EXHIBIT 10.2
Exh. 10.2 CREDIT AGREEMENT
----------------
THIS CREDIT AGREEMENT (the "Agreement") is made as of October
17, 1997, by and among MARITRANS TANKERS INC., a Delaware corporation with chief
executive offices at Xxxx Xxxxxxx Xxxx, Xxxxxxxxxxxx, XX 00000 ("Borrower"),
MARITRANS INC., a Delaware corporation with chief executive offices at Xxx Xxxxx
Xxxxxx, 00xx Xxxxx, Xxxxxxxxxxxx, XX 00000 ("Guarantor"), and MELLON BANK, N.A.,
a national banking association with offices at Mellon Bank Center, 0000 Xxxxxx
Xxxxxx, Xxxxxxxxxxxx, XX 00000 ("Bank").
RECITALS:
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WHEREAS, the Borrower and the Guarantor have requested that
Bank provide to the Borrower a revolving credit facility in the initial
aggregate principal amount of up to Thirty-Three Million and 00/100 Dollars
($33,000,000) (hereinafter referred to as the "Loan") pursuant to the terms,
conditions and provisions hereinafter stated; and
WHEREAS, this Agreement is entered into in order to effect
the desires of the Borrower, Guarantor and Bank, and the lending of such sum
is subject to the terms, conditions, covenants, warranties and representations
mentioned or set forth in this Agreement and the documents taken pursuant to
this Agreement;
NOW, THEREFORE, for and in consideration of the mutual
covenants and agreements herein contained, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, and
each party hereto intending to be legally bound hereby, it is hereby agreed by
and among the parties hereto as follows:
ARTICLE I
Definition of Terms
-------------------
Section 1.1 Certain Definitions. As used in this Agreement,
the following terms shall have the
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respective meanings indicated below:
"1991 Financing" means any extensions of credit made or to be
made by Bank to Maritank Philadelphia Inc. or Guarantor or any of their
affiliates under or in connection with that certain Loan and Security Agreement
dated as of June 27, 1991 among Bank, Guarantor, Maritank Inc. and others, as
amended from time to time
"Advance" means an advance by Bank of all or any portion of
the Loan proceeds, including both initial advances and subsequent advances made
before or after one or more repayments.
"Affiliate" of any Person means any Person which directly or
indirectly, controls, is controlled by or is under common control with, such
Person.
"Agreement" means this Credit Agreement, as the same may be
amended or supplemented from time to time.
"Authorized Financial Officer" means the Chairman of the Board
of Directors, President, chief financial officer, Treasurer, Assistant Treasurer
or Controller, from time to time, of the Borrower or Guarantor as the case may
be. Bank shall have no duty to verify the identity of any person giving
telephonic notice or instructions who represents himself or herself to be an
Authorized Financial Officer, or to examine for genuineness any signature
purporting to be the signature of an Authorized Financial Officer.
"Bank's Counsel" means Stradley, Ronon, Xxxxxxx & Xxxxx, LLP,
Philadelphia, Pennsylvania.
"Borrowing" means the borrowing hereunder consisting of the
Loan made to the Borrower by the Bank under this Agreement and the Note.
"Business Day" means a day other than a Saturday, Sunday, or
legal holiday or a day on which banking institutions doing business in the City
of Philadelphia or the Bank is authorized or required to close.
"Cash" shall mean unrestricted cash and cash equivalents.
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"CERCLA" shall have the meaning set forth in Section 5.20.
"Charter" means, as to each Vessel, that certain Bareboat
Charter between Borrower and Partners which is being entered into
contemporaneously with Borrower's acquisition of the Vessel, and "Charters"
means all of them.
"Charterer" shall mean Partners and its successors and assigns
under any of the Charters.
"Chevron Agreement" means that certain Memorandum of Agreement
dated October 10, 1997 between/among Maritrans Tankers Inc. and Chevron Shipping
Company relating to the purchase of either or both of the Vessels CHEVRON OREGON
and CHEVRON LOUISIANA.
"Closing" shall mean the First Closing or the Second Closing,
as the case may be.
"Closing Date" shall mean the First Closing Date or the Second
Closing Date, as the case may be.
"CMLTD" shall mean an amount equal to the installments of
principal payable in respect of all Funded Indebtedness during the Four-Quarter
Period beginning immediately after the relevant Measuring Date (excluding
balloon payments which may come due under this Agreement or with respect to the
1991 Financing).
"COFR" means one or more Certificates of Financial
Responsibility for each Vessel which are issued by the United States Coast Guard
and required to be carried aboard the Vessel.
"Collateral" collectively means (i) the collateral covered by
each Vessel Mortgage, or intended to be, and (ii) all other collateral security
which may at any time secure the Obligations.
"Consolidated" means, with reference to any item, such item of
the Guarantor or Borrower, as applicable, or, if the Guarantor or Borrower, as
applicable, shall have any Subsidiary or Subsidiaries which are consolidated for
financial reporting purposes on the date or for the period as or with respect to
which a determination is made, of the Guarantor or Borrower, as applicable and
such Subsidiary or Subsidiaries, on a Consolidated basis.
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"Contractual Obligations" means all indebtedness for borrowed
money, all liabilities for the deferred payment of the purchase price of
property, and all other obligations and liabilities for the payment of money
which are not cancelable by the appropriate Person on notice of ninety (90) days
or less without liability for further payment other than nominal penalty,
including, but not limited to, obligations evidenced by promissory notes,
chattel paper, leases, or other contractual obligations, and included within
such liability or obligation for the payment of money and unpaid balance or the
maximum aggregate potential obligations thereon.
"Controlled Group Member" means any entity which is a member
of a group of separate entities which, in conjunction with Borrower or
Guarantor, either alone or in conjunction with one or more other entities, is,
or has been, treated as a single employer under Section 414(b), (c), (m) or (o)
of the Code.
"Corresponding Source of Funds" shall mean the proceeds of
hypothetical issuances by the Bank of one or more sales by the Bank of funds at
the LIBOR Rate at the beginning of the Euro-Rate Interest Period for such
Portion, in each case having maturities approximately equal to such Euro-Rate
Interest Period and in an aggregate amount approximately equal to such Portion.
"Coverage Ratio" shall mean, for the Borrower or Guarantor as
the case may be (the "Measured Entity"), as of the Measuring Date in question:
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I. IN THE CASE OF GUARANTOR
------------------------
The quotient obtained by dividing EBITDA of Guarantor on a
Consolidated basis by the sum of the following:
(a) Guarantor's Prior Period Interest (on a Consolidated basis),
plus
(b) CMLTD of Guarantor (on a Consolidated basis)
-- which may also be expressed by the following formula:
Coverage Ratio = EBITDA
-----------------------------
Prior Period Interest + CMLTD
II. IN THE CASE OF BORROWER
-----------------------
The quotient obtained by dividing Borrower's EBITDA by Borrower's Prior
Period Interest
-- which may also be expressed by the following formula:
Coverage Ratio = EBITDA
----------------------------
Prior Period Interest
"Current Date" means a date not more than five (5) calendar
days prior to the Closing Date.
"Debt" means (i) all indebtedness for the repayment of money
borrowed whether or not represented by bonds, debentures, notes or other
securities, (ii) all deferred indebtedness for the payment of the purchase price
of property, services or assets purchased (except for accounts payable incurred
in the ordinary course of business and having an original due date not more than
180 days from the date the account payable was created), (iii) all indebtedness
under any lease which, under GAAP, is required to be capitalized for balance
sheet purposes, (iv) all guarantees, endorsements, assumptions or other
contingent obligations, in respect of, or to purchase or otherwise
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acquire, indebtedness of others, specifically including, but not limited to, any
and all guarantees, endorsements, assumptions or other contingent obligations,
(v) all indebtedness secured by any Lien existing on property owned, subject to
such Lien, whether or not the indebtedness secured thereby shall have been
assumed by the owner thereof, and (vi) all reimbursement obligations under or in
respect to letters of credit, but only to the extent of amounts actually drawn
under one or more letters of credit; provided, however, that indebtedness,
liability or an obligation of a character included within the meaning of more
than one of the foregoing classifications shall not be included under more than
one of such classifications.
"Debtor Relief Laws" means applicable liquidation,
conservatorship, bankruptcy, insolvency, rearrangement, moratorium,
reorganization, or similar debtor relief laws affecting the rights of creditors
generally from time to time in effect.
"Default" means the occurrence of any event which with the
giving of notice or lapse of time, or both, would become an Event of Default.
"Default Rate" means a rate of interest at a per annum rate
equal to the Prime Rate plus two percent (2.00%) per annum.
"Documentation Center" means the National Vessel Documentation
Center of the U.S. Coast Guard, or any office designated by the U.S. Coast Guard
for recording of preferred ship mortgages such as any of the Vessel Mortgages.
"Dollars" or the numismatic symbol "$" means lawful money of
the United States of America.
"EBITDA" for any period means Consolidated earnings for such
period, before interest, taxes, depreciation and amortization.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended, and any successor statute of similar import, and regulations
thereunder, in each case as in effect from time to time. References to
sections of ERISA shall be construed to also refer to any successor sections.
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"Euro-Rate" shall mean, with respect to each proposed
Euro-Rate Interest Period, the rate per annum determined by the Bank by
dividing
(1) the LIBOR Rate by
(2) a number equal to 1.00 minus the Euro-Rate Reserve
Percentage (as defined below, but only to the extent reserves are incurred).
The "Euro-Rate" may also be expressed by the following
formula:
Euro-Rate = [ LIBOR Rate ]
-------------------------------------
[1.00 - Euro-Rate Reserve Percentage]
"Euro-Rate Business Day" shall mean a day which is both a
Business Day and a day for dealings in deposits in Dollars by and among banks in
the London interbank market.
"Euro-Rate Interest Period" shall mean a period of 1, 2, 3, or
6 months; provided, however, that (i) each Euro-Rate Interest Period shall begin
on a Euro-Rate Business Day, (ii) no Euro-Rate Interest Period shall extend
beyond October 17, 2000, (iii) any Euro-Rate Interest Period that would
otherwise end on a day that is not a Euro-Rate Business Day shall be extended to
the next succeeding Euro-Rate Business Day unless such Euro-Rate Business Day
falls in another calendar month in which case such Euro-Rate Interest Period
shall end on the next preceding Euro-Rate Business Day, and (iv) any Euro-Rate
Interest Period that begins on the last day of a calendar month or on a day for
which there is no numerically corresponding day in a subsequent calendar month
during which such Euro-Rate Interest Period is to end shall, subject to clause
(iii) above, end on the last day of such subsequent calendar month.
"Euro-Rate Option" means the sum of (1) a fixed rate per annum
equal to the Euro-Rate determined two Euro-Rate Business Days prior to the first
day of a Euro-Rate Interest Period and (2) any applicable Margin.
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"Euro-Rate Reserve Percentage" means, for any day, the maximum
effective percentage (expressed as a decimal and rounded upward to the nearest
1/100th of 1%), as determined in good faith by the Bank (which determination
shall be conclusive), which is in effect as of such day as prescribed in
Regulation D of the Board of Governors of the Federal Reserve System (or any
successor) for determining the maximum reserve requirements (including, without
limitation, supplemental, marginal and emergency reserve requirements, but only
to the extent that such reserves are actually required to be and are, in fact,
maintained by the Bank on such day) applicable to the Bank in respect of
Eurocurrency Liabilities (as defined in such Regulation D).
"Event of Default" has the meaning provided in Article VII
hereof.
"First Closing" means the exchange of the various documents
and instruments by the parties hereto on the First Closing Date which are
required to be exchanged on the First Closing Date to consummate the First Loan
and related transactions in accordance with this Agreement.
"First Closing Date" means the date on which each of the
conditions to the making of advances by the Bank on account of the First Loan
shall have first occurred, or such other date as may be agreed upon and
designated as such by Borrower and Bank in writing.
"Four-Quarter Period" shall mean any period consisting of four
consecutive fiscal quarters of the Measured Entity, even if such fiscal quarters
pre-date the date of this Agreement. For the purpose of this definition, each
fiscal quarter shall be included in four separate Four-Quarter Periods. For
example, the fiscal quarter ended March 31, 1998 shall be included in each of
the Four-Quarter Periods ended or ending (A) Xxxxx 00, 0000, (X) June 30, 1998,
(C) September 30, 1998, and (D) December 31, 1998.
"Funded Debt/EBITDA Ratio" shall mean, for the Guarantor, as
of a date (the "Measuring Date") which is the end of each Four-Quarter Period,
the quotient obtained by dividing (1) the total Funded Indebtedness of the
Guarantor on a Consolidated basis as of such Measuring Date by (2) Guarantor's
EBITDA for the Four-Quarter Period ending on the Measuring date.
"Funded Indebtedness" of a person at any time shall mean all
Indebtedness (including the current portion thereof) of such person which would
at such time be classified in whole or part as a long-term liability of
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such person in accordance with GAAP and shall also and in any event include (i)
any Indebtedness having a final maturity more than one year from the date of
creation of such Indebtedness and (ii) any Indebtedness, regardless of its term,
which is renewable or extendable by such person (pursuant to the terms thereof
or pursuant to a revolving credit or similar agreement or otherwise) to a date
more than one year from such date or more than one year from the date of
creation of such Indebtedness.
"FWPCA" shall have the meaning set forth in Section 5.20.
-----
"GAAP" means:
----
(a) Generally accepted accounting principles in the United
States of America (as such principles may change from time to time) applied on a
consistent basis from year to year (except for changes in application in which
the Borrower's independent certified public accountants concur), applied both to
classification of items and amounts. The statements, principles, policies and
requirements of the Financial Accounting Standards Board and, to the extent
consistent therewith, of the Securities and Exchange Commission, in effect at
any time in question, shall presumptively be deemed to reflect generally
accepted accounting principles at such time.
(b) If any change in GAAP (as reflected in the statements,
principles, policies and requirements of the Financial Accounting Standards
Board, as opposed to a change in Borrower's or its accountants' or auditor's
application or interpretation of GAAP) (hereinafter, a "Change in GAAP") after
the date of this Agreement shall be required to be applied to transactions then
or thereafter in existence, and a violation of one or more provisions of this
Agreement shall have occurred or in the opinion of the Borrower would likely
occur which would not have occurred or be likely to have occurred if no Change
in GAAP had taken place:
(i) The parties agree that such violation shall not be
considered to constitute an Event of Default for a period of 30 days from the
date the Borrower notifies the Bank of the application of this subsection (b);
(ii) The parties agree in such event to negotiate in good
faith an amendment of this
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Agreement which shall approximate to the extent possible the economic effect of
the original financial covenants after taking into account such Change in GAAP;
and
(iii) If the parties are unable to negotiate such an
amendment within 30 days, the Borrower shall have the option of (A) prepaying
the Loan (pursuant to applicable provisions hereof) or (B) submitting the
drafting of such an amendment to a firm of independent certified public
accountants of nationally recognized standing acceptable to the parties, which
shall complete its draft of such amendment within 90 days of submission; if the
Borrower and the Bank cannot agree upon the firm, it shall be selected by
binding arbitration in Philadelphia, Pennsylvania in accordance with the rules
then obtaining of the American Arbitration Association. If the Borrower does not
exercise either such option within said period, then as used in this Agreement,
"GAAP" shall mean generally accepted accounting principles in effect at the date
of the relevant financial statements. The parties agree that if the Borrower
elects the option in clause (B) above, until such firm has been selected and
completes drafting such amendment, no such violation shall constitute an Event
of Default.
(c) If any Change in GAAP after the date of this Agreement
shall be required to be applied to transactions or conditions then or thereafter
in existence, and the Bank shall assert that the effect of such Change in GAAP
is or shall likely be to distort materially the effect of any of the definitions
of financial terms in Article I hereof or any of the covenants of the Borrower
or Guarantor in Section 6.1(j) hereof (the "Financial Provisions"), so that the
intended economic effect of any of the Financial Provisions will not in fact be
accomplished:
(i) The Bank shall notify the Borrower of such assertion,
specifying the Change in GAAP which is objected to, and until otherwise
determined as provided below, the specified Change in GAAP shall not be made by
the Borrower in its financial statements for the purpose of applying the
Financial Provisions; and
(ii) The parties shall follow the procedures set forth in
paragraph (ii) and the first sentence of paragraph (iii) of subsection (b) of
this definition. If the parties are unable to agree on an amendment as provided
in said paragraph (ii) and if the Borrower does not exercise either option set
forth in the first sentence of said paragraph (iii) within the specified period,
then as used in this Agreement "GAAP" shall mean generally accepted accounting
principles in effect at the date of the relevant financial statements, except
that the
37
specified Change in GAAP which is objected to by the Bank shall not be made in
applying the Financial Provisions. The parties agree that if the Borrower elects
the option in clause (B) of the first sentence of said paragraph (iii), until
such independent firm has been selected and completes drafting such amendment,
the specified Change in GAAP shall not be made in applying the Financial
Provisions.
