SUPPLEMENT TO CREDIT AGREEMENT
THIS SUPPLEMENT TO CREDIT AGREEMENT (this "Supplement"), dated as of
February 4, 2000, is by and among MARITRANS TANKERS INC., a Delaware corporation
with its chief executive office at 0000 Xxxxxx Xxxxxx, Xxxxx 0000, Xxxxxxxxxxxx,
XX 00000 ("Borrower"), MARITRANS INC., a Delaware corporation with chief
executive offices at 0000 Xxxxxx Xxxxxx, Xxxxx 0000, 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").
Background:
A. On or about October 17, 1997, Borrower, Guarantor and Bank entered
into a Credit Agreement (the "Credit Agreement") providing for a credit facility
of up to US$33,000,000.00 (the "Loan") to the Borrower. In connection with the
Credit Agreement and the Loan, Borrower executed and delivered to Bank, inter
alia, Borrower's promissory note in the principal amount of US$33,000,000.00
(the "Note") and Guarantor executed and delivered to Bank a Guaranty and
Suretyship Agreement (the "Guaranty"). In connection therewith, Borrower
executed and delivered to Lender, and there were filed of public record, first
preferred ship mortgages on the Vessels PERSEVERANCE and ALLEGIANCE.
B. On or about August 12, 1998, Borrower executed and delivered to
Lender, and there were filed of public record, first preferred ship mortgages on
the Vessels DILIGENCE and INTEGRITY. The Credit Agreement, Note, the four (4)
Vessel Mortgages referred to above, and any other agreements, undertakings,
instruments and documents related to the Loan are sometimes referred to in this
Supplement collectively as the "Loan Documents."
C. The presently scheduled maturity date for the Loan is October 17,
2000. Borrower and Guarantor have requested Lender to extend the maturity date
for the Loan and reduce the maximum credit available under the Loan to
$33,000,000.00, which Lender is willing to do on certain terms and conditions.
D. Contemporaneously with the execution of this Supplement, the
Borrower is executing and delivering to Bank four Assignments (individually, an
"Assignment" and collectively, the "Assignments"), assigning to Lender the
charters, charter hire and freights of each of the Vessels to further secure
Borrower's obligations with respect to the Loan (the "Obligations"). This
Supplement and the Assignments and any other agreements and documents being
executed and delivered in connection herewith, are sometimes referred to
collectively herein as the ("Supplemental Loan Documents").
NOW, THEREFORE, intending to be legally bound hereby, and in
consideration of the mutual benefits conferred hereby, the parties hereto agree
to modify the Credit Agreement and the other Loan Documents as follows:
1. Definitions. As used in this Supplement, all capitalized terms shall
have the respective meanings provided therefor herein or, in absence of such
provision, the respective meanings provided therefor in the Credit Agreement.
Without limiting the foregoing:
(a) References herein and in the Credit Agreement to the
"Credit Agreement" shall mean and include the Credit Agreement as modified and
supplemented, including without limitation by this Supplement.
(b) References in any of the Loan Documents to the "Loan
Documents" shall mean and include the Loan Documents as supplemented and
modified, including without limitation by this Supplement.
(c) References to the "Second Loan," "Second Note," "Second
Closing" and "Second Closing Date" shall be of no further force or effect.
2. Extension of Maturity Date and Other Definitional Changes. The
definitions of "Second Loan" in Section 1.1 of the Credit Agreement is hereby
deleted, and the following definitions in Section 1.1 of the Credit Agreement
are hereby modified to read in full as follows:
"Coverage Ratio" shall mean, for the Borrower or Guarantor as
the case may be (the "Measured Entity"), as of the Measuring Date in
question:
I. IN THE CASE OF GUARANTOR
The quotient obtained by dividing EBITDA of Guarantor on a
Consolidated basis for the Four-Quarter Period ending on the relevant
Measuring Date 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) plus
(c) Dividends and other distributions paid by Guarantor during
the Four-Quarter Period ending on the relevant Measuring Date
-- which may also be expressed by the following formula:
----------------------------------------------------------------------
Coverage Ratio = EBITDA
-----------------------------------------
Prior Period Interest + CMLTD + Dividends
----------------------------------------------------------------------
-2-
II. IN THE CASE OF BORROWER
The quotient obtained by dividing Borrower's EBITDA for the
Four-Ouarter Period ending on the relevant Measuring Date by Borrower's
Prior Period Interest
-- which may also be expressed by the following formula:
----------------------------------------------------------------------
Coverage Ratio = EBITDA
-----------------------------------------
Prior Period Interest
----------------------------------------------------------------------
"Maturity Date" means October 17, 2002.
