENTIAL REALIZABLE
VALUE AT ASSUMED
PERCENT OF ANNUAL RATES
TOTAL SHARES OF STOCK
SHARES UNDERLYING APPRECIATION FOR
UNDERLYING OPTIONS PER SHARE OPTION TERM(2)
OPTIONS TO BE TO BE GRANTED EXERCISE EXPIRATION ---------------------
NAME GRANTED(1) TO EMPLOYEES PRICE DATE 5% 10%
<S> <C> <C> <C> <C> <C> <C>
J. Erik Hvide............. 100,000 12.0% --(3) --(4) $359,166 $ 793,663
John H. Blankley.......... 100,000 12.0 --(3) --(5) 817,563 2,071,865
Eugene F. Sweeney......... 100,000 12.0 --(3) --(5) 817,563 2,071,865
Donald L. Caldera......... 100,000 12.0 --(3) --(5) 817,563 2,071,865
Gene Douglas.............. 28,000 3.4 --(3) --(5) 228,918 580,122
Andrew W. Brauninger...... -- -- -- -- -- --
</TABLE>
- -----------------------
(1) Options vest 25% per annum over four years.
(2) The dollar amounts are the result of calculations at specified rates of
appreciation, assuming an initial public offering price of $13.00 per share,
and therefore are not intended to forecast possible future appreciation.
(3) Exercise price will be equal to offering price of shares offered hereby.
(4) Five years following the grant date.
(5) Ten years following the grant date.
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<PAGE>
EQUITY OWNERSHIP PLANS
Long-Term Incentive Plan. The Company has reserved 1,000,000 shares of Class
A Common Stock for issuance under the Hvide Marine Incorporated Equity Ownership
Plan (the "Plan"). The Plan is administered by the Compensation Committee.
Subject to selection by the Compensation Committee, any key employee, including
executive officers, is eligible to participate in the Plan. The benefits to be
granted under the Plan may take the form of (i) incentive or non-qualified stock
options, (ii) stock awards subject to future vesting, (iii) stock appreciation
rights, (iv) phantom shares, or (v) performance unit awards. Options granted
under the Plan may not be exercised until vested and shares of Common Stock may
not be issued pursuant to any stock award until vested. The Compensation
Committee is empowered under the Plan to determine all terms and provisions
under which options, awards, and other rights are granted under the Plan,
including (i) the number of shares subject to each option, award, or right, (ii)
when the option, award, or right becomes exercisable, (iii) the exercise price,
and (iv) the duration of the option, award, or right, which cannot exceed ten
years. The Compensation Committee has determined to grant prior to the
consummation of the Offering options to 53 employees (including four employees
of OSTC who will become employees of the Company) to purchase 800,000 shares
(including options to purchase 428,000 shares granted to the Named Executives)
at an exercise price equal to the initial public offering price of the Class A
Common Stock. Such options will have ten year terms and will vest 25% each year
over four years.
Employee Stock-Purchase Plan. The Company has reserved 500,000 shares of
Class A Common Stock for purchase over the next five years under its 1996
Employee Stock-Purchase Plan. This plan permits employees to purchase stock at a
discount to market value and be eligible to receive favorable income tax
treatment of the discount under Section 423 of the Internal Revenue Code. Under
this plan, all employees working more than twenty hours weekly are eligible to
purchase reserved shares at a discount equal to 15% of market price. The market
cost of shares purchased by an employee under this plan may not exceed $25,000
per year.
DIRECTOR COMPENSATION AND OPTIONS
Directors not employed by the Company are paid $2,000 per board meeting and
$1,500 per board committee meeting attended and are reimbursed by the Company
for reasonable out-of-pocket expenses incurred for attendance at such meetings
in accordance with Company policy. All committee chairmen not employed by the
Company are also paid an annual retainer of $3,000. In order to promote the
alignment of the directors' and the stockholders' financial interests, it is the
intent of the Board of Directors that each Director should initially acquire at
least 500 shares of Common Stock and should increase this ownership interest by
a minimum of 500 shares annually. Each director's ownership interest can be
achieved by the purchase of Common Stock on the open market, by stock grants, or
by the exercise of stock options. In this regard, the Company intends to grant
to each director who is not an employee 500 shares of Class A Common Stock per
year. Additionally, the Company intends to adopt a stock option plan for
directors (the "Directors Plan") and to reserve 70,000 shares of Class A Common
Stock for issuance under that plan. Under the Directors Plan, all directors not
employed by the Company will annually be granted an option to purchase 1,500
shares of Class A Common Stock with an exercise price equal to the fair market
value of the Class A Common Stock on the date of grant. The date of grant for
these options will be the first business day following the annual meeting of
shareholders. Also, the Company intends to grant to each director not employed
by the Company prior to the consummation of the Offering and pursuant to the
Directors Plan, an option to purchase 5,000 shares with an exercise price equal
to the offering price of the Class A Common Stock. Directors elected to the
Board after consummation of the Offering will each be granted an option to
purchase 5,000 shares with an exercise price equal to the fair market value of
the Class A Common Stock as of the first business day following the stockholder
meeting at which the director is elected to the Board. All stock options under
the Directors Plan will vest at the earliest of death, disability,
change-in-control, voluntary retirement from the Board at or after age 62,
completion of ten years service on the Board, or one year from the
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date of grant. All directors have agreed not to sell any shares of Class A
Common Stock for 180 days after the date of the Prospectus without the written
consent of the Representatives.
ANNUAL INCENTIVE PLAN
The Company has established an annual incentive plan under which key members
of management will be awarded cash payments based upon the achievement of
certain performance goals. Each year, the chief executive officer will recommend
to the Compensation Committee a list of participants and performance goals for
each proposed participant. The performance goals will consist of an objective
element, which will be based upon financial objectives relating to the Company
as a whole and/or a component of the Company, and a discretionary element, which
will be established by a participant's supervisor and may be financial or
non-financial in nature. Participants will be awarded cash payments based upon
the extent to which they have met or exceeded their performance goals.
NON-COMPETE AND BENEFITS AGREEMENTS
The Company is party to a non-compete agreement dated September 28, 1994
with Hans J. Hvide, the founder of the Company and father of its current
Chairman, pursuant to which Mr. Hvide receives a fee of $185,000 per year
(subject to annual adjustments based on the Consumer Price Index) in exchange
for an agreement not to provide any services to any person in competition with
the Company. The non-compete agreement expires upon the earlier of September 30,
2014 or the death of Mr. Hvide. The non-compete agreement can be terminated by
the Company only if Mr. Hvide materially breaches the Agreement, and by Mr.
Hvide only if the Company fails to pay the non-compete fees. The Company is also
party to a post-retirement benefits agreement with Mr. Hvide pursuant to which
he receives the use of an automobile, major medical health insurance for himself
and for his spouse, the use of an office and secretarial assistance, and a
payment of $2,000 per month in lieu of other expenses. The term of the
post-retirement benefits agreement is for the life of Mr. Hvide except for major
medical health insurance for Mr. Hvide's spouse, which is for the life of Mr.
Hvide's spouse. In the event the Company terminates the non-compete agreement,
the post-retirement benefits agreement terminates automatically.
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CERTAIN TRANSACTIONS
The Company's Articles of Incorporation require that any material
transaction between the Company and any of its officers, directors, holders of
more than 5% of any class of its capital stock, or other affiliates be on terms
no less favorable than those that could be obtained from unaffiliated persons
and be approved by a majority of the independent and disinterested directors.
The Company believes that the transactions described below were or will be on
terms no less favorable than those that could be obtained from unaffiliated
persons. Furnished below is information regarding certain transactions since
January 1, 1993 in which executive officers and directors of the Company have
had an interest.
In September 1994, the Company purchased all of the partnership interests
owned by certain directors, officers, and employees of the Company in Hvide
Offshore Services, Ltd. ("HOS") for $607,000 in cash and $1.0 million in
promissory notes (the "HOS Notes") and assumed the bareboat charter rights and
obligations of HOS, which charters were acquired by HOS at no cost. HOS was the
bareboat charterer of four offshore service vessels managed by the Company. See
"Description of Certain Indebtedness--Long-Term Charter Obligations--Bareboat
Charters" and "--Acquisition Notes and Assumed Indebtedness." The purchase price
of these interests was based upon an independent appraisal of the fair market
value of the vessels being acquired. The appraisal, which was based upon a
market analysis, was conducted by Bassoe Offshore (USA), Inc., a company with
substantial experience in the maritime industry. The general partner of HOS was
Maritime Transport Development Corp. ("Maritime Transport"), a company wholly
owned by Hans J. Hvide and for which J. Erik Hvide serves as an officer and a
director. The limited partners of HOS were Messrs. Hans J. Hvide (32%), J. Erik
Hvide (32%), Farmer (10%), Sweeney (7.5%), Brauninger (10%), John Krumenacker
(the Company's Controller) (5%), and Douglas (2.5%). HOS has since been
dissolved and the Company has assumed all of its obligations. As a result of the
cancellation of $0.1 million in principal amount of the HOS Notes held by
Messrs. J. Erik and Hans J. Hvide as described below, there is currently
outstanding $0.9 million principal amount of HOS Notes. Of the currently
outstanding principal and accrued interest thereon, $0.3 million will be repaid
in cash with a portion of the proceeds from the Offering, $0.2 million will be
exchanged for shares of Class A Common Stock valued at the initial public
offering price, and the balance will remain outstanding.
Also in September 1994, the Company purchased for $781,000 in cash and an
aggregate of $1,089,000 in promissory notes (the "HCL Notes") partnership
interests owned by certain directors, officers, and employees of the Company in
(i) Hvide Chartering, Ltd. ("HCL"), which owns the tug Hollywood (formerly the
Cape Canaveral) and chartered it to the Company; (ii) Hvide Leasing Partnership,
Ltd. ("HLP"), which owned office and computer equipment leased to the Company
(acquired by HLP in 1988 for $87,000); and (iii) HLP II, Ltd. ("HLP II"), which
owned office furniture and equipment leased to the Company (acquired by HLP II
in 1990 for $372,000). HLP and HLP II have since been dissolved. See
"Description of Certain Indebtedness--Acquisition Notes and Assumed
Indebtedness" for a description of the HCL Notes. The purchase price of the HCL
interests was based upon an independent appraisal of the fair market value of
the Hollywood. The HCL appraisal, which was based upon a market analysis, was
conducted by Charles S. Smith, a marine consultant with substantial experience
in the maritime industry. The HLP and HLP II partnership interests were
purchased at book value, which the Company believes approximated fair market
value, for $20,000 and $93,000, respectively, in cash. The Company believes that
the book value approximated fair market value because the interests were not
liquid and had declining values which the Company believes correspond with their
depreciated book value. Messrs. Hans J. Hvide (33.33%), J. Erik Hvide (20.0%),
Farmer (2.67%), Sweeney (2.67%), Santos (2.67%), and Douglas (2.67%) were
limited partners of HCL. The Company was the sole general partner of HCL and the
owner of a 33.33% interest in that partnership. Messrs. J. Erik Hvide (30%),
Farmer (10%), Sweeney (5%), Santos (10%), and Douglas (5%) were the limited
partners of HLP. The Company was the sole general partner of HLP and the owner
of a 40.0% interest in that partnership. The Company, Mr. J. Erik Hvide
(14.29%), and Mr. Farmer (14.29%) were the limited partners of HLP II. As a
result of the cancellation of $0.8
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million in principal amount of the HCL Notes held by Messrs. J. Erik and Hans J.
Hvide as described below, there is currently outstanding $0.3 million principal
amount of HCL Notes. Of the currently outstanding principal and accrued interest
thereon, $0.1 million will be exchanged for shares of Class A Common Stock
valued at the initial public offering price, and the balance will remain
outstanding. The Company was the sole general partner of HLP II, the owner of a
5% interest as general partner in that partnership, and the owner of a 66.42%
interest as a limited partner in that partnership.
In September 1994, the Company issued to the Investor Group $25.0 million
aggregate principal amount of Senior Notes and $25.0 million aggregate principal
amount of Junior Notes at discounts resulting in proceeds to the Company of
approximately $23.1 million and $17.5 million, respectively. In connection with
the issuance of the Junior Notes, the Company issued to members of the Investor
Group 452,518 shares of Class B Common Stock and 313,215 shares of Class C
Common Stock, and agreed to issue to them up to 554,495 additional shares of
Common Stock (to be contributed by J. Erik Hvide) to the extent necessary to
earn a specified return on their investment. In addition, J. Erik Hvide and the
Investor Group are parties to an agreement granting them certain voting and
approval rights, including the right to nominate eight and three persons,
respectively, to the Company's 11-member Board of Directors. Immediately prior
to the Offering, the principal amount of the Junior Notes not being repaid with
the proceeds of the Offering will be exchanged for shares of Class A Common
Stock and Class B Common Stock and certain shares of Class B Common Stock and
all shares of Class C Common Stock held by the Investor Group will be converted
into shares of Class A Common Stock or Class B Common Stock. The Company made
aggregate cash payments on the notes during 1995 in the approximate amount of
$3.0 million. In addition, the Company agreed to pay an annual advisory fee of
$100,000 to the Investor Group. Such fee was paid in full in 1995 and in a pro
rata amount of $25,000 for 1994. Following the Offering, the amount of the fee
will be reduced by the compensation received by Messrs. Calhoun and Lee in their
capacities as directors of the Company. See "Management--Director Compensation
and Options," "Description of Certain Indebtedness--Senior Notes," "--Junior
Notes," "Description of Capital Stock--Shareholders Agreement," "--Contingent
Share Issuance Agreement," and "Recapitalization Agreement."
In September 1994, the Company redeemed its outstanding preferred stock, all
of which was owned by Hans J. Hvide, at its par value in exchange for $2.4
million in cash and a $3.6 million promissory note (the "Founder's Note"). The
Company will repay $1.6 million of outstanding principal and accrued interest on
the Founder's Note with a portion of the proceeds from the Offering. See
"Description of Certain Indebtedness--Acquisition Notes and Assumed
Indebtedness" and Note 3 to the Company's consolidated financial statements.
Maritime Transport is the successor in interest to the entity which
developed and engineered and provides marketing services for the CATUG(R) vessel
design. Maritime Transport receives a commission equal to 1.25% of charter hire
received by the Company for the Seabulk Challenger and the Seabulk Magnachem as
payment for those development and engineering services. For the years ended
December 31, 1993, 1994, and 1995, the Company made payments to Maritime
Transport of $0.21 million, $0.19 million, and $0.21 million, respectively.
As of December 31, 1995, J. Erik Hvide was indebted to Maritime Transport in
the amount of $675,000 as a result of miscellaneous personal advances made to
him over a number of years. In 1996, Mr. Hvide guaranteed repayment of a like
portion of approximately $0.9 million owed to the Company by Maritime Transport.
All amounts owed to the Company by Maritime Transport, including the amount
guaranteed by Mr. Hvide, will be repaid upon the consummation of the Offering by
the cancellation of $0.8 million of the HCL Notes and $0.1 million of the HOS
Notes held by Mr. Hvide and Hans J. Hvide.
The Company intends to purchase a 152-foot crew/supply boat, to be named
Seabulk St. Francis, from J. Erik Hvide and the Investor Group for a purchase
price of approximately $2.2 million, which is
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equal to their cost of the vessel. The Seabulk St. Francis is currently under
construction and is expected to be available for delivery in October 1996.
The Company has verbal arrangements with Jean Fitzgerald and Gerald Farmer
to provide technical and financial consulting services, respectively, to the
Company. Mr. Fitzgerald, whose arrangement commenced in February 1994, is
currently compensated for such services at the rate of $6,500 per month, and
received total compensation of $66,000 during 1995. Mr. Farmer, whose
arrangement commenced in December 1995, is compensated at an hourly rate. Both
arrangements may be terminated by either party without prior notice.
In addition to the foregoing transactions involving officers and directors,
the Company engaged First Stanford Corporation to render advisory services to
the Company. In exchange for these services, the Company agreed to pay a fee
equal to approximately $1.6 million subject to adjustment, of which 30% is
payable in cash and 70% is payable in Class A Common Stock of the Company valued
at the initial public offering price (87,750 shares based upon an assumed
offering price of $13.00 per share). The Company has also agreed to indemnify
and hold First Stanford harmless from and against any liabilities arising from
its engagement except those arising from First Stanford's bad faith or gross
negligence. Neither First Stanford nor its principal, Thomas M. Ferguson, is
affiliated with or related to the Company. Mr. Ferguson has agreed to indemnify
the Company against liability incurred by it pursuant to certain indemnity
obligations that the Company is undertaking in connection with the Seal Fleet
acquisition. See "Business--The Acquisitions." The Class A Common Stock payable
to First Stanford will be held by the Company as security for Mr. Ferguson's
indemnity obligation, subject to release beginning 24 months following the
Offering.
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SECURITY OWNERSHIP OF PRINCIPAL
STOCKHOLDERS AND MANAGEMENT
The following table sets forth certain information regarding the beneficial
ownership of Common Stock immediately prior to the Offering and as adjusted to
give effect to the sale of 7,000,000 shares of Class A Common Stock in the
Offering, by (i) each Named Executive, (ii) each director of the Company, (iii)
each of the Company's stockholders who is known by the Company to beneficially
own at least five percent of any class of Common Stock of the Company or at
least five percent of the voting power of the Company's Common Stock, and (iv)
all executive officers and directors of the Company as a group. Management
believes that the beneficial owners of the Common Stock listed below, based on
information furnished by such owners, have sole voting and investment power with
respect to such shares, subject to community property laws where applicable, the
provisions of the Shareholders Agreement, and the information contained in the
footnotes to the table below.
<TABLE>
<CAPTION>
CLASS A COMMON STOCK CLASS B COMMON STOCK PERCENT OF
---------------------------------- ---------------------------------- TOTAL VOTING
PERCENT OF CLASS PERCENT OF CLASS POWER OF
BENEFICIALLY BENEFICIALLY OUTSTANDING
OWNED OWNED COMMON STOCK
NUMBER ------------------- NUMBER ------------------- -------------------
NAME AND ADDRESS BENEFICIALLY BEFORE AFTER BENEFICIALLY BEFORE AFTER BEFORE AFTER
OF BENEFICIAL OWNER(1) OWNED(2) OFFERING OFFERING OWNED(2) OFFERING OFFERING OFFERING OFFERING
<S> <C> <C> <C> <C> <C> <C> <C> <C>
J. Erik Hvide (3)................... -- * * 1,769,107 76.1% 53.3% 75.5% 43.6%
Hvide Family Trust I (4)............ -- * * 1,454,383 62.6 43.8 62.0 35.8
Hvide Family Trust II (4)........... -- * * 110,215 4.7 3.3 4.7 2.7
Clipper/Park HMI, L.P. (5).......... -- * * 700,630 10.0 21.1 9.9 17.2
Clipper/Hercules, L.P. (5).......... -- * * 387,408 5.5 11.7 5.5 9.5
Clipper/Merban, L.P. (5)............ 203,555 34.0% 2.7% 148,516 4.0 4.5 4.3 4.2
Clipper/Merchant HMI, L.P. (5)...... -- * * 280,252 4.0 8.4 3.9 6.9
Clipper Capital Associates, L.P.
(5)(6).............................. 203,555 34.0 2.7 1,547,709 23.5 45.7 23.6 37.8
Metropolitan Life Insurance Company
(5)................................. 71,820 34.0 1.0 -- * * * *
Olympus Growth Fund II, L.P. (5).... 67,596 32.0 * -- * * * *
John H. Blankley.................... -- * * -- * * * *
Eugene F. Sweeney................... -- * * -- * * * *
Gene Douglas........................ -- * * -- * * * *
Donald L. Caldera................... -- * * -- * * * *
Andrew W. Brauninger................ -- * * -- * * * *
Robert B. Calhoun, Jr. (6).......... 203,555 34.0 2.7 1,547,709 23.5 45.7 23.6 37.8
Gerald Farmer....................... -- * * -- * * * *
Jean Fitzgerald..................... -- * * -- * * * *
John Lee............................ -- * * -- * * * *
Walter C. Mink...................... -- * * -- * * * *
Robert Rice......................... -- * * -- * * * *
Raymond B. Vickers.................. -- * * -- * * * *
All executive officers and directors
as a group (16 persons) (6)........ 203,555 34.0 2.7 3,316,816 100.0 100.0 99.1 81.4
</TABLE>
- -----------------------
* Less than one percent
(1) Unless otherwise indicated, the address of each of the persons whose name
appears in the table above is: c/o Hvide Marine Incorporated, 2200 Eller
Drive, P.O. Box 13038, Fort Lauderdale, Florida 33316.
(2) Assumes consummation of the following transactions, which will occur
simultaneously with the consummation of the Offering, except as noted: (i)
the issuance of 211,236 shares of Class A Common Stock and 765,394 shares of
Class B Common Stock in exchange for the then-outstanding shares of Class C
Common Stock; (ii) the issuance of 85,750 shares of Class A Common Stock in
payment for services; (iii) the issuance of 23,692 shares of Class A Common
Stock in exchange for certain indebtedness; and (iv) the exchange of 39,205
shares of Class A Common Stock and 1,085,742 shares of Class B Common Stock
following the Offering for the principal amount of the Junior Notes to be
outstanding after the application of the proceeds of the Offering.
(3) Includes the shares held by Hvide Family Trust I and Hvide Family Trust II,
of which Mr. Hvide is the sole trustee.
(4) J. Erik Hvide is the sole trustee for both trusts. Hvide Family Trust I is a
trust for the benefit of Mr. Hvide, his sister, Elsa Hvide Sowrey, (now
known as Elsa Hvide Mumma), and their children in which Mr. Hvide has an
economic interest in 65% of the income of the trust. Hvide Family Trust II
is a trust for the benefit of Elsa Hvide Sowrey and her children, in which
Mr. Hvide has no economic interest.
(Footnotes continued on following page)
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(Footnotes continued from preceding page)
(5) Member of the Investor Group, defined as the "Investor Shareholders" in the
Company's Articles of Incorporation. The Investor Group owns an aggregate of
342,971 shares of Class A Common Stock and 1,547,710 shares of Class B
Common Stock (38.9% of total voting power). The address for Clipper Capital
Associates, L.P., Clipper/Hercules HMI, L.P., Clipper/Merban HMI, L.P.,
Clipper/Merchant HMI, L.P., Clipper/Park HMI, L.P. is: c/o Clipper Capital
Associates, L.P., 12 East 49th Street (30th Floor), New York, New York
10017. The address for Metropolitan Life Insurance Company is: 334 Madison
Avenue, P.O. Box 633, Convent Station, New Jersey 07961-0633. The address
for Olympus Growth Fund II, L.P. is: c/o Olympus Partners, Metro Center, One
Station Place, Stamford, Connecticut 06902.
(6) Includes shares held by Clipper/Hercules, L.P., Clipper/Merban, L.P.,
Clipper/Merchant, L.P., and Clipper/Park, L.P. Clipper Capital Associates,
L.P. is the general partner of those entities, and Mr. Calhoun is an
officer, director, and stockholder of the corporate general partner of
Clipper Capital Associates, L.P.
Pursuant to certain agreements, on or about , 1997 (300 days
following completion of the Offering), the Investor Group will receive
additional shares of Class A Common Stock from the Company. J. Erik Hvide and
the Hvide Trusts will contribute a like number of shares to the Company, thereby
changing the amounts of Class A Common Stock and Class B Common Stock owned,
respectively, by the Investor Group and J. Erik Hvide and the Hvide Trusts. For
information concerning the manner in which the number of shares to be
transferred will be determined, see "Description of Capital Stock--Contingent
Share Issuance Agreement."
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DESCRIPTION OF CERTAIN INDEBTEDNESS
The following is a description of the principal terms of certain of the
Company's indebtedness, including indebtedness to be repaid with a portion of
the proceeds of the Offering and indebtedness to be incurred in connection with
the Acquisitions. Copies of the definitive agreements setting forth the terms of
this indebtedness have been filed as exhibits to the Registration Statement of
which this Prospectus is a part. The following summaries of certain provisions
of the agreements do not purport to be complete and are subject to, and are
qualified in their entirety by reference to, all the provisions of the
agreements.
BANK DEBT
The Company's outstanding bank indebtedness, aggregating $57.5 million at
March 31, 1996, is held by a five-bank syndicate led by Citibank, N.A. under a
loan agreement (the "Credit Facility"). The Credit Facility, as amended in March
1996, currently provides the Company with a $45.5 million term loan, $15.0
million of revolving lines of credit, and a $5.6 million letter of credit, all
maturing January 15, 2001, with the exception of the letter of credit, which
matures on January 15, 2000. The Credit Facility was amended in June 1996 and,
upon consummation of the Offering, the amount available under the term loan will
increase to $60.5 million, the amount available under the revolving lines of
credit will decrease to $10.0 million, and an additional $25.0 million vessel
acquisition credit line will become available. To the extent that the gross
proceeds of the Offering are less than $91.0 million, the $25.0 million
available under the vessel acquisition credit line will be reduced by the amount
of such shortfall. Advances under the vessel acquisition credit line will not be
permitted to exceed either (i) 70% of the lesser of the purchase price or
appraised value of the vessel being acquired, or (ii) a multiple of six times
EBITDA of the acquisition, and the amount of available will decrease to $11.5
million over a four-year period, during which time the Company will be required
to make quarterly installment payments equal to the reduction in the available
commitment.
Borrowings under the Credit Facility bear interest at prime or LIBOR, at the
Company's option, plus a margin based upon certain financial ratios. Such
borrowings were accruing interest at approximately 8.3% at March 31, 1996. After
the Offering and the consummation of the Acquisitions, annual principal payments
under the term loan will aggregate $2.0 million for the remainder of 1996, $7.0
million in 1997, $9.0 million in 1998, $11.0 million in 1999, $13.0 million in
2000, with the remaining $18.5 million due January 15, 2001. All borrowings are
secured by preferred ship mortgages on all vessels owned by the Company,
assignments of all of the Company's receivables and earnings, and collateral
mortgages of spare parts, supplies, and fuel.
The letter of credit serves as collateral for a surety bond to ensure
payment of any final judgment in the pending litigation relating to the
reconstruction of the Seabulk America. See "Business--Legal Proceedings" and
Note 5 to Notes to Consolidated Financial Statements.
The Credit Facility also provides that amounts equal to 50% of Annual Excess
Cash Flow (as defined) and 100% of the net proceeds of certain sales of assets
be used to repay borrowings under the Credit Facility.
Covenants under the Credit Facility, among other things, (i) require the
Company to meet certain financial tests, including tests requiring the
maintenance of minimum interest coverage ratios, leverage ratios, levels of
liquidity, and cash flow ratios; (ii) require the Company to maintain certain
levels of collateral securing amounts outstanding under the Credit Facility;
(iii) limit the incurrence of additional indebtedness; (iv) limit purchases of
capital equipment and other capital expenditures; (v) restrict payments,
including dividends, with respect to shares of any class of capital stock; and
(vi) limit certain corporate acts of the Company, such as incurring debt,
creating liens and entering into certain types of business transactions,
including mergers and joint ventures. The limitation on mergers generally
prohibits mergers other than acquisitions funded by the Credit Facility or
otherwise meeting certain requirements for such acquisitions, including the
requirements described above.
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<PAGE>
Events of default under the Credit Facility include, among other things, (i)
any failure to pay principal thereunder when due, or to pay interest or fees
within three business days after the date due; (ii) the breach of certain
covenants or the inaccuracy of certain representations or warranties made under
the Credit Facility; (iii) any failure to pay amounts due on certain
indebtedness, or defaults that result in or permit the acceleration of such
indebtedness; (iv) certain events of bankruptcy, insolvency, or dissolution; (v)
certain judgments or orders; (vi) certain seizures, condemnations, or similar
actions pertaining to the Company's assets or business; (vii) the invalidity of
the security interests granted under the Credit Facility; and (viii) a Change in
Control (as defined).
The Credit Facility permits the acquisitions of the OMI Chemical Carriers
and the Seal Fleet Vessels and the related assumption of Title XI debt,
incurrance of lease debt and making and delivery of promissory notes. See "Use
of Proceeds" and "Business--The Acquisitions." The Credit Facility limits the
Company's annual capital expenditures, including capital expenditures respecting
maintenance and improvements of existing vessels, to $10.0 million without the
consent of the lending banks. This limitation excludes (i) acquisitions made
with the $25.0 million vessel acquisition credit line, (ii) additional
indebtedness of $10.0 million that the Company is permitted to incur outside the
Credit Facility, (iii) acquisitions financed with proceeds of the Offering, and
(iv) the payment of amounts necessary to retire the Senior Notes, the Junior
Notes, and certain related party notes.
The Credit Facility provides that upon consummation of the Offering, the
Company must pay the banks a fee of $425,000.
In addition to the letter of credit available under the Credit Facility, the
Company has an available letter of credit issued by California Federal Bank in
the amount of $7.0 million. That letter of credit is pledged to the
owner-trustee of the Seabulk Magnachem and the U.S. Maritime Administration as
security for the Company's obligation to pay charter hire under the long-term
bareboat charter of that vessel. See "--Long-Term Charter Obligations--Title XI
Bonds." The Company anticipates that the letter of credit will no longer be
required as a result of the assumption of the Title XI debt associated with the
OMI Hudson and the OMI Dynachem.
SENIOR NOTES
The Senior Notes were issued in the aggregate principal amount of $25.0
million pursuant to that certain Senior Subordinated Note and Common Stock
Purchase Agreement dated September 30, 1994 (the "Senior Note Agreement"). The
Senior Notes were issued at a discount, resulting in proceeds to the Company of
approximately $23.1 million. The issuances of the Senior Notes and the Common
Stock issued in connection with the Senior Notes, resulted in total proceeds to
the Company of $25.0 million. The Senior Notes will mature in two equal
installments on September 30, 2003 and 2004, and bear interest at 12% per annum,
payable semi-annually in arrears on March 31 and September 30 of each year. The
Company at its option may prepay the Senior Notes at any time in whole or in
part in a minimum aggregate amount of $500,000, at a price equal to the
principal amount of the Senior Notes being prepaid, plus accrued interest. The
Senior Notes rank pari passu with all other Senior Subordinated Debt (as
defined).
Covenants under the Senior Note Agreement, among other things, (i) limit the
issuance of debt by the Company and of debt or preferred stock by the Company's
subsidiaries; (ii) restrict certain payments, including dividends, with respect
to shares of any class of capital stock or to repurchase or redeem capital stock
or Subordinated Obligations (as defined); (iii) limit certain corporate acts of
the Company, including permitting any of its subsidiaries to create or permit
any restriction on the subsidiaries' ability to pay dividends, make loans or
advances, or transfer assets or property to the Company; (iv) limit certain
transactions by the Company and its subsidiaries, including certain mergers or
consolidations, asset sales, sales of subsidiary stock, leases, other asset
dispositions, transactions with affiliates, creations of liens, and sale and
leaseback transactions; and (v) provide that upon a Change in Control (as
defined), each holder of the Senior Notes shall have the right to require that
the Company repurchase such holders' Senior Notes at a purchase price equal to
100% of principal plus accrued and
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unpaid interest. In addition, the Company has agreed not to consolidate with or
merge into, sell all of its issued and outstanding capital stock, or convey,
transfer or lease all of its assets to another person unless certain conditions
are met.
Events of Default (as defined) under the Senior Note Agreement include (i)
failure to pay principal or interest when due; (ii) failure to comply with
certain restrictions on mergers, consolidations, and transfers of assets; (iii)
failure to comply with certain agreements and covenants in the Senior Notes and
the Senior Note Agreement; (iv) certain events of default on other indebtedness;
(v) certain events of bankruptcy; and (vi) the inaccuracy of any representation
or warranty.
The Company intends to repay $0.8 million of accrued interest on and $20.0
million of principal of the Senior Notes with a portion of the proceeds from the
Offering. To the extent the net proceeds of the Offering are less than $82.9
million, however, there will be a dollar-for-dollar reduction of the principal
amount of Senior Notes repaid. See "Use of Proceeds" and "Capitalization."
JUNIOR NOTES
The Junior Notes were issued in the aggregate principal amount of $25.0
million pursuant to that certain Junior Subordinated Note and Common Stock
Purchase Agreement dated September 30, 1994 (the "Junior Note Agreement"). The
Junior Notes were issued at a discount, resulting in proceeds to the Company of
approximately $17.5 million. The issuances of the Junior Notes, the Common
Stock, and the Common Stock Contingent Share Issuances issued in connection with
the Junior Notes, resulted in total proceeds to the Company of $25.0 million.
The principal of and accrued interest on the Junior Notes are due and payable on
September 30, 2014; provided, however, that the Junior Notes must be prepaid
upon the closing of the Offering. This prepayment requirement will be amended
prior to the Offering. See "Description of Capital Stock--Recapitalization
Agreement." Interest accrues on the Junior Notes at a rate of 8% per annum,
compounded quarterly. The Company at its option may prepay the Junior Notes at
any time in whole or in part at a price equal to the principal amount of the
Junior Notes being prepaid, plus accrued interest. The Junior Notes are
subordinated to all Senior Debt (as defined).
Covenants under the Junior Note Agreement, among other things, provide that
upon a Change in Control (as defined), each holder of the Junior Notes shall
have the right to require that the Company repurchase such holders' Junior Notes
at a purchase price equal to 100% of principal plus accrued and unpaid interest.
In addition, the Company has agreed not to consolidate with or merge into, sell
all of its issued and outstanding capital stock, or convey, transfer or lease
all of its assets to another person unless certain conditions are met.
Events of Default (as defined) under the Junior Note Agreement include (i)
failure to pay principal or interest when due; (ii) failure to comply with
covenants; (iii) certain events of bankruptcy; (iv) certain judgments or
decrees; and (v) the inaccuracy of any representation or warranty.
Immediately prior to the consummation of the Offering, the outstanding
principal of and accrued but unpaid interest on the Junior Notes will total
$28.7 million (assuming a closing date of June 30, 1996), of which $15.1 million
will be repaid from the proceeds of the Offering. If the Underwriters'
over-allotment option is not exercised, the outstanding principal balance will
be exchanged for 39,205 shares of Class A Common Stock and 1,085,742 shares of
Class B Common Stock valued at $12.09 per share (assuming a public offering
price of $13.00 per share) within 30 days following the Offering. To the extent
that the Underwriters' over-allotment option is exercised, the net proceeds
therefrom will be used to repay an equal principal amount of the Junior Notes
and any then remaining principal amount of the Junior Notes will be converted
into shares of Class A Common Stock and Class B Common Stock on the same
proportionate basis as if the Underwriters' over-allotment option were not
exercised. See "Description of Capital Stock--Recapitalization Agreement."
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LONG-TERM CHARTER OBLIGATIONS
Title XI Bonds. Two of the Company's subsidiaries are parties to long-term,
"hell or high water" charters of the Seabulk Challenger and the Seabulk
Magnachem, the performance of which is guaranteed by the Company. Both vessels
were financed by the issuance of U.S. Government Guaranteed Ship Financing Bonds
issued pursuant to Title XI in leveraged lease transactions. As of December 31,
1995, approximately $4.2 million of 8.5% Title XI Bonds due 1999 relating to the
Seabulk Challenger was outstanding and approximately $7.3 million of 5.25% Title
XI Bonds due 2000 relating to the Seabulk Magnachem was outstanding. The
long-term charter for the Seabulk Challenger is coterminous with the maturity
date of the respective obligation, and the charter for the Seabulk Magnachem
terminates in 2002. The Company has the option to purchase the vessels or renew
the charters at fair market value and, with respect to the Seabulk Magnachem,
has the right to share in the residual value proceeds of any sale to a third
party.
In connection with the acquisition of the OMI Chemical Carriers, the Company
is assuming approximately $34.7 million of U.S. Government Guaranteed Ship
Financing Bonds issued pursuant to Title XI in five distinct series bearing
interest at an average rate of 7.65%.
Repayment of the Company's existing Title XI bonds and the Title XI bonds to
be assumed is guaranteed by the full faith and credit of the United States,
acting through the Maritime Administration. As security for such guarantee, the
vessels are mortgaged to the United States, and the subsidiaries that own or
charter the vessels are each party to a security agreement and a financial
agreement with the United States containing various operating covenants and
financial conditions that, among other things, restrict the ability of each to
(i) incur additional indebtedness, (ii) make certain loans, advances, or
investments, (iii) create certain liens, (iv) pay stock dividends, (v) sell,
transfer, or dispose of assets, (vi) change the nature of its business, (vii)
make capital expenditures, (viii) effect certain mergers, consolidations, or
similar business combinations, or (ix) enter into certain vessel charter
arrangements. The agreements specify various events of default, including
failure to pay charter hire, pay certain guarantee fees, satisfy certain
covenants, maintain required insurance, and maintain U.S. citizenship (within
the meaning of Section 2 of the Shipping Act, 1916) and certain events of
insolvency or bankruptcy. No consents or approvals are required under the
Company's existing Title XI bonds to consummate the Offering or accomplish the
Acquisitions.
Bareboat Charters. The Company is party to bareboat charters relating to
four offshore service vessels, two of which expire in June 2001 and two of which
expire in January 2002. See "Certain Transactions" and Note 4 to the Company's
consolidated financial statements. The Company has an option to purchase each of
these vessels for a nominal amount upon the expiration of the charters. The
Company is also party to two bareboat charters relating to a total of nine crew
boats. The charter on one crew boat expires in 2002 with an option to purchase
the vessel for $0.4 million. The charter on the remaining eight crew boats
expires in 2004 with an option to purchase the vessels for a nominal amount. In
addition, the Company is party to a bareboat charter on a tractor tug which
expires in 2010 with an option to purchase the vessel for $1.6 million.
ACQUISITION NOTES AND ASSUMED DEBT
In connection with the redemption in September 1994 of the Company's
outstanding preferred stock, the purchase of partnership interests in HOS, and
the purchase of partnership interests in HCL, the Company issued the unsecured
subordinated Founder's Note, HOS Notes, and HCL Notes, in the approximate
principal amounts of $3.6 million, $1.0 million, and $1.1 million, respectively.
See "Certain Transactions." The Founder's Note bears interest, payable
quarterly, at the greater of 12% per annum or prime plus 3%. The HOS and HCL
Notes bear interest at 12% per annum. A portion of the notes will be repaid in
cash with a portion of the proceeds from the Offering and a portion of the notes
will be exchanged for shares of Class A Common Stock. See "Use of Proceeds" and
"Certain Transactions." Of the balance of $4.8 million of currently remaining
outstanding principal amount of such notes, $1.6 million will be repaid in cash
on the Founder's Note and $0.3 million will be repaid in
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cash on the HOS Notes. In addition, $0.3 million of outstanding principal on the
HCL and HOS Notes will be exchanged for 23,692 shares of Class A Common Stock
(assuming an Offering price of $13.00 per share).
In September 1994, the Company issued a $3.0 million promissory note (the
"Vessel Acquisition Note") in partial payment for the 20% minority interest in a
partnership that owned, directly or indirectly, eight of the Company's offshore
supply boats and substantially all of the Company's interests in its product
carrier and one of its chemical carriers. The unsecured note bears interest,
payable quarterly, at the lesser of 10% per annum or prime plus 2%. Principal on
the Vessel Acquisition Note is payable in five equal annual installments
commencing October 1, 1995. The Company will repay $2.4 million of outstanding
principal and accrued interest on the Vessel Acquisition Note with a portion of
the proceeds from the Offering.
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DESCRIPTION OF CAPITAL STOCK
The following summary description of the Company's capital stock is
qualified in its entirety by reference to the Articles of Incorporation and its
Amended and Restated Bylaws (the "Bylaws"), copies of which have been included
as exhibits to the Registration Statement of which this Prospectus is a part,
and reference to Florida law. All capitalized terms used and not defined below
have the respective meanings assigned to them in the Articles of Incorporation.
Upon consummation of the Offering, the authorized capital stock of the
Company will consist of 100,000,000 shares of Class A Common Stock, par value
$.001 per share, of which 7,452,413 shares will be issued and outstanding,
5,000,000 shares of Class B Common Stock, par value $.001 per share, of which
3,316,817 shares will be issued and outstanding, and 10,000,000 shares of
Preferred Stock, par value $1.00 per share, none of which will be issued and
outstanding. The Class A Common Stock and Class B Common Stock are in this
section collectively referred to as the "Common Stock."
COMMON STOCK
The holders of Common Stock are entitled to receive such dividends, in cash,
property or securities, as may be declared from time to time by the Board of
Directors out of funds legally available therefor. The holders of Common Stock
are entitled to participate in dividends ratably on a per share basis. If
dividends consist of Common Stock or other voting securities of the Company, the
voting rights of each such security shall correspond to the voting rights of the
security held. Any dividend declared for one class of Common Stock must be
declared for the other classes of Common Stock. The holders of Common Stock have
no preemptive or redemption rights and are not subject to future calls or
assessments by the Company. Subject to the prior rights of holders, if any, of
any outstanding class or series of capital stock having a preference in relation
to the Common Stock as to distributions upon dissolution, liquidation, and
winding-up of the Company, holders of Common Stock are entitled to share ratably
in any assets of the Company that remain after payment in full of all debts and
liabilities of the Company.
The holders of Class A Common Stock and Class B Common Stock vote together
as a single class on all matters submitted to a vote of the stockholders,
including the election of directors, except as described below under "--Foreign
Ownership Restrictions" and as provided under Florida law. In all matters
submitted to a vote of the stockholders, including the election of directors,
and except as described below under "--Foreign Ownership Restrictions" and under
"--Certain Provisions of Articles of Incorporation and Bylaws," each share of
Class A Common Stock is entitled to one vote and each share of Class B Common
Stock is entitled to ten votes. The stockholders do not have cumulative voting
rights.
The Class B Common Stock can be owned only by (i) J. Erik Hvide and, subject
to certain limitations set forth in the Articles of Incorporation, any person
related to him by kinship or marriage, trusts or similar arrangements
established solely on the behalf of one or more of them, and partnerships and
other entities that are wholly owned by them (collectively, the "Hvide Family");
or (ii) the Investor Group and its affiliates. If the ownership or beneficial
interest in any share of Class B Common Stock ceases to be vested in any of
these persons, then such share will automatically and immediately convert into a
share of Class A Common Stock, although such a conversion will not occur where
Class B Common Stock is transferred from one Hvide Family member, upon death, to
another Hvide Family member.
Except as described below under "--Foreign Ownership Restrictions," each
holder of Class B Common Stock may elect at any time to convert any of his
shares, share for share, into Class A Common Stock.
Immediately after completion of the Offering, the Hvide Family and the
Investor Group will hold 53.3% and 46.7%, respectively, of the outstanding Class
B Common Stock. The Hvide Family and the Investor Group will thus own 16.4% and
17.6%, respectively, of the combined classes of Common Stock (16.4% and 7.8%,
respectively, if the Underwriters' over-allotment option is exercised in full)
and
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control 43.6% and 38.9%, respectively, of the voting power of such stock upon
completion of the Offering (56.2% and 17.9%, respectively, if the Underwriters'
over-allotment option is exercised in full) and will control the management and
affairs of the Company and any corporate actions requiring stockholder approval.
PREFERRED STOCK
The Board of Directors has the authority, without further action by the
stockholders, to issue from time to time shares of Preferred Stock in one or
more series and to fix, with respect to each series, the number of shares,
voting powers, designations, relative rights, preferences (including seniority
upon liquidation), privileges, and restrictions thereof. The rights,
preferences, privileges, and restrictions of different series of Preferred Stock
may differ with respect to dividend rates, amounts payable on liquidation,
voting rights, conversion rights, redemption provisions, sinking fund
provisions, and other matters. The Preferred Stock is subject to the dual stock
certificate system described below under "--Foreign Ownership Restrictions."
The issuance of Preferred Stock could decrease the amount of earnings and
assets available for distribution to holders of Common Stock, could adversely
affect the rights and powers, including voting and distribution rights, of
holders of Common Stock and could have the effect of delaying, deferring, or
preventing a change in control of the Company. Except as otherwise provided by
law, the holders of any series of Preferred Stock may be given the right, voting
separately as a class, to elect one or more directors of the Company. The term
of any such director would expire at the next succeeding annual meeting of
shareholders.
The Company has no present intention to issue any shares of Preferred Stock.
FOREIGN OWNERSHIP RESTRICTIONS
The Articles of Incorporation (i) contain provisions limiting the aggregate
percentage ownership by Non-Citizens of each class of the Company's capital
stock (including the Class A Common Stock and the Class B Common Stock) to
24.99% of the outstanding shares of each such class (the "Permitted Percentage")
to ensure that such foreign ownership will not exceed the maximum percentage
permitted by applicable federal law (presently 25.0%), (ii) require institution
of a dual stock certificate system to help determine such ownership, and (iii)
permit the Board of Directors to make such determinations as may reasonably be
necessary to ascertain such ownership and implement such limitations. These
provisions are intended to protect the Company's ability to operate its vessels
in the U.S. domestic trade governed by the Jones Act. The ability of the Company
to so operate is necessary to avoid default under certain of the Company's
financings, may enhance the Company's ability to incur additional debt, and may
have other effects upon the Company. See "Risk Factors--Restriction on Foreign
Ownership" and "Business--Environmental and Other Regulation--Coastwise Laws."
To provide a method to enable the Company reasonably to determine stock
ownership by Non-Citizens, the Articles of Incorporation require the Company to
institute (and to implement through the transfer agent for the Common Stock) a
dual stock certificate system, pursuant to which certificates representing
shares of Common Stock will bear legends that designate such certificates as
either "citizen" or "non-citizen," depending on the citizenship of the owner.
Accordingly, stock certificates are denominated as "citizen" (blue) in respect
of Class A Common Stock owned by Citizens and as "non-citizen" (red) in respect
of Class A Common Stock owned by Non-Citizens. The Company may also issue
non-certificated shares through depositories if the Company determines such
depositories have established procedures that allow the Company to monitor the
ownership of Common Stock by Non-Citizens.
For purposes of the dual stock certificate system, a "Non-Citizen" is
defined as any person other than a Citizen, and a "Citizen" is defined as: (i)
any individual who is a citizen of the U.S. by birth, naturalization, or as
otherwise authorized by law; (ii) any corporation (a) organized under the laws
of the U.S., or a state, territory, district, or possession thereof, (b) of
which title to not less than 75% of its stock is beneficially owned by and
vested in Citizens, free from any trust or fiduciary obligation in favor
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of Non-Citizens, (c) of which not less than 75% of the voting power is vested in
Citizens, free from any contract or understanding through which it is arranged
that such voting power may be exercised directly or indirectly in behalf of
Non-Citizens, (d) of which there are no other means by which control is
conferred upon or permitted to be exercised by Non-Citizens, (e) whose president
or chief executive officer, chairman of the board of directors and all officers
authorized to act in their absence or disability are Citizens, and (f) of which
more than 50% of that number of its directors necessary to constitute a quorum
are Citizens; (iii) any partnership (a) organized under the laws of the U.S., or
a state, territory, district, or possession thereof, (b) all general partners of
which are Citizens, and (c) of which not less than a 75% interest is
beneficially owned and controlled by, and vested in, Citizens, free and clear of
any trust or fiduciary obligation in favor of Non-Citizens; (iv) any association
(a) organized under the laws of the U.S., or a state, territory, district, or
possession thereof, (b) of which 100% of the members are Citizens, (c) whose
president, chief executive officer, or equivalent position, chairman of the
board of directors, or equivalent committee or body, and all persons authorized
to act in their absence or disability are Citizens, (d) of which not less than
75% of the voting power is beneficially owned by Citizens, free and clear of any
trust or fiduciary obligation in favor of Non-Citizens, and (e) of which more
than 50% of that number of its directors or equivalent persons necessary to
constitute a quorum are Citizens; (v) any limited liability company (a)
organized under the laws of the U.S., or a state, territory, district or
possession thereof, (b) of which not less than 75% of the membership interests
are beneficially owned by and vested in Citizens, free from any trust or
fiduciary obligation in favor of Non-Citizens, and the remaining membership
interests are beneficially owned by and vested in persons meeting the
requirements of 46 U.S.C. Sec.12102(a), (c) of which not less than 75% of the
voting power is vested in Citizens, free from any contract or understanding
through which it is arranged that such voting power may be exercised directly or
indirectly in behalf of Non-Citizens, (d) of which there are no other means by
which control is conferred upon or permitted to be exercised by Non-Citizens,
(e) whose president or other chief executive officer or equivalent position,
chairman of the board of directors or equivalent committee or body, managing
members (or equivalent), if any, and all persons authorized to act in their
absence or disability are citizens, free and clear of any trust or fiduciary
obligation in favor of any Non-Citizens, and (f) of which more than 50% of that
number of its directors or equivalent persons necessary to constitute a quorum
are Citizens; (vi) any joint venture, if not an association, corporation,
partnership, or limited liability company (a) organized under the laws of the
U.S., or a state, territory, district, or possession thereof, and (b) of which
100% of the equity is beneficially owned and vested in Citizens, free and clear
of any trust or fiduciary obligation in favor of any Non-Citizens; and (vii) any
trust (a) domiciled in and existing under the laws of the U.S., or a state,
territory, district, or possession thereof, (b) the trustee of which is a
Citizen, and (c) of which not less than a 75% interest is held for the benefit
of Citizens, free and clear of any trust or fiduciary obligation in favor of any
Non-Citizens. The foregoing definition is applicable at all tiers of ownership
and in both form and substance at each tier of ownership.
Shares of Common Stock are transferable to Citizens at any time and are
transferable to Non-Citizens if, at the time of such transfer, the transfer
would not increase the aggregate ownership by Non-Citizens of that particular
class of Common Stock above the Permitted Percentage in relation to the total
outstanding shares of that particular class Common Stock. In determining whether
the percentage of shares of Class A Common Stock beneficially owned by
Non-Citizens exceeds the Permitted Percentage, the total number of issued and
outstanding shares of Class A Common Stock and the total number of shares of
Class A Common Stock beneficially owned by Non-Citizens will be increased (i) by
185,056 shares until shares of Common Stock are issued pursuant to the
Contingent Share Issuance Agreement (see "Description of Capital
Stock--Contingent Share Issuance Agreement"), and (ii) by 131,735 shares until
the earlier to occur of (x) conversion to Common Stock or (y) the redemption, of
the Company's Junior Subordinated Notes (See "Description of Certain
Indebtedness--Junior Notes"). Non-Citizen certificates may be converted to
Citizen certificates upon a showing, satisfactory to the Company, that the
holder is a Citizen. Any purported transfer to Non-Citizens of shares or of an
interest in shares of the Company represented by a Citizen certificate in excess
of the
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Permitted Percentage will be ineffective as against the Company for all purposes
(including for purposes of voting, dividends, and any other distribution, upon
liquidation or otherwise). In addition, the shares may not be transferred on the
books of the Company, and the Company, whether or not such stock certificate is
validly issued, may refuse to recognize the holder thereof as a stockholder of
the Company except to the extent necessary to effect any remedy available to the
Company. Subject to the foregoing limitations, upon surrender of any stock
certificate for transfer, the transferee will receive citizen (blue)
certificates or non-citizen (red) certificates, as applicable.
The Articles of Incorporation establish procedures with respect to the
transfer of shares to enforce the limitations referred to above and authorize
the Board of Directors to implement such procedures. The Board of Directors may
take other ministerial actions or make interpretations of the Company's foreign
ownership policy as it deems necessary in order to implement the policy.
Pursuant to the procedures established in the Articles of Incorporation, as a
condition precedent to each issuance and/or transfer of stock certificates
representing shares of Common Stock (including the shares of Class A Common
Stock being sold in the Offering), a citizenship certificate will be required
from all transferees (and from any recipient upon original issuance) of Common
Stock, with respect to the beneficial owner of the Common Stock being
transferred, if the transferee (or the original recipient) is acting as a
fiduciary or nominee for such beneficial owner. The registration of the
transfer (or original issuance) will be denied upon refusal to furnish such
citizenship certificate, which must provide information about the purported
transferee's or beneficial owner's citizenship. Furthermore, as part of the
dual stock certificate system, depositories holding shares of the Company's
Common Stock will be required to maintain separate accounts for "Citizen" and
"Non-Citizen" shares. When the beneficial ownership of such shares is
transferred, the depositories' participants will be required to advise such
depositories as to which account the transferred shares should be held. In
addition, to the extent necessary to enable the Company to determine the
number of shares owned by Non-Citizens, the Company may from time to time
require record holders and beneficial owners of shares of Common Stock to
confirm their citizenship status and may, in the discretion of the Board of
Directors, temporarily withhold dividends payable to, and deny voting rights
to, any such record holder or beneficial owner until confirmation of
citizenship is received.
Should the Company (or its transfer agent for the Common Stock) become aware
that the ownership by Non-Citizens of Common Stock at any time exceeds the
Permitted Percentage (the "Excess Shares"), the Board of Directors is authorized
to withhold dividends and other distributions temporarily on the Excess Shares,
pending the transfer of such shares to a Citizen or the reduction in the
percentage of shares owned by Non-Citizens to or below the Permitted Percentage,
and to deny voting rights with respect to the Excess Shares. If dividends and
distributions are to be withheld, they will be set aside for the account of the
Excess Shares. At such time as such shares are transferred to a Citizen or the
ownership of such shares by Non-Citizens will not result in aggregate ownership
by Non-Citizens in excess of the Permitted Percentage, the dividends withheld
shall be paid to the then record holders of the related shares. Excess Shares
shall, so long as the excess exists, not be deemed to be outstanding for
purposes of determining the vote required on any matter brought before the
stockholders for a vote. The Articles of Incorporation provide that the Board of
Directors has the power, in its reasonable discretion and based upon the records
maintained by the Company's transfer agent, to determine those shares of Common
Stock that constitute the Excess Shares. Such determination will be made by
reference to the date or dates on which such shares were purchased by
Non-Citizens, starting with the most recent acquisition of shares by a
Non-Citizen and including, in reverse chronological order, all other
acquisitions of shares by Non-Citizens from and after the acquisition that first
caused the Permitted Percentage to be exceeded; provided that Excess Shares
resulting from a determination that a record holder or beneficial owner is no
longer a Citizen will be deemed to have been acquired as of the date of such
determination.
To satisfy the Permitted Percentage described above, the Articles of
Incorporation authorize the Board of Directors, in its discretion, to redeem
(upon written notice) Excess Shares in order to reduce the aggregate ownership
by Non-Citizens to the Permitted Percentage. As long as the shares of Class A
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Common Stock offered hereby continue to be authorized for quotation on the
Nasdaq National Market, the redemption price will be the average of the closing
sale price of the shares (as reported by the Nasdaq National Market) during the
30 trading days next preceding the date of the notice of redemption. The
redemption price for Excess Shares will be payable in cash. In the event the
Company is not permitted by applicable law to make such redemption or the Board
of Directors, in its discretion, elects not to make such redemption, the Company
will give notice to the holders of Class B Common Stock and those of whom are
Citizens may elect to purchase their pro rata portion of the Excess Shares by
delivering written notice of such election within 30 days of receipt of the
Company's notice.
POSSIBLE ANTI-TAKEOVER PROVISIONS
Florida Business Corporation Act. The Company is subject to Sections
607.0901 and 607.0902 of the Florida Business Corporation Act ("FBCA"), which
regulate the acquisition and exercise of corporate control.
Under Section 607.0902 of the FBCA, "control shares" of certain corporations
acquired in a "control share acquisition," with certain exceptions, have no
voting rights unless such rights are granted pursuant to a vote of the holders
of a majority of the corporation's voting stock (excluding all "interested
shares"). "Control shares" are shares that, when added to all other shares which
a person owns or has the power to vote, would give that person any of the
following ranges of voting power: (i) one-fifth or more but less than one-third
of the voting power; (ii) one-third or more but less than a majority of the
voting power; and (iii) more than a majority of the voting power. A "control
share acquisition" is the acquisition of ownership of, or the power to vote,
outstanding control shares. Shares acquired within 90 days, or as part of a plan
to effectuate a control share acquisition, are deemed to have been acquired in
the same transaction. "Interested shares" include shares held by the person
attempting to effectuate the control share acquisition or any officer or
employee-director of the corporation. A corporation may elect to not be governed
by Section 607.0902 of the FBCA in its articles of incorporation or bylaws.
Section 607.0901 of the FBCA requires that certain transactions between an
interested stockholder (in general, a stockholder that beneficially owns more
than 10% of a corporation's outstanding voting stock) and a corporation be
approved by the affirmative vote of the holders of two-thirds of the
corporation's voting shares (excluding those shares beneficially owned by the
interested stockholder). In general, such approval will not be required if the
transaction is approved by a majority of disinterested directors, the interested
stockholder has been the beneficial owner of at least 80% of the corporation's
outstanding voting stock for at least the preceding five years, the interested
stockholder is the beneficial owner of at least 90% of the outstanding voting
stock of the corporation (excluding stock acquired directly from the corporation
in a transaction not approved by a majority of the disinterested directors), or
the consideration paid in the affiliated transaction satisfies the statutory
"fair price" formula and certain other conditions are met. Transactions covered
by Section 607.0901 include mergers, consolidations, sales of assets having an
aggregate fair market value of 5% or more of the aggregate fair market value of
all the corporation's assets on a consolidated basis or of all the corporation's
outstanding stock or representing 5% or more of the corporation's earning power
or net income on a consolidated basis, transfers of shares having an aggregate
fair market value of 5% or more of the aggregate fair market value of all
outstanding shares of the corporation, liquidations, dissolutions,
reclassifications, recapitalizations, and loans. A corporation may elect, by the
vote of a majority of the outstanding voting stock (not including shares held by
an interested stockholder), by amending such corporation's articles of
incorporation or bylaws, to not be subject to the provisions of Section 607.0901
of the FBCA. Any such election, however, will not be effective until 18 months
after it is made, and will not apply to any affiliated transaction between such
corporation and someone who was an interested stockholder prior to the effective
date of such amendment.
Each of the foregoing provisions of the FBCA could have the effect of
delaying or making it more difficult to effect a change of control or management
of the Company, even though such a change may be beneficial to the Company and
its stockholders.
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Dual Classes of Common Stock. The Class A Common Stock entitles its holders
to one vote per share, and the Class B Common Stock entitles its holders to ten
votes per share. Accordingly, the Hvide Family and the Investor Group, as the
holders of all the outstanding Class B Common Stock, if they vote together, will
be able to control the vote on all matters submitted to a vote of the holders of
the Common Stock, and such control may have the effect of discouraging certain
types of transactions involving an actual or potential change of control of the
Company, including transactions in which the holders of Class A Common Stock
might otherwise receive a premium for their shares over then-current market
prices.
Board of Directors. In all elections of directors, except elections, if any,
for directors for Preferred Stock, as described in "--Preferred Stock," each
share of Class A Common Stock is entitled to one vote and each share of Class B
Common Stock is entitled to ten votes, and neither class has cumulative voting
rights. The Hvide Family and the Investor Group, under the terms of the
Shareholders Agreement, will have the ability to nominate eight and three
members, respectively, of the Company's 11-member Board of Directors, who are
elected by the holders of Class A Common Stock and Class B Common Stock, voting
together as a class. In addition, pursuant to the Articles of Incorporation, the
Board of Directors will be divided into three classes of directors serving
staggered three-year terms as well as directors, if any, for Preferred Stock who
serve one-year terms. As a result, approximately one third of the Board of
Directors is elected each year. Each of these provisions could have the effect
of delaying or making it more difficult to effect a change in control or
management of the Company, even though such a change may be beneficial to the
Company and its stockholders.
Restrictions on Taking Stockholder Action. The Company's Bylaws provide that
a stockholder must notify the Company in advance of such holder's intent to
bring up items of business or nominate directors at any annual meeting of
stockholders. With respect to other items of business, the Bylaws provide that a
stockholder's notice must be given in accordance with the procedures set forth
in Rule 14a-8 of Regulation 14A under the Securities Exchange Act of 1934, as
amended, which generally requires that such proposals be received by the Company
not less than 120 days prior to the anniversary date that proxy solicitation
materials were sent out for the immediately preceding annual meeting of
stockholders of the Company. As permitted by the FBCA, pursuant to the Company's
Articles of Incorporation, stockholders may only call a special meeting of
stockholders when the holders of not less than 50% of the shares entitled to
vote make written demand on the Company for such a meeting.
Authorized but Unissued Capital Stock. One of the effects of the existence
of authorized but unissued Common Stock and undesignated Preferred Stock may be
to enable the Board of Directors to make more difficult or to discourage an
attempt to obtain control of the Company by means of a merger, tender offer,
proxy contest, or otherwise, and thereby to protect the continuity of the
Company's management. If, in the exercise of its fiduciary obligations, the
Board of Directors were to determine that a takeover proposal was not in the
Company's best interest, such shares could be issued by the Board of Directors
without stockholder approval in one or more transactions that might prevent or
make more difficult or costly the completion of the takeover transaction by
diluting the voting or other rights of the proposed acquiror or insurgent
stockholder group, by creating a substantial voting block in institutional or
other hands that might undertake to support the position of the incumbent Board
of Directors, by effecting an acquisition that might complicate or preclude the
takeover, or otherwise. In this regard, the Articles of Incorporation grant the
Board of Directors broad power to establish the rights and preferences of the
authorized and unissued Preferred Stock, one or more series of which could be
issued entitling holders (i) to vote separately as a class on any proposed
merger or consolidation, (ii) to cast a proportionately larger vote together
with the Common Stock on any such transaction or for all purposes, (iii) to
elect directors having terms of office or voting rights greater than those of
other directors, (iv) to convert Preferred Stock into a greater number of shares
of Common Stock or other securities, (v) to demand redemption at a specified
price under prescribed circumstances related to a change of control, or (vi) to
exercise other rights designated to impede a takeover. The issuance of shares of
Preferred Stock pursuant to the Board of Directors' authority described above
may adversely effect the rights of holders of the Common Stock.
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CERTAIN PROVISIONS OF ARTICLES OF INCORPORATION AND BYLAWS
Rights of Approval. So long as the Investor Group owns at least 5% of the
Company's outstanding Class B Common Stock, subject to the following exception,
the following actions must be approved by holders of at least 95% of the Class B
Common Stock: (i) engagement of the Company or its subsidiaries in any material
new business; (ii) a merger involving the Company or a sale of all or
substantially all of the Company's assets; (iii) a recapitalization or voluntary
bankruptcy filing; (iv) a capital investment, acquisition, or asset sale in
excess of $5 million; (v) borrowings or issuances of securities in excess of $5
million; or (vi) amendment to the Articles of Incorporation reducing or
delegating the authority of the Board of Directors or affecting the rights of
holders of shares of Class B Common Stock. After September 30, 1999, however, a
merger or sale of substantially all of the Company's assets no longer will
require the approval of holders of 95% of the Class B Common Stock. In addition,
so long as the Investor Group owns at least 25% of the Company's outstanding
Class B Common Stock, the appointment of a new chief executive officer must be
approved by the holders of at least 75% of the Class B Common Stock.
Liability of Directors and Officers. The FBCA permits corporations to (i)
include provisions in their articles of incorporation that limit the personal
liability of directors for monetary damages resulting from breaches of the duty
of care, subject to certain exceptions, and (ii) indemnify directors and
officers, among others, in certain circumstances for their expenses and
liabilities incurred in connection with defending pending or threatened suits.
The Articles of Incorporation include a provision that eliminates the
personal liability of a director to the Company and its stockholders for
monetary damages resulting from breaches of the duty of care to the fullest
extent permitted by the FBCA and further provide that any amendment or repeal of
that provision will not adversely affect any right or protection of a director
of the Company existing at the time of such amendment, modification, or repeal
to any director for acts or omissions occurring prior to such amendment.
Pursuant to the Articles of Incorporation, the Board of Directors has
indemnified the Company's current and former directors, officers, employees, and
agents to the fullest extent permitted, from time to time, under the FBCA as
presently or hereafter in effect. The Company also may enter into agreements
providing for greater or different indemnification of any of these persons. The
Company maintains an insurance policy covering the liability of its directors
and officers for actions taken in their official capacity.
Citizenship of Directors and Officers. The Company's Bylaws provide that the
Chairman of the Board of Directors, Chief Executive Officer, President, and all
Vice Presidents must be Citizens, and restrict any officer who is not a Citizen
from acting in the absence or disability of such persons. The Bylaws further
provide that the number of Non-Citizen directors shall not exceed a minority of
the number necessary to constitute a quorum for the transaction of business. See
"Business--Environmental and Other Regulation--Coastwise Laws."
RECAPITALIZATION AGREEMENT
The Company, the Investor Group, J. Erik Hvide, and two trusts for the
benefit of certain members of Mr. Hvide's family will enter into a
recapitalization agreement (the "Recapitalization Agreement") simultaneously
with the execution of the Underwriting Agreement. Under the Recapitalization
Agreement, the parties will agree that immediately prior to the Offering, 74,704
shares of the 452,518 Class B Common Stock owned by the Investor Group will be
converted into 74,704 shares of Class A Common Stock, the 313,215 shares of
Class C Common Stock owned by the Investor Group will be converted into 229,062
shares of Class A Common Stock and 84,153 shares of Class B Common Stock and the
663,415 shares of Class C Common Stock owned by J. Erik Hvide and the Hvide
Trusts will be converted into 663,415 shares of Class B Common Stock. In
addition, the parties will agree to the application of $35.8 million of the
proceeds of the Offering to repay the $20.7 million of principal and accrued but
unpaid interest on the Senior Notes and $15.1 million of the principal and
accrued but unpaid interest on the
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Junior Notes; provided, however, to the extent that the net proceeds from the
Offering are less than $82.9 million, there will be a dollar-for-dollar
reduction in the principal amount of Senior Notes repaid. Under the
Recapitalization Agreement, the parties will also agree that if the
Underwriters' over-allotment option is not exercised, the remaining principal
amount of the Junior Notes will be converted into an aggregate of 39,205 shares
of Class A Common Stock and 1,085,742 shares of Class B Common Stock (assuming
an offering price of $13.00 per share). To the extent that the Underwriters'
over-allotment option is exercised, the net proceeds therefrom will be used to
repay an equal principal amount of the remaining $5.0 million of outstanding
Senior Notes and, to the extent that such net proceeds exceed $5.0 million, an
equal principal amount of the Junior Notes and any then-remaining principal
amount of the Junior Notes will be converted into shares of Class A Common Stock
and Class B Common Stock on the same proportionate basis as if the Underwriters'
over-allotment option were not exercised. Any interest that accrues on the
Junior Notes between the closing of the Offering and the conversion or repayment
of the Junior Notes will be paid in cash by the Company. The parties will also
enter into a restated shareholders agreement, a restated contingent share
issuance agreement, and a registration rights agreement, all as described below.
SHAREHOLDERS AGREEMENT
In connection with the September 30, 1994 issuance of the Senior Notes and
the Junior Notes the Company, J. Erik Hvide, two trusts for the benefit of
certain members of Mr. Hvide's family, of which Mr. Hvide is sole trustee, and
the Investor Group entered into an agreement granting certain voting and
approval rights to the Investor Group and the Hvide Family. Immediately prior to
the Offering, that agreement will be terminated and Mr. Hvide, the Hvide Trusts,
and the Investor Group will enter into a new agreement (the "Shareholders
Agreement") that will provide as follows:
Designations to the Board of Directors. The Investor Group may initially
nominate three persons to the Board of Directors and must vote all its shares so
as to elect eight other persons nominated to the Board of Directors by Mr. J.
Erik Hvide. Of these eight nominees, one will be Mr. Hvide, no more than three
others may be employees of the Company, its subsidiaries or members of the Hvide
Family, and the remainder must be independent of Mr. Hvide, the Company, and its
subsidiaries. In addition,
J. Erik Hvide and the Hvide Trusts must vote their shares to elect the three
Investor Group nominees. The number of nominees that the Investor Group is
entitled to designate will be reduced by one at such times as the Investor
Group's holdings drop below 20%, 10%, and 5%, respectively, of the Company's
outstanding Common Stock. The Investor Group may remove their nominees, with or
without cause, and may nominate successors to their nominees. All director
nominees must be U.S. citizens.
Right of First Refusal. Mr. Hvide (together with the Hvide Trusts) and the
Investor Group, respectively, have granted a right of first refusal for each to
purchase the other's stock in certain circumstances.
Share Adjustment. The Investor Group has agreed that, if following the
issuance of the CSIs (as defined below), the aggregate votes held by the
Investor Group by virtue of its ownership of Class A and Class B Common Stock
would exceed the votes held by the Hvide Family by virtue of its ownership of
Class A and Class B Common Stock, the Investor Group will convert sufficient
Class B Common Stock to Class A Common Stock to allow the Hvide Family to
maintain a one vote majority over the Investor Group.
CONTINGENT SHARE ISSUANCE AGREEMENT
Also in connection with the issuance of the Junior Notes, the Company and
the Investor Group entered into a Contingent Share Issuance Agreement. The
agreement, as to be amended pursuant to the Recapitalization Agreement (the "CSI
Agreement"), provides for the issuance of additional shares of Class A Common
Stock to the purchasers of the Junior Notes to the extent necessary for such
purchasers to earn a specified All-in Return (as defined by the CSI Agreement)
on their investment. Mr. Hvide and the Hvide Trusts agreed in the Shareholders
Agreement to contribute to the Company a
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number of shares of Class B Common Stock equal to the number of shares of Common
Stock issued by the Company pursuant to the CSI Agreement.
Pursuant to the CSI Agreement, the Company issued to the purchasers of the
Junior Notes two series of Common Stock Contingent Share Issuances ("CSIs") that
are convertible into shares of Class A Common Stock on , 1997 (300
days following completion of the Offering). The number of shares of such stock
issuable with respect to the first series of CSIs is the lesser of (i) that
number necessary to cause the All-in Return (as defined below) to equal 60% and
(ii) a number of shares equal to 9.375% of the outstanding shares of the
Company's Common Stock on a fully-diluted basis, without giving effect to the
offering or the CSI issuance. The number of shares issuable with respect to the
second series of CSIs is equal to the lesser of (i) that number necessary to
cause the All-in Return to equal 35% and (ii) a number of shares equal to 12.5%
of the outstanding shares of the Company's Common Stock on a fully-diluted
basis, without giving effect to the Offering or the CSI issuance. The value of
the shares of Class A Common Stock issuable upon conversion of the CSIs is based
upon the average market price of the Class A Common Stock during the 30 trading
days preceding , 1997 (the "Valuation Period"). "All-in Return" is
defined as the annual rate of return earned by the purchasers of the Junior
Notes with respect to their aggregate investment in the Junior Notes, the shares
of Common Stock issued to them in connection with their purchase of the Junior
Notes, and the shares of Common Stock issued to them upon conversion of the
CSIs.
While it is not possible to predict the future market value of the Company's
Common Stock, assuming, for illustrative purposes only, that the average market
price of the Class A Common Stock during the Valuation Period is equal to the
initial public offering price of the shares offered hereby, an aggregate of
554,496 shares of Class A Common Stock (based upon an assumed offering price of
$13.00 per share) will be issuable upon conversion of the CSIs, which would
increase the Investor Group's ownership from 17.6% to 22.7% of the outstanding
shares of Common Stock and would reduce Mr. Hvide's ownership from 16.4% to
11.2% of the outstanding shares. A higher average market price during the
Valuation Period will reduce the number of shares issuable upon conversion of
the CSIs and the corresponding number of shares required to be contributed to
the Company by Mr. Hvide, and a lower market price during the Valuation Period
will increase such numbers of shares. The Investor Group has agreed, however,
that if following the issuance of the CSIs, the aggregate votes held by the
Investor Group would exceed the votes held by the Hvide Family, the Investor
Group will convert sufficient Class B Common Stock to Class A Common Stock to
allow the Hvide Family to maintain a one-vote majority over the Investor Group.
See "--Shareholders Agreement--Share Adjustment."
REGISTRATION RIGHTS AGREEMENT
In connection with the Recapitalization Agreement the Company and the
Investor Group will enter into a registration rights agreement (the
"Registration Rights Agreement"). Under the Registration Rights Agreement, the
Investor Group has the right to demand that its shares of Common Stock be
registered for sale pursuant to the requirements of the Securities Act, up to
three times, subject to certain deferral rights of the Company. Each of the
members of the Investor Group has the right to request that its shares be
included in any registered underwritten public offering of the Company's Common
Stock, subject to certain cutbacks.
TRANSFER AGENT
The transfer agent and registrar for the Common Stock is ChaseMellon
Shareholder Services, LLC, New York, New York.
SHARES ELIGIBLE FOR FUTURE SALE
Upon completion of the Offering, 7,452,413 shares of Class A Common Stock
and 3,316,817 shares of Class B Common Stock will be outstanding, of which the
7,000,000 shares of Class A Common Stock offered hereby (assuming the
Underwriters' over-allotment option is not exercised) will be transferable
without restriction under the Securities Act, except for shares acquired by
"affiliates" of
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the Company (as defined in Rule 144 under the Securities Act ("Rule 144")). Of
the 3,769,230 shares beneficially owned by the Company's existing stockholders,
all may become eligible for resale at various times under Rule 144 or otherwise.
In general, under Rule 144, a person (or persons whose shares are
aggregated) (i) who is not an "affiliate," as that term is defined below, and
whose shares have been outstanding and not owned by an "affiliate" for at least
two years, or (ii) who is an "affiliate" and has beneficially owned his or its
shares for a period of at least two years, is entitled to sell, within any
90-day period, such number of shares that does not exceed the greater of (i) one
percent (1%) of the then-outstanding shares or (ii) the average weekly trading
volume of the then outstanding shares during the four calendar weeks next
preceding each such sale. Resales under Rule 144 are also subject to certain
notice and manner of sale requirements, and the availability of current public
information about the Company. A person (or persons whose shares are aggregated)
who is not deemed an "affiliate" of the Company at any time during the three
months next preceding a sale by such person (or persons) and who has
beneficially owned shares of Common Stock that were not acquired from the
Company or an "affiliate" of the Company within the previous three years, would
be entitled to sell such shares under Rule 144(k) without regard to volume
limitations, manner of sale provisions, notification requirements, or the
availability of current public information concerning the Company. Affiliates
continue to be subject to the restrictions and requirements of Rule 144. As
defined in Rule 144, an "affiliate" of an issuer is a person that directly, or
indirectly through one or more intermediaries, controls, is controlled by, or is
under common control with, such issuer.
The Company's current stockholders, who beneficially own 452,413 shares of
Class A Common Stock and 3,316,817 shares of Class B Common Stock in the
aggregate (6.1% of the Class A Common Stock and 100% of the outstanding shares
of Class B Common Stock upon completion of the Offering, or 82.5% of the voting
power of the Common Stock, assuming the Underwriters' over-allotment option is
not exercised) have executed lock-up agreements pursuant to which they have
agreed not to demand the registration of, offer, sell, contract to sell, or
otherwise dispose of, directly or indirectly, any of their shares of Common
Stock for a period of 180 days after the date of this Prospectus, without the
prior written consent of the Representatives of the Underwriters. All other
executive officers, directors and employees of the Company who will be granted
options to purchase shares of Class A Common Stock prior to the consummation of
the Offering have also agreed not to offer, sell, contract to sell, or otherwise
dispose of, directly or indirectly, any of their shares of Common Stock for a
period of 180 days after the date of this Prospectus without the prior written
consent of the Representatives of the Underwriters.
The Company will grant registration rights to certain stockholders. See
"Description of Capital Stock--Registration Rights Agreement."
Prior to the Offering, there has been no public market for the Common Stock
and no predictions can be made as to the effect, if any, that future sales of
shares, or the availability of shares for future sale, will have on the market
price prevailing from time to time. Nevertheless, sales of substantial amounts
of such shares in the public market could adversely affect the prevailing market
price of the Common Stock and could impair the Company's future ability to raise
capital through an offering of its equity securities.
As part of its business plan, the Company may, from time to time, issue
shares of Common Stock or Preferred Stock to finance future vessel improvements,
acquisitions, and other transactions. See "Management's Discussion and Analysis
of Financial Condition and Results of Operations--Liquidity and Capital
Resources" and "Business--Strategy."
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UNDERWRITING
Subject to the terms and conditions set forth in the Underwriting Agreement
(the "Underwriting Agreement") among the Company and each of the underwriters
named below (the "Underwriters"), the Company has agreed to sell to each of the
Underwriters, and each of the Underwriters, for whom Donaldson, Lufkin &
Jenrette Securities Corporation and Howard, Weil, Labouisse, Friedrichs
Incorporated are acting as representatives (the "Representatives"), have
severally agreed to purchase from the Company the number of shares of Class A
Common Stock set forth below opposite their respective names. The Underwriters
are committed to purchase all of such shares if any are purchased. Under certain
circumstances, the commitments of non-defaulting Underwriters may be increased
as set forth in the Underwriting Agreement.
NUMBER OF
UNDERWRITERS SHARES
- ---------------------------------------------------------------- ---------
Donaldson, Lufkin & Jenrette Securities Corporation.............
Howard, Weil, Labouisse, Friedrichs Incorporated................
---------
Total....................................................... 7,000,000
---------
---------
The Representatives have advised the Company that the Underwriters propose
to offer the shares of Class A Common Stock to the public initially at the
public offering price set forth on the cover page of this Prospectus and to
certain dealers at such price less a concession not in excess of $ per
share. The Underwriters may allow, and such dealers may re-allow, a discount not
in excess of $ per share on sale to certain other dealers. After the
initial public offering of the Class A Common Stock, the public offering price,
concession, and discount may be changed.
The Company has granted the Underwriters an option, exercisable by the
Representatives, to purchase up to 1,050,000 additional shares of Class A Common
Stock, at the initial public offering price, less the underwriting discount.
Such option, which expires 30 days after the date of this Prospectus, may be
exercised solely to cover over-allotments. To the extent the Representatives
exercise such option, each of the Underwriters will be obligated, subject to
certain conditions, to purchase approximately the same percentage of the option
shares as the number of shares of Class A Common Stock to be purchased initially
by that Underwriter bears to the total number of shares to be purchased
initially by the Underwriters.
The initial public offering price for the Class A Common Stock in the
Offering will be determined by negotiations among the Company and the
Representatives. Among the factors to be considered in determining the initial
public offering price include the history of and the prospects for the industry
in which the Company competes, the past and present operations of the Company
and the historical results of operations of the Company, the prospects for
future earnings of the Company, the general condition of the securities markets
at the time of the Offering, the ability of the Company's management, and the
recent market prices of securities of generally comparable companies. There can
be no assurance that an active trading market will develop for the Class A
Common Stock or that the Class A Common Stock will trade in the public market
subsequent to the Offering at or above the initial public offering price.
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The Company has agreed to indemnify the several Underwriters against certain
liabilities, including liabilities under the Securities Act, or to contribute to
payments the Underwriters may be required to make in respect thereof.
The Class A Common Stock has been approved for listing on the Nasdaq
National Market under the symbol "HMAR."
In accordance with applicable rules of the National Association of
Securities Dealers, Inc. ("NASD"), no NASD member participating in the
distribution is permitted to confirm sales to accounts over which it exercises
discretionary authority without prior written consent, and, accordingly, each
Underwriter intends to abide by such rules.
In connection with the Offering, the Company's officers and directors and
certain of its stockholders have agreed that, during a period of 180 days from
the date of this Prospectus, such holders will not, without the prior written
consent of the Representatives, directly or indirectly, offer, sell, grant any
option with respect to, pledge, hypothecate, or otherwise dispose of, any shares
of Class A Common Stock or Class B Common Stock in a public transaction (or make
public announcement with regard to any such transaction) or demand or request
the registration of any shares of Class A Common Stock or Class B Common Stock
under the Securities Act or otherwise exercise any registration rights with
respect thereto. In addition, the Company has agreed that, during a period of
180 days from the date of this Prospectus, the Company will not, without the
prior written consent of the Representatives, directly or indirectly, offer,
sell, grant any option with respect to, pledge, hypothecate, or otherwise
dispose of any shares of Class A Common Stock or Class B Common Stock except for
(i) shares of Class A Common Stock to be issued in the Offering, and (ii) shares
issued upon the exercise of options to be granted under the various employee and
director benefit plans, as described under "Management."
LEGAL MATTERS
Certain legal matters in connection with the validity of the issuance of the
Common Stock offered hereby are being passed upon for the Company by Dyer Ellis
& Joseph PC, Washington, D.C. Certain legal matters in connection with the
Offering will be passed upon for the Underwriters by Akin, Gump, Strauss, Hauer
& Feld, L.L.P.
EXPERTS
The consolidated financial statements of Hvide Marine Incorporated and
subsidiaries at December 31, 1995 and 1994 and for each of the three years in
the period ended December 31, 1995, and the statements of assets to be sold of
Gulf Boat Marine Services, Inc. and E&D Boat Rentals, Inc. as of September 30,
1994 and 1995, and the related statements of vessel operations for the years
then ended, appearing in this Prospectus and Registration Statement have been
audited by Ernst & Young LLP, independent auditors, as set forth in their
reports thereon, appearing elsewhere herein and in the Registration Statement,
and are included in reliance upon such reports given upon the authority of such
firm as experts in accounting and auditing.
The combined financial statements of OMI Chemical Carrier Group at December
31, 1995 and 1994 and for each of the three years in the period ended December
31, 1995 appearing in this Prospectus and Registration Statement have been
audited by Deloitte & Touche LLP, independent auditors, as stated in their
report appearing herein, and are included in reliance upon the report of such
firm given upon their authority as experts in accounting and auditing.
The financial statements of the Seal Fleet Vessels at December 31, 1995 and
1994 and for each of the three years in the period ended December 31, 1995,
appearing in this Prospectus and Registration
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Statement have been audited by Pannell Kerr Forster of Texas, P.C., independent
certified public accountants, as set forth in their reports thereon appearing
elsewhere herein and in the Registration Statement, and are included in reliance
upon such reports given upon the authority of such firm as experts in accounting
and auditing.
ADDITIONAL INFORMATION
The Company has filed with the Securities and Exchange Commission (the
"Commission") a Registration Statement on Form S-1 (the "Registration
Statement") pursuant to the Securities Act, with respect to the Class A Common
Stock offered hereby. This Prospectus does not contain all the information set
forth in the Registration Statement, certain parts of which are omitted in
accordance with the rules and regulations of the Commission. Statements made in
this Prospectus as to the contents
of any contract, agreement, or other document are summaries of the material
terms of such contract, agreement, or document. With respect to each such
contract, agreement, or other document filed as an exhibit to the Registration
Statement, reference is made to the exhibit for a more complete description of
the matter involved. The Registration Statement (including the exhibits and
schedules thereto) filed with the Commission by the Company may be inspected and
copied at the public reference facilities maintained by the Commission at 450
Fifth Street, N.W., Washington, D.C. 20549, and at the following regional
offices of the Commission: New York Regional Office, Seven World Trade Center,
13th Floor, New York, New York 10048; and Chicago Regional Office, Suite 1400,
500 West Madison Street, Chicago, Illinois 60661. Copies of such material may be
obtained at prescribed rates from the Public Reference Section of the
Commission, 450 Fifth Street, N.W., Washington, D.C. 20549.
The Company is not currently subject to the informational requirements of
the Securities Exchange Act of 1934, as amended (the "Exchange Act"). As a
result of the offering of the Company's Class A Common Stock, the Company will
become subject to the informational requirements of the Exchange Act. The
Company will fulfill its obligations with respect to such requirements by filing
periodic reports with the Commission.
The Company intends to furnish holders of the Class A Common Stock offered
hereby with annual reports containing consolidated financial statements audited
by an independent public accounting firm and may provide quarterly reports
containing unaudited financial information for the first three quarters of each
fiscal year.
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INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
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<S> <C>
PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited):
Pro Forma Condensed Consolidated Balance Sheet
As of March 31, 1996 (unaudited)................................................... F-3
Pro Forma Condensed Consolidated Statement of Operations
for the three months ended March 31, 1996 (unaudited).............................. F-4
Pro Forma Condensed Consolidated Statement of Operations
for the year ended December 31, 1995 (unaudited)................................... F-9
HVIDE MARINE INCORPORATED AND SUBSIDIARIES:
Report of Independent Certified Public Accountants................................... F-12
Consolidated Balance Sheets as of December 31, 1994 and 1995 and March 31, 1996
(unaudited)........................................................................ F-13
Consolidated Statements of Operations for the Three Years Ended December 31, 1995 and
for the three months ended March 31, 1995 and 1996 (unaudited)..................... F-14
Consolidated Statements of Stockholders' Equity for the Three Years Ended
December 31, 1995 and for the three months ended March 31, 1996 (unaudited)........ F-15
Consolidated Statements of Cash Flows for the Three Years Ended December 31, 1995 and
for the three months ended March 31, 1995 and 1996 (unaudited)..................... F-16
Notes to Consolidated Financial Statements........................................... F-17
OMI CHEMICAL CARRIER GROUP:
Independent Auditors' Report......................................................... F-32
Combined Balance Sheets as of December 31, 1994 and 1995 and March 31, 1996
(unaudited)........................................................................ F-33
Combined Statements of Operations and Deficit for the Three Years Ended
December 31, 1995 and for the three months ended March 31, 1995 and 1996
(unaudited)........................................................................ F-34
Combined Statements of Cash Flows for the Three Years Ended December 31, 1995 and for
the three months ended March 31, 1995 and 1996 (unaudited)......................... F-35
Notes to Combined Financial Statements............................................... F-36
SEAL FLEET VESSELS:
Independent Auditors' Report......................................................... F-41
Combined Statements of Vessel Operations for the Three Years Ended
December 31, 1995 and for the three months ended March 31, 1995 and 1996
(unaudited)........................................................................ F-42
Notes to Combined Financial Statements............................................... F-43
Independent Auditors' Report......................................................... F-45
Statements of Assets to be Sold as of December 31, 1993, 1994, and 1995 and March 31,
1996 (unaudited)................................................................... F-46
Statements of Vessel Operations for the Three Years Ended December 31, 1995 and for
the three months ended March 31, 1995 and 1996 (unaudited)......................... F-47
Notes to Financial Statements........................................................ F-48
GULF BOAT MARINE SERVICES, INC. AND E&D BOAT RENTALS, INC.:
Report of Independent Certified Public Accountants................................... F-49
Statement of Assets to be Sold as of September 30, 1994 and 1995 and December 31,
1995 (unaudited)................................................................... F-50
Statements of Vessel Operations for the Two Years Ended September 30, 1995 and for
the three months ended December 31, 1994 and 1995 (unaudited)...................... F-51
Notes to Financial Statements........................................................ F-52
</TABLE>
F-1
<PAGE>
PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
The following pro forma condensed consolidated balance sheet at March 31,
1996 gives effect to the pending acquisitions of the OMI Chemical Carriers, the
Seal Fleet Vessels and two additional vessels, the Offering, repayment of
certain indebtedness and the conversion of the Junior Notes into shares of
Common Stock as if the transactions had occurred on March 31, 1996. The pro
forma condensed consolidated statements of operations for the year ended
December 31, 1995 and the three months ended March 31, 1996 give effect to the
foregoing, except for the pending acquisitions of four additional vessels and
the acquisition of certain vessels from GBMS in January 1996 and one vessel in
February 1996, as if the transactions had occurred on January 1, 1995 and 1996,
respectively. The pro forma financial information is presented for illustrative
purposes only and does not purport to project the financial position or results
of operations for any future period or as of any future date. The pro forma
condensed consolidated financial statements should be read in conjunction with
the notes thereto and with the financial statements and the notes thereto of the
Company, the OMI Chemical Carriers, the Seal Fleet Vessels, and the GBMS Vessels
and "Management's Discussion and Analysis of Financial Condition and Results of
Operations," all appearing elsewhere in this Prospectus. See "Business--The
Acquisitions," "Use of Proceeds," and "Capitalization."
F-2
<PAGE>
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
MARCH 31, 1996
(UNAUDITED)
PRO FORMA ADJUSTMENTS FOR THE ACQUISITIONS
OF (1)
------------------------------------------ COMPANY PRO
COMPANY OMI OTHER PRO FORMA FORMA
AS CHEMICAL SEAL ACQUISITIONS ADJUSTMENTS OFFERING CONDENSED
REPORTED CARRIERS FLEET OSTC (1) (1) (2) CONSOLIDATED
-------- -------- ------- ------ ------------ ----------- -------- ------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
ASSETS
Cash and cash equivalents.... $ 6,013 $ $ $2,234 $ $ (37,725) $ 35,925 $ 6,447
Accounts receivable, net..... 14,065 1,639 15,704
Spare parts and supplies..... 3,573 1,803 49 148 5,573
Prepaid expenses and other... 3,578 40 3,618
-------- -------- ------- ------ ----- ----------- -------- ------------
Total Current Assets........ 27,229 1,803 49 4,061 (37,725) 35,925 31,342
Property, net................ 110,742 59,702 25,190 385 9,025 205,044
Goodwill, net................ 8,991 8,991
Deferred costs, net.......... 4,791 3,145 936 11 (1,135) 7,748
Investment in affiliates..... 840 840
Other........................ 1,427 (883) 544
-------- -------- ------- ------ ----- ----------- -------- ------------
Total Assets................ $154,020 $64,650 $26,175 $4,457 $9,025 $ (37,725) $ 33,907 $254,509
-------- -------- ------- ------ ----- ----------- -------- ------------
-------- -------- ------- ------ ----- ----------- -------- ------------
LIABILITIES AND STOCKHOLDERS'
EQUITY
Current maturities of debt... $ 12,292 $ 4,815 $ $1,627 $ $ 3,623 $ (3,388) $ 18,969
Accounts Payable............. 7,526 393 7,919
Other........................ 6,963 16 2,437 (1,499) 7,917
-------- -------- ------- ------ ----- ----------- -------- ------------
Total Current Liabilities... 26,781 4,815 16 4,457 3,623 (4,887) 34,805
Long-term debt............... 103,486 29,835 23,752 (44,770) 112,303
Long-term interest payable... 3,157 (3,157)
Deferred income taxes........ 4,351 (1,874) 2,477
Other Liabilities............ 2,447 84 99 2,630
-------- -------- ------- ------ ----- ----------- -------- ------------
Total Liabilities........... 140,222 34,650 100 4,457 27,375 (54,589) 152,215
-------- -------- ------- ------ ----- ----------- -------- ------------
Investment in acquisitions... 30,000 26,075 9,025 (65,100)
Minority partners' equity.... 1,488 1,488
Common stock, paid-in
capital, retained earnings
and treasury stock.......... 12,310 88,496 100,806
-------- -------- ------- ------ ----- ----------- -------- ------------
Total stockholders' equity... 12,310 88,496 100,806
-------- -------- ------- ------ ----- ----------- -------- ------------
Total stockholders' and
minority partners' equity... 13,798 88,496 102,294
-------- -------- ------- ------ ----- ----------- -------- ------------
Total liabilities and
equity...................... $154,020 $64,650 $26,175 $4,457 $9,025 $ (37,725) $ 33,907 $254,509
-------- -------- ------- ------ ----- ----------- -------- ------------
-------- -------- ------- ------ ----- ----------- -------- ------------
</TABLE>
See notes to the pro forma condensed consolidated financial statements.
F-3
<PAGE>
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1996
(UNAUDITED)
<TABLE>
<CAPTION>
OMI
COMPANY AS CHEMICAL SEAL ROYAL PRO FORMA
REPORTED CARRIERS FLEET(A) GBMS(B) RUNNER(B) OSTC ELIMINATIONS ADJUSTMENTS
---------- -------- -------- ------- --------- ------- ------------ -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
(DOLLARS IN THOUSANDS)
Revenues............. $ 20,211 $6,307 $ 2,355 $ 296 $57 $13,775 $(10,669)(3) $
Operating expenses... 12,216 4,842 1,071 174 29 12,977 (10,669)(3) (830)(4)
Overhead expenses.... 3,613 209 44 279 36(4)
Depreciation and
amortization......... 1,677 1,062 98 14 46 378(5)
--
---------- -------- -------- ------- ------- ------------ -----------
Income (loss) from
operations........... 2,705 194 1,186 64 28 473 416
Net interest......... 2,882 652 11 (854)(6)
Other income
(expense):
Minority interest
and equity in
subsidiaries...... 154
Other............... 23
--
---------- -------- -------- ------- ------- ------------ -----------
Total other income
(expense)......... 177
--
---------- -------- -------- ------- ------- ------------ -----------
Income before income
taxes.............. 0 (458) 1,186 64 28 462 1,270
Provision (benefit)
for income taxes.... 35 (160) 8 1,036(7)
--
---------- -------- -------- ------- ------- ------------ -----------
Net income (loss)
before non-recurring
items directly
attributable to the
transaction......... $ (35) $ (298) $ 1,186 $ 64 $28 $ 454 $ $ 234
--
--
---------- -------- -------- ------- ------- ------------ -----------
---------- -------- -------- ------- ------- ------------ -----------
Earnings (loss) per
common share........ $ (0.01)
----------
----------
Weighted average
number of common
shares and common
share equivalents
outstanding......... 2,534,840
----------
----------
<CAPTION>
COMPANY
PRO FORMA
CONDENSED
CONSOLIDATED
------------
<S> <C>
Revenues............. $ 32,332
Operating expenses... 19,810
Overhead expenses.... 4,181
Depreciation and
amortization......... 3,275
------------
Income (loss) from
operations........... 5,066
Net interest......... 2,691
Other income
(expense):
Minority interest
and equity in
subsidiaries...... 154
Other............... 23
------------
Total other income
(expense)......... 177
------------
Income before income
taxes............... 2,552
Provision (benefit)
for income taxes.... 919
------------
Net income (loss)
before non-recurring
items directly
attributable to the
transaction......... $ 1,633
------------
------------
Earnings (loss) per
common share........ $ 0.15
------------
------------
Weighted average
number of common
shares and common
share equivalents
outstanding......... 10,769,230
------------
------------
</TABLE>
- ------------
<TABLE>
<C> <S>
(a) Represents the combined statements of vessel operations of assets to be sold for Seal Fleet, Inc.
and the Seal Partners, (Indian Seal Partners, Ltd., Baffin Seal Partners, Ltd., Baltic Seal
Partners, Ltd., Bengal Seal Partners, Ltd., and Ross Seal Partners, Ltd.)
</TABLE>
<TABLE>
<CAPTION>
MARCH 31, 1996
---------------------------------
SEAL SEAL SEAL
FLEET, INC. PARTNERS FLEET
----------- -------- ------
<S> <C> <C> <C>
Revenues........................................................ $ 841 $1,514 $2,355
Operating expenses.............................................. 418 653 1,071
Depreciation and amortization................................... 98 98
--- -------- ------
Income (loss) from operations................................... $ 325 $ 861 $1,186
--- -------- ------
--- -------- ------
</TABLE>
<TABLE>
<C> <S>
(b) Amounts represent the results of operations for the period January 1, 1996 through the date of
acquisition of January 31, 1996 for GBMS and February 9, 1996 for Royal Runner.
</TABLE>
See notes to the pro forma condensed consolidated financial statement.
F-4
<PAGE>
NOTES TO PRO FORMA CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(1) The Company expects the purchase price of the acquisitions to be allocated
to acquired assets and liabilities as follows:
<TABLE>
<CAPTION>
MARCH 31, 1996
----------------------------------------------------------
OTHER
OMI ACQUISITIONS
CHEMICAL SEAL ----------------------------
CARRIERS FLEET OSTC CAROL ST. FRANCIS IMI TOTAL
-------- ------- ------ ----- ----------- ------ --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
Cash and cash equivalents...... $ $ $2,234 $ $ $ $ 2,234
Accounts receivable............ 1,639 1,639
Prepaid expenses and other..... 40 40
Property, net.................. 59,702 25,190 385 825 2,200 6,000 94,302
Spare parts and supplies....... 1,803 49 148 2,000
Deferred costs (net)(a)........ 3,145 936 11 4,092
-------- ------- ------ ----- ----------- ------ --------
$ 64,650 $26,175 $4,457 $ 825 $ 2,200 $6,000 $104,307
-------- ------- ------ ----- ----------- ------ --------
-------- ------- ------ ----- ----------- ------ --------
Current maturities of debt..... $ 4,815 $ $1,627 $ $ $ $ 6,442
Accounts payable............... 393 393
Other current liabilities...... 16 2,437 2,453
Other long-term liabilities.... 84 84
Assumption of long-term debt... 29,835 29,835
Payment of cash................ 15,500 18,075 150 2,200 1,800 37,725
Issuance of debt:
Current........................ 2,554 959 110 3,623
Long-term...................... 11,946 7,041 565 4,200 23,752
-------- ------- ------ ----- ----------- ------ --------
Investment in Acquisitions..... 30,000 26,075 825 2,200 6,000 65,100
-------- ------- ------ ----- ----------- ------ --------
$ 64,650 $26,175 $4,457 $ 825 $ 2,200 $6,000 $104,307
-------- ------- ------ ----- ----------- ------ --------
-------- ------- ------ ----- ----------- ------ --------
</TABLE>
--------------------------
<TABLE>
<C> <S>
(a) Primarily represents an allocation of the purchase price to reflect deferred
drydocking costs in accordance with the Company's policies.
</TABLE>
F-5
<PAGE>
NOTES TO PRO FORMA CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(UNAUDITED)
(2) Adjustments to reflect transactions that are expected to use certain of the
proceeds of the Offering, or occur in conjunction with the Offering, as
follows:
<TABLE>
<CAPTION>
OFFERING
OF REPAYMENT
COMMON OF
STOCK LOANS TOTAL
-------- --------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Cash.................................................... $ 82,880 $(46,955 ) $ 35,925
Deferred costs (net).................................... (1,135 )(b) (1,135)
Other assets............................................ (883 )(c) (883)
-------- --------- --------
$ 82,880 $(48,973 ) $ 33,907
-------- --------- --------
-------- --------- --------
Income taxes............................................ $ $ (1,874 ) $ (1,874)
Current maturities of debt.............................. (3,388 ) (3,388)
Other current liabilities............................... (1,499 ) (1,499)
Long-term debt.......................................... (44,770 ) (44,770)
Long-term interest payable.............................. (3,157 ) (3,157)
Other long-term liabilities............................. 99 99
Common stock............................................ 82,880(a) 13,350 (d) 96,230
Retained earnings....................................... (7,734 )(e) (7,734)
-------- --------- --------
$ 82,880 $(48,973 ) $ 33,907
-------- --------- --------
-------- --------- --------
</TABLE>
--------------------------
<TABLE>
<C> <S>
(a) Common stock issued in conjunction with the Offering, less expenses as follows:
</TABLE>
Common stock......................................................... $91,000
Less: Underwriter's discount of 7%................................. (6,370)
Cash portion of investment advisory fee...................... (478)
Legal, accounting, and other costs........................... (1,272)
--------
$82,880
--------
--------
<TABLE>
<C> <S>
(b) Represents the write off of deferred loan costs $(1,260) on the Junior and Senior
Notes to be repaid from the proceeds of the Offering, net of financing costs incurred
on new financing obtained upon the effective date of the Offering ($125).
(c) Represents the reduction of a long-term receivable due from a company owned by the
former Chairman of the Board of the Company in exchange for the reduction of the
principal portion of notes payable to the current and former chairman.
(d) Common stock issued in conjunction with the conversion of Junior Notes and certain
related party notes.
(e) Extraordinary loss on extinguishment of Junior and Senior Notes and certain related
party notes, net of income taxes:
Write-off of deferred loan costs on Junior and Senior Notes................ $(1,260)
Loss on early extinguishment of Junior Notes............................... (7,340)
Loss on early extinguishment of Senior Notes............................... (1,008)
Less applicable income taxes at statutory rate............................. 1,874
-------
$(7,734)
-------
-------
</TABLE>
F-6
<PAGE>
NOTES TO PRO FORMA CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(UNAUDITED)
(3) Elimination of historical revenue and expense associated with OSTC charter
hire of vessels from Hvide and OMI............................... $10,669
=======
(4) Reflects the reduction in insurance expense based upon quotations received
from the Company's insurance underwriters; adjustments to drydocking expense
to reflect the Company's deferral method; elimination of operating lease
expense on acquired OMI vessels that will be financed by Hvide; and
adjustments to reflect incremental corporate overhead and employee salaries
and benefits in accordance with management's plans with respect to the Seal
Fleet Vessels and reduction of historical overhead expenses related to the
integration of the OMI Chemical Carriers and GBMS vessels into the Company's
operations.