(d) All expenses of compliance with this definition shall be
paid for by the Borrower.
"Guaranty" means the guaranty agreements of even date herewith
evidencing the guarantee of the obligations by the Guarantor.
"Hazardous Substance" shall have the meaning set forth in
Section 5.20.
"Hazardous Waste" shall have the meaning set forth in
Section 5.20.
"Hull Insurance" shall have the meaning assigned thereto in
Section 6.4(a)(1) of this Agreement.
"Indebtedness" of a person shall mean all indebtedness or
liability for or on account of borrowed money.
"Initial Loan" means the initial $33,000,000 revolving credit
facility to be extended to the Borrower by the Bank and evidenced by the Initial
Note, as more fully provided in Section 2.1 hereof, subject to, and in
accordance with, the terms and conditions of this Agreement.
"Initial Note" means that certain $33,000,000 Note of the
Borrower to Bank which is to be executed and delivered by the Borrower to Bank
on the Closing Date to evidence the sums advanced by Bank to the Borrower
pursuant to the Initial Loan under this Agreement, and any and all renewals,
extensions or rearrangements thereof or modifications thereto or substitutions
therefor.
"Interest Period" shall mean an Euro-Rate Interest Period.
"Interest Rate Option" means the Euro-Rate Option or the Prime
Rate Option, and "Interest Rate
38
Options" includes both of them.
"Interest Rate Selection Notice" shall mean a written
notice as provided in Section 2.4(b) substantially in the form of Exhibit B
attached hereto and made part hereof, appropriately filled in and signed by the
Borrower.
"Laws" means all statutes, laws, ordinances, regulations,
orders, writs, injunctions, or decrees of the United States, any state, any
foreign country, or any Tribunal.
"LIBOR Rate" means, for any Euro-Rate Interest Period, the
rate per annum at which deposits in Dollars are offered to lending banks in the
London interbank market at approximately 11:00 o'clock a.m. (London time) two
Euro-Rate Business Days prior to the first day of a proposed Euro-Rate Interest
Period in an amount approximately equal to the amount of the proposed Euro-Rate
Portion of the Loan corresponding to such proposed Euro-Rate Interest Period for
a number of days substantially equal to the number of days in such Interest
Period.
"Lien" means, with respect to any property or asset, any
mortgage, charter, lease or assignment thereof, any lien, claim, charge or other
encumbrance of any kind thereon, or any security interest therein.
"Litigation" means any proceeding, claim, lawsuit and/or
investigation conducted or threatened by or before any Tribunal, including, but
not limited to, proceedings, claims, lawsuits, and/or investigations under or
pursuant to any occupational safety and health, antitrust, unfair competition,
securities, tax, or other laws, or under or pursuant to any contract, agreement,
or other instrument.
"Loan" means the Initial Loan and, if made, the Second Loan,
individually and collectively.
"Loan Documents" means this Agreement and all Exhibits and
Schedules attached hereto which are incorporated in this Agreement the same as
if stated verbatim herein, and all documents executed in connection with or
pursuant to or contemplated by this Agreement, whether executed prior to,
contemporaneously with, or subsequent to the execution hereof, including,
without limitation, the Note, the Vessel Mortgage for each Vessel as it is
acquired by Borrower and all other documents, agreements, and other instruments
contemplated hereby,
39
executed pursuant hereto, or in connection herewith.
"Loan Rate" means the rate of interest applicable to the Loan
from time to time, as determined pursuant to Section 2.4 of this Agreement.
"Location" means, for Borrower and Guarantor, respectively,
the location of their respective chief executive offices first set forth above
and each other location referred to in Section 5.22 of this Agreement and
identified on Schedule 5.22.
"Long Term Debt" means any Debt which by its terms is due one
(1) year, or longer, from any date of determination thereof.
"Margin" and "Margins" shall be determined as provided in
Section 2.5 hereof.
"Marine Insurance" shall mean any and all policies of
contracts of insurance or indemnification cover as the Bank may reasonably
require from time to time (including, but not limited to, hull and machinery,
protection and indemnity and war risks) pertaining to any one or more of the
Vessels.
"Material Adverse Effect" means any effect which would be
material and adverse to the financial condition, assets, properties, business or
operations of any Person, or which would impair the ability of such Person to
perform its obligations under the Loan Documents to which it is a party.
"Material Agreement" means any material contract, agreement,
or other instrument to which the Borrower or the Guarantor is a party or which
may be applicable to the Borrower, the Guarantor, or any of their property.
"Maturity Date" means October 17, 2000.
"Maximum Rate" means a rate of interest per annum from day to
day equal to the maximum (if any) non-usurious rate permitted by applicable law
for this transaction, as applicable from day to day during the term of this
Agreement.
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"Measured Entity" means Borrower or Guarantor, as the case
may be.
"Measuring Date" for any Measured Entity (A) as to compliance
with the Tangible Net Worth Requirement has the respective meaning provided in
Section 6.2(j)(I)(i) and 6.2(j)(II)(i), and (B) as to compliance with the
Coverage Ratio and Funded Debt/EBITDA Ratio means each date which is the end of
a fiscal quarter of the Measured Entity.
"Multiemployer Plan" means any employee benefit plan which is
a "multiemployer plan" within the meaning of Section 4001(a)(3) of ERISA and to
which any Controlled Group Member has or had an obligation to contribute.
"New Amount" has the meaning specified in Section 6.4(f)(5).
"Note" means the Initial Note; provided, however, if the
Second Note is executed and delivered to and accepted by the Bank, "Note" shall
also mean and include the Second Note.
"Obligations" means all present and future obligations,
liabilities and indebtedness, and all renewals and extensions thereof, or any
part thereof, of the Borrower to Bank arising pursuant to the Loan Documents and
all interest accruing thereon and reasonable attorney's fees incurred in the
enforcement or collection thereof, regardless of whether such obligations,
liabilities and indebtedness are direct or indirect, primary or secondary,
fixed, contingent, liquidated, unliquidated, joint, several, or joint and
several, including, but not limited to, the indebtedness and obligations
evidenced by the Note, and by any and all other Loan Documents.
"Oil" shall have the meaning set forth in Section 5.20.
"OPA" shall have the meaning set forth in Section 5.20.
"Operating Agreement" means, as to all of the Vessels
collectively as they are acquired by Borrower, that certain Operating Agreement
dated as of October 14, 1997 between Partners and Operator relating to the
operation of the Vessels.
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"Operator" means Mormac Marine Enterprises, Inc., and its
successors and assigns under the Operating Agreement.
"Ordinary Maritime Liens" shall mean (but only so long as, and
to the extent that, such are discharged in the ordinary course of business) (A)
liens for crew's wages and salvage (including contract salvage) not exceeding an
amount customary in the ordinary course of business and limited to the current
voyage or which shall be contested by the Borrower in good faith with adequate
reserve or provision therefor; (B) liens for crew's wages, salvage (including
contract salvage) and general average which are either unclaimed or covered by
insurance; and (C) liens incident to current operations (except for crew's
wages, salvage and general average), limited to the current voyage, liens for
the wages of a stevedore limited to the current voyage when employed directly by
the Borrower or the operator, master or agent of a Vessel or liens covered by
insurance.
"Partners" means Maritrans Operating Partners L.P., a Delaware
limited partnership.
"PBGC" means the Pension Benefit Guaranty Corporation
established under Title IV of ERISA or any other governmental agency, department
or instrumentality succeeding to the functions of said corporation.
"Permitted Liens" means any one or more of the following:
(i) Liens for taxes or assessments either not yet delinquent
or the validity of which are being contested in good faith by
appropriate proceedings diligently prosecuted and as to which adequate
reserves shall have been set aside in conformity with GAAP;
(ii) Deposits or pledges to secure the payment of workers'
compensation, unemployment insurance or other social security benefits
or obligations, or to secure the performance of bids, trade contracts,
leases, public or statutory obligations, surety or appeal bonds and
other obligations of a like nature incurred in the ordinary course of
business;
(iii) materialmen's, mechanics', worker's, repairmen's,
employees, or other like liens arising in the ordinary course of
business to secure obligations not yet delinquent or being contested in
good faith and as to which adequate reserves shall have been set aside
in conformity with GAAP or as to which adequate bonds
42
shall have been obtained;
(iv) Purchase money liens, purchase money security interests,
or title retention arrangements upon or in any property acquired or
held by such Person in the ordinary course of business to secure
purchase money indebtedness incurred solely for the purpose of
financing the acquisition of such property, or renewals or extensions
thereof, in an aggregate amount of not more than $100,000;
(v) Liens granted to Bank hereunder; or
(vi) Ordinary Maritime Liens.
"Person" means and includes all natural persons, corporations
(which shall be deemed to include business trusts), associations, companies,
partnerships, joint ventures, associations, or other entities.
"Plan" means any "employee benefit plan" as such term is
defined in Section 3(3) of ERISA.
"Portion" means, at any time, any portion of the outstanding
balance of the Loan (including, if applicable, the entire outstanding balance
of the Loan) to which a distinct Euro-Rate Interest Period applies at the time
in question, provided that each Portion shall be in the principal amount of
$100,000 or any greater amount.
"Potential Default" means any event or condition which, solely
with the giving of notice by Lender, solely with passage of time, or both, would
constitute an Event of Default.
"Prime Rate" means that variable reference or index rate of
interest maintained by Bank from time to time for loans such as the Loan and
known as Bank's "prime rate". Borrower acknowledges that the Prime Rate may
not be the lowest rate or index applicable to any loan, borrower or class of
loans or borrowers.
"Prime Rate Interest Period" shall mean any period that does
not extend beyond the Maturity Date.
"Prime Rate Option" shall mean that fluctuating rate per annum
equal to the Prime Rate and
43
changing automatically from time to time effective as of the effective date of
each change in the Prime Rate.
"Prime Rate Portion" shall mean any portion, including the
whole, of the Loan bearing interest at any time under the Prime Rate Option.
"Principal Balance" means with respect to the Note the
outstanding principal balance thereof as of the date of any determination
thereof.
"Prior Period Interest" means interest accrued or accruing
on the Measured Entity's obligations on a Consolidated basis during the
Four-Quarter Period ending on the relevant Measuring Date.
"Purchase Agreement" means, individually, the Sun Agreement
or the Chevron Agreement, as the case may be, and "Purchase Agreements" means
both of them.
"Quarterly Compliance Certificate" shall mean the certificate
of each Measured Entity to be delivered quarterly as provided in Section
6.1(a)(iii) of this Agreement in substantially the form of EXHIBIT A attached
hereto and made part hereof.
"RCRA" shall have the meaning set forth in Section 5.20.
"Reportable Event" means (i) a reportable event described in
Section 4043 of ERISA and regulations thereunder unless not required to be
reported under applicable regulations, (ii) a withdrawal by a substantial
employer from a Plan to which more than one employer contributes, as referred to
in Section 4063(b) of ERISA, or (iii) a cessation of operations at a facility
causing more than twenty percent (20%) of Plan participants to be separated from
employment, as referred to in Section 4062(e) of ERISA.
"Rights" means with respect to any Person, the rights,
remedies (equitable or legal), claims, causes of action, powers, and privileges
granted to such Person pursuant to any or all of this Agreement, the Note, the
other Loan Documents or any other document, instrument or other agreement
heretofore, now, or hereafter executed in connection therewith, whether granted
or arising pursuant to the express provisions of any of the foregoing, or at
law, or in equity, by constitution, statute, case or otherwise.
44
"XXXX Title III" shall have the meaning set forth in
Section 5.20.
"Second Closing" means the exchange of the various documents
and instruments by the parties hereto on the Second Closing Date which are
required to be exchanged on the Second Closing Date to consummate the Second
Loan and related transactions in accordance with this Agreement.
"Second Closing Date" means the date on which each of the
conditions to the making of advances by the Bank on account of the Second Loan
shall have first occurred, or such other date as may be agreed upon and
designated as such by Borrower and Bank in writing.
"Second Loan" means the additional $17,000,000 revolving
credit facility to be extended to the Borrower by the Bank and evidenced by the
Second Note, as more fully provided in Section 2.1 hereof, subject to, and in
accordance with, the terms and conditions of this Agreement.
"Second Note" means, when and if executed and delivered to the
Bank and accepted by the Bank, a note of Borrower in an original principal
amount of up to $17,000,000, which may be executed and delivered by the Borrower
to Bank as more fully provided in Section 2.2 of this Agreement, to evidence
additional sums which may be advanced by Bank to the Borrower, subject to the
terms of this Agreement, on and after the Second Closing Date, and any and all
renewals, extensions or rearrangements thereof or modifications thereto or
substitutions therefor.
"Security Interest" means a mortgage, deed of trust, pledge,
security interest, encumbrance, or lien, or other Rights in any assets or
properties of any Person, or any part thereof, created in favor of any other
Person as secured party, whether by assignment and transfer of, the granting of
a lien, security interest, mortgage, or deed of trust upon, or possession of,
such assets and properties, or any part thereof, to secure payment and
performance of any Debt.
"Seller" means Sun Shipping Co., in the case of the Sun
Vessels, and Chevron Shipping Co., in the case of the Chevron Vessels.
"Subsidiaries" means any and all corporations, partnerships or
joint ventures as to which more than
45
fifty percent (50%) of the equity or voting control is owned or controlled
directly or indirectly by the Borrower or by or through one or more of its
Subsidiaries (or by the Guarantor, if applicable).
"Subsidiary" when used in connection with any entity shall
mean any other entity which is wholly owned by such entity.
"Sun Agreement" means, collectively, those two (2) certain
Memoranda of Agreement, each dated July 25, 1997 between/among Maritrans Tankers
Inc. and New York Sun Shipping Company, Inc. relating to the purchase of the Sun
Vessels.
"Tangible Net Worth" shall mean the Consolidated stockholders'
equity of the Person and its Consolidated Subsidiaries, determined and
consolidated in accordance with GAAP, except that there shall be deducted from
such Consolidated stockholders' equity on a Consolidated basis all treasury
stock and all intangible assets of the Person and its Consolidated Subsidiaries,
including but not limited to goodwill, organization costs, patents, copyrights,
trademarks, trade names, franchises, licenses, research and development
expenses, unamortized debt discount and expense, and deferred charges.
"Tangible Net Worth Requirement" means the requirement as to
Tangible Net Worth, for Borrower as set forth in Section 6.2(j)(I)(i) of this
Agreement, and for Guarantor as set forth in Section 6.2(j)(II)(i) of this
Agreement.
"Termination Date" means the maturity date of the Note and/or
the other Obligations, however such maturity is brought about, whether upon
acceleration or otherwise.
"Tribunal" means any state, commonwealth, federal, foreign,
territorial, or other court or governmental department, commission, board,
bureau, agency, or instrumentality, or any arbitrator.
"UCC" means the Uniform Commercial Code as adopted and amended
by the Commonwealth of Pennsylvania.
"Vessel" means, individually, CHEVRON OREGON (to be renamed)
(Official No. 586080),
46
CHEVRON LOUISIANA (to be renamed) (Official No. to be identified) (collectively,
the "Chevron Vessels"), PERSEVERANCE (formerly, PHILADELPHIA SUN) (Official No.
638073) or ALLEGIANCE (formerly, NEW YORK SUN (Official No. 628783)
(collectively, the "Sun Vessels"), as the case may be, and "Vessels" means any
or all of them collectively.
"Vessel Mortgage" means the preferred ship mortgage to be
granted to Bank by Borrower on each Vessel as it is acquired by Borrower, to be
filed of public record with the United States Coast Guard, and "Vessel
Mortgages" means any more than one of them.
"Yield Maintenance Premium" shall mean with respect to a
prepayment or repayment of the Loan in whole or part, an amount equal to:
(i) the total amount of interest which the Borrower would have
paid for the balance of such Interest Period in respect of the
Euro-Rate Portion of the Loan prepaid or repaid if such Portion had not
been prepaid or repaid prior to the end of such Interest Period
reduced, if the Bank is able to relend or reinvest the amount prepaid
or repaid for the balance of such Interest Period, by the net amount of
interest (after deducting expenses, commissions and the like) which
will be paid to the Bank as a result of so relending or reinvesting
such amount; plus
(ii) any penalty imposed on, or expense reasonably incurred
by, the Bank on so relending or reinvesting such amount.
