As filed with the Securities and Exchange Commission on October 15, 1997
Registration No. 333-34941
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------
Amendment No. 1
to
FORM S-3
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
---------------
HVIDE MARINE INCORPORATED
Florida 65-0524593
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
---------------
HVIDE CAPITAL TRUST
Delaware TO BE APPLIED FOR
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
---------------
2200 Eller Drive, P.O. Box 13038
Fort Lauderdale, Florida 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:
Michael Joseph
Dyer Ellis & Joseph
600 New Hampshire Ave., N.W.
Washington, DC 20037
(202) 944-3000
---------------
Approximate Date of Commencement of Proposed Sale to the Public: As
soon as practicable after this Registration Statement becomes effective.
If the only securities being registered on this form are being offered
pursuant to dividend or reinvestment plans, please check the following box. |_|
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. |X|
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. |_|
<PAGE>
CALCULATION OF REGISTRATION FEE:
<TABLE>
<CAPTION>
Proposed Proposed
maximum maximum
Title of each offering price aggregate Amount of
class of securities Amount to be per offering registration
to be registered registered security(1) price(1) fee
<S> <C> <C> <C> <C>
6 1/2% Trust Convertible Preferred Securities
of Hvide Capital Trust........................... 2,300,000 $50.00(1)(2) $115,000,000 $34,849.00
preferred (1)(2)
securities
Convertible Subordinated Debentures of
Hvide Marine Incorporated........................ (3) (3) (3) --
Class A Common Stock, par value $0.001 per
share, of Hvide Marine Incorporated.............. 4,035,120 shs. (4) (4) (4) (4)
Preferred Securities Guarantee of Hvide
Marine Incorporated.............................. (5) (5) (5) (5)
Class A Common Stock, par value $0.001 per
share, of Hvide Marine Incorporated............... 141,760 35.125 4,979,320 1,508.88
================================================== ================== =============== ================= =================
Total............................................. 2,441,760 100%(1)(2) $119,979,320 $36,357.88(6)
================================================== ================== =============== ================= =================
</TABLE>
(1) Estimated solely for the purpose of computing the registration fee in
accordance with Rule 457 of the Securities Act.
(2) Exclusive of accrued interest and distributions, if any.
(3) $115,000,000 in aggregate principal amount of 6 1/2% Convertible
Subordinated Debentures due 2012 (the "Debentures") issued by Hvide Marine
Incorporated, were issued and sold to Hvide Capital Trust, a Delaware
statutory business trust (the "Issuer"), in connection with the issuance by
the Issuer of its 6 1/2% Trust Convertible Preferred Securities (the
"Preferred Securities"). The Debentures may be distributed, under certain
circumstances, to the holders of Preferred Securities for no additional
consideration.
(4) The Preferred Securities are convertible into Class A Common Stock, $0.001
par value per share (the "Class A Common Stock"), of Hvide Marine
Incorporated (the "Company"). Each Preferred Security is initially
convertible into 1.7544 shares of Class A Common Stock, subject to
adjustment under certain circumstances. This registration statement
includes such additional shares of Class A Common Stock as may be issuable
pursuant to such adjustments.
(5) Includes the obligation of the Company under the Guarantee (as defined
herein) and certain back-up undertakings under (i) the Indenture (as
defined herein) pursuant to which the Debentures were issued, (ii) the
Debentures and (iii) the Amended and Restated Trust Agreement of the
Issuer, including the Company's obligation under such Indenture to pay
costs, expenses, debts and liabilities of the trust (other than with
respect to the Preferred Securities and the Common Securities of the
Issuer), which in the aggregate provide a full and unconditional guarantee
of amounts due on the Preferred Securities. No separate consideration will
be received for the Guarantee and such back-up undertakings. The Guarantee
is not traded separately.
(6) Of this amount, $34,849 was previously paid. Accordingly the balance of
$1,508.88 is being paid herewith.
---------------
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>
PROSPECTUS SUBJECT TO COMPLETION, DATED OCTOBER 15, 1997
, 1997
2,300,000 Preferred Securities
Hvide Capital Trust
6 1/2% Trust Convertible Preferred Securities
(Liquidation Preference $50 per Preferred Security)
and
4,176,880 Shares
Hvide Marine Incorporated
Class A Common Stock
(Including 4,035,120 Shares Issuable Upon Conversion of the Preferred
Securities)
This Prospectus relates to the resale by the holders thereof of 6 1/2%
Trust Convertible Preferred Securities (the "Preferred Securities"), which
represent undivided beneficial interests in the assets of Hvide Capital Trust, a
statutory business trust created under the laws of the State of Delaware (the
"Issuer" or the "Trust"), and the shares of Class A Common Stock, par value
$0.001 per share (the "Hvide Class A Common Stock" or "Class A Common Stock"),
of Hvide Marine Incorporated, a Florida corporation ("Hvide" or the "Company"),
issuable upon conversion of the Preferred Securities. The Preferred Securities
were issued and sold by the Issuer on June 27, 1997 (the "Original Offering") to
Donaldson, Lufkin & Jenrette Securities Corporation, Howard, Weil, Labouisse,
Friedrichs Incorporated, and Raymond James & Associates, Inc. (the "Initial
Purchasers") and were simultaneously resold by the Initial Purchasers in
transactions exempt from the Securities Act of 1933, as amended (the "Securities
Act"). The Preferred Securities are traded in the Private Offering, Resale and
Trading through Automated Linkages ("PORTAL") Market. All of the beneficial
interests in the assets of the Issuer represented by common securities of the
Issuer (the "Common Securities") are owned by Hvide. The Issuer exists for the
sole purpose of issuing the Preferred Securities and Common Securities and
investing the proceeds therefrom in 6 1/2% Convertible Subordinated Debentures
due June 15, 2012 (the "Debentures") issued by Hvide. The Preferred Securities
have a preference under certain circumstances with respect to cash distributions
and amounts payable on liquidation, redemption or otherwise over the Common
Securities. See "Description of the Preferred Securities--Subordination of
Common Securities." This Prospectus also relates to the resale by the holder
thereof of 141,760 shares of Class A Common Stock issued by the Company in
connection with an acquisition of certain vessels.
The Preferred Securities, the Class A Common Stock issuable upon
conversion of the Preferred Securities, and the Class A Common Stock issued in
connection with an acquisition (collectively the "Offered Securities") may be
offered and sold from time to time by the holders named herein or by their
transferees, pledgees, donees or their successors (collectively, the "Selling
Holders") pursuant to this Prospectus. The Offered Securities may be sold by the
Selling Holders from time to time directly to purchasers or through agents,
underwriters or dealers. See "Selling Holders" and "Plan of Distribution." If
required, the names of any such agents or underwriters involved in the sale of
the Offered Securities and the applicable agent's commission, dealer's purchase
price or underwriter's discount, if any, will be set forth in an accompanying
supplement to this Prospectus (the "Prospectus Supplement"). The Selling Holders
will receive all of the net proceeds from the sale of the Offered Securities and
will pay all underwriting discounts, selling commissions and transfer taxes, if
any, applicable to any such sale. Hvide is responsible for payment of all
expenses incident to the registration of the Offered Securities. The Selling
Holders and any broker-dealers, agents or underwriters that participate in the
distribution of the Offered Securities may be deemed to be "underwriters" within
the meaning of the Securities Act, and any commission received by them and any
profit on the resale of the Offered Securities purchased by them may be deemed
to be underwriting commissions or discounts under the Securities Act. See "Plan
of Distribution" for a description of indemnification arrangements.
Holders of the Preferred Securities are entitled to receive
preferential cumulative cash distributions from the Issuer at an annual rate of
6 1/2% of the liquidation preference of $50 per Preferred Security accruing from
June 27, 1997 and payable quarterly in arrears on January 1, April 1, July 1 and
October 1 of each year, commencing October 1, 1997 ("Distributions"). The
distribution rate and the distribution and other payment dates for the Preferred
Securities correspond to the interest rate and interest and other payment dates
in the Debentures, which are the sole assets of the Issuer. As a result, if
principal or interest is not paid on the Debentures, no amounts will be paid on
the Preferred Securities.
Each Preferred Security is convertible in the manner described herein
at the option of the holder, at any time beginning September 25, 1997 and prior
to the Conversion Expiration Date (as defined herein), into shares of Hvide
Class A Common Stock at the rate of 1.7544 shares of Hvide Class A Common Stock
for each Preferred Security (equivalent to a conversion price of $28.50 per
share of Hvide Class A Common Stock), subject to adjustment in certain
circumstances. See "Description of the Preferred Securities--Conversion Rights"
and "Description of Hvide Capital Stock." The last reported sale price of Hvide
Class A Common Stock, which is traded under the symbol "HMAR" on The Nasdaq
National Market, on October 14, 1997 was $ 35.25 per share. (continued on next
page)
See "Risk Factors" beginning on page 13 for a discussion of certain factors to
be considered in connection with an investment in the Preferred Securities and
the Class A Common Stock.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
3
<PAGE>
(continued from cover page)
In order to maintain the eligibility of Hvide to operate vessels in the
U.S. domestic trade, 75% of the outstanding capital stock and voting power of
Hvide is required to be held by U.S. citizens. As a result of this requirement,
any non-citizen holder of the Preferred Securities or the Debentures will, to
the extent the conversion thereof into shares of Hvide Class A Common Stock
would cause more than 25% of Hvide's outstanding Common Stock (as defined
herein) to be held by non-citizens, be unable to convert its Preferred
Securities or Debentures into shares of Hvide Class A Common Stock and will be
required to sell its Preferred Securities or Debentures to U.S. citizens in
order to realize the economic benefits, if any, of conversion. See "Risk
Factors--Restriction on Foreign Ownership of Common Stock; Possible Inability to
Convert Preferred Securities and Debentures."
So long as Hvide is not in default in the payment of interest on the
Debentures and no other event of default under the Debentures is continuing,
Hvide has the right to defer payment of interest on the Debentures at any time
or from time to time for a period not exceeding 20 consecutive quarters with
respect to each deferral period (each, an "Extension Period"), provided that no
Extension Period may extend beyond the stated maturity of the Debentures. Upon
the termination of any such Extension Period and the payment of all amounts then
due on any Interest Payment Date (as defined herein), Hvide may elect to begin a
new Extension Period subject to the requirements set forth herein. If interest
payments on the Debentures are so deferred, Distributions on the Preferred
Securities will also be deferred and Hvide will not be permitted, subject to
certain exceptions set forth herein, to declare or pay cash distributions with
respect to Hvide's capital stock or debt securities that rank pari passu with or
junior to the Debentures.
During an Extension Period, interest on the Debentures will continue to
accrue (and the amount of Distributions to which holders of the Preferred
Securities are entitled will accumulate at the stated rate per annum, compounded
quarterly) and holders of Preferred Securities will be required to accrue
interest income for United States federal income tax purposes. See "Description
of the Debentures--Option to Extend Interest Payment Period" and "Certain
Federal Income Tax Consequences--Original Issue
Discount."
Except as provided below, the Preferred Securities may not be redeemed
by the Issuer prior to July 2, 2000. The Preferred Securities are subject to
mandatory redemption, in whole or in part, on or after such date, at redemption
prices set forth herein, upon any permitted redemption of Debentures by Hvide.
See "Description of the Preferred Securities--Optional Redemption." In addition,
the Preferred Securities are subject to mandatory redemption upon the repayment
at maturity or as a result of acceleration of the Debentures. See "Description
of the Preferred Securities--Mandatory Redemption."
Under certain circumstances following the occurrence of a Special Event
(as defined herein), the Preferred Securities are also subject to (i) exchange,
at the option of the Issuer in the manner described herein, for Debentures (see
"Description of the Preferred Securities--Special Event Exchange or Redemption")
and (ii) redemption, in whole or in part, on or after July 2, 2000, if such
Special Event constitutes a Tax Event (as defined herein). At any time, Hvide
will have the right to terminate the Issuer and cause the Debentures to be
distributed to the holders of the Preferred Securities in liquidation of the
Issuer. See "Description of the Preferred Securities--Distribution of
Debentures."
4
<PAGE>
Hvide has, through the Guarantee, the Declaration, the Debentures and
the Indenture (each, as defined herein), taken together, fully, irrevocably and
unconditionally guaranteed all of the Issuer's obligations under the Preferred
Securities. See "Description of the Guarantee," "Hvide Capital Trust" and
"Description of the Debentures." The Guarantee of Hvide guarantees the payment
of Distributions and payments on liquidation or redemption of the Preferred
Securities, but only in each case to the extent of funds held by the Issuer, as
described herein (the "Guarantee"). See "Description of the Guarantee." If Hvide
does not make interest payments on the Debentures held by the Issuer, the Issuer
will have insufficient funds to pay Distributions on the Preferred Securities.
The Guarantee does not cover payment of Distributions when the Issuer does not
have sufficient funds to pay such Distributions. In such event, a holder of
Preferred Securities may institute a legal proceeding directly against Hvide to
enforce payment under the Debentures of such Distributions to such holder. The
obligations of Hvide under the Guarantee are subordinate and junior in right of
payment to all other liabilities of Hvide and rank pari passu with any guarantee
now or hereafter entered into by Hvide in respect of any preferred or preference
stock of any affiliate of Hvide. See "Description of the
Debentures--Subordination."
The Debentures are subordinate and junior in right of payment to all
Senior Debt (as defined herein) of Hvide. The terms of the Debentures place no
limitation on the amount of Senior Debt that may be incurred by Hvide or the
amount of indebtedness that may be incurred by its subsidiaries. As of June 30,
1997, Hvide had outstanding $38.8 million of Senior Debt. Hvide will have the
right from time to time on or after July 2, 2000 to redeem, in whole or in part,
the Debentures at the redemption prices set forth herein. See "Description of
the Debentures--Mandatory Redemption" and "--Optional Redemption."
In the event of the dissolution of the Issuer, after satisfaction of
the creditors of the Issuer as provided by applicable law, the holders of the
Preferred Securities will be entitled to receive a liquidation preference of $50
per Preferred Security plus accumulated and unpaid Distributions thereon to the
date of payment, which may be in the form of a distribution of such amount in
Debentures, subject to certain exceptions. See "Description of the Preferred
Securities--Liquidation Distribution Upon Dissolution."
5
<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 made, such information or representations must not be relied
upon as having been authorized. Neither the delivery of this Prospectus nor any
sale made hereunder shall under any circumstances create any implication that
there has been no change in the affairs of the Company or the Trust since the
date hereof or that the information contained herein is correct as of any time
subsequent to its date. 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 who it
is unlawful to make such offer or solicitation.
TABLE OF CONTENTS
Prospectus Summary......................................................7
Risk Factors...........................................................13
Incorporation of Certain Documents by Reference........................22
Forward-Looking Information............................................22
Hvide Capital Trust....................................................23
The Company............................................................25
Use of Proceeds........................................................25
Accounting Treatment...................................................25
Ratio of Earnings to Fixed Charges.....................................25
Description of the Preferred Securities................................26
Description of the Guarantee...........................................48
Description of the Debentures..........................................51
Relationship Among the Preferred Securities,
the Debentures and the Guarantee..............................61
Description of Certain Indebtedness....................................63
Description of Hvide Capital Stock.....................................65
Certain Federal Income Tax Consequences................................74
Selling Holders........................................................82
Plan of Distribution...................................................83
Experts................................................................84
Legal Matters..........................................................84
Available Information..................................................84
6
<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 and in the documents incorporated herein by reference.
THE COMPANY
Hvide (pronounced "vee-dah") provides marine support and transportation
services in the U.S. domestic trade and in selected international markets
principally to the energy and chemical industries. The Company is the third
largest operator of supply and crew boats in the U.S. Gulf of Mexico and, as a
result of a May 1997 acquisition, is one of the largest operators of offshore
energy support vessels in the Arabian Gulf. 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. In
addition, the Company has a 2.4% interest, and options to acquire up to an
additional 72.6% interest, in five double-hull petroleum product carriers
currently under construction for delivery during 1998 and 1999.
OFFERED SECURITIES
Preferred Securities................. 2,300,000 6 1/2% Trust Convertible
Preferred Securities of Hvide Capital
Trust, liquidation preference of $50 per
Preferred Security.
Common Stock......................... 4,035,120 shares of Class A Common Stock
of Hvide issuable upon conversion of the
Preferred Securities, and 141,760 shares
of Class A Common Stock of Hvide issued
in connection with an acquisition.
DESCRIPTION OF PREFERRED SECURITIES
Issuer............................... Hvide Capital Trust, a statutory business
trust created under the laws of the
State of Delaware.
Distributions........................ Distributions on the Preferred Securities
are cumulative from June 27, 1997, the
date of the original issuance of the
Preferred Securities, and are payable at
the annual rate of 6 1/2% of the
liquidation preference of $50 per
Preferred Security. Distributions are
made quarterly in arrears on January 1,
April 1, July 1 and October 1 commencing
on October 1, 1997 when and to the
extent that funds of the Issuer are
available therefor. The proceeds from
the Original Offering were invested in
the Debentures. Interest payment periods
on the Debentures are quarterly but may
be deferred from time to time by Hvide
for periods of up to 20 consecutive
quarters, so long as no Debenture Event
of Default (as defined herein) has
occurred and is continuing. The Issuer
will not make quarterly Distributions on
the Preferred Securities during the
period of any such Extension Period.
During any Extension Period, interest on
the
7
<PAGE>
Debentures will continue to accrue (and
the amount of Distributions to which
holders of the Preferred Securities are
entitled will accumulate at the stated
rate per annum set forth herein,
compounded quarterly) and holders of
Preferred Securities will be required to
accrue interest income for United States
federal income tax purposes. See
"Description of the Debentures--Option
to Extend Interest Payment Period" and
"Certain Federal Income Tax
Consequences--Original Issue Discount."
Distribution Deferral Provisions..... Hvide has the right to defer payment of
interest on the Debentures at any time
or from time to time for a period not
exceeding 20 consecutive quarters with
respect to each Extension Period,
provided that no Extension Period may
extend beyond the stated maturity of the
Debentures. Upon the termination of any
such Extension Period and the payment of
all amounts then due on any Interest
Payment Date, Hvide may elect to begin a
new Extension Period subject to the
requirements set forth herein. If
interest payments on the Debentures are
so deferred, Distributions on the
Preferred Securities will also be
deferred and Hvide will not be
permitted, subject to certain exceptions
set forth herein, to declare or pay any
cash distributions with respect to Hvide
capital stock or debt securities
(including guarantees of indebtedness
for borrowed money) that rank pari passu
with or junior to the Debentures. See
"Description of the Debentures--Option
to Extend Interest Payment Period" and
"Certain Federal Income Tax
Consequences--Original Issue Discount."
Liquidation Preference............... $50 per Preferred Security, and all
accumulated and unpaid Distributions.
Conversion into Hvide Class A
Common Stock....................... Each Preferred Security is convertible
beginning September 25, 1997 and prior
to the maturity date of the Debentures
or, in the case of Preferred Securities
called for redemption, prior to the
close of business on the Business Day
(as defined herein) prior to the
Redemption Date (the "Conversion
Expiration Date") at the option of the
holder into shares of Hvide Class A
Common Stock at the rate of 1.7544
shares of Hvide Class A Common Stock for
each Preferred Security (equivalent to a
conversion price of $28.50 per share of
Hvide Class A Common Stock), subject to
adjustment in certain circumstances. A
holder of Preferred Securities wishing
to exercise its conversion right shall
surrender any or all of such Preferred
Securities, together with an irrevocable
conversion notice, to the Trustee as the
paying, conversion and exchange agent
acting on behalf of the holders of
Preferred Securities (in such capacity,
the "Conversion Agent"), which shall
exchange the Preferred Securities for a
portion (equal to the aggregate
liquidation preference of the
8
<PAGE>
Preferred Securities being so converted)
of the Debentures held by the Issuer and
immediately convert such Debentures into
Hvide Class A Common Stock. Except
possibly to the extent attributable to
accumulated and unpaid interest on the
Debentures, a holder should not
recognize gain or loss upon the exchange
through the Conversion Agent of the
Preferred Securities for a proportionate
share of the Debentures, followed
immediately by the conversion of the
Debentures into Hvide Class A Common
Stock. See "Certain Federal Income Tax
Consequences--Conversion of Preferred
Securities Into Hvide Class A Common
Stock."
Limitation on Ability to Exercise
Conversion Rights.................. Inorder to maintain the eligibility of
Hvide to operate vessels in the U.S.
domestic trade, 75% of the outstanding
capital stock and voting power of Hvide
is required to be held by U.S. citizens.
As a result of this requirement, any
non-citizen holder of the Preferred
Securities or the Debentures will, to
the extent the conversion thereof into
shares of Hvide Class A Common Stock
would cause more than 25% of Hvide's
outstanding Common Stock to be held by
non-citizens, be unable to convert such
Preferred Securities or Debentures into
shares of Hvide Class A Common Stock and
will be required to sell its Preferred
Securities or Debentures to U.S.
citizens in order to realize the
economic benefits, if any, of
conversion. See "Risk
Factors--Restriction on Foreign
Ownership of Common Stock; Possible
Inability to Convert Preferred
Securities and Debentures."
Common Stock Voting Rights........... Hvide's outstanding capital stock consists
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.
See "Description of Hvide Capital
Stock."
Redemption........................... Except as provided below, the Preferred
Securities may not be redeemed by the
Issuer prior to July 2, 2000. If at any
time following the Conversion Expiration
Date, less than 5% of the Preferred
Securities remains outstanding, such
Preferred Securities shall be redeemable
at the option of the Issuer, in whole
but not in part, at a redemption price
of $50 per Preferred Security together
with accumulated and unpaid
Distributions thereon (whether or not
earned) through the date of redemption.
The Preferred Securities are subject to
mandatory redemption upon the repayment
at maturity or as a result of
acceleration of the Debentures. See
"Description of the Preferred
9
<PAGE>
Securities--Declaration Events of Default;
Notice" and "-- Mandatory Redemption."
Special Event Exchange or
Redemption......................... Upon the occurrence of a Tax Event or an
Investment Company Event, the Issuer
Trustees (each as defined herein) shall
direct the Conversion Agent to exchange
all outstanding Preferred Securities for
Debentures and to terminate the Trust,
provided that, in the case of a Tax
Event, the Issuer Trustees shall have
the right to direct that less than all
of the Preferred Securities be so
exchanged if and for so long as Hvide
shall have elected to pay Additional
Sums (as defined herein) such that the
amounts received by the holders of
Preferred Securities that remain
outstanding are not reduced thereby and
shall not have revoked any such election
or failed to make such payments. Upon
the occurrence of a Tax Event, the
Debentures may be redeemed by Hvide on
or after July 2, 2000 at 100% of the
principal amount thereof, plus accrued
and unpaid interest thereon. In the
event the Debentures are redeemed by
Hvide, the Preferred Securities will be
redeemed by the Issuer Trustees at $50
per Preferred Security plus accumulated
and unpaid Distributions thereon
(whether or not earned) through the date
of Redemption. See "Description of the
Preferred Securities--Special Event
Exchange or Redemption."
Distribution of Debentures........... At any time, Hvide has the right to
dissolve the Trust and, after
satisfaction of the liabilities of
creditors of the Trust as provided by
applicable law, cause the Debentures to
be distributed to the holders of the
Preferred Securities in liquidation of
the Trust. See "Description of the
Preferred Securities--Distribution of
Debentures."
Guarantee............................ Pursuant to the Guarantee, Hvide has
irrevocably agreed, on a subordinated
basis, to guarantee the payment in full
of (i) the Distributions payable by the
Issuer on the Preferred Securities, if
and to the extent the Issuer has funds
on hand available therefor, (ii) the
redemption price (including all
accumulated and unpaid Distributions) of
the Preferred Securities, to the extent
the Issuer has funds on hand available
therefor and (iii) payments on
liquidation with respect to the
Preferred Securities (unless the
Debentures are distributed to holders of
the Preferred Securities), to the extent
that there are assets of the Issuer
available for distribution to holders of
the Preferred Securities. A holder of
Preferred Securities may enforce Hvide's
obligations under the Guarantee directly
against Hvide, and Hvide waives any
right to require that an action be
brought against the Issuer or any other
person before proceeding against Hvide.
The Guarantee will constitute an
unsecured obligation of Hvide and will
rank subordinate and junior in right of
payment to all liabilities of Hvide and
pari passu with any guarantee now or
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hereinafter entered into by Hvide in
respect of any preferred or preference
stock of any affiliate of Hvide. See
"Risk Factors--Ranking of Subordinate
Obligations Under the Guarantee and the
Debentures" and "--Structural
Subordination" and "Description of the
Guarantee."
Voting Rights........................ Holders of Preferred Securities generally
have limited voting rights relating only
to the modification of the Preferred
Securities. Holders of Preferred
Securities are not entitled to vote to
appoint, remove or replace the Issuer
Trustees, which voting rights are vested
exclusively in Hvide as holder of the
Common Securities. The Issuer Trustees
and Hvide may amend the Declaration
without the consent of holders of
Preferred Securities to ensure that the
Issuer will be classified for United
States federal income tax purposes as a
grantor trust even if such action
adversely affects the interests of such
holders. See "Description of the
Preferred Securities--Voting Rights;
Amendment of the Declaration."
Debentures........................... The Debentures mature June 15, 2012 and
bear interest at the rate of 6 1/2% per
annum payable quarterly in arrears.
Hvide has the right from time to time to
select an interest payment period or
periods longer than one quarter (during
which period or periods interest will
compound quarterly), provided that no
such deferral of interest payments will
exceed 20 consecutive quarters and
provided further that no such deferral
of interest payments may extend beyond
the stated maturity of the Debentures.
Accordingly, Distribution payments on
the Preferred Securities may not be
deferred beyond the stated maturity of
the Debentures. If Hvide defers interest
payments longer than one quarter,
subject to certain exceptions, it will
be prohibited from paying dividends on
any of its capital stock and making
certain other restricted payments until
quarterly interest payments are resumed
and all accumulated and unpaid interest
on the Debentures is brought current.
Hvide has the right to make partial
payments of such interest during a
deferral of interest payments. The
Debentures are convertible into shares
of Hvide Class A Common Stock at the
option of the holders thereof at a
conversion rate of 1.7544 shares of
Hvide Class A Common Stock for each $50
in principal amount of Debentures
(equivalent to a conversion price of
$28.50 per share of Hvide Class A Common
Stock) subject to certain adjustments
set forth herein. The Issuer has
covenanted not to convert Debentures
except pursuant to a notice of
conversion delivered to the Conversion
Agent by a holder of Preferred
Securities.
In addition, on and after July 2, 2000,
the Debentures are redeemable at the
option of Hvide at any time, in whole or
in part, at the redemption prices set
forth herein, together with accrued and
unpaid interest to the date fixed for
redemption.
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See "Description of the
Debentures--Optional Redemption." The
Debentures are also redeemable, in whole
or in part, upon the occurrence and
continuation of a Tax Event. See
"Description of the Preferred
Securities--Special Event Exchange or
Redemption."
The payment of the principal of and
interest on the Debentures is
subordinated in right of payment to all
Senior Debt of Hvide. As of June 30,
1997, Hvide had outstanding $38.8
million of Senior Debt. See "Risk
Factors--Ranking of Subordinate
Obligations Under the Guarantee and the
Debentures" and "--Structural
Subordination." While the Preferred
Securities are outstanding, the Issuer
will not have the right to amend the
Indenture (as defined herein) or the
terms of the Debentures in a manner that
adversely affects the holders of the
Preferred Securities or to waive a
Debenture Event of Default without the
consent of holders of at least a
majority in aggregate liquidation
preference of the Preferred Securities
and, in certain cases, the Common
Securities then outstanding. See
"Description of the
Debentures--Modification of Indenture."
Trading.............................. The Preferred Securities are traded in the
PORTAL market. The Hvide Class A Common
Stock is traded on the Nasdaq National
Market under the symbol "HMAR."