<TABLE>
<CAPTION>
OMI
CHEMICAL SEAL
CARRIERS FLEET GBMS TOTAL
-------- ----- ---- -----
<S> <C> <C> <C> <C>
Operating Expenses:
Insurance.............................................. $ (89) $ 9 $(2 ) $ (82)
Drydocking............................................. 7 7
Operating lease expense................................ (755) (755)
-------- ----- ---- -----
$ (837) $ 9 $(2 ) $(830)
-------- ----- ---- -----
-------- ----- ---- -----
Overhead Expenses:
Salaries and benefits.................................. $ 62 $ 112 $(19) $ 155
Other.................................................. (133) 31 (17 ) (119)
-------- ----- ---- -----
$ (71) $ 143 $(36) $ 36
-------- ----- ---- -----
-------- ----- ---- -----
</TABLE>
(5) The adjustment to depreciation and amortization is comprised of:
<TABLE>
<CAPTION>
<S> <C>
Depreciation adjustment to reflect the Company's policies applied to the acquired
cost of the vessels of:
OMI.............................................................................. $104
Seal Fleet....................................................................... 269
GBMS (acquired January 31, 1996)................................................. 4
Royal Runner (acquired February 9, 1996)......................................... 6
----
383
Amortization Adjustment:
Deferred loan costs amortizations-Junior Notes................................. (10)
Deferred loan costs amortizations-Senior Notes................................. (15)
New money fee for the Seal Fleet acquisition................................... 4
Commitment fee................................................................. 10
Revolver fee................................................................... 6
----
(5)
----
$378
----
----
</TABLE>
F-7
<PAGE>
NOTES TO PRO FORMA CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(UNAUDITED)
(6) The adjustment of net interest expense is comprised of:
<TABLE>
<CAPTION>
<S> <C>
Interest expense on additional borrowings pursuant to the OMI acquisition..... $ 159
Interest expense on assumed Title XI debt from OMI............................ 85
Interest expense on OMI Star debt............................................. 141
Interest expense on additional borrowings pursuant to the Seal Fleet
acquisition.................................................................. 165
Interest expense on additional borrowings pursuant to the GBMS acquisition.... 23
Interest expense on Royal Runner debt......................................... 11
Reduction of interest expense due to the repayment of Junior Notes............ (578)
Reduction of interest expense due to the repayment of Senior Notes............ (636)
Reduction of interest expense due to the repayment of Credit Facility......... (92)
Reduction of interest expense due to the repayment of other subordinated
notes........................................................................ (166)
Commitment fee on acquisition line of credit.................................. 34
-----
$(854)
-----
-----
</TABLE>
<TABLE>
<S> <C> <C>
(7) Adjustment for estimated income taxes at combined federal and state statutory
rates for the effect of the pro forma adjustments.............................. $1,036
</TABLE>
F-8
<PAGE>
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1995
(UNAUDITED)
<TABLE>
<CAPTION>
DECEMBER 31, 1995
--------------------------------------------------------------------------------
OMI
COMPANY AS CHEMICAL SEAL ROYAL PRO FORMA
REPORTED CARRIERS FLEET (A) GBMS RUNNER OSTC ELIMINATIONS ADJUSTMENTS
---------- -------- --------- ------ ------ ------- ------------ -----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Revenues.................... $ 70,562 $ 26,099 $ 8,650 $3,287 $651 $57,577 $(43,841)(1) $
Operating expenses.......... 40,664 29,141 4,500 2,209 243 56,064 (43,841)(1) (12,669)(2)
Overhead expenses........... 12,518 848 469 74 1,205 (95)(2)
Depreciation and
amortization................ 6,308 3,355 498 195 145 166 2,019(3)
---------- -------- --------- ------ ------ ------- ------------ -----------
Income (loss) from
operations.................. 11,072 (7,245) 3,652 414 189 142 10,745
Net interest................ 11,460 2,160 95 68 (2,252)(4)
Other income (expense):
Minority interest and
equity in subsidiaries... 137
Other...................... (111) 167 (3)
---------- -------- --------- ------ ------ ------- ------------ -----------
Total other income
(expense)................. 26 167 (3)
---------- -------- --------- ------ ------ ------- ------------ -----------
Income before income
taxes..................... (362) (9,238) 3,652 414 94 71 12,997
Provision (benefit) for
income taxes.............. (2) (3,234) 21 5,961(5)
---------- -------- --------- ------ ------ ------- ------------ -----------
Net income (loss) from
continuing operations
before non-recurring items
directly attributable to
the transaction............ $ (360) $ (6,004) $ 3,652 $ 414 $ 94 $ 50 $ $ 7,036
---------- -------- --------- ------ ------ ------- ------------ -----------
---------- -------- --------- ------ ------ ------- ------------ -----------
Earnings (loss) per common
share..................... $ (0.14)
----------
----------
Weighted average number of
common shares and common
share equivalents
outstanding............... 2,534,840
----------
----------
<CAPTION>
COMPANY
PRO FORMA
CONDENSED
CONSOLIDATED
------------
<S> <C><C>
Revenues.................... $ 122,985
Operating expenses.......... 76,311
Overhead expenses........... 15,019
Depreciation and
amortization................ 12,686
------------
Income (loss) from
operations.................. 18,969
Net interest................ 11,531
Other income (expense):
Minority interest and
equity in subsidiaries... 137
Other...................... 53
------------
Total other income
(expense)................. 190
------------
Income before income
taxes..................... 7,628
Provision (benefit) for
income taxes................ 2,746
------------
Net income (loss) from
continuing operations
before non-recurring items
directly attributable to
the transaction............ $ 4,882
------------
------------
Earnings (loss) per common
share...................... $ 0.45
------------
------------
Weighted average number of
common shares and common
share equivalents
outstanding............... 10,769,230
------------
------------
</TABLE>
- ------------
<TABLE>
<C> <S>
(a) Represents the combined statements of vessel operations of assets to be sold for Seal
Fleet, Inc. and the Seal Partners, (Indian Seal Partners, Ltd., Baffin Seal Partners,
Ltd., Baltic Seal Partners, Ltd., Bengal Seal Partners, Ltd., and Ross Seal Partners,
Ltd.).
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31, 1995
---------------------------------
<S> <C> <C> <C>
SEAL SEAL SEAL
FLEET, INC. PARTNERS FLEET
----------- -------- ------
Revenues............................................... $ 3,267 $5,383 $8,650
Operating expenses..................................... 1,723 2,777 4,500
Depreciation and amortization.......................... 498 498
----- -------- ------
Income (loss) from operations.......................... $ 1,046 $2,606 $3,652
----- -------- ------
----- -------- ------
</TABLE>
See notes to the pro forma condensed consolidated financial statements.
F-9
<PAGE>
NOTES TO PRO FORMA CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(1) Elimination of historical revenue and expense associated with OSTC charter
hire of
vessels from Hvide and OMI..................................................
$43,841
(2) Reflects the reduction in insurance expense based upon quotations received
from the Company's insurance underwriters; adjustment to drydocking expense
to reflect the Company's deferral method; elimination of operating lease
expense on acquired OMI vessels that will be owned or capital leased by
Hvide; elimination of a provision for lease penalties on an OMI vessel that
will not be incurred due to the purchase of the vessels; and adjustments to
reflect incremental corporate overhead and employee salaries and benefits in
accordance with management's plans with respect to the OMI Chemical Carriers
and Seal Fleet Vessels and reduction of historical overhead expenses related
to the integration of the GBMS vessels into the Company's operations.
<TABLE>
<CAPTION>
OMI
CHEMICAL SEAL
CARRIERS FLEET GBMS TOTAL
-------- ----- ----- --------
<S> <C> <C> <C> <C>
Operating Expenses:
Insurance......................................... $ (598) $ 8 $ (80) $ (670)
Drydocking........................................ (1,145) (1,145)
Operating lease expense........................... (7,557) (7,557)
Provision for lease penalties..................... (3,297) (3,297)
-------- ----- ----- --------
$(12,597) $ 8 $ (80) $(12,669)
-------- ----- ----- --------
-------- ----- ----- --------
Overhead Expenses:
Salaries and benefits............................. $ 247 $ 447 $(245) $ 449
Other............................................. (544) 124 (124) (544)
-------- ----- ----- --------
$ (297) $ 571 $(369) $ (95)
-------- ----- ----- --------
-------- ----- ----- --------
</TABLE>
(3) The adjustment to depreciation and amortization is comprised of:
<TABLE>
<CAPTION>
<S> <C>
Depreciation adjustment to reflect the Company's policies applied to the
acquired cost of the vessels of:
OMI(a)......................................................................... $1,094
Seal Fleet..................................................................... 1,009
GBMS........................................................................... 23
Royal Runner................................................................... (70)
------
2,056
Amortization Adjustment:
Deferred loan costs amortization--Junior Notes............................... (32)
Deferred loan costs amortization--Senior Notes............................... (96)
New money fee for the Seal Fleet acquisition................................. 17
Commitment fee............................................................... 48
Revolver fee................................................................. 26
------
(37)
------
$2,019
------
------
</TABLE>
--------------------------
<TABLE>
<C> <S>
(a) Includes depreciation on an OMI vessel historically under an operating lease.
</TABLE>
F-10
<PAGE>
NOTES TO PRO FORMA CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(UNAUDITED)
(4) The adjustment of net interest expense is comprised of:
<TABLE>
<CAPTION>
<S> <C>
Interest expense on additional borrowings pursuant to the OMI acquisition.... $ 634
Removal of historical interest income of OMI................................. 1
Interest expense on assumed Title XI debt from OMI(a)........................ 1,003
Interest expense on OMI Star capital lease................................... 520
Interest expense on debt issued pursuant to the Seal Fleet acquisition....... 638
Interest expense on debt issued pursuant to the GBMS acquisition............. 269
Removal of historical interest expense of Royal Runner....................... (95)
Interest expense on Royal Runner debt........................................ 131
Reduction of interest expense due to the repayment of Junior Notes........... (2,199)
Reduction of interest expense due to the repayment of Senior Notes........... (2,556)
Reduction of interest expense due to the repayment of Credit Facility........ (63)
Reduction of interest expense due to the repayment of other subordinated
notes....................................................................... (665)
Commitment fee on acquisition line of credit................................. 130
-------
$(2,252)
-------
-------
</TABLE>
--------------------------
<TABLE>
<C> <S>
(a) Reflects a full year of interest expense on Title XI debt that was outstanding for a
partial year for OMI.
</TABLE>
<TABLE>
<S> <C> <C>
(5) Adjustment for estimated income taxes at combined federal and state statutory
rates for the effect of the pro forma adjustments.............................. $5,961
</TABLE>
F-11
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Board of Directors
HVIDE MARINE INCORPORATED
We have audited the accompanying consolidated balance sheets of Hvide Marine
Incorporated (f/k/a Hvide Corp.) and subsidiaries as of December 31, 1995 and
1994, and the related consolidated statements of operations, stockholders'
equity and cash flows for each of the three years in the period ended December
31, 1995. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Hvide Marine
Incorporated and subsidiaries at December 31, 1995 and 1994, and the
consolidated results of their operations and their cash flows for each of the
three years in the period ended December 31, 1995, in conformity with generally
accepted accounting principles.
As explained in Note 1 to the consolidated financial statements, effective
January 1, 1993, the Company changed its method of accounting for drydocking
costs from the accrual method to the deferral method.
ERNST & YOUNG LLP
Miami, Florida
March 28, 1996, except the
first paragraph of Note
14, as to which the date is
May 10, 1996.
F-12
<PAGE>
HVIDE MARINE INCORPORATED AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31 MARCH 31
1994 1995 1996
(UNAUDITED)
(IN THOUSANDS,)EXCEPT SHARE AMOUNTS
<S> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents...................................... $ 6,363 $ 3,050 $ 6,013
Escrow deposit................................................. 500 -- --
Accounts receivable:
Trade, net................................................... 7,862 9,602 10,048
Insurance claims and other................................... 1,292 4,399 4,017
Due from affiliate............................................. 547 101 --
Spare parts and supplies....................................... 3,375 3,417 3,573
Prepaid expenses............................................... 784 960 1,115
Deferred costs (net)........................................... 1,523 2,550 2,463
-------- -------- -----------
Total current assets....................................... 22,246 24,079 27,229
Property:
Construction in progress....................................... 1,646 1,387 1,480
Vessels and improvements....................................... 110,542 122,198 129,518
Less accumulated depreciation................................ (16,040) (20,585) (21,832)
Furniture and equipment........................................ 2,054 2,601 2,633
Less accumulated depreciation................................ (827) (998) (1,057)
-------- -------- -----------
Net property............................................... 97,375 104,603 110,742
Other assets:
Deferred costs (net)........................................... 4,422 4,112 4,791
Due from affiliates............................................ 109 131 150
Investment in affiliates....................................... 574 423 840
Goodwill (net)................................................. 9,586 9,117 8,991
Long-term receivable (net)..................................... 785 831 883
Other.......................................................... 374 387 394
-------- -------- -----------
Total other assets......................................... 15,850 15,001 16,049
-------- -------- -----------
Total..................................................... $135,471 $143,683 $ 154,020
-------- -------- -----------
-------- -------- -----------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current maturities of long-term debt........................... $ 4,779 $ 7,708 $ 11,110
Current obligations under capital leases....................... 521 577 1,182
Accounts payable............................................... 4,681 4,905 7,526
Charter hire and other liabilities............................. 4,472 6,574 6,963
-------- -------- -----------
Total current liabilities.................................. 14,453 19,764 26,781
Long-term liabilities:
Long-term debt................................................. 93,700 96,014 94,119
Notes payable to related parties............................... 1,302 1,302 1,302
Obligations under capital leases............................... 3,979 3,450 8,065
Due to charterer............................................... 547 547 547
Deferred income taxes.......................................... 4,319 4,317 4,352
Other.......................................................... 2,268 4,290 5,056
-------- -------- -----------
Total long-term liabilities................................ 106,115 109,920 113,441
-------- -------- -----------
Total liabilities.......................................... 120,568 129,684 140,222
Minority partners' equity in subsidiaries....................... 2,198 1,654 1,488
Commitments and contingencies
Stockholders' equity:
Preferred Stock, $1.00 par value--10,000,000 shares authorized,
no shares issued and outstanding............................. -- -- --
Class A Common Stock--$.001 par value, 100,000,000 shares
authorized, no shares issued and outstanding................. -- -- --
Class B Common Stock--$.001 par value, 5,000,000 shares
authorized, 1,558,210 shares issued and outstanding.......... 1 1 1
Class C Common Stock--$.001 par value, 2,500,000 shares
authorized, 976,630 shares issued and outstanding............ 1 1 1
Additional paid-in capital..................................... 6,341 6,341 6,341
Retained earnings.............................................. 6,362 6,002 5,967
-------- -------- -----------
Total stockholders' equity................................. 12,705 12,345 12,310
-------- -------- -----------
Total minority partners' equity in subsidiaries and
stockholders' equity..................................... 14,903 13,999 13,798
-------- -------- -----------
Total..................................................... $135,471 $143,683 $ 154,020
-------- -------- -----------
-------- -------- -----------
</TABLE>
See notes to consolidated financial statements.
F-13
<PAGE>
HVIDE MARINE INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEAR ENDED DECEMBER 31 MARCH 31
1993 1994 1995 1995 1996
(UNAUDITED)
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
Revenues................................ $ 41,527 $ 49,792 $ 70,562 $ 15,780 $ 20,211
Operating expenses:
Crew payroll and benefits.............. 11,238 13,510 20,132 4,549 5,963
Charter hire and bond guarantee fee.... 4,037 5,013 4,063 1,076 1,086
Repairs and maintenance................ 3,024 3,847 5,347 1,375 1,734
Insurance.............................. 2,365 2,991 4,547 985 1,480
Consumables............................ 1,770 2,237 3,395 626 1,131
Other.................................. 1,598 2,275 3,180 654 822
---------- ---------- ---------- ---------- ----------
Total operating expenses........... 24,032 29,873 40,664 9,265 12,216
Selling, general and administrative
expenses:
Salaries and benefits.................. 3,202 4,649 6,856 1,481 1,894
Office expenses........................ 633 819 1,068 255 300
Professional fees...................... 1,268 2,645 2,137 426 768
Other.................................. 1,073 1,468 2,457 556 651
---------- ---------- ---------- ---------- ----------
Total overhead expenses............ 6,176 9,581 12,518 2,718 3,613
Depreciation and amortization........... 4,735 4,500 6,308 1,479 1,677
---------- ---------- ---------- ---------- ----------
Income from operations.................. 6,584 5,838 11,072 2,318 2,705
Interest:
Interest expense....................... 3,606 5,614 11,748 2,791 2,948
Interest income........................ (194) (312) (288) (75) (66)
---------- ---------- ---------- ---------- ----------
Net interest....................... 3,412 5,302 11,460 2,716 2,882
Other income (expense):
Minority interest and equity in
earnings of subsidiaries............. (960) (115) 137 27 154
Other.................................. 1,479 126 (111) (238) 23
---------- ---------- ---------- ---------- ----------
Total other income (expense)....... 519 11 26 (211) 177
---------- ---------- ---------- ---------- ----------
Income (loss) before provision for
(benefit from) income taxes and
cumulative effect of a change in
accounting principle.................... 3,691 547 (362) (609) --
Provision for (benefit from) income
taxes................................... 1,873 189 (2) -- 35
---------- ---------- ---------- ---------- ----------
Income (loss) before cumulative effect
of a change in accounting principle.... 1,818 358 (360) (609) (35)
---------- ---------- ---------- ---------- ----------
Cumulative effect (to January 1, 1993)
of change in drydocking method......... 1,491 -- -- -- --
---------- ---------- ---------- ---------- ----------
Net income (loss)....................... $ 3,309 $ 358 $ (360) $ (609) $ (35)
---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ----------
Net income (loss) applicable to common
shares................................. $ 1,615 $ 136 $ (360) $ (609) $ (35)
---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ----------
Earnings (loss) per common share:
Income (loss) applicable to common
shares before cumulative effect of a
change in accounting principle....... $ 0.26 $ 0.03 $ (0.14) $ (0.24) $ (0.01)
Cumulative effect (to January 1, 1993)
of change in dry-docking method........ 0.24 -- -- -- --
---------- ---------- ---------- ---------- ----------
Net income (loss) applicable to common
shares................................. $ 0.50 $ 0.03 $ (0.14) $ (0.24) $ (0.01)
---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ----------
Weighted average number of common shares
and common share equivalents
outstanding............................ 6,267,558 5,302,060 2,534,840 2,534,840 2,534,840
---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ----------
</TABLE>
See notes to consolidated financial statements.
F-14
<PAGE>
HVIDE MARINE INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
11% 5% CLASS A CLASS B CLASS C
CLASS A CLASS B COMMON STOCK COMMON STOCK COMMON STOCK ADDITIONAL
PREFERRED PREFERRED -------------------- ----------------- --------------- PAID-IN RETAINED
STOCK STOCK SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT CAPITAL EARNINGS
--------- --------- ------------ ------ --------- ------ ------- ------ ---------- --------
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at January 1,
1993, as previously
reported................. $ 2,669 $ 3,266 16,302,946 $ 19 -- $-- -- $-- $1,008 $ 9,381
Effect of recapitalization
(see Note 1)............. -- -- (16,302,946) (19) 1,105,692 1 663,415 1 17 (5,935)
--------- --------- ------------ ------ --------- ------ ------- ------ ----- --------
Balance at January 1,
1993, as restated........ 2,669 3,266 -- -- 1,105,692 1 663,415 1 1,025 3,446
Net income................ -- -- -- -- -- -- -- 3,309
Preferred stock cash
dividends................ -- -- -- -- -- -- -- (366)
--------- --------- ------------ ------ --------- ------ ------- ------ ----- --------
Balance at December 31,
1993..................... 2,669 3,266 -- -- 1,105,692 1 663,415 1 1,025 6,389
Net income................ -- -- -- -- -- -- -- -- -- 358
Common stock issued, net
of issuance costs........ -- -- -- -- 452,518 -- 313,215 -- 8,640 --
Redemption of preferred
stock.................... (2,669) (3,266) -- -- -- -- -- -- (1,350) --
Acquisition of limited
partnership interests.... -- -- -- -- -- -- -- -- (1,974) --
Preferred stock cash
dividends................ -- -- -- -- -- -- -- (385)
--------- --------- ------------ ------ --------- ------ ------- ------ ----- --------
Balance at December 31,
1994..................... -- -- -- -- 1,558,210 1 976,630 1 6,341 6,362
Net loss.................. -- -- -- -- -- -- -- -- -- (360)
--------- --------- ------------ ------ --------- ------ ------- ------ ----- --------
Balance at December 31,
1995..................... -- -- -- -- 1,558,210 1 976,630 1 6,341 6,002
Net loss.................. -- -- -- -- -- -- -- -- -- (35)
--------- --------- ------------ ------ --------- ------ ------- ------ ----- --------
Balance at March 31, 1996
(unaudited).............. $ -- $ -- $ -- $-- 1,558,210 $ 1 976,630 $ 1 $6,341 $ 5,967
--------- --------- ------------ ------ --------- ------ ------- ------ ----- --------
--------- --------- ------------ ------ --------- ------ ------- ------ ----- --------
<CAPTION>
TREASURY
STOCK TOTAL
-------- -------
<S> <C> <C>
Balance at January 1,
1993, as previously
reported................. $ (5,935) $10,408
Effect of recapitalization
(see Note 1)............. 5,935 --
-------- -------
Balance at January 1,
1993, as restated........ -- 10,408
Net income................ -- 3,309
Preferred stock cash
dividends................ -- (366)
-------- -------
Balance at December 31,
1993..................... -- 13,351
Net income................ -- 358
Common stock issued, net
of issuance costs........ -- 8,640
Redemption of preferred
stock.................... -- (7,285)
Acquisition of limited
partnership interests.... -- (1,974)
Preferred stock cash
dividends................ -- (385)
-------- -------
Balance at December 31,
1994...................... -- 12,705
Net loss.................. -- (360)
-------- -------
Balance at December 31,
1995..................... -- 12,345
Net loss.................. -- (35)
-------- -------
Balance at March 31, 1996
(unaudited).............. $ -- $12,310
-------- -------
-------- -------
</TABLE>
See notes to consolidated financial statements.
F-15
<PAGE>
HVIDE MARINE INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
THREE MONTHS
YEAR ENDED DECEMBER 31 ENDED MARCH 31
1993 1994 1995 1995 1996
(UNAUDITED)
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
OPERATING ACTIVITIES:
Income (loss) before cumulative effect of a change in
accounting principle................................. $ 1,818 $ 358 $ (360) $ (609) $ (35)
Adjustments to reconcile income (loss) before
cumulative effect of a change in accounting principle
to net cash provided by operating activities:
Cumulative effect of change in drydocking method..... 1,491 -- -- -- --
Depreciation and amortization........................ 4,735 4,500 6,308 1,479 1,677
Provision for bad debts.............................. -- -- 114 -- 31
Gain on disposals of property........................ -- -- (73) -- --
Amortization of discount on long-term debt........... -- 52 201 48 54
Provision for (benefit from) deferred taxes.......... 1,402 189 (2) -- 35
Minority partners' equity in earnings (losses) of
subsidiaries, net................................... 1,179 184 (625) (181) (166)
Undistributed (earnings) losses of affiliates, net... (219) (69) 488 154 12
Changes in operating assets and liabilities, net of
effect of acquisitions:
Accounts receivable................................ (790) (4,574) (5,056) (258) (95)
Due from affiliates................................ (630) (235) (394) (139) 82
Other assets....................................... (819) (1,622) (1,317) (637) (1,207)
Accounts payable and other liabilities............. (1,211) 4,075 4,664 3,347 3,776
------- -------- ------- ------- -------
Net cash provided by operating activities............... 6,956 2,858 3,948 3,204 4,164
INVESTING ACTIVITIES:
Purchase of property................................... (1,917) (5,672) (6,312) (1,044) (2,035)
Proceeds from disposals of property.................... -- -- 690 -- --
Capital contribution to affiliates..................... (330) -- -- -- (429)
Deposit of funds in escrow........................... -- (500) -- -- --
Acquisitions, net of $500 escrow deposit utilized in
1995 and net of cash acquired of $106 in 1994........ -- (33,643) (2,444) (2,375) --
------- -------- ------- ------- -------
Net cash used in investing activities................... (2,247) (39,815) (8,066) (3,419) (2,464)
FINANCING ACTIVITIES:
Proceeds from line of credit borrowings................ -- -- 7,500 -- 3,000
Proceeds from Senior Note.............................. -- 23,072 -- -- --
Proceeds from Junior Note.............................. -- 17,508 -- -- --
Proceeds from term loan................................ -- 50,000 -- -- 2,197
Proceeds from stock issuance........................... -- 9,420 -- -- --
Principal payments of long-term debt................... (5,738) (51,700) (5,458) (1,332) (3,744)
Payment of debt and other financing costs.............. -- (3,478) (727) -- --
Payment of stock issuance costs........................ -- (780) -- -- --
Payment of obligations under capital leases............ -- (34) (510) (103) (190)
Payment of dividends................................... (366) (385) -- -- --
Distribution of minority partners' equity.............. (54) -- -- -- --
Redemption of preferred stock.......................... -- (2,374) -- -- --
------- -------- ------- ------- -------
Net cash (used in) provided by financing activities..... (6,158) 41,249 805 (1,435) 1,263
------- -------- ------- ------- -------
(Decrease) increase in cash and cash equivalents........ (1,449) 4,292 (3,313) (1,650) 2,963
Cash and cash equivalents at beginning of period........ 3,520 2,071 6,363 6,363 3,050
------- -------- ------- ------- -------
Cash and cash equivalents at end of period.............. $ 2,071 $ 6,363 $ 3,050 $ 4,713 $ 6,013
------- -------- ------- ------- -------
------- -------- ------- ------- -------
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING
ACTIVITIES
Net assets recorded in connection with dissolution of
affiliate.............................................. $ -- $ -- $ 341 $ -- $ --
------- -------- ------- ------- -------
------- -------- ------- ------- -------
Notes payable and notes payable to related parties
issued for the acquisition of vessels (see Note 3)..... $ -- $ 2,149 $ 3,000 $ 3,000 $ --
------- -------- ------- ------- -------
------- -------- ------- ------- -------
Capital leases assumed for the acquisition of vessels
(see Note 4)........................................... $ -- $ 4,534 $ -- $ -- $ 5,410
------- -------- ------- ------- -------
------- -------- ------- ------- -------
Note payable issued for the acquisition of minority
interest (see Note 3).................................. $ -- $ 3,039 $ -- $ -- $ --
------- -------- ------- ------- -------
------- -------- ------- ------- -------
Note payable issued and other liabilities incurred in
conjunction with the redemption of preferred stock
(see Note 9)........................................... $ -- $ 4,911 $ -- $ -- $ --
------- -------- ------- ------- -------
------- -------- ------- ------- -------
Mortgage liabilities assumed for the acquisition of
vessels
(see Note 3)........................................... $ -- $ 279 $ -- $ -- $ --
------- -------- ------- ------- -------
------- -------- ------- ------- -------
</TABLE>
See notes to consolidated financial statements.
F-16
<PAGE>
HVIDE MARINE INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1994 AND 1995
(INFORMATION PERTAINING TO THE THREE MONTHS ENDED MARCH 31, 1995 AND 1996 IS
UNAUDITED)
1. SUMMARY OF SIGNIFICANT ACCOUNTING AND REPORTING POLICIES
Organization and Basis of Consolidation--Hvide Marine Incorporated ("HMI,"
the "Company," and the "Successor") (f/k/a Hvide Corp.) was incorporated in the
state of Florida on September 28, 1994 as the holding company for the former
Hvide Marine Incorporated (f/k/a Hvide Shipping, Incorporated) and its
majority-owned subsidiaries (the "Predecessor Company"). On September 30, 1994,
100% of the Common Stock of the Predecessor Company was exchanged for common
stock of HMI and accounted for in a manner similar to a pooling-of-interests.
Accordingly, the accompanying consolidated financial statements include the
combined successor/predecessor companies for all periods subsequent to September
30, 1994 and the Predecessor Company for all periods prior to September 30,
1994. All share and per share amounts have been adjusted to give retroactive
effect to the capital structure of HMI. All material intercompany transactions
and balances have been eliminated in the consolidated financial statements.
Investments in limited partnerships and less-than-majority-owned subsidiaries
are accounted for on the equity method.
The accompanying unaudited Consolidated Financial Statements as of March 31,
1995 and 1996 have been prepared in accordance with generally accepted
accounting principles for interim financial information. In the opinion of
management, all adjustments considered necessary to present fairly the
consolidated financial position, results of operations and cash flows have been
included in the accompanying unaudited consolidated interim financial
statements.
Operations--The principal operations of the Company consist of vessel time
charters, vessel operating agreements and harbor towing. Through its vessel time
charters and operating agreements, the Company serves the energy and chemical
industries in the U.S. domestic trade. The Company's harbor towing operations
principally serve the passenger cruise ship, energy, and chemical industries and
are concentrated in ports located in the southeastern United States.
Revenues--Revenues from time charters are earned and recognized on a daily
basis. Time charter revenues are adjusted periodically based on changes in
specified price indices and market conditions.
Cash and Cash Equivalents--The Company considers all highly liquid
investments with a maturity of three months or less when purchased to be cash
equivalents.
Insurance Claims Receivable--Insurance claims receivable represent costs
incurred in connection with insurable incidents for which the Company expects to
be reimbursed by the insurance carrier(s), subject to applicable deductibles.
Deductible amounts related to covered incidents are expensed in the period of
occurrence of the incident.
Spare Parts and Supplies--Inventories of spare parts and supplies are stated
at the lower of cost, determined on a basis that approximates the last-in,
first-out method, or market.
Prepaid Expenses--Prepaid expenses primarily include prepaid vessel
insurance.
Property--Vessels, improvements and equipment are stated at cost less
accumulated depreciation. Major renewals and improvements are capitalized and
replacements, maintenance and repairs which do not improve or extend the lives
of the assets are expensed. Depreciation is computed on the straight-line method
over the estimated useful lives of the assets. The estimated useful lives of
vessels and improvements other than tankers are 15 to 40 years and the estimated
useful lives of furniture and equipment are 3 to 10 years. Tankers and related
improvements are depreciated over estimated useful lives, as determined by the
Oil Pollution Act of 1990 and other factors, ranging from 4 to 24 years.
F-17
<PAGE>
HVIDE MARINE INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
1. SUMMARY OF SIGNIFICANT ACCOUNTING AND REPORTING POLICIES--(CONTINUED)
Vessels under capital leases are amortized over the estimated useful lives
of the vessels. Included in vessels and improvements at December 31, 1994 and
1995 and at March 31, 1996 are vessels under capital leases of approximately
$5,003,000, $5,229,000 and $10,660,000, net of accumulated amortization of
approximately $37,000, $149,000 and $301,000, respectively.
For the years ended December 31, 1993, 1994 and 1995, and the three months
ended March 31, 1995 and 1996, depreciation and amortization of vessels,
improvements and equipment was approximately $3,020,000, $3,397,000 and
$4,770,000, and $1,127,000 and $1,306,000, respectively.
Accounting for Drydocking Expenses--Approximately every 30 months, certain
Company vessels are drydocked for major repairs and maintenance which cannot be
performed while the vessels are operating.
Through fiscal 1992, the Company provided currently for the estimated future
costs of drydockings. Effective January 1, 1993, the Company changed its method
of accounting for drydocking costs from the accrual method to the deferral
method. Under the deferral method, the Company capitalizes its drydocking costs
and amortizes them over the period through the next drydocking. Management
believes the deferral method better matches costs with revenues. Also, the
deferral method minimizes any significant changes in estimates associated with
the accrual method. The cumulative effect of this accounting change for years
prior to 1993, which is shown separately in the consolidated statement of
operations for 1993, resulted in a benefit of $1,491,000, or $0.24 per common
share.
The following summary reflects net income and net income per common share
for the year ended December 31, 1993 on an historical basis and as if the change
in accounting principle had been retroactively applied:
<TABLE>
<CAPTION>
NET INCOME
PER COMMON
SHARE (PRIMARY
NET INCOME AND FULLY DILUTED)
---------- ------------------
<S> <C> <C>
As reported..................................... $3,309,000 $ 0.50
Pro Forma....................................... 1,818,000 0.26
</TABLE>
At December 31, 1994 and 1995 and at March 31, 1996, deferred costs include
unamortized drydocking of approximately $1,938,000, $2,534,000 and $2,188,000,
respectively.
Deferred Costs--Deferred costs primarily represent drydocking and financing
costs. Deferred financing costs are amortized over the term of the related
borrowings.
Goodwill--Goodwill represents the excess of the purchase price over the fair
value of certain assets acquired and is amortized on the straight-line basis
over 20 to 40 years. The carrying value of goodwill is reviewed if facts and
circumstances suggest that it may be impaired. If this review indicates that
goodwill will not be recoverable, as determined based on the estimated
undiscounted cash flows of the assets acquired over the remaining amortization
period, the carrying value will be adjusted accordingly. At December 31, 1994
and 1995 and at March 31, 1996, accumulated amortization of goodwill was
approximately $1,184,000, $1,689,000 and $1,815,000, respectively.
Income Taxes--HMI files a consolidated tax return with all corporate
subsidiaries other than Seabulk Ocean Systems Holdings, Inc. and Seabulk Ocean
Systems Corporation, which file a separate consolidated income tax return. Each
partnership subsidiary files a separate partnership tax return.
F-18
<PAGE>
HVIDE MARINE INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
1. SUMMARY OF SIGNIFICANT ACCOUNTING AND REPORTING POLICIES--(CONTINUED)
The Financial Accounting Standards Board ("FASB") issued Statement No. 109,
"Accounting for Income Taxes," which requires the liability method of accounting
for income taxes. Under the liability method, deferred income tax assets and
liabilities are determined based on differences between financial reporting and
tax bases of assets and liabilities, and are measured using the enacted tax
rates and laws in effect when the differences are expected to reverse. Under
FASB Statement No. 109, the effect on deferred tax assets and liabilities of a
change in tax rates is recognized in income in the period that includes the
enactment date. The Company adopted FASB Statement No. 109 in 1993 and applied
its provisions retroactively.
Prospective Accounting Change--In March 1995, the FASB issued Statement No.
121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to Be Disposed Of," which requires impairment losses to be recorded on
long-lived assets used in operations when indicators of impairment are present
and the undiscounted cash flows estimated to be generated by those assets are
less than the assets' carrying amount. Statement No. 121 also addresses the
accounting for long-lived assets that are expected to be disposed of. The
Company adopted Statement No. 121 in the first quarter of 1996 and the effect of
adoption was not material.
Earnings (Loss) per Common Share--Earnings (loss) per common share is
calculated based on the weighted average number of common shares and dilutive
common stock equivalents outstanding during the period. Common stock equivalents
result from convertible preferred stock outstanding in 1993 and 1994. Weighted
average shares outstanding were increased by 4,498,451 and 3,339,946 shares in
1993 and 1994, respectively, to reflect the if-converted effect of convertible
Class B Preferred Stock. Net income (loss) applicable to common shares used in
the calculation of earnings (loss) per common share has been adjusted to give
effect to cash dividends of $203,000 and $222,000 paid on Class A Preferred
Stock during 1993 and 1994, respectively. Shares of common stock contingently
issuable pursuant to the convertible Junior Subordinated Note (see Note 3) had
no effect on earnings per share data for 1994 or 1995, or for the three months
ended March 31, 1995 or 1996, as the effect is antidilutive.
Concentrations of Credit Risk--Financial instruments which potentially
subject the Company to concentrations of credit risk consist principally of cash
and cash equivalents in banks, trade accounts receivable and insurance claims
receivable. The credit risk associated with cash and cash equivalents in banks
is considered low due to the credit quality of the financial institutions. The
Company performs ongoing credit evaluations of its trade customers and generally
does not require collateral. The credit risk associated with insurance claims
receivable is considered low due to the credit quality and funded status of the
insurance pools that the Company participates in.
Estimates--The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.
Reclassifications--Certain amounts from the prior years' consolidated
financial statements have been reclassified to conform with the current year's
presentation.
2. CAPITAL CONSTRUCTION FUNDS
Pursuant to a Dual Use Agreement between Seabulk Tankers, Ltd. ("STL") and
the United States of America ("U.S."), the Capital Construction Funds maintained
by STL is collateral to the U.S., which amounts were $33,000 and $36,000 at
December 31, 1994 and 1995, respectively.
F-19
<PAGE>
HVIDE MARINE INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
3. DEBT
Long-term debt as of December 31, 1994 and 1995, and as of March 31, 1996,
consisted of the following (in thousands):
<TABLE>
<CAPTION>
DECEMBER 31 MARCH 31, 1996
1994 1995 (UNAUDITED)
<S> <C> <C> <C>
Borrowings outstanding under line of
credit.................................. $ -- $ 7,500 $ 10,500
Term loan................................ 50,000 46,000 47,000
Senior note.............................. 23,096 23,200 23,227
Junior note.............................. 17,536 17,633 17,660
Notes payable............................ 7,447 9,389 6,842
Mortgage note............................ 276 -- --
Other.................................... 124 -- --
-------- ------- --------------
98,479 103,722 105,229
Less: Current maturities................. (4,779) (7,708) (11,110)
-------- ------- --------------
$ 93,700 $96,014 $ 94,119
-------- ------- --------------
-------- ------- --------------
</TABLE>
On September 28, 1994, the Company entered into an agreement, as amended on
May 15, 1995 and March 26, 1996, for a credit facility (the "Credit Facility")
with its principal banks, under which the Company received aggregate financing
of $63,100,000.
The Credit Facility provides for a working capital credit line of $7,500,000
through January 15, 2001 (the "Original Line") and a stand-by letter of credit
(the "Letter of Credit") of $5,600,000. Borrowings under the Original Line bear
interest at the prime rate or LIBOR, at the option of the Company, plus an
applicable margin based upon the Company's compliance with certain financial
covenants (approximately 8.9% and 8.2% at December 31, 1995 and March 31, 1996,
respectively), and are subject to an annual commitment fee of 0.50% of the
unused portion of the credit line. Borrowings outstanding under the Original
Line totaled $7,500,000 at December 31, 1995 and March 31, 1996, of which
$2,500,000 is currently due and $5,000,000 is due on the ultimate maturity date
of January 15, 2001. The Letter of Credit is collateral for a surety bond to
fund any final award relating to the shipyard's claims discussed in Note 5.
Additionally, the Credit Facility provides for a letter of credit in an amount
equal to the greater of amounts available to be drawn under the Original Line or
$4,000,000. Amounts drawn under either letter of credit are due on demand or the
ultimate maturity date of January 15, 2001. There were no amounts outstanding
under the letters of credit at December 31, 1995 or March 31, 1996.
The Credit Facility provided for a term loan (the "Term Loan") in the
original principal amount of $50,000,000. The Term Loan is payable in quarterly
principal and interest payments beginning January 15, 1995. Borrowings under the
Term Loan bear interest at the prime rate or LIBOR, at the option of the
Company, plus an applicable margin based upon the Company's compliance with
certain financial covenants. At December 31, 1995 and March 31, 1996, the Term
Loan was accruing interest at LIBOR +3.0% (approximately 8.9% and 8.3%,
respectively).
The Credit Facility provides for an additional $7,500,000 working capital
line of credit due the earlier of the successful completion of an initial public
offering of the Company's common stock (the "Offering"), or March 15, 1997. At
December 31, 1995 and March 31, 1996, $0 and $3,000,000 was outstanding under
this line. Additionally, the Credit Facility provides that the amount available
under the Term Loan will increase to $54,500,000 and will provide a $12,500,000
vessel acquisition line of
F-20
<PAGE>
HVIDE MARINE INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
3. DEBT--(CONTINUED)
credit ("Vessel Acquisition Line of Credit") upon the successful completion of
the Offering. The Credit Facility was amended on June 21, 1996 as described in
Note 14.
The collateral for the Company's debt includes all Company-owned vessels,
outstanding common stock, the partnership interests in STL and Seabulk
Transmarine Partnership, Ltd., spare parts, fuel and supplies, and eligible
accounts receivable.
On September 30, 1994, and as amended on May 24, 1995, the Company issued a
$25,000,000 senior subordinated note (the "Senior Note"). The Senior Note bears
interest at 12%, payable semi-annually on March 31 and September 30. The
principal portion of the Senior Note is payable in equal annual installments on
September 30, 2003 and 2004. The Company received proceeds of approximately
$23,072,000, net of a discount of $1,928,000 ($1,904,000, $1,800,000 and
$1,773,000 at December 31, 1994 and 1995 and March 31, 1996, respectively) which
is being amortized as interest expense over the term of the Senior Note.
Repayment of the Senior Note is subordinated to the claims of the Company's
principal banks for amounts outstanding under the Credit Facility.
The terms of the Credit Facility and Senior Note prohibit the Company or any
of its wholly owned subsidiaries from paying dividends on any class of common
stock and restrict, among other things, the Company's ability to enter into new
commitments or borrowings over specified amounts and dispose of assets outside
the ordinary course of business. In addition, the Company is required to
maintain a minimum level of tangible net worth, as defined, and to prepay
amounts outstanding under the Credit Facility to the extent of 50% of excess
cash flow, as defined.
On September 30, 1994, HMI issued a $25,000,000 junior subordinated note
(the "Junior Note"). The Junior Note bears interest at 8%, compounded quarterly.
The principal sum and all accrued and unpaid interest ($2,607,000 and $3,157,000
at December 31, 1995 and March 31, 1996, respectively) is payable on the earlier
of the Offering or September 30, 2014. The Company received proceeds of
approximately $17,508,000, net of a discount of $7,492,000 ($7,464,000,
$7,367,000 and $7,340,000 at December 31, 1994 and 1995 and March 31, 1996,
respectively) which is being amortized as interest expense over the term of the
Junior Note. Repayment of the Junior Note is subordinated to the claims of the
Company's principal banks for amounts outstanding under the Credit Facility and
to the claims of the note holders for amounts outstanding under the Senior Note.
Commencing on September 30, 1998, the Junior Note, or any portion of the
principal amount thereof, is convertible, at the option of the holders, into a
fixed number of shares of the Company's common stock.
In connection with the acquisition of the minority interest in STL in 1994
(see Note 6), the Company issued a note payable of approximately $3,039,000.
Interest on the note is payable quarterly at Prime +2%, limited to 10% (10% at
December 31, 1995 and March 31, 1996), and the principal portion of the note is
due in equal annual installments through 1999 ($2,431,000 outstanding at
December 31, 1995 and March 31, 1996). Repayment of this note is subordinated to
the claims of the Company's principal banks for amounts outstanding under the
Credit Facility.
In connection with the acquisition of the outstanding limited partnership
interests in Hvide Chartering, Ltd. ("HCL") and Hvide Offshore Services, Ltd.
("HOS") in 1994 (see Note 6), the Company issued notes payable of approximately
$2,149,000. Approximately $1,302,000 of these notes were issued to certain
officers and employees of the Company and are recorded as notes payable to
related parties in the accompanying consolidated balance sheets. Interest on the
notes is payable quarterly at 12% and the notes are due in 2004.
F-21
<PAGE>
HVIDE MARINE INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
3. DEBT--(CONTINUED)
In connection with redemption of the outstanding preferred stock of the
Predecessor Company in 1994 (see Note 9), the Company issued notes payable
totaling approximately $3,561,000 to the former stockholder. Interest on the
notes is payable quarterly at the greater of 12% or Prime +3% (12% at December
31, 1995 and March 31, 1996). The principal portion of the notes is due in the
year 2000. Repayment of these notes is subordinated to the claims of the
Company's principal banks for amounts outstanding under the Credit Facility.
In connection with the acquisition of seven crew vessels in 1995 (see Note
11), the Company issued a $3,000,000 note payable. The note bears interest at 8%
and provides for quarterly payments of principal and interest through the year
2000 ($2,550,000 outstanding at December 31, 1995). The note is secured by first
preferred mortgages on four of the acquired vessels. The note payable was repaid
in February 1996.
The aggregate annual future payments due on debt and notes payable at
December 31, 1995 are as follows (in thousands):
1996............................................................ $ 7,708
1997............................................................ 7,208
1998............................................................ 9,208
1999............................................................ 9,208
2000............................................................ 11,710
Thereafter...................................................... 58,680
--------
$103,722
--------
--------
In addition to the letter of credit available pursuant to the Credit
Facility, the Company has an available letter of credit of $7,000,000 for future
charter hire payments relating to the Seabulk Magnachem lease financing.
The Company made interest payments of approximately $3,593,000, $3,062,000
and $8,952,000 in 1993, 1994 and 1995, respectively and approximately $1,861,000
and $2,530,000 for the three months ended March 31, 1995 and 1996, respectively.
F-22
<PAGE>
HVIDE MARINE INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
4. CAPITAL LEASES
The Company owns certain vessels under leases that are classified as capital
leases. The following is a schedule of future minimum lease payments under
capital leases together with the present value of the
net minimum lease payments as of December 31, 1995 (in thousands):
1996........................................................ $ 875
1997........................................................ 875
1998........................................................ 875
1999........................................................ 863
2000........................................................ 863
Thereafter.................................................. 683
------------
Total minimum lease payments................................ 5,034
Less amount representing interest........................... (1,007)
------------
Present value of minimum lease payments (including current
portion of $577)............................................ $ 4,027
------------
------------
5. COMMITMENTS AND CONTINGENCIES
A significant portion of the Company's operations consists of charters of
ocean-going vessels. The Seabulk Challenger and Seabulk Magnachem are bareboat
chartered for periods extending through the years 1999 and 2002, respectively.
Charter hire expense on these vessels was approximately $3,400,000, $3,100,000
and $3,153,000, and $773,000 and $790,000, for the years ended December 31,
1993, 1994 and 1995, and the three months ended March 31, 1995 and 1996,
respectively. The Company's tractor tug Broward is bareboat chartered, through
the year 2010. Charter hire expense on this vessel was approximately $217,000
and $163,000 for the year ended December 31, 1995 and the three months ended
March 31, 1996, respectively. The aggregate annual future payments due under
these charter agreements at December 31, 1995 for the next five years are as
follows (in thousands):
1996............................................................. $ 3,795
1997............................................................. 3,842
1998............................................................. 3,893
1999............................................................. 3,949
2000............................................................. 2,592
-------
$18,071
-------
-------
F-23
<PAGE>
HVIDE MARINE INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
5. COMMITMENTS AND CONTINGENCIES--(CONTINUED)
The Company is party to a lease agreement, as amended, of its office
facilities with a remaining period of 14 years. The estimated remaining
commitment under this lease at December 31, 1995 was $7,450,000 with
approximately $532,000 payable in each of the next five years.
Rent expense for the years ended December 31, 1993, 1994 and 1995, and for
the three months ended March 31, 1995 and 1996, was approximately $341,000,
$467,000 and $666,000 and $178,000 and $193,000, respectively.
In 1990, the Company withheld approximately $2,400,000 from a shipyard
relating to delays and other problems encountered in the construction of a
vessel. In 1993, the shipyard filed a claim to recover approximately $8,500,000
for costs allegedly due the shipyard, and the Company asserted a counterclaim
for approximately $5,600,000 against the shipyard. In addition, the shipyard is
seeking $10,000,000 of punitive damages. Management believes the shipyard's
claim amounts are unsubstantiated and that recoveries upon its counterclaim,
together with insurance coverage, will exceed amounts, if any, which may be
awarded to the shipyard for its claim. Management believes that the additional
costs it incurred to complete the construction of the vessel exceeded the
amounts withheld (settlement of construction costs, if any, would generally be
capitalized and depreciated over future periods); however, the Company is unable
to predict the final outcome of this matter.
In November 1989, STL formed an 88%-owned subsidiary, Seabulk Offshore, Ltd.
("SOL"), which acquired eight offshore supply vessels for approximately
$13,510,000. In December 1990, STL and Hvide Marine Transport, Incorporated (a
wholly-owned subsidiary of HMI) purchased the remaining 12% interest in SOL from
the limited partner ("U.S. Offshore") for $825,000. Additionally, SOL agreed to
pay U.S. Offshore an amount equal to 5% of gross revenues from the operation of
the vessels for a period not to exceed a maximum of 40 months (December 1, 1990
through March 31, 1994) and in a total amount not to exceed $1,300,000,
whichever occurred first. Approximately $769,000 has been paid to U.S. Offshore
under this agreement. U.S. Offshore has filed a claim against SOL related to the
amount due under the agreement. SOL is vigorously defending this claim and
believes that it will ultimately prevail; however, the Company is unable to
predict the final outcome of this matter.
On August 6, 1992, a wholly-owned subsidiary, Seabulk Transmarine II, Inc.
acquired a 49% interest in a joint venture which charters two offshore supply
vessels from SOL for a period of six years. At the end of the charter period,
the joint venture shall have the option to purchase each of the vessels at an
agreed-upon purchase price of $300,000.
On September 30, 1994, the Company acquired Sun State Marine Services, Inc.
("SSMS"). The acquisition agreement provides the sellers contingent payments for
a period of five years from the date of the agreement. The contingent amount
payable each year is 30% of the amount by which net income pertaining to the
acquired operations for that year, as defined, exceeds $1,800,000. The aggregate
total of the additional consideration is limited to $3,000,000 over the term of
the agreement. Such contingent payments, when incurred, will be recorded as
additional cost of the acquisition. During the year ended December 31, 1995,
contingent payments made related to 1994 amounted to approximately $36,000.
There were no contingent amounts due related to the acquired operations for the
year ended December 31, 1995.
The Company has guaranteed 50% of the outstanding line of credit borrowings
of its unconsolidated 50%-owned affiliate Ocean Specialty Tankers Corporation
("OSTC"), up to a maximum of
F-24
<PAGE>
HVIDE MARINE INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
5. COMMITMENTS AND CONTINGENCIES--(CONTINUED)
$2,000,000. Total borrowings outstanding under the line of credit subject to the
guarantee were approximately $1,600,000 at December 31, 1995.
At December 31, 1995, the Company was party to an agreement, as amended on
January 31, 1996 and March 28, 1996, for the purchase of the remaining 50% of
the outstanding common stock of OSTC, pursuant to which the Company is to
acquire three chemical tankers. The agreement, which is subject to the
successful completion of the Offering, provides for an aggregate purchase price
of approximately $64,650,000, consisting of approximately $30,000,000 in cash
and the assumption of approximately $34,650,000 in mortgage obligations related
to two of the vessels to be acquired. The agreement calls for payments to the
seller totaling $300,000 in the event that the transaction does not close by
August 15, 1996.
At December 31, 1995, Hvide Partners, L.P. ("HPLP"), an affiliated entity in
which the Company participates as the sole general partner, was party, through
its five 75%-owned limited liability companies Hvide Van Ommeren Tankers I-V LLC
("HVOT I-V"), to contracts for the construction of five double-hulled tankers.
Pursuant to its general and indirect limited partnership interests in HPLP, the
Company is required to make capital contributions to HPLP in 1996 totaling
approximately $1,000,000. The Company was also party to an agreement at December
31, 1995 to provide technical services and support related to the operations of
HVOT I-V. Pursuant to this agreement and commencing in 1997, the Company is to
be paid an annual fee of $295,000, subject to future escalation equal to
increases, if any, in the CPI.
6. RELATED PARTY TRANSACTIONS
In 1994, the Company acquired outstanding limited partnership interests of
HCL, a limited partnership in which the Company owned a 33 1/3% interest as
general partner, from certain officers and employees of the Company for cash and
notes payable of approximately $668,000 and $1,089,000, respectively.
In 1994, the Company acquired the outstanding limited partnership interests
of HOS from certain officers and employees of the Company for cash and notes
payable of approximately $607,000 and $1,060,000, respectively. Additionally,
the company assumed HOS's outstanding capital lease obligations (see Note 4) and
certain other liabilities.
The purchase price of the vessels and other net assets acquired in the
acquisition of the limited partnership interests of HCL and HOS was
approximately $1,974,000 in excess of their historical net book value.
Accordingly, such amounts were deemed special distributions to the related
parties and recorded as a reduction of paid-in capital.
In 1994, the Company acquired the outstanding minority interest in STL for
cash and notes payable of approximately $1,302,000 and $3,039,000, respectively.
Maritime Transport Development Corp., which is owned by the former Chairman
of the Company, receives a commission equal to 1.25% of charter hire
(approximately $210,000, $190,000, and $210,000 for the years ended December 31,
1993, 1994, and 1995, respectively) received by the Company for the Seabulk
Challenger and the Seabulk Magnachem as payment for development and engineering
services and marketing services related to the design of these vessels.
F-25
<PAGE>
HVIDE MARINE INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
7. EMPLOYEE BENEFIT PLANS
The Company sponsors a Section 401(k) retirement plan covering substantially
all employees. Expense under this plan for the years ended December 31, 1993,
1994 and 1995, and for the three months ended March 31, 1995 and 1996, was
approximately $724,000, $834,000 and $1,047,000, and $244,000 and $297,000,
respectively. Contributions under the plan are determined on the basis of
employee compensation.
8. INCOME TAXES
The components of the provision for (benefit from) income taxes are as
follows (in thousands):
<TABLE>
<CAPTION>
THREE MONTHS
YEAR ENDED ENDED
DECEMBER 31 MARCH 31
1993 1994 1995 1995 1996
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Current.......................... $ 471 $ -- $ -- $ -- $ --
Deferred......................... 1,402 189 (2) -- 35
------ ------ ------ ------ ------
$1,873 $ 189 $ (2) $ -- $ 35
------ ------ ------ ------ ------
------ ------ ------ ------ ------
</TABLE>
Incomes taxes paid were approximately $18,000, $400,000, and $0 in 1993,
1994, and 1995, respectively.
A reconciliation of the Company's income tax rate to the federal rate of 34%
is as follows:
<TABLE>
<CAPTION>
1993 1994 1995
<S> <C> <C> <C>
Income tax expense (benefit) computed at the
statutory rate..................................... 34% 34% (34)%
State income taxes................................... 3 2 (2)
Capital Construction Funds........................... 8 16 24
Rate differential.................................... 4 -- --
Other................................................ 2 (17) 11
----- ----- -----
51% 35% (1)%
----- ----- -----
----- ----- -----
</TABLE>
F-26
<PAGE>
HVIDE MARINE INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
8. INCOME TAXES--(CONTINUED)
Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes. Significant components of
the Company's deferred income tax assets and liabilities as of December 31, 1994
and 1995 are as follows:
<TABLE>
<CAPTION>
1994 1995
<S> <C> <C>
Deferred income tax assets:
Net operating loss carryforward........................ $3,779 $ 8,388
Charitable contributions carryforward.................. 22 43
Alternative minimum tax credit carryforward............ 1,226 1,226
Accrued compensation................................... 142 315
Other.................................................. 12 161
------ -------
Total deferred income tax assets......................... 5,181 10,133
------ -------
Deferred income tax liabilities:
Fixed asset differences................................ 8,850 13,869
Deferred drydocking costs.............................. 617 581
Other.................................................. 33 --
------ -------
Total deferred income tax liabilities.................... 9,500 14,450
------ -------
Net deferred income tax liability........................ $4,319 $ 4,317
------ -------
------ -------
</TABLE>
At December 31, 1995, the Company had approximately $23,600,000 in net
operating loss carryforwards for federal income tax purposes, expiring in
various amounts from 1998 to 2010. In conjunction with the anticipated Offering,
the utilization of the Company's NOL's will be limited, based upon the estimated
value of the Company prior to the Offering, to approximately $2,000,000 per
year.
9. CAPITAL STOCK
On September 28, 1994, all the stock of the Predecessor Company was
exchanged for shares of the Company's stock (see Note 1). The fair value of the
Predecessor Company's common stock and the Company's common stock were
equivalent.
On September 29, 1994, all of the outstanding shares of Class A and Class B
Preferred Stock of the Predecessor Company were repurchased from the shareholder
for cash of $2,374,000, notes of $3,561,000 and certain agreements providing for
future payments over a specified term. The present value of the agreements
providing for future payments has been recorded in other liabilities in the
accompanying consolidated balance sheets and total approximately $1,350,000 and
$1,282,000 at December 31, 1994 and 1995, respectively.
Each share of the Company's Class A Common Stock is entitled to one vote per
share and each share of Class B Common Stock is entitled to ten votes per share.
Shares of Class C Common Stock are nonvoting. The holders of Class B Common
Stock are entitled to convert, at the holder's election and at any time, such
shares into shares of Class A Common Stock or Class C Common Stock at the rate
of one share of Class B Common Stock for one share of Class A Common Stock or
Class C Common Stock. The holders of Class C Common Stock are entitled to
convert, at the holder's election and subject to certain restrictions, such
shares into shares of Class A Common Stock at the rate of one share of Class C
Common Stock for one share of Class A Common Stock.
F-27
<PAGE>
HVIDE MARINE INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
9. CAPITAL STOCK--(CONTINUED)
In connection with the issuance of the Junior Notes, the Company issued to
the note holders 765,733 shares of its Class B and Class C Common Stock and
Common Stock Contingent Share Issuances ("CSIs") to purchase a maximum of
554,495 additional shares of its common stock. The Junior Notes, shares of Class
A and Class C Common Stock and the CSIs were recorded based upon their estimated
fair values at the date of issuance. The CSIs are generally exercisable, at a
price equal to the par value of the underlying shares, at the earlier of a
qualified initial public offering of the Company's common stock, or September
30, 1998. The maximum amount of CSIs that may be exercised is based upon the
note holders return on their investment in the Company.
Simultaneously with the issuance of the CSIs, the Company entered into an
agreement with its Chairman and principal stockholder and certain trusts whereby
the principal stockholder and the trusts agreed to contribute pro rata a like
amount of shares of common stock to the Company concurrently with the issuance
of shares pursuant to the CSIs. Accordingly, issuance of shares pursuant to the
CSIs will not effect the Company's financial position or results of operations.
10. SIGNIFICANT CUSTOMER
The Company derived revenues from a long-term contract with one company
representing 13% to 22% of its revenues over the three year period ended
December 31, 1995.
11. ACQUISITIONS
On September 30, 1994, the Company acquired 24 vessels and associated spare
parts and other equipment. The Company paid an aggregate amount of approximately
$17,886,000, consisting of $17,056,000 in cash and the assumption of $279,000 of
vessel mortgages and $551,000 of bareboat charter obligations. The operations of
these acquired assets for the periods subsequent to September 30, 1994 are
included in the accompanying consolidated statements of operations for the years
ended December 31, 1994 and 1995.
On September 30, 1994, the Company acquired SSMS in an acquisition accounted
for as a purchase. The aggregate purchase price of $13,900,000 was approximately
$8,615,000 in excess of the net assets acquired, which is being amortized using
the straight-line method over 20 years. The operations of SSMS for periods
subsequent to September 30, 1994 are included in the accompanying consolidated
statements of operations for the years ended December 31, 1994 and 1995.
On March 8, 1995, the Company acquired seven offshore crew vessels for
$5,875,000, including cash of $2,875,000 and a $3,000,000 promissory note. The
operations of these acquired vessels subsequent to March 8, 1995 are included in
the accompanying consolidated statement of operations for the year ended
December 31, 1995.
In January and February 1996, the Company acquired nine offshore crew
vessels under capital lease obligations. The operations of these vessels for the
period subsequent to their acquisition are included in the accompanying
unaudited consolidated statement of operations for the three months ended March
31, 1996.
F-28
<PAGE>
HVIDE MARINE INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
12. FAIR VALUE OF FINANCIAL INSTRUMENTS
The following methods and assumptions were used to estimate the fair value
of financial instruments included in the following categories:
Cash and cash equivalents and accounts receivable. The carrying amounts
reported in the balance sheets approximates fair value.
Credit Facility, Mortgage note and Other. Amounts outstanding under the
Company's Credit Facility, as amended, bear interest at variable rates that
periodically adjust to reflect changes in overall market rates and
approximate fair value. Amounts outstanding in 1994 under the mortgage note
and other amounts approximate fair value due to their short-term nature.
Senior and Junior Notes. Amounts outstanding under the Senior and Junior
Notes bear interest at 12% and 8%, respectively. The fair value of the
Senior and Junior Notes is estimated to be $23.5 million and $16.5 million,
respectively, using a discounted cash flow analysis at estimated market
rates.
Notes Payable. The carrying amount reported in the balance sheets
approximates fair value using a discounted cash flow analysis at estimated
market rates.
13. CONDENSED FINANCIAL INFORMATION
The following are parent company-only condensed financial statements, and
notes thereto, of Hvide Marine Incorporated:
F-29
<PAGE>
HVIDE MARINE INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
13. CONDENSED FINANCIAL INFORMATION--(CONTINUED)
PARENT COMPANY--ONLY CONDENSED BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31
1994 1995
(IN THOUSANDS)
<S> <C> <C>
ASSETS
Current Assets:
Deferred costs......................................................... $ 78 $ 38
------- -------
Total current assets..................................................... 78 38
Other assets:
Deferred costs, net.................................................. 1,358 1,235
Other (principally investment in wholly-owned subsidiaries).......... 29,524 31,614
------- -------
Total other assets....................................................... 30,882 32,849
------- -------
Total.................................................................... $30,960 $32,887
------- -------
------- -------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities (principally amounts due to wholly-owned
subsidiaries)............................................................ $ 215 $ 302
Long-Term Debt......................................................... 17,536 17,633
Other Noncurrent Liabilities (long-term payable)......................... 504 2,607
------- -------
Total liabilities...................................................... 18,255 20,542
Stockholders' Equity:
Common stock......................................................... 2 2
Other stockholders' equity........................................... 12,703 12,343
------- -------
Total stockholders' equity............................................... 12,705 12,345
------- -------
Total.................................................................... $30,960 $32,887
------- -------
------- -------
</TABLE>
PARENT COMPANY--ONLY CONDENSED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
PERIOD FROM
INCEPTION
(SEPTEMBER 28,
1994) THROUGH YEAR ENDED
DECEMBER 31, DECEMBER 31,
1994 1995
-------------- ------------
(IN THOUSANDS)
<S> <C> <C>
Costs and expenses:
Professional fees............................................... $1,195 $ 151
Interest expense................................................ 549 2,218
Other........................................................... 331 81
------- ------------
Total costs and expenses.......................................... 2,075 2,450
Benefit from income taxes......................................... 714 871
------- ------------
1,361 1,579
Equity in net income of subsidiaries.............................. 717 1,219
------- ------------
Net loss.......................................................... $ 644 $ 360
------- ------------
------- ------------
</TABLE>
F-30
<PAGE>
HVIDE MARINE INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
13. CONDENSED FINANCIAL INFORMATION--(CONTINUED)
BASIS OF PRESENTATION
In the parent company-only financial statements, the Company's investment in
subsidiaries is stated at cost plus equity in undistributed earnings of its
wholly-owned subsidiaries. The parent company-only financial statements should
be read in conjunction with the Company's consolidated financial statements.
LONG-TERM DEBT
On September 30, 1994, the Company issued the Junior Note (see Note 3).
The Company serves as co-guarantor of amounts under the Credit Facility and
Senior Note (see Note 3). Repayment of the Junior Note is subordinated to the
claims for amounts outstanding under the Credit Facility and the Senior Note.
DIVIDENDS FROM SUBSIDIARIES
No cash dividends have been paid to the Parent Company since inception as
the Company's Credit Facility prohibits the payment of dividends or other
distributions on any class of capital stock of the Company or its wholly-owned
subsidiaries.
STATEMENT OF CASH FLOWS
The statement of cash flows has been omitted as the Parent Company does not
maintain cash balances.
14. SUBSEQUENT EVENTS
On May 10, 1996, the Company's Board of Directors authorized a 1.5843-for-1
split of its common stock, and an increase of the number of authorized shares of
its Class A, Class B, and Class C Common Stock to 100,000,000, 5,000,000, and
2,500,000, respectively. All share and per share data in the accompanying
financial statements have been restated to reflect the stock split.
The Company entered into asset purchase agreements with Seal Fleet, Inc.
("Seal Fleet") and certain related partnerships dated as of March 29, 1996 and
amended as of July 23, 1996 pursuant to which the Company has agreed to purchase
an aggregate of eight supply boats. The aggregate purchase price is $26,075,000.
The purchase of certain of the supply boats is subject to the approval of the
Seal Fleet shareholders. The Company has agreed to indemnify certain affiliates
of Seal Fleet against certain of Seal Fleet's liabilities due to its creditors.
The Company's maximum liability pursuant to the indemnification is $7,000,000.
The Company has also agreed to indemnify Seal Fleet, the members of its Board of
Directors, and such affiliates for certain liabilities they may incur as a
result of the Board's approval of the Seal Fleet Acquisition.
On June 21, 1996, the Company amended its Credit Facility whereby upon a
successful initial public offering with gross proceeds of at least $91,000,000,
amounts available under the Original Line will increase to $10,000,000, amounts
available under the term loan will increase to $61,500,000 and the Vessel
Acquisition Line of Credit will increase to $25,000,000. To the extent that the
gross proceeds of the Offering are less than $91.0 million, the initial amount
available under the Vessel Acquisition Line of Credit will be reduced by the
amount of such shortfall.
F-31
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Boards of Directors and Stockholder of OMICHEM TRANSPORT, INC.,
OMI CLOVER TRANSPORT, INC., and OMI HUDSON TRANSPORT, INC.:
We have audited the accompanying combined balance sheets of the OMI Chemical
Carrier Group as of December 31, 1994 and 1995 and the related combined
statements of operations and deficit and of cash flows for each of the three
years in the period ended December 31, 1995. The combined financial statements
include the accounts of Omichem Transport, Inc., OMI Clover Transport, Inc., and
OMI Hudson Transport, Inc. which are wholly owned subsidiaries of OMI Corp.
These financial statements are the responsibility of the companies' management.
Our responsibility is to express an opinion on these financial statements based
on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the combined financial position of the OMI Chemical Carrier Group at
December 31, 1994 and 1995 and the combined results of their operations and
their combined cash flows for each of the three years in the period ended
December 31, 1995 in conformity with generally accepted accounting principles.
DELOITTE & TOUCHE LLP
New York, New York
January 26, 1996
F-32
<PAGE>
OMI CHEMICAL CARRIER GROUP
COMBINED BALANCE SHEETS
(IN THOUSANDS)
<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
1994 1995 1996
(UNAUDITED)
<S> <C> <C> <C>
ASSETS
Current assets:
Advances to masters....................................... $ 171 $ 102 $ 275
Receivables:
Due from OSTC (Notes 1, 3).............................. 638 544 511
Other................................................... 40 52 27
Deferred income taxes (Note 4)............................ 731 9,176 483
Prepaid expenses and other current assets................. 987 524 180
-------- -------- -----------
Total current assets.................................. 2,567 10,398 1,476
-------- -------- -----------
Vessels (Notes 1, 3)........................................ 75,225 84,738 113,499
Less accumulated depreciation............................... (43,872) (47,066) (48,128)
-------- -------- -----------
Vessels--net.............................................. 31,353 37,672 65,371
-------- -------- -----------
Due from parent (Notes 4, 6)................................ 3,983 7,086
Other assets and deferred charges........................... 1,537 1,094 1,025
-------- -------- -----------
Total....................................................... $ 39,440 $ 49,164 $ 74,958
-------- -------- -----------
-------- -------- -----------
LIABILITIES AND STOCKHOLDER'S EQUITY (DEFICIT)
Current liabilities:
Accounts payable.......................................... $ 1,328 $ 389 $ 443
Accrued liabilities:
Voyage and vessel....................................... 2,524 2,273 3,076
Interest................................................ 498 432 243
Operating lease (Note 3)................................ 738 756
Accrued lease termination costs (Note 5).................. 25,000
Accrued loss on lease obligation (Note 5)................. 1,487
Current portion of long-term debt (Notes 2, 3)............ 2,525 2,525 4,815
-------- -------- -----------
Total current liabilities............................. 9,100 31,375 8,577
-------- -------- -----------
Long-term debt (Notes 2, 3)................................. 17,488 14,963 30,980
Accrued loss on lease obligation (Note 5)................... 18,313
Deferred income taxes (Note 4).............................. 1,523 8,797 8,750
Due to parent (Notes 4, 6).................................. 1,535
Advances from parent (Note 3)............................... 9,623 9,623
Accrued lease payable (Note 3).............................. 2,243
Deferred gain on sale/leaseback of vessel (Note 3).......... 1,281
Advance time charter revenues and other liabilities......... 1,447 830 985
Commitments and contingencies (Note 7)......................
Stockholder's equity (deficit):
Common stock..............................................
Capital surplus (Note 3).................................. 80,881 80,881 115,181
Deficit (Note 1).......................................... (92,836) (98,840) (99,138)
-------- -------- -----------
Total stockholder's equity (deficit).................. (11,955) (17,959) 16,043
-------- -------- -----------
Total....................................................... $ 39,440 $ 49,164 $ 74,958
-------- -------- -----------
-------- -------- -----------
</TABLE>
See notes to combined financial statements
F-33
<PAGE>
OMI CHEMICAL CARRIER GROUP
COMBINED STATEMENTS OF OPERATIONS AND DEFICIT
(IN THOUSANDS)
<TABLE>
<CAPTION>
FOR THE THREE MONTHS
FOR THE YEARS ENDED DECEMBER 31, ENDED MARCH 31,
1993 1994 1995 1995 1996
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Revenues................................ $ 24,434 $ 26,564 $ 26,099 $ 6,658 $ 6,307
-------- -------- -------- -------- -----------
Operating Expenses:
Vessel and voyage..................... 17,418 17,711 18,287 4,419 4,087
Depreciation and amortization......... 3,672 3,878 3,355 671 1,062
Operating lease (Note 3).............. 10,730 10,805 7,557 2,317 755
Provision for losses (Notes 3, 5):
Impaired value of vessel............ 14,798
Lease obligation.................... 19,800 3,297
General and administrative (Note 6)... 827 854 848 214 209
-------- -------- -------- -------- -----------
Total operating expenses.......... 32,647 67,846 33,344 7,621 6,113
-------- -------- -------- -------- -----------
Operating (loss) income................. (8,213) (41,282) (7,245) (963) 194
-------- -------- -------- -------- -----------
Other Income (Expense):
Gain on disposal of assets (Note 3)... 334 333 167 84
Interest expense...................... (2,888) (2,253) (2,161) (478) (652)
Interest income....................... 109 105 1
-------- -------- -------- -------- -----------
Net other expense................. (2,445) (1,815) (1,993) (394) (652)
-------- -------- -------- -------- -----------
Loss before income taxes................ (10,658) (43,097) (9,238) (1,357) (458)
Benefit for income taxes (Note 4)....... 3,293 15,084 3,234 475 160
-------- -------- -------- -------- -----------
Net loss................................ (7,365) (28,013) (6,004) (882) (298)
Deficit, beginning of year.............. (57,458) (64,823) (92,836) (92,836) (98,840)
-------- -------- -------- -------- -----------
Deficit, end of year.................... $(64,823) $(92,836) $(98,840) $(93,718) $ (99,138)
-------- -------- -------- -------- -----------
-------- -------- -------- -------- -----------
</TABLE>
See notes to combined financial statements
F-34
<PAGE>
OMI CHEMICAL CARRIER GROUP
COMBINED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
FOR THE THREE
FOR THE YEARS MONTHS
ENDED DECEMBER 31, ENDED MARCH 31,
1993 1994 1995 1995 1996
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
CASH FLOWS PROVIDED BY OPERATING
ACTIVITIES:
Net loss................................. $(7,365) $(28,013) $ (6,004) $ (882) $ (298)
Adjustments to reconcile net loss to cash
provided by operating activities:
(Decrease) increase in deferred income
taxes.................................. (461) (13,629) (1,171) (121) 8,646
Depreciation and amortization.......... 3,672 3,878 3,355 671 1,062
Gain on disposal of assets--net........ (334) (333) (167) (84)
Provision for losses on vessel and
lease................................. 34,598 3,297
Changes in Assets and Liabilities:
Decrease (increase) in receivables and
other current assets.................. 135 (371) 614 356 229
(Decrease) increase in accounts payable
and accrued expenses................. (1,814) 2,614 (1,975) 669 685
Decrease (increase) in due from (to)
parent................................ 8,346 3,654 5,518 831 (8,621)
Decrease (increase) in other assets and
deferred charges...................... 260 (200) 443 80 69
Increase (decrease) in advance time
charter revenues and other liabilities. 1,369 78 (617) 95 155
Other assets & liabilities--net....... 1,257 133
------- -------- -------- ------- -------
Net cash provided by operating
activities........................... 5,065 2,276 3,426 1,615 1,927
------- -------- -------- ------- -------
CASH FLOWS (USED) PROVIDED BY INVESTING
ACTIVITIES:
Additions to vessels..................... (3,040) (351) (10,524) (352) (664)
Proceeds received on note receivable..... 500 1,500
------- -------- -------- ------- -------
Net cash (used) provided by investing
activities.......................... (2,540) 1,149 (10,524) (352) (664)
------- -------- -------- ------- -------
CASH FLOWS (USED) PROVIDED BY FINANCING
ACTIVITIES:
Payments on long-term debt............... (2,525) (3,425) (2,525) (1,263) (1,263)
Advances from parent..................... 9,623
------- -------- -------- ------- -------
Net cash (used) provided by financing
activities........................... (2,525) (3,425) 7,098 (1,263) (1,263)
------- -------- -------- ------- -------
Net (decrease) increase in cash............ $ -- $ -- $ -- $ -- $ --
------- -------- -------- ------- -------
------- -------- -------- ------- -------
</TABLE>
See notes to combined financial statements
F-35
<PAGE>
OMI CHEMICAL CARRIER GROUP
NOTES TO COMBINED FINANCIAL STATEMENTS
FOR THE THREE YEARS ENDED DECEMBER 31, 1995
AND (UNAUDITED) FOR THE THREE MONTHS ENDED MARCH 31, 1995 AND 1996
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Combined Statements--The combined financial statements for the OMI
Chemical Carrier Group (the "Group" or "Companies") include the financial
statements of Omichem Transport, Inc., OMI Clover Transport, Inc., and OMI
Hudson Transport, Inc. which are wholly owned subsidiaries of OMI Corp. ("OMI").
The three companies each own a vessel (OMI Star, OMI Hudson and OMI Dynachem,
respectively) which is time chartered to a joint venture, Ocean Specialty
Tankers Corporation ("OSTC"), owned by OMI and Seabulk Ocean Systems Corporation
("SOSC"), a subsidiary of Hvide Marine Incorporated ("Hvide") (see Note 3). OSTC
contracts with customers for ocean shipping of liquid chemicals.
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
disclosures 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.
Since inception, the Companies have incurred cumulative losses aggregating
over $99,000,000 at March 31, 1996. The Companies have been able to sustain
their ongoing operations because of OMI's commitment to provide funding for
working capital and other purposes. These financial statements have been
prepared on the assumption that OMI will continue to provide required funding in
the future.
In October 1995, OMI entered into an agreement with Hvide for the sale of
the OMI Star, OMI Hudson and OMI Dynachem and its interest in OSTC for
approximately $64,650,000, $30,000,000 in cash and the assumption of all
outstanding indebtedness relating to the vessels ($34,650,000 at June 2, 1996).
The agreement was amended April 30, 1996 to swap the OMI Dynachem for a
replacement vessel to be identified at a later date. Cash of $12,775,000 (of the
$30,000,000) will be transferred to an escrow account at delivery until such
vessel is identified and delivered. The sale of these three vessels and the
interest in OSTC is contingent upon Hvide successfully completing its initial
public offering of common stock in 1996.
Operating Revenues and Expenses--Voyage revenues are earned and recognized
on a daily basis and are subject to adjustments based on the operating results
of OSTC.
Special survey and drydock expenses are accrued and charged to operating
expense over the survey cycle, which generally is a two- to three-year period.
The accruals of such expenses are based on management's best estimates of future
cost and the expected length of the survey cycle. However, the ultimate
liability may be more or less than such estimates.
Vessels and Improvements--Vessels are recorded at cost. Depreciation for
financial reporting purposes is provided principally on the straight-line method
based on the estimated useful lives of the vessels up to the vessels' estimated
salvage value. The useful lives of the vessels are 25 and 30 years. Salvage
value is based upon a vessel's light weight tonnage multiplied by a scrap rate.
Improvements on leased vessels are amortized on the straight-line method
over the lives of the leases.
In the event that facts and circumstances indicate that the carrying amount
of a vessel may be impaired, an evaluation of recoverability is performed. If an
evaluation is required, the estimated future
F-36
<PAGE>
OMI CHEMICAL CARRIER GROUP
NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES--(CONTINUED)
undiscounted cash flows associated with the vessel are compared to the vessel's
carrying value to determine if a write-down to fair value or discounted cash
flow is required (see Note 5).
The Companies adopted Statement of Financial Accounting Standards No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
Be Disposed Of" effective January 1, 1995. Adoption of this statement did not
have a material effect on the Companies' combined financial position or results
of operations.
Income Taxes--The Companies are included in a consolidated Federal income
tax return filed by OMI which includes all eligible subsidiary Companies. The
accompanying financial statements include for each subsidiary in the Group a
cost or benefit for Federal income taxes based on the related separate taxable
income of each subsidiary. Deferred income taxes are recorded under the
provisions of Statement of Financial Accounting Standards No. 109, "Accounting
for Income Taxes."
Retirement Plans--The Companies comprising the Group make contributions to
union sponsored multi-employer pension plans covering seagoing personnel.
Contributions to these plans amounted to approximately $218,000, $276,000, and
$262,000 for the years ended December 31, 1993, 1994 and 1995 and $53,000 and
$38,000 for the three months ended March 31, 1995 and 1996, respectively. If
these Companies were to withdraw from the plans or the plans were to terminate,
the Companies would be liable for a portion of any unfunded plan benefits that
might exist. The Group has been advised by the trustees of such plans that it
has no withdrawal liability as of December 31, 1995.
Cash Flows--During the years ended December 31, 1993, 1994 and 1995, the
Group paid interest of $2,504,000, $1,932,000, and $1,475,000, respectively.
During the three months ended March 31, 1995 and 1996 the Group paid interest of
$870,000 and $841,000, respectively.
2. LONG-TERM DEBT
Long-term debt consists of the following:
<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
1994 1995 1996
<S> <C> <C> <C>
Bonds, secured by a vessel, at 5.35% and 10.1%
payable in installments to 2006..................... $20,013,000 $17,488,000 $35,795,000
Less: current portion of long-term debt............. 2,525,000 2,525,000 4,815,000
----------- ----------- -----------
Long-term debt...................................... $17,488,000 $14,963,000 $30,980,000
----------- ----------- -----------
----------- ----------- -----------
Fair value of long-term debt........................ $19,871,000 $18,926,000 $39,637,000
----------- ----------- -----------
----------- ----------- -----------
</TABLE>
The bonds are collateralized by a mortgage on the OMI Dynachem and OMI
Hudson and are guaranteed as to principal and interest by the U.S. Government
under the Title XI Program. At March 31, 1996, the vessels (net book values
aggregating $56,993,000) and investments of $9,717,000 held by OMI Corp. in its
Capital Construction and other restricted funds have been pledged as collateral
for the long-term debt issues. The security arrangement restricts OMI Hudson
Transport, Inc. and OMI Clover Transport, Inc. ("OMI Clover") from, among other
things, the withdrawal of capital, the payment of common stock dividends and the
extending of loans to affiliated parties.
F-37
<PAGE>
OMI CHEMICAL CARRIER GROUP
NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)
2. LONG-TERM DEBT--(CONTINUED)
Subsequent to December 31, 1995, aggregate annual maturities of the bonds
during each of the next five years 1996 through 2000 were $2,525,000. Subsequent
to March 31, 1996, aggregate maturities for a twelve month period on such bonds
in the next five years through 2001 are $4,815,000.
The fair value of the bonds is estimated based on current rates available
for similar issues.
3. OPERATING LEASES
Total rent expense, which relates to two vessels, amounted to $10,730,000,
$10,805,000 and $7,557,000 for the years ended December 31, 1993, 1994 and 1995,
respectively. Rent expense for the three months ended March 31, 1995 and 1996
was $2,317,000 and $755,000, respectively.
OMI Clover has operated the vessel OMI Hudson under a long-term operating
lease requiring semi-annual payments through December 2006. In October 1995, OMI
Clover entered into an agreement with the owner/lessor of the OMI Hudson to
terminate the operating lease for $25,000,000 and subsequently purchase the
vessel for $30,000,000. The estimated loss on lease termination of $3,297,000
was reported as a separate item in the 1995 Combined Statement of Operations and
Deficit. In February 1996, OMI Clover terminated the operating lease on the
vessel for $22,000,000 cash and the issuance of a $3,000,000 Convertible Note by
OMI. In March 1996, OMI Clover purchased the vessel for cash of $9,300,000
($10,430,000 less reimbursement of a portion of the lease payment of $1,130,000
in accordance with the agreement) and assumption of debt of $19,570,000 (see
Note 2). The $31,300,000 cash paid by OMI on behalf of OMI Clover and the
$3,000,000 Note issued by OMI aggregating $34,300,000 to terminate the lease and
purchase the vessel was recorded as a capital contribution to OMI Clover.
In 1992, Omichem Transport, Inc. ("Omichem") entered into a sale/leaseback
transaction for the OMI Star. Omichem received $11,500,000 in cash, of which
$3,500,000 was used to pay the mortgage on the vessel, a $2,000,000 secured note
receivable paid December 1994 and a six year lease. The gain on the transaction
of approximately $2,001,000 was deferred and amortized over the life of the
lease until June 29, 1995 when Omichem repurchased the OMI Star for $9,623,000.
The funds to purchase the OMI Star were in the form of a long-term advance from
OMI at a variable rate based on the London Interbank Offering Rate.
The three vessels operated by the Group are time chartered to OSTC, a joint
venture between OMI and SOSC. The balances included in the financial statements
due from OSTC represent charter hire receivables.
As of December 31, 1995 the Companies have time charter agreements with OSTC
for initial terms ending May 31, 2000, with extension options after that date.
The vessels are under charter for "base" hire rates dependent upon the
performance of the vessels.
F-38
<PAGE>
OMI CHEMICAL CARRIER GROUP
NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)
4. INCOME TAXES
A summary of the components of the benefit for income taxes is as follows:
<TABLE>
<CAPTION>
FOR THE THREE
FOR THE YEARS MONTHS
ENDED DECEMBER 31, ENDED MARCH 31,
1993 1994 1995 1995 1996
<S> <C> <C> <C> <C> <C>
Current benefit.............. $(2,542) $ (1,156) $(1,766) $(280) $(8,733)
Deferred tax benefit......... (461) (13,629) (1,171) (120) 8,646
------- -------- ------- ----- -------
Benefit for income taxes as
originally reported for
internal purposes.......... (3,003) (14,785) (2,937) (400) (87)
Current benefit for allocated
general and administrative
expenses (see Note 6)...... (290) (299) (297) (75) (73)
------- -------- ------- ----- -------
Total........................ $(3,293) $(15,084) $(3,234) $(475) $ (160)
------- -------- ------- ----- -------
------- -------- ------- ----- -------
</TABLE>
Deferred income taxes are payable to OMI. The components of deferred income
taxes relate to tax effects of temporary differences as follows:
<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
1994 1995 1996
<S> <C> <C> <C>
Deferred tax liabilities:
Differences between book and tax basis of
vessels.................................... $ 9,424 $ 9,108 $ 9,088
Other....................................... 54 74 75
------- ------- ---------
Total deferred tax liabilities.......... 9,478 9,182 9,163
------- ------- ---------
Deferred tax assets:
Future lease liability accrual.............. (6,930) (8,750)
Accrual for drydocking...................... (567) (811) (896)
Accrued lease payable....................... (785)
Deferred gain on sale/leaseback............. (404)
------- ------- ---------
Total deferred tax assets............... (8,686) (9,561) (896)
------- ------- ---------
Deferred income taxes--net.................... $ 792 $ (379) $ 8,267
------- ------- ---------
------- ------- ---------
</TABLE>
On August 2, 1993, Congress passed the Omnibus Budget Reconciliation Act of
1993 (the "Act"). The major component of the Act affecting the Group was the
retroactive increase in the marginal corporate tax rate from 34 percent to 35
percent, increasing the 1993 deferred income taxes of the Group by $438,000 to
comply with the provisions of the Act.
5. IMPAIRMENT AND PROVISION FOR LOSS ON VESSEL LEASE OBLIGATION
As part of the periodic review of the recoverability of the investment in
vessels, in 1994 management determined that the carrying value of the OMI
Dynachem exceeded the undiscounted forecasted future net cash flows from its
operations. This indicated that an impairment loss for this vessel should be
recognized. This loss was measured by the excess of the carrying value of the
vessel over its estimated fair value which was based on values provided by two
shipbrokers. The carrying value was reduced by $14,798,000, which is reported as
a separate item in the 1994 Combined Statement of Operations and Deficit.
As part of this periodic review, it also was determined that a similar loss
should be recognized for the forecasted loss from operations of the OMI Hudson
which is chartered-in on an operating lease
F-39
<PAGE>
OMI CHEMICAL CARRIER GROUP
NOTES TO COMBINED FINANCIAL STATEMENTS--(CONCLUDED)
5. IMPAIRMENT AND PROVISION FOR LOSS ON VESSEL LEASE OBLIGATION-- (CONTINUED)
through 2006. The amount of the loss was estimated based on forecasted
undiscounted cash flows, excluding from rent expense an amount representative of
the interest component of the lease agreement, through the lease expiration
date. This loss, estimated as $19,800,000, is also reported as a separate item
in the 1994 Combined Statement of Operations and Deficit.
6. TRANSACTIONS WITH PARENT
Due from (to) Parent represents tax benefits currently due from OMI reduced
by non-interest bearing advances from OMI to fund the Group's operations. OMI
maintains a centralized cash management system whereby it accepts and deposits
all cash receipts on behalf of its subsidiaries and pays all costs, expenses and
other obligations of such subsidiaries. These disbursements primarily represent
vessel and voyage expenses, lease payments, interest expense and required
payments of long-term debt. The average balances due from (to) OMI (based on
individual monthly balances outstanding) are as follows:
<TABLE>
<CAPTION>
FOR THE THREE
FOR THE YEARS MONTHS
ENDED DECEMBER 31, ENDED MARCH 31,
<S> <C> <C> <C> <C> <C>
1993 1994 1995 1995 1996
$11,957 $5,307 $1,535 $3,567 $(1,526)
</TABLE>
OMI provides all general and administrative services for the Group and has
not followed the practice of allocating general and administrative expenses
incurred by OMI to its various domestic subsidiaries although it does allocate
such costs to its various foreign subsidiaries. For purposes of the accompanying
financial statements, provision has been made during each period for the
allocation of general and administrative costs to the Group on a basis similar
to that used by OMI for allocation of such costs to foreign subsidiaries as
follows:
<TABLE>
<CAPTION>
FOR THE THREE
FOR THE YEARS MONTHS
ENDED DECEMBER 31, ENDED MARCH 31,
<S> <C> <C> <C> <C> <C>
1993 1994 1995 1995 1996
Allocated general and adminis-
trative costs.................. $ 827 $ 854 $ 848 $ 214 $ 209
Benefit for income taxes (see
Note 4)....................... (290) (299) (297) (75) (73)
------- ------ ------ ------ -------
$ 537 $ 555 $ 551 $ 139 $ 136
------- ------ ------ ------ -------
------- ------ ------ ------ -------
</TABLE>
The method used allocates fixed annual amounts of costs on a per vessel
basis for financial accounting and vessel management activities and allocates
costs for general corporate activities based on 1.25 percent of revenues earned
by each vessel. Management of OMI believes that this allocation method is
reasonable.
7. CONTINGENT LIABILITIES
Companies in the Group are defendants in various legal actions from shipping
operations. Such actions are covered by insurance or, in the opinion of
management after review with counsel, are of such a nature that the ultimate
liability, if any, would not have a material adverse effect on the combined
financial statements.
F-40
<PAGE>
INDEPENDENT AUDITORS' REPORT
Partners of
INDIAN SEAL PARTNERS, LTD.,
BAFFIN SEAL PARTNERS, LTD.,
BALTIC SEAL PARTNERS, LTD.,
BENGAL SEAL PARTNERS, LTD., and
ROSS SEAL PARTNERS, LTD.
We have audited the accompanying Combined Statements of Vessel Operations of
Indian Seal Partners, Ltd., Baffin Seal Partners, Ltd., Baltic Seal Partners,
Ltd., Bengal Seal Partners, Ltd., and Ross Seal Partners, Ltd. (collectively
"the Seal Partners") for the years ended December 31, 1995, 1994 and 1993. These
financial statements are the responsibility of the management of the Seal
Partners. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
As described in Note 1, the combined financial statements referred to above
have been prepared in accordance with the Asset Purchase Agreement between the
Seal Partners and Hvide Marine Incorporated, dated March 29, 1996, and amended
July 23, 1996, for the sale of certain assets and operations to Hvide Marine
Incorporated (the "Agreement") and are not intended to be complete presentations
of the Seal Partners' revenues and expenses.
In our opinion, the combined statements referred to above present fairly, in
all material respects, the combined vessel operations of the Seal Partners for
the years ended December 31, 1995, 1994, and 1993, pursuant to the Agreement
described in Note 1, in conformity with generally accepted accounting
principles.
PANNELL KERR FORSTER OF TEXAS, P.C.
Houston, Texas
April 12, 1996, except for the fourth paragraph of
Note 1, as to which the date is August 1, 1996
F-41
<PAGE>
INDIAN SEAL PARTNERS, LTD.
BAFFIN SEAL PARTNERS, LTD.
BALTIC SEAL PARTNERS, LTD.
BENGAL SEAL PARTNERS, LTD.
ROSS SEAL PARTNERS, LTD.
COMBINED STATEMENTS OF VESSEL OPERATIONS
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH
FOR THE YEAR ENDED DECEMBER 31, 31,
1993 1994 1995 1995 1996
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Combined operating
revenues.................... $4,402,220 $4,150,519 $5,383,398 $1,254,719 $1,513,800
Combined operating expenses
Groceries.................. 16,742 30,490 49,741 11,364 13,313
Insurance claims........... 115,252 77,907 62,543 1,603 4,195
Insurance premiums......... 302,295 431,129 428,589 104,630 101,367
Medical.................... 14,809 37,549 44,242 9,854 8,552
Payroll taxes.............. 39,618 68,539 101,600 29,520 27,827
Repairs and maintenance.... 286,373 417,341 422,016 146,359 102,350
Safety training............ 18,792 30,163 34,919 5,424 8,789
Salaries--crews............ 690,960 995,602 1,297,067 321,196 320,662
Supplies................... 77,145 268,254 87,672 19,745 27,896
Taxes, licenses and
miscellaneous............. 42,910 168,467 154,769 17,044 24,301
Transportation--crews...... 133,148 84,888 93,453 17,908 13,912
---------- ---------- ---------- ---------- ----------
Total combined
operating expenses.... 1,738,044 2,610,329 2,776,611 684,647 653,164
---------- ---------- ---------- ---------- ----------
Excess of combined
operating revenues
over expenses........ $2,664,176 $1,540,190 $2,606,787 $ 570,072 $ 860,636
---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ----------
</TABLE>
See notes to financial statements.
F-42
<PAGE>
INDIAN SEAL PARTNERS, LTD.
BAFFIN SEAL PARTNERS, LTD.
BALTIC SEAL PARTNERS, LTD.
BENGAL SEAL PARTNERS, LTD.
ROSS SEAL PARTNERS, LTD.
NOTES TO COMBINED FINANCIAL STATEMENTS
NOTE 1--BASIS OF PRESENTATION
The accompanying combined financial statement includes certain accounts of:
<TABLE>
<CAPTION>
NAME OF ENTITY TYPE OF ENTITY NAME OF SHIP
- ----------------------------- ----------------------------- -----------------------------
<S> <C> <C>
Indian Seal Partners, Ltd. Limited Partnership Indian Seal--204 Feet
Baffin Seal Partners, Ltd. Limited Partnership Baffin Seal--185 Feet
Baltic Seal Partners, Ltd. Limited Partnership Baltic Seal--205 Feet
Bengal Seal Partners, Ltd. Limited Partnership Bengal Seal--185 Feet
Ross Seal Partners, Ltd. Limited Partnership Ross Seal--163 Feet
</TABLE>
Each of the five limited partnerships above (collectively "the Seal
Partners") owns an offshore service ship (collectively "the Seal Partners
Ships"). These entities have been combined because they have common partners and
have collectively entered into an Asset Purchase Agreement to sell certain
assets. There have been no significant intercompany transactions or interrelated
activities between these entities.
The Baltic Seal was purchased by Baltic Seal Partners, Ltd. in February 1994
and was placed in service in August 1994 after a period of drydocking.
According to the terms of the Asset Purchase Agreement dated March 29, 1996,
and amended July 23, 1996 the Seal Partners have committed to sell certain
assets which include the Seal Partners Ships and related improvements to Hvide
Marine Incorporated ("Hvide"). In accordance with the July 1996 amendment, Hvide
will purchase the assets for the price of $16.0 million.
The accompanying combined statements of vessel operations include only
operating revenues and direct expenses related solely to the assets to be
acquired by Hvide. Other operating results of the Seal Partners are omitted from
the statements as they do not directly relate to the assets being sold to Hvide.
The accompanying combined statements of vessel operations (i) include the
operating revenues and operating expenses directly related to the operations of
the Seal Partners Ships, and (ii) exclude depreciation, general and
administrative overhead allocations, management fees, interest expense and
income taxes.
General and administrative expenses have been excluded since Seal Partners
have operations other than the vessel operations presented herein. Seal Partners
do not allocate general and administrative expenses among specific operations or
vessels.
NOTE 2--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
__Operating revenues
All operating revenues are earned from time charters and recognized based on
contract day rates.
F-43
<PAGE>
INDIAN SEAL PARTNERS, LTD.
BAFFIN SEAL PARTNERS, LTD.
BALTIC SEAL PARTNERS, LTD.
BENGAL SEAL PARTNERS, LTD.
ROSS SEAL PARTNERS, LTD.
NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)
NOTE 3--ASSETS TO BE SOLD BY THE SEAL PARTNERS (UNAUDITED)
The following presents the combined historical costs of acquisition and
accumulated depreciation of the assets to be sold to Hvide which have been
recorded by the Seal Partners (unaudited):
<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
<S> <C> <C> <C> <C> <C>
1993 1994 1995 1995 1996
Vessels.................. $10,761,504 $11,411,504 $11,411,504 $11,411,504 $11,411,504
Accumulated
depreciation............ (7,445,096) (7,971,650) (8,514,471) (8,107,354) (8,650,177)
----------- ----------- ----------- ----------- -----------
Net...................... $ 3,316,408 $ 3,439,854 $ 2,897,033 $ 3,304,150 $ 2,761,327
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
</TABLE>
The costs of major improvements to the vessels which have been made by the
Seal Partners have not been capitalized and depreciated, are excluded from the
above unaudited schedule, and aggregated $481,765, $3,487,435 and $922,475
during the years ended December 31, 1995, 1994, and 1993, respectively and
$407,604 and $226,630 during the three months ended March 31, 1996 and 1995,
respectively. Additional costs of improvements were incurred during periods
prior to 1993.
Depreciation expense, based on useful lives of 7 to 32 years for the vessels
and approximately three years for the related improvements presented herein, is
approximately $2,093,000, $1,415,000 and $608,000 for the years ended December
31, 1995, 1994 and 1993, respectively, and $543,000 and $503,000 for the three
months ended March 31, 1996 and 1995, respectively.
The assets of the Seal Partners that are not being sold to Hvide have been
excluded from the table above. No liabilities of the Seal Partners are to be
assumed in connection with the Agreement.
NOTE 4--ALLOCATION OF PURCHASE PRICE (UNAUDITED)
In accordance with the Agreement, as amended, the purchase price of the
assets of $16.0 million will be allocated to the vessels.
Based upon Hvide's policies, the vessels will be depreciated on a straight
line basis over 8 to 26 years.
F-44
<PAGE>
INDEPENDENT AUDITORS' REPORT
Board of Directors of
Seal Fleet, Inc.
We have audited the accompanying Statements of Assets to be Sold of Seal
Fleet, Inc. and Subsidiaries as of December 31, 1995, 1994 and 1993 and the
related Statements of Vessel Operations for the years then ended. These
financial statements are the responsibility of the management of Seal Fleet,
Inc. Our responsibility is to express an opinion on these financial statements
based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
As described in Note 1, the financial statements referred to above have been
prepared in accordance with the Asset Purchase Agreement between Seal Fleet,
Inc. and Subsidiaries and Hvide Marine Incorporated dated March 29, 1996, and
amended July 23, 1996 for the sale of certain assets and operations to Hvide
Marine Incorporated (the "Agreement") and are not intended to be complete
presentations of Seal Fleet, Inc. and Subsidiaries' assets, liabilities,
revenues and expenses.
In our opinion, the statements referred to above present fairly, in all
material respects, the assets to be sold of Seal Fleet, Inc. and Subsidiaries as
of December 31, 1995, 1994 and 1993 and the related vessel operations for the
years then ended, pursuant to the Agreement described in Note 1, in conformity
with generally accepted accounting principles.
PANNELL KERR FORSTER OF TEXAS, P.C.
Houston, Texas
April 12, 1996, except for the second paragraph of Note 1,
as to which the date is August 1, 1996
F-45
<PAGE>
SEAL FLEET, INC. AND SUBSIDIARIES
STATEMENTS OF ASSETS TO BE SOLD
<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
1993 1994 1995 1996
(UNAUDITED)
<S> <C> <C> <C> <C>
Vessels.................................... $9,922,088 $9,922,088 $9,922,088 $9,922,088
Accumulated depreciation................... (6,320,197) (6,819,771) (7,319,309) (7,417,261)
Deferred drydocking (net).................. 558,412 315,323 643,049 836,027
Inventory.................................. 125,652 125,652 49,127 49,127
---------- ---------- ---------- ----------
Total.............................. $4,285,955 $3,543,292 $3,294,955 $3,389,981
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
</TABLE>
See notes to financial statements.
F-46
<PAGE>
SEAL FLEET, INC. AND SUBSIDIARIES
STATEMENTS OF VESSEL OPERATIONS
<TABLE>
<CAPTION>
THREE MONTHS
FOR THE YEAR ENDED DECEMBER 31, ENDED MARCH 31,
1993 1994 1995 1995 1996
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Operating revenues................ $3,155,315 $3,333,704 $3,267,072 $786,124 $841,239
Operating expenses
Depreciation.................... 498,140 498,144 498,139 125,969 97,952
Engineering allocation.......... 58,284 19,576 42,530 13,299 10,890
Groceries....................... 24,606 12,395 16,167 6,575 5,532
Insurance claims................ 41,886 43,481 12,589 (3,196) 8,994
Insurance premiums.............. 243,954 237,558 232,565 59,647 56,744
Medical......................... 20,479 14,259 19,423 4,114 4,899
Payroll taxes................... 48,637 50,326 65,934 19,621 19,282
Repairs and maintenance......... 416,337 412,302 471,493 105,429 102,217
Safety training................. 16,016 15,349 17,736 6,643 6,180
Salaries--crews................. 612,871 675,786 731,030 177,909 182,750
Supplies........................ 49,607 26,737 27,915 8,764 6,691
Taxes, licenses and
miscellaneous.................. 81,118 34,964 40,668 10,279 7,696
Transportation--crews........... 17,379 64,731 45,255 12,910 6,139
---------- ---------- ---------- -------- --------
Total operating
expenses................. 2,129,314 2,105,608 2,221,444 547,963 515,966
---------- ---------- ---------- -------- --------
Excess of operating
revenues over expenses... $1,026,001 $1,228,096 $1,045,628 $238,161 $325,273
---------- ---------- ---------- -------- --------
---------- ---------- ---------- -------- --------
</TABLE>
See notes to financial statements.
F-47
<PAGE>
SEAL FLEET, INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
NOTE 1--BASIS OF PRESENTATION
Seal Fleet, Inc. and Subsidiaries ("Seal Fleet") own and manage the
following three offshore service ships (the "Seal Fleet Ships").
<TABLE>
<S> <C>
China Seal--176 Feet
Hawke Seal--185 Feet
Pegasus Seal--185 Feet
</TABLE>
In accordance with an Asset Purchase Agreement with Hvide Marine
Incorporated ("Hvide"), dated March 29, 1996, and amended July 23, 1996 Seal
Fleet committed to sell the Seal Fleet Ships, related improvements, and
inventory to Hvide. In accordance with the July 1996 amendment, Hvide will
purchase the assets for the price of $9.6 million and provide the sum of
$475,000 to Seal Fleet for its use in downsizing its operations.
The accompanying statements of assets include only those assets to be sold.
They are presented at their historical cost, less any accumulated depreciation
and amortization.
The assets and liabilities of Seal Fleet which are not being sold to or
assumed by Hvide, are omitted from the accompanying statements of assets, as
such statements are not intended to be complete financial statements of Seal
Fleet.
The accompanying statements of vessel operations include only operating
revenues and direct expenses related solely to the assets to be acquired by
Hvide. Other operating results of Seal Fleet are omitted from the statements as
they do not directly relate to the assets being sold to Hvide.
The accompanying statements of vessel operations (i) include the operating
revenues and operating expenses directly related to the operations of the Seal
Fleet Ships, and (ii) exclude general and administrative overhead allocations,
intercompany commissions allocated among Seal Fleet, Inc. and its Subsidiaries,
interest expense and income taxes.
General and administrative expenses have been excluded since Seal Fleet has
operations other than the vessel operations presented herein. Seal Fleet does
not allocate general and administrative expenses among specific operations or
vessels.
NOTE 2--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Vessels and Improvements
Vessels and improvements include two seismic ships and one supply service
ship and are stated at cost less accumulated depreciation. Depreciation is
computed on the straight-line method using estimated useful lives of twenty
years. Major improvements are capitalized as deferred drydocking and are
amortized over the estimated period benefitted of eighteen months to four years
while replacements, maintenance and repairs which do not improve or extend the
lives of the assets are expensed as incurred. The costs of annual drydocking and
inspections of the ships are expensed as incurred.
Operating revenues
Operating revenues are earned from time charters and are recognized based on
contract day rates for the Seal Fleet Ships.
NOTE 3--DEFERRED DRYDOCKING
The costs of major improvements to the vessels, which have been capitalized
as deferred drydocking, aggregated $659,780, $22,719 and $476,922 during the
years ended December 31, 1995, 1994
F-48
<PAGE>
SEAL FLEET, INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
NOTE 3--DEFERRED DRYDOCKING--(CONTINUED)
and 1993, respectively, and $616,530 and $11,939 during the three months ended
March 31, 1996 and 1995, respectively.
NOTE 4--ALLOCATION OF PURCHASE PRICE (UNAUDITED)
In accordance with the Agreement, as amended, the following is the expected
allocation of the purchase price of the assets (in thousands):
Vessels.................................................. $ 9,190
Deferred drydocking costs................................ 836
Spare parts and supplies................................. 49
-------
$10,075
-------
Based upon Hvide's policies, the vessels will be depreciated on a straight
line basis over 6 to 11 years and the drydocking costs will be amortized on a
straight line basis from the date purchased to the next required drydocking for
each vessel.
F-49
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The Board of Directors and Shareholders
HVIDE MARINE INCORPORATED
We have audited the accompanying statements of assets to be sold of Gulf
Boat Marine Services, Inc. and E&D Boat Rentals, Inc. (the Companies) as of
September 30, 1994 and 1995, and the related statements of vessel operations for
the years then ended. These statements of assets to be sold and the related
statements of vessel operations are the responsibility of the management of the
Companies. Our responsibility is to express an opinion on the statements of
assets to be sold and the related statements of vessel operations based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the statements of assets to be sold and the
related statements of vessel operations are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the statements of assets to be sold and the related statements of
vessel operations. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating the
overall presentation of the statements of assets to be sold and the related
statements of vessel operations. We believe that our audits provide a reasonable
basis for our opinion.
As described in Note 1, the statements of assets to be sold and the related
statements of vessel operations referred to above have been prepared in
accordance with the Asset Purchase Agreement between the Companies and Hvide
Marine Incorporated dated January 15, 1996 for the sale of certain assets to
Hvide Marine Incorporated, and is not intended to be a complete presentation of
the Companies' assets, liabilities, revenue and expenses.