Section 1.2 Accounting Terms and Definitions. Unless otherwise
specified herein, all accounting terms used herein shall be interpreted, all
accounting determinations hereunder shall be made, and all financial statements
of any Person that are required to be delivered hereunder shall be prepared in
accordance with GAAP as in effect from time to time, applied on a basis (except
for changes approved by the independent public accountants of such Person) with
the most recent respective financial statements of such Person delivered to
Bank.
Section 1.3 Miscellaneous.
(a) The words "herein," "hereof," "hereunder" and other words
of similar import refer to this
47
Agreement as a whole and not to a particular section, paragraph or other
subdivision.
(b) The terms defined in Section 1.1 hereof, unless the
context requires otherwise, will have the meaning assigned to them in Section
1.1 hereof, and will include the plural as well as the singular.
(c) All other terms used herein shall have the meanings as
otherwise stated herein or as otherwise defined in the UCC.
(d) References to section of the "U.S.C." shall mean such
section of the United States Code, or any successor provision thereto, and any
regulations adopted thereunder, in each case as amended from time to time.
ARTICLE II
The Loan
--------
Section 2.1 Loan.
----
(a) Basic Conditions. Subject to the terms and conditions and
relying upon the representations and warranties herein set forth, and absent the
occurrence of an Event of Default, the Bank agrees to make advances on account
of the Loan to the Borrower, to pay, or replace funds of Borrower applied to
costs of acquiring the Vessels and financing the cost hereunder. Notwithstanding
any other provision of this Agreement: (I) the aggregate principal amount of the
Initial Loan shall not at any time exceed $33,000,000.00; (II) the aggregate
principal amount of the Second Loan shall not at any time exceed $17,000,000.00;
(III) the aggregate principal amount of Bank's own funds which Bank shall be
obligated to advance and have outstanding at any time with respect to the Loan
shall not exceed $33,000,000.00; (IV) the aggregate amount of all Advances which
the Bank shall be obligated to make and which may be outstanding and unpaid from
time to time shall not in any event exceed eighty percent (80%) of the appraised
value of those Vessels acquired by Borrower and which are subject to one or more
duly recorded Vessel Mortgages in favor of the Bank; (V) the aggregate amount of
all Advances which the Bank shall be obligated to make and which may be
outstanding and unpaid from time to time shall not in any event exceed the
aggregate dollar amount (deducting the amounts of any
48
deductibles or retentions) of Hull Insurance in force on the Vessels at the time
of reference. In the event that the aggregate principal dollar amount
outstanding and unpaid with respect to the Loan exceeds any of the limitations
set forth in this subsection (a), the Borrower shall repay any excess
immediately to Bank without demand.
(b) Advances on a Revolving Basis. The Initial Loan and Second
Loan shall each be available on a revolving basis, so that, in the event the
Borrower repays all or any Portion of the principal amount of the Loan to the
Bank, the Borrower shall be entitled to reborrow any such repaid principal
amounts from the Bank, subject as described above. Notwithstanding any other
agreement of the parties, Bank shall not be obligated to make an Advance other
than in an amount which (taken together with any other Portions to which the
same Euro-Rate Interest Period applies) is permitted to be selected by the
Borrower as a separate Portion. Notwithstanding any other agreement of the
parties, Bank shall not be obligated to advance, in the aggregate, more than 80%
of the aggregate appraised value of the Vessels as of the respective times of
their acquisition.
(c) Conditions to Additional Advances Relating to Vessels Not
Yet Acquired. Prior to the making of any Advances relating to Vessels which are
acquired by the Borrower after the Initial Closing Date, Bank shall have
received evidence satisfactory to Bank and Bank's Counsel of the due recordation
of the Vessel Mortgage relating to the Vessel in question, together with the
Charter and any opinions, agreements, documents and instruments relating to such
Vessel or its operation which are contemplated to be delivered under this
Agreement.
Section 2.2 Note. The obligation of the Borrower to repay the
Initial Loan and to pay interest thereon and other sums related thereto shall be
evidenced by the Initial Note, to be executed and delivered by the Borrower on
and dated the Closing Date. The obligation of the Borrower to repay the Second
Loan and to pay interest thereon and other sums related thereto shall be
evidenced by the Second Note, to be executed and delivered by the Borrower on
and dated the Second Closing Date.
Section 2.3 Advances.
(a) For those Portions of the Loan, if any, which the Borrower
desires to borrow on the Closing Date, the Borrower shall provide to the Bank on
the Closing Date the information required in subsection (b) of this Section 2.3.
On the Closing Date, provided the conditions to such Advance shall have been
fulfilled
49
by 4:30 p.m. prevailing Philadelphia time, the Bank shall make such Advance
available to the Borrower on the Closing Date at the Bank's Office in funds
immediately available at such Office, by depositing all or part of such proceeds
in the Borrower's account maintained at the Bank's Office, or by wiring all or
part of such proceeds to Seller's or a title company's account pursuant to
Borrower's instructions.
(b) Whenever the Borrower desires that the Bank make an
Advance on account of the Loan after the Closing Date, the Borrower shall
provide to the Bank, not later than the time required under Section 2.4(b), a
written notice setting forth the following information:
(i) The date, which shall be a Business Day, on which the
proposed Advance is to be made;
(ii) The total principal amount of such Advance;
(iii) As to each Portion to be advanced, an Interest Rate
Selection Notice.
If the foregoing notice requirements shall have been satisfied, the Bank shall
make the proceeds of such Advance available to the Borrower at the Bank's
Office, no later than 2:00 o'clock p.m., Philadelphia time, in funds immediately
available at such Office, by depositing such proceeds in the Borrower's account
maintained at the Bank's Office.
Section 2.4 Interest Rates.
--------------
(a) The Loan shall bear interest at the rate or rates selected
by the Borrower from time to time from among the Interest Rate Options in the
manner provided in subsection (b) of this Section 2.4. The Borrower may select
different Interest Rate Options to apply simultaneously to different Portions of
the Loan or any advance; provided, however, that (1) each separate Euro-Rate
Portion to which such selection relates shall be in the principal amount of
$100,000 or any greater amount and (2) if the Borrower fails to select an
Interest Rate Option for any part of the Loan for any period, the Borrower shall
be deemed to have selected the Prime Rate Option for such part and period.
50
(b) The Borrower shall give the Bank an Interest Rate
Selection Notice no later than 12:00 o'clock noon (prevailing Philadelphia time)
on:
(i) the third Euro-Rate Business Day preceding the first
day of any proposed Euro-Rate Interest Period;
(ii) the first day of any Prime Rate Interest Period; and
stating (x) the Interest Rate Option or Options selected, (y) the principal
amount of each separate Portion of the Loan to which such selection relates, and
(z) the proposed Interest Period or Periods, if applicable.
(c) Subject to compliance with subsection (b) of this Section
2.4, the Borrower may:
(i) select a Euro Rate Option for any Prime Rate Portion
of the Loan to be effective at any time designated by the Borrower; and
(ii) select the Prime Rate Option for any Euro-Rate
Portion of the Loan to be effective as of the end of the Interest
Period for such Portion.
(d) After the principal amount of any Portion of the Loan
shall have become due (by acceleration or otherwise), the unpaid principal
amount of such Portion of the Loan shall thereafter bear interest, payable upon
demand, for each day until paid (before and after judgment) at a variable rate
per annum which shall be: (I) for Euro-Rate Portions, 1.00% per annum (100 basis
points) in excess of the Interest Rate Option which would otherwise be
applicable for the balance of the then current Interest Period, and (II) at all
relevant times for Prime Rate Portions, and at all times after the expiration of
the then current Euro-Rate Interest Period, 1.50% per annum (150 basis points)
above the Prime Rate.
Section 2.5 Determination of Margins and Quarterly Compliance
Certificates. The Bank shall determine the Margin from time to time in the
following manner. If, as of the end of any Four-Quarter Period, the Debt/EBITDA
Ratio for the Guarantor, on a consolidated basis, is within a range stated in
the following column (1), the respective percentage rate per annum set forth
opposite such range in column (2) (the "Margin")
51
shall be applicable during the fiscal quarter of Guarantor immediately following
the end of such Four-Quarter Period:
Guarantor Coverage Ratio Margin
------------------------ ------
Greater than 3.50 125 basis points
Equal to or greater than 2.50 and 100 basis points
Equal to or less than 3.49
Equal to or greater than 1.50 and 75 basis points
Equal to or less than 2.49
Less than 1.50 50 basis points
(b) At the Initial Closing (for the Four-Quarter Period ending
June 30, 1997), and thereafter within 45 days after the end of each of their
fiscal quarters commencing with the fiscal quarter-end on September 30, 1997,
the Borrower and Guarantor shall each furnish to the Bank a Quarterly Compliance
Certificate, except that at the Initial Closing Borrower shall only be obligated
to certify its Tangible Net Worth.
Section 2.6 Determination of Euro-Rates and Margin. Upon
identifying any change in the Euro Rate or Margin, the Bank shall determine the
applicable rates and Margin and shall promptly give the Borrower notice thereof.
Such determination by the Bank shall be conclusive in the absence of error.
Section 2.7 Payment of Interest.
-------------------
(a) The Borrower shall pay interest on the Loan from the date
thereof until the Loan has been repaid in full, at the rate or rates determined
in accordance with Section 2.4 hereof and at the times provided in subsections
(b), (c) and (d) of this Section 2.7. For any Portions which are subject to the
Prime Rate Option, the Bank shall notify the Borrower at least five (5) days
prior to any regularly scheduled interest payment date of the amount of interest
which would be payable on such payment date if all applicable interest rates
remained constant from the date of such notice to such payment date.
52
(b) Interest accrued on the Loan and not previously paid
pursuant to subsection (c) of this Section 2.7 shall be paid:
(i) as to any Prime Rate Portion, monthly on the first day
of each calendar month;
(ii) as to any Euro-Rate Portion, on the ninetieth (90th)
day of any Euro-Rate Interest Period of six months (if applicable);
(iii) on the date of payment of the Loan balance in full.
(c) Interest accrued on each Portion of the Loan and not
previously paid pursuant to subsection (b) of this Section 2.7 shall be paid on
the last day of the Interest Period for such Portion.
(d) Borrower shall not be entitled to select the Euro-Rate
Interest Option at any time that a current Quarterly Compliance Certificate has
not been delivered to Bank. If the Euro-Rate Interest Option has been selected
for any Portion at a time when the Borrower fails to deliver to Bank, when
required, a current Quarterly Compliance Certificate enabling Bank to determine
the Margin, if any, to be used in calculating the amount of such interest
payment, Borrower shall thereafter pay interest on all Euro-Rate Portions at the
Prime Rate until such time as Borrower complies with the obligation to deliver a
Quarterly Compliance Certificate. If, upon Borrower's delivery of any Quarterly
Compliance Certificates which had not been timely delivered when due, Bank
determines that Borrower should have paid interest under the terms of this
Agreement for any Portion for any period at a higher rate than the rate at which
Borrower actually paid interest on such Portion during such period, Borrower
shall reimburse Bank upon demand for any shortfall. However, in such
circumstances, in the event it is determined that Borrower should have paid
interest on any Portion during any such period at a rate lower than the rate at
which Borrower actually paid interest on such Portion during such period, Bank
shall not be obligated to reimburse Borrower any excess.
Section 2.8 Prepayment of the Loan.
----------------------
(a) Subject to compliance with this Section 2.8 and Section
2.9 hereof, the Borrower may prepay any Prime Rate Portion at any time in whole
or in part, and may prepay any Euro-Rate Portion in whole
53
or in part on the last day of the applicable Euro-Rate Interest Period;
provided, however, that any such prepayment other than a prepayment in full
shall be in the principal amount of $100,000 or any greater amount that is an
integral multiple of $100,000.
(b) If the Borrower gives notice, as provided in Section 2.9
hereof, of its intention to make a prepayment pursuant to subsection (a) of this
Section, the Portion or Portions of the Loan specified in such notice, together
with the unpaid interest accrued thereon to the date of such prepayment and
premium, if any, shall become due and payable on the prepayment date specified
in such notice.
Section 2.9 Payment of the Loan.
-------------------
(a) The Loan outstanding from time to time (including without
limitation the Initial Loan and the Second Loan) shall be payable as provided in
the Note or this Section 2.9. All sums other than principal or interest which
may become owing to Bank shall be payable as provided herein or in the Note or
other Loan Documents, as applicable, but otherwise upon demand by Bank.
(b) The Borrower shall repay the full, unpaid balance of
principal, accrued interest and other sums and charges with respect to the Loan
on the Maturity Date.
(c) Each prepayment made pursuant to subsection (a) of Section
2.8 and each principal repayment made pursuant to this Section 2.9 shall be
applied on account of the Portion or Portions of the Loan designated by the
Borrower in the manner provided in subsection (d) of this Section 2.9; provided,
however, that (1) no amount other than $100,000 or an integral multiple thereof
may be applied on account of any separate Portion of the Loan and (2) if the
Borrower fails to designate the manner in which any repayment or prepayment is
to be applied, it shall be applied in any manner selected by the Bank.
(d) The Borrower shall notify the Bank in writing of each
prepayment that the Borrower proposes to make pursuant to subsection (a) of
Section 2.8 hereof and the manner in which any such prepayment or any principal
repayment to be made pursuant to this Section 2.9 is to be applied no later than
12:00 o'clock noon local time in Philadelphia on the third Euro-Rate Business
Day preceding the date on which the prepayment or repayment is to be made.
54
(e) If any prepayment pursuant to subsection (a) of Section
2.8 hereof or any repayment of principal pursuant to this Section 2.9 is to be
applied on a day other than the last day of the Interest Period therefor, the
Borrower shall pay the Bank as a premium upon demand an amount equal to the
Yield Maintenance Premium. The Bank shall notify the Borrower of the amount of
any Yield Maintenance Premium which notice shall set forth in reasonable detail
the nature and the calculation of such Yield Maintenance Premium and shall be
final and conclusive as to the matters set forth therein absent error.
(f) Whenever any payment to be made hereunder shall be stated
to be due on a day which is not a Business Day, such payment may be made on the
next succeeding Business Day, but such extension of time shall not be included
in the computation of interest payable on such next succeeding Business Day
hereunder.
Section 2.10 Euro-Rate Unascertainable, Euro-Rate
Impracticable, and Euro-Rate Interest Period Unavailable.
(a) If, on any date on which a Euro-Rate Interest Period would
otherwise begin, the Bank shall have determined (which determination shall be
final and conclusive if made in good faith) that, by reason of circumstances
affecting the London interbank market for Dollar deposits, adequate and
reasonable means do not exist for ascertaining such Euro-Rate, then the Bank
shall forthwith so notify the Borrower thereof. Until the Bank notifies the
Borrower that the circumstances giving rise to such notice no longer apply, the
Bank's obligation to allow the selection of the Euro-Rate Option by the Borrower
shall be suspended.
(b) If, at any time, the Bank shall have determined (which
determination shall be final and conclusive if made in good faith) that the
application of the Euro Rate or the continuation of any Euro-Rate Portion of the
Loan has been made impracticable or unlawful:
(i) by the occurrence of a contingency which materially
and adversely affects the London interbank market for Dollar deposits;
or
(ii) because compliance by the Bank in good faith with any
applicable law, treaty, or governmental regulation, guideline or order
or change therein or interpretation or administration thereof by any
governmental authority charged with the interpretation or
administration thereof or with any
55
request or directive of such governmental authority (whether or not
having the force of law) has become impracticable or unlawful,
then, and in any such event, the Bank shall forthwith so notify the Borrower
thereof. An alternate interest rate based on Bank's cost of funds selected by
Bank shall apply until the Bank notifies the Borrower that the circumstances
giving rise to such notice no longer apply.
(c) Upon such date as shall be specified in a notice given
pursuant to subsection (a) or (b) of this Section 2.10 (which shall not be
earlier than the date such notice is given), the Borrower shall pay to the Bank
the accrued and unpaid interest on the Euro-Rate Portions of the Loan to (but
not including) such specified date, but the Borrower shall not be obligated to
pay a Yield Maintenance Premium as a result of such payment.