Risk Factors......................... Prospective investors should carefully
consider certain risk factors relating
to an investment in the Offered
Securities. See "Risk Factors."
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RISK FACTORS
Prospective purchasers of the Preferred Securities or Hvide Class A
Common Stock should carefully review the information contained elsewhere in this
Prospectus and should particularly consider the following matters.
Ranking of Subordinate Obligations Under the Guarantee and the Debentures
The obligations of Hvide under the Guarantee issued by Hvide for the
benefit of the holders of Preferred Securities are unsecured and rank
subordinate and junior in right of payment to all other liabilities of Hvide and
pari passu with any guarantee now or hereafter entered into by Hvide in respect
of any preferred or preference stock of any affiliate of Hvide. The obligations
of Hvide under the Debentures are subordinate and junior in right of payment to
all present and future Senior Debt. As of June 30, 1997, Hvide had outstanding
$38.8 million of Senior Debt (excluding accounts payable and accrued expenses,
deferred income taxes and other liabilities). The ability of the Issuer to pay
amounts due on the Preferred Securities is solely dependent upon Hvide making
payments on the Debentures as and when required. Neither the Indenture, the
Guarantee nor the Trust Agreement places any limitation on the amount of secured
or unsecured debt, including Senior Debt, that may be incurred by Hvide and its
subsidiaries. See "Description of the Guarantee--Status of the Guarantee" and
"Description of the Debentures--Subordination."
Structural Subordination
The Debentures are obligations of Hvide exclusively. Since a
substantial portion of Hvide's operations are conducted through subsidiaries, a
significant portion of Hvide's cash flow and, consequently, its ability to
service debt, including the Debentures, is dependent upon the earnings of its
subsidiaries and the transfer of funds by those subsidiaries to Hvide in the
form of dividends or other transfers, supplemented with borrowings. The ability
of these subsidiaries to pay dividends to Hvide in the future is subject to
restrictions contained in indentures and other financing agreements by which
such subsidiaries are bound. See "--Restrictive Covenants Under Hvide Credit
Facility."
In addition, creditors of Hvide's subsidiaries would be entitled to a
claim on the assets of such subsidiaries prior to any claims by Hvide.
Consequently, in the event of a liquidation or reorganization of any subsidiary,
creditors of such subsidiary are likely to be paid in full before any
distribution is made to Hvide, except to the extent that Hvide itself is
recognized as a creditor of such subsidiary, in which case the claims of Hvide
would still be subordinate to any security interest in the assets of such
subsidiary and any indebtedness of such subsidiary senior to that held by Hvide.
As of June 30, 1997, the aggregate indebtedness (excluding accounts payable and
accrued expenses, deferred income taxes and other liabilities) of the
consolidated subsidiaries of Hvide was approximately $38.8 million. See
"Description of the Preferred Securities--Distributions" and "Description of the
Debentures--Option to Extend Interest Payment Period."
Option to Extend Interest Payment Period; Tax Consequences; Trading Price
So long as there is no continuing event of default under the
Debentures, Hvide has the right under the Indenture to defer the payment of
interest on the Debentures at any time or from time to time for a period not
exceeding 20 consecutive quarters with respect to each Extension Period,
provided that no
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Extension Period may extend beyond the stated maturity of the Debentures. Upon
the termination of any Extension Period and the payment of all amounts then due,
Hvide may select a new Extension Period and terminate the payments of all
amounts then due, subject to the requirements described herein. As a consequence
of any such deferral, quarterly Distributions on the Preferred Securities by the
Issuer will be deferred (and the amount of Distributions to which holders of the
Preferred Securities are entitled will accumulate additional Distributions)
during any such Extension Period.
During any Extension Period, holders of Preferred Securities will
continue to accrue income (in the form of original issue discount) in respect of
their pro rata share of the deferred interest allocable to the Debentures held
by the Issuer for United States federal income tax purposes. As a result, a
holder of Preferred Securities will include such income in gross income for
United States federal income tax purposes in advance of the receipt of cash, and
will not receive the cash related to such income from the Issuer if the holder
disposes of the Preferred Securities prior to the record date for the payment of
Distributions. See "Certain Federal Income Tax Consequences--Original Issue
Discount." Moreover, if a holder of Preferred Securities converts its Preferred
Securities into Hvide Class A Common Stock during an Extension Period, the
holder will not receive any cash related to the deferred distribution. See
"Description of the Preferred Securities--Distributions."
Although Hvide has no current intention of exercising its right to
defer payments of interest by extending the interest payment period on the
Debentures, should Hvide elect to exercise such right in the future, the market
price of the Preferred Securities is likely to be adversely affected. A holder
that disposes of its Preferred Securities during an Extension Period, therefore,
might not receive the same return on its investment as a holder that continues
to hold its Preferred Securities. In addition, as a result of the existence of
Hvide's right to defer interest payments, the market price of the Preferred
Securities (which represent preferred undivided beneficial interests in the
Debentures) may be more volatile than the market prices of other securities on
which original issue discount accrues that are not subject to such deferrals.
Special Event Exchange or Redemption
Upon certain circumstances following the occurrence and continuation of
a Special Event (as defined herein), the Preferred Securities are also subject
to (i) exchange in whole or in part, in the manner described herein, for the
Debentures and termination of the Trust or (ii) redemption in whole or in part,
on or after July 2, 2000 in the case of a Tax Event. See "Description of the
Preferred Securities--Special Event Exchange or Redemption."
There can be no assurance as to the market prices for Preferred
Securities or Debentures that may be distributed in exchange for Preferred
Securities if a liquidation of the Issuer occurs or if the Preferred Securities
are exchanged for Debentures in connection with a Special Event. Accordingly,
the Preferred Securities that an investor may purchase or the Debentures that a
holder of Preferred Securities may receive on liquidation of the Issuer may
trade at a discount to the price that the investor paid to purchase the
Preferred Securities offered hereby. Because holders of Preferred Securities may
receive Debentures on dissolution of the Issuer or if the Preferred Securities
are exchanged for Debentures in connection with a Special Event, prospective
purchasers of Preferred Securities are also making an investment decision with
respect to the Debentures and should carefully review all the information
regarding the Debentures contained herein. See "Description of the Preferred
Securities--Special Event Exchange or Redemption" and "Description of the
Debentures--General."
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<PAGE>
Limited Rights under the Guarantee
Hvide's guarantee of payments of Distributions on the Preferred
Securities, of payment of the redemption price of any Preferred Securities
called for redemption, and of payment of the liquidation preference of the
Preferred Securities upon liquidation of the Trust is limited to the extent that
the Trust has funds on hand available for such payment and, in the case of
liquidation, to the assets of the Trust available for distribution.
If Hvide were to default on its obligation to pay amounts payable under
the Debentures, the Issuer would lack funds for the payment of Distribution or
amounts payable on redemption of the Preferred Securities or otherwise, and, in
such event, holders of the Preferred Securities would not be able to rely upon
the Guarantee for payment of such amount. Instead, in the event a Debenture
Event of Default shall have occurred and be continuing, a holder of Preferred
Securities would be required to rely on its enforcement by the Trustee of its
rights as registered holder of the Debenture against Hvide pursuant to the terms
of the Indenture and the Debentures. If, however, such event is attributable to
the failure of Hvide to pay interest on or principal of the Debentures on the
payment date on which such payment is due and payable, then a holder of
Preferred Securities may directly institute a proceeding against Hvide for
enforcement of payment to such holder of the interest on or principal of such
Debentures having a principal amount equal to the aggregate liquidation
preference of the Preferred Securities of such holder (a "Direct Action"). In
connection with such Direct Action, Hvide will be subrogated to the rights of
such holder of Preferred Securities under the Declaration to the extent of any
payment made by Hvide to such holder of Preferred Securities in such Direct
Action. Except as set forth herein, holders of Preferred Securities will not be
able to exercise directly any other remedy available to the holders of
Debentures or assert directly any other rights in respect of the Debentures. See
"Description of the Preferred Securities--Enforcement of Certain Rights by
Holders of Preferred Securities," "Description of the Guarantee" and
"Description of the Debentures--Debenture Events of Default." The Declaration
provides that each holder of Preferred Securities by acceptance thereof agrees
to the provisions of the Guarantee and the Indenture.
Limited Voting Rights
Holders of the Preferred Securities have limited voting rights. The
voting rights that they have are primarily limited to directing the activities
of the Trustee as the holder of the Debentures. Holders of the Preferred
Securities are not entitled to vote to appoint, remove or replace the Issuer
Trustee, which voting rights are vested exclusively in Hvide. The Issuer
Trustees and Hvide may amend the Declaration without the consent of holders of
Preferred Securities to ensure that the Issuer will be classified for United
States federal income tax purposes as a grantor trust even if such action
adversely affects the interests of such holders. See "Description of the
Preferred Securities--Voting Rights; Amendment of the Declaration."
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<PAGE>
Proposed Tax Legislation
As a part of President Clinton's Fiscal 1998 Budget Proposal, the
Treasury Department proposed legislation that, among other things, would have
treated as equity for United States federal income tax purposes certain debt
instruments that are not shown as indebtedness on the consolidated balance sheet
of the issuer. Although this proposal was not included in the tax legislation
ultimately enacted, there can be no assurance that such a proposal will not be
enacted in the future, that such future legislation would not have a retroactive
effective date and that such future legislation would not prevent Hvide from
deducting interest on the Debentures. Such an event would constitute a Tax Event
and would permit the Issuer to exchange the Preferred Securities, in whole or in
part, for the Debentures or redeem, in whole or in part, the Preferred
Securities and Debentures.
Potential Reduction of Payments to Non-United States Holders for United States
Tax Withholding Requirements
In the event that any United States taxes, duties or other governmental
charges are required to be deducted or withheld from any payments by Hvide to
holders of Preferred Securities that are Non-U.S. Persons, neither Hvide nor the
Issuer will be required to pay any additional amounts to such holders and,
therefore, any such taxes, duties or charges will reduce the amounts received by
such holders. See "Certain Federal Income Tax Consequences--Certain United
States Tax Consequences to Non-United States Holders."
Absence of Public Market for the Preferred Securities
Although the Preferred Securities are currently traded in the PORTAL
market, there can be no assurance that such market will continue to be
maintained. If an active market for the Preferred Securities fails to be
sustained, the trading price of the Preferred Securities could be adversely
affected.
Trading Price of Preferred Securities
The Preferred Securities may trade at a price that does not fully
reflect the value of accrued but unpaid interest with respect to the underlying
Debentures. A holder disposing of Preferred Securities between record dates for
payments of distributions thereon will be required for United States federal
income tax purposes to include accrued but unpaid interest on the Debentures
through the date of disposition in income as ordinary income (i.e., original
issue discount), and to add such amount to the adjusted tax basis in the
holder's Preferred Securities. To the extent the selling price is less than the
holder's adjusted tax basis (which will include, in the form of original issue
discount, all accrued but unpaid interest), a holder will recognize a capital
loss. Subject to certain limited exceptions, capital losses cannot be applied to
offset ordinary income for United States federal income tax purposes. See
"Certain Federal Income Tax Consequences--Sales of Preferred Securities."
Restrictive Covenants under Hvide Credit Facility
The terms of the Company's Credit Facility (as defined herein) (i)
require the Company to meet certain financial tests, including tests requiring
the maintenance of minimum leverage ratios, debt service coverage ratios, and
indebtedness to tangible net worth ratios; (ii) limit the creation or incurrence
of certain liens; (iii) limit the incurrence of additional indebtedness; (iv)
restrict the Company from making
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certain investments; (v) restrict certain payments, including dividends, with
respect to shares of any class of capital stock; (vi) restrict modification of
the terms of the Preferred Securities (as defined herein), and in certain
circumstances the repayment, redemption, or repurchase of the Preferred
Securities; and (vii) limit certain corporate acts of the Company, such as
making certain dispositions of assets, and entering into certain types of
business transactions, including certain mergers and acquisitions. Such
provisions could adversely affect the Company's ability to pursue its strategy
of growth through acquisitions. Borrowings under the Credit Facility constitute
Senior Debt for purposes of the Indenture.
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
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
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recent years, oil and natural gas prices, and therefore the level of offshore
drilling and exploration activity, have been extremely volatile. 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. 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 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, the Oil Pollution Act of 1990 ("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.
Mandated Removal of Vessels from Jones Act Trade
OPA 90 establishes a phase-out schedule, depending upon vessel size and
age, for single-hull vessels carrying crude oil and petroleum products which, in
the case of the Company's petroleum products carrier (Seabulk Challenger) and
five chemical carriers (HMI Astrachem, Seabulk Magnachem, HMI Dynachem, HMI
Petrochem and Seabulk America), are the years 2003, 2000, 2007, 2011, 2011, and
2015, respectively; and in the case of its fuel barges is the year 2015. 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 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.
Risks of International Operations
The Company derives revenues from international operations. The Company
currently operates 41 vessels in international waters, including the Arabian
Gulf and the waters offshore Southeast Asia, Egypt and Cameroon. Risks
associated with operating in international markets include vessel seizure,
foreign exchange restrictions and currency fluctuations, foreign taxation,
political instability, foreign and domestic monetary and tax policies,
expropriation, nationalization, nullification, modification or renegotiation of
contracts, war and civil disturbances or other risks that may limit or disrupt
markets.
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Additionally, the ability of the Company to compete in the international marine
support and transportation market may be adversely affected by foreign
government regulations that favor or require the awarding of such contracts to
local persons, or by regulations requiring foreign persons to employ citizens
of, or purchase supplies from, a particular jurisdiction. Furthermore, the
Company's foreign subsidiaries may face governmentally imposed restrictions from
time to time on their ability to transfer funds to the Company. No predictions
can be made as to what foreign governmental regulations may be applicable to the
Company's operations in the future.
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. 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 of Common Stock; Possible Inability to Convert
Preferred Securities and Debentures
In order to maintain the eligibility of the Company to operate vessels
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. Although the
Company's Articles of Incorporation contain provisions limiting non-citizen
ownership of its capital stock (see "Description of Hvide 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. See "Description of Hvide Capital
Stock."
As a result of this limitation upon the non-citizen ownership of the
Company's outstanding capital stock, any non-citizen holder of the Preferred
Securities will, to the extent such conversion would cause more than 25% of the
Company's outstanding Common Stock held by non-citizens, be unable to convert
its Preferred Securities or Debentures into shares of Hvide Class A Common Stock
and will be required to sell its Preferred Securities or Debentures to U.S.
citizens in order to realize the economic benefits, if any, of conversion.
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Risks of Acquisition Strategy
As the marine support and transportation market continues to
consolidate, a key component of the Company's business strategy is to pursue
selected acquisitions of complementary assets and businesses. Since 1994, the
Company has completed a number of significant acquisitions. Possible future
acquisitions may be for purchase prices significantly higher than those paid for
recent and pending acquisitions. Certain risks are inherent in an acquisition
strategy, such as increasing leverage and debt service requirements, which could
adversely affect the Company's operating results. The success of any completed
acquisition will depend in part on the Company's ability to integrate
effectively the acquired business into the Company. The process of integrating
such acquired businesses may involve unforeseen difficulties and may require a
disproportionate amount of management's attention and the Company's financial
and other resources. No assurance can be given that the Company will be able to
continue to identify additional suitable acquisition opportunities, negotiate
acceptable terms, obtain financing for acquisitions on satisfactory terms or
successfully acquire identified targets. The Company's failure to achieve
consolidation savings, to incorporate the acquired businesses and assets into
its existing operations successfully or to minimize any unforeseen operational
difficulties could have a material adverse effect on the Company.
Legal Proceedings
The Company's chemical carrier Seabulk America is the subject of a
pending legal proceeding which, if determined adversely to the Company, could
have a material adverse effect 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.
Possible Volatility of Stock Price
There may be significant volatility in the market price for the
Company's Class A Common Stock. Quarterly operating results of the Company,
changes in general conditions in the economy, the financial markets, or the
marine support and transportation services industry, or other developments
affecting the Company or its competitors, could cause the market price of the
Company's Class A Common Stock to fluctuate substantially. In addition, in
recent years, the stock market and, in particular, the marine support and
transportation services industry segment, has experienced significant price and
volume fluctuations. This volatility has affected the market prices of
securities issued by many companies for reasons unrelated to their operating
performance. In addition, the Company's operating results in future periods may
be below the expectations of securities analysts and investors. In such event,
the price of the Class A Common Stock would likely decline, perhaps
substantially.
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,
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of which each share is entitled to ten votes with respect to such matters. J.
Erik Hvide, the Company's Chairman, together with certain trusts of which he is
the trustee (the "Hvide Trusts"), beneficially own 10,000 shares of Class A
Common Stock and 1,496,466 shares of Class B Common Stock, and a group of
investors (the "Investor Group"), which in September 1994 purchased shares of
Common Stock and certain of the Company's debt securities, beneficially owns
874,668 shares of Class A Common Stock and 1,409,999 shares of Class B Common
Stock. Mr. Hvide (together with the Hvide Trusts) and the Investor Group
therefore own shares that represent 9.9% and 15.0%, respectively, of the
outstanding shares of Common Stock and each owns shares representing 36.2% of
the voting power of all Common Stock. Accordingly, Mr. Hvide and the Investor
Group, acting together, are able to 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, the Hvide Family (as defined herein) and the Investor
Group have entered into an agreement that currently gives them the right to
nominate eight and up to two persons, respectively, to the Company's 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 if held by persons other than the Hvide Family and members
of the Investor Group. See "Description of Hvide Capital Stock--Certain
Provisions of Articles of Incorporation and Bylaws." 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 Hvide 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, or the perception that such sales may occur, could have an adverse
effect on the market price of the stock. All of the shares of Class B Common
Stock owned by Mr. Hvide, the Hvide Trusts, and the Investor Group are currently
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. The Company has granted the Investor Group
certain registration rights under the Securities Act with respect to the Common
Stock owned by them. See "Description of Hvide Capital Stock--Shareholders
Agreement." Certain directors, officers, and employees of the Company hold
options to purchase 827,325 shares of Class A Common Stock. Moreover, the
Company may issue shares of Common Stock in connection with future acquisitions.
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<PAGE>
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed with the Securities and Exchange
Commission (the "Commission") are incorporated by reference into this
Prospectus:
(i) the Company's Annual Report on Form 10-K for the year ended
December 31, 1996;
(ii) the Company's Quarterly Report on Form 10-Q for the quarterly
period ended March 31, 1997;
(iii) the Company's Current Report on Form 8-K filed June 9, 1997 and
amended by Form 8- K/A dated June 26, 1997;
(iv) the description of the Company's Common Stock contained in the
Company's registration statement on Form 8-A filed under the Exchange Act and
any amendments or reports filed for the purpose of updating such description;
and
(v) the Company's Quarterly Report on Form 10-Q for the quarterly
period ended June 30, 1997.
All documents filed by the Company pursuant to Section 13(a), 13(c), 14
or 15(d) of the Exchange Act subsequent to the date of this Prospectus and prior
to the termination of the offering of the Offered Securities shall be deemed to
be incorporated by reference into this Prospectus and to be a part hereof from
the date of filing of such documents. See "Available Information."
Any statement contained in a document incorporated by reference herein
shall be deemed to be modified or superseded for purposes of this Prospectus to
the extent that a statement contained in this Prospectus, or in any other
subsequently filed document that is also incorporated herein by reference,
modifies or supersedes such statement. Any such statement so modified or
superseded shall not be deemed to constitute a part of this Prospectus except as
so modified or superseded.
The Company hereby undertakes to provide without charge to each person
to whom a copy of this Prospectus has been delivered, on the written or oral
request of any such person, a copy of any or all of the documents referred to
above which have been or may be incorporated into this Prospectus by reference,
other than exhibits to such documents. Requests for such copies should be
directed to Investor Relations, Hvide Marine Incorporated, 2200 Eller Drive,
Fort Lauderdale, Florida 33316, telephone
number (954) 523-2200.
FORWARD-LOOKING INFORMATION
Certain statements and information discussed under "Risk Factors," and
elsewhere in this Prospectus and the documents incorporated herein by reference
constitute forward-looking statements within the meaning of the Federal Private
Securities Litigation Reform Act of 1995. Such statements are subject to certain
risks, uncertainties, or assumptions. Should one or more of these risks or
uncertainties materialize, or should underlying assumptions prove incorrect,
actual results may vary materially from those anticipated, estimated, or
projected. Among the key factors that may have a direct bearing on the Company's
results and financial condition are: (i) competitive factors in the marine
support and transportation industry in which the Company competes, (ii)
fluctuations in oil and gas prices, (iii)
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<PAGE>
environmental liabilities to which the Company may become subject in the future
which are not covered by an indemnity or insurance, (iv) the impact of current
and future laws and governmental regulations (particularly coastwise and
environmental laws and regulations) affecting the marine support and
transportation industry in general and the Company's operations in particular,
(v) risks relating to the Company's high leverage position and potential
inability to service its debt, (vi) risks related to the mandated removal of the
Company's vessels from the Jones Act trade, (vii) risks related to the Company's
reliance on significant customers, and (viii) risks related to the outcome of
pending legal proceedings. Such statements speak only as of the date of the
document in which they are made. The Company expressly disclaims any obligation
or undertaking to release publicly any updates or revisions to any such
statements to reflect any change in its expectations with respect thereto or any
change in events, conditions, or circumstances on which any such statement is
based.
HVIDE CAPITAL TRUST
Hvide Capital Trust is a statutory business trust formed under Delaware
law pursuant to (i) a declaration of trust (the "Declaration") executed by
Hvide, as sponsor of the Trust, and the trustees of the Issuer (the "Issuer
Trustees") and (ii) the filing of a certificate of trust with the Secretary of
State of the State of Delaware. The Company holds Common Securities in an
aggregate liquidation amount equal to 3.0% of the total capital of the Issuer.
The Common Securities rank pari passu, and payment is made thereon pro rata,
with the Preferred Securities, except that, upon the occurrence and during the
continuance of an event of default under the Declaration, the rights of the
holders of the Common Securities to payment in respect of distributions and
payments upon liquidation, redemption and otherwise will be subordinated to the
rights of the holders of the Preferred Securities. The assets of the Trust
consist principally of the Debentures. The Issuer exists for the exclusive
purpose of (i) issuing the Preferred Securities and Common Securities
representing undivided beneficial interests in the assets of the Trust, (ii)
investing the gross proceeds of the Preferred Securities and Common Securities
in the Debentures and (iii) engaging in only those other activities necessary or
incidental thereto.
Pursuant to the Declaration, the number of Issuer Trustees currently is
five. Three of the Issuer Trustees (the "Company Trustees") are individuals who
are employees or officers of or who are affiliated with Hvide. The fourth Issuer
Trustee is a financial institution that is unaffiliated with Hvide (the
"Trustee"). The fifth Issuer Trustee is an entity that maintains its principal
place of business in the State of Delaware (the "Delaware Trustee"). Currently,
The Bank of New York, a New York banking corporation, is the Trustee, and its
affiliate, The Bank of New York (Delaware), a Delaware banking corporation, is
the Delaware Trustee until, in each case, removed or replaced by the Company
Trustees. The Bank of New York also acts as indenture trustee under the
Guarantee (the "Guarantee Trustee") and under the Indenture (the "Indenture
Trustee"). See "Description of the Guarantee" and "Description of the Preferred
Securities."
The Trustee holds title to the Debentures for the benefit of the
holders of the Preferred Securities and has the power to exercise all rights,
powers and privileges under the Indenture as the holder of the Debentures. In
addition, the Trustee maintains exclusive control of a segregated non-interest
bearing bank account (the "Property Account") to hold all payments made in
respect of the Debentures for the benefit of the holders of Preferred
Securities. Hvide, as the direct or indirect holder of all of the Common
Securities, has the right to appoint, remove or replace any of the Issuer
Trustees and to increase or decrease the number of Issuer Trustees, provided
that the number of Issuer Trustees shall be at least
23
<PAGE>
three, the majority of which shall be Company Trustees. Hvide paid all fees
and expenses related to the Trust and the Original Offering. See "Description
of the Debentures."
The rights of the holders of the Preferred Securities, including
economic rights, rights to information and voting rights, if any, are as set
forth in the Declaration and the Delaware Business Trust Act, as amended (the
"Trust Act"). See "Description of the Preferred Securities." The Declaration,
the Indenture and the Guarantee also incorporate by reference the terms of the
Trust Indenture Act of 1939, as amended (the "Trust Indenture Act"). It is
expected that, at the time the registration statement of which this Prospectus
is part becomes effective, the Declaration, the Indenture and the Guarantee will
be qualified under the Trust Indenture Act. The Trustee will act as Indenture
Trustee for the Debentures under the Declaration for purposes of complying with
the Trust Indenture Act.
The place of business and telephone number of the Trust are the
principal executive offices and telephone number of Hvide. See "The Company."
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<PAGE>
THE COMPANY
Hvide (pronounced "vee-dah") provides marine support and transportation
services in the U.S. domestic trade and in selected international markets
principally to the energy and chemical industries. The Company is the third
largest operator of supply and crew boats in the U.S. Gulf of Mexico and, as a
result of a May 1997 acquisition, is one of the largest operators of offshore
energy support vessels in the Arabian Gulf. 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. In
addition, the Company has a 2.4% interest, and options to acquire up to an
additional 72.6% interest, in five double-hull petroleum product carriers
currently under construction for delivery during 1998 and 1999.
Recent Developments. In August 1997 the Company entered into a letter of intent
to acquire all of the outstanding stock of Bay Transportation Corporation ("Bay
Transportation"). Bay Transportation is the primary provider of harbor towing
services in the Port of Tampa and also charters tugs to other operators in the
Ports of San Francisco and Long Beach, California. Its 14-vessel fleet, which
includes six tractor tugs, will increase to 30 the number of tugs operated by
the Company. Consideration payable by the Company in connection with the
acquisition, which the Company anticipates will be completed in October 1997, is
expected to include cash of $41 million and the assumption of approximately $15
million of debt.
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 Selling Holders will receive all of the proceeds from any sale of
the Offered Securities. Neither the Company nor the Trust will receive any
proceeds therefrom.
ACCOUNTING TREATMENT
The financial statements of the Issuer are included in the consolidated
financial statements of Hvide with the Preferred Securities shown on such
consolidated financial statements as "Company-obligated mandatory redeemable
preferred securities issued by a consolidated subsidiary." The sole assets of
the Issuer will be the 6 1/2% Convertible Subordinated Debentures due 2012.
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth the Company's ratio of earnings to fixed
charges on a historical basis for each of the five fiscal years in the period
ended December 31, 1996 and for the six months ended June 30, 1996 and 1997.
<TABLE>
<CAPTION>
Six Months
Year Ended December 31, Ended June 30,
1992 1993 1994 1995 1996 1996 1997
<S> <C> <C> <C> <C> <C> <C> <C>
Ratio of Earnings
to Fixed Charges (1)........................ 1.04 1.74 1.02 --(2) 1.67 1.00 4.23
</TABLE>
25
<PAGE>
(1) The ratio of earnings to fixed charges is computed by dividing the
Company's pre tax income from continuing operations adjusted for fixed
charges less preferred stock dividends and minority interest in the
income or loss of majority owned subsidiaries, divided by fixed
charges. Fixed charges include interest, amortization of debt expense
and discount and preferred stock dividends.
(2) Earnings were not able to cover fixed charges by $499,000 for the year
ended December 31, 1995.
26
<PAGE>
DESCRIPTION OF THE PREFERRED SECURITIES
This summary of certain provisions of the Preferred Securities and the
Declaration does not purport to be complete and is subject to, and is qualified
in its entirety by reference to, all the provisions of the Declaration (a copy
of which has been filed as an exhibit to the registration statement of which
this Prospectus is part), the Trust Act and the Trust Indenture Act which is
incorporated by reference in the Declaration. Wherever particular defined terms
of the Declaration are referred to herein, such defined terms are incorporated
herein by reference.