"Vessel" means, individually, the vessel INTEGRITY (formerly
CHEVRON OREGON) (Official No. 566080), the vessel DILIGENCE (formerly
CHEVRON LOUISIANA) (Official No.584696) (collectively, the, "Chevron
Vessels"), the vessel PERSEVERANCE (formerly, PHILADELPHIA SUN)
(Official No. 638073) the vessel ALLEGIANCE (formerly, NEW YORK SUN
(Official No. 628783) (collectively, the "Sun Vessels"), or any other
vessels for which all or part of the cost of acquisition, repair or
rebuilding is financed with Loan proceeds ("Additional Vessels"), as
the case may be; and "Vessels" means any or all of them collectively.
"Vessel Mortgage" means, as to each Vessel, collectively, (i)
a preferred ship mortgage and (ii) an assignment of charter, charter
hire and freights, granted to Bank by Borrower on each Vessel, each
in form reasonably acceptable to the Bank, which shall have been filed
of public record with the United Stares Coast Guard; and "Vessel
Mortgages" means the same for any more than one of the Vessels.
3. Maximum Loan Amount; Use of Proceeds.
(a) Subsection (a) of Section 2.1 of the Credit Agreement ("Loan") is
hereby modified to read in full as follows:
(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 finance (i) all or
part of the costs of acquiring the Sun Vessels or the Chevron Vessels,
and (ii) all or part of the costs of acquisitions, repairs and
rebuilding for Additional Vessels. Notwithstanding any other provision
of this Agreement, the aggregate principal amount of the Loan shall not
at any time exceed $33,000,000.00; (II) the aggregate amount of all
Advances which the Bank shall be obligated to make and which may be
-3-
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; and (III) 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 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) Provisions of the Credit Agreement and other Loan
Documents relating to the "Second Loan" referred to therein shall be of
no further force or effect.
4. Conditions for Advances for Additional Vessels. Section 2.3 of the
Credit Agreement ("Advances") is hereby modified by adding a new subsection (c)
to read in full as follows:
(c) Conditions to Advances for Additional Vessels. Bank shall
make Advances to finance all or part of the costs of acquisitions,
repairs and rebuilding for Additional Vessels, provided Borrower and
Guarantor shall have satisfied the following conditions with respect to
each Additional Vessel for which an Advance or Advances are to be made:
(i) The Borrower shall have executed and delivered
to the Bank, in recordable form, a Vessel Mortgage for each such
Additional Vessel, 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).
(ii) At Bank's request the Guarantor shall join in,
but whether or not Bank so requests, Guarantor shall in any event be
deemed to have joined in, each request for an Advance relating to any
Additional Vessel, and such joinder (or deemed joinder) shall be deemed
Guarantor's consent to the Advance, Guarantor's reaffirmation of its
Guaranty obligations with respect to such Advance, and Guarantor's
waiver of any conditions to such Advance which shall not have been
satisfied. Guarantor acknowledges and agrees that all conditions to
Advances set forth in this Agreement are for the sole benefit of Bank
and not of Guarantor.
(iii) If requested by Bank or Bank Counsel, the
Borrower and the Guarantor shall have delivered to Bank favorable
opinions of their special financing and maritime counsel, dated on or
before the date of the Advance, each in form and substance satisfactory
to Bank and Bank's Counsel, relating to legal matters with respect to
the Advance, the Additional Vessel(s) in question and the Vessel
Mortgage(s) in question.
-4-
(iv) Bank shall have received evidence satisfactory
to the Bank that all insurance coverage required to be obtained under
Section 6.4 of this Credit Agreement has been obtained and is in force
with respect to each Additional Vessel in question and a report of
insurance broker or an attorney's summary of insurance, all in form and
substance satisfactory to Bank and Bank's Counsel.