In our opinion, the statements of assets to be sold and the related
statements of vessel operations referred to above present fairly, in all
material respects, the assets to be sold of the Companies at September 30, 1994
and 1995, and its vessel operations for each of the years then ended, pursuant
to the Sale and Purchase Agreement described in Note 1, in conformity with
generally accepted accounting principles.
ERNST & YOUNG LLP
New Orleans, Louisiana
February 1, 1996
F-50
<PAGE>
GULF BOAT MARINE SERVICES, INC. AND E&D BOAT RENTALS, INC.
STATEMENTS OF ASSETS TO BE SOLD
(IN THOUSANDS)
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1994 1995 1995
(UNAUDITED)
<S> <C> <C> <C>
Vessels and improvements....................................... $8,864 $8,972 $8,999
Less accumulated depreciation.................................. 8,030 8,240 8,283
------ ------ ------------
$ 834 $ 732 $ 716
------ ------ ------------
------ ------ ------------
</TABLE>
See accompanying notes.
F-51
<PAGE>
GULF BOAT MARINE SERVICES, INC. AND E&D BOAT RENTALS, INC.
STATEMENTS OF VESSEL OPERATIONS
(IN THOUSANDS)
<TABLE>
<CAPTION>
THREE MONTHS
YEAR ENDED ENDED
SEPTEMBER 30, DECEMBER 31,
1994 1995 1994 1995
(UNAUDITED)
<S> <C> <C> <C> <C>
Charter hire revenue......................................... $3,095 $3,252 $797 $832
Operating expenses:
Crew payroll and benefits.................................. 1,137 1,113 276 276
Repairs, maintenance, fuel and supplies.................... 584 565 126 166
Insurance.................................................. 384 424 105 86
Depreciation............................................... 222 210 58 43
Other...................................................... 37 60 -- 26
------ ------ ---- ----
Total operating expenses..................................... 2,364 2,372 565 597
------ ------ ---- ----
Gross profit................................................. 731 880 232 235
Overhead expenses:
Salaries and benefits...................................... 308 290 74 91
Office expenses............................................ 46 53 17 21
Professional fees.......................................... 26 30 3 10
Other...................................................... 59 56 30 42
------ ------ ---- ----
Total overhead expenses...................................... 439 429 124 164
------ ------ ---- ----
Income from vessel operations................................ $ 292 $ 451 $108 $ 71
------ ------ ---- ----
------ ------ ---- ----
</TABLE>
See accompanying notes.
F-52
<PAGE>
GULF BOAT MARINE SERVICES, INC. AND E&D BOAT RENTALS, INC.
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1994 AND 1995
1. BASIS OF PRESENTATION
Under the terms of an Asset Purchase Agreement (the Agreement) dated January
15, 1996, Gulf Boat Marine Services, Inc. and E&D Boat Rentals, Inc. (the
Companies) have agreed to sell eight crew boats to Hvide Marine Incorporated
(Hvide) for $3,350,000. On January 31, 1996, Hvide assigned its rights under the
terms of the Agreement to Lawrence Bedrosian (d/b/a Steel Style Marine C.C.F.
Fund) and the sale was completed.
The accompanying statements of assets to be sold presents the historical
cost and accumulated depreciation of these eight crew boats which were owned and
operated by the Companies.
The accompanying statements of vessel operations include the revenue,
operating expenses and overhead expenses directly related to the operations of
these eight crew boats. Items excluded are the revenue, operating expenses and
overhead expenses associated with the operations of six other crew boats not
being sold to Hvide, along with the Companies' interest income and expense, and
income taxes. Overhead expenses of the Companies were allocated based upon
revenue by crew boat.
The accompanying statements are not intended to be complete financial
statements of the Companies.
2. SUMMARY OF SIGNIFICANT ACCOUNTING AND REPORTING POLICIES
Unaudited Interim Financial Statements
The unaudited statement of assets to be sold at December 31, 1995 and the
unaudited statements of vessel operations for the three months ended December
31, 1994 and 1995 and the notes thereto have been prepared in accordance with
generally accepted accounting principles for interim financial information. In
the opinion of management, all adjustments (consisting of normal recurring
accruals) considered necessary for a fair statement have been included. The
results of vessel operations are not necessarily indicative of the results which
can be expected for full years.
Operations
The principal operations of the Companies consist of short-term vessel time
charters of its crew boats. The crew boats are used primarily in the Gulf of
Mexico by operators drilling oil and gas wells. During the years ended September
30, 1994 and 1995, five major customers accounted for 91% and 88%, respectively,
of its charter hire revenue. During the years ending September 30, 1994 and
1995, there were five individual customers representing greater than 10% of
charter hire revenues, as follows:
1994 1995
34.1% 26.6%
12.5 23.9
14.2 13.9
13.5 13.8
13.9% 12.9%
Revenue
Revenue from time charters are earned and recognized on a daily basis.
Vessels and Improvements
Vessels and improvements are stated at cost less accumulated depreciation.
Depreciation is computed on the straight-line method over 5 years for
improvements and 12 to 24 years for vessels, the estimated useful life of the
assets. Major renewals and betterments are capitalized, while replacements,
maintenance, and repairs which do not improve or extend the life of the assets
are expensed.
F-53
<PAGE>
GULF BOAT MARINE SERVICES, INC. AND E&D BOAT RENTALS, INC.
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
SEPTEMBER 30, 1994 AND 1995
3. RELATED PARTIES
The Companies are owned by four individuals. Total salaries for these
individuals for the years ended September 30, 1994 and 1995 were $311,000 and
$298,000, respectively. Approximately $178,000 and $170,000, respectively, of
these salaries are included in the accompanying 1994 and 1995 statements of
vessel operations. Total salaries for these individuals for the three months
ended December 31, 1994 and 1995 were $76,000 and $92,000, respectively.
Approximately $43,000 and $52,000, respectively, of these salaries are included
in the accompanying statements of vessel operations for the quarters ended
December 31, 1994 and 1995 (unaudited).
F-54
<PAGE>
GLOSSARY
The following is a set of definitions for shipping terms that are used
throughout this Prospectus:
American Bureau of Shipping (or "ABS"): a vessel classification society.
Bareboat Charter: the rental or lease of an empty ship, without crew, stores
or provisions; the charterer (lessee) has the responsibility of operating the
vessel as though it were his own.
Certificate of Financial Responsibility (Water Pollution) or "COFR": means a
certificate issued by the U.S. Coast Guard that evidences a vessel owner or
operator's compliance with the statutory requirement to provide evidence of the
financial ability to meet liability for discharges of oil and hazardous
substances under the federal Water Pollution Control Act, the Comprehensive
Environmental Response, Compensation, and Liability Act, and OPA 90.
Classification Societies: classification societies hold records of the class
maintenance of each ship registered or classed with them; these records are
deposited for the personal and confidential information and guidance of the
owner of the vessel.
Crew boat or Vessel: an offshore supply vessel generally employed to
transport crew and supplies between ports and offshore drilling or production
facilities.
Day Rate: the price paid under a bareboat charter for one day's operation.
Double Bottom: compartments at the bottom of a vessel between the skin of
the vessel and its inner compartments containing cargo tanks and machinery
spaces; double bottom spaces can be used as void spaces or as ballast, water, or
fuel tanks.
Double Hull: hull construction technique by which a ship has an inner and
outer hull separated by void space, usually several feet in width.
Drydocking: the process by which a vessel is taken out of the water to
accomplish underwater repairs.
DWT: deadweight ton; a measurement of the carrying capacity of a vessel,
generally equal to the difference between the amount of water displaced by the
unloaded vessel and that displaced by the fully loaded vessel.
Escort Tug: a tugboat employed as an escort for a larger vessel usually in
dangerous or constricted waters.
Gross Ton: enclosed space of a ship measured in cubic feet divided by 100;
thus 100 cubic feet of such capacity is equivalent to one gross ton.
Integrated tug/barge or "ITB": a large barge integrated from the stern onto
the bow of a tug constructed to push the barge.
ISO 9002: one of three generic standards for quality management and quality
assurance intended to instill confidence in customers that a business will
provide satisfactory service on a consistent basis.
Jones Act: the portions of the federal Merchant Marine Act, 1920 restricting
U.S. domestic trade to U.S. owned and constructed U.S.-flag vessels.
Offshore Supply Boat or Vessel: a boat or vessel engaged in providing supply
services to the offshore energy industry.
OPA 90: the federal Oil Pollution Act of 1990.
A-1
<PAGE>
Time Charter: the hire of a fully operational ship for a specified period of
time; the shipowner provides the ship with crew, stores and provisions, ready in
all aspects to load cargo and proceed on a voyage as instructed by the
charterer. The charterer pays for fuel and all voyage-related expenses including
canal tolls and port charges.
Tractor Tug: a tugboat able to apply force in all directions which can
generally perform certain maneuvers more quickly and efficiently than
conventional tugs.
Utility Boat or Vessel: an offshore supply vessel generally employed to
transport crew and supplies between ports and offshore drilling or production
facilities.
Voyage Charter: contract of carriage in which the charterer pays for the use
of a ship's cargo capacity for one, or sometimes more than one, voyage; under
this type of charter, the shipowner pays all the operating costs of the ship
(including fuel, canal and port charges, pilotage, towage and ship's agency)
while payment for port and cargo handling charges are subject to agreement
between the parties; freight is generally paid per unit of cargo, such as a ton,
based on an agreed quantity, or as a lump sum irrespective of the quantity
loaded.
A-2
<PAGE>
Description of Picture:
The Seabulk California at an offshore location.
Caption:
One of the Company's 180-foot supply boats offloading drilling fluids, fuel, and
other supplies at an offshore Gulf of Mexico drilling location.
<PAGE>
=========================================== ==================================
- ------------------------------------------- ----------------------------------
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS,
OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS, IN CONNECTION WITH THE OFFERING 7,000,000 SHARES
MADE HEREBY, AND, IF GIVEN OR MADE, SUCH IN-
FORMATION OR REPRESENTATIONS MUST NOT BE
RELIED UPON AS HAVING BEEN AUTHORIZED BY THE
COMPANY, THE UNDERWRITERS, OR ANY OTHER [LOGO]
PERSON. NEITHER THE DELIVERY OF THIS
PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL
UNDER ANY CIRCUMSTANCES CREATE ANY
IMPLICATION THAT THERE HAS BEEN NO CHANGE IN HVIDE MARINE
THE AFFAIRS OF THE COMPANY SINCE THE DATE INCORPORATED
HEREOF. THIS PROSPECTUS DOES NOT CONSTITUTE
AN OFFER OR A SOLICITATION OF AN OFFER TO BUY
ANY SECURITIES BY ANYONE IN ANY JURISDICTION
IN WHICH SUCH OFFER OR SOLICITATION IS NOT
AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH
OFFER OR SOLICITATION IS NOT QUALIFIED TO DO
SO OR TO ANY PERSON TO WHOM IT IS UNLAWFUL TO
MAKE SUCH OFFER OR SOLICITATION.
-------------------
TABLE OF CONTENTS
PAGE CLASS A COMMON STOCK
Prospectus Summary.................... 3
Risk Factors.......................... 8
The Company........................... 13
Use of Proceeds....................... 14
Dividend Policy....................... 15
Dilution.............................. 15
Capitalization........................ 16 ----------------
Selected Historical and Pro Forma PROSPECTUS
Consolidated Financial Data........... 17 ----------------
Management's Discussion and Analysis
of Results of Operations and
Financial Condition................. 19
Business.............................. 30
Management............................ 52
Certain Transactions.................. 59
Security Ownership of Principal
Stockholders and Management........... 62 DONALDSON, LUFKIN & JENRETTE
Description of Certain Indebtedness... 64 SECURITIES CORPORATION
Description of Capital Stock.......... 69
Shares Eligible for Future Sale....... 77 HOWARD, WEIL, LABOUISSE,
Underwriting.......................... 79 FRIEDRICHS
Legal Matters......................... 80 INCORPORATED
Experts............................... 80
Additional Information................ 81
Index to Financial Statements......... F-1
Glossary.............................. A-1
-------------------
UNTIL , 1996 (25 DAYS AFTER THE
COMMENCEMENT OF THE OFFERING) ALL DEALERS
EFFECTING TRANSACTIONS IN THE COMMON
STOCK, WHETHER OR NOT PARTICIPATING IN THIS
DISTRIBUTION, MAY BE REQUIRED TO
DELIVER A PROSPECTUS. THIS DELIVERY
REQUIREMENT IS IN ADDITION TO THE OBLIGATION
OF DEALERS TO DELIVER A PROSPECTUS WHEN , 1996
ACTING AS UNDERWRITERS AND WITH RESPECT
TO THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.
=========================================== ==================================
- ------------------------------------------- ----------------------------------
<PAGE>
PART II.
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth all expenses payable in connection with the
registration of the Common Stock that is the subject of this Registration
Statement, all of which shall be borne by the Company. All the amounts shown are
estimates except for the registration fee, and the NASD listing and filing fees.
<TABLE>
<CAPTION>
TO BE PAID BY
REGISTRANT
-------------
<S> <C>
Securities and Exchange Commission registration fee........................... $ 38,862.07
NASD filing fee............................................................... 7,745.00
NASDAQ/NMS listing fees....................................................... 36,010.00
Printing and engraving expenses............................................... 250,000.00
Legal fees and expenses....................................................... 725,000.00
Accounting fees and expenses.................................................. 585,000.00
Blue sky fees and expenses.................................................... 20,000.00
Transfer Agent and Registrar fees............................................. 1,000.00
Miscellaneous expenses (including counsel fees)............................... 36,000.00
-------------
Total..................................................................... 1,699,617.07
</TABLE>
- -----------------------
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Company's Articles of Incorporation provides that the Company shall
indemnify each director and officer of the Company to the fullest extent
permitted from time to time by the laws of the State of Florida or any other
applicable laws as presently or hereafter in effect. Section 607.0850 of the
Florida Business Corporation Act currently provides as follows:
(1) A corporation shall have power to indemnify any person who was or is
a party to any proceeding (other than an action by, or in the right of, the
corporation), by reason of the fact that he is or was a director, officer,
employee, or agent of the corporation or is or was serving at the request of
the corporation as a director, officer, employee, or agent of another
corporation, partnership, joint venture, trust, or other enterprise against
liability incurred in connection with such proceeding, including any appeal
thereof, if he acted in good faith and in a manner he reasonably believed to
be in, or not opposed to, the best interests of the corporation and, with
respect to any criminal action or proceeding, had no reasonable cause to
believe his conduct was unlawful. The termination of any proceeding by
judgment, order, settlement, or conviction or upon a plea of nolo contendere
or its equivalent shall not, of itself, create a presumption that the person
did not act in good faith and in a manner which he reasonably believed to be
in, or not opposed to, the best interests of the corporation or, with
respect to any criminal action or proceeding, had reasonable cause to
believe that his conduct was unlawful.
(2) A corporation shall have power to indemnify any person, who was or
is a party to any proceeding by or in the right of the corporation to
procure a judgment in its favor by reason of the fact that he is or was a
director, officer, employee, or agent of the corporation or is or was
serving at the request of the corporation as a director, officer, employee,
or agent of another corporation, partnership, joint venture, trust, or other
enterprise, against expenses and amounts paid in settlement not exceeding,
in the judgment of the board of directors, the estimated expense of
litigating the proceeding to conclusion, actually and reasonably incurred in
connection with the
II-1
<PAGE>
defense or settlement of such proceeding, including any appeal thereof. Such
indemnification shall be authorized if such person acted in good faith and
in a manner he reasonably believed to be in, or not opposed to, the best
interests of the corporation, except that no indemnification shall be made
under this subsection in respect of any claim, issue, or matter as to which
such person shall have been adjudged to be liable unless, and only to the
extent that, the court in which such proceeding was brought, or any other
court of competent jurisdiction, shall determine upon application that,
despite the adjudication of liability but in view of all circumstances of
the case, such person is fairly and reasonably entitled to indemnity for
such expenses which such court shall deem proper.
(3) To the extent that a director, officer, employee, or agent of a
corporation has been successful on the merits or otherwise in defense of any
proceeding referred to in subsection (1) or subsection (2), or in defense of
any claim, issue, or matter therein, he shall be indemnified against
expenses actually and reasonably incurred by him in connection therewith.
(4) Any indemnification under subsection (1) or subsection (2), unless
pursuant to a determination by a court, shall be made by the corporation
only as authorized in the specific case upon a determination that
indemnification of the director, officer, employee, or agent is proper in
the circumstances because he has met the applicable standard of conduct set
forth in subsection (1) or subsection (2). Such determination shall be made:
(a) By the board of directors by a majority vote of a quorum
consisting of directors who were not parties to such proceeding;
(b) If such a quorum is not obtainable or, even if obtainable, by
majority vote of a committee duly designated by the board of directors
(in which directors who are parties may participate) consisting solely of
two or more directors not at the time parties to the proceeding;
(c) By independent legal counsel:
1. Selected by the board of directors prescribed in paragraph (a)
or the committee prescribed in paragraph (b); or
2. If a quorum of the directors cannot be obtained for paragraph
(a) and the committee cannot be designated under paragraph (b),
selected by majority vote of the full board of directors (in which
directors who are parties may participate); or
(d) By the stockholders by a majority vote of a quorum consisting of
stockholders who were not parties to such proceeding or, if no such
quorum is obtainable, by a majority vote of stockholders who were not
parties to such proceeding.
(5) Evaluation of the reasonableness of expenses and authorization of
indemnification shall be made in the same manner as the determination that
indemnification is permissible. However, if the determination of
permissibility is made by independent legal counsel, persons specified by
paragraph (4)(c) shall evaluate the reasonableness of expenses and may
authorize indemnification.
(6) Expenses incurred by an officer or director in defending a civil or
criminal proceeding may be paid by the corporation in advance of the final
disposition of such proceeding upon receipt of an undertaking by or on
behalf of such director or officer to repay such amount if he is ultimately
found not to be entitled to indemnification by the corporation pursuant to
this section. Expenses incurred by other employees and agents may be paid in
advance upon such terms or conditions that the board of directors deems
appropriate.
(7) The indemnification and advancement of expenses provided pursuant to
this section are not exclusive, and a corporation may make any other or
further indemnification or advancement of expenses of any of its directors,
officers, employees, or agents, under any bylaw, agreement, vote of
II-2
<PAGE>
stockholders or disinterested directors, or otherwise, both as to action in
his official capacity and as to action in another capacity while holding
such office. However, indemnification or advancement of expenses shall not
be made to or on behalf of any director, officer, employee, or agent if a
judgment or other final adjudication establishes that his actions, or
omissions to act, were material to the cause of action so adjudicated and
constitute:
(a) A violation of the criminal law, unless the director, officer,
employee, or agent had reasonable cause to believe his conduct was lawful
or had no reasonable cause to believe his conduct was unlawful;
(b) A transaction from which the director, officer, employee, or
agent derived an improper personal benefit;
(c) In the case of a director, a circumstance under which the
liability provisions of s. 607.0834 are applicable; or
(d) Willful misconduct or a conscious disregard for the best
interests of the corporation in a proceeding by or in the right of the
corporation to procure a judgment in its favor or in a proceeding by or
in the right of a stockholder.
(8) Indemnification and advancement of expenses as provided in this
section shall continue as, unless otherwise provided when authorized or
ratified, to a person who has ceased to be a director, officer, employee, or
agent and shall inure to the benefit of the heirs, executors, and
administrators of such a person, unless otherwise provided when authorized
or ratified.
(9) Unless the corporation's articles of incorporation provide
otherwise, notwithstanding the failure of a corporation to provide
indemnification, and despite any contrary determination of the board or of
the stockholders in the specific case, a director, officer, employee, or
agent of the corporation who is or was a party to a proceeding may apply for
indemnification or advancement of expenses, or both, to the court conducting
the proceeding, to the circuit court, or to another court of competent
jurisdiction. On receipt of an application, the court, after giving any
notice that it considers necessary, may order indemnification and
advancement of expenses, including expenses incurred in seeking
court-ordered indemnification or advancement of expenses, if it determines
that:
(a) The director, officer, employee, or agent is entitled to
mandatory indemnification under subsection (3), in which case the court
shall also order the corporation to pay the director reasonable expenses
incurred in obtaining court-ordered indemnification or advancement of
expenses;
(b) The director, officer, employee, or agent is entitled to
indemnification or advancement of expenses, or both, by virtue of the
exercise by the corporation of its power pursuant to subsection (7); or
(c) The director, officer, employee, or agent is fairly and
reasonably entitled to indemnification or advancement of expenses, or
both, in view of all the relevant circumstances, regardless of whether
such person met the standard of conduct set forth in subsection (1),
subsection (2), or subsection (7).
(10) For purposes of this section, the term "corporation" includes, in
addition to the resulting corporation, any constituent corporation
(including any constituent of a constituent) absorbed in a consolidation or
merger, so that any person who is or was a director, officer, employee, or
agent of a constituent corporation, or is or was serving at the request of a
constituent corporation as a director, officer, employee, or agent of
another corporation, partnership, joint venture, trust, or other enterprise,
is in the same position under this section with respect to the resulting or
surviving
II-3
<PAGE>
corporation as he would have with respect to such constituent corporation if
its separate existence had continued.
(11) For purposes of this section:
(a) The term "other enterprises" includes employee benefit plans;
(b) The term "expenses" includes counsel fees, including those for
appeal;
(c) The term "liability" includes obligations to pay a judgment,
settlement, penalty, fine (including an excise tax assessed with respect
to any employee benefit plan), and expenses actually and reasonably
incurred with respect to a proceeding;
(d) The term "proceeding" includes any threatened, pending, or
completed action, suit, or other type of proceeding, whether civil,
criminal, administrative, or investigative, and whether formal or
informal;
(e) The term "agent" includes a volunteer;
(f) The term "serving at the request of the corporation" includes any
service as a director, officer, employee, or agent of the corporation
that imposes duties on such persons, including duties relating to an
employee benefit plan and its participants or beneficiaries; and
(g) The term "not opposed to the best interest of the corporation"
describes the actions of a person who acts in good faith and in a manner
he reasonably believes to be in the best interests of the participants
and beneficiaries of an employee benefit plan.
(12) A corporation shall have power to purchase and maintain insurance
on behalf of any person who is or was director, officer, employee, or agent
of the corporation or is or was serving at the request of the corporation as
a director, officer, employee, or agent of another corporation, partnership,
joint venture, trust, or other enterprise against any liability asserted
against him and incurred by him in any such capacity or arising out of his
status as such, whether or not the corporation would have the power to
indemnify him against such liability under the provisions of this section.
The Underwriting Agreement (Exhibit 1) provides for indemnification by the
Underwriters of the Registrant, its directors and executive officers and by the
Registrant of the Underwriters for certain liabilities, including liabilities
arising under the Securities Act of 1933, as amended (the "Act") and affords
certain rights of contribution with respect thereto.
The Registrant has purchased an insurance policy that provides for
indemnification of the Registrant's executive officers and directors for
liability resulting from their negligence, error, omission or breach of duty
while acting in their capacities as executive officers and directors on any
matter claimed against them by reason of their being executive officers and
directors.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.
In September 1994, the Company exchanged 1,105,962 shares of Class B Common
Stock and 663,415 shares of Class C Common Stock for all of the outstanding
common stock of its predecessor. Also in September 1994, in connection with the
issuance of the Senior Notes and the Junior Notes, the Company issued 452,518
shares of Class B Common Stock and 313,215 shares of Class C Common Stock to
members of the Investors Group. The proceeds of the issuances of the Senior
Notes and the Junior Notes were $23.1 million and $17.5 million, respectively,
and the proceeds of the issuances of the Class B Common Stock and the Class C
Common Stock to the Investor Group were $4.1 million and $2.9 million,
respectively. Such issuances were made in reliance upon section 4(2) of the Act.
II-4
<PAGE>
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) The following is a list of exhibits furnished:
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT
- -------- ---------------------------------------------------------------------------------
<C> <S>
1 --Form of Underwriting Agreement.
2.1+ --Stock Purchase Agreement dated as of October 12, 1995 by and between Hvide
Marine Incorporated and OMI Corp.
2.1(a)+ --Amendment to Stock Purchase Agreement dated as of January 31, 1996, by and
among Hvide Marine Incorporated and OMI Corp.
2.2+ --Asset Purchase Agreement dated as of March 29, 1996, by and among Hvide Marine
Incorporated, Seal Fleet, Inc., Sealcraft Operators, Inc., Seal GP, Inc., South
Corporation, and Thomas M. Ferguson.
2.2(a) --Amendment No. 1 dated July 23, 1996, to Asset Purchase Agreement dated as of
March 29, 1996, by and among Hvide marine Incorporated, Seal Fleet, Inc.,
Sealcraft Operators, Inc., Seal GP, Inc., South Corporation, and Thomas M.
Ferguson.
2.3+ --Asset Purchase Agreement dated as of March 29, 1996, by and among Hvide Marine
Incorporated, Ross Seal Partners, Ltd., Bengal Seal Partners, Ltd., Indian Seal
Partners, Ltd., Baffin Seal Partners, Ltd., Baltic Seal Partners, Ltd., and
Irwin M. Herz, Jr., as trustee under certain trusts.
2.3(a) --Amendment Number 1 dated July 23, 1996, to Asset Purchase Agreement dated as of
March 29, 1996, by and among Hvide marine Incorporated, Ross Seal Partners,
Ltd., Bengal Seal Partners, Ltd., Indian Seal Partners, Ltd., Baffin Seal
Partners, Ltd., Baltic Seal Partners, Ltd., and Irwin M. Herz, Jr., as trustee
under certain trusts.
2.4 --Articles of Merger of Hvide Marine Incorporated, a Florida corporation into
Hvide Corp., a Florida corporation.
3.1 --Amended and Restated Articles of Incorporation.
3.2 --Bylaws of the Company, as amended.
4.1 --Form of Class A Common Stock Certificate (Domestic).
4.2 --Form of Class A Common Stock Certificate (Foreign).
5 --Opinion of Counsel as to the legality of the securities being registered.
10.1+ --Non-Compete Agreement, between the Company and Hans J. Hvide, dated September
28, 1994.
10.2+ --Consulting Agreement between Sun State Marine Services, Inc. and Frank V.
Oliver, Jr., dated September 30, 1994.
10.3 --Form of 1996 Annual Incentive Plan.
10.4 --Form of Stock Option Plan for Directors.
10.4.1 --1996 Employee Stock Purchase Plan
10.4.2 --Equity Ownership Plan
10.5+ --Security Agreement, dated December 14, 1973, relating to United States
Government Ship Financing Bonds, between The Provident Bank and The United
States of America, with respect to Seabulk Challenger/S.T.L. 3901.
10.6*+ --Bareboat Charter, dated as of December 14, 1973, by and between The Provident
Bank and Seabulk Tankers, Ltd., with respect to Seabulk Challenger/S.T.L. 3901.
10.7*+ --Time Charter Party, dated as of December 20, 1989, between Seabulk Tankers,
Ltd., and Shell Oil Company with respect to Seabulk Challenger/S.T.L. 3901, as
amended.
10.8+ --Security Agreement, dated August 20, 1975, by and among Port Everglades Towing,
Inc., Central National Bank of Cleveland and The United States of America, with
respect to the Seabulk Magnachem/S.C.C. 3902, as amended.
10.9*+ --Bareboat Charter, dated February 24, 1977, by and between Central National Bank
of Cleveland and Seabulk Chemical Carriers, Inc., with respect to Seabulk
Magnachem/S.C.C. 3902, as amended.
10.10+ --Sub-Bareboat Charter, dated January 16, 1988, between Seabulk Chemical
Carriers,
</TABLE>
II-5
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT
- -------- ---------------------------------------------------------------------------------
Inc., and Hvide Shipping, Incorporated, with respect to Seabulk
Magnachem/S.C.C. 3902, as amended.
<C> <S>
10.12*+ --Tanker Time Charter Party, dated December 15, 1989, between Seabulk Ocean
Systems Corporation and Ocean Specialty Tankers Corporation, with respect with
to Seabulk Magnachem/S.C.C. 3902, as amended.
10.13*+ --Tanker Time Charter Party, dated December 15, 1989, between Seabulk Transmarine
Partnership, Ltd., and Ocean Specialty Tankers Corporation, with respect to
Seabulk America.
10.14+ --Franchise Agreement, dated as of January 8, 1975, by and between Canaveral Port
Authority and Port Everglades Towing, Inc.
10.15*+ --Non-Exclusive Franchise Agreement, dated as of March 7, 1991, by and between
Port Everglades Authority and Hvide Shipping, Incorporated.
10.16*+ --Contract for Fuel Transportation, dated as of February 18, 1993, by and between
Florida Power & Light Company and Sun State Marine, Incorporated.
10.17+ --Sale and Purchase Agreement between the Company and certain officers, directors
and employees relating to the purchase of partnership interests, dated
September 30, 1994.
10.18+ --Post-Retirement Benefits Agreement between the Company and Hans J. Hvide, dated
September 28, 1994.
10.19+ --Junior Subordinated Note and Common Stock Purchase Agreement dated September
30, 1994.
10.20+ --Senior Subordinated Note and Common Stock Purchase Agreement dated September
30, 1994.
10.21+ --Letter of Credit Agreement, dated as of September 29, 1994, between Hvide
Shipping, Inc. and Bank of Boston.
10.22+ --Credit Agreement, dated as of September 28, 1994, among Hvide Marine
Incorporated, Citibank, N.A., The First National Bank of Boston, and Citibank,
N.A.
10.22(a)+ --Amendment No. 1 dated as of May 15, 1995, to the Credit Agreement dated as of
September 28, 1994, by and among Hvide Marine Incorporated, Citibank, N.A., The
First National Bank of Boston, and others.
10.22(b)+ --Amendment No. 2 dated as of March 26, 1996, to the Credit Agreement dated as of
September 28, 1994, by and among Hvide Marine Incorporated, Citibank, N.A., The
First National Bank of Boston, and others.
10.22(c) --Amended and Restated Credit Agreement dated as of June 21, 1996, by and among
Hvide Marine Incorporated, Citibank, N.A., The First National Bank of Boston,
BNY Financial Corporation, Hibernia National Bank, and Amsouth Bank of Florida.
10.26+ --Amendment No. 2 to Charter of Seabulk Magnachem.
10.27 --Form of Recapitalization Agreement among Hvide Corp., Hvide Marine
Incorporated, the Junior Subordinated Noteholders, the Senior Subordinated
Noteholders, J. Erik Hvide, and certain trusts.
10.28 --Form of Registration Rights Agreement by and between Hvide Marine Incorporated
and certain shareholders.
10.29 --Form of Agreement Among Shareholders among certain shareholders.
10.30 --Form of Amended and Restated Contingent Share Issuance Agreement among Hvide
Marine Incorporated and certain purchasers.
21+ --List of Subsidiaries.
23.1 --Consents of Ernst & Young LLP.
23.2 --Consent of Counsel (included as part of Exhibit 5).
23.3 --Consent of Deloitte & Touche LLP.
23.4 --Consent of Pannell Kerr Forster of Texas, P.C.
24.1+ --Powers of Attorney.
24.2+ --Certificate of Secretary.
27+ --Financial Data Schedule
</TABLE>
II-6
<PAGE>
- -----------------------
+ Previously filed.
* Confidential treatment requested. The materials omitted from these documents
have been marked with an asterisk (*). The materials omitted have been
separately filed with the Commission pursuant to the confidential treatment
request.
# To be filed by amendment.
Schedules not listed above have been omitted because they are not applicable
or because required information is included in the financial statements or notes
thereto.
ITEM 17. UNDERTAKINGS.
(1) The undersigned registrant hereby undertakes to provide to the
underwriters at the closing specified in the underwriting agreement certificates
in such denominations and registered in such names as required by the
underwriters to permit prompt delivery to each purchaser.
(2) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
(3) The undersigned registrant hereby undertakes that:
(a) For purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of prospectus filed as part
of a registration statement in reliance upon Rule 430A and contained in the
form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4)
or 497(h) under the Securities Act shall be deemed to be part of the
registration statement as of the time it was declared effective.
(b) For the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
II-7
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this amendment to the registration statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in Fort Lauderdale,
Florida on the 6th day of August, 1996.
HVIDE MARINE INCORPORATED
By:
*
..................................
J. Erik Hvide
Chairman, President and
Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this amendment
to the registration statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ---------------------------------- ----------------------------------------- --------------
<S> <C> <C>
* Chairman of the Board, President, Chief August 6, 1996
.................................. Executive Officer and Director
J. Erik Hvide (principal executive officer)
* Executive Vice President--Chief Financial August 6, 1996
.................................. Officer, Treasurer and Director
John H. Blankley
* Executive Vice President and Director August 6, 1996
..................................
Donald L. Caldera
* Controller (principal accounting officer) August 6, 1996
..................................
John J. Krumenacker
* Executive Vice President and Director August 6, 1996
..................................
Eugene F. Sweeney
* Director August 6, 1996
..................................
Robert B. Calhoun, Jr.
* Director August 6, 1996
..................................
Gerald Farmer
* Director August 6, 1996
..................................
Jean Fitzgerald
.................................. Director August , 1996
John Lee
* Director August 6, 1996
..................................
Walter C. Mink
* Director August 6, 1996
..................................
Robert Rice
.................................. Director August , 1996
Raymond B. Vickers
*By: /s/ MICHAEL JOSEPH
..............................
Michael Joseph
Attorney-in-Fact
</TABLE>
II-8
<PAGE>
<TABLE>
<CAPTION>
INDEX TO EXHIBITS
EXHIBIT
NUMBER EXHIBIT
- -------- ---------------------------------------------------------------------------------
<C> <S>
1 --Form of Underwriting Agreement.
2.1+ --Stock Purchase Agreement dated as of October 12, 1995 by and between Hvide
Marine Incorporated and OMI Corp.
2.1(a)+ --Amendment to Stock Purchase Agreement dated as of January 31, 1996, by and
among Hvide Marine Incorporated and OMI Corp.
2.2+ --Asset Purchase Agreement dated as of March 29, 1996, by and among Hvide Marine
Incorporated, Seal Fleet, Inc., Sealcraft Operators, Inc., Seal GP, Inc., South
Corporation, and Thomas M. Ferguson.
2.2(a) --Amendment No. 1 dated July 23, 1996, to Asset Purchase Agreement dated as of
March 29, 1996, by and among Hvide marine Incorporated, Seal Fleet, Inc.,
Sealcraft Operators, Inc., Seal GP, Inc., South Corporation, and Thomas M.
Ferguson.
2.3+ --Asset Purchase Agreement dated as of March 29, 1996, by and among Hvide Marine
Incorporated, Ross Seal Partners, Ltd., Bengal Seal Partners, Ltd., Indian Seal
Partners, Ltd., Baffin Seal Partners, Ltd., Baltic Seal Partners, Ltd., and
Irwin M. Herz, Jr., as trustee under certain trusts.
2.3(a) --Amendment Number 1 dated July 23, 1996, to Asset Purchase Agreement dated as of
March 29, 1996, by and among Hvide marine Incorporated, Ross Seal Partners,
Ltd., Bengal Seal Partners, Ltd., Indian Seal Partners, Ltd., Baffin Seal
Partners, Ltd., Baltic Seal Partners, Ltd., and Irwin M. Herz, Jr., as trustee
under certain trusts.
2.4 --Articles of Merger of Hvide Marine Incorporated, a Florida corporation into
Hvide Corp., a Florida corporation.
3.1 --Amended and Restated Articles of Incorporation.
3.2 --Bylaws of the Company, as amended.
4.1 --Form of Class A Common Stock Certificate (Domestic).
4.2 --Form of Class A Common Stock Certificate (Foreign).
5 --Opinion of Counsel as to the legality of the securities being registered.
10.1+ --Non-Compete Agreement, between the Company and Hans J. Hvide, dated September
28, 1994.
10.2+ --Consulting Agreement between Sun State Marine Services, Inc. and Frank V.
Oliver, Jr., dated September 30, 1994.
10.3 --Form of 1996 Annual Incentive Plan.
10.4 --Form of Stock Option Plan for Directors.
10.4.1 --1996 Employee Stock Purchase Plan
10.4.2 --Equity Ownership Plan
10.5+ --Security Agreement, dated December 14, 1973, relating to United States
Government Ship Financing Bonds, between The Provident Bank and The United
States of America, with respect to Seabulk Challenger/S.T.L. 3901.
10.6*+ --Bareboat Charter, dated as of December 14, 1973, by and between The Provident
Bank and Seabulk Tankers, Ltd., with respect to Seabulk Challenger/S.T.L. 3901.
10.7*+ --Time Charter Party, dated as of December 20, 1989, between Seabulk Tankers,
Ltd., and Shell Oil Company with respect to Seabulk Challenger/S.T.L. 3901, as
amended.
10.8+ --Security Agreement, dated August 20, 1975, by and among Port Everglades Towing,
Inc., Central National Bank of Cleveland and The United States of America, with
respect to the Seabulk Magnachem/S.C.C. 3902, as amended.
10.9*+ --Bareboat Charter, dated February 24, 1977, by and between Central National Bank
of Cleveland and Seabulk Chemical Carriers, Inc., with respect to Seabulk
Magnachem/S.C.C. 3902, as amended.
10.10+ --Sub-Bareboat Charter, dated January 16, 1988, between Seabulk Chemical
Carriers,
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
INDEX TO EXHIBITS
EXHIBIT
NUMBER EXHIBIT
- -------- ---------------------------------------------------------------------------------
<C> <S>
Inc., and Hvide Shipping, Incorporated, with respect to Seabulk
Magnachem/S.C.C. 3902, as amended.
10.12*+ --Tanker Time Charter Party, dated December 15, 1989, between Seabulk Ocean
Systems Corporation and Ocean Specialty Tankers Corporation, with respect with
to Seabulk Magnachem/S.C.C. 3902, as amended.
10.13*+ --Tanker Time Charter Party, dated December 15, 1989, between Seabulk Transmarine
Partnership, Ltd., and Ocean Specialty Tankers Corporation, with respect to
Seabulk America.
10.14+ --Franchise Agreement, dated as of January 8, 1975, by and between Canaveral Port
Authority and Port Everglades Towing, Inc.
10.15*+ --Non-Exclusive Franchise Agreement, dated as of March 7, 1991, by and between
Port Everglades Authority and Hvide Shipping, Incorporated.
10.16*+ --Contract for Fuel Transportation, dated as of February 18, 1993, by and between
Florida Power & Light Company and Sun State Marine, Incorporated.
10.17+ --Sale and Purchase Agreement between the Company and certain officers, directors
and employees relating to the purchase of partnership interests, dated
September 30, 1994.
10.18+ --Post-Retirement Benefits Agreement between the Company and Hans J. Hvide, dated
September 28, 1994.
10.19+ --Junior Subordinated Note and Common Stock Purchase Agreement dated September
30, 1994.
10.20+ --Senior Subordinated Note and Common Stock Purchase Agreement dated September
30, 1994.
10.21+ --Letter of Credit Agreement, dated as of September 29, 1994, between Hvide
Shipping, Inc. and Bank of Boston.
10.22+ --Credit Agreement, dated as of September 28, 1994, among Hvide Marine
Incorporated, Citibank, N.A., The First National Bank of Boston, and Citibank,
N.A.
10.22(a)+ --Amendment No. 1 dated as of May 15, 1995, to the Credit Agreement dated as of
September 28, 1994, by and among Hvide Marine Incorporated, Citibank, N.A., The
First National Bank of Boston, and others.
10.22(b)+ --Amendment No. 2 dated as of March 26, 1996, to the Credit Agreement dated as of
September 28, 1994, by and among Hvide Marine Incorporated, Citibank, N.A., The
First National Bank of Boston, and others.
10.22(c) --Amended and Restated Credit Agreement dated as of June 21, 1996, by and among
Hvide Marine Incorporated, Citibank, N.A., The First National Bank of Boston,
BNY Financial Corporation, Hibernia National Bank, and Amsouth Bank of Florida.
10.26+ --Amendment No. 2 to Charter of Seabulk Magnachem.
10.27 --Form of Recapitalization Agreement among Hvide Corp., Hvide Marine
Incorporated, the Junior Subordinated Noteholders, the Senior Subordinated
Noteholders, J. Erik Hvide, and certain trusts.
10.28 --Form of Registration Rights Agreement by and between Hvide Marine Incorporated
and certain shareholders.
10.29 --Form of Agreement Among Shareholders among certain shareholders.
10.30 --Form of Amended and Restated Contingent Share Issuance Agreement among Hvide
Marine Incorporated and certain purchasers.
21+ --List of Subsidiaries.
23.1 --Consents of Ernst & Young LLP.
23.2 --Consent of Counsel (included as part of Exhibit 5).
23.3 --Consent of Deloitte & Touche LLP.
23.4 --Consent of Pannell Kerr Forster of Texas, P.C.
24.1+ --Powers of Attorney.
24.2+ --Certificate of Secretary.
27+ --Financial Data Schedule
</TABLE>
- -----------------------
+ Previously filed.
* Confidential treatment requested. The materials omitted from these documents
have been marked with an asterisk (*). The materials omitted have been
separately filed with the Commission pursuant to the confidential treatment
request.
# To be filed by amendment.
EXHIBIT 1
DRAFT DATED AUGUST 2, 1996
7,000,000 Shares
HVIDE MARINE INCORPORATED
Class A Common Stock
UNDERWRITING AGREEMENT
----------------------
August ____, 1996
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
HOWARD, WEIL, LABOUISSE,
FRIEDRICHS INCORPORATED
As representatives of the
several underwriters
named in Schedule I hereto
c/o Donaldson, Lufkin & Jenrette
Securities Corporation
277 Park Avenue
New York, New York 10172
Dear Sirs:
Hvide Marine Incorporated, a Florida corporation (the "Company"), proposes
to issue and sell an aggregate of 7,000,000 shares of Class A Common Stock, par
value $0.001 per share, of the Company (the "Firm Shares"), to the several
underwriters named in Schedule I hereto (the "Underwriters"). The Company also
proposes to sell to the several Underwriters not more than 1,050,000 additional
shares of Class A Common Stock, par value $0.001 per share, of the Company (the
"Additional Shares"), if requested by the Underwriters as provided in Section 2
hereof. The Firm Shares and the Additional Shares are hereinafter collectively
called the Shares.
1. Registration Statement and Prospectus. The Company has prepared and
filed with the Securities and Exchange Commission (the "Commission") in
accordance with the provisions of
<PAGE>
the Securities Act of 1933, as amended, and the rules and regulations of the
Commission thereunder (collectively, the Securities Act"), a registration
statement on Form S-1 (File No. 33-78166) including a prospectus relating to
the Shares, which may be amended. The registration statement as amended at the
time when it becomes effective, including information (if any) deemed to be part
of the registration statement at the time of effectiveness pursuant to Rule 430A
under the Securities Act and a registration statement (if any) filed pursuant to
Rule 462(b) under the Securities Act increasing the size of the offering
registered under the Securities Act, is hereinafter referred to as the
Registration Statement; and the prospectus in the form first used to confirm
sales of Shares is hereinafter referred as the Prospectus.
2. Agreements to Sell and Purchase. On the basis of the representations and
warranties contained in this Agreement, and subject to its terms and conditions,
(i) the Company agrees to issue and sell the Firm Shares and (ii) each
Underwriter agrees, severally and not jointly, to purchase from the Company at a
price per share of $ (the "Purchase Price") the number of Firm Shares set forth
opposite the name of such Underwriter in Schedule I hereto.
On the basis of the representations and warranties contained in this
Agreement, and subject to its terms and conditions, (i) the Company agrees to
issue and sell the Additional Shares and (ii) the Underwriters shall have the
right to purchase, severally and not jointly, up to the number of Additional
Shares (subject to adjustments to eliminate fractional shares as you may
determine) at the Purchase Price. Additional Shares may be purchased solely for
the purpose of covering over-allotments made in connection with the offering of
the Firm Shares. The Underwriters may exercise their right to purchase
Additional Shares in whole or in part from time to time by giving written notice
thereof to the Company within 30 days after the date of this Agreement. You
shall give any such notice on behalf of the Underwriters and such notice shall
specify the aggregate number of Additional Shares to be purchased pursuant to
such exercise and the date for payment and delivery thereof. The date specified
in any such notice shall be a business day (i) no earlier than the Closing Date
(as hereinafter defined), (ii) no later than ten (10) business days after such
notice has been given and (iii) no earlier than two (2) business days after such
notice has been given. If any Additional Shares are to be purchased, each
Underwriter, severally and not jointly, agrees to purchase from the Company the
number of Additional Shares (subject to such adjustments to eliminate fractional
shares as you may determine) which bears the same proportion to the total number
of Additional Shares to be purchased from the Company as the number of Firm
Shares set forth opposite the name of such Underwriter in Schedule I bears to
the total number of Firm Shares.
The Company shall, concurrently with the execution of this Agreement,
deliver an agreement executed by (i) each of the directors and officers of the
Company and (ii) each stockholder listed on Annex I hereto, pursuant to which
each such person agrees, not to offer, sell, contract to sell, grant any option
to purchase, or otherwise dispose of any Class A Common Stock or other common
stock of the Company or any securities convertible into or exercisable or
exchangeable for such Class A Common Stock or other common stock of the Company
(collectively, the "Common Stock") or in any other manner transfer all or a
portion of the
<PAGE>
economic consequences associated with the ownership of any such Common Stock,
except to the Underwriters pursuant to this Agreement, for a period of 180
days after the date of the Prospectus without the prior written consent of
Donaldson, Lufkin & Jenrette Securities Corporation. Notwithstanding
the foregoing, during such period (i) the Company may grant options to purchase
shares of Class A Common Stock pursuant to the Company's existing stock option
plans and (ii) the Company may issue shares of its Common Stock upon the
exercise of an option or warrant or the conversion of a security outstanding on
the date hereof.
3. Terms of Public Offering. The Company is advised by you that the
Underwriters propose (i) to make a public offering of their respective portions
of the Shares as soon after the effective date of the Registration Statement as
in your judgment is advisable and (ii) initially to offer the Shares upon the
terms set forth in the Prospectus.
4. Delivery and Payment. Delivery to the Underwriters of and payment for
the Firm Shares shall be made at 10:00 a.m., New York City time, on the third
business day, unless otherwise permitted or required by the Commission pursuant
to Rule 15c6-1 under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), following the date of the initial public offering (the "Closing
Date"), at such place as you shall designate. The Closing Date and the location
of delivery of and the form of payment for the Firm Shares may be varied by
agreement between you and the Company.
Delivery to the Underwriters of and payment for any Additional Shares to be
purchased by the Underwriters shall be made at such place as you shall designate
at 10:00 a.m., New York City time, on the date specified in the applicable
exercise notice given by you pursuant to Section 2 (an "Option Closing Date").
Any such Option Closing Date and the location of delivery of and the form of
payment for such Additional Shares may be varied by agreement between you and
the Company.
Certificates for the Shares shall be registered in such names and issued in
such denominations as you shall request in writing not later than two (2) full
business days prior to the Closing Date or an Option Closing Date, as the case
may be. Such certificates shall be made available to you for inspection not
later than 9:30 a.m., New York City time, on the business day next preceding the
Closing Date or an Option Closing Date, as the case may be. Certificates in
definitive form evidencing the Shares shall be delivered to you on the Closing
Date or an Option Closing Date, as the case may be, with any transfer taxes
thereon duly paid by the Company, for the respective accounts of the several
Underwriters, against payment of the Purchase Price therefor by certified or
official bank checks payable in New York Clearing House funds to the order of
the Company.
5. Agreements of the Company. The Company agrees with you:
<PAGE>
(a) To use its best efforts to cause the Registration
Statement to become effective at the earliest possible time.
(b) To advise you promptly and, if requested by you, to
confirm such advice in writing, (i) when the Registration
Statement has become effective and when any post-effective
amendment to it becomes effective, (ii) of any request by the
Commission for amendments to the Registration Statement or
amendments or supplements to the Prospectus or for additional
information, (iii) of the issuance by the Commission of any stop
order suspending the effectiveness of the Registration Statement
or of the suspension of qualification of the Shares for offering
or sale in any jurisdiction, or the initiation of any proceeding
for such purposes, and (iv) of the happening of any event during
the period referred to in paragraph (e) below which makes any
statement of a material fact made in the Registration Statement
or the Prospectus untrue or which requires the making of any
additions to or changes in the Registration Statement or the
Prospectus in order to make the statements therein not
misleading. If at any time the Commission shall issue any stop
order suspending the effectiveness of the Registration Statement,
the Company will make every reasonable effort to obtain the
withdrawal or lifting of such order at the earliest possible
time.
(c) To furnish to you, without charge, three signed copies
of the Registration Statement as first filed with the Commission
and of each amendment to it, including all exhibits, as you may
reasonably request, and to furnish to you and each Underwriter
designated by you such number of conformed copies of the
Registration Statement as so filed and of each amendment to it,
without exhibits, as you may reasonably request.
(d) Not to file any amendment or supplement to the
Registration Statement, whether before or after the time when it
becomes effective, or to make any amendment or supplement to the
Prospectus of which you shall not previously have been advised or
to which you shall reasonably object; and to prepare and file
with the Commission, promptly upon your reasonable request, any
amendment to the Registration Statement or supplement to the
Prospectus which may be necessary or advisable in connection with
the distribution of the Shares by you, and to use its best
efforts to cause any such amendment to become promptly effective.
(e) Promptly after the Registration Statement becomes
effective, and from time to time thereafter for such period as in
the opinion of counsel for the Underwriters a prospectus is
required by law to be delivered in connection with sales by an
Underwriter or a dealer, to furnish to each Underwriter and
dealer as many copies of the Prospectus (and of any amendment or
supplement to the Prospectus) as such Underwriter or dealer may
reasonably request.
(f) If during the period specified in paragraph (e) any
event shall occur as a result of which, in the opinion of counsel
for the Underwriters it becomes necessary to amend or supplement
<PAGE>
the Prospectus in order to make the statements therein, in the
light of the circumstances when the Prospectus is delivered to a
purchaser, not misleading, or if it is necessary to amend or
supplement the Prospectus to comply with any law, forthwith to
prepare and file with the Commission an appropriate amendment or
supplement to the Prospectus so that the statements in the
Prospectus, as so amended or supplemented, will not in the light
of the circumstances when it is so delivered, be misleading, or
so that the Prospectus will comply with law, and to furnish to
each Underwriter and to such dealers as you shall specify, such
number of copies thereof as such Underwriter or dealers may
reasonably request.
(g) Prior to any public offering of the Shares, to cooperate
with you and counsel for the Underwriters in connection with the
registration or qualification of the Shares for offer and sale by
the several Underwriters and by dealers under the state
securities or Blue Sky laws of such jurisdictions as you may
request, to continue such qualification in effect so long as
required for distribution of the Shares and to file such consents
to service of process or other documents as may be necessary in
order to effect such registration or qualification.
(h) To mail and make generally available to its stockholders
as soon as reasonably practicable an earnings statement covering
a period of at least twelve months after the effective date of
the Registration Statement (but in no event commencing later than
90 days after such date) which shall satisfy the provisions of
Section 11(a) of the Securities Act, and to advise you in writing
when such statement has been so made available.
(i) During the period of five years after the date of this
Agreement, (i) to mail as soon as reasonably practicable after
the end of each fiscal year to the record holders of its Common
Stock an annual report of the Company and the Subsidiaries
meeting the requirements of the Exchange Act, all such annual
reports to include a consolidated balance sheet, a consolidated
statement of operations, a consolidated statement of cash flows
and a consolidated statement of shareholders' equity, certified
by independent certified public accountants, and (ii) to mail and
make generally available as soon as practicable after the end of
each quarterly period (except for the last quarterly period of
each fiscal year) to such holders a quarterly report meeting the
requirements of the Exchange Act, all such quarterly reports to
include a consolidated balance sheet, a consolidated statement of
operations and a consolidated statement of cash flows.
(j) During the period referred to in paragraph (i), to
furnish to you as soon as available a copy of each report or
other publicly available information of the Company mailed to the
holders of Common Stock or filed with the Commission and such
other publicly available information concerning the Company and
the Subsidiaries as you may reasonably request.
<PAGE>
(k) To pay all costs, expenses, fees and taxes incident to
(i) the preparation, printing, filing and distribution under the
Securities Act of the Registration Statement (including financial
statements and exhibits), each preliminary prospectus and all
amendments and supplements to any of them prior to or during the
period specified in paragraph (e), (ii) the printing and delivery
of the Prospectus and all amendments or supplements to it during
the period specified in paragraph (e), (iii) the printing and
delivery of this Agreement, the Preliminary and Supplemental Blue
Sky Memoranda and all other agreements, memoranda, correspondence
and other documents printed and delivered in connection with the
offering of the Shares (including in each case any disbursements
of counsel for the Underwriters relating to such printing and
delivery), (iv) the registration or qualification of the Shares
for offer and sale under the securities or Blue Sky laws of the
several states (including in each case the fees and disbursements
of counsel for the Underwriters relating to such registration or
qualification and memoranda relating thereto), (v) filings and
clearance with the National Association of Securities Dealers,
Inc. in connection with the offering, (vi) the listing of the
Shares on the Nasdaq National Market, (vii) furnishing such
copies of the Registration Statement, the Prospectus and all
amendments and supplements thereto as may be requested for use in
connection with the offering or sale of the Shares by the
Underwriters or by dealers to whom Shares may be sold and (viii)
the performance by the Sellers of their other obligations under
this Agreement.
(l) To use its best efforts to maintain the inclusion of the
Common Stock in the Nasdaq National Market (or on a national
securities exchange) for a period of five years after the
effective date of the Registration Statement.
(m) To use its best efforts to do and perform all things
required or necessary to be done and performed under this
Agreement by the Company prior to the Closing Date or any Option
Closing Date, as the case may be, and to satisfy all conditions
precedent to the delivery of the Shares.
6. Representations and Warranties of the Company. The
Company represents and warrants to each Underwriter that:
(a) The Registration Statement has become effective; no stop
order suspending the effectiveness of the Registration Statement
is in effect, and no proceedings for such purpose are pending
before or threatened by the Commission.
(b) (i) Each part of the Registration Statement, when such
part became effective, did not contain and each such part, as
amended or supplemented, if applicable, will not contain any
untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the
statements therein not misleading, (ii) the Registration
Statement and the Prospectus comply and, as amended or
<PAGE>
supplemented, if applicable, will comply in all material respects
with the Securities Act and (iii) the Prospectus does not contain
and, as amended or supplemented, if applicable, will not contain
any untrue statement of a material fact or omit to state a
material fact necessary to make the statements therein, in the
light of the circumstances under which they were made, not
misleading, except that the representations and warranties set
forth in this paragraph (b) do not apply to statements or
omissions in the Registration Statement or the Prospectus based
upon information relating to any Underwriter furnished to the
Company in writing by such Underwriter through you expressly for
use therein.
(c) Each preliminary prospectus filed as part of the
Registration Statement as originally filed or as part of any
amendment thereto, or filed pursuant to Rule 424 under the
Securities Act, and each Registration Statement (if any) filed
pursuant to Rule 462(b) under the Securities Act, complied when
so filed in all material respects with the Securities Act; and
did not contain an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary
to make the statements therein, in the light of the circumstances
under which they were made, not misleading.
(d) Exhibit 21 to the Registration Statement sets forth a
complete and accurate list of all of the subsidiaries of the
Company (the "Subsidiaries"). Each of the Company and the
Subsidiaries has been duly incorporated or formed, is validly
existing as a corporation, limited liability company or
partnership in good standing under the laws of its jurisdiction
of incorporation or formation and has the power and authority to
carry on its business as it is currently being conducted and to
own, lease, charter and operate its properties, including,
without limitation, the Vessels (defined herein) owned, chartered
and operated by it, and each is duly qualified and is in good
standing as a foreign corporation, limited liability company or
partnership authorized to do business in each jurisdiction in
which the nature of its business or its ownership, chartering,
leasing or operation of Vessels and other property requires such
qualification, except where the failure to be so qualified would
not have a material adverse effect on the Company and the
Subsidiaries, taken as a whole.
(e) All of the outstanding shares of capital stock of, or
other ownership interests in, each of the Subsidiaries have been
duly authorized and validly issued and are fully paid and
non-assessable, and are owned by the Company, free and clear of
any security interest, claim, lien, encumbrance or adverse
interest of any nature.
(f) All the outstanding shares of capital stock of the
Company have been duly authorized and validly issued and are
fully paid, non-assessable and not subject to any preemptive or
similar rights; and the Shares to be issued and sold by the
Company hereunder have been duly authorized and, when issued and
delivered to the Underwriters against payment therefor as
provided by this Agreement, will be validly issued, fully paid
<PAGE>
and non-assessable, and the issuance of such Shares will not be
subject to any preemptive or similar rights.
(g) The authorized capital stock of the Company, including
the Common Stock, conforms as to legal matters to the description
thereof contained in the Prospectus.
(h) Neither the Company nor any of the Subsidiaries is in
violation of its respective charter, bylaws or other
organizational or constituent documents (collectively,
"Constituent Documents") or in default in the performance of any
obligation, agreement or condition contained in any bond,
debenture, note or any other evidence of indebtedness or in any
other agreement, indenture or instrument material to the conduct
of the business of the Company and the Subsidiaries, taken as a
whole, to which the Company or any of the Subsidiaries is a party
or by which it or any of the Subsidiaries or their respective
property is bound.
(i) The execution, delivery and performance of this
Agreement, compliance by the Company with all the provisions
hereof and the consummation of the Acquisitions (as defined in
the Prospectus) and the transactions contemplated hereby will not
require any consent, approval, authorization or other order of
any court, regulatory body, administrative agency or other
governmental body (except as such may be required under the
securities or Blue Sky laws of the various states) and will not
conflict with or constitute a breach of any of the terms or
provisions of, or a default under, the Constituent Documents of
the Company or any of the Subsidiaries or any agreement,
indenture or other instrument to which it or any of the
Subsidiaries is a party or by which it or any of the Subsidiaries
or their respective property is bound, or violate or conflict
with any laws, administrative regulations or rulings or court
decrees applicable to the Company, any of the Subsidiaries or
their respective property.
(j) Except as otherwise set forth in the Prospectus, there
are no material legal or governmental proceedings pending to
which the Company or any of the Subsidiaries is a party or of
which any of their respective property is the subject, and, to
the best of the Company's knowledge, no such proceedings are
threatened or contemplated. No contract or document of a
character required to be described in the Registration Statement
or the Prospectus or to be filed as an exhibit to the
Registration Statement is not so described or filed as required.
(k) Neither the Company nor any of the Subsidiaries has
violated or is in violation of any foreign, federal, state or
local law or regulation relating to the protection of human
health and safety, the environment or hazardous or toxic
substances or wastes, pollutants or contaminants ("Environmental
Laws"), nor any federal or state law relating to discrimination
in the hiring, promotion or pay of employees nor any applicable
federal or state wages and hours laws, nor any provisions of the
Employee Retirement Income Security Act of 1974, as amended
("ERISA"), or the rules and regulations promulgated thereunder,
<PAGE>
which in each case might result in any material adverse change in
the business, prospects, financial condition or results of
operation of the Company and the Subsidiaries, taken as a whole.
(l) Each of the Company and the Subsidiaries has such
permits, certificates, endorsements, licenses, franchises and
authorizations of governmental or regulatory authorities
("Permits"), including, without limitation, under any applicable
Environmental Laws, as are necessary to own, lease, charter and
operate its respective Vessels and other properties and to
conduct its business; each of the Company and the Subsidiaries
has fulfilled and performed all of its material obligations with
respect to such Permits and no event has occurred which allows,
or after notice or lapse of time would allow, revocation or
termination thereof or results in any other material impairment
of the rights of the holder of any such permit; and, except as
described in the Prospectus, such Permits contain no restrictions
that are materially burdensome to the Company or any of the
Subsidiaries.
(m) In the ordinary course of its business, the Company
conducts a periodic review of the effect of Environmental Laws on
the business, operations and properties of the Company and the
Subsidiaries, in the course of which it identifies and evaluates
associated costs and liabilities (including, without limitation,
any capital or operating expenditures required for clean-up or
closure of properties or compliance with Environmental Laws or
any Permits or any related constraints on operating activities
and any potential liabilities to third parties). On the basis of
such review, the Company has reasonably concluded that such
associated costs and liabilities would not, singly or in the
aggregate, have a material adverse effect on the Company and the
Subsidiaries, taken as a whole.
(n) Except as otherwise set forth in the Prospectus or such
as are not material to the business, prospects, financial
condition or results of operation of the Company and the
Subsidiaries, taken as a whole, the Company and each of the
Subsidiaries has good and marketable title, free and clear of all
liens, claims, encumbrances and restrictions except liens for
taxes not yet due and payable, to all property and assets
described in the Registration Statement as being owned by it. All
leases and charters to which the Company or any of the
Subsidiaries is a party are valid and binding and no default has
occurred or is continuing thereunder, which might result in any
material adverse change in the business, prospects, financial
condition or results of operation of the Company and the
Subsidiaries taken as a whole, and the Company and the
Subsidiaries enjoy peaceful and undisturbed possession under all
such leases and charters to which any of them is a party as
lessee or charterer with such exceptions as do not materially
interfere with the use made by the Company or such Subsidiary.
(o) Each of the Company and the Subsidiaries maintains
adequate insurance.
<PAGE>
(p) Ernst & Young LLP are independent public accountants
with respect to the Company as required by the Securities Act.
(q) The historical financial statements, together with
related schedules and notes, set forth in the Registration
Statement and the Prospectus (and any amendment or supplement
thereto), present fairly the consolidated financial position,
results of operations and changes in financial position of the
Company and the Subsidiaries on the basis stated in the
Registration Statement at the respective dates or for the
respective periods to which they apply; such statements and
related schedules and notes have been prepared in accordance with
generally accepted accounting principles consistently applied
throughout the periods involved, except as disclosed therein; the
pro forma financial statements of the Company, together with the
related notes, set forth in the Registration Statement and the
Prospectus (and any amendment or supplement thereto) have been
prepared on a basis consistent with the historical financial
statements, except for the pro forma adjustments specified
therein, and have been prepared in good faith on the basis of the
assumptions described in the Registration Statement and such
assumptions are reasonable and the adjustments used therein are
appropriate to give effect to the transactions and circumstances
referred to therein; and the other financial and statistical
information and data set forth in the Registration Statement and
the Prospectus (and any amendment or supplement thereto) are, in
all material respects, accurately presented and prepared on a
basis consistent with such financial statements and the books and
records of the Company.
(r) Each of the Company and the Subsidiaries has such
Permits as are necessary to own, lease, charter and operate its
respective Vessels and other properties and to conduct its
business in the manner described in the Prospectus, subject to
such qualifications as may be set forth in the Prospectus; each
of the Company and the Subsidiaries has fulfilled and performed
all of its material obligations with respect to such Permits and
no event has occurred which allows, or after notice or lapse of
time would allow, revocation or termination thereof or results in
any other material impairment of the rights of the holder of any
such Permit, subject in each case to such qualification as may be
set forth in the Prospectus; and, except as described in the
Prospectus, such Permits contain no restrictions that are
materially burdensome to the Company or any of the Subsidiaries.
(s) The Company is not an "investment company" or a company
"controlled" by an "investment company" within the meaning of the
Investment Company Act of 1940, as amended.
(t) Except as disclosed in the Prospectus, no holder of any
security of the Company has any right to require registration of
shares of Common Stock or any other security of the Company.
<PAGE>
(u) The Company has complied with all provisions of Section
517.075, Florida Statutes (Chapter 92-198, Laws of Florida).
(v) There are no outstanding subscriptions, rights,
warrants, options, calls, convertible securities, commitments of
sale or liens related to or entitling any person to purchase or
otherwise to acquire any shares of the capital stock of, or other
ownership interest in, the Company or any Subsidiary thereof
except as otherwise disclosed in the Registration Statement.
(w) Except as disclosed in the Prospectus, there are no
business relationships or related party transactions required to
be disclosed therein by Item 404 of Regulation S-K of the
Commission.
(x) There is (i) no significant unfair labor practice
complaint pending against the Company or any of the Subsidiaries
or, to the best knowledge of the Company, threatened against any
of them, before the National Labor Relations Board or any other
federal, state or local labor relations board, and no significant
grievance or more significant arbitration proceeding arising out
of or under any collective bargaining agreement is so pending
against the Company or any of the Subsidiaries or, to the best
knowledge of the Company, threatened against any of them, and
(ii) no significant strike, labor dispute, slowdown or stoppage
pending against the Company or any of the Subsidiaries or, to the
best knowledge of the Company, threatened against it or any of
the Subsidiaries except for such actions specified in clause (i)
or (ii) above, which, singly or in the aggregate could not
reasonably be expected to have a material adverse effect on the
Company and the Subsidiaries, taken as a whole.
(y) Each of the Company and the Subsidiaries maintains a
system of internal accounting controls sufficient to provide
reasonable assurance that (i) transactions are executed in
accordance with management's general or specific authorizations;
(ii) transactions are recorded as necessary to permit preparation
of financial statements in conformity with generally accepted
accounting principles and to maintain asset accountability; (iii)
access to assets is permitted only in accordance with
management's general or specific authorization; and (iv) the
recorded accountability for assets is compared with the existing
assets at reasonable intervals and appropriate action is taken
with respect to any differences.
(z) All material tax returns required to be filed by the
Company and each of the Subsidiaries in any jurisdiction have
been filed, other than those filings being contested in good
faith, and all material taxes, including, without limitation,
withholding taxes, penalties and interest, assessments, fees and
other charges due pursuant to such returns or pursuant to any
assessment received by the Company or any of the Subsidiaries
have been paid, other
<PAGE>
than those being contested in good faith and for which adequate
reserves have been provided.
(aa) The Company has filed a registration statement pursuant
to Section 12(g) of the Exchange Act to register the Class A
Common Stock, has filed an application to list the Shares on the
Nasdaq National Market, and has received notification that the
listing has been approved, subject to notice of issuance of the
Firm Shares.
(bb) Each of the Company and the Subsidiaries that owns any
of the marine vessels described in the Prospectus (the "Vessels")
is and at all times has been a citizen of the United States
within the meaning of Section 2 of the Shipping Act, 1916, as
amended, 46 U.S.C.app. SEC. 802 (the "Shipping Act"), and
qualified to engage in coastwise trade. During the period that
the Company or any Subsidiary has owned any of the Vessels, none
of the Vessels has been sold, chartered or otherwise transferred
to any person or entity in violation of any applicable laws,
rules or regulations. Each Vessel operated in the U.S. coastwise
trade is properly documented under the laws of the United States
with all necessary endorsements to operate in the U.S. coastwide
trade and maintained and operated in compliance with the
requirements of a currently valid Certificate of Inspection
issued by the U.S. Coast Guard and the each of the Vessels not
operated in the U.S. coastwise trade is properly documented under
the laws of Panama. Each Vessel which is classed by the American
Bureau of Shipping is in class and classed in the highest
classification for vessels of the same age and type by the
American Bureau of Shipping, free of any outstanding
recommendations affecting class.
7. Indemnification. (a) The Company agrees to indemnify and hold harmless
each Underwriter and each person, if any, who controls any Underwriter within
the meaning of Section 15 of the Securities Act or Section 20 of the Exchange
Act, from and against any and all losses, claims, damages, liabilities and
judgments caused by any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement or the Prospectus (as
amended or supplemented if the Company shall have furnished any amendments or
supplements thereto) or any preliminary prospectus, or caused by any omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, except insofar as
such losses, claims, damages, liabilities or judgments are caused by any such
untrue statement or omission or alleged untrue statement or omission based upon
information relating to any Underwriters furnished in writing to the Company by
or on behalf of any Underwriter through you expressly for use therein.
(b) In case any action shall be brought against any Underwriter or any
person controlling such Underwriter, based upon any preliminary prospectus, the
Registration Statement or the Prospectus or any amendment or supplement thereto
and with respect to which indemnity may be sought against the Company, such
Underwriter shall promptly notify the Company in writing and the Company shall
assume the defense thereof, including the employment of counsel reasonably
<PAGE>
satisfactory to such indemnified party and payment of all fees and expenses. Any
Underwriter or any such controlling person shall have the right to employ
separate counsel in any such action and participate in the defense thereof, but
the fees and expenses of such counsel shall be at the expense of such
Underwriter or such controlling person unless (i) the employment of such counsel
has been specifically authorized in writing by the Company, (ii) the Company
shall have failed to assume the defense and employ counsel or (iii) the named
parties to any such action (including any impleaded parties) include both such
Underwriter or such controlling person and the Company and such Underwriter or
such controlling person shall have been advised by such counsel that there may
be one or more legal defenses available to it which are different from or
additional to those available to the Company (in which case the Company shall
not have the right to assume the defense of such action on behalf of such
Underwriter or such controlling person, it being understood, however, that the
Company shall not, in connection with any one such action or separate but
substantially similar or related actions in the same jurisdiction arising out of
the same general allegations or circumstances, be liable for the fees and
expenses of more than one separate firm of attorneys (in addition to any local
counsel) for all such Underwriters and controlling persons, which firm shall be
designated in writing by Donaldson, Lufkin & Jenrette Securities Corporation and
that all such fees and expenses shall be reimbursed as they are incurred). The
Company shall not be liable for any settlement of any such action effected
without the written consent of the Company but, if settled with the written
consent of the Company, the Company agrees to indemnify and hold harmless any
Underwriter and any such controlling person from and against any loss or
liability by reason of such settlement. Notwithstanding the immediately
preceding sentence, if in any case where the fees and expenses of counsel are at
the expense of the indemnifying party and an indemnified party shall have
requested the indemnifying party to reimburse the indemnified party for such
fees and expenses of counsel as incurred, such indemnifying party agrees that it
shall be liable for any settlement of any action effected without its written
consent if (i) such settlement is entered into more than ten business days after
the receipt by such indemnifying party of the aforesaid request and (ii) such
indemnifying party shall have failed to reimburse the indemnified party in
accordance with such request for reimbursement prior to the date of such
settlement. No indemnifying party shall, without the prior written consent of
the indemnified party, effect any settlement of any pending or threatened
proceeding in respect of which any indemnified party is or could have been a
party and indemnity could have been sought hereunder by such indemnified party,
unless such settlement includes an unconditional release of such indemnified
party from all liability on claims that are the subject matter of such
proceeding.
(c) Each Underwriter agrees, severally and not jointly, to indemnify and
hold harmless the Company, its directors, its officers who sign the Registration
Statement and any person controlling the Company within the meaning of Section
15 of the Securities Act or Section 20 of the Exchange Act to the same extent as
the foregoing indemnity from the Company to each Underwriter but only with
reference to information relating to such Underwriter furnished in writing by or
on behalf of such Underwriter through you expressly for use in the Registration
Statement, the Prospectus or any preliminary prospectus. In case any action
shall be brought against the Company, any of its directors, any such officer or
any person controlling the Company based on the Registration Statement, the
<PAGE>
Prospectus or any preliminary prospectus and in respect of which indemnity may
be sought against any Underwriter, the Underwriter shall have the rights and
duties given to the Company (except that if the Company shall have assumed the
defense thereof such Underwriter shall not be required to do so, but may employ
separate counsel therein and participate in the defense thereof but the fees and
expenses of such counsel shall be at the expense of such Underwriter), and the
Company, its directors, any such officers and any person controlling the Company
shall have the rights and duties given to the Underwriters, by Section 7(b)
hereof.
(d) If the indemnification provided for in this Section 7 is unavailable to
an indemnified party in respect of any losses, claims, damages, liabilities or
judgments referred to therein, then each indemnifying party, in lieu of
indemnifying such indemnified party, shall contribute to the amount paid or
payable by such indemnified party as a result of such losses, claims, damages,
liabilities and judgments (i) in such proportion as is appropriate to reflect
the relative benefits received by the Company on the one hand and the
Underwriters on the other hand from the offering of the Shares or (ii) if the
allocation provided by clause (i) above is not permitted by applicable law, in
such proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) above but also the relative fault of the Company and
the Underwriters in connection with the statements or omissions which resulted
in such losses, claims, damages, liabilities or judgments, as well as any other
relevant equitable considerations. The relative benefits received by the Company
and the Underwriters shall be deemed to be in the same proportion as the total
net proceeds from the offering (before deducting expenses) received by the
Company, and the total underwriting discounts and commissions received by the
Underwriters, bear to the total price to the public of the Shares, in each case
as set forth in the table on the cover page of the Prospectus. The relative
fault of the Company and the Underwriters shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a material
fact or the omission to state a material fact relates to information supplied by
the Company or the Underwriters and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such statement or
omission.
The Company and the Underwriters agree that it would not be just and
equitable if contribution pursuant to this Section 7(d) were determined by pro
rata allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation which does not take account of the
equitable considerations referred to in the immediately preceding paragraph. The
amount paid or payable by an indemnified party as a result of the losses,
claims, damages, liabilities or judgments referred to in the immediately
preceding paragraph shall be deemed to include, subject to the limitations set
forth above, any legal or other expenses reasonably incurred by such indemnified
party in connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 8, no Underwriter shall be
required to contribute any amount in excess of the amount by which the total
price at which the Shares underwritten by it and distributed to the public were
offered to the public exceeds the amount of any damages which such Underwriter
has otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. No person guilty of fraudulent
<PAGE>
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The Underwriters' obligations to contribute
pursuant to this Section 7(d) are several in proportion to the respective number
of Shares purchased by each of the Underwriters hereunder and not joint.
(e) The Company hereby agrees to the jurisdiction of any state or federal
court in the State of New York in any action instituted by any Underwriter or
person controlling an Underwriter asserting a claim for indemnification or
contribution under or pursuant to this Section 7, and waives, to the fullest
extent permitted by applicable law, any defense based upon lack of personal
jurisdiction or venue. A copy of any such process shall be sent or given to such
Seller, at the address for notices specified in Section 10 hereof.
8. Conditions of Underwriters' Obligations. The several obligations of the
Underwriters to purchase the Firm Shares under this Agreement are subject to the
satisfaction of each of the following conditions:
(a) All the representations and warranties of the Company contained in
this Agreement shall be true and correct on the Closing Date with the same
force and effect as if made on and as of the Closing Date. (b) The
Registration Statement shall have become effective not later than 5:00 p.m.
(and in the case of a Registration Statement filed under Rule 462(b) under
the Securities Act, not later than 10:00 p.m.), New York City time, on the
date of this Agreement or at such later date and time as you may approve in
writing, and at the Closing Date no stop order suspending the effectiveness
of the Registration Statement shall have been issued and no proceedings for
that purpose shall have been commenced or shall be pending before or
contemplated by the Commission.
(c)(i) Since the date of the latest balance sheet included in the
Registration Statement and the Prospectus, there shall not have been any
material adverse change, or any development involving a prospective
material adverse change, in the condition, financial or otherwise, or in
the earnings, affairs or business prospects, whether or not arising in the
ordinary course of business, of the Company, (ii) since the date of the
latest balance sheet included in the Registration Statement and the
Prospectus there shall not have been any change, or any development
involving a prospective material adverse change, in the capital stock or in
the long-term debt of the Company from that set forth in the Registration
Statement and Prospectus, (iii) the Company and the Subsidiaries shall have
no liability or obligation, direct or contingent, which is material to the
Company and the Subsidiaries, taken as a whole, other than those reflected
in the Registration Statement and the Prospectus and (iv) on the Closing
Date you shall have received a certificate dated the Closing Date, signed
by J. Erik Hvide and John H. Blankley, in their capacities as the Chief
<PAGE>
Executive Officer and Chief Financial Officer of the Company, respectively,
confirming the matters set forth in paragraphs (a), (b), and (c) of this
Section 8.
(d) You shall have received on the Closing Date an opinion
(satisfactory to you and counsel for the Underwriters), dated the Closing
Date, of Dyer Ellis & Joseph counsel for the Company, to the effect that:
(i) each of the Company and the Subsidiaries has been duly
incorporated or formed, is validly existing as a corporation, limited
liability company or partnership, in good standing under the laws of
its jurisdiction of incorporation or formation and has the power and
authority required to carry on its business as it is currently being
conducted and to own, lease, charter and operate its properties and
assets, including, without limitation, the Vessels;
(ii) the Company and each of the Subsidiaries is duly qualified
and is in good standing as a foreign corporation, limited liability
company or partnership authorized to do business in each jurisdiction
in which the nature of its business or its ownership, chartering or
leasing of property requires such qualification, except where the
failure to be so qualified would not have a material adverse effect on
the Company and the Subsidiaries, taken as a whole;
(iii) all of the outstanding shares of capital stock of, or other
ownership interests in, each of the Company's subsidiaries have been
duly and validly authorized and issued and are fully paid and
non-assessable, and are owned by the Company, free and clear of any
security interest, claim, lien, encumbrance or adverse interest of any
nature;
(iv) all the outstanding shares of Common Stock have been duly
authorized and validly issued and are fully paid, non-assessable and
not subject to any preemptive or similar rights;
(v) the Shares to be issued and sold by the Company hereunder
have been duly authorized, and when issued and delivered to the
Underwriters against payment therefor as provided by this Agreement,
will have been validly issued and will be fully paid and
non-assessable, and the issuance of such Shares is not subject to any
preemptive or similar rights;
(vi) this Agreement has been duly authorized, executed and
delivered by the Company and is a valid and binding agreement of the
Company enforceable in accordance with its terms (except as rights to
indemnity and contribution hereunder may be limited by applicable
law);
<PAGE>
(vii) the authorized capital stock of the Company, including the
Common Stock, conforms as to legal matters to the description thereof
contained in the Prospectus;
(viii) the Registration Statement has become effective under the
Securities Act, no stop order suspending its effectiveness has been
issued and no proceedings for that purpose are, to the knowledge of
such counsel, pending before or contemplated by the Commission;
(ix) the statements under the captions "Business--Legal
Proceedings," "Business--Environmental and Other Regulation," "Certain
Transactions," "Description of Certain Indebtedness," "Description of
Capital Stock" and "Shares Eligible for Future Sale" in the Prospectus
and Items 14 and 15 of Part II of the Registration Statement insofar
as such statements constitute a summary of legal matters, documents or
proceedings referred to therein, fairly present the information called
for with respect to such legal matters, documents and proceedings;
(x) To the best of such counsel's knowledge after due inquiry,
neither the Company nor any of the Subsidiaries is in violation of its
respective Constituent Documents and neither the Company nor any of
the Subsidiaries is in default in the performance of any obligation,
agreement or condition contained in any bond, debenture, note or any
other evidence of indebtedness or in any other agreement, indenture or
instrument material to the conduct of the business of the Company and
the Subsidiaries, taken as a whole, to which the Company or any of the
Subsidiaries is a party or by which it or any of the Subsidiaries or
their respective property is bound;
(xi) the execution, delivery and performance of this Agreement by
the Company, compliance by the Company with all the provisions hereof
and the consummation of the Acquisitions and the transactions
contemplated hereby will not require any consent, approval,
authorization or other order of any court, regulatory body,
administrative agency or other governmental body (except as such may
be required under the Securities Act or other securities or Blue Sky
laws) and will not conflict with or constitute a breach of any of the
terms or provisions of, or a default under, the Constituent Documents
of the Company or any of the Subsidiaries or any agreement, indenture
or other instrument to which the Company or any of the Subsidiaries is
a party or by which the Company or any of the Subsidiaries or their
respective properties are bound, or violate or conflict with any laws,
administrative regulations or rulings or court decrees applicable to
the Company or any of the Subsidiaries or their respective properties;
<PAGE>
(xii) each of the Company and any Subsidiaries that owns any of
the Vessels is, and during all relevant times has been, a citizen of
the United States within the meaning of Section 2 of the Shipping Act
and qualified to own and operate vessels engaged in U.S. coastwise
trade; each of the Vessels identified in the Prospectus as being
owned, operated or managed by the Company and engaged in U.S.
coastwise trade is properly documented under the laws of the United
States with all necessary endorsements to operate in the U.S.
coastwise trade; the Company is the owner of record of each Vessel
identified in the Prospectus as being owned by it, free and clear of
all liens, claims and encumbrances of record, other than those
described in the Prospectus;
(xiii) after due inquiry, such counsel does not know of any legal
or governmental proceeding pending or threatened to which the Company
or any of the Subsidiaries is a party or to which any of their
respective property is subject which is required to be described in
the Registration Statement or the Prospectus and is not so described,
or of any contract or other document which is required to be described
in the Registration Statement or the Prospectus or is required to be
filed as an exhibit to the Registration Statement which is not
described or filed as required;
(xiv) to the best of such counsel's knowledge, after due inquiry,
neither the Company nor any of the Subsidiaries has violated any
Environmental Laws, nor any federal or state law relating to
discrimination in the hiring, promotion or pay of employees nor any
applicable federal or state wages and hours laws, nor any provisions
of ERISA or the rules and regulations promulgated thereunder, which in
each case might result in any material adverse change in the business,
prospects, financial condition or results of operation of the Company
and the Subsidiaries, taken as a whole;
(xv) each of the Company and the Subsidiaries has such Permits,
including, without limitation, under any applicable Environmental
Laws, as are necessary to own, lease, charter and operate its
respective Vessels and other properties and to conduct its business in
the manner described in the Prospectus; to the best of such counsel's
knowledge, after due inquiry, each of the Company and the Subsidiaries
has fulfilled and performed all of its material obligations with
respect to such Permits and no event has occurred which allows, or
after notice or lapse of time would allow, revocation or termination
thereof or results in any other material impairment of the rights of
the holder of any such Permit, subject in each case to such
qualification as may be set forth in the Prospectus; and, except as
described in the Prospectus, such Permits contain no restrictions that
are materially burdensome to the Company or any of the Subsidiaries;
<PAGE>
(xvi) the Company is not an "investment company" or a company
"controlled" by an "investment company" within the meaning of the
Investment Company Act of 1940, as amended;
(xvii) to the best of such counsel's knowledge, after due
inquiry, no holder of any security of the Company has any right to
require registration of shares of Common Stock or any other security
of the Company, except as disclosed in the Prospectus;
(xviii) to the best of such counsel's knowledge after due
inquiry, all leases and vessel charters to which the Company or any of
the Subsidiaries is a party are valid and binding and, to the best of
such counsel's knowledge after due inquiry, no default has occurred or
is continuing thereunder, which might result in any material adverse
change in the business, prospects, financial condition or results of
operation of the Company and the Subsidiaries taken as a whole, and
the Company and the Subsidiaries enjoy peaceful and undisturbed
possession under all such leases and vessel charters to which any of
them is a party as lessee or charterer with such exceptions as do not
materially interfere with the use made by the Company or such
Subsidiary;
(xix) (i) the Registration Statement (including a Registration
Statement, if any, filed pursuant to Rule 462(b) under the Securities
Act) and the Prospectus and any supplement or amendment thereto
(except for financial statements as to which no opinion need be
expressed) comply as to form in all material respects with the
Securities Act, and (ii) such counsel believes that (except for
financial statements, as aforesaid) the Registration Statement and the
prospectus included therein at the time the Registration Statement
became effective did not contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading, and that the
Prospectus, as amended or supplemented, if applicable (except for
financial statements, as aforesaid) does not contain any untrue
statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; and
(xx) the provisions set forth in Article VI, Section 7 of the
Company's Articles of the Incorporation which provide that any
purported transfer to non-U.S. citizens of shares or an interest in
shares of the Company representated by a "Citizen" certificate in
excess of 24.99% of the outstanding shares of each class of capital
stock are enforceable in accordance with their terms under applicable
law.
<PAGE>
In giving such opinion with respect to the matters covered by clause (xx)
such counsel may state that their opinion and belief are based upon their
participation in the preparation of the Registration Statement and Prospectus
and any amendments or supplements thereto and review and discussion of the
contents thereof, but are without independent check or verification except as
specified. In giving such opinion with respect to the matters covered by clauses
(i), (ii), (iii) and (iv), such counsel may state that their opinion is based
upon the opinion of Gene Douglas, Vice President - Legal and General Counsel of
the Company. In giving such opinion with respect to the matters covered by
clause (xii), such counsel may state that their opinion relies upon the
Company's most recent affidavit of citizenship filed with the U.S. Maritme
Administation. In giving such opinion with respect to matters of Florida law,
such counsel may state that their opinion relies upon the opinion of Florida
counsel to the Company. In each instance, Dyer Ellis & Joseph shall deliver to
the Underwriters a copy of the opinion relied upon and state that they are
justified in relying thereon. In giving such opinions, such counsel (i) may
state that when a statement is qualified by "to the best of such counsel's
knowledge" or a similar phrase, it is intended to indicate that those attorneys
in such firm who have rendered significant legal services in connection with
such firm's representation of the Company do not have actual knowledge and (ii)
may state that when a statement is qualified by "after due inquiry" or similar
phrase, it is intended to indicate that attorneys in such firm have participated
in conferences with officers and other representatives of the Company and such
firm has received written representations from the Company or its officers
regarding the subject matter referenced in such statement.
The opinion of Dyer Ellis & Joseph described in paragraph (d) above shall
be rendered to you at the request of the Company and shall so state therein.
(e) You shall have received on the Closing Date an opinion, dated the
Closing Date, of Akin, Gump, Strauss, Hauer & Feld, L.L.P., counsel for the
Underwriters, in form and substance satisfactory to the Underwriters, and
Akin, Gump, Strauss, Hauer & Feld, L.L.P. shall have received such
documentation and information as it requests to enable it to pass upon the
matters covered in such opinion.
(f) You shall have received a letter on and as of the Closing Date, in
form and substance satisfactory to you, from Ernst & Young LLP, independent
public accountants, with respect to the financial statements and certain
financial information contained in the Registration Statement and the
Prospectus and substantially in the form and substance of the letter
delivered to you by Ernst & Young LLP on the date of this Agreement.
(g) The Company shall not have failed at or prior to the Closing Date
to perform or comply with any of the agreements herein contained and
required to be performed or complied with by the Company at or prior to the
Closing Date.
(h) You shall have received on the Closing Date a certificate of class
for each Vessel (dated not more than ten (10) days prior to the Closing
Date) evidencing that each such Vessel is in class and classed in the
highest classification for vessels of the same age and type by the American
<PAGE>
Bureau of Shipping, free of any outstanding recommendations affecting
class.
The several obligations of the Underwriters to purchase any Additional
Shares hereunder are subject to the delivery to you on the applicable Option
Closing Date of such documents as you may reasonably request with respect to the
good standing of the Company, the due authorization and issuance of such
Additional Shares and other matters related to the issuance of such Additional
Shares.
9. Effective Date of Agreement and Termination. This Agreement shall become
effective upon the later of (i) execution of this Agreement and (ii) when
notification of the effectiveness of the Registration Statement has been
released by the Commission.
This Agreement may be terminated at any time prior to the Closing Date by
you by written notice to the Company if any of the following has occurred: (i)
since the respective dates as of which information is given in the Registration
Statement and the Prospectus, any adverse change or development involving a
prospective adverse change in the condition, financial or otherwise, of the
Company or any of the Subsidiaries or the earnings, affairs, or business
prospects of the Company or any of the Subsidiaries, whether or not arising in
the ordinary course of business, which would, in your judgment, make it
impracticable to market the Shares on the terms and in the manner contemplated
in the Prospectus, (ii) any outbreak or escalation of hostilities or other
national or international calamity or crisis or change in economic conditions or
in the financial markets of the United States or elsewhere that, in your
judgment, is material and adverse and would, in your judgment, make it
impracticable to market the Shares on the terms and in the manner contemplated
in the Prospectus, (iii) the suspension or material limitation of trading in
securities on the New York Stock Exchange, the American Stock Exchange or the
Nasdaq National Market or limitation on prices for securities on any such
exchange or Nasdaq National Market, (iv) the enactment, publication, decree or
other promulgation of any federal or state statute, regulation, rule or order of
any court or other governmental authority which in your opinion materially and
adversely affects, or will materially and adversely affect, the business or
operations of the Company or any Subsidiary, (v) the declaration of a banking
moratorium by either federal or New York State authorities or (vi) the taking of
any action by any federal, state or local government or agency in respect of its
monetary or fiscal affairs which in your opinion has a material adverse effect
on the financial markets in the United States.
If on the Closing Date or on an Option Closing Date, as the case may be,
any one or more of the Underwriters shall fail or refuse to purchase the Firm
Shares or Additional Shares, as the case may be, which it or they have agreed to
purchase hereunder on such date and the aggregate number of Firm Shares or
Additional Shares, as the case may be, which such defaulting Underwriter or
Underwriters, as the case may be, agreed but failed or refused to purchase is
not more than one-tenth of the total number of Shares to be purchased on such
date by all Underwriters, each non-defaulting Underwriter shall be obligated
severally, in the proportion which the number of Firm Shares set forth opposite
<PAGE>
its name in Schedule I bears to the total number of Firm Shares which all the
non-defaulting Underwriters, as the case may be, have agreed to purchase, or in
such other proportion as you may specify, to purchase the Firm Shares or
Additional Shares, as the case may be, which such defaulting Underwriter or
Underwriters, as the case may be, agreed but failed or refused to purchase on
such date; provided that in no event shall the number of Firm Shares or
Additional Shares, as the case may be, which any Underwriter has agreed to
purchase pursuant to Section 2 hereof be increased pursuant to this Section 10
by an amount in excess of one-ninth of such number of Firm Shares or Additional
Shares, as the case may be, without the written consent of such Underwriter. If
on the Closing Date or on an Option Closing Date, as the case may be, any
Underwriter or Underwriters shall fail or refuse to purchase Firm Shares, or
Additional Shares, as the case may be, and the aggregate number of Firm Shares
or Additional Shares, as the case may be, with respect to which such default
occurs is more than one-tenth of the aggregate number of Shares to be purchased
on such date by all Underwriters and arrangements satisfactory to you and the
Company for purchase of such Shares are not made within 48 hours after such
default, this Agreement will terminate without liability on the part of any
non-defaulting Underwriter and the Company. In any such case which does not
result in termination of this Agreement, either you or the Company shall have
the right to postpone the Closing Date or the applicable Option Closing Date, as
the case may be, but in no event for longer than seven days, in order that the
required changes, if any, in the Registration Statement and the Prospectus or
any other documents or arrangements may be effected. Any action taken under this
paragraph shall not relieve any defaulting Underwriter from liability in respect
of any default of any such Underwriter under this Agreement.
10. Miscellaneous. Notices given pursuant to any provision of this
Agreement shall be addressed as follows: (a) if to the Company, to Hvide Marine
Incorporated, 2200 Eller Driver, Fort Lauderdale, Florida 33316, Attention:
Chief Financial Officer and (b) if to any Underwriter or to you, to you c/o
Donaldson, Lufkin & Jenrette Securities Corporation, 277 Park Avenue, New York,
New York 10172, Attention: Syndicate Department, or in any case to such other
address as the person to be notified may have requested in writing.
The respective indemnities, contribution agreements, representations,
warranties and other statements of the Company, its officers and directors and
of the several Underwriters set forth in or made pursuant to this Agreement
shall remain operative and in full force and effect, and will survive delivery
of and payment for the Shares, regardless of (i) any investigation, or statement
as to the results thereof, made by or on behalf of any Underwriter or by or on
behalf of the Company, the officers or directors of the Company or any
controlling person of the Company, (ii) acceptance of the Shares and payment for
them hereunder and (iii) termination of this Agreement.
If this Agreement shall be terminated by the Underwriters because of any
failure or refusal on the part of the Company to comply with the terms or to
fulfill any of the conditions of this Agreement, the Company agrees to reimburse
the several Underwriters for all out-of-pocket expenses (including the fees and
disbursements of counsel) reasonably incurred by them.
<PAGE>
Except as otherwise provided, this Agreement has been and is made solely
for the benefit of and shall be binding upon the Company, the Underwriters, any
controlling persons referred to herein and their respective successors and
assigns, all as and to the extent provided in this Agreement, and no other
person shall acquire or have any right under or by virtue of this Agreement. The
term "successors and assigns" shall not include a purchaser of any of the Shares
from any of the several Underwriters merely because of such purchase.
This Agreement shall be governed and construed in accordance with the laws
of the State of New York.
This Agreement may be signed in various counterparts which together shall
constitute one and the same instrument.
Please confirm that the foregoing correctly sets forth the agreement
between the Company and the several Underwriters.
Very truly yours,
HVIDE MARINE INCORPORATED
By:
Printed Name:
Title:
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
HOWARD, WEIL, LABOUISSE, FRIEDRICHS
INCORPORATED
Acting severally on behalf of themselves and the several
Underwriters named in Schedule I hereto
By: DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
By:
Printed Name:
Title:
<PAGE>
SCHEDULE I
----------
Number of Firm Shares
Underwriters to be Purchased
------------ ---------------
Donaldson, Lufkin & Jenrette
Securities Corporation
Howard, Weil, Labouisse, Friedrichs
Incorporated
---------
Total 7,000,000
=========
<PAGE>
ANNEX I
-------
Required Stockholder Lock-ups
-----------------------------
EXHIBIT 2.2(a)
AMENDMENT NO. 1 TO ASSET PURCHASE AGREEMENT
This Amendment No. 1 to Asset Purchase Agreement made and entered into as
of the 23rd day of July, 1996 by and among Hvide Marine Incorporated, a Florida
corporation, Seal Fleet, Inc., a Nevada corporation, Sealcraft Operators, Inc.,
a Texas corporation, Seal GP, Inc., a Delaware corporation, and South
corporation, a Delaware corporation, First Magnum corporation, a Florida
corporation, and Thomas M. Ferguson.
Whereas, the parties hereto, having entered into that certain Asset
Purchase Agreement dated as of March 29, 1996 (the "Agreement"), desire to amend
the Agreement upon the terms hereinafter set forth; and
Whereas Thomas M. Ferguson intends to transfer his interest under the Asset
Purchase Agreement to First Magnum Corporation, a Florida Corporation.
Now therefore, in consideration of the premises and the mutual covenants
contained herein, and for other good and valuable consideration, the parties
agree as follows:
1. Paragraph 2 of the Agreement is amended to read in its entirety as
follows:
2. Purchase Price. Purchaser will purchase the Assets for the price
---------------
of Nine Million Six Hundred Thousand Dollars ($9,600,000) (the "Purchase
Price"), payable as provided in Paragraph 4. The portion of the Purchase
Price allocable to each of the Assets to be sold hereunder is set forth in
the Disclosure Letter dated as of March 29, 1996 between Seal Fleet and
Purchaser (the "Disclosure Letter").
2. The first sentence of Paragraph 4 of the Agreement is amended to read
in its entirety as follows:
The Purchase Price shall be paid by Purchaser as follows: (a) $100,000 upon
execution of this Agreement (the "Deposit") and (b) $9,500,000 at Closing
by wire transfer to an account designated by Sellers.
3. Subparagraph (m) of Paragraph 6 of the Agreement is amended to read in
its entirety as follows:
(m) Repayment of Indebtedness. On or before the Closing Date,
-------------------------
Sellers shall repay all indebtedness to the Three R Trusts.
<PAGE>
4. Paragraph 7 is amended to add the following representation and
warranty:
(k) Transaction with Three R Trusts. Purchaser has entered into an
-------------------------------
amendment to the Three R Trusts Agreement (as hereinafter defined)
whereby Purchaser will pay $16,000,000 for the five vessels purchased
and for 50,000 shares of Class B and 212,655 shares of Class A common
stock of Seal Fleet purchased. No other consideration, payment or
inducement has been or will be paid to the Three R Trusts or the
partnerships that own the vessels beneficially owned by the Three R
Trusts.
5. Subparagraph (i) of Paragraph 11 of the Agreement is amended to read
in its entirety as follows:
(i) payment and/or release of all indebtedness of Sellers to Three R
Trusts.
6. Paragraph 20 of the Agreement is amended to read in its entirety as
follows:
20. Employment of Sellers' Personnel. At the Closing, Purchaser will
--------------------------------
offer employment to certain administrative employees of Sellers and to the
officers and crew members of the Vessels employed by Sellers on the Closing
Date, as the Closing Date may be extended pursuant to this Agreement,
provided that such persons qualify for hiring under Purchaser's customary
terms and conditions of employment. All employees hired will be retained
under compensation packages commensurate with the compensation package in
force for comparable personnel currently employed by Seabulk Offshore, Ltd.
All personnel hired pursuant to this paragraph shall be hired as employees
at will. Purchaser will provide to Sellers at Closing the sum of Four
Hundred Fifty Thousand Dollars ($475,000) to be utilized by the Sellers to
assist in downsizing its operations, as appropriate, and in mitigating any
dislocation associated with such downsizing, such amount to be allocated
in Sellers' sole discretion.
7. Except to the extent amended by the foregoing Paragraphs 1 through 6
of this Amendment No. 1, the provisions of the Agreement shall remain in full
force and effect.
8. This Amendment may be executed in multiple counterparts, each of which
shall be deemed to be an original, but all of which together shall constitute
but one and the same instrument.
<PAGE>
In Witness Whereof, the parties have executed this Amendment No. 1 on the
date first hereinabove written.
Sellers:
Seal Fleet, Inc.
By:
-----------------------------
John Bissell, President
Sealcraft Operators, Inc.
By:
-----------------------------
John Bissell, President
Seal GP, Inc.
By:
-----------------------------
John Bissell, President
South Corporation
By:
-----------------------------
John Bissell, President
Purchaser:
Hvide Marine Incorporated
By:
-----------------------------
Name: Donald L. Caldera
Title: Executive Vice
President
First Magnum Corporation
By:
-----------------------------
Name:
Title:
Thomas M. Ferguson
EXHIBIT 2.3(a)
AMENDMENT NUMBER ONE
TO ASSET PURCHASE AGREEMENT
---------------------------
This Amendment Number One to Asset Purchase Agreement (hereinafter referred
to as the "Amendment Number One") is made and entered into as of July 23, 1996,
by and among Hvide Marine Incorporated, a Florida corporation ("Purchaser"),
Ross Seal Partners, Ltd., Bengal Seal Partners, Ltd, Indian Seal Partners, Ltd.,
Baffin Seal Partners, Ltd., and Baltic Seal Partners, Ltd., each a Texas Limited
Partnership (collectively, "Sellers") and Irwin M. Herz, Jr., as trustee under
those certain trusts created under Indenture of Trusts dated June 13, 1960, as
amended (collectively, "Three R Trusts"), as defined in that certain Asset
Purchase Agreement (the "Agreement") dated March 29, 1996 (Purchaser, Sellers
and Three R Trusts are sometimes collectively referred to as the "Parties").
For good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the Parties agree that the Agreement shall be amended
as follows:
A. That Paragraph 2.(a) shall be deleted in its entirely and the
following paragraph shall be inserted in its place:
"2. Purchase Price. (a) Purchaser will purchase the Assets from
--------------
Sellers for the price of Fifteen Million Nine Hundred and Ten Thousand
Dollars ($15,910,000.00) cash (the "Asset Purchase Price"), payable as
provided in Paragraph 4."
B. That the next to last paragraph of Paragraph 8.(i)-shall be amended by
deleting ", up to $3.8 million, plus (ii) an amount equal to $3 million less any
payments of principal made by Purchaser under its guarantee of the Modified Seal
Fleet Note, as hereinafter defined" from the first sentence of such paragraph
and adding "of approximately $ 7 million" in lieu thereof.
C. That Paragraph 10.(i)(bb) shall be deleted in its entirety;
D. That Paragraph 11.(b) shall be deleted in its entirety and the
following paragraph shall be inserted in its place:
"(b) Seal Fleet shall have paid Three R Trusts all principal and
accrued interest due on the Existing Seal Fleet Notes, which payment shall
leave the indebtedness subject to reconciliation pursuant to Exhibit "H" as
the only indebtedness owed by Seal Fleet to the Three R Trusts or their
affiliates on the Closing Date;"
E. That Paragraph 11.(c) shall be deleted in its entirety,
<PAGE>
F. That Paragraph 17. Shall be deleted in its entirety and the following
paragraph shall be inserted in its place:
"17. Expenses. On the Closing Date, Purchaser shall pay to Greer, Herz
--------
& Adams, L.L.P., Sellers' and the Three R Trusts' attorneys', such
firm's attorneys' fees and costs incurred in connection with the
transactions contemplated by this Asset Purchase Agreement."
G. That paragraph 25. Shall be amended by deleting "and the guaranty
referenced in Paragraph 11(c) hereof" from the first sentence of such paragraph.
H. That Exhibit G shall be deleted;
I. That Schedule 11(c) shall be deleted."
The Parties further agree that any of the Parties executing the Agreement
shall do so by executing multiple separate signature pages, one of which shall
be attached to and become a part of the original counterparts of the Agreement
in each of the Parties' possession. All of the Parties to the Agreement,
including any Parties executing by executing a signature page on or after this
date, shall be duly and fully bound by all of the terms of the Agreement for all
purposes as fully as though such Parties had executed on this date.
Except as expressly modified herein, the provisions of the Agreement shall
remain in full force and effect and shall not be altered, modified or amended.
In Witness Whereof, the Parties have executed this Agreement as of July 23,
1996.
Sellers:
Ross Seal Partners, Ltd.
By:
------------------------------
Drew Hollinger, President of Three
R Markets, General Partner
Bengal Seal Partners, Ltd.
By:
------------------------------
Drew Hollinger, President of Three
R Markets, General Partner
Indian Seal Partners, Ltd.
<PAGE>
By:
------------------------------
Drew Hollinger, President of Three
R Markets, General Partner
Baffin Seal Partners, Ltd.
By:
------------------------------
Drew Hollinger, President of Three
R Markets, General Partner
Baltic Seal Partners, Ltd.
By:
------------------------------
Drew Hollinger, President of Three
R Markets, General Partner
Three R Trusts:
By:
-------------------------------
Irwin M. Herz, Jr.
