PROSPECTUS
HVIDE MARINE INCORPORATED
OFFER TO EXCHANGE ITS
83/8% SENIOR NOTES DUE 2008,
WHICH HAVE BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED,
FOR ANY AND ALL OF ITS OUTSTANDING
83/8% SENIOR NOTES DUE 2008
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME,
ON APRIL 30, 1998 UNLESS EXTENDED
Hvide Marine Incorporated, a Florida corporation (the "Company" or
"Hvide"), hereby offers, upon the terms and subject to the conditions set forth
in this Prospectus and the accompanying Letter of Transmittal (the "Letter of
Transmittal") to exchange ( the "Exchange Offer") its 83/8% Senior Notes Due
2008 (the "New Notes"), which have been registered under the Securities Act of
1933, as amended (the "Securities Act"), for an equal principal amount of its
83/8% Senior Notes Due 2008 (the "Old Notes"), of which an aggregate of
$300,000,000 in principal amount is outstanding as of the date hereof. The form
and terms of the New Notes are identical in all material respects to the form
and terms of the Old Notes except that (i) the New Notes are registered under
the Securities Act, and therefore will not bear any legends restricting their
transfer and (ii) holders of the New Notes, other than certain broker-dealers,
are not entitled to the rights of holders of Transfer Restricted Securities (as
defined herein) under the Registration Rights Agreement (as defined herein). The
New Notes evidence the same indebtedness as the Old Notes and have been issued
pursuant to, and are entitled to the benefits of, the Indenture (as defined
herein) governing the Old Notes. The New Notes and the Old Notes are
collectively referred to herein as the "Notes" or the "Senior Notes." See "The
Exchange Offer" and "Description of the Notes."
(continued on next page)
SEE "RISK FACTORS" BEGINNING ON PAGE 15 FOR A DISCUSSION OF CERTAIN
FACTORS THAT SHOULD BE CONSIDERED IN CONNECTION WITH THE
EXCHANGE OFFER AND AN INVESTMENT IN THE NEW NOTES
OFFERED HEREBY.
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.
The date of this Prospectus is March 27, 1998.
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Interest on the New Notes will accrue from February 19, 1998, the date
of issuance of the Old Notes, and will be payable semi-annually in cash in
arrears on February 15 and August 15 of each year, commencing August 15, 1998.
The Notes will mature on February 15, 2008.
On or after February 15, 2003, Hvide may redeem the Notes, in whole or
in part, at the redemption prices set forth herein, plus accrued and unpaid
interest to the date of redemption. Notwithstanding the foregoing, at any time
prior to February 15, 2001, Hvide may redeem up to 35% of the original aggregate
principal amount of the Notes with the net proceeds of one or more Public Equity
Offerings (as defined herein) at a redemption price equal to 108.375% of the
principal amount thereof, plus accrued and unpaid interest to the date of
redemption, provided that at least 65% of the original aggregate principal
amount of the Notes remains outstanding immediately after such redemption. See
"Description of the Notes--Optional Redemption." Upon a Change of Control, each
holder of Notes will have the right to require Hvide to repurchase all or a
portion of such holder's Notes at a purchase price equal to 101% of the
principal amount thereof plus accrued and unpaid interest to the date of
repurchase. See "Description of the Notes--Change of Control."
The Notes are senior unsecured obligations of Hvide and rank pari passu
in right of payment with all Indebtedness (as defined herein) and other
liabilities of Hvide that are not subordinated by their terms to other
Indebtedness of Hvide and senior in right of payment to all Indebtedness of
Hvide that by its terms is so subordinated. The Notes are effectively
subordinated to all existing and future secured Indebtedness of Hvide to the
extent of the value of the assets securing such Indebtedness and are
structurally subordinated to all existing and future Indebtedness, if any, and
other liabilities of Hvide's Subsidiaries that are not Guarantors (as defined
herein). As of September 30, 1997, on a pro forma basis, after giving effect to
the issuance of the Old Notes and the application of the proceeds therefrom and
the Recent Acquisitions (as defined herein), Hvide and its subsidiaries would
have had outstanding $195.8 million of secured Indebtedness and $343.7 million
of unsecured senior Indebtedness and other liabilities. The Indenture permits
Hvide and its subsidiaries to incur additional Indebtedness, including
additional secured Indebtedness of up to $175.0 million under the revolving
credit portion of its Credit Facility (as defined herein), subject to certain
limitations. See "Risk Factors--Holding company Structure; Effective
Subordination of the Notes" and "Description of the Notes--Certain
Covenants--Limitation on Indebtedness." The Notes are jointly and severally
guaranteed by the Company's present principal operating subsidiaries and any
future Significant Subsidiaries (as defined herein).
The Company will accept for exchange any and all Old Notes validly tendered
and not withdrawn prior to 5:00 p.m., New York City time, on April 30, 1998,
unless extended (as so extended, the "Expiration Date"). Tenders of Old Notes
may be withdrawn at any time prior to 5:00 p.m. New York City time on the
Expiration Date. The Exchange Offer is not conditioned upon any minimum
principal amount of Old Notes being tendered for exchange; however, the Exchange
Offer is subject to certain customary conditions. Old Notes may be tendered only
in denominations of $1,000 principal amount and integral multiples thereof. See
"The Exchange Offer."
The Old Notes were sold by the Company on February 19, 1998 to
Donaldson, Lufkin & Jenrette Securities Corporation, Morgan Stanley & Co.,
Incorporated, BancBoston Securities, Inc., and Citicorp Securities, Inc.
(collectively, the "Initial Purchasers") in a private transaction not subject to
the registration requirements of the Securities Act (the "Original Offering").
The Old Notes were thereupon offered and sold by the Initial Purchasers only to
(a) persons they reasonably believed to be qualified institutional buyers
("QIBs") in reliance on Rule 144A under the Securities Act and (b) to certain
eligible
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persons in "offshore transactions" pursuant to Regulation S under the Securities
Act, each of which agreed to comply with certain transfer restrictions and other
conditions. Accordingly, the Old Notes may not be offered, resold or otherwise
transferred unless registered under the Securities Act or unless an applicable
exemption from the registration requirements of the Securities Act is available.
The New Notes have been registered under the Securities Act and are being
offered hereunder in order to satisfy the obligations of the Company under the
Registration Rights Agreement entered into with the Initial Purchasers in
connection with the offering of the Old Notes. See "The Exchange Offer" and
"Description of the Notes--Exchange Offer; Registration Rights."
Based on interpretations by the staff of the Securities and Exchange
Commission (the "Commission") set forth in no-action letters issued to unrelated
parties, the Company believes that the New Notes issued pursuant to the Exchange
Offer in exchange for Old Notes may be offered for resale, resold and otherwise
transferred by any holder thereof (other than broker-dealers, as set forth
below, and any such holder that is an "affiliate" of the Company within the
meaning of Rule 405 under the Securities Act) without compliance with the
registration and prospectus-delivery provisions of the Securities Act, provided
that (i) the New Notes are acquired in the ordinary course of such holder's
business, (ii) such holder is not engaging in and does not intend to engage in a
distribution of the New Notes, and (iii) such holder does not have an
arrangement or understanding with any person to participate in the distribution
of the New Notes. Any holder who tenders in the Exchange Offer with the
intention to participate, or for the purpose of participating, in a distribution
of the New Notes or who is an affiliate of the Company may not rely upon such
staff interpretations and, in the absence of an exemption therefrom, must comply
with the registration and prospectus-delivery requirements of the Securities Act
in connection with any secondary resale transaction. Failure to comply with any
of the foregoing conditions may result in a holder incurring liabilities under
the Securities Act for which such holder is not indemnified by the Company.
Holders of Old Notes wishing to accept the Exchange Offer must represent to the
Company in the Letter of Transmittal that all of the foregoing conditions, if
applicable, have been met. Each broker-dealer that receives New Notes for its
own account in exchange for Old Notes, if such Old Notes were acquired by the
broker-dealer as a result of its market-making activities or other trading
activities, must acknowledge that it will deliver a prospectus in connection
with any resale of such New Notes. The Letter of Transmittal states that by so
acknowledging and by delivering a prospectus, a broker-dealer will not be deemed
to admit that it is an "underwriter" within the meaning of the Securities Act.
This Prospectus, as it may be amended or supplemented from time to time, may be
used by a broker-dealer in connection with resales of New Notes received in
exchange for Old Notes if such Old Notes were acquired by such broker-dealer as
a result of market-making activities or other trading activities. The Company
has agreed, for a period of one year after the date of this Prospectus, to make
this Prospectus available to any broker-dealer for use in connection with any
such resale.
Prior to this Exchange Offer, there has been no public market for the
Notes. If such market were to develop, the Notes could trade at prices that may
be higher or lower than their principal amount. The Old Notes are eligible for
trading in the National Association of Securities Dealer's Private Offering,
Resales and Trading through Automated Linkages ("PORTAL") Market. The Company
does not intend to apply for listing of the New Notes on any securities exchange
or stock market. Although the Initial Purchasers have advised the Company that
one or more of them may act as market makers for the New Notes, they are not
obligated so to act and they may discontinue any market-making activities at any
time without notice. Therefore, there can be no assurance as to the liquidity of
any trading market for the New Notes or that an active public market for the New
Notes will develop. See "Risk Factors--Absence of Public Market for the New
Notes."
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Neither the Company nor the Guarantors will receive any proceeds from
this Exchange Offer. The Company has agreed to pay the expenses of the Exchange
Offer. No underwriter is being used in connection with this Exchange Offer.
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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 by the Company, the underwriters, or any other
person. Neither the delivery of this Prospectus nor any sale made hereunder
shall under any circumstances create any implication that there has been no
change in the affairs of the Company since the date hereof. This Prospectus does
not constitute an offer or a solicitation of an offer to buy any securities by
anyone in any jurisdiction in which such offer or solicitation is not authorized
or in which the person making such offer or solicitation is not qualified to do
so or to any person to who it is unlawful to make such offer or solicitation.
TABLE OF CONTENTS
Available Information.......................................... 6
Incorporation of Certain Documents by Reference................ 6
Summary........................................................ 8
Risk Factors................................................... 15
Use of Proceeds................................................ 23
Capitalization................................................. 24
Selected Historical Consolidated Financial Data................ 25
The Exchange Offer............................................. 29
Description of the Notes....................................... 39
Plan of Distribution........................................... 75
Legal Matters.................................................. 76
Experts........................................................ 76
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AVAILABLE INFORMATION
The Company has filed with the Commission a Registration Statement on
Form S-4 pursuant to the Securities Act (the "Exchange Offer Registration
Statement"), with respect to the New Notes offered hereby. This Prospectus does
not contain all the information set forth in the Registration Statement, certain
parts of which are omitted in accordance with the rules and regulations of the
Commission. Statements made in this Prospectus as to the contents of any
contract, agreement, or other document are summaries of the material terms of
such contract, agreement, or document. With respect to each such contract,
agreement, or other document filed as an exhibit to the Registration Statement,
reference is made to the exhibit for a more complete description of the matter
involved. The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the rules
and regulations thereunder, and in accordance therewith files periodic reports
and proxy and other information statements with the Commission. All reports,
proxy and information statements, and other information filed by the Company
with the Commission may be inspected at the public reference facilities
maintained by the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549,
and at the regional offices of the Commission located at 7 World Trade Center,
13th Floor, New York, New York 10048, and 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661. Copies of such material may be obtained from the Public
Reference Section of the Commission at 450 Fifth Street, N.W., Washington, D.C.
20549, at prescribed rates. The Commission also maintains a Web site
(http://www.sec.gov) that contains reports, proxy and information statements
regarding registrants, such as the Company, that file electronically with the
Commission. The Company's Common Stock is traded on the Nasdaq National Market
and reports, proxy statements and other information concerning the Company can
also be inspected at the offices of the National Association of Securities
Dealers, Inc. at 1735 K Street, N.W., Washington, D.C. 20006.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Company's (i) Annual Report on Form 10-K for the year ended
December 31, 1996, (ii) Quarterly Reports on Form 10-Q for the quarters ended
March 31, 1997, June 30, 1997, and September 30, 1997, (iii) Current Report on
Form 8-K dated June 9, 1997 and the amendment thereto dated June 26, 1997, (iv)
Current Report on Form 8-K dated February 25, 1998, (v) the combined statements
of assets to be sold of Care Offshore, Inc. as of December 31, 1995 and 1996 and
as of September 30, 1997 (unaudited), and the combined statements of vessel
operations for the years ended December 31, 1995 and 1996 and for the nine
months ended September 30, 1996 and 1997 (unaudited), filed with the Commission
on December 11, 1997 as part of the Company's Registration Statement on Form
S-3, Registration No. 333-42039, and (vi) the consolidated financial statements
of Bay Transportation Corporation as of December 31, 1995 and 1996 and for the
nine months ended September 30, 1996 and 1997, filed with the Commission on
December 11, 1997 as part of the Company's Registration Statement on Form S-3,
Registration No. 333-42039, which have been filed by the Company with the
Commission pursuant to the Exchange Act, are incorporated in and made a part of
this Prospectus.
All documents filed by the Company pursuant to Section 13(a), 13(c),
14, or 15(d) of the Exchange Act after the date of this Prospectus and prior to
the termination of the Exchange Offer shall be deemed to be incorporated by
reference in this Prospectus and to be part hereof from the date of filing of
such documents. Any statement contained in a document incorporated or deemed to
be incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained herein
or in any other subsequently filed document which also is or is deemed to be
incorporated by reference herein modifies or supersedes such statement. Any such
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statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this Prospectus.
The Company will provide without charge to each person to whom a copy
of this Prospectus has been delivered, upon the written or oral request of such
person, a copy of any and all of the documents which have been or may be
incorporated by reference in this Prospectus, except that exhibits to such
documents will not be provided unless they are specifically incorporated by
reference into such documents. Requests for copies of any such document should
be directed to Investor Relations, Hvide Marine Incorporated, 2200 Eller Drive,
P.O. Box 13038, Fort Lauderdale, Florida 33316, telephone number (954) 523-2200.
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SUMMARY
The following is a summary of certain information contained elsewhere
in this Prospectus or incorporated by reference herein and does not purport to
be complete. Reference is made to, and this Summary is qualified in its entirety
by and should be read in conjunction with, the more detailed information
contained elsewhere herein or incorporated by reference herein. Unless otherwise
defined herein, capitalized terms used in this Summary have the respective
meanings ascribed to them elsewhere in this Prospectus or in the Indenture.
The Company
Hvide (pronounced "vee-dah") is one of the world's leading providers of
marine support and transportation services, serving primarily the energy and
chemical industries. The Company has been an active consolidator in each of the
markets in which it operates, increasing its vessel fleet from 23 vessels in
1993 to 267 vessels currently. As a result, the Company is the third largest
operator of offshore energy support vessels in the U.S. Gulf of Mexico, the
largest operator of such vessels in the Arabian Gulf, and a leading operator of
energy support vessels offshore West Africa and Southeast Asia. In addition, the
Company is the sole provider of commercial tug services at Port Everglades,
Tampa, and Port Canaveral, Florida, and a leading provider of such services in
Mobile, Alabama, Lake Charles, Louisiana, and Port Arthur, Texas. The Company is
also the leading transporter of specialty chemicals in the U.S. domestic trade,
with 47% of the capacity, and also transports petroleum products in the domestic
trade.
Beginning with the May 1997 acquisition of a 35-vessel fleet of
offshore energy support vessels operating in the Arabian Gulf, the Company has
recently substantially expanded its offshore energy support operations into
several international markets and increased its deepwater capability. Since the
May 1997 acquisition, the Company has completed five substantial acquisitions
(the "Recent Acquisitions") that have further expanded its offshore energy
support fleet internationally and also increased its domestic offshore and
harbor towing and petroleum product transportation operations. These have
consisted of (i) the October 1997 acquisition of 30 offshore energy support
vessels operating primarily in the Arabian Gulf for $36.0 million, (ii) the
December 1997 acquisition of 14 offshore energy support vessels operating
primarily in the Arabian Gulf for $20.5 million, (iii) the February 1998
acquisition of 37 offshore energy support vessels operating primarily offshore
West Africa and Southeast Asia for $289.7 million, (iv) the October 1997
acquisition for $57.6 million of a company operating 14 tugs that expanded the
Company's harbor towing operations to the port of Tampa, Florida, and (v) the
March 1998 acquisition for $31.4 million of two petroleum product carriers and
seven harbor tugs.
The Original Offering and Use of Proceeds
The Old Notes were sold by the Company on February 19, 1998 to the
Initial Purchasers and were thereupon offered and sold by the Initial Purchasers
only to qualified buyers pursuant to Rule 144A and Regulation S under the
Securities Act. The net proceeds from the sale of the Old Notes, after deducting
discounts and commissions and estimated offering expenses, were approximately
$291.7 million, of which $141.7 million was used to repay outstanding
indebtedness under the Company's $300.0 million term loan, $125.0 million was
used to repay outstanding indebtedness under the Company's $175.0 million
revolving line of credit, and the balance is being used for general corporate
purposes, primarily vessel acquisitions.
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The Exchange Offer
The Exchange Offer relates to the exchange of up to $300.0 million
aggregate principal amount of New Notes for up to $300.0 million aggregate
principal amount of the Old Notes. The form and terms of the New Notes are
identical in all material respects to the form and terms of the Old Notes except
that (i) the New Notes are registered under the Securities Act and therefore
will not bear any legends restricting their transfer and (ii) holders of the New
Notes, other than certain broker-dealers, will not be entitled to the rights of
holders of Transfer Restricted Securities under the Registration Rights
Agreement. The New Notes evidence the same indebtedness as the Old Notes and are
entitled to the benefits of the Indenture governing the Old Notes. See
"Description of the Notes."
The Exchange Offer..............Pursuant to the Exchange Offer, $1,000
principal amount of New Notes will be
exchanged for each $1,000 principal
amount of Old Notes that are validly
tendered and not withdrawn. As of the
date hereof, Old Notes representing
$300.0 million aggregate principal
amount are outstanding.
Resales..........................Based on interpretations by the staff of
the Commission set forth in no- action
letters issued to unrelated parties, the
Company believes that the New Notes
issued pursuant to the Exchange Offer in
exchange for Old Notes may be offered
for resale, resold and otherwise
transferred by any holder thereof (other
than broker-dealers, as set forth below,
and any such holder that is an
"affiliate" of the Company within the
meaning of Rule 405 under the Securities
Act) without compliance with the
registration and prospectus-delivery
provisions of the Securities Act,
provided that (i) the New Notes are
acquired in the ordinary course of such
holder's business, (ii) such holder is
not engaging in and does not intend to
engage in a distribution of the New
Notes, and (iii) such holder does not
have an arrangement or understanding
with any person to participate in the
distribution of the New Notes. Any
holder who tenders in the Exchange Offer
with the intention to participate, or
for the purpose of participating, in a
distribution of the New Notes or who is
an affiliate of the Company may not rely
upon such staff interpretations and, in
the absence of an exemption therefrom,
must comply with the registration and
prospectus-delivery requirements of the
Securities Act in connection with any
secondary resale transaction. Failure to
comply with any of the foregoing
conditions may result in a holder
incurring liabilities under the
Securities Act for which such holder is
not indemnified by the Company. Holders
of Old Notes wishing to accept the
Exchange Offer must represent to the
Company in the Letter of Transmittal
that all of the foregoing conditions, if
applicable, have been met. Each
broker-dealer that receives New Notes
for its own account in exchange for Old
Notes, if such Old Notes were acquired
by the broker-dealer as a result of its
market-making activities or other
trading activities, must acknowledge
that it will deliver a prospectus in
connection with any resale of such New
Notes. The Letter of Transmittal states
that by so acknowledging and by
delivering a prospectus, a broker-dealer
will not be deemed to admit that it is
an "underwriter" within the meaning of
the Securities Act. This Prospectus, as
it may be amended or supplemented from
time to time,
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may be used by a broker-dealer in
connection with resales of New Notes
received in exchange for Old Notes if such
Old Notes were acquired by such
broker-dealer as a result of market-making
activities or other trading activities. The
Company has agreed, for a period of one
year after the date of this Prospectus, to
make this Prospectus available to any
broker-dealer for use in connection with
any such resale. The Exchange Offer is not
being made to, nor will the Company accept
surrenders for exchange from, holders of
Old Notes in any jurisdiction in which this
Exchange Offer or the acceptance thereof
would not be in compliance with the
securities or blue sky laws of such
jurisdiction.
Expiration Date.................. The Exchange Offer will expire at 5:00
p.m., New York City time, on April
30, 1998, unless extended, in which
case, the term "Expiration Date" shall
mean the latest date and time to which
the Exchange Offer is extended. See
"The Exchange Offer--Terms of the
Exchange Offer--Expiration Date;
Extension; Amendments."
Conditions to the
Exchange Offer................ The Exchange Offer is subject to customary
conditions, certain of which may be
waived by the Company. See "The Exchange
Offer--Terms of the Exchange
Offer--Conditions to the Exchange
Offer." The Exchange Offer is not
conditioned upon any minimum principal
amount of Old Notes being tendered.
Procedures for Tendering
Old Notes..................... Each holder of Old Notes wishing to accept
the Exchange Offer must complete, sign,
and date the Letter of Transmittal, or a
facsimile thereof, in accordance with
the instructions contained herein and
therein, and mail or otherwise deliver
the Letter of Transmittal, or a
facsimile, together with the Old Notes
and any other required documentation, to
the Exchange Agent (as defined herein)
at the address set forth herein and in
the Letter of Transmittal. Persons
holding Old Notes through the Depository
Trust Company ("DTC") and wishing to
accept the Exchange Offer must do so
pursuant to DTC's ATOP (as defined
herein), by which each tendering
Participant will agree to be bound by
the Letter of Transmittal. By executing
or agreeing to be bound by the Letter of
Transmittal, each holder will represent
to the Company that, among other things,
(i) the New Notes acquired pursuant to
the Exchange Offer are being acquired in
the ordinary course of such holder's
business, (ii) such holder is not
engaging and does not intend to engage
in a distribution of such New Notes,
(iii) such holder does not have an
arrangement or understanding with any
person to participate in the
distribution of such New Notes, and (iv)
such holder is not an "affiliate," as
defined in Rule 405 under the Securities
Act, of the Company.
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Special Procedures for
Beneficial Owners................ Any beneficial owner whose Old Notes are
registered in the name of a
broker-dealer, commercial bank, trust
company, or other nominee and who wishes
to tender such Old Notes in response to
the Exchange Offer should contact such
registered holder promptly and instruct
such registered holder to tender on such
beneficial owner's behalf. If such
beneficial owner wishes to tender on its
own behalf, such owner must, prior to
completing and executing the Letter of
Transmittal and delivering its Old
Notes, either make appropriate
arrangements to register ownership of
the Old Notes in such beneficial owner's
name or obtain a properly completed bond
power from the registered holder. The
transfer of registered ownership may
take considerable time, however, and may
not be able to be completed prior to the
Expiration Date. See "The Exchange
Offer--Terms of the Exchange
Offer--Procedures for Tendering Old
Notes." Guaranteed Delivery Procedures
Holders of Old Notes who wish to tender
their Old Notes and whose Old Notes are
not immediately available, or who cannot
deliver their Old Notes, the Letter of
Transmittal or any other documents
required by the Letter of Transmittal,
to the Exchange Agent prior to the
Expiration Date, must tender their Old
Notes according to the
guaranteed-delivery procedures set forth
in "The Exchange Offer--Terms of the
Exchange Offer--Guaranteed Delivery
Procedures."
Withdrawal......................... The tender of Old Notes pursuant to the
Exchange Offer may be withdrawn at any
time prior to 5:00 p.m., New York City
time, on the Expiration Date. Any Old
Notes not accepted for exchange for any
reason will be returned without expense
to the tendering holder as promptly as
practicable after the expiration or
termination of the Exchange Offer. See
"The Exchange Offer--Terms of the
Exchange Offer--Withdrawal Rights."
Acceptance of Old Notes
and Delivery of
New Notes.................. Subject to certain conditions (as
described more fully in "The Exchange
Offer--Terms of the Exchange
Offer--Conditions to the Exchange
Offer"), the Company will accept for
exchange any and all Old Notes that are
properly tendered in response to the
Exchange Offer prior to 5:00 p.m., New
York City time, on the Expiration Date.
The New Notes issued pursuant to the
Exchange Offer will be delivered
promptly following the Expiration Date.
See "The Exchange Offer--Terms of the
Exchange Offer."
Interest on the New Notes
and the Old Notes................. Interest on each New Note will accrue from
the date of issuance of the Old Note for
which the New Note is exchanged.
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Exchange Agent..................... The Bank of New York is serving as
Exchange Agent in connection with the
Exchange Offer. The address, telephone
number and facsimile number of the
Exchange Agent are set forth in "The
Exchange Offer--Exchange Agent."
Effect of Not Tendering............ Old Notes that are not tendered or that
are tendered but not accepted, will,
following the completion of the Exchange
Offer, continue to be subject to the
existing restrictions upon their
transfer. The Company will have no
further obligation (other than to
certain broker-dealers as described in
"Description of the Notes--Exchange
Offer; Registration Rights" with respect
to the Shelf Registration Statement (as
defined herein)) to provide for the
registration of such Old Notes under the
Securities Act.
Terms of the Notes
Securities Offered................. $300.0 million aggregate principal amount
of 83/8% Senior Notes due 2008.
Maturity.......................... February 15, 2008.
Interest Payment Dates............ Interest on the Notes is payable
semi-annually in cash in arrears on
February 15 and August 15 of each year,
commencing August 15, 1998.
Ranking........................... The Notes are senior unsecured obligations
of Hvide and rank pari passu in right of
payment with all Indebtedness and other
liabilities of Hvide that are not
subordinated by their terms to other
Indebtedness of Hvide and senior in
right of payment to all Indebtedness of
Hvide that by its terms is so
subordinated. The Notes are effectively
subordinated to all existing and future
secured Indebtedness of Hvide to the
extent of the value of the assets
securing such Indebtedness and are
structurally subordinated to all
existing and future Indebtedness, if
any, and other liabilities of its
Subsidiaries that are not Guarantors. As
of September 30, 1997, on a pro forma
basis, after giving effect to the
Original Offering and the application of
the proceeds therefrom and the Recent
Acquisitions, Hvide and its subsidiaries
would have had outstanding $195.8
million of secured Indebtedness and
$343.7 million of unsecured senior
Indebtedness and other liabilities. The
Indenture permits Hvide and its
subsidiaries to incur additional
Indebtedness, including additional
secured Indebtedness under the $175.0
million revolving credit facility
portion of its $325.0 million Credit
Facility, subject to certain
limitations.
