-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, M0vJ5F8gCeZ6lGitU0Iho99JnkG71FWX/N2i3D/i63g7LhtQl8OfxX34GKyXWsTF X7c6G8Cmge1KejP8xJs5GA== 0000925328-00-000043.txt : 20000510 0000925328-00-000043.hdr.sgml : 20000510 ACCESSION NUMBER: 0000925328-00-000043 CONFORMED SUBMISSION TYPE: S-3/A PUBLIC DOCUMENT COUNT: 5 FILED AS OF DATE: 20000509 FILER: COMPANY DATA: COMPANY CONFORMED NAME: HVIDE MARINE INC CENTRAL INDEX KEY: 0000922341 STANDARD INDUSTRIAL CLASSIFICATION: DEEP SEA FOREIGN TRANSPORTATION OF FREIGHT [4412] IRS NUMBER: 650524593 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-3/A SEC ACT: SEC FILE NUMBER: 333-30390 FILM NUMBER: 622375 BUSINESS ADDRESS: STREET 1: 2200 ELLER DR BLDG 27 STREET 2: PO BOX 13038 CITY: FORT LAUDERDALE STATE: FL ZIP: 33316 BUSINESS PHONE: 3055232200 MAIL ADDRESS: STREET 1: 2200 ELLER DR BLDG 27 CITY: FT LAUDERDALE STATE: FL ZIP: 33316 S-3/A 1 AMENDMENT NO. 1 As filed with the Securities and Exchange Commission on May 8, 2000 Registration No. 333-30390 ================================================================================ SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Amendment No. 1 to FORM S-3 REGISTRATION STATEMENT Under THE SECURITIES ACT OF 1933 HVIDE MARINE INCORPORATED Delaware 65-0966399 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 2200 Eller Drive, P.O. Box 13038 Fort Lauderdale, Florida 33316 (954) 524-4200 (Address, including zip code, and telephone number, including area code, of registrant's principal executive offices) --------------- Gerhard E. Kurz Chief Executive Officer 2200 Eller Drive, P.O. Box 13038 Fort Lauderdale, Florida 33316 (954) 524-4200 (Name, address, including zip code, and telephone number, including area code, of agent for service) --------------- Copies of communications to: John F. Kearney Dyer Ellis & Joseph, P.C. 600 New Hampshire Ave., N.W. Washington, D.C. 20037 (202) 944-3000 --------------- Approximate Date of Commencement of Proposed Sale to the Public: From time to time after this Registration Statement becomes effective. If the only securities being registered on this form are being offered pursuant to dividend or reinvestment plans, please check the following box.[ ] If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. [X] If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ] If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ] If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box. [ ] ================================================================================ CALCULATION OF REGISTRATION FEE:
========================================= ================= ============== =============== =================== Proposed Proposed maximum maximum offering aggregate Amount of Title of each Amount to be price offering registration class of securities registered per price(1) fee(2) to be registered security(1) - ----------------------------------------- ----------------- -------------- --------------- ------------------- Noteholder warrants 567,084 warrants (3) (3) (3) - ----------------------------------------- ----------------- -------------- --------------- ------------------- Common Stock issuable upon exercise of noteholder warrants 567,084 shares $0.01 $5,671 $100 - ----------------------------------------- ----------------- -------------- --------------- ------------------- Total $100 ========================================= ================= ============== =============== ===================
(1) Estimated solely for the purpose of computing the registration fee in accordance with Rule 457 of the Securities Act. (2) A fee of $19,670 was previously paid with respect to other securities covered by this registration statement when it was first filed on February 14, 2000. (2) This registration statement also covers the shares of common stock issuable upon exercise of the warrants. In accordance with Rule 457 (g), no separate fee is payable for the warrants. The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine. PROSPECTUS May , 2000 Subject to Completion, Dated , 2000 Hvide Marine Incorporated 6,157,244 Shares of Common Stock Class A warrants to Purchase 56,239 Shares of Common Stock Noteholder warrants to Purchase 723,861 Shares of Common Stock and Shares Issued Upon Exercise of the Class A warrants and Noteholder warrants The securities covered by this prospectus are being offered by selling security holders. Hvide Marine Incorporated ("Hvide Marine") emerged from Chapter 11 proceedings on December 15, 1999, and the selling security holders acquired their common stock and warrants in connection with the consummation of our plan of reorganization. We agreed to register these securities for resale by the selling security holders. The selling security holders will receive all of the net proceeds from the sale of these securities and will pay any underwriting discounts and selling commissions applicable to their sale. The common stock and Class A warrants are traded on the Over-the-Counter Bulletin Board under the symbols "HVDM" for the common stock and "HVDMW" for the warrants. The noteholder warrants are not currently traded on any market. See "Risk Factors" beginning on page 3 for a discussion of risk factors to be considered in connection with an investment in the common stock or warrants. These securities have not been approved or disapproved by the Securities and Exchange Commission or any state securities commission nor has the Securities and Exchange Commission or any state securities commission passed upon the accuracy or adequacy of this prospectus. Any representation to the contrary is a criminal offense. TABLE OF CONTENTS
Item Page About this Prospectus.............................................................................................3 Hvide Marine Incorporated.........................................................................................3 Risk Factors......................................................................................................4 Our Recent Bankruptcy and Reorganization.........................................................................10 Description of Capital Stock.....................................................................................13 Description of Class A Warrants..................................................................................18 Description of Noteholder Warrants...............................................................................20 Selling Security Holders.........................................................................................22 Plan of Distribution.............................................................................................23 Experts..........................................................................................................26 Where You Can Find More Information..............................................................................26 Documents Incorporated by Reference..............................................................................26
ABOUT THIS PROSPECTUS This prospectus is a part of a registration statement that we have filed with the SEC using a "shelf registration" process. You should read both this prospectus and any supplement, together with the additional information described under "Where You Can Find More Information." You should rely only on the information provided or incorporated by reference in this prospectus or any supplement. We have not authorized anyone else to provide you with additional or different information. The common stock and warrants are not being offered in any state where the offer is not permitted. You should not assume that the information in this prospectus or any supplement is accurate as of any date other than the date of such documents. HVIDE MARINE INCORPORATED We provide marine support and transportation services domestically and internationally, primarily serving the energy and chemical industries. We have been an active consolidator in each of the markets in which we operate, increasing our fleet from 23 vessels in 1993 to 274 vessels at year-end 1999. Our three principal markets are domestic and international offshore energy support services, domestic offshore and harbor towing services, and transportation of specialty chemicals and petroleum products in the U.S. domestic trade. Our offshore energy support fleet provides services to operators of offshore oil and gas exploration, development and production facilities in the Gulf of Mexico, the Arabian Gulf, offshore West Africa and Southeast Asia. We are the sole provider of commercial tug services at Port Everglades and Port Canaveral, Florida, and a leading provider of those services in Tampa, Florida, Mobile, Alabama, Lake Charles, Louisiana, and Port Arthur, Texas. Our domestic transportation fleet includes five new double-hull chemical and petroleum product carriers delivered in 1998 and 1999. Our principal offices are located at 2200 Eller Drive, P.O. Box 13038, Fort Lauderdale, Florida 33316, and our telephone number is (954) 524-4200. On September 9, 1999, we filed a petition under chapter 11 of the U.S. Bankruptcy Code. We emerged from bankruptcy proceedings when our plan of reorganization became effective on December 15, 1999. For more information on our bankruptcy and other recent developments, see "Our Recent Bankruptcy and Reorganization." RISK FACTORS In addition to the other information contained and incorporated by reference in this prospectus, you should carefully consider the following risk factors. These are the risks that we believe are material to our company and an investment in our shares and warrants at this time. Depressed industry conditions and substantial cash requirements have adversely affected our earnings and liquidity and may cause us to violate a covenant in our bank credit agreement. Beginning in mid-1998, there was a severe downturn in offshore oil and gas exploration, development and production activities in all markets in which our offshore energy support fleet operates. This downturn, which was primarily a result of a worldwide decline in oil and gas prices, resulted in a substantial decline in vessel rates and utilization throughout our industry and adversely affected our operating results. As a result, we have experienced substantial declines in revenue, earnings before interest, taxes and depreciation, or EBITDA, and net losses. Our offshore energy support business is not expected to fully recover unless recent oil and gas price increases are sustained, leading to upturns in exploration, development and production activities. Through the first quarter of 2000, recent price increases have not led to an upturn in these activities. If there is no significant increase in those activities, our liquidity will continue to be adversely affected, and our cash flow from operations and cash on hand will not be sufficient to satisfy our short-term working capital needs, capital expenditures, debt service requirements and lease and other payment obligations. The actual sale or possibility of the sale of substantial amounts of our common stock by the selling security holder could negatively affect the market price of our common stock. The shares of common stock offered by this prospectus, including the shares issuable upon the exercise of the warrants, constitute approximately 60.3% of our outstanding common stock and are beneficially owned by accounts managed by the selling security holder. This prospectus has been prepared to permit this holder to sell all of its common stock and warrants and the common stock underlying the warrants from time to time, if it chooses to do so, without any volume or other limitations. Sales of substantial amounts of our securities by this holder, or the possibility that substantial sales may occur, could negatively affect prevailing market prices for our securities. Our recent bankruptcy has adversely affected our ability to compete and is likely to continue to do so. We emerged from bankruptcy on December 15, 1999, the effective date of our plan of reorganization. While we were in bankruptcy, the resulting adverse publicity harmed our ability to attract new customers and to maintain favorable relationships with our existing customers and suppliers. For example, some of our suppliers required cash payments rather than extend credit, which adversely affected our liquidity. We also experienced attrition of employees in key functions. These trends may continue even though we are no longer in bankruptcy. The marine transportation industry is highly competitive, and these factors have had and are likely to continue to have an adverse effect on our ability to compete. We are highly leveraged, and our business may be harmed if we cannot maintain our operating cash flow. Although our plan of reorganization significantly reduced our debt, we still have substantial debt and debt service requirements, in absolute terms and in relation to stockholders' equity. Our ability to meet our debt service obligations will depend on a number of factors, including our ability to maintain operating cash flow. We cannot assure you that we will achieve our targeted levels of operating cash flow. Our ability to maintain or increase operating cash flow will depend upon improvement in industry conditions discussed elsewhere in these risk factors, prevailing economic conditions and other factors, many of which are beyond our control. Our inability to maintain or increase our operating cash flow may have a material adverse impact on our business and the market price of our securities. Our business is substantially dependent on the oil and gas industry, which is cyclical and is currently operating at reduced levels. Our business and operations are substantially dependent upon conditions in the oil and gas industry, particularly expenditures by oil and gas companies for offshore exploration, development and production activities. These expenditures, and hence the demand for offshore energy support and transportation services, are directly influenced by oil and gas prices, expectations concerning future prices, the cost of producing and delivering oil and gas and government regulation and policies regarding exploration and development of oil and gas reserves, including the ability of OPEC to set and maintain production levels and prices. Since mid-1998, there has been a severe downturn in the level of offshore exploration and production activity, which has adversely affected the rates we receive for and the level of utilization of our offshore energy support vessels. Offshore exploration and production expenditures may not increase in the near future, and our business will not recover until there is a significant increase in these expenditures. While oil and gas prices have recently increased, the increases are not yet generally believed to be sufficiently sustained to lead to upturns in offshore exploration, development and production activities to their previous levels. We cannot predict whether or when vessel utilization and rates will improve or the extent of any improvement. Excess vessel supply and vessel newbuilds have depressed day rates and adversely affected our operating results and have caused any recovery in the offshore energy support market to lag increases in oil and gas prices. Our offshore energy support business is affected by the supply of and demand for offshore energy support vessels. During periods when supply exceeds demand there is significant downward pressure on the rates we can obtain for our vessels. Because vessel operating costs cannot be significantly reduced, any reduction in rates adversely affects our results of operations. Currently, the industry supply of offshore energy support vessels significantly exceeds demand, and this imbalance is expected to increase with the delivery of additional vessels currently under construction or on order. Newbuilds generally have substantially greater capability than older vessels, thereby exacerbating the oversupply. In addition, because the supply of vessels currently exceeds demand, we and other vessel operators have elected to defer drydocking and other significant maintenance capital expenditures and have "cold stacked" vessels, thereby creating an additional source of vessels if vessel demand increases. Thus, before there is significant improvement in vessel day rates and utilization, exploration and production activities will have to increase to levels that will generate demand for the current excess supply, cold-stacked vessels and the newbuilds that come into service. We may be at a competitive disadvantage in responding to any improved demand in the offshore energy support industry. As a result of our need to reduce capital expenditures, we are deferring required drydockings of a number of our offshore energy support vessels that are laid up due to lack of demand. If and when increased demand should provide employment opportunities for these vessels, we might not have the capital resources with which to proceed with the required drydockings or to proceed with them on as timely a basis as our competitors that have sufficient resources. We also will be required to undertake the maintenance that has been and will be deferred due to our program to reduce expenditures. We conduct international operations, which involve additional risks. We operate vessels worldwide. Operations outside the United States involve additional risks, including the possibility of vessel seizure, foreign taxation, political instability, foreign and domestic monetary and tax policies, expropriation, nationalization, loss of contract rights, war and civil disturbances or other risks that may limit or disrupt markets. Additionally, our ability 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 that require foreign persons to employ citizens of, or purchase supplies from, a particular jurisdiction. Further, our foreign subsidiaries may face governmentally imposed restrictions on their ability to transfer funds to their parent company. Our offshore energy support fleet includes many older vessels. The average age of our offshore energy support vessels, based on the later of the date of construction or rebuilding, is approximately 18 years, and approximately 31% of these vessels are more than 20 years old. We believe that after a vessel has been in service for approximately 30 years, repair, vessel certification and maintenance costs may not be economically justifiable. We may not be able to maintain our fleet by extending the economic life of existing vessels through major refurbishment or by acquiring new or used vessels. Our business is subject to environmental risk and regulations. Our operations are subject to federal, state, local and foreign laws and regulations relating to safety and health and environmental protection, including the generation, storage, handling, emission, transportation and discharge of hazardous and non-hazardous materials. The trend in environmental legislation and regulation is generally toward stricter standards, and this trend will likely continue. If we fail to comply with these regulations, we could face substantial liability for damages, remediation costs and penalties associated with oil or hazardous-substance spills or other discharges into the environment involving our vessel operations. Damages under these regulations are defined broadly to include: o natural resource damages and the costs of assessment; o damages for injury to or losses resulting from destruction of property; o net loss of taxes, royalties, rents, fees and profits by the U.S. federal, state, local and foreign governments; o lost profits from property or natural resource damage; o the net costs of providing increased or additional public services necessitated by a spill response, including protection from fire, safety or other hazards; and o the loss of subsistence use of natural resources. Our shoreside operations are also subject to federal, state, local and foreign environmental laws and regulations. In addition, tanker owners and operators are required to establish and maintain evidence of financial responsibility with respect to potential oil spill liability. We currently satisfy this requirement through self-insurance or third-party insurance. Amendments to existing laws and regulations or new laws and regulations may be adopted that could limit our ability to do business or increase our cost of doing business. Our business involves hazardous activities and other risks of loss against which we may not be adequately insured. Our business is affected by a number of risks, including the mechanical failure of our 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 the loss of revenues and increased costs and other liabilities. Although our losses from such hazards have not historically exceeded our insurance coverage, there can be no assurance that this will continue to be the case. The Oil Pollution Act of 1990, known as OPA 90, imposes virtually unlimited liability upon vessel owners, operators and certain charterers for certain oil pollution accidents in the United States. This has made liability insurance more expensive and has also prompted insurers to consider reducing available liability coverage. While we maintain 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, and that any particular claim will be paid. In addition, we may not be able to procure adequate insurance coverage at commercially reasonable rates in the future. Because we maintain mutual insurance, we are 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 shortfalls could have a material adverse impact on our financial condition. We could lose Jones Act protection, which would result in additional competition in the markets we serve. A substantial portion of our operations is conducted in the U.S. domestic trade. Under the U.S. coastwise laws, known as the Jones Act, this trade is restricted to vessels built in the United States, owned and manned by U.S. citizens and registered under U.S. law. There have been repeated attempts to repeal the Jones Act, and these attempts are expected to continue in the future. Repeal of the Jones Act would result in additional competition from vessels built in lower-cost foreign shipyards and owned and manned by foreign nationals accepting lower wages and benefits than U.S. citizens, which could have a material adverse effect on our business. Over time, we will have to remove some of our vessels from petroleum product transport service in U.S. waters. OPA 90 establishes a phase-out schedule, depending upon vessel size and age, for single-hull vessels carrying crude oil and petroleum products. The phase-out dates for our single-hull carriers are as follows: HMI Trader -- 2000, Seabulk Magnachem -- 2007, HMI Defender -- 2008, HMI Dynachem -- 2011, HMI Petrochem -- 2011 and Seabulk America -- 2015. The phase-out date for some of our 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 phase-out dates. However, these vessels may be taken out of service for other reasons prior to their OPA 90 phase-out dates. Although our remaining vessels are not subject to mandatory retirement, and we employ what we believe to be a satisfactory maintenance program for all our vessels, we may not be able to maintain our fleet by extending the economic lives of existing vessels or acquiring new or used vessels. There are restrictions on foreign ownership of our stock, which could require a non-U.S.-citizen investor to sell its stock to us. In order to maintain our eligibility to operate vessels in the U.S. domestic trade, 75% of our outstanding common stock is required to be held by U.S. citizens. Although our certificate of incorporation contains provisions limiting non-U.S.-citizen ownership of our capital stock, we could lose our ability to conduct operations in the domestic trade if these provisions prove unsuccessful in maintaining the required level of citizen ownership. Loss of this ability would harm our business. As a result of this limitation upon the non-U.S.-citizen ownership of our common stock, any non-U.S.-citizen holder of our common stock may, to the extent such ownership would cause 25% or more of our outstanding common stock to be held by non-U.S.-citizens, be required to sell its common stock to us. There is no established trading market for our equity securities. Although our common stock was previously traded on the Nasdaq National Market, Nasdaq halted trading of our shares when we initiated our chapter 11 reorganization. Our new common stock and warrants were issued as of December 15, 1999, the effective date of our plan of reorganization, and do not have an established trading market. As a result, there may be little liquidity in the market for these securities, market prices may not reflect their true value, and market prices may change substantially in response to changes in the supply of and demand for the securities. The Class A warrants may expire before the market price of the common stock exceeds their exercise price. The market price of the common stock may never exceed the Class A warrant exercise price of $38.49 per share, or may exceed the exercise price only after the Class A warrants expire on December 14, 2003. As a result, a purchaser of the Class A warrants may never be able to obtain value through the exercise of the warrants. We are authorized to issue preferred stock without stockholder approval, and the preferential rights of preferred stock holders may be detrimental to the interests of holders of common stock. We are authorized to issue preferred stock without stockholder approval. If we issue preferred stock, it may have dividend, liquidation and voting rights senior to those of our common stock. As a result, the effects of an issuance of preferred stock could include: o reduction of the amount of cash otherwise available for payment of dividends on our common stock, o dilution of the voting power of our common stock if the preferred stock has voting rights, and o restriction of the rights of holders of our common stock to share in our assets upon liquidation until satisfaction of any liquidation preference granted to the holders of preferred stock. In addition, so-called "blank check" preferred stock may be viewed as having possible anti-takeover effects, if it were used to make a third party's attempt to gain control of our company more difficult, time consuming or costly. We have no current plans to issue preferred stock as an anti-takeover device or otherwise, and our borrowing agreements restrict our ability to issue preferred stock. Our borrowing agreements contain covenants that restrict our activities. Our borrowing agreements o require us to meet various financial tests, including the maintenance of minimum levels of earnings before interest, taxes, depreciation, and amortization, or EBITDA, and of minimum ratios of leverage, debt service and indebtedness to net worth, o limit liens, o limit additional borrowing, o limit our ability to make investments, o limit payments, including dividends on shares of any class of capital stock, and o limit our ability to do other things, such as entering into business transactions, including mergers and acquisitions. These provisions could limit our future ability to continue to pursue actions or strategies that we believe would be beneficial to our company or our stockholders. Forward-Looking Statements This prospectus and the information it incorporates by reference include forward-looking statements. These are statements that address activities, events or developments that we expect, project, believe or anticipate will or may occur in the future. Examples include statements about 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 similar matters. These statements are based on assumptions and analyses made by our management 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. These statements are subject to a number of assumptions, risks and uncertainties, including the risk factors discussed in this prospectus, 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 us, changes in laws or regulations and other factors, many of which are beyond our control. We caution you that these forward-looking statements are not guarantees of future performance and that actual results or developments may differ materially from those we project. OUR RECENT BANKRUPTCY AND REORGANIZATION The events leading to the bankruptcy Between 1997 and early 1999, we completed a number of acquisitions and built new vessels that substantially expanded our offshore energy support operations into several new international markets, increased the deepwater capability of our offshore energy support fleet, and increased our domestic offshore and harbor towing and petroleum product transportation operations. Our principal sources of cash to finance these acquisitions were bank borrowings, cash provided by operations, proceeds from two public offerings of common stock, proceeds from an offering of $119.0 million of trust preferred securities and proceeds from an offering of $300.0 million principal amount of senior notes. The significant increase in our indebtedness incurred to finance these acquisitions and newbuilds placed great demands on our capital resources beginning in late 1997, when market forces brought about a precipitous decline in our revenues. The revenues of our offshore energy support fleet are dependent upon the level of offshore oil and gas exploration, development and production activities, which are in turn heavily dependent upon the prevailing price of crude oil and natural gas. Beginning in late 1997 and continuing through 1998 and the first half of 1999, crude oil prices declined substantially, which resulted in a severe downturn in these offshore activities, and in turn, in the revenues of our offshore energy support operations. As a result of this decline in revenues, we experienced a liquidity crisis beginning in mid-1998 and were unable to comply with some of the financial covenants in our bank loan agreement. Although the lending banks agreed to modifications of these covenants, the continuing decline in our revenues caused us to be unable to comply with the modified financial covenants at the end of the first quarter of 1999. As a consequence, our independent auditors' report on our 1998 financial statements (issued at the end of March 1999) included an explanatory paragraph stating that the reduction in revenues and noncompliance with the loan agreement covenants raised substantial doubt about our ability to continue as a going concern. Our lending banks agreed to further waivers of our noncompliance with covenants, which were accompanied by substantial fees and increases in interest rates. Despite these waivers, adoption of a cash management program and reduction in operating and overhead expenses during 1999, we were unable to make a $12.5 million interest payment due August 16, 1999 on our $300.0 million of senior notes. Discussions with an informal committee of holders of the senior notes and our trust preferred securities led to our filing of a petition under chapter 11 of the U.S. Bankruptcy Code on September 9, 1999. The reorganization Under our reorganization plan, which became effective on December 15, 1999: o the holders of the $300.0 million of senior notes received 9,800,000 shares of our common stock in exchange for their notes; o the holders of the $115.0 million of trust preferred securities received 200,000 shares of our common stock, as well as Class A warrants to purchase an additional 125,000 shares, in exchange for those securities; o stockholders received Class A warrants to purchase a total of 125,000 shares of our common stock; o noteholder warrants to purchase 6.75% of our common stock on a fully diluted basis after giving effect to the exercise of these warrants, exercisable at a nominal purchase price for seven and one-half years, were issued to purchasers of our new senior secured second notes described below; o claims of general and trade creditors were unaffected; and o we reincorporated from Florida to Delaware. The 9,800,000 shares received by the holders of the senior notes represent 98.0% of our currently outstanding common stock and 89.3% of our common stock on a fully diluted basis after assuming exercise of all the Class A warrants and the noteholder warrants. The 200,000 shares received by holders of the trust preferred securities represent 2.0% of our currently outstanding common stock and 1.8% of our common stock on a fully diluted basis. We also obtained new credit facilities from a group of financial institutions. The new facilities, totaling $320.0 million, consist of $200.0 million in term loans, a $25.0 million revolving credit facility, and $95.0 million in aggregate principal amount at maturity of new 12 1/2% senior secured notes due 2007. A portion of the proceeds from these facilities was used to repay all outstanding borrowings under our bank loans and to pay administrative and other fees and expenses. The balance of the proceeds will be used for working capital and general corporate purposes. As discussed under "--Recent Developments," we are required to attain the consent of the lending banks to borrow in excess of $17.5 million under the revolving credit facility. The terms of the term loans and revolving credit facility are contained in a credit agreement between us and the financial institutions. The credit agreement provides for the following facilities: Facility Amount Maturity o A term loan $75 million 2004 o B term loan $30 million 2005 o C term loan $95 million 2006 o Revolving loan $25 million 2004 The interest rate for borrowings under the credit agreement is set from time to time at our option, subject to certain conditions set forth in the credit agreement, at either: o the higher of the rate that the administrative agent announces from time to time as its prime lending rate and 1/2 of 1% in excess of the overnight federal funds rate, plus a margin ranging from 2.25% to 4.25% or o a rate based on a percentage of the administrative agent's quotation to first-class banks in the New York interbank Eurodollar market for dollar deposits, plus a margin ranging from 3.25% to 4.25%. Borrowings under the credit agreement are secured by first priority perfected security interests in substantially all of the equity of our subsidiaries and by first priority perfected security interests in substantially all of the vessels and other assets owned by us and our subsidiaries. In addition, substantially all of our subsidiaries have guaranteed our obligations under the credit agreement. The credit agreement contains customary covenants that require us, among other things, to meet certain financial ratios and that prohibit us from taking certain actions and entering into certain transactions. The senior secured notes are our senior obligations and are secured by a second priority lien on the assets that secure borrowings under the credit agreement. The notes are unconditionally guaranteed by all of our subsidiaries that have guaranteed borrowings under the credit agreement. The notes were issued at 90.0% of their face value for gross proceeds of $85.5 million. The notes were issued under an indenture among us, the subsidiary guarantors and financial institutions serving as trustee and collateral agent. The indenture contains customary covenants that, among other things, restrict our ability to incur additional debt, sell assets, and engage in mergers and transactions with affiliates. The indenture provides that if the notes have not been rated by Moody's and Standard & Poor's prior to April 15, 2000 or have not received a rating better than Caa1 from Moody's and a rating better than CCC+ from Standard & Poor's by April 15, 2000, the interest rate on the notes will increase to 13.5% from the issue date, with the increase payable in additional notes. As of April 15, 2000, the notes had not been rated by Moody's or Standard & Poor's and, accordingly, the additional interest became payable. The interest rate will be reduced to 12.5% when the notes are rated better than Caa1 and CCC+. Although we are currently seeking to obtain ratings for the notes, we may be unable to obtain ratings that will reduce the interest rate to 12.5%. As consideration for the purchase of the notes and as compensation for certain financial services, we issued to the purchasers of the notes noteholder warrants to purchase 723,861 shares of our common stock at an exercise price of $.01 per share for a term of seven and one-half years. Recent Developments Due to continuing weakness in day rates and utilization in the offshore energy support business, as well as adverse market conditions in our towing and transportation businesses, we anticipated that earnings would be lower than expected in the first quarter of 2000. As a result, we were not in compliance with certain covenants in our bank credit agreement as of March 31, 2000. We have entered into an amendment to our credit agreement with the lending banks under which the relevant covenants have been modified through March 31, 2001 and we are required to prepay principal under the term loans aggregating cumulative amounts of $10 million before June 30, 2000, $35 million before August 31, 2000, and $60 million before January 1, 2001. We intend to sell vessels and other assets to obtain the funds with which to make these payments. Some of these sales may be at less than book value. The amended credit agreement further provides that, in the event we have not made the required principal payments as scheduled or achieved certain target levels of EBITDA for the third and fourth quarters of 2000, the lending banks may require us to sell additional vessels, to be selected by the lending banks, with an aggregate fair market value of $35 million on a timetable specified by the lending banks. Additionally, we are required to obtain the consent of the lending banks to borrow in excess of $17.5 million under the revolving loan portion of the credit facility. We are required to pay a fee of $4.5 million to the lending banks in connection with the amendment of the credit agreement, payable in the form of a promissory note, accruing interest at 15% per annum, due the earlier of (i) April 2002 and (ii) the date on which the ratio of funded indebtedness to EBITDA for any quarter is less than four to one. DESCRIPTION OF CAPITAL STOCK We are authorized to issue 20,000,000 shares of common stock, par value $0.01 per share, and 5,000,000 shares of preferred stock, without par value. As of April 1, 2000, 10,000,000 shares of common stock were issued and outstanding. We have not issued any preferred stock. Common Stock Holders of our common stock are entitled to one vote for each share held of record on all matters submitted to a vote of the stockholders, including the election of directors. They do not have cumulative voting rights. Subject to preferences that may be applicable to any outstanding series of preferred stock, holders of our common stock are entitled to share ratably in any dividends that may be declared by our Board of Directors out of legally available funds. Upon any liquidation, dissolution or winding up of Hvide Marine, the holders of common stock will be entitled to share ratably in the net assets legally available for distribution to shareholders, in each case after payment of all of our liabilities and subject to preferences that may be applicable to any series of preferred stock then outstanding. Holders of common stock have no preemptive or conversion rights or other rights to subscribe for additional shares. There are no sinking fund provisions applicable to the common stock. Subject to applicable law, we may, at the discretion of our Board, redeem shares of our common stock if the provisions described under "-Limitation on Stock Ownership by Non-U.S. Citizens" are not met. The rights, preferences and privileges of holders of common stock are subject to the rights of the holders of shares of any series of preferred stock that we may designate and issue in the future. Preferred Stock Our Board has the authority, without further action by the stockholders, to issue from time to time shares of preferred stock in one or more series. The Board may fix the number of shares, designations, preferences, powers and other special rights of the preferred stock. The preferences, powers, rights and restrictions of different series of preferred stock may differ. The issuance of preferred stock could decrease the amount of earnings and assets available for distribution to holders of common stock or affect adversely the rights and powers, including voting rights, of the holders of common stock. The issuance may also have the effect of discouraging, delaying or preventing a change in control of Hvide Marine, regardless of whether the transaction may be beneficial to stockholders. We have no current plans to issue any shares of preferred stock. Delaware Law and Certain Charter and By-law Provisions Section 203 of the General Corporation Law of Delaware (the "GCL"), an antitakeover law, prohibits a publicly held Delaware corporation from engaging in a "business combination" with an "interested stockholder" for a period of three years after the date of the transaction in which the person became an interested stockholder. There are several exceptions that permit an interested stockholder to engage in a business combination, including if prior to the date the stockholder became an interested stockholder the Board approves either the business combination or the interested stockholder transaction, or if the business combination is approved by our Board and authorized by a vote of at least 66 2/3% of the outstanding voting stock of the corporation not owned by the interested stockholder. A "business combination" includes mergers, asset sales and other transactions resulting in a financial benefit to the interested stockholder. Subject to some exceptions, an "interested stockholder" is a person who, together with affiliates and associates, owns, or within three years did own, 15% or more of the corporation's voting stock. Our certificate of incorporation and by-laws provide for the division of our Board into three classes as nearly equal in size as possible with staggered three-year terms. Any vacancy on the Board, however occurring, including a vacancy resulting from an enlargement of the Board, may be filled only by vote of a majority of the directors then in office. The classification of our Board and the limitation on the filling of vacancies could have the effect of making it more difficult for a third party to acquire, or of discouraging a third party from acquiring, control of Hvide Marine. Our certificate of incorporation prohibits the issuance of nonvoting equity securities. However, preferred stock having the right, voting separately as a class, to elect any directors if and when dividends payable on shares of preferred stock have been in arrears and unpaid for a specified period of time will not be deemed nonvoting equity securities. Limitation of Liability Our certificate of incorporation contains a provision eliminating, to the fullest extent permitted by the GCL, directors' personal liability to Hvide Marine and to its stockholders for monetary damages for breaches of fiduciary duty. By virtue of this provision, under the GCL, a director will not be personally liable for monetary damages for a breach of his or her fiduciary duty, except for liability arising out of: o a breach of duty of loyalty to Hvide Marine or to its stockholders, o acts or omissions not in good faith or that involve intentional misconduct or a knowing violation of law, o dividends or stock repurchases or redemptions that are unlawful under Delaware law, or o any transaction from which the director receives an improper personal benefit. This provision pertains only to breaches of duty by directors as directors and not in any other corporate capacity, such as officers. Our certificate of incorporation also provides that Hvide Marine shall, to the fullest extent permitted by the GCL, indemnify each director, officer, employee or agent against, and hold each director, officer, employee or agent harmless from, certain expenses, liabilities, and losses, including attorneys' fees. These expenses, liabilities, and losses are those reasonably incurred in connection with a proceeding brought against the director or officer by reason of the fact that he or she was a director, officer, employee or agent of Hvide Marine or was serving at our request as a director, officer, employee or agent of another entity. Under this provision, we are required to advance all reasonable costs incurred in defending any such proceeding to the fullest extent permitted by Delaware law. Limitation on Stock Ownership by Non-U.S. Citizens Our certificate of incorporation: o contains provisions limiting the aggregate percentage ownership by non-U.S. citizens (as defined below) of each class of our capital stock to 24.99% of the outstanding shares of each class to ensure that such foreign ownership will not exceed the maximum percentage of 25.0% permitted by federal law, o requires a dual stock certificate system to help determine non-U.S.-citizen ownership, and o permits the Board to make determinations reasonably necessary to ascertain such ownership and implement the limitations. These provisions are intended to protect our ability to operate our vessels in the U.S. domestic trade governed by the Jones Act, and to assure continuous compliance with the citizenship requirements of the Merchant Marine Act, 1936, as amended, and the Shipping Act, 1916, as amended, and the regulations promulgated thereunder. Under our dual stock certificate system, certificates representing shares of our common stock bear legends that designate the certificates as either "citizen" or "non-citizen," depending on the citizenship of the owner. We may also issue non-certificated shares through depositories if we determine that the depositories have established procedures that allow us to monitor the ownership of our common stock by non-U.S. citizens. For purposes of the dual stock certificate system, a "non-citizen" is defined as any person other than a citizen, and a "citizen" is defined as: o any individual who is a citizen of the U.S. by birth, naturalization, or as otherwise authorized by law; o any corporation o organized under the laws of the U.S., or a state, territory, district, political subdivision or possession thereof (each, a "state"), o of which title to not less than 75% of each class or series of its stock is beneficially owned by and vested in citizens, free from any trust or fiduciary obligation in favor of non-U.S. citizens, o of which not less than 75% of the voting power is vested in citizens, free from any contract or understanding through which voting power may be exercised directly or indirectly on behalf of non-U.S. citizens, o of which there are no other means by which control is conferred upon or permitted to be exercised by non-U.S. citizens, o whose president, chief executive officer, chairman of the board and all officers authorized to act in their absence or disability, are citizens, and o of which more than 50% of the number of its directors necessary to constitute a quorum are citizens; o any partnership, o organized under the laws of the U.S. or a state of the U.S., o all general partners of which are citizens, and o of which not less than a 75% interest is beneficially owned and controlled by, and vested in, citizens, free and clear of any trust or fiduciary obligation in favor of non-U.S. citizens; o any association o organized under the laws of the U.S. or a state of the U.S., o of which 100% of the members are citizens, o whose president, chief executive officer, or equivalent position, chairman of the board, or equivalent committee or body, and all persons authorized to act in their absence or disability, are citizens, o of which not less than 75% of the voting power is beneficially owned by citizens, free and clear of any trust or fiduciary obligation in favor of non-U.S. citizens, and o of which more than 50% of that number of its directors or equivalent persons necessary to constitute a quorum are citizens; o any limited liability company o organized under the laws of the U.S. or a state of the U.S., o of which not less than 75% of the members are citizens, and the remaining members are persons meeting the requirements of 46 U.S.C.ss.12102(a), o of which not less than 75% of the voting power is vested in citizens, free and clear of any trust or fiduciary obligation in favor of any non-U.S. citizen, o whose president or other chief executive officer or equivalent position, chairman of the board or equivalent committee or body, managing members (or equivalent), if any, and all persons authorized to act in their absence or disability are citizens and o of which more than 50% of the number of its directors or equivalent persons necessary to constitute a quorum are citizens; o any joint venture, if not an association, corporation, partnership, or limited liability company, o organized under the laws of the U.S. or a state of the U.S., and o 100% of the members are, or of which 100% of the equity is beneficially owned and vested in citizens, free and clear of any trust or fiduciary obligation in favor of any non-U.S. citizens; and o any trust o domiciled in and existing under the laws of the U.S. or a state of the U.S., o all of the trustees of which are citizens, o of which not less than a 75% interest is held for the benefit of citizens, free and clear of any trust or fiduciary obligation in favor or any non-U.S. citizens and o each beneficiary of which with an enforceable interest in the trust is a citizen. This definition is applicable at all tiers of ownership and in both form and substance at each tier of ownership. Shares of our common stock are transferable to citizens at any time and are transferable to non-U.S. citizens if, at the time of the transfer, the transfer would not increase the aggregate ownership by non-U.S. citizens of our common stock above 24.99% of the total outstanding shares. Any purported transfer to non-U.S. citizens of shares in excess of 24.99% of the outstanding shares will be ineffective as against us for all purposes, including voting, dividends, and other distributions. In addition, the shares may not be transferred on our books and we may refuse to recognize the holder as a stockholder, except to the extent necessary to effect any remedy available to us. Subject to these limitations, upon surrender of any stock certificate for transfer, the transferee will receive citizen (blue) certificates or non-U.S. citizen (red) certificates. Our certificate of incorporation establishes procedures for the transfer of shares to enforce the limitations described above. Under the procedures, before a stock certificate is issued or transferred, the recipient or transferee of the shares must provide a certificate providing information about their citizenship. If the recipient or transferee is acting as a fiduciary or nominee for a beneficial owner, the beneficial owner must provide the certificate. The issuance or transfer will be denied upon refusal to furnish the citizenship certificate. Furthermore, as part of the dual stock certificate system, depositories holding shares of our common stock will be required to maintain separate accounts for citizen and non-U.S. citizen shares. When the beneficial ownership of shares is transferred, the depositories' participants will be required to advise the depositories as to the account in which the transferred shares should be held. In addition, to the extent necessary to enable us to determine the number of shares owned by non-U.S. citizens, we may require record holders and beneficial owners of shares of common stock to confirm their citizenship status and may temporarily withhold dividends payable to, and deny voting rights to, any such record holder or beneficial owner until confirmation of citizenship is received. Should we become aware that the ownership by non-U.S. citizens of our common stock at any time exceeds 24.99% of our outstanding shares we may temporarily withhold dividends and other distributions on and to deny voting rights with respect to the excess shares. We may withhold dividends and distributions and deny voting rights pending the transfer of the excess shares such shares to a citizen or the reduction in the percentage of shares owned by non-U.S. citizens to below 25.0%. If we withhold dividends and distributions, we will set them aside for the account of the excess shares. Once the excess shares are transferred to a citizen or the aggregate ownership of shares by non-U.S. citizens is less than 25.0%, we will pay the dividends to the then record holders of the related shares. So long as the excess exists, excess shares will not be deemed to be outstanding for purposes of determining the vote required on any matter brought before the stockholders for a vote. Our Board has the power to determine which shares of common stock constitute the excess shares. The determination will be made by reference to the date or dates on which the shares were purchased by non-U.S. citizens, starting with the most recent acquisitions of shares by a non-U.S. citizen and including, in reverse chronological order, all other acquisitions of shares by non-U.S. citizens from and after the acquisition that first caused the percentage of shares owned by non-U.S. citizens to exceed 24.99%. The excess shares resulting from a determination that a record holder or beneficial owner is no longer a citizen will be deemed to have been acquired as of the date of such determination. We may redeem excess shares in order to reduce the aggregate ownership by non-U.S. citizens to 24.99%. As long as our common stock is not authorized for listing on a national securities exchange or for quotation on the Nasdaq National Market, the redemption price will be the average of the bid and asked prices furnished by any Nasdaq member firm that makes a market for the 30 trading days preceding the date of determination. If it is so listed, the redemption price will be the average of the closing sale price of the shares during the 30 trading days preceding the date of determination. The redemption price for excess shares will be payable in cash. In addition to implementing these procedures, our Board may take other ministerial actions or interpret our foreign ownership policy as it deems necessary in order to implement the policy. --------- The above statements and descriptions concerning our certificate of incorporation and by-laws summarize what we believe to be the material information in those documents, which have been filed as exhibits to the registration statement of which this prospectus is part. For information on obtaining copies of those documents, see "Where You Can Find More Information." DESCRIPTION OF CLASS A WARRANTS The Class A warrants are subject to a warrant agreement between us and State Street Bank and Trust Company as warrant agent. The following description summarizes what we believe to be the material provisions of the Class A warrant agreement. For more information, refer to the Class A warrant agreement, which is an exhibit to the registration statement of which this prospectus is part. For information on obtaining a copy of the Class A warrant agreement, see "Where You Can Find More Information." General Each Class A warrant entitles the holder to purchase one share of our common stock at an exercise price of $38.49. The exercise price and the number of shares of common stock issuable upon the exercise of the Class A warrants are both subject to adjustment in certain cases described below. The Class A warrants are exercisable at any time on or after December 15, 1999. If they are not exercised, the Class A warrants will automatically expire at 5:00 p.m. on December 14, 2003. The Class A warrants may be exercised by surrendering to the warrant agent the warrant certificates, if any, with the accompanying form of election to purchase and an application for purchase of common stock (or equivalent form with citizenship information). No Class A warrant may be exercised if such exercise causes ownership of our common stock by non-U.S. citizens to exceed the limit set by applicable law or our certificate of incorporation. These must be properly completed and executed and delivered with payment of the Class A exercise price. Payment of the Class A exercise price may be made in the form of cash or a certified or official bank check, payable to the order of Hvide Marine Incorporated. Upon surrender of the warrant certificates and payment of the Class A exercise price, the warrant agent will notify us, and we will deliver to or upon the written order of the holder, stock certificates representing the number of whole shares of common stock or other property to which the holder is entitled, including any cash payment to adjust for fractional interests in shares issuable upon exercise. If less than all of the Class A warrants evidenced by a Class A warrant certificate are exercised, a new Class A warrant certificate will be issued for the remaining number of Class A warrants. We will not be required to, but may at our option, issue fractional shares of common stock on the exercise of Class A warrants. If more than one Class A warrant is presented for exercise in full at the same time by the same holder, the number of full shares issuable upon such exercise will be computed on the basis of the aggregate number of shares issuable on exercise of the Class A warrants so presented. If any fraction of a share would be issuable on the exercise of any Class A warrant, and we elect not to issue such fractional shares, we will direct the transfer agent to pay cash equal to the then current market price per share multiplied by the fraction computed to the nearest whole cent. Certificates for Class A warrants will be issued in registered form only, and no service charge will be made for registration for transfer or exchange upon surrender of any warrant certificate at the office of the warrant agent maintained for that purpose. We may require payment of a sum sufficient to cover any tax or other governmental charge imposed in connection with registration for transfer or exchange of warrant certificates. The holders of the Class A warrants do not have the rights of stockholders, including the right to vote on matters submitted to our stockholders and the right to receive cash dividends. The holders of the Class A warrants are not entitled to share in our assets in the event of the liquidation, dissolution or winding up of our company's affairs. Adjustments The number of shares issuable upon the exercise of the Class A warrants and the Class A exercise price both are subject to adjustment in certain events. These events include if we o subdivide our outstanding shares of common stock, o combine our outstanding shares of common stock into a smaller number of shares, or o issue by reclassification of our shares of common stock any shares of our capital stock. The Class A exercise price in effect and the number of shares issuable upon exercise of each Class A warrant immediately prior to these actions will be adjusted so that the holder of any Class A warrant will be entitled to receive the number of shares of our capital stock it would have owned immediately following the action had it exercised their Class A warrants immediately prior to the action. In case of certain consolidations or mergers of our company, or the sale of all or substantially all of its assets, each Class A warrant will be exercisable for the right to receive the kind and amount of shares of stock or other securities or property to which the holder would have been entitled as a result of the consolidation, merger or sale had it exercised their Class A warrants immediately prior to the transaction. Reservation of Shares We have authorized and reserved for issuance the number of shares of our common stock that will be issuable upon the exercise of all outstanding Class A warrants. These shares of common stock, when paid for and issued, will be duly and validly issued, fully paid and non-assessable, free of preemptive rights and free from all taxes, liens, charges and security interests. Amendment We and the warrant agent may amend or supplement the warrant agreement for various purposes without consent of the holders of the Class A warrants. These include curing defects or inconsistencies or making changes that do not materially adversely affect the rights of any holder. Any amendment or supplement to the warrant agreement that has a material adverse effect on the interests of the holders of the Class A warrants requires the written consent of the holders of a majority of the then outstanding Class A warrants. The consent of each holder of the Class A warrants affected is required for any amendment increasing the Class A exercise price or decreasing the number of shares issuable upon exercise of the Class A warrants, except for adjustments provided for in the warrant agreement as described above. DESCRIPTION OF NOTEHOLDER WARRANTS The noteholder warrants are subject to a warrant agreement between us and State Street Bank and Trust Company as warrant agent, pursuant to which we issued 723,861 common stock warrants. The following description summarizes what we believe to be the material provisions of the noteholder warrant agreement. For more information, refer to the noteholder warrant agreement, which is an exhibit to the registration statement of which this prospectus is part. For information on obtaining a copy of the noteholder warrant agreement, see "Where You Can Find More Information." General Each noteholder warrant entitles the holder to purchase one share of our common stock at an exercise price of $.01 or pursuant to the cashless exercise provision in the noteholder warrant agreement. The exercise price and the number of shares of common stock issuable upon the exercise of the noteholder warrants are both subject to adjustment in certain cases described below. The noteholder warrants are exercisable at any time on or after December 15, 1999. If they are not exercised, the noteholder warrants will automatically expire at 5:00 p.m. on June 30, 2007. Holders of the noteholder warrants are entitled to purchase in the aggregate approximately 6.75% of our common stock outstanding on a fully diluted basis. The noteholder warrants may be exercised by surrendering to the warrant agent the warrant certificates, if any, with the accompanying form of election to purchase and Application for Purchase of Common Stock (or equivalent form with citizenship information). These must be properly completed and executed and delivered with payment of the noteholder exercise price. Payment of the noteholder exercise price may be made in the form of cash or a certified or official bank check, payable to the order of Hvide Marine Incorporated. Upon surrender of the warrant certificates and payment of the noteholder exercise price, the warrant agent will deliver to or upon the written order of the holder stock certificates representing the number of whole shares of common stock or other property to which the holder is entitled, including any cash payment to adjust for fractional interests in shares issuable upon exercise. If less than all of the noteholder warrants evidenced by a noteholder warrant certificate are exercised, a new noteholder warrant certificate will be issued for the remaining number of noteholder warrants. We will not issue fractional shares on the exercise of noteholder warrants. If more than one noteholder warrant is presented for exercise in full at the same time by the same holder, the number of full shares issuable upon such exercise will be computed on the basis of the aggregate number of shares issuable on exercise of the noteholder warrants so presented. If any fraction of a share would be issuable on the exercise of any noteholder warrant, we will direct the transfer agent to pay cash equal to the excess of the value (as determined by our Board in good faith) of a warrant share over the exercise price on the day before the warrant is exercised, multiplied by the fraction. Certificates for noteholder warrants will be issued in registered form only, and no service charge will be made for registration for transfer or exchange upon surrender of any warrant certificate at the office of the warrant agent maintained for that purpose. We may require payment of a sum sufficient to cover any tax imposed in connection with registration for transfer or exchange of warrant certificates. The holders of the noteholder warrants do not have the rights of stockholders, including the right to vote on matters submitted to our stockholders and the right to receive cash dividends. The holders of the noteholder warants are not entitled to share in our assets in the event of the liquidation, dissolution or winding up of our company's affairs. Adjustments The number of shares issuable upon the exercise of the noteholder warrants and the exercise price both are subject to adjustment in certain events. These events include if we o pay a dividend or make a distribution on our common stock in shares of any class of our capital stock, o subdivide our outstanding shares of common stock, o combine our outstanding shares of common stock into a smaller number of shares, or o issue by reclassification of our shares of common stock any shares of our capital stock. The noteholder exercise price in effect and the number of shares issuable upon exercise of each noteholder warrant immediately prior to these actions will be adjusted so that the holder of any noteholder warrant will be entitled to receive the number of shares of our capital stock it would have owned immediately following the action had it exercised their noteholder warrants immediately prior to the action. In addition, we will adjust the number of shares issuable upon the exercise of the noteholder warrants and/or the exercise price if we issue or sell common stock or certain rights, options or warrants for the purchase of common stock or if we make certain distributions (including any evidence of indebtedness or assets). In case of certain consolidations or mergers of our company, or the sale of all or substantially all of its assets, each noteholder warrant will be exercisable for the right to receive the kind and amount of shares of stock or other securities or property to which the holder would have been entitled as a result of the consolidation, merger or sale had it exercised their noteholder warrants immediately prior to the transaction. Reservation of Shares We have authorized and reserved for issuance the number of shares of our common stock that will be issuable upon the exercise of all outstanding noteholder warrants. These shares of common stock, when paid for and issued, will be duly and validly issued, fully paid and non-assessable, free of preemptive rights and free from all taxes, liens, charges and security interests. Amendment We and the warrant agent may amend or supplement the warrant agreement for certain purposes without consent of the holders of the noteholder warrants. These include curing defects or inconsistencies or making changes that do not materially adversely affect the rights of any holder. Any amendment or supplement to the warrant agreement that has a material adverse effect on the interests of the holders of the noteholder warrants requires the written consent of the holders of a majority of the then outstanding noteholder warrants. The consent of each holder of the noteholder warrants affected is required for any amendment increasing theexercise Price or decreasing the number of shares issuable upon exercise of the noteholder warrants, except for adjustments provided for in the noteholder warrant agreement as described above. Registration Rights We have granted holders of our noteholder warrants various registration rights. If at any time we propose or are required to register common equity securities under the Securities Act, holders of our noteholder warrants have the right to cause us to use our reasonable best efforts, following a customary notice and response period, to register the common stock underlying their warrants with our registration statement. In addition, we have agreed to effect a registration statement on up to two occasions upon demand by warrant holders owning at least 20% of the noteholder warrants. SELLING SECURITY HOLDERS The following table sets forth information with respect to the selling security holders whose shares and warrants are covered by this prospectus. The share information provided in the table below is based in part on information provided to us by the selling security holders as of April 28, 2000. We calculated beneficial ownership according to Rule 13d-3 of the Exchange Act as of this date. We may update, amend or supplement this prospectus from time to time to update the disclosure in this section. The securities included in this table do not represent all of the securities covered by the registration statement of which this prospectus is part. Additional selling security holders will be added to the table by amendment or prospectus supplement before they sell their securities. The selling security holders may from time to time offer and sell any or all of their equity securities that are registered under this prospectus. Because the selling security holders are not obligated to sell its equity securities, and because the selling security holder may also acquire our publicly traded equity securities, we cannot estimate how many equity securities the selling security holders will beneficially own after this offering. If the selling security holders sell all of the securities registered under this prospectus and does not acquire any other of our securities, they will no longer own any of our equity securities. Shares of Common Stock Beneficially Owned Before Offering Name Number Percent Entities affiliated with 6,157,244 2 60.3% 3 Loomis, Sayles & Company, L.P. 1 One Financial Center Boston, MA 02111 - -------------- (1) A Loomis, Sayles & Company, L.P. ("Loomis") officer was appointed to the creditors' committee that represented creditors of the Company in conjunction with the development of the Company's plan of reorganization under chapter 11 of the U.S. bankruptcy code. The effective date of the plan was December 15, 1999. As of the effective date, Loomis is no longer a member of any creditors' committee relating to the Company and disclaims any present intent to change or influence control of the Company's management. (2) Based on the Schedule 13D/A filed jointly on March 15, 2000 by Loomis and its general partner, Loomis, Sayles & Company, Inc. and on clerical adjustments and account terminations between March 15, 2000 and April 28, 2000, Loomis holds these securities on behalf of a number of managed accounts, two of which beneficially own more than 5% of the issued and outstanding common stock of the Company. Loomis has full discretion to manage each of these accounts through advisory agreements. Includes 56,239 shares issuable upon the exercise of Loomis' Class A warrants and 155,366 shares issuable upon exercise of Loomis' noteholder warrants, assuming that no anti-dilution or other adjustments are required on or before the date of exercise, that were exercisable within 60 days of the date hereof. (3) The percentages are calculated on the basis of the amount of outstanding shares of common stock as of April 1, 2000, which is 10,000,000, plus shares of common stock underlying each holder's options and warrants which have been issued and are exercisable within 60 days hereof. The selling security holders received the shares of common stock and the Class A warrants in connection with our plan of reorganization in respect of securities held before the reorganization. In addition, the selling security holders obtained warrants to purchase 723,861 shares of common stock in connection with the acquisition of our 12 1/2% senior secured notes due 2007. In connection with our plan of reorganization, we entered into a registration rights agreement where we agreed to file a registration statement on an appropriate form under the Securities Act with respect to the equity securities offered hereby and any debt securities held by the selling security holders. We further agreed that we will use our best efforts to cause this registration statement to be declared effective and to keep it continuously effective, subject to customary limitations, so as to permit or facilitate the sale or distribution of these securities. In addition, the selling security holders may make unlimited demands on us for registration under the Securities Act and have customary "piggyback" registration rights to include their equity securities in other registration statements we file. Pursuant to this registration rights agreement, we have agreed to pay expenses in connection with the performance of the obligations to effect the shelf, demand and piggyback registrations other than underwriting fees, discounts, commissions or other similar selling expenses. We have also agreed to indemnify the selling security holders against certain liabilities, including liabilities under the Securities Act. PLAN OF DISTRIBUTION Who may sell and applicable restrictions We will not receive any of the proceeds from the sale of securities offered hereby. The selling security holders will be offering and selling all securities offered and sold under this prospectus. Alternatively, the selling security holders may from time to time offer the securities through brokers, dealers or agents that may receive compensation in the form of discounts, concessions or commissions from the selling security holders and/or the purchasers of the securities for whom they may act as agent. In effecting sales, broker-dealers that are engaged by the selling security holders may arrange for other broker-dealers to participate. The selling security holders and any brokers, dealers or agents who participate in the distribution of the securities may be deemed to be underwriters, and any profits on the sale of the securities by them and any discounts, commissions or concessions received by any broker, dealer or agent may be deemed to be underwriting discounts and commissions under the Securities Act. To the extent the selling security holders may be deemed to be underwriters, they may be subject to statutory liabilities, including, but not limited to, Sections 11, 12 and 17 of the Securities Act and Rule 10b-5 under the Exchange Act. Manner of sales The selling security holders will act independently of us in making decisions with respect to the timing, manner and size of each sale. Sales of our equity securities may be made over the over-the-counter market. The securities may be sold at then prevailing market prices, at prices related to prevailing market prices or at negotiated prices. The selling security holders may also resell all or a portion of the securities in open market transactions in reliance upon Rule 144 under the Securities Act, provided that the securities meet the criteria and conform to the requirements of this rule. The selling security holders may decide not to sell any of the securities offered under this prospectus, and they may transfer, devise or gift these securities by other means. The securities may be sold according to one or more of the following methods: o a block trade in which the broker or dealer so engaged will attempt to sell the securities as agent but may position and resell a portion of the block as principal to facilitate the transaction; o purchases by a broker or dealer as principal and resale by the broker or dealer for its account; o ordinary brokerage transactions and transactions in which the broker solicits purchasers; o an exchange distribution under the rules of the exchange; o transactions in the over-the-counter market; o face-to-face transactions between sellers and purchasers without a broker-dealer; o by writing options; o through underwriters or dealers who may receive compensation in the form of underwriting discounts, concessions or commissions; o the pledge of the securities as security for any loan or obligation; and o a combination of any of the above transactions. Some persons participating in this offering may engage in transactions that stabilize, maintain or otherwise affect the price of the securities, including the entry of stabilizing bids or syndicate covering transactions or the imposition of penalty bids. The selling security holders and any other person participating in a distribution will be subject to applicable provisions of the Exchange Act and the rules and regulations thereunder including Regulation M. This regulation may limit the timing of purchases and sales of any of the securities by the selling security holder and any other person. The anti-manipulation rules under the Exchange Act may apply to sales of securities in the market and to the activities of the selling security holders and their affiliates. Furthermore, Regulation M of the Exchange Act may restrict the ability of any person engaged in the distribution of the securities to engage in market-making activities with respect to the particular securities being distributed for a period of up to five business days before the distribution. All of the foregoing may affect the marketability of the securities and the ability of any person or entity to engage in market-making activities with respect to the securities. Hedging and other transactions with broker-dealers In connection with distributions of the securities, the selling security holder may enter into hedging transactions with broker-dealers. In connection with these transactions, broker-dealers may engage in short sales of the registered securities in the course of hedging the positions they assume with selling security holders. A "short sale" or "selling short" involves the sale of a security that the selling security holder has borrowed. The selling security holders may purchase identical securities in the market at a later date for redelivery to the lender. The selling security holders may also enter into option or other transactions with broker-dealers which require the delivery to the broker-dealer of the registered securities. The broker-dealer may then resell or transfer these securities under this prospectus. The selling security holders may also loan or pledge the registered securities to a broker-dealer and the broker-dealer may sell the securities so loaned or, upon a default, the broker-dealer may effect sales of the pledged securities under this prospectus. Prospectus delivery Because the selling security holders may be deemed to be an underwriter within the meaning of Section 2(11) of the Securities Act, it will be subject to the prospectus delivery requirements of the Securities Act. At any time a particular offer of the securities is made, a revised prospectus or prospectus supplement, if required, will be distributed which will set forth: o the name of the selling security holders and of any participating underwriters, broker-dealers or agents; o the aggregate amount and type of securities being offered; o the price at which the securities were sold and other material terms of the offering; o any discounts, commissions, concessions and other items constituting compensation from the selling security holders and any discounts, commissions or concessions allowed or reallowed or paid to dealers; and o that the participating broker-dealers did not conduct any investigation to verify the information in this prospectus or incorporated in this prospectus by reference. The prospectus supplement or a post-effective amendment will be filed with the SEC to reflect the disclosure of additional information with respect to the distribution of the securities. Expenses associated with registration We have agreed to pay the expenses of registering the securities under the Securities Act, including registration and filing fees, printing and duplication expenses, administrative expenses and legal and accounting fees. The selling security holders will pay their own brokerage fees, if any. Suspension of this offering We may suspend the use of this prospectus if we learn of any event that causes this prospectus to include an untrue statement of a material fact or omit to state a material fact required to be stated in the prospectus or necessary to make the statements in the prospectus not misleading in the light of the circumstances then existing. If this type of event occurs, a prospectus supplement or post-effective amendment, if required, will be distributed to the selling security holders. Indemnification Pursuant to a registration rights agreement we entered into with the selling security holders in connection with the initial offer and sale of the securities by the selling security holders, we have agreed to indemnify the selling security holders against certain liabilities, including liabilities under the Securities Act. EXPERTS Ernst & Young LLP, independent certified public accountants, have audited our consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 1999, as amended on Form 10-K/A, as set forth in their report, which is incorporated by reference in this prospectus and elsewhere in the registration statement. Our financial statements are incorporated by reference in reliance on Ernst & Young LLP's report, given on their authority as experts in accounting and auditing. WHERE YOU CAN FIND MORE INFORMATION We file with the SEC annual, quarterly and current reports, proxy statements and other information required by the Securities Exchange Act of 1934, as amended. You may read and copy any document we file at the SEC's public reference rooms located at Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549, at Northwestern Atrium Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661, and at Seven World Trade Center, Suite 1300, New York, New York 10048. Please call the SEC at 1-800-SEC-0330 for further information on the public reference rooms. Copies of such material can be obtained by mail from the Public Reference Section of the SEC at 450 Fifth Street, N.W., Judiciary Plaza, Washington, D.C. 20549 at prescribed rates. Our filings with the SEC are also available to the public on the SEC's Internet web site at http://www.sec.gov. DOCUMENTS INCORPORATED BY REFERENCE The SEC allows us to incorporate by reference the information we file with it, which means that we can disclose important information to you by referring you to those documents. The information incorporated by reference is considered to be part of this prospectus, and information that we file with the SEC later will automatically update and supersede this information. The following documents filed by us are incorporated by reference in this prospectus: o our annual report on Form 10-K, including any amendments thereto, for the latest fiscal year for which such a report has been filed, o our quarterly reports on Form 10-Q and current reports on Form 8-K filed since the end of the latest fiscal year for which we have filed an annual report on Form 10-K, and o any future filings or amendments to filings incorporated by reference in this prospectus made by us with the SEC under sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act prior to the termination of the offering You may request a copy of these and any future filings, at no cost, by writing or telephoning us at: Hvide Marine Incorporated 2200 Eller Drive P.O. Box 13038 Ft. Lauderdale, Florida 33316 (954) 524-4200 Attention: Investor Relations PART II INFORMATION NOT REQUIRED IN THE PROSPECTUS Item 14. Other expenses of issuance and distribution. The following table sets forth an estimate of the expenses that will be incurred by the Registrant in connection with the distribution of the securities being registered hereby: SEC registration fee..........................................$ 19,670 Legal fees and expenses.......................................$ 30,000 Accounting fees and expenses..................................$ 15,000 State "Bluesky" filing fees and Legal fees....................$ 50,000 Miscellaneous.................................................$ 10,000 Total.........................................................$ 124,670 ================= Item 15. Indemnification of directors and officers. Generally, Section 145 of the GCL permits a corporation to indemnify certain persons made a party to an action, by reason of the fact that such person is or was a director, officer, employee or agent of the corporation or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation or enterprise if the person acted in good faith and in a manner he or she reasonably believed to be in or not opposed to the best interests of the corporation. In the case of an action by or in the right of the corporation, no indemnification may be made in respect of any matter as to which such person is adjudged liable to the corporation unless the Delaware Court of Chancery or the court in which such action was brought determines that despite the adjudication of liability such person is fairly and reasonably entitled to indemnity for such expenses. To the extent such person has been successful in the defense of any matter, such person shall be indemnified against expenses actually and reasonably incurred by him or her. The registrant's certificate of incorporation provides that it shall, to the fullest extent permitted by the GCL, indemnify each officer, director, employee, or agent. Section 102(b)(7) of the GCL enables a Delaware corporation to include a provision in its certificate of incorporation limiting a director's liability to the corporation or its stockholders for monetary damages for breaches of fiduciary duty as a director. The registrant's certificate of incorporation provides that its directors shall not be liable to the corporation or its stockholders for monetary damages for breach of fiduciary duty, except for liability for breach of duty of loyalty, for acts or omissions not in good faith involving intentional misconduct or a knowing violation of law, for liability under Section 174 of the GCL, or for any transaction from which the director derived an improper personal benefit. Item 16. Exhibits. Exhibit No. ......... Description 2.1* Debtor's First Amended Joint Plan of Reorganization, dated November 1, 1999, and related Disclosure Statement, filed with the U.S. Bankruptcy Court for the District of Delaware (incorporated by reference to Exhibits 1 and 2 to the Schedule 13D/A filed with the Commission on December 29, 1999 by Loomis, Sayles & Company, L.P. (Commission File No. 000-28732)). 3.1(a)+ Certificate of Incorporation of the Registrant 3.2+ By-laws of the Registrant 4.2+ Form of warrant Certificate of the Registrant 4.3* Indenture for the 12 1/2% Senior Secured Notes due 2007, dated December 15, 1999 among Hvide Marine Incorporated as the Issuer, the Subsidiary Guarantors named therein, State Street Bank and Trust Company as the Trustee and Bankers Trust Company as the Collateral agent (incorporated by reference to Exhibit 4.1 to the Registrant's Form 8-K filed with the Commission on December 27, 1999 (Commission File No. 000-28732)). 4.4 Warrant agreement, dated December 15, 1999, between Hvide Marine Incorporated and State Street Bank and Trust Company as warrant agent. 4.5+ Class A warrant agreement, dated as of December 15, 1999 by and between Hvide Marine Incorporated and State Street Bank and Trust Company. 5.1 Opinion of Dyer Ellis & Joseph. 10.1* Credit agreement, dated December 15, 1999, among Hvide Marine Incorporated, Bankers Trust Company as Administrative Agent, Deutsche Bank Securities Inc. as Lead Arranger and Book Manager, Meespierson Capital Corp. as Syndication Agent and Co-Arranger and the various persons from time to time parties to the agreement as Lenders (incorporated by reference to Exhibit 10.1 to the Registrant's Form 8-K filed with the Commission on December 27, 1999 (Commission File No. 000-28732)). 10.2* Common Stock Registration Rights agreement, dated December 15, 1999, among Hvide Marine Incorporated, Bankers Trust Corporation and Great American Life Insurance Company, Great American Insurance Company, New Energy Corp., American Empire Surplus Lines Insurance Company, Worldwide Insurance Company and American National Fire Insurance Company as Purchasers (incorporated by reference to Exhibit 10.2 to the Registrant's Form 8-K filed with the Commission on December 27, 1999 (Commission File No. 000-28732)). 10.3* Registration Rights Agreement for the 12 1/2% Senior Secured Notes due 2007, dated December 15, 1999, among Hvide Marine Incorporated, Bankers Trust Corporation and Great American Life Insurance Company, Great American Insurance Company, New Energy Corp., American Empire Surplus Lines Insurance Company, Worldwide Insurance Company and American National Fire Insurance Company as Purchasers (incorporated by reference to Exhibit 10.3 to the Registrant's Form 8-K filed with the Commission on December 27, 1999 (Commission File No. 000-28732)). 10.4*Registration Rights Agreement by and between Loomis, Sayles & Company, L.P. and Hvide Marine Incorporated, dated as of December 15, 1999 (incorporated by reference to Exhibit 4 to the Schedule 13D/A filed with the Commission on December 29, 1999 by Loomis, Sayles & Company, L.P. (Commission File No. 000-28732)). 10.5*First Amendment to Credit Agreement dated as of April 13, 2000 (incorporated by reference to exhibit 10.5 to the Registrant's Form 10-K for the year ended December 31, 1999. 23.1 Consent of Ernst & Young LLP. 23.2 Consent of Dyer Ellis & Joseph (included in their opinion filed as Exhibit 5.1). 24 Power of Attorney (Power of attorney with respect to certain officers and directors). 27* Financial Data Schedule. 99.1*Order, dated December 9, 1999, of the United States Bankruptcy Court for the District of Delaware, confirming the First Amended Joint Plan of Reorganization in In re: Hvide Marine Incorporated, et al., Case No. 99-3024 (PJW), including the Supplement to such Plan (incorporated by reference to Exhibit 99.1 to the Registrant's Form 8-K filed with the Commission on December 27, 1999 (Commission File No. 000-28732)). - ----------------- * Incorporated herein by reference. + Previously filed. Item 17. Undertakings. Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the provisions in Item 15 above, or otherwise, the registrant has been advised that in the opinion of the Commission such indemnification is against public policy as expressed in such act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director or officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question of whether such indemnification by it is against public policy as expressed in such act and will be governed by the final adjudication of such issue. The undersigned registrant hereby undertakes that, for purposes of determining any liability under the Securities Act of 1933, each filing of the registrant's annual report pursuant to section 13(a) or section 15(d) of the Securities Exchange Act of 1934 (and, where applicable, each filing of an employee benefit plan's annual report pursuant to section 15(d) of the Securities Exchange Act of 1934) that is incorporated by reference in the registration statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. The undersigned registrant hereby undertakes: (1) To file, during any period in which offers or sales are being made, a post-effective amendment to this Registration Statement; (a) To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933; (b) To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20 percent change in the maximum aggregate offering price set forth in the "Calculation of Registration Fee" table in the effective registration statement; and (c) To include any material information with respect to the Plan of Distribution not previously disclosed in the registration statement or any material change to such information in the registration statement; provided, however, that paragraphs (1)(a) and (1)(b) above do not apply if the information required to be included in a post-effective amendment by those paragraphs is contained in periodic reports filed with or furnished to the Commission by the registrant pursuant to section 13 or section 15(d) of the Securities Exchange Act of 1934 that are incorporated by reference in the registration statement. (2) That, for the purpose of determining any liability under the Act, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. SIGNATURES Pursuant to the requirements of the Securities Act of 1933, as amended, the registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on form S-3 and has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the city of Ft. Lauderdale, state of Florida, on May 8, 2000. HVIDE MARINE INCORPORATED By: * Gerhard E. Kurz Chief Executive Officer Pursuant to the requirements of the Securities Act of 1933, as amended, this registration statement has been signed by the following persons in the capacities and on the dates indicated.
Signature Title Date * Chief Executive Officer May 8, 2000 Gerhard E. Kurz * President, Chief Operating May 8, 2000 Eugene F. Sweeney Officer and Director * Executive Vice President, May 8, 2000 Walter S. Zorkers Chief Financial Officer, and Director (principal financial officer) * Controller (principal accounting May 8, 2000 John J. Krumenacker officer) * Director May 8, 2000 James J. Gaffney * Director May 8, 2000 John F. McGovern Director May 8, 2000 Thomas P. Moore, Jr. * Director May 8, 2000 Donald R. Shepherd * By John Kearney Attorney-in-Fact
EX-4.4 2 WARRANT AGREEMENT WARRANT AGREEMENT (the "Agreement"), dated as of December 15, 1999, between Hvide Marine Incorporated, a Delaware corporation (together with any successors and assigns, the "Company"), and STATE STREET BANK AND TRUST COMPANY, a Massachusetts chartered trust company, as Warrant Agent (the "Warrant Agent"). WHEREAS, the Company proposes to issue and sell pursuant to a Purchase Agreement, dated as of December 15, 1999, among the Company, the Guarantors named therein (the "Guarantors") and the Purchasers named therein (the "Purchasers"), $95,000,000 in aggregate principal amount at maturity of the Company's 12 1/2% Senior Secured Notes due 2007, issued under an Indenture dated as of the date hereof among the Company, the Guarantors and STATE STREET BANK AND TRUST COMPANY, as Trustee (the "Indenture"), along with 536,193 Warrants (each, including any additional Warrants as described below, a "Warrant," and collectively, the "Warrants") for the purchase of an aggregate of 536,193 shares of the Company's Common Stock, par value $.01 per share (the "Common Stock," and the shares of Common Stock issuable upon exercise of the Warrants, including any additional warrants as described below, being referred to herein as the "Warrant Shares"); and the Company has also delivered on the date hereof an additional 187,668 Warrant to purchase 187,668 Warrant Shares to the Purchasers as compensation for certain advisory fees; and WHEREAS, the Company desires the Warrant Agent to act on behalf of the Company and the Warrant Agent is willing to act in connection with the issuance, transfer, exchange and exercise of Warrants as provided herein; and WHEREAS, the holders of Warrants and Warrant Shares shall, from time to time, have certain rights and obligations with respect thereto as set forth in the Common Stock Registration Rights Agreement, dated as of December 15, 1999, among the Company and the Purchasers; NOW, THEREFORE, in consideration of the premises and mutual agreements herein, the Company and the Warrant Agent hereby agree as follows: SECTION 1. Appointment of Warrant Agent. The Company hereby appoints the Warrant Agent to act as agent for the Company in accordance with the instructions hereinafter set forth in this Agreement, and the Warrant Agent hereby accepts such appointment. SECTION 2. Warrant Certificates. The Warrants will initially be issued either in global form (the "Global Warrants"), substantially in the form of Exhibit A hereto (including footnote 1 thereto) or in registered form as definitive Warrant certificates (the "Definitive Warrants"), substantially in the form of Exhibit A hereto (excluding footnote 1 thereto). Such Global Warrants shall represent such of the outstanding Warrants as shall be specified therein and each shall provide that it shall represent the aggregate amount of outstanding Warrants from time to time endorsed thereon and that the aggregate amount of outstanding Warrants represented thereby may from time to time be reduced or increased, as appropriate. Any endorsement of a Global Warrant to reflect the amount of any increase or decrease in the amount of outstanding Warrants represented thereby shall be made by the Warrant Agent and Depository (as defined below) in accordance with instructions given by the holder thereof. The Depository Trust Company (the "Depository") shall act as the Depository with respect to the Global Warrants until a successor shall be appointed by the Company. Upon written request, a Warrant holder may receive from the Depository and Warrant Agent Definitive Warrants as set forth in Section 6 below. SECTION 3. Execution of Warrant Certificates. Certificates ("Warrant Certificates") evidencing the Global Warrants or the Definitive Warrants to be delivered pursuant to this Agreement shall be signed on behalf of the Company by its Chairman of the Board or its President, Chief Executive Officer, Chief Operating Officer, Chief Financial Officer or a Vice President and by its Secretary or an Assistant Secretary. Each such signature upon the Warrant Certificates may be in the form of a facsimile signature of the present or any future Chairman of the Board, President, Chief Executive Officer, Chief Operating Officer, Chief Financial Officer, a Vice President, Secretary or Assistant Secretary and may be imprinted or otherwise reproduced on the Warrant Certificates and for that purpose the Company may adopt and use the facsimile signature of any person who shall have been Chairman of the Board, Chief Executive Officer, President, Chief Financial Officer, Chief Operating Officer, Vice President, Secretary or Assistant Secretary, notwithstanding the fact that at the time the Warrant Certificates shall be countersigned and delivered or disposed of such person shall have ceased to hold such office. In case any officer of the Company who shall have signed any of the Warrant Certificates shall cease to be such officer before the Warrant Certificates so signed shall have been countersigned by the Warrant Agent, or disposed of by the Company, such Warrant Certificates nevertheless may be countersigned and delivered or disposed of as though such person had not ceased to be such officer of the Company; and any Warrant Certificate may be signed on behalf of the Company by any person who, at the actual date of the execution of such Warrant Certificate, shall be a proper officer of the Company to sign such Warrant Certificate, although at the date of the execution of this Warrant Agreement any such person was not such officer. Warrant Certificates shall be dated the date of countersignature by the Warrant Agent. SECTION 4. Registration and Countersignature. The Warrants shall be numbered and shall be registered on the books of the Company maintained at the principal office of the Warrant Agent in the Borough of Manhattan, City of New York (the "Warrant Register") as they are issued. Warrant Certificates shall be manually countersigned by the Warrant Agent and shall not be valid for any purpose unless so countersigned. The Warrant Agent shall, upon written instructions of the Chairman of the Board, the President, Chief Executive Officer, Chief Operating Officer, Chief Financial Officer, a Vice President, the Secretary or an Assistant Secretary of the Company, initially countersign and deliver Warrants entitling the holders thereof to purchase not more than the number of Warrant Shares referred to above in the first recital hereof and shall thereafter countersign and deliver Warrants as otherwise provided in this Agreement. The Company and the Warrant Agent may deem and treat the registered holders,(the "Holders", as listed on Schedule 1) of the Warrant Certificates as the absolute owners thereof (notwithstanding any notation of ownership or other writing thereon made by anyone) for all purposes, and neither the Company nor the Warrant Agent shall be affected by any notice to the contrary. SECTION 5. Transfer and Exchange of Warrants. The Warrant Agent shall from time to time, subject to the limitations of Section 6, register the transfer of any outstanding Warrants upon the records to be maintained by it for that purpose, upon surrender thereof duly endorsed or accompanied (if so required by it) by a written instrument or instruments of transfer in form reasonably satisfactory to the Warrant Agent, duly executed by the registered Holder or Holders thereof or by the duly appointed legal representative thereof or by a duly authorized attorney. Subject to the terms of this Agreement, each Warrant Certificate may be exchanged for another certificate or certificates entitling the Holder thereof to purchase a like aggregate number of Warrant Shares as the certificate or certificates surrendered then entitle each Holder to purchase. Any Holder desiring to exchange a Warrant Certificate or Certificates shall make such request in writing delivered to the Warrant Agent, and shall surrender, duly endorsed or accompanied (if so required by the Warrant Agent) by a written instrument or instruments of transfer in form satisfactory to the Warrant Agent, the Warrant Certificate or Certificates to be so exchanged. Upon registration of transfer, the Warrant Agent shall countersign and deliver by certified or first class mail a new Warrant Certificate or Certificates to the persons entitled thereto. The Warrant Certificates may be exchanged at the option of the Holder thereof, when surrendered at the office or agency of the Company maintained for such purpose, which initially will be the corporate trust office of the Warrant Agent in New York, New York for another Warrant Certificate, or other Warrant Certificates of different denominations, of like tenor and representing in the aggregate the right to purchase a like number of Warrant Shares. No service charge shall be made for any exchange or registration of transfer of Warrant Certificates, but the Company may require payment of a sum sufficient to cover any stamp or other tax or other governmental charge that is imposed in connection with any such exchange or registration of transfer. The Warrant Agent shall have no obligation or duty to monitor, determine or inquire as to compliance with any restrictions on transfer imposed under this Agreement or under applicable law with respect to any transfer of any interest in any Warrant (including any transfers between or among Depository participants or beneficial owners of interests in any Global Warrant) other than to require delivery of such certificates and other documentation or evidence as are expressly required by, and to do so if and when expressly required by the terms of this Agreement and to examine the same to determine substantial compliance as to form with the express requirements thereof. SECTION 6. Registration of Transfers and Exchanges. (a) Transfer and Exchange of Definitive Warrants. When Definitive Warrants are presented to the Warrant Agent with a request: (i) to register the transfer of the Definitive Warrants; or (ii) to exchange such Definitive Warrants for an equal number of Definitive Warrants of other authorized denominations, the Warrant Agent shall register the transfer or make the exchange as requested if its requirements under this Agreement are met; provided, however, that the Definitive Warrants presented or surrendered for registration of transfer or exchange: (x) shall be duly endorsed or accompanied by a written instruction of transfer in form reasonably satisfactory to the Warrant Agent, duly executed by the Holder thereof or by such Holder's attorney, duly authorized in writing; and (y) in the case of Warrants (the "Restricted Warrants") that constitute Restricted Securities (as such term is defined in Rule 144(a)(3) of the Securities Act of 1933, as amended (the "Securities Act")), such Warrants shall be accompanied, in the sole discretion of the Company, by the following additional information and documents, as applicable; it being understood, however, that the Warrant Agent need not determine whether any Warrants are Restricted Warrants and, if so, which clause (A) through (C) below is applicable: (A) if such Restricted Warrant is being delivered to the Warrant Agent by a Holder for registration in the name of such Holder, without transfer, a certification from such holder to that effect (in substantially the form of Exhibit B hereto); or (B) if such Restricted Warrant is being transferred to a qualified institutional buyer (as defined in Rule 144A under the Securities Act, a "QIB") in accordance with Rule 144A under the Securities Act or pursuant to an exemption from registration in accordance with Rule 144 under the Securities Act or Regulation S under the Securities Act or pursuant to an effective registration statement under the Securities Act, a certification to that effect (in substantially the form of Exhibit B hereto) and, with respect to transfers pursuant to Rule 144 or Regulation S, an opinion of counsel reasonably acceptable to the Company and the Warrant Agent to the effect that such transfer does not require registration under the Securities Act; or (C) if such Restricted Warrant is being transferred in reliance on another exemption from the registration requirements of the Securities Act, a certification to that effect (in substantially the form of Exhibit B hereto) and an opinion of counsel reasonably acceptable to the Company and to the Warrant Agent to the effect that such transfer does not require registration under the Securities Act. (b) Restrictions on Transfer of a Definitive Warrant for a Beneficial Interest in a Global Warrant. A Definitive Warrant may not be exchanged for a beneficial interest in a Global Warrant except upon satisfaction of the requirements set forth below. Upon receipt by the Warrant Agent of a Definitive Warrant, duly endorsed or accompanied by appropriate instruments of transfer, in form satisfactory to the Warrant Agent, together with: (A) if such Definitive Warrant constitutes Restricted Warrants, certification, substantially in the form of Exhibit B hereto, that such Definitive Warrant is being transferred to a QIB in accordance with Rule 144A under the Securities Act; and (B) written instructions directing the Warrant Agent to make, or to direct the Depository to make, an endorsement on the Global Warrant to reflect an increase in the aggregate amount of the Warrants represented by the Global Warrant, then the Warrant Agent shall cancel such Definitive Warrant and cause, or direct the Depository to cause, in accordance with the standing instructions and procedures existing between the Depository and the Warrant Agent, the number of Warrant Shares represented by the Global Warrant to be increased accordingly, or, if no Global Warrant is then outstanding, the Company shall issue and the Warrant Agent shall countersign a new Global Warrant in the appropriate amount. (c) Transfer and Exchange of Global Warrants. The transfer and exchange of Global Warrants or beneficial interests therein shall be effected through the Depository, in accordance with this Agreement (including the restrictions on transfer set forth herein) and the procedures of the Depository therefor. (d) Transfer of a Beneficial Interest in a Global Warrant for a Definitive Warrant. (i) Any person having a beneficial interest in a Global Warrant may upon request exchange such beneficial interest for a Definitive Warrant. Upon receipt by the Warrant Agent of written instructions or such other form of instructions as is customary for the Depository from the Depository or its nominee on behalf of any person having a beneficial interest in a Global Warrant and upon receipt by the Warrant Agent of a written order or such other form of instructions as is customary for the Depository or the person designated by the Depository as having such a beneficial interest containing registration instructions and, in the case of a beneficial interest in Restricted Warrants, the following additional information and documents; it being understood, however, that the Warrant Agent need not determine which clause (A) through (C) below is applicable: (A) If such beneficial interest is being transferred to the person designated by the Depository as being the beneficial owner, a certification from such person to that effect (in substantially the form of Exhibit B hereto); or (B) if such beneficial interest is being transferred to a QIB in accordance with Rule 144A under the Securities Act or pursuant to an exemption from registration in accordance with Rule 144 or Regulation S under the Securities Act or pursuant to an effective registration statement under the Securities Act, a certification to that effect from the transferee and/or transferor (in substantially the form of Exhibit B hereto), as requested by the Company and the Warrant Agent, and, with respect to transfers pursuant to Rule 144 or Regulation S, an opinion of counsel reasonably acceptable to the Company and the Warrant Agent to the effect that such transfer does not require registration under the Securities Act; or (C) if such beneficial interest is being transferred in reliance on another exemption from the registration requirements of the Securities Act, a certification to that effect from the transferee and/or transferor, as requested by the Company and the Warrant Agent (in substantially the form of Exhibit B hereto), and an opinion of counsel from the transferee or transferor reasonably acceptable to the Company and to the Warrant Agent to the effect that such transfer does not require registration under the Securities Act, then the Warrant Agent will cause, in accordance with the standing instructions and procedures existing between the Depository and the Warrant Agent, the aggregate amount of the Global Warrant to be reduced and, following such reduction, the Company will execute and, upon receipt of appropriate instructions in the form of an Officers' Certificate (as defined in the Indenture), the Warrant Agent will countersign and deliver to the transferee a Definitive Warrant. (ii) Definitive Warrants issued in exchange for a beneficial interest in a Global Warrant pursuant to this Section 6(d) shall be registered in such names and in such authorized denominations as the Depository, pursuant to instructions from its direct or indirect participants or otherwise, shall instruct the Warrant Agent in writing, provided such designation is in accordance with this Section 6(d). The Warrant Agent shall deliver such Definitive Warrants to the persons in whose names such Definitive Warrants are registered. (e) Restrictions on Transfer and Exchange of Global Warrants. Notwithstanding any other provisions of this Warrant Agreement (other than the provisions set forth in subsection (f) of this Section 6), a Global Warrant may not be transferred as a whole except by the Depository to a nominee of the Depository or by a nominee of the Depository to the Depository or another nominee of the Depository or by the Depository or any such nominee to a successor Depository or a nominee of such successor Depository. (f) Authentication of Definitive Warrants in Absence of Depository. If at any time: (i) the Depository for the Global Warrants notifies the Company that the Depository is unwilling or unable to continue as depository for the Global Warrant and a successor depository for the Global Warrant is not appointed by the Company within 90 days after delivery of such notice; or (ii) the Company, at its sole discretion, notifies the Warrant Agent in writing that it elects to cause the issuance of Definitive Warrants under this Warrant Agreement, then the Company will execute, and the Warrant Agent, upon receipt of an Officers' Certificate (as defined in the Indenture) requesting the countersignature and delivery of Definitive Warrants, will countersign and deliver Definitive Warrants, in an aggregate number equal to the aggregate number of Warrants represented by the Global Warrant, in exchange for such Global Warrant. (g) Legends. (i) Except as permitted by the following paragraph (ii), each Warrant Certificate evidencing the Global Warrants and the Definitive Warrants (and all Warrants issued in exchange therefor or substitution thereof) shall bear a legend substantially as set forth in Exhibit C. (ii) Upon any sale or transfer of a Warrant pursuant to Rule 144 under the Securities Act or an effective registration statement under the Securities Act: (A) in the case of any Warrant that is a Definitive Warrant, the Warrant Agent shall permit the Holder thereof to exchange such Restricted Warrant for a Definitive Warrant that does not bear the legend set forthin Exhibit C and rescind any related restriction on the transfer of such Warrant (i) in the case of a sale or transfer pursuant to Rule 144, after delivery by the Holder thereof of a certificate to that effect (substantially in the form of Exhibit B hereto) and accompanied by an opinion of counsel, reasonably satisfactory to the Company and the Warrant Agent, to the effect that such transfer does not require registration under the Securities Act or (ii) in the case of a sale or transfer pursuant to an effective registration statement, after delivery of evidence of such effective registration statement; and (B) any such Warrant represented by a Global Warrant shall not be subject to the provisions set forth in (i) above (such sales or transfers being subject only to the provisions of Section 6(c) hereof); provided, however, that with respect to any request for an exchange of a Warrant that is represented by a Global Warrant for a Definitive Warrant that does not bear the legend set forth in Exhibit C, which request is made in reliance upon Rule 144, the Holder thereof shall certify in writing to the Warrant Agent that such request is being made pursuant to Rule 144 (such certification to be substantially in the form of Exhibit B hereto) and shall obtain an opinion of counsel, reasonably acceptable to the Company and the Warrant Agent, to the effect that such transfer does not require registration under the Securities Act. (h) Cancellation and/or Adjustment of a Global Warrant. At such time as all beneficial interests in a Global Warrant have either been exchanged for Definitive Warrants, redeemed, repurchased or cancelled, such Global Warrant shall be returned to or retained and cancelled by the Warrant Agent. At any time prior to such cancellation, if any beneficial interest in a Global Warrant is exchanged for Definitive Warrants, redeemed, repurchased or cancelled, the number of Warrants represented by such Global Warrant shall be reduced and an endorsement shall be made on such Global Warrant, by the Warrant Agent to reflect such reduction. (i) Obligations with Respect to Transfers and Exchanges of Definitive Warrants. (i) To permit registrations of transfers and exchanges in accordance with the terms of this Agreement, the Company shall execute, and the Warrant Agent, upon receipt of appropriate instructions in the form of an Officers' Certificate, shall countersign, Definitive Warrants and Global Warrants. (ii) All Definitive Warrants and Global Warrants issued upon any registration, transfer or exchange of Definitive Warrants or Global Warrants shall be the valid obligations of the Company, entitled to the same benefits under this Warrant Agreement as the Definitive Warrants or Global Warrants surrendered upon the registration of transfer or exchange. (iii) Prior to due presentment for registration of transfer of any Warrant, the Warrant Agent and the Company may deem and treat the person in whose name any Warrant is registered as the absolute owner of such Warrant, and neither the Warrant Agent nor the Company shall be affected by notice to the contrary. SECTION 7. Terms of Warrants; Exercise of Warrants Subject to the terms of this Agreement, each Warrant Holder shall have the right, which may be exercised commencing on or after the original date of issue of the Warrants (the "Issue Date") and until 5:00 p.m., New York City time, on June 30, 2007 (the "Expiration Date"), to receive from the Company the number of fully paid and nonassessable Warrant Shares that the Holder may at the time be entitled to receive on exercise of such Warrants and payment of the Exercise Price (as defined below) then in effect for such Warrant Shares. Subject to the next paragraph of this Section, each Warrant not exercised prior to the Expiration Date shall become void and all rights thereunder and all rights in respect thereof under this Agreement and otherwise shall cease as of such time. No adjustments as to dividends will be made upon exercise of the Warrants. The initial price per share at which Warrant Shares shall be purchasable upon exercise of Warrants (the "Exercise Price") shall be $.01. The number of Warrant Shares for which a Warrant may be exercised is subject to adjustment as provided in Section 12 hereof. A Warrant may be exercised upon surrender at the office or agency of the Company maintained for such purpose, which initially will be the corporate trust office of the Warrant Agent in New York, New York, of the certificate or certificates evidencing the Warrants to be exercised with the form of election to purchase on the reverse thereof duly filled in and signed, which signature shall be guaranteed by a participant in a recognized Signature Guarantee Medallion Program, and upon payment to the Warrant Agent for the account of the Company of the Exercise Price, as adjusted as herein provided, for the number of Warrant Shares in respect of which such Warrants are then exercised. Payment of the Exercise Price may be made, in the sole discretion of the Holder, in the form of any of the following: (a) cash or a check or bank draft in New York Clearing House funds, (b) by the surrender to the Company for cancellation of a portion of the Warrants held by a Holder representing that number of unissued Warrant Shares having a Current Market Value equal to the aggregate Exercise Price of the Warrant Shares being obtained or (c) by the surrender of the applicable Warrant and without the payment of the Exercise Price in cash, for such number of Warrant Shares equal to the product of (1) the number of Warrant Shares for which such Warrants are exercisable with payment in cash of the Exercise Price as of the date of exercise and (2) the Cashless Exercise Ratio or (d) by any combination of (a), (b) and (c) above. For purposes of this Agreement, the "Cashless Exercise Ratio" shall equal a fraction, the numerator of which is the excess of the Current Market Value of the Common Stock on the date of exercise over the Exercise Price Per Share as of the date of exercise and the denominator of which is the Current Market Value of the Common Stock on the date of exercise. An exercise of a Warrant in accordance with the immediately preceding sentences through the surrender of Warrants and not with cash is herein called a "Cashless Exercise." Upon surrender of a Warrant Certificate representing more than one Warrant in connection with the Holder's option to elect a Cashless Exercise, the number of Warrant Shares deliverable upon a Cashless Exercise shall be equal to the number of Warrants that the holder specifies is to be exercised pursuant to a Cashless Exercise multiplied by the Cashless Exercise Ratio. All provisions of this Agreement shall be applicable with respect to an exercise of a Warrant Certificate pursuant to a Cashless Exercise for less than the full number of Warrants represented thereby. "Exercise Price Per Share" means the Exercise Price divided by the number of Warrant Shares for which a Warrant is then exercisable (without giving effect to the Cashless Exercise option). Subject to the provisions of Section 6 hereof, upon such surrender of Warrants and payment of the Exercise Price, the Company shall issue and cause to be delivered with all reasonable dispatch to or upon the written order of the Holder and in such name or names as the Warrant Holder may designate a certificate or certificates for the number of full Warrant Shares issuable upon the exercise of such Warrants together with cash as provided in Section 13; provided, however, that if any consolidation, merger or lease or sale of assets and subsequent liquidation of the Company is proposed to be effected by the Company as described in subsection (k) of Section 12 hereof, or a tender offer or an exchange offer for shares of Common Stock of the Company shall have been made and not terminated, upon such surrender of Warrants and payment of the Exercise Price as aforesaid, the Company shall, as soon as possible, but in any event not later than three days, other than a Saturday or Sunday or a day on which banking institutions in the State of New York are not open for business ("Business Day") thereafter, issue and cause to be delivered the full number of Warrant Shares issuable upon the exercise of such Warrants in the manner described in this sentence together with cash as provided in Section 13. Such certificate or certificates shall be deemed to have been issued and any person so named therein shall be deemed to have become a holder of record of such Warrant Shares as of the date of the surrender of such Warrants and payment of the Exercise Price. The Warrants shall be exercisable, at the election of the Holders thereof, either in full or from time to time in part and, in the event that a certificate evidencing Warrants is exercised in respect of fewer than all of the Warrant Shares issuable on such exercise at any time prior to the date of expiration of the Warrants, a new certificate evidencing the remaining Warrant or Warrants will be issued, and the Warrant Agent is hereby irrevocably authorized to countersign and to deliver the required new Warrant Certificate or Certificates pursuant to the provisions of this Section 7 and of Section 3 hereof, and the Company, whenever required by the Warrant Agent, will promptly supply the Warrant Agent with Warrant Certificates duly executed on behalf of the Company for such purpose. All Warrant Certificates surrendered upon exercise of Warrants shall be cancelled by the Warrant Agent. Such cancelled Warrant Certificates shall then be disposed of by the Warrant Agent in a manner consistent with the Warrant Agent's customary procedure for such disposal and in a manner reasonably satisfactory to the Company. The Warrant Agent shall account promptly to the Company with respect to Warrants exercised and concurrently pay to the Company all monies received by the Warrant Agent for the purchase of the Warrant Shares through the exercise of such Warrants. The Warrant Agent shall keep copies of this Agreement available for inspection by the Holders during normal business hours at its office. The Company shall supply the Warrant Agent from time to time with such numbers of copies of this Agreement as the Warrant Agent may request. SECTION 8. Payment of Taxes. The Company will pay all documentary stamp taxes attributable to the initial issuance of Warrant Shares upon the exercise of Warrants; provided, however, that the Company shall not be required to pay any tax or taxes that may be payable in respect of any transfer involved in the issue of any Warrant Certificates or any certificates for Warrant Shares in a name other than that of the registered Holder of a Warrant Certificate surrendered upon the exercise of a Warrant, and the Company shall not be required to issue or deliver such Warrant Certificates unless or until the person or persons requesting the issuance thereof shall have paid to the Company the amount of such tax or shall have established to the satisfaction of the Company that such tax has been paid. SECTION 9. Mutilated or Missing Warrant Certificates. In case any of the Warrant Certificates shall be mutilated, lost, stolen or destroyed, the Company may in its discretion issue and the Warrant Agent upon written instructions from the Company in the form of an Officers' Certificate, may countersign, in exchange and substitution for and upon cancellation of the mutilated Warrant Certificate, or in lieu of and substitution for the Warrant Certificate lost, stolen or destroyed, a new Warrant Certificate of like tenor and representing an equivalent number of Warrants, but only upon receipt of evidence satisfactory to the Company and the Warrant Agent of such loss, theft or destruction of such Warrant Certificate and a bond or indemnity, if requested, also satisfactory to them. Applicants for such substitute Warrant Certificates shall also comply with such other reasonable regulations and pay such other reasonable charges as the Company or the Warrant Agent may prescribe. SECTION 10. Reservation of Warrant Shares. The Company will at all times reserve and keep available, free from preemptive rights, out of the aggregate of its authorized but unissued Common Stock or its authorized and issued Common Stock held in its treasury, for the purpose of enabling it to satisfy any obligation to issue Warrant Shares upon exercise of Warrants, the maximum number of shares of Common Stock which may then be deliverable upon the exercise of all outstanding Warrants. The Company or, if appointed, the transfer agent for the Common Stock and every subsequent transfer agent for any shares of the Company's capital stock issuable upon the exercise of any of the rights of purchase aforesaid (the "Transfer Agent") will be authorized and directed at all times to reserve such number of authorized shares as shall be required for such purpose. The Company will keep a copy of this Agreement on file with the Transfer Agent and with every subsequent transfer agent for any shares of the Company's capital stock issuable upon the exercise of the rights of purchase represented by the Warrants. The Warrant Agent is hereby irrevocably authorized to requisition from time to time from such Transfer Agent the stock certificates required to honor outstanding Warrants upon exercise thereof in accordance with the terms of this Agreement. The Company will supply such Transfer Agent with duly executed certificates for such purposes and will provide or otherwise make available any cash which may be payable as provided in Section 13. The Company will furnish such Transfer Agent a copy of all notices of adjustments and certificates related thereto transmitted to each Holder pursuant to Section 14 hereof. The Company covenants that all Warrant Shares which may be issued upon exercise of Warrants will, upon payment of the Exercise Price therefor and issue, be validly authorized and issued, fully paid, nonassessable, free of preemptive rights and free from all taxes, liens, charges and security interests with respect to the issuance thereof. The Company will take no action to increase the par value of the Common Stock to an amount in excess of the Exercise Price, and the Company will not enter into any agreements inconsistent in any material respect with the rights of Holders hereunder. The Company will use its reasonable best efforts to obtain all such authorizations, exemptions or consents from any public regulatory body having jurisdiction thereof as may be necessary to enable the Company to perform its obligations under this Agreement. SECTION 11. Public Equity Offering of Common Stock; PORTAL. In the event that, at any time during the period in which the Warrants are exercisable, the Common Stock is not listed on any principal securities or exchanges or markets within the United States of America, the Company will use its reasonable best efforts to permit the Warrant Shares to be designated PORTAL securities in accordance with the rules and regulations adopted by the National Association of Securities Dealers, Inc. relating to trading in the Private Offerings, Resales and Trading through Automated Linkages market. SECTION 12. Adjustment of Exercise Price and Number of Warrant Shares Issuable. The Exercise Price and the number of shares of Common Stock issuable upon the exercise of each Warrant (the "Exercise Rate") is subject to adjustment from time to time upon the occurrence of the events enumerated in this Section 12. (a) Adjustment for Change in Capital Stock. If the Company: (1) pays a dividend or makes a distribution on its Common Stock in shares of its Common Stock or other capital stock of the Company; or (2) subdivides, combines or reclassifies its outstanding shares of Common Stock, then the Exercise Rate in effect immediately prior to such action shall be proportionately adjusted so that the Holder of any Warrant thereafter exercised may receive the aggregate number and kind of shares of capital stock of the Company that such Holder would have owned immediately following such action if such Warrant had been exercised immediately prior to such action or immediately prior to the record date applicable thereto, if any (regardless of whether the Warrants are then exercisable and without giving effect to the Cashless Exercise Option). The Exercise Price in effect immediately prior to such action shall be adjusted to a price determined by multiplying the Exercise Price in effect immediately prior to such action by a fraction, the numerator of which shall be the number of shares of Common Stock outstanding before giving effect to such action and the denominator of which shall be the number of shares of Common Stock and/or such other capital stock outstanding referred to in the foregoing clause (a)(1) after giving effect to such action. The adjustment shall become effective immediately after the record date in the case of a dividend or distribution and immediately after the effective date in the case of a subdivision, combination or reclassification. If after an adjustment a Holder of a Warrant upon exercise of it may receive shares of two or more classes of capital stock of the Company, the board of directors of the Company shall determine the allocation of the adjusted Exercise Price between the classes of capital stock. After such allocation, the exercise privilege and the Exercise Price of each class of capital stock shall thereafter be subject to adjustment on terms comparable to those applicable to Common Stock in this Section 12. Such adjustment shall be made successively whenever any event listed above shall occur. (b) Adjustment for Certain Issuances of Common Stock. If the Company issues or sells to any holder of its Common Stock or any Affiliate of such holder or distributes to any holder or any Affiliate of such holder any rights, options or warrants entitling them to purchase shares of Common Stock, or securities convertible into or exchangeable for Common Stock, in each case, at a price per share less than the Current Market Value on the record date for determining entitlements of any such holder of Common Stock to participate in such issuance, sale or distribution (the "Time of Determination"), the Exercise Rate shall be adjusted in accordance with the formula: and the Exercise Price shall be adjusted in accordance with the following formula: where: E' = the adjusted Exercise Rate. E = the Exercise Rate immediately prior to the Time of Determination for any such issuance, sale or distribution. EP' = the adjusted Exercise Price. EP = the Exercise Price immediately prior to the Time of Determination for any such issuance, sale or distribution. O = the number of Fully Diluted Shares (as defined below) outstanding immediately prior to the Time of Determination for any such issuance, sale or distribution. N = the number of additional shares of Common Stock issued, sold or issuable upon exercise of such rights, options or warrants. P = the offering price per share received in the case of any issuance or sale of Common Stock or rights, options or warrants inclusive of the exercise price per share of Common Stock payable upon exercise of such rights, options or warrants. M = the Current Market Value per share of Common Stock on the Time of Determination for any such issuance, sale or distribution. For purposes of this Section 12 the term "Fully Diluted Shares" shall mean (i) the shares of Common Stock outstanding as of a specified date, and (ii) the shares of Common Stock into or for which rights, options, warrants or other securities outstanding as of such date are exercisable or convertible (other than the Warrants). The adjustments shall be made successively whenever any such rights, options or warrants are issued and shall become effective immediately after the relevant Time of Determination. Notwithstanding the foregoing, the Exercise Rate and the Exercise Price shall not be subject to adjustment in connection with (i) the issuance of any shares of Common Stock upon exercise of any such rights, options or warrants which (x) have previously been the subject of an adjustment under this Agreement for which the required adjustment has been made or (y) are outstanding on the date hereof and have already been included in the number of Fully Diluted Shares and (ii) the exercise of the Warrants. If at the end of the period during which any such rights, options or warrants are exercisable, not all rights, options or warrants shall have been exercised, the Warrant shall be immediately readjusted to what it would have been if "N" in each of the above formulas had been the number of shares actually issued. No adjustment shall be made under this paragraph (b) if the application of the formula stated above in this paragraph (b) would result in a value of E' that is lower than the value of E. (c) Adjustment for Other Distribution. If the Company distributes to any holder of its Common Stock or any Affiliate of such holder (i) any evidences of indebtedness of the Company or any of its subsidiaries, (ii) any assets of the Company or any of its subsidiaries (other than cash dividends or other cash distributions that do not constitute an Extraordinary Cash Dividend), or (iii) any rights, options or warrants to acquire any of the foregoing or to acquire any other securities of the Company, the Exercise Rate shall be adjusted in accordance with the formula: E' = E x M M - F and the Exercise Price shall be decreased (but not increased) in accordance with the following formula: EP' = EP x E E' where: E' = the adjusted Exercise Rate. E = the current Exercise Rate on the record date referred to in this paragraph (c) below. EP' = the adjusted Exercise Price. EP = the current Exercise Price on the record date referred to in this paragraph (c) below. M = the Current Market Value per share of Common Stock on the record date referred to in this paragraph (c) below. F = the fair market value on the record date referred to in this paragraph (c) below of the indebtedness, assets, rights, options or warrants distributable in respect of one share of Common Stock. The adjustments shall be made successively whenever any such distribution is made and shall become effective immediately after the record date for the determination of stockholders entitled to receive the distribution. If any adjustment is made pursuant to clause (iii) above of this subsection (c) as a result of the issuance of rights, options or warrants and at the end of the period during which any such rights, options or warrants are exercisable, not all such rights, options or warrants shall have been exercised, the Warrant shall be immediately readjusted as if "F" in the above formula was the fair market value on the record date of the indebtedness or assets actually distributed upon exercise of such rights, options or warrants divided by the number of shares of Common Stock outstanding on the record date. This subsection does not apply to rights, options or warrants referred to in subsection (b) of this Section 12. (d) Current Market Value. "Current Market Value" per share of Common Stock or of any other security (herein collectively referred to as a "Security") at any date shall be: (1) if the Security is not registered under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), (i) the value of the Security determined in good faith by the board of directors of the Company and certified in a board resolution, based on the most recently completed arm's length transaction between the Company and a person other than an Affiliate of the Company and the closing of which occurs on such date or shall have occurred within the six months preceding such date or (ii) if no such transaction shall have occurred on such date or within such six-month period, the value of the Security preceding such date determined by the disinterested members of the board of directors of the Company and certified in a board resolution adopted by the disinterested members of the Company's board of directors delivered to the Holders unless the Holders of at least 33 1/3 percent of the outstanding Warrants shall object to such determination in which case the value shall be determined by an Independent Financial Expert (as defined below) in all other instances, or (2) if the Security is registered under the Exchange Act, the average of the daily closing bid prices for each Business Day during the period commencing 15 Business Days before such date and ending on the date one day prior to such date or, if the Security has been registered under the Exchange Act for less than 15 consecutive Business Days before such date, then the average of the daily closing bid prices (as defined below) for all of the Business Days before such date for which daily closing bid prices are available. If the closing bid price is not determinable for at least 10 Business Days in such period, the Current Market Value of the Security shall be determined as if the Security was not registered under the Exchange Act. The "closing bid price" for any Security on each Business Day means: (A) if such Security is listed or admitted to trading on any securities exchange, the closing price, regular way, on such day on the principal exchange on which such Security is traded, or if no sale takes place on such day, the average of the closing bid and asked prices on such day, (B) if such Security is not then listed or admitted to trading on any securities exchange, the last reported sale price on such day, or if there is no such last reported sale price on such day, the average of the closing bid and the asked prices on such day, as reported by a reputable quotation source designated by the Company or (C) if neither clause (A) nor (B) is applicable, the average of the reported high bid and low asked prices on such day, as reported by a reputable quotation service, or a newspaper of general circulation in the Borough of Manhattan, City of New York, customarily published on each Business Day, designated by the Company. If there are no such prices on a Business Day, then the market price shall not be determinable for such Business Day. "Independent Financial Expert" shall mean any nationally recognized investment banking firm reasonably acceptable to the Warrant Agent (i) that does not (and whose directors, officers, employees and Affiliates do not) have a direct or indirect material financial interest in the Company, (ii) that has not been, and, at the time it is called upon to serve as an Independent Financial Expert under this Agreement is not (and none of whose directors, officers, employees or Affiliates is) a promoter, director or officer of the Company, (iii) that has not been retained by the Company for any purpose, other than to perform an equity valuation, within the preceding twelve months and (iv) that, in the reasonable judgment of the board of directors of the Company (certified by a board resolution), is otherwise qualified to serve as an independent financial advisor. Any such person may receive customary compensation and indemnification by the Company for opinions or services it provides as an Independent Financial Expert. "Affiliate" of any specified person means any other person which directly or indirectly through one or more intermediaries controls or is controlled by, or is under common control with, such specified person. For the 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, means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such person, whether through the ownership of voting securities, by agreement or otherwise. "Extraordinary Cash Dividend" means any cash dividends with respect to the Common Stock the aggregate amount of which in any fiscal year exceeds the greater of (i) 5.0% of the net income of the Company and its subsidiaries for the fiscal year immediately preceding the payment of such dividend and (ii) $100,000. (e) When De Minimis Adjustment May Be Deferred. No adjustment in the Exercise Rate or Exercise Price need be made unless the adjustment would require an increase or decrease of at least 1% in the Exercise Rate or Exercise Price, as the case may be. Notwithstanding the foregoing, any adjustments that are not made shall be carried forward and taken into account in any subsequent adjustment, provided that no such adjustment shall be deferred beyond the date on which a Warrant is exercised. All calculations under this Section 12 shall be made to the nearest cent (one-half a cent being rounded up) or to the nearest 1/100th (5/1000 of a share being rounded up) of a share, as the case may be. (f) When No Adjustment Required. If an adjustment is made upon the establishment of a record date for a distribution subject to subsections (a), (b) or (c) hereof and such distribution is subsequently cancelled, the Exercise Rate and Exercise Price then in effect shall be readjusted, effective as of the date when the board of directors determines to cancel such distribution, to that which would have been in effect if such record date had not been fixed. If the Company includes the Warrant Holders in any distribution subject to subsection (a), (b) or (c) hereof and such inclusion results in the Warrant Holders maintaining their ownership percentage of the Company on a fully diluted basis, then no adjustment shall be necessary. If an adjustment would be required under two or more of paragraphs (a), (b) and (c), such adjustments will be determined without duplication. To the extent the Warrants become convertible into cash, no adjustment need be made thereafter as to the amount of cash into which such Warrants are exercisable. Interest will not accrue on the cash. (g) Notice of Adjustment. Whenever the Exercise Rate or Exercise Price is adjusted, the Company shall provide the notices required by Section 14 hereof. (h) Voluntary Reduction. The Company from time to time may increase the Exercise Rate or reduce the Exercise Price by any amount for any period of time (including, without limitation, permanently) if the period is at least 20 Business Days. An increase of the Exercise Rate or reduction of the Exercise Price under this subsection (h) (other than a permanent increase or reduction) does not change or adjust the Exercise Rate or Exercise Price otherwise in effect for purposes of subsections (a), (b) or (c) of this Section 12. (i) Minimum Exercise Price. Notwithstanding anything to the contrary contained in this Agreement, if the Exercise Price, as adjusted pursuant to this Agreement (other than this Section 12(i)), shall be less than the aggregate par values of the related Warrant Shares, then such Exercise Price, as so adjusted, for all purposes of this Agreement, shall be an amount equal to the aggregate par value of such related Warrant Shares. (j) When Issuance or Payment May Be Deferred. In any case in which this Section 12 shall require that an adjustment in the Exercise Rate or Exercise Price be made effective as of a record date for a specified event, the Company may elect to defer until the occurrence of such event (i) issuing to the Holder of any Warrant exercised after such record date the Warrant Shares and other capital stock of the Company, if any, issuable upon such exercise over and above the Warrant Shares and other capital stock of the Company, if any, issuable upon such exercise on the basis of the Exercise Rate prior to such adjustment, and (ii) paying to such Holder any amount in cash in lieu of a fractional share pursuant to Section 13; provided, however, that the Company shall deliver to the Warrant Agent and shall cause the Warrant Agent, on behalf of and at the expense of the Company, to deliver to such Holder a due bill or other appropriate instrument evidencing such Holder's right to receive such additional Warrant Shares, other capital stock and cash upon the occurrence of the event requiring such adjustment. (k) Reorganizations. In case of any capital reorganization, other than in the cases referred to in Sections 12(a), (b) or (c) hereof, or the consolidation or merger of the Company with or into another corporation (other than a merger or consolidation in which the Company is the continuing corporation and which does not result in any reclassification of the outstanding shares of Common Stock into shares of other stock or other securities or property) (collectively such actions being hereinafter referred to as "Reorganizations"), or the sale of the property of the Company as an entirety or substantially as an entirety, there shall thereafter be deliverable upon exercise of any Warrant (in lieu of the number of shares of Common Stock theretofore deliverable) the number of shares of stock or other securities or property, if any, to which a holder of the number of shares of Common Stock that would otherwise have been deliverable upon the exercise of such Warrant would have been entitled upon such Reorganization or sale if such Warrant had been exercised in full immediately prior to such Reorganization. In case of any Reorganization or sale, appropriate adjustment, as determined in good faith by the board of directors of the Company, whose determination shall be described in a duly adopted resolution certified by the Company's Secretary or Assistant Secretary, shall be made in the application of the provisions herein set forth with respect to the rights and interests of Holders so that the provisions set forth herein shall thereafter be applicable, as nearly as possible, in relation to any such shares or other securities or property thereafter deliverable upon exercise of Warrants. The Company shall not effect any such Reorganization unless prior to or simultaneously with the consummation thereof the successor corporation (if other than the Company) resulting from such Reorganization or the corporation or other appropriate corporation or entity purchasing such assets shall (i) expressly assume, by a supplemental warrant agreement or other acknowledgment executed and delivered to the Warrant Agent the obligation to deliver to the Warrant Agent and to cause the Warrant Agent to deliver to each such Holder such shares of stock, securities or assets as, in accordance with the foregoing provisions, such Holder may be entitled to purchase, and the due and punctual performance and observance of each and every covenant, condition, obligation and liability under this Agreement to be performed and observed by the Company in the manner prescribed herein and (ii) enter into an agreement providing to the Holders rights and benefits substantially similar to those enjoyed by the Holders under the Common Stock Registration Rights Agreement of even date herewith. The foregoing provisions of this Section 12(k) shall apply to successive Reorganization transactions. (l) Form of Warrants. Irrespective of any adjustments in the number or kind of shares purchasable upon the exercise of the Warrants, Warrants theretofore or thereafter issued may continue to express the same price and number and kind of shares as are stated in the Warrants initially issuable pursuant to this Agreement. (m) Warrant Agent's Disclaimer. The Warrant Agent has no duty to determine when an adjustment under this Section 12 should be made, how it should be made or what it should be. The Warrant Agent has no duty to determine whether any provisions of a supplemental warrant agreement under subsection (k) of this Section 12 are correct. The Warrant Agent makes no representation as to the validity or value of any securities or assets issued upon exercise of Warrants. The Warrant Agent shall not be responsible for the Company's failure to comply with this Section 12. (n) Miscellaneous. (i) For purpose of this Section 12 the term "shares of Common Stock" shall mean (a) the Company's Common Stock, par value $.01 per share, as of the date of this Agreement, and (b) shares of any other class of stock resulting from successive changes or reclassification of such shares consisting solely of changes in par value, or from par value to no par value, or from no par value to par value. In the event that at any time, as a result of an adjustment made pursuant to this Section 12, the Holders of Warrants shall become entitled to purchase any securities of the Company other than, or in addition to, shares of Common Stock, thereafter the number or amount of such other securities so purchasable upon exercise of each Warrant shall be subject to adjustment from time to time in a manner and on terms as nearly equivalent as practicable to the provisions with respect to the Warrant Shares contained in subsections (a) through (m) of this Section 12, inclusive, and the provisions of Sections 7, 8, 10 and 13 with respect to the Warrant Shares or the Common Stock shall apply on like terms to any such other securities generally. (ii) The Company shall provide Holders, within 15 days after it files them with the SEC, copies of its annual report and of the information, documents and other reports (or copies of such portions of any of the foregoing as the SEC may by rules and regulations prescribe) that the Company is required to file with the SEC pursuant to Section 13(a) or 15(d) of the Exchange Act. Notwithstanding that the Company may not be required to remain subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act, the Company shall continue to file such annual reports and information, documents and other reports with the SEC and to provide the Holders with such annual reports and such information, documents and other reports as the Company provides to the holders of its Common Stock or other securities. SECTION 13. Fractional Interests. The Company shall not be required to issue fractional Warrant Shares on the exercise of Warrants. If more than one Warrant shall be presented for exercise in full at the same time by the same Holder, the number of full Warrant Shares which shall be issuable upon the exercise thereof shall be computed on the basis of the aggregate number of Warrant Shares purchasable on exercise of the Warrants so presented. If any fraction of a Warrant Share would, except for the provisions of this Section 13, be issuable on the exercise of any Warrants (or specified portion thereof), the Company shall pay an amount in cash equal to the excess of the value (as determined by the Board of Directors in good faith) of a Warrant Share over the Exercise Price on the day immediately preceding the date the Warrant is presented for exercise, multiplied by such fraction. SECTION 14. Notices to Warrant Holders. Upon any adjustment pursuant to Section 12 hereof, the Company shall give prompt written notice of such adjustment to the Warrant Agent and shall cause the Warrant Agent, on behalf of and at the expense of the Company, within 10 days after notification is received by the Warrant Agent of such adjustment, to mail by first class mail, postage prepaid, to each Holder a notice of such adjustment(s) and shall deliver to the Warrant Agent a certificate of the Chief Financial Officer of the Company setting forth in reasonable detail (i) the number of Warrant Shares purchasable upon the exercise of each Warrant and the Exercise Price of such Warrant after such adjustment(s), (ii) a brief statement of the facts requiring such adjustment(s) and (iii) the computation by which such adjustment(s) was made. Where appropriate, such notice may be given in advance and included as a part of the notice required under the other provisions of this Section 14. In case: (a) the Company shall authorize the issuance to all holders of shares of Common Stock of rights, options or warrants to subscribe for or purchase shares of capital stock of the Company; or (b) the Company shall authorize the distribution to all holders of shares of Common Stock of evidences of its indebtedness or assets; or (c) of any consolidation or merger to which the Company is a party and for which approval of any shareholders of the Company is required, or of the conveyance or transfer of the properties and assets of the Company substantially as an entirety, or of any reclassification or change of Common Stock issuable upon exercise of the Warrants (other than a change in par value, or from par value to no par value, or from no par value to par value, or as a result of a subdivision or combination), or a tender offer or exchange offer for shares of capital stock of the Company; or (d) of the voluntary or involuntary dissolution, liquidation or winding up of the Company; or (e) the Company proposes to take any action that would require an adjustment to the Exercise Rate and/or Exercise Price pursuant to Section 12; then the Company shall give prompt written notice to the Warrant Agent at least ten days prior to the date the Warrant Agent should give notice to the holders of the Warrant Certificate, and shall cause the Warrant Agent, on behalf of and at the expense of the Company, to give to each of the registered holders of the Warrant Certificates at his or its address appearing on the Warrant Register, at least 20 days prior to the applicable record date hereinafter specified, or the date of the event in the case of events for which there is no record date, by first-class mail, postage prepaid, a written notice stating (i) the date as of which the holders of record of shares of Common Stock to be entitled to receive any such rights, options, warrants or distribution are to be determined, or (ii) the initial expiration date set forth in any tender offer or exchange offer for shares of Common Stock, or (iii) the date on which any such consolidation, merger, conveyance, transfer, dissolution, liquidation or winding up is expected to become effective or consummated, and the date as of which it is expected that holders of record of shares of Common Stock shall be entitled to exchange such shares for securities or other property, if any, deliverable upon such reclassification, consolidation, merger, conveyance, transfer, dissolution, liquidation or winding up. The failure by the Company or the Warrant Agent to give such notice or any defect therein shall not affect the legality or validity of any distribution, right, option, warrant, consolidation, merger, conveyance, transfer, dissolution, liquidation or winding up, or the vote upon any action. The Company shall give prompt written notice to the Warrant Agent, at least ten days prior to the date the Warrant Agent should give notice to the holders of the Warrant Certificate and shall cause the Warrant Agent, on behalf of and at the expense of the Company, to give to each Holder written notice of any determination to make a distribution or dividend to the holders of any class of its Common Stock of any assets (including cash), debt securities, preferred stock, or any rights or warrants to purchase debt securities, preferred stock, assets or other securities (other than Common Stock, or rights, options, or warrants to purchase Common Stock) of the Company, which notice shall state the nature and amount of such planned dividend or distribution and the record date therefor, and shall be sent to the Holders at least 20 days prior to such record date therefor. Nothing contained in this Agreement or in any Warrant Certificate shall be construed as conferring upon the Holders the right to vote or to consent or to receive notice as shareholders in respect of the meetings of shareholders or the election of directors of the Company or any other matter, or any rights whatsoever as shareholders of the Company. In all cases, the text of any notice to Holders provided pursuant to this Section shall be prepared by the Company and the Warrant Agent shall have no responsibility with regard to such notice being accurate. SECTION 15. Notices to the Company and Warrant Agent. Any notice or demand authorized by this Agreement to be given or made by the Warrant Agent or by any Holder to or on the Company shall be sufficiently given or made when received at the office of the Company expressly designated by the Company as its office for purposes of this Agreement (until the Warrant Agent is otherwise notified in accordance with this Section 15 by the Company), as follows: Hvide Marine Incorporated 2200 Eller Drive P.O. Box 13038 Fort Lauderdale, Florida 33316 Attention: Robert B. Lamm Fax Number: (954) 527-1772 with a copy to: Kronish Lieb Weiner & Hellman LLP 1114 Avenue of the Americas New York, New York 10036-7798 Attention: Robert J. Feinstein, Esq. Fax Number: (212) 479-6275 and to: Dyer Ellis & Joseph Watergate, Eleventh Floor 600 New Hampshire Ave., N.W. Washington, D.C. 20034 Attention: James B. Ellis, Esq. Fax Number: 202-944-3068 Any notice pursuant to this Agreement to be given by the Company or by any Holder(s) to the Warrant Agent shall be sufficiently given when received by the Warrant Agent at the address appearing below (until the Company is otherwise notified in accordance with this Section by the Warrant Agent). STATE STREET BANK AND TRUST COMPANY Goodwin Square 225 Asylum Street, 23rd Floor Hartford, CT 06103 Attention: Cauna Silva Fax Number: (860) 244-1881 SECTION 16. Supplements and Amendments. The Company and the Warrant Agent may from time to time supplement or amend this Agreement without the approval of any holders of Warrants in order to cure any ambiguity or to correct or supplement any provision contained herein which may be defective or inconsistent with any other provision herein, or to make any other provisions in regard to matters or questions arising hereunder which the Company and the Warrant Agent may deem necessary or desirable and all other supplements or amendments, except those that have a material adverse effect on the interests of any holder of Warrants. Any amendment or supplement to this Agreement that has a material adverse effect on the interests of holders shall require the written consent of registered holders of a majority of the then outstanding Warrants. Notwithstanding the foregoing, the consent of each holder of a Warrant affected shall be required for any amendment pursuant to which the Exercise Price would be increased or the number of Warrant Shares purchasable upon exercise of Warrants would be decreased (not including adjustments contemplated hereunder). The Warrant Agent shall be entitled to receive and shall be fully protected in relying upon an Officers' Certificate and opinion of counsel as conclusive evidence that any such amendment or supplement is authorized or permitted hereunder, that it is not inconsistent herewith, and that it will be valid and binding upon the Company in accordance with its terms. SECTION 17. Concerning the Warrant Agent. The Warrant Agent undertakes the duties and obligations imposed by this Agreement upon the following terms and conditions, by all of which the Company and the Holders, by their acceptance of Warrants, shall be bound: (a) The statements contained herein and in the Warrant Certificate shall be taken as statements of the Company, and the Warrant Agent assumes no responsibility for the correctness of any of the same except such as describe the Warrant Agent or any action taken by it. The Warrant Agent assumes no responsibility with respect to the distribution of the Warrants except as herein otherwise provided. (b) The Warrant Agent shall not be responsible for any failure of the Company to comply with the covenants contained in this Agreement or in the Warrants to be complied with by the Company. (c) The Warrant Agent may execute and exercise any of the rights or powers hereby vested in it or perform any duty hereunder either itself (through its employees) or by or through its attorneys or agents (which shall not include its employees) and shall not be responsible for the misconduct of any agent appointed with due care. (d) The Warrant Agent may consult at any time with legal counsel satisfactory to it (who may be counsel for the Company), and the Warrant Agent shall incur no liability or responsibility to the Company or to any Holder in respect of any action taken, suffered or omitted by it hereunder in good faith and in accordance with the opinion or the advice of such counsel. (e) Whenever in the performance of its duties under this Agreement the Warrant Agent shall deem it necessary or desirable that any fact or matter be proved or established by the Company prior to taking or suffering any action hereunder, such fact or matter (unless such evidence in respect thereof be herein specifically prescribed) may be deemed to be conclusively proved and established by a certificate signed by the Chairman of the Board, Chief Executive Officer, the President, Chief Financial Officer, Chief Operating Officer, one of the Vice Presidents, the Treasurer, the Secretary or an Assistant Secretary of the Company and delivered to the Warrant Agent; and such certificate shall be full authorization to the Warrant Agent for any action taken or suffered in good faith by it under the provisions of this Agreement in reliance upon such certificate. (f) The Company agrees to pay the Warrant Agent reasonable compensation for all services rendered by the Warrant Agent in the performance of its duties under this Agreement, to reimburse the Warrant Agent for all expenses and governmental charges and other charges of any kind and nature incurred by the Warrant Agent (including reasonable fees and expenses of the Warrant Agent's counsel and agents) in the performance of its duties under this Agreement, and to indemnify the Warrant Agent and its officers, directors, employees and agents and save them harmless against any and all liabilities, including judgments, costs and counsel fees, for anything done or omitted by the Warrant Agent in the performance of its duties under this Agreement, except as a result of the Warrant Agent's gross negligence or bad faith. (g) The Warrant Agent and any stockholder, director, officer or employee of the Warrant Agent may buy, sell or deal in any of the Warrants or other securities of the Company or become pecuniarily interested in any transactions in which the Company may be interested, or contract with or lend money to the Company or otherwise act as fully and freely as though it were not Warrant Agent under this Agreement or such stockholder, director, officer or employee. Nothing herein shall preclude the Warrant Agent from acting in any other capacity for the Company or for any other legal entity including, without limitation, acting as Transfer Agent, Trustee under the Indenture or as a lender to the Company or an affiliate thereof. (h) The Warrant Agent shall act hereunder solely as agent, and its duties shall be determined solely by the provisions hereof. The Warrant Agent shall not be liable for anything which it may do or refrain from doing in connection with this Agreement except for its own gross negligence or bad faith. (i) The Warrant Agent will not incur any liability or responsibility to the Company or to any Holder for any action taken in reliance on any notice, resolution, waiver, consent, order, certificate, or other paper, document or instrument reasonably believed by it to be genuine and to have been signed, sent or presented by the proper party or parties. (j) The Warrant Agent shall not be under any responsibility in respect of the validity of this Agreement or the execution and delivery hereof (except the due execution hereof by the Warrant Agent) or in respect of the validity or execution of any Warrant (except its countersignature thereof); nor shall the Warrant Agent by any act hereunder be deemed to make any representation or warranty as to the authorization or reservation of any Warrant Shares (or other stock) to be issued pursuant to this Agreement or any Warrant, or as to whether any Warrant Shares (or other stock) will, when issued, be validly issued, fully paid and nonassessable, or as to the Exercise Price or the number or amount of Warrant Shares or other securities or other property issuable upon exercise of any Warrant. (k) The Warrant Agent is hereby authorized and directed to accept instructions with respect to the performance of its duties hereunder from the Chairman of the Board, Chief Executive Officer, the President, Chief Financial Officer, Chief Operating Officer, one of the Vice Presidents, the Treasurer, the Secretary or Assistant Secretary of the Company, and to apply to such officers for advice or instructions in connection with its duties, and shall not be liable for any action taken or suffered to be taken by it in good faith and without gross negligence in accordance with instructions of any such officer or officers. The provisions of this Section 17 shall survive the termination of this Agreement and any resignation or removal of the Warrant Agent. SECTION 18. Change of Warrant Agent. The Warrant Agent may resign at any time and be discharged from its duties under this Agreement by giving to the Company 30 days' notice in writing. The Warrant Agent may be removed by like notice to the Warrant Agent from the Company. If the Warrant Agent shall resign or be removed or shall otherwise become incapable of acting, the Company shall appoint a successor to the Warrant Agent. If the Company shall fail to make such appointment within a period of 60 days after such removal or after it has been notified in writing of such resignation or incapacity by the resigning or incapacitated Warrant Agent or by any Holder (who shall with such notice submit his Warrant for inspection by the Company), then the Warrant Agent or any Holder may apply to any court of competent jurisdiction for the appointment of a successor to the Warrant Agent. Pending appointment of a successor warrant agent, either by the Company or by such court, the duties of the Warrant Agent shall be carried out by the Company. Any successor warrant agent, whether appointed by the Company or such a court, shall be a bank or trust company in good standing, incorporated under the laws of the United States of America or any State thereof or the District of Columbia and having at the time of its appointment as warrant agent a combined capital and surplus of at least $10,000,000. After appointment, the successor warrant agent shall be vested with the same powers, rights, duties and responsibilities as if it had been originally named as Warrant Agent without further act or deed; but the former Warrant Agent shall deliver and transfer to the successor warrant agent any property at the time held by it hereunder, and execute and deliver any further assurance, conveyance, act or deed necessary for such purpose. Failure to file any notice provided for in this Section 18, however, or any defect therein, shall not affect the legality or validity of the resignation or removal of the Warrant Agent or the appointment of the successor warrant agent, as the case may be. In the event of such resignation or removal, the Company or the successor warrant agent shall mail by first class mail, postage prepaid, to each Holder, written notice of such removal or resignation and the name and address of such successor warrant agent. SECTION 19. Identity of Transfer Agent. Forthwith upon the appointment of any Transfer Agent for the Common Stock, or any other shares of the Company's capital stock issuable upon the exercise of the Warrants, the Company shall promptly file with the Warrant Agent a statement setting forth the name and address of such Transfer Agent. SECTION 20. Registration Rights. The Holders shall be entitled to all of the benefits under that certain Common Stock Registration Rights Agreement among the Company and the parties named therein dated as of December 15, 1999. SECTION 21. Successors. All the covenants and provisions of this Agreement by or for the benefit of the Company, the Warrant Agent or any holder of Warrants shall bind and inure to the benefit of their respective successors and assigns hereunder. SECTION 22. Termination. This Agreement shall terminate at 5:00 p.m. New York City time on June 30, 2007. Notwithstanding the foregoing, this Agreement will terminate on any earlier date if all Warrants have been exercised or redeemed pursuant to this Agreement. SECTION 23. GOVERNING LAW. THIS AGREEMENT AND EACH WARRANT CERTIFICATE ISSUED HEREUNDER SHALL BE DEEMED TO BE A CONTRACT MADE UNDER THE LAWS OF THE STATE OF NEW YORK AND SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF SAID STATE, WITHOUT REGARD TO THE CONFLICT OF LAW RULES THEREOF. SECTION 24. Benefits of This Agreement. Nothing in this Agreement shall be construed to give to any person or corporation other than the Company, the Warrant Agent and the registered Holders of the Warrant Certificates any legal or equitable right, remedy or claim under this Agreement; but this Agreement shall be for the sole and exclusive benefit of the Company, the Warrant Agent and the registered Holders of the Warrant Certificates. SECTION 25. Counterparts. This Agreement may be executed in any number of counterparts and each of such counterparts shall for all purposes be deemed to be an original, and all such counterparts shall together constitute but one and the same instrument. SECTION 26. Headings. The headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the meaning hereof. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed, as of the day and year first above written. HVIDE MARINE INCORPORATED By:______________________________ Name: Title: STATE STREET BANK AND TRUST COMPANY, as Warrant Agent By:______________________________ Name: Title: EX-5.1 3 DEJ OPINION May 8, 2000 Hvide Marine Incorporated 2200 Eller Drive Fort Lauderdale, Florida 33316 Ladies and Gentlemen: We have acted as counsel for Hvide Marine Incorporated, a Delaware corporation (the"Company"), in connection with the sale by certain of its stockholders, pursuant to the Company's registration statement on Form S-3, File No. 333-30390, of the securities being registered thereby (the "Securities"). Based upon our examination of such corporate records and other documents and such questions of law as we have deemed necessary and appropriate, we are of the opinion that the Securities have been duly authorized and are validly issued, fully paid, and non-assessable. We hereby consent to the filing of this opinion as an exhibit to the Registration Statement. Very truly yours, Dyer Ellis & Joseph PC EX-23.1 4 CONSENT OF E&Y Consent of Independent Certified Public Accountants We consent to the reference to our firm under the caption "Experts" in Amendment No. 1 to the Registration Statement (Form S-3 No. 333-30390) and related prospectus of Hvide Marine Incorporated of our report dated February 25, 2000 (except for Note 2, as to which the date is April 13, 2000 and Note 24, as to which the date is April 14, 2000), included in its Annual Report (Form 10-K) for the year ended December 31, 1999, with respect to its consolidated financial statements, as amended on Form 10-K/A, filed with the Securities and Exchange Commission. Miami, Florida May 8, 2000 EX-24.1 5 POWER OF ATTORNEY POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that Hvide Marine Incorporated, a corporation organized under the laws of the State of Delaware (the "Corporation"), and the undersigned officer and director of the Corporation, individually and in his capacities indicated below, hereby make, constitute and appoint Michael Joseph and John F. Kearney its and their true and lawful attorney, their separate or joint signatures sufficient to bind, with power of substitution, to execute, deliver and file in its or their behalf, and in each person's respective capacity or capacities as shown below, a registration statement on Form S-3 under the Securities Act of 1933, any and all amendments to and documents in support of or supplemental to said registration statement by the Corporation; and the Corporation and each said person hereby grant to said attorney full power and authority to do and perform each and every act and thing whatsoever as said attorney may deem necessary or advisable to carry out the full intent of this Power of Attorney to the same extent and with the same effect as the Corporation or the undersigned officers and directors of the Corporation might or could do personally in its or their capacity or capacities as aforesaid; and the Corporation and each of said persons hereby ratify, confirm and approve all acts and things that any one of said attorneys may do or cause to be done by virtue of this Power of Attorney and its signature or their signatures as the same may be signed by any one of said attorneys to said registration statement and any and all documents in support of or supplemental to said registration statement and any and all amendments thereto. HVIDE MARINE INCORPORATED By: ______________________________ Gerhard E. Kurz Chief Executive Officer and Director -----END PRIVACY-ENHANCED MESSAGE-----