8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported): September 13, 2002

SEABULK INTERNATIONAL, INC.
(Exact name of registrant as specified in its charter)

Delaware	0-28732	65-0966399
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)

2200 Eller Drive, P.O. Box 13038, Ft. Lauderdale, Florida
(Address of principal executive offices) 33316
(Zip code)

Registrant’s telephone number, including area code (954) 523-2200

Item 1. Changes in Control of Registrant.

     Seabulk International, Inc. (the “Company”) today announced the completion of the issuance of 12.5 million shares of common stock at $8.00 per share to a group of investors including an entity associated with DLJ Merchant Banking Partners III, L.P., an affiliate of CSFB Private Equity (the “DLJ Investor”), and entities associated with Carlyle/Riverstone Global Energy and Power Fund I, L.P., an affiliate of The Carlyle Group of Washington, D.C. (the “Carlyle/Riverstone Investors”). The stock issuance was previously approved by the Company’s shareholders at a Special Meeting held on September 5, 2002. The new investors also purchased approximately 5.1 million shares of outstanding Company common stock (including shares issuable upon the exercise of warrants) beneficially owned by accounts managed by Loomis, Sayles & Co., L.P. As a result of the two transactions, the investors will own approximately 72% of the fully diluted shares of common stock of the Company.

     In connection with the completion of the transaction:

• the Company has amended its Certificate of Incorporation to increase the number of its authorized shares, to remove the classification of the Company’s board into three classes of directors and to add certain minority stockholder protection provisions;

• the Company has amended and restated its By-laws to (1) provide that a quorum for meetings of the Company’s board will consist of seven directors and (2) remove provisions relating to the classification of the Company’s board;

• the Company, the investors and Gerhard Kurz, President and Chief Executive Officer of the Company, have executed a Stockholders’ Agreement; and

• Mr. Kurz has agreed to a five-year extension of his employment contract with the Company.

Copies of the Certificate of Amendment to the Company’s Certificate of Incorporation, the Amended and Restated By-Laws of the Company, the Stockholders’ Agreement and the Amendment to Mr. Kurz’s employment agreement are attached hereto as Exhibits 99.1, 99.2, 99.3 and 99.4, respectively, and are incorporated herein by reference.

     Pursuant to the Stockholders’ Agreement, the Company’s board of directors has been restructured to permit the investors to designate a majority (six of ten seats) of the Board. The Company’s reconstituted board of directors will have six new members and four continuing members. The new members are Ari Benacerraf, a Managing Director of Credit Suisse First Boston; David Durkin, a Vice President of Credit Suisse First Boston; Kenneth V. Huseman, President and Chief Executive Officer of BASiC Energy Services; Pierre F. Lapeyre, Jr. and David M. Leuschen, co-Founders and Managing Directors of Riverstone Holdings LLC; and Steven Webster, Managing Director of Global Energy Partners, an affiliate of DLJ Merchant Banking Partners. The continuing members are RADM Peter H. Cressy, USN (ret.), President and Chief Executive Officer of the Distilled Spirits Council of the United States, Inc.; Robert L. Keiser, former Chairman of the Board of the Kerr-McGee Corporation; Gerhard E. Kurz, President and Chief Executive Officer of Seabulk International, Inc.; and Thomas P. Moore, Jr., a Principal of State Street Global Advisors and a member of the State Street Global Advisors International Equity Team.

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     The Stockholders’ Agreement provides that the investors will vote the shares owned by them to cause the Company’s board of directors to consist of ten members to be constituted as follows:

• The DLJ Investors will be entitled to designate four of the directors;

• One of the Riverstone/Carlyle Investors will be entitled to designate two of the directors;

• three of the directors will be independent directors (that is, non-investor designated directors), who initially were selected by the investors from directors currently serving on our board of directors; and

• the Chief Executive Officer will serve as a director.

     Messrs. Benacerraf, Durkin, Huseman and Webster were designated as directors of the Company by the DLJ Investor and Messrs. Lapeyre and Leuschen were designated as directors of the Company by one of the Riverstone/Carlyle Investors.

     The Stockholders’ Agreement provides that directors designated by the DLJ Investor and one of the Carlyle/Riverstone Investors will be represented on, subject to compliance with Nasdaq and SEC rules, the audit and compensation committees of the board of directors.

     The Stockholders’ Agreement provides that until September 13, 2003:

• the initial continuing directors will not be removed except for cause;

• the investors will not take any action that will cause the continuing directors to be less than a majority of the total number of independent directors on our board of directors; and

• to the extent an annual meeting is held for the election of the Company’s directors, the investors will vote for the election of the continuing directors.

     Under the Stockholders’ Agreement, in the event that the DLJ Investor owns less than 50%, but more than 10%, of the shares of common stock initially purchased by it, it will be entitled to designate only two of the Company’s directors. In the event the DLJ Investor owns less than 10%, but more than 5%, of the shares of common stock initially purchased by it, it will be entitled to designate only one of the Company’s directors. In the event the DLJ Investor owns less than 5% of the common stock initially purchased by it, it will no longer be entitled to designate a director of the Company.

     Under the Stockholders’ Agreement, in the event that the Carlyle/Riverstone Investors own less than 50%, but more than 10%, of the shares of common stock initially purchased by them, collectively, they will be entitled to designate only one of the Company’s directors. In the event the Carlyle/Riverstone Investors own less than 10% of the shares of common stock initially purchased by them, collectively, they will no longer be entitled to designate a director of the Company.

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Item 5. Other Events and Regulation FD Disclosure.

New Credit Agreement

     The Company also announced it had entered into a new $180 million credit facility with Fortis Capital Corp. and NIB Capital Bank N.V. The new facility, which matures in five years, consists of an $80 million term loan and a $100 million revolving credit facility. A copy of the Credit Agreement is attached hereto as Exhibit 99.5 and is incorporated herein by reference.

     Proceeds from the stock issuance and new credit facility, totaling $280 million, less applicable fees and expenses, are being used primarily to pay off the Company’s previous bank debt of approximately $151 million and to redeem all of its 121/2% Senior Secured Notes due 2007 for approximately $100.3 million plus accrued interest.

Redemption and Discharge of 12 1/2% Senior Secured Notes

     The Company has issued an irrevocable notice of redemption to holders setting a redemption date of October 15, 2002 for the approximately $97.4 million in outstanding Notes at a redemption price of 102.934% of par plus accrued and unpaid interest at 13.5% per annum to the redemption date. The Company will pay interest on the Notes on its regularly scheduled interest payment date of September 30, 2002 at a rate of 13.5% per annum, which rate includes payment of an additional 1.0% per annum interest in cash in lieu of the issuance of additional “pay in kind” interest Notes. Notes should be presented for redemption and payment to State Street Bank & Trust as Paying Agent. The Company has deposited with the Paying Agent the full amount of funds to make all redemption and interest payments on the Notes. As a result, the Company has been released and discharged from all of its obligations under the Notes. A copy of the Notice of Redemption mailed to holders of the Notes is attached hereto as Exhibit 99.6 and is incorporated herein by reference.

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Item 7. Financial Statements and Exhibits

     (c)  Exhibits.

Exhibit
Number	Description of Document
99.1	Certificate of Amendment to the Certificate of Incorporation, dated as of September 13, 2002
99.2	Amended and Restated By-Laws
99.3	Stockholders’ Agreement, dated as of September 13, 2002, among Seabulk International, Inc., Nautilus Acquisition, L.P., C/R Marine Domestic Partnership, L.P., C/R Marine Non-U.S. Partnership, L.P., C/R Marine Coinvestment, L.P., C/R Marine Coinvestment II, L.P. and Gerhard Kurz
99.4	Amendment to Employment Agreement, dated as of September 13, 2002, between Seabulk International, Inc. and Gerhard Kurz
99.5	Credit Agreement, dated as of September 13, 2002, among Seabulk International, Inc., each Subsidiary Guarantor, Fortis Capital Corp., NIB Capital Bank N.V. and each other financial institution which may become a party to the Agreement as a Lender, Fortis Capital Corp., as administrative agent on behalf of the Lenders, and as book runner and as an arranger and NIB Capital Bank N.V., as an arranger
99.6	Notice of Redemption of 12 1/2% Senior Secured Notes due 2007, Series B, dated as of September 13, 2002

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	SEABULK INTERNATIONAL, INC.
	By: /s/ ALAN R. TWAITS
	ALAN R. TWAITS Senior Vice President, General Counsel and Secretary
September 13, 2002

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INDEX TO EXHIBITS

Exhibit
Number	Description of Document
99.1	Certificate of Amendment to the Certificate of Incorporation, dated as of September 13, 2002
99.2	Amended and Restated By-Laws
99.3	Stockholders’ Agreement, dated as of September 13, 2002, among Seabulk International, Inc., Nautilus Acquisition, L.P., C/R Marine Domestic Partnership, L.P., C/R Marine Non-U.S. Partnership, L.P., C/R Marine Coinvestment, L.P., C/R Marine Coinvestment II, L.P. and Gerhard Kurz
99.4	Amendment to Employment Agreement, dated as of September 13, 2002, between Seabulk International, Inc. and Gerhard Kurz
99.5	Credit Agreement, dated as of September 13, 2002, among Seabulk International, Inc., each Subsidiary Guarantor, Fortis Capital Corp., NIB Capital Bank N.V. and each other financial institution which may become a party to the Agreement as a Lender, Fortis Capital Corp., as administrative agent on behalf of the Lenders, and as book runner and as an arranger and NIB Capital Bank N.V., as an arranger
99.6	Notice of Redemption of 12 1/2% Senior Secured Notes due 2007, Series B, dated as of September 13, 2002

7 EX-99.1 3 g78328exv99w1.txt SEABULK - CERTIFICATE OF AMENDMENT 09/13/02 Exhibit 99.1 CERTIFICATE OF AMENDMENT OF THE CERTIFICATE OF INCORPORATION OF SEABULK INTERNATIONAL, INC. FILED IN THE OFFICE OF THE SECRETARY OF STATE OF DELAWARE ON SEPTEMBER 13, 2002 Seabulk International, Inc., a corporation organized and existing under and by virtue of the General Corporation Law of the State of Delaware (the "DGCL"), hereby certifies that: 1. The name of the corporation is Seabulk International, Inc. (the "Corporation"). 2. The Certificate of Incorporation of the Corporation is hereby amended to change the number of shares of stock which the Corporation shall have authority to issue so that Article IV, paragraph (a) of the Certificate of Incorporation is hereby amended to read in its entirety as follows: "(a) The total number of shares of stock which the Corporation shall have authority to issue is Forty-Five Million (45,000,000), consisting of Five Million (5,000,000) shares of Preferred Stock, without par value (the "PREFERRED STOCK"), and Forty Million (40,000,000) shares of Common Stock, par value $0.01 per share (the "COMMON STOCK")." 3. The Certificate of Incorporation of the Corporation is hereby amended to delete the third paragraph of Article IX. 4. The following Article XIV of the Certificate of Incorporation of the Corporation is hereby inserted in its entirety to read as follows: "ARTICLE XIV (a) For purposes of this Article XIV, the following terms shall have the meanings specified below: (1) "Affiliate" shall mean, with respect to any Person, any other Person directly or indirectly controlling, controlled by, or under direct or indirect common control with, such Person. For the purposes of this definition, "control" when used with respect to any Person means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms "controlling" and "controlled" have meanings correlative to the foregoing. (2) "Business Combination" shall mean (A) any merger or consolidation of the Corporation or any direct or indirect majority-owned subsidiary of the Corporation with any Control Person (as defined below), or (B) any sale, lease, exchange, mortgage, pledge, transfer or other disposition (in one transaction or a series of transactions) by the Corporation or a majority-owned subsidiary of the Corporation, except proportionately as a stockholder of the Corporation, to or with a Control Person, whether as part of a dissolution (except as part of an insolvency or bankruptcy proceeding under applicable laws) or otherwise, of assets of the Corporation or of any direct or indirect majority-owned subsidiary of the Corporation which assets have an aggregate Fair Market Value equal to 10% or more of either the aggregate Fair Market Value of all the assets of the Corporation determined on a consolidated basis or the aggregate Fair Market Value of all the outstanding stock of the Corporation; PROVIDED, HOWEVER, that the foregoing shall not apply to mortgages, pledges, transfers or other dispositions made pursuant to any credit facility or other loan or financing arrangement of the Corporation or any of its majority-owned subsidiaries with respect to which a Control Person is an agent or member of a bona fide syndication of financial institutions or other lenders. (3) A "Control Person" is (x) a Person or group of Persons (as contemplated by Section 13(d)(3) of the Exchange Act) who beneficially owns (as determined pursuant to Rule 13d-3 under the Exchange Act) more than 30% of the outstanding shares of Voting Stock of the Corporation, (y) any Person or group of Persons who by agreement, arrangement or understanding has the right or power to elect a majority of the members of the board of directors of the Corporation, or (z) any Affiliate of any such Person or member of a group of such Persons described in clause (x) or (y) (other than the Corporation and direct or indirect majority-owned subsidiaries of the Corporation); provided that (i) no Person or group (an "Exempt Person") shall be a Control Person if, and for so long as, (A) the Exempt Person is not a Person or group described in clause (y) or an Affiliate of such Person or group and (B) a Person (who is not a member of a group that includes the Exempt Person) or group (which does not include the Exempt Person as a member), together with any Affiliates of such other Person (or member of such group) beneficially owns a majority of the outstanding shares of Voting Stock of the Corporation and (ii) no individual who is a member of management and a party to the Stockholders Agreement as of the date of filing of a Certificate of Amendment initially including this Article XIV shall be a Control Person solely by reason of being a party to such Stockholders Agreement. (4) "Determination Date" shall mean, with respect to each Business Combination for which Fair Market Value is being calculated, the date that the Board of Directors of the Corporation approves the Business Combination pursuant to which Fair Market Value is being calculated. (5) "Exchange Act" shall mean the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder. (6) "Fair Market Value" shall mean with respect to property, securities or rights other than cash, its fair market value as of the Determination Date as mutually determined by the Independent Directors and the directors of the 2 Corporation who are not Independent Directors (the "non-Independent Directors"); PROVIDED, HOWEVER, that, if the Independent Directors and the non-Independent Directors are unable to agree within fifteen days as to Fair Market Value, the Fair Market Value shall be determined by an independent third party appraiser selected by the Independent Directors and the non-Independent Directors. Notwithstanding the foregoing, any publicly-traded securities shall be valued as follows: (a) If traded on a securities exchange or through the Nasdaq National Market, the value shall be deemed to be the average of the reported closing prices of the securities on such exchange or market over the 30-day period ending three (3) days prior to the Determination Date; or (b) If actively traded over-the-counter, the value shall be deemed to be the average of the closing bid or sale prices (whichever is applicable) over the 30-day period ending three (3) days prior to the Determination Date. (7) "Independent Directors" shall mean directors of the Corporation who (A) meet the standards for independent directors under the rules or listing requirements of any national stock exchange or Securities and Exchange Commission recognized quotation system on which the Common Stock is then listed or quoted or, if the Common Stock is not listed or quoted, the last national stock exchange or Securities and Exchange Commission recognized quotation system on which the Common Stock was listed or quoted and (B) are not officers, directors, employees or immediate family members of a Control Person. (8) "Minority Stockholders" shall mean the holders of Common Stock of the Corporation, other than any holder that constitutes a Control Person. (9) "Person" shall mean any individual, partnership, corporation, limited liability company, joint venture, association, joint-stock company, trust, unincorporated organization, or other entity. (10) "Stockholders Agreement" dated as of the date of the filing of the Certificate of Amendment initially including this Article XIV by and among the Corporation, the Investors named therein and certain members of management, as such agreement may be amended in accordance with the terms thereof. (11) "Voting Stock" shall have the meaning set forth in Section 203 of the General Corporation Law of the State of Delaware, as such section was in effect on the date of the filing of the Certificate of Amendment initially including this Article XIV. (b) No less than three of the directors of the Corporation shall at all times be Independent Directors, except for temporary periods resulting from the resignation, 3 removal from office, disqualification or death of an Independent Director. Vacancies created by the resignation, removal from office, disqualification or death of an Independent Director shall be filled as promptly as reasonably practicable in accordance with the Corporation's by-laws or by the stockholders in accordance with the terms of the Stockholders Agreement or any stockholders agreement then in effect to which the Corporation is a party and in any case by the next annual meeting of stockholders of the Corporation. (c) The Corporation will not, and will not permit, cause or suffer any direct or indirect majority-owned subsidiary of the Corporation to, enter into or engage in any contract or transaction, or any series of similar contracts or transactions, with any Control Person, having a value to the Control Persons reasonably estimated by the Independent Directors to be more than $300,000, or reasonably estimated by the Independent Directors to involve or expected to involve payments by the Corporation in excess of $300,000 in any twelve-month period, unless (1) there are at least two Independent Directors then in office and (2) such contract or transaction, or series of similar contracts or transactions, are approved by a majority of the Independent Directors then in office; PROVIDED, HOWEVER, that such approval shall not be required with respect to any of the following: (a) directors' fees, indemnification or similar arrangements or any compensation, reimbursement, incentive or benefit plan or arrangement entered into by the Corporation or any of its subsidiaries with a director of the Corporation or any of its subsidiaries who is a Control Person that are consistent with benefits pursuant to agreements and policies in effect on the date of the filing of the Certificate of Amendment initially including this Article XIV; (b) any contract to which the Control Person and the Corporation or any of its subsidiaries is a party that is in effect on the date of the filing of the Certificate of Amendment initially including this Article XIV or any transaction contemplated thereby; (c) pro rata payments of dividends or other distributions that are also paid or made to the Corporation's other stockholders; or (d) transactions (including a placement or offering of additional securities of the Corporation) that are on substantially the same terms as transactions with stockholders of the Corporation that do not constitute Control Persons. Additionally, such contract or transaction shall not be void or voidable to the extent that a Control Person notifies the Independent Directors of such contract or transaction, or series of contracts or transactions, and the Independent Directors determine that such contract or transaction, or series of contracts or transactions, does not meet the $300,000 threshold, notwithstanding that such contract or transaction, or series of contracts or transactions, ultimately results in value or payments in excess of $300,000. Such approval shall be in addition to any other approval required by applicable law. (d) Until the date which is one year from the date of the filing of the Certificate of Amendment initially including this Article XIV, the Corporation will not, and will not permit, cause or suffer any direct or indirect majority-owned subsidiary of the Corporation to, enter into or become party to any Business Combination with any Control Person that would result in Minority Stockholders receiving cash, property, rights or securities having an aggregate Fair Market Value of less than $8.00 per share of Common Stock of the Corporation (as such price may be adjusted pursuant to the 4 following sentence, the "Minimum Price"). If, between the date hereof and the date of the consummation of any such Business Combination, the outstanding Common Stock of the Corporation shall have been changed into a different number of shares or different class by reason of any reclassification, recapitalization, stock split, reverse stock split, combination or exchange (as part of a reclassification or recapitalization) of shares, or a stock dividend payable in any other securities shall be declared with a record date within such period, or any similar event shall have occurred, the Minimum Price shall be appropriately adjusted to provide to the Minority Stockholders the same economic effect as contemplated by this paragraph (d) prior to such event. (e) Until the date which is two years from the date of the filing of the Certificate of Amendment initially including this Article XIV, the Corporation will not, and will not permit, cause or suffer any direct or indirect majority-owned subsidiary of the Corporation to, enter into or become party to any Business Combination with any Control Person without the approval of the holders of a majority of the outstanding Common Stock held by Minority Stockholders and Control Persons that are not Affiliates of the Control Person that enters into or is party to such Business Combination; PROVIDED, HOWEVER, that such approval shall not be required for (i) a merger to be effected pursuant to Section 253 of the DGCL (a "Short-form Merger"), or (ii) a Business Combination that occurs within 150 days following the consummation of a tender offer by a Control Person for all of the shares of Common Stock then held by the Minority Stockholders, provided that (x) such tender offer is subject to the nonwaiveable condition that there have been validly tendered and not withdrawn a majority of the shares of Common Stock then held by the Minority Stockholders; (y) such condition is met; and (z) the consideration to be paid in respect of shares of Common Stock held by remaining Minority Stockholders in such merger shall be the same consideration per share as the consideration paid per share in such tender offer. (f) In addition to any other vote of stockholders or the Board of Directors of the Corporation required by law or this Certificate of Incorporation, this Article XIV may not be amended, altered or modified unless either (1)(A) there are at least two Independent Directors then in office and (B) such amendment, alteration, or modification is approved by a majority of the Independent Directors then in office or (2) such amendment, alteration, or modification is approved by the holders of a majority of the Common Stock of the Corporation held by Minority Stockholders. (g) Except for provisions that by their terms expire earlier, this Article XIV shall cease to have any further force and effect on the date which is three years from the date of the filing of the Certificate of Amendment initially including this Article XIV, or such earlier date on which no less than 98% of the Corporation's Common Stock is held by Control Persons or officers, directors, or employees of the Corporation." 5. The foregoing amendment to the Certificate of Incorporation of the Corporation was duly adopted by the Board of Directors and the stockholders of the Corporation in accordance with the provisions of Section 242 of the General Corporation Law of the State of Delaware. 5 IN WITNESS WHEREOF, the Corporation has caused this Certificate of Amendment to be signed by Gerhard E. Kurz, its President and Chief Executive Officer, this 13th day of September, 2002. SEABULK INTERNATIONAL, INC. /s/ GERHARD E. KURZ ----------------------------------------- Name: Gerhard E. Kurz Title: President and Chief Executive Officer 6 EX-99.2 4 g78328exv99w2.txt SEABULK - AMENDED & RESTATED BYLAWS EXHIBIT 99.2 AMENDED AND RESTATED BY-LAWS OF SEABULK INTERNATIONAL, INC. INCORPORATED UNDER THE LAWS OF THE STATE OF DELAWARE ARTICLE I OFFICES AND RECORDS Section 1.1. DELAWARE OFFICE. The principal office of the Corporation in the State of Delaware shall be located in Wilmington, Delaware, and the name and address of its registered agent is The Corporation Trust Company, The Corporation Trust Center, 1209 Orange Street, in the City of Wilmington, County of New Castle. Section 1.2. OTHER OFFICES. The Corporation may have such other offices, either within or without the State of Delaware, as the Board of Directors may designate or as the business of the Corporation may from time to time require. Section 1.3. BOOKS AND RECORDS. The books and records of the Corporation may be kept outside the State of Delaware at such place or places as may from time to time be designated by the Board of Directors. ARTICLE II STOCKHOLDERS Section 2.1. ANNUAL MEETING. The annual meeting of the stockholders of the Corporation shall be held annually on such date as may be fixed by the Board of Directors. Section 2.2. SPECIAL MEETINGS. Subject to the rights of the holders of any series of stock having a preference over the Common Stock of the Corporation as to dividends or upon liquidation ("PREFERRED STOCK") with respect to such series of Preferred Stock, special meetings of the stockholders may be called by the Chairman of the Board, by the President, by the Board of Directors pursuant to a resolution adopted by a majority of the total number of directors which the Corporation would have if there were no vacancies (the "WHOLE BOARD"), by a duly designated committee of the Board of Directors whose powers and authority, as provided in a resolution adopted by a majority of the Whole Board, include the power to call such meetings, or by the holders of a majority of the voting power of the then outstanding shares of capital stock of the Corporation entitled to vote generally in the election of directors (the "VOTING STOCK"). Section 2.3. PLACE OF MEETING. The person or entity calling any annual or special meeting of the stockholders may designate the place of such meeting. If no designation is so made, the place of meeting shall be the principal office of the Corporation. Section 2.4. NOTICE OF MEETING. Written or printed notice, stating the place, date and time of the meeting and the purpose or purposes for which the meeting is called, shall be delivered by the Corporation not less than ten (10) days nor more than sixty (60) days before the date of the meeting, either personally or by mail, to each stockholder of record entitled to vote at such meeting. If mailed, such notice shall be deemed to be delivered when deposited in the U.S. mail with postage thereon prepaid, addressed to the stockholder at his address as it appears on the stock transfer books of the Corporation. Such further notice shall be given as may be required by law. Only such business shall be conducted at a special meeting of stockholders as shall have been brought before the meeting pursuant to the Corporation's notice of meeting. Meetings may be held without notice if all stockholders entitled to vote are present, or if notice is waived by those not present in accordance with Section 6.4 of these By-laws. Any previously scheduled meeting of the stockholders may be postponed, and (unless the Certificate of Incorporation otherwise provides) any special meeting of the stockholders may be cancelled, by resolution of the Board of Directors, or by the stockholders calling the meeting, upon public notice given prior to the date previously scheduled for such meeting of stockholders. Section 2.5. QUORUM AND ADJOURNMENT. Except as otherwise provided by law or by the Certificate of Incorporation, the holders of a majority of the voting power of the then outstanding Voting Stock, represented in person or by proxy, shall constitute a quorum at a meeting of stockholders, except that when specified business is to be voted on by a class or series of stock voting as a class, the holders of a majority of the voting power of the shares of such class or series shall constitute a quorum of such class or series for the transaction of such business. The chairman of the meeting or the holders of a majority of the voting power so represented may adjourn the meeting from time to time, whether or not there is a quorum. No notice of the time and place of adjourned meetings need be given except as required by law. The stockholders present at a duly called meeting at which a quorum is present may continue to transact business until adjournment, notwithstanding the withdrawal of enough stockholders to leave less than a quorum. Section 2.6. PROXIES. At all meetings of stockholders, a stockholder may vote by proxy executed in writing (or in any other manner permitted by law) by the stockholder, or by his duly authorized attorney-in-fact. Section 2.7. NOTICE OF STOCKHOLDER BUSINESS AND NOMINATIONS. (A) ANNUAL MEETINGS OF STOCKHOLDERS. (1) Nominations of persons for election to the Board of Directors of the Corporation and the proposal of business to be considered by the stockholders may be made at an annual meeting of stockholders (a) pursuant to the Corporation's notice of meeting, (b) by or -2- at the direction of the Board of Directors or (c) by any stockholder of the Corporation who was a stockholder of record at the time of giving of the notice provided for in this Section 2.7, who is entitled to vote at the meeting and who complies with the notice procedures set forth in this Section 2.7. (2) For nominations or other business to be properly brought before an annual meeting by a stockholder pursuant to clause (c) of paragraph (A)(1) of this Section 2.7, the stockholder must have given timely notice thereof in writing to the Secretary of the Corporation, and such other business must otherwise be a proper matter for stockholder action. To be timely, a stockholder's notice shall be delivered to the Secretary at the principal executive offices of the Corporation not later than the close of business on the 60th day nor earlier than the close of business on the 90th day prior to the first anniversary of the preceding year's annual meeting; provided, however, that in the event that the date of the annual meeting is more than 30 days before or more than 60 days after such anniversary date, notice by the stockholder to be timely must be so delivered not earlier than the close of business on the 90th day prior to such annual meeting and not later than the close of business on the later of the 60th day prior to such annual meeting or the 10th day following the day on which public announcement of the date of such meeting is first made by the Corporation. In no event shall the public announcement of an adjournment of an annual meeting commence a new time period for the giving of a stockholder's notice as described above. Such stockholder's notice shall set forth (a) as to each person whom the stockholder proposes to nominate for election or re-election as a director all information relating to such person that is required to be disclosed in solicitations of proxies for election of directors in an election contest, or is otherwise required, in each case pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT"), and Rule 14a-11 thereunder (including such person's written consent to being named in the proxy statement as a nominee and to serving as a director if elected); (b) as to any other business that the stockholder proposes to bring before the meeting, a brief description of the business desired to be brought before the meeting, the reasons for conducting such business at the meeting and any material interest in such business of such stockholder and the beneficial owner, if any, on whose behalf the proposal is made; and (c) as to the stockholder giving the notice and the beneficial owner, if any, on whose behalf the nomination or proposal is made (i) the name and address of such stockholder, as they appear on the Corporation's books, and of such beneficial owner and (ii) the class and number of shares of the Corporation which are owned beneficially and of record by such stockholder and such beneficial owner. (3) Notwithstanding anything in the second sentence of paragraph (A)(2) of this Section 2.7 to the contrary, in the event that the number of directors to be elected to the Board of Directors of the Corporation is increased and there is no public announcement by the Corporation naming all of the nominees for election as director or specifying the size of the increased Board of Directors at least 70 days prior to the first anniversary of the preceding year's annual meeting, a stockholder's notice required by this Section 2.7 shall also be considered timely, but only with respect to nominees for any new -3- positions created by such increase, if it shall be delivered to the Secretary at the principal executive offices of the Corporation not later than the close of business on the 10th day following the day on which such public announcement is first made by the Corporation. (B) SPECIAL MEETINGS OF STOCKHOLDERS. Only such business shall be conducted at a special meeting of stockholders as shall have been brought before the meeting pursuant to the Corporation's notice of meeting. Nominations of persons for election to the Board of Directors may be made at a special meeting of stockholders at which directors are to be elected pursuant to the Corporation's notice of meeting (a) by or at the direction of the Board of Directors or (b) by any stockholder of the Corporation who is a stockholder of record at the time of giving of notice provided for in this Section 2.7, who shall be entitled to vote at the meeting and who complies with the notice procedures set forth in this Section 2.7. In the event the Corporation calls a special meeting of stockholders for the purpose of electing one or more directors to the Board of Directors, any such stockholder may nominate a person or persons (as the case may be), for election to such position(s) as specified in the Corporation's notice of meeting, if the stockholder's notice required by paragraph (A)(2) of this Section 2.7 shall be delivered to the Secretary at the principal executive offices of the Corporation not earlier than the close of business on the 90th day prior to such special meeting and not later than the close of business on the later of the 60th day prior to such special meeting or the 10th day following the day on which public announcement is first made of the date of the special meeting and of the nominees proposed by the Board of Directors to be elected at such meeting. In no event shall the public announcement of an adjournment of a special meeting commence a new time period for the giving of a stockholder's notice as described above. (C) GENERAL. (1) Only such persons who are nominated in accordance with the procedures set forth in this Section 2.7 shall be eligible to serve as directors and only such business shall be conducted at a meeting of stockholders as shall have been brought before the meeting in accordance with the procedures set forth in this Section 2.7. Except as otherwise provided by law, the Certificate of Incorporation or these By-laws, the chairman of the meeting shall have the power and duty to determine whether a nomination or any business proposed to be brought before the meeting was made or proposed, as the case may be, in accordance with the procedures set forth in this Section 2.7 and, if any proposed nomination or business is not in compliance with this Section 2.7, to declare that such defective proposal or nomination shall be disregarded. (2) For purposes of this Section 2.7, "PUBLIC ANNOUNCEMENT" shall mean disclosure in a press release reported by the Dow Jones News Service, Associated Press or a comparable national news service or in a document publicly filed by the Corporation with the Securities and Exchange Commission pursuant to Section 13, 14 or 15(d) of the Exchange Act. (3) Notwithstanding the foregoing provisions of this Section 2.7, a stockholder shall also comply with all applicable requirements of the Exchange Act and the rules and regulations thereunder with respect to the matters set forth in this Section 2.7. Nothing in this Section 2.7 shall be deemed to affect any rights (i) of stockholders to request inclusion of proposals in the -4- Corporation's proxy statement pursuant to Rule 14a-8 under the Exchange Act or (ii) of the holders of any series of Preferred Stock to elect directors under specified circumstances. Section 2.8. PROCEDURE FOR ELECTION OF DIRECTORS; REQUIRED VOTE. Election of directors at all meetings of the stockholders at which directors are to be elected shall be by ballot, and, subject to the rights of the holders of any series of Preferred Stock to elect directors under specified circumstances, a plurality of the votes cast thereat shall elect directors. Except as otherwise provided by law, the Certificate of Incorporation, or these By-laws, in all matters other than the election of directors, the affirmative vote of the holders of a majority of the voting power present in person or represented by proxy at the meeting and entitled to vote on the matter shall be the act of the stockholders. Section 2.9. INSPECTORS OF ELECTIONS; OPENING AND CLOSING THE POLLS. The Board of Directors by resolution shall appoint one or more inspectors, which inspector or inspectors may include individuals who serve the Corporation in other capacities, including, without limitation, as officers, employees, agents or representatives, to act at meetings of stockholders and make written reports thereof. One or more persons may be designated as alternate inspectors to replace any inspector who fails to act. If no inspector or alternate has been appointed to act or is able to act at a meeting of stockholders, the chairman of the meeting shall appoint one or more inspectors to act at the meeting. Each inspector, before discharging his or her duties, shall take and sign an oath faithfully to execute the duties of inspector with strict impartiality and according to the best of his or her ability. The inspectors shall have the duties prescribed by law. The chairman of the meeting shall fix and announce at the meeting the date and time of the opening and the closing of the polls for each matter upon which the stockholders will vote at a meeting. ARTICLE III BOARD OF DIRECTORS Section 3.1. GENERAL POWERS. The business and affairs of the Corporation shall be managed under the direction of the Board of Directors. In addition to the powers and authorities by these By-laws expressly conferred upon them, the Board of Directors may exercise all such powers of the Corporation and do all such lawful acts and things as are not by statute or by the Certificate of Incorporation or by these By-laws required to be exercised or done by the stockholders. Section 3.2. NUMBER, TENURE AND QUALIFICATIONS. (A) Each director shall be at least 18 years of age. A director need not be a stockholder, a citizen of the United States, or a resident of the State of Delaware. The number of directors constituting the Whole Board shall be ten, or such other number as may be fixed from time to time by action of the -5- stockholders or Board of Directors, one of whom may be selected by the Board of Directors to be its Chairman. (B) Directors who are elected at an annual meeting of stockholders, and directors who are elected in the interim to fill vacancies and newly created directorships, shall hold office until the next annual meeting of stockholders and until their successors are elected and qualified or until their earlier resignation or removal. Section 3.3. REGULAR MEETINGS. A regular meeting of the Board of Directors shall be held without other notice than this Section 3.3 immediately after, and at the same place as, the Annual Meeting of Stockholders. The Board of Directors may fix the time and place for the holding of additional regular meetings without notice. Section 3.4. SPECIAL MEETINGS. Special meetings of the Board of Directors shall be called at the request of the Chairman of the Board, the President or a majority of the directors then in office. The person or persons authorized to call special meetings of the Board of Directors may fix the place and time of such meetings. Section 3.5. NOTICE. Notice of any special meeting or notice of a change in the time or place of any regular meeting of the Board of Directors shall be given to each director at his or her business or residence in writing by hand delivery, first-class or overnight mail or courier service, telegram, or facsimile or other electronic transmission (including electronic mail), or orally by telephone. If mailed by first-class mail, such notice shall be deemed adequately delivered when deposited in the U.S. mails so addressed, with postage thereon prepaid, at least five (5) days before such meeting. If by telegram, overnight mail or courier service, such notice shall be deemed adequately delivered when the telegram is delivered to the telegraph company or the notice is delivered to the overnight mail or courier service company at least twenty-four (24) hours before such meeting. If by facsimile or other electronic transmission, such notice shall be deemed adequately delivered when the notice is transmitted at least twelve (12) hours before such meeting. If by telephone, the notice shall be communicated to the director or his or her representative or answering machine. If by telephone or by hand delivery, the notice shall be given at least twenty-four (24) hours prior to the time set for the meeting. Neither the business to be transacted at, nor the purpose of, any regular or special meeting of the Board of Directors need be specified in the notice of such meeting, except for amendments to these By-laws, as provided under Section 8.1. A meeting may be held at any time without notice if all the directors are present or if those not present waive notice of the meeting in accordance with Section 6.4 of these By-laws. Section 3.6. ACTION BY CONSENT OF BOARD OF DIRECTORS. Any action required or permitted to be taken at any meeting of the Board of Directors or of any committee thereof may be taken without a meeting if all members of the Board of Directors or committee, as the case may be, consent thereto in writing, and the writing or writings are filed with the minutes of proceedings of the Board of Directors or committee. -6- Section 3.7. CONFERENCE TELEPHONE MEETINGS. Members of the Board of Directors, or any committee thereof, may participate in a meeting of the Board of Directors or such committee by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other, and such participation in a meeting shall constitute presence in person at such meeting. Section 3.8. QUORUM. Subject to Section 3.9, seven directors shall constitute a quorum for the transaction of business. If at any meeting of the Board of Directors there shall be less than a quorum present, a majority of the directors present may adjourn the meeting from time to time without further notice. The act of the majority of the directors present at a meeting at which a quorum is present shall be the act of the Board of Directors. The directors present at a duly organized meeting may continue to transact business until adjournment, notwithstanding the withdrawal of enough directors to leave less than a quorum. Section 3.9. VACANCIES. Subject to applicable law and the rights of the holders of any series of Preferred Stock with respect to such series of Preferred Stock, and unless the Board of Directors otherwise determines, vacancies resulting from death, resignation, retirement, disqualification, removal from office or other cause, and newly created directorships resulting from any increase in the authorized number of directors, may be filled only by the affirmative vote of a majority of the remaining directors, though less than a quorum of the Board of Directors, and directors so chosen shall hold office for a term expiring at the annual meeting of stockholders at which the term of office of the class to which they have been elected expires and until such director's successor shall have been duly elected and qualified. No decrease in the number of authorized directors constituting the Whole Board shall shorten the term of any incumbent director. Section 3.10. COMMITTEES. The Board of Directors may establish one or more committees. Each Committee shall consist of two or more directors of the Corporation designated by the Board of Directors. The Board of Directors may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. Any such committee may to the extent permitted by law exercise such powers and shall have such responsibilities as shall be specified in the designating resolution. In the absence or disqualification of any member of such committee or committees, the member or members thereof present at any meeting and not disqualified from voting, whether or not constituting a quorum, may unanimously appoint another member of the Board of Directors to act at the meeting in the place of any such absent or disqualified member. Each committee shall keep written minutes of its proceedings and shall report such proceedings to the Board of Directors when requested. A majority of any committee may determine its action and fix the time and place of its meetings, unless the Board of Directors shall otherwise provide. Notice of such meetings shall be given to each member of the committee in the manner provided for in Section 3.5 of these By-laws. The Board of Directors shall have the power at any time to fill vacancies in, to change the -7- membership of, or to dissolve any such committee. Nothing herein shall be deemed to prevent the Board of Directors from appointing one or more committees consisting in whole or in part of persons who are not directors of the Corporation; PROVIDED, HOWEVER, that no such committee shall have or may exercise any authority of the Board of Directors. The term of office of a committee member shall be as provided in the resolution of the Board designating him or her but shall not exceed his or her term as a director. If prior to the end of his or her term, a committee member should cease to be a director, he or she shall cease to be a committee member. Any member of a committee may resign at any time by giving written notice to the Board of Directors, the Chairman of the Board, the President or the Secretary. Such resignation shall take effect as provided in Section 6.6 of these By-laws in the case of resignations by directors. Any member of a committee may be removed from such committee, either with or without cause, at any time, by resolution adopted by a majority of the Whole Board. Any vacancy in a committee shall be filled by the Board of Directors in the manner prescribed by these By-laws for the original designation of the members of such committee. Section 3.11. REMOVAL. Subject to the rights of the holders of any series of Preferred Stock with respect to such series of Preferred Stock, any director, or the entire Board of Directors, may be removed from office at any time by the stockholders, with or without cause. Section 3.12. RECORDS. The Board of Directors shall cause to be kept a record containing the minutes of the proceedings of the meetings of the Board of Directors and of the stockholders, appropriate stock books and registers and such books of records and accounts as may be necessary for the proper conduct of the business of the Corporation. ARTICLE IV OFFICERS Section 4.1. ELECTED OFFICERS. The elected officers of the Corporation shall be a Chairman of the Board, a Chief Executive Officer, a President, a Secretary, a Treasurer, and such other officers (including, without limitation, a Chief Financial Officer, Chief Operating Officer, and Controller) as the Board of Directors may deem necessary or desirable from time to time. The Chairman of the Board shall be chosen from among the directors. Each officer elected by the Board of Directors shall have such powers and duties as generally pertain to his or her respective office, subject to the specific provisions of this ARTICLE IV. Such officers shall also have such powers and duties as may be conferred from time to time by the Board of Directors. The Board of Directors may from time to time, elect, or the Chief Executive Officer or the President may appoint, such assistant officers (including one or more Assistant Vice Presidents, Assistant Secretaries, Assistant Treasurers and Assistant Controllers) as may be necessary or desirable for the conduct of the business of the Corporation. Such assistant -8- officers shall have such duties and shall hold their offices for such terms as shall be provided in these By-laws or as may be prescribed by the Board of Directors, the Chief Executive Officer or the President, as the case may be. The Chairman of the Board, the Chief Executive Officer, the President, and any Vice President or other individual authorized to act in the absence of any of the foregoing, shall be citizens of the United States. Any two or more offices may be held by the same natural person. Section 4.2. ELECTION AND TERM OF OFFICE. The elected officers of the Corporation shall be elected annually by the Board of Directors at the regular meeting of the Board of Directors held after the annual meeting of the stockholders or at any other time as the Board of Directors may deem proper. Each officer shall hold office until his successor shall have been duly elected and shall have qualified or until his death or until he shall resign, but any officer may be removed from office in the manner specified in Section 4.12 of these By-laws. No officer or assistant shall have any rights against the Corporation for compensation by virtue of such election beyond the date of the election of his or her successor, or his or her death, resignation or removal, whichever event shall first occur, except as otherwise provided in an employment contract or under an employee deferred compensation plan Section 4.3. CHAIRMAN OF THE BOARD. The Chairman of the Board shall preside at all meetings of the stockholders and of the Board of Directors. The Chairman of the Board shall have such other powers and duties in the management of the Corporation as may be prescribed from time to time by the Board of Directors. Section 4.4. CHIEF EXECUTIVE OFFICER. The Chief Executive Officer shall be responsible for the general management of the affairs of the Corporation and shall perform all duties incidental to that office. He or she shall make reports to the Board of Directors and the stockholders, and shall see that all orders and resolutions of the Board of Directors and any committee thereof are carried into effect. In the absence of or the inability to act of the Chairman of the Board, the Chief Executive Officer shall preside at all meetings of stockholders and of the Board of Directors. Except as otherwise directed by the Board of Directors, the Chief Executive Officer shall have the power to sign and execute, on behalf of the Corporation, any and all deeds, mortgages, bonds, agreements, contracts and other instruments, including cheques, promissory notes, drafts, and bills of exchange, in the ordinary course of business of the Corporation. In addition, except as otherwise directed by the Board of Directors, the Chief Executive Officer shall have the power to transfer, endorse for transfer, vote, consent or take any other action with respect to any securities of another issuer held or owned by the Corporation, and to make, execute and deliver any waiver, proxy or consent with respect to any such security, in the ordinary course of business of the Corporation. The Chief Executive Officer shall have such other powers and duties in the management of the Corporation as may be prescribed from time to time by the Board of Directors. Section 4.5. PRESIDENT. The President, shall, if he shall be the Chief Executive Officer, perform the duties assigned to the Chief Executive Officer. If the President shall not be the Chief Executive Officer, the President shall act in a general executive capacity and shall assist the Chief Executive Officer in the administration and operation of the Corporation's business and the -9- general supervision of its policies and affairs. In the absence of or the inability to act of the Chief Executive Officer, the President shall have all of the powers and perform all of the duties of the Chief Executive Officer. Except as otherwise directed by the Board of Directors or the Chief Executive Officer, the President shall have the power to sign and execute, on behalf of the Corporation, any and all deeds, mortgages, bonds, agreements, contracts and other instruments, including cheques, promissory notes, drafts, and bills of exchange, in the ordinary course of business of the Corporation. In addition, except as otherwise directed by the Board of Directors or the Chief Executive Officer, the President shall have the power to transfer, endorse for transfer, vote, consent or take any other action with respect to any securities of another issuer held or owned by the Corporation, and to make, execute and deliver any waiver, proxy or consent with respect to any such security, in the ordinary course of business of the Corporation. The President shall perform such other duties and have such other authority and powers as may be prescribed from time to time by the Board of Directors or as may be delegated from time to time by the Chief Executive Officer. Section 4.6. VICE PRESIDENTS. Each Vice President shall have such powers and shall perform such duties as shall be assigned to him by the Board of Directors. Section 4.7. CHIEF FINANCIAL OFFICER. The Chief Financial Officer (if any) shall be a Vice President and act in an executive financial capacity. He or she shall assist the Chief Executive Officer and the President in the general supervision of the Corporation's financial policies and affairs. Section 4.8. CHIEF OPERATING OFFICER. The Chief Operating Officer (if any) shall act in an executive capacity with respect to the business operations of the Corporation. He or she shall be assist the Chief Executive Officer and the President in the general supervision of the Corporation's daily operational activities. Section 4.9. TREASURER. The Treasurer shall exercise general supervision over the receipt, custody and disbursement of corporate funds. The Treasurer shall cause the funds of the Corporation to be deposited in such banks as may be authorized by the Board of Directors, or in such banks as may be designated as depositaries in the manner provided by resolution of the Board of Directors. He or she shall have such further powers and duties and shall be subject to such directions as may be granted or imposed upon him or her from time to time by the Board of Directors, the Chief Executive Officer or the President. Section 4.10. SECRETARY. The Secretary shall keep or cause to be kept in one or more books provided for that purpose, the minutes of all meetings of the Board of Directors, the committees of the Board of Directors and the stockholders; he or she shall see that all notices are duly given in accordance with the provisions of these By-laws and as required by law; he or she shall be custodian of the records and the seal of the Corporation and affix and attest the seal to all stock certificates of the Corporation (unless the seal of the Corporation on such certificates shall be a facsimile, as hereinafter provided) -10- and affix and attest the seal to all other documents to be executed on behalf of the Corporation under its seal; and he or she shall see that the books, reports, statements, certificates and other documents and records required by law to be kept and filed are properly kept and filed; and in general, he or she shall perform all the duties incident to the office of Secretary and such other duties as from time to time may be assigned to him or her by the Board of Directors, the Chief Executive Officer or the President. Section 4.11. CONTROLLER. The Controller shall have general control, charge and supervision of the accounts of the Corporation. He or she shall see that proper accounts are maintained and that all accounts are properly credited from time to time. He or she shall prepare or cause to be prepared the financial statements of the Corporation. Section 4.12. REMOVAL. Any officer elected by the Board of Directors may be removed by the affirmative vote of a majority of the Whole Board whenever, in their judgment, the best interests of the Corporation would be served thereby. Any assistant officer appointed by the Chief Executive Officer or the President may be removed by him or her whenever, in his or her judgment, the best interests of the Corporation would be served thereby. The removal of an officer or assistant officer shall be without prejudice to the contractual rights, if any, of the person so removed. Section 4.13. VACANCIES. A newly created elected office and a vacancy in any elected office because of death, resignation, or removal may be filled by the Board of Directors for the unexpired portion of the term at any meeting of the Board of Directors. ARTICLE V STOCK CERTIFICATES AND TRANSFERS Section 5.1. STOCK CERTIFICATES AND TRANSFERS. The interest of each stockholder of the Corporation shall be evidenced by certificates for shares of stock in such form as the appropriate officers of the Corporation may from time to time prescribe. The shares of the stock of the Corporation shall be transferred on the books of the Corporation by the holder thereof in person or by his or her attorney, upon surrender for cancellation of certificates for at least the same number of shares, with an assignment and power of transfer endorsed thereon or attached thereto, duly executed, with such proof of the authenticity of the signature as the Corporation or its agents may reasonably require. The certificates of stock shall be signed, countersigned and registered in such manner as the Board of Directors may by resolution prescribe, which resolution may permit all or any of the signatures on such certificates to be in facsimile. In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed upon a certificate has ceased to be such officer, transfer agent or registrar before such certificate is issued, it may be issued by the Corporation with the same effect as if he were such officer, transfer agent or registrar at the date of issue. -11- Section 5.2. LOST, STOLEN OR DESTROYED CERTIFICATES. No certificate for shares of stock in the Corporation shall be issued in place of any certificate alleged to have been lost, destroyed or stolen, except on production of such evidence of such loss, destruction or theft and on delivery to the Corporation of a bond of indemnity in such amount, upon such terms and secured by such surety, as the Board of Directors or any officer may in its or his or her discretion require. ARTICLE VI MISCELLANEOUS PROVISIONS Section 6.1. FISCAL YEAR. The fiscal year of the Corporation shall begin on the first day of January and end on the thirty-first day of December of each year. Section 6.2. DIVIDENDS. The Board of Directors may from time to time declare, and the Corporation may pay, dividends on its outstanding shares in the manner and upon the terms and conditions provided by law and the Certificate of Incorporation. Section 6.3. SEAL. The corporate seal shall have enscribed thereon the words "Corporate Seal," the year of incorporation and around the margin thereof the words "Seabulk International, Inc.". Section 6.4. WAIVER OF NOTICE. Whenever any notice is required to be given to any stockholder or director of the Corporation under the provisions of the General Corporation Law of the State of Delaware (the "GCL") or these By-laws, a waiver thereof in writing, signed by the person or persons entitled to such notice, whether before or after the time stated therein, shall be deemed equivalent to the giving of such notice. The attendance of any stockholder at a meeting in person or by proxy, without protesting at the beginning of the meeting the lack of notice of such meeting, shall constitute a waiver of notice of such stockholder. Neither the business to be transacted at, nor the purpose of, any annual or special meeting of the stockholders or the Board of Directors or committee thereof need be specified in any waiver of notice of such meeting. Section 6.5. AUDITS. The accounts, books and records of the Corporation shall be audited upon the conclusion of each fiscal year by an independent certified public accountant selected by the Board of Directors, and it shall be the duty of the Board of Directors to cause such audit to be done annually. Section 6.6. RESIGNATIONS. Any director or any officer or assistant officer, whether elected or appointed, may resign at any time by giving written notice of such resignation to the Chairman of the Board, the President, or the Secretary, and such resignation shall be deemed to be effective as of the close of business on the date said notice is received by the Chairman of the Board, -12- the President, or the Secretary, or at such later time as is specified therein. No formal action shall be required of the Board of Directors or the stockholders to make any such resignation effective. Section 6.7. INDEMNIFICATION AND INSURANCE. (A) Each person who was or is made a party or is threatened to be made a party to or is involved in any action, suit, or proceeding, whether civil, criminal, administrative or investigative (hereinafter, a "PROCEEDING"), by reason of the fact that he or she or a person of whom he or she is the legal representative is or was a director or officer 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 of a partnership, joint venture, trust or other enterprise, including service with respect to employee benefit plans maintained or sponsored by the Corporation, whether the basis of such proceeding is alleged action in an official capacity as a director, officer, employee or agent or in any other capacity while serving as a director, officer, employee or agent, shall be indemnified and held harmless by the Corporation to the fullest extent authorized by the GCL as the same exists or may hereafter be amended (but, in the case of any such amendment, only to the extent that such amendment permits the Corporation to provide broader indemnification rights than said law permitted the Corporation to provide prior to such amendment), against all expense, liability and loss (including attorneys' fees, judgments, fines, excise taxes or penalties and amounts paid or to be paid in settlement) reasonably incurred or suffered by such person in connection therewith, and such indemnification shall continue as to a person who has ceased to be a director, officer, employee or agent and shall inure to the benefit of his or her heirs, executors and administrators; PROVIDED, HOWEVER, that except as provided in paragraph (C) of this Section 6.7, the Corporation shall indemnify any such person seeking indemnification in connection with a proceeding (or part thereof) initiated by such person only if such proceeding (or part thereof) was authorized by the Board of Directors. The right to indemnification conferred in this Section 6.7 shall be a contract right and shall include the right to be paid by the Corporation the expenses incurred in defending any such proceeding in advance of its final disposition, such advances to be paid by the Corporation within 20 days after the receipt by the Corporation of a statement or statements from the claimant requesting such advance or advances from time to time; PROVIDED, HOWEVER, that if the GCL requires, the payment of such expenses incurred by a director or officer in his or her capacity as a director or officer (and not in any other capacity in which service was or is rendered by such person while a director or officer, including, without limitation, service to an employee benefit plan) in advance of the final disposition of a proceeding, shall be made only upon delivery to the Corporation of an undertaking by or on behalf of such director or officer, to repay all amounts so advanced if it shall ultimately be determined that such director or officer is not entitled to be indemnified under this Section 6.7 or otherwise. (B) To obtain indemnification under this Section 6.7, a claimant shall submit to the Corporation a written request, including therein or therewith such documentation and information as is reasonably available to the claimant and is reasonably necessary to determine whether and to what extent the claimant is entitled to indemnification. Upon written request by a claimant for indemnification pursuant to the first sentence of this paragraph (B), a -13- determination, if required by applicable law, with respect to the claimant's entitlement thereto shall be made as follows: (1) if requested by the claimant, by Independent Counsel (as hereinafter defined), or (2) if no request is made by the claimant for a determination by Independent Counsel, (i) by the Board of Directors by a majority vote of a quorum consisting of Disinterested Directors (as hereinafter defined), or (ii) if a quorum of the Board of Directors consisting of Disinterested Directors is not obtainable or, even if obtainable, such quorum of Disinterested Directors so directs, by Independent Counsel in a written opinion to the Board of Directors, a copy of which shall be delivered to the claimant, or (iii) if a quorum of Disinterested Directors so directs, by the stockholders of the Corporation. In the event the determination of entitlement to indemnification is to be made by Independent Counsel at the request of the claimant, the Independent Counsel shall be selected by the Board of Directors unless there shall have occurred within two years prior to the date of the commencement of the action, suit or proceeding for which indemnification is claimed a "Change of Control" (as defined below) in which case the Independent Counsel shall be selected by the claimant unless the claimant shall request that such selection be made by the Board of Directors. If it is so determined that the claimant is entitled to indemnification, payment to the claimant shall be made within 10 days after such determination. (C) If a claim under paragraph (A) of this Section 6.7 is not paid in full by the Corporation within 30 days after a written claim pursuant to paragraph (B) of this Section 6.7 has been received by the Corporation, the claimant may at any time thereafter bring suit against the Corporation to recover the unpaid amount of the claim and, if successful in whole or in part, the claimant shall be entitled to be paid also the expense of prosecuting such claim. It shall be a defense to any such action (other than an action brought to enforce a claim for expenses incurred in defending any proceeding in advance of its final disposition where the required undertaking, if any is required, has been tendered to the Corporation) that the claimant has not met the standard of conduct which makes it permissible under the GCL for the Corporation to indemnify the claimant for the amount claimed, but the burden of proving such defense shall be on the Corporation. Neither the failure of the Corporation (including its Board of Directors, Independent Counsel or stockholders) to have made a determination prior to the commencement of such action that indemnification of the claimant is proper in the circumstances because he or she has met the applicable standard of conduct set forth in the GCL, nor an actual determination by the Corporation (including its Board of Directors, Independent Counsel or stockholders) that the claimant has not met such applicable standard of conduct, shall be a defense to the action or create a presumption that the claimant has not met the applicable standard of conduct. (D) If a determination shall have been made pursuant to paragraph (B) of this Section 6.7 that the claimant is entitled to indemnification, the Corporation shall be bound by such determination in any judicial proceeding commenced pursuant to paragraph (C) of this Section 6.7. (E) The Corporation shall be precluded from asserting in any judicial proceeding commenced pursuant to paragraph (C) of this Section 6.7 that the -14- procedures and presumptions of this Section 6.7 are not valid, binding and enforceable and shall stipulate in such proceeding that the Corporation is bound by all the provisions of this Section 6.7. (F) The right to indemnification and the payment of expenses incurred in defending a proceeding in advance of its final disposition conferred in this Section 6.7 shall not be exclusive of any other right which any person may have or hereafter acquire under any statute, provision of the Certificate of Incorporation, these By-laws, agreement, vote of stockholders or Disinterested Directors or otherwise. No repeal or modification of this Section 6.7 shall in any way diminish or adversely affect the rights of any director, officer, employee or agent of the Corporation hereunder in respect of any occurrence or matter arising prior to any such repeal or modification. (G) The Corporation may maintain insurance, at its expense, to protect itself and any director, officer, employee or agent of the Corporation or another corporation, partnership, joint venture, trust or other enterprise against any expense, liability or loss, whether or not the Corporation would have the power to indemnify such person against such expense, liability or loss under the GCL. To the extent that the Corporation maintains any policy or policies providing such insurance, each such director or officer, and each such agent or employee to which rights to indemnification have been granted as provided in paragraph (H) of this Section 6.7, shall be covered by such policy or policies in accordance with its or their terms to the maximum extent of the coverage thereunder for any such director, officer, employee or agent. (H) The Corporation may, to the extent authorized from time to time by the Board of Directors, grant rights to indemnification, and rights to be paid by the Corporation the expenses incurred in defending any proceeding in advance of its final disposition, to any employee or agent of the Corporation to the fullest extent of the provisions of this Section 6.7 with respect to the indemnification and advancement of expenses of directors and officers of the Corporation. (I) If any provision or provisions of this Section 6.7 shall be held to be invalid, illegal or unenforceable for any reason whatsoever: (1) the validity, legality and enforceability of the remaining provisions of this Section 6.7 (including, without limitation, each portion of any paragraph of this By-law containing any such provision held to be invalid, illegal or unenforceable, that is not itself held to be invalid, illegal or unenforceable) shall not in any way be affected or impaired thereby; and (2) to the fullest extent possible, the provisions of this Section 6.7 (including, without limitation, each such portion of any paragraph of this By-law containing any such provision held to be invalid, illegal or unenforceable) shall be construed so as to give effect to the intent manifested by the provision held invalid, illegal or unenforceable. (J) For purposes of this Section 6.7: (1) "DISINTERESTED DIRECTOR" means a director of the Corporation who is not and was not a party to the matter in respect of which indemnification is sought by the claimant. -15- (2) "INDEPENDENT COUNSEL" means a law firm, a member of a law firm, or an independent practitioner, that is experienced in matters of corporation law and shall include any person who, under the applicable standards of professional conduct then prevailing, would not have a conflict of interest in representing either the Corporation or the claimant in an action to determine the claimant's rights under this Section 6.7. (3) "CHANGE OF CONTROL" has the meaning given such term in the Corporation's Stock Option Plan, as the same may be amended or superseded from time to time. (K) Any notice, request or other communication required or permitted to be given to the Corporation under this Section 6.7 shall be in writing and either delivered in person or sent by facsimile, telex, telegram, overnight mail or courier service, or certified or registered mail, postage prepaid, return receipt requested, to the Secretary of the Corporation and shall be effective only upon receipt by the Secretary. ARTICLE VII CONTRACTS, PROXIES, ETC. Section 7.1. CONTRACTS. Except as otherwise required by law, the Certificate of Incorporation or these By-laws, any contracts or other instruments may be executed and delivered in the name and on the behalf of the Corporation by such officer or officers of the Corporation as the Board of Directors may from time to time direct. Such authority may be general or confined to specific instances as the Board of Directors may determine. The Chairman of the Board, the President or any Vice President may execute bonds, contracts, deeds, leases and other instruments to be made or executed for or on behalf of the Corporation. Subject to any restrictions imposed by the Board of Directors or the Chairman of the Board, the President or any Vice President of the Corporation may delegate contractual powers to others under his or her jurisdiction, it being understood, however, that any such delegation of power shall not relieve such officer of responsibility with respect to the exercise of such delegated power. Section 7.2. PROXIES. Unless otherwise provided by resolution adopted by the Board of Directors, the Chairman of the Board, the President or any Vice President may from time to time appoint an attorney or attorneys or agent or agents of the Corporation, in the name and on behalf of the Corporation, to cast the votes which the Corporation may be entitled to cast as the holder of stock or other securities in any other corporation, any of whose stock or other securities may be held by the Corporation, at meetings of the holders of the stock or other securities of such other corporation, or to consent in writing, in the name of the Corporation as such holder, to any action by such other corporation, and may instruct the person or persons so appointed as to the manner of casting such votes or giving such consent, and may execute or cause to be executed in the name and on behalf of the Corporation and under its corporate seal or otherwise, all such written proxies or other instruments as he may deem necessary or proper in the premises. -16- ARTICLE VIII AMENDMENTS Section 8.1. AMENDMENTS. These By-laws may be altered, amended, or repealed at any meeting of the Board of Directors or of the stockholders, provided notice of the proposed change was given in the notice of the meeting and, in the case of a meeting of the Board of Directors, in a notice given not less than two days prior to the meeting; PROVIDED, HOWEVER, that, in the case of amendments by stockholders, notwithstanding any other provisions of these By-laws or any provision of law which might otherwise permit a lesser vote or no vote, but in addition to any affirmative vote of the holders of any particular class or series of the capital stock of the Corporation required by law, the Certificate of Incorporation or these By-laws, the affirmative vote of the holders of a majority of the voting power of all the then outstanding shares of the Voting Stock, voting together as a single class, shall be required to alter, amend or repeal any provision of these By-laws. -17- EX-99.3 5 g78328exv99w3.txt SEABULK - STOCKHOLDERS AGREEMENT 09/13/02 Exhibit 99.3 ================================================================================ STOCKHOLDERS' AGREEMENT dated as of September 13, 2002 among SEABULK INTERNATIONAL, INC., NAUTILUS ACQUISITION, L.P., C/R MARINE DOMESTIC PARTNERSHIP, L.P., C/R MARINE NON-U.S. PARTNERSHIP, L.P., C/R MARINE COINVESTMENT, L.P., C/R MARINE COINVESTMENT II, L.P. and GERHARD KURZ ================================================================================ TABLE OF CONTENTS Page ---- Article 1 DEFINITIONS.............................................1 1.1 Definitions.................................................1 Article 2 CORPORATE GOVERNANCE....................................9 2.1 Composition of the Board....................................9 2.2 Removal....................................................11 2.3 Vacancies..................................................12 2.4 Special Continuing Director Provisions.....................13 2.5 Committees.................................................13 2.6 Compensation...............................................14 2.7 Investor Protective Provisions.............................14 2.8 Minority Stockholder Protections...........................14 2.9 No Voting or Conflicting Agreements........................15 Article 3 RESTRICTIONS ON TRANSFER...............................15 3.1 General Restrictions.......................................15 3.2 Offer Notice...............................................15 3.3 Right of First Refusal.....................................15 3.4 Co-Sale Right..............................................16 3.5 Permitted Transfers by Kurz................................17 3.6 Exceptions.................................................17 3.7 Jones Act Compliance.......................................18 3.8 Transferees Bound..........................................18 3.9 Legend.....................................................18 3.10 Improper Transfer..........................................18 Article 4 REPURCHASE RIGHT.......................................19 4.1 Repurchase Right...........................................19 4.2 Legend.....................................................19 Article 5 REGISTRATION RIGHTS....................................19 5.1 Demand Registration........................................19 5.2 Incidental Registration....................................21 5.3 Holdback Agreements........................................23 i TABLE OF CONTENTS (CONTINUED) Page ---- 5.4 Registration Procedures....................................23 5.5 Indemnification by the Company.............................26 5.6 Indemnification by Participating Holders...................27 5.7 Conduct of Indemnification Proceedings.....................27 5.8 Contribution...............................................28 5.9 Participation in Public Offering...........................29 5.10 Assignment of Registration Rights..........................29 5.11 Limitation on Grant of Other Registration Rights...........30 Article 6 HOLDING COMPANY........................................30 6.1 Formation of a Holding Company.............................30 6.2 Stockholders Agreement.....................................30 6.3 Jones Act Compliance.......................................30 Article 7 MISCELLANEOUS..........................................31 7.1 Entire Agreement; No Inconsistent Agreements...............31 7.2 Binding Effect; Assignability; No Beneficiaries............31 7.3 Amendment; Waiver; Termination.............................31 7.4 Notices....................................................32 7.5 After-Acquired Shares......................................33 7.6 Headings and References to Sections........................33 7.7 Severability...............................................33 7.8 Counterparts...............................................33 7.9 APPLICABLE LAW.............................................33 7.10 Specific Enforcement.......................................34 7.11 Pronouns...................................................34 7.12 Trial by Jury..............................................34 ii STOCKHOLDERS' AGREEMENT STOCKHOLDERS' AGREEMENT dated as of September 13, 2002 (this "AGREEMENT"), among Seabulk International, Inc., a Delaware corporation (the "COMPANY"), Nautilus Acquisition, L.P., a Delaware limited partnership ("NAUTILUS"), C/R Marine Domestic Partnership, L.P., a Delaware limited partnership ("C/R U.S."), C/R Marine Non-U.S. Partnership, L.P., a Delaware limited partnership ("C/R NON-U.S."), C/R Marine Coinvestment, L.P., a Delaware limited partnership ("C/R COINVESTMENT") and C/R Marine Coinvestment II, L.P., a Delaware limited partnership ("C/R COINVESTMENT II" and, together with C/R U.S., C/R Non-U.S. and C/R Coinvestment, the "C/R ENTITIES") and Gerhard Kurz ("KURZ"). W I T N E S S E T H WHEREAS, the Company and the Stockholders desire to enter into certain agreements with respect to the Company. NOW, THEREFORE, in consideration of the foregoing covenants and agreements herein contained, the parties hereto agree as follows: ARTICLE 1 DEFINITIONS 1.1 DEFINITIONS. (a) The following terms, as used herein, have the following meanings: "ACQUISITION" has the meaning set forth in SECTION 6.1(A) of this Agreement. "ACQUISITION NOTICE" has the meaning set forth in SECTION 6.1(A) of this Agreement. "AFFILIATE" means, with respect to any Person, any other Person directly or indirectly controlling, controlled by, or under common control with such Person; PROVIDED, HOWEVER, that no Stockholder shall be deemed an Affiliate of any other Stockholder solely by reason of any investment in the Company. For the purpose of this definition, the term "CONTROL" (including with correlative meanings, the terms "CONTROLLING," "CONTROLLED BY" and "UNDER COMMON CONTROL WITH"), as used with respect to any Person, shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities or by contract or otherwise. "AGREEMENT" has the meaning set forth in the introductory paragraph hereof. "BOARD" means the Board of Directors of the Company. "BUSINESS COMBINATION" means (A) any merger or consolidation of the Company or any direct or indirect majority-owned subsidiary of the Company with any Control Person, or (B) any sale, lease, exchange, mortgage, pledge, transfer or other disposition (in one transaction or a series of transactions) by the Company or a majority-owned subsidiary of the Company, except proportionately as a stockholder of the Company, to or with a Control Person, whether as part of a dissolution (except as part of an insolvency or bankruptcy proceeding under applicable laws) or otherwise, of assets of the Company or of any direct or indirect majority-owned subsidiary of the Company which assets have an aggregate Fair Market Value equal to ten percent (10%) or more of either the aggregate Fair Market Value of all the assets of the Company determined on a consolidated basis or the aggregated Fair Market Value of all the outstanding stock of the Company; PROVIDED, HOWEVER, that the foregoing shall not apply to mortgages, pledges, transfers or other dispositions made pursuant to any credit facility or other loan or financing arrangement of the Company or any of its majority-owned subsidiaries with respect to which a Control Person is an agent or member of a bona fide syndication of financial institutions or other lenders. "BUSINESS DAY" means any day except a Saturday, Sunday or other day on which commercial banks in New York City are authorized by law to close. "BY-LAWS" means the By-laws of the Company in effect as of the date hereof, as amended from time to time. "CERTIFICATE OF INCORPORATION" means the Certificate of Incorporation of the Company, as in effect from time to time. "CHANGE OF CONTROL" means a transaction or series of transactions whereby any Person or group of Persons (within the meaning of the Exchange Act), other than any of the Stockholders or their Affiliates, shall have acquired beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of fifty percent (50%) or more of the issued and outstanding shares of Common Stock. "CITIZEN" has the meaning ascribed to such term in the Certificate of Incorporation. "CLOSINGS" shall mean the consummation of the transactions contemplated by the Purchase Agreements. "COMMON STOCK" means the Common Stock, par value $0.01 per share, of the Company. "COMMON STOCK EQUIVALENTS" means, without duplication with any other Common Stock or Common Stock Equivalents, any security of or right issued by the Company that is convertible into, exercisable for or exchangeable for, directly or indirectly, Common Stock of the Company, whether at the time of issuance or upon the passage of time or the occurrence of some future event. 2 "COMPANY" has the meaning set forth in the introductory paragraph hereof. "COMPANY PURCHASE AGREEMENT" means the Stock Purchase Agreement dated as of June 13, 2002, by and among the Company, Nautilus and the C/R Entities, as may be amended from time to time. "CONTINUING DIRECTORS" means directors selected by the Investor Stockholders pursuant to SECTION 5.07 of the Company Purchase Agreement to continue to serve on the Board following the closing of the transactions contemplated by the Company Purchase Agreement and any director that is designated to the Board to fill a vacancy created by the death, disability, retirement, resignation or removal of such a director. "CONTROL PERSON" means (x) a Person or group of Persons (as contemplated by Section 13(d)(3) of the Exchange Act) who beneficially owns (as determined pursuant to Rule 13d-3 promulgated under the Exchange Act) more than thirty percent (30%) of the outstanding shares of Voting Stock of the Company, (y) any Person or group of Persons who by agreement, arrangement or understanding has the right or power to elect a majority of the members of the board of directors of the Company, or (z) any Affiliate of any such Person or member of a group of such Persons described in clause (x) or (y) (other than the Company and direct or indirect majority-owned subsidiaries of the Company); provided that (i) no Person or group (an "EXEMPT PERSON") shall be a Control Person if, and for so long as, (A) the Exempt Person is not a Person or group described in clause (y) or an Affiliate of such Person or group and (B) a Person (who is not a member of a group that includes the Exempt Person) or group (which does not include the Exempt Person as a member), together with any Affiliates of such other Person (or member of such group) beneficially owns a majority of the outstanding shares of Voting Stock of the Company and (ii) no individual who is a member of management and a party to this Agreement shall be a Control Person solely by reason of being a party to this Agreement. "CORPORATE TRANSACTION" has the meaning set forth in SECTION 3.5 hereof. "CO-SALE ELECTION" has the meaning set forth in SECTION 3.4 hereof. "CO-SALE OFFER" has the meaning set forth in SECTION 3.4 hereof. "C/R COINVESTMENT" has the meaning set forth in the introductory paragraph of this Agreement. "C/R COINVESTMENT II" has the meaning set forth in the introductory paragraph of this Agreement. "C/R DIRECTORS" has the meaning set forth in SECTION 2.1(A)(II) of his Agreement. 3 "C/R ENTITIES" has the meaning set forth in the introductory paragraph of this Agreement. "C/R NON-U.S." has the meaning set forth in the introductory paragraph of this Agreement. "C/R PERMITTED TRANSFEREE" means (A) any general or limited partner of any C/R Entity (a "C/R PARTNER"), and any corporation, partnership, limited liability company or other entity that is an Affiliate of a C/R Partner (collectively with the C/R Partners, the "C/R AFFILIATES"); (B) any managing director, general partner, director, limited partner, member, officer or employee of any C/R Entity or in any C/R Affiliate (collectively, "C/R ASSOCIATES"); (C) the heirs, executors, administrators, testamentary trustees, legatees or beneficiaries of any C/R Associate; and (D) a trust, the beneficiaries of which, or a corporation, partnership or limited liability company, the stockholders, general or limited partners or members of which, include only C/R Affiliates, C/R Associates, their spouses or their lineal descendants. "C/R U.S." has the meaning set forth in the introductory paragraph of this Agreement. "C/R VOTING ENTITIES" means C/R U.S., C/R Coinvestment and C/R Coinvestment II. "DEMAND REGISTRATION" has the meaning set forth in SECTION 5.1(A) of this Agreement. "DGCL" means the General Corporation Law of the State of Delaware. "ELECTING STOCKHOLDERS" has the meaning set forth in SECTION 6.1(A) of this Agreement. "EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended, or any similar federal statute, and the rules and regulations of the SEC thereunder, all as the same shall be in effect from time to time. "FAIR MARKET VALUE" means with respect to property, securities or rights other than cash, its fair market value as determined by the Board; PROVIDED, that any publicly-traded securities shall be valued as follows: (a) If traded on a securities exchange or through the Nasdaq Stock Market, the value shall be deemed to be the average of the reported closing prices of the securities on such exchange or market over the thirty (30) day period ending three (3) days prior to the determination date; or (b) If actively traded over-the-counter, the value shall be deemed to be the average of the closing bid or sale prices (whichever is applicable) over the thirty (30) day period ending three (3) days prior to the determination date. 4 "FULLY DILUTED COMMON STOCK" means, at any time, the then outstanding shares of Common Stock plus (without duplication) all shares of Common Stock issuable, whether at such time or upon the passage of time or the occurrence of future events, upon the conversion, exchange or exercise of all then outstanding Common Stock Equivalents. "HOLDERS" means the Investor Stockholders and any Stockholder to whom an Investor Stockholder transfers registration rights pursuant to SECTION 5.10 of this Agreement. "HOLDING COMPANY" has the meaning set forth in SECTION 6.1(A) of this Agreement. "INCIDENTAL REGISTRATION" has the meaning set forth in SECTION 5.2(A) of this Agreement. "INCIDENTAL WITHDRAWAL ELECTION" has the meaning set forth in SECTION 5.2(B) of this Agreement. "INDEMNIFIED PARTY" has the meaning set forth in SECTION 5.7 of this Agreement. "INDEMNIFYING PARTY" has the meaning set forth in SECTION 5.7 of this Agreement. "INDEPENDENT DIRECTORS" has the meaning ascribed to such term in paragraph (a) of Article XIV of the Certificate of Incorporation. "INITIAL OWNERSHIP" of a Stockholder means the number of shares of Common Stock owned by such Stockholder immediately following the Closings and the number of shares of Common Stock issuable pursuant to Note Warrants (as defined in the Loomis Purchase Agreement) owned by such Stockholder immediately following the Closings (or the corresponding number of shares of Common Stock resulting from any stock dividend, stock split, combination of shares, reorganization, reclassification or other similar event). "INSPECTORS" has the meaning set forth in SECTION 5.4(G) of this Agreement. "INVESTOR DIRECTORS" means the Nautilus Directors and the C/R Directors. "INVESTOR STOCKHOLDERS" means Nautilus and the C/R Entities (including as such terms may be defined pursuant to SECTIONS 1.1(B) and (C) hereof). "KURZ" has the meaning set forth in the introductory paragraph hereof. 5 "KURZ PERMITTED TRANSFEREE" means, with respect to Kurz, a trust that is for the exclusive benefit of, or a partnership the partners of which are exclusively, Kurz or the spouse, issue or parent of Kurz; a corporation or other entity, all of the capital stock or other equity of which is held by Kurz or the spouse, issue or parent of Kurz; or the estate or legal representative of Kurz. "LOOMIS PURCHASE AGREEMENT" means the Securities Purchase Agreement dated as of June 13, 2002, by and among Loomis, Sayles & Company, L.P., Nautilus and the C/R Entities, as may be amended from time to time. "MANAGEMENT DIRECTOR" has the meaning set forth in SECTION 2.1(A)(III) of this Agreement. "MAXIMUM OFFERING SIZE" has the meaning set forth in SECTION 5.1(D) of this Agreement. "MINORITY STOCKHOLDERS" shall mean the holders of Common Stock of the Company, other than any holder that constitutes a Control Person. "MUTUAL DIRECTORS" has the meaning set forth in SECTION 2.1(A)(IV) of this Agreement. "NASD" has the meaning set forth in the definition of "REGISTRATION EXPENSES" in this SECTION 1.1. "NAUTILUS" has the meaning set forth in the introductory paragraph of this Agreement. "NAUTILUS DIRECTORS" has the meaning set forth in SECTION 2.1(A)(I) of this Agreement. "NAUTILUS PERMITTED TRANSFEREE" means (A) any general or limited partner, member or stockholder of Nautilus (a "NAUTILUS PARTNER"), and any corporation, partnership, limited liability company, or other entity that is an Affiliate of any Nautilus Partner (collectively, the "NAUTILUS AFFILIATES"); (B) any managing director, general partner, director, limited partner, officer or employee of Nautilus or in any Nautilus Affiliate (collectively, "NAUTILUS ASSOCIATES"); (C) the heirs, executors, administrators, testamentary trustees, legatees or beneficiaries of any Nautilus Associate; and (D) a trust, the beneficiaries of which, or a corporation or partnership, the stockholders or general or limited partners of which, include only Nautilus, Nautilus Affiliates, Nautilus Associates, their spouses or their lineal descendants. "NOMINEE" has the meaning set forth in SECTION 2.3(A) of this Agreement. "NON-ACCEPTING OFFEREE" has the meaning set forth in SECTION 3.3 of this Agreement. 6 "OFFEREE" has the meaning set forth in SECTION 3.2 of this Agreement. "OPTION" has the meaning set forth in SECTION 3.3 of this Agreement. "PERMITTED TRANSFEREE" means, in the case of Nautilus, a Nautilus Permitted Transferee, in the case of a C/R Entity, a C/R Permitted Transferee, or in the case of Kurz, a Kurz Permitted Transferee. "PERSON" means an individual, corporation, partnership, association, limited liability company, trust or other entity or organization, including a government or political subdivision or an agency or instrumentality thereof. "PUBLIC OFFERING" means an underwritten offering of Registrable Shares. "PUBLIC SALE" means a sale (i) pursuant to an effective registration statement under the Securities Act or (ii) under Rule 144 or similar rule. "PURCHASE AGREEMENTS" means the Company Purchase Agreement and the Loomis Purchase Agreement. "QUALIFIED MINORITY TRANSACTION" means a Business Combination that follows a public tender offer for voting stock by a Control Person where (i) the Control Person purchases all shares that are validly tendered and (ii) to the extent that a Control Person has purchased shares of such voting stock in the six (6) month period prior to the consummation of the tender offer, the offer price is, at a minimum, the highest price per share paid by such Control Person or an Affiliate of such Control Person in the six (6) month period prior to the commencement of the tender offer. "RECORDS" has the meaning set forth in SECTION 5.4(G) of this Agreement. "REGISTRABLE SHARES" means all shares of Common Stock then held by a Holder (including, but not limited to, any Common Stock issuable upon exercise or conversion of any Common Stock Equivalents) and all other shares of capital stock of the Company and shares of capital stock of the Company issued or issuable upon conversion, exercise or exchange of securities of the Company then held by a Holder. "REGISTRATION EXPENSES" means (i) all registration and prospectus filing fees, (ii) fees and expenses of compliance with securities or blue sky laws (including reasonable fees and disbursements of counsel in connection with blue sky qualifications of the Registrable Shares, if any), (iii) printing expenses, (iv) internal expenses of the Company (including, without limitation, all salaries and expenses of its officers and employees performing legal or accounting duties), (v) reasonable fees and disbursements of counsel for the Company and customary fees and expenses for independent certified public or chartered accountants retained by the Company (including the expenses of any comfort letters or costs associated with the delivery by such accountants of a comfort letter or comfort letters requested pursuant to SECTION 5.4(H) hereof), (vi) the reasonable 7 fees and expenses of any special experts retained by the Company in connection with such registration, (vii) reasonable fees and expenses of counsel for all Holders, (viii) fees and expenses in connection with any review of underwriting arrangements by the National Association of Securities Dealers, Inc. (the "NASD") including fees and expenses of any "qualified independent underwriter," (ix) fees and expenses of listing the Registrable Shares on an exchange or other trading system and (x) fees and disbursements of underwriters customarily paid by issuers or sellers of securities; but shall not include any underwriting fees, discounts or commissions attributable to the sale of Registrable Shares, or any out-of-pocket expenses (except as set forth in clause (vii) above) of the Holders (or the agents who manage their accounts), or any fees and expenses of underwriter's counsel. "REPRESENTATIVE" has the meaning set forth in SECTION 2.5(B) of this Agreement. "REQUESTING STOCKHOLDER" has the meaning set forth in SECTION 5.1(A) of this Agreement. "RULE 144" means Rule 144 (or any successor provision) under the Securities Act, as such rule may be amended from time to time. "SEC" means the Securities and Exchange Commission or any successor thereto performing similar regulatory functions. "SECURITIES ACT" means the Securities Act of 1933, as amended, or any similar federal statute, and the rules and regulations of the SEC thereunder, all as the same shall be in effect from time to time. "STOCKHOLDERS" means Nautilus, the C/R Entities, Kurz and those Persons to whom shares of Common Stock and/or Common Stock Equivalents are transferred and who become a party hereto in accordance with SECTION 3.8 hereof. "TRANSFER" has the meaning set forth in SECTION 3.1(A) hereof. "TRANSFEROR" has the meaning set forth in SECTION 3.2 hereof. "TRANSFEROR'S NOTICE" has the meaning set forth in SECTION 3.2 hereof. "TRANSFEROR'S SECURITIES" has the meaning set forth in SECTION 3.2 hereof. "U.S. STOCKHOLDER" means any Stockholder that is a Citizen. "VOTING STOCK" means stock of the Company of any class or series that entitles its holder to vote in the election of directors. "WITHDRAWAL ELECTION" has the meaning set forth in SECTION 5.1(D) of this Agreement. 8 (b) The term "NAUTILUS" (including in any case where such term is included in another defined term hereunder), to the extent that Nautilus shall have transferred any of its shares of Common Stock and/or Common Stock Equivalents to the Nautilus Permitted Transferees, shall mean Nautilus and the Nautilus Permitted Transferees, and any right or action that may be taken at the election of Nautilus may be taken at the election of Nautilus on behalf of itself and the Nautilus Permitted Transferees, as the case may be; PROVIDED, HOWEVER, that for purposes of ARTICLE 2 hereof the term "NAUTILUS" shall not include any Nautilus Permitted Transferee to the extent that such Nautilus Permitted Transferee is not a Citizen. (c) The term "C/R ENTITIES" (including in any case where such term is included in another defined term hereunder), to the extent a C/R Entity shall have transferred any of its shares of Common Stock and/or Common Stock Equivalents to C/R Permitted Transferees, shall mean the C/R Entities and the C/R Permitted Transferees, and any right or action that may be taken at the election of the C/R Entities may be taken at the election of C/R U.S. on behalf of the C/R Entities and the C/R Permitted Transferees, as the case may be; provided, HOWEVER, that for purposes of ARTICLE 2 hereof the term "C/R ENTITIES" shall not include any C/R Permitted Transferee to the extent that such C/R Permitted Transferee is not a Citizen. (d) The words "HEREIN," "HEREOF" and "HEREUNDER" and other words of similar import refer to this Agreement as a whole, including the schedules and exhibits hereto, as the same may from time to time be amended or supplemented, and not to any particular section, subsection or clause contained in this Agreement. Article 2 CORPORATE GOVERNANCE 2.1 COMPOSITION OF THE BOARD. (a) The Board shall consist of ten (10) directors appointed in accordance with this SECTION 2.1. At any time at which the stockholders of the Company will have the right to vote for, or will vote for, or consent in writing to, the election or appointment of directors of the Company, Nautilus and each of the C/R Voting Entities hereby agrees to vote or cause to be voted all shares of Common Stock owned or hereafter acquired by it, or over which it has voting control, in favor of the following actions: (i) NAUTILUS DESIGNEES. To cause and maintain the election to the Board of the following number of designees of Nautilus, the names of which shall be submitted to the Company in writing by Nautilus (the "NAUTILUS DIRECTORS"): (1) For so long as Nautilus continues to own shares of Common Stock representing at least 50% of its Initial Ownership, four (4) designees; 9 (2) For so long as Nautilus continues to own shares of Common Stock representing less than 50% but at least 10% of its Initial Ownership, two (2) designees; (3) For so long as Nautilus continues to own shares of Common Stock representing less than 10% but at least 5% of its Initial Ownership, one (1) designee; and (4) At such time as Nautilus owns shares of Common Stock representing less than 5% of its Initial Ownership, it shall no longer be entitled to designate any directors to the Board. (ii) C/R DESIGNEES. To cause and maintain the election to the Board of the following number of designees of C/R U.S., the names of which shall be to the Company in writing by C/R U.S. (the "C/R DIRECTORS"): (1) For so long as the C/R Entities continue to own in the aggregate shares of Common Stock representing at least 50% of their aggregate Initial Ownership, two (2) designees; (2) For so long as the C/R Entities continue to own in the aggregate shares of Common Stock representing less than 50% but at least 10% of their aggregate Initial Ownership, one (1) designee; and (3) At such time as the C/R Entities own in the aggregate shares of Common Stock representing less than 10% of their aggregate Initial Ownership, it shall no longer be entitled to designate any directors to the Board. (iii) MANAGEMENT DIRECTOR. To cause and maintain the election to the Board of the then duly appointed and serving Chief Executive Officer of the Company (as such, the "MANAGEMENT DIRECTOR"). (iv) MUTUAL DIRECTORS. So long as Article XIV of the Certificate of Incorporation is in effect, to cause and maintain the election to the Board of three (3) Independent Directors, who shall be acceptable to (A) Nautilus, so long as it continues to own shares of Common Stock representing at least 5% of its Initial Ownership, and (B) C/R U.S. so long as the C/R Entities continue to own in the aggregate shares of Common Stock representing at least 10% of their aggregate Initial Ownership (the "MUTUAL DIRECTORS"); PROVIDED, HOWEVER, that the initial Mutual Directors shall be Continuing Directors; provided, further, that in the event there are less than three (3) Independent Directors and Nautilus and C/R U.S. fail to agree on an acceptable Independent Director to fill such vacancy within ninety (90) days of the occurrence of such vacancy (or within such shorter period as may be required if such vacancy is required to be filled prior to such date by applicable law or rule or listing requirement of any national stock exchange or SEC recognized trading market on which securities issued by the Company are listed 10 or quoted that is applicable to the Company), then the remaining Independent Director(s) shall designate an Independent Director to fill such vacancy. (b) Immediately upon the Closings, the Nautilus Directors shall be Ari Benacerraf, David Durkin, Kenneth V. Huseman, and Steven Webster; the C/R Directors shall be Pierre F. Lapeyre and David M. Leuschen; the Management Director shall be Kurz; and the Mutual Directors shall be Peter H. Cressy, Robert L. Keiser and Thomas P. Moore, Jr. (c) In furtherance of the foregoing, Nautilus and each of the C/R Voting Entities hereby agrees to take all necessary action in order to ensure that the composition of the Board is as set forth in this SECTION 2.1; provided, however, that nothing contained herein shall require Nautilus and the C/R Voting Entities to take action to ensure the composition of the Board in the manner set forth in this SECTION 2.1 to the extent that such composition would be in contravention of any law or rule or listing requirement of any national stock exchange or SEC recognized trading market on which securities issued by the Company are listed or quoted that is applicable to the Company. (d) In the event that at any time during the term of this Agreement any Person or Persons entitled under this SECTION 2.1 to designate a director is no longer entitled to designate one or more persons to serve as directors, then such director position(s) shall be filled by the remaining directors or by the stockholders of the Company in accordance with the DGCL, the Certificate of Incorporation and the By-laws. Notwithstanding that a Person or Persons is no longer entitled to designate one or more persons to serve as directors under this SECTION 2.1, nothing herein shall preclude an Affiliate, partner or associate of such Person from serving on the Board if such person is elected in accordance with this SECTION 2.1(D). (e) In furtherance of the foregoing, promptly following such designations, the Company will take all action necessary to elect the Nautilus Directors, the C/R Directors, the Management Director and the Mutual Directors as members of the Board. Without limiting the foregoing the Company agrees to cause each such designee to be nominated for election to the Board at each annual meeting of the Company's stockholders or any special meeting in lieu thereof. To the extent the Company's proxy statement for any annual meeting of stockholders, or any special meeting in lieu thereof, includes a recommendation regarding the election of any other nominees to the Board, the Company agrees to include a recommendation of its Board that the stockholders also vote in favor of each such designee pursuant to this Agreement standing for election at such meeting. The Company shall take all actions necessary to ensure that the Certificate of Incorporation and By-laws as in effect immediately following the date hereof and at any time thereafter do not conflict in any respect with the provisions of this ARTICLE 2. 2.2 REMOVAL. (a) If any Person(s) entitled to designate a director requests that any of its or their respective designees be removed as a director (with or without cause) by written 11 notice thereof to the Company, each U.S. Stockholder shall vote all of its shares of Common Stock in favor of such removal upon such request. (b) Each U.S. Stockholder agrees that if at any time it is then entitled to vote for the removal of directors of the Company, it shall not vote any of its shares of Common Stock in favor of, or take any other action related to, the removal of any director who shall have been designated pursuant to SECTION 2.1 unless the Person(s), if any, entitled to designate or nominate such director shall have consented to such removal in writing or unless requested by such Person(s) pursuant to SECTION 2.2(A) or unless such removal is pursuant to SECTION 2.3(B). (c) Notwithstanding SECTIONS 2.2(A) and (B) above, each U.S. Stockholder agrees that, for a period of one (1) year following the date hereof, it shall not vote any of its shares of Common Stock in favor of the removal of any Continuing Director, unless such removal is for cause (as determined in accordance with Section 141 of the DGCL). 2.3 VACANCIES. (a) If, as a result of death, disability, retirement, resignation or removal (for any or no reason) of a director designated pursuant to SECTION 2.1, there shall exist or occur any vacancy of the Board (other than with respect to the Management Director): (i) the Person or Persons entitled under SECTION 2.1 to designate such director whose death, disability, retirement, resignation or removal resulted in such vacancy shall (so long as such person is then entitled), as promptly as reasonably possible, designate another individual (the "NOMINEE") to fill such capacity and serve as a director of the Company; and (ii) Nautilus and each of the C/R Voting Entities shall vote his, her or its shares of Common Stock, or execute a written consent, as the case may be, and take all such other actions to ensure that the Nominee will be elected to the Board. Any vacancy that occurs shall be filled as promptly as possible upon the designation of a Nominee by the Person or Persons having the right to nominate a Nominee to fill such vacancy. (b) If, prior to or following his or her election to the Board of Directors of the Company pursuant to SECTION 2.1(A)(III) hereof, the Management Director shall be unable or unwilling to serve as a director of the Company, shall resign or be removed or be unable to serve for any reason prior to the expiration of his or her term as a director of the Company, or shall cease to be the Chief Executive Officer of the Company for any reason, then the Board shall elect a replacement designee (to be nominated by (A) Nautilus, so long as it continues to own shares of Common Stock representing at least 5% of its Initial Ownership, and (B) C/R U.S. so long as the C/R Entities continue to own in the aggregate shares of Common Stock representing at least 10% of their aggregate Initial Ownership) to fill the unexpired term of the Management Director; PROVIDED, HOWEVER, that at such time as the Chief Executive Officer of the Company shall be able and willing 12 to serve as a director such replacement designee shall be removed (and each of the Stockholders shall vote all of his or her or its Common Stock in favor of such removal) and the Chief Executive Officer shall be appointed by the Board of Directors to fill such vacancy; IT BEING UNDERSTOOD that upon any Person's ceasing to the Chief Executive Officer of the Company, including but not limited to, as a result of the resignation, renewal or termination of such Person, such Person shall immediately be removed as a director. 2.4 SPECIAL CONTINUING DIRECTOR PROVISIONS. For a period of one (1) year after the Closings, the Investor Stockholders shall not take any action that will cause the Continuing Directors to represent less than a majority of the total number of Independent Directors, except to the extent necessary to comply with any law or rule or listing requirement of any national stock exchange or SEC recognized trading market on which securities issued by the Company are listed or quoted that is applicable to the Company. Additionally, to the extent that an annual meeting of stockholders of the Company is held for the election of the directors during the first (1st) year after the Closings, Nautilus and the C/R Voting Entities will vote for the election of the Continuing Directors then serving as directors to serve an additional one (1) year term. 2.5 COMMITTEES. (a) From and after the date hereof, the Company, to the extent requested by Nautilus and the C/R Voting Entities, Nautilus and each of the C/R Voting Entities shall cause the Board of Directors to designate at least one Nautilus Director and at least one C/R Director to serve on each of the audit committee and the compensation committee of the Board, except to the extent that such designation would not comply with any law or rule or listing requirement of any national stock exchange or SEC recognized trading market on which securities issued by the Company are listed or quoted that is applicable to the Company. (b) If at any time that Nautilus or the C/R Voting Entities do not have a representative on any committee of the Board then Nautilus or the C/R Voting Entities, as the case may be, shall have the right to select one representative (each a "REPRESENTATIVE") who shall (i) receive all notices and information that the Company distributes to each such committee at the time such notices and information are distributed to members of such committees, and (ii) have the right to attend and observe in a nonvoting capacity all meetings of such committees; provided, however, (x) that the Company reserves the right to exclude each Representative from access to any material or meeting or portion thereof if the Company believes upon advice of counsel that such exclusion is reasonably necessary to preserve the attorney-client privilege; (y) that each Representative shall agree to maintain the confidentiality of all Company information and all proceedings at such committees to the same extent as he would be required to do if he were a member of such committee; and (z) that such designation shall not conflict with any law or rule or listing requirement of any national stock exchange or SEC recognized trading market on which securities issued by the Company are listed or quoted that is applicable to the Company. 13 2.6 COMPENSATION. Each director of the Board shall receive fees or other compensation as may be determined from time to time by the Board; PROVIDED, HOWEVER, that directors shall be entitled to reimbursement for all reasonable out-of-pocket expenses incurred in connection with their services as directors, including, without limitation, those out-of-pocket expenses incurred in connection with their travel to and attendance at Board and Board committee meetings. 2.7 INVESTOR PROTECTIVE PROVISIONS. So long as Nautilus owns at least 15% of the Fully Diluted Common Stock of the Company, the following matters will require unanimous affirmative approval of the Investor Directors appointed by Nautilus, and so long as the C/R Entities own, in the aggregate, at least 15% of the Fully Diluted Common Stock of the Company, the following matters will require unanimous approval of the Investor Directors appointed by the C/R Voting Entities: (a) any purchase or other acquisition by the Company of capital stock of the Company, directly or indirectly, except in connection with the purchase of shares of Common Stock from former employees, consultants and directors of the Company; (b) any transaction for which the approval of Independent Directors would be required pursuant to paragraph (c) of Article XIV of the Certificate of Incorporation; (c) any issuance of securities of the Company, other than (i) pursuant to employee or director compensation arrangements approved by the Board, (ii) ordinary trade debt and (iii) in conjunction with equipment leases; and (d) any amendment to the Certificate of Incorporation or By-laws. 2.8 MINORITY STOCKHOLDER PROTECTIONS. Until the earliest to occur of (a) the second anniversary of this Agreement, (b) the consummation of a Qualified Minority Transaction or (c) the consummation of a Business Combination in compliance with the Certificate of Incorporation, at any time a Control Person beneficially owns (as determined pursuant to Rule 13d-3 of the Exchange Act) 90% or more of the outstanding shares of Common Stock, the Company shall not enter into a Business Combination (including a merger pursuant to Section 253 of the General Corporation Law of Delaware) without the approval of holders of a majority of the outstanding shares of Common Stock held by Minority Stockholders, PROVIDED, HOWEVER, that such approval shall not be required for (x) a Business Combination that occurs within 150 days following the consummation of a tender offer by a Control Person for all of the shares of the Common Stock then held by the Minority Stockholders, provided that (i) such tender offer is subject to the nonwaiveable condition that there have been validly tendered and not withdrawn a majority of the shares of Common Stock then held by the Minority Stockholders; (ii) such condition is met; and (iii) the Fair Market Value of the consideration to be paid in respect of shares of Common Stock held by remaining Minority Stockholders in such merger shall be no less than the Fair Market Value of the consideration paid per share in such tender offer or (y) a Qualified Minority Transaction. 14 2.9 NO VOTING OR CONFLICTING AGREEMENTS. No Stockholder shall grant any proxy or enter into or agree to be bound by any voting trust or agreement with respect to the shares of Common Stock held by such Stockholder, nor shall any Stockholder enter into any agreements or arrangements of any kind with any Person that contain provisions that are inconsistent with the provisions of this Agreement. ARTICLE 3 RESTRICTIONS ON TRANSFER 3.1 GENERAL RESTRICTIONS. No Stockholder may, directly or indirectly, sell, assign, transfer, offer, grant a participation in, mortgage, pledge, hypothecate, create a security interest in or lien upon, encumber, donate, contribute, place in trust, or otherwise dispose of (collectively, "TRANSFER") any shares of Common Stock or Common Stock Equivalents, except in compliance with this Agreement. 3.2 OFFER NOTICE. In the event that a Stockholder (a "TRANSFEROR") proposes to Transfer for value any Common Stock and/or Common Stock Equivalents held by such Stockholder (the "TRANSFEROR'S SECURITIES"), then the Transferor shall, no later than fifteen (15) days prior to the consummation of such transaction, give notice in writing of such transaction (the "TRANSFEROR'S NOTICE") to each other Stockholder (an "OFFEREE") stating (i) the Transferor's bona fide intention to Transfer the Transferor's Securities, (ii) the number and kind of the Transferor's Securities to be Transferred, (iii) the price and terms for such proposed Transfer, (iv) the name of the proposed transferee and that such proposed transferee is committed to acquire the stated number of the Transferor's Securities on the stated price and terms, and (v) a representation that such proposed transferee has been informed of the rights provided for in this ARTICLE 3 and has agreed to purchase the Transferor's Securities in accordance with the terms hereof. 3.3 RIGHT OF FIRST REFUSAL. In the event a Transferor proposes to Transfer any of the Transferor's Securities pursuant to SECTION 3.2 above, then the Transferor's Notice shall also contain an offer to sell (the "OPTION") to each of the Offerees, at the same price and for the same consideration specified to be paid by the proposed transferee (provided that, in the event any of such consideration is non-cash consideration, at the election of such Offeree, such Offeree may pay cash equal to the Fair Market Value of such non-cash consideration), the Transferor's Securities to be sold in the proposed Transfer in proportion to the number of shares of Common Stock owned by each Offeree. If any Offeree to whom the Option is given fails to accept (a "NON-ACCEPTING OFFEREE") in writing the Option by the fifteenth (15th) day after the Transferor's delivery of the Transferor's Notice, then the Transferor shall promptly notify the Offerees accepting such Option in writing of such failure and such other Offerees may purchase such Transferor's Securities that were offered to such Non-Accepting Offeree in the proportions upon which they mutually agree, or, if they are unable to agree upon an allocation of such Transferor's Securities among themselves, then in proportion to the number of shares of Common Stock owned by each such Offeree who wishes to purchase such Transferor's Securities. Unless, through exercise of the Option, all the Transferor's 15 Securities proposed to be Transferred in the Transferor's Notice are to be acquired by the Offerees, the Transferor may Transfer, subject to the remaining provisions of this ARTICLE 3, all of such Transferor's Securities covered by the Transferor's Notice in accordance with the terms of such Transfer set forth in the Transferor's Notice; PROVIDED, HOWEVER, that such Transfer must occur no later than thirty (30) days after the date the Transferor's Notice was received by the Offerees; PROVIDED FURTHER, that if such Transfer is subject to any prior regulatory approval and the Transferor and the proposed transferee act in a commercially reasonable manner to obtain such regulatory approval, the time period during which such Transfer may be consummated shall be extended until the expiration of five (5) Business Days after all such approvals shall have been received; and PROVIDED FURTHER, that such time period shall not exceed ninety (90) days from the date the Transferor's Notice was received by the Offerees. If the Option is accepted in a manner such that all the Transferor's Securities covered by the Transferor's Notice are to be acquired by the Offerees, the Transferor shall Transfer all such Transferor's Securities (free and clear of all liens and encumbrances other than those created hereunder) to the applicable Offerees within twenty (20) days after the date such Option is accepted by such Offerees, against delivery by such Offerees of the consideration payable to the Transferor; PROVIDED, however, that such closing may be extended by the Offerees to obtain any required governmental approvals or to call capital, if applicable. 3.4 CO-SALE RIGHT. The Transferor's Notice delivered pursuant to SECTION 3.2 (unless such Transferor's Notice is delivered by Kurz, who shall not be bound by the obligations of this SECTION 3.4) shall also state (the "CO-SALE OFFER") that, in lieu of exercising the Option, or if less than all of the Transferor's Securities covered by the Transferor's Notice are to be purchased as a result of the exercise of the Option, then each Offeree (other than Kurz, who shall not be entitled to any of the rights of this SECTION 3.4) shall have the right to have included in the proposed Transfer a portion of the Common Stock and/or Common Stock Equivalents to be Transferred, which shall be the product of (i) the number of shares (including shares issuable upon exercise or conversion of Common Stock Equivalents to be transferred) covered by the Transferor's Notice and (ii) a fraction, the numerator of which is the number of shares of Common Stock held by such Offeree, and the denominator of which in the aggregate number of all shares of Common Stock held by the Transferor and all Offerees electing to accept the Co-Sale Offer. If any Offeree elects to participate in the proposed Transfer pursuant to this SECTION 3.4 (a "CO-SALE ELECTION") by providing written notice thereof to the Transferor by the fifteenth (15th) day after delivery of the Transferor's Notice, such Offeree shall convert the portion of its then-convertible or exercisable Common Stock Equivalents to be included in the proposed Transfer to Common Stock prior to any such Transfer to the extent the Transferor is transferring shares of Common Stock. The Company and the Transferor agree to make any such conversion or exercise concurrent with the actual Transfer to the proposed transferee. If any Offeree shall make a Co-Sale Election, the Transferor shall reduce, to the extent necessary, the number of shares of Common Stock or Common Stock Equivalents it otherwise would have sold in the proposed Transfer so as to permit those Offerees who have made a Co-Sale Election to Transfer the number of shares of Common Stock and/or Common Stock Equivalents, if 16 applicable, that they are entitled to Transfer under this SECTION 3.4. If a Co-Sale Election has been made with respect to any Common Stock or Common Stock Equivalents proposed to be Transferred, then the Transferor may not effect any Transfer of any Common Stock or Common Stock Equivalents to any transferee (as otherwise permitted by SECTION 3.4) unless such transferee shall also purchase from the Offerees making such Co-Sale Election the Common Stock or Common Stock Equivalents, as applicable, permitted to be included by such Offerees in such Transfer pursuant to this SECTION 3.4; PROVIDED, HOWEVER, that such transferee need not purchase any Common Stock or Common Stock Equivalents from an Offeree (and may instead purchase a like number of such Common Stock or Common Stock Equivalents at the same price from the Transferor) if such Offeree refuses to enter into any applicable agreements between the Transferor and the proposed transferee on the same terms as are applicable to the Transferor (provided that no Offeree will be required to (A) enter into any agreements not relating directly to the purchase and sale of the Common Stock or Common Stock Equivalents, (B) enter into any non-competition covenant or (C) make representations or warranties except as to title to and absence of liens or encumbrances (other than those created hereunder) on the securities being sold by such Offeree). 3.5 PERMITTED TRANSFERS BY KURZ. The provisions of SECTIONS 3.2 and 3.3 shall not apply to any Transfers by Kurz of shares of Common Stock or Common Stock Equivalents held by him in an amount not to exceed in the aggregate, in any given year ending on the anniversary date of this Agreement, the sum of (i) 2% of the aggregate number of shares of Common Stock and vested Common Stock Equivalents (on an as converted basis) held by him at the beginning of such year and (ii) the aggregate number of shares that could have been transferred by Kurz in any prior years under clause (i) of this SECTION 3.5 that were not so transferred; PROVIDED THAT the aggregate number of shares that Kurz may transfer pursuant to this sentence shall not exceed 10% of the greatest aggregate number of shares of Common Stock and vested Common Stock Equivalents (on an as converted basis) held by Kurz since the date of this Agreement. Until the earlier of (i) the termination of Kurz's employment with the Company without cause (as such term is defined in any employment agreement between the Company and Kurz) and (ii) the later of (x) five (5) years from the date hereof and (y) the expiration or termination of Kurz's employment with the Company (such time period as applicable under clause (i) or (ii), the "CONSENT PERIOD"), any transfers in excess of such amounts shall require the express written consent of Stockholders holding at least a majority of the shares of Common Stock held by all Stockholders (excluding Kurz), notwithstanding anything to the contrary contained herein, including SECTIONS 3.2 and 3.3. In any event, Kurz shall give the Stockholders at least 5 Business Days notice prior to any transfer of Common Stock or Common Stock Equivalents being effected in accordance with this SECTION 3.5. The provisions of this SECTION 3.5 shall terminate and cease to be of any force and effect upon the expiration of the Consent Period and any transfers after such expiration shall be subject to SECTIONS 3.2 and 3.3 hereof. 3.6 EXCEPTIONS. In no event shall (a) any exchange, reclassification, or other conversion of shares of Common Stock or Common Stock Equivalents into any 17 cash, securities, or other property pursuant to a recapitalization or a merger or consolidation of the Company or any subsidiary of the Company with, any sale of all of the outstanding Common Stock and Common Stock Equivalents to, or any sale or Transfer by the Company or any subsidiary of the Company of all or substantially all its assets to, any Person (a "CORPORATE TRANSACTION"), (b) a Transfer of shares of Common Stock or Common Stock Equivalents to the Holding Company in accordance with ARTICLE 6 hereof or (c) a Public Sale, constitute a Transfer of shares of Common Stock or Common Stock Equivalents for purposes of this ARTICLE 3. In addition, SECTIONS 3.2, 3.3 and 3.4 hereof shall not apply to any Transfer of Common Stock or Common Stock Equivalents (i) by a Stockholder to a Permitted Transferee of such Stockholder, PROVIDED THAT any Permitted Transferee having acquired Common Stock and/or Common Stock Equivalents shall have agreed, by the execution of a counterpart signature page hereto, to take and hold such shares of Common Stock or Common Stock Equivalents subject to the provisions and upon the conditions specified in this Agreement as a Stockholder. 3.7 JONES ACT COMPLIANCE. Notwithstanding anything in this Agreement to the contrary, no Stockholder shall Transfer shares of Common Stock or Common Stock Equivalents owned by it to any Person (including any Permitted Transferee) that does not constitute a Citizen to the extent that such Transfer would result in the Company not meeting the requirements of Section 2 of the Shipping Act, 1916, as amended, for the ownership and operation of vessels in the United States coastwise trade. 3.8 TRANSFEREES BOUND. No Stockholder shall Transfer any Common Stock or Common Stock Equivalents, unless such transferee shall have agreed, by execution of a counterpart signature page hereto, to take and hold such shares of Common Stock and Common Stock Equivalents subject to the provisions and upon the conditions specified in this Agreement, and upon such execution, such transferee shall become a "STOCKHOLDER" hereunder. 3.9 LEGEND. In addition to any other legend that may be required, each certificate for shares of Common Stock and Common Stock Equivalents that is issued to any Stockholder shall bear a legend in substantially the following form: "THIS SECURITY IS SUBJECT TO RESTRICTIONS ON TRANSFER AS SET FORTH IN THE STOCKHOLDERS' AGREEMENT DATED SEPTEMBER 13, 2002, A COPY OF WHICH MAY BE OBTAINED UPON REQUEST FROM THE COMPANY AND ANY SUCCESSOR THERETO. BY ACCEPTANCE OF THIS CERTIFICATE, EACH HOLDER HEREOF AGREES TO BE BOUND BY THE PROVISIONS OF THE STOCKHOLDERS' AGREEMENT." 3.10 IMPROPER TRANSFER. Any attempt to Transfer any shares of Common Stock or Common Stock Equivalents not in compliance with this Agreement or the Securities Act shall be null and void, and neither the Company nor any transfer agent shall give any effect in the Company's transfer records to such attempted Transfer. 18 ARTICLE 4 REPURCHASE RIGHT 4.1 REPURCHASE RIGHT. The Company shall have a purchase right in any Common Stock or Common Stock Equivalents owned (including shares of Common Stock and Common Stock Equivalents hereafter acquired) by Kurz on the terms of the purchase right contained in that certain Non-Qualified Stock Option Agreement between Kurz and the Company, dated June 16, 2000, as in effect as of the date hereof; provided that the foregoing repurchase right shall terminate and this paragraph shall cease to be of any force and effect upon the later of (i) five (5) years from the date hereof and (ii) the expiration of such purchase right following the expiration or termination of Kurz's employment with the Company, except that if Kurz's employment with the Company is terminated by the Company without cause (as defined in any employment agreement between the Company and Kurz), then such purchase right shall terminate immediately upon such termination of Kurz's employment. Without limiting the foregoing, no waiver or amendment of any provision of any applicable benefit plan or agreement to eliminate or restrict such repurchase right shall be effective with respect to Kurz. 4.2 LEGEND. Each certificate or instrument representing shares of Common Stock or a Common Stock Equivalent held by Kurz or a Kurz Permitted Transferee shall bear a conspicuous legend in substantially the following form: "THE SHARES [REPRESENTED BY THIS CERTIFICATE] [ISSUABLE PURSUANT TO THIS AGREEMENT] ARE SUBJECT TO AN OPTION TO PURCHASE PROVIDED UNDER THE PROVISIONS OF THE STOCKHOLDERS' AGREEMENT DATED SEPTEMBER 13, 2002, A COPY OF WHICH MAY BE OBTAINED UPON REQUEST FROM THE COMPANY AND ANY SUCCESSOR THERETO." ARTICLE 5 REGISTRATION RIGHTS 5.1 DEMAND REGISTRATION. (a) Upon the written request of a Holder (such requesting party, a "REQUESTING STOCKHOLDER") requesting that the Company effect the registration under the Securities Act of any or all such Requesting Stockholder's Registrable Shares and specifying the intended method of disposition thereof, the Company will promptly give written notice of such requested registration (a "DEMAND REGISTRATION") at least twenty (20) days prior to the anticipated filing date of the registration statement relating to such Demand Registration to all other Holders, and thereupon will use its best efforts to effect, as expeditiously as reasonably possible, the registration under the Securities Act of: (i) the Registrable Shares that the Company has been so requested to register by the Requesting Stockholder; and 19 (ii) all other Registrable Shares that any other Holder has requested the Company to register, subject to SECTION 5.2 hereof, by written request received by the Company within ten (10) days after the receipt by such Holders of such written notice given by the Company, all to the extent necessary to permit the disposition (in accordance with the intended methods thereof as aforesaid) of the Registrable Shares so to be registered; PROVIDED, HOWEVER, that (i) the Company shall not be obligated to effect more than one Demand Registrations in any nine-month period, (ii) the Company shall not be obligated to effect (A) more than four Demand Registrations for Nautilus or its transferees or (B) more than two Demand Registrations for the C/R Entities (taken as a group) or their transferees, (iii) the Company shall not be obligated to effect a Demand Registration unless, in the reasonable judgment of the Company exercised in good faith, the aggregate number of Registrable Shares requested to be included in such Demand Registration by the Holders would have a Fair Market Value of at least $20,000,000, and (iv) the Company may delay the filing of a registration statement pursuant to a Demand Registration for a reasonable period (not to exceed 90 days), if, in the good faith judgment of the Company, it is in the best interests of the Company not to disclose the existence of or facts surrounding a significant corporate development or transaction then pending or in progress. The Requesting Stockholder requesting a registration under this SECTION 5.1(A) may, at any time prior to the effective date of the registration statement relating to such Demand Registration, revoke such request, without liability to the Company or any of the other Holders (except as provided below) by providing a written notice to the Company and such other Holders irrevocably revoking such request, in which case such request, so revoked, shall not be considered a Demand Registration and any fees and expenses incurred in connection with such request prior to such revocation shall not be deemed to be Registration Expenses and shall be paid by the Requesting Stockholder revoking such request, except to the extent that such Demand Registration is continued in accordance with the following proviso; PROVIDED, HOWEVER, that any other Holder entitled to request a Demand Registration under this SECTION 5.1(A) may request the Company to continue such registration by providing written notice within five (5) days of receipt of the notice revoking the original request, in which case such registration shall constitute a Demand Registration of such other Holder and such Holder will be deemed to be the "REQUESTING STOCKHOLDER" with respect to such registration; PROVIDED THAT the Company shall not be obligated to effect the Demand Registration unless, in the reasonable judgment of the Company exercised in good faith, the aggregate number of Registrable Shares requested to be included in such Demand Registration by the Holders would have a Fair Market Value of at least $20,000,000. (b) The Company will pay all Registration Expenses in connection with any Demand Registration. (c) A Demand Registration requested pursuant to SECTION 5.1(A) shall not be deemed to have been effected unless the registration statement relating thereto (i) has become effective under the Securities Act and (ii) has remained effective for a period of 20 at least 120 days (or such shorter period in which all Registrable Shares of the Holders included in such Demand Registration has actually been sold thereunder); PROVIDED, HOWEVER, that, if after any registration statement requested pursuant to this SECTION 5.1 becomes effective, such registration statement is interfered with by any stop order, cease trade order, injunction or other order or requirement of the SEC, or other governmental agency or court solely due to the actions or omissions to act of the Company, such registration statement shall be at the sole expense of the Company and shall not be considered a Demand Registration. (d) If a Demand Registration involves a Public Offering and the managing underwriter thereof shall advise the Company and the Requesting Stockholder that, in its view, (i) the number of shares of Common Stock requested to be included in such registration or (ii) the inclusion of some or all of the Registrable Shares owned by the other Holders, in either case, exceeds the largest number of shares of Common Stock that can be sold without having an adverse effect on such Public Offering, including the price at which such shares can be sold (the "MAXIMUM OFFERING SIZE"), the Company will include in such registration, up to and not in excess of the Maximum Offering Size FIRST, all Registrable Shares requested to be included in such Demand Registration by the Requesting Stockholder; SECOND, all Registrable Shares requested to be included in such Demand Registration by the other Holders, allocated, if necessary, for the offering not to exceed the Maximum Offering Size among the Holders pro rata on the basis of the relative number of Registrable Shares requested to be included in such Demand Registration by such Holders; and THIRD, any shares of Common Stock proposed to be included in such Demand Registration by the Company. If as a result of the proration provisions of this SECTION 5.1(D), any Holder of Registrable Shares is not entitled to include all such Registrable Shares in such Demand Registration, such Holder may elect to withdraw his, her or its request to include any Registrable Shares in such Demand Registration (a "WITHDRAWAL ELECTION"); PROVIDED, HOWEVER, that a Withdrawal Election shall be irrevocable and any Holder of Registrable Shares who has made a Withdrawal Election shall no longer have any right to include any Registrable Shares in such Demand Registration as to which such Withdrawal Election was made. The number of securities required to satisfy any underwriters' over-allotment option shall be allocated pro rata among the Holders and the Company on the basis of the relative number of securities otherwise to be included by each of them in the registration with respect to which such over-allotment option relates. 5.2 INCIDENTAL REGISTRATION. (a) If the Company proposes to register any of its shares of Common Stock under the Securities Act (other than a registration (i) on Form S-8 or S-4 or any successor or similar forms, (ii) relating to shares of Common Stock issuable upon exercise of employee share options or in connection with any employee benefit or similar plan of the Company or (iii) in connection with a direct or indirect acquisition by the Company of another Person or any transaction with respect to which Rule 145 (or any successor provision) under the Securities Act applies), whether or not for sale for its own account, it will each such time, subject to the provisions of SECTION 5.2(B) hereof, give 21 prompt written notice at least twenty (20) days prior to the anticipated filing date of the registration statement relating to such registration to each Holder, which notice shall set forth such Holder's rights under this SECTION 5.2 and shall offer all Holders the opportunity to include in such registration statement such number of Registrable Shares as each such Holder may request (an "INCIDENTAL REGISTRATION"); PROVIDED, HOWEVER, that the provisions of SECTION 5.1 hereof and not this SECTION 5.2 shall apply to the ability of any Holder to participate in any registration being effected pursuant to a Demand Registration contemplated by SECTION 5.1 hereof. Upon the written request of any such Holder made within ten (10) days after the receipt of notice from the Company (which request shall specify the number of Registrable Shares intended to be disposed of by such Holder), the Company will use its best efforts to effect the registration under the Securities Act of all Registrable Shares that the Company has been so requested to register by such Holders, to the extent requisite to permit the disposition of the Registrable Shares to be so registered; PROVIDED, HOWEVER, that (A) if such registration involves a Public Offering, all such Holders requesting to be included in the Company's registration must sell their Registrable Shares to the underwriters selected as provided in SECTION 5.4(F) hereof on the same terms and conditions as apply to the Company, and (B) if, at any time after giving written notice of its intention to register any shares pursuant to this SECTION 5.2(A) and prior to the effective date of the registration statement filed in connection with such registration, the Company shall determine for any reason not to register such shares, the Company shall give written notice to all such Holders and, thereupon, shall be relieved of its obligation to register any Registrable Shares in connection with such registration (without prejudice, however, to rights of any of the Holders under SECTION 5.1 hereof). No registration effected under this SECTION 5.2 shall relieve the Company of its obligations to effect a Demand Registration to the extent required by SECTION 5.1 hereof. The Company will pay all Registration Expenses in connection with each registration of Registrable Shares requested pursuant to this SECTION 5.2. (b) If a registration pursuant to this SECTION 5.2 involves a Public Offering and the managing underwriter thereof advises the Company that, in its view, the number of shares of Common Stock that the Company and the Holders intend to include in such registration exceeds the Maximum Offering Size, the Company will include in such registration, in the following priority, only that number of shares such that the number of Registrable Shares registered does not exceed the Maximum Offering Size: (i) FIRST, all of the shares of Common Stock proposed to be registered by the Company as would not cause the offering to exceed the Maximum Offering Size; and (ii) SECOND, all Registrable Shares requested to be included in such registration by all Holders pursuant to this SECTION 5.2, allocated, if necessary, for the offering not to exceed the Maximum Offering Size among the Holders pro rata on the basis of the relative number of Registrable Shares requested to be included in such Incidental Registration by such Holders. 22 If as a result of the proration provisions of this SECTION 5.2(B), any Holder is not entitled to include all such Registrable Shares in such registration, such Holder may elect to withdraw his, her or its request to include any Registrable Shares in such registration (an "INCIDENTAL WITHDRAWAL ELECTION"); PROVIDED, HOWEVER, that an Incidental Withdrawal Election shall be irrevocable and any Holder that has made an Incidental Withdrawal Election shall no longer have any right to include any Registrable Shares in such registration as to which such Incidental Withdrawal Election was made. With respect to registrations pursuant to this SECTION 5.2, the number of securities required to satisfy any underwriters' over-allotment option shall be allocated pro rata among the Company and the Holders on the basis of the relative number of securities otherwise to be included by each of them in the registration with respect to which such over-allotment option relates. 5.3 HOLDBACK AGREEMENTS. If any registration of Registrable Shares shall be in connection with a Public Offering, each Stockholder agrees not to effect any Public Sale of any shares of Common Stock or any Common Stock Equivalents (in each case, other than as part of such Public Offering) during the 14 days prior to the effective date of such registration statement (except as part of such registration) or during the period after such effective date equal to the lesser of (i) 180 days or (ii) such other period as reasonably required by the managing underwriters of an underwritten offering. 5.4 REGISTRATION PROCEDURES. Whenever Holders request that any Registrable Shares be registered pursuant to SECTION 5.1 or 5.2 hereof, the Company will, subject to the provisions of such Sections, use its best efforts to effect the registration and the sale of such Registrable Shares in accordance with the intended method of disposition thereof and the applicable provisions of SECTION 5.1 or 5.2, as appropriate, as promptly as practicable, and in connection with any such request: (a) The Company will as expeditiously as reasonably possible prepare and file with the SEC a registration statement on any form for which the Company then qualifies or which counsel for the Company shall deem appropriate and which form shall be available for the sale of the Registrable Shares to be registered thereunder in accordance with the intended method of distribution thereof, and use its best efforts to cause such filed registration statement to become and remain effective for a period of not less than 120 days. (b) The Company will, if requested, prior to filing a registration statement or prospectus or any amendment or supplement thereto, furnish to each Holder and each underwriter, if any, of the Registrable Shares covered by such registration statement copies of such registration statement as proposed to be filed, and thereafter the Company will furnish to such Holder and underwriter, if any, such number of copies of such registration statement, each amendment and supplement thereto (in each case including all exhibits thereto and documents incorporated by reference therein), the prospectus included in such registration statement (including each preliminary prospectus) and such other documents as such Holder or underwriter may reasonably request in order to facilitate the disposition of the Registrable Shares owned by such Holder. 23 (c) After the filing of the registration statement, the Company will promptly notify each Holder holding Registrable Shares covered by such registration statement of any stop order or cease trade order issued or threatened by the SEC and take all reasonable actions required to prevent the entry of such stop order or cease trade order or to remove or revoke it if entered. (d) The Company will use its best efforts to (i) register or qualify the Registrable Shares covered by such registration statement under such other securities or blue sky laws of such jurisdictions in the United States as any Holder holding such Registrable Shares reasonably (in light of such Holder's intended plan of distribution) requests and (ii) cause such Registrable Shares to be registered with or approved by such other governmental agencies or authorities as may be necessary by virtue of the business and operations of the Company and do any and all other acts and things that may be reasonably necessary or advisable to enable such Holder to consummate the disposition of the Registrable Shares owned by such Holder; PROVIDED that the Company will not be required to (A) qualify generally to do business in any jurisdiction where it would not otherwise be required to qualify but for this paragraph (d), (B) subject itself to taxation in any such jurisdiction or (C) consent to general service of process in any such jurisdiction. (e) The Company will immediately notify each Holder holding such Registrable Shares, at any time when a prospectus relating thereto is required to be delivered under the Securities Act, of the occurrence of an event requiring the preparation of a supplement or amendment to such prospectus so that, as thereafter delivered to the purchasers of such Registrable Shares, such prospectus will disclose all material facts relating to the securities covered thereby and will not contain an untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances in which they were made and promptly prepare and make available to each such Holder any such supplement or amendment. (f) A Requesting Stockholder will have the exclusive right to select the lead underwriters, which may include any Affiliate of such Requesting Stockholder, in connection with any Public Offering pursuant to a Demand Registration triggered by such Requesting Stockholder. The Company will enter into customary agreements (including an underwriting agreement in customary form) and take such other actions as are reasonably required in order to expedite or facilitate the disposition of shares in any such Public Offering, including the engagement of a "qualified independent underwriter" in connection with the qualification of the underwriting arrangements with the NASD. (g) Upon the execution of confidentiality agreements in form and substance satisfactory to the Company, the Company will make available for inspection by any Holder and any underwriter participating in any disposition pursuant to a registration statement being filed by the Company pursuant to this SECTION 5.4 and any attorney, accountant or other professional retained by any such Holder or underwriter (collectively, the "INSPECTORS"), all financial and other records, pertinent corporate documents and properties of the Company (collectively, the "RECORDS") as shall be 24 reasonably necessary to enable them to exercise their due diligence responsibility, and cause the Company's officers, directors and employees to supply all information reasonably requested by any Inspectors in connection with such registration statement. Records that the Company determines, in good faith, to be confidential and that it notifies the Inspectors are confidential shall not be disclosed by the Inspectors unless (i) the disclosure of such Records is necessary to avoid or correct a misstatement or omission in such registration statement or (ii) the release of such Records is ordered pursuant to a subpoena or other order from a court of competent jurisdiction. Each Holder agrees that information obtained by it as a result of such inspections shall be deemed confidential and shall not be used by it as the basis for any market transactions in the securities of the Company unless and until such is made generally available to the public. Each Holder further agrees that it will, upon learning that disclosure of such Records is sought in a court of competent jurisdiction, give notice to the Company and allow the Company, at its own expense, to undertake appropriate action to prevent disclosure of the Records deemed confidential. (h) The Company will furnish to each such Holder and to each such underwriter, if any, a signed counterpart, addressed to such underwriter, of (i) an opinion or opinions of counsel to the Company and (ii) a comfort letter or comfort letters from the Company's independent public or chartered accountants, each in customary form and covering such matters of the type customarily covered by opinions or comfort letters, as the case may be, as the Holders of a majority of the Registrable Shares being sold or the managing underwriter therefor reasonably requests. (i) The Company shall use its best efforts to cause all the Registrable Shares in any registration under this ARTICLE 5 to be listed on the principal securities exchange or included in the over-the-counter market on which similar securities issued by the Company are then listed or quoted, as the case may be, or eligible for listing or quotation, or on The Nasdaq Stock Market or such other national securities exchange as the Board may designate. (j) The Company will otherwise use its best efforts to comply with all applicable rules and regulations of the SEC including, without limitation, making available to its security holders, as soon as reasonably practicable, an earnings statement covering a period of twelve (12) months, beginning within three months after the effective date of the registration statement, which earnings statement shall satisfy the provisions of Section 11(a) of the Securities Act. (k) The Company may require, as a condition to including any Registrable Shares in any registration under this ARTICLE 5, each such Holder to promptly furnish in writing to the Company such information regarding such Holder, the distribution of the Registrable Shares and such other information as the Company may from time to time reasonably request in connection with such registration. The Company shall permit any Holder which, in its sole judgment, exercised in good faith, and upon advice of counsel, might be deemed to be an underwriter or a controlling person of the Company, to participate in the preparation of such registration or comparable statement and to require 25 the insertion therein of material, furnished to the Company in writing, which in the reasonable judgment of such Holder and its counsel should be included. (l) Each such Holder agrees that, upon receipt of any notice from the Company of the happening of any event of the kind described in SECTION 5.4(E) hereof, such Holder will forthwith discontinue disposition of Registrable Shares pursuant to the registration statement covering such Registrable Shares until such Holder's receipt of the copies of the supplemented or amended prospectus contemplated by SECTION 5.4(E) hereof, and, if so directed by the Company, such Holder will deliver to the Company all copies, other than any permanent file copies then in such Holder's possession, of the most recent prospectus covering such Registrable Shares at the time of receipt of such notice. In the event that the Company shall give such notice, the Company shall extend the period during which such registration statement shall be maintained effective (including the period referred to in SECTION 5.4(A) hereof) by the number of days during the period from and including the date of the giving of notice pursuant to SECTION 5.4(E) hereof to the date when the Company shall make available to such Holder a prospectus supplemented or amended to conform with the requirements of SECTION 5.4(E) hereof. 5.5 INDEMNIFICATION BY THE COMPANY. The Company agrees to indemnify and hold harmless each Holder holding Registrable Shares covered by a registration statement, its officers, directors and agents, and each Person, if any, who controls such Holder within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act from and against any and all losses, claims, damages and liabilities (including those resulting from any order made or any inquiry, investigation or proceeding commenced or threatened by any securities regulatory authority, stock exchange or by any other competent authority) caused by any untrue statement or alleged untrue statement of a material fact contained in any registration statement or prospectus relating to the Registrable Shares (as amended or supplemented if the Company shall have furnished any amendments or supplements thereto) or any preliminary prospectus, or caused by any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances under which they were made, except insofar as such losses, claims, damages or liabilities are caused by any such untrue statement or omission or alleged untrue statement or omission based upon information furnished in writing to the Company by such Holder or on such Holder's behalf expressly for use therein; provided, that the Company shall not be liable for any untrue statement or omission contained in a preliminary prospectus, which untrue statement or omission was corrected in a final prospectus or supplement that was furnished to such Holder. The Company also agrees to indemnify any underwriters of the Registrable Shares, their officers, directors, employees and agents, and each Person, if any, who controls such underwriters (other than in respect of loss of profit or information relating solely to the underwriters) on substantially the same basis as that of the indemnification of the Holders provided in this SECTION 5.5 and which indemnification shall provide, in addition, an indemnity in respect of any breach of representation or warranty of the Company contained in any underwriting agreement in respect of Registrable Shares. 26 5.6 INDEMNIFICATION BY PARTICIPATING HOLDERS. Each Holder holding Registrable Shares included in any registration statement agrees, severally but not jointly, to indemnify and hold harmless the Company, its officers, directors and agents and each Person, if any, who controls the Company within the meaning of either Section 15 of the Securities Act or Section 20 of the Exchange Act to the same extent as the foregoing indemnity from the Company to such Holder, but only with respect to information furnished in writing by such Holder or on such Holder's behalf expressly for use in any registration statement or prospectus relating to the Registrable Shares, or any amendment or supplement thereto, or any preliminary prospectus, and only up to an amount equal to the aggregate purchase price received by such Holder from the sale of such Holder's Registrable Shares in such registration. Each such Holder also agrees to indemnify and hold harmless underwriters (other than in respect of loss of profit or information relating to the underwriters) of the Registrable Shares, their officers, directors, employees and agents and each person who controls such underwriters on substantially the same basis as that of the indemnification of the Company provided in this SECTION 5.6. As a condition to including Registrable Shares in any registration statement filed in accordance with ARTICLE 5 hereof, the Company may require that it shall have received an undertaking reasonably satisfactory to it from any underwriter to indemnify and hold it harmless to the extent customarily provided by underwriters with respect to similar securities. 5.7 CONDUCT OF INDEMNIFICATION PROCEEDINGS. In case any proceeding (including any governmental investigation) shall be instituted involving any Person in respect of which indemnity may be sought pursuant to this ARTICLE 5, such Person (an "INDEMNIFIED PARTY") shall promptly notify the Person against whom such indemnity may be sought (the "INDEMNIFYING PARTY") in writing and the Indemnifying Party shall assume the defense thereof, including the employment of counsel reasonably satisfactory to such Indemnified Party, and shall assume the payment of all fees and expenses; PROVIDED, HOWEVER, that the failure of any Indemnified Party so to notify the Indemnifying Party shall not relieve the Indemnifying Party of his or its obligations hereunder except to the extent that the Indemnifying Party is materially prejudiced by such failure to notify. In any such proceeding, any Indemnified Party shall have the right to retain his or its own counsel, but the fees and expenses of such counsel shall be at the expense of such Indemnified Party unless (i) the Indemnifying Party and the Indemnified Party shall have mutually agreed to the retention of such counsel, (ii) the Indemnifying Party shall have failed to assume the defense and employ counsel or (iii) in the reasonable judgment of such Indemnified Party representation of both parties by the same counsel would be inappropriate due to actual or potential differing interests between them or differing legal defenses available to them. It is understood that the Indemnifying Party shall not, in connection with any proceeding or related proceedings in the same jurisdiction, be liable for the reasonable fees and expenses of more than one separate firm of attorneys (in addition to any local counsel) at any time for all such Indemnified Parties, and that all such fees and expenses shall be reimbursed as they are incurred. In the case of any such separate firm for the Indemnified Parties, such firm shall be designated in writing by the Indemnified Parties. The Indemnifying Party shall not be liable for any settlement of any proceeding effected without his or its written consent (not to be unreasonably withheld), 27 but if settled with such consent, or if there be a final judgment for the plaintiff, the Indemnifying Party shall indemnify and hold harmless such Indemnified Parties from and against any loss or liability (to the extent stated above) by reason of such settlement or judgment; PROVIDED, HOWEVER, that, if any case where the fees and expenses of counsel are at the expense of the Indemnifying Party in accordance with this ARTICLE 5 and an Indemnified Party shall have requested the Indemnifying Party to reimburse the Indemnified Party for such fees and expenses of counsel as incurred, such Indemnifying Party agrees that it shall be liable for any settlement of any action effected without its written consent if (i) such settlement is entered into more than ten (10) Business Days after the receipt by such Indemnifying Party of the aforesaid request and (ii) such Indemnifying Party shall have failed to reimburse the Indemnified Party in accordance with such request for reimbursement prior to the date of such settlement. No Indemnifying Party shall, without the prior written consent of the Indemnified Party (not to be unreasonably withheld), effect any settlement of any pending or threatened proceeding in respect of which any Indemnified Party is or could have been a party and indemnity could have been sought hereunder by such Indemnified Party, unless such settlement includes an unconditional release of such Indemnified Party from all liability arising out of such proceeding. 5.8 CONTRIBUTION. If the indemnification provided for in this ARTICLE 5 is unavailable to the Indemnified Parties in respect of any losses, claims, damages or liabilities referred to herein, then each such Indemnifying Party, in lieu of indemnifying such Indemnified Party, shall contribute to the amount paid or payable by such Indemnified Party as a result of such losses, claims, damages or liabilities (i) as between the Company and the Holders holding Registrable Shares covered by a registration statement on the one hand and the underwriters on the other, in such proportion as is appropriate to reflect the relative benefits received by the Company and such Holders on the one hand and the underwriters on the other, from the offering of the Registrable Shares, or if such allocation is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits but also the relative fault of the Company and such Holders on the one hand and of such underwriters on the other in connection with the statements or omissions which resulted in such losses, claims, damages or liabilities, as well as any other relevant equitable considerations and (ii) as between the Company on the one hand and each such Holder on the other, in such proportion as is appropriate to reflect the relative fault of the Company and of each such Holder in connection with such statements or omissions, as well as any other relevant equitable considerations. The relative benefits received by the Company and such Holders on the one hand and such underwriters on the other shall be deemed to be in the same proportion as the total proceeds from the offering (net of underwriting discounts and commissions but before deducting expenses) received by the Company and such Holders bear to the total underwriting discounts and commissions received by such underwriters, in each case as set forth in the table on the cover page of the prospectus. The relative fault of the Company and such Holders on the one hand and of such underwriters on the other shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or 28 alleged omission to state a material fact relates to information supplied by the Company and such Holders or by such underwriters and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The relative fault of the Company on the one hand and of each such Holder on the other shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied in writing by such party, and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The Company and the Holders agree that it would not be just and equitable if contribution pursuant to this SECTION 5.8 were determined by pro rata allocation (even if the underwriters were treated as one entity for such purpose) or by any other method of allocation which does not take account of the equitable considerations referred to in the immediately preceding paragraph. The amount paid or payable by an Indemnified Party as a result of the losses, claims, damages or liabilities referred to in the immediately preceding paragraph shall be deemed to include, subject to the limitations set forth above, any legal or other expenses reasonably incurred by such Indemnified Party in connection with investigating or defending any such action or claim. Notwithstanding the provisions of this SECTION 5.8, no underwriter shall be required to contribute any amount in excess of the amount of the total fees, discounts and commissions received by it, and no Holder shall be required to contribute any amount in excess of the amount of the proceeds received by such Holder in respect of a sale of its Registrable Shares. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. Each such Holder's obligation to contribute pursuant to this SECTION 5.8 is several in the proportion that the proceeds of the offering received by such Holder bears to the total proceeds of the offering received by all such Holders and not joint. 5.9 PARTICIPATION IN PUBLIC OFFERING. No Person may participate in any Public Offering hereunder unless such Person (a) agrees to sell such Person's securities on the basis provided in any underwriting arrangements approved by the Persons entitled hereunder to approve such arrangements and not inconsistent with this Agreement and (b) completes and executes all questionnaires, powers of attorney, indemnities (which indemnities shall not be inconsistent with the indemnification provisions contained in this ARTICLE 5), underwriting agreements and other documents reasonably required under the terms of such underwriting arrangements and the provisions of this Agreement in respect of registration rights. 5.10 ASSIGNMENT OF REGISTRATION RIGHTS. The right to cause the Company to register Registrable Shares pursuant to this ARTICLE 5 may be assigned (but only with all related obligations) by a Holder to a person to whom such securities are Transferred in accordance with ARTICLE 3 hereof, PROVIDED THAT following such Transfer, such transferee (together with its Affiliates) owns, or has the right to acquire pursuant to Common Stock Equivalents, at least 500,000 shares of Common Stock. Notwithstanding 29 the foregoing, no such transferee shall have the right to request a Demand Registration unless the transferring Holder specifically assigns such rights (and only then to the extent that such Transferring Holder had the right to request a Demand Registration). 5.11 LIMITATION ON GRANT OF OTHER REGISTRATION RIGHTS. From and after the date hereof, the Company shall not grant any registration rights without the prior written consent of the Investor Stockholders. ARTICLE 6 HOLDING COMPANY 6.1 FORMATION OF A HOLDING COMPANY. (a) In the event that Stockholders (the "ELECTING STOCKHOLDERS") holding a majority of the shares of Common Stock held by all Stockholders determine to acquire or attempt to acquire all or a substantial portion of the shares of Common Stock held by Persons other than the Stockholders (whether by tender offer, merger or otherwise) (the "ACQUISITION"), such Stockholders shall deliver a notice (the "ACQUISITION NOTICE") to each other Stockholder notifying such Stockholders of such determination. Within ten (10) days of the receipt of such Acquisition Notice, each Stockholder shall transfer all shares of Common Stock and Common Stock Equivalents held by it to a corporation or other entity selected by the Electing Stockholders (the "HOLDING COMPANY"); PROVIDED that in selecting the form of the Holding Company, the Electing Stockholders shall consider the possible tax effects on the Stockholders (as a group) of transferring such shares of Common Stock and Common Stock Equivalents to the Holding Company and any possible regulatory restrictions that may arise. The Stockholders shall, hereby covenant and agree to, take all action necessary to form the Holding Company and to effect the Acquisition, except that no Stockholder shall be required to contribute any cash to the Holding Company. (b) The Stockholders shall hold equity positions in the Holding Company in the same proportion as such Stockholders hold shares of Common Stock in the Company and in exchange for Common Stock Equivalents shall receive a security of the Holding Company having terms as similar as possible to each such Common Stock Equivalent exchanged. 6.2 STOCKHOLDERS AGREEMENT. In connection with the formation of the Holding Company, the Stockholders shall enter into a stockholders' agreement on substantially similar terms to this Agreement and which shall confer on the Stockholders the same rights and obligations as this Agreement, to the extent possible and to the extent necessary to manifest the intent of the Stockholders in entering into this Agreement. 6.3 JONES ACT COMPLIANCE. The Stockholders shall structure the Holding Company in a way such that the transfer of the shares of Common Stock to Holding Company and the subsequent issuances of securities of the Holding Company (as contemplated by SECTION 6.1(A)) will not result in the Company failing to meet the 30 requirements of Section 2 of the Shipping Act, 1916, as amended, for the ownership and operation of vessels in the United States coastwise trade. ARTICLE 7 MISCELLANEOUS 7.1 ENTIRE AGREEMENT; NO INCONSISTENT AGREEMENTS. (a) This Agreement constitutes the entire agreement among the parties hereto with respect to the subject matter hereof and supersedes all prior agreements and understandings, oral and written, among the parties hereto with respect to the subject matter hereof. (b) The Company will not hereafter enter into any agreement with respect to its securities which is inconsistent with the rights granted to the Stockholders hereunder. 7.2 BINDING EFFECT; ASSIGNABILITY; NO BENEFICIARIES. This Agreement shall inure to the benefit of and be binding upon the parties hereto and their respective heirs, successors, legal representatives and permitted assigns, including any Permitted Transferee to whom Shares are transferred. Subject to the limitations on assignability otherwise provided for in this Agreement, this Agreement may be assigned only in connection with a Transfer of shares of Common Stock or Common Stock Equivalents made in compliance with ARTICLE 3 hereof. Nothing in this Agreement, expressed or implied, is intended to confer on any Person other than the parties hereto, and their respective heirs, successors, legal representatives and permitted assigns, any rights, remedies, obligations or liabilities under or by reason of this Agreement. 7.3 AMENDMENT; WAIVER; TERMINATION. (a) No provision of this Agreement may be waived except by an instrument in writing executed by the party against whom the waiver is to be effective. No provision of this Agreement may be amended or otherwise modified except by an instrument in writing executed by the Company, with the approval of Stockholders holding at least a majority of the shares of Common Stock held by all Stockholders; PROVIDED, HOWEVER that no such amendment or waiver shall amend or waive the provisions of this Agreement to adversely affect a Stockholder, but not all other similarly situated Stockholders, unless such amendment or waiver is signed by such adversely affected Stockholder. Any amendment or waiver effected in accordance with this SECTION 7.3(A) shall be binding upon each Stockholder, including future Stockholders, and the Company, whether or not such Stockholder executed such amendment or waiver. (b) Unless otherwise specifically provided herein, this Agreement shall expire and be of no force and effect upon a Change of Control. Notwithstanding the foregoing, the provisions of ARTICLE 5 hereof shall survive until the earlier of (i) the 31 seventh anniversary of the date hereof and (ii) with respect to each Holder, at such time as such Holder owns less than 3% of its Initial Ownership. 7.4 NOTICES. All notices, requests and other communications to any party hereunder shall be in writing (including facsimile transmissions) and shall be given, if to the Company, to: Seabulk International, Inc. 2200 Eller Drive Fort Lauderdale, FL 33316 Attn: General Counsel Telephone: (954) 524-4200 Fax: (954) 527-1772 if to Nautilus, to: c/o Credit Suisse First Boston Private Equity 11 Madison Avenue New York NY 10010 Attn: Ari Benacerraf Telephone: (646) 935-7190 Fax: (212) 538-0415 if to the C/R Entities, to: c/o Riverstone Holdings, LLC 712 Fifth Avenue, 19th Floor New York, NY 10019 Attn: John Lancaster Telephone: (212) 993-0088 Fax: (212) 993-0077 if to Kurz, to: c/o Seabulk International, Inc. 2200 Eller Drive Fort Lauderdale, FL 33316 Attn: General Counsel Telephone: (954) 524-4200 Fax: (954) 527-1772 All notices, requests and other communications delivered in connection with or pursuant to this Agreement shall be deemed given and received on the date of receipt by the 32 recipient thereof (or upon refusal if properly delivered) if received prior to 5 p.m. in the place of receipt and such day is a Business Day in the place of receipt. Otherwise, any such notice, request or communication shall be deemed not to have been received until the next succeeding Business Day in the place of receipt. Any notice, request or other written communication sent by facsimile transmission shall be confirmed by certified mail, return receipt requested, posted within one Business Day, or by personal delivery, whether courier or otherwise, made within two (2) Business Days after the date of such facsimile transmission. Failure or delay in delivering copies of any notice, request or other written communication to the Person specified above to receive a copy thereof shall in no way adversely affect the effectiveness of such notice, request or other written communication. Any Person who after the date hereof becomes a Stockholder shall provide his, her or its address and fax number to the Company, which shall promptly provide such information to each other Stockholder. 7.5 AFTER-ACQUIRED SHARES. All of the provisions of this Agreement shall apply to all shares of Common Stock and Common Stock Equivalents now owned or hereafter issued or transferred to a Stockholder, other than those purchased in a Public Sale; PROVIDED, HOWEVER, that notwithstanding the foregoing, ARTICLE 6 hereof will apply to shares of Common Stock and Common Stock Equivalents purchased in a Public Sale. 7.6 HEADINGS AND REFERENCES TO SECTIONS. The headings contained in this Agreement are for convenience only and shall not affect the meaning or interpretation of this Agreement. Sections referenced by numbers only are to the respective sections of this Agreement. 7.7 SEVERABILITY. If any provision of this Agreement shall be determined to be illegal and unenforceable by any court of law, the remaining provisions shall be severable and enforceable in accordance with their terms. 7.8 COUNTERPARTS. This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original and all of which together shall be deemed to be one and the same instrument. 7.9 APPLICABLE LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO ANY PRINCIPLE OF CONFLICTS OF LAWS THEREOF, EXCEPT THE CORPORATE LAWS OF THE STATE OF DELAWARE, WITHOUT GIVING EFFECT TO ANY PRINCIPLE OF CONFLICTS OF LAWS THEREOF, SHALL GOVERN ALL ISSUES CONCERNING THE RELATIVE RIGHTS OF THE COMPANY AND ITS STOCKHOLDERS AND THE DUTIES AND RESPONSIBILITIES OF THE COMPANY'S DIRECTORS TO THE COMPANY AND ITS STOCKHOLDERS. 33 7.10 SPECIFIC ENFORCEMENT. Each party hereto acknowledges that the remedies at law of the other parties for a breach or threatened breach of this Agreement would be inadequate and, in recognition of this fact, any party to this Agreement, without posting any bond, and in addition to all other remedies which may be available, shall be entitled to obtain equitable relief in the form of specific performance, a temporary restraining order, a temporary or permanent injunction or any other equitable remedy which may then be available. 7.11 PRONOUNS. Any masculine personal pronoun shall be considered to mean the corresponding feminine or neuter personal pronoun, and VICE VERSA, as the context requires. 7.12 TRIAL BY JURY. Each party to this Agreement hereby waives any right to trial by jury in any action, matter or proceeding regarding this Agreement or any provision hereof. [The remainder of this page has been intentionally left blank.] 34 IN WITNESS WHEREOF, the parties hereto have caused this Stockholders' Agreement to be duly executed as of the day and year first above written. SEABULK INTERNATIONAL, INC. By: /s/ Alan R. Twaits ------------------------------------- Name: Alan R. Twaits Title: Senior Vice President NAUTILUS ACQUISITION, L.P. By: /s/ David A. Durkin ------------------------------------- Name: David A. Durkin Title: C/R MARINE DOMESTIC PARTNERSHIP, L.P. By: C/R Marine GP Corp., its general partner By: /s/ Pierre F. Lapeyre ------------------------------------- Name: Pierre F. Lapeyre Title: Vice President C/R MARINE NON-U.S. PARTNERSHIP, L.P. By: C/R Marine GP Corp., its general partner By: /s/ Pierre F. Lapeyre ------------------------------------- Name: Pierre F. Lapeyre Title: Vice President 35 C/R MARINE COINVESTMENT, L.P. By: C/R Marine GP Corp., its general partner By: /s/ Pierre F. Lapeyre ------------------------------------- Name: Pierre F. Lapeyre Title: Vice President C/R MARINE COINVESTMENT II, L.P. By: C/R Marine GP Corp., its general partner By: /s/ Pierre F. Lapeyre ------------------------------------- Name: Pierre F. Lapeyre Title: Vice President /s/ Gerhard Kurz --------------------------- Gerhard Kurz EX-99.4 6 g78328exv99w4.txt SEABULK - GERHARD KURZ AMENDMENT 09/13/02 Exhibit 99.4 AMENDMENT NO. 2 TO EXECUTIVE EMPLOYMENT AGREEMENT BY AND BETWEEN GERHARD E. KURZ AND SEABULK INTERNATIONAL, INC. This Amendment No. 2 (this "Amendment No. 2") to the Executive Employment Agreement (the "Agreement") by and between Seabulk International, Inc., a Delaware corporation, formerly known as Hvide Marine, Incorporated (the "Company"), and Gerhard E. Kurz (the "Executive") is entered into as of the 13th day of September, 2002. WHEREAS, Exhibit C of the Stock Purchase Agreement by and among Seabulk International, Inc. and certain Investors, dated as of June 13, 2002 (the "Stock Purchase Agreement") entitled the Kurz Employment Agreement Term Sheet sets forth certain terms to be included in an amendment to the Agreement to be entered into at closing of the Stock Purchase Agreement. NOW THEREFORE, in consideration of the mutual covenants and the mutual benefits provided in the Agreement, the receipt and sufficiency of which are hereby acknowledged, the Company and the Executive hereby amend the Agreement as set forth hereinbelow effective on the date set forth hereinabove: 1. Sections 2.1, 4.1, 4.2, 8.4 and 9.2 of the Agreement are hereby amended and restated by deleting the text appearing therein in their entirety and inserting the following text in lieu thereof: 2.1 The Company will employ Executive commencing April 18, 2000 ("Effective Date") through September 13, 2007 (the "Employment Period"), unless Executive's employment is terminated prior to the end of the Employment Period in accordance with this Agreement, and Executive accepts employment with the Company on the terms and conditions contained in the Agreement. 4.1 BASE SALARY. As compensation for his services under this Agreement, commencing on September 13, 2002 and effective for the duration of Executive's employment during the Employment Period , the Company agrees to pay Executive a base salary at the rate of Five Hundred Thousand Dollars (US$500,000.00) per annum, payable in accordance with the Company's normal payroll schedule, or on such other periodic basis as may be mutually agreed upon. Such salary shall be subject to annual review by the Board for possible upward adjustment based on Company policy and contributions made by Executive to the enterprise. The Company may withhold from any amounts payable under this Agreement such federal, state or local taxes as shall be required to be withheld pursuant to any applicable law or regulation. 4.2 BONUS. Executive shall be eligible to receive an annual cash bonus award with a target bonus of one hundred percent (100%) of Executive's then current base salary during each year of Executive's employment during the Employment Period. The amount of the annual bonus for calendar years 2002 through 2007 will be based upon the Company's achievement of performance targets to be agreed upon annually between the Company and Executive. Annual bonuses will be paid to Executive upon completion of the Company's annual audit. 8.4 As used in this Agreement, "good reason" for Executive to resign means, without Executive's express written consent, the occurrence of any one or more of the following: (a) a material reduction or alteration in the nature, scope or status of Executive's authorities, duties or responsibilities; (b) a material reduction by the Company of Executive's compensation; and (c) the Company's failure to pay any part of Executive's compensation within four (4) weeks after such compensation was due; provided, however, the stock sale, spin off, asset sale or other disposition of either the tanker business or offshore business of the Company, resulting in Executive's termination as President or CEO of either such business, shall not constitute "good reason". 9.2 In general, if Executive's employment is terminated "without cause" or for "good reason," as defined herein, Executive will receive an amount equal to the sum of (i) an amount equal to 2.00 times Executive's annual base salary then in effect and (ii) 2.00 times Executive's annual maximum bonus for the year in which such termination occurs, such amount to be paid in equal monthly amounts over the remaining term of the Agreement or, if the remaining term is less than two years, over two years, or, at the election of the Company, in a lump sum. In the event of Executive's death, any remaining payments shall be paid to Executive's estate in a single lump sum amount. 2. Section 9.3 is hereby deleted in its entirety. 3. As so amended, the Agreement remains in full force and effect. 2 IN WITNESS WHEREOF, each of the parties hereto has caused this Amendment No. 2 to the Agreement to be duly executed and delivered as of the day and year first written above. SEABULK INTERNATIONAL, INC. By: /s/ ALAN R. TWAITS ------------------------------------- Name: Alan R. Twaits Title: Senior Vice President, General Counsel and Secretary /s/ GERHARD E. KURZ ----------------------------------------- GERHARD E. KURZ Executive 3 EX-99.5 7 g78328exv99w5.txt SEABULK - CREDIT AGREEMENT 09/13/02 EXHIBIT 99.5 ================================================================================ FORTIS CAPITAL CORP., AS AGENT FOR THE LENDERS FORTIS CAPITAL CORP., AS ARRANGER AND BOOK RUNNER NIB CAPITAL BANK N.V., AS ARRANGER SEABULK INTERNATIONAL, INC., AS BORROWER THE LENDERS FROM TIME TO TIME A PARTY HERETO and THE SUBSIDIARY GUARANTORS NAMED HEREIN ----------------------------- CREDIT AGREEMENT Dated as of September 13, 2002 ----------------------------- THACHER PROFFITT & WOOD ================================================================================ TABLE OF CONTENTS PRELIMINARY STATEMENT.............................................................................................................1 Article I DEFINITIONS.............................................................................................................1 Section 1.01 Definitions................................................................................1 Section 1.02 Interpretation.............................................................................1 Section 1.03 Accounting Terms...........................................................................2 Article II REVOLVING LOANS AND TERM LOANS.........................................................................................2 Section 2.01 Revolving Loans............................................................................2 Section 2.02 Term Loans.................................................................................3 Section 2.03 Interest on the Loans......................................................................4 Section 2.04 Maximum Interest Rate......................................................................5 Section 2.05 Repayment..................................................................................6 Section 2.06 Mandatory Permanent Reduction of Tranches..................................................6 Section 2.07 Optional Permanent Reduction of Aggregate Tranche A Loan Commitment and Aggregate Tranche B Loan Commitment.........................................8 Section 2.08 Application of Payments....................................................................8 Section 2.09 Manner of Payments.........................................................................8 Section 2.10 Register of Notes; Lost and Mutilated Notes................................................9 Section 2.11 Change in Circumstances...................................................................10 Section 2.12 Illegality................................................................................12 Section 2.13 Taxes.....................................................................................12 Section 2.14 Break Funding Payments....................................................................14 Section 2.15 Alternate Rate of Interest................................................................14 Section 2.16 Fees......................................................................................15 Article III LETTERS OF CREDIT....................................................................................................15 Section 3.01 Issuing the Letters of Credit.............................................................15 Section 3.02 Drawings under Letters of Credit..........................................................15 Section 3.03 Reimbursement on Demand...................................................................16 Section 3.04 Obligations Absolute......................................................................16 Section 3.05 Action in Respect of the Letters of Credit................................................17 Section 3.06 Indemnification...........................................................................17 Section 3.07 Deemed Disbursements......................................................................18 Section 3.08 L/C Participations........................................................................18 Section 3.09 Lenders Not Required to Make Loans or Issue Letters of Credit.............................19 Article IV REPRESENTATIONS, WARRANTIES AND AGREEMENTS............................................................................19 Section 4.01 Company Status............................................................................19 Section 4.02 Company Power and Authority...............................................................20 Section 4.03 No Violation..............................................................................20 Section 4.04 Governmental Approvals....................................................................20 Section 4.05 Financial Statement; Financial Condition; Undisclosed Liabilities; etc....................20 Section 4.06 Litigation................................................................................21 -i- Section 4.07 No Default................................................................................21 Section 4.08 Use of Proceeds; Margin Regulations.......................................................21 Section 4.09 Tax Returns and Payments..................................................................21 Section 4.10 Compliance with ERISA.....................................................................22 Section 4.11 Ownership; Subsidiaries...................................................................23 Section 4.12 Compliance with Statutes, etc.............................................................23 Section 4.13 Investment Company Act....................................................................24 Section 4.14 Environmental Matters.....................................................................24 Section 4.15 Labor Relations...........................................................................24 Section 4.16 Patents, Licenses, Franchises and Formulas................................................25 Section 4.17 Security Interests........................................................................25 Section 4.18 Indebtedness..............................................................................25 Section 4.19 Capitalization of Borrower................................................................25 Section 4.20 Concerning the Vessels....................................................................25 Section 4.21 Citizenship...............................................................................26 Section 4.22 Vessel Classification.....................................................................26 Section 4.23 [Reserved]................................................................................26 Section 4.24 Insurance.................................................................................26 Article V CONDITIONS OF LENDING..................................................................................................26 Section 5.01 Conditions Precedent to Drawdown of the Initial Loan......................................26 Section 5.02 Further Conditions Precedent..............................................................29 Article VI AFFIRMATIVE COVENANTS.................................................................................................30 Section 6.01 Existence.................................................................................30 Section 6.02 Payment of Debts..........................................................................30 Section 6.03 Accounts and Records......................................................................30 Section 6.04 Payment of Taxes and Claims...............................................................30 Section 6.05 Financing Statements......................................................................30 Section 6.06 Compliance with Law.......................................................................31 Section 6.07 Financial Statements......................................................................31 Section 6.08 Access to Books and Records...............................................................32 Section 6.09 Notifications.............................................................................32 Section 6.10 Performance of Obligations................................................................32 Section 6.11 Environmental Matters.....................................................................32 Section 6.12 Transaction Document Obligations..........................................................33 Section 6.13 ERISA.....................................................................................33 Section 6.14 Minimum Adjusted EBITDA to Adjusted Interest Expense......................................34 Section 6.15 Minimum Adjusted Tangible Net Worth.......................................................34 Section 6.16 Maximum Adjusted Funded Debt Ratio........................................................34 Section 6.17 Minimum Fair Market Value of the Vessels..................................................35 Section 6.18 Ownership of Subsidiary Guarantors........................................................35 Section 6.19 Additional Vessels; Further Assurances....................................................35 Section 6.20 Vessel Operations and Management..........................................................35 Section 6.21 Appraisals................................................................................36 Section 6.22 Reimbursement for Expenses................................................................36 Section 6.23 Remittance of Insurance Proceeds..........................................................37 ii Article VII NEGATIVE COVENANTS...................................................................................................38 Section 7.01 Indebtedness..............................................................................38 Section 7.02 Liens.....................................................................................39 Section 7.03 Asset Sales...............................................................................39 Section 7.04 Assignment of Insurances..................................................................39 Section 7.05 Sale of Notes or Accounts Receivable......................................................39 Section 7.06 Sale and Leaseback........................................................................39 Section 7.07 Restricted Payments.......................................................................39 Section 7.08 Investments...............................................................................40 Section 7.09 Restriction on Payment Restrictions Affecting Subsidiary Guarantors.......................40 Section 7.10 Change in Business........................................................................40 Section 7.11 [Reserved]................................................................................40 Section 7.12 Transactions with Affiliates..............................................................40 Section 7.13 Changes in Offices or Names...............................................................41 Section 7.14 Changes in Fiscal Year....................................................................41 Section 7.15 Other Indebtedness........................................................................41 Section 7.16 Consolidation, Merger and Sale of Assets..................................................41 Article VIII AGREEMENT TO GUARANTEE..............................................................................................42 Section 8.01 Obligations Guaranteed....................................................................42 Section 8.02 Subsidiary Guarantee Obligations of Subsidiary Guarantors Unconditional...................43 Section 8.03 Waiver of Notice; Expenses................................................................46 Section 8.04 Other Security............................................................................46 Section 8.05 No Set-off by the Subsidiary Guarantors...................................................46 Section 8.06 Joint and Several Obligation..............................................................46 Section 8.07 Limitation on Liability...................................................................48 Section 8.08 Release of Subsidiary Guarantor...........................................................48 Article IX EVENTS OF DEFAULT; REMEDIES; APPLICATION OF PROCEEDS..................................................................48 Section 9.01 Events of Default.........................................................................48 Section 9.02 Waiver of Default.........................................................................50 Section 9.03 Remedies..................................................................................51 Section 9.04 Rights of Set-Off.........................................................................51 Section 9.05 Rights and Remedies Cumulative............................................................51 Section 9.06 Specific Remedies.........................................................................52 Section 9.07 Restoration of Rights and Remedies........................................................53 Section 9.08 Cure of Defaults..........................................................................53 Article X RELATIONSHIP AMONG THE LENDERS.........................................................................................53 Section 10.01 Appointment and Authorization.............................................................53 Section 10.02 Delegation of Duties......................................................................54 Section 10.03 Liability of Agent........................................................................54 Section 10.04 Reliance by the Agent.....................................................................54 Section 10.05 Notice of Default.........................................................................55 Section 10.06 Credit Decision...........................................................................55 Section 10.07 Indemnification...........................................................................56 Section 10.08 Agent in Individual Capacity..............................................................56 iii Section 10.09 Successor Agent...........................................................................56 Section 10.10 Collateral Matters........................................................................57 Section 10.11 Assignments, Participations, Etc..........................................................57 Article XI MISCELLANEOUS.........................................................................................................59 Section 11.01 Notices...................................................................................59 Section 11.02 Survival of Agreement.....................................................................60 Section 11.03 Governing Law.............................................................................60 Section 11.04 Modification of Agreement.................................................................61 Section 11.05 Costs and Expenses........................................................................61 Section 11.06 Waivers...................................................................................62 Section 11.07 Indemnification...........................................................................62 Section 11.08 Separability of Provisions; Obligations Several...........................................63 Section 11.09 Counterparts..............................................................................63 Section 11.10 Entire Agreement..........................................................................63 Section 11.11 Headings..................................................................................63 Section 11.12 Successors and Assigns....................................................................64 Section 11.13 Gender and Number.........................................................................64 Section 11.14 Exhibits..................................................................................64 Section 11.15 Notification of Addresses, Lending Offices, Etc...........................................64 Section 11.16 No Third Parties Benefitted...............................................................64 Section 11.17 Equitable Relief..........................................................................64 Section 11.18 Notice of Claims; Claims Bar..............................................................64 Section 11.19 Waiver of Punitive Damages................................................................65 Section 11.20 Consent to Jurisdiction...................................................................65 Section 11.21 Waiver of Jury Trial......................................................................65 Section 11.22 Currency Indemnity........................................................................65 Section 11.23 Release of Lien...........................................................................66