Guarantees.......................... The Notes are unconditionally guaranteed,
on a joint and several basis, subsidiary
that guarantees any Indebtedness of
Hvide or the other guarantors of the
Notes. The Guarantees may be released
under certain circumstances. The
Guarantees are senior unsecured
obligations of each respective Guarantor
and rank pari passu in right of payment
with all other
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Indebtedness and liabilities of such
Guarantor that are not subordinated by
their terms to other Indebtedness of
such Guarantor. A Guarantee of a
Guarantor is effectively subordinated to
secured Indebtedness of such Guarantor.
In addition, Hvide's obligations under
the Notes are effectively subordinated
to existing and future claims of
creditors (other than Hvide and the
Guarantors) of Hvide's subsidiaries
other than the Guarantors. Claims of
creditors (other than Hvide and the
Guarantors) of such subsidiaries,
including trade creditors, tort
claimants, secured creditors, taxing
authorities, and creditors holding
guarantees, generally will have priority
as to assets of such subsidiaries over
the claims and equity interest of Hvide
and thereby, indirectly, the holders of
Indebtedness of Hvide, including the
Notes and the Guarantees. See
"Description of the Notes--Guarantees of
Notes."
Optional Redemption................ On or after February 15, 2003, Hvide may
redeem the Notes, in whole or in part,
at the redemption prices set forth
herein, plus accrued and unpaid interest
to the date of redemption.
Notwithstanding the foregoing, at any
time prior to February 15, 2001, Hvide
may redeem up to 35% of the original
aggregate principal amount of the Notes
with the net proceeds of one or more
Public Equity Offerings at a redemption
price equal to 108.375% of the principal
amount thereof, plus accrued and unpaid
interest to the date of redemption;
provided that at least 65% of the
original aggregate principal amount of
the Notes remains outstanding
immediately after such redemption. See
"Description of the Notes--Optional
Redemption."
Change of Control.................. Upon a Change of Control, each holder of
Notes will have the right to require
Hvide to repurchase all or a portion of
such holder's Notes at a purchase price
equal to 101% of the principal amount
thereof plus accrued and unpaid interest
to the date of repurchase. See
"Description of the Notes--Change of
Control."
Certain Covenants.................. The Indenture contains certain covenants
that, among other things, limit the
ability of Hvide and its Subsidiaries
to: (i) incur additional Indebtedness
and issue Preferred Stock; (ii) pay
dividends or make other Restricted
Payments, including certain Investments;
(iii) consummate certain Asset Sales;
(iv) enter into certain transactions
with Affiliates; (v) enter into Sale and
Lease-Back Transactions; (vi) incur
liens; (vii) merge or consolidate with
any other Person; (viii) sell, assign,
transfer, lease, convey, or otherwise
dispose of all or substantially all of
the assets of Hvide and its
Subsidiaries, taken as a whole; or (ix)
engage in lines of business other than
the Related Business. Under certain
circumstances, Hvide is required to make
an offer to purchase Notes at a price
equal to 100% of the principal amount
thereof, plus accrued and unpaid
interest to the date of purchase, with
the proceeds from certain Asset Sales.
In addition, the Indenture imposes
restrictions on the ability of the
Subsidiaries to issue guarantees or to
create restrictions on their ability to
make distributions on their capital
stock or make loans to Hvide and its
Subsidiaries. These covenants are
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subject to important exceptions and
qualifications. See "Description of the
Notes--Certain Covenants."
Exchange Offer;
Registration Rights................. Pursuant to the Registration Rights
Agreement among Hvide, the Guarantors,
and the Initial Purchasers, under
certain circumstances Hvide and the
Guarantors will be required to file and
use their best efforts to cause a shelf
registration statement to become and
remain effective to effect the resale of
the Notes. See "Description of the
Notes--Exchange Offer; Registration
Rights."
For further information regarding the Notes, see "Description of the Notes."
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RISK FACTORS
In addition to the other information set forth elsewhere in this
Prospectus or incorporated by reference herein, the following factors relating
to the Company and this Exchange Offer should be considered by prospective
investors when evaluating any investment in the New Notes offered hereby.
Holding Company Structure; Effective Subordination of the Notes
Hvide is a holding company that conducts substantially all of its
operations through its U.S. and foreign subsidiaries, and substantially all of
its assets consist of equity in such subsidiaries. Accordingly, the Company is
and will be dependent on its ability to obtain funds from its subsidiaries to
service its indebtedness, including the Notes.
The Company's bank credit facility (the "Credit Facility") provides for
a $175.0 million revolving line of credit and a $150.0 million term loan.
Borrowings under the Credit Facility are initially secured by a portion of the
assets of the Company, primarily vessels, having an appraised market value of
approximately $400.0 million, whereas the Notes are not secured by any assets of
the Company. See "Description of the Notes." Accordingly, claims of the lenders
under the Credit Facility, and other secured debt of the Company with respect to
the assets constituting collateral for any indebtedness thereunder and the
assets of any subsidiary guaranteeing such indebtedness, will be satisfied prior
to the unsecured claims of holders of the Notes. In the event of a default on
the Notes or a bankruptcy, liquidation, or reorganization of the Company, such
assets will be available to satisfy obligations with respect to the indebtedness
secured thereby before any payment therefrom can be made on the Notes. Thus the
Notes are effectively subordinated to claims of the lenders under the Credit
Facility to the extent of such pledged collateral. Assuming the Credit Facility
had been in place at September 30, 1997, on a pro forma basis, after giving
effect to the Original Offering and the application of the proceeds therefrom
and the Recent Acquisitions, the Company would have had $195.8 million of
secured Indebtedness at that date and $175.0 million of borrowing capacity under
the Credit Facility, all of which would be effectively senior to the Notes.
In addition, the Notes are effectively subordinated to the claims of
all creditors, including trade creditors and tort claimants, of the Company's
subsidiaries that are not Guarantors and to all secured creditors of the
Guarantors including the lenders under the Credit Facility. In the event of the
insolvency, bankruptcy, liquidation, reorganization, dissolution or winding up
of the business of a subsidiary that is not a Guarantor, creditors of such
subsidiary will generally have the right to be paid in full before any
distribution is made to the Company or the holders of the Notes.
Enforceability of Subsidiary Guarantees
Substantially all of the subsidiaries of the Company have guaranteed
the Company's obligations under the Notes. There can be no assurance that any
such Subsidiary Guarantee can be enforced easily, if at all. Certain of the
Guarantors are, or may be, incorporated in jurisdictions outside the United
States. In the event of a default under a Subsidiary Guarantee, any enforcement
action in all likelihood will have to occur in the jurisdiction where the
Subsidiary's assets are located. The limited jurisprudence and experience with
such enforcement actions in the relevant jurisdiction may significantly
complicate, delay, or limit the scope of such enforcement action. The ability of
a foreign claimant to enforce a judgment or arbitral award obtained outside
those jurisdictions may be limited. In addition, the ability to enforce
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<PAGE>
an "upstream guarantee" (i.e., a guarantee by a subsidiary of a parent's
obligations) is subject to some uncertainty not only in the United States but
also in other applicable jurisdictions.
Unenforceability and Releases of Subsidiary Guarantees
Although holders of the Notes are direct creditors of each Guarantor by
virtue of its Guarantee, existing or future creditors of a Guarantor, a trustee
in bankruptcy or a Guarantor as a debtor-in-possession could avoid or
subordinate such Guarantee, under U.S. fraudulent conveyance laws, if
applicable, in the event that it were successful in establishing that (i) the
Guarantee was incurred with intent to hinder, delay, or defraud any present or
future creditor or (ii) the Guarantor in question did not receive fair
consideration or reasonably equivalent value for issuing its Guarantee and that
it (a) was insolvent at the time of such issuance, or (b) was rendered insolvent
by reason of such issuance, or (c) was engaged in a business or transaction for
which its assets constituted unreasonably small capital to carry on its
business, or (d) intended to incur, or believed that it would incur, debts
beyond its ability to pay such debts as they matured. Among other things, a
legal challenge of the Guarantee on U.S. fraudulent conveyance grounds may focus
on the benefits, if any, realized by the Guarantor in question as a result of
the issuance by the Company of the Notes. The measure of insolvency for these
purposes will depend upon the governing law of the relevant jurisdiction.
Generally, however, a Person will be considered insolvent for these purposes if
the sum of that Person's debts is greater than the fair value or the fair
saleable value of all of that Person's property or if the present fair saleable
value of that Person's assets is less than the amount that will be required to
pay its probable liability on its existing debts as they become absolute and
matured. Moreover, regardless of solvency, a court could void an incurrence of
indebtedness, including the Notes, if it determined that such transaction was
made with the intent to hinder, delay, or defraud creditors. In addition, a
court could subordinate indebtedness, including the Notes, to the claims of all
existing and future creditors on similar grounds. The Company believes that,
after giving effect to the Original Offering, the Company was (i) neither
insolvent nor rendered insolvent by the incurrence of indebtedness in connection
with the Original Offering, (ii) in possession of sufficient capital to run its
business effectively, and (iii) incurring debts within its ability to pay as the
same mature or become due. A Guarantee may also be avoided, declared
unenforceable, or subordinated to other obligations of the applicable Guarantor
under any applicable foreign bankruptcy, reorganization, receivership,
insolvency, liquidation, or other similar legislation or legal principles under
any other applicable foreign law. To the extent any Guarantee is avoided as a
fraudulent conveyance or held unenforceable for any other reason, the holders of
the Notes will cease to have any claim in respect of the Guarantor in question
and will be solely creditors of the Company, and may be required to return all
amounts received pursuant to such Guarantee. In such event, or in the event of
the subordination of such Guarantee, the claims of the holders of the Notes
would be subject to the prior payment of all liabilities of the Guarantor in
question. There can be no assurance that, after providing for all prior claims,
there would be sufficient assets to satisfy the claims of the holders of the
Notes relating to any avoided, unenforceable, or subordinated portion of the
Guarantees.
Any Guarantor may be released from its Guarantee at any time upon any
sale, exchange, or transfer, in compliance with the provisions of the Indenture,
by the Company of the capital stock of such Guarantor or substantially all of
the assets of such Guarantor and in certain other circumstances. See
"Description of the Notes--Guarantees of Notes."
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<PAGE>
Other Constraints to Realizing Cash from Subsidiaries
In addition to the risks described in "--Holding Company Structure;
Effective Subordination of the Notes" and "--Unenforceability and Releases of
Subsidiary Guarantees," the ability of the Company's subsidiaries to make
payments to the Company may be constrained by (i) the level of taxation,
particularly corporate profits and withholding taxes, in the jurisdictions in
which they operate, (ii) exchange controls and repatriation restrictions in
effect in the jurisdictions in which they operate, and (iii) the ownership
interests of other investors in the Company's subsidiaries.
If the Company is not able to realize sufficient cash flow from its
subsidiaries, the Company may be required to refinance its indebtedness, raise
funds in a public or private equity or debt offering, or sell some or all of its
and its subsidiaries' assets. If the Company is required to conduct an offering
of its capital stock or to refinance either the Notes or its other indebtedness,
its ability to do so on acceptable terms, if at all, will be affected by many
factors, including economic and industry cycles. There can be no assurance that
an offering of the Company's capital stock or a refinancing of the Notes or
other indebtedness can or will be completed on satisfactory terms, or that they
would be sufficient to enable Hvide to make payments with respect to the Notes.
Risk of Inability to Repurchase the Notes Upon a Change of Control
Upon a Change of Control, the Company is required to offer to purchase
all outstanding Notes at 101% of the aggregate principal amount thereof plus
accrued and unpaid interest to the Change of Control Payment Date. The source of
funds for any such purchase would be the Company's available cash or cash
generated from other sources, including borrowings, sales of assets, sales of
equity or funds provided by new controlling persons. A Change of Control would
give lenders under the Credit Facility the right to require the Company to repay
all indebtedness then outstanding thereunder. There can be no assurance that
sufficient funds will be available at the time of any Change of Control to make
any required purchases of validly tendered Notes and to repay any other
indebtedness then in default. See "Description of the Notes--Change of Control."
Absence of Public Market for the New Notes
The New Notes constitute a new issue of securities with no existing
trading market, and there can be no assurance as to the liquidity of any markets
that may develop for the New Notes, the ability of the holders of New Notes to
sell their New Notes, or the prices at which such holders will be able to sell
their New Notes. Future trading prices of the New Notes will depend on many
factors, including, among others, prevailing interest rates, the Company's
operating results, and the market for similar securities. The Company does not
intend to apply for listing of the New Notes on any securities exchange or to
seek the approval for quotation through an automated quotation system. Although
the Initial Purchasers have advised the Company that they currently intend to
make a market in the New Notes, they are not obligated to do so and may
discontinue such market-making activity at any time without notice. In addition,
such market-making activity will be subject to the limits imposed by the
Securities Act and the Exchange Act and may be limited during the Exchange
Offer. See "Plan of Distribution." Accordingly, no assurance can be given that
an active market will develop for the New Notes or as to the liquidity of, or
the trading market for, the New Notes.
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<PAGE>
Leverage and Debt Service
As of September 30, 1997, on a pro forma basis, after giving effect to
the Recent Acquisitions and the Original Offering and the application of the
estimated net proceeds therefrom, the Company would have had outstanding
indebtedness and other liabilities of approximately $539.5 million and
significant debt service obligations, plus additional payments of interest on
$115.0 million of debentures relating to the issuance in July 1997 of Trust
Preferred Securities (the "Trust Preferred Securities") that are not classified
as indebtedness in the Company's financial statements. In addition, the Company
may incur additional indebtedness in the future.
The Company's high level of indebtedness will have several important
effects on its future operations, including the following: (i) the Company will
have significant cash requirements to service debt, thereby reducing funds
available for operations and future business opportunities and increasing the
Company's vulnerability to adverse general economic and industry conditions;
(ii) the Company may be restricted in the future from obtaining additional
financing, whether for acquisitions, working capital, or other purposes; (iii)
the Company will be required to comply with certain financial covenants and
other restrictions contained in the debt instruments; and (iv) the Company's
high level of indebtedness could make it more vulnerable to economic downturns
in the future.
The Company's ability to meet its debt service obligations will depend
on its future operating performance and financial results, which are subject to
economic, financial, competitive, and other factors beyond its control,
including fluctuations in charter rates and vessel values, government and
industry regulation, and levels of activity in offshore oil and gas exploration.
See "--Dependence on Oil and Gas Industry; Cyclical Industry Conditions." There
can be no assurance that the Company's business will generate sufficient cash
flow from operations in the future to service its debt and make necessary
capital expenditures. If the Company is unable to generate sufficient cash flow
in the future, it may be required to refinance all or a portion of its existing
debt, to sell assets, or to obtain additional financing. There can be no
assurance that any such refinancing would be possible or that any such sales of
assets or additional financing could be achieved.
Restrictive Covenants Under Debt Instruments
The terms of the Credit Facility (i) require the Company to meet
certain financial tests, including the maintenance of minimum leverage ratios,
debt service coverage ratios, and indebtedness to 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 Trust Preferred Securities, and in certain circumstances the repayment,
redemption, or repurchase of the Trust 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 continue to pursue its strategy of growth through
acquisitions.
Dependence on Oil and Gas Industry; Cyclical Industry Conditions
The Company's current business and operations are substantially
dependent upon conditions in the oil and gas industry, particularly the
expenditures by oil and gas companies for offshore exploration and production
activities. The demand for offshore energy support and transportation services
is directly
18
<PAGE>
influenced by oil and gas prices, expectations concerning future prices, the
cost of producing and delivering oil and gas, government regulation, local and
international political and economic conditions, including the ability of the
Organization of Petroleum Exporting Countries ("OPEC") to set and maintain
production levels and prices, the level of production by non-OPEC countries, and
the policies of various governments regarding exploration and development of
their oil and gas reserves. There can be no assurance that current levels of
expenditures for offshore exploration and production will be maintained or that
demand for the Company's services will reflect the level of such expenditures.
To the extent that oil and natural gas prices continue their recent decline or
remain at present levels for an extended period of time, the Company's business
could be adversely affected due to a reduction in expenditures for offshore
exploration and production.
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 number of vessels constructed and retired and by
government and industry regulation of maritime transportation practices. The
Company's offshore energy support services are dependent upon the levels of
activity in offshore oil and natural gas exploration, development, and
production, which are affected by 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.
Risks of Acquisition Strategy; Management of Growth
A key component of the Company's business strategy is to pursue
selected acquisitions of complementary assets and businesses. The Company has
completed a number of substantial acquisitions since 1994 and has rapidly
expanded its international operations since May 1997. 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.
Possible future acquisitions may be for purchase prices significantly higher
than those paid for recent 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 Company's recent rapid growth and the process of integrating the
acquired operations has placed, and is expected to continue to place,
substantial demands on the Company's management and operational resources. 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. In addition, the assumption of liabilities, whether disclosed or
undisclosed, associated with acquired businesses could have a material adverse
effect on the Company.
Risks of International Operations
The Company derives substantial revenue from international operations
primarily under dollar denominated contracts with major international oil
companies. The Company currently operates 124 vessels in international waters,
primarily the Arabian Gulf and to a lesser extent the waters offshore West
Africa and Southeast Asia, and other international locations. Risks associated
with operating in international markets include vessel seizure, foreign exchange
restrictions and currency fluctuations,
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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. Additionally, the ability of the Company to compete in
the international offshore energy support market may be adversely affected by
foreign government regulations that favor or require the awarding of contracts
to local persons, or by regulations requiring foreign persons to employ citizens
of, or purchase supplies from, a particular jurisdiction. Further, 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.
Age of Offshore Energy Support Fleet
Because of overcapacity within the marine support services industry on
a worldwide basis, there has been no significant construction of offshore energy
support vessels since 1983. As of September 30, 1997, the average age of the
Company's offshore energy support vessels (based on the date of construction)
was approximately 17 years. Management believes that after a vessel has been in
service for approximately 30 years, repair, vessel certification, and
maintenance costs may become no longer economically justifiable. There can be no
assurance that the Company will be able to maintain its fleet by extending the
economic life of existing vessels through major refurbishment or by acquiring
new or used vessels.
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.
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 two
marine maintenance facilities owned and operated by the Company, are also
subject to federal, state, and local environmental laws and regulations.
Amendment of these laws and regulations to impose more stringent requirements
would likely result in increased maintenance and operating expenses. In
addition, OPA 90 requires tanker owners and operators to establish and maintain
with the U.S. Coast Guard evidence of financial responsibility, as demonstrated
by a certificate of financial responsibility ("COFR"), with respect to potential
oil spill liability, which the Company and most of its competitors currently
satisfy by virtue of self- insurance or third-party insurance. Additional laws
and regulations may be
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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.
Competition
The Company operates in a highly competitive industry. In addition to
price, service, and reputation, which affect all of the Company's operations,
the principal competitive factors with respect to its offshore energy support
vessels include operating conditions and intended use (both of which determine
the suitability of vessel types), complexity of maintaining logistical support,
and the cost of transferring equipment from one market to another. Some of the
Company's competitors have significantly greater financial resources than the
Company.
Potential Loss of Jones Act Protection
A substantial portion of the Company's operations is conducted in the
U.S. domestic trade, which, by virtue of the U.S. coastwise laws (often referred
to collectively 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.
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 three petroleum products carriers (Seabulk Challenger,
Willamette, and Concho) and five chemical carriers (HMI Astrachem, Seabulk
Magnachem, HMI Dynachem, HMI Petrochem and Seabulk America), is 2003, 2008,
2000, 2000, 2007, 2011, 2011, and 2015, respectively; and in the case of some of
its fuel barges is 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.
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
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and other liabilities. Although the Company's losses from such hazards have not
historically exceeded its insurance coverage, there can be no assurance that
this will continue to be the case.
OPA 90, by imposing virtually unlimited liability upon vessel owners,
operators, and certain charterers for certain oil pollution accidents in the
United States, has made liability insurance more expensive and has also prompted
insurers to consider reducing available liability coverage. See
"Business--Environmental and Other Regulation." While the Company maintains
insurance, there can be no assurance that all risks are adequately insured
against particularly in light of the virtually unlimited liability imposed by
OPA 90, that any particular claim will be paid, or that the Company will be able
to procure adequate insurance coverage at commercially reasonable rates in the
future. Because it maintains mutual insurance, the Company is subject to funding
requirements and coverage shortfalls in the event claims exceed available funds
and reinsurance and to premium increases based on prior loss experience. Any
such shortfalls could have a material adverse impact on the Company.
Consequences of Failure to Exchange and Restrictions on Transfer
Holders of Old Notes who do not exchange their Old Notes for New Notes
pursuant to the Exchange Offer will continue to be subject to the restrictions
on transfer of Old Notes set forth in the legend thereon. In general, the Old
Notes may not be offered or sold, unless registered under the Securities Act,
except pursuant to an exemption from, or in a transaction not subject to, the
Securities Act and applicable state securities laws. Except as described herein
in the second paragraph under "The Exchange Offer--Purpose and Effect," the
Company does not anticipate registering the Old Notes under the Securities Act.
Forward-Looking Statements
This Prospectus and the information incorporated herein by reference
includes certain statements that may be deemed to be "forward-looking
statements" within the meaning of Section 27A of the Securities Act. All
statements, other than statements of historical fact, included in this
Prospectus and the information incorporated herein by reference that addresses
activities, events, or developments that the Company expects, projects,
believes, or anticipates will or may occur in the future, including such matters
as future levels of day rates for offshore energy support vessels, future
capital expenditures and investments in the acquisition and refurbishment of
vessels, repayment of debt, business strategies, future acquisitions, expansion
and growth of operations and other such matters, are forward-looking statements.
These statements are based on certain assumptions and analyses made by
management of the Company in light of its experience and its perception of
historical trends, current conditions, expected future developments, and other
factors it believes are appropriate in the circumstances. Such statements are
subject to a number of assumptions, risks and uncertainties, including the risk
factors discussed herein, general economic and business conditions, oil and gas
prices, foreign exchange and currency fluctuations, the business opportunities
(or lack thereof) that may be presented to and pursued by the Company, changes
in laws or regulations and other factors, many of which are beyond the control
of the Company. Prospective investors are cautioned that such forward-looking
statements are not guarantees of future performance and that actual results or
developments may differ materially from those projected in such statements.
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USE OF PROCEEDS
The Company will not receive any cash proceeds from the issuance of the New
Notes offered hereby. In consideration for issuing the New Notes as contemplated
in this Prospectus, the Company will receive in exchange a like principal amount
of Old Notes, the terms of which are identical in all material respects to the
New Notes. The Old Notes surrendered in exchange for the New Notes will be
retired and cancelled and cannot be reissued. Accordingly, issuance of the New
Notes will not result in any change in capitalization of the Company. See
"Summary--The Original Offering and Use of Proceeds."
The Old Notes were sold by the Company on February 19, 1997 to the
Initial Purchasers and were thereupon offered and sold by the Initial Purchasers
only to qualified buyers pursuant to Rule 144A and Regulation S under the
Securities Act. The net proceeds to the Company from the sale of the Old Notes,
after deducting discounts and commissions and estimated offering expenses, were
approximately $291.7 million of which $141.7 million was used to repay
outstanding indebtedness under the Company's $300.0 million term loan, $125.0
million was used to repay outstanding indebtedness under the Company's $175.0
million revolving line of credit, and the balance is being used for general
corporate purposes, primarily vessel acquisitions.
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CAPITALIZATION
The following table sets forth the actual consolidated capitalization
of the Company as of September 30, 1997, and such capitalization as adjusted to
give effect to the February 1998 acquisition of 37 offshore energy support
vessels and the October 1997 acquisition of the company operating 14 tugs and as
further adjusted to give effect to the Original Offering and the application of
the estimated net proceeds therefrom. The information presented below should be
read in conjunction with the Company's consolidated financial statements and the
notes thereto incorporated by reference herein.
<TABLE>
<CAPTION>
September 30, 1997
As Further
Adjusted for
As Adjusted the Original
Actual for Acquisitions Offering
(In thousands)
<S> <C> <C> <C>
Current portion of long-term debt.................................... $ 8,381 $ 40,029 $ 40,029
Long-term debt (excluding current portion)(1)
Credit Facility................................................... $ 17,000 $ 53,500 $ --
Term Loan......................................................... -- 258,646 108,646
Title XI debt..................................................... 23,756 38,163 38,163
Senior Notes...................................................... -- -- 300,000
Other notes payable............................................... 6,408 6,408 6,408
Obligations under capital leases.................................. 6,312 6,312 6,312
Total long-term debt............................................ 53,476 363,029 459,529
Company-obligated mandatorily redeemable
preferred securities issued by a consolidated subsidiary(2) 115,000 115,000 115,000
Minority partners' equity in subsidiaries............................ 818 818 818
Stockholders' equity:
Class A Common Stock, par value $0.001; 100,000,000 shares
authorized; 12,095,568 shares issued and outstanding 12 12 12
Class B Common Stock, par value $0.001; 5,000,000 shares
authorized; 3,181,936 shares issued and outstanding 3 3 3
Additional paid-in capital........................................ 195,398 195,398 195,398
Retained earnings................................................. 19,641 19,641 19,095
Total stockholders' equity........................................... 215,054 215,054 214,508
Total minority partners' equity in subsidiaries and stockholders'
equity............................................................ 215,872 215,872 215,326
Total capitalization................................................. $ 384,348 $ 693,901 $ 789,855
</TABLE>
(1) Does not include an aggregate of $56.5 million of indebtedness incurred
after September 30, 1997 under the Credit Facility and the Term Loan
related to the October and December 1997 acquisitions of 30 and 14
offshore energy support vessels.
(2) The sole assets of the subsidiary, Hvide Capital Trust, are debentures
having an aggregate principal amount of $115.0 million. Upon redemption
or maturity of the debentures, the Trust Preferred Securities will be
mandatorily redeemable.