General
Pursuant to the terms of the Declaration, the Issuer Trustees, on
behalf of the Issuer, issued the Preferred Securities and the Common Securities.
The Preferred Securities represent preferred undivided beneficial interests in
the assets of the Issuer and the Common Securities represent common undivided
beneficial interests in the assets of the Issuer. All of the Common Securities
are owned by Hvide. The Preferred Securities rank pari passu, and payments are
made thereon pro rata, with the Common Securities except as described under
"--Subordination of Common Securities." Legal title to the Debentures are held
by the Trustee in trust for the benefit of the holders of the Preferred
Securities and Common Securities. The Declaration does not permit the issuance
by the Issuer of any securities other than the Preferred Securities and the
Common Securities or the incurrence of any indebtedness by the Issuer. The
payment of Distributions out of money held by the Issuer, and payments upon
redemption of the Preferred Securities or liquidation of the Issuer, are
guaranteed by Hvide to the extent described under "Description of the
Guarantee." The Guarantee is held by The Bank of New York, as the Guarantee
Trustee, for the benefit of the holders of the Preferred Securities. The
Guarantee does not cover payment of Distributions when the Issuer does not have
sufficient available funds to pay such Distributions. The remedy of a holder of
Preferred Securities in such an event is as described herein in "--Voting
Rights; Amendment of the Declaration."
Distributions
Distributions on the Preferred Securities are payable at the annual
rate of 6 1/2% of the liquidation preference of $50 per Preferred Security.
Distributions will accumulate from the date of the original issuance of the
Preferred Securities and will be payable quarterly in arrears on January 1,
April 1, July 1 and October 1 of each year on the applicable record date,
commencing October 1, 1997 when, as and if available for payment by the Trustee,
except as otherwise described below. The amount of Distributions payable for any
period will be computed on the basis of a 360-day year of twelve 30-day months.
In the event that any date on which Distributions are payable on the Preferred
Securities is not a Business Day, the payment of the Distributions payable on
such date will be made on the next succeeding day that is a Business Day and
without any additional Distributions or other payment in respect of any such
delay, except that, if such Business Day is in the next succeeding calendar
year, such payment shall be made on the immediately preceding Business Day, in
each case with the same force and effect as if made on such record date (each
date on which Distributions are payable in accordance with the foregoing, a
"Distribution Date"). A "Business Day" shall mean any day other than a Saturday
or a Sunday, or a day on which banking institutions in the City of New York are
authorized or required by law or executive order to remain closed or a day on
which the corporate trust office of the Trustee or the Indenture Trustee is
closed for business.
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<PAGE>
So long as no Debenture Event of Default has occurred and is
continuing, Hvide has the right under the Indenture to defer the payment of
interest on the Debentures at any time or from time to time for a period not
exceeding 20 consecutive quarters with respect to each Extension Period,
provided that no Extension Period may extend beyond the stated maturity of the
Debentures. As a consequence of any such election, quarterly Distributions on
the Preferred Securities will be deferred by the Issuer during any such
Extension Period. Distributions to which holders of the Preferred Securities are
entitled will accumulate additional Distributions thereon at the rate per annum
set forth herein, compounded quarterly from the relevant payment date for such
Distributions. The term "Distributions" as used herein shall include any such
additional Distributions. During any such Extension Period, Hvide may not, and
may not cause any of its subsidiaries to, (i) declare or pay any dividends or
distributions on, or redeem, purchase, acquire, or make a liquidation payment
with respect to, any of Hvide's capital stock or (ii) make any payment of
principal, interest or premium, if any, on or repay, repurchase or redeem any
debt securities (including guarantees of indebtedness for money borrowed) of
Hvide that rank pari passu with or junior to the Debentures (other than with
respect to both (i) and (ii)) (a) any dividend, redemption, liquidation,
interest, principal or guarantee payment by Hvide where the payment is made by
way of securities (including capital stock) that rank pari passu with or junior
to the securities on which such dividend, redemption, interest, principal or
guarantee payment is being made, (b) payments under the Guarantee, (c) purchases
of Hvide Class A Common Stock related to the issuance of Hvide Class A Common
Stock under any of Hvide's benefit plans for its directors, officers or
employees, (d) as a result of a reclassification of Hvide's capital stock or the
exchange or conversion of one series or class of Hvide's capital stock for
another series or class of Hvide's capital stock, and (e) the purchase of
fractional interests in shares of Hvide's capital stock pursuant to the
conversion or exchange provisions of such capital stock or the security being
converted or exchanged). Prior to the termination of any such Extension Period,
Hvide may further extend the interest payment period, provided that no Extension
Period may exceed 20 consecutive quarters or extend beyond the stated maturity
of the Debentures. Upon the termination of any such Extension Period and the
payment of all amounts then due on any Interest Payment Date, Hvide may elect to
begin a new Extension Period. See "Description of the Debentures--Option to
Extend Interest Payment Period" and "Certain Federal Income Tax
Consequences--Original Issue Discount."
Hvide has no current intention to exercise its right to defer payments
of interest by extending the Interest Payment Period on the Debentures.
Distributions with respect to the Preferred Securities must be paid on
the dates payable to the extent that the Issuer has funds available for the
payment of such Distributions in the Property Account. The funds of the Issuer
available for distribution to holders of the Preferred Securities will be
limited to payments under the Debentures in which the Issuer will invest the
proceeds from the issuance and sale of the Preferred Securities and the Common
Securities. See "Description of the Debentures." If Hvide does not make interest
payments on such Debentures, the Trustee will not have funds available to pay
Distributions on the Preferred Securities. The payment of Distributions (if and
to the extent the Issuer has funds on hand available for the payment of such
Distributions and cash sufficient to make such payments) is guaranteed by Hvide
as set forth herein under "Description of the Guarantee."
Distributions on the Preferred Securities will be payable to the
holders thereof as they appear on the register of the Issuer on the relevant
record dates, which shall be the fifteenth day (whether or not a Business Day)
next preceding the relevant distribution date. As long as the Preferred
Securities remain in book-entry form, subject to any applicable laws and
regulations and the provisions of the Trust
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<PAGE>
Agreement, each such payment will be made as described under "--Certain
Book-Entry Procedures for Global Certificates."
Conversion Rights
The Preferred Securities are convertible at any time beginning
September 25, 1997 through the close of business on the Business Day prior to
the maturity date of the Debentures (or, in the case of Preferred Securities
called for redemption, prior to the close of business on the Business Day prior
to the Redemption Date) (the "Conversion Expiration Date") at the option of the
holder thereof and in the manner described below, into shares of Hvide Class A
Common Stock at an initial conversion rate of 1.7544 shares of Hvide Class A
Common Stock for each Preferred Security (equivalent to a purchase price of
$28.50 per share of Hvide Class A Common Stock), subject to adjustment as
described under "--Conversion Price Adjustments" below.
A holder of Preferred Securities wishing to exercise its conversion
right shall surrender such Preferred Securities, together with an irrevocable
conversion notice to the Trustee, as Conversion Agent, or to such other agent
appointed for such purpose, which shall, on behalf of such holder, exchange the
Preferred Securities for a portion of the Debentures and immediately convert
such Debentures into Hvide Class A Common Stock. So long as a book-entry system
for the Preferred Securities is in effect, however, the procedures for
converting the Preferred Stock that are in the form of Global Certificates into
shares of Hvide Class A Common Stock will be as described under "--Certain
Book-Entry Procedures for Global Certificate." Hvide's delivery upon conversion
of the fixed number of shares of Hvide Class A Common Stock into which the
Debentures are convertible (together with the cash payment, if any, in lieu of
any fractional share) shall be deemed to satisfy Hvide's obligation to pay the
principal amount at maturity of the portion of the Debentures so converted and
any unpaid interest accrued on such Debentures at the time of such conversion.
For a discussion of the taxation of such an exchange to holders, including the
possibility that holders who exchange their Preferred Securities for Hvide Class
A Common Stock may be subject to additional income tax to the extent accrued but
unpaid interest on the Debentures upon a conversion into Hvide Class A Common
Stock, see "Certain Federal Income Tax Consequences--Conversion of Preferred
Securities into Hvide Class A Common Stock." Holders may obtain copies of the
required form of the conversion notice from the Conversion Agent.
Accumulated Distributions will not be paid on Preferred Securities that
are converted; provided, however, holders of Preferred Securities at the close
of business on a Distribution payment record date will be entitled to receive
the Distribution payable, in cash, on such Preferred Securities on the
corresponding Distribution payment date notwithstanding the conversion of such
Preferred Securities on or subsequent to such Distribution record date but prior
to such Distribution payment date. Except as provided in the immediately
preceding sentence, the Issuer will make no payment or allowance for accumulated
and unpaid Distributions, whether or not in arrears, on converted Preferred
Securities. Hvide will make no payment or allowance for dividends on the shares
of Hvide Class A Common Stock issued upon such conversion. Each conversion will
be deemed to have been effected immediately prior to the close of business on
the day on which proper notice was received by the Conversion Agent.
Shares of Hvide Class A Common Stock issued upon conversion of
Preferred Securities will be validly issued, fully paid and non-assessable. No
fractional shares of Hvide Class A Common Stock will be issued as a result of
conversion, but in lieu thereof such fractional interest will be paid in cash.
29
<PAGE>
For possible restrictions on the ability of non-U.S. citizens to
convert Preferred Securities Debentures into Class A Common Stock, see "Risk
Factors--Restriction on Foreign Ownership of Common Stock; Possible Inability
to Convert Preferred Securities and Debentures."
Conversion Price Adjustments
General. The conversion price will be subject to adjustment in certain
events including, without duplication: (i) the payment of dividends (and other
distributions) payable exclusively in Hvide common stock on Hvide common stock;
(ii) the issuance to all holders of Hvide common stock of rights or warrants
entitling holders of such rights or warrants (for a period not exceeding 45
days) to subscribe for or purchase Hvide common stock at less than the then
Current Market Price (as defined herein); (iii) subdivisions and combinations of
Hvide common stock; (iv) the payment of dividends (and other distributions) to
all holders of Hvide common stock consisting of evidences of indebtedness of
Hvide, securities or capital stock, cash, or assets (but excluding those rights
or warrants referred to above in clause (ii) and dividends and distributions
paid exclusively in cash); (v) the payment of dividends (and other
distributions) on Hvide common stock paid exclusively in cash, excluding (A)
cash dividends that do not exceed the per share amount of the immediately
preceding regular cash dividend (as adjusted to reflect any of the events
referred to in clauses (i) through (vi) of this sentence), and (B) cash
dividends if the annualized per share amount thereof does not exceed 5% of the
last sale price of Hvide common stock, as reported on the Nasdaq National
Market, on the trading day immediately preceding the date of declaration of such
dividend (such adjustment being limited to the amount in excess of 5% of such
Current Market Price); and (vi) payment in respect of a tender or exchange offer
(other than an odd-lot offer) by Hvide or any subsidiary of Hvide for Hvide
common stock in excess of 110% of the Current Market Price of Hvide common stock
on the trading day next succeeding the last date tenders or exchanges may be
made pursuant to such tender or exchange offer.
Hvide from time to time may reduce the conversion price of the
Debentures (and thus the conversion price of the Preferred Securities) by any
amount selected by Hvide for any period of at least 30 days, in which case Hvide
shall give at least 15 days' notice of such reduction. Hvide may, at its option,
make such reductions in the conversion price, in addition to those set forth
above, as the Board of Directors of Hvide deems advisable to avoid or diminish
any income tax to holders of Hvide Class A Common Stock resulting from any
dividend or distribution of stock (or rights to acquire stock) or from any event
treated as such for income tax purposes. See "Certain Federal Income Tax
Consequences--Adjustment of Conversion Price."
No adjustment of the conversion price will be made upon the issuance of
any shares of Hvide common stock pursuant to any present or future plan
providing for the reinvestment of dividends or interest payable on securities of
Hvide and the investment of additional optional amounts in shares of Hvide
common stock under any such plan, or the issuance of any shares of Hvide common
stock or options or rights to purchase such shares pursuant to any present or
future employee benefit plan or program of Hvide or pursuant to any option,
warrant, right, or exercisable, exchangeable or convertible security which does
not constitute an issuance to all holders of Hvide common stock (or a class
thereof) of rights or warrants entitling holders of such rights or warrants to
subscribe for or purchase Hvide common stock at less than the Current Market
Price. There shall also be no adjustment of the conversion price in case of the
issuance of any Hvide common stock (or securities convertible into or
exchangeable for Hvide common stock), except as specifically described above. If
any action would require adjustment of the conversion price pursuant to more
than one of the anti-dilution provisions, only one adjustment
30
<PAGE>
shall be made and such adjustment shall be the amount of adjustment that has the
highest absolute value to holders of the Preferred Securities. No adjustment in
the conversion price will be required unless such adjustment would require an
increase or decrease of at least 1% of the conversion price, but any adjustment
that would otherwise be required to be made shall be carried forward and taken
into account in any subsequent adjustment.
Merger, Consolidation or Sale of Assets of Hvide. In the event that
Hvide is a party to any transaction (including, without limitation, a merger
other than a merger that does not result in a reclassification, conversion,
exchange or cancellation of Hvide Class A Common Stock), consolidation,
continuance, sale of all or substantially all of the assets of Hvide,
recapitalization or reclassification of Hvide Class A Common Stock (other than a
change in par value, or from par value to no par value, or from no par value to
par value or as a result of a subdivision or combination of Hvide Class A Common
Stock) or any compulsory share exchange (each of the foregoing being referred to
as a "Transaction"), in each case, as a result of which shares of Hvide Class A
Common Stock shall be converted into the right to receive, or shall be exchanged
for, (i) in the case of any Transaction other than a Transaction involving a
Stock Fundamental Change (as defined below) (and subject to funds being legally
available for such purpose under applicable law at the time of such conversion),
securities, cash or other property, each Preferred Security shall thereafter be
convertible into the kind and, in the case of a Transaction which does not
involve a Fundamental Change (as defined herein), amount of securities, cash and
other property receivable upon the consummation of such Transaction by a holder
of that number of shares of Hvide Class A Common Stock into which a Preferred
Security was convertible immediately prior to such Transaction, or (ii) in the
case of a Transaction involving a Stock Fundamental Change, each Preferred
Security shall thereafter be convertible (in the manner described herein) into
common stock of the kind received by holders of Hvide Class A Common Stock (but
in each case after giving effect to any adjustment discussed below relating to a
Fundamental Change if such Transaction constitutes a Fundamental Change). The
holders of Preferred Securities will have no voting rights with respect to any
Transaction described in this section.
If any Fundamental Change occurs, then the conversion price in effect
will be adjusted immediately after such Fundamental Change as described below.
In addition, in the event of a Stock Fundamental Change, each Preferred Security
shall be convertible solely into common stock of the kind received by holders of
Hvide Class A Common Stock as a result of such Stock Fundamental Change.
The conversion price in the case of any Fundamental Change will be
adjusted immediately after such Fundamental Change:
(i) in the case of a Non-Stock Fundamental Change (as defined
herein), the conversion price of the Preferred Securities immediately
following such Non-Stock Fundamental Change will be the lower of (A)
the conversion price in effect immediately prior to such Non-Stock
Fundamental Change (after giving effect to any other adjustments
effected pursuant to the preceding paragraphs) or (B) the product of
(1) the greater of the Applicable Price (as defined herein) and the
then applicable Reference Market Price (as defined herein) and (2) a
fraction, the numerator of which is $50 and the denominator of which is
(x) the amount of the redemption price for one Preferred Security if
the redemption date were the date of such Non-Stock Fundamental Change
(or, for the twelve-month periods commencing July 2, 1997, July 2, 1998
and July 2,
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<PAGE>
1999 the product of 105.23%, 105.91% and 106.60%, respectively, times
$50) plus (y) any then-accumulated and unpaid distributions on one
Preferred Security; and
(ii) in the case of a Stock Fundamental Change (as defined
herein), the conversion price of the Preferred Securities immediately
following such Stock Fundamental Change will be the conversion price in
effect immediately prior to such Stock Fundamental Change (after giving
effect to any adjustments effected pursuant to the preceding
paragraphs) as adjusted by multiplying such conversion price by a
fraction of which the numerator will be the Purchaser Stock Price and
the denominator will be the Applicable Price; provided, however, that
in the event of a Stock Fundamental Change in which (A) 100% of the
value of the consideration received by a holder of Hvide Class A Common
Stock is common stock of the successor, acquiror, or other third party
(and cash, if any, is paid only with respect to any fractional
interests in such common stock resulting from such Stock Fundamental
Change) and (B) all Hvide Class A Common Stock will have been exchanged
for, converted into, or acquired for common stock (and cash with
respect to fractional interests) of the successor, acquiror, or other
third party, the conversion price of the Preferred Securities in effect
immediately prior to such Stock Fundamental Change as adjusted by
multiplying such conversion price by a fraction of which the numerator
will be one and the denominator will be the number of shares of common
stock of the successor, acquiror, or other third party received by a
holder of one share of Hvide Class A Common Stock as a result of such
Stock Fundamental Change.
In the absence of the Fundamental Change provisions, in the case of a
Transaction each Preferred Security would become convertible into the
securities, cash, or property receivable by a holder of the number of shares of
Hvide Class A Common Stock into which such Preferred Security was convertible
immediately prior to such Transaction. A failure to apply the Fundamental Change
conversion price adjustments described above could substantially lessen or
eliminate the value of the conversion privilege associated with the Preferred
Securities. For example, if Hvide were acquired in a cash merger, each Preferred
Security would become convertible solely into cash and would no longer be
convertible into securities whose value would vary depending on the future
prospects of Hvide and other factors.
The foregoing conversion price adjustments are designed, in certain
circumstances, to reduce the conversion price that would be applicable in a
Fundamental Change where all or substantially all the Hvide Class A Common Stock
is converted into securities, cash, or property and not more than 50% of the
value received by the holders of Hvide Class A Common Stock consists of stock
listed or admitted for listing subject to notice of issuance on a national
securities exchange or quoted on the Nasdaq National Market. Such reduction
would result in an increase in the amount of the securities, cash, or property
into which each Preferred Security is convertible over that which would have
been obtained in the absence of such conversion price adjustments.
In a Non-Stock Fundamental Change where the initial value received per
share of Hvide Class A Common Stock (measured as described in the definition of
Applicable Price) is lower than the then applicable conversion price of a
Preferred Security but greater than or equal to the Reference Market Price, the
conversion price will be adjusted as described above with the effect that each
Preferred Security will be convertible into securities, cash or property of the
same type received by the holders of Hvide Class A Common Stock in the
Transaction but in an amount per Preferred Security that would at the time
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<PAGE>
of the Transaction have had a value equal to the then applicable redemption
price per Preferred Security set forth under "--Optional Redemption."
In a Non-Stock Fundamental Change where the initial value received per
share of Hvide Class A Common Stock (measured as described in the definition of
Applicable Price) is lower than both the conversion price of a Preferred
Security in effect prior to any adjustment described above and the Reference
Market Price, the conversion price will be adjusted as described above but
calculated as though such initial value had been the Reference Market Price.
In a Stock Fundamental Change, the foregoing adjustments are designed
to provide in effect that (a) where Hvide Class A Common Stock is converted
partly into such common stock and partly into other securities, cash, or
property, each Preferred Security will be convertible solely into a number of
shares of such common stock determined so that the initial value of such shares
(measured as described in the definition of Purchaser Stock Price) equals the
value of the shares of Hvide Class A Common Stock into which such Preferred
Security was convertible immediately before the Transaction (measured as
aforesaid) and (b) where the Hvide Class A Common Stock is converted solely into
such common stock, each Preferred Security will be convertible into the same
number of shares of such common stock receivable by a holder of the number of
shares of Hvide Class A Common Stock into which such Preferred Security was
convertible immediately before such Transaction.
The term "Applicable Price" means (i) in the case of a Non-Stock
Fundamental Change in which the holders of the Hvide Class A Common Stock
receive only cash, the amount of cash received by the holder of one share of
Hvide Class A Common Stock and (ii) in the event of any other Non-Stock
Fundamental Change or any Stock Fundamental Change, the average of the Closing
Prices (as defined herein) for the Hvide Class A Common Stock during the ten
trading days prior to the record date for determination of the holders of Hvide
Class A Common Stock entitled to receive such securities, cash, or other
property in connection with such Non-Stock Fundamental Change or Stock
Fundamental Change or, if there is no such record date, the date upon which the
holders of the Hvide Class A Common Stock shall have the right to receive such
securities, cash, or other property (such record date or distribution date being
hereinafter referred to as the "Entitlement Date"), in each case as adjusted in
good faith by Hvide to appropriately reflect any of the events referred to in
clauses (i) through (vi) of the first paragraph under "--Conversion Price
Adjustments--General."
The term "Closing Price" means on any day the reported last sale price
on such day or in case no sale takes place on such day, the average of the
reported closing bid and asked prices in each case on the Nasdaq Composite or,
if the stock is not traded on the Nasdaq National Market, on the principal
national securities exchange or quotation system on which such stock is listed
or admitted to trading or, if not listed or admitted to trading on any national
securities exchange or quotation system, the average of the closing bid and
asked prices as furnished by any NASD member firm, selected by the Indenture
Trustee for that purpose.
The term "Current Market Price" of Hvide Class A Common Stock for any
day means the last reported sale price, regular way, on such day, or if no sale
takes place on such day, the average of the reported closing bid and asked
prices on such day, regular way, in either case as reported on The Nasdaq
National Market, or, if the Hvide Class A Common Stock is not quoted on The
Nasdaq National Market on such day, on the principal national securities
exchange or quotation system on which the Hvide Class A Common Stock is listed
or admitted to trading, or, if not listed or admitted to trading or quoted on
any
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<PAGE>
national securities exchange or quotation system, the average closing bid and
asked prices of the Hvide Class A Common Stock in the over-the-counter market on
the day in question as reported by the National Quotation Bureau Incorporated,
or a similar generally accepted reporting service, or, if not so available, in
such manner, as furnished by the NASD member firm selected from time to time by
the Board of Directors of Hvide for that purpose or, if not so available in such
manner, as otherwise determined in good faith by the Board of Directors of
Hvide.
The term "Fundamental Change" means the occurrence of any Transaction
or event in connection with a plan pursuant to which all or substantially all of
the Hvide Class A Common Stock shall be exchanged for, converted into, acquired
for, or constitute solely the right to receive securities, cash, or other
property (whether by means of an exchange offer, liquidation, tender offer,
consolidation, merger, continuance, combination, reclassification,
recapitalization, or otherwise), provided, that, in the case of a plan involving
more than one such Transaction or event, for purposes of adjustment on the
conversion price, such Fundamental Change shall be deemed to have occurred when
substantially all of the Hvide Class A Common Stock shall be exchanged for,
converted into, or acquired for or constitute solely the right to receive
securities, cash, or other property, but the adjustment shall be based upon the
consideration that a holder of Hvide Class A Common Stock received in such
Transaction or event as a result of which more than 50% of the Hvide Class A
Common Stock shall have been exchanged for, converted into, or acquired for or
constitute solely the right to receive securities, cash, or other property.
The term "Non-Stock Fundamental Change" means any Fundamental Change
other than a Stock Fundamental Change.
The term "Purchaser Stock Price" means, with respect to any Stock
Fundamental Change, the average of the Closing Prices for the common stock
received in such Stock Fundamental Change for the ten consecutive trading days
prior to and including the Entitlement Date, as adjusted in good faith by Hvide
to appropriately reflect any of the events referred to in clauses (i) through
(vi) of the first paragraph under "--Conversion Price Adjustments--General."
The term "Reference Market Price" shall initially mean $15.08 (which is
an amount equal to 662/3% of the last reported sale price for Hvide Class A
Common Stock on The Nasdaq National Market on June 23, 1997) and in the event of
any adjustment of the conversion price other than as a result of a Non-Stock
Fundamental Change, the Reference Market Price shall also be adjusted so that
the ratio of the Reference Market Price to the conversion price after giving
effect to any such adjustment shall always be the same as the ratio of the
initial Reference Market Price to the initial conversion price of the Preferred
Securities.
The term "Stock Fundamental Change" means any Fundamental Change in
which more than 50% of the value (as determined in good faith by the Board of
Directors of Hvide) of the consideration received by holders of Hvide Class A
Common Stock consists of common stock that for each of the ten consecutive
trading days prior to the Entitlement Date has been admitted for listing or
admitted for listing subject to notice of issuance on a national securities
exchange or quoted on The Nasdaq National Market; provided, however, a
Fundamental Change shall not be a Stock Fundamental Change if either (i) Hvide
continues to exist after the occurrence of such Fundamental Change and the
outstanding Preferred Securities continue to exist as outstanding Preferred
Securities or (ii) not later than the occurrence of such Fundamental Change, the
outstanding Preferred Securities are converted into or exchanged for shares of
convertible preferred stock of an entity succeeding to the business of Hvide or
a subsidiary thereof, which
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<PAGE>
convertible preferred stock has powers, preferences, and relative,
participating, optional, or other rights, and qualifications, limitations, and
restrictions, substantially similar to those of the Preferred Securities.
Special Event Exchange or Redemption
At any time following the occurrence and the continuation of a Tax
Event or an Investment Company Event (each as defined herein), the Issuer
Trustees shall direct the Conversion Agent to exchange all outstanding Preferred
Securities for Debentures and to dissolve the Trust, provided that, in the case
of a Tax Event, Hvide shall have the right to (a) direct that less than all, or
none, of the Preferred Securities be so exchanged if and for so long as Hvide
shall have elected to pay any Additional Sums such that the net amounts received
by the holders of Preferred Securities not so exchanged in respect of
Distributions and other distributions are not reduced as a result of such Tax
Event, and shall not have revoked any such election or failed to make such
payments or (b) redeem the Preferred Securities in the manner set forth below.
If a Tax Event shall occur or be continuing, Hvide shall have the
right, upon not less than 30 nor more than 60 days' notice, to redeem the
Debentures, in whole or in part, for cash upon the later of (i) 90 days
following the occurrence of such Tax Event or (ii) July 2, 2000. Promptly
following such redemption, Preferred Securities and Common Securities with an
aggregate liquidation amount equal to the aggregate principal amount of the
Debentures so redeemed will be redeemed by the Issuer at the liquidation amount
thereof plus accrued and unpaid Distributions thereon to the redemption date on
a pro rata basis. The Common Securities will be redeemed on a pro rata basis
with the Preferred Securities, except that if a Declaration Event of Default has
occurred and is continuing, the Preferred Securities will have a priority over
the Common Securities with respect to the Redemption Price.
A "Special Event" means a Tax Event or an Investment Company Event. A
"Tax Event" means the receipt by the Trustee, on behalf of the Issuer, of an
opinion of counsel, rendered by a law firm having a national tax and securities
practice (which opinion shall not have been rescinded by such law firm), to the
effect that, as a result of any amendment to, or change (including any announced
prospective change) in, the laws (or any regulations thereunder) of the United
States or any political subdivision or taxing authority thereof or therein
affecting taxation, or as a result of any official administrative pronouncement
or judicial decision interpreting or applying such laws or regulations, which
amendment or change is effective or such pronouncement or decision is announced
on or after the date of this Registration Statement, there is more than an
insubstantial risk in each case after the date hereof that (i) the Issuer is, or
will be within 90 days of the date thereof, subject to United States federal
income tax with respect to income received or accrued on the Debentures, (ii)
interest payable by Hvide on such Debentures is not, or within 90 days of the
date thereof will not be, deductible by Hvide, in whole or in part, for United
States federal income tax purposes; or (iii) the Issuer is, or will be within 90
days of the date thereof, subject to more than a de minimis amount of other
taxes, duties or other governmental charges. "Investment Company Event" means
the receipt by the Trustee, on behalf of the Issuer, of an opinion of counsel,
rendered by a law firm having a recognized national tax and securities practice
(which opinion shall not have been rescinded by such law firm), to the effect
that, as a result of the occurrence of a change in law or regulation or a change
in interpretation or application of law or regulation by any legislative body,
court, governmental agency or regulatory authority (a "Change in 1940 Act Law"),
that there is more than an insubstantial risk that the Issuer is or will be
considered an "investment company" that is required to be registered under the
Investment Company Act of 1940, as amended (the "Investment
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<PAGE>
Company Act"), which Change in 1940 Act Law becomes effective on or after the
date of this Registration Statement.