(d) If, on any date on which a Euro-Rate Interest Period would
otherwise begin, the Bank shall have determined (which determination shall be
final and conclusive if made in good faith) that the selection of such Interest
Period by the Borrower has been made impracticable by the occurrence of a
contingency which materially and adversely affects the London interbank market
for Dollar deposits, the Bank shall forthwith so notify the Borrower thereof and
the Borrower's selection of such Interest Period shall be deemed to be of no
force and effect. Upon receipt of any such notice, the Borrower may select a
different Euro-Rate Interest Period in accordance with Section 2.4 hereof.
Section 2.11 Fees. The Borrower agrees to pay to the Bank, as
consideration for the Loan commitment hereunder, such commitment, structuring,
agent's and other fees as may be provided in Bank's commitment (which shall
survive each Closing with respect to matters relating to the Bank's fees and
expenses) or any other subsequent written agreement between the parties.
Section 2.12 Additional Compensation.
-----------------------
(a) Compensation for Taxes, Reserves and Expenses on
Outstanding Loans. If, by virtue of any change in any Law or guideline or
interpretation or application thereof, any Official Body charged with the
interpretation or administration thereof or compliance with any request or
directive of any central bank or other Official Body (whether or not having the
force of law):
56
(i) subjects the Bank to any tax, or changes the basis of
taxation, with respect to this Agreement, any Note, any Vessel
Mortgage, any other Loan Document, the Loan or payments by the Borrower
of principal, interest, commitment fee or other amounts due from the
Borrower hereunder or under the Note (except for taxes on or measured
based on the overall net income of the Bank imposed by the federal,
state and local jurisdictions in which the Bank's principal executive
office or lending office is located),
(ii) imposes, modifies or deems applicable any reserve,
special deposit or similar requirement against assets held by, credit
extended by, deposits with or for the account of, or other acquisition
of funds by, the Bank, or
(iii) imposes upon the Bank any other condition or expense
with respect to this Agreement, either Note, any Vessel Mortgage or any
other Loan Document, or its making, maintenance or funding of any part
of the Loans,
and the result of any of the foregoing is to increase the cost to, reduce the
income receivable by, or impose any expense upon the Bank with respect to this
Agreement, the Notes, the Vessel Mortgages, any other Loan Document, or the
making, maintenance or funding of any part of the Loan by an amount which the
Bank deems to be material (the Bank being deemed for this purpose to have made,
maintained or funded each Portion of the Loan from a Corresponding Source of
Funds), the Bank shall from time to time notify the Borrower, in reasonable
detail, of the amount determined in good faith (using any averaging and
attribution methods employed in good faith) by the Bank (which determination
shall be conclusive, absent manifest error) to be necessary to compensate the
Bank for any increased cost actually incurred due to such increase in cost,
reduction in income or additional expense (net of any possible tax savings
directly attributable thereto). Such amount shall be due and payable by the
Borrower to the Bank ten (10) Business Days after such notice is received.
(b) Indemnity. In addition to the compensation required by
subsection (a) hereof, the Borrower shall indemnify the Bank against all claims,
liability, loss, cost and expense (including loss of margin) which the Bank
sustains or incurs as a consequence of any:
57
(i) payment, prepayment or conversion of any part of any
Portion of the Loan on a day other than the last day of the
corresponding Euro-Rate Interest Period or a day on or after the
Maturity Date or other date of maturity of any Portion of the Loan
(whether or not such payment, prepayment or conversion is mandatory or
automatic and whether or not such payment or prepayment is then due),
(ii) attempt by the Borrower to revoke (expressly, by
later inconsistent notices or otherwise) in whole or part any notice
stated herein to be irrevocable (the Bank having in its sole discretion
the options (A) to give effect to such attempted revocation and obtain
indemnity under this Section 2.14(b) or (B) to treat such attempted
revocation as having no force or effect, as if never made),
(iii) default by the Borrower in the performance or
observation of any covenant or condition contained in this Agreement or
any Note, any Vessel Mortgage or any other of the Loan Documents,
including without limitation any failure of the Borrower to pay when
due (by acceleration or otherwise) any principal, interest, commitment
fee or any other amount due hereunder or under either Note, and
(iv) the ownership, chartering, operation, damage or
destruction of each of the Vessels and any damages, injuries, losses,
liabilities, expenses or claims which any Vessel causes to the third
persons or to other property.
If the Bank sustains or incurs any such loss or expense it shall from time to
time notify the Borrower, in reasonable detail, of the amount determined in good
faith by the Bank (which determination shall be conclusive, absent manifest
error) to be necessary to indemnify the Bank for such loss or expense. Such
amount shall be due and payable by the Borrower to the Bank ten(10) Business
Days after such notice is received.
58
ARTICLE III
Conditions to Loan
------------------
Section 3.1 Conditions Precedent to Initial Loan and Second
Loan. The obligations of Bank to make the Initial Loan and the Second Loan
pursuant hereto is subject to the accuracy, as of the date hereof, of the
representations and warranties herein contained, to the performance by the
Borrower of its obligations to be performed hereunder on or before the date
hereof, and to the compliance by the Borrower with the following further
conditions:
(a) Representations and Warranties. The representations and
warranties contained in Article V hereof shall be true in all material respects
on and as of the respective Closing Date and the respective date of each
Advance, and no Event of Default and no condition, event or act which, with the
giving of notice or the lapse of time or both, could become such an Event of
Default shall have occurred and be continuing or shall exist, and Borrower and
Guarantor shall confirm the same by certificate to Bank.
(b) Note. On the respective Closing Date, the Borrower shall
have executed and delivered to Bank the respective Note for the Initial Loan or
Second Loan, as the case may be.
(c) Vessel Mortgages. On the First Closing Date, the Borrower
shall have executed and delivered to the Bank, in recordable form, the Vessel
Mortgages for each of the two Vessels being acquired under the Sun Agreement,
along with assurances satisfactory to Bank and Bank's Counsel of the proper
recording of the Vessel Mortgage in the Documentation Center and the status of
the Vessel Mortgage, and endorsement by the Documentation Center, as a first
priority "preferred mortgage", as defined in 46 U.S.C. Section 31301(6). Vessel
Mortgages for any Chevron Vessels acquired by Borrower, and the evidence of
recording and endorsement for such Vessel Mortgages, as required under this
Agreement, shall be delivered to Bank prior to Bank's making of any Advance for
either of the Chevron Vessels.
(d) Guaranty. On the First Closing Date, the Guarantor shall
have executed and delivered to the Bank its Guaranty.
(e) Opinions of Counsel. On the Closing Date, and thereafter
prior to any Advance related to a Vessel as to which the required opinions shall
not yet have been delivered, the Borrower and the Guarantor shall have delivered
to Bank favorable opinions of their special financing and maritime counsel,
dated the Closing Date (or on or prior to the date of such Advance, in the case
of later opinions), each in form and substance satisfactory to Bank
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and Bank's Counsel.
(f) Insurance. Evidence satisfactory to the Bank that all
insurance coverage required to be obtained under Section 6.4 hereof has been
obtained and a report of insurance broker or attorney's summary of insurance,
all in form and substance satisfactory to Bank and Bank's counsel, and that such
insurance is in force for each Vessel for which Bank is to make any Advance.
(g) Executed Agreements. Executed counterparts of the Purchase
Agreements, Charters and Operating Agreement and all other agreements,
instruments and documents relating to each Vessel for which Bank is being
requested to make an Advance.
(h) Other Documents. Such other documents, opinions,
certificates and evidence as Bank or Bank's Counsel may reasonably request or as
may be required under Bank's commitment for the Loan, including without
limitation such documentation as the Bank may reasonably request regarding each
Vessel being acquired and any charters, subcharters, operating agreements or
other matters related to each Vessel.
(i) Proceedings. All proceedings to be taken in connection
with the transactions contemplated by this Agreement and all documents incident
thereto shall be satisfactory in form and substance to Bank and Bank's Counsel,
and Bank shall have received copies of all documents which it may reasonably
request in connection with such transactions and all corporate proceedings with
respect thereto in form and substance satisfactory to Bank and Bank's Counsel.
(j) Fees. Borrower shall have paid and reimbursed to Bank, or
adequate provisions shall have been made for, such fees and expenses of Bank as
may be applicable to the Initial Loan or Second Loan (as the case may be) under
Bank's commitments or any other written agreement between the parties.
Section 3.2 Additional Conditions to Second Loan. As a
condition precedent to Bank's obligation to make the Second Loan:
(a) Bank shall have received agreements, in form and substance
satisfactory to Bank and its counsel, binding one or more additional
institutional lenders reasonably satisfactory to Bank and Borrower to fund
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not less than $17,000,000.00 of the Loan on the terms set forth herein and in
the Loan Documents.
(b) Borrower shall have executed and delivered to Bank such
additional agreements, instruments, certificates, opinions and other documents
as Bank may reasonably request to evidence the Second Loan and confirm that any
Liens granted to Bank to secure the Second Loan rank in equal priority to the
Liens securing the First Loan.
(c) Borrower shall have paid and reimbursed to Bank such fees
and expenses of Bank as may be applicable to the Second Loan under Bank's
commitments or any other written agreement between the parties.
ARTICLE IV
The Closing; Funding
--------------------
Section 4.1 Closing. The First Closing shall commence on
October 17, 1997 and shall be completed at or before 5:00 P.M. on October 18,
1997, or at such later dates and times as the parties hereto may mutually agree
(the "Closing Date"), and shall be conducted at the offices of Xxxxxx, Xxxxx &
Xxxxxxx, One Xxxxx Square, Philadelphia, Pennsylvania, or elsewhere as Bank may
reasonably determine. The Second Closing shall be conducted on such dates and at
such time and place as the parties may hereafter agree.
Section 4.2 Funding. Advances pursuant to this Agreement shall
be made in immediately available funds available at the banking offices of Bank
at Mellon Bank Center, Philadelphia, Pennsylvania, upon and after the Closing
Date, as more fully provided in the Note and this Agreement, and as may be
mutually agreed upon by the parties from time to time.
ARTICLE V
Representations and Warranties
------------------------------
The Borrower and the Guarantor jointly and severally represent
and warrant to Bank as follows,
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which representations and warranties shall be deemed reaffirmed as if given anew
on the Second Closing and immediately prior to the making of each Advance by
Bank:
Section 5.1 Organization, Authority, and Qualification. The
Borrower (i) is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware, (ii) has the power and
authority to execute, deliver and perform this Agreement, the Note and the other
Loan Documents to which it is a party, and to borrow hereunder and thereunder,
(iii) is in all respects duly qualified and licensed under all applicable Laws
to own its properties as now owned and to carry on its business as now
conducted, and (iv) is duly qualified as a foreign corporation to do business
and is in good standing in the Commonwealth of Pennsylvania and in every
jurisdiction where the character of its properties or nature of its activities
make such qualification necessary and where the failure to so qualify would have
a Material Adverse Effect on the Borrower, its business or affairs. All (100%)
of the issued and outstanding shares of capital stock in the Borrower is owned
beneficially and of record by Guarantor.
Section 5.2 Organization, Authority, and Qualification of
Guarantor. The Guarantor (i) is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware, (ii) has the power
and authority to execute, deliver and perform this Agreement, its Guaranty and
the other Loan Documents to which it is a party, (iii) is in all respects duly
qualified and licensed under all applicable Laws to own its properties as now
owned and to carry on its business as now conducted, and (iv) is duly qualified
as a foreign corporation to do business -and is in good standing in the
Commonwealth of Pennsylvania and in every jurisdiction where the character of
its properties or nature of its activities make such qualification necessary and
where the failure to so qualify could have a Material Adverse Effect on the
Guarantor. Guarantor owns all (100%) of the issued and outstanding shares in
Borrower.
Section 5.3 Subsidiaries. The Borrower has no Subsidiaries.
Section 5.4 Financial Statements. The Guarantor has delivered
to Bank its audited Consolidated and consolidating financial statements as at
and for the fiscal year ended December 31, 1996 (the "Audited Date"), and its
unaudited financial statements for the three (3) month periods ended March 31,
1997 and June 30, 1997, respectively (collectively, the "Delivered Financial
Statements"). Such financial statements fairly reflect the respective financial
conditions of the Guarantor and the Borrower as at such dates and fairly reflect
the results of the
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Consolidated operations of the Guarantor for the periods then ended, all in
conformity with GAAP consistently applied. Except as disclosed in Schedule 5.4
attached hereto, there has been no material adverse change in the condition,
financial or otherwise, of the Guarantor since the Audited Date. Neither
Borrower nor Guarantor has any material obligations or liabilities which are not
disclosed in the Delivered Financial Statements or in a Schedule attached to
this Agreement except obligations arising in the ordinary course of business
since June 30, 1997. Borrower is solvent on this date in that (i) the fair value
of its assets exceeds the amounts of its liabilities and other obligations, and
(ii) Borrower is capable of paying its debts and obligations as they may become
due.
Section 5.5 Default. Neither the Borrower nor the Guarantor is
in default in any material respect under the provisions of any instrument
evidencing any material obligation, indebtedness, or liability of the Borrower
or of any agreement relating thereto, or under any order, writ, injunction, or
decree of any Tribunal, or in default in any material respect under or in
violation of any order, regulation, or demand of any Tribunal, which default or
violation could have a Material Adverse Effect on the Borrower.
Section 5.6 Authorization and Compliance with Laws and
Material Agreements. The execution, delivery and performance of this Agreement,
the Borrowing, and the execution, delivery and performance of each Note, each
Vessel Mortgage and the other Loan Documents, as applicable, to which the
Borrower or the Guarantor is a party, by the Borrower or the Guarantor have been
duly authorized by all requisite corporate action on the part of the Borrower
and the Guarantor and will not violate the corporate charter of the Borrower or
the Guarantor and will not violate any provision of any Laws or any order of any
Tribunal, and will not conflict with, result in a breach of the provisions of,
constitute a default under, or result in the imposition of any Lien upon the
assets of the Borrower or the Guarantor except as otherwise contemplated by this
Agreement, or any provisions of any indenture, mortgage, deed of trust or
material franchise, permit, license or note, or any other agreement or
instrument to which the Borrower or the Guarantor is now or may in the future be
a party, including, but not limited to, any Material Agreement.
Section 5.7 Litigation and Judgments. Except as disclosed in
the Loan Documents and on Schedule 5.7 attached hereto, there is no action,
suit, or proceeding, at law or in equity, or by or before any Tribunal, pending,
or, to the knowledge of Borrower or the Guarantor, threatened against or
affecting any Vessel or the Borrower or involving the validity or enforceability
of the Loan Documents, which, if adversely determined, could materially
adversely affect the financial condition of the Borrower or the ability of the
Borrower to perform its
63
obligations as contemplated by this Agreement. Except as disclosed in the Loan
Documents and on said Schedule 5.7, there are no outstanding judgments
individually in excess of $100,000.00 (net of any insurance coverage which is
not being contested by the insurer), against the Borrower or the Guarantor or
their respective assets or properties.
Section 5.8 Debt. The Borrower has no Debt except the
Obligations and Debt owed to Guarantor.
Section 5.9 Ownership of Properties; Liens. The Borrower has
good and indefeasible title or valid leasehold interests in all its material
properties and assets, real and personal, including the Vessels which have been
acquired at or prior to each Closing, and all of its Accounts and Equipment, and
none of such property or assets is subject to any Lien, except as permitted
under Section 6.2(c) of this Agreement.
Section 5.10 Use of Proceeds; Margin Securities. Neither the
Borrower nor the Guarantor is engaged principally, or as one of its important
activities, in the business of extending credit for the purpose of purchasing or
carrying margin stock (within the meaning of Regulations G, T, U or X of the
Board of Governors of the Federal Reserve System), and no part of the proceeds
of the Loan under this Agreement will be used to purchase or carry any such
margin stock or to extend credit to others for the purpose of purchasing or
carrying any such margin stock. Neither the Borrower nor any Person acting on
its behalf has taken or will take any action which might cause this Agreement or
the Note to violate any of said Regulations G, T, U, or X, or any other
regulation of the Board of Governors of the Federal Reserve System or to violate
the Securities Exchange Act of 1934, in each case as now in effect or as the
same may hereafter be in effect.