24
<PAGE>
SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA
The following table sets forth selected consolidated financial and
operating data for the dates and periods indicated. The financial information
for each of the years ended December 31, 1992 through 1996 is derived from the
Company's audited consolidated financial statements and notes thereto. The
selected consolidated financial data for the nine month periods ended September
30, 1996 and 1997 is derived from the unaudited consolidated statements of the
Company for such periods. In the opinion of management, the unaudited financial
statements of the Company reflect all adjustments (consisting of only normal
recurring adjustments) necessary for fair presentation of the financial
condition and results of operations for these periods. This information should
be read in conjunction with the consolidated financial statements and notes
thereto and "Management's Discussion and Analysis of Financial Condition and
Results of Operations" set forth in the Company's Annual Report on Form 10-K for
the year ended December 31, 1996 and Quarterly Report on Form 10-Q for the
quarter ended September 30, 1997 incorporated by reference into this Prospectus.
<TABLE>
<CAPTION>
Nine Months
Ended
Year Ended December 31, September 30,
1992 1993 1994 1995 1996 1996 1997
(In thousands)
<S> <C> <C> <C> <C> <C> <C> <C>
Statement of Operations Data:
Revenue........................................ $39,639 $41,527 $49,792 $ 70,562 $109,356 $72,130 $142,853
Operating expenses............................. 24,602 24,032 29,873 40,664 63,777 42,089 77,134
Overhead expenses.............................. 6,778 6,176 9,581 12,518 14,979 11,049 17,568
Depreciation and amortization.................. 4,106 4,735 4,500 6,308 9,830 6,115 13,021
Income from operations......................... 4,153 6,584 5,838 11,072 20,770 12,877 35,130
Interest expense, net.......................... 3,993 3,412 5,302 11,460 11,631 8,751 4,529
Other income (expense)......................... 8 519 11 26 437 199 (2,093)
Income (loss) before provision
for (benefit from) income taxes,
extraordinary item and cumulative effect
of a change in accounting principle......... 168 3,691 547 (362) 9,576 4,325 28,508
Provision for (benefit from) income taxes...... 158 1,873 189 (2) 3,543 1,616 10,662
Income (loss) before extraordinary item and
cumulative effect of a change in accounting
principle................................... 10 1,818 358 (360) 6,033 2,709 17,846
Loss on extinguishment of debt, net(1)......... -- -- -- -- (8,108) (8,016) (2,132)
Cumulative effect of a change in accounting
principle................................... -- 1,491 -- -- -- -- --
Net income (loss).............................. $ 10 $3,309 $ 358 $ (360) $ (2,075) $(5,30) $15,714
Basic Earnings (loss) per common share(2):
Income (loss) before extraordinary item and
cumulative effect of a change in accounting
principle................................... $(0.01) $ 0.26 $ 0.03 $ (0.14) $ 1.05 $ 0.68 $ 1.22
Net income (loss).............................. (0.01) 0.50 0.03 (0.14) (0.36) (1.32) 1.07
Weighted average number of common shares
outstanding................................. 6,268 6,268 5,302 2,535 5,763 4,012 14,620
Diluted earnings (loss) per common share(2):
Income (loss) before extraordinary item and
cumulative effect of a change in accounting
principle................................... $(0.01) $ 0.26 $ 0.03 $ (0.14) $ 0.99 $ 0.64 $ 1.17
Net income (loss).............................. (0.01) 0.50 0.03 (0.14) (0.24) (0.95) 1.04
Weighted average number of common shares and
common share equivalents outstanding........ 6,268 6,268 5,302 2,535 6,590 5,042 16,280
</TABLE>
25
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
Other Financial Data:
EBITDA(3)...................................... $8,259 $11,319 $10,338 $ 17,380 $ 30,600 $18,992 $48,151
Ratio of earnings to fixed charges(4).......... 1.05 1.66 1.09 -- 1.58 1.33 3.81
Ratio of EBITDA to interest expense, net(3).... 2.07 3.32 1.95 1.52 2.63 2.17 10.63
Net Cash Provided by (Used in):
Operating activities........................... $ (930) $6,956 $ 2,858 $ 3,948 $ 22,584 $11,038 $18,137
Investing activities........................... (1,592) (2,247) (39,815) (8,066) (84,354) (62,45) (137,75)
Financing activities........................... (2,473) (6,158) 41,249 805 68,337 53,962 117,793
</TABLE>
<TABLE>
<CAPTION>
December 31, September 30,
1992 1993 1994 1995 1996 1997
(In thousands)
<S> <C> <C> <C> <C> <C> <C>
Balance Sheet Data:
Working capital.................................. $ 847 $2,640 $ 7,793 $4,315 $(8,704) $ 24,362
Total assets..................................... 83,718 82,373 135,471 143,683 273,473 433,267
Long-term obligations............................ 50,861 47,485 98,981 100,766 115,824 53,476
Total debt....................................... 57,011 51,273 104,281 109,051 141,642 61,857
Convertible preferred securities
of subsidiary trust........................... -- -- -- -- -- 115,000
Stockholders' and minority partners' equity ..... 15,858 19,926 14,903 13,999 101,989 215,872
</TABLE>
(1) Reflects the loss on the extinguishment of debt from a portion of the
proceeds of the Company's two public offerings of common stock, net of
applicable income taxes of $1,474,000 for the year ended December 31,
1996 and nine months ended September 30, 1996 and $1,252,000 for the nine
months ended September 30, 1997.
(2) Statement of Financial Accounting Standards No. 128, adopted by the
Company, requires the presentation of basic and diluted earnings per
share and replaces the prior presentation of primary and fully diluted
earnings per share. Basic earnings per share is calculated on the basis
of weighted average outstanding common shares, after giving effect to
preferred stock dividends. Diluted earnings per share is computed on the
basis of weighted average outstanding common shares, outstanding options
that are dilutive, and equivalent shares assuming conversion of
outstanding convertible securities, where dilutive.
The following table sets forth the computation of basic and diluted
earnings per share.
<TABLE>
<CAPTION>
Year Ended December 31,
1994 1995 1996
<S> <C> <C> <C>
Income (loss) before extraordinary item............................. $ 358 $ (360) $ 6,033
Less: Class A Preferred Stock Cash Dividends........................ 222 -- --
Income available to common shareholders
for basic earnings per share................................... 136 (360) 6,033
Effect of dilutive securities:
Convertible preferred securities.................................. -- -- --
Convertible Junior Notes(a)....................................... -- -- 515
Income (loss) available to common shareholders before extraordinary
item for diluted earnings per share............................... $ 136 $ (360) $ 6,548
Weighted average shares outstanding
for basic earnings per share..................................... 5,302 2,535 5,763
Effect of dilutive securities:
Convertible preferred stock....................................... -- -- --
Convertible Junior Notes(a)....................................... -- -- 772
Stock options..................................................... -- -- 55
Dilutive potential common shares.................................... -- -- 828
Adjusted weighted average shares for
diluted earnings per share....................................... 5,302 2,535 6,590
Basic earnings per share............................................ $ 0.03 $ (0.14) $ 1.05
Dilutive earnings per share......................................... $ 0.03 $ (0.14) $ 0.99
</TABLE>
(a) Diluted earnings per share for the years ended December 31, 1994
and 1995 does not reflect any potential shares relating to the
conversion of the Junior Note due to the loss for that year. The
assumed issuance of any additional shares would be antidilutive.
26
<PAGE>
(3) EBITDA (net income from continuing operations before interest expense,
income tax expense, depreciation expense, amortization expense, minority
interests, and other non-operating income) is frequently used by securities
analysts and is presented here to provide additional information about the
Company's operations. EBITDA is not required by generally accepted
accounting principles, should not be considered as an alternative to net
income as an indicator of the Company's operating performance or as an
alternative to cash flows from operations as a measure of liquidity, and
does not represent funds available for management's use. The Company's
EBITDA may not be comparable to similarly titled measures reported by other
companies.
(4) 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 minority interest in the income or loss of majority-owned
subsidiaries divided by fixed charges. Fixed charges include interest and
amortization of debt expense and discount. Earnings for the year ended
December 31, 1995 were not able to cover fixed charges by $499,000.
27
<PAGE>
THE EXCHANGE OFFER
Purpose and Effect
The Old Notes, having been sold by the Company in a private transaction
not subject to the registration requirements of the Securities Act, are subject
to certain restrictions on transfer. In connection with the sale of the Old
Notes, the Company entered into the Registration Rights Agreement with the
Initial Purchasers (the "Registration Rights Agreement"), which requires that
the Company conduct the Exchange Offer. The Registration Rights Agreement
further provides that the Company use its reasonable best efforts to (i) cause a
registration statement with respect to the Exchange Offer (the "Exchange Offer
Registration Statement") to be declared effective on or before the 90th day
after the date on which the Old Notes were originally issued under the Indenture
(the "Closing Date") and (ii) consummate the Exchange Offer on or before the
120th day after the Closing Date. Except as provided below, upon the completion
of the Exchange Offer, the Company's obligation with respect to the registration
of the New Notes will terminate. The summary herein of certain provisions of the
Registration Rights Agreement does not purport to be complete and is subject to,
and is qualified in its entirety by reference thereto. Copies of the
Registration Rights Agreement are available as set forth under "Description of
the Notes--Additional Information." As a result of the filing and effectiveness
of the Exchange Offer Registration Statement, Special Interest on the Notes
provided for in the Registration Rights Agreement will not become payable by the
Company. Following the completion of the Exchange Offer (except as set forth in
the paragraph immediately below), certain holders of Old Notes not tendered will
not have any further registration rights and those Old Notes will continue to be
subject to certain restrictions on transfer.
In order to participate in the Exchange Offer, a holder must represent
to the Company, among other things, that (i) the New Notes acquired pursuant to
the Exchange Offer are being obtained in the ordinary course of such holder's
business, (ii) such holder is not engaging in and does not intend to engage in a
distribution of the New Notes, (iii) such holder does not have an arrangement or
understanding with any person to participate in the distribution of the New
Notes, and (iv) such holder is not an "affiliate," as defined under Rule 405
promulgated under the Securities Act, of the Company. Pursuant to the
Registration Rights Agreement, the Company is required to file a Shelf
Registration Statement for a continuous offering pursuant to Rule 415 under the
Securities Act in respect of the Old Notes (and cause such shelf registration
statement to be declared effective by the Commission and keep it continuously
effective, supplemented, and amended for prescribed periods) if (i) the Company
is not permitted to consummate the Exchange Offer because the Exchange Offer is
not permitted by applicable law or Commission policy, or (ii) any holder of
Transfer Restricted Securities (as defined in the Registration Rights Agreement)
notifies the Company prior to the 30th day following consummation of the
Exchange Offer (A) that such holder is prohibited by law or Commission policy
from participating in the Exchange Offer or (B) that such holder may not resell
the New Notes acquired by it in the Exchange Offer to the public without
delivering a prospectus and the prospectus contained in the Exchange Offer
Registration Statement would not be available for such resale by such holder.
Other than as set forth in this paragraph, no holder will have the right to
participate in the Shelf Registration Statement nor otherwise to require that
the Company register such holder's shares of Old Notes under the Securities Act.
See "Description of the Notes--Exchange Offer; Registration Rights."
The Company has not requested, and does not intend to request, an
interpretation by the staff of the Commission with respect to whether the New
Notes issued pursuant to the Exchange Offer in exchange for the Old Notes may be
offered for sale, resold, or otherwise transferred by any holder
29
<PAGE>
without compliance with the registration and prospectus-delivery provisions of
the Securities Act. Based on interpretations by the staff of the Commission set
forth in no-action letters issued to parties unrelated to the Company, the
Company believes that New Notes issued pursuant to the Exchange Offer in
exchange for Old Notes may be offered for resale, resold and otherwise
transferred by holders thereof (other than any such holder or such other person
that is an "affiliate" of the Company within the meaning of Rule 405 under the
Securities Act), without compliance with the registration and
prospectus-delivery provisions of the Securities Act, provided that (i) the New
Notes are acquired in the ordinary course of such holder's business, (ii) such
holder is not engaging in and does not intend to engage in a distribution of the
New Notes, and (iii) such holder does not have an arrangement or understanding
with any person to participate in the distribution of the New Notes. Any holder
who tenders in the Exchange Offer with the intention to participate, or for the
purpose of participating, in a distribution of the New Notes or who is an
affiliate of the Company may not rely upon such interpretation by the staff of
the Commission and, in the absence of an exemption therefrom, must comply with
the registration and prospectus-delivery requirements of the Securities Act in
connection with any secondary resale transaction. Failure to comply with such
requirements in such instance may result in such holder incurring liabilities
under the Securities Act for which the holder is not indemnified by the Company.
Each broker-dealer that receives New Notes for its own account in exchange for
Old Notes, where those Old Notes were acquired by the broker-dealer as a result
of its market-making activities or other trading activities, must acknowledge
that it will deliver a prospectus in connection with any resale of these New
Notes. The Letter of Transmittal states that by so acknowledging and by
delivering a prospectus, a broker-dealer will not be deemed to admit that it is
an "underwriter" within the meaning of the Securities Act. The Company has
agreed that, for a period of one year after the effective date of the Exchange
Offer Registration Statement, it will make the Prospectus available to any
broker-dealer for use in connection with any such resale.
The Exchange Offer is not being made to, nor will the Company accept
surrenders for exchange from, holders of Old Notes in any jurisdiction in which
this Exchange Offer or the acceptance thereof would not be in compliance with
the securities or blue sky laws of such jurisdiction.
Participation in the Exchange Offer is voluntary and holders should
carefully consider whether to tender their Old Notes. Holders of the Old Notes
are urged to consult their financial and tax advisors in making their own
decisions on whether to participate in the Exchange Offer.
Consequences of Failure to Exchange
Old Notes that are not tendered for exchange in the Exchange Offer will
remain outstanding and interest thereon will continue to accrue. Following the
completion of the Exchange Offer (except as set forth above in the second
paragraph under "--Purpose and Effect"), holders of Old Notes not tendered will
not have any further registration rights and those Old Notes will remain
restricted securities within the meaning of Rule 144 of the Securities Act.
Accordingly, the liquidity of the market for a holder's Old Notes could be
adversely affected upon completion of the Exchange Offer if the holder does not
participate in the Exchange Offer.
30
<PAGE>
Terms of the Exchange Offer
General
Upon the terms and subject to the conditions set forth in this
Prospectus and in the Letter of Transmittal, the Company will accept any and all
Old Notes validly tendered and not withdrawn prior to 5:00 p.m., New York City
time, on the Expiration Date. The Company will issue $1,000 principal amount of
New Notes in exchange for each $1,000 principal amount of outstanding Old Notes
accepted in the Exchange Offer. Holders may tender some or all of their Old
Notes pursuant to the Exchange Offer. Old Notes may be tendered, however, only
in integral multiples of $1,000 in principal amount.
The form and terms of the New Notes are identical in all material
respects to the form and terms of the Old Notes except that (i) the New Notes
have been registered under the Securities Act and, therefore, will not bear
legends restricting their transfer and (ii) holders of the New Notes, other than
certain broker-dealers, will not be entitled to the rights of holders of the
Transfer Restricted Securities under the Registration Rights Agreement. The New
Notes will evidence the same indebtedness as the Old Notes, will be issued
pursuant to, and entitled to the benefits of, the Indenture pursuant to which
the Old Notes were issued, and will be treated as a single class thereunder with
any Old Notes that remain outstanding. The Exchange Offer is not conditioned
upon any minimum aggregate principle amount of Old Notes being tendered for
exchange.
As of the date of this Prospectus, $300.0 million aggregate principal
amount of Old Notes were outstanding and there were 27 registered holders. This
Prospectus, together with the Letter of Transmittal, is being sent to such
registered holders and to others believed to have beneficial interests in the
Old Notes. Holders of Old Notes do not have any appraisal or dissenters' rights
under the Florida Business Corporation Act or the Indenture in connection with
the Exchange Offer. The Company intends to conduct the Exchange Offer in
accordance with the applicable requirements of the Exchange Act and the rules
and regulations of the Commission promulgated thereunder.
The Company will be deemed to have accepted validly tendered Old Notes
when, as and if the Company has given oral or written notice thereof to the
Exchange Agent. The Exchange Agent will act as agent for the tendering holders
of Old Notes for the purpose of receiving the New Notes from the Company and
delivering the New Notes to such holders. If any tendered Old Notes are not
accepted for exchange because of an invalid tender, the occurrence of certain
other events set forth herein or otherwise, certificates for any such unaccepted
Old Notes will be returned, without expense, to the tendering holder thereof as
promptly as practicable after the Expiration Date.
Holders who tender Old Notes in the Exchange Offer will not be required
to pay brokerage commissions or fees or, subject to the instructions in the
Letter of Transmittal, transfer taxes with respect to the exchange of Old Notes
pursuant to the Exchange Offer. The Company will pay all charges and expenses,
other than certain applicable taxes, in connection with the Exchange Offer. See
"--Fees and Expenses."
Expiration Date; Extensions; Amendments
The term "Expiration Date" shall mean 5:00 p.m., New York City time, on
, 1998, unless the Company, in its sole discretion, extends the Exchange Offer,
in which case the term "Expiration Date" shall mean the latest date and time to
which the Exchange Offer is extended. In order
31
<PAGE>
to extend the Exchange Offer, the Company will notify the Exchange Agent and
each registered holder of any extension by oral or written notice prior to 9:00
a.m., New York City time, on the next business day after the previously
scheduled Expiration Date. During any extension of the Exchange Offer, all Old
Notes previously tendered pursuant to the Exchange Offer and not withdrawn will
remain subject to the Exchange Offer. The date of the exchange of the New Notes
for Old Notes will be the first Nasdaq National Market ("NNM") trading day
following the Expiration Date.
The Company reserves the right, in its sole discretion, (i) to delay
accepting any Old Notes, to extend the Exchange Offer or, if any of the
conditions set forth under "--Conditions to Exchange Offer" have not been
satisfied and have not been waived by the Company, to terminate the Exchange
Offer, by giving oral or written notice of such delay, extension, or
termination, to the Exchange Agent, or (ii) to amend the terms of the Exchange
Offer in any manner deemed by it to be advantageous to the holders of the Old
Notes. Any such delay in acceptance, extension, termination or amendment will be
followed as promptly as practicable by oral or written notice thereof to the
registered holders. If the Exchange Offer is amended in any manner determined by
the Company to constitute a material change, the Company will promptly disclose
such amendment by means of a prospectus supplement that will be distributed to
the registered holders, and the Company will extend the Exchange Offer for a
period of time, depending upon the significance of the amendment and the manner
of disclosure to the registered holders, if the Exchange Offer would otherwise
expire during such period.
Interest on the New Notes
The New Notes bear interest payable semi-annually on February 15 and
August 15 of each year, commencing August 15, 1998. Holders of New Notes of
record on August 1, 1998 will receive interest on August 15, 1998 from the date
of issuance of the New Notes, plus an amount equal to the accrued interest on
the Old Notes from the date of issuance of the Old Notes, February 19, 1998, to
the date of exchange thereof. Consequently, assuming the Exchange Offer is
consummated prior to the record date in respect of the August 15, 1998 interest
payment for the Old Notes, holders who exchange their Old Notes for New Notes
will receive the same interest payment on August 15, 1998 that they would have
received had they not accepted the Exchange Offer. Interest on the Old Notes
accepted for exchange will cease to accrue upon issuance of the New Notes.
Procedures for Tendering Old Notes
The tender to the Company of Old Notes by a holder thereof pursuant to
one of the procedures set forth below will constitute an agreement between such
holder and the Company in accordance with the terms and subject to the
conditions set forth herein and in the Letter of Transmittal. A holder of the
Old Notes may tender such Old Notes by (i) properly completing, signing, and
dating a Letter of Transmittal or a facsimile thereof (all references in this
Prospectus to Letter of Transmittal shall be deemed to include a facsimile
thereof) and delivering the same, together with any corresponding certificate or
certificates representing the Old Notes being tendered (if in certificated form)
and any required signature guarantees, to the Exchange Agent at its address set
forth in the Letter of Transmittal on or prior to the Expiration Date (or
complying with the procedure for book-entry transfer described below), or (ii)
complying with the guaranteed-delivery procedures described below.
If tendered Old Notes are registered in the name of the signer of the
Letter of Transmittal and the New Notes to be issued in exchange therefor are to
be issued (and any untendered Old Notes are to be reissued) in the name of the
registered holder (which term, for the purposes described herein, shall
32
<PAGE>
include any participant in DTC (also referred to as a book-entry facility) whose
name appears on a security listing as the owner of Old Notes), the signature of
such signer need not be guaranteed. In any other case, the tendered Old Notes
must be endorsed or accompanied by written instruments of transfer in form
satisfactory to the Company and duly executed by the registered holder, and the
signature on the endorsement or instrument of transfer must be guaranteed by an
eligible guarantor institution that is a member of or a participant in the
Securities Transfer Agents Medallion Program, the New York Stock Exchange
Medallion Signature Program, the Stock Exchange Medallion Program or an
"eligible guarantor institution" within the meaning of Rule 17Ad-15 under the
Exchange Act (an "Eligible Institution"). If the New Notes or Old Notes not
exchanged are to be delivered to an address other than that of the registered
holder appearing on the note register for the Old Notes, the signature in the
Letter of Transmittal must be guaranteed by an Eligible Institution.
THE METHOD OF DELIVERY OF OLD NOTES, THE LETTER OF TRANSMITTAL, AND ALL
OTHER REQUIRED DOCUMENTS TO THE EXCHANGE AGENT IS AT THE ELECTION AND RISK OF
THE HOLDER. IF SUCH DELIVERY IS BY MAIL, IT IS RECOMMENDED THAT REGISTERED MAIL,
PROPERLY INSURED, WITH RETURN RECEIPT REQUESTED, BE USED. IN ALL CASES,
SUFFICIENT TIME SHOULD BE ALLOWED TO ASSURE DELIVERY TO THE EXCHANGE AGENT
BEFORE THE EXPIRATION DATE. NO LETTER OF TRANSMITTAL OR OLD NOTES SHOULD BE SENT
TO THE COMPANY. ONLY HOLDERS OF OLD NOTES MAY TENDER SUCH OLD NOTES IN THE
EXCHANGE OFFER. HOLDERS MAY REQUEST THEIR RESPECTIVE BROKERS, DEALERS,
COMMERCIAL BANKS, TRUST COMPANIES, OR NOMINEES TO EFFECT THESE TRANSACTIONS FOR
SUCH HOLDERS.
Any beneficial owner whose Old Notes are registered in the name of a
broker, dealer, commercial bank, trust company, or other nominee and who wishes
to tender should contact the registered holder promptly and instruct the
registered holder to tender on the beneficial owner's behalf. If the beneficial
owner wishes to tender on the owner's own behalf, the owner must, prior to
completing and executing the Letter of Transmittal and delivering the owner's
Old Notes, either make appropriate arrangements to register ownership of the Old
Notes in the beneficial owner's name or obtain a properly completed bond power
from the registered holder. The transfer of registered ownership may take
considerable time.
The Company understands that the Exchange Agent has confirmed with DTC
that any financial institution that is a participant in DTC's system may utilize
DTC's Automated Tender Offer Program ("ATOP") to tender Old Notes. The Company
further understands that the Exchange Agent will request, within two business
days after the date the Exchange Offer commences, that DTC establish an account
with respect to the Old Notes for the purpose of facilitating the Exchange
Offer, and any participant may make book-entry delivery of Old Notes by causing
DTC to transfer such Old Notes into the Exchange Agent's account in accordance
with DTC's ATOP procedures for transfer. However, the exchange of the Old Notes
so tendered will be made only after timely confirmation (a "Book-Entry
Confirmation") of such book-entry transfer and timely receipt by the Exchange
Agent of an Agent's Message (as defined in the next sentence), and any other
documents required by the Letter of Transmittal. The term "Agent's Message"
means a message, transmitted by DTC and received by the Exchange Agent and
forming a part of Book-Entry Confirmation, which states that DTC has received an
express acknowledgment from a participant tendering Old Notes which are the
subject of such Book-Entry Confirmation and that such participant has received
and agrees to be bound by the terms of the Letter of Transmittal and that the
Company may enforce such agreement against such participant.
33
<PAGE>
A tender will be deemed to have been received as of the date when (i)
the tendering holder's properly completed and duly signed Letter of Transmittal
accompanied by the Old Notes (or a confirmation of book-entry transfer of such
Old Notes into the Exchange Agent's account at DTC), is received by the Exchange
Agent, or (ii) a Notice of Guaranteed Delivery or letter, telegram, or facsimile
transmission to similar effect from an Eligible Institution is received by the
Exchange Agent. Issuances of New Notes in exchange for Old Notes tendered
pursuant to a Notice of Guaranteed Delivery or letter, telegram, or facsimile
transmission to similar effect by an Eligible Institution will be made only
against submission of a duly signed Letter of Transmittal (and any other
required documents) and deposit of the tendered Old Notes.
All questions as to the validity, form, eligibility (including time of
receipt), acceptance, and withdrawal of tendered Old Notes will be determined by
the Company, in its sole discretion, which determination will be final and
binding. The Company reserves the absolute right to reject any or all tenders
not in proper form or the acceptance for exchange of which may, in the opinion
of counsel for the Company, be unlawful. The Company also reserves the absolute
right to waive any of the conditions of the Exchange Offer or any defect or
irregularity in the tender of any Old Notes. The Company's interpretation of the
terms and conditions of the Exchange Offer (including the instructions in the
Letter of Transmittal) will be final and binding on all parties. Unless waived,
any defects or irregularities in connection with tenders of Old Notes must be
cured within such time as the Company shall determine. Although the Company
intends to notify holders of defects or irregularities with respect to tenders
of Old Notes, neither the Company, the Exchange Agent, nor any other person
shall be under any duty to give notification of any defects or irregularities in
tenders or incur any liability for failure to give such notification. Tenders of
Old Notes will not be deemed to have been made until such defects or
irregularities have been cured or waived. Any Old Notes received by the Exchange
Agent that are not properly tendered and as to which the defects or
irregularities have not been cured or waived will be returned by the Exchange
Agent to the tendering holders, unless otherwise provided in the Letter of
Transmittal, as soon as practicable following the Expiration Date.
In addition, the Company reserves the right in its sole discretion to
purchase or make offers for any Old Notes that remain outstanding after the
Expiration Date or, as set forth under "--Conditions to the Exchange Offer," to
terminate the Exchange Offer and, to the extent permitted by applicable law,
purchase Old Notes in the open market, in privately negotiated transactions, or
otherwise. The terms of any such purchases or offers could differ from the terms
of the Exchange Offer.