"Additional Sums" means the additional amounts (which shall constitute
part of the Distributions) as may be necessary in order that the amount of
Distributions then due and payable by the Issuer on the outstanding Preferred
Securities and Common Securities of the Issuer shall not be reduced as a result
of any additional taxes, duties and other governmental charges to which the
Issuer has become subject as a result of a Tax Event.
Holders of Preferred Securities, by purchasing such Preferred
Securities, will be deemed to have agreed to be bound by these exchange
provisions in regard to the exchange of such Preferred Securities for Debentures
on the terms described above. See "Risk Factors--Special Event Exchange or
Redemption."
Distribution of Debentures
At any time, Hvide will have the right to dissolve the Issuer and,
after satisfaction of the liabilities of creditors of the Issuer as provided by
applicable law, cause the Debentures to be distributed to the holders of the
Preferred Securities in liquidation of the Issuer. There can be no assurance as
to the market price for the Debentures distributed to the holders of the
Preferred Securities after such a termination of the Issuer. Under current
United States federal income tax law and interpretations and assuming, as
expected, the Issuer is treated as a grantor trust, a distribution of the
Debentures should not be a taxable event to the Issuer and holders of the
Preferred Securities. Should there be a change in law, a change in legal
interpretation, a Special Event or other circumstances, however, the
distribution could be a taxable event to holders of the Preferred Securities.
See "Certain Federal Income Tax Consequences--Redemption of Preferred Securities
for Debentures or Cash Upon Liquidation of the Issuer."
After the liquidation date fixed for any distribution of Debentures for
Preferred Securities (i) such Preferred Securities will no longer be deemed to
be outstanding, (ii) DTC or its nominee, as the record holder of such Preferred
Securities, will receive a registered Global Certificate or certificates
representing the Debentures to be delivered upon such distribution and (iii) any
certificates representing such Preferred Securities not held by DTC or its
nominee will be deemed to represent the Debentures having a principal amount
equal to the liquidation amount of such Preferred Securities, and bearing
accrued and unpaid interest in an amount equal to the accrued and unpaid
Distributions on such Preferred Securities until such certificates are presented
to the Trustee for transfer or reissuance.
Optional Redemption
Except as provided under "--Mandatory Redemption" below, the Preferred
Securities may not be redeemed by the Issuer prior to July 2, 2000.
On and after such date, upon any permitted redemption by Hvide of
Debentures, the Preferred Securities are subject to redemption, in whole or in
part, at the following percentages of the liquidation preference thereof plus
accrued and unpaid Distributions, if any, to the date fixed for redemption if
redeemed during the twelve-month period commencing July 2, in each of the
following years indicated:
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<PAGE>
<TABLE>
<CAPTION>
Redemption Redemption
Year Price Year Price
<S> <C> <C> <C>
2000................................ 104.55% 2004.......................... 101.95%
2001................................ 103.90% 2005.......................... 101.30%
2002................................ 103.25% 2006.......................... 100.65%
2003................................ 102.60% 2007 and thereafter 100.00%
</TABLE>
The Issuer may not redeem the Preferred Securities in part unless all
accumulated and unpaid Distributions have been paid in full on all outstanding
Preferred Securities. If fewer than all the outstanding Preferred Securities are
to be redeemed, the Preferred Securities to be so redeemed will be selected as
described under "--Certain Book-Entry Procedures" and "--Redemption Procedures
for Global Certificates."
In the event Hvide redeems the Debentures in certain circumstances upon
the occurrence of a Tax Event as described under "--Special Event Exchange or
Redemption," the appropriate amount of the Preferred Securities will be redeemed
at 100% of the principal amount thereof together with accumulated and unpaid
Distributions to the redemption date.
If at any time following the Conversion Expiration Date, less than 5%
of the Preferred Securities offered hereby remain outstanding, such Preferred
Securities shall be redeemable at the option of the Issuer, in whole but not in
part, at a redemption price of $50 per Preferred Security, and all accumulated
and unpaid Distributions.
Mandatory Redemption
Upon repayment at maturity or as a result of the acceleration of the
Debentures upon the occurrence of a "Debenture Event of Default" described under
"Description of the Debentures--Debenture Events of Default," the Debentures
shall be subject to mandatory redemption, in whole but not in part, by Hvide,
and the proceeds from such repayment will be applied to redeem Preferred
Securities and Common Securities having an aggregate liquidation amount equal to
the aggregate principal amount of Debentures so repaid or redeemed at a
redemption price equal to the respective liquidation amount of the Preferred
Securities and Common Securities or, in the case of a redemption of the
Debentures, at the redemption price paid with respect to the Debentures, as
described below, together with accumulated and unpaid Distributions on the
Preferred Securities and Common Securities to the date of redemption. In the
case of acceleration of the Debentures, the Preferred Securities will be
redeemed only when repayment of the Debentures has actually been received by the
Issuer. In addition, as described above under "--Special Event Exchange or
Redemption," upon the occurrence of a Special Event, Preferred Securities shall
be exchanged for Debentures unless, in the case of a Tax Event, Hvide shall have
elected to (a) pay any Additional Sums such that the net amounts of
Distributions received by the holders of any Preferred Securities not so
exchanged are not reduced as a result of such Tax Event and shall not have
revoked any such election or failed to make such payments or (b) redeem the
Preferred Securities as further set forth in "--Special Event Exchange or
Redemption."
Redemption Procedures
Preferred Securities redeemed on the date fixed for redemption shall be
redeemed at the redemption price with the applicable proceeds from the
contemporaneous redemption of the Debentures.
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Redemptions of the Preferred Securities shall be made and the redemption price
shall be payable on the redemption date only to the extent that the Issuer has
funds on hand available for the payment of such redemption price. See also
"--Subordination of Common Securities."
Notice of any redemption (optional or mandatory) of Preferred
Securities (which notice will be irrevocable) will be given by the Trustee to
each recordholder of Preferred Securities that are being redeemed not fewer than
30 nor more than 60 days prior to the redemption date. If the Trustee gives a
notice of redemption in respect of the Preferred Securities, then, by 12:00
noon, New York City time, on the redemption date, to the extent funds are
available, the Trustee will deposit irrevocably with DTC or the Conversion
Agent, as the case may be, funds sufficient to pay the applicable redemption
price and will give DTC or the Conversion Agent, as the case may be, irrevocable
instructions and authority to pay the redemption price to the holders of such
Preferred Securities. See "--Certain Book-Entry Procedures for Global
Certificates." If such Preferred Securities are no longer in book-entry form,
the Trustee, to the extent funds are available, will irrevocably deposit with
the Paying Agent funds sufficient to pay the applicable redemption price and
will give the Paying Agent irrevocable instructions and authority to pay the
redemption price to the holders thereof upon surrender of their certificates
evidencing such Preferred Securities. Notwithstanding the foregoing,
Distributions payable on or prior to the redemption date for any Preferred
Securities called for redemption shall be payable to the holders of such
Preferred Securities as of the relevant record dates for the related
distribution dates. If notice of redemption shall have been given and funds
deposited as required, then upon the date of such deposit, all rights of the
holders of such Preferred Securities so called for redemption will cease
(including the accumulation of Distributions and conversion rights of the
Preferred Securities), except the right of the holders of such Preferred
Securities to receive the redemption price, but without interest on such
redemption price, and such Preferred Securities will cease to be outstanding. In
the event that any date fixed for redemption of Preferred Securities is not a
Business Day, then payment of the redemption price on such date will be made on
the next succeeding day which is a Business Day (and without any interest or
other payment in respect of any such delay), except that, if such Business Day
falls in the next calendar year, such payment will be made on the immediately
preceding Business Day. In the event that payment of the redemption price in
respect of Preferred Securities called for redemption is improperly withheld or
refused and not paid either by the Issuer or by Hvide pursuant to the Guarantee
as described under "Description of the Guarantee," distributions on such
Preferred Securities will continue to accumulate at the then applicable rate,
from the redemption date originally established by the Issuer to the date such
redemption price is actually paid, in which case the actual payment date will be
the date fixed for redemption for purposes of calculating the redemption price.
Subject to applicable law (including, without limitation, United States
federal securities law), Hvide, or its subsidiaries, may at any time and from
time to time purchase outstanding Preferred Securities by tender, in the open
market or by private agreement.
Payment of the redemption price on the Preferred Securities and any
distribution or exchange of Debentures to holders of Preferred Securities shall
be made to the applicable recordholders thereof as they appear on the register
for such Preferred Securities on the relevant record date, which shall be the
fifteenth day (whether or not a Business Day) prior to the redemption date or
liquidation date, as applicable.
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If less than all of the Preferred Securities and Common Securities are
to be redeemed on a redemption date, then the aggregate liquidation amount of
such Preferred Securities and Common Securities to be redeemed shall be
allocated pro rata among the Preferred Securities and the Common Securities. The
particular Preferred Securities to be redeemed shall be selected not more than
60 days prior to the redemption date by the Trustee from the outstanding
Preferred Securities not previously called for redemption, by lot or by such
method as the Trustee shall deem fair and appropriate and which may provide for
the selection for redemption of portions (equal to $50 or an integral multiple
of $50 in excess thereof) of the liquidation amount of the Preferred Securities.
The Trustee shall promptly notify the Conversion Agent in writing of the
Preferred Securities selected for redemption and, in the case of any Preferred
Securities selected for partial redemption, the liquidation amount thereof to be
redeemed; it being understood that, in the case of Preferred Securities held by
DTC (or any successor) or its nominee, the distribution of the proceeds of such
redemption will be made in accordance with the procedures of DTC or its nominee.
For all purposes of the Trust Agreement, unless the context otherwise requires,
all provisions relating to the redemption of Preferred Securities shall relate,
in the case of any Preferred Securities redeemed or to be redeemed only in part,
to the portion of the aggregate liquidation amount of Preferred Securities which
has been or is to be redeemed.
Notice of any redemption of Debentures will be mailed at least 30 days
but not more than 60 days before the redemption date to each holder of
Debentures to be redeemed at its registered address. Unless Hvide defaults in
payment of the redemption price, on and after the redemption date, interest
ceases to accrue on such Debentures or portions thereof called for redemption.
Subordination of Common Securities
Payment of Distributions on, and the redemption price of, the Preferred
Securities and Common Securities, as applicable, shall be made pro rata based on
the liquidation amount of such Preferred Securities and Common Securities;
provided, however, that if on any distribution date or redemption date, a
Declaration Event of Default shall have occurred and be continuing, no payment
of any Distribution on, or redemption price of, any of the Common Securities,
and no other payment on account of the redemption, liquidation or other
acquisition of such Common Securities, shall be made unless payment in full in
cash of all accumulated and unpaid Distributions on all of the outstanding
Preferred Securities for all Distribution periods terminating on or prior
thereto, or in the case of payment of the redemption price the full amount of
such redemption price on all of the outstanding Preferred Securities then called
for redemption, shall have been made or provided for, and all funds available to
the Trustee shall first be applied to the payment in full in cash of all
Distributions on, or redemption price of, the Preferred Securities then due and
payable.
Liquidation Distribution upon Dissolution
In the event of any voluntary or involuntary dissolution of the Issuer
(each, a "Liquidation"), the holders of the Preferred Securities at that time
will be entitled to receive out of the assets of the Issuer, after satisfaction
of liabilities to creditors of the Issuer as provided by applicable law,
distributions in an amount equal to the aggregate of the stated liquidation
amount of $50 per Preferred Security plus accumulated and unpaid Distributions
thereon to the date of payment (the "Liquidation Distribution"), unless, in
connection with such Liquidation, after satisfaction of liabilities to creditors
of the Issuer as provided by applicable law, Debentures in an aggregate
principal amount equal to the aggregate stated liquidation amount of, with an
interest rate identical to the distribution rate of, and accrued and unpaid
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<PAGE>
interest equal to accumulated and unpaid Distributions on, the Preferred
Securities, have been distributed on a pro rata basis to the holders of
Preferred Securities in exchange for such Preferred Securities. See
"--Distribution of Debentures."
If such Liquidation Distribution can be paid only in part because the
Issuer has insufficient assets available to pay in full the aggregate
Liquidation Distribution, then the amounts payable directly by the Issuer on the
Preferred Securities shall be paid on a pro rata basis. Hvide will be entitled
to receive Liquidation Distributions upon any such liquidation pro rata with the
holders of the Preferred Securities, except that if a Debenture Event of Default
has occurred and is continuing, the Preferred Securities shall have a priority
over the Common Securities.
Pursuant to the Declaration, the Issuer shall automatically dissolve
upon expiration of its term and shall dissolve on the first to occur of: (i)
certain events of bankruptcy, dissolution or liquidation of Hvide; (ii) upon
receipt by the Trustee of written direction from Hvide, as sponsor of the
Issuer, to dissolve the Issuer (which direction is optional and wholly within
the discretion of Hvide, as depositor); (iii) the redemption, conversion, or
exchange of all of the Preferred Securities and Common Securities; (iv) the
entry by a court of competent jurisdiction of an order for the dissolution of
the Issuer; (v) the occurrence of a Special Event except in the case of a Tax
Event following which Hvide has elected to pay any Additional Sums such that the
net amount received by holders of Preferred Securities in respect of
Distributions is not reduced as a result of such Tax Event and Hvide has not
revoked any such election or failed to make such payment; and (vi) distribution
of all of the underlying Hvide Class A Common Stock to all holders of Preferred
Securities upon conversion of all of the Preferred Securities.
Declaration Events of Default; Notice
An event of default under the Indenture (a "Debenture Event of
Default") constitutes an event of default under the Declaration with respect to
the Preferred Securities and the Common Securities (a "Declaration Event of
Default"), whatever the reason for such Debenture Event of Default and whether
it shall be voluntary or involuntary or be effected by operation of law or
pursuant to any judgment, decree or order of any court or any order, rule or
regulation of any administrative or governmental body.
Within ten days after the occurrence of any Declaration Event of
Default actually known to the Trustee, the Trustee shall transmit notice of such
Declaration Event of Default to the holders of the Preferred Securities, the
Company Trustees and Hvide, as depositor, unless such Declaration Event of
Default shall have been cured or waived. Hvide, as depositor, and the Company
Trustees, on behalf of the Issuer, are required to file annually with the
Trustee a certificate as to whether or not they are in compliance with all the
conditions and covenants applicable to them under the Declaration.
If a Declaration Event of Default has occurred and is continuing, the
Preferred Securities shall have a preference over the Common Securities upon
dissolution of the Issuer as described above. See "--Liquidation Distribution
Upon Dissolution." The existence of a Declaration Event of Default does not
entitle the holders of Preferred Securities to accelerate the maturity thereof.
In the case of any Declaration Events of Default, Hvide as holder of
the Common Securities will be deemed to have waived any right to act with
respect to any such Declaration Events of Default until such Declaration Events
of Default with respect to the Preferred Securities have been cured, waived or
otherwise eliminated. Until any such Declaration Events of Default with respect
to the Preferred
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Securities have been so cured, waived or otherwise eliminated, the Trustee shall
act solely on behalf of the holders of the Preferred Securities and not on
behalf of Hvide as holder of the Common Securities, and only the holders of the
Preferred Securities will have the right to direct the Trustee to act on their
behalf.
Enforcement of Certain Rights by Holders of Preferred Securities
If a Declaration Event of Default has occurred and is continuing, the
Trustee, as the sole holder of the Debentures, shall have the right under the
Indenture to declare the principal of, premium, if any, on and interest on the
Debentures immediately due and payable, and, accordingly, the holders of
Preferred Securities would rely on the enforcement by the Trustee of its rights
as a holder of the Debentures against Hvide. In addition, the holders of a
majority in aggregate liquidation amount of the Preferred Securities will have
the right to direct the time, method and place of conducting any proceeding for
any remedy available to the Trustee or to direct the exercise of any trust or
power conferred upon the Trustee under the Declaration, including the right to
direct the Trustee to exercise the remedies available to it as a holder of the
Debentures. If the Trustee fails to enforce its rights as holder of the
Debentures after a request therefor by a holder of Preferred Securities, such
holder may proceed to enforce such rights directly against Hvide.
Notwithstanding the foregoing, if a Declaration Event of Default has occurred
and is continuing and such event is attributable to the failure of Hvide to pay
interest or principal on the Debentures on the date such interest or principal
is otherwise payable (or in the case of redemption, on the redemption date),
then a holder of Preferred Securities may directly institute a Direct Action
against Hvide for enforcement of payment to such holder of the principal of or
interest on the Debentures having a principal amount equal to the aggregate
liquidation amount of the Preferred Securities of such holder on or after the
respective due date specified in the Debentures. In connection with such Direct
Action, Hvide will be subrogated to the rights of such holder of Preferred
Securities under the Declaration to the extent of any payment made by Hvide to
such holder of Preferred Securities in such Direct Action. The holders of
Preferred Securities will not be able to exercise directly against Hvide any
other remedy available to the Trustee unless the Trustee first fails to do so.
Merger or Consolidation of Issuer Trustees
Any corporation into which the Trustee, the Delaware Trustee or any
Company Trustee that is not a natural person may be merged or converted or with
which it may be consolidated, or any corporation resulting from any merger,
conversion or consolidation to which such Issuer Trustee shall be a party, or
any corporation succeeding to all or substantially all the corporate trust
business of such Issuer Trustee, shall be the Successor of such Issuer Trustee
under the Declaration, provided such corporation shall be otherwise qualified
and eligible.
Mergers, Consolidations, Amalgamations or Replacements of the Issuer
The Issuer may not merge with or into, consolidate, amalgamate, or be
replaced by, or convey, transfer or lease its properties and assets
substantially as an entirety to any corporation or other person, except as
described below. The Issuer may, at the request of Hvide, with the consent of
the Company Trustees and without the consent of the Trustee, the Delaware
Trustee or the holders of the Preferred Securities, merge with or into,
consolidate, amalgamate, be replaced by or convey, transfer or lease its
properties and assets substantially as an entirety to a trust organized as such
under the laws of any state, provided that (i) such successor entity either (a)
expressly assumes all of the obligations of the Issuer with
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respect to the Preferred Securities or (b) substitutes for the Preferred
Securities other securities having substantially the same terms as the Preferred
Securities (the "Successor Securities") so long as the Successor Securities rank
the same as the Preferred Securities rank in priority with respect to
Distributions and payments upon liquidation, redemption and otherwise, (ii)
Hvide expressly appoints a trustee of such successor entity possessing the same
powers and duties as the Trustee as the holder of the Debentures, (iii) the
Successor Securities are listed, or any Successor Securities will be listed upon
notification of issuance, on any national securities exchange or other
organization on which the Preferred Securities are then listed, if any, (iv)
such merger, consolidation, amalgamation, replacement, conveyance, transfer or
lease does not cause the Preferred Securities (including any Successor
Securities) to be downgraded by any nationally recognized statistical rating
organization, (v) such merger, consolidation, amalgamation, replacement,
conveyance, transfer or lease does not adversely affect the rights, preferences
and privileges of the holders of the Preferred Securities (including any
Successor Securities) in any material respect (other than with respect to any
dilution of the holders' interest in the new entity), (vi) such successor entity
has a purpose identical to that of the Issuer, (vii) prior to such merger,
consolidation, amalgamation, replacement, conveyance, transfer or lease, Hvide
has received an opinion from independent counsel to the Issuer experienced in
such matters to the effect that (a) such merger, consolidation, amalgamation,
replacement, conveyance, transfer or lease does not adversely affect the rights,
preferences and privileges of the holders of the Preferred Securities (including
any Successor Securities) in any material respect (other than with respect to
any dilution of the holders' interest in the new entity) and (b) following such
merger, consolidation, amalgamation, replacement, conveyance, transfer or lease,
neither the Issuer nor such successor entity will be required to register as an
investment company under the Investment Company Act, and (viii) Hvide or any
permitted successor or assignee owns all of the Common Securities of such
successor entity and guarantees the obligations of such successor entity under
the Successor Securities at least to the extent provided by the Guarantee.
Notwithstanding the foregoing, the Issuer shall not, except with the consent of
holders of 100% in aggregate liquidation amount of the Preferred Securities,
consolidate, amalgamate, merge with or into, be replaced by or convey, transfer
or lease its properties and assets substantially as an entirety to any other
entity or permit any other entity to consolidate, amalgamate, merge with or
into, or replace it if such consolidation, amalgamation, merger, replacement,
conveyance, transfer or lease would cause the Issuer or the successor entity to
be classified as other than a grantor trust for United States federal income tax
purposes.
Voting Rights; Amendment of the Declaration
Except as provided below and under "Description of the
Guarantee--Amendments and Assignment" and as otherwise required by law and the
Declaration, the holders of the Preferred Securities will have no voting rights.
The Declaration may be amended from time to time by Hvide and the
Issuer Trustees, without the consent of the holders of the Preferred Securities
(i) to cure any ambiguity, correct or supplement any provisions in the
Declaration that may be inconsistent with any other provision, or to make any
other provisions with respect to matters or questions arising under the
Declaration that shall not be inconsistent with the other provisions of the
Declaration, (ii) to modify, eliminate or add to any provision of the
Declaration to such extent as shall be necessary to ensure that the Issuer will
be classified for United States federal income tax purposes as a grantor trust
at all times that any Preferred Securities and Common Securities are outstanding
or to ensure that the Issuer will not be required to register as an "investment
company" under the Investment Company Act or be classified as other than a
grantor trust
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for United States federal income tax purposes or (iii) to qualify or maintain
the qualification of the Declaration under the Trust Indenture Act; provided,
however, that in the case of clause (i), such action shall not adversely affect
in any material respect the interests of any holder of Preferred Securities or
Common Securities, and any amendments of the Declaration shall become effective
when notice thereof is given to the holders of Preferred Securities and Common
Securities. The Declaration may be amended by the Issuer Trustees and Hvide with
(i) the consent of holders representing not less than a majority (based upon
liquidation amounts) of the outstanding Preferred Securities and Common
Securities, acting as a single class, and (ii) receipt by the Issuer Trustees of
an opinion of counsel to the effect that such amendment or the exercise of any
power granted to the Issuer Trustees in accordance with such amendment will not
affect the Issuer's status as a grantor trust for United States federal income
tax purposes or the Issuer's exemption from the status of an "investment
company" under the Investment Company Act; provided further that (a) without the
consent of each holder of Preferred Securities and Common Securities, the
Declaration may not be amended to (i) change the amount or timing of any
Distribution on the Preferred Securities and Common Securities or otherwise
adversely affect the amount of any Distribution required to be made in respect
of the Preferred Securities and Common Securities as of a specified date or (ii)
restrict the right of a holder of Preferred Securities and Common Securities to
institute suit for the enforcement of any such payment on or after such date.
If any proposed amendment of the Declaration provides for, or the
Issuer Trustees otherwise proposes to effect, the dissolution, winding-up or
termination of the Issuer, other than pursuant to the terms of the Declaration,
then the holders of the then outstanding Preferred Securities, as a class, will
be entitled to vote on such amendment or proposal and such amendment or proposal
shall not be effective except with the approval of the holders of the majority
in aggregate liquidation amount of the Preferred Securities.
The holders of a majority in aggregate liquidation amount of Preferred
Securities will have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee or to direct
the exercise of any trust or power conferred upon the Trustee under the
Declaration, including the right to direct the Trustee to exercise the remedies
available to it as a holder of the Debentures. So long as any Debentures are
held by the Trustee, the Issuer Trustees shall not (i) direct the time, method
and place of conducting any proceeding for any remedy available to the Indenture
Trustee or executing any trust or power conferred on the Indenture Trustee with
respect to such Debentures, (ii) waive any past default that is waivable under
Section 5.13 of the Indenture, (iii) exercise any right to rescind or annul a
declaration that the principal of all the Debentures shall be due and payable,
or (iv) consent to any amendment, modification or termination of the Indenture
or the Debentures where such consent shall be required, without in each case,
obtaining the prior approval of the holders of a majority in aggregate
liquidation amount of all outstanding Preferred Securities (except in the case
of clause (iv), which consent, in the event that no Declaration Event of Default
shall occur and be continuing, shall be of the holders of Preferred Securities
and Common Securities, voting together as a single class); provided, however,
that where a consent under the Indenture would require the consent of each
holder of Debentures affected thereby, no such consent shall be given by the
Trustee without the prior written consent of each holder of the Preferred
Securities. The Issuer Trustees shall not revoke any action previously
authorized or approved by a vote of the holders of the Preferred Securities
except by subsequent vote of the holders of the Preferred Securities. The
Trustee shall notify each holder of record of the Preferred Securities of any
notice of default with respect to the Debentures.
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A waiver of a Debenture Event of Default will constitute a waiver of
the corresponding Declaration Event of Default.
Any required approval or direction of holders of Preferred Securities
may be given at a separate meeting of holders of Preferred Securities convened
for such purpose, at a meeting of all of the holders of the Preferred Securities
and the Common Securities or pursuant to written consent. The Trustee will cause
a notice of any meeting at which holders of Preferred Securities are entitled to
vote, or of any matter upon which action by written consent of such holders is
to be taken, to be given to each holder of record of Preferred Securities in the
manner set forth in the Trust Agreement.
No vote or consent of the holders of Preferred Securities will be
required for the Issuer to redeem and cancel the Preferred Securities in
accordance with the Declaration.
Notwithstanding that holders of Preferred Securities are entitled to
vote or consent under any of the circumstances described above, any of the
Preferred Securities that are owned at such time by Hvide, any affiliate of
Hvide, the Issuer Trustees or any affiliate of any Issuer Trustee shall, for
purposes of such vote or consent, be treated as if such Preferred Securities
were not outstanding.
The procedures by which holders of Preferred Securities may exercise
their voting rights are described below. See "--Certain Book-Entry Procedures
for Global Certificates."
Holders of the Preferred Securities will have no rights to appoint or
remove the Issuer Trustees, who may be appointed, removed or replaced solely by
Hvide, as the direct or indirect holder of all the Common Securities.
Payment and Paying Agency
Payments in respect of the Preferred Securities shall be made to DTC,
which shall credit the relevant accounts at DTC on the applicable distribution
dates or, if the Preferred Securities are not held by DTC, such payments shall
be made by check mailed to the address of the holder entitled thereto as such
address shall appear on the Securities Register. The Paying Agent shall
initially be the Trustee and any co-paying agent chosen by the Trustee and
acceptable to the Company Trustees and Hvide. The Paying Agent shall be
permitted to resign as Paying Agent upon 30 days' written notice to the Trustee
and Hvide. In the event that the Trustee shall no longer be the Paying Agent the
Company Trustees shall appoint a successor (which shall be a bank or trust
company acceptable to the Company Trustees and Hvide) to act as Paying Agent.
Certain Book-Entry Procedures for Global Certificates
The description of book-entry procedures in this Prospectus includes
summaries of certain rules and operating procedures of DTC that affect transfers
of interests in the global certificate or certificates issued in connection with
sales of Preferred Securities made pursuant to this Prospectus. Substantially
all of the Preferred Securities were issued as fully registered securities
registered in the name of Cede & Co. (as nominee for DTC). Fully registered
global Preferred Security certificates (the "Global Certificates") were issued,
representing such Preferred Securities and were deposited with DTC.
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DTC has advised the Issuer and the Company as follows: DTC is a limited
purpose trust company organized under the laws of the State of New York, a
member of the Federal Reserve System, a "clearing corporation" within the
meaning of the Uniform Commercial Code and a "clearing agency" registered
pursuant to the provisions of Section 17A of the Exchange Act. DTC was created
to hold securities for its participants ("participants") and facilitate the
clearance and settlement of securities transactions between participants through
electronic book-entry changes in accounts of its participants, thereby
eliminating the need for physical transfer and delivery of certificates.