Section 5.11 Taxes. Except as may be set forth on Schedule
5.11 attached hereto, the Borrower has filed or is in the process of filing all
federal and state tax returns or reports required of it, including but not
limited to, income, franchise, employment, and sales taxes, and has paid all tax
liability (other than those such Person is contesting in good faith by
appropriate proceedings being diligently conducted and for which adequate
reserves have been set aside by such Person), to the extent the same has become
due and before it may have become delinquent in accordance with such returns,
and the Borrower knows of no pending investigations of the Borrower by any
taxing authority, nor of any material pending but unassessed tax liability.
Section 5.12 ERISA.
-----
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(a) Relationship of Vested Benefits to Pension Plan Assets.
The present value of all vested benefits under each Plan maintained by Guarantor
or the Borrower that is a "defined benefit plan" as that term is defined in
Section 3(35) of ERISA, as from time to time in effect, does not exceed (on a
termination basis utilizing the same actuarial assumptions contained in the most
recent actuarial report for such Plan) the value of the assets of the Plans
allocable to such vested benefits.
(b) Prohibited Transactions. Neither any of the Plans nor any
trusts created thereunder, nor any trustee or administrator thereof, has engaged
in a "prohibited transaction", as such term is defined in ERISA or Section 4975
of the Code, which could subject the Plans or any of them, any such trust, or
any trustee or administrator thereof, or any party dealing with the Plans or any
such trust to any material tax or penalty on prohibited transactions imposed by
said Section 4975.
(c) Reportable Events. Neither any of the Plans nor any trusts
created thereunder have been terminated, nor have there been any Reportable
Events with respect thereto since the effective date of ERISA that, individually
or in the aggregate, impose any material liability on the Borrower or the
Guarantor.
(d) Accumulated Funding Deficiency. Neither any of the Plans
nor any trusts created thereunder have incurred any "accumulated funding
deficiency", as such term is defined in Section 302 of ERISA (whether or not
waived), since the effective date of ERISA.
(e) Loan Transaction Not a Violation. To the Borrower's
knowledge, the consummation of the transactions described in the Loan Documents
do not involve any "prohibited transaction".
Section 5.13 Consents. No consent of any Person and no
consent, license, approval or authorization of, or registration or declaration
with, any Tribunal is required in connection with the execution, delivery and
performance of this Agreement, the Note, and the other Loan Documents to which
the Borrower or the Guarantor is a party, other than any consent required from
the Bank or any of its corporate Affiliates and such other consents or other
actions that have been obtained as of the date hereof and delivered to the Bank.
Section 5.14 Nature of Obligations. The execution and delivery
of this Agreement, the Note, and the other Loan Documents to which the Borrower
or the Guarantor is a party have been duly authorized by all
65
necessary corporate proceedings on the part of the Borrower and the Guarantor,
have been duly executed and delivered by the Borrower and, where applicable, the
Guarantor, and are valid and binding obligations of the Borrower, and, where
applicable, the Guarantor, and are enforceable in accordance with their
respective terms, except as the enforceability of such terms may be limited by
any Debtor Relief Laws of judicial decisions affecting creditors' rights
generally.
Section 5.15 Securities Laws. The Borrower has not, nor has
any Person acting or purporting to act on behalf of the Borrower directly or
indirectly offered the Note for sale to, or solicited any offer to buy the Note,
or otherwise negotiated in respect thereof with, any Person (except Bank) and
has not done (or omitted to do) any other act, so as to bring the issuance or
sale thereof within the registration requirements of the Securities Act of 1933,
as amended, and the Borrower has complied with or is exempt from the
registration provisions of all state securities or "blue sky" Laws applicable to
the issuance or sale of the Note.
Section 5.16 Disclosure of Other Facts. Except as disclosed on
Schedule 5.16 attached hereto, there is no significant material fact or
condition relating to the financial condition, results of operations, or
business of the Borrower which would have a Material Adverse Effect on the
Borrower which has not been related to Bank in writing.
Section 5.17 Genuineness of Writings. All writings heretofore
exhibited to Bank by the Borrower and the Guarantor which are of a material
consequence are genuine and in all material respects what they purport to be.
Section 5.18 Investment Company Act. Neither the Borrower nor
the Guarantor is an "investment company" or a company "controlled by" an
"investment company" within the meaning of the Investment Borrower Act of 1940,
as amended.
Section 5.19 Compliance with Laws. The Borrower and the
Guarantor each has all necessary operating licenses and is in material
compliance with all Laws.
Section 5.20 Environmental Matters. The Borrower has no
knowledge of any material environmental liabilities applicable to it on its
assets or business, or of any material violations by Borrower of any
66
state or federal statutes, regulations, laws or orders pertaining to
environmental matters, including, without limitation, the federal Oil Pollution
Act of 1990 ("OPA"), 33 U.S.C. ss.2701, et seq., the Federal Water Pollution
Control Act ("FWPCA"), 33 U.S.C. ss.1251 et seq., the federal Comprehensive
Environmental Response, Compensation and Liability Act ("CERCLA") as renewed by
the Superfund Spill Compensation and Reauthorization Act of 1986 ("XXXX TITLE
III"), and the federal Resource Conservation and Recovery Act ("RCRA"). The
Borrower has not received any summons, citation, notice, directive, letter or
other communication, written or oral, from any state or federal agency that has
not been delivered to Bank, concerning any intentional or unintentional action
or omission by the Borrower resulting in any releasing, spilling, leaking,
pumping, pouring, emitting, emptying, dumping or otherwise disposing of
"Hazardous waste" (as defined in 42 U.S.C. Section 6903(5)) or "Hazardous
Substance" (as defined in 42 U.S.C. Section (9609(14)), or any "oil,, (as
defined in OPA) or any petroleum byproducts in violation of OPA or any other
applicable law. No Lien arising under or in connection with OPA, FWPCA, RCRA,
CERCLA or XXXX TITLE III has attached to any Vessel or the Charter or to any
revenues of, or any other real or personal property (including, but not limited
to the Collateral) owned by, the Borrower.
Section 5.21 Representations and Warranties Regarding Each
Vessel.
(a) Liens, Charters, Operating Agreement, Etc. Upon
consummation of each purchase pursuant to a Purchase Agreement, and at the time
of each Advance, the Borrower will be the sole owner of the whole of each
Vessel, and there will not be any Liens, encumbrances, mortgages, security
interests, charter, hire, towage, lightering, hauling or rental agreements, or
any obligations, liabilities or claims affecting any Vessel, except the Charter
and any others listed and described on Schedule 5.21 hereto or as may have been
expressly disclosed in writing to Bank with reference to this Section. There
have not occurred any events which have, do, will or could give rise to any
liens, whether for damages arising out of tort, for wages, for necessaries, for
general average, or for salvage (including contract salvage), or otherwise of a
statutory, maritime or equitable nature, or Ordinary Maritime Liens.
(b) Citizenship and Eligibility for Documentation. The
Borrower and Guarantor are each, and each shall continue to be, a citizen of the
United States of America, as defined and within the meaning of 12 U.S.C. Section
12102, and a corporation established under the laws of the United States or of a
State, whose president or other chief executive officer and chairman of its
board of directors are citizens of the United States and no more of its
directors are noncitizens than a minority of the number necessary to constitute
a quorum, within the meaning of 46 U.S.C. Section 12102; and each Vessel is
eligible for documentation and is a "documented vessel" as such term
67
is used in 46 U.S.C. Section 31322. Any charterer or sub-charterer shall be an
eligible party to charter the Vessel in question under applicable law.
(c) Insurance. Insurance meeting the requirements of Section
6.4 of this Agreement is currently in force for each Vessel in which Borrower
has an interest, Bank is an additional insured and loss payee with respect to
each policy coverage as provided in Section 6.4 of this Agreement, and the
premiums for all such insurance coverage have been prepaid for the current
period.
(d) Certain Environmental Responsibilities. A COFR has been
duly issued by the United States Coast Guard, and a Vessel Response Plan and a
Spill Prevention and Contingency Plan is in force, with respect to each Vessel
in which Borrower has an interest, all in compliance with applicable laws and
regulations.
(e) Certain Regulatory Matters. None of the Vessels was built
with Construction-Differential Subsidy under Title V of the Merchant Marine Act
of 1936 (the "1936 Act"), none of the Vessels was built with government
guarantees under Title XX xx xxx 0000 Xxx, xxxx of the Vessels is a "qualified
agreement vessel" with respect to any Capital Construction Fund ("CCF")
Agreement with MARAD, and no CCF monies have been used to pay for any portion of
any Vessel's cost during construction or at delivery, nor have any withdrawals
of CCF monies been made to pay any indebtedness with respect to any Vessel.
Section 5.22 Locations. The chief executive office of the
Borrower and the Guarantor, all of the Borrower's assets and corporate books and
records, and all books and records relating to any of the Collateral are located
exclusively at their respective addresses first set forth above and at the
additional locations identified in Schedule 5.22 hereto. The home port of each
Vessel is Wilmington Delaware and each Vessel is employed only in U.S. coastwise
trade.
Section 5.23 Interstate Commerce Act. The Borrower, Partners,
each Vessel, and the operation of each Vessel as contemplated in the Charter,
are exempt from regulation under the federal Interstate Commerce Act and the
rules and regulations promulgated thereunder.
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ARTICLE VI
Covenants and Continuing Agreements
-----------------------------------
Section 6.1 Affirmative Covenants. The Borrower and, as
applicable, the Guarantor jointly and severally covenant that during the term of
this Agreement, and so long as any Loan obligations are owed to Bank, it and
they shall each:
(a) Information Reporting Requirements. Comply with each of
the following:
(i) Annual Audit Reports. As soon as practicable, and in
any event within 120 days after the close of each fiscal year of the
Borrower and Guarantor, respectively, each shall furnish to the Bank
fiscal year end balance sheets, statements of income, retained earnings
and cash flow for the Borrower on a separate basis and for Guarantor
and its Consolidated Subsidiaries, in each case on a Consolidated and
consolidating basis, for such fiscal year, and notes to each, all in
reasonable detail, setting forth in comparative form the corresponding
figures for the preceding fiscal year, with the consolidated statements
and balance sheet of Guarantor to be certified as being in conformity
with GAAP by independent certified public accountants of recognized
national standing selected by Guarantor and acceptable to Bank. The
certificate or report of such accountants shall be free of exceptions
or qualifications which Bank shall not have consented to in writing.
(ii) Quarterly Reports. As soon as practicable, and in any
event within 60 days after the close of each of the first three
quarters of each fiscal year of the Borrower and Guarantor, the
Borrower and Guarantor shall furnish to the Bank unaudited Consolidated
and consolidating period-end balance sheets, statements of income,
retained earnings and cash flow for the Borrower and Guarantor and its
Consolidated Subsidiaries, respectively, for such fiscal quarter and
for the period from the beginning of such fiscal year to the end of
such fiscal quarter, setting forth in comparative form the
corresponding figures for the same period or as of the same date during
the preceding respective fiscal quarter, certified by an Authorized
Financial Officer of the respective entity as presenting fairly the
financial position of the Borrower and of Guarantor and its
Consolidated Subsidiaries respectively as of the end of such fiscal
quarter and the results of their operations and
69
cash flow for such fiscal quarter, in conformity with GAAP.
(iii) Quarterly Compliance Certificates. Within 120 days
after the end of each fiscal year and within 60 days after the end of
each of the first three quarters of each fiscal year of the Borrower
and Guarantor, respectively, the Borrower and Guarantor shall each
deliver to the Bank a certificate (the "Quarterly Compliance
Certificate") dated as of the end of such fiscal year or quarter
(signed on its behalf by an Authorized Financial Officer) in the form
attached hereto as EXHIBIT A and made part hereof.
(iv) Accountants' Certificate. Each set of Consolidated
statements and balance sheet delivered by Guarantor pursuant to Section
5.1(a) hereof shall be accompanied by a certificate or report dated the
date of such statements and balance sheet by the accountants who
certified such statements and balance sheet stating in substance that
they have reviewed this Agreement and the Quarterly Compliance
Certificates delivered by the Borrower and Guarantor as of the end of
such fiscal year, and that in making the examination necessary for
their certification of such statements and balance sheet they did not
become aware of any Event of Default or Potential Default or any
inaccuracy in the Quarterly Compliance Certificate delivered by the
Borrower and Guarantor as of the end of such fiscal year, or if they
did become so aware, such certificate or report shall state the nature
and period of existence thereof.
(v) Other Reports and Information. Promptly upon their
becoming available to the Borrower, the Borrower shall deliver to the
Bank a copy of (i) all regular or special reports or effective
registration statements which Guarantor shall file with the Securities
and Exchange Commission (or any successor thereto) or any securities
exchange (other than those in S-8 or any successor form), (ii) all
reports, proxy statements, financial statements and other information
distributed by Guarantor to its shareholders or the financial community
in general, and (iii) any reports submitted to Guarantor by independent
accountants in connection with any annual, interim or special audit.
(vi) Further Information. The Borrower and Guarantor will
promptly furnish to the Bank such other information regarding the
Borrower or Guarantor as the Bank may reasonably request.
70
(vi) Notice of Event of Default. Promptly upon becoming
aware of any Event of Default or Potential Default, the Borrower and
Guarantor shall give the Bank notice thereof, together with a written
statement of an Authorized Financial Officer of the Borrower and
Guarantor setting forth the details thereof and any action with respect
thereto taken or contemplated to be taken by the Borrower or Guarantor
with respect thereto.
(vii) Notice of Material Adverse Change. Promptly upon
becoming aware thereof, Guarantor or the Borrower, as applicable, shall
give the Bank notice about any material adverse change in the business,
operations or financial condition of any of them, individually or all
of them, taken as a whole.
(viii) Notice of Material Proceedings. Promptly upon
becoming aware thereof, the Borrower or Guarantor, as applicable, shall
give the Bank notice of the commencement, existence or written threat
of any proceeding by or before any Official Body against or affecting
it, which, if adversely decided, would have a material adverse effect
on its business, operations or financial condition individually, or of
all of them, taken as a whole, or on its ability to perform its
obligations under the Loan Documents to which it is a party.
(ix) Notice of Other Material Defaults. Promptly upon
becoming aware of any material default under any agreement or
instrument to which the Borrower or Guarantor or any of their
respective properties may be bound, the Borrower or Guarantor, as
applicable, shall give the Bank notice thereof, together with a written
statement of its chief financial officer, setting forth the details
thereof if such agreement or instrument or the consequences of such
default are material to its business, operations or financial condition
individually, or of all of them taken as a whole.
(b) Visitation. Permit such persons as the Bank may designate
to visit and inspect any of their respective properties, to examine and audit
their respective books and records and to discuss their respective affairs with
their respective officers, employees, independent accountants and independent
engineers at such times and as often as the Bank may reasonably request.
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(c) Payment of Taxes. Pay or discharge on or prior to the date
on which penalties attach thereto, all taxes, assessments and other governmental
charges or levies imposed upon it or any of its properties or income (including
such as may arise under Section 4062, Section 4063 or Section 4064 of ERISA, or
any similar provision of law); provided, however, that items of the foregoing
need not be paid while being contested in good faith and by appropriate
proceedings and if adequate reserves have been established with respect thereto
to the extent required by GAAP.
(d) Notice of Tax Lien. Promptly give the Bank notice of the
filing by the United States, or any department, agency or instrumentality
thereof, or by any state, county, municipality or other governmental agency of a
Lien, levy or assessment of any unpaid taxes in the amount of $10,000.00 or more
against the Borrower, or $100,000 or more against the Guarantor.
(e) Businesses and Properties. Maintain its current primary
lines of business, and maintain its assets and properties in good condition and
repair (normal wear and tear excepted), and pay and discharge or cause to be
paid and discharged when due, the costs of repairs to or maintenance of the
same; and notify Bank of any damage or casualties to any of its assets or
properties which shall require repairs costing in excess of $250,000.00 or
result in a reduction in value thereof, after repairs, in excess of $250,000.00,
within ten (10) calendar days of the occurrence thereof, and of the scrapping,
sale or other transfer or disposition of any Collateral not otherwise permitted
hereunder.
(f) Environmental Considerations. Each Vessel shall only be
operated in full compliance with an approved tank vessel response plan under
OPA, any applicable industry standards and any applicable requirements of
insurance coverage. The Borrower and Guarantor shall furnish to Bank,
immediately upon receipt, a copy of any notice, summons, citation, lawsuit,
injunction, claim, directive, letter of other written communication and pass on
any oral communication, from any local, state or federal environmental agency or
department or third party, which may result in a liability under any local,
state or federal law or order.