In all cases, issuance of New Notes for Old Notes that are accepted for
exchange pursuant to the Exchange Offer will be made only after timely receipt
by the Exchange Agent of certificates for such Old Notes or a timely Book-Entry
Confirmation of such Old Notes into the Exchange Agent's account at DTC, a
properly completed and duly executed Letter of Transmittal (or, with respect to
DTC and its participants, electronic instructions in which the tendering holder
acknowledges its receipt of and agreement to be bound by the Letter of
Transmittal), and all other required documents. If any tendered Old Notes are
not accepted for any reason set forth in the terms and conditions of the
Exchange Offer or if Old Notes are submitted for a greater principal amount than
the holder desires to exchange, such unaccepted or non-exchanged Old Notes will
be returned without expense to the tendering Holder thereof (or, in the case of
Old Notes tendered by book-entry transfer into the Exchange Agent's account at
DTC pursuant to the book-entry transfer procedures described below, such
non-exchanged Old Notes will be credited to an account maintained with such
book-entry transfer facility) as promptly as practicable after the expiration or
termination of the Exchange Offer.
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Each broker-dealer that receives New Notes for its own account in
exchange for Old Notes, if the Old Notes were acquired by such broker-dealer as
a result of market-making activities or other trading activities, must
acknowledge that it will deliver a prospectus in connection with any resale of
such New Notes.
Guaranteed-Delivery Procedures
If the holder desires to accept the Exchange Offer and time will not
permit a Letter of Transmittal or Old Notes to reach the Exchange Agent before
the Expiration Date or the procedure for book-entry transfer cannot be completed
on a timely basis, a tender may be effected if the Exchange Agent has received
at its office, on or prior to the Expiration Date, a letter, telegram, or
facsimile transmission from an Eligible Institution setting forth the name and
address of the tendering holder, the name(s) in which the Old Notes are
registered and the certificate number(s) of the Old Notes to be tendered, and
stating that the tender is being made thereby and guaranteeing that, within five
NNM trading days after the date of execution of such letter, telegram, or
facsimile transmission by the Eligible Institution, such Old Notes, in proper
form for transfer (or a confirmation of book-entry transfer of such Old Notes
into the Exchange Agent's account at DTC), will be delivered by such Eligible
Institution together with a properly completed and duly executed Letter of
Transmittal (and any other required documents). Unless Old Notes being tendered
by such method are deposited with the Exchange Agent within the time period set
forth above (accompanied or preceded by a properly completed Letter of
Transmittal and any other required documents), the Company may, at its option,
reject the tender. Copies of a Notice of Guaranteed Delivery that may be used by
Eligible Institutions for the purposes described in this paragraph are available
from the Exchange Agent.
Terms and Conditions of the Letter of Transmittal
The Letter of Transmittal contains, among other things, certain terms
and conditions that are summarized below and are part of the Exchange Offer.
Each holder who participates in the Exchange Offer will be required to
represent that any New Notes received by it will be acquired in the ordinary
course of its business, that such holder is not participating in, and has no
arrangement with any person to participate in, the distribution (within the
meaning of the Securities Act) of the New Notes, and that such holder is not an
affiliate of the Company.
Old Notes tendered in exchange for New Notes (or a timely confirmation
of a book-entry transfer of such Old Notes into the Exchange Agent's account at
DTC) must be received by the Exchange Agent, with the Letter of Transmittal and
any other required documents, by the Expiration Date or within the time periods
set forth above pursuant to a Notice of Guaranteed Delivery from an Eligible
Institution. Each holder tendering the Old Notes for exchange sells, assigns,
and transfers the Old Notes to the Exchange Agent, as agent of the Company, and
irrevocably constitutes and appoints the Exchange Agent as the holder's agent
and attorney-in-fact to cause the Old Notes to be transferred and exchanged. The
holder warrants that it has full power and authority to tender, exchange, sell,
assign, and transfer the Old Notes and to acquire the New Notes issuable upon
the exchange of such tendered Old Notes, that the Exchange Agent, as agent of
the Company, will acquire good and unencumbered title to the tendered Old Notes,
free and clear of all liens, restrictions, charges and encumbrances, and that
the Old Notes tendered for exchange are not subject to any adverse claims when
accepted by the Exchange Agent, as agent of the Company. The holder also
warrants and agrees that it will, upon request, execute and deliver any
additional documents deemed by the Company or the Exchange Agent to be necessary
or desirable to
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complete the exchange, sale, assignment and transfer of the Old Notes. All
authority conferred or agreed to be conferred in the Letter of Transmittal by
the holder will survive the death, incapacity or dissolution of the holder and
any obligation of the holder shall be binding upon the heirs, personal
representatives, successors and assigns of such holder.
Withdrawal Rights
Except as otherwise provided herein, tenders of Old Notes may be
withdrawn at any time prior to 5:00 p.m., New York City time, on the Expiration
Date unless previously accepted for exchange.
To withdraw a tender of Old Notes in the Exchange Offer, a written,
facsimile, or (for DTC participation) electronic ATOP transmission notice of
withdrawal must be received by the Exchange Agent at its address set forth
herein prior to 5:00 p.m., New York City time, on the Expiration Date prior to
acceptance for exchange thereof by the Company. Any such notice of withdrawal
must (i) specify the name of the person having deposited the Old Notes to be
withdrawn (the "Depositor"), (ii) identify the Old Notes to be withdrawn
(including the certificate number or numbers and principal amount of such Old
Notes), (iii) contain a statement that such holder is withdrawing its election
to have such Old Notes exchanged, (iv) be signed by the holder in the same
manner as the original signature on the Letter of Transmittal by which such Old
Notes were tendered (including any required signature guarantees) or be
accompanied by documents of transfer sufficient to have the Trustee register the
transfer of such Old Notes in the name of the person withdrawing the tender, and
(v) specify the name in which any such Old Notes are to be registered, if
different from that of the Depositor. If Old Notes have been tendered pursuant
to the procedure for book-entry transfer, any notice of withdrawal must specify
the name and number of the account at the book-entry transfer facility. All
questions as to the validity, form, and eligibility (including time of receipt)
of such notices will be determined by the Company, whose determination shall be
final and binding on all parties. Any Old Notes so withdrawn will be deemed not
to have been validly tendered for purposes of the Exchange Offer and no Exchange
Notes will be issued with respect thereto unless the Old Notes so withdrawn are
validly returned. Any Old Notes that have been tendered but are not exchanged
for any reason will be returned to the holder thereof without cost to such
holder as soon as practicable after withdrawal, rejection of tender, or
termination of the Exchange Offer. Properly withdrawn Old Notes may be
retendered by following one of the procedures (described above) under
"--Procedures for Tendering Old Notes" at any time on or prior to the Expiration
Date.
Conditions to the Exchange Offer
Notwithstanding any other provision of the Exchange Offer, the Company
will not be required to accept for exchange, or to issue New Notes in exchange
for, any Old Notes and may terminate or amend the Exchange Offer if at any time
before the acceptance of such Old Notes for exchange or the exchange of the New
Notes for such Old Notes, the Company determines that the Exchange Offer
violates applicable law or Commission policy.
If the Company determines that it may terminate the Exchange Offer, as
set forth above, the Company may (i) refuse to accept any Old Notes and return
any Old Notes that have been tendered to the holders thereof, (ii) extend the
Exchange Offer and retain all Old Notes tendered prior to the Expiration of the
Exchange Offer, subject to the rights of such holders of tendered Old Notes to
withdraw their tendered Old Notes, or (iii) waive such termination event with
respect to the Exchange Offer and accept all properly tendered Old Notes that
have not been withdrawn. If such waiver constitutes a material change in the
Exchange Offer, the Company will disclose such change by means of a supplement
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to this Prospectus that will be distributed to each registered holder of Old
Notes, and the Company will extend the Exchange Offer for a period of time,
depending upon the significance of the waiver and the manner of disclosure to
the registered holders of the Old Notes, if the Exchange Offer would otherwise
expire during such period. Holders of Old Notes will have certain rights against
the Company under the Registration Rights Agreement should the Company fail to
consummate the Exchange Offer. See "Description of the Notes--Exchange Offer;
Registration Rights."
The foregoing conditions are for the sole benefit of the Company and
may be asserted by the Company regardless of the circumstances giving rise to
any such condition or may be waived by the Company in whole or in part at any
time and from time to time in its sole discretion. The failure by the Company at
any time to exercise any of the foregoing rights shall not be deemed a waiver of
any such right and each such right shall be deemed an ongoing right which may be
asserted at any time and from time to time.
In addition, the Company will not accept for exchange any Old Notes
tendered, and no New Notes will be issued in exchange for, any such Old Notes,
if at such time any stop order shall be threatened or in effect with respect to
the Exchange Offer Registration Statement of which this Prospectus constitutes a
part of the qualification of the Indenture under the Trust Indenture Act of
1939, as amended (the "Trust Indenture Act"). In any such event the Company is
required to use every reasonable effort to obtain the withdrawal of any stop
order at the earliest possible time.
Exchange Agent
The Bank of New York has been appointed as Exchange Agent for the
Exchange Offer. Questions and requests for assistance and requests for
additional copies of this Prospectus or of the Letter of Transmittal should be
directed to the Exchange Agent addressed as follows:
For Information by Telephone:
(212) 815-4146
By Registered or Certified Mail: By Hand or Overnight Delivery Service:
The Bank of New York The Bank of New York
101 Barclay Street, 7E 101 Barclay Street
New York, New York 10286 Corporate Trust Services Window
Attn: Reorganization Section New York, New York 10286
Vincent Jhingoor Attn: Reorganization Section
Vincent Jhingoor
By Facsimile Transmission:
(Eligible Institutions Only)
(212) 815-6339
Fees and Expenses
The expenses of soliciting tenders will be borne by the Company. The
principal solicitation is being made by mail; however, additional solicitations
may be made by telecopy, telephone, or in person by officers and regular
employees of the Company. No additional compensation will be paid to any such
officers and employees who engage in soliciting tenders. The Company will not
make any payments to brokers, dealers, or other persons soliciting acceptances
of the Exchange Offer. The Company will,
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however, pay the Exchange Agent reasonable and customary fees for its services
and will reimburse the Exchange Agent for its reasonable out-of-pocket expenses
in connection therewith. The Company may also pay brokerage houses and other
custodians, nominees and fiduciaries the reasonable out-of-pocket expenses
incurred by them in forwarding copies of this Prospectus, Letters of Transmittal
and related documents to the beneficial owners of the Old Notes and in handling
or forwarding tenders for exchange.
The expenses to be incurred in connection with the Exchange Offer,
including fees and expenses of the Exchange Agent, accounting, legal and related
fees and expenses, will be paid by the Company.
DESCRIPTION OF THE NOTES
The Notes were issued pursuant to an indenture, dated as of February
19, 1998 (the "Indenture") by and among the Company, the Guarantors, and The
Bank of New York, as trustee under the Indenture (the "Trustee"), in a private
transaction not subject to the registration requirements of the Securities Act.
Upon the effectiveness of the Exchange Offer Registration Statement, the
Indenture was qualified under the Trust Indenture Act. The Notes are subject to
the terms stated in the Indenture and the Trust Indenture Act. Holders of the
Notes are referred to the Indenture and the Trust Indenture Act for a statement
of those terms. The statements and definitions of terms under this caption
relating to the Notes, the Guarantees, and the Indenture described below are
summaries and do not purport to be complete. Such summaries make use of certain
terms defined in the Indenture and are qualified in their entirety by express
reference to the Indenture. A copy of the Indenture is available as set forth
under "--Additional Information." For purposes of this section of this
Prospectus references to the "Company" means Hvide Marine Incorporated,
excluding its subsidiaries. Certain terms used herein are defined below under
"--Certain Definitions."
General
The Notes are general unsecured senior obligations of the Company,
limited in aggregate principal amount at Stated Maturity to $300.0 million. The
Indebtedness evidenced by the Notes ranks pari passu in right of payment with
all indebtedness and other liabilities of the Company that are not subordinated
by their express terms to other Indebtedness of the Company and senior to all
Indebtedness of the Company that by its terms is so subordinated, including the
Debentures, the Debenture Indenture, and the Trust Preferred Securities
Guarantee. The Notes are effectively subordinated to all existing and future
secured Indebtedness of the Company to the extent of the value of the assets
securing such Indebtedness (including up to $325.0 million under the Credit
Facility). To the extent that the value of such collateral is not sufficient to
satisfy the indebtedness secured thereby, amounts remaining outstanding on such
Indebtedness would be entitled to share with the claims of holders of the Notes
and the Trustee with respect to any other assets of the Company. As of September
30, 1997, after giving effect to the Original Offering and the application of
the proceeds therefrom and the Recent Acquisitions, the Company and its
subsidiaries would have had outstanding approximately $195.8 million of secured
Indebtedness and approximately $343.7 million of unsecured Senior Indebtedness
and other liabilities. See "--Certain Covenants--Limitation on Indebtedness" and
"--Limitation on Subsidiary Indebtedness and Preferred Stock."
The Indenture provides that each of the Company's Subsidiaries that has
guaranteed Indebtedness of the Company or other Obligor (and any other
Subsidiary that guarantees any Indebtedness of the Company or other Obligor in
the future) is a Guarantor. The Guarantees are senior unsecured obligations of
each respective Guarantor and rank pari passu in right of payment with all other
Indebtedness and
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liabilities of such Guarantor that are not subordinated by their terms to other
Indebtedness of such Guarantor, and senior in right of payment to all
Subordinated Indebtedness of such Guarantor. However, the Guarantees are
effectively subordinated to secured indebtedness of the Guarantors (including
guarantees of the Credit Facility and the Term Loan). The holders of any secured
Indebtedness of a Guarantor have claims with respect to the assets of such
Guarantor securing such Indebtedness that is prior to claims of holders of the
Notes and the Trustee under its Guarantee. In the event of a bankruptcy,
liquidation, or reorganization of such Guarantor, such assets will be available
to satisfy obligations with respect to the Indebtedness secured thereby before
any payment therefrom could be made on the Notes or the Guarantees.
The Notes are effectively subordinated to claims of creditors (other
than the Company or any Guarantor) of the Company's Subsidiaries other than the
Guarantors. Claims of creditors (other than the Company or a Guarantor) of such
Subsidiaries, including trade creditors, tort claimants, secured creditors,
taxing authorities and creditors holding guarantees, do have priority as to
assets of such Subsidiaries over the claims and equity interests of the Company
and/or the Guarantors and, thereby indirectly, the holders of the indebtedness
of the Company or the Guarantors, as applicable, including the Notes and the
Subsidiary Guarantees. The Indenture permits under limited circumstances the
creation of, or the designation of existing Subsidiaries as, Unrestricted
Subsidiaries. The Notes are effectively subordinated to claims of creditors
(other than the Company or a Guarantor) of any Unrestricted Subsidiaries.
Unrestricted Subsidiaries are not generally subject to the covenants applicable
to the Company and the Subsidiaries under the Indenture. See "--Certain
Covenants--Unrestricted Subsidiaries."
Principal, Maturity and Interest
The Notes are limited in aggregate principal amount to $300.0 million
and mature on February 15, 2008. The Notes bear interest at 83/8% per annum from
the most recent interest payment date to which interest has been paid or
provided for, or, if no interest has been paid, from the date of original
issuance. Interest on the Notes is payable semi-annually in arrears on February
15 and August 15 of each year, commencing August 15, 1998, to the Persons in
whose names such Notes are registered at the close of business on the January 31
or July 31, immediately preceding such interest payment date. Interest is
calculated on the basis of a 360-day year consisting of twelve 30-day months.
The Notes may be presented or surrendered for payment of principal,
premium, if any, and interest and for registration of transfer or exchange, at
the office or agency of the Company within the City and State of New York,
maintained for such purpose. In addition, in the event the Notes do not remain
in book-entry form, interest may be paid, at the option of the Company, by check
mailed to the registered holders of the Notes at the respective addresses as set
forth on the Note Register. The Notes are issued only in fully registered form,
without coupons, in denominations of $1,000 and integral multiples thereof. No
service charge will be made for any registration of transfer or exchange or
redemption of Notes, but the Company or the Trustee may require in certain
circumstances payment of a sum sufficient to cover any tax or other governmental
charge payable in connection therewith.
Guarantees of Notes
Each Guarantor has unconditionally guaranteed, jointly and severally,
to each holder and the Trustee, the full and prompt performance of the Company's
Obligations under the Indenture and the Notes, including the payment of
principal of, premium, if any, and interest on the Notes pursuant to its
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Guarantee. As of the Issue Date, the Initial Guarantors are the only Guarantors.
Such Guarantors guarantee the obligations of the Company under the Company's
existing Credit Agreement. The Company will cause each Subsidiary that
guarantees any Indebtedness of the Company or any other Obligor to execute and
deliver a supplement to the Indenture pursuant to which such Subsidiary will
guarantee the payment of the Notes on the same terms and conditions as the
Guarantees by the Initial Guarantors. The maximum aggregate liability of Seabulk
Transmarine Partnership, Ltd. and Seabulk America Partnership, Ltd. under their
Guarantees is limited to 66 2/3% of the fair market value, from time to time, of
the Seabulk America, Official No. 961357.
The Obligations of each Guarantor is limited to the maximum amount as
will, after giving effect to all other contingent and fixed liabilities of such
Guarantor and after giving effect to any collections from or payments made by or
on behalf of any other Guarantor in respect of the Obligations of such other
Guarantor under its Guarantee or pursuant to its contribution obligations under
the Indenture, result in the Obligations of such Guarantor under its Guarantee
not constituting a fraudulent conveyance or fraudulent transfer under federal or
state law or otherwise not being void, voidable, or unenforceable under any
bankruptcy, reorganization, receivership, insolvency, liquidation, or other
similar legislation or legal principles under any applicable foreign law. Each
Guarantor that makes a payment or distribution under a Guarantee shall be
entitled to a contribution from each other Guarantor in a pro rata amount based
on the Adjusted Net Assets of each Guarantor.
Each Guarantor may consolidate with or merge into or sell or otherwise
dispose of all or substantially all of its Property and assets to the Company or
another Guarantor without limitation, except to the extent any such transaction
is subject to the "Consolidation, Merger, Conveyance, Lease or Transfer"
covenant of the Indenture. Each Guarantor may consolidate with or merge into or
sell all or substantially all of its Property and assets to a Person other than
the Company or another Guarantor (whether or not Affiliated with the Guarantor),
provided that (a) if the surviving Person is not the Guarantor, the surviving
Person agrees to assume such Guarantor's Guarantee and all its Obligations
pursuant to the Indenture (except to the extent the following paragraph would
result in the release of such Guarantee) and (b) such transaction does not (i)
violate any of the covenants described below under "--Certain Covenants" or (ii)
result in a Default or Event of Default being in existence or continuing
immediately thereafter.
Upon the sale or other disposition (by merger or otherwise) of a
Guarantor (or all or substantially all of its Property and assets) to a Person
other than the Company or another Guarantor and pursuant to a transaction that
is otherwise in compliance with the Indenture (including as described in clause
(b) of the foregoing paragraph and as described below in the covenant described
"--Certain Covenants--Limitation on Asset Sales"), such Guarantor (unless it
otherwise remains a Subsidiary) shall be deemed released from its Guarantee and
the related Obligations set forth in the Indenture; provided that any such
termination shall occur only to the extent that all Obligations of such
Guarantor under all of its guarantees of and under all of its pledges of assets
or other security interests which secure, other Indebtedness of the Company or
any other Subsidiary shall also terminate or be released upon such sale or other
disposition. Each Guarantor that is designated as an Unrestricted Subsidiary in
accordance with the Indenture shall be released from its Guarantee and the
related Obligations set forth in the Indenture so long as it remains an
Unrestricted Subsidiary.
The Indenture provides that any Guarantee by a Subsidiary (including an
Initial Guarantor) shall be automatically and unconditionally released and
discharged, as evidenced by a supplemental indenture executed by the Company,
the Guarantors, if any, and the Trustee, upon the release or discharge of the
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guarantee which resulted in the creation of such Subsidiary's Guarantee and all
other guarantees of the Obligations of any Obligor on the Notes, except a
discharge or release by, or as a result of, payment under such guarantee.
Optional Redemption
Except as provided in the next paragraph, the Notes are not redeemable
at the option of the Company prior to February 15, 2003. On or after such date,
the Notes will be redeemable at the option of the Company, in whole at any time
or in part from time to time, at the following prices (expressed in percentages
of the principal amount thereof), if redeemed during the twelve-month period
beginning February 15 of the years indicated below, in each case together with
interest accrued to the redemption date (subject to the right of holders of
record on the relevant record date to receive interest due on the relevant
interest payment date):
Year Percentage
2003.............................................. 104.188%
2004.............................................. 102.792%
2005.............................................. 101.396%
2006 and thereafter............................... 100.000%
Notwithstanding the foregoing, at any time during the first 36 months
after the Issue Date, the Company may, at its option, redeem up to a maximum of
35% of the aggregate principal amount of the Notes with the net cash proceeds of
one or more Public Equity Offerings at a redemption price equal to 108.375% of
the principal amount thereof, plus accrued and unpaid interest thereon to the
redemption date; provided that at least 65% of the aggregate principal amount of
Notes originally issued shall remain outstanding immediately after the
occurrence of any such redemption; and provided, further, that each such
redemption shall occur within 90 days of the closing of such Public Equity
Offering.
If fewer than all the Notes are redeemed, selection for redemption will
be made by the Trustee in accordance with the principal stock exchange, if any,
on which the Notes are listed, or, if the Notes are not so listed, on a pro rata
basis, by lot or by any other means which the Trustee determines to be fair and
appropriate.
Change of Control
Upon the occurrence of a Change of Control, each holder will have the
right to require the Company to repurchase such holder's Notes in whole or in
part (the "Change of Control Offer") at a purchase price (the "Change of Control
Purchase Price") in cash equal to 101% of the aggregate principal amount
thereof, plus accrued and unpaid interest thereon, if any, and Special Interest,
if any, to the Change of Control Payment Date (as defined below) on the terms
described below.
Within 30 days following any Change of Control, the Company or the
Trustee (at the expense of the Company) will mail a notice to each holder and to
the Trustee stating, among other things, (i) that a Change of Control has
occurred and a Change of Control Offer is being made as provided for in the
Indenture, and that, although holders are not required to tender their Notes,
all Notes that are validly tendered will be accepted for payment; (ii) the
Change of Control Purchase Price and the repurchase date, which will be no
earlier than 30 days and no later than 60 days after the date such notice is
mailed (the "Change of Control Payment Date"); (iii) that any Note accepted for
payment pursuant to the Change
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of Control Offer (and duly paid for on the Change of Control Payment Date) will
cease to accrue interest and Special Interest, if applicable, after the Change
of Control Payment Date; (iv) that any Notes (or portions thereof) not validly
tendered will continue to accrue interest and Special Interest, if applicable;
(v) the procedures that holders of Notes must follow to withdraw an election to
tender Notes (or portions thereof); and (vi) the instructions and any other
information necessary to enable holders to tender their Notes (or portions
thereof) and have such Notes (or portions thereof) purchased pursuant to the
Change of Control Offer. The Company will comply with any applicable tender
offer rules (including, without limitation, any applicable requirements of Rule
14e-1 under the Exchange Act) in the event that the Change of Control Offer is
triggered under the circumstances described herein.
The existence of the holders' rights to require, subject to certain
conditions, the Company to repurchase Notes upon a Change of Control may deter a
third party from acquiring the Company in a transaction that constitutes a
Change of Control. The source of funds for the repurchase of Notes upon a Change
of Control will be the Company's cash or cash generated from operations or other
sources, including borrowings or sales of assets; however, a "Change of Control"
(as defined in the Revolving Credit Agreement) constitutes an event of default
thereunder that alleviates the lenders from any obligation to make loans and
allows them to accelerate the Indebtedness outstanding thereunder. There can be
no assurance that sufficient funds will be available at the time of any Change
of Control to repay all amounts owing under such other Indebtedness or to make
the required payments of the Notes. See "Risk Factors--Risk of Inability to
Repurchase the Notes Upon a Change of Control." In the event that a Change of
Control Offer occurs at a time when the Company does not have sufficient
available funds to pay the Change of Control Purchase Price for all Notes
validly tendered pursuant to such offer or at a time when the Company is
prohibited from purchasing the Notes (and the Company is unable either to obtain
the consent of the holders of the relevant Indebtedness or to repay such
Indebtedness), an Event of Default would occur under the Indenture. In addition,
one of the events that constitutes a Change of Control under the Indenture is a
sale, conveyance, transfer or lease of all or substantially all of the assets of
the Company or the Company and the Subsidiaries, taken as a whole. The Indenture
is governed by New York law, and there is no established quantitative definition
under New York law of "substantially all" of the assets of a corporation.
Accordingly, if the Company or its Subsidiaries were to engage in a transaction
in which it or they disposed of less than all of the assets of the Company or
the Company and its Subsidiaries taken as a whole, as applicable, a question or
interpretation could arise as to whether such disposition was of "substantially
all" of its assets and whether the Company was required to make a Change of
Control Offer.
The Company will not be required to make a Change of Control Offer upon
a Change of Control if a third party makes the Change of Control Offer in the
manner, at the times and otherwise in compliance with the requirements set forth
in the Indenture applicable to a Change of Control Offer made by the Company and
repurchases all Notes validly tendered and not withdrawn under such Change of
Control Offer.
Except as described above with respect to a Change of Control, the
Indenture does not contain provisions that permit the holders to require the
Company to repurchase or redeem the Notes in the event of a takeover,
recapitalization, or similar restructuring. The provisions of the Indenture may
not afford holders protection in the event of a highly leveraged transaction,
reorganization, restructuring, merger, or similar transaction affecting the
Company that may adversely affect holders because (i) such transactions may not
involve a shift in voting power or beneficial ownership or, even if they do, may
not involve a shift of the magnitude required under the definition of Change of
Control to require the Company to make a Change of Control Offer or (ii) such
transactions may include an actual shift in
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voting power or beneficial ownership to a Permitted Holder which is excluded
under the definition of Change of Control from the amount of shares involved in
determining whether or not the transaction involves a shift of the magnitude
required to trigger the provisions. A transaction involving the management of
the Company or its Affiliates, or a transaction involving a recapitalization of
the Company, will result in a Change of Control only if it is the type of
transaction specified in such definition.