Trustee
Purchaser
Hvide Marine Incorporated
By:
------------------------------
Donald L. Caldera
Executive Vice President
EXHIBIT 2.4
ARTICLES OF MERGER
OF
HVIDE MARINE INCORPORATED, A FLORIDA CORPORATION
INTO
HVIDE CORP., A FLORIDA CORPORATION
The undersigned, Hvide Corp., a Florida corporation (sometimes hereinafter
referred to as the "Surviving Corporation"), and Hvide Marine Incorporated, a
Florida corporation (sometimes hereinafter referred to as the "Merging
Corporation"), hereby execute the following Articles of Merger pursuant to
Section 607.1105 of the Florida Statutes:
1. The Plan of Merger of the Merging Corporation into the Surviving
Corporation that was approved by the Board of Directors and the shareholders of
each of the Surviving Corporation and the Merging Corporation on July ___, 1996,
in accordance with the provisions of Sections 607.1101 and 607.1103 of the
Florida Statutes, is as follows:
Plan of Merger of
Hvide Marine Incorporated
Into
Hvide Corp.
a. The names of the corporations planning to merge are Hvide Corp., a
Florida corporation, and Hvide Marine Incorporated, a Florida corporation
("Merging Corporation"). The name of the surviving corporation of this merger is
Hvide Corp. ("Surviving Corporation"). The Merging Corporation is a wholly-
owned subsidiary of the Surviving Corporation.
b. The shares of the Merging Corporation shall be surrendered to the
Surviving Corporation for cancellation in consideration of the transfer of the
assets of the Merging Corporation to the Surviving Corporation, and its
assumption of liabilities and obligations of the Merging Corporation.
c. The Surviving Corporation, as the sole shareholder of the Merging
Corporation, acknowledges its dissenters rights but by its vote approving the
adoption of this Plan of Merger it hereby waives any further notice of
dissenters rights.
d. The Articles of Incorporation of the Surviving Corporation shall be
revised as set forth in the form of the Amended and Restated Articles of
Incorporation annexed to this Plan of Merger, including changing the name of the
Surviving Corporation to "Hvide Marine Incorporated".
e. Immediately following the merger of the Merging Corporation into the
Surviving Corporation, the Surviving Corporation shall effectuate a 1.584274 for
1 stock split on all of its outstanding shares of capital stock.
<PAGE>
2. The merger shall become effective upon the filing of these Articles of
Merger with the Florida Department of State.
3. The Plan of Merger was adopted by the Board of Directors and the
shareholders of each of the Merging Corporation and the Surviving Corporation on
July ___, 1996.
Dated as of July ___, 1996.
Hvide Corp.
By:
-----------------------------------
Name:
Title:
Hvide Marine Incorporated
By:
-------------------------------------
Name:
Title:
EXHIBIT 3.1
AMENDED AND RESTATED
ARTICLES OF INCORPORATION
OF
HVIDE CORP.
THE UNDERSIGNED, being the _____________ of Hvide Corp., does hereby make,
subscribe, file and acknowledge these Amended and Restated Articles of
Incorporation ("Articles of Incorporation") for the purpose of continuing a
corporation under the Florida Business Corporation Act.
ARTICLE I
NAME
The name of the corporation (hereinafter referred to as the "Corporation")
is Hvide Marine Incorporated.
ARTICLE II
PRINCIPAL OFFICE AND REGISTERED AGENT
The principal office of the Corporation shall be at 2200 Eller Drive, Fort
Lauderdale, Florida, or in any other city in the State of Florida designated by
the Board of Directors from time to time. The name and address of the
Corporation's registered agent in the State of Florida, whose Consent to
Appointment as Registered Agent accompanies these Articles of Incorporation, is
Gene Douglas, 2200 Eller Drive, P. O. Box 13038, Fort Lauderdale, Florida 33316.
ARTICLE III
PURPOSE
The purpose of the Corporation is to engage in any lawful act or activity
for which corporations may be organized under the laws of the State of Florida,
and the Corporation shall have all of the powers conferred upon corporations
organized under the laws of the State of Florida to carry out such purpose.
1
<PAGE>
ARTICLE IV
TERM
The Corporation shall have perpetual existence.
ARTICLE V
CAPITAL STOCK
1. Authorized Capital Stock. Except as otherwise provided by law,
authorized shares of capital stock of the Corporation, regardless of class or
series, may be issued by the Corporation, from time to time in such amounts, for
such lawful consideration and for such corporate purposes as the Board of
Directors may from time to time determine. All capital stock when issued and
fully paid for shall be deemed fully paid and non-assessable. The total number
of shares of all classes of capital stock which the Corporation shall have
authority to issue shall be 65,000,000 consisting of:
(a) 100,000,000 shares of Class A Common Stock, having a par value of
$.001 per share;
(b) 5,000,000 shares of Class B Common Stock, having a par value of
$.001 per share; and
(c) 10,000,000 shares of Preferred Stock, having a par value of $1.00
per share.
2. Terms of Common Stock.
(a) General. Except as otherwise required by law or as otherwise
provided in these Articles of Incorporation, each share of each class of Common
Stock shall have identical powers, preferences, qualifications, limitations and
other rights. The Class A Common Stock, and Class B Common Stock are
hereinafter collectively referred to as the "Common Stock."
(b) Voting Rights. Except as otherwise required by law or as
otherwise provided in these Articles of Incorporation: (i) each share of Class
A Common Stock shall be entitled to one vote per share; (ii) each share of Class
B Common Stock shall be entitled to ten votes per share; and (iii) the holders
of Class A Common Stock and the holders of Class B Common Stock shall vote
together as a single class on all matters submitted to a vote of stockholders.
(c) Dividends. Subject to the rights of any outstanding class or
series of capital stock ranking senior to Common Stock as to dividends,
dividends may be paid upon Common Stock in cash, property or securities as and
when declared by the Board of Directors out of funds legally available therefor.
As and when dividends are so declared and paid, the holders of Common Stock
shall be entitled to participate in such dividends ratably on a per share basis;
provided that: (i) if dividends are declared that are payable in shares of
Common Stock, such dividends shall be declared
2
<PAGE>
and payable at the same rate to holders of each class of Common Stock, but the
holders of Class A Common Stock shall receive dividends in Class A Common Stock
(rather than dividends in Class B Common Stock), and the holders of Class B
Common Stock shall receive dividends in Class B Common Stock, and (ii) if the
dividends consist of other voting securities of the Corporation, the Corporation
shall declare and pay such dividends in separate classes of securities,
identical in all respects, except that the voting rights of each such security
shall correspond to the class of security held.
(d) Liquidation. In the event of any liquidation, dissolution or
winding-up of the Corporation, whether voluntary or involuntary, the holders of
each class of Common Stock are entitled to share ratably in the net assets, if
any, remaining after payment in full or all debts and liabilities of the
Corporation and after the holders of any outstanding class or series of capital
stock ranking senior to Common Stock shall have been paid in full the amounts to
which such holders shall be entitled, or an amount sufficient to pay the
aggregate amount to which such holders are entitled shall have been set aside
for the benefit of the holders of such senior stock.
(e) Stock Splits. The Corporation may not split, divide or combine
the shares of any class of Common Stock unless, at the same time, the
Corporation splits, divides or combines, as the case may be, the shares of the
other class of Common Stock in the same proportion and manner.
(f) No Preemptive Rights. The Board of Directors may from time to
time issue any class or series of authorized stock of the Corporation, or any
notes, debentures, bonds, or other securities convertible into or carrying
options or warrants to purchase authorized stock of any class or series without
offering any such stock, either in whole or in part, to the existing
stockholders of any class or series. No stockholder of the Corporation shall by
reason of his holding shares of any class or series have any preemptive or
preferential rights to purchase or subscribe to stock of any class or series of
the Corporation now or hereafter to be authorized, or any notes, debentures,
bonds, or other securities convertible into or carrying options or warrants to
purchase stock of any class or series now or hereafter to be authorized, whether
or not the issuance of any such stock, or such notes, debentures, bonds or other
securities, would adversely affect the dividend or voting rights of such
stockholder; provided, however, all such newly authorized shares of stock of any
class or series, or notes, debentures, bonds or other securities convertible
into, or carrying options or warrants to purchase, stock of any class or series,
may be issued and disposed of or sold by the Board of Directors on such terms
and for such consideration, so far as may be permitted by law, and to such
person or persons as the Board of Directors may determine in its discretion from
time to time.
(g) Conversion. Before any holder of a share converted pursuant to
Section 3(c) or Section 3(d) of this Article V shall be entitled to the rights
of a holder of a share of the class of Common Stock into which such holder is
converting, such holder must surrender the certificate therefor, duly endorsed,
at the office of the Corporation or its transfer agent and registrar for capital
3
<PAGE>
stock and there give written notice to the Corporation at such office stating
such holder's name or the name of such holder's nominee in which such holder
wishes the certificate for the converted share of Common Stock to be issued and
such holder's agreement to pay any applicable transfer taxes. The Corporation
shall, as soon as practicable thereafter, issue and deliver to the holder or
such holder's nominee, as the case may be, such certificate.
3. Restrictions on Ownership and Transfer of Common Stock.
(a) Definitions.
(1) "Hvide Family" means Mr. J. Erik Hvide and any person
related to him by kinship or marriage (including Hans J. Hvide), trusts or
similar arrangements established solely on the behalf of one or more of them and
partnerships and other entities that are wholly owned by them and that remain
wholly owned by them; provided, however, that any such person, trust, similar
-------- -------
arrangement, partnership or other entity shall qualify as a member of the Hvide
Family only if the voting power of all voting securities held by him, her or it
is controlled by J. Erik Hvide during his lifetime and by other members of the
Hvide Family thereafter; provided, further, however, that the beneficiaries of
-------- ------- -------
that certain trust created by the Declaration of Trust dated June 23, 1978, for
the benefit of Elsa Hvide Sowrey (now known as Elsa Hvide Mumma) and her
children, as constituted as of the date of these Articles of Incorporation,
shall in all events constitute members of the Hvide Family with respect to any
Common Stock distributed to them pursuant to such trust.
(2) "Investor Shareholders" means Clipper Capital Associates,
L.P., a Delaware limited partnership, Clipper/Merchant HMI, L.P., a Delaware
limited partnership, Clipper/Park HMI, L.P., a Delaware limited partnership,
Clipper/Merban, L.P., a Delaware limited partnership, Clipper/Hercules L.P., a
Delaware limited partnership, Olympus Growth Fund II, L.P., a Delaware limited
partnership, Metropolitan Life Insurance Company, a New York corporation, and
each of their affiliates.
(3) "Third Party" means any person other than a member of the
Hvide Family or the Investor Shareholders.
(b) Shares of Class B Common Stock may only be issued to or owned by
members of the Hvide Family or the Investor Shareholders. In the event the
ownership or the beneficial interest in any share of Class B Common Stock ceases
to be vested in a member of the Hvide Family or an Investor Shareholder, such
share shall, immediately upon the effectiveness of such divestiture, convert
into a share of Class A Common Stock; provided, however, that, upon the death of
a member of the Hvide Family holding Class B Common Stock, the shares of Class B
Common Stock owned by such holder at the time of death shall remain Class B
Common Stock if they are to be transferred to another member of the Hvide
Family, in either case without any intermediate holding by a Third Party other
than the personal representative of the deceased.
4
<PAGE>
(c) Subject to Section 3(d) of this Article V, shares of Class B
Common Stock registered for sale under the Securities Act of 1933, as amended,
or resold to the public pursuant to Rule 144 promulgated thereunder shall be
converted at the time of sale to Class A Common Stock.
(d) Subject to and upon compliance with Article VI, each holder of
Class B Common Stock is entitled to convert at the holder's election and at any
time any or all of such holder's Class B Common Stock into shares of Class A
Common Stock at the rate of one share of Class B Common Stock for one share of
Class A Common Stock.
4. Special Rights of Holders of Class B Common Stock.
(a) Definitions.
(1) "Capital Stock" of any Person means any and all shares,
interests, rights to purchase, warrants, options, contingent shares
certificates, participations or other equivalents of or interests in (however
designated) equity of such Person, but excluding any debt securities convertible
into or exchangeable for such equity.
(2) "Indebtedness" means: (a) any liability of any Person: (i)
for borrowed money, or under any reimbursement obligation related to a letter of
credit or bid or performance bond facility; or (ii) evidenced by a bond, note,
debenture or other evidence of indebtedness; or (iii) any purchase money
obligation representing extensions of credit or given in connection with the
acquisition of any business, property, service or asset of any kind (other than
a trade payable or other current liability arising in the ordinary course of
business); or (iv) for obligations with respect to: (A) an operating lease
calculated on the basis of the present value discounted at ten percent (10%) on
the future payments from such person under such operating lease; or (B) a lease
of real or personal property that is or would be classified and accounted for as
a capital lease; (b) any liability (whether of such Person or of another Person)
for any lease, dividend or letter of credit, or for any obligation described in
the preceding clause (a) that: (i) the Person has guaranteed or that is
otherwise its legal liability (whether contingent or otherwise or direct or
indirect, but excluding endorsements of negotiable instruments for deposit or
collection in the ordinary course of business); or (ii) is secured by any lien
on any property or asset owned or held by that Person, regardless of whether the
obligation secured thereby shall have been assumed by or is a personal liability
of that Person; and (c) any amendment, supplement, modification, deferral,
renewal, extension or refunding of any liability of the types referred to in
clauses (a) and (b), above.
(3) "Person" means any individual, corporation, trust,
partnership, joint venture, association, joint-stock company, unincorporated
organization, government or any agency or political subdivision thereof or any
other entity.
(4) "Primary Economic Interest" of any Person means, at any
time, the total number of issued and outstanding shares of Common Stock owned by
such Person at such time.
5
<PAGE>
(5) "Subsidiary" means a corporation or other entity (including
a partnership) of which a majority of the Capital Stock having voting power
under ordinary circumstances to elect a majority of the board of directors or
other voting interests are owned by (a) the Corporation, (b) the Corporation and
one or more Subsidiaries or (c) one or more Subsidiaries.
(6) "Total Primary Economic Interests in the Corporation" means
the total number of shares of Common Stock issued and outstanding at such time.
(7) "Voting Securities" means the Class A Common Stock and the
Class B Common Stock and any other securities of the Corporation entitled to
vote generally in the election of directors of the Corporation, and any other
securities (including rights, warrants, options and contingent share
certificates) convertible into, exchangeable for or exercisable for any Class A
Common Stock or Class B Common Stock or other securities referred to above
(whether or not presently convertible, exchangeable or exercisable).
(8) "Wholly-Owned Subsidiary" means a Subsidiary all the Capital
Stock of which (other than directors' qualifying shares) is owned by the
Corporation or another Wholly-Owned Subsidiary.
(b) Approval Rights of Holders of Class B Common Stock. For so long
as the Investor Shareholders own an aggregate of at least 5% of the total
outstanding shares of Class B Common Stock, the following actions shall require
the approval of the holders of 95% of the then-issued and outstanding shares of
Class B Common Stock:
(i) The engagement of the Corporation or any of its subsidiaries
in any material business other than marine support and transportation services
consistent (including with respect to the extent of transportation of crude oil
and any other hazardous or "persistent" materials) with its business practices
as engaged as of the date of these Articles of Incorporation.
(ii) Until September 30, 1999, the consolidation or merger of
the Corporation or any of its Subsidiaries with or into, or a conveyance or
transfer of all or substantially all of the Corporation's or any of its
Subsidiaries' assets to, another Person; provided, however, that any Wholly-
Owned Subsidiary of the Corporation may consolidate or merge with or convey or
transfer assets to the Corporation or any other such Wholly-Owned Subsidiary.
(iii) The adoption of any amendment to the Articles of
Incorporation or the Corporation's Bylaws that has the effect of (A) reducing or
delegating the authority of the Board of Directors or (B) changing the voting
characteristics or otherwise adversely affecting the holders of Class B Common
Stock.
(iv) The sale, lease, transfer or other disposition, or a series
of related sales, leases, transfers or other dispositions (other than sales,
transfers or other dispositions referred
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to in paragraph (ii) above), of property or other assets of the Corporation or
any of its Subsidiaries, including shares of the Capital Stock of any of its
Subsidiaries, in an aggregate amount in excess of $5,000,000 provided, however,
this Section 4(b)(iv) shall not prohibit the Corporation or any of its
Subsidiaries from chartering vessels in the ordinary course of its business
practices as engaged in as of the date of these Articles of Incorporation.
(v) The issuance in any manner, in one or a series of related
transactions, of Capital Stock of the Corporation or any of its Subsidiaries in
an aggregate amount in excess of $5,000,000.
(vi) The construction or acquisition (including, without
limitation, entering into capital leases or operating leases) in one or a series
of related transactions by the Corporation or any of its Subsidiaries of
property or other assets, from a party other than a Wholly-Owned Subsidiary of
the Corporation, that represent an aggregate amount in excess of $5,000,000.
(vii) The issuance, directly or indirectly, including by way
of assumption, guarantee, refinancing or otherwise by the Corporation or any of
its Subsidiaries of any Indebtedness other than (A) Indebtedness to the extent
that the issuance of such Indebtedness does not cause the aggregate amount of
Indebtedness at any time outstanding pursuant to this Section 4(b)(vii)(A) to
exceed $5,000,000 and (B) any Indebtedness issued and outstanding as of the date
of the Articles of Incorporation (prior to any extension, modification or
refinancing thereof).
(viii) The restructuring of the Corporation's capital
structure (including any refinancing, refunding or replacement or extension of
any Indebtedness in excess of $5,000,000) or a decision to have the Corporation
apply for or consent to the appointment of a trustee, receiver or liquidator of
the Corporation or commence a case or have an order for relief entered against
the Corporation under the federal bankruptcy laws or any other applicable
federal or state bankruptcy, insolvency or other similar law.
(c) Right of Class B Stockholders to Approve Selection of Chief
Executive Officer. For so long as the Investor Shareholders own an aggregate of
at least 25% of the total outstanding shares of Class B Common Stock, if at any
time the Person previously serving as the Chief Executive Officer of the
Corporation ceases to hold such position (whether by reason of death,
disability, resignation, removal or otherwise) the appointment of a new Chief
Executive Officer shall require the approval of at least 75% of the holders of
Class B Common Stock.
(d) Right of Holders of Class B Common Stock to Appoint Observers.
The holders of Class B Common Stock shall have the right to appoint two
individuals as observers, which observers shall receive reasonable prior notice
of all meetings of the Board of Directors at the addresses provided by such
observers to the Corporation for such purpose and shall have the right to attend
all such meetings, and the Corporation shall deliver to such observers at the
addresses so provided all written information furnished to the Board of
Directors in advance of such meetings
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concurrently with the delivery of such information to the Board of Directors.
All observers appointed pursuant to this paragraph shall also have the right to
attend meetings of committees of the Board of Directors. Any observer who has
not demonstrated U.S. Citizenship to the satisfaction of the Maritime
Administration, shall not, through any means or device whatsoever, present or
prospective, control by any means whatsoever within the meaning of Section 2 of
the Shipping Act, 1916, as amended, the business decisions of the Board of
Directors or the committees of the Board of Directors of the Corporation. Such
observers shall also be provided an opportunity from time to time to meet and
consult with the senior management of the Corporation.
All reasonable out-of-pocket expenses of the observers appointed
pursuant to the preceding paragraph related to attendance at meetings of the
Board of Directors or any committee thereof shall be promptly reimbursed by the
Corporation.
5. Terms of Preferred Stock. The Board of Directors is expressly
authorized to issue from time to time all or any shares of Preferred Stock, in
one or more series, and to fix for each such series such voting powers, full or
limited, or no voting powers, and such designations, preferences (including
seniority upon liquidation), relative participating, optional or other special
rights, redemption rights, conversion privileges and such qualifications,
limitations or restrictions thereof, as shall be stated and expressed in the
resolution or resolutions adopted by the Board of Directors providing for the
issuance of such series and to the fullest extent as now or hereafter permitted
by these Articles of Incorporation and the laws of the State of Florida. The
Board of Directors may from time to time increase or decrease (but not below the
number of shares of such series then outstanding) the number of shares of any
series of Preferred Stock subsequent to the issuance of shares of that series.
In case the number of shares of any series is so decreased, the shares
constituting such reduction shall resume the status that such shares had prior
to the adoption of the resolution originally fixing the number of shares of such
series.
ARTICLE VI
FOREIGN OWNERSHIP
1. Definitions. For purposes of this Article VI, the following terms
shall have the meanings specified below:
(a) A Person shall be deemed to be the "Beneficial Owner" of, or to
"Beneficially Own" shares of Common Stock to the extent such Person would be
deemed to be the beneficial owner thereof pursuant to Rule 13d-3 promulgated by
the Securities and Exchange Commission under the Securities Exchange Act of
1934, as such rule may be amended from time to time.
(b) "Citizen" shall mean, at all tiers of ownership and in both form
and substance at each tier of ownership:
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(i) any individual who is a citizen of the United States, by
birth, naturalization or as otherwise authorized by law;
(ii) any corporation (A) that is organized under the laws of the
United States or of a state, territory, district or possession thereof, (B) of
which title to not less than 75% of its stock is Beneficially Owned by and
vested in Persons who are Citizens, as defined herein, free from any trust or
fiduciary obligation in favor of Non-Citizens, as defined herein, (C) of which
not less than 75% of the voting power is vested in Citizens, as defined herein,
free from any contract or understanding through which it is arranged that such
voting power may be exercised directly or indirectly on behalf of Non-Citizens,
as defined herein, (D) of which there are no other means by which control is
conferred upon or permitted to be exercised by Non-Citizens, as defined herein,
(E) whose president or chief executive officer, chairman of the Board of
Directors and all officers authorized to act in the absence or disability of
such Persons are Citizens, as defined herein, and (F) of which more than 50% of
that number of its directors necessary to constitute a quorum are Citizens, as
defined herein;
(iii) any partnership (A) that is organized under the laws of
the United States or of a state, territory, district or possession thereof, (B)
all general partners of which are Citizens, as defined herein, and (C) of which
not less than a 75% interest is Beneficially Owned and controlled by, and vested
in, Persons who are Citizens, as defined herein, free and clear of any trust or
fiduciary obligation in favor of any Non-Citizens, as defined herein;
(iv) any association (A) that is organized under the laws of the
United States, or of a state, territory, district or possession thereof, (B) of
which 100% of the members are Citizens, as defined herein, (C) whose president
or other chief executive officer (or equivalent position), chairman of the Board
of Directors (or equivalent committee or body) and all Persons authorized to act
in the absence or disability of such Persons are Citizens, as defined herein,
(D) of which not less than 75% of the voting power is vested in Citizens, as
defined herein, free and clear of any trust or fiduciary obligation in favor of
any Non-Citizens, as defined herein, and (E) of which more than 50% of that
number of its directors (or equivalent Persons) necessary to constitute a quorum
are Citizens as defined herein;
(v) any limited liability company (A) that is organized under
the laws of the United States, or of a state, territory, district or possession
thereof, (B) of which 75% of the members are Citizens, as defined herein, and
the remaining members are Persons meeting the requirements of 46 U.S.C.
Sec.12102(a), (C) whose president or other chief executive officer (or
equivalent position), chairman of the Board of Directors (or equivalent
committee or body) and all Persons authorized to act in the absence or
disability of such Persons are Citizens, as defined herein, (D) of which not
less than 75% of the voting power is vested in Citizens, as defined herein,
free and clear of any trust or fiduciary obligation in favor of any
Non-Citizens, as defined herein, and (E) of which more than 50% of that number
of its directors (or equivalent Persons) necessary to constitute a quorum are
Citizens, as defined herein;
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(vi) any joint venture (if not an association, corporation,
partnership or limited liability company) (a) that is organized under the laws
of the United States or of a state, territory, district or possession thereof,
and (B) of which 100% of the equity is Beneficially Owned by and vested in
Citizens, as defined herein, free and clear of any trust or fiduciary obligation
in favor of any Non-Citizens, as defined herein; and
(vii) any trust (a) that is domiciled in and existing under
the laws of the United States or a state, territory, district or possession
thereof, (B) the trustee of which is a Citizen, as defined herein, and (C) of
which not less than 75% interest is held for the benefit of Citizens, as defined
herein, free and clear of any trust or fiduciary obligation in favor of any Non-
Citizens, as defined herein.
(c) "Fair Market Value" shall mean the average Market Price of one
share of stock for the 30 consecutive trading days immediately preceding the
date of determination. The "Market Price" for a particular day shall mean: (i)
the last reported sales price, regular way, or, in case no sale takes place on
such day, the average of the reported closing bid and asked prices, regular way,
in either case as reported on the American Stock Exchange, Inc. ("AMEX")
composite tape; and (ii) if the Common Stock is not then listed or admitted to
unlisted trading privileges on the AMEX, as such prices referred to in clause
(i) above are reported on the consolidated reporting system of the principal
national securities exchange (then registered as such pursuant to Section 6 of
the Securities Exchange Act of 1934, as amended) on which the Common Stock is
then listed or admitted to unlisted trading privileges; and (iii) if the Common
Stock is not then listed or admitted to unlisted trading privileges on the AMEX
or any national securities exchange, as such prices referred to in clause (i)
above are included for quotation through the National Association of Securities
Dealers, Inc. Automated Quotation ("NASDAQ") National Market System; and (iv) if
the Common Stock is not then listed or admitted to unlisted trading privileges
on the AMEX or on any national securities exchange, and is not then included for
quotation through the NASDAQ National Market System, (A) the average of the
closing "bid" and "asked" prices on such day in the over-the-counter market as
reported by NASDAQ, or (B) if "bid" and "asked" prices for the Common Stock on
such day shall not have been reported on NASDAQ, the average of the "bid" and
"asked" prices for such day as furnished by any NASDAQ member firm regularly
making a market in and for the Common Stock. If the Common Stock ceases to be
publicly traded, the Fair Market Value thereof shall mean the fair value of one
share of Common Stock determined jointly by the Corporation and the holders of a
majority of the securities being effected by such determination. If such
parties are unable to reach agreement within a reasonable period of time, such
fair value shall be determined by an independent appraiser jointly selected by
the Corporation and the holders of the class or series of security being
evaluated for redemption, whose determination shall be final and binding and
whose fees shall be paid by the Corporation.
(d) "Non-Citizen" shall mean any Person other than a Citizen.
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(e) "Permitted Percentage" shall mean 24.99% of the shares of Common
Stock from time to time issued and outstanding.
(f) "Person" shall mean any individual, corporation, trust,
partnership, joint venture, association, joint-stock company, unincorporated
organization, government or any agency or political subdivision thereof or any
other entity.
2. General Policy. It is the policy of the Corporation that Non-Citizens
should Beneficially Own, individually or in the aggregate, no more than the
Permitted Percentage of each class of the Common Stock. If at any time Non-
Citizens, individually or in the aggregate, become the Beneficial Owners of more
than the Permitted Percentage of any class of the Common Stock, then the
Corporation shall have the power to take the actions prescribed in Sections 3,
4, 5 and 6 of this Article VI. The provisions of this Article VI are intended
to assure that the Corporation remains in continuous compliance with the
citizenship requirements of the Merchant Marine Act of 1936, as amended, the
Shipping Act, 1916, as amended (collectively, the "Maritime Laws") and the
regulations promulgated thereunder. Any amendments to the Maritime Laws or the
regulations relating to the citizenship of vessel owners are deemed to be
incorporated herein by reference. The Board of Directors (or any duly
constituted committee thereof) is specifically authorized to make all such
reasonable determinations in accordance with applicable law and these Articles
of Incorporation to implement the provisions of this Article VI.
3. Dual Stock Certificate System. To implement the policy set forth in
Section 2 of this Article VI, the Corporation shall institute a Dual Stock
Certificate System such that (a) each stock certificate representing shares of
Common Stock that are Beneficially Owned by a Citizen shall be marked "Citizen"
and each stock certificate representing shares of Common Stock that are
Beneficially Owned by a Non-Citizen shall be marked "Non-Citizen", but with all
such stock certificates to be identical in all other respects and to comply with
all provisions of the laws of the State of Florida; (b) to the extent necessary
to enable the Corporation to submit any proof of citizenship required by law or
by contract with the United States government (or any agency thereof), the
Corporation may require the record holders and the Beneficial Owners of such
Common Stock to confirm their citizenship status from time to time, and
dividends payable with respect to stock held by such record holder or owned by
such Beneficial Owner may, in the discretion of the Board of Directors, be
withheld until confirmation of such citizenship status is received; and (c) the
stock transfer records of the Corporation shall be maintained in such manner as
to enable the percentage of Common Stock that is Beneficially Owned by Non-
Citizens and by Citizens to be confirmed. The Board of Directors is authorized
to take such other ministerial actions or make such interpretations of these
Articles of Incorporation as it may deem necessary or advisable in order to
implement the policy set forth in Section 2 of this Article VI.
Nothing contained in these Articles of Incorporation shall be construed as
requiring the Corporation to issue physical certificates in connection with the
issuance of shares of Common Stock held through The Depository Trust Company or
other depository if the Board of Directors
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determines that The Depository Trust Company or such other depository has
established procedures that will allow the Corporation to determine the
citizenship of the Beneficial Owner of shares of Common Stock held through
them. The Board of Directors is authorized to take such ministerial actions
or make such interpretations of these Articles of Incorporation as it may
deem necessary or advisable in order to facilitate the trading of Common
Stock through The Depository Trust Company or other depository as the Board
of Directors may determine.
4. Restrictions on Transfer. Any transfer, or attempted transfer, of any
shares of Common Stock, the effect of which would be to cause one or more Non-
Citizens to Beneficially Own Common Stock in excess of the Permitted Percentage,
shall be ineffective as against the Corporation, and neither the Corporation nor
its transfer agent shall register such transfer or purported transfer on the
stock transfer records of the Corporation and neither the Corporation nor its
transfer agent shall be required to recognize the transferee or purported
transferee thereof as a stockholder of the Corporation for any purpose
whatsoever except to the extent necessary to effect any remedy available to the
Corporation under this Article VI. A citizenship certificate shall be required
from all transferees (and from any recipient upon original issuance) of stock
certificates representing shares of Common Stock of the Corporation and, if such
transferee (or recipient) is acting as a fiduciary or nominee for a Beneficial
Owner, with respect to such Beneficial Owner, and registration of transfer
(or original issuance) shall be denied upon refusal to furnish such certificate.
In determining whether the percentage of shares of each class of
Common Stock Beneficially Owned by Non-Citizens exceeds the Permitted Percentage
for the purposes of this Article VI, the following adjustments shall be made:
(i) until shares of Common Stock are issued pursuant to the Amended and Restated
Contingent Share Issuance Agreement, dated August ___, 1996, by and among the
Company and the Investor Shareholders (the "CSI Agreement"), there shall be
added to the number of shares of Class A Common Stock Beneficially Owned by Non-
Citizens and to the total number of issued and outstanding shares of Class A
Common Stock 185,056 shares, and (ii) until the Company's 8% Junior Subordinated
Notes due 2014 ("Junior Notes") are completely redeemed or converted, pursuant
to the terms of the Recapitalization Agreement, dated August ___, 1996, by and
among the Company, the Investor Shareholders and the Hvide Family (the
"Recapitalization Agreement"), there shall be added to the number of shares of
Class A Common Stock Beneficially Owned by Non-Citizens and to the total number
of issued and outstanding shares of Class A Common Stock 131,735 shares.
5. No Voting Rights, Temporary Withholding of Dividends and Other
Distributions. If on any date (including any record date) the number of shares
of Common Stock that is Beneficially Owned by Non-Citizens is in excess of the
Permitted Percentage (such shares herein referred to as the "Excess Shares"),
the Corporation shall determine those shares Beneficially Owned by Non-Citizens
that constitute such Excess Shares. The determination of those shares that
constitute Excess Shares shall be made by reference to the date or dates such
shares were acquired by Non-Citizens, starting with the most recent acquisition
of shares of Common Stock by a Non-Citizen and including, in reverse
chronological order of acquisition, all other acquisitions of shares
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of Common Stock by Non-Citizens from and after the acquisition of those shares
of Common Stock by a Non-Citizen that first caused the Permitted Percentage to
be exceeded. For the purposes of this Article VI, (a) Excess Shares that result
from a determination that a stockholder is no longer a Citizen will be deemed to
have been acquired as of the date that it is determined that such stockholder is
not a Citizen; (b) all shares of Common Stock issued pursuant to the CSI
Agreement shall be deemed to have been issued to such shareholders on the date
of issuance, pursuant to the CSI Agreement, of the Common Stock Contingent Share
Issuances (as defined in the CSI Agreement) related to such shares of Common
Stock; and (c) all shares of Common Stock issued to holders of the Junior Notes
with respect to the conversion of the Junior Notes pursuant to the
Recapitalization Agreement shall be deemed to have been issued to such
shareholders on the date of the execution of the Recapitalization Agreement.
The determination of the Corporation as to those shares that constitute the
Excess Shares shall be conclusive. Shares deemed to constitute such Excess
Shares shall (so long as such excess exists) not be accorded any voting rights
and shall not be deemed to be outstanding for purposes of determining the vote
required on any matter properly brought before the stockholders of the
Corporation for a vote thereon. The Corporation shall (so long as such excess
exists) withhold the payment of dividends and the sharing in any other
distribution (upon liquidation or otherwise) in respect of the Excess Shares.
At such time as the Permitted Percentage is no longer exceeded, full voting
rights shall be restored to any shares previously deemed to be Excess Shares and
any dividend or distribution with respect thereto that has been withheld shall
be due and paid solely to the record holders of such shares at the time the
Permitted Percentage is no longer exceeded.
6. Redemption of Excess Shares. Unless such redemption is not permitted
under Section 607.06401 of the Florida Business Corporation Act or under other
provisions of applicable law, Excess Shares shall be subject to redemption by
the Corporation (by action of the Board of Directors, in its discretion) solely
to the extent necessary to reduce the aggregate number of shares of such capital
stock owned by Non-Citizens to the Permitted Percentage. In the event the
Corporation is not permitted by applicable law to make such redemption or the
Board of Directors, in its discretion, elects not to make such redemption, then
the Corporation may thereafter give notice of the Corporation's election not to
redeem the Excess Shares to the holders of Class B Common Stock. Each holder of
Class B Common Stock that is a Citizen may then elect to purchase his pro rata
portion of the Excess Shares by delivering written notice of such election
within 30 days of receipt of the Corporation's notice of the availability of
Excess Shares. The Excess Shares shall then be sold to the holders of Class B
Common Stock electing to purchase the Excess Shares pro rata based on the number
of shares of Class B Common Stock held by each such purchaser. The terms and
conditions of such redemption or purchase shall be as follows:
(a) the per share redemption or purchase price (the "Transfer Price")
to be paid for the Excess Shares shall be the sum of (i) the Fair Market Value
of such shares of capital stock plus (ii) an amount equal to the amount of any
dividend or any other distribution (upon a liquidation or otherwise) declared in
respect of such shares prior to the date on which such shares are called for
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redemption or purchase and which amount has been withheld by the Corporation
pursuant to Section 5 of this Article VI;
(b) the Transfer Price shall be paid in cash (by bank or cashier's
check);
(c) the Excess Shares to be redeemed or purchased shall be selected
in the same manner as provided in Section 5 of this Article VI and shall not
exceed the number necessary to reduce the percentage of shares of capital stock
owned by Non-Citizens, in the aggregate, to the Permitted Percentage; provided
that the Corporation may adjust upward to the nearest whole share the number of
shares to be redeemed or purchased so as not to be required to redeem or issue
fractional shares;
(d) written notice of the date of redemption or purchase (the
"Transfer Date") together with a letter of transmittal to accompany certificates
representing shares of stock that are surrendered for redemption or purchase (if
any) shall be given either by hand delivery or by overnight courier service or
by first-class mail, postage prepaid, to each holder of record of the selected
shares to be redeemed or purchased, at such holder's last known address as the
same appears on the stock register of the Corporation (unless such notice is
waived in writing by any such holders) (the "Transfer Notice");
(e) The Transfer Date (for purposes of determining right, title and
interest in and to shares of capital stock being selected for redemption or
purchase) shall be the later of (i) the date specified in the Transfer Notice
furnished to record holders (which shall not be earlier than the date of such
notice) or (ii) the date on which the funds necessary to effect the redemption
or purchase have been irrevocably deposited in trust for the benefit of such
record holders;
(f) each Transfer Notice shall specify (i) the Transfer Date (as
determined pursuant to Subsection (e) of this Section 6), (ii) the number of
shares of capital stock to be redeemed or purchased from such holder (and, to
the extent such shares are certificated, the certificate number(s) representing
such shares), (iii) the Transfer Price and the manner of payment thereof, (iv)
the place where certificates for such shares (if such shares are certificated)
are to be surrendered for cancellation against the simultaneous payment of the
Transfer Price, (v) any instructions as to the endorsement or assignment for
transfer for such certificates (if any) and the completion of the accompanying
letter of transmittal, and (vi) the fact that all right, title and interest in
respect of the shares so selected for redemption or purchase (including, without
limitation, voting and dividend rights) shall cease and terminate on the
Transfer Date, except for the right to receive the Transfer Price;
(g) in the case of a redemption, from and after the Transfer Date,
all right, title and interest in respect of the shares selected for redemption
(including, without limitation, voting and dividend rights) shall cease and
terminate, such shares shall no longer be deemed to be
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outstanding (and may either be retired or held by the Corporation as treasury
stock) and the owners of such shares shall thereafter be entitled only to
receive the Transfer Price;
(h) in the case of a purchase, from and after the Transfer Date, all
right, title and interest in respect of the shares selected for purchase
(including, without limitation, voting and dividend rights) shall be transferred
to the purchasers thereof, the purchasers thereof shall be deemed the owners
thereof for all purposes and the transferors of such shares shall thereafter be
entitled only to receive the Transfer Price; and
(i) upon surrender of the certificates (if any) for any shares so
redeemed or purchased in accordance with the requirements of the Transfer Notice
and accompanying letter of transmittal (and otherwise in proper form for
transfer as specified in the Transfer Notice), the owner of such shares shall be
entitled to payment of the Transfer Price. In case fewer than all the shares
represented by any such certificate are redeemed or purchased, a new certificate
(or certificates), to the extent such shares were certificated, shall be issued
representing the shares not redeemed or purchased without cost to the holder
thereto.
7. Determination of Citizenship. In determining the citizenship of the
Beneficial Owners or their transferees of its Common Stock, the Corporation may
rely on the stock transfer records of the Corporation and the citizenship
certificates given by Beneficial Owners or their transferees or any recipients
(in the case of original issuance) (in each case whether such certificates have
been given on their own behalf or on behalf of others) to prove the citizenship
of such Beneficial Owners, transferees or recipients of the Common Stock. The
determination of the citizenship of Beneficial Owners and their transferees of
the Common Stock may also be subject to proof in such other way or ways as the
Corporation may deem reasonable. The Corporation may at any time reasonably
require proof, in addition to the citizenship certificates, of the Beneficial
Owner or proposed transferee of Common Stock, and the payment of dividends may
be withheld, and any application for transfer of ownership on the stock transfer
records of the Corporation may be refused, until such additional proof is
submitted.
8. Severability. Each provision of this Article VI is intended to be
severable from every other provision. If any one or more of the provisions
contained in this Article VI is held to be invalid, illegal or unenforceable,
the validity, legality or enforceability of any other provision of this Article
VI shall not be affected, and this Article VI shall be construed as if the
provisions held to be invalid, illegal or unenforceable had never been contained
herein.
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ARTICLE VII
DIRECTORS
1. Number of Directors. The number of directors constituting the entire
Board of Directors, which shall be not less than 9 nor more than 17, shall be
fixed from time to time by resolution of the Board of Directors adopted by the
affirmative vote of a majority of the total number of directors; provided,
however, that the number of directors shall not be reduced so as to shorten the
term of any incumbent director.
Notwithstanding the foregoing paragraph, for so long as the aggregate
Primary Economic Interest of the Investor Shareholders is at least 5% of the
Total Primary Economic Interest in the Corporation, the Board of Directors shall
consist of not more than eleven (11) members.
2. Classes of Directors. The Board of Directors shall be divided into
three classes in respect of term of office, Class I, Class II and Class III.
Each class shall contain one-third of the total number of directors, or such
other number so as to make all three classes as nearly equal in numbers as
possible, and the Chairman of the Board of Directors shall resolve any rounding
issues. At each annual meeting of stockholders, one class of directors shall be
elected to serve until the third succeeding annual meeting of stockholders and
until their successors are elected and qualified or until their earlier
resignation or removal. Any increase or decrease in the number of directors
shall be apportioned among the classes so as to make all classes as nearly equal
in numbers as possible. Directors need not be stockholders. Notwithstanding
the foregoing, and except as otherwise required by law, whenever the holders of
any one or more series of Preferred Stock shall have the right, voting
separately as a class, to elect one or more directors of the Corporation, the
terms of the director or directors elected by such holders shall expire at the
next succeeding annual meeting of stockholders.
3. Directors for Preferred Stock. Notwithstanding the foregoing, and
except as otherwise provided by law, in the event that Preferred Stock of the
Corporation is issued and holders of any one or more series of such Preferred
Stock are entitled, voting separately as a class, to elect one or more directors
of the Corporation to serve for such terms as set forth in the resolution or
resolutions providing for the issue of such stock adopted by the Board of
Directors (in which case, the maximum number of directors set forth in Section 1
of this Article VII shall be deemed to be increased by the number of directors
to be elected by holders of the Preferred Stock, as set forth in such resolution
or resolutions), the provisions of this Article VII shall also apply, in respect
to the removal of a director or directors so elected, to the vote of the holders
of the outstanding shares of that class, and not to the vote of the outstanding
shares as a whole.
4. Election of Directors. Elections of directors at all meetings of the
stockholders at which directors are to be elected shall be conducted by written
ballot, and a plurality of the votes so cast shall elect directors. The holders
of shares of Class A Common Stock and shares of Class B Common Stock, voting
together as a single class, shall have the right to vote on the election of
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all directors of the Corporation. In all elections of directors, the holders of
Class A Common Stock are entitled to cast one vote per share held by them, and
the holders of Class B Common Stock are entitled to cast ten votes per share
held by them. The holders of the Common Stock do not have cumulative voting
rights.
The stockholders may remove at any time, including by written consent
without a meeting, without prior notice and without a vote, one or more
directors with or without cause. If at any time any director previously elected
by the holders of Common Stock ceases to serve on the Board of Directors
(whether by reason of death, disability, resignation, removal or otherwise), the
holders of Common Stock shall immediately be entitled to elect a successor
director to fill the vacancy created thereby.
All directors of the Corporation who are not also employees or
officers of the Corporation shall be equally compensated, and shall receive
reimbursement for all out-of-pocket expenses related to his or her attendance at
meetings of the Board of Directors or any committee thereof.
5. Initial Board of Directors. The names of the initial members of the
Board of Directors of the Corporation, who shall hold office until the annual
meeting of stockholders at which their respective class of directors shall be
elected and until their respective successors are duly elected and qualified,
are as follows:
Class I Class II Class III
------- -------- ---------
Donald L. Caldera Eugene F. Sweeney J. Erik Hvide
Raymond B. Vickers Walter C. Mink Jean Fitzgerald
Robert Rice John H. Blankley Gerald Farmer
John Lee Robert B. Calhoun, Jr.
The term of office of initial Class I directors shall expire at the 1997 annual
meeting of stockholders, of initial Class II directors at the 1998 annual
meeting of stockholders, and of initial Class III directors at the 1999 annual
meeting of stockholders.
ARTICLE VIII
MANAGEMENT OF CORPORATION; BYLAWS
Except as otherwise provided in Section 4(b)(iii) of Article V hereof, for
the management of the business and for the conduct of the affairs of the
Corporation, and in further definition, limitation and regulation of the powers
of the directors and stockholders of the Corporation, it is further provided:
(1) the management of the business and the conduct of the affairs of the
Corporation shall be vested in its Board of Directors; and (2) the power to
adopt, alter, amend, repeal, or rescind any provisions of the Bylaws of the
Corporation may be exercised by the Board of Directors by the vote of at least a
majority of the total number of directors.
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ARTICLE IX
SPECIAL MEETINGS OF STOCKHOLDERS
Special meetings of holders of all voting shares of capital stock, or, as
the case may be, such holders of one class or certain classes of stock entitled
to vote with respect to the business to be transacted at the special meeting,
shall be called by the Chairman of the Board of Directors or the Secretary at
the request of stockholders only if the holders of shares representing not less
than 50 percent of the votes entitled to be cast on any issue proposed to be
considered at the proposed special meeting sign, date, and deliver to the
Secretary one or more written demands for a special meeting describing the
purpose or purposes of which it is to be held.
ARTICLE X
LIABILITY OF DIRECTORS
To the fullest extent permitted by the laws of the State of Florida, a
director of the Corporation shall not be personally liable to the Corporation or
its stockholders for monetary damages for breach of fiduciary duty as a
director, except for liability (i) for any breach of the director's duty of
loyalty to the Corporation or its stockholders, (ii) for acts or omissions not
in good faith or which involve intentional misconduct or knowing violation of
law, (iii) under Section 607.0834 of the Florida Business Corporation Act, as
the same may hereafter be amended or supplemented, or (iv) for any transaction
from which the director derived an improper personal benefit. If the laws of
the State of Florida are amended after the filing of these Articles of
Incorporation to authorize corporate action further eliminating or limiting the
personal liability of directors, then the liability of a director or the
Corporation shall be eliminated or limited to the fullest extent so permitted.
Any amendment, modification or repeal of this Article X shall not adversely
affect any right or protection of a director of the Corporation existing at the
time of such amendment, modification or repeal.
ARTICLE XI
INDEMNIFICATION
Each person who is or was a director, officer, employee, or agent of the
Corporation, and each such person who is or was serving at the request of the
Corporation as a director, officer, employee, or agent of another corporation or
of a partnership, joint venture, trust or other enterprise, including service
with respect to employee benefit plans maintained or sponsored by the
Corporation (including the heirs, executors, administrators or estate of such
person), shall be indemnified by the Corporation to the fullest extent permitted
from time to time by the laws of the State of Florida or any other applicable
laws as presently or hereafter in effect. The Corporation shall advance the
expenses incurred by any of the foregoing persons in defending actions against
them to the full extent permitted by applicable law. Without limiting the
generality or the effect of the foregoing, the Corporation may enter into one or
more agreements with any person which provide for
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indemnification greater or different than that provided by this Article XI.
Any amendment, modification or repeal of this Article XI shall not adversely
affect any right or protection existing hereunder at the time of such amendment,
modification or repeal.
ARTICLE XII
AMENDMENT
Subject to Section 4(b)(iii) of Article V hereof, from time to time, any
for the provisions of these Articles of Incorporation may be altered, amended,
repealed, or rescinded, and other provisions authorized by the laws of the State
of Florida at the time in force may be added or inserted, in the manner or at
the time prescribed by such laws, and all rights at any time conferred upon the
stockholders of the Corporation by these Articles of Incorporation are granted
subject to the provisions of this Article XII.
ARTICLE XIII
INCORPORATOR
The name and address of the incorporator is:
Gene Douglas
2200 Eller Drive, Bldg. 27
P.O. Box 13038
Fort Lauderdale, Florida 33316
IN WITNESS WHEREOF, the undersigned does hereby execute these Amended and
Restated Articles of Incorporation, and does hereby acknowledge that this
instrument constitutes his act and deed and that the facts stated herein are
true.
HVIDE CORP.
Date: August __, 1996 ________________________________
Name:
Title:
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CONSENT TO APPOINTMENT AS REGISTERED AGENT
------------------------------------------
THE UNDERSIGNED, named as the registered agent in Article II of these
Articles of Incorporation, hereby accepts the appointment as such registered
agent, and acknowledges that he is familiar with, and accepts the obligations
imposed upon registered agents under, the Florida Business Corporation Act,
including specifically Section 607.0505.
Date: August __, 1996
_________________________________
Gene Douglas, Registered Agent
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EXHIBIT 3.2
BYLAWS
OF
HVIDE MARINE INCORPORATED
____________
ARTICLE I
STOCKHOLDERS
1.1 Annual Meetings. Annual meetings of the stockholders shall be held at
such places and at such times and dates as shall be designated by the Chairman
of the Board of Directors and stated in the notice of such meetings, at which
times the stockholders shall elect Directors in accordance with these Bylaws and
transact such other business as may properly be brought before the meeting.
1.2 Special Meetings. Special meetings of holders of all voting shares of
capital stock, or, as the case may be, such holders of one class or certain
classes of stock entitled to vote with respect to the business to be transacted
at the special meeting, may be called by the Chairman of the Board, and shall be
called by the Chairman of the Board or the Secretary at the request in writing
of a majority of the entire Board of Directors or by the stockholders in
accordance with Article IX of the Articles of Incorporation. Such request shall
state the purpose or purposes of the proposed meeting. Business transacted at
all special meetings shall be confined to the objects stated in the notice of
the meeting. Special meetings shall be held at such place and at such time and
date as shall be designated by the Chairman of the Board of Directors and stated
in the notice of the meeting.
1.3 Voting List. A complete list of the stockholders entitled to vote at
the meeting, arranged in alphabetical order, with the address of each and the
number of voting shares held by each, shall be prepared. Such list, for a
period of 10 days prior to the meeting, shall be kept on file at a place within
the city where the meeting is to be held and shall be subject to inspection by
any stockholder, for any purpose germane to the meeting, during usual business
hours. Such list shall be kept open at the meeting and shall be subject to the
inspection of any stockholder.
1.4 Notice. A notice stating the place, day and hour of the meeting and,
in case of a special meeting, the purpose for which the meeting is called shall
be delivered not less than 10 days nor more than 60 days before the date of the
meeting either personally or by mail, by or at the direction of the person
calling the meeting, to each stockholder of record entitled to vote at the
meeting. If mailed, such notice shall be deemed to be delivered when deposited
in the mail, addressed to the stockholder at his address as it appears on the
stock transfer books of the
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Corporation, with postage thereon prepaid. Meetings may be held without notice
if all stockholders entitled to vote are present or if notice is waived by those
not present in accordance with Section 5.5 of these Bylaws. Any previously
scheduled meeting of the stockholders may be postponed by resolution of the
Board of Directors upon public notice given prior to the date previously
scheduled for such meeting of stockholders.
1.5 Quorum. The holders of shares representing a majority of the votes
entitled to be cast in each class of stock issued and outstanding, present in
person or represented by proxy, shall constitute a quorum at all meetings of the
stockholders for the transaction of business. If, however, such quorum shall
not be present or represented at the meeting of stockholders, the stockholders
entitled to vote thereat, present in person or represented by proxy, shall have
the power to adjourn the meeting from time to time, without notice other than
announcement at the meeting, until a quorum shall be present or represented. At
such adjourned meeting at which a quorum shall be present or represented any
business may be transacted that might have been transacted at the meeting as
originally notified.
1.6 Majority Vote; Withdrawal of Quorum. When a quorum is present at any
meeting, the vote of the holders of shares representing a majority of the votes
entitled to be cast, present in person or represented by proxy, shall decide any
question brought before such meeting, unless the question is one upon which, by
provision of the Florida Business Corporation Act or of the Corporation's
Articles of Incorporation, or of these Bylaws, a different vote is required, in
which case such provision shall govern. The stockholders present at a duly
organized meeting may continue to transact business until adjournment,
notwithstanding the withdrawal of enough stockholders to leave less than a
quorum.
1.7 Method of Voting. Each outstanding share shall have such voting
rights as prescribed by the Corporation's Articles of Incorporation. Each
stockholder having the right to vote may vote either in person or by proxy
executed in writing. Each proxy shall be revocable unless expressly provided
therein to be irrevocable and unless otherwise made irrevocable by law. Each
proxy shall be filed with the Secretary of the Corporation prior to or at the
time of the meeting.
1.8 Agenda of Annual Meeting of Stockholders.
(a) At an annual meeting of stockholders, only such business shall be
conducted as shall have been properly brought before the meeting. To be
properly brought before an annual meeting, business must be (1) specified
in the notice of the meeting (or any supplement thereto) given by or at the
direction of the Board of Directors, (2) brought before the meeting by or
at the direction of the Board of Directors, or (3) brought before the
meeting by a stockholder in the manner set forth in Section 1.8(b).
(b) For business to be properly brought before an annual meeting by a
stockholder, if such business relates to the election of directors of the
Corporation, the
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stockholder shall comply with the procedures set forth in these Bylaws.
If such business relates to any other matter, the stockholder must give
timely written notice thereof to the Secretary of the Corporation at the
principal executive offices of the Corporation in accordance with the
procedures set forth in Rule 14a-8 of Regulation 14A under the Securities
Exchange Act of 1934, as amended, or any successor rule or regulation.
A stockholder's notice to the Secretary shall set forth as to any matter
the stockholder proposes to bring before the annual meeting: (A) a brief
description of each matter of business desired to be brought before the
annual meeting and the reasons for conducting such business at the annual
meeting; and (B) as to the stockholder giving the notice and the beneficial
owner, if any, on whose behalf the nomination is made (i) the name and
address of such stockholder, as they appear in the Corporation's books, and
of such beneficial owner, and (ii) the number and class of shares of stock
of the Corporation that are owned beneficially and of record by such
stockholder, and (iii) any material interest of the stockholder and
beneficial owner in such business.
(c) The Chairman of the Board of Directors shall have the power and
duty to determine at the meeting whether any business proposed to be
brought before the meeting was made in accordance with the procedures set
forth in this Section 1.8 and, if any proposed business is not in
compliance with this Section 1.8 to declare that such defective proposal
shall be disregarded.
1.9 Presiding Officer; Conduct of Meetings.
(a) The Chairman of the Board of Directors shall preside at all
meetings of the stockholders. In the absence of the Chairman of the Board
of Directors, the Vice Chairman of the Board of Directors shall preside at
the meetings of the stockholders unless and until a different person is
elected by a majority of the shares entitled to vote at such meeting.
(b) Meetings of the stockholders shall generally follow accepted
rules of parliamentary procedure, subject to the following:
(1) The Chairman of the meeting shall have absolute
authority over matters of procedure, and there shall be no appeal
from the ruling of the Chairman.
(2) If the Chairman deems it advisable to dispense
with the rules of parliamentary procedure as to any one meeting
of stockholders or part thereof, the Chairman shall so state and
shall clearly state the rules under which the meeting or
appropriate part thereof shall be conducted.
(3) The Chairman may ask or require that anyone who is
not a bona fide stockholder or proxy leave the meeting.
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1.10 Place of Meetings. Meetings of the stockholders of the Corporation
may be held either within or without the state of Florida.
1.11 Record Date. In order that the Corporation may determine the
stockholders entitled to notice of or to vote at any meeting of stockholders of
any adjournment thereof, or to express consent to corporate action in writing
without a meeting, or entitled to receive payment of any dividend or other
distribution or allotment of any rights, or entitled to exercise any rights in
respect of any change, conversion or exchange of stock or for the purpose of any
other lawful action, the Board of Directors may fix a record date, which record
date shall not precede the date upon which the resolution fixing the record date
is adopted by the Board of Directors and which record date: (1) in the case of
determination of stockholders entitled to vote at any meeting of stockholders or
adjournment thereof, shall, unless otherwise required by law, not be more than
60 nor less than 10 days before the date of such meeting; (2) in the case of
determination of stockholders entitled to express consent to corporate action in
writing without a meeting, shall not be more than 10 days from the date upon
which the resolution fixing the record date is adopted by the Board of
Directors; and (3) in the case of payment of such dividends or other
distribution or allotment of any rights, or the exercise of such rights in
respect of any change, conversion or exchange of stock, or any other action, as
the case may be, shall not be more than 60 days prior to such action. If no
record date is fixed: (1) the record date for determining stockholders entitled
to notice of or to vote at a meeting of stockholders shall be at the close of
business on the day next preceding the day on which notice is given, or, if
notice is waived, at the close of business on the day next preceding the day on
which the meeting is held; (2) the record date for determining stockholders
entitled to express consent to corporate action in writing without a meeting
when no prior action of the Board of Directors is required by law, shall be the
first date on which a signed written consent setting forth the action taken or
proposed to be taken is delivered to the Corporation in accordance with
applicable law, or, if prior action by the Board of Directors is required by
law, shall be at the close of business on the day on which the Board of
Directors adopts the resolution taking such prior action; and (3) the record
date for determining stockholders for any other purpose shall be at the close of
business on the day on which the Board of Directors adopts the resolution
relating thereto. A determination of stockholders of record entitled to notice
of or to vote at a meeting of stockholders shall apply to any adjournment of the
meeting; provided, however, that the Board of Directors may fix a new record
date for the adjourned meeting.
1.12 Nomination of Directors.
(a) Except for the filling of any vacancies by the Board of
Directors, which is governed by Section 607.0809 of the Florida 1989
Business Corporation Act, nominations for the election of directors may be
made at an annual meeting of stockholders (i) by or at the direction of the
Board of Directors, or (ii) by any stockholder of the Corporation who was a
stockholder of record at the time of giving of notice provided for in this
Section 1.12 who is entitled to vote for the election of directors at such
meeting, and who has complied with the procedures set forth in this Section
1.12.
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(b) A stockholder shall only be entitled to nominate candidates for
the seats on the Board of Directors for which he is entitled to vote. For
nominations to be properly brought before an annual meeting by a
stockholder pursuant to this Section 1.12 the stockholder must have given
timely notice thereof in writing to the Secretary of the Corporation. To
be timely, a stockholder's notice shall be delivered to the Secretary at
the principal executive offices of the Corporation not less than 60 days
nor more than 90 days prior to the first anniversary of the preceding
year's annual meeting; provided, however, that in the event that the date
of the annual meeting is advanced by more than 30 days or delayed by more
than 60 days from such anniversary date, notice by the stockholder to be
timely must be so delivered not earlier than the 9th day prior to such
annual meeting and not later than the close of business on the later of the
60th day prior to such annual meeting or the 10th day following the day on
which public announcement of the date of such meeting is first made by the
Corporation. Such stockholder's notice shall set forth (A) as to each
proposed nominee (i) the name, age, business address, and if known,
residence address of such nominee, (ii) the principal occupation or
employment of such nominee, (iii) the number and class or series of shares
of capital stock of the Corporation that are beneficially owned by such
nominees, and (iv) all other information concerning the nominee that must
be disclosed as to nominees in proxy solicitations or as otherwise required
pursuant to Regulation 14A under the Securities Exchange Act of 1934, as
amended (including such nominee's written consent to be named as a nominee
and to serve as a director if elected); and (B) as to stockholder giving
the notice and the beneficial owner, if any, on whose behalf the nomination
is made (i) the name and address of such stockholder, as they appear in the
Corporation's books, and of such beneficial owner, and (ii) the number and
class or series of shares of capital stock of the Corporation that are
owned beneficially and of record by such stockholder. The Corporation may
require any nominee to furnish such other information as may reasonably be
required by the Corporation to determine the eligibility of such proposed
nominee to serve as a director of the Corporation.
(c) The Chairman of the Board of Directors shall have the power and
duty to determine at the meeting whether a nomination proposed to be
brought before the meeting was made in accordance with the procedures set
forth in this Section 1.12, and, if any proposed nomination is not in
compliance with this Section 1.12 to declare that such defective nomination
shall be disregarded.
ARTICLE II
DIRECTORS
2.1 Management. The business and affairs of the Corporation shall be
managed by the Board of Directors who may exercise such powers of the
Corporation as are not by the Florida Business Corporation Act or by the
Corporation's Articles of Incorporation or by these Bylaws required to be
exercised by the stockholders.
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2.2 Chairman. The Chairman of the Board shall preside over meetings of
stockholders and directors. The Chairman of the Board shall hold office until a
successor is elected and qualified. In the absence of the Chairman, the Vice
Chairman of the Board of Directors, shall serve as the Chairman of the Board.
2.3 Vice Chairman. The Vice Chairman of the Board of Directors shall
preside over meetings of the stockholders and directors in the absence of the
Chairman.
2.4 Honorary Titles. In order to recognize publicly distinguished service
to or on behalf of the Corporation, the Board of Directors may from time to time
confer honorary titles on directors or officers of the Corporation as the Board
of Directors in its discretion deems appropriate.
2.5. Nomination of Directors; Number, Election and Term. The nomination of
directors and the number, election and term of directors shall be governed by
the provisions of the Articles of Incorporation.
2.6. Citizenship of Directors and Officers. The Chairman of the Board of
Directors, the Chief Executive Officer, the President, and the Vice Presidents
and any other persons who are authorized by the Board of Directors to act in
their absence, shall be citizens of the United States. Other directors need not
be citizens of the United States but the total number of directors who are not
citizens of the United States shall at no time exceed a minority of the number
necessary to constitute a quorum pursuant to Section 2.15 of these Bylaws.
2.7. Resignation. Any director may voluntarily resign at any time upon
written notice to the Corporation, and such resignation shall take effect upon
receipt thereof by the President or Secretary, unless otherwise specified in the
resignation.
2.8. Removal. Directors may be removed in accordance with the provisions
of the Articles of Incorporation.
2.9. Vacancies. Any vacancies on the Board of Directors resulting from
death, resignation, disqualification, removal or other cause shall be filled in
accordance with the provisions of the Articles of Incorporation.
2.10. Place and Manner of Meetings. Meetings of the Board of Directors
may be held either within or without the State of Florida. Members of the Board
of Directors may participate in such meetings by means of conference telephone
or similar communications equipment.
2.11. Regular Meetings. A regular meeting of the Board of Directors
shall be held without other notice than this Section 2.11 immediately after the
annual meeting of stockholders. From time to time, the Board of Directors may,
by resolution, provide for additional regular meetings of the Board of Directors
to be held at such time and such place as set forth in such
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resolution and without other notice than such resolution.
2.12. Special Meetings. Special meetings of the Board of Directors may
be called by the Chairman of the Board, by the Chief Executive Officer or by any
two directors. The person or persons authorized to call special meetings of the
Board of Directors may fix the place and time of the meetings.
2.13. Notice. Notice of any special meeting of directors shall be
given to each director at his business or residence in writing by mail,
telegram, facsimile transmission, or by telephone. If mailed, such notice shall
be deemed to be delivered when deposited in the mail, so addressed to the
director, with postage thereon prepaid at least five days' before such meeting.
If by telegram, such notice shall be deemed adequately delivered when the
telegram is delivered to the telegraph company at least 24 hours before such
meeting. If by facsimile transmission, such notice shall be deemed adequately
delivered with the notice is transmitted at least 24 hours before such meeting.
If by telephone, such notice shall be deemed adequately delivered when the
notice is given at least 12 hours prior to the time set for the meeting.
Neither the business to be transacted at, not the purpose of, any regular or
special meeting of the Board of Directors need be specified in the notice of (or
in any waiver of) such meeting. A special meeting may be held at any time
without notice if all directors are present or if those not present waive notice
of the meeting in accordance with Section 5.5 of these Bylaws.
2.14. Action Without Meeting. Any action required or permitted to be
taken at any meeting of the Board of Directors, or any committee thereof, may be
taken without a meeting if all members of the Board of Directors or committee
thereof, as the case may be, consent thereto in writing and the writing or
writings are filed with the minutes of the proceedings of the Board of Directors
or committee thereof.
2.15. Quorum; Majority Vote. A majority of the number of directors
shall constitute a quorum for the transaction of business. The act of a
majority of the directors present at any meeting at which a quorum is present
shall be deemed the act of the Board of Directors. If, however, such a quorum
shall not be present at any meeting of directors, the directors present thereat
may adjourn the meeting from time to time without notice other than announcement
at the meeting, until a quorum shall be present. At such adjourned meeting at
which a quorum shall be present, any business may be transacted which might have
been transacted at the meeting as originally notified.
2.16. Committees. The Board of Directors may designate committees to
consist of two or more directors of the Corporation, which shall have such
powers over particular matters explicitly identified by the Board of Directors,
and the members of which shall hold office for such periods, as the Board of
Directors may determine. Except as authorized by the Board of Directors
pursuant to this Section, any action of any committee of the Board of Directors
shall be binding upon the Corporation only upon the review and approval of such
action by the Board of Directors. Any member of any committee so designated may
be removed by the Board of Directors by the
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affirmative vote of a majority of the whole Board.
2.17. Records. The Board of Directors and any committees thereof shall
keep minutes of its proceedings which shall be placed in the minute book of the
Corporation.
2.18. Interested Directors, Officers and Stockholders. Any transaction
between the Corporation and any of its directors, officers or stockholders, or
close relatives of such persons (or any corporation or firm in which any of them
are directly or indirectly interested) shall be valid provided the transaction
is approved in accordance with Sec. 607.0832 of the Florida 1989 Business
Corporation Act.
2.19. Compensation. Directors and members of committees may receive
such compensation, if any, for their services, and such reimbursement for
expenses, as may be fixed or determined by the Board of Directors. Nothing
herein shall be construed to preclude any director from serving the Corporation
in any other capacity as an officer, agent, employee, or otherwise and receiving
compensation therefor.
ARTICLE III
OFFICERS
3.1. Officers. The officers of the Corporation may consist of a Chief
Executive Officer, a President, one or more Vice Presidents, a Secretary and a
Treasurer, each of whom shall be elected by the Board of Directors. Any number
of offices may be held by the same person. None of the officers of the
Corporation need be directors.
3.2. Election. Subject to the provisions of the Corporation's Articles of
Incorporation, the Board of Directors shall elect such officers and agents as it
shall deem necessary at the first meeting of the Board of Directors after each
annual meeting.
3.3. Term. Each officer of the Corporation shall hold office until the
first meeting of the Board of Directors after the annual meeting of stockholders
next succeeding his election and until his successor is elected and qualified or
until his earlier resignation or removal from office.
3.4. Resignation. Any officer may resign at any time upon written notice
to the Corporation, and such resignation shall take effect upon receipt thereof
by the Board of Directors, unless otherwise specified in the resignation.
3.5. Removal. The Board of Directors may remove any officer with or
without cause at any time, but such removal shall be without prejudice to the
contractual rights, if any, of such officer with the Corporation. In addition,
the Chief Executive Officer may remove any officer with or without cause at any
time.
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3.6. Vacancies. Any vacancy occurring in any office of the Corporation by
death, resignation, removal or otherwise may be filled for the unexpired portion
of the term of such office by the Board of Directors at any regular or special
meeting.
3.7. Compensation. The compensation of all officers shall be fixed by the
Board of Directors or a committee thereof.
3.8. Chief Executive Officer. The Chief Executive Officer, subject to the
control of the Board of Directors, shall, in general, supervise and control all
of the business and affairs of the Corporation and shall see that all orders and
resolutions of the Board of Directors are carried into effect. The Chief
Executive Officer shall have such powers and duties in the management of the
Corporation as may be prescribed by the Board of Directors and, to the extent
not so provided, as generally pertain to the office of Chief Executive Officer.
3.9. President. If the President shall be the Chief Executive Officer, he
shall perform the duties assigned above to the Chief Executive Officer. If the
President shall not be the Chief Executive Officer, he shall perform such other
duties and have such other authority and powers as the Board of Directors may
from time to time prescribe or as the Chief Executive Officer may from time to
time delegate.
3.10. Vice President. Each of the Vice Presidents shall perform such
duties and have such authority and powers as the Board of Directors may from
time to time prescribe or as the Chief Executive Officer or the President may
from time to time delegate. If so authorized by the Board of Directors, a Vice
President may, in the absence or disability of the President, perform the duties
and have the authority and exercise the powers of the President. Except as
otherwise directed by the Board of Directors or the Chief Executive Officer or
the President, each Vice President shall have the power to execute agreements,
bonds, contracts, deeds, mortgages, and other instruments on behalf of the
Corporation and shall cause the seal of the Corporation to be affixed to any
instrument requiring it and when so affixed the seal shall be attested by the
signature of the Secretary or the Treasurer.
3.11. Chief Financial Officer. The Chief Financial Officer (if one
shall have been elected by the Board of Directors) shall be a Vice President and
act in an executive financial capacity. He shall assist the Chief Executive
Officer and the President in the general supervision of the Corporation's
financial policies and affairs.
3.12. Secretary and Assistant Secretaries.
(a) The Secretary shall attend all sessions of the Board of Directors
and all meetings of the stockholders and record all votes and the minutes
of all proceedings in a book to be kept for that purpose. The Secretary
shall give, or cause to be given, notice of the meetings of the Board of
Directors and stockholders where such notices are required by
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these Bylaws to be given. The Secretary shall keep the seal of the
Corporation, and when authorized by the Board, affix the same to any
instrument requiring it and when so affixed, it shall be attested by the
signature of the Secretary or any Assistant Secretary. The Secretary shall
perform such other duties and have such other authority and powers as the
Board of Directors may from time to time prescribe or as the Chief
Executive Officer or the President may from time to time delegate.
(b) Any Assistant Secretaries elected by the Board of Directors, in
the order of their seniority, shall, in the absence or disability of the
Secretary, perform the duties and have the authority and exercise the
powers of the Secretary.
3.13. Treasurer and Assistant Treasurers.
(a) The Treasurer shall have the custody of the corporate funds and
securities and shall keep full and accurate accounts of receipts and
disbursements of the Corporation, and shall deposit all moneys and other
valuable effects in the name and to the credit of the Corporation in such
depositories as may be designated by the Board of Directors.
(b) The Treasurer shall disburse the funds of the Corporation as may
be ordered by the Board of Directors, taking proper vouchers for such
disbursements, and shall render to the Chief Executive Officer and
directors an account of all his transactions as Treasurer and of the
financial condition of the Corporation.
(c) In case of death, resignation, retirement or removal of the
Treasurer from office, all books, papers, vouchers, money or other property
in the possession or control of the Treasurer belonging to the Corporation
shall be returned to the Corporation.
(d) Any Assistant Treasurers elected by the Board of Directors, in
the order of their seniority, shall, in the absence or disability of the
Treasurer, perform the duties and have the authority and exercise the
powers of the Treasurer.
3.14 Other Officers and Agents. The Board of Directors from time to time
may elect such officers (including one or more Assistant Secretaries and
Assistant Treasurers) and such agents as may be necessary or desirable for the
conduct of the business of the Corporation. Such other officers and agents
shall hold their offices for such terms and exercise such powers and perform
such duties as shall be provided in these Bylaws or as may be determined from
time to time by the Board of Directors.
10
<PAGE>
ARTICLE IV
SHARES WITHOUT CERTIFICATES; CERTIFICATES AND STOCKHOLDERS
4.1 Shares Without Certificates. The Board of Directors from time to time
may elect to authorize the issuance of some or all of the shares of any or all
of its classes or series without certificates. The ownership of such shares
shall be entered in the books of the Corporation as they are issued.
Notwithstanding the foregoing, any stockholder, upon request, shall be entitled
to have a certificate representing the shares to which such stockholder is
entitled delivered to such stockholder pursuant to the provisions of Section 4.2
of these Bylaws.
4.2 Certificates. Subject to the provisions of Section 4.1 of these
Bylaws, certificates may be delivered to a stockholder representing the shares
to which such stockholder is entitled. Such certificates shall be consecutively
numbered, and shall be entered in the books of the Corporation as they are
issued. Each certificate shall state on the face thereof the holder's name, the
number and class of shares, the par value of shares or a statement that such
shares are without par value, and such other matters as may be required by the
laws of the State of Florida. They shall be signed by the President or any Vice
President and the Secretary or any Assistant Secretary. If any certificate is
countersigned by a transfer agent or registered by a registrar other than the
Corporation or an employee of the Corporation, the signature of such officers of
the Corporation may be a facsimile.
4.3 Transfer of Shares. Shares of stock shall be transferable only on the
books of the Corporation by the holder thereof or by the holder's duly
authorized attorney. Upon surrender to the Corporation or its transfer agent of
a certificate representing shares duly endorsed or accompanied by proper
evidence of succession, assignment or authority to transfer or, with respect to
uncertificated shares, upon delivery to the Corporation or its transfer agent of
proper instructions to transfer and proper evidence of succession, assignment or
authority to transfer such uncertificated shares, the Corporation or its
transfer agent shall issue a new certificate to, or upon the request of such
stockholder, issue uncertificated shares in the name of, the person entitled
thereto, and cancel the old certificate (if any) and record the transaction upon
its books.
4.4 Lost, Stolen or Destroyed Certificates. The Corporation may issue a
new certificate of stock in place of any certificate, theretofore issued by it,
alleged by its rightful owner to have been lost, stolen or destroyed, and the
Board of Directors may, in its discretion, determine the procedure and
conditions for such issuance. In the absence of such determination by the Board
of Directors, the rightful owner of any lost, stolen or destroyed certificate,
or his legal representative, shall, as conditions precedent to the issuance of
any such new certificate: (i) furnish an affidavit as to such loss, theft or
destruction; (ii) post with the Corporation a bond in such amount as the Board
of Directors, in its discretion, shall determine to be sufficient to indemnify
the Corporation against any claim that may be made against it on account of, or
in connection with, the alleged loss, theft or destruction of any such
certificate or the issuance of any such new certificate; and (iii) pay to the
Corporation or its transfer agent any fees and charges as may reasonably be
required by the Board
11
<PAGE>
of Directors.
4.5 Registered Stockholders. The Corporation shall be entitled to treat
the holder of record of any share or shares of stock as the holder in fact
thereof.
4.6 Foreign Ownership Restrictions. The provisions of this Article IV
shall be subject to the provisions of Article VI of the Corporation's Articles
of Incorporation.
ARTICLE V
MISCELLANEOUS
5.1 Dividends and Reserves. Subject to the provisions of the
Corporation's Articles of Incorporation, at any regular or special meeting the
Board of Directors may, out of funds legally available therefor, declare
dividends upon the capital stock of the Corporation as and when it deems
expedient. Such dividends may be paid in cash, in property, or in shares of the
Corporation. Before declaring any such dividend, there may be set apart out of
any funds of the Corporation available for dividends such sums as the Board of
Directors from time to time in its discretion deems proper for working capital,
a reserve to meet contingencies, equalizing dividends, or such other purposes as
the Board of Directors shall deem conducive to the interest of the Corporation.
5.2 Books and Records. The Corporation shall keep accurate and complete
books and records of account and shall keep minutes of the proceedings of its
stockholders and Board of Directors, and shall keep at its registered office or
principal place of business, or at the office of its transfer agent or
registrar, a record of its stockholders, setting forth the names and addresses
of all stockholders and the number and class of shares held by each.
5.3 Checks and Notes. All checks, drafts or other orders or demands for
the payment of money, notes or other evidences of indebtedness issued in the
name of the Corporation shall be signed by such officer or officers or such
other person or persons as may be designated from time to time by resolution of
the Board of Directors or a committee thereof.
5.4 Securities of Other Corporations. The President and the Treasurer
shall each have the power and authority to transfer, endorse for transfer, vote,
consent, or take any other action with respect to any securities of another
issuer held or owned by the Corporation, and to make, execute and deliver any
waiver, proxy or consent with respect to any such security, subject to any
directions of the Board of Directors.
5.5 Waiver of Notice. Whenever any notice is required to be given to any
stockholder or director of the Corporation under the provisions of the Florida
Business Corporation Act or these Bylaws, a waiver thereof in writing, signed by
the person or persons entitled to such notice, whether before or after the time
stated therein, shall be deemed equivalent to the giving of such notice.
Neither the business to be transacted at, nor the purpose of, any annual or
special meeting
12
<PAGE>
of the stockholders need to be specified in any waiver of notice of such
meeting.
5.6 Fiscal Year. The fiscal year of the Corporation shall end on such
date as the Board of Directors may from time to time determine and specify by
resolution, provided that, in the absence of any contrary determination by the
Board of Directors, the fiscal year shall end December 31.
5.7 Seal. The corporate seal shall be circular in form and shall have
inscribed thereon the name of the Corporation, the year of its incorporation and
the words "CORPORATE SEAL
FLORIDA." Such seal may be used by causing it or a facsimile thereof to be
impressed, affixed, reproduced or otherwise.
5.8 Amendment of Bylaws. Pursuant to and in accordance with the
provisions of the Articles of Incorporation, these Bylaws may be altered,
amended or repealed at any meeting of the Board of Directors or of the
Stockholders at which a quorum is present.
13
EXHIBIT 4.1
Cusip Number
Shares
IMPORTANT:
- ---------
TERMS ON REVERSE SEE REVERSE
REQUIRE CAREFUL FOR CERTAIN
READING. DEFINITIONS.
LOGO
Hvide Marine Incorporated
Incorporated under the laws of the State of Florida
CLASS A
COMMON STOCK
Citizen Share Certificate
This Certifies That is the registered holder of fully
paid and non-assessable shares of the CLASS A COMMON STOCK, having a par value
of $.001 per share, of HVIDE MARINE INCORPORATED (hereinafter called the
"Corporation") transferable only upon the books of the Corporation by the holder
hereof in person or by duly authorized attorney upon the surrender of this
Certificate properly endorsed.
Witness the facsimile seal of the Corporation and the facsimile signature of its
duly authorized officers.
Dated:
Secretary President and Chief Executive Officer
[SEAL]
Countersigned and Registered
ChaseMellon Shareholder Services, L.L.C.
Transfer Agent and Resistrar
Authorized signature
<PAGE>
HVIDE MARINE INCORPORATED
READ CAREFULLY
Hvide Marine Incorporated (the "Corporation") will furnish to any
stockholder, upon request and without charge, a full statement of the
designation, relative rights, preferences and limitations of the shares of each
class of stock authorized to be issued and the designation, relative rights,
preferences and limitations of each series of Preferred Stock so far as the same
have been fixed, and the authority of the Board of Directors to designate and
fix the relative rights, preferences and limitations of other series. Any such
request may be addressed to the Corporation or to the Transfer Agent.
Because the Corporation's vessels operate in the United States coastwise
trades, United States law requires no more than 25 percent of its stock may be
owned or controlled by Non-Citizens as defined in the Application for Transfer
of Shares printed below on this Certificate. If this certificate is a CITIZEN
SHARE CERTIFICATE, it has been issued on the representation by the registered
owner thereof that it is held by or for the account of a Citizen as defined
below. If the holder of a CITIZEN SHARE CERTIFICATE is a Non-Citizen, or holds
for the account of a Non-Citizen, the certificate must be exchanged immediately
for a NON-CITIZEN SHARE CERTIFICATE, subject to the limitations set forth below.
Similarly, where the beneficial interest is transferred from a Citizen to a Non-
Citizen, the record holder must likewise exchange the certificate. Should such
certificate be sold to a Citizen holding for himself or another Citizen, the
transferee should exchange it for a CITIZEN SHARE CERTIFICATE. Under the
Articles of Incorporation, the minimum percentage of the total outstanding
shares of the Corporation that may be owned by Non-Citizens is 24.99% Any
purported sale, transfer or other disposition to Non-Citizens of shares
evidenced by CITIZEN SHARE CERTIFICATES, which at the time of presentation to
the Transfer Agent of the Corporation would result in increasing the ownership
of shares by Non-Citizens above such minimum permitted percentage, shall be
ineffective as against the Corporation to transfer the shares or any voting or
other rights in respect thereof, and such transfer shall not be recorded on the
books of the Corporation in any such case, and neither the Corporation nor the
Transfer Agent shall be required to recognize the transferee or purported
transferee thereof as a stockholder of the Corporation for any purpose
whatsoever except to the extent necessary to effect any remedy available to the
Corporation. Any shares represented by CITIZEN SHARE CERTIFICATES held in the
names of or for the account of Non-Citizens will have no rights, and the
Corporation may regard this Certificate, whether or not validly issued, as
having been invalidly issued. The Corporation will furnish to any stockholder,
upon written request and without charge, copies of the applicable
<PAGE>
provisions of the Articles of Incorporation. Any such request may be addressed
to the Corporation or to the Transfer Agent. The shares represented by this
Certificate will be transferred on the books of the Corporation only if the
Application for Transfer of Shares set forth below has been executed by the
transferee.
APPLICATION FOR TRANSFER OF COMMON STOCK
The undersigned (the "Applicant") makes application for the transfer to the
name of the Applicant of the number of shares of common stock indicated below
and hereby certifies to Hvide Marine Incorporated that: (answer (a), (b) and/or
(c) as applicable)
(a) The Applicant will be the beneficial owner of
------------------------
shares of the common stock of Hvide Marine Incorporated
----------
and is is not a "Citizen" (check one).
(b) The Applicant will hold shares
------------------------------------
of the common stock of Hvide Marine Incorporated for the benefit of
one or more "Persons" who ARE "Citizens."
(c) The Applicant will hold shares
------------------------------------
of the common stock of Hvide Marine Incorporated for the benefit of
one or more "Persons" who ARE NOT "Citizens."
The Applicant agrees that, on the request of Hvide Marine Incorporated, he
will furnish proof in support of this certificate. The Applicant understands
that he has an ongoing obligation to provide the information set forth herein
and agrees to provide a new Citizenship Certificate at any time as the facts
affecting his citizenship or the citizenship of the beneficial owner(s) for whom
he holds Hvide Marine Incorporated common stock change. Hvide Marine
Incorporated will provide a blank Citizenship Certificate to the Applicant upon
request.
IMPORTANT NOTICE
THIS APPLICATION CONSTITUTES A BASIS FOR HVIDE MARINE INCORPORATED'S
REPRESENTATION TO THE UNITED STATES GOVERNMENT THAT IT IS A CITIZEN WITHIN THE
MEANING OF THE SHIPPING ACT, 1916, AS AMENDED, ANY PERSON MAKING A STATEMENT
HEREIN WHICH HE KNOWS TO BE FALSE MAY BE PROCEEDED AGAINST UNDER TITLE 18,
UNITED STATES CODE, SECTION 1001 WHICH SECTION PRESCRIBES PENALTIES OF UP TO
FIVE YEARS IMPRISONMENT OR A FINE OF UP TO $10,000.
This Certificate is dated , .
-------- ---
<PAGE>
Signature of Applicant
For purposes of this Certificate:
A "Citizen" is:
(i) any individual who is a citizen of the United States, by birth,
naturalization or as otherwise authorized by law;
(ii) any corporation (A) that is organized under the laws of the United
States or of a state, territory, district or possession thereof, (B)
of which title to not less than 75% of its stock is Beneficially
Owned, as defined herein, by and vested in Persons, as defined herein,
who are Citizens, as defined herein, free from any trust or fiduciary
obligation in favor of Non-Citizens, as defined herein, (C) of which
not less than 75% of the voting power is vested in Citizens free from
any contract or understanding through which it is arranged that such
voting power may be exercised directly or indirectly in behalf of Non-
Citizens, (D) of which there are no other means by which control is
conferred upon or permitted to be exercised by Non-Citizens, (E) whose
president or chief executive officer, chairman of the Board of
Directors and all officers authorized to act in the absence or
disability of such Persons are Citizens, and (F) of which more than
50% of the number of its directors necessary to constitute a quorum
are Citizens;
(iii) any partnership (A) that is organized under the laws of the United
States or of a state, territory, district or possession thereof, (B)
all general partners of which are Citizens, and (C) of which not less
than a 75% partnership interest is Beneficially Owned and controlled
by, and vested in, Persons who are Citizens free and clear of any
trust or fiduciary obligation in favor of any Non-Citizens;
(iv) any association (A) that is organized under the laws of the United
States, or of a state, territory, district or possession thereof, (B)
of which 100% of the members are Citizens, (C) whose president or
other chief executive officer (or equivalent position), chairman of
the Board of Directors (or equivalent committee or body) and all
Persons authorized to act in the absence or disability of such Persons
are Citizens, (D) of which not less than 75% of the voting power is
vested in Citizens free and clear of any trust or fiduciary obligation
in favor of any Non-Citizens, and (E) of which more than 50% of the
number of
<PAGE>
its directors (or equivalent Persons) necessary to constitute a quorum
are Citizens;
(v) any limited liability company (A) that is organized under the laws of
the United States, or of a state, territory, district or possession
thereof, (B) of which not less than 75% of the membership interests
are Beneficially Owned by and vested in Persons that are Citizens free
from any trust or fiduciary obligation in favor of Non-Citizens and of
which the remaining membership interests are Beneficially Owned by and
vested in Persons meeting the requirements of 46 U.S.C. Sec.12102(a),
(C) of which not less than 75% of the voting power is vested in
Citizens free from any contract or understanding through which it is
arranged that such voting power may be exercised directly or
indirectly in behalf of Non-Citizens, (D) of which there are no
other means by which control is conferred upon or permitted to be
exercised by Non-Citizens, (E) whose president or other chief
executive officer (or equivalent position), chairman of the Board of
Directors (or equivalent committee or body), managing members (or
equivalent), if any, and all Persons authorized to act in the absence
or disability of such Persons are Citizens, and (F) of which more than
50% of the number of its directors (or equivalent Persons) necessary
to constitute a quorum are Citizens;
(vi) any joint venture (if not an association, corporation, partnership, or
limited liability company) (A) that is organized under the laws of the
United States or of a state, territory, district or possession
thereof, and (B) of which 100% of the equity is Beneficially Owned by
and vested in Citizens free and clear of any trust or fiduciary
obligation in favor of any Non-Citizens; and
(vii) any trust (A) that is domiciled in and existing under the laws of the
United States or of a state, territory, district or possession
thereof, (B) the trustee of which is a Citizen, and (C) of which not
less than a 75% interest is held for the benefit of Citizens free and
clear of any trust or fiduciary obligation in favor of any Non-
Citizens.
The foregoing definition is applicable at all tiers of ownership and in both
form and substance at each tier of ownership.
A "Non-Citizen" is any Person other than a Citizen.
A "Person" is an individual, corporation, partnership, association, trust, joint
venture, limited liability company or other entity.
<PAGE>
A Person shall be deemed to be the "Beneficial Owner" of, or to "Beneficially
Own" shares of Common Stock to the extent such Person would be deemed to be the
beneficial owner thereof pursuant to Rule 13d-3 promulgated by the Securities
and Exchange Commission under the Securities Exchange Act of 1934, as such rule
may be amended from time to time.
ABBREVIATIONS
The following abbreviations when used in the inscriptions on the face of this
Certificate shall be construed as though they were written out in full according
to applicable laws or regulations.
TEN COM -- as tenants in common
UNIF GIFT MIN ACT
------------------------
CUSTODIAN
---------------------
TEN ENT -- as tenants by the entireties
JT TEN -- as joint tenants with right
under Uniform Gifts to Minors Act
of survivorship and not as
tenants in common
Additional abbreviations may also be used though not in the above list.
For value received, hereby sell, assign and transfer
---------------------------
unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
Please print or typewrite name and address including postal zip code of
assignee.
shares of the common stock represented by the within Certificate, and do hereby
irrevocably constitute and appoint
Attorney to transfer the said stock on the books of the within named Corporation
with full power of substitution in the premises.
Dated
Notice: The signature to this assignment must correspond with the name as
written upon the face of the Certificate in every particular without alteration
or enlargement or any change whatever.
EXHIBIT 4.2
Cusip Number
Shares
IMPORTANT:
- ---------
TERMS ON REVERSE SEE REVERSE
REQUIRE CAREFUL FOR CERTAIN
READING. DEFINITIONS.
HVIDE MARINE INCORPORATED
Incorporated under the laws of the State of Florida
CLASS A
COMMON STOCK
Non-Citizen Share Certificate
This Certifies That is the registered holder of fully paid and
non-assessable shares of the CLASS A COMMON STOCK, having a par value of $.001
per share, of HVIDE MARINE INCORPORATED (hereinafter called the "Corporation")
transferable only upon the books of the Corporation by the holder hereof in
person or by duly authorized attorney upon the surrender of this Certificate
properly endorsed.
Witness the facsimile seal of the Corporation and the facsimile signature
of its duly authorized officers.
Dated:
Secretary President and Chief Executive Officer
[SEAL]
Countersigned and Registered
ChaseMellon Shareholder Services, L.L.C.
Transfer Agent and Resistrar
Authorized signature
<PAGE>
HVIDE MARINE INCORPORATED
READ CAREFULLY
Hvide Marine Incorporated (the "Corporation") will furnish to any
stockholder, upon request and without charge, a full statement of the
designation, relative rights, preferences and limitations of the shares of each
class of stock authorized to be issued and the designation, relative rights,
preferences and limitations of each series of Preferred Stock so far as the same
have been fixed, and the authority of the Board of Directors to designate and
fix the relative rights, preferences and limitations of other series. Any such
request may be addressed to the Corporation or to the Transfer Agent.
Because the Corporation's vessels operate in the United States coastwise
trades, United States law requires no more than 25 percent of its stock may be
owned or controlled by Non-Citizens as defined in the Application for Transfer
of Shares printed below on this Certificate. If this certificate is a CITIZEN
SHARE CERTIFICATE, it has been issued on the representation by the registered
owner thereof that it is held by or for the account of a Citizen as defined
below. If the holder of a CITIZEN SHARE CERTIFICATE is a Non-Citizen, or holds
for the account of a Non-Citizen, the certificate must be exchanged immediately
for a NON-CITIZEN SHARE CERTIFICATE, subject to the limitations set forth below.
Similarly, where the beneficial interest is transferred from a Citizen to a Non-
Citizen, the record holder must likewise exchange the certificate. Should such
certificate be sold to a Citizen holding for himself or another Citizen, the
transferee should exchange it for a CITIZEN SHARE CERTIFICATE. Under the
Articles of Incorporation, the minimum percentage of the total outstanding
shares of the Corporation that may be owned by Non-Citizens is 24.99% Any
purported sale, transfer or other disposition to Non-Citizens of shares
evidenced by CITIZEN SHARE CERTIFICATES, which at the time of presentation to
the Transfer Agent of the Corporation would result in increasing the ownership
of shares by Non-Citizens above such minimum permitted percentage, shall be
ineffective as against the Corporation to transfer the shares or any voting or
other rights in respect thereof, and such transfer shall not be recorded on the
books of the Corporation in any such case, and neither the Corporation nor the
Transfer Agent shall be required to recognize the transferee or purported
transferee thereof as a stockholder of the Corporation for any purpose
whatsoever except to the extent necessary to effect any remedy available to the
Corporation. Any shares represented by CITIZEN SHARE CERTIFICATES held in the
names of or for the account of Non-Citizens will have no rights, and the
Corporation may regard this Certificate, whether or not validly issued, as
having been invalidly issued. The Corporation will furnish to any stockholder,
upon written request and without charge, copies of the applicable
<PAGE>
provisions of the Articles of Incorporation. Any such request may be addressed
to the Corporation or to the Transfer Agent. The shares represented by this
Certificate will be transferred on the books of the Corporation only if the
Application for Transfer of Shares set forth below has been executed by the
transferee.
APPLICATION FOR TRANSFER OF COMMON STOCK
The undersigned (the "Applicant") makes application for the transfer to the
name of the Applicant of the number of shares of common stock indicated below
and hereby certifies to Hvide Marine Incorporated that: (answer (a), (b) and/or
(c) as applicable)
(a) The Applicant will be the beneficial owner of
------------------------
shares of the common stock of Hvide Marine Incorporated
----------
and is is not a "Citizen" (check one).
(b) The Applicant will hold shares
------------------------------------
of the common stock of Hvide Marine Incorporated for the benefit of
one or more "Persons" who ARE "Citizens."
(c) The Applicant will hold shares
------------------------------------
of the common stock of Hvide Marine Incorporated for the benefit of
one or more "Persons" who ARE NOT "Citizens."
The Applicant agrees that, on the request of Hvide Marine Incorporated, he
will furnish proof in support of this certificate. The Applicant understands
that he has an ongoing obligation to provide the information set forth herein
and agrees to provide a new Citizenship Certificate at any time as the facts
affecting his citizenship or the citizenship of the beneficial owner(s) for whom
he holds Hvide Marine Incorporated common stock change. Hvide Marine
Incorporated will provide a blank Citizenship Certificate to the Applicant upon
request.
IMPORTANT NOTICE
THIS APPLICATION CONSTITUTES A BASIS FOR HVIDE MARINE INCORPORATED'S
REPRESENTATION TO THE UNITED STATES GOVERNMENT THAT IT IS A CITIZEN WITHIN THE
MEANING OF THE SHIPPING ACT, 1916, AS AMENDED, ANY PERSON MAKING A STATEMENT
HEREIN WHICH HE KNOWS TO BE FALSE MAY BE PROCEEDED AGAINST UNDER TITLE 18,
UNITED STATES CODE, SECTION 1001 WHICH SECTION PRESCRIBES PENALTIES OF UP TO
FIVE YEARS IMPRISONMENT OR A FINE OF UP TO $10,000.
<PAGE>
This Certificate is dated ,
-------------------------------- -----------------
.
----------------------------------------------------------------------
For purposes of this Certificate:
Signature of Applicant
A "Citizen" is:
(i) any individual who is a citizen of the United States, by birth,
naturalization or as otherwise authorized by law;
(ii) any corporation (A) that is organized under the laws of the United
States or of a state, territory, district or possession thereof, (B)
of which title to not less than 75% of its stock is Beneficially
Owned, as defined herein, by and vested in Persons, as defined herein,
who are Citizens, as defined herein, free from any trust or fiduciary
obligation in favor of Non-Citizens, as defined herein, (C) of which
not less than 75% of the voting power is vested in Citizens free from
any contract or understanding through which it is arranged that such
voting power may be exercised directly or indirectly in behalf of Non-
Citizens, (D) of which there are no other means by which control is
conferred upon or permitted to be exercised by Non-Citizens, (E) whose
president or chief executive officer, chairman of the Board of
Directors and all officers authorized to act in the absence or
disability of such Persons are Citizens, and (F) of which more than
50% of the number of its directors necessary to constitute a quorum
are Citizens;
(iii) any partnership (A) that is organized under the laws of the United
States or of a state, territory, district or possession thereof, (B)
all general partners of which are Citizens, and (C) of which not less
than a 75% partnership interest is Beneficially Owned and controlled
by, and vested in, Persons who are Citizens free and clear of any
trust or fiduciary obligation in favor of any Non-Citizens;
(iv) any association (A) that is organized under the laws of the United
States, or of a state, territory, district or possession thereof, (B)
of which 100% of the members are Citizens, (C) whose president or
other chief executive officer (or equivalent position), chairman of
the Board of Directors (or equivalent committee or body) and all
Persons authorized to act in the absence or disability of such Persons
are Citizens, (D) of which not less than 75%
<PAGE>
of the voting power is vested in Citizens free and clear of any trust
or fiduciary obligation in favor of any Non-Citizens, and (E) of which
more than 50% of the number of its directors (or equivalent Persons)
necessary to constitute a quorum are Citizens;
(v) any limited liability company (A) that is organized under the laws of
the United States, or of a state, territory, district or possession
thereof, (B) of which not less than 75% of the membership interests
are Beneficially Owned by and vested in Persons that are Citizens free
from any trust or fiduciary obligation in favor of Non-Citizens and of
which the remaining membership interests are Beneficially Owned by and
vested in Persons meeting the requirements of 46 U.S.C. Sec.12102(a),
(C) of which not less than 75% of the voting power is vested in
Citizens free from any contract or understanding through which it is
arranged that such voting power may be exercised directly or
indirectly in behalf of Non-Citizens, (D) of which there are no other
means by which control is conferred upon or permitted to be exercised
by Non-Citizens, (E) whose president or other chief executive officer
(or equivalent position), chairman of the Board of Directors (or
equivalent committee or body), managing members (or equivalent), if
any, and all Persons authorized to act in the absence or disability of
such Persons are Citizens, and (F) of which more than 50% of the
number of its directors (or equivalent Persons) necessary to
constitute a quorum are Citizens;
(vi) any joint venture (if not an association, corporation, partnership, or
limited liability company) (A) that is organized under the laws of the
United States or of a state, territory, district or possession
thereof, and (B) of which 100% of the equity is Beneficially Owned by
and vested in Citizens free and clear of any trust or fiduciary
obligation in favor of any Non-Citizens; and
(vii) any trust (A) that is domiciled in and existing under the laws of the
United States or of a state, territory, district or possession
thereof, (B) the trustee of which is a Citizen, and (C) of which not
less than a 75% interest is held for the benefit of Citizens free and
clear of any trust or fiduciary obligation in favor of any Non-
Citizens.
The foregoing definition is applicable at all tiers of ownership and in both
form and substance at each tier of ownership.
A "Non-Citizen" is any Person other than a Citizen.
<PAGE>
A "Person" is an individual, corporation, partnership, association, trust, joint
venture, limited liability company or other entity.
A Person shall be deemed to be the "Beneficial Owner" of, or to "Beneficially
Own" shares of Common Stock to the extent such Person would be deemed to be the
beneficial owner thereof pursuant to Rule 13d-3 promulgated by the Securities
and Exchange Commission under the Securities Exchange Act of 1934, as such rule
may be amended from time to time.
ABBREVIATIONS
The following abbreviations when used in the inscriptions on the face of this
Certificate shall be construed as though they were written out in full according
to applicable laws or regulations.
TEN COM -- as tenants in common
UNIF GIFT MIN ACT
------------------------
CUSTODIAN
---------------------
TEN ENT -- as tenants by the entireties
JT TEN -- as joint tenants with right
under Uniform Gifts to Minors Act
of survivorship and not as
tenants in common
(State)
Additional abbreviations may also be used though not in the above list.
------------------------
For value received,
-------------------------------------------------------
hereby sell, assign and transfer unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
Please print or typewrite name and address including postal zip code of
assignee.
shares of the common stock represented by the within Certificate, and do hereby
irrevocably constitute and appoint
Attorney to transfer the said stock on the books of the within named Corporation
with full power of substitution in the premises.
Dated
Notice: The signature to this assignment must correspond with the name as
written upon the face of the Certificate in every particular without alteration
or enlargement or any change whatever.
EXHIBIT 5
August 5, 1996
Hvide Marine Incorporated
2200 Eller Drive
Ft. Lauderdale, FL 33316
Ladies and Gentlemen:
We have acted as counsel for Hvide Marine Incorporated, a Florida corporation
(the"Company"), in connection with the issuance and sale pursuant to the
Company's registration statement on Form S-1, File No. 33-78166, (the
"Registration Statement") of up to 8,050,000 shares of its Class A Common Stock,
par value $0.001 per share (the "Shares"). Based upon our examination of such
corporate records and other documents and such questions of law as we have
deemed necessary and appropriate, we are of the opinion that the Shares have
been duly authorized and, when sold as provided in the Underwriting Agreement
described in the Registration Statement, will be validly issued, fully paid, and
non-assessable.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement.
Very truly yours,
Dyer Ellis & Joseph PC
/s/ MICHAEL JOSEPH
By:
Exhibit 10.3
HVIDE MARINE INCORPORATED
ANNUAL INCENTIVE PLAN
Section 1. Plan Establishment and Purpose
------------------------------------------
1.1 Establishment. Hvide Marine Incorporated (the "Company"), a Florida
-------------
corporation, hereby establishes an annual executive compensation program for
selected executives, which shall be known as the Hvide Marine Incorporated
Annual Incentive Plan (the "Plan").
1.2 Purpose. The purpose of the Plan is to maximize the success and
-------
profitability of the Company by providing significant incentive opportunities to
selected executives. It is also intended to assist in the attraction and
retention of key members of management and to further link executive and Company
interests and objectives.
Section 2. Definitions
-----------------------
2.1 Definitions. Whenever used herein, the following terms shall have their
-----------
respective meanings set forth below:
(a) "Administrator" means the Compensation Committee of the Board of Directors
of Hvide Marine Incorporated.
(b) "Company" means Hvide Marine Incorporated, and any subsidiaries.
(c) "Disability" has the same meaning as provided in the long-term disability
plan maintained by the Company. In the event of a dispute, the
determination of Disability shall be made by the Administrator. If, at any
time during the period that this Plan is in operation, the Company does not
maintain a long term disability plan, Disability shall mean a physical or
mental condition which, in the judgment off the Administrator, permanently
prevents a Participant from performing his usual duties for the Company or
such other position or job which the Company makes available to him and for
which the Participant is qualified by reason of his education, training and
experience. In making its determination the Administrator may, but is not
required to, rely on advice of a physician competent in the area to which
such Disability relates. The Administrator
- 1 -
<PAGE>
may make the determination in its sole discretion and any decision of the
Administrator will be binding on all parties.
(d) "Participant" means any individual designated to participate in the Plan
pursuant to Subsection 4.1.
(e) "Plan" means the Hvide Marine Incorporated Annual Incentive Plan.
(f) "Plan Year" means the twelve-month period of January 1 to December 31.
(g) "Retirement" means the voluntary termination of a Participant who has
attained age 65.
2.2 Gender and Number. Except when otherwise indicated by the context, words
-----------------
in the masculine gender when used in the Plan shall include the feminine gender,
the singular shall include the plural, and the plural shall include the
singular.
Section 3. Administration. No Control and Nature of Interest
--------------------------------------------------------------
3.1 Administration. The Administrator shall have the exclusive responsibility
--------------
for the general administration of the Plan according to the terms and provisions
of the Plan and shall have all the powers necessary to accomplish these
purposes; including but not by way of limitation, the right, power and
authority:
(a) To make rules and regulations for the administration of the Plan;
(b) To construe all terms, provisions, conditions, and limitations of the Plan;
(c) To correct any defects, supply any omissions or reconcile any
inconsistencies that may appear in the Plan in the manner and to the extent
deemed expedient;
(d) To determine all controversies relating to the administration of the Plan,
including but not limited to differences of opinion which may arise between
the Company or the Administrator and the Participants;
- 2 -
<PAGE>
(e) To resolve any questions necessary to promote the uniform administration of
the Plan;
3.2 Administrator's Discretion. The Administrator, in exercising any power or
--------------------------
authority granted under this Plan, or in making any determination under this
Plan, shall perform or refrain from performing those acts in his sole and
absolute discretion and judgment. Any decision made by the Administrator, or
any refraining to act or any act taken by the Administrator, in good faith shall
be final and binding on all parties.
3.3 Liability and Indemnity of Administrator. The Administrator shall not be
----------------------------------------
liable for any act done or any determination made in good faith. The Company
shall, to the fullest extent permitted by law, indemnify and hold the
Administrator harmless from any and all claims, causes of action, damages and
expenses (including reasonable attorneys' fees and expenses) incurred by the
Administrator in connection with or otherwise related to his or her service in
such capacity.
3.5 No Control and Nature of Interest. The granting of rights to Participants
---------------------------------
under the provisions of the Plan represents only a contracted right to receive
compensation. Accordingly, the Plan grants no right to, or interest in, either
express or implied, any equity position or ownership in the Company.
Section 4. Eligibility and Participation
-----------------------------------------
4.1 Eligibility and Participation. Participants in the Plan shall be
-----------------------------
recommended by the Chief Executive officer of the company and approved by the
Administrator from among those Executives of the Company who, in the opinion of
the Chief Executive Officer of the Company and the Administrator, are in a
position to contribute materially to the Company's continued growth and
development and to its long term financial success.