(g) Qualifications; Licenses; Good Standing. Maintain their
respective corporate existence and good standing and their respective
qualifications or licenses to do business and their good standing in all
jurisdictions in which the Laws thereof require the company and Guarantor, as
applicable, to be so qualified or licensed, and the Borrower and Guarantor shall
qualify or obtain licenses to do business in any additional jurisdictions in
which the
72
Laws thereof require the Borrower or Guarantor to so qualify or be licensed in
the future.
(h) Post-Closing Matters. At and after Closing, immediately
upon request of Bank or any of its attorneys or agents, execute, deliver and
file of record all such amendments, corrections and substitutions for the Notes,
Vessel Mortgages, security agreements, financing statements or other Loan
Documents, as Bank or its attorneys or agents may reasonably request to evidence
and perfect the Security Interests, Vessel Mortgages and Rights intended to be
given Bank in connection herewith and to give Bank Vessel Mortgages which meet
the requirements for a first priority, perfected, preferred ship mortgage under
applicable law.
(i) Places of Business; Location of Collateral and
Records; Change of Name. Notify Bank in writing thirty (30) days in
advance of (i) each change in the location of its Chief Executive
Office, (ii) each change in any Location, (iii) any Location coming
into existence hereafter, and (iv) any event involving a change in
Borrower's or Guarantor's name; in each case providing Bank with (as
applicable) Borrower's or Guarantor's full new legal name and, as
filed, copies of corporate filings evidencing any name change, the full
street mailing address of each new Location, and complete copies, on
request, of all deeds, mortgages, leases, license, occupancy, storage,
bailment or warehousing agreements, or the like, affecting Borrower's
and any third persons' rights respecting any Collateral or books or
records relating thereto.
(j) Notice of Pension-Related Events. If a Potential Default
or an Event of Default shall have occurred and be continuing, then promptly
after the Borrower, Guarantor, any Controlled Group Member, or any administrator
of a Plan:
(i) receives the notification referred to in subsections
(i), (iv), or (vii) of Section 7.1(g) hereof,
(ii) has knowledge of (A) the occurrence of a Reportable
Event with respect to a Plan; (B) any event which has occurred or any
action which has been taken to amend or terminate a Plan as referred to
in subsections (ii) and (vi) of Section 7.1(g) hereof; (C) any event
which has occurred or any action which has been taken which could
result in complete withdrawal, partial withdrawal, or secondary
liability for withdrawal liability payments with respect to a
Multiemployer Plan as referred to in subsection (vii) of Section 8.1(g)
hereof; or (D) any action which has been taken in furtherance of, any
73
agreement which has been entered into for, or any petition which has
been filed with a United States district court for, the appointment
of a trustee for a Plan as referred to in subsection (iii) of Section
7.1(g) hereof, or
(iii) files a notice of intent to terminate a Plan with
the PBGC; or files with the Internal Revenue Service a request pursuant
to Section 412(d) of the Code for a variance from the minimum funding
standard for a Plan; or files a return with the Internal Revenue
Service with respect to the tax imposed under Section 4971(a) of the
Code for failure to meet the minimum funding standards established
under Section 412 of the Code for a Plan,
furnish to the Bank a copy of any such notice received, request or petition
filed, or agreement entered into; the most recent Annual Report (Form 5500
Series) and attachments thereto for the Plan; the most recent actuarial report
for the Plan; any notice, return, or materials required to be filed with the
Internal Revenue Service in connection with the event, action, or filing; and a
written statement of the chief financial officer of the Borrower describing the
event or the action taken and the reasons therefor.
(k) Information Regarding Environmental Matters. Provide or
cause the Charterer or Operator to provide Bank the following:
(i) Immediately upon receipt, with complete copies of all
notices from any local, federal or state prosecutorial or enforcement
agency or environmental or occupational safety regulatory agency
("Environmental Regulator") notifying or alleging, that there exists or
may exist a violation or potential violation, with respect to any
Vessel, of any local, federal or state law, now or hereafter in force,
regulating the handling labeling, custody, storing, transportation,
discharge, disposal, release, treatment, processing or other
disposition of Oil, petroleum byproducts, Hazardous Waste or other
Hazardous Substances, chemicals, or similar substances now or hereafter
subject to environmental or occupational safety regulation; and
(ii) Upon Bank's request from time to time, with complete
copies of (i) any or all documents required to be filed or in fact
filed, by Borrower with any Environmental Regulator, including but not
limited to a vessel response plan and a spill prevention and
contingency plan (ii) any or all
74
material safety data sheets or other documents or data which applicable
law or any Environmental Regulator now or hereafter requires Borrower
to prepare, compile or maintain, and (iii) any and all documents and
other information which applicable law or any Environmental Regulator
require to be made available to employees, contractors, transferees,
the local community, local government agencies or the public; (iv) any
reports of Borrower's employees, consultants, advisors, engineers or
others relating to Borrower's compliance with applicable environmental
or occupational safety laws, or to the status or manner of disposal,
discharge or release of any petroleum product or hazardous substance.
(l) Compliance with Laws. The Borrower and Guarantor shall
each comply in all material respects with all Laws (including but not limited to
ERISA, the Code, and any applicable tax Law, product safety Law, right-to-know,
occupational safety or health Law, environmental protection or pollution control
Law, hazardous waste or toxic substance management, handling or disposal Law)
applicable to it, except to the extent that the failure to so comply would not
have a material adverse effect on its business, operations or financial
condition.
(m) Government Authorizations, etc. The Borrower shall obtain
and maintain in force any and all authorizations, consents, approvals, licenses,
exemptions and other actions by, and all registrations, qualifications,
designations, declarations and other filings with, any Official Body necessary
or required in connection with execution and delivery of this Agreement and each
of the other Loan Documents, and the consummation of the transactions herein or
therein contemplated.
(n) Regulation U. The Borrower shall not use the proceeds of
the Loan directly or indirectly to purchase or carry any "margin stock" (within
the meaning of Regulation U of the Board of Governors of the Federal Reserve
System) or to extend credit to others for the purpose of purchasing or carrying,
directly or indirectly, any such margin stock.
Section 6.2 Negative Covenants. The Borrower and, as
applicable, the Guarantor, jointly and severally covenant that during the term
of this Agreement, and so long as any Loan obligations are owed to Bank, neither
of them shall:
(a) No Sales or Mergers. Merge or consolidate with any Person,
or sell substantially all of its
75
assets to, or purchase substantially all of the assets of, any other Person;
provided, however, that the foregoing prohibition shall not preclude
acquisitions by Borrower or Guarantor of entities or assets in the same line of
business as Borrower or Guarantor, respectively. Furthermore, there shall be no
change in the voting control of the Borrower. Guarantor shall not sell,
transfer, pledge, hypothecate or otherwise dispose of, whether by operation of
law or otherwise, any of the capital stock in the Borrower.
(b) Contingent Liabilities Benefiting Third Parties. Neither
Guarantor nor Borrower shall, nor shall either of them permit their respective
Subsidiaries to, guarantee or otherwise, in any way, become liable with respect
to the Debt of any other Person except (i) its Affiliates' obligations to Bank
or any other lender to the extent otherwise permitted under this Agreement, (ii)
by endorsement in the ordinary course of business of instruments or items of
payment for deposit to the general account of the Borrower or Guarantor or for
delivery to Bank on account of the obligations, and (iii) obligations to refund
deposits held for third parties in the ordinary course of business. Bank shall
be entitled to review, but shall not unreasonably withhold its consent to, the
terms of any proposed guaranty, but in no event shall Bank be obligated to
consent to, and neither Borrower nor Guarantor shall enter into, any guaranty
which adversely affects any Collateral or Bank's interest therein.
(c) Prohibited Liens. Except for Permitted Liens, (i) cause or
permit or (ii) agree or consent to cause or permit in the future (upon the
happening of a contingency or otherwise), Collateral to be subject to a third
party interest or Lien.
(d) Location of Books and Records. Remove the Borrower's or
Guarantor's books and records from the locations set forth on Schedule 5.22
hereto, unless (i) the Person intending to do so gives Bank written notice
thereof and of the new location of said books and records and/or the Collateral
at least thirty (30) calendar days prior thereto and (ii) the other office or
location is within the continental United States of America.
(e) Sale of Collateral. Sell, assign, transfer or permit the
sale, assignment or transfer of any Collateral, whether by operation of law or
otherwise.
(f) Change of Address. Relocate the Borrower's or Guarantor's
chief executive office from the address set forth at the beginning of this
Agreement, unless (i) such Person intending to do so gives Bank at least thirty
(30) days written notice prior thereto and (ii) the other office is located
within the continental United States of America.
76
(g) Interstate Commerce Act. Carry or permit to be carried on
any Vessel any cargo or take or omit to take, or permit to be taken or omitted,
any action if the carrying of such cargo or other commission or omission would
cause the Borrower, the Vessel, Charterer or the operation of the Vessel
pursuant to the Charters to be subject to regulation under the federal
Interstate Commerce Act or the rules and regulations promulgated thereunder.
(h) No Subsidiaries or Ownership. Without the prior written
consent of the Bank, the Borrower shall not establish, maintain, or own,
directly or indirectly, legally, beneficially or otherwise, or be shareholder
of, any other corporation, partnership, association, business trust or other
entity.
(i) No Other Activities. Without the prior written consent of
the Bank, the Borrower shall not engage, directly or indirectly, in any
activities other than the ownership and operation of each Vessel and the
chartering thereof under the Charter.
(j) Financial Maintenance Covenants.
-------------------------------
(i) Covenants Pertaining to Borrower.
--------------------------------
(a) Tangible Net Worth. Tangible Net Worth of the
Borrower shall at no time be less than (I) $2,000,000 or (II)
20% of the aggregate bona fide purchase price of the Vessels
which have been acquired, whichever is greater, measured at
the time of each Advance and at the end of each fiscal quarter
thereafter (any time of reference is referred to herein for
this purposes as a "Measuring Date".
(b) Indebtedness. The Borrower will not at any time
incur any Indebtedness other than that represented by the Loan
and any Indebtedness to Guarantor.
(c) Coverage Ratio. Borrower's Coverage Ratio,
measured at December 31, 1997 and at the end of each
subsequent fiscal quarter of Borrower, shall never be less
than 1.25.
77
(ii) Covenants Pertaining to Guarantor.
---------------------------------
(a) Coverage Ratio. Guarantor's Coverage Ratio,
measured at the end of each fiscal quarter of Guarantor, shall
never be less than 1.75.
(b) Tangible Net Worth. Tangible Net Worth of
Guarantor shall not be less than $79,000,000.00 on the date of
the First Closing. At the end of each fiscal quarter (any time
of reference is referred to herein for this purpose as a
"Measuring Date", the Tangible Net Worth of Guarantor shall
not be less than an amount equal to the sum of (A)
$79,000,000.00 plus (B) the sum of the Net Income Increments.
For purposes of this Agreement, a "Net Income Increment" shall
be calculated for each fiscal year of Guarantor commencing
with the fiscal year ending December 31, 1998 and for each
fiscal year shall be an amount (but not less than zero) equal
to fifty percent (50%) of Guarantor's Consolidated Net Income
for such fiscal year. For example, if Guarantor's Consolidated
Net Income for the fiscal year ending December 31, 1998 were
$1,000,000 the Net Income Increment attributable to that
fiscal year would be $500,000; and if its Consolidated Net
Income for the fiscal year ending December 31, 1999 were a
loss of $50,000, the Net Income Increment attributable to that
fiscal year would be zero; and in this example the minimum
required Tangible Net Worth for Guarantor would be $79,500,000
for each Measuring Date beginning on December 31, 1998,
through the Measuring Date on September 30, 2000.
(c) Funded Debt/EBITDA Ratio. Guarantor's Debt/EBITDA
Ratio, measured at the end of each fiscal quarter of
Guarantor, shall never be greater than the following: (A) 3.75
at December 31, 1997 and thereafter through December 30, 1998;
(B) 3.25 at December 31, 1998 and thereafter through December
30, 1999; and (C) 2.75 at December 31, 1999 and thereafter.
(d) Additional Debt. Guarantor shall not incur any
Debt except such as (i) is consistent with Guarantor's
compliance with the covenants of this Agreement and (ii) has
an average maturity beyond the Maturity Date.
Section 6.3 Payment of Liens. Except for Permitted Liens and
Liens (X) being contested in good
78
faith and (Y) for which, if Bank has so requested, the Borrower has established
and is maintaining reserves satisfactory to the Bank, if the Borrower, at any
time or times hereafter, shall fail (i) to pay and satisfy Liens when due or
(ii) obtain the release or discharge of any Lien, claim or encumbrance asserted
against the Collateral within thirty (30) calendar days of the entry thereof,
then Bank may, without waiving or releasing any obligation or liability of the
Borrower or any Event of Default, in its sole discretion, at any time or times
thereafter, make such payment, or any part thereof, or obtain such release or
discharge and take any other action with respect thereto which Bank deems
advisable. All sums so paid by Bank and any expenses shall be payable, upon
demand, by the Borrower to Bank and shall be additional obligations hereunder
secured by the Collateral.
Section 6.4 Insurance.
---------
(a) The Borrower shall provide and maintain the following
insurance on or with respect to each Vessel and the operation thereof:
(i) Subject to the provisions of the following sentence,
marine navigating risk, hull and machinery insurance and war risk
insurance (collectively, "Hull Insurance"), together with, at
Borrower's option, such amounts of increased value and total loss only
insurance as are permitted by such hull and machinery insurance
policies. While any Vessel is idle or laid up, at the option of
Borrower and in lieu of any of the insurance referred to in the
preceding sentence, port risk hull and machinery insurance may be taken
out on the Vessel by Borrower. Until the Obligations are fully-paid and
performed, the foregoing insurance (including such increased value and
total loss only insurance) shall be in amounts aggregating at all times
not less than the greater of the Principal Balance or the Vessels' full
commercial value. In any event, the amount of Hull Insurance need not
be greater than the amount of coverage underwriters will write.
(ii) Marine protection and indemnity insurance and, at
Borrower's option, excess protection and indemnity insurance and marine
multi-liability insurance and, where appropriate or necessary, war risk
insurance. In no event will the amount of protection and indemnity
coverage be less than coverage customarily provided to members of
Borrower's P&I club.
(iii) Insurance against liability under law or
international convention arising out of pollution, spillage or leakage.
Until the obligations are fully paid and performed, the foregoing
insurance shall
79
be against such risks and in such form as are, and the amount of such
insurance shall be not less than such amounts as are, in the opinion
of the insurance broker expressed in its most recent report delivered
in accordance with, but subject to, the provisions of Section 6.4(f),
necessary or advisable for the protection of the interests of the
Borrower, Charterer and Bank.
(b) Additional Insurance. Borrower shall provide and maintain
insurance to the extent obtainable on or with respect to the Vessels and the
operation thereof, in addition to the insurance as set forth in Section 6.4(a),
as follows:
(i) Mortgagee Single Interest Insurance on each Vessel and
the other Collateral, if and to the extent required by Bank.
(ii) Insurance covering such other risks as Bank may from
time to time request or consent to or Borrower may from time to time
propose and which would be covered by prudent shipowners and managing
agents, generally recognized as being among the best, in operating and
maintaining similar United States flag vessels engaged in similar
trades.
All insurance carried pursuant to this Section 6.4(b) shall, to the extent
obtainable, be taken out in the names of the Borrower, the Operator, Charterer,
Bank and such of Charterer's corporate Affiliates as Charterer shall designate,
as named insureds as their interests may appear. Subject to the provisions of
the next sentence, each policy in respect of such insurance shall contain
provisions or endorsements waiving the insurer's right of subrogation against
the Operator, Charterer, the Bank and, to the extent reasonably obtainable from
the underwriter of such Policy, such of the respective corporate Affiliates of
Borrower or Charterer as it shall designate, unless any such Person shall
request that a waiver of subrogation in favor of it not be obtained, in which
event it need not be. Any such waiver of subrogation shall not extend to the
Operator, or any such corporate Affiliate of the Borrower, except in its
capacity under the Charters.
(c) Obtaining Mandatory and Additional Insurance.