Certain Covenants
Set forth below are certain covenants contained in the Indenture.
Transactions with Affiliates. The Indenture provides that, the Company
will not, and will not permit any Subsidiary to, directly or indirectly, enter
into or permit to exist any transaction or series of related transactions
(including, but not limited to, the purchase, sale or exchange of Property, the
making of any Investment, the giving of any guarantee or the rendering of any
service with any Affiliate of the Company, other than transactions among the
Company and any Subsidiaries) unless (i) such transaction or series of related
transactions is on terms no less favorable to the Company or such Subsidiary
than those that could be obtained in a comparable arm's length transaction with
a Person that is not such an Affiliate, and (ii) (a) with respect to a
transaction or series of related transactions that has a Fair Market Value in
excess of $2.0 million, the transaction or series of related transactions is
approved by a majority of the Board of Directors of the Company (including a
majority of the disinterested directors), which approval is set forth in a Board
Resolution certifying that such transaction or series of transactions complies
with clause (i) above , and (b) with respect to a transaction or series of
related transactions that has a Fair Market Value in excess of $10.0 million,
the Company delivers an opinion as to the fairness from a financial point of
view to the Company or such Subsidiary issued by an investment banking firm of
nationally recognized standing or other independent appraisal firm or expert of
nationally recognized standing that is qualified, in the reasonable and good
faith judgment of the Board of Directors, to perform the task for which it has
been engaged. The foregoing provisions shall not be applicable to (i) reasonable
and customary compensation, indemnification and other benefits paid or made
available to an officer, director, or employee of the Company or a Subsidiary
for services rendered in such person's capacity as an officer, director, or
employee (including reimbursement or advancement of reasonable out-of-pocket
expenses and provisions of directors' and officers' liability insurance) or (ii)
the making of any Restricted Payment otherwise permitted by the Indenture.
Limitation on Restricted Payments. The Company will not, and will not
permit any Subsidiary to, make any Restricted Payment, unless at the time of and
after giving effect to the proposed Restricted Payment, (a) no Default shall
have occurred and be continuing (or would result therefrom), (b) the Company
could incur at least $1.00 of additional Indebtedness under the test described
in the first sentence under the caption"--Certain Covenants--Limitation on
Indebtedness" and (c) the aggregate amount of all Restricted Payments declared
or made on or after the Issue Date by the Company or any Subsidiary shall not
exceed the sum of (i) $15.0 million, plus (ii) 50% (or if such Consolidated Net
Income shall be a deficit, minus 100% of such deficit) of the aggregate
Consolidated Net Income accrued during the period beginning on the first day of
the fiscal quarter in which the Issue Date falls and ending on the last day of
the fiscal quarter ending immediately prior to the date of such proposed
Restricted Payment, minus 100% of the amount of any writedowns, write-offs, and
other negative extraordinary charges not otherwise reflected in Consolidated Net
Income during such period, plus (iii) an amount equal to the aggregate net cash
proceeds received by the Company, subsequent to the Issue Date, from the
issuance or sale (other than to a Subsidiary) of shares of its Capital Stock
(excluding Redeemable Stock,
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but including Capital Stock issued upon the exercise of options, warrants, or
rights to purchase Capital Stock (other than Redeemable Stock) of the Company)
and the liability (expressed as a positive number) as expressed on the face of a
balance sheet in accordance with GAAP in respect of any Indebtedness of the
Company or any of its Subsidiaries, or the carrying value of Redeemable Stock,
which has been converted into, exchanged for or satisfied by the issuance of
shares of Capital Stock (other than Redeemable Stock) of the Company, subsequent
to the Issue Date, plus (iv) 100% of the net reduction in Restricted
Investments, subsequent to the Issue Date, in any Person, resulting from
payments of interest on Indebtedness, dividends, repayments of loans or
advances, or other transfers of Property (but only to the extent such interest,
dividends, repayments or other transfers of Property are not included in the
calculation of Consolidated Net Income), in each case to the Company or any
Subsidiary from any Person (including, without limitation, from Unrestricted
Subsidiaries) or from redesignations of Unrestricted Subsidiaries as
Subsidiaries (valued in each case as provided in the definition of
"Investments"), not to exceed in the case of any Person the amount of Restricted
Investments previously made by the Company or any Subsidiary in such Person and
in each such case which was treated as a Restricted Payment.
The foregoing provisions will not prevent (A) the payment of any
dividend on Capital Stock of any class within 60 days after the date of its
declaration if at the date of declaration such payment would be permitted by the
Indenture; (B) any repurchase or redemption of Capital Stock or Subordinated
Indebtedness of the Company or a Subsidiary made by exchange for Capital Stock
of the Company (other than Redeemable Stock), or out of the net cash proceeds
from the substantially concurrent issuance or sale (other than to a Subsidiary)
of Capital Stock of the Company (other than Redeemable Stock), provided that the
net cash proceeds from such sale are excluded from computations under clause
(c)(iii) above to the extent that such proceeds are applied to purchase or
redeem such Capital Stock or Subordinated Indebtedness; (C) so long as no
Default shall have occurred and be continuing or should occur as a consequence
thereof, any repurchase or redemption of Subordinated Indebtedness of the
Company or a Subsidiary solely in exchange for, or out of the net cash proceeds
from the substantially concurrent sale of, new Subordinated Indebtedness of the
Company or a Subsidiary, so long as such Subordinated Indebtedness is permitted
under the covenant described under "--Limitation on Indebtedness" and (x) is
subordinated to the Notes at least to the same extent as the Subordinated
Indebtedness so exchanged, purchased, or redeemed, (y) has a stated maturity
later than the stated maturity of the Subordinated Indebtedness so exchanged,
purchased, or redeemed and (z) has an Average Life at the time incurred that is
greater than the remaining Average Life of the Subordinated Indebtedness so
exchanged, purchased, or redeemed; and (D) Investments in any Joint Ventures in
an aggregate amount not to exceed $25.0 million. Notwithstanding the foregoing,
the amount available for Investments in Joint Ventures pursuant to clause (D) of
the preceding sentence may be increased by the aggregate amount received by the
Company and its Subsidiaries from a Joint Venture on or before such date
resulting from payments of interest on Indebtedness, dividends, repayments of
loans or advances or other transfers of Property made to such Joint Venture (but
only to the extent such interest, dividends, repayments or other transfers of
Property are not included in the calculation of Consolidated Net Income).
Restricted Payments permitted to be made as described in the first sentence of
this paragraph will be excluded in calculating the amount of Restricted Payments
thereafter, except that any such Restricted Payments permitted to be made
pursuant to clause (D) will be included in calculating the amount of Restricted
Payments made pursuant to such clause (D) thereafter.
For purposes of this covenant, if a particular Restricted Payment
involves a non-cash payment, including a distribution of assets, then such
Restricted Payment shall be deemed to be an amount equal
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to the cash portion of such Restricted Payment, if any, plus an amount equal to
the Fair Market Value of the non-cash portion of such Restricted Payment.
Limitation on Indebtedness. The Company will not, and will not permit
any Subsidiary to, directly or indirectly, incur any Indebtedness (including
Acquired Indebtedness), unless after giving pro forma effect to the incurrence
of such Indebtedness, the Consolidated Interest Coverage Ratio for the
Determination Period preceding the Transaction Date is at least 2.25 to 1.0.
Notwithstanding the foregoing, the Company or any Subsidiary may incur Permitted
Indebtedness which such Person is permitted thereby to incur. Any Indebtedness
of a Person existing at the time at which such Person becomes a Subsidiary
(whether by merger, consolidation, acquisition, or otherwise) shall be deemed to
be incurred by such Subsidiary at the time at which it becomes a Subsidiary.
Limitation on Subsidiary Indebtedness and Preferred Stock. The Company
will not permit any Subsidiary to, directly or indirectly, incur any
Indebtedness or issue any Preferred Stock except:
(a) Indebtedness or Preferred Stock issued to and held by the
Company or a Subsidiary, so long as any transfer of such Indebtedness
or Preferred Stock to a Person other than the Company or a Subsidiary
will be deemed to constitute an incurrence of such Indebtedness or
Preferred Stock by the issuer thereof as of the date of such transfer;
(b) Acquired Indebtedness or Preferred Stock of a Subsidiary
issued and outstanding prior to the date on which such Subsidiary was
acquired by the Company (other than Indebtedness or Preferred Stock
issued in connection with or in anticipation of such acquisition);
(c) Indebtedness or Preferred Stock outstanding on the Issue
Date and listed in a schedule attached to the Indenture;
(d) Indebtedness permitted to be incurred by the first
sentence of the covenant described in "--Limitation on Indebtedness"
and Indebtedness described in clauses (b), (c), (d), (e), (f), (g), and
(h) under the definition of "Permitted Indebtedness";
(e) Permitted Subsidiary Refinancing Indebtedness of such
Subsidiary; and
(f) Indebtedness of a Subsidiary which represents the
assumption by such Subsidiary of Indebtedness of another Subsidiary in
connection with a merger of such Subsidiaries, provided that no
Subsidiary or any successor (by way of merger) thereto existing on the
Issue Date shall assume or otherwise become responsible for any
Indebtedness of an entity which is not a Subsidiary on the Issue Date,
except to the extent that a Subsidiary would be permitted to incur such
Indebtedness under this paragraph.
Limitations on Dividends and Other Payment Restrictions Affecting
Subsidiaries. The Company will not, and will not permit any Subsidiary, directly
or indirectly, to create, enter into any agreement with any Person or otherwise
cause or suffer to exist or become effective any consensual encumbrance or
restriction of any kind which by its terms restricts the ability of any
Subsidiary to (a) pay dividends, in cash or otherwise, or make any other
distributions on its Capital Stock to the Company or any Subsidiary, (b) pay any
Indebtedness owed to the Company or any Subsidiary, (c) make loans or advances
to the Company or any Subsidiary, or (d) transfer any of its Property or assets
to the Company or any Subsidiary except any encumbrance or restriction contained
in any agreement or instrument:
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(i) existing on the Issue Date;
(ii) relating to any Property or assets acquired after the
Issue Date, so long as such encumbrance or restriction relates only to
the Property or assets so acquired and is not and are not created in
anticipation of such acquisition;
(iii) relating to any Acquired Indebtedness of any Subsidiary
at the date on which such Subsidiary was acquired by the Company or any
Subsidiary (other than Indebtedness incurred in anticipation of such
acquisition);
(iv) effecting a refinancing of Indebtedness incurred pursuant
to an agreement referred to in the foregoing clauses (i) through (iii),
so long as the encumbrances and restrictions contained in any such
refinancing agreement are no more restrictive than the encumbrances and
restrictions contained in such agreements;
(v) constituting customary provisions restricting subletting
or assignment of any lease of the Company or any Subsidiary or
provisions in license agreements or similar agreements that restrict
the assignment of such agreement or any rights thereunder;
(vi) constituting restrictions on the sale or other
disposition of any Property securing Indebtedness as a result of a
Permitted Lien on such Property;
(vii) constituting any temporary encumbrance or restriction
with respect to a Subsidiary pursuant to an agreement that has been
entered into for the sale or disposition of all or substantially all of
the Capital Stock of, or Property and assets of, such Subsidiary; or
(viii) governing Senior Debt permitted to be incurred under
the Indenture, provided that the terms and conditions of any such
restrictions and encumbrances are not materially more restrictive than
those contained in the Indenture.
Limitation on Asset Sales. The Company will not engage in, and will not
permit any Subsidiary to engage in, any Asset Sale unless (a) except in the case
of an Asset Sale resulting from the requisition of title to, seizure or
forfeiture of any Property or assets or any actual or constructive total loss or
an agreed or compromised total loss, the Company or such Subsidiary, as the case
may be, receives consideration at the time of such Asset Sale at least equal to
the Fair Market Value of the Property; (b) at least 75% of such consideration
consists of Cash Proceeds (or the assumption of Indebtedness of the Company or
such Subsidiary relating to the Capital Stock or Property or asset that was the
subject of such Asset Sale and the unconditional release of the Company or such
Subsidiary from such Indebtedness); (c) after giving effect to such Asset Sale,
the total non-cash consideration held by the Company from all such Asset Sales
does not exceed $10.0 million; and (d) the Company delivers to the Trustee an
Officers' Certificate certifying that such Asset Sale complies with clauses (a),
(b), and (c). The Company or such Subsidiary, as the case may be, may apply the
Net Available Proceeds from each Asset Sale (x) to the acquisition of one or
more Replacement Assets, or (y) to repurchase or repay Senior Debt (with a
permanent reduction of availability in the case of revolving credit borrowings);
provided that such acquisition or such repurchase or repayment shall be made
within 365 days after the consummation of the relevant Asset Sale; provided,
further, that any such Net Available Proceeds that are applied to the
acquisition of Replacement Assets pursuant to any binding agreement to construct
any new marine vessel useful in the business of the Company or any of its
Subsidiaries shall be deemed to have been applied
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for such purpose within such 365-day period so long as they are so applied
within 18 months of the effective date of such agreement but no later than two
years after the date of receipt of such Net Available Proceeds.
Any Net Available Proceeds from any Asset Sale that are not used to so
acquire Replacement Assets or to repurchase or repay Senior Debt within 365 days
after consummation of the relevant Asset Sale constitute "Excess Proceeds." When
the aggregate amount of Excess Proceeds exceeds $15.0 million, the Company shall
within 30 days thereafter, or at any time after receipt of Excess Proceeds but
prior to there being $15.0 million of Excess Proceeds, the Company may, at its
option, make a pro rata offer (an "Asset Sale Offer") to all holders of Notes
and holders of Senior Debt, if and to the extent the Company is required by the
instruments governing such Senior Debt to make such an offer, to purchase Notes
and such Senior Debt in an aggregate amount equal to the Excess Proceeds, at a
price in cash (the "Asset Sale Offer Purchase Price") equal to 100% of the
outstanding principal of the Notes plus accrued interest and Special Interest,
if any, to the date of purchase and, in the case of such other Senior Debt, 100%
of the principal amount thereof, plus accrued and unpaid interest, if any,
thereon to the date of purchase, in accordance with the procedures set forth in
the Indenture. Upon completion of such Asset Sale Offer, the amount of Excess
Proceeds shall be reset to zero and the Company may use any remaining amount for
general corporate purposes.
The Company will comply with any applicable tender offer rules
(including, without limitation, any applicable requirements of Rule 14e-1 under
the Exchange Act) in the event that an Asset Sale Offer is required under the
circumstances described herein.
Limitation on Sale and Lease-Back Transactions. The Company will not,
and will not permit any Subsidiary to, directly or indirectly, enter into,
assume, guarantee, or otherwise become liable with respect to any Sale and
Lease-Back Transaction unless (i) the proceeds from such Sale and Lease-Back
Transaction are at least equal to the Fair Market Value of such Property being
transferred and (ii) the Company or such Subsidiary would have been permitted to
enter into such transaction under the covenants described in "--Certain
Covenants--Limitation on Indebtedness," "--Certain Covenants--Limitation on
Liens," and "--Certain Covenants--Limitation on Subsidiary Indebtedness and
Preferred Stock."
Limitation on Liens. The Company will not, and will not permit any
Subsidiary to, directly or indirectly, create, affirm, incur, assume, or suffer
to exist any Liens of any kind other than Permitted Liens on or with respect to
any Property or assets of the Company or such Subsidiary or any interest therein
or any income or profits therefrom, whether owned at the Issue Date or
thereafter acquired, without effectively providing that the Notes shall be
secured equally and ratably with (or prior to) the Indebtedness so secured for
so long as such obligations are so secured.
Limitation on Guarantees by Subsidiaries. The Company will not permit
any Subsidiary to guarantee the payment of any Subordinated Indebtedness of the
Company unless such Subsidiary becomes a Guarantor and such guarantee is
subordinated to such Guarantor's Guarantee at least to the same extent as such
Subordinated Indebtedness is subordinated to the Notes; provided that this
covenant will not be applicable to any guarantee of any Guarantor that (i)
existed at the time at which such Person became a Subsidiary of the Company and
(ii) was not incurred in connection with, or in contemplation of, such Person's
becoming a Subsidiary of the Company.
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Unrestricted Subsidiaries. The Indenture provides that the Company may
designate a subsidiary (including a newly formed or newly acquired subsidiary)
of the Company or any of its Subsidiaries as an Unrestricted Subsidiary;
provided that (i) immediately after giving effect to the transaction, the
Company could incur $1.00 of additional Indebtedness pursuant to the first
sentence of "--Certain Covenants--Limitation on Indebtedness" and (ii) such
designation is at the time permitted under "--Certain Covenants--Limitation on
Restricted Payments." Notwithstanding any provisions of this covenant all
subsidiaries of an Unrestricted Subsidiary will be Unrestricted Subsidiaries.
The Indenture further provides that the Company will not, and will not
permit any of its Subsidiaries to, take any action or enter into any transaction
or series of transactions that would result in a Person (other than a newly
formed subsidiary having no outstanding Indebtedness (other than Indebtedness to
the Company or a Subsidiary) at the date of determination) becoming a Subsidiary
(whether through an acquisition, the redesignation of an Unrestricted
Subsidiary, or otherwise) unless, after giving effect to such action,
transaction or series of transactions on a pro forma basis, (i) the Company
could incur at least $1.00 of additional Indebtedness pursuant to the first
sentence of "--Certain Covenants--Limitation on Indebtedness" and (ii) no
Default or Event of Default would occur.
Subject to the preceding paragraphs, an Unrestricted Subsidiary may be
redesignated as a Subsidiary. The designation of a subsidiary as an Unrestricted
Subsidiary or the designation of an Unrestricted Subsidiary as a Subsidiary in
compliance with the preceding paragraphs shall be made by the Board of Directors
pursuant to a Board Resolution delivered to the Trustee and shall be effective
as of the date specified in such Board Resolution, which shall not be prior to
the date such Board Resolution is delivered to the Trustee. Any Unrestricted
Subsidiary shall become a Subsidiary if it incurs any Indebtedness other than
Non-Recourse Indebtedness. If at any time Indebtedness of an Unrestricted
Subsidiary which was Non-Recourse Indebtedness no longer so qualifies, such
Indebtedness shall be deemed to have been incurred when such Non-Recourse
Indebtedness becomes Indebtedness.
Limitations on Line of Business. The Indenture provides that neither
the Company nor any of its Subsidiaries will directly or indirectly engage to
any substantial extent in any line or lines of business activity other than a
Related Business.
Reports. The Indenture provides that, whether or not the Company is
subject to Section 13(a) or 15(d) of the Exchange Act, or any successor
provision thereto, the Company shall file with the Commission the annual
reports, quarterly reports and other documents which the Company would have been
required to file with the Commission pursuant to such Section 13(a) or 15(d) or
any successor provision thereto if the Company were subject thereto, such
documents to be filed with the Commission on or prior to the respective dates
(the "Required Filing Dates") by which the Company would have been required to
file them. The Company shall also (whether or not it is required to file reports
with the Commission), within 30 days of each Required Filing Date, (i) transmit
by mail to all holders of Notes, as their names and addresses appear in the
applicable Security Register, without cost to such holders or Persons, and (ii)
file with the Trustee, copies of the annual reports, quarterly reports and other
documents (without exhibits) which the Company has filed or would have filed
with the Commission pursuant to Section 13(a) or 15(d) of the Exchange Act, any
successor provisions thereto or this covenant. The Company shall not be required
to file any report with the Commission if the Commission does not permit such
filing.
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Consolidation, Merger, Conveyance, Lease, or Transfer
The Company will not, in any transaction or series of transactions,
consolidate with or merge into any other Person (other than a merger of a Wholly
Owned Subsidiary into the Company in which the Company is the continuing
corporation), continue in a new jurisdiction or sell, convey, assign, transfer,
lease or otherwise dispose of all or substantially all of the Property and
assets of the Company and the Subsidiaries, taken as a whole, to any Person,
unless
(i) either (a) the Company shall be the continuing corporation
or (b) the corporation (if other than the Company) formed by such
consolidation or into which the Company is merged, or the Person which
acquires, by sale, assignment, conveyance, transfer, lease or
disposition, all or substantially all of the Property and assets of the
Company and the Subsidiaries, taken as a whole (such corporation or
Person, the "Surviving Entity"), shall be a corporation organized and
validly existing under the laws of the United States of America, any
political subdivision thereof or any state thereof or the District of
Columbia, and shall expressly assume, by a supplemental indenture, the
due and punctual payment of the principal of (and premium, if any) and
interest (including Special Interest, if any) on all the Notes and the
performance of the Company's covenants and obligations under the
Indenture;
(ii) immediately before and after giving effect to such
transaction or series of transactions on a pro forma basis (including,
without limitation, any Indebtedness incurred or anticipated to be
incurred in connection with or in respect of such transaction or series
of transactions), no Event of Default or Default shall have occurred
and be continuing or would result therefrom;
(iii) immediately after giving effect to such transaction or
series of transactions on a pro forma basis (including, without
limitation, any Indebtedness incurred or anticipated to be incurred in
connection with or in respect of such transaction or series of
transactions), the Company (or the Surviving Entity if the Company is
not continuing) shall have a Consolidated Net Worth equal to or greater
than the Consolidated Net Worth of the Company immediately prior to
such transactions; and
(iv) immediately after giving effect to any such transaction
or series of transactions on a pro forma basis as if such transaction
or series of transactions had occurred on the first day of the
Determination Period, the Company (or the Surviving Entity if the
Company is not continuing) would be permitted to incur $1.00 of
additional Indebtedness pursuant to the test described in the first
sentence under the caption "--Certain Covenants--Limitation on
Indebtedness."
The provision of clause (iv) shall not apply to any merger or
consolidation into or with, or any such transfer of all or substantially all of
the Property and assets of the Company and the Subsidiaries taken as a whole
into, the Company.
In connection with any consolidation, merger, continuance, transfer of
assets or other transactions contemplated by this provision, the Company shall
deliver, or cause to be delivered, to the Trustee, in form and substance
reasonably satisfactory to the Trustee, an Officers' Certificate and an opinion
of counsel, each stating that such consolidation, merger, continuance, sale,
assignment, conveyance, or transfer and the supplemental indenture in respect
thereto comply with the provisions of the Indenture and that all conditions
precedent in the Indenture relating to such transactions have been complied
with.
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Upon any transaction or series of transactions that are of the type
described in, and are effected in accordance with, the foregoing paragraphs, the
Surviving Entity shall succeed to, and be substituted for, and may exercise
every right and power of, the Company under the Indenture and the Notes with the
same effect as if such Surviving Entity had been named as the Company in the
Indenture; and when a Surviving Person duly assumes all of the obligations and
covenants of the Company pursuant to the Indenture and the Notes, except in the
case of a lease, the predecessor Person shall be relieved of all such
obligations.
Events of Default
Each of the following is an "Event of Default" under the Indenture:
(a) default in the payment of interest on, or Special
Interest, if any, with respect to, any Note issued pursuant to the
Indenture when the same becomes due and payable, and the continuance of
such default for a period of 30 days;
(b) default in the payment of the principal of (or premium, if
any, on) any Note issued pursuant to the Indenture at its Maturity,
whether upon optional redemption, required repurchase (including
pursuant to a Change of Control Offer or an Asset Sale Offer) or
otherwise or the failure to make an offer to purchase any such Note as
required;
(c) the Company fails to comply with any of its covenants or
agreements contained in "--Change of Control," "--Certain
Covenants--Limitation on Restricted Payments," "--Certain
Covenants--Limitation on Asset Sales," "--Certain Covenants--Limitation
on Indebtedness," "--Certain Covenants--Limitation on Subsidiary
Indebtedness and Preferred Stock," "--Certain Covenants--Limitation on
Sale and Lease-Back Transactions" or "--Consolidation, Merger,
Conveyance, Lease or Transfer";
(d) default in the performance, or breach, of any covenant or
warranty of the Company in the Indenture (other than a covenant or
warranty addressed in clause (a), (b) or (c) above) and continuance of
such Default or breach for a period of 30 days after written notice
thereof has been given to the Company by the Trustee or to the Company
and the Trustee by holders of at least 25% of the aggregate principal
amount at Stated Maturity of the outstanding Notes;
(e) Indebtedness of the Company or any Subsidiary is not paid
when due within the applicable grace period, if any, or is accelerated
by the holders thereof and, in either case, the principal amount of
such unpaid or accelerated Indebtedness exceeds $10.0 million;
(f) the entry by a court of competent jurisdiction of one or
more final judgments against the Company or any Subsidiary in an
uninsured or unindemnified aggregate amount in excess of $5.0 million
which is not discharged, waived, appealed, stayed, bonded, or satisfied
for a period of 60 consecutive days;
(g) the entry by a court having jurisdiction in the premises
of (i) a decree or order for relief in respect of the Company or any
Significant Subsidiary in an involuntary case or proceeding under U.S.
bankruptcy laws, as now or hereafter constituted, or any other
applicable Federal, state, or foreign bankruptcy, insolvency, or other
similar law or (ii) a decree or order adjudging the Company or any
Significant Subsidiary a bankrupt or insolvent, or approving as
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properly filed a petition seeking reorganization, arrangement,
adjustment, or composition of or in respect of the Company or any
Significant Subsidiary under U.S. bankruptcy laws, as now or hereafter
constituted, or any other applicable Federal, state or foreign
bankruptcy, insolvency, or similar law, or appointing a custodian,
receiver, liquidator, assignee, trustee, sequestrator, or other similar
official of the Company or any Significant Subsidiary or of any
substantial part of the Property or assets of the Company or any
Significant Subsidiary, or ordering the winding up or liquidation of
the affairs of the Company or any Significant Subsidiary, and the
continuance of any such decree or order for relief or any such other
decree or order unstayed and in effect for a period of 60 consecutive
days;
(h) (i) the commencement by the Company or any Significant
Subsidiary of a voluntary case or proceeding under U.S. bankruptcy
laws, as now or hereafter constituted, or any other applicable Federal,
state or foreign bankruptcy, insolvency or other similar law or of any
other case or proceeding to be adjudicated a bankrupt or insolvent; or
(ii) the consent by the Company or any Significant Subsidiary to the
entry of a decree or order for relief in respect of the Company or any
Significant Subsidiary in an involuntary case or proceeding under U.S.
bankruptcy laws, as now or hereafter constituted, or any other
applicable Federal, state, or foreign bankruptcy, insolvency or other
similar law or to the commencement of any bankruptcy or insolvency case
or proceeding against the Company or any Significant Subsidiary; or
(iii) the filing by the Company or any Significant Subsidiary of a
petition or answer or consent seeking reorganization or relief under
U.S. bankruptcy laws, as now or hereafter constituted, or any other
applicable Federal, state or foreign bankruptcy, insolvency or other
similar law; or (iv) the consent by the Company or any Significant
Subsidiary to the filing of such petition or to the appointment of or
taking possession by a custodian, receiver, liquidator, assignee,
trustee, sequestrator or similar official of the Company or any
Significant Subsidiary or of any substantial part of the Property or
assets of the Company or any Significant Subsidiary, or the making by
the Company or any Significant Subsidiary of an assignment for the
benefit of creditors; or (v) the admission by the Company or any
Significant Subsidiary in writing of its inability to pay its debts
generally as they become due; or (vi) the taking of corporate action by
the Company or any Significant Subsidiary in furtherance of any such
action; or
(i) any Guarantee shall for any reason cease to be, or be
asserted by the Company or any Guarantor, as applicable, not to be, in
full force and effect (except pursuant to the release of any such
Guarantee in accordance with the Indenture).