(v) Bank shall have received true an complete copies
of the current certificate of documentation, executed xxxx of sale and
purchase agreement if applicable, charters, subcharters, operating
agreement and all other agreements, instruments and documents relating
to each Additional Vessel for which Bank is being requested to make an
Advance.
(vi) Bank shall have received a current fair market
value appraisal satisfactory to Bank relating to each Additional Vessel
for which Bank is being requested to make an Advance.
(vii) Borrower and Guarantor shall each execute,
acknowledge and deliver such other undertakings, agreements,
instruments, documents, opinions, certificates and evidence in such
form, as Bank or Bank's Counsel may reasonably request in connection
with the Advance or the Additional Vessels in question, or as may
otherwise be required under the Credit Agreement.
5. Revisions to Euro-Rate Margins. The first paragraph of Section 2.5
of the Credit Agreement ("Determination of Margins and Quarterly Compliance
Certificates") is hereby modified to read in full as follows:
(a) 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
Funded 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" shall be applicable during the fiscal quarter of
Guarantor immediately following the end of such Four-Quarter Period:
Guarantor Funded Debt/EBITDA Ratio Margin
---------------------------------- ------
Equal to or greater than 2.50 150 basis points
and equal to or less than 3.00
Equal to or greater than 1.50 125 basis points
and less than 2.50
Less than 1.50 100 basis points
6. Fees. Section 2.11(a) of the Credit Agreement is hereby modified to
read in full as follows:
Section 2.11 Fees. The Borrower agrees to pay to the Bank, as
consideration for the Loan commitment hereunder, the following fees:
-5-
(a) Unused Commitment Fee. The Borrower agrees to
pay to the Bank, as additional consideration for the extension of the
Maturity Date of the Loan and the maintenance of availability of
Lender's commitment, an unused commitment fee for the period from and
after January 1, 2000, to be calculated on a per them basis and payable
in arrears on the last day of each fiscal quarter of the Guarantor
commencing on March 31, 2000, or a rate or rates equivalent to the
applicable "Unused Fee Rare" set forth below, calculated over the
actual number of days in the fiscal quarter in question over an assumed
year of 360 days, mutiplied times the average daily balance of the
unused portion of the $33,000,000.00 Loan commitment for the fiscal
quarter in question.. The Bank shall determine the "Unused Fee Rate"
from time to time in the following manner. If, as of the end of the
Four-Quarter Period ending on or most recently prior to the
commencement of the Guarantor's fiscal quarter in question, the Funded
Debt/EBITDA Ratio for the Guarantor, on a consolidated basis, is within
a range stated in the following column (1), the Unused Fee Rate set
forth opposite such range in column (2) shall be the "Unused Fee Rate"
applicable to such fiscal quarter:
Guarantor Funded Debt/EBITDA Ratio Unused Fee Rate
---------------------------------- ---------------
Equal to or greater than 2.50 37.5 basis points
and equal to or less than 3.00
Equal to or greater than 1.50 37.5 basis points
and less than 2.50
Less than 1.50 25 basis points
7. Assignments, The Borrower is executing and delivering the
Assignments to the Bank, for filing with the United States Coast Guard National
Vessel Documentation Center to the extent so fileable, together with UCC-1
financing statements for filing with the applicable Uniform Commercial Code
filing offices. The Assignments and the collateral granted thereby to Bank
secure the Obligations in addition to any other collateral security. Without
limiting the foregoing, the Assignments are intended to supplement the original
Vessel Mortgages and shall not be deemed discharged by any satisfaction,
discharge or foreclosure of any of the original Vessel Mortgages. If Bank should
discharge an Assignment of record with the U.S. Coast Guard, such record
assignment shall not constitute a satisfaction or discharge of the Assignment
for any other purpose, and the assignments, security interests and liens granted
thereby shall nevertheless continue until Bank executes a written instrument
confirming that the Assignment is terminated absolutely. In the event of a
default, neither Borrower nor Guarantor shall have any right to demand that Bank
marshal any type or item of collateral security or any source of repayment for
application prior to or after any other type or item of collateral or source of
repayment for the Obligations.