Participants include securities brokers and dealers, banks, trust companies and
clearing corporations and may include certain other organizations. Indirect
access to the DTC system is available to other entities such as banks, brokers,
dealers and trust companies that clear through or maintain a custodial
relationship with a participant, either directly or indirectly ("indirect
participants").
DTC has advised the Issuer and the Company that its current practice,
upon the issuance of Global Certificates, is to credit, on its internal system,
the respective principal amount of the individual beneficial interests
represented by such Global Certificates to the accounts with DTC of the
participants through which such interests are to be held. Ownership of
beneficial interests in the Global Certificates will be shown on, and the
transfer of that ownership will be effected only through, records maintained by
DTC or its nominees (with respect to interests of participants) and the records
of participants and indirect participants (with respect to interests of persons
other than participants).
As long as DTC, or its nominee, is the registered holder of a Global
Certificate, DTC or such nominee, as the case may be, will be considered the
sole owner and holder of the Preferred Securities represented by such Global
Certificate for all purposes under the Declaration and the Preferred Securities.
Except in certain limited circumstances owners of beneficial interests
in a Global Certificate will not be entitled to have any portions of such Global
Certificate registered in their names, will not receive or be entitled to
receive physical delivery of Preferred Securities in definitive form and will
not be considered the owners or holders of the Global Certificate (or any
Preferred Securities represented thereby) under the Declaration or the Preferred
Securities.
Investors may hold their interests in Global Certificates directly
through DTC, if they are participants in such system, or indirectly through
organizations (including Euroclear and CEDEL), which are participants in such
system. All interests in a Global Certificate, including those held through
Euroclear or CEDEL, will be subject to the procedures and requirements of DTC.
Those interests held through Euroclear and CEDEL will also be subject to the
procedures and requirements of such system.
The laws of some states require that certain persons take physical
delivery in definitive form of securities that they own. Consequently, the
ability to transfer beneficial interests in a Global Certificate to such persons
may be limited. Because DTC can act only on behalf of its participants, which in
turn act on behalf of indirect participants and certain banks, the ability of a
person having beneficial interests in a Global Certificate to pledge such
interest to persons or entities that do not participate in the DTC system, or
otherwise take actions in respect of such interests, may be affected by the lack
of a certificate evidencing such interests.
Payments of Distributions on Global Certificates will be made to DTC or
its nominee as the registered owner thereof. Neither the Issuer, the Company,
the Trustee nor any of their respective agents will have any responsibility or
liability for any aspect of the records relating to or payments made on
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account of beneficial ownership interests in the Global Certificates or for
maintaining, supervising or reviewing any records relating to such beneficial
ownership interests.
The Issuer and the Company expect that DTC or its nominee, upon receipt
of any payment of Distributions in respect of a Global Certificate representing
any Preferred Securities held by it or its nominee, will immediately credit
participants' accounts with payments in amounts proportionate to their
respective beneficial interests in the principal amount of such Global
Certificate for such Preferred Securities as shown on the records of DTC or its
nominee. The Issuer and the Company also expect that payments by participants to
owners of beneficial interests in such Global Certificate held through such
participants will be governed by standing instructions and customary practices,
as is now the case with securities held for the accounts of customers registered
in "street name." Such payments will be the responsibility of such participants.
Except for trades involving only Euroclear and CEDEL participants,
interests in the Global Certificates will trade in DTC's Same-Day Funds
Settlement System and secondary market trading activity in such interests will
therefore settle in immediately available funds, subject in all cases to the
rules and procedures of DTC and its participants. Transfers between participants
in DTC will be effected in accordance with DTC's procedures, and will be settled
in same day funds. Transfers between participants in Euroclear and CEDEL will be
effected in the customary manner in accordance with their respective rules and
operating procedures.
Subject to compliance with the transfer and exchange restrictions
applicable to the Preferred Securities described elsewhere herein, cross-market
transfers between DTC participants, on the one hand, and Euroclear or CEDEL
participants, on the other hand, will be effected by DTC in accordance with
DTC's rules on behalf of Euroclear or CEDEL, as the case may be, by its
respective depositary; however, such cross-market transactions will require
delivery of instructions to Euroclear or CEDEL, as the case may be, by the
counterparts in such system in accordance with the rules and procedures and
within the established deadlines (Brussels time) of such system. Euroclear or
CEDEL, as the case may be, will, if the transaction meets its settlement
requirements, deliver instructions to its respective depository to take action
to effect final settlement on its behalf by delivering or receiving interests in
the relevant Global Certificate in DTC, and making or receiving payment in
accordance with customary procedures for same-day funds settlement applicable to
DTC. Euroclear participants and CEDEL participants may not deliver instructions
directly to the depositories for Euroclear or CEDEL.
Because of time zone differences, the securities account of a Euroclear
or CEDEL participant purchasing an interest in a Global Certificate from a DTC
participant will be credited, and any such crediting will be reported to the
relevant Euroclear or CEDEL participant, during the securities settlement
processing day (which must be a business day for Euroclear and CEDEL)
immediately following the DTC settlement date. Cash received in Euroclear or
CEDEL as a result of sales of interests in a Global Certificate by or through a
Euroclear or CEDEL participant to a DTC participant will be received with value
on the DTC settlement date but will be available in the relevant Euroclear or
CEDEL cash account only as of the business day for Euroclear or CEDEL following
the DTC settlement date.
DTC has advised the Issuer and the Company that it will take any action
permitted to be taken by a holder of Global Certificates (including the
presentation of Preferred Securities for exchange as described below and the
conversion of Preferred Securities) only at the direction of one or more
participants to whose account with DTC interests in the Global Certificates are
credited and only in
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respect of such portion of the aggregate liquidation amount of the Preferred
Securities as to which such participant or participants has or have given such
direction. However, if there is a Declaration Event of Default, DTC reserves the
right to exchange the Global Certificates for legended Preferred Securities in
certificated form, and to distribute such Preferred Securities to its
participants.
Although DTC, Euroclear and CEDEL have agreed to the foregoing
procedures in order to facilitate transfers of beneficial ownership interests in
the Global Certificates among participants of DTC, Euroclear and CEDEL, they are
under no obligation to perform or continue to perform such procedures, and such
procedures may be discontinued at any time. None of the Issuer, the Company, the
Trustee nor any of their respective agents will have any responsibility for the
performance by DTC, Euroclear and CEDEL, their participants or indirect
participants of their respective obligations under the rules and procedures
governing their operations, including maintaining, supervising or reviewing the
records relating to, or payments made on account of, beneficial ownership
interests in Global Certificates.
Redemption notices shall be sent to Cede as the registered holder of
the Preferred Securities. If less than all of the Preferred Securities are being
redeemed, DTC's current practice is to determine by lot the amount of the
interest of each direct participant to be redeemed.
Although voting with respect to the Preferred Securities is limited to
the holders of record of the Preferred Securities, in those instances in which a
vote is required, neither DTC nor Cede will itself consent or vote with respect
to Preferred Securities. Under its usual procedures, DTC would mail an omnibus
proxy (the "Omnibus Proxy") to the Trustee as soon as possible after the record
date. The Omnibus Proxy assigns Cede's consenting or voting rights to those
direct participants to whose accounts such Preferred Securities are credited on
the record date (identified in a listing attached to the Omnibus Proxy).
Conveyance of notices and other communications by DTC to participants,
by participants to indirect participants, and by participants and indirect
participants to beneficial owners of the Preferred Securities and the voting
rights of participants, indirect participants and beneficial owners of Preferred
Securities will be governed by arrangements among them, subject to any statutory
or regulatory requirements as may be in effect from time to time.
DTC may discontinue providing its services as securities depositary
with respect to the Preferred Securities at any time by giving reasonable notice
to the Trustee and Hvide. In the event that a successor securities depositary is
not obtained, definitive Preferred Securities certificates representing such
Preferred Securities are required to be printed and delivered. Hvide, at its
option, may decide to discontinue use of the system of book-entry transfers
through DTC (or a successor depositary). After a Debenture Event of Default, the
holders of a majority in liquidation amount of Preferred Securities may
determine to discontinue the system of book-entry transfers through DTC. In any
such event, definitive certificates for the Preferred Securities will be printed
and delivered.
Transfer Agent, Registrar and Paying, Conversion and Exchange Agent
The Bank of New York, the Trustee, currently acts as transfer agent,
registrar and paying, conversion and exchange agent for the Preferred
Securities.
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Registration of transfers or exchanges of Preferred Securities will be
effected without charge by or on behalf of the Issuer, but upon payment of any
tax or other governmental charges that may be imposed in connection with any
transfer or exchange. The Issuer will not be required to register or cause to be
registered the transfer of the Preferred Securities after such Preferred
Securities have been called for redemption.
Information Concerning the Trustee
Hvide and certain of its subsidiaries may maintain deposit accounts and
conduct other banking and corporate securities transactions and relationships
with the Trustee in the ordinary course of their businesses. The Trustee, other
than during the occurrence and continuance of a Declaration Event of Default,
undertakes to perform only such duties as are specifically set forth in the
Declaration and, after such Declaration Event of Default, must exercise the same
degree of care and skill as a prudent person would exercise or use in the
conduct of his or her own affairs. Subject to this provision, the Trustee is
under no obligation to exercise any of the powers vested in it by the
Declaration at the request of any holder of Preferred Securities unless it is
offered reasonable indemnity against the costs, expenses and liabilities that
might be incurred thereby. If no Declaration Event of Default has occurred and
is continuing and the Trustee is required to decide between alternative causes
of action, construe ambiguous provisions in the Declaration or is unsure of the
application of any provision of the Declaration, and the matter is not one on
which holders of Preferred Securities are entitled under the Declaration to
vote, then the Trustee shall take such action as is directed by Hvide and, if
not so directed, shall take such action as it deems advisable and in the best
interests of the holders of the Preferred Securities and the Common Securities
and will have no liability except for its own bad faith, negligence or willful
misconduct.
Miscellaneous
The Company Trustees are authorized and directed to conduct the affairs
of and to operate the Issuer in such a way that the Issuer will not be deemed to
be an "investment company" required to be registered under the Investment
Company Act or classified as an association taxable as a corporation for United
States federal income tax purposes and so that the Debentures will be treated as
indebtedness of Hvide for United States federal income tax purposes. In this
connection, Hvide and the Company Trustees are authorized to take any action,
not inconsistent with applicable law, the certificate of trust of the Issuer or
the Declaration, that Hvide and the Company Trustees determine in their
discretion to be necessary or desirable for such purposes, as long as such
action does not materially adversely affect the interests of the holders of the
Preferred Securities.
Holders of the Preferred Securities have no preemptive or similar
rights.
The Issuer may not borrow money or issue debt or mortgage or pledge any
of its assets.
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DESCRIPTION OF THE GUARANTEE
The Guarantee was executed and delivered by Hvide concurrently with the
issuance by the Issuer of the Preferred Securities for the benefit of the
holders from time to time of such Preferred Securities. The Bank of New York is
the trustee ("Guarantee Trustee") under the Guarantee. This summary of certain
provisions of the Guarantee does not purport to be complete and is subject to,
and qualified in its entirety by reference to, all of the provisions of the
Guarantee, a copy of which has been filed as an exhibit to the registration
statement. The Guarantee Trustee holds the Guarantee for the benefit of the
holders of the Preferred Securities.
General
Pursuant to and to the extent set forth in the Guarantee, Hvide has
irrevocably agreed to pay in full on a subordinated basis, to the extent set
forth herein, the Guarantee Payments (as defined below) to the holders of the
Preferred Securities, as and when due, regardless of any defense, right of
set-off or counterclaim that the Issuer may have or assert other than the
defense of payment. The following payments with respect to the Preferred
Securities, to the extent not paid by or on behalf of the Issuer (the "Guarantee
Payments"), are subject to the Guarantee: (i) any accumulated and unpaid
Distributions required to be paid on the Preferred Securities, to the extent
that the Issuer has funds on hand available therefor at such time, (ii) the
redemption price with respect to any Preferred Securities called for redemption
to the extent that the Issuer has funds on hand available therefor at such time,
or (iii) upon a voluntary or involuntary dissolution, winding up or liquidation
of the Issuer (unless the Debentures are distributed to holders of the Preferred
Securities), the lesser of (a) the Liquidation Distribution, to the extent that
the Issuer has funds on hand available therefor at such time, and (b) the amount
of assets of the Issuer remaining available for distribution to holders of
Preferred Securities. Hvide's obligation to make a Guarantee Payment may be
satisfied by direct payment of the required amounts by Hvide to the holders of
the Preferred Securities or by causing the Issuer to pay such amounts to such
holders.
The Guarantee is an irrevocable guarantee on a subordinated basis of
the Issuer's obligations under the Preferred Securities, but applies only to the
extent that the Issuer has funds sufficient to make such payments, and is not a
guarantee of collection. If Hvide does not make interest payments on the
Debentures held by the Issuer, the Issuer will not be able to pay Distributions
on the Preferred Securities and will not have funds legally available therefor.
Hvide has, through the Guarantee, the Declaration, the Debentures and
the Indenture, taken together, fully, irrevocably and unconditionally guaranteed
all of the Issuer's obligations under the Preferred Securities. No single
document standing alone or operating in conjunction with fewer than all of the
other documents constitutes such guarantee. It is only the combined operation of
these documents that has the effect of providing a full, irrevocable and
unconditional guarantee of the Issuer's obligations under the Preferred
Securities. See "Relationship Among the Preferred Securities, the Debentures and
the Guarantee."
The Company has also agreed separately to irrevocably and
unconditionally guarantee the obligations of the Issuer with respect to the
Common Securities to the same extent as the Guarantee, except that upon the
occurrence and during the continuation of a Declaration Event of Default,
holders of Preferred Securities shall have priority over holders of Common
Securities with respect to distributions and payments on liquidation, redemption
or otherwise.
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Status of the Guarantee
The Guarantee constitutes an unsecured obligation of Hvide and ranks
subordinate and junior in right of payment to all other liabilities of Hvide and
ranks pari passu with any guarantee now or hereafter entered into by Hvide in
respect of any preferred or preference stock of any affiliate of Hvide and
senior to the Common Stock of Hvide. The terms of the Preferred Securities
provide that each holder by acceptance thereof, consents and agrees to the
subordination and other provisions of the Guarantee.
The Guarantee constitutes a guarantee of payment and not of collection
(i.e., the guaranteed party may institute a legal proceeding directly against
the Guarantor to enforce its rights under the Guarantee without first
instituting a legal proceeding against any other person or entity). The
Guarantee is held for the benefit of the holders of the Preferred Securities.
The Guarantee will not be discharged except by payment of the Guarantee Payments
in full to the extent not paid by the Issuer or upon distribution of the
Debentures to the holders of the Preferred Securities. The Guarantee does not
place a limitation on the amount of additional indebtedness that may be incurred
by Hvide or any of its subsidiaries.
Amendments and Assignment
Except with respect to any changes that do not materially adversely
affect the rights of holders of the Preferred Securities (in which case no vote
will be required), the Guarantee may not be amended without the prior approval
of the holders of not less than a majority in aggregate liquidation amount of
such outstanding Preferred Securities. The manner of obtaining any such approval
is as set forth under "Description of the Preferred Securities--Voting Rights;
Amendment of the Declaration." All guarantees and agreements contained in the
Guarantee shall bind the successors, assigns, receivers, trustees and
representatives of Hvide and shall inure to the benefit of the holders of the
Preferred Securities then outstanding.
Certain Covenants of Hvide
Hvide has covenanted in the Guarantee that if and so long as (i) the
Issuer is the holder of all the Debentures, (ii) a Tax Event in respect of the
Issuer has occurred and is continuing and (iii) Hvide has elected, and has not
revoked such election, to pay Additional Sums in respect of the Preferred
Securities and Common Securities, Hvide will pay to the Issuer such Additional
Sums. Hvide has also covenanted that it will not, and it will not cause any of
its subsidiaries to, (i) declare or pay any dividends or distributions on, or
redeem, purchase, acquire, or make a liquidation payment with respect to, any of
Hvide's capital stock or (ii) make any payment of principal, interest or
premium, if any, on or repay or repurchase or redeem any debt securities
(including guarantees of indebtedness for money borrowed) of Hvide that rank
pari passu with or junior to the Debentures (other than (a) any dividend,
redemption, liquidation, interest, principal or guarantee payment by Hvide where
the payment is made by way of securities (including capital stock) that rank
pari passu with or junior to the securities on which such dividend, redemption,
interest, principal or guarantee payment is being made, (b) payments under the
Guarantee, (c) purchases of Hvide Class A Common Stock related to the issuance
of Hvide Class A Common Stock under any of Hvide's benefit plans for its
directors, officers or employees, (d) as a result of a reclassification of
Hvide's capital stock or the exchange or conversion of one series or class of
Hvide's capital stock for another series or class of Hvide's capital stock and
(e) the purchase of fractional interests in shares of Hvide's capital stock
pursuant to the conversion or exchange provisions of such capital stock or the
security being converted or exchanged) if at such time (i) there shall have
occurred
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and be continuing any event of which Hvide has actual knowledge that with the
giving of notice or the lapse of time, or both, would constitute a Debenture
Event of Default, (ii) Hvide shall be in default with respect to its payment of
any obligations under the Guarantee or (iii) Hvide shall have given notice of
its selection of an Extension Period as provided in the Indenture with respect
to the Debentures and shall not have rescinded such notice, or such Extension
Period, or any extension thereof, shall be continuing. Hvide has also covenanted
(i) for so long as Preferred Securities are outstanding, not to convert
Debentures except pursuant to a notice of conversion delivered to the Conversion
Agent by a holder of Preferred Securities, (ii) to maintain directly or
indirectly 100% ownership of the Common Securities, provided that certain
successors which are permitted pursuant to the Indenture may succeed to Hvide's
ownership of the Common Securities, (iii) not to voluntarily dissolve, wind-up,
liquidate or terminate the Issuer, except (a) in connection with a distribution
of the Debentures to the holders of the Preferred Securities in liquidation of
the Issuer upon the redemption of all outstanding Preferred Securities or (b) in
connection with certain mergers, consolidations or amalgamations permitted by
the Declaration, (iv) to maintain the reservation for issuance of the number of
shares of Hvide Class A Common Stock that would be required from time to time
upon the conversion of all of the Debentures then outstanding, (v) to use its
reasonable efforts, consistent with the terms and provisions of the Declaration,
to cause the Issuer to remain classified as a grantor trust and not as an
association taxable as a corporation for United States federal income tax
purposes and (vi) to deliver shares of Hvide Class A Common Stock upon an
election by the holders of the Preferred Securities to convert such Preferred
Securities into Hvide Class A Common Stock.
As part of the Guarantee, Hvide has agreed that it will honor all
obligations described therein relating to the conversion or exchange of the
Preferred Securities into or for Hvide Class A Common Stock or Debentures.
Guarantee Events of Default
An event of default under the Guarantee will occur upon the failure of
Hvide to perform any of its payment or other obligations thereunder. The holders
of a majority in aggregate liquidation amount of the Preferred Securities have
the right to direct the time, method and place of conducting any processing for
any remedy available to the Guarantee Trustee in respect of the Guarantee or to
direct the exercise of any trust or power conferred upon the Guarantee Trustee
under the Guarantee.
If the Guarantee Trustee fails to enforce the Guarantee, any holder of
the Preferred Securities may institute a legal proceeding directly against Hvide
to enforce its rights under the Guarantee without first instituting a legal
proceeding against the Issuer, the Guarantee Trustee or any other person or
entity. In addition, any record holder of Preferred Securities shall have the
right, which is absolute and unconditional, to proceed directly against Hvide to
obtain Guarantee Payments, without first waiting to determine if the Guarantee
Trustee has enforced the Guarantee or instituting a legal proceeding against the
Issuer, the Guarantee Trustee or any other person or entity. Hvide has waived
any right or remedy to require that any action be brought just against the
Issuer, or any other person or entity before proceeding directly against Hvide.
Hvide, as guarantor, is required to file annually with the Guarantee
Trustee a certificate as to whether or not Hvide is in compliance with all the
conditions and covenants applicable to it under the Guarantee.
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Information Concerning the Guarantee Trustee
The Guarantee Trustee, other than during the occurrence and continuance
of a default by Hvide in performance of the Guarantee, undertakes to perform
only such duties as are specifically set forth in the Guarantee and, after
default with respect to the Guarantee, must exercise the same degree of care and
skill as a prudent person would exercise or use under the circumstances in the
conduct of his or her own affairs. Subject to this provision, the Guarantee
Trustee is under no obligation to exercise any of the powers vested in it by the
Guarantee at the request of any holder of Preferred Securities unless it is
offered reasonable indemnity against the costs, expenses and liabilities that
might be incurred thereby.
Termination of the Guarantee
The Guarantee will terminate and be of no further force and effect upon
full payment of the redemption price of the Preferred Securities, upon full
payment of the amounts payable upon liquidation of the Issuer, upon the
distribution, if any, of Hvide Class A Common Stock to the holders of Preferred
Securities in respect of the conversion of all such holders' Preferred
Securities into Hvide Class A Common Stock or upon distribution of Debentures to
the holders of the Preferred Securities in exchange for all of the Preferred
Securities. The Guarantee will continue to be effective or will be reinstated,
as the case may be, if at any time any holder of Preferred Securities must
restore payment of any sums under such Preferred Securities or the Guarantee.
Governing Law
The Guarantee is governed by and construed in accordance with the laws
of the State of New York.
DESCRIPTION OF THE DEBENTURES
The Debentures are to be issued under a Junior Subordinated Indenture
(the "Indenture") between Hvide and The Bank of New York, as trustee (the
"Indenture Trustee"), copies of which will be available for inspection at the
corporate trust office of the Indenture Trustee in New York, New York. The terms
of the Debentures include those stated in the Indenture and made a part thereof
by reference to the Trust Indenture Act in effect on the date of the Indenture.
This summary of certain terms and provisions of the Debentures and the Indenture
does not purport to be complete and is subject to, and is qualified in its
entirety by reference to, the Indenture. Whenever particular defined terms of
the Indenture are referred to herein, such defined terms are incorporated herein
by reference.
General
The Debentures are unsecured and rank junior and are subordinate in
right of payment to all Senior Debt of Hvide. The Debentures are limited in
aggregate principal amount to $118.5 million, such amount being the sum of the
$115.0 million aggregate stated liquidation amount of the Preferred Securities
and the $3.5 million capital contributed by Hvide in exchange for the Common
Securities. The Indenture does not limit the incurrence or issuance of other
secured or unsecured debt of Hvide, whether under the Indenture or any existing
or other indenture that Hvide may enter into in the future or otherwise. See
"--Subordination."
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Concurrently with the issuance of the Preferred Securities, the Issuer
invested the proceeds thereof and the consideration paid by Hvide for the Common
Securities in the Debentures. The Debentures are in the principal amount equal
to the aggregate stated liquidation amount of the Preferred Securities plus
Hvide's concurrent investment in the Common Securities.
The Debentures are not subject to any sinking fund provision. The
entire principal amount of the Debentures will mature, and become due and
payable, together with any accrued and unpaid interest thereon, on June 15,
2012.
Interest
The Debentures bear interest at the annual rate of 6 1/2% per annum,
payable quarterly in arrears on January 1, April 1, July 1 and October 1 of each
year, commencing on October 1, 1997 (each, an "Interest Payment Date"), to the
person in whose name each Debenture is registered at the close of business on
the fifteenth day (whether or not a Business Day) preceding such Interest
Payment Date (the "Regular Record Date"), subject to certain exceptions. It is
anticipated that, until the Liquidation, if any, of the Issuer, each Debenture
will be held in the name of the Trustee in trust for the benefit of the holders
of the Preferred Securities and the Common Securities. The amount of interest
payable for any period will be computed on the basis of a 360-day year of twelve
30-day months. In the event that any date on which interest is payable on the
Debentures is not a Business Day, then payment of the interest payable on such
date will be made on the next succeeding day that is a Business Day (and without
any interest or other payment in respect of any such delay) except that if such
Business Day is in the next succeeding calendar year, then such payment shall be
made on the immediately preceding Business Day, in each case with the same force
and effect as if made on such Interest Payment Date. Accrued interest that is
not paid on the applicable Interest Payment Date will bear additional interest
on the amount thereof (to the extent permitted by law) at the stated rate per
annum, compounded quarterly. The term "interest" as used herein shall include
quarterly interest payments, interest on quarterly interest payments not paid on
the applicable Interest Payment Date, and Additional Sums, as applicable.
Global Securities
If distributed to holders of the Preferred Securities in connection
with the involuntary or voluntary dissolution, winding-up or liquidation of the
Issuer as a result of the occurrence of a Special Event, the Debentures will be
issued in the same form as the Preferred Securities that such Debentures
replace. Any Global Certificate will be replaced by one or more global
securities (each, a "Global Security") registered in the name of the depositary
or its nominee. Except under the limited circumstances described below, the
Debentures represented by the Global Security will not be exchangeable for, and
will not otherwise be issuable as, Debentures in definitive form. The Global
Securities described above may not be transferred except by the depository to a
nominee of the depository or by a nominee of the depository to the depository or
another nominee of the depository or to a successor depository or its nominee.
The laws of some jurisdictions require that certain purchasers of
securities take physical delivery of securities in definitive form. Such laws
may impair the ability to transfer beneficial interests in a Global Security.
Except as provided below, owners of beneficial interests in a Global
Security will not be entitled to receive physical delivery of Debentures in
definitive form and will not be considered the holders
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thereof for any purpose under the Indenture, and no Global Security representing
Debentures shall be exchangeable, except for another Global Security of like
denomination and tenor to be registered in the name of the depository or its
nominee or to a successor depository or its nominee. Accordingly, each
beneficial owner of Preferred Securities must rely on the procedures of DTC, or
if such person is not a participant, on the procedures of the participant
through which such person owns its interest to exercise any rights of a holder
under the Indenture.
If Debentures are distributed to holders of Preferred Securities in
liquidation of such holders' interests in the Issuer and a Global Security is
issued, DTC will act as securities depository for the Debentures represented by
such Global Security. For a description of DTC and the general terms of the
depository arrangements, see "Description of the Preferred Securities--Certain
Book-Entry Procedures for Global Certificates." As of the date of this
Prospectus, the description therein of DTC's book-entry system and DTC's
practices as they relate to purchases, transfers, notices and payments with
respect to the Preferred Securities apply in all material respects to any debt
obligations represented by one or more Global Securities held by DTC. Hvide may
appoint a successor to DTC or any successor depository in the event DTC or such
depository is unable or unwilling to continue as a depository for the Global
Securities.
None of Hvide, the Indenture Trustee, any Paying Agent or the
Securities Registrar will have any responsibility or liability for any aspect of
the records relating to or payments made on account of beneficial ownership
interests of the Global Security representing such Debentures or for
maintaining, supervising or reviewing any records relating to such beneficial
ownership interests.
A Global Security shall be exchangeable for Debentures registered in
the names of persons other than DTC or its nominee only if (i) DTC notifies
Hvide that it is unwilling or unable to continue as a depository for such Global
Debenture and no successor depositary shall have been appointed by Hvide within
90 days, or if at any time DTC ceases to be a "clearing agency" registered under
the Exchange Act at a time when DTC is required to be so registered to act as
such depository and no such successor depository has been appointed within 90
days by the Company, (ii) Hvide in its sole discretion determines that such
Global Security shall be so exchangeable, or (iii) there shall have occurred and
be continuing an Event of Default with respect to such Global Security. Any
Global Security that is exchangeable pursuant to the preceding sentence shall be
exchangeable for definitive certificates registered in such names as DTC shall
direct. It is expected that such instructions will be based upon directions
received by DTC from its participants with respect to ownership of beneficial
interests in such Global Security. In the event that Debentures are issued in
definitive form, such Debentures will be in denominations of $50 and integral
multiples thereof and may be transferred or exchanged at the offices described
in "--Payment and Paying Agent" below.