If any Event of Default (other than an Event of Default specified in
clause (g) or (h) above) occurs and is continuing, then and in every such case
the Trustee or the holders of not less than 25% of the outstanding aggregate
principal amount at Stated Maturity of the Notes, may declare the principal
amount at Stated Maturity, premium, if any, and any accrued and unpaid interest
on all such Notes then outstanding to be immediately due and payable by a notice
in writing to the Company (and to the Trustee if given by holders of such
Notes), and upon any such declaration all amounts payable in respect of the
Notes will become and be immediately due and payable. If any Event of Default
specified in clause (g) or (h) above occurs, the principal amount at Stated
Maturity, premium, if any, and any accrued and unpaid interest (including
Special Interest, if any) on the Notes then outstanding shall become immediately
due and payable without any declaration or other act on the part of the Trustee
or any holder of such Notes. In the event of a declaration of acceleration
because an Event of Default set forth in clause (e) above has occurred and is
continuing, such declaration of acceleration shall be automatically rescinded
and annulled if the event of default triggering such Event of Default pursuant
to clause (e) shall be
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remedied or cured or waived by the holders of the relevant Indebtedness within
30 days after such event of default; provided that no judgment or decree for the
payment of the money due on the Notes has been obtained by the Trustee as
provided in the Indenture. Under certain circumstances, the holders of a
majority in principal amount at Stated Maturity of the outstanding Notes by
notice to the Company and the Trustee may rescind an acceleration and its
consequences.
The holders of a majority in aggregate principal amount at Stated
Maturity of the Notes then outstanding by notice to the Trustee may on behalf of
the holders of all such Notes waive any existing Default and its consequences
under the Indenture except a continuing Default or Event of Default in the
payment of interest (including Special Interest, if any) on, premium, if any on
or the principal of, such Notes. Subject to the provisions of the Indenture
relating to the duties of the Trustee, the Trustee is under no obligation to
exercise any of its rights or powers under the Indenture at the request, order,
or direction of any of the holders, unless such holders have offered to such
Trustee reasonable security or indemnity. Subject to the provisions of the
Indenture and applicable law, the holders of a majority in aggregate principal
amount at Stated Maturity of the Notes at the time outstanding have the right to
direct the time, method, and place of conducting any proceeding for any remedy
available to the Trustee, or exercising any trust or power conferred upon the
Trustee.
The Company is required to deliver to the Trustee annually a statement
regarding compliance with the Indenture, and the Company is required within five
Business Days after becoming aware of any Default or Event of Default, to
deliver to the Trustee a statement describing such Default or Event of Default,
its status and what action the Company is taking or proposes to take with
respect thereto.
Amendment, Supplement and Waiver
The Company, the Guarantors, and the Trustee may, at any time and from
time to time, without notice to or consent of any holder, enter into one or more
indentures supplemental to the Indenture (a) to evidence the succession of
another Person to the Company and the Guarantors and the assumption by such
successor of the covenants and Obligations of the Company under the Indenture
and contained in the Notes and of the Guarantors contained in the Indenture and
the Guarantees, (b) to add to the covenants of the Company, for the benefit of
the holders, or to surrender any right or power conferred upon the Company or
the Guarantors by the Indenture, (c) to add any additional Events of Default,
(d) to provide for uncertificated Notes in addition to or in place of
certificated Notes, (e) to evidence and provide for the acceptance of
appointment under the Indenture by the successor Trustee, (f) to secure the
Notes and/or the Guarantees, (g) to cure any ambiguity, to correct or supplement
any provision in the Indenture which may be inconsistent with any other
provision therein or to add any other provisions with respect to matters or
questions arising under the Indenture, provided that such actions will not
adversely affect the interests of the holders in any material respect, (h) to
add or release any Guarantor pursuant to the terms of the Indenture, or (i) to
comply with the requirements of the Commission to effect or maintain the
qualification of the Indenture under the Trust Indenture Act.
With the consent of the holders of not less than a majority in
aggregate principal amount at Stated Maturity of the outstanding Notes
(including consents obtained in connection with a tender offer or exchange offer
for the Notes), the Company, the Guarantors and the Trustee may enter into one
or more indentures supplemental to the Indenture for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions of
the Indenture or of modifying in any manner the rights of the holders; provided
that no such supplemental indenture will, without the consent of the holder of
each outstanding Note affected thereby, (a) change the Stated Maturity of the
principal of, or any
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installment of interest on, any Note, or reduce the principal amount thereof (or
premium, if any), or the interest thereon that would be due and payable upon
Maturity thereof, or change the place of payment where, or the coin or currency
in which, any Note or any premium or interest thereon is payable, or impair the
right to institute suit for the enforcement of any such payment on or after the
Stated Maturity thereof, (b) reduce the percentage in principal amount at Stated
Maturity of the outstanding Notes, the consent of whose Holders is necessary for
any such supplemental indenture or required for any waiver of compliance with
certain provisions of the Indenture, or certain Defaults thereunder, (c) modify
the Obligations of the Company to make offers to purchase Notes upon a Change of
Control or from the proceeds of Asset Sales, (d) subordinate in right of
payment, or otherwise subordinate, the Notes or the Guarantees to any other
Indebtedness, (e) amend, supplement, or otherwise modify the provisions of the
Indenture relating to Guarantees, or (f) modify any of the provisions of this
paragraph (except to increase any percentage set forth herein).
The holders of not less than a majority in aggregate principal amount
at Stated Maturity of the outstanding Notes may on behalf of the holders of all
the Notes waive any past Default or Event of Default under the Indenture and its
consequences, except a Default or Event of Default (a) in the payment of the
principal of (or premium, if any) or interest (including Special Interest, if
any) on any Note or (b) in respect of a covenant or provision hereof which under
the proviso to the prior paragraph cannot be modified or amended without the
consent of the Holder of each outstanding Note affected thereby.
Satisfaction and Discharge of the Indenture; Defeasance
The Company may terminate its obligations and the obligations of the
Guarantors under the Notes, the Indenture, and the Guarantees when (i) either
(A) all outstanding Notes have been delivered to the Trustee for cancellation or
(B) all such Notes not therefore delivered to the Trustee for cancellation have
become due and payable, will become due and payable within one year, or are to
be called for redemption within one year under irrevocable arrangements
satisfactory to the Trustee for the giving of notice of redemption by the
Trustee in the name and at the expense of the Company, and the Company has
irrevocably deposited or caused to be deposited with the Trustee funds in an
amount sufficient to pay and discharge the entire indebtedness on the Notes not
theretofore delivered to the Trustee for cancellation, for principal of
(premium, if any, on) and interest (including Special Interest, if any) to the
date of deposit or Maturity or date of redemption; (ii) the Company has paid or
caused to be paid all sums then due and payable by the Company under the
Indenture; and (iii) the Company has delivered an Officers' Certificate and an
opinion of counsel relating to compliance with the conditions set forth in the
Indenture.
The Company, at its election, shall (a) be deemed to have paid and
discharged its debt on the Notes and the Indenture and Guarantees shall cease to
be of further effect as to all outstanding Notes (except as to (i) rights of
registration of transfer, substitution and exchange of Notes, (ii) the Company's
right of optional redemption, (iii) rights of holders to receive payments of
principal of, premium, if any, and interest on the Notes (but not the Change of
Control Purchase Price or the Asset Sale Offer Purchase Price) and any rights of
the holders with respect to such amounts, (iv) the rights, obligations and
immunities of the Trustee under the Indenture, and (v) certain other specified
provisions in the Indenture) or (b) cease to be under any obligation to comply
with certain restrictive covenants that are described in the Indenture, after
the irrevocable deposit by the Company with the Trustee, in trust for the
benefit of the holders, at any time prior to the Stated Maturity of the Notes,
of (A) money in an amount, (B) U.S. Government Obligations which through the
payment of interest and principal will provide, not later than one Business Day
before the due date of payment in respect of such Notes, money in an amount, or
(C) a
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combination thereof sufficient to pay and discharge the principal of, premium,
if any, on, and interest (including Special Interest, if any) on, such Notes
then outstanding on the dates on which any such payments are due in accordance
with the terms of the Indenture and of such Notes. Such defeasance or covenant
defeasance shall be deemed to occur only if certain conditions are satisfied,
including, among other things, delivery by the Company to the Trustee of an
opinion of outside counsel acceptable to the Trustee to the effect that (i) such
deposit, defeasance, and discharge will not be deemed, or result in, a taxable
event for federal income tax purposes with respect to the holders; and (ii) the
Company's deposit will not result in the trust or such Trustee being subject to
regulation under the Investment Company Act of 1940.
Additional Information
Anyone who receives this Prospectus may obtain a copy of the Indenture
or the Registration Rights Agreement without charge by writing to the Company at
2200 Eller Drive, P.O. Box 13038, Fort Lauderdale, Florida 33316.
Book-Entry, Delivery; Form and Transfer
The Notes sold to QIBs initially were in the form of one or more
registered global notes without interest coupons (collectively, the "U.S. Global
Notes"). Upon issuance, the U.S. Global Notes were deposited with the Trustee,
as custodian for DTC, in New York, New York, and registered in the name of DTC
or its nominee, in each case for credit to the accounts of DTC's Direct and
Indirect Participants (as defined below). The Notes sold in offshore
transactions in reliance on Regulation S initially were in the form of one or
more registered, global book-entry notes without interest coupons (the "Reg S
Global Notes"). The Reg S Global Notes were deposited with the Trustee, as
custodian for DTC, in New York, New York, and registered in the name of a
nominee of DTC (a "Nominee") for credit to the accounts of Indirect Participants
at Euroclear and CEDEL. During the 40-day period commencing on the day after the
later of the Offering Date and the original Issue Date (as defined) of the Notes
(the "40-Day Restricted Period"), beneficial interests in the Reg S Global Note
may be held only through Euroclear or CEDEL, and, pursuant to DTC's procedures,
Indirect Participants that hold a beneficial interest in the Reg S Global Note
will not be able to transfer such interest to a person that takes delivery
thereof in the form of an interest in the U.S. Global Notes. After the 40-Day
Restricted Period, (i) beneficial interests in the Reg S Global Notes may be
transferred to a person that takes delivery in the form of an interest in the
U.S. Global Notes and (ii) beneficial interests in the U.S. Global Notes may be
transferred to a person that takes delivery in the form of an interest in the
Reg S Global Notes, provided, in each case, that the certification requirements
described below are complied with. See "--Transfers of Interests in One Global
Note for Interests in Another Global Note." All registered global notes are
referred to herein collectively "Global Notes."
Beneficial interests in all Global Notes and all Certificated Notes (as
defined below) will be subject to the applicable rules and procedures of DTC and
its Direct or Indirect Participants (including, if applicable, those of
Euroclear and CEDEL), which may change from time to time.
The Global Notes may be transferred, in whole and not in part, only to
another nominee of DTC or to a successor of DTC or its nominee in certain
limited circumstances. Beneficial interests in the Global Notes may be exchanged
for Notes in certificated form in certain limited circumstances. See "--Transfer
of Interests in Global Notes for Certificated Notes."
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Initially, the Trustee is acting as Paying Agent and Registrar. The
Notes may be presented for registration of transfer and exchange at the offices
of the Registrar.
Depositary Procedures
DTC has advised Hvide that DTC is a limited-purpose trust company
created to hold securities for its participating organizations (collectively,
the "Direct Participants") and to facilitate the clearance and settlement of
transactions in those securities between Direct Participants through electronic
book-entry changes in accounts of Participants. The Direct Participants include
securities brokers and dealers (including the Initial Purchasers), banks, trust
companies, clearing corporations and certain other organizations, including
Euroclear and CEDEL. Access to DTC's system is also available to other entities
that clear through or maintain a direct or indirect, custodial relationship with
a Direct Participant (collectively, the "Indirect Participants").
DTC has advised Hvide that, pursuant to DTC's procedures, (i) upon
deposit of the Global Notes, DTC credited the accounts of the Direct
Participants designated by the Initial Purchasers with portions of the principal
amount of the Global Notes allocated by the Initial Purchasers to such Direct
Participants, and (ii) DTC maintains records of the ownership interests of such
Direct Participants in the Global Notes and the transfer of ownership interests
by and between Direct Participants. DTC does not maintain records of the
ownership interests of, or the transfer of ownership interests by and between,
Indirect Participants or other owners of beneficial interests in the Global
Notes. Direct Participants and Indirect Participants must maintain their own
records of the ownership interests of, and the transfer of ownership interests
by and between, Indirect Participants and other owners of beneficial interests
in the Global Notes.
Investors in the U.S. Global Notes may hold their interests therein
directly through DTC if they are Direct Participants in DTC or indirectly
through organizations that are Direct Participants in DTC. Investors in the Reg
S Global Notes may hold their interests therein directly through Euroclear or
CEDEL or indirectly through organizations that are participants in Euroclear or
CEDEL. After the expiration of the 40-Day Restricted Period (but not earlier),
investors may hold interests in the Reg S Global Notes through organizations
other than Euroclear and CEDEL that are Direct Participants in DTC system.
Morgan Guaranty Trust Company of New York, Brussels office, is the operator and
depository of Euroclear and Citibank, N.A. is the operator and depository of
CEDEL (each a "Nominee" of Euroclear and CEDEL, respectively). Therefore, they
will each be recorded on DTC's records as the holders of all ownership interests
held by them on behalf of Euroclear and CEDEL, respectively. Euroclear and CEDEL
will maintain on their records the ownership interests, and transfer of
ownership interests by and between, their own customer's securities accounts.
DTC will not maintain records of the ownership interests of, or the transfer of
ownership interests by and between, customers of Euroclear or CEDEL. All
ownership interests in any Global Notes, including those of customers'
securities accounts held through Euroclear or CEDEL, may be subject to the
procedures and requirements of DTC.
The laws of some states in the United States require that certain
persons take physical delivery in definitive, certificated form, of securities
that they own. This limits or curtails the ability to transfer beneficial
interests in a Global Note to such persons. Because DTC can act only on behalf
of Direct Participants, which in turn act on behalf of Indirect Participants and
others, the ability of a person having a beneficial interest in a Global Note to
pledge such interest to persons or entities that are not Direct Participants in
DTC, or to otherwise take actions in respect of such interests, may be affected
by the lack
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of physical certificates evidencing such interests. For certain other
restrictions on the transferability of the Notes see "--Transfers of Interests
in Global Notes for Certificated Notes."
Except as described in "--Transfer of Interests in Global Notes for
Certificated Notes," owners of beneficial interests in the Global Notes did not
have Notes registered in their names, did not receive physical delivery of Notes
in certificated form and are not considered the registered owners or holders
thereof under the Indenture for any purpose.
Under the terms of the Indenture, Hvide, the Guarantors, and the
Trustee will treat the persons in whose names the Notes are registered
(including Notes represented by Global Notes) as the owners thereof for the
purpose of receiving payments and for any and all other purposes whatsoever.
Payments in respect of the principal, premium, Special Interest, if any, and
interest on Global Notes registered in the name of DTC or its nominee will be
payable by the Trustee to DTC or its nominee as the registered holder under the
Indenture. Consequently, neither Hvide, the Trustee, nor any agent of Hvide, or
the Trustee has or will have any responsibility or liability for (i) any aspect
of DTC's records or any Direct Participant's or Indirect Participant's records
relating to or payments made on account of beneficial ownership interests in the
Global Notes or for maintaining, supervising, or reviewing any of DTC's records
or any Direct Participant's or Indirect Participant's records relating to the
beneficial ownership interests in any Global Note or (ii) any other matter
relating to the actions and practices of DTC or any of its Direct Participants
or Indirect Participants.
DTC has advised Hvide that its current payment practice (for payments
of principal, interest, and the like) with respect to securities such as the
Notes is to credit the accounts of the relevant Direct Participants with such
payment on the payment date in amounts proportionate to such Direct
Participant's respective ownership interests in the Global Notes as shown on
DTC's records. Payments by Direct Participants and Indirect Participants to the
beneficial owners of the Notes will be governed by standing instructions and
customary practices between them and will not be the responsibility of DTC, the
Trustee, Hvide, or the Guarantors. Neither Hvide, the Guarantors, nor the
Trustee will be liable for any delay by DTC or its Direct Participants or
Indirect Participants in identifying the beneficial owners of the Notes and
Hvide and the Trustee may conclusively rely on and will be protected in relying
on instructions from DTC or its nominee as the registered owner of the Notes for
all purposes.
The Global Notes trade in DTC's Same-Day Funds Settlement System and,
therefore, transfers between Direct Participants in DTC will be effected in
accordance with DTC's procedures, and will be settled in immediately available
funds. Transfers between Indirect Participants (other than Indirect Participants
who hold an interest in the Notes through Euroclear or CEDEL) who hold an
interest through a Direct Participant will be effected in accordance with the
procedures of such Direct Participant but generally will settle in immediately
available funds. Transfers between and among Indirect Participants who hold
interests in the Notes through Euroclear and CEDEL will be effected in the
ordinary way in accordance with their respective rules and operating procedures.
Subject to compliance with the transfer restrictions applicable to the
Notes described herein, cross-market transfers between Direct Participants in
DTC, on the one hand, and Indirect Participants who hold interests in the Notes
through Euroclear or CEDEL, on the other hand, will be effected by Euroclear or
CEDEL's respective nominee through DTC in accordance with DTC's rules on behalf
of Euroclear or CEDEL; however, delivery of instructions relating to
cross-market transactions must be made directly to Euroclear or CEDEL, as the
case may be, by the counterparty in accordance with the rules and procedures of
Euroclear or CEDEL and within their established deadlines (Brussels time for
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Euroclear and UK time for CEDEL). Indirect Participants who hold interest in the
Notes through Euroclear and CEDEL may not deliver instructions directly to
Euroclear's or CEDEL's Nominee. Euroclear or CEDEL will, if the transaction
meets its settlement requirements, deliver instructions to its respective
Nominee to deliver or receive interests on Euroclear's or CEDEL's behalf in the
relevant Global Note in DTC, and make or receive payment in accordance with
normal procedures for same-day fund settlement applicable to DTC.
Because of time zone differences, the securities accounts of an
Indirect Participant who holds an interest in the Notes through Euroclear or
CEDEL purchasing an interest in a Global Note from a Direct Participant in DTC
will be credited, and any such crediting will be reported to Euroclear or CEDEL
during the European business day immediately following the settlement date of
DTC in New York. Although recorded in DTC's accounting records as of DTC's
settlement date in New York, Euroclear and CEDEL customers will not have access
to the cash amount credited to their accounts as a result of a sale of an
interest in a Reg S Global Note to a DTC Participant until the European business
day for Euroclear or CEDEL immediately following DTC's settlement date.
DTC advised the Company that it will take any action permitted to be
taken by a holder of Notes only at the direction of one or more Direct
Participants to whose accounts interests in the Global Notes are credited and
only in respect of such portion of the aggregate principal amount of the Notes
as to which such Direct Participant or Direct Participants has or have given
direction. However, if there is an Event of Default under the Notes, DTC
reserves the right to exchange Global Notes (without the direction of one or
more of its Direct Participants) for legended Notes in certificated form, and to
distribute such certificated forms of Notes to its Direct Participants. See
"--Transfers of Interests in Global Notes for Certificated Notes."
Although DTC, Euroclear, and CEDEL have agreed to the foregoing
procedures to facilitate transfers of interests in the Reg S Global Notes and in
the U.S. Global Notes among Direct Participants, Euroclear and CEDEL, they are
under no obligation to perform or to continue to perform such procedures, and
such procedures may be discontinued at any time. None of Hvide, the Guarantors,
the Initial Purchasers or the Trustee will have any responsibility for the
performance by DTC, Euroclear and CEDEL or their respective Direct and Indirect
Participants of their respective obligations under the rules and procedures
governing any of their operations.
The information in this section concerning DTC, Euroclear and CEDEL and
their book-entry systems has been obtained from sources that the Company
believes to be reliable, but the Company takes no responsibility for the
accuracy thereof.
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Transfers of Interests in One Global Note for Interests in Another Global Note
Prior to the expiration of the 40-Day Restricted Period, an Indirect
Participant who holds an interest in the Reg S Global Note through Euroclear and
CEDEL will not be permitted to transfer its interest to a U.S. Person who takes
delivery in the form of an interest in U.S. Global Notes. After the expiration
of the 40-Day Restricted Period, an Indirect Participant who holds an interest
in Reg S Global Notes will be permitted to transfer its interest to a U.S.
Person who takes delivery in the form of an interest in U.S. Global Notes only
upon receipt by the Trustee of a written certification from the transferor to
the effect that such transfer is being made in accordance with the restrictions
on transfer set forth under "Notice to Investors" and set forth in the legend
printed on the Reg S Global Notes.
Prior to the expiration of the 40-Day Restricted Period, Direct and
Indirect Participants who hold an interest in a U.S. Global Note will not be
permitted to transfer their interests to any person that takes delivery thereof
in the form of an interest in the Reg S Global Notes. After the expiration of
the 40-Day Restricted Period, a Direct or Indirect Participant who holds an
interest in U.S. Global Notes may transfer its interests to a person who takes
delivery in the form of an interest in Reg S Global Notes only upon receipt by
the Trustee of a written certification from the transferor to the effect that
such transfer is being made in accordance with Rule 904 of Regulation S.
Transfers involving an exchange of a beneficial interest in Reg S
Global Notes for a beneficial interest in U.S. Global Notes or vice versa will
be effected by DTC by means of an instruction originated by the Trustee through
DTC/Deposit Withdraw at Custodian (DWAC) system. Accordingly, in connection with
such transfer, appropriate adjustments will be made to reflect a decrease in the
principal amount of the one Global Note and a corresponding increase in the
principal amount of the other Global Note, as applicable. Any beneficial
interest in the one Global Note that is transferred to a person who takes
delivery in the form of the other Global Note will, upon transfer, cease to be
an interest in such first Global Note and become an interest in such other
Global Note and, accordingly, will thereafter be subject to all transfer
restrictions and other procedures applicable to beneficial interests in such
other Global Note for as long as it remains such an interest.
Transfers of Interests in Global Notes for Certificated Notes
An entire Global Note may be exchanged for definitive Notes in
registered, certificated form without interest coupons ("Certificated Notes") if
(i) DTC (x) notifies Hvide that it is unwilling or unable to continue as
depositary for the Global Notes and Hvide thereupon fails to appoint a successor
depositary within 90 days or (y) has ceased to be a clearing agency registered
under the Exchange Act, (ii) Hvide, at its option, notifies the Trustee in
writing that it elects to cause the issuance of Certificated Notes or (iii)
there shall have occurred and be continuing a Default or an Event of Default
with respect to the Notes. In any such case, Hvide will notify the Trustee in
writing that, upon surrender by the Direct and Indirect Participants of their
interest in such Global Note, Certificated Notes will be issued to each person
that such Direct and Indirect Participants and DTC identify as being the
beneficial owner of the related Notes.
Beneficial interests in Global Notes held by any Direct or Indirect
Participant may be exchanged for Certificated Notes upon request to DTC, by such
Direct Participant (for itself or on behalf of an Indirect Participant), to the
Trustee in accordance with customary DTC procedures. Certificated Notes
delivered in exchange for any beneficial interest in any Global Note will be
registered in the names, and
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issued in any approved denominations, requested by DTC on behalf of such Direct
and Indirect Participants (in accordance with DTC's customary procedures).
In all cases described herein, such Certificated Notes will bear the
restrictive legend referred to in "Notice to Investors," unless the Company
determines otherwise in compliance with applicable law.
Neither Hvide, the Guarantors, nor the Trustee will be liable for any
delay by the holder of the Global Notes or DTC in identifying the beneficial
owners of Notes, and Hvide, the Guarantors and the Trustee may conclusively rely
on, and will be protected in relying on, instructions from the holder of the
Global Note or DTC for all purposes.
Transfers of Certificated Notes for Interests in Global Notes
A Certificated Note may only be transferred if the transferor first
delivers to the Trustee a written certificate (and in certain circumstances, an
opinion of counsel) confirming that, in connection with such transfers, it has
complied with all restrictions on transfer applicable to such Certificated Note.
Same Day Settlement and Payment
The Indenture requires that payments in respect of the Notes
represented by the Global Notes (including principal, premium, if any, interest
and Special Interest, if any) be made by wire transfer of immediately available
same day funds to the accounts specified by the holder of interests in such
Global Note. With respect to Certificated Notes, Hvide will make all payments of
principal, premium, if any, interest and Special Interest, if any, by wire
transfer of immediately available same day funds to the accounts specified by
the holders thereof or, if no such account is specified, by mailing a check to
each such holder's registered address. Hvide expects that secondary trading in
the Certificated Notes will also be settled in immediately available funds.