8. Modification of Certain Financial Covenants.
(a) Amendment of Borrower Tangible Net Worth Covenant.
Subparagraph (a) of Paragraph 6.2(j)(i) of the Credit Agreement ("Negative
Covenants - Financial Maintenance
-6-
Covenants - Covenants Pertaining To Borrower") is hereby modified to read in
full as follows, effective on and after December 30, 1999:
(a) Tangible Net Worth. Tangible Net Worth of the Borrower
shall at no time be less than $10,392,000, measured at the end of each
fiscal year of Borrower (any time of reference is referred to herein
for this purposes as a "Measuring Date").
(b) Amendment of Certain Guarantor Financial Covenants.
Subparagraphs, (a), (b) and (c) of Paragraph 6.2(j)(ii) of the Credit Agreement
("Negative Covenants - Financial Maintenance Covenants - Covenants Pertaining to
Guarantor") are hereby modified to read in full as follows, effective on and
after December 30, 1999:
(a) Coverage Ratio. Guarantor's Coverage Ratio, measured at
the end of each fiscal quarter of Guarantor, shall never be less than
1.40.
(b) Tangible Net Worth. Tangible Net Worth of Guarantor shall
not be less than $97,000,000.00 on December 31, 1999. At the end of
each fiscal year of Guarantor commencing with the fiscal year ending
December 31, 2000 (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)
$97,000,000.00 plus (B) the sum of the Net Income Increments for each
fiscal year of Guarantor after December 31, 1999. 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,
2000 and for the fiscal year in question 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, 2000 were $1,000,000 the Net Income Increment attributable to that
fiscal year would be $500,000 and the Guarantor's Minimum Tangible Net
Worth would be $97,500,000 as of December 31, 2000; if its Consolidated
Net Income for the fiscal year ending December 31, 2001 were a loss of
$50,000, the Net Income Increment attributable to that fiscal year
would be zero and the Guarantor's Minimum Tangible Net Worth would be
$97,500,000 as of December 31, 2001; and if its Consolidated Net Income
for the fiscal year ending December 31, 2002 were $2,000,000, the Net
Income Increment attributable to that fiscal year would be $1,000,000
and the Guarantor's Minimum Tangible Net Worth would be $98,500,000 as
of December 31, 2002.
(c) Funded Debt/EBITDA Ratio. Guarantor's Funded Debt/EBITDA
Ratio, measured at the end of each fiscal
-7-
quarter of Guarantor, shall never be greater than 3.00 at December 31,
1999 and thereafter.
9. Cross-Default Provisions. Section 7.1 of the Credit Agreement
("Events of Default") is hereby modified by adding a new subsection (p) to read
in full as follows:
(p) An "Event of Default" occurs under that certain Letter of
Credit Agreement or Addendum thereto dated August 18, 1999
(collectively, the "Maritrans Barge Credit Agreement") providing for
the issuance of a $4,946,771.05 Standby Letter of Credit in favor of
Coastal Tug & Barge, Inc. for the Account of Maritrans Barge Co.;
provided, however, that an "Event of Default" under Section 5.1(i) of
the Addendum to the Maritrans Barge Credit Agreement shall not be an
Event of Default hereunder if it either (A) is due to a dispute
involving an amount in controversy of less than $100,000 or (B) is
based upon claims arising in the ordinary course of the business of
Maritrans Barge Co., and in either case the Event of Default is cured
within thirty (30) days after it first occurs.
10. Representations, Warranties and Other Covenants. Borrower and
Guarantor each jointly and severally reaffirms, as of this date, the truth and
completeness of the representations and warranties set forth in the Credit
Agreement, other than the representations and warranties regarding material
events since the date of the financial statements referred to in Section 3.4 of
the Credit Agreement, except to the extent heretofore waived in writing by the
Bank. In addition:
(a) Borrower and Guarantor each jointly and severally represent and
warrant that no Event of Default, or any event which with the passing of time or
the giving of notice or both would become an Event of Default, has occurred and
is continuing.
