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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported)
September 30, 1997
Mobil Corporation
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(Exact Name of registrant as specified in its charter)
Delaware 1-7555 13-2850309
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(State of Other Jurisdiction (Commission (I.R.S. Employer
of Incorporation) File Number) Identification No.)
3225 Gallows Road
Fairfax, Virginia 22037-0001
(Address of Principal (Zip Code)
Executive Offices)
Registrant's telephone number, including area code (703) 846-3000
No Change
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(Former name or former address, if changed since last report)
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Item 7. Exhibits. The documents listed below are filed as Exhibits
with reference to the Registration Statement (the "Registration Statement") on
Form S-3 (Registration No. 333-13457) of Mobil Corporation (the "Company"),
Mobil Transport Finance Company Inc. (the "Charterer"), and certain other
subsidiaries of the Company. The Registration Statement and the Prospectus
Supplement, dated September 23, 1997, to the Prospectus, dated November 12,
1996, relate to the offering of the Company's Pass Through Certificates, Series
1997-B.
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
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1.1 Underwriting Agreement, among Mobil Corporation, Mobil Transport
Finance Company Inc. and Morgan Stanley & Co. Incorporated.
4.1 Pass Through Trust Supplement, among Mobil Corporation, Mobil
Transport Finance Company Inc. and State Street Bank and Trust
Company, dated as of September 30, 1997.
4.2 Form of Indenture relating to the Vessel.
4.3 Form of Secured Note relating to the Vessel.
4.4 Form of Ship Mortgage relating to the Vessel.
4.5 Form of Demise Charter Party relating to the Vessel.
4.6 Form of Trust Agreement relating to the Vessel.
4.7 Form of Participation Agreement relating to the Vessel.
4.8 Form of Guaranty relating to the Vessel.
4.9 Form of Appendix of Definitions.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
MOBIL CORPORATION
By: /s/ W.R. Arnheim
---------------------------------
Name: W.R. Arnheim
Title: Treasurer
Dated: October 6, 1997
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EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
- ----------- -----------
1.1 Underwriting Agreement, among Mobil Corporation, Mobil Transport
Finance Company Inc. and Morgan Stanley & Co. Incorporated.
4.1 Pass Through Trust Supplement, among Mobil Corporation, Mobil
Transport Finance Company Inc. and State Street Bank and Trust
Company, dated as of September 30, 1997.
4.2 Form of Indenture relating to the Vessel.
4.3 Form of Secured Note relating to the Vessel.
4.4 Form of Ship Mortgage relating to the Vessel.
4.5 From of Demise Charter Party relating to the Vessel.
4.6 Form of Trust Agreement relating to the Vessel.
4.7 Form of Participation Agreement relating to the Vessel.
4.8 Form of Guaranty relating to the Vessel.
4.9 Form of Appendix of Definitions.
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September 23, 1997
Morgan Stanley & Co. Incorporated
1585 Broadway
New York, New York 10036
Ladies and Gentlemen:
Mobil Transport Finance Company Inc., a Delaware corporation (the
"Company"), in connection with the financing of the debt portion of a leveraged
lease transaction with respect to a certain, double-hulled tanker vessel (the
"Vessel"), proposes that State Street Bank and Trust Company ("SSB&T"), as
trustee (the "Pass Through Trustee"), will issue and sell to you its Pass
Through Certificates, Series 1997-B, in the principal amount and with the
interest rate and final distribution date set forth on Schedule A hereto (the
"Offered Certificates") on the terms and conditions stated herein and in
Schedule II hereto. The Offered Certificates will be issued under the Pass
Through Trust Agreement, dated as of October 4, 1996 (the "Basic Agreement")
among Mobil Corporation, a Delaware corporation (the "Guarantor"), the Company,
the Pass Through Trustee, and the other parties described therein, as
supplemented by the Pass Through Trust Supplement No. 1997-B, dated as of
September 29, 1997 (the "Trust Supplement"), among the Guarantor, the Company
and the Pass Through Trustee (the Basic Agreement as supplemented by the Trust
Supplement being referred to herein as the "Designated Agreement"). Capitalized
terms used herein without definition shall have the respective meanings ascribed
to such terms in the Designated Agreement or in the Trust Indenture, Mortgage,
Assignment of Charter and Security Agreement, dated effective as of September
29, 1997 ("the Indenture"), between First Security Bank, National Association,
as owner trustee (the "Owner Trustee"), and SSB&T, as Indenture Trustee (the
"Indenture Trustee").
The Guarantor and the Company and certain other subsidiaries of the
Guarantor have filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form S-3 (File No. 333-13457),
relating to certain pass through certificates, including the Offered
Certificates, and the offering thereof from time to time in accordance with Rule
415 promulgated under the Securities Act of 1933, as amended, and the rules and
regulations of the Commission thereunder (collectively, the "Securities Act").
The registration statement as amended at the date hereof, including the exhibits
thereto and the documents incorporated by reference therein, is herein referred
to as the "Registration Statement". The Registration Statement includes a basic
prospectus referred to below which, as supplemented from time to time, will be
used in connection with all offerings of such pass through certificates
thereunder. A prospectus supplement reflecting the terms of the Offered
Certificates, the terms of the offering thereof and other matters relating to
the Offered Certificates has been prepared and has been or will be filed (or
mailed for filing) together with the basic prospectus referred to below pursuant
to Rule 424 under the Securities Act (such prospectus supplement, in the form
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2
first filed on or after the date hereof pursuant to Rule 424, is herein referred
to as the "Prospectus Supplement" and any such prospectus supplement in the form
or forms filed prior to the Prospectus Supplement is herein referred to as a
"Preliminary Prospectus Supplement"). The basic prospectus included in the
Registration Statement and relating to all offerings of pass through
certificates under the Registration Statement, as supplemented by the Prospectus
Supplement, is herein called the "Prospectus", except that, if such basic
prospectus is amended on or prior to the date on which the Prospectus Supplement
is first filed (or mailed for filing) pursuant to Rule 424, the term
"Prospectus" shall refer to such basic prospectus as so amended and as
supplemented by the Prospectus Supplement, in either case including the
documents filed by the Guarantor with the Commission pursuant to the Securities
Exchange Act of 1934, as amended, and the rules and regulations of the
Commission thereunder (collectively, the "Exchange Act"), that are incorporated
by reference therein. Any reference herein to the terms "amendment" or
"supplement" with respect to the Registration Statement, to the Prospectus, any
Preliminary Prospectus Supplement or to any preliminary prospectus shall be
deemed to refer to and include any documents filed with the Commission under the
Exchange Act after the date hereof, the date the Prospectus is filed (or mailed
for filing) with the Commission, or the date of such Preliminary Prospectus
Supplement or preliminary prospectus, as the case may be, and incorporated
therein by reference pursuant to Item 12 of Form S-3 under the Securities Act.
I.
The Guarantor and the Company represent and warrant to, and agree with, you
that:
(a) The Guarantor and the Company meet the requirements for use of
Form S-3 under the Securities Act; the Registration Statement has become
effective; (i) on the original effective date of the Registration
Statement, on the effective date of the most recent post-effective
amendment thereto, if any, and on the date of the filing by the Guarantor
of any annual report on Form 10-K after the original effective date of the
Registration Statement, the Registration Statement and any amendments and
supplements thereto complied in all material respects with the requirements
of the Securities Act and did not contain an untrue statement of a material
fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading; and (ii) on the
date hereof and at all times subsequent thereto up to the Closing Date
referred to below, neither the Prospectus nor any amendment or supplement
thereto will include an untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not misleading,
except that neither the Guarantor nor the Company makes any representation
or warranty as to statements or omissions made in reliance upon and in
conformity with information furnished in writing to the Guarantor and/or
the Company
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3
by or on behalf of you expressly for use in the Registration Statement or
the Prospectus or to statements or omissions in that part of the
Registration Statement which shall constitute the Statement of Eligibility
on Form T-1 (the "Statement of Eligibility") under the Trust Indenture Act
of 1939, as amended (the "Trust Indenture Act"), of the Pass Through
Trustee.
(b) The documents incorporated by reference in the Prospectus pursuant
to Item 12 of Form S-3 under the Securities Act, at the time they were or
hereafter are filed with the Commission, complied and will comply in all
material respects with the requirements of the Exchange Act.
(c) The Guarantor and the Company have been informed by Ernst & Young
LLP ("E&Y"), who have reported upon the audited consolidated financial
statements and the financial statement schedules, if any, included or
incorporated by reference in the Registration Statement, that E&Y are
independent public accountants as required by the Securities Act.
(d) This Agreement has been duly authorized, executed and delivered by
the Guarantor and the Company.
(e) The consolidated financial statements included or incorporated by
reference in the Registration Statement present fairly the consolidated
financial position of the Guarantor and its subsidiaries as of the dates
indicated and the consolidated results of operations and cash flows or
changes in financial position of the Guarantor and its subsidiaries for the
periods specified. Such financial statements have been prepared in
conformity with generally accepted accounting principles applied on a
consistent basis throughout the periods involved, except as may be
indicated therein. The financial statement schedules, if any, included or
incorporated by reference in the Registration Statement present fairly the
information required to be stated therein. The selected consolidated
financial data included in the Prospectus (if any) present fairly the
information shown therein and have been compiled on a basis consistent with
that of the audited consolidated financial statements included or
incorporated by reference in the Registration Statement.
(f) Each of the Guarantor and the Company is a corporation duly
organized, validly existing and in good standing under the laws of the
State of Delaware with corporate power and authority under such laws to
own, lease and operate its properties and conduct its business as described
in the Prospectus and to perform its obligations under this Agreement, the
Designated Agreement and the other Operative Documents to which it is, or
is to be, a party; and each of the Guarantor and the Company is duly
qualified to transact business as a foreign corporation and is in good
standing in each
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other jurisdiction in which it owns or leases property of a nature, or
transacts business of a type, that would make such qualification necessary,
except to the extent that the failure to so qualify or be in good standing
would not have a material adverse effect on the Guarantor and its
subsidiaries, taken as a whole, or on the power or ability of the Guarantor
or the Company, as the case may be, to perform its obligations under this
Agreement, the Designated Agreement or the Operative Documents to which it
is, or is to be, a party or to consummate the transactions contemplated
hereby and thereby (any such material adverse effect, whether with respect
to the Guarantor or the Company, as applicable, is referred to herein as a
"Material Adverse Effect").
(g) Each subsidiary of the Guarantor (other than the Company) is a
corporation duly organized, validly existing and in good standing under the
laws of the jurisdiction of its incorporation with corporate power and
authority under such laws to own, lease and operate its properties and
conduct its business as described in the Prospectus, and is duly qualified
to transact business as a foreign corporation and is in good standing in
each other jurisdiction in which it owns or leases property of a nature, or
transacts business of a type, that would make such qualification necessary,
except to the extent that the failure to so qualify or be in good standing
would not have a Material Adverse Effect.
(h) The Designated Agreement and the other Operative Documents to
which the Guarantor and/or the Company is, or is to be, a party, have each
been duly authorized by the Guarantor and/or the Company, as the case may
be, and, when duly executed and delivered by the Guarantor and/or the
Company, as the case may be, and assuming the due authorization, execution
and delivery thereof by the other parties thereto, will constitute valid
and binding obligations of the Guarantor and/or the Company, as the case
may be, except as (A) the enforceability thereof may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting enforcement of creditors' rights generally, and by general
principles of equity and (B) the enforceability of the Charter and the Ship
Mortgage may be limited by applicable laws which may affect the remedies
provided therein, which laws, however, do not make such remedies inadequate
for the practical realization of the rights and remedies provided thereby.
The Basic Agreement as executed is substantially in the form filed as an
exhibit to the Registration Statement and has been duly qualified under the
Trust Indenture Act. The Offered Certificates, the Secured Notes, the
Indenture, the Designated Agreement and other Operative Documents to which
the Guarantor and/or the Company is, or is to be, a party will conform in
all material respects to the descriptions thereof in the Prospectus.
(i) The Offered Certificates, when duly executed, authenticated and
delivered by the Pass Through Trustee in accordance with the terms of the
Designated Agreement, this Agreement and any Delayed Delivery Contracts (as
defined below), will be duly
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5
issued under the Designated Agreement and will constitute valid and binding
obligations of the Pass Through Trustee, except as the enforceability
thereof may be limited by bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting enforcement of creditors' rights
generally and by general principles of equity; and the Holders thereof will
be entitled to the benefits of the Designated Agreement.
(j) The Secured Notes to be issued under the Indenture, when duly
executed and delivered by the Owner Trustee and duly authenticated by the
Indenture Trustee in accordance with the terms of the Indenture, will be
duly issued under the Indenture and will constitute the valid and binding
obligations of the Owner Trustee and the Holders thereof will be entitled
to the benefits of the Indenture.
(k) In the event that any of the Offered Certificates are purchased
pursuant to Delayed Delivery Contracts, each of such Delayed Delivery
Contracts has been duly authorized by the Guarantor and the Company and,
when duly executed and delivered by the Guarantor and the Company, will
constitute a valid and binding obligation of the Guarantor and the Company.
(l) Since the respective dates as of which information is given in the
Registration Statement and the Prospectus, except as otherwise stated
therein or contemplated thereby, there has not been any material adverse
change, or any development involving a prospective material adverse change,
in the condition, financial or otherwise, or in the earnings, or business
operations of the Guarantor and its subsidiaries, taken as a whole.
(m) The execution and delivery by the Guarantor and/or the Company of
this Agreement, the Designated Agreement and the other Operative Documents
to which the Guarantor and/or the Company is, or is to be, a party, the
consummation by the Guarantor and the Company of the transactions
contemplated in this Agreement, the Designated Agreement and such Operative
Documents, and compliance by the Guarantor and the Company with the terms
of this Agreement, the Designated Agreement and such other Operative
Documents, do not and will not result in any violation of the charter or
by-laws of the Guarantor or the Company, and do not and will not conflict
with, or result in a breach of any of the terms or provisions of, or
constitute a default under, or result in the creation or imposition of any
lien, charge or encumbrance (other than Permitted Liens) upon any property
or assets of the Guarantor or the Company under (A) any indenture,
mortgage, loan agreement, note, lease or other agreement or instrument to
which the Guarantor or any of its subsidiaries is a party or by which it
may be bound or to which any of its properties may be subject and which is
material to the Guarantor and its subsidiaries, taken as a whole, or to the
Company or (B) any existing applicable law, rule, regulation, judgment,
order or decree of any government, governmental instrumentality
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6
or court, domestic or foreign, having jurisdiction over the Guarantor or
any of the subsidiaries or any of their properties other than the
securities or Blue Sky or similar laws of the various states (except, in
the case of either clause (A) or (B), for such conflicts, breaches or
defaults or liens, charges or encumbrances that would not result in a
Material Adverse Effect).
(n) No authorization, approval, consent, order or license of or filing
with or notice to any government, governmental instrumentality or court,
domestic or foreign, is required for the valid authorization, issuance,
sale and delivery of the Offered Certificates, the valid authorization,
execution, delivery and performance by the Guarantor or the Company of this
Agreement, the Designated Agreement and the Guaranty and any Delayed
Delivery Contracts or the consummation by the Guarantor or the Company of
the transactions contemplated by this Agreement, the Designated Agreement
and the Guaranty, except (i) such as are required under the Securities Act,
the Trust Indenture Act and the securities or Blue Sky or similar laws of
the various states and (ii) those which if not obtained would not result in
a Material Adverse Effect.
(o) Except as disclosed in the Prospectus, there are no legal or
governmental proceedings pending or, to the knowledge of the Guarantor,
threatened to which the Guarantor or any of its subsidiaries is a party or
to which any of the properties of the Guarantor or any of its subsidiaries
is subject other than proceedings that if adversely determined would not
have a Material Adverse Effect.
(p) There are no contracts or documents of a character required to be
described in the Registration Statement or the Prospectus or to be filed as
exhibits to the Registration Statement that are not described and filed as
required.
(q) Each of the Guarantor and its subsidiaries has all necessary
consents, authorizations, approvals, orders, certificates and permits of
and from, and has made all declarations and filings with, all federal,
state, local and other governmental authorities, all self-regulatory
organizations and all courts and other tribunals, to own, lease, license
and use its properties and assets and to conduct its business in the manner
described in the Prospectus, except to the extent that the failure to so
obtain or file would not have a Material Adverse Effect.
(r) Neither the Guarantor nor the Company is an "investment company"
or a company "controlled" by an "investment company" within the meaning of
the Investment Company Act of 1940, as amended (the "Investment Company
Act"); and the Pass Through Trust, after giving effect to the offering and
sale of the Offered Certificates and the application of proceeds thereof as
described in the Prospectus, will not be an "investment company" as defined
in the Investment Company Act.
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(s) Neither the Guarantor nor the Company has taken or will take,
directly or indirectly, any actions prohibited by Regulation M under the
Exchange Act.
II.
Subject to the terms and conditions set forth herein and in reliance
upon the representations and warranties herein contained, the Guarantor and the
Company agree to cause the Pass Through Trustee to sell to you, and you agree to
purchase from the Pass Through Trustee, at a purchase price of 100% of the
principal amount thereof, the aggregate principal amount of Offered Certificates
set forth in Schedule A.
The Guarantor and the Company are advised by you that you propose to
make a public offering of the Offered Certificates as soon after this Agreement
has been entered into as in your judgment is advisable. The Guarantor and the
Company are further advised by you that the Offered Certificates are to be
offered to the public initially at 100% of their principal amount -- the public
offering price -- plus accrued interest, if any, and to certain dealers selected
by you at concessions not in excess of the concessions set forth in the
Prospectus, and that you may allow, and such dealers may reallow, concessions,
not in excess of the concessions set forth in the Prospectus, to certain other
dealers.
If specified in Schedule II, you may solicit offers from institutional
investors to purchase Offered Certificates pursuant to delayed delivery
contracts ("Delayed Delivery Contracts") substantially in the form of Schedule
III with such changes therein as the Company may approve. On the Closing Date
(as defined below), the Guarantor and the Company will enter into Delayed
Delivery Contracts (for the minimum principal amount of Certificates per Delayed
Delivery Contract specified in Schedule II) with all purchasers proposed by you
and previously approved by the Guarantor and the Company as provided below, but
not for an aggregate principal amount of Offered Certificates less than the
minimum or greater than the maximum aggregate principal amounts specified in
Schedule II. You will not have any responsibility for the validity or
performance of Delayed Delivery Contracts.
You are to submit to the Guarantor and the Company, at least three
business days prior to the Closing Date, the names of any institutional
investors with which it is proposed that the Company enter into Delayed Delivery
Contracts, the principal amount of Offered Certificates to be purchased by each
of them and the date of delivery thereof, and the Company will advise you, at
least two business days prior to the Closing Date, of the names of the
institutions with which the making of Delayed Delivery Contracts is approved by
the Company and the principal amount of Offered Certificates to be covered by
each such Delayed Delivery Contract.
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8
As compensation for arranging Delayed Delivery Contracts, the Company
will pay (by Federal funds check or other immediately available funds) to you on
the Closing Date, a fee equal to that percentage of the principal amount of
Offered Certificates for which Delayed Delivery Contracts are made on the
Closing Date as is specified in Schedule II or the amount of such fee may be
deducted from the check delivered by you pursuant to Article III.
As compensation to you for your commitments and obligations hereunder
in respect of the Offered Certificates, including your undertaking to distribute
Offered Certificates, the Guarantor will pay or cause to be paid by the Owner
Trustee to you an amount equal to that percentage of the aggregate principal
amount of the Offered Certificates purchased by you as set forth in Schedule A.
Such payment shall be made simultaneously with the payment by you to the Pass
Through Trustee of the purchase price of the Offered Certificates as specified
in Article III hereof. Payment of such compensation shall be made by Federal
funds check or other immediately available funds.
III.
Delivery of and payment for the Offered Certificates shall be made at
the offices of Haight, Gardner, Holland & Knight, New York, New York, at 9:00
A.M. (New York time) September 29, 1997, or such other date, time and place as
may be agreed upon by the Guarantor, the Company and you (such date and time of
delivery and payment for the Offered Certificates being herein called the
"Closing Date"). Delivery of the Offered Certificates shall be made to your
account at The Depository Trust Company against payment by you of the purchase
price thereof to or upon the order of the Pass Through Trustee by Federal funds
check or other immediately available funds. The Offered Certificates shall be
registered in the name of Cede & Co. or in such other names, and in such
denominations as you may request in writing at least two full business days in
advance of the Closing Date.
The Guarantor and the Company agree to have the Offered Certificates,
which may be in temporary form, available for inspection, checking and packaging
by you in New York, New York not later than 1:00 P.M. on the business day prior
to the Closing Date.
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9
IV.
Your obligations hereunder are subject to the following conditions:
(a) No stop order suspending the effectiveness of the Registration
Statement shall have been issued under the Securities Act and no
proceedings therefor shall have been instituted or threatened by the
Commission.
(b) You shall have received on the Closing Date an opinion of Haight,
Gardner, Holland & Knight, counsel for the Guarantor and the Company
reasonably acceptable to you, dated the Closing Date, in form satisfactory
to you and to your counsel, to the effect that:
(i) Assuming that the Offered Certificates have been duly
authorized and validly executed, authenticated, issued and delivered
by the Pass Through Trustee pursuant to the Designated Agreement, when
such Offered Certificates have been paid for in accordance with the
terms of this Agreement, such Offered Certificates will (x) be valid
and binding obligations of the Pass Through Trustee enforceable in
accordance with their terms except as may be limited by bankruptcy,
insolvency, moratorium, reorganization or similar laws affecting
creditors' rights generally and by general principles of equity and
(y) be entitled to the benefits of the Designated Agreement;
(ii) In the event that any of the Offered Certificates are to be
purchased pursuant to Delayed Delivery Contracts, each Delayed
Delivery Contract that has been executed by the Guarantor and the
Company has been duly authorized, executed and delivered by the
Guarantor and the Company and is a valid and binding obligation of the
Guarantor and the Company enforceable against the Guarantor and the
Company in accordance with its terms, except as may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar
laws affecting enforcement of creditors' rights generally and by
general principles of equity;
(iii) (x) The Offered Certificates, the Designated Agreement
and the Operative Documents conform in all material respects as to
legal matters to the descriptions thereof, if any, contained in the
Prospectus, and the description of the Offered Certificates conforms
in all material respects to the rights set forth in the instruments
defining the same and (y) insofar as they relate to admiralty or
maritime matters, the descriptions in the Prospectus of the statutes,
regulations, legal or governmental proceedings, contracts and other
documents therein
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10
described are accurate in all material respects and fairly summarize
the information required to be shown;
(iv) No authorization, approval, consent, order or license of or
filing with or notice to any government, governmental instrumentality,
regulatory body or authority or court is required for the valid
authorization, issuance and delivery of the Offered Certificates, the
valid authorization, execution, delivery and performance by the
Guarantor and the Company of this Agreement, the Designated Agreement
and the Guaranty, or the consummation by the Guarantor and/or the
Company of the transactions contemplated by this Agreement, the
Designated Agreement and/or the Guaranty, except (i) such as are
required under the Securities Act, the Trust Indenture Act and the
securities or Blue Sky laws of the various states (as to which such
counsel need express no opinion) and (ii) those which if not obtained
would not result in a Material Adverse Effect;
(v) The Participation Agreement has been duly authorized,
executed and delivered by the Company, and the Designated Agreement
has been duly authorized, executed and delivered by the Guarantor and
the Company and, assuming the due authorization, execution and
delivery thereof by the other parties thereto, each of the
Participation Agreement and the Designated Agreement is a valid and
binding obligation of the Guarantor and the Company enforceable
against the Guarantor and/or the Company in accordance with its terms,
except as may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting enforcement of creditors'
rights generally and by general principles of equity;
(vi) The Guaranty has been duly authorized and upon due execution
and delivery by the Guarantor will be a valid and binding obligation
of the Guarantor enforceable against the Guarantor in accordance with
its terms, except as may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting enforcement
of creditors' rights generally and by general principles of equity;
(vii) The statements in the Registration Statement and
Prospectus under the headings "Federal Income Tax Consequences" and
"ERISA Considerations", to the extent that they constitute matters of
law or legal conclusions with respect thereto, have been prepared or
reviewed by such counsel and are correct in all material respects;
(viii) Based upon an interpretation of analogous authorities
under currently applicable law, the Pass Through Trust created by the
Designated
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11
Agreement will be classified as a grantor trust (and not as an
association taxable as a corporation) for federal income tax purposes
and each Certificate Owner will be treated as the owner of a pro rata
undivided interest in each of the Secured Notes or any other property
held in the Pass Through Trust;
(ix) Upon consummation of the transactions contemplated by the
Participation Agreement, on the Closing Date, assuming due
authorization, execution and delivery by the Owner Trustee and due
authentication by the Indenture Trustee, the Secured Notes will
constitute valid and binding obligations of the Owner Trustee,
enforceable against the Owner Trustee in accordance with their terms,
except as may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting enforcement of creditors'
rights generally and by general principles of equity; and the holders
of the Secured Notes will be entitled to the benefits of the
Indenture; and
(x) Assuming due authorization, execution and delivery of the
Designated Agreement by the Pass Through Trustee, the Designated
Agreement constitutes the valid and binding obligation of the Pass
Through Trustee, enforceable in accordance with its terms, except as
may be limited by bankruptcy, insolvency, reorganization, moratorium
or other similar laws affecting enforcement of creditors' rights
generally and by general principles of equity;
and to such further effect with respect to other legal matters relating to
this Agreement, the Designated Agreement, the Participation Agreement, the
Guaranty and other Operative Documents to which the Guarantor and/or the
Company is, or is to be, a party and the sale of the Offered Certificates
hereunder as your counsel may reasonably request.