EXHIBITS - -------- EXHIBIT A Revolving Loan Note EXHIBIT B Term Loan Note EXHIBIT C Drawdown Request EXHIBIT D Issuance Request EXHIBIT E-I First Registered Ship Mortgage EXHIBIT E-II Second Registered Ship Mortgage EXHIBIT F Pledge Agreement EXHIBIT G Subsidiary Guarantee Agreement EXHIBIT H Assignment and Acceptance SCHEDULES - --------- SCHEDULE I Tranche A Loan Commitment and Tranche B Loan Commitment SCHEDULE 4.06 Litigation SCHEDULE 4.10 ERISA SCHEDULE 4.11 Ownership/Equity Interests SCHEDULE 4.14 Environmental Matters SCHEDULE 4.18 Indebtedness SCHEDULE 4.20 Vessel Information/Noncompliance with Maritime Rules and Regulations

iv CREDIT AGREEMENT (this "Agreement") dated as of September 13, 2002, among Seabulk International, Inc., a corporation existing under the laws of Delaware, as borrower (the "Borrower"), each Subsidiary Guarantor, Fortis Capital Corp. ("Fortis"), NIB Capital Bank N.V. ("NIB") and each other financial institution which may hereafter execute and deliver an Assignment and Acceptance with respect to this Agreement pursuant to Section 10.11 (any one individually, a "Lender", and collectively, the "Lenders"), Fortis, as administrative agent on behalf of the Lenders (when acting in its capacity as administrative agent under this Agreement or under any other Transaction Document, herein referred to, together with any successor administrative agent, as the "Agent"), and as book runner and as an arranger (when acting in such capacity, an "Arranger") and NIB, as an arranger (when acting in such capacity, an "Arranger", and together with Fortis, the "Arrangers"). PRELIMINARY STATEMENT Pursuant to the Existing Credit Agreement and the Existing Indenture, the Borrower incurred the Existing Indebtedness and pursuant to the Existing Indenture, the Borrower issued the Existing Senior Notes. The Borrower desires to obtain the Loans and Letters of Credit from the Lenders in an aggregate amount, together with all Reimbursement Obligations, up to the Aggregate Loan Commitment to refinance the Existing Indebtedness, to have access to funds to redeem or repurchase any of the Existing Senior Notes upon the occurrence of certain events specified herein and to have access to funds for general corporate purposes. In order to induce the Lenders to make the Loans to the Borrower and issue Letters of Credit on behalf of the Borrower, the Subsidiary Guarantors have agreed to jointly and severally guarantee the Obligations of the Borrower hereunder. The Borrower and the Subsidiary Guarantors have agreed to grant to the Agent on its behalf and on the behalf of the Lenders a first, priority, perfected security interest (other than in the case of the Second Lien Vessels for which the Borrower or related Subsidiary Guarantors grant to the Agent a second priority perfected security interest) in the Collateral to secure such Obligations. The Lenders are willing to make the Loans and issue Letters of Credit on behalf of the Borrower in an amount, together with all Reimbursement Obligations, up to the Aggregate Loan Commitment pursuant to this Agreement and upon the terms and subject to the conditions set forth herein and in reliance on the representations and warranties set forth herein. NOW THEREFORE, in consideration of the mutual agreements herein contained, the parties hereto agree as follows: ARTICLE I DEFINITIONS Section 1.01 Definitions. Capitalized terms used herein, but not otherwise defined herein shall have the meanings assigned to such terms in Appendix A hereto. Section 1.02 Interpretation. Words importing the singular number only shall include the plural and vice versa. Words importing persons shall include companies, firms, corporations, partnerships, unincorporated associations and their respective successors and assigns. Section 1.03 Accounting Terms. All accounting terms not specifically defined herein shall be construed in accordance with GAAP and all financial statements submitted pursuant to this Agreement shall be prepared in accordance with, and all financial data submitted pursuant hereto shall be derived from financial statements prepared in accordance with, GAAP. ARTICLE II REVOLVING LOANS AND TERM LOANS Section 2.01 Revolving Loans. (a) The Lenders shall make the Revolving Loans available to the Borrower and issue Letters of Credit for the purpose of (i) refinancing the Existing Indebtedness of the Borrower and (ii) for general corporate purposes. (b) Each of the Lenders, relying upon each of the representations and warranties of the Borrower set forth herein, hereby severally and not jointly agrees with the Borrower that, upon satisfaction of the conditions precedent set forth in Article V and subject to and upon the terms of this Agreement, it will on each Drawdown Date, make the Revolving Loans available to the Borrower through the Agent in an aggregate amount not to exceed its Tranche A Loan Commitment ratably with the other Lenders according to their respective Tranche A Loan Commitments. The maximum aggregate amount of all Revolving Loans, together with all L/C Obligations, which may be outstanding at any time under this Agreement is the Aggregate Tranche A Loan Commitment, as may be reduced pursuant to Sections 2.06 and 2.07. Each Revolving Loan shall be drawn in a Minimum Borrowing Amount. (c) The maximum number of Revolving Loans that may be outstanding at any time under this Agreement shall be eight (8). Subject to the remaining provisions of this Section 2.01, the Borrower may obtain Revolving Loans, repay or prepay such Revolving Loans, and reborrow such Revolving Loans. (d) The Borrower shall, at least five (5) Business Days prior to a Drawdown Date, deliver a Drawdown Request to the Agent in writing addressed to the Agent. Each Drawdown Request shall be effective on receipt by the Agent and shall be irrevocable. (e) Each Drawdown Request shall be deemed to constitute a warranty by the Borrower (i) that the representations and warranties stated in Article IV are true and correct on and as of the date of such Drawdown Request and will be true and correct on and as of the relevant Drawdown Date as if made on such date (unless, in each case, such representation and warranty is expressly limited to an earlier date or is no longer true and correct solely as a result of transactions not prohibited by the Transaction Documents), (ii) that after giving effect to the borrowing made pursuant to such Drawdown Request, the sum of the outstanding L/C Obligations and the aggregate principal amount of all outstanding Revolving Loans will not exceed the Aggregate Tranche A Loan Commitment and (iii) that no Default or Event of Default has occurred and is continuing. Each Revolving Loan made by the Lenders to the -2- Borrower shall be evidenced by one or more promissory notes in the form of Exhibit A attached hereto (each, as the same from time to time may be amended, restated, modified, supplemented or renewed, a "Revolving Loan Note"), duly executed by the Borrower, dated as of the applicable Drawdown Date. Each Lender (or the Agent if only one Revolving Loan Note shall be issued to the Agent for the benefit of the Lenders) shall, and is hereby authorized by the Borrower to, record on the schedule attached to its Revolving Loan Note (or on a continuation of such schedule attached to such Revolving Loan Note) and make a part thereof, an appropriate notation evidencing the date and amount of each such Lender's Proportionate Share of such Revolving Loan, which notation, absent manifest error, shall be prima facie evidence of the amount of the relevant Revolving Loan. Section 2.02 Term Loans. (a) The Lenders shall make the Term Loans available to the Borrower for the sole purpose of redeeming or repurchasing the Existing Senior Notes in the event that (i) the Borrower is required to repurchase the Existing Senior Notes due to a Change of Control, (ii) the Borrower elects to call the Existing Senior Notes in accordance with the terms of the Existing Indenture or (iii) the Borrower enters into a solicitation with the holders of the Existing Senior Notes that is acceptable to the Arrangers in their sole and absolute discretion. (b) Each of the Lenders, relying upon each of the representations and warranties of the Borrower set forth herein, hereby severally and not jointly agrees with the Borrower that, upon satisfaction of the applicable conditions precedent in Article V and subject to and upon the terms of this Agreement, it will on each Drawdown Date, make the Term Loans available to the Borrower through the Agent in an aggregate amount not to exceed its Tranche B Loan Commitment ratably with the other Lenders according to their respective Tranche B Loan Commitments. The maximum aggregate amount of all Terms Loans which may be outstanding at any time under this Agreement is the Aggregate Tranche B Loan Commitment, as may be reduced pursuant to Sections 2.06 and 2.07. (c) The Borrower shall, (i) in the case of a LIBOR Loan, at least five (5) Business Days prior to a Drawdown Date and (ii) in the case of a Base Rate Loan, at least one (1) Business Day prior to a Drawdown Date, deliver a Drawdown Request to the Agent in writing addressed to the Agent. Each Drawdown Request shall be effective on receipt by the Agent and shall be irrevocable. (d) Each Drawdown Request shall be deemed to constitute a warranty by the Borrower (i) that the representations and warranties of the Borrower set forth herein are true and correct on and as of the date of such Drawdown Request and will be true and correct on and as of the relevant Drawdown Date as if made on such date (unless, in each case, such representation and warranty is expressly limited to an earlier date or is no longer true and correct solely as a result of transactions not prohibited by the Transaction Documents), (ii) that after giving effect to the borrowing made pursuant to such Drawdown Request, the sum of the outstanding Term Loans will not exceed the Aggregate Tranche B Loan Commitment and (iii) -3- that no Default or Event of Default has occurred and is continuing. The Term Loan made by the Lenders to the Borrower shall be evidenced by one or more promissory notes in the form of Exhibit B attached hereto (each, as the same from time to time may be amended, restated, modified, supplemented or renewed, a "Term Loan Note"), duly executed by the Borrower, dated as of the applicable Drawdown Date. Each Lender (or the Agent if only one Term Loan Note shall be issued to the Agent for the benefit of the Lenders) shall, and is hereby authorized by the Borrower to, record on the schedule attached to its Term Loan Note (or on a continuation of such schedule attached to such Term Loan Note) and make a part thereof, an appropriate notation evidencing the date and amount of each such Lender's Proportionate Share of such Term Loan, which notation, absent manifest error, shall be prima facie evidence of the amount of the relevant Term Loan. Section 2.03 Interest on the Loans. (a) Interest on the outstanding principal amount of each (i) LIBOR Loan shall be payable on each Interest Payment Date, unless the Interest Period exceeds three months in which case it shall be paid quarterly, at a rate per annum equal to the Interest Rate for the related Interest Period from the date when made and continued until paid in full and (ii) Base Rate Loan shall be payable on each Commitment Fee Payment Date at a rate per annum equal to the daily average Interest Rate for the period from the date when made and continued until paid in full. (b) The duration of each Interest Period for each LIBOR Loan shall be one month; provided, however, that (i) the Borrower may direct that the duration of an Interest Period for a LIBOR Loan be three or six months (or any other period agreed to by the Agent and all of the Lenders) by giving the Agent written notice thereof at least three Business Days before the first day of such Interest Period. The Agent shall deliver a copy of such notice on the same day to the Lenders. (c) Each Loan will bear interest at the Overdue Rate on any part of the principal amount and interest and other amounts due thereunder not paid when due (whether at stated maturity, by acceleration or otherwise), for any period during which the same will be overdue. (d) No later than 150 days after the Closing Date the Borrower shall enter into an interest rate hedging agreement with respect to the interest payable under the Term Loans for a period of at least three years from the Closing Date. The Borrower shall deliver a copy of such interest rate hedging agreement to the Agent. The Borrower shall have the right to obtain one or more interest rate hedging agreements and either Arranger or an Affiliate of either Arranger shall have the right to arrange therefor pursuant to the terms of an ISDA Master Agreement to be entered into between the Borrower and such Arranger or an Affiliate of such Arranger; provided, however, if the Borrower has requested an interest rate Hedging Agreement through the Agent from either of the Arrangers or any Affiliate of an Arranger and no Arranger or Affiliate of an Arranger wishes to arrange for such interest rate Hedging Agreement or does not do so on terms reasonably acceptable to the Borrower -4- immediately following the Borrower's request therefor, then the Borrower may use any other entity to arrange for such interest rate hedging agreements; provided further, that any interest rate Hedging Agreement entered into with an Arranger or an Affiliate of an Arranger shall, if so required by such Arranger or such Affiliate, be guaranteed by the Subsidiary Guarantors and secured by a second priority mortgage on the Vessels (but excluding the Second Lien Vessels). If the Collateral is used as security for an interest rate Hedging Agreement with an Arranger or an Affiliate of an Arranger the interest of such Arranger or Affiliate in respect of such agreement shall be subordinated to the interests of the Lenders hereunder. In no event shall the Collateral be used as security for any interest rate hedging agreement with an entity other than an Arranger or an Affiliate of an Arranger. The Borrower agrees to enter into good faith negotiations with the Agent with respect to the terms of an ISDA Master Agreement, to be used by a Arranger or an Affiliate of an Arranger in connection with an interest rate hedge, promptly following the Closing Date. If an Arranger or an Affiliate of an Arranger does not agree to use the form of ISDA Master Agreement agreed to by the Borrower and the Agent, the Borrower shall not be obligated to make hedging arrangements with such Arranger or such Affiliate. (e) The Borrower may elect to continue all or any part of any borrowing of any LIBOR Loan beyond the expiration of the then current Interest Period relating thereto by giving a Drawdown Request (which shall be irrevocable) to the Agent of such election, specifying the LIBOR Loan or LIBOR Loans or portion thereof to be continued and the Interest Period therefor. In the absence of such a timely and proper election with regard to LIBOR Loans, the Borrower shall be deemed to have elected to convert such LIBOR Loans to Base Rate Loans pursuant to Subsection 2.03(g). (f) All or part of any LIBOR Loans may be continued as provided herein, provided that any continuation of such Loans shall not be (as to each borrowing of such Loans as continued for an applicable Interest Period) less than $1,000,000 and shall be in an integral multiple of $100,000. (g) The Borrower may elect to convert any LIBOR Loan on the last day of the then current Interest Period relating thereto to a Base Rate Loan by giving a Drawdown Request to the Agent regarding such election. (h) The Borrower may elect to convert any Base Rate Loan at any time or from time to time to a LIBOR Loan by giving a Drawdown Request (which shall be irrevocable) to the Agent of such election, specifying each Interest Period therefor. (i) All or any part of the outstanding Loans may be converted as provided herein, provided that any conversion of such Loans shall not result in a borrowing of Loans in an amount less than $1,000,000 and in integral multiples of $100,000. Section 2.04 Maximum Interest Rate. In no event shall the interest charged with respect to a Loan exceed the maximum amount permitted by applicable law. If at any time the Interest Rate exceeds the maximum rate permitted by applicable law, the rate of interest to accrue pursuant to this Agreement and such Loan shall be limited to the maximum rate permitted by applicable law, but any subsequent reductions in the Base Rate or LIBOR shall not reduce the -5- interest to accrue on such Loan below the maximum amount permitted by applicable law until the total amount of interest accrued on such Loan equals the amount of interest that would have accrued if a varying rate per annum equal to the Interest Rate had at all times been in effect. If the total amount of interest paid or accrued on a Loan under the foregoing provisions is less than the total amount of interest that would have accrued if the Interest Rate had at all times been in effect, the Borrower, agrees to pay to the Lenders an amount equal to the difference between (a) the lesser of (i) the amount of interest that would have accrued if the maximum rate permitted by applicable law had at all times been in effect or (ii) the amount of interest that would have accrued if the Interest Rate had at all times been in effect, and (b) the amount of interest accrued in accordance with the other provisions of this Agreement. Section 2.05 Repayment. The Borrower shall repay all outstanding Loans (subject to such reduction and prepayments as hereinafter set forth) on the Maturity Date. Section 2.06 Mandatory Permanent Reduction of Tranches. (a) The Aggregate Tranche A Loan Commitment shall be permanently reduced on each Tranche A Reduction Date pursuant to the following schedule:

---------------------------------------------------------------------- TRANCHE A REDUCTION DATE TRANCHE A LOAN COMMITMENT REDUCTION AMOUNT ---------------------------------------------------------------------- March 13, 2003 $ 5,000,000 ---------------------------------------------------------------------- September 13, 2003 $ 5,000,000 ---------------------------------------------------------------------- March 13, 2004 $ 5,000,000 ---------------------------------------------------------------------- September 13, 2004 $ 5,000,000 ---------------------------------------------------------------------- March 13, 2005 $10,000,000 ---------------------------------------------------------------------- September 13, 2005 $10,000,000 ---------------------------------------------------------------------- March 13, 2006 $12,500,000 ---------------------------------------------------------------------- September 13, 2006 $12,500,000 ---------------------------------------------------------------------- March 13, 2007 $12,500,000 ---------------------------------------------------------------------- Maturity Date $22,500,000 ----------------------------------------------------------------------

provided, however, in the event that the aggregate outstanding principal amount of all of the Term Loans is less than the Aggregate Tranche B Loan Commitment on the date that is the four month anniversary of the Closing Date and the Aggregate Tranche B Loan Commitment is reduced pursuant to Section 2.06(b), then the Tranche A Loan Commitment Reduction Amount for each Tranche A Reduction Date shall be calculated using the following formula: A - [(B-C)(A/D)] + E Where A = The Tranche A Loan Commitment Reduction Amount as set forth in the above chart for such Tranche A Reduction Date B = The Aggregate Tranche B Commitment Amount C = The aggregate outstanding principal amount of all of the Term Loans as of the date that is the four month anniversary of the Closing Date D = The Aggregate Tranche A Commitment Amount E = The Tranche B Reduction Amount, if any, on such Tranche A Reduction Date -6- For purposes of illustration, if it is the first Tranche A Reduction Date (i.e., March 2003) and the aggregate outstanding principal amount of the Terms Loans as of four month anniversary of the Closing Date is $60,000,000, then the Tranche A Loan Commitment Reduction Amount will be determined as follows: $5,000,000 - [($80,000,000-$60,000,000) ($5,000,000/$100,000,000)] + 0 = $4,000,000. If is the Tranche A Reduction Date occurring in September 2006, then the Tranche A Loan Commitment Reduction Amount will be determined as follows: $12,500,000 - [($80,000,000-$60,000,000) ($12,500,000/$100,000,000)] + [75,000,000-$63,000,000] = $22,000,000. (b) In the event that the aggregate outstanding principal amount of all of the Term Loans is less than the Aggregate Tranche B Loan Commitment on the date that is the four month anniversary of the Closing Date, the Aggregate Tranche B Loan Commitment shall be permanently reduced to an amount equal to the outstanding principal amount of the Terms Loans as of such date. In addition, the Aggregate Tranche B Loan Commitment shall be permanently reduced on each Tranche B Reduction Date by the amount necessary to cause the outstanding principal amount of the Term Loans as of such date to not exceed the amount indicated below beside such dates:

- -------------------------------------------------------------------------------- TRANCHE B REDUCTION DATE AGGREGATE TRANCHE B LOAN COMMITMENT - -------------------------------------------------------------------------------- The date that is thirty-six (36) months $77,500,000 after the Closing Date - -------------------------------------------------------------------------------- The date that is forty-two (42) months $75,000,000 after the Closing Date - -------------------------------------------------------------------------------- The date that is forty-eight (48) months $63,000,000 after the Closing Date - -------------------------------------------------------------------------------- The date that is fifty-four (54) months $51,000,000 after the Closing Date - -------------------------------------------------------------------------------- Maturity Date $0.00 - --------------------------------------------------------------------------------