Section 5. Incentive Awards
----------------------------
5.1 Setting Target Incentive. Annually, the Company's Chief Executive Officer
------------------------
will recommend to the Administrator a list of Participants and a Target
Incentive for each. The Target Incentive will be calculated as a percent of
each Participant's base salary at the beginning of the Plan Year. Each Target
Incentive will consist of up two components, namely:
-An Objective Goal, and
- 3 -
<PAGE>
-A Discretionary Goal
The Objective Goal will equal two-thirds of the Target Incentive and the
Discretionary Goal will equal one-third of the Target Incentive. The
Administrator will review the recommendations, will approve, modify or reject
each and will notify each Participant of his or her Target Incentive for the
Plan Year and the components included in the Target Incentive. It is
anticipated that the Target Incentive will be established and communicated to
the Participant no later than the end of the first month of the Plan Year.
5.2 Objective Goal. The Objective Goal will be based upon financial objectives
--------------
relating to the performance of the Company as a whole, one division or component
of the Company or a combination of the Company and division financial
objectives. The Objective Goal may vary from year to year and for a given year,
will be recommended by the Company's Chief Executive Officer and approved by the
Administrator.
5.3 Discretionary Goal. The Discretionary Goal will be based upon individual
-------------------
goals established and agreed upon between the Participant and his or her
supervisor. The Board of Directors of the Company will set the Discretionary
Goals for the Chief Executive Officer of the Company. Discretionary Goals may
be financial or non-financial in nature. Achievement of all of the
Discretionary Goals within the fiscal year should be possible but considerable
effort should be required to do so.
Section 6. Payment of Incentive Amounts
----------------------------------------
6.1 Objective Goals. At the end of each Plan Year, the Administrator will
---------------
review the Company's financial performance and calculate the amount of Objective
Goal that has been earned by each Participant. Payment for achievement of
Objective Goals will be based upon the following schedule:
If financial performance measured as The percent of the Objective Goal
a percent of the Objective Goal is: Incentive which will be paid is:
- -------------------------------------------------------------------------
Below 80% 0%
At least 80% but less than 85% 50%
At least 85% but less than 90% 62.5%
At least 90% but less than 95% 75%
- 4 -
<PAGE>
At least 95% but less than 100% 87.5%
At least 100% but less than 105% 100%
At least 105% but less than 110% 110%
At least 110% but less than 115% 120%
At least 115% but less than 120% 130%
At least 120% but less than 125% 140%
125% or greater 150%
6.2 Discretionary Goals. At the end of each Plan Year, the Administrator will
-------------------
review the Participant's performance compared to the Discretionary Goals and
will determine the amount of payment which has been earned. If the
Discretionary Goals are significantly exceeded, a Participant may earn in excess
of 100% of the Discretionary Goal, but not more than 150% of the Discretionary
Goal. If the Discretionary Goals are not achieved, or only partially achieved,
the Participant can earn from 0% to 100% of the Discretionary Goals.
6.3. Payment and Timing. All payments under the Plan will be made in cash.
-------------------
Payments will be made as soon as administratively feasible following the
finalization of the Company's year-end financial statements.
Section 7. Employment Events
-----------------------------
7.1 Termination of Employment. In the event that the Participant terminates
-------------------------
employment for any reason other than death, Disability or Retirement, prior to
payment of all or a portion of the Target Incentive which has been earned, the
unpaid portion, even if earned, shall be forfeited.
7.2 Death, Disability, Retirement. In the event that the Participant
-----------------------------
terminates employment as a result of death, Disability or Retirement, the
Participant, or the estate of the Participant, will be entitled to a payment
based upon the Objective Goals achieved and the Discretionary Goals achieved;
but the payment will be reduced by one-twelfth for each full month, by which the
Participant's death, Disability or Retirement preceds the end of the Plan Year.
- 5 -
<PAGE>
Section 8. Limitation of Rights
--------------------------------
8.1 Limitation of Rights. Nothing in this Plan shall be construed:
--------------------
(a) To give any Participant any right to be awarded a Target Incentive other
than at the sole discretion of the Administrator;
(b) To limit in any way the right of the Company to terminate a Participant's
employment with the Company at any time; or
(c) To evidence any agreement or understanding, expressed or implied, that the
Company will employ a Participant in any particular capacity or for any
particular remuneration.
Section 9. Duration of Plan
----------------------------
9.1 Duration of Plan. The Plan shall remain in effect indefinitely, subject to
----------------
the Company's right to terminate the Plan pursuant to Section 10 hereof.
Section 10. Amendment, Modification and Termination of Plan
------------------------------------------------------------
10.1 Amendment. Modification. and Termination of Plan. The Company may at any
------------------------------------------------
time terminate the Plan, and from time to time may amend or modify it, provided
that no such action shall adversely affect any right or obligation with respect
to any awards therefore granted.
- 6 -
<PAGE>
Section 11. Alienation
-----------------------
11.1 Alienation. No benefit provided by this Plan shall be transferable by the
----------
Participant except on the Participant's death, as provided in this Plan. No
right or benefit under this Plan shall be subject to anticipation, alienation,
sale, assignment, pledge, encumbrance or charge. Any attempt to anticipate,
alienate, sell, assign, pledge, encumber or charge any right or benefit under
this Plan shall be void. No right or benefit under this Plan shall, in any
manner, be liable for or subject to any debts, contracts, liabilities or torts
of the person entitled to the right or benefit. If any Participant becomes
bankrupt or attempts to anticipate, alienate, assign, pledge, sell, encumber or
charge any right or benefit under this Plan, then the right or benefit shall, in
the discretion of the Administrator, cease. In that event, the Company may hold
or apply the right or benefit, or any part of the right or benefit, for the
benefit of the Participant, his or her spouse, children, or dependents, the
beneficiary or any of them, in the manner or in the proportion that the
Administrator shall deem proper, in his sole discretion, but is not required to
do so.
Section 12. Tax Withholding
----------------------------
12.1 Tax Withholding. Payments under the Plan shall be subject to applicable
---------------
federal, state, and local tax withholding requirements.
Section 13. Unfunded Plan
--------------------------
13.1 Unfunded Plan. The Plan shall be unfunded. The Company shall not be
-------------
required to segregate any assets that may be represented by an Incentive Amount;
the Company shall not be deemed to be a trustee of any amounts to be paid to a
Participant. Any liability of the Company to pay any Participant with respect
to an Incentive Amount shall be based solely upon any contractual obligations
created pursuant to the provisions of the Plan; and no such obligation shall be
deemed to be secured by any pledge or encumbrance on any property of the
Company. However, the Company has the discretion at any time to segregate such
assets that may be represented by an Incentive Amount. The assets will at all
times remain property of the Company. The Participants and their beneficiaries
shall at all times be merely unsecured creditors of the Company.
- 7 -
<PAGE>
Section 14. Successor Company
------------------------------
14.1 Successor Company. In the event of a merger, consolidation, combination or
-----------------
reorganization involving the Company and any other entity or corporation, the
Administrator shall not agree to such merger, consolidation, combination or
reorganization unless and until the succeeding or continuing business entity
shall expressly assume the obligations of the Company under this Plan.
Section 15. Governing Law
--------------------------
15.1 Governing Law. The Plan, and all agreements hereunder, shall be
-------------
constructed in accordance with and governed by the laws of the State of Florida
except to the extent superseded by federal law.
Section 16. Effective Date
---------------------------
16.1 Effective Date. The plan shall become effective as of June 28, 1996.
--------------
- 8 -
EXHIBIT 10.4
HVIDE MARINE INCORPORATED
STOCK OPTION PLAN
FOR DIRECTORS
<PAGE>
HVIDE MARINE INCORPORATED
STOCK OPTION PLAN FOR DIRECTORS
TABLE OF CONTENTS
-----------------
Article Page
- ------- ----
I. Establishment, Purpose and Effective Date of Plan....................1
1.1 Establishment.................................................1
1.2 Purpose.......................................................1
1.3 Effective Date................................................1
II. Definitions..........................................................1
2.1 Definitions......................................................1
(a) "Beneficiary".............................................1
(b) "Board"...................................................1
(c) "Change of Control".......................................2
(d) "Code"....................................................2
(e) "Committee"...............................................2
<PAGE>
(f) "Company".................................................2
(g) "Disability"..............................................2
(h) "Exercise Price"..........................................2
(i) "Fair Market Value".......................................2
(j) "Initial Public Offering".................................2
(k) "Non-Qualified Stock Option"..............................3
(l) "Option"..................................................3
(m) "Participant".............................................3
(n) "Retirement"..............................................3
(o) "Service".................................................3
(p) "Stock"...................................................3
(q) "Stock Option Agreement"..................................3
(r) "Vested"..................................................3
(s) "Service".................................................3
(t) "Stock"...................................................3
(u) "Stock Option Agreement"..................................3
(v) "Vested"..................................................3
<PAGE>
TABLE OF CONTENTS (continued)
-----------------------------
Article Page
- ------- ----
III. Eligibility and Participation .......................................3
IV. Administration ......................................................4
V. Stock Subject to Plan................................................4
5.1 Number........................................................4
5.2 Unused Stock..................................................4
5.3 Adjustment in Capitalization..................................4
VI. Duration of Plan ....................................................5
VII. Terms of Options.....................................................5
7.1 Grant of Options..............................................5
7.2 Option Agreement..............................................5
7.3 Exercise Price................................................5
<PAGE>
7.4 Duration of Options...........................................5
7.5 Vesting of Options............................................6
7.6 Nontransferability of Options.................................6
7.7 Restriction on Stock Transferability..........................6
7.8 Exercise of Options...........................................6
7.9 Purchase for Investment.......................................6
VIII. Cessation as Director................................................7
IX. Amendment, Modification and Termination of Plan .....................7
X. Tax Withholding .....................................................8
XI. Unfunded Plan........................................................8
<PAGE>
TABLE OF CONTENTS (continued)
-----------------------------
Article Page
- ------- ----
XII. No Right to Remain a Director.........................................8
XIII. Requirement of Law ...................................................8
13.1 Requirement of Law ..............................................8
13.2 Governing Law ...................................................9
<PAGE>
HVIDE MARINE INCORPORATED
STOCK OPTION PLAN FOR DIRECTORS
Article I
Establishment, Purpose and Effective Date of Plan
1.1 Establishment.
--------------
Hvide Marine Incorporated, a Florida corporation, hereby establishes a
stock option plan for members of its Board of Directors, which shall be
known as the Hvide Marine Incorporated Stock Option Plan for Directors
(the "Plan").
1.2 Purpose.
--------
The purpose of the Plan is to aid the Company in competing with other
companies for the services of new Directors, to induce Directors to
remain as Directors, to focus Directors on the long-term Company
objectives, to reward and recognize Directors for their contributions to
the success of the Company and to motivate Directors to acquire an
interest in the Company.
1.3 Effective Date.
---------------
The "Effective Date" of the Plan shall be June 28, 1996 subject to
approval by the vote of the holders of a majority of the Stock within 12
months before or after the adoption of the Plan by the Board.
Article II - Definitions
2.1 Definitions.
------------
Whenever used herein, the masculine pronoun shall be deemed to include the
feminine, the singular to include the plural, unless the context clearly
indicates otherwise, and the following capitalized words and phrases are used
herein with the meaning thereafter ascribed:
<PAGE>
"Annual Options" means options granted on an ongoing annual
basis.
"Beneficiary" means the person or persons designated by a
Participant to exercise an Option in the event of the Participant's
death while employed by, or as a Director of, the Company, or in the
absence of such designation, the legal representative of the
Participant's estate.
"Board" or "Directors" mean the Board of Directors of the
Company.
A "Change of Control" shall be deemed to have occurred if (i) a
tender offer shall be made and consummated of the ownership of 30% or
more of the outstanding voting securities of the Company, (ii) the
Company shall be merged or consolidated with another corporation and as
a result of such merger or consolidation less than 70% of the
outstanding voting securities of the surviving or resulting corporation
shall be owned in the aggregate by the former shareholders of the
Company, other than affiliates (within the meaning of the Securities
Exchange Act of 1934) of any party to such merger or consolidation,
(iii) the Company shall sell substantially all of its assets to another
corporation which corporation is not wholly owned by the company, or
(iv) a person, within the meaning of Section 3(a)(9) or of Section
13(d)(3) (as in effect on the date hereof) of the Securities Exchange
Act of 1934, shall acquire 30% or more of the outstanding voting
securities of the Company (whether directly, indirectly, beneficially or
of record). For purposes hereof, ownership of voting securities shall
take into account and shall include ownership as determined by applying
the provisions of Rule 13d-3(d)(1)(i) (as in effect on the date hereof)
pursuant to the Securities and Exchange Act of 1934.
"Code" means the Internal Revenue Code of 1986, as amended.
"Committee" means the Compensation Committee of the Board.
"Company" means Hvide Marine Incorporated, a Florida
corporation.
"Disability" means the inability of an individual to fulfill his
responsibilities as a Director as a result of mental or physical
incapacity.
"Exercise Price" means, with respect to any Option, a value as
specified in Section 7.3, determined as of the date of grant of such
Option.
-2-
<PAGE>
"Fair Market Value" means, for any particular date, (i) for any
period during which the Stock shall not be listed for trading on a
national securities exchange, but when prices for the Stock shall be
reported by the National Market System of the National Association of
Securities Dealers Automated Quotation System ("NASDAQ"), the last
transaction price per share as quoted by the National Market System of
NASDAQ, (ii) for any period during which the Stock shall not be listed
for trading on a national securities exchange or its price reported by
the National Market System of NASDAQ, but when prices for the Stock
shall be reported by NASDAQ, the closing bid price as reported by
NASDAQ, (iii) for any period during which the Stock shall be listed for
trading on a national securities exchange, the closing price per share
of Stock on such exchange as of the close of such trading day, or (iv)
the market price per share of Stock as determined by a qualified
valuation expert selected by the Board in the event neither (i), (ii),
or (iii) above shall be applicable. If the Fair Market Value is to be
determined as of a day when the securities markets are not open, the
Fair Market Value on that day shall be the Fair Market Value on the next
succeeding day when the markets are open.
"Initial Options" means Options granted in the initial year that
an individual becomes a Director.
"Initial Public Offering" means the first instance in which
Company Stock is offered for sale to the public following successful
registration of the Stock with the Securities and Exchange Commission.
"IPO Options" means Options granted in conjunction with the
Initial Public Offering of Company Stock.
"Non-Qualified Stock Option" means a Stock Option, other than an
Option qualifying as an Incentive Stock Option, as defined in Code
Section 422.
"Option" means the contractual right granted to a Participant to
purchase a share of Stock under the Plan at a stated price for a
specified period of time.
"Option Date" means (i) with regard to IPO Options, the date of
the date of the Initial Public Offering or; (ii) with regard to all
other Options granted under the Plan, the first business day after the
annual meeting of stockholders of the Company.
"Participant" means a Director who has been granted Options
under the Plan.
"Retirement" means the cessation of a Participant's Service as a
Director after attaining age 62.
-3-
<PAGE>
"Service" means the period of time that an individual serves as
a member of the Board and includes any service prior to the adoption of
the Plan as well as service as a consultant to the Board prior to
election to the Board.
"Stock" means the Company's Class A Common Stock.
"Stock Option Agreement" means an agreement between the
Participant and the Company evidencing the grant and terms of an Option.
"Vested" means that an Option is nonforfeitable and exercisable
with regard to a designated number of shares of Stock as specified in
Section 7.5.
Article III - Eligibility and Participation
All members of the Board, who are not otherwise officers or employees of
the Company, shall be eligible to participate in the Plan.
-4-
<PAGE>
Article IV - Administration
The Committee shall be responsible for the administration of the Plan.
The Committee, by majority action thereof, is authorized to interpret
the Plan, to prescribe, amend, and rescind rules and regulations
relating to the Plan, to provide for conditions and assurances deemed
necessary or advisable to protect the interests of the Company, and to
make all other determinations necessary or advisable for the
administration of the Plan, but only to the extent not contrary to the
express provisions of the Plan. Determinations, interpretations, or
other actions made or taken by the Committee pursuant to the provisions
of the Plan shall be uniformly applied and shall be final, binding and
conclusive for all purposes and upon all persons.
Article V - Stock Subject To Plan
5.1 Number.
-------
Subject to adjustment as provided by Section 5.3, the total number of
shares of Stock reserved for Options and subject to issuance under the
Plan may not exceed 70,000 shares of Stock. The shares to be delivered
under the Plan may consist, in whole or in part, of authorized but
unissued Stock or treasury Stock, not reserved for any other purpose.
5.2 Unused Stock.
-------------
In the event any shares of Stock are subject to an Option which, for any
reason, expires or is terminated unexercised as to such shares, such
shares again shall become available for issuance under the Plan.
5.3 Adjustment in Capitalization.
-----------------------------
In the event of any change in the Stock of the Company by reason of any
stock dividend, recapitalization, reorganization, merger, consolidation,
split-up, combination, or change of shares, or rights offering to
purchase Stock at a price substantially below fair market value, or of
any similar change affecting the Stock, the number and Exercise Price of
any Options may be proportionately adjusted, as deemed equitable and
appropriate by the Committee, and the number of shares of Stock subject
to issuance under the Plan may be proportionately adjusted by the Board
upon the recommendation of the Committee, as the Board deems equitable
and appropriate.
-5-
<PAGE>
Article VI - Duration of Plan
The Plan shall remain in effect, subject to the Board's right to
terminate the Plan pursuant to Article IX, until all Stock subject to it
has been purchased or acquired pursuant to the provisions hereof.
Notwithstanding the foregoing, no Option may be granted under the Plan
on or after the tenth anniversary of the Plan's Effective Date.
Article VII - Terms of Options
7.1 Grant of Options.
-----------------
Each person who is an eligible participant in the Plan as specified in
Article III shall receive the following Option grants.
Those eligible Directors as of the Initial Public Offering will
receive 5,000 IPO Options on the Option Date.
Those individuals who become eligible Directors after the
Initial Public Offering will receive 5,000 Initial Options on the first
Option Date following their election to the Board.
All eligible Directors will receive 1,500 Annual Options each
year on the next Option Date following the grant of IPO Options or
Initial Options.
7.2 Stock Option Agreement.
-----------------------
Each Option shall be evidenced by a Stock Option Agreement that shall
specify the type of Options granted, the Exercise Price, the duration of
the Options, the number of shares of Stock to which the Option pertains,
the events by which the Options become Vested, and such other provisions
as the Committee shall determine.
7.3 Exercise Price.
---------------
All Options granted under the Plan will be granted at a price equal to
the Fair Market Value as of the Option Date applicable to that Option.
-6-
<PAGE>
7.4 Duration of Options.
--------------------
Each Option shall expire at such time as the Committee shall determine
at the time it is granted, provided, however, that no Option shall be
exercisable on or after ten years following the date of grant.
7.5 Vesting of Options.
-------------------
All Options granted under the Plan will become 100% Vested and
exerciseable as of the first anniversary of the date that the Options
are granted.
Notwithstanding the provisions of Subsection (a) above, Options
granted under the Plan will become 100% Vested and exerciseable in the
event of the Participant's death, Disability, completion of ten (10)
years Service, Retirement or Change of Control, except to the extent
that the exerciseability of any such Option would result in an "excess
parachute payment" within the meaning of Section 280G of the Code.
7.6 Nontransferability of Options.
------------------------------
No Option granted under the Plan, may be sold, transferred, pledged,
assigned, or otherwise alienated or hypothecated, otherwise than by will
or by the laws of descent and distribution. During the lifetime of the
Participant, Options may be exercised only by the Participant.
7.7 Restriction on Stock Transferability.
-------------------------------------
The Committee may impose such restrictions on any shares of Stock
acquired pursuant to the exercise of an Option under the Plan as it may
deem advisable, including, without limitation, restrictions under
applicable federal securities law, under the requirements of any stock
exchange upon which such shares of Stock are then listed, under any blue
sky or state securities laws applicable to such shares and under any
buy/sell agreements entered into by the existing shareholders.
7.8 Exercise of Options.
--------------------
A Participant shall exercise a Vested Option by written notice to the
Committee specifying the number of shares of Stock to be purchased. The
Exercise Price of any Vested Option
-7-
<PAGE>
shall be payable to the Company in full at the time of the exercise of
the Option in a manner as is specified in the Stock Agreement.
7.9 Purchase for Investment.
------------------------
At the time of any exercise of any Option, the Committee may, if it
shall deem it necessary for any reason connected with any law or
regulation of any governmental authority relating to the regulation of
securities, require as a condition to the issuance of Stock that the
Participant represent in writing to the Company that it is his intention
to acquire the Stock for investment only and not for resale. In the
event such a representation is required and made, no Stock shall be
issued to the Participant unless and until the Company is satisfied with
the validity of such representation. Certificates for Stock as to which
such representation is required and made may, in the discretion of the
Board, be endorsed with a legend noting such representations.
-8-
<PAGE>
Article VIII - Cessation As Director
In the event the Participant shall cease to be a Director of the Company
for any reason, except following an event enumerated in Section 7.5(b),
any outstanding Vested Options may be exercised for a period of twelve
(12) months following such cessation as a Director (or the expiration
date of the Option, if shorter). The Participant may exercise any such
Options as were exercisable at the date of cessation as a Director, and
no more.
In the event the Participant shall cease to be a Director of the Company
following an event enumerated in Section 7.5(b), except death, any
outstanding Vested Options may be exercised until the expiration date of
the Option. The Participant may exercise only such options as were
exercisable at the date of the cessation as a director, and no more.
If the Participant dies before his service as a Director ceases, the
Participant's Beneficiary may, within the twelve (12) month period
following death (or the expiration date of the Options, if shorter),
exercise the Options on the Participant's behalf.
Article IX
Amendment, Modification and Termination of Plan
The Board may at any time terminate, and from time to time may amend or
modify the Plan, provided, however, that no such action of the Board,
without the approval by vote of the holders of a majority of Stock may:
(a) Increase the total amount of Stock which may be issued under the
Plan, except as provided in Sections 5.1 and 5.3 of the Plan.
(b) Change the class of individuals eligible to receive Options.
(c) Change the provisions of the Plan regarding the Option price except
as permitted by Section 5.3.
(d) Materially increase the cost of the Plan or materially increase
the benefits to Participants.
(e) Extend the period during which Options may be granted.
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<PAGE>
(f) Extend the maximum period after the date of grant during which
Options may be exercised.
No amendment, modification, or termination of the Plan shall in any
manner adversely affect any Option granted under the Plan without the
consent of the Participant.
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<PAGE>
Article X - Tax Withholding
Whenever shares of Stock are to be issued under the Plan, the Company
shall have the power to require the recipient of the Stock to remit to
the Company an amount sufficient to satisfy federal, state, and local
tax withholding requirements. The Company may also withhold from
delivery to the recipient a number of shares, the Fair Market Value of
which is sufficient to satisfy federal, state and local withholding
requirements.
Article XI - Unfunded Plan
The Plan shall be unfunded. The Company shall not be required to
segregate any assets that may be represented by Options. The Company
shall not be deemed to be a trustee of any amounts to be paid under any
Option. Any liability of the Company to pay any Participant with respect
to an Option shall be based solely upon any contractual obligations
created pursuant to the provisions of the Plan; no such obligation shall
be deemed to be secured by any pledge or encumbrance on any property of
the Company.
Article XII - No Right To Remain A Director
The grant of an Option shall not create any right in any person to
remain as a Director of the Company.
Article XIII - Requirement of Law
13.1 Requirement of Law.
-------------------
The granting of Options and the issuance of shares of Stock shall be
subject to all applicable laws, rules, and regulations, and to such
approvals by any governmental agencies or national securities exchanges
as may be required.
13.2 Governing Law.
--------------
The Plan, and all agreements hereunder, shall be construed in accordance
with and governed by the laws of the State of Florida except to the
extent superseded by federal law.
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<PAGE>
HVIDE MARINE INCORPORATED
BY:____________________________
TITLE: ________________________
ATTEST:
- -----------------------------
SECRETARY
[CORPORATE SEAL]
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EXHIBIT 10.4.1
HVIDE MARINE INCORPORATED
1996 EMPLOYEE STOCK PURCHASE PLAN
ARTICLE I - PURPOSE
1.01 Purpose
The Hvide Marine Incorporated 1996 Employee Stock Purchase Plan (the
"Plan") is intended to provide employees of the Company with an opportunity to
acquire a proprietary interest in the Company through the purchase of shares of
the Common Stock of the Company. It is the intention of the Company to have the
Plan qualify as an "employee stock purchase plan" under Code Section 423. The
provisions of the Plan shall be construed so as to extend and limit
participation in a manner consistent with the requirements of that section of
the Code.
ARTICLE II - DEFINITIONS
2.01. "Account" shall mean the separate bookkeeping account which shall
be established for each Participant to record the payroll deductions made on his
behalf to purchase shares of Common Stock under the Plan.
2.02. "Code" shall mean the Internal Revenue Code of 1986, as now or
hereafter amended.
2.03. "Committee" shall mean the individuals described in Article XI.
2.04. "Common Stock" shall mean the Company's Class A common stock.
2.05. "Company" shall mean Hvide Marine Incorporated, a Florida
corporation and any Subsidiary Corporations and shall be deemed to include any
corporation into which such entity shall be merged or consolidated.
2.06. "Employee" means any person who is employed by the Company whose
customary employment is more than 20 hours per week.
2.07 "Initial Public Offering" shall mean the first instance in which
the Company's Common Stock is offered for sale to the public following
successful registration of the Common Stock with the Securities and Exchange
Commission.
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2.08. "Offering" shall mean the offer of shares of Common Stock to
Participants during each Offering Period.
2.09. "Offering Commencement Date" shall mean the first date of each
Offering Period as set forth in Section 4.01 hereof.
2.10. "Offering Period" shall mean each period from an Offering
Commencement Date until the respective Offering Termination Date as set forth in
Section 4.01 hereof.
2.11. "Offering Termination Date" shall mean the last date of each
Offering Period as set forth in Section 4.01 hereof.
2.12. "Participant" shall mean any Employee who becomes eligible to
participate in this Plan as set forth in Section 3.01 hereof and who authorizes
payroll deductions under this Plan.
2.13. "Subsidiary Corporation" shall mean any present or future
corporation or other entity which (i) would be a "subsidiary corporation" of the
Company (as that term is defined in Section 421 et. seq. of the Code) and (ii)
is designated as a sponsor of the Plan by the Committee.
ARTICLE III - ELIGIBILITY AND PARTICIPATION
3.01. Eligibility Requirements
(a) Any Employee who has been employed by the Company for a period of 90
days on the first Offering Date, as specified in Section 4.01, shall be eligible
to participate in that Offering and each Offering thereafter.
(b) Any other Employee shall be eligible to participate in Offerings
under the Plan as of the first January 1 on or after the date such Employee has
completed ninety (90) days of full and continuous employment with the Company.
3.02. Restrictions on Participation
Notwithstanding any provisions of the Plan to the contrary, no Employee
shall be granted an option to participate in the Plan if, immediately after the
grant, such Employee would own stock, and/or hold outstanding options to
purchase stock, possessing 5% or more of the total combined voting power or
value of all classes of stock of the Company (for purposes of this paragraph,
the rules of Section 424(d) of the Code shall apply in determining stock
ownership of any Employee).
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<PAGE>
3.03. Commencement of Participation.
An eligible Employee may become a Participant by completing an
authorization for a payroll deduction on the form provided by the Company and
filing it with the Committee on or before the date set therefor by the
Committee, which date shall be on or before the Offering Commencement Date for
each Offering. Payroll deductions for a Participant shall commence on or after
the applicable Offering Commencement Date when his authorization for a payroll
deduction becomes effective and shall continue until terminated by the
Participant or by a withdrawal as provided herein.
ARTICLE IV - OFFERINGS
4.01. Offerings.
The Plan will be implemented by semi-annual Offerings of the Company's
Common Stock beginning on the Offering Commencement Dates and terminating on the
Offering Termination Dates indicated below:
The first Offering Period shall begin following approval by the
shareholders and shall end on the following December 31 or June 30.
Thereafter, the Offering Periods will begin and end on the following
dates:
Offering Offering
Commencement Date Termination Date
----------------- ----------------
Each January 1 The next following June 30
--------- --------
Each July 1 The next following December 31
------ -----------
Each period from an Offering Commencement Date until the respective
Offering Termination Date is referred to as the "Offering Period".
The Board of Directors of the Company shall have the right to change the
duration of the Offering Periods and their respective Offering Commencement
Dates and Offering Termination Dates so long as any such change does adversely
affect the Plan's qualification as an employee stock purchase plan under Code
Section 423.
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Notwithstanding anything contained herein to the contrary, no offerings
may be made under this Plan until the date of, or following, an Initial Public
Offering of the Company's Common Stock.
4.02. Stockholder Approval.
The Plan shall be submitted for approval by the stockholders of the
Company within twelve (12) months before or after the Plan is adopted by the
Board of Directors. Options granted hereunder shall be subject to the condition
that this Plan shall be approved by a majority of the stockholders of the
Company in the manner contemplated by Code Section 423(b)(2). If not approved by
the stockholders of the Company within the required time, the Plan shall
terminate, all options hereunder shall be canceled and shall be of no further
force and effect, and all persons who shall have authorized payroll deductions
pursuant to the terms of the Plan shall be entitled to the prompt refund in cash
of all sums withheld from them pursuant to the Plan.
ARTICLE V - PAYROLL DEDUCTIONS
5.01. Amount of Deduction.
At the time a Participant files his authorization for payroll deduction,
he shall elect to have deductions made from his pay on each payday during the
time he is a Participant in an Offering at a rate not to exceed 10% of his
compensation during any Offering Period.
5.02. Participant Account.
All payroll deductions made for a Participant shall be credited to his
Account under the Plan. A Participant may not make any separate cash payment
into such account.
5.03. Changes in Payroll Deductions
A Participant may discontinue his payroll deductions at any time and may
withdraw all amounts in his Account as provided in Article VIII, but no other
change to a Participant's payroll deductions can be made during a calendar year.
Once a Participant has elected payroll deductions in a calendar year, he may not
alter the amount of his payroll deductions until the next January 1. Once a
Participant discontinues payroll deductions or withdraws the amount in his
Account, such Participant shall not be allowed to recommence payroll deductions
until the next January 1.
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<PAGE>
5.04. Leave of Absence.
If a Participant goes on a leave of absence, such Participant shall have
the right to elect: (a) to request withdrawal of the balance in his or her
Account as a result of hardship pursuant to Section 8.01 hereof, or (b) to
discontinue contributions to the Plan but remain a Participant in the Plan with
respect to the amount then in his account.
5
<PAGE>
ARTICLE VI - GRANTING OF OPTION
6.01. Number of Option Shares.
As of each Offering Termination Date, a Participant shall be deemed to
have been granted an option to purchase the whole number of shares of the Common
Stock equal to an amount determined as follows: (i) the amount in such
Participant's Account as of such Offering Termination Date, divided by (ii) an
amount equal to the "Applicable Percentage" of the market value of the Common
Stock on such Offering Termination Date; with the result rounded down to the
nearest whole number. The Applicable Percentage shall be: (i) determined by the
Board of Directors for each Offering Period, (ii) not less than 85% nor more
than 100%, and (iii) announced by the Company on or before the beginning of each
Offering Period. The Applicable Percentage announced for any Offering Period
shall apply for such Offering Period and any subsequent Offering Periods until
and unless a change in Applicable Percentage is announced. The market value of
the Common Stock shall be determined as provided in Section 6.02 below.
Any options granted under the Plan before the date the stockholders of
the Company (acting at a duly called meeting of such stockholders) are treated
under Code Section 423(b)(2) as having approved the Plan shall be granted
subject to such approval and, if such stockholders fail to approve the Plan on
or before all such options automatically shall be null and void.
6.02. Option Price
The option price of stock purchased with payroll deductions made during
each Offering Period for Participant therein shall be equal to the "Applicable
Percentage" (as determined in accordance with Section 6.01) of the closing price
of the stock on the Offering Termination Date for such Offering period or the
nearest prior business day on which trading occurred on the NASDAQ Stock Market
or other stock exchange on which the Common Stock is actively traded. If the
Common Stock is not admitted to trading on any of the aforesaid dates for which
closing prices of the stock are to be determined, then reference shall be made
to the fair market value of the stock on that date, as determined on such basis
as shall be established or specified for that purpose by the Committee.
6.03. Statutory Limitation
No option granted by operation of the Plan to any Participant in any
Offering shall permit his rights to purchase shares of Common Stock under this
Plan or under any other employee stock purchase plan (within the meaning of Code
Section 423) of the Company to accrue (within the meaning of Code Section
423(b)(8) at a rate which exceeds $25,000 in any calendar year. Such value shall
be determined as of the Offering Termination Dates within each calendar year (or
portion of such year) in which such option would be
6
<PAGE>
outstanding, and the options granted by operation of the Plan under Section 6.01
to any Participant automatically shall be limited by this Section 6.03.
ARTICLE VII - EXERCISE OF OPTION
7.01. Automatic Exercise.
Unless a Participant is permitted to withdraw his payroll deductions as
a result of hardship, his option for the purchase of stock with payroll
deductions made during any Offering Period will be deemed to have been exercised
automatically on the Offering Termination Date applicable to such Offering
Period, for the purchase of the number of whole shares of stock which the
accumulated payroll deductions in his Account at that time will purchase at the
applicable option price. Any excess amount in his Account at that time will
remain in his Account for future applications in accordance with the terms of
the Plan.
7.02. Fractional Shares
Fractional shares will not be issued under the Plan and any accumulated
payroll deductions which would have been used to purchase fractional shares will
remain in each Participant's Account and carried over to the next Offering
Period.
7.03. Election Not to Exercise Option.
Except in the case of a hardship as determined by the Committee, once
payroll deductions commence for an Offering Period, a Participant will be
required to exercise any options granted to him with respect to such Offering
Period.
7.04. Transferability of Option.
During a Participant's lifetime, options held by such Participant shall
be exercisable only by that Participant and no Participant in the Plan shall
have the right to assign his interest in the Plan.
7.05. Delivery of Stock; Nominee Record Holder.
As promptly as practicable after the Offering Termination Date of each
Offering, the Company will deliver to each Participant, as appropriate, the
stock purchased upon exercise of his option. Notwithstanding the foregoing, at
the option of the Committee, the stock purchased may be issued in the name of a
nominee (the "Nominee") on behalf of all Participants or on behalf of all
Participants to whom fewer than a specified number of shares are to be issued.
If Common Stock is issued to a Nominee on behalf of all or some Participants,
then the following shall apply: (i) each such Participant shall have all
ownership rights attributable to the ownership of such Common Stock on his
behalf, and (ii) the Company and the Nominee shall cause separate stock
certificates to be issued in the
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<PAGE>
name of and delivered to such a Participant upon the earliest to occur of his
request for a separate certificate in his name, his termination of employment
with the Company for any reason whatsoever or the termination of the Plan. The
Company shall indemnify any such Nominee and hold him harmless from any and all
actions, loss, damage or liability suffered by him as a result of serving as the
Nominee for the Participants hereunder except to the extent caused by such
Nominee's gross negligence or willful misconduct. The Company shall have the
right to remove and replace any Nominee. By prior written notice to the Company,
the Nominee may resign. Any Nominee removed or resigning shall take such action
as may be necessary or desirable to transfer to the successor Nominee selected
by the Company all shares of Common Stock then in his name as Nominee.
ARTICLE VIII - WITHDRAWAL
8.01. In General.
In the event of a severe economic hardship, a Participant may request
permission to withdraw payroll deductions credited to his Account under the Plan
by giving written notice to the Committee. The Committee in its sole discretion
will determine whether a hardship exists. If the Committee does decide that a
hardship exists, all of the Participant's payroll deductions credited to his
Account will be paid to him, and such Participant shall not be allowed to again
participate or authorize further payroll deductions under the Plan until the
January 1 next following the date of the withdrawal notice.
8.02. Termination of Employment.
Upon termination of a Participant's employment for any reason, including
retirement (but excluding death while in the employ of the Company), the payroll
deductions credited to his Account will be returned to him.
8.03. Termination of Employment Due to Death.
Upon termination of the Participant's employment because of his death,
his beneficiary (as defined in Section 12.01) shall have the right to elect, by
written notice given to the Committee prior to the Offering Termination Date,
either: (a) to withdraw all of the payroll deductions credited to the
Participant's Account under the Plan, or (b) to exercise the Participant's
option for the purchase of stock on the Offering Termination Date next following
the date of the Participant's death for the purchase of the number of whole
shares of stock which the accumulated payroll deductions in the Participant's
Account at the date of the Participant's death will purchase at the applicable
option price, in which event, any excess in such Account will be returned to
said beneficiary. In the event that no such written notice of election shall be
duly received by the Committee, the beneficiary shall
8
<PAGE>
automatically be deemed to have elected, pursuant to paragraph (b), to exercise
the Participant's option to purchase stock.
9
<PAGE>
8.04. Leave of Absence.
A Participant on leave of absence shall subject to the election made by
such Participant pursuant to Section 5.04, continue to be a Participant in the
Plan with respect to the amounts then in his Account so long as such Participant
is on continuous leave of absence.
ARTICLE IX - NO INTEREST
9.01. No Interest.
No interest will be paid or allowed on any money paid into the Plan or
credited to the account of any Participant.
ARTICLE X - STOCK
10.01. Maximum Number of Shares.
The maximum number of shares which shall be issued under the Plan,
subject to adjustment upon changes in capitalization of the Company as provided
in Section 12.04, shall be 500,000 shares for all Offerings. If the total number
of shares for which options are exercised on any Offering Termination Date in
accordance with Article VI exceeds the maximum number of shares available for
purchase hereunder, the Company shall make a pro rata allocation of the shares
available for delivery and distribution in as nearly a uniform manner as shall
be practicable and as it shall determine to be equitable, and the balance of
payroll deductions credited to the account of each Participant under the Plan
shall be returned to him as promptly as possible.
10.02. Participant's Interest in Option Stock.
The Participant will have no interest in stock covered by any option
granted to him hereunder until such option has been exercised.
10.03. Registration of Stock.
Stock to be delivered to a Participant under the Plan will be registered
in the name of the Participant or in the name of the Nominee for such
Participant as provided in Section 7.05 hereof.
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<PAGE>
10.04. Restrictions on Exercise.
The Board of Directors may, in its discretion, require as conditions to
the exercise of any option that the shares of Common Stock reserved for issuance
upon the exercise of the option shall have been duly listed, upon official
notice of issuance, upon a stock exchange, and that either:
(a) a Registration Statement under the Securities Act of 1933,
as amended, with respect to said shares shall be effective, or
(b) the Participant shall have represented at the time of
purchase, in form and substance satisfactory to the Company, that it is
his intention to purchase the shares for investment and not for resale
or distribution.
ARTICLE XI - ADMINISTRATION
11.01. Appointment of Committee.
The Board of Directors shall appoint a committee (the "Committee") to
administer the Plan, which may consist of persons who may or may not be members
of the Board of Directors.
11.02. Authority of Committee.
Subject to the express provisions of the Plan, the Committee shall have
plenary authority in its discretion to interpret and construe any and all
provisions of the Plan, to adopt rules and regulations for administering the
Plan and to make all other determinations deemed necessary or advisable for
administering the Plan. The Committee's determination on the foregoing matters
shall be conclusive.
11.03 Rules Governing the Administration of the Committee.
The Board of Directors may from time to time appoint members of the
Committee in substitution for or in addition to members previously appointed and
may fill vacancies, however caused, in the Committee. The Committee may select
one of its members as its Chairman and shall hold its meetings at such times and
places as it shall deem advisable and may hold telephonic meetings. A majority
of its members shall constitute a quorum. All determinations of the Committee
shall be made by a majority of its members. The Committee may correct any defect
or omission or reconcile any inconsistency in the Plan, in the manner and to the
extent it shall deem desirable. Any decision or determination reduced to writing
and signed by a majority of the members of the Committee shall be as fully
effective as if it had been made by a majority vote at a meeting duly called and
held. The Committee may appoint a secretary and shall make such rules and
regulations for the conduct of its business as it shall deem advisable.
11
<PAGE>
11.04. Notices.
All notices and other communications from a Participant to the Committee
under,or in connection with, this Plan shall be deemed to have been filed with
the Committee when actually received in the form specified by the Committee at
the location and by the person designated by the Committee for the receipt of
such notices and communications.
ARTICLE XII - MISCELLANEOUS
12.01. Designation of Beneficiary.
A Participant may file a written designation of a beneficiary who is to
receive any stock and/or cash. Such designation of beneficiary may be changed by
the Participant at any time by written notice to the Committee. Upon the death
of a Participant and upon receipt by the Company of proof of identity and
existence at the Participant's death of a beneficiary validly designated by him
under the Plan, the Company shall deliver such stock and/or cash to such
beneficiary validly designated under the Plan who is living at the time of such
Participant's death, the Company shall deliver such stock and/or cash to the
executor or administrator of the estate of the Participant, or if no such
executor or administrator has been appointed (to the knowledge of the Company),
the Company, in its discretion, may deliver such stock and/or cash to the spouse
or to any one or more dependents of the Participant as the Company may
designate. No beneficiary shall, prior to the death of the Participant by whom
he has been designated, acquire any interest in the stock or cash credited to
the Participant under the Plan.
12.02. Transferability.
Neither payroll deductions credited to a Participant's Account nor any
rights with regard to the exercise of an option or to receive stock under the
Plan may be assigned, transferred, pledged or otherwise disposed of in any way
by the Participant other than (i) by will or the laws of descent and
distribution, or (ii) stock held by the Nominee for the benefit of such
Participant as provided in Section 7.05 hereof. Any such attempted assignment,
transfer, pledge or other disposition shall be without effect, except that the
Company may treat such act as an election to withdraw funds in accordance with
the terms of the Plan.
12.03. Use of Funds.
All payroll deductions received or held by the Company under the Plan
may be used by the Company for any corporate purpose and the Company shall not
be obligated to segregate such payroll deductions.
12
<PAGE>
12.04. Adjustment Upon Changes in Capitalization.
(a) If the outstanding shares of Common Stock of the Company
have increased, decreased, changed into or been exchanged for a
different number or kind of shares or securities of the Company through
reorganization, merger, recapitalization, reclassification, stock
dividend, stock split, reverse stock split or similar transaction,
appropriate and proportionate adjustments may be made by the Committee
in the number and/or kind of shares which are subject to purchase under
outstanding options and on the option exercise price applicable to such
outstanding options. In addition, in any such event, the number and/or
kind of shares which may be offered in the Offerings described in
Article IV hereof and the maximum number of shares which may be issued
under the Plan as set forth in Section 10.01 shall also be
proportionately adjusted.
(b) Upon the dissolution or liquidation of the Company, or upon
a reorganization, merger or consolidation of the Company with one or
more corporation as a result of which the Company is not the surviving
corporation, or upon a sale of substantially all of the property or
stock of the Company to another corporation, the holder of each option
then outstanding under the Plan will thereafter be entitled to receive
at the next Offering Termination Date upon the exercise of such option
for each share as to which such option shall be exercised, as nearly as
reasonably may be determined, the cash, securities and/or property which
a holder of one share of the Common Stock was entitled to receive upon
and at the time of such transaction. The Board of Directors shall take
such steps in connection with such transactions as the Board shall deem
necessary to assure that the provisions of this Section 12.04 shall
thereafter be applicable, as nearly as reasonably may be determined, in
relation to the said cash, securities and/or property as to which such
holder of such option might thereafter be entitled to receive.
12.05. Amendment and Termination
(a) The Plan shall terminate as of the earliest of: (i) the date
the maximum number of shares of Common Stock available for purchase
hereunder shall have been purchased in accordance with the terms of the
Plan, or (ii) the date the Plan is terminated as provided in paragraph
(b) below.
(b) The Board of Directors shall have complete power and
authority to terminate or amend the Plan; provided, however, that the
Board of Directors shall not, without the approval of the stockholders
of the Corporation (i) increase the maximum number of shares which may
be issued under the Plan (except pursuant to Section 12.04); or (ii)
amend the requirements as to the class of Employees eligible to
participate in the purchase of stock under the Plan. No termination,
modification or amendment of the Plan may, without the consent of a
Participant then having an option under the Plan to purchase stock,
adversely affect the rights of such Participant under such option.
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12.06. Effective Date.
The Plan shall become effective as of the date it is approved by a
majority of the shareholders of the Company.
12.07. No Employment Rights.
The Plan does not, directly or indirectly, create any right for the
benefit of any Employee or class of Employees to purchase any shares under the
Plan, or create in any Employee or class of Employees any right with respect to
continuation of employment by the Company, and it shall not be deemed to
interfere in any way with the Company's right to terminate, or otherwise modify,
an Employee's employment at any time.
12.08. Effect of Plan.
The provisions of the Plan shall, in accordance with its terms, be
binding upon, and inure to the benefit of, all successors of each Employee
participating in the Plan, including, without limitation, such Employee's estate
and the executors, administrators or trustees thereof, heirs and legatees, and
any receiver, trustee in bankruptcy or representative of creditors of such
Employee.
12.09. Governing Law.
The laws of the State of Florida will govern all matters relating to the
Plan except to the extent superseded by the laws of the United States.
12.10. Headings.
The headings to sections in the Plan have been included for convenience
of reference only and shall not affect the interpretation of the Plan.
14
EXHIBIT 10.4.2
HVIDE MARINE INCORPORATED
EQUITY OWNERSHIP PLAN
<PAGE>
TABLE OF CONTENTS
Page
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SECTION 1 DEFINITIONS 1
1.1 Definitions 1
SECTION 2 GENERAL TERMS 4
2.1 Purpose of the Plan 4
2.2 Stock Subject to the Plan 4
2.3 Administration of the Plan 4
2.4 Eligibility and Limits 5
SECTION 3 TERMS OF AWARDS 5
3.1 Terms and Conditions of All Awards 5
3.2 Terms and Conditions of Options 6
(a) Option Price 6
(b) Option Term 6
(c) Payment 6
(d) Conditions to the Exercise of an Option 6
(e) Termination of Incentive Stock Option 7
(f) Special Provisions for Certain Substitute
Options 7
i
<PAGE>
3.3 Terms and Conditions of Stock Appreciation Rights 7
(a) Payment 7
(b) Conditions to Exercise 7
3.4 Terms and Conditions of Stock Awards 8
3.5 Terms and Conditions of Dividend Equivalent Rights 8
(a) Payment 8
(b) Conditions to Payment 8
3.6 Terms and Conditions of Performance Unit Awards 8
(a) Payment 8
(b) Conditions to Payment 9
3.7 Terms and Conditions of Phantom Shares 9
(a) Payment 9
(b) Conditions to Payment 9
3.8 Treatment of Awards Upon Termination of Employment 9
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<PAGE>
SECTION 4 RESTRICTIONS ON STOCK 9
4.1 Escrow of Shares 9
4.2 Forfeiture of Shares 10
4.3 Restrictions on Transfer 10
SECTION 5 GENERAL PROVISIONS 10
5.1 Withholding 10
5.2 Changes in Capitalization; Merger; Liquidation 11
5.3 Compliance with Code 11
5.4 Right to Terminate Employment 12
5.5 Restrictions on Delivery and Sale of Shares;
Legends 12
5.6 Non-alienation of Benefits 12
5.7 Termination and Amendment of the Plan 12
5.8 Stockholder Approval 12
5.9 Choice of Law 12
5.10 Effective Date of Plan 13
iii
<PAGE>
HVIDE MARINE INCORPORATED
EQUITY OWNERSHIP PLAN
Hvide Marine Incorporated hereby establishes this Plan to be called the Equity
Ownership Plan to encourage certain employees of the Company to acquire Common
Stock of the Company, to make monetary payments to certain employees based upon
the value of the Common Stock, or based upon achieving certain goals on a basis
mutually advantageous to such employees and the Company and thus provide an
incentive for continuation of the efforts of the employees for the success of
the Company, for continuity of employment and to further the interests of the
shareholders.
SECTION 1 DEFINITIONS
1.1 Definitions. Whenever used herein, the masculine pronoun shall be
------------
deemed to include the feminine, the singular to include the plural, unless the
context clearly indicates otherwise, and the following capitalized words and
phrases are used herein with the meaning thereafter ascribed:
(a) "Award" means any Stock Option, Stock Appreciation Right,
Restricted Stock or Performance Award granted under the Plan.
(b) "Beneficiary" means the person or persons designated by a
Participant to exercise an Award in the event of the Participant's death while
employed by the Company, or in the absence of such designation, the executor or
administrator of the Participant's estate.
(c) "Board" means the Board of Directors of the Company.
(d) "Cause" means conduct by the Participant amounting to (1)
fraud or dishonesty against the Company, (2) willful misconduct, repeated
refusal to follow the reasonable directions of the Board of Directors of the
Company, or knowing violation of law in the course of performance of the duties
of Participant's employment with the Company, (3) repeated absences from work
without a reasonable excuse, (4) repeated intoxication with alcohol or drugs
while on the Company's premises during regular business hours, (5) a conviction
or plea of guilty or nolo contendere to a felony or a crime involving
dishonesty, or (6) a breach or violation of the terms of any employment or other
agreement to which Participant and the Company are party.
(e) "Change in Control" shall be deemed to have occurred if (i) a
tender offer shall be made and consummated of the ownership of 30% or more of
the outstanding voting securities of the Company, (ii) the Company shall be
merged or consolidated with another corporation and as a result of such merger
or consolidation less than 70% of the outstanding voting securities of the
surviving or resulting corporation shall be owned in the aggregate by the former
shareholders of the
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<PAGE>
Company, other than affiliates (within the meaning of the Securities Exchange
Act of 1934) of any party to such merger or consolidation, (iii) the Company
shall sell substantially all of its assets to another corporation which is not a
wholly owned company, or (iv) a person, within the meaning of Section 3(a)(9) or
of Section 13(d)(3) (as in effect on the date hereof) of the securities Exchange
Act of 1934, shall acquire 30% or more of the outstanding voting securities of
the Company ( whether directly, indirectly beneficially or of record). For
purposes hereof, ownership of voting securities shall take into account and
shall include ownership as determined by applying the provisions of Rule
13d-3(d)(1)(i) ( as in effect on the date hereof) pursuant to the Securities
Exchange Act of 1934.
(f) "Code" means the Internal Revenue Code of 1986, as amended.
----
(g) "Committee" means the Compensation Committee of the Board of
---------
Directors.
(h) "Company" means Hvide Marine Incorporated, a Florida
-------
corporation.
(i) "Disability" has the same meaning as provided in the
----------
retirement plan maintained by the Company. In the event of a dispute, the
determination of Disability shall be made by the Committee. In making its
determination the Committee may, but is not required to, rely on advice of a
physician competent in the area to which such Disability relates. The Committee
may make the determination in its sole discretion and any decision of the
Committee will be binding on all parties.
(j) "Disposition" means any conveyance, sale, transfer,
-----------
assignment, pledge or hypothecation, whether outright or as security, inter
vivos or testamentary, with or without consideration, voluntary or involuntary.
(k) "Dividend Equivalent Rights" means certain rights to receive
---------------------------
cash payments as described in Plan Section 3.5.
(l) "Fair Market Value" means, for any particular date,(i) for
-----------------
any period during which the Stock shall not be listed for trading on a national
securities exchange, but when prices for the Stock shall be reported by the
National Market System of the National Association of Securities Dealers
Automated Quotation System ("NASDAQ"), the last transaction price per share as
quoted by the National Market System of NASDAQ, (ii) for any period during which
the Stock shall not be listed for trading on a national securities exchange or
its price reported by the National Market System of NASDAQ, but when prices for
the Stock shall be reported by NASDAQ, the closing bid price as reported by
NASDAQ, (iii) for any period during which the Stock shall be listed for trading
on a national securities exchange, the closing price per share of Stock on such
exchange as of the close of such trading day, or (iv) the market price per share
of Stock as determined by a qualified valuation expert selected by the Board in
the event neither (i), (ii), or (iii) above shall be applicable. If the Fair
Market Value is to be determined as of a day when the securities markets are not
open, the Fair Market Value on that day shall be the Fair Market Value on the
next succeeding day when the markets are open.
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<PAGE>
(m) "Incentive Stock Option" means an incentive stock option, as
----------------------
defined in Code Section 422, described in Plan Section 3.2.
(n) "Non-Qualified Stock Option" means a stock option, other than
--------------------------
an option qualifying as an Incentive Stock Option, described in Plan Section 3.2
(o) "Option" means a Non-Qualified Stock Option or an Incentive
------
Stock Option.
(p) "Over 10% Owner" means an individual who at the time an
--------------
Incentive Stock Option is granted owns Stock possession more than 10% of the
total combined voting power of the Company or one of its Parents of
Subsidiaries, determined by applying the attribution rules of Code Section
424(d).
(q) "Parent" means any corporation (other than the Company) in
------
an unbroken chain of corporation ending with the Company if, with respect to
Incentive Stock Options, at the time of granting of the Option, each of the
corporation other than the company owns stock possessing 50% or more of the
total combined voting power of all classes of stock in one of the other
corporations in the chain.
(r) "Participant" means an individual who receives an Award
-----------
hereunder.
(s) "Performance Unit Award" refers to a performance unit award
----------------------
described in Plan Section 3.6.
(t) "Phantom Shares" refers to the rights described in Plan
--------------
Section 3.7.
(u) "Plan" means the Hvide Marine Incorporated Equity Ownership
----
Plan.
(v) "Retirement" means a Participant's termination of employment
----------
after attaining age 62.
(w) "Stock" means the Company's Class A common stock.
-----
(x) "Stock Agreement" means an agreement between the Company and
---------------
a Participant or other documentation evidencing an Award.
(y) "Stock Appreciation Right" means a stock appreciation right
------------------------
described in Plan Section 3.3.
(z) "Stock Award" means a stock award described in Plan Section
-----------
3.4.
-3-
<PAGE>
(aa) "Subsidiary" means any corporation (other than the Company)
----------
in an unbroken chain of corporations beginning with the Company if, with respect
to Incentive Stock Options, at the time of the granting of the Option, each of
the corporations other than the last corporation in the unbroken chain owns
stock possession 50% or more of the total combined voting power of all classes
of stock in one of the other corporations in the chain.
(ab) "Termination of Employment" means the termination of the
-------------------------
employee-employer relationship between a Participant and the Company and its
affiliates regardless of the fact that severance or similar payments are made to
the Participant, for any reason, including, but not by way of limitation, a
termination by resignation, discharge, death, Disability or Retirement. The
Committee shall, in its absolute discretion, determine the effect of all matters
and questions relating to Termination of Employment, including, but not by way
of limitation, the question of whether a leave of absence constitutes a
Termination of Employment, or whether a Termination of Employment is for Cause.
In the event that a Participant who has been granted a Non-Qualified Stock
Option hereunder ceases to be an employee but remains a member of the Board, no
Termination of Employment shall be deemed to have occurred until the Participant
ceases to be a member of the Board.
(ac) "Vested" means that an Award is nonforfeitable and
------
exercisable with regard to a designated number of shares of Stock.
SECTION 2 GENERAL TERMS
2.1 Purpose of the Plan. The Plan is intended to (a) provide incentive
-------------------
to officers and key employees of the Company and its affiliates to stimulate
their efforts toward the continued success of the Company and to operate and
manage the business in a manner that will provide for the long-term growth and
profitability of the Company; (b) encourage stock ownership by officers and key
employees by providing them with a means to acquire a proprietary interest in
the Company by acquiring shares of Stock or to receive compensation which is
based upon appreciation in the value of Stock; and (c) provide a means of
obtaining and rewarding key personnel.
2.2 Stock Subject to the Plan. Subject to adjustment in accordance with
-------------------------
Section 5.2, 1,000,000 shares of Stock (the "Maximum Plan Shares") are hereby
reserved and subject to issuance under the Plan. At no time shall the Company
have outstanding Awards and shares of Stock issued in respect to Awards in
excess of the Maximum Plan Shares. To the extent permitted by law, the shares of
Stock attributable to the nonvested, unpaid, unexercised, unconverted or
otherwise unsettled portion of any Award that is forfeited, canceled or expires
or terminates for any reason without becoming vested, paid, exercised, converted
or otherwise settled in full shall again be available for purposes of the Plan.
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<PAGE>
2.3 Administration of the Plan. The Plan shall be administered by the
--------------------------
Committee. The Committee shall have full authority in its discretion to
determine the officers and key employees of the Company or its affiliates to
whom Awards shall be granted and the terms and provisions of Stock Incentives,
subject to the Plan. Subject to the provisions of the Plan, the Committee shall
have full and conclusive authority to interpret the Plan; to prescribe, amend
and rescind rules and regulations relating to the Plan; to determine the terms
and provisions of the respective Stock Agreements and to make all other
determinations necessary or advisable for the proper administration of the Plan.
The committee's determination under the Plan need not be uniform and may be made
by it selectively among persons who receive, or are eligible to receive, awards
under the Plan (whether or not such persons are similarly situated). The
Committee's decisions shall be final and binding on all Participants.
2.4 Eligibility and Limits. Participants in the Plan shall be selected
----------------------
by the Committee from among those employees of the Company who, in the opinion
of the Committee, are in a position to contribute materially to the Company's
continued growth and development and to its long-term financial success. In the
case of Incentive Stock Options, the aggregate Fair Market Value (determined as
at the date an Incentive Stock Option is granted) of Stock with respect to which
Stock Options intended to meet the requirements of Code Section 422 become
exercisable for the first time by an individual during any calendar year under
all plans of the Company and its Parents and Subsidiaries shall not exceed
$100,000; provided further, that if the limitation is exceeded, the Incentive
Stock Option(s) which cause the limitation to be exceeded shall be treated as
Non-Qualified Stock Option(s). No participant shall receive Awards which in
total shall be for more than 500,000 shares of Stock.
SECTION 3 TERMS OF AWARDS
3.1 Terms and Conditions of All Awards.
----------------------------------
(a) The number of shares of Stock as to which an Award shall be
granted shall be determined by the Committee in its sole discretion, subject to
the provisions of Sections 2.2 and 2.4 as to the total number of shares
available for grants under the Plan.
(b) Each Award shall be evidenced by a Stock Agreement in such
form as the Committee may determine is appropriate, subject to the provisions of
the Plan.
(c) The date an Award is granted shall be the date on which the
Committee has approved the terms and conditions of the Stock Agreement and has
determined the recipient of the Award and the number of shares covered by the
Award and has taken all such other action necessary to complete the grant of the
Award.
-5-
<PAGE>
(d) The Committee may provide in any Stock Agreement a vesting schedule.
The vesting schedule shall specify when such Awards shall become Vested and thus
exercisable. Notwithstanding any vesting schedule which may be specified in a
Stock Agreement, in the event the Participant terminates within 2 years
following a Change of Control the Awards granted under the Plan shall become
100% Vested and exercisable except to the extent that the exercisability of any
such Award would result in an "excess parachute payment" within the meaning of
Section 280G of the Code.
(e) Awards shall not be transferable or assignable except by will or by
the laws of descent and distribution and shall be exercisable, during the
Participant's lifetime, only by the Participant, or in the event of the
Disability of the Participant, by the legal representative of the Participant.
3.2 Terms and Conditions of Options. At the time any Option is granted,
-------------------------------
the Committee shall determine whether the Option is to be an Incentive Stock
Option or a Non-Qualified Stock Option, and the Option shall be clearly
identified as to its status as an Incentive Stock Option or a Non-Qualified
Stock Option. At the time any Incentive Stock Option is exercised, the Company
shall be entitled to place a legend on the certificates representing the shares
of Stock purchased pursuant to the Option to clearly identify them as shares of
Stock purchased upon exercise of an Incentive Stock Option. An Incentive Stock
Option may only be granted within ten (10) years from the earlier of the date
the Plan, as amended and restated, is adopted or approved by the Company's
stockholders.
(a) Option Price. Subject to adjustment in accordance with Section
------------
5.2 and the other provisions of this Section 3.2, the exercise price (the
"Exercise Price") per share of the Stock purchasable under any Option shall be
as set forth in the applicable Stock Agreement. With respect to each grant of an
Incentive Stock Option to a Participant who is not an Over 10% Owner, the
Exercise Price per share shall not be less than the Fair Market Value on the
date the Option is granted. With respect to each grant for an Incentive Stock
Option to a Participant who is an Over 10% Owner, the Exercise Price shall not
be less than 110% of the Fair Market Value on the date the Option is granted.
(b) Option Term. Any Incentive Stock Option granted to a
-----------
Participant who is not an Over 10% Owner shall not be exercisable after the
expiration of ten (10) years after the date the Option is granted. Any Incentive
Stock Option granted to an Over 10% Owner shall not be exercisable after the
expiration of five (5) years after the date the Option is granted. In either
case, the Committee may specify a shorter term and state such term in the Stock
Agreement.
(c) Payment. Payment for all shares of Stock purchased pursuant to
-------
exercise of an Option shall be made in any form or manner authorized by the
Committee in the Stock Agreement or by amendment thereto, including, but not
limited to, cash or, if the Stock Agreement provides, (i) by delivery to the
Company of a number of shares of Stock which have been owned by the holder
-6-
<PAGE>
for at least six (6) months prior to the date of exercise having an aggregate
Fair Market Value on the date of exercise equal to the Exercise Price or (ii) by
tendering a combination of cash and Stock. Payment shall be made at the time
that the Option or any part thereof is exercised, and no shares shall be issued
or delivered upon exercise of an option until full payment has been made by the
Participant. The holder of an Option, as such, shall have none of the rights of
a stockholder.
(d) Conditions to the Exercise of an Option. Each Option granted
---------------------------------------
under the Plan shall be exercisable by whom, at such time or times, or upon the
occurrence of such event or events, and in such amounts, as the Committee shall
specify in the Stock Agreement; provided, however, that subsequent to the grant
of an Option, the Committee, at any time before complete termination of such
Option, may accelerate the time or times at which such Option may be exercised
in whole or in part, including, without limitation, upon a Change in Control and
may permit the Participant or any other designated person to exercise the
Option, or any portion thereof, for all or part of the remaining Option term
notwithstanding any provision of the Stock Agreement to the contrary.
(e) Termination of Incentive Stock Option. With respect to an
-------------------------------------
Incentive Stock Option, in the event of Termination of Employment of a
Participant, the Option or portion thereof held by the Participant which is
unexercised shall expire, terminate, and become unexercisable no later than the
expiration of three (3) months after the date of Termination of Employment;
provided, however, that in the case of a holder whose Termination of Employment
is due to death or Disability, one (1) year shall be substituted for such three
(3) month period. For purposes of this Subsection (e), Termination of Employment
of the Participant shall not be deemed to have occurred if the Participant is
employed by another corporation (or a parent or subsidiary corporation of such
other corporation) which has assumed the Incentive Stock Option of the
Participant in a transaction to which Code Section 424(a) is applicable.
(f) Special Provisions for Certain Substitute Options.
-------------------------------------------------
Notwithstanding anything to the contrary in this Section 3.2, any Option issued
in substitution for an option previously issued by another entity, which
substitution occurs in connection with a transaction to which Code Section
424(a) is applicable, may provide for an exercise price computed in accordance
with such Code Section and the regulations thereunder and may contain such other
terms and conditions as the Committee may prescribe to cause such substitute
Option to contain as nearly as possible the same terms and conditions (including
the applicable vesting and termination provisions) as those contained in the
previously issued option being replaced thereby.
3.3 Terms and Conditions of Stock Appreciation Rights. A Stock
-------------------------------------------------
Appreciation Right may be granted in connection with all or any portion of a
previously or contemporaneously granted Award or not in connection with an
Award. A Stock Appreciation Right shall entitle the Participant to receive the
excess of (1) the Fair Market Value of a specified or determinable number of
shares of the Stock at the time of payment or exercise over (2) a specified
price which, in the case of a Stock Appreciation Right granted in connection
with an Option, shall be not less than the Exercise Price for that number of
shares. A Stock Appreciation Right granted in connection with an Award
-7-
<PAGE>
may only be exercised to the extent that the related Award has not been
exercised, paid or otherwise settled. The exercise of a Stock Appreciation Right
granted in connection with an Award shall result in a pro rata surrender or
cancellation of any related Award to the extent the Stock Appreciation Right has
been exercised.
(a) Payment. Upon payment or exercise of a Stock Appreciation
-------
Right, the Company shall pay to the Participant the appreciation in cash or
shares of Stock (valued at the aggregate Fair Market Value on the date of
payment or exercise) as provided in the Stock Agreement or, in the absence of
such provision, as the Committee may determine.
(b) Conditions to Exercise. Each Stock Appreciation Right granted
----------------------
under the Plan shall be exercisable or payable at such time or times, or upon
the occurrence of such event or events, and in such amounts, as the Committee
shall specify in the Stock Agreement; provided, however, that subsequent to the
grant of a Stock Appreciation Right, the Committee, at any time before complete
termination of such Stock Appreciation Right, may accelerate the time or times
at which such Stock Appreciation Right may be exercised or paid in whole or in
part.
3.4 Terms and Conditions of Stock Awards. The numbers of Stock subject
------------------------------------
to a Stock Award and restrictions or conditions on such shares, if any, shall be
as the Committee determines, and the certificate for such shares shall bear
evidence of any restrictions or conditions. Subsequent to the date of the grant
of the Stock Award, the Committee shall have the power to permit, in its
discretion, an acceleration of the expiration of an applicable restriction
period with respect to any part or all of the shares awarded to a Participant.
The Committee may require a cash payment from the Participant in an amount no
greater than the aggregate Fair Market Value of the shares of Stock awarded
determined at the date of grant in exchange for the grant of a Stock Award or
may grant a Stock Award without the requirement of a cash payment.
3.5 Terms and Conditions of Dividend Equivalent Rights. A Dividend
--------------------------------------------------
Equivalent Right shall entitle the Participant to receive payments from the
Company in an amount determined by reference to any cash dividends paid on a
specified number of shares of Stock to Company stockholders of record during the
period such rights are effective. The Committee may impose such restrictions and
conditions on any Dividend Equivalent Right as the Committee in its discretion
shall determine, including the date any such right shall terminate and may
reserve the right to terminate, amend or suspend any such right at any time.
(a) Payment. Payment in respect of a Dividend Equivalent Right may
-------
be made by the Company in cash or shares of Stock (valued at Fair Market Value
on the date of payment) as provided in the Stock Agreement or, in the absence of
such provision, as the Committee may determine.
(b) Conditions to Payment. Each Dividend Equivalent Right granted
---------------------
under the Plan shall be payable at such time or times, or upon the occurrence of
such event or events, and in such
-8-
<PAGE>
amounts, as the Committee shall specify in the Dividend Equivalent Right;
provided, however, that subsequent to the grant of a Dividend Equivalent Right,
the Committee, at any time before complete termination of such Dividend
Equivalent Right, may accelerate the time or times at which such Dividend
Equivalent Right may be paid in whole or in part.
3.6 Terms and Conditions of Performance Unit Awards. A Performance Unit
-----------------------------------------------
Award shall entitle the Participant to receive, at a specified future date,
payment of an amount equal to all or a portion of the value of a specified
number of units (stated in terms of a designated dollar amount per unit) granted
by the Committee. At the time of the grant, the Committee must determine the
base value of each unit, the number of units subject to a Performance Unit
Award, the performance factors applicable to the determination of the ultimate
payment value of the Performance Unit Award and the period over which Company
performance shall be measured. The Committee may provide for an alternate base
value for each unit under certain specified conditions.
(a) Payment. Payment in respect of Performance Unit Awards may be
-------
made by the Company in cash or shares of Stock (valued at Fair Market Value on
the date of payment) as provided in the Stock Agreement or, in the absence of
such provision, as the Committee may determine.
(b) Conditions to Payment. Each Performance Unit Award granted
---------------------
under the Plan shall be payable at such time or times, or upon the occurrence of
such event or events, and in such amounts, as the Committee shall specify in the
Performance Unit Award; provided, however, that subsequent to the grant of a
Performance Unit Award, the Committee, at any time before complete termination
of such Performance Unit Award, may accelerate the time or times at which such
Performance Unit Award may be paid in whole or in part.
3.7 Terms and Conditions of Phantom Shares. Phantom shares shall entitle
--------------------------------------
the Participant to receive, at a specified future date, payment of an amount
equal to all or a portion of the Fair Market Value of a specified number of
shares of Stock at the end of a specified period. At the time of the grant, the
Committee shall determine the factors which will govern the portion of the
rights so payable, including, at the discretion of the Committee, any
performance criteria that must be satisfied as a condition to payment.
(a) Payment. Payment in respect of Phantom Shares may be made by
-------
the Company in cash or shares of Stock (valued at Fair Market Value on the date
of payment) as provided in the Stock Agreement or, in the absence of such
provision, as the Committee may determine.
(b) Conditions to Payment. Each Phantom Share granted under the
---------------------
Plan shall be payable at such time or times, or upon the occurrence of such
event or events, and in such amounts, as the Committee shall specify in the
Phantom Share; provided, however, that subsequent to the grant of a Phantom
Share, the Committee, at any time before complete termination of such Phantom
-9-
<PAGE>
Share, may accelerate the time or times at which such Phantom Share may be paid
in whole or in part.
3.8 Treatment of Awards Upon Termination of Employment. Except as
--------------------------------------------------
otherwise provided by Plan Section 3.2(e), any award under this Plan to a
Participant who suffers a Termination of Employment may be canceled,
accelerated, paid or continued, as provided in the Stock Agreement or, in the
absence of such provision, as the Committee may determine. The portion of any
award exercisable in the event of continuation or the amount of any payment due
under a continued award may be adjusted by the Committee to reflect the
Participant's period of service from the date of grant through the date of the
Participant's Termination of Employment or such other factors as the Committee
determines are relevant to its decision to continue the award.
SECTION 4 RESTRICTIONS ON STOCK
4.1 Escrow of Shares. Any certificates representing the shares of Stock
----------------
issued under the Plan shall be issued in the Participant's name, but, if the
Stock Agreement so provides, the shares of Stock shall be held by a custodian
designated by the Committee (the "Custodian"). Each Stock Agreement providing
for transfer of shares of Stock to the Custodian shall appoint the Custodian as
the attorney-in-fact for the Participant for the term specified in the Stock
Agreement, with full power and authority in the Participant's name, place and
stead to transfer, assign and convey to the Company any shares of Stock held by
the Custodian for such Participant, if the Participant forfeits the shares under
the terms of the Stock Agreement. During the period that the Custodian holds the
shares subject to this Section, the Participant shall be entitled to all rights,
except as provided in the Stock Agreement, applicable to shares of Stock not so
held. Any dividends declared on shares of Stock held by the Custodian shall, as
the Committee may provide in the Stock Agreement, be paid directly to the
Participant or, in the alternative, be retained by the Custodian until the
expiration of the term specified in the Stock Agreement and shall then be
delivered, together with any proceeds, with the shares of Stock to the
Participant or the Company, as applicable.
4.2 Forfeiture of Shares. Notwithstanding any vesting schedule set forth
--------------------
in any Stock Agreement, in the event that the Participant violates a non
competition agreement as set forth in the Stock Agreement, all Awards and shares
of Stock issued to the holder pursuant to the Plan shall be forfeited; provided,
however, that the Company shall return to the holder the lesser of any
consideration paid by the Participant in exchange for Stock issued to the
Participant pursuant to the Plan or the then Fair Market Value of the Stock
forfeited hereunder.
4.3 Restrictions on Transfer. The Participant shall not have the right
------------------------
to make or permit to exist any Disposition of the shares of Stock issued
pursuant to the Plan except as provided in the Plan or the Stock Agreement. Any
Disposition of the shares of Stock issued under the Plan by the Participant not
made in accordance with the Plan or the Stock Agreement shall be void. The
Company shall not recognize, or have the duty to recognize, any Disposition not
made in accordance
-10-
<PAGE>
with the Plan and the Stock Agreement, and the shares so transferred shall
continue to be bound by the Plan and the Stock Agreement.
SECTION 5 GENERAL PROVISIONS
5.1 Withholding. The Company shall deduct from all cash distributions
-----------
under the Plan any taxes required to be withheld by federal, state or local
government. Whenever the Company proposes or is required to issue or transfer
shares of Stock under the Plan or upon the vesting of any Stock Award, the
Company shall have the right to require the recipient to remit to the Company an
amount sufficient to satisfy any federal, state and local withholding tax
requirements prior to the delivery of any certificate or certificates for such
shares or the vesting of such Stock Award. A Participant may pay the withholding
tax in cash, or, if the Stock Agreement provides, a Participant may also elect
to have the number of shares of Stock he is to receive reduced by, or with
respect to a Stock Award, tender back to the Company, the smallest number of
whole shares of Stock which, when multiplied by the Fair Market Value of the
shares determined as of the Tax Date (defined below), is sufficient to satisfy
federal, state and local, if any, withholding taxes arising from exercise or
payment of an Award (a "Withholding Election"). A Participant may make a
Withholding Election only if both of the following conditions are met:
(a) The Withholding Election must be made on or prior to the date
on which the amount of tax required to be withheld is determined (the "Tax
Date") by executing and delivering to the Company a properly completed notice of
Withholding Election as prescribed by the Committee; and
(b) Any Withholding Election made will be irrevocable; however, the
Committee may in its sole discretion approve and give no effect to the
Withholding Election.
5.2 Changes in Capitalization; Merger; Liquidation.
----------------------------------------------
(a) The number of shares of Stock reserved for the grant of
Options, Dividend Equivalent Rights, Performance Unit Awards, Phantom Shares,
Stock Appreciation Rights and Stock Awards; the number of shares of Stock
reserved for issuance upon the exercise or payment, as applicable, of each
outstanding Option, Dividend Equivalent Right, Performance Unit Award, Phantom
Share and Stock Appreciation Right and upon vesting or grant, as applicable, of
each Stock Award; the Exercise Price of each outstanding Option and the
specified number of shares of Stock to which each outstanding Dividend
Equivalent Right, Phantom Share and Stock Appreciation Right pertains shall be
proportionately adjusted for any increase or decrease in the number of issued
shares of Stock resulting from a subdivision or combination of shares or the
payment of a stock dividend in shares of Stock to holders of outstanding shares
of Stock or any other increase or decrease in the number of shares of Stock
outstanding effected without receipt of consideration by the Company.
-11-
<PAGE>
(b) In the event of a merger, consolidation or other reorganization
of the Company or tender offer for shares of Stock, the Committee may make such
adjustments with respect to awards and take such other action as it deems
necessary or appropriate to reflect or in anticipation of such merger,
consolidation, reorganization or tender offer, including, without limitation,
the substitution of new awards, the termination or adjustment of outstanding
awards, the acceleration of awards or the removal of restrictions on outstanding
awards. Any adjustment pursuant to this Section 5.2 may provide, in the
Committee's discretion, for the elimination without payment therefor of any
fractional shares that might otherwise become subject to any Award.
(c) The existence of the Plan and the Awards granted pursuant to
the Plan shall not affect in any way the right or power of the Company to make
or authorize any adjustment, reclassification, reorganization or other change in
its capital or business structure, any merger or consolidation of the Company,
any issue of debt or equity securities having preferences or priorities as to
the Stock or the rights thereof, the dissolution or liquidation of the Company,
any sale or transfer of all or any part of its business or assets, or any other
corporate act or proceeding.
5.3 Compliance with Code. All Incentive Stock Options to be granted
--------------------
hereunder are intended to comply with Code Section 422, and all provisions of
the Plan and all Incentive Stock Options granted hereunder shall be construed in
such manner as to effectuate that intent.
5.4 Right to Terminate Employment. Nothing in the Plan or in any Award
-----------------------------
shall confer upon any Participant the right to continue as an employee or
officer of the Company or any of its affiliates or affect the right of the
Company or any of its affiliates to terminate the Participant's employment at
any time.
5.5 Restrictions on Delivery and Sale of Shares; Legends. Each Award is
----------------------------------------------------
subject to the condition that if at any time the Committee, in its discretion,
shall determine that the listing, registration or qualification of the shares
covered by such Award upon any securities exchange or under any state or federal
law is necessary or desirable as a condition of or in connection with the
granting of such Award or the purchase or delivery of shares thereunder, the
delivery of any or all shares pursuant to such Award may be withheld unless and
until such listing, registration or qualification shall have been effected. If a
registration statement is not in effect under the Securities Act of 1933 or any
applicable state securities laws with respect to the shares of Stock purchasable
or otherwise deliverable under Awards then outstanding, the Committee may
require, as a condition of exercise of any Option or as a condition to any other
delivery of Stock pursuant to an Award, that the Participant or other recipient
of an Award represent, in writing, that the shares received pursuant to the
Award are being acquired for investment and not with a view to distribution and
agree that shares will not be disposed of except pursuant to an effective
registration statement, unless the Company shall have received an opinion of
counsel that such disposition is exempt from such requirement under the
Securities Act of 1933 and any applicable state securities laws. The Company may
include on certificates representing shares delivered pursuant to an Award such
legends
-12-
<PAGE>
referring to the foregoing representations or restrictions or any other
applicable restrictions on resale as the Company, in its discretion, shall deem
appropriate.
5.6 Non-alienation of Benefits. Other than as specifically provided with
--------------------------
regard to the death of a Participant, no benefit under the Plan shall be subject
in any manner to anticipation, alienation, sale, transfer, assignment, pledge,
encumbrance or charge; and any attempt to do so shall be void. No such benefit
shall, prior to receipt by the Participant, be in any manner liable for or
subject to the debts, contracts, liabilities, engagements or torts of the
Participant.
5.7 Termination and Amendment of the Plan. The Board of Directors at any
-------------------------------------
time may amend or terminate the Plan without stockholder approval; provided,
however, that the Board of Directors may condition any amendment on the approval
of stockholders of the Company if such approval is necessary or advisable with
respect to tax, securities or other applicable laws. No such termination or
amendment without the consent of the holder of an Award shall adversely affect
the rights of the Participant under such Award.
5.8 Stockholder Approval. The Plan shall be submitted to the
--------------------
stockholders of the Company for their approval within twelve (12) months before
or after the adoption of the Plan by the Board of Directors of the Company. If
such approval is not obtained, any Award granted hereunder shall be void.
5.9 Choice of Law. The laws of the State of Florida shall govern the
-------------
Plan, to the extent not preempted by federal law.
5.10 Effective Date of Plan. The Plan, as amended and restated, shall
-----------------------
become effective upon the date the Plan is approved by the stockholders of the
Company.
HVIDE MARINE INCORPORATED
By:
Title:
Attest:
Secretary
-13-
<PAGE>
[CORPORATE SEAL]
-14-
EXHIBIT 10.22C
AMENDED AND RESTATED CREDIT AGREEMENT
THIS AMENDED AND RESTATED CREDIT AGREEMENT, dated as of June 21, 1996
of a Credit Agreement dated as of September 28, 1994 as subsequently amended by
Amendment No. 1 dated as of May 15, 1995 and Amendment No. 2 dated as of March
26, 1996 is made and entered into by and among HVIDE MARINE INCORPORATED, a
corporation organized and existing under the laws of the State of Florida
("Hvide" or a "Borrower"), as the successor by merger to each of the Persons
listed in Schedule A (each a "Borrower" and together with each other Borrower,
the "Borrowers") and CITIBANK, N.A., a national banking association organized
and existing under the laws of the United States of America ("United States" or
"U.S."), THE FIRST NATIONAL BANK OF BOSTON, a national banking association
organized and existing under the laws of the United States and each of the other
banks or other institutions whose names may appear on the signature pages of
this Agreement or, if applicable, in the Register (each a "Bank" and,
collectively, the "Banks") for whom Citibank, N.A., subject to Article VII of
this Agreement, acts as Administrative Agent and Co-Agent and The First National
Bank of Boston, subject of Article VII of this Agreement acts as Letter of
Credit Agent and Co-Agent. Capitalized terms not otherwise herein defined shall
have the respective meanings set forth below in Section 1.01.
PRELIMINARY STATEMENTS
----------------------
(1) The Borrowers have requested that the Banks enter into this
Agreement to provide the following Facilities:
Facility Principal Amount Purpose
-------- ---------------- -------
A Ten Million Dollars to finance seasonal
($10,000,000) working capital
needs of Borrowers
B up to Sixty One to finance
Million Five Hundred acquisition of
Thousand Dollars offshore supply
($61,500,000) vessels and to
refinance Crewboats
Note and to pay for
a portion of the
acquisition of the
OMI Vessels
C up to Five Million to replace an
Six Hundred Thousand existing standby
Dollars ($5,600,000) Letter of Credit
D up to Four Million to provide other
Dollars ($4,000,000) letters of credit
(sublimit of
Facility A)
<PAGE>
Facility Principal Amount Purpose
-------- ---------------- -------
F up to Twenty Five to provide for
Million Dollars acquisitions of
($25,000,000) vessels:
Availability of
Advances for an
Acquisition is
restricted to
amounts up to (x)
seventy percent
(70%) of the
purchase price or
appraised value
(whichever is less)
of the vessel; and
(y) a multiple of
six times EBITDA of
the Acquisition.
(2) The Borrowers have agreed to grant a first priority security
interest in the Mortgaged Vessels and the Receivables for all Obligations of the
Borrowers.
(3) Each of the Banks has agreed severally, and not jointly, for such
Bank's Aggregate Amount and in the Percentage Interest in each Facility and to
provide the Loan upon the terms and conditions set forth herein.
(4) The Banks have requested each of the Administrative Agent and the
Letter of Credit Agent, and each of the Administrative Agent and the Letter of
Credit Agent has agreed, to act on behalf of the Banks in accordance with the
terms and conditions set forth herein.
(5) The Borrowers, the Administrative Agent, the Letter of Credit
Agent and each of the Banks party hereto desire to amend and restate this Credit
Agreement in its entirety, following the Effective Date, to reflect the changes
occasioned by the IPO.
NOW, THEREFORE, the Borrowers, the Banks, the Administrative Agent and
the Letter of Credit Agent hereby agree among themselves as follows:
ARTICLE I.
DEFINITIONS
SECTION 1.011. Definitions. As used in this Agreement, each of the
-----------
following terms shall have the respective meaning set forth below (such
meanings, unless otherwise indicated, to apply to both the singular and plural
forms of the terms defined) and all references to "Article", "Schedule",
"Section" and "Exhibit" shall mean an Article of, a Schedule to, a Section of,
or Exhibit to, this Agreement unless otherwise specified:
-2-
<PAGE>
"Acquisition" means each of the Vessels or all of the equity interest
-----------
in a corporation or limited partnership or other entity acquired by Hvide which
may be funded with Advances under Facilities B or F subject to the terms of
Section 2.01(a).
"Administrative Agent" means Citibank, N.A., and any successor
--------------------
administrative agent under this Agreement.
"Advance" means all amounts disbursed by the Banks and the
-------
Administrative Agent to the Borrowers under this Agreement or owed to the Letter
of Credit Agent under Section 2.07(g).
"Affiliate" means, with respect to any Person, any other person
---------
controlling, controlled by or under common control with, such Person. For
purposes of this definition, "control" (including, with correlative meanings,
the terms "controlling", "controlled by" and "under common control with"), as
applied to any Person, means the possession, directly or indirectly, of the
power to vote ten percent (10%) or more of the securities having voting power
for the election of directors of such Person, or otherwise to direct or cause
the direction of the management and policies of that Person, whether through
the ownership of voting securities or by contract or otherwise.
"Aggregate Amount" means, as to a Bank the Dollar amount opposite such
----------------
Bank's name and signature on the signature pages to this Agreement or, if
applicable, in the Register, opposite each Facility, as such amount may be
adjusted from time to time pursuant to this Agreement.
"Agreement" means this Agreement, and as it may be restated, amended,
---------
supplemented or otherwise modified from time to time.
"Agreement Date" means June 21, 1996 on which the respective parties
--------------
hereto shall have executed and delivered the Agreement.
"Alternate Base Rate" means, for any Interest Period or any other
-------------------
period, a fluctuating interest rate per annum as shall be in effect from time to
time, which rate per annum shall at all times be equal to the highest of:
(a) the rate of interest announced publicly by Citibank, N.A., in New
York, New York, from time to time, as its base rate;
(b) a rate equal to 1/2 of one percent per annum above the latest
three-week moving average of secondary market morning offering rates in the
United States for three-month certificates of deposit of major United
States money market banks, such three-week moving average determined weekly
on each Monday (or if such day is not a Business Day, on the next
succeeding Business Day) for the three-week period
-3-
<PAGE>
ending on the previous Friday by Citibank, N.A., on the basis of such rates
reported by certificate of deposit dealers to and published by the Federal
Reserve Bank of New York or, if such publication shall be suspended or
terminated, on the basis of quotations for such rates received by Citibank,
N.A., from three New York certificate of deposit dealers of recognized
standing selected by Citibank, N.A., in each case adjusted to the nearest
1/4 of one percent, or, if there is not nearest 1/4 of one percent, to the
next higher 1/4 of one percent; or
(c) a rate equal to 1/2 of one percent per annum above the then
current Federal Funds Rate.
"Amended S-1" means the Form S-1, Registration No. 33-78166 filed with
-----------
the SEC on May 13, 1996 as amended by Amendments No. 1, No. 2 and No. 3 and such
other future amendments as may be required by the SEC.
"Amendment No. 2" dated as of March 26, 1996 to the Credit Agreement
---------------
dated as of September 28, 1994 as subsequently amended by Amendment No. 1 dated
as of May 15, 1995.
"Annual Excess Cash Flow" means for any calendar year, (a) EBITDA plus
-----------------------
(b) amortized drydocking expenditures minus (c) the sum of (i) Interest Expense,
(ii) an annual allowance for capital expenditures of $10,000,000 plus actual
drydocking expenditures for such year, (iii) payments of principal in respect of
Facilities B and F and any other scheduled principal payments for such year plus
cash used to collateralize the Letters of Credit, (iv) the capital portion of
all lease payments made during such year and (v) cash taxes paid during such
year.
"Applicable Law" means anything in Section 8.09(d) to the contrary
--------------
notwithstanding, (a) all applicable common law and principles of equity and (b)
all applicable provisions of all (i) constitutions, statutes, rules, regulations
and orders of governmental bodies, including without limitation all provisions
relating to the environment, hazardous substances, health or safety, (ii)
governmental approvals and (iii) orders, decisions, judgments and decrees of all
courts (whether at law, in equity or admiralty) and arbitrators.
"Applicable Margin" means as to the LIBOR Rate or the Alternate Base
-----------------
Rate, as the case may be, the Applicable Margin determined by the Administrative
Agent pursuant to Section 2.04(b)(iii)(A) and as to the Letter of Credit as
determined by the Letter of Credit Agent pursuant to Section 2.04(b)(iii)(A).
"Applicable Rate" means the Alternate Base Rate or the LIBOR Rate.
---------------
-4-
<PAGE>
"Application" means an application for a letter of credit executed by
-----------
the Borrowers and delivered to the Letter of Credit Agent.
"Assignment and Acceptance" means any Assignment and Acceptance
-------------------------
Agreement, substantially in the form of Exhibit I and executed and delivered
pursuant to Section 7.10.
"Availability Fee" shall have the meaning set forth in Section
----------------
2.10(d).
"Available Collateral" means, at any time (i) all Mortgaged Vessels;
--------------------
(ii) Eligible Receivables; and (iii) all products and proceeds thereof.
"Available Commitment" shall have the meaning set forth in Exhibit M
--------------------
hereto.
"Bank Taxes" means (i) net income, capital, doing business and
----------
franchise taxes imposed on the Administrative Agent, the Letter of Credit Agent
or a Bank by the jurisdiction (a) under the laws of which the Administrative
Agent, the Letter of Credit Agent or such Bank is organized or any political
subdivision or taxing authority thereof or therein, (b) in which such Bank's
lending office is located or any political subdivision or taxing authority
thereof or therein or (c) in which such Bank is doing business or any political
subdivision or taxing authority thereof or therein and (ii) any tax, charge,
fee, levy, impost, duty, deduction or withholding that would not have been
imposed but for the existence of any present or former connection between the
Administrative Agent, the Letter of Credit Agent or Bank, as relevant (or
between shareholders of such Administrative Agent, the Letter of Credit Agent or
Bank), and the United States or any political subdivision thereof imposing such
tax, charge, fee, levy, impost, duty, deduction or withholding including,
without limitation, the Administrative Agent, the Letter of Credit Agent or Bank
(or shareholders thereof) being or having been a resident thereof, being or
having been present therein, being or having been engaged in a trade or business
therein, or having had a permanent establishment or fixed place of business
therein (but excluding a connection arising from the Administrative Agent's,
Letter of Credit Agent's or a Bank's execution or enforcement of or performance
of its obligations under or receipt of payment under the Loan Documents).
"Breakage Costs" has the meaning defined in Section 8.04(b).
--------------
"Business Day" means any day other than a Saturday, Sunday or any
------------
other day on which commercial banks are required or authorized by law to close
in New York, New York, Boston, Massachusetts, London, England or in the city
where the Lending Office is located.
-5-
<PAGE>
"Capital Expenditures" means the aggregate of all expenditures
--------------------
(including that portion of leases which is capitalized on the consolidated
balance sheet of the Borrowers and their Subsidiaries and capitalized interest
thereon) by the Borrowers and their Subsidiaries that, in conformity with GAAP,
should be, has been or should have been included in the property, plant or
equipment reflected in a consolidated balance sheet of the Borrowers and their
Subsidiaries.
"Capital Lease" means, with respect to any Person, any lease of any
-------------
property (whether real, personal or mixed) by such Person as lessee that, in
accordance with GAAP, either would be required to be classified and accounted
for as a capital lease on a balance sheet of such Person or otherwise be
disclosed as such in a note to such balance sheet, other than, in the case of
the Borrowers or a Subsidiary of the Borrowers, any such lease under which any
of the Borrowers or such Subsidiary is the lessor.
"Cash Collateral Account" has the meaning defined in Section 5.03.
-----------------------
"Change of Control" means any change in the share ownership of Class B
-----------------
Common Stock of Hvide except as may be disclosed by the filings made with the
SEC or which is not in accordance with Hvide's Articles of Incorporation.
"Closing Date" means September 29, 1994 on which the original Credit
------------
Agreement was executed and delivered.
"Co-Agent" means each of Citibank, N.A. and The First National Bank of
--------
Boston, as Co-Agent under this Agreement.
"Code" means the Internal Revenue Code of 1986, as amended from time
----
to time, and the regulations promulgated and rulings issued thereunder.
"Collateral" means, collectively, the collateral listed in Schedule D
----------
and all proceeds of the same and any property which becomes subject to the
Security Agreement after the date of this Agreement.
"Commitment" means the obligation of each Bank to lend the amounts set
----------
forth in Section 2.01 hereof, as such amounts may be reduced from time to time
pursuant to this Agreement.
"Commitment Termination Date" means January 14, 2001 with respect to
---------------------------
Facility A; the Effective Date with respect to Facility B; and January 14, 2001
with respect to Facility F.
"Consolidated Assets" means, at any time, the consolidated assets of
-------------------
the Borrowers and their consolidated subsidiaries as of such time.
-6-
<PAGE>
"Consolidated Cash Flow" means for any period EBITDA less cash taxes
----------------------
paid plus Rental Expense.
"Consolidated Financial Obligations" means for any period, all
----------------------------------
scheduled principal payments in respect of Indebtedness plus Interest Expense
and Rental Expense which is to be paid by the Borrowers and their Consolidated
Subsidiaries.
"Consolidated Indebtedness" means Indebtedness of Hvide and its
-------------------------
Subsidiaries on a consolidated basis.
"Country of Registry" means each country under which a Vessel is
-------------------
documented in the name of a Borrower as the owner and where the Mortgage in
respect of said Vessel is recorded.
"Credit Agreement" shall mean this Agreement, as from time to time
----------------
restated, amended, supplemented or modified.
"Crewboats Note" means the promissory note dated March 8, 1995 in the
--------------
original aggregate principal amount of Three Million United States Dollars (U.S.
$3,000,000) granted by Hvide in favor of Crewboats, Inc. and secured by First
Preferred mortgages over the U.S. flag vessels GULF RUNNER II, STORM RUNNER,
RAPID RUNNER and BIG BLUE.
"Default" means any event or condition that, with the giving of
-------
notice, the lapse of time or both, would become an Event of Default.
"Dollars" and "$" means the lawful and freely transferable currency of
------- -
the United States of America.
"Drawdown Date" has the meaning set forth in Section 2.02(a).
-------------
"Earnings Assignment" means any assignment of earnings of a Mortgaged
-------------------
Vessel by a Borrower to the Administrative Agent on behalf of the Banks,
substantially in the form of Exhibit G, and as the same may be amended,
supplemented or otherwise modified from time to time.
"EBITDA" means for any period and Person, the net income without
------
giving effect to adjustments, accruals, deductions or entries resulting from any
gains or losses from sales or other dispositions of assets of such Person for
such period plus, to the extent deducted in the calculation of net income,
Interest Expense, income taxes paid, depreciation, amortization and other non-
cash adjustments to income for such period excluding amortized drydocking
expenses.
"EBITDAR" means EBITDA plus Rental Expenses.
-------
-7-
<PAGE>
"Effective Date" means the Business Day on which Hvide has received
--------------
gross proceeds of at least Eighty One Million Dollars ($81,000,000) from its
IPO.
"Eligible Assignee" means (i) a commercial bank, savings and loan
-----------------
institution, insurance company or financial institution organized under the laws
of the United States, or any State thereof, which bank has both assets in excess
of One Billion Dollars ($1,000,000,000) and combined capital and surplus in
excess of One Hundred Million Dollars ($100,000,000), or which insurance company
or financial institution has total assets in excess of One Billion Dollars
($1,000,000,000), and (ii) a finance company, insurance company or other
financial institution or a fund which is engaged in making, purchasing or
otherwise investing in commercial loans in the ordinary course of its business,
has total assets in excess of Five Hundred Million Dollars ($500,000,000), is
doing business in the United States and is organized under the laws of the
United States, or any State thereof, or under the laws of any member country of
the OECD.
"Eligible Receivable" has the meaning stated in the Security
-------------------
Agreement.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
-----
amended from time to time, and the regulations promulgated and rulings issued
thereunder.
"Event of Default" means any of the events specified as such in
----------------
Section 6.01.
"Facility" means each of Facility A, B, C, D and F.
--------
"Facility A" means the credit facility available to the Borrowers
----------
pursuant to Section 2.01(a)(i).
"Facility B" means the credit facility available to the Borrowers
----------
pursuant to Section 2.01(a)(ii).
"Facility C" means the credit facility available to the Borrowers
----------
pursuant to Sections 2.07(a)(i) and 2.07(b)(i).
"Facility D" means the credit facility available to the Borrowers
----------
pursuant to Section 2.07(b)(ii).
"Facility F" means (i) if Hvide receives gross proceeds in connection
----------
with the IPO of at least Ninety One Million Dollars ($91,000,000), the credit
facility made available to the Borrowers in a maximum principal amount of Twenty
Five Million Dollars ($25,000,000); or (ii) if Hvide receives gross proceeds in
connection with the IPO of at least Eighty One Million Dollars ($81,000,000) but
less than Ninety One Million Dollars ($91,000,000), the credit facility made
available to the Borrowers in a maximum principal amount calculated by
subtracting
-8-
<PAGE>
(x) the difference between Ninety One Million Dollars ($91,000,000) and the
amount of gross proceeds received from the IPO from (y) Twenty Five Million
Dollars ($25,000,000); pursuant to Section 2.01(a)(iii).
"Fair Market Value" has the meaning specified in Section 1.03.
-----------------
"Federal Funds Rate" means, for any period, a fluctuating interest
------------------
rate per annum equal for each day during such period to the weighted average of
the rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers, as published for such day (or,
if such day is not a Business Day, for the next preceding Business Day) by the
Federal Reserve Bank of New York, or, if such rate is not so published for any
day which is a Business Day, the average of the quotations of such day on such
transactions received by the Administrative Agent from three Federal funds
brokers of recognized standing selected by it.
"GAAP" means generally accepted accounting principles set forth in the
----
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and in the statements and
pronouncements of the Financial Accounting Standards Board, or in such other
statements by such other entity as may be approved by a significant segment of
the accounting profession for use in the United States; provided, however, that
if, as a result of any change in GAAP after the Closing Date, such change in the
opinion of the Banks adversely affects the basis or efficacy of the covenants
used in this Agreement to ascertain the financial condition of the Borrowers,
then the calculation of covenant compliance under this Agreement shall be
determined in accordance with GAAP, as applied as if such change had not
occurred.
"Home Port" means, as to each Vessel, the port of each Country of
---------
Registry where documents of title and mortgages may be recorded in respect of
such Vessel.
"Hvide" means Hvide Marine Incorporated, and all of Hvide's
-----
subsidiaries.
"Incorporation Jurisdiction" means the jurisdiction of incorporation
--------------------------
or legal organization of a Person.
"Indebtedness" means (a) any liability of any Person (i) for borrowed
------------
money, or under any reimbursement obligation related to a letter of credit or
bid or performance bond facility, or (ii) evidenced by a bond, note, debenture
or other evidence of indebtedness (including a purchase money obligation)
representing extensions of credit or given in connection with the acquisition of
any business, property, service or asset of any kind (other than a trade payable
or other current liability
-9-
<PAGE>
arising in the ordinary course of business) or (iii) for obligations with
respect to (A) an operating lease calculated on the basis of the present value
discounted at ten percent (10%) on the future payments from such Person under
such operating lease, or (B) a lease of real or personal property that is or
would be classified and accounted for as a Capital Lease; (b) any liability of
others either for any lease, dividend or letter of credit, or for any obligation
described in the preceding clause (a) that (i) the Person has guaranteed or that
is otherwise its legal liability (whether contingent or otherwise or direct or
indirect, but excluding endorsements of negotiable instruments for deposit or
collection in the ordinary course of business) or (ii) is secured by any Lien on
any property or asset owned or held by that Person, regardless whether the
obligation secured thereby shall have been assumed by or is a personal liability
of that Person; and (c) any amendment, supplement, modification, deferral,
renewal, extension or refunding of any liability of the types referred to in
clauses (a) and (b), above.
"Insurance Assignment" means any assignment of insurance in respect of
--------------------
a Mortgaged Vessel by any of the Borrowers to the Administrative Agent on behalf
of the Banks, substantially in the form of Exhibit H, and as the same may be
amended, supplemented or otherwise modified from time to time.
"Interest Expense" means interest expense net of interest income as
----------------
determined in accordance with GAAP.
"Interest Payment Date" means with respect to any Advance (1) the last
---------------------
day of each Interest Period for such Advance, (2) the last day of each three-
month portion of each Interest Period which is longer than three months, and (3)
the day any principal amount of such Advance matures and becomes due and
payable.
"Interest Period" means with respect to each Advance (or any tranche
---------------
comprising a part thereof), each respective and successive (i) one-, two-,
three- or six-month calendar period for any portion of the Loan bearing interest
at a rate based on the LIBOR Rate and (ii) period for any portion of the Loan
bearing interest at a rate based on the Alternate Base Rate. Each such period
shall be designated by the Borrowers or the Administrative Agent, as the case
may be, pursuant to Section 2.04(b), and shall commence on the Drawdown Date or
the last day of the immediately preceding Interest Period, as the case may be,
of such Advance (or tranche comprising a part thereof) and continue until such
date as the Advance (or such tranche) shall be paid in full, provided, however,
-------- -------
that (i) if any Interest Period (other than in respect of any portion of the
Loan bearing interest at a rate based on the Alternate Base Rate) includes a
Principal Payment Date but does not end on such date, then (x) the principal
amount of the Loan required to be paid on such date shall have an Interest
Period ending on such date and (y) the remainder (if any) of the Loan shall have
an Interest Period
-10-
<PAGE>
determined pursuant to Section 2.04, (ii) in all cases each Interest Period
shall commence on expiry of the immediately preceding Interest Period, and (iii)
no Interest Period with respect to any Note shall commence on or extend past the
maturity date of such Note.
"IPO" means the initial public offering of Hvide stock described in
---
the Amended S-1.
"IPO Commitment" means the obligation of each Bank to lend the amounts
--------------
set forth in Exhibit B hereto, as such amounts may be reduced from time to time
pursuant to this Agreement.
"IPO Commitment Fee" shall have the meaning set forth in Section
------------------
2.10(e).
"IPO Fee" shall have the meaning set forth in Section 2.10(e).
-------
"Junior Subordinated Note" means the 8% Junior Subordinated Notes due
------------------------
2014 in the principal amount of $25,000,000 purchased on or before September 29,
1994 under the Junior Subordinated Note and Common Stock Purchase Agreement
dated as of September 29, 1994.
"Lending Office" means the office of the Administrative Agent at One
--------------
Court Square, 7th Floor, Long Island City, New York, N.Y. 11120-0001, or any
other office or affiliate of the Administrative Agent hereafter selected and
notified to the Borrowers from time to time by the Administrative Agent.
"Letter of Credit" means each Letter of Credit issued in respect of
----------------
Facilities C and D, substantially in the form of Exhibit A or in such form as
may be approved by the Letter of Credit Agent and as the same may be from time
to time amended, supplemented or otherwise modified.
"Letter of Credit Agent" means The First National Bank of Boston, and
----------------------
any successor letter of credit agent under this Agreement.
"Letter of Credit Closing Date" means any date on which the Letter of
-----------------------------
Credit Agent has issued one or more Letters of Credit pursuant to Facility C
and/or Facility D.
"Letter of Credit Renewal Date" means any date on which a Letter of
-----------------------------
Credit by its terms, may be renewed.
"Leverage Ratio" means the ratio of Consolidated Indebtedness to
--------------
Tangible Net Worth as described in Section 5.01(d)(iii).
"LIBOR Rate" means, for an Interest Period for any portion of the Loan
----------
bearing interest at a rate based on the LIBOR
-11-
<PAGE>
Rate, the rate determined by the Administrative Agent to be the rate of interest
per annum equal to the average (rounded upward to the nearest whole multiple
of 1/16 of 1% per annum, if such average is not such a multiple) of the rate
per annum at which deposits in United States Dollars are offered by the
principal office of each of the Reference Banks in London, England to prime
banks in the London interbank market at 11:00 A.M. (London time) as published
by Reuters or Telerate two Business Days before the first day of such Interest
Period for a term equal to such Interest Period and in an amount substantially
equal to such portion of the Loan. The LIBOR Rate for an Interest Period shall
be determined by the Administrative Agent on the basis of applicable rate
furnished to and received by the Administrative Agent from the Reference Banks
two Business Days before the first day of such Interest Period. If at any time
the Administrative Agent shall determine that by reason of circumstances
affecting the London interbank market (i) adequate and reasonable means do not
exist for ascertaining the LIBOR Rate for the succeeding Interest Period or (ii)
the making or continuance of any Loan at a rate based on the LIBOR Rate has
become impracticable as a result of a contingency occurring after the date of
this Agreement which materially and adversely affects the London interbank
market, the Administrative Agent shall so notify the Banks and the Borrowers.