--------------------------------------------
(i) Subject to Section 6.4(c)(2), Charterer shall be
entitled to direct and assist Borrower in placing all insurance carried
pursuant to Section 6.4(a) and (b), and all such insurance shall be
obtained
80
by Borrower from such insurance underwriters, including protection and
indemnity clubs, through such insurance brokers, in such maximum
amounts, with such types and forms of coverage and subject to such
deductibles as Charterer shall from time to time request and shall be
reasonably acceptable to Bank; provided, however, that the Borrower
shall not cancel any such existing insurance or place the same with
different insurance underwriters or through different insurance brokers
except (i) in connection with the expiration of such insurance or (ii)
after the first anniversary of the placement or last renewal or
extension of such insurance. Nothing contained in the foregoing
provisions of this Section 6.4(c)(1) shall require Borrower to insure
any Vessel as part of any fleet of vessels owned or operated by the
Operator or its Affiliates.
(ii) The respective amounts of the liability insurance
referred to in Section 6.4(a), carried on each Vessel shall not be
limited to the respective minimum amounts thereof specified in such
section, and Borrower will consult with Bank from time to time
regarding the maximum amount thereof which will be carried on each
Vessel and the respective maximum amounts in which the insurance
carried pursuant to Section 6.4(b) will be obtained.
(d) Named Insureds.
--------------
(i) All insurance carried pursuant to Section 6.4(a) (and
if applicable 6.4(b)) shall be taken out in the names of the Borrower,
the Operator, such of Borrower's corporate affiliates as Borrower shall
designate as named insureds, Charterer and such of Charterer's
corporate Affiliates as Charterer shall designate as named insureds as
their interests may appear. Bank shall be named as an additional
insured on all protection and indemnity and pollution coverage and as
loss payee on all hull and other property casualty insurance.
(ii) All insurance carried pursuant to Section 6.4(a) (and
if applicable 6.4(b)) shall contain provisions or endorsements waiving
the insured's right of subrogation against Borrower, the Operator,
Charterer, Bank and, to the extent obtainable, such of their respective
corporate Affiliates as Borrower and Charterer shall designate, unless
any such Person shall request that a waiver of subrogation in favor of
it not be obtained, in which event it need not be. Any such waiver of
subrogation shall not extend to Borrower, the operator, or any such
corporate Affiliate of Borrower except in its capacity under the
Charters. The policies in respect of all such insurance shall provide
that there shall be no recourse against the Bank, the
81
Borrower, or the Operator for the payment of premiums, commissions,
club calls, assessments or advances.
(iii) The policies in respect of all insurance carried
pursuant to Section 6.4(a) and (b) shall provide that at least ten days
prior notice shall be given to the Borrower, the Bank and Charterer by
the underwriters of any cancellation for the non-payment of premiums,
commissions, club calls, assessments or advances and, to the extent
reasonably available from the underwriter of any such policy, such
policy shall provide for at least 30 days' prior notice thereof. Hull
Insurance shall include an endorsement which shall provide that the
insurance cannot be canceled or materially changed without thirty (30)
days prior written notice to Bank. Borrower shall request that its P&I
Club shall give the Bank as much notice as possible of Borrower's
failure to renew its entry in the Club, and in any event Borrower shall
so notify Bank immediately if its entry in the Club is not renewed. If
Borrower receives any notice referred to in the preceding sentences of
this paragraph (3), Borrower shall promptly deliver a copy of such
notice to Bank.
(iv) In the event that Bank shall be subject to a
third-party claim arising out of risks covered by any insurance carried
pursuant to Section 6.4(a) or (b), Borrower shall give Bank the benefit
of such insurance, so far as the policies allow; provided, however,
that, in the event Bank should have a claim against Borrower arising
out of any such risk, Borrower shall reimburse Bank for such claim to
the extent recovered from the underwriters concerned.
(e) Proofs of Loss. Borrower shall have the duty and
responsibility to make proofs of loss and take any and all other steps necessary
to effect collections from underwriters for any loss under any insurance carried
pursuant to this Section 6.4 or carried by Charterer pursuant to the Charter.
(f) Insurance Reports.
-----------------
(i) Borrower shall furnish, or cause to be furnished, to
the Charterer and Bank on the Closing Date and not later than April 1
of each year thereafter a detailed report, signed by Xxxxxxx & Xxxxxxx
of PA, Inc. or another insurance broker satisfactory to the Charterer
and Bank, describing the insurance carried on or with respect to each
Vessel and the operation thereof, together with a hull valuation report
or other survey and appraisal satisfactory to Bank and addressed to the
Bank, provided by a professional valuation consultant or appraiser
satisfactory to Bank, setting forth the full commercial value of each
Vessel.
82
(ii) Such report shall state that, subject to Section
6.4(f)(3), in the opinion of such insurance broker, the insurance
referred to in Section 6.4(a) carried on or with respect to the Vessel
or Vessels in question or its or their operation is against such
respective risks and in such respective forms as are, and the
respective amounts of such insurance are not less than such amounts as
are, necessary or advisable for the protection of the interests of the
Charterer, Borrower and Bank. Such report shall further state that,
subject to Section 6.4(f)(3), in the opinion of such insurance broker,
all insurance carried pursuant to Section 6.4(a) is underwritten by
satisfactory insurance companies, underwriters, associations or
underwriting funds.
(iii) In connection with the opinions expressed pursuant
to Section 6.4(f)(2), such report shall state that such opinions are
based upon such insurance broker's experience as an insurance broker
and its examination of information available to it concerning insurance
carried by, shipowners and managing agents which it considers to be
prudent and generally recognized as being among the best in operating
and maintaining similar vessels engaged in similar trades, and such
report may state one or more of the following matters:
(I) such opinions are not intended as a guarantee
that the insurance referred to therein is necessarily in such amounts
as may be adequate to protect the interests of Borrower, Charterer and
Bank.
(II) such opinions should be relied on only as
guides to Borrower, Charterer and Bank in making their respective
business judgments as to the amounts of such insurance as would be
prudent to be carried on each Vessel; and
(III) that by its acceptance of such report and
except for the gross negligence or willful misconduct of such insurance
broker each recipient thereof (i) waives any and all rights it may have
against such insurance broker with respect to the opinion as to the
amounts of the insurance referred to therein and (ii) thereby agrees
that such insurance broker shall have no liability in connection with
such opinion as to the amounts of such insurance.
(IV) Borrower will cause such insurance broker to
agree (i) to advise Borrower,
83
Charterer and Bank promptly of any default in the payment of any
premium, commission, club call, assessment or advance required (whether
for new insurance or for insurance replacing, renewing or extending
existing insurance) and of any other act, omission or event of which
such insurance broker has knowledge and which in its sole judgment (A)
might invalidate or render unenforceable, or cause the cancellation or
lapse or prevent the renewal or extension of, in whole or in part, any
insurance carried pursuant to Section 6.4(a), (B) has or might result
in any material modification of the terms of any such insurance or (C)
has or might result in any such insurance not being in compliance with
the applicable requirements of this Agreement and (ii) to furnish
Borrower, Bank, and the Charterer from time to time, upon request,
detailed information with respect to any of the insurance carried on or
with respect to the vessel or the operation thereof.
(V) During any year Xxxxxxx & Xxxxxxx of PA, Inc. or
the other insurance broker which is then acting pursuant to Section
6.4(f)(1) may (but shall not be obligated hereby to do so) furnish to
the Borrower, Bank and Charterer a report, in addition to the report
required pursuant to Section 6.4(f)(1), to the effect that, in the
opinion of such insurance broker, the amount of any liability insurance
referred to in Section 6.4(a) hereof then carried on any Vessel is
either higher or lower than an amount (the "New Amount"), specified in
such additional report, which is necessary or advisable for the
protection of the interests of the Borrower, Bank or the Charterer. Any
such additional report shall be subject to all the provisions of
Section 6.4(f)(2). If any such additional report is received and the
New Amount specified therein for any such insurance is higher than that
then carried, Borrower shall obtain, as promptly as practicable, an
additional amount of such insurance so that the amount thereof is at
least equal to such New Amount. If any-such additional report is
received and the New Amount specified therein for any such insurance is
lower than that then carried, Borrower may reduce the amount of such
insurance, so long as the reduced amount thereof is at least equal to
such New Amount and, is not less than the minimum amount of such
insurance required to be carried by such Section 6.4(a).
(g) Optional Insurance.
------------------
(i) The Borrower shall ensure that any insurance obtained
by Charterer on or with respect to each Vessel or the operation thereof
does not conflict with or otherwise limit the insurance carried
pursuant to Section 6.4(a) or (b) and contains provisions or
endorsements waiving the insurer's right of subrogation against the
Bank, Charterer, the operator, and the Borrower and, to the extent
obtainable, such
84
of their respective corporate Affiliates as Borrower and Charterer
shall designate. The Borrower shall cause Charterer to furnish Borrower
and the Bank with copies of all policies relating to insurance carried
by the Charterer pursuant to the Charters.
(ii) Borrower may place, at Borrower's expense, any
insurance on or with respect to any Vessels or the operation thereof as
Borrower desires unless such insurance would conflict with or otherwise
limit the insurance carried pursuant to Section 6.4(a) or (b). The loss
payee or payees under such insurance shall be designated by the
Borrower. Any such insurance so obtained by the Borrower shall contain
provisions or endorsements waiving the insurer's right of subrogation
against the Bank, Borrower, the operator, Charterer and, to the extent
obtainable, such of their respective corporate Affiliates as Borrower
and Charterer shall designate. The Borrower shall furnish Charterer and
the Bank with copies of all policies relating to insurance carried by
the Borrower pursuant to this Section 6.4(g)(2).
(h) Copies of Policies. Borrower shall furnish Charterer and
Bank with certified copies of all policies required to be carried under this
Agreement.
(i) Failure to Maintain. In the event the Borrower at any time
hereafter shall fail to obtain or maintain, or cause to be obtained or
maintained, any of the policies of insurance required above or to pay any
premium in whole or in part relating thereto, then Bank, without waiving or
releasing any obligations or Event of Default hereunder, may at any time
thereafter (but Bank shall be under no obligation to) obtain and maintain such
policies of insurance and pay such premium and take any other action with
respect thereto which Bank deems advisable. All sums so disbursed by Bank,
including any related expenses and other charges relating thereto, shall be
payable on demand to Bank and shall be additional Obligations hereunder secured
by the Collateral.
Section 6.5 Casualty or Damage to Insured Property. Proceeds
of insurance for casualty or damage to the Vessel shall be applied as provided
in the Vessel Mortgage. Proceeds of insurance for casualty or damage to any
other Collateral shall be applied as provided in the Vessel Mortgage to the
extent applicable, and otherwise as the parties may agree in writing.
85
ARTICLE VII
Events of Default
-----------------
Section 7.1 Events of Default. An "Event of Default" shall
mean the occurrence or existence of one or more of the following events or
conditions (whatever the reason for such Event of Default and whether voluntary,
involuntary or effected by operation of Law):
(a) The Borrower shall fail to pay when due any principal
under the Note; or
(b) The Borrower shall fail to pay when due any interest under
the Note, any commitment fee or any other amount due hereunder or under the
Note, any Vessel Mortgage or any other Loan Document, and such failure shall
have continued for a period of five (5) Business Days; or
(c) Any representation or warranty made by the Borrower in
this Agreement, any financial statement described in Section 3.1, or any exhibit
attached hereto, shall prove to have been false or misleading in any material
respect as of the time when made (including by omission of material information
necessary to make such representation, warranty or statement not misleading); or
(d) The Borrower or Guarantor shall default in the performance
or observance of any covenant contained in Section 6.2(j) hereof; or
(e) The Borrower shall default in the performance or
observance of any other covenant, agreement or duty under this Agreement and
such default shall continue for a period of fifteen (15) days after notice of
such default from Bank (provided that if the default cannot be cured within 15
days and Borrower has commenced cure within said 15 day period, and so long as
Borrower continuously and diligently pursues completion of said cure and in any
event completes said cure within 60 days from said notice, an Event of Default
shall not be deemed to exist; or
(f) The Borrower or Guarantor (i) shall default in any payment
of principal of or interest on any obligation (or set of related obligations)
for borrowed money of $250,000 or more beyond any period of grace with respect
thereto or, if such obligation or obligations is or are payable or repayable on
demand, shall fail to pay or repay such obligation or obligations when demanded,
or (ii) shall default (beyond any grace period with
86
respect thereto) in the payment of any guaranty, surety or other Debt obligation
exceeding $250,000, or (iii) shall default in the observance of any covenant,
term or condition contained in any agreement or instrument by which such
obligation or obligations is or are created, secured or evidenced if the effect
of such default is to cause, or to permit the holder or holders of such
obligation or obligations (or a trustee or agent on behalf of such holder or
holders) to cause, all or part of such obligation or obligations to become due
before its or their otherwise stated maturity; or
(g) The Bank shall determine in good faith (which
determination shall be conclusive) that the potential liabilities associated
with the events set forth in subsections (i) through (vii) below, individually
or in the aggregate, could cause a material decline in the business operations
or financial condition of the Borrower or of Guarantor or of the enterprise
comprised of Guarantor and its Subsidiaries taken as a whole:
(i) The PBGC notifies a Plan pursuant to Section 4042 of
ERISA by service of a complaint, filing of a law suit, or otherwise of
its determination that an event described in Section 4042(a) of ERISA
has occurred, a Plan should be terminated, or a trustee should be
appointed for a Plan and, as to such Plan, the representation contained
in Section 5.12(a) hereof is not then correct; or
(ii) Any action is taken to terminate a Plan subject to
title IV of ERISA pursuant to its provisions or the plan administrator
files with the PBGC a notice of intent to terminate a Plan in
accordance with Section 4041 of ERISA and, as to such Plan, the
representation contained in Section 5.12(a) hereof is not then correct;
or
(iii) Any action is taken by a Plan administrator to have
a trustee appointed for a Plan pursuant to Section 4042 of ERISA and,
as to such Plan, the representation contained in Section 5.12(a) hereof
is not then correct; or
(iv) A return is filed with the Internal Revenue Service,
or a Plan is notified by the Secretary of the Treasury that a notice of
deficiency under Section 6212 of the Code has been mailed, with respect
to the tax imposed under Section 4971(a) of the Code for failure to
meet the minimum funding standards established under Section 412 of the
Code; or
87
(v) A Reportable Event occurs with respect to a Plan; or
(vi) Any action is taken to amend a Plan to become an
employee benefit plan described in Section 4021(b)(1) of ERISA, causing
a Plan termination under Section 4041(e) of ERISA and, as to such Plan,
the representation contained in Section 5.12(a) hereof is not then
correct; or
(vii) The Borrower, Guarantor or any Controlled Group
Member receives a notice of liability or demand for payment on account
of complete withdrawal under Section 4203 of ERISA, partial withdrawal
under Section 4205 of ERISA or on account of becoming secondarily
liable for withdrawal liability payments under Section 4204 of ERISA
(sale of assets); or
(h) One or more judgments for the payment of money shall have
been entered against the Borrower, Guarantor or Partners which judgment or
judgments exceed, in any instance, $100,000 beyond the amount of any insurance
proceeds available to pay the same, and such judgment or judgments shall have
remained undischarged, unstayed and not fully bonded for a period of thirty (30)
consecutive days; or
(i) A writ or warrant of attachment, garnishment, execution,
distraint or similar process shall have been issued against the Borrower or
Guarantor or any of their respective properties which shall have remained
undischarged, unstayed and not fully bonded for a period of thirty (30)
consecutive days; or
(j) A proceeding shall have been instituted in respect of the
Borrower or Guarantor:
(i) seeking to have an order for relief entered in respect
of any of them or seeking a declaration or entailing a finding that any
of them is insolvent or a similar declaration or finding, or seeking
dissolution, winding-up, charter revocation or forfeiture, liquidation,
reorganization, arrangement, adjustment, composition or other similar
relief with respect to any of them, its assets or its debts under any
law relating to bankruptcy, insolvency, relief of debtors or protection
of creditors, termination of legal entities or any other similar law
now or hereafter in effect, or
(ii) seeking appointment of a receiver, trustee,
custodian, liquidator, assignee, sequestrator or other similar official
for any of them or of any substantial part of its or their property and
88
such proceeding shall result in the entry, making or grant of any such
order for relief, declaration, finding, relief or appointment, or such
proceeding shall remain undismissed and unstayed for a period of thirty
consecutive days; or
(k) The Borrower or Guarantor shall become insolvent, shall
become generally unable to pay its debts as they become due, shall voluntarily
suspend transaction of its business, shall make a general assignment for the
benefit of creditors, shall institute a proceeding described in Section
7.1(j)(i) hereof or shall consent to any such order for relief, declaration,
finding or relief described therein, shall institute a proceeding described in
Section 7.1(j)(ii) hereof or shall consent to any such appointment or to the
taking of possession by any such official of all or any substantial part of its
property whether or not any such proceeding is instituted, shall dissolve,
wind-up or liquidate itself or any substantial part of its property, or shall
take any action in furtherance of any of the foregoing; or
(l) An "Event of Default" shall occur with respect to any
Note, any Vessel Mortgage, the Guarantee, or any other Loan Document (as such
term is defined therein).