In addition, in the event that the Borrower shall consummate a public or Rule 144A offering of its Indebtedness after the Closing Date, then the Aggregate Tranche B Loan Commitment shall be permanently reduced on the date such offering is completed by an amount equal to the net proceeds of such issuance. (c) If, on any Tranche A Reduction Date, the outstanding principal amount of the Revolving Loans plus all L/C Obligations as of such date exceed the Aggregate Tranche A Loan Commitment (as reduced on such Tranche A Reduction Date), then the Borrower shall, on such Tranche A Reduction Date, make a mandatory repayment of the Revolving Loans (or pay over to the Agent to be applied to or held as cash collateral for the L/C Obligations) of the amount (the "Tranche A Reduction Amount") of such excess. If, on any Tranche B Reduction Date, the outstanding principal amount of the Term Loans as of such date exceeds the -7- Aggregate Tranche B Loan Commitment (as reduced on such Tranche B Reduction Date), then the Borrower shall, on such Tranche B Reduction Date, make a mandatory prepayment of the Term Loans in the amount (the "Tranche B Reduction Amount") of such excess. Section 2.07 Optional Permanent Reduction of Aggregate Tranche A Loan Commitment and Aggregate Tranche B Loan Commitment. (a) The Borrower shall have the right, at any time and from time to time, to request, without penalty, a permanent reduction of either the Aggregate Tranche A Loan Commitment or the Aggregate Tranche B Loan Commitment so long as the Agent receives five (5) Business Days prior written notice of such request. Each such partial permanent reduction shall be in an amount at least equal to Five Million Dollars ($5,000,000) and multiples of One Million Dollars ($1,000,000) thereafter. To the extent that the outstanding principal amount of Revolving Loans and L/C Obligations or the outstanding principal amount of the Term Loans exceeds the Aggregate Tranche A Loan Commitment or the Aggregate Tranche B Loan Commitment, as applicable, the Borrower shall pay the Tranche A Reduction Amount and/or the Tranche B Reduction Amount, respectively. (b) Any prepayment of any Loan made hereunder shall be subject to the condition that on the date of prepayment all accrued interest to the date of such prepayment shall be paid in full with respect to such Loans or portions thereof being prepaid, together with any and all actual costs or expenses incurred by any Lender in connection with any breaking of funding (as certified by such Lender, which certification shall, absent any manifest error, be conclusive and binding on the Borrower). (c) Prepayments made under this Section 2.07 shall, at the option of the Borrower, be applied either (i) pro rata to any mandatory repayments due under Section 2.06(c) during the next six (6) months or (ii) to mandatory repayments due under Section 2.06(c) in inverse order of maturity. Section 2.08 Application of Payments. Unless otherwise expressly provided herein, each payment made on a Loan will be applied, first to the payment of all fees and expenses due to the Agent or the Lenders under this Agreement, second, to the payment of interest on overdue interest at the Overdue Rate on such Loan to the date of such payment, third, to the payment of interest on any overdue Reduction Amount at the Overdue Rate on such Loan to the date of such payment, fourth, to the payment of accrued interest on such Loan to the date of such payment, fifth, to the payment of any overdue Reduction Amount past due on such Loan and sixth, to the payment of the Reduction Amount of such Loan then due. Section 2.09 Manner of Payments. (a) All payments made pursuant to the Credit Agreement shall be made without set-off or counterclaim but subject to deduction for, and net of, applicable Excluded Taxes and shall be made in immediately available funds by the Borrower to -8- the Agent for the account of the Lenders in accordance with their Proportionate Share. All such payments shall be made to the Agent, prior to 11:00 a.m., New York City time, on the date due to the Agent's account at JPMorgan Chase Bank, ABA#: 021000021, Account of Fortis Capital Corp., Account # 001-1-624418, Reference: Seabulk, or at such other place in New York as may be designated by the Agent to the Borrower in writing. Any payments received after 11:00 a.m., New York City time, shall be deemed received on the next Business Day. The Agent shall promptly remit to each Lender, in the same type of funds as payment was received, each Lender's Proportionate Share according to its respective interest of all such payments received by the Agent for the account of such Lender. Subject to the definition of "Interest Period", whenever any payment to be made hereunder shall be stated to be due on a date other than a Business Day, such payment may be made on the next succeeding Business Day with the same effect as if made on the due date but interest shall continue to accrue until the date of payment. (b) If any Lender or other holder of a Note shall obtain any payment or other recovery (whether voluntary, involuntary, by application of offset, set-off, banker's lien, counterclaim or otherwise) on account of principal of or interest on any Note or Reimbursement Obligation in excess of its Proportionate Share of payments and other recoveries obtained by all Lenders or other holders, such Lender or other holder shall purchase from the other Lenders or holders such participation in the Notes and Reimbursement Obligations held by them as shall be necessary to cause such purchasing Lender or other holder to share the excess payment or other recovery with each of them; provided, however, that if all or any portion of the excess payment or other recovery is thereafter recovered from such purchasing holder, the purchase shall be rescinded and the purchase price restored to the extent of such recovery, but without interest. The Borrower agrees that the Lender so purchasing a participation from the other Lenders under this Section 2.09(b) may exercise all its rights of payment, including the right of set-off, with respect to such participation as fully as if such Lender were the direct creditor of such Borrower in the amount of the participation Section 2.10 Register of Notes; Lost and Mutilated Notes (a) The Agent will maintain at its principal office a register (the "Register") for the purpose of registering the Notes and registering transfers and exchanges of Notes. The Person in whose name a Note is registered in accordance with this Section 2.10(a) shall for all purposes hereof be deemed a Lender. Upon surrender for transfer or exchange of any Note at the principal office of the Agent, the Borrower will execute and deliver (in the case of any such transfer, in the name of the designated transferee or transferees or, in the case of an exchange, in the name of the holder thereof), one or more new Notes of the same series of a like aggregate principal amount. The Agent will not be required to register or exchange any surrendered Note as above provided during the 15-day period preceding any Interest Payment Date. Every Note presented or surrendered for transfer or exchange will be duly endorsed (or be accompanied by a written instrument of transfer in form satisfactory to the Agent) duly executed by the holder thereof or his attorney duly -9- authorized in writing. Any Note issued in a registration of transfer or exchange will carry the same rights to interest (unpaid and to accrue) carried by the Note so transferred or exchanged so that there will not be any loss or gain of interest on such Note. The Agent shall mark on each new Note (i) the dates to which principal and interest have been paid on the old Note and (ii) all payments and prepayments of principal previously made on such old Note which are allocable to such new Note. (b) If any Note has been mutilated, lost, stolen or destroyed, the Borrower will execute and deliver a new Note of like date and tenor in exchange and substitution for, and upon cancellation of, such mutilated Note or in lieu of and in substitution for such lost, stolen or destroyed Note; provided, however, that the Borrower will so execute and deliver such new Note only if the applicable holder has paid the reasonable expenses and charges of the Borrower in connection therewith and, in the case of a lost, stolen or destroyed Note, (i) has filed with the Borrower evidence satisfactory to it that such Note was lost, stolen or destroyed, and (ii) has furnished to the Borrower indemnity satisfactory to it. Neither the Borrower nor the Agent shall have any obligation to indemnify or reimburse such holder for any losses, expenses or charges that it may suffer or incur in connection with the previous sentence, such costs to be borne entirely by such holder. If any such Note has matured or is otherwise subject to payment, instead of issuing a new Note the Borrower may pay the same without surrender thereof. Any Note issued in exchange for a lost, stolen, destroyed or mutilated Note will carry the same rights to interest (unpaid and to accrue) carried by the Note lost, stolen, destroyed or mutilated so that there will not be any loss or gain of interest on such Note. The Agent shall mark on each new Note (A) the dates to which interest has been paid on the old Note and (B) all payments and prepayments of principal previously made on such old Note which are allocable to such new Note. (c) Upon the issuance of a new Note or Notes pursuant to Section 2.10(a) or 2.10(b) hereof, each of the Borrower and the Agent may require from the party requesting such new Note or Notes payment of a sum to reimburse the Borrower for, or to provide funds for, the payment of any tax or other governmental charge in connection therewith or any charges and expenses connected with such tax or other governmental charge paid or payable by the Borrower. Section 2.11 Change in Circumstances. (a) If after the date of this Agreement, there shall have occurred the adoption of any applicable law, rule or regulation regarding capital adequacy, or any change therein, or any change in the interpretation or administration thereof by any Governmental Authority, central bank or comparable agency, that a Lender has reasonably determined has or would have the effect of reducing the rate of return on the Lender's capital or the capital of its direct or indirect holding company as a consequence of its obligations hereunder to a level below that which such Lender or its holding company would have achieved but for such adoption, change or compliance (taking into consideration such Lender's or its holding company's policies with respect to capital adequacy) by an amount which such Lender, in its -10- reasonable judgment, shall deem material, then from time to time, the Borrower shall pay to such Lender such additional amount or amounts as will compensate such Lender or its holding company for such reduction. A certificate as to such amounts submitted to the Borrower by such Lender shall be conclusive and binding for such purposes, absent manifest error; provided, however, that the determination of such additional amount or amounts shall be made in good faith in a manner generally consistent with such Lender's standard practice. (b) If after the date of this Agreement, there shall have occurred the adoption of any applicable law, rule or regulation regarding the maintenance of reserves, special deposits, compulsory loans or similar requirements against assets held by, deposits or liabilities in or for the account of, advances, loans or other extensions of credit by, or any other acquisition of funds by, any office of such Lender which is not otherwise included in the determination of the Interest Rate hereunder, or any change therein, or any change in the interpretation or administration thereof by any Governmental Authority, central bank or comparable agency, that a Lender has reasonably determined has or would have the effect of increasing the cost to such Lender or such Lender's direct or indirect holding company, by an amount which such Lender deems to be material, with respect to issuing the Letters of Credit or making, continuing or maintaining the LIBOR Loans, or to reduce any amount receivable hereunder in respect thereof, then, in any such case, the Borrower shall promptly pay such Lender, upon its demand, any additional amount or amounts as will compensate such Lender or holding company for such increased cost or reduced amount receivable. A certificate as to such amounts submitted to the Borrower by such Lender shall be conclusive and binding for such purposes, absent manifest error; provided, however, that the determination of such additional amount or amounts shall be made in good faith in a manner generally consistent with such Lender's standard practice. (c) Upon the occurrence of any event giving rise to the operation of this Section 2.11, the affected Lender shall use reasonable efforts to designate or cause its direct or indirect holding company to designate a different lending office for funding or booking its obligations hereunder or to assign its rights and obligations hereunder to another of its offices, branches or affiliates, if, in the judgment of such Lender such designation or assignment (i) would eliminate or reduce amounts payable pursuant to this Section 2.11 in the future, (ii) would not subject such Lender to any economic, legal or regulatory disadvantage or to any unreimbursed cost or expense and (iii) would not otherwise be disadvantageous to such Lender. The Borrower hereby agrees to pay all reasonable costs and expenses incurred by such Lender in connection with such designation or assignment. If the affected Lender does not so designate or cause its direct or indirect holding company to designate a different lending office, then the Borrower shall have the right to require such lender to assign its interest to an Eligible Assignee pursuant to Section 10.11 hereof. (d) The Borrower shall not be required to compensate a Lender pursuant to this Section 2.11 for any amounts pursuant to the immediately preceding clauses (a) and/or (b) of this Section 2.11 to the extent that such amounts were incurred more -11- than 180 days prior to the date that such Lender notifies the Borrower of the circumstances giving rise to such amounts and of such Lender's intention to claim compensation therefor; provided, however, that, if the circumstances giving rise to such amounts are retroactive, then the 180-day period referred to above shall be extended to include the period of retroactive effect thereof. Section 2.12 Illegality. Notwithstanding any other provision herein, if any Change in Law shall make it unlawful for any Lender to make or maintain any portion of a Loan as a LIBOR Loan, such Lender shall so notify the Borrower and the Agent in writing and interest on such portion of such Loan shall thereafter be calculated by reference to the Base Rate. If any such change in the method of calculating interest is required, pursuant to such change in law, to be made on a day which is not the last day of an Interest Period, the Borrower shall pay to such Lender the amounts, if any, as may be required pursuant to Section 2.14. Section 2.13 Taxes. (a) Any and all payments on account of any Obligations shall be made free and clear of and without deduction for any Taxes (other than, and excluding, Excluded Taxes); provided, however, that if the Borrower shall be required to withhold or deduct any Indemnified Taxes from any such payment, the amount of such payment shall be increased as necessary so that after making all required withholdings or deductions (including withholdings or deductions applicable to additional sums payable under this Section 2.13) the Lenders receive an amount equal to the sum that they would have received had no such deductions been made. The Borrower shall pay the full amount withheld or deducted to the relevant Governmental Authority in accordance with applicable law. (b) The Borrower shall indemnify each Indemnified Party (provided, however, that for purposes of this Section 2.13, Indemnified Party shall mean the Agent, any Issuing Lender, each Arranger, each Lender, and any Affiliate of any of the foregoing) within twenty (20) days after written demand therefor for the full amount of any Indemnified Taxes payable with respect to or on account of any Obligation (including Taxes imposed on or attributable to amounts payable under this Section 2.13) and any penalties, interest, and reasonable expenses arising therefrom or with respect thereto, whether or not such Indemnified Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. In the case of Indemnified Taxes paid by an Indemnified Party, a certificate as to the amount of such payment or liability delivered to the Borrower by such Indemnified Party shall be conclusive absent manifest error. The agreements in this Section shall survive the termination of this Agreement and the Transaction Documents and the payment of all amounts payable hereunder and thereunder. (c) As soon as practicable after any payment of Indemnified Taxes or Other Taxes by the Borrower to a Governmental Authority, the Borrower shall deliver to such Indemnified Party the original or a certified copy of a receipt issued by such Governmental Authority evidencing such payment, a copy of the return -12- reporting such payment or other evidence of such payment reasonably satisfactory, to such Indemnified Party. (d) Each Indemnified Party not incorporated or organized under the laws of the United States of America or a state thereof shall deliver to the Borrower and Agent prior to the first date on which any payment is due such entity hereunder two duly completed copies of United States Internal Revenue Service Form W-8BEN or W-8ECI, or successor applicable form, as the case may be, certifying in each case that such entity is entitled to receive payments under the Loan without withholding or deduction of any United States federal income tax. Each entity required to deliver Forms W-8BEN or W-8ECI, or successor applicable form pursuant to the preceding sentence, further undertakes to deliver to the Borrower and the Agent two further copies of W-8BEN or W-8ECI, or successor applicable forms, as the case may be, on or before the date that any such form expires or becomes obsolete or after the occurrence of any event requiring a change in the most recent forms previously delivered by it to the Borrower and the Agent, unless in any such case an event (including, without limitation, any change in treaty, law or regulation or in the interpretation thereof) has occurred prior to the date on which any such delivery otherwise would be required which renders all such forms inapplicable or which would prevent such entity from duly completing and delivering any such form. The Borrower shall not be obligated to pay any Indemnified Party any amounts pursuant to this Section 2.13 in respect of Indemnified Taxes that would not have been imposed but for failure of the Indemnified Party to comply with this Section 2.13(d). (e) Notwithstanding the foregoing, if the Borrower incurs any liability pursuant to this Section 2.13, to make a payment (or pay an increased amount) to a Lender with respect to a Loan or otherwise, the Lender in respect of whose Proportionate Share of such Loan such liability arises shall use reasonable efforts to designate a different lending office for funding or booking its obligations hereunder or to assign its rights and obligations hereunder to another of its offices, branches or affiliates, if, in the judgment of such Lender such designation or assignment (i) would eliminate or reduce amounts payable pursuant to this Section 2.13 in the future and (ii) would not subject such Lender to any unreimbursed cost or expense and would not otherwise be disadvantageous to such Lender. The Borrower hereby agrees to pay all reasonable costs and expenses incurred by such Lender in connection with such designation or assignment. (f) The Borrower shall pay any Other Taxes to the relevant Governmental Authority in accordance with applicable law. (g) If a Lender, the Issuing Lender, the Agent or any Arranger shall become aware that it is entitled to claim a refund from a Governmental Authority in respect of Taxes or Other Taxes as to which it has been indemnified by the Borrower, or with respect to which the Borrower has paid additional amounts, pursuant to this Section 2.13, it shall promptly notify the Borrower of the availability of such claim and shall, within thirty (30) days after receipt of a request by the Borrower, make a claim to such Governmental Authority for such refund at the Borrower's expense. If a Lender, the Issuing Lender, the Agent or any Arranger receives a refund in respect of -13- any Taxes or Other Taxes with respect to which the Borrower has paid additional amounts pursuant to this Section 2.13, it shall within thirty (30) days from the date of such receipt pay over such refund to the Borrower (but only to the extent of indemnity payments made, or additional amounts paid, by the Borrower under this Section 2.13 with respect to the Taxes or Other Taxes giving rise to such refund), net of all out-of-pocket expenses of such Lender, the Issuing Lender, the Agent or such Arranger and without interest (other than interest paid by the relevant Governmental Authority with respect to such refund); provided, however, that the Borrower, upon the request of such Lender, the Issuing Lender, the Agent or any Arranger, agrees to repay the amount paid over to the Borrower (plus penalties, interest or other charges payable to the relevant Governmental Authority) to such Lender, the Issuing Lender, the Agent or any Arranger in the event such Lender, the Issuing Lender, the Agent or any Arranger is required to repay such refund to such Governmental Authority. Section 2.14 Break Funding Payments. The Borrower agree to indemnify each Lender and to hold each Lender harmless from any loss or expense which such Lender may sustain or incur as a consequence of (a) default by the Borrower in making a borrowing of a LIBOR Loan after the Borrower has given irrevocable notice requesting such borrowing in accordance with Section 2.01(d), 2.02(c) or 3.01 or (b) a prepayment of a LIBOR Loan on any day other than the last day of the Interest Period applicable to such Loan. The provisions of this Section 2.14 shall survive the termination of the Transaction Documents and the payment of all amounts payable hereunder and thereunder. A certificate as to any additional amounts payable pursuant to this Section 2.14 submitted by such Lender to the Borrower shall (i) set forth the basis for requesting such amounts and (ii) be conclusive absent manifest error. Section 2.15 Alternate Rate of Interest. If prior to the commencement of any Interest Period: (a) the Agent determines (which determination shall be reasonably made and shall be conclusive absent manifest error) that, by reason of changes arising after the date of this Agreement affecting the interbank LIBOR market, or any Lender's position in such market, adequate and reasonable means do not exist for ascertaining Adjusted LIBOR, for such Interest Period, or (b) the Agent is advised by any Lender that, by reason of changes arising after the date of this Agreement affecting the interbank LIBOR market, or any Lender's position in such market, Adjusted LIBOR for such Interest Period will not adequately and fairly reflect the cost to such Lender of making or maintaining such Lender's Proportionate Share of the Loans during such Interest Period, then the Agent shall promptly give notice thereof to the Borrower, whereupon until the Agent notifies the Borrower that the circumstances giving rise to such notice no longer exist, the Loans shall not be LIBOR Loans and interest on the Loans shall be calculated by reference to the Base Rate (in the case of clause (a) above) or such Lender's Proportionate Share of the Loan (in the case of clause (b) above) shall not be a LIBOR Loan and interest on such portion of the Loans shall be calculated by reference to the Base Rate. -14- Section 2.16 Fees. (a) The Borrower shall pay the Commitment Fee to the Agent on each Commitment Fee Payment Date. (b) The Borrower shall pay (i) to the Agent for pro rata distribution to each L/C Participant (based upon each L/C Participant's Proportionate Share) a fee in respect of each Letter of Credit (the "Letter of Credit Fee") for the period from and including the date of issuance of such Letter of Credit through the Termination Date of such Letter of Credit, computed at a rate equal to the Applicable Margin for Revolving Loans maintained as LIBOR Loans per annum on the average daily Stated Amount of such Letter of Credit and (ii) to the Issuing Lender in respect of each Letter of Credit issued by it, a fee (the "Facing Fee"), for the period from and including the date of issuance of such Letter of Credit through the Termination Date of such Letter of Credit, computed at a rate equal to 0.25% per annum on the daily Stated Amount of such Letter of Credit; provided that in no event shall the annual Facing Fee with respect to any Letter of Credit be less than $500. Accrued Letter of Credit and Facing Fees shall be due and payable quarterly in arrears on each Commitment Fee Payment Date and on the first date on and after the Maturity Date on which no Letters of Credit remain outstanding. In addition, the Borrower shall pay, upon each payment under, issuance of, or amendment to, any Letter of Credit, such amount as shall at the time of such event be the administrative charge which the Issuing Lender is generally imposing in connection with such occurrence with respect to letters of credit. ARTICLE III LETTERS OF CREDIT Section 3.01 Issuing the Letters of Credit. The Borrower shall, at least five (5) Business Days prior to an Issuance Date, deliver an Issuance Request to the Agent in writing addressed to the Agent. Each Issuance Request shall be effective on receipt by the Agent and shall be irrevocable. On the Issuance Date and upon fulfillment of the applicable conditions set forth in Article V, the Letter of Credit shall be issued. Notwithstanding anything to the contrary contained herein, the Issuing Lender shall have no obligation to issue a Letter of Credit if (a) a Default or Event of Default has occurred and is continuing, (b), after giving effect to such issuance, the L/C Obligations would exceed the L/C Commitment or (c) after giving effect to the issuance of such Letter of Credit, the sum of the outstanding L/C Obligations and the aggregate principal amount of all outstanding Revolving Loans would exceed the Aggregate Tranche A Loan Commitment. Each Letter of Credit shall be in a Minimum Borrowing Amount and no Letter of Credit shall have a Termination Date later than thirty (30) days prior to the Maturity Date. Section 3.02 Drawings under Letters of Credit. In the event that there occurs one or more drawings under any Letter of Credit, and such drawing(s) are made in accordance with the terms and conditions thereof, the Issuing Lender shall, on the Business Day on which such drawing is required to be honored pursuant to such Letter of Credit (the "Disbursement Date"), -15- make available to the beneficiary under such Letter of Credit, in same day funds, the amount of such drawing. Section 3.03 Reimbursement on Demand. On (or promptly after) each Disbursement Date, the Issuing Lender shall notify the Borrower of a drawing under a Letter of Credit, and the Issuing Lender will promptly thereafter furnish to the Borrower copies of (i) each draft drawn under such Letter of Credit and (ii) each certificate and each other document (if any) accompanying any such draft. The Borrower will, as reimbursement for such payment by the Issuing Lender either (i) immediately and unconditionally repay the amount drawn under a Letter of Credit to the Issuing Lender, or (ii) if the Borrower does not effect such repayment by 5:00 p.m., New York time, on the Disbursement Date, the amount drawn under such Letter of Credit shall automatically convert into a Revolving Loan (without regard to the minimum prior notice provisions of Section 2.01(d) and the Minimum Borrowing Amount) on the following day, provided that no Default or Event of Default shall have occurred and be continuing as of the Disbursement Date. If, however, a Default or an Event of Default shall have occurred and be continuing as of the Disbursement Date, the amount drawn under such Letter of Credit shall not convert into a Revolving Loan and, instead, shall be immediately due and payable hereunder, as of the Disbursement Date. Section 3.04 Obligations Absolute. The obligation of the Borrower to reimburse the Issuing Lender with respect to each payment under each Letter of Credit (its "Reimbursement Obligation") shall, to the extent permitted by applicable New York law, be unconditional and irrevocable, and shall to such extent be paid strictly in accordance with the terms of this Agreement under all circumstances, including, without limitation, to the extent permitted by applicable New York Law, the following circumstances: (a) any lack of validity or enforceability of any Letter of Credit or any related contract, instrument or other agreement in support of which the Letter of Credit has been issued (collectively referred to as a "Contract"); (b) any amendment or waiver of or any consent to departure from all or any of the Letters of Credit or any Contract in each case agreed to by the Borrower; (c) the existence of any claim, set-off, defense or other right which the Borrower may have at any time against any beneficiary of any Letter of Credit (or any Person for whom any such beneficiary may be acting), the Issuing Lender or any other Person, whether in connection with this Agreement, the transactions contemplated herein or in such Letter of Credit or any Contract or any unrelated transaction; (d) any certificate or any other document presented under any Letter of Credit proving to be forged, fraudulent or insufficient in any respect or any statement therein being untrue or inaccurate in any respect due to circumstances not known to the Issuing Lender; or (e) any other circumstance or happening whatsoever, whether or not similar to any of the foregoing; -16- provided, however, that such circumstances do not result directly from the gross negligence, willful misconduct or bad faith of the Issuing Lender. Section 3.05 Action in Respect of the Letters of Credit. To the extent permitted by applicable New York law, the Borrower assumes all risks of the acts or omissions of the beneficiaries under the Letters of Credit with respect to their use of the Letters of Credit. Neither the Issuing Lender nor any of their officers, employees, agents or directors shall be liable or responsible for: (a) the use which may be made of any Letter of Credit; (b) the form, sufficiency, accuracy or genuineness of certificates or other documents delivered under or in connection with any Letter of Credit, even if such certificates or other documents should prove to be insufficient, fraudulent or forged; (c) errors, omissions, interruptions or delays in transmission or delivery of any messages, by mail, email, cable, telex, telecopy, telegraph, wireless or otherwise; or (d) errors in translation or for errors in interpretation of technical terms; provided, however, that such circumstances do not result directly from the gross negligence, willful misconduct or bad faith of the Issuing Lender. The Issuing Lender may accept certificates or other documents that appear on their face to be in order, without responsibility for further investigation, regardless of any notice or information to the contrary. In furtherance and not in limitation of the foregoing provisions, the Borrower agrees that, except for the Issuing Lender's gross negligence, willful misconduct or bad faith, and except as otherwise required by applicable New York law, any action, inaction or omission taken or suffered by the Issuing Lender in good faith in connection with any Letter of Credit, or the relative drafts, certificates or other documents, shall be binding on the Borrower and shall not result in any liability of the Issuing Lender to the Borrower. Section 3.06 Indemnification. The Borrower hereby agrees to protect, indemnify, defend and hold harmless the Issuing Lender and each of its directors, officers, employees and agents and any person who controls any of them within the meaning of the federal, state and foreign securities laws from and against any and all liabilities, losses, obligations, damages, penalties, expenses or costs of any kind or nature and from any suits, judgments, claims or demands (including in respect of or for attorney costs and other fees and other disbursements of counsel for and consultants of such party in connection with any investigative, administrative or judicial proceeding, whether or not such party shall be designated a party thereto) (collectively, the "Indemnified Liabilities") incurred by reason of or in connection with the execution and delivery of, or payment or failure to make payment under, any Letter of Credit; provided, however, that the Borrower shall not be required to indemnify pursuant to this Section for any Indemnified Liabilities to the extent caused by (i) the Issuing Lender's gross negligence or willful misconduct in determining whether documents presented under any Letter of Credit comply with the terms of such Letter of Credit or (ii) the Issuing Lender's gross negligence or willful misconduct in failing to make lawful payment under any Letter of Credit after presentation to it by a beneficiary of a draft and certificate strictly complying with the terms and -17- conditions of such Letter of Credit. If and to the extent that the foregoing undertaking may be unenforceable for any reason, the Borrower hereby agrees to make the maximum contribution to the payment and satisfaction of each of the Indemnified Liabilities which is permissible under applicable law. Section 3.07 Deemed Disbursements. Upon the occurrence and during the continuation of an Event of Default and upon notification by the Issuing Lender to the Borrower of its obligations under this Section 3.07, the Borrower shall be immediately obligated to deliver to the Issuing Lender cash collateral for the Issuing Lender's unfunded obligations under all issued and outstanding Letters of Credit in an amount equal to the then aggregate amount of each Letter of Credit which is undrawn and available under all issued and outstanding Letters of Credit. Any amounts so payable by the Borrower pursuant to this Section shall be deposited in immediately available funds in an interest bearing collateral account maintained with the Issuing Lender, and held as collateral security for the Reimbursement Obligations. At such time when all Events of Default shall have been cured or waived, the Issuing Lender shall return to the Borrower all amounts then on deposit with the Issuing Lender pursuant to this Section 3.07 which have not been applied towards satisfaction of all amounts owing to the Issuing Lender. Section 3.08 L/C Participations. (a) The Issuing Lender irrevocably agrees to grant and hereby grants to each L/C Participant, and, to induce the Issuing Lender to issue Letters of Credit hereunder, each L/C Participant irrevocably agrees to accept and purchase and hereby accepts and purchases from the Issuing Lender, on the terms and conditions hereinafter stated, for such L/C Participant's own account and risk an undivided interest equal to such L/C Participant's Proportionate Share in the Issuing Lender's obligations and rights under each Letter of Credit issued hereunder and the amount of each draft paid by the Issuing Lender thereunder. Each L/C Participant unconditionally and irrevocably agrees with the Issuing Lender that, if a draft is paid under any Letter of Credit for which the Issuing Lender is not reimbursed in full by the Borrower in accordance with the terms of this Agreement, such L/C Participant shall pay to the Issuing Lender upon demand, at the Issuing Lender's address for notices specified herein, an amount equal to such L/C Participant's Proportionate Share of the amount of such draft, or any part thereof, which is not so reimbursed and whether or not such amount is converted into a Revolving Loan pursuant to Section 3.03. (b) Upon becoming aware of any amount required to be paid by any L/C Participant to the Issuing Lender pursuant to Section 3.08(a) in respect of any unreimbursed portion of any payment made by the Issuing Lender under any Letter of Credit, the Issuing Lender shall notify each L/C Participant in writing of the amount and due date of such required payment and such L/C Participant shall pay to the Issuing Lender the amount specified on the applicable due date. If any such amount is paid to the Issuing Lender after the date such payment is due, such L/C Participant shall pay to the Issuing Lender on demand, in addition to such amount, the product of (i) such amount, times (ii) the daily average Federal Funds Rate as determined by the Issuing Lender during the period from and including the date such payment is due to -18- the date on which such payment is immediately available to the Issuing Lender, times (iii) a fraction the numerator of which is the number of days that elapsed during such period and the denominator of which is 360. A certificate of the Issuing Lender with respect to any amounts owing under this Section 3.08(b) shall be conclusive in the absence of manifest error. With respect to payment to the Issuing Lender of the unreimbursed amounts described in this Section 3.08(b), if the L/C Participants receive written notice that any such payment is due (A) prior to 1:00 p.m. (New York time) on any Business Day, such payment shall be due that Business Day, and (B) after 1:00 p.m. (New York time) on any Business Day, such payment shall be due on the following Business Day. (c) Whenever, at any time after the Issuing Lender has made payment under any Letter of Credit and has received from any L/C Participant such L/C Participant's Proportionate Share of such payment in accordance with this Section 3.08, the Issuing Lender receives any payment related to such Letter of Credit (whether directly from the Borrower or otherwise), or any payment of interest on account thereof, the Issuing Lender will promptly distribute to such L/C Participant its Proportionate Share thereof; provided, however, that in the event any such payment received by the Issuing Lender shall be required to be returned by the Issuing Lender, such L/C Participant shall return to the Issuing Lender the portion thereof previously distributed by the Issuing Lender to it. Section 3.09 Lenders Not Required to Make Loans or Issue Letters of Credit. Notwithstanding anything to the contrary contained in this Agreement, neither the Lenders nor the Issuing Lender shall be obligated in any manner to make any Loan or issue any Letter of Credit in a principal amount which, together with the aggregate principal amount of all Loans outstanding and all L/C Obligations outstanding on the proposed date of making such Loan or issuance of a Letter of Credit, would exceed the Aggregate Loan Commitment. ARTICLE IV REPRESENTATIONS, WARRANTIES AND AGREEMENTS In order to induce the Agent, the Arrangers and the Lenders to enter into this Agreement and to induce the Lenders to make the Facility available, each Credit Party hereby represents and warrants to the Agent, the Arrangers and the Lenders (which representations and warranties shall survive the execution and delivery of this Agreement, the Notes and the other Transaction Documents and the drawdown of the Loans and the issuances of any Letters of Credit hereunder) that: Section 4.01 Company Status. Each Credit Party (i) is a duly organized and validly existing in good standing under the laws of the jurisdiction of its incorporation or formation, (ii) has the organizational power and authority to own its property and assets and to transact the business in which it is engaged and presently proposes to engage and (iii) is duly qualified and is authorized to do business and is in good standing in each jurisdiction where the conduct of its business requires such qualifications, except where the failure to be so qualified is not reasonably expected to result in a Material Adverse Change. -19- Section 4.02 Company Power and Authority. Each Credit Party has the requisite power and authority to execute, deliver and perform the terms and provisions of each of the Transaction Documents to which it is party and has taken all necessary action to authorize the execution, delivery and performance by it of each of such Transaction Documents. Each Credit Party has duly executed and delivered each of the Transaction Documents to which it is party, and each of such Transaction Documents constitutes the legal, valid and binding obligation of such Credit Party enforceable in accordance with its terms, except to the extent that such enforceability may be limited by any applicable bankruptcy, insolvency or similar laws generally affecting the enforcement of creditor's rights and by general principles of equity. Section 4.03 No Violation. Neither the execution, delivery or performance by any Credit Party of the Transaction Documents to which it is a party, nor compliance by it with the terms and provisions thereof, (i) will contravene any provision of any applicable law, statute, rule or regulation or any applicable order, writ, injunction or decree of any court or governmental instrumentality, other than any such contravention that could not reasonably be expected to result in a Material Adverse Change, (ii) will conflict with or result in any breach of any of the terms, covenants, conditions or provisions of, or constitute a default under, or result in the creation or imposition of (or the obligation to create or impose) any Lien (except pursuant to the Security Documents) upon any of the material properties or assets of the Borrower or any of its Subsidiaries pursuant to the terms of, any indenture, mortgage, deed of trust, credit agreement or loan agreement, or any other material agreement, contract or instrument, to which the Borrower or any of its Subsidiaries is a party or by which it or any of its property or assets is bound or to which it may be subject, or (iii) will violate any provision of the Certificate of Incorporation or other documents of the Borrower or any of its Subsidiaries. Section 4.04 Governmental Approvals. Except for filings and recordings in connection with the Security Documents (which filings shall be made on or before the Closing Date with respect to the Collateral delivered as of the Closing Date) and except as have been obtained and are in effect, no order, consent, approval, license, authorization or validation of, or filing, recording or registration with or exemption by, any governmental or public body or authority, or any subdivision thereof, is required to authorize, or is required in connection with, (i) the consummation and performance by any Credit Party of any Transaction Document or (ii) the legality, validity, binding effect or enforceability of any Transaction Document. Section 4.05 Financial Statement; Financial Condition; Undisclosed Liabilities; etc. Except as otherwise disclosed in writing to the Lenders on or prior to the date hereof, the financial information regarding the Borrower and its Subsidiaries for the year ended December 31, 2001 and for the quarters ended March 31, 2002 and June 30, 2002 contained in the Borrower's Form 10-K/A, Form 10-QA and Form 10-Q, respectively, are complete and correct, have been prepared in accordance with GAAP and accurately and fairly present the financial condition of the parties covered thereby as of the respective dates thereof and the results of the operations thereof for the period or respective periods covered by such financial statements and since the date of the most recent of such statements, there has been no Material Adverse Change and there are no contingent obligations, liabilities for Taxes or other outstanding financial obligations which are material in the aggregate except as disclosed in such statements. No written information, exhibit, schedule or report prepared by or on behalf of the Borrower and furnished to the Agent or the Lenders by or at the direction of the Borrower or any of its -20- Subsidiaries in connection with the negotiation of this Agreement contained any material misstatement of fact or, when such statement is considered with all other written statements furnished to the Agent or the Lenders in that connection, omitted to state a material fact or any fact necessary to make the statement contained therein not misleading; provided, that, the financial information with respect to the Borrower's projections, copies of which have been furnished to the Agent and each Lender prior to the Closing Date, were prepared in good faith on the basis of the assumptions stated therein, which assumptions were believed by the Borrower to be reasonable in all material respects at the time made. Section 4.06 Litigation. Except as disclosed in Schedule 4.06 hereto, there is no action, suit, proceeding or investigation pending or, to the best knowledge of each Credit Party, threatened, before any court or administrative agency that might: (i) adversely affect its ability to perform its obligations under this Agreement or any other Transaction Document to which it is a party, (ii) reasonably be expected to result in any judgment or liability which would result in a Material Adverse Change or (iii) adversely affect the enforceability of this Agreement, any Note or any other Transaction Document. Section 4.07 No Default. No Credit Party is in default (in any respect that could reasonably be expected to result in a Material Adverse Change) under any agreement by which it is bound, or is in default in respect of any financial commitment or obligation. Section 4.08 Use of Proceeds; Margin Regulations. (a) The proceeds received with respect to the (i) Terms Loans shall be used by the Borrower for the sole purpose of repurchasing or redeeming the Existing Senior Notes in the event that (1) the Borrower is required to repurchase the Existing Senior Notes due to a Change of Control, (2) the Borrower elects to call the Existing Senior Notes in accordance with the terms of the Existing Indenture or (3) the Borrower enters into a solicitation with the holders of the Existing Senior Notes that is acceptable to the Arrangers in their sole discretion and (ii) Revolving Loans shall be used by the Borrower for (1) general corporate purposes and payment of professional fees and expenses of the Borrower and the other Credit Parties and (2) to refinance and repay the Existing Indebtedness. (b) No part of the proceeds of any Loan will be used by the Borrower to purchase or carry any Margin Stock or to extend credit to others for the purpose of purchasing or carrying any Margin Stock. Neither the making of any Loan nor the use of the proceeds thereof will violate or be inconsistent with the provisions of Regulation T, U or X of the Board of Governors of the Federal Reserve System. Section 4.09 Tax Returns and Payments. The Borrower and each of its Subsidiaries has filed or caused to be filed, with the appropriate taxing authority, all federal, state, provincial and other returns, statements, forms and reports for Taxes (the "Returns") required to be filed by or with respect to the income, properties or operations of the Borrower and/or its Subsidiaries except where the failure to so file or cause to be filed could not reasonably be expected to result in a Material Adverse Change. The Borrower and its Subsidiaries have paid all Taxes payable by them other than (a) Taxes which are not delinquent, (b) Taxes contested in good faith for -21- which adequate reserves have been established in accordance with GAAP and (c) foreign Taxes as to which the failure to pay such foreign Taxes could not reasonably be expected to result in a Material Adverse Change. Section 4.10 Compliance with ERISA. (a) Except, in each case, as could not reasonably be expected to result in a Material Adverse Change or except as disclosed on Schedule 4.10 hereto, (i) each Plan (and each related trust, insurance contract or fund) is in compliance in all material respects with its terms and with all applicable laws, including without limitation ERISA and the Code; (ii) each Plan (and each related trust, if any) which is intended to be qualified under Section 401(a) of the Code has received a determination letter from the Internal Revenue Service to the effect that it is qualified and meets the requirements of Sections 401(a) and 501(a) of the Code and nothing has occurred since the date of such determination letter that could adversely affect the qualification of such Plan; (iii) the most recent annual report (Form 5500 Series) with respect to each Plan, including Schedule B (Actuarial Information) thereto, copies of which have been filed with the Internal Revenue Service, is complete and correct and fairly presents the funding status of each such Plan, and since the date of such report there has been no Material Adverse Change in such funding status; (iv) no Reportable Event has occurred or is reasonably likely to occur; (v) no Plan which is a multiemployer plan (as defined in Section 4001(a)(3) of ERISA) is insolvent or in reorganization; (vi) no Plan which is subject to Section 412 of the Code or Section 302 of ERISA has an accumulated funding deficiency, within the meaning of such sections of the Code or ERISA, or has applied for or received a waiver of a funding deficiency or an extension of any amortization period, within the meaning of Section 412 of the Code or Section 303 or 304 of ERISA; (vii) all contributions required to be made with respect to a Plan have been or will be timely made; (viii) neither the Borrower nor any Subsidiary of the Borrower nor any ERISA Affiliate has committed any violation or incurred any liability (including any indirect, contingent or secondary liability) pursuant to Section 406, 409, 502(i), 502(l), 515 or Title IV of ERISA (other than the payment of premiums, none of which are overdue) or Section 401(a)(29), 4971 or 4975 of the Code or reasonably expects to incur any such liability under any of the foregoing sections; (ix) no condition exists which presents a risk to the Borrower or any Subsidiary of the Borrower or any ERISA Affiliate of incurring a liability to or on account of a Plan pursuant to the foregoing provisions of ERISA and the Code; (x) no proceedings have been instituted to terminate or appoint a trustee to administer any Plan which is subject to Title IV of ERISA; (xi) neither the Borrower, any Subsidiary Guarantor nor any ERISA Affiliate has incurred any liability under the Worker Adjustment and Retraining Notification Act (29 U.S.C.ss.ss.201-2109) (which remains unpaid); (xii) no action, suit, proceeding, hearing, audit or investigation with respect to the administration, operation or the investment of assets of any Plan (other than routine claims for benefits) is pending, expected or threatened; (xiii) the Borrower has not received notice that indicates the existence of potential withdrawal liability under a Multiemployer Plan (as defined In Section 4001(a)(3) of ERISA); (xiv) each group health plan (as defined in Section 607(1) of ERISA or Section 4980B(g)(2) of the Code) which covers or has covered employees or former -22- employees of the Borrower, any Subsidiary of the Borrower, or any ERISA Affiliate has at all times been operated in compliance with the provisions of Part 6 of subtitle B of Title I of ERISA and Section 4980B of the Code; (xv) no lien or security interest encumbrance on the assets of the Borrower or any Subsidiary of the Borrower or any ERISA Affiliate that is imposed under the Code or ERISA or is likely to arise in connection with any Plan; (xvi) the Borrower and its Subsidiaries do not maintain or contribute to any employee welfare benefit plan (as defined in Section 3(1) of ERISA) which provides benefits to retired employees or other former employees (other than as required by Section 601 of ERISA) or any Plan; (xvii) no Plan has an Unfunded Current Liability in excess of $1,000,000; (xviii) the accumulated post retirement benefit obligation (as determined in accordance with Financial Accounting Standard 106 of the Borrower, any Subsidiary Guarantor and any ERISA Affiliate, to the extent it could subject the Borrower to liability, shall not as of the end of the fiscal year preceding the Closing Date exceed $1,000,000, and there is no other post-termination benefit obligation for which the Borrower could reasonably be expected to incur liability or be obligated in excess of $1,000,000, and the Borrower shall not take any action not required by applicable law that could reasonably be expected to cause such obligation to increase above $1,000,000; and (xix) using actuarial assumptions and computation methods consistent with Part 1 of Subtitle E of Title IV of ERISA, the aggregate liabilities of the Borrower and its Subsidiaries and their ERISA Affiliates to all Plans which are multiemployer plans (as defined in Section 4001(a)(3) of ERISA) in the event of a complete withdrawal therefrom, as of the close of the most recent fiscal year of such Plan ended prior to the date of the most recent Credit Event, would not exceed $100,000. (b) Except, in each case, as could not reasonably be expected to result in a Material Adverse Change, (i) each Foreign Pension Plan has been maintained in compliance in all material respects with its terms and with the requirements of any and all applicable laws, statutes, rules, regulations and orders and has been maintained, where required, in good standing with applicable regulatory authorities; (ii) all contributions required to be made with respect to a Foreign Pension Plan have been timely made; (iii) neither the Borrower nor any of its Subsidiaries has incurred any obligation in connection with the termination of or withdrawal from any Foreign Pension Plan; and (iv) the present value of the accrued benefit liabilities (whether or not vested) under each Foreign Pension Plan, determined as of the end of the Borrower's most recently ended fiscal year on the basis of actuarial assumptions, each of which is reasonable, did not exceed the current value of the assets of such Foreign Pension Plan allocable to such benefit liabilities. Section 4.11 Ownership; Subsidiaries. Schedule 4.11 correctly (a) lists each of the Borrower's direct and indirect Subsidiaries as of the Closing Date and (b) describes the Equity Interests owned by the Borrower (directly or indirectly) in each of its Subsidiaries as of the Closing Date. Section 4.12 Compliance with Statutes, etc. The Borrower and each of its Subsidiaries is in compliance with all applicable statutes, regulations and orders of, and all applicable restrictions imposed by, all governmental bodies, domestic or foreign, in respect of the conduct -23- of its businesses and the ownership of its property, except such noncompliances as could not (in the event such noncompliance were asserted by any Person through appropriate action), individually or in the aggregate, reasonably be expected to result in a Material Adverse Change. Section 4.13 Investment Company Act. Neither the Borrower nor any of its Subsidiaries is an "investment company" or a company controlled by an "investment company" within the meaning of the Investment Company Act of 1940, as amended. Section 4.14 Environmental Matters. (a) To the actual knowledge of each Responsible Officer of each Credit Party who executes any Transaction Document on behalf of any Credit Party and without independent investigation: (i) except as disclosed in Schedule 4.14, the Borrower and each of its Subsidiaries have complied with, and on the date of each Credit Event will be in compliance with, all applicable Environmental Laws and the requirements of any permits issued under such Environmental Laws, (ii) there are no pending or threatened Environmental Claims against the Borrower or any of its Subsidiaries or any Real Property owned or operated by the Borrower or any of its Subsidiaries in excess of $150,000, (iii) there are no facts, circumstances, conditions or occurrences with respect to the business or operations of the Borrower or any Real Property at any time owned or operated by the Borrower or any of its Subsidiaries that could reasonably be expected to form the basis of an Environmental Claim against the Borrower or any of its Subsidiaries or any such Real Property in excess of $150,000, or to cause any such currently owned Real Property to be subject to any restrictions on the ownership, occupancy, use or transferability of such Real Property by the Borrower or any of its Subsidiaries under any applicable Environmental Law. (b) To the actual knowledge of each Responsible Officer of each Credit Party who executes any Transaction Document on behalf of any Credit Party and without independent investigation: (i) except as disclosed in Schedule 4.14, Hazardous Materials have not at any time been generated, used, treated or stored on, or transported to or from, any Real Property owned or operated by the Borrower or any of its Subsidiaries where such generation, use, treatment or storage has violated or could reasonably be expected to violate any Environmental Law in such a manner so as to cause this representation to be untrue; or (ii) Hazardous Materials have not at any time been Released on or from any Real Property owned or operated by the Borrower or any of its Subsidiaries where such Release has violated or could reasonably be expected to violate any applicable Environmental Law in such a manner so as to cause this representation to be untrue. Section 4.15 Labor Relations. (a) Except as could not reasonably be expected to result in a Material Adverse Change, neither the Borrower nor any of its Subsidiaries is engaged in any unfair labor practice; (b) except (in each case) as could not reasonably be expected to result in a Material Adverse Change, there is (i) no unfair labor practice complaint pending against the Borrower or any of its Subsidiaries, or, to the knowledge of the Borrower, threatened against any of them, before the National Labor Relations Board, and no material grievance or arbitration proceeding arising out of or under any collective bargaining agreement is so pending against the -24- Borrower or any of its Subsidiaries or threatened against any of them, (ii) no strike, labor dispute, slowdown or stoppage pending against the Borrower or any of its Subsidiaries or threatened against the Borrower or any of its Subsidiaries and (iii) no union representation proceeding pending with respect to the employees of the Borrower or any of its Subsidiaries; and (c) except (in each case) as could not reasonably be expected to result in a Material Adverse Change, hours worked by and payments made to any employee of the Borrower, any Subsidiary Guarantor or any ERISA Affiliate have not been in violation of the Fair Labor Standards Act or any other applicable law dealing with such matters. Section 4.16 Patents, Licenses, Franchises and Formulas. The Borrower and each of its Subsidiaries owns or is licensed to use all material patents, trademarks, permits, service marks, trade names, copyrights, licenses, franchises and formulas, or rights with respect to the foregoing, and has obtained assignments of all material leases and other rights of whatever nature, reasonably necessary for the present conduct of its business, without any known conflict with the rights of others which, or the failure to obtain or so own which, as the case may be, has had, or could reasonably be expected to result in, a Material Adverse Change. Section 4.17 Security Interests. On and after the Closing Date, each of the Security Documents creates (or after the execution and delivery thereof, will create), as security for the Obligations purported to be secured thereby, a valid and enforceable security interest in and Lien on all of the Collateral subject thereto, which shall be perfected upon the taking of possession thereof or completion of filings with respect thereto, in each case as required by this Agreement or the other Transaction Documents, superior to and prior to the rights of all third Persons and subject to no other Liens (except for Permitted Encumbrances with respect to the Vessels, first mortgages with respect to the Second Lien Vessels and Customary Permitted Liens with respect to other assets). No filings or recordings are required in order to perfect the security interests created under any Security Document except for filings or recordings required in connection with any such Security Document which shall have been made substantially contemporaneously with the execution and delivery thereof. Section 4.18 Indebtedness. Schedule 4.18 sets forth a true and complete list of all (i) Indebtedness for borrowed money of the Borrower and each of its Subsidiaries outstanding as of the Closing Date and (ii) agreements existing on the Closing Date pursuant to which the Borrower or any of its Subsidiaries are entitled to incur Indebtedness, in each case showing the aggregate principal amount thereof and the name of the borrower and any other entity which directly or indirectly guaranteed such debt. Section 4.19 Capitalization of Borrower. On and as of the Closing Date, the authorized capital stock of the Borrower shall consist of 40,000,000 shares of common stock, 23,200,000 shares of which shall be issued and outstanding and 5,000,000 shares of preferred stock, none of which shall be issued or outstanding. All such outstanding shares of common stock are duly and validly issued and fully paid and non-assessable. Section 4.20 Concerning the Vessels. The name, official number, registered owner, and jurisdiction of registration of each Vessel is set forth on Schedule 4.20 hereto. Except as set forth on Schedule 4.20 (which includes a list of vessels designated as laid-up), each Vessel is operated in material compliance with all applicable maritime rules and regulations, including, -25- without limitation, with respect to each Vessel operated in the coastwise trade of the United States of America, the Shipping Act of 1916, as amended and in effect, and the regulations promulgated thereunder. Each Vessel not designated as laid-up on Schedule 4.20 is maintained and operated in material compliance with all applicable Environmental Laws. Section 4.21 Citizenship. The Borrower and each Subsidiary Guarantor which owns or operates one or more Vessels is qualified to own and operate such Vessels under the laws of the Approved Jurisdiction. Section 4.22 Vessel Classification. Except (a) as permitted by the laws and/or regulations of the relevant flag state or (b) with respect to a Vessel that has been laid-up in accordance with Section 6.20(c) of this Agreement, each Vessel is classified in the highest classification and rating for vessels of the same age and type with the respective classification society set forth in Schedule 4.20, without any conditions or recommendations affecting class other than those for which the time prescribed for curing the condition or recommendation has not passed. Section 4.23 [Reserved] Section 4.24 Insurance. Each of the Credit Parties has insured its properties and assets against such risks and in such amounts as are customary for companies engaged in similar businesses. ARTICLE V CONDITIONS OF LENDING Section 5.01 Conditions Precedent to Drawdown of the Initial Loan. The obligation of the Lenders to make the Initial Loan available to the Borrower and/or issue a Letter of Credit (if the Initial Loan has not yet been made) under this Agreement shall be expressly subject to the following conditions precedent: (a) The Agent shall have received the following documents in form and substance satisfactory to the Arrangers and their legal advisor: (i) copies, certified as true and complete by an officer of each Credit Party, of the resolutions of such Credit Party evidencing approval of this Agreement, the Notes and the other Transaction Documents to which it is a party and authorizing an appropriate officer or officers or attorney-in-fact or attorneys-in-fact to execute the same on its behalf, or other evidence of such approvals and authorizations; (ii) copies, certified as true and complete by an officer of each Credit Party, of all documents evidencing any other necessary action (including actions by such parties thereto other than the Credit Parties as may b e required by the Arrangers), approvals or consents with respect to the Transaction Documents; -26- (iii) copies, certified as true and complete by an officer of each Credit Party of the certificate of incorporation and bylaws or the certificate of formation and operating agreement (or equivalent instruments) thereof; (iv) certificate of the Secretary of the Borrower certifying that it legally and beneficially owns, directly or indirectly, all of the issued and outstanding Equity Interests of each of the Subsidiary Guarantors and that, except as disclosed in a schedule hereto, such Equity Interests are free and clear of any liens, claims, pledges or other encumbrances whatsoever; (v) certificate of the Secretary of each Credit Party (other than the Borrower) certifying as to the record ownership of all of its issued and outstanding Equity Interests; and (vi) certificates of the jurisdiction of formation of each Credit Party as to the good standing thereof. (b) The Agent shall have received evidence satisfactory to the Arrangers and their legal advisor that: (i) the Vessels (except as disclosed in schedule 4.20) are in the sole and absolute ownership of the relevant Subsidiary Guarantor as set forth in Schedule 4.20 and duly registered in such Subsidiary Guarantor's name under the flag of an Approved Jurisdiction, unencumbered, save and except for the Mortgage recorded against it and Permitted Encumbrances and with respect to Second Lien Vessels the first mortgages thereon as of the Closing Date; (ii) the Mortgage on each Vessel has been properly recorded under the laws of the jurisdiction of registration and constitutes a first priority mortgage (or, in the case of the Second Lien Vessels, a second priority mortgage), subject only to Permitted Encumbrances; (iii) except as otherwise disclosed to the Agent in writing, the Vessels are classed in the highest classification and rating for vessels of the same age and type with the respective classification society as set forth in Schedule 4.22 without any outstanding conditions or recommendations affecting class other than those for which the time prescribed for curing the condition or recommendation has not passed; (iv) except as otherwise disclosed to the Agent in writing, each Vessel is operationally seaworthy and in every way fit for its intended service; (v) all necessary governmental or regulatory approvals, licenses and authorities which are necessary to the operation of each Vessel have been obtained from each applicable Governmental Authority; and -27- (vi) each Vessel is insured in accordance with the provisions of the related Mortgage and the requirements thereof in respect of such insurances have been complied with. (c) The Borrower shall have duly executed and delivered this Agreement, the Notes, the Pledge Agreement and the other Transaction Documents to which it is a Party and each Subsidiary Guarantor shall have duly executed and delivered this Agreement, the Security Documents and the other Transaction Documents to which it is a party. Notwithstanding any provision in this Agreement to the contrary, so long as MARAD is the first mortgagee on any Vessel owned by Seabulk Towing, Inc., Seabulk Towing, Inc. shall be under no obligation to enter into or execute any security agreement, Assignment of Earnings and Insurances, or any other agreement granting a security interest in its assets, except for (i) second priority Mortgages on its Second Lien Vessels and (ii) first priority Mortgages and Assignments of Insurances with respect to its other Vessels. (d) The Borrower and the Subsidiary Guarantors shall have delivered the Equity Interests subject to the Pledge Agreement to the Agent, together with executed and undated stock powers with respect thereto, and all other documents required to be delivered pursuant to the Pledge Agreement. (e) The Borrower and the Subsidiary Guarantors shall each have duly executed and delivered the following documents: (i) the Mortgage with respect to its Vessel(s); (ii) an Assignment of Earnings and Insurances with respect to its Vessel(s), other than its Second Lien Vessels, or, with respect to the Vessels owned by Seabulk Towing, Inc., other than the Second Lien Vessels owned by Seabulk Towing, Inc., an Assignment of Insurances; (iii) Uniform Commercial Code Financing Statements for filing with the appropriate jurisdictions necessary to perfect the security interest of the Agent for the benefit of the Lenders in and to its Collateral; and (iv) such other documents as may be required to perfect the security interest of the Agent, on behalf of the Lenders, in the Collateral. (f) The Agent shall have received a certificate from the Borrower to the effect that the Borrower is in compliance with the conditions precedent set forth in this Article V. (g) The Agent shall have received evidence that neither the Borrower nor any of its Subsidiaries is subject to any Environmental Claim which could reasonably be expected to result in a Material Adverse Change. (h) The Agent shall have received payment in full of all fees and expenses due on or before the Closing Date to the Agents, the Arrangers and the Lenders under -28- Section 2.16, or such fees and expenses shall be paid directly from the Initial Loan proceeds on the Closing Date. (i) The Agent shall have received evidence satisfactory to the Arrangers and to their legal advisor that, save for the liens created by the Mortgages and the Assignments of Earnings and Insurances, there are no liens, charges or encumbrances of any kind whatsoever on any of the Vessels or on their respective earnings except for Permitted Encumbrances and, with respect to the Second Lien Vessels, the first mortgages thereon as of the Closing Date. (j) The Agent shall have received the favorable written opinions of counsel to the Borrower and the Subsidiary Guarantors, dated the Closing Date and in form and substance satisfactory to the Agent and its legal advisors. (k) The Agent shall have received a favorable written opinion of counsel to the Borrower to the effect that any existing indebtedness of the Lightship Tanker Entities is non-recourse to the Borrower and the Subsidiary Guarantors. (l) The Borrower shall have completed the successful offering of new Equity Interests, the gross proceeds of which shall at least equal $100,000,000, and $25,000,000 of such proceeds shall have been used to reduce the Borrower's Existing Indebtedness. (m) There shall have occurred no event that could result in a Material Adverse Change since the date hereof. (n) The Agent shall have received any additional documents, affidavits or certificates of the Borrower, the Subsidiary Guarantors or any other Person as it may reasonably require. Section 5.02 Further Conditions Precedent. The obligation of the Lenders to make any Loan available to the Borrower under this Agreement or to issue any Letter of Credit shall be expressly and separately subject to the following further conditions precedent on the relevant Drawdown Date or Issuance Date, as the case may be: (a) The Agent shall have received a Drawdown Request or Issuance Request, as the case may be, in accordance with the terms of Section 2.01(d), Section 2.02 (c) or Section 3.01, as the case may be. (b) The representations and warranties set forth in Article IV hereof shall be true and correct in all material respects with the same effect as though each such representation and warranty had been made on and as of such date, except to the extent that any of such representations and warranties expressly relate to earlier dates, or are no longer true as a result of transactions not prohibited by the Transaction Documents. (c) No Default or Event of Default shall have occurred and be continuing. -29- (d) No change in any applicable laws, regulations, rules or in the interpretation thereof shall have occurred which make it unlawful for any Credit Party to make any payment as required under the terms of the Transaction Documents. ARTICLE VI AFFIRMATIVE COVENANTS The Borrower covenants and agrees that, so long as this Agreement shall remain in effect or any of the Obligations shall be outstanding, it shall, and shall cause each of the Subsidiary Guarantors to unless the Borrower shall have received the prior written consent of the Requisite Lenders: Section 6.01 Existence. Do or cause to be done all things necessary to preserve and keep in full force and effect its existence (except as permitted by Section 7.16), rights and franchises and comply with all laws applicable to it and at all times be qualified to do business in the jurisdictions where failure to qualify could reasonably be expected to result in a Material Adverse Change. Section 6.02 Payment of Debts. Pay its debts, liabilities and obligations when due, except (a) any such debts, liabilities and obligations that are being contested in good faith by appropriate proceedings, (b) any single debt, liability or obligation, which does not exceed $2,500,000 and (c) any debts, liabilities and obligations, which in the aggregate do not exceed $5,000,000. Section 6.03 Accounts and Records. Keep and maintain full and accurate accounts and records in accordance with GAAP consistently applied. Section 6.04 Payment of Taxes and Claims. Prepare and timely file all tax returns required to be filed by it and pay and discharge all Taxes imposed upon it or in respect of any of its property and assets before the same shall become in default, as well as all lawful claims (including, without limitation, claims for labor, materials and supplies) which, if unpaid, might become a lien or charge upon the Collateral or any part thereof, except (a) in each case, for any such Taxes as are being contested in good faith by appropriate proceedings or (b) with respect to foreign Taxes, the failure of which to pay or discharge could not reasonably be expected to result in a Material Adverse Change. Section 6.05 Financing Statements. In the case of the Collateral, execute, financing statements or other documents deemed necessary or desirable by the Agent to perfect, maintain or preserve any security interest granted pursuant to the Transaction Documents and pay the filing costs pursuant to law. Without limiting the generality of the foregoing, each of the Credit Parties will execute and file such financing or continuation statements, or amendments thereto, and such other instruments or notices, as may be reasonably necessary or desirable, or that the Agent may reasonably request, to protect and preserve the Liens granted or purported to be granted hereby and by the other Transaction Documents. Each of the Credit Parties hereby authorizes the Agent to file one or more financing or continuation statements, and amendments thereto, relative to all or any part of the Collateral without the signature of such Credit Party, where permitted by law. -30- Section 6.06 Compliance with Law. Comply in all material respects with all applicable federal, state, local and foreign laws, ordinances, rules, orders and regulations now in force or hereafter enacted, including, without limitation all laws and regulations relating to environmental laws and employee benefit plans, failure to comply with which could reasonably be expected to result in a Material Adverse Change. Section 6.07 Financial Statements. Furnish to the Agent the following financial statements: (a) as soon as available but not later than ninety (90) days after the end of each fiscal year of the Borrower, complete copies of the consolidated financial reports of the Borrower and its Subsidiaries, all in reasonable detail, which shall include at least the consolidated balance sheet of the Borrower and its Subsidiaries as of the end of such year and the related consolidated statements of income and sources and uses of funds for such year, which shall be audited reports prepared by independent chartered accountants of international standing; (b) as soon as available but not later than ninety (90) days after the end of each fiscal year of the Borrower, complete copies of the consolidated financial reports of the Borrower and its Subsidiaries excluding the Lightship Tanker Entities, all in reasonable detail, which shall include at least the consolidated balance sheet of the Borrower and its Subsidiaries, excluding the Lightship Tanker Entities, as of the end of such year and the related consolidated statements of income and sources and uses of funds for such year, which shall be unaudited, but certified to be true and complete by the chief financial officer of the Borrower; (c) as soon as available but not less than forty-five (45) days after the end of each of the first three quarters of each fiscal year of the Borrower, a quarterly interim consolidated balance sheet of the Borrower and its Subsidiaries and the related consolidated profit and loss statements and sources and uses of funds, all in reasonable detail, unaudited, but certified to be true and complete by the chief financial officer of the Borrower; (d) within ten (10) days of the filing thereof, copies of all registration statements and reports on Forms 10-K, 10-Q and 8-K (or their equivalents) and other material filings which the Borrower shall have filed with the SEC or any similar governmental authority; and (e) promptly upon the mailing thereof to the shareholders of the Borrower, copies of all financial statements, reports, proxy statements, notices and other communications transmitted to all of the Borrower's shareholders; (f) at such time as the financial statements described in Sections 6.07(a), 6.07(b) and 6.07(c) are delivered, a certificate of the Borrower's Chief Financial Officer (i) certifying the Borrower's compliance with each of its -31- covenants contained herein and showing the calculations thereof (with respect to the covenants in Sections 6.14, 6.15, 6.16 and 6.17 hereof) in reasonable detail and (ii) stating that the financial statements delivered in accordance with Sections 6.07(a), 6.07(b) and 6.07(c) are complete and correct in all material respects and present fairly the financial condition and results of operations of the Borrower and its Subsidiaries as of the dates and for the periods indicated, in accordance with generally accepted accounting principles consistently applied (subject as to interim statements to normal year-end adjustments); and (g) any other information regarding the Borrower that is material to the Transaction Documents or, the Loans or the Letters of Credit as any Lender, through the Agent, may reasonably request. Upon receipt the Agent shall promptly deliver the above referenced financial statements to the Lenders. Section 6.08 Access to Books and Records. Permit the Agent and each Lender, and their respective duly authorized agents and officers, during normal business hours and upon reasonable notice to (a) examine the books and records of the Borrower and to make copies and extracts therefrom, and (b) discuss the affairs, finances and accounts of the Borrower, and be advised as to the same by, the officers of the Borrower as shall be relevant to the performance or observance of the terms, covenants or conditions of this Agreement, the other Transaction Documents or the financial condition of the Borrower. Section 6.09 Notifications. Give prompt written notice to the Agent of (a) any Default of which the Borrower has actual knowledge or an Event of Default specifying the same and the steps being taken to remedy the same, (b) any litigation or governmental proceeding pending or, to the best knowledge of the Borrower, threatened against the Borrower or against any of the Subsidiaries which could reasonably be expected to result in a Material Adverse Change, (c) the withdrawal of any Vessel's rating by its classification society or the issuance by such classification society of any material recommendation or notation affecting class and (d) any other event or condition which could reasonably be expected to result in a Material Adverse Change. Section 6.10 Performance of Obligations. Not take, or fail to take, any action, or fail to use commercially reasonable efforts to prevent any action to be taken by others, (a) which would release any Person from any of such Person's covenants or obligations under any agreement or instrument included in the Security Documents, or (b) which would result in the amendment, hypothecation, subordination, termination or discharge of, or impair the validity or effectiveness of, any such agreement or instrument in a manner materially adverse to the Agent or the Lenders. Section 6.11 Environmental Matters. Promptly, and in any event within five (5) Business Days after an officer of the Borrower or any of its Subsidiaries obtains actual knowledge thereof, give written notice to the Agent of one or more of the following environmental matters, unless, in each case, such environmental matters could not, individually -32- or when aggregated with all other such environmental matters, be reasonably expected to result in a Material Adverse Change: (a) any pending or threatened in writing Environmental Claim against the Borrower or any of its Subsidiaries or any Real Property owned or operated by the Borrower or any of its Subsidiaries; (b) any condition or occurrence on or arising from any Real Property owned or operated by the Borrower or any of its Subsidiaries that (i) results in noncompliance by the Borrower or any of its Subsidiaries with any applicable Environmental Law or (ii) could reasonably be expected to form the basis of an Environmental Claim against the Borrower or any of its Subsidiaries or any such Real Property; (c) any condition or occurrence on any Real Property owned or operated by the Borrower or any of its Subsidiaries that could reasonably be expected to cause such Real Property to be subject to any restrictions on the ownership, occupancy, use or transferability by the Borrower or any of its Subsidiaries of such Real Property under any Environmental Law; and (d) the taking of any removal or remedial action in response to the actual or alleged presence of any Hazardous Material on any Real Property owned or operated by the Borrower or any of its Subsidiaries as required by any Environmental Law or any governmental or other administrative agency; provided that in any event the Borrower shall deliver to each Lender all material notices received after the date hereof by them or any of its Subsidiaries from any Governmental Authority under, or pursuant to, CERCLA. All such notices shall describe in reasonable detail the nature of the claim, investigation, condition, occurrence or removal or remedial action and the Borrower or such Subsidiary's response thereto. In addition, upon the request of the Agent, the Borrower will provide the Lenders with copies of all material communications with any Governmental Authority relating to Environmental Laws, all material communications with any Person (other than their attorneys) relating to any Environmental Claim of which notice is required to be given pursuant to this Section 6.11(e), and such detailed reports of any such Environmental Claim as may reasonably be requested by the Agent on behalf of the Lenders. Section 6.12 Transaction Document Obligations. Pay the Notes according to the reading, tenor and effect thereof, and do and perform every act and discharge all of the obligations provided to be performed by the Borrower under the Transaction Documents, including this Agreement, at the time or times and in the manner specified, and cause the Subsidiary Guarantors to take such action with respect to their obligations to be performed and discharged under the Transaction Documents to which they respectively are parties. Section 6.13 ERISA. Promptly upon learning of the occurrence or the expected occurrence of (i) any material liability of any Credit Party or any ERISA Affiliate pursuant to ERISA in connection with the termination of any Plan or withdrawal or partial withdrawal of any -33- multi-employer plan (as defined in ERISA), (ii) a failure to satisfy the minimum funding standards of Section 412 of the Code or Part 3 of Title I of ERISA by any Plan for which any Credit Party or any ERISA Affiliate is plan administrator (as defined in ERISA) other than to the extent such failure could not reasonably be expected to result in a Material Adverse Change, (iii) a plant closing or mass layoff (as defined in the Worker Adjustment and Retraining Notification Act) of the Borrower, any Subsidiary Guarantor or any ERISA Affiliate; (iv) the Borrower, any Subsidiary Guarantor or any ERISA Affiliate becoming liable for material increases in retiree medical, life insurance or other death benefits (contingent or otherwise) (other than as a result of a continuation of medical coverage required under section 4980B of the Code or the insurance coverage continuation provisions of applicable state law); or (v) a failure to satisfy the conditions represented, warranted and agreed to in Section 4.10 of this Agreement other than to the extent such failure could not reasonably be expected to result in a Material Adverse Change, furnish or cause to be furnished to the Agent written notice thereof. Section 6.14 Minimum Adjusted EBITDA to Adjusted Interest Expense. With respect to the Borrower, maintain a ratio determined as of the last day of each of the Borrower's fiscal quarters commencing September 30, 2002 of Adjusted EBITDA to Adjusted Interest Expense as follows: (a) through the fiscal quarter ending December 31, 2002, not less than 2.25 to 1.00; (b) thereafter, until the fiscal quarter ending December 31, 2003, not less than 2.50 to 1.00; (c) thereafter, until the fiscal quarter ending December 31, 2004, not less than 2.75 to 1.00; (d) thereafter, until the fiscal quarter ending December 31, 2005, not less than 3.00 to 1.00; and (e) thereafter, not less than 3.25 to 1.00. Section 6.15 Minimum Adjusted Tangible Net Worth With respect to the Borrower, maintain an Adjusted Tangible Net Worth of not less than One Hundred Seventy-Five Million Dollars ($175,000,000) plus fifty percent (50%) of the Borrower's cumulative positive annual net income (on a consolidated basis) for each fiscal quarter from September 30, 2002 onwards, plus seventy-five percent (75%) of the net proceeds received by the Borrower (or any of the Borrower's Subsidiaries) from the issuance of Equity Interests issued after the Closing Date. Section 6.16 Maximum Adjusted Funded Debt Ratio. With respect to the Borrower, maintain an Adjusted Funded Debt Ratio determined as of the last day of each of the Borrower's fiscal quarters commencing September 30, 2002 as follows: (a) through the fiscal quarter ending March 31, 2003, not more than 4.25 to 1.00; -34- (b) thereafter, until the fiscal quarter ending March 31, 2004, not more than 4.00 to 1.00; and (c) thereafter, not more than 3.50 to 1.00. Section 6.17 Minimum Fair Market Value of the Vessels. Maintain an Asset Coverage Ratio at all times equal to or greater than 1.75 to 1.00. Section 6.18 Ownership of Subsidiary Guarantors. With respect to the Borrower, own, directly or indirectly, the percentage of the Equity Interests of each Subsidiary Guarantor shown on Schedule 4.11 hereto. Section 6.19 Additional Vessels; Further Assurances. If either (a) the Borrower or a Subsidiary acquires a Vessel after the Closing Date and, if as of the date of acquisition of such Vessel the Borrower is not in compliance with Section 6.17 hereof or (b) the Borrower is not in compliance with Section 6.17 hereof, then the Borrower shall or shall cause its Subsidiary within 30 days of such acquisition to: (a) Execute and deliver a Mortgage, deliver related information and reports, and otherwise take such actions with respect to such Vessel and Mortgage as would have been required to satisfy the conditions of Section 5.01 if such new Vessel were a Vessel on the Closing Date; (b) Execute and deliver a Subsidiary Guarantee Agreement (to the extent not previously delivered); (c) Pledge and deliver, or cause to be pledged and delivered, all of the Equity Interest of each new Subsidiary Guarantor acquired or created after the Closing Date, to the extent owned by the Borrower or any Subsidiary Guarantor, to the Agent for the benefit of the Lenders pursuant to the Pledge Agreement; and (d) Execute and deliver an Assignment of Earnings and Insurances; provided, however, that if, pursuant to Section 7.03, the Borrower or a Subsidiary Guarantor mortgages a vessel in order to remain in compliance with Section 6.17, such vessel must be a Qualified Substitute Vessel. Section 6.20 Vessel Operations and Management. (a) Procure that each of the Vessels not laid-up in accordance with Section 6.20(c) hereof, shall at all times be (i) managed by the technical and commercial managers managing the Vessels as of the Closing Date or such other managers acceptable to the Requisite Lenders in accordance with vessel management agreements acceptable to the Requisite Lenders, (ii) flagged under the laws of an Approved Jurisdiction and (iii) classed in the highest classification and rating for vessels of the same age and type without any outstanding conditions or recommendations affecting class (other than those for which the time prescribed for curing the condition or recommendation has not passed) with Lloyds Registry of Shipping, Det norske Veritas, Bureau Veritas, American Bureau of Shipping or such other classification society classing the Vessels as of the Closing Date or with such other -35- classification society acceptable to the Agent; provided, however, if a Vessel is reflagged under the laws of an Approved Jurisdiction, it shall be a condition to such reflagging that the Subsidiary Guarantors deliver to the Agent (A) evidence (including an opinion of counsel) that such Vessel has been registered in the name of the related Subsidiary Guarantor under the laws of such jurisdiction; (B) evidence (including an opinion of counsel) that the related Mortgage has been properly recorded under the laws of such jurisdiction and constitutes a first priority mortgage (or, in the case of the Second Lien Vessels, a second priority mortgage) subject only to Permitted Encumbrances; (C) evidence that all necessary governmental or regulatory approvals, licenses and authorities which are necessary to the operation of the Vessel have been obtained; (D) evidence that insurances in compliance with the requirements of the Mortgage have been obtained; and (E) such other items as the Agent may reasonably require. (b) Except with respect to any Vessel that has been laid-up in accordance with Section 6.20(c) hereof, comply in all material respects or to procure that the operator of each of the Vessels will comply in all material respects within the requisite applicable time limits for vessels of the same type, size, age and flag of the Vessels with the International Management Code for the Safe Operation of Ships and for Pollution Prevention (as the same may be amended from time to time, the "ISM Code") adopted by the International Maritime Organization or any replacement of the ISM Code and in particular, without prejudice to the generality of the foregoing, as and when required to do so by the ISM Code and at all times thereafter, (i) to hold or to procure that the operator of each of the Vessels holds, a valid Document of Compliance (being a document issued to a vessel operator as evidence of its compliance with the requirements of the ISM Code) duly issued to the Subsidiary Guarantor or the operator (as the case may be) pursuant to the ISM Code and a valid Safety Management Certificate (being a document issued to a vessel as evidence that the vessel operator and its shipboard management operate in accordance with an approved structured and documented system enabling the personnel of that vessel operator to implement effectively the safety and environmental protection policy of that vessel operator) duly issued to each of the Vessels pursuant to the ISM Code, (ii) to provide the Agent with copies of any such Document of Compliance and Safety Management Certificate promptly following the issue thereof and after every renewal and (iii) to keep or to procure that there is kept, on board each of the Vessels a copy of any such Document of Compliance and the original of any such Safety Management Certificate (c) Ensure that the laying-up of any Vessel is commercially reasonable; that each laid-up Vessel is maintained in accordance with ordinary and reasonable commercial standards for laid-up vessels, and that the Agent is notified of each lay-up within thirty (30) days after the commencement thereof. Section 6.21 Appraisals. Upon the request of the Agent and at the Borrower's expense, furnish the Agent with appraisals from an Appraiser for each of the Vessels; provided, however, such request shall not be made more than once in any twelve-month period. Section 6.22 Reimbursement for Expenses. Reimburse the Agent, or cause the Subsidiary Guarantors to reimburse the Agent, promptly, with interest at the interest rate applicable to the Notes, for any and all expenditures which the Agent may from time to time make in providing protection in respect of insurance, discharge or purchase of liens, taxes, dues, assessments, governmental charges, fines and penalties lawfully imposed, repairs, attorneys' -36- fees, necessary translation fees for documents made in a language other than English and other matters, in each case in respect of which the Borrower has Defaulted in its obligation hereunder with respect to such matters, or the Subsidiary Guarantors have Defaulted in their Subsidiary Guarantee Obligation hereunder with respect to such matters or under a Subsidiary Guarantee Agreement with respect to such matters, to provide. Such obligation of the Borrower and the Subsidiary Guarantors to reimburse the Agent shall be an additional indebtedness due from the Borrower and the Subsidiary Guarantors, secured by the Collateral and the Transaction Documents, and shall be payable by the Borrower and the Subsidiary Guarantors on demand. The Agent, though privileged to do so, shall be under no obligation to the Borrower or the Subsidiary Guarantors to make any such expenditures, nor shall the making thereof relieve the Borrower or the Subsidiary Guarantors of any default in that respect. Section 6.23 Remittance of Insurance Proceeds. (a) Immediately upon the receipt of any and all insurance proceeds in respect of a Second Lien Vessel that are not used to repair or replace the relevant Second Lien Vessel in accordance with the provisions of the MARAD first mortgage, promptly pay to the Agent, or cause the applicable Subsidiary Guarantor to pay to the Agent, any insurance proceeds received by the Borrower or a Subsidiary Guarantor after payment of such insurance proceeds to MARAD, as first mortgagee thereon, to the extent of the outstanding amount of the indebtedness owing to MARAD with respect to such Second Lien Vessel. Such proceeds shall be used to repay the Revolving Loans outstanding at such time; provided however, if the Borrower delivers to the Agent appraisals, from an Appraiser selected by the Agent for all of the Vessels, dated no earlier than ten (10) days prior to the date such proceeds are received by and paid to the Agent, that demonstrate compliance with Section 6.17, then such proceeds, or portion thereof not required to cause the Borrower to be in compliance with Section 6.17, shall be remitted by the Agent back to the Borrower. (b) Upon the discharge of the first mortgage on any Second Lien Vessel owned by the Borrower and upon the discharge of all of the first mortgages on the Second Lien Vessels owned by Seabulk Towing, Inc., the Borrower or Seabulk Towing, Inc., as the case may be, shall deliver to the Agent an Assignment of Earnings and Insurances with respect to such Vessel(s), together with such other documents as may be required to perfect the security interest of the Agent, on behalf of the Lenders, in such Collateral. -37- ARTICLE VII NEGATIVE COVENANTS The Borrower covenants and agrees that, so long as this Agreement shall remain in effect or any of the Obligations shall be outstanding, it shall not, and shall not permit any of the Subsidiary Guarantors to, without the prior written consent of the Requisite Lenders: Section 7.01 Indebtedness. Contract for, create, incur, assume or suffer to exist any Indebtedness, except: (a) Indebtedness contemplated by this Agreement or any of the other Transaction Documents; (b) Indebtedness outstanding on the date hereof which is set forth on Schedule 4.18 and any extensions, renewals and replacements of any such Indebtedness, provided that any such Indebtedness indicated on Schedule 4.18 as "Indebtedness to be Repaid" shall have been repaid on or before the Closing Date; (c) accounts payable (for the deferred purchase price of property or services) from time to time incurred in the ordinary course of business and guarantees by the Borrower or any Subsidiary Guarantor in the ordinary course of business of any such obligations incurred by the Borrower or any other Subsidiary Guarantor; (d) obligations for current taxes, assessments and other governmental charges and taxes, assessments or other governmental charges which are not yet due or are being contested in good faith by appropriate procedures, diligently prosecuted or appealed; (e) Indebtedness of the Borrower to any Subsidiary and of any Subsidiary to the Borrower or any other Subsidiary; (f) Guarantees by the Borrower of Indebtedness of any Subsidiary and by any Subsidiary of Indebtedness of the Borrower or any other Subsidiary; (g) Indebtedness of the Borrower or any Subsidiary incurred to finance the acquisition, construction or improvement of any fixed or capital assets, including Capital Lease Obligations and any Indebtedness assumed in connection with the acquisition of any such assets or secured by a Lien on any such assets prior to the acquisition thereof, and extensions, renewals and replacements of any such Indebtedness; provided that (i) such Indebtedness is incurred prior to or within 90 days after such acquisition or the completion of such construction or improvement and (ii) the aggregate principal amount of Indebtedness permitted by this clause (g) shall not exceed $5,000,000 at any time outstanding; (h) Indebtedness of any Person that becomes a Subsidiary after the date hereof; provided that (i) such Indebtedness exists at the time such Person becomes a Subsidiary and is not created in contemplation of or in connection with such Person becoming a Subsidiary and (ii) the aggregate principal amount of Indebtedness permitted by this clause (h) shall not exceed $5,000,000 at any time outstanding; -38- (i) Capital Lease Obligations not to exceed $10,000,000 at any one time; (j) Indebtedness owing pursuant to hedge agreements entered into in the ordinary course of business for the purpose of hedging against fluctuations in interest rates (on money borrowed by the Borrower or any Subsidiary), commodity prices and foreign exchange rates; and (k) any Indebtedness (and any extensions, renewals and replacements of such Indebtedness), to the extent that, at the time such Indebtedness is contracted for, created, assumed or incurred, and both before and after giving effect to such Indebtedness, no Default or Event of Default exists or would exist hereunder. Section 7.02 Liens. Create, assume, permit or suffer to exist any mortgage, pledge, encumbrance, security interest or other Lien securing an obligation on any Vessel or on any other asset, whether now owned or hereafter acquired, except Permitted Encumbrances and second priority mortgages to secure a Hedging Agreement pursuant to Section 2.03(d) with respect to the Vessels and Customary Permitted Liens with respect to such other assets. Section 7.03 Asset Sales. Sell, lease, transfer, assign or otherwise dispose of any Vessel unless (a) after giving effect to such sale, lease, transfer, assignment or disposition, the Borrower is in compliance with Section 6.17 hereof or (b) the Borrower delivers to the Agent a Qualified Substitute Vessel and the documents described in Section 6.19 with respect thereto in order to remain in compliance with Section 6.17. Section 7.04 Assignment of Insurances. Grant an assignment or permit or suffer to exist any mortgage, pledge, encumbrance, security interest or other Lien on the Insurances relating to a Second Lien Vessel other than Liens in favor of MARAD. Section 7.05 Sale of Notes or Accounts Receivable. Sell, lease, transfer, assign or otherwise dispose of any notes, accounts receivable or other obligations owed to by any Person, except (a) for the purpose of collection in the ordinary course of its business and (b) to the extent that, both before and after giving effect to any such sale, lease, transfer, assignment or disposition (taking into account any prepayment to be made to the Lenders under this Agreement from the net proceeds of any such sale, lease, transfer, assignment or disposition), no Default or Event of Default would exist hereunder. Section 7.06 Sale and Leaseback. Enter into any arrangements, directly or indirectly, with any Person whereby it shall sell or transfer any property, whether real or personal, and used and useful in its business, whether now owned or hereafter acquired, if it, at the time of such sale or disposition, intends to lease or otherwise acquire the right to use or possess (except by purchase) such property or like property for a substantially similar purpose. Section 7.07 Restricted Payments. With respect to the Borrower, declare or pay any dividend or make any distribution on its capital stock or purchase, redeem, acquire or otherwise retire any capital stock for value (in each case, a "Restricted Payment"); provided, however, that the Borrower may make a Restricted Payment so long as, at the time of, and after giving effect to, the proposed Restricted Payment: (a) no Default or Event of Default shall have occurred and be continuing and (b) the aggregate amount expended for all Restricted Payments (the amount so -39- expended, if other than in cash, to be determined in good faith by the Board of Directors) would not exceed fifty percent (50%) of the aggregate amount of the consolidated net income of the Borrower and its consolidated Subsidiaries excluding the Lightship Tanker Entities for the fiscal year ended immediately prior to the fiscal year in which such proposed Restricted Payment is to be made determined in accordance with GAAP. Notwithstanding the preceding sentence, (w) the Borrower may make Restricted Payments with the proceeds of substantially concurrent capital contributions made by its stock holders so long as no Default or Event of Default shall have occurred and be continuing prior to or after giving effect thereto, (x) the Borrower may declare and pay dividends with respect to its Equity Interests payable solely in additional shares of its common stock, (y) Subsidiaries of the Borrower may declare and pay dividends ratably with respect to their Equity Interests, and (z) the Borrower may make Restricted Payments pursuant to and in accordance with stock option plans or other benefit plans for management, directors or employees of the Borrower and its Subsidiaries. Section 7.08 Investments. Make any Investment unless at the time of, and after giving effect to, the making of any proposed Investment, no Default or Event of Default has occurred and is continuing or would occur as a consequence of the making of such Investment. Notwithstanding the foregoing sentence, the Borrower and the Subsidiary Guarantors may make the following Investments at any time: (a) direct obligations of, or obligations the principal of and interest on which are unconditionally guaranteed by, the United States of America (or by any agency thereof to the extent such obligations are backed by the full faith and credit of the United States of America), in each case maturing within one year from the date of acquisition thereof, and (b) investments in certificates of deposit, banker's acceptances and time deposits maturing within 180 days from the date of acquisition thereof issued or guaranteed by or placed with, and money market deposit accounts issued or offered by, any domestic office of any commercial bank organized under the laws of the United States of America or any State thereof which has a combined capital and surplus and undivided profits of not less than $500,000,000. Section 7.09 Restriction on Payment Restrictions Affecting Subsidiary Guarantors. Create or otherwise cause or suffer to exist or become effective any encumbrance or restriction (other than pursuant to this Agreement) on the ability of the Subsidiary Guarantors to (a) pay dividends or make any other distributions on its capital stock or any other interest or participation in its profits or pay any Indebtedness owed to the Borrower, (b) make advances or loans to the Borrower or (c) transfer any of its properties or assets to the Borrower, except for such encumbrances or restrictions existing under or by reason of applicable law. Section 7.10 Change in Business Engage (directly or indirectly) in any business other than the business of the Borrower and its Subsidiaries as of the Closing Date and other businesses reasonably related thereto. Section 7.11 [Reserved] Section 7.12 Transactions with Affiliates. Enter into any transaction or series of related transactions, whether or not in the ordinary course of business, with any Affiliate, other than on terms and conditions substantially as favorable to such Person as would be obtainable by such Person at the time in a comparable arm's-length transaction with a Person other than an Affiliate. Notwithstanding the foregoing, the restrictions set forth in this Section 7.12 shall not apply to (a) -40- the payment of reasonable and customary fees to directors of the Borrower who are not employees of the Borrower, (b) any other transaction with any employee, officer or director of the Borrower or any of its Subsidiaries pursuant to employee benefit plans and compensation arrangements in amounts customary for corporations similarly situated to the Borrower or any such Subsidiary and entered into the ordinary course of business and approved by the Board of Directors of the Borrower or any committee thereof or the Board of Directors of such Subsidiary, (c) transactions between or among the Borrower and its Subsidiaries who are Subsidiary Guarantors and not involving any other Affiliate, (d) the Stock Purchase Agreement and the Stock Holders Agreement, and (e) any Restricted Payment permitted by Section 7.07. Section 7.13 Changes in Offices or Names. Change the location of the chief executive office of any Credit Party, the office of the chief place of business any such parties, the office of the Credit Parties in which the records relating to the earnings or insurances of the Vessels are kept unless the Agent shall have received thirty (30) days prior written notice of such change. Section 7.14 Changes in Fiscal Year. Change its fiscal year. Section 7.15 Other Indebtedness. For a period, which shall be the lesser of (a) 60 days following the Closing Date and (b) completion of the syndication by the Arrangers, engage in any offering, placement or arrangement of any Indebtedness of the Credit Parties or their Affiliates, other than the transaction described in this Agreement. Section 7.16 Consolidation, Merger and Sale of Assets. Consolidate with, or merge with or into, any other Person or convey, sell, lease or otherwise dispose of (or agree to do any of the foregoing at any future time) all or substantially all of its property or assets, unless each of the following conditions is satisfied: (a) The entity formed by such consolidation or into which such Credit Party is merged or the Person which acquires by conveyance or transfer substantially all of the assets of such Credit Party as an entirety shall expressly assume all of the obligations of such Credit Party under this Agreement and the other Transaction Documents pursuant to a written supplement to this Agreement executed in accordance with Article XI. (b) Immediately prior to and after giving effect to such transaction, no Default or Event of Default shall have occurred and be continuing and the Agent shall have received a certificate from an Executive Officer to such effect. (c) The Agent shall have received an opinion of counsel regarding the merged or consolidated entity, the legality, validity and enforceability of this Agreement and the other Transaction Documents, the title to the related Vessels and the priority of the Mortgages, as applicable. (d) Upon any consolidation or merger, or any conveyance or transfer of substantially all of the assets of such Credit Party as an entirety in accordance with this Section 7.16, the successor entity formed by such consolidation or into which such Credit Party is merged or to which such conveyance or transfer is made shall -41- succeed to, and be substituted for, and may exercise every right and power of, such Credit Party under this Agreement and the other Transaction Documents with the same effect as if such successor entity had been named as a Credit Party herein. No such conveyance or transfer of substantially all of the assets of such Credit Party as an entirety shall have the effect of releasing such Credit Party or any successor entity which shall theretofore have become such in the manner prescribed in this Section 7.16 from its liability hereunder. Nothing in this Section 7.16 shall restrict the Subsidiary Guarantors from chartering the Vessels so long as such charters are not bareboat charters for a period in excess of ten (10) years, except with respect to bareboat charters of the Second Lien Vessels so long as MARAD is the first mortgagee thereon and all Vessels owned now or in the future by Seabulk Towing, Inc. so long as MARAD is the first mortgagee on a Second Lien Vessel owned by Seabulk Towing, Inc., which shall not be subject to any such restriction. ARTICLE VIII AGREEMENT TO GUARANTEE Section 8.01 Obligations Guaranteed. (a) The Subsidiary Guarantors, jointly and severally, hereby unconditionally guarantee to each of the Agent and the Lenders (i) the full and prompt payment of the principal of the Notes and the indebtedness represented thereby and the L/C Obligations when and as the same shall become due and payable, whether at the stated maturity thereof, by acceleration, call for redemption or otherwise; (ii) the full and prompt payment of interest on the Notes and the L/C Obligations when and as the same shall become due and payable (including interest at the Overdue Rate on any part of the principal amount, interest amount or other amount due under this Agreement and not paid when due); (iii) the full and prompt payment of an amount equal to each and all of the payments and other sums when and as the same shall become due, required to be paid by the Borrower under the terms of this Agreement and under each of the other Transaction Documents to which it is a party and (iv) the full and prompt performance and observance by the Borrower of the obligations, covenants and agreements required to be performed and observed by the Borrower under the terms of this Agreement and under each of the other Transaction Documents to which it is a party (items (i) through (iv), the "Subsidiary Guarantee Obligations"). The Subsidiary Guarantors hereby irrevocably and unconditionally agree that upon any default by the Borrower in the payment, when due, of any principal of, interest on or other amounts (including amounts in respect of fees and indemnification owing to the Agent or the Lenders) due under the Notes, this Agreement or any other Transaction Document, the Subsidiary Guarantors will promptly pay the same within ten (10) days after receipt of written demand therefor from the Agent or any Lender. The Subsidiary Guarantors further hereby irrevocably and unconditionally agree that upon any default by the Borrower in any of its obligations, covenants and agreements required to be performed and observed by the Borrower under this Agreement and under each of the other Transaction Documents to which it is a party, the Subsidiary Guarantors will effect the observance of such -42- obligations, covenants and agreements within ten (10) days after receipt of written demand therefor from the Agent or any Lender. (b) All payments by the Subsidiary Guarantors shall be paid in the lawful currency of the United States of America. Each and every default (i) in the payment of the principal of, premium, if any, interest on or other amounts due under the Notes or L/C Obligations, (ii) in the payment of any sum required to be paid by the Borrower under the terms of this Agreement or the other Transaction Documents, or (iii) in the prompt performance and observance by the Borrower of all of the obligations, covenants and agreements required to be performed and observed by the Borrower under the terms of the Transaction Documents, shall give rise to a separate cause of action hereunder, and separate suits may be brought hereunder as each cause of action arises. (c) The Subsidiary Guarantors further agree that the Subsidiary Guarantee Obligations constitute an absolute, unconditional, present and continuing guarantee of performance and payment and not of collection, and waives any right to require that any resort be had by the Agent and the Lenders to (i) any security held by or for the benefit of the Agent and the Lenders for payment of the principal of, premium, if any, interest on or other amounts due under the Notes, this Agreement or the Transaction Documents, (ii) the Agent's and Lenders' right against any other Person, or (iii) any other right or remedy available to the Agent and the Lenders by contract, applicable law or otherwise. The Subsidiary Guarantee Obligations are direct, unconditional and completely independent of the obligations of any other Person or entity, and a separate cause of action or separate causes of action may be brought and prosecuted against the Subsidiary Guarantors without the necessity of any other party or previous proceeding with or exhausting any other remedy against any other Person who might have become liable for the indebtedness or of realizing upon any security held by or for the benefit of the Agent and the Lenders. (d) The Subsidiary Guarantors shall pay to the Agent and the Lenders all reasonable costs and expenses (including, without limitation, reasonable attorneys' fees) incurred by the Agent and the Lenders upon the occurrence of an Event of Default under any or all of the Transaction Documents. Section 8.02 Subsidiary Guarantee Obligations of Subsidiary Guarantors Unconditional. The Subsidiary Guarantee Obligations shall be absolute and unconditional and shall remain in full force and effect until (1) the entire principal of, premium, if any, interest on and other amounts due under the Notes and the L/C Obligations shall have been paid and (2) all other sums payable by the Borrower and the Subsidiary Guarantors under this Agreement and the other Transaction Documents have been paid in full (including, without limitation, Section 8.01 hereof) have been paid in full, and, to the extent permitted by law, such Subsidiary Guarantee Obligations shall not be affected, modified, released or impaired by any state of facts or the happening from time to time of any event, including, without limitation, any of the following, whether or not with notice to or the consent of the Subsidiary Guarantors: -43- (a) the invalidity, irregularity, illegality, frustration or unenforceability of, or any defect in, (i) any Transaction Document or (ii) any collateral security given in connection therewith; (b) any present or future law or order of any government (de jure or de facto) or of any agency thereof purporting to reduce, amend or otherwise affect the Notes, the L/C Obligations or any other obligation of the Borrower or any other obligor or to vary any terms of payment; (c) any claim of immunity on behalf of the Borrower or any other obligor or with respect to any property of the Borrower or any other obligor; (d) the waiver, compromise, settlement, release, extension, change, modification or termination of any or all of the obligations, covenants or agreements of (i) the Borrower under this Agreement or any other Transaction Document (except by payment in full of all its Obligations under this Agreement) or (ii) the Subsidiary Guarantors with respect to the Subsidiary Guarantee Obligations (except by payment in full of all the Subsidiary Guarantee Obligations hereunder); (e) the failure to give notice to the Subsidiary Guarantors of the occurrence of a Default or an Event of Default hereunder or under any other Transaction Document; (f) the transfer, assignment, sublease or mortgaging, or the purported or attempted transfer, assignment, sublease or mortgaging, of all or any part of the interest of the Borrower in any of its properties, or any failure of or defect in the title with respect to the Borrower's interest in any of its properties; (g) the release, sale, exchange, surrender or other change in any collateral security for payment of the Borrower's Obligations; (h) the extension of the time for payment of any amounts payable on the Notes, the L/C Obligations or any part thereof or of the time for performance of any other obligations, covenants or agreements under or arising out of this Agreement, any other Transaction Document or the extension or the renewal of any thereof; (i) the modification or amendment (whether material or otherwise) of any Subsidiary Guarantee Obligation, covenant or agreement set forth in any Transaction Document; (j) the taking of, or the omission to take, any of the actions referred to in this Agreement or any Transaction Document; (k) any failure, omission, delay, or lack on the part of the Agent or the Lenders or any other Person to enforce, assert or exercise any right, power or remedy conferred on the Agent and the Lenders or such other Person in this Agreement or any other Transaction Document; -44- (l) the voluntary or involuntary liquidation, dissolution, sale or other disposition of all or substantially all the assets, marshalling of assets and liabilities, receivership, insolvency, bankruptcy, assignment for the benefit of creditors, reorganization, arrangement or composition with creditors or readjustment of, or other similar proceedings affecting the Subsidiary Guarantors or any of their assets, or any allegation or contest of the validity of this Agreement, or any other Transaction Document, or the disaffirmance or attempted disaffirmance of this Agreement or any other Transaction Document, in any such proceedings; (m) any event or action that would, in the absence of this Section, result in the release or discharge of the Subsidiary Guarantors from the performance or observance of any Subsidiary Guarantee Obligation, covenant or agreement contained in this Guarantee, other than the performance thereof; (n) the default or failure of any Subsidiary Guarantor to fully perform any of its Subsidiary Guarantee Obligations; (o) any other circumstances which might otherwise constitute a legal or equitable discharge or defense of a surety or a guarantor; (p) the actual or purported assignment of any of the Subsidiary Guarantee Obligations; (q) the receipt and acceptance by the Agent or the Lenders of notes, checks or other instruments for the payment of money made by the Subsidiary Guarantors and any extensions and renewals thereof (other than the payment in full of the entire principal of, premium, if any, interest on and other amounts due under the Notes and the L/C Obligations and all other sums payable by the Borrower and the Subsidiary Guarantors under this Agreement and the other Transaction Documents); (r) to the extent permitted by law, the release or discharge of the Subsidiary Guarantors from the performance or observance of any guaranteed obligation, covenant or agreement contained herein by operation of law; (s) any release or impairment of the Collateral pledged under this Agreement or any other Transaction Document; (t) the release, substitution or replacement in accordance with the terms of any Transaction Document of any property subject thereto or any redelivery, repossession, surrender or destruction of any such property, in whole or in part; (u) any limitation on the liability or obligations of the Borrower under this Agreement or any other Transaction Document or any termination, cancellation, frustration, invalidity or unenforceability, in whole or in part, of this Agreement or any other Transaction Document, or any term thereof; (v) the merger or consolidation or any sale, lease or transfer of any or all of the assets of the Borrower or any Subsidiary Guarantor to any Person; or -45- (w) any other occurrence whatsoever, whether similar or dissimilar to the foregoing. Section 8.03 Waiver of Notice; Expenses. The Subsidiary Guarantors each hereby expressly waive notice from the Agent and the Lenders of its acceptance and reliance on the Subsidiary Guarantor's Guarantee or of any action taken or omitted in reliance hereon. The Subsidiary Guarantors further expressly waive diligence, presentment, demand for payment, protest, any requirement that any right or power be exhausted or any action be taken against the Borrower or against any other obligor under any of the Transaction Documents or against the Collateral or any other collateral security for the Obligations. The Subsidiary Guarantors jointly and severally agree to pay all costs, fees, commissions and expenses (including, without limitation, all court costs and reasonable attorneys' fees) which may be incurred by the Agent or the Lenders in enforcing or attempting to enforce the Subsidiary Guarantee Obligations following any default on the part of any or all of the Subsidiary Guarantors hereunder, whether the same shall be enforced by suit or otherwise. Section 8.04 Other Security. The Agent and Lenders may pursue their rights and remedies against the Subsidiary Guarantors notwithstanding (a) any other Guarantee of or security for the Obligations and (b) any action taken or omitted to be taken by the Agent, the Lenders or any other Person to enforce any of the rights or remedies under such other guarantee or with respect to any other security. Section 8.05 No Set-off by the Subsidiary Guarantors. No set-off, abatement, recoupment, counterclaim, reduction or diminution of an obligation, or any defense of any kind or nature (other than performance by the Subsidiary Guarantors of the Subsidiary Guarantee Obligations hereunder) which the Subsidiary Guarantors have or may have with respect to a claim hereunder, shall be available hereunder to the Subsidiary Guarantors against the Agent or the Lenders. Section 8.06 Joint and Several Obligation. Each of the Subsidiary Guarantors hereby agrees that it is jointly and severally liable for each of the Subsidiary Guarantee Obligations hereunder and under each of the other Transaction Documents. Each of the Subsidiary Guarantors accepts joint and several liability for all Subsidiary Guarantee Obligations hereunder in consideration of the financial accommodation to be provided by the Lenders to the Borrower under this Agreement, and in turn, the Borrower to the Subsidiary Guarantors, for the mutual benefit, directly and indirectly, of each of the Subsidiary Guarantors and in consideration of the undertakings by each of the Subsidiary Guarantors to accept joint and several liability for each of their Subsidiary Guarantee Obligations. Each of the Subsidiary Guarantors jointly and severally hereby irrevocably and unconditionally accepts, not merely as a surety but also as a co-debtor, joint and several liability with the other Subsidiary Guarantors with respect to the payment and performance of all of the Subsidiary Guarantee Obligations, it being the intention of the parties hereto that all the Subsidiary Guarantee Obligations shall be the joint and several obligations of each of the Subsidiary Guarantors without preferences or distinction among them. -46- If and to the extent that any Subsidiary Guarantor shall fail to make any payment with respect to any of the Subsidiary Guarantee Obligations as and when due or to perform any of the Subsidiary Guarantee Obligations in accordance with the terms thereof, then in each such event, the other Subsidiary Guarantor will make such payment with respect to, or perform, such Subsidiary Guarantee Obligations. The obligations of each Subsidiary Guarantor under the provisions of this Section 8.06 constitute full recourse obligations of such Subsidiary Guarantor, enforceable against it to the full extent of its properties and assets, irrespective of the validity, regularity or enforceability of this Agreement or any other Transaction Document against another Subsidiary Guarantor or any other circumstances whatsoever that under applicable law might constitute a defense to the joint and several Subsidiary Guarantee Obligations of such other Subsidiary Guarantor. Except as otherwise expressly provided herein, each Subsidiary Guarantor hereby waives notice of acceptance of its joint and several liability, notice of any and all Subsidiary Guarantee Obligations incurred hereunder or under any other Transaction Document, notice of the occurrence of any Default or Event of Default, or of any demand for any payment hereunder or any other Transaction Document, notice of any action at any time taken or omitted by the Agent or any Lender under or in respect of any of the Subsidiary Guarantee Obligations, any requirement of diligence and, generally, all demands, notices and other formalities of every kind in connection with the Subsidiary Guarantee Obligations, this Agreement or any other Transaction Document. Each Subsidiary Guarantor hereby assents to, and waives notice of, any extension or postponement of the time for the payment of any of the Subsidiary Guarantee Obligations, the acceptance of any partial payment thereon, any waiver, consent or other action or acquiescence by the Agent or any Lender at any time or times in respect of any default by any Subsidiary Guarantor in the performance or satisfaction of any term, covenant, condition or provision hereunder or under this Agreement or any other Transaction Document, any and all other indulgences whatsoever by the Agent or any Lender in respect of any of the Subsidiary Guarantee Obligations, and the taking, addition, substitution or release, in whole or in part, at any time or times, of any security for any of the Subsidiary Guarantee Obligations or the addition, substitution or release, in whole or in part, of any Subsidiary Guarantor. Without limiting the generality of the foregoing, each Subsidiary Guarantor assents to any other action or delay in acting or failure to act on the part of the Agent or any Lender, including, without limitation, any failure strictly or diligently to assert any right or to pursue any remedy or to comply fully with applicable laws or regulations thereunder which might, but for the provisions of this Section 8.06, afford grounds for terminating, discharging or relieving such Subsidiary Guarantor, in whole or in part, from any of its obligations under this Section 8.06, it being the intention of each Subsidiary Guarantor that, so long as any of the Subsidiary Guarantee Obligations remain unsatisfied, the obligations of such Subsidiary Guarantor shall not be discharged except by performance and then only to the extent of such performance. The Subsidiary Guarantee Obligations of each Subsidiary Guarantor shall not be diminished or rendered unenforceable by any winding up, reorganization, arrangement, liquidation, reconstruction or similar proceeding with respect to the Borrower or the other Subsidiary Guarantors or any Lender. The joint and several liability of the Subsidiary Guarantors hereunder shall continue in full force and effect notwithstanding any absorption, merger, amalgamation or any other change whatsoever in the name, membership, constitution or place of formation of the Borrower, any Subsidiary Guarantor or any Lender. -47- The provisions of this Section 8.06 are made for the benefit of the Agent and each Lender and their successors and assigns, and may be enforced by such party from time to time against any of the Subsidiary Guarantors as often as occasion therefore may arise and without requirement on the part of the Agent or any Lender first to marshal any of its claims or to exercise any of its rights against the other Subsidiary Guarantor or to exhaust any remedies available to it against the other Subsidiary Guarantor or to resort to any other source or means of obtaining payment of any of the Subsidiary Guarantee Obligations or to elect any other remedy. The provisions of this Section 8.06 shall remain in effect until all the Subsidiary Guarantee Obligations shall have been paid in full or otherwise fully satisfied. If at any time, any payment, or any part thereof, made in respect of any of the Subsidiary Guarantee Obligations, is rescinded or must otherwise be restored or returned by the Agent or any Lender upon the insolvency, bankruptcy or reorganization of either of the Subsidiary Guarantors, or otherwise, the provisions of this Section 8.06 will forthwith be reinstated in effect, as though such payment had not been made. Section 8.07 Limitation on Liability. Any term or provision of this Agreement or any other Transaction Document to the contrary notwithstanding, the maximum, aggregate amount of the Obligations guaranteed hereunder by any Subsidiary Guarantor shall not exceed the maximum amount that can be hereby guaranteed without rendering this Agreement or any other Transaction Document, as it relates to such Subsidiary Guarantor, voidable under applicable law relating to fraudulent conveyance or fraudulent transfer or similar laws affecting the rights of creditors generally. Section 8.08 Release of Subsidiary Guarantor. So long as no Default or Event of Default has occurred and is continuing, upon the sale or other disposition (including by way of consolidation or merger) of a Subsidiary Guarantor or the sale or disposition of all or substantially all the assets of such Subsidiary Guarantor in compliance with the terms of this Agreement, such Subsidiary Guarantor shall be deemed released from all obligations under this Article VIII without any further action required on the part of the Agent or any Lender. At the request and sole cost and expense of the Borrower, the Agent shall execute and deliver an appropriate instrument evidencing such release. ARTICLE IX EVENTS OF DEFAULT; REMEDIES; APPLICATION OF PROCEEDS Section 9.01 Events of Default. Any one or more of the following events shall constitute an Event of Default: (a) if any payment of any Reduction Amount, interest, fees, charge or any other amounts due to the Agent or the Lenders under the Notes, this Agreement, the Mortgages, or any Transaction Document, whether at the stated maturity thereof or at any date fixed for payment by acceleration, by notice of prepayment or otherwise, shall not be made on the due date thereof and if such failure to pay shall remain unremedied for two (2) Business Days; (b) if the Borrower shall default in the performance or observance of any covenant contained in Sections 6.14, 6.15, 6.16, 6.17, 6.18, 6.19, 6.23 or in Article -48- VII of this Agreement, Sections 4.01 and 4.02 of the Assignment(s) of Earnings and Insurances, Sections 4.01 and 4.02 of the Assignment(s) of Insurances, the second sentence of Section 5 and Section 7(a) of the Pledge Agreement(s) and Article I, Sections 4, 5(a)(ii), 7, 9, 10, 12(a), 13(b), 14 and 19 of the Mortgages and Deeds of Covenant; (c) if the Borrower shall default in any material respect in the performance or observance of any covenant contained in Article VI of this Agreement or any other covenant, agreement or condition (other than those set forth in (a) or (b) above) contained in this Agreement or in any other Transaction Document and such default shall not be cured by the earlier of (i) twenty (20) days after an Executive Officer of the Borrower had actual knowledge of such default and (ii) twenty (20) days after receipt by the Borrower of notice thereof from the Agent; (d) if any representation or warranty made by a Credit Party herein or in any other Transaction Document shall prove to have been false, incorrect or misleading in any material respect on the date as of which made and uncured at the time discovered and shall not have been cured by the earlier of (i) 30 days after an Executive Officer of a Credit Party obtains actual knowledge thereof and (ii) 30 days after receipt by the Borrower of notice thereof from the Agent; (e) if a Credit Party shall (i) generally not be paying its debts as they come due, (ii) file a petition in bankruptcy or a petition to take advantage of any insolvency act, (iii) become insolvent or make an assignment for the benefit of its creditors, (iv) consent to the appointment of a custodian or receiver of itself or of the whole or any substantial part of its property, (v) on a petition in bankruptcy filed against it, have an order for relief entered against it or (vi) file a petition or answer seeking reorganization or arrangement under the federal bankruptcy laws or any other applicable law; (f) if a petition in bankruptcy shall be filed against a Credit Party or any of their respective subsidiaries and not dismissed within 60 days from the date of the filing; (g) if a court of competent jurisdiction shall enter an order, judgment or decree appointing, without the consent of an affected entity, a custodian or receiver of a Credit Party, or of the whole or any substantial part of its property, or approving a petition filed against such entity seeking reorganization or arrangement of such entity under applicable law, and such order, judgment or decree shall not be set aside or stayed within 60 days from the date of its entry; (h) if, under the provisions of any other law for the relief or aid of debtors, any court of competent jurisdiction shall assume custody or control of a Credit Party or of the whole or any substantial part of such entity's property and such custody or control shall not be terminated or stayed within 60 days from the date of assumption of custody or control; -49- (i) if a final judgment, a fine or other order for the payment of money in excess of $2,000,000 or the equivalent thereof in another currency shall be rendered by a court or administrative agency against a Credit Party and such entity shall not discharge the same or provide for its discharge in accordance with its terms, or procure a stay of execution thereof within 30 days from the date of its entry and within the 30-day period, or any longer period during which execution of such judgment, fine or other order shall have been stayed, appeal therefrom and cause the execution thereof to be stayed during the appeal; (j) if a Credit Party shall default (as principal or guarantor or other surety) in any payment of principal or interest on any obligation for money borrowed beyond any period of grace provided with respect thereto, or if any other default under any agreement under which any such obligation is created or under any instrument securing or evidencing such obligation, shall have occurred, if the effect of such other default is to cause, or permit the holder of such obligation to cause, such obligation to become due prior to its stated maturity; provided, however, in the case of any such obligation for money borrowed as to which any such default in any payment of principal or interest or any such other default has occurred, it shall not constitute an Event of Default under this clause (j) unless (i) with respect to any such obligation for borrowed money evidenced by common loan documents (such as a single credit agreement or a single series of notes), the principal amount of such obligation exceeds $2,500,000, or (ii) the principal amount of all such obligations for money borrowed (including, without limitation, any such obligations described in the immediately preceding clause (i)) as to which any such default then exists exceeds $5,000,000 in aggregate; (k) if an Event of Default has occurred and is continuing under a Security Document or if any of the Transaction Documents shall for any reason other than the satisfaction in full of the Obligations cease to be, or be asserted by a Credit Party not to be, a legal, valid and binding obligation of such Credit Party, enforceable in accordance with its terms, except to the extent that such enforceability may be limited by any applicable bankruptcy, insolvency or similar laws generally affecting the enforcement of creditor's rights or by general principles of equity; (l) if a Borrower shall breach or default under any Hedging Agreement or any interest rate or currency hedging agreement in any material respect and such breach or default shall not have been cured within 30 days; or (m) if a Subsidiary Guarantor ceases to be a direct or indirect wholly-owned subsidiary of the Borrower without the written consent of the Requisite Lenders which consent shall not be unreasonably withheld. Section 9.02 Waiver of Default. Any Event of Default may be waived only with the written consent of the Requisite Lenders. Any Event of Default so waived shall be deemed to have been cured and not to be continuing, but no such waiver shall be deemed a continuing waiver or shall extend to or affect any subsequent like default or impair any rights arising therefrom. -50- Section 9.03 Remedies. Upon the occurrence and continuance of any Default or Event of Default, the Lenders shall have no further obligation to advance money or extend any additional credit to or for the benefit of the Borrower, whether in the form of Loans, Letters of Credit or otherwise. In addition, upon the occurrence and during the continuance of an Event of Default, the Requisite Lenders or the Agent, on behalf and for the ratable benefit of the Lenders, may, at the direction of the Requisite Lenders, do any one or more of the following, all of which are hereby authorized by the Borrower: (a) declare (i) all or any of the Notes, the L/C Obligations, the Obligations of the Borrower under this Agreement, the other Transaction Documents and any other instrument executed by the Borrower pursuant to the Transaction Documents to be immediately due and payable and, upon such declaration, such obligations so declared due and payable shall immediately become due and payable; provided, however, that if such Event of Default is under either Sections 9.01(e), (f), (g) or (h), then all of the Obligations shall become immediately due and payable forthwith without the requirement of any notice or other action by the Lenders or the Agent; (b) declare the Commitments and other lending obligations under the Transaction Documents, if any, terminated, whereupon the Commitments and such other lending obligations, if any, of each Lender shall immediately terminate; (c) exercise any or all of the rights and powers and pursue any and all of the remedies pursuant to this Article and any of the other Transaction Documents, to the extent permitted by applicable law; and (d) bring suit at law or in equity, to collect the payments due under each of the Transaction Documents and to recover judgment for the Obligations hereby secured, and collect the same out of any and all of the Collateral. Section 9.04 Rights of Set-Off. Regardless of the adequacy of any Collateral, during the continuance of an Event of Default, any deposits or other sums credited by or due from any Lender to the Borrower may be set-off against the Obligations and any and all other liabilities, direct or indirect, absolute or contingent, due or to become due, now existing or hereafter arising, of the Borrower to the Lenders. Any Lender that exercises any such set-off right shall use reasonable diligence to notify the Borrower of any such exercise, provided that the failure of such Lender to provide any such notice shall not affect the validity of such Lender's exercise of such set-off right. Section 9.05 Rights and Remedies Cumulative. The Lenders' and the Agent's rights and remedies under this Agreement shall be cumulative and shall be in addition to every other right, power and remedy herein specifically given or now or hereafter existing at law, in admiralty, in equity or by statute, and each and every right, power and remedy whether specifically herein given or otherwise existing may be exercised from time to time and as often and in such order as may be deemed expedient by the Agent or the Lenders, and the exercise or the beginning of the exercise of any power or remedy shall not be construed to be a waiver of the right to exercise at the same time or thereafter any other right, power or remedy. The Lenders and the Agent shall have all other rights and remedies not inconsistent herewith as provided by law or in equity. No exercise by any Lender or the Agent of one right or remedy shall be -51- deemed an election. No delay or omission by any Lender or the Agent shall constitute a waiver, election or acquiescence by such party. Section 9.06 Specific Remedies. Upon the occurrence and during the continuance of an Event of Default: (a) At the request of the Agent, each Credit Party shall promptly execute and deliver such instruments and other documents as the Agent may deem necessary or advisable to enable the Agent to obtain possession of all or any part of the Collateral to which possession the Lenders shall at the time be entitled hereunder. If a Credit Party shall for any reason fail to execute and deliver such instruments and documents after such request by the Agent, the Agent may obtain a judgment conferring on the Agent the right to such possession on behalf of the Lenders immediately and requiring such Credit Party to deliver such instruments and documents to the Agent, to the entry of which judgment such Credit Party hereby specifically consents. (b) The Agent, on behalf of the Lenders, may proceed to enforce the rights of the Lenders by directing payment to it of all monies payable under any agreement or undertaking constituting a part of the Collateral, by proceedings in any court of competent jurisdiction for the appointment of a receiver or for sale of all or any part of the Collateral possession to which the Lenders shall at the time be entitled hereunder or for foreclosure of such Collateral, and by any other action, suit, remedy or proceeding authorized or permitted by this Agreement or by law or by equity, and may file such proofs of claim and other papers or documents as may be necessary or advisable in order to have the claims of the Lenders asserted or upheld in any bankruptcy, receivership or other judicial proceedings. (c) The Agent shall be entitled to set-off against and withdraw all amounts constituting a part of the Collateral and to apply the same as follows: First: To the payment of all reasonable expenses and charges, including the expenses of any taking, operating, attorney's fees, court costs and other expenses or advances made or incurred by the Agent in connection with the ascertainment or protection of its rights and the pursuance of its remedies hereunder or under any of the Transaction Documents (including, without limitation, the reasonable fees and disbursements of counsel); Second: To the payment of interest on the Notes and L/C Obligations; Third: To the payment of principal on the Notes and the L/C Obligations; Fourth: To the payment of all amounts due to the Agent and the Lenders in respect of taxes, indemnities, fees, expenses, premiums, -52- purchase of liens or otherwise under the provisions hereof or under any of the Transaction Documents; Fifth: To the payment of the Obligations in respect any Hedging Agreement; provided, however, if there is more than one Counterparty in respect of the Hedging Agreements, a Counterparty's right to payment pursuant to this clause Fifth shall be pari pasu with the rights of each other Counterparty; Sixth: To the payment of the Obligations, other than those referred to in First through Fifth above; and Seventh: To the payment of any surplus thereafter remaining to the Borrower or whomever may be lawfully entitled thereto. (d) Without limiting the foregoing, the Agent and the Lenders, their respective assigns and legal representatives shall have all the remedies of a secured party under applicable law and such further remedies as from time to time may hereafter be provided pursuant to such law for a secured party. In exercising its power of sale, the Agent shall be entitled to add to the Loans any and all of the Agent's or Lenders' expenses incurred in connection therewith. Section 9.07 Restoration of Rights and Remedies. In case the Agent or a Lender shall have proceeded to enforce any right, power or remedy under this Agreement or any other Transaction Document by foreclosure, entry or otherwise, and such proceedings shall have been discontinued or abandoned for any reason or shall have been determined adversely to the Agent or such Lender, then and in every such case the Borrower, the Agent and the Lenders shall be restored to their former positions and rights hereunder with respect to this Agreement, the Transaction Documents, the Collateral, and all rights, remedies and powers of the Agent and the Lenders shall continue as if no such proceedings had been taken. Section 9.08 Cure of Defaults. Subject to the terms of this Agreement, if at any time after an Event of Default, the Borrower offers completely to cure all Events of Default and to pay all expenses, advances and damages to the Agent and the Lenders related to such Events of Default, with interest with respect to such Borrower's obligations as provided herein, then the Agent may, but shall not be required to, accept such offer and payment and restore the Borrower to its former position, but such action, if taken, shall not affect any subsequent Event of Default or impair any rights consequent thereon. ARTICLE X RELATIONSHIP AMONG THE LENDERS Section 10.01 Appointment and Authorization. Each Lender hereby irrevocably appoints, designates and authorizes Fortis as the Agent under this Agreement and under each of the other Transaction Documents and irrevocably authorizes the Agent to take such action on its behalf under the provisions of this Agreement and each other Transaction Document and to exercise such powers and perform such duties as are expressly delegated to it by the terms of this Agreement or any other Transaction Document, together with such powers as are reasonably -53- incidental thereto. Notwithstanding any provision to the contrary contained elsewhere in this Agreement or in any other Transaction Document, the Agent shall not have any duties or responsibilities, except those expressly set forth herein, nor shall the Agent have or be deemed to have any fiduciary relationship with any Lender, and no implied covenants, functions, responsibilities, duties, obligations or liabilities shall be read into this Agreement or any other Transaction Document or otherwise exist against the Agent. Section 10.02 Delegation of Duties. The Agent may execute any of its duties under this Agreement or any other Transaction Document by or through agents, employees or attorneys-in-fact and shall be entitled to advice of counsel concerning all matters pertaining to such duties. The Agent shall not be responsible for the gross negligence or misconduct of any agent or attorney-in-fact that it selects with reasonable care or for any action it takes on the advice of counsel. Section 10.03 Liability of Agent. None of the Agent-Related Persons shall (a) be liable for any action taken or omitted to be taken by any of them under or in connection with this Agreement or any other Transaction Document (except for its own gross negligence or willful misconduct), (b) be liable as a consequence of any failure or delay in performance by, or any breach by, any other Lender or any other Person, of its obligations under this Agreement or any other Transaction Document or (c) be responsible in any manner to any Lender for any recital, statement, representation or warranty made by a Credit Party, or any officer thereof, contained in this Agreement or in any other Transaction Document, or in any certificate, report, statement or other document referred to or provided for in, or received by the Agent under or in connection with, this Agreement or any other Transaction Document, or for the value of any Collateral or the validity, effectiveness, genuineness, enforceability or sufficiency of this Agreement or any other Transaction Document, or for any failure of a Credit Party or any other party to this Agreement or any other Transaction Document to perform its obligations hereunder or thereunder. No Agent-Related Person shall be under any obligation to any Lender to ascertain or to inquire as to the observance or performance of any of the agreements contained in, or conditions of, this Agreement or any other Transaction Document, or to inspect the properties, books or records of any Credit Party. Section 10.04 Reliance by the Agent. (a) The Agent shall be entitled to rely, and shall be fully protected in relying, upon (i) any writing, resolution, notice, consent, certificate, affidavit, letter, telegram, facsimile, telex or telephone message, statement or other document or conversation believed by it to be genuine and correct and to have been signed, sent or made by the proper Person or Persons, and (ii) any advice or statements of legal counsel (including counsel to the Borrower), independent accountants and other experts selected by the Agent. The Agent shall be fully justified in failing or refusing to take any action under this Agreement or any other Transaction Document unless it shall first receive such advice or concurrence of the Requisite Lenders as it deems appropriate and, if it so requests, it shall first be indemnified to its satisfaction by the Lenders against any and all liability and expense which may be incurred by it by reason of taking or continuing to take any such action. The Agent shall in all cases be fully protected in acting, or in refraining from acting, under this Agreement or any -54- other Transaction Document in accordance with a request or consent of the Requisite Lenders and such request and any action taken or failure to act pursuant thereto shall be binding upon all of the Lenders. (b) For purposes of determining compliance with the conditions precedent specified in Article V, each Lender that has executed this Agreement or shall hereafter execute and deliver an Assignment and Acceptance in accordance with Section 10.11 shall be deemed to have consented to, approved or accepted or to be satisfied with each document or other matter either sent by the Agent to such Lender for consent, approval, acceptance or satisfaction, or required thereunder to be consented to or approved by or acceptable or satisfactory to the Lender, unless an officer of the Agent responsible for the transactions contemplated by the Transaction Documents shall have received notice from the Lender prior to the borrowing specifying its objection thereto and either such objection shall not have been withdrawn by notice to the Agent to that effect or the Lender shall not have made available to the Agent the Lender's Proportionate Share of such borrowing. Section 10.05 Notice of Default. The Agent shall not be deemed to have knowledge or notice of the occurrence of any Default or Event of Default, except with respect to defaults in the payment of any Reduction Amount, interest and fees required to be paid to the Agent on behalf and for the benefit of the Lenders, unless the Agent shall have received written notice from a Lender or the Borrower referring to this Agreement, describing such Default or Event of Default and stating that such notice is a "notice of default". In the event that the Agent receives such a notice, the Agent shall give notice thereof to the Lenders. The Agent shall take such action with respect to such Default or Event of Default as shall be requested by the Requisite Lenders in accordance with this Agreement; provided, however, that unless and until the Agent shall have received any such request, the Agent may (but shall not be obligated to) take such action, or refrain from taking such action, with respect to such Default or Event of Default as it shall deem advisable or in the best commercial interest of the Lenders. Section 10.06 Credit Decision. Each Lender expressly acknowledges that none of the Agent-Related Persons has made any representation or warranty to it and that no act by the Agent hereinafter taken, including any review of the affairs of a Credit Party, shall be deemed to constitute any representation or warranty by the Agent to any Lender. Each Lender represents to the Agent that it has, independently and without reliance upon the Agent and based on such documents and information as it has deemed appropriate, made its own appraisal of and investigation into the business, prospects, operations, property, financial and other condition and creditworthiness of the Credit Parties, and all applicable Lender regulatory laws relating to the transactions contemplated thereby, and made its own decision to enter into this Agreement and extend credit to the Borrower under and pursuant to this Agreement. Each Lender also represents that it will, independently and without reliance upon the Agent and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit analysis, appraisals and decisions in taking or not taking action under this Agreement and the other Transaction Documents, and to make such investigations as it deems necessary to inform itself as to the business, prospects, operations, property, financial and other condition and creditworthiness of the Borrower. Except for notices, reports and other documents expressly herein required to be furnished to the Lenders by the Agent, the Agent shall not have any duty or -55- responsibility to provide any Lender with any credit or other information concerning the business, prospects, operations, property, financial and other condition or creditworthiness of the Borrower, which may come into the possession of any of the Agent-Related Persons. Section 10.07 Indemnification. Whether or not the transactions contemplated hereby shall be consummated, the Lenders shall indemnify upon demand the Agent-Related Persons (to the extent not reimbursed by or on behalf of the Borrower and without limiting the obligation of the Borrower to do so), ratably from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses and disbursements of any kind whatsoever which may at any time (including at any time following the repayment of the Notes and the L/C Obligations and the termination or resignation of the related Agent) be imposed on, incurred by or asserted against any such Person in any way relating to or arising out of this Agreement, the Transaction Documents or any document contemplated by or referred to herein or therein or the transactions contemplated hereby or thereby or any action taken or omitted by any such Person under or in connection with any of the foregoing; provided, however, that no Lender shall be liable for the payment to the Agent-Related Persons of any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements resulting from such Agent-Related Person's gross negligence or willful misconduct. Without limiting the foregoing, each Lender shall reimburse the Agent upon demand for its ratable share of any costs or out-of-pocket expenses (including reasonable attorney fees) incurred by the Agent in connection with the preparation, execution, delivery, administration, modification, amendment or enforcement (whether through negotiations, legal proceedings or otherwise) of, or legal advice in respect of rights or responsibilities under this Agreement, any other Transaction Document, or any document contemplated by or referred to herein to the extent that the Agent is not reimbursed for such expenses by or on behalf of the Borrower. The obligation of the Lenders in this Section 10.07 shall survive the payment of the Obligations. Section 10.08 Agent in Individual Capacity. Fortis and its affiliates may make loans to, issue letters of credit for the account of, accept deposits from, acquire equity interests in and generally engage in any kind of banking, trust, financial advisory or other business with the Borrower and any of its affiliates as though Fortis were not the Agent hereunder and without notice to or consent of the Lenders. With respect to its Proportionate Share, Fortis shall have the same rights and powers under this Agreement as any other Lender and may exercise the same as though it were not the Agent, and the terms "Lender" and "Lenders" shall include Fortis in its individual capacity. Section 10.09 Successor Agent. The Agent may resign as Agent upon thirty (30) days' notice to the Lenders. If the Agent shall resign as Agent under this Agreement, the Requisite Lenders shall appoint from among the Lenders a successor agent for the Lenders. If no successor agent is appointed prior to the effective date of the resignation of the Agent, the Agent may appoint, after consulting with the Lenders and the Borrower, a successor agent from among the Lenders. Upon the acceptance of its appointment as successor agent hereunder, such successor agent shall succeed to all the rights, powers and duties of the retiring Agent and the term "Agent" shall mean such successor agent and the retiring Agent's appointment, powers and duties as Agent shall be terminated. After any retiring Agent's resignation hereunder as Agent, the provisions of this Article X shall inure to its benefit as to any actions taken or omitted to be -56- taken by it while it was Agent under this Agreement. If no successor agent has accepted appointment as Agent by the date which is thirty (30) days following a retiring Agent's notice of resignation, the retiring Agent's resignation shall nevertheless thereupon become effective and the Lenders shall perform all of the duties of the Agent hereunder until such time, if any, as the Requisite Lenders appoint a successor agent as provided for above. Any successor Agent appointed under this Section 10.09 shall be reasonably acceptable to Borrower. Section 10.10 Collateral Matters. (a) The Agent is authorized on behalf of all the Lenders, without the necessity of any notice to or further consent from the Lenders, from time to time to take any action with respect to the Collateral which may be necessary to perfect and maintain perfected the security interest in and Liens upon the Collateral granted pursuant thereto. (b) The Lenders irrevocably authorize the Agent, at its option and in its discretion, to release any Lien granted to or held by the Agent upon any Collateral (i) upon payment in full of all of the Notes, the L/C Obligations and all other Obligations then payable under this Agreement and under any other Transaction Document; (ii) consisting of an instrument evidencing Indebtedness or other debt instrument, if the indebtedness evidenced thereby has been paid in full; (iii) if approved, authorized or ratified in writing by all of the Lenders or (iv) upon any sale, transfer, assignment or other disposition of any Collateral, to the extent that the same is expressly permitted by the terms of this Agreement and the other Transaction Documents. Upon request by the Agent at any time, the Lenders will confirm in writing the Agent's authority to release particular types or items of Collateral pursuant to this Section 10.10(b). Section 10.11 Assignments, Participations, Etc. (a) Any Lender may, with the written consent of the Borrower (other than during the existence of a Default or Event of Default in which event the Borrower's consent shall not be required) and the Agent, which consent, in each case, shall not be unreasonably withheld (which consent of the Borrower and the Agent shall not be required if the Eligible Assignee is an Affiliate of such Lender or is another Lender), provided that such assignment shall not result in increased costs to the Borrower pursuant to Section 2.11, at any time assign and delegate to one or more Eligible Lender (each an "Assignee") all, or any ratable part of all, of the Notes, L/C Obligations and the other rights and obligations of such Lender hereunder. In the event of a partial assignment (other than to another Lender or an Affiliate of a Lender), such assignment shall be in a minimum amount of not less than $5,000,000 and, after giving effect to such assignment, the assigning Lender's or selling Lender's Proportionate Share of the Notes and L/C Obligations shall equal an amount that it not less than $10,000,000, in each case, unless otherwise agreed in writing by the Borrower and the Agent; provided, however, that the Borrower and the Agent may continue to deal solely and directly with such Lender in connection with the interest so assigned to an Assignee until (i) written notice of such assignment, together with payment instructions, addresses and related information with respect to the Assignee, -57- shall have been given to the Borrower and the Agent by such Lender and the Assignee; (ii) such Lender and its Assignee shall have delivered to the Borrower and the Agent an Assignment and Acceptance in the form of Exhibit H ("Assignment and Acceptance") together with any Note subject to such assignment; and (iii) the assignor Lender or the Assignee has paid to the Agent a processing fee in the amount of $4,000. (b) From and after the date that the Agent notifies the assigning Lender that it has received an executed Assignment and Acceptance and payment of the above-referenced processing fee, (i) the Assignee thereunder shall be a party hereto and, to the extent that rights and obligations hereunder have been assigned to it pursuant to such Assignment and Acceptance, shall have the rights and obligations of a Lender under the Transaction Documents, and (ii) the assignor Lender shall, to the extent that rights and obligations hereunder and under the other Transaction Documents have been assigned by it pursuant to such Assignment and Acceptance, relinquish its rights and be released from its obligations under the Transaction Documents. (c) Within five (5) Business Days after its receipt of notice by the Agent that it has received an executed Assignment and Acceptance and payment of the processing fee, the Borrower shall execute and deliver to the Agent, a new Note evidencing such Assignee's assigned Proportionate Share of the related Loans and, if the assignor Lender has retained a portion thereof, a replacement Note in the principal amount of the Proportionate Share of the Loans retained by the assignor Lender (such Note to be in exchange for, but not in payment of, the Note held by such Lender). Immediately upon each Assignee's making its processing fee payment under the Assignment and Acceptance, this Agreement shall be deemed to be amended to the extent, but only to the extent, necessary to reflect the addition of the Assignee and the adjustment of the Proportionate Share of the Loans. (d) Any Lender may at any time sell to one or more commercial banks or other Persons not affiliates of the Borrower (a "Participant") participating interests in the Loans, the L/C Obligations and the other interests of that Lender (the "Originating Lender") hereunder and under the other Transaction Documents; provided, however, that (i) the Originating Lender's obligations under this Agreement shall remain unchanged, (ii) the Originating Lender shall remain solely responsible for the performance of such obligations, (iii) the Borrower and the Agent shall continue to deal solely and directly with the Originating Lender in connection with the Originating Lender's rights and obligations under this Agreement and the other Transaction Documents and (iv) no Lender shall transfer or grant any participating interest under which the Participant shall have rights to approve any amendment to, or any consent or waiver with respect to, this Agreement or any other Transaction Documents other than those that pursuant to the terms of this Agreement require the consent of the affected Lender; and provided further that, and it is hereby agreed that, the Borrower shall not be obligated to make any greater payment or otherwise incur any greater cost or liability under Section 2.11 than had no such sale of a participating interest occurred. -58- (e) Each Lender agrees to maintain the confidentiality of all information identified as "confidential" by the Borrower and provided to it by the Borrower, or by the Agent on the Borrower's behalf, in connection with this Agreement or any other Transaction Document, and neither it nor any of its Affiliates shall use any such information for any purpose or in any manner other than pursuant to the terms contemplated by this Agreement; except to the extent such information (i) was or becomes generally available to the public other than as a result of a disclosure by the Lender, or (ii) was or becomes available on a non-confidential basis from a source other than the Borrower or one of its affiliates; provided, however, that any Lender may disclose such information (A) at the request or pursuant to any requirement of any Governmental Authority to which the Lender is subject or in connection with an examination of such Lender by any such authority; (B) pursuant to subpoena or other court process; (C) when required to do so in accordance with the provisions of any applicable law or requirement of law; and (D) to such Lender's independent auditors and other professional advisors. If the Agent or any Lender discloses any such confidential information pursuant to the provisions of the immediately proceeding proviso, the Agent or such Lender shall seek to obtain assurance that confidential treatment will be accorded to such confidential information; provided, however, that neither the Agent nor any Lender shall have any liability for the failure to obtain such confidential treatment. Notwithstanding the foregoing, the Borrower authorizes each Lender to disclose to any Participant or Assignee and to any prospective Participant or Assignee, such financial and other information in such Lender's possession concerning a Borrower or a Subsidiary Guarantor which has been delivered to the Agent or the Lenders pursuant to this Agreement or which has been delivered to the Agent or the Lenders by the Borrower or a Subsidiary Guarantor in connection with the Lenders' credit evaluation of the Borrower and the Subsidiary Guarantors prior to entering into this Agreement, provided that such participant or assignee (or prospective participant or assignee) agrees in writing to be bound by a confidentiality agreement similar to the provisions of this Section 10.11(e). (f) Notwithstanding any other provision contained in this Agreement or any other Transaction Document to the contrary, any Lender may assign all or any portion of its Proportionate Share of the Notes and the L/C Obligations held by it to any Federal Reserve Bank or the United States Treasury as collateral security pursuant to Regulation A of the Board of Governors of the Federal Reserve System and any Operating Circular issued by such Federal Reserve Bank ARTICLE XI MISCELLANEOUS Section 11.01 Notices. (a) All notices, requests, approvals and other communications provided for hereunder shall be in writing (including, unless the context expressly otherwise provides, by facsimile transmission, provided that any matter transmitted by the Borrower or a Subsidiary Guarantor by facsimile (i) shall be immediately confirmed by a telephone call to the recipient at the number specified on the applicable signature -59- page hereof, and (ii) shall be followed promptly by a hard copy original thereof) and faxed, sent for overnight (next day) delivery or delivered, to the address or facsimile number specified for notices on the applicable signature page hereof or, as directed to the Borrower or the Agent, to such other address as shall be designated by such party in a written notice to the other parties, and as directed to each other party, at such other address as shall be designated by such party in a written notice to the Borrower and the Agent. (b) All such notices, requests and communications shall, when transmitted by overnight delivery, or faxed, be effective when delivered for overnight (next day) delivery, or transmitted by facsimile machine, respectively, or if delivered, upon delivery, except that notices pursuant to Articles II, V, VI and IX shall not be effective until actually received by the Agent. (c) The Borrower acknowledges and agrees that any agreement of the Agent and the Lenders to receive certain notices by telephone and facsimile is solely for the convenience and at the request of the Borrower. The Agent and the Lenders shall be entitled to rely on the authority of any Person purporting to be a Person authorized by such Borrower to give such notice and the Agent and the Lenders shall not have any liability to the Borrower or other Person on account of any action taken or not taken by the Agent or the Lenders in reliance upon such telephonic or facsimile notice. The obligation of the Borrower and the Subsidiary Guarantors to repay the Obligations shall not be affected in any way or to any extent by any failure by the Agent and the Lenders to receive written confirmation of any telephonic or facsimile notice or the receipt by the Agent and the Lenders of a confirmation which is at variance with the terms understood by the Agent and the Lenders to be contained in the telephonic or facsimile notice. Section 11.02 Survival of Agreement. All covenants, agreements, representations and warranties made herein and in the certificates delivered pursuant hereto shall survive the making of the Loans and the issuance of the Letters of Credit and the execution and delivery of the Notes and shall continue in full force and effect so long as the Obligations remain outstanding. Section 11.03 Governing Law. This Agreement shall be governed by and interpreted in accordance with the laws of the State of New York, without giving effect to the principles of conflicts of law. -60- Section 11.04 Modification of Agreement. (a) No amendment, modification or waiver of any provision of this Agreement or any other Transaction Document, and no consent with respect to any departure by a Borrower therefrom, shall be effective unless the same shall be in writing and signed by the Requisite Lenders and acknowledged by the Agent, and then such waiver shall be effective only in the specific instance and for the specific purpose for which given; provided, however, that no such waiver, amendment, or consent shall, unless in writing and signed by each Lender affected thereby and acknowledged by the Agent, do any of the following: (i) increase or extend the Commitment or Proportionate Share of any Lender, decrease the Applicable Margin, change the Aggregate Loan Commitment, Tranche A Loan Commitment or Tranche B Loan Commitment (other than as provided in Article II) or subject any Lender to any additional obligations; (ii) postpone or delay any date fixed for any payment of principal, interest, fees or other amounts due to the Lenders (or any of them) hereunder or under any Transaction Document; (iii) reduce the principal of, or the rate of interest specified herein on any Loan or L/C Obligation, or of any fees or other amounts payable hereunder or under any Transaction Document; (iv) amend this Section 11.04; or; (v) amend Section 2.09 or any other provision with respect to pro rata payments or sharing of recoveries among the Lenders; and, provided further that no amendment, modification, waiver or consent shall, unless in writing and signed by the Agent in addition to the Requisite Lenders or all the Lenders, as the case may be, affect the rights or duties of the Agent under this Agreement or any other Transaction Document. (b) Notwithstanding the provisions of Section 11.04(a), in order for a Subsidiary of the Borrower to become a Subsidiary Guarantor pursuant to Section 6.19, this Agreement may be supplemented for the purpose of adding such Subsidiary as a party hereto with the consent of the Borrower and the Agent but without the consent of the other Subsidiary Guarantors or the Lenders. Section 11.05 Costs and Expenses. The Borrower agrees whether or not the transactions contemplated hereby shall be consummated, to: (a) pay or reimburse each Arranger and the Agent within five (5) Business Days after demand for all costs and expenses incurred by the Agent or such Arranger in connection with the development, preparation, delivery, administration and execution of, and any amendment, supplement, waiver or modification to (in each case, whether or not consummated), this Agreement, any other Transaction Document and any other documents prepared in connection herewith (including any commitment letter and related -61- documents preceding this Agreement) or therewith, and the consummation of the transactions contemplated hereby and thereby, including the attorney costs incurred by each Arranger and the Agent with respect hereto and thereto; (b) pay or reimburse the Agent and each Lender within five (5) Business Days after demand for all costs and expenses incurred by them in connection with the enforcement, attempted enforcement, or preservation of any rights or remedies (including in connection with any "workout" or restructuring regarding the Loans and/or the L/C Obligations, and including in any insolvency proceedings or appellate proceeding) under this Agreement, any other Transaction Document, and any such other documents, including attorney costs incurred by the Agent and any Lender; and (c) pay or reimburse each Arranger and the Agent within five (5) Business Days after demand for all reasonable audit, environmental inspection and review, search and filing, registration and recording costs, fees and expenses, incurred or sustained in connection with the matters referred to under Section 11.05(a) and Section 11.05(b). Section 11.06 Waivers. No waiver of any of the provisions of this Agreement (a) shall be valid unless evidenced by a writing executed by each party to be bound thereby, (b) shall be deemed or shall constitute a waiver of any other provision of this Agreement or any other provisions hereof (whether or not similar), or (c) shall constitute a continuing waiver unless otherwise expressly provided. No delay on the part of the Agent or any Lender in exercising any right or remedy hereunder shall operate as a waiver thereof nor shall any single or partial exercise of any power or right or remedy preclude other or further exercise thereof or the exercise of any other right or remedy. No notice to or demand on the Borrower or a Subsidiary Guarantor in any case shall entitle it to any other or further notice or demand in the same or similar circumstances. Section 11.07 Indemnification. To the fullest extent permitted by law, the Borrower agrees to protect, indemnify, defend and hold harmless each Indemnified Party from and against any and all liabilities, losses, obligations, damages, penalties, expenses or costs of any kind or nature and from any suits, judgments, claims or demands (including in respect of or for attorney costs and other fees and other disbursements of counsel for and consultants of any Indemnified Party in connection with any investigative, administrative or judicial proceeding, whether or not such Indemnified Party shall be designated a party thereto) based on any federal, state, local or foreign law or other statutory regulation, including securities, environmental and commercial law or other statutory regulation, which arises under common law or at equitable cause or on contract or otherwise on account of or in connection with any matter or thing or any action or failure to act by the Indemnified Parties, or any of them, arising out of or relating to the Transaction Documents or any agreement or instrument contemplated by the Transaction Documents, but excluding those arising (x) with respect to an Indemnified Party, by reason of gross negligence or willful misconduct of such Indemnified Party or (y) in respect of Taxes (as to which indemnification shall be applicable only as and to the extent set forth in Section 2.13). Upon receiving knowledge of any suit, claim or demand asserted by any Person that an Indemnified Party believes is covered by this indemnity, such Indemnified Party shall give the Borrower notice thereof and an opportunity to defend it, at the Borrower's sole cost and expense, with legal counsel satisfactory to such Indemnified Party. Such Indemnified Party may also require the -62- Borrower to defend the matter. The obligations of the Borrower under this Section 11.07 shall survive the payment and performance of the Obligations and the termination of this Agreement. To the extent that the undertaking to indemnify, pay and hold harmless set forth in this Section 11.07 may be unenforceable because it violates any law or public policy, the Borrower shall contribute the maximum portion which it is permitted to pay and satisfy under applicable law to the payment and satisfaction of its obligations set forth in this Section 11.07. Section 11.08 Separability of Provisions; Obligations Several. (a) If any provision of this Agreement or other Transaction Document should be deemed invalid under any applicable law, such provision shall be void and of no effect and shall cease to be a part of this Agreement or other Transaction Document without affecting the remaining provisions, which shall remain in full force and effect. (b) In the event that this Agreement, the Notes, any Transaction Document or any of the documents or instruments which may from time to time be delivered hereunder or thereunder or any provision hereof or thereof shall be deemed invalidated by present or future law of any nation or by decision of any court, or if any third party shall fail or refuse to recognize any of the powers granted to the Agent hereunder when it is sought to exercise them, this shall not affect the validity and/or enforceability of all or any other parts of this Agreement, the Notes, any Transaction Document or such documents or instruments and, in any such case, the Borrower covenants and agrees that, on demand, they will execute and deliver such other and further agreements and/or documents and/or instruments and do such things as the Agent in its sole discretion may deem to be necessary to carry out the true intent of this Agreement and of the obligations secured hereby. Section 11.09 Counterparts. This Agreement and any amendment, waivers, consents or supplements hereto may be executed in two or more counterparts, any by different parties hereto in different counterparts, each of which when so executed shall constitute an original, but all of which, when taken together, shall constitute but one Agreement. Section 11.10 Entire Agreement. This Agreement constitutes the entire agreement between the parties hereto pertaining to the subject matter hereof and supersedes all prior and contemporaneous agreements, understandings, negotiations and discussions, whether oral or written, of the parties, and there are no warranties, representations or other agreements between the parties in connection with the subject matter hereof except as specifically set forth or incorporated herein. Section 11.11 Headings. Section and paragraph headings and the table of contents are not to be considered part of this Agreement, are included solely for convenience and are not intended to be full or accurate descriptions of the contents thereof. Sections and paragraphs mentioned by number only are the respective sections and paragraphs of this Agreement. The use of the terms "herein", "hereunder", "hereof", and like terms shall be deemed to refer to this entire Agreement and not merely to the particular provision in which the term is contained, unless the context clearly indicates otherwise. -63- Section 11.12 Successors and Assigns. All Persons shall be deemed to include the successors or assigns thereof. All of the terms and provisions of this Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective transferees, legal representatives, heirs, successors and assigns; provided, however, that (a) the Borrower may not assign its rights or obligations hereunder without the prior written consent of the Agent and each Lender and (b) the Lenders may assign their respective rights and obligations hereunder only in accordance with Section 10.11 hereof. Section 11.13 Gender and Number. Words importing a particular gender mean and include every other gender and words importing the singular number mean and include the plural number and vice-versa. Section 11.14 Exhibits. Exhibits to this Agreement are an integral part of this Agreement. Section 11.15 Notification of Addresses, Lending Offices, Etc. Each Lender shall notify the Agent in writing of any changes in the address to which notices to the Lender should be directed, of addresses of its Lending Office, of payment instructions in respect of all payments to be made to it hereunder and of such other administrative information as the Agent shall reasonably request. Section 11.16 No Third Parties Benefitted. This Agreement is made and entered into for the sole protection and legal benefit of the Borrower, the Subsidiary Guarantors, the Lenders, the Arrangers and the Agent, and their permitted successors and assigns, and no other Person shall be a direct or indirect legal beneficiary of, or have any direct or indirect cause of action or claim in connection with, this Agreement or any of the other Transaction Documents. None of the Agent, the Arrangers nor any Lenders shall have any obligation to any Person not a party to this Agreement or other Transaction Documents. Section 11.17 Equitable Relief. The Borrower recognizes that, in the event it fails to perform, observe or discharge any of its obligations or liabilities under this Agreement, the Notes or any of the other Transaction Documents, any remedy at law may prove to be inadequate relief to the Lenders or the Agent; therefore, the Borrower agrees that the Lenders or the Agent, if the Lenders so request, shall be entitled to temporary and permanent injunctive relief in any such case without the necessity of proving actual damages. Section 11.18 Notice of Claims; Claims Bar. THE BORROWER AND EACH SUBSIDIARY GUARANTOR HEREBY AGREES THAT IT SHALL GIVE PROMPT NOTICE OF ANY CLAIM OR CAUSE OF ACTION IT BELIEVES IT HAS, OR MAY SEEK TO ASSERT OR ALLEGE AGAINST ANY LENDER, EITHER ARRANGER OR THE AGENT, WHICH SUCH CLAIM IS BASED IN LAW OR EQUITY OR ADMIRALTY, ARISING UNDER OR RELATED TO THIS AGREEMENT, THE NOTES OR ANY OF THE OTHER TRANSACTION DOCUMENTS OR TO THE LOANS, THE L/C OBLIGATIONS OR SUBSIDIARY GUARANTOR OBLIGATIONS (OR THE COLLATERAL THEREFOR) CONTEMPLATED HEREBY OR THEREBY OR ANY ACT OR OMISSION TO ACT BY ANY LENDER, EITHER ARRANGER OR THE AGENT WITH RESPECT HERETO OR -64- THERETO, AND THAT IF IT SHALL FAIL TO GIVE SUCH PROMPT NOTICE TO THE AGENT WITH REGARD TO ANY SUCH CLAIM OR CAUSE OF ACTION, IT SHALL BE DEEMED TO HAVE WAIVED, AND SHALL BE FOREVER BARRED FROM BRINGING OR ASSERTING SUCH CLAIM OR CAUSE OF ACTION IN ANY SUIT, ACTION OR PROCEEDING IN ANY COURT OR BEFORE ANY GOVERNMENTAL AGENCY. Section 11.19 Waiver of Punitive Damages. NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED IN THIS AGREEMENT, EACH PARTY HERETO HEREBY AGREES THAT IT SHALL NOT SEEK FROM ANY OTHER PARTY HERETO, UNDER ANY THEORY OF LIABILITY, INCLUDING, WITHOUT LIMITATION, ANY THEORY IN TORTS, ANY SPECIAL, INDIRECT, CONSEQUENTIAL OR PUNITIVE DAMAGES. Section 11.20 Consent to Jurisdiction. (a) Any legal suit, action or proceeding against a Credit Party arising out of or relating to this Agreement or any other Transaction Document, or any transaction contemplated hereby or thereby, may be instituted in any federal or state court of competent jurisdiction in The City of New York, State of New York, and each Credit Party hereby irrevocably submits to the jurisdiction of any such court in any such suit, action or proceeding. Each Credit Party hereby waives, to the fullest extent permitted by applicable law, any defense which it may now or hereafter have based upon lack of personal jurisdiction or venue or forum non conveniens. Each Credit Party hereby irrevocably appoints and designates Corporate Creations Network, Inc., having an address at 277 Broadway, Suite 510, New York, New York 10007, as its true and lawful attorney-in-fact and duly authorized agent for the limited purpose of accepting service of legal process and each Credit Party agrees that service of process upon such party shall constitute personal service of such process such Credit Party. Each Credit Party shall maintain the designation and appointment of such authorized agent until all Obligations shall have been paid in full. If such agent shall cease to so act, the Credit Parties shall immediately designate and appoint another such agent satisfactory to the Agent and shall promptly deliver to the Agent evidence in writing of such other agent's acceptance of such appointment. Section 11.21 Waiver of Jury Trial. THE BORROWER, EACH SUBSIDIARY GUARANTOR, EACH ARRANGER, EACH LENDER AND THE AGENT HEREBY IRREVOCABLY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL WITH RESPECT TO ANY ACTION, CLAIM OR OTHER PROCEEDING ARISING OUT OF ANY DISPUTE IN CONNECTION WITH THIS AGREEMENT, THE NOTES OR THE OTHER TRANSACTION DOCUMENTS, ANY RIGHTS OR OBLIGATIONS HEREUNDER OR THEREUNDER, OR THE PERFORMANCE OF SUCH RIGHTS AND OBLIGATIONS. Section 11.22 Currency Indemnity. Any payment or payments made to or for the account of the Agent, either Arranger or any Lender in a currency other than the currency in which such payment is required to be made hereunder or under any other Transaction Document (the "Required Currency") for any reason (pursuant to a judgment or order of a court or tribunal of any jurisdiction) shall only constitute a discharge to the Borrower to the extent of the amount of the Required Currency which the Agent, such Arranger or -65- such Lender is, acting in good faith and exercising reasonable and customary diligence, able to purchase in New York City with the amount or amounts so received on the date or dates of receipt by the Agent, such Arranger or such Lender of such payment or payments (or if such date is not a Business Day on the next succeeding Business Day). If the amount of the Required Currency which the Agent, such Arranger or such Lender is so able to purchase falls short of the amount of the Required Currency due to the Agent, such Arranger or such Lender, the Borrower shall indemnify and hold the Agent, such Arranger or such Lender harmless against any loss or damage arising as a result. This indemnity shall constitute a separate and independent obligation from the other obligations contained in this Agreement, shall give rise to an independent cause or causes of action, shall apply irrespective of any indulgence granted by the Agent, such Arranger or such Lender from time to time and shall continue in full force and effect notwithstanding any judgment or order for a liquidated sum or sums in respect of the amount due hereunder or under any such judgment or order. Section 11.23 Release of Lien. In the event that the Borrower or a Subsidiary Guarantor sells, leases, transfers, assigns or otherwise disposes of a Vessel in accordance with Section 7.03, the Agent shall execute and file such instruments and take such actions, at the expense of Borrower, as may be reasonably requested to release such Vessel and the related collateral from the Lien securing the Obligations. -66- IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed and delivered by their respective officers thereunto duly authorized as of the date first written above. FORTIS CAPITAL CORP. as Agent, Arranger, Bookrunner and Lender By: ------------------------------------------- By: ------------------------------------------- Address: Three Stamford Plaza, 301 Tresser Boulevard, Stamford, CT 06901-3239 Phone: (203) 705-5787 Fax: (203) 705-5896 NIB CAPITAL BANK N.V., as Arranger and Lender By: ------------------------------------------- By: ------------------------------------------- Address: Phone: Fax: SEABULK INTERNATIONAL, INC., the Borrower, By: ------------------------------------------- Address: 2200 Eller Dr., Fort Lauderdale, FL 33316 Phone: (954) 524-4200 Fax: (954) 527-1772 SEABULK ARIES II, INC. SEABULK BETSY, INC. SEABULK CAPRICORN, INC. SEABULK CAROL, INC. SEABULK CHAMP, INC. SEABULK COOT I, INC. SEABULK COOT II, INC. SEABULK CORMORANT, INC. SEABULK CYGNET I, INC. SEABULK CYGNET II, INC. SEABULK DANAH, INC. SEABULK DEFENDER, INC SEABULK DUKE, INC. SEABULK EAGLE II, INC. SEABULK EMERALD, INC. SEABULK EXPLORER, INC. SEABULK FALCON II, INC. SEABULK FREEDOM, INC. SEABULK GANNET II, INC. SEABULK GIANT, INC. SEABULK GREBE, INC. SEABULK HAWAII, INC. SEABULK HAWK, INC. SEABULK HERCULES, INC. SEABULK HORIZON, INC. SEABULK KESTREL, INC. SEABULK LAKE EXPRESS, INC. SEABULK MARLENE, INC. SEABULK MARTIN I, INC. SEABULK MARTIN II, INC. SEABULK MASTER, INC. SEABULK MERLIN, INC. SEABULK NEPTUNE, INC. SEABULK OSPREY, INC. SEABULK OFFSHORE, LTD. By its general partner Seabulk Tankers, Ltd By its general partner Seabulk Transport, Inc. SEABULK PENGUIN I, INC. SEABULK PENGUIN II, INC. SEABULK PENNY, INC. SEABULK PERSISTENCE, INC. SEABULK PETREL, INC. SEABULK RAVEN, INC. SEABULK SERVICE, INC. SEABULK TENDER, INC. SEABULK TITAN, INC. SEABULK TOOTA, INC. SEABULK TOUCAN, INC. SEABULK TOWING, INC. SEABULK VERITAS, INC. SEABULK ALKATAR, INC. SEABULK CLIPPER, INC. SEABULK CONSRUCTOR, INC. SEABULK HABARA, INC. SEABULK JEBEL ALI, INC. SEABULK MAINTAINER, INC. SEABULK SAPPHIRE, INC. SEABULK SARA, INC. SEABULK TREASURE ISLAND, INC. SEABULK HERON, INC. SEABULK JASPER, INC. SEABULK LINCOLN, INC. SEABULK MALLARD, INC. SEABULK PLOVER, INC. SEABULK SWIFT, INC. SEABULK OFFSHORE U.K. LIMITED SEABULK TOWING SERVICES, INC. OFFSHORE MARINE MANAGEMENT INTERNATIONAL, INC., SEABULK TANKERS, LTD. By its general partner Seabulk Transport, Inc. SEABULK TRANSPORT, INC. SEABULK MARINE INTERNATIONAL, INC. SEABULK OCEAN SYSTEMS HOLDING CORPORATION SEABULK OFFSHORE INTERNATIONAL, INC. SEABULK OFFSHORE OPERATORS, INC. SEABULK OFFSHORE GLOBAL HOLDINGS, INC. SEABULK OFFSHORE HOLDINGS, INC. SEABULK TANKERS, INC. SEABULK OFFSHORE OPERATORS TRINIDAD LIMITED, each a Subsidiary Guarantor By: ------------------------------------------- Address: 2200 Eller Dr., Fort Lauderdale, FL 33316 Phone: (954) 524-4200 Fax: (954) 527-1772 APPENDIX A DEFINITIONS "Adjusted EBITDA" means, with respect to the Borrower for any period, an amount equal to EBITDA for each of the Borrower's most recently ended four fiscal quarters, as reported in the financial statements most recently delivered to the Agent, minus that portion of EBITDA attributable to the Lightship Tanker Entities plus an amount equal to the dividends received during such period from the Lightship Tanker Entities. "Adjusted Funded Debt" means, with respect to the Borrower for any period, the average of the Borrower's Consolidated Funded Debt less any Indebtedness relating to the Lightship Tanker Entities for each of the Borrower's most recently ended four fiscal quarters, as reported in the financial statements most recently delivered to the Agent; provided, however, until the completion of four full fiscal quarters following the Closing Date, the Consolidated Funded Debt for the fiscal quarters ending prior to the first full fiscal quarter after the Closing Date shall be determined as if the Existing Indebtedness were repaid and the Facility had been entered into as of the first day of such four full fiscal quarter period. "Adjusted Funded Debt Ratio" means as of any date of determination the ratio of (x) the Adjusted Funded Debt to (y) the Adjusted EBITDA. "Adjusted Interest Expense" means, with respect to the Borrower for any period, the Consolidated Interest Expense less any such Consolidated Interest Expense relating to the Lightship Tanker Entities for each of the Borrower's most recently ended four fiscal quarters, as reported in the financial statements most recently delivered to the Agent; provided, however, until the completion of four full fiscal quarters following the Closing Date, the Adjusted Interest Expense for the fiscal quarters ending prior to the first full fiscal quarter after the Closing Date shall be determined as if the Existing Indebtedness were repaid and the Facility had been entered into as of the first day of such four full fiscal quarter period. "Adjusted LIBOR" means, for each Interest Period in respect of a LIBOR Loan, an interest rate per annum (rounded upward to the nearest 1/16th of one percent (0.0625%)) determined pursuant to the following formula: Adjusted LIBOR = LIBOR ------------------------------------ 1.00 - Reserve Percentage The Adjusted LIBOR shall be adjusted automatically as of the effective date of any change in the Reserve Percentage. "Adjusted Tangible Net Worth" means with respect to the Borrower, as of any date of determination, the Consolidated Tangible Net Worth of the Borrower less any Consolidated Tangible Net Worth relating to the Lightship Tanker Entities. "Affiliate" means, with respect to any Person, any other Person (i) directly or indirectly controlling (including, but not limited to, all directors and officers of such Person), controlled by, or under direct or indirect common control with, such Person, or (ii) that directly or indirectly owns more than 10% of the voting securities of such Person. A Person shall be deemed to control another Person if such Person possesses, directly or indirectly, the power to direct or cause the direction of the management and policies of such other Person, whether through the ownership of voting securities, by contract or otherwise. For purposes of this definition, the terms "controlling," "controlled by" and "under common control with" have correlative meanings. "Agent" has the meaning set forth in the initial paragraph of the Agreement. "Agent-Related Persons" means the Agent, together with its Affiliates and the officers, directors, employees, agents and attorneys-in-fact of the Agent and its Affiliates. "Aggregate Loan Commitment" means the sum of the Aggregate Tranche A Loan Commitment and the Aggregate Tranche B Loan Commitment. "Aggregate Tranche A Loan Commitment" means the aggregate of the Tranche A Loan Commitments for the Lenders, which on the Closing Date shall equal $100,000,000.00, subject to adjustment as set forth in Sections 2.06 and 2.07 of the Credit Agreement. "Aggregate Tranche A Loan Commitment Reduction Amount" shall have the meaning set forth in Section 2.06(a) of the Agreement. "Aggregate Tranche B Loan Commitment" means the aggregate of the Tranche B Loan Commitments for the Lenders, which on the Closing Date shall equal $80,000,000.00, subject to adjustment as set forth in Sections 2.06 and 2.07 of the Credit Agreement. "Agreement" means the Credit Agreement, dated as of September 13, 2002, among the Borrower, the Subsidiary Guarantors, the Lenders, the Agent and the Arrangers, as modified, supplemented or amended from time to time. 2 "Applicable Margin" means, with respect to each Loan, the margin set forth below if the Adjusted Funded Debt Ratio determined as of the most recent fiscal quarter is:

- ------------------------------------------------------------------------------------------------------------------ ADJUSTED FUNDED DEBT RATIO LIBOR MARGIN BASE RATE MARGIN - ------------------------------------------------------------------------------------------------------------------ REVOLVING TERM REVOLVING TERM LOANS LOANS LOANS LOANS - ------------------------------------------------------------------------------------------------------------------ equal to or greater than 3.75 3.50% 4.00% 2.50% 3.00% - ------------------------------------------------------------------------------------------------------------------ equal to or greater than 3.00, but less 3.00% 3.50% 2.00% 2.50% than 3.75 - ------------------------------------------------------------------------------------------------------------------ equal to or greater than 2.00, but less 2.50% 3.00% 1.50% 2.00% than 3.00 - ------------------------------------------------------------------------------------------------------------------ less than 2.00 1.75% 2.25% 0.75% 1.25% - ------------------------------------------------------------------------------------------------------------------

Notwithstanding the above, the Applicable Margin shall be subject to adjustment as set forth in Section 2.03(e) of the Credit Agreement. "Appraiser" means any of Fearnleys A.S., R.S. Platou Shipbrokers A.S., Bassoe Offshore A.S., H. Clarkson Ltd., Simpson Spence Young Ltd., Mallory Jones Lynch & Flynn, Inc., Compass Maritime Services LLC, Lorentzen Stemoco Shipbrokers A.S., Braemar Shipbrokers Ltd., Barry Rogliano Salles, Poten & Partners, Inc., Jaques Pierot & Sons, DuFour Laskay & Strouse, Inc. and Nobel Denton Marine, together with any other Person not affiliated with the Borrower and acceptable to the Agent engaged in the business of appraising vessels, including tug and supply service vessels. "Approved Jurisdiction" means United States of America, Republic of Liberia, Marshall Islands, Commonwealth of Dominica, United Kingdom, St. Vincent and the Grenadines, Panama or such other jurisdiction as may be acceptable to the Requisite Lenders. "Arranger" and "Arrangers" have the meaning set forth in the initial paragraph of the Agreement. "Asset Coverage Ratio" means, at any time, the ratio of (x) the aggregate Fair Market Value of the Vessels (excluding laid-up Vessels, Vessels held for sale and the Second Lien Vessels other than the Seabulk Trader and the Seabulk Challenge) at such time to (y) the aggregate outstanding principal amount of the Term Loans, Revolving Loans and Stated Amount of the Letters of Credit then outstanding. "Assignee" shall have the meaning provided in Section 10.11(a) of the Credit Agreement. "Assignment and Acceptance" shall have the meaning provided in Section 10.11(a) of the Credit Agreement. 3 "Assignment of Earnings and Insurances" means an assignment between the Borrower or a Subsidiary Guarantor and the Agent, on behalf of the Lenders, as the same from time to time may be amended, restated, modified, supplemented or renewed, in each case in accordance with the terms thereof, pursuant to which the Borrower or such Subsidiary Guarantor assigns to the Agent, on behalf of the Lenders, all of its right, title and interest in, to and under the Earnings and Insurances with respect to its Vessel. Assignment of Insurances" means an assignment between Seabulk Towing, Inc. and the Agent, on behalf of the Lenders, as the same from time to time may be amended, restated, modified, supplemented or renewed, in each case in accordance with the terms thereof, pursuant to which Seabulk Towing, Inc. assigns to the Agent, on behalf of the Lenders, all of its right, title and interest in, to and under the Insurances with respect to such Vessels. "Attributable Debt" in respect of a sale and leaseback transaction means, at the time of determination, the present value of the obligation of the lessee for net rental payments during the remaining term of the lease included in such sale and leaseback transaction including any period for which such lease has been extended or may, at the option of the lessor, be extended. Such present value shall be calculated using a discount rate equal to the rate of interest implicit in such transaction, determined in accordance with GAAP. "Bankruptcy Code" means Title 11 of the United States Code entitled "Bankruptcy", as in effect from time to time. "Base Rate" means for any day, a rate per annum equal to the greater of (a) the Prime Rate and (b) the Federal Funds Effective Rate in effect on such day plus 1/2 of 1%. Any change in the Base Rate due to a change in the Prime Rate or the Federal Funds Effective Rate shall be effective from and including the effective day of such change in the Prime Rate or the Federal Funds Effective Rate, respectively. "Base Rate Loan" means any Loan designated as such by the Borrower in the related Drawdown Request at the time of the incurrence thereof, conversion or continuation thereto, which Loan shall bear interest based on the Base Rate. "Borrower" has the meaning set forth in the initial paragraph of this Agreement. "Business Day" means any day which is not a Saturday, Sunday or legal holiday or any other day on which banking institutions in New York, The Netherlands, Norway or Germany are authorized by law or executive order to close. "Capital Lease Obligation" means, at the time any determination is to be made, the amount of the liability in respect of a capital lease that would at that time be required to be capitalized on a balance sheet in accordance with GAAP. "CERCLA" means the Comprehensive Environmental Response Compensation and Liability Act of 1980, as same may be amended from time to time. "Change of Control" means a "change of control" or similar event under the Existing Indenture. 4 "Change in Law" means (a) the adoption of any law, rule or regulation after the Closing Date, (b) any change in law, rule or regulation or in the interpretation or application thereof by any Governmental Authority after the Closing Date or (c) compliance by any Lender with any request, guideline or directive (whether or not having the force of law) of any Governmental Authority made or issued after the Closing Date. "Closing Date" means September 13, 2002. "Code" means the Internal Revenue Code of 1986, as amended from time to time, and the regulations promulgated and rulings issued thereunder. Section references to the Code are to the Code, as in effect at the date of the Agreement and any subsequent provisions of the Code amendatory thereof, supplemental thereto or substituted therefor. "Collateral" means the Vessels, the Earnings on the Vessels (other than the Second Lien Vessels so long as MARAD is the first mortgagee and the Vessels owned by Seabulk Towing, Inc. so long as MARAD is the first mortgagee on a Second Lien Vessel owned by Seabulk Towing, Inc.), the Insurances on the Vessels (other than the Second Lien Vessels), the Mortgages, any Hedging Agreements, the Equity Interests from time to time subject to the Pledge Agreement and any other property in which a security interest is created in favor of the Agent for the benefit of the Lenders to secure the payment and performance of the Obligations of the Borrower and the Subsidiary Guarantors under the Credit Agreement. "Commitment" means either of and "Commitments" means both of the Tranche A Loan Commitment and the Tranche B Loan Commitment. "Commitment Fee" means, for the time period commencing on the Closing Date to and including the Maturity Date (or such earlier date as the Aggregate Loan Commitments shall have been terminated entirely), a commitment fee computed at the rate per annum equal to the Commitment Fee Percentage on the average daily excess amount of (a) the Aggregate Loan Commitments on such date over (b) the sum of, without duplication, (i) the aggregate principal amount of the Loans outstanding on such date, (ii) the aggregate amount available for drawings under the Letters of Credit, and (iii) the aggregate unpaid amount of all Reimbursement Obligations due and payable as of such date in respect of previous drawings made under the Letters of Credit. The Commitment Fee shall be calculated on the basis of a year of 360 days, in each case for the actual number of days (including the first day but excluding the last day) in the period for which such Commitment Fee is payable. "Commitment Fee Payment Date" the last Business Day of means each December, March, June and September, commencing on the Closing Date and ending on the Maturity Date. 5 "Commitment Fee Percentage" means the percentage set forth below if the Adjusted Funded Debt Ratio (expressed as a percentage) determined as of the most recent fiscal quarter is:

- ------------------------------------------------------------------------------------------------------ ADJUSTED FUNDED DEBT RATIO COMMITMENT FEE PERCENTAGE - ------------------------------------------------------------------------------------------------------ equal to or greater than 3.75 0.875% - ------------------------------------------------------------------------------------------------------ equal to or greater than 3.00, but less than 3.75 0.750% - ------------------------------------------------------------------------------------------------------ equal to or greater than 2.00, but less than 3.00 0.625% - ------------------------------------------------------------------------------------------------------ less than 2.00 0.500% - ------------------------------------------------------------------------------------------------------

"Company" means any corporation, limited liability company, partnership or other business entity. "Compulsory Acquisition" means, with respect to a Vessel, the requisition for title or other compulsory acquisition of such Vessel (otherwise than by requisition for hire), capture, seizure, detention or confiscation of such Vessel by any government or by Persons acting or purporting to act on behalf of any government or Governmental Authority. "Consolidated Funded Debt" means, with respect to any Person as of any date of determination, the sum, without duplication, of (i) the total amount of Indebtedness of such Person and its Subsidiaries, plus (ii) the total amount of Indebtedness of any other Person, to the extent that such Indebtedness has been Guaranteed by such Person or one or more of its Subsidiaries, plus (iii) the aggregate value of all Disqualified Shares of such Person, in each case, determined on a consolidated basis in accordance with GAAP. "Consolidated Interest Expense" means, for any period, the sum of: (A) the total interest expense of the Borrower and the Subsidiary Guarantors plus, to the extent not otherwise included in such interest expense (without duplication), and to the extent incurred by the Borrower or the Subsidiary Guarantors: (1) interest expense attributable to Capital Lease Obligations, the interest expense attributable to leases constituting part of a sale and leaseback transaction and the interest portion of rent expense associated with Attributable Debt in respect of the relevant lease giving rise thereto, determined as if such lease were a capitalized lease in accordance with GAAP and the interest component of any deferred payment obligations; (2) amortization of debt discount but not debt issuance costs; (3) non-cash interest expense; 6 (4) amortization of commissions, discounts and other fees and charges owed with respect to letters of credit and bankers' acceptance financing; (5) interest accruing on any Indebtedness of any other Person to the extent such Indebtedness is Guaranteed by (or secured by the assets of) the Borrower or any such Subsidiary Guarantor; (6) net costs associated with Hedging Obligations (excluding amortization of fees paid at the time or entering into such Hedging Obligations); plus (B) all dividends, whether paid or accrued and whether or not in cash, on any series of Preferred Shares of a Person or any of its Subsidiaries payable to a Person other than the Borrower or a Subsidiary Guarantor; plus (C) cash contributions to any employee stock ownership plan or other trust for the benefit of employees to the extent such contributions are used by such plan or trust to pay interest or fees to any Person (other than the Borrower and the Subsidiary Guarantors) in connection with Indebtedness incurred by such plan or trust to purchase share capital of the Borrower. "Consolidated Net Income" means, for any period for any Person, the net income (loss) of such Person and its consolidated Subsidiaries determined in accordance with GAAP; provided, however, that there shall not be included in determining such Consolidated Net Income: (A) any net income (or loss) of any Subsidiary if at the date of determination the making of distributions or the payment of dividends by such Subsidiary are not permitted without any prior governmental approval (that has not been obtained) or, directly or indirectly, by operation of the terms of its charter or other organizational document or any agreement, instrument, judgment, decree, order, statute, rule or governmental regulation applicable to that Subsidiary or its stockholders except: (i) subject to the limitations contained in Clause (2) and (3) below, the Borrower's equity in the net income of any such Subsidiary for such period shall be included in such Consolidated Net Income up to the aggregate amount of cash distributed by such Subsidiary during such period to the Borrower or a Subsidiary as a dividend or other distribution (subject, in the case of a dividend to a Subsidiary, to the limitation contained in this clause); and (ii) the Borrower's equity in a net loss of any such Subsidiary for such period shall be included in determining such Consolidated Net Income; 7 (B) any gain or loss, together with any related provision for taxes on such gain or loss, realized upon (i) a sale or other disposition of any assets of the Borrower, its consolidated Subsidiaries or any other Person (including pursuant to any sale and leaseback transaction) which is not sold or otherwise disposed of in the ordinary course of business, (ii) the sale or other disposition of any securities of any Person not sold or otherwise disposed of in the ordinary course of business or (iii) the extinguishment of any Indebtedness of any Person; (C) any extraordinary gain or loss, together with any related provision for taxes on such extraordinary gain or loss. "Consolidated Tangible Net Worth" of any Person, as of any date of determination, means the consolidated shareholders' equity of such Person as determined in accordance with GAAP less (to the extent included) amounts attributable to Disqualified Shares of such Person plus (i) all expenses or charges incurred as a result of the transactions contemplated in conjunction with the Facility plus (ii) US $4,100,000 the amount associated with the premium and indemnity club charge booked retroactively in July 2002 against the quarter ended December 31, 2001) less (iii) an amount equal to US $4,100,000 amortized over a period of 24 months beginning with the month of July 2002. "Contract" shall have the meaning provided in Section 3.04(a) of the Credit Agreement. "Counterparty" means any Lender or any Affiliate of a Lender who enters into a Hedging Agreement with the Borrower. "Credit Event" means the making of any Loan or the issuance of any Letter of Credit. "Credit Party" means either of and "Credit Parties" means both the Borrower and each Subsidiary Guarantor. "Customary Permitted Liens" means (A) Liens for taxes, assessments or charges of any government authority or claims not yet due or which are being contested in good faith by appropriate proceedings and with respect to which adequate reserves or other appropriate provisions are being maintained in accordance with the provisions of GAAP; (B) statutory Liens of landlords and Liens of carriers, warehousemen, mechanics, materialmen and other Liens imposed by law created in the ordinary course of business for amounts which are not past due for more than 30 days or which are being contested in good faith by appropriate proceedings and with respect to which adequate reserves or other appropriate provisions are being maintained in accordance with GAAP or which in the aggregate do not detract from the value of the Borrower or any Subsidiary's property or assets or materially impair the use thereof in the operation of the business of the Borrower or such Subsidiary; 8 (C) licenses, leases or subleases granted to other Persons in the ordinary course of business not materially interfering with the conduct of the business of the Borrower and its Subsidiaries taken as a whole; (D) easements, rights-of-way, restrictions (including zoning restrictions), encroachments, protrusions and other similar charges or encumbrances, and minor title deficiencies, in each case whether now or hereafter in existence, not securing obligations for the payment of borrowed money and not materially interfering with the conduct of the business of the Borrower or any of its Subsidiaries; (E) rights of tenants, subtenants, franchisees or parties in possession (other than a debtor in possession, trustee in bankruptcy or receiver of the Borrower), or options or rights of first refusal, whether pursuant to leases, subleases, franchise agreements, other occupancy agreements or otherwise, if such rights were vested on the Closing Date or created thereafter in the ordinary course of business in transactions permitted under the Credit Agreement; (F) any interest or title of a lessor, sublessor, licensee or licensor under any lease or license agreement permitted by the Credit Agreement; (G) Liens in favor of a banking institution arising as a matter of law encumbering deposits (including the right of set-off) held by such banking institutions incurred in the ordinary course of business and which are within the general parameters customary in the banking industry; (H) Liens in favor of customs and revenue authorities arising as a matter of law to secure the payment of customs duties in connection with the importation of goods; (I) Liens arising out of conditional sale, title retention, consignment or similar arrangements for the purchase or sale of goods entered into by the Borrower or any of its Subsidiaries in the ordinary course of business in accordance with the past practices of the Borrower and its Subsidiaries; (J) deposits made to secure statutory obligations in the form of excise taxes; . (K) Liens incurred or deposits or pledges made in the ordinary course of business in connection with workers' compensation, unemployment insurance and other types of social security, old age or other similar obligations, or to secure the performance of tenders, statutory obligations, surety and appeal bonds, bids, leases, government contracts, performance and return-of-money bonds and other similar obligations (exclusive of obligations for the payment of borrowed money); and (L) Liens resulting from operation of law with respect to any judgments or orders not constituting a Default. 9 "Default" shall mean an Event of Default or any condition or event which, with notice or lapse of time or both, would constitute an Event of Default. "Disbursement Date" shall have the meaning provided in Section 3.02 of the Agreement. "Disqualified Shares" means any Share Capital that, by its terms (or by the terms of any security into which it is convertible, or for which it is exchangeable, in each case at the option of the holder of the Share Capital), or upon the happening of any event, matures or is mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or redeemable at the option of the holder of the Share Capital, in whole or in part, on or prior to the date that is 91 days after the Maturity Date. "Dollars" and the sign "$" shall each mean freely transferable lawful money of the United States (expressed in dollars). "Drawdown Date" means each Business Day designated by the Borrower in a Drawdown Request, as the day on which a Revolving Loan or a Term Loan, as the case may be, subject to the terms and conditions of the Agreement, is requested to be made by the Lenders to the Borrower; provided, however, a Drawdown Date with respect to a Revolving Loan shall not occur later than the day immediately preceding the Maturity Date and a Drawdown Date with respect to a Term Loan shall not occur later the date that is the four month anniversary of the Closing Date. "Drawdown Request" means, with respect to any borrowing, conversion or continuation of a Loan, a written request, substantially in the form of Exhibit C to the Credit Agreement executed by an Executive Officer of the Borrower wherein the Borrower indicates, among other things, (a) the proposed Drawdown Date, (b) the amount of such Loan, (c) the initial Interest Period for such Loan, (d) whether the Loan is a Revolving Loan or a Term Loan, (e) whether such Loan is a Base Rate Loan or a LIBOR Loan, (f) in the case of a borrowing, the disbursement instructions therefore and (g) in the case of the borrowing of a Term Loan, that (i) the proceeds thereof are being used to purchase Existing Senior Notes, (ii) the seller of such Existing Notes and (iii) the purchase price and principal amount of such Existing Notes. "Earnings" means and includes all present and future moneys and claims which are earned by or become payable to or for the account of the Borrower or the Subsidiary Guarantors in connection with the operation or ownership of the Vessels, including but not limited to freights, passage and hire moneys, remuneration for salvage and towage services, demurrage and detention moneys, all present and future moneys and claims payable to the Borrower or the Subsidiary Guarantors in respect of any breach or variation of any charterparty or contract of affreightment in respect of the Vessels, and all moneys and claims payable to the Borrower or the Subsidiary Guarantors in respect of the requisition for hire of the Vessels; provided, however, that the use of this term shall create no security interests with respect to the earnings of the Second Lien Vessels owned by the Borrower so long as MARAD is the first mortgagee thereon or on any Vessels now or in the future owned by Seabulk Towing, Inc. so long as MARAD is the first mortgagee on any Second Lien Vessel owned by Seabulk Towing, Inc. 10 "EBITDA" means, with respect to the Borrower and the Subsidiary Guarantors for any period, the Consolidated Net Income of such Person for such period plus the following to the extent deducted in calculating such Consolidated Net Income: (A) all Federal, state and local and all foreign income tax expense; (B) Consolidated Interest Expense; (C) depreciation expense and amortization expense; (D) the sum of any non-cash costs, charges or expenses attributable to the accrual of or reserve for cash charges in any future period for pension liabilities of the Borrower and the Subsidiary Guarantors; (E) an amount equal to any non-cash loss or gain realized in connection with an asset sale; (F) an amount equal to the fees, expenses and other costs incurred by the Borrower and the Subsidiary Guarantors in connection with the transactions contemplated in conjunction with the Facility; and (G) to the extent the Borrower's accounting policy with respect to the capitalization of dry-docking costs is changed, an amount equal to any expensed dry-docking cost. Notwithstanding the foregoing, amounts relating to a Subsidiary Guarantor shall be added to Consolidated Net Income to compute EBITDA only to the extent (and in the same proportion) that the net income (or loss) of such Subsidiary Guarantor was included in calculating Consolidated Net Income. "Eligible Lender" means and include a commercial bank, financial institution or other institutional "accredited investor" (as defined in Regulation D of the Securities Act). "Environmental Claims" means any and all administrative, regulatory or judicial actions, suits, demands, demand letters, directives, claims, liens, notices of noncompliance or violation, investigations or proceedings relating in any way to any Environmental Law or any permit issued, or any approval given, under any such Environmental Law (hereafter, "Claims"), including, without limitation, (a) any and all Claims by governmental or regulatory authorities for enforcement, cleanup, removal, response, remedial or other actions or damages pursuant to any applicable Environmental Law, and (b) any and all Claims by any third party seeking damages, contribution, indemnification, cost recovery, compensation or injunctive relief in connection with alleged injury or threat of injury to health, safety or the environment due to the presence of Hazardous Materials. "Environmental Law" means any applicable federal, state, provincial, foreign or local statute, law, rule, regulation, ordinance, code, binding and enforceable guideline, binding and enforceable written policy or rule of common law now or hereafter in effect and in each case as amended, or any binding judicial or administrative interpretation thereof, including any judicial 11 or administrative order, consent decree or judgment, to the extent binding on the Borrower or any of its Subsidiaries, relating to the environment, employee health and safety or Hazardous Materials, including, without limitation, CERCLA; RCRA; the Federal Water Pollution Control Act, 33 USC. ss. 1251 et seq.; the Toxic Substances Control Act, 15 USC. ss. 2601 et seq.; the Clean Air Act, 42 USC. ss. 7401 et seq.; the Safe Drinking Water Act, 42 USC. ss. 3803 et seq.; the Oil Pollution Act of 1990, 33 USC. ss. 2701 et seq.; the Emergency Planning and the Community Right-to-Know Act of 1986, 42 USC. ss. 11001 et seq.; the Hazardous Material Transportation Act, 49 USC. ss.1801 et seq.; and the Occupational Safety and Health Act, 29 USC. ss.651 et seq. (to the extent it regulates occupational exposure to Hazardous Materials); any state and local or foreign counterparts or equivalents, in each case as amended from time to time. "Equity Interests" means Share Capital and all warrants, options or other rights to acquire Share Capital (but excluding any debt security that is convertible into, or exchangeable for, Share Capital). "ERISA" means the Employee Retirement Income Security Act of 1974, as amended from time to time, and the regulations promulgated and rulings issued thereunder. Section references to ERISA are to ERISA, as in effect at the date of the Agreement, and any subsequent provisions of ERISA, amendatory thereof, supplemental thereto or substituted therefor. "ERISA Affiliate" means each person (as defined in Section 3(9) of ERISA) which together with the Borrower or a Subsidiary of the Borrower would be deemed to be a "single employer" (i) within the meaning of Section 414(b), (c), (m) or (o) of the Code or (ii) as a result of the Borrower or a Subsidiary of the Borrower being or having been a general partner of such person. "Event of Default" means any of the events described in Article IX of the Agreement. "Excluded Taxes" any tax imposed on or measured by the net income or profits of a Lender, or any franchise tax based on the net income or net profits of a Lender, in either case pursuant to the laws of (a) the United States of America, (b) any jurisdiction (or political subdivision thereof) of which the Agent, any Arranger, the Issuing Lender or any other Lender, as the case may be, is a citizen or is resident or in which such Lender has a permanent establishment (or is otherwise engaged in the active conduct of its banking business through an office or a branch) which is such Lender's applicable Lending Office, (c) the jurisdiction (or any political subdivision thereof) in which the Agent, any Arranger, the Issuing Lender or any other Lender is organized, and (d) any jurisdiction (or political subdivision thereof) in which the Agent, any Arranger, the Issuing Lender or any other Lender is presently doing business which taxes are imposed solely as a result of doing business in such jurisdiction.. "Executive Officer" means, with respect to a Person, any officer having the authority to bind such Person pursuant to the terms of the constitutive documents of such Person. "Existing Credit Agreement" means the Credit Agreement, dated as of December 15, 1999, together with the various amendments and supplements thereto, among Seabulk International, Inc. (formerly known as Hvide Marine Incorporated), a corporation existing under the laws of Delaware, as borrower, Bankers Trust Company, as administrative agent for the 12 lenders from time to time parties thereto, Deutsche Bank Securities, Inc., as lead arranger and book manager, and MeesPierson Capital Corp., as syndication agent and co-arranger, and the lenders a party thereto. "Existing Indebtedness" means the Indebtedness incurred under the Existing Credit Agreement and the Existing Indenture. "Existing Indenture" means the Indenture, dated December 15, 1999, between Seabulk International, Inc. (formerly known as Hvide Marine Incorporated) and State Street Bank and Trust Company of Connecticut, N.A., as trustee, as the same may be modified, amended, restated, supplemented or renewed from time to time in accordance with the terms hereof and thereof. "Existing Senior Notes" means the Borrower's senior secured second lien notes, issued pursuant to the Existing Indenture, as the same may be modified, supplemented, restated, amended or renewed from time to time pursuant to the terms hereof and thereof. "Facility" means the $180,000,000 senior secured credit facility created pursuant to the Agreement consisting of the Revolving Loans, the Term Loans and the Letters of Credit. "Facing Fee" shall have the meaning provided in Section 2.16(b) of the Credit Agreement. "Fair Market Value" means, with respect to a Vessel, the fair market sale value as of a specified date of such Vessel determined on a standalone basis free and clear of any Liens and charters and with no value given to pooling arrangements that would be obtained in an arm's-length transaction between an informed and willing seller under no compulsion to sell and an informed and willing buyer under no compulsion to buy, as determined by an Appraiser selected by the Agent at the expense of the Borrower; provided, however, that the Borrower shall have the option to select an additional Appraiser to make such determination and, in such case, the "Fair Market Value" shall be the average of the fair market sale value determined by the Agent's Appraiser and the fair market sale value determined by the Borrower's Appraiser. The Fair Market Value of the Seabulk Trader and the Seabulk Challenge shall be an amount equal to the excess of (a) 50% of the fair market value determined as described in the immediately preceding sentence over (b) the discharge amount of the first priority mortgages thereon. "Federal Funds Effective Rate" means, for any day, the weighted average (rounded upwards, if necessary, to the next 1/100 of 1%) of the rates on overnight federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers, as published on the next succeeding Business Day by the Federal Reserve Bank of New York, or, if such rate is not so published for any day that is a Business Day, the average (rounded upwards, if necessary, to the next 1/100 of 1%) of the quotations for such day of such transactions received by the Agent from three federal funds brokers of recognized standing selected by it. "Federal Reserve Board" means the Board of Governors of the Federal Reserve System or any successor thereto. 13 "Foreign Pension Plan" means any plan, fund (including, without limitation, any superannuation fund) or other similar program established or maintained outside the United States of America by the Borrower or any one or more of its Subsidiaries primarily for the benefit of employees of the Borrower or such Subsidiaries residing outside the United States of America, which plan, fund or other similar program provides, or results in, retirement income, a deferral of income in contemplation of retirement or payments to be made upon termination of employment, and which plan is not subject to ERISA or the Code. "Fortis" has the meaning set forth in the initial paragraph of the Agreement. "GAAP" means generally accepted accounting principles as in effect from time to time in the United States of America consistently applied, except as disclosed in the financial statements of the Borrower. "Governmental Authority" means any government, parliament, legislature, regulatory authority, agency, commission, tribunal, department, commission, board, instrumentality, court, arbitration board or arbitrator or other law, regulation or rule making entity (including a Minister of the Crown) having or purporting to have jurisdiction on behalf of, or pursuant to the laws of, any country in which any Credit Party is organized, continued, amalgamated, merged or otherwise created or established or in which any Credit Party carries on business or holds property, or any province, territory, state, municipality, district or political subdivision of any such country or of any such state, province or territory of such country. "Guarantee" means a guarantee other than by endorsement of negotiable instruments for collection in the ordinary course of business, direct or indirect, in any manner including, without limitation, by way of a pledge of assets or through letters of credit or reimbursement agreements in respect thereof, of all or any part of any Indebtedness. "Hazardous Materials" means (a) any petroleum or petroleum products, radioactive materials, asbestos in any form that is or could become friable, urea formaldehyde foam insulation, transformers or other equipment that contain dielectric fluid containing levels of polychlorinated biphenyls, and radon gas; (b) any chemicals, materials or substances defined as or included in the definition of "hazardous substances," "hazardous waste," "hazardous materials," "extremely hazardous substances," "restricted hazardous waste," "toxic substances," "toxic pollutants," "contaminants," "dangerous goods," or "pollutants," or words of similar import, under any applicable Environmental Law; and (c) any other chemical, material or substance, exposure to which is prohibited, limited or regulated by any governmental authority under Environmental Laws. "Hedging Agreement" means any agreement entered into by and between the Borrower and any Lender or any Affiliate of any Lender pursuant to which the Borrower has the ability to reduce exposure to currency or interest rate risks, as any such Hedging Agreement from time to time may be amended, restated, modified, supplemented or renewed. "Hedging Obligations" means, with respect to any specified Person, the net amount of the obligations of such Person under interest rate swap agreements, interest rate cap agreements, interest rate collar agreements, foreign currency exchange agreements, commodity price 14 protection agreements and other agreements or arrangements designed to protect such Person against fluctuations in interest rates, foreign currency exchange rates and commodity prices. "Indebtedness" means, with respect to a Person, any indebtedness of such Person, whether or not contingent: (A) in respect of borrowed money; (B) evidenced by bonds, notes, debentures, promissory notes, loan agreements or similar instruments or letters of credit (other than obligations with respect to letters of credit securing obligations entered into in the ordinary course of business of such Person to the extent such letters of credit are not drawn upon or, if and to the extent drawn upon, such drawing is reimbursed no later than the tenth Business Day following payment on the letter of credit)(or reimbursement agreements in respect thereof); (C) in respect of bankers' acceptances; (D) representing Capital Lease Obligations; (E) representing the balance deferred and unpaid of the purchase price of any property, except any such balance that constitutes an accrued expense or trade payable; (F) representing any Hedging Obligations; or (G) representing the maximum fixed repurchase price of Disqualified Shares; if and to the extent any of the preceding items (other than letters of credit and Hedging Obligations) would appear as a liability upon a balance sheet of the specified Person prepared in accordance with GAAP. In addition, the term "Indebtedness" includes all Indebtedness of others secured by a Lien on any asset of the specified Person (whether or not such Indebtedness is assumed by the specified Person) and, to the extent not otherwise included, the Guarantee by the specified Person of any indebtedness of any other Person. The amount of any Indebtedness outstanding as of any date shall be: (A) in the case of any Indebtedness issued with original issue discount, the accreted value of the Indebtedness; and (B) in the case of any other Indebtedness, the principal amount of the Indebtedness, together with any interest on the Indebtedness that is more than 30 days past due. "Indemnified Liabilities" shall have the meaning provided in Section 3.06 of the Credit Agreement. 15 "Indemnified Party" means each of and "Indemnified Parties" means collectively the Agent, each Arranger and each Lender and each of their respective directors, officers, employees and agents and any Person who controls any of them within the meaning of the federal, state and foreign securities laws. "Indemnified Taxes" means any Taxes (including, without limitation, income taxes withheld at source) other than Excluded Taxes. "Initial Loan" means the first Loan made pursuant to Article II of the Credit Agreement. "Insurances" includes all policies and contracts of insurance whatsoever (which expression includes all entries of the Vessels in a protection and indemnity or war risks association) which are from time to time taken out or entered into in respect of the Vessels and their Earnings or otherwise in connection with the Vessels; provided, however, that the use of this term shall create no security interests with respect to the insurances relating to the Second Lien Vessels so long as MARAD is the first mortgagee thereon. "Interest Payment Date" means the last day of each Interest Period; provided, however, that if any Interest Period exceeds three (3) months, interest shall also be paid on the last day of each three (3) month period during such Interest Period. "Interest Period" means (a) with respect to any Loan, the one, three or six-month period (or, if agreed to by all of the Lenders, any other period), selected by the Borrower pursuant to Article II of the Credit Agreement, commencing on the Drawdown Date, with respect to the first Interest Period for such Loan, and on the termination of the prior Interest Period, with respect to all other Interest Periods; provided, however, that notwithstanding Article II of the Credit Agreement, the Borrower shall not select an Interest Period for any Loan, which includes and extends beyond the Maturity Date; and provided further, that any Interest Period which would otherwise end on a day that is not a Business Day shall end on the next succeeding Business Day unless such next succeeding Business Day is in the following calendar month, in which case such Interest Period shall end on the immediately preceding Business Day. "Interest Rate" means either (a) a rate per annum equal to the Base Rate for the relevant Interest Period plus the Applicable Margin (computed on the basis of a year of 365 days for the actual number of days--including the first day but excluding the last day--occurring in the period for which such interest is payable) or (b) a rate per annum equal to the Adjusted LIBOR for the relevant Interest Period plus the Applicable Margin (computed on the basis of a year of 360 days for the actual number of days--including the first day but excluding the last day--occurring in the period for which such interest is payable). "Investment" means any direct or indirect advance, loan or other extension of credit (including by way of guarantee or similar arrangement) or capital contribution to (by means of any transfer of cash or other property to others or any payment for property or services for the account or use of others), or any purchase or acquisition of capital stock (or other equity interest), Indebtedness or other similar instruments. "ISM Code" shall have the meaning provided in Section 6.20(b) of the Credit Agreement. 16 "Issuance Date" means a Business Day designated by the Borrower in an Issuance Request as the day on which a Letter of Credit, subject to the terms and conditions of the Credit Agreement, is requested to be issued by the Issuing Lender or an existing Letter of Credit is requested to be extended; provided, however, an Issuance Date shall not occur later than thirty (30) days immediately preceding the Maturity Date. "Issuing Lender" means Fortis Capital Corp. or one of its Affiliates, in its capacity as issuer of any Letter of Credit, or any successors thereto. "Issuance Request" means, with respect to a Letter of Credit, a written request, substantially in the form of Exhibit D to the Agreement executed by an Executive Officer of the Borrower wherein the Borrower indicates, among other things, (i) the Issuance Date, (ii) the Stated Amount of the Letter of Credit, (iii) the Stated Expiration Date, it being expressly agreed that unless the Issuing Lender otherwise agrees no Letter of Credit shall contain a provision for the automatic renewal or extension thereof, (iv) the beneficiary of such Letter of Credit, (v) whether such Letter of Credit is a Standby Letter of Credit or Trade Letter of Credit and (vi) the terms and conditions, if any, required for draws thereunder. "L/C Commitment" means the Issuing Lender's obligation to issue Letters of Credit for the account of the Borrower in an aggregate amount not to exceed $10,000,000. "L/C Obligations" means on any date, an amount equal to the sum of (i) the aggregate Stated Amount of all issued and outstanding Letters of Credit, plus (ii) the then aggregate amount of all unpaid Reimbursement Obligations. "L/C Participant" means all Lenders other than the Issuing Lender. "Lender and Lenders" have the meanings set forth in the initial paragraph of the Agreement. "Lending Office" means, with respect to any Lender, the office or offices of the Lender specified opposite its name on the applicable signature page to the Loan Agreement, or such other office or offices of the Lender as it may from time to time notify the Borrower and the Agent. "Letter of Credit" means a Standby Letter of Credit or Trade Letter of Credit issued pursuant to an Issuance Request; provided, that the aggregate amount available to be drawn under all such Letters of Credit shall not exceed the L/C Commitment. "Letter of Credit Fee" shall have the meaning provided in Section 2.16(b) of the Credit Agreement. "LIBOR" means, with respect to an Interest Period and any Loan to be made, continued as or converted into a LIBOR Loan, the rate for a period of time comparable to the numbers of days in such Interest Period which appears on the Telerate Page 3750 (or such other page as may replace the page on that service for the purpose of displaying London inter-bank market rates) at or about 11:00 a.m., London time, on the date that is two London Banking Days preceding the date of calculation. If, at any time of determination, two such offered rates appear on the 17 Telerate Page 3750, LIBOR will be the arithmetic mean of such offered rates (rounded to the nearest.0001 percentage point). If, at any time of determination, the Telerate Page 3750 or any replacement page is not available, LIBOR will be calculated as the average (rounded upward, if necessary to the next higher 1/16 of 1%) of the respective rates per annum at which deposits in United States dollars are offered to each of three reference banks of internationally recognized standing selected by the Agent in the London interbank market for Dollar deposits of amounts comparable to the principal amount of the LIBOR Loan to which such LIBOR rate is to be applicable with maturities comparable to the Interest Period for which such LIBOR rate will apply at approximately 11:00 a.m., London time, on the date that is two London (US$) Banking Days preceding the date of calculation. The determination of LIBOR by the Agent shall be conclusive in the absence of manifest error. "LIBOR Loan" means a Loan that bears interest based on Adjusted LIBOR. "Lien" means mean any mortgage, pledge, hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or other), preference, priority or other security agreement of any kind or nature whatsoever (including, without limitation, any conditional sale or other title retention agreement, any financing or similar statement or notice filed under the UCC or any other applicable personal property security legislation in any jurisdiction or any other similar recording or notice statute, and any lease having substantially the same effect as any of the foregoing). "Lightship Tanker Entities" means Lightship Tanker Holdings, L.L.C., Lightship Partners, L.P., Lightship Tankers I, L.L.C., Lightship Tankers II, L.L.C., Lightship Tankers III, L.L.C., Lightship Tankers IV, L.L.C., Lightship Tankers V, L.L.C., Delaware Tanker Holdings I, Inc., Delaware Tanker Holdings II, Inc., Delaware Tanker Holdings III, Inc., Delaware Tanker Holdings IV, Inc. and Delaware Tanker Holdings V, Inc. "Loan" means either of, and "Loans" means both of the Term Loans and the Revolving Loans. "London Banking Day" means any day on which dealings in deposits in United States dollars are carried on in the London interbank market and on which commercial banks are open for domestic and international business (including dealings in United States dollar deposits) in London and New York. "Loss Date" means with respect to a Vessel and a Total Loss, the Business Day following the earlier of (a) receipt by the related Subsidiary Guarantor of insurance, condemnation or other proceeds with respect to such Total Loss and (b) 180 days after the occurrence of such Total Loss. "Margin Stock" shall have the meaning provided in Regulation U of the Board of Governors of the Federal Reserve System. "MARAD" means the United States Maritime Administration. "Material Adverse Change" means any circumstance or event or any set of circumstances or events which (a) has or could reasonably be expected to have any material adverse effect 18 whatsoever upon the validity or enforceability of any Transaction Document, (b) is or could reasonably be expected to be material and adverse to the condition (financial or otherwise) or business operations of the Borrower or any Subsidiary Guarantor, each individually or taken together as a whole, (c) materially impairs or could reasonably be expected to materially impair the ability of the Borrower or any of the Subsidiary Guarantors to perform their respective obligations under the Transaction Documents, or (d) materially impairs or could reasonably be expected to materially impair the ability of the Agent to enforce any of the Transaction Documents or any Lender to enforce its Note. "Maturity Date" means the fifth (5th) anniversary of the Closing Date or if such date is not a Business Day, the Business Day immediately preceding such date. "Minimum Borrowing Amount" means (a) for Revolving Loans, $1,000,000 and integral multiples of $100,000 thereafter and (b) for Letters of Credit, $50,000. "Mortgage" means, with respect to a Vessel, the first registered ship mortgage (or, in the case of the Second Lien Vessels, a second registered ship mortgage) on such Vessel substantially in the form of Exhibit E-I (or, in the case of the Second Lien Vessels, Exhibit E-II) to the Agreement, granted by the related Subsidiary Guarantor to the Agent, on behalf of the Lenders, as such Mortgage from time to time may be amended, restated, modified, supplemented or renewed in accordance with the terms of such Mortgage. "NIB" has the meaning set forth in the initial paragraph of the Agreement. "Note" means either of, and "Notes" means both of, a Revolving Loan Note and a Term Loan Note, as the same from time to time may be amended, restated, modified, supplemented or renewed. "Obligations" means any and all of the obligations of the Borrower and each of the Subsidiary Guarantors, whether due or to become due, matured or unmatured, liquidated or unliquidated, contingent or non-contingent, and all covenants and duties regarding such amounts, of any kind or nature, present or future, whether or not evidenced by any note, agreement or other instrument, in each case arising under the Agreement or under any Note, Hedging Agreement, under any of the Transaction Documents or under any currency hedging agreement arranged by a Lender or an Affiliate of a Lender. This term includes, without limitation, all principal, interest (including interest that accrues after the commencement by or against the Borrower or any Subsidiary Guarantor of any action under the Bankruptcy Code), L/C Obligations, fees, including, without limitation, any and all arrangement fees, loan fees, agent fees and any and all other fees, expenses, costs or other sums (including attorney costs) payable by the Borrower or the Subsidiary Guarantors under any of the Transaction Documents. "Originating Lender" shall have the meaning provided in Section 10.11(d) of the Credit Agreement. "Other Taxes" means any and all current or future stamp or documentary taxes or other excise or property taxes, charges or similar levies arising from any payment made hereunder or under the Notes or from the execution, delivery, registration, enforcement, of or otherwise with respect to, any Transaction Document. 19 "Overdue Rate" means, with respect to a Note, a rate per annum for each day from the date of a default in any payment hereunder until such payment shall be paid in full equal to (a) in the case of any LIBOR Loan, the rate that would be applicable under Section 2.06(a) to such LIBOR Loan plus 2% per annum, and (b) in the case of any other overdue amount, the rate that would be applicable under Section 2.06(a) to a Base Rate Loan, plus 2% per annum. "Participant" shall have the meaning provided in Section 10.11(d) of the Credit Agreement. "PBGC" means, the Pension Benefit Guaranty Corporation. "Permitted Encumbrances" means: (a) liens or rights in rem for current crew's wages, for general average or salvage (including contract salvage) or for wages of stevedores employed by the charterer, the operator, agent or master of a Vessel which in each case (i) are unclaimed or (ii) shall not have been due and payable for ten (10) days after termination of a voyage; (b) liens or rights in rem for repairs or incident to current operations of a Vessel (other than those referred to in clause (a) above) or with respect to any change, alteration or addition made to such Vessel, but only to the extent in each case that such liens are based on claims not yet delinquent and do not involve any risk of a sale, forfeiture, hindrance to operation or loss of such Vessel; (c) liens for amounts that are not delinquent or that are due and unpaid for not more than thirty (30) days after such amounts shall become due that do not involve any risk of a sale, forfeiture, hindrance to operation or loss of a Vessel; (d) liens for amounts being contested by the applicable Subsidiary Guarantor in good faith by appropriate procedures, diligently prosecuted or appealed which do not involve any risk of a sale, forfeiture, hindrance to operation or loss of a Vessel; (e) liens covered by valid policies of insurance held with respect to a Vessel and meeting the requirements of the related Mortgage; (f) the lien of the Mortgages and the other Transaction Documents; (g) any other liens expressly permitted by any of the Transaction Documents; and (h) liens and security interests in existence as of the Closing Date granted in favor of the United States of America, represented by the Secretary of Transportation, acting by and through the Maritime Administrator, pursuant to the first priority mortgages, security agreements and other documents so long as such liens and security interests relate solely to the Second Lien Vessels. "Permitted Pledge Liens" means: (A) Liens for taxes, assessments or other governmental charges or levies not yet due or which are being contested in good faith by appropriate action or proceedings and with respect to which adequate reserves are being maintained; (B) Liens resulting from operation of law with respect to any judgments or orders not constituting a Default; and (C) Liens created by the Pledge Agreement and the other Transaction Documents. "Person" means an individual, a corporation, a partnership, an association, a trust, a limited liability company or any other entity or organization, including a government or political subdivision or an agency or instrumentality thereof. 20 "Plan" means any pension plan, as defined in Section 3(2) of ERISA, which is maintained or contributed to by (or to which there is an obligation to contribute of), the Borrower or a Subsidiary of the Borrower or an ERISA Affiliate, and each such plan for the five year period immediately following the latest date on which the Borrower, a Subsidiary of the Borrower or an ERISA Affiliate maintained, contributed or had an obligation to contribute to such plan. "Pledge Agreement" means the pledge agreement from the Borrower to the Agent on behalf of the Lenders as may be amended, restated, modified, supplemented or renewed from time to time in accordance with the terms thereof pursuant to which the Borrower pledges all of the issued and outstanding Equity Interests in the Subsidiary Guarantors to the Agent on behalf of the Lenders. "Preferred Shares" of any Person means any Equity Interests of such Person that have any rights which are preferential to the rights of any other Equity Interests of such Person with respect to dividends or redemptions or upon liquidation. "Prime Rate" means the rate of interest per annum publicly announced from time to time by Fortis Financial Services LLC as its prime rate in effect at its principal office in New York, New York; each change in the Prime Rate shall be effective from and including the date such change is publicly announced as being effective. "Proportionate Share" means (a) with respect to the Tranche A and a Lender, a fraction expressed as a percentage, the numerator of which shall be the amount of such Lender's Tranche A Loan Commitment and the denominator of which shall be the Aggregate Tranche A Loan Commitment or, if the Aggregate Tranche A Loan Commitment is terminated, a fraction expressed as a percentage the numerator of which is such Lender's outstanding Tranche A Loan Commitment and the denominator of which is the amount of the then outstanding Revolving Loans and Stated Amount of the then outstanding Letters of Credit and (b) with respect to the Tranche B and a Lender, a fraction expressed as a percentage, the numerator of which shall be the amount of such Lender's Tranche B Loan Commitment and the denominator of which shall be the Aggregate Tranche B Loan Commitment or, if the Aggregate Tranche B Loan Commitment is terminated, a fraction expressed as a percentage the numerator of which is such Lender's outstanding Tranche B Loan Commitment and the denominator of which is the amount of the then outstanding Term Loans. "Qualified Substitute Vessel" means a vessel which (a) has a Fair Market Value which is equal to or greater than that of the Vessel for which it is being substituted and (b) is of a similar type and classification as the Vessel for which it is being substituted. "Real Property" means all of the right, title and interest of any Person in and to land, improvements and fixtures, including leaseholds. "Reduction Amount" means either of the Tranche A Reduction Amount or the Tranche B Reduction Amount. "Reduction Date" means any Tranche A Reduction Date or Tranche B Reduction Date. 21 "Register" shall have the meaning provided in Section 2.10(a) of the Agreement. "Regulation D" means Regulation D of the Board of Governors of the Federal Reserve System as from time to time in effect and any successor to all or a portion thereof establishing reserve requirements. "Reimbursement Obligation" shall have the meaning provided in Section 3.04 of the Agreement. "Release" means any spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting, escaping, leaching, dumping, disposing or migration into the environment. "Reportable Event" means an event described in Section 4043(c) of ERISA with respect to a Plan that is subject to Title IV of ERISA other than those events as to which the 30-day notice period is waived under subsection ..22, .23, .25, .27, or .28 of Section 4043 of the Pension Benefit Guaranty Corporation Regulations. "Required Currency" shall have the meaning provided in Section 11.22 of the Credit Agreement. "Restricted Payment" shall have the meaning provided in Section 7.07 of the Credit Agreement "Requisite Lenders" means any combination of Lenders whose combined Proportionate Share (and voting interest with respect thereto) of all amounts outstanding under the Credit Agreement is greater than 50% of all such amounts outstanding. "Reserve Percentage" means with respect to Adjusted LIBOR and an Interest Period, the maximum reserve percentage (expressed as a decimal, rounded upward to the nearest 1/100th of one percent (0.01%)) in effect on the date LIBOR for such Interest Period is determined (whether or not applicable to any Lender) under regulations issued from time to time by the Federal Reserve Board for determining the maximum reserve requirement (including any emergency, supplemental or other marginal reserve requirement) with respect to Eurocurrency funding having a term comparable to such Interest Period. "Responsible Officer" means, with respect to a Credit Party, the Chief Financial Officer, the Chief Executive Officer (or any person having a similar capacity), any senior vice-president, director of treasury and finance and any other officer designated by the Chief Financial Officer of such Credit Party acceptable to the Agent. "Returns" shall have the meaning provided in Section 4.09 of the Credit Agreement. "Revolving Loan" means an extension of credit pursuant to Section 2.01(b) of the Credit Agreement. The Revolving Loans shall not include any L/C Obligations. "Revolving Loan Note" shall have the meaning provided in Section 2.01(f) of the Credit Agreement. 22 "SEC" means the Securities and Exchange Commission or any successor thereto. "Second Lien Vessels" means the Seabulk Challenge, Seabulk Trader, Condor, Eagle II and Hawk. "Security Documents" means all contracts, instruments and other documents now or hereafter executed and delivered in connection with the Credit Agreement, pursuant to which liens and security interests are granted to the Agent for the benefit of the Lenders, including without limitation, each Mortgage, each Assignment of Earnings and Insurances and each Pledge Agreement. "Share Capital" means: (A) in the case of a corporation or a company, any and all shares, interest, participations, or other equivalent (however designated and whether or not voting) of share capital or corporate stock; (B) in the case of an association or business entity, any and all shares, interests, participations, rights or other equivalents (however designated) of share capital or corporate stock; (C) in the case of a partnership or limited liability company, partnership or membership interests (whether general or limited); and (D) any other interest or participation that confers on a Person the right to receive a share of the profits and losses of, or distributions of assets of, the issuer of such share capital. "Shareholder Agreements" means all agreements entered into by the Borrower or any of its Subsidiaries governing the terms and relative rights of their capital stock. "Standby Letter of Credit" means any irrevocable standby letter of credit for the account of the Borrower issued by the Issuing Lender in a form customarily used by such Issuing Lender or in such other form as has been approved by such Issuing Lender. "Stated Amount" of each Letter of Credit means the maximum amount available to be drawn thereunder, determined without regard to whether any conditions to drawing could then be met, as such amount may be reduced from time to time in accordance with the terms of such Letter of Credit (determined without regard to whether any conditions to drawing could then be met). "Stated Expiration Date" means, with respect to a Letter of Credit, the stated expiration date thereof which shall not exceed one year; provided, however, the Stated Expiration Date shall in no event be later than the Maturity Date. "Stock Holders Agreement" means that certain Stockholders' Agreement, dated as of the date hereof, among Seabulk International, Inc., Nautilus Acquisition, L.P., C/R Marine Domestic 23 Partnership, L.P., C/R Marine Non-U.S. Partnership, L.P., C/R Marine Coinvestment, L.P., C/R Marine Coinvestment II, L.P. and Gerhard Kurz. "Stock Purchase Agreement" means that certain Sock Purchase Agreement, dated as of June 13, 2002, by and among Seabulk International, Inc. and each of the investors listed on Schedule 1 thereto. "Subsidiary" means any corporation, partnership, limited liability company or other entity, the majority of the voting interests (including interests arising out of securities or other interests convertible, at the option of the holder, into interests of voting stock) of which is owned by a Person either directly or through Subsidiaries. "Subsidiary Guarantee Agreement" means the Guarantee by each of the Subsidiary Guarantors set forth in the Agreement or a supplement to the Agreement substantially in the form of Exhibit G to the Agreement pursuant to which a Subsidiary Guarantor becomes subject to the applicable terms and conditions of the Agreement, in each case as such supplement to the Agreement from time to time may be amended, restated, modified, supplemented or renewed. "Subsidiary Guarantee Obligation" shall have the meaning provided in Section 8.01(a) of the Credit Agreement. "Subsidiary Guarantor" means each of the Borrower's Subsidiaries as identified on the signature pages of the Credit Agreement or to a Subsidiary Guarantee Agreement. "Tax Sharing Agreements" means all tax sharing, tax allocation and other similar agreements entered into by the Borrower and/or any of its Subsidiaries. "Taxes" means any and all present or future taxes, levies, imposts, duties, deductions, withholdings, fees, assessments or other charges of whatever nature, together with any and all assessments, penalties, fines, additions thereto and interest thereon, in each case, now or hereafter imposed by any governmental jurisdiction or other taxing authority. "Term Loan" means an extension of credit pursuant to Section 2.02(b) of the Agreement. "Term Loan Note" shall have the meaning provided in Section 2.02(d) of the Agreement. "Termination Date" means with respect to each Letter of Credit (x) if no drawing is made thereunder, the final expiration date thereof or such earlier date on which such Letter of Credit was cancelled and returned to the respective Issuing Lender or (y) if a drawing or drawings are made thereunder, the date of payment of the final drawing thereunder as provided by the terms thereof. "Total Loss" means, with respect to a Vessel, (a) an actual or constructive or compromised or arranged total loss of such Vessel, (b) a Compulsory Acquisition of such Vessel or (c) a requisition for hire of such Vessel for a period in excess of 180 days. "Total Loss Proceeds" means all compensation, damages and other payments (including insurance proceeds other than certain liability insurance proceeds) received by the Agent, on 24 behalf of the Lenders, from any Person, including any governmental authority, with respect to or in connection with a Total Loss. "Trade Letter of Credit" means any irrevocable letter of credit for the account of the Borrower and for the benefit of the sellers of goods and services to the Borrower or any of the Subsidiary Guarantors issued by the Issuing Lender in a form customarily used by such Issuing Lender or in such other form as has been approved by such Issuing Lender. "Tranche" means the respective facility and commitments utilized in making Loans and issuing Letters of Credit hereunder, with there being two separate Tranches. "Tranche A" consists of the Revolving Loans and the Letters of Credit and "Tranche B" consists of the Term Loans. "Tranche A Loan" means a Revolving Loan or Letter of Credit. "Tranche A Loan Commitment" means, for each Lender, the amount set for the opposite such lender's name in Schedule I hereto directly below the column entitled "Tranche A Loan Commitment", as same may be reduced from the time pursuant to Sections 2.06 and/or 2.07 of the Credit Agreement or adjusted from time to time as a result of assignments to or from such Lender pursuant to Section 10.11(a) of the Credit Agreement. "Tranche A Reduction Amount" shall have the meaning provided in Section 2.06(c) of the Credit Agreement. "Tranche A Reduction Date" means each of the dates contained in the table set forth in Section 2.06(a) of the Agreement. "Tranche B Loan" means a Term Loan. "Tranche B Loan Commitment" means, for each Lender, the amount set for the opposite such lender's name in Schedule I hereto directly below the column entitled "Tranche B Loan Commitment", as same may be reduced from the time pursuant to Sections 2.06 and/or 2.07 of the Credit Agreement or adjusted from time to time as a result of assignments to or from such Lender pursuant to Section 10.11(a) of the Credit Agreement. "Tranche B Reduction Date" means each of the dates contained in the table set forth in Section 2.06(b) of the Agreement. "Tranche B Reduction Amount" shall have the meaning provided in Section 2.06(c) of the Credit Agreement. "Transaction Document" when used in the singular and "Transaction Documents" when used in the plural means any and all of the Agreement, the Notes, the Subsidiary Guarantee Agreements, the Assignments of Earnings and Insurances, the Hedging Agreements (if any), the Mortgages and the Pledge Agreements, as the same may from time to time be amended, restated, modified, supplemented or renewed. 25 "UCC" means the Uniform Commercial Code as from time to time in effect the State of New York, or if the Uniform Commercial Code in any other State of the United States is mandatorily applicable with respect to any particular matter, the Uniform Commercial Code as from time to time in effect in such other State of the United States. "Unfunded Current Liability" of any Plan means the amount, if any, by which the value of the accumulated plan benefits under the Plan determined on a plan termination basis in accordance with actuarial assumptions at such time consistent with those prescribed by the PBGC for purposes of Section 4044 of ERISA, exceeds the fair market value of all plan assets allocable to such liabilities under Title IV of ERISA (excluding any accrued but unpaid contributions). "United States" and "US" shall each mean the United States of America. "Vessel" means any of, and "Vessels" means all of the vessels owned by the Subsidiary Guarantors, other than the vessels owned by the Lightship Tanker Entities and the Seabulk Nebraska, the Seabulk St. Francis and the Seabulk America, that are or will be security for the Obligations. "Wholly-Owned Subsidiary" means, as to any Person, (i) any corporation, 100% of whose capital stock (other than directors' qualifying shares) is at the time owned by such Person and/or one or more Wholly-Owned Subsidiaries of such Person and (ii) any limited liability company, partnership, association, joint venture or other entity in which such Person and/or one or more Wholly-Owned Subsidiaries of such Person has a 100% equity interest at such time. 26 EX-99.6 8 g78328exv99w6.txt SEABULK - NOTICE OF NOTES 09/13/02 Exhibit 99.6 SEABULK INTERNATIONAL, INC. (formerly HVIDE MARINE INCORPORATED) NOTICE OF REDEMPTION OF 12 1/2% SENIOR SECURED NOTES DUE 2007, SERIES B To the Holders of Outstanding 121/2% Senior Secured Notes Due 2007, Series B of Seabulk International, Inc. (CUSIP: 81169PAA9): Seabulk International, Inc., a Delaware corporation (formerly known as Hvide Marine Incorporated) (the "Company"), is hereby giving notice of redemption of all of its outstanding 12 1/2% Senior Secured Notes Due 2007, Series B ("Notes") issued under an Indenture dated December 15, 1999 among the Company, certain guarantors, State Street Bank and Trust Company, as Trustee, and Bankers Trust Company, as Collateral Agent (as such Indenture has been modified, amended or supplemented to date, the "Indenture"). The Notes will be redeemed as follows: 1. The redemption date is October 15, 2002. 2. The redemption price, calculated in accordance with the Indenture, is 102.934% of the principal amount of Notes. The redemption price was determined using a weighted average (based on outstanding principal) of two redemption prices determined in accordance with the Indenture: (i) a redemption price of 102.727% of the principal amount applicable to the outstanding originally issued $95,000,000.00 principal amount of Notes (the "Original Notes"), and (ii) a redemption price of 111.000% of the principal amount applicable to the outstanding $2,441,673.00 principal amount of additional outstanding Notes issued as additional "pay-in-kind" interest pursuant to Section 4.21 of the Indenture ("Additional Notes"). The redemption price for the Original Notes set forth in the Indenture is 111% of accreted value. The Original Notes were issued at a discount to par. Using an accretion rate set forth in the Indenture of 14.72% per annum (on a constant yield to maturity basis), the accreted value of the Original Notes as of October 15, 2002 is 92.546497% of the principal amount of Notes. The Additional Notes were issued under the Indenture at par value. The Original Notes and the Additional Notes are held under a common CUSIP number. 3. The scheduled interest payment on the Notes due on September 30, 2002 will be paid on such date and will include any additional interest payable under Section 4.21 of the Indenture (one quarter of 1%) payable in cash in lieu of the issuance of any additional "pay-in-kind" Notes. 4. In addition to the scheduled interest to be paid on September 30, 2002, accrued and unpaid interest of $5.25 per $1,000 principal amount of Notes will be paid in connection with the redemption on the redemption date. This includes additional interest payable under Section 4.21 of the Indenture. 5. The redemption price of and accrued interest on the Notes become due and payable on October 15, 2002 and, from and after October 15, 2002, interest on such Notes shall cease to accrue and be payable. As of the date of this Notice, the Company has irrevocably deposited with the Trustee funds in an amount sufficient to pay and discharge the Notes (including interest payable to October 15, 2002). Pursuant to Section 8.1 of the Indenture, the obligations of the Company and the Guarantors under the Notes have been satisfied and discharged. Pursuant to Article III and Section 8.1 of the Indenture, the Holders shall only be entitled to receive the redemption price on the redemption date upon proper presentation of the Notes to the Trustee. 6. Holders of such Notes will receive payment of the redemption price and accrued interest to which they are entitled upon presentation and surrender thereof at the principal offices of State Street Bank and Trust Company, at the following addresses: If by mail: P. O. Box 778, Boston, Massachusetts, 02102-0778; If by overnight mail and hand deliveries: Corporate Trust Window, Fifth Floor, 2 Avenue de Lafayette, Boston, Massachusetts, 02111-1724. HOLDERS PLANNING TO PRESENT NOTES DIRECTLY TO THE PAYING AGENT FOR REDEMPTION SHOULD BE PREPARED TO CERTIFY (UNDER PENALTIES OF PERJURY) THEIR TAXPAYER IDENTIFICATION NUMBER (EMPLOYER IDENTIFICATION NUMBER OR SOCIAL SECURITY NUMBER, AS APPROPRIATE) AT THAT TIME, OR PRIOR THERETO. UNDER FEDERAL TAX LAW, IN THE ABSENCE OF SUCH CERTIFICATION, THE PAYING AGENT MAY BE REQUIRED TO WITHHOLD 30% OF THE REDEMPTION PROCEEDS. YOU MUST FURNISH A PROPERLY COMPLETED IRS FORM W-9 WHEN PRESENTING YOUR NOTES. 7. The CUSIP number listed above is included solely for the convenience of the Holders. The Trustee shall not be responsible for the selection or use of the CUSIP number, nor is any representation made as to the correctness of the CUSIP number on the securities or as indicated in this redemption notice. SEABULK INTERNATIONAL, INC. BY: STATE STREET BANK AND TRUST COMPANY, as Trustee Dated: September 13, 2002 -----END PRIVACY-ENHANCED MESSAGE-----

EX-99.1

                                                                    Exhibit 99.1

                            CERTIFICATE OF AMENDMENT
                                     OF THE
                          CERTIFICATE OF INCORPORATION
                                       OF
                           SEABULK INTERNATIONAL, INC.
FILED IN THE OFFICE OF THE SECRETARY OF STATE OF DELAWARE ON SEPTEMBER 13, 2002

         Seabulk International, Inc., a corporation organized and existing under
and by virtue of the General Corporation Law of the State of Delaware (the
"DGCL"), hereby certifies that:

     1.   The name of the corporation is Seabulk International, Inc. (the
          "Corporation").

     2.   The Certificate of Incorporation of the Corporation is hereby amended
          to change the number of shares of stock which the Corporation shall
          have authority to issue so that Article IV, paragraph (a) of the
          Certificate of Incorporation is hereby amended to read in its entirety
          as follows:

               "(a) The total number of shares of stock which the Corporation
          shall have authority to issue is Forty-Five Million (45,000,000),
          consisting of Five Million (5,000,000) shares of Preferred Stock,
          without par value (the "PREFERRED STOCK"), and Forty Million
          (40,000,000) shares of Common Stock, par value $0.01 per share (the
          "COMMON STOCK")."

     3.   The Certificate of Incorporation of the Corporation is hereby amended
          to delete the third paragraph of Article IX.

     4.   The following Article XIV of the Certificate of Incorporation of the
          Corporation is hereby inserted in its entirety to read as follows:

                                  "ARTICLE XIV

               (a) For purposes of this Article XIV, the following terms shall
          have the meanings specified below:

                    (1) "Affiliate" shall mean, with respect to any Person, any
               other Person directly or indirectly controlling, controlled by,
               or under direct or indirect common control with, such Person. For
               the purposes of this definition, "control" when used with respect
               to any Person means the power to direct the management and
               policies of such Person, directly or indirectly, whether through
               the ownership of voting securities, by contract or otherwise; and
               the terms "controlling" and "controlled" have meanings
               correlative to the foregoing.

                    (2) "Business Combination" shall mean (A) any merger or
               consolidation of the Corporation or any direct or indirect
               majority-owned subsidiary of the Corporation with any Control
               Person (as defined below), or (B) any sale, lease, exchange,
               mortgage, pledge, transfer or other disposition (in





               one transaction or a series of transactions) by the Corporation
               or a majority-owned subsidiary of the Corporation, except
               proportionately as a stockholder of the Corporation, to or with a
               Control Person, whether as part of a dissolution (except as part
               of an insolvency or bankruptcy proceeding under applicable laws)
               or otherwise, of assets of the Corporation or of any direct or
               indirect majority-owned subsidiary of the Corporation which
               assets have an aggregate Fair Market Value equal to 10% or more
               of either the aggregate Fair Market Value of all the assets of
               the Corporation determined on a consolidated basis or the
               aggregate Fair Market Value of all the outstanding stock of the
               Corporation; PROVIDED, HOWEVER, that the foregoing shall not
               apply to mortgages, pledges, transfers or other dispositions made
               pursuant to any credit facility or other loan or financing
               arrangement of the Corporation or any of its majority-owned
               subsidiaries with respect to which a Control Person is an agent
               or member of a bona fide syndication of financial institutions or
               other lenders.

                    (3) A "Control Person" is (x) a Person or group of Persons
               (as contemplated by Section 13(d)(3) of the Exchange Act) who
               beneficially owns (as determined pursuant to Rule 13d-3 under the
               Exchange Act) more than 30% of the outstanding shares of Voting
               Stock of the Corporation, (y) any Person or group of Persons who
               by agreement, arrangement or understanding has the right or power
               to elect a majority of the members of the board of directors of
               the Corporation, or (z) any Affiliate of any such Person or
               member of a group of such Persons described in clause (x) or (y)
               (other than the Corporation and direct or indirect majority-owned
               subsidiaries of the Corporation); provided that (i) no Person or
               group (an "Exempt Person") shall be a Control Person if, and for
               so long as, (A) the Exempt Person is not a Person or group
               described in clause (y) or an Affiliate of such Person or group
               and (B) a Person (who is not a member of a group that includes
               the Exempt Person) or group (which does not include the Exempt
               Person as a member), together with any Affiliates of such other
               Person (or member of such group) beneficially owns a majority of
               the outstanding shares of Voting Stock of the Corporation and
               (ii) no individual who is a member of management and a party to
               the Stockholders Agreement as of the date of filing of a
               Certificate of Amendment initially including this Article XIV
               shall be a Control Person solely by reason of being a party to
               such Stockholders Agreement.

                    (4) "Determination Date" shall mean, with respect to each
               Business Combination for which Fair Market Value is being
               calculated, the date that the Board of Directors of the
               Corporation approves the Business Combination pursuant to which
               Fair Market Value is being calculated.

                    (5) "Exchange Act" shall mean the Securities Exchange Act of
               1934, as amended, and the rules and regulations promulgated
               thereunder.

                    (6) "Fair Market Value" shall mean with respect to property,
               securities or rights other than cash, its fair market value as of
               the Determination Date as mutually determined by the Independent
               Directors and the directors of the



                                      2


               Corporation who are not Independent Directors (the
               "non-Independent Directors"); PROVIDED, HOWEVER, that, if the
               Independent Directors and the non-Independent Directors are
               unable to agree within fifteen days as to Fair Market Value, the
               Fair Market Value shall be determined by an independent third
               party appraiser selected by the Independent Directors and the
               non-Independent Directors. Notwithstanding the foregoing, any
               publicly-traded securities shall be valued as follows:

                         (a) If traded on a securities exchange or through the
                    Nasdaq National Market, the value shall be deemed to be the
                    average of the reported closing prices of the securities on
                    such exchange or market over the 30-day period ending three
                    (3) days prior to the Determination Date; or

                         (b) If actively traded over-the-counter, the value
                    shall be deemed to be the average of the closing bid or sale
                    prices (whichever is applicable) over the 30-day period
                    ending three (3) days prior to the Determination Date.

                    (7) "Independent Directors" shall mean directors of the
               Corporation who (A) meet the standards for independent directors
               under the rules or listing requirements of any national stock
               exchange or Securities and Exchange Commission recognized
               quotation system on which the Common Stock is then listed or
               quoted or, if the Common Stock is not listed or quoted, the last
               national stock exchange or Securities and Exchange Commission
               recognized quotation system on which the Common Stock was listed
               or quoted and (B) are not officers, directors, employees or
               immediate family members of a Control Person.

                    (8) "Minority Stockholders" shall mean the holders of Common
               Stock of the Corporation, other than any holder that constitutes
               a Control Person.

                    (9) "Person" shall mean any individual, partnership,
               corporation, limited liability company, joint venture,
               association, joint-stock company, trust, unincorporated
               organization, or other entity.

                    (10) "Stockholders Agreement" dated as of the date of the
               filing of the Certificate of Amendment initially including this
               Article XIV by and among the Corporation, the Investors named
               therein and certain members of management, as such agreement may
               be amended in accordance with the terms thereof.

                    (11) "Voting Stock" shall have the meaning set forth in
               Section 203 of the General Corporation Law of the State of
               Delaware, as such section was in effect on the date of the filing
               of the Certificate of Amendment initially including this Article
               XIV.

               (b) No less than three of the directors of the Corporation shall
          at all times be Independent Directors, except for temporary periods
          resulting from the resignation,



                                       3


          removal from office, disqualification or death of an Independent
          Director. Vacancies created by the resignation, removal from office,
          disqualification or death of an Independent Director shall be filled
          as promptly as reasonably practicable in accordance with the
          Corporation's by-laws or by the stockholders in accordance with the
          terms of the Stockholders Agreement or any stockholders agreement then
          in effect to which the Corporation is a party and in any case by the
          next annual meeting of stockholders of the Corporation.

               (c) The Corporation will not, and will not permit, cause or
          suffer any direct or indirect majority-owned subsidiary of the
          Corporation to, enter into or engage in any contract or transaction,
          or any series of similar contracts or transactions, with any Control
          Person, having a value to the Control Persons reasonably estimated by
          the Independent Directors to be more than $300,000, or reasonably
          estimated by the Independent Directors to involve or expected to
          involve payments by the Corporation in excess of $300,000 in any
          twelve-month period, unless (1) there are at least two Independent
          Directors then in office and (2) such contract or transaction, or
          series of similar contracts or transactions, are approved by a
          majority of the Independent Directors then in office; PROVIDED,
          HOWEVER, that such approval shall not be required with respect to any
          of the following: (a) directors' fees, indemnification or similar
          arrangements or any compensation, reimbursement, incentive or benefit
          plan or arrangement entered into by the Corporation or any of its
          subsidiaries with a director of the Corporation or any of its
          subsidiaries who is a Control Person that are consistent with benefits
          pursuant to agreements and policies in effect on the date of the
          filing of the Certificate of Amendment initially including this
          Article XIV; (b) any contract to which the Control Person and the
          Corporation or any of its subsidiaries is a party that is in effect on
          the date of the filing of the Certificate of Amendment initially
          including this Article XIV or any transaction contemplated thereby;
          (c) pro rata payments of dividends or other distributions that are
          also paid or made to the Corporation's other stockholders; or (d)
          transactions (including a placement or offering of additional
          securities of the Corporation) that are on substantially the same
          terms as transactions with stockholders of the Corporation that do not
          constitute Control Persons. Additionally, such contract or transaction
          shall not be void or voidable to the extent that a Control Person
          notifies the Independent Directors of such contract or transaction, or
          series of contracts or transactions, and the Independent Directors
          determine that such contract or transaction, or series of contracts or
          transactions, does not meet the $300,000 threshold, notwithstanding
          that such contract or transaction, or series of contracts or
          transactions, ultimately results in value or payments in excess of
          $300,000. Such approval shall be in addition to any other approval
          required by applicable law.

               (d) Until the date which is one year from the date of the filing
          of the Certificate of Amendment initially including this Article XIV,
          the Corporation will not, and will not permit, cause or suffer any
          direct or indirect majority-owned subsidiary of the Corporation to,
          enter into or become party to any Business Combination with any
          Control Person that would result in Minority Stockholders receiving
          cash, property, rights or securities having an aggregate Fair Market
          Value of less than $8.00 per share of Common Stock of the Corporation
          (as such price may be adjusted pursuant to the



                                       4


          following sentence, the "Minimum Price"). If, between the date hereof
          and the date of the consummation of any such Business Combination, the
          outstanding Common Stock of the Corporation shall have been changed
          into a different number of shares or different class by reason of any
          reclassification, recapitalization, stock split, reverse stock split,
          combination or exchange (as part of a reclassification or
          recapitalization) of shares, or a stock dividend payable in any other
          securities shall be declared with a record date within such period, or
          any similar event shall have occurred, the Minimum Price shall be
          appropriately adjusted to provide to the Minority Stockholders the
          same economic effect as contemplated by this paragraph (d) prior to
          such event.