Failing the availability of the LIBOR Rate, the LIBOR Rate shall mean the
Alternate Base Rate thereafter in effect from time to time until such time as a
LIBOR Rate may be determined by reference to the London interbank market.
"Lien" means any lien, charge, easement, claim, mortgage, option,
----
pledge, right of first refusal, right of usufruct, security interest, servitude,
transfer restriction or other encumbrance or any restriction or limitation of
any kind (including, without limitation, any adverse claim to title, conditional
sale or other title retention agreement, any lease in the nature thereof, and
any agreement to give any security interest).
"Liquidity" means as to any Borrower unrestricted cash and Permitted
---------
Investments of such Borrower plus the undrawn and available amount of Advances
under Facility A.
"Loan" means the aggregate amount of the Advances to the Borrowers by
----
each Bank and all amounts owed by the Borrowers in respect of drawings under the
Letter of Credit provided for in Section 2.01.
"Loan Documents" means this Agreement, the Notes, the Letter of
--------------
Credit, the Applications and the Security Documents.
"Majority Banks" means any Bank or Banks having an aggregate of not
--------------
less than a (65%) Sixty-Five Percentage Interest and holding at least 65% of the
then aggregate unpaid principal amount of the Advances.
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<PAGE>
"Master Vessel Trust Agreement" means the Master Vessel Trust
-----------------------------
Agreement between the Mortgagee and the Administrative Agent on behalf of the
Banks, substantially in the form of Exhibit J, and as the same may be from time
to time amended, supplemented or otherwise modified.
"Maturity Date" means in respect of Advances made under Facilities A,
-------------
B, D and F, January 15, 2001, and in respect of Advances made under Facility C,
January 15, 2000.
"Mortgage" means a mortgage by a Borrower of any Vessel delivered to
--------
the Mortgagee for the benefit of the Banks, substantially in the form of Exhibit
F, and as the same may be from time to time amended, supplemented or otherwise
modified.
"Mortgaged Vessel" means a Vessel as described in each granting clause
----------------
of a Mortgage.
"Mortgagee" means First Union National Bank (as successor by merger
---------
with First Fidelity Bank, National Association), a national banking association
organized and existing under the laws of the United States, or such other Person
as the Administrative Agent on behalf of the Banks shall designate as trustee
under the Master Vessel Trust Agreement to act as Mortgagee under the Mortgage.
"Note" means any of, and "Notes" means all, the promissory notes
----
executed and delivered by the Borrowers in connection with this Agreement,
substantially in the form of Exhibits A-1, A-2 and A-3, respectively, and as any
such note may be replaced, amended, supplemented or otherwise modified from time
to time.
"Notice of Borrowing" has the meaning stated in Section 2.02(a).
-------------------
"Notice of Margin Adjustment" has the meaning stated in Section
---------------------------
2.04(b)(iii).
"OECD" means the Organization for Economic Cooperation and
----
Development.
"Obligations" means all obligations, including but not limited to, all
-----------
principal, interest, fees, expenses and other obligations, of every nature of
the Borrowers, or any of their Subsidiaries or Affiliates from time to time owed
to the Administrative Agent, any of the Banks, the Letter of Credit Agent, or
all of them, under this Agreement or any of the Loan Documents.
"OMI Vessels" means each of OMI HUDSON, OMI DYNACHEM and OMI STAR to
-----------
be acquired by Hvide from OMI Corp. as described in Exhibit L hereto.
-13-
<PAGE>
"Percentage Interest" means, as to a Bank, the percentage set forth
-------------------
opposite such Bank's name and signature on the signature pages of this Agreement
and any amendment hereto, or if applicable, in the Register.
"Permitted Capital Expenditures" means the Capital Expenditures which
------------------------------
do not exceed the annual limits set forth in Sections 5.02(i) and 5.01(e)(iii)
plus the aggregate of (a) Acquisitions financed by Facility F, (b) additional
Indebtedness of Ten Million Dollars (USD 10,000,000) pursuant to Section 5.02(j)
over the term of the Loan, and (c) Acquisitions financed out of the net proceeds
of the IPO after the payment of fees and expenses in conjunction with the IPO,
the payment of any Acquisitions contemplated in connection with the IPO listed
in Exhibit L hereto, the payment of all amounts necessary to retire the Junior
Subordinated Note and any Related Party Note and the payment of all amounts
necessary to reduce the Senior Subordinated Note to no more than Fifteen Million
Dollars ($15,000,000) or to retire the Senior Subordinated Note.
"Permitted Investments" means (i) direct obligations of, or
---------------------
obligations guaranteed by, the Government of the United States or any agency
thereof, in each case backed by the full faith and credit of the United States
and having maturities of not later than the Principal Payment Date next
succeeding the date of acquisition, (ii) commercial paper, maturing not later
than the Principal Payment Date next succeeding the date of acquisition, rated
at least P-1 by Moody's Investors Service, Inc. ("Moody's") or at least A-1 by
Standard & Poor's Corporation ("S&P"), (iii) Dollar denominated certificates of
deposit, time deposits and banker's acceptances maturing not later than the
Principal Payment Date next succeeding the date of acquisition, issued by (A)
the Administrative Agent, the Co-Agents or any one of the Banks hereunder, (B) a
domestic commercial bank that has a combined capital and surplus and undivided
profits of not less than $500,000,000, or (C) any bank whose short-term
commercial paper rating from Moody's is at least P-1 or from S&P is at least A-
1, and (iv) repurchase agreements having maturities of not later than the
Principal Payment Date next succeeding the date of acquisition (A) which are
entered into with major money center banks included in the commercial banking
institutions described in clause (iii), and (B) which are secured by readily
marketable direct obligations of the Government of the United States of America
or any agency thereof having maturities of not later than the Principal Payment
Date next succeeding the date of acquisition.
"Person" means any individual, corporation, limited partnership,
------
partnership, business trust, joint venture, association, joint stock company,
trust or other unincorporated organization, whether or not a legal entity, or
any government or agency or political subdivision thereof.
-14-
<PAGE>
"Pledged Collateral" shall have the meaning set forth in Section
------------------
5.01(e)(i).
"Principal Payment Date" means (a) as to each Advance in respect of
----------------------
Facility A, the Maturity Date, (b) as to each Advance in respect of Facility B
and Facility F, the Maturity Date for such advance and the 15th day of each of
January, April, July and October of each year commencing on the dates provided
in Section 2.03, (c) as to any Advance in respect of Facility C, the date on
which demand for repayment is made, or January 15, 2000, whichever is earlier,
and (d) as to any Advance in respect of Facility D, the date on which demand for
repayment is made, or January 15, 2001, whichever is earlier.
"Receivables" has the meaning stated in the Security Agreement.
-----------
"Reference Bank" means Citibank, N.A.
--------------
"Register" has the meaning stated in Section 7.10(d).
--------
"Related Party Contract" means those contracts listed in Schedule B.
----------------------
"Relevant Amount" has the meaning stated in Section 2.04(b)(iii).
---------------
"Rental Expense" means operating lease payments and other rental
--------------
payments as determined in accordance with GAAP.
"Reserve Percentage" has the meaning stated in Section 2.06(b).
------------------
"SEABULK AMERICA" means that U.S. flag vessel owned by Seabulk Tankers
---------------
Partnership, Ltd., and bearing Official Number 961357.
"Seal Fleet Vessels" means each of the eight vessels acquired by Hvide
------------------
from Seal Fleet Inc., Ross Seal Partners, Ltd., Bengal Seal Partners, Ltd.,
Indian Seal Partners, Ltd., Baffin Seal Partners, Ltd., and Baltor Seal
Partners, Ltd., as described in Exhibit L hereto.
"Security Agreement" means the Security Agreement dated as of the date
------------------
hereof for the benefit of the Banks substantially in the form of Exhibit E, and
as the same may be from time to time amended, supplemented or otherwise
modified.
"Security Documents" means the Master Vessel Trust Agreement, each
------------------
Mortgage, each Earnings Assignment, each Insurance Assignment, and the Security
Agreement.
"Senior Subordinated Note" means Hvide's 12% Senior Subordinated Notes
------------------------
due 2004 in the original principal amount of
-15-
<PAGE>
$25,000,000 purchased on or before the Closing Date under the Senior
Subordinated Note and Common Stock Purchase Agreement dated as of September 29,
1994.
"SEC" means the Securities and Exchange Commission of the United
---
States and its successors.
"Shareholders' Agreement" means the Agreement Among Shareholders dated
-----------------------
as of July 1996 by and among Clipper Capital Associates, L.P., Clipper/Merchant
HMI, L.P., Metropolitan Life Insurance Company, Clipper/Park HMI, L.P.,
Clipper/Merban HMI, L.P., Clipper/Hercules, L.P. and Olympus Growth Fund II,
L.P., Trusts created by the Declaration of Trust dated June 23, 1978, for Elsa
Hvide and Elsa Hvide Sovery and the others named herein.
"Solvent" means with respect to any Person on a particular date, that
-------
on such date (i) the fair market value of the assets of such Person is greater
than the total amount of liabilities (including contingent liabilities) of such
Person, (ii) the present fair salable value of the assets of such Person is
greater than the amount that will be required to pay the probable liabilities of
such Person for its debts as they become absolute and matured, (iii) such Person
is able to realize upon its assets and pay its debts and other liabilities,
including contingent obligations, as they mature, and (iv) such Person does not
have unreasonably small capital for the business in which it is engaged.
"Subsidiary" means, with respect to any Person, any corporation,
----------
association, limited partnership, partnership or other business entity of which
a majority of the voting power entitled to vote in the election of directors,
managers or trustees thereof (or in the case of a limited partnership, in the
control of the general partner) is at the time owned, directly or indirectly, by
such Person or by one or more other Subsidiaries, or by such Person and one or
more other Subsidiaries, or a combination thereof.
"Tangible Net Worth" means the excess of the total assets of the
------------------
Borrowers on a consolidated basis over Total Liabilities, excluding, however,
from the determination of total assets (i) goodwill, organizational expenses,
research and development expenses, trademarks, trade names, copyrights, patents,
patent applications, licenses and rights in any thereof and other similar
intangibles, (ii) unamortized debt discount and expense, (iii) all reserves
carried and not deducted from assets, (iv) treasury stock and capital stock,
obligations or other securities of or capital contributions to or investments in
any Subsidiary, (v) sinking or other analogous funds established for the purpose
of redemption, retirement or prepayment of capital stock, (vi) any write up in
the book value of any assets resulting from a revaluation thereof subsequent to
December 31, 1993, (vii) capitalized expenses in connection with the issuance of
debt or equity and (viii) any items not included in clauses
-16-
<PAGE>
(i) through (vii) above which are treated as intangibles in conformity with
GAAP.
"Taxes" means all income, excise, stamp or franchise taxes and any
-----
other tax, charge, fee, levy, impost, duty, withholding, deduction or other
assessment of any kind whatsoever, including any interest, penalties or
additions attributable thereto, imposed by any federal, commonwealth, state,
local or foreign taxing authority.
"Title XI Debt" means the United States Government Guaranteed Ship
-------------
Financing Bonds ("Title XI Bonds") issued pursuant to Title XI of the Merchant
Marine Act of 1936, as amended, which consist of approximately Five Million
Eight Hundred Thousand Dollars ($5,800,000) in eight and one half percent (8.5%)
Title XI Bonds due 1999 relating to M/V SEABULK CHALLENGER and approximately
Nine Million Seven Hundred Thousand Dollars ($9,700,000) in five and one quarter
percent (5.25%) Title XI Bonds due 2000 relating to M/V SEABULK MAGNACHEM and
which consist of approximately Thirty Five Million Seven Hundred Ninety Five
Thousand Dollars ($35,795,000) in eight and one half one percent (8.5%) Bonds
due 2006 relating to OMI HUDSON and OMI DYNACHEM.
"Total Liabilities" means all the obligations in accordance with GAAP
-----------------
which are included in determining the total liabilities as shown on the
liabilities side of the balance sheet of the Borrowers on a consolidated basis.
"Total Loss" means, in respect of any Vessel, any of the following
----------
events; (x) the actual or constructive total loss of such Vessel or the agreed
or compromised total loss of such Vessel; or (y) the capture, condemnation,
confiscation, requisition, purchase, seizure or forfeiture of, or any taking of
title to, such Vessel. A Total Loss shall be deemed to have occurred (i) in the
event of an actual loss of such Vessel, on the date of such loss; (ii) in the
event of damage which results in a constructive or compromised or arranged total
loss of such Vessel, on the date of the event giving rise to such damage; or
(iii) in the case of any event referred to in clause (y) above, on the date of
the occurrence of such event. Notwithstanding the foregoing, if such Vessel is
subject to a Mortgage and such Vessel shall have been returned to the Borrowers
following any capture, requisition or seizure referred to in clause (y) above
prior to the date upon which payment is required to be made under Section
2.05(d), no Total Loss of such Vessel shall be deemed to have occurred by reason
of such capture, requisition or seizure.
"Total Outstandings" has the meaning stated in Section 5.01(e)(i).
------------------
"Transaction" means the financing contemplated by the Loan Documents.
-----------
-17-
<PAGE>
"Uniform Customs" means Uniform Customs and Practice for Commercial
---------------
Documentary Credits of the International Chamber of Commerce, revision 500 of
1993 and as the same may be amended, modified or supplemented.
"Unreimbursed Letter of Credit Obligations" means any amounts which
-----------------------------------------
the Borrowers are obligated to reimburse the Letter of Credit Agent for drawings
on a Letter of Credit.
"Vessel" means any of, and "Vessels" mean all of, the vessels
------ -------
described in Schedule D and any vessel which in the future may be owned by a
Borrower and covered by a Mortgage.
SECTION 1.012. Accounting Terms. All accounting terms not
----------------
specifically defined herein shall be construed in accordance with GAAP,
consistently applied.
SECTION 1.013. Valuations. (a) "Fair Market Value" shall mean as to
----------
any Vessel and any determination of "Fair Market Value" of a Vessel as the
Administrative Agent may require from time to time in accordance with this
Agreement, the fair market value of such Vessel determined as set forth in this
Section 1.03. All appraisers shall be selected from firms of independent
shipbrokers or marine surveyors of recognized standing and listed in Schedule C
to this Agreement, and as such schedule may be amended, modified or supplemented
from time to time.
(b) The Administrative Agent may at any time direct, and the
Borrowers may, and shall, if requested by the Administrative Agent, cause an
appraiser designated by the Administrative Agent to perform a valuation and such
determination will be binding; provided, however, if such appraisal is
-------- -------
challenged pursuant to (c) below, such determination shall be binding until the
resolution of the matter pursuant to (c) below. Except as otherwise provided in
paragraph (c) below, the cost of obtaining at the request of the Administrative
Agent up to two appraisals per calendar year for each Vessel shall be paid by
the Borrowers and the cost of appraisals obtained at the Borrowers' request
shall be paid by the Borrowers.
(c) In the event that the Borrowers or the Administrative Agent shall
dispute or challenge the fair market value determined by such appraiser, then
the Borrowers and the Administrative Agent shall each appoint a separate
appraiser (which need not be listed in Schedule C) and the two appraisers (which
need not be listed in Schedule C) appointed by the Administrative Agent and the
Borrowers shall appoint a third appraiser (which need not be listed in Schedule
C). Each appraiser so appointed shall make a separate determination of fair
market value on the same basis. The three determinations of fair market value
shall be averaged by the Administrative Agent and the determination which is
furthest from such average (whether higher or lower) shall be disregarded. The
remaining two determinations shall then be averaged by the Administrative
-18-
<PAGE>
Agent with such average to be controlling for purposes of this Agreement with
respect to the then current fair market value of a Vessel. The cost of
obtaining all such opinions in the event of a dispute or challenge shall be
payable by the party disputing or challenging the original fair market value
determination.
(d) In the event the appraisers nominated by the parties fail to
appoint a third appraiser or any such appraiser, however appointed, fails to
deliver a valuation, unless otherwise agreed, the parties may petition the
American Arbitration Association in New York, New York to appoint a third
appraiser. Upon receipt of such appointed appraiser's appraisal, the
Administrative Agent shall determine the fair market value as provided in
paragraph (c) above.
(e) All appraisals shall be made without, unless otherwise reasonably
required by the Administrative Agent, physical inspection and on the basis of an
arm's length purchase by a willing and able commercial buyer from a willing and
able commercial seller and without taking into account any charter party.
ARTICLE II.
AMOUNTS AND TERMS OF THE ADVANCES
AND LETTER OF CREDIT
SECTION 1.021. The Advances. (a) Upon the terms and subject to the
------------
conditions set forth in this Agreement, the Banks agree, severally on the basis
of their respective Percentage Interests but not jointly, to make Advances as
follows:
(i) in respect of Facility A, subject to the terms of Section
2.07(b)(ii), in a maximum amount not to exceed at any time outstanding such
Bank's Aggregate Amount in respect of Facility A, and provided further that
any request for an advance under Facility A shall be in an aggregate amount
not less than $500,000 and an integral multiple of $100,000 if in excess
thereof;
(ii) in respect of Facility B, in an aggregate amount not to
exceed at any time outstanding such Bank's Aggregate Amount in respect
of Facility B; and
(iii) in respect of Facility F, in an aggregate amount not to
exceed at any time outstanding such Bank's Aggregate Amount in respect of
Facility F; PROVIDED HOWEVER, that amounts advanced under this Facility F
are restricted to Acquisitions which do not exceed (x) seventy percent
(70%) of the purchase price or appraised value (whichever is less) of the
vessel being acquired, or (y) a multiple of six times EBITDA of the
Acquisition.
-19-
<PAGE>
(b) The total amount to be made available by each Bank as part of an
Advance for a Facility shall never exceed the Commitment of such Bank for such
Facility, and shall be proportionate always to such Bank's Percentage Interest.
The Banks are obligated to make Advances pursuant to this Agreement until the
relevant Commitment Termination Date. The obligation of the Borrowers to repay
each Advance shall be evidenced by this Agreement and in the case of Facility A,
Facility B, and Facility F, the Notes. In respect of each Advance to the
Borrowers under Facility A, Facility B, and Facility F, the Borrowers shall
issue in favor of each Bank a Note in respect of each of such Facilities.
(c) The failure of any Bank to advance its Commitment in respect of
any Advance shall not relieve it or any other Bank of the obligation to advance
its Commitment, but no Bank or the Administrative Agent shall be responsible for
the failure of any other Bank to advance its Commitment to the Borrowers.
SECTION 1.022. Disbursement of the Advances. (a) The Advance for
----------------------------
each Facility shall be made simultaneously, on at least three Business Days
prior written notice from the Borrowers to the Banks and the Administrative
Agent specifying the disbursement date therefor (a "Drawdown Date") which shall
not be later than the Business Day prior to the Maturity Date. There shall be
no more than three Drawdown Dates for Facility B (except as to Advances made in
respect of Facility C pursuant to Section 2.03 (iii)). There shall be one
Drawdown Date with respect to Facility C. Each Drawdown Date shall be a
Business Day. Not later than 10:00 A.M. (New York City time) on such Drawdown
Date, and upon fulfillment of the conditions in Article III hereof, the Banks
will make the Advances available to the Administrative Agent for disbursement to
the Borrowers in same day funds at the Lending Office. Such notice of borrowing
(the "Notice of Borrowing") shall be by telex, telefacsimile or cable, confirmed
immediately in writing signed by an authorized officer of each of the Borrowers,
in substantially the form of Exhibit C, specifying therein (i) the requested
date of such borrowing, (ii) the aggregate Dollar amount to be borrowed and, but
only to the extent the same may be permitted or required in Section 2.04(b)(ii),
the number of tranches and the Dollar amount of each tranche and (iii) the
Interest Period for such borrowing (and each tranche thereof). The Commitment
of each Bank shall terminate in an amount equal to, and the Aggregate Amount of
each Bank shall be reduced by, the amount made available by such Bank in respect
of each Advance.
(b) Each Notice of Borrowing sent shall be irrevocable and binding on
the Borrowers. If for any reason on a Drawdown Date specified in a Notice of
Borrowing, any Advance is not made as a result of any failure to fulfill on or
before such Drawdown Date the applicable conditions precedent, the Borrowers
shall indemnify each Bank against any loss, cost or expense incurred by such
Bank as a result of such failure, including, without
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<PAGE>
limitation, any loss, cost or expense incurred by reason of the liquidation or
reemployment of deposits or other funds acquired by such Bank to fund the
Advances to be made by such Bank as part of such borrowing.
SECTION 1.023. Repayment. The Borrowers shall repay the aggregate
---------
principal amount of each Advance in respect of each Facility as follows:
(i) Advances with respect to Facility A shall be paid on the
Maturity Date with respect to such Facility; PROVIDED HOWEVER, that the
Borrowers shall repay any and all Advances in respect of Facility A
(including amounts drawn under Facility D) annually and shall not reborrow
such amounts for a period of no less than 30 consecutive calendar days in
each calendar year.
(ii) Advances with respect to Facility B shall be repaid in 18
consecutive quarterly payments commencing on July 15, 1996 and on each
subsequent July 15th, October 15th, January 15th and April 15th, until the
Maturity Date according to the amortization schedule set forth in Exhibit K
hereto.
(iii) Advances with respect to Facility C shall be repayable on
demand; PROVIDED HOWEVER, that, subject to the terms of this Agreement, the
Borrowers may request, and if there is no existing Event of Default each
Bank shall make, an additional Advance under Facility B to reimburse any
amounts drawn under Facility C (and in such case, the Advances will be
repaid according to the Schedule provided in Section 2.03(ii) pro rated
over the then remaining Principal Payment Dates).
(iv) Advances with respect to Facility F shall be repaid in
consecutive quarterly installments according to the Schedule set forth in
(x) Exhibit M hereto, if the original maximum principal amount drawn is
equal to Twenty Five Million Dollars ($25,000,000) or (y) in Schedule 1 to
the Notes executed and delivered by the Borrower in connection with
Facility F, if the original maximum principal amount drawn is less than
Twenty Five Million Dollars ($25,000,000). The installments paid in
respect of Facility F shall be equal to the reduction in the Available
Commitment.
(v) The final payment of all outstanding principal amounts of a
Facility shall be made on the Maturity Date for such Facility.
SECTION 1.024. Interest. (a) The Borrowers shall pay interest on
--------
the unpaid principal amount of each Advance from the Drawdown Date for such
Advance until the principal amount of such Advance is paid in full, payable on
each Interest Payment Date
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<PAGE>
with respect to each such Advance. Notwithstanding the preceding sentence of
this Section 2.04(a), all interest accrued on any Advance outstanding on the
Maturity Date of such Advance shall be paid on the Maturity Date for such
Advance.
(b) As long as any Advance shall be outstanding, and payment of the
principal thereof and interest thereon shall not be in default, interest on the
Advance shall be payable at an interest rate which shall be adjusted as provided
in this Section, and in the case of the Alternate Base Rate and to reflect any
change in the Applicable Margin, as set forth herein during such Interest
Period, and which shall be determined as follows:
(i) with respect to each day of the period commencing on and
following a Drawdown Date and for each day of each successive Interest
Period thereafter, the Borrowers shall pay interest on each Advance in its
entirety or in one or more tranches permitted under Section 2.04(b)(ii) at
an interest rate equal to the sum of (y) the Applicable Margin plus (z) the
Alternate Base Rate or the LIBOR Rate, as the case may be, subject to
periodic adjustment as provided in Section 2.04(b)(iii);
(ii) with respect to each Interest Period, the Borrowers shall,
by telex notice to be received by the Administrative Agent by 10 A.M. New
York time at least four Business Days (one Business Day, in the case of an
Advance bearing interest at Alternate Base Rate) prior to the commencement
of each such successive period, elect the Applicable Rate and elect an
Interest Period of one, two, three or six months duration in the case of
LIBOR Rate, and such other period in the case of the Alternate Base Rate,
and one or more but no more than four tranches in total for all outstanding
Advances, provided each tranche shall be in an amount not less than the
scheduled principal amount due on the Maturity Date; provided the Borrowers
--------
shall select Interest Periods, and if necessary shall select as the final
Interest Period for each Advance an Interest Period less than one month in
duration, so that the maturity date of each Advance shall be the last day
of the Interest Period for such Advance; provided that if the Borrowers
-------- ----
shall fail to elect the Applicable Rate or an Interest Period as herein
provided, and so long as any Event of Default has not occurred and is
continuing, the Administrative Agent shall elect the relevant Applicable
Rate and the Interest Period, which may be one day;
(iii) (A) the interest payable on each Advance during each
successive Interest Period shall be adjusted as set forth herein by the
Administrative Agent for any change in the Applicable Margin in addition to
adjustments in respect of the Alternate Base Rate, if such rate is then
used. The Applicable Margin for each Interest Period (and
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<PAGE>
each day thereof) shall be determined by the Administrative Agent, subject
to further adjustment from time to time pursuant to paragraph (B) of this
sub-section (iii). In respect of the Advances the highest Applicable
Margin shall be in effect unless both of the following tests are met on a
rolling four quarter basis:
Consolidated Base Rate LIBOR and Letter
Leverage Indebtedness/ Applicable of Credit
Ratio EBITDAR Margin Applicable Margin
-------- ------------ ----------- -----------------
Above 4.00 Above 4.5 2.00% 3.00%
3.00 to 3.99 3.51 to 4.50 1.50% 2.50%
2.00 to 2.99 2.51 to 3.50 0.75% 1.75%
Below 2.00 2.50 or Below 0.00% 1.00%
For the first three quarters following the Effective Date, the
Administrative Agent shall use Hvide's Pro Forma Consolidated Historical
Financial Statements as presented in the Amended Form S-1 for purposes of
determining whether the foregoing tests have been met. From the fourth
quarter following the Effective Date until the Maturity Date, the
Administrative Agent shall use the Borrowers' most recent quarterly
financial statements for purposes of determining whether the foregoing
tests have been met.
(B) To the extent of any change in the Applicable Margin
during any Interest Period, the Administrative Agent shall give prompt
written notice to the Borrowers and the Banks (a "Notice of Margin
Adjustment") specifying the amount, if any, of additional interest payable
by the Borrowers, or excess interest paid by the Borrowers, as the case may
be, as a result of such change in the Applicable Margin (such amount, the
"Relevant Amount"). The Borrowers shall immediately pay to the
Administrative Agent any such Relevant Amount specified as payable in the
Notice of Margin Adjustment, together with interest to the date of payment
calculated as for an Advance; any Relevant Amount specified in the Notice
of Margin Adjustment as an excess payment by the Borrowers shall be
credited to interest payable by the Borrowers on the next Interest Payment
Date;
(iv) the Administrative Agent shall give prompt notice to the
Borrowers and the Banks of the applicable interest rate determined by the
Administrative Agent for purposes of Section 2.04(b) and the rates
published by each Reference Bank and used for the purpose of determining
the applicable LIBOR Rate hereunder; and
(v) if, with respect to any Advance bearing interest at a rate
based on the LIBOR Rate, any Bank shall notify the Administrative Agent
that the LIBOR Rate for any
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<PAGE>
Interest Period for such Advance will not adequately reflect the cost to
such Bank of making, funding or maintaining its portion of such Advance for
such Interest Period, the Administrative Agent shall forthwith so notify
the Borrowers and the Banks, whereupon
(A) each such Bank's portion of each such Advance bearing
interest at a rate based on the LIBOR Rate will automatically, on the last
day of the then existing Interest Period therefor, convert into an Advance
bearing interest at a rate based on the Alternate Base Rate, and
(B) the obligation of each such Bank to make Advances, or
to convert Advances into Advances, bearing interest at a rate based on the
LIBOR Rate shall be suspended until such Bank shall notify the Borrowers
and the Administrative Agent that the circumstances causing such suspension
no longer exist.
(c) In the event that the Administrative Agent or any Bank does not
receive on the due date any sum due under this Agreement or any of the other
Loan Documents in accordance with the terms hereof or thereof, or so long as any
Event of Default has occurred and is continuing, the Borrowers shall pay to the
Administrative Agent and such Banks, as the case may be, on demand in accordance
with Section 2.07 hereof, interest on all unpaid sums, from and including the
due date thereof or the date such Event of Default occurred, whichever is
earlier to but not including the date of actual payment (or date such Event of
Default is cured), at a rate per annum determined by the Administrative Agent
from time to time to be the sum of (a) two per cent (2%) and the Applicable
Margin plus (b) the Applicable Rate. Except as otherwise provided in the
following subsection (d), any such interest which is not paid when due shall be
compounded at the end of each Interest Period (both before and after any notice
of demand) by the Administrative Agent on behalf of the Banks under this
Agreement.
(d) Notwithstanding any provision contained in any of the Loan
Documents, none of the Banks, the Letter of Credit Agent nor the Administrative
Agent shall ever be entitled to receive, collect, or apply, as interest on the
Obligations, any amount in excess of the maximum rate of interest permitted to
be charged by Applicable Law. In the event any Bank, the Letter of Credit Agent
or the Administrative Agent ever receives, collects, or applies as interest, any
such excess, such amount which would be excessive interest shall be applied to
the reduction of the Obligations then outstanding. If the Obligations then
outstanding are paid in full, any remaining excess shall forthwith be paid to
the Borrowers. In determining whether or not the interest paid or payable,
under any specific contingency, exceeds the highest lawful rate, the Borrowers
and any Bank, the Letter of Credit Agent or the Administrative Agent, as the
case may be, shall, to the maximum extent permitted under Applicable
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<PAGE>
Law, (i) characterize any non-principal payment as an expense, fee or premium
rather than as interest, (ii) exclude any voluntary prepayments and the effects
thereof, and (iii) spread the total amount of interest throughout the entire
contemplated term of the Obligations so that the interest rate is uniform
throughout the entire term of the Obligations.
SECTION 1.025. Prepayments. (a) Upon at least four Business Days'
-----------
notice to the Administrative Agent received by 10:00 A.M. New York time, the
Borrowers may prepay, subject to payment of Breakage Costs, if any, incurred by
the Banks, the outstanding amount of each Advance for a Facility, in whole or in
part, on the last day of any Interest Period for each such Advance or part
thereof, with accrued interest to the date of such prepayment on the amount
prepaid, provided that no such partial prepayment shall be in a principal amount
--------
of less than Two Hundred Fifty Thousand Dollars ($250,000) and be in integral
multiples of One Hundred Thousand Dollars ($100,000) in addition to such minimum
amount. The Administrative Agent promptly shall give the Banks a copy of each
such notice received from the Borrowers. Optional repayments shall be applied
to completely repay the Facilities in the following order: Facility A, then
Facility B, then Facility F, and then, to the extent that the Borrowers have
terminated the Commitment under Facility A, to be deposited in the Cash
Collateral Account as security for Facility C and Facility D. Optional
prepayments in respect of each Facility shall be applied to such Facility (i)
first to the next scheduled payment of principal, (ii) then to the final payment
due on the Maturity Date and (iii) finally pro rata over the remaining scheduled
principal payments. Prepayments shall be applied pro rata to all Banks'
Advances under the respective Facility. If Facility B is prepaid, no part
thereof may be reborrowed. If Facility F is prepaid, the Available Commitment
shall be reduced by the amounts prepaid.
(b) The Borrowers shall prepay the Advances as follows:
(i) (A) an amount equal to fifty percent (50%) of the Annual
Excess Cash Flow of the Borrowers for each fiscal year of the Borrowers on
the earlier of April 15 following such Fiscal Year or the date which is 10
business days following delivery of audited financial statements for such
fiscal year;
(B) an amount equal to one hundred percent (100%) of all
proceeds (net of Taxes and reasonable expenses in connection with the sale)
from the sale of any assets by the Borrowers in excess of One Hundred
Thousand Dollars ($100,000) in any one transaction or Five Hundred Thousand
Dollars ($500,000) in any calendar year; such prepayment to be made not
later than the date of such sale;
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<PAGE>
any such mandatory prepayments shall be applied ratably among all Advances
of the Banks as follows (v) first, to repay to the last installment due in
respect of Advances for Facility B on the Maturity Date and then pro rata
over the remaining Principal Payment Dates for Facility B, (w) second, to
reduce Advances under Facility A to the last installment due in respect of
Advances (x) third, for Facility F on the Maturity Date and then pro rata
over the remaining Principal Payment Dates for Facility F, fourth, and (y)
to the extent that the Borrowers have terminated the Commitment under
Facility A, to be deposited to the Cash Collateral Account as security for
Facility C and Facility D; and
(ii) an amount as shall be necessary to comply with the
provisions of Section 5.01(e); such prepayment to be applied first to
Advances outstanding in respect of Facility B, and then to Advances
outstanding in respect of Facility A and Facility F in inverse order of
maturity and ratably among the Banks.
(c) If it shall become unlawful for any Bank to continue to fund or
maintain any Advance or to perform its obligations hereunder, such Bank shall
notify and consult with the Borrowers and the Administrative Agent before making
any demand under this Section 2.05(c), and such Bank and the Administrative
Agent shall use all reasonable efforts to change its lending office or take
other measures so that it can perform its obligations hereunder; provided that
--------
neither such Bank nor the Administrative Agent shall be obligated to change its
lending office or take any other measures if in its sole reasonable judgment it
would be disadvantageous to do so. If such Bank does not change its lending
office because it determines in its sole reasonable judgment that it is
disadvantageous to do so or because such change would not render such Advance
lawful, then such Bank shall notify the Administrative Agent and the Borrowers,
as the case may be, and shall make an Advance, and the Borrowers shall borrow
such Advance, at a rate based on the Alternate Base Rate in an amount equal to
the amount of the Advance currently outstanding and made by such Bank to the
Borrowers, if in the sole reasonable judgment of such Bank such Advance can
lawfully be extended at a rate based on the Alternate Base Rate. Simultaneously
with making such Advance at a rate based on the Alternate Base Rate, the Advance
then outstanding made available by such Bank to the Borrowers shall be repaid
with accrued interest thereon to the date of payment. If any Bank makes an
Advance at a rate based on the Alternate Base Rate to the Borrowers pursuant to
this Section, the Borrowers may prepay such Advance made by such Bank, without
penalty, at any time upon five Business Days notice. If despite such Bank's
compliance with the preceding provisions of this Section 2.05(c), or if the
Borrowers shall refuse to borrow an Advance at a rate based on the Alternate
Base Rate as herein provided, and if it shall become unlawful for any Bank to
fund or maintain any Advance or
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<PAGE>
perform its obligations hereunder, upon demand by such Bank, the Borrowers shall
prepay in full the outstanding Advance made by such Bank, with accrued interest
thereon and all other amounts payable by the Borrowers hereunder, and upon such
demand or any notice of prepayment the obligation of such Bank to make any
Advance to the Borrowers shall terminate.
(d) (1) If a Total Loss occurs, the Borrowers shall give prompt
written notice to the Administrative Agent of such Total Loss. Unless the
Borrowers provide a Substitute Vessel under Section 2.05 (d)(3) and to the
extent necessary to comply with Section 5.01(e), not more than 120 days (the
"Loss Termination Date") after the date such Total Loss occurred, the Borrowers
shall pay to or to the order of the Administrative Agent, the sum of (a) the
product of the then outstanding principal amount of the Notes multiplied by a
fraction, in which the numerator is the Fair Market Value of the Vessel subject
to the Total Loss as determined by the last appraisal obtained pursuant to
Section 1.03 prior to such Total Loss and the denominator is the aggregate Fair
Market Value similarly determined for all Vessels subject to a Mortgage
immediately prior to such Total Loss, (b) accrued and unpaid interest on the
Notes being prepaid through the Loss Termination Date, (c) an amount equal to
all out-of-pocket third party expenses (including legal and investigatory fees)
incurred by and not otherwise reimbursed to, the Administrative Agent or the
Banks in connection with the occurrence of the Total Loss, as set forth in a
certificate of the Administrative Agent to be delivered to the Borrowers not
less than five Business Days prior to the Loss Termination Date, and (d) any
other amounts which have become due and payable under the Loan Documents but
shall not have been paid prior to the Loss Termination Date minus the sum of all
insurance proceeds actually received by the Administrative Agent in connection
with such Total Loss. All prepayments received after such Total Loss shall be
applied as provided in Section 6.02 hereunder.
(2) If a Total Loss occurs, the Borrowers, not less than 30 days
before the Loss Termination Date, may notify the Administrative Agent of their
intention to replace the Vessel constituting the Total Loss with a substitute
vessel (the "Substitute Vessel"). Prior to or at the time of any substitution
under this Section, the Borrowers will at their own expense and cost furnish the
Administrative Agent with a satisfactory appraisal of the proposed Substitute
Vessel. If the Administrative Agent and the Banks in their reasonable
discretion, have agreed to permit the substitution, the Borrowers at their own
cost and expense shall cause a Mortgage covering the Substitute Vessel to be
duly executed and recorded at the Home Port of the Substitute Vessel and shall
make such amendments to the Loan Documents and Security Documents as the
Administrative Agent shall deem necessary or desirable to reflect such
substitution.
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<PAGE>
(3) If the Fair Market Value of the Substitute Vessel is less than
the Fair Market Value of the Vessel which constituted such Total Loss, the
Borrowers may grant the Administrative Agent on behalf of the Banks a perfected
first priority security interest in additional collateral satisfactory to the
Administrative Agent and the Banks, in their sole discretion, the Fair Market
Value of which (as determined by an appraisal of the type described in Section
1.03) shall be added to the Fair Market Value of the Substitute Vessel for the
purposes of complying with Section 5.01(e)(ii).
(4) If the Banks, in their sole discretion, permit the sale or other
such disposition of any Mortgaged Vessel and if as a result of such sale or
disposition the Borrowers no longer comply with Section 5.01(e)(ii), then all
proceeds of such sale or disposition shall be paid to the Administrative Agent
and the Administrative Agent shall apply all such proceeds to the payment of all
such amounts payable as if in respect of a Total Loss of such Vessel pursuant to
subsection (d)(1) above.
(e) If at any time the Borrowers shall, or may reasonably be expected
to, be required to deduct and withhold, or indemnify any Bank with respect to,
any Taxes (as defined in Section 2.09) (in each case, as evidenced by an opinion
reasonably satisfactory in form and substance to the Borrowers, the
Administrative Agent, the Letter of Credit Agent and the Banks from independent
tax counsel reasonably satisfactory to the Borrowers, the Administrative Agent,
the Letter of Credit Agent and the Banks) the Borrowers, upon at least four
Business Days' notice to the Administrative Agent and the Banks, may prepay at
any time, pro rata, the outstanding principal amount of each Advance, in whole
--- ----
or in part, together with accrued interest to the date of prepayment on the
amount prepaid and all other amounts, including without limitation Breakage
Costs, then payable to the Banks by the Borrowers; provided that, if such Taxes
-------- ----
relate to payments to fewer than all the Banks (the "Affected Banks"), the
--------------
Borrowers, upon at least four Business Days' notice to the Administrative Agent
and the Affected Banks, may prepay, in whole or in part, pro rata (except as set
--- ----
forth in the following provision), the outstanding principal amount of Advances
made by the Affected Banks, with accrued interest thereon and all other amounts
payable to the Affected Banks by the Borrowers (without prepayment any portion
of any Advance made by any Bank that is not any Affected Bank); provided
--------
further, that if the rate of Taxes with respect to any Affected Bank is higher
- -------
than with respect to another Affected Bank, the Borrowers may prepay any portion
of the Advance made by the former Affected Bank without prepaying any portion of
the Advance made by the latter Affected Bank. The Administrative Agent shall
give prompt written notice to the Banks of any prepayments made under this
paragraph (e). No amount of principal paid or prepaid, as the case may be, may
be reborrowed except as otherwise explicitly provided in this Agreement.
Prepayments shall be applied first to outstanding interest and Breakage Costs,
if any, and then to
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<PAGE>
installments of outstanding principal in inverse order of maturity, except as
otherwise expressly provided herein.
SECTION 1.026. Increased Costs; Additional Interest. (a) If on or
------------------------------------
after the Closing Date due to (i) the introduction of or any change (including,
without limitation, any change by way of imposition or increase of reserve or
capital adequacy requirements) in, or in the interpretation of, any law or
regulation, or (ii) the compliance by any Bank with any guideline or request
(including, with respect to reserve and capital adequacy requirements, those
Applicable Laws, policies, guidelines and directives and interpretations in
effect on the Closing Date) from any central bank or other governmental
authority, whether or not having the force of law, there shall be any increase
in the cost to, or reduction in the return on capital of any Bank in consequence
of, any Bank agreeing to make or making, funding or maintaining an Advance, then
the Borrowers shall from time to time, upon demand by such Bank, pay to such
Bank additional amounts sufficient to indemnify such Bank against such increased
cost (without duplication of any amounts pursuant to Section 2.06(b) herein).
(b) If any Bank shall determine that reserves under Regulation D of
the Board of Governors of the Federal Reserve System, as in effect from time to
time, are required to be maintained by it in respect of, or a portion of its
costs of maintaining reserves under Regulation D is properly attributable to,
one or more of its Advances, such Bank shall, subject to the provisions of
Section 2.06(d) below, give notice to the Borrowers, together with a certificate
as described below in Section 2.06(c) and the Borrowers, as the case may be,
shall pay to such Bank additional interest on the unpaid principal amount of
each such Advance, payable on the same day or days on which interest is payable
on such Advance, at an interest rate per annum equal at all times during each
Interest Period for such Advance to the excess of (i) the Applicable Margin plus
the rate obtained by dividing the LIBOR Rate for such Interest Period by a
percentage equal to 100% minus the Reserve Percentage (defined in the next
sentence), if any, applicable during such Interest Period over (ii) the LIBOR
Rate for such Interest Period. The "Reserve Percentage" for any such period,
with respect to any Advance, means the reserve percentage applicable thereto
under regulations issued from time to time by the Board of Governors of the
Federal Reserve System (or any successor) for determining the maximum reserve
requirement (including, but not limited to, any emergency, supplemental or other
marginal reserve requirement) for a member bank of the Federal Reserve System in
New York City with respect to (i) liabilities or assets consisting of or
including eurocurrency liabilities, as defined in Regulation D of the Board of
Governors of the Federal Reserve System, as in effect from time to time, and
having a term equal to any such period, or (ii) any other category of
liabilities which includes deposits by reference to which the interest rate on
such Advance is determined and which have a term equal to any such period.
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<PAGE>
(c) If any Bank determines that compliance with any law or regulation
or any guideline or request from any central bank or other governmental
authority (whether or not having the force of law) affects or would affect the
amount of capital required or expected to be maintained by the Bank or any
corporation controlling the Bank and that the amount of such capital is
increased by or based upon the existence of the Bank's commitment to lend
hereunder and other commitments of this type, then, upon demand by the Bank made
in accordance with the provisions of Section 2.06(d) hereof, the Borrowers shall
immediately pay to the Bank, from time to time as specified by the Bank in a
certificate delivered to the Borrowers, additional amounts sufficient to
compensate the Bank or such corporation in the light of such circumstance, to
the extent that the Bank reasonably determines such increase in capital to be
allocable to the existence of the Bank's commitment to lend hereunder. A
certificate as to the amount of any such increased cost, increased interest or
reduced return under this Section 2.06, submitted to the Borrowers and the
Administrative Agent by such Bank, setting forth calculations in reasonable
detail shall be conclusive and binding for all purposes, absent manifest error.
(d) Before making any demand under this Section 2.06, the Bank shall
consult with the Borrowers and the Administrative Agent and such Bank and the
Administrative Agent shall designate as to itself a different lending office or
take such other measures if such designation or measures would avoid the need
for, or reduce the amount of such increased cost or interest, provided that
--------
neither such Bank nor the Administrative Agent shall be obliged to change its
lending office or take any other measures if in its sole reasonable judgment it
would be disadvantageous to do so.
(e) The Borrowers may, upon at least four Business Days' notice to
the Administrative Agent and any such Bank requesting payment of any amounts
pursuant to this Section 2.06, prepay the outstanding principal amount of each
Advance together with accrued interest to the date of prepayment on the amount
prepaid and all other amounts, including without limitation Breakage Costs, if
any, then payable to such Bank by the Borrowers.
SECTION 1.027. Letter of Credit. (a) Subject to the terms and
----------------
conditions of this Agreement, the Letter of Credit Agent, in reliance on the
Agreements of the Banks set forth in Section 2.07(f), agrees to issue:
(i) a Letter of Credit in respect of Facility C for the account
of the Borrowers on the Closing Date and on each Letter of Credit Renewal
Date in such form as may be approved from time to time by the Letter of
Credit Agent; and
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<PAGE>
(ii) one or more Letters of Credit in respect of Facility D for
the account of the Borrowers on a Letter of Credit Closing Date and on each
Letter of Credit Renewal Date in such form as may be approved from time to
time by the Letter of Credit Agent.
(b) (i) The stated amount of a Letter of Credit in respect of
Facility C shall not exceed the following except to the extent cash collateral
has been provided pursuant to Section 5.01(o):
Facility C Letter of Credit
Date Maximum Face Amount
---- -------------------
September 30, 1994 $5,600,000
January 15, 1999 60% of Original Stated Amount
January 15, 2000 Zero (0).
(ii) The aggregate stated amount of all issued and outstanding
Letters of Credit (including Unreimbursed Letter of Credit Obligations) in
respect of Facility D shall not exceed Four Million United States Dollars (US
$4,000,000) at any one time. Subject to the Four Million United States Dollar
limit imposed in the preceding sentence, Letters of Credit in respect of
Facility D may be issued only to the extent that the aggregate stated amount
(including unreimbursed Letter of Credit Obligations, if any) of such Letters of
Credit shall be equal or less than (x) the sum of the aggregate amounts
available to be drawn in respect of Facility A minus (y) the sum of the
outstanding Advances in respect of Facility A. The amounts that may be drawn
and are permitted to be outstanding in respect of Facility A are reduced by the
aggregate stated amounts of all Letters of Credit issued and outstanding
pursuant to Facility D. The aggregate stated amounts of all Letters of Credit
issued and outstanding under Facility D shall not include any expired or
canceled Letters of Credit which have been issued under Facility D unless the
expired or canceled Letters of Credit constitute Unreimbursed Letter of Credit
Obligations.
(c) Any Letter of Credit shall be subject to the Uniform Customs and,
to the extent not inconsistent, with the laws of the state in which the
principal office of the Letter of Credit Agent is located.
(d) The Letter of Credit Agent shall not be obligated to issue any
Letter of Credit hereunder if (x) such issuance would conflict with, or cause
the Letter of Credit Agent to exceed any limits imposed by Applicable Law; or
(y) if the Letter of Credit by its terms, expires after the applicable Maturity
Date.
(e) The Borrowers may request that the Letter of Credit Agent issue a
Letter of Credit by delivering to the Letter
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<PAGE>
of Credit Agent and the Administrative Agent an Application completed to the
satisfaction of the Letter of Credit Agent, the certificate referred to in
Section 3.02 dated the date of such Application and such other certificates,
documents and other papers and information as may be customary for a letter of
credit of the kind being requested and as the Letter of Credit Agent may
reasonably request. Upon receipt of the Application, and the certificates,
documents and other papers and information delivered to it in connection
therewith in accordance with its customary procedures, the Letter of Credit
Agent shall promptly issue any Letter of Credit requested thereby issuing the
original of such Letter of Credit to the beneficiary thereof or as otherwise may
be agreed by the Letter of Credit Agent and the Borrowers.
(f) (i) Effective on the date of issuance of a Letter of Credit, the
Letter of Credit Agent irrevocably agrees to grant and hereby grants to each
Bank, and each Bank irrevocably agrees to accept and purchase and thereby
accepts and purchases from the Letter of Credit Agent, on the terms and
conditions hereinafter stated, for such Bank's own account and risk an undivided
participation equal to such Bank's Percentage Interest in the Facility relating
to such Letter of Credit and in the Letter of Credit Agent's obligations and
rights under such Letter of Credit issued by the Letter of Credit Agent and the
amount of each draft paid by the Letter of Credit Agent thereunder. Each Bank
unconditionally and irrevocably agrees with the Letter of Credit Agent that, if
a draft is paid whether prior to the Maturity Date or after the Maturity Date,
under any Letter of Credit for which the Letter of Credit Agent is not
reimbursed in full by the Borrowers in accordance with the terms of this
Agreement, each Bank shall pay to the Letter of Credit Agent upon demand at the
Lending Office an amount equal to such Bank's Percentage Interest of the
unreimbursed amount of such draft or any part thereof. The Banks' obligations
hereunder shall be absolute without regard to the occurrence of any Default or
Event of Default, the lapsing of Maturity Date or the occurrence of any other
condition precedent whatsoever.
(ii) If the Letter of Credit Agent does not receive any payment from a
Bank required under this section on the date such payment is due, such Bank
shall pay to the Letter of Credit Agent, on demand, an amount equal to the
product of (x) such amount, and (y) the daily average Federal Funds Rate during
the period from and including the date such payment is required to the date on
which such payment is immediately available to the Letter of Credit Agent
multiplied by (z) a fraction the numerator of which is the number of days that
have elapsed during such period and the denominator of which is 360. If any
unreimbursed amount required to be paid by any Bank pursuant to this Section is
not made available to the Letter of Credit Agent by such Bank within three
Business Days after the date such payment is due, the Letter of Credit Agent
shall be entitled to recover from such Bank, on demand, such amount with
interest thereon calculated
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<PAGE>
from such due date at the rate per annum applicable to Base Rate Advances
hereunder. A certificate of the Letter of Credit Agent submitted to any Bank
with respect to any amounts owing under this Section shall be conclusive in the
absence of manifest error.
(iii) If, at any time after the Letter of Credit Agent has paid a draft
under a Letter of Credit and has received from any Bank its pro rata share of
such payment in accordance with this Section, the Letter of Credit Agent
receives any payment (excluding any fees and other amounts paid pursuant to
Section 2.07(g)) related to such Letter of Credit (whether directly from the
Borrowers or otherwise, including proceeds of collateral applied thereto by the
Administrative Agent), or any payment of interest on account thereof, then the
Letter of Credit Agent shall pay to the Administrative Agent, for the account of
such Bank, its pro rata share thereof; provided, however, that if any such
-------- -------
payment received by the Letter of Credit Agent is required to be returned by the
Letter of Credit Agent, such Bank shall return to the Administrative Agent for
the account of the Letter of Credit Agent, the portion thereof previously
distributed to such Bank.
(g) The Letter of Credit Agent shall notify the Borrowers of the date
and amount of any draft presented under a Letter of Credit. The Borrowers agree
to reimburse the Letter of Credit Agent on each such date for all amounts paid
by the Letter of Credit Agent for the account of (i) such drafts so paid and
(ii) any Taxes, fees, charges or other costs or expenses incurred by the Letter
of Credit Agent in connection with such payment. Each payment shall be made to
the Letter of Credit Agent at its address for notices specified herein and in
lawful money of the United States and immediately available funds. Interest
shall be payable on any or all amounts remaining unpaid by the Borrowers under
this subsection from the date such amounts become payable until payment in full
at the rate which will be payable on Base Rate Advances at such time.
(h) Each of the Borrowers' obligations under this Section shall be
absolute and unconditional under any and all circumstances and without setoff,
counterclaim or defense to payment which any Borrower may have or have had
against the Letter of Credit Agent or any beneficiary of a Letter of Credit.
Each of the Borrowers also agrees with the Letter of Credit Agent that the
Letter of Credit Agent shall not be responsible for, and that the Borrowers'
obligations under this Section shall not be affected by, among other things, the
validity or genuineness of documents or any endorsements thereon, even though
such documents shall in fact prove to be invalid, fraudulent or forged or any
dispute between or among the Borrowers and any beneficiary of a Letter of Credit
or any other party to which such Letter of Credit may be transferred or any
claims whatsoever of the Borrowers against any beneficiary of a Letter of Credit
or any such transferee. The Letter of Credit Agent shall not be liable
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<PAGE>
for any error, omission, interruption or delay in transmission, dispatch or
delivery of any message or advice, however transmitted, in connection with a
Letter of Credit, except for errors or omissions caused by the Letter of Credit
Agent's gross negligence or willful misconduct. The Borrowers agree that any
action taken or omitted by the Letter of Credit Agent in connection with a
Letter of Credit or the related drafts or documents, if done in the absence of
gross negligence or willful misconduct and in accordance with the standards of
care specified in the Uniform Commercial Code of the state in which the
principal office of the Letter of Credit Agent is located, shall be binding on
the Borrowers and shall not result in any liability of the Letter of Credit
Agent to the Borrowers.
(i) If any draft shall be presented for payment of a Letter of
Credit, the Letter of Credit Agent shall promptly notify the Borrowers, the
Banks and the Administrative Agent of the date and amount thereof. The
responsibility of the Letter of Credit Agent to the Borrowers in connection with
any draft presented for payment under a Letter of Credit shall, in addition to
any payment obligation expressly provided in a Letter of Credit, be limited to
determining that the documents (including each draft delivered under a Letter of
Credit in connection with such presentment) are in conformity on their face with
such Letter of Credit.
(j) To the extent that any provision of the Application, including
any reimbursement provisions contained therein, related to a Letter of Credit is
inconsistent with the provisions of this Section, the provisions of this Section
shall prevail.
SECTION 1.028. Payments and Computations. (a) The Borrowers shall
-------------------------
make each payment hereunder and under any instrument and other Loan Document
delivered hereunder (except as otherwise provided in any such instrument) due to
any Bank or the Administrative Agent not later than 12:00 noon New York City
time on the date when due, without set off or counterclaim, in lawful and freely
transferable United States Dollars to the Administrative Agent at the Lending
Office for the account of the Administrative Agent in same day funds. The
Administrative Agent shall promptly disburse to the Banks funds of such type as
it shall have received in the manner provided by this Agreement.
(b) The Borrowers hereby authorize the Administrative Agent and each
Bank, if and to the extent payment is not made when due hereunder or under any
instrument delivered hereunder and the Borrowers have been given, or otherwise
have, notice thereof, to charge from time to time against any or all of the
Borrowers' accounts with the Administrative Agent or the Banks, as the case may
be, any amounts so due, provided that, so long as a Default or Event of Default
has occurred and is continuing, no such notice to the Borrowers shall be
required. The Borrowers further agree that not later than 12:00 noon (New York
City time)
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<PAGE>
on each day on which a payment is due hereunder with respect to the Advance or
under any Note, it will have in its account maintained with the Administrative
Agent in New York City a credit balance at least equal to the total amount so
due on such day.
(c) All computations of interest and fees shall be made by the
Administrative Agent, the Letter of Credit Agent and the Banks on the basis of a
year of 360 days for the actual number of days (including the first day but
excluding the last day) occurring in the period for which such interest or fee
is payable except that interest in respect of the Base Rate shall be calculated
on the basis of actual days elapsed over a 365/366 day year.
(d) Whenever any payment to be made hereunder or under the Loan
Documents shall be stated to be due, or the Interest Payment Date would
otherwise occur on a day other than a Business Day, such payment shall be made,
and the Interest Payment Date shall occur, on the next succeeding Business Day,
and any such extension of time shall in all cases be taken into account in the
computation of payment of interest due hereunder or otherwise; provided,
--------
however, if such extension would extend the Maturity Date or would cause such
- -------
payment to be made, or, in respect of an Interest Payment Date for any Advance
bearing interest at a rate based on the LIBOR Rate, to occur in a new calendar
month, such payment shall be made, and the Interest Payment Date shall occur on
the preceding Business Day.
(e) All parties to this Agreement acknowledge and agree that the
Obligations shall be automatically decreased (without any further action of any
Person being required) to the extent of any amounts received pursuant to Section
2.08(a) hereof by the Administrative Agent, the Mortgagee or any of the Banks
under the Security Documents, as the case may be, which amounts the
Administrative Agent or the Banks, as the case may be, may freely apply or cause
to be applied to the repayment of the Obligations as provided in the Loan
Documents. Except as otherwise expressly provided in the preceding sentence,
the Security Documents shall not in any way negate or adversely affect the
liabilities and Obligations which the Borrowers and any other party have under
this Agreement and the other Loan Documents to the Banks, the Letter of Credit
Agent or the Administrative Agent.
SECTION 1.029. Taxes. (a) Any and all payments made by the
-----
Borrowers under this Agreement shall be made free and clear of, and without
deduction or withholding for or on account of, any present or future Taxes,
except as required by Applicable Law. If any Taxes are required by Applicable
Law to be deducted or withheld from any payment hereunder to the Administrative
Agent, the Letter of Credit Agent or any Bank, the Borrowers shall (i) promptly
notify the Administrative Agent, the Letter of Credit Agent or such Bank, as
applicable, of such requirement,
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(ii) deduct or withhold the full amount of such Taxes in a timely manner and pay
such Taxes in a timely manner to the appropriate authorities, (iii) promptly
forward to the Administrative Agent for its own account, the Letter of Credit
Agent for its own account or the account of such Bank, as applicable, an
official receipt or certified copy thereof or other documentary evidence
satisfactory to the Administrative Agent, Letter of Credit Agent or such Bank
evidencing such payment and (iv) except in the case of Bank Taxes, pay such
additional amounts so that the amount received by the Administrative Agent, the
Letter of Credit Agent or such Bank with respect to such payment, after the
payment of such Taxes (including any Taxes on such additional amounts), equals
the full amount such Administrative Agent, the Letter of Credit Agent or such
Bank would have otherwise received with respect to such payment had no deduction
or withholding been required. Further, if any Taxes (other than Bank Taxes) are
asserted directly against the Administrative Agent, Letter of Credit Agent or
any Bank with respect to any payment hereunder to the Administrative Agent, the
Letter of Credit Agent or such Bank, the Administrative Agent, the Letter of
Credit Agent or such Bank may pay such Taxes and the Borrower shall promptly pay
such additional amounts (including any penalties, interest or expenses) so that
the amount received by the Administrative Agent, Letter of Credit Agent or such
Bank, after the payment of such Taxes (including any Taxes on such additional
amounts), equals the full amount the Administrative Agent, the Letter of Credit
Agent or such Bank would have otherwise received had no such Taxes been
asserted. If the Borrower fails to pay to the appropriate authority any Taxes
when due or fails to remit to the Administrative Agent, the Letter of Credit
Agent or such Bank, as applicable, the required receipts evidencing payment of
such Taxes, the Borrowers shall indemnify the Administrative Agent, the Letter
of Credit Agent or such Bank for any Taxes that may become payable as a result
of such failure.
(b) The Borrowers shall not be required to pay any additional amounts
to the Administrative Agent, Letter of Credit Agent or any Bank in respect of
United States federal withholding taxes pursuant to Section 2.09(a) above if the
obligation to pay such additional amounts would not have arisen but for a
failure by such Bank to comply with the provisions of Section 2.09(c). In the
event the Borrowers have actual knowledge that they are required to, or there
arises, in the Borrowers' reasonable opinion, a substantial likelihood that the
Borrowers will be required to, pay an increased amount or otherwise indemnify
the Administrative Agent, the Letter of Credit Agent or any Bank for or on
account of any Taxes pursuant to Section 2.09(a), the Borrowers shall promptly
notify the Administrative Agent, the Letter of Credit Agent and such Bank of the
nature of such Taxes and shall furnish such information to the Administrative
Agent, the Letter of Credit Agent and such Bank as the Administrative Agent, the
Letter of Credit Agent or such Bank may reasonably request. In the event the
Borrowers provide the notice described in the preceding sentence, the Borrowers,
the Administrative
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<PAGE>
Agent, the Letter of Credit Agent and each relevant Bank shall consult in good
faith to determine what may be required to avoid or reduce such Taxes and shall
each use reasonable efforts to avoid or reduce such Taxes (so long as such
efforts result in no incremental costs to the Administrative Agent, the Letter
of Credit Agent or such Bank, do not modify the terms of repayment of the Loans
or materially disadvantage the Administrative Agent, the Letter of Credit Agent
or such Bank).
(c) Prior to the first payment to the Administrative Agent, the
Letter of Credit Agent or any Bank under this Agreement, each Bank that is not
incorporated under the laws of the United States, any State thereof or the
District of Columbia shall deliver to the Borrowers and the Administrative Agent
(i) two duly completed copies of United States Internal Revenue Service Form
1001 or Form 4224 (or applicable successor form and any related forms as may
from time to time be adopted to document a claim to which such form relates) and
(ii) a duly completed copy of United States Internal Revenue Service Form W-8 or
W-9 (or applicable successor form and any related forms as may from time to time
be adopted to document a claim to which such form relates). Such Bank shall
certify that (x) in the case of any form provided pursuant to clause (i) of the
preceding sentence it is entitled to receive payments hereunder without
deduction or withholding of any United States federal income taxes and (y) in
the case of any form provided pursuant to clause (ii) of the preceding sentence
it is entitled to receive payments hereunder without deduction or withholding of
any United States federal backup withholding taxes. Each such Bank also agrees
to deliver further copies of said Form 1001, 4224, W-8 or W-9 (or applicable
successor form and any related forms as may from time to time be adopted to
document a claim to which such form relates), and any related certification as
described in the preceding sentence, as the case may be, (i) on or before the
date that any such form previously provided expires or becomes obsolete, (ii)
after the occurrence of any event requiring a change in the most recent form
previously provided unless, in any case, an event (including, without
limitation, any change in a treaty, law or regulation) has occurred prior to the
date on which delivery would otherwise be required that renders all such forms
inapplicable or that would prevent such Bank from duly completing and delivering
any such form with respect to it and such Bank so advises the Borrowers and the
Administrative Agent and the Letter of Credit Agent and (iii) upon reasonable
request of the Borrower.
(d) The Borrowers will indemnify the Administrative Agent and each
Bank for the full amount of Taxes (other than Bank Taxes) payable by the
Administrative Agent or such Bank, as the case may be, on any and all payments
made hereunder or on any instrument delivered hereunder and any liability
(including penalties, interest and expenses) arising therefrom or with respect
thereto, whether or not such Taxes were correctly or legally asserted. This
indemnification shall be made within 30
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<PAGE>
days from the date the Administrative Agent or the Bank, as the case may be,
makes written demand therefor with appropriate supporting documentation. The
Administrative Agent or the Bank, as the case may be, to the extent practicable,
shall notify the Borrowers before paying, or requiring the Borrowers to pay, any
such Tax.
(e) Within 30 days after the date of any payment of Taxes, the
Borrowers will deliver to the Administrative Agent and each Bank satisfactory
evidence of payment thereof. If no Taxes are payable in respect of any payment,
the Borrowers will, at the reasonable request of the Administrative Agent on
behalf of any Bank, as the case may be, deliver to the Administrative Agent a
certificate from each appropriate taxing authority or any political subdivision
thereof, or an opinion of counsel acceptable to the Administrative Agent, in a
form reasonably acceptable to the Administrative Agent, stating, or other
satisfactory evidence, that such payment is exempt from or not subject to Taxes.
(f) Without prejudice to the survival of any other agreement of the
Borrowers hereunder, the agreements and obligations of the Borrowers contained
in subsections (a) through (f) of this Section 2.09 shall survive the payment in
full of the Obligations and the expiry of the Loan Documents.
SECTION 2.10. Fees. (a) On the Agreement Date, the Borrowers shall pay solely
----
for the account of each Bank on the Agreement Date $52,104.17 representing the
aggregate amount of any commitment fees and other fees owed the Banks accruing
prior to the Agreement Date. The Borrowers shall pay the Administrative Agent,
solely for the account of each Bank, on the date which is three months from the
Agreement Date and quarterly thereafter, a non-refundable commitment fee (as to
each Bank, its "IPO Commitment Fee") of one-half of one percent (1/2%) per annum
of each such Bank's respective Commitment daily in respect of the unused portion
of the Bank's IPO Commitment calculated quarterly in arrears from the Agreement
Date. Notwithstanding anything to the contrary contained in this Agreement or
in any other agreement, each Bank's IPO Commitment Fee and the fees described in
the first sentence of this subsection shall be solely for the account of such
Bank.
(b) The Borrowers shall pay the Co-Agents for their own accounts on
the Closing Date, and not later than the anniversary of such date of each year
thereafter so long as any amount payable by the Borrowers hereunder remains
outstanding, an annual agency fee in an amount mutually agreed between them.
(c) (i) The Borrower shall pay a letter of credit fee to the
Administrative Agent for the account of the Letter of Credit Agent. Upon
receipt of the letter of credit fee, the Letter of Credit Agent shall distribute
such fee to the Banks pro
---
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rata and without deduction. The letter of credit fee shall be at the per annum
- ----
rate equal to the Applicable Margin (as determined in Section 2.04(b)(iii) on
the average daily aggregate amount available to be drawn under the Letter of
Credit for the period for which the fee is calculated. Such fee shall accrue
from the date on which the Letter of Credit is issued and shall be payable
quarterly in arrears commencing on December 31 and quarterly thereafter until
the termination of the Letter of Credit. (ii) In addition to the foregoing
fees and commissions, the Borrowers shall pay or reimburse the Letter of Credit
Agent for such normal and customary costs and expenses as are incurred or
charged by the Letter of Credit Agent in issuing, effecting payment under or
amending any Letter of Credit.
(d) On the Agreement Date, the Borrowers shall pay to the
Administrative Agent an Availability Fee of Fifty-Three Thousand Seven Hundred
Fifty Dollars ($53,750.00) which Availability Fee shall be shared by the Banks
according to their respective Percentage Interests.
(e) On the Effective Date, the Borrowers shall pay to the
Administrative Agent an IPO Fee of Four Hundred Twenty Five Thousand Dollars
($420,000.00) which IPO Fee shall be shared by the Banks according to their
respective Percentage Interests.
SECTION 2.11. Optional Reduction. Upon at least four Business Days'
------------------
notice, the Borrowers shall have the right to terminate, in whole or in part,
the undrawn portion of Facility A. Any such partial terminations shall be in a
minimum amount of $250,000 and integral multiples thereof. Reductions shall be
applied ratably among the Banks' Commitments. Once terminated, the Borrowers
shall have no right to reinstate such terminated Commitment.
ARTICLE III.
CONDITIONS PRECEDENT
SECTION 1.031. Conditions Precedent to an Advance on the Agreement
---------------------------------------------------
Date. (a) The obligations of the Banks to make an Advance on the Agreement
- ----
Date is subject to the conditions precedent that the Administrative Agent, the
Letter of Credit Agent and the Banks shall have received on or before such Date,
the following in form and substance satisfactory to the Administrative Agent,
the Letter of Credit Agent and the Banks:
(i) The Agreement, and the Notes each duly executed by the
Borrowers.
(ii) Each of the Security Documents, duly executed by the
parties thereto.
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(iii) A certificate of each of the Secretary or an Assistant
Secretary of each of the Borrowers, dated such Date, certifying that the
Board of Directors (or the partners) of such Borrower has duly authorized
the Transaction, the IPO, the Loan Documents and all the other transactions
contemplated in and by this Agreement and the organizational documents of
such Borrowers and by an official of the relevant Incorporation
Jurisdiction, and evidence of the good standing of such Borrowers in its
Incorporation Jurisdiction.
(iv) A certificate of each of the Secretary or an Assistant
Secretary of each Borrower dated such date, certifying the names and true
signatures of the officers of such Borrower who are fully authorized to
sign the Agreement and the other Loan Documents, and any other document to
be delivered by or in respect of such Borrowers hereunder.
(v) Proper financing statements or other filings, duly executed
by each of the Borrowers under the Uniform Commercial Code or Applicable
Law of all jurisdictions as the Administrative Agent may deem necessary or
desirable in order to perfect the security interests created by the
Security Documents in the Collateral covered thereby.
(vi) Favorable opinions of Messrs. Dyer Ellis Joseph & Mills,
and Panamanian counsel, special counsel for the Borrowers, dated such Date,
in form and as to such matters as the Administrative Agent, the Letter of
Credit Agent and the Banks may request.
(vii) A favorable opinion of Messrs. Winthrop, Stimson, Putnam &
Roberts, special counsel for the Administrative Agent, the Letter of Credit
Agent and the Banks, in form and substance satisfactory to the
Administrative Agent, the Letter of Credit Agent and the Banks.
(viii) Evidence that all other actions have been taken which are
necessary or, in the opinion of the Administrative Agent, desirable, to
perfect or protect the first priority Liens in favor of the Administrative
Agent or the Mortgagee for the benefit of the Banks in the Collateral.
(ix) Each of the Banks shall be satisfied with the final terms
and conditions of the transactions contemplated by the IPO, including
without limitation all legal and tax aspects thereof; all documentation
relating to such transactions shall be in form and substance satisfactory
to the Banks; and a copy certified, as true and complete by the Secretary
or an Assistant Secretary of Hvide, of each such document or filing as of
such Date (together with all documents and consents, if any, to be
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<PAGE>
delivered under each thereof), together with all exhibits, schedules and
other documents furnished in connection therewith, and the opinions of
counsel, if any, delivered to the Borrowers thereunder, together with a
letter of such counsel addressed to the Banks to the effect that they each
may rely upon such opinions as though an addressee thereof.
(x) A list, certified by the chief financial officer of the
Borrowers, as of the date hereof and, to the extent necessary supplemented
as of the Agreement Date, of (1) all agreements of the Borrowers and of
their Subsidiaries relating to any Indebtedness of the Borrowers or any
Subsidiary, which Indebtedness, singly or in the aggregate, equals or
exceeds Five Hundred Thousand Dollars ($500,000), specifying the amount of
Indebtedness outstanding and which may be outstanding under each such
agreement, (2) all consensual Liens and known Liens for Taxes, assessments
or other governmental charges or levies, in each case on any vessel or
other properties or assets of any kind, real or personal, tangible or
intangible, of the Borrowers or any of its Subsidiaries and (3) any other
Liens on any vessel or other properties or assets of any kind, real or
personal, tangible or intangible, of the Borrowers or any of its
Subsidiaries, having a value in each case equal to or greater than Five
Hundred Thousand Dollars ($500,000), specifying the amount of such Liens in
each case.
(xi) As to each Vessel:
(A) evidence satisfactory to the Administrative Agent, that
each Borrower has good title to such Vessel owned by such Borrower and
that each such Vessel is duly documented in the name and ownership of
such Borrower under the laws and flag of the United States for the
trade in which it is to engage or under the laws and flag of such
other Country of Registry as may be approved by the Administrative
Agent at the direction of the Majority Banks, free of recorded Liens
except the Mortgage;
(B) evidence satisfactory to the Administrative Agent, that
such Vessel and such other risks as may be required to be covered by
the terms of the relevant Mortgage have been insured upon terms and
with underwriters in respect of such events as may be acceptable to
the Banks in their reasonable discretion and that the interest of the
Mortgagee in any such insurances as assignee has been effected and
will be noted by all underwriters, brokers and mutual clubs and
associations concerned;
(C) letters of undertaking and opinions as to insurance
coverage addressed to the Mortgagee and
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<PAGE>
the Banks by relevant brokers, underwriters and mutual clubs and
associations covering such Vessel's insurance policies and mutual club
entries, in each case reasonably satisfactory to the Mortgagee and the
Administrative Agent;
(D) as to new Vessels which are classed, a certificate of
class (dated not more than ten (10) days prior to the Effective Date)
evidencing that such Vessel is in class and classed in the highest
classification for vessels of the same age and type by a
classification society reasonably acceptable to the Banks, free of any
outstanding recommendations affecting class;
(E) an appraisal of any such new Vessel completed in
accordance with the provisions of Section 1.03 hereof not more than 30
days prior to the Effective Date;
(F) evidence satisfactory to the Administrative Agent that
each of the Mortgages has been duly recorded at the Home Port of each
of the Mortgaged Vessels and constitute a first "Preferred Mortgage"
within the meaning of Chapter 313 of Title 46 of the United States
Code.
(xii) all governmental and third party consents and approvals
necessary in connection with the Transactions and the transactions
contemplated by the IPO shall have been obtained (without the imposition of
any conditions that are not acceptable to the Banks) and shall be in full
force and effect; all applicable waiting periods shall have expired without
any action being taken by any competent authority; and no law or regulation
shall be applicable in the judgment of the Banks that restrains, prevents
or imposes materially adverse conditions upon the Transactions or
transactions contemplated by the IPO. The Banks shall have completed a due
diligence investigation of each Borrower and its Subsidiaries in scope and
with results satisfactory to the Banks; and the Banks shall be satisfied
with each Borrower's management and with the arrangements between the
Borrowers and their respective managements including any management
agreements, contracts, consulting agreements or similar agreements.
(xiii) Each Borrower shall have satisfied the Banks that such
Borrower is in compliance with all material environmental statutes and
regulations and maintains adequate reserves in connection therewith,
including without limitation if requested a Phase I report in respect of
any facilities to be acquired as part of the transactions contemplated by
the Acquisition Documents.
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<PAGE>
(xiv) The Banks shall be satisfied that each Borrower and each
of their Affiliates shall be able to meet its obligations under all
employee and retiree welfare plans, that each Borrower's and each
Affiliates' employee benefit plans are funded in accordance with the
minimum statutory requirements, that no material "reportable event" (as
defined in ERISA) has occurred as to any such employee benefit plan and
that no termination of, or withdrawal from, any such employee benefit plan
has occurred or is contemplated that could result in a material liability.
(xv) The Banks (A) shall be satisfied with the terms and
conditions of the IPO (B) shall have received a copy certified as true and
complete by the Secretary or an Assistant Secretary or other appropriate
officer of the Amended S-1, the prospectus and all of the other documents
and consents, if any, delivered in connection therewith (C) shall have
received evidence of gross receipt by Hvide of at least Eighty One Million
Dollars ($81,000,000) in connection with the IPO (D) shall have received
evidence that (x) the Senior Subordinated Note and the Indebtedness related
thereto has been reduced to no more than Five Million Dollars ($5,000,000)
if Hvide has raised gross proceeds of at least Ninety One Million Dollars
($91,000,000); or (y) if Hvide shall have raised gross proceeds of less
than Ninety One Million Dollars, in the discretion of the Banks, the Senior
Subordinated Note shall be reduced to no more than Fifteen Million Dollars
($15,000,000) and (E) shall have received evidence that the Junior
Subordinated Noteholders and Hvide have entered into an Agreement whereby
the Junior Subordinated Notes and the Indebtedness related thereto shall be
retired and the Junior Subordinated Notes shall be redeemed or shall be
converted into Class A or Class B shares of Hvide stock, and (F) shall have
received evidence that the Acquisitions as described in Exhibit L shall
have been completed in form and substance acceptable to the Banks.
(xvi) Unaudited, pro forma consolidated financial statements of
---------
Hvide as of December 31, 1995, giving effect to the IPO and the financing
contemplated hereby.
SECTION 1.032. Conditions Precedent to Each Advance and Letter of
--------------------------------------------------
Credit Following the Agreement Date. The obligation of the Banks to make each
- -----------------------------------
Advance on a Drawdown Date and the Letter of Credit Agent to renew the Letter of
Credit shall be subject to the further conditions precedent that on each
Drawdown Date or Letter of Credit Renewal Date:
(a) the following statements shall be true and correct, and the
Administrative Agent on behalf of the Banks shall have received a
certificate signed by a duly authorized officer of the Borrowers and dated
the Drawdown
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<PAGE>
Date of the Advance or Letter of Credit Renewal Date, as the case may be,
to attest that:
(i) The representations and warranties of the Borrowers
contained in this Agreement, the other Loan Documents are true and
correct on and as of the Drawdown Date, as though made on and as of
such date, and no Default or Event of Default has occurred and is
continuing, or would result from such Advance, Letter of Credit or the
Transaction; and
(ii) The Borrowers are, and immediately upon giving effect
to the making of the Loan hereunder, shall be in compliance with their
obligations under Section 5.01(e) hereof;
(b) the Borrowers shall have paid or caused to be paid all fees
required to be paid under this Agreement on prior to such Drawdown Date or
Letter of Credit Renewal Date;
(c) no material adverse change shall have occurred since
December 31, 1995, in the business, operations, properties, prospects or
condition (financial or otherwise) of any of the Borrowers or their
Subsidiaries taken as a whole;
(d) the Advance when added to previous Advances and such Letter
of Credit when renewed are in an aggregate amount not greater than the
aggregate available on undisbursed or undrawn sum of the then available
Commitments of the Banks;
(e) all corporate, organizational or other proceedings, and all
documents, instruments and other legal matters in connection with the
transactions contemplated by the Loan Documents and the Transaction shall
be satisfactory in form and substance to the Administrative Agent, the
Banks and their counsel; and
(f) the Banks shall have received such other approvals,
opinions, or documents as they may reasonably request.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES
SECTION 1.041. Representations and Warranties of the Borrowers. Each
-----------------------------------------------
of the Borrowers represents and warrants as follows:
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(a) Due Existence; Compliance. Each of the Borrowers is a
-------------------------
corporation or limited partnership duly organized, validly existing and in good
standing, where applicable under the laws of its Incorporation Jurisdiction and
has all requisite power and authority under such laws to own or lease and
operate its properties and to carry on its business as now conducted and as
proposed to be conducted, and to execute, deliver and perform its obligations
under the Loan Documents to which it is, or will be, a party. Each of the
Borrowers and its Subsidiaries is duly qualified or licensed to do business as a
foreign corporation or entity and is in good standing, where applicable, in all
jurisdictions in which it owns or leases property (including vessels), or
proposes to own or lease property (including vessels), or in which the conduct
of its business, and the conduct of its business upon consummation of the
Transaction, requires it to so qualify or be licensed, except to the extent that
the failure to so qualify or be in good standing would have no material adverse
effect on the business, operations, properties, prospects or condition
(financial or otherwise) of any of the Borrowers and its Subsidiaries or the
ability of any such Person to perform its obligations under any of the Loan
Documents to which it is or may be a party. Each of the Borrowers and their
Subsidiaries is in compliance in all material respects with all Applicable Law,
rules, regulations and orders.
(b) Corporate Authorities; No Conflicts. The execution, delivery and
-----------------------------------
performance by each of the Borrowers of this Agreement and the other Loan
Documents to which it is or will be a party are within its corporate or limited
partnership powers and have been duly authorized by all necessary corporate and
stockholder approvals or partnership approvals and (i) do not contravene its
organizational documents or any law, rule, regulation, judgment, order or decree
applicable to or binding on any of the Borrowers or their Subsidiaries and (ii)
do not contravene, and will not result in the creation of any lien under, any
provision of any contract, indenture, mortgage or agreement to which any of the
Borrowers or their Subsidiaries is a party, or by which it or any of its
properties are bound.
(c) Government Approvals and Authorizations. No authorization or
---------------------------------------
approval or other action by, and no notice to or filing with, any governmental
authority or regulatory body is required for the due execution, delivery and
performance by or enforcement against each of the Borrowers of the Loan
Documents (except such governmental approvals or authorizations as have been
duly obtained or made and remain in full force and effect).
(d) Legal, Valid and Binding. Each of the Loan Documents to which
------------------------
any of the Borrowers is a party is, or upon delivery will be, the legal, valid
and binding obligation of such Borrowers, enforceable against such Borrowers in
accordance with its terms.
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<PAGE>
(e) Financial Information. The consolidated annual audited balance
---------------------
sheet of the Borrowers as of December 31, 1995 (as updated on March 31, 1996)
and the related statements of operations and changes in financial position of
the Borrowers for the fiscal year then ended, copies of which have been
furnished to the Administrative Agent, fairly present the consolidated financial
condition of the Borrowers as of such date and the results of the operations of
the Borrowers for the period ended on such date, all in accordance with GAAP
consistently applied. There has been no material adverse change in the
business, operations, properties or condition (financial or otherwise) of any of
the Borrowers or any of its Subsidiaries taken as a whole since December 31,
1995.
(f) Litigation. There is no pending or threatened action or
----------
proceeding affecting any of the Borrowers or any of their Subsidiaries by or
before any court, governmental agency or arbitrator, which may materially
adversely affect the condition, operations, business, prospects, properties or
assets of the Borrowers or their Subsidiaries taken as a whole, or prohibit,
limit in any way or materially adversely affect the consummation of the
Transaction, including, without limitation, the ability of any of the Borrowers
or their Subsidiaries to perform its respective obligations under the Loan
Documents to which it is or may be a party, except as disclosed to the Banks in
Schedule E.
(g) Immunities. None of the Borrowers or any of their Subsidiaries,
----------
or the property of any of them, has any immunity from jurisdiction of any court
or from any legal process (whether through service or notice, attachment prior
to judgment, attachment in aid of execution, execution or otherwise) under
Applicable Law.
(h) No Taxes. There is no Tax or similar item imposed by the United
--------
States, the States of New York or Florida or any other jurisdiction in which the
Borrowers conduct business, or by any political subdivision of any of the
foregoing, on or by virtue of the execution or delivery or enforcement of this
Agreement or the Loan Documents or any other document to be furnished hereunder,
including without limitation any document included in the Collateral.
(i) No Filing. To ensure the legality, validity, enforceability or
---------
admissibility in evidence of this Agreement and the other Loan Documents in each
of the Incorporation Jurisdictions and the States of New York or Florida or any
other jurisdiction in which the Borrowers conduct business, it is not necessary
that any Loan Document, or any other document related to any thereof except the
Mortgages, be filed or recorded with any court or other authority in such
jurisdiction, or that any stamp or similar tax be paid on or with respect to
this Agreement or any of the other Loan Documents.
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<PAGE>
(j) Loan Document Representations and Warranties. The
--------------------------------------------
representations and warranties of the Borrowers in the Loan Documents were true
and correct in all material respects when made, and are true and correct in all
material respects on the date hereof as if made as of the date hereof.
(k) No Defaults. There does not exist (i) any event of default, or
-----------
any event that with notice or lapse of time or both would constitute an event of
default, under any agreement to which any of the Borrowers or any of their
Subsidiaries is a party or by which any of them may be bound, or to which any of
their properties or assets may be subject which default would have a material
adverse effect on the Borrowers and their Subsidiaries taken as a whole, or
would materially adversely affect any of the Borrowers' ability to perform its
obligations under the Loan Documents to which it is or may be a party, or (ii)
any event which is a Default or Event of Default.
(l) Margin Regulations. No part of the proceeds of the Loan will be
------------------
used for any purpose that violates the provisions of any of Regulations G, T, U
or X of the Board of Governors of the Federal Reserve System of the United
States or any other regulation of such Board of Governors. Neither the
Borrowers nor any of their Subsidiaries is engaged in the business of extending
credit for the purpose of purchasing or carrying margin stock, within the
meaning of Regulations G, T, U and X issued by the Board of Governors of the
Federal Reserve System of the United States.
(m) Investment Company Act. None of the Borrowers is an "investment
----------------------
company" or a company "controlled" by an "investment company" (as each of such
terms is defined or used in the Investment Company Act of 1940, as amended) of
the United States.
(n) Taxes Paid. (i) Each of the Borrowers and their Subsidiaries
----------
(A) has filed or caused to be filed, or has timely requested an extension to
file or has received from the relevant governmental authorities an extension to
file, all material tax returns which are required to have been filed, and (B)
has paid all Taxes shown to be due and payable on said returns or extension
requests or on any assessments made against it or any of its properties, and all
other Taxes, fees or other charges imposed on it or any of its properties by any
governmental authority (other than those the amount or validity of which is
currently being contested in good faith by appropriate proceedings and with
respect to which appropriate reserves in conformity with GAAP have been provided
on its books); and (ii) no tax liens have been filed and no claims are being
asserted with respect to any such Taxes, fees or other charges other than those
the amount or validity of which is currently being contested in good faith by
appropriate proceedings and with respect to which appropriate reserves in
accordance with GAAP have been provided on its books.
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<PAGE>
(o) Disclosure. No representation, warranty or statements made or
----------
document or financial statement provided by any of the Borrowers or any
Affiliate or Subsidiary thereof, in or pursuant to this Agreement, any other
Loan Document, or in any other document furnished in connection with this
Agreement, any other Loan Document or the Transaction, is untrue or incomplete
in any material respect or contains any misrepresentation of a material fact or
omits to state any material fact necessary to make any such statement herein or
therein not misleading.
(p) The Security Documents. The provisions of each of the Security
----------------------
Documents create in favor of the Administrative Agent or the Mortgagee under the
Master Vessel Trust Agreement for the Banks a valid, binding and enforceable
security interest and Lien in all right, title and interest in the Collateral
therein described, and shall, upon execution by the parties thereto constitute a
fully perfected first priority security interest in favor of the Banks and the
Mortgagee on behalf of the Banks in all right, title and interest in such
Collateral, subject in the case of (x) each Mortgage, to the recordation of the
-------
Mortgage as described in the following sentence, (y) each Earnings Assignment,
to notice being given to charterers and account parties and (z) each Insurance
Assignment to notice being given to underwriters and protection and indemnity
clubs, and their consent being obtained where policy provisions or club rules so
require. Upon execution and delivery of a Mortgage by each of the Borrowers who
are owners of a Mortgaged Vessel and the recordation of a Mortgage in the Home
Port of such Vessel, the Mortgage for each such Vessel will be a first
"preferred mortgage" within the meaning of Chapter 313 of Title 46 of the United
States Code and will qualify for the benefits accorded a "preferred mortgage"
under Chapter 313 of Title 46 of the United States Code and no other filing or
recording or refiling or rerecording or any other act is necessary or advisable
to create or perfect such security interests under such Mortgage or in the
mortgaged property therein described. No consent, approval or authorization of
any Person is necessary or desirable for the realization of the benefits
afforded by the Security Documents or for enforcement of the rights and remedies
therein contained by the Administrative Agent, the Mortgagee or the Banks.
(q) Good Title. Each of the Borrowers has good title to its
----------
properties and assets, except for (i) as created hereby and permitted hereunder,
existing or future Liens, security interests, mortgages, conditional sales
arrangements and other encumbrances either securing Indebtedness or other
liabilities of any of the Borrowers or any of their Subsidiaries; (ii) other
than in respect of Collateral, Liens which the Borrowers in their reasonable
business judgment has determined would not be reasonably expected to materially
interfere with the business or operations of the Borrowers or their Subsidiaries
as conducted from time to time, (iii) minor irregularities therein which do not
materially adversely affect their value or utility; and (iv) Liens disclosed in
Schedule F.
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<PAGE>
(r) ERISA. None of the Borrowers nor any of their Subsidiaries, is
-----
or has been subject to, or has any liability, or has incurred any liability of
any sort whatsoever to any Person in respect of any plan within the meaning of,
ERISA or the Code.
(s) Solvency. Each of the Borrowers is on the date hereof, and at
--------
all times will be, Solvent.
(t) Chief Executive Offices. The chief executive offices of the
-----------------------
Borrowers are located at Fort Lauderdale, Florida.
(u) Burdensome Provisions. None of the Borrowers or any of their
---------------------
Subsidiaries is a party to or bound by any contract or applicable law,
compliance with which will have a materially adverse effect on (a) the Borrowers
and their consolidated Subsidiaries taken as a whole, or (b) any Loan Document
to which any of the Borrowers is a party or (c) the Collateral.
(v) Pari Passu Status. The Obligations of the Borrowers to the Banks
-----------------
under the Loan Documents will at all times rank at least pari passu in priority
---- -----
of payment with all of the Borrowers' other Indebtedness.
(w) Citizenship. Each of Hvide and each Borrower owning a Vessel
-----------
engaged in the coastwise trade of the United States is a "citizen of the United
States" within the meaning of Section 2 of the Shipping Act, 1916, as amended,
for purposes of engaging in the coastwise trade of the United States.
ARTICLE V.
COVENANTS OF THE BORROWERS
SECTION 1.051. Affirmative Covenants. So long as an Advance or any
---------------------
other Obligation shall remain unpaid or any Bank shall have any Commitment under
this Agreement, each of the Borrowers shall, unless the Administrative Agent on
behalf of the Banks shall otherwise consent in writing in accordance with
Section 7.04, comply with each of the following affirmative covenants:
(a) Compliance with Laws. Each of the Borrowers shall comply, and
--------------------
cause each of their Subsidiaries to comply, in all material respects with
Applicable Law, and to pay when due all Taxes, assessments and governmental
charges imposed upon it or upon its properties, and all lawful claims and
liabilities which, if unpaid, might by law become a Lien upon its properties,
provided, however, that the Borrowers shall not be required to pay or discharge
- -------- -------
any such Tax, assessment, charge or claim that is being contested in good faith
by appropriate proceedings properly instituted, diligently conducted and for
which adequate reserves in conformity with GAAP have been provided. Each of the
Borrowers will take such action and make such payments which may
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be required by any change in applicable laws affecting any of the Loan
Documents, in whole or in part, so that it may continue to perform this
Agreement, the Loan Documents and the other related documents in compliance with
such laws.
(b) Use of Proceeds. The Borrowers shall use all proceeds of the
---------------
Advances under this Agreement for the purposes set out in Recital 1 of this
Agreement.
(c) Financial Information; Defaults.
-------------------------------
(i) Each of the Borrowers shall promptly inform the
Administrative Agent of any event which is a Default or Event of Default,
or any event which materially adversely affects its ability fully to
perform any of its obligations under any Loan Document, or any Event of
Default which has occurred and is continuing under any material agreement
to which such Borrower or any of its Subsidiaries is a party;
(ii) As soon as the same become available, but in any event
within 90 days after the end of each fiscal year, the Borrowers shall
deliver to the Administrative Agent on behalf of the Banks (x) audited
consolidated financial statements of the Borrowers and their Subsidiaries
in accordance with GAAP (y) unaudited consolidating financial statements
reconciled to the audited financial statements and certified by Hvide's
Chief Financial Officer and (z) a certificate of the chief financial
officer of Hvide setting forth an audited calculation of the financial
tests specified in Sections 5.01(d),(e) and Section 5.02 (i) in accordance
with GAAP showing compliance therewith and stating that no Event of Default
or Default has occurred and is continuing, or setting forth in detail any
such Event of Default or Default and any steps being taken by the Borrowers
to cure the same; all such audited consolidated financial statements shall
be accompanied by an opinion thereon of independent certified public
accountants of recognized national standing acceptable to the
Administrative Agent, which opinion shall state that said financial
statements fairly present the consolidated financial condition and results
of operations of the Borrowers and their Subsidiaries as at the end of, and
for, such fiscal year;
(iii) As soon as the same become available and in any event within
45 days after the end of each of the first three fiscal quarters of each
fiscal year, the Borrowers shall deliver to the Administrative Agent on
behalf of the Banks unaudited consolidated and consolidating financial
statements of the Borrowers and their Subsidiaries including statements of
income, retained earnings and cash flow and consolidated balance sheets for
such quarter in accordance with GAAP and (z) a certificate of the chief
financial officer of Hvide, which certificate shall state that such
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financial statements fairly present the consolidated financial condition
and results of the operations of the Borrowers and their Subsidiaries, as
at the end of, and for, such period (subject to normal year end audit
adjustments) in accordance with GAAP, consistently applied and set forth in
reasonable detail a calculation of the financial tests specified in
Sections 5.01(d) and (e) and Section 5.02 (i) in accordance with GAAP,
showing compliance therewith and stating that no Event of Default or
Default has occurred and is continuing, or setting forth in detail any such
Event of Default or Default and any steps being taken by the Borrowers to
cure the same;
(iv) Not later than 30 days after the close of each month,
beginning with the month ended December 31, 1994, monthly financial
statements on a consolidating and consolidated basis of the Borrowers
showing income statements, balance sheets, cash flows and actual cash
position, together with a certificate of the Chief Financial Officer of
Hvide stating that no Event of Default or Default has occurred and is
continuing, or setting forth in detail any such Event of Default or Default
and any steps being taken by the Borrowers to cure the same;
(v) As soon as the same become available and in any event not
later than January 15 of each year, the Borrowers shall deliver to the
Administrative Agent on behalf of the Banks an annual business plan of the
Borrowers on a consolidated basis for such fiscal year, financial
projections for the Borrowers on a consolidated basis for three years
including statements of income and cash flow, and balance sheets and the
assumptions underlying such plan in reasonable detail, certified by the
chief financial officer of the Borrowers as a reasonable forecast of the
anticipated financial condition of the Borrowers and their Subsidiaries on
a consolidated basis and business segment basis in respect of such fiscal
years;
(vi) Promptly upon their becoming available, the Borrowers shall
deliver to the Administrative Agent copies of any registration statements
and periodic reports which the Borrowers shall have filed with the SEC or
any national securities exchange or market and, to the extent any of the
Borrowers has notice of the same, any ratings (and changes thereto) of its
debt by any rating agency or service in the United States;
(vii) Promptly upon obtaining knowledge of the same give notice to
the Administrative Agent, the Letter of Credit Agent and the Banks of any
material litigation against, any of the Borrowers or their Affiliates or
Subsidiaries;
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(viii) As soon as reasonably possible, in the event any of the
Borrowers or any of their Subsidiaries incurs any liability under ERISA the
Borrowers shall deliver to the Administrative Agent copies of all reports
and notices which it or any of its Subsidiaries files under ERISA; and
(ix) From time to time on request, the Borrowers shall furnish
the Administrative Agent, the Letter of Credit Agent and the Banks with
such information and documents respecting the condition of operations,
financial or otherwise, of each of the Borrowers and its Subsidiaries, and
provide access to the properties, accounts, books, records and agreements
of such Borrowers or any Subsidiary or Affiliate, as the Administrative
Agent or any of the Banks may reasonably require.
(d) Financial Covenants. The Borrowers shall ensure that on a
-------------------
consolidated basis:
(i) At the end of each of Hvide's fiscal quarters, the ratio of
Hvide's EBITDA to Interest Expense; shall not be less than the amounts
listed below, for the respective period:
Quarterly Periods Ratio
----------------- -----
12/31/95 to 6/29/96 1.70
6/30/96 to 12/30/96 2.00
12/31/96 to 9/29/97 2.30
9/30/97 to 9/29/98 2.75
9/30/98 and, thereafter 3.00
(ii) From the Effective Date, at all times Hvide's minimum
Liquidity shall be not less than $3,000,000.
(iii) At all times Hvide's maximum Leverage Ratio shall be no
greater than the ratios listed below:
Period Ratio
------ -----
12/31/95 to 6/29/96 5.25
6/30/96 to 9/29/97 3.00
9/30/97 and thereafter 2.50
(iv) At the end of each of Hvide's fiscal quarters, for such
quarter taken together with the immediately preceding three fiscal
quarters; the ratio of Hvide's Consolidated Indebtedness to EBITDAR
shall not be greater than the amount shown below for the respective
periods:
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<PAGE>
Test Period
(Fiscal Quarters Ending) Ratio
------------------------ -----
12/31/95 to 2/28/96 7.00
2/29/96 to 6/29/96 6.50
6/30/96 to 12/30/96 5.50
12/31/96 to thereafter 5.00
(v) At the end of each of Hvide's fiscal quarters, for
such quarter taken together with the three immediately preceding
fiscal quarters, the ratio of Hvide's Consolidated Cash Flow to
Consolidated Financial Obligations shall not be less than the amount
shown below for the respective period:
Test Period
(Quarters Ending) Ratio
----------------- -----
12/31/95 to 6/29/96 1.00
6/30/96 to 12/30/96 1.10
12/31/96 to 9/29/97 1.15
9/30/97 to 9/29/98 1.25
9/30/98 and thereafter 1.25
(vi) Notwithstanding the foregoing, for the period from the
Effective Date until the first day of the last quarter following the
Effective Date, all calculations made under this Section 5.01(d) shall
be made using Hvide's Pro Forma Consolidated Historical Financial
Statements as presented in the Amended Form S-1 giving effect to the
proposed IPO and Acquisitions. Thereafter, the Administrative Agent
shall use the Borrowers' most recent quarterly financial statements
for purposes of determining whether the foregoing tests have been met.
(e) Collateral Maintenance and Valuation. (i) The Borrowers
------------------------------------
shall ensure that at all times on and after the first Drawdown Date the
aggregate amount of unpaid principal in respect of Facilities A, B, and F
and the undrawn amounts of any Letters of Credit, issued in respect of
Facilities C and D and Unreimbursed Letter of Credit Obligations ("Total
Outstandings") will be less than the sum of (1) 75% of the Aggregate Fair
Market Value of all Mortgaged Vessels (provided that as to the SEABULK
AMERICA, the value for such Vessel shall not be greater than the maximum
amount of the Mortgage on such Vessel), (2) 80% of all Eligible Receivables
and (3) other such unencumbered material assets reasonably acceptable to
the Banks and pledged to the Banks on a first priority basis as security at
such advance rates as shall be determined reasonably by the Banks
(collectively the "Pledged Collateral"). At any time the Borrowers fail to
satisfy the test prescribed in the preceding sentence, the Borrowers will
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<PAGE>
promptly either (a) provide additional collateral reasonably acceptable to
the Banks or (b) make a mandatory prepayment in respect of Facilities A, B,
or F or cause any Letter of Credit to be reduced or terminated in the case
of Facilities C and D sufficient to comply with the test in the preceding
sentence.
(ii) For purposes of covenant testing the Fair Market Value of
each such Mortgaged Vessel shall be the most recent value determined
pursuant to Section 1.03 hereof provided that the value of a Mortgaged
-------------
Vessel which is a Total Loss shall be zero unless (a) such Total Loss is
covered by valid and effective uncontested insurance complying with the
requirements of the Mortgage for such Mortgaged Vessel and the Loss
Termination Date has not passed; or (b) such Total Loss has been replaced
by a Substitute Vessel pursuant to Section 2.05(d)(2) and such additional
collateral as may be required by Section 2.05(d)(3) hereof and all of the
requirements of the Administrative Agent in connection therewith have been
fulfilled and complied with to the satisfaction of the Administrative
Agent.
(iii) At any time that the Borrowers demonstrate to the reasonable
satisfaction of the Banks for each fiscal quarter after the Effective Date
that the ratio of Total Outstandings to the Pledged Collateral is less than
fifty percent (50%), the Banks agree that in respect of the then next
following quarter (A) the requirement for a pledge or mortgage on all
Vessels acquired after the Closing Date (except for the Vessels listed in
Exhibit L hereto which are required to be mortgaged pursuant to Amendment
No. 2) is waived (provided however, that there shall be no release of
-------- -------
existing Mortgaged Vessels) and (B) the restriction on contributing
Mortgaged Vessels to joint ventures and partnerships will be relaxed for
such next following quarter from two percent (2%) to five percent (5%).
However, if the ratio of Total Outstandings to the Pledged Collateral is
equal to or greater than fifty percent (50%) in successive quarters, the
requirement for a pledge or mortgage on all Vessels acquired after the
Closing Date will be re-imposed and the restriction on future contributions
of Mortgaged Vessels to joint ventures and partnerships will be reduced to
two percent (2%).
(f) Insurance. Each of the Borrowers shall, and shall cause
---------
each of its Subsidiaries to, insure and keep insured, with financially
sound and reputable insurers, so much of its properties, in such amounts
and against such risks, as to all the foregoing, in each case, reasonably
satisfactory to the Administrative Agent on behalf of the Banks and as are
usually and customarily insured by companies engaged in a similar business
with respect to properties of a similar character (other than with respect
to Vessels which shall be insured as provided in the Mortgages).
(g) Access to Books and Records. Each of the Borrowers shall
---------------------------
permit the Administrative Agent or its authorized representatives, promptly
upon request, to make such inspection,
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<PAGE>
examination, copy and audit of its properties, books, records and accounts
and those of its Subsidiaries as the Administrative Agent or its authorized
representative may reasonably deem necessary or appropriate in connection
with this Agreement or any of the Loan Documents.
(h) Good Standing. Each of the Borrowers shall remain a
-------------
corporation or limited partnership duly organized and in good standing
under the laws of its Incorporation Jurisdiction.
(i) Keeping of Books and Records. The Borrowers shall keep
----------------------------
proper books of record and accounts, in which full and correct entries
shall be made of all financial transactions and the assets and business of
the Borrowers and its Subsidiaries, respectively, in accordance with GAAP
consistently applied, or as otherwise required by applicable rules and
regulations of any governmental agency or regulatory authority having
jurisdiction over the Borrowers and its Subsidiaries, respectively, and as
required.
(j) Solvency. The Borrowers shall procure that each of them is,
--------
and shall be, at all times Solvent.
(k) Notice of Litigation. The Borrowers shall promptly give
--------------------
notice in writing to the Administrative Agent of all litigation and of all
proceedings before any governmental or regulatory agency affecting itself
which, if adversely determined, would materially adversely affect the
condition, financial or otherwise, of the Borrowers.
(l) Further Assurances. The Borrowers shall, from time to time
------------------
upon the request of the Administrative Agent on behalf of any Bank, accept
for cancellation any Note or Notes held by and payable to such Bank, and
thereupon the Borrowers shall execute and deliver to the Administrative
Agent on behalf of such Bank, payable to it and its registered assigns, a
substitute Note or Notes, prepared and delivered to the Borrowers by the
Administrative Agent, in like form and total aggregate amount as the
canceled Note or Notes, but in any denomination not smaller than One
Million Dollars ($1,000,000) or such lesser amount as such Bank may request
as shall constitute the outstanding principal of all outstanding Notes held
by such Bank. The Borrowers shall do all things necessary to grant to, and
maintain in favor of, the Administrative Agent or the Mortgagee on behalf
of the Banks a valid, first priority security interest in the Collateral,
and to maintain each of the Loan Documents as legal, valid and binding
obligations, enforceable in accordance with their respective terms by the
Administrative Agent, the Mortgagee, the Banks, as the case may be. The
Borrowers shall take such other actions and deliver such instruments as may
be necessary or advisable, in the opinion of the Administrative Agent on
behalf of the Banks, to protect the security interest created in the
Collateral, and the rights and remedies of the
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<PAGE>
Banks and the Mortgagee as the case may be, under the Loan Documents.
(m) Acquired Vessels. All vessels acquired by any of the
----------------
Borrowers after the Closing Date will be pledged or mortgaged to the Banks
as Mortgaged Vessels except as otherwise provided in Section 5.01(e)
hereof.