Exchange Offer; Registration Rights
In the event that applicable interpretations of the staff of the
Commission do not permit the Company to effect the Exchange Offer, or if for any
other reason the Exchange Offer is not consummated within 120 days of the date
of the Registration Rights Agreement, or if the Initial Purchasers so request
with respect to Old Notes not eligible to be exchanged for New Notes in the
Exchange Offer, or if any holder of Old Notes is not eligible to participate in
the Exchange Offer or does not receive freely tradable New Notes in the Exchange
Offer, the Company will, at its cost, (a) as promptly as practicable, file a
Shelf Registration Statement covering resales of the Old Notes or the New Notes,
as the case may be, (b) use its best efforts to cause the Shelf Registration
Statement to be declared effective under the Securities Act and (c) keep the
Shelf Registration Statement effective until the earlier of (i) the time when
the Old Notes covered by the Shelf Registration Statement can be sold pursuant
to Rule 144 without any limitations under clauses (c), (e), (f) and (h) of Rule
144 and (ii) two years from the date the Old Notes were issued. The Company
will, in the event a Shelf Registration Statement is filed, among other things,
provide to each holder for whom such Shelf Registration Statement was filed
copies of the prospectus which is a part of the Shelf Registration Statement,
notify each such holder when the Shelf Registration Statement has become
effective and take certain other actions as are required to permit unrestricted
resales of the Old Notes or the New Notes, as the case may be. A holder selling
such Old Notes or New Notes pursuant to the Shelf Registration Statement
generally would be required to be named as a selling security holder in the
related prospectus and to deliver a prospectus to purchasers, will be subject to
certain of
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the civil liability provisions under the Securities Act in connection with such
sales and will be bound by the provisions of the Registration Rights Agreement
which are applicable to such holder (including certain indemnification
obligations).
Certain Definitions
Set forth below is a summary of certain of the defined terms used in
the Indenture. Reference is made to the Indenture for the full definition of all
such terms, as well as any capitalized terms used herein for which no definition
is provided.
"Acquired Indebtedness" means, with respect to any specified Person,
Indebtedness of any other Person existing at the time such other Person merged
with or into or became a subsidiary of such specified Person, including
Indebtedness incurred in connection with, or in contemplation of, such other
Person merging with or into or becoming a subsidiary of such specified Person,
but excluding Indebtedness which is extinguished, retired, or repaid in
connection with such other Person merging with or into or becoming a subsidiary
of such specified Person.
"Adjusted Net Assets" of a Guarantor at any date shall mean the amount
by which the fair value of the Property and other assets of such Guarantor
exceeds the total amount of liabilities, including, without limitation,
contingent liabilities (after giving effect to all other fixed and contingent
liabilities incurred or assumed on such date), but excluding liabilities under
the Guarantee of such Guarantor.
"Affiliate" of any specified Person means another Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling," "controlled by,"
and "under common control with"), as used with respect to any Person, shall mean
the possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of such Person, whether through the
ownership of voting securities, by agreement or otherwise; provided, however,
that beneficial ownership of 10% or more of the Voting Stock of a Person shall
be deemed to be control.
"Asset Sale" means any direct or indirect sale, conveyance, transfer,
lease, or other disposition (including, without limitation, by way of merger or
consolidation or by means of a Sale and Lease-Back Transaction) by the Company
or any Subsidiary to any Person other than the Company or a Subsidiary, in one
transaction, or a series of related transactions, of (i) any Capital Stock of
any Subsidiary (except for directors' qualifying shares or certain minority
interests sold to other Persons solely due to local law requirements that there
be more than one stockholder, but which are not in excess of what is required
for such purpose), or (ii) any other Property or assets of the Company or any
Subsidiary, other than (A) sales of obsolete or worn out equipment in the
ordinary course of business or other assets that, in the Company's reasonable
judgment, are no longer used or useful in the conduct of the business of the
Company and its Subsidiaries), (B) any charter (bareboat or otherwise) or other
lease of Property or other assets entered into by the Company or any Subsidiary
in the ordinary course of business, other than any Bargain Purchase Contract,
(C) a Restricted Payment or Restricted Investment permitted under "--Certain
Covenants--Limitation on Restricted Payments," (D) a Change of Control, and (E)
a consolidation, merger, continuance, or the disposition of all or substantially
all of the assets of the Company and the Subsidiaries, taken as a whole in
compliance with the provision of the Indenture described in "--Consolidation,
Merger, Conveyance, Lease, or Transfer." An Asset Sale shall include the
requisition
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of title to, seizure of, or forfeiture of any Property or assets, or any actual
or constructive total loss or an agreed or compromised total loss of any
Property or assets.
"Attributable Indebtedness" in respect of a Sale and Lease-Back
Transaction means, at any date of determination, the present value (discounted
at the interest rate borne by the Notes, compounded annually) of the total
obligations of the lessee for rental payments during the remaining term of the
lease (or to the first date on which the lessee is permitted to terminate such
lease without the payment of a penalty) included in such Sale and Lease-Back
Transaction (including any period for which such lease has been extended).
"Average Life" means, as of any date, with respect to any debt
security, the quotient obtained by dividing (i) the sum of the products of (x)
the number of years from such date to the date of each scheduled principal
payment (including any sinking fund or mandatory redemption payment
requirements) of such debt security multiplied in each case by (y) the amount of
such principal payment by (ii) the sum of all such principal payments.
"Bargain Purchase Contract" means a charter or lease that provides for
acquisition of the Property subject thereto by the other party to such agreement
during or at the end of the term thereof for less than the Fair Market Value
thereof at the time such right to acquire such Property is granted.
"Board of Directors" of any Person means the Board of Directors of such
Person, or any authorized committee of such Board of Directors.
"Board Resolution" means a duly authorized resolution of the Board of
Directors in full force and effect of the terms of determination and certified
as such.
"Capital Lease Obligation" means, at any time as to any Person with
respect to any Property leased by such Person as lessee, the amount of the
liability with respect to such lease that would be required at such time to be
capitalized and accounted for as a capital lease on the balance sheet of such
Person prepared in accordance with GAAP.
"Capital Stock" in any Person means any and all shares, interests,
partnership interests, participations, or other equivalents in the equity
interest (however designated) in such Person and any rights (other than debt
securities convertible into an equity interest), warrants or options to acquire
any equity interest in such Person.
"Cash Proceeds" means, with respect to any Asset Sale by any Person,
the aggregate consideration received for such Asset Sale by such Person in the
form of cash or cash equivalents (including any amounts of insurance or other
proceeds received in connection with an Asset Sale of the type described in the
last sentence of the definition thereof or marketable securities that are
converted into cash or cash equivalents within 30 days of an Asset Sale),
including payments in respect of deferred payment obligations when received in
the form of cash or cash equivalents (except to the extent that such obligations
are financed or sold with recourse to such Person or any subsidiary thereof).
"Change of Control" means (i) a determination by the Company that any
Person or group (as defined in Section 13(d)(3) or 14(d)(2) of the Exchange Act)
has become the direct or beneficial owner (as defined in Rule 13d-3 under the
Exchange Act) of more than 50% of the voting power of the
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outstanding Voting Stock of the Company other than Permitted Holders; (ii) the
Company is merged with or into or consolidated with another corporation and,
immediately after giving effect to the merger or consolidation, less than 50% of
the outstanding voting securities entitled to vote generally in the election of
directors or persons who serve similar functions of the surviving or resulting
entity are then beneficially owned (within the meaning of Rule 13d-3 of the
Exchange Act) in the aggregate by (x) the stockholders of the Company
immediately prior to such merger or consolidation, or (y) if the record date has
been set to determine the stockholders of the Company entitled to vote on such
merger or consolidation, the stockholders of the Company as of such a record
date; (iii) the Company, either individually or in conjunction with one or more
Subsidiaries, sells, conveys, transfers, or leases, or the Subsidiaries sell,
convey, transfer, or lease, all or substantially all of the assets of the
Company or the Company and the Subsidiaries, taken as a whole (either in one
transaction or a series of related transactions), including Capital Stock of the
Subsidiaries, to any Person (other than a Wholly Owned Subsidiary); (iv) the
liquidation or dissolution of the Company; or (v) the first day on which a
majority of the individuals who constitute the Board of Directors of the Company
are not Continuing Directors.
"Consolidated Interest Coverage Ratio" means as of the date of the
transaction giving rise to the need to calculate the Consolidated Interest
Coverage Ratio (the "Transaction Date"), the ratio of (a) the aggregate amount
of EBITDA of the Company and its consolidated Subsidiaries for the four fiscal
quarters for which financial information in respect thereof is available
immediately prior to the applicable Transaction Date (the "Determination
Period") to (b) the aggregate Consolidated Interest Expense of the Company and
its consolidated Subsidiaries that is anticipated to accrue during a period
consisting of the fiscal quarter in which the Transaction Date occurs and the
three fiscal quarters immediately subsequent thereto (based upon the pro forma
amount and maturity of, and interest payments in respect of, Indebtedness of the
Company and its consolidated Subsidiaries expected by the Company to be
outstanding on the Transaction Date), assuming for the purposes of this
measurement the continuation of market interest rates prevailing on the
Transaction Date and base interest rates in respect of floating interest rate
obligations equal to the base interest rates on such obligations in effect as of
the Transaction Date; provided that if the Company or any of its consolidated
Subsidiaries is a party to any Interest Swap Obligation that would have the
effect of changing the interest rate on any Indebtedness of the Company or any
of its consolidated Subsidiaries for such four-quarter period (or a portion
thereof), the resulting rate shall be used for such four-quarter period or
portion thereof; provided, further, that any Consolidated Interest Expense of
the Company with respect to Indebtedness incurred or retired by the Company or
any of its Subsidiaries during the fiscal quarter in which the Transaction Date
occurs shall be calculated as if such Indebtedness was incurred or retired on
the first day of the fiscal quarter in which the Transaction Date occurs; and
provided, further, that if the transaction giving rise to the need to calculate
the Consolidated Interest Coverage Ratio would have the effect of increasing or
decreasing EBITDA in the future and if such increase or decrease is readily
quantifiable and is attributable to such transaction, EBITDA shall be calculated
on a pro forma basis as if such transaction had occurred on the first day of the
Determination Period, and if, during the Determination Period (x) the Company or
any of its consolidated Subsidiaries shall have engaged in any Asset Sale,
EBITDA for such period shall be reduced by an amount equal to the EBITDA (if
positive), or increased by an amount equal to the EBITDA (if negative), directly
attributable to the assets which are the subject of such Asset Sale for such
period calculated on a pro forma basis as if such Asset Sale and any related
retirement of Indebtedness had occurred on the first day of such period or (y)
after the Issue Date, the Company or any of its consolidated Subsidiaries shall
have acquired any material assets other than in the ordinary course of business,
EBITDA and Consolidated Interest Expense shall be calculated on a pro forma
basis as if such acquisition had occurred on the first day of such period.
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"Consolidated Interest Expense" means, with respect to any Person for
any period, without duplication (A) the sum of (i) the aggregate amount of cash
and noncash interest expense (including capitalized interest) of such Person and
its subsidiaries for such period as determined on a consolidated basis in
accordance with GAAP in respect of Indebtedness (including, without limitation,
(v) any amortization of debt discount, (w) net costs associated with Interest
Swap Obligations (including any amortization of discounts), (x) the interest
portion of any deferred payment obligation calculated in accordance with the
effective interest method, (y) all accrued interest, and (z) all commissions,
discounts, and other fees and charges owed with respect to letters of credit,
bankers acceptances, or similar facilities) paid or accrued, or scheduled to be
paid or accrued, during such period; (ii) dividends on Preferred Stock or
Redeemable Stock of such Person (and Preferred Stock or Redeemable Stock of its
subsidiaries if paid to a Person other than such Person or its subsidiaries)
declared and payable in cash; (iii) the portion of any rental obligation of such
Person or its subsidiaries in respect of any Capital Lease Obligation allocable
to interest expense in accordance with GAAP; (iv) the portion of any rental
obligation of such Person or its subsidiaries in respect of any Sale and
Lease-Back Transaction allocable to interest expense (determined as if such were
treated as a Capital Lease Obligation); and (v) to the extent any debt of any
other Person is guaranteed by such Person or any of its subsidiaries, the
aggregate amount of interest paid, accrued, or scheduled to be paid or accrued,
by such other Person during such period attributable to any such debt, less (B)
to the extent included in (A) above, amortization or write-off of deferred
financing costs of such Person and its subsidiaries during such period and any
charge related or any premium or penalty paid in connection with redeeming or
retiring any Indebtedness of such Person and its subsidiaries prior to its
stated maturity; in the case of both (A) and (B) above, after elimination of
intercompany accounts among such Person and its subsidiaries and as determined
in accordance with GAAP. For purposes of clause (ii) above, dividend
requirements attributable to any Preferred Stock or Redeemable Stock shall be
deemed to be an amount equal to the amount of dividend requirements on such
Preferred Stock or Redeemable Stock times a fraction, the numerator of which is
one, and the denominator of which is one minus the applicable combined federal,
state, local and foreign income tax rate of the Company and its Subsidiaries
(expressed as a decimal), on a consolidated basis, for the fiscal year
immediately preceding the date of the transaction giving rise to the need to
calculate Consolidated Interest Expense.
"Consolidated Net Income" of any Person means, for any period, the
aggregate net income (or net loss, as the case may be) of such Person and its
subsidiaries for such period on a consolidated basis, determined in accordance
with GAAP, provided that there shall be excluded therefrom, without duplication,
(i) any net income of any Unrestricted Subsidiary, except that the Company's or
any Subsidiary's interest in the net income of such Unrestricted Subsidiary for
such period shall be included in such Consolidated Net Income up to the
aggregate amount of cash or cash equivalents actually distributed by such
Unrestricted Subsidiary during such period to the Company or a Subsidiary as a
dividend or other distribution, (ii) gains and losses, net of taxes, from Asset
Sales or reserves relating thereto, (iii) the net income of any Person that is
not a subsidiary or that is accounted for by the equity method of accounting
which shall be included only to the extent of the amount of dividends or
distributions paid to such Person or its subsidiaries, (iv) items (but not loss
items) classified as extraordinary, unusual, or nonrecurring (other than the tax
benefit, if any, of the utilization of net operating loss carryforwards or
alternative minimum tax credits), (v) the net income (but not net loss) of any
Person acquired by such specified Person or any of its subsidiaries in a
pooling-of-interests transaction for any period prior to the date of such
acquisition, (vi) any gain or loss, net of taxes, realized on the termination of
any employee pension benefit plan, (vii) the net income (but not net loss) of
any subsidiary of such specified Person to the extent that the transfer to that
Person of that income is not at the time permitted, directly or indirectly, by
any means (including by dividend, distribution, advance or
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loan, or otherwise), or by operation of the terms of its charter or any
agreement with a Person other than with such specified Person, instrument held
by a Person other than by such specified Person, judgment, decree, order,
statute, law, rule, or governmental regulations applicable to such subsidiary or
its stockholders, except for any dividends or distributions actually paid by
such subsidiary to such Person, and (viii) with regard to a non-Wholly Owned
Subsidiary, any aggregate net income (or loss) in excess of such Person's or
such subsidiary's pro rata share of such non-Wholly Owned Subsidiary's net
income (or loss).
"Consolidated Net Worth" of any Person means, as of any date, the sum
of the Capital Stock and additional paid-in capital plus retained earnings (or
minus accumulated deficit) of such Person and its subsidiaries on a consolidated
basis at such date, each item determined in accordance with GAAP, less amounts
attributable to Redeemable Stock of such Person or any of its subsidiaries.
"Continuing Director" means an individual who (i) is a member of the
Board of Directors of the Company and (ii) either (A) was a member of the Board
of Directors of the Company on the Issue Date or (B) whose nomination for
election or election to the Board of Directors of the Company was approved by
vote of at least a majority of the directors then still in office who were
either directors on the Issue Date or whose election or nomination for election
was previously so approved.
"Currency Hedge Obligations" means, at any time as to any Person, the
obligations of such Person at such time which were incurred in the ordinary
course of business pursuant to any foreign currency exchange agreement, option
or future contract or other similar agreement or arrangement designed to protect
against or manage such Person's or any of its subsidiaries' exposure to
fluctuations in foreign currency exchange rates.
"Debenture Indenture" means that certain Indenture dated as of June 27,
1997, between the Company and the trustee named therein relating to $118.5
million aggregate principal amount of Debentures, as such may be amended,
supplemented or modified from time to time.
"Debentures" means the 6 1/2% Convertible Subordinated Debentures due
June 15, 2012 issued pursuant to the Debenture Indenture.
"Default" means any event, act, or condition the occurrence of which
is, or after notice or the passage time or both would be, an Event of Default.
"Determination Period" has the meaning specified in clause (a) of the
definition of "Consolidated Interest Coverage Ratio."
"EBITDA" means, with respect to any Person for any period, the
Consolidated Net Income of such Person for such period, plus to the extent
reflected in the income statement of such Person for such period from which
Consolidated Net Income is determined, without duplication, (i) Consolidated
Interest Expense, (ii) income tax expense, (iii) depreciation expense, (iv)
amortization expense, (v) any charge related to any premium or penalty paid in
connection with redeeming or retiring any Indebtedness prior to its stated
maturity, and (vi) any other non-cash charges minus, to the extent reflected in
such income statement, any noncash credits that had the effect of increasing
Consolidated Net Income of such Person for such period.
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"Fair Market Value" means, with respect to consideration received or to
be received pursuant to any transaction by any Person, the fair market value of
such consideration as determined in good faith by the Board of Directors of the
Company.
"Fair Value" means, with respect to any asset or Property, the price
which could be negotiated in an arm's-length free market transaction, for cash,
between a willing seller and a willing buyer, neither of whom is under undue
pressure or compulsion to complete the transaction.
"GAAP" means, at any date, United States generally accepted accounting
principles, consistently applied, as set forth in the opinions of the Accounting
Principles Board of the American Institute of Certified Public Accountants
("AICPA") and statements of the Financial Accounting Standards Board, or in such
other statements by such other entity as may be designated by the AICPA, that
are applicable to the circumstances as of the date of determination; provided,
however, that all calculations made for purposes of determining compliance with
the provisions set forth in the Indenture shall utilize GAAP in effect at the
Issue Date.
"Guarantee" means any guarantee of the Notes by any Guarantor in
accordance with the provisions described under "--Guarantees of Notes."
"Guarantor" means the Initial Guarantors and each other future
Subsidiary of the Company that is required to guarantee the Company's
Obligations under the Notes and the Indenture as described in "--Guarantees of
Notes" and any other Subsidiary of the Company that executes a supplemental
indenture in which such Subsidiary agrees to guarantee the Company's Obligations
under the Notes and the Indenture.
"Incur" means, with respect to any Indebtedness or other obligation of
any Person, to create, issue, suffer to exist, incur (by conversion, exchange or
otherwise), assume, guarantee, or otherwise become liable in respect of such
Indebtedness or other obligation or the recording, as required pursuant to GAAP
or otherwise, of any such Indebtedness or obligation on the balance sheet of
such Person (and "incurrence," "incurred," "incurrable," and "incurring" shall
have meanings correlative to the foregoing); provided that a change in GAAP that
results in an obligation of such Person that exists at such time becoming
Indebtedness shall not be deemed an incurrence of such Indebtedness.
Indebtedness otherwise incurred by a Person before it becomes a Subsidiary shall
be deemed to have been incurred at the time at which it becomes a Subsidiary. A
guarantee otherwise permitted by the Indenture to be incurred by the Company or
a Subsidiary of the Company of Indebtedness incurred in compliance with the
terms of the Indenture by the Company or a Subsidiary of the Company, as
applicable, shall not constitute a separate incurrence of Indebtedness.
"Indebtedness" as applied to any Person means, at any time, without
duplication, whether recourse is to all or a portion of the assets of such
Person, and whether or not contingent, (i) any obligation of such Person for
borrowed money; (ii) any obligation of such Person evidenced by bonds,
debentures, notes or other similar instruments, including, without limitation,
any such obligations incurred in connection with acquisition of Property, assets
or businesses, excluding accounts payable made in the ordinary course of
business which are not more than 90 days overdue or which are being contested in
good faith and by appropriate proceedings; (iii) any obligation of such Person
for all or any part of the purchase price of Property or assets or for the cost
of Property constructed or of improvements thereto (including any obligation
under or in connection with any letter of credit related thereto), other than
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accounts payable incurred in respect of Property and services purchased in the
ordinary course of business which are no more than 90 days overdue or which are
being contested in good faith and by appropriate proceedings; (iv) any
obligation of such Person upon which interest charges are customarily paid
(other than accounts payable incurred in the ordinary course of business); (v)
any obligation of such Person under conditional sale or other title retention
agreements relating to purchased Property; (vi) any obligation of such Person
issued or assumed as the deferred purchase price of Property or assets (other
than accounts payable incurred in the ordinary course of business which are no
more than 90 days overdue or which are being contested in good faith and by
appropriate proceedings); (vii) any Capital Lease Obligation or Attributable
Indebtedness pursuant to any Sale and Lease-Back Transaction of such Person;
(viii) any obligation of any other Person secured by (or for which the obligee
thereof has an existing right, contingent or otherwise, to be secured by) any
Lien on Property owned or acquired, whether or not any obligation secured
thereby has been assumed, by such Person; (ix) any obligation of such Person in
respect of any letter of credit supporting any obligation of any other Person;
(x) the maximum fixed repurchase price of any Redeemable Stock of such Person
(or if such Person is a subsidiary, any Preferred Stock of such Person); (xi)
the notional amount of any Interest Swap Obligation or Currency Hedge Obligation
of such Person at the time of determination; and (xii) any obligation which is
in economic effect a guarantee, regardless of its characterization (other than
an endorsement in the ordinary course of business), with respect to any
Indebtedness of another Person, to the extent guaranteed. For purposes of the
preceding sentence, the maximum fixed repurchase price of any Redeemable Stock
or subsidiary Preferred Stock that does not have a fixed repurchase price shall
be calculated in accordance with the terms of such Redeemable Stock or
subsidiary Preferred Stock as if such Redeemable Stock or subsidiary Preferred
Stock were repurchased on any date on which Indebtedness shall be required to be
determined pursuant to the Indenture; provided that if such Redeemable Stock or
subsidiary Preferred Stock is not then permitted to be repurchased, the
repurchase price shall be the book value of such Redeemable Stock or subsidiary
Preferred Stock. The amount of Indebtedness of any Person at any date shall be
the outstanding balance at such date of all unconditional obligations as
described above and the maximum liability of any guarantees at such date;
provided, further, that for purposes of calculating the amount of any
non-interest bearing or other discount security, such Indebtedness shall be
deemed to be the principal amount thereof that would be shown on the balance
sheet of the issuer dated such date prepared in accordance with GAAP but that
such security shall be deemed to have been incurred only on the date of the
original issuance thereof.
"Initial Guarantors" means all of the Company's subsidiaries except Seabulk
Offshore Chartering, Inc., Hvide Capital Trust, Hvide Aker Holdings, L.L.C.,
Hvide Aker CAHT 1, L.L.C. and Hvide Aker Chartering 1, L.L.C.
"Interest Swap Obligation" means, with respect to any Person, the
obligation of such Person pursuant to any interest rate swap agreement, interest
rate cap, collar or floor agreement or other similar agreement or arrangement
designed to protect against or manage such Person's or any of its subsidiaries'
exposure to fluctuations in interest rates.
"Investment" means, with respect to any Person, any direct, indirect,
or contingent investment in another Person, whether by means of a share
purchase, capital contribution, loan, advance (other than advances to employees
for moving and travel expenses, drawing accounts, and similar expenditures in
the ordinary course of business), or similar credit extension constituting
Indebtedness of such other Person, and any guarantee of Indebtedness of any
other Person; provided that the term "Investment" shall not include any
transaction involving the purchase or other acquisition (including by way of
merger) of
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Property or assets (including Capital Stock) by the Company or any Subsidiary in
exchange for Capital Stock (other than Redeemable Stock) of the Company. The
amount of any Person's Investment shall be the original cost of such Investment
to such Person, plus the cost of all additions thereto paid by such Person, and
minus the amount of any portion of such Investment repaid to such Person in cash
as a repayment of principal or a return of capital, as the case may be, but
without any other adjustments for increases or decreases in value, or write-ups,
writedowns, or write-offs with respect to such Investment. In determining the
amount of any Investment involving a transfer of any Property or assets other
than cash, such Property or assets shall be valued at its Fair Value at the time
of such transfer as determined in good faith by the board of directors (or
comparable body) of the Person making such transfer. The Company shall be deemed
to make an "Investment" in the amount of the Fair Value of the Property and
assets of a Subsidiary at the time such Subsidiary is designated an Unrestricted
Subsidiary.
"Issue Date" means the date on which the Notes are first authenticated
and delivered under the Indenture.
"Joint Venture" means any Person (other than a Subsidiary) designated
as such by a resolution of the Board of Directors of the Company and as to which
(i) the Company, any Subsidiary, or any Joint Venture owns less than 50% of the
Capital Stock of such Person; (ii) no more than ten unaffiliated Persons own of
record any Capital Stock of such Person; (iii) at all times, each such Person
owns the same proportion of each class of Capital Stock of such Person
outstanding at such time; (iv) no Indebtedness of such Person is or becomes
outstanding other than Non-Recourse Indebtedness; (v) there exist no consensual
encumbrances or restrictions on the ability of such Person to (x) pay, directly
or indirectly, dividends or make any other distributions in respect of its
Capital Stock to the holders of its Capital Stock or (y) pay any Indebtedness or
other obligation owed to the holders of its Capital Stock or (z) make any
Investment in the holders of its Capital Stock, in each case other than the
types of consensual encumbrances or restrictions that would be permitted by the
"Limitation on Dividends and Other Payment Restrictions Affecting Subsidiaries"
covenant if such Person were a Subsidiary; and (vi) the business engaged in by
such Person is a Related Business.
"Lien" means any mortgage, pledge, hypothecation, charge, assignment,
deposit arrangement, encumbrance, security interest, lien (statutory or other),
or preference, priority or other security or similar agreement or preferential
arrangement of any kind or nature whatsoever (including, without limitation, any
agreement to give or grant a Lien or any lease, conditional sale or other title
retention agreement having substantially the same economic effect as any of the
foregoing).
"Maturity" means the date on which the principal of a Note becomes due
and payable as provided therein or in the Indenture, whether at the Stated
Maturity or the Change of Control Payment Date or purchase date established
pursuant to the terms of the Indenture for an Asset Sale Offer or by declaration
of acceleration, call for redemption or otherwise.
"Net Available Proceeds" means, as to any Asset Sale, the Cash Proceeds
therefrom, net of all legal and title expenses, commissions and other fees and
expenses incurred, and all Federal, state, foreign, recording and local taxes
payable, as a consequence of such Asset Sale, net of all payments made to any
Person other than the Company or a Subsidiary on any Indebtedness which is
secured by such assets, in accordance with the terms of any Lien upon or with
respect to such assets, or which must by its terms, or in order to obtain a
necessary consent to such Asset Sale, or by applicable law, be repaid out of the
proceeds from such Asset Sale and, as for any Asset Sale by a Subsidiary, net of
the equity
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interest in such Cash Proceeds of any holder of Capital Stock of such Subsidiary
(other than the Company, any other Subsidiary or any Affiliate of the Company or
any such other Subsidiary).