               (e) Until the date which is two years from the date of the filing
          of the Certificate of Amendment initially including this Article XIV,
          the Corporation will not, and will not permit, cause or suffer any
          direct or indirect majority-owned subsidiary of the Corporation to,
          enter into or become party to any Business Combination with any
          Control Person without the approval of the holders of a majority of
          the outstanding Common Stock held by Minority Stockholders and Control
          Persons that are not Affiliates of the Control Person that enters into
          or is party to such Business Combination; PROVIDED, HOWEVER, that such
          approval shall not be required for (i) a merger to be effected
          pursuant to Section 253 of the DGCL (a "Short-form Merger"), or (ii) a
          Business Combination that occurs within 150 days following the
          consummation of a tender offer by a Control Person for all of the
          shares of Common Stock then held by the Minority Stockholders,
          provided that (x) such tender offer is subject to the nonwaiveable
          condition that there have been validly tendered and not withdrawn a
          majority of the shares of Common Stock then held by the Minority
          Stockholders; (y) such condition is met; and (z) the consideration to
          be paid in respect of shares of Common Stock held by remaining
          Minority Stockholders in such merger shall be the same consideration
          per share as the consideration paid per share in such tender offer.

               (f) In addition to any other vote of stockholders or the Board of
          Directors of the Corporation required by law or this Certificate of
          Incorporation, this Article XIV may not be amended, altered or
          modified unless either (1)(A) there are at least two Independent
          Directors then in office and (B) such amendment, alteration, or
          modification is approved by a majority of the Independent Directors
          then in office or (2) such amendment, alteration, or modification is
          approved by the holders of a majority of the Common Stock of the
          Corporation held by Minority Stockholders.

               (g) Except for provisions that by their terms expire earlier,
          this Article XIV shall cease to have any further force and effect on
          the date which is three years from the date of the filing of the
          Certificate of Amendment initially including this Article XIV, or such
          earlier date on which no less than 98% of the Corporation's Common
          Stock is held by Control Persons or officers, directors, or employees
          of the Corporation."

     5.   The foregoing amendment to the Certificate of Incorporation of the
          Corporation was duly adopted by the Board of Directors and the
          stockholders of the Corporation in accordance with the provisions of
          Section 242 of the General Corporation Law of the State of Delaware.




                                       5


         IN WITNESS WHEREOF, the Corporation has caused this Certificate of
Amendment to be signed by Gerhard E. Kurz, its President and Chief Executive
Officer, this 13th day of September, 2002.


                                       SEABULK INTERNATIONAL, INC.



                                       /s/ GERHARD E. KURZ
                                       -----------------------------------------
                                       Name:  Gerhard E. Kurz
                                       Title: President and
                                              Chief Executive Officer





                                       6

EX-99.2

                                                                    EXHIBIT 99.2

                          AMENDED AND RESTATED BY-LAWS
                                       OF
                           SEABULK INTERNATIONAL, INC.

              INCORPORATED UNDER THE LAWS OF THE STATE OF DELAWARE


                                    ARTICLE I
                               OFFICES AND RECORDS

         Section 1.1. DELAWARE OFFICE. The principal office of the Corporation
in the State of Delaware shall be located in Wilmington, Delaware, and the name
and address of its registered agent is The Corporation Trust Company, The
Corporation Trust Center, 1209 Orange Street, in the City of Wilmington, County
of New Castle.

         Section 1.2. OTHER OFFICES. The Corporation may have such other
offices, either within or without the State of Delaware, as the Board of
Directors may designate or as the business of the Corporation may from time to
time require.

         Section 1.3. BOOKS AND RECORDS. The books and records of the
Corporation may be kept outside the State of Delaware at such place or places as
may from time to time be designated by the Board of Directors.


                                   ARTICLE II
                                  STOCKHOLDERS

         Section 2.1. ANNUAL MEETING. The annual meeting of the stockholders of
the Corporation shall be held annually on such date as may be fixed by the Board
of Directors.

         Section 2.2. SPECIAL MEETINGS. Subject to the rights of the holders of
any series of stock having a preference over the Common Stock of the Corporation
as to dividends or upon liquidation ("PREFERRED STOCK") with respect to such
series of Preferred Stock, special meetings of the stockholders may be called by
the Chairman of the Board, by the President, by the Board of Directors pursuant
to a resolution adopted by a majority of the total number of directors which the
Corporation would have if there were no vacancies (the "WHOLE BOARD"), by a duly
designated committee of the Board of Directors whose powers and authority, as
provided in a resolution adopted by a majority of the Whole Board, include the
power to call such meetings, or by the holders of a majority of the voting power
of the then outstanding shares of capital stock of the Corporation entitled to
vote generally in the election of directors (the "VOTING STOCK").






         Section 2.3. PLACE OF MEETING. The person or entity calling any annual
or special meeting of the stockholders may designate the place of such meeting.
If no designation is so made, the place of meeting shall be the principal office
of the Corporation.

         Section 2.4. NOTICE OF MEETING. Written or printed notice, stating the
place, date and time of the meeting and the purpose or purposes for which the
meeting is called, shall be delivered by the Corporation not less than ten (10)
days nor more than sixty (60) days before the date of the meeting, either
personally or by mail, to each stockholder of record entitled to vote at such
meeting. If mailed, such notice shall be deemed to be delivered when deposited
in the U.S. mail with postage thereon prepaid, addressed to the stockholder at
his address as it appears on the stock transfer books of the Corporation. Such
further notice shall be given as may be required by law. Only such business
shall be conducted at a special meeting of stockholders as shall have been
brought before the meeting pursuant to the Corporation's notice of meeting.
Meetings may be held without notice if all stockholders entitled to vote are
present, or if notice is waived by those not present in accordance with Section
6.4 of these By-laws. Any previously scheduled meeting of the stockholders may
be postponed, and (unless the Certificate of Incorporation otherwise provides)
any special meeting of the stockholders may be cancelled, by resolution of the
Board of Directors, or by the stockholders calling the meeting, upon public
notice given prior to the date previously scheduled for such meeting of
stockholders.

         Section 2.5. QUORUM AND ADJOURNMENT. Except as otherwise provided by
law or by the Certificate of Incorporation, the holders of a majority of the
voting power of the then outstanding Voting Stock, represented in person or by
proxy, shall constitute a quorum at a meeting of stockholders, except that when
specified business is to be voted on by a class or series of stock voting as a
class, the holders of a majority of the voting power of the shares of such class
or series shall constitute a quorum of such class or series for the transaction
of such business. The chairman of the meeting or the holders of a majority of
the voting power so represented may adjourn the meeting from time to time,
whether or not there is a quorum. No notice of the time and place of adjourned
meetings need be given except as required by law. The stockholders present at a
duly called meeting at which a quorum is present may continue to transact
business until adjournment, notwithstanding the withdrawal of enough
stockholders to leave less than a quorum.

         Section 2.6. PROXIES. At all meetings of stockholders, a stockholder
may vote by proxy executed in writing (or in any other manner permitted by law)
by the stockholder, or by his duly authorized attorney-in-fact.

         Section 2.7. NOTICE OF STOCKHOLDER BUSINESS AND NOMINATIONS.

         (A) ANNUAL MEETINGS OF STOCKHOLDERS. (1) Nominations of persons for
election to the Board of Directors of the Corporation and the proposal of
business to be considered by the stockholders may be made at an annual meeting
of stockholders (a) pursuant to the Corporation's notice of meeting, (b) by or


                                      -2-


at the direction of the Board of Directors or (c) by any stockholder of the
Corporation who was a stockholder of record at the time of giving of the notice
provided for in this Section 2.7, who is entitled to vote at the meeting and who
complies with the notice procedures set forth in this Section 2.7.

         (2) For nominations or other business to be properly brought before an
annual meeting by a stockholder pursuant to clause (c) of paragraph (A)(1) of
this Section 2.7, the stockholder must have given timely notice thereof in
writing to the Secretary of the Corporation, and such other business must
otherwise be a proper matter for stockholder action. To be timely, a
stockholder's notice shall be delivered to the Secretary at the principal
executive offices of the Corporation not later than the close of business on the
60th day nor earlier than the close of business on the 90th day prior to the
first anniversary of the preceding year's annual meeting; provided, however,
that in the event that the date of the annual meeting is more than 30 days
before or more than 60 days after such anniversary date, notice by the
stockholder to be timely must be so delivered not earlier than the close of
business on the 90th day prior to such annual meeting and not later than the
close of business on the later of the 60th day prior to such annual meeting or
the 10th day following the day on which public announcement of the date of such
meeting is first made by the Corporation. In no event shall the public
announcement of an adjournment of an annual meeting commence a new time period
for the giving of a stockholder's notice as described above. Such stockholder's
notice shall set forth (a) as to each person whom the stockholder proposes to
nominate for election or re-election as a director all information relating to
such person that is required to be disclosed in solicitations of proxies for
election of directors in an election contest, or is otherwise required, in each
case pursuant to Regulation 14A under the Securities Exchange Act of 1934, as
amended (the "EXCHANGE ACT"), and Rule 14a-11 thereunder (including such
person's written consent to being named in the proxy statement as a nominee and
to serving as a director if elected); (b) as to any other business that the
stockholder proposes to bring before the meeting, a brief description of the
business desired to be brought before the meeting, the reasons for conducting
such business at the meeting and any material interest in such business of such
stockholder and the beneficial owner, if any, on whose behalf the proposal is
made; and (c) as to the stockholder giving the notice and the beneficial owner,
if any, on whose behalf the nomination or proposal is made (i) the name and
address of such stockholder, as they appear on the Corporation's books, and of
such beneficial owner and (ii) the class and number of shares of the Corporation
which are owned beneficially and of record by such stockholder and such
beneficial owner.

         (3) Notwithstanding anything in the second sentence of paragraph (A)(2)
of this Section 2.7 to the contrary, in the event that the number of directors
to be elected to the Board of Directors of the Corporation is increased and
there is no public announcement by the Corporation naming all of the nominees
for election as director or specifying the size of the increased Board of
Directors at least 70 days prior to the first anniversary of the preceding
year's annual meeting, a stockholder's notice required by this Section 2.7 shall
also be considered timely, but only with respect to nominees for any new


                                      -3-


positions created by such increase, if it shall be delivered to the Secretary at
the principal executive offices of the Corporation not later than the close of
business on the 10th day following the day on which such public announcement is
first made by the Corporation.

         (B) SPECIAL MEETINGS OF STOCKHOLDERS. Only such business shall be
conducted at a special meeting of stockholders as shall have been brought before
the meeting pursuant to the Corporation's notice of meeting. Nominations of
persons for election to the Board of Directors may be made at a special meeting
of stockholders at which directors are to be elected pursuant to the
Corporation's notice of meeting (a) by or at the direction of the Board of
Directors or (b) by any stockholder of the Corporation who is a stockholder of
record at the time of giving of notice provided for in this Section 2.7, who
shall be entitled to vote at the meeting and who complies with the notice
procedures set forth in this Section 2.7. In the event the Corporation calls a
special meeting of stockholders for the purpose of electing one or more
directors to the Board of Directors, any such stockholder may nominate a person
or persons (as the case may be), for election to such position(s) as specified
in the Corporation's notice of meeting, if the stockholder's notice required by
paragraph (A)(2) of this Section 2.7 shall be delivered to the Secretary at the
principal executive offices of the Corporation not earlier than the close of
business on the 90th day prior to such special meeting and not later than the
close of business on the later of the 60th day prior to such special meeting or
the 10th day following the day on which public announcement is first made of the
date of the special meeting and of the nominees proposed by the Board of
Directors to be elected at such meeting. In no event shall the public
announcement of an adjournment of a special meeting commence a new time period
for the giving of a stockholder's notice as described above.

         (C) GENERAL. (1) Only such persons who are nominated in accordance with
the procedures set forth in this Section 2.7 shall be eligible to serve as
directors and only such business shall be conducted at a meeting of stockholders
as shall have been brought before the meeting in accordance with the procedures
set forth in this Section 2.7. Except as otherwise provided by law, the
Certificate of Incorporation or these By-laws, the chairman of the meeting shall
have the power and duty to determine whether a nomination or any business
proposed to be brought before the meeting was made or proposed, as the case may
be, in accordance with the procedures set forth in this Section 2.7 and, if any
proposed nomination or business is not in compliance with this Section 2.7, to
declare that such defective proposal or nomination shall be disregarded.

         (2) For purposes of this Section 2.7, "PUBLIC ANNOUNCEMENT" shall mean
disclosure in a press release reported by the Dow Jones News Service, Associated
Press or a comparable national news service or in a document publicly filed by
the Corporation with the Securities and Exchange Commission pursuant to Section
13, 14 or 15(d) of the Exchange Act.

         (3) Notwithstanding the foregoing provisions of this Section 2.7, a
stockholder shall also comply with all applicable requirements of the Exchange
Act and the rules and regulations thereunder with respect to the matters set
forth in this Section 2.7. Nothing in this Section 2.7 shall be deemed to affect
any rights (i) of stockholders to request inclusion of proposals in the


                                      -4-


Corporation's proxy statement pursuant to Rule 14a-8 under the Exchange Act or
(ii) of the holders of any series of Preferred Stock to elect directors under
specified circumstances.

         Section 2.8. PROCEDURE FOR ELECTION OF DIRECTORS; REQUIRED VOTE.
Election of directors at all meetings of the stockholders at which directors are
to be elected shall be by ballot, and, subject to the rights of the holders of
any series of Preferred Stock to elect directors under specified circumstances,
a plurality of the votes cast thereat shall elect directors. Except as otherwise
provided by law, the Certificate of Incorporation, or these By-laws, in all
matters other than the election of directors, the affirmative vote of the
holders of a majority of the voting power present in person or represented by
proxy at the meeting and entitled to vote on the matter shall be the act of the
stockholders.

         Section 2.9. INSPECTORS OF ELECTIONS; OPENING AND CLOSING THE POLLS.
The Board of Directors by resolution shall appoint one or more inspectors, which
inspector or inspectors may include individuals who serve the Corporation in
other capacities, including, without limitation, as officers, employees, agents
or representatives, to act at meetings of stockholders and make written reports
thereof. One or more persons may be designated as alternate inspectors to
replace any inspector who fails to act. If no inspector or alternate has been
appointed to act or is able to act at a meeting of stockholders, the chairman of
the meeting shall appoint one or more inspectors to act at the meeting. Each
inspector, before discharging his or her duties, shall take and sign an oath
faithfully to execute the duties of inspector with strict impartiality and
according to the best of his or her ability. The inspectors shall have the
duties prescribed by law.

         The chairman of the meeting shall fix and announce at the meeting the
date and time of the opening and the closing of the polls for each matter upon
which the stockholders will vote at a meeting.


                                   ARTICLE III
                               BOARD OF DIRECTORS

         Section 3.1. GENERAL POWERS. The business and affairs of the
Corporation shall be managed under the direction of the Board of Directors. In
addition to the powers and authorities by these By-laws expressly conferred upon
them, the Board of Directors may exercise all such powers of the Corporation and
do all such lawful acts and things as are not by statute or by the Certificate
of Incorporation or by these By-laws required to be exercised or done by the
stockholders.

         Section 3.2.  NUMBER, TENURE AND QUALIFICATIONS.

         (A) Each director shall be at least 18 years of age. A director need
not be a stockholder, a citizen of the United States, or a resident of the State
of Delaware. The number of directors constituting the Whole Board shall be ten,
or such other number as may be fixed from time to time by action of the



                                      -5-


stockholders or Board of Directors, one of whom may be selected by the Board of
Directors to be its Chairman.

         (B) Directors who are elected at an annual meeting of stockholders, and
directors who are elected in the interim to fill vacancies and newly created
directorships, shall hold office until the next annual meeting of stockholders
and until their successors are elected and qualified or until their earlier
resignation or removal.

         Section 3.3. REGULAR MEETINGS. A regular meeting of the Board of
Directors shall be held without other notice than this Section 3.3 immediately
after, and at the same place as, the Annual Meeting of Stockholders. The Board
of Directors may fix the time and place for the holding of additional regular
meetings without notice.

         Section 3.4. SPECIAL MEETINGS. Special meetings of the Board of
Directors shall be called at the request of the Chairman of the Board, the
President or a majority of the directors then in office. The person or persons
authorized to call special meetings of the Board of Directors may fix the place
and time of such meetings.

         Section 3.5. NOTICE. Notice of any special meeting or notice of a
change in the time or place of any regular meeting of the Board of Directors
shall be given to each director at his or her business or residence in writing
by hand delivery, first-class or overnight mail or courier service, telegram, or
facsimile or other electronic transmission (including electronic mail), or
orally by telephone. If mailed by first-class mail, such notice shall be deemed
adequately delivered when deposited in the U.S. mails so addressed, with postage
thereon prepaid, at least five (5) days before such meeting. If by telegram,
overnight mail or courier service, such notice shall be deemed adequately
delivered when the telegram is delivered to the telegraph company or the notice
is delivered to the overnight mail or courier service company at least
twenty-four (24) hours before such meeting. If by facsimile or other electronic
transmission, such notice shall be deemed adequately delivered when the notice
is transmitted at least twelve (12) hours before such meeting. If by telephone,
the notice shall be communicated to the director or his or her representative or
answering machine. If by telephone or by hand delivery, the notice shall be
given at least twenty-four (24) hours prior to the time set for the meeting.
Neither the business to be transacted at, nor the purpose of, any regular or
special meeting of the Board of Directors need be specified in the notice of
such meeting, except for amendments to these By-laws, as provided under Section
8.1. A meeting may be held at any time without notice if all the directors are
present or if those not present waive notice of the meeting in accordance with
Section 6.4 of these By-laws.

         Section 3.6. ACTION BY CONSENT OF BOARD OF DIRECTORS. Any action
required or permitted to be taken at any meeting of the Board of Directors or of
any committee thereof may be taken without a meeting if all members of the Board
of Directors or committee, as the case may be, consent thereto in writing, and
the writing or writings are filed with the minutes of proceedings of the Board
of Directors or committee.




                                      -6-


         Section 3.7. CONFERENCE TELEPHONE MEETINGS. Members of the Board of
Directors, or any committee thereof, may participate in a meeting of the Board
of Directors or such committee by means of conference telephone or similar
communications equipment by means of which all persons participating in the
meeting can hear each other, and such participation in a meeting shall
constitute presence in person at such meeting.

         Section 3.8. QUORUM. Subject to Section 3.9, seven directors shall
constitute a quorum for the transaction of business. If at any meeting of the
Board of Directors there shall be less than a quorum present, a majority of the
directors present may adjourn the meeting from time to time without further
notice. The act of the majority of the directors present at a meeting at which a
quorum is present shall be the act of the Board of Directors. The directors
present at a duly organized meeting may continue to transact business until
adjournment, notwithstanding the withdrawal of enough directors to leave less
than a quorum.

         Section 3.9. VACANCIES. Subject to applicable law and the rights of the
holders of any series of Preferred Stock with respect to such series of
Preferred Stock, and unless the Board of Directors otherwise determines,
vacancies resulting from death, resignation, retirement, disqualification,
removal from office or other cause, and newly created directorships resulting
from any increase in the authorized number of directors, may be filled only by
the affirmative vote of a majority of the remaining directors, though less than
a quorum of the Board of Directors, and directors so chosen shall hold office
for a term expiring at the annual meeting of stockholders at which the term of
office of the class to which they have been elected expires and until such
director's successor shall have been duly elected and qualified. No decrease in
the number of authorized directors constituting the Whole Board shall shorten
the term of any incumbent director.

         Section 3.10. COMMITTEES. The Board of Directors may establish one or
more committees. Each Committee shall consist of two or more directors of the
Corporation designated by the Board of Directors. The Board of Directors may
designate one or more directors as alternate members of any committee, who may
replace any absent or disqualified member at any meeting of the committee. Any
such committee may to the extent permitted by law exercise such powers and shall
have such responsibilities as shall be specified in the designating resolution.
In the absence or disqualification of any member of such committee or
committees, the member or members thereof present at any meeting and not
disqualified from voting, whether or not constituting a quorum, may unanimously
appoint another member of the Board of Directors to act at the meeting in the
place of any such absent or disqualified member. Each committee shall keep
written minutes of its proceedings and shall report such proceedings to the
Board of Directors when requested.

         A majority of any committee may determine its action and fix the time
and place of its meetings, unless the Board of Directors shall otherwise
provide. Notice of such meetings shall be given to each member of the committee
in the manner provided for in Section 3.5 of these By-laws. The Board of
Directors shall have the power at any time to fill vacancies in, to change the



                                      -7-


membership of, or to dissolve any such committee. Nothing herein shall be deemed
to prevent the Board of Directors from appointing one or more committees
consisting in whole or in part of persons who are not directors of the
Corporation; PROVIDED, HOWEVER, that no such committee shall have or may
exercise any authority of the Board of Directors.

         The term of office of a committee member shall be as provided in the
resolution of the Board designating him or her but shall not exceed his or her
term as a director. If prior to the end of his or her term, a committee member
should cease to be a director, he or she shall cease to be a committee member.
Any member of a committee may resign at any time by giving written notice to the
Board of Directors, the Chairman of the Board, the President or the Secretary.
Such resignation shall take effect as provided in Section 6.6 of these By-laws
in the case of resignations by directors. Any member of a committee may be
removed from such committee, either with or without cause, at any time, by
resolution adopted by a majority of the Whole Board. Any vacancy in a committee
shall be filled by the Board of Directors in the manner prescribed by these
By-laws for the original designation of the members of such committee.

         Section 3.11. REMOVAL. Subject to the rights of the holders of any
series of Preferred Stock with respect to such series of Preferred Stock, any
director, or the entire Board of Directors, may be removed from office at any
time by the stockholders, with or without cause.

         Section 3.12. RECORDS. The Board of Directors shall cause to be kept a
record containing the minutes of the proceedings of the meetings of the Board of
Directors and of the stockholders, appropriate stock books and registers and
such books of records and accounts as may be necessary for the proper conduct of
the business of the Corporation.


                                   ARTICLE IV
                                    OFFICERS

         Section 4.1. ELECTED OFFICERS. The elected officers of the Corporation
shall be a Chairman of the Board, a Chief Executive Officer, a President, a
Secretary, a Treasurer, and such other officers (including, without limitation,
a Chief Financial Officer, Chief Operating Officer, and Controller) as the Board
of Directors may deem necessary or desirable from time to time. The Chairman of
the Board shall be chosen from among the directors. Each officer elected by the
Board of Directors shall have such powers and duties as generally pertain to his
or her respective office, subject to the specific provisions of this ARTICLE IV.
Such officers shall also have such powers and duties as may be conferred from
time to time by the Board of Directors. The Board of Directors may from time to
time, elect, or the Chief Executive Officer or the President may appoint, such
assistant officers (including one or more Assistant Vice Presidents, Assistant
Secretaries, Assistant Treasurers and Assistant Controllers) as may be necessary
or desirable for the conduct of the business of the Corporation. Such assistant


                                      -8-


officers shall have such duties and shall hold their offices for such terms as
shall be provided in these By-laws or as may be prescribed by the Board of
Directors, the Chief Executive Officer or the President, as the case may be. The
Chairman of the Board, the Chief Executive Officer, the President, and any Vice
President or other individual authorized to act in the absence of any of the
foregoing, shall be citizens of the United States. Any two or more offices may
be held by the same natural person.

         Section 4.2. ELECTION AND TERM OF OFFICE. The elected officers of the
Corporation shall be elected annually by the Board of Directors at the regular
meeting of the Board of Directors held after the annual meeting of the
stockholders or at any other time as the Board of Directors may deem proper.
Each officer shall hold office until his successor shall have been duly elected
and shall have qualified or until his death or until he shall resign, but any
officer may be removed from office in the manner specified in Section 4.12 of
these By-laws. No officer or assistant shall have any rights against the
Corporation for compensation by virtue of such election beyond the date of the
election of his or her successor, or his or her death, resignation or removal,
whichever event shall first occur, except as otherwise provided in an employment
contract or under an employee deferred compensation plan

         Section 4.3. CHAIRMAN OF THE BOARD. The Chairman of the Board shall
preside at all meetings of the stockholders and of the Board of Directors. The
Chairman of the Board shall have such other powers and duties in the management
of the Corporation as may be prescribed from time to time by the Board of
Directors.

         Section 4.4. CHIEF EXECUTIVE OFFICER. The Chief Executive Officer shall
be responsible for the general management of the affairs of the Corporation and
shall perform all duties incidental to that office. He or she shall make reports
to the Board of Directors and the stockholders, and shall see that all orders
and resolutions of the Board of Directors and any committee thereof are carried
into effect. In the absence of or the inability to act of the Chairman of the
Board, the Chief Executive Officer shall preside at all meetings of stockholders
and of the Board of Directors. Except as otherwise directed by the Board of
Directors, the Chief Executive Officer shall have the power to sign and execute,
on behalf of the Corporation, any and all deeds, mortgages, bonds, agreements,
contracts and other instruments, including cheques, promissory notes, drafts,
and bills of exchange, in the ordinary course of business of the Corporation. In
addition, except as otherwise directed by the Board of Directors, the Chief
Executive Officer shall have the power to transfer, endorse for transfer, vote,
consent or take any other action with respect to any securities of another
issuer held or owned by the Corporation, and to make, execute and deliver any
waiver, proxy or consent with respect to any such security, in the ordinary
course of business of the Corporation. The Chief Executive Officer shall have
such other powers and duties in the management of the Corporation as may be
prescribed from time to time by the Board of Directors.

         Section 4.5. PRESIDENT. The President, shall, if he shall be the Chief
Executive Officer, perform the duties assigned to the Chief Executive Officer.
If the President shall not be the Chief Executive Officer, the President shall
act in a general executive capacity and shall assist the Chief Executive Officer
in the administration and operation of the Corporation's business and the



                                      -9-


general supervision of its policies and affairs. In the absence of or the
inability to act of the Chief Executive Officer, the President shall have all of
the powers and perform all of the duties of the Chief Executive Officer. Except
as otherwise directed by the Board of Directors or the Chief Executive Officer,
the President shall have the power to sign and execute, on behalf of the
Corporation, any and all deeds, mortgages, bonds, agreements, contracts and
other instruments, including cheques, promissory notes, drafts, and bills of
exchange, in the ordinary course of business of the Corporation. In addition,
except as otherwise directed by the Board of Directors or the Chief Executive
Officer, the President shall have the power to transfer, endorse for transfer,
vote, consent or take any other action with respect to any securities of another
issuer held or owned by the Corporation, and to make, execute and deliver any
waiver, proxy or consent with respect to any such security, in the ordinary
course of business of the Corporation. The President shall perform such other
duties and have such other authority and powers as may be prescribed from time
to time by the Board of Directors or as may be delegated from time to time by
the Chief Executive Officer.

         Section 4.6. VICE PRESIDENTS. Each Vice President shall have such
powers and shall perform such duties as shall be assigned to him by the Board of
Directors.

         Section 4.7. CHIEF FINANCIAL OFFICER. The Chief Financial Officer (if
any) shall be a Vice President and act in an executive financial capacity. He or
she shall assist the Chief Executive Officer and the President in the general
supervision of the Corporation's financial policies and affairs.

         Section 4.8. CHIEF OPERATING OFFICER. The Chief Operating Officer (if
any) shall act in an executive capacity with respect to the business operations
of the Corporation. He or she shall be assist the Chief Executive Officer and
the President in the general supervision of the Corporation's daily operational
activities.

         Section 4.9. TREASURER. The Treasurer shall exercise general
supervision over the receipt, custody and disbursement of corporate funds. The
Treasurer shall cause the funds of the Corporation to be deposited in such banks
as may be authorized by the Board of Directors, or in such banks as may be
designated as depositaries in the manner provided by resolution of the Board of
Directors. He or she shall have such further powers and duties and shall be
subject to such directions as may be granted or imposed upon him or her from
time to time by the Board of Directors, the Chief Executive Officer or the
President.

         Section 4.10. SECRETARY. The Secretary shall keep or cause to be kept
in one or more books provided for that purpose, the minutes of all meetings of
the Board of Directors, the committees of the Board of Directors and the
stockholders; he or she shall see that all notices are duly given in accordance
with the provisions of these By-laws and as required by law; he or she shall be
custodian of the records and the seal of the Corporation and affix and attest
the seal to all stock certificates of the Corporation (unless the seal of the
Corporation on such certificates shall be a facsimile, as hereinafter provided)



                                      -10-


and affix and attest the seal to all other documents to be executed on behalf of
the Corporation under its seal; and he or she shall see that the books, reports,
statements, certificates and other documents and records required by law to be
kept and filed are properly kept and filed; and in general, he or she shall
perform all the duties incident to the office of Secretary and such other duties
as from time to time may be assigned to him or her by the Board of Directors,
the Chief Executive Officer or the President.

         Section 4.11. CONTROLLER. The Controller shall have general control,
charge and supervision of the accounts of the Corporation. He or she shall see
that proper accounts are maintained and that all accounts are properly credited
from time to time. He or she shall prepare or cause to be prepared the financial
statements of the Corporation.

         Section 4.12. REMOVAL. Any officer elected by the Board of Directors
may be removed by the affirmative vote of a majority of the Whole Board
whenever, in their judgment, the best interests of the Corporation would be
served thereby. Any assistant officer appointed by the Chief Executive Officer
or the President may be removed by him or her whenever, in his or her judgment,
the best interests of the Corporation would be served thereby. The removal of an
officer or assistant officer shall be without prejudice to the contractual
rights, if any, of the person so removed.

         Section 4.13. VACANCIES. A newly created elected office and a vacancy
in any elected office because of death, resignation, or removal may be filled by
the Board of Directors for the unexpired portion of the term at any meeting of
the Board of Directors.


                                    ARTICLE V
                        STOCK CERTIFICATES AND TRANSFERS

         Section 5.1. STOCK CERTIFICATES AND TRANSFERS. The interest of each
stockholder of the Corporation shall be evidenced by certificates for shares of
stock in such form as the appropriate officers of the Corporation may from time
to time prescribe. The shares of the stock of the Corporation shall be
transferred on the books of the Corporation by the holder thereof in person or
by his or her attorney, upon surrender for cancellation of certificates for at
least the same number of shares, with an assignment and power of transfer
endorsed thereon or attached thereto, duly executed, with such proof of the
authenticity of the signature as the Corporation or its agents may reasonably
require.

         The certificates of stock shall be signed, countersigned and registered
in such manner as the Board of Directors may by resolution prescribe, which
resolution may permit all or any of the signatures on such certificates to be in
facsimile. In case any officer, transfer agent or registrar who has signed or
whose facsimile signature has been placed upon a certificate has ceased to be
such officer, transfer agent or registrar before such certificate is issued, it
may be issued by the Corporation with the same effect as if he were such
officer, transfer agent or registrar at the date of issue.



                                      -11-


         Section 5.2. LOST, STOLEN OR DESTROYED CERTIFICATES. No certificate for
shares of stock in the Corporation shall be issued in place of any certificate
alleged to have been lost, destroyed or stolen, except on production of such
evidence of such loss, destruction or theft and on delivery to the Corporation
of a bond of indemnity in such amount, upon such terms and secured by such
surety, as the Board of Directors or any officer may in its or his or her
discretion require.


                                   ARTICLE VI
                            MISCELLANEOUS PROVISIONS

         Section 6.1. FISCAL YEAR. The fiscal year of the Corporation shall
begin on the first day of January and end on the thirty-first day of December of
each year.

         Section 6.2. DIVIDENDS. The Board of Directors may from time to time
declare, and the Corporation may pay, dividends on its outstanding shares in the
manner and upon the terms and conditions provided by law and the Certificate of
Incorporation.

         Section 6.3. SEAL. The corporate seal shall have enscribed thereon the
words "Corporate Seal," the year of incorporation and around the margin thereof
the words "Seabulk International, Inc.".

         Section 6.4. WAIVER OF NOTICE. Whenever any notice is required to be
given to any stockholder or director of the Corporation under the provisions of
the General Corporation Law of the State of Delaware (the "GCL") or these
By-laws, a waiver thereof in writing, signed by the person or persons entitled
to such notice, whether before or after the time stated therein, shall be deemed
equivalent to the giving of such notice. The attendance of any stockholder at a
meeting in person or by proxy, without protesting at the beginning of the
meeting the lack of notice of such meeting, shall constitute a waiver of notice
of such stockholder. Neither the business to be transacted at, nor the purpose
of, any annual or special meeting of the stockholders or the Board of Directors
or committee thereof need be specified in any waiver of notice of such meeting.

         Section 6.5. AUDITS. The accounts, books and records of the Corporation
shall be audited upon the conclusion of each fiscal year by an independent
certified public accountant selected by the Board of Directors, and it shall be
the duty of the Board of Directors to cause such audit to be done annually.

         Section 6.6. RESIGNATIONS. Any director or any officer or assistant
officer, whether elected or appointed, may resign at any time by giving written
notice of such resignation to the Chairman of the Board, the President, or the
Secretary, and such resignation shall be deemed to be effective as of the close
of business on the date said notice is received by the Chairman of the Board,



                                      -12-


the President, or the Secretary, or at such later time as is specified therein.
No formal action shall be required of the Board of Directors or the stockholders
to make any such resignation effective.

         Section 6.7.  INDEMNIFICATION AND INSURANCE.

         (A) Each person who was or is made a party or is threatened to be made
a party to or is involved in any action, suit, or proceeding, whether civil,
criminal, administrative or investigative (hereinafter, a "PROCEEDING"), by
reason of the fact that he or she or a person of whom he or she is the legal
representative is or was a director or officer 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 of a partnership, joint venture, trust or other
enterprise, including service with respect to employee benefit plans maintained
or sponsored by the Corporation, whether the basis of such proceeding is alleged
action in an official capacity as a director, officer, employee or agent or in
any other capacity while serving as a director, officer, employee or agent,
shall be indemnified and held harmless by the Corporation to the fullest extent
authorized by the GCL as the same exists or may hereafter be amended (but, in
the case of any such amendment, only to the extent that such amendment permits
the Corporation to provide broader indemnification rights than said law
permitted the Corporation to provide prior to such amendment), against all
expense, liability and loss (including attorneys' fees, judgments, fines, excise
taxes or penalties and amounts paid or to be paid in settlement) reasonably
incurred or suffered by such person in connection therewith, and such
indemnification shall continue as to a person who has ceased to be a director,
officer, employee or agent and shall inure to the benefit of his or her heirs,
executors and administrators; PROVIDED, HOWEVER, that except as provided in
paragraph (C) of this Section 6.7, the Corporation shall indemnify any such
person seeking indemnification in connection with a proceeding (or part thereof)
initiated by such person only if such proceeding (or part thereof) was
authorized by the Board of Directors. The right to indemnification conferred in
this Section 6.7 shall be a contract right and shall include the right to be
paid by the Corporation the expenses incurred in defending any such proceeding
in advance of its final disposition, such advances to be paid by the Corporation
within 20 days after the receipt by the Corporation of a statement or statements
from the claimant requesting such advance or advances from time to time;
PROVIDED, HOWEVER, that if the GCL requires, the payment of such expenses
incurred by a director or officer in his or her capacity as a director or
officer (and not in any other capacity in which service was or is rendered by
such person while a director or officer, including, without limitation, service
to an employee benefit plan) in advance of the final disposition of a
proceeding, shall be made only upon delivery to the Corporation of an
undertaking by or on behalf of such director or officer, to repay all amounts so
advanced if it shall ultimately be determined that such director or officer is
not entitled to be indemnified under this Section 6.7 or otherwise.

         (B) To obtain indemnification under this Section 6.7, a claimant shall
submit to the Corporation a written request, including therein or therewith such
documentation and information as is reasonably available to the claimant and is
reasonably necessary to determine whether and to what extent the claimant is
entitled to indemnification. Upon written request by a claimant for
indemnification pursuant to the first sentence of this paragraph (B), a



                                      -13-


determination, if required by applicable law, with respect to the claimant's
entitlement thereto shall be made as follows: (1) if requested by the claimant,
by Independent Counsel (as hereinafter defined), or (2) if no request is made by
the claimant for a determination by Independent Counsel, (i) by the Board of
Directors by a majority vote of a quorum consisting of Disinterested Directors
(as hereinafter defined), or (ii) if a quorum of the Board of Directors
consisting of Disinterested Directors is not obtainable or, even if obtainable,
such quorum of Disinterested Directors so directs, by Independent Counsel in a
written opinion to the Board of Directors, a copy of which shall be delivered to
the claimant, or (iii) if a quorum of Disinterested Directors so directs, by the
stockholders of the Corporation. In the event the determination of entitlement
to indemnification is to be made by Independent Counsel at the request of the
claimant, the Independent Counsel shall be selected by the Board of Directors
unless there shall have occurred within two years prior to the date of the
commencement of the action, suit or proceeding for which indemnification is
claimed a "Change of Control" (as defined below) in which case the Independent
Counsel shall be selected by the claimant unless the claimant shall request that
such selection be made by the Board of Directors. If it is so determined that
the claimant is entitled to indemnification, payment to the claimant shall be
made within 10 days after such determination.

         (C) If a claim under paragraph (A) of this Section 6.7 is not paid in
full by the Corporation within 30 days after a written claim pursuant to
paragraph (B) of this Section 6.7 has been received by the Corporation, the
claimant may at any time thereafter bring suit against the Corporation to
recover the unpaid amount of the claim and, if successful in whole or in part,
the claimant shall be entitled to be paid also the expense of prosecuting such
claim. It shall be a defense to any such action (other than an action brought to
enforce a claim for expenses incurred in defending any proceeding in advance of
its final disposition where the required undertaking, if any is required, has
been tendered to the Corporation) that the claimant has not met the standard of
conduct which makes it permissible under the GCL for the Corporation to
indemnify the claimant for the amount claimed, but the burden of proving such
defense shall be on the Corporation. Neither the failure of the Corporation
(including its Board of Directors, Independent Counsel or stockholders) to have
made a determination prior to the commencement of such action that
indemnification of the claimant is proper in the circumstances because he or she
has met the applicable standard of conduct set forth in the GCL, nor an actual
determination by the Corporation (including its Board of Directors, Independent
Counsel or stockholders) that the claimant has not met such applicable standard
of conduct, shall be a defense to the action or create a presumption that the
claimant has not met the applicable standard of conduct.

         (D) If a determination shall have been made pursuant to paragraph (B)
of this Section 6.7 that the claimant is entitled to indemnification, the
Corporation shall be bound by such determination in any judicial proceeding
commenced pursuant to paragraph (C) of this Section 6.7.

         (E) The Corporation shall be precluded from asserting in any judicial
proceeding commenced pursuant to paragraph (C) of this Section 6.7 that the



                                      -14-


procedures and presumptions of this Section 6.7 are not valid, binding and
enforceable and shall stipulate in such proceeding that the Corporation is bound
by all the provisions of this Section 6.7.

         (F) The right to indemnification and the payment of expenses incurred
in defending a proceeding in advance of its final disposition conferred in this
Section 6.7 shall not be exclusive of any other right which any person may have
or hereafter acquire under any statute, provision of the Certificate of
Incorporation, these By-laws, agreement, vote of stockholders or Disinterested
Directors or otherwise. No repeal or modification of this Section 6.7 shall in
any way diminish or adversely affect the rights of any director, officer,
employee or agent of the Corporation hereunder in respect of any occurrence or
matter arising prior to any such repeal or modification.

         (G) The Corporation may maintain insurance, at its expense, to protect
itself and any director, officer, employee or agent of the Corporation or
another corporation, partnership, joint venture, trust or other enterprise
against any expense, liability or loss, whether or not the Corporation would
have the power to indemnify such person against such expense, liability or loss
under the GCL. To the extent that the Corporation maintains any policy or
policies providing such insurance, each such director or officer, and each such
agent or employee to which rights to indemnification have been granted as
provided in paragraph (H) of this Section 6.7, shall be covered by such policy
or policies in accordance with its or their terms to the maximum extent of the
coverage thereunder for any such director, officer, employee or agent.

         (H) The Corporation may, to the extent authorized from time to time by
the Board of Directors, grant rights to indemnification, and rights to be paid
by the Corporation the expenses incurred in defending any proceeding in advance
of its final disposition, to any employee or agent of the Corporation to the
fullest extent of the provisions of this Section 6.7 with respect to the
indemnification and advancement of expenses of directors and officers of the
Corporation.

         (I) If any provision or provisions of this Section 6.7 shall be held to
be invalid, illegal or unenforceable for any reason whatsoever: (1) the
validity, legality and enforceability of the remaining provisions of this
Section 6.7 (including, without limitation, each portion of any paragraph of
this By-law containing any such provision held to be invalid, illegal or
unenforceable, that is not itself held to be invalid, illegal or unenforceable)
shall not in any way be affected or impaired thereby; and (2) to the fullest
extent possible, the provisions of this Section 6.7 (including, without
limitation, each such portion of any paragraph of this By-law containing any
such provision held to be invalid, illegal or unenforceable) shall be construed
so as to give effect to the intent manifested by the provision held invalid,
illegal or unenforceable.

         (J) For purposes of this Section 6.7:

                  (1) "DISINTERESTED DIRECTOR" means a director of the
         Corporation who is not and was not a party to the matter in respect of
         which indemnification is sought by the claimant.




                                      -15-


                  (2) "INDEPENDENT COUNSEL" means a law firm, a member of a law
         firm, or an independent practitioner, that is experienced in matters of
         corporation law and shall include any person who, under the applicable
         standards of professional conduct then prevailing, would not have a
         conflict of interest in representing either the Corporation or the
         claimant in an action to determine the claimant's rights under this
         Section 6.7.

                  (3) "CHANGE OF CONTROL" has the meaning given such term in the
         Corporation's Stock Option Plan, as the same may be amended or
         superseded from time to time.

         (K) Any notice, request or other communication required or permitted to
be given to the Corporation under this Section 6.7 shall be in writing and
either delivered in person or sent by facsimile, telex, telegram, overnight mail
or courier service, or certified or registered mail, postage prepaid, return
receipt requested, to the Secretary of the Corporation and shall be effective
only upon receipt by the Secretary.


                                   ARTICLE VII
                            CONTRACTS, PROXIES, ETC.

         Section 7.1. CONTRACTS. Except as otherwise required by law, the
Certificate of Incorporation or these By-laws, any contracts or other
instruments may be executed and delivered in the name and on the behalf of the
Corporation by such officer or officers of the Corporation as the Board of
Directors may from time to time direct. Such authority may be general or
confined to specific instances as the Board of Directors may determine. The
Chairman of the Board, the President or any Vice President may execute bonds,
contracts, deeds, leases and other instruments to be made or executed for or on
behalf of the Corporation. Subject to any restrictions imposed by the Board of
Directors or the Chairman of the Board, the President or any Vice President of
the Corporation may delegate contractual powers to others under his or her
jurisdiction, it being understood, however, that any such delegation of power
shall not relieve such officer of responsibility with respect to the exercise of
such delegated power.

         Section 7.2. PROXIES. Unless otherwise provided by resolution adopted
by the Board of Directors, the Chairman of the Board, the President or any Vice
President may from time to time appoint an attorney or attorneys or agent or
agents of the Corporation, in the name and on behalf of the Corporation, to cast
the votes which the Corporation may be entitled to cast as the holder of stock
or other securities in any other corporation, any of whose stock or other
securities may be held by the Corporation, at meetings of the holders of the
stock or other securities of such other corporation, or to consent in writing,
in the name of the Corporation as such holder, to any action by such other
corporation, and may instruct the person or persons so appointed as to the
manner of casting such votes or giving such consent, and may execute or cause to
be executed in the name and on behalf of the Corporation and under its corporate
seal or otherwise, all such written proxies or other instruments as he may deem
necessary or proper in the premises.



                                      -16-



                                  ARTICLE VIII
                                   AMENDMENTS

         Section 8.1. AMENDMENTS. These By-laws may be altered, amended, or
repealed at any meeting of the Board of Directors or of the stockholders,
provided notice of the proposed change was given in the notice of the meeting
and, in the case of a meeting of the Board of Directors, in a notice given not
less than two days prior to the meeting; PROVIDED, HOWEVER, that, in the case of
amendments by stockholders, notwithstanding any other provisions of these
By-laws or any provision of law which might otherwise permit a lesser vote or no
vote, but in addition to any affirmative vote of the holders of any particular
class or series of the capital stock of the Corporation required by law, the
Certificate of Incorporation or these By-laws, the affirmative vote of the
holders of a majority of the voting power of all the then outstanding shares of
the Voting Stock, voting together as a single class, shall be required to alter,
amend or repeal any provision of these By-laws.














                                      -17-

EX-99.3

                                                                    Exhibit 99.3

================================================================================


                             STOCKHOLDERS' AGREEMENT


                                   dated as of

                               September 13, 2002

                                      among

                          SEABULK INTERNATIONAL, INC.,

                           NAUTILUS ACQUISITION, L.P.,

                     C/R MARINE DOMESTIC PARTNERSHIP, L.P.,

                     C/R MARINE NON-U.S. PARTNERSHIP, L.P.,

                         C/R MARINE COINVESTMENT, L.P.,

                        C/R MARINE COINVESTMENT II, L.P.

                                       and


                                  GERHARD KURZ



================================================================================



                                TABLE OF CONTENTS

                                                                            Page
                                                                            ----


Article 1             DEFINITIONS.............................................1

         1.1      Definitions.................................................1

Article 2             CORPORATE GOVERNANCE....................................9

         2.1      Composition of the Board....................................9

         2.2      Removal....................................................11

         2.3      Vacancies..................................................12

         2.4      Special Continuing Director Provisions.....................13

         2.5      Committees.................................................13

         2.6      Compensation...............................................14

         2.7      Investor Protective Provisions.............................14

         2.8      Minority Stockholder Protections...........................14

         2.9      No Voting or Conflicting Agreements........................15

Article 3             RESTRICTIONS ON TRANSFER...............................15

         3.1      General Restrictions.......................................15

         3.2      Offer Notice...............................................15

         3.3      Right of First Refusal.....................................15

         3.4      Co-Sale Right..............................................16

         3.5      Permitted Transfers by Kurz................................17

         3.6      Exceptions.................................................17

         3.7      Jones Act Compliance.......................................18

         3.8      Transferees Bound..........................................18

         3.9      Legend.....................................................18

         3.10     Improper Transfer..........................................18

Article 4             REPURCHASE RIGHT.......................................19

         4.1      Repurchase Right...........................................19

         4.2      Legend.....................................................19

Article 5             REGISTRATION RIGHTS....................................19

         5.1      Demand Registration........................................19

         5.2      Incidental Registration....................................21

         5.3      Holdback Agreements........................................23




                                       i


                                TABLE OF CONTENTS
                                   (CONTINUED)

                                                                            Page
                                                                            ----

         5.4      Registration Procedures....................................23

         5.5      Indemnification by the Company.............................26

         5.6      Indemnification by Participating Holders...................27

         5.7      Conduct of Indemnification Proceedings.....................27

         5.8      Contribution...............................................28

         5.9      Participation in Public Offering...........................29

         5.10     Assignment of Registration Rights..........................29

         5.11     Limitation on Grant of Other Registration Rights...........30

Article 6             HOLDING COMPANY........................................30

         6.1      Formation of a Holding Company.............................30

         6.2      Stockholders Agreement.....................................30

         6.3      Jones Act Compliance.......................................30

Article 7             MISCELLANEOUS..........................................31

         7.1      Entire Agreement; No Inconsistent Agreements...............31

         7.2      Binding Effect; Assignability; No Beneficiaries............31

         7.3      Amendment; Waiver; Termination.............................31

         7.4      Notices....................................................32

         7.5      After-Acquired Shares......................................33

         7.6      Headings and References to Sections........................33

         7.7      Severability...............................................33

         7.8      Counterparts...............................................33

         7.9      APPLICABLE LAW.............................................33

         7.10     Specific Enforcement.......................................34

         7.11     Pronouns...................................................34

         7.12     Trial by Jury..............................................34




                                       ii




                             STOCKHOLDERS' AGREEMENT

                  STOCKHOLDERS' AGREEMENT dated as of September 13, 2002 (this
"AGREEMENT"), among Seabulk International, Inc., a Delaware corporation (the
"COMPANY"), Nautilus Acquisition, L.P., a Delaware limited partnership
("NAUTILUS"), C/R Marine Domestic Partnership, L.P., a Delaware limited
partnership ("C/R U.S."), C/R Marine Non-U.S. Partnership, L.P., a Delaware
limited partnership ("C/R NON-U.S."), C/R Marine Coinvestment, L.P., a Delaware
limited partnership ("C/R COINVESTMENT") and C/R Marine Coinvestment II, L.P., a
Delaware limited partnership ("C/R COINVESTMENT II" and, together with C/R U.S.,
C/R Non-U.S. and C/R Coinvestment, the "C/R ENTITIES") and Gerhard Kurz
("KURZ").

                               W I T N E S S E T H

                  WHEREAS, the Company and the Stockholders desire to enter into
certain agreements with respect to the Company.

                  NOW, THEREFORE, in consideration of the foregoing covenants
and agreements herein contained, the parties hereto agree as follows:

                                    ARTICLE 1
                                   DEFINITIONS

                  1.1 DEFINITIONS.

                  (a) The following terms, as used herein, have the following
meanings:

                  "ACQUISITION" has the meaning set forth in SECTION 6.1(A) of
this Agreement.

                  "ACQUISITION NOTICE" has the meaning set forth in SECTION
6.1(A) of this Agreement.

                  "AFFILIATE" means, with respect to any Person, any other
Person directly or indirectly controlling, controlled by, or under common
control with such Person; PROVIDED, HOWEVER, that no Stockholder shall be deemed
an Affiliate of any other Stockholder solely by reason of any investment in the
Company. For the purpose of this definition, the term "CONTROL" (including with
correlative meanings, the terms "CONTROLLING," "CONTROLLED BY" and "UNDER COMMON
CONTROL WITH"), as used with respect to any Person, shall mean the possession,
directly or indirectly, of the power to direct or cause the direction of the
management and policies of such Person, whether through the ownership of voting
securities or by contract or otherwise.

                  "AGREEMENT" has the meaning set forth in the introductory
paragraph hereof.

                  "BOARD" means the Board of Directors of the Company.





                  "BUSINESS COMBINATION" means (A) any merger or consolidation
of the Company or any direct or indirect majority-owned subsidiary of the
Company with any Control Person, or (B) any sale, lease, exchange, mortgage,
pledge, transfer or other disposition (in one transaction or a series of
transactions) by the Company or a majority-owned subsidiary of the Company,
except proportionately as a stockholder of the Company, to or with a Control
Person, whether as part of a dissolution (except as part of an insolvency or
bankruptcy proceeding under applicable laws) or otherwise, of assets of the
Company or of any direct or indirect majority-owned subsidiary of the Company
which assets have an aggregate Fair Market Value equal to ten percent (10%) or
more of either the aggregate Fair Market Value of all the assets of the Company
determined on a consolidated basis or the aggregated Fair Market Value of all
the outstanding stock of the Company; PROVIDED, HOWEVER, that the foregoing
shall not apply to mortgages, pledges, transfers or other dispositions made
pursuant to any credit facility or other loan or financing arrangement of the
Company or any of its majority-owned subsidiaries with respect to which a
Control Person is an agent or member of a bona fide syndication of financial
institutions or other lenders.

                  "BUSINESS DAY" means any day except a Saturday, Sunday or
other day on which commercial banks in New York City are authorized by law to
close.

                  "BY-LAWS" means the By-laws of the Company in effect as of the
date hereof, as amended from time to time.

                  "CERTIFICATE OF INCORPORATION" means the Certificate of
Incorporation of the Company, as in effect from time to time.

                  "CHANGE OF CONTROL" means a transaction or series of
transactions whereby any Person or group of Persons (within the meaning of the
Exchange Act), other than any of the Stockholders or their Affiliates, shall
have acquired beneficial ownership (within the meaning of Rule 13d-3 promulgated
under the Exchange Act) of fifty percent (50%) or more of the issued and
outstanding shares of Common Stock.

                  "CITIZEN" has the meaning ascribed to such term in the
Certificate of Incorporation.

                  "CLOSINGS" shall mean the consummation of the transactions
contemplated by the Purchase Agreements.

                  "COMMON STOCK" means the Common Stock, par value $0.01 per
share, of the Company.

                  "COMMON STOCK EQUIVALENTS" means, without duplication with any
other Common Stock or Common Stock Equivalents, any security of or right issued
by the Company that is convertible into, exercisable for or exchangeable for,
directly or indirectly, Common Stock of the Company, whether at the time of
issuance or upon the passage of time or the occurrence of some future event.




                                       2


                  "COMPANY" has the meaning set forth in the introductory
paragraph hereof.

                  "COMPANY PURCHASE AGREEMENT" means the Stock Purchase
Agreement dated as of June 13, 2002, by and among the Company, Nautilus and the
C/R Entities, as may be amended from time to time.

                  "CONTINUING DIRECTORS" means directors selected by the
Investor Stockholders pursuant to SECTION 5.07 of the Company Purchase Agreement
to continue to serve on the Board following the closing of the transactions
contemplated by the Company Purchase Agreement and any director that is
designated to the Board to fill a vacancy created by the death, disability,
retirement, resignation or removal of such a director.

                  "CONTROL PERSON" means (x) a Person or group of Persons (as
contemplated by Section 13(d)(3) of the Exchange Act) who beneficially owns (as
determined pursuant to Rule 13d-3 promulgated under the Exchange Act) more than
thirty percent (30%) of the outstanding shares of Voting Stock of the Company,
(y) any Person or group of Persons who by agreement, arrangement or
understanding has the right or power to elect a majority of the members of the
board of directors of the Company, or (z) any Affiliate of any such Person or
member of a group of such Persons described in clause (x) or (y) (other than the
Company and direct or indirect majority-owned subsidiaries of the Company);
provided that (i) no Person or group (an "EXEMPT PERSON") shall be a Control
Person if, and for so long as, (A) the Exempt Person is not a Person or group
described in clause (y) or an Affiliate of such Person or group and (B) a Person
(who is not a member of a group that includes the Exempt Person) or group (which
does not include the Exempt Person as a member), together with any Affiliates of
such other Person (or member of such group) beneficially owns a majority of the
outstanding shares of Voting Stock of the Company and (ii) no individual who is
a member of management and a party to this Agreement shall be a Control Person
solely by reason of being a party to this Agreement.

                  "CORPORATE TRANSACTION" has the meaning set forth in SECTION
3.5 hereof.

                  "CO-SALE ELECTION" has the meaning set forth in SECTION 3.4
hereof.

                  "CO-SALE OFFER" has the meaning set forth in SECTION 3.4
hereof.

                  "C/R COINVESTMENT" has the meaning set forth in the
introductory paragraph of this Agreement.

                  "C/R COINVESTMENT II" has the meaning set forth in the
introductory paragraph of this Agreement.

                  "C/R DIRECTORS" has the meaning set forth in SECTION
2.1(A)(II) of his Agreement.




                                       3


                  "C/R ENTITIES" has the meaning set forth in the introductory
paragraph of this Agreement.

                  "C/R NON-U.S." has the meaning set forth in the introductory
paragraph of this Agreement.

                  "C/R PERMITTED TRANSFEREE" means (A) any general or limited
partner of any C/R Entity (a "C/R PARTNER"), and any corporation, partnership,
limited liability company or other entity that is an Affiliate of a C/R Partner
(collectively with the C/R Partners, the "C/R AFFILIATES"); (B) any managing
director, general partner, director, limited partner, member, officer or
employee of any C/R Entity or in any C/R Affiliate (collectively, "C/R
ASSOCIATES"); (C) the heirs, executors, administrators, testamentary trustees,
legatees or beneficiaries of any C/R Associate; and (D) a trust, the
beneficiaries of which, or a corporation, partnership or limited liability
company, the stockholders, general or limited partners or members of which,
include only C/R Affiliates, C/R Associates, their spouses or their lineal
descendants.

                  "C/R U.S." has the meaning set forth in the introductory
paragraph of this Agreement.

                  "C/R VOTING ENTITIES" means C/R U.S., C/R Coinvestment and C/R
Coinvestment II.

                  "DEMAND REGISTRATION" has the meaning set forth in SECTION
5.1(A) of this Agreement.

                  "DGCL" means the General Corporation Law of the State of
Delaware.

                  "ELECTING STOCKHOLDERS" has the meaning set forth in SECTION
6.1(A) of this Agreement.

                  "EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended, or any similar federal statute, and the rules and regulations of the
SEC thereunder, all as the same shall be in effect from time to time.

                  "FAIR MARKET VALUE" means with respect to property, securities
or rights other than cash, its fair market value as determined by the Board;
PROVIDED, that any publicly-traded securities shall be valued as follows:

         (a) If traded on a securities exchange or through the Nasdaq Stock
Market, the value shall be deemed to be the average of the reported closing
prices of the securities on such exchange or market over the thirty (30) day
period ending three (3) days prior to the determination date; or

         (b) If actively traded over-the-counter, the value shall be deemed to
be the average of the closing bid or sale prices (whichever is applicable) over
the thirty (30) day period ending three (3) days prior to the determination
date.



                                       4


                  "FULLY DILUTED COMMON STOCK" means, at any time, the then
outstanding shares of Common Stock plus (without duplication) all shares of
Common Stock issuable, whether at such time or upon the passage of time or the
occurrence of future events, upon the conversion, exchange or exercise of all
then outstanding Common Stock Equivalents.

                  "HOLDERS" means the Investor Stockholders and any Stockholder
to whom an Investor Stockholder transfers registration rights pursuant to
SECTION 5.10 of this Agreement.

                  "HOLDING COMPANY" has the meaning set forth in SECTION 6.1(A)
of this Agreement.

                  "INCIDENTAL REGISTRATION" has the meaning set forth in SECTION
5.2(A) of this Agreement.

                  "INCIDENTAL WITHDRAWAL ELECTION" has the meaning set forth in
SECTION 5.2(B) of this Agreement.

                  "INDEMNIFIED PARTY" has the meaning set forth in SECTION 5.7
of this Agreement.

                  "INDEMNIFYING PARTY" has the meaning set forth in SECTION 5.7
of this Agreement.

                  "INDEPENDENT DIRECTORS" has the meaning ascribed to such term
in paragraph (a) of Article XIV of the Certificate of Incorporation.

                  "INITIAL OWNERSHIP" of a Stockholder means the number of
shares of Common Stock owned by such Stockholder immediately following the
Closings and the number of shares of Common Stock issuable pursuant to Note
Warrants (as defined in the Loomis Purchase Agreement) owned by such Stockholder
immediately following the Closings (or the corresponding number of shares of
Common Stock resulting from any stock dividend, stock split, combination of
shares, reorganization, reclassification or other similar event).

                  "INSPECTORS" has the meaning set forth in SECTION 5.4(G) of
this Agreement.

                  "INVESTOR DIRECTORS" means the Nautilus Directors and the C/R
Directors.

                  "INVESTOR STOCKHOLDERS" means Nautilus and the C/R Entities
(including as such terms may be defined pursuant to SECTIONS 1.1(B) and (C)
hereof).

                  "KURZ" has the meaning set forth in the introductory paragraph
hereof.



                                       5


                  "KURZ PERMITTED TRANSFEREE" means, with respect to Kurz, a
trust that is for the exclusive benefit of, or a partnership the partners of
which are exclusively, Kurz or the spouse, issue or parent of Kurz; a
corporation or other entity, all of the capital stock or other equity of which
is held by Kurz or the spouse, issue or parent of Kurz; or the estate or legal
representative of Kurz.

                  "LOOMIS PURCHASE AGREEMENT" means the Securities Purchase
Agreement dated as of June 13, 2002, by and among Loomis, Sayles & Company,
L.P., Nautilus and the C/R Entities, as may be amended from time to time.

                  "MANAGEMENT DIRECTOR" has the meaning set forth in SECTION
2.1(A)(III) of this Agreement.

                  "MAXIMUM OFFERING SIZE" has the meaning set forth in SECTION
5.1(D) of this Agreement.

                  "MINORITY STOCKHOLDERS" shall mean the holders of Common Stock
of the Company, other than any holder that constitutes a Control Person.

                  "MUTUAL DIRECTORS" has the meaning set forth in SECTION
2.1(A)(IV) of this Agreement.

                  "NASD" has the meaning set forth in the definition of
"REGISTRATION EXPENSES" in this SECTION 1.1.

                  "NAUTILUS" has the meaning set forth in the introductory
paragraph of this Agreement.

                  "NAUTILUS DIRECTORS" has the meaning set forth in SECTION
2.1(A)(I) of this Agreement.

                  "NAUTILUS PERMITTED TRANSFEREE" means (A) any general or
limited partner, member or stockholder of Nautilus (a "NAUTILUS PARTNER"), and
any corporation, partnership, limited liability company, or other entity that is
an Affiliate of any Nautilus Partner (collectively, the "NAUTILUS AFFILIATES");
(B) any managing director, general partner, director, limited partner, officer
or employee of Nautilus or in any Nautilus Affiliate (collectively, "NAUTILUS
ASSOCIATES"); (C) the heirs, executors, administrators, testamentary trustees,
legatees or beneficiaries of any Nautilus Associate; and (D) a trust, the
beneficiaries of which, or a corporation or partnership, the stockholders or
general or limited partners of which, include only Nautilus, Nautilus
Affiliates, Nautilus Associates, their spouses or their lineal descendants.

                  "NOMINEE" has the meaning set forth in SECTION 2.3(A) of this
Agreement.

                  "NON-ACCEPTING OFFEREE" has the meaning set forth in SECTION
3.3 of this Agreement.



                                       6


                  "OFFEREE" has the meaning set forth in SECTION 3.2 of this
Agreement.

                  "OPTION" has the meaning set forth in SECTION 3.3 of this
Agreement.

                  "PERMITTED TRANSFEREE" means, in the case of Nautilus, a
Nautilus Permitted Transferee, in the case of a C/R Entity, a C/R Permitted
Transferee, or in the case of Kurz, a Kurz Permitted Transferee.

                  "PERSON" means an individual, corporation, partnership,
association, limited liability company, trust or other entity or organization,
including a government or political subdivision or an agency or instrumentality
thereof.

                  "PUBLIC OFFERING" means an underwritten offering of
Registrable Shares.

                  "PUBLIC SALE" means a sale (i) pursuant to an effective
registration statement under the Securities Act or (ii) under Rule 144 or
similar rule.

                  "PURCHASE AGREEMENTS" means the Company Purchase Agreement and
the Loomis Purchase Agreement.

                  "QUALIFIED MINORITY TRANSACTION" means a Business Combination
that follows a public tender offer for voting stock by a Control Person where
(i) the Control Person purchases all shares that are validly tendered and (ii)
to the extent that a Control Person has purchased shares of such voting stock in
the six (6) month period prior to the consummation of the tender offer, the
offer price is, at a minimum, the highest price per share paid by such Control
Person or an Affiliate of such Control Person in the six (6) month period prior
to the commencement of the tender offer.

                  "RECORDS" has the meaning set forth in SECTION 5.4(G) of this
Agreement.

                  "REGISTRABLE SHARES" means all shares of Common Stock then
held by a Holder (including, but not limited to, any Common Stock issuable upon
exercise or conversion of any Common Stock Equivalents) and all other shares of
capital stock of the Company and shares of capital stock of the Company issued
or issuable upon conversion, exercise or exchange of securities of the Company
then held by a Holder.

                  "REGISTRATION EXPENSES" means (i) all registration and
prospectus filing fees, (ii) fees and expenses of compliance with securities or
blue sky laws (including reasonable fees and disbursements of counsel in
connection with blue sky qualifications of the Registrable Shares, if any),
(iii) printing expenses, (iv) internal expenses of the Company (including,
without limitation, all salaries and expenses of its officers and employees
performing legal or accounting duties), (v) reasonable fees and disbursements of
counsel for the Company and customary fees and expenses for independent
certified public or chartered accountants retained by the Company (including the
expenses of any comfort letters or costs associated with the delivery by such
accountants of a comfort letter or comfort letters requested pursuant to SECTION
5.4(H) hereof), (vi) the reasonable



                                       7


fees and expenses of any special experts retained by the Company in connection
with such registration, (vii) reasonable fees and expenses of counsel for all
Holders, (viii) fees and expenses in connection with any review of underwriting
arrangements by the National Association of Securities Dealers, Inc. (the
"NASD") including fees and expenses of any "qualified independent underwriter,"
(ix) fees and expenses of listing the Registrable Shares on an exchange or other
trading system and (x) fees and disbursements of underwriters customarily paid
by issuers or sellers of securities; but shall not include any underwriting
fees, discounts or commissions attributable to the sale of Registrable Shares,
or any out-of-pocket expenses (except as set forth in clause (vii) above) of the
Holders (or the agents who manage their accounts), or any fees and expenses of
underwriter's counsel.

                  "REPRESENTATIVE" has the meaning set forth in SECTION 2.5(B)
of this Agreement.

                  "REQUESTING STOCKHOLDER" has the meaning set forth in SECTION
5.1(A) of this Agreement.

                  "RULE 144" means Rule 144 (or any successor provision) under
the Securities Act, as such rule may be amended from time to time.

                  "SEC" means the Securities and Exchange Commission or any
successor thereto performing similar regulatory functions.

                  "SECURITIES ACT" means the Securities Act of 1933, as amended,
or any similar federal statute, and the rules and regulations of the SEC
thereunder, all as the same shall be in effect from time to time.

                  "STOCKHOLDERS" means Nautilus, the C/R Entities, Kurz and
those Persons to whom shares of Common Stock and/or Common Stock Equivalents are
transferred and who become a party hereto in accordance with SECTION 3.8 hereof.

                  "TRANSFER" has the meaning set forth in SECTION 3.1(A) hereof.

                  "TRANSFEROR" has the meaning set forth in SECTION 3.2 hereof.

                  "TRANSFEROR'S NOTICE" has the meaning set forth in SECTION 3.2
hereof.

                  "TRANSFEROR'S SECURITIES" has the meaning set forth in SECTION
3.2 hereof.

                  "U.S. STOCKHOLDER" means any Stockholder that is a Citizen.

                  "VOTING STOCK" means stock of the Company of any class or
series that entitles its holder to vote in the election of directors.

                  "WITHDRAWAL ELECTION" has the meaning set forth in SECTION
5.1(D) of this Agreement.



                                       8


                  (b) The term "NAUTILUS" (including in any case where such term
is included in another defined term hereunder), to the extent that Nautilus
shall have transferred any of its shares of Common Stock and/or Common Stock
Equivalents to the Nautilus Permitted Transferees, shall mean Nautilus and the
Nautilus Permitted Transferees, and any right or action that may be taken at the
election of Nautilus may be taken at the election of Nautilus on behalf of
itself and the Nautilus Permitted Transferees, as the case may be; PROVIDED,
HOWEVER, that for purposes of ARTICLE 2 hereof the term "NAUTILUS" shall not
include any Nautilus Permitted Transferee to the extent that such Nautilus
Permitted Transferee is not a Citizen.

                  (c) The term "C/R ENTITIES" (including in any case where such
term is included in another defined term hereunder), to the extent a C/R Entity
shall have transferred any of its shares of Common Stock and/or Common Stock
Equivalents to C/R Permitted Transferees, shall mean the C/R Entities and the
C/R Permitted Transferees, and any right or action that may be taken at the
election of the C/R Entities may be taken at the election of C/R U.S. on behalf
of the C/R Entities and the C/R Permitted Transferees, as the case may be;
provided, HOWEVER, that for purposes of ARTICLE 2 hereof the term "C/R ENTITIES"
shall not include any C/R Permitted Transferee to the extent that such C/R
Permitted Transferee is not a Citizen.

                  (d) The words "HEREIN," "HEREOF" and "HEREUNDER" and other
words of similar import refer to this Agreement as a whole, including the
schedules and exhibits hereto, as the same may from time to time be amended or
supplemented, and not to any particular section, subsection or clause contained
in this Agreement.

Article 2
                              CORPORATE GOVERNANCE

                  2.1 COMPOSITION OF THE BOARD.

                  (a) The Board shall consist of ten (10) directors appointed in
accordance with this SECTION 2.1. At any time at which the stockholders of the
Company will have the right to vote for, or will vote for, or consent in writing
to, the election or appointment of directors of the Company, Nautilus and each
of the C/R Voting Entities hereby agrees to vote or cause to be voted all shares
of Common Stock owned or hereafter acquired by it, or over which it has voting
control, in favor of the following actions:

                           (i) NAUTILUS DESIGNEES. To cause and maintain the
election to the Board of the following number of designees of Nautilus, the
names of which shall be submitted to the Company in writing by Nautilus (the
"NAUTILUS DIRECTORS"):

                                    (1) For so long as Nautilus continues to own
shares of Common Stock representing at least 50% of its Initial Ownership, four
(4) designees;




                                       9


                                    (2) For so long as Nautilus continues to own
shares of Common Stock representing less than 50% but at least 10% of its
Initial Ownership, two (2) designees;

                                    (3) For so long as Nautilus continues to own
shares of Common Stock representing less than 10% but at least 5% of its Initial
Ownership, one (1) designee; and

                                    (4) At such time as Nautilus owns shares of
Common Stock representing less than 5% of its Initial Ownership, it shall no
longer be entitled to designate any directors to the Board.

                            (ii) C/R DESIGNEES. To cause and maintain the
election to the Board of the following number of designees of C/R U.S., the
names of which shall be to the Company in writing by C/R U.S. (the "C/R
DIRECTORS"):

                                    (1) For so long as the C/R Entities continue
to own in the aggregate shares of Common Stock representing at least 50% of
their aggregate Initial Ownership, two (2) designees;

                                    (2) For so long as the C/R Entities continue
to own in the aggregate shares of Common Stock representing less than 50% but at
least 10% of their aggregate Initial Ownership, one (1) designee; and

                                    (3) At such time as the C/R Entities own in
the aggregate shares of Common Stock representing less than 10% of their
aggregate Initial Ownership, it shall no longer be entitled to designate any
directors to the Board.

                           (iii) MANAGEMENT DIRECTOR. To cause and maintain the
election to the Board of the then duly appointed and serving Chief Executive
Officer of the Company (as such, the "MANAGEMENT DIRECTOR").

                           (iv) MUTUAL DIRECTORS. So long as Article XIV of the
Certificate of Incorporation is in effect, to cause and maintain the election to
the Board of three (3) Independent Directors, who shall be acceptable to (A)
Nautilus, so long as it continues to own shares of Common Stock representing at
least 5% of its Initial Ownership, and (B) C/R U.S. so long as the C/R Entities
continue to own in the aggregate shares of Common Stock representing at least
10% of their aggregate Initial Ownership (the "MUTUAL DIRECTORS"); PROVIDED,
HOWEVER, that the initial Mutual Directors shall be Continuing Directors;
provided, further, that in the event there are less than three (3) Independent
Directors and Nautilus and C/R U.S. fail to agree on an acceptable Independent
Director to fill such vacancy within ninety (90) days of the occurrence of such
vacancy (or within such shorter period as may be required if such vacancy is
required to be filled prior to such date by applicable law or rule or listing
requirement of any national stock exchange or SEC recognized trading market on
which securities issued by the Company are listed




                                       10


or quoted that is applicable to the Company), then the remaining Independent
Director(s) shall designate an Independent Director to fill such vacancy.

                  (b) Immediately upon the Closings, the Nautilus Directors
shall be Ari Benacerraf, David Durkin, Kenneth V. Huseman, and Steven Webster;
the C/R Directors shall be Pierre F. Lapeyre and David M. Leuschen; the
Management Director shall be Kurz; and the Mutual Directors shall be Peter H.
Cressy, Robert L. Keiser and Thomas P. Moore, Jr.

                  (c) In furtherance of the foregoing, Nautilus and each of the
C/R Voting Entities hereby agrees to take all necessary action in order to
ensure that the composition of the Board is as set forth in this SECTION 2.1;
provided, however, that nothing contained herein shall require Nautilus and the
C/R Voting Entities to take action to ensure the composition of the Board in the
manner set forth in this SECTION 2.1 to the extent that such composition would
be in contravention of any law or rule or listing requirement of any national
stock exchange or SEC recognized trading market on which securities issued by
the Company are listed or quoted that is applicable to the Company.

                  (d) In the event that at any time during the term of this
Agreement any Person or Persons entitled under this SECTION 2.1 to designate a
director is no longer entitled to designate one or more persons to serve as
directors, then such director position(s) shall be filled by the remaining
directors or by the stockholders of the Company in accordance with the DGCL, the
Certificate of Incorporation and the By-laws. Notwithstanding that a Person or
Persons is no longer entitled to designate one or more persons to serve as
directors under this SECTION 2.1, nothing herein shall preclude an Affiliate,
partner or associate of such Person from serving on the Board if such person is
elected in accordance with this SECTION 2.1(D).

                  (e) In furtherance of the foregoing, promptly following such
designations, the Company will take all action necessary to elect the Nautilus
Directors, the C/R Directors, the Management Director and the Mutual Directors
as members of the Board. Without limiting the foregoing the Company agrees to
cause each such designee to be nominated for election to the Board at each
annual meeting of the Company's stockholders or any special meeting in lieu
thereof. To the extent the Company's proxy statement for any annual meeting of
stockholders, or any special meeting in lieu thereof, includes a recommendation
regarding the election of any other nominees to the Board, the Company agrees to
include a recommendation of its Board that the stockholders also vote in favor
of each such designee pursuant to this Agreement standing for election at such
meeting. The Company shall take all actions necessary to ensure that the
Certificate of Incorporation and By-laws as in effect immediately following the
date hereof and at any time thereafter do not conflict in any respect with the
provisions of this ARTICLE 2.

                  2.2 REMOVAL.

                  (a) If any Person(s) entitled to designate a director requests
that any of its or their respective designees be removed as a director (with or
without cause) by written



                                       11


notice thereof to the Company, each U.S. Stockholder shall vote all of its
shares of Common Stock in favor of such removal upon such request.

                  (b) Each U.S. Stockholder agrees that if at any time it is
then entitled to vote for the removal of directors of the Company, it shall not
vote any of its shares of Common Stock in favor of, or take any other action
related to, the removal of any director who shall have been designated pursuant
to SECTION 2.1 unless the Person(s), if any, entitled to designate or nominate
such director shall have consented to such removal in writing or unless
requested by such Person(s) pursuant to SECTION 2.2(A) or unless such removal is
pursuant to SECTION 2.3(B).

                  (c) Notwithstanding SECTIONS 2.2(A) and (B) above, each U.S.
Stockholder agrees that, for a period of one (1) year following the date hereof,
it shall not vote any of its shares of Common Stock in favor of the removal of
any Continuing Director, unless such removal is for cause (as determined in
accordance with Section 141 of the DGCL).

                  2.3 VACANCIES.

                  (a) If, as a result of death, disability, retirement,
resignation or removal (for any or no reason) of a director designated pursuant
to SECTION 2.1, there shall exist or occur any vacancy of the Board (other than
with respect to the Management Director):

                           (i) the Person or Persons entitled under SECTION 2.1
to designate such director whose death, disability, retirement, resignation or
removal resulted in such vacancy shall (so long as such person is then
entitled), as promptly as reasonably possible, designate another individual (the
"NOMINEE") to fill such capacity and serve as a director of the Company; and

                           (ii) Nautilus and each of the C/R Voting Entities
shall vote his, her or its shares of Common Stock, or execute a written consent,
as the case may be, and take all such other actions to ensure that the Nominee
will be elected to the Board. Any vacancy that occurs shall be filled as
promptly as possible upon the designation of a Nominee by the Person or Persons
having the right to nominate a Nominee to fill such vacancy.

                  (b) If, prior to or following his or her election to the Board
of Directors of the Company pursuant to SECTION 2.1(A)(III) hereof, the
Management Director shall be unable or unwilling to serve as a director of the
Company, shall resign or be removed or be unable to serve for any reason prior
to the expiration of his or her term as a director of the Company, or shall
cease to be the Chief Executive Officer of the Company for any reason, then the
Board shall elect a replacement designee (to be nominated by (A) Nautilus, so
long as it continues to own shares of Common Stock representing at least 5% of
its Initial Ownership, and (B) C/R U.S. so long as the C/R Entities continue to
own in the aggregate shares of Common Stock representing at least 10% of their
aggregate Initial Ownership) to fill the unexpired term of the Management
Director; PROVIDED, HOWEVER, that at such time as the Chief Executive Officer of
the Company shall be able and willing



                                       12


to serve as a director such replacement designee shall be removed (and each of
the Stockholders shall vote all of his or her or its Common Stock in favor of
such removal) and the Chief Executive Officer shall be appointed by the Board of
Directors to fill such vacancy; IT BEING UNDERSTOOD that upon any Person's
ceasing to the Chief Executive Officer of the Company, including but not limited
to, as a result of the resignation, renewal or termination of such Person, such
Person shall immediately be removed as a director.

                  2.4 SPECIAL CONTINUING DIRECTOR PROVISIONS. For a period of
one (1) year after the Closings, the Investor Stockholders shall not take any
action that will cause the Continuing Directors to represent less than a
majority of the total number of Independent Directors, except to the extent
necessary to comply with any law or rule or listing requirement of any national
stock exchange or SEC recognized trading market on which securities issued by
the Company are listed or quoted that is applicable to the Company.
Additionally, to the extent that an annual meeting of stockholders of the
Company is held for the election of the directors during the first (1st) year
after the Closings, Nautilus and the C/R Voting Entities will vote for the
election of the Continuing Directors then serving as directors to serve an
additional one (1) year term.

                  2.5 COMMITTEES.

                  (a) From and after the date hereof, the Company, to the extent
requested by Nautilus and the C/R Voting Entities, Nautilus and each of the C/R
Voting Entities shall cause the Board of Directors to designate at least one
Nautilus Director and at least one C/R Director to serve on each of the audit
committee and the compensation committee of the Board, except to the extent that
such designation would not comply with any law or rule or listing requirement of
any national stock exchange or SEC recognized trading market on which securities
issued by the Company are listed or quoted that is applicable to the Company.

                  (b) If at any time that Nautilus or the C/R Voting Entities do
not have a representative on any committee of the Board then Nautilus or the C/R
Voting Entities, as the case may be, shall have the right to select one
representative (each a "REPRESENTATIVE") who shall (i) receive all notices and
information that the Company distributes to each such committee at the time such
notices and information are distributed to members of such committees, and (ii)
have the right to attend and observe in a nonvoting capacity all meetings of
such committees; provided, however, (x) that the Company reserves the right to
exclude each Representative from access to any material or meeting or portion
thereof if the Company believes upon advice of counsel that such exclusion is
reasonably necessary to preserve the attorney-client privilege; (y) that each
Representative shall agree to maintain the confidentiality of all Company
information and all proceedings at such committees to the same extent as he
would be required to do if he were a member of such committee; and (z) that such
designation shall not conflict with any law or rule or listing requirement of
any national stock exchange or SEC recognized trading market on which securities
issued by the Company are listed or quoted that is applicable to the Company.



                                       13


                  2.6 COMPENSATION. Each director of the Board shall receive
fees or other compensation as may be determined from time to time by the Board;
PROVIDED, HOWEVER, that directors shall be entitled to reimbursement for all
reasonable out-of-pocket expenses incurred in connection with their services as
directors, including, without limitation, those out-of-pocket expenses incurred
in connection with their travel to and attendance at Board and Board committee
meetings.

                  2.7 INVESTOR PROTECTIVE PROVISIONS. So long as Nautilus owns
at least 15% of the Fully Diluted Common Stock of the Company, the following
matters will require unanimous affirmative approval of the Investor Directors
appointed by Nautilus, and so long as the C/R Entities own, in the aggregate, at
least 15% of the Fully Diluted Common Stock of the Company, the following
matters will require unanimous approval of the Investor Directors appointed by
the C/R Voting Entities:

                  (a) any purchase or other acquisition by the Company of
capital stock of the Company, directly or indirectly, except in connection with
the purchase of shares of Common Stock from former employees, consultants and
directors of the Company;

                  (b) any transaction for which the approval of Independent
Directors would be required pursuant to paragraph (c) of Article XIV of the
Certificate of Incorporation;

                  (c) any issuance of securities of the Company, other than (i)
pursuant to employee or director compensation arrangements approved by the
Board, (ii) ordinary trade debt and (iii) in conjunction with equipment leases;
and

                  (d) any amendment to the Certificate of Incorporation or
By-laws.

                  2.8 MINORITY STOCKHOLDER PROTECTIONS. Until the earliest to
occur of (a) the second anniversary of this Agreement, (b) the consummation of a
Qualified Minority Transaction or (c) the consummation of a Business Combination
in compliance with the Certificate of Incorporation, at any time a Control
Person beneficially owns (as determined pursuant to Rule 13d-3 of the Exchange
Act) 90% or more of the outstanding shares of Common Stock, the Company shall
not enter into a Business Combination (including a merger pursuant to Section
253 of the General Corporation Law of Delaware) without the approval of holders
of a majority of the outstanding shares of Common Stock held by Minority
Stockholders, PROVIDED, HOWEVER, that such approval shall not be required for
(x) a Business Combination that occurs within 150 days following the
consummation of a tender offer by a Control Person for all of the shares of the
Common Stock then held by the Minority Stockholders, provided that (i) such
tender offer is subject to the nonwaiveable condition that there have been
validly tendered and not withdrawn a majority of the shares of Common Stock then
held by the Minority Stockholders; (ii) such condition is met; and (iii) the
Fair Market Value of the consideration to be paid in respect of shares of Common
Stock held by remaining Minority Stockholders in such merger shall be no less
than the Fair Market Value of the consideration paid per share in such tender
offer or (y) a Qualified Minority Transaction.



                                       14


                  2.9 NO VOTING OR CONFLICTING AGREEMENTS. No Stockholder shall
grant any proxy or enter into or agree to be bound by any voting trust or
agreement with respect to the shares of Common Stock held by such Stockholder,
nor shall any Stockholder enter into any agreements or arrangements of any kind
with any Person that contain provisions that are inconsistent with the
provisions of this Agreement.

                                   ARTICLE 3
                            RESTRICTIONS ON TRANSFER

                  3.1 GENERAL RESTRICTIONS. No Stockholder may, directly or
indirectly, sell, assign, transfer, offer, grant a participation in, mortgage,
pledge, hypothecate, create a security interest in or lien upon, encumber,
donate, contribute, place in trust, or otherwise dispose of (collectively,
"TRANSFER") any shares of Common Stock or Common Stock Equivalents, except in
compliance with this Agreement.

                  3.2 OFFER NOTICE. In the event that a Stockholder (a
"TRANSFEROR") proposes to Transfer for value any Common Stock and/or Common
Stock Equivalents held by such Stockholder (the "TRANSFEROR'S SECURITIES"), then
the Transferor shall, no later than fifteen (15) days prior to the consummation
of such transaction, give notice in writing of such transaction (the
"TRANSFEROR'S NOTICE") to each other Stockholder (an "OFFEREE") stating (i) the
Transferor's bona fide intention to Transfer the Transferor's Securities, (ii)
the number and kind of the Transferor's Securities to be Transferred, (iii) the
price and terms for such proposed Transfer, (iv) the name of the proposed
transferee and that such proposed transferee is committed to acquire the stated
number of the Transferor's Securities on the stated price and terms, and (v) a
representation that such proposed transferee has been informed of the rights
provided for in this ARTICLE 3 and has agreed to purchase the Transferor's
Securities in accordance with the terms hereof.

                  3.3 RIGHT OF FIRST REFUSAL. In the event a Transferor proposes
to Transfer any of the Transferor's Securities pursuant to SECTION 3.2 above,
then the Transferor's Notice shall also contain an offer to sell (the "OPTION")
to each of the Offerees, at the same price and for the same consideration
specified to be paid by the proposed transferee (provided that, in the event any
of such consideration is non-cash consideration, at the election of such
Offeree, such Offeree may pay cash equal to the Fair Market Value of such
non-cash consideration), the Transferor's Securities to be sold in the proposed
Transfer in proportion to the number of shares of Common Stock owned by each
Offeree. If any Offeree to whom the Option is given fails to accept (a
"NON-ACCEPTING OFFEREE") in writing the Option by the fifteenth (15th) day after
the Transferor's delivery of the Transferor's Notice, then the Transferor shall
promptly notify the Offerees accepting such Option in writing of such failure
and such other Offerees may purchase such Transferor's Securities that were
offered to such Non-Accepting Offeree in the proportions upon which they
mutually agree, or, if they are unable to agree upon an allocation of such
Transferor's Securities among themselves, then in proportion to the number of
shares of Common Stock owned by each such Offeree who wishes to purchase such
Transferor's Securities. Unless, through exercise of the Option, all the
Transferor's



                                       15


Securities proposed to be Transferred in the Transferor's Notice are to be
acquired by the Offerees, the Transferor may Transfer, subject to the remaining
provisions of this ARTICLE 3, all of such Transferor's Securities covered by the
Transferor's Notice in accordance with the terms of such Transfer set forth in
the Transferor's Notice; PROVIDED, HOWEVER, that such Transfer must occur no
later than thirty (30) days after the date the Transferor's Notice was received
by the Offerees; PROVIDED FURTHER, that if such Transfer is subject to any prior
regulatory approval and the Transferor and the proposed transferee act in a
commercially reasonable manner to obtain such regulatory approval, the time
period during which such Transfer may be consummated shall be extended until the
expiration of five (5) Business Days after all such approvals shall have been
received; and PROVIDED FURTHER, that such time period shall not exceed ninety
(90) days from the date the Transferor's Notice was received by the Offerees. If
the Option is accepted in a manner such that all the Transferor's Securities
covered by the Transferor's Notice are to be acquired by the Offerees, the
Transferor shall Transfer all such Transferor's Securities (free and clear of
all liens and encumbrances other than those created hereunder) to the applicable
Offerees within twenty (20) days after the date such Option is accepted by such
Offerees, against delivery by such Offerees of the consideration payable to the
Transferor; PROVIDED, however, that such closing may be extended by the Offerees
to obtain any required governmental approvals or to call capital, if applicable.

                  3.4 CO-SALE RIGHT. The Transferor's Notice delivered pursuant
to SECTION 3.2 (unless such Transferor's Notice is delivered by Kurz, who shall
not be bound by the obligations of this SECTION 3.4) shall also state (the
"CO-SALE OFFER") that, in lieu of exercising the Option, or if less than all of
the Transferor's Securities covered by the Transferor's Notice are to be
purchased as a result of the exercise of the Option, then each Offeree (other
than Kurz, who shall not be entitled to any of the rights of this SECTION 3.4)
shall have the right to have included in the proposed Transfer a portion of the
Common Stock and/or Common Stock Equivalents to be Transferred, which shall be
the product of (i) the number of shares (including shares issuable upon exercise
or conversion of Common Stock Equivalents to be transferred) covered by the
Transferor's Notice and (ii) a fraction, the numerator of which is the number of
shares of Common Stock held by such Offeree, and the denominator of which in the
aggregate number of all shares of Common Stock held by the Transferor and all
Offerees electing to accept the Co-Sale Offer. If any Offeree elects to
participate in the proposed Transfer pursuant to this SECTION 3.4 (a "CO-SALE
ELECTION") by providing written notice thereof to the Transferor by the
fifteenth (15th) day after delivery of the Transferor's Notice, such Offeree
shall convert the portion of its then-convertible or exercisable Common Stock
Equivalents to be included in the proposed Transfer to Common Stock prior to any
such Transfer to the extent the Transferor is transferring shares of Common
Stock. The Company and the Transferor agree to make any such conversion or
exercise concurrent with the actual Transfer to the proposed transferee. If any
Offeree shall make a Co-Sale Election, the Transferor shall reduce, to the
extent necessary, the number of shares of Common Stock or Common Stock
Equivalents it otherwise would have sold in the proposed Transfer so as to
permit those Offerees who have made a Co-Sale Election to Transfer the number of
shares of Common Stock and/or Common Stock Equivalents, if



                                       16


applicable, that they are entitled to Transfer under this SECTION 3.4. If a
Co-Sale Election has been made with respect to any Common Stock or Common Stock
Equivalents proposed to be Transferred, then the Transferor may not effect any
Transfer of any Common Stock or Common Stock Equivalents to any transferee (as
otherwise permitted by SECTION 3.4) unless such transferee shall also purchase
from the Offerees making such Co-Sale Election the Common Stock or Common Stock
Equivalents, as applicable, permitted to be included by such Offerees in such
Transfer pursuant to this SECTION 3.4; PROVIDED, HOWEVER, that such transferee
need not purchase any Common Stock or Common Stock Equivalents from an Offeree
(and may instead purchase a like number of such Common Stock or Common Stock
Equivalents at the same price from the Transferor) if such Offeree refuses to
enter into any applicable agreements between the Transferor and the proposed
transferee on the same terms as are applicable to the Transferor (provided that
no Offeree will be required to (A) enter into any agreements not relating
directly to the purchase and sale of the Common Stock or Common Stock
Equivalents, (B) enter into any non-competition covenant or (C) make
representations or warranties except as to title to and absence of liens or
encumbrances (other than those created hereunder) on the securities being sold
by such Offeree).

                  3.5 PERMITTED TRANSFERS BY KURZ. The provisions of SECTIONS
3.2 and 3.3 shall not apply to any Transfers by Kurz of shares of Common Stock
or Common Stock Equivalents held by him in an amount not to exceed in the
aggregate, in any given year ending on the anniversary date of this Agreement,
the sum of (i) 2% of the aggregate number of shares of Common Stock and vested
Common Stock Equivalents (on an as converted basis) held by him at the beginning
of such year and (ii) the aggregate number of shares that could have been
transferred by Kurz in any prior years under clause (i) of this SECTION 3.5 that
were not so transferred; PROVIDED THAT the aggregate number of shares that Kurz
may transfer pursuant to this sentence shall not exceed 10% of the greatest
aggregate number of shares of Common Stock and vested Common Stock Equivalents
(on an as converted basis) held by Kurz since the date of this Agreement. Until
the earlier of (i) the termination of Kurz's employment with the Company without
cause (as such term is defined in any employment agreement between the Company
and Kurz) and (ii) the later of (x) five (5) years from the date hereof and (y)
the expiration or termination of Kurz's employment with the Company (such time
period as applicable under clause (i) or (ii), the "CONSENT PERIOD"), any
transfers in excess of such amounts shall require the express written consent of
Stockholders holding at least a majority of the shares of Common Stock held by
all Stockholders (excluding Kurz), notwithstanding anything to the contrary
contained herein, including SECTIONS 3.2 and 3.3. In any event, Kurz shall give
the Stockholders at least 5 Business Days notice prior to any transfer of Common
Stock or Common Stock Equivalents being effected in accordance with this SECTION
3.5. The provisions of this SECTION 3.5 shall terminate and cease to be of any
force and effect upon the expiration of the Consent Period and any transfers
after such expiration shall be subject to SECTIONS 3.2 and 3.3 hereof.

                  3.6 EXCEPTIONS. In no event shall (a) any exchange,
reclassification, or other conversion of shares of Common Stock or Common Stock
Equivalents into any



                                       17


cash, securities, or other property pursuant to a recapitalization or a merger
or consolidation of the Company or any subsidiary of the Company with, any sale
of all of the outstanding Common Stock and Common Stock Equivalents to, or any
sale or Transfer by the Company or any subsidiary of the Company of all or
substantially all its assets to, any Person (a "CORPORATE TRANSACTION"), (b) a
Transfer of shares of Common Stock or Common Stock Equivalents to the Holding
Company in accordance with ARTICLE 6 hereof or (c) a Public Sale, constitute a
Transfer of shares of Common Stock or Common Stock Equivalents for purposes of
this ARTICLE 3. In addition, SECTIONS 3.2, 3.3 and 3.4 hereof shall not apply to
any Transfer of Common Stock or Common Stock Equivalents (i) by a Stockholder to
a Permitted Transferee of such Stockholder, PROVIDED THAT any Permitted
Transferee having acquired Common Stock and/or Common Stock Equivalents shall
have agreed, by the execution of a counterpart signature page hereto, to take
and hold such shares of Common Stock or Common Stock Equivalents subject to the
provisions and upon the conditions specified in this Agreement as a Stockholder.

                  3.7 JONES ACT COMPLIANCE. Notwithstanding anything in this
Agreement to the contrary, no Stockholder shall Transfer shares of Common Stock
or Common Stock Equivalents owned by it to any Person (including any Permitted
Transferee) that does not constitute a Citizen to the extent that such Transfer
would result in the Company not meeting the requirements of Section 2 of the
Shipping Act, 1916, as amended, for the ownership and operation of vessels in
the United States coastwise trade.

                  3.8 TRANSFEREES BOUND. No Stockholder shall Transfer any
Common Stock or Common Stock Equivalents, unless such transferee shall have
agreed, by execution of a counterpart signature page hereto, to take and hold
such shares of Common Stock and Common Stock Equivalents subject to the
provisions and upon the conditions specified in this Agreement, and upon such
execution, such transferee shall become a "STOCKHOLDER" hereunder.

                  3.9 LEGEND. In addition to any other legend that may be
required, each certificate for shares of Common Stock and Common Stock
Equivalents that is issued to any Stockholder shall bear a legend in
substantially the following form:

         "THIS SECURITY IS SUBJECT TO RESTRICTIONS ON TRANSFER AS SET FORTH IN
         THE STOCKHOLDERS' AGREEMENT DATED SEPTEMBER 13, 2002, A COPY OF WHICH
         MAY BE OBTAINED UPON REQUEST FROM THE COMPANY AND ANY SUCCESSOR
         THERETO. BY ACCEPTANCE OF THIS CERTIFICATE, EACH HOLDER HEREOF AGREES
         TO BE BOUND BY THE PROVISIONS OF THE STOCKHOLDERS' AGREEMENT."

                  3.10 IMPROPER TRANSFER. Any attempt to Transfer any shares of
Common Stock or Common Stock Equivalents not in compliance with this Agreement
or the Securities Act shall be null and void, and neither the Company nor any
transfer agent shall give any effect in the Company's transfer records to such
attempted Transfer.



                                       18


                                   ARTICLE 4
                                REPURCHASE RIGHT

                  4.1 REPURCHASE RIGHT. The Company shall have a purchase right
in any Common Stock or Common Stock Equivalents owned (including shares of
Common Stock and Common Stock Equivalents hereafter acquired) by Kurz on the
terms of the purchase right contained in that certain Non-Qualified Stock Option
Agreement between Kurz and the Company, dated June 16, 2000, as in effect as of
the date hereof; provided that the foregoing repurchase right shall terminate
and this paragraph shall cease to be of any force and effect upon the later of
(i) five (5) years from the date hereof and (ii) the expiration of such purchase
right following the expiration or termination of Kurz's employment with the
Company, except that if Kurz's employment with the Company is terminated by the
Company without cause (as defined in any employment agreement between the
Company and Kurz), then such purchase right shall terminate immediately upon
such termination of Kurz's employment. Without limiting the foregoing, no waiver
or amendment of any provision of any applicable benefit plan or agreement to
eliminate or restrict such repurchase right shall be effective with respect to
Kurz.

                  4.2 LEGEND. Each certificate or instrument representing shares
of Common Stock or a Common Stock Equivalent held by Kurz or a Kurz Permitted
Transferee shall bear a conspicuous legend in substantially the following form:

                  "THE SHARES [REPRESENTED BY THIS CERTIFICATE] [ISSUABLE
                  PURSUANT TO THIS AGREEMENT] ARE SUBJECT TO AN OPTION TO
                  PURCHASE PROVIDED UNDER THE PROVISIONS OF THE STOCKHOLDERS'
                  AGREEMENT DATED SEPTEMBER 13, 2002, A COPY OF WHICH MAY BE
                  OBTAINED UPON REQUEST FROM THE COMPANY AND ANY SUCCESSOR
                  THERETO."

                                   ARTICLE 5
                               REGISTRATION RIGHTS

                  5.1 DEMAND REGISTRATION.

                  (a) Upon the written request of a Holder (such requesting
party, a "REQUESTING STOCKHOLDER") requesting that the Company effect the
registration under the Securities Act of any or all such Requesting
Stockholder's Registrable Shares and specifying the intended method of
disposition thereof, the Company will promptly give written notice of such
requested registration (a "DEMAND REGISTRATION") at least twenty (20) days prior
to the anticipated filing date of the registration statement relating to such
Demand Registration to all other Holders, and thereupon will use its best
efforts to effect, as expeditiously as reasonably possible, the registration
under the Securities Act of:

                           (i) the Registrable Shares that the Company has been
so requested to register by the Requesting Stockholder; and



                                       19


                           (ii) all other Registrable Shares that any other
Holder has requested the Company to register, subject to SECTION 5.2 hereof, by
written request received by the Company within ten (10) days after the receipt
by such Holders of such written notice given by the Company,

all to the extent necessary to permit the disposition (in accordance with the
intended methods thereof as aforesaid) of the Registrable Shares so to be
registered; PROVIDED, HOWEVER, that (i) the Company shall not be obligated to
effect more than one Demand Registrations in any nine-month period, (ii) the
Company shall not be obligated to effect (A) more than four Demand Registrations
for Nautilus or its transferees or (B) more than two Demand Registrations for
the C/R Entities (taken as a group) or their transferees, (iii) the Company
shall not be obligated to effect a Demand Registration unless, in the reasonable
judgment of the Company exercised in good faith, the aggregate number of
Registrable Shares requested to be included in such Demand Registration by the
Holders would have a Fair Market Value of at least $20,000,000, and (iv) the
Company may delay the filing of a registration statement pursuant to a Demand
Registration for a reasonable period (not to exceed 90 days), if, in the good
faith judgment of the Company, it is in the best interests of the Company not to
disclose the existence of or facts surrounding a significant corporate
development or transaction then pending or in progress.

                  The Requesting Stockholder requesting a registration under
this SECTION 5.1(A) may, at any time prior to the effective date of the
registration statement relating to such Demand Registration, revoke such
request, without liability to the Company or any of the other Holders (except as
provided below) by providing a written notice to the Company and such other
Holders irrevocably revoking such request, in which case such request, so
revoked, shall not be considered a Demand Registration and any fees and expenses
incurred in connection with such request prior to such revocation shall not be
deemed to be Registration Expenses and shall be paid by the Requesting
Stockholder revoking such request, except to the extent that such Demand
Registration is continued in accordance with the following proviso; PROVIDED,
HOWEVER, that any other Holder entitled to request a Demand Registration under
this SECTION 5.1(A) may request the Company to continue such registration by
providing written notice within five (5) days of receipt of the notice revoking
the original request, in which case such registration shall constitute a Demand
Registration of such other Holder and such Holder will be deemed to be the
"REQUESTING STOCKHOLDER" with respect to such registration; PROVIDED THAT the
Company shall not be obligated to effect the Demand Registration unless, in the
reasonable judgment of the Company exercised in good faith, the aggregate number
of Registrable Shares requested to be included in such Demand Registration by
the Holders would have a Fair Market Value of at least $20,000,000.

                  (b) The Company will pay all Registration Expenses in
connection with any Demand Registration.

                  (c) A Demand Registration requested pursuant to SECTION 5.1(A)
shall not be deemed to have been effected unless the registration statement
relating thereto (i) has become effective under the Securities Act and (ii) has
remained effective for a period of



                                       20


at least 120 days (or such shorter period in which all Registrable Shares of the
Holders included in such Demand Registration has actually been sold thereunder);
PROVIDED, HOWEVER, that, if after any registration statement requested pursuant
to this SECTION 5.1 becomes effective, such registration statement is interfered
with by any stop order, cease trade order, injunction or other order or
requirement of the SEC, or other governmental agency or court solely due to the
actions or omissions to act of the Company, such registration statement shall be
at the sole expense of the Company and shall not be considered a Demand
Registration.

                  (d) If a Demand Registration involves a Public Offering and
the managing underwriter thereof shall advise the Company and the Requesting
Stockholder that, in its view, (i) the number of shares of Common Stock
requested to be included in such registration or (ii) the inclusion of some or
all of the Registrable Shares owned by the other Holders, in either case,
exceeds the largest number of shares of Common Stock that can be sold without
having an adverse effect on such Public Offering, including the price at which
such shares can be sold (the "MAXIMUM OFFERING SIZE"), the Company will include
in such registration, up to and not in excess of the Maximum Offering Size
FIRST, all Registrable Shares requested to be included in such Demand
Registration by the Requesting Stockholder; SECOND, all Registrable Shares
requested to be included in such Demand Registration by the other Holders,
allocated, if necessary, for the offering not to exceed the Maximum Offering
Size among the Holders pro rata on the basis of the relative number of
Registrable Shares requested to be included in such Demand Registration by such
Holders; and THIRD, any shares of Common Stock proposed to be included in such
Demand Registration by the Company. If as a result of the proration provisions
of this SECTION 5.1(D), any Holder of Registrable Shares is not entitled to
include all such Registrable Shares in such Demand Registration, such Holder may
elect to withdraw his, her or its request to include any Registrable Shares in
such Demand Registration (a "WITHDRAWAL ELECTION"); PROVIDED, HOWEVER, that a
Withdrawal Election shall be irrevocable and any Holder of Registrable Shares
who has made a Withdrawal Election shall no longer have any right to include any
Registrable Shares in such Demand Registration as to which such Withdrawal
Election was made. The number of securities required to satisfy any
underwriters' over-allotment option shall be allocated pro rata among the
Holders and the Company on the basis of the relative number of securities
otherwise to be included by each of them in the registration with respect to
which such over-allotment option relates.