(n) Cash Management. The Borrowers shall maintain cash
---------------
management systems acceptable to the Administrative Agent, and the
collection accounts for payment of earnings of Mortgaged Vessels shall be
subject to a first perfected priority lien in favor of the Administrative
Agent on behalf of the Banks.
(o) Cash Collateral. In the event the face amount of the Letter
---------------
of Credit exceeds the amount to which the Letter of Credit should have been
reduced as set forth in Section 2.07(b), the Borrowers shall deposit
additional funds in the Cash Collateral Account equal to such excess
amount.
(p) Contracts. The Borrowers shall comply with the terms of all
---------
contracts to which any of them is a party or by which any of them or any of
their properties may be bound, except that this Section 5.01(p) shall not
apply to any non-compliance that (a) has been excused or waived under the
relevant contract or (b) either alone or when aggregated with all other
such non-compliances, would not have a materially adverse effect on the
Borrowers and their consolidated Subsidiaries taken as a whole.
(q) Corporate Structure. The Borrowers shall (i) maintain Hvide
-------------------
as a publicly traded company as contemplated by the Amended S-1; and (ii)
ensure that the Hvide stock is always entitled to be traded on public
markets of the United States and is not censored by any exchange, the SEC
or comparable organization.
SECTION 1.052. Negative Covenants. So long as any Advance or
------------------
any other Obligation shall remain unpaid or any Bank shall have any
Commitment, the Borrowers shall not, unless the Administrative Agent on
behalf of the Banks shall otherwise consent in writing in accordance with
Section 7.04:
(a) Mergers, Acquisitions, etc. Acquire the capital stock of
--------------------------
any Person, or merge or consolidate with or into, or permit any of its
Subsidiaries to do so, except that (x) any Subsidiary of the Borrowers may
------ ----
merge or consolidate with or into, or transfer assets to the Borrowers, or
(y) any Subsidiary of the Borrowers may merge or consolidate with or into,
or transfer assets to, or acquire assets of, any other Subsidiary of the
Borrowers, and any Borrower may cause the change of its Incorporation
Jurisdiction by way of merger or otherwise, upon consent of the Majority
Banks;
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<PAGE>
(b) Liens. Permit Liens on the Consolidated Assets of the
-----
Borrowers other than (i) those existing on the Closing Date which are
approved by the Banks, (ii) those permitted under the Mortgages, and (iii)
anticipated Indebtedness described in Exhibit D hereto;
(c) Restricted Payments. Make any payment of cash, property or
-------------------
other assets in respect of any shares of any class of capital stock;
including but not limited to, dividends or other distribution or payment of
assets property, rights, obligations or securities on account of any of its
shares of capital stock; and not make any voluntary prepayment of
indebtedness other than Obligations under this Agreement.
(d) Business Change. Make or permit any material change to
---------------
occur in the nature, or conduct of business of the Borrowers and their
Subsidiaries, taken as a whole, as conducted on the date hereof;
(e) Guarantees. Assume, guarantee, endorse, agree to purchase
----------
or repurchase or provide funds in respect of, or otherwise become or be, or
remain directly or contingently liable upon any Indebtedness, obligation or
dividend of, any other Person, firm, corporation or enterprise, except (i)
those which when aggregated with the additional indebtedness permitted
under Section 5.02(j), do not exceed the requirements set forth in 5.02(j)
in principal amount or on a present value discounted basis; (ii)
endorsements of negotiable instruments for deposit or collection in the
ordinary course of business; (iii) the Hvide guarantee of an existing
letter of credit in the amount of Seven Million Dollars ($7,000,000) issued
by California Federal Savings Bank and the Hvide guarantee to OMI, Corp.
relating to existing receivables financing for Ocean Specialty Tankers
Corporation or any replacement of such guarantee or letter of credit not
exceeding the amounts of each on the date hereof; and (iv) guarantees of
the obligations of Subsidiaries which are not otherwise prohibited by this
Agreement;
(f) Transactions with Officers, Directors and Shareholders.
------------------------------------------------------
Enter or permit any of its Subsidiaries to enter into any transaction or
agreement, including but not limited to any lease, Capital Lease, purchase
or sale of real property, purchase of goods or services, with any
Subsidiary, Affiliate or any officer, or director of the Borrowers or of
any such Subsidiary or Affiliate, or any record or known beneficial owner
of equity securities of any such Subsidiary, any known record or beneficial
owner of equity securities of any such Affiliate or the Borrowers, or any
record or beneficial owner of at least five percent (5%) of the equity
securities of the Borrowers, except (i) on terms that are no less favorable
to the Borrowers or the relevant Subsidiary than those that could have been
obtained in a comparable transaction by the Borrowers or such Subsidiary
with an unrelated Person; (ii) between Subsidiaries or between the
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Borrowers and Subsidiaries which are consolidated for financial reporting
purposes with the Borrowers;
(g) Compliance with ERISA. Become party to any prohibited
---------------------
transaction, reportable event, accumulated funding deficiency or plan
termination with respect to any plan as to which there is an insufficiency,
all within the meaning of ERISA and the Code, nor permit any Subsidiary to
do so;
(h) Investment Company. Be or become an investment company
------------------
subject to the registration requirements of the Investment Company Act of
1940, as amended, or permit any Subsidiary to do so;
(i) Expenditures for Capital Assets. Purchase or otherwise
-------------------------------
acquire (including, without limitation, entering into capital leases), or
commit to purchase or otherwise acquire, any fixed or capital asset or
otherwise make or incur obligations for capital expenditures (including
without limitation, acquisitions, joint venture investments, acquisitions
of equity or other investments in excess of Ten Million Dollars
($10,000,000) for each calendar year, and over the term of the Loan, in
excess of Permitted Capital Expenditures.
(j) Additional Indebtedness. Incur additional Indebtedness
-----------------------
except for (i) existing Indebtedness listed in Schedule F; (ii) trade debt
and similar obligations incurred in the ordinary course of business; (iii)
anticipated Indebtedness listed in Exhibit D hereto; (iv) Indebtedness not
to exceed Ten Million Dollars ($10,000,000) in principal amount which is
permitted in connection with Permitted Capital Expenditures.
(k) Place of Business, Etc. Change its principal place of
-----------------------
business or chief executive offices without first (i) giving the
Administrative Agent at least 30 days advance written notice thereof and
(ii) executing and filing Uniform Commercial Code financing statements, in
form and substance satisfactory to the Administrative Agent, in such
jurisdiction or jurisdictions as the Administrative Agent shall request;
(l) Organizational Documents. Amend its articles of
------------------------
incorporation (or similar organizational documents) or by-laws, or permit
any Subsidiary to do any of the foregoing (except for such amendments as
shall not adversely affect the rights and remedies of the Administrative
Agent or any Bank);
(m) Management Contracts. Enter into any material changes to
--------------------
the management or management contracts in connection with any Vessels
without the consent of the Administrative Agent, which consent shall not
unreasonably be withheld;
(n) Contribution to Joint Ventures. Contribute Mortgaged
------------------------------
Vessels to joint ventures or partnerships except for those Vessels in joint
ventures at the Closing Date and (over the
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life of the Transaction) vessels valued at no more than a two percent (2%)
in the aggregate of the total value of Mortgaged Vessels at the time of
their contribution to such joint venture or partnership.
SECTION 1.053. Cash Collateral Account. (a) When required by
-----------------------
the terms of this Agreement, the Borrowers will establish and maintain at
Citibank, N.A. at 399 Park Avenue, New York, New York, 10043 under the
Administrative Agent's sole dominion and control, a special cash account
(the "Cash Collateral Account").
(b) For so long as no Default or Event of Default has occurred
or is continuing hereunder, the Administrative Agent agrees to make
Permitted Investments with the funds in such account upon the instruction
of the Borrowers. Absent instruction from the Borrowers, the
Administrative Agent shall have no obligation to make such Permitted
Investments. Any losses which result in a shortfall of the amount
necessary to pay the next maturing installment of principal and interest
shall be for the account of the Borrowers.
(c) The Administrative Agent on behalf of the Banks and the
Letter of Credit Agent shall have rights of setoff and a security interest
and charge in the Cash Collateral Account. If any Default or Event of
Default shall have occurred and be continuing, all amounts then on deposit
or at any time thereafter deposited in the Cash Collateral Account in lieu
of being released shall, in the sole discretion of the Administrative
Agent, be retained by the Administrative Agent, and/or from time to time
applied by the Administrative Agent against, any or all of the Obligations
as such Obligations become due and payable, whether by acceleration or
otherwise.
(d) Any funds remaining in the Cash Collateral Account or after
the Loan and all Obligations have been repaid shall be released to the
Borrowers.
ARTICLE VI.
DEFAULT
SECTION 1.061. Events of Default. If any of the following
-----------------
events ("Events of Default") shall occur and be continuing:
(a) Any of the Borrowers shall fail to pay any installment of
principal of the Loan when due, or interest with respect to the Loan within
three Business Days after an Interest Payment Date, or fees with respect to
the Loan within three Business Days after the date on which such fee is due
or any other amounts with respect to the Loan within three Business Days of
the notice demanding payment thereof; or
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(b) Any representation or warranty made by or on behalf of any
of the Borrowers under or in connection with this Agreement or any of the
other Loan Documents shall prove to have been incorrect in any material
respect when made; or
(c) Any of the Borrowers shall fail to perform or observe any
covenant contained in Section 5.01(d), (e), (f), (j), (k), (l), (n) or (q),
Section 5.02, or Section 5.03 of this Agreement on its part to be performed
or observed; or
(d) Any of the Borrowers shall fail to perform or observe any
other term, covenant or agreement contained in this Agreement or any of the
other Loan Documents (other than any Mortgage) on its part to be performed
or observed and, in each case, any such failure shall remain unremedied for
30 days after written notice thereof shall have been given to the Borrowers
by the Administrative Agent or any Bank; or
(e) Any of the Borrowers shall fail to pay any amount or amounts
due in respect of material Indebtedness of such Borrower when due (whether
by scheduled maturity, required prepayment, acceleration, demand or
otherwise), and such failure shall continue after the applicable grace
period, if any, specified in the agreement or instrument relating to such
Indebtedness; or any other default under one or more agreements or
instruments relating to Indebtedness of such Borrower or such Subsidiary,
or any other event, shall occur and shall continue after the applicable
grace period, if any, specified in such agreement or instrument, if the
effect of such default or event is to accelerate, or to permit the
acceleration of, the maturity of such Indebtedness; or any such
Indebtedness shall be declared to be due and payable, or required to be
prepaid (other than by a regularly scheduled required prepayment),
redeemed, purchased or defeased, or an offer to prepay, redeem, purchase or
defease shall be required to be made, in each case prior to the stated
maturity thereof; or
(f) (1) Any of the Borrowers shall (A) generally not pay its
debts as such debts become due, (B) threaten to stop making payments
generally, (C) admit in writing its inability to pay its debts generally,
(D) make a general assignment for the benefit of creditors, (E) not be
Solvent or (F) be unable to pay its debts;
(2) Any proceeding shall be instituted in any jurisdiction by or
against any of the Borrowers or any of its material Subsidiaries (A)
seeking to adjudicate it a bankrupt or insolvent, (B) seeking liquidation,
winding up, reorganization, arrangement, adjustment, protection, relief, or
composition of its debts under any law relating to bankruptcy, insolvency
or reorganization or relief of debtors, or (C) seeking the entry of an
administration order, an order for relief, or the appointment of a
receiver, trustee, or other similar official, for it or for any substantial
part of its property; or
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(3) Any of the Borrowers or any of their Subsidiaries shall take
any corporate action to authorize any of the actions set forth above in
subparagraph (f)(2) of this Section 6.01; or
(g) One or more judgments or orders shall be rendered against
any of the Borrowers or any of their Subsidiaries for the payment of money,
singly or in the aggregate, in excess of One Hundred Fifty Thousand Dollars
($150,000) which amounts are not covered by valid insurance policies and
either (i) enforcement proceedings to sell assets have been commenced by
any creditor upon such judgment or order or (ii) there shall have elapsed
any period of 30 consecutive days during which a stay of enforcement of
such judgment or order, by reason of a pending appeal or otherwise, shall
not have been in effect; or
(h) Any governmental authority or any Person or entity acting or
purporting to act under governmental authority shall have taken any action
to condemn, seize or appropriate, or to assume custody or control of, all
or substantially all of the property of any of the Borrowers or of any of
their Subsidiaries which are material to the assets or business of the
Borrowers on a consolidated basis, or shall have taken any action to
displace the management of the Borrowers or of any of their Subsidiaries
which are material to the assets or business of the Borrowers on a
consolidated basis, or to curtail its authority in the conduct of the
business of any of the Borrowers or of any of their Subsidiaries which are
material to the assets or business of the Borrowers on a consolidated
basis; or
(i) After delivery thereof to the Administrative Agent, the
Banks, or the Mortgagee, the Administrative Agent, the Banks or the
Mortgagee shall for any reason (except to the extent permitted by the terms
thereof) not have a valid and perfected first priority security interest in
any of the Pledged Collateral purported to be covered by any of the
Security Documents which results in a default in the performance of the
Borrowers' obligations under Section 5.01(e); or
(j) An "event of default" shall have occurred and be continuing
under any Mortgage; or
(k) The Borrowers shall take any action in connection with any
charter or other operation of any Vessel which shall impair the security
interests of the Administrative Agent or the Mortgagee created or purported
to be created by any related Earnings Assignment or Insurance Assignment;
or
(l) Any material provision of the Loan Documents after delivery
thereof shall for any reason cease to be in full force and effect, or any
party thereto shall so state in writing; or
(m) There shall have occurred a Change of Control.
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SECTION 1.062. Application of Proceeds. All payments received
-----------------------
and amounts held or realized by the Administrative Agent, or delivered to
the Administrative Agent by the Mortgagee, in respect of any of the Loan
Documents and the Collateral (or any proceeds thereof) after an Event of
Default shall have occurred and so long as an Event of Default shall be
continuing shall promptly be distributed by the Administrative Agent in the
following order of priority:
First, so much of such payments or amounts as shall be
-----
required to pay the Administrative Agent, the Letter of Credit
Agent and the Mortgagee for any Tax, expense, charge or other
loss incurred by the Administrative Agent, the Letter of Credit
Agent or the Mortgagee to the extent not previously reimbursed
(including, without limitation, the expenses of any sale, taking
or other possession, attorneys' fees and expenses, court costs
and any other expenditures incurred or expenditures or advances
made by the Administrative Agent, the Letter of Credit Agent or
the Mortgagee in the protection, exercise or enforcement of any
right, power, or remedy or any damages sustained by the
Administrative Agent or the Mortgagee, liquidated or otherwise
upon such Event of Default) and to pay any other Obligations
arising hereunder or under any of the other Loan Documents to the
Administrative Agent, the Letter of Credit Agent and the
Mortgagee shall be applied by the Administrative Agent in payment
of such expenses;
Second, so much of such payments or amounts as shall be required
------
to reimburse the Banks ratably in accordance with their respective
Percentage Interests for all outstanding amounts in respect of (i)
accrued and unpaid interest, Breakage Costs, and then (ii) outstanding
principal of each Advance until paid in full, with any amounts
remaining to be applied in accordance with clause Third below;
-----
Third, so much of such payments or amounts as shall be required
-----
to reimburse the Banks ratably in accordance with their respective
Percentage Interests for all other amounts owing in respect of any
Obligations other than those specified in paragraph Second above; and
------
Fourth, the balance, if any, of such payments or amounts
------
remaining thereafter shall be distributed to the Borrowers.
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ARTICLE VII.
RELATION OF BANKS, ASSIGNMENT
AND PARTICIPATIONS
SECTION 1.071. Banks and Administrative Agent. The general
------------------------------
administration of this Agreement and the Loan Documents shall be by the
Administrative Agent, and each Bank hereby authorizes and directs the
Administrative Agent to take such action (including without limitation
retaining lawyers, accountants, surveyors or other experts) or forbear from
taking such action as in the Administrative Agent's reasonable opinion may
be necessary or desirable for the administration hereof (subject to any
direction of the Majority Banks and to the other requirements of Section
7.04 hereof). The Administrative Agent shall inform each Bank, and each
Bank shall inform the Administrative Agent, of the occurrence of any Event
of Default promptly after obtaining knowledge thereof; however, unless it
has actual knowledge of an Event of Default, each of the Administrative
Agent, the Letter of Credit Agent and the Banks may assume that no Event of
Default has occurred.
SECTION 1.072. Pro Rata Sharing. All commissions, fees,
----------------
interest and payments received by the Administrative Agent or any Bank
under the terms of this Agreement and the other Loan Documents and all
expenses arising from the administration hereof or the enforcement of any
security and any sum realized therefrom or from any setoff (other than sums
applied to the payment of expenses or for reimbursement of expenses paid)
for which provision for allocation and payment is not otherwise provided
for herein or therein shall be divided pro rata among the Banks in
--- ----
accordance with their Percentage Interests set forth on the signature pages
hereof or, if applicable, in the Register. Notwithstanding the foregoing,
nothing herein shall be construed to prevent Citibank, N.A. or The First
National Bank of Boston from receiving solely for its own account as
neither Bank, Administrative Agent, Co-Agent nor Letter of Credit Agent
hereunder, such other fees and payments in respect of the Transaction as it
may mutually agree with the Borrowers. Each Bank shall pay to the
Administrative Agent promptly on demand any sums payable by such Bank
hereunder. Under no circumstances shall the Administrative Agent be
obligated to expend its own funds for the protection of the interests of
the Banks, but the Administrative Agent shall be entitled to be indemnified
hereunder by the Banks in accordance with their Percentage Interest prior
to taking any action or expending any funds.
SECTION 1.073. Setoff. Any Bank which shall receive payment of
------
or on account of all or part of its claim against the Borrowers hereunder
through the exercise of any right of setoff, counterclaim, banker's lien,
or secured claim under any bankruptcy statute in a greater proportion than
its Percentage Interest shall promptly notify the Administrative Agent
thereof as set forth in Section 8.05 hereof and shall be deemed to have
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purchased immediately prior to such payment a ratable proportion of the
claims of the other Banks so that all recoveries of principal and interest
shall be shared by the Banks in accordance with their respective Percentage
Interests. If all or any portion of such excess payment is thereafter
recovered from such Bank, such purchase shall be rescinded and the purchase
price restored of such recovery, but without interest.
SECTION 1.074. Approvals. Upon any occasion requiring or
---------
permitting an approval of any amendment or modification or any consent,
waiver, declaring an Event of Default or taking any action thereafter, or
any other action on the part of the Administrative Agent or the Banks under
any of the Loan Documents, (1) action may (but shall not be required to) be
taken by the Administrative Agent for and on the behalf or for the benefit
of all Banks, provided (A) that no contrary direction of the Majority Banks
--------
shall have been previously received by the Administrative Agent, and (B)
that the Administrative Agent shall have received consent of the Majority
Banks to enter into any written amendment, waiver or modification of the
provisions of any of the Loan Documents, or to consent in writing to any
material departure from the terms of any Loan Documents by the Borrowers or
any other party thereto or (2) action shall be taken by the Administrative
Agent upon the direction of the Majority Banks, and any such action shall
be binding on all Banks; provided further, however, that unless all of the
-------- ------- -------
Banks agree in writing thereto, no amendment, modification, waiver, consent
or other action with respect to any of the Loan Documents shall be
effective which (a) increases the Commitment, increases the Percentage
Interest of any of the Banks or increases the Aggregate Amount, (b) reduces
any commission, fee, principal or interest owing to any Bank hereunder or
the method of calculation of any thereof, (c) extends Maturity Date, the
expiry date of any Letter of Credit or any other date on which any sum is
due hereunder, including, without limitation, the date or amount of any
prepayment required hereunder, (d) releases any Collateral, guaranty or
other security, (e) amends, waives or modifies the provisions of Section
5.01(e) hereof, or (f) amends the provisions of this Section 7.04 or the
definition of Majority Banks.
SECTION 1.075. Exculpation. The Administrative Agent shall not
-----------
be liable or answerable for anything whatsoever in connection with any of
the Loan Documents or other instrument or agreement required hereunder or
thereunder, including responsibility in respect of the execution, delivery,
construction or enforcement of any of the Loan Documents or any such other
instrument or agreement, or for any action taken or not taken by the
Administrative Agent in any case involving exercise of any power or
authority conferred upon the Administrative Agent under any thereof, except
for its wilful misconduct or gross negligence, and the Administrative Agent
shall have no duties or obligations other than as provided herein and
therein. The Administrative Agent shall be entitled to rely
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on any opinion of counsel (including counsel for any of the Borrowers or
any of their Subsidiaries) in relation to any of the Loan Documents or any
other instrument or agreement required hereunder or thereunder and upon
writings, statements and communications received from the Borrowers or any
of its Subsidiaries (including any representation made in or in connection
with any Loan Document), or from any other party to any of the Loan
Documents or any documents referred to therein or any other Person, firm or
corporation reasonably believed by it to be authentic, and the
Administrative Agent shall not be required to investigate the truth or
accuracy of any writing or representation, nor shall the Administrative
Agent be liable for any action it has taken or omitted in good faith on
such reliance.
SECTION 1.076. Indemnification. Each Bank agrees to indemnify
---------------
the Administrative Agent, except to the extent reimbursed by the Borrowers
and except in the case of any suit by any Bank against the Administrative
Agent resulting in a final judgment against the Administrative Agent,
ratably according to its Percentage Interest against all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursement of any kind or nature whatsoever (except to the
extent the foregoing result from the Administrative Agent's gross
negligence or wilful misconduct) which may be imposed on, incurred by or
asserted against the Administrative Agent in any way relating to or arising
out of (y) any of the Loan Documents or any other instrument or agreement
contemplated hereunder or thereunder or (z) any action taken or omitted by
the Administrative Agent under any of the Loan Documents or such other
instrument or agreement.
SECTION 1.077. Administrative Agent, Co-Agents and Letter of
---------------------------------------------
Credit Agent as Bank. Each of the Administrative Agent, the Co-Agents and
- --------------------
the Letter of Credit Agent shall, in its individual capacity, have the same
rights and powers hereunder as any other Bank and may exercise the same as
though it were not an agent; the term "Banks" shall include each of the
Administrative Agent, the Co-Agents and the Letter of Credit Agent in its
individual capacity to the extent of its Percentage Interest. Each of the
Administrative Agent, the Co-Agents and the Letter of Credit Agent and its
respective Subsidiaries and Affiliates may accept deposits from, lend money
to, and generally engage in any kind of banking, trust or other business
with each of the Borrowers, and their respective Subsidiaries and
Affiliates, as if it were not the Administrative Agent, Co-Agents or Letter
of Credit Agent, as the case may be.
SECTION 1.078. Notice of Transfer; Resignation; Successor
------------------------------------------
Administrative Agent. (a) The Administrative Agent may deem and treat a
- --------------------
Bank party to this Agreement as the owner of such Bank's interest in any
Loan and any other instrument or agreement of the assignment or transfer
thereof, executed by such Bank and otherwise in compliance with the
requirements of Section
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7.10 hereof, shall have been received and accepted by the Administrative
Agent. The Administrative Agent shall resign if directed by the Majority
Banks. The Administrative Agent may resign at any time by notice to the
Borrowers and the Banks.
(b) Any successor Administrative Agent shall be appointed by the
Majority Banks and shall be a bank or trust company reasonably satisfactory
to the Majority Banks, and, so long as no Event of Default shall have
occurred and be continuing, appointment of any such successor
Administrative Agent (whether by the Majority Banks or by the retiring
Administrative Agent) shall be subject to the consent of the Borrowers,
such consent not to be unreasonably denied or withheld. If no successor
Administrative Agent shall have been so appointed by the Majority Banks,
and shall have accepted such appointment, within 30 days after the retiring
Administrative Agent's giving of notice of resignation or the Majority
Bank's removal of the Administrative Agent, then such retiring
Administrative Agent may, on behalf of the Banks, appoint a successor
Administrative Agent, which shall be a commercial bank organized under the
laws of the United States of America or of any State thereof and having a
combined capital and surplus of at least $50,000,000. Upon the acceptance
of any appointment as Administrative Agent hereunder by a successor
Administrative Agent, such successor Administrative Agent shall thereupon
succeed to and become vested with all the rights, powers, privileges and
duties of the retiring Administrative Agent, and the retiring
Administrative Agent shall be discharged from its duties and obligations
under this Agreement. After any retiring Administrative Agent's
resignation or removal hereunder as Administrative Agent, the provisions of
this Article VII shall inure to its benefit as to any actions taken or
omitted to be taken by it while it was Administrative Agent under this
Agreement.
SECTION 1.079. Credit Decision; Not Trustee. Each Bank
----------------------------
represents that it has made, and agrees that it shall continue to make its
own independent investigation of the financial condition of each of the
Borrowers and their Subsidiaries and its own appraisal of the
creditworthiness of each of the Borrowers and their Subsidiaries in
connection with the making and performance of the Loan Documents. The
Administrative Agent has and shall have no duty or responsibility
whatsoever on the date hereof or, except as otherwise expressly provided in
this Agreement at any time hereafter, to provide any Bank with any credit
or other information. Nothing herein shall (nor shall it be construed so
as to) constitute the Administrative Agent or the Letter of Credit Agent a
trustee for each of the Borrowers or their Subsidiaries or impose on it any
duties or obligations other than those for which express provision is made
in this Agreement or under the other Loan Documents.
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SECTION 7.10. Assignments and Participation; Termination.
------------------------------------------
(a) Each Bank may assign to one or more banks or other entities all or a
portion of its rights and obligations under this Agreement (including,
without limitation, all or a portion of its Commitment, the Advances owing
to it and the Note or Notes held by it); provided, however, that (i) each
-------- -------
such assignment shall be of a constant, and not a varying, percentage of
all rights and obligations under this Agreement, (ii) unless the Borrowers
shall otherwise agree with the assigning Bank, the amount of the Commitment
of the assigning Bank being assigned pursuant to each such assignment
(determined as of the date of the Assignment and Acceptance with respect to
such assignment) shall in no event be less than Five Million Dollars
($5,000,000) or such lesser amount as shall constitute all of such
assigning Bank's Commitment and the outstanding principal of Notes payable
to it, (iii) each such assignment shall be to an Eligible Assignee, and
(iv) the parties to each such assignment shall execute and deliver to the
Administrative Agent, for its acceptance and recording in the Register, an
Assignment and Acceptance, together with any Note or Notes subject to such
assignment and a processing recordation fee of $3,000; provided further,
-------- -------
however, that so long as no Event of Default shall have occurred and be
- -------
continuing, each such assignment shall be subject to the consent of the
Borrowers, which consent shall not unreasonably be denied and which consent
shall be deemed given unless the Borrowers gives the assigning Bank and the
Administrative Agent written notice of and a reasonable basis for its
denial not later than ten (10) Business Days following telex, telefacsimile
or cable notice given to the Borrowers by the assigning Bank or the
Administrative Agent of the name of the proposed transferee, the amount of
Commitment to be assigned and such information as the Borrowers may
reasonably request for purposes of making an informed judgment. Prior to
contacting a prospective assignee in connection with a proposed assignment
hereunder, the assignor Bank shall give the Borrowers notice of the
identity of any such prospective assignee. Any consent to assignment
untimely or unreasonably denied by the Borrowers shall be void and of no
effect, and shall not preclude or bar any assignment otherwise permitted by
this Section 7.10(a). Any assignment or purported assignment not in
compliance with this Section shall be void and of no effect. Without
regard to any of the other terms of this Agreement or of any other
agreement, any Bank may assign, as collateral or otherwise, any of its
rights (including, without limitation, rights to payments of principal
and/or interest on the Notes) under this Agreement to any Federal Reserve
Bank of the United States without notice to or consent of the Borrowers,
the Agent or any other Person.
(b) Upon such execution, delivery, acceptance and recording,
from and after the effective date specified in each Assignment and
Acceptance (x) the assignee thereunder shall be a party hereto and, to the
extent that rights and obligations hereunder have been assigned to it
pursuant to such Assignment and Acceptance and subject to the foregoing,
have the rights and
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obligations of a Bank hereunder and (y) the Bank assignor thereunder shall,
to the extent that rights and obligations hereunder have been assigned by
it pursuant to such Assignment and Acceptance, relinquish its rights and be
released from its obligations under this Agreement (and, in the case of an
Assignment and Acceptance covering all or the remaining portion of an
assigning Bank's rights and obligations under this Agreement, such Bank
shall cease to be party hereto).
(c) By executing and delivering an Assignment and Acceptance,
the Bank assignor thereunder and the assignee thereunder confirm to and
agree with each other and the other parties hereto as follows: (i) other
than as provided in such Assignment and Acceptance, such assigning Bank
makes no representation or warranty and assumes no responsibility with
respect to any statements, warranties or representations made in connection
with this Agreement or the execution, legality, validity, enforceability,
genuineness, sufficiency or value of this Agreement or any other instrument
or document furnished pursuant hereto; (ii) such assigning Bank makes no
representation or warranty and assumes no responsibility with respect to
the financial condition of any of the Borrowers or its Subsidiaries or the
performance or observance by any of the Borrowers or its Subsidiaries of
any of its obligations under this Agreement or any other instrument or
document furnished pursuant hereto; (iii) such assignee confirms that it
has received a copy of this agreement, together with copies of the
Borrowers' financial statements referred to herein, and such other
documents and information as it has deemed appropriate to make its own
credit analysis and decision to enter into such Assignment and Acceptance;
(iv) such assignee will, independently and without reliance upon the
Administrative Agent, such assigning Bank or any other Bank, and based on
such documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking action
under this Agreement; (v) such assignee confirms that it is an Eligible
Assignee; (vi) such assignee appoints and authorizes the Administrative
Agent to take such action as agent on its behalf and to exercise such
powers under this Agreement as are delegated to the Administrative Agent by
the terms hereof, together with such powers as are reasonably incidental
thereto; and (vii) such assignee agrees that it will perform in accordance
with their terms all of the obligations which by the terms of this
Agreement are required to be performed by it as a Bank.
(d) Upon its receipt of an Assignment and Acceptance executed by
an assigning Bank and an assignee representing that it is an Eligible
Assignee, the Administrative Agent shall, if such Assignment and Acceptance
has been completed and is in substantially the form of Exhibit I hereto,
(i) accept such Assignment and Acceptance, (ii) record the information
contained therein in the Register (including the transfer of Notes to such
Eligible Assignee by the assigning Bank) and (iii) give prompt notice and
an execution counterpart thereof to the Borrowers.
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Within five (5) Business Days after its receipt of such notice, the
Borrowers, at the expense of the assigning Bank, shall execute and deliver
to the Administrative Agent in exchange for the surrendered Note or Notes a
new Note or new Notes, as the case may be, of the same series to the order
of such Eligible Assignee in an amount equal to the Commitment assumed by
it pursuant to such Assignment and Acceptance. Such new Note or Notes
shall be in an aggregate principal amount equal to the aggregate principal
amount of such surrendered Note or Notes, shall be dated the effective date
of such Assignment and Acceptance and shall otherwise be in substantially
the form of Exhibit I hereto.
(e) The Administrative Agent shall maintain at its address
referred to in Section 8.02 of this Agreement a register for the
recordation of the names and addresses of the Banks and the Commitment of,
and principal amount of the Advance owing and each Note payable to, each
Bank from time to time and a copy of each Assignment and Acceptance
delivered to and accepted by it (the "Register"). The entries in the
Register shall be conclusive and binding for all purposes, absent manifest
error, and the Borrowers, the Administrative Agent, the Letter of Credit
Agent and the Banks may treat each Person whose name is recorded in the
Register as a Bank hereunder for all purposes of this Agreement. The
Register shall be available for inspection by the Borrowers or any Bank at
any reasonable time and from time to time upon reasonable prior notice and
each shall be entitled to make copies thereof at its expense.
(f) Each Bank may grant participations to one or more banks or
other entities in or to all or any part of its rights and obligations under
this Agreement (including, without limitation, all or a portion of its
Commitment and the Advance owing to it); provided, however, that,
-------- -------
notwithstanding the grant of any such participation by any Bank, such
participation, and the right to grant such a participation, shall be
expressly subject to the following conditions and limitations: (i) such
Bank's obligations under this Agreement (including without limitation, its
Commitment to the Borrowers hereunder) shall remain unchanged, (ii) such
Bank shall remain solely responsible to the other parties hereto for the
performance of such obligations, (iii) such Bank shall remain the holder of
any such Note and Advance for all purposes of this Agreement, (iv) the
Borrowers, the Administrative Agent and the other Banks shall continue to
deal solely and directly with such Bank in connection with such Bank's
rights and obligations under the Agreement, (v) such Bank shall continue to
be able to agree to any modification or amendment of this Agreement or any
waiver hereunder without the consent, approval or vote of any such
participant or group of participants, other than modifications, amendments,
and waivers which (a) postpone the Maturity Date or any date fixed for any
payment of, or reduce any payment of, principal of or interest on such
Bank's Advance or any fees or other amounts payable under this Agreement,
or (b) increase the amount of such Bank's
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Commitment, or (c) change the interest rate payable under this Agreement,
or (d) release all or any substantial part of the Collateral, provided that
--------
if a Bank agrees to any modification or waiver relating to items (a)
through (d), the Borrowers, the Administrative Agent and each other Bank
may conclusively assume that such Bank duly received any necessary consent
of each of its participants, and (vi) except as contemplated by the
immediately preceding clause (v), no participant shall be deemed to be or
to have any of the rights or obligations of a "Bank" hereunder.
(g) Any Bank may, in connection with any assignment, designation
or participation or proposed assignment, designation or participation
pursuant to this Section 7.10, disclose to the assignee or participant, or
proposed assignee, or participant, any information relating to any of the
Borrowers or their Subsidiaries that is otherwise publicly available and
has been furnished to such Bank by or on behalf of the Borrowers, provided
--------
that without the Borrowers' prior written or oral consent, no Bank shall
- ----
disclose to any proposed assignee or proposed participant, any such
information not otherwise publicly available relating to the Borrowers or
its Subsidiaries as has been furnished to such Bank by or on behalf of the
Borrowers hereby; provided, however, any Bank may disclose such information
-------- -------
to a potential assignee if prior to any disclosure, the potential assignee
has signed a confidentiality agreement in form and substance reasonably
satisfactory to Borrowers. Any Bank that sells or grants a participation
pursuant to this Section 7.10 shall (i) in a timely manner withhold or
deduct from each payment to the holder of such participation the amount of
any Taxes required under Applicable Law to be withheld or deducted from
such payment that have not been withheld or deducted by the Borrowers or
the Administrative Agent or the Letter of Credit Agent (ii) pay such Taxes
in a timely manner to the appropriate authorities and (iii) indemnify the
Borrowers and the Administrative Agent or the Letter of Credit Agent for
any Taxes, losses, costs or expenses that they may incur as a result of any
failure to pay such Taxes to the appropriate authority when due.
SECTION 7.11. Co-Agents. Each of the Co-Agents shall have no
---------
duties, responsibilities, rights or liabilities as Co-Agent, as the case
may be, under this Agreement or any of the other Loan Documents and shall
not be liable or answerable for anything whatsoever in connection with any
of the Loan Documents or other instrument or agreement required hereunder
or thereunder, including responsibility in respect of the execution,
delivery, construction or enforcement of any of the Loan Documents or any
such other instrument or agreement, or for any action taken or not taken by
any Person with respect thereto. Each of the Co-Agents has and shall have
no duty or responsibility whatsoever on the date hereof or at any time
hereafter, to provide any Bank with any credit or other information.
Nothing herein shall (nor shall it be construed so as to) constitute the
Co-Agents a trustee for the Borrowers or their Subsidiaries or impose on it
any duties or obligations
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whatsoever under this Agreement, the other Loan Documents, or otherwise.
ARTICLE VIII.
MISCELLANEOUS
SECTION 1.081. Amendments. No amendment, supplement or
----------
modification to this Agreement shall be enforceable against the Borrowers
unless the same shall be in writing and signed by the Borrowers. No
amendment or waiver of any provision of this Agreement or any instrument
delivered hereunder, nor consent to any departure by the Borrowers
therefrom, shall in any event be effective unless the same shall be in
writing and signed by the Administrative Agent and, to the extent required
by Section 7.04 hereof, the Majority Banks or each Bank, as the case may
be, and then such waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given, provided that in the
-------- ----
absence of actual notice to the contrary, the Borrowers may conclusively
rely on all writings purported to be delivered and actions taken by the
Administrative Agent on behalf of the Banks or the Majority Banks, as the
case may be, without inquiry as to the authority of the Administrative
Agent with respect thereto.
SECTION 1.082. Notices. All notices, demands and other
-------
communications provided for hereunder shall be in writing (including
telegraphic communication) telexed, telecopied or telegraphed or delivered,
if to the Borrowers, at its address set forth below its signature herein
written; if to the Administrative Agent, at its address set forth below its
signature herein written; and if to a Bank other than the Administrative
Agent, the Letter of Credit Agent at its address set forth below its
signature herein written; or, as to each party, at such other address as
shall be designated by such party in a notice to the other parties hereto.
All such notices and communications shall, when telexed, telecopied, or
telegraphed, be effective upon the earliest of (i) actual receipt or (ii)
when (on a Business Day and during normal business hours at the addressee's
address) transmitted by telecopy or telex or delivered to the telegraph
company, respectively, except that notices and communications to the
Administrative Agent pursuant to Article II hereof shall not be effective
until received by the Administrative Agent.
SECTION 1.083. No Waiver; Remedies. Regardless of any fact
-------------------
known or investigation undertaken by the Administrative Agent or any Bank,
no failure on the part of the Administrative Agent or any Bank to exercise,
and no delay in exercising, any right hereunder shall operate as a waiver
thereof; nor shall any single or partial exercise of any right hereunder
preclude any other or further exercise thereof or the exercise of any other
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<PAGE>
right. The remedies herein provided are cumulative and not exclusive of
any remedies provided by law.
SECTION 1.084. Costs, Expenses, Fees and Indemnities; Concerning
-------------------------------------------------
the Mortgagee and the Trustee. (a) Each Borrower agrees to pay on demand
- -----------------------------
(i) in connection with the preparation, execution, and delivery of this
Agreement and the instruments and other documents to be delivered
hereunder, (x) the reasonable fees and out-of-pocket expenses of Messrs.
Winthrop, Stimson, Putnam & Roberts, as special counsel for the
Administrative Agent, the Letter of Credit Agent and the Banks and Messrs.
Bingham, Dana & Gould as special counsel to the Letter of Credit Agent (and
any local counsel retained by such firm) with respect to the closing of the
Transaction and (y) all other reasonable and customary third party costs
and expenses of the Banks and the Administrative Agent (other than any
other legal fees and related expenses incurred by them) and (z) the
reasonable fees and out-of-pocket expenses of the Mortgagee and the Trustee
(including reasonable attorney fees and out-of-pocket expenses) and (ii)
after the Closing Date, all reasonable and customary third party costs and
expenses in connection with the administration of this Agreement and the
other instruments and documents to be delivered hereunder, including,
without limitation, (y) the reasonable fees and out-of-pocket expenses of
any counsel for the Administrative Agent or the Banks in connection with
advice given the Administrative Agent or the Banks, from time to time, as
to their rights and responsibilities under this Agreement and in connection
with the waiver, supplementation or amendment of such instruments and
documents and (z) the reasonable fees and out-of-pocket expenses of the
Mortgagee (including the reasonable fees and out-of-pocket expenses of
counsel to the Mortgagee) and the indemnities payable to the Mortgagee as
trustee under the Master Vessel and Collateral Trust Agreement,
respectively, pursuant to the terms hereof. The Borrowers further agree to
pay on demand all losses, costs and expenses, if any (including, without
limitation, counsel fees and expenses), in connection with the enforcement
of this Agreement and the instruments and other documents delivered
hereunder, including, without limitation, losses, costs and expenses
sustained as a result of a Default by any of the Borrowers in the
performance of its obligations contained in this Agreement or any
instrument or document delivered hereunder.
(b) If, for any reason, including maturity or demand of the Loan
under Article VI, or prepayment of the Loan, in whole or in part, the
Administrative Agent or any of the Banks receives payment of principal of
or interest on an Advance on any day other than the Principal Payment Date
or Interest Payment Date for such Advance, the Borrowers shall pay to the
Administrative Agent on behalf of the Banks on demand any amounts required
to compensate the Banks for any breakage costs (including cost or expense
incurred by reason of the liquidation or reemployment of deposits or other
funds in respect of such payment) and any additional losses, costs or
expenses which any Bank may incur as
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<PAGE>
a result of such payment, prepayment, purchase or acceleration in
connection with unwinding or liquidating of any deposits or funding or
financing arrangement with its funding sources (collectively, "Breakage
Costs"), provided that the Bank shall have delivered to the Administrative
-------- ----
Agent and the Borrowers a certificate as to the amount of such Breakage
Costs, which certificate shall be binding, absent manifest error, except
that the failure of the Bank to provide such certificate shall in no way
relieve the Borrowers of their obligations under this Section 8.04(b).
(c) Each Borrower agrees to indemnify and hold harmless each of
the Banks and the Administrative Agent, the Letter of Credit Agent and its
and their respective Affiliates, directors, officers, employees, agents,
representatives, counsel and advisors (each an "Indemnified Party") from
and against any and all claims, damages, losses, liabilities and expenses
(including, without limitation, reasonable fees and disbursements of
counsel and the costs of investigation and defense thereof) which may be
incurred by or asserted or awarded against any Indemnified Party, in each
case based upon, arising out of or in connection with or by reason of, the
Transaction (including, without limitation, any act or failure to act by
the Administrative Agent, the Letter of Credit Agent or the Mortgagee where
such act or failure to act was taken pursuant to the Borrowers' request,
any Transaction contemplated by this Agreement, or any Loan Document),
whether or not any Advance hereunder is made, except to the extent that
such claim, damage, loss, liability or expense results from the gross
negligence or willful misconduct of such Indemnified Party. The
indemnities of this Loan Agreement shall survive the termination of this
Loan Agreement and the other Loan Documents.
SECTION 1.085. Right of Setoff. Upon the occurrence and during
---------------
the continuance of an Event of Default, each of the Administrative Agent,
the Letter of Credit Agent, each Bank and their respective Affiliates is
hereby authorized at any time and from to time, to the fullest extent
permitted by law, to set off and apply any and all deposits (general or
special, time or demand, provisional or final) any time held, and other
Indebtedness at any time owing, by the Administrative Agent, the Letter of
Credit Agent, a Bank or their respective Affiliates to or for the credit or
the account of the Borrowers against any and all of the obligations of the
Borrowers now or hereafter existing under the Agreement and any instrument
delivered hereunder, irrespective of whether or not the Bank shall have
made any demand under this Agreement or such instrument and although such
obligations may be unmatured. The Administrative Agent, the Letter of
Credit Agent and each Bank agrees promptly to notify the Borrowers, as the
case may be, and the Administrative Agent, the Letter of Credit Agent, as
the case may be, after any such setoff and application, provided that the
--------
failure to give such notice shall not affect the validity of such setoff
and application. The rights of the Administrative Agent, the Letter
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<PAGE>
of Credit Agent, each Bank and their respective Affiliates under this
Section are in addition to other rights and remedies (including, without
limitation, other rights of setoff) which the Administrative Agent, the
Letter of Credit Agent or such Bank may have.
SECTION 1.086. Joint and Several Liability of Borrowers. Each
----------------------------------------
Borrower agrees with the Banks, the Letter of Credit Agent and the
Administrative Agent that such Borrower shall be jointly and severally
liable for the Obligations with the other Borrowers except that Seabulk
Transmarine Partnership, Ltd.'s liability hereunder shall be limited to
such amounts as may be recovered pursuant to the Mortgage and Assignments
in respect of M/V SEABULK AMERICA.
SECTION 1.087. Judgment. (a) If for the purposes of obtaining
--------
judgment in any court it is necessary to convert a sum due hereunder or
under any instrument delivered hereunder in United States Dollars into
another currency, the parties hereto agree, to the fullest extent permitted
by law, that the rate of exchange used shall be that at which in accordance
with normal banking procedures the Administrative Agent, the Letter of
Credit Agent or the Banks, as the case may be, could purchase United States
Dollars with such other currency on the Business Day preceding that on
which final judgment is given.
(b) The obligation of a Borrower in respect of any sum due from
it to the Administrative Agent, the Letter of Credit Agent or any Bank
hereunder or under such instrument shall, notwithstanding any judgment in a
currency other than United States Dollars, be discharged only to the extent
that on the Business Day following receipt by the Administrative Agent, the
Letter of Credit Agent or such Bank of any sum adjudged to be so due in
such other currency the Administrative Agent, the Letter of Credit Agent or
such Bank, as the case may be, may in accordance with normal banking
procedures purchase United States Dollars with such other currency; if the
United States Dollars so purchased are less than the sum originally due to
the Administrative Agent, the Letter of Credit Agent or such Bank, as the
case may be, in United States Dollars, each Borrower agrees, as a separate
obligation and notwithstanding any such judgment, to indemnify the
Administrative Agent, the Letter of Credit Agent or such Bank, as the case
may be, against such loss, and if the United States Dollars so purchased
exceed the sum originally due to the Administrative Agent, the Letter of
Credit Agent or such Bank in United States Dollars, the Administrative
Agent, the Letter of Credit Agent or such Bank shall remit such excess to
such Borrower.
SECTION 1.088. Consent to Jurisdiction; Waiver of Immunities.
---------------------------------------------
(a) Each Borrower hereby irrevocably submits to the jurisdiction of any
New York State court sitting in New York County and to the jurisdiction of
the United States District Court for the Southern District of New York in
any action or
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<PAGE>
proceeding arising out of or relating to this Agreement or the Notes or the
other Loan Documents, and each Borrower hereby irrevocably agrees that all
claims in respect of such action or proceeding may be heard and determined
in such New York State or Federal court. Each Borrower irrevocably waives,
to the fullest extent it may effectively do so, the defense of an
inconvenient forum to the maintenance of such action or proceeding or the
failure to join any other Borrower as a necessary party to such action.
The Borrowers hereby irrevocably appoint CT Corporation (the "Process
Agent"), with an office on the date hereof at 1633 Broadway, New York, New
York, 10019, United States, as their agent to receive on behalf of each of
them and their property service of copies of the summons and complaint and
any other process which may be served in any such action or proceeding.
Such service may be made by mailing or delivering a copy of such process to
the Borrowers in care of the Process Agent (or any successor thereto, as
the case may be) at such Process Agent's above address (or the address of
any successor thereto, as the case may be), and the Borrowers hereby
irrevocably authorize and direct the Process Agent (and any successor
thereto) to accept such service on their behalf. The Borrowers shall
appoint a successor agent for service of process should the agency of CT
Corporation terminate for any reason, and further shall at all times
maintain an agent for service of process in New York, New York, so long as
there shall be outstanding any Obligations under the Loan Documents. The
Borrowers shall give notice to the Administrative Agent of any appointment
of successor agents for service of process, and shall obtain for each
successor agent a letter of acceptance of appointment and promptly deliver
the same to the Administrative Agent. As an alternative method of service,
each Borrower also irrevocably consents to the service of any and all
process in any such action or proceeding by the mailing of copies of such
process to it at its address specified in Section 8.02 hereof. Without
waiver of its rights of appeal permitted by relevant law, each Borrower
agrees that a final judgment in any such action or proceeding shall be
conclusive and may be enforced in other jurisdictions by suit on the
judgment or in any other manner provided by law.
(b) Nothing in this Section 8.07 shall affect the right of the
Administrative Agent, the Letter of Credit Agent or any Bank to serve legal
process in any other manner permitted by law, or affect the right of the
Administrative Agent, the Letter of Credit Agent or any Bank to bring any
action or proceeding against any Borrower or its respective properties in
the courts of any other jurisdiction.
(c) To the extent that any Borrower has or hereafter may acquire
any immunity from jurisdiction of any court or from any legal process
(whether through service or notice, attachment prior to judgment,
attachment in aid of execution, execution or otherwise) with respect to
itself or its property, such Borrower hereby irrevocably waives such
immunity in respect of its
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<PAGE>
obligations under this Agreement and the Notes and each of the other Loan
Documents.
SECTION 1.089. Binding Effect; Merger; Severability; GOVERNING
-----------------------------------------------
LAW. (a) This Agreement shall be binding upon, and shall inure to the
- ---
benefit of, the Borrowers, the Administrative Agent, the Letter of Credit
Agent and each Bank, and their respective successors and assigns, except
that the Borrowers shall not have the right to assign its rights hereunder
or any interest herein. Each Bank may, to the extent permitted under this
Agreement, assign to any other financial institution all or any part of, or
any interest in, the Bank's rights and benefits hereunder and under any
instrument delivered hereunder, and to the extent of such assignment such
assignee shall have the same rights and benefits against the Borrowers as
it would have had if it were the Bank hereunder.
(b) The Loan Documents, together with all attachments and
exhibits to each of them and all other documents referenced herein and
therein, and delivered hereunder and thereunder and pursuant hereto and
thereto, constitute the entire agreement among the parties with respect to
the subject matter hereof and thereof, and supersede all prior and
contemporaneous written and oral understandings and agreements related
thereto among the parties.
(c) If any work, phrase, sentence, paragraph, provision or
section of the Loan Documents shall be held, declared, pronounced or
rendered invalid, void, unenforceable or inoperative for any reason by any
court of competent jurisdiction, governmental authority, statute, or
otherwise, such holding, declaration, pronouncement or rendering shall not
adversely affect any other word, phrase, sentence, paragraph, provision or
section of the Loan Documents, which shall otherwise remain in full force
and effect and be enforced in accordance with their respective terms.
(d) This Agreement has been delivered in New York, New York.
THIS AGREEMENT AND THE NOTES SHALL BE GOVERNED BY, AND BE CONSTRUED IN
ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK.
SECTION 8.10. Counterparts. This Agreement may be executed in
------------
as many counterparts as may be deemed necessary or convenient and by each
party hereto on separate counterparts, each of which, when so executed,
shall be deemed as original, but all such counterparts shall constitute but
one and the same agreement.
SECTION 8.11. WAIVER OF JURY TRIAL. BY ITS SIGNATURE BELOW
--------------------
WRITTEN EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES ALL RIGHT TO A TRIAL BY
JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING
TO THIS AGREEMENT, THE
-76-
<PAGE>
LOAN DOCUMENTS HEREIN DESCRIBED OR THE TRANSACTIONS CONTEMPLATED HEREBY OR
THEREBY.
SECTION 8.12. Effectiveness. This Agreement shall not come into
-------------
effect until the Effective Date. Prior to the Effective Date, the Credit
Agreement dated as of September 28, 1994, as amended by Amendment No. 1
dated as of May 15, 1995 and Amendment No. 2 dated as of March 26, 1996
shall be binding upon the parties hereto.
-77-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Credit
Agreement to be executed by their respective officers thereunto duly
authorized, as of the date first above written.
HVIDE MARINE INCORPORATED
By:
------------------------------------
Name:
Title:
Address: 2200 Eller Drive, Building 27
P.O. Box 13038
Port Everglades
Fort Lauderdale, FL 33316
Telephone: 305-524-4200
Facsimile: 305-527-1772
SEABULK TRANSMARINE PARTNERSHIP, LTD.
By its general partner Seabulk Tankers, Ltd.
By its general partner Hvide Marine
Transport, Incorporated
By:
------------------------------------
Name:
Title:
Address: 2200 Eller Drive, Building 27
P.O. Box 13038
Port Everglades
Fort Lauderdale, FL 33316
Telephone: 305-524-4200
Facsimile: 305-527-1772
SEABULK OFFSHORE, LTD.
By its general partner Seabulk Tankers Ltd.
By its general partner Hvide Marine
Transport, Incorporated
By:
------------------------------------
Name:
Title:
Address: 2200 Eller Drive, Building 27
P.O. Box 13038
Port Everglades
Fort Lauderdale, FL 33316
Telephone: 305-524-4200
Facsimile: 305-527-1772
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Credit
Agreement to be executed by their respective officers thereunto duly
authorized, as of the date first above written.
HVIDE MARINE TRANSPORT, INCORPORATED
By:
------------------------------------
Name:
Title:
Address: 2200 Eller Drive, Building 27
P.O. Box 13038
Port Everglades
Fort Lauderdale, FL 33316
Telephone: 305-524-4200
Facsimile: 305-527-1772
SEABULK TANKERS, LTD.
By its general partner Hvide Marine
Transport, Incorporated
By:
------------------------------------
Name:
Title:
Address: 2200 Eller Drive, Building 27
P.O. Box 13038
Port Everglades
Fort Lauderdale, FL 33316
Telephone: 305-524-4200
Facsimile: 305-527-1772
HVIDE CHARTERING, LTD.
By its general partner Hvide Marine
Incorporated
By:
------------------------------------
Name:
Title: Senior Vice President
Address: 2200 Eller Drive, Building 27
P.O. Box 13038
Port Everglades
Fort Lauderdale, FL 33316
Telephone: 305-524-4200
Facsimile: 305-527-1772
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Credit Agreement to be executed by their respective officers thereunto duly
authorized, as of the date first above written.
SEABULK OCEAN SYSTEMS CORPORATION
By:
------------------------------------
Name:
Title:
Address: 2200 Eller Drive, Building 27
P.O. Box 13038
Port Everglades
Fort Lauderdale, FL 33316
Telephone: 305-524-4200
Facsimile: 305-527-1772
SUN STATE MARINE SERVICES, INC.
By:
------------------------------------
Name:
Title:
Address: 2200 Eller Drive, Building 27
P.O. Box 13038
Port Everglades
Fort Lauderdale, FL 33316
Telephone: 305-524-4200
Facsimile: 305-527-1772
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Credit
Agreement to be executed by their respective officers thereunto duly
authorized, as of the date first above written.
CITIBANK, N.A.
Administrative Agent, Co-Agent
By:
----------------------
Name:
Title:
Address: Citibank, N.A.
NAGF Loan Processing
One Court Square, 7th Floor
Long Island City
New York, NY 11120-0001
Telephone: (718) 248-7180
Facsimile: (718) 248-4844
CITIBANK, N.A.
By: -----------------------
Name:
Title:
Address: 399 Park Avenue
Global Shipping Division
8th Floor
New York, NY 10043
Attention: Vice President
Telephone: (212) 559-5604
Telex:
Answerback:
Facsimile: (212) 793-3588
Lending Office: The above address or such other address
or addresses as may be notified to the
Administrative Agent and the Borrowers
from time to time.
Percentage Interest
as of Effective Date Commitment
-------------------- ----------
Facilities A and D: 24.49% $ 2,248,579.82
Facility B: 24.49% $15,058,765.89
Facility C: 24.49% $ 1,371,204.70
Facility F: 24.49% $ 6,121,449.55
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Credit
Agreement to be executed by their respective officers thereunto duly
authorized, as of the date first above written.
BNY FINANCIAL CORPORATION
By:
-------------------------------
Name:
Title:
Address: 1290 Ave. of the Americas
Third Floor-Legal Depart.
New York, NY 10104
Attention: Vice President
Telephone: 212-408-7272
Facsimile: 212-408-7372
Lending Office: The above address or such other
address or addresses as may be
notified to the Administrative
Agent and the Borrowers from
time to time.
Percentage Interest
as of Effective Date Commitment
-------------------- ----------
Facilities A and D: 21.09% $ 2,109,181.13
Facility B: 21.09% $12,971,464.01
Facility C: 21.09% $ 1,181,141.43
Facility F: 21.09% $ 5,272,952.83
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Credit
Agreement to be executed by their respective officers thereunto duly
authorized, as of the date first above written.
FIRST NATIONAL BANK OF BOSTON
as Letter of Credit Agent, Co-Agent
By:
------------------------------------
Name: Victor Garcia
Title: Vice President
Address: The First National Bank of
Boston Transportation
Mail Stop: 01-08-01
100 Federal Street
Boston, MA 02106-2016
Attention: Vice President
Telephone: 617-434-5176
Facsimile: 617-434-1955
FIRST NATIONAL BANK OF BOSTON
By:
------------------------------------
Name: Victor Garcia
Title: Vice President
Address: Mail Stop: 01-08-01
100 Federal Street
Boston, MA 02106-2016
Attention: Vice President
Telephone: 617-434-5176
Facsimile: 617-434-1955
Lending Office: The above address or such other
address or addresses as may be
notified to the Administrative Agent
and the Borrowers from time to time.
Percentage Interest
as of Effective Date Commitment
-------------------- ----------
Facilities A and D: 22.16% $ 2,216,432.59
Facility B: 22.16% $13,631,060.40
Facility C: 22.16% $ 1,241,202.25
Facility F: 22.16% $ 5,541,081.46
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Credit
Agreement to be executed by their respective officers thereunto duly
authorized, as of the date first above written.
HIBERNIA NATIONAL BANK
By:
----------------------------------
Name:
Title:
Address: 313 Carondelet Street, Suite 1400
New Orleans, LA 70130
Telephone: 504-533-5395
Facsimile: 504-533-5434
Lending Office: The above address or such other
address or addresses as may be
notified to the Administrative Agent
and the Borrowers from time to time.
Percentage Interest
as of Effective Date Commitment
-------------------- ----------
Facilities A and D: 16.13% $ 1,612,903.23
Facility B: 16.13% $ 9,919,354.85
Facility C: 16.13% $ 903,225.80
Facility F: 16.13% $ 4,032,258.08
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Credit
Agreement to be executed by their respective officers thereunto duly
authorized, as of the date first above written.
AMSOUTH BANK OF FLORIDA
By:
-------------------------------------
Name:
Title:
Address: 469 West 23rd Street
P.O. Box 550
Panama City, FL 32405
Telephone: 904-747-4543
Facsimile: 904-747-4543
Lending Office: The above address or such other
address or addresses as may be
notified to the Administrative Agent
and the Borrowers from time to time.
Percentage Interest
as of Effective Date Commitment
-------------------- ----------
Facilities A and D: 16.13% $ 1,612,903.23
Facility B: 16.13% $ 9,919,354.85
Facility C: 16.13% $ 903,225.81
Facility F: 16.13% $ 4,032,258.08
EXHIBIT 10.27
[Draft--7/1/96]
RECAPITALIZATION AGREEMENT dated as of July [ ], 1996,
among HVIDE CORP., a Florida corporation (the "Holding
Company"), HVIDE MARINE INCORPORATED, a Florida corporation
(the "Company"), the JUNIOR SUBORDINATED NOTEHOLDERS (as
hereinafter defined) and the SENIOR SUBORDINATED NOTEHOLDERS
(as hereinafter defined) (together with their successors and
assigns, the "Investors"), J. ERIK HVIDE (the "Principal
Shareholder") and the trusts identified on the signature pages
hereof (together with the Principal Shareholder and any of
their respective successors and assigns that are members of
the Hvide Group, the "Hvide Group Shareholders").
W I T N E S S E T H:
WHEREAS pursuant to the Senior Subordinated Note and Common Stock Purchase
Agreement dated as of September 30, 1994 (as amended, restated, supplemented or
otherwise modified or replaced from time to time, the "Senior Subordinated Note
Agreement"), among the Company, the Holding Company and certain of the Investors
(the "Senior Subordinated Noteholders"), the Senior Subordinated Noteholders
hold an aggregate of (a) approximately $[25,700,000] aggregate principal amount
(including accrued but unpaid interest) of the Company's 12% senior subordinated
notes due 2004 (the "Senior Subordinated Notes") and (b) [133,333] shares of the
Holding Company's Class C common stock, $0.001 par value ("Class C Common
Stock");
WHEREAS pursuant to the Junior Subordinated Note and Common Stock Purchase
Agreement dated as of September 30, 1994 (the "Junior Subordinated Note
Agreement"), among the Holding Company and certain of the Investors (the "Junior
Subordinated Noteholders"), the Junior Subordinated Noteholders hold, in the
aggregate, (a) approximately $[28,700,000] aggregate principal amount (including
accrued but unpaid interest) of the Holding Company's 8% junior subordinated
notes due 2014 (the "Junior Subordinated Notes"), (b) 285,631 shares of the
Holding Company's Class B common stock, par value $0.001 ("Class B Common
Stock"), (c) 64,370 shares of Class C Common Stock
<PAGE>
2
and (d) 150,000 Series 1 CSIs (as hereinafter defined) and 200,000 Series 2 CSIs
(as hereinafter defined);
WHEREAS the Holding Company desires to commence an Initial Public Offering
of its Class A Common Stock, $0.001 par value per share (the "Class A Common
Stock"), and effect certain other changes in its capital structure;
WHEREAS the Junior Subordinated Note Agreement requires that the Junior
Subordinated Notes be repaid in full in cash with the proceeds of such Initial
Public Offering;
WHEREAS the Holding Company does not anticipate that the available proceeds
of such Initial Public Offering will be sufficient to make the payment required
in respect of the Junior Subordinated Notes;
WHEREAS, in view of the foregoing, the Holding Company and the Company have
requested, and the other parties hereto have agreed, upon the terms and subject
to the conditions set forth or referred to herein, (a) that all the outstanding
Class C Common Stock be converted into Class A Common Stock or Class B Common
Stock; (b) that the Holding Company merge with the Company, with the Holding
Company being the surviving entity, and in connection therewith effect a
1.584274 for 1 forward stock split of its outstanding shares of Capital Stock;
(c) that the accrued but unpaid interest on the Junior Subordinated Notes be
paid and the aggregate principal amount of Junior Subordinated Notes outstanding
be redeemed or converted into shares of Common Stock; (d) that a portion of the
proceeds from the Initial Public Offering be used to (i) consummate the 1996
Acquisitions, (ii) prepay in full the Senior Subordinated Notes together with
all accrued but unpaid interest thereon, (iii) repay $[8,100,000] of the
aggregate principal amount outstanding on a revolving line of credit under the
Credit Agreement and (iv) repay no more than $[4,300,000] of the outstanding
aggregate principal amount of the Related Party Notes; (e) that the documents
relating to the Company's and the Holding Company's 1994 financings and the
Holding Company's charter and By-laws be amended to reflect the recapitalization
and provide for certain other changes; (f) that the Investors be granted certain
registration rights with respect to the Common Stock; and (g) that certain other
transactions contemplated hereby occur to effectuate the recapitalization (the
transactions and events specified in clauses (a) through (g) above, together
with
<PAGE>
3
the consummation of the Initial Public Offering, are collectively referred to
herein as the "Transactions");
NOW, THEREFORE, in consideration of the premises and agreements contained
in this Agreement, and for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties, intending to be
legally bound, agree as follows:
ARTICLE I
Definitions
SECTION 1.01. Interpretation. For all purposes of this Agreement, except as
otherwise expressly provided or unless the context otherwise requires:
(a) the terms defined in this Article have the meanings assigned to
them in this Article and include the plural as well as the singular; and
(b) the words "herein", "hereof" and "hereunder" and other words of
similar import refer to this Agreement as a whole and not to any particular
Article, Section or other subdivision.
SECTION 1.02. Definitions.
"1996 Acquisitions" means the Company's purchase of (i) three chemical
carriers and the 50% interest in Ocean Specialty Tankers Corporation not already
owned by the Company from OMI Corp.; (ii) eight offshore supply boats and
bareboat charter rights to one other supply boat from Seal Fleet, Inc., and
certain of its affiliated partnerships; [(iii) a 152-foot crew/supply boat, to
be named the Seabulk St. Francis, currently under construction, from the
Principal Shareholder and the Investors]; and (iv) an existing 120-foot crew
boat from Leppaluoto Offshore Marine, Inc.
"Affiliate" of any specified person means (a) any other person that,
directly or indirectly, is in control of, is controlled by or is under common
control with such specified person, (b) any other person who is a director or
officer (i) of such specified person, (ii) of any subsidiary of such specified
person or (iii) of any person described in clause (a) above and (c) if such
specified person is a
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4
partnership, any partner included in such partnership. For purposes of this
definition, control of a person means the power, direct or indirect, to direct
or cause the direction of the management and policies of such person whether
through the ownership of any class of Capital Stock of such person then
outstanding and normally entitled to vote in the election of directors, by
contract or otherwise; and the terms "controlling" and "controlled" have
meanings correlative to the foregoing.
"Capital Stock" of any person means any and all shares, interests, rights
to purchase, warrants, options, contingent share certificates, participations or
other equivalents of or interests in (however designated) equity of such person,
but excluding any debt securities convertible into or exchangeable for such
equity.
"Clipper" means Clipper Capital Associates, L.P., a Delaware limited
partnership.
"Clipper/Merban" means Clipper/Merban HMI, L.P., a Delaware limited
partnership.
"Closing Date" shall have the meaning assigned to such term in Article V
hereof.
"Code" means the Internal Revenue Code of 1986, as amended.
"Common Stock" means the Class A Common Stock and the Class B Common Stock.
"Credit Agreement" means the Amended and Restated Credit Agreement dated as
of June [ ], 1996, among the Company, the other borrowers named therein,
Citibank, N.A., as administrative agent and co-agent, The First National Bank of
Boston, as letter of credit agent and co-agent, and the financial institutions
from time to time party thereto as banks.
"CSI Agreement" means that certain Contingent Share Issuance Agreement,
dated as of September 30, 1994, among the Holding Company and the Junior Note
Purchasers.
"Environmental Law" means any Federal, state or local statute, law, rule,
regulation, ordinance, code, policy or rule of common law now or hereafter in
effect and in each case as amended, and any judicial or administrative
<PAGE>
5
order, consent decree, interpretation, or judgment, relating to hazardous
materials, the environment, health or safety, including, without limitation, (i)
the Federal Water Pollution Control Act of 1972, as amended, 33 U.S.C. Section
1251 et seq. and the regulations promulgated in connection therewith; the Oil
Pollution Act of 1990, 33 U.S.C. Section 2701 et seq. and the regulations
promulgated in connection therewith or in connection with prior laws amended by
Title IV of the Oil Pollution Act of 1990; the Comprehensive Environmental
Response, Compensation, and Liability Act of 1980, 42 U.S.C. Section 9601 et
seq. and the regulations promulgated in connection therewith; An Act to Prevent
Pollution from Ships, 33 U.S.C. Section 1901 et seq. and the regulations
promulgated in connection therewith; the Port and Waterways Safety Act, 33
U.S.C. Section 1221 et seq. and the regulations promulgated in connection
therewith; The Rivers and Harbors Act, 33 U.S.C. Section 407 et seq. and the
regulations promulgated in connection therewith; the Clean Air Act of 1970 as
amended by the Clear Air Act Amendments of 1990, 42 U.S.C. 7401 et seq. and the
regulations promulgated in connection therewith; the Occupational Safety and
Health Act, 29 U.S.C. Section 651 et seq. and the regulations promulgated in
connection therewith and (ii) any other state and local laws and regulations
applicable to vessels owned, operated and/or managed by the Holding Company and
its Subsidiaries.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and the rules and regulations promulgated thereunder
from time to time in effect.
"ERISA Affiliate" means any trade or business (whether or not incorporated)
that is treated as a single employer together with the Holding Company under
Section 414 of the Code.
"Existing Shareholders Agreement" means that certain Shareholders Agreement
dated as of September 30, 1994, among the Company, the Investors, the Principal
Shareholder and the other Hvide Group Shareholders.
"Fee Letter" means the Fee Letter dated as of September 30, 1994, between
the Company and Clipper.
"Hvide Group" means the Principal Shareholder and any person related to him
by kinship or marriage (including
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6
Mr. Hans J. Hvide), trusts or similar arrangements established solely on the
behalf of one or more of them and partnerships and other entities that are
wholly owned by them and that remain wholly owned by them.
"Initial C/M Closing Date Amount" has the meaning ascribed to such term in
Section 6.03(a) hereof.
"Initial C/M Over-allotment Amount" has the meaning ascribed to such term
in Section 6.03(b) hereof.
"Initial Public Offering" means the initial public offering contemplated by
the Registration Statement.
"Jones Act" means Section 27 of the Merchant Marine Act, 1920, 46 U.S.C.
ss. 883, as amended.
"Multiemployer Plan" means any Plan that is a "multiemployer plan" (as such
term is defined in Section 4001(a)(3) of ERISA).
"Net Cash Proceeds", with respect to the Initial Public Offering, means the
cash proceeds received by the Holding Company from such issuance or sale
(including from the exercise of any underwriters' over-allotment options) net of
attorneys' fees, accountants' fees, underwriters' or placement agents' fees,
discounts or commissions and brokerage, consultant and other fees actually
incurred in connection with such issuance or sale and net of taxes paid or
payable as a result thereof.
"Net Offering Price" means the per share public offering price of the
Offered Securities less the underwriters' discount.
"Offered Securities" means the Class A Common Stock offered in the Initial
Public Offering.
"OPA 90" means the Oil Pollution Act of 1990, 33 U.S.C. Section 270 et
seq., and the regulations promulgated in connection therewith.
"Over-allotment Option" means the over-allotment option granted to the
Underwriters pursuant to the Underwriting Agreement.
"person" means any individual, corporation, partnership, limited liability
company, joint venture,
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7
association, joint-stock company, trust, unincorporated organization, government
or any agency or political subdivision thereof or any other entity.
"Plan" means an "employee benefit plan" (as defined in section 3(3) of
ERISA) that is or, within the preceding five years, has been established or
maintained, or to which contributions are or, within the preceding five years,
have been made or required to be made, by the Holding Company or any ERISA
Affiliate or with respect to which the Holding Company or any ERISA Affiliate
may have any liability.
"Registration Rights Agreement" means the Registration Rights Agreement to
be entered into as contemplated by Article VIII hereof.
"Registration Statement" means that certain Registration Statement (No.
33-78166) filed by the Company with the SEC, and any amendments or supplements
thereto, including post-effective amendments, in each case including the
prospectus contained therein, all exhibits thereto and all documents and other
materials incorporated by reference therein.
"Related Party Notes" means, collectively, (i) the promissory note dated
September 30, 1994, issued by the Company in favor of the Estate of Lucy
Henderson-Edmondson and in an aggregate principal amount of $3,038,688.80, (ii)
the three promissory notes dated September 28, 1994, issued by the Company in
favor of Hans J. Hvide and in an aggregate principal amount of $3,561,000, (iii)
the eight promissory notes dated September 30, 1994, issued by the Company and
its wholly-owned Subsidiary Hvide Marine International, Inc. in favor of certain
of the Company's directors, officers and employees and in an aggregate principal
amount of $1,059,695 (of which $959,695 is currently outstanding) and (iv) the
seven promissory notes dated September 30, 1994, issued by the Holding Company
and its wholly-owned Subsidiary Hvide Marine International, Inc. (except for the
promissory note in favor of Brian S. Sowrey, which is dated October 27, 1994,
and issued only by the Company) in favor of certain of the Company's directors,
officers and employees and in an aggregate principal amount of $1,089,902.83 (of
which $289,902.83 is currently outstanding).
"Remaining C/M Closing Date Amount" has the meaning ascribed to such term
in Section 6.03(a) hereof.
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8
"Remaining C/M Over-allotment Amount" has the meaning ascribed to such term
in Section 6.03(b) hereof.
"Securities Act" means the Securities Act of 1933, as amended.
"Series 1 CSI" has the meaning ascribed to such term in the CSI Agreement.
"Series 2 CSI" has the meaning ascribed to such term in the CSI Agreement.
"Shareholders Agreement" means an Agreement Among Shareholders among the
Investors and the Hvide Group Shareholders in the form attached hereto as
Exhibit A.
"Subsidiary" means, in respect of any person, any corporation, association,
partnership or other business entity of which a majority of the Capital Stock
having voting power under ordinary circumstances to elect a majority of the
board of directors or other voting interests are owned by (a) such person, (b)
such person and one or more Subsidiaries or (c) one or more Subsidiaries of such
person.
"Transaction Documents" means this Agreement, the Credit Agreement, the
Shareholders Agreement, the Registration Rights Agreement, the CSI Agreement,
the Registration Statement, the Fee Letter and each other document contemplated
hereby, in each case as amended, supplemented, replaced or otherwise modified as
contemplated herein.
"Underwriting Agreement" means that certain Underwriting Agreement dated
the date hereof between the Holding Company, the Investors and the several
Underwriters named therein and relating to the Initial Public Offering.
<PAGE>
9
ARTICLE II
Representations and Warranties
of the Holding Company and the Company
Each of the Holding Company and the Company represents, warrants and
covenants, on the date hereof and as of the Closing Date, to each of the
Investors and to each of the Hvide Group Shareholders as follows:
SECTION 2.01. Due Authorization. Each of the Holding Company and the
Company has the corporate power and authority, and the legal right, to make,
deliver and perform this Agreement and to consummate the Transactions. All
corporate action on the part of the Holding Company, the Company and their
respective officers, directors and stockholders necessary for the authorization,
execution and delivery of this Agreement and the other Transaction Documents and
the performance of their respective obligations hereunder and thereunder has
been taken. This Agreement and the other Transaction Documents constitute valid
and legally binding obligations of each of the Holding Company and the Company,
enforceable against each of the Holding Company and the Company in accordance
with their terms.
SECTION 2.02. Enforceable Obligations. The Offered Securities and the
Common Stock to be issued pursuant to Sections 6.01 and 6.03 hereof have been
duly authorized and, when issued and delivered against payment therefor pursuant
to the Underwriting Agreement or this Agreement will be fully paid and
nonassessable and the issuance, sale and delivery of the Offered Securities and
such Common Stock by the Holding Company is not subject to any preemptive rights
of shareholders of the Holding Company.
SECTION 2.03. No Conflicts. Neither the execution, delivery and performance
of this Agreement or the other Transaction Documents, nor the consummation of
any of the Transactions (a) violates, conflicts with or will result in the
breach of any provision of the charter or by-laws (or similar organizational
documents) of the Holding Company or any of its Subsidiaries, (b) violates any
law, rule or regulation, or any order or decree of any court or government
instrumentality applicable to the Holding Company or any of its Subsidiaries or
(c) conflicts with or would result in the breach of, or constitute a default or
an event
<PAGE>
10
that with notice, lapse of time or both would constitute a default under, any
contract, lease, indenture, loan agreement, mortgage, deed of trust or other
agreement or instrument to which the Holding Company or any of its Subsidiaries
is a party or by which the Holding Company or any of its Subsidiaries or any of
their respective properties or assets may be bound.
SECTION 2.04. Full Disclosure. No information (including that relating to
the 1996 Acquisitions and that set forth in the Registration Statement as of the
date hereof and as of the Closing Date), report, financial statement or
certificate delivered to the Investors in connection with this Agreement or the
Transactions contains or will contain any untrue statement of a material fact or
omitted or will omit to state a material fact necessary to make such statements
therein not misleading in light of the circumstances in which such statements
were made.
SECTION 2.05. Default. No event has occurred and is continuing which
constitutes a Default or an Event of Default under the Credit Agreement, the
Senior Subordinated Note Agreement or the Junior Subordinated Note Agreement.
SECTION 2.06. Legal Status. The Holding Company and each of its
Subsidiaries (a) has been duly incorporated or organized and is an existing
corporation or partnership in good standing under the laws of the respective
jurisdiction in which it is incorporated or organized, (b) has the corporate or
partnership power and authority to own or lease its properties and conduct its
businesses as contemplated by the Transaction Documents, and (c) is duly
qualified as a foreign corporation or partnership and in good standing in each
jurisdiction where the ownership, lease or operation of property or the conduct
of its businesses requires such qualification, except where the failure to be so
qualified would not have a material adverse effect on the business, operations,
property, condition (financial or otherwise) or prospects of the Holding Company
and its Subsidiaries taken as a whole.
SECTION 2.07. Litigation. Except as disclosed in the Registration
Statement, there are no actions, suits or proceedings pending or, to the best of
the knowledge of the Holding Company and the Company, threatened (a) with
respect to the Transactions or (b) that could materially and adversely affect
the operations, business, property, assets,
<PAGE>
11
condition (financial or otherwise) or prospects of the Holding Company and its
Subsidiaries taken as a whole.
SECTION 2.08. Financial Statements; Financial Condition, etc. (a) The
historical consolidated financial statements of the Holding Company and its
Subsidiaries included in the Registration Statement fairly present in accordance
with generally accepted accounting principles applied on a consistent basis the
financial position of the Company and its Subsidiaries on the dates and for the
periods covered thereby. To the best of the Holding Company's and the Company's
knowledge after due inquiry, the historical financial statements of the OMI
Chemical Carriers Group, Seal Fleet Vessels, Gulf Boat Marine Services, Inc.,
and E&D Boat Rentals, Inc., included in the Registration Statement fairly
present in accordance with generally accepted accounting principles applied on a
consistent basis the financial position of the entities covered thereby on the
dates and for the periods covered thereby. The Holding Company and its
Subsidiaries do not have any liabilities, either direct or contingent, other
than those specified or described in such historical financial statements
(including the notes thereto) or as otherwise disclosed in the Registration
Statement. To the best of the Holding Company's and the Company's knowledge
after due inquiry, the OMI Chemical Carrier Group, Seal Fleet Vessels, Gulf Boat
Marine Services, Inc., and E&D Boat Rentals, Inc., do not have any liabilities,
either direct or contingent, other than those specified or described in such
historical financial statements (including the notes thereto) or as otherwise
disclosed in the Registration Statement. All assumptions on which the pro forma
financial statements included in the Registration Statement are based are fully
described therein and reflect management's reasonable good faith judgment with
respect to such matters. Since December 31, 1995, there has been no material
adverse change in the operations, business, property, assets, condition
(financial or otherwise) or prospects of the Holding Company and its
Subsidiaries taken as a whole or in the assets to be acquired as a part of the
1996 Acquisitions.
(b) As of the Closing Date and after giving effect to the Transactions, (i)
the assets of the Holding Company, at a fair valuation, will exceed its
liabilities, including contingent liabilities, (ii) the remaining capital of the
Holding Company will not be unreasonably small to conduct its business and (iii)
the Holding Company will not have incurred debts, and does not intend to incur
debts,
<PAGE>
12
beyond its ability to pay such debts as they mature. For purposes of this
Section 2.08(b), "debt" means any liability on a claim, and "claim" means (x)
right to payment, whether or not such right is reduced to judgment, liquidated,
unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed,
legal, equitable, secured or unsecured; or (y) right to an equitable remedy for
breach of performance if such breach gives rise to a payment, whether or not
such right to an equitable remedy is reduced to judgment, fixed, contingent,
matured, unmatured, disputed, undisputed, secured, or unsecured.
SECTION 2.09. Capitalization. (a) The authorized capital of the Holding
Company consists or will consist immediately prior to the consummation of the
Transactions on the Closing Date of (i) 20,000,000 shares of Class A Common
Stock, $0.001 par value, of which no shares shall be outstanding, (ii) 1,250,000
shares of Class B Common Stock, $0.001 par value, of which 983,548 shares shall
be issued and outstanding; (iii) 1,250,000 shares of Class C Common Stock,
$0.001 par value, of which 616,453 shares shall be issued and outstanding; (iv)
10,000,000 shares of Preferred Stock, $1.00 par value, of which no shares shall
be outstanding; (v) 150,000 Series 1 CSIs and 200,000 Series 2 CSIs, all of
which shall be issued and outstanding; (vi) except for the conversion privileges
of the Junior Subordinated Notes and as contemplated by the CSI Agreement, and,
except for the options granted to management as described in the Registration
Statement, immediately prior to the consummation of the Transactions on the
Closing Date there will be no other outstanding options, warrants, rights
(including conversion or preemptive rights), or agreements for the purchase or
acquisition from the Holding Company of, any shares of its Capital Stock; and
(vii) no dividends or other distributions have been declared, paid or made upon
the Capital Stock of the Holding Company, nor has any of the Capital Stock of
the Holding Company been redeemed, retired, purchased or otherwise acquired for
value by the Holding Company or any of its Subsidiaries.
(b) The authorized capital of the Company consists or will consist
immediately prior to the consummation of the Transactions on the Closing Date of
(i) 10,000 shares of common stock, $1.00 par value, of which 10,000 shares shall
be issued and outstanding and shall be held by the Holding Company; (ii)
immediately prior to the Closing Date, there will be no other outstanding
options, warrants, rights (including conversion or preemptive
<PAGE>
13
rights), or agreements for the purchase or acquisition from the Company of, any
shares of its Capital Stock; and (iii) since [December 31, 1995], no dividends
or other distributions have been declared, paid or made upon the Capital Stock
of the Company, nor has any of the Capital Stock of the Company been redeemed,
retired, purchased or otherwise acquired for value by the Company or any of its
Subsidiaries.
SECTION 2.10. Approvals. Except as have been already obtained and are in
full force and effect and not subject to any appeal or stay, no notice to,
order, consent, approval, license, authorization, or validation of, or filing,
recording or registration with, or exemption by, any governmental or public body
or authority, or any subdivision thereof, or any person, is required to
authorize, or is required in connection with, (a) the execution, delivery and
performance of this Agreement and the other Transaction Documents and the
consummation of the Transactions or (b) the legality, validity, binding effect
or enforceability of this Agreement and the other Transaction Documents.
SECTION 2.11. Tax Returns and Payments. The Holding Company and each of its
Subsidiaries has filed all tax returns required to be filed by it and has paid
all income taxes payable by it that have become due pursuant to such tax returns
and all other taxes and assessments payable by it that have become due, other
than those not yet delinquent and except for those contested in good faith. The
Holding Company and each of its Subsidiaries has paid, or has provided adequate
reserves (in the good faith judgment of the management of the Holding Company or
such Subsidiary) for the payment of, all Federal and state income taxes
applicable for all prior fiscal years and for the current fiscal year to the
date hereof.
SECTION 2.12. Compliance with Applicable Law. The Holding Company and each
of its Subsidiaries (a) is not in violation of any provisions of any applicable
law, rule or regulation (including, but not limited to, OPA 90, the Jones Act,
ERISA or any Environmental Law), which violation might result, individually or
in the aggregate, in any material adverse change in the business, operations,
affairs, condition (financial or otherwise), properties or assets of the Holding
Company and its Subsidiaries, taken as a whole, and (b) is not in violation of
any order of any court or any other governmental authority.
<PAGE>
14
SECTION 2.13. Investment Company Act. Neither the Holding Company nor the
Company is an "investment company" within the meaning of the Investment Company
Act of 1940, as amended.
SECTION 2.14. Insurance. The Holding Company and its Subsidiaries have
insurance, including insurance relating to each vessel (or its operation) owned
or operated by the Company or its Subsidiaries or to be acquired or operated by
the Company or any of its Subsidiaries pursuant to the 1996 Acquisitions and
insurance relating to the program for the construction of new vessels by the
Company, in such amounts and covering such risks and liabilities as are in
accordance with normal industry practice, and such insurance is in full force
and effect.
SECTION 2.15. Foreign Investment in Real Property Tax Act of 1980
("FIRPTA"). Neither the Holding Company nor the Company is a "United States real
property holding corporation" within the meaning of Section 897(c)(2) of the
Code.
SECTION 2.16. Ownership of Property; Liens. The Holding Company and its
Subsidiaries have (a) good title in fee simple to, or a valid leasehold interest
in, all their respective real property, and (b) good title to all their
respective personal property, except to the extent that failure to do so would
not have a material adverse effect on the operations, business, property,
assets, condition (financial or otherwise) or prospects of the Holding Company
and its Subsidiaries taken as a whole.
SECTION 2.17. Subsidiaries of the Holding Company. Set forth on Schedule
2.17 attached hereto is a complete and accurate list of all the Subsidiaries of
the Holding Company.
SECTION 2.18. Brokers. Except as described in the Registration Statement,
neither the Holding Company nor the Company has employed any broker, finder or
agent (other than Clipper) in connection with the Transactions, and the Company
is under no obligation to pay any broker's fee or commission in connection with
the Transactions.
SECTION 2.19. ERISA. (a) The Holding Company and each ERISA Affiliate have
operated and administered each Plan in compliance with all applicable laws
except for such instances of noncompliance as have not resulted in and could
<PAGE>
15
not reasonably be expected to result in a material adverse effect on the
business, operations, affairs, financial condition, assets or properties of the
Holding Company and its Subsidiaries taken as a whole. Neither the Holding
Company nor any ERISA Affiliate has incurred any liability pursuant to Title I
or IV of ERISA or the penalty or excise tax provisions of the Code relating to
employee benefit plans (as defined in Section 3 of ERISA), and no event,
transaction or condition has occurred or exists that could reasonably be
expected to result in the incurrence of any such liability by the Holding
Company or any ERISA Affiliate, or in the imposition of any lien on any of the
rights, properties or assets of the Holding Company or any ERISA Affiliate, in
either case pursuant to Title I or IV of ERISA or to such penalty or excise tax
provisions or to Section 401(a)(29) or 412 of the Code, other than such
liabilities or liens as would not be individually or in the aggregate material
to the business, operations, affairs, financial condition, assets, properties or
prospects of the Holding Company and its Subsidiaries taken as a whole.
(b) The present value of the aggregate benefit liabilities under each of
the Plans (other than Multiemployer Plans), determined as of the end of such
Plan's most recently ended plan year on the basis of the actuarial assumptions
specified for funding purposes in such Plan's most recent actuarial valuation
report, did not exceed the aggregate current value of the assets of such Plan
allocable to such benefit liabilities. The term "benefit liabilities" has the
meaning specified in section 4001 of ERISA and the terms "current value" and
"present value" have the meaning specified in section 3 of ERISA.
(c) The Company and its ERISA Affiliates have not incurred withdrawal
liabilities (and are not subject to contingent withdrawal liabilities) under
Section 4201 or 4204 of ERISA in respect of Multiemployer Plans that
individually or in the aggregate are material to the business, operations,
affairs, financial condition, assets, properties or prospects of the Holding
Company and its Subsidiaries taken as a whole.
(d) The expected postretirement benefit obligation (determined as of the
last day of the Holding Company's most recently ended fiscal year in accordance
with Financial Accounting Standards Board Statement No. 106, without regard to
liabilities attributable to continuation
<PAGE>
16
coverage mandated by Section 4980B of the Code) of the Holding Company and its
Subsidiaries is not material to the business, operations, affairs, financial
condition, assets, properties or prospects of the Holding Company and its
Subsidiaries taken as a whole.
ARTICLE III
Representations and Warranties
of the Investors
Each Investor, severally and not jointly, represents, warrants and
covenants, on the date hereof and as of the Closing Date, to the Holding
Company, the Company and each of the Hvide Group Shareholders as follows:
SECTION 3.01. Due Authorization. Each Investor has full power and
authority, and the legal right, to make, deliver and perform this Agreement, and
all action on the part of such Investor necessary for the authorization,
execution and delivery of this Agreement and the performance of its obligations
hereunder has been taken, and this Agreement constitutes a valid and legally
binding obligation of such Investor, enforceable against such Investor in
accordance with its terms.
SECTION 3.02. No Conflicts. Neither the execution and delivery of this
Agreement, nor the compliance by such Investor with the terms and provisions
hereof, violates, conflicts with or will result in the breach of, or constitute
a default or an event that with notice, lapse of time or both would constitute a
default under, any material agreement or instrument to which such Investor is a
party or that is binding on such Investor.
ARTICLE IV
Representations and Warranties
of the Hvide Group Shareholders
Each Hvide Group Shareholder, severally and not jointly, represents,
warrants and covenants, on the date hereof and as of the Closing Date, to the
Holding Company, the Company, the Principal Shareholder and each of the
Investors as follows:
SECTION 4.01. Due Authorization. Each Hvide Group Shareholder has full
power and authority, and the
<PAGE>
17
legal right, to make, deliver and perform this Agreement and the other
Transaction Documents to which it is a party, and to consummate the
Transactions, and all action on the part of such Hvide Group Shareholder
necessary for the authorization, execution and delivery of this Agreement and
the other Transaction Documents to which it is a party and the performance of
all its obligations hereunder and thereunder has been taken, and this Agreement
and each other Transaction Document to which such Hvide Group Shareholder is a
party constitutes a valid and legally binding obligation of such Hvide Group
Shareholder, enforceable against such Hvide Group Shareholder in accordance with
its terms.
SECTION 4.02. No Conflicts. Neither the execution and delivery of this
Agreement and the other Transaction Documents, nor the compliance by such Hvide
Group Shareholder with the terms and provisions hereof or thereof, nor the
consummation of any of the Transactions violates, conflicts with or will result
in the breach of, or constitute a default or an event that with notice, lapse of
time or both would constitute a default under any material agreement or
instrument to which such Hvide Group Shareholder is a party or that is binding
on such Hvide Group Shareholder or its properties or assets.
SECTION 4.03. Shares Outstanding. Immediately [prior] to the consummation
of the Transactions on the Closing Date, the Hvide Group Shareholders will hold
Capital Stock of the Holding Company in the respective amounts set forth in
Schedule 4.03 hereto, free and clear of any liens, claims, options, charges or
other encumbrances, and the Principal Shareholder has full power and authority
to direct on behalf of each Hvide Group Shareholder all actions required
hereunder.
ARTICLE V
Closing Date
The transactions provided for in Article VI hereof shall be consummated at
a closing to be held on the Closing Date at the offices of [ ], or at such other
time and place as the parties hereto shall agree. As used herein, the term
"Closing Date" shall mean the date specified by the Company on or prior to July
[ ], 1996, on
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18
which all the conditions set forth in Article VIII hereof shall have been (or
shall be) satisfied.
ARTICLE VI
Recapitalization of the Holding Company and the Company
SECTION 6.01. Conversion of Common Stock. (a) On the Closing Date (i)
[47,153] shares of Class B Common Stock held by Clipper/Merban pursuant to the
Junior Subordinated Note Agreement, [11,252] shares of Class C Common Stock held
by Clipper/Merban pursuant to the Junior Subordinated Note Agreement and
[45,333] shares of Class C Common Stock held by Clipper/Merban pursuant to the
Senior Subordinated Note Agreement shall be converted into [103,738] fully paid
and nonassessable shares of Class A Common Stock, (ii) the [88,000] shares of
Class C Common Stock held by the Senior Subordinated Noteholders other than
Clipper/Merban shall be converted into an equal number of fully paid and
nonassessable shares of Class A Common Stock, (iii) the 53,118 shares of Class C
Common Stock held by the Junior Subordinated Noteholders other than
Clipper/Merban shall be converted into an equal number of fully paid and
nonassessable shares of Class B Common Stock and (iv) the 418,750 shares of
Class C Common Stock held by the Hvide Group Shareholders shall be converted
into an equal number of fully paid and nonassessable shares of Class B Common
Stock.
(b) The Common Stock converted pursuant to paragraph (a) above shall be
deemed to have been converted immediately prior to the sale of the Offered
Securities by the Underwriters pursuant to the Underwriting Agreement. At such
time, (i) the certificates representing the converted shares of Common Stock
shall be delivered to the Holding Company, (ii) such shares shall be canceled
and (iii) each person entitled to receive Class A Common Stock or Class B Common
Stock upon such conversion shall, for all purposes, become the record holder of
the number of shares of Class A Common Stock or Class B Common Stock to be
issued at such time. On the Closing Date, the Holding Company shall issue and
deliver a certificate or certificates for the number of shares issuable to each
person entitled to receive the same.
(c) The Holding Company shall pay any and all stamp, transfer or other
similar taxes that may be payable in respect of the issuance or delivery of
shares of Class A
<PAGE>
19
Common Stock and Class B Common Stock pursuant to this Section 6.01.
SECTION 6.02. Application of Net Cash Proceeds. (a) After the conversion of
Common Stock pursuant to Section 6.01, the Holding Company agrees to apply the
first $[40,800,000] of Net Cash Proceeds from the Initial Public Offering as
follows: (i) $[25,700,000] to repay in full the Senior Subordinated Notes
together with the accrued but unpaid interest thereon, (ii) [$3,700,000] to
prepay the accrued but unpaid interest on the Junior Subordinated Notes and
(iii) $[11,400,000] to prepay a portion of the outstanding aggregate principal
amount of Junior Subordinated Notes.
(b) If the Underwriters exercise the Over-allotment Option on or before the
Closing Date, the Holding Company agrees to apply, simultaneously with the
prepayments specified in paragraph (a) above, the proceeds it receives from such
exercise to prepay to the extent of such proceeds the aggregate principal amount
of Junior Subordinated Notes remaining outstanding after the prepayments
specified in paragraph (a) above.
(c) If the Underwriters exercise the Over-allotment Option after the
Closing Date, then the Holding Company agrees to apply the proceeds it receives
from the exercise thereof, on the date the Holding Company receives such
proceeds, to prepay, to the extent of such proceeds, first the accrued but
unpaid interest on the Junior Subordinated Notes then outstanding and second the
aggregate principal amount of Junior Subordinated Notes then outstanding.
SECTION 6.03. Conversion of Junior Subordinated Notes. (a) If the
Underwriters exercise the Over-allotment Option on or before the Closing Date or
the Underwriters notify the Holding Company on or before the Closing Date that
they will not exercise the Over-allotment Option, the Junior Subordinated
Noteholders and the Holding Company agree that on the Closing Date, immediately
after the prepayments referred to in Section 6.02(a) and, if applicable, Section
6.02(b), (i) up to $[ ] of the outstanding aggregate principal amount of the
Junior Subordinated Notes then held by Clipper/Merban (the "Initial C/M Closing
Date Amount") shall be converted into a fixed number of fully paid and
nonassessable shares of Class B Common Stock determined by dividing (x) the
Initial C/M
<PAGE>
20
Closing Date Amount by (y) the Net Offering Price, (ii) the
outstanding aggregate principal amount, if any, of the Junior Subordinated Notes
held by Clipper/Merban after the conversion specified in clause (i) above (the
"Remaining C/M Closing Date Amount") shall be converted into a fixed number of
fully paid and nonassessable shares of Class A Common Stock determined by
dividing (x) the Remaining C/M Closing Date Amount by (y) the Net Offering Price
and (iii) the aggregate principal amount of Junior Subordinated Notes then
outstanding and held by Investors other than Clipper/Merban shall be converted
into a fixed number of fully paid and nonassessable shares of Class B Common
Stock determined by dividing (x) such aggregate principal amount by (y) the Net
Offering Price.
(b) If the Underwriters exercise the Over-allotment Option after the
Closing Date or the Over-allotment Option expires or is terminated after the
Closing Date, then on the date the Holding Company receives the proceeds from
such exercise or on the date of such expiration or termination, as the case may
be, the Junior Subordinated Noteholders and the Holding Company agree that,
after the prepayment, if any, specified in Section 6.02(c), (i) up to $[ ] of
any accrued but unpaid interest on the Junior Subordinated Notes held by
Clipper/Merban and the aggregate principal amount of such Notes then outstanding
(the "Initial C/M Over-allotment Amount") shall be converted into a fixed number
of fully paid and nonassessable shares of Class B Common Stock determined by
dividing (x) the Initial C/M Over-allotment Amount by (y) the Net Offering
Price, (ii) the outstanding aggregate principal amount, if any, of the Junior
Subordinated Notes held by Clipper/Merban after the conversion specified in
clause (i) above together with any accrued but unpaid interest thereon (the
"Remaining C/M Over-allotment Amount") shall be converted into a fixed number of
fully paid and nonassessable shares of Class A Common Stock determined by
dividing (x) the Remaining C/M Over-allotment Amount by (y) the Net Offering
Price and (iii) the aggregate principal amount of Junior Subordinated Notes then
outstanding and held by Investors other than Clipper/Merban, together with any
accrued but unpaid interest thereon, shall be converted into a fixed number of
fully paid and nonassessable shares of Class B Common Stock determined by
dividing (x) such aggregate principal amount plus such interest by (y) the Net
Offering Price.
(c) On the Closing Date, the date the Holding Company receives the proceeds
from the exercise of the Over-
<PAGE>
21
allotment Option or the date the Over-allotment Option expires or is terminated,
as applicable, the Junior Subordinated Notes converted pursuant to paragraph (a)
or (b) above, as applicable, shall be delivered to the Holding Company and
canceled and the persons entitled to receive the Common Stock issuable upon
conversion thereof shall for all purposes become the record holders of the
number of shares of Common Stock to be issued at such time and the Holding
Company shall issue and deliver a certificate or certificates for the number of
shares issuable to each person entitled to receive the same; provided, however,
that notwithstanding anything to the contrary contained in this Section 6.03,
for the purposes of the foreign ownership provisions contained in the Holding
Company's Amended and Restated Articles of Incorporation, such shares of Common
Stock shall be deemed to have been issued to the Junior Subordinated Noteholders
[immediately prior to the Initial Public Offering][on the date hereof].
(d) The Holding Company shall pay any and all stamp, transfer or other
similar taxes that may be payable in respect of the issuance or delivery of
shares of Common Stock on conversion of any Notes pursuant to this Section 6.03.
(e) No fractional shares of Common Stock shall be issued upon the
conversion of any Notes. If more than one Note shall be surrendered for
conversion by any one Junior Subordinated Noteholder, the number of full shares
that shall be issuable upon conversion thereof shall be computed on the basis of
the outstanding aggregate principal amount of notes so surrendered. A fractional
share of Common Stock that would otherwise be issuable upon conversion of any
note or notes shall be eliminated by rounding any fraction to the nearest whole
number of shares of such Common Stock.
SECTION 6.04. Termination of Existing Shareholders Agreement. The parties
hereto hereby agree that on the Closing Date the Existing Shareholders Agreement
shall be deemed to be terminated and of no further force and effect; provided,
however, that the indemnity provided for in Section 10.01 thereof shall survive
the termination thereof and remain in full force and effect.
<PAGE>
22
ARTICLE VII
Covenants of the Holding Company, the Company
and the Hvide Group Shareholders
Each of the Holding Company, the Company and each Hvide Group Shareholder
hereby covenants and agrees with the Investors as follows:
SECTION 7.01. Further Instruments and Acts. Upon the request of any of the
Investors, each of the Holding Company, the Company and each Hvide Group
Shareholder will execute and deliver such further instruments and do such
further acts as may be reasonably necessary or proper to carry out more
effectively the purposes of this Agreement.
SECTION 7.02. Authorization and Approvals. Each of the Holding Company and
the Company will promptly make or obtain, from time to time at its own expense,
all such governmental notices, filings, licenses, authorizations, consents,
permits and approvals as may be required to enable it to comply with its
obligations hereunder.
SECTION 7.03. Compliance with Conditions. Each of the Holding Company, the
Company and each Hvide Group Shareholder will use its best efforts to cause each
of the conditions specified in Article VIII hereof to be satisfied on or before
July [ ], 1996.
ARTICLE VIII
Conditions
SECTION 8.01. Conditions to the Investors' Obligations. The obligations of
the Investors hereunder are subject to the satisfaction, on or prior to the
Closing Date, of the following conditions precedent:
(a) each Investor shall have received the favorable opinion of Dyer
Ellis & Joseph, counsel to the Holding Company, the Company and the Hvide
Group Shareholders, dated the Closing Date and addressed to the Investors,
in the form attached hereto as Exhibit B, and covering such other matters
as any of the Investors may reasonably request.
<PAGE>
23
(b) the Initial Public Offering shall have been consummated on terms
satisfactory to the Investors and the Net Cash Proceeds thereof shall not
be less than $[ ];
(c) any amendments or supplements to the Registration Statement shall
be in form and substance satisfactory to Clipper;
(d) the Underwriting Agreement, in form and substance satisfactory to
Clipper shall have been executed and delivered by the parties thereto and
shall be in full force and effect, all conditions specified therein shall
have been satisfied and the Investors shall have received copies of each
certificate, document or legal opinion delivered pursuant thereto;
(e) the Company shall have merged into the Holding Company pursuant to
the Merger Agreement attached hereto as Exhibit C and the Holding Company
shall have succeeded to and been substituted for the Company with respect
to all liabilities and obligations of the Company whatsoever, including
without limitation the Credit Agreement;
(f) in connection with the merger referred to in paragraph (e) above,
the Holding Company shall have effected a 1.584274 for 1 [forward] stock
split of all of its outstanding shares of Capital Stock;
(g) the 1996 Acquisitions shall have been consummated on terms
satisfactory to Clipper;
(h) at least $[8,100,000] of the Net Cash Proceeds shall have been
used to repay a portion of the outstanding revolving line of credit under
the Credit Agreement;
(i) no more than $[4,300,000] of the Net Cash Proceeds shall have been
used to prepay a portion of the outstanding aggregate principal amount of
the Related Party Notes;
(j) the Credit Agreement shall be in full force and effect and any
conditions to the effectiveness of the amendment and restatement thereof
shall have been satisfied;
<PAGE>
24
(k) the Holding Company shall have executed and delivered to the
Investors the Registration Rights Agreement, and such Registration Rights
Agreement shall be in full force and effect;
(l) the Shareholders Agreement shall have been executed and delivered
by each of the parties thereto and shall be in full force and effect;
(m) the CSI Agreement shall have been amended and restated in the form
attached hereto as Exhibit D;
(n) no condition or event shall exist that constitutes or, after
giving effect to the Transactions, would constitute a Default or an Event
of Default (as such terms are defined in the Credit Agreement, the Senior
Subordinated Note Agreement and the Junior Subordinated Note Agreement);
(o) the representations and warranties of each of the Holding Company
and the Company contained in Article II hereof shall be true and correct as
of the date hereof and, after giving effect to the Transactions, as of the
Closing Date;
(p) the Registration Statement shall not include any untrue statement
of a material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein not misleading;
(q) there shall have been no material adverse change in the business,
operations, property, condition (financial or otherwise) or prospects of
the Holding Company and its Subsidiaries taken as a whole since December
31, 1995;
(r) the Investors shall have received certificates of the President of
each of the Holding Company and the Company and dated the Closing Date,
certifying that the conditions specified in paragraphs (n) through (q)
above have been satisfied;
(s) the Articles of Incorporation of the Holding Company shall have
been amended and restated in the form attached hereto as Exhibit E and each
of the Investors shall have received a copy of such Amended
<PAGE>
25
and Restated Articles of Incorporation[, certified by the Secretary of
State of the State of Florida];
(t) the By-laws of the Holding Company shall have been amended in form
and substance satisfactory to the Investors;
(u) each Investor shall have received a certificate of the Secretary
of each of the Holding Company and the Company and dated the Closing Date
certifying (i) that attached thereto are true and correct copies of (A) the
By-laws of the Holding Company or the Company, as applicable, and (B) the
resolutions of the board of directors (and stockholders, where appropriate)
of the Holding Company or the Company, as applicable, approving the
execution, delivery and performance of this Agreement and the other
Transaction Documents and the consummation of the Transactions, (ii) that
such By-laws and resolutions have not been altered or repealed and are in
full force and effect and (iii) as to the incumbency and signature of each
officer of the Holding Company or the Company, as applicable, who signs
this Agreement or any certificate or document delivered by the Holding
Company or the Company, as applicable, pursuant to this Agreement;
(v) each of the Investors shall have received a good standing
certificate for each of the Holding Company and the Company issued as of a
recent date by the Secretary of State of the State of Florida and each of
the states in which the Holding Company or the Company, as applicable, is
qualified to do business as a foreign corporation;
(w) each of the Investors shall have received such other certificates,
legal opinions and documents evidencing compliance with the terms hereof as
any of the Investors may request;
(x) the Holding Company shall have reimbursed the Investors for all
reasonable out-of-pocket expenses (including fees, expenses and
disbursements of counsel) incurred by them in connection with this
Agreement and the Transactions;
(y) the Fee Letter shall have been amended and restated in the form
attached hereto as Exhibit F;
<PAGE>
26
(z) no legislative order, rule, ruling or regulation will have been
enacted or made by or on behalf of any governmental body, department or
agency, nor will any legislation have been introduced and favorably
reported for passage by either house of Congress or by any committee
thereof, nor will any investigation by any governmental authority or
administrative body have been commenced, nor will any decision of any court
of the competent jurisdiction have been rendered, that in the reasonable
opinion of the Investors would have a material adverse effect on the
business, operations, property, condition (financial or otherwise) or
prospects of the Holding Company and its Subsidiaries taken as a whole, it
being agreed and understood that unless there are material adverse
developments after the date hereof with respect to the proposed legislation
described on Schedule 8.01 hereto, such legislation will not be deemed by
the Investors to be materially adverse to the Holding Company and its
Subsidiaries taken as a whole; and
(aa) the Transactions, including, without limitation, the purchase of
and payment for the Offered Securities and the conversion of the Junior
Subordinated Notes into Common Stock as provided herein, (i) shall not be
prohibited by any applicable law, court or other governmental authority,
order or injunction, or governmental regulation, release, interpretation or
opinion and (ii) shall not subject any Investor to any penalty, tax or
liability.