"Non-Recourse Indebtedness" means Indebtedness or that portion of
Indebtedness of an Unrestricted Subsidiary as to which (a) neither the Company
nor any other Subsidiary (other than an Unrestricted Subsidiary) (i) provides
credit support including any undertaking, agreement or instrument which would
constitute Indebtedness or (ii) is directly or indirectly liable for such
Indebtedness and (b) no default with respect to such Indebtedness (including any
rights which the holders thereof may have to take enforcement action against an
Unrestricted Subsidiary) would permit (upon notice, lapse of time or both) any
holder of any other Indebtedness of the Company or its other Subsidiaries to
declare a default on such other Indebtedness or cause the payment thereof to be
accelerated or payable prior to its stated maturity.
"Obligations" means, with respect to any Indebtedness, any obligation
thereunder, including, without limitation, principal, premium, and interest
(including post petition interest thereon), penalties, fees, costs, expenses,
indemnifications, reimbursements, damages, and other liabilities.
"Obligors" means the Company and the Guarantors, collectively;
"Obligor" means the Company or any Guarantor.
"Officers' Certificate" means a certificate signed by the Chairman of
the Board, a Vice Chairman of the Board, the President, the Chief Executive
Officer, a Vice President, and by the Chief Financial Officer, the Chief
Accounting Officer, the Treasurer, an Assistant Treasurer, the Secretary or an
Assistant Secretary of the Company or a Subsidiary and delivered to the Trustee,
which shall comply with the Indenture.
"Permitted Holders" means J. Erik Hvide and 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
controlled by them.
"Permitted Indebtedness" means (a) Indebtedness of the Company under
the Notes; (b) Indebtedness (and any guarantee thereof) under one or more credit
or revolving credit facilities with a bank or syndicate of banks or financial
institutions, including the Credit Facility, as such may be amended, modified,
revised, extended, replaced, or refunded from time to time, in an aggregate
principal amount at any one time outstanding not to exceed $175.0 million, less
any amounts derived from Asset Sales and applied to the required permanent
reduction of Senior Debt (and a permanent reduction of the related commitment to
lend or amount available to be reborrowed in the case of a revolving credit
facility) under such credit facilities as contemplated by the "Limitation on
Asset Sales" covenant; (c) Indebtedness of the Company or any Subsidiary under
Interest Swap Obligations, provided that (i) such Interest Swap Obligations are
related to payment obligations on Indebtedness otherwise permitted under the
covenants described in "--Certain Covenants--Limitation on Indebtedness" and
(ii) the notional principal amount of such Interest Swap Obligations does not
exceed the principal amount of the Indebtedness to which such Interest Swap
Obligations relate; (d) Indebtedness of the Company or any Subsidiary under
Currency Hedge Obligations, provided that (i) such Currency Hedge Obligations
are related to payment obligations on Indebtedness otherwise permitted under the
covenants described in "--Certain Covenants--Limitation on Indebtedness" or to
the foreign currency cash flows reasonably expected to be generated by the
Company and the Subsidiaries and (ii) the notional principal amount of such
Currency Hedge Obligations does not exceed the principal amount of the
Indebtedness and the amount of the foreign currency cash flows to which such
Currency Hedge Obligations relate; (e) Indebtedness of the Company or any
Subsidiary outstanding on the Issue Date including Indebtedness under the
Debentures, the Debenture Indenture and the Trust Preferred Securities
Guarantee; (f) the
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Guarantees of the Notes (and any assumption of the Obligations guaranteed
thereby); (g) Indebtedness of the Company or any Subsidiary in respect of bid
performance bonds, surety bonds, appeal bonds and letters of credit or similar
arrangements issued for the account of the Company or any Subsidiary, in each
case in the ordinary course of business and other than for an obligation for
money borrowed; (h) Indebtedness of the Company to a Subsidiary and Indebtedness
of a Subsidiary to the Company or another Subsidiary; provided that upon any
subsequent event which results in any such Subsidiary ceasing to be a Subsidiary
or any other subsequent transfer of any such Indebtedness (except to the Company
or a Subsidiary), such Indebtedness shall be deemed, in each case, to be
incurred and shall be treated as an incurrence for purposes of the "Limitation
on Indebtedness" covenants at the time the Subsidiary in question ceased to be a
Subsidiary or on which such subsequent transfer occurred; (i) Indebtedness of
the Company in connection with a purchase of the Notes pursuant to a Change of
Control Offer, provided that the aggregate principal amount of such Indebtedness
does not exceed 101% of the aggregate principal amount at Stated Maturity of the
Notes purchased pursuant to such Change of Control Offer; provided, further,
that such Indebtedness (A) has an Average Life equal to or greater than the
remaining Average Life of the Notes and (B) does not mature prior to one year
following the Stated Maturity of the Notes; (j) Permitted Refinancing
Indebtedness; and (k) Permitted Subsidiary Refinancing Indebtedness. So as to
avoid duplication in determining the amount of Permitted Indebtedness under any
clause of this definition, guarantees permitted to be incurred pursuant to the
Indenture of, or obligations permitted to be incurred pursuant to the Indenture
in respect of letters of credit supporting, Indebtedness otherwise included in
the determination of such amount shall not also be included.
"Permitted Investments" means (a) certificates of deposit, bankers
acceptances, time deposits, Eurocurrency deposits, and similar types of
Investments routinely offered by commercial banks with final maturities of one
year or less issued by commercial banks organized in the United States, or
foreign branches thereof, having capital and surplus in excess of $500.0 million
or any commercial bank of any other country that is a member of the Organization
for Economic Cooperation and Development ("OECD") and has total assets in excess
of $500.0 million; (b) commercial paper issued by any corporation, if such
commercial paper has credit ratings of at least "A-1" or its equivalent by S&P
or at least "P-1" or its equivalent by Moody's; (c) U.S. Government Obligations
with a maturity of four years or less; (d) repurchase obligations for
instruments of the type described in clause (c) with any bank meeting the
qualifications specified in clause (a) above; (e) shares of money market mutual
or similar funds having assets in excess of $100.0 million; (f) payroll advances
in the ordinary course of business and other advances and loans to officers and
employees of the Company or any Subsidiary, so long as the aggregate principal
amount of such advances and loans does not exceed $500,000 at any one time
outstanding; (h) Investments represented by that portion of the proceeds from
Asset Sales that is not required to be Cash Proceeds by the covenant described
in "--Certain Covenants--Limitation on Asset Sales"; (i) Investments made by the
Company in Subsidiaries (or any Person that will be a Subsidiary as a result of
such Investment) or by a Subsidiary in the Company or in one or more
Subsidiaries (or any Person that will be a Subsidiary as a result of such
Investment); (j) Investments in stock, obligations, or securities received in
settlement of debts owing to the Company or any Subsidiary as a result of
bankruptcy or insolvency proceedings or upon the foreclosure, perfection or
enforcement of any Lien in favor of the Company or any Subsidiary, in each case
as to debt owing to the Company or any Subsidiary that arose in the ordinary
course of business of the Company or any such Subsidiary; (k) foreign bank
deposits and cash equivalents in jurisdictions where the Company or its
Subsidiaries are then actively conducting business provided that (i) all such
deposits are required to be made in the ordinary course of business, (ii) such
deposits do not exceed $15.0 million in the aggregate, and (iii) the funds so
deposited do not remain in such bank for more than 30 days; (l) Interest Swap
Obligations with respect to any
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floating rate Indebtedness that is permitted by the terms of the Indenture to be
outstanding; (m) Currency Hedge Obligations, provided that such Currency Hedge
Obligations constitute Permitted Indebtedness permitted by clause (d) of the
definition thereof; (n) Investments in prepaid expenses, negotiable instruments
held for collection and lease, utility, worker's compensation and performance
and other similar deposits in the ordinary course of business; and (o)
Investments pursuant to any agreement or obligation of the Company or any
Subsidiary in effect on the Issue Date and listed on a schedule attached to the
Indenture.
"Permitted Liens" means (a) Liens in existence on the Issue Date; (b)
Liens created for the benefit of the Notes and/or the Guarantees; (c) Liens on
Property of a Person existing at the time such Person is merged or consolidated
with or into the Company or a Subsidiary (and not incurred as a result of, or in
anticipation of, such transaction), provided that any such Lien relates solely
to such Property; (d) Liens on Property existing at the time of the acquisition
thereof (and not incurred as a result of, or in anticipation of such
transaction), provided that any such Lien relates solely to such Property; (e)
Liens incurred or pledges and deposits made in connection with worker's
compensation, unemployment insurance and other social security benefits,
statutory obligations, bid, surety or appeal bonds, performance bonds or other
obligations of a like nature incurred in the ordinary course of business; (f)
Liens imposed by law or arising by operation of law, including, without
limitation, landlords', mechanics', carriers', warehousemen's, materialmen's,
suppliers' and vendors' Liens and Liens for master's and crew's wages and other
similar maritime Liens, and incurred in the ordinary course of business for sums
not delinquent or being contested in good faith, if such reserves or other
appropriate provisions, if any, as shall be required by GAAP shall have been
made with respect thereof; (g) zoning restrictions, easements, licenses,
covenants, reservations, restrictions on the use of real property and defects,
irregularities and deficiencies in title to real property that do not,
individually or in the aggregate, materially affect the ability of the Company
or any Subsidiary to conduct its business presently conducted; (h) Liens for
taxes or assessments or other governmental charges or levies not yet due and
payable, or the validity of which is being contested by the Company or a
Subsidiary in good faith and by appropriate proceedings upon stay of execution
or the enforcement thereof and for which adequate reserves in accordance with
GAAP or other appropriate provision has been made; (i) Liens to secure
Indebtedness incurred for the purpose of financing all or a part of the purchase
price or construction cost of Property or assets acquired or constructed after
the Issue Date, provided that (1) the principal amount of Indebtedness secured
by such Liens shall not exceed 100% of the lesser of cost or Fair Market Value
of the Property or assets so acquired or constructed plus transaction costs
related thereto, (2) such Liens shall not encumber any other assets or Property
of the Company or any Subsidiary (other than the proceeds thereof and accessions
and upgrades thereto) and (3) such Liens shall attach to such Property or assets
within 120 days of the date of the completion of the construction or acquisition
of such Property or assets; (j) Liens securing Capital Lease Obligations,
provided that such Liens secure Capital Lease Obligations which, when combined
with (1) the outstanding secured Indebtedness of the Company and its
Subsidiaries (other than Indebtedness secured by Liens described under clauses
(b) and (i) hereof) and (2) the aggregate principal amount of all other Capital
Lease Obligations of the Company and Subsidiaries, does not exceed $5.0 million
at any one time outstanding; (k) Liens to secure any extension, renewal,
refinancing or refunding (or successive extensions, renewals, refinancings or
refundings), in whole or in part, of any Indebtedness secured by Liens referred
to in the foregoing clauses (a), (c) and (d), provided, that such Lien does not
extend to any other Property or assets of the Company or any Subsidiary and the
principal amount of the Indebtedness secured by such Lien is not increased; (l)
any charter or maritime lease; (m) leases or subleases of real property to other
Persons; (n) judgment liens not giving rise to an Event of Default so long as
any appropriate legal proceedings which may have been
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initiated for the review of such judgment shall not have been finally terminated
or the period within which such proceeding may be initiated shall not have
expired; (o) rights of off-set of banks and other Persons; (p) liens in favor of
the Company; and (q) Liens securing Indebtedness described under clause (b) of
the definition of Permitted Indebtedness and the Term Loan.
"Permitted Refinancing Indebtedness" means Indebtedness of the Company,
incurred in exchange for, or the net proceeds of which are used to renew,
extend, refinance, refund or repurchase, outstanding Indebtedness of the Company
which outstanding Indebtedness was incurred in accordance with, or is otherwise
permitted by, the terms of clauses (a) and (e) of the definition of "Permitted
Indebtedness", provided that (i) if the Indebtedness being renewed, extended,
refinanced, refunded or repurchased is pari passu with or subordinated in right
of payment (without regard to its being secured) to the Notes, then such new
Indebtedness is pari passu with or subordinated in right of payment (without
regard to its being secured) to, as the case may be, the Notes at least to the
same extent as the Indebtedness being renewed, extended, refinanced, refunded or
repurchased, (ii) such new Indebtedness is scheduled to mature later than the
Indebtedness being renewed, extended, refinanced, refunded or repurchased, (iii)
such new Indebtedness has an Average Life at the time such Indebtedness is
incurred that is greater than the Average Life of the Indebtedness being
renewed, extended, refinanced, refunded or repurchased, and (iv) such new
Indebtedness is in aggregate principal amount (or, if such Indebtedness is
issued at a price less than the principal amount thereof, the aggregate amount
of gross proceeds therefrom is) not in excess of the aggregate principal amount
then outstanding of the Indebtedness being renewed, extended, refinanced,
refunded or repurchased (or if the Indebtedness being renewed, extended,
refinanced, refunded or repurchased was issued at a price less than the
principal amount thereof, then not in excess of the amount of liability in
respect thereof determined in accordance with GAAP) plus the amount of
reasonable fees, expenses, and premium, if any, incurred by the Company or such
Subsidiary in connection therewith.
"Permitted Subsidiary Refinancing Indebtedness" means Indebtedness of
any Subsidiary, incurred in exchange for, or the net proceeds of which are used
to renew, extend, refinance, refund or repurchase, outstanding Indebtedness of
such Subsidiary which outstanding Indebtedness was incurred in accordance with,
or is otherwise permitted by, the terms of clauses (e) and (f) of the definition
of Permitted Indebtedness, provided that (i) if the Indebtedness being renewed,
extended, refinanced, refunded or repurchased is pari passu with or subordinated
in right of payment (without regard to its being secured) to the Guarantee of
such Subsidiary, then such new Indebtedness is pari passu with or subordinated
in right of payment (without regard to its being secured) to, as the case may
be, the Guarantee of such Subsidiary at least to the same extent as the
Indebtedness being renewed, extended, refinanced, refunded, or repurchased, (ii)
such new Indebtedness is scheduled to mature later than the Indebtedness being
renewed, extended, refinanced, refunded, or repurchased, (iii) such new
Indebtedness has an Average Life at the time such Indebtedness is incurred that
is greater than the Average Life of the Indebtedness being renewed, extended,
refinanced, refunded or repurchased, and (iv) such new Indebtedness is in an
aggregate principal amount (or, if such Indebtedness is issued at a price less
than the principal amount thereof, the aggregate amount of gross proceeds
therefrom is) not in excess of the aggregate principal amount then outstanding
of the Indebtedness being renewed, extended, refinanced, refunded or repurchased
(or if the Indebtedness being renewed, extended, refinanced, refunded or
repurchased was issued at a price less than the principal amount thereof, then
not in excess of the amount of liability in respect thereof determined in
accordance with GAAP) plus the amount of reasonable fees, expenses, and premium,
if any, incurred by the Company or such Subsidiary in connection therewith.
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"Person" means any individual, corporation, partnership, joint venture,
incorporated or unincorporated association, joint stock company, trust,
unincorporated organization or government or other agency or political
subdivision thereof or other entity of any kind.
"Preferred Stock" of any Person means Capital Stock of such Person of
any class or classes (however designated) that ranks prior, as to the payment of
dividends and/or as to the distribution of assets upon any voluntary or
involuntary liquidation, dissolution or winding up of such Person, to shares of
Capital Stock of at least one other class of such Person.
"Property" means, with respect to any Person, any interest of such
Person in any kind of property or asset, whether real, personal or mixed, or
tangible or intangible, excluding Capital Stock in any other Person.
"Public Equity Offering" means an offering of Capital Stock (other than
Redeemable Stock) of the Company for cash pursuant to an effective registration
statement (other than on a Form S-4 or a Form S-8 or any other form relating to
securities issuable under any employee benefit plan of the Company) under the
Securities Act resulting in aggregate gross proceeds to the Company of at least
$25.0 million.
"Redeemable Stock" means, with respect to any Person, any equity
security that by its terms or otherwise is required to be redeemed, or is
redeemable at the option of the holder thereof, at any time prior to one year
following the Stated Maturity of the Notes or is exchangeable into Indebtedness
of such Person or any of its subsidiaries.
"Related Business" means the offshore energy services and marine
transportation services business and activities incidental thereto and any
business related or ancillary thereto.
"Replacement Asset" means a Property or asset that, as determined by
the Board of Directors of the Company as evidenced by a Board Resolution, is
used or is useful in a Related Business.
"Restricted Investment" means any Investment in any Person, including
an Unrestricted Subsidiary or the designation of a Subsidiary as an Unrestricted
Subsidiary, other than a Permitted Investment.
"Restricted Payment" means to (i) declare or pay any dividend on, or
make any distribution in respect of, or purchase, redeem, retire, or otherwise
acquire for value, any Capital Stock of the Company or any Affiliate of the
Company, or warrants, rights, or options to acquire such Capital Stock, other
than (x) dividends payable solely in the Capital Stock (other than Redeemable
Stock) of the Company or such Affiliate, as the case may be, or in warrants,
rights, or options to acquire such Capital Stock and (y) dividends or
distributions by a Subsidiary to the Company or to a Wholly Owned Subsidiary;
(ii) make any principal payment on, or redeem, repurchase, defease (including an
in-substance or legal defeasance) or otherwise acquire or retire for value
(including pursuant to mandatory repurchase covenants), prior to any scheduled
principal payment, scheduled sinking fund payment or other stated maturity,
Indebtedness of the Company or any Subsidiary which is subordinated (whether
pursuant to its terms or by operation of law) in right of payment to the Notes
or the Guarantees, as applicable; or (iii) make any Restricted Investment in any
Person.
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"Sale and Lease-Back Transaction" means, with respect to any Person,
any direct or indirect arrangement pursuant to which Property is sold or
transferred by such Person or a subsidiary of such Person and is thereafter
leased back from the purchaser or transferee thereof by such Person or one of
its subsidiaries.
"Senior Debt" means any Indebtedness incurred by the Company, unless
the instrument under which such Indebtedness is incurred expressly provides that
it is subordinated in right of payment to the Notes, provided that Senior Debt
will not include (a) any liability for federal, state, local, or other taxes
owed or owing, (b) any Indebtedness owing to any Subsidiaries of the Company,
(c) any trade payables, (d) the Debentures, the Debenture Indenture, or the
Trust Preferred Securities Guarantee, or (e) any Indebtedness that is incurred
in violation of the Indenture.
"Significant Subsidiary" means any Guarantor or any other Subsidiary
that is a "significant subsidiary" as defined in Rule 1-02(w) of Regulation S-X
under the Securities Act and the Exchange Act.
"Stated Maturity" when used with respect to a Note or any installment
of interest thereon, means the date specified in such Note as the fixed date on
which the principal of such Note or such installment of interest is due and
payable.
"Subordinated Indebtedness" means any Indebtedness of the Company or
any Guarantor that is subordinated in right of payment to the Notes or the
Guarantees, as the case may be, and does not mature prior to one year following
the Stated Maturity of the Notes.
"subsidiary" means, with respect to any Person, (i) any corporation
more than 50% of the outstanding Voting Stock of which is owned, directly or
indirectly, by such Person, or by one or more other subsidiaries of such Person,
or by such Person and one or more other subsidiaries of such Person, (ii) any
general partnership, joint venture or similar entity, more than 50% of the
outstanding partnership or similar interest of which is owned, directly or
indirectly, by such Person, or by one or more other subsidiaries of such Person,
or by such Person and one or more other subsidiaries of such Person and (iii)
any limited partnership of which such Person or any subsidiary of such Person is
a general partner.
"Subsidiary" means a subsidiary of the Company other than an
Unrestricted Subsidiary or Hvide Capital Trust.
"Transaction Date" has the meaning specified within the definition of
Consolidated Interest Coverage Ratio.
"Trust Preferred Securities" means the 6 1/2% Trust Convertible
Preferred Securities of Hvide Capital Trust.
"Trust Preferred Securities Guarantee" means that certain Guarantee
dated as of June 27, 1997 executed and delivered by the Company to the guarantee
trustee named therein for the benefit of the holders of the Trust Preferred
Securities whereby the Company guarantees on a subordinated basis certain
payments by Hvide Capital Trust to the extent that Hvide Capital Trust has funds
on hand available therefor.
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"U.S. Government Obligations" means securities that are (i) direct
obligations of the United States of America for the payment of which its full
faith and credit is pledged; (ii) obligations of a Person controlled or
supervised by and acting as an agency or instrumentality of the United States of
America the payment of which is unconditionally guaranteed as a full faith and
credit obligation by the United States of America, which, in either case under
clauses (i) or (ii) above, are not callable or redeemable at the option of the
issuers thereof; or (iii) depository receipts issued by a bank or trust company
as custodian with respect to any such U.S. Government Obligations or a specific
payment of interest on or principal of any such U.S. Government Obligation held
by such custodian for the account of the holder of a Depository receipt,
provided that (except as required by law) such custodian is not authorized to
make any deduction from the amount payable to the holder of such Depository
receipt from any amount received by the custodian in respect of the U.S.
Government Obligation evidenced by such Depository receipt.
"Unrestricted Subsidiary" means any subsidiary of the Company that the
Company has classified as an Unrestricted Subsidiary, and that has not been
reclassified as a Subsidiary, pursuant to the terms of the Indenture.
"Voting Stock" means with respect to any Person, securities of any
class or classes of Capital Stock in such Person entitling the holder thereof
(whether at all times or at the times that such class of Capital Stock has
voting power by reason of the happening of any contingency) to vote in the
election of members of the board of directors or comparable body of such Person.
"Wholly Owned Subsidiary" means any Subsidiary to the extent (i) all of
the Capital Stock or other ownership interests in such Subsidiary, other than
any directors' qualifying shares mandated by applicable law, is owned directly
or indirectly by the Company or (ii) such Subsidiary is organized in a foreign
jurisdiction and is required by the applicable laws and regulations of such
foreign jurisdiction to be partially owned by the government of such foreign
jurisdiction or individual or corporate citizens of such foreign jurisdiction in
order for such Subsidiary to transact business in such foreign jurisdiction,
provided that the Company, directly or indirectly, owns the remaining Capital
Stock or ownership interest in such Subsidiary and, by contract or otherwise,
controls the management and business of such Subsidiary and derives the economic
benefits of ownership of such Subsidiary to substantially the same extent as if
such Subsidiary were a wholly owned Subsidiary.
PLAN OF DISTRIBUTION
Each broker-dealer that receives New Notes for its own account pursuant
to the Exchange Offer must acknowledge that it will deliver a prospectus in
connection with any resale of such New Notes. This Prospectus, as it may be
amended or supplemented from time to time, may be used by a broker-dealer in
connection with the resale of New Notes received in exchange for the Old Notes
if such Old Notes were acquired as a result of market-making activities or other
trading activities. The Company has agreed that, beginning on the Expiration
Date and ending on the close of business one year after the Expiration Date, it
will make this Prospectus, as amended or supplemented, available to any
broker-dealer for use in connection with any such resale.
The Company will not receive any proceeds from any sale of New Notes by
broker-dealers. New Notes received by broker-dealers for their own account
pursuant to the Exchange Offer may be sold from
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time to time in one or more transactions in the over-the-counter market, in
negotiated transactions, through the writing of options on the New Notes or a
combination of such methods of resale, at market prices prevailing at the time
of resale, at prices related to such prevailing market prices or negotiated
prices. Any such resale may be made directly to purchasers or to or through
brokers or dealers who may receive compensation in the form of commissions or
concessions from any such broker-dealer and/or the purchasers of any such New
Notes. Any account pursuant to the Exchange Offer and any broker or dealer that
participates in a distribution of such Notes may be deemed to be an
"underwriter" within the meaning of the Securities Act and any profit of any
such resale of New Notes and any commissions or concessions received by any such
persons may be deemed to be underwriting compensation under the Securities Act.
The Letter of Transmittal states that by acknowledging that it will deliver and
by delivering a prospectus, a broker-dealer will not be deemed to admit that it
is an "underwriter" within the meaning of the Securities Act.
For a period of one year after the Expiration Date, the Company will
promptly send additional copies of this Prospectus and any amendment or
supplement to this prospectus to any broker-dealer that requests such documents
in the Letter of Transmittal. The Company has agreed to pay all expenses
incident to the Exchange Offer (including the expenses of one counsel for the
Holders of the Notes) other than commissions or concessions of any brokers or
dealers and will indemnify the Holders of the Notes (including any
broker-dealers) against certain liabilities, including liabilities under the
Securities Act.
LEGAL MATTERS
The validity of the Notes offered hereby and certain legal matters
relating thereto will be passed upon on behalf of Hvide by Dyer Ellis & Joseph
PC, Washington, D.C.
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.
The combined statements of assets to be sold of Care Offshore, Inc. as
of December 31, 1995 and 1996 and the related combined statements of vessel
operations for the years then ended appearing in Hvide Marine Incorporated's
Registration Statement (Form S-3 No. 333-42039), filed with the Securities and
Exchange Commission, have been audited by ATAG Ernst & Young SA, independent
auditors, as set forth in their report thereon and included therein and
incorporated herein by reference. Such combined 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.
The consolidated financial statements of Bay Transportation Corporation
as of December 31, 1996 and 1995 and for each of the two years in the period
ended December 31, 1996 incorporated in this Prospectus by reference to the
Registration Statement on Form S-3, Registration No. 333-42039 of Hvide Marine
Incorporated have been so incorporated in reliance on the report of Price
Waterhouse LLP, independent certified public accountants, given on the authority
of said firm as experts in auditing and accounting.
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The statements of net assets to be acquired of the Marine Division of
Gulf Marine Maintenance and Offshore Service Company L.L.C., Dubai as at
December 31, 1996 and 1995 and related statements of revenues, direct expenses
and departmental overheads before corporate expenses and interest for the years
then ended, incorporated by reference in this Prospectus and the Exchange Offer
Registration Statement of which this Prospectus forms a part, have been audited
by Deloitte Touch, independent auditor, as stated in their report with respect
thereto and are incorporated herein by reference in reliance upon the authority
of said firm as experts in accounting and auditing.
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