(b) The Guarantor has delivered to Bank its audited Consolidated and
consolidating financial statements as at and for the fiscal year ended December
31, 1998 (the "Audited Date"), and its unaudited financial statements for the
three (3) month periods ended September 30, 1999, stated on a non-Consolidated
basis, dated the date of this Agreement (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 Consolidated operations of The Guarantor for the periods then
ended, all in conformity with GAAP consistently applied. 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 except obligations arising in the ordinary course of
business since September 30, 1999. Borrower and Guarantor are each solvent on
this date in that (i) the fair value of its assets exceeds the amounts of its
liabilities and other obligations, and (ii) each of them is capable of paying
its debts and obligations as they may become due.
(c) The "chief executive office" of the Borrower, and the location of
its records relating to Vessel charters, charter hire, freights and the like
(the Borrower's "Chief Executive Office"),
-8-
is presently at 0000 Xxxxxx Xxxxxx, Xxxxx 0000, Xxxxxxxxxxxx, XX 00000. On and
after March 31, 2000, Borrower's Chief Executive Office will be located at Two
Harbour Place, 000 Xxxxxxx Xxx Xxxxxx, 00xx Xxxxx, Xxxxx, XX 00000.
11. Reaffirmation of Loan Documents, Accommodations and Collateral.
Guarantor hereby ratifies and confirms that it remains fully obligated under the
Guaranty, and that the Guaranty including without limitation the warrant of
attorney to confess judgment contained therein remains in full force and effect
as heretofore modified and supplemented, and, as modified including without
limitation the warrant of attorney to confess judgment contained therein hereby
and extends to and secures the payment of the Obligations pursuant to the Loan
Documents as heretofore supplemented and modified and as supplemented and
modified by this Supplement. Each of the Loan Documents including without
limitation the warrant of attorney to confess judgment contained therein remains
in full force and effect as heretofore supplemented and modified and, as
supplemented and modified by this Supplement, including without limitation the
warrant of attorney to confess judgment contained therein, extend to and
continue to secure the Obligations as modified and supplemented by this
Supplement and the other Supplemental Loan Documents. To the extent required in
order to achieve the intent of this Supplement, this Supplement shall be deemed
to supplement and modify each of the Loan Documents.
12. Miscellaneous.
(a) Effect of Agreements; Waivers: Construction. The
provisions of this Supplement shall supplement and modify the
provisions of the Loan Documents, which continue in full force and
effect as supplemented and modified hereby.
(b) Counterparts. This Supplement may be executed in any
number of counterparts, each of which shall be deemed to be an
original, but all of which together shall constitute one and the same
instrument.
(c) Successors and Assigns. This Supplement shall be binding
upon and inure to the benefit of the Bank, the Borrower and their
respective successors and assigns.
(d) Signing Authority. The individuals signing this Supplement
on behalf of each party represent and warrant to the other parties that
they are respectively authorized by all necessary corporate action to
execute and deliver this Supplement on behalf of the respective party
or parties for whom they are signing.
(e) Expenses and Legal Fees. Borrower and Guarantor will pay
on demand all of the fees and expenses of Bank and its legal counsel
arising in connection with this Supplement, the Assignments, any Vessel
Mortgages or any further supplements or amendments to any of the Loan
Documents and the transactions contemplated thereby 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
this Supplement and all such documents.
-9-
IN WITNESS WHEREOF, the parties hereto have duly executed this
Supplement by their respective authorized officers, as of the date first written
above.
Attest: MARITRANS TANKERS INC.
/s/ Xxxxxx Xxxxxx By: /s/ Xxxxxx X. Xxxxxxxxx
--------------------------- -------------------------
Title: Secretary Title: Treasurer
Attest: MARITRANS INC.
/s/ /s/ Xxxxxx X. Xxxxxxxxx By: /s/ Xxxxxx X. Xxxxxxx
--------------------------- -----------------------------
Title: Asst Secretary Title: Vice President
Witness: MELLON BANK, N.A.
By: /s/ Xxxx Xxxxxxxx
--------------------------- -----------------------------
Title: Vice President
-10-