SECTION 8.02. Conditions of the Principal Shareholder's and Hvide Group
Shareholders' Obligations. The obligations of the Principal Shareholder and the
Hvide Group Shareholders under Article VI hereof are subject to satisfaction of
the condition precedent that the Net Cash Proceeds from the sale of the Offered
Securities shall be at least $[ ].
ARTICLE IX
Indemnity
SECTION 9.01. Indemnity. The Holding Company and the Company hereby jointly
and severally agree to indemnify each of the Investors and their respective
partners, directors, officers, employees, Affiliates, representatives
<PAGE>
27
and agents against, and agree to hold the Investors and such persons harmless
from, any and all losses, claims, damages and liabilities and related expenses,
including reasonable fees and disbursements of counsel, incurred by the
Investors or any such person as a result of, or arising out of, or in any way
related to, the Holding Company's or the Company's entering into and performance
of this Agreement or the other Transaction Documents (including, without
limitation, the participation by the Investors and their partners, directors,
officers, employees, Affiliates and representatives on the board of directors of
the Holding Company, and such board's committees, and the exercise of their
other rights under the Shareholders Agreement) and the consummation of the
Transactions, or any claim, litigation, investigation or proceeding relating to
any of the foregoing, whether or not the Investors or any such person is a party
thereto; provided, however, that such indemnity shall not apply to any such
losses, claims, damages, liabilities or related expenses determined by a
judgment of a court of competent jurisdiction not subject to appeal to have
arisen primarily from the gross negligence or wilful misconduct of such
Investor. The foregoing indemnity shall survive and remain operative and in full
force and effect regardless of the termination of all or any part of this
Agreement, the invalidity or unenforceability of any term or provision of this
Agreement, any investigation made by or on behalf of the Investors and the
accuracy of any representation or warranty made under this Agreement. All
amounts due under this Section 9.01 shall be payable on written demand therefor.
ARTICLE X
Miscellaneous
SECTION 10.01. Notices. All notices and other communications pertaining to
this Agreement shall be in writing and shall be deemed to have been duly given
upon the receipt thereof. Such notices shall be delivered by hand,
<PAGE>
28
or mailed, certified or registered mail with postage prepaid:
(a) if to Clipper or the other Investors, at its addresses set forth
in Schedule 10.01 hereto, with a copy to:
Cravath, Swaine & Moore
Worldwide Plaza
825 Eighth Avenue
New York, NY 10019-7475
Attention of D. Collier Kirkham, Esq.; and
(b) if to the Holding Company, the Company, the Principal Shareholder
or the Hvide Group Shareholders, to it, him or each of them at:
2200 Eller Drive, P.O. Box 13038
Fort Lauderdale, FL 33316
Attention of Gene Douglas, Esq.
with a copy to:
Dyer Ellis & Joseph
600 New Hampshire Avenue, N.W.
Washington, D.C. 20037
Attention of Michael Joseph, Esq.
or to such other person or address as shall be furnished to the other party in
writing.
SECTION 10.02. Parties. This Agreement shall inure to the benefit of and be
binding upon the parties hereto and each of their respective successors. Nothing
expressed or mentioned in this Agreement is intended or shall be construed to
give any person, firm or corporation, other than the parties hereto and their
respective successors, any legal or equitable right, remedy or claim under or in
respect of this Agreement or any provision herein contained. This Agreement and
all conditions and provisions hereof are intended to be for the sole and
exclusive benefit of the parties hereto and their respective successors, and for
the benefit of no other person, firm or corporation.
SECTION 10.03. Governing Law. This Agreement shall be governed by the laws
of the State of Florida
<PAGE>
29
regardless of the laws that might otherwise govern under applicable principles
of conflict of laws thereof.
SECTION 10.04. Successors and Assigns. All covenants and agreements of the
Holding Company and the Company in this Agreement shall bind their respective
successors and assigns.
SECTION 10.05. Severability Clause. In case any provision in this Agreement
shall be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby and such provision shall be ineffective only to the extent of
such invalidity, illegality or unenforceability. The parties hereto shall
endeavor in good-faith negotiations to replace the invalid, illegal or
unenforceable provisions with valid provisions the economic effect of which
comes as close as possible to that of the invalid, illegal or unenforceable
provisions.
SECTION 10.06. Representations, Warranties and Agreements To Survive
Delivery. All representations, warranties and agreements contained in or
incorporated into this Agreement, or contained in certificates of officers of
the Holding Company and the Company submitted pursuant thereto, shall remain
operative and in full force and effect, regardless of any investigation made by
or on behalf of any of the Investors or any controlling person of any of the
Investors, or by or on behalf of the Holding Company, the Company or the
Principal Shareholder, and shall survive the execution and delivery of this
Agreement.
SECTION 10.07. Waivers, Amendment and Remedies. The failure of any of the
parties to insist in any one or more instances upon strict performance of any of
the provisions of this Agreement or to take advantage of any of its rights
hereunder shall not be construed as a waiver of any such provisions or the
relinquishment of any such rights, but the same shall continue and remain in
full force and effect.
Neither this Agreement nor any provision hereof may be waived, amended or
modified except pursuant to an agreement or agreements in writing entered into
by each of the parties hereto.
Except as otherwise expressly limited in this Agreement, all remedies under
this Agreement shall be
<PAGE>
30
cumulative and in addition to every other remedy provided for herein or by law.
SECTION 10.08. Entire Agreement. This Agreement, together with all exhibits
and schedules hereto, is intended by the parties hereto to be a final expression
of their agreement in respect of the subject matter contained herein, and
supersedes all prior agreements and understandings between the parties hereto
with respect to such subject matter.
SECTION 10.09. Headings. The headings of the Articles and the Sections in
this Agreement are for convenience of reference only and shall not be deemed to
alter or affect the meaning or interpretation of any provisions hereof.
SECTION 10.10. Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed to be an original and all of which
shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the
date first above written.
HVIDE CORP.,
by____________________________
Name:
Title:
HVIDE MARINE INCORPORATED,
by____________________________
Name:
Title:
<PAGE>
31
CLIPPER CAPITAL ASSOCIATES,
L.P.,
by____________________________
Name: Kevin A. Macdonald
Title: Authorized Officer
CLIPPER/MERCHANT HMI, L.P.,
by its general partner
CLIPPER CAPITAL ASSOCIATES,
L.P.,
by____________________________
Name: Kevin A. Macdonald
Title: Authorized Officer
CLIPPER/PARK HMI, L.P.,
by its general partner
CLIPPER CAPITAL ASSOCIATES,
L.P.,
by____________________________
Name: Kevin A. Macdonald
Title: Authorized Officer
CLIPPER/MERBAN HMI, L.P.,
by its general partner
CLIPPER CAPITAL ASSOCIATES,
L.P.,
by____________________________
Name: Kevin A. Macdonald
Title: Authorized Officer
<PAGE>
32
CLIPPER/HERCULES, L.P.,
by its general partner
CLIPPER CAPITAL ASSOCIATES,
L.P.,
by____________________________
Name: Kevin A. Macdonald
Title: Authorized Officer
METROPOLITAN LIFE INSURANCE
COMPANY,
by____________________________
Name:
Title:
OLYMPUS GROWTH FUND II, L.P.,
by its general partner
OGP II, L.P.,
by____________________________
Name: Louis J. Mischianti
Title: Partner
__________________________
J. Erik Hvide
Trust created by the
Declaration of Trust dated
June 23, 1978, for Elsa Hvide
and the others named therein,
by____________________________
Name: J. Erik Hvide
<PAGE>
33
Trust created by the
Declaration of Trust, dated
June 23, 1978, for Elsa Hvide
Sowrey and the others named therein,
by____________________________
Name: J. Erik Hvide
<PAGE>
Exhibits and Schedules
EXHIBITS
Exhibit A [Form of Shareholders Agreement]
Exhibit B [Form of Opinion of Dyer Ellis & Joseph]
Exhibit C [Form of Merger Agreement]
Exhibit D [Form of Amended and Restated CSI Agreement]
Exhibit E [Form of Amended and Restated Articles of
Incorporation]
Exhibit F [Form of Amended and Restated Fee Letter]
SCHEDULES
Schedule 2.17 Subsidiaries
Schedule 4.13 Shares Owned by the Hvide Group
Schedule 8.01 Certain Legislation
Schedule 10.01 Addresses for Notices
<PAGE>
Schedule 4.03
Shares Owned by the Hvide Group
Class B Class C
Holder Shares Shares
- ------ ------ ------
Erik J. Hvide 80,679 48,408
Trust created by the Declaration of 573,758 344,254
Trust dated June 23, 1978, for
Elsa Hvide and the others named
therein
Trust created by the Declaration of 43,480 26,088
Trust, dated June 23, 1978, for
Elsa Hvide Sowrey and the others named
therein
<PAGE>
Schedule 8.01
Certain Legislation
H.B. [ ] pertaining to the U.S. coastwise trade as reported to the
Transportation Committee of the U.S. House of Representatives on June [ ], 1996.
<PAGE>
Schedule 10.03
Addresses for Notices
Clipper Capital Associates, L.P.,
Clipper/Hercules HMI, L.P.,
Clipper/Merban HMI, L.P.,
Clipper/Merchant HMI, L.P., and
Clipper/Park HMI, L.P.
c/o Clipper Capital Associates, L.P.
12 East 49th Street (30th Floor)
New York, NY 10017
Attention of: Mr. Kevin A. Macdonald
Metropolitan Life Insurance Company
334 Madison Avenue
P.O. Box 633
Convent Station, NJ 07961-0633
Attention of: Mr. Charles Symington
Olympus Growth Fund II, L.P.
c/o Olympus Partners
Metro Center, One Station Place
Stamford, CT 06902
Attention of: Mr. Louis J. Mischianti
EXHIBIT 10.28
[CS&M Draft -- 6/18/96]
REGISTRATION RIGHTS AGREEMENT dated as of July [ ],
1996, by and between HVIDE MARINE INCORPORATED, a Florida
corporation (the "Company"), and the shareholders of the
Company identified on the signature pages hereof (together
with their permitted successors and assigns, the
"Shareholders").
W I T N E S S E T H:
WHEREAS the Company and the Shareholders are parties to the
Recapitalization Agreement dated as of the date hereof (as amended, supplemented
or otherwise modified from time to time, the "Recapitalization Agreement");
WHEREAS it is a condition to the effectiveness of the Recapitalization
Agreement that the Company execute and deliver this Agreement and provide the
registration rights set forth herein;
NOW, THEREFORE, in order to induce the Shareholders to consummate the
transactions contemplated by the Recapitalization Agreement and in consideration
of the premises and agreements contained in this Agreement and for other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties, intending to be legally bound, agree as follows:
SECTION 1. Interpretation and Definitions. (a) For all purposes of this
Agreement, except as otherwise expressly provided or unless the context
otherwise requires:
(i) the terms defined in this Section 1 have the meanings assigned to
them in this Section and include the plural as well as the singular; and
(ii) the words "herein", "hereof" and "hereunder" and other words of
similar import refer to this Agreement as a whole and not to any particular
Section or other subdivision.
(b) As used in this Agreement, the following terms shall have the following
meanings:
"Additional Shareholders" means persons, other than Shareholders or members
of the Hvide Group, from time to time holding Registrable Securities of the
Company.
<PAGE>
2
"Board" means the board of directors of the Company.
"Capital Stock" of any person means any and all shares, interests, rights
to purchase, warrants, options, contingent share certificates, participations or
other equivalents of or interests in (however designated) equity of such person,
but excluding any debt securities convertible into or exchangeable for such
equity.
"Clipper" means Clipper Capital Associates, L.P., a Delaware limited
partnership
"Clipper Shareholders" means Clipper, Clipper/Merchant HMI, L.P., a
Delaware limited partnership, Clipper/Park HMI, L.P., a Delaware limited
partnership, Clipper/Merban HMI, L.P., a Delaware limited partnership, and
Clipper/Hercules L.P., a Delaware limited partnership, and each of their
permitted successors and assigns.
"Demand Registration" has the meaning ascribed to such term in Section 2
hereof.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Hvide Group" means J. Erik Hvide and any person related to him by kinship
or marriage (including Hans J. Hvide), trusts or similar arrangements
established solely on the behalf of one or more of them and partnerships and
other entities that are wholly owned by them and that remain wholly owned by
them.
"Initial Public Offering" means the offering or sale of the Class A Common
Stock of the Company, par value $0.001 per share, pursuant to a Registration
Statement (No. 33-78166) filed by the Company with the SEC, and any amendments
or supplements thereto, including post-effective amendments, in each case
including the Prospectus contained therein, all exhibits thereto and all
documents and other materials incorporated by reference therein.
"Managing Underwriter" means the Underwriter or Underwriters that manage or
lead an underwritten offering.
"person" means any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization, government
or any agency or political subdivision thereof or any other entity.
<PAGE>
3
"Piggyback Registration" has the meaning ascribed to such term in Section 3
hereof.
"Prospectus" means the prospectus included in any Registration Statement
(including a prospectus that discloses information previously omitted from a
prospectus filed as part of an effective registration statement in reliance upon
Rule 430A under the Securities Act) and all amendments and supplements to such
prospectus, including post-effective amendments.
"Registrable Securities" means the Class A and Class B Common Stock par
value $0.001 per share of the Company (as presently constituted), any stock or
other securities into which or for which such Class A or Class B Common Stock
may hereafter be changed, converted or exchanged, and any other securities
issued to holders of such Class A or Class B Common Stock (or such shares into
which or for which such shares are so changed, converted or exchanged) upon any
reclassification, share combination, share subdivision, share dividend, merger,
consolidation or similar transactions or events, provided that any such
securities shall not be Registrable Securities with respect to a proposed offer
or sale thereof if a Registration Statement with respect to the sale of such
securities shall have become effective under the Securities Act and such
securities shall have been disposed of in accordance with the plan of
distribution set forth in such Registration Statement.
"Registration Statement" means any registration statement filed by the
Company with the SEC under the Securities Act that covers some or all
Registrable Securities, and any amendments or supplements thereto, including
post-effective amendments, in each case including the Prospectus contained
therein, all exhibits thereto and all documents and other materials incorporated
by reference therein.
"SEC" means the United States Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Selling Party" has the meaning ascribed to such term in Section 7(b)
hereof.
"Subsidiary" means a corporation or other entity (including a partnership)
of which a majority of the Capital
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4
Stock having voting power under ordinary circumstances to elect a majority of
the board of directors or other voting interests are owned by (a) the Company,
(b) the Company and one or more Subsidiaries or (c) one or more Subsidiaries.
"Underwriter" means any underwriter of Registrable Securities in connection
with an offering thereof pursuant to a Registration Statement.
SECTION 2. Demand Registration. (a) Upon written notice from Clipper
requesting that the Company effect the registration (a "Demand Registration")
under the Securities Act of any or all of the Registrable Securities held by any
of the Shareholders, which notice shall specify the intended method or methods
of disposition of such Registrable Securities, the Company will use its best
efforts to effect (at the earliest practicable date), the registration under the
Securities Act of such Registrable Securities for disposition in accordance with
the intended method or methods of disposition stated in such request, provided
that:
i) if, while a registration request is pending pursuant to this
Section 2(a), counsel to the Company delivers to Clipper an opinion to the
effect that the filing of a registration statement would require the
disclosure of material information that the Company has a bona fide
business purpose for preserving as confidential and that such disclosure
would have a material adverse effect on the Company's business or
prospects, the Company shall not be required to effect a registration
pursuant to this Section 2(a) until the earlier of (1) the date upon which
such material information is disclosed to the public or ceases to be
material and (2) 30 days after the delivery of such opinion; and
ii) Clipper shall have the right to exercise registration rights
pursuant to this Section 2(a) an aggregate of three (3) times.
(b) Notwithstanding any other provision of this Agreement to the contrary,
a registration requested by Clipper pursuant to this Section 2 shall not be
deemed to have been effected (and, therefore, not exercised for purposes of
Section 2(a)), if (i) it has not become effective, (ii) it is interfered with by
any stop order, injunction or other order or requirement of the SEC or other
governmental agency or court such that the Registrable Securities requested to
be registered cannot be completely
<PAGE>
5
distributed in accordance with the plan of distribution set forth in the related
Registration Statement, unless the sole reason for such interference is a
misrepresentation or an omission by any Clipper Shareholder, or (iii) the
conditions to closing specified in the purchase agreement or underwriting
agreement entered into in connection with such registration are not satisfied or
waived, unless such failure is caused solely by a default by any Clipper
Shareholder in carrying out its obligations thereunder.
(c) In the event that any registration pursuant to this Section 2 shall
involve, in whole or in part, an underwritten offering, Clipper shall have the
right to designate the Managing Underwriter for such underwritten offering;
provided that such Managing Underwriter shall be reasonably acceptable to the
Company.
(d) The Company shall have the right to cause the registration of
additional securities for sale for the account of any person (including the
Company) in any registration of Registrable Securities requested by Clipper
pursuant to Section 2(a); provided, that the Company shall not have the right to
cause the registration of such additional securities if Clipper is advised in
writing (with a copy to the Company) by one or more of the Managing Underwriters
designated pursuant to Section 2(c) that, in such firm's opinion, registration
of such additional securities would materially and adversely affect the offering
and sale of the Registrable Securities then contemplated by Clipper (on its own
behalf and on behalf of the other Shareholders); provided, further, that to the
extent Clipper is so advised that a lesser number of such additional securities
could be so registered and sold in such offering, such additional securities
shall be allocated as follows: (A) first, the securities the Company proposes to
sell; (B) second, the securities held by any Additional
<PAGE>
6
Shareholders to be included in such offering; and (C) third, the securities held
by the Hvide Group to be included in such offering. Clipper may require that any
such additional securities be included in the offering proposed by Clipper on
the same terms and conditions as the Registrable Securities that are included
therein.
SECTION 3. Piggyback Registrations. If the Company proposes to register a
transaction under the Securities Act (other than pursuant to a registration
statement on Form S-4 or S-8 or the equivalent thereof) involving any of its
equity securities (or any security with respect to which equity securities may
be issuable upon exercise, conversion or exchange of any options, rights thereto
or thereunder) to be offered for cash or cash equivalents, the Company shall
each such time give, at least 30 days prior to the anticipated filing date of
the Registration Statement relating to such transaction, written notice to the
Shareholders of the Company's intention to do so, describing such securities and
specifying the form and manner and the other relevant facts involved in such
proposed registration (including, without limitation, the identity of any
Managing Underwriter, which Managing Underwriter shall have been mutually
selected by the Company and Clipper, and whether such offering will be pursuant
to a "best efforts" or "firm commitment" underwriting). Upon the written request
of any Shareholder delivered to the Company within 25 days after such notice
shall have been given to the Shareholders (which request shall specify the
Registrable Securities intended to be disposed of by such Shareholder and the
intended method of disposition thereof), the Company shall, if it has not
already done so, use its best efforts to effect the registration (a "Piggyback
Registration") under the Securities Act, as expeditiously as is reasonable, of
the sale of all Registrable Securities that the Company has been so requested to
register by the Shareholders and include all such Registrable Securities in such
offering (in accordance with the intended methods of distribution thereof as
aforesaid); provided, that:
(i) if, at any time after giving such written notice of its intention
to register any offering of such securities and prior to the effective date
of the Registration Statement filed in connection with such Piggyback
Registration, the Company shall determine for any reason not to register or
to delay the registration of such offering of securities, the Company may,
at its election, give written notice of such determination to the
Shareholders in connection with such Piggyback Registration (but the
Company shall not thereby be
<PAGE>
7
relieved from its obligation to pay the registration expenses in connection
therewith to the extent provided in Section 6 hereof), without prejudice,
however, to any rights of any Shareholder hereunder;
(ii) if the Managing Underwriter of such underwritten offering shall
inform the Company in writing of its opinion that the number of securities
requested to be included in such offering would materially and adversely
affect its ability to effect such offering (such opinion shall state the
reasons therefor and the approximate number of securities that may be
included in such offering without such effect), the Company shall register
an offering of, and shall subsequently offer, that number of securities
that the Company is so advised can be sold in such offering, which shall be
allocated as follows: (A) first, the securities the Company proposes to
sell; (B) second, the Registrable Securities held by any Shareholder and
requested to be included in such offering; (C) third, the Registrable
Securities held by any Additional Shareholder and requested to be included
in such offering; and (D) fourth, the securities proposed to be sold by any
member of the Hvide Group;
(iii) Clipper shall have the right, upon written notice (a "Conversion
Notice") to the Company (A) within fifteen days after receipt of notice of
the Company's proposal to register a transaction under the Securities Act
pursuant to this Section 3 or (B) within fifteen days after receipt of
notice pursuant to clause (i) above of the Company's intention to
discontinue any such offering, to convert any registration of securities
proposed by the Company into a Demand Registration, and upon the Company's
receipt of such Conversion Notice, any such proposed registration shall be
treated as a Demand Registration in accordance with the provisions of
Sections 2 and 4 hereof; provided that any Conversion Notice shall not be
effective if, within five days of the Company's receipt thereof, (A) the
Board demonstrates to the reasonable satisfaction of Clipper that the
Company has an identifiable need for the capital to be raised by the
Company in such offering for a specific purpose and that such capital
cannot reasonably be raised through alternative means and (B) the Managing
Underwriter indicates in writing that, in its reasonable opinion, so
converting the offering would materially and adversely affect the public
equity financing proposed by the Company; and
<PAGE>
8
(iv) no registration of Registrable Securities effected under this
Section 3 shall relieve the Company of its obligation to effect
registrations of Registrable Securities pursuant to Section 2 hereof;
provided, however, that, subject to Section 2(b) hereof, a Piggyback
Registration converted to a Demand Registration pursuant to clause (iii)
above shall be considered a Demand Registration for the purposes of Section
2(a)(ii) hereof.
SECTION 4. Registration Procedures. If and whenever the Company is required
to effect the registration of any Registrable Securities under the Securities
Act as provided in Section 2 or 3 hereof, the following provisions shall apply:
(a) The Company shall furnish to the Shareholders and their counsel prior
to the filing thereof with the SEC, a copy of any Registration Statement by
which such registration is effected (including any preliminary prospectus
contained therein), and each amendment thereto and each amendment or supplement,
if any, to the Prospectus included therein and shall in good faith consider
incorporating in each such document, when so filed with the SEC, such changes as
Clipper reasonably may propose.
(b) The Company shall ensure that (i) any such Registration Statement and
any amendment thereto and any Prospectus forming part thereof and any amendment
or supplement thereto complies as to form in all material respects with the
Securities Act, (ii) any such Registration Statement and any amendment thereto
does not, when it becomes effective, contain an untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
to make the statements therein not misleading and (iii) subject to Section 5
hereof, any Prospectus forming part of any such Registration Statement, and any
amendment or supplement to such Prospectus, does not include an untrue statement
of a material fact or omit to state a material fact necessary in order to make
the statements therein, in the light of the circumstances under which they were
made, not misleading, other than, with respect to clauses (ii) and (iii) above,
any such untrue statement or omission made therein in reliance upon and
conformity with written information furnished to the Company by or on behalf of
any Shareholder specifically for inclusion therein.
<PAGE>
9
(c) The Company shall promptly advise each Shareholder then holding
Registrable Securities and, if requested by such Shareholder, promptly confirm
such advice in writing:
(i) when any such Registration Statement and any amendment or
supplement thereto has been filed with the SEC and when any such
Registration Statement or any post-effective amendment thereto has become
effective;
(ii) of any request by the SEC for amendments or supplements to any
such Registration Statement or the Prospectus included therein or for
additional information;
(iii) of the issuance by the SEC of any stop order suspending the
effectiveness of any such Registration Statement or the initiation of any
actions or proceedings for that purpose;
(iv) of the receipt by the Company of any notification with respect to
the suspension of the qualification of the Registrable Securities included
therein for sale in any jurisdiction or the initiation or threatening of
any action or proceeding for such purpose; and
(v) of the happening of any event that requires the making of any
changes in any such Registration Statement or Prospectus so that, as of
such date, the statements therein are not misleading and do not omit to
state a material fact required to be stated therein or necessary to make
the statements therein (in the case of the Prospectus, in light of the
circumstances under which they were made) not misleading.
(d) The Company shall use its best efforts to obtain the withdrawal of any
order suspending the effectiveness of any such Registration Statement at the
earliest possible time.
(e) The Company shall furnish to each Shareholder and its counsel, without
charge, a copy of each Registration Statement and any and all amendments
thereto, including financial statements and schedules, and all exhibits thereto
(including those incorporated therein by reference).
(f) The Company shall furnish to each Shareholder and its counsel, without
charge, copies of any and all correspondence with the SEC or any other
governmental entity
<PAGE>
10
relating to any Registration Statement or the public offering of the Company's
securities.
(g) The Company shall deliver to each Shareholder, without charge, as many
copies of the Prospectus (including each preliminary Prospectus) included in
such Registration Statement and any amendment or supplement thereto as such
person may reasonably request; and subject to Section 5 below, the Company
consents to the use of the Prospectus or any amendment or supplement thereto by
each such person in connection with the offering and sale of the Registrable
Securities covered by the Prospectus or any amendment or supplement thereto.
(h) Prior to any offering of Registrable Securities pursuant to any
Registration Statement, the Company shall use its best efforts to register or
qualify or cooperate with each Shareholder and its counsel in connection with
the registration or qualification of such Registrable Securities for offer and
sale under the securities, Blue Sky or similar laws of such jurisdictions as the
Shareholders request, and the Company shall use its best efforts to do any and
all other acts or things necessary or advisable to enable the offer and sale in
such jurisdictions of the Registrable Securities covered by such Registration
Statement; provided, however, that the Company shall not be required to qualify
generally to do business in any jurisdiction where it is not then so qualified
or to take any action which would subject it to general service of process or to
taxation in any such jurisdiction where it is not then so subject.
(i) The Company shall cooperate with each Shareholder to facilitate the
timely preparation and delivery of certificates representing Registrable
Securities to be sold pursuant to any Registration Statement free of any
restrictive legends and in such denominations and registered in such names as
requested prior to such sales.
(j) Subject to Section 5 hereof, at any time and from time to time upon the
occurrence of any event contemplated by paragraph (c)(ii) or (c)(v) above, the
Company shall promptly prepare and file with the SEC a post-effective amendment
to any Registration Statement or an amendment or supplement to the related
Prospectus or file any other required document so that, as thereafter delivered
to purchasers of the Registrable Securities offered thereby, the Prospectus will
not include an untrue statement of a material fact or omit to state any material
fact necessary
<PAGE>
11
to make the statements therein, in light of the circumstances under which they
were made, not misleading.
(k) The Company shall comply with all applicable rules and regulations of
the SEC and shall make generally available to the Shareholders as soon as
practicable after the effective date of the applicable Registration Statement an
earnings statement satisfying the provisions of Section 11(a) of the Securities
Act and Rule 158 under the Securities Act.
(l) Each Shareholder that plans to participate in a distribution pursuant
to a Registration Statement shall furnish to the Company such information
regarding such Shareholder and its affiliates and the distribution of such
Registrable Securities as the Company may from time to time reasonably require
for inclusion in such Registration Statement. Such information at the time any
Registration Statement and any amendment thereto becomes effective, and at the
time any Prospectus or supplement thereto previously reviewed by the
Shareholders forming a part of any Registration Statement is delivered in any
offering of Registrable Securities, shall not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein (in the case of the Prospectus, in
light of the circumstances under which they were made) not misleading. Each
Shareholder shall advise the Company and, if requested by the Company, confirm
such advice in writing in the event that such Shareholder becomes aware of the
happening of any event that requires the making of any changes in a Registration
Statement or Prospectus so that as of such dates the statements therein provided
by any Shareholder specifically for inclusion therein are not misleading and do
not omit to state a material fact required to be stated therein or necessary to
make the statements therein (in the case of the Prospectus, in light of the
circumstances under which they were made) not misleading.
(m) Subject to Section 5 hereof, the Company shall, upon request, promptly
incorporate in a Prospectus or prospectus supplement or post-effective amendment
to a Registration Statement, such information, if any, as the Managing
Underwriter, the Shareholders and the Company reasonably agree should be
included therein and shall make all required filings of such Prospectus or
prospectus supplement or post-effective amendment as soon as practicable
following notification of the matters to be incorporated in such Prospectus or
prospectus supplement or post-effective amendment, and the Company shall print
and
<PAGE>
12
deliver copies of such amended Prospectus or prospectus supplement to all
purchasers of such Registrable Securities.
(n) If requested by the Shareholders in connection with the offering and
sale of Registrable Securities pursuant to a Registration Statement, the Company
shall enter into one or more underwriting agreements with the Managing
Underwriter selected (i) by Clipper in accordance with Section 2(c) hereof or
(ii) by the mutual agreement of the Company and Clipper in accordance with
Section 3 hereof, as applicable. Any such underwriting agreement shall contain
such representations and warranties by the Company and such other terms and
provisions as are then customarily included in underwriting agreements relating
to secondary public offerings, including, without limitation, indemnification
and contribution provisions and procedures to the effect and to the extent
provided in Section 7 hereof and provisions for the delivery of opinions of
counsel and accountants' letters to the effect and to the extent provided in
Section 4(o) hereof. The Shareholders on whose behalf any Registrable Securities
are to be distributed by such underwriters shall be parties to any such
underwriting agreement and the representations and warranties by, and any other
agreements on the part of, the Company to and for the benefit of such
underwriters shall also be made to and for the benefit of such Shareholders.
Such underwriting agreement shall also contain such representations and
warranties by the Shareholders on whose behalf the Registrable Securities are to
be distributed as are then customarily contained in underwriting agreements with
respect to secondary distributions.
(o) The Company shall (i) make reasonably available for inspection during
normal business hours by the Shareholders, any Underwriter participating in any
disposition pursuant to a Registration Statement, and any attorney, accountant
or other agent or representative retained by the Shareholders or any such
Underwriter all relevant financial and other records, pertinent corporate
documents and properties of the Company and its Subsidiaries; (ii) cause the
Company's officers, directors and employees to supply all relevant information
reasonably requested by the Shareholders or any such Underwriter, attorney,
accountant, agent or representative in connection with any such Registration
Statement as is customary for similar due diligence examinations; provided,
however, that any information that is designated in writing by the Company as
confidential at the time of delivery of such information shall be kept
confidential by the Shareholders or any such Underwriter, attorney, accountant,
agent or representative,
<PAGE>
13
unless (x) disclosure is, in the opinion of counsel to the disclosing party,
required to be made in connection with a court proceeding or required by law or
(y) such information becomes available to the public generally or through a
third party without an accompanying obligation of confidentiality; (iii) make
such representations and warranties to the holders of Registrable Securities
registered thereunder and the Underwriters, if any, in form, substance and scope
as are customarily made by issuers in secondary public underwritten offerings;
(iv) obtain opinions of counsel to the Company and updates thereof (which
counsel and opinions (in form, scope and substance) shall be reasonably
satisfactory to the Managing Underwriter, if any) addressed to each selling
holder of Registrable Securities and the Underwriters, if any, covering such
matters as are customarily covered in opinions requested in underwritten
secondary public offerings by an affiliate and such other matters as may be
reasonably requested by such holders of Registrable Securities and Underwriters;
(v) obtain "cold comfort" letters and updates thereof from the independent
certified public accountants of the Company (and, if necessary, any other
independent certified public accountants of any Subsidiary of the Company or of
any business acquired by the Company for which financial statements and
financial data are, or are required to be, included in a Registration
Statement), addressed to each holder of Registrable Securities and the
Underwriters, if any, in customary form and covering matters of the type
customarily covered in "cold comfort" letters in connection with underwritten
secondary public offerings by an affiliate; (vi) deliver such documents and
certificates as may be reasonably requested by the Shareholders and the Managing
Underwriter, if any, including those to evidence compliance with this Section 4
and with any customary conditions contained in the underwriting agreement or
other agreements entered into by the Company; and (vii) participate in good
faith in any meetings with potential investors or securities analysts (including
"road shows") as Clipper may from time to time reasonably request. The foregoing
actions set forth in clauses (iii), (iv), (v) and (vi) of this Section 4(o)
shall be performed at (A) the effectiveness of such Registration Statement and
each post-effective amendment thereto and (B) each closing under any
underwriting or similar agreement as and to the extent required thereunder.
(p) The Company shall cause all Registrable Securities to be listed on each
securities exchange or quoted through each automated interdealer quotation
system
<PAGE>
14
on which similar securities of the Company are then listed or quoted.
(q) If, pursuant to any other provision of this Agreement, not all
Registrable Securities held by a Shareholder and requested to be included in a
registered offering may be so included, then, with respect to the Registrable
Securities that such Shareholder may, pursuant to the terms hereof, include in
such offering, such Shareholder in its sole discretion shall determine which of
its Registrable Securities shall be so included.
SECTION 5. Suspension of Offerings in Certain Circumstances. The Company
shall be entitled for the period referred to below to postpone the filing of any
Registration Statement or the taking of any other action (including those
actions required by Section 2, 3 or 4(m) hereof) otherwise required to be
prepared, filed or taken by it pursuant to Section 2, 3 or 4(m) hereof and/or to
direct the suspension of any public offering, sale or distribution of
Registrable Securities if the Board determines in good faith that any disclosure
that would be required in connection therewith would have a material adverse
effect on the Company or any financing, acquisition, disposition, merger,
business combination, corporate reorganization, or other transaction or
development involving the Company or any Subsidiary of the Company (a "Business
Development Determination"). Such postponement or direction shall continue until
such time as the Board determines that the preparation and/or filing of such
Registration Statement or the taking of any such action and/or such public
offering, sale or distribution would no longer have a material adverse effect on
the Company or any such transaction but shall not, in any event, exceed 30 days
for any particular Business Development Determination or 60 days for all
Business Development Determinations during any twelve month period. No Business
Development Determination shall occur within 90 days of the expiration of a
postponement or suspension caused by another Business Development Determination.
The Board shall, as promptly as practicable, give the Shareholders written
notice of any Business Development Determination.
SECTION 6. Registration Expenses. The Company shall bear all costs and
expenses incurred in connection with Sections 2, 3 and 4 hereof, including fees
and disbursements of its counsel and accountants, the reasonable fees and
disbursements of one counsel for the Shareholders, printing, messenger and
delivery expenses and all SEC, NASD and Blue Sky filing fees (including those
payable by any
<PAGE>
15
Underwriters), provided, that such expenses shall exclude any brokerage fees or
underwriting discounts and fees.
SECTION 7. Indemnification and Contribution. (a) Indemnification of
Shareholders. In the case of any offering or sale of Registrable Securities
covered by this Agreement, the Company shall indemnify and hold harmless each of
the Shareholders and each person affiliated with or retained by any Shareholder
and who may be subject to liability under any applicable securities laws,
against any and all losses, claims, damages or liabilities to which they or any
of them may become subject under the Securities Act or any other statute or
common law of the United States of America or political subdivision thereof, or
any other country or political subdivision thereof or otherwise, including,
subject to Section 7(c) hereof, any amount paid in settlement of any litigation
commenced or threatened (including any amounts paid pursuant to or in settlement
of claims made under customary indemnification or contribution provisions of any
underwriting or similar agreement entered into by the Shareholders in connection
with any offering or sale of Registrable Securities), and shall, subject to
Section 7(c) hereof, promptly reimburse them, as and when incurred, for any
legal fees or disbursements or other expenses incurred by them in connection
with investigating any claims and defending any actions, insofar as any such
losses, claims, damages, liabilities or actions shall arise out of or shall be
based upon any untrue statement or alleged untrue statement of a material fact
contained in any Registration Statement (or in any preliminary or final
Prospectus included therein) or other offering document relating to the offering
and sale of such Registrable Securities, or the omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading; provided, however, that the Company will
not be liable in any case to the extent that any such loss, claim, damage or
liability is determined by a final and non-appealable judgment of a court of
competent jurisdiction to have been caused by any such untrue statement or
omission made therein in reliance upon and in conformity with written
information furnished to the Company by or on behalf of any such Shareholders
specifically for inclusion therein, including any such information furnished
pursuant to Section 4(l) hereof. Any offering or sale of the Company's common
stock pursuant to the Initial Public Offering shall be considered an offering or
sale of Registrable Securities for the purposes of the indemnity provided for in
this Section 7(a) and the contribution provided for in Section 7(d) hereof.
<PAGE>
16
(b) Indemnification of the Company. In the case of each offering or sale of
securities covered by this Agreement, each Shareholder that sells such
Registrable Securities pursuant to a Registration Statement ("Selling Party")
shall indemnify and hold harmless the Company and each person, if any, who
controls the Company within the meaning of Section 15 of the Securities Act,
each person affiliated with or retained by the Company and who may be subject to
liability under any applicable securities laws, and each of the Company's
directors and those officers of the Company who shall have signed any
Registration Statement or other offering document, against any and all losses,
claims, damages or liabilities to which they or any of them may become subject
under the Securities Act or any other statute or common law of the United States
of America or political subdivision thereof, or any other country or political
subdivision thereof or otherwise, including, subject to Section 7(c) hereof, any
amount paid in settlement of any litigation commenced or threatened (including
any amounts paid pursuant to or in settlement of claims made under customary
indemnification or contribution provisions of any underwriting or similar
agreement entered into by the respective Shareholders in connection with any
offering or sale of Registrable Securities), and shall, subject to Section 7(c)
hereof, promptly reimburse them, as and when incurred, for any legal fees or
disbursements or other expenses incurred by them in connection with
investigating any claims and defending any actions, insofar as any such losses,
claims, damages, liabilities or actions shall arise out of or shall be based
upon any untrue statement or alleged untrue statement of a material fact
contained in any Registration Statement (or in any preliminary or final
Prospectus included therein) or other offering document relating to the offering
and sale of such Registrable Securities, or the omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading; provided, however, that such Shareholders
shall not be liable in any case, except to the extent such loss, claim, damage
or liability is determined by a final and non-appealable judgment of a court of
competent jurisdiction to have been caused by written information solely
relating to such Shareholders and their affiliates furnished to the Company by
or on behalf of such Shareholders specifically for inclusion in any Registration
Statement, any preliminary Prospectus or Prospectus contained in such
Registration Statement or other offering document, or any amendment thereof or
supplement thereto, including any such information furnished pursuant to Section
4(l); provided, further, that in no case shall any Shareholder be
<PAGE>
17
responsible for any amount in excess of the amount of net proceeds received by
such Shareholder in connection with the sale of Registrable Securities in the
offering that is the subject of such loss, claim, damage or liability.
(c) Procedure for Indemnification. Each party indemnified under paragraph
(a) or (b) of this Section 7, shall, promptly after receipt of notice of the
commencement of any action against such indemnified party in respect of which
indemnity may be sought, notify the indemnifying party in writing of the
commencement thereof. The omission of any indemnified party so to notify an
indemnifying party of such action shall not relieve such indemnifying party from
any liability in respect of such action which it may have to such indemnified
party on account of the indemnity agreement contained in paragraph (a) or (b) of
this Section 7, except to the extent that such indemnifying party was or is
actually prejudiced thereby, and in no event shall relieve such indemnifying
party from any other liability that it may have to such indemnified party to the
extent such indemnifying party has not actually been prejudiced thereby. In case
any such action shall be brought against any indemnified party and such
indemnified party shall notify an indemnifying party of the commencement
thereof, such indemnifying party shall be entitled to participate therein and,
to the extent that it may wish, jointly with any other indemnifying party
similarly notified, to assume the defense thereof, with counsel reasonably
satisfactory to such indemnified party. If such indemnifying party so assumes
the defense thereof, it may not agree to any settlement of any such action as
the result of which any remedy or relief, other than monetary damages for which
such indemnifying party shall be responsible hereunder, shall be applied to or
against such indemnified party, without the prior written consent of such
indemnified party. An indemnifying party may not assume or jointly assume the
defense of an action if in the reasonable judgment of the indemnified party a
conflict of interest may exist between such indemnifying party and such
indemnified party with respect to such action. An indemnifying party who is not
entitled to, who elects not to, or who has not appointed counsel reasonably
satisfactory to the indemnified party within a reasonable time to, assume the
defense of an action shall be obligated to pay the fees and expenses of counsel
for such indemnified party; provided that such indemnifying party shall not be
obligated to pay the fees and the expenses of more than one counsel (plus local
counsel) for all parties who may be indemnified by such indemnifying party with
respect to such action, unless in the reasonable judgment of any indemnified
party a conflict of interest exists between such indemnified
<PAGE>
18
party and any other indemnified party with respect to such action. If the
indemnifying party does not assume the defense of an action, it shall be bound
by any settlement to which the indemnified party agrees, irrespective of whether
such indemnifying party consents thereto provided, that if such indemnifying
party does not assume the defense of action because of a conflict of interest
that prevented it from doing so, then such indemnifying party shall be bound by
any settlement to which the indemnified party agrees and to which such
indemnifying party consents (which consent shall not be unreasonably withheld).
In any action with respect to which the indemnifying party has assumed the
defense thereof, the indemnified party shall continue to be entitled to
participate in the defense thereof, with counsel of its own choice, provided
that such indemnifying party shall be relieved of the obligation hereunder to
reimburse such indemnified party for the costs thereof.
(d) Contribution. In the event that the indemnity provided in paragraph (a)
or (b) of this Section 7 is unavailable to or insufficient to hold harmless an
indemnified party for any reason, the applicable indemnifying party agrees, in
lieu of or in addition to indemnifying such indemnified party, to contribute to
the aggregate losses, claims, damages and liabilities (including legal or other
expenses reasonably incurred in connection with investigating or defending same)
(collectively "Losses") to which such indemnified party may be subject in such
proportion as is appropriate to reflect the relative fault of such indemnifying
party on the one hand and such indemnified party on the other with respect to
the statements or omissions which resulted in such Losses and any other relevant
equitable considerations; provided, however, that in no case shall any Selling
Party be responsible for any amount in excess of the amount of net proceeds
received by such Selling Party in connection with the sale of Registrable
Securities in the offering that is the subject of such loss, claim, damage or
liability; provided, further, that in no event shall any Selling party be
responsible for any amount not resulting from a final and non-appealable
judgment by a court of competent jurisdiction. Relative fault shall be
determined by reference to whether any alleged untrue statement or omission
related to information provided by the indemnifying party or the indemnified
party. The Company and the Shareholders agree that it would not be just and
equitable if contribution were determined by pro rata allocation or any other
method of allocation that does not take account of the equitable considerations
referred above. Notwithstanding the provisions of this paragraph (d), no
<PAGE>
19
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation. For purposes of this
Section 7, each person who controls a Selling Party within the meaning of either
the Securities Act or the Exchange Act and each director, officer, employee and
agent of a Selling Party, and each person who controls the Company within the
meaning of either the Securities Act or the Exchange Act, each officer of the
Company who shall have signed the Registration Statement and each director of
the Company shall have the same rights to contribution as the Company or the
appropriate Selling Party, as applicable, subject in each case to the applicable
terms and conditions of this paragraph (d).
SECTION 8. Transfer of Registration Rights. Each Shareholder (and any
permitted transferee) may transfer all or any portion of its rights under this
Agreement to any transferee (each, a "transferee") of an amount of Registrable
Securities owned by such Shareholder. Any transfer of registration rights
pursuant to this Section 8 shall be effective upon receipt by the Company of
written notice from any Shareholder stating the name and address of any
transferee and identifying the amount of Registrable Securities with respect to
which the rights under this Agreement are being transferred and the nature of
the rights so transferred. In connection with any such transfer, the term
"Shareholder" as used in this Agreement shall, where appropriate to assign the
rights and obligations of the Shareholders hereunder to such transferee, be
deemed to refer to the transferee holder of such Registrable Securities, and
each such transferee shall be deemed to be a party to this Agreement, and,
subject to the terms contained herein, shall be entitled to the benefits hereof.
The Shareholders and such transferees may exercise the registration rights
hereunder in such proportion as they shall agree among themselves; provided,
that in no event shall the Company be required to effect more than an aggregate
of three (3) registrations pursuant to Section 2 of this Agreement or to do so
upon the request of any person other than Clipper. After any such transfer, each
Shareholder shall retain its rights under this Agreement with respect to all
other Registrable Securities owned by such Shareholder.
SECTION 9. Miscellaneous. (a) Notices. All notices and other communications
pertaining to this Agreement shall be in writing and shall be deemed to have
been duly given upon the receipt thereof. Such notices
<PAGE>
20
shall be delivered by hand or mailed, certified or registered mail with postage
prepaid:
(i) if to Clipper, to it at:
12 East 49th Street (30th Floor)
New York, NY 10017
Attention of Kevin A. Macdonald
with a copy to:
Cravath, Swaine & Moore
Worldwide Plaza
825 Eighth Avenue
New York, NY 10019-7475
Attention of D. Collier Kirkham, Esq.;
(ii) if to the other Shareholders, to them at their respective addresses
set forth on Schedule 1 hereto, with a copy to:
Cravath, Swaine & Moore
Worldwide Plaza
825 Eighth Avenue
New York, NY 10019-7475
Attention of D. Collier Kirkham, Esq.; and
(iii) if to the Company, to it at:
2200 Eller Drive, P. O. Box 13038
Fort Lauderdale, FL 33316
Attention of Gene Douglas, Esq.
with a copy to:
Dyer Ellis & Joseph
600 New Hampshire Avenue, N.W.
Washington, D.C. 20037
Attention of Michael Joseph, Esq.
or to such other person or address as shall be furnished to the other party in
writing.
(b) Parties. This Agreement shall inure to the benefit of and be binding
upon the parties hereto and each of their respective successors and permitted
assigns. Nothing expressed or mentioned in this Agreement is intended or shall
be construed to give any person, firm or corporation, other than the parties
hereto and their respective successors and permitted assigns, any legal or
<PAGE>
21
equitable right, remedy or claim under or in respect of this Agreement or any
provision herein contained. This Agreement and all conditions and provisions
hereof are intended to be for the sole and exclusive benefit of the parties
hereto and their respective successors and permitted assigns, and for the
benefit of no other person, firm or corporation.
(c) Governing Law. This Agreement shall be governed by the laws of the
State of Florida regardless of the laws that might otherwise govern under
applicable principles of conflict of laws thereof.
(d) Assignment. Except as provided in Section 8 hereof, the parties may not
assign or transfer their rights or obligations under this Agreement. Subject to
the preceding sentence, this Agreement shall be binding upon, inure to the
benefit of, and be enforceable by the parties and their respective successors
and permitted assigns.
(e) Severability Clause. In case any provision in this Agreement shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby
and such provision shall be ineffective only to the extent of such invalidity,
illegality or unenforceability. The parties shall endeavor in good-faith
negotiations to replace the invalid, illegal or unenforceable provisions with
valid provisions the economic effect of which comes as close as possible to that
of the invalid, illegal or unenforceable provisions.
(f) Waivers, Amendment and Remedies. The failure of any of the parties to
insist in any one or more instances upon strict performance of any of the
provisions of this Agreement or to take advantage of any of its rights hereunder
shall not be construed as a waiver of any such provisions or the relinquishment
of any such rights, but the same shall continue and remain in full force and
effect.
Neither this Agreement nor any provision hereof may be waived, amended or
modified except pursuant to an agreement or agreements in writing entered into
by the Company, Clipper and Shareholders holding in excess of 50% of the
Registrable Securities then held by all Shareholders.
Except as otherwise expressly limited in this Agreement, all remedies under
this Agreement shall be cumulative and in addition to every other remedy
provided for herein or by law.
<PAGE>
22
(g) Entire Agreement. This Agreement, together with all exhibits and
schedules hereto, is intended by the parties hereto to be a final expression of
their agreement in respect of the subject matter contained herein, and
supersedes all prior agreements and understandings between the parties hereto
with respect to such subject matter.
(h) Headings. The headings of the Sections in this Agreement are for
convenience of reference only and shall not be deemed to alter or affect the
meaning or interpretation of any provision hereof.
(i) Counterparts. This Agreement may be executed in counterparts, each of
which shall be deemed to be an original and all of which shall constitute one
and the same instrument.
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the
date first above written.
HVIDE MARINE INCORPORATED,
by___________________________
Name:
Title:
CLIPPER CAPITAL ASSOCIATES,
L.P.,
by___________________________
Name: Kevin A. Macdonald
Title: Authorized Officer
CLIPPER/MERCHANT HMI, L.P.,
By its general partner Clipper
Capital Associates, L.P.,
by___________________________
Name: Kevin A. Macdonald
Title: Authorized Officer
<PAGE>
23
CLIPPER/PARK HMI, L.P.,
By its general partner Clipper
Capital Associates, L.P.,
by___________________________
Name: Kevin A. Macdonald
Title: Authorized Officer
CLIPPER/MERBAN HMI, L.P.,
By its general partner Clipper
Capital Associates, L.P.,
by___________________________
Name: Kevin A. Macdonald
Title: Authorized Officer
CLIPPER/HERCULES, L.P.,
By its general partner Clipper
Capital Associates, L.P.,
by___________________________
Name: Kevin A. Macdonald
Title: Authorized Officer
METROPOLITAN LIFE INSURANCE
COMPANY,
by___________________________
Name:
Title:
OLYMPUS GROWTH FUND II, L.P.,
By its general partner OGP II,
L.P.,
by___________________________
Name: Louis J. Mischianti
Title: Partner
<PAGE>
Schedule 1
Addresses for Notice
Clipper/Merchant HMI, L.P.
[ ]
[ ]
Attention of:
Clipper/Park HMI, L.P.
[ ]
[ ]
Attention of:
Clipper/Merban HMI, L.P.
[ ]
[ ]
Attention of:
Clipper/Hercules HMI, L.P.
[ ]
[ ]
Attention of:
Metropolitan Life Insurance Company
[ ]
[ ]
Attention of:
Olympus Growth Fund II, L.P.
[ ]
[ ]
Attention of: Mr. Louis J. Mischianti
EXHIBIT 10.29
[CS&M Draft-7/01/96]
AGREEMENT AMONG SHAREHOLDERS dated as of July [ ], 1996,
among the shareholders of HVIDE MARINE INCORPORATED, a Florida
corporation (the "Company"), identified on the signature pages
hereto (the
"Shareholders").
W I T N E S S E T H:
WHEREAS the Company, formerly known as Hvide Corp., was the surviving
entity in a merger (which was consummated immediately prior to the execution and
delivery of this Agreement) with the former Hvide Marine Incorporated and in
connection therewith assumed the name Hvide Marine Incorporated;
WHEREAS the Company and the Shareholders are parties to that certain
Shareholders Agreement dated as of September 30, 1994 (the "Existing
Shareholders Agreement"), that provides the Shareholders and their affiliates
with certain special rights;
WHEREAS the Company and the Shareholders are parties to that certain
Recapitalization Agreement dated as of July [ ], 1996 (as amended, supplemented,
replaced or otherwise modified from time to time, the "Recapitalization
Agreement"), which requires that the Existing Shareholders Agreement be
terminated and replaced with an agreement among shareholders in the form hereof
at or prior to the closing of the Initial Public Offering (as hereinafter
defined);
WHEREAS the other conditions precedent specified in the Recapitalization
Agreement have been satisfied;
NOW, THEREFORE, in consideration of the premises and agreements contained
in this Agreement, and for good and valuable consideration, the receipt and
sufficiency of which
<PAGE>
2
are hereby acknowledged, the parties, intending to be
legally bound, hereby agree as follows:
ARTICLE I
Definitions
SECTION 1.01. Interpretation. For all purposes of this Agreement and any
agreement executed in connection with this Agreement, except as otherwise
expressly provided or unless the context otherwise requires:
(a) the terms defined in this Article have the meanings assigned to
them in this Article and include the plural as well as the singular; and
(b) the words "herein", "hereof" and "hereunder" and other words of
similar import refer to this Agreement as a whole and not to any particular
Article, Section or other subdivision.
SECTION 1.02. Definitions.
"Affiliate" of any specified person means (a) any other person which,
directly or indirectly, is in control of, is controlled by or is under common
control with such specified person, (b) any other person who is a director or
officer (i) of such specified person, (ii) of any subsidiary of such specified
person or (iii) of any person described in clause (a) above and (c) if such
specified person is a partnership, any partner included in such partnership. For
purposes of this definition, control of a person means the power, direct or
indirect, to direct or cause the direction of the management and policies of
such person whether through the ownership of Capital Stock of such person then
outstanding and normally entitled to vote in the election of directors of such
person, by contract or otherwise; and the terms "controlling" and "controlled"
have meanings correlative to the foregoing.
"Articles" means the Amended and Restated Articles of Incorporation of the
Company.
"Board of Directors" means the Board of Directors of the Company.
<PAGE>
3
"Capital Stock" of any person means any and all shares, interests, rights
to purchase, warrants, options, contingent share certificates, participations or
other equivalents of or interests in (however designated) equity of such person,
but excluding any debt securities convertible into or exchangeable for such
equity.
"Citizen" has the meaning provided in the Articles.
"Class A Common Stock" means the Class A Common Stock, $0.001 par value, of
the Company, which has one vote per share.
"Class B Common Stock" means the Class B Common Stock, $0.001 par value, of
the Company, which has ten votes per share.
"Clipper" means Clipper Capital Associates, L.P., a Delaware limited
partnership.
"Common Stock" means the Class A Common Stock and the Class B Common Stock.
"Contingent Share Issuance Agreement" means that certain Amended and
Restated Contingent Share Issuance Agreement (including the Schedule and
Exhibits attached thereto) dated as of the date hereof, among the Company and
the Shareholders, as the same may be amended, supplemented, replaced or
otherwise modified from time to time.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Hvide Group" means the Principal Shareholder and any person related to him
by kinship or marriage (including Hans J. Hvide), trusts or similar arrangements
established solely on the behalf of one or more of them and partnerships and
other entities that are wholly owned by them and that remain wholly owned by
them.
"Hvide Group Shareholders" means the shareholders identified in Schedule 1
attached hereto and any transferees that are members of the Hvide Group.
"Initial Public Offering" means the offering or sale of the Class A Common
Stock of the Company, par value $0.001 per share, pursuant to a Registration
Statement
<PAGE>
4
(No. 33-78166) filed by the Company with the SEC, and any amendments or
supplements thereto, including post-effective amendments, in each case including
the Prospectus contained therein, all exhibits thereto and all documents and
other materials incorporated by reference therein.
"Investor Shareholders" means Clipper, Clipper/Merchant HMI, L.P., a
Delaware limited partnership, Clipper/Park HMI, L.P., a Delaware limited
partnership, Clipper/Merban HMI, L.P., a Delaware limited partnership, and
Clipper/Hercules L.P., a Delaware limited partnership, Olympus Growth Fund II,
L.P., a Delaware limited partnership, Metropolitan Life Insurance Company, a New
York corporation, each of their permitted successors and assigns and each of
their Affiliates.
"Jones Act" means Section 27 of the Merchant Marine Act, 1920, 46 U.S.C.
ss.883, as amended.
"person" means any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization, government
or any agency or political subdivision thereof or any other entity.
"Primary Economic Interest" of any person means, at any time, the total
number of issued and outstanding shares of Common Stock owned by such person at
such time.
"Principal Shareholder" means Mr. J. Erik Hvide.
"Rule 144" means Rule 144 (or any replacement therefor) promulgated under
the Securities Act.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Subsidiary" means a corporation or other entity (including a partnership)
of which a majority of the Capital Stock having voting power under ordinary
circumstances to elect a majority of the board of directors or other voting
interests are owned by (a) the Company, (b) the Company and one or more
Subsidiaries or (c) one or more Subsidiaries.
<PAGE>
5
"Total Primary Economic Interests in the Company" means, at any time, the
total number of shares of Common Stock issued and outstanding at such time.
"Total Voting Power of the Company" means the total number of votes that
may be cast in the election of directors of the Company at any meeting of
shareholders of the Company if all Voting Securities (assuming full conversion,
exchange or exercise of all securities (including rights, warrants, options and
contingent share certificates, but specifically excluding the conversion of any
shares of Class B Common Stock into shares of Class A Common Stock unless such
shares have been so converted prior to any such vote) convertible into,
exchangeable for or exercisable for any securities of the Company entitled to
vote generally in the election of directors of the Company) were present and
voted at such meeting, other than votes that may be cast only upon the happening
of a contingency.
"Voting Power" of any person means the total number of votes that may be
cast in the election of directors of the Company at any meeting of the
shareholders of the Company by the Voting Securities owned by such person
(assuming full conversion, exchange or exercise (whether or not presently
convertible, exchangeable or exercisable) of all securities (including rights,
warrants, options and contingent share certificates) convertible into,
exchangeable for or exercisable for any securities of the Company entitled to
vote generally in the election of directors of the Company), other than votes
that may be cast only upon the happening of a contingency.
"Voting Securities" means the Class A Common Stock, the Class B Common
Stock and any other securities of the Company entitled to vote generally in the
election of directors of the Company, and any other securities (including
rights, warrants, options and contingent share certificates) convertible into,
exchangeable for or exercisable for any Class A Common Stock, Class B Common
Stock or other securities referred to above (whether or not presently
convertible, exchangeable or exercisable).
ARTICLE II
Representations and Warranties
of the Investor Shareholders
<PAGE>
6
Each Investor Shareholder, severally and not jointly, represents and
warrants to each of the Hvide Group Shareholders as follows:
SECTION 2.01. Due Authorization. Each Investor Shareholder has full power
and authority, and the legal right, to make, deliver and perform this Agreement
and to consummate the transactions contemplated hereby, and all action on the
part of such Investor Shareholder necessary for the authorization, execution and
delivery of this Agreement and the performance of all its obligations hereunder
has been taken, and this Agreement constitutes a valid and legally binding
obligation of such Investor Shareholder, enforceable against such Investor
Shareholder in accordance with its terms.
SECTION 2.02. No Conflicts. Neither the execution and delivery of this
Agreement, nor the consummation of any of the transactions contemplated herein,
nor the compliance with the terms and provisions hereof violates, conflicts with
or will result in the breach of, or constitute a default or an event that with
notice, lapse of time or both would constitute a default under any material
agreement or instrument to which such Investor Shareholder is a party or which
is binding on such Investor Shareholder.
ARTICLE III
Representations and Warranties
of the Hvide Group Shareholders
Each Hvide Group Shareholder, severally and not jointly, represents and
warrants to each of the Investor Shareholders as follows:
SECTION 3.01. Due Authorization. Each Hvide Group Shareholder has full
power and authority, and the legal right, to make, deliver and perform this
Agreement and to consummate the transactions contemplated hereby, and all action
on the part of such Hvide Group Shareholder necessary for the authorization,
execution and delivery of this Agreement and the performance of all obligations
of such Hvide Group Shareholder hereunder has been taken, and this Agreement
constitutes a valid and legally binding obligation of such Hvide Group
Shareholder, enforceable against such Hvide Group Shareholder in accordance with
its terms.
<PAGE>
7
SECTION 3.02. No Conflicts. Neither the execution and delivery of this
Agreement nor the consummation of any of the transactions contemplated herein,
nor the compliance with the terms and provisions hereof violates, conflicts with
or will result in the breach of, or constitute a default or an event that with
notice, lapse of time or both would constitute a default under any material
agreement or instrument to which such Hvide Group Shareholder is a party or
which is binding on such Hvide Group Shareholder.
SECTION 3.03. Approvals. No notice to, order, consent, approval, license,
authorization, or validation of, or filing, recording or registration with, or
exemption by, any governmental or public body or authority, or any subdivision
thereof, or any person, is required to authorize, or is required in connection
with, the execution, delivery and performance of this Agreement by any of the
Hvide Group Shareholders.
SECTION 3.04. Shares Outstanding. Immediately [prior] to the consummation
of the Initial Public Offering, the Hvide Group Shareholders will hold the
outstanding Common Stock of the Company in the respective amounts set forth in
Schedule 1 hereto, free and clear of any liens, claims, options, charges or
other encumbrances, and the Principal Shareholder has full power and authority
to direct on behalf of each Hvide Group Shareholder all actions required
hereunder.
ARTICLE IV
Certain Rights of the Investor Shareholders and the
Principal Shareholder
SECTION 4.01. Nominations to the Board of Directors. For so long as the
aggregate Primary Economic Interest of the Investor Shareholders is at least 5%
of the Total Primary Economic Interests in the Company, then:
(a) Each Investor Shareholder and each Hvide Group Shareholder agrees
that it will take such actions as shall be reasonably necessary to demand,
request or convene a meeting of the shareholders of the Company, and that
at every meeting of the shareholders of the Company, however called, and at
every adjournment thereof, or in connection with any written consent of
<PAGE>
8
the shareholders of the Company, it shall vote or cause to be voted all
shares of Voting Securities now held or hereafter acquired by it or an
Affiliate controlled by it, so as in each case to elect and to continue in
office a Board of Directors consisting entirely of the following:
(i) if, at the time of any such vote, the aggregate Primary
Economic Interest of the Investor Shareholders is at least 5%, but
less than 10%, of the Total Primary Economic Interests in the Company,
one nominee of the Investor Shareholders;
(ii) if, at the time of any such vote, the aggregate Primary
Economic Interest of the Investor Shareholders is at least 10%, but
less than 20%, of the Total Primary Economic Interests in the Company,
two nominees of the Investor Shareholders;
(iii) if, at the time of any such vote, the aggregate Primary
Economic Interest of the Investor Shareholders is 20% or more of the
Total Primary Economic Interests in the Company, three nominees of the
Investor Shareholders; and
(iv) eight nominees of the Principal Shareholder, of which no
more than four shall be employees of the Company or any of its
Subsidiaries or members of the Hvide Group and the remainder of which
shall be independent of the Principal Shareholder, the Company and its
Subsidiaries.
(b) All nominations to the Board of Directors to be made by the
Investor Shareholders pursuant to this Section 4.01 shall be made by
Clipper on behalf of itself and the other Investor Shareholders.
(c) If at any time Clipper shall notify the Hvide Group Shareholders
of the Investor Shareholders' desire to remove (with or without cause) any
director of the Company previously nominated by the Investor Shareholders,
the Hvide Group Shareholders shall vote or cause to be voted all the shares
of Voting Securities owned or held of record by them, and take such other
actions as may be reasonably necessary, so
<PAGE>
9
as to remove such director. No such removal of an individual nominated
pursuant to this Section 4.01 shall affect any of the Investor
Shareholders' rights to nominate a different individual pursuant to this
Section 4.01.
(d) If at any time any director previously nominated by the Investor
Shareholders ceases to serve on the Board of Directors (whether by reason
of death, disability, resignation, removal or otherwise), the Investor
Shareholders shall immediately be entitled to nominate a successor director
to fill the vacancy created thereby. The Hvide Group Shareholders shall
vote or cause to be voted all the shares of Voting Securities owned or held
of record by them, and take such other actions as may be reasonably
necessary, so as to elect such director.
(e) If any of the Hvide Group Shareholders fails or refuses to vote
its Voting Securities as required by this Section 4.01, Clipper shall have
an irrevocable proxy coupled with an interest to vote those securities on
behalf of the Investor Shareholders in accordance with this Section 4.01,
and each Hvide Group Shareholder hereby grants to Clipper such irrevocable
proxy coupled with an interest.
(f) The nominees of the Investor Shareholders elected to the Board of
Directors pursuant to Section 4.01(a) shall be U.S. citizens within the
meaning of Section 2 of the Shipping Act, 1916, as amended.
(g) Each Investor Shareholder and each Hvide Group Shareholder hereby
agrees (i) that Clipper and Olympus Growth Fund II, L.P. shall each be
entitled to appoint one of the observers to meetings of the Board of
Directors (and the committees thereof) that the holders of the Class B
Common Stock are entitled to appoint pursuant to the Articles and (ii) to
vote or cause to be voted all the shares of Voting Securities owned or held
of record by it and take such other actions as may be reasonably necessary
to so cause such appointments.
(h) Except as otherwise provided in Section 4.01(b), all actions by
the Investor Shareholders pursuant to this Section 4.01 shall
<PAGE>
10
require the direction or consent of Clipper and the holders of a majority
of the Voting Power then held by the Investor Shareholders.
SECTION 4.02. Sales of the Investor Shareholders' Common Stock. Each
Investor Shareholder agrees that it shall not sell or otherwise transfer any
Class A Common Stock to any person who is not an Investor Shareholder or a
member of the Hvide Group unless, upon the consummation of such sale or other
transfer, such Investor Shareholder shall not own any shares of Class B Common
Stock.
SECTION 4.03. Rights of First Refusal. (a) In the event that an Investor
Shareholder or a Hvide Group Shareholder (the "Offering Shareholder") has
received a bona fide offer to purchase all or any part of its shares of Class A
or Class B Common Stock and desires to accept such offer, it shall give written
notice ("Notice") at the address or addresses provided pursuant to Section 8.01
of such offer to the Principal Shareholder (if the Offering Shareholder is an
Investor Shareholder) or the Investor Shareholders (if the Offering Shareholder
is a member of the Hvide Group). Such Notice shall name the proposed transferee
(including all parties who will be receiving any direct or indirect record, or
beneficial, ownership interest in the shares transferred), specify the number of
shares of Class A or Class B Common Stock intended to be transferred (the
"Offered Shares"), the price per share and all other material terms and
conditions of the offer. The Principal Shareholder or each Investor Shareholder,
as applicable, shall then have the exclusive and irrevocable right and option
for 10 days from the date such Notice was given to purchase all and not less
than all of the Offered Shares at the price and on the terms and conditions set
forth in such Notice. The Principal Shareholder or each Investor Shareholder, as
applicable, may exercise such option by giving written notice to the Offering
Shareholder of its election to do so within such 10 day period. If more than one
such person elects to purchase Offered Shares, each such person shall be
entitled to so purchase all or part of that proportion of the total Offered
Shares equal to the proportion that the number of shares of Common Stock (if
any) it owns bears to the number of shares of Common Stock (if any) held by all
other such persons electing to purchase.
(b) If all of the Offered Shares are elected to be purchased in accordance
with the above provisions of this
<PAGE>
11
Section 4.03, the purchaser or purchasers thereof shall pay the purchase price,
against delivery of the certificate or certificates representing the Offered
Shares being purchased, properly endorsed for transfer, in the manner and within
the time period set forth in the Notice;
(c) If the bona fide offer to purchase described in Section 4.03(a)
contemplates the payment of consideration other than cash or deferred cash
payment, then the purchase price payable by such persons pursuant to the above
provisions of this Section 4.03 shall, with respect to such noncash
consideration, be the cash equivalent value thereof as agreed to by the Offering
Shareholder and such persons or, in the absence of such agreement, such cash
equivalent value as determined by a nationally recognized investment banking
firm selected by the Investor Shareholders and reasonably acceptable to such
other parties.
(d) If the Offered Shares are not elected to be purchased in accordance
with the above provisions of this Section 4.03, the Offering Shareholder may
then and only then transfer the Offered Shares, subject to compliance with all
applicable state and Federal securities laws, at any time within 90 days from
the date the Notice was given, but only to the transferee and at a price and on
the terms specified in the Notice (or at a price and on other terms more
favorable to the Offering Shareholder than the price and the other terms
specified in the Notice); provided that any material change in the terms that
are less favorable to the Offering Shareholder or any changes in the transferee
shall require a reoffering of the Offered Shares as provided above in this
Section 4.03; provided, further, that if the Offered Shares have not been
transferred or sold within such 90-day period, the above provisions of this
Section 4.03 must be satisfied again before the Offered Shares may be
transferred.
(e) The rights of first refusal set forth above in this Section 4.03 (i)
shall not apply to any transfer of shares by any Investor Shareholder to another
Investor Shareholder, (ii) shall not apply to any transfer of shares by any
member of the Hvide Group by way of sale, bona fide gift or testamentary or
intestate transfer or otherwise, to one or more members of the Hvide Group;
provided that such transferee member or members are bound by the terms and
provisions hereof, and (iii) shall not apply to any public sale of Common Stock
registered with the SEC or made pursuant to Rule 144.
<PAGE>
12
(f) Notwithstanding the foregoing provisions of this Section 4.03, if any
member of the Hvide Group, other than the Principal Shareholder, desires to
transfer Common Stock to any person not a member of the Hvide Group, then the
Principal Shareholder shall have the first opportunity to purchase such shares.
Any shares not so purchased shall then be subject to the provisions of Section
4.03(a), except that the Principal Shareholder shall not have any further rights
of first refusal. If any Investor Shareholder desires to transfer Common Stock
to any person that is not an Investor Shareholder, then each other Investor
Shareholder shall have the first opportunity to purchase such shares, pro rata,
based on their respective holdings of Common Stock. Any shares not so purchased
shall then be subject to the provisions of Section 4.03(a), except that the
Investor Shareholders shall not have any further rights of first refusal.
(g) The rights of first refusal provided herein may be transferred by any
Investor Shareholder only to another Investor Shareholder, and by any member of
the Hvide Group only to another member of the Hvide Group.
SECTION 4.04. Modification of Articles and Bylaws. Each Investor
Shareholder and each Hvide Group Shareholder agrees that if and when the
Investor Shareholders own in the aggregate less than 5% of the then issued and
outstanding shares of Class B Common Stock, it shall vote or cause to be voted
all shares of Common Stock now held or hereafter acquired by it or an Affiliate
controlled by it, and take such other actions as may be reasonably necessary, to
cause the Articles and by-laws of the Company to be amended so as to remove
therefrom the provisions requiring the approval of the holders of the Class B
Common Stock for certain corporate actions.
ARTICLE V
Transferability Generally; Citizenship
SECTION 5.01. Compliance with Applicable Law. Notwithstanding any other
provision contained in this Agreement, each Investor Shareholder and each Hvide
Group Shareholder will not, directly or indirectly, sell all or any part of the
Common Stock owned by such person, unless and until appropriate action necessary
for compliance with the Securities Act and the Exchange Act shall have been
taken.
<PAGE>
13
SECTION 5.02. Transfers to Permitted Transferees. Neither any Investor
Shareholder, any Hvide Group Shareholder nor any transferee may sell or
otherwise transfer (including any transfer by operation of law or otherwise of
the corpus of a trust to the beneficiaries of such trust) all or any portion of
its shares of Common Stock to any person (other than a party to this Agreement)
unless and until such person shall have become a party to, and become bound by
all the terms and conditions of, this Agreement, and in connection therewith
such person has executed and delivered to each of Clipper and the Principal
Shareholder a counterpart of this Agreement; provided that such requirements
shall not apply to any registered public sale of Common Stock in connection with
the Initial Public Offering or any subsequent public sale of Common Stock
registered with the SEC or made pursuant to Rule 144.
SECTION 5.03. Transfers by the Hvide Group Shareholders. The Hvide Group
Shareholders shall not transfer all or any part of the shares of Common Stock
owned by them to a person that is not a Citizen, and pursuant to such obligation
shall not transfer shares of Common Stock to a person that is not a Hvide Group
Shareholder unless and until such person provides the necessary proof of
citizenship.
ARTICLE VI
Legend for the Common Stock
SECTION 6.01. Legend for the Common Stock. The certificates representing
the Common Stock held by the Shareholders shall bear a legend reading
substantially as follows:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND ARE
SUBJECT TO A CERTAIN AGREEMENT AMONG SHAREHOLDERS. NO SALE, HYPOTHECATION,
TRANSFER OR OTHER DISPOSITION OF THIS CERTIFICATE (OTHER THAN TO THE ISSUER
THEREOF) MAY BE MADE UNLESS MADE IN ACCORDANCE WITH SUCH AGREEMENT AMONG
SHAREHOLDERS AND EITHER (A) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OR (B) PURSUANT TO AN EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT.
<PAGE>
14
ARTICLE VII
Contribution and Conversion of Shares
of Class B Common Stock.
SECTION 7.01. Contribution of Shares of Class B Common Stock by the Hvide
Group Shareholders. Each of the Hvide Group Shareholders hereby agrees to
contribute, pro rata, to the Company an amount of shares of Class B Common Stock
equal to the amount of shares of Class A Common Stock issued by the Company at
any time pursuant to the Contingent Share Issuance Agreement. Such shares shall
be contributed concurrently with the issuance of shares from time to time by the
Company pursuant to such agreement.
SECTION 7.02. Conversion of the Investor Shareholders' Class B Common
Stock. If, after the Hvide Group Shareholders contribute Class B Common Stock to
the Company pursuant to Section 7.01, the Investor Shareholders have more Voting
Power than the Hvide Group Shareholders, then the Investor Shareholders shall,
to the extent permitted by the Articles, convert, pro rata, shares of Class B
Common Stock into shares of Class A Common Stock to the extent necessary to make
the Voting Power of the Hvide Group Shareholders exceed the Voting Power of the
Investor Shareholders by one vote.
ARTICLE VII
Miscellaneous
SECTION 8.01. Notices. All notices and other communications pertaining to
this Agreement shall be in writing and shall be deemed to have been duly given
upon the receipt thereof. Such notices shall be delivered by hand, or mailed,
certified or registered mail with postage prepaid:
(a) if to Clipper or the other Investor Shareholders, at their
respective addresses set forth in Schedule 2 hereto, with a copy to:
Cravath, Swaine & Moore
Worldwide Plaza
825 Eighth Avenue
New York, NY 10019-7475
Attention of D. Collier Kirkham, Esq.; and
<PAGE>
15
(b) if to the Principal Shareholder or the other Hvide Group
Shareholders, to him or each of them at:
2200 Eller Drive, P. O. Box 13038
Fort Lauderdale, FL 33316
Attention of Gene Douglas, Esq.
with a copy to:
Dyer Ellis & Joseph
600 New Hampshire Avenue, N.W.
Washington, D.C. 20037
Attention of Michael Joseph, Esq.
or to such other person or address as shall be furnished to
the other party in writing.
SECTION 8.02. Parties. This Agreement shall inure to the benefit of and be
binding upon the parties hereto and each of their respective permitted
successors and assigns. Nothing expressed or mentioned in this Agreement is
intended or shall be construed to give any person, firm or corporation, other
than the parties hereto and their respective permitted successors and assigns,
any legal or equitable right, remedy or claim under or in respect of this
Agreement or any provision herein contained. This Agreement and all conditions
and provisions hereof are intended to be for the sole and exclusive benefit of
the parties hereto and their respective permitted successors and assigns, and
for the benefit of no other person, firm or corporation.
SECTION 8.03. Governing Law. This Agreement shall be governed by the laws
of the State of Florida regardless of the laws that might otherwise govern under
applicable principles of conflict of laws thereof.
SECTION 8.04. Successors and Assigns. Each party hereto may, subject to
Section 4.03(g) hereof, assign to one or more assignees all or a portion of its
interests, rights and obligations under this Agreement; provided that (i) each
such party may only so assign such interests, rights and obligations to the
extent that it transfers shares of Common Stock to such assignee in accordance
with the provisions hereof and (ii) such assignee shall have executed and
delivered to each of Clipper and the Principal Shareholder a counterpart hereof.
<PAGE>
16
SECTION 8.05. Severability Clause. In case any provision in this Agreement
shall be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby and such provision shall be ineffective only to the extent of
such invalidity, illegality or unenforceability. The parties hereto shall
endeavor in good-faith negotiations to replace the invalid, illegal or
unenforceable provisions with valid provisions the economic effect of which
comes as close as possible to that of the invalid, illegal or unenforceable
provisions.
SECTION 8.06. Representations, Warranties and Agreements To Survive
Delivery. All representations, warranties and agreements contained in or
incorporated into this Agreement shall remain operative and in full force and
effect, regardless of any investigation made by or on behalf of any of the
Shareholders or any controlling person of any of the Shareholders, or by or on
behalf of the Principal Shareholder, and shall survive the execution and
delivery of this Agreement.
SECTION 8.07. Waivers, Amendment and Remedies. The failure of any of the
parties to insist in any one or more instances upon strict performance of any of
the provisions of this Agreement or to take advantage of any of its rights
hereunder shall not be construed as a waiver of any such provisions or the
relinquishment of any such rights, but the same shall continue and remain in
full force and effect.
Neither this Agreement nor any provision hereof may be waived, amended or
modified except pursuant to an agreement or agreements in writing entered into
by the Principal Shareholder, Clipper and the Investor Shareholders holding a
majority of the Voting Power then held by the Investor Shareholders.
Except as otherwise expressly limited in this Agreement, all remedies under
this Agreement shall be cumulative and in addition to every other remedy
provided for herein or by law.
SECTION 8.08. Specific Performance. Each of the Shareholders agrees that
the other Shareholders would be irreparably damaged if for any reason it fails
to perform any of its obligations under this Agreement, and that the other
Shareholders would not have an adequate remedy at law
<PAGE>
17
for money damages in such event. Accordingly, each Shareholder shall be entitled
to seek specific performance and injunctive and other equitable relief to
enforce the performance of this Agreement by the other Shareholders. This
provision is without prejudice to any other rights that any Shareholder may have
against any other Shareholder for any failure to perform its obligations under
this Agreement.
SECTION 8.09. Termination of Agreement. At such time as the aggregate
Primary Economic Interest of the Investor Shareholders shall be less than 5% of
the Total Primary Economic Interests in the Company, the rights and obligations
of the parties hereunder shall cease and this Agreement shall terminate and be
of no further force and effect.
SECTION 8.10. Voting Agreements, etc. None of the Shareholders shall, nor
shall any Shareholder permit any other Shareholder controlled by it to, enter
into any agreement or understanding with any person, directly or indirectly, to
vote, grant any proxy or give instructions with respect to the voting of Voting
Securities in any manner inconsistent with the terms of this Agreement.
SECTION 8.11. Entire Agreement. This Agreement, together with all schedules
hereto, is intended by the parties hereto to be a final expression of their
agreement in respect of the subject matter contained herein, and supersedes all
prior agreements and understandings between the parties hereto with respect to
such subject matter.
SECTION 8.12. Headings. The headings of the Articles and the Sections in
this Agreement are for convenience of reference only and shall not be deemed to
alter or affect the meaning or interpretation of any provisions hereof.
SECTION 8.13. Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed to be an original and all of which shall
constitute one and the same instrument.
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the
date first above written.
<PAGE>
18
CLIPPER CAPITAL ASSOCIATES, L.P.,
by___________________________
Name: Kevin A. Macdonald
Title: Authorized Officer
CLIPPER/MERCHANT HMI, L.P., By its
general partner Clipper Capital
Associates, L.P.,
by___________________________
Name: Kevin A. Macdonald
Title: Authorized Officer
CLIPPER/PARK HMI, L.P.,
By its general partner Clipper
Capital Associates, L.P.,
by___________________________
Name: Kevin A. Macdonald
Title: Authorized Officer
CLIPPER/MERBAN HMI, L.P.,
By its general partner Clipper
Capital Associates, L.P.,
by___________________________
Name: Kevin A. Macdonald
Title: Authorized Officer
<PAGE>
19
CLIPPER/HERCULES, L.P.,
By its general partner Clipper
Capital Associates, L.P.,
by___________________________
Name: Kevin A. Macdonald
Title: Authorized Officer
METROPOLITAN LIFE INSURANCE
COMPANY,
by___________________________
Name:
Title:
OLYMPUS GROWTH FUND II, L.P.,
By its general partner OGP II,
L.P.,
by___________________________
Name: Louis J. Mischianti
Title: Partner
______________________________
J. Erik Hvide
Trust created by the
Declaration of Trust dated
June 23, 1978, for Elsa Hvide
and the others named therein,
by___________________________
J. Erik Hvide
<PAGE>
20
Trust created by the
Declaration of Trust, dated
June 23, 1978,
for Elsa Hvide
Sowrey and the others named
therein,
by
___________________________
J. Erik Hvide
<PAGE>
SCHEDULE 1
Hvide Group Shareholders
Holder Class A Class B
- ------ Shares Shares
------ ------
Erik J. Hvide
Trust created by the Declaration of
Trust dated June 23, 1978, for
Elsa Hvide and the others named
therein
Trust created by the Declaration of
Trust, dated June 23, 1978, for
Elsa Hvide Sowrey and the others named
therein
<PAGE>
SCHEDULE 2
Addresses for Investor Shareholders
Clipper Capital Associates, L.P.,
Clipper/Hercules HMI, L.P.,
Clipper/Merban HMI, L.P.,
Clipper/Merchant HMI, L.P., and
Clipper/Park HMI, L.P.
c/o Clipper Capital Associates, L.P.
12 East 49th Street (30th Floor)
New York, NY 10017
Attention of: Mr. Kevin A. Macdonald
Metropolitan Life Insurance Company
334 Madison Avenue
P.O. Box 633
Convent Station, NJ 07961-0633
Attention of: Mr. Charles Symington
Olympus Growth Fund II, L.P.
c/o Olympus Partners
Metro Center, One Station Place
Stamford, CT 06902
Attention of: Mr. Louis J. Mischianti
EXHIBIT 10.30
[Draft--6/18/96]
================================================================================
HVIDE MARINE INCORPORATED
--------------------
AMENDED AND RESTATED
CONTINGENT SHARE ISSUANCE AGREEMENT
--------------------
Dated as of July [ ], 1996
================================================================================
<PAGE>
AMENDED AND RESTATED CONTINGENT SHARE ISSUANCE AGREEMENT
dated as of July [ ], 1996, among HVIDE MARINE INCORPORATED, a
Florida corporation (the "Company"), and the purchasers
identified in Schedule 1 attached hereto (the "Purchasers").
W I T N E S S E T H:
WHEREAS pursuant to the Contingent Share Issuance Agreement dated as of
September 30, 1994 (the "Initial CSI Agreement"), the Company issued to the
Purchasers the Series 1 Common Stock Contingent Share Issuances (the "Series 1
CSIs") and Series 2 Common Stock Contingent Share Issuances (the "Series 2 CSIs"
and, together with the Series 1 CSIs, the "CSIs") in the amounts set forth on
Schedule 1 hereto;
WHEREAS the Company, formerly known as Hvide Corp., was the surviving
entity in a merger (which was consummated immediately prior to the execution and
delivery of this Agreement) with the former Hvide Marine Incorporated and in
connection therewith assumed the name Hvide Marine Incorporated;
WHEREAS the Company and the Purchasers are parties to that certain
Recapitalization Agreement dated as of July [ ], 1996 (as amended, supplemented,
replaced or otherwise modified from time to time, the "Recapitalization
Agreement"; each capitalized term used but not defined herein shall have the
meaning ascribed to such term in the Recapitalization Agreement), which requires
that the Initial CSI Agreement be amended and restated in the form hereof at or
prior to the closing of the Initial Public Offering;
WHEREAS the other conditions precedent specified in the Recapitalization
Agreement have been satisfied;
NOW, THEREFORE, in consideration of the foregoing premises, the agreements
herein set forth and other good and valuable consideration, the receipt and
sufficiency of which
<PAGE>
2
are hereby acknowledged, the parties hereto hereby amend and restate the Initial
CSI Agreement as follows:
ARTICLE I
CSI Certificates
SECTION 1.01. CSI Certificates. The parties hereto acknowledge and affirm
that the Purchasers are the holders of record of the certificates (the "CSI
Certificates") representing the CSIs issued by the Company pursuant to the
Initial CSI Agreement in the amounts set forth on Schedule 1 hereto. Each
reference in the CSI Certificates to the Contingent Share Issuance Agreement and
the terms thereof shall be deemed to be a reference to this Amended and Restated
Contingent Shares Issuance Agreement and the terms hereof.
SECTION 1.02. Exchange and Replacement of CSI Certificates. (a) Exchange.
Any CSI Certificate may be exchanged at the option of the registered holder
thereof (the "Holder") for another CSI Certificate or Certificates representing
in the aggregate a like number of CSIs. Any Holder desiring to effect such an
exchange shall make such request in writing delivered to the Company and shall
surrender, properly endorsed, the CSI Certificate or Certificates to be so
exchanged. Thereupon, the Company shall execute and deliver to the Holder, or at
the Holder's written direction to any other person, a new CSI Certificate or
Certificates, as the case may be, as so requested.
(b) Replacement. In case any of the CSI Certificates shall be mutilated,
lost, stolen or destroyed, the Company shall issue and deliver in exchange and
substitution for and upon cancellation of the mutilated CSI Certificate, or in
lieu of and substitution for the CSI Certificate lost, stolen or destroyed, a
new CSI Certificate of like tenor and representing an equivalent right and
interest; but, unless waived by the Company, only upon receipt, in the case of
loss, theft or destruction of such CSI Certificate, of an indemnity in an amount
reasonably satisfactory to the Company. An applicant for such substitute CSI
Certificate shall also comply with such other reasonable regulations and pay
such other reasonable charges as the Company may prescribe.
<PAGE>
3
SECTION 1.03. Legend for the CSI Certificates. The CSI Certificates will
bear a legend reading substantially as follows:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 (THE "SECURITIES ACT"). NO SALE,
HYPOTHECATION, TRANSFER OR OTHER DISPOSITION OF THIS CERTIFICATE (OTHER
THAN TO THE ISSUER HEREOF) MAY BE MADE UNLESS EITHER (A) PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR (B) PURSUANT
TO AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT.
ARTICLE II
[INTENTIONALLY OMITTED]
ARTICLE III
Issuance Terms
SECTION 3.01. Triggering Events for the CSIs. (a) Upon the occurrence of a
Triggering Event (as defined below):
(i) the Company shall issue to the Holder of a Series 1 CSI the
number of shares (the "Class A Shares" or "Shares") of Class A Common
Stock, $0.001 par value, of the Company (the "Class A Common Stock"; the
Class A Common Stock, together with the Class B Common Stock, $0.001 par
value, of the Company (the "Class B Common Stock"), are hereinafter
referred to collectively as the "Common Stock"), determined pursuant to
Section 3.02 hereof, and such Holder shall pay the Company par value for
such shares; and
(ii) the Company shall issue to the Holder of a Series 2 CSI the
number of Shares determined pursuant to Section 3.03 hereof, and such
Holder shall pay the Company par value for such Shares.
(b) As used in this Agreement, the term "Triggering Event" shall
mean 120 days after the expiration or termination of the lockup provision
described in the
<PAGE>
4
"Underwriting" section of the prospectus included in the
Registration Statement.
SECTION 3.02. Number of Shares Issuable to the Holder of a Series 1 CSI.
Upon the occurrence of a Triggering Event, the Company shall issue to each
Holder of a Series 1 CSI the number of Shares determined by dividing (i) the
lesser of (x) the number of additional Shares, if any, that would have to be
issued pursuant to the Series 1 CSIs so as to cause the All-in Return (as
defined in Section 3.04) to equal 60% or (y) the number of shares of Common
Stock equal to 9.375% of the then issued and outstanding Common Stock of the
Company on a fully diluted basis without giving effect to the CSIs and not
including the shares of Common Stock issued in the Initial Public Offering or
the shares of Common Stock issuable upon conversion of the Junior Subordinated
Notes by (ii) 150,000, the total number of Series 1 CSIs issued by the Company
pursuant to this Agreement.
SECTION 3.03. Number of Shares Issuable to the Holder of a Series 2 CSI.
Upon the occurrence of a Triggering Event, the Company shall issue to each
Holder of a Series 2 CSI the number of Shares determined by dividing (i) the
lesser of (x) the number of additional Shares, if any, that would have to be
issued pursuant to the Series 2 CSIs so as to cause the All-in Return to equal
35% or (y) the number of shares of Common Stock equal to 12.5% of the then
issued and outstanding Common Stock of the Company on a fully diluted basis
without giving effect to the CSIs and not including the shares of Common Stock
issued in the Initial Public Offering or the shares of Common Stock issuable
upon conversion of the Junior Subordinated Notes by (ii) 200,000, the total
number of Series 2 CSIs issued by the Company pursuant to this Agreement.
SECTION 3.04. All-in Return. (a) As used in this Agreement, the term
"All-in Return" shall mean the annual internal rate of return earned by the
Purchasers and their assignees with respect to their aggregate $25,000,000
investment (the "Investment Amount") in the Junior Subordinated Notes and the
Common Stock, including, in addition to the Common Stock issued pursuant to the
Junior Subordinated Note Agreement, any shares of Common Stock that are received
upon the conversion of Junior Subordinated Notes pursuant to the
Recapitalization Agreement (collectively, the "Purchased Shares").
<PAGE>
5
(b) The All-in Return shall be measured from September 30, 1994 (the
"Junior Subordinated Notes Closing Date") until the date of the Triggering Event
(the "Measurement Date"). For purposes of determining the All-in Return, (i) the
Investment Amount shall be treated as an outflow occurring on the Junior
Subordinated Notes Closing Date, (ii) the amounts paid in cash by the Company as
interest, principal and redemption with respect to the Junior Subordinated Notes
shall be treated as inflows on the dates such amounts are received by the
Purchasers, (iii) the proceeds, net of transaction expenses, actually realized
by the Purchasers with respect to the disposition and sale of the Purchased
Shares shall be treated as inflows on the date of such sales or dispositions,
and (iv) any Purchased Shares still held on the Measurement Date and any shares
of Common Stock to be issued pursuant to the CSIs shall be treated as inflows in
an amount equal to their value on the Measurement Date (the "Measurement Date
Share Value"). The Measurement Date Share Value shall be an amount calculated by
multiplying (A) the average of Closing Prices (as defined in Section 4.01
hereof, and appropriately adjusted to reflect any stock splits or other dilutive
events occurring during such period) for the 30 consecutive trading days
immediately prior to the Measurement Date by (B) 95%. [Examples of the
calculation of the All-in Return are set forth in Exhibit B].
SECTION 3.05. Delivery of Certificates. Subject to Section 3.08, upon a
Triggering Event, the Company shall cause to be delivered to each Holder, with
all reasonable dispatch, a certificate or certificates for the number of full
shares of Common Stock issuable to such Holder pursuant to the CSIs in such name
or names as such Holder may designate.
SECTION 3.06. Elimination of Fractional Interests. The Company shall not be
required to issue certificates representing fractions of shares of Common Stock
upon a Triggering Event, nor shall it be required to issue scrip or pay cash in
lieu of fractional interests, it being the intent of the parties that all
fractional interests shall be eliminated by rounding any fraction to the nearest
whole number of shares of Common Stock or other securities, properties or
rights.
SECTION 3.07. Reservation of Securities. The Company shall at all times
reserve and keep available such number of shares of Common Stock as shall be
issuable
<PAGE>
6
pursuant to the CSIs, and shall at all times reserve and keep available an
adequate allowance, as the parties may reasonably agree, on the Company's
foreign stock register, to provide for the issuance of such Shares (so that the
receipt of such Shares by persons other than citizens of the United States will
not result in the Company no longer qualifying as a United States citizen under
the Shipping Act, 1916, as amended, or other applicable Federal or state
maritime laws). The Company covenants and agrees that all shares of Common Stock
issued pursuant to the CSIs shall be duly and validly issued, fully paid,
nonassessable and not subject to the preemptive rights of any stockholder of the
Company.
SECTION 3.08. Payment of Taxes. The Company will pay all documentary stamp
taxes, if any, attributable to the shares of Common Stock issued pursuant to the
CSIs; provided, however, that the Company shall not be required to pay any tax
or taxes which may be payable in respect of any transfer involved in the issue
or delivery of any CSI Certificate in a name other than that of the Holder of
the transferred CSI Certificate or Certificates or of any certificate for shares
of Common Stock issued pursuant to the CSIs in a name other than that of the
Holder of the CSI Certificate.
ARTICLE IV
Miscellaneous
SECTION 4.01. Closing Price. As used in this Agreement, the term "Closing
Price" on any day shall mean the reported last sales price regular way on such
day on the New York Stock Exchange, or, if not reported for such Exchange, on
the New York Stock Exchange Composite Tape, or, in case no such reported sale
takes place on such day, the average of the reported closing bid and asked
prices regular way on the New York Stock Exchange, or, if Common Stock is not
listed or admitted to trading on such Exchange, on the principal national
securities exchange on which such Common Stock is listed or admitted to trading,
or, if not listed or admitted to trading on any national securities exchange,
the average of the closing bid and asked prices in the over-the-counter market
as furnished by any New York Stock Exchange member firm selected from time to
time by the Company for that purpose. The term "trading day" shall mean, so long
as Common Stock is listed or admitted to
<PAGE>
7
trading on the New York Stock Exchange (or any successor to such Exchange), a
date on which the New York Stock Exchange (or such successor) is open for the
transaction of business, or, if such Common Stock is not listed or admitted to
trading on such Exchange, a date on which the principal national securities
exchange on which such Common Stock is listed is open for the transaction of
business, or, if such Common Stock is not listed or admitted to trading on any
national securities exchange, a date on which any New York Stock Exchange member
firm is open for the transaction of business. The price of shares of any class
of Common Stock shall be deemed to be the Closing Price of the publicly traded
class of Common Stock, if any.
SECTION 4.02. Compliance with Applicable Law. Notwithstanding anything to
the contrary herein, the acquisition of Class A Shares by any Holder hereunder
shall be subject to any limitations then imposed under applicable Federal or
state maritime (including, without limitation, establishing U.S. Citizenship in
accordance with the Shipping Act, 1916, as amended), banking or other law,
including without limitation the International Banking Act of 1978, as amended,
the Bank Company Act of 1956, as amended and any applicable rules or regulations
promulgated thereunder by, or understandings with, the Board of Governors of the
Federal Reserve System, it being understood and agreed that in the event a
Holder is not permitted under any such applicable law to acquire the full amount
of Class A Shares to which such Holder would then be entitled pursuant hereto,
such Holder shall acquire as many Class A Shares as shall be permissible under
applicable law; provided that in the event such Holder is then not permitted
under applicable law to acquire any portion of such Class A Shares, such Holder
may or, if required by applicable law, shall transfer its right to receive any
such Class A Shares to another investor at a purchase price not greater than the
fair market value of such shares as mutually determined by such Holder and such
investor; provided, further, that if an issuance hereunder (after giving effect
to the alternatives described above) would result in such a violation and the
right to receive such Shares may be deferred in accordance with applicable law,
the right to receive such Shares shall be deferred until (but only until) the
issuance of such shares may be effected without causing such a violation. In the
event that a Holder of CSIs under this Agreement determines to transfer its
rights hereunder to any person or entity as permitted hereunder, such transfer
shall, if required by applicable law, in addition to any other
<PAGE>
8
requirements set forth herein, be subject to the condition that, upon notice
from such Holder of any applicable restrictions or limitations under applicable
law on its ability to acquire Class A Shares, the transferee shall agree in
writing to be bound by any such restrictions or limitations to the same extent
as if such transferee was itself subject thereto.
SECTION 4.03. Notices. All notices and other communications pertaining to
this Agreement shall be in writing and shall be deemed to have been duly given
upon the receipt thereof. Such notices shall be delivered by hand, or mailed,
certified or registered mail with postage prepaid:
(a) If to a Purchaser, at its address set forth in Schedule 1 hereto, with
a copy to:
Cravath, Swaine & Moore
Worldwide Plaza
825 Eighth Avenue
New York, NY 10019-7475
Attention of D. Collier Kirkham
or to such other address as such Purchaser may prescribe from time to time by
written notice to the Company.
(b) If to the Company, to it at:
2200 Eller Drive, P.O. Box 13038
Fort Lauderdale, FL 33316
Attention of Gene Douglas
with a copy to:
Dyer Ellis & Joseph
600 New Hampshire Avenue, N.W.
Washington, D.C. 20037
Attention of Michael Joseph
or to such other address as the Company may prescribe from time to time by
written notice to each of the Purchasers.
SECTION 4.04. Governing Law. This Agreement shall be governed by the laws
of the State of Florida regardless of the laws that might otherwise govern under
applicable principles of conflict of laws thereof.
<PAGE>
9
SECTION 4.05. Successors. All the covenants and provisions of this
Agreement by or for the benefit of the parties hereto shall bind and inure to
the benefit of their respective successors and assigns hereunder.
SECTION 4.06. Entire Agreement; Modification. This Agreement contains the
entire understanding between the parties hereto with respect to the subject
matter hereof and may not be modified or amended except by a writing duly signed
by the party against whom enforcement of the modification or amendment is
sought.
SECTION 4.07. Severability. If any provision of this Agreement shall be
held to be invalid and unenforceable, such invalidity or unenforceability shall
not affect any other provision of this Agreement.
SECTION 4.08. Benefits of This Agreement; Disclaimer. Nothing in this
Agreement shall be construed to give to any person or corporation other than the
parties hereto any legal or equitable right, remedy or claim under this
Agreement, but this Agreement shall be for the sole and exclusive benefit of the
parties hereto.
SECTION 4.09. No Novation. Nothing herein contained shall be construed as a
substitution or a novation of the obligations of the Company under the Initial
CSI Agreement or the CSIs, which shall remain in full force and effect except as
modified hereby.
SECTION 4.10. Captions. The captions of the sections and subsections of
this Agreement have been inserted for convenience only and shall have no
substantive effect.
SECTION 4.11. Counterparts. This Agreement may be executed in any number of
counterparts, each of which so executed shall be deemed to be an original; but
such
<PAGE>
10
counterparts together shall constitute but one and the same
instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day, month and year first above written.
HVIDE MARINE INCORPORATED,
by
__________________________
Name:
Title:
CLIPPER/MERCHANT HMI, L.P.,
By its general partner Clipper
Capital Associates,L.P.
by
__________________________
Name:
Title:
CLIPPER/MERBAN HMI, L.P.,
By its general partner Clipper
Capital Associates,L.P.
by
__________________________
Name:
Title:
CLIPPER/PARK HMI, L.P.,
By its general partner Clipper
Capital Associates, L.P.
by
__________________________
Name:
Title:
<PAGE>
11
CLIPPER/HERCULES, L.P.,
By its general partner Clipper
Capital Associates, L.P.
by
__________________________
Name:
Title:
CLIPPER CAPITAL ASSOCIATES,
L.P.,
by
__________________________
Name:
Title:
<PAGE>
Schedule I
----------
Number of Number of
Name and Address Series 1 CSIs Series 2 CSIs
- ---------------- ------------- -------------
Clipper/Merchant 25,031 33,374
HMI, L.P.
Clipper/Merban 25,031 33,374
HMI L.P.
Clipper/Park HMI, 62,577 83,436
L.P.
Clipper/Hercules 34,601 46,135
L.P.
Clipper Capital 2,760 3,680
Associates, L.P.
EXHIBIT 23.1
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We consent to the reference to our firm under the caption "experts"
and to the use of our report dated March 28, 1996 (except the first and
second paragraphs of Note 14, as to which the dates are May 13, 1996 and
June 1996), in Amendment No. 3 to the Registration Statement (Form S-1 No.
33-78166) and related Prospectus of Hvide Marine Incorporated for the
registration of 8,050,000 shares of its common stock.
Ernst & Young LLP
Miami, Florida
August 2, 1996
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts"
and to the use of our rperot dated february 1, 1996, with respect to the
statements of assets to be sold and the related statements of vessel operations
of Gulf Boat Marine Services, Inc. and E & D Boat Rentals, Inc. included in
Amendment No. 3 to the Registration Statement (Form S-1 No. 33-78166) and
related Prspectus of Hvide Marine Incorporated for the registration of
8,050,000 shares of its common stock.
ERNST & YOUNG LLP
New Orleans, Louisiana
August 2, 1996
EXHIBIT 23.3
INDEPENDENT AUDITORS' CONSENT
We consent to the use in this Amendment No. 4 to Registration Statement No.
33-78166 of Hvide Marine Incorporated on Form S-1 of our report dated January
26, 1996 (relating to the financial statements of the OMI Chemical Carrier Group
presented separately herein) appearing in the Prospectus, which is part of this
Registration Statement.
We also consent to the reference to us under the heading "Experts" in such
Prospectus.
DELOITTE & TOUCHE LLP
New York, New York
August 2, 1996
EXHIBIT 23.4
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We consent to the inclusion in this registration statement on Form S-1 (File
No. 33-78166) of our reports dated April 12, 1996, on our audits of (i) the
statements of assets to be sold and related statements of vessel operations of
Seal Fleet, Inc. and Subsidiaries and (ii) the combined statements of vessel
operations of Indian Seal Partners, Ltd., Baffin Seal Partners, Ltd., Baltic
Seal Partners, Ltd., Bengal Seal Partners, Ltd., and Ross Seal Partners, Ltd. We
also consent to the reference to our firm under the caption "Experts."
PANNELL KERR FORSTER OF TEXAS, P.C.
Houston, Texas
August 2, 1996