(m) An event of default occurs with respect to any other
present or future obligations owed (whether primarily or secondarily,
immediately or contingently) by Borrower, Guarantor, Maritrans Holdings Inc.,
Maritank Inc. or Partners to Bank.
(n) The termination, material modification or expiration of
any Charter, or any material breach by the Borrower under any Charter, or any
material breach by Partners under any Operating Agreement.
(o) Use of all or any of the Loan proceeds other than for the
purposes described in Section 2.1 hereof.
89
ARTICLE VIII
Remedies
--------
Section 8.1 Occurrence of Event of Default. If an Event of
Default shall occur and be continuing (provided, however, that there shall be no
right of cure after acceleration of the Obligations), Bank may, but need not, do
any one or more of the following:
(a) Acceleration. Declare the entire unpaid balance of the
Obligations, or any part thereof, immediately due and payable, whereupon it
shall be due and payable.
(b) Judgment. Reduce any claim to judgment.
(c) Foreclosure. Take such steps as Bank may deem appropriate
to foreclose or otherwise enforce any Security Interest or Liens which may
herein or at any time hereafter be granted to Bank to secure payment and
performance of the Obligations, or to exercise such other judicial, self-help or
other remedies as may be available under applicable law.
(d) Rights. Exercise any and all rights afforded by the Laws
or the United States of America or the Commonwealth of Pennsylvania or any other
jurisdiction, as Bank shall deem appropriate, including, but not limited to, the
UCC or of such other jurisdiction or by any of the Loan Documents, or by law or
equity, or otherwise.
(e) Vessel Mortgages. Exercise any and all of its rights under
the Vessel Mortgages or any other agreement or agreements, without being deemed
to have elected any remedy over another.
(f) Cross-Default to Other Debt. Declare an event of default
under any agreements relating to any other obligations now or hereafter owing by
Borrower or Guarantor or any of their affiliates to Bank in connection with the
1991 Financing.
(g) WARRANT OF ATTORNEY TO CONFESS JUDGMENT. IF AN EVENT OF
DEFAULT SHALL OCCUR AND BE CONTINUING, GUARANTOR AND BORROWER EACH
90
HEREBY IRREVOCABLY AUTHORIZE AND EMPOWER ANY ATTORNEY OR ATTORNEYS OR THE
PROTHONOTARY OR CLERK OF ANY COURT OF RECORD IN THE COMMONWEALTH OF
PENNSYLVANIA, OR ELSEWHERE, TO APPEAR FOR GUARANTOR OR BORROWER, OR BOTH, IN ANY
COURT OR COURTS IN AN APPROPRIATE ACTION THERE BROUGHT OR TO BE BROUGHT AGAINST
GUARANTOR OR BORROWER, OR BOTH, AT THE SUIT OF BANK OR ANY SUCCESSOR TO ITS
INTEREST UNDER THIS AGREEMENT, AND THEREIN TO CONFESS JUDGMENT AGAINST GUARANTOR
OR BORROWER, OR BOTH, FOR ALL SUMS DUE BY BORROWER HEREIN TOGETHER WITH COSTS OF
SUIT AND AN ATTORNEY'S FEE FOR COLLECTION AS AFORESAID; AND FOR SO DOING THIS
AGREEMENT OR A COPY HEREOF VERIFIED BY AFFIDAVIT SHALL BE A SUFFICIENT WARRANT.
THIS WARRANT OF ATTORNEY SHALL NOT BE EXHAUSTED BY ANY EXERCISE THEREOF, BUT
JUDGMENT MAY BE CONFESSED REPEATEDLY SO LONG AS ANY OBLIGATIONS REMAIN OWING BY
GUARANTOR OR BORROWER, RESPECTIVELY, UNDER THIS AGREEMENT.
Section 8.2 Waivers. The acceptance by Bank at any time and
from time to time of part payment on the obligations shall not be deemed to be a
waiver of any Default or Event of Default then existing. No waiver by Bank of
any Default or Event of Default shall be deemed to be a waiver of any other then
existing or subsequent Default or Event of Default. No delay or omission by Bank
in exercising any Rights under the Loan Documents shall impair such Rights or be
construed a waiver thereof or any acquiescence therein, nor shall any single or
partial exercise of any such Rights preclude other or further exercise thereof,
or the exercise of any other Rights under the Loan Documents or otherwise.
Section 8.3 Application of Proceeds. Any and all proceeds ever
received by Bank from the exercise of any Rights shall be applied by Bank to the
Obligations in such order and manner as Bank, in its sole discretion, may deem
appropriate, notwithstanding any instructions to the contrary by the Borrower,
and the Borrower shall remain liable to Bank for any deficiency.
Section 8.4 Cumulative Rights. All Rights available to Bank
under the Loan Documents shall be cumulative of and in addition to all other
rights granted to Bank at law or in equity, whether or not the Obligations be
due and payable and whether or not Bank shall have instituted any suit for
collection or other action in connection with the Loan Documents.
91
Section 8.5 Expenditures by Bank. Any reasonable sums spent by
Bank pursuant to the exercise of any Right provided herein shall become part of
the Obligations, except as otherwise provided by Law.
ARTICLE IX
Miscellaneous
-------------
Section 9.1 Waiver. Neither this Agreement nor any provisions
hereof may be changed, waived, discharged, or terminated, except by instrument
in writing signed by the parties hereto.
Section 9.2 Benefit. Neither the Borrower nor Guarantor may
transfer or assign its rights and obligations hereunder, and subject to such
restriction, the provisions hereof shall extend to and be binding upon its
successors and assigns. All covenants and agreements made by or on behalf of any
of the parties hereto shall bind and inure to the benefit of, and be enforceable
by, the respective successors and assigns of the parties hereto, whether so
expressed or not, and, in particular, shall inure to the benefit of, and be
enforceable by, the holder or holders of the Note.
Section 9.3 Survival of Representations, Covenants and
Warranties. All representations, covenants and or warranties herein contained or
in any other instrument contemplated hereby shall survive the execution and
delivery of this Agreement and the Note, and no investigation by Bank or the
Closing shall affect the representations, covenants and/or warranties or the
right of Bank to rely on and enforce them.
Section 9.4 Notices. Unless actual receipt is otherwise
required by the specific provisions hereof, any notice or demand upon any party
to this Agreement shall be deemed to have been effectively given or made when
deposited in the mail, certified mail, postage prepaid, or when delivered by
hand or, in the case of telegraphic notice, when delivered to the telegraph
company or, in the case of telex or telecopy notice (if the recipient then is
capable or receiving telex or telecopy notices), when sent, subject to receipt
of any answer back (such telegraph or telex to be confirmed in writing) to the
address set forth below (until another address shall have been designated in
writing by the respective party to which such address relates):
92
The Borrower: Xxxx Xxxxxxx Xxxx
Xxxxxxxxxxxx, XX 00000
The Guarantor: Xxx Xxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
Attn: Legal Department
Bank: Mellon Bank, X.X.
Xxxxxx Bank Center, 0000 Xxxxxx Xxxxxx
X.X. Xxx 0000
Xxxxxxxxxxxx, XX 00000-0000
Attn: Xxxxxxxx X. Xxxxxxxx, Vice President
with a copy to: Legal Department
Mellon Bank, X.X.
Xxxxxx Bank Center, 0000 Xxxxxx Xxxxxx
X.X. Xxx 0000
Xxxxxxxxxxxx, XX 00000-0000
and a copy to: Xxxxx X. Xxxxxxxx, Esquire
Stradley, Ronon, Xxxxxxx & Xxxxx
00 Xxxxxx Xxxxxx Xxxxxxx
Xxxxxxx, XX 00000
Section 9.5 Applicable Law. This Agreement, the Note and the
other Loan Documents shall be deemed to have been made and to be performable in
Philadelphia, Pennsylvania, and shall be governed by and construed in accordance
with the laws of the Commonwealth of Pennsylvania and the applicable laws of the
United States of America.
Section 9.6 Severability. Any section, clause or subsection,
sentence, paragraph, or provision of this Agreement held by a court of competent
jurisdiction to be invalid, illegal, or ineffective shall not impair, invalidate
or nullify the remainder of this Agreement, but the effect thereof shall be
confined to the section, clause,
93
subsection, sentence, paragraph or provision so held to be invalid, illegal or
ineffective.
Section 9.7 Effect of Waiver. No consent or waiver, express or
implied, by Bank of any breach of or deviation from any covenant, condition or
duty of Borrower or Guarantor shall be deemed a consent or waiver to or of any
breach of the same or any other covenant, condition or duty.
Section 9.8 Counterparts. This Agreement may be executed
simultaneously in one or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same
instrument.
Section 9.9 Investment Representation. Bank hereby represents
to the Borrower that Bank has acquired the Note in a commercial banking
transaction without a view towards distribution; provided, however, that Bank
reserves the right to sell, pledge, transfer, convey, hypothecate, grant
participations, mortgage and dispose of either or both Notes (and the Liens and
Security Interests securing either or both Notes) at some future date determined
by it.
Section 9.10 Further Assurances. The Borrower and Guarantor
agree that they will execute and deliver to Bank such additional agreements and
instruments, in form and substance satisfactory to Bank's counsel, and do such
further acts and things of any nature, whether similar to the acts enumerated
above or not, as Bank or Bank's counsel may require or reasonably deem advisable
to carry into effect the purposes of this Agreement and the other Loan Documents
or to better assure and confirm unto Bank its rights, powers and remedies under
this Agreement and the other Loan Documents.
Section 9.11 Expenses and Legal Fees. Borrower and Guarantor
will pay all fees and expenses arising in connection with this Agreement or any
amendment hereto and the Closing of the transactions contemplated hereby
including, but not limited to, all legal fees and out-of-pocket expenses
incurred by Bank in the development, preparation, negotiation, filing and
closing of the Loan Documents and the enforcement of Bank's rights hereunder and
under the Loan Documents. The Bank's structuring, loan and or commitment fees
attributable to the First Closing shall be paid at the First Closing, and any
such fees of Bank attributable to the Second Closing shall be paid at the Second
Closing. If any fees or expenses are not paid at a Closing or if they relate to
an amendment or supplement to this Agreement, then they shall be payable on
demand.
94
Section 9.12 Indemnity. Borrower hereby indemnifies, holds
harmless, and upon request will defend Bank and its shareholders, officers,
directors, employees, attorneys and agents, and their respective successors and
assigns (collectively, the "Indemnified Parties") from and against any and all
claims and liabilities to third parties, and will pay and reimburse to the
Indemnified Parties all losses, payments, reasonable costs and expenses
associated therewith, or with Bank's defense (including without limitation
reasonable attorneys fees) which Bank may suffer, incur or be exposed to by
reason of or in connection with or rising out of (i) the transactions evidenced
by or referred to in or related to this Agreement, any of the Vessels, Vessel
Mortgages, Charters, Operating Agreement, subcharters, or any of the Loan
Documents, and (ii) any actions or omissions of any one or more of the
Indemnified Parties which conforms with the terms of this Agreement or the other
Loan Documents, or is in good faith and connected therewith or with the
enforcement thereof; provided, however, that the Indemnified Parties shall not
be indemnified, defended or held harmless for any consequential or indirect
losses or damages, or any losses or damages which were caused by the Indemnified
Parties' willful misconduct or gross negligence.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement, effective as of the date first above written.
BORROWER:
--------
Attest: (Seal) MARITRANS TANKERS INC.
/s/ Xxxxxx X. Xxxxxxxxx By: /s/ Xxxx X. Xxxxxxx
------------------------- -------------------
Assistant Secretary Vice President
BANK:
----
Witness: MELLON BANK, N.A.
/s/ Xxxxx X. Xxxxxxxx By: /s/ Xxxxxxxx X. Xxxxxxxx
-------------------------- ------------------------
Vice President
95
GUARANTOR:
---------
Attest: MARITRANS INC.
/s/ Xxxxxx X. Xxxxxxxxx By: /s/ Xxxx X. Xxxxxxx
------------------------- -------------------------
Assistant Secretary Vice President
96
Exhibit A
[Form of Quarterly Compliance Certificate]
To: Mellon Bank, N.A. Date:_______, ____
Re: Maritrans Tankers Inc. ("Borrower")
Maritrans Inc. ("Guarantor")
Credit Agreement dated as of October 17, 1997 (the "Credit Agreement")
Ladies and Gentlemen:
This Quarterly Compliance Certificate is being delivered to you
pursuant to the provisions of Section 6.1(a)(iii) of the Credit Agreement with
respect to the fiscal [year][quarter] of [Borrower][Guarantor] ending on
_______________. All terms used herein shall have the respective meanings
ascribed thereto in the Credit Agreement.
1. As of the date hereof [no Event of Default or Potential
Default has occurred and is continuing.][the following Event[s] of Default or
Potential Default[s] has/have occurred and is/are continuing:
{Specifying in detail the nature and period of existence thereof
and any action with respect thereto taken or contemplated to be
taken by the Borrower and Partners}]
2. Set forth below in reasonable detail are the information and
calculations necessary to establish compliance with the provisions of Section
6.2(j) of the Credit Agreement:
[Set forth detail]
97
3. The signer is an Authorized Financial Officer of [Borrower]
[Guarantor], and has personally reviewed the Credit Agreement. This certificate
is based on an examination made by or under the supervision of the signer
sufficient to assure that this certificate is accurate.
------------------------------
[Print Name]
[Title]
98
Exhibit B
[Form of Interest Rate Selection Notice]
__________, 199_
[Addressed to Bank
at Notice Address
provided in Loan
Agreement]
RE: Maritrans Tankers Inc. - Credit Agreement dated October 17, 1997
Ladies and Gentlemen:
Reference is made to the Credit Agreement (the "Credit
Agreement"), dated as of October 17, 1997, among Maritrans Tankers Inc. (the
"Borrower"), Maritrans Inc. ("Guarantor") and Mellon Bank, N.A. All capitalized
terms used herein which are not otherwise defined shall have the meanings set
forth in the Credit Agreement.
The Borrower hereby notifies you, in accordance with
Section 2.4(b) of the Credit Agreement, of the following:
The Borrower selects the following Interest Option[s] to
be in effect for the following Portion[s] of the Loan for the following
respective Interest Rate Period[s] beginning and ending on the respective dates
set forth below:
99
[Specify]
MARITRANS TANKERS INC.
By:_____________________
Chief Financial Officer
100
SCHEDULE 5.4
Material Adverse Changes
------------------------
None.
101
SCHEDULE 5.7
Litigation, Etc.
----------------
None.
102
SCHEDULE 5.8
Existing Debt of Borrower
-------------------------
None.
103
SCHEDULE 5.11
Exceptions to Representations and Warranties Regarding Tax Matters
------------------------------------------------------------------
None.
104
SCHEDULE 5.16
Other Material Facts
--------------------
None.
105
SCHEDULE 5.21
Matters Affecting Vessels
-------------------------
A. As to Vessel PERSEVERANCE:
1. Bareboat Charter from Borrower to Charterer dated October 14, 1997
2. Operating Agreement between Charterer and Operator dated October
14, 1997
3. Time Charter from Charterer to Sun Company Inc. (R&M) dated
October 14, 1997
B. As to Vessel ALLEGIANCE:
1. Bareboat Charter from Borrower to Charterer dated October 14, 1997
2. Operating Agreement between Charterer and Operator dated October
14, 1997
3. Time Charter from Charterer to U.S. Department of the Navy,
Military Sealift Command dated October 14, 1997
106
SCHEDULE 5.22
Locations of Books and Records
------------------------------
1. Xxxx Xxxxxxx Xxxx, Xxxxxxxxxxxx, XX 00000 (Borrower's chief executive office)
2. Xxx Xxxxx Xxxxxx, 00xx Xxxxx, Xxxxxxxxxxxx, XX 00000 (Guarantor's chief
executive office)
3. Offices of the Borrower at Xxx X. Xxxxxx Xxxx., Xxxxx, XX 00000
4. Mormac Marine Enterprises Inc., Three Landmark Square, Stamford, CT 06901
5. On board each Vessel
107