Payment and Paying Agent
Payments on Debentures represented by a Global Security will be made to
DTC, as the depositary for the Debentures. In the event Debentures are issued in
definitive form, principal of and premium, if any, and any interest on
Debentures will be payable, the transfer of the Debentures will be registrable,
and the Debentures will be exchangeable for Debentures of other denominations of
a like aggregate principal amount at the corporate office of the Indenture
Trustee in the City of New York or at the office of such Paying Agent or Paying
Agents as Hvide may designate, except that at the option of Hvide payment of any
interest may be made (i) by check mailed to the address of the Person entitled
thereto as
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such address shall appear in the Securities Register or (ii) by wire transfer to
an account maintained by the Person entitled thereto as specified in the
Securities Register, provided that proper transfer instructions have been
received by the Regular Record Date. Payment of any interest on Debentures will
be made to the Person in whose name such Debentures are registered at the close
of business on the Regular Record Date for such interest, except in the case of
Defaulted Interest. The Regular Record Date for the interest payable on any
Interest Payment Date shall be the fifteenth day (whether or not a Business Day)
next preceding such Interest Payment Date. Hvide may at any time designate
additional Paying Agents or rescind the designation of any Paying Agent.
Any monies deposited with the Indenture Trustee or any Paying Agent, or
then held by Hvide in trust, for the payment of the principal of and premium, if
any, or interest on any Debentures and remaining unclaimed for two years after
such principal and premium, if any, or interest has become due and payable
shall, at the request of Hvide, be repaid to Hvide and the holder of such
Debentures shall thereafter look, as a general unsecured creditor, only to Hvide
for payment thereof.
Option to Extend Interest Payment Period
So long as no Event of Default under the Indenture has occurred and is
continuing, Hvide has the right under the Indenture to defer the payment of
interest on the Debentures at any time or from time to time for a period not
exceeding 20 consecutive quarters with respect to each Extension Period,
provided that no Extension Period may extend beyond the stated maturity of the
Debentures. At the end of such Extension Period, Hvide must pay all interest
then accrued and unpaid (together with interest thereon at the stated annual
rate, compounded quarterly, to the extent permitted by applicable law). During
an Extension Period, interest will continue to accrue and holders of Debentures
(or holders of Preferred Securities while the Preferred Securities are
outstanding) will be required to accrue interest income for United States
federal income tax purposes. See "Certain Federal Income Tax
Consequences--Original Issue Discount."
During any such Extension Period, Hvide shall not, and shall not permit
any subsidiary to, (i) declare or pay any dividends or distributions on, or
redeem, purchase, acquire, or make a liquidation payment with respect to, any of
Hvide's capital stock or (ii) make any payment of principal, interest or
premium, if any, on or repay, repurchase or redeem any debt securities
(including guarantees of indebtedness for money borrowed) of Hvide that rank
pari passu with or junior to the Debentures (other than in the case of both (i)
and (ii) (a) any dividend, redemption, liquidation, interest, principal or
guarantee payment by Hvide where the payment is made by way of securities
(including capital stock) that rank pari passu with or junior to the securities
on which such dividend, redemption, interest, principal or guarantee payment is
being made, (b) payments under the Guarantee, (c) purchases of Hvide Class A
Common Stock related to the issuance of Hvide Class A Common Stock under any of
Hvide's benefit plans for its directors, officers or employees, (d) as a result
of a reclassification of Hvide's capital stock or the exchange or conversion of
one series or class of Hvide's capital stock for another series or class of
Hvide's capital stock, and (e) the purchase of fractional interests in shares of
Hvide's capital stock pursuant to the conversion or exchange provisions of such
capital stock or the security being converted or exchanged).
Prior to the termination of any such Extension Period, Hvide may
further extend the interest payment period, provided that no Extension Period
may exceed 20 consecutive quarters or extend beyond the stated maturity of the
Debentures. Upon the termination of any such Extension Period and the
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payment of all amounts then due on any Interest Payment Date, Hvide may elect to
begin a new Extension Period subject to the above requirements. No interest
shall be due and payable during an Extension Period, except at the end thereof.
Hvide shall give the Trustee, the Delaware Trustee, the Company Trustees and the
Indenture Trustee notice of its election to begin any Extension Period at least
one Business Day prior to the earlier of (i) the record date for the date
Distributions on the Preferred Securities (or, if no Preferred Securities are
outstanding, for the date interest on the Debentures) would have been payable
except for the election to begin such Extension Period and (ii) the date the
Trustee is (or, if no Preferred Securities are outstanding, the Indenture
Trustee is) required to give notice to The Nasdaq National Market or other
applicable self-regulatory organization or to holders of such Preferred
Securities (or, if no Preferred Securities are outstanding, to the holders of
such Debentures) of such election. The Indenture Trustee and the Trustee shall
give notice of Hvide's election to begin an Extension Period to the holders of
the Debentures and the Preferred Securities, respectively.
Mandatory Redemption
Upon repayment at maturity or as a result of acceleration upon the
occurrence of a Debenture Event of Default, Hvide will redeem the Debentures, in
whole but not in part, at a redemption price equal to 100% of the principal
amount thereof, together with any accrued and unpaid interest thereon. Any
payment pursuant to this provision shall be made prior to 12:00 noon, New York
City time, on the date of such repayment or acceleration or at such other time
on such earlier date as the parties thereto shall agree. The Debentures are not
entitled to the benefit of any sinking fund or, except as set forth above or as
a result of acceleration, any other provision for mandatory prepayment.
Optional Redemption
On and after July 2, 2000, and subject to the next succeeding sentence,
Hvide will have the right, at any time and from time to time, to redeem the
Debentures, in whole or in part, upon notice given as provided below, during the
twelve-month periods beginning on July 2 in each of the following years and at
the indicated redemption prices (expressed as a percentage of the principal
amount of the Debentures being redeemed), together with any accrued but unpaid
interest on the portion being redeemed.
<TABLE>
<CAPTION>
Redemption Redemption
Year Price Year Price
<S> <C> <C> <C>
2000................................... 104.55% 2004........................... 101.95%
2001................................... 103.90% 2005........................... 101.30%
2002................................... 103.25% 2006........................... 100.65%
2003................................... 102.60% 2007 and thereafter 100.0%
</TABLE>
For so long as the Issuer is the holder of all the outstanding
Debentures, the proceeds of any such redemption will be used by the Issuer to
redeem Preferred Securities and Common Securities in accordance with their
terms. Hvide may not redeem the Debentures in part unless all accrued and unpaid
interest has been paid in full on all outstanding Debentures. See "Description
of the Preferred Securities--Optional Redemption."
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Hvide also shall have the right to redeem the Debentures at any time
after July 2, 2000 upon the occurrence of a Tax Event as described in
"Description of the Preferred Securities--Special Event Exchange or Redemption"
at a redemption price equal to the principal amount thereof, plus any accrued
and unpaid interest.
If at any time following the Conversion Expiration Date, less than 5%
of the original aggregate principal amount of the Debentures remains
outstanding, such Debentures shall be redeemable at the option of Hvide, in
whole but not in part, at a redemption price equal to the principal amount
thereof, plus any accrued and unpaid interest.
Redemption Procedures
Notices of any redemption of the Debentures and the procedures for such
redemption shall be as provided with respect to the Preferred Securities under
"Description of the Preferred Securities--Redemption Procedures." Notice of any
redemption will be mailed at least 30 days but not more than 60 days before the
redemption date to each holder of Debentures to be redeemed at its registered
address. Unless Hvide defaults in payment of the redemption price, on and after
the redemption date interest ceases to accrue and conversion rights cease on
such Debentures or portions thereof called for redemption.
Distribution of Debentures
At any time, Hvide will have the right to dissolve the Issuer and cause
the Debentures to be distributed to the holders of the Preferred Securities in
liquidation of the Issuer after satisfaction of liabilities to creditors of the
Issuer as provided by applicable law. If distributed to holders of Preferred
Securities in liquidation, the Debentures will initially be issued in the form
of one or more Global Securities and DTC, or any successor depositary for the
Preferred Securities, will act as depositary for the Debentures. It is
anticipated that the depositary arrangements for the Debentures would be
substantially identical to those in effect for the Preferred Securities. There
can be no assurance as to the market price of any Debentures that may be
distributed to the holders of Preferred Securities. For a description of DTC and
the terms of the depositary arrangement, see "Description of the Preferred
Securities--Certain Book-Entry Procedures for Global Certificates."
Conversion of the Debentures
The Debentures are convertible at the option of the holders of the
Debentures into Hvide Class A Common Stock, at any time prior to redemption,
maturity or the Conversion Expiration Date, initially at the rate of 1.7544
shares of Hvide Class A Common Stock for each $50 in principal amount of
Debentures (equivalent to a conversion price of $28.50 per share of Hvide Class
A Common Stock), subject to the conversion price adjustments described under
"Description of the Preferred Securities--Conversion Rights." The Issuer has
covenanted for so long as the Preferred Securities are outstanding not to
convert Debentures except pursuant to a notice of conversion delivered to the
Conversion Agent by a holder of Preferred Securities. Upon surrender of such
Preferred Securities to the Conversion Agent for conversion, the Issuer will
distribute the commensurate principal amount of the Debentures to the Conversion
Agent on behalf of the holder of every Preferred Security so converted,
whereupon the Conversion Agent will convert such Debentures into Hvide Class A
Common Stock on behalf of such holder. Hvide's delivery to the holders of the
Debentures (through the Conversion Agent)
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of the fixed number of shares of Hvide Class A Common Stock into which the
Debentures are convertible (together with the cash payment, if any, in lieu of
fractional shares) will be deemed to satisfy Hvide's obligation to pay the
principal amount of the Debentures, and the accrued and unpaid interest
attributable to the period from the last date to which interest has been paid or
duly provided for; provided, however, that if any Debenture is converted on or
after a Regular Record Date for payment of interest, the interest payable on the
related Interest Payment Date with respect to such Debenture shall be paid to
the Issuer (which will distribute such interest to the holder) or other holder
of Debentures, as the case may be, despite such conversion; provided, further,
that if a redemption date falls between such Regular Record Date and the related
Interest Payment Date, the amount of such payment shall include interest accrued
to, but excluding, such redemption date.
For possible restrictions on the ability of non-U.S. citizens to
convert Debentures into Class A Common Stock, see "Risk Factors--Restriction on
Foreign Ownership of Common Stock; Possible Inability to Convert Preferred
Securities and Debentures."
Expiration of Conversion Rights
The conversion rights of any Debentures held by the Issuer shall expire
upon the expiration of the conversion rights of the Preferred Securities on the
terms described above under "Description of the Preferred Securities--Conversion
Rights."
Modification of Indenture
From time to time, Hvide and the Indenture Trustee may, without the
consent of the holders of Debentures, amend, waive or supplement the Indenture
for specified purposes, including, among other things, curing ambiguities,
defects or inconsistencies (provided that any such action does not materially
adversely affect the interest of the holders of the Debentures, or the holders
of the Preferred Securities so long as they remain outstanding) and qualifying,
or maintaining the qualification of, the Indenture under the Trust Indenture
Act. The Indenture contains provisions permitting Hvide and the Indenture
Trustee, with the consent of the holders of not less than a majority in
principal amount of the outstanding Debentures, to modify the Indenture in a
manner affecting the rights of the holders of the Debentures; provided that no
such modification may, without the consent of the holder of each outstanding
Debenture so affected, (i) change the stated maturity of the Debentures, or
reduce the principal amount thereof, or reduce any premium payable on the
redemption thereof, or reduce the rate or extend the time of payment of interest
thereon (other than deferrals of the payments of interest as described under
"--Option to Extend Interest Payment Period") or impair any right to institute
suit for the enforcement of any such payment, or adversely affect the
subordination provisions of the Indenture or any right to convert any Debentures
or (ii) reduce the percentage of principal amount of Debentures, the holders of
which are required to consent to any such modification of the Indenture,
provided that, so long as any of the Preferred Securities remain outstanding, no
such modification may be made that adversely affects the holders of such
Preferred Securities in any material respect, and no termination of the
Indenture may occur, and no waiver of any Debenture Event of Default or
compliance with any covenant under the Indentures shall be effective, without
the prior consent of the holders of at least a majority in aggregate
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liquidation amount of the Preferred Securities then outstanding unless and until
the principal of the Debentures and all accrued and unpaid interest thereon has
been paid in full; provided, however, that where a consent under the Indenture
would require the consent of each holder of Debentures affected thereby, no such
consent shall be given by the Trustee without the prior consent of each holder
of Preferred Securities.
Debenture Events of Default
The Indenture provides that any one or more of the following described
events that has occurred and is continuing constitutes a "Debenture Event of
Default" with respect to such Debentures: (i) failure for 30 days to pay any
interest on the Debentures, when due (subject to the deferral of any due date in
the case of an Extension Period); or (ii) failure to pay any principal or
premium, if any, on the Debentures when due whether at maturity, upon
redemption, by declaration or otherwise; or (iii) failure by Hvide to deliver
shares of Hvide Class A Common Stock upon an appropriate election by holders of
Debentures to convert such Debentures; or (iv) failure to observe or perform in
any material respect certain other covenants contained in the Indenture for 90
days after written notice to Hvide from the Indenture Trustee or to the
Indenture Trustee and Hvide from the holders of at least 25% in aggregate
outstanding principal amount of such Debentures or by the holder or holders of
at least 25% in the aggregate outstanding liquidation amount of the Preferred
Securities; or (v) the dissolution, winding up or termination of the Trust,
except in connection with the distribution of Debentures to the holders of
Preferred Securities in liquidation of the Trust upon the redemption of all
outstanding Preferred Securities and in connection with certain mergers,
consolidations or amalgamations permitted by the Declaration; or (vi) certain
events in bankruptcy, insolvency or reorganization of Hvide.
The holders of a majority in aggregate outstanding principal amount of
the Debentures have the right to direct the time, method and place of conducting
any proceeding for any remedy available to the Indenture Trustee. The Indenture
Trustee or the holders of not less than 25% in aggregate principal amount of the
Debentures then outstanding may declare the principal due and payable
immediately upon a Debenture Event of Default, and, should the Indenture Trustee
or the holders of the Debentures fail to make such declaration, the holders of
at least 25% in aggregate liquidation amount of the Preferred Securities then
outstanding shall have such right. The holders of a majority in aggregate
outstanding principal amount of the Debentures may annul and rescind such
declaration if the default (other than the non-payment of the principal of the
Debentures which has become due solely by such acceleration) has been cured and
a sum sufficient to pay all matured installments of interest and principal due
otherwise than by acceleration has been deposited with the Indenture Trustee
and, should the holders of the Debentures fail to annul and rescind such
declaration, the holders of a majority in aggregate liquidation amount of the
Preferred Securities then outstanding shall have such right.
The holders of a majority in aggregate outstanding principal amount of
the Debentures affected thereby may, on behalf of the holders of all the
Debentures, waive any past default, except a default in the payment of principal
or interest (unless such default has been cured and a sum sufficient to pay all
matured installments of interest and principal due otherwise than by
acceleration has been deposited with the Indenture Trustee) or a default in
respect of a covenant or provision which under the Indenture cannot be modified
or amended without the consent of the holder of each outstanding Debenture
affected thereby
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and, should the holders of the Debentures fail to annul such declaration and
waive such default, the holders of a majority in aggregate liquidation amount of
the Preferred Securities shall have such right. Hvide is required to file
annually with the Indenture Trustee a certificate as to whether or not Hvide is
in compliance with all the conditions and covenants applicable to it under the
Indenture.
In case a Debenture Event of Default shall occur and be continuing as
to the Debentures, the Trustee will have the right to declare the principal of
and the interest on the Debentures and any other amounts payable under the
Indenture to be forthwith due and payable and to enforce its other rights as a
creditor with respect to the Debentures.
Enforcement of Certain Rights by Holders of Preferred Securities
If a Debenture Event of Default has occurred and is continuing and such
event is attributable to the failure of Hvide to pay interest, premium, if any,
or principal on the Debentures on the date such interest or principal is
otherwise payable, a holder of Preferred Securities may institute a Direct
Action for payment after the respective due date specified in the Debentures.
Hvide may not amend the Indenture to remove the foregoing right to bring a
Direct Action without the prior written consent of the holders of all of the
Preferred Securities. Notwithstanding any payment made to such holder of
Preferred Securities by Hvide in connection with a Direct Action, Hvide shall
remain obligated to pay the principal of or interest on the Debentures held by
the Issuer or the Trustee and Hvide shall be subrogated to the rights of the
holder of such Preferred Securities with respect to payments on the Preferred
Securities in the extent of any payments made by Hvide to such holder in any
Direct Action.
Consolidation, Merger, Sale of Assets and Other Transactions
The Indenture provides that Hvide shall not consolidate with or merge
into any other Person, continue in another jurisdiction or convey, transfer or
lease its properties and assets substantially as an entirety to any Person, and
no Person shall consolidate with or merge into Hvide or convey, transfer or
lease its properties and assets substantially or as an entirety to Hvide, unless
(i) in case Hvide consolidates with or merges into another Person or conveys,
transfers or leases its properties and assets substantially as an entirety to
any Person, the successor Person is organized under the laws of the United
States or any state or the District of Columbia, and such successor Person
expressly assumes Hvide's obligations on the Debentures; (ii) immediately after
giving effect thereto, no Debenture Event of Default, and no event which, after
notice or lapse of time or both, would become a Debenture Event of Default,
shall have happened and be continuing; (iii) in the case of the Debentures, such
transaction is permitted under the Declaration and Guarantee and does not give
rise to any breach or violation of the Declaration or Guarantee; and (iv)
certain other conditions as prescribed in the Indenture are met.
The general provisions of the Indenture do not afford holders of the
Debentures protection in the event of a highly leveraged or other transaction
involving Hvide that may adversely affect holders of the Debentures.
Expenses of Issuer
The Indenture provides that Hvide will pay all fees and expenses
related to (i) the Original Offering of the Preferred Securities and the
Debentures, (ii) the organization, maintenance and dissolution of the Trust,
(iii) the retention of the Issuer Trustees, the Guarantee Trustee and the
Indenture Trustee
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and (iv) the enforcement by the Trustee of the rights of the holders of the
Preferred Securities. The payment of such fees and expenses is fully and
unconditionally guaranteed by Hvide.
Satisfaction and Discharge
The Indenture provides that when, among other things, all Debentures
not previously delivered to the Indenture Trustee for cancellation (i) have
become due and payable or (ii) will become due and payable at their stated
maturity within one year or are to be called for redemption within one year
under irrevocable agreements satisfactory to the Indenture Trustee for the
giving of notice of redemption, and Hvide irrevocably deposits or causes to be
deposited with the Indenture Trustee trust funds, in trust, for the purpose and
in an amount in the currency or currencies in which the Debentures are payable
sufficient to pay and discharge the entire indebtedness on the Debentures not
previously delivered to the Indenture Trustee for cancellation, for the
principal and premium, if any, and interest to the date of the deposit or to the
stated maturity, as the case may be, then the Indenture will cease to be of
further effect (except as to Hvide's obligations to pay all other sums due
pursuant to the Indenture, to honor any conversion rights prior to the
redemption date or maturity date, and to provide the officers' certificates and
opinions of counsel described therein), and Hvide will be deemed to have
satisfied and discharged the Indenture.
Subordination
In the Indenture, Hvide has covenanted and agreed that any Debentures
issued thereunder will be subordinate and junior in right of payment to all
Senior Debt of Hvide whether now existing or hereafter incurred. Upon any
payment or distribution of assets to creditors upon any liquidation,
dissolution, winding-up, reorganization, assignment for the benefit of
creditors, marshaling of assets or any bankruptcy, insolvency, debt
restructuring or similar proceedings in connection with any insolvency or
bankruptcy proceeding of Hvide, the holders of Senior Debt will first be
entitled to receive payment in full of principal of and premium, if any, and
interest, if any, on such Senior Debt before the Trustee, on behalf of the
holders of the Debentures, will be entitled to receive or retain any payment in
respect of the principal of and premium, if any, or interest, if any, on the
Debentures.
In the event of the acceleration of the maturity of any Debentures, the
holders of all Senior Debt outstanding at the time of such acceleration will
first be entitled to receive payment in full of all amounts due thereon
(including any amounts due upon acceleration) before the holders of Debentures
will be entitled to receive or retain any payment in respect of the principal of
or premium, if any, or interest, if any, on the Debentures.
No payment on account of principal (or premium, if any) or interest, if
any, in respect of the Debentures may be made if there shall have occurred and
be continuing a default in any payment with respect to Senior Debt, or an event
of default with respect to any Senior Debt resulting in the acceleration of the
maturity thereof, or if any judicial proceeding shall be pending with respect to
any such default.
"Debt" means, with respect to any Person, whether recourse is to all or
a portion of the assets of such Person and whether or not contingent, (i) every
obligation of such Person for money borrowed; (ii) every obligation of such
Person evidenced by bonds, debentures, notes or other similar instruments,
including obligations incurred in connection with the acquisition of property,
assets or businesses; (iii) every reimbursement obligation of such Person with
respect to letters of credit, bankers' acceptances or similar facilities issued
for the account of such Person; (iv) every obligation of such Person issued or
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assumed as the deferred purchase price of property or services (but excluding
trade accounts payable or accrued liabilities arising in the ordinary course of
business); (v) every capital lease obligation of such Person; and (vi) every
obligation of the type referred to in clauses (i) through (v) of another Person
and all dividends of another person the payment of which, in either case, such
Person has guaranteed or for which such Person is responsible or liable,
directly or indirectly, as obligor or otherwise.
"Senior Debt" means the principal of (and premium, if any) and
interest, if any (including interest accruing on or after the filing of any
petition in bankruptcy or for reorganization relating to Hvide whether or not
such claim for post-petition interest is allowed in such proceeding), on Debt of
Hvide, whether incurred on or prior to the date of the Indenture or thereafter
incurred, unless, in the instrument creating or evidencing the same or pursuant
to which the same is outstanding, it is provided that such obligations are not
superior in right of payment to the Debentures or to other Debt which is pari
passu with, or subordinated to, the Debentures; provided, however, that Senior
Debt shall not be deemed to include: (i) any Debt of Hvide which, when incurred
and without respect to any election under Section 1111(b) of the Bankruptcy
Code, was without recourse to Hvide, (ii) any Debt of Hvide to any of its
subsidiaries, (iii) Debt to any employee of Hvide, (iv) any liability for taxes,
and (v) Debt or other monetary obligations to trade creditors or assumed by
Hvide or any of its subsidiaries in the ordinary course of business in
connection with the obtaining of goods, materials or services.
The Indenture places no limitation on the amount of additional Senior
Debt that may be incurred by Hvide.
Governing Law
The Indenture and the Debentures are governed by and construed in
accordance with the laws of the State of New York.
Information Concerning the Indenture Trustee
The Indenture Trustee is under no obligation to exercise any of the
powers vested in it by the Indenture at the request of any holder of Debentures,
unless offered reasonable indemnity by such holder against the costs, expenses
and liabilities which might be incurred thereby. The Indenture Trustee is not
required to expend or risk its own funds or otherwise incur personal financial
liability in the performance of its duties if the Indenture Trustee reasonably
believes that repayment or adequate indemnity is not reasonably assured to it.
RELATIONSHIP AMONG THE PREFERRED
SECURITIES, THE DEBENTURES AND THE GUARANTEE
Full and Unconditional Guarantee
Payments of Distributions and other amounts due on the Preferred
Securities (to the extent the Issuer has funds available for the payment of such
Distributions) are irrevocably guaranteed by Hvide as and to the extent set
forth under "Description of the Guarantee." Taken together, Hvide's obligations
under the Debentures, the Indenture, the Declaration and the Guarantee provide,
in the aggregate, a full, irrevocable and unconditional guarantee of payments of
Distributions and other amounts due on the Preferred Securities. No single
document standing alone or operating in conjunction with fewer than all
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of the other documents constitutes such guarantee. It is only the combined
operation of these documents that has the effect of providing a full,
irrevocable and unconditional guarantee of the Issuer's obligations under the
Preferred Securities. If and to the extent that Hvide does not make payments on
the Debentures, the Issuer will not pay Distributions or other amounts due on
the Preferred Securities. The Guarantee does not cover payment of Distributions
when the Issuer does not have sufficient funds to pay such Distributions. In
such event, a holder of Preferred Securities may institute a Direct Action
directly against Hvide to enforce payment of such Distributions to such holder
after the respective due dates. The obligations of Hvide under the Guarantee are
subordinate and junior in right of payment to all other liabilities of Hvide;
and pari passu with any guarantee now or hereafter entered into by Hvide in
respect of any preferred or preference stock of any affiliate of Hvide.
Sufficiency of Payments
As long as payments of interest and other payments are made when due on
the Debentures, such payments will be sufficient to cover Distributions and
other payments due on the Preferred Securities, primarily because (i) the
aggregate principal amount of the Debentures will be equal to the sum of the
aggregate stated liquidation amount of the Preferred Securities and Common
Securities; (ii) the interest rate and interest and other payment dates on the
Debentures will match the Distribution rate and Distribution and other payment
dates for the Preferred Securities; (iii) Hvide shall pay for all and any costs,
expenses and liabilities of the Issuer except the Issuer's obligations to
holders of the Preferred Securities under such Preferred Securities; and (iv)
the Declaration further provides that the Issuer will not engage in any activity
that is not consistent with the limited purposes of the Issuer.
Notwithstanding anything to the contrary in the Indenture, Hvide has
the right to set-off any payment it is otherwise required to make thereunder
with and to the extent Hvide has theretofore made, or is concurrently on the
date of such payment making, a payment under the Guarantee.
Enforcement Rights of Holders of Preferred Securities
A holder of any Preferred Securities may institute a legal proceeding
directly against Hvide to enforce its rights under the Guarantee without first
instituting a legal proceeding against the Guarantee Trustee, the Issuer or any
other person or entity.
A default or event of default under any Senior Debt of Hvide will not
constitute a default under the Indenture or a Debenture Event of Default.
However, in the event of payment defaults under, or acceleration of, Senior Debt
of Hvide, the subordination provisions of the Indenture provide that no payments
may be made in respect of the Debentures until such Senior Debt has been paid in
full or any payment default thereunder has been cured or waived. Failure to make
required payments on the Debentures would constitute a Debenture Event of
Default.
Limited Purpose of Issuer
The Preferred Securities evidence a beneficial interest in the Issuer,
and the Issuer exists for the sole purpose of issuing the Preferred Securities
and Common Securities and investing the proceeds thereof in the Debentures. A
principal difference between the rights of a holder of Preferred Securities and
a holder of Debentures is that a holder of Debentures is entitled to receive
from Hvide the principal amount of and interest accrued on Debentures held,
while a holder of Preferred Securities is entitled to receive
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Distributions from the Issuer (or from Hvide under the applicable Guarantee) if
and to the extent the Issuer has funds available for the payment of such
Distributions.
Rights Upon Dissolution
Upon any voluntary or involuntary dissolution, winding-up, liquidation
or termination of the Issuer involving the liquidation of the Debentures, the
holders of the Preferred Securities will be entitled to receive, after
satisfaction of liabilities to creditors of the Issuer as provided by applicable
law, out of assets held by the Issuer, the Liquidation Distribution in cash. See
"Description of the Preferred Securities--Liquidation Distribution Upon
Dissolution." Upon any voluntary or involuntary liquidation or bankruptcy of
Hvide, the Trustee, as holder of the Debentures, would be a subordinated
creditor of Hvide, subordinated in right of payment to all Senior Debt, but
entitled to receive payment in full of principal and interest before any
stockholders of Hvide receive payments or distributions. Since Hvide is the
guarantor under the Guarantee and has agreed to pay for all costs, expenses and
liabilities of the Issuer (other than the Issuer's obligations to the holders of
the Preferred Securities), the positions of a holder of such Preferred
Securities and a holder of such Debentures relative to other creditors and to
stockholders of Hvide in the event of liquidation or bankruptcy of Hvide would
be substantially the same.