                  5.2 INCIDENTAL REGISTRATION.

                  (a) If the Company proposes to register any of its shares of
Common Stock under the Securities Act (other than a registration (i) on Form S-8
or S-4 or any successor or similar forms, (ii) relating to shares of Common
Stock issuable upon exercise of employee share options or in connection with any
employee benefit or similar plan of the Company or (iii) in connection with a
direct or indirect acquisition by the Company of another Person or any
transaction with respect to which Rule 145 (or any successor provision) under
the Securities Act applies), whether or not for sale for its own account, it
will each such time, subject to the provisions of SECTION 5.2(B) hereof, give



                                       21


prompt written notice at least twenty (20) days prior to the anticipated filing
date of the registration statement relating to such registration to each Holder,
which notice shall set forth such Holder's rights under this SECTION 5.2 and
shall offer all Holders the opportunity to include in such registration
statement such number of Registrable Shares as each such Holder may request (an
"INCIDENTAL REGISTRATION"); PROVIDED, HOWEVER, that the provisions of SECTION
5.1 hereof and not this SECTION 5.2 shall apply to the ability of any Holder to
participate in any registration being effected pursuant to a Demand Registration
contemplated by SECTION 5.1 hereof. Upon the written request of any such Holder
made within ten (10) days after the receipt of notice from the Company (which
request shall specify the number of Registrable Shares intended to be disposed
of by such Holder), the Company will use its best efforts to effect the
registration under the Securities Act of all Registrable Shares that the Company
has been so requested to register by such Holders, to the extent requisite to
permit the disposition of the Registrable Shares to be so registered; PROVIDED,
HOWEVER, that (A) if such registration involves a Public Offering, all such
Holders requesting to be included in the Company's registration must sell their
Registrable Shares to the underwriters selected as provided in SECTION 5.4(F)
hereof on the same terms and conditions as apply to the Company, and (B) if, at
any time after giving written notice of its intention to register any shares
pursuant to this SECTION 5.2(A) and prior to the effective date of the
registration statement filed in connection with such registration, the Company
shall determine for any reason not to register such shares, the Company shall
give written notice to all such Holders and, thereupon, shall be relieved of its
obligation to register any Registrable Shares in connection with such
registration (without prejudice, however, to rights of any of the Holders under
SECTION 5.1 hereof). No registration effected under this SECTION 5.2 shall
relieve the Company of its obligations to effect a Demand Registration to the
extent required by SECTION 5.1 hereof. The Company will pay all Registration
Expenses in connection with each registration of Registrable Shares requested
pursuant to this SECTION 5.2.

                  (b) If a registration pursuant to this SECTION 5.2 involves a
Public Offering and the managing underwriter thereof advises the Company that,
in its view, the number of shares of Common Stock that the Company and the
Holders intend to include in such registration exceeds the Maximum Offering
Size, the Company will include in such registration, in the following priority,
only that number of shares such that the number of Registrable Shares registered
does not exceed the Maximum Offering Size:

                           (i) FIRST, all of the shares of Common Stock proposed
to be registered by the Company as would not cause the offering to exceed the
Maximum Offering Size; and

                           (ii) SECOND, all Registrable Shares requested to be
included in such registration by all Holders pursuant to this SECTION 5.2,
allocated, if necessary, for the offering not to exceed the Maximum Offering
Size among the Holders pro rata on the basis of the relative number of
Registrable Shares requested to be included in such Incidental Registration by
such Holders.



                                       22


If as a result of the proration provisions of this SECTION 5.2(B), any Holder is
not entitled to include all such Registrable Shares in such registration, such
Holder may elect to withdraw his, her or its request to include any Registrable
Shares in such registration (an "INCIDENTAL WITHDRAWAL ELECTION"); PROVIDED,
HOWEVER, that an Incidental Withdrawal Election shall be irrevocable and any
Holder that has made an Incidental Withdrawal Election shall no longer have any
right to include any Registrable Shares in such registration as to which such
Incidental Withdrawal Election was made. With respect to registrations pursuant
to this SECTION 5.2, the number of securities required to satisfy any
underwriters' over-allotment option shall be allocated pro rata among the
Company and the Holders on the basis of the relative number of securities
otherwise to be included by each of them in the registration with respect to
which such over-allotment option relates.

                  5.3 HOLDBACK AGREEMENTS. If any registration of Registrable
Shares shall be in connection with a Public Offering, each Stockholder agrees
not to effect any Public Sale of any shares of Common Stock or any Common Stock
Equivalents (in each case, other than as part of such Public Offering) during
the 14 days prior to the effective date of such registration statement (except
as part of such registration) or during the period after such effective date
equal to the lesser of (i) 180 days or (ii) such other period as reasonably
required by the managing underwriters of an underwritten offering.

                  5.4 REGISTRATION PROCEDURES. Whenever Holders request that any
Registrable Shares be registered pursuant to SECTION 5.1 or 5.2 hereof, the
Company will, subject to the provisions of such Sections, use its best efforts
to effect the registration and the sale of such Registrable Shares in accordance
with the intended method of disposition thereof and the applicable provisions of
SECTION 5.1 or 5.2, as appropriate, as promptly as practicable, and in
connection with any such request:

                  (a) The Company will as expeditiously as reasonably possible
prepare and file with the SEC a registration statement on any form for which the
Company then qualifies or which counsel for the Company shall deem appropriate
and which form shall be available for the sale of the Registrable Shares to be
registered thereunder in accordance with the intended method of distribution
thereof, and use its best efforts to cause such filed registration statement to
become and remain effective for a period of not less than 120 days.

                  (b) The Company will, if requested, prior to filing a
registration statement or prospectus or any amendment or supplement thereto,
furnish to each Holder and each underwriter, if any, of the Registrable Shares
covered by such registration statement copies of such registration statement as
proposed to be filed, and thereafter the Company will furnish to such Holder and
underwriter, if any, such number of copies of such registration statement, each
amendment and supplement thereto (in each case including all exhibits thereto
and documents incorporated by reference therein), the prospectus included in
such registration statement (including each preliminary prospectus) and such
other documents as such Holder or underwriter may reasonably request in order to
facilitate the disposition of the Registrable Shares owned by such Holder.



                                       23


                  (c) After the filing of the registration statement, the
Company will promptly notify each Holder holding Registrable Shares covered by
such registration statement of any stop order or cease trade order issued or
threatened by the SEC and take all reasonable actions required to prevent the
entry of such stop order or cease trade order or to remove or revoke it if
entered.

                  (d) The Company will use its best efforts to (i) register or
qualify the Registrable Shares covered by such registration statement under such
other securities or blue sky laws of such jurisdictions in the United States as
any Holder holding such Registrable Shares reasonably (in light of such Holder's
intended plan of distribution) requests and (ii) cause such Registrable Shares
to be registered with or approved by such other governmental agencies or
authorities as may be necessary by virtue of the business and operations of the
Company and do any and all other acts and things that may be reasonably
necessary or advisable to enable such Holder to consummate the disposition of
the Registrable Shares owned by such Holder; PROVIDED that the Company will not
be required to (A) qualify generally to do business in any jurisdiction where it
would not otherwise be required to qualify but for this paragraph (d), (B)
subject itself to taxation in any such jurisdiction or (C) consent to general
service of process in any such jurisdiction.

                  (e) The Company will immediately notify each Holder holding
such Registrable Shares, at any time when a prospectus relating thereto is
required to be delivered under the Securities Act, of the occurrence of an event
requiring the preparation of a supplement or amendment to such prospectus so
that, as thereafter delivered to the purchasers of such Registrable Shares, such
prospectus will disclose all material facts relating to the securities covered
thereby and will not contain an untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to make the
statements therein not misleading in light of the circumstances in which they
were made and promptly prepare and make available to each such Holder any such
supplement or amendment.

                  (f) A Requesting Stockholder will have the exclusive right to
select the lead underwriters, which may include any Affiliate of such Requesting
Stockholder, in connection with any Public Offering pursuant to a Demand
Registration triggered by such Requesting Stockholder. The Company will enter
into customary agreements (including an underwriting agreement in customary
form) and take such other actions as are reasonably required in order to
expedite or facilitate the disposition of shares in any such Public Offering,
including the engagement of a "qualified independent underwriter" in connection
with the qualification of the underwriting arrangements with the NASD.

                  (g) Upon the execution of confidentiality agreements in form
and substance satisfactory to the Company, the Company will make available for
inspection by any Holder and any underwriter participating in any disposition
pursuant to a registration statement being filed by the Company pursuant to this
SECTION 5.4 and any attorney, accountant or other professional retained by any
such Holder or underwriter (collectively, the "INSPECTORS"), all financial and
other records, pertinent corporate documents and properties of the Company
(collectively, the "RECORDS") as shall be



                                       24


reasonably necessary to enable them to exercise their due diligence
responsibility, and cause the Company's officers, directors and employees to
supply all information reasonably requested by any Inspectors in connection with
such registration statement. Records that the Company determines, in good faith,
to be confidential and that it notifies the Inspectors are confidential shall
not be disclosed by the Inspectors unless (i) the disclosure of such Records is
necessary to avoid or correct a misstatement or omission in such registration
statement or (ii) the release of such Records is ordered pursuant to a subpoena
or other order from a court of competent jurisdiction. Each Holder agrees that
information obtained by it as a result of such inspections shall be deemed
confidential and shall not be used by it as the basis for any market
transactions in the securities of the Company unless and until such is made
generally available to the public. Each Holder further agrees that it will, upon
learning that disclosure of such Records is sought in a court of competent
jurisdiction, give notice to the Company and allow the Company, at its own
expense, to undertake appropriate action to prevent disclosure of the Records
deemed confidential.

                  (h) The Company will furnish to each such Holder and to each
such underwriter, if any, a signed counterpart, addressed to such underwriter,
of (i) an opinion or opinions of counsel to the Company and (ii) a comfort
letter or comfort letters from the Company's independent public or chartered
accountants, each in customary form and covering such matters of the type
customarily covered by opinions or comfort letters, as the case may be, as the
Holders of a majority of the Registrable Shares being sold or the managing
underwriter therefor reasonably requests.

                  (i) The Company shall use its best efforts to cause all the
Registrable Shares in any registration under this ARTICLE 5 to be listed on the
principal securities exchange or included in the over-the-counter market on
which similar securities issued by the Company are then listed or quoted, as the
case may be, or eligible for listing or quotation, or on The Nasdaq Stock Market
or such other national securities exchange as the Board may designate.

                  (j) The Company will otherwise use its best efforts to comply
with all applicable rules and regulations of the SEC including, without
limitation, making available to its security holders, as soon as reasonably
practicable, an earnings statement covering a period of twelve (12) months,
beginning within three months after the effective date of the registration
statement, which earnings statement shall satisfy the provisions of Section
11(a) of the Securities Act.

                  (k) The Company may require, as a condition to including any
Registrable Shares in any registration under this ARTICLE 5, each such Holder to
promptly furnish in writing to the Company such information regarding such
Holder, the distribution of the Registrable Shares and such other information as
the Company may from time to time reasonably request in connection with such
registration. The Company shall permit any Holder which, in its sole judgment,
exercised in good faith, and upon advice of counsel, might be deemed to be an
underwriter or a controlling person of the Company, to participate in the
preparation of such registration or comparable statement and to require



                                       25


the insertion therein of material, furnished to the Company in writing, which in
the reasonable judgment of such Holder and its counsel should be included.

                  (l) Each such Holder agrees that, upon receipt of any notice
from the Company of the happening of any event of the kind described in SECTION
5.4(E) hereof, such Holder will forthwith discontinue disposition of Registrable
Shares pursuant to the registration statement covering such Registrable Shares
until such Holder's receipt of the copies of the supplemented or amended
prospectus contemplated by SECTION 5.4(E) hereof, and, if so directed by the
Company, such Holder will deliver to the Company all copies, other than any
permanent file copies then in such Holder's possession, of the most recent
prospectus covering such Registrable Shares at the time of receipt of such
notice. In the event that the Company shall give such notice, the Company shall
extend the period during which such registration statement shall be maintained
effective (including the period referred to in SECTION 5.4(A) hereof) by the
number of days during the period from and including the date of the giving of
notice pursuant to SECTION 5.4(E) hereof to the date when the Company shall make
available to such Holder a prospectus supplemented or amended to conform with
the requirements of SECTION 5.4(E) hereof.

                  5.5 INDEMNIFICATION BY THE COMPANY. The Company agrees to
indemnify and hold harmless each Holder holding Registrable Shares covered by a
registration statement, its officers, directors and agents, and each Person, if
any, who controls such Holder within the meaning of Section 15 of the Securities
Act or Section 20 of the Exchange Act from and against any and all losses,
claims, damages and liabilities (including those resulting from any order made
or any inquiry, investigation or proceeding commenced or threatened by any
securities regulatory authority, stock exchange or by any other competent
authority) caused by any untrue statement or alleged untrue statement of a
material fact contained in any registration statement or prospectus relating to
the Registrable Shares (as amended or supplemented if the Company shall have
furnished any amendments or supplements thereto) or any preliminary prospectus,
or caused by any omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading in light of the circumstances under which they were made, except
insofar as such losses, claims, damages or liabilities are caused by any such
untrue statement or omission or alleged untrue statement or omission based upon
information furnished in writing to the Company by such Holder or on such
Holder's behalf expressly for use therein; provided, that the Company shall not
be liable for any untrue statement or omission contained in a preliminary
prospectus, which untrue statement or omission was corrected in a final
prospectus or supplement that was furnished to such Holder. The Company also
agrees to indemnify any underwriters of the Registrable Shares, their officers,
directors, employees and agents, and each Person, if any, who controls such
underwriters (other than in respect of loss of profit or information relating
solely to the underwriters) on substantially the same basis as that of the
indemnification of the Holders provided in this SECTION 5.5 and which
indemnification shall provide, in addition, an indemnity in respect of any
breach of representation or warranty of the Company contained in any
underwriting agreement in respect of Registrable Shares.




                                       26


                  5.6 INDEMNIFICATION BY PARTICIPATING HOLDERS. Each Holder
holding Registrable Shares included in any registration statement agrees,
severally but not jointly, to indemnify and hold harmless the Company, its
officers, directors and agents and each Person, if any, who controls the Company
within the meaning of either Section 15 of the Securities Act or Section 20 of
the Exchange Act to the same extent as the foregoing indemnity from the Company
to such Holder, but only with respect to information furnished in writing by
such Holder or on such Holder's behalf expressly for use in any registration
statement or prospectus relating to the Registrable Shares, or any amendment or
supplement thereto, or any preliminary prospectus, and only up to an amount
equal to the aggregate purchase price received by such Holder from the sale of
such Holder's Registrable Shares in such registration. Each such Holder also
agrees to indemnify and hold harmless underwriters (other than in respect of
loss of profit or information relating to the underwriters) of the Registrable
Shares, their officers, directors, employees and agents and each person who
controls such underwriters on substantially the same basis as that of the
indemnification of the Company provided in this SECTION 5.6. As a condition to
including Registrable Shares in any registration statement filed in accordance
with ARTICLE 5 hereof, the Company may require that it shall have received an
undertaking reasonably satisfactory to it from any underwriter to indemnify and
hold it harmless to the extent customarily provided by underwriters with respect
to similar securities.

                  5.7 CONDUCT OF INDEMNIFICATION PROCEEDINGS. In case any
proceeding (including any governmental investigation) shall be instituted
involving any Person in respect of which indemnity may be sought pursuant to
this ARTICLE 5, such Person (an "INDEMNIFIED PARTY") shall promptly notify the
Person against whom such indemnity may be sought (the "INDEMNIFYING PARTY") in
writing and the Indemnifying Party shall assume the defense thereof, including
the employment of counsel reasonably satisfactory to such Indemnified Party, and
shall assume the payment of all fees and expenses; PROVIDED, HOWEVER, that the
failure of any Indemnified Party so to notify the Indemnifying Party shall not
relieve the Indemnifying Party of his or its obligations hereunder except to the
extent that the Indemnifying Party is materially prejudiced by such failure to
notify. In any such proceeding, any Indemnified Party shall have the right to
retain his or its own counsel, but the fees and expenses of such counsel shall
be at the expense of such Indemnified Party unless (i) the Indemnifying Party
and the Indemnified Party shall have mutually agreed to the retention of such
counsel, (ii) the Indemnifying Party shall have failed to assume the defense and
employ counsel or (iii) in the reasonable judgment of such Indemnified Party
representation of both parties by the same counsel would be inappropriate due to
actual or potential differing interests between them or differing legal defenses
available to them. It is understood that the Indemnifying Party shall not, in
connection with any proceeding or related proceedings in the same jurisdiction,
be liable for the reasonable fees and expenses of more than one separate firm of
attorneys (in addition to any local counsel) at any time for all such
Indemnified Parties, and that all such fees and expenses shall be reimbursed as
they are incurred. In the case of any such separate firm for the Indemnified
Parties, such firm shall be designated in writing by the Indemnified Parties.
The Indemnifying Party shall not be liable for any settlement of any proceeding
effected without his or its written consent (not to be unreasonably withheld),




                                       27


but if settled with such consent, or if there be a final judgment for the
plaintiff, the Indemnifying Party shall indemnify and hold harmless such
Indemnified Parties from and against any loss or liability (to the extent stated
above) by reason of such settlement or judgment; PROVIDED, HOWEVER, that, if any
case where the fees and expenses of counsel are at the expense of the
Indemnifying Party in accordance with this ARTICLE 5 and an Indemnified Party
shall have requested the Indemnifying Party to reimburse the Indemnified Party
for such fees and expenses of counsel as incurred, such Indemnifying Party
agrees that it shall be liable for any settlement of any action effected without
its written consent if (i) such settlement is entered into more than ten (10)
Business Days after the receipt by such Indemnifying Party of the aforesaid
request and (ii) such Indemnifying Party shall have failed to reimburse the
Indemnified Party in accordance with such request for reimbursement prior to the
date of such settlement. No Indemnifying Party shall, without the prior written
consent of the Indemnified Party (not to be unreasonably withheld), effect any
settlement of any pending or threatened proceeding in respect of which any
Indemnified Party is or could have been a party and indemnity could have been
sought hereunder by such Indemnified Party, unless such settlement includes an
unconditional release of such Indemnified Party from all liability arising out
of such proceeding.

                  5.8 CONTRIBUTION. If the indemnification provided for in this
ARTICLE 5 is unavailable to the Indemnified Parties in respect of any losses,
claims, damages or liabilities referred to herein, then each such Indemnifying
Party, in lieu of indemnifying such Indemnified Party, shall contribute to the
amount paid or payable by such Indemnified Party as a result of such losses,
claims, damages or liabilities (i) as between the Company and the Holders
holding Registrable Shares covered by a registration statement on the one hand
and the underwriters on the other, in such proportion as is appropriate to
reflect the relative benefits received by the Company and such Holders on the
one hand and the underwriters on the other, from the offering of the Registrable
Shares, or if such allocation is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits but also
the relative fault of the Company and such Holders on the one hand and of such
underwriters on the other in connection with the statements or omissions which
resulted in such losses, claims, damages or liabilities, as well as any other
relevant equitable considerations and (ii) as between the Company on the one
hand and each such Holder on the other, in such proportion as is appropriate to
reflect the relative fault of the Company and of each such Holder in connection
with such statements or omissions, as well as any other relevant equitable
considerations. The relative benefits received by the Company and such Holders
on the one hand and such underwriters on the other shall be deemed to be in the
same proportion as the total proceeds from the offering (net of underwriting
discounts and commissions but before deducting expenses) received by the Company
and such Holders bear to the total underwriting discounts and commissions
received by such underwriters, in each case as set forth in the table on the
cover page of the prospectus. The relative fault of the Company and such Holders
on the one hand and of such underwriters on the other shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or the omission or



                                       28


alleged omission to state a material fact relates to information supplied by the
Company and such Holders or by such underwriters and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission. The relative fault of the Company on the one hand
and of each such Holder on the other shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or the omission or alleged omission to state a material fact relates to
information supplied in writing by such party, and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission.

                  The Company and the Holders agree that it would not be just
and equitable if contribution pursuant to this SECTION 5.8 were determined by
pro rata allocation (even if the underwriters were treated as one entity for
such purpose) or by any other method of allocation which does not take account
of the equitable considerations referred to in the immediately preceding
paragraph. The amount paid or payable by an Indemnified Party as a result of the
losses, claims, damages or liabilities referred to in the immediately preceding
paragraph shall be deemed to include, subject to the limitations set forth
above, any legal or other expenses reasonably incurred by such Indemnified Party
in connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this SECTION 5.8, no underwriter shall be
required to contribute any amount in excess of the amount of the total fees,
discounts and commissions received by it, and no Holder shall be required to
contribute any amount in excess of the amount of the proceeds received by such
Holder in respect of a sale of its Registrable Shares. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. Each such Holder's obligation to
contribute pursuant to this SECTION 5.8 is several in the proportion that the
proceeds of the offering received by such Holder bears to the total proceeds of
the offering received by all such Holders and not joint.

                  5.9 PARTICIPATION IN PUBLIC OFFERING. No Person may
participate in any Public Offering hereunder unless such Person (a) agrees to
sell such Person's securities on the basis provided in any underwriting
arrangements approved by the Persons entitled hereunder to approve such
arrangements and not inconsistent with this Agreement and (b) completes and
executes all questionnaires, powers of attorney, indemnities (which indemnities
shall not be inconsistent with the indemnification provisions contained in this
ARTICLE 5), underwriting agreements and other documents reasonably required
under the terms of such underwriting arrangements and the provisions of this
Agreement in respect of registration rights.

                  5.10 ASSIGNMENT OF REGISTRATION RIGHTS. The right to cause the
Company to register Registrable Shares pursuant to this ARTICLE 5 may be
assigned (but only with all related obligations) by a Holder to a person to whom
such securities are Transferred in accordance with ARTICLE 3 hereof, PROVIDED
THAT following such Transfer, such transferee (together with its Affiliates)
owns, or has the right to acquire pursuant to Common Stock Equivalents, at least
500,000 shares of Common Stock. Notwithstanding



                                       29


the foregoing, no such transferee shall have the right to request a Demand
Registration unless the transferring Holder specifically assigns such rights
(and only then to the extent that such Transferring Holder had the right to
request a Demand Registration).

                  5.11 LIMITATION ON GRANT OF OTHER REGISTRATION RIGHTS. From
and after the date hereof, the Company shall not grant any registration rights
without the prior written consent of the Investor Stockholders.

                                    ARTICLE 6
                                 HOLDING COMPANY

                  6.1 FORMATION OF A HOLDING COMPANY.

                  (a) In the event that Stockholders (the "ELECTING
STOCKHOLDERS") holding a majority of the shares of Common Stock held by all
Stockholders determine to acquire or attempt to acquire all or a substantial
portion of the shares of Common Stock held by Persons other than the
Stockholders (whether by tender offer, merger or otherwise) (the "ACQUISITION"),
such Stockholders shall deliver a notice (the "ACQUISITION NOTICE") to each
other Stockholder notifying such Stockholders of such determination. Within ten
(10) days of the receipt of such Acquisition Notice, each Stockholder shall
transfer all shares of Common Stock and Common Stock Equivalents held by it to a
corporation or other entity selected by the Electing Stockholders (the "HOLDING
COMPANY"); PROVIDED that in selecting the form of the Holding Company, the
Electing Stockholders shall consider the possible tax effects on the
Stockholders (as a group) of transferring such shares of Common Stock and Common
Stock Equivalents to the Holding Company and any possible regulatory
restrictions that may arise. The Stockholders shall, hereby covenant and agree
to, take all action necessary to form the Holding Company and to effect the
Acquisition, except that no Stockholder shall be required to contribute any cash
to the Holding Company.

                  (b) The Stockholders shall hold equity positions in the
Holding Company in the same proportion as such Stockholders hold shares of
Common Stock in the Company and in exchange for Common Stock Equivalents shall
receive a security of the Holding Company having terms as similar as possible to
each such Common Stock Equivalent exchanged.

                  6.2 STOCKHOLDERS AGREEMENT. In connection with the formation
of the Holding Company, the Stockholders shall enter into a stockholders'
agreement on substantially similar terms to this Agreement and which shall
confer on the Stockholders the same rights and obligations as this Agreement, to
the extent possible and to the extent necessary to manifest the intent of the
Stockholders in entering into this Agreement.

                  6.3 JONES ACT COMPLIANCE. The Stockholders shall structure the
Holding Company in a way such that the transfer of the shares of Common Stock to
Holding Company and the subsequent issuances of securities of the Holding
Company (as contemplated by SECTION 6.1(A)) will not result in the Company
failing to meet the



                                       30


requirements of Section 2 of the Shipping Act, 1916, as amended, for the
ownership and operation of vessels in the United States coastwise trade.

                                    ARTICLE 7
                                  MISCELLANEOUS

                  7.1 ENTIRE AGREEMENT; NO INCONSISTENT AGREEMENTS.

                  (a) This Agreement constitutes the entire agreement among the
parties hereto with respect to the subject matter hereof and supersedes all
prior agreements and understandings, oral and written, among the parties hereto
with respect to the subject matter hereof.

                  (b) The Company will not hereafter enter into any agreement
with respect to its securities which is inconsistent with the rights granted to
the Stockholders hereunder.

                  7.2 BINDING EFFECT; ASSIGNABILITY; NO BENEFICIARIES. This
Agreement shall inure to the benefit of and be binding upon the parties hereto
and their respective heirs, successors, legal representatives and permitted
assigns, including any Permitted Transferee to whom Shares are transferred.
Subject to the limitations on assignability otherwise provided for in this
Agreement, this Agreement may be assigned only in connection with a Transfer of
shares of Common Stock or Common Stock Equivalents made in compliance with
ARTICLE 3 hereof. Nothing in this Agreement, expressed or implied, is intended
to confer on any Person other than the parties hereto, and their respective
heirs, successors, legal representatives and permitted assigns, any rights,
remedies, obligations or liabilities under or by reason of this Agreement.

                  7.3 AMENDMENT; WAIVER; TERMINATION.

                  (a) No provision of this Agreement may be waived except by an
instrument in writing executed by the party against whom the waiver is to be
effective. No provision of this Agreement may be amended or otherwise modified
except by an instrument in writing executed by the Company, with the approval of
Stockholders holding at least a majority of the shares of Common Stock held by
all Stockholders; PROVIDED, HOWEVER that no such amendment or waiver shall amend
or waive the provisions of this Agreement to adversely affect a Stockholder, but
not all other similarly situated Stockholders, unless such amendment or waiver
is signed by such adversely affected Stockholder. Any amendment or waiver
effected in accordance with this SECTION 7.3(A) shall be binding upon each
Stockholder, including future Stockholders, and the Company, whether or not such
Stockholder executed such amendment or waiver.

                  (b) Unless otherwise specifically provided herein, this
Agreement shall expire and be of no force and effect upon a Change of Control.
Notwithstanding the foregoing, the provisions of ARTICLE 5 hereof shall survive
until the earlier of (i) the



                                       31


seventh anniversary of the date hereof and (ii) with respect to each Holder, at
such time as such Holder owns less than 3% of its Initial Ownership.

                  7.4 NOTICES. All notices, requests and other communications to
any party hereunder shall be in writing (including facsimile transmissions) and
shall be given,

                  if to the Company, to:

                           Seabulk International, Inc.
                           2200 Eller Drive
                           Fort Lauderdale, FL 33316
                           Attn:  General Counsel
                           Telephone:  (954) 524-4200
                           Fax:  (954) 527-1772

                  if to Nautilus, to:

                           c/o Credit Suisse First Boston Private Equity
                           11 Madison Avenue
                           New York NY 10010
                           Attn:  Ari Benacerraf
                           Telephone:  (646) 935-7190
                           Fax:  (212) 538-0415

                  if to the C/R Entities, to:

                           c/o Riverstone Holdings, LLC
                           712 Fifth Avenue, 19th Floor
                           New York, NY 10019
                           Attn:  John Lancaster
                           Telephone:  (212) 993-0088
                           Fax:  (212) 993-0077


                  if to Kurz, to:

                           c/o Seabulk International, Inc.
                           2200 Eller Drive
                           Fort Lauderdale, FL 33316
                           Attn:  General Counsel
                           Telephone:  (954) 524-4200
                           Fax:  (954) 527-1772



All notices, requests and other communications delivered in connection with or
pursuant to this Agreement shall be deemed given and received on the date of
receipt by the



                                       32


recipient thereof (or upon refusal if properly delivered) if received prior to 5
p.m. in the place of receipt and such day is a Business Day in the place of
receipt. Otherwise, any such notice, request or communication shall be deemed
not to have been received until the next succeeding Business Day in the place of
receipt. Any notice, request or other written communication sent by facsimile
transmission shall be confirmed by certified mail, return receipt requested,
posted within one Business Day, or by personal delivery, whether courier or
otherwise, made within two (2) Business Days after the date of such facsimile
transmission. Failure or delay in delivering copies of any notice, request or
other written communication to the Person specified above to receive a copy
thereof shall in no way adversely affect the effectiveness of such notice,
request or other written communication.

                  Any Person who after the date hereof becomes a Stockholder
shall provide his, her or its address and fax number to the Company, which shall
promptly provide such information to each other Stockholder.

                  7.5 AFTER-ACQUIRED SHARES. All of the provisions of this
Agreement shall apply to all shares of Common Stock and Common Stock Equivalents
now owned or hereafter issued or transferred to a Stockholder, other than those
purchased in a Public Sale; PROVIDED, HOWEVER, that notwithstanding the
foregoing, ARTICLE 6 hereof will apply to shares of Common Stock and Common
Stock Equivalents purchased in a Public Sale.

                  7.6 HEADINGS AND REFERENCES TO SECTIONS. The headings
contained in this Agreement are for convenience only and shall not affect the
meaning or interpretation of this Agreement. Sections referenced by numbers only
are to the respective sections of this Agreement.

                  7.7 SEVERABILITY. If any provision of this Agreement shall be
determined to be illegal and unenforceable by any court of law, the remaining
provisions shall be severable and enforceable in accordance with their terms.

                  7.8 COUNTERPARTS. This Agreement may be executed in any number
of counterparts, each of which shall be deemed to be an original and all of
which together shall be deemed to be one and the same instrument.

                  7.9 APPLICABLE LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING
EFFECT TO ANY PRINCIPLE OF CONFLICTS OF LAWS THEREOF, EXCEPT THE CORPORATE LAWS
OF THE STATE OF DELAWARE, WITHOUT GIVING EFFECT TO ANY PRINCIPLE OF CONFLICTS OF
LAWS THEREOF, SHALL GOVERN ALL ISSUES CONCERNING THE RELATIVE RIGHTS OF THE
COMPANY AND ITS STOCKHOLDERS AND THE DUTIES AND RESPONSIBILITIES OF THE
COMPANY'S DIRECTORS TO THE COMPANY AND ITS STOCKHOLDERS.



                                       33


                  7.10 SPECIFIC ENFORCEMENT. Each party hereto acknowledges that
the remedies at law of the other parties for a breach or threatened breach of
this Agreement would be inadequate and, in recognition of this fact, any party
to this Agreement, without posting any bond, and in addition to all other
remedies which may be available, shall be entitled to obtain equitable relief in
the form of specific performance, a temporary restraining order, a temporary or
permanent injunction or any other equitable remedy which may then be available.

                  7.11 PRONOUNS. Any masculine personal pronoun shall be
considered to mean the corresponding feminine or neuter personal pronoun, and
VICE VERSA, as the context requires.

                  7.12 TRIAL BY JURY. Each party to this Agreement hereby waives
any right to trial by jury in any action, matter or proceeding regarding this
Agreement or any provision hereof.


         [The remainder of this page has been intentionally left blank.]




                                       34

                  IN WITNESS WHEREOF, the parties hereto have caused this
Stockholders' Agreement to be duly executed as of the day and year first above
written.

                                       SEABULK INTERNATIONAL, INC.


                                       By: /s/ Alan R. Twaits
                                           -------------------------------------
                                                Name:  Alan R. Twaits
                                                Title: Senior Vice President



                                       NAUTILUS ACQUISITION, L.P.



                                       By: /s/ David A. Durkin
                                           -------------------------------------
                                                Name:  David A. Durkin
                                                Title:



                                       C/R MARINE DOMESTIC PARTNERSHIP, L.P.

                                       By:      C/R Marine GP Corp.,
                                                its general partner


                                       By: /s/ Pierre F. Lapeyre
                                           -------------------------------------
                                                Name: Pierre F. Lapeyre
                                                Title: Vice President


                                       C/R MARINE NON-U.S.
                                       PARTNERSHIP, L.P.

                                       By:      C/R Marine GP Corp.,
                                                its general partner


                                       By: /s/ Pierre F. Lapeyre
                                           -------------------------------------
                                                Name: Pierre F. Lapeyre
                                                Title: Vice President




                                       35


                                       C/R MARINE COINVESTMENT, L.P.

                                       By:      C/R Marine GP Corp.,
                                                its general partner


                                       By: /s/ Pierre F. Lapeyre
                                           -------------------------------------
                                                Name: Pierre F. Lapeyre
                                                Title: Vice President




                                       C/R MARINE COINVESTMENT II, L.P.

                                       By:      C/R Marine GP Corp.,
                                                its general partner


                                       By: /s/ Pierre F. Lapeyre
                                           -------------------------------------
                                                Name: Pierre F. Lapeyre
                                                Title: Vice President











                                                /s/ Gerhard Kurz
                                                ---------------------------
                                                    Gerhard Kurz

EX-99.4

                                                                    Exhibit 99.4


                               AMENDMENT NO. 2 TO
                         EXECUTIVE EMPLOYMENT AGREEMENT
                                 BY AND BETWEEN
                 GERHARD E. KURZ AND SEABULK INTERNATIONAL, INC.

         This Amendment No. 2 (this "Amendment No. 2") to the Executive
Employment Agreement (the "Agreement") by and between Seabulk International,
Inc., a Delaware corporation, formerly known as Hvide Marine, Incorporated (the
"Company"), and Gerhard E. Kurz (the "Executive") is entered into as of the 13th
day of September, 2002.

         WHEREAS, Exhibit C of the Stock Purchase Agreement by and among Seabulk
International, Inc. and certain Investors, dated as of June 13, 2002 (the "Stock
Purchase Agreement") entitled the Kurz Employment Agreement Term Sheet sets
forth certain terms to be included in an amendment to the Agreement to be
entered into at closing of the Stock Purchase Agreement.

         NOW THEREFORE, in consideration of the mutual covenants and the mutual
benefits provided in the Agreement, the receipt and sufficiency of which are
hereby acknowledged, the Company and the Executive hereby amend the Agreement as
set forth hereinbelow effective on the date set forth hereinabove:

1. Sections 2.1, 4.1, 4.2, 8.4 and 9.2 of the Agreement are hereby amended and
restated by deleting the text appearing therein in their entirety and inserting
the following text in lieu thereof:

         2.1 The Company will employ Executive commencing April 18, 2000
         ("Effective Date") through September 13, 2007 (the "Employment
         Period"), unless Executive's employment is terminated prior to the end
         of the Employment Period in accordance with this Agreement, and
         Executive accepts employment with the Company on the terms and
         conditions contained in the Agreement.

         4.1 BASE SALARY. As compensation for his services under this Agreement,
         commencing on September 13, 2002 and effective for the duration of
         Executive's employment during the Employment Period , the Company
         agrees to pay Executive a base salary at the rate of Five Hundred
         Thousand Dollars (US$500,000.00) per annum, payable in accordance with
         the Company's normal payroll schedule, or on such other periodic basis
         as may be mutually agreed upon. Such salary shall be subject to annual
         review by the Board for possible upward adjustment based on Company
         policy and contributions made by Executive to the enterprise. The
         Company may withhold from any amounts payable under this Agreement such
         federal, state or local taxes as shall be required to be withheld
         pursuant to any applicable law or regulation.

         4.2 BONUS. Executive shall be eligible to receive an annual cash bonus
         award with a target bonus of one hundred percent (100%) of Executive's
         then current base salary during each year of Executive's employment
         during the Employment Period. The amount of the annual bonus for
         calendar years 2002 through 2007 will be based upon the Company's
         achievement of performance targets to be agreed upon annually between





         the Company and Executive. Annual bonuses will be paid to Executive
         upon completion of the Company's annual audit.

         8.4 As used in this Agreement, "good reason" for Executive to resign
         means, without Executive's express written consent, the occurrence of
         any one or more of the following: (a) a material reduction or
         alteration in the nature, scope or status of Executive's authorities,
         duties or responsibilities; (b) a material reduction by the Company of
         Executive's compensation; and (c) the Company's failure to pay any part
         of Executive's compensation within four (4) weeks after such
         compensation was due; provided, however, the stock sale, spin off,
         asset sale or other disposition of either the tanker business or
         offshore business of the Company, resulting in Executive's termination
         as President or CEO of either such business, shall not constitute "good
         reason".

         9.2 In general, if Executive's employment is terminated "without cause"
         or for "good reason," as defined herein, Executive will receive an
         amount equal to the sum of (i) an amount equal to 2.00 times
         Executive's annual base salary then in effect and (ii) 2.00 times
         Executive's annual maximum bonus for the year in which such termination
         occurs, such amount to be paid in equal monthly amounts over the
         remaining term of the Agreement or, if the remaining term is less than
         two years, over two years, or, at the election of the Company, in a
         lump sum. In the event of Executive's death, any remaining payments
         shall be paid to Executive's estate in a single lump sum amount.


2. Section 9.3 is hereby deleted in its entirety.

3. As so amended, the Agreement remains in full force and effect.





                                       2



IN WITNESS WHEREOF, each of the parties hereto has caused this Amendment No. 2
to the Agreement to be duly executed and delivered as of the day and year first
written above.

                                       SEABULK INTERNATIONAL, INC.



                                       By: /s/ ALAN R. TWAITS
                                           -------------------------------------
                                           Name:  Alan R. Twaits
                                           Title: Senior Vice President,
                                                  General Counsel and
                                                  Secretary




                                       /s/ GERHARD E. KURZ
                                       -----------------------------------------
                                       GERHARD E. KURZ
                                       Executive






                                       3

EX-99.5

                                                                    EXHIBIT 99.5

================================================================================




                             FORTIS CAPITAL CORP.,
                            AS AGENT FOR THE LENDERS

                             FORTIS CAPITAL CORP.,
                          AS ARRANGER AND BOOK RUNNER

                             NIB CAPITAL BANK N.V.,
                                  AS ARRANGER

                          SEABULK INTERNATIONAL, INC.,
                                  AS BORROWER

                  THE LENDERS FROM TIME TO TIME A PARTY HERETO

                                      and

                     THE SUBSIDIARY GUARANTORS NAMED HEREIN
                         -----------------------------

                                CREDIT AGREEMENT

                         Dated as of September 13, 2002

                         -----------------------------






                            THACHER PROFFITT & WOOD






================================================================================




                                TABLE OF CONTENTS

                                                                                                                             
PRELIMINARY STATEMENT.............................................................................................................1

Article I DEFINITIONS.............................................................................................................1
     Section 1.01                      Definitions................................................................................1
     Section 1.02                      Interpretation.............................................................................1
     Section 1.03                      Accounting Terms...........................................................................2

Article II REVOLVING LOANS AND TERM LOANS.........................................................................................2
     Section 2.01                      Revolving Loans............................................................................2
     Section 2.02                      Term Loans.................................................................................3
     Section 2.03                      Interest on the Loans......................................................................4
     Section 2.04                      Maximum Interest Rate......................................................................5
     Section 2.05                      Repayment..................................................................................6
     Section 2.06                      Mandatory Permanent Reduction of Tranches..................................................6
     Section 2.07                      Optional Permanent Reduction of Aggregate Tranche A Loan
                                       Commitment and Aggregate Tranche B Loan Commitment.........................................8
     Section 2.08                      Application of Payments....................................................................8
     Section 2.09                      Manner of Payments.........................................................................8
     Section 2.10                      Register of Notes; Lost and Mutilated Notes................................................9
     Section 2.11                      Change in Circumstances...................................................................10
     Section 2.12                      Illegality................................................................................12
     Section 2.13                      Taxes.....................................................................................12
     Section 2.14                      Break Funding Payments....................................................................14
     Section 2.15                      Alternate Rate of Interest................................................................14
     Section 2.16                      Fees......................................................................................15

Article III LETTERS OF CREDIT....................................................................................................15
     Section 3.01                      Issuing the Letters of Credit.............................................................15
     Section 3.02                      Drawings under Letters of Credit..........................................................15
     Section 3.03                      Reimbursement on Demand...................................................................16
     Section 3.04                      Obligations Absolute......................................................................16
     Section 3.05                      Action in Respect of the Letters of Credit................................................17
     Section 3.06                      Indemnification...........................................................................17
     Section 3.07                      Deemed Disbursements......................................................................18
     Section 3.08                      L/C Participations........................................................................18
     Section 3.09                      Lenders Not Required to Make Loans or Issue Letters of Credit.............................19

Article IV REPRESENTATIONS, WARRANTIES AND AGREEMENTS............................................................................19
     Section 4.01                      Company Status............................................................................19
     Section 4.02                      Company Power and Authority...............................................................20
     Section 4.03                      No Violation..............................................................................20
     Section 4.04                      Governmental Approvals....................................................................20
     Section 4.05                      Financial Statement; Financial Condition; Undisclosed Liabilities; etc....................20
     Section 4.06                      Litigation................................................................................21



                                       -i-


                                                                                                                             
     Section 4.07                      No Default................................................................................21
     Section 4.08                      Use of Proceeds; Margin Regulations.......................................................21
     Section 4.09                      Tax Returns and Payments..................................................................21
     Section 4.10                      Compliance with ERISA.....................................................................22
     Section 4.11                      Ownership; Subsidiaries...................................................................23
     Section 4.12                      Compliance with Statutes, etc.............................................................23
     Section 4.13                      Investment Company Act....................................................................24
     Section 4.14                      Environmental Matters.....................................................................24
     Section 4.15                      Labor Relations...........................................................................24
     Section 4.16                      Patents, Licenses, Franchises and Formulas................................................25
     Section 4.17                      Security Interests........................................................................25
     Section 4.18                      Indebtedness..............................................................................25
     Section 4.19                      Capitalization of Borrower................................................................25
     Section 4.20                      Concerning the Vessels....................................................................25
     Section 4.21                      Citizenship...............................................................................26
     Section 4.22                      Vessel Classification.....................................................................26
     Section 4.23                      [Reserved]................................................................................26
     Section 4.24                      Insurance.................................................................................26

Article V CONDITIONS OF LENDING..................................................................................................26
     Section 5.01                      Conditions Precedent to Drawdown of the Initial Loan......................................26
     Section 5.02                      Further Conditions Precedent..............................................................29

Article VI AFFIRMATIVE COVENANTS.................................................................................................30
     Section 6.01                      Existence.................................................................................30
     Section 6.02                      Payment of Debts..........................................................................30
     Section 6.03                      Accounts and Records......................................................................30
     Section 6.04                      Payment of Taxes and Claims...............................................................30
     Section 6.05                      Financing Statements......................................................................30
     Section 6.06                      Compliance with Law.......................................................................31
     Section 6.07                      Financial Statements......................................................................31
     Section 6.08                      Access to Books and Records...............................................................32
     Section 6.09                      Notifications.............................................................................32
     Section 6.10                      Performance of Obligations................................................................32
     Section 6.11                      Environmental Matters.....................................................................32
     Section 6.12                      Transaction Document Obligations..........................................................33
     Section 6.13                      ERISA.....................................................................................33
     Section 6.14                      Minimum Adjusted EBITDA to Adjusted Interest Expense......................................34
     Section 6.15                      Minimum Adjusted Tangible Net Worth.......................................................34
     Section 6.16                      Maximum Adjusted Funded Debt Ratio........................................................34
     Section 6.17                      Minimum Fair Market Value of the Vessels..................................................35
     Section 6.18                      Ownership of Subsidiary Guarantors........................................................35
     Section 6.19                      Additional Vessels; Further Assurances....................................................35
     Section 6.20                      Vessel Operations and Management..........................................................35
     Section 6.21                      Appraisals................................................................................36
     Section 6.22                      Reimbursement for Expenses................................................................36
     Section 6.23                      Remittance of Insurance Proceeds..........................................................37




                                       ii


                                                                                                                             
Article VII NEGATIVE COVENANTS...................................................................................................38
     Section 7.01                      Indebtedness..............................................................................38
     Section 7.02                      Liens.....................................................................................39
     Section 7.03                      Asset Sales...............................................................................39
     Section 7.04                      Assignment of Insurances..................................................................39
     Section 7.05                      Sale of Notes or Accounts Receivable......................................................39
     Section 7.06                      Sale and Leaseback........................................................................39
     Section 7.07                      Restricted Payments.......................................................................39
     Section 7.08                      Investments...............................................................................40
     Section 7.09                      Restriction on Payment Restrictions Affecting Subsidiary Guarantors.......................40
     Section 7.10                      Change in Business........................................................................40
     Section 7.11                      [Reserved]................................................................................40
     Section 7.12                      Transactions with Affiliates..............................................................40
     Section 7.13                      Changes in Offices or Names...............................................................41
     Section 7.14                      Changes in Fiscal Year....................................................................41
     Section 7.15                      Other Indebtedness........................................................................41
     Section 7.16                      Consolidation, Merger and Sale of Assets..................................................41

Article VIII AGREEMENT TO GUARANTEE..............................................................................................42
     Section 8.01                      Obligations Guaranteed....................................................................42
     Section 8.02                      Subsidiary Guarantee Obligations of Subsidiary Guarantors Unconditional...................43
     Section 8.03                      Waiver of Notice; Expenses................................................................46
     Section 8.04                      Other Security............................................................................46
     Section 8.05                      No Set-off by the Subsidiary Guarantors...................................................46
     Section 8.06                      Joint and Several Obligation..............................................................46
     Section 8.07                      Limitation on Liability...................................................................48
     Section 8.08                      Release of Subsidiary Guarantor...........................................................48

Article IX EVENTS OF DEFAULT; REMEDIES; APPLICATION OF PROCEEDS..................................................................48
     Section 9.01                      Events of Default.........................................................................48
     Section 9.02                      Waiver of Default.........................................................................50
     Section 9.03                      Remedies..................................................................................51
     Section 9.04                      Rights of Set-Off.........................................................................51
     Section 9.05                      Rights and Remedies Cumulative............................................................51
     Section 9.06                      Specific Remedies.........................................................................52
     Section 9.07                      Restoration of Rights and Remedies........................................................53
     Section 9.08                      Cure of Defaults..........................................................................53

Article X RELATIONSHIP AMONG THE LENDERS.........................................................................................53
     Section 10.01                     Appointment and Authorization.............................................................53
     Section 10.02                     Delegation of Duties......................................................................54
     Section 10.03                     Liability of Agent........................................................................54
     Section 10.04                     Reliance by the Agent.....................................................................54
     Section 10.05                     Notice of Default.........................................................................55
     Section 10.06                     Credit Decision...........................................................................55
     Section 10.07                     Indemnification...........................................................................56
     Section 10.08                     Agent in Individual Capacity..............................................................56




                                       iii


                                                                                                                             
     Section 10.09                     Successor Agent...........................................................................56
     Section 10.10                     Collateral Matters........................................................................57
     Section 10.11                     Assignments, Participations, Etc..........................................................57

Article XI MISCELLANEOUS.........................................................................................................59
     Section 11.01                     Notices...................................................................................59
     Section 11.02                     Survival of Agreement.....................................................................60
     Section 11.03                     Governing Law.............................................................................60
     Section 11.04                     Modification of Agreement.................................................................61
     Section 11.05                     Costs and Expenses........................................................................61
     Section 11.06                     Waivers...................................................................................62
     Section 11.07                     Indemnification...........................................................................62
     Section 11.08                     Separability of Provisions; Obligations Several...........................................63
     Section 11.09                     Counterparts..............................................................................63
     Section 11.10                     Entire Agreement..........................................................................63
     Section 11.11                     Headings..................................................................................63
     Section 11.12                     Successors and Assigns....................................................................64
     Section 11.13                     Gender and Number.........................................................................64
     Section 11.14                     Exhibits..................................................................................64
     Section 11.15                     Notification of Addresses, Lending Offices, Etc...........................................64
     Section 11.16                     No Third Parties Benefitted...............................................................64
     Section 11.17                     Equitable Relief..........................................................................64
     Section 11.18                     Notice of Claims; Claims Bar..............................................................64
     Section 11.19                     Waiver of Punitive Damages................................................................65
     Section 11.20                     Consent to Jurisdiction...................................................................65
     Section 11.21                     Waiver of Jury Trial......................................................................65
     Section 11.22                     Currency Indemnity........................................................................65
     Section 11.23                     Release of Lien...........................................................................66






                          
EXHIBITS
- --------

EXHIBIT A                    Revolving Loan Note
EXHIBIT B                    Term Loan Note
EXHIBIT C                    Drawdown Request
EXHIBIT D                    Issuance Request
EXHIBIT E-I                  First Registered Ship Mortgage
EXHIBIT E-II                 Second Registered Ship Mortgage
EXHIBIT F                    Pledge Agreement
EXHIBIT G                    Subsidiary Guarantee Agreement
EXHIBIT H                    Assignment and Acceptance

SCHEDULES
- ---------
SCHEDULE I                   Tranche A Loan Commitment and Tranche B Loan Commitment
SCHEDULE 4.06                Litigation
SCHEDULE 4.10                ERISA
SCHEDULE 4.11                Ownership/Equity Interests
SCHEDULE 4.14                Environmental Matters
SCHEDULE 4.18                Indebtedness
SCHEDULE 4.20                Vessel Information/Noncompliance with Maritime Rules and Regulations



                                       iv


         CREDIT AGREEMENT (this "Agreement") dated as of September 13, 2002,
among Seabulk International, Inc., a corporation existing under the laws of
Delaware, as borrower (the "Borrower"), each Subsidiary Guarantor, Fortis
Capital Corp. ("Fortis"), NIB Capital Bank N.V. ("NIB") and each other financial
institution which may hereafter execute and deliver an Assignment and Acceptance
with respect to this Agreement pursuant to Section 10.11 (any one individually,
a "Lender", and collectively, the "Lenders"), Fortis, as administrative agent on
behalf of the Lenders (when acting in its capacity as administrative agent under
this Agreement or under any other Transaction Document, herein referred to,
together with any successor administrative agent, as the "Agent"), and as book
runner and as an arranger (when acting in such capacity, an "Arranger") and NIB,
as an arranger (when acting in such capacity, an "Arranger", and together with
Fortis, the "Arrangers").

                              PRELIMINARY STATEMENT

         Pursuant to the Existing Credit Agreement and the Existing Indenture,
the Borrower incurred the Existing Indebtedness and pursuant to the Existing
Indenture, the Borrower issued the Existing Senior Notes. The Borrower desires
to obtain the Loans and Letters of Credit from the Lenders in an aggregate
amount, together with all Reimbursement Obligations, up to the Aggregate Loan
Commitment to refinance the Existing Indebtedness, to have access to funds to
redeem or repurchase any of the Existing Senior Notes upon the occurrence of
certain events specified herein and to have access to funds for general
corporate purposes. In order to induce the Lenders to make the Loans to the
Borrower and issue Letters of Credit on behalf of the Borrower, the Subsidiary
Guarantors have agreed to jointly and severally guarantee the Obligations of the
Borrower hereunder. The Borrower and the Subsidiary Guarantors have agreed to
grant to the Agent on its behalf and on the behalf of the Lenders a first,
priority, perfected security interest (other than in the case of the Second Lien
Vessels for which the Borrower or related Subsidiary Guarantors grant to the
Agent a second priority perfected security interest) in the Collateral to secure
such Obligations. The Lenders are willing to make the Loans and issue Letters of
Credit on behalf of the Borrower in an amount, together with all Reimbursement
Obligations, up to the Aggregate Loan Commitment pursuant to this Agreement and
upon the terms and subject to the conditions set forth herein and in reliance on
the representations and warranties set forth herein.

         NOW THEREFORE, in consideration of the mutual agreements herein
contained, the parties hereto agree as follows:

                                   ARTICLE I
                                   DEFINITIONS

         Section 1.01      Definitions. Capitalized terms used herein, but not
otherwise defined herein shall have the meanings assigned to such terms in
Appendix A hereto.

         Section 1.02      Interpretation. Words importing the singular number
only shall include the plural and vice versa. Words importing persons shall
include companies, firms, corporations, partnerships, unincorporated
associations and their respective successors and assigns.




         Section 1.03      Accounting Terms. All accounting terms not
specifically defined herein shall be construed in accordance with GAAP and all
financial statements submitted pursuant to this Agreement shall be prepared in
accordance with, and all financial data submitted pursuant hereto shall be
derived from financial statements prepared in accordance with, GAAP.

                                   ARTICLE II
                         REVOLVING LOANS AND TERM LOANS

         Section 2.01      Revolving Loans.

                  (a)      The Lenders shall make the Revolving Loans available
         to the Borrower and issue Letters of Credit for the purpose of (i)
         refinancing the Existing Indebtedness of the Borrower and (ii) for
         general corporate purposes.

                  (b)      Each of the Lenders, relying upon each of the
         representations and warranties of the Borrower set forth herein, hereby
         severally and not jointly agrees with the Borrower that, upon
         satisfaction of the conditions precedent set forth in Article V and
         subject to and upon the terms of this Agreement, it will on each
         Drawdown Date, make the Revolving Loans available to the Borrower
         through the Agent in an aggregate amount not to exceed its Tranche A
         Loan Commitment ratably with the other Lenders according to their
         respective Tranche A Loan Commitments. The maximum aggregate amount of
         all Revolving Loans, together with all L/C Obligations, which may be
         outstanding at any time under this Agreement is the Aggregate Tranche A
         Loan Commitment, as may be reduced pursuant to Sections 2.06 and 2.07.
         Each Revolving Loan shall be drawn in a Minimum Borrowing Amount.

                  (c)      The maximum number of Revolving Loans that may be
         outstanding at any time under this Agreement shall be eight (8).
         Subject to the remaining provisions of this Section 2.01, the Borrower
         may obtain Revolving Loans, repay or prepay such Revolving Loans, and
         reborrow such Revolving Loans.

                  (d)      The Borrower shall, at least five (5) Business Days
         prior to a Drawdown Date, deliver a Drawdown Request to the Agent in
         writing addressed to the Agent. Each Drawdown Request shall be
         effective on receipt by the Agent and shall be irrevocable.

                  (e)      Each Drawdown Request shall be deemed to constitute a
         warranty by the Borrower (i) that the representations and warranties
         stated in Article IV are true and correct on and as of the date of such
         Drawdown Request and will be true and correct on and as of the relevant
         Drawdown Date as if made on such date (unless, in each case, such
         representation and warranty is expressly limited to an earlier date or
         is no longer true and correct solely as a result of transactions not
         prohibited by the Transaction Documents), (ii) that after giving effect
         to the borrowing made pursuant to such Drawdown Request, the sum of the
         outstanding L/C Obligations and the aggregate principal amount of all
         outstanding Revolving Loans will not exceed the Aggregate Tranche A
         Loan Commitment and (iii) that no Default or Event of Default has
         occurred and is continuing. Each Revolving Loan made by the Lenders
         to the


                                       -2-


         Borrower shall be evidenced by one or more promissory notes in the form
         of Exhibit A attached hereto (each, as the same from time to time may
         be amended, restated, modified, supplemented or renewed, a "Revolving
         Loan Note"), duly executed by the Borrower, dated as of the applicable
         Drawdown Date. Each Lender (or the Agent if only one Revolving Loan
         Note shall be issued to the Agent for the benefit of the Lenders)
         shall, and is hereby authorized by the Borrower to, record on the
         schedule attached to its Revolving Loan Note (or on a continuation of
         such schedule attached to such Revolving Loan Note) and make a part
         thereof, an appropriate notation evidencing the date and amount of each
         such Lender's Proportionate Share of such Revolving Loan, which
         notation, absent manifest error, shall be prima facie evidence of the
         amount of the relevant Revolving Loan.

         Section 2.02      Term Loans.

                  (a)      The Lenders shall make the Term Loans available to
         the Borrower for the sole purpose of redeeming or repurchasing the
         Existing Senior Notes in the event that (i) the Borrower is required to
         repurchase the Existing Senior Notes due to a Change of Control, (ii)
         the Borrower elects to call the Existing Senior Notes in accordance
         with the terms of the Existing Indenture or (iii) the Borrower enters
         into a solicitation with the holders of the Existing Senior Notes that
         is acceptable to the Arrangers in their sole and absolute discretion.

                  (b)      Each of the Lenders, relying upon each of the
         representations and warranties of the Borrower set forth herein, hereby
         severally and not jointly agrees with the Borrower that, upon
         satisfaction of the applicable conditions precedent in Article V and
         subject to and upon the terms of this Agreement, it will on each
         Drawdown Date, make the Term Loans available to the Borrower through
         the Agent in an aggregate amount not to exceed its Tranche B Loan
         Commitment ratably with the other Lenders according to their respective
         Tranche B Loan Commitments. The maximum aggregate amount of all Terms
         Loans which may be outstanding at any time under this Agreement is the
         Aggregate Tranche B Loan Commitment, as may be reduced pursuant to
         Sections 2.06 and 2.07.

                  (c)      The Borrower shall, (i) in the case of a LIBOR Loan,
         at least five (5) Business Days prior to a Drawdown Date and (ii) in
         the case of a Base Rate Loan, at least one (1) Business Day prior to a
         Drawdown Date, deliver a Drawdown Request to the Agent in writing
         addressed to the Agent. Each Drawdown Request shall be effective on
         receipt by the Agent and shall be irrevocable.

                  (d)      Each Drawdown Request shall be deemed to constitute a
         warranty by the Borrower (i) that the representations and warranties of
         the Borrower set forth herein are true and correct on and as of the
         date of such Drawdown Request and will be true and correct on and as of
         the relevant Drawdown Date as if made on such date (unless, in each
         case, such representation and warranty is expressly limited to an
         earlier date or is no longer true and correct solely as a result of
         transactions not prohibited by the Transaction Documents), (ii) that
         after giving effect to the borrowing made pursuant to such Drawdown
         Request, the sum of the outstanding Term Loans will not exceed the
         Aggregate Tranche B Loan Commitment and (iii)


                                       -3-


         that no Default or Event of Default has occurred and is continuing. The
         Term Loan made by the Lenders to the Borrower shall be evidenced by one
         or more promissory notes in the form of Exhibit B attached hereto
         (each, as the same from time to time may be amended, restated,
         modified, supplemented or renewed, a "Term Loan Note"), duly executed
         by the Borrower, dated as of the applicable Drawdown Date. Each Lender
         (or the Agent if only one Term Loan Note shall be issued to the Agent
         for the benefit of the Lenders) shall, and is hereby authorized by the
         Borrower to, record on the schedule attached to its Term Loan Note (or
         on a continuation of such schedule attached to such Term Loan Note) and
         make a part thereof, an appropriate notation evidencing the date and
         amount of each such Lender's Proportionate Share of such Term Loan,
         which notation, absent manifest error, shall be prima facie evidence of
         the amount of the relevant Term Loan.

         Section 2.03      Interest on the Loans.

                  (a)      Interest on the outstanding principal amount of each
         (i) LIBOR Loan shall be payable on each Interest Payment Date, unless
         the Interest Period exceeds three months in which case it shall be paid
         quarterly, at a rate per annum equal to the Interest Rate for the
         related Interest Period from the date when made and continued until
         paid in full and (ii) Base Rate Loan shall be payable on each
         Commitment Fee Payment Date at a rate per annum equal to the daily
         average Interest Rate for the period from the date when made and
         continued until paid in full.

                  (b)      The duration of each Interest Period for each LIBOR
         Loan shall be one month; provided, however, that (i) the Borrower may
         direct that the duration of an Interest Period for a LIBOR Loan be
         three or six months (or any other period agreed to by the Agent and all
         of the Lenders) by giving the Agent written notice thereof at least
         three Business Days before the first day of such Interest Period. The
         Agent shall deliver a copy of such notice on the same day to the
         Lenders.

                  (c)      Each Loan will bear interest at the Overdue Rate on
         any part of the principal amount and interest and other amounts due
         thereunder not paid when due (whether at stated maturity, by
         acceleration or otherwise), for any period during which the same will
         be overdue.

                  (d)      No later than 150 days after the Closing Date the
         Borrower shall enter into an interest rate hedging agreement with
         respect to the interest payable under the Term Loans for a period of at
         least three years from the Closing Date. The Borrower shall deliver a
         copy of such interest rate hedging agreement to the Agent. The Borrower
         shall have the right to obtain one or more interest rate hedging
         agreements and either Arranger or an Affiliate of either Arranger shall
         have the right to arrange therefor pursuant to the terms of an ISDA
         Master Agreement to be entered into between the Borrower and such
         Arranger or an Affiliate of such Arranger; provided, however, if the
         Borrower has requested an interest rate Hedging Agreement through the
         Agent from either of the Arrangers or any Affiliate of an Arranger and
         no Arranger or Affiliate of an Arranger wishes to arrange for such
         interest rate Hedging Agreement or does not do so on terms reasonably
         acceptable to the Borrower


                                       -4-


         immediately following the Borrower's request therefor, then the
         Borrower may use any other entity to arrange for such interest rate
         hedging agreements; provided further, that any interest rate Hedging
         Agreement entered into with an Arranger or an Affiliate of an Arranger
         shall, if so required by such Arranger or such Affiliate, be guaranteed
         by the Subsidiary Guarantors and secured by a second priority mortgage
         on the Vessels (but excluding the Second Lien Vessels). If the
         Collateral is used as security for an interest rate Hedging Agreement
         with an Arranger or an Affiliate of an Arranger the interest of such
         Arranger or Affiliate in respect of such agreement shall be
         subordinated to the interests of the Lenders hereunder. In no event
         shall the Collateral be used as security for any interest rate hedging
         agreement with an entity other than an Arranger or an Affiliate of an
         Arranger. The Borrower agrees to enter into good faith negotiations
         with the Agent with respect to the terms of an ISDA Master Agreement,
         to be used by a Arranger or an Affiliate of an Arranger in connection
         with an interest rate hedge, promptly following the Closing Date. If an
         Arranger or an Affiliate of an Arranger does not agree to use the form
         of ISDA Master Agreement agreed to by the Borrower and the Agent, the
         Borrower shall not be obligated to make hedging arrangements with such
         Arranger or such Affiliate.

                  (e)      The Borrower may elect to continue all or any part of
         any borrowing of any LIBOR Loan beyond the expiration of the then
         current Interest Period relating thereto by giving a Drawdown Request
         (which shall be irrevocable) to the Agent of such election, specifying
         the LIBOR Loan or LIBOR Loans or portion thereof to be continued and
         the Interest Period therefor. In the absence of such a timely and
         proper election with regard to LIBOR Loans, the Borrower shall be
         deemed to have elected to convert such LIBOR Loans to Base Rate Loans
         pursuant to Subsection 2.03(g).

                  (f)      All or part of any LIBOR Loans may be continued as
         provided herein, provided that any continuation of such Loans shall not
         be (as to each borrowing of such Loans as continued for an applicable
         Interest Period) less than $1,000,000 and shall be in an integral
         multiple of $100,000.

                  (g)      The Borrower may elect to convert any LIBOR Loan on
         the last day of the then current Interest Period relating thereto to a
         Base Rate Loan by giving a Drawdown Request to the Agent regarding such
         election.

                  (h)      The Borrower may elect to convert any Base Rate Loan
         at any time or from time to time to a LIBOR Loan by giving a Drawdown
         Request (which shall be irrevocable) to the Agent of such election,
         specifying each Interest Period therefor.

                  (i)      All or any part of the outstanding Loans may be
         converted as provided herein, provided that any conversion of such
         Loans shall not result in a borrowing of Loans in an amount less than
         $1,000,000 and in integral multiples of $100,000.

         Section 2.04      Maximum Interest Rate. In no event shall the interest
charged with respect to a Loan exceed the maximum amount permitted by applicable
law. If at any time the Interest Rate exceeds the maximum rate permitted by
applicable law, the rate of interest to accrue pursuant to this Agreement and
such Loan shall be limited to the maximum rate permitted by applicable law, but
any subsequent reductions in the Base Rate or LIBOR shall not reduce the


                                       -5-


interest to accrue on such Loan below the maximum amount permitted by applicable
law until the total amount of interest accrued on such Loan equals the amount of
interest that would have accrued if a varying rate per annum equal to the
Interest Rate had at all times been in effect. If the total amount of interest
paid or accrued on a Loan under the foregoing provisions is less than the total
amount of interest that would have accrued if the Interest Rate had at all times
been in effect, the Borrower, agrees to pay to the Lenders an amount equal to
the difference between (a) the lesser of (i) the amount of interest that would
have accrued if the maximum rate permitted by applicable law had at all times
been in effect or (ii) the amount of interest that would have accrued if the
Interest Rate had at all times been in effect, and (b) the amount of interest
accrued in accordance with the other provisions of this Agreement.

         Section 2.05      Repayment. The Borrower shall repay all outstanding
Loans (subject to such reduction and prepayments as hereinafter set forth) on
the Maturity Date.

         Section 2.06      Mandatory Permanent Reduction of Tranches.

                  (a)      The Aggregate Tranche A Loan Commitment shall be
         permanently reduced on each Tranche A Reduction Date pursuant to the
         following schedule:




         ----------------------------------------------------------------------
         TRANCHE A REDUCTION DATE                     TRANCHE A LOAN COMMITMENT
                                                          REDUCTION AMOUNT
         ----------------------------------------------------------------------
                                                   
         March 13, 2003                                             $ 5,000,000
         ----------------------------------------------------------------------
         September 13, 2003                                         $ 5,000,000
         ----------------------------------------------------------------------
         March 13, 2004                                             $ 5,000,000
         ----------------------------------------------------------------------
         September 13, 2004                                         $ 5,000,000
         ----------------------------------------------------------------------
         March 13, 2005                                             $10,000,000
         ----------------------------------------------------------------------
         September 13, 2005                                         $10,000,000
         ----------------------------------------------------------------------
         March 13, 2006                                             $12,500,000
         ----------------------------------------------------------------------
         September 13, 2006                                         $12,500,000
         ----------------------------------------------------------------------
         March 13, 2007                                             $12,500,000
         ----------------------------------------------------------------------
         Maturity Date                                              $22,500,000
         ----------------------------------------------------------------------


provided, however, in the event that the aggregate outstanding principal amount
of all of the Term Loans is less than the Aggregate Tranche B Loan Commitment on
the date that is the four month anniversary of the Closing Date and the
Aggregate Tranche B Loan Commitment is reduced pursuant to Section 2.06(b), then
the Tranche A Loan Commitment Reduction Amount for each Tranche A Reduction Date
shall be calculated using the following formula:

                              A - [(B-C)(A/D)] + E

Where
A =      The Tranche A Loan Commitment Reduction Amount as set forth in the
above chart for such Tranche A Reduction Date
B =      The Aggregate Tranche B Commitment Amount
C =      The aggregate outstanding principal amount of all of the Term Loans as
of the date that is the four month anniversary of the Closing Date
D =      The Aggregate Tranche A Commitment Amount
E =      The Tranche B Reduction Amount, if any, on such Tranche A Reduction
Date


                                       -6-


For purposes of illustration, if it is the first Tranche A Reduction Date (i.e.,
March 2003) and the aggregate outstanding principal amount of the Terms Loans as
of four month anniversary of the Closing Date is $60,000,000, then the Tranche A
Loan Commitment Reduction Amount will be determined as follows:

$5,000,000 - [($80,000,000-$60,000,000) ($5,000,000/$100,000,000)] + 0 =
$4,000,000.

If is the Tranche A Reduction Date occurring in September 2006, then the Tranche
A Loan Commitment Reduction Amount will be determined as follows:

$12,500,000 - [($80,000,000-$60,000,000) ($12,500,000/$100,000,000)] +
[75,000,000-$63,000,000] = $22,000,000.

                  (b)      In the event that the aggregate outstanding principal
         amount of all of the Term Loans is less than the Aggregate Tranche B
         Loan Commitment on the date that is the four month anniversary of the
         Closing Date, the Aggregate Tranche B Loan Commitment shall be
         permanently reduced to an amount equal to the outstanding principal
         amount of the Terms Loans as of such date. In addition, the Aggregate
         Tranche B Loan Commitment shall be permanently reduced on each Tranche
         B Reduction Date by the amount necessary to cause the outstanding
         principal amount of the Term Loans as of such date to not exceed the
         amount indicated below beside such dates:



- --------------------------------------------------------------------------------
TRANCHE B REDUCTION DATE                    AGGREGATE TRANCHE B LOAN COMMITMENT
- --------------------------------------------------------------------------------
                                         
The date that is thirty-six (36) months                             $77,500,000
after the Closing Date
- --------------------------------------------------------------------------------
The date that is forty-two (42) months                              $75,000,000
after the Closing Date
- --------------------------------------------------------------------------------
The date that is forty-eight (48) months                            $63,000,000
after the Closing Date
- --------------------------------------------------------------------------------
The date that is fifty-four (54) months                             $51,000,000
after the Closing Date
- --------------------------------------------------------------------------------
Maturity Date                                                             $0.00
- --------------------------------------------------------------------------------


In addition, in the event that the Borrower shall consummate a public or Rule
144A offering of its Indebtedness after the Closing Date, then the Aggregate
Tranche B Loan Commitment shall be permanently reduced on the date such offering
is completed by an amount equal to the net proceeds of such issuance.

                  (c)      If, on any Tranche A Reduction Date, the outstanding
         principal amount of the Revolving Loans plus all L/C Obligations as of
         such date exceed the Aggregate Tranche A Loan Commitment (as reduced on
         such Tranche A Reduction Date), then the Borrower shall, on such
         Tranche A Reduction Date, make a mandatory repayment of the Revolving
         Loans (or pay over to the Agent to be applied to or held as cash
         collateral for the L/C Obligations) of the amount (the "Tranche A
         Reduction Amount") of such excess. If, on any Tranche B Reduction Date,
         the outstanding principal amount of the Term Loans as of such date
         exceeds the


                                       -7-


Aggregate Tranche B Loan Commitment (as reduced on such Tranche B Reduction
Date), then the Borrower shall, on such Tranche B Reduction Date, make a
mandatory prepayment of the Term Loans in the amount (the "Tranche B Reduction
Amount") of such excess.

         Section 2.07      Optional Permanent Reduction of Aggregate Tranche A
Loan Commitment and Aggregate Tranche B Loan Commitment.

                  (a)      The Borrower shall have the right, at any time and
         from time to time, to request, without penalty, a permanent reduction
         of either the Aggregate Tranche A Loan Commitment or the Aggregate
         Tranche B Loan Commitment so long as the Agent receives five (5)
         Business Days prior written notice of such request. Each such partial
         permanent reduction shall be in an amount at least equal to Five
         Million Dollars ($5,000,000) and multiples of One Million Dollars
         ($1,000,000) thereafter. To the extent that the outstanding principal
         amount of Revolving Loans and L/C Obligations or the outstanding
         principal amount of the Term Loans exceeds the Aggregate Tranche A Loan
         Commitment or the Aggregate Tranche B Loan Commitment, as applicable,
         the Borrower shall pay the Tranche A Reduction Amount and/or the
         Tranche B Reduction Amount, respectively.

                  (b)      Any prepayment of any Loan made hereunder shall be
         subject to the condition that on the date of prepayment all accrued
         interest to the date of such prepayment shall be paid in full with
         respect to such Loans or portions thereof being prepaid, together with
         any and all actual costs or expenses incurred by any Lender in
         connection with any breaking of funding (as certified by such Lender,
         which certification shall, absent any manifest error, be conclusive and
         binding on the Borrower).

                  (c)      Prepayments made under this Section 2.07 shall, at
         the option of the Borrower, be applied either (i) pro rata to any
         mandatory repayments due under Section 2.06(c) during the next six (6)
         months or (ii) to mandatory repayments due under Section 2.06(c) in
         inverse order of maturity.

         Section 2.08      Application of Payments. Unless otherwise expressly
provided herein, each payment made on a Loan will be applied, first to the
payment of all fees and expenses due to the Agent or the Lenders under this
Agreement, second, to the payment of interest on overdue interest at the Overdue
Rate on such Loan to the date of such payment, third, to the payment of interest
on any overdue Reduction Amount at the Overdue Rate on such Loan to the date of
such payment, fourth, to the payment of accrued interest on such Loan to the
date of such payment, fifth, to the payment of any overdue Reduction Amount past
due on such Loan and sixth, to the payment of the Reduction Amount of such Loan
then due.

         Section 2.09      Manner of Payments.

                  (a)      All payments made pursuant to the Credit Agreement
         shall be made without set-off or counterclaim but subject to deduction
         for, and net of, applicable Excluded Taxes and shall be made in
         immediately available funds by the Borrower to


                                       -8-


         the Agent for the account of the Lenders in accordance with their
         Proportionate Share. All such payments shall be made to the Agent,
         prior to 11:00 a.m., New York City time, on the date due to the Agent's
         account at JPMorgan Chase Bank, ABA#: 021000021, Account of Fortis
         Capital Corp., Account # 001-1-624418, Reference: Seabulk, or at such
         other place in New York as may be designated by the Agent to the
         Borrower in writing. Any payments received after 11:00 a.m., New York
         City time, shall be deemed received on the next Business Day. The Agent
         shall promptly remit to each Lender, in the same type of funds as
         payment was received, each Lender's Proportionate Share according to
         its respective interest of all such payments received by the Agent for
         the account of such Lender. Subject to the definition of "Interest
         Period", whenever any payment to be made hereunder shall be stated to
         be due on a date other than a Business Day, such payment may be made on
         the next succeeding Business Day with the same effect as if made on the
         due date but interest shall continue to accrue until the date of
         payment.

                  (b)      If any Lender or other holder of a Note shall obtain
         any payment or other recovery (whether voluntary, involuntary, by
         application of offset, set-off, banker's lien, counterclaim or
         otherwise) on account of principal of or interest on any Note or
         Reimbursement Obligation in excess of its Proportionate Share of
         payments and other recoveries obtained by all Lenders or other holders,
         such Lender or other holder shall purchase from the other Lenders or
         holders such participation in the Notes and Reimbursement Obligations
         held by them as shall be necessary to cause such purchasing Lender or
         other holder to share the excess payment or other recovery with each of
         them; provided, however, that if all or any portion of the excess
         payment or other recovery is thereafter recovered from such purchasing
         holder, the purchase shall be rescinded and the purchase price restored
         to the extent of such recovery, but without interest. The Borrower
         agrees that the Lender so purchasing a participation from the other
         Lenders under this Section 2.09(b) may exercise all its rights of
         payment, including the right of set-off, with respect to such
         participation as fully as if such Lender were the direct creditor of
         such Borrower in the amount of the participation

         Section 2.10      Register of Notes; Lost and Mutilated Notes

                  (a)      The Agent will maintain at its principal office a
         register (the "Register") for the purpose of registering the Notes and
         registering transfers and exchanges of Notes. The Person in whose name
         a Note is registered in accordance with this Section 2.10(a) shall for
         all purposes hereof be deemed a Lender. Upon surrender for transfer or
         exchange of any Note at the principal office of the Agent, the Borrower
         will execute and deliver (in the case of any such transfer, in the name
         of the designated transferee or transferees or, in the case of an
         exchange, in the name of the holder thereof), one or more new Notes of
         the same series of a like aggregate principal amount. The Agent will
         not be required to register or exchange any surrendered Note as above
         provided during the 15-day period preceding any Interest Payment Date.
         Every Note presented or surrendered for transfer or exchange will be
         duly endorsed (or be accompanied by a written instrument of transfer in
         form satisfactory to the Agent) duly executed by the holder thereof or
         his attorney duly


                                       -9-


         authorized in writing. Any Note issued in a registration of transfer or
         exchange will carry the same rights to interest (unpaid and to accrue)
         carried by the Note so transferred or exchanged so that there will not
         be any loss or gain of interest on such Note. The Agent shall mark on
         each new Note (i) the dates to which principal and interest have been
         paid on the old Note and (ii) all payments and prepayments of principal
         previously made on such old Note which are allocable to such new Note.

                  (b)      If any Note has been mutilated, lost, stolen or
         destroyed, the Borrower will execute and deliver a new Note of like
         date and tenor in exchange and substitution for, and upon cancellation
         of, such mutilated Note or in lieu of and in substitution for such
         lost, stolen or destroyed Note; provided, however, that the Borrower
         will so execute and deliver such new Note only if the applicable holder
         has paid the reasonable expenses and charges of the Borrower in
         connection therewith and, in the case of a lost, stolen or destroyed
         Note, (i) has filed with the Borrower evidence satisfactory to it that
         such Note was lost, stolen or destroyed, and (ii) has furnished to the
         Borrower indemnity satisfactory to it. Neither the Borrower nor the
         Agent shall have any obligation to indemnify or reimburse such holder
         for any losses, expenses or charges that it may suffer or incur in
         connection with the previous sentence, such costs to be borne entirely
         by such holder. If any such Note has matured or is otherwise subject to
         payment, instead of issuing a new Note the Borrower may pay the same
         without surrender thereof. Any Note issued in exchange for a lost,
         stolen, destroyed or mutilated Note will carry the same rights to
         interest (unpaid and to accrue) carried by the Note lost, stolen,
         destroyed or mutilated so that there will not be any loss or gain of
         interest on such Note. The Agent shall mark on each new Note (A) the
         dates to which interest has been paid on the old Note and (B) all
         payments and prepayments of principal previously made on such old Note
         which are allocable to such new Note.

                  (c)      Upon the issuance of a new Note or Notes pursuant to
         Section 2.10(a) or 2.10(b) hereof, each of the Borrower and the Agent
         may require from the party requesting such new Note or Notes payment of
         a sum to reimburse the Borrower for, or to provide funds for, the
         payment of any tax or other governmental charge in connection therewith
         or any charges and expenses connected with such tax or other
         governmental charge paid or payable by the Borrower.

         Section 2.11      Change in Circumstances.

                  (a)      If after the date of this Agreement, there shall have
         occurred the adoption of any applicable law, rule or regulation
         regarding capital adequacy, or any change therein, or any change in the
         interpretation or administration thereof by any Governmental Authority,
         central bank or comparable agency, that a Lender has reasonably
         determined has or would have the effect of reducing the rate of return
         on the Lender's capital or the capital of its direct or indirect
         holding company as a consequence of its obligations hereunder to a
         level below that which such Lender or its holding company would have
         achieved but for such adoption, change or compliance (taking into
         consideration such Lender's or its holding company's policies with
         respect to capital adequacy) by an amount which such Lender, in its


                                      -10-


         reasonable judgment, shall deem material, then from time to time, the
         Borrower shall pay to such Lender such additional amount or amounts as
         will compensate such Lender or its holding company for such reduction.
         A certificate as to such amounts submitted to the Borrower by such
         Lender shall be conclusive and binding for such purposes, absent
         manifest error; provided, however, that the determination of such
         additional amount or amounts shall be made in good faith in a manner
         generally consistent with such Lender's standard practice.

                  (b)      If after the date of this Agreement, there shall have
         occurred the adoption of any applicable law, rule or regulation
         regarding the maintenance of reserves, special deposits, compulsory
         loans or similar requirements against assets held by, deposits or
         liabilities in or for the account of, advances, loans or other
         extensions of credit by, or any other acquisition of funds by, any
         office of such Lender which is not otherwise included in the
         determination of the Interest Rate hereunder, or any change therein, or
         any change in the interpretation or administration thereof by any
         Governmental Authority, central bank or comparable agency, that a
         Lender has reasonably determined has or would have the effect of
         increasing the cost to such Lender or such Lender's direct or indirect
         holding company, by an amount which such Lender deems to be material,
         with respect to issuing the Letters of Credit or making, continuing or
         maintaining the LIBOR Loans, or to reduce any amount receivable
         hereunder in respect thereof, then, in any such case, the Borrower
         shall promptly pay such Lender, upon its demand, any additional amount
         or amounts as will compensate such Lender or holding company for such
         increased cost or reduced amount receivable. A certificate as to such
         amounts submitted to the Borrower by such Lender shall be conclusive
         and binding for such purposes, absent manifest error; provided,
         however, that the determination of such additional amount or amounts
         shall be made in good faith in a manner generally consistent with such
         Lender's standard practice.

                  (c)      Upon the occurrence of any event giving rise to the
         operation of this Section 2.11, the affected Lender shall use
         reasonable efforts to designate or cause its direct or indirect holding
         company to designate a different lending office for funding or booking
         its obligations hereunder or to assign its rights and obligations
         hereunder to another of its offices, branches or affiliates, if, in the
         judgment of such Lender such designation or assignment (i) would
         eliminate or reduce amounts payable pursuant to this Section 2.11 in
         the future, (ii) would not subject such Lender to any economic, legal
         or regulatory disadvantage or to any unreimbursed cost or expense and
         (iii) would not otherwise be disadvantageous to such Lender. The
         Borrower hereby agrees to pay all reasonable costs and expenses
         incurred by such Lender in connection with such designation or
         assignment. If the affected Lender does not so designate or cause its
         direct or indirect holding company to designate a different lending
         office, then the Borrower shall have the right to require such lender
         to assign its interest to an Eligible Assignee pursuant to Section
         10.11 hereof.

                  (d)      The Borrower shall not be required to compensate a
         Lender pursuant to this Section 2.11 for any amounts pursuant to the
         immediately preceding clauses (a) and/or (b) of this Section 2.11 to
         the extent that such amounts were incurred more


                                      -11-


         than 180 days prior to the date that such Lender notifies the Borrower
         of the circumstances giving rise to such amounts and of such Lender's
         intention to claim compensation therefor; provided, however, that, if
         the circumstances giving rise to such amounts are retroactive, then the
         180-day period referred to above shall be extended to include the
         period of retroactive effect thereof.

         Section 2.12      Illegality. Notwithstanding any other provision
herein, if any Change in Law shall make it unlawful for any Lender to make or
maintain any portion of a Loan as a LIBOR Loan, such Lender shall so notify the
Borrower and the Agent in writing and interest on such portion of such Loan
shall thereafter be calculated by reference to the Base Rate. If any such change
in the method of calculating interest is required, pursuant to such change in
law, to be made on a day which is not the last day of an Interest Period, the
Borrower shall pay to such Lender the amounts, if any, as may be required
pursuant to Section 2.14.

         Section 2.13      Taxes.

                  (a)      Any and all payments on account of any Obligations
         shall be made free and clear of and without deduction for any Taxes
         (other than, and excluding, Excluded Taxes); provided, however, that if
         the Borrower shall be required to withhold or deduct any Indemnified
         Taxes from any such payment, the amount of such payment shall be
         increased as necessary so that after making all required withholdings
         or deductions (including withholdings or deductions applicable to
         additional sums payable under this Section 2.13) the Lenders receive an
         amount equal to the sum that they would have received had no such
         deductions been made. The Borrower shall pay the full amount withheld
         or deducted to the relevant Governmental Authority in accordance with
         applicable law.

                  (b)      The Borrower shall indemnify each Indemnified Party
         (provided, however, that for purposes of this Section 2.13, Indemnified
         Party shall mean the Agent, any Issuing Lender, each Arranger, each
         Lender, and any Affiliate of any of the foregoing) within twenty (20)
         days after written demand therefor for the full amount of any
         Indemnified Taxes payable with respect to or on account of any
         Obligation (including Taxes imposed on or attributable to amounts
         payable under this Section 2.13) and any penalties, interest, and
         reasonable expenses arising therefrom or with respect thereto, whether
         or not such Indemnified Taxes were correctly or legally imposed or
         asserted by the relevant Governmental Authority. In the case of
         Indemnified Taxes paid by an Indemnified Party, a certificate as to the
         amount of such payment or liability delivered to the Borrower by such
         Indemnified Party shall be conclusive absent manifest error. The
         agreements in this Section shall survive the termination of this
         Agreement and the Transaction Documents and the payment of all amounts
         payable hereunder and thereunder.

                  (c)      As soon as practicable after any payment of
         Indemnified Taxes or Other Taxes by the Borrower to a Governmental
         Authority, the Borrower shall deliver to such Indemnified Party the
         original or a certified copy of a receipt issued by such Governmental
         Authority evidencing such payment, a copy of the return


                                      -12-


         reporting such payment or other evidence of such payment reasonably
         satisfactory, to such Indemnified Party.

                  (d)      Each Indemnified Party not incorporated or organized
         under the laws of the United States of America or a state thereof shall
         deliver to the Borrower and Agent prior to the first date on which any
         payment is due such entity hereunder two duly completed copies of
         United States Internal Revenue Service Form W-8BEN or W-8ECI, or
         successor applicable form, as the case may be, certifying in each case
         that such entity is entitled to receive payments under the Loan without
         withholding or deduction of any United States federal income tax. Each
         entity required to deliver Forms W-8BEN or W-8ECI, or successor
         applicable form pursuant to the preceding sentence, further undertakes
         to deliver to the Borrower and the Agent two further copies of W-8BEN
         or W-8ECI, or successor applicable forms, as the case may be, on or
         before the date that any such form expires or becomes obsolete or after
         the occurrence of any event requiring a change in the most recent forms
         previously delivered by it to the Borrower and the Agent, unless in any
         such case an event (including, without limitation, any change in
         treaty, law or regulation or in the interpretation thereof) has
         occurred prior to the date on which any such delivery otherwise would
         be required which renders all such forms inapplicable or which would
         prevent such entity from duly completing and delivering any such form.
         The Borrower shall not be obligated to pay any Indemnified Party any
         amounts pursuant to this Section 2.13 in respect of Indemnified Taxes
         that would not have been imposed but for failure of the Indemnified
         Party to comply with this Section 2.13(d).

                  (e)      Notwithstanding the foregoing, if the Borrower incurs
         any liability pursuant to this Section 2.13, to make a payment (or pay
         an increased amount) to a Lender with respect to a Loan or otherwise,
         the Lender in respect of whose Proportionate Share of such Loan such
         liability arises shall use reasonable efforts to designate a different
         lending office for funding or booking its obligations hereunder or to
         assign its rights and obligations hereunder to another of its offices,
         branches or affiliates, if, in the judgment of such Lender such
         designation or assignment (i) would eliminate or reduce amounts payable
         pursuant to this Section 2.13 in the future and (ii) would not subject
         such Lender to any unreimbursed cost or expense and would not otherwise
         be disadvantageous to such Lender. The Borrower hereby agrees to pay
         all reasonable costs and expenses incurred by such Lender in connection
         with such designation or assignment.

                  (f)      The Borrower shall pay any Other Taxes to the
         relevant Governmental Authority in accordance with applicable law.

                  (g)      If a Lender, the Issuing Lender, the Agent or any
         Arranger shall become aware that it is entitled to claim a refund from
         a Governmental Authority in respect of Taxes or Other Taxes as to which
         it has been indemnified by the Borrower, or with respect to which the
         Borrower has paid additional amounts, pursuant to this Section 2.13, it
         shall promptly notify the Borrower of the availability of such claim
         and shall, within thirty (30) days after receipt of a request by the
         Borrower, make a claim to such Governmental Authority for such refund
         at the Borrower's expense. If a Lender, the Issuing Lender, the Agent
         or any Arranger receives a refund in respect of


                                      -13-


         any Taxes or Other Taxes with respect to which the Borrower has paid
         additional amounts pursuant to this Section 2.13, it shall within
         thirty (30) days from the date of such receipt pay over such refund to
         the Borrower (but only to the extent of indemnity payments made, or
         additional amounts paid, by the Borrower under this Section 2.13 with
         respect to the Taxes or Other Taxes giving rise to such refund), net of
         all out-of-pocket expenses of such Lender, the Issuing Lender, the
         Agent or such Arranger and without interest (other than interest paid
         by the relevant Governmental Authority with respect to such refund);
         provided, however, that the Borrower, upon the request of such Lender,
         the Issuing Lender, the Agent or any Arranger, agrees to repay the
         amount paid over to the Borrower (plus penalties, interest or other
         charges payable to the relevant Governmental Authority) to such Lender,
         the Issuing Lender, the Agent or any Arranger in the event such Lender,
         the Issuing Lender, the Agent or any Arranger is required to repay such
         refund to such Governmental Authority.

         Section 2.14      Break Funding Payments. The Borrower agree to
indemnify each Lender and to hold each Lender harmless from any loss or expense
which such Lender may sustain or incur as a consequence of (a) default by the
Borrower in making a borrowing of a LIBOR Loan after the Borrower has given
irrevocable notice requesting such borrowing in accordance with Section 2.01(d),
2.02(c) or 3.01 or (b) a prepayment of a LIBOR Loan on any day other than the
last day of the Interest Period applicable to such Loan. The provisions of this
Section 2.14 shall survive the termination of the Transaction Documents and the
payment of all amounts payable hereunder and thereunder. A certificate as to any
additional amounts payable pursuant to this Section 2.14 submitted by such
Lender to the Borrower shall (i) set forth the basis for requesting such amounts
and (ii) be conclusive absent manifest error.

         Section 2.15      Alternate Rate of Interest. If prior to the
commencement of any Interest Period: (a) the Agent determines (which
determination shall be reasonably made and shall be conclusive absent manifest
error) that, by reason of changes arising after the date of this Agreement
affecting the interbank LIBOR market, or any Lender's position in such market,
adequate and reasonable means do not exist for ascertaining Adjusted LIBOR, for
such Interest Period, or (b) the Agent is advised by any Lender that, by reason
of changes arising after the date of this Agreement affecting the interbank
LIBOR market, or any Lender's position in such market, Adjusted LIBOR for such
Interest Period will not adequately and fairly reflect the cost to such Lender
of making or maintaining such Lender's Proportionate Share of the Loans during
such Interest Period, then the Agent shall promptly give notice thereof to the
Borrower, whereupon until the Agent notifies the Borrower that the circumstances
giving rise to such notice no longer exist, the Loans shall not be LIBOR Loans
and interest on the Loans shall be calculated by reference to the Base Rate (in
the case of clause (a) above) or such Lender's Proportionate Share of the Loan
(in the case of clause (b) above) shall not be a LIBOR Loan and interest on such
portion of the Loans shall be calculated by reference to the Base Rate.


                                      -14-


         Section 2.16      Fees.

                  (a)      The Borrower shall pay the Commitment Fee to the
         Agent on each Commitment Fee Payment Date.

                  (b)      The Borrower shall pay (i) to the Agent for pro rata
         distribution to each L/C Participant (based upon each L/C Participant's
         Proportionate Share) a fee in respect of each Letter of Credit (the
         "Letter of Credit Fee") for the period from and including the date of
         issuance of such Letter of Credit through the Termination Date of such
         Letter of Credit, computed at a rate equal to the Applicable Margin for
         Revolving Loans maintained as LIBOR Loans per annum on the average
         daily Stated Amount of such Letter of Credit and (ii) to the Issuing
         Lender in respect of each Letter of Credit issued by it, a fee (the
         "Facing Fee"), for the period from and including the date of issuance
         of such Letter of Credit through the Termination Date of such Letter of
         Credit, computed at a rate equal to 0.25% per annum on the daily Stated
         Amount of such Letter of Credit; provided that in no event shall the
         annual Facing Fee with respect to any Letter of Credit be less than
         $500. Accrued Letter of Credit and Facing Fees shall be due and payable
         quarterly in arrears on each Commitment Fee Payment Date and on the
         first date on and after the Maturity Date on which no Letters of Credit
         remain outstanding. In addition, the Borrower shall pay, upon each
         payment under, issuance of, or amendment to, any Letter of Credit, such
         amount as shall at the time of such event be the administrative charge
         which the Issuing Lender is generally imposing in connection with such
         occurrence with respect to letters of credit.

                                  ARTICLE III
                                LETTERS OF CREDIT

         Section 3.01      Issuing the Letters of Credit. The Borrower shall, at
least five (5) Business Days prior to an Issuance Date, deliver an Issuance
Request to the Agent in writing addressed to the Agent. Each Issuance Request
shall be effective on receipt by the Agent and shall be irrevocable. On the
Issuance Date and upon fulfillment of the applicable conditions set forth in
Article V, the Letter of Credit shall be issued. Notwithstanding anything to the
contrary contained herein, the Issuing Lender shall have no obligation to issue
a Letter of Credit if (a) a Default or Event of Default has occurred and is
continuing, (b), after giving effect to such issuance, the L/C Obligations would
exceed the L/C Commitment or (c) after giving effect to the issuance of such
Letter of Credit, the sum of the outstanding L/C Obligations and the aggregate
principal amount of all outstanding Revolving Loans would exceed the Aggregate
Tranche A Loan Commitment. Each Letter of Credit shall be in a Minimum Borrowing
Amount and no Letter of Credit shall have a Termination Date later than thirty
(30) days prior to the Maturity Date.

         Section 3.02      Drawings under Letters of Credit. In the event that
there occurs one or more drawings under any Letter of Credit, and such
drawing(s) are made in accordance with the terms and conditions thereof, the
Issuing Lender shall, on the Business Day on which such drawing is required to
be honored pursuant to such Letter of Credit (the "Disbursement Date"),


                                      -15-


make available to the beneficiary under such Letter of Credit, in same day
funds, the amount of such drawing.

         Section 3.03      Reimbursement on Demand. On (or promptly after) each
Disbursement Date, the Issuing Lender shall notify the Borrower of a drawing
under a Letter of Credit, and the Issuing Lender will promptly thereafter
furnish to the Borrower copies of (i) each draft drawn under such Letter of
Credit and (ii) each certificate and each other document (if any) accompanying
any such draft. The Borrower will, as reimbursement for such payment by the
Issuing Lender either (i) immediately and unconditionally repay the amount drawn
under a Letter of Credit to the Issuing Lender, or (ii) if the Borrower does not
effect such repayment by 5:00 p.m., New York time, on the Disbursement Date, the
amount drawn under such Letter of Credit shall automatically convert into a
Revolving Loan (without regard to the minimum prior notice provisions of Section
2.01(d) and the Minimum Borrowing Amount) on the following day, provided that no
Default or Event of Default shall have occurred and be continuing as of the
Disbursement Date. If, however, a Default or an Event of Default shall have
occurred and be continuing as of the Disbursement Date, the amount drawn under
such Letter of Credit shall not convert into a Revolving Loan and, instead,
shall be immediately due and payable hereunder, as of the Disbursement Date.

         Section 3.04      Obligations Absolute. The obligation of the Borrower
to reimburse the Issuing Lender with respect to each payment under each Letter
of Credit (its "Reimbursement Obligation") shall, to the extent permitted by
applicable New York law, be unconditional and irrevocable, and shall to such
extent be paid strictly in accordance with the terms of this Agreement under all
circumstances, including, without limitation, to the extent permitted by
applicable New York Law, the following circumstances:

                  (a)      any lack of validity or enforceability of any Letter
         of Credit or any related contract, instrument or other agreement in
         support of which the Letter of Credit has been issued (collectively
         referred to as a "Contract");

                  (b)      any amendment or waiver of or any consent to
         departure from all or any of the Letters of Credit or any Contract in
         each case agreed to by the Borrower;

                  (c)      the existence of any claim, set-off, defense or other
         right which the Borrower may have at any time against any beneficiary
         of any Letter of Credit (or any Person for whom any such beneficiary
         may be acting), the Issuing Lender or any other Person, whether in
         connection with this Agreement, the transactions contemplated herein or
         in such Letter of Credit or any Contract or any unrelated transaction;

                  (d)      any certificate or any other document presented under
         any Letter of Credit proving to be forged, fraudulent or insufficient
         in any respect or any statement therein being untrue or inaccurate in
         any respect due to circumstances not known to the Issuing Lender; or

                  (e)      any other circumstance or happening whatsoever,
         whether or not similar to any of the foregoing;


                                      -16-


provided, however, that such circumstances do not result directly from the gross
negligence, willful misconduct or bad faith of the Issuing Lender.

         Section 3.05      Action in Respect of the Letters of Credit. To the
extent permitted by applicable New York law, the Borrower assumes all risks of
the acts or omissions of the beneficiaries under the Letters of Credit with
respect to their use of the Letters of Credit. Neither the Issuing Lender nor
any of their officers, employees, agents or directors shall be liable or
responsible for:

                  (a)      the use which may be made of any Letter of Credit;

                  (b)      the form, sufficiency, accuracy or genuineness of
         certificates or other documents delivered under or in connection with
         any Letter of Credit, even if such certificates or other documents
         should prove to be insufficient, fraudulent or forged;

                  (c)      errors, omissions, interruptions or delays in
         transmission or delivery of any messages, by mail, email, cable, telex,
         telecopy, telegraph, wireless or otherwise; or

                  (d)      errors in translation or for errors in interpretation
         of technical terms;

provided, however, that such circumstances do not result directly from the gross
negligence, willful misconduct or bad faith of the Issuing Lender. The Issuing
Lender may accept certificates or other documents that appear on their face to
be in order, without responsibility for further investigation, regardless of any
notice or information to the contrary. In furtherance and not in limitation of
the foregoing provisions, the Borrower agrees that, except for the Issuing
Lender's gross negligence, willful misconduct or bad faith, and except as
otherwise required by applicable New York law, any action, inaction or omission
taken or suffered by the Issuing Lender in good faith in connection with any
Letter of Credit, or the relative drafts, certificates or other documents, shall
be binding on the Borrower and shall not result in any liability of the Issuing
Lender to the Borrower.

         Section 3.06      Indemnification. The Borrower hereby agrees to
protect, indemnify, defend and hold harmless the Issuing Lender and each of its
directors, officers, employees and agents and any person who controls any of
them within the meaning of the federal, state and foreign securities laws from
and against any and all liabilities, losses, obligations, damages, penalties,
expenses or costs of any kind or nature and from any suits, judgments, claims or
demands (including in respect of or for attorney costs and other fees and other
disbursements of counsel for and consultants of such party in connection with
any investigative, administrative or judicial proceeding, whether or not such
party shall be designated a party thereto) (collectively, the "Indemnified
Liabilities") incurred by reason of or in connection with the execution and
delivery of, or payment or failure to make payment under, any Letter of Credit;
provided, however, that the Borrower shall not be required to indemnify pursuant
to this Section for any Indemnified Liabilities to the extent caused by (i) the
Issuing Lender's gross negligence or willful misconduct in determining whether
documents presented under any Letter of Credit comply with the terms of such
Letter of Credit or (ii) the Issuing Lender's gross negligence or willful
misconduct in failing to make lawful payment under any Letter of Credit after
presentation to it by a beneficiary of a draft and certificate strictly
complying with the terms and


                                      -17-


conditions of such Letter of Credit. If and to the extent that the foregoing
undertaking may be unenforceable for any reason, the Borrower hereby agrees to
make the maximum contribution to the payment and satisfaction of each of the
Indemnified Liabilities which is permissible under applicable law.

         Section 3.07      Deemed Disbursements. Upon the occurrence and during
the continuation of an Event of Default and upon notification by the Issuing
Lender to the Borrower of its obligations under this Section 3.07, the Borrower
shall be immediately obligated to deliver to the Issuing Lender cash collateral
for the Issuing Lender's unfunded obligations under all issued and outstanding
Letters of Credit in an amount equal to the then aggregate amount of each Letter
of Credit which is undrawn and available under all issued and outstanding
Letters of Credit. Any amounts so payable by the Borrower pursuant to this
Section shall be deposited in immediately available funds in an interest bearing
collateral account maintained with the Issuing Lender, and held as collateral
security for the Reimbursement Obligations. At such time when all Events of
Default shall have been cured or waived, the Issuing Lender shall return to the
Borrower all amounts then on deposit with the Issuing Lender pursuant to this
Section 3.07 which have not been applied towards satisfaction of all amounts
owing to the Issuing Lender.

         Section 3.08      L/C Participations.

                  (a)      The Issuing Lender irrevocably agrees to grant and
         hereby grants to each L/C Participant, and, to induce the Issuing
         Lender to issue Letters of Credit hereunder, each L/C Participant
         irrevocably agrees to accept and purchase and hereby accepts and
         purchases from the Issuing Lender, on the terms and conditions
         hereinafter stated, for such L/C Participant's own account and risk an
         undivided interest equal to such L/C Participant's Proportionate Share
         in the Issuing Lender's obligations and rights under each Letter of
         Credit issued hereunder and the amount of each draft paid by the
         Issuing Lender thereunder. Each L/C Participant unconditionally and
         irrevocably agrees with the Issuing Lender that, if a draft is paid
         under any Letter of Credit for which the Issuing Lender is not
         reimbursed in full by the Borrower in accordance with the terms of this
         Agreement, such L/C Participant shall pay to the Issuing Lender upon
         demand, at the Issuing Lender's address for notices specified herein,
         an amount equal to such L/C Participant's Proportionate Share of the
         amount of such draft, or any part thereof, which is not so reimbursed
         and whether or not such amount is converted into a Revolving Loan
         pursuant to Section 3.03.

                  (b)      Upon becoming aware of any amount required to be paid
         by any L/C Participant to the Issuing Lender pursuant to Section
         3.08(a) in respect of any unreimbursed portion of any payment made by
         the Issuing Lender under any Letter of Credit, the Issuing Lender shall
         notify each L/C Participant in writing of the amount and due date of
         such required payment and such L/C Participant shall pay to the Issuing
         Lender the amount specified on the applicable due date. If any such
         amount is paid to the Issuing Lender after the date such payment is
         due, such L/C Participant shall pay to the Issuing Lender on demand, in
         addition to such amount, the product of (i) such amount, times (ii) the
         daily average Federal Funds Rate as determined by the Issuing Lender
         during the period from and including the date such payment is due to


                                      -18-


         the date on which such payment is immediately available to the Issuing
         Lender, times (iii) a fraction the numerator of which is the number of
         days that elapsed during such period and the denominator of which is
         360. A certificate of the Issuing Lender with respect to any amounts
         owing under this Section 3.08(b) shall be conclusive in the absence of
         manifest error. With respect to payment to the Issuing Lender of the
         unreimbursed amounts described in this Section 3.08(b), if the L/C
         Participants receive written notice that any such payment is due (A)
         prior to 1:00 p.m. (New York time) on any Business Day, such payment
         shall be due that Business Day, and (B) after 1:00 p.m. (New York time)
         on any Business Day, such payment shall be due on the following
         Business Day.

                  (c)      Whenever, at any time after the Issuing Lender has
         made payment under any Letter of Credit and has received from any L/C
         Participant such L/C Participant's Proportionate Share of such payment
         in accordance with this Section 3.08, the Issuing Lender receives any
         payment related to such Letter of Credit (whether directly from the
         Borrower or otherwise), or any payment of interest on account thereof,
         the Issuing Lender will promptly distribute to such L/C Participant its
         Proportionate Share thereof; provided, however, that in the event any
         such payment received by the Issuing Lender shall be required to be
         returned by the Issuing Lender, such L/C Participant shall return to
         the Issuing Lender the portion thereof previously distributed by the
         Issuing Lender to it.

         Section 3.09      Lenders Not Required to Make Loans or Issue Letters
of Credit. Notwithstanding anything to the contrary contained in this Agreement,
neither the Lenders nor the Issuing Lender shall be obligated in any manner to
make any Loan or issue any Letter of Credit in a principal amount which,
together with the aggregate principal amount of all Loans outstanding and all
L/C Obligations outstanding on the proposed date of making such Loan or issuance
of a Letter of Credit, would exceed the Aggregate Loan Commitment.