Such opinion may state that, except with respect to the matters set
forth in clauses (iii) and (x) above, such counsel have not verified, and
are not passing upon and do not assume any responsibility for, the
accuracy, completeness or fairness of the statements contained in the
Registration Statement or the Prospectus, or the documents incorporated by
reference therein, and have not made an independent investigation of facts
for the purpose of rendering such opinion. Such opinion shall state,
however, that no facts came to such counsel's attention that caused them to
believe that the descriptions of the Offered Certificates, the Designated
Agreement and the Operative Documents set forth under the headings
"Description of the Pass Through Certificates" and "Description of the
Secured Note" in the Prospectus or any amendment or supplement thereto, at
the time the Prospectus Supplement was issued, at the time any such amended
or supplemented prospectus was issued or at the Closing Date, included or
includes an untrue statement of a material fact or omitted or omits to
state a material fact necessary in order to make the
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12
statements therein, in the light of the circumstances under which they were
made, not misleading.
In addition, such counsel may rely upon the opinions of counsel for
the Owner Trustee and counsel for the Pass Through Trustee and the
Indenture Trustee, and may state that their opinion is limited to matters
governed by the laws of the State of New York, the corporate law of the
State of Delaware and the federal law of the United States, except that
such counsel expresses no opinion as to the securities laws of any state.
(c) You shall have received on the Closing Date an opinion of Ralph N.
Johanson, Jr., Managing Counsel, Corporate, Finance and Securities of the
Guarantor, dated the Closing Date, in form satisfactory to you and to your
counsel, to the effect that:
(i) Each of the Guarantor and the Company is a corporation duly
organized, validly existing and in good standing under the laws of the
State of Delaware with corporate power and authority under such laws
to own, lease and operate its properties and conduct its business as
described in the Prospectus and to perform its obligations under this
Agreement, the Designated Agreement, the Participation Agreement and
the other Operative Documents to which the Guarantor and/or the
Company is, or is to be, a party;
(ii) Each of Mobil's Significant Subsidiaries (as defined under
Regulation S-X) has been duly incorporated, is validly existing as a
corporation in good standing under the laws of the jurisdiction of its
incorporation, has the corporate power and authority to own its
property and to conduct its business as described in the Prospectus;
(iii) Each of the Guarantor and the Company is duly qualified
to transact business as a foreign corporation and is in good standing
in each other jurisdiction in which it owns or leases property of a
nature, or transacts business of a type, that would make such
qualification necessary, except to the extent that the failure to so
qualify or be in good standing would not have a Material Adverse
Effect;
(iv) Each of the Guarantor, the Company and the Guarantor's
Significant Subsidiaries (as defined under Regulation S-X) has all
necessary consents, authorizations, approvals, orders, certificates
and permits of and from, and has made all declarations and filings
with, all federal, state, local and other governmental authorities,
all self-regulatory organizations and all courts and other tribunals,
to own, lease, license and use its properties and assets and to
conduct its business in the manner described in the Prospectus, except
to the extent that, with
<PAGE>
13
respect to the Guarantor and its Significant Subsidiaries, the failure to
obtain or file would not have a material adverse effect on the Guarantor
and its subsidiaries, taken as a whole and with respect to the Company, the
failure to obtain or file would not have a Material Adverse Effect;
(v) No authorization, approval, consent, order or license of or
filing with or notice to any government, governmental instrumentality,
regulatory body or authority or court is required for the valid
authorization, issuance and delivery of the Offered Certificates, the
valid authorization, execution, delivery and performance by the
Guarantor and/or the Company of this Agreement, the Designated
Agreement and the Guaranty, or the consummation by the Guarantor
and/or the Company of the transactions contemplated by this Agreement,
the Designated Agreement and the Guaranty, except (i) such as are
required under the Securities Act, the Trust Indenture Act and the
securities or Blue Sky laws of the various states (as to which such
counsel need express no opinion) and (ii) those which if not obtained
would not result in a Material Adverse Effect;
(vi) To the best of such counsel's knowledge, there are no
statutes or regulations, or any pending or threatened legal or
governmental proceedings, required to be described in the Prospectus
that are not described as required, nor any contracts or documents of
a character required to be described or referred to in the
Registration Statement or the Prospectus or to be filed as exhibits to
the Registration Statement that are not described, referred to or
filed as required;
(vii) The descriptions in the Prospectus of the statutes,
regulations, legal or governmental proceedings, contracts and other
documents therein described are accurate in all material respects and
fairly summarize the information required to be shown;
(viii) To such counsel's knowledge, no default exists in the
Guarantor's or the Company's performance or observance of any material
obligation, agreement, covenant or condition contained in any material
contract, indenture, mortgage, loan agreement, note, lease or other
agreement or instrument that is described or referred to in the
Registration Statement or the Prospectus or filed as an exhibit to the
Registration Statement;
(ix) This Agreement, the Designated Agreement, the Participation
Agreement and the Operative Documents to which the Guarantor and/or
the Company is a party have each been authorized, executed and
delivered by the Guarantor and/or the Company, as the case may be.
The execution and delivery by the Guarantor and/or the Company of this
Agreement, the Designated
<PAGE>
14
Agreement, the Participation Agreement and the Operative Documents to
which the Guarantor and/or the Company is a party, the issuance and
sale of the Certificates, the consummation by the Guarantor and/or
Company of the transactions contemplated in this Agreement, the
Designated Agreement and the Participation Agreement, in the
Registration Statement and in such Operative Documents and compliance
by the Guarantor and/or the Company, as the case may be, with the
terms hereof and thereof do not and will not result in any violation
of the charter or by-laws of the Guarantor or the Company, and do not
and will not conflict with, or result in a breach of any of the terms
or provisions of, or constitute a default under, or result in the
creation or imposition of any lien, charge or encumbrance (except for
Permitted Liens) upon any property or assets of the Guarantor or the
Company under (A) any indenture, mortgage, loan agreement, note, lease
or other agreement or instrument known to such counsel, to which the
Guarantor or the Company is a party or by which it may be bound or to
which any of its properties may be subject (except for such conflicts,
breaches or defaults or liens, charges or encumbrances that would not
have a Material Adverse Effect), (B) any existing law, rule or
regulation applicable to the Guarantor or the Company (other than the
securities or Blue Sky laws of the various states, as to which such
counsel need express no opinion), or (C) any judgment, order or decree
of any government, governmental instrumentality or court, domestic or
foreign, known to such counsel having jurisdiction over the Guarantor
or the Company or any of their properties;
(x) The documents incorporated by reference in the Prospectus
(except for the financial statements and other financial data included
or incorporated by reference therein or omitted therefrom, as to which
such counsel need express no opinion), as of the dates they were filed
with the Commission, complied as to form in all material respects with
the requirements of the Exchange Act and the rules and regulations
thereunder;
(xi) Neither the Guarantor nor the Company is an "investment
company" or a company "controlled" by an "investment company" within
the meaning of the Investment Company Act of 1940, as amended;
(xii) The Registration Statement has become effective under the
Securities Act, the Basic Agreement has been duly qualified under the
Trust Indenture Act and, to the knowledge of such counsel, no stop
order suspending the effectiveness of the Registration Statement has
been issued and no proceedings for that purpose have been instituted
or threatened;
<PAGE>
15
(xiii) The Registration Statement, the Prospectus and each
amendment thereof or supplement thereto (except for the financial
statements and other financial data included or incorporated by
reference therein, the documents incorporated by reference in the
Prospectus, and the Statement of Eligibility, as to which such counsel
need express no opinion) comply as to form in all material respects
with the requirements of the Securities Act;
(xiv) Although counsel is not aware of any judicial authority,
the Pass Through Trust is not required to be registered under the
Investment Company Act of 1940, as amended; and
(xv) This Agreement has been duly authorized, executed and
delivered by the Guarantor and the Company.
Such opinion shall also state that such counsel or lawyers on his
staff have participated in the preparation of the Registration Statement,
the Prospectus and the documents incorporated by reference therein and that
no facts have come to his attention to lead him to believe (A) that the
Registration Statement or any amendment thereto (except for (i) the
financial statements and other financial data included therein or omitted
therefrom, (ii) the Statement of Eligibility and Qualification of the
Trustee on Form T-1 and (iii) the descriptions of the Offered Certificates,
the Designated Agreement and the Operative Documents set forth under the
headings "Description of the Pass Through Certificates" and "Description of
the Secured Note" in the Prospectus Supplement, as to which such counsel
need express no opinion), at the time the Registration Statement or any
such amendment became effective, contained an untrue statement of a
material fact or omitted to state a material fact required to be stated
therein or necessary to make the statements therein not misleading, (B)
that the Prospectus or any amendment or supplement thereto (except for the
financial statements and other financial data included therein or omitted
therefrom and the descriptions of the Offered Certificates, the Designated
Agreement and the Operative Documents set forth under the headings
"Description of the Pass Through Certificates" and "Description of the
Secured Note" in the Prospectus Supplement, as to which such counsel need
express no opinion), at the time the Prospectus was issued, at the time any
such amended or supplemented prospectus was issued or at the Closing Date,
included or includes an untrue statement of a material fact or omitted or
omits to state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading or (C) that the documents incorporated by reference in the
Prospectus (except for the financial statements and other financial data
included therein or omitted therefrom and the Statement of Eligibility, as
to which such counsel need express no opinion), as of the dates they were
filed with the Commission, included an untrue statement of a material
<PAGE>
16
fact or omitted to state a material fact required to be stated therein or
necessary to make the statements therein not misleading.
It shall be understood that such opinion shall not address matters of
admiralty law, which are the subject of the opinion of Haight Gardner
Holland & Knight to be delivered pursuant to the Participation Agreement.
(d) You shall have received on the Closing Date an opinion of Bingham,
Dana & Gould LLP, counsel to SSB&T, individually and as Pass Through
Trustee and Indenture Trustee, dated the Closing Date to the effect that:
(i) SSB&T is a state chartered trust company duly organized
and validly existing in good standing under the laws of the
Commonwealth of Massachusetts and, in its individual capacity or as
Pass Through Trustee or Indenture Trustee, as the case may be, has
full corporate power and authority to execute, deliver and perform its
obligations under the Designated Agreement, the Offered Certificates,
the Participation Agreement and the other Operative Documents to which
it is a party;
(ii) SSB&T, in its individual capacity or as Pass Through
Trustee or as Indenture Trustee, as the case may be, has duly
authorized the Designated Agreement, the Participation Agreement, the
Indenture and the other Operative Documents to which it is a party,
and has duly executed and delivered the Designated Agreement, the
Participation Agreement and the Indenture which constitute, and on the
Closing Date the other Operative Documents to which it is a party upon
due execution and delivery thereof will constitute, valid and binding
obligations of SSB&T, in its individual capacity or as Pass Through
Trustee or Indenture Trustee, as the case may be, enforceable against
SSB&T, in its individual capacity or as Pass Through Trustee or
Indenture Trustee, as the case may be, in accordance with their
respective terms, except as enforcement thereof may be limited by
bankruptcy, insolvency, reorganization or other similar laws affecting
enforcement of creditors' rights generally, and except as enforcement
thereof is subject to general principles of equity (regardless of
whether enforcement is considered in a proceeding in equity or at
law);
(iii) The Offered Certificates have been duly authorized and
validly executed, authenticated, issued and delivered pursuant to the
Designated Agreement by SSB&T in its capacity as Pass Through Trustee,
pursuant to the Designated Agreement and the Offered Certificates
constitute valid and binding obligations of SSB&T, in its capacity as
Pass Through Trustee, enforceable against SSB&T, as Pass Through
Trustee, in accordance with their respective
<PAGE>
17
terms, except as enforcement thereof may be limited by bankruptcy,
insolvency, reorganization or other similar laws affecting enforcement
of creditors' rights generally, and except as enforcement thereof is
subject to general principles of equity (regardless of whether
enforcement is considered in a proceeding in equity or at law);
pursuant to the Designated Agreement, and the holders of the Offered
Certificates are entitled to the benefits of the Designated Agreement;
(iv) The authorization, execution, delivery and performance by
SSB&T, in its individual capacity or as Pass Through Trustee or
Indenture Trustee as the case may be, of the Designated Agreement, the
Participation Agreement, the Indenture or the other Operative
Documents to which it is, or is to be, a party and the consummation of
the transactions therein contemplated and compliance with the terms
thereof and issuance of the Offered Certificates under the Designated
Agreement do not and will not result in the violation of the
provisions of the charter documents or by-laws of the SSB&T and do not
and will not conflict with, or result in a breach of any terms or
provisions of, or constitute a default under, or result in the
creation or the imposition of any lien, charge or encumbrance upon any
property or assets of the Trustee under any indenture, mortgage or
other agreement or instrument known to such counsel to which SSB&T is
a party or by which it or any of its property is bound, or any
Massachusetts or federal law, rule or regulation governing SSB&T's
banking or trust powers, or of any judgment, order or decree known to
such counsel to be applicable to SSB&T of any court, regulatory body,
administrative agency, government or governmental body having
jurisdiction over SSB&T or its properties;
(v) No authorization, approval, consent, license or order of,
giving of notice to, registration with, or taking of any other action
in respect of, any federal or state governmental authority or agency
pursuant to any federal or Massachusetts law governing the banking or
trust powers of SSB&T is required for the authorization, execution,
delivery and performance by SSB&T, in its individual capacity or as
Pass Through Trustee or Indenture Trustee, as the case may be, of the
Designated Agreement, the Participation Agreement, the Indenture or
the other Operative Documents to which it is, or is to be, a party or
the consummation of any of the transactions by SSB&T, in its
individual capacity or as Pass Through Trustee or Indenture Trustee as
the case may be, contemplated thereby or the issuance of the Offered
Certificates under the Designated Agreement (except as shall have been
duly obtained, given or taken); and such authorization, execution,
delivery, performance, consummation and issuance do not conflict with
or result in a breach of the provisions of any such law;
<PAGE>
18
(vi) There are no taxes, fees or other governmental charges
payable under the laws of the Commonwealth of Massachusetts or any
political subdivision of such State in connection with the execution
and delivery by SSB&T, of the Designated Agreement and the other
Operative Documents or in connection with the issuance, execution and
delivery of the Offered Certificates by SSB&T pursuant to the
Designated Agreement;
(vii) The statements in the Registration Statements and in
the Prospectus under the caption "Certain Massachusetts Taxes", to the
extent that they constitute matters of law or legal conclusions with
respect thereto, have been prepared and reviewed by such counsel and
are correct in all material respects; and
(viii) To such counsel's knowledge, there are no proceedings
pending or threatened against or affecting SSB&T in any court or
before any governmental authority, agency, arbitration board or
tribunal which, if adversely determined, individually or in the
aggregate, would materially and adversely affect the Pass Through
Trust or any trust related to any Indenture or question the right,
power and authority of SSB&T, in its individual capacity or as Pass
Through Trustee or Indenture Trustee as the case may be, to enter into
or perform its obligations under the Designated Agreement, the
Participation Agreement and the other Operative Documents to which it
is, or is to be, a party or to issue the Offered Certificates.
(e) You shall have received on the Closing Date an opinion of Shearman
& Sterling, your counsel, dated the Closing Date, to the effect that the
opinions delivered pursuant to paragraphs (b), (c) and (d) appear on their
face to be appropriately responsive to the requirements of this Agreement
except, specifying the same, to the extent waived by you and with respect
to the issuance and sale of the Offered Certificates, the Registration
Statement, the Prospectus and other related matters as you may reasonably
require.
(f) There shall not have occurred any change, or any development
involving a prospective change, in the condition, financial or otherwise,
or in the earnings, business or operations, of the Guarantor and its
subsidiaries, taken as a whole, from that set forth in the Prospectus, that
is material and adverse and that would, in your reasonable judgment after
consultation with the Guarantor, prevent or materially impair the
marketing or enforcement of contracts for sale of the Offered Certificates
on the terms and in the manner contemplated in the Prospectus.
<PAGE>
19
(g) Subsequent to the execution and delivery of this Agreement and
prior to the Closing Date, there shall not have been any downgrading, nor
any notice given either publicly or directly to the Guarantor of any
intended or potential downgrading or any review with possible negative
implications, in the rating accorded any of the Guarantor's or the
Company's securities, including the Offered Certificates, by Standard &
Poor's Rating Group or Moody's Investors Service, Inc.
(h) You shall have received on the Closing Date (i) a certificate,
dated the Closing Date and signed by the President, a Vice President, the
Treasurer or the Controller of the Guarantor, to the effect set forth in
paragraph (g) above and to the effect that the representations and
warranties of the Guarantor contained in this Agreement shall be true and
correct as of the Closing Date and that the Guarantor shall have performed
all of its obligations to be performed hereunder on or prior to the Closing
Date and (ii) a certificate, dated the Closing Date and signed by the
President, a Vice President, the Treasurer or the Controller of the
Company, to the effect that the representations and warranties of the
Company contained in this Agreement shall be true and correct as of the
Closing Date and that the Company shall have performed all of its
obligations to be performed hereunder on or prior to the Closing Date.
(i) You shall have received on the Closing Date a letter from E&Y,
dated the Closing Date, in form and substance satisfactory to you, from the
Guarantor's independent auditors, containing statements and information of
the type ordinarily included in auditors' "comfort letters" to underwriters
with respect to the financial statements and certain financial information
contained in or incorporated by reference into the Prospectus.
(j) All conditions specified in the Participation Agreement with
respect to the Pass Through Trustee's purchase of the Secured Note on the
Closing Date shall have been satisfied on the Closing Date; the
representations and warranties of the Company contained in the
Participation Agreement shall be accurate as of the Closing Date (except to
the extent that they relate solely to an earlier date in which case they
shall be accurate as of such earlier date) and you shall have received a
certificate of a Vice President, Treasurer or Assistant Treasurer of the
Company, dated as of the Closing Date, to such effect; and you shall have
received each opinion referred to in Section 4.6 of the Participation
Agreement (except the Mayer, Brown & Platt tax opinion).
(k) The representations and warranties of the Guarantor contained in
the Guaranty shall be accurate as of the Closing Date (except to the extent
that they relate solely to an earlier date in which case they shall be
accurate as of such earlier date) and you shall have received a certificate
of a Vice President, Treasurer or Assistant Treasurer of the Guarantor,
dated as of the Closing Date, to such effect.
<PAGE>
20
(l) The Guarantor and the Company shall have furnished to you and to
your counsel, in form and substance satisfactory to them, such other
documents, certificates and opinions as such counsel may reasonably request
in order to evidence the accuracy and completeness of any of the
representations, warranties or statements, the performance of any covenant
by the Guarantor or the Company theretofore to be performed, or the
compliance with any of the conditions herein contained.
V.
In further consideration of the agreements of your agreement herein
contained, the Guarantor and the Company covenant as follows:
(a) To furnish to you, without charge, one signed copy of the
Registration Statement including exhibits and a conformed copy of the
Registration Statement without exhibits and, during the period mentioned in
paragraph (c) below, as many copies of the Prospectus, any documents
incorporated by reference therein and any supplements and amendments
thereto or to the Registration Statement as you may reasonably request.
(b) Before amending or supplementing the Registration Statement or the
Prospectus, to furnish you a copy of each such proposed amendment or
supplement, and to file no such proposed amendment or supplement to which
you reasonably object.
(c) If, during such period after the first date of the public offering
of the Offered Certificates as in the opinion your counsel the Prospectus
is required by law to be delivered in connection with sales by you or a
dealer, any event shall occur as a result of which it is necessary to amend
or supplement the Prospectus in order to make the statements therein, in
the light of the circumstances when the Prospectus is delivered to a
purchaser, not misleading, or if it is necessary to amend or supplement the
Prospectus to comply with law, forthwith to prepare and furnish, at its own
expense, to you and to the dealers (whose names and addresses you will
furnish to the Guarantor and the Company) to which Offered Certificates may
have been sold by you on behalf of you and to any other dealers upon
request, either amendments or supplements to the Prospectus so that the
statements in the Prospectus as so amended or supplemented will not, in the
light of the circumstances when the Prospectus is delivered to a purchaser,
be misleading or so that the Prospectus, as so amended or supplemented,
will comply with law and to cause such amendments or supplements to be
filed promptly with the Commission.
(d) To endeavor to qualify the Offered Certificates for offer and sale
under the securities or Blue Sky laws of such jurisdictions as you shall
reasonably request, to maintain such qualifications for so long as required
for the distribution of such Offered
<PAGE>
21
Securities and to pay all expenses (including filing fees and reasonable
fees and disbursements of counsel) in connection with such qualification
and in connection with (i) the review (if any) of the offering of the
Offered Certificates by the National Association of Securities Dealers,
Inc., (ii) the determination of the eligibility of the Offered Certificates
for investment under the laws of such jurisdictions as you may designate
and (iii) the preparation of any Blue Sky or Legal Investment Memorandum;
provided, however, that neither the Guarantor nor the Company shall be
-------- -------
obligated to file any general consent to service of process or to qualify
as a foreign corporation or as a dealer in securities in any jurisdiction
in which it is not so qualified or to subject itself to taxation in respect
of doing business in any jurisdiction in which it is not otherwise so
subject.
(e) To make generally available to the Guarantor's security holders as
soon as practicable an earnings statement covering the twelve-month period
ending twelve months after the end of the Guarantor's fiscal quarter in
which the Closing Date occurs that satisfies the provisions of Section
11(a) of the Securities Act.
(f) Between the date of this Agreement and the Closing Date, neither
the Guarantor nor the Company will without your prior written consent
offer, sell, or enter into any agreement to sell, any public debt
securities registered under the Securities Act (other than the Offered
Certificates) or any debt securities which may be resold in a transaction
exempt from the registration requirements of the Securities Act in reliance
on Rule 144A thereunder and which are marketed through the use of a
disclosure document containing substantially the same information as a
prospectus for similar debt securities registered under the Securities Act.
(g) The Guarantor, during the period when a prospectus relating to the
Offered Certificates is required to be delivered under the Securities Act,
will file promptly all documents required to be filed with the Commission
pursuant to Section 13, 14 or 15(d) of the Exchange Act.
VI.
The Guarantor and the Company, jointly and severally, agree to
indemnify and hold harmless you and each person, if any, who controls you within
the meaning of either Section 15 of the Securities Act or Section 20 of the
Exchange Act from and against any and all losses, claims, damages and
liabilities caused by any untrue statement or allegedly untrue statement of a
material fact contained in the Registration Statement, any preliminary
prospectus or the Prospectus (as amended or supplemented if the Guarantor or the
Company shall have furnished any amendments or supplements thereto) or caused by
any omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the
<PAGE>
22
statements therein not misleading, except insofar as such losses, claims,
damages or liabilities are caused by any such untrue statement or omission or
allegedly untrue statement or alleged omission based upon information relating
to you furnished to the Guarantor and/or the Company in writing by you expressly
for use therein; provided, however, that the foregoing indemnity agreement with
-------- -------
respect to any Preliminary Prospectus Supplement shall not inure to the benefit
of you or any person controlling you with respect to any person asserting any
such losses, claims, damages or liabilities who purchased Offered Certificates
from you or any person controlling you, if a copy of the Prospectus (as then
amended or supplemented if the Guarantor and the Company shall have furnished
any amendments or supplements thereto) was not sent or given by or on behalf of
you to such person, if required by law so to have been delivered, at or prior to
the written confirmation of the sale of the Offered Certificates to such person,
and if the Prospectus (as so amended or supplemented) would have cured the
defect giving rise to such losses, claims, damages or liabilities.
You agree to indemnify and hold harmless the Guarantor and the
Company, each of their directors, each of their officers who sign the
Registration Statement and each person, if any, who controls the Guarantor or
the Company within the meaning of either Section 15 of the Securities Act or
Section 20 of the Exchange Act to the same extent as the foregoing indemnity
from the Guarantor and the Company to you, but only with reference to
information relating to you furnished to the Guarantor and/or the Company in
writing by you expressly for use in the Registration Statement, any preliminary
prospectus, the Prospectus or any amendments or supplements thereto.
In case any proceeding (including any governmental investigation)
shall be instituted involving any person in respect of which indemnity may be
sought pursuant to either of the two preceding paragraphs, such person (the
"indemnified party") shall promptly notify the person against whom such
indemnity may be sought (the "indemnifying party") in writing and the
indemnifying party, upon request of the indemnified party, shall retain counsel
reasonably satisfactory to the indemnified party to represent the indemnified
party and any others the indemnifying party may designate in such proceeding and
shall pay the fees and disbursements of such counsel related to such proceeding.
In any such proceeding, any indemnified party shall have the right to retain its
own counsel, but the fees and expenses of such counsel shall be at the expense
of such indemnified party unless (i) the indemnifying party and the indemnified
party shall have mutually agreed to the retention of such counsel or (ii) the
named parties to any such proceeding (including any impleaded parties) include
both the indemnifying party and the indemnified party and representation of both
parties by the same counsel would be inappropriate due to actual or potential
differing interests between them. It is understood that the indemnifying party
shall not, in connection with any proceeding or related proceedings in the same
jurisdiction, be liable for the fees and expenses of more than one separate
firm (in addition to any local counsel) for all such indemnified parties, and
that all such fees and expenses shall be reimbursed as they are incurred. In
the case of any such separate firm for you and such control persons of
<PAGE>
23
you, such firm shall be designated in writing by you. In the case of any such
separate firm for the Guarantor and the Company, and such directors, officers
and control persons of the Guarantor and the Company, such firm shall be
designated in writing by the Guarantor or the Company, as the case may be. The
indemnifying party shall not be liable for any settlement of any proceeding
effected without its written consent, but if settled with such consent or if
there be a final judgment for the plaintiff, the indemnifying party agrees to
indemnify the indemnified party from and against any loss or liability by reason
of such settlement or judgment. No indemnifying party shall, without the prior
written consent of the indemnified party, effect any settlement of any pending
or threatened proceeding in respect of which any indemnified party is or could
have been a party and indemnity could have been sought hereunder by such
indemnified party, unless such settlement includes an unconditional release of
such indemnified party from all liability on claims that are the subject matter
of such proceeding.
If the indemnification provided for in the first or second paragraph
of this Article VI is unavailable to an indemnified party or insufficient in
respect of any losses, claims, damages or liabilities referred to therein, then
each indemnifying party under such paragraph, in lieu of indemnifying such
indemnified party thereunder, shall contribute to the amount paid or payable by
such indemnified party as a result of such losses, claims, damages or
liabilities (i) in such proportion as is appropriate to reflect the relative
benefits received by the Guarantor and the Company on the one hand and you on
the other hand from the offering of the Offered Certificates or (ii) if the
allocation provided by clause (i) above is not permitted by applicable law, in
such proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) above but also the relative fault of the Guarantor and
the Company on the one hand and of you on the other hand in connection with the
statements or omissions that resulted in such losses, claims, damages or
liabilities, as well as any other relevant equitable considerations. The
relative benefits received by the Guarantor and the Company on the one hand and
you on the other hand shall be deemed to be in the same respective proportions
as the net proceeds from the offering of the Offered Certificates (before
deducting expenses) received by the Pass Through Trustee and the total
underwriting commissions received by you, in each case as set forth in the table
and footnotes thereto on the cover of the Prospectus Supplement, bear to the
aggregate public offering price of the Offered Certificates. The relative fault
of the Guarantor and the Company on the one hand and you on the other hand shall
be determined by reference to, among other things, whether the untrue or
allegedly untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by the
Guarantor or the Company or by you and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such statement or
omission.
The Guarantor, the Company and you agree that it would not be just and
equitable if contribution pursuant to this Article VI were determined by pro
---
rata allocation or by any other method of allocation that does not take account
- ----
of the equitable considerations referred to in the immediately preceding
paragraph. The amount paid or payable by an indemnified party as a
<PAGE>
24
result of the losses, claims, damages and liabilities referred to in the
immediately preceding paragraph shall be deemed to include, subject to the
limitations set forth above, any legal or other expenses reasonably incurred by
such indemnified party in connection with investigating or defending any such
action or claim. Notwithstanding the provisions of this Article VI, you shall
not be required to contribute any amount in excess of the amount by which the
total price at which the Offered Certificates underwritten by you and
distributed to the public were offered to the public exceeds the amount of any
damages that you have otherwise been required to pay by reason of such untrue or
allegedly untrue statement or omission or alleged omission. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. The remedies provided in this
Article VI are not exclusive and shall not limit any rights or remedies which
may otherwise be available to any indemnified party at law or in equity.
The indemnity and contribution agreements contained in this Article VI
and the representations and warranties of the Guarantor and the Company
contained in this Agreement shall remain operative and in full force and effect
regardless of (i) any termination of this Agreement, (ii) any investigation made
by or on behalf of you or any person controlling you or by or on behalf of the
Guarantor or the Company, its officers or directors or any other person
controlling the Guarantor or the Company and (iii) acceptance of and payment for
any of the Offered Certificates.
VII.
This Agreement shall be subject to termination in your absolute
discretion, by notice given to the Guarantor or the Company, if (a) after the
execution and delivery of this Agreement and prior to the Closing Date (i)
trading generally shall have been suspended or materially limited on or by, as
the case may be, any of the New York Stock Exchange, the American Stock
Exchange, the National Association of Securities Dealers, Inc., the Chicago
Board of Options Exchange, the Chicago Mercantile Exchange or the Chicago Board
of Trade, (ii) trading of any securities of the Guarantor or the Company shall
have been suspended on any exchange or in any over-the-counter market, (iii) a
general moratorium on commercial banking activities in New York shall have been
declared by either Federal or New York State authorities, or (iv) there shall
have occurred any outbreak or escalation of hostilities or any change in
financial markets or any calamity or crisis that, in your judgment, is material
and adverse and (b) in the case of any of the events specified in clauses (a)(i)
through (iv), such event singly or together with any other such event would, in
your reasonable judgement after consultation with the Guarantor, prevent or
materially impair the marketing, or enforcement of contracts for sale, of the
Offered Certificates on the terms and in the manner contemplated in the
Prospectus.
<PAGE>
25
VIII.
If this Agreement shall be terminated by you, because of any failure
or refusal on the part of the Guarantor or the Company to comply with the terms
or to fulfill any of the conditions of this Agreement, or if for any reason the
Guarantor or the Company shall be unable to perform its obligations under this
Agreement, the Guarantor and the Company, jointly and severally, will reimburse
you for all out-of-pocket expenses (including the fees and disbursements of your
counsel) reasonably incurred by you in connection with this Agreement or the
offering contemplated hereunder.
This Agreement may be signed in two or more counterparts, each of
which shall be an original, with the same effect as if the signatures thereto
and hereto were upon the same instrument.
<PAGE>
This Agreement shall be governed by and construed in accordance with
the internal laws of the State of New York.
Very truly yours,
MOBIL TRANSPORT FINANCE COMPANY INC.
By: /s/ RICHARD E. SLIWINSKI
______________________
Name: Richard E. Sliwinski
Title: Vice-President
MOBIL CORPORATION
By: /s/ J.A. SARNOWSKI
______________________
Name: J.A. Sarnoswki
Title: Assistant Treasurer
Accepted as of the date first
above written:
MORGAN STANLEY & CO. INCORPORATED
By: /s/ TOM CAHILL
_______________________
Name: Tom Cahill
Title: Principal
<PAGE>
MOBIL CORPORATION
MOBIL TRANSPORT FINANCE COMPANY INC.
1997-B PASS THROUGH TRUST
PASS THROUGH CERTIFICATES,
SERIES 1997-B
UNDERWRITING AGREEMENT
<PAGE>
28
Dated: September 23, 1997
<PAGE>
SCHEDULE A
Pass Through Aggregate Final
Certificate Principal Interest Distribution Underwriting
Designation Amount Rate Date Commissions
----------- ------ ---- ---- -----------
Series 1997-B $36,714,000 6.654% July 31, 2015 $238,641
<PAGE>
SCHEDULE II
to
Underwriting
Agreement
Dated:___________
MOBIL TRANSPORT FINANCE COMPANY INC.
MOBIL CORPORATION, GUARANTOR
Underwriting fees, discounts, commissions or other compensation:
Closing date, time and location:
Location for checking Offered Certificates:
Delayed delivery contracts: [Authorized] [Not Authorized]
[Delivery date:
Minimum principal amount per contract:
Minimum aggregate principal amount:
Maximum aggregate principal amount:
Fee: %]
Listing requirement:
Other terms and conditions:
<PAGE>
SCHEDULE III
to
Underwriting
Agreement
Dated:_________
MOBIL TRANSPORT FINANCE COMPANY INC., ISSUER
MOBIL CORPORATION, GUARANTOR
PASS THROUGH CERTIFICATES
DELAYED DELIVERY CONTRACT
Mobil Transport Finance Company Inc.
3225 Gallows Road
Fairfax, Virginia 22037
Dear Sirs:
The undersigned hereby agrees with Mobil Transport Finance Company
Inc., a Delaware corporation (the "Company"), and Mobil Corporation, a Delaware
corporation (the "Guarantor"), to purchase and the Company and the Guarantor
agree with the undersigned to cause State Street Bank and Trust Company, not in
its individual capacity but solely as trustee under a Pass Through Trust
Agreement dated _________, 1997, as supplemented by the Pass Through Trust
Supplement No. 1997-B, dated ______, 1997 to issue and sell to the undersigned
on ________, 1997 (the "Delivery Date"), $___ aggregate principal amount of the
Trustee's Pass Through Certificates Series 1997-B (the "Offered Certificates"),
offered by the Company's Prospectus dated November 12, 1996, as supplemented by
its Prospectus Supplement dated September ___, 1997, relating to the Offered
Certificates, receipt of which is hereby acknowledged, at a purchase price of
__% of the principal amount thereof, plus interest accrued on the principal
amount thereof at a rate borne by the Offered Certificates from ___________,
1997 to the Delivery Date, and on the further terms and conditions set forth in
this contract.
Payment for the Offered Certificates which the undersigned has agreed
to purchase shall be made to State Street Bank and Trust Company, as Trustee, or
its order by
<PAGE>
2
Federal funds check or other immediately available funds, at the
offices of [____________], [__________________], New York, New York, at ______
A.M., New York time, on the Delivery Date (or in such other funds and/or at such
other place as the Guarantor, the Company, the Trustee and the undersigned may
agree upon in writing) upon delivery to the undersigned of the Offered
Certificates to be purchased by the undersigned and in such authorized
denominations and registered in such names as the undersigned may request in
writing addressed to the Guarantor, the Company and the Trustee not less than
three business days prior to the Delivery Date.
The obligation of the undersigned to take delivery of and make payment
for the Offered Certificates on the Delivery Date shall be subject only to the
conditions that (1) the purchase of the Offered Certificates to be made by the
undersigned shall not on the Delivery Date be prohibited under the laws of any
jurisdiction to which the undersigned is subject and which govern such
investment, and (2) the Trustee, on or before ___________, 1997, shall have sold
to the Underwriters of the Offered Certificates (the "Underwriters") such
principal amount of the Offered Certificates as is to be sold to them pursuant
to the Underwriting Agreement dated the date hereof among the Guarantor, the
Company and the Underwriters. The obligation of the undersigned to take delivery
of and make payment for the Offered Certificates shall not be affected by the
failure of any Underwriter or other purchaser to take delivery of and make
payment for the Offered Certificates pursuant to other contracts similar to this
contract.
Promptly after completion of the sale to the Underwriters, the Company
will mail or deliver to the undersigned at its address set forth below a notice
to such effect, accompanied by copies of the opinions of counsel for the
Guarantor and the Company and counsel for the Trustee delivered to the
Underwriters in connection therewith.
By the execution hereof, the undersigned represents and warrants to
the Guarantor and the Company that (1) its investment in the Offered
Certificates is not, as of the date hereof, prohibited under the laws of any
jurisdiction to which the undersigned is subject and which govern such
investment, (2) all necessary corporate action for the due execution and
delivery of this contract and the payment for and purchase of the Offered
Certificates has been taken by it and no further authorization or approval of
any governmental or other regulatory authority is required for such execution,
delivery, payment or purchase and (3) upon the acceptance hereof by the
Guarantor and the Company and the mailing or delivery of a copy hereof as
provided below, this contract will constitute a valid and binding agreement of
the undersigned in accordance with its terms.
This contract will inure to the benefit of and be binding upon the
parties hereto and their respective successors, but will not be assignable by
either party hereto without the written consent of the other.
<PAGE>
3
It is understood that neither the Company nor the Guarantor will
accept Delayed Delivery Contracts for an aggregate principal amount of the
Offered Certificates in excess of $___ and that the acceptance of any Delayed
Delivery Contract is in the sole discretion of the Company and the Guarantor
and, without limiting the foregoing, need not be on a "first come, first served"
basis. If this contract is acceptable to the Company and the Guarantor, it is
requested that the Company and the Guarantor sign the form of acceptance on a
copy hereof and mail or deliver a signed copy hereof to the undersigned at its
address set forth below. This will become a binding contract among the
Guarantor, the Company and the undersigned when such copy is so mailed or
delivered.
THIS CONTRACT SHALL BE GOVERNED BY THE LAWS OF THE STATE OF NEW
YORK.
Yours very truly,
-------------------------
(Name of Purchaser)
By:
---------------------
Title:
-------------------------
-------------------------
(Address)
Accepted as of the date first above written.
Mobil Transport Finance Company Inc.
By:
--------------------------
Mobil Corporation
By:
--------------------------
<PAGE>
4
PURCHASER -- PLEASE COMPLETE AT TIME OF SIGNING
The name and telephone number of the representative of the Purchaser
with whom details of delivery on the Delivery Date may be discussed is as
follows: (Please print)
Telephone No.
Name (including Area Code)
---- ---------------------
<PAGE>
EXHIBIT 4.1
This Pass Through Trust Supplement No. 1997-B, dated as of September 30,
1997 (herein called the "Trust Supplement"), among Mobil Corporation, a Delaware
----------------
corporation (the "Guarantor"), Mobil Transport Finance Company Inc., a Delaware
---------
corporation ("MTFC" or the "Company"), and State Street Bank and Trust Company
---- -------
(the "Trustee"), to the Pass Through Trust Agreement, dated as of October 4,
-------
1996, among the Guarantor, the Company, seven other companies named therein and
the Trustee (the "Basic Agreement").
---------------
W I T N E S S E T H:
- - - - - --- - - -
WHEREAS, the Basic Agreement, unlimited as to the aggregate principal
amount of Certificates (unless otherwise specified herein, capitalized terms
used herein without definition having the respective meanings specified
heretofore in the Basic Agreement) which may be issued thereunder, has
heretofore been executed and delivered;
WHEREAS, the Owner Trustee, acting at the direction of the Owner
Participant, will, among other things, issue, on a non-recourse basis one
Secured Note to finance in part the purchase price of M.T. AMERICAN PROGRESS, a
Jones Act double-hulled product tanker built by Newport News Shipbuilding and
Dry Dock Company (the "Vessel"), to be purchased by the Owner Trustee from an
affiliate of the Company and chartered to the Company pursuant to the Charter;
WHEREAS, pursuant to the terms and conditions of the Basic Agreement, as
supplemented by this Trust Supplement (the "Agreement"), the Trustee shall
----------
purchase the Secured Note issued by the Owner Trustee and shall hold the Secured
Note in trust for the benefit of the Certificateholders;
WHEREAS, all of the conditions and requirements necessary to make this
Trust Supplement, when duly executed and delivered, a valid, binding and legal
instrument in accordance with its terms for the purposes herein expressed, have
been done, performed and fulfilled, and the execution and delivery of this Trust
Supplement in the form and with the terms hereof have been in all respects duly
authorized;
WHEREAS, this Trust Supplement is subject to the provisions of the Trust
Indenture Act of 1939, as amended, and shall, to the extent applicable, be
governed by such provisions;
NOW THEREFORE, in consideration of the premises herein, it is agreed among
the Guarantor, the Company and the Trustee as follows:
<PAGE>
2
ARTICLE I
DECLARATION OF TRUST
Section 1.01. Declaration of Trust. The Trustee hereby declares the
--------------------
creation of this Trust (the "1997-B Trust") for the benefit of the
------------
Certificateholders, and the initial Certificateholders as the grantors of the
1997-B Trust, by their respective acceptances of the Certificates, join in the
creation of this 1997-B Trust with the Trustee.
ARTICLE II
THE CERTIFICATES
Section 2.01. The Certificates. There is hereby created a series of
----------------
Certificates to be issued under this Agreement to be distinguished and known as
"Pass Through Certificates, Series 1997-B" (hereinafter referred to as the
"Series 1997-B Certificates"). Each Series 1997-B Certificate represents a
- ---------------------------
Fractional Undivided Interest in the 1997-B Trust created hereby.
The terms and conditions applicable to the Series 1997-B Certificates are
as follows:
(a) The aggregate principal amount at maturity of the Series 1997-B
Certificates that shall be authenticated under the Agreement (except for
Series 1997-B Certificates authenticated and delivered pursuant to Sections
3.3, 3.4 and 3.5 of the Basic Agreement) upon their initial issuance is
$36,714,000.
(b) The Cut-off Date is October 14, 1997.
(c) The Regular Distribution Dates with respect to any payment of
Scheduled Payments means each January 31 and July 31 commencing January 31,
1998, until payment of all of the Scheduled Payments to be made under the
Secured Note has been made.
(d) The Special Distribution Dates are as follows: (i) when used with
respect to the redemption or purchase of a Secured Note, the day (which
shall be a Business Day) on which such redemption or purchase is scheduled
to occur pursuant to the terms of the Indenture and (ii) when used with
respect to a Special Payment other
<PAGE>
3
than as described in clause (i) above, 20 days after the last date on which
the Trustee must give notice pursuant to Section 4.2(c) of the Basic
Agreement (or the next Business Day after such 20/th/ day if such date is
not a Business Day).
(e) (i) The Series 1997-B Certificates shall be in the form
attached hereto as Exhibit A.
---------
(ii) The Series 1997-B Certificates shall be Book-Entry
Certificates and shall be subject to the conditions set forth in the Letter
of Representations among the Guarantor, the Company, the Trustee and The
Depositary Trust Company, the initial Clearing Agency, attached hereto as
Exhibit B.
---------
(f) The Scheduled Payments of principal shall be as set forth in
Exhibit C hereto.
---------
(g) The Owner Trustee, acting at the direction of the Owner
Participant, will issue on a non-recourse basis, a Secured Note, the
proceeds of which shall be used, among other things, to finance in part the
purchase price to the Owner Trustee of the Vessel. The Vessel is being
chartered to the Company.
(h) The proceeds of the Series 1997-B Certificates shall be used to
purchase the Secured Note in the principal amount and at the debt portion
of the purchase price specified below:
Debt Portion of the Principal Payable at
Vessel Purchase Price Maturity
------ -------------- --------
M.T. American Progress $36,714,000 Same as Debt Portion of the
Purchase Price
(i) The Series 1997-B Certificates are not subject to any
intercreditor agreement, liquidity or credit facility or similar agreement.
Neither the Guarantor nor the Company may deliver Series 1997-B
Certificates or cash to the Trustee in exchange for the Secured Note.
(j) The related Note Documents are as follows:
<PAGE>
4
(i) Trust Indenture, Mortgage, Assignment of Charter and and
Security Agreement dated as of September 30, 1997, between First
Security Bank, National Association, not in its individual capacity,
except as expressly provided therein, but solely as Owner Trustee, and
State Street Bank and Trust Company, not in its individual capacity,
except as expressly provided therein, but solely as Indenture Trustee;
(ii) Series 1997 B-1 Secured Non-Recourse Note, dated September
30, 1997;
(iii) Demise Charter Party (M.T. AMERICAN PROGRESS) dated as of
September 30, 1997 (the "Charter"); between First Security Bank, National
Association, not in its individual capacity, except as expressly provided
therein, but solely as Owner Trustee under the Trust Agreement for the
Owner Participant named therein, as Shipowner, and MTFC, as Charterer;
(iv) Participation Agreement (M.T. AMERICAN PROGRESS) dated as
of September 30, 1997, among MTFC, as Charterer, SBCM Maritime Finance,
Inc., as Owner Participant, First Security Bank, National Association, as
Owner Trustee, State Street Bank and Trust Company, as Indenture Trustee,
and State Street Bank and Trust Company, as Pass Through Trustee and Loan
Participant;
(v) Trust Agreement (M.T. AMERICAN PROGRESS) dated as of
September 30, 1997, between SBCM Maritime Finance, Inc., as Owner
Participant, and First Security Bank, National Association, as Owner
Trustee;
(vi) Guaranty (M.T. AMERICAN PROGRESS) dated as of September 30,
1997, among Mobil Corporation, Guarantor, First Security Bank,
National Association, both in its individual capacity and as
Owner Trustee, State Street Bank and Trust Company, both in its
individual capacity and as Indenture Trustee, State Street Bank
and Trust Company, as Pass Through Trustee and Loan Participant,
the Certificateholders from time to time, and SBCM Maritime
Finance, Inc., as Owner Participant;
(vii) Ship Mortgage (M.T. AMERICAN PROGRESS) dated September 30,
1997;
(viii) Owner Participant Guaranty (M.T. AMERICAN PROGRESS) dated
as of September 30, 1997, among Sumitomo Bank Capital
<PAGE>
5
Markets, Inc., Owner Participant Guarantor, Mobil Corporation, MTFC,
as Charterer, Mobil Oil Corporation, as Vessel Operator referred to
therein, First Security Bank, National Association, both in its
individual capacity and as Owner Trustee, and State Street Bank and
Trust Company, both in its individual capacity and as Indenture
Trustee; and
(ix) Tax Indemnity Agreement dated as of September 30, 1997,
between MTFC, as Charterer, and SBCM Maritime Finance, Inc., as
Owner Participant.
ARTICLE III
DEFINITIONS
Section 3.01. Definitions. For the purposes of the 1997-B Trust the
-----------
following defined terms shall be added to Section 1.1(b) of the Basic Agreement
or shall be amended to read as set forth below, as the case may be:
Guaranty: Means the Mobil Guaranty by the Guarantor of the
--------
obligations of the Company under the Operative Documents.
Note Documents: Means the Indenture, Participation Agreement,
--------------
Charter, Guaranty and the other agreements and documents assigned to the
Indenture Trustee pursuant to the Indenture.
Pool Balance: With respect to the Trust, means as of any date the
------------
aggregate unpaid principal amount of the Secured Note held in the Trust on
such date plus the amount of the principal payments on the Secured Note
held by the Trustee and not yet distributed plus the amount of any moneys
held in the related Escrow Account (other than earnings thereon). The Pool
Balance as of any Regular Distribution Date or Special Distribution Date
with respect to the Trust shall be computed after giving effect to the
payment of principal, if any, of the Secured Note and distribution thereof
to be made on that date.
Pool Factor: With respect to the Trust, means as of any date the
-----------
quotient (rounded to the seventh decimal place, with .00000000005 being
rounded upwards) computed by dividing (i) the Pool Balance by (ii) the
original aggregate principal amount of the Certificates issued by such
Trust. The Pool Factor as of any Regular
<PAGE>
6
Distribution Date or Special Distribution Date with respect to the Trust
shall be computed after giving effect to the payment of principal, if any,
on the Secured Note held in the Trust and distribution thereof to be made
on that date.
Property: With respect to the Secured Note means all right, title and
--------
interest of the Owner Trustee to the Vessel, including contractual rights.
ARTICLE IV
THE TRUSTEE
Section 4.01. The Trustee. The Trustee is hereby directed to execute
-----------
and deliver the Note Purchase Agreement on or prior to the Issuance Date in the
form delivered to the Trustee by the Company. The Trustee shall not be
responsible in any manner whatsoever for, or in respect of, the validity or
sufficiency of this Trust Supplement or the due execution hereof by the
Guarantor or the Company, or for, or in respect of, the recitals and statements
contained herein, all of which recitals and statements are made solely by the
Company.
Except as herein otherwise provided, no duties, responsibilities or
liabilities are assumed, or shall be construed to be assumed by the Trustee by
reason of this Trust Supplement other than as set forth in the Basic Agreement,
and this Trust Supplement is executed and accepted on behalf of the Trustee,
subject to all the terms and conditions set forth in the Basic Agreement, upon
the effectiveness thereof, as fully to all intents as if the same were herein
set forth at length.
The Trustee represents and warrants that this Trust Supplement has
been and the Note Purchase Agreement has been or will be duly executed and
delivered by one of its officers who is duly authorized to execute and deliver
such document on its behalf.
ARTICLE V
MISCELLANEOUS PROVISIONS
Section 5.01. Assignment of Charter. The Company will not assign its
---------------------
rights under Article 20(c) of the Charter unless the assignee thereof enters
into a supplement to this Agreement pursuant to which it shall agree to fulfill
the obligations of the Company hereunder.
<PAGE>
7
Section 5.02. Basic Agreement Ratified. Except and so far as herein
------------------------
expressly provided, all of the provisions, terms and conditions of the Basic
Agreement are in all respects ratified and confirmed; and the Basic Agreement
and this Trust Supplement shall be taken, read and construed as one and the same
instrument.
Section 5.03. GOVERNING LAW. THIS TRUST SUPPLEMENT AND THE SERIES
-------------
1997-B CERTIFICATES SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK.
Section 5.04. Execution and Counterparts. This Trust Supplement
--------------------------
may be executed in any number of counterparts, each of which shall be an
original, but such counterparts shall together constitute but one and the same
instrument.
<PAGE>
8
IN WITNESS WHEREOF, the Guarantor, the Company and the Trustee have
caused this Trust Supplement to be duly executed by their respective officers
thereto duly authorized, as of the day and year first written above.
MOBIL CORPORATION
By: /s/ WALTER ARNHEIM
__________________
Name: Walter Arnheim
Title: Treasurer
MOBIL TRANSPORT FINANCE
COMPANY INC.
By: /s/ WALTER ARNHEIM
____________________
Name: Walter Arnheim
Title: President
STATE STREET BANK AND TRUST
COMPANY, as Trustee
By: /s/ RUTH A. SMITH
______________________
Name: Ruth A. Smith
Title: Vice President
<PAGE>
EXHIBIT 4.2
Execution Copy
================================================================================
TRUST INDENTURE, MORTGAGE,
ASSIGNMENT OF CHARTER, AND SECURITY AGREEMENT
between
FIRST SECURITY BANK, NATIONAL ASSOCIATION,
not in its individual
capacity, except to
the extent expressly
set forth herein,
but solely as Owner Trustee,
and
STATE STREET BANK AND TRUST COMPANY,
not in its individual
capacity, except to
the extent expressly
set forth herein,
but solely as Indenture Trustee
Dated as of September 30, 1997
Leveraged Lease for One New, Double-Hulled Product Tanker
================================================================================
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions................................................. 5
ARTICLE II
THE SECURED NOTES
SECTION 2.01. Secured Notes............................................. 5
SECTION 2.02. Payment from Indenture Estate Only........................ 7
SECTION 2.03. Method of Payment......................................... 7
SECTION 2.04. Note Register............................................. 8
SECTION 2.05. Registered Owners......................................... 8
SECTION 2.06. Transfer, Exchange and Replacement of Notes............... 9
SECTION 2.07. New Notes, Payment of Expenses............................ 10
SECTION 2.08. Additional Notes.......................................... 10
SECTION 2.09. Termination of Interest in Indenture Estate............... 14
SECTION 2.10. Equally and Ratably Secured............................... 14
SECTION 2.11. Execution and Delivery of Secured Note upon Original
Issuance................................................... 14
ARTICLE III
REDEMPTION AND REFUNDING
SECTION 3.01. Generally................................................. 14
SECTION 3.02. Mandatory Redemption...................................... 15
SECTION 3.03. [Intentionally Omitted]................................... 15
SECTION 3.04. Assumption of Obligations of the Owner Trustee by the
Charterer................................................. 15
SECTION 3.05. Optional Redemption Refunding............................. 18
SECTION 3.06. Owner Trustee's and Owner Participant's Option to Redeem or
Purchase Secured Notes.................................... 18
SECTION 3.07. Deposited Redemption or Purchase Moneys................... 20
SECTION 3.08. Acquisition of Secured Notes.............................. 20
SECTION 3.09. Condition to Redemption and Refunding..................... 20
SECTION 3.10. Notice of Certain Redemptions............................. 20
<PAGE>
ii
ARTICLE IV
RECEIPT, DISTRIBUTION AND APPLICATION
OF INCOME FROM THE INDENTURE ESTATE
SECTION 4.01. Base Charter Hire Distribution............................... 21
SECTION 4.02. Certain Distributions........................................ 22
SECTION 4.03. Distribution After Indenture Event of Default................ 23
SECTION 4.04. Application of Payments on Secured Notes..................... 25
SECTION 4.05. Applications of Payments According to Applicable Operative
Document Provisions.......................................... 25
SECTION 4.06. Amounts Received for Which No Provision Is Made.............. 26
SECTION 4.07. Payment Procedures........................................... 27
SECTION 4.08. Application of Payments Under Guaranty....................... 27
ARTICLE V
COVENANTS OF OWNER TRUSTEE; CERTAIN AGREEMENTS;
INDENTURE EVENTS OF DEFAULT; REMEDIES OF INDENTURE TRUSTEE
SECTION 5.01. Covenants of Owner Trustee; Certain Agreements............... 27
SECTION 5.02. Indenture Events of Default.................................. 29
SECTION 5.03. Certain Rights............................................... 31
SECTION 5.04. Remedies..................................................... 33
SECTION 5.05. Suit; Possession; Title; Sale of Indenture Estate............ 35
SECTION 5.06. Remedies Cumulative.......................................... 39
SECTION 5.07. Discontinuance of Proceedings................................ 39
SECTION 5.08. Waiver of Past Defaults...................................... 39
SECTION 5.09. No Action Contrary to Charterer's Rights Under the Charter... 40
SECTION 5.10. Rights of Holders of Secured Notes........................... 40
SECTION 5.11. Limitation on Suits by Holders............................... 40
ARTICLE VI
DUTIES OF THE INDENTURE TRUSTEE
SECTION 6.01. Certain Actions.............................................. 41
SECTION 6.02. Action upon Instructions..................................... 41
SECTION 6.03. Release of Lien of Indenture................................. 42
SECTION 6.04. Indemnification.............................................. 43
<PAGE>
iii
SECTION 6.05. No Implied Duties........................................... 44
SECTION 6.06. Duties to Remove Certain Liens.............................. 44
SECTION 6.07. No Action Except Under Operative Documents or Instructions.. 44
SECTION 6.08. Certain Rights of the Owner Trustee and the Owner Participant 44
SECTION 6.09. Filing of Financing and Continuation Statements............. 45
SECTION 6.10. Publishing of Notices....................................... 45
SECTION 6.11. Taxes; Withholding; Information Reporting................... 46
ARTICLE VII
THE INDENTURE TRUSTEE AND THE OWNER TRUSTEE
SECTION 7.01. Acceptance of Trusts and Duties............................. 46
SECTION 7.02. Absence of Duties Except as Specified....................... 47
SECTION 7.03. No Representations or Warranties............................ 47
SECTION 7.04. No Segregation of Moneys; No Interest; Investments.......... 47
SECTION 7.05. Reliance; Agents; Advice of Counsel......................... 48
SECTION 7.06. No Compensation from Holders or Indenture Estate............ 49
SECTION 7.07. Right of the Indenture Trustee to Perform Covenants, Etc.... 49
SECTION 7.08. Moneys for Payments in Respect of Notes to be Held in Trust. 49
SECTION 7.09. Disposition of Moneys Held for Payments of Notes............ 50
ARTICLE VIII
SUCCESSOR TRUSTEES AND ADDITIONAL TRUSTEES
SECTION 8.01. Notice of Successor Owner Trustees.......................... 50
SECTION 8.02. Resignation of Indenture Trustee; Appointment of Successor.. 50
SECTION 8.03. Co-Trustees and Separate Trustees........................... 52
ARTICLE IX
SUPPLEMENTS AND AMENDMENTS TO THIS
INDENTURE AND OTHER DOCUMENTS
SECTION 9.01. Indenture Supplements Without Consent of Holders............ 54
SECTION 9.02. Supplements and Amendments to Indenture With Consent of
Holders of Notes............................................ 55
SECTION 9.03. Execution of Indenture Supplement, Amendments, Etc.......... 60
SECTION 9.04. Effect of Indenture Supplement.............................. 61
<PAGE>
iv
SECTION 9.05. Reference in Secured Notes to Indenture Supplements......... 61
SECTION 9.06. Notices of Indenture Supplements and Amendments, Etc........ 61
SECTION 9.07. Charterer's Rights.......................................... 61
ARTICLE X
MISCELLANEOUS
SECTION 10.01. Termination of Indenture................................... 62
SECTION 10.02. No Legal Title to Indenture Estate in Holders.............. 63
SECTION 10.03. Power of Attorney.......................................... 63
SECTION 10.04. Regarding the Owner Trustee................................ 64
SECTION 10.05. Notices.................................................... 65
SECTION 10.06. Severability of Provisions................................. 65
SECTION 10.07. No Oral Modification or Continuing Waivers................. 65
SECTION 10.08. Successors and Assigns..................................... 66
SECTION 10.09. Headings; Table of Contents................................ 66
SECTION 10.10. Normal Commercial Relations................................ 66
SECTION 10.11. Governing Law.............................................. 66
SECTION 10.12. Execution.................................................. 66
SECTION 10.13. Security Agreement......................................... 66
SECTION 10.14. Benefits of Indenture...................................... 66
Appendix A Definitions
Schedule 1 Description of Vessel
Exhibit A Form of Secured Note
Exhibit B Maturity Dates, etc.
Exhibit C Relevant Amendment
Exhibit D Form of Indenture Supplement
Exhibit E Form of Relevant Date Supplement
Exhibit F Form of Ship Mortgage
<PAGE>
TRUST INDENTURE, MORTGAGE, ASSIGNMENT OF CHARTER,
AND SECURITY AGREEMENT
--------------------------------------------------------
This TRUST INDENTURE, MORTGAGE, ASSIGNMENT OF CHARTER, AND SECURITY
AGREEMENT, dated as of September 30, 1997, between FIRST SECURITY BANK, NATIONAL
ASSOCIATION, a national banking association, not in its individual capacity,
except as expressly provided herein, but solely as Owner Trustee under the Trust
Agreement (the "Owner Trustee") (capitalized terms used herein having the
-------------
respective meanings ascribed to them in Section 1.01) and STATE STREET BANK AND
TRUST COMPANY, a Massachusetts trust company, not in its individual capacity,
except as expressly provided herein, but solely as Indenture Trustee (the
"Indenture Trustee"):
- ------------------
WITNESSETH:
----------
WHEREAS, the Owner Participant and the Owner Trustee have heretofore
entered into the Trust Agreement, whereby, among other things, the Owner Trustee
in its capacity as Owner Trustee thereunder has declared a certain trust for the
use and benefit of the Owner Participant, subject, however, to the Lien of this
Indenture, and the Owner Trustee has been authorized and directed to execute and
deliver this Indenture;
WHEREAS, the Owner Trustee desires by this Indenture to provide, among
other things (i) for the issuance by the Owner Trustee to the Pass Through
Trustee of the Series 1997-B Secured Note specified in Exhibit B hereto, upon
payment by the Pass Through Trustee of the principal amount of such Series 1997-
B Secured Note, and (ii) for the assignment, mortgage and pledge by the Owner
Trustee to the Indenture Trustee, as part of the Indenture Estate hereunder,
among other things, of all of the right, title and interest of the Owner
Trustee, other than Excepted Payments, in, to and under, as the case may be, the
Vessel (by virtue of the grant hereunder and the grant under the Ship Mortgage),
the Charter, the Parent Guaranty, and all payments and other amounts received
hereunder and thereunder, other than Excepted Payments, in accordance with the
terms hereof and thereof, as security for, among other things, the Owner
Trustee's obligations to the Indenture Trustee, the Loan Participant and other
Holders from time to time and for the benefit and security of the Loan
Participant and such Holders;
WHEREAS, all things have been done to make the Secured Notes, when executed
by the Owner Trustee and authenticated, issued and delivered hereunder, the
legal, valid, binding and enforceable obligations of the Owner Trustee in
accordance with their terms; and
WHEREAS, all things necessary to make this Indenture the legal, valid,
binding and enforceable obligation of the Owner Trustee, for the uses and
purposes herein set forth, in accordance with its terms, have been done and
performed and have happened, and the Indenture
<PAGE>
2
Trustee has duly accepted the trust created hereby and as evidenced thereof has
joined in the execution hereof;
NOW, THEREFORE, THIS TRUST INDENTURE, MORTGAGE, ASSIGNMENT OF CHARTER AND
SECURITY AGREEMENT, WITNESSETH, that, to secure (i) the prompt payment when and
as due and payable of the principal of, Make-Whole Amount, if any, and interest
on all the Secured Notes from time to time Outstanding hereunder and of all
other amounts payable to the Holders (whether as Holders or Loan Participants)
hereunder, under the Secured Notes and under the other Operative Documents
(other than the Tax Indemnity Agreement), (ii) the performance and observance by
the Owner Trustee of all the provisions, covenants and agreements for the
benefit of the Indenture Trustee or the Holders herein, in the Participation
Agreement, in the Secured Notes and in the other Operative Documents (other than
the Tax Indemnity Agreement), and (iii) the performance and observance by the
Owner Participant of its covenants and agreements contained in the Operative
Documents (other than the Tax Indemnity Agreement) (the obligations described in
the above clauses (i), (ii) and (iii) collectively, the "Indenture
---------
Indebtedness"), and for the uses and purposes and subject to the terms and
provisions hereof, and in consideration of the premises and of the covenants
herein contained and of the acceptance of the Secured Notes by the Holders
thereof:
GRANTING CLAUSE
---------------
The Owner Trustee, for valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, and in order to secure the payment and
performance of the Indenture Indebtedness, hereby presently irrevocably grants,
conveys, mortgages, hypothecates, and pledges unto the Indenture Trustee and
creates, to and for the benefit of the Indenture Trustee a security interest in
and mortgage lien on, and assigns by way of security, all of the right, title
and interest of the Owner Trustee in and to the following property, rights and
privileges, other than Excepted Payments, now owned or in the future acquired by
the Owner Trustee or in which the Owner Trustee now has or may in the future
acquire any estate, right, title or interest (which collectively, together with
all of the Indenture Trustee's right, title and interest in and to the Vessel
described in the Ship Mortgage, by virtue of the grant of the Ship Mortgage,
including all property subjected to the Lien of this Indenture, the Ship
Mortgage or any security interest or mortgage supplemental hereto or thereto,
but excluding Excepted Payments, shall constitute the "Indenture Estate"), to
----------------
wit:
(a) all right, title and interest of the Owner Trustee in the Vessel
(as described in Schedule 1 hereto), including, without limitation, any
appurtenance thereto and any Modification to the Vessel which, pursuant to
the terms of the Charter, are the property of the Owner Trustee;
<PAGE>
3
(b) the Bill of Sale and the Conveyancing Instrument, and all rights,
powers and remedies of the Owner Trustee pursuant thereto, whether arising
thereunder or by statute, at law, in equity or otherwise;
(c) the Charter, including, without limitation, (i) all amounts of
hire, rent, income, insurance proceeds and requisition, indemnity or other
payments of any kind for or with respect to the Vessel, (ii) all rights of
the Owner Trustee to exercise any election or option, or to give any
notice, consent, waiver or approval under or in respect of the Charter, or
to accept any surrender or enter into any modification thereof, as the case
may be, and (iii) all rights, powers and remedies of the Owner Trustee
pursuant to the Charter, whether arising thereunder or by statute, at law,
in equity or otherwise, including, without limitation, the right to
possession of the Vessel;
(d) the Parent Guaranty, including without limitation, (i) all amounts
payable thereunder, (ii) all rights of the Owner Trustee to exercise any
election or option, or to give any notice, consent, waiver or approval
under or in respect of the Parent Guaranty, or to accept any surrender or
enter into any modification thereof, as the case may be, and (iii) all
rights, powers and remedies of the Owner Trustee pursuant to the Parent
Guaranty, whether arising thereunder or by statute, at law, in equity or
otherwise;
(e) all moneys and securities now or hereafter paid or deposited or
required to be paid or deposited to or with the Indenture Trustee pursuant
to any term of any Operative Document, and held or required to be held by
the Indenture Trustee hereunder;
(f) to the extent assignable, any and all permits, certificates,
approvals and authorizations, however characterized, issued or in any way
furnished to the Owner Trustee in connection with the Vessel, whether
necessary or not for the operation and use of the Vessel;
(g) all the tolls, rents, issues, profits, products, revenues and
other income of the property subjected or required to be subjected to the
Lien of this Indenture, including all payments or proceeds payable to the
Owner Trustee upon or after termination of the Charter as the result of the
sale, lease or other disposition of the Vessel, and all estate, right,
title and interest of every nature whatsoever of the Owner Trustee in and
to the same and every part thereof; and
(h) all rights or property which may be received upon the exercise of
any remedy or option contained in any of the above-described instruments
and all proceeds in whatever form of all or any part of any of the
foregoing;
<PAGE>
4
EXCLUDING, HOWEVER, from the foregoing grant, and thereby from the
Lien of this Indenture and from the Indenture Estate, any and all Excepted
Payments and provided that, notwithstanding the foregoing provisions or anything
--------
herein to the contrary, the charter interest granted to the Charterer under the
Charter shall not be subject to the Lien of this Indenture or the Ship Mortgage
or be part of the Indenture Estate, and nothing in this Indenture or in the Ship
Mortgage shall affect the rights of the Charterer under the Charter so long as
no Charter Event of Default has occurred and is continuing; and
SUBJECT to the rights of the Owner Trustee and the Owner Participant
hereunder;
HABENDUM CLAUSE
TO HAVE AND TO HOLD the aforesaid property unto the Indenture Trustee
and its successors and assigns, for the benefit and security of the Holders,
without any priority of any one Secured Note over any other (except as expressly
provided herein or under any Operative Document), and for the uses and purposes
and subject to the terms and conditions set forth in this Indenture. This
Indenture is a mortgage given to secure the payment of the Indenture
Indebtedness and this Indenture is also intended to operate as, among other
things, a security agreement and, to the extent set forth above, an assignment
of Base Charter Hire, Interim Charter Hire and Supplemental Charter Hire, leases
and rents.
It is expressly agreed that anything contained in this Indenture to
the contrary notwithstanding, the Owner Trustee shall remain liable under the
Charter and the other Operative Documents to perform all of the obligations of
the Owner Trustee hereunder and thereunder, all in accordance with and pursuant
to the terms and provisions of each thereof, and the Holders and, except as
expressly provided herein, the Indenture Trustee shall have no obligation or
liability under any Operative Document by reason of or arising out of this
Indenture (except as to the Indenture Trustee, if the Indenture Trustee shall
have become the "Shipowner" under the Charter). None of the Indenture Trustee
or any Holder shall be required or obligated in any manner to perform or fulfill
any obligation of the Owner Trustee under or pursuant to any Operative Document
or, except as herein expressly provided, to make any payment, or to make any
inquiry as to the nature or sufficiency of any payment received by it, or to
present or file any claim, or to take any action to collect or enforce the
payment of any amounts which may have been assigned to it or to which it may be
entitled at any time or times.
Simultaneously with the execution and delivery hereof, the Owner
Trustee, as mortgagor, shall execute and deliver the Ship Mortgage,
substantially in the form annexed hereto as Exhibit F, except that the blanks in
such form shall be filled in, and such form may be modified as contemplated
therein.
<PAGE>
5
So long as no Charter Event of Default shall have occurred and be
continuing, the Indenture Trustee hereby reassigns to the Owner Trustee all the
Indenture Trustee's right, title and interest in the Conveyancing Instrument and
in the interests contained therein; provided, if and so long as an Charter Event
of Default shall have occurred and be continuing, the reassignment to the Owner
Trustee contained herein shall be void and of no further force and effect.
Accordingly, the Owner Trustee and the Indenture Trustee hereby agree
for themselves and for the benefit and security of the Holders as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions. Unless otherwise defined herein, for the
-----------
purposes hereof, capitalized terms used herein and not otherwise defined shall
have the meanings assigned to them in Appendix A. References in this Indenture
to Sections, subsections, paragraphs, Schedules, Appendices and Exhibits are to
Sections, subsections and paragraphs in, and Schedules, Appendices and Exhibits
to, this Indenture unless otherwise indicated.
ARTICLE II
THE SECURED NOTES
SECTION 2.01. Secured Notes. (a) Generally. Except for any Secured
------------- ---------
Note issued pursuant to Section 2.06 or 2.08, the Secured Note may be issued
only on the Funding Date. On the Funding Date, the Secured Note to be issued on
such Date pursuant to Section 2.2 of the Participation Agreement, subject to
Section 2.11, shall be duly executed by the Owner Trustee, duly authenticated
and delivered by the Indenture Trustee and registered in the name of the Loan
Participant to which the Secured Note is being issued and shall have attached
thereto the Amortization Schedule for the Secured Note. Receipt by the
Indenture Trustee of Secured Notes duly executed by the Owner Trustee shall
constitute instructions to the Indenture Trustee to authenticate, register and
deliver such Secured Notes on the Funding Date.
(b) Series 1997-B Secured Note. The Series 1997-B Secured Note shall:
--------------------------
(i) be limited in aggregate original principal amount to the
amount specified in Exhibit B hereto;
<PAGE>
6
(ii) be issuable only as registered Secured Notes in
denominations of $1,000, and integral multiples thereof, or if the
remaining principal amount thereof shall be less than $1,000, such
remaining principal amount;
(iii) be dated the Funding Date;
(iv) bear interest on the unpaid principal amount thereof from
the date of the Series 1997-B Secured Note at the rate specified in
Exhibit B (computed on the basis of a 360-day year consisting of
twelve 30-day months);
(v) provide for payments of interest and otherwise be due and
payable as to principal and interest as specified herein and therein;
(vi) be prepayable only as provided in Sections 3.02, 3.05,
3.06, 4.02 and 4.03; and
(vii) be substantially of the tenor and in the form set forth in
Exhibit A.
(c) Each Secured Note shall be signed on behalf of the Owner Trustee
by a Responsible Officer of the Owner Trustee, manually or in facsimile.
If any officer of the Owner Trustee executing Secured Notes or attesting to
the Owner Trustee's seal no longer holds that office at the time a Secured
Note is executed on behalf of the Owner Trustee, such Secured Note shall be
valid nevertheless. No Secured Note shall be secured by or entitled to any
benefit under this Indenture, or be valid for any purpose, unless there
appears thereon a certificate of authentication executed by or on behalf of
the Indenture Trustee by the manual signature of a Responsible Officer of
the Indenture Trustee, and such certificate on any Secured Note shall be
conclusive evidence that such Secured Note has been duly authenticated and
delivered hereunder.
(d) The Indenture Trustee shall not be required (i) to register the
transfer of or to exchange any Secured Note during a period beginning at
the opening of business 15 Business Days before the day of the mailing of a
notice of redemption (or purchase in lieu of redemption) of Secured Notes
pursuant to Section 3.02, 3.05 or 3.06 and ending at the close of business
on the day of such mailing, or (ii) to register the transfer of or to
exchange any Secured Note called for redemption (or purchase in lieu of
redemption) pursuant to such Section 3.02, 3.05 or 3.06.
SECTION 2.02. Payment from Indenture Estate Only. All payments of
----------------------------------
principal, Make-Whole Amount, if any, and interest to be made by the Owner
Trustee and, except as otherwise provided in the Operative Documents, all
payments of any other amounts payable by or on behalf of the Owner Trustee under
the Secured Notes and this Indenture, shall be made
<PAGE>
7
only from the income and proceeds from the Indenture Estate, and only to the
extent that the Indenture Trustee shall have received sufficient income or
proceeds from the Indenture Estate to make such payments in accordance with the
terms hereof. Each Holder, by its acceptance of a Secured Note, agrees that it
will look solely to the income and proceeds from the Indenture Estate to the
extent available for payment as herein provided and that (a) none of the Owner
Trustee or the Indenture Trustee (whether in its individual or trust capacity)
shall be personally liable to such Holder for any amounts payable under the
Secured Notes, nor, except as specifically provided herein or in the other
Operative Documents, for any amounts payable or any liability under this
Indenture and (b) the Owner Participant shall not be liable to the Indenture
Trustee or to any Holder under any circumstances for any reason whatsoever
except to the extent expressly provided herein or in any other Operative
Document.
SECTION 2.03. Method of Payment. (a) The principal of, and Make-
-----------------
Whole Amount, if any, and interest, on each Secured Note shall be payable in
immediately available funds, the receipt of which has been confirmed by a
Responsible Officer of the Indenture Trustee (which shall be done promptly upon
receipt thereof) on or before 12:00 p.m., New York time, at the place of
receipt, on the due date therefor, to the Indenture Trustee at the Corporate
Trust Office of the Indenture Trustee. Amounts so received by the Indenture
Trustee shall be paid by the Indenture Trustee to each Holder on the due date
therefor without any presentment or surrender of any Secured Note held by such
Holder by whichever of the following methods shall be specified by prior written
notice from such Holder to the Indenture Trustee: (i) by transferring prior to
2:00 p.m., New York City time, on such date such payment to such Holder in
immediately available funds by crediting the amount to be distributed to any
Holder to any account maintained by such Holder with the Indenture Trustee or
(ii) by initiating a wire transfer prior to the time set forth in clause (i) of
this Section 2.03(a) of such amount in immediately available funds to a banking
institution designated in such notice with bank wire transfer facilities for the
account of such Holder, in all cases without any presentment or surrender of any
Secured Note, except that on the date of the final maturity thereof (whether at
maturity, upon prepayment, acceleration or otherwise), the Holder of each
Secured Note shall surrender such Secured Note promptly after payment; provided
--------
that failure to so present such Secured Note shall not diminish the effect of
full and final payment by the Owner Trustee. If any Holder does not specify one
of the foregoing methods, payment will be made by check mailed to the registered
address of such Holder. In the event the Indenture Trustee shall fail to make
any payment as provided in the preceding sentences after its receipt of funds at
the place and on or before the time specified in this Section 2.03(a), the
Indenture Trustee in its individual capacity agrees to compensate each Holder
for loss of use of funds at the Federal Funds overnight rate.
(b) Whenever any payment to be made hereunder or pursuant to the terms
of any Secured Note shall be stated to be due on a day which is not a Business
Day, such payment shall be due and payable on the next succeeding Business Day
with the same force and effect as if made on such scheduled date and (provided
such payment is timely made on such succeeding
<PAGE>
8
Business Day) no interest shall accrue on the amount of such payment from and
after such scheduled date.
(c) If payment of any installment of principal or interest payable in
accordance with the terms hereof and of the Secured Notes is not paid in full
when due, whether as scheduled or upon acceleration and whether before or after
the maturity date of the Secured Notes, such overdue amount of principal or
interest shall (to the extent not prohibited by applicable law) bear interest,
payable on demand, for each day from and including the date payment thereof was
due to the actual date of payment, at the Overdue Rate.
(d) Subject to Section 6.11, the Holder of any Secured Note shall be
entitled to the principal of, and Make-Whole Amount, if any, and interest on
such Secured Note free from all rights of set-off or counterclaims of the Owner
Trustee, the Indenture Trustee or any prior Holder of such Secured Note.
Nothing set forth in this Section 2.03(d) shall impair the right of the Owner
Trustee to receive a return from the Indenture Trustee of any amount
unintentionally overpaid by the Owner Trustee in respect of a Secured Note.
SECTION 2.04. Note Register. The Indenture Trustee shall cause to be
-------------
kept at the Indenture Trustee's corporate trust office a register (the "Note
----
Register") for the registration or transfer of the Secured Notes. The Note
- --------
Register shall be maintained by the Indenture Trustee, and the names and
addresses of the registered Holders of the Secured Notes, the transfers of the
Secured Notes and the names and addresses of the transferees of the Secured
Notes shall be entered in the Note Register under such reasonable regulations as
the Indenture Trustee may prescribe.
SECTION 2.05. Registered Owners. The Owner Trustee and the Indenture
-----------------
Trustee shall deem and treat any registered Holder as the absolute owner of any
Secured Note held by such Holder, as indicated in the Note Register, for the
purpose of receiving payment of all amounts payable with respect to such Secured
Note and for all other purposes, and neither the Owner Trustee nor the Indenture
Trustee shall be affected by any notice to the contrary. All such payments so
made shall be valid and effectual to satisfy and discharge the liability of the
Owner Trustee upon such Secured Note to the extent of the sum or sums so paid.
SECTION 2.06. Transfer, Exchange and Replacement of Notes. (a)
-------------------------------------------
Secured Notes may be transferred only on the Note Register. Any Secured Note
may be transferred on the Note Register if such Secured Note is surrendered for
cancellation at the Corporate Trust Office of the Indenture Trustee and is
accompanied by an instrument of transfer in form and substance reasonably
satisfactory to the Indenture Trustee, which Secured Note or Secured Notes shall
be canceled by the Indenture Trustee. A new Secured Note or Secured Notes of
the same series, duly executed by the Owner Trustee and registered in the name
of the transferee or transferees in a principal amount or amounts equal to the
principal amount of such transferred
<PAGE>
9
Secured Note, shall be duly authenticated and delivered by the Indenture Trustee
to the transferee or transferees named by the Holder of such transferred Secured
Note in exchange for such transferred Secured Note. Promptly after registration
of the transfer of any Secured Note, the Indenture Trustee shall give notice
thereof to the Charterer and the Owner Trustee specifying the name and address
for notices of the transferee or transferees.
(b) Any Secured Note may be exchanged for a new Secured Note if such
Secured Note to be so exchanged is surrendered for cancellation at the Corporate
Trust Office of the Indenture Trustee and is accompanied by the request of the
Holder thereof specifying the denomination of the new Secured Note (which shall
be in denominations of at least $1,000 or in integral multiples thereof, or if
less, the remaining principal amount thereof) to be issued in exchange therefor.
Upon instructions from the Indenture Trustee, the Owner Trustee shall deliver to
the Indenture Trustee a new Secured Note of the same series, duly executed by
the Owner Trustee and registered in the name of such Holder in the denominations
so requested and in an aggregate principal amount equal to the aggregate
original principal amount of such Secured Note to be so exchanged, and such new
Secured Note shall be duly authenticated by the Indenture Trustee and delivered
by the Indenture Trustee to such Holder in exchange for such Secured Note to be
so exchanged, which Secured Note shall be cancelled by the Indenture Trustee.
(c) If any Secured Note shall become mutilated or be destroyed, lost
or stolen, upon request of the Holder thereof, a new Secured Note of the same
series, duly executed by the Owner Trustee and registered in the name of such
Holder in the same original principal amount as the Secured Note so mutilated,
destroyed, lost or stolen, shall be duly authenticated and delivered by the
Indenture Trustee to such Holder in exchange for such Secured Note, if
mutilated, or in substitution for such Secured Note, if destroyed, lost or
stolen. In the case of a mutilated Secured Note, such Secured Note shall be
surrendered for cancellation at the Corporate Trust Office of the Indenture
Trustee and shall be cancelled by the Indenture Trustee. In the case of a
destroyed, lost or stolen Secured Note, the Holder thereof shall furnish to the
Owner Trustee and the Indenture Trustee (i) evidence to their reasonable
satisfaction of the destruction, loss or theft of such Secured Note and
ownership thereof, and (ii) such security or indemnity as may be reasonably
required by them to save them harmless; provided that if the affected Holder is
--------
a Pass Through Trustee, the written agreement of such Holder to indemnify the
Owner Trustee and the Indenture Trustee (in their respective individual and
trust capacities) with respect to such destroyed, lost or stolen Secured Note,
together with written notice of ownership and destruction, loss or theft
thereof, shall satisfy the conditions of this sentence.
(d) The Indenture Trustee shall cancel all Secured Notes surrendered
for replacement, redemption, registration of transfer, exchange, payment or
cancellation and shall destroy canceled Secured Notes.
<PAGE>
10
SECTION 2.07. New Notes, Payment of Expenses. (a) Each Secured Note
------------------------------
issued pursuant to Section 2.06 (a "New Note") upon transfer of, in exchange for
--------
or in substitution for a Secured Note (an "Old Note") shall be dated as of the
--------
date of such Old Note. The Indenture Trustee shall mark on each New Note (i) the
date to which principal and interest have been paid on the applicable Old Note
and (ii) all payments and prepayments of principal made on such Old Note which
are allocable to such New Note. Interest shall be deemed to have been paid on
such New Note to the date to which interest was paid on the applicable Old Note,
and all payments and prepayments of principal required to have been marked on
such New Note, as provided in clause (ii) of the preceding sentence, shall be
deemed to have been made thereon. All New Notes issued pursuant to Section 2.06
upon transfer of, in exchange for or in substitution for or in lieu of Old Notes
shall be valid obligations of the Owner Trustee evidencing the same debt as such
Old Notes and shall be entitled to the benefits and security of this Indenture
to the same extent as such Old Notes. Issuance of any New Note shall not for
any purposes be deemed a further advance of funds to the Owner Trustee and the
perfection and priority of the security interest in the Indenture Estate
applicable to such New Note shall for all purposes be the same as that
applicable to the Old Note replaced by such New Note.
(b) Upon the issuance of a New Note or New Notes pursuant to Section
2.06, the Owner Trustee and/or the Indenture Trustee may require from the party
requesting such New Note or New Notes payment of a sum to reimburse the Owner
Trustee and/or the Indenture Trustee for, or to provide funds for, the payment
of any tax or other governmental charge or any other charge or expense paid or
payable with respect to such transfer by the Owner Trustee and/or the Indenture
Trustee, without any right of reimbursement under any Operative Document with
respect to such payments.
SECTION 2.08. Additional Notes. (a) So long as no Charter Event of
----------------
Default or Indenture Event of Default shall have occurred and be continuing,
Additional Notes of one or more series may be issued under and secured by this
Indenture at any time or from time to time, subject to the conditions
hereinafter provided in this Section 2.08, for the purpose of financing all or a
portion of the cost of any Modification to the Vessel as provided in Section 14
of the Participation Agreement.
(b) Prior to the issuance of any Additional Notes of any series
pursuant to this Section 2.08, the Owner Trustee shall have received from the
Charterer and delivered to the Indenture Trustee, not less than thirty (30) days
prior to the proposed date of issuance of such Additional Notes, a request and
authorization to issue Additional Notes (a "Request"), which Request shall
-------
include the amount and series of such Additional Notes, the proposed date of
issuance of such Additional Notes, and the other details with respect thereto
which shall be consistent with this Section 2.08. Such Additional Notes shall
have a designation so as to distinguish such Additional Notes from the Initial
Secured Note and Additional Notes of any other series, but otherwise shall be
substantially similar in form to the Initial Secured Note, with
<PAGE>
11
such omissions therefrom, variations therein and additions thereto as shall be
appropriate. Such Additional Notes shall not rank senior in any respect to the
Initial Secured Note, but may be subordinate to the Initial Secured Note and
other Secured Notes issued pursuant to the terms hereof.
(c) The terms, conditions and designations of such Additional Notes
(which shall be consistent with the Request and with the terms of this Indenture
and of the Participation Agreement) shall be set forth in a supplement to this
Indenture, substantially in the form of Exhibit D, which shall be executed by
the Owner Trustee and the Indenture Trustee. Such indenture supplement shall
set forth:
(i) after giving effect to the issuance of the Additional Notes, the
aggregate principal amount Outstanding of all Secured Notes (including such
Additional Notes), which shall not exceed 80% of the total Fair Market
Sales Value of the Vessel at such time (as determined pursuant to mutual
agreement of the Owner Trustee and the Charterer and otherwise by the
Appraisal Procedure) after giving effect to such Modifications;
(ii) the principal amount of the Additional Notes, which shall not
exceed 100% of the cost of such Modifications;
(iii) the text of such Additional Notes (which, except for the terms
of payment thereof, shall be of substantially the same effect as the text
of the Initial Secured Notes set forth in this Indenture, with such changes
as are consistent with and permitted by this Indenture and which in all
events shall provide that such Additional Notes are never more than pari
passu in priority of payment, in right of security and in all other
respects with the Initial Secured Notes);
(iv) the date of maturity of such Additional Notes (which shall be no
later than the end of the Base Charter Term);
(v) the date from which, and the date or dates on which, interest is
payable (which shall be Interest Payment Dates);
(vi) the terms for the repayment of the principal amount of such
Additional Notes (each regularly scheduled payment of principal shall be an
Interest Payment Date);
(vii) the terms, if any, as to prepayment or redemption of such
Additional Notes at the option of the Owner Trustee or the Charterer, and
as to the premium, if any, payable on any redemption or prepayment of such
Additional Notes; and
<PAGE>
12
(viii) any other terms and agreements in respect thereof as required
or permitted by this Indenture or necessary to specify the terms and
conditions on which such Additional Notes shall be issued.
(d) Such Additional Notes shall be executed by the Owner Trustee
as provided in Section 2.01 and deposited with the Indenture Trustee for
authentication and delivery, but before such Additional Notes shall be
authenticated and delivered by the Indenture Trustee, there shall be delivered
to or deposited with the Indenture Trustee the following:
(i) the Request;
(ii) the supplement to this Indenture described in Section 2.08(c),
duly executed by the Owner Trustee;
(iii) a supplement to the Charter, duly authorized, executed and
delivered by the Charterer and the Owner Trustee, providing for adjustments
to the Base Charter Percentages, Stipulated Loss Value Percentages and
Termination Value Percentages, to ensure that all such payments required
hereunder and under the Secured Notes, after giving effect to the issuance
of such Additional Notes, shall be sufficient in amount to pay all amounts
due hereunder and thereunder, together with such instruments of conveyance,
assignment and transfer, if any, necessary to subject such supplement to
the Charter to the Lien and security interest of this Indenture and to
perfect such Lien and security interest subject to no Liens other than
Permitted Liens, and evidence as to the due recording or filing of each
thereof or of financing or similar statements with respect thereto;
(iv) such instruments of conveyance, assignment and transfer
(including, without limitation, contractors' waivers), if any, duly
executed and delivered by the respective parties thereto, and such evidence
of the due filing thereof or of financing statements with respect thereto,
as may be required to convey title to the Owner Trustee of all property
included in such Modification and to subject such property to the Lien of
this Indenture, subject to no Liens except Permitted Liens or an opinion of
counsel reasonably satisfactory to the Indenture Trustee that such filing
is not required;
(v) an amendment to the Ship Mortgage so that it will secure the
Additional Notes to the extent set forth in the supplement to this
Indenture described in Section 2.08(c) or an opinion of counsel that such
amendment is not required;
(vi) originals or certified copies of all corporate actions
necessary for the due and valid issue of such Additional Notes, the due and
valid authorization, execution, delivery and performance by the Owner
Trustee of the supplement to this Indenture
<PAGE>
13
relating thereto, and the due and valid authorization, execution, delivery
and performance by the Charterer and the Owner Trustee of the Supplement to
the Charter and the creation of the Lien and security interest thereon
referred to above, all of which corporate actions shall have been duly
obtained and shall be in full force and effect, together with evidence as
to the due occurrence of all such authorization, execution, delivery and
performance;
(vii) documentation, duly executed and delivered, to the extent
practicable, by the respective parties thereto, whereby the proposed
holders of the Additional Notes agree to be bound by the terms of the
Operative Documents (including, without limitation, representations and
covenants corresponding to those contained in Section 9 of the
Participation Agreement);
(viii) an Officer's Certificate of the Charterer certifying (a) as to
the cost of such Modification and (b) that all conditions precedent to the
issuance of the Additional Notes contained in this Section 2.08 and in
Section 14 of the Participation Agreement have been satisfied unless such
conditions have been waived in writing by the Indenture Trustee and Owner
Trustee;
(ix) such opinions of counsel as are customary in transactions of
this type, including, without limitation, opinions of counsel to the
Charterer and/or the Owner Trustee as to the due authorization, execution,
delivery and enforceability of such supplement to this Indenture and such
Additional Notes and the creation and perfection of the security interest
in such Modification (subject to usual or customary exceptions,
qualifications and assumptions) and such other certificates and other
documents as may be reasonably requested by the Indenture Trustee to
evidence the validity and binding effect of such supplement to this
Indenture and such Additional Notes and compliance with this Section 2.08;
and
(x) Rating Agency Confirmation with respect to the issuance of
such Additional Notes.
(e) When the documents referred to in Section 2.08(d) shall have
been delivered to or deposited with the Indenture Trustee and when such
Additional Notes described in the Request and the supplement to this Indenture
have been executed by the Owner Trustee as required by this Indenture, the
Indenture Trustee shall authenticate and deliver such Additional Notes in the
manner described in such Request, but only upon payment to the Owner Trustee of
the sum or sums specified in such Request, whereupon the Owner Trustee shall pay
such sum or sums to the Charterer.
SECTION 2.09. Termination of Interest in Indenture Estate. A Holder
-------------------------------------------
shall have no further interest in, or other right with respect to, the Indenture
Estate upon the payment of
<PAGE>
14
principal of, Make-Whole Amount, if any, and interest on, any Secured Notes held
by such Holder and all other sums payable to such Holder hereunder with respect
to any such Secured Notes, under the other Operative Documents and under such
Secured Notes.
SECTION 2.10. Equally and Ratably Secured. Except as otherwise
---------------------------
expressly provided in this Indenture, all Secured Notes at any time Outstanding
under this Indenture shall be equally and ratably secured by this Indenture
without preference, priority or distinction on account of the series, date, time
of issue or maturity of such Secured Notes.
SECTION 2.11. Execution and Delivery of Secured Note upon Original
----------------------------------------------------
Issuance. The Owner Trustee shall issue and execute, and the Indenture Trustee
- --------
shall authenticate and deliver, one or more Secured Notes for original issuance
only upon Charterer's request and upon payment by the Loan Participant pursuant
to the Participation Agreement of an aggregate amount equal to the aggregate
original principal amount of such Secured Note or Notes.
ARTICLE III
REDEMPTION AND REFUNDING
SECTION 3.01. Generally. The Secured Notes may not be redeemed or
---------
prepaid except to the extent and in the manner expressly permitted or required
by this Indenture. Except as otherwise expressly provided in this Indenture,
any amount prepaid in partial redemption of the Secured Notes Outstanding shall
be distributed by the Indenture Trustee to all Holders ratably, without priority
of any Holder or any series over any other Holder or any other series, in the
proportion that the principal amount of Secured Notes held by such Holder bears
to the principal amount of all Secured Notes then Outstanding.
SECTION 3.02. Mandatory Redemption. (a) Casualty Redemption. If an
-------------------- -------------------
Event of Loss with respect to the Vessel shall occur, unless the Charterer shall
have elected to substitute a vessel as the Vessel in accordance with the terms
and requirements set forth in Section 11(b)(ii) of the Charter, then the Owner
Trustee shall redeem on the date on which Stipulated Loss Value is paid pursuant
to the Charter (the date of any redemption under this Section 3.02(a) being
herein called a "Casualty Redemption Date") the entire unpaid principal amount
------------------------
of the Secured Notes Outstanding on such Casualty Redemption Date, at a
redemption price equal to 100% of such unpaid principal amount of such Secured
Notes, together with any accrued and unpaid interest thereon to, but not
including, such Casualty Redemption Date and without Make-Whole Amount or any
other premium.
(b) Early Termination Redemption. If the Charter is terminated with
----------------------------
respect to the Vessel pursuant to Section 12 of the Charter, the Owner Trustee
shall redeem on the
<PAGE>
15
applicable Termination Date (the date of any redemption under this Section
3.02(b) being herein called a "Termination Redemption Date"), the entire unpaid
---------------------------
principal amount of the Secured Notes Outstanding on such Termination Redemption
Date, at a redemption price equal to 100% of such unpaid principal amount of
such Secured Notes, together with any accrued and unpaid interest thereon to,
but not including, such Termination Redemption Date plus, in the case of each
Secured Note redeemed prior to the Premium Termination Date applicable to such
Secured Note, a premium, equal to the Make-Whole Amount, if any, with respect to
such Secured Note and otherwise without Make-Whole Amount or any other premium.
(c) Purchase Redemption. In the event that the Charterer shall
-------------------
purchase the Vessel pursuant to Section 15(a) of the Charter prior to the date
of expiration of the Basic Charter Term, and the Charterer shall not have
assumed the obligations of the Owner Trustee under the Secured Notes pursuant to
Section 11.6 of the Participation Agreement, the Owner Trustee shall redeem on
the date of purchase (the date of any redemption under this Section 3.02(c)
being herein called a "Purchase Redemption Date"), the entire unpaid principal
------------------------
of the Secured Notes Outstanding on such Purchase Redemption Date at a
redemption price equal to 100% of the unpaid principal amount of the Secured
Notes together with any accrued and unpaid interest thereon to, but not
including, such Purchase Redemption Date plus, in the case of each Secured Note
redeemed prior to the Premium Termination Date applicable to such Secured Note,
a premium equal to the Make-Whole Amount, if any, with respect to such Secured
Note and otherwise without Make-Whole Amount or any other premium.
SECTION 3.03. [Intentionally Omitted]
----------------------
SECTION 3.04. Assumption of Obligations of the Owner Trustee by the
-----------------------------------------------------
Charterer. In the event that the Charterer shall have elected to assume all of
- ---------
the rights and obligations of the Owner Trustee under this Indenture in respect
of the Secured Notes in connection with the purchase by the Charterer of the
Vessel pursuant to Section 15(a) of the Charter or pursuant to Section 11.6 of
the Participation Agreement (the date of any such assumption being referred to
hereinafter as the "Relevant Date") and, if on or prior to the Relevant Date:
-------------
(a) the Charterer shall have delivered to the Indenture Trustee an
Officer's Certificate of the Charterer, dated the Relevant Date, stating
that the Charterer has paid to the Owner Trustee all amounts required to be
paid to the Owner Trustee pursuant to the Charter, in connection with such
purchase or termination and assumption;
(b) no Indenture Event of Default after giving effect to the Relevant
Amendment (as defined below) shall have occurred and be continuing
immediately subsequent to such purchase or termination and assumption and
the Indenture Trustee
<PAGE>
16
shall have received an Officer's Certificate, dated the Relevant Date, of
the Charterer to such effect;
(c) the Indenture Trustee shall have received a supplement to this
Indenture, substantially in the form of Exhibit E (the "Relevant Date
-------------
Supplement"), duly executed by the Charterer, which shall provide that the
----------
Charterer agrees that it is acquiring, subject to the mortgage, security
interest and Lien thereon granted to the Indenture Trustee under this
Indenture (or a mortgage, security interest and Lien in the same or
substantially identical terms), the Vessel, as provided in Section 2 of the
form of Relevant Date Supplement attached as Exhibit E;
(d) the Indenture Trustee shall have received, on or prior to the
Relevant Date, evidence of all filings, recordings and other action
referred to in the opinion of counsel referred to below;
(e) the Guarantor shall have confirmed in writing to the Indenture
Trustee that the Guaranty remains in full force and effect and covers the
Charterer's obligations under this Indenture and under the Secured Notes;
and
(f) the Indenture Trustee shall have received an opinion or opinions
of counsel to the Charterer subject to usual or customary qualifications,
exceptions and assumptions, to the effect that, after giving effect to the
Relevant Amendment (as defined below):
(i) on the Relevant Date, this Indenture, as supplemented by the
Relevant Date Supplement and as amended by the Relevant Amendment, the
Ship Mortgage, and the Secured Notes issued thereunder constitute the
legal, valid and binding obligations of the Charterer, enforceable
against the Charterer in accordance with their terms, except as the
same may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the rights of
creditors generally and by general principles of equity, and except as
limited by applicable laws which may affect the remedies provided for
in this Indenture or the Ship Mortgage as so supplemented, which laws,
however, do not in the opinion of such counsel make the remedies
provided for in this Indenture or the Ship Mortgage inadequate for the
practical realization of the rights and benefits provided for in this
Indenture as so supplemented or the Ship Mortgage;
(ii) on the Relevant Date, the Guaranty constitutes the legal,
valid and binding obligation of the Guarantor enforceable in
accordance with its terms, except as the same may be limited by
applicable bankruptcy, insolvency,
<PAGE>
17
reorganization, moratorium or similar laws affecting the rights of
creditors generally and by general principles of equity;
(iii) the Lien of this Indenture, and of the Ship Mortgage on
the Vessel, has been accomplished and creates a security interest or
first preferred mortgage, respectively, in the Indenture Estate and
all filings and recordings and other action necessary or appropriate
to perfect the interests of the Indenture Trustee have been
accomplished; and
(iv) holders of the Secured Notes will not recognize income, gain
or loss for United States federal income tax purposes as a result of
such assumption;
then, simultaneously with the delivery of such documents, the Indenture Trustee
shall execute and deliver the Relevant Date Supplement, and automatically and
without the requirement of further action by any Person, effective as of the
Relevant Date:
(x) this Indenture shall be deemed to have been amended as provided
for in Exhibit C hereto (the "Relevant Amendment"); and
------------------
(y) the Owner Trustee shall be released from all of its obligations
under this Indenture in respect of the Secured Notes or otherwise (other
than any obligations or liabilities of the Owner Trustee in its individual
capacity incurred on or prior to the Relevant Date or arising out of or
based upon events occurring on or prior to the Relevant Date, which
obligations and liabilities shall remain the sole responsibility of the
Owner Trustee) and there shall be immediately distributed any funds then
being retained hereunder that are distributable to the Owner Trustee or the
Owner Participant.
SECTION 3.05. Optional Redemption Refunding. (a) The Owner Trustee,
-----------------------------
with the prior written consent of the Charterer, may redeem at any time in whole
all Outstanding Secured Notes, or in whole all Outstanding Secured Notes of any
series, at a redemption price equal to 100% of the unpaid principal amount of
the Secured Notes to be redeemed pursuant to this Section 3.05, together with
any accrued and unpaid interest thereon to, but not including, the date of
redemption, plus, in the case of each Secured Note redeemed prior to the Premium
Termination Date applicable to such Secured Note, a premium equal to the Make-
Whole Amount, if any, with respect to such Secured Note and otherwise without
Make-Whole Amount or any other premium.
(b) Following a redemption of the Initial Secured Note in accordance
with this Section 3.05(a), the Owner Trustee, with the prior written consent of
the Charterer, may issue and sell, and the Indenture Trustee shall authenticate
and deliver, one or more new series of Secured Notes having such terms and
provisions (including, without limitation, interest rate,
<PAGE>
18
amortization schedule, maturity date and redemption provisions) as the Owner
Trustee shall deem appropriate and as shall be approved by the Charterer;
provided that prior to the authentication of such new series of Secured Notes,
- --------
the Indenture Trustee shall have received written evidence from Standard & Poors
Ratings Group and Moody's Investors Service, Inc. to the effect that the
issuance of such new series, by itself, would not result in the downgrading of
the credit rating (if any) assigned to the then Outstanding Pass Through
Certificates issued in respect of the Initial Secured Note.
(c) The Owner Trustee shall not refund or refinance any Secured Notes
unless requested by Charterer.
SECTION 3.06. Owner Trustee's and Owner Participant's Option to
-------------------------------------------------
Redeem or Purchase Secured Notes. In the event that (i) the Indenture Trustee
- --------------------------------
has given the Owner Trustee or the Owner Participant notice of the intent to
accelerate the Secured Notes pursuant to Section 5.04, (ii) the Secured Notes
shall have been accelerated pursuant to Section 5.04 or (iii) at any time one or
more Charter Events of Default shall have occurred and be continuing for more
than 180 days during which time the Secured Notes could, but shall not have
been, accelerated pursuant to Section 5.04, the Owner Trustee or the Owner
Participant may, at its option, give at least 30 days' prior irrevocable notice
to the Indenture Trustee that it will redeem (or purchase in lieu of redemption)
all Secured Notes then Outstanding, which redemption or purchase shall be at a
redemption or purchase price equal to 100% of the unpaid principal amount of
such Secured Notes, together with any accrued and unpaid interest thereon to,
but not including, the date of such redemption or purchase, but otherwise
without Make-Whole Amount or any other premium. On or prior to the Business Day
preceding such Redemption Date, the Owner Trustee or the Owner Participant will
deposit with the Indenture Trustee an amount sufficient to redeem or purchase at
the applicable Redemption Price all Secured Notes then Outstanding plus an
amount equal to all other sums then due and payable to the Loan Participants
hereunder, and to pay the Indenture Trustee all amounts then due it hereunder,
which funds shall be held by the Indenture Trustee as provided in Section 7.04.
Upon the giving of such notice and the receipt by the Indenture Trustee of such
deposit, the Indenture Trustee shall deem all instructions received from the
Owner Trustee or the Owner Participant as having been given by the Loan
Participants of 100% of the Outstanding principal amount of Secured Notes for
all purposes of this Indenture. If such notice is given, the Owner Trustee
further agrees that it will deposit or cause to be deposited with the Indenture
Trustee, on or prior to the Business Day preceding the applicable Redemption
Date, whether or not an Indenture Event of Default is then continuing, funds
sufficient, when added to the funds already held by the Indenture Trustee for
such purpose, to redeem or purchase at the applicable Redemption Price
(including the premium actually payable in respect thereof computed as provided
for herein), on such Redemption Date all Secured Notes then Outstanding, to pay
all other sums then due and payable to a Loan Participant hereunder and to pay
the Indenture Trustee all amounts then due it hereunder. In the event the Owner
Trustee shall have given any such notice to purchase or redeem, unless the Owner
Trustee shall have consented
<PAGE>
19
thereto, the Indenture Trustee shall not during the period from such notice to
the Redemption Date specified therein institute any new remedy or proceeding in
respect of any new remedy under this Indenture, and the Indenture Trustee shall,
to the extent the same may be accomplished without prejudicing the rights of the
Indenture Trustee hereunder, take such actions and forbear from taking actions,
in each case sufficient to maintain the status quo with respect to any pending
------ ---
remedies or proceedings in respect thereof being then pursued hereunder;
provided, however, that in no event shall the Indenture Trustee sell or assign
- -------- -------
any portion of the Indenture Estate during the period from such notice to the
Redemption Date specified therein. In the event the Owner Trustee shall have
given any such notice to purchase or redeem, and the Owner Trustee has deposited
with the Indenture Trustee the amounts required to be deposited pursuant to this
Section 3.06, then on the Redemption Date, each Loan Participant will be deemed
to sell, assign, transfer and convey to the Owner Trustee or its designee
(without recourse or warranty of any kind other than of title to the Secured
Notes so conveyed) all of the right, title and interest of such Loan Participant
in and to the Secured Notes held by such Loan Participant. On and after such
Redemption Date, the Indenture Trustee shall no longer treat the former Loan
Participants as the "Loan Participants," except for purposes of the Loan
Participants' right to receive their respective portions of the amounts paid to
the Indenture Trustee as aforesaid and all other amounts due to such Loan
Participants under the Operative Documents with respect to acts, events,
circumstances or conditions occurring or existing prior to such Redemption Date,
and on such date the Indenture Trustee shall register the transfer of ownership
of the Secured Notes into the name of the Owner Trustee or its designee. If the
Owner Trustee elects to purchase the Secured Notes under this Section 3.06,
nothing herein, including the use of the terms "Redemption Date" and "Redemption
Price," shall be deemed to result in a redemption of the Secured Notes.
SECTION 3.07. Deposited Redemption or Purchase Moneys. Moneys held
---------------------------------------
by the Indenture Trustee for the redemption or purchase of any Secured Note
issued hereunder as provided in this Article III shall be held by the Indenture
Trustee as a separate fund in trust for the account of the respective Holders of
the Secured Notes to be redeemed, shall be invested in accordance with the
provisions of Section 7.04 and shall be delivered to such Holders respectively
in accordance with Section 2.03 on the Redemption Date. Any amounts so held by
the Indenture Trustee shall be deemed paid for purposes of Section 2.09, and
promptly after payment of all amounts of principal of, Make-Whole Amount, if
any, and interest on, and all other amounts due and payable under any such
Secured Notes, the Holders thereof shall deliver such Secured Notes to the
Indenture Trustee for cancellation.
SECTION 3.08. Acquisition of Secured Notes. The Owner Trustee
----------------------------
covenants that it will not, directly or indirectly, acquire or make any offer to
acquire any Secured Note except pursuant to the provisions of this Indenture.
<PAGE>
20
SECTION 3.09. Condition to Redemption and Refunding. It shall be a
-------------------------------------
condition to any redemption, refinancing or refunding of Secured Notes effected
under this Article III other than under Section 3.06 that all amounts of
principal of, Make-Whole Amount, if any, and interest on, and all other amounts
then due and payable under the Secured Notes which are to be the subject of such
redemption, refinancing or refunding, as the case may be, as well as all other
amounts due and payable to the Holders of such Secured Notes as are to be the
subject of such redemption, refinancing or refunding shall have been paid as
specified therein or in any other Operative Document.
SECTION 3.10. Notice of Certain Redemptions. In connection with a
-----------------------------
redemption of any of the Secured Notes pursuant to Section 3.02 or Section 3.05,
the Owner Trustee shall give irrevocable (except with respect to redemption
notices given pursuant to Section 3.02(a), Section 3.02(b), Section 3.02(c) (to
the extent, in the case of Section 3.02(c), such redemption notice relates to
the Charterer's election to exercise a purchase option under Section 15(a)(iv)
or 12(d) of the Charter) or Section 3.05, which may be withdrawn, (a) in the
case of such a redemption notice given pursuant to 3.02(a) following the
occurrence of an Event of Loss with respect to the Vessel, if the Charterer has
elected (or shall be deemed to have elected) the option set forth in Section
11(b)(ii) of the Charter with respect to such Event of Loss, (b) in the case of
such a redemption notice given pursuant to Section 3.02(b) or 3.02(c), if the
Charter is not terminated with respect to the Vessel, and (c) in the case of
such a redemption notice given pursuant to Section 3.05, not less than three
Business Days prior to the Redemption Date) notice of such redemption at least
25 days and not more than 60 days prior to the Redemption Date to each Loan
Participant of such Secured Notes to be redeemed, at such Loan Participant's
address appearing in the Note Register.
Any such notice of redemption shall state:
(i) the Redemption Date;
(ii) the applicable basis for determining the redemption price
pursuant to Section 3.02 or Section 3.05 (the "Redemption Price");
----------------
(iii) that on the Redemption Date, the Redemption Price will become
due and payable upon each such Secured Note, and that, if any such Secured
Notes are then Outstanding, interest on such Secured Notes shall cease to
accrue on and after such Redemption Date; and
(iv) the place or places where such Secured Notes are to be
surrendered for payment of the Redemption Price.
<PAGE>
21
ARTICLE IV
RECEIPT, DISTRIBUTION AND APPLICATION
OF INCOME FROM THE INDENTURE ESTATE
SECTION 4.01. Base Charter Hire Distribution. (a) Generally.
------------------------------ ---------
Except as otherwise provided in Sections 4.01(b) and 4.03, each installment of
Base Charter Hire (other than any portion thereof constituting an Excepted
Payment), any payment of Supplemental Charter Hire representing interest on
overdue installments of Base Charter Hire (other than any portion thereof
constituting an Excepted Payment) and any payment received by the Indenture
Trustee as contemplated by Section 5.03 shall be promptly distributed by the
Indenture Trustee on the date such payment is due (or as soon thereafter as such
payment shall be received by the Indenture Trustee) in the following order of
priority:
first, in accordance with Section 4.04, so much of such installment or
-----
payment as shall be required to pay in full the aggregate amount of the
payment or repayment of principal, interest and other amounts then due
under all Secured Notes shall be distributed to the Holders of such Secured
Notes ratably, without priority of one Holder over any other Holder (except
for Additional Notes, if any, which are subordinate to the Initial Secured
Note and other Secured Notes), in the proportion that the amount of such
payment or payments then due under each such Secured Note bears to the
aggregate amount of the payments then due under all such Secured Notes; and
second, subject to Section 4.01(b), the balance, if any, of such
------
installment remaining thereafter shall be distributed to the Owner Trustee
for distribution pursuant to the Trust Agreement.
(b) Retention of Amounts by the Indenture Trustee. If, at the time of
---------------------------------------------
receipt by the Indenture Trustee of an installment of Base Charter Hire (whether
or not then overdue) or of payment of Supplemental Charter Hire representing
interest on any overdue installment of Base Charter Hire, the Indenture Trustee
shall have Actual Knowledge that there shall have occurred and be continuing an
Indenture Event of Default, the Indenture Trustee shall retain and not
distribute any amount otherwise required to be distributed pursuant to clause
"second" of Section 4.01(a), and (i) at such time as there shall not be
- -------
continuing any such Indenture Event of Default or (ii) on the first Business Day
following the date that is 180 days after the receipt of such amount, whichever
shall first occur, the Indenture Trustee shall distribute such amount pursuant
to clause "second" of Section 4.01(a) unless prior thereto the Indenture Trustee
------
(as assignee of the Owner Trustee) shall have given notice to declare the
Charter to be in default in accordance with Section 18 thereof, the Indenture
Trustee shall have given notice to the Owner Trustee pursuant to the first
proviso to Section 5.04 of the Indenture Trustee's intent to declare the Secured
Notes due and payable or any of the Secured Notes shall have been declared or
<PAGE>
22
otherwise shall have become immediately due and payable pursuant to Section
5.04, in which case such amount shall be distributed by the Indenture Trustee
forthwith in accordance with the terms of Section 4.03.
SECTION 4.02. Certain Distributions. (a) In the event the Secured
---------------------
Notes are to be redeemed pursuant to Section 3.02 or 3.05, any payment received
by the Indenture Trustee from the Owner Trustee or the Charterer pursuant to
such Section 3.02 or 3.05, shall be distributed forthwith in the following order
of priority:
first, in the manner provided in clause "first" of Section 4.03;
----- -----
second, so much of the proceeds remaining as shall be required to pay
------
in full the aggregate unpaid principal amount of each Secured Note then
Outstanding and Make-Whole Amount, if any, and all accrued but unpaid
interest thereon to, but not including, the date of distribution, shall be
distributed to the Holder of such Secured Note, and if the proceeds
remaining are insufficient to pay all such amounts in full, they shall be
distributed to all Holders ratably, without priority of any Holder over any
other Holder (except as otherwise expressly provided herein), in the
proportion that the aggregate amount due each such Holder under this clause
"second" bears to the aggregate amount due all such Holders under this
------
clause "second";
------
third, in the manner provided in clause "second" of Section 4.03;
----- ------
fourth, in the manner provided in clause "fourth" of Section 4.03; and
------ ------
fifth, in the manner provided in clause "fifth" of Section 4.03.
----- -----
(b) The portion of each payment referred to in this Section 4.02
distributed to a Holder on account of principal or interest on any Secured Note
held by such Holder shall be applied by such Holder in payment of such Secured
Note in accordance with the terms of Section 4.04.
(c) Application of Certain Payments in Case of Event of Loss. Except
--------------------------------------------------------
as otherwise provided in the second sentence of this Section 4.02(c), any
amounts received directly or through the Charterer from any Governmental
Authority or other Person pursuant to Section 11 of the Charter with respect to
the Vessel as the result of an Event of Loss, to the extent that such amounts
are not at the time required or permitted to be paid to, or retained by, the
Charterer pursuant to said Section 11, and any amounts of insurance proceeds for
damage to the Indenture Estate received directly or through the Charterer from
any insurer pursuant to Section 10 of the Charter with respect thereto as the
result of an Event of Loss, to the extent such amounts are not at the time
required to be paid to, or retained by, the Charterer pursuant to said Section
10, shall,
<PAGE>
23
except as otherwise provided in the next sentence, be applied in reduction of
the Charterer's obligations to pay Stipulated Loss Value as provided in the
Charter and the remainder, if any, shall, except as provided in the next
sentence, be distributed to the Owner Trustee to be held or distributed in
accordance with the terms of the Charter. Notwithstanding this Section 4.02(c)
or Section 4.03 hereof, any amounts held by the Indenture Trustee, including,
without limitation, pursuant to Section 11 of the Charter, which are payable to
the Charterer pursuant to the terms of the Charter or held by the Indenture
Trustee in accordance with Section 21(g) of the Charter shall be (i) so paid to
the Charterer or (ii) held by the Indenture Trustee as security for the
obligations of the Charterer, in each case in accordance with the applicable
provisions of the Charter.
SECTION 4.03. Distribution After Indenture Event of Default. Except
---------------------------------------------
as otherwise provided in the second sentence of Section 4.02(c) or in Section
4.05, if (a) an Indenture Event of Default shall have occurred and be
continuing, and (b) either the Indenture Trustee (as assignee of the Owner
Trustee) shall have given notice to declare the Charter to be in default
pursuant to Section 18(a) thereof, the Indenture Trustee shall have given notice
to the Owner Trustee pursuant to the first proviso to Section 5.04 of the
Indenture Trustee's intent to declare the Secured Notes due and payable or any
of the Secured Notes shall have been declared or otherwise shall have become
immediately due and payable pursuant to Section 5.04, then, to the extent that
each such notice or declaration shall not have been rescinded or the Secured
Notes shall remain immediately due and payable, (i) all amounts then held by the
Indenture Trustee pursuant to Section 4.01 or otherwise under the Indenture (but
not including funds described in the second sentence of Section 4.02(c) and
Section 4.05 excluded from the operation of this Section 4.03), in each case
hereunder or under any Operative Document (other than amounts held for its own
account), and (ii) all payments and amounts thereafter realized by the Indenture
Trustee through the exercise of remedies hereunder or under any of the
agreements assigned or pledged to the Indenture Trustee under this Indenture or
otherwise as trustee under this Indenture or under the Ship Mortgage (for
purposes of this Section 4.03, all such amounts and payments held or realized
being herein called "proceeds"), other than amounts expressly paid to it for its
--------
own account and other than Excepted Payments, shall be distributed forthwith by
the Indenture Trustee in the following order of priority:
first, so much of such proceeds as shall be required to reimburse the
-----
Indenture Trustee for any unpaid fees for its services under this Indenture
and any unreimbursed tax, expense (including reasonable legal fees) or
other loss incurred by it (in each case to the extent reimbursable under
the Operative Documents) shall be distributed to the Indenture Trustee for
application to itself;
second, so much of the remaining proceeds as shall be required to
------
reimburse the then existing or prior Holders for amounts paid or advanced
by the Holders pursuant to Section 6.04 (to the extent not previously
reimbursed), shall be distributed to the then existing and prior Holders as
their respective interests may appear, and if the proceeds
<PAGE>
24
remaining are insufficient to pay all such amounts in full, they shall be
distributed ratably, without priority of any recipient over any other
recipient (except as otherwise expressly provided herein), in the
proportion the aggregate amount due each such Person under this clause
"second" bears to the aggregate amount and interest due all such Persons
-------
under this clause "second";
------
third, so much of the proceeds remaining as shall be required to pay
-----
in full the aggregate unpaid principal amount of each Secured Note then
Outstanding and all accrued but unpaid interest thereon to, but not
including, the date of distribution, shall be distributed to the Holder of
such Secured Note, and if the proceeds remaining are insufficient to pay
all such amounts in full, they shall be distributed to all Holders ratably,
without priority of any Holder over any other Holder (except as otherwise
expressly provided herein), in the proportion that the aggregate amount due
each such Holder under this clause "third" bears to the aggregate amount
-----
due all such Holders under this clause "third";
-----
fourth, so much of the proceeds remaining as shall be required to pay
------
to each Holder all other amounts payable pursuant to the indemnification
provisions of Section 12 of the Participation Agreement or pursuant to any
other provision of any Operative Document and secured hereunder to such
Holder or to its predecessors and remaining unpaid shall be distributed to
such Holder for distribution to itself and such predecessors, as their
respective interests may appear, and if the proceeds remaining are
insufficient to pay all such amounts in full, they shall be distributed
ratably, without priority of any Holder over any other Holder (except as
otherwise expressly provided herein), in the proportion that the aggregate
amount due each such Holder under this clause "fourth" bears to the
------
aggregate amount due all such Holders under this clause "fourth"; and
------
fifth, the balance, if any, of the proceeds remaining shall be
-----
distributed to the Owner Trustee for distribution pursuant to the Trust
Agreement.
For the avoidance of doubt, no Make-Whole Amount or any other premium
shall be due and payable on the Secured Notes as a consequence of the
acceleration of the Secured Notes as a result of an Indenture Event of Default.
All amounts distributed to any Holder pursuant to clause "third" of
-----
this Section 4.03 shall be applied by such Holder in payment of the Secured
Notes held by it in accordance with the terms of Section 4.04.
SECTION 4.04. Application of Payments on Secured Notes. Each payment
----------------------------------------
on a Secured Note shall be applied, first, to the payment of accrued interest on
-----
such Secured Note to
<PAGE>
25
the date of such payment and second, to the payment of any principal on such
------
Secured Note then due thereunder.
SECTION 4.05. Applications of Payments According to Applicable
------------------------------------------------
Operative Document Provisions. (a) Notwithstanding Section 4.03 or any other
- -----------------------------
provision of this Indenture to the contrary, any payments or amounts (other than
Excepted Payments) received by the Indenture Trustee, provision for the
application of which is made in any Operative Document, shall be applied
promptly as provided in such Operative Document (including in the case of
payments or amounts that would be payable to the Charterer as provided in
Sections 11(b), 11(c) and 21(g) of the Charter) unless (i) in the case of
payments or amounts that would be payable to the Charterer upon satisfaction of
any applicable conditions, a Charter Event of Default shall have occurred and be
continuing at the time the Indenture Trustee receives such payment and the
Indenture Trustee has Actual Knowledge of such Charter Event of Default, in
which case the Indenture Trustee shall hold such payments and amounts as cash
collateral security for the obligations of the Charterer under the Operative
Documents and shall invest such payments and amounts in accordance with the
terms of Section 7.04, and, subject to earlier distribution thereof by the
Indenture Trustee under Section 4.03 if the Charter shall have been declared in
default in accordance with Section 18 thereof, or under Section 4.01(b) (subject
to Section 4.05(b)), such payments and amounts, and the proceeds of any
investment thereof, shall be paid by the Indenture Trustee to the Charterer at
such time as any applicable conditions shall have been satisfied and no Charter
Event of Default shall be continuing, and (ii) in the case of any other such
payments and amounts, an Indenture Event of Default shall have occurred and be
continuing at the time the Indenture Trustee receives such payment and the
Indenture Trustee has Actual Knowledge of such Indenture Event of Default, in
which case the Indenture Trustee shall hold such payment as part of the
Indenture Estate, as cash collateral security hereunder for the performance of
the Indenture Indebtedness and on the earlier of the next Business Day on which
no Indenture Event of Default shall have occurred and be continuing or the first
Business Day occurring more than 180 days after the receipt of such payment,
and, subject to any prior application of such payment pursuant to Section
4.01(b) or 4.03, the Indenture Trustee shall apply such payment, and the
proceeds of any investment thereof, to the purpose for which it was made.
(b) Notwithstanding any other provision of this Indenture to the
contrary, and whether or not any such provision refers to this Section 4.05, any
Excepted Payment or other amount expressly provided by the terms of this
Indenture to be paid directly to the Owner Trustee or to the Owner Participant
shall be paid or distributed promptly by the Indenture Trustee to the Owner
Trustee or the Owner Participant, as the case may be.
(c) The Indenture Trustee will distribute promptly upon receipt any
indemnity or other payment received by it from the Owner Trustee or the
Charterer in respect of the
<PAGE>
26
Indenture Trustee in its individual capacity or any Holder pursuant to either
Section 12.1 or 12.2 of the Participation Agreement directly to the Person
entitled thereto.
SECTION 4.06. Amounts Received for Which No Provision Is Made. (a)
-----------------------------------------------
Any payment received or amounts realized by the Indenture Trustee for which no
provision as to the application thereof is made elsewhere in this Indenture or
in any other Operative Document, except as provided in Section 4.03, and (b) all
payments received and amounts realized by the Indenture Trustee under the
Charter, or otherwise with respect to the Vessel, to the extent received or
realized at any time after payment in full of the principal of and interest on
all Secured Notes issued hereunder or after the conditions set forth in Section
10.01 for the defeasance of the Secured Notes shall have been satisfied, as well
as any other amounts remaining as part of or as proceeds of the Indenture Estate
after payment in full of the principal of, Make-Whole Amount, if any, and
interest on all such Secured Notes, shall be distributed forthwith by the
Indenture Trustee in the following order of priority:
first, so much of such aggregate amount as shall be required to pay
-----
the Indenture Trustee all amounts then due it pursuant to Section 6.04
shall be applied to pay the Indenture Trustee such amounts; and
second, the balance, if any, of such aggregate amount remaining
------
thereafter shall be distributed to the Owner Trustee to be held or
distributed in accordance with the terms of the Trust Agreement, the
Charter or the Participation Agreement, as applicable.
SECTION 4.07. Payment Procedures. All amounts which are
------------------
distributable from time to time by the Indenture Trustee to the Owner Trustee,
the Charterer, the Owner Participant or any Holder shall be paid by the
Indenture Trustee in immediately available funds promptly after such amounts
become immediately available to it, and the Indenture Trustee shall not be
obligated to see to the application of any such payment made by it. All
payments made by the Indenture Trustee to the Owner Participant or to the Owner
Trustee shall be made in the manner and to the address set forth in Schedule 1
to the Participation Agreement or to such other address as may be specified from
time to time by notice to the Indenture Trustee from the Owner Participant or
the Owner Trustee.
SECTION 4.08. Application of Payments Under Guaranty. All payments
--------------------------------------
received by the Indenture Trustee pursuant to the Guaranty shall be distributed
forthwith by the Indenture Trustee in the same order of priority, and in the
same manner, as it would have distributed the payment on the underlying
obligation in respect of which such payment under the Guaranty was received.
<PAGE>
27
ARTICLE V
COVENANTS OF OWNER TRUSTEE; CERTAIN AGREEMENTS;
INDENTURE EVENTS OF DEFAULT; REMEDIES OF INDENTURE TRUSTEE
SECTION 5.01. Covenants of Owner Trustee; Certain Agreements. (a)
----------------------------------------------
Subject to Section 2.02, the Owner Trustee will duly and punctually perform and
observe all covenants and conditions to be performed and observed by it pursuant
to the terms of any Operative Document. Except as permitted by this Indenture
or the terms of any Operative Document, the Owner Trustee will take no action
and will cooperate with the Indenture Trustee so as to permit no action to be
taken by others which will release, or which may be construed as releasing, the
Owner Trustee or the Charterer from any of its or the Charterer's, as the case
may be, obligations or liabilities under any Operative Document, or which may
result in the termination, amendment or modification, or impair the validity, of
any such Operative Document.
(b) If the Owner Trustee has Actual Knowledge of any Indenture Event
of Default, Indenture Default, Charter Event of Default or Event of Loss, the
Owner Trustee will give prompt written notice thereof to the Indenture Trustee,
the Charterer and the Owner Participant if such notice shall not already have
been given to such party. The notice shall set forth in reasonable detail the
circumstances of such default or loss known to such Owner Trustee.
(c) At any time and from time to time, upon the reasonable request of
the Indenture Trustee, the Owner Trustee shall promptly and duly execute and
deliver any and all such further instruments and documents as the Indenture
Trustee may deem necessary or desirable (and as shall be consistent with the
intent, purposes and provisions hereof) to perfect or maintain the Liens of this
Indenture and of the Ship Mortgage or to obtain for the Indenture Trustee the
full benefit of the specific rights and powers herein or therein granted,
conveyed or assigned, or which the Owner Trustee may be or may hereafter be
bound to convey or assign to the Indenture Trustee or to facilitate the
performance of the terms of this Indenture and of the Ship Mortgage, or the
filing, registering or recording of this Indenture and of the Ship Mortgage,
including, without limitation, the execution and delivery of any financing
statement (and any continuation statement with respect to any such financing
statement) or any other similar document specified in such instructions as may
be necessary or desirable to perfect or maintain the Lien of this Indenture and
of the Ship Mortgage.
(d) The Owner Trustee does hereby warrant and represent that it has
not assigned or pledged, and hereby covenants that, except as provided herein or
permitted by the other Operative Documents, it will not (other than in respect
of Excepted Payments) and rights under the Conveyancing Instrument assign or
pledge, so long as this Indenture shall remain in effect and the Lien of this
Indenture shall not have been released pursuant to Section 6.03 hereof, any of
the Owner Trustee's right, title or interest hereby assigned to anyone other
than the
<PAGE>
28
Indenture Trustee, and that the Owner Trustee will not (other than in respect of
Excepted Payments and rights under the Conveyancing Instrument), except as
provided in or permitted by this Indenture or any other Operative Document, (i)
accept any payment from the Charterer, (ii) terminate or consent to the
cancellation or surrender of the Charter or accept any prepayment of Charter
Hire under the Charter, (iii) enter into any agreement amending or supplementing
any Operative Document, (iv) execute or grant any waiver or modification of, or
consent under, the terms of any Operative Document, (v) settle or compromise any
claim arising under any Operative Document, or (vi) submit or consent to the
submission of any dispute, difference or other matter arising under or in
respect of any Operative Document to arbitration thereunder.
(e) The Owner Trustee does hereby ratify and confirm the Charter, and
does hereby agree the Owner Trustee will not, except as provided in or permitted
by this Indenture or the terms of any other Operative Document, take or omit to
take any action, the taking or omission of which might result in an alteration
or impairment of the Charter or any other Operative Document, or of any of the
rights created by the Charter or any Operative Document, or the assignment
hereunder or thereunder, as the case may be.
(f) The Owner Trustee will, in its individual capacity and at its own
cost and expense, promptly take such action as may be necessary to discharge any
Shipowner's Lien on any of the Owner Trustee's estate, right, title or interest
in the Trust Estate so pledged or assigned or intended to be conveyed, pledged
or assigned under this Indenture or the Ship Mortgage.
(g) Until the release of the security interest in the Indenture Estate
pursuant to Section 6.03, all payments due or to become due under any Operative
Document to the Owner Trustee that are part of the Indenture Estate shall be
made directly to the Indenture Trustee or in accordance with the Indenture
Trustee's instructions, and the Owner Trustee shall give all notices as shall be
required under each Operative Document to direct that such payments be made to
the Indenture Trustee and promptly upon receipt of any such amount, the Owner
Trustee shall transfer such amount to the Indenture Trustee for distribution
pursuant to this Indenture.
(h) An executed counterpart of each amendment or supplement to the
Trust Agreement shall be delivered within 20 Business Days after the execution
thereof to the Indenture Trustee, provided that any amendment or supplement
under which a successor trustee is appointed shall be mailed to the Indenture
Trustee within 10 days after the execution thereof. The Lien of this Indenture
shall not be affected by any amendment or supplement to the Trust Agreement or
by any other action taken under or in respect of the Trust Agreement. Without
the prior written consent of the Indenture Trustee, the Trust Agreement may not
in any event be terminated or revoked by the Owner Participant prior to the
termination of this Indenture. In the case of any appointment of a successor to
any Owner Trustee pursuant to the Trust Agreement or any merger, conversion,
consolidation or transfer of all or substantially all of the corporate trust
<PAGE>
29
business of the Owner Trustee pursuant to the Trust Agreement, the successor
Owner Trustee shall give prompt notice thereof to the Indenture Trustee and the
Charterer.
SECTION 5.02. Indenture Events of Default. "Indenture Event of
--------------------------- ------------------
Default" means any of the following events (whatever the reason for such
- -------
Indenture Event of Default and whether such event shall be voluntary or
involuntary or come about or be effected by operation of law or pursuant to or
in compliance with any judgment, decree or order of any court or any
Governmental Rule):
(a) any Charter Event of Default (other than a Charter Event of
Default arising from the failure of the Charterer to make an Excepted
Payment) shall have occurred and be continuing; or
(b) to the extent not arising from clause (a) above, any payment of
principal of, Make-Whole Amount, if any, or interest on any Secured Note
shall not have been made when due and such default shall continue
unremedied for ten (10) Business Days after the same shall have become due
and payable; or
(c) the assignment or pledge by the Owner Trustee (except as permitted
under the Operative Documents) of any of its right, title or interest in
the Indenture Estate hereby assigned to anyone other than the Indenture
Trustee, or the failure by either of the Owner Participant or the Owner
Trustee, in their individual or trust capacities, as the case may be, to
perform or observe in any material respect any covenant or agreement to be
performed or observed by it under this Indenture or any other Operative
Document (other than the Tax Indemnity Agreement), (i) which failure,
assignment or pledge, as the case may be, shall continue for a period of 30
days after receipt by the Owner Participant or the Owner Trustee, as the
case may be, of a written notice from the Indenture Trustee or from Holders
of Secured Notes owning at least 25% in principal amount of Outstanding
Secured Notes specifying such failure, assignment or pledge and requiring
it be remedied or (ii) which failure, assignment or pledge, as the case may
be, if such failure, assignment or pledge is remediable and the Owner
Participant or the Owner Trustee is diligently attempting to remedy such
failure, assignment or pledge, shall continue for a period of 180 days
after receipt of notice thereof; or
(d) any representation or warranty made by either of the Owner
Participant or the Owner Trustee pursuant to Sections 6 or 7, as the case
may be, of the Participation Agreement shall prove to have been inaccurate
in any material respect when made, unless such inaccurate representation or
warranty shall not be material to the recipient at the time when the notice
referred to below shall have been received by the Owner Participant or the
Owner Trustee or any material adverse impact thereof shall have been cured
within thirty (30) days after receipt by the Owner Participant or the Owner
Trustee, as the case
<PAGE>
30
may be, of a written notice thereof from the Indenture Trustee or from
Holders of Secured Notes owning at least 25% in principal amount of
Outstanding Secured Notes; provided that if such material adverse impact is
--------
remediable and the Owner Participant or the Owner Trustee is diligently
attempting to remedy such impact, the Owner Participant or the Owner
Trustee shall have 90 days after receipt of written notice thereof from the
Indenture Trustee to remedy any such material adverse impact; or
(e) either of the Owner Participant or the Owner Trustee shall
commence a voluntary case or other proceeding seeking liquidation,
reorganization or other relief with respect to itself or its debts under
any bankruptcy, insolvency, or other similar law now or hereafter in effect
or seeking the appointment of a trustee, receiver, liquidator, custodian or
other similar official of its or any substantial part of its property, or
shall consent to any such relief or to the appointment or taking possession
by any such official or agency in an involuntary case or other proceeding
commenced against it, or shall make a general assignment for the benefit of
creditors, or shall take any corporate action to authorize any of the
foregoing, or an involuntary case or other proceeding shall be commenced
against either of the Owner Participant or the Owner Trustee seeking
liquidation, reorganization or other relief with respect to it or its debts
under any bankruptcy, insolvency or other similar law now or hereafter in
effect or seeking the appointment of a trustee, receiver, liquidator,
custodian or other similar official or agency of its or any substantial
part of its part of its property, and such involuntary case or other
proceeding shall remain undismissed and unstayed for a period of ninety
(90) days, or if, under the provisions of any law providing for
reorganization or winding-up of corporations which may apply to the Owner
Trustee or the Owner Participant, any court of competent jurisdiction shall
assume jurisdiction, custody or control of the Indenture Estate, the Owner
Trustee or the Owner Participant or of any substantial part of its property
and such jurisdiction, custody or control shall remain in force
unrelinquished, unstayed or unterminated for a period of ninety (90) days.
SECTION 5.03. Certain Rights. (a) If the Charterer shall fail to
--------------
make any payment of Base Charter Hire under the Charter when the same shall
become due, and if such failure of the Charterer to make such payment of Base
Charter Hire shall not constitute the fourth consecutive such failure or the
sixth or subsequent cumulative such failure, then as long as no Indenture Event
of Default (other than arising from a Charter Event of Default not involving any
failure to make any payments to which the Indenture Trustee or any Loan
Participant is entitled hereunder when due) shall have occurred and be
continuing, the Owner Participant or the Owner Trustee may (but need not),
without consent or concurrence of the Indenture Trustee or any Holder, in the
manner provided in Section 2.03, for application in accordance with Section
4.01, pay to the Indenture Trustee, at any time prior to the day which is the
11th day subsequent to the expiration of the grace period provided for in
Section 17(a)(i) of the Charter with respect to the payment of Base Charter Hire
(and the Indenture Trustee shall not (without the prior written
<PAGE>
31
consent of the Owner Trustee) declare the Charter in default pursuant to Section
18 thereof or exercise any of the rights, powers or remedies pursuant to such
Section 18 of the Charter or Section 5.04 hereof prior to the occurrence of such
later date), an amount equal to the full amount of such payment of Base Charter
Hire, together with any interest due thereon on account of the delayed payment
thereof to, but not including, the date of such payment in accordance with
Section 2.03(c) hereof, and such payment by the Owner Participant or the Owner
Trustee shall be deemed to cure as of the date of such payment any Indenture
Event of Default which arose from such failure of the Charterer (including any
Charter Event of Default arising from the Charterer's failure to pay interest in
respect of such overdue Base Charter Hire for the period commencing on the date
of such payment), but such cure shall not relieve the Charterer of any of its
obligations. If the Charterer shall fail to perform or observe any covenant,
condition or agreement to be performed or observed by it under the Charter or
any other Charter Event of Default shall exist (other than the failure to pay
Base Charter Hire), and if (but only if) the performance or observance of such
covenant, condition or agreement or the cure of such Charter Event of Default
can be effected by the payment of money alone (it being understood that actions
such as the obtaining of insurance can be so effected), then as long as no other
Indenture Event of Default (other than those arising from a Charter Event of
Default) shall have occurred and be continuing, the Owner Participant or the
Owner Trustee may (but need not), without consent or concurrence of the
Indenture Trustee or any Holder, pay to the Indenture Trustee (or to such other
person as may be entitled to receive the same), at any time prior to the day
which is the later of (x) the 11th day subsequent to notice of such failure or
such Charter Event of Default by the Indenture Trustee to the Owner Trustee or
the Owner Participant and (y) the 11th day subsequent to the expiration of the
grace period, if any, provided with respect to such failure or such Charter
Event of Default on the part of the Charterer in Section 17 of the Charter (and
the Indenture Trustee shall not (without the prior written consent of the Owner
Trustee) declare the Charter in default pursuant to Section 18 thereof or
exercise any of the rights, powers or remedies pursuant to such Section 18 or
Section 5.04 hereof prior to the occurrence of such later date), all sums
necessary to effect the performance or observance of such covenant or agreement
of the Charterer or to cure such Charter Event of Default, together with any
interest due thereon on account of the delayed payment thereof to, but not
including, the date of such payment, and such payment by the Owner Participant
or the Owner Trustee shall be deemed to cure as of the date of such payment any
Indenture Event of Default which arose from such failure of the Charterer or
such Charter Event of Default (including any Charter Event of Default arising
from the Charterer's failure to pay interest in respect of such overdue payment
for the period commencing on the date of such payment), but such cure shall not
relieve the Charterer of any of its obligations; provided that the Owner Trustee
--------
and the Owner Participant, collectively, shall not be entitled to cure any such
default or Charter Event of Default if the total amount previously expended and
not reimbursed by the Charterer or the Guarantor for curing such Charter Events
of Default and the amount which would be expended in connection with any such
Charter Event of Default would exceed in the aggregate 2% of the Total Vessel
Cost.
<PAGE>
32
(b) To the extent of any payment made by the Owner Trustee or the
Owner Participant pursuant to Section 5.03(a), the Owner Trustee or the Owner
Participant, as the case may be, shall be subrogated to the rights of the
Indenture Trustee hereunder (or in the case of the second sentence of Section
5.03(a), to the rights of the Indenture Trustee or such other person, as the
case may be) to receive the payment of Base Charter Hire or other amount for
which such payment was made by the Owner Trustee or the Owner Participant, as
the case may be, and the Owner Trustee or the Owner Participant, as the case may
be, shall be entitled to receive such payment from the Indenture Trustee upon
receipt thereof by the Indenture Trustee; provided, however, that no such amount
-------- -------
shall be paid to the Owner Trustee or the Owner Participant, as the case may be,
unless all principal of and interest on the Secured Notes then due and payable
and any other amounts then due and payable under the Secured Notes and this
Indenture shall have been paid in full and no Indenture Default shall have
occurred and be continuing; provided that neither the Owner Participant nor the
--------
Owner Trustee shall attempt to recover any such amount paid by it on behalf of
the Charterer pursuant to Section 5.03(a) except by demanding of the Charterer
payment of such amount or by commencing an action against the Charterer to
require the payment of such amount.
(c) The Owner Trustee, upon exercising cure rights under Section
5.03(a) or rights under Section 6.08(a)(iii) or under Section 20(a) of the
Charter, shall not obtain any Lien on any part of the Indenture Estate or Trust
Estate on account of such payment for the costs and expenses incurred in
connection therewith, nor shall any claims of the Owner Trustee against the
Charterer or any other Person for the repayment thereof impair the prior right
and security interest of the Indenture Trustee in and to the Indenture Estate or
otherwise related to the Indenture Estate.
(d) If there shall occur an Indenture Event of Default pursuant to
Section 5.02(a) arising as a result of a failure by the Charterer to make any
payment of Base Charter Hire when due, the Indenture Trustee shall so notify the
Owner Trustee in writing promptly upon such occurrence.
SECTION 5.04. Remedies. (a) If an Indenture Event of Default shall
--------
have occurred and be continuing and so long as the same shall be unremedied,
then and in every such case the Indenture Trustee, subject to Sections 3.06,
5.03, 5.04(d), 5.05, 5.09, 6.01 and 6.08, may exercise any or all of the rights
and powers and pursue any and all of the remedies herein provided or available
under applicable law; provided, however, the Indenture Trustee must give the
-------- -------
Owner Trustee and the Charterer at least 10 Business Days' (other than in the
case of an automatic acceleration of the Secured Notes as provided in Section
5.04(c)) prior written notice of its intention to exercise remedies pursuant to
this Section 5.04 (it being understood that such notice may be given
concurrently with any notice of default given hereunder or under the Charter and
prior to the expiration of any applicable grace periods). Notwithstanding any
contrary provision herein, upon the occurrence and during the continuance of an
Indenture Event of
<PAGE>
33
Default, the Indenture Trustee may exercise, subject to Sections 3.06, 5.03(a),
5.05, 5.09, 5.10 and 6.08, all rights and remedies of the Owner Trustee to the
exclusion of the Owner Trustee under the Charter (other than those rights and
remedies to the extent relating to Excepted Payments), including, without
limitation, the right to take possession of all or any part of the Indenture
Estate and exclude the Owner Trustee and all Persons (except the Charterer or
any Affiliate in respect of rights conveyed under the Conveyancing Instrument if
a Charter Event of Default shall not have occurred and be continuing) claiming
under the Owner Trustee wholly or partly therefrom. In addition to and without
limiting the foregoing, the Indenture Trustee, upon at least twenty-five (25)
days' prior written notice to the Owner Trustee, the Charterer and the Owner
Participant, may invoke and exercise the power of sale and sell (or cause to be
sold) any or all of the Indenture Estate in the manner required by law at public
auction, or in any other manner which shall be in accordance with applicable
law, or, in lieu of sale pursuant to the power of sale, the Indenture Estate may
be foreclosed, and the Indenture Trustee has and may exercise all rights and
remedies of a secured party under the Uniform Commercial Code as in effect in
any applicable jurisdiction; provided, however, that if an Indenture Event of
-------- -------
Default has occurred and is continuing solely by virtue of one or more Charter
Events of Default (at a time when no other Indenture Events of Default shall
have occurred and be continuing), the Indenture Trustee shall not exercise
foreclosure remedies under this Indenture without exercising repossessory or
other substantial remedies provided in Section 18 of the Charter, unless
exercising such remedies under the Charter shall be prohibited by law,
governmental authority or court order, in which case the Indenture Trustee shall
not exercise foreclosure remedies under the Indenture until the later of (i) the
expiration of a period of sixty (60) days from the commencement of such
prohibition and (ii) the expiration of an additional period commencing on the
day immediately following the expiration of such 60-day period and ending on the
earlier of (x) the 180th day after the relevant stay or prohibition is imposed,
(y) the occurrence of any additional Indenture Event of Default during such
additional period and (z) rejection of the Charter; provided that such extended
--------
period will not apply unless, on the 60th day following the date upon which such
stay or prohibition becomes effective, all Indenture Events of Default
theretofore existing have been cured (except to the extent arising from the
bankruptcy or similar proceeding giving rise to the applicable stay or similar
prohibition) and to the extent the Owner Trustee exercises its right to cure any
Charter defaults or Charter Events of Default during such 180-day period, the
exercise of such rights will not limit the cure rights otherwise available to
Shipowner under Section 5.03(a); provided further that notwithstanding any
-------- -------
provision herein to the contrary, the Indenture Trustee shall not sell, assign,
transfer or deliver any of the Indenture Estate or take possession of the
Indenture Estate unless the Secured Notes shall have been accelerated pursuant
to Section 5.04(b) or 5.04(c). The Indenture Trustee shall notify the Owner
Trustee, the Owner Participant and the Charterer as soon as is reasonably
practicable after its commencement of the exercise of any remedy pursuant to
this Section 5.04.
(b) If an Indenture Event of Default (other than an Indenture Event of
Default specified in Section 5.02(e) or an Indenture Event of Default of the
type specified in Section
<PAGE>
34
5.02(a) which arises as a result of any Charter Event of Default as is specified
in Section 17(a)(vi) of the Charter) shall have occurred and be continuing,
then, subject to Sections 5.03, 6.01 and 6.08, the Indenture Trustee may at any
time (or shall when instructed by a Majority Interest of Holders of Notes), by
five (5) days' written notice to the Owner Trustee, declare all (but not less
than all) of the Secured Notes to be due and payable. Upon such declaration,
the unpaid principal of all Secured Notes then Outstanding, together with
accrued but unpaid interest thereon and any other amounts due thereunder, shall
immediately become due and payable without presentment, demand, protest, further
notice of intention to accelerate maturity or other notice, all of which are
hereby waived.
(c) If an Indenture Event of Default of the type specified in Section
5.02(e), or an Indenture Event of Default of the type specified in Section
5.02(a) which arises as a result of any Charter Event of Default specified in
Section 17(a)(vi) of the Charter shall have occurred and be continuing, the
principal of all Secured Notes then Outstanding, together with accrued but
unpaid interest thereon and any other amounts due thereunder, shall become and
be due and payable automatically, without declaration, notice, demand, or any
other action on the part of the Indenture Trustee or any Holder, all of which
are hereby waived. Each of Section 5.04(a), Section 5.04(b) and this Section
5.04(c), however, is subject to the condition that, if at any time after the
principal of the Secured Notes shall have become due and payable upon a declared
or automatic acceleration thereof as provided herein, and before any judgment or
decree for the payment of the money so due, or any portion thereof, shall be
entered, all overdue payments of interest upon the Secured Notes and all other
amounts payable under the Secured Notes (except the principal of the Secured
Notes which by such declaration shall have become payable) shall have been duly
paid, and every other Indenture Event of Default with respect to any covenant or
provision of this Indenture shall have been cured or waived, then in every such
case a Majority in Interest of Holders of Notes, by written instrument filed
with the Indenture Trustee, may (but shall not be obligated to) rescind and
annul the Indenture Trustee's declaration and its consequences; but no such
rescission or annulment shall extend to or affect any subsequent Event of
Default or impair any right consequent thereon.
(d) Notwithstanding any provision in any document or instruction that
purports to require the Indenture Trustee to acquire title to any or all of the
Indenture Estate upon foreclosure, or pursuant to instructions, the Indenture
Trustee shall not be obligated to acquire any such title unless: (i) the
Indenture Trustee is provided with such security or indemnity as it shall deem
satisfactory to it; (ii) such acquisition of title complies with all applicable
Operative Documents, laws, rules and regulations, which shall be evidenced by an
opinion of counsel to such effect in form and substance satisfactory to the
Indenture Trustee; and (iii) the Indenture Trustee shall have obtained such
executed certificates, instruments or other documents, in accordance with its
reasonable inquiries or requests.
<PAGE>
35
SECTION 5.05. Suit; Possession; Title; Sale of Indenture Estate. (a)
-------------------------------------------------
The Owner Trustee agrees that, if an Indenture Event of Default shall have
occurred and be continuing and the Indenture Trustee shall be entitled to
exercise remedies hereunder as provided in Section 5.04, the Indenture Trustee
may take possession of all or any part of the Indenture Estate and may exclude
the Owner Trustee, and all Persons (except the Charterer or any Affiliate in
respect of the rights conveyed under the Conveyancing Instrument if a Charter
Event of Default shall not have occurred and be continuing) claiming under the
Owner Trustee, wholly or partly therefrom; provided, however, that at least ten
-------- -------
(10) Business Days' prior notice of such taking of possession shall be given to
the Owner Trustee. If an Indenture Event of Default shall have occurred and be
continuing and the Indenture Trustee shall be entitled to exercise remedies
hereunder as provided in Section 5.04, at the request of the Indenture Trustee,
the Owner Trustee shall promptly execute and deliver to the Indenture Trustee
such instruments of title and other documents as the Indenture Trustee may deem
necessary or advisable to enable the Indenture Trustee or any agent or
representative designated by the Indenture Trustee, at such time or times and
place or places as the Indenture Trustee may specify, to obtain possession of
all or any part of the Indenture Estate to which the Indenture Trustee shall at
the time be entitled hereunder. If the Owner Trustee shall for any reason fail
to execute and deliver such instruments and documents after such request by the
Indenture Trustee, the Indenture Trustee may (i) obtain a judgment conferring on
the Indenture Trustee the right to immediate possession of any property
comprising a portion of the Indenture Estate and requiring the Owner Trustee to
execute and deliver such instruments and documents to the Indenture Trustee, or
(ii) pursue all or part of such property wherever it may be found, and the
Indenture Trustee may enter any of the premises where such property or any
portion thereof may be or is supposed to be and search for such property. All
expenses of obtaining such judgment or of pursuing, searching for and taking
such property shall, until paid, be secured by the Lien of this Indenture.
(b) Upon every such taking of possession, the Indenture Trustee may,
but shall not be obligated to, make, from time to time and at the expense of the
Indenture Estate, such expenditures for maintenance, insurance, repairs,
replacements, alterations, additions and improvements to and of the Indenture
Estate as it may deem proper. In each such case, the Indenture Trustee shall
have the right to maintain, use, operate, store, lease, control or manage the
Indenture Estate and to exercise all rights and power of the Owner Trustee
relating to the Indenture Estate as the Indenture Trustee shall deem to be in
the best interest of the Holders; provided, however, the Indenture Trustee shall
-------- -------
not operate or use the Vessel in such a manner that disqualifies the Vessel from
engaging in U.S. coastwise trade. The Indenture Trustee shall be entitled to
collect and receive directly all tolls, rents (including Rent), revenue, issues,
income, products and profits of the Indenture Estate and every part thereof,
other than Excepted Payments. Such tolls, rents (including Charter Hire),
revenues, issues, income, products and profits shall be applied (i) to pay the
expenses of the use, operation, storage, leasing, control, management or
disposition of the Indenture Estate, (ii) to pay the expense of all maintenance,
repairs, replacements, alterations, additions and improvements, (iii) to make
all payments which
<PAGE>
36
the Indenture Trustee may be required or may elect to make, if any, for taxes,
assessments, insurance or other proper charges upon the Indenture Estate or any
portion thereof, including, without limitation, the employment of engineers and
accountants to examine, inspect and make reports upon the properties and books
and records of the Owner Trustee, and (iv) to pay amounts owing in respect of
the Secured Notes in accordance with the provisions thereof and hereof and to
make all other payments which the Indenture Trustee may be required or
authorized to make under any provision of this Indenture, as well as just and
reasonable compensation for the services of the Indenture Trustee and of all
Persons properly engaged and employed by the Indenture Trustee.
(c) Any of the Indenture Trustee, the Owner Trustee or the Owner
Participant may be a purchaser of the Indenture Estate or any portion thereof or
any interest therein at any sale thereof, whether pursuant to foreclosure or
power of sale or otherwise. The Indenture Trustee may apply against the
purchase price therefor the amount then due to it hereunder or under any of the
Secured Notes secured hereby and any Holder may apply against the purchase price
therefor the amount then due to it hereunder or under the Secured Notes held by
such Holder, to the extent of such portion of the purchase price as it would
have received had it been entitled to share in any distribution thereof. The
Indenture Trustee or any Holder or any nominee of any such Holder shall acquire,
upon any such purchase, good title to the property so purchased, free of the
Lien of this Indenture and, to the extent permitted by applicable law, free of
all rights of redemption in the Owner Trustee in respect of the property so
purchased.
(d) Any sale or other conveyance of any of the Indenture Estate by the
Indenture Trustee made pursuant to the terms of this Indenture or the Charter
shall bind the Owner Trustee, the Holders and the Owner Participant and shall be
effective to transfer or convey all right, title and interest of the Indenture
Trustee, the Owner Trustee, the Holders and the Owner Participant in and to such
Indenture Estate or portion thereof, as the case may be. No purchaser or other
grantee shall be required to inquire as to the authorization, necessity,
expediency or regularity of such sale or conveyance, or as to the application of
any sale or other proceeds with respect thereto by the Indenture Trustee. In
the event of any such sale, the Owner Trustee shall execute any and all such
bills of sale and other documents, and perform and do all other acts and things
requested by the Indenture Trustee in order to permit continuation of such sale
and to effectuate the transfer or conveyance referred to in the first sentence
of this Section 5.05(d). The Owner Trustee shall ratify and confirm any such
sale or sales by executing and delivering to the Indenture Trustee or to such
purchaser or purchasers all instruments as may reasonably be requested for such
purpose. Any such sale or sales made hereunder shall operate to divest all the
estate, right, title, interest, claim and demand whatsoever, whether at law or
in equity, of the Owner Trustee in and to the properties and rights so sold, and
shall be a perpetual bar both at law and in equity against the Owner Trustee and
against any and all persons claiming or who may claim the same, or any part
thereof from, through or under the Owner Trustee. Upon any sale or other
disposition of the Indenture Estate by the Indenture Trustee, the Indenture
<PAGE>
37
Trustee will promptly account in writing, in reasonable detail, to the Owner
Trustee for the amount of such sale, the costs and expenses incurred in
connection therewith and any surplus proceeds.
(e) The Indenture Trustee shall, as a matter of right, be entitled to
the appointment of a receiver (who may be the Indenture Trustee or any successor
or nominee thereof), at any time after an Indenture Event of Default either
before or after declaring due and payable the principal of all Secured Notes
then Outstanding, together with accrued but unpaid interest thereon and any
other amounts due thereunder, for all or any portion of the Indenture Estate,
whether such receivership be incidental to a proposed sale of the Indenture
Estate or the taking of possession thereof or otherwise, and, to the extent
permitted by applicable law, the Owner Trustee hereby consents to the
appointment of such a receiver, and agrees that it will not oppose any such
appointment. Any receiver appointed for all or any portion of the Indenture
Estate shall be entitled in addition to any powers available under applicable
law, to exercise all the rights and powers of the Indenture Trustee with respect
to the Indenture Estate.
(f) To the extent now or at any time hereafter enforceable under
applicable law, the Owner Trustee covenants that it will not at any time insist
upon or plead, or in any manner whatsoever claim or take any benefit or
advantage of any stay, extension, moratorium, any exemption from execution or
sale or other similar law or from any law now or hereafter in force providing
for the valuation or appraisement of the Indenture Estate or any part thereof,
prior to any sale or sales thereof to be made pursuant to any provision herein
contained, or prior to any applicable decree, judgment or order of any court of
competent jurisdiction; nor, after such sale or sales, claim or exercise any
right under any statute now or hereafter made or enacted by any state or any
right to have a portion of the Indenture Estate or the security for the Secured
Notes marshalled or otherwise redeem the property so sold or any part thereof,
and hereby expressly waives for itself and on behalf of each and every Person,
except decree or judgment creditors of the Owner Trustee acquiring any interest
in or title to the Indenture Estate or any part thereof subsequent to the date
of this Indenture, all benefit and advantage of any such law or laws, and
covenants that it will not invoke or use any such law or laws, but will suffer
and permit the execution of every such power as though no such law or laws had
been made or enacted. Nothing in this Section 5.05(f) shall be deemed to be a
waiver by the Owner Trustee of its rights under Section 5.03 hereof.
The Indenture Trustee may maintain such a pleading, or, in any manner
whatsoever, claim or take any benefit or advantage of or from any law now or
hereafter in force even if it does not possess any of the Secured Notes or does
not produce any of them in the proceeding. A delay or omission by the Indenture
Trustee or any Holder in exercising any right or remedy accruing upon an
Indenture Event of Default under this Indenture shall not impair the right or
remedy or constitute a waiver of or acquiescence in such Indenture Event of
Default.
<PAGE>
38
(g) The Indenture Trustee may adjourn from time to time any sale to be
made under or by virtue of this Indenture for such sale or for such adjourned
sale or sales, and, except as otherwise provided by any applicable provision of
law, the Indenture Trustee, without further notice or publication, may make such
sale at the time and place to which the same shall be so adjourned.
(h) Any recovery of any judgment by the Indenture Trustee under the
Secured Notes and any levy of any execution under any such judgment upon the
Indenture Estate shall not affect in any manner or to any extent the security
title and security interest conveyed hereby upon the Indenture Estate or any
part thereof, or any conveyances, powers, rights and remedies of the Indenture
Trustee hereunder, but such conveyances, powers, rights and remedies shall
continue unimpaired as before.
(i) Notwithstanding anything contained herein, so long as any Pass
Through Trustee is a registered Holder, the Indenture Trustee is not authorized
or empowered to acquire title to all or any portion of the Indenture Estate or
take any action with respect to all or any portion of the Indenture Estate so
acquired by it if such acquisition or action would cause the related Pass
Through Trust to fail to qualify as a "grantor trust" for federal income tax
purposes.
SECTION 5.06. Remedies Cumulative. Each and every right, power and
-------------------
remedy provided the Indenture Trustee specifically or otherwise in this
Indenture shall be cumulative and shall be in addition to every right, power and
remedy herein specifically provided or now or hereafter existing at law, in
equity or otherwise. Each and every such right, power and remedy may be
exercised from time to time and as often and in such order as may be deemed
expedient by the Indenture Trustee, and the exercise or the beginning of the
exercise of any such right, power or remedy shall not be construed to be a
waiver of the right to exercise at the same time or thereafter any other right,
power or remedy. No delay or omission by the Indenture Trustee in the exercise
of any right or power or in the pursuit of any remedy shall impair any such
right, power or remedy, or be construed to be a waiver of any Indenture Event of
Default or to be an acquiescence therein.
SECTION 5.07. Discontinuance of Proceedings. In case the Indenture
-----------------------------
Trustee shall have instituted any proceeding to enforce any right, power or
remedy under this Indenture by foreclosure, entry or otherwise, and such
proceeding shall have been discontinued or abandoned for any reason or shall
have been determined adversely to the Indenture Trustee, then and in every such
case the Owner Trustee, the Indenture Trustee and the Charterer shall, subject
to any determination in such proceeding, be restored to their former positions
and rights hereunder with respect to the Indenture Estate, and all right, powers
and remedies of the Indenture Trustee shall continue as if no such proceeding
had been instituted.
<PAGE>
39
SECTION 5.08. Waiver of Past Defaults. Upon written instruction of a
-----------------------
Majority in Interest of Holders of Notes, the Indenture Trustee shall waive any
Indenture Event of Default specified in such instruction and its consequences,
and upon any such waiver such Indenture Event of Default shall cease to exist
for every purpose of this Indenture; provided, however, that no such waiver
-------- -------
shall extend to any subsequent or other Indenture Event of Default or impair any
right or consequence thereof; and provided further, however, that in the absence
-------- ------- -------
of the written instruction of the Holders of all Secured Notes then Outstanding,
the Indenture Trustee shall not waive any Indenture Event of Default arising
from a default (i) in the payment of the principal of or interest on, or other
amounts due under, any Secured Note then Outstanding, or (ii) in respect of a
covenant or provision hereof which pursuant to the terms of Article IX cannot be
modified or amended without the consent of each Holder of a Secured Note then
Outstanding.
SECTION 5.09. No Action Contrary to Charterer's Rights Under the
--------------------------------------------------
Charter. Notwithstanding any other provision of this Indenture or any other
- -------
Operative Document, including, without limitation, Sections 5.04 and 5.05
hereof, unless a Charter Event of Default shall have occurred and be continuing
and the Charter shall have been declared to be in default pursuant to Section
18(a) thereof (and then only in accordance with the Charter), the Indenture
Trustee shall not take or cause to be taken any action contrary to the
Charterer's rights under the Charter, including, without limitation, the rights
of the Charterer under Section 5(e) thereof.
SECTION 5.10. Rights of Holders of Secured Notes. Notwithstanding
----------------------------------
any provision herein (including Section 5.11) to the contrary, the Holder of a
Secured Note shall have the absolute and unconditional right to receive payment
from the Indenture Estate of the principal of and interest on such Secured Note
on the dates and as specified in such Secured Note, and to institute suit
against the Owner Trustee for the enforcement of any such payment, subject to
Section 2.02, and such right shall not be impaired without the consent of such
Holder.
SECTION 5.11. Limitation on Suits by Holders. A Holder may pursue a
------------------------------
remedy under this Indenture or under a Secured Note only if:
(i) the Holder gives to the Indenture Trustee written notice of a
continuing Indenture Event of Default under this Indenture;
(ii) the Holders of at least 25 percent (25%) of the Outstanding
principal amount of the Secured Notes instruct the Indenture Trustee to
pursue the remedy;
(iii) such Holder or Holders offer to the Indenture Trustee indemnity
satisfactory to the Indenture Trustee against any loss, liability or
expense to be, or which may be, incurred by the Indenture Trustee in
pursuing the remedy;
<PAGE>
40
(iv) the Indenture Trustee does not comply with the request within 60
days after receipt of the instructions and the offer of indemnity; and
(v) during such 60-day period, a Majority in Interest of Holders do
not give the Indenture Trustee an instruction inconsistent with the
request.
A Holder may not use this Indenture to prejudice the rights of another
Holder or to obtain a preference or priority over another Holder.
ARTICLE VI
DUTIES OF THE INDENTURE TRUSTEE
SECTION 6.01. Certain Actions. If the Indenture Trustee shall have
---------------
Actual Knowledge of any Indenture Event of Default or any Indenture Default or
any failure on the part of the Charterer to make any payment of Charter Hire
when due or any Event of Loss or other material fact relating to the Vessel, the
Indenture Trustee shall (a) give prompt telephonic notice (promptly confirmed in
writing) to the Owner Trustee, the Owner Participant and the Charterer and (b)
within ninety (90) days after obtaining such Actual Knowledge, mail to each
Holder notice of all Indenture Events of Default unless, in each case, such
Indenture Event of Default has been remedied before the giving of such notice
and the Indenture Trustee has Actual Knowledge that such Indenture Default or
Indenture Event of Default has been so remedied; provided, however, that the
-------- -------
failure by the Indenture Trustee to provide such notice shall not invalidate any
actions subsequently taken by the Indenture Trustee in connection with such
Indenture Event of Default. Except in the case of a default in the payment of
the principal or interest on any Secured Note, the Indenture Trustee shall be
protected in withholding the notice required under clause (b) above if and so
long as Responsible Officers of the Indenture Trustee in good faith determine
that withholding such notice is in the interest of the Holders.
SECTION 6.02. Action upon Instructions. (a) The Indenture Trustee
------------------------
shall, upon the written instruction at any time and from time to time of a
Majority in Interest of Holders of Notes, give such notice, consent or direction
or exercise such right, remedy or power hereunder or under the Charter or any
other agreement constituting part of the Indenture Estate as shall be specified
in such instruction; provided, however, that nothing set forth in this Section
-------- -------
6.02(a) shall entitle the Holders to cause the Indenture Trustee to give any
notice or exercise any right, power or remedy that is not elsewhere authorized
by, or is otherwise restricted or prohibited by, this Indenture or any other
Operative Document. If the Indenture Trustee shall not have received
instructions as above provided within twenty (20) calendar days after mailing of
the notice pursuant to Section 6.01 to the Holders, the Indenture Trustee may
take such action, or refrain from taking such action, but shall be under no duty
to take or refrain from taking any action, with
<PAGE>
41
respect to such Indenture Event of Default as it shall determine to be advisable
and in the best interest of the Holders. If the Indenture Trustee receives any
instructions after the expiration of the aforementioned 20-day period, the
Indenture Trustee shall use its best efforts to conform any action being taken
to comply with those instructions.
(b) The Indenture Trustee shall not consent to the assignment by the
Charterer of all or any material portion of its right, title and interest in, to
and under the Charter, except (i) with respect to an assignment permitted under
Section 16(b) of the Charter or (ii) upon the written instruction at any time
and from time to time of a Majority in Interest of Holders of Notes. Nothing
set forth herein shall be construed to permit such assignment without the
consent of the Owner Trustee or to adversely affect any right of the Owner
Trustee.
SECTION 6.03. Release of Lien of Indenture. (a) Release of
---------------------------- ----------
Indenture Estate. Upon satisfaction of the conditions for termination of this
- ----------------
Indenture set forth in Section 10.01, the Liens of the Indenture and of the Ship
Mortgage on the Indenture Estate shall terminate and the Indenture Trustee, upon
the written request of the Owner Trustee or the Charterer, shall execute and
deliver to, or as directed by, the Owner Trustee or the Charterer, all
appropriate instruments (in due form for recording or filing) releasing the
Indenture Estate from the Liens of this Indenture and of the Ship Mortgage, and
the Indenture Trustee shall pay all moneys or other properties or proceeds held
by it under this Indenture to the Owner Trustee and shall give notice to the
Charterer of such payment. The reasonable cost and expense associated with any
action taken by the Indenture Trustee pursuant to the provisions of this Section
6.03(a) shall be borne by the Charterer.
(b) Release of