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DESCRIPTION OF CERTAIN INDEBTEDNESS
The following is a description of the principal terms of certain of the
Company's indebtedness.
Credit Facility
The Company currently has a credit facility that provides for a $175
million revolving line of credit (the "Credit Facility") which matures on
September 30, 2002 (the "Maturity Date"). There were no borrowings outstanding
under the Credit Facility at June 30, 1997.
Borrowings under the Credit Facility bear interest based on one of two
calculations set forth in the Credit Agreement dated September 30, 1997 (the
"Credit Agreement"), at the Company's option, plus a margin based on the
Company's compliance with certain financial ratios. One interest rate
calculation is tied to the Eurodollar (the "Eurodollar Rate") and the other
calculation is tied to the higher of the base rate of the administrative agent
named in the Credit Agreement or the Federal Funds Effective Rate (the "Base
Rate"). The Credit Agreement allows the Company to convert its revolving credit
loans from Eurodollar Rate loans to Base Rate loans, and vice versa, from time
to time. Such borrowings were accruing interest at approximately 6.7% at October
1, 1997. On the Maturity Date, all amounts outstanding under the revolving line
of credit, together with any and all accrued and unpaid interest, will become
due and payable. Prior to the Maturity Date, the Company can repay any
outstanding amount, in whole or in part, without penalty or premium.
Covenants under the Credit Facility, among other things, (i) require
the Company to meet certain financial tests, including tests requiring the
maintenance of minimum leverage ratios, debt service coverage ratios, and
indebtedness to tangible net worth ratios; (ii) limit the creation or incurrence
of certain liens; (iii) limit the incurrence of additional indebtedness; (iv)
restrict the Company from making certain investments; (v) restrict certain
payments, including dividends, with respect to shares of any class of capital
stock; (vi) restrict modification of the terms of the Preferred Securities (as
defined herein), and in certain circumstances the repayment, redemption, or
repurchase of the Preferred Securities; and (vii) limit certain corporate acts
of the Company, such as making certain dispositions of assets, and entering into
certain types of business transactions, including certain mergers and
acquisitions.
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) an acceleration of the maturity of the
Preferred Securities or in certain circumstances the prepayment, redemption or
repurchase of the Preferred Securities, or any default under the Preferred
Securities, and (vii) a change in control.
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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, 1996, the total remaining outstanding obligations of the Company
under the charters for the Seabulk Challenger and Seabulk Magnachem are $4.3
million and $10.6 million, respectively. The Company's aggregate payments due
under such charters for 1997 and 1998 are $3.2 million and $3.3 million,
respectively. 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 in
August 1996, the Company assumed 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 Title XI bonds 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.
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. 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
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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.
DESCRIPTION OF HVIDE 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 relating to the IPO, 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.
The authorized capital stock of the Company consists of 100,000,000
shares of Class A Common Stock, par value $.001 per share, of which 12,040,388
shares were issued and outstanding as of June 30, 1997, 5,000,000 shares of
Class B Common Stock, par value $.001 per share, of which 3,181,936 shares were
issued and outstanding as of June 30, 1997, and 10,000,000 shares of Preferred
Stock, par value $1.00 per share, none of which are issued and outstanding.
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
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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.
The Hvide Family and the Investor Group hold 51.5% and 48.5%,
respectively, of the outstanding Class B Common Stock. The Hvide Family and the
Investor Group own 9.9% and 15.0%, respectively, of the combined classes of
Common Stock and each controls 36.2% of the voting power and together 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
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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; Possible Inability
to Convert Preferred Securities and Debentures."
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 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
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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 of Common Stock. 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 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 and, 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
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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
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
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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.
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, upon consummation of the Offering, the
Hvide Family and the Investor Group, as the holders of all the outstanding Class
B Common Stock, 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," the
holders of the Class A Common Stock and Class B Common Stock vote together as a
class, with each share of Class A Common Stock entitled to one vote and each
share of Class B Common Stock entitled to ten votes. Neither class has
cumulative
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voting rights. As a result of their ownership of Class B Common Stock, the Hvide
Family and the Investor Group will, upon consummation of the Offering, have the
ability to elect all of the members of the Company's Board of Directors. Under
the terms of the Shareholders Agreement, the Hvide Family and the Investor Group
have the ability to nominate eight and up to three persons, respectively, to the
Company's Board of Directors. In addition, pursuant to the Articles of
Incorporation, the Board of Directors is 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 $5.0 million; (v) borrowings or issuances of securities in
excess of $5.0 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. As of June 30, 1997, the Investor Group owned of record 1,409,999 shares
of Class B Common Stock representing 48.5% of the outstanding Class B Common
Stock on such date.
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 such capacities 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.
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Shareholders Agreement
In connection with the September 30, 1994 issuance of debt and equity
securities to the Investor Group, the Company, J. Erik Hvide, the Hvide Trusts,
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 IPO, that agreement was terminated and Mr. Hvide, the Hvide Trusts, and the
Investor Group entered into a new agreement (the "Shareholders Agreement") that
provides 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 Primary Economic Interest (as defined in the
Shareholders Agreement) 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.
The rights granted to the Investor Group under the Shareholders
Agreement are in addition to the rights granted to the Investor Group under the
Articles of Incorporation. See "--Certain Provisions of Articles of
Incorporation and Bylaws."
Registration Rights Agreement
The Company and the Investor Group have entered into a registration
rights agreement. Under such 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.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following is a summary of certain of the material United States
federal income tax consequences of the purchase, ownership and disposition of
the Preferred Securities. Unless otherwise stated, this summary deals only with
Preferred Securities held as capital assets by holders who purchase
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the Preferred Securities upon original issuance. It does not deal with special
classes of holders such as banks, thrifts, real estate investment trusts,
regulated investment companies, insurance companies, dealers in securities or
currencies, tax-exempt investors, foreign corporations and persons who are not
citizens or residents of the United States (except to the extent discussed under
the heading "--Certain United States Tax Consequences to Non-United States
Holders") or persons that will hold the Preferred Securities as a position in a
"straddle," as part of a "synthetic security" or "hedge," as part of a
"conversion transaction" or other integrated investment, or as other than a
capital asset. This summary also does not address the tax consequences to
persons that have a functional currency other than the U.S. Dollar. Further, it
does not include any description of any alternative minimum tax consequences or
the tax laws of any state or local government or of any foreign government that
may be applicable to the Preferred Securities. This summary is based on the
Internal Revenue Code of 1986, as amended (the "Code"), Treasury regulations
thereunder and administrative and judicial interpretations thereof, as of the
date hereof, all of which are subject to change, possibly on a retroactive
basis.
INVESTORS ARE ADVISED TO CONSULT THEIR TAX ADVISORS AS TO THE UNITED
STATES FEDERAL INCOME TAX CONSEQUENCES OF THE OWNERSHIP AND DISPOSITION OF
PREFERRED SECURITIES IN LIGHT OF THEIR PARTICULAR CIRCUMSTANCES, AS WELL AS THE
EFFECT OF ANY STATE, LOCAL, FOREIGN OR OTHER TAX LAWS AND OF POTENTIAL CHANGES
IN APPLICABLE TAX LAWS.
Classification of the Debentures
Hvide has taken the position that the Debentures will be classified for
United States federal income tax purposes as indebtedness of Hvide under current
law and, by acceptance of Preferred Securities, each holder covenants to treat
the Debentures as indebtedness and the Preferred Securities as evidence of an
indirect beneficial ownership interest in the Debentures. No assurance can be
given, however, that such position of Hvide will not be challenged by the
Internal Revenue Service ("IRS") or, if challenged, that such a challenge will
not be successful. The remainder of this discussion assumes that the Debentures
will be classified as indebtedness of Hvide for United States federal income tax
purposes.
Classification of the Issuer
In connection with the issuance of the Preferred Securities, Dyer Ellis
& Joseph PC, United States tax counsel to the Issuer and Hvide, rendered its
opinion generally to the effect that, under then current law and assuming full
compliance with the terms of the Declaration and the Indenture (and certain
other documents), based on certain facts and assumptions contained in such
opinion, the Trust will be classified for United States federal income tax
purposes as a grantor trust and not as an association taxable as a corporation.
Accordingly, for United States federal income tax purposes, each holder of
Preferred Securities generally will be considered the owner of an undivided
interest in the Debentures, and each holder will be required to include in its
gross income any original issue discount accrued with respect to its allocable
share of those Debentures.
Original Issue Discount
Because Hvide has the option, under the terms of the Debentures, to
defer payments of interest by extending interest payment periods for up to 60
months, all of the stated interest payments on the Debentures will be treated as
"original issue discount." Under the Code, holders of debt instruments
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(such as the Debentures) issued with original issue discount must include that
discount in income on an economic accrual basis before the receipt of cash
attributable to the interest, regardless of their method of tax accounting.
Generally, all of a holder's taxable interest income with respect to the
Debentures will be accounted for as original issue discount. Actual payments and
distributions of stated interest will not, however, be separately reported as
taxable income. The amount of original issue discount that accrues in any
quarter will approximately equal the amount of the interest that accrues on the
Debentures in that quarter at the stated interest rate. In the event that the
interest payment period is extended, holders will continue to accrue original
issue discount in an amount approximately equal to the amount of the interest
payment due at the end of the extended interest payment period on an economic
accrual basis over the length of the extended interest payment period.
Because income on the Debentures will constitute original issue
discount, corporate holders will not be entitled to a dividends-received
deduction with respect to any income recognized with respect to the Debentures.
Redemption of Preferred Securities for Debentures or Cash Upon Liquidation of
the Issuer
Under certain circumstances, the Debentures may be discounted to
holders in exchange for the Preferred Securities. Under current law, such a
distribution to holders, for United States federal income tax purposes, would be
treated as a nontaxable event to each holder, and each holder would receive an
aggregate tax basis in the Debentures distributed equal to such holder's
aggregate tax basis in its Preferred Securities exchanged therefor. A holder's
holding period in the Debentures so received would include the period during
which the Preferred Securities were held by such holder. If, however, the
exchange is caused by a Tax Event which results in the Issuer being treated as
an association taxable as a corporation the distribution would likely constitute
a taxable event to the Issuer and holders of the Preferred Securities.
Under certain circumstances described herein (see "Description of the
Preferred Securities--Special Event Exchange or Redemption"), the Debentures may
be redeemed for cash and the proceeds of such redemption distributed to holders
in redemption of their Preferred Securities. Under current law, such a
redemption would, for United States federal income tax purposes, constitute a
taxable disposition of the redeemed Preferred Securities, and a holder would
recognize gain or loss in the same manner as if it sold such redeemed Preferred
Securities for cash. See "--Sales of Preferred Securities."
Sales of Preferred Securities
A holder that sells Preferred Securities will recognize gain or loss
equal to the difference between the amount realized on the sale of the Preferred
Securities and the holder's adjusted tax basis in such Preferred Securities. A
holder's adjusted tax basis in the Preferred Securities generally will be its
initial purchase price increased by original issue discount previously
includible in such holder's gross income to the date of disposition and
decreased by payments received on the Preferred Securities to the date of
disposition. In general, such gain or loss will be a capital gain or loss and
will be a long-term capital gain or loss if the Preferred Securities have been
held for more than one year at the time of sale.
The Preferred Securities may trade at a price that does not accurately
reflect the value of accrued but unpaid interest with respect to the underlying
Debentures. A holder who disposes of or converts his Preferred Securities
between record dates for payments of distributions thereon will be required to
include
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accrued but unpaid interest on the Debenture through the date of disposition or
conversion in income as ordinary income, and to add such amount to his adjusted
tax basis in his pro rata share of the underlying Debentures deemed disposed of
or converted. To the extent the selling price is less than the holder's adjusted
tax basis (which basis will include, in the form of original issue discount, all
accrued but unpaid interest), a holder will recognize a capital loss. Subject to
certain limited exceptions, capital losses cannot be applied to offset ordinary
income for United States federal income tax purposes.
Market Discount and Bond Premium
Holders that purchase the Preferred Securities at a price that is
greater or less than the adjusted issue price of such holder's proportionate
share of the Debentures (which generally should approximate the face amount plus
accrued but unpaid interest on the Debentures) may be considered to have
acquired their undivided interests in the Debentures with market discount or
acquisition premium as such phrases are defined for United States federal income
tax purposes. Such holders are advised to consult their tax advisors as to the
income tax consequences of the acquisition, ownership and disposition of the
Preferred Securities.
Conversion of Preferred Securities Into Hvide Class A Common Stock
Except possibly to the extent attributable to accrued and unpaid
interest on the Debentures, a holder of Preferred Securities will not recognize
income, gain or loss upon the conversion of the Preferred Securities into Hvide
Class A Common Stock through the Conversion Agent. A holder of Preferred
Securities will, however, recognize gain upon the receipt of cash in lieu of a
fractional share of Hvide Class A Common Stock equal to the amount of cash
received less such holder's tax basis in such fractional share. Such a holder's
tax basis in the Hvide Class A Common Stock received upon conversion should
generally be equal to such holder's tax basis in the Preferred Securities
delivered to the Conversion Agent for exchange less the basis allocated to any
fractional share for which cash is received and such holder's holding period in
the Hvide Class A Common Stock received upon conversion should generally begin
on the date such holder acquired the Preferred Securities delivered to the
Conversion Agent for exchange.
Holders of Preferred Securities should not recognize gain or loss upon
expiration of the conversion rights. Such expiration should not affect a
significant modification of the underlying Debentures within the meaning of
applicable Treasury Regulations, and thus will not be considered a sale or
exchange for purposes of federal income taxation.
Adjustment of Conversion Price
Treasury Regulations promulgated under Section 305 of the Code would
treat holders of Preferred Securities as having received a constructive
distribution from Hvide in the event the conversion ratio of the Debentures were
adjusted if (i) as a result of such adjustment, the proportionate interest
(measured by the quantum of Hvide Class A Common Stock into or for which the
Debentures are convertible or exchangeable) of the holders of the Preferred
Securities in the assets or earnings and profits of Hvide were increased, and
(ii) the adjustment was not made pursuant to a bona fide, reasonable
antidilution formula. An adjustment in the conversion ratio would not be
considered made pursuant to such a formula if the adjustment was made to
compensate for certain taxable distributions with respect to the Hvide Class A
Common Stock. Thus, under certain circumstances, a reduction in the conversion
price for the holders
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may result in deemed dividend income to holders to the extent of the current or
accumulated earnings and profits of Hvide. Holders of the Preferred Securities
would be required to include their allocable share of such deemed dividend
income in gross income but would not receive any cash related thereto.
Information Reporting to Holders
The Issuer will report the original issue discount, if any, that
accrued during the year with respect to the Debentures, and any gross proceeds
received by the Issuer from the retirement or redemption of the Debentures,
annually to the holders of record of the Preferred Securities and the IRS. The
Issuer currently intends to deliver such reports to holders of record prior to
January 31, following each calendar year. It is anticipated that persons who
hold Preferred Securities as nominees for beneficial holders will report the
required tax information to beneficial holders on Form 1099.
Backup Withholding
Payments made on, and proceeds from the sale of, Preferred Securities
may be subject to a "backup" withholding tax of 31% unless the holder complies
with certain identification requirements. Any withheld amounts will generally be
allowed as a credit against the holder's federal income tax provided the
required information is timely filed with the IRS.
Possible Tax Legislation
As a part of President Clinton's Fiscal 1998 Budget Proposal, the
Treasury Department proposed legislation that, among other things, would have
treated as equity for United States federal income tax purposes certain debt
instruments that are not shown as indebtedness on the consolidated balance sheet
of the Issuer. Although this proposal was not included in the tax legislation
ultimately enacted, there can be no assurance that such a proposal will not be
enacted in the future, that such future legislation will not have a retroactive
effective date and that such future legislation will not prevent Hvide from
deducting interest on the Debentures. Such an event would constitute a Tax Event
and would permit the Issuer to exchange the Preferred Securities, in whole or in
part, for the Debentures or redeem, in whole or in part, the Preferred
Securities and Debentures.
Certain United States Tax Consequences to Non-United States Holders
General. The following is a general discussion of certain United States
federal income and estate tax consequences of the acquisition, ownership and
disposition of Preferred Securities by a "Non-United States Holder" and does not
deal with tax consequences arising under the laws of any foreign, state, or
local jurisdiction. As used herein, a "Non-United States Holder" is a person or
entity that, for United States federal income tax purposes, is not a citizen or
resident of the United States, a corporation, partnership, or other entity
created or organized under the laws of the United States or a political
subdivision thereof, or an estate or trust, the income of which is subject to
United States federal income taxation regardless of its source, or that
otherwise is subject to United States federal income taxation on a net basis in
respect of the Preferred Securities. The tax treatment of the holders of the
Preferred Securities may vary depending upon their particular situations.
Certain holders (including insurance companies, tax exempt organizations,
financial institutions and broker-dealers) may be subject to special rules not
discussed below. Prospective investors who are Non-United States Holders are
urged to consult their tax advisors regarding the United States Federal tax
consequences of acquiring, holding and
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<PAGE>
disposing of Preferred Securities and Hvide Class A Common Stock, as well as any
tax consequences that may arise under the laws of any foreign, state, local or
other taxing jurisdiction.
Interest. Interest (including original issue discount) received or
accrued by a Non-United States Holder of Preferred Securities will not be
subject to United States federal income or withholding tax if such interest is
not effectively connected with the conduct of a trade or business within the
United States by such Non-United States Holder and (i) the Non-United States
Holder does not actually or constructively own 10% or more of the total voting
power of all voting stock of Hvide and is not a controlled foreign corporation
with respect to which Hvide is a "related person" within the meaning of the Code
and (ii) the beneficial owner of the Preferred Securities certifies, under
penalty of perjury, that the beneficial owner is not a United States person and
provide the beneficial owner's name and address.
Gain on Disposition of Preferred Securities. A Non-United States Holder
will generally not be subject to United States federal income tax on gain
recognized on a sale, redemption or other disposition of a Preferred Security
unless (i) the gain is effectively connected with the conduct of a trade or
business within the United States by the Non-United States Holder, or (ii) in
the case of a Non-United States Holder who is a nonresident alien individual and
holds the Preferred Security as a capital asset, such holder is present in the
United States for 183 or more days in the taxable year and certain other
requirements are met.
Dividends on Hvide Class A Common Stock. In the event that dividends
are paid on Hvide Class A Common Stock, except as described below, such
dividends paid to a Non-United States Holder of Hvide Class A Common Stock will
be subject to withholding of United States federal income tax at a 30% rate or
such lower rate as may be specified by an applicable income tax treaty, unless
the dividends are effectively connected with the conduct of a trade or business
of the Non-United States Holder within the United States. If the dividend is
effectively connected with the conduct of a trade or business of the Non-United
States Holder within the United States, the dividend would be subject to United
States federal income tax on a net income basis of applicable graduated
individual or corporate rates and would be exempt from the 30% withholding tax
described above. Any such effectively connected dividends received by a foreign
corporation may, under certain circumstances, be subject to an additional
"branch profits tax" at a 30% rate or such lower rate as may be specified by an
applicable income tax treaty.
Under current United States Treasury regulations, dividends paid to an
address outside the United States are presumed to be paid to a resident of such
country for purposes of the withholding discussed above, and, under the current
interpretation of United States Treasury regulations, for purposes of
determining the applicability of a tax treaty rate. Under proposed United States
Treasury regulations, not currently in effect, however, a Non-United States
Holder of Hvide Class A Common Stock who wishes to claim the benefit of an
applicable treaty rate would be required to satisfy applicable certification and
other requirements. Certain certification and disclosure requirements must be
complied with in order to be exempt from withholding under the effectively
connected income exemption discussed above.
A Non-United States Holder of Hvide Class A Common Stock that is
eligible for a reduced rate of United States withholding tax pursuant to a tax
treaty may obtain a refund of any excess amounts currently withheld by filing an
appropriate claim for refund with the IRS.
Gain on Disposition of Hvide Class A Common Stock. A Non-United States
Holder generally will not be subject to United States income tax on any gain
recognized on a disposition of the Hvide Class
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A Common Stock unless (i) Hvide is or has been a "United States real property
holding corporation" (a "USRPHC") within the meaning of Section 897(c)(2) of the
Code at any time within the shorter of the five-year period preceding such
disposition or such Non-United States Holder's holding period, (ii) the gain is
effectively connected with the conduct of a trade or business within the United
States of the NonUnited States Holder and, if a tax treaty applies, attributable
to a permanent establishment maintained by the Non-United States Holder, (iii)
The Non-United States Holder is an individual who holds the Hvide Class A Common
Stock as a capital asset and is present in the United States for 183 days or
more in the taxable year of the disposition and either (a) such individual has a
"tax home" (as defined for United States federal income tax purposes) in the
United States or (b) the gain is attributable to an office or other fixed place
of business maintained in the United States by such individual, or (iv) the
Non-United States Holder is subject to tax pursuant to the Code provisions
applicable to certain United States expatriates. If an individual Non-United
States Holder falls under clauses (ii) or (iv) above, he or she will be taxed on
his or her net gain derived from the sale under regular United States federal
income tax rates. If the individual Non-United States Holder falls under clause
(iii) above, he or she will be subject to a flat 30% tax on the gain derived
from the sale which may be offset by United States capital losses
(notwithstanding the fact that he or she is not considered a resident of the
United States). If a Non-United States Holder that is a foreign corporation
falls under clause (ii) above, it will be taxed on its gain under regular
graduated United States federal income tax rates and, in addition, will under
certain circumstances be subject to the branch profits tax equal to 30% of its
"effectively connected earnings and profits" within the meaning of the Code for
the taxable year, as adjusted for certain items, unless it qualifies for a lower
rate under an applicable income tax treaty.
A corporation is generally a USRPHC if the fair amount value of its
United States real property interests equals or exceeds 50% of the sum of the
fair market value of its worldwide real property interests plus its other assets
used or held for use in a trade or business. Hvide believes that it currently is
not a USRPHC.
Federal Estate Taxes. A Preferred Security beneficially owned by an
individual who is a NonUnited States Holder at the time of his or her death
generally will not be subject to United States Federal estate tax as a result of
such individual's death, provided that (i) such individual does not actually or
constructively own 10% or more of the total combined voting power of all classes
of stock of Hvide entitled to vote within the meaning of section 871(h)(3) of
the Code, and (ii) interest payments (including payments of original issue
discount) with respect to the Debentures would not have been, if received at the
time of such individual's death, effectively connected with the conduct of a
U.S. trade or business by such individual. Common Stock of Hvide owned, or
treated as owned, by an individual Non-United States Holder at the time of his
or her death will be included in such holder's gross estate for United States
federal estate tax purposes, unless an applicable estate tax treaty provides
otherwise.
Information Reporting and Backup Withholding. Hvide must report
annually to the IRS and to each Non-United States Holder the amount of interest
and dividends paid to such holder and the amount of any tax withheld. These
information reporting requirements apply regardless of whether withholding is
required. Copies of the information returns reporting such interest and
dividends and withholding may also be made available to the tax authorities in
the country in which the Non-United States Holder resides under the provisions
of an applicable income tax treaty.
In the case of payments of interest to Non-United States Holders,
temporary Treasury regulations provide that the 31% backup withholding tax and
certain information reporting will not apply to such
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<PAGE>
payments with respect to which either the requisite certification, as described
above, has been received or an exemption has otherwise been established;
provided that neither Hvide nor its payment agent has actual knowledge that the
holder is a United States person or that the conditions of any other exemption
are not in fact satisfied. Under temporary Treasury regulations, these
information reporting and backup withholding requirements will apply, however,
to the gross proceeds paid to a Non-United States Holder on the disposition of
the Preferred Securities by or through a United States office of a United States
or foreign broker, unless the holder certifies to the broker under penalty of
perjury as to its name, address and status as a foreign person or the holder
otherwise establishes an exemption. Information reporting requirements, but not
backup withholding, will also apply to a payment of the proceeds of a
disposition of the Preferred Securities by or through a foreign office of a
United States broker or foreign brokers with certain types of relationships to
the United States. Neither information reporting nor backup withholding
generally will apply to a payment of the proceeds of a disposition of the
Preferred Securities by or through a foreign office or foreign broker not
subject to the preceding sentence.
United States backup withholding tax generally will not apply to (a)
the payment of dividends paid on Hvide Class A Common Stock to a Non-United
States Holder at an address outside the United States or (b) the payment of the
proceeds of the sale of Hvide Class A Common Stock to or through the foreign
office of a broker. In the case of the payment of proceeds from such a sale of
Hvide Class A Common Stock through a foreign office of a broker that is a United
States person or a "U.S. related person," however, information reporting (but
not backup withholding) is required with respect to the payment unless the
broker has documentary evidence in its files that the owner is a Non-United
States Holder and certain other requirements are met or the holder otherwise
establishes an exemption. For this purpose, a "U.S. related person" is (i) a
controlled foreign corporation for United States federal income tax purposes, or
(ii) a foreign person 50% or more of whose gross income from all sources for the
three-year period ending with the close of its taxable year preceding the
payment (or for such part of the period that the broker has been in existence)
is derived from activities that are effectively connected with the conduct of a
United States trade or business. The payment of the proceeds of a sale of Hvide
Class A Common Stock to or through a United States office of a broker is subject
to information reporting and possible backup withholding unless the owner
certifies its non-United States status under penalty of perjury or otherwise
establishes an exemption.
Backup withholding is not an additional tax. Any amounts withheld under
the backup withholding rules may be refunded or credited against the Non-United
States Holder's United States federal income tax liability, provided that the
required information is furnished to the IRS.
These information and backup withholding rules are under review by the
United States Treasury and their application to the Preferred Securities and the
Hvide Class A Common Stock could be changed by future regulations. On April 15,
1996, the IRS issued proposed Treasury Regulations concerning the withholding of
tax and reporting for certain amounts paid to non-resident individuals and
foreign corporations. The proposed regulations would, among other changes,
eliminate the presumption under current regulations with respect to dividends
paid to addresses outside the United States. The proposed Treasury Regulations,
if adopted in their present form, would be effective for payments made after
December 31, 1997. Prospective purchasers of the Preferred Securities should
consult their tax advisors concerning the potential adoption of such Treasury
Regulations.
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<PAGE>
SELLING HOLDERS
The Preferred Securities were originally issued and sold by the Issuer
to Donaldson, Lufkin & Jenrette Securities Corporation, Howard, Weil, Labouisse,
Friedrichs Incorporated, and Raymond James & Associates, Inc. (the "Initial
Purchasers") and were simultaneously resold by the Initial Purchasers in
transactions exempt from the registration requirements of the Securities Act.
The Selling Holders may from time to time offer and sell pursuant to this
Prospectus any or all of the Offered Securities. The term Selling Holder
includes the holders listed below and the beneficial owners of the Preferred
Securities and their transferees, pledgees, donees or other successors.
The following table sets forth information with respect to the Selling
Holders of the Preferred Securities and the respective number of Preferred
Securities beneficially owned by each Selling Holder that may be offered
pursuant to this Prospectus.
<TABLE>
<CAPTION>
Shares of Common
Stock Issuable Upon
Number of Conversion of
Selling Holders Preferred Securities Preferred Securities
<S> <C> <C>
Donaldson, Lufkin & Jenrette Securities Corp................. 333,400 584,916
Putnam Convertible Income-Growth Trust....................... 127,100 222,984
AIM Charter Fund............................................. 123,000 215,791
Swiss Bank Corporation-London Branch......................... 116,000 203,510
Alpine Associates............................................ 113,800 199,650
The TCW Group, Inc........................................... 82,500 144,738
Neuberger & Berman Genesis Portfolio......................... 60,000 105,264
Deeprock & Co................................................ 50,000 87,720
Van Kampen American Capital Harbor Fund...................... 50,000 87,720
Paloma Securities, L.L.C..................................... 47,400 83,158
Provident Life and Accident Insurance Company................ 40,000 70,176
San Diego County Convertible................................. 39,300 68,947
Nicholas-Applegate Income & Growth Fund...................... 38,600 67,719
Silverton International Fund Limited......................... 31,600 55,439
Bond Fund Series-- Oppenheimer Bond Fund
for Growth.............................................. 30,000 52,632
Alexandra Global Investment Fund I, Ltd...................... 25,500 44,737
AIM Balanced Fund............................................ 25,000 43,860
Allstate Insurance Company................................... 25,000 43,860
Argent Classic Convertible Arbitrage Fund, L.P. ............. 25,000 43,860
Security Insurance Company of Hartford....................... 25,000 43,860
Davis Convertible Securities Fund............................ 22,000 38,596
The Guardian Life Insurance Company
of America.............................................. 20,000 35,088
MFS Total Return Fund........................................ 19,940 34,982
Yield Strategies Fund II, LP................................. 15,000 26,316
AIM V.I. Growth & Income Fund................................ 12,000 21,052
Lincoln National Convertible Securities Fund................. 11,015 19,324
Hartford Fire Insurance Company.............................. 10,400 18,245
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
Commonwealth Life Insurance-Stock TRAC....................... 10,000 17,544
Castle Convertible Fund, Inc................................. 10,000 17,544
Guaranty National Insurance Company.......................... 10,000 17,544
Employers' Reinsurance Corporation........................... 9,500 16,666
The Alpine Group............................................. 9,500 16,666
San Diego City Retirement.................................... 9,300 16,315
LaSalle National Bank........................................ 7,500 13,158
Reserve Convertible Securities Fund.......................... 7,500 13,158
Wake Forest University....................................... 7,300 12,807
Engineers Joint Pension Fund................................. 4,700 8,245
New Hampshire State Retirement System........................ 4,200 7,368
Promutual.................................................... 3,500 6,140
Weirton Trust................................................ 3,270 5,736
Baptist Health of South Florida.............................. 3,000 5,263
Putnam Convertible Opportunities and
Income Trust............................................ 3,000 5,263
Occidental College........................................... 2,800 4,912
Putnam Balanced Retirement Fund.............................. 2,500 4,386
Stark International.......................................... 2,417 4,240
Shepherd Investments International Ltd....................... 2,317 4,064
Boston College Endowment..................................... 1,600 2,807
McMahan Securities Co., L.P.................................. 1,515 2,657
Boston Museum of Fine Art.................................... 1,300 2,280
Walker Art Center............................................ 1,255 2,201
New England Equity Income Fund............................... 1,000 1,754
Museum of Fine Arts, Boston.................................. 985 1,728
Dunham & Associates Fund II.................................. 800 1,403
United National Insurance.................................... 520 912
Edward B. Bates.............................................. 500 877
Dunham & Associates Fund III................................. 400 701
Putnam Funds Trust - Putnam High Yield Total
Return Fund............................................. 400 701
MFS Convertible Securities Fund.............................. 60 105
----------------- ---------------
Total.................................................. 1,641,194 2,879,289
================= ===============
</TABLE>
Hvide issued 141,760 shares of Class A Common Stock in connection with
an acquisition of certain vessels. The following table sets forth information
with respect to the Selling Holder of such Class A Common Stock.
<TABLE>
<CAPTION>
Shares of Class A
Common Stock
Selling Holder Owned and Offered
<S> <C>
Wellington Capital Limited...................................................... 141,760
</TABLE>
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<PAGE>
PLAN OF DISTRIBUTION
The Offered Securities may be sold from time to time to purchasers
directly by the Selling Holders. Alternatively, the Selling Holders may from
time to time offer the Offered Securities to or through underwriters,
broker/dealers or agents, who may receive compensation in the form of
underwriting discounts, concessions or commissions from the Selling Holders or
the purchasers of such securities for whom they may act as agents. The Selling
Holders and any underwriters, broker/dealers or agents that participate in the
distribution of Offered Securities may be deemed to be "underwriters" within the
meaning of the Securities Act and any profit on the sale of such securities and
any discounts, commissions, concessions or other compensation received by any
such underwriter, broker/dealer or agent may be deemed to be underwriting
discounts and commissions under the Securities Act. The Offered Securities may
be sold from time to time in one or more transactions at fixed prices, at
prevailing market prices at the time of sale, at varying prices determined at
the time of sale or at negotiated prices. The sale of the Offered Securities may
be effected in transactions (which may involve crosses or block transactions)
(i) on any national securities exchange on which the Offered Securities may be
listed or quoted at the time of sale, (ii) in the over-the-counter market, (iii)
in transactions otherwise than on such exchanges or in the over-the-counter
market, or (iv) through the writing of options. The Selling Holders may enter
into hedging transactions with broker-dealers, which may in turn engage in short
sales of the Offered Securities in the course of hedging the positions they
assume. The Selling Holders may also sell Offered Securities short and deliver
Offered Securities to close out such short positions, or lend or pledge Offered
Securities to broker-dealers that may in turn sell such securities. At the time
a particular offering of the Offered Securities is made, a Prospectus
Supplement, if required, will be distributed setting forth the aggregate amount
and type of Offered Securities being offered and the terms of the offering,
including the name or names of any underwriters, broker/dealers or agents, any
discounts, commissions and other terms constituting compensation from the
Selling Holders and any discounts, commissions or concessions allowed or
reallowed or paid to broker/dealers.
To comply with the securities laws of certain jurisdictions, if
applicable, the Offered Securities will be offered or sold in such jurisdictions
only through registered or licensed brokers or dealers. In addition, in certain
jurisdictions the Offered Securities may not be offered or sold unless they have
been registered or qualified for sale in such jurisdictions or an exemption from
registration or qualification is available and is complied with.
The Selling Holders will be subject to applicable provisions of the
Exchange Act and the rules and regulations thereunder, which provisions may
limit the timing of purchases and sales of any of the Offered Securities by the
Selling Holders. The foregoing may affect the marketability of such securities.
The Company and the Trust will bear the expenses of registration of the
Offered Securities, and the Selling Holders will pay all underwriting discounts
and selling commissions, if any. The Selling Holders will be indemnified by the
Company and the Trust, jointly and severally against certain civil liabilities,
including certain liabilities under the Securities Act, or will be entitled to
contribution in connection therewith. The Company and the Trust will be
indemnified by the Selling Holders severally against certain civil liabilities,
including certain liabilities under the Securities Act, or will be entitled to
contribution in connection therewith.
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<PAGE>
EXPERTS
The consolidated financial statements of Hvide Marine Incorporated and
subsidiaries appearing in Hvide Marine Incorporated's Annual Report (Form 10-K)
for the year ended December 31, 1996, have been audited by Ernst & Young LLP,
independent certified public accountants, as set forth in their report thereon
included therein and incorporated herein by reference. Such consolidated
financial statements are incorporated herein by reference in reliance upon such
report given upon the authority of such firm as experts in accounting and
auditing.
LEGAL MATTERS
Certain matters of Delaware law relating to the validity of the
Preferred Securities have been passed upon on behalf of the Issuer by Morris,
Nichols, Arsht & Tunnel, Wilmington, Delaware. The validity of the Debentures,
the Guarantee, and certain legal matters relating thereto have been passed upon
on behalf of Hvide by Dyer Ellis & Joseph PC, Washington, D.C.
AVAILABLE INFORMATION
Hvide is subject to the informational requirements of the Exchange Act
and, in accordance therewith files reports, proxy statements and other
information with the Commission. The reports, proxy statements and other
information filed by Hvide may be inspected and copied at the public reference
facilities maintained by the Commission at Room 1024, 450 Fifth Street, N.W.,
Washington, D.C. 20549, and at the Commission's regional offices located at 7
World Trade Center, New York, New York 10048, and 500 West Madison Street, Suite
1400, Chicago, Illinois 60661. Copies of such material can be obtained at
prescribed rates from the Public Reference Section of the Commission at 450
Fifth Street, N.W., Washington, D.C. 20549. Hvide Class A Common Stock is traded
on the Nasdaq National Market and reports and other information herein and
therein concerning Hvide can also be inspected at the Nasdaq National Market
Exchange, 1735 K Street, N.W., Washington, D.C. 20546. Such material may also be
accessed electronically by means of the Commission's home page on the Internet
at http://www.sec.gov.
No separate financial statements of the Issuer have been included
herein. The Issuer and Hvide do not consider that such financial statements
would be material to potential investors because the Issuer is a special purpose
entity, has no operating history or independent operations, and is not engaged
in and does not propose to engage in any activity other than holding as trust
assets the Debentures of Hvide and issuing the Preferred Securities and Common
Securities and Hvide has fully and unconditionally guaranteed all of the
Issuer's obligations under the Preferred Securities. See "Hvide Capital Trust,"
"Description of the Preferred Securities," "Description of the Guarantee," and
"Description of the Debentures."
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<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. 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.
To be Paid by
Registrant
Securities and Exchange Commission registration fee..........$ 36,358
Printing and engraving expenses.............................. 10,000
Legal fees and expenses...................................... 40,000
Accounting fees and expenses................................. 30,000
Miscellaneous expenses....................................... 5,000
------------
Total............................................... $ 121,358
=============
Item 15. Indemnification of Directors and Officers
The Company's Articles of Incorporation provide 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 defense or
settlement of such proceeding, including any appeal thereof. Such
indemnification shall be authorized if such person acted in good faith
II-1
<PAGE>
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
II-2
<PAGE>
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 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;
II-3
<PAGE>
(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 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
II-4
<PAGE>
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 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 16. Exhibits
(a) The following is a list of exhibits furnished:
2.1 Stock Purchase Agreement dated as of October 12, 1995 by and
between Hvide Marine Incorporated and OMI Corp.(1)
2.1(a) Amendment to Stock Purchase Agreement dated as of January 31,
1996 by and among Hvide Marine Incorporated and OMI Corp.(1)
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.(1)
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)
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.(1)
2.3(a) Amendment Number 1 dated July 23, 1996, to Asset Purchase
Agreement dated a 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)
2.4 Articles of Merger of Hvide Marine Incorporated, a Florida
corporation into Hvide Corp., a Florida corporation.(2)
4.1* Certificate of Trust of Hvide Capital Trust.
4.1(a)* Appointment of Additional Administrative Trustees of Hvide
Capital Trust.
4.2* Amended and Restated Declaration of Trust, dated as of June 27,
1997, Among Hvide Marine Incorporated as Depositor, The Bank of
New York as Property Trustee, The Bank of New York (Delaware)
as Delaware Trustee, and J. Erik Hvide, John H. Blankley, and
Gene Douglas as Administrative Trustees.
4.3* Indenture for the 6 1/2% Convertible Subordinated Debentures,
dated as of June 27, 1997, among Hvide Marine Incorporated and
The Bank of New York as Indenture Trustee.
II-5
<PAGE>
4.4* Form of 6 1/2% Preferred Securities.
4.5* Form of 6 1/2% Convertible Debentures.
4.6* Preferred Securities Guarantee Agreement, dated as of June 27,
1997, between Hvide Marine Incorporated, as Guarantor, and The
Bank of New York, as Guarantee Trustee.
5.1 Opinion of Dyer Ellis & Joseph, Counsel to Hvide Marine
Incorporated and special counsel to Hvide Capital Trust, as to
the legality of the Debentures, Guarantee and the Common Stock
of Hvide marine Incorporated issuable upon conversion of the
Preferred Securities being registered hereby.
5.2 Opinion of Morris, Nichols, Arsht & Tunnell, special Delaware
counsel to Hvide Capital Trust, as to the legality of the
Preferred Securities being registered hereby.
8.1 Opinion of Dyer Ellis & Joseph, special United States tax
counsel to Hvide Marine Incorporated and Hvide Capital Trust, as
to certain tax matters.
10.1* Registration Rights Agreement, dated June 27, 1997, between
Hvide Capital Trust and Donaldson, Lufkin & Jenrette Securities
Corporation, Howard, Weil, Labouisse, Friedrichs Incorporated
and Raymond James & Associates, Inc., as Purchasers.
12* Computation of Ratios.
23.1 Consent of Ernst & Young LLP.
23.2 Consent of Counsel (included as part of Exhibit 5).
23.3 Consent of Deloitte & Touche
25.1* Form T-1 Statement of Eligibility under the Trust Indenture Act
of 1939, as amended, of The Bank of New York, as Trustee under
the 6 1/2% Convertible Subordinated Indenture.
25.2* Form T-1 Statement of Eligibility under the Trust Indenture Act
of 1939, as amended, of The Bank of New York, as Property
Trustee under the Amended and Restated Declaration of Trust.
25.3* Form T-1 Statement of Eligibility under the Trust Indenture Act
of 1939, as amended, of The Bank of New York, as Guarantee
Trustee under the Guarantee Agreement.
- ---------------
* Previously filed.
(1) Incorporated herein by reference to Amendment No. 1 to Registration
Statement on Form S-1 (Registration No. 33-78166) filed with the Commission on
May 3, 1996.
(2) Incorporated herein by reference to Amendment No. 4 to Registration
Statement on Form S-1 (Registration No. 33-78166) filed with the Commission on
August 5, 1996.
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.
II-6
<PAGE>
Item 17. Undertakings
(1) The undersigned registrant hereby undertakes:
(a) To file, during any period in which offers or sales are
being made, a post-effective amendment to this registration statement:
(i) To include any material information with respect
to the plan of distribution not previously disclosed in the
registration statement or any material change to such
information in the registration statement;
(b) That, for the purpose of determining any liability under
the Securities Act of 1933, each such post-effective amendment 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.
(c) To remove from registration by means of a post-effective
amendment any of the securities which remain unsold at the termination
of the Offering.
(2) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement 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.
(3) 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.
(4) 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.
II-7
<PAGE>
(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-8
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in Fort Lauderdale, Florida on the 15th day of October, 1997.
HVIDE MARINE INCORPORATED
By: /s/ J. ERIK HVIDE
J. Erik Hvide
Chairman, President and
Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
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>
/s/ J. ERIK HVIDE
J. Erik Hvide Chairman of the Board, President, October 15, 1997
Chief Executive Officer and
Director (principal executive
officer)
/s/ JOHN H. BLANKLEY
John H. Blankley Executive Vice President-- October 15, 1997
Chief Financial Officer
and Director (principal financial
officer)
/s/ JOHN J. KRUMENACKER
John J. Krumenacker Controller (principal accounting October 15, 1997
officer)
/s/ EUGENE F. SWEENEY
Eugene F. Sweeney Executive Vice President--Operations October 15, 1997
and Director
/s/ ROBERT B. CALHOUN, JR.
Robert B. Calhoun, Jr. Director October 15, 1997
/s/ GERALD FARMER
Gerald Farmer Director October 15, 1997
</TABLE>
II-9
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
/s/ JEAN FITZGERALD
Jean Fitzgerald Director October 15, 1997
/s/ JOHN J. LEE
John J. Lee Director October 15, 1997
/s/ WALTER C. MINK
Walter C. Mink Director October 15, 1997
/s/ ROBERT RICE
Robert Rice Director October 15, 1997
/s/ RAYMOND B. VICKERS
Raymond B. Vickers Director October 15, 1997
</TABLE>
II-10
Exhibit 5.1
October 15, 1997
Hvide Marine Incorporated
Hvide Capital Trust
2200 Eller Drive
Port Everglades Station
Ft. Lauderdale, Florida 33316
Re: Hvide Marine Incorporated and Hvide Capital Trust
Registration Statement on Form S-3 (File No. 333-34941)
Ladies and Gentlemen:
We are delivering this opinion in connection with the Registration Statement,
which relates to the registration of (i) 2,300,000 of the Trust's 6 1/2% Trust
Convertible Preferred Securities (the "Preferred Securities"), (ii) $115.0
million aggregate principal amount of the Company's 6 1/2% Convertible
Subordinated Debentures due June 15, 2012 (the "Debentures"), (iii) the shares
of Class A Common Stock of the Company, $0.001 par value, issuable upon
conversion of the Preferred Securities or the Debentures and shares of Class A
Common Stock issued in connection with the acquisition of certain vessels (the
"Common Stock") and (iv) the Company's guarantee of the payment of distributions
by the Trust and payments on liquidation of the Trust or the redemption of the
Preferred Securities pursuant to a guarantee agreement, dated as of June 24,
1997, between the Company and The Bank of New York, as guaranty trustee (the
"Guarantee", and together with, the Preferred Securities, the Debentures and the
Common Stock, the "Registrable Securities").
Based upon and subject to the foregoing, we are of the opinion that:
1. The shares of Common Sock have been duly authorized and, in the case of
the Common Stock issuable upon conversion of the Preferred Securities
or the Debentures, upon conversion in accordance with the terms of the
Indenture, will be validly issued, fully paid and nonassessable.
2. The Debentures have been duly authorized by the Company, and constitute
valid and binding obligations of the Company, enforceable against the
Company in accordance with their terms.
<PAGE>
Hvide Marine Incorporated
October 15, 1997
Page 2
3. The Guarantee has been duly authorized by the Company, and is a valid
and binding obligation of the Company, enforceable against the Company
in accordance with its terms.
The opinions rendered in paragraphs 2 and 3 above relating to the enforceability
of the Debentures and the Guarantee are subject to the following exceptions,
limitations and qualifications: (i) the effect of bankruptcy, insolvency,
fraudulent transfer, fraudulent conveyance, reorganization, moratorium or other
similar laws now or hereafter in effect relating to or affecting the rights and
remedies of creditors; and (ii) the effect of general principles of equity,
whether enforcement is considered in a proceeding in equity or law, and the
discretion of the court before which any proceeding therefor may be brought.
To the extent that the obligations of the Company under the Indenture may be
dependent upon such matters, we assume for purposes of this opinion that the
Indenture Trustee is duly organized, validly existing and in good standing under
the laws of its jurisdiction of organization; that the Indenture Trustee is duly
qualified to engage in the activities contemplated by the Indenture; that the
Indenture has been duly authorized, executed and delivered by the Indenture
Trustee and constitutes the legally valid, binding and enforceable obligation of
the Indenture Trustee enforceable against the Indenture Trustee in accordance
with its terms; that the Indenture Trustee is in compliance, generally and with
respect to acting as a trustee under the Indenture, with all applicable laws and
regulations; and that the Indenture Trustee has the requisite organizational and
legal power and authority to perform its obligations under the Indenture.
We hereby consent to the filing of this opinion with the Commission as an
exhibit to the Registration Statement and the reference to this firm under the
heading "Legal Matters" in the Registration Statement.
Very truly yours,
Dyer Ellis & Joseph
Exhibit 5.2
October 15, 1997
Hvide Capital Trust
c/o Hvide Marine Incorporated
2200 Eller Drive
P.O. Box 13038
Fort Lauderdale, FL 33316
Re: Hvide Capital Trust
Ladies and Gentlemen:
We have acted as special Delaware counsel to Hvide Capital Trust, a
Delaware statutory business trust (the "Trust"), in connection with certain
matters relating to the creation of the Trust and the issuance by the Trust of
Preferred Securities. The Preferred Securities have been issued pursuant to (i)
a Purchase Agreement dated June 23, 1997 (the "Purchase Agreement") among the
several purchasers named on Schedule I thereto (the "Purchasers"), the Trust and
the Company and (ii) the Amended and Restated Declaration of Trust of the Trust
dated as of June 27, 1997 (the "Governing Instrument"). We understand that the
Trust is in the process of registering the Preferred Securities pursuant to a
Registration Statement (and the Prospectus forming a part thereof) on Form S-3
to be filed with the Securities and Exchange Commission (the "Commission") by
the Trust and Hvide Marine Incorporated (the "Company") on or about the date
hereof (the "Registration Statement"). Capitalized terms used herein and not
otherwise herein defined are used as defined in the Governing Instrument.
In rendering this opinion, we have examined and relied upon copies of
the following documents in the forms provided to us: the Certificate of Trust of
the Trust as filed in the Office of the Secretary of State of the State of
Delaware (the "State Office") on June 20, 1997 (the "Certificate"); a
Declaration of Trust of the Trust dated as of June 20, 1997 (the "Original
Governing Instrument"); the Governing Instrument; the Indenture dated as of June
27, 1997 between the Company and The Bank of New York, as Trustee; the
<PAGE>
Guarantee Agreement by the Company dated as of June 27, 1997; the Purchase Agree
ment; the Trust's Offering Memorandum dated June 24, 1997 relating to the
Preferred Securities (the "Offering Memorandum"); the Registration Rights
Agreement dated June 27, 1997 among the Trust, the Company and the Purchasers;
the Registration Statement; and a certification of good standing of the Trust
obtained as of a recent date from the State Office. In such examinations, we
have assumed the genuineness of all signatures, the conformity to original
documents of all documents submitted to us as drafts or copies or forms of
documents to be executed and the legal capacity of natural persons to complete
the execution of documents. We have further assumed for purposes of this
opinion: (i) the due formation or organization, valid existence and good
standing of each entity (other than the Trust) that is a party to any of the
documents reviewed by us under the laws of the jurisdiction of its respective
formation or organization; (ii) the due authori zation, execution and delivery
by, or on behalf of, each of the parties thereto of the above-referenced
documents (including, without limitation, the due authorization, execution and
delivery of the Governing Instrument and the Purchase Agreement prior to the
first issuance of Preferred Securities); (iii) that no event has occurred
subsequent to the filing of the Certificate that would cause a dissolution or
liquidation of the Trust under the Original Governing Instrument or the
Governing Instrument, as applicable; (iv) that the activities of the Trust have
been and will be conducted in accordance with the Original Governing Instrument
or the Governing Instrument, as applicable, and the Delaware Business Trust Act,
12 Del. C. ss.ss. 3801 et seq. (the "Delaware Act"); (v) that each Holder of
Preferred Securities has made payment of the required consideration therefor and
received a Preferred Securities Certificate in consideration thereof in
accordance with the terms and conditions of the Governing Instrument, the
Offering Memorandum and the Purchase Agreement; (vi) that the Preferred
Securities have been issued and sold to, and held or transferred by, the
Preferred Securities Holders (and any subsequent transferee), and that all
transfers have been made, in accordance with the terms, conditions, requirements
and procedures set forth in the Governing Instrument, the Offering Memorandum
and the Purchase Agreement; (vii) that none of the Preferred Securities has been
called for redemption, redeemed, converted or canceled (except in connection
with a permitted transfer) and all of the Preferred Securities remain
outstanding; and (viii) that the documents examined by us are in full force and
effect, express the entire understanding of the parties thereto with respect to
the subject matter thereof and have not been amended, supplemented or otherwise
modified, except as herein referenced. No opinion is expressed with respect to
the requirements of, or compliance with, federal or state securities or blue sky
laws. We have not participated in the preparation of the Registration Statement
or any other offering materials relating to the Preferred Securities, and we
assume no responsibility for their contents. As to any fact material to our
opinion, other than those assumed, we have relied without independent
investigation on the above-referenced documents and certificates and on the
accuracy, as of the date hereof, of the matters therein contained.
Based on and subject to the foregoing, and limited in all respects to
matters of Delaware law, it is our opinion that:
1. The Trust is a duly created and validly existing statutory business
trust in good standing under the laws of the State of Delaware.
<PAGE>
2. The Preferred Securities constitute validly issued and, subject to
the qualifications set forth in paragraph 3 below, fully paid and nonassessable
beneficial interests in the assets of the Trust.
3. Under the Delaware Act and the terms of the Governing Instrument,
each Preferred Security Holder of the Trust, in such capacity, will be entitled
to the same limitation of personal liability as that extended to stockholders of
private corporations for profit organized under the General Corporation Law of
the State of Delaware; provided, however, we express no opinion with respect to
the liability of any Preferred Security Holder who is, was or may become a named
Trustee of the Trust. We note that the Holders of Preferred Securities may be
obligated to make payments or provide indemnity or security and will be liable
for the debts and obligations of the Trust to the extent provided and as set
forth in the Governing Instrument.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the use of our name under the heading "LEGAL
MATTERS" in the Prospectus forming a part thereof. In giving this consent, we do
not thereby admit that we come within the category of persons whose consent is
required under Section 7 of the Securities Act of 1933, as amended, or the rules
and regulations of the Commission thereunder. This opinion speaks only as of the
date hereof and is based on our understandings and assumptions as to present
facts, and on our review of the above-referenced documents and the application
of Delaware law as the same exist as of the date hereof, and we undertake no
obligation to update or supplement this opinion after the date hereof for the
benefit of any person or entity with respect to any facts or circumstances that
may hereafter come to our attention or any changes in facts or law that may
hereafter occur or take effect.
Very truly yours,
MORRIS, NICHOLS, ARSHT & TUNNELL
Exhibit 8.1
October 15, 1997
Hvide Marine Incorporated
Hvide Capital Trust
2200 Eller Drive
Port Everglades Station
Ft. Lauderdale, Florida 33316
Re: Registration Statement on Form S-3 (File No. 333-34941)
Ladies and Gentlemen:
You have requested our opinion concerning certain United States federal income
tax consequences expected to result to holders from the ownership of the
Preferred Securities of Hvide Capital Trust (the "Trust"), which represent
preferred undivided beneficial interests in 6 1/2% Convertible Subordinated
Debentures due June 15, 2012 of Hvide Marine Incorporated held by the Trust, and
which have been registered under the Securities Act of 1933 pursuant to the
Registration Statement on Form S-3 filed herewith (the "Registration
Statement").
The facts, as we understand them, and upon which with your permission we rely in
rendering the opinion expressed herein, are set forth in the Registrant
Statement under the caption "Certain Federal Income Tax Consequences." The
opinions expressly set forth under said caption constitute the opinions of Dyer
Ellis & Joseph.
This opinion is based on various statutory provisions, regulations promulgated
thereunder and interpretations thereof by the Internal Revenue Service and the
courts having jurisdiction over such matters all of which are subject to change
either prospectively or retroactively. Also, any variation or difference in the
facts from those set forth in the Registration Statement may affect the
conclusions stated herein.
This opinion is rendered to you solely for use in connection with the
Registration Statement. We consent to your filing this opinion as an exhibit to
the Registration Statement, and to the reference to our firm under the headings
"Certain Federal Income Tax Considerations" and "Legal Matters."
Very truly yours,
/s/ Dyer Ellis & Joseph
Exhibit 23.1
Consent of Independent Certified Public Accountants
We consent to the reference to out firm under the caption "Experts" in Amendment
No. 1 to the Registration Statement (Form S-3, No. 333-34941) and related
Prospectus of Hvide Marine Incorporated and Hvide Capital Trust for the
registration of 2,300,000 shares of 6 1/2% Trust Convertible Securities of Hvide
Capital Trust and 4,176,880 shares of Class A Common Stock of Hvide Marine
Incorporated and to the incorporation by reference therein of our report dated
February 20, 1997, except the eighth paragraph of Note 3, as to which the date
is March 25, 1997, with respect to the consolidated financial statements of
Hvide Marine Incorporated included in its Annual Report (Form 10-K) for the year
ended December 31, 1996, filed with the Securities and Exchange Commission.
Ernst & Young LLP
Miami Florida
October 13, 1997
Exhibit 23.3
Consent of Independent Certified Public Accountants
We consent to the incorporation by reference in the Registration
Statement (Form S-3, No. 333- 34941) and related Prospectus of Hvide Marine
Incorporated and Hvide Capital Trust (collectively, the Company) for the
registration of 2,300,000 shares of the Company's convertible preferred stock
and 4,035,120 shares of the Company's Class A common stock of our report dated
May 19, 1997, with respect to the financial statements of the Marine Division of
GMMOS, included in the Company's report on Form 8-K dated May 23, 1997.
October 15, 1997 Deloitte & Touche Dubai, U.A.E.