                                   ARTICLE IV
                   REPRESENTATIONS, WARRANTIES AND AGREEMENTS

         In order to induce the Agent, the Arrangers and the Lenders to enter
into this Agreement and to induce the Lenders to make the Facility available,
each Credit Party hereby represents and warrants to the Agent, the Arrangers and
the Lenders (which representations and warranties shall survive the execution
and delivery of this Agreement, the Notes and the other Transaction Documents
and the drawdown of the Loans and the issuances of any Letters of Credit
hereunder) that:

         Section 4.01      Company Status. Each Credit Party (i) is a duly
organized and validly existing in good standing under the laws of the
jurisdiction of its incorporation or formation, (ii) has the organizational
power and authority to own its property and assets and to transact the business
in which it is engaged and presently proposes to engage and (iii) is duly
qualified and is authorized to do business and is in good standing in each
jurisdiction where the conduct of its business requires such qualifications,
except where the failure to be so qualified is not reasonably expected to result
in a Material Adverse Change.


                                      -19-


         Section 4.02      Company Power and Authority. Each Credit Party has
the requisite power and authority to execute, deliver and perform the terms and
provisions of each of the Transaction Documents to which it is party and has
taken all necessary action to authorize the execution, delivery and performance
by it of each of such Transaction Documents. Each Credit Party has duly executed
and delivered each of the Transaction Documents to which it is party, and each
of such Transaction Documents constitutes the legal, valid and binding
obligation of such Credit Party enforceable in accordance with its terms, except
to the extent that such enforceability may be limited by any applicable
bankruptcy, insolvency or similar laws generally affecting the enforcement of
creditor's rights and by general principles of equity.

         Section 4.03      No Violation. Neither the execution, delivery or
performance by any Credit Party of the Transaction Documents to which it is a
party, nor compliance by it with the terms and provisions thereof, (i) will
contravene any provision of any applicable law, statute, rule or regulation or
any applicable order, writ, injunction or decree of any court or governmental
instrumentality, other than any such contravention that could not reasonably be
expected to result in a Material Adverse Change, (ii) will conflict with or
result in any breach of any of the terms, covenants, conditions or provisions
of, or constitute a default under, or result in the creation or imposition of
(or the obligation to create or impose) any Lien (except pursuant to the
Security Documents) upon any of the material properties or assets of the
Borrower or any of its Subsidiaries pursuant to the terms of, any indenture,
mortgage, deed of trust, credit agreement or loan agreement, or any other
material agreement, contract or instrument, to which the Borrower or any of its
Subsidiaries is a party or by which it or any of its property or assets is bound
or to which it may be subject, or (iii) will violate any provision of the
Certificate of Incorporation or other documents of the Borrower or any of its
Subsidiaries.

         Section 4.04      Governmental Approvals. Except for filings and
recordings in connection with the Security Documents (which filings shall be
made on or before the Closing Date with respect to the Collateral delivered as
of the Closing Date) and except as have been obtained and are in effect, no
order, consent, approval, license, authorization or validation of, or filing,
recording or registration with or exemption by, any governmental or public body
or authority, or any subdivision thereof, is required to authorize, or is
required in connection with, (i) the consummation and performance by any Credit
Party of any Transaction Document or (ii) the legality, validity, binding effect
or enforceability of any Transaction Document.

         Section 4.05      Financial Statement; Financial Condition; Undisclosed
Liabilities; etc. Except as otherwise disclosed in writing to the Lenders on or
prior to the date hereof, the financial information regarding the Borrower and
its Subsidiaries for the year ended December 31, 2001 and for the quarters ended
March 31, 2002 and June 30, 2002 contained in the Borrower's Form 10-K/A, Form
10-QA and Form 10-Q, respectively, are complete and correct, have been prepared
in accordance with GAAP and accurately and fairly present the financial
condition of the parties covered thereby as of the respective dates thereof and
the results of the operations thereof for the period or respective periods
covered by such financial statements and since the date of the most recent of
such statements, there has been no Material Adverse Change and there are no
contingent obligations, liabilities for Taxes or other outstanding financial
obligations which are material in the aggregate except as disclosed in such
statements. No written information, exhibit, schedule or report prepared by or
on behalf of the Borrower and furnished to the Agent or the Lenders by or at the
direction of the Borrower or any of its


                                      -20-


Subsidiaries in connection with the negotiation of this Agreement contained any
material misstatement of fact or, when such statement is considered with all
other written statements furnished to the Agent or the Lenders in that
connection, omitted to state a material fact or any fact necessary to make the
statement contained therein not misleading; provided, that, the financial
information with respect to the Borrower's projections, copies of which have
been furnished to the Agent and each Lender prior to the Closing Date, were
prepared in good faith on the basis of the assumptions stated therein, which
assumptions were believed by the Borrower to be reasonable in all material
respects at the time made.

         Section 4.06      Litigation. Except as disclosed in Schedule 4.06
hereto, there is no action, suit, proceeding or investigation pending or, to the
best knowledge of each Credit Party, threatened, before any court or
administrative agency that might: (i) adversely affect its ability to perform
its obligations under this Agreement or any other Transaction Document to which
it is a party, (ii) reasonably be expected to result in any judgment or
liability which would result in a Material Adverse Change or (iii) adversely
affect the enforceability of this Agreement, any Note or any other Transaction
Document.

         Section 4.07      No Default. No Credit Party is in default (in any
respect that could reasonably be expected to result in a Material Adverse
Change) under any agreement by which it is bound, or is in default in respect of
any financial commitment or obligation.

         Section 4.08      Use of Proceeds; Margin Regulations.

                  (a)      The proceeds received with respect to the (i) Terms
         Loans shall be used by the Borrower for the sole purpose of
         repurchasing or redeeming the Existing Senior Notes in the event that
         (1) the Borrower is required to repurchase the Existing Senior Notes
         due to a Change of Control, (2) the Borrower elects to call the
         Existing Senior Notes in accordance with the terms of the Existing
         Indenture or (3) the Borrower enters into a solicitation with the
         holders of the Existing Senior Notes that is acceptable to the
         Arrangers in their sole discretion and (ii) Revolving Loans shall be
         used by the Borrower for (1) general corporate purposes and payment of
         professional fees and expenses of the Borrower and the other Credit
         Parties and (2) to refinance and repay the Existing Indebtedness.

                  (b)      No part of the proceeds of any Loan will be used by
         the Borrower to purchase or carry any Margin Stock or to extend credit
         to others for the purpose of purchasing or carrying any Margin Stock.
         Neither the making of any Loan nor the use of the proceeds thereof will
         violate or be inconsistent with the provisions of Regulation T, U or X
         of the Board of Governors of the Federal Reserve System.

         Section 4.09      Tax Returns and Payments. The Borrower and each of
its Subsidiaries has filed or caused to be filed, with the appropriate taxing
authority, all federal, state, provincial and other returns, statements, forms
and reports for Taxes (the "Returns") required to be filed by or with respect to
the income, properties or operations of the Borrower and/or its Subsidiaries
except where the failure to so file or cause to be filed could not reasonably be
expected to result in a Material Adverse Change. The Borrower and its
Subsidiaries have paid all Taxes payable by them other than (a) Taxes which are
not delinquent, (b) Taxes contested in good faith for


                                      -21-


which adequate reserves have been established in accordance with GAAP and (c)
foreign Taxes as to which the failure to pay such foreign Taxes could not
reasonably be expected to result in a Material Adverse Change.

         Section 4.10      Compliance with ERISA.

                  (a)      Except, in each case, as could not reasonably be
         expected to result in a Material Adverse Change or except as disclosed
         on Schedule 4.10 hereto, (i) each Plan (and each related trust,
         insurance contract or fund) is in compliance in all material respects
         with its terms and with all applicable laws, including without
         limitation ERISA and the Code; (ii) each Plan (and each related trust,
         if any) which is intended to be qualified under Section 401(a) of the
         Code has received a determination letter from the Internal Revenue
         Service to the effect that it is qualified and meets the requirements
         of Sections 401(a) and 501(a) of the Code and nothing has occurred
         since the date of such determination letter that could adversely affect
         the qualification of such Plan; (iii) the most recent annual report
         (Form 5500 Series) with respect to each Plan, including Schedule B
         (Actuarial Information) thereto, copies of which have been filed with
         the Internal Revenue Service, is complete and correct and fairly
         presents the funding status of each such Plan, and since the date of
         such report there has been no Material Adverse Change in such funding
         status; (iv) no Reportable Event has occurred or is reasonably likely
         to occur; (v) no Plan which is a multiemployer plan (as defined in
         Section 4001(a)(3) of ERISA) is insolvent or in reorganization; (vi) no
         Plan which is subject to Section 412 of the Code or Section 302 of
         ERISA has an accumulated funding deficiency, within the meaning of such
         sections of the Code or ERISA, or has applied for or received a waiver
         of a funding deficiency or an extension of any amortization period,
         within the meaning of Section 412 of the Code or Section 303 or 304 of
         ERISA; (vii) all contributions required to be made with respect to a
         Plan have been or will be timely made; (viii) neither the Borrower nor
         any Subsidiary of the Borrower nor any ERISA Affiliate has committed
         any violation or incurred any liability (including any indirect,
         contingent or secondary liability) pursuant to Section 406, 409,
         502(i), 502(l), 515 or Title IV of ERISA (other than the payment of
         premiums, none of which are overdue) or Section 401(a)(29), 4971 or
         4975 of the Code or reasonably expects to incur any such liability
         under any of the foregoing sections; (ix) no condition exists which
         presents a risk to the Borrower or any Subsidiary of the Borrower or
         any ERISA Affiliate of incurring a liability to or on account of a Plan
         pursuant to the foregoing provisions of ERISA and the Code; (x) no
         proceedings have been instituted to terminate or appoint a trustee to
         administer any Plan which is subject to Title IV of ERISA; (xi) neither
         the Borrower, any Subsidiary Guarantor nor any ERISA Affiliate has
         incurred any liability under the Worker Adjustment and Retraining
         Notification Act (29 U.S.C.ss.ss.201-2109) (which remains unpaid);
         (xii) no action, suit, proceeding, hearing, audit or investigation with
         respect to the administration, operation or the investment of assets of
         any Plan (other than routine claims for benefits) is pending, expected
         or threatened; (xiii) the Borrower has not received notice that
         indicates the existence of potential withdrawal liability under a
         Multiemployer Plan (as defined In Section 4001(a)(3) of ERISA); (xiv)
         each group health plan (as defined in Section 607(1) of ERISA or
         Section 4980B(g)(2) of the Code) which covers or has covered employees
         or former


                                      -22-


         employees of the Borrower, any Subsidiary of the Borrower, or any ERISA
         Affiliate has at all times been operated in compliance with the
         provisions of Part 6 of subtitle B of Title I of ERISA and Section
         4980B of the Code; (xv) no lien or security interest encumbrance on the
         assets of the Borrower or any Subsidiary of the Borrower or any ERISA
         Affiliate that is imposed under the Code or ERISA or is likely to arise
         in connection with any Plan; (xvi) the Borrower and its Subsidiaries do
         not maintain or contribute to any employee welfare benefit plan (as
         defined in Section 3(1) of ERISA) which provides benefits to retired
         employees or other former employees (other than as required by Section
         601 of ERISA) or any Plan; (xvii) no Plan has an Unfunded Current
         Liability in excess of $1,000,000; (xviii) the accumulated post
         retirement benefit obligation (as determined in accordance with
         Financial Accounting Standard 106 of the Borrower, any Subsidiary
         Guarantor and any ERISA Affiliate, to the extent it could subject the
         Borrower to liability, shall not as of the end of the fiscal year
         preceding the Closing Date exceed $1,000,000, and there is no other
         post-termination benefit obligation for which the Borrower could
         reasonably be expected to incur liability or be obligated in excess of
         $1,000,000, and the Borrower shall not take any action not required by
         applicable law that could reasonably be expected to cause such
         obligation to increase above $1,000,000; and (xix) using actuarial
         assumptions and computation methods consistent with Part 1 of Subtitle
         E of Title IV of ERISA, the aggregate liabilities of the Borrower and
         its Subsidiaries and their ERISA Affiliates to all Plans which are
         multiemployer plans (as defined in Section 4001(a)(3) of ERISA) in the
         event of a complete withdrawal therefrom, as of the close of the most
         recent fiscal year of such Plan ended prior to the date of the most
         recent Credit Event, would not exceed $100,000.

                  (b)      Except, in each case, as could not reasonably be
         expected to result in a Material Adverse Change, (i) each Foreign
         Pension Plan has been maintained in compliance in all material respects
         with its terms and with the requirements of any and all applicable
         laws, statutes, rules, regulations and orders and has been maintained,
         where required, in good standing with applicable regulatory
         authorities; (ii) all contributions required to be made with respect to
         a Foreign Pension Plan have been timely made; (iii) neither the
         Borrower nor any of its Subsidiaries has incurred any obligation in
         connection with the termination of or withdrawal from any Foreign
         Pension Plan; and (iv) the present value of the accrued benefit
         liabilities (whether or not vested) under each Foreign Pension Plan,
         determined as of the end of the Borrower's most recently ended fiscal
         year on the basis of actuarial assumptions, each of which is
         reasonable, did not exceed the current value of the assets of such
         Foreign Pension Plan allocable to such benefit liabilities.

         Section 4.11      Ownership; Subsidiaries. Schedule 4.11 correctly (a)
lists each of the Borrower's direct and indirect Subsidiaries as of the Closing
Date and (b) describes the Equity Interests owned by the Borrower (directly or
indirectly) in each of its Subsidiaries as of the Closing Date.

         Section 4.12      Compliance with Statutes, etc. The Borrower and each
of its Subsidiaries is in compliance with all applicable statutes, regulations
and orders of, and all applicable restrictions imposed by, all governmental
bodies, domestic or foreign, in respect of the conduct


                                      -23-


of its businesses and the ownership of its property, except such noncompliances
as could not (in the event such noncompliance were asserted by any Person
through appropriate action), individually or in the aggregate, reasonably be
expected to result in a Material Adverse Change.

         Section 4.13      Investment Company Act. Neither the Borrower nor any
of its Subsidiaries is an "investment company" or a company controlled by an
"investment company" within the meaning of the Investment Company Act of 1940,
as amended.

         Section 4.14      Environmental Matters.

                  (a)      To the actual knowledge of each Responsible Officer
         of each Credit Party who executes any Transaction Document on behalf of
         any Credit Party and without independent investigation: (i) except as
         disclosed in Schedule 4.14, the Borrower and each of its Subsidiaries
         have complied with, and on the date of each Credit Event will be in
         compliance with, all applicable Environmental Laws and the requirements
         of any permits issued under such Environmental Laws, (ii) there are no
         pending or threatened Environmental Claims against the Borrower or any
         of its Subsidiaries or any Real Property owned or operated by the
         Borrower or any of its Subsidiaries in excess of $150,000, (iii) there
         are no facts, circumstances, conditions or occurrences with respect to
         the business or operations of the Borrower or any Real Property at any
         time owned or operated by the Borrower or any of its Subsidiaries that
         could reasonably be expected to form the basis of an Environmental
         Claim against the Borrower or any of its Subsidiaries or any such Real
         Property in excess of $150,000, or to cause any such currently owned
         Real Property to be subject to any restrictions on the ownership,
         occupancy, use or transferability of such Real Property by the Borrower
         or any of its Subsidiaries under any applicable Environmental Law.

                  (b)      To the actual knowledge of each Responsible Officer
         of each Credit Party who executes any Transaction Document on behalf of
         any Credit Party and without independent investigation: (i) except as
         disclosed in Schedule 4.14, Hazardous Materials have not at any time
         been generated, used, treated or stored on, or transported to or from,
         any Real Property owned or operated by the Borrower or any of its
         Subsidiaries where such generation, use, treatment or storage has
         violated or could reasonably be expected to violate any Environmental
         Law in such a manner so as to cause this representation to be untrue;
         or (ii) Hazardous Materials have not at any time been Released on or
         from any Real Property owned or operated by the Borrower or any of its
         Subsidiaries where such Release has violated or could reasonably be
         expected to violate any applicable Environmental Law in such a manner
         so as to cause this representation to be untrue.

         Section 4.15      Labor Relations. (a) Except as could not reasonably
be expected to result in a Material Adverse Change, neither the Borrower nor any
of its Subsidiaries is engaged in any unfair labor practice; (b) except (in each
case) as could not reasonably be expected to result in a Material Adverse
Change, there is (i) no unfair labor practice complaint pending against the
Borrower or any of its Subsidiaries, or, to the knowledge of the Borrower,
threatened against any of them, before the National Labor Relations Board, and
no material grievance or arbitration proceeding arising out of or under any
collective bargaining agreement is so pending against the


                                      -24-


Borrower or any of its Subsidiaries or threatened against any of them, (ii) no
strike, labor dispute, slowdown or stoppage pending against the Borrower or any
of its Subsidiaries or threatened against the Borrower or any of its
Subsidiaries and (iii) no union representation proceeding pending with respect
to the employees of the Borrower or any of its Subsidiaries; and (c) except (in
each case) as could not reasonably be expected to result in a Material Adverse
Change, hours worked by and payments made to any employee of the Borrower, any
Subsidiary Guarantor or any ERISA Affiliate have not been in violation of the
Fair Labor Standards Act or any other applicable law dealing with such matters.

         Section 4.16      Patents, Licenses, Franchises and Formulas. The
Borrower and each of its Subsidiaries owns or is licensed to use all material
patents, trademarks, permits, service marks, trade names, copyrights, licenses,
franchises and formulas, or rights with respect to the foregoing, and has
obtained assignments of all material leases and other rights of whatever nature,
reasonably necessary for the present conduct of its business, without any known
conflict with the rights of others which, or the failure to obtain or so own
which, as the case may be, has had, or could reasonably be expected to result
in, a Material Adverse Change.

         Section 4.17      Security Interests. On and after the Closing Date,
each of the Security Documents creates (or after the execution and delivery
thereof, will create), as security for the Obligations purported to be secured
thereby, a valid and enforceable security interest in and Lien on all of the
Collateral subject thereto, which shall be perfected upon the taking of
possession thereof or completion of filings with respect thereto, in each case
as required by this Agreement or the other Transaction Documents, superior to
and prior to the rights of all third Persons and subject to no other Liens
(except for Permitted Encumbrances with respect to the Vessels, first mortgages
with respect to the Second Lien Vessels and Customary Permitted Liens with
respect to other assets). No filings or recordings are required in order to
perfect the security interests created under any Security Document except for
filings or recordings required in connection with any such Security Document
which shall have been made substantially contemporaneously with the execution
and delivery thereof.

         Section 4.18      Indebtedness. Schedule 4.18 sets forth a true and
complete list of all (i) Indebtedness for borrowed money of the Borrower and
each of its Subsidiaries outstanding as of the Closing Date and (ii) agreements
existing on the Closing Date pursuant to which the Borrower or any of its
Subsidiaries are entitled to incur Indebtedness, in each case showing the
aggregate principal amount thereof and the name of the borrower and any other
entity which directly or indirectly guaranteed such debt.

         Section 4.19      Capitalization of Borrower. On and as of the Closing
Date, the authorized capital stock of the Borrower shall consist of 40,000,000
shares of common stock, 23,200,000 shares of which shall be issued and
outstanding and 5,000,000 shares of preferred stock, none of which shall be
issued or outstanding. All such outstanding shares of common stock are duly and
validly issued and fully paid and non-assessable.

         Section 4.20      Concerning the Vessels. The name, official number,
registered owner, and jurisdiction of registration of each Vessel is set forth
on Schedule 4.20 hereto. Except as set forth on Schedule 4.20 (which includes a
list of vessels designated as laid-up), each Vessel is operated in material
compliance with all applicable maritime rules and regulations, including,


                                      -25-


without limitation, with respect to each Vessel operated in the coastwise trade
of the United States of America, the Shipping Act of 1916, as amended and in
effect, and the regulations promulgated thereunder. Each Vessel not designated
as laid-up on Schedule 4.20 is maintained and operated in material compliance
with all applicable Environmental Laws.

         Section 4.21      Citizenship.  The Borrower and each Subsidiary
Guarantor which owns or operates one or more Vessels is qualified to own and
operate such Vessels under the laws of the Approved Jurisdiction.

         Section 4.22      Vessel Classification. Except (a) as permitted by the
laws and/or regulations of the relevant flag state or (b) with respect to a
Vessel that has been laid-up in accordance with Section 6.20(c) of this
Agreement, each Vessel is classified in the highest classification and rating
for vessels of the same age and type with the respective classification society
set forth in Schedule 4.20, without any conditions or recommendations affecting
class other than those for which the time prescribed for curing the condition or
recommendation has not passed.

         Section 4.23      [Reserved]

         Section 4.24      Insurance. Each of the Credit Parties has insured its
properties and assets against such risks and in such amounts as are customary
for companies engaged in similar businesses.

                                   ARTICLE V
                              CONDITIONS OF LENDING

         Section 5.01      Conditions Precedent to Drawdown of the Initial Loan.
The obligation of the Lenders to make the Initial Loan available to the Borrower
and/or issue a Letter of Credit (if the Initial Loan has not yet been made)
under this Agreement shall be expressly subject to the following conditions
precedent:

                  (a)      The Agent shall have received the following documents
         in form and substance satisfactory to the Arrangers and their legal
         advisor:

         (i)      copies, certified as true and complete by an officer of each
                  Credit Party, of the resolutions of such Credit Party
                  evidencing approval of this Agreement, the Notes and the other
                  Transaction Documents to which it is a party and authorizing
                  an appropriate officer or officers or attorney-in-fact or
                  attorneys-in-fact to execute the same on its behalf, or other
                  evidence of such approvals and authorizations;

         (ii)     copies, certified as true and complete by an officer of each
                  Credit Party, of all documents evidencing any other necessary
                  action (including actions by such parties thereto other than
                  the Credit Parties as may b e required by the Arrangers),
                  approvals or consents with respect to the Transaction
                  Documents;


                                      -26-


         (iii)    copies, certified as true and complete by an officer of each
                  Credit Party of the certificate of incorporation and bylaws or
                  the certificate of formation and operating agreement (or
                  equivalent instruments) thereof;

         (iv)     certificate of the Secretary of the Borrower certifying that
                  it legally and beneficially owns, directly or indirectly, all
                  of the issued and outstanding Equity Interests of each of the
                  Subsidiary Guarantors and that, except as disclosed in a
                  schedule hereto, such Equity Interests are free and clear of
                  any liens, claims, pledges or other encumbrances whatsoever;

         (v)      certificate of the Secretary of each Credit Party (other than
                  the Borrower) certifying as to the record ownership of all of
                  its issued and outstanding Equity Interests; and

         (vi)     certificates of the jurisdiction of formation of each Credit
                  Party as to the good standing thereof.

                  (b)      The Agent shall have received evidence satisfactory
         to the Arrangers and their legal advisor that:

         (i)      the Vessels (except as disclosed in schedule 4.20) are in the
                  sole and absolute ownership of the relevant Subsidiary
                  Guarantor as set forth in Schedule 4.20 and duly registered in
                  such Subsidiary Guarantor's name under the flag of an Approved
                  Jurisdiction, unencumbered, save and except for the Mortgage
                  recorded against it and Permitted Encumbrances and with
                  respect to Second Lien Vessels the first mortgages thereon as
                  of the Closing Date;

         (ii)     the Mortgage on each Vessel has been properly recorded under
                  the laws of the jurisdiction of registration and constitutes a
                  first priority mortgage (or, in the case of the Second Lien
                  Vessels, a second priority mortgage), subject only to
                  Permitted Encumbrances;

         (iii)    except as otherwise disclosed to the Agent in writing, the
                  Vessels are classed in the highest classification and rating
                  for vessels of the same age and type with the respective
                  classification society as set forth in Schedule 4.22 without
                  any outstanding conditions or recommendations affecting class
                  other than those for which the time prescribed for curing the
                  condition or recommendation has not passed;

         (iv)     except as otherwise disclosed to the Agent in writing, each
                  Vessel is operationally seaworthy and in every way fit for its
                  intended service;

         (v)      all necessary governmental or regulatory approvals, licenses
                  and authorities which are necessary to the operation of each
                  Vessel have been obtained from each applicable Governmental
                  Authority; and


                                      -27-


         (vi)     each Vessel is insured in accordance with the provisions of
                  the related Mortgage and the requirements thereof in respect
                  of such insurances have been complied with.

                  (c)      The Borrower shall have duly executed and delivered
         this Agreement, the Notes, the Pledge Agreement and the other
         Transaction Documents to which it is a Party and each Subsidiary
         Guarantor shall have duly executed and delivered this Agreement, the
         Security Documents and the other Transaction Documents to which it is a
         party. Notwithstanding any provision in this Agreement to the contrary,
         so long as MARAD is the first mortgagee on any Vessel owned by Seabulk
         Towing, Inc., Seabulk Towing, Inc. shall be under no obligation to
         enter into or execute any security agreement, Assignment of Earnings
         and Insurances, or any other agreement granting a security interest in
         its assets, except for (i) second priority Mortgages on its Second Lien
         Vessels and (ii) first priority Mortgages and Assignments of Insurances
         with respect to its other Vessels.

                  (d)      The Borrower and the Subsidiary Guarantors shall have
         delivered the Equity Interests subject to the Pledge Agreement to the
         Agent, together with executed and undated stock powers with respect
         thereto, and all other documents required to be delivered pursuant to
         the Pledge Agreement.

                  (e)      The Borrower and the Subsidiary Guarantors shall each
         have duly executed and delivered the following documents:

         (i)      the Mortgage with respect to its Vessel(s);

         (ii)     an Assignment of Earnings and Insurances with respect to its
                  Vessel(s), other than its Second Lien Vessels, or, with
                  respect to the Vessels owned by Seabulk Towing, Inc., other
                  than the Second Lien Vessels owned by Seabulk Towing, Inc., an
                  Assignment of Insurances;

         (iii)    Uniform Commercial Code Financing Statements for filing with
                  the appropriate jurisdictions necessary to perfect the
                  security interest of the Agent for the benefit of the Lenders
                  in and to its Collateral; and

         (iv)     such other documents as may be required to perfect the
                  security interest of the Agent, on behalf of the Lenders, in
                  the Collateral.

                  (f)      The Agent shall have received a certificate from the
         Borrower to the effect that the Borrower is in compliance with the
         conditions precedent set forth in this Article V.

                  (g)      The Agent shall have received evidence that neither
         the Borrower nor any of its Subsidiaries is subject to any
         Environmental Claim which could reasonably be expected to result in a
         Material Adverse Change.

                  (h)      The Agent shall have received payment in full of all
         fees and expenses due on or before the Closing Date to the Agents, the
         Arrangers and the Lenders under


                                      -28-


         Section 2.16, or such fees and expenses shall be paid directly from the
         Initial Loan proceeds on the Closing Date.

                  (i)      The Agent shall have received evidence satisfactory
         to the Arrangers and to their legal advisor that, save for the liens
         created by the Mortgages and the Assignments of Earnings and
         Insurances, there are no liens, charges or encumbrances of any kind
         whatsoever on any of the Vessels or on their respective earnings except
         for Permitted Encumbrances and, with respect to the Second Lien
         Vessels, the first mortgages thereon as of the Closing Date.

                  (j)      The Agent shall have received the favorable written
         opinions of counsel to the Borrower and the Subsidiary Guarantors,
         dated the Closing Date and in form and substance satisfactory to the
         Agent and its legal advisors.

                  (k)      The Agent shall have received a favorable written
         opinion of counsel to the Borrower to the effect that any existing
         indebtedness of the Lightship Tanker Entities is non-recourse to the
         Borrower and the Subsidiary Guarantors.

                  (l)      The Borrower shall have completed the successful
         offering of new Equity Interests, the gross proceeds of which shall at
         least equal $100,000,000, and $25,000,000 of such proceeds shall have
         been used to reduce the Borrower's Existing Indebtedness.

                  (m)      There shall have occurred no event that could result
         in a Material Adverse Change since the date hereof.

                  (n)      The Agent shall have received any additional
         documents, affidavits or certificates of the Borrower, the Subsidiary
         Guarantors or any other Person as it may reasonably require.

         Section 5.02      Further Conditions Precedent. The obligation of the
Lenders to make any Loan available to the Borrower under this Agreement or to
issue any Letter of Credit shall be expressly and separately subject to the
following further conditions precedent on the relevant Drawdown Date or Issuance
Date, as the case may be:

                  (a)      The Agent shall have received a Drawdown Request or
         Issuance Request, as the case may be, in accordance with the terms of
         Section 2.01(d), Section 2.02 (c) or Section 3.01, as the case may be.

                  (b)      The representations and warranties set forth in
         Article IV hereof shall be true and correct in all material respects
         with the same effect as though each such representation and warranty
         had been made on and as of such date, except to the extent that any of
         such representations and warranties expressly relate to earlier dates,
         or are no longer true as a result of transactions not prohibited by the
         Transaction Documents.

                  (c)      No Default or Event of Default shall have occurred
         and be continuing.


                                      -29-


                  (d)      No change in any applicable laws, regulations, rules
         or in the interpretation thereof shall have occurred which make it
         unlawful for any Credit Party to make any payment as required under the
         terms of the Transaction Documents.

                                   ARTICLE VI
                              AFFIRMATIVE COVENANTS

         The Borrower covenants and agrees that, so long as this Agreement shall
remain in effect or any of the Obligations shall be outstanding, it shall, and
shall cause each of the Subsidiary Guarantors to unless the Borrower shall have
received the prior written consent of the Requisite Lenders:

         Section 6.01      Existence. Do or cause to be done all things
necessary to preserve and keep in full force and effect its existence (except as
permitted by Section 7.16), rights and franchises and comply with all laws
applicable to it and at all times be qualified to do business in the
jurisdictions where failure to qualify could reasonably be expected to result in
a Material Adverse Change.

         Section 6.02      Payment of Debts. Pay its debts, liabilities and
obligations when due, except (a) any such debts, liabilities and obligations
that are being contested in good faith by appropriate proceedings, (b) any
single debt, liability or obligation, which does not exceed $2,500,000 and (c)
any debts, liabilities and obligations, which in the aggregate do not exceed
$5,000,000.

         Section 6.03      Accounts and Records.  Keep and maintain full and
accurate accounts and records in accordance with GAAP consistently applied.

         Section 6.04      Payment of Taxes and Claims. Prepare and timely file
all tax returns required to be filed by it and pay and discharge all Taxes
imposed upon it or in respect of any of its property and assets before the same
shall become in default, as well as all lawful claims (including, without
limitation, claims for labor, materials and supplies) which, if unpaid, might
become a lien or charge upon the Collateral or any part thereof, except (a) in
each case, for any such Taxes as are being contested in good faith by
appropriate proceedings or (b) with respect to foreign Taxes, the failure of
which to pay or discharge could not reasonably be expected to result in a
Material Adverse Change.

         Section 6.05      Financing Statements. In the case of the Collateral,
execute, financing statements or other documents deemed necessary or desirable
by the Agent to perfect, maintain or preserve any security interest granted
pursuant to the Transaction Documents and pay the filing costs pursuant to law.
Without limiting the generality of the foregoing, each of the Credit Parties
will execute and file such financing or continuation statements, or amendments
thereto, and such other instruments or notices, as may be reasonably necessary
or desirable, or that the Agent may reasonably request, to protect and preserve
the Liens granted or purported to be granted hereby and by the other Transaction
Documents. Each of the Credit Parties hereby authorizes the Agent to file one or
more financing or continuation statements, and amendments thereto, relative to
all or any part of the Collateral without the signature of such Credit Party,
where permitted by law.


                                      -30-


         Section 6.06      Compliance with Law. Comply in all material respects
with all applicable federal, state, local and foreign laws, ordinances, rules,
orders and regulations now in force or hereafter enacted, including, without
limitation all laws and regulations relating to environmental laws and employee
benefit plans, failure to comply with which could reasonably be expected to
result in a Material Adverse Change.

         Section 6.07      Financial Statements. Furnish to the Agent the
following financial statements:

                  (a)      as soon as available but not later than ninety (90)
                           days after the end of each fiscal year of the
                           Borrower, complete copies of the consolidated
                           financial reports of the Borrower and its
                           Subsidiaries, all in reasonable detail, which shall
                           include at least the consolidated balance sheet of
                           the Borrower and its Subsidiaries as of the end of
                           such year and the related consolidated statements of
                           income and sources and uses of funds for such year,
                           which shall be audited reports prepared by
                           independent chartered accountants of international
                           standing;

                  (b)      as soon as available but not later than ninety (90)
                           days after the end of each fiscal year of the
                           Borrower, complete copies of the consolidated
                           financial reports of the Borrower and its
                           Subsidiaries excluding the Lightship Tanker Entities,
                           all in reasonable detail, which shall include at
                           least the consolidated balance sheet of the Borrower
                           and its Subsidiaries, excluding the Lightship Tanker
                           Entities, as of the end of such year and the related
                           consolidated statements of income and sources and
                           uses of funds for such year, which shall be
                           unaudited, but certified to be true and complete by
                           the chief financial officer of the Borrower;

                  (c)      as soon as available but not less than forty-five
                           (45) days after the end of each of the first three
                           quarters of each fiscal year of the Borrower, a
                           quarterly interim consolidated balance sheet of the
                           Borrower and its Subsidiaries and the related
                           consolidated profit and loss statements and sources
                           and uses of funds, all in reasonable detail,
                           unaudited, but certified to be true and complete by
                           the chief financial officer of the Borrower;

                  (d)      within ten (10) days of the filing thereof, copies of
                           all registration statements and reports on Forms
                           10-K, 10-Q and 8-K (or their equivalents) and other
                           material filings which the Borrower shall have filed
                           with the SEC or any similar governmental authority;
                           and

                  (e)      promptly upon the mailing thereof to the shareholders
                           of the Borrower, copies of all financial statements,
                           reports, proxy statements, notices and other
                           communications transmitted to all of the Borrower's
                           shareholders;

                  (f)      at such time as the financial statements described in
                           Sections 6.07(a), 6.07(b) and 6.07(c) are delivered,
                           a certificate of the Borrower's Chief Financial
                           Officer (i) certifying the Borrower's compliance with
                           each of its


                                      -31-


                           covenants contained herein and showing the
                           calculations thereof (with respect to the covenants
                           in Sections 6.14, 6.15, 6.16 and 6.17 hereof) in
                           reasonable detail and (ii) stating that the financial
                           statements delivered in accordance with Sections
                           6.07(a), 6.07(b) and 6.07(c) are complete and correct
                           in all material respects and present fairly the
                           financial condition and results of operations of the
                           Borrower and its Subsidiaries as of the dates and for
                           the periods indicated, in accordance with generally
                           accepted accounting principles consistently applied
                           (subject as to interim statements to normal year-end
                           adjustments); and

                  (g)      any other information regarding the Borrower that is
                           material to the Transaction Documents or, the Loans
                           or the Letters of Credit as any Lender, through the
                           Agent, may reasonably request.

         Upon receipt the Agent shall promptly deliver the above referenced
financial statements to the Lenders.

         Section 6.08      Access to Books and Records. Permit the Agent and
each Lender, and their respective duly authorized agents and officers, during
normal business hours and upon reasonable notice to (a) examine the books and
records of the Borrower and to make copies and extracts therefrom, and (b)
discuss the affairs, finances and accounts of the Borrower, and be advised as to
the same by, the officers of the Borrower as shall be relevant to the
performance or observance of the terms, covenants or conditions of this
Agreement, the other Transaction Documents or the financial condition of the
Borrower.

         Section 6.09      Notifications. Give prompt written notice to the
Agent of (a) any Default of which the Borrower has actual knowledge or an Event
of Default specifying the same and the steps being taken to remedy the same, (b)
any litigation or governmental proceeding pending or, to the best knowledge of
the Borrower, threatened against the Borrower or against any of the Subsidiaries
which could reasonably be expected to result in a Material Adverse Change, (c)
the withdrawal of any Vessel's rating by its classification society or the
issuance by such classification society of any material recommendation or
notation affecting class and (d) any other event or condition which could
reasonably be expected to result in a Material Adverse Change.

         Section 6.10      Performance of Obligations. Not take, or fail to
take, any action, or fail to use commercially reasonable efforts to prevent any
action to be taken by others, (a) which would release any Person from any of
such Person's covenants or obligations under any agreement or instrument
included in the Security Documents, or (b) which would result in the amendment,
hypothecation, subordination, termination or discharge of, or impair the
validity or effectiveness of, any such agreement or instrument in a manner
materially adverse to the Agent or the Lenders.

         Section 6.11      Environmental Matters. Promptly, and in any event
within five (5) Business Days after an officer of the Borrower or any of its
Subsidiaries obtains actual knowledge thereof, give written notice to the Agent
of one or more of the following environmental matters, unless, in each case,
such environmental matters could not, individually


                                      -32-


or when aggregated with all other such environmental matters, be reasonably
expected to result in a Material Adverse Change:

                  (a)      any pending or threatened in writing Environmental
                           Claim against the Borrower or any of its Subsidiaries
                           or any Real Property owned or operated by the
                           Borrower or any of its Subsidiaries;

                  (b)      any condition or occurrence on or arising from any
                           Real Property owned or operated by the Borrower or
                           any of its Subsidiaries that (i) results in
                           noncompliance by the Borrower or any of its
                           Subsidiaries with any applicable Environmental Law or
                           (ii) could reasonably be expected to form the basis
                           of an Environmental Claim against the Borrower or any
                           of its Subsidiaries or any such Real Property;

                  (c)      any condition or occurrence on any Real Property
                           owned or operated by the Borrower or any of its
                           Subsidiaries that could reasonably be expected to
                           cause such Real Property to be subject to any
                           restrictions on the ownership, occupancy, use or
                           transferability by the Borrower or any of its
                           Subsidiaries of such Real Property under any
                           Environmental Law; and

                  (d)      the taking of any removal or remedial action in
                           response to the actual or alleged presence of any
                           Hazardous Material on any Real Property owned or
                           operated by the Borrower or any of its Subsidiaries
                           as required by any Environmental Law or any
                           governmental or other administrative agency; provided
                           that in any event the Borrower shall deliver to each
                           Lender all material notices received after the date
                           hereof by them or any of its Subsidiaries from any
                           Governmental Authority under, or pursuant to, CERCLA.

All such notices shall describe in reasonable detail the nature of the claim,
investigation, condition, occurrence or removal or remedial action and the
Borrower or such Subsidiary's response thereto. In addition, upon the request of
the Agent, the Borrower will provide the Lenders with copies of all material
communications with any Governmental Authority relating to Environmental Laws,
all material communications with any Person (other than their attorneys)
relating to any Environmental Claim of which notice is required to be given
pursuant to this Section 6.11(e), and such detailed reports of any such
Environmental Claim as may reasonably be requested by the Agent on behalf of the
Lenders.

         Section 6.12      Transaction Document Obligations. Pay the Notes
according to the reading, tenor and effect thereof, and do and perform every act
and discharge all of the obligations provided to be performed by the Borrower
under the Transaction Documents, including this Agreement, at the time or times
and in the manner specified, and cause the Subsidiary Guarantors to take such
action with respect to their obligations to be performed and discharged under
the Transaction Documents to which they respectively are parties.

         Section 6.13      ERISA. Promptly upon learning of the occurrence or
the expected occurrence of (i) any material liability of any Credit Party or any
ERISA Affiliate pursuant to ERISA in connection with the termination of any Plan
or withdrawal or partial withdrawal of any


                                      -33-


multi-employer plan (as defined in ERISA), (ii) a failure to satisfy the minimum
funding standards of Section 412 of the Code or Part 3 of Title I of ERISA by
any Plan for which any Credit Party or any ERISA Affiliate is plan administrator
(as defined in ERISA) other than to the extent such failure could not reasonably
be expected to result in a Material Adverse Change, (iii) a plant closing or
mass layoff (as defined in the Worker Adjustment and Retraining Notification
Act) of the Borrower, any Subsidiary Guarantor or any ERISA Affiliate; (iv) the
Borrower, any Subsidiary Guarantor or any ERISA Affiliate becoming liable for
material increases in retiree medical, life insurance or other death benefits
(contingent or otherwise) (other than as a result of a continuation of medical
coverage required under section 4980B of the Code or the insurance coverage
continuation provisions of applicable state law); or (v) a failure to satisfy
the conditions represented, warranted and agreed to in Section 4.10 of this
Agreement other than to the extent such failure could not reasonably be expected
to result in a Material Adverse Change, furnish or cause to be furnished to the
Agent written notice thereof.

         Section 6.14      Minimum Adjusted EBITDA to Adjusted Interest Expense.
With respect to the Borrower, maintain a ratio determined as of the last day of
each of the Borrower's fiscal quarters commencing September 30, 2002 of Adjusted
EBITDA to Adjusted Interest Expense as follows:

                  (a)      through the fiscal quarter ending December 31, 2002,
                           not less than 2.25 to 1.00;

                  (b)      thereafter, until the fiscal quarter ending December
                           31, 2003, not less than 2.50 to 1.00;

                  (c)      thereafter, until the fiscal quarter ending December
                           31, 2004, not less than 2.75 to 1.00;

                  (d)      thereafter, until the fiscal quarter ending December
                           31, 2005, not less than 3.00 to 1.00; and

                  (e)      thereafter, not less than 3.25 to 1.00.

         Section 6.15      Minimum Adjusted Tangible Net Worth With respect to
the Borrower, maintain an Adjusted Tangible Net Worth of not less than One
Hundred Seventy-Five Million Dollars ($175,000,000) plus fifty percent (50%) of
the Borrower's cumulative positive annual net income (on a consolidated basis)
for each fiscal quarter from September 30, 2002 onwards, plus seventy-five
percent (75%) of the net proceeds received by the Borrower (or any of the
Borrower's Subsidiaries) from the issuance of Equity Interests issued after the
Closing Date.

         Section 6.16      Maximum Adjusted Funded Debt Ratio. With respect to
the Borrower, maintain an Adjusted Funded Debt Ratio determined as of the last
day of each of the Borrower's fiscal quarters commencing September 30, 2002 as
follows:

                  (a)      through the fiscal quarter ending March 31, 2003, not
                           more than 4.25 to 1.00;


                                      -34-


                  (b)      thereafter, until the fiscal quarter ending March 31,
                           2004, not more than 4.00 to 1.00; and

                  (c)      thereafter, not more than 3.50 to 1.00.

         Section 6.17      Minimum Fair Market Value of the Vessels. Maintain an
Asset Coverage Ratio at all times equal to or greater than 1.75 to 1.00.

         Section 6.18      Ownership of Subsidiary Guarantors.  With respect to
the Borrower, own, directly or indirectly, the percentage of the Equity
Interests of each Subsidiary Guarantor shown on Schedule 4.11 hereto.

         Section 6.19      Additional Vessels; Further Assurances. If either
(a) the Borrower or a Subsidiary acquires a Vessel after the Closing Date and,
if as of the date of acquisition of such Vessel the Borrower is not in
compliance with Section 6.17 hereof or (b) the Borrower is not in compliance
with Section 6.17 hereof, then the Borrower shall or shall cause its Subsidiary
within 30 days of such acquisition to:

                  (a)      Execute and deliver a Mortgage, deliver related
                           information and reports, and otherwise take such
                           actions with respect to such Vessel and Mortgage as
                           would have been required to satisfy the conditions of
                           Section 5.01 if such new Vessel were a Vessel on the
                           Closing Date;

                  (b)      Execute and deliver a Subsidiary Guarantee Agreement
                           (to the extent not previously delivered);

                  (c)      Pledge and deliver, or cause to be pledged and
                           delivered, all of the Equity Interest of each new
                           Subsidiary Guarantor acquired or created after the
                           Closing Date, to the extent owned by the Borrower or
                           any Subsidiary Guarantor, to the Agent for the
                           benefit of the Lenders pursuant to the Pledge
                           Agreement; and

                  (d)      Execute and deliver an Assignment of Earnings and
                           Insurances;

provided, however, that if, pursuant to Section 7.03, the Borrower or a
Subsidiary Guarantor mortgages a vessel in order to remain in compliance with
Section 6.17, such vessel must be a Qualified Substitute Vessel.

         Section 6.20      Vessel Operations and Management. (a) Procure that
each of the Vessels not laid-up in accordance with Section 6.20(c) hereof, shall
at all times be (i) managed by the technical and commercial managers managing
the Vessels as of the Closing Date or such other managers acceptable to the
Requisite Lenders in accordance with vessel management agreements acceptable to
the Requisite Lenders, (ii) flagged under the laws of an Approved Jurisdiction
and (iii) classed in the highest classification and rating for vessels of the
same age and type without any outstanding conditions or recommendations
affecting class (other than those for which the time prescribed for curing the
condition or recommendation has not passed) with Lloyds Registry of Shipping,
Det norske Veritas, Bureau Veritas, American Bureau of Shipping or such other
classification society classing the Vessels as of the Closing Date or with such
other


                                      -35-


classification society acceptable to the Agent; provided, however, if a Vessel
is reflagged under the laws of an Approved Jurisdiction, it shall be a condition
to such reflagging that the Subsidiary Guarantors deliver to the Agent (A)
evidence (including an opinion of counsel) that such Vessel has been registered
in the name of the related Subsidiary Guarantor under the laws of such
jurisdiction; (B) evidence (including an opinion of counsel) that the related
Mortgage has been properly recorded under the laws of such jurisdiction and
constitutes a first priority mortgage (or, in the case of the Second Lien
Vessels, a second priority mortgage) subject only to Permitted Encumbrances; (C)
evidence that all necessary governmental or regulatory approvals, licenses and
authorities which are necessary to the operation of the Vessel have been
obtained; (D) evidence that insurances in compliance with the requirements of
the Mortgage have been obtained; and (E) such other items as the Agent may
reasonably require.

         (b)      Except with respect to any Vessel that has been laid-up in
accordance with Section 6.20(c) hereof, comply in all material respects or to
procure that the operator of each of the Vessels will comply in all material
respects within the requisite applicable time limits for vessels of the same
type, size, age and flag of the Vessels with the International Management Code
for the Safe Operation of Ships and for Pollution Prevention (as the same may be
amended from time to time, the "ISM Code") adopted by the International Maritime
Organization or any replacement of the ISM Code and in particular, without
prejudice to the generality of the foregoing, as and when required to do so by
the ISM Code and at all times thereafter, (i) to hold or to procure that the
operator of each of the Vessels holds, a valid Document of Compliance (being a
document issued to a vessel operator as evidence of its compliance with the
requirements of the ISM Code) duly issued to the Subsidiary Guarantor or the
operator (as the case may be) pursuant to the ISM Code and a valid Safety
Management Certificate (being a document issued to a vessel as evidence that the
vessel operator and its shipboard management operate in accordance with an
approved structured and documented system enabling the personnel of that vessel
operator to implement effectively the safety and environmental protection policy
of that vessel operator) duly issued to each of the Vessels pursuant to the ISM
Code, (ii) to provide the Agent with copies of any such Document of Compliance
and Safety Management Certificate promptly following the issue thereof and after
every renewal and (iii) to keep or to procure that there is kept, on board each
of the Vessels a copy of any such Document of Compliance and the original of any
such Safety Management Certificate

         (c)      Ensure that the laying-up of any Vessel is commercially
reasonable; that each laid-up Vessel is maintained in accordance with ordinary
and reasonable commercial standards for laid-up vessels, and that the Agent is
notified of each lay-up within thirty (30) days after the commencement thereof.

         Section 6.21      Appraisals. Upon the request of the Agent and at the
Borrower's expense, furnish the Agent with appraisals from an Appraiser for each
of the Vessels; provided, however, such request shall not be made more than once
in any twelve-month period.

         Section 6.22      Reimbursement for Expenses. Reimburse the Agent, or
cause the Subsidiary Guarantors to reimburse the Agent, promptly, with interest
at the interest rate applicable to the Notes, for any and all expenditures which
the Agent may from time to time make in providing protection in respect of
insurance, discharge or purchase of liens, taxes, dues, assessments,
governmental charges, fines and penalties lawfully imposed, repairs, attorneys'


                                      -36-


fees, necessary translation fees for documents made in a language other than
English and other matters, in each case in respect of which the Borrower has
Defaulted in its obligation hereunder with respect to such matters, or the
Subsidiary Guarantors have Defaulted in their Subsidiary Guarantee Obligation
hereunder with respect to such matters or under a Subsidiary Guarantee Agreement
with respect to such matters, to provide. Such obligation of the Borrower and
the Subsidiary Guarantors to reimburse the Agent shall be an additional
indebtedness due from the Borrower and the Subsidiary Guarantors, secured by the
Collateral and the Transaction Documents, and shall be payable by the Borrower
and the Subsidiary Guarantors on demand. The Agent, though privileged to do so,
shall be under no obligation to the Borrower or the Subsidiary Guarantors to
make any such expenditures, nor shall the making thereof relieve the Borrower or
the Subsidiary Guarantors of any default in that respect.

         Section 6.23      Remittance of Insurance Proceeds. (a) Immediately
upon the receipt of any and all insurance proceeds in respect of a Second Lien
Vessel that are not used to repair or replace the relevant Second Lien Vessel in
accordance with the provisions of the MARAD first mortgage, promptly pay to the
Agent, or cause the applicable Subsidiary Guarantor to pay to the Agent, any
insurance proceeds received by the Borrower or a Subsidiary Guarantor after
payment of such insurance proceeds to MARAD, as first mortgagee thereon, to the
extent of the outstanding amount of the indebtedness owing to MARAD with respect
to such Second Lien Vessel. Such proceeds shall be used to repay the Revolving
Loans outstanding at such time; provided however, if the Borrower delivers to
the Agent appraisals, from an Appraiser selected by the Agent for all of the
Vessels, dated no earlier than ten (10) days prior to the date such proceeds are
received by and paid to the Agent, that demonstrate compliance with Section
6.17, then such proceeds, or portion thereof not required to cause the Borrower
to be in compliance with Section 6.17, shall be remitted by the Agent back to
the Borrower.

         (b)      Upon the discharge of the first mortgage on any Second Lien
Vessel owned by the Borrower and upon the discharge of all of the first
mortgages on the Second Lien Vessels owned by Seabulk Towing, Inc., the Borrower
or Seabulk Towing, Inc., as the case may be, shall deliver to the Agent an
Assignment of Earnings and Insurances with respect to such Vessel(s), together
with such other documents as may be required to perfect the security interest of
the Agent, on behalf of the Lenders, in such Collateral.


                                      -37-


                                  ARTICLE VII
                               NEGATIVE COVENANTS

         The Borrower covenants and agrees that, so long as this Agreement shall
remain in effect or any of the Obligations shall be outstanding, it shall not,
and shall not permit any of the Subsidiary Guarantors to, without the prior
written consent of the Requisite Lenders:

         Section 7.01      Indebtedness.  Contract for, create, incur, assume or
suffer to exist any Indebtedness, except:

         (a)      Indebtedness contemplated by this Agreement or any of the
other Transaction Documents;

         (b)      Indebtedness outstanding on the date hereof which is set forth
on Schedule 4.18 and any extensions, renewals and replacements of any such
Indebtedness, provided that any such Indebtedness indicated on Schedule 4.18 as
"Indebtedness to be Repaid" shall have been repaid on or before the Closing
Date;

         (c)      accounts payable (for the deferred purchase price of property
or services) from time to time incurred in the ordinary course of business and
guarantees by the Borrower or any Subsidiary Guarantor in the ordinary course of
business of any such obligations incurred by the Borrower or any other
Subsidiary Guarantor;

         (d)      obligations for current taxes, assessments and other
governmental charges and taxes, assessments or other governmental charges which
are not yet due or are being contested in good faith by appropriate procedures,
diligently prosecuted or appealed;

         (e)      Indebtedness of the Borrower to any Subsidiary and of any
Subsidiary to the Borrower or any other Subsidiary;

         (f)      Guarantees by the Borrower of Indebtedness of any Subsidiary
and by any Subsidiary of Indebtedness of the Borrower or any other Subsidiary;

         (g)      Indebtedness of the Borrower or any Subsidiary incurred to
finance the acquisition, construction or improvement of any fixed or capital
assets, including Capital Lease Obligations and any Indebtedness assumed in
connection with the acquisition of any such assets or secured by a Lien on any
such assets prior to the acquisition thereof, and extensions, renewals and
replacements of any such Indebtedness; provided that (i) such Indebtedness is
incurred prior to or within 90 days after such acquisition or the completion of
such construction or improvement and (ii) the aggregate principal amount of
Indebtedness permitted by this clause (g) shall not exceed $5,000,000 at any
time outstanding;

         (h)      Indebtedness of any Person that becomes a Subsidiary after the
date hereof; provided that (i) such Indebtedness exists at the time such Person
becomes a Subsidiary and is not created in contemplation of or in connection
with such Person becoming a Subsidiary and (ii) the aggregate principal amount
of Indebtedness permitted by this clause (h) shall not exceed $5,000,000 at any
time outstanding;


                                      -38-

         (i)      Capital Lease Obligations not to exceed $10,000,000 at any
one time;

         (j)      Indebtedness owing pursuant to hedge agreements entered into
in the ordinary course of business for the purpose of hedging against
fluctuations in interest rates (on money borrowed by the Borrower or any
Subsidiary), commodity prices and foreign exchange rates; and

         (k)      any Indebtedness (and any extensions, renewals and
replacements of such Indebtedness), to the extent that, at the time such
Indebtedness is contracted for, created, assumed or incurred, and both before
and after giving effect to such Indebtedness, no Default or Event of Default
exists or would exist hereunder.

         Section 7.02      Liens. Create, assume, permit or suffer to exist any
mortgage, pledge, encumbrance, security interest or other Lien securing an
obligation on any Vessel or on any other asset, whether now owned or hereafter
acquired, except Permitted Encumbrances and second priority mortgages to secure
a Hedging Agreement pursuant to Section 2.03(d) with respect to the Vessels and
Customary Permitted Liens with respect to such other assets.

         Section 7.03      Asset Sales. Sell, lease, transfer, assign or
otherwise dispose of any Vessel unless (a) after giving effect to such sale,
lease, transfer, assignment or disposition, the Borrower is in compliance with
Section 6.17 hereof or (b) the Borrower delivers to the Agent a Qualified
Substitute Vessel and the documents described in Section 6.19 with respect
thereto in order to remain in compliance with Section 6.17.

         Section 7.04      Assignment of Insurances. Grant an assignment or
permit or suffer to exist any mortgage, pledge, encumbrance, security interest
or other Lien on the Insurances relating to a Second Lien Vessel other than
Liens in favor of MARAD.

         Section 7.05      Sale of Notes or Accounts Receivable. Sell, lease,
transfer, assign or otherwise dispose of any notes, accounts receivable or
other obligations owed to by any Person, except (a) for the purpose of
collection in the ordinary course of its business and (b) to the extent that,
both before and after giving effect to any such sale, lease, transfer,
assignment or disposition (taking into account any prepayment to be made to the
Lenders under this Agreement from the net proceeds of any such sale, lease,
transfer, assignment or disposition), no Default or Event of Default would
exist hereunder.

         Section 7.06      Sale and Leaseback. Enter into any arrangements,
directly or indirectly, with any Person whereby it shall sell or transfer any
property, whether real or personal, and used and useful in its business,
whether now owned or hereafter acquired, if it, at the time of such sale or
disposition, intends to lease or otherwise acquire the right to use or possess
(except by purchase) such property or like property for a substantially similar
purpose.

         Section 7.07      Restricted Payments. With respect to the Borrower,
declare or pay any dividend or make any distribution on its capital stock or
purchase, redeem, acquire or otherwise retire any capital stock for value (in
each case, a "Restricted Payment"); provided, however, that the Borrower may
make a Restricted Payment so long as, at the time of, and after giving effect
to, the proposed Restricted Payment: (a) no Default or Event of Default shall
have occurred and be continuing and (b) the aggregate amount expended for all
Restricted Payments (the amount so


                                     -39-


expended, if other than in cash, to be determined in good faith by the Board of
Directors) would not exceed fifty percent (50%) of the aggregate amount of the
consolidated net income of the Borrower and its consolidated Subsidiaries
excluding the Lightship Tanker Entities for the fiscal year ended immediately
prior to the fiscal year in which such proposed Restricted Payment is to be
made determined in accordance with GAAP. Notwithstanding the preceding
sentence, (w) the Borrower may make Restricted Payments with the proceeds of
substantially concurrent capital contributions made by its stock holders so
long as no Default or Event of Default shall have occurred and be continuing
prior to or after giving effect thereto, (x) the Borrower may declare and pay
dividends with respect to its Equity Interests payable solely in additional
shares of its common stock, (y) Subsidiaries of the Borrower may declare and
pay dividends ratably with respect to their Equity Interests, and (z) the
Borrower may make Restricted Payments pursuant to and in accordance with stock
option plans or other benefit plans for management, directors or employees of
the Borrower and its Subsidiaries.

         Section 7.08      Investments. Make any Investment unless at the time
of, and after giving effect to, the making of any proposed Investment, no
Default or Event of Default has occurred and is continuing or would occur as a
consequence of the making of such Investment. Notwithstanding the foregoing
sentence, the Borrower and the Subsidiary Guarantors may make the following
Investments at any time: (a) direct obligations of, or obligations the
principal of and interest on which are unconditionally guaranteed by, the
United States of America (or by any agency thereof to the extent such
obligations are backed by the full faith and credit of the United States of
America), in each case maturing within one year from the date of acquisition
thereof, and (b) investments in certificates of deposit, banker's acceptances
and time deposits maturing within 180 days from the date of acquisition thereof
issued or guaranteed by or placed with, and money market deposit accounts
issued or offered by, any domestic office of any commercial bank organized
under the laws of the United States of America or any State thereof which has a
combined capital and surplus and undivided profits of not less than
$500,000,000.

         Section 7.09      Restriction on Payment Restrictions Affecting
Subsidiary Guarantors. Create or otherwise cause or suffer to exist or become
effective any encumbrance or restriction (other than pursuant to this
Agreement) on the ability of the Subsidiary Guarantors to (a) pay dividends or
make any other distributions on its capital stock or any other interest or
participation in its profits or pay any Indebtedness owed to the Borrower, (b)
make advances or loans to the Borrower or (c) transfer any of its properties or
assets to the Borrower, except for such encumbrances or restrictions existing
under or by reason of applicable law.

         Section 7.10      Change in Business Engage (directly or indirectly) in
any business other than the business of the Borrower and its Subsidiaries as of
the Closing Date and other businesses reasonably related thereto.

         Section 7.11      [Reserved]

         Section 7.12      Transactions with Affiliates. Enter into any
transaction or series of related transactions, whether or not in the ordinary
course of business, with any Affiliate, other than on terms and conditions
substantially as favorable to such Person as would be obtainable by such Person
at the time in a comparable arm's-length transaction with a Person other than
an Affiliate. Notwithstanding the foregoing, the restrictions set forth in this
Section 7.12 shall not apply to (a)


                                     -40-


the payment of reasonable and customary fees to directors of the Borrower who
are not employees of the Borrower, (b) any other transaction with any employee,
officer or director of the Borrower or any of its Subsidiaries pursuant to
employee benefit plans and compensation arrangements in amounts customary for
corporations similarly situated to the Borrower or any such Subsidiary and
entered into the ordinary course of business and approved by the Board of
Directors of the Borrower or any committee thereof or the Board of Directors of
such Subsidiary, (c) transactions between or among the Borrower and its
Subsidiaries who are Subsidiary Guarantors and not involving any other
Affiliate, (d) the Stock Purchase Agreement and the Stock Holders Agreement,
and (e) any Restricted Payment permitted by Section 7.07.

         Section 7.13      Changes in Offices or Names. Change the location of
the chief executive office of any Credit Party, the office of the chief place
of business any such parties, the office of the Credit Parties in which the
records relating to the earnings or insurances of the Vessels are kept unless
the Agent shall have received thirty (30) days prior written notice of such
change.

         Section 7.14      Changes in Fiscal Year. Change its fiscal year.

         Section 7.15      Other Indebtedness. For a period, which shall be the
lesser of (a) 60 days following the Closing Date and (b) completion of the
syndication by the Arrangers, engage in any offering, placement or arrangement
of any Indebtedness of the Credit Parties or their Affiliates, other than the
transaction described in this Agreement.

         Section 7.16      Consolidation, Merger and Sale of Assets. Consolidate
with, or merge with or into, any other Person or convey, sell, lease or
otherwise dispose of (or agree to do any of the foregoing at any future time)
all or substantially all of its property or assets, unless each of the
following conditions is satisfied:

                  (a)      The entity formed by such consolidation or into
         which such Credit Party is merged or the Person which acquires by
         conveyance or transfer substantially all of the assets of such Credit
         Party as an entirety shall expressly assume all of the obligations of
         such Credit Party under this Agreement and the other Transaction
         Documents pursuant to a written supplement to this Agreement executed
         in accordance with Article XI.

                  (b)      Immediately prior to and after giving effect to such
         transaction, no Default or Event of Default shall have occurred and be
         continuing and the Agent shall have received a certificate from an
         Executive Officer to such effect.

                  (c)      The Agent shall have received an opinion of counsel
         regarding the merged or consolidated entity, the legality, validity
         and enforceability of this Agreement and the other Transaction
         Documents, the title to the related Vessels and the priority of the
         Mortgages, as applicable.

                  (d)      Upon any consolidation or merger, or any conveyance
         or transfer of substantially all of the assets of such Credit Party as
         an entirety in accordance with this Section 7.16, the successor entity
         formed by such consolidation or into which such Credit Party is merged
         or to which such conveyance or transfer is made shall


                                     -41-


         succeed to, and be substituted for, and may exercise every right and
         power of, such Credit Party under this Agreement and the other
         Transaction Documents with the same effect as if such successor entity
         had been named as a Credit Party herein. No such conveyance or
         transfer of substantially all of the assets of such Credit Party as an
         entirety shall have the effect of releasing such Credit Party or any
         successor entity which shall theretofore have become such in the
         manner prescribed in this Section 7.16 from its liability hereunder.
         Nothing in this Section 7.16 shall restrict the Subsidiary Guarantors
         from chartering the Vessels so long as such charters are not bareboat
         charters for a period in excess of ten (10) years, except with respect
         to bareboat charters of the Second Lien Vessels so long as MARAD is
         the first mortgagee thereon and all Vessels owned now or in the future
         by Seabulk Towing, Inc. so long as MARAD is the first mortgagee on a
         Second Lien Vessel owned by Seabulk Towing, Inc., which shall not be
         subject to any such restriction.

                                 ARTICLE VIII
                             AGREEMENT TO GUARANTEE

         Section 8.01      Obligations Guaranteed.

                  (a)      The Subsidiary Guarantors, jointly and severally,
         hereby unconditionally guarantee to each of the Agent and the Lenders
         (i) the full and prompt payment of the principal of the Notes and the
         indebtedness represented thereby and the L/C Obligations when and as
         the same shall become due and payable, whether at the stated maturity
         thereof, by acceleration, call for redemption or otherwise; (ii) the
         full and prompt payment of interest on the Notes and the L/C
         Obligations when and as the same shall become due and payable
         (including interest at the Overdue Rate on any part of the principal
         amount, interest amount or other amount due under this Agreement and
         not paid when due); (iii) the full and prompt payment of an amount
         equal to each and all of the payments and other sums when and as the
         same shall become due, required to be paid by the Borrower under the
         terms of this Agreement and under each of the other Transaction
         Documents to which it is a party and (iv) the full and prompt
         performance and observance by the Borrower of the obligations,
         covenants and agreements required to be performed and observed by the
         Borrower under the terms of this Agreement and under each of the other
         Transaction Documents to which it is a party (items (i) through (iv),
         the "Subsidiary Guarantee Obligations"). The Subsidiary Guarantors
         hereby irrevocably and unconditionally agree that upon any default by
         the Borrower in the payment, when due, of any principal of, interest
         on or other amounts (including amounts in respect of fees and
         indemnification owing to the Agent or the Lenders) due under the
         Notes, this Agreement or any other Transaction Document, the
         Subsidiary Guarantors will promptly pay the same within ten (10) days
         after receipt of written demand therefor from the Agent or any Lender.
         The Subsidiary Guarantors further hereby irrevocably and
         unconditionally agree that upon any default by the Borrower in any of
         its obligations, covenants and agreements required to be performed and
         observed by the Borrower under this Agreement and under each of the
         other Transaction Documents to which it is a party, the Subsidiary
         Guarantors will effect the observance of such


                                     -42-


         obligations, covenants and agreements within ten (10) days after
         receipt of written demand therefor from the Agent or any Lender.

                  (b)      All payments by the Subsidiary Guarantors shall be
         paid in the lawful currency of the United States of America. Each and
         every default (i) in the payment of the principal of, premium, if any,
         interest on or other amounts due under the Notes or L/C Obligations,
         (ii) in the payment of any sum required to be paid by the Borrower
         under the terms of this Agreement or the other Transaction Documents,
         or (iii) in the prompt performance and observance by the Borrower of
         all of the obligations, covenants and agreements required to be
         performed and observed by the Borrower under the terms of the
         Transaction Documents, shall give rise to a separate cause of action
         hereunder, and separate suits may be brought hereunder as each cause
         of action arises.

                  (c)      The Subsidiary Guarantors further agree that the
         Subsidiary Guarantee Obligations constitute an absolute,
         unconditional, present and continuing guarantee of performance and
         payment and not of collection, and waives any right to require that
         any resort be had by the Agent and the Lenders to (i) any security
         held by or for the benefit of the Agent and the Lenders for payment of
         the principal of, premium, if any, interest on or other amounts due
         under the Notes, this Agreement or the Transaction Documents, (ii) the
         Agent's and Lenders' right against any other Person, or (iii) any
         other right or remedy available to the Agent and the Lenders by
         contract, applicable law or otherwise. The Subsidiary Guarantee
         Obligations are direct, unconditional and completely independent of
         the obligations of any other Person or entity, and a separate cause of
         action or separate causes of action may be brought and prosecuted
         against the Subsidiary Guarantors without the necessity of any other
         party or previous proceeding with or exhausting any other remedy
         against any other Person who might have become liable for the
         indebtedness or of realizing upon any security held by or for the
         benefit of the Agent and the Lenders.

                  (d)      The Subsidiary Guarantors shall pay to the Agent and
         the Lenders all reasonable costs and expenses (including, without
         limitation, reasonable attorneys' fees) incurred by the Agent and the
         Lenders upon the occurrence of an Event of Default under any or all of
         the Transaction Documents.

         Section 8.02      Subsidiary Guarantee Obligations of Subsidiary
Guarantors Unconditional. The Subsidiary Guarantee Obligations shall be
absolute and unconditional and shall remain in full force and effect until (1)
the entire principal of, premium, if any, interest on and other amounts due
under the Notes and the L/C Obligations shall have been paid and (2) all other
sums payable by the Borrower and the Subsidiary Guarantors under this Agreement
and the other Transaction Documents have been paid in full (including, without
limitation, Section 8.01 hereof) have been paid in full, and, to the extent
permitted by law, such Subsidiary Guarantee Obligations shall not be affected,
modified, released or impaired by any state of facts or the happening from time
to time of any event, including, without limitation, any of the following,
whether or not with notice to or the consent of the Subsidiary Guarantors:


                                     -43-


                  (a)      the invalidity, irregularity, illegality,
         frustration or unenforceability of, or any defect in, (i) any
         Transaction Document or (ii) any collateral security given in
         connection therewith;

                  (b)      any present or future law or order of any government
         (de jure or de facto) or of any agency thereof purporting to reduce,
         amend or otherwise affect the Notes, the L/C Obligations or any other
         obligation of the Borrower or any other obligor or to vary any terms
         of payment;

                  (c)      any claim of immunity on behalf of the Borrower or
         any other obligor or with respect to any property of the Borrower or
         any other obligor;

                  (d)      the waiver, compromise, settlement, release,
         extension, change, modification or termination of any or all of the
         obligations, covenants or agreements of (i) the Borrower under this
         Agreement or any other Transaction Document (except by payment in full
         of all its Obligations under this Agreement) or (ii) the Subsidiary
         Guarantors with respect to the Subsidiary Guarantee Obligations
         (except by payment in full of all the Subsidiary Guarantee Obligations
         hereunder);

                  (e)      the failure to give notice to the Subsidiary
         Guarantors of the occurrence of a Default or an Event of Default
         hereunder or under any other Transaction Document;

                  (f)      the transfer, assignment, sublease or mortgaging, or
         the purported or attempted transfer, assignment, sublease or
         mortgaging, of all or any part of the interest of the Borrower in any
         of its properties, or any failure of or defect in the title with
         respect to the Borrower's interest in any of its properties;

                  (g)      the release, sale, exchange, surrender or other
         change in any collateral security for payment of the Borrower's
         Obligations;

                  (h)      the extension of the time for payment of any amounts
         payable on the Notes, the L/C Obligations or any part thereof or of
         the time for performance of any other obligations, covenants or
         agreements under or arising out of this Agreement, any other
         Transaction Document or the extension or the renewal of any thereof;

                  (i)      the modification or amendment (whether material or
         otherwise) of any Subsidiary Guarantee Obligation, covenant or
         agreement set forth in any Transaction Document;

                  (j)      the taking of, or the omission to take, any of the
         actions referred to in this Agreement or any Transaction Document;

                  (k)      any failure, omission, delay, or lack on the part of
         the Agent or the Lenders or any other Person to enforce, assert or
         exercise any right, power or remedy conferred on the Agent and the
         Lenders or such other Person in this Agreement or any other
         Transaction Document;


                                     -44-


                  (l)      the voluntary or involuntary liquidation,
         dissolution, sale or other disposition of all or substantially all the
         assets, marshalling of assets and liabilities, receivership,
         insolvency, bankruptcy, assignment for the benefit of creditors,
         reorganization, arrangement or composition with creditors or
         readjustment of, or other similar proceedings affecting the Subsidiary
         Guarantors or any of their assets, or any allegation or contest of the
         validity of this Agreement, or any other Transaction Document, or the
         disaffirmance or attempted disaffirmance of this Agreement or any
         other Transaction Document, in any such proceedings;

                  (m)      any event or action that would, in the absence of
         this Section, result in the release or discharge of the Subsidiary
         Guarantors from the performance or observance of any Subsidiary
         Guarantee Obligation, covenant or agreement contained in this
         Guarantee, other than the performance thereof;

                  (n)      the default or failure of any Subsidiary Guarantor
         to fully perform any of its Subsidiary Guarantee Obligations;

                  (o)      any other circumstances which might otherwise
         constitute a legal or equitable discharge or defense of a surety or a
         guarantor;

                  (p)      the actual or purported assignment of any of the
         Subsidiary Guarantee Obligations;

                  (q)      the receipt and acceptance by the Agent or the
         Lenders of notes, checks or other instruments for the payment of money
         made by the Subsidiary Guarantors and any extensions and renewals
         thereof (other than the payment in full of the entire principal of,
         premium, if any, interest on and other amounts due under the Notes and
         the L/C Obligations and all other sums payable by the Borrower and the
         Subsidiary Guarantors under this Agreement and the other Transaction
         Documents);

                  (r)      to the extent permitted by law, the release or
         discharge of the Subsidiary Guarantors from the performance or
         observance of any guaranteed obligation, covenant or agreement
         contained herein by operation of law;

                  (s)      any release or impairment of the Collateral pledged
         under this Agreement or any other Transaction Document;

                  (t)      the release, substitution or replacement in
         accordance with the terms of any Transaction Document of any property
         subject thereto or any redelivery, repossession, surrender or
         destruction of any such property, in whole or in part;

                  (u)      any limitation on the liability or obligations of
         the Borrower under this Agreement or any other Transaction Document or
         any termination, cancellation, frustration, invalidity or
         unenforceability, in whole or in part, of this Agreement or any other
         Transaction Document, or any term thereof;

                  (v)      the merger or consolidation or any sale, lease or
         transfer of any or all of the assets of the Borrower or any Subsidiary
         Guarantor to any Person; or


                                     -45-


                  (w)      any other occurrence whatsoever, whether similar or
         dissimilar to the foregoing.

         Section 8.03      Waiver of Notice; Expenses. The Subsidiary Guarantors
each hereby expressly waive notice from the Agent and the Lenders of its
acceptance and reliance on the Subsidiary Guarantor's Guarantee or of any
action taken or omitted in reliance hereon. The Subsidiary Guarantors further
expressly waive diligence, presentment, demand for payment, protest, any
requirement that any right or power be exhausted or any action be taken against
the Borrower or against any other obligor under any of the Transaction
Documents or against the Collateral or any other collateral security for the
Obligations. The Subsidiary Guarantors jointly and severally agree to pay all
costs, fees, commissions and expenses (including, without limitation, all court
costs and reasonable attorneys' fees) which may be incurred by the Agent or the
Lenders in enforcing or attempting to enforce the Subsidiary Guarantee
Obligations following any default on the part of any or all of the Subsidiary
Guarantors hereunder, whether the same shall be enforced by suit or otherwise.

         Section 8.04      Other Security. The Agent and Lenders may pursue
their rights and remedies against the Subsidiary Guarantors notwithstanding (a)
any other Guarantee of or security for the Obligations and (b) any action taken
or omitted to be taken by the Agent, the Lenders or any other Person to enforce
any of the rights or remedies under such other guarantee or with respect to any
other security.

         Section 8.05      No Set-off by the Subsidiary Guarantors. No set-off,
abatement, recoupment, counterclaim, reduction or diminution of an obligation,
or any defense of any kind or nature (other than performance by the Subsidiary
Guarantors of the Subsidiary Guarantee Obligations hereunder) which the
Subsidiary Guarantors have or may have with respect to a claim hereunder, shall
be available hereunder to the Subsidiary Guarantors against the Agent or the
Lenders.

         Section 8.06      Joint and Several Obligation. Each of the Subsidiary
Guarantors hereby agrees that it is jointly and severally liable for each of
the Subsidiary Guarantee Obligations hereunder and under each of the other
Transaction Documents. Each of the Subsidiary Guarantors accepts joint and
several liability for all Subsidiary Guarantee Obligations hereunder in
consideration of the financial accommodation to be provided by the Lenders to
the Borrower under this Agreement, and in turn, the Borrower to the Subsidiary
Guarantors, for the mutual benefit, directly and indirectly, of each of the
Subsidiary Guarantors and in consideration of the undertakings by each of the
Subsidiary Guarantors to accept joint and several liability for each of their
Subsidiary Guarantee Obligations.

         Each of the Subsidiary Guarantors jointly and severally hereby
irrevocably and unconditionally accepts, not merely as a surety but also as a
co-debtor, joint and several liability with the other Subsidiary Guarantors
with respect to the payment and performance of all of the Subsidiary Guarantee
Obligations, it being the intention of the parties hereto that all the
Subsidiary Guarantee Obligations shall be the joint and several obligations of
each of the Subsidiary Guarantors without preferences or distinction among
them.


                                     -46-


         If and to the extent that any Subsidiary Guarantor shall fail to make
any payment with respect to any of the Subsidiary Guarantee Obligations as and
when due or to perform any of the Subsidiary Guarantee Obligations in
accordance with the terms thereof, then in each such event, the other
Subsidiary Guarantor will make such payment with respect to, or perform, such
Subsidiary Guarantee Obligations.

         The obligations of each Subsidiary Guarantor under the provisions of
this Section 8.06 constitute full recourse obligations of such Subsidiary
Guarantor, enforceable against it to the full extent of its properties and
assets, irrespective of the validity, regularity or enforceability of this
Agreement or any other Transaction Document against another Subsidiary
Guarantor or any other circumstances whatsoever that under applicable law might
constitute a defense to the joint and several Subsidiary Guarantee Obligations
of such other Subsidiary Guarantor.

         Except as otherwise expressly provided herein, each Subsidiary
Guarantor hereby waives notice of acceptance of its joint and several
liability, notice of any and all Subsidiary Guarantee Obligations incurred
hereunder or under any other Transaction Document, notice of the occurrence of
any Default or Event of Default, or of any demand for any payment hereunder or
any other Transaction Document, notice of any action at any time taken or
omitted by the Agent or any Lender under or in respect of any of the Subsidiary
Guarantee Obligations, any requirement of diligence and, generally, all
demands, notices and other formalities of every kind in connection with the
Subsidiary Guarantee Obligations, this Agreement or any other Transaction
Document. Each Subsidiary Guarantor hereby assents to, and waives notice of,
any extension or postponement of the time for the payment of any of the
Subsidiary Guarantee Obligations, the acceptance of any partial payment
thereon, any waiver, consent or other action or acquiescence by the Agent or
any Lender at any time or times in respect of any default by any Subsidiary
Guarantor in the performance or satisfaction of any term, covenant, condition
or provision hereunder or under this Agreement or any other Transaction
Document, any and all other indulgences whatsoever by the Agent or any Lender
in respect of any of the Subsidiary Guarantee Obligations, and the taking,
addition, substitution or release, in whole or in part, at any time or times,
of any security for any of the Subsidiary Guarantee Obligations or the
addition, substitution or release, in whole or in part, of any Subsidiary
Guarantor. Without limiting the generality of the foregoing, each Subsidiary
Guarantor assents to any other action or delay in acting or failure to act on
the part of the Agent or any Lender, including, without limitation, any failure
strictly or diligently to assert any right or to pursue any remedy or to comply
fully with applicable laws or regulations thereunder which might, but for the
provisions of this Section 8.06, afford grounds for terminating, discharging or
relieving such Subsidiary Guarantor, in whole or in part, from any of its
obligations under this Section 8.06, it being the intention of each Subsidiary
Guarantor that, so long as any of the Subsidiary Guarantee Obligations remain
unsatisfied, the obligations of such Subsidiary Guarantor shall not be
discharged except by performance and then only to the extent of such
performance. The Subsidiary Guarantee Obligations of each Subsidiary Guarantor
shall not be diminished or rendered unenforceable by any winding up,
reorganization, arrangement, liquidation, reconstruction or similar proceeding
with respect to the Borrower or the other Subsidiary Guarantors or any Lender.
The joint and several liability of the Subsidiary Guarantors hereunder shall
continue in full force and effect notwithstanding any absorption, merger,
amalgamation or any other change whatsoever in the name, membership,
constitution or place of formation of the Borrower, any Subsidiary Guarantor or
any Lender.


                                     -47-


         The provisions of this Section 8.06 are made for the benefit of the
Agent and each Lender and their successors and assigns, and may be enforced by
such party from time to time against any of the Subsidiary Guarantors as often
as occasion therefore may arise and without requirement on the part of the
Agent or any Lender first to marshal any of its claims or to exercise any of
its rights against the other Subsidiary Guarantor or to exhaust any remedies
available to it against the other Subsidiary Guarantor or to resort to any
other source or means of obtaining payment of any of the Subsidiary Guarantee
Obligations or to elect any other remedy. The provisions of this Section 8.06
shall remain in effect until all the Subsidiary Guarantee Obligations shall
have been paid in full or otherwise fully satisfied. If at any time, any
payment, or any part thereof, made in respect of any of the Subsidiary
Guarantee Obligations, is rescinded or must otherwise be restored or returned
by the Agent or any Lender upon the insolvency, bankruptcy or reorganization of
either of the Subsidiary Guarantors, or otherwise, the provisions of this
Section 8.06 will forthwith be reinstated in effect, as though such payment had
not been made.

         Section 8.07      Limitation on Liability. Any term or provision of
this Agreement or any other Transaction Document to the contrary
notwithstanding, the maximum, aggregate amount of the Obligations guaranteed
hereunder by any Subsidiary Guarantor shall not exceed the maximum amount that
can be hereby guaranteed without rendering this Agreement or any other
Transaction Document, as it relates to such Subsidiary Guarantor, voidable
under applicable law relating to fraudulent conveyance or fraudulent transfer
or similar laws affecting the rights of creditors generally.

         Section 8.08      Release of Subsidiary Guarantor. So long as no
Default or Event of Default has occurred and is continuing, upon the sale or
other disposition (including by way of consolidation or merger) of a Subsidiary
Guarantor or the sale or disposition of all or substantially all the assets of
such Subsidiary Guarantor in compliance with the terms of this Agreement, such
Subsidiary Guarantor shall be deemed released from all obligations under this
Article VIII without any further action required on the part of the Agent or
any Lender. At the request and sole cost and expense of the Borrower, the Agent
shall execute and deliver an appropriate instrument evidencing such release.

                                  ARTICLE IX
              EVENTS OF DEFAULT; REMEDIES; APPLICATION OF PROCEEDS

         Section 9.01      Events of Default. Any one or more of the following
events shall constitute an Event of Default:

                  (a)      if any payment of any Reduction Amount, interest,
         fees, charge or any other amounts due to the Agent or the Lenders
         under the Notes, this Agreement, the Mortgages, or any Transaction
         Document, whether at the stated maturity thereof or at any date fixed
         for payment by acceleration, by notice of prepayment or otherwise,
         shall not be made on the due date thereof and if such failure to pay
         shall remain unremedied for two (2) Business Days;

                  (b)      if the Borrower shall default in the performance or
         observance of any covenant contained in Sections 6.14, 6.15, 6.16,
         6.17, 6.18, 6.19, 6.23 or in Article


                                     -48-


         VII of this Agreement, Sections 4.01 and 4.02 of the Assignment(s) of
         Earnings and Insurances, Sections 4.01 and 4.02 of the Assignment(s)
         of Insurances, the second sentence of Section 5 and Section 7(a) of
         the Pledge Agreement(s) and Article I, Sections 4, 5(a)(ii), 7, 9, 10,
         12(a), 13(b), 14 and 19 of the Mortgages and Deeds of Covenant;

                  (c)      if the Borrower shall default in any material
         respect in the performance or observance of any covenant contained in
         Article VI of this Agreement or any other covenant, agreement or
         condition (other than those set forth in (a) or (b) above) contained
         in this Agreement or in any other Transaction Document and such
         default shall not be cured by the earlier of (i) twenty (20) days
         after an Executive Officer of the Borrower had actual knowledge of
         such default and (ii) twenty (20) days after receipt by the Borrower
         of notice thereof from the Agent;

                  (d)      if any representation or warranty made by a Credit
         Party herein or in any other Transaction Document shall prove to have
         been false, incorrect or misleading in any material respect on the
         date as of which made and uncured at the time discovered and shall not
         have been cured by the earlier of (i) 30 days after an Executive
         Officer of a Credit Party obtains actual knowledge thereof and (ii) 30
         days after receipt by the Borrower of notice thereof from the Agent;

                  (e)      if a Credit Party shall (i) generally not be paying
         its debts as they come due, (ii) file a petition in bankruptcy or a
         petition to take advantage of any insolvency act, (iii) become
         insolvent or make an assignment for the benefit of its creditors, (iv)
         consent to the appointment of a custodian or receiver of itself or of
         the whole or any substantial part of its property, (v) on a petition
         in bankruptcy filed against it, have an order for relief entered
         against it or (vi) file a petition or answer seeking reorganization or
         arrangement under the federal bankruptcy laws or any other applicable
         law;

                  (f)      if a petition in bankruptcy shall be filed against a
         Credit Party or any of their respective subsidiaries and not dismissed
         within 60 days from the date of the filing;

                  (g)      if a court of competent jurisdiction shall enter an
         order, judgment or decree appointing, without the consent of an
         affected entity, a custodian or receiver of a Credit Party, or of the
         whole or any substantial part of its property, or approving a petition
         filed against such entity seeking reorganization or arrangement of
         such entity under applicable law, and such order, judgment or decree
         shall not be set aside or stayed within 60 days from the date of its
         entry;

                  (h)      if, under the provisions of any other law for the
         relief or aid of debtors, any court of competent jurisdiction shall
         assume custody or control of a Credit Party or of the whole or any
         substantial part of such entity's property and such custody or control
         shall not be terminated or stayed within 60 days from the date of
         assumption of custody or control;


                                     -49-


                  (i)      if a final judgment, a fine or other order for the
         payment of money in excess of $2,000,000 or the equivalent thereof in
         another currency shall be rendered by a court or administrative agency
         against a Credit Party and such entity shall not discharge the same or
         provide for its discharge in accordance with its terms, or procure a
         stay of execution thereof within 30 days from the date of its entry
         and within the 30-day period, or any longer period during which
         execution of such judgment, fine or other order shall have been
         stayed, appeal therefrom and cause the execution thereof to be stayed
         during the appeal;

                  (j)      if a Credit Party shall default (as principal or
         guarantor or other surety) in any payment of principal or interest on
         any obligation for money borrowed beyond any period of grace provided
         with respect thereto, or if any other default under any agreement
         under which any such obligation is created or under any instrument
         securing or evidencing such obligation, shall have occurred, if the
         effect of such other default is to cause, or permit the holder of such
         obligation to cause, such obligation to become due prior to its stated
         maturity; provided, however, in the case of any such obligation for
         money borrowed as to which any such default in any payment of
         principal or interest or any such other default has occurred, it shall
         not constitute an Event of Default under this clause (j) unless (i)
         with respect to any such obligation for borrowed money evidenced by
         common loan documents (such as a single credit agreement or a single
         series of notes), the principal amount of such obligation exceeds
         $2,500,000, or (ii) the principal amount of all such obligations for
         money borrowed (including, without limitation, any such obligations
         described in the immediately preceding clause (i)) as to which any
         such default then exists exceeds $5,000,000 in aggregate;

                  (k)      if an Event of Default has occurred and is
         continuing under a Security Document or if any of the Transaction
         Documents shall for any reason other than the satisfaction in full of
         the Obligations cease to be, or be asserted by a Credit Party not to
         be, a legal, valid and binding obligation of such Credit Party,
         enforceable in accordance with its terms, except to the extent that
         such enforceability may be limited by any applicable bankruptcy,
         insolvency or similar laws generally affecting the enforcement of
         creditor's rights or by general principles of equity;

                  (l)      if a Borrower shall breach or default under any
         Hedging Agreement or any interest rate or currency hedging agreement
         in any material respect and such breach or default shall not have been
         cured within 30 days; or

                  (m)      if a Subsidiary Guarantor ceases to be a direct or
         indirect wholly-owned subsidiary of the Borrower without the written
         consent of the Requisite Lenders which consent shall not be
         unreasonably withheld.

         Section 9.02      Waiver of Default. Any Event of Default may be waived
only with the written consent of the Requisite Lenders. Any Event of Default so
waived shall be deemed to have been cured and not to be continuing, but no such
waiver shall be deemed a continuing waiver or shall extend to or affect any
subsequent like default or impair any rights arising therefrom.


                                     -50-


         Section 9.03      Remedies. Upon the occurrence and continuance of any
Default or Event of Default, the Lenders shall have no further obligation to
advance money or extend any additional credit to or for the benefit of the
Borrower, whether in the form of Loans, Letters of Credit or otherwise. In
addition, upon the occurrence and during the continuance of an Event of
Default, the Requisite Lenders or the Agent, on behalf and for the ratable
benefit of the Lenders, may, at the direction of the Requisite Lenders, do any
one or more of the following, all of which are hereby authorized by the
Borrower:

                  (a)      declare (i) all or any of the Notes, the L/C
         Obligations, the Obligations of the Borrower under this Agreement, the
         other Transaction Documents and any other instrument executed by the
         Borrower pursuant to the Transaction Documents to be immediately due
         and payable and, upon such declaration, such obligations so declared
         due and payable shall immediately become due and payable; provided,
         however, that if such Event of Default is under either Sections
         9.01(e), (f), (g) or (h), then all of the Obligations shall become
         immediately due and payable forthwith without the requirement of any
         notice or other action by the Lenders or the Agent;

                  (b)      declare the Commitments and other lending
         obligations under the Transaction Documents, if any, terminated,
         whereupon the Commitments and such other lending obligations, if any,
         of each Lender shall immediately terminate;

                  (c)      exercise any or all of the rights and powers and
         pursue any and all of the remedies pursuant to this Article and any of
         the other Transaction Documents, to the extent permitted by applicable
         law; and

                  (d)      bring suit at law or in equity, to collect the
         payments due under each of the Transaction Documents and to recover
         judgment for the Obligations hereby secured, and collect the same out
         of any and all of the Collateral.

         Section 9.04      Rights of Set-Off. Regardless of the adequacy of any
Collateral, during the continuance of an Event of Default, any deposits or
other sums credited by or due from any Lender to the Borrower may be set-off
against the Obligations and any and all other liabilities, direct or indirect,
absolute or contingent, due or to become due, now existing or hereafter
arising, of the Borrower to the Lenders. Any Lender that exercises any such
set-off right shall use reasonable diligence to notify the Borrower of any such
exercise, provided that the failure of such Lender to provide any such notice
shall not affect the validity of such Lender's exercise of such set-off right.

         Section 9.05      Rights and Remedies Cumulative. The Lenders' and the
Agent's rights and remedies under this Agreement shall be cumulative and shall
be in addition to every other right, power and remedy herein specifically given
or now or hereafter existing at law, in admiralty, in equity or by statute, and
each and every right, power and remedy whether specifically herein given or
otherwise existing may be exercised from time to time and as often and in such
order as may be deemed expedient by the Agent or the Lenders, and the exercise
or the beginning of the exercise of any power or remedy shall not be construed
to be a waiver of the right to exercise at the same time or thereafter any
other right, power or remedy. The Lenders and the Agent shall have all other
rights and remedies not inconsistent herewith as provided by law or in equity.
No exercise by any Lender or the Agent of one right or remedy shall be


                                     -51-


deemed an election. No delay or omission by any Lender or the Agent shall
constitute a waiver, election or acquiescence by such party.

         Section 9.06      Specific Remedies. Upon the occurrence and during the
continuance of an Event of Default:

                  (a)      At the request of the Agent, each Credit Party shall
         promptly execute and deliver such instruments and other documents as
         the Agent may deem necessary or advisable to enable the Agent to
         obtain possession of all or any part of the Collateral to which
         possession the Lenders shall at the time be entitled hereunder. If a
         Credit Party shall for any reason fail to execute and deliver such
         instruments and documents after such request by the Agent, the Agent
         may obtain a judgment conferring on the Agent the right to such
         possession on behalf of the Lenders immediately and requiring such
         Credit Party to deliver such instruments and documents to the Agent,
         to the entry of which judgment such Credit Party hereby specifically
         consents.

                  (b)      The Agent, on behalf of the Lenders, may proceed to
         enforce the rights of the Lenders by directing payment to it of all
         monies payable under any agreement or undertaking constituting a part
         of the Collateral, by proceedings in any court of competent
         jurisdiction for the appointment of a receiver or for sale of all or
         any part of the Collateral possession to which the Lenders shall at
         the time be entitled hereunder or for foreclosure of such Collateral,
         and by any other action, suit, remedy or proceeding authorized or
         permitted by this Agreement or by law or by equity, and may file such
         proofs of claim and other papers or documents as may be necessary or
         advisable in order to have the claims of the Lenders asserted or
         upheld in any bankruptcy, receivership or other judicial proceedings.

                  (c)      The Agent shall be entitled to set-off against and
         withdraw all amounts constituting a part of the Collateral and to
         apply the same as follows:

                First: To the payment of all reasonable expenses and
                charges, including the expenses of any taking,
                operating, attorney's fees, court costs and other
                expenses or advances made or incurred by the Agent in
                connection with the ascertainment or protection of
                its rights and the pursuance of its remedies
                hereunder or under any of the Transaction Documents
                (including, without limitation, the reasonable fees
                and disbursements of counsel);

                Second: To the payment of interest on the Notes and
                L/C Obligations;

                Third: To the payment of principal on the Notes and
                the L/C Obligations;

                Fourth: To the payment of all amounts due to the
                Agent and the Lenders in respect of taxes,
                indemnities, fees, expenses, premiums,


                                -52-


                purchase of liens or otherwise under the provisions
                hereof or under any of the Transaction Documents;

                Fifth: To the payment of the Obligations in respect
                any Hedging Agreement; provided, however, if there is
                more than one Counterparty in respect of the Hedging
                Agreements, a Counterparty's right to payment
                pursuant to this clause Fifth shall be pari pasu with
                the rights of each other Counterparty;

                Sixth: To the payment of the Obligations, other than
                those referred to in First through Fifth above; and

                Seventh: To the payment of any surplus thereafter
                remaining to the Borrower or whomever may be lawfully
                entitled thereto.

                  (d)      Without limiting the foregoing, the Agent and the
         Lenders, their respective assigns and legal representatives shall have
         all the remedies of a secured party under applicable law and such
         further remedies as from time to time may hereafter be provided
         pursuant to such law for a secured party. In exercising its power of
         sale, the Agent shall be entitled to add to the Loans any and all of
         the Agent's or Lenders' expenses incurred in connection therewith.

         Section 9.07      Restoration of Rights and Remedies. In case the Agent
or a Lender shall have proceeded to enforce any right, power or remedy under
this Agreement or any other Transaction Document by foreclosure, entry or
otherwise, and such proceedings shall have been discontinued or abandoned for
any reason or shall have been determined adversely to the Agent or such Lender,
then and in every such case the Borrower, the Agent and the Lenders shall be
restored to their former positions and rights hereunder with respect to this
Agreement, the Transaction Documents, the Collateral, and all rights, remedies
and powers of the Agent and the Lenders shall continue as if no such
proceedings had been taken.

         Section 9.08      Cure of Defaults. Subject to the terms of this
Agreement, if at any time after an Event of Default, the Borrower offers
completely to cure all Events of Default and to pay all expenses, advances and
damages to the Agent and the Lenders related to such Events of Default, with
interest with respect to such Borrower's obligations as provided herein, then
the Agent may, but shall not be required to, accept such offer and payment and
restore the Borrower to its former position, but such action, if taken, shall
not affect any subsequent Event of Default or impair any rights consequent
thereon.

                                   ARTICLE X
                         RELATIONSHIP AMONG THE LENDERS

         Section 10.01     Appointment and Authorization. Each Lender hereby
irrevocably appoints, designates and authorizes Fortis as the Agent under this
Agreement and under each of the other Transaction Documents and irrevocably
authorizes the Agent to take such action on its behalf under the provisions of
this Agreement and each other Transaction Document and to exercise such powers
and perform such duties as are expressly delegated to it by the terms of this
Agreement or any other Transaction Document, together with such powers as are
reasonably


                                     -53-


incidental thereto. Notwithstanding any provision to the contrary contained
elsewhere in this Agreement or in any other Transaction Document, the Agent
shall not have any duties or responsibilities, except those expressly set forth
herein, nor shall the Agent have or be deemed to have any fiduciary
relationship with any Lender, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read into this
Agreement or any other Transaction Document or otherwise exist against the
Agent.

         Section 10.02     Delegation of Duties. The Agent may execute any of
its duties under this Agreement or any other Transaction Document by or through
agents, employees or attorneys-in-fact and shall be entitled to advice of
counsel concerning all matters pertaining to such duties. The Agent shall not
be responsible for the gross negligence or misconduct of any agent or
attorney-in-fact that it selects with reasonable care or for any action it
takes on the advice of counsel.

         Section 10.03     Liability of Agent. None of the Agent-Related Persons
shall (a) be liable for any action taken or omitted to be taken by any of them
under or in connection with this Agreement or any other Transaction Document
(except for its own gross negligence or willful misconduct), (b) be liable as a
consequence of any failure or delay in performance by, or any breach by, any
other Lender or any other Person, of its obligations under this Agreement or
any other Transaction Document or (c) be responsible in any manner to any
Lender for any recital, statement, representation or warranty made by a Credit
Party, or any officer thereof, contained in this Agreement or in any other
Transaction Document, or in any certificate, report, statement or other
document referred to or provided for in, or received by the Agent under or in
connection with, this Agreement or any other Transaction Document, or for the
value of any Collateral or the validity, effectiveness, genuineness,
enforceability or sufficiency of this Agreement or any other Transaction
Document, or for any failure of a Credit Party or any other party to this
Agreement or any other Transaction Document to perform its obligations
hereunder or thereunder. No Agent-Related Person shall be under any obligation
to any Lender to ascertain or to inquire as to the observance or performance of
any of the agreements contained in, or conditions of, this Agreement or any
other Transaction Document, or to inspect the properties, books or records of
any Credit Party.

         Section 10.04     Reliance by the Agent.

                  (a)      The Agent shall be entitled to rely, and shall be
         fully protected in relying, upon (i) any writing, resolution, notice,
         consent, certificate, affidavit, letter, telegram, facsimile, telex or
         telephone message, statement or other document or conversation
         believed by it to be genuine and correct and to have been signed, sent
         or made by the proper Person or Persons, and (ii) any advice or
         statements of legal counsel (including counsel to the Borrower),
         independent accountants and other experts selected by the Agent. The
         Agent shall be fully justified in failing or refusing to take any
         action under this Agreement or any other Transaction Document unless
         it shall first receive such advice or concurrence of the Requisite
         Lenders as it deems appropriate and, if it so requests, it shall first
         be indemnified to its satisfaction by the Lenders against any and all
         liability and expense which may be incurred by it by reason of taking
         or continuing to take any such action. The Agent shall in all cases be
         fully protected in acting, or in refraining from acting, under this
         Agreement or any


                                     -54-




         other Transaction Document in accordance with a request or consent of
         the Requisite Lenders and such request and any action taken or failure
         to act pursuant thereto shall be binding upon all of the Lenders.

                  (b)      For purposes of determining compliance with the
         conditions precedent specified in Article V, each Lender that has
         executed this Agreement or shall hereafter execute and deliver an
         Assignment and Acceptance in accordance with Section 10.11 shall be
         deemed to have consented to, approved or accepted or to be satisfied
         with each document or other matter either sent by the Agent to such
         Lender for consent, approval, acceptance or satisfaction, or required
         thereunder to be consented to or approved by or acceptable or
         satisfactory to the Lender, unless an officer of the Agent responsible
         for the transactions contemplated by the Transaction Documents shall
         have received notice from the Lender prior to the borrowing specifying
         its objection thereto and either such objection shall not have been
         withdrawn by notice to the Agent to that effect or the Lender shall
         not have made available to the Agent the Lender's Proportionate Share
         of such borrowing.

         Section 10.05     Notice of Default. The Agent shall not be deemed to
have knowledge or notice of the occurrence of any Default or Event of Default,
except with respect to defaults in the payment of any Reduction Amount,
interest and fees required to be paid to the Agent on behalf and for the
benefit of the Lenders, unless the Agent shall have received written notice
from a Lender or the Borrower referring to this Agreement, describing such
Default or Event of Default and stating that such notice is a "notice of
default". In the event that the Agent receives such a notice, the Agent shall
give notice thereof to the Lenders. The Agent shall take such action with
respect to such Default or Event of Default as shall be requested by the
Requisite Lenders in accordance with this Agreement; provided, however, that
unless and until the Agent shall have received any such request, the Agent may
(but shall not be obligated to) take such action, or refrain from taking such
action, with respect to such Default or Event of Default as it shall deem
advisable or in the best commercial interest of the Lenders.

         Section 10.06     Credit Decision. Each Lender expressly acknowledges
that none of the Agent-Related Persons has made any representation or warranty
to it and that no act by the Agent hereinafter taken, including any review of
the affairs of a Credit Party, shall be deemed to constitute any representation
or warranty by the Agent to any Lender. Each Lender represents to the Agent
that it has, independently and without reliance upon the Agent and based on
such documents and information as it has deemed appropriate, made its own
appraisal of and investigation into the business, prospects, operations,
property, financial and other condition and creditworthiness of the Credit
Parties, and all applicable Lender regulatory laws relating to the transactions
contemplated thereby, and made its own decision to enter into this Agreement
and extend credit to the Borrower under and pursuant to this Agreement. Each
Lender also represents that it will, independently and without reliance upon
the Agent and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit analysis, appraisals
and decisions in taking or not taking action under this Agreement and the other
Transaction Documents, and to make such investigations as it deems necessary to
inform itself as to the business, prospects, operations, property, financial
and other condition and creditworthiness of the Borrower. Except for notices,
reports and other documents expressly herein required to be furnished to the
Lenders by the Agent, the Agent shall not have any duty or


                                     -55-


responsibility to provide any Lender with any credit or other information
concerning the business, prospects, operations, property, financial and other
condition or creditworthiness of the Borrower, which may come into the
possession of any of the Agent-Related Persons.

         Section 10.07     Indemnification. Whether or not the transactions
contemplated hereby shall be consummated, the Lenders shall indemnify upon
demand the Agent-Related Persons (to the extent not reimbursed by or on behalf
of the Borrower and without limiting the obligation of the Borrower to do so),
ratably from and against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses and disbursements of any
kind whatsoever which may at any time (including at any time following the
repayment of the Notes and the L/C Obligations and the termination or
resignation of the related Agent) be imposed on, incurred by or asserted
against any such Person in any way relating to or arising out of this
Agreement, the Transaction Documents or any document contemplated by or
referred to herein or therein or the transactions contemplated hereby or
thereby or any action taken or omitted by any such Person under or in
connection with any of the foregoing; provided, however, that no Lender shall
be liable for the payment to the Agent-Related Persons of any portion of such
liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements resulting from such Agent-Related
Person's gross negligence or willful misconduct. Without limiting the
foregoing, each Lender shall reimburse the Agent upon demand for its ratable
share of any costs or out-of-pocket expenses (including reasonable attorney
fees) incurred by the Agent in connection with the preparation, execution,
delivery, administration, modification, amendment or enforcement (whether
through negotiations, legal proceedings or otherwise) of, or legal advice in
respect of rights or responsibilities under this Agreement, any other
Transaction Document, or any document contemplated by or referred to herein to
the extent that the Agent is not reimbursed for such expenses by or on behalf
of the Borrower. The obligation of the Lenders in this Section 10.07 shall
survive the payment of the Obligations.

         Section 10.08     Agent in Individual Capacity. Fortis and its
affiliates may make loans to, issue letters of credit for the account of,
accept deposits from, acquire equity interests in and generally engage in any
kind of banking, trust, financial advisory or other business with the Borrower
and any of its affiliates as though Fortis were not the Agent hereunder and
without notice to or consent of the Lenders. With respect to its Proportionate
Share, Fortis shall have the same rights and powers under this Agreement as any
other Lender and may exercise the same as though it were not the Agent, and the
terms "Lender" and "Lenders" shall include Fortis in its individual capacity.

         Section 10.09     Successor Agent. The Agent may resign as Agent upon
thirty (30) days' notice to the Lenders. If the Agent shall resign as Agent
under this Agreement, the Requisite Lenders shall appoint from among the
Lenders a successor agent for the Lenders. If no successor agent is appointed
prior to the effective date of the resignation of the Agent, the Agent may
appoint, after consulting with the Lenders and the Borrower, a successor agent
from among the Lenders. Upon the acceptance of its appointment as successor
agent hereunder, such successor agent shall succeed to all the rights, powers
and duties of the retiring Agent and the term "Agent" shall mean such successor
agent and the retiring Agent's appointment, powers and duties as Agent shall be
terminated. After any retiring Agent's resignation hereunder as Agent, the
provisions of this Article X shall inure to its benefit as to any actions taken
or omitted to be


                                     -56-


taken by it while it was Agent under this Agreement. If no successor agent has
accepted appointment as Agent by the date which is thirty (30) days following a
retiring Agent's notice of resignation, the retiring Agent's resignation shall
nevertheless thereupon become effective and the Lenders shall perform all of
the duties of the Agent hereunder until such time, if any, as the Requisite
Lenders appoint a successor agent as provided for above. Any successor Agent
appointed under this Section 10.09 shall be reasonably acceptable to Borrower.

         Section 10.10     Collateral Matters.

                  (a)      The Agent is authorized on behalf of all the
         Lenders, without the necessity of any notice to or further consent
         from the Lenders, from time to time to take any action with respect to
         the Collateral which may be necessary to perfect and maintain
         perfected the security interest in and Liens upon the Collateral
         granted pursuant thereto.

                  (b)      The Lenders irrevocably authorize the Agent, at its
         option and in its discretion, to release any Lien granted to or held
         by the Agent upon any Collateral (i) upon payment in full of all of
         the Notes, the L/C Obligations and all other Obligations then payable
         under this Agreement and under any other Transaction Document; (ii)
         consisting of an instrument evidencing Indebtedness or other debt
         instrument, if the indebtedness evidenced thereby has been paid in
         full; (iii) if approved, authorized or ratified in writing by all of
         the Lenders or (iv) upon any sale, transfer, assignment or other
         disposition of any Collateral, to the extent that the same is
         expressly permitted by the terms of this Agreement and the other
         Transaction Documents. Upon request by the Agent at any time, the
         Lenders will confirm in writing the Agent's authority to release
         particular types or items of Collateral pursuant to this Section
         10.10(b).

         Section 10.11     Assignments, Participations, Etc.

                  (a)      Any Lender may, with the written consent of the
         Borrower (other than during the existence of a Default or Event of
         Default in which event the Borrower's consent shall not be required)
         and the Agent, which consent, in each case, shall not be unreasonably
         withheld (which consent of the Borrower and the Agent shall not be
         required if the Eligible Assignee is an Affiliate of such Lender or is
         another Lender), provided that such assignment shall not result in
         increased costs to the Borrower pursuant to Section 2.11, at any time
         assign and delegate to one or more Eligible Lender (each an
         "Assignee") all, or any ratable part of all, of the Notes, L/C
         Obligations and the other rights and obligations of such Lender
         hereunder. In the event of a partial assignment (other than to another
         Lender or an Affiliate of a Lender), such assignment shall be in a
         minimum amount of not less than $5,000,000 and, after giving effect to
         such assignment, the assigning Lender's or selling Lender's
         Proportionate Share of the Notes and L/C Obligations shall equal an
         amount that it not less than $10,000,000, in each case, unless
         otherwise agreed in writing by the Borrower and the Agent; provided,
         however, that the Borrower and the Agent may continue to deal solely
         and directly with such Lender in connection with the interest so
         assigned to an Assignee until (i) written notice of such assignment,
         together with payment instructions, addresses and related information
         with respect to the Assignee,


                                     -57-


         shall have been given to the Borrower and the Agent by such Lender and
         the Assignee; (ii) such Lender and its Assignee shall have delivered
         to the Borrower and the Agent an Assignment and Acceptance in the form
         of Exhibit H ("Assignment and Acceptance") together with any Note
         subject to such assignment; and (iii) the assignor Lender or the
         Assignee has paid to the Agent a processing fee in the amount of
         $4,000.

                  (b)      From and after the date that the Agent notifies the
         assigning Lender that it has received an executed Assignment and
         Acceptance and payment of the above-referenced processing fee, (i) the
         Assignee thereunder shall be a party hereto and, to the extent that
         rights and obligations hereunder have been assigned to it pursuant to
         such Assignment and Acceptance, shall have the rights and obligations
         of a Lender under the Transaction Documents, and (ii) the assignor
         Lender shall, to the extent that rights and obligations hereunder and
         under the other Transaction Documents have been assigned by it
         pursuant to such Assignment and Acceptance, relinquish its rights and
         be released from its obligations under the Transaction Documents.

                  (c)      Within five (5) Business Days after its receipt of
         notice by the Agent that it has received an executed Assignment and
         Acceptance and payment of the processing fee, the Borrower shall
         execute and deliver to the Agent, a new Note evidencing such
         Assignee's assigned Proportionate Share of the related Loans and, if
         the assignor Lender has retained a portion thereof, a replacement Note
         in the principal amount of the Proportionate Share of the Loans
         retained by the assignor Lender (such Note to be in exchange for, but
         not in payment of, the Note held by such Lender). Immediately upon
         each Assignee's making its processing fee payment under the Assignment
         and Acceptance, this Agreement shall be deemed to be amended to the
         extent, but only to the extent, necessary to reflect the addition of
         the Assignee and the adjustment of the Proportionate Share of the
         Loans.

                  (d)      Any Lender may at any time sell to one or more
         commercial banks or other Persons not affiliates of the Borrower (a
         "Participant") participating interests in the Loans, the L/C
         Obligations and the other interests of that Lender (the "Originating
         Lender") hereunder and under the other Transaction Documents;
         provided, however, that (i) the Originating Lender's obligations under
         this Agreement shall remain unchanged, (ii) the Originating Lender
         shall remain solely responsible for the performance of such
         obligations, (iii) the Borrower and the Agent shall continue to deal
         solely and directly with the Originating Lender in connection with the
         Originating Lender's rights and obligations under this Agreement and
         the other Transaction Documents and (iv) no Lender shall transfer or
         grant any participating interest under which the Participant shall
         have rights to approve any amendment to, or any consent or waiver with
         respect to, this Agreement or any other Transaction Documents other
         than those that pursuant to the terms of this Agreement require the
         consent of the affected Lender; and provided further that, and it is
         hereby agreed that, the Borrower shall not be obligated to make any
         greater payment or otherwise incur any greater cost or liability under
         Section 2.11 than had no such sale of a participating interest
         occurred.


                                     -58-


                  (e)      Each Lender agrees to maintain the confidentiality
         of all information identified as "confidential" by the Borrower and
         provided to it by the Borrower, or by the Agent on the Borrower's
         behalf, in connection with this Agreement or any other Transaction
         Document, and neither it nor any of its Affiliates shall use any such
         information for any purpose or in any manner other than pursuant to
         the terms contemplated by this Agreement; except to the extent such
         information (i) was or becomes generally available to the public other
         than as a result of a disclosure by the Lender, or (ii) was or becomes
         available on a non-confidential basis from a source other than the
         Borrower or one of its affiliates; provided, however, that any Lender
         may disclose such information (A) at the request or pursuant to any
         requirement of any Governmental Authority to which the Lender is
         subject or in connection with an examination of such Lender by any
         such authority; (B) pursuant to subpoena or other court process; (C)
         when required to do so in accordance with the provisions of any
         applicable law or requirement of law; and (D) to such Lender's
         independent auditors and other professional advisors. If the Agent or
         any Lender discloses any such confidential information pursuant to the
         provisions of the immediately proceeding proviso, the Agent or such
         Lender shall seek to obtain assurance that confidential treatment will
         be accorded to such confidential information; provided, however, that
         neither the Agent nor any Lender shall have any liability for the
         failure to obtain such confidential treatment. Notwithstanding the
         foregoing, the Borrower authorizes each Lender to disclose to any
         Participant or Assignee and to any prospective Participant or
         Assignee, such financial and other information in such Lender's
         possession concerning a Borrower or a Subsidiary Guarantor which has
         been delivered to the Agent or the Lenders pursuant to this Agreement
         or which has been delivered to the Agent or the Lenders by the
         Borrower or a Subsidiary Guarantor in connection with the Lenders'
         credit evaluation of the Borrower and the Subsidiary Guarantors prior
         to entering into this Agreement, provided that such participant or
         assignee (or prospective participant or assignee) agrees in writing to
         be bound by a confidentiality agreement similar to the provisions of
         this Section 10.11(e).

                  (f)      Notwithstanding any other provision contained in
         this Agreement or any other Transaction Document to the contrary, any
         Lender may assign all or any portion of its Proportionate Share of the
         Notes and the L/C Obligations held by it to any Federal Reserve Bank
         or the United States Treasury as collateral security pursuant to
         Regulation A of the Board of Governors of the Federal Reserve System
         and any Operating Circular issued by such Federal Reserve Bank

                                  ARTICLE XI
                                 MISCELLANEOUS

         Section 11.01     Notices.

                  (a)      All notices, requests, approvals and other
         communications provided for hereunder shall be in writing (including,
         unless the context expressly otherwise provides, by facsimile
         transmission, provided that any matter transmitted by the Borrower or
         a Subsidiary Guarantor by facsimile (i) shall be immediately confirmed
         by a telephone call to the recipient at the number specified on the
         applicable signature


                                     -59-


         page hereof, and (ii) shall be followed promptly by a hard copy
         original thereof) and faxed, sent for overnight (next day) delivery or
         delivered, to the address or facsimile number specified for notices on
         the applicable signature page hereof or, as directed to the Borrower
         or the Agent, to such other address as shall be designated by such
         party in a written notice to the other parties, and as directed to
         each other party, at such other address as shall be designated by such
         party in a written notice to the Borrower and the Agent.

                  (b)      All such notices, requests and communications shall,
         when transmitted by overnight delivery, or faxed, be effective when
         delivered for overnight (next day) delivery, or transmitted by
         facsimile machine, respectively, or if delivered, upon delivery,
         except that notices pursuant to Articles II, V, VI and IX shall not be
         effective until actually received by the Agent.

                  (c)      The Borrower acknowledges and agrees that any
         agreement of the Agent and the Lenders to receive certain notices by
         telephone and facsimile is solely for the convenience and at the
         request of the Borrower. The Agent and the Lenders shall be entitled
         to rely on the authority of any Person purporting to be a Person
         authorized by such Borrower to give such notice and the Agent and the
         Lenders shall not have any liability to the Borrower or other Person
         on account of any action taken or not taken by the Agent or the
         Lenders in reliance upon such telephonic or facsimile notice. The
         obligation of the Borrower and the Subsidiary Guarantors to repay the
         Obligations shall not be affected in any way or to any extent by any
         failure by the Agent and the Lenders to receive written confirmation
         of any telephonic or facsimile notice or the receipt by the Agent and
         the Lenders of a confirmation which is at variance with the terms
         understood by the Agent and the Lenders to be contained in the
         telephonic or facsimile notice.

         Section 11.02     Survival of Agreement. All covenants, agreements,
representations and warranties made herein and in the certificates delivered
pursuant hereto shall survive the making of the Loans and the issuance of the
Letters of Credit and the execution and delivery of the Notes and shall
continue in full force and effect so long as the Obligations remain
outstanding.

         Section 11.03     Governing Law. This Agreement shall be governed by
and interpreted in accordance with the laws of the State of New York, without
giving effect to the principles of conflicts of law.


                                     -60-


         Section 11.04     Modification of Agreement.

                  (a)      No amendment, modification or waiver of any
         provision of this Agreement or any other Transaction Document, and no
         consent with respect to any departure by a Borrower therefrom, shall
         be effective unless the same shall be in writing and signed by the
         Requisite Lenders and acknowledged by the Agent, and then such waiver
         shall be effective only in the specific instance and for the specific
         purpose for which given; provided, however, that no such waiver,
         amendment, or consent shall, unless in writing and signed by each
         Lender affected thereby and acknowledged by the Agent, do any of the
         following:

            (i)      increase or extend the Commitment or Proportionate Share of
                     any Lender, decrease the Applicable Margin, change the
                     Aggregate Loan Commitment, Tranche A Loan Commitment or
                     Tranche B Loan Commitment (other than as provided in
                     Article II) or subject any Lender to any additional
                     obligations;

            (ii)     postpone or delay any date fixed for any payment of
                     principal, interest, fees or other amounts due to the
                     Lenders (or any of them) hereunder or under any Transaction
                     Document;

            (iii)    reduce the principal of, or the rate of interest specified
                     herein on any Loan or L/C Obligation, or of any fees or
                     other amounts payable hereunder or under any Transaction
                     Document;

            (iv)     amend this Section 11.04; or;

            (v)      amend Section 2.09 or any other provision with respect to
                     pro rata payments or sharing of recoveries among the
                     Lenders;

and, provided further that no amendment, modification, waiver or consent shall,
unless in writing and signed by the Agent in addition to the Requisite Lenders
or all the Lenders, as the case may be, affect the rights or duties of the
Agent under this Agreement or any other Transaction Document.

                  (b)      Notwithstanding the provisions of Section 11.04(a),
         in order for a Subsidiary of the Borrower to become a Subsidiary
         Guarantor pursuant to Section 6.19, this Agreement may be supplemented
         for the purpose of adding such Subsidiary as a party hereto with the
         consent of the Borrower and the Agent but without the consent of the
         other Subsidiary Guarantors or the Lenders.

         Section 11.05     Costs and Expenses. The Borrower agrees whether or
not the transactions contemplated hereby shall be consummated, to:

                  (a)      pay or reimburse each Arranger and the Agent within
         five (5) Business Days after demand for all costs and expenses
         incurred by the Agent or such Arranger in connection with the
         development, preparation, delivery, administration and execution of,
         and any amendment, supplement, waiver or modification to (in each
         case, whether or not consummated), this Agreement, any other
         Transaction Document and any other documents prepared in connection
         herewith (including any commitment letter and related


                                     -61-


         documents preceding this Agreement) or therewith, and the consummation
         of the transactions contemplated hereby and thereby, including the
         attorney costs incurred by each Arranger and the Agent with respect
         hereto and thereto;

                  (b)      pay or reimburse the Agent and each Lender within
         five (5) Business Days after demand for all costs and expenses
         incurred by them in connection with the enforcement, attempted
         enforcement, or preservation of any rights or remedies (including in
         connection with any "workout" or restructuring regarding the Loans
         and/or the L/C Obligations, and including in any insolvency
         proceedings or appellate proceeding) under this Agreement, any other
         Transaction Document, and any such other documents, including attorney
         costs incurred by the Agent and any Lender; and

                  (c)      pay or reimburse each Arranger and the Agent within
         five (5) Business Days after demand for all reasonable audit,
         environmental inspection and review, search and filing, registration
         and recording costs, fees and expenses, incurred or sustained in
         connection with the matters referred to under Section 11.05(a) and
         Section 11.05(b).

         Section 11.06     Waivers. No waiver of any of the provisions of this
Agreement (a) shall be valid unless evidenced by a writing executed by each
party to be bound thereby, (b) shall be deemed or shall constitute a waiver of
any other provision of this Agreement or any other provisions hereof (whether
or not similar), or (c) shall constitute a continuing waiver unless otherwise
expressly provided. No delay on the part of the Agent or any Lender in
exercising any right or remedy hereunder shall operate as a waiver thereof nor
shall any single or partial exercise of any power or right or remedy preclude
other or further exercise thereof or the exercise of any other right or remedy.
No notice to or demand on the Borrower or a Subsidiary Guarantor in any case
shall entitle it to any other or further notice or demand in the same or
similar circumstances.

         Section 11.07     Indemnification. To the fullest extent permitted by
law, the Borrower agrees to protect, indemnify, defend and hold harmless each
Indemnified Party from and against any and all liabilities, losses,
obligations, damages, penalties, expenses or costs of any kind or nature and
from any suits, judgments, claims or demands (including in respect of or for
attorney costs and other fees and other disbursements of counsel for and
consultants of any Indemnified Party in connection with any investigative,
administrative or judicial proceeding, whether or not such Indemnified Party
shall be designated a party thereto) based on any federal, state, local or
foreign law or other statutory regulation, including securities, environmental
and commercial law or other statutory regulation, which arises under common law
or at equitable cause or on contract or otherwise on account of or in
connection with any matter or thing or any action or failure to act by the
Indemnified Parties, or any of them, arising out of or relating to the
Transaction Documents or any agreement or instrument contemplated by the
Transaction Documents, but excluding those arising (x) with respect to an
Indemnified Party, by reason of gross negligence or willful misconduct of such
Indemnified Party or (y) in respect of Taxes (as to which indemnification shall
be applicable only as and to the extent set forth in Section 2.13). Upon
receiving knowledge of any suit, claim or demand asserted by any Person that an
Indemnified Party believes is covered by this indemnity, such Indemnified Party
shall give the Borrower notice thereof and an opportunity to defend it, at the
Borrower's sole cost and expense, with legal counsel satisfactory to such
Indemnified Party. Such Indemnified Party may also require the


                                     -62-


Borrower to defend the matter. The obligations of the Borrower under this
Section 11.07 shall survive the payment and performance of the Obligations and
the termination of this Agreement. To the extent that the undertaking to
indemnify, pay and hold harmless set forth in this Section 11.07 may be
unenforceable because it violates any law or public policy, the Borrower shall
contribute the maximum portion which it is permitted to pay and satisfy under
applicable law to the payment and satisfaction of its obligations set forth in
this Section 11.07.

         Section 11.08     Separability of Provisions; Obligations Several.

                  (a)      If any provision of this Agreement or other
         Transaction Document should be deemed invalid under any applicable
         law, such provision shall be void and of no effect and shall cease to
         be a part of this Agreement or other Transaction Document without
         affecting the remaining provisions, which shall remain in full force
         and effect.

                  (b)      In the event that this Agreement, the Notes, any
         Transaction Document or any of the documents or instruments which may
         from time to time be delivered hereunder or thereunder or any
         provision hereof or thereof shall be deemed invalidated by present or
         future law of any nation or by decision of any court, or if any third
         party shall fail or refuse to recognize any of the powers granted to
         the Agent hereunder when it is sought to exercise them, this shall not
         affect the validity and/or enforceability of all or any other parts of
         this Agreement, the Notes, any Transaction Document or such documents
         or instruments and, in any such case, the Borrower covenants and
         agrees that, on demand, they will execute and deliver such other and
         further agreements and/or documents and/or instruments and do such
         things as the Agent in its sole discretion may deem to be necessary to
         carry out the true intent of this Agreement and of the obligations
         secured hereby.

         Section 11.09     Counterparts. This Agreement and any amendment,
waivers, consents or supplements hereto may be executed in two or more
counterparts, any by different parties hereto in different counterparts, each
of which when so executed shall constitute an original, but all of which, when
taken together, shall constitute but one Agreement.

         Section 11.10     Entire Agreement. This Agreement constitutes the
entire agreement between the parties hereto pertaining to the subject matter
hereof and supersedes all prior and contemporaneous agreements, understandings,
negotiations and discussions, whether oral or written, of the parties, and
there are no warranties, representations or other agreements between the
parties in connection with the subject matter hereof except as specifically set
forth or incorporated herein.

         Section 11.11     Headings. Section and paragraph headings and the
table of contents are not to be considered part of this Agreement, are included
solely for convenience and are not intended to be full or accurate descriptions
of the contents thereof. Sections and paragraphs mentioned by number only are
the respective sections and paragraphs of this Agreement. The use of the terms
"herein", "hereunder", "hereof", and like terms shall be deemed to refer to
this entire Agreement and not merely to the particular provision in which the
term is contained, unless the context clearly indicates otherwise.


                                     -63-


         Section 11.12     Successors and Assigns. All Persons shall be deemed
to include the successors or assigns thereof. All of the terms and provisions
of this Agreement shall be binding upon and shall inure to the benefit of the
parties hereto and their respective transferees, legal representatives, heirs,
successors and assigns; provided, however, that (a) the Borrower may not assign
its rights or obligations hereunder without the prior written consent of the
Agent and each Lender and (b) the Lenders may assign their respective rights
and obligations hereunder only in accordance with Section 10.11 hereof.

         Section 11.13     Gender and Number. Words importing a particular
gender mean and include every other gender and words importing the singular
number mean and include the plural number and vice-versa.

         Section 11.14      Exhibits. Exhibits to this Agreement are an integral
part of this Agreement.

         Section 11.15     Notification of Addresses, Lending Offices, Etc. Each
Lender shall notify the Agent in writing of any changes in the address to which
notices to the Lender should be directed, of addresses of its Lending Office,
of payment instructions in respect of all payments to be made to it hereunder
and of such other administrative information as the Agent shall reasonably
request.

         Section 11.16     No Third Parties Benefitted. This Agreement is made
and entered into for the sole protection and legal benefit of the Borrower, the
Subsidiary Guarantors, the Lenders, the Arrangers and the Agent, and their
permitted successors and assigns, and no other Person shall be a direct or
indirect legal beneficiary of, or have any direct or indirect cause of action
or claim in connection with, this Agreement or any of the other Transaction
Documents. None of the Agent, the Arrangers nor any Lenders shall have any
obligation to any Person not a party to this Agreement or other Transaction
Documents.

         Section 11.17     Equitable Relief. The Borrower recognizes that, in
the event it fails to perform, observe or discharge any of its obligations or
liabilities under this Agreement, the Notes or any of the other Transaction
Documents, any remedy at law may prove to be inadequate relief to the Lenders
or the Agent; therefore, the Borrower agrees that the Lenders or the Agent, if
the Lenders so request, shall be entitled to temporary and permanent injunctive
relief in any such case without the necessity of proving actual damages.

         Section 11.18     Notice of Claims; Claims Bar. THE BORROWER AND EACH
SUBSIDIARY GUARANTOR HEREBY AGREES THAT IT SHALL GIVE PROMPT NOTICE OF ANY
CLAIM OR CAUSE OF ACTION IT BELIEVES IT HAS, OR MAY SEEK TO ASSERT OR ALLEGE
AGAINST ANY LENDER, EITHER ARRANGER OR THE AGENT, WHICH SUCH CLAIM IS BASED IN
LAW OR EQUITY OR ADMIRALTY, ARISING UNDER OR RELATED TO THIS AGREEMENT, THE
NOTES OR ANY OF THE OTHER TRANSACTION DOCUMENTS OR TO THE LOANS, THE L/C
OBLIGATIONS OR SUBSIDIARY GUARANTOR OBLIGATIONS (OR THE COLLATERAL THEREFOR)
CONTEMPLATED HEREBY OR THEREBY OR ANY ACT OR OMISSION TO ACT BY ANY LENDER,
EITHER ARRANGER OR THE AGENT WITH RESPECT HERETO OR


                                     -64-


THERETO, AND THAT IF IT SHALL FAIL TO GIVE SUCH PROMPT NOTICE TO THE AGENT WITH
REGARD TO ANY SUCH CLAIM OR CAUSE OF ACTION, IT SHALL BE DEEMED TO HAVE WAIVED,
AND SHALL BE FOREVER BARRED FROM BRINGING OR ASSERTING SUCH CLAIM OR CAUSE OF
ACTION IN ANY SUIT, ACTION OR PROCEEDING IN ANY COURT OR BEFORE ANY
GOVERNMENTAL AGENCY.

         Section 11.19     Waiver of Punitive Damages. NOTWITHSTANDING ANYTHING
TO THE CONTRARY CONTAINED IN THIS AGREEMENT, EACH PARTY HERETO HEREBY AGREES
THAT IT SHALL NOT SEEK FROM ANY OTHER PARTY HERETO, UNDER ANY THEORY OF
LIABILITY, INCLUDING, WITHOUT LIMITATION, ANY THEORY IN TORTS, ANY SPECIAL,
INDIRECT, CONSEQUENTIAL OR PUNITIVE DAMAGES.

         Section 11.20     Consent to Jurisdiction. (a) Any legal suit, action
or proceeding against a Credit Party arising out of or relating to this
Agreement or any other Transaction Document, or any transaction contemplated
hereby or thereby, may be instituted in any federal or state court of competent
jurisdiction in The City of New York, State of New York, and each Credit Party
hereby irrevocably submits to the jurisdiction of any such court in any such
suit, action or proceeding. Each Credit Party hereby waives, to the fullest
extent permitted by applicable law, any defense which it may now or hereafter
have based upon lack of personal jurisdiction or venue or forum non conveniens.
Each Credit Party hereby irrevocably appoints and designates Corporate
Creations Network, Inc., having an address at 277 Broadway, Suite 510, New
York, New York 10007, as its true and lawful attorney-in-fact and duly
authorized agent for the limited purpose of accepting service of legal process
and each Credit Party agrees that service of process upon such party shall
constitute personal service of such process such Credit Party. Each Credit
Party shall maintain the designation and appointment of such authorized agent
until all Obligations shall have been paid in full. If such agent shall cease
to so act, the Credit Parties shall immediately designate and appoint another
such agent satisfactory to the Agent and shall promptly deliver to the Agent
evidence in writing of such other agent's acceptance of such appointment.

         Section 11.21     Waiver of Jury Trial. THE BORROWER, EACH SUBSIDIARY
GUARANTOR, EACH ARRANGER, EACH LENDER AND THE AGENT HEREBY IRREVOCABLY WAIVE
THEIR RESPECTIVE RIGHTS TO A JURY TRIAL WITH RESPECT TO ANY ACTION, CLAIM OR
OTHER PROCEEDING ARISING OUT OF ANY DISPUTE IN CONNECTION WITH THIS AGREEMENT,
THE NOTES OR THE OTHER TRANSACTION DOCUMENTS, ANY RIGHTS OR OBLIGATIONS
HEREUNDER OR THEREUNDER, OR THE PERFORMANCE OF SUCH RIGHTS AND OBLIGATIONS.

         Section 11.22     Currency Indemnity. Any payment or payments made to
or for the account of the Agent, either Arranger or any Lender in a currency
other than the currency in which such payment is required to be made hereunder
or under any other Transaction Document (the "Required Currency") for any
reason (pursuant to a judgment or order of a court or tribunal of any
jurisdiction) shall only constitute a discharge to the Borrower to the extent
of the amount of the Required Currency which the Agent, such Arranger or


                                     -65-


such Lender is, acting in good faith and exercising reasonable and customary
diligence, able to purchase in New York City with the amount or amounts so
received on the date or dates of receipt by the Agent, such Arranger or such
Lender of such payment or payments (or if such date is not a Business Day on
the next succeeding Business Day). If the amount of the Required Currency which
the Agent, such Arranger or such Lender is so able to purchase falls short of
the amount of the Required Currency due to the Agent, such Arranger or such
Lender, the Borrower shall indemnify and hold the Agent, such Arranger or such
Lender harmless against any loss or damage arising as a result. This indemnity
shall constitute a separate and independent obligation from the other
obligations contained in this Agreement, shall give rise to an independent
cause or causes of action, shall apply irrespective of any indulgence granted
by the Agent, such Arranger or such Lender from time to time and shall continue
in full force and effect notwithstanding any judgment or order for a liquidated
sum or sums in respect of the amount due hereunder or under any such judgment
or order.

         Section 11.23     Release of Lien. In the event that the Borrower or a
Subsidiary Guarantor sells, leases, transfers, assigns or otherwise disposes of
a Vessel in accordance with Section 7.03, the Agent shall execute and file such
instruments and take such actions, at the expense of Borrower, as may be
reasonably requested to release such Vessel and the related collateral from the
Lien securing the Obligations.


                                     -66-


         IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed and delivered by their respective officers thereunto duly
authorized as of the date first written above.


                             FORTIS CAPITAL CORP. as Agent, Arranger,
                             Bookrunner and Lender



                             By:
                                -------------------------------------------



                             By:
                                -------------------------------------------
                              Address: Three Stamford Plaza, 301 Tresser
                              Boulevard, Stamford, CT 06901-3239
                              Phone: (203) 705-5787
                              Fax: (203) 705-5896


                             NIB CAPITAL BANK N.V., as Arranger and
                             Lender



                             By:
                                -------------------------------------------



                             By:
                                -------------------------------------------
                              Address:
                              Phone:
                              Fax:


                             SEABULK INTERNATIONAL, INC.,
                             the Borrower,



                             By:
                                -------------------------------------------
                              Address: 2200 Eller Dr., Fort Lauderdale, FL 33316
                              Phone: (954) 524-4200
                              Fax: (954) 527-1772


                             SEABULK ARIES II, INC.
                             SEABULK BETSY, INC.
                             SEABULK CAPRICORN, INC.
                             SEABULK CAROL, INC.
                             SEABULK CHAMP, INC.
                             SEABULK COOT I, INC.
                             SEABULK COOT II, INC.
                             SEABULK CORMORANT, INC.
                             SEABULK CYGNET I, INC.
                             SEABULK CYGNET II, INC.
                             SEABULK DANAH, INC.
                             SEABULK DEFENDER, INC
                             SEABULK DUKE, INC.
                             SEABULK EAGLE II, INC.




                             SEABULK EMERALD, INC.
                             SEABULK EXPLORER, INC.
                             SEABULK FALCON II, INC.
                             SEABULK FREEDOM, INC.
                             SEABULK GANNET II, INC.
                             SEABULK GIANT, INC.
                             SEABULK GREBE, INC.
                             SEABULK HAWAII, INC.
                             SEABULK HAWK, INC.
                             SEABULK HERCULES, INC.
                             SEABULK HORIZON, INC.
                             SEABULK KESTREL, INC.
                             SEABULK LAKE EXPRESS, INC.
                             SEABULK MARLENE, INC.
                             SEABULK MARTIN I, INC.
                             SEABULK MARTIN II, INC.
                             SEABULK MASTER, INC.
                             SEABULK MERLIN, INC.
                             SEABULK NEPTUNE, INC.
                             SEABULK OSPREY, INC.
                             SEABULK OFFSHORE, LTD.
                             By its general partner Seabulk Tankers, Ltd
                             By its general partner Seabulk Transport, Inc.
                             SEABULK PENGUIN I, INC.
                             SEABULK PENGUIN II, INC.
                             SEABULK PENNY, INC.
                             SEABULK PERSISTENCE, INC.
                             SEABULK PETREL, INC.
                             SEABULK RAVEN, INC.
                             SEABULK SERVICE, INC.
                             SEABULK TENDER, INC.
                             SEABULK TITAN, INC.
                             SEABULK TOOTA, INC.
                             SEABULK TOUCAN, INC.
                             SEABULK TOWING, INC.
                             SEABULK VERITAS, INC.
                             SEABULK ALKATAR, INC.
                             SEABULK CLIPPER, INC.
                             SEABULK CONSRUCTOR, INC.
                             SEABULK HABARA, INC.
                             SEABULK JEBEL ALI, INC.
                             SEABULK MAINTAINER, INC.
                             SEABULK SAPPHIRE, INC.
                             SEABULK SARA, INC.
                             SEABULK TREASURE ISLAND, INC.
                             SEABULK HERON, INC.
                             SEABULK JASPER, INC.
                             SEABULK LINCOLN, INC.




                             SEABULK MALLARD, INC.
                             SEABULK PLOVER, INC.
                             SEABULK SWIFT, INC.
                             SEABULK OFFSHORE U.K. LIMITED
                             SEABULK TOWING SERVICES, INC.
                             OFFSHORE MARINE MANAGEMENT
                             INTERNATIONAL, INC.,
                             SEABULK TANKERS, LTD.
                             By its general partner Seabulk Transport, Inc.
                             SEABULK TRANSPORT, INC.
                             SEABULK MARINE INTERNATIONAL, INC.
                             SEABULK OCEAN SYSTEMS HOLDING CORPORATION
                             SEABULK OFFSHORE INTERNATIONAL, INC.
                             SEABULK OFFSHORE OPERATORS, INC.
                             SEABULK OFFSHORE GLOBAL HOLDINGS, INC.
                             SEABULK OFFSHORE HOLDINGS, INC.
                             SEABULK TANKERS, INC.
                             SEABULK OFFSHORE OPERATORS
                             TRINIDAD  LIMITED,
                             each a Subsidiary Guarantor

                             By:
                                -------------------------------------------
                              Address: 2200 Eller Dr., Fort Lauderdale, FL 33316
                              Phone: (954) 524-4200
                              Fax: (954) 527-1772

                             APPENDIX A DEFINITIONS

         "Adjusted EBITDA" means, with respect to the Borrower for any period,
an amount equal to EBITDA for each of the Borrower's most recently ended four
fiscal quarters, as reported in the financial statements most recently
delivered to the Agent, minus that portion of EBITDA attributable to the
Lightship Tanker Entities plus an amount equal to the dividends received during
such period from the Lightship Tanker Entities.

         "Adjusted Funded Debt" means, with respect to the Borrower for any
period, the average of the Borrower's Consolidated Funded Debt less any
Indebtedness relating to the Lightship Tanker Entities for each of the
Borrower's most recently ended four fiscal quarters, as reported in the
financial statements most recently delivered to the Agent; provided, however,
until the completion of four full fiscal quarters following the Closing Date,
the Consolidated Funded Debt for the fiscal quarters ending prior to the first
full fiscal quarter after the Closing Date shall be determined as if the
Existing Indebtedness were repaid and the Facility had been entered into as of
the first day of such four full fiscal quarter period.

         "Adjusted Funded Debt Ratio" means as of any date of determination the
ratio of (x) the Adjusted Funded Debt to (y) the Adjusted EBITDA.

         "Adjusted Interest Expense" means, with respect to the Borrower for
any period, the Consolidated Interest Expense less any such Consolidated
Interest Expense relating to the Lightship Tanker Entities for each of the
Borrower's most recently ended four fiscal quarters, as reported in the
financial statements most recently delivered to the Agent; provided, however,
until the completion of four full fiscal quarters following the Closing Date,
the Adjusted Interest Expense for the fiscal quarters ending prior to the first
full fiscal quarter after the Closing Date shall be determined as if the
Existing Indebtedness were repaid and the Facility had been entered into as of
the first day of such four full fiscal quarter period.

         "Adjusted LIBOR" means, for each Interest Period in respect of a LIBOR
Loan, an interest rate per annum (rounded upward to the nearest 1/16th of one
percent (0.0625%)) determined pursuant to the following formula:

               Adjusted LIBOR  =                  LIBOR
                                  ------------------------------------
                                        1.00 - Reserve Percentage

The Adjusted LIBOR shall be adjusted automatically as of the effective date of
any change in the Reserve Percentage.

         "Adjusted Tangible Net Worth" means with respect to the Borrower, as
of any date of determination, the Consolidated Tangible Net Worth of the
Borrower less any Consolidated Tangible Net Worth relating to the Lightship
Tanker Entities.

         "Affiliate" means, with respect to any Person, any other Person (i)
directly or indirectly controlling (including, but not limited to, all
directors and officers of such Person), controlled by, or under direct or
indirect common control with, such Person, or (ii) that directly or indirectly
owns more than 10% of the voting securities of such Person. A Person shall be
deemed to




control another Person if such Person possesses, directly or indirectly, the
power to direct or cause the direction of the management and policies of such
other Person, whether through the ownership of voting securities, by contract
or otherwise. For purposes of this definition, the terms "controlling,"
"controlled by" and "under common control with" have correlative meanings.

         "Agent" has the meaning set forth in the initial paragraph of the
Agreement.

         "Agent-Related Persons" means the Agent, together with its Affiliates
and the officers, directors, employees, agents and attorneys-in-fact of the
Agent and its Affiliates.

         "Aggregate Loan Commitment" means the sum of the Aggregate Tranche A
Loan Commitment and the Aggregate Tranche B Loan Commitment.

         "Aggregate Tranche A Loan Commitment" means the aggregate of the
Tranche A Loan Commitments for the Lenders, which on the Closing Date shall
equal $100,000,000.00, subject to adjustment as set forth in Sections 2.06 and
2.07 of the Credit Agreement.

         "Aggregate Tranche A Loan Commitment Reduction Amount" shall have the
meaning set forth in Section 2.06(a) of the Agreement.

         "Aggregate Tranche B Loan Commitment" means the aggregate of the
Tranche B Loan Commitments for the Lenders, which on the Closing Date shall
equal $80,000,000.00, subject to adjustment as set forth in Sections 2.06 and
2.07 of the Credit Agreement.

         "Agreement" means the Credit Agreement, dated as of September 13,
2002, among the Borrower, the Subsidiary Guarantors, the Lenders, the Agent and
the Arrangers, as modified, supplemented or amended from time to time.


                                       2


         "Applicable Margin" means, with respect to each Loan, the margin set
forth below if the Adjusted Funded Debt Ratio determined as of the most recent
fiscal quarter is:



- ------------------------------------------------------------------------------------------------------------------
ADJUSTED FUNDED DEBT RATIO                    LIBOR MARGIN                         BASE RATE MARGIN
- ------------------------------------------------------------------------------------------------------------------
                                              REVOLVING            TERM            REVOLVING           TERM
                                              LOANS                LOANS           LOANS               LOANS
- ------------------------------------------------------------------------------------------------------------------
                                                                                           
equal to or greater than 3.75                 3.50%                4.00%           2.50%               3.00%
- ------------------------------------------------------------------------------------------------------------------
equal to or greater than 3.00, but less       3.00%                3.50%           2.00%               2.50%
than 3.75
- ------------------------------------------------------------------------------------------------------------------
equal to or greater than 2.00, but less       2.50%                3.00%           1.50%               2.00%
than 3.00
- ------------------------------------------------------------------------------------------------------------------
less than 2.00                                1.75%                2.25%           0.75%               1.25%
- ------------------------------------------------------------------------------------------------------------------


Notwithstanding the above, the Applicable Margin shall be subject to adjustment
as set forth in Section 2.03(e) of the Credit Agreement.

         "Appraiser" means any of Fearnleys A.S., R.S. Platou Shipbrokers A.S.,
Bassoe Offshore A.S., H. Clarkson Ltd., Simpson Spence Young Ltd., Mallory
Jones Lynch & Flynn, Inc., Compass Maritime Services LLC, Lorentzen Stemoco
Shipbrokers A.S., Braemar Shipbrokers Ltd., Barry Rogliano Salles, Poten &
Partners, Inc., Jaques Pierot & Sons, DuFour Laskay & Strouse, Inc. and Nobel
Denton Marine, together with any other Person not affiliated with the Borrower
and acceptable to the Agent engaged in the business of appraising vessels,
including tug and supply service vessels.

         "Approved Jurisdiction" means United States of America, Republic of
Liberia, Marshall Islands, Commonwealth of Dominica, United Kingdom, St.
Vincent and the Grenadines, Panama or such other jurisdiction as may be
acceptable to the Requisite Lenders.

         "Arranger" and "Arrangers" have the meaning set forth in the initial
paragraph of the Agreement.

         "Asset Coverage Ratio" means, at any time, the ratio of (x) the
aggregate Fair Market Value of the Vessels (excluding laid-up Vessels, Vessels
held for sale and the Second Lien Vessels other than the Seabulk Trader and the
Seabulk Challenge) at such time to (y) the aggregate outstanding principal
amount of the Term Loans, Revolving Loans and Stated Amount of the Letters of
Credit then outstanding.

         "Assignee" shall have the meaning provided in Section 10.11(a) of the
Credit Agreement.

         "Assignment and Acceptance" shall have the meaning provided in Section
10.11(a) of the Credit Agreement.


                                       3


         "Assignment of Earnings and Insurances" means an assignment between
the Borrower or a Subsidiary Guarantor and the Agent, on behalf of the Lenders,
as the same from time to time may be amended, restated, modified, supplemented
or renewed, in each case in accordance with the terms thereof, pursuant to
which the Borrower or such Subsidiary Guarantor assigns to the Agent, on behalf
of the Lenders, all of its right, title and interest in, to and under the
Earnings and Insurances with respect to its Vessel.

         Assignment of Insurances" means an assignment between Seabulk Towing,
Inc. and the Agent, on behalf of the Lenders, as the same from time to time may
be amended, restated, modified, supplemented or renewed, in each case in
accordance with the terms thereof, pursuant to which Seabulk Towing, Inc.
assigns to the Agent, on behalf of the Lenders, all of its right, title and
interest in, to and under the Insurances with respect to such Vessels.

         "Attributable Debt" in respect of a sale and leaseback transaction
means, at the time of determination, the present value of the obligation of the
lessee for net rental payments during the remaining term of the lease included
in such sale and leaseback transaction including any period for which such
lease has been extended or may, at the option of the lessor, be extended. Such
present value shall be calculated using a discount rate equal to the rate of
interest implicit in such transaction, determined in accordance with GAAP.

         "Bankruptcy Code" means Title 11 of the United States Code entitled
"Bankruptcy", as in effect from time to time.

         "Base Rate" means for any day, a rate per annum equal to the greater
of (a) the Prime Rate and (b) the Federal Funds Effective Rate in effect on
such day plus 1/2 of 1%. Any change in the Base Rate due to a change in the
Prime Rate or the Federal Funds Effective Rate shall be effective from and
including the effective day of such change in the Prime Rate or the Federal
Funds Effective Rate, respectively.

         "Base Rate Loan" means any Loan designated as such by the Borrower in
the related Drawdown Request at the time of the incurrence thereof, conversion
or continuation thereto, which Loan shall bear interest based on the Base Rate.

         "Borrower" has the meaning set forth in the initial paragraph of this
Agreement.

         "Business Day" means any day which is not a Saturday, Sunday or legal
holiday or any other day on which banking institutions in New York, The
Netherlands, Norway or Germany are authorized by law or executive order to
close.

         "Capital Lease Obligation" means, at the time any determination is to
be made, the amount of the liability in respect of a capital lease that would
at that time be required to be capitalized on a balance sheet in accordance
with GAAP.

         "CERCLA" means the Comprehensive Environmental Response Compensation
and Liability Act of 1980, as same may be amended from time to time.

         "Change of Control" means a "change of control" or similar event under
the Existing Indenture.


                                       4


         "Change in Law" means (a) the adoption of any law, rule or regulation
after the Closing Date, (b) any change in law, rule or regulation or in the
interpretation or application thereof by any Governmental Authority after the
Closing Date or (c) compliance by any Lender with any request, guideline or
directive (whether or not having the force of law) of any Governmental
Authority made or issued after the Closing Date.

         "Closing Date" means September 13, 2002.

         "Code" means the Internal Revenue Code of 1986, as amended from time
to time, and the regulations promulgated and rulings issued thereunder. Section
references to the Code are to the Code, as in effect at the date of the
Agreement and any subsequent provisions of the Code amendatory thereof,
supplemental thereto or substituted therefor.

         "Collateral" means the Vessels, the Earnings on the Vessels (other
than the Second Lien Vessels so long as MARAD is the first mortgagee and the
Vessels owned by Seabulk Towing, Inc. so long as MARAD is the first mortgagee
on a Second Lien Vessel owned by Seabulk Towing, Inc.), the Insurances on the
Vessels (other than the Second Lien Vessels), the Mortgages, any Hedging
Agreements, the Equity Interests from time to time subject to the Pledge
Agreement and any other property in which a security interest is created in
favor of the Agent for the benefit of the Lenders to secure the payment and
performance of the Obligations of the Borrower and the Subsidiary Guarantors
under the Credit Agreement.

         "Commitment" means either of and "Commitments" means both of the
Tranche A Loan Commitment and the Tranche B Loan Commitment.

         "Commitment Fee" means, for the time period commencing on the Closing
Date to and including the Maturity Date (or such earlier date as the Aggregate
Loan Commitments shall have been terminated entirely), a commitment fee
computed at the rate per annum equal to the Commitment Fee Percentage on the
average daily excess amount of (a) the Aggregate Loan Commitments on such date
over (b) the sum of, without duplication, (i) the aggregate principal amount of
the Loans outstanding on such date, (ii) the aggregate amount available for
drawings under the Letters of Credit, and (iii) the aggregate unpaid amount of
all Reimbursement Obligations due and payable as of such date in respect of
previous drawings made under the Letters of Credit. The Commitment Fee shall be
calculated on the basis of a year of 360 days, in each case for the actual
number of days (including the first day but excluding the last day) in the
period for which such Commitment Fee is payable.

         "Commitment Fee Payment Date" the last Business Day of means each
December, March, June and September, commencing on the Closing Date and ending
on the Maturity Date.


                                       5


         "Commitment Fee Percentage" means the percentage set forth below if
the Adjusted Funded Debt Ratio (expressed as a percentage) determined as of the
most recent fiscal quarter is:



- ------------------------------------------------------------------------------------------------------
ADJUSTED FUNDED DEBT RATIO                                            COMMITMENT FEE PERCENTAGE
- ------------------------------------------------------------------------------------------------------
                                                                   
equal to or greater than 3.75                                         0.875%
- ------------------------------------------------------------------------------------------------------
equal to or greater than 3.00, but less than 3.75                     0.750%
- ------------------------------------------------------------------------------------------------------
equal to or greater than 2.00, but less than 3.00                     0.625%
- ------------------------------------------------------------------------------------------------------
less than 2.00                                                        0.500%
- ------------------------------------------------------------------------------------------------------


         "Company" means any corporation, limited liability company,
partnership or other business entity.

         "Compulsory Acquisition" means, with respect to a Vessel, the
requisition for title or other compulsory acquisition of such Vessel (otherwise
than by requisition for hire), capture, seizure, detention or confiscation of
such Vessel by any government or by Persons acting or purporting to act on
behalf of any government or Governmental Authority.

         "Consolidated Funded Debt" means, with respect to any Person as of any
date of determination, the sum, without duplication, of (i) the total amount of
Indebtedness of such Person and its Subsidiaries, plus (ii) the total amount of
Indebtedness of any other Person, to the extent that such Indebtedness has been
Guaranteed by such Person or one or more of its Subsidiaries, plus (iii) the
aggregate value of all Disqualified Shares of such Person, in each case,
determined on a consolidated basis in accordance with GAAP.

         "Consolidated Interest Expense" means, for any period, the sum of:

                  (A)      the total interest expense of the Borrower and the
                           Subsidiary Guarantors plus, to the extent not
                           otherwise included in such interest expense (without
                           duplication), and to the extent incurred by the
                           Borrower or the Subsidiary Guarantors:

                           (1)      interest expense attributable to Capital
                                    Lease Obligations, the interest expense
                                    attributable to leases constituting part of
                                    a sale and leaseback transaction and the
                                    interest portion of rent expense associated
                                    with Attributable Debt in respect of the
                                    relevant lease giving rise thereto,
                                    determined as if such lease were a
                                    capitalized lease in accordance with GAAP
                                    and the interest component of any deferred
                                    payment obligations;

                           (2)      amortization of debt discount but not debt
                                    issuance costs;

                           (3)      non-cash interest expense;


                                       6


                           (4)      amortization of commissions, discounts and
                                    other fees and charges owed with respect to
                                    letters of credit and bankers' acceptance
                                    financing;

                           (5)      interest accruing on any Indebtedness of
                                    any other Person to the extent such
                                    Indebtedness is Guaranteed by (or secured
                                    by the assets of) the Borrower or any such
                                    Subsidiary Guarantor;

                           (6)      net costs associated with Hedging
                                    Obligations (excluding amortization of fees
                                    paid at the time or entering into such
                                    Hedging Obligations); plus

                  (B)      all dividends, whether paid or accrued and whether
                           or not in cash, on any series of Preferred Shares of
                           a Person or any of its Subsidiaries payable to a
                           Person other than the Borrower or a Subsidiary
                           Guarantor; plus

                  (C)      cash contributions to any employee stock ownership
                           plan or other trust for the benefit of employees to
                           the extent such contributions are used by such plan
                           or trust to pay interest or fees to any Person
                           (other than the Borrower and the Subsidiary
                           Guarantors) in connection with Indebtedness incurred
                           by such plan or trust to purchase share capital of
                           the Borrower.

         "Consolidated Net Income" means, for any period for any Person, the
net income (loss) of such Person and its consolidated Subsidiaries determined
in accordance with GAAP; provided, however, that there shall not be included in
determining such Consolidated Net Income:

                  (A)      any net income (or loss) of any Subsidiary if at the
                           date of determination the making of distributions or
                           the payment of dividends by such Subsidiary are not
                           permitted without any prior governmental approval
                           (that has not been obtained) or, directly or
                           indirectly, by operation of the terms of its charter
                           or other organizational document or any agreement,
                           instrument, judgment, decree, order, statute, rule
                           or governmental regulation applicable to that
                           Subsidiary or its stockholders except:

                           (i)      subject to the limitations contained in
                                    Clause (2) and (3) below, the Borrower's
                                    equity in the net income of any such
                                    Subsidiary for such period shall be
                                    included in such Consolidated Net Income up
                                    to the aggregate amount of cash distributed
                                    by such Subsidiary during such period to
                                    the Borrower or a Subsidiary as a dividend
                                    or other distribution (subject, in the case
                                    of a dividend to a Subsidiary, to the
                                    limitation contained in this clause); and

                           (ii)     the Borrower's equity in a net loss of any
                                    such Subsidiary for such period shall be
                                    included in determining such Consolidated
                                    Net Income;


                                       7


                  (B)      any gain or loss, together with any related
                           provision for taxes on such gain or loss, realized
                           upon (i) a sale or other disposition of any assets
                           of the Borrower, its consolidated Subsidiaries or
                           any other Person (including pursuant to any sale and
                           leaseback transaction) which is not sold or
                           otherwise disposed of in the ordinary course of
                           business, (ii) the sale or other disposition of any
                           securities of any Person not sold or otherwise
                           disposed of in the ordinary course of business or
                           (iii) the extinguishment of any Indebtedness of any
                           Person;

                  (C)      any extraordinary gain or loss, together with any
                           related provision for taxes on such extraordinary
                           gain or loss.

         "Consolidated Tangible Net Worth" of any Person, as of any date of
determination, means the consolidated shareholders' equity of such Person as
determined in accordance with GAAP less (to the extent included) amounts
attributable to Disqualified Shares of such Person plus (i) all expenses or
charges incurred as a result of the transactions contemplated in conjunction
with the Facility plus (ii) US $4,100,000 the amount associated with the
premium and indemnity club charge booked retroactively in July 2002 against the
quarter ended December 31, 2001) less (iii) an amount equal to US $4,100,000
amortized over a period of 24 months beginning with the month of July 2002.

         "Contract" shall have the meaning provided in Section 3.04(a) of the
Credit Agreement.

         "Counterparty" means any Lender or any Affiliate of a Lender who
enters into a Hedging Agreement with the Borrower.

         "Credit Event" means the making of any Loan or the issuance of any
Letter of Credit.

         "Credit Party" means either of and "Credit Parties" means both the
Borrower and each Subsidiary Guarantor.

         "Customary Permitted Liens" means

                  (A)      Liens for taxes, assessments or charges of any
                           government authority or claims not yet due or which
                           are being contested in good faith by appropriate
                           proceedings and with respect to which adequate
                           reserves or other appropriate provisions are being
                           maintained in accordance with the provisions of
                           GAAP;

                  (B)      statutory Liens of landlords and Liens of carriers,
                           warehousemen, mechanics, materialmen and other Liens
                           imposed by law created in the ordinary course of
                           business for amounts which are not past due for more
                           than 30 days or which are being contested in good
                           faith by appropriate proceedings and with respect to
                           which adequate reserves or other appropriate
                           provisions are being maintained in accordance with
                           GAAP or which in the aggregate do not detract from
                           the value of the Borrower or any Subsidiary's
                           property or assets or materially impair the use
                           thereof in the operation of the business of the
                           Borrower or such Subsidiary;


                                       8


                  (C)      licenses, leases or subleases granted to other
                           Persons in the ordinary course of business not
                           materially interfering with the conduct of the
                           business of the Borrower and its Subsidiaries taken
                           as a whole;

                  (D)      easements, rights-of-way, restrictions (including
                           zoning restrictions), encroachments, protrusions and
                           other similar charges or encumbrances, and minor
                           title deficiencies, in each case whether now or
                           hereafter in existence, not securing obligations for
                           the payment of borrowed money and not materially
                           interfering with the conduct of the business of the
                           Borrower or any of its Subsidiaries;

                  (E)      rights of tenants, subtenants, franchisees or
                           parties in possession (other than a debtor in
                           possession, trustee in bankruptcy or receiver of the
                           Borrower), or options or rights of first refusal,
                           whether pursuant to leases, subleases, franchise
                           agreements, other occupancy agreements or otherwise,
                           if such rights were vested on the Closing Date or
                           created thereafter in the ordinary course of
                           business in transactions permitted under the Credit
                           Agreement;

                  (F)      any interest or title of a lessor, sublessor,
                           licensee or licensor under any lease or license
                           agreement permitted by the Credit Agreement;

                  (G)      Liens in favor of a banking institution arising as a
                           matter of law encumbering deposits (including the
                           right of set-off) held by such banking institutions
                           incurred in the ordinary course of business and
                           which are within the general parameters customary in
                           the banking industry;

                  (H)      Liens in favor of customs and revenue authorities
                           arising as a matter of law to secure the payment of
                           customs duties in connection with the importation of
                           goods;

                  (I)      Liens arising out of conditional sale, title
                           retention, consignment or similar arrangements for
                           the purchase or sale of goods entered into by the
                           Borrower or any of its Subsidiaries in the ordinary
                           course of business in accordance with the past
                           practices of the Borrower and its Subsidiaries;

                  (J)      deposits made to secure statutory obligations in the
                           form of excise taxes; .

                  (K)      Liens incurred or deposits or pledges made in the
                           ordinary course of business in connection with
                           workers' compensation, unemployment insurance and
                           other types of social security, old age or other
                           similar obligations, or to secure the performance of
                           tenders, statutory obligations, surety and appeal
                           bonds, bids, leases, government contracts,
                           performance and return-of-money bonds and other
                           similar obligations (exclusive of obligations for
                           the payment of borrowed money); and

                  (L)      Liens resulting from operation of law with respect
                           to any judgments or orders not constituting a
                           Default.


                                       9


         "Default" shall mean an Event of Default or any condition or event
which, with notice or lapse of time or both, would constitute an Event of
Default.

         "Disbursement Date" shall have the meaning provided in Section 3.02 of
the Agreement.

         "Disqualified Shares" means any Share Capital that, by its terms (or
by the terms of any security into which it is convertible, or for which it is
exchangeable, in each case at the option of the holder of the Share Capital),
or upon the happening of any event, matures or is mandatorily redeemable,
pursuant to a sinking fund obligation or otherwise, or redeemable at the option
of the holder of the Share Capital, in whole or in part, on or prior to the
date that is 91 days after the Maturity Date.

         "Dollars" and the sign "$" shall each mean freely transferable lawful
money of the United States (expressed in dollars).

         "Drawdown Date" means each Business Day designated by the Borrower in
a Drawdown Request, as the day on which a Revolving Loan or a Term Loan, as the
case may be, subject to the terms and conditions of the Agreement, is requested
to be made by the Lenders to the Borrower; provided, however, a Drawdown Date
with respect to a Revolving Loan shall not occur later than the day immediately
preceding the Maturity Date and a Drawdown Date with respect to a Term Loan
shall not occur later the date that is the four month anniversary of the
Closing Date.

         "Drawdown Request" means, with respect to any borrowing, conversion or
continuation of a Loan, a written request, substantially in the form of Exhibit
C to the Credit Agreement executed by an Executive Officer of the Borrower
wherein the Borrower indicates, among other things, (a) the proposed Drawdown
Date, (b) the amount of such Loan, (c) the initial Interest Period for such
Loan, (d) whether the Loan is a Revolving Loan or a Term Loan, (e) whether such
Loan is a Base Rate Loan or a LIBOR Loan, (f) in the case of a borrowing, the
disbursement instructions therefore and (g) in the case of the borrowing of a
Term Loan, that (i) the proceeds thereof are being used to purchase Existing
Senior Notes, (ii) the seller of such Existing Notes and (iii) the purchase
price and principal amount of such Existing Notes.

         "Earnings" means and includes all present and future moneys and claims
which are earned by or become payable to or for the account of the Borrower or
the Subsidiary Guarantors in connection with the operation or ownership of the
Vessels, including but not limited to freights, passage and hire moneys,
remuneration for salvage and towage services, demurrage and detention moneys,
all present and future moneys and claims payable to the Borrower or the
Subsidiary Guarantors in respect of any breach or variation of any charterparty
or contract of affreightment in respect of the Vessels, and all moneys and
claims payable to the Borrower or the Subsidiary Guarantors in respect of the
requisition for hire of the Vessels; provided, however, that the use of this
term shall create no security interests with respect to the earnings of the
Second Lien Vessels owned by the Borrower so long as MARAD is the first
mortgagee thereon or on any Vessels now or in the future owned by Seabulk
Towing, Inc. so long as MARAD is the first mortgagee on any Second Lien Vessel
owned by Seabulk Towing, Inc.


                                      10


         "EBITDA" means, with respect to the Borrower and the Subsidiary
Guarantors for any period, the Consolidated Net Income of such Person for such
period plus the following to the extent deducted in calculating such
Consolidated Net Income:

                  (A)      all Federal, state and local and all foreign income
                           tax expense;

                  (B)      Consolidated Interest Expense;

                  (C)      depreciation expense and amortization expense;

                  (D)      the sum of any non-cash costs, charges or expenses
                           attributable to the accrual of or reserve for cash
                           charges in any future period for pension liabilities
                           of the Borrower and the Subsidiary Guarantors;

                  (E)      an amount equal to any non-cash loss or gain
                           realized in connection with an asset sale;

                  (F)      an amount equal to the fees, expenses and other
                           costs incurred by the Borrower and the Subsidiary
                           Guarantors in connection with the transactions
                           contemplated in conjunction with the Facility; and

                  (G)      to the extent the Borrower's accounting policy with
                           respect to the capitalization of dry-docking costs
                           is changed, an amount equal to any expensed
                           dry-docking cost.

Notwithstanding the foregoing, amounts relating to a Subsidiary Guarantor shall
be added to Consolidated Net Income to compute EBITDA only to the extent (and
in the same proportion) that the net income (or loss) of such Subsidiary
Guarantor was included in calculating Consolidated Net Income.

         "Eligible Lender" means and include a commercial bank, financial
institution or other institutional "accredited investor" (as defined in
Regulation D of the Securities Act).

         "Environmental Claims" means any and all administrative, regulatory or
judicial actions, suits, demands, demand letters, directives, claims, liens,
notices of noncompliance or violation, investigations or proceedings relating
in any way to any Environmental Law or any permit issued, or any approval
given, under any such Environmental Law (hereafter, "Claims"), including,
without limitation, (a) any and all Claims by governmental or regulatory
authorities for enforcement, cleanup, removal, response, remedial or other
actions or damages pursuant to any applicable Environmental Law, and (b) any
and all Claims by any third party seeking damages, contribution,
indemnification, cost recovery, compensation or injunctive relief in connection
with alleged injury or threat of injury to health, safety or the environment
due to the presence of Hazardous Materials.

         "Environmental Law" means any applicable federal, state, provincial,
foreign or local statute, law, rule, regulation, ordinance, code, binding and
enforceable guideline, binding and enforceable written policy or rule of common
law now or hereafter in effect and in each case as amended, or any binding
judicial or administrative interpretation thereof, including any judicial


                                      11


or administrative order, consent decree or judgment, to the extent binding on
the Borrower or any of its Subsidiaries, relating to the environment, employee
health and safety or Hazardous Materials, including, without limitation,
CERCLA; RCRA; the Federal Water Pollution Control Act, 33 USC. ss. 1251 et seq.;
the Toxic Substances Control Act, 15 USC. ss. 2601 et seq.; the Clean Air Act,
42 USC. ss. 7401 et seq.; the Safe Drinking Water Act, 42 USC. ss. 3803 et seq.;
the Oil Pollution Act of 1990, 33 USC. ss. 2701 et seq.; the Emergency Planning
and the Community Right-to-Know Act of 1986, 42 USC. ss. 11001 et seq.; the
Hazardous Material Transportation Act, 49 USC. ss.1801 et seq.; and the
Occupational Safety and Health Act, 29 USC. ss.651 et seq. (to the extent it
regulates occupational exposure to Hazardous Materials); any state and local or
foreign counterparts or equivalents, in each case as amended from time to time.

         "Equity Interests" means Share Capital and all warrants, options or
other rights to acquire Share Capital (but excluding any debt security that is
convertible into, or exchangeable for, Share Capital).

         "ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and the regulations promulgated and rulings issued
thereunder. Section references to ERISA are to ERISA, as in effect at the date
of the Agreement, and any subsequent provisions of ERISA, amendatory thereof,
supplemental thereto or substituted therefor.

         "ERISA Affiliate" means each person (as defined in Section 3(9) of
ERISA) which together with the Borrower or a Subsidiary of the Borrower would
be deemed to be a "single employer" (i) within the meaning of Section 414(b),
(c), (m) or (o) of the Code or (ii) as a result of the Borrower or a Subsidiary
of the Borrower being or having been a general partner of such person.

         "Event of Default" means any of the events described in Article IX of
the Agreement.

         "Excluded Taxes" any tax imposed on or measured by the net income or
profits of a Lender, or any franchise tax based on the net income or net
profits of a Lender, in either case pursuant to the laws of (a) the United
States of America, (b) any jurisdiction (or political subdivision thereof) of
which the Agent, any Arranger, the Issuing Lender or any other Lender, as the
case may be, is a citizen or is resident or in which such Lender has a
permanent establishment (or is otherwise engaged in the active conduct of its
banking business through an office or a branch) which is such Lender's
applicable Lending Office, (c) the jurisdiction (or any political subdivision
thereof) in which the Agent, any Arranger, the Issuing Lender or any other
Lender is organized, and (d) any jurisdiction (or political subdivision
thereof) in which the Agent, any Arranger, the Issuing Lender or any other
Lender is presently doing business which taxes are imposed solely as a result
of doing business in such jurisdiction..

         "Executive Officer" means, with respect to a Person, any officer
having the authority to bind such Person pursuant to the terms of the
constitutive documents of such Person.

         "Existing Credit Agreement" means the Credit Agreement, dated as of
December 15, 1999, together with the various amendments and supplements
thereto, among Seabulk International, Inc. (formerly known as Hvide Marine
Incorporated), a corporation existing under the laws of Delaware, as borrower,
Bankers Trust Company, as administrative agent for the


                                      12


lenders from time to time parties thereto, Deutsche Bank Securities, Inc., as
lead arranger and book manager, and MeesPierson Capital Corp., as syndication
agent and co-arranger, and the lenders a party thereto.

         "Existing Indebtedness" means the Indebtedness incurred under the
Existing Credit Agreement and the Existing Indenture.

         "Existing Indenture" means the Indenture, dated December 15, 1999,
between Seabulk International, Inc. (formerly known as Hvide Marine
Incorporated) and State Street Bank and Trust Company of Connecticut, N.A., as
trustee, as the same may be modified, amended, restated, supplemented or
renewed from time to time in accordance with the terms hereof and thereof.

         "Existing Senior Notes" means the Borrower's senior secured second
lien notes, issued pursuant to the Existing Indenture, as the same may be
modified, supplemented, restated, amended or renewed from time to time pursuant
to the terms hereof and thereof.

         "Facility" means the $180,000,000 senior secured credit facility
created pursuant to the Agreement consisting of the Revolving Loans, the Term
Loans and the Letters of Credit.

         "Facing Fee" shall have the meaning provided in Section 2.16(b) of the
Credit Agreement.

         "Fair Market Value" means, with respect to a Vessel, the fair market
sale value as of a specified date of such Vessel determined on a standalone
basis free and clear of any Liens and charters and with no value given to
pooling arrangements that would be obtained in an arm's-length transaction
between an informed and willing seller under no compulsion to sell and an
informed and willing buyer under no compulsion to buy, as determined by an
Appraiser selected by the Agent at the expense of the Borrower; provided,
however, that the Borrower shall have the option to select an additional
Appraiser to make such determination and, in such case, the "Fair Market Value"
shall be the average of the fair market sale value determined by the Agent's
Appraiser and the fair market sale value determined by the Borrower's
Appraiser. The Fair Market Value of the Seabulk Trader and the Seabulk
Challenge shall be an amount equal to the excess of (a) 50% of the fair market
value determined as described in the immediately preceding sentence over (b)
the discharge amount of the first priority mortgages thereon.

         "Federal Funds Effective Rate" means, for any day, the weighted
average (rounded upwards, if necessary, to the next 1/100 of 1%) of the rates
on overnight federal funds transactions with members of the Federal Reserve
System arranged by Federal funds brokers, as published on the next succeeding
Business Day by the Federal Reserve Bank of New York, or, if such rate is not
so published for any day that is a Business Day, the average (rounded upwards,
if necessary, to the next 1/100 of 1%) of the quotations for such day of such
transactions received by the Agent from three federal funds brokers of
recognized standing selected by it.

         "Federal Reserve Board" means the Board of Governors of the Federal
Reserve System or any successor thereto.


                                      13


         "Foreign Pension Plan" means any plan, fund (including, without
limitation, any superannuation fund) or other similar program established or
maintained outside the United States of America by the Borrower or any one or
more of its Subsidiaries primarily for the benefit of employees of the Borrower
or such Subsidiaries residing outside the United States of America, which plan,
fund or other similar program provides, or results in, retirement income, a
deferral of income in contemplation of retirement or payments to be made upon
termination of employment, and which plan is not subject to ERISA or the Code.

         "Fortis" has the meaning set forth in the initial paragraph of the
Agreement.

          "GAAP" means generally accepted accounting principles as in effect
from time to time in the United States of America consistently applied, except
as disclosed in the financial statements of the Borrower.

         "Governmental Authority" means any government, parliament,
legislature, regulatory authority, agency, commission, tribunal, department,
commission, board, instrumentality, court, arbitration board or arbitrator or
other law, regulation or rule making entity (including a Minister of the Crown)
having or purporting to have jurisdiction on behalf of, or pursuant to the laws
of, any country in which any Credit Party is organized, continued, amalgamated,
merged or otherwise created or established or in which any Credit Party carries
on business or holds property, or any province, territory, state, municipality,
district or political subdivision of any such country or of any such state,
province or territory of such country.

         "Guarantee" means a guarantee other than by endorsement of negotiable
instruments for collection in the ordinary course of business, direct or
indirect, in any manner including, without limitation, by way of a pledge of
assets or through letters of credit or reimbursement agreements in respect
thereof, of all or any part of any Indebtedness.

         "Hazardous Materials" means (a) any petroleum or petroleum products,
radioactive materials, asbestos in any form that is or could become friable,
urea formaldehyde foam insulation, transformers or other equipment that contain
dielectric fluid containing levels of polychlorinated biphenyls, and radon gas;
(b) any chemicals, materials or substances defined as or included in the
definition of "hazardous substances," "hazardous waste," "hazardous materials,"
"extremely hazardous substances," "restricted hazardous waste," "toxic
substances," "toxic pollutants," "contaminants," "dangerous goods," or
"pollutants," or words of similar import, under any applicable Environmental
Law; and (c) any other chemical, material or substance, exposure to which is
prohibited, limited or regulated by any governmental authority under
Environmental Laws.

         "Hedging Agreement" means any agreement entered into by and between
the Borrower and any Lender or any Affiliate of any Lender pursuant to which
the Borrower has the ability to reduce exposure to currency or interest rate
risks, as any such Hedging Agreement from time to time may be amended,
restated, modified, supplemented or renewed.

         "Hedging Obligations" means, with respect to any specified Person, the
net amount of the obligations of such Person under interest rate swap
agreements, interest rate cap agreements, interest rate collar agreements,
foreign currency exchange agreements, commodity price


                                      14


protection agreements and other agreements or arrangements designed to protect
such Person against fluctuations in interest rates, foreign currency exchange
rates and commodity prices.

         "Indebtedness" means, with respect to a Person, any indebtedness of
such Person, whether or not contingent:

                  (A)      in respect of borrowed money;

                  (B)      evidenced by bonds, notes, debentures, promissory
                           notes, loan agreements or similar instruments or
                           letters of credit (other than obligations with
                           respect to letters of credit securing obligations
                           entered into in the ordinary course of business of
                           such Person to the extent such letters of credit are
                           not drawn upon or, if and to the extent drawn upon,
                           such drawing is reimbursed no later than the tenth
                           Business Day following payment on the letter of
                           credit)(or reimbursement agreements in respect
                           thereof);

                  (C)      in respect of bankers' acceptances;

                  (D)      representing Capital Lease Obligations;

                  (E)      representing the balance deferred and unpaid of the
                           purchase price of any property, except any such
                           balance that constitutes an accrued expense or trade
                           payable;

                  (F)      representing any Hedging Obligations; or

                  (G)      representing the maximum fixed repurchase price of
                           Disqualified Shares;

if and to the extent any of the preceding items (other than letters of credit
and Hedging Obligations) would appear as a liability upon a balance sheet of
the specified Person prepared in accordance with GAAP. In addition, the term
"Indebtedness" includes all Indebtedness of others secured by a Lien on any
asset of the specified Person (whether or not such Indebtedness is assumed by
the specified Person) and, to the extent not otherwise included, the Guarantee
by the specified Person of any indebtedness of any other Person.

The amount of any Indebtedness outstanding as of any date shall be:

                  (A)      in the case of any Indebtedness issued with original
                           issue discount, the accreted value of the
                           Indebtedness; and

                  (B)      in the case of any other Indebtedness, the principal
                           amount of the Indebtedness, together with any
                           interest on the Indebtedness that is more than 30
                           days past due.

         "Indemnified Liabilities" shall have the meaning provided in Section
3.06 of the Credit Agreement.


                                      15


         "Indemnified Party" means each of and "Indemnified Parties" means
collectively the Agent, each Arranger and each Lender and each of their
respective directors, officers, employees and agents and any Person who
controls any of them within the meaning of the federal, state and foreign
securities laws.

         "Indemnified Taxes" means any Taxes (including, without limitation,
income taxes withheld at source) other than Excluded Taxes.

         "Initial Loan" means the first Loan made pursuant to Article II of the
Credit Agreement.

         "Insurances" includes all policies and contracts of insurance
whatsoever (which expression includes all entries of the Vessels in a
protection and indemnity or war risks association) which are from time to time
taken out or entered into in respect of the Vessels and their Earnings or
otherwise in connection with the Vessels; provided, however, that the use of
this term shall create no security interests with respect to the insurances
relating to the Second Lien Vessels so long as MARAD is the first mortgagee
thereon.

         "Interest Payment Date" means the last day of each Interest Period;
provided, however, that if any Interest Period exceeds three (3) months,
interest shall also be paid on the last day of each three (3) month period
during such Interest Period.

         "Interest Period" means (a) with respect to any Loan, the one, three
or six-month period (or, if agreed to by all of the Lenders, any other period),
selected by the Borrower pursuant to Article II of the Credit Agreement,
commencing on the Drawdown Date, with respect to the first Interest Period for
such Loan, and on the termination of the prior Interest Period, with respect to
all other Interest Periods; provided, however, that notwithstanding Article II
of the Credit Agreement, the Borrower shall not select an Interest Period for
any Loan, which includes and extends beyond the Maturity Date; and provided
further, that any Interest Period which would otherwise end on a day that is
not a Business Day shall end on the next succeeding Business Day unless such
next succeeding Business Day is in the following calendar month, in which case
such Interest Period shall end on the immediately preceding Business Day.

         "Interest Rate" means either (a) a rate per annum equal to the Base
Rate for the relevant Interest Period plus the Applicable Margin (computed on
the basis of a year of 365 days for the actual number of days--including the
first day but excluding the last day--occurring in the period for which such
interest is payable) or (b) a rate per annum equal to the Adjusted LIBOR for
the relevant Interest Period plus the Applicable Margin (computed on the basis
of a year of 360 days for the actual number of days--including the first day
but excluding the last day--occurring in the period for which such interest is
payable).

         "Investment" means any direct or indirect advance, loan or other
extension of credit (including by way of guarantee or similar arrangement) or
capital contribution to (by means of any transfer of cash or other property to
others or any payment for property or services for the account or use of
others), or any purchase or acquisition of capital stock (or other equity
interest), Indebtedness or other similar instruments.

         "ISM Code" shall have the meaning provided in Section 6.20(b) of the
Credit Agreement.


                                      16


         "Issuance Date" means a Business Day designated by the Borrower in an
Issuance Request as the day on which a Letter of Credit, subject to the terms
and conditions of the Credit Agreement, is requested to be issued by the
Issuing Lender or an existing Letter of Credit is requested to be extended;
provided, however, an Issuance Date shall not occur later than thirty (30) days
immediately preceding the Maturity Date.

         "Issuing Lender" means Fortis Capital Corp. or one of its Affiliates,
in its capacity as issuer of any Letter of Credit, or any successors thereto.

         "Issuance Request" means, with respect to a Letter of Credit, a
written request, substantially in the form of Exhibit D to the Agreement
executed by an Executive Officer of the Borrower wherein the Borrower
indicates, among other things, (i) the Issuance Date, (ii) the Stated Amount of
the Letter of Credit, (iii) the Stated Expiration Date, it being expressly
agreed that unless the Issuing Lender otherwise agrees no Letter of Credit
shall contain a provision for the automatic renewal or extension thereof, (iv)
the beneficiary of such Letter of Credit, (v) whether such Letter of Credit is
a Standby Letter of Credit or Trade Letter of Credit and (vi) the terms and
conditions, if any, required for draws thereunder.

         "L/C Commitment" means the Issuing Lender's obligation to issue
Letters of Credit for the account of the Borrower in an aggregate amount not to
exceed $10,000,000.

         "L/C Obligations" means on any date, an amount equal to the sum of (i)
the aggregate Stated Amount of all issued and outstanding Letters of Credit,
plus (ii) the then aggregate amount of all unpaid Reimbursement Obligations.

         "L/C Participant" means all Lenders other than the Issuing Lender.

         "Lender and Lenders" have the meanings set forth in the initial
paragraph of the Agreement.

         "Lending Office" means, with respect to any Lender, the office or
offices of the Lender specified opposite its name on the applicable signature
page to the Loan Agreement, or such other office or offices of the Lender as it
may from time to time notify the Borrower and the Agent.

         "Letter of Credit" means a Standby Letter of Credit or Trade Letter of
Credit issued pursuant to an Issuance Request; provided, that the aggregate
amount available to be drawn under all such Letters of Credit shall not exceed
the L/C Commitment.

         "Letter of Credit Fee" shall have the meaning provided in Section
2.16(b) of the Credit Agreement.

         "LIBOR" means, with respect to an Interest Period and any Loan to be
made, continued as or converted into a LIBOR Loan, the rate for a period of
time comparable to the numbers of days in such Interest Period which appears on
the Telerate Page 3750 (or such other page as may replace the page on that
service for the purpose of displaying London inter-bank market rates) at or
about 11:00 a.m., London time, on the date that is two London Banking Days
preceding the date of calculation. If, at any time of determination, two such
offered rates appear on the


                                      17


Telerate Page 3750, LIBOR will be the arithmetic mean of such offered rates
(rounded to the nearest.0001 percentage point). If, at any time of
determination, the Telerate Page 3750 or any replacement page is not available,
LIBOR will be calculated as the average (rounded upward, if necessary to the
next higher 1/16 of 1%) of the respective rates per annum at which deposits in
United States dollars are offered to each of three reference banks of
internationally recognized standing selected by the Agent in the London
interbank market for Dollar deposits of amounts comparable to the principal
amount of the LIBOR Loan to which such LIBOR rate is to be applicable with
maturities comparable to the Interest Period for which such LIBOR rate will
apply at approximately 11:00 a.m., London time, on the date that is two London
(US$) Banking Days preceding the date of calculation. The determination of
LIBOR by the Agent shall be conclusive in the absence of manifest error.

         "LIBOR Loan" means a Loan that bears interest based on Adjusted LIBOR.

         "Lien" means mean any mortgage, pledge, hypothecation, assignment,
deposit arrangement, encumbrance, lien (statutory or other), preference,
priority or other security agreement of any kind or nature whatsoever
(including, without limitation, any conditional sale or other title retention
agreement, any financing or similar statement or notice filed under the UCC or
any other applicable personal property security legislation in any jurisdiction
or any other similar recording or notice statute, and any lease having
substantially the same effect as any of the foregoing).

         "Lightship Tanker Entities" means Lightship Tanker Holdings, L.L.C.,
Lightship Partners, L.P., Lightship Tankers I, L.L.C., Lightship Tankers II,
L.L.C., Lightship Tankers III, L.L.C., Lightship Tankers IV, L.L.C., Lightship
Tankers V, L.L.C., Delaware Tanker Holdings I, Inc., Delaware Tanker Holdings
II, Inc., Delaware Tanker Holdings III, Inc., Delaware Tanker Holdings IV, Inc.
and Delaware Tanker Holdings V, Inc.

         "Loan" means either of, and "Loans" means both of the Term Loans and
the Revolving Loans.

         "London Banking Day" means any day on which dealings in deposits in
United States dollars are carried on in the London interbank market and on
which commercial banks are open for domestic and international business
(including dealings in United States dollar deposits) in London and New York.

         "Loss Date" means with respect to a Vessel and a Total Loss, the
Business Day following the earlier of (a) receipt by the related Subsidiary
Guarantor of insurance, condemnation or other proceeds with respect to such
Total Loss and (b) 180 days after the occurrence of such Total Loss.

         "Margin Stock" shall have the meaning provided in Regulation U of the
Board of Governors of the Federal Reserve System.

         "MARAD" means the United States Maritime Administration.

         "Material Adverse Change" means any circumstance or event or any set
of circumstances or events which (a) has or could reasonably be expected to
have any material adverse effect


                                      18


whatsoever upon the validity or enforceability of any Transaction Document, (b)
is or could reasonably be expected to be material and adverse to the condition
(financial or otherwise) or business operations of the Borrower or any
Subsidiary Guarantor, each individually or taken together as a whole, (c)
materially impairs or could reasonably be expected to materially impair the
ability of the Borrower or any of the Subsidiary Guarantors to perform their
respective obligations under the Transaction Documents, or (d) materially
impairs or could reasonably be expected to materially impair the ability of the
Agent to enforce any of the Transaction Documents or any Lender to enforce its
Note.

         "Maturity Date" means the fifth (5th) anniversary of the Closing Date
or if such date is not a Business Day, the Business Day immediately preceding
such date.

         "Minimum Borrowing Amount" means (a) for Revolving Loans, $1,000,000
and integral multiples of $100,000 thereafter and (b) for Letters of Credit,
$50,000.

         "Mortgage" means, with respect to a Vessel, the first registered ship
mortgage (or, in the case of the Second Lien Vessels, a second registered ship
mortgage) on such Vessel substantially in the form of Exhibit E-I (or, in the
case of the Second Lien Vessels, Exhibit E-II) to the Agreement, granted by the
related Subsidiary Guarantor to the Agent, on behalf of the Lenders, as such
Mortgage from time to time may be amended, restated, modified, supplemented or
renewed in accordance with the terms of such Mortgage.

         "NIB" has the meaning set forth in the initial paragraph of the
Agreement.

         "Note" means either of, and "Notes" means both of, a Revolving Loan
Note and a Term Loan Note, as the same from time to time may be amended,
restated, modified, supplemented or renewed.

         "Obligations" means any and all of the obligations of the Borrower and
each of the Subsidiary Guarantors, whether due or to become due, matured or
unmatured, liquidated or unliquidated, contingent or non-contingent, and all
covenants and duties regarding such amounts, of any kind or nature, present or
future, whether or not evidenced by any note, agreement or other instrument, in
each case arising under the Agreement or under any Note, Hedging Agreement,
under any of the Transaction Documents or under any currency hedging agreement
arranged by a Lender or an Affiliate of a Lender. This term includes, without
limitation, all principal, interest (including interest that accrues after the
commencement by or against the Borrower or any Subsidiary Guarantor of any
action under the Bankruptcy Code), L/C Obligations, fees, including, without
limitation, any and all arrangement fees, loan fees, agent fees and any and all
other fees, expenses, costs or other sums (including attorney costs) payable by
the Borrower or the Subsidiary Guarantors under any of the Transaction
Documents.

         "Originating Lender" shall have the meaning provided in Section
10.11(d) of the Credit Agreement.

         "Other Taxes" means any and all current or future stamp or documentary
taxes or other excise or property taxes, charges or similar levies arising from
any payment made hereunder or under the Notes or from the execution, delivery,
registration, enforcement, of or otherwise with respect to, any Transaction
Document.


                                      19


         "Overdue Rate" means, with respect to a Note, a rate per annum for
each day from the date of a default in any payment hereunder until such payment
shall be paid in full equal to (a) in the case of any LIBOR Loan, the rate that
would be applicable under Section 2.06(a) to such LIBOR Loan plus 2% per annum,
and (b) in the case of any other overdue amount, the rate that would be
applicable under Section 2.06(a) to a Base Rate Loan, plus 2% per annum.

         "Participant" shall have the meaning provided in Section 10.11(d) of
the Credit Agreement.

         "PBGC" means, the Pension Benefit Guaranty Corporation.

         "Permitted Encumbrances" means: (a) liens or rights in rem for current
crew's wages, for general average or salvage (including contract salvage) or
for wages of stevedores employed by the charterer, the operator, agent or
master of a Vessel which in each case (i) are unclaimed or (ii) shall not have
been due and payable for ten (10) days after termination of a voyage; (b) liens
or rights in rem for repairs or incident to current operations of a Vessel
(other than those referred to in clause (a) above) or with respect to any
change, alteration or addition made to such Vessel, but only to the extent in
each case that such liens are based on claims not yet delinquent and do not
involve any risk of a sale, forfeiture, hindrance to operation or loss of such
Vessel; (c) liens for amounts that are not delinquent or that are due and
unpaid for not more than thirty (30) days after such amounts shall become due
that do not involve any risk of a sale, forfeiture, hindrance to operation or
loss of a Vessel; (d) liens for amounts being contested by the applicable
Subsidiary Guarantor in good faith by appropriate procedures, diligently
prosecuted or appealed which do not involve any risk of a sale, forfeiture,
hindrance to operation or loss of a Vessel; (e) liens covered by valid policies
of insurance held with respect to a Vessel and meeting the requirements of the
related Mortgage; (f) the lien of the Mortgages and the other Transaction
Documents; (g) any other liens expressly permitted by any of the Transaction
Documents; and (h) liens and security interests in existence as of the Closing
Date granted in favor of the United States of America, represented by the
Secretary of Transportation, acting by and through the Maritime Administrator,
pursuant to the first priority mortgages, security agreements and other
documents so long as such liens and security interests relate solely to the
Second Lien Vessels.

         "Permitted Pledge Liens" means:

                  (A)      Liens for taxes, assessments or other governmental
                           charges or levies not yet due or which are being
                           contested in good faith by appropriate action or
                           proceedings and with respect to which adequate
                           reserves are being maintained;

                  (B)      Liens resulting from operation of law with respect
                           to any judgments or orders not constituting a
                           Default; and

                  (C)      Liens created by the Pledge Agreement and the other
                           Transaction Documents.

         "Person" means an individual, a corporation, a partnership, an
association, a trust, a limited liability company or any other entity or
organization, including a government or political subdivision or an agency or
instrumentality thereof.


                                      20


         "Plan" means any pension plan, as defined in Section 3(2) of ERISA,
which is maintained or contributed to by (or to which there is an obligation to
contribute of), the Borrower or a Subsidiary of the Borrower or an ERISA
Affiliate, and each such plan for the five year period immediately following
the latest date on which the Borrower, a Subsidiary of the Borrower or an ERISA
Affiliate maintained, contributed or had an obligation to contribute to such
plan.

         "Pledge Agreement" means the pledge agreement from the Borrower to the
Agent on behalf of the Lenders as may be amended, restated, modified,
supplemented or renewed from time to time in accordance with the terms thereof
pursuant to which the Borrower pledges all of the issued and outstanding Equity
Interests in the Subsidiary Guarantors to the Agent on behalf of the Lenders.

         "Preferred Shares" of any Person means any Equity Interests of such
Person that have any rights which are preferential to the rights of any other
Equity Interests of such Person with respect to dividends or redemptions or
upon liquidation.

         "Prime Rate" means the rate of interest per annum publicly announced
from time to time by Fortis Financial Services LLC as its prime rate in effect
at its principal office in New York, New York; each change in the Prime Rate
shall be effective from and including the date such change is publicly
announced as being effective.

         "Proportionate Share" means (a) with respect to the Tranche A and a
Lender, a fraction expressed as a percentage, the numerator of which shall be
the amount of such Lender's Tranche A Loan Commitment and the denominator of
which shall be the Aggregate Tranche A Loan Commitment or, if the Aggregate
Tranche A Loan Commitment is terminated, a fraction expressed as a percentage
the numerator of which is such Lender's outstanding Tranche A Loan Commitment
and the denominator of which is the amount of the then outstanding Revolving
Loans and Stated Amount of the then outstanding Letters of Credit and (b) with
respect to the Tranche B and a Lender, a fraction expressed as a percentage,
the numerator of which shall be the amount of such Lender's Tranche B Loan
Commitment and the denominator of which shall be the Aggregate Tranche B Loan
Commitment or, if the Aggregate Tranche B Loan Commitment is terminated, a
fraction expressed as a percentage the numerator of which is such Lender's
outstanding Tranche B Loan Commitment and the denominator of which is the
amount of the then outstanding Term Loans.

         "Qualified Substitute Vessel" means a vessel which (a) has a Fair
Market Value which is equal to or greater than that of the Vessel for which it
is being substituted and (b) is of a similar type and classification as the
Vessel for which it is being substituted.

         "Real Property" means all of the right, title and interest of any
Person in and to land, improvements and fixtures, including leaseholds.

         "Reduction Amount" means either of the Tranche A Reduction Amount or
the Tranche B Reduction Amount.

         "Reduction Date" means any Tranche A Reduction Date or Tranche B
Reduction Date.


                                      21


         "Register" shall have the meaning provided in Section 2.10(a) of the
Agreement.

         "Regulation D" means Regulation D of the Board of Governors of the
Federal Reserve System as from time to time in effect and any successor to all
or a portion thereof establishing reserve requirements.

         "Reimbursement Obligation" shall have the meaning provided in Section
3.04 of the Agreement.

         "Release" means any spilling, leaking, pumping, pouring, emitting,
emptying, discharging, injecting, escaping, leaching, dumping, disposing or
migration into the environment.

         "Reportable Event" means an event described in Section 4043(c) of
ERISA with respect to a Plan that is subject to Title IV of ERISA other than
those events as to which the 30-day notice period is waived under subsection
..22, .23, .25, .27, or .28 of Section 4043 of the Pension Benefit Guaranty
Corporation Regulations.

         "Required Currency" shall have the meaning provided in Section 11.22
of the Credit Agreement.

         "Restricted Payment" shall have the meaning provided in Section 7.07
of the Credit Agreement

         "Requisite Lenders" means any combination of Lenders whose combined
Proportionate Share (and voting interest with respect thereto) of all amounts
outstanding under the Credit Agreement is greater than 50% of all such amounts
outstanding.

         "Reserve Percentage" means with respect to Adjusted LIBOR and an
Interest Period, the maximum reserve percentage (expressed as a decimal,
rounded upward to the nearest 1/100th of one percent (0.01%)) in effect on the
date LIBOR for such Interest Period is determined (whether or not applicable to
any Lender) under regulations issued from time to time by the Federal Reserve
Board for determining the maximum reserve requirement (including any emergency,
supplemental or other marginal reserve requirement) with respect to
Eurocurrency funding having a term comparable to such Interest Period.

         "Responsible Officer" means, with respect to a Credit Party, the Chief
Financial Officer, the Chief Executive Officer (or any person having a similar
capacity), any senior vice-president, director of treasury and finance and any
other officer designated by the Chief Financial Officer of such Credit Party
acceptable to the Agent.

         "Returns" shall have the meaning provided in Section 4.09 of the
Credit Agreement.

         "Revolving Loan" means an extension of credit pursuant to Section
2.01(b) of the Credit Agreement. The Revolving Loans shall not include any L/C
Obligations.

         "Revolving Loan Note" shall have the meaning provided in Section
2.01(f) of the Credit Agreement.


                                      22


         "SEC" means the Securities and Exchange Commission or any successor
thereto.

         "Second Lien Vessels" means the Seabulk Challenge, Seabulk Trader,
Condor, Eagle II and Hawk.

         "Security Documents" means all contracts, instruments and other
documents now or hereafter executed and delivered in connection with the Credit
Agreement, pursuant to which liens and security interests are granted to the
Agent for the benefit of the Lenders, including without limitation, each
Mortgage, each Assignment of Earnings and Insurances and each Pledge Agreement.

         "Share Capital" means:

                  (A)      in the case of a corporation or a company, any and
                           all shares, interest, participations, or other
                           equivalent (however designated and whether or not
                           voting) of share capital or corporate stock;

                  (B)      in the case of an association or business entity,
                           any and all shares, interests, participations,
                           rights or other equivalents (however designated) of
                           share capital or corporate stock;

                  (C)      in the case of a partnership or limited liability
                           company, partnership or membership interests
                           (whether general or limited); and

                  (D)      any other interest or participation that confers on
                           a Person the right to receive a share of the profits
                           and losses of, or distributions of assets of, the
                           issuer of such share capital.

         "Shareholder Agreements" means all agreements entered into by the
Borrower or any of its Subsidiaries governing the terms and relative rights of
their capital stock.

         "Standby Letter of Credit" means any irrevocable standby letter of
credit for the account of the Borrower issued by the Issuing Lender in a form
customarily used by such Issuing Lender or in such other form as has been
approved by such Issuing Lender.

         "Stated Amount" of each Letter of Credit means the maximum amount
available to be drawn thereunder, determined without regard to whether any
conditions to drawing could then be met, as such amount may be reduced from
time to time in accordance with the terms of such Letter of Credit (determined
without regard to whether any conditions to drawing could then be met).

         "Stated Expiration Date" means, with respect to a Letter of Credit,
the stated expiration date thereof which shall not exceed one year; provided,
however, the Stated Expiration Date shall in no event be later than the
Maturity Date.

         "Stock Holders Agreement" means that certain Stockholders' Agreement,
dated as of the date hereof, among Seabulk International, Inc., Nautilus
Acquisition, L.P., C/R Marine Domestic


                                      23


Partnership, L.P., C/R Marine Non-U.S. Partnership, L.P., C/R Marine
Coinvestment, L.P., C/R Marine Coinvestment II, L.P. and Gerhard Kurz.

         "Stock Purchase Agreement" means that certain Sock Purchase Agreement,
dated as of June 13, 2002, by and among Seabulk International, Inc. and each of
the investors listed on Schedule 1 thereto.

         "Subsidiary" means any corporation, partnership, limited liability
company or other entity, the majority of the voting interests (including
interests arising out of securities or other interests convertible, at the
option of the holder, into interests of voting stock) of which is owned by a
Person either directly or through Subsidiaries.

         "Subsidiary Guarantee Agreement" means the Guarantee by each of the
Subsidiary Guarantors set forth in the Agreement or a supplement to the
Agreement substantially in the form of Exhibit G to the Agreement pursuant to
which a Subsidiary Guarantor becomes subject to the applicable terms and
conditions of the Agreement, in each case as such supplement to the Agreement
from time to time may be amended, restated, modified, supplemented or renewed.

         "Subsidiary Guarantee Obligation" shall have the meaning provided in
Section 8.01(a) of the Credit Agreement.

         "Subsidiary Guarantor" means each of the Borrower's Subsidiaries as
identified on the signature pages of the Credit Agreement or to a Subsidiary
Guarantee Agreement.

         "Tax Sharing Agreements" means all tax sharing, tax allocation and
other similar agreements entered into by the Borrower and/or any of its
Subsidiaries.

         "Taxes" means any and all present or future taxes, levies, imposts,
duties, deductions, withholdings, fees, assessments or other charges of
whatever nature, together with any and all assessments, penalties, fines,
additions thereto and interest thereon, in each case, now or hereafter imposed
by any governmental jurisdiction or other taxing authority.

         "Term Loan" means an extension of credit pursuant to Section 2.02(b)
of the Agreement.

         "Term Loan Note" shall have the meaning provided in Section 2.02(d) of
the Agreement.

         "Termination Date" means with respect to each Letter of Credit (x) if
no drawing is made thereunder, the final expiration date thereof or such
earlier date on which such Letter of Credit was cancelled and returned to the
respective Issuing Lender or (y) if a drawing or drawings are made thereunder,
the date of payment of the final drawing thereunder as provided by the terms
thereof.

         "Total Loss" means, with respect to a Vessel, (a) an actual or
constructive or compromised or arranged total loss of such Vessel, (b) a
Compulsory Acquisition of such Vessel or (c) a requisition for hire of such
Vessel for a period in excess of 180 days.

         "Total Loss Proceeds" means all compensation, damages and other
payments (including insurance proceeds other than certain liability insurance
proceeds) received by the Agent, on


                                      24


behalf of the Lenders, from any Person, including any governmental authority,
with respect to or in connection with a Total Loss.

          "Trade Letter of Credit" means any irrevocable letter of credit for
the account of the Borrower and for the benefit of the sellers of goods and
services to the Borrower or any of the Subsidiary Guarantors issued by the
Issuing Lender in a form customarily used by such Issuing Lender or in such
other form as has been approved by such Issuing Lender.

         "Tranche" means the respective facility and commitments utilized in
making Loans and issuing Letters of Credit hereunder, with there being two
separate Tranches. "Tranche A" consists of the Revolving Loans and the Letters
of Credit and "Tranche B" consists of the Term Loans.

         "Tranche A Loan" means a Revolving Loan or Letter of Credit.

         "Tranche A Loan Commitment" means, for each Lender, the amount set for
the opposite such lender's name in Schedule I hereto directly below the column
entitled "Tranche A Loan Commitment", as same may be reduced from the time
pursuant to Sections 2.06 and/or 2.07 of the Credit Agreement or adjusted from
time to time as a result of assignments to or from such Lender pursuant to
Section 10.11(a) of the Credit Agreement.

         "Tranche A Reduction Amount" shall have the meaning provided in
Section 2.06(c) of the Credit Agreement.

         "Tranche A Reduction Date" means each of the dates contained in the
table set forth in Section 2.06(a) of the Agreement.

         "Tranche B Loan" means a Term Loan.

         "Tranche B Loan Commitment" means, for each Lender, the amount set for
the opposite such lender's name in Schedule I hereto directly below the column
entitled "Tranche B Loan Commitment", as same may be reduced from the time
pursuant to Sections 2.06 and/or 2.07 of the Credit Agreement or adjusted from
time to time as a result of assignments to or from such Lender pursuant to
Section 10.11(a) of the Credit Agreement.

         "Tranche B Reduction Date" means each of the dates contained in the
table set forth in Section 2.06(b) of the Agreement.

         "Tranche B Reduction Amount" shall have the meaning provided in
Section 2.06(c) of the Credit Agreement.

         "Transaction Document" when used in the singular and "Transaction
Documents" when used in the plural means any and all of the Agreement, the
Notes, the Subsidiary Guarantee Agreements, the Assignments of Earnings and
Insurances, the Hedging Agreements (if any), the Mortgages and the Pledge
Agreements, as the same may from time to time be amended, restated, modified,
supplemented or renewed.


                                      25


         "UCC" means the Uniform Commercial Code as from time to time in effect
the State of New York, or if the Uniform Commercial Code in any other State of
the United States is mandatorily applicable with respect to any particular
matter, the Uniform Commercial Code as from time to time in effect in such
other State of the United States.

         "Unfunded Current Liability" of any Plan means the amount, if any, by
which the value of the accumulated plan benefits under the Plan determined on a
plan termination basis in accordance with actuarial assumptions at such time
consistent with those prescribed by the PBGC for purposes of Section 4044 of
ERISA, exceeds the fair market value of all plan assets allocable to such
liabilities under Title IV of ERISA (excluding any accrued but unpaid
contributions).

         "United States" and "US" shall each mean the United States of America.

         "Vessel" means any of, and "Vessels" means all of the vessels owned by
the Subsidiary Guarantors, other than the vessels owned by the Lightship Tanker
Entities and the Seabulk Nebraska, the Seabulk St. Francis and the Seabulk
America, that are or will be security for the Obligations.

         "Wholly-Owned Subsidiary" means, as to any Person, (i) any
corporation, 100% of whose capital stock (other than directors' qualifying
shares) is at the time owned by such Person and/or one or more Wholly-Owned
Subsidiaries of such Person and (ii) any limited liability company,
partnership, association, joint venture or other entity in which such Person
and/or one or more Wholly-Owned Subsidiaries of such Person has a 100% equity
interest at such time.

                                       26

EX-99.6

                                                                    Exhibit 99.6


                           SEABULK INTERNATIONAL, INC.
                      (formerly HVIDE MARINE INCORPORATED)

                             NOTICE OF REDEMPTION OF
                 12 1/2% SENIOR SECURED NOTES DUE 2007, SERIES B

To the Holders of Outstanding 121/2% Senior Secured Notes Due 2007, Series B
of Seabulk International, Inc. (CUSIP: 81169PAA9):

         Seabulk International, Inc., a Delaware corporation (formerly known as
Hvide Marine Incorporated) (the "Company"), is hereby giving notice of
redemption of all of its outstanding 12 1/2% Senior Secured Notes Due 2007,
Series B ("Notes") issued under an Indenture dated December 15, 1999 among the
Company, certain guarantors, State Street Bank and Trust Company, as Trustee,
and Bankers Trust Company, as Collateral Agent (as such Indenture has been
modified, amended or supplemented to date, the "Indenture").

         The Notes will be redeemed as follows:

         1.       The redemption date is October 15, 2002.

         2.       The redemption price, calculated in accordance with the
                  Indenture, is 102.934% of the principal amount of Notes. The
                  redemption price was determined using a weighted average
                  (based on outstanding principal) of two redemption prices
                  determined in accordance with the Indenture: (i) a redemption
                  price of 102.727% of the principal amount applicable to the
                  outstanding originally issued $95,000,000.00 principal amount
                  of Notes (the "Original Notes"), and (ii) a redemption price
                  of 111.000% of the principal amount applicable to the
                  outstanding $2,441,673.00 principal amount of additional
                  outstanding Notes issued as additional "pay-in-kind" interest
                  pursuant to Section 4.21 of the Indenture ("Additional
                  Notes"). The redemption price for the Original Notes set forth
                  in the Indenture is 111% of accreted value. The Original Notes
                  were issued at a discount to par. Using an accretion rate set
                  forth in the Indenture of 14.72% per annum (on a constant
                  yield to maturity basis), the accreted value of the Original
                  Notes as of October 15, 2002 is 92.546497% of the principal
                  amount of Notes. The Additional Notes were issued under the
                  Indenture at par value. The Original Notes and the Additional
                  Notes are held under a common CUSIP number.

         3.       The scheduled interest payment on the Notes due on September
                  30, 2002 will be paid on such date and will include any
                  additional interest payable under Section 4.21 of the
                  Indenture (one quarter of 1%) payable in cash in lieu of the
                  issuance of any additional "pay-in-kind" Notes.

         4.       In addition to the scheduled interest to be paid on September
                  30, 2002, accrued and unpaid interest of $5.25 per $1,000
                  principal amount of Notes will be paid in





                  connection with the redemption on the redemption date. This
                  includes additional interest payable under Section 4.21 of the
                  Indenture.

         5.       The redemption price of and accrued interest on the Notes
                  become due and payable on October 15, 2002 and, from and after
                  October 15, 2002, interest on such Notes shall cease to accrue
                  and be payable. As of the date of this Notice, the Company has
                  irrevocably deposited with the Trustee funds in an amount
                  sufficient to pay and discharge the Notes (including interest
                  payable to October 15, 2002). Pursuant to Section 8.1 of the
                  Indenture, the obligations of the Company and the Guarantors
                  under the Notes have been satisfied and discharged. Pursuant
                  to Article III and Section 8.1 of the Indenture, the Holders
                  shall only be entitled to receive the redemption price on the
                  redemption date upon proper presentation of the Notes to the
                  Trustee.

         6.       Holders of such Notes will receive payment of the redemption
                  price and accrued interest to which they are entitled upon
                  presentation and surrender thereof at the principal offices of
                  State Street Bank and Trust Company, at the following
                  addresses:

                  If by mail: P. O. Box 778, Boston, Massachusetts, 02102-0778;

                  If by overnight mail and hand deliveries: Corporate Trust
                  Window, Fifth Floor, 2 Avenue de Lafayette, Boston,
                  Massachusetts, 02111-1724.

                  HOLDERS PLANNING TO PRESENT NOTES DIRECTLY TO THE PAYING AGENT
                  FOR REDEMPTION SHOULD BE PREPARED TO CERTIFY (UNDER PENALTIES
                  OF PERJURY) THEIR TAXPAYER IDENTIFICATION NUMBER (EMPLOYER
                  IDENTIFICATION NUMBER OR SOCIAL SECURITY NUMBER, AS
                  APPROPRIATE) AT THAT TIME, OR PRIOR THERETO. UNDER FEDERAL TAX
                  LAW, IN THE ABSENCE OF SUCH CERTIFICATION, THE PAYING AGENT
                  MAY BE REQUIRED TO WITHHOLD 30% OF THE REDEMPTION PROCEEDS.
                  YOU MUST FURNISH A PROPERLY COMPLETED IRS FORM W-9 WHEN
                  PRESENTING YOUR NOTES.

         7.       The CUSIP number listed above is included solely for the
                  convenience of the Holders. The Trustee shall not be
                  responsible for the selection or use of the CUSIP number, nor
                  is any representation made as to the correctness of the CUSIP
                  number on the securities or as indicated in this redemption
                  notice.



                                       SEABULK INTERNATIONAL, INC.

                                       BY: STATE STREET BANK AND TRUST
                                       COMPANY, as Trustee


Dated: September 13, 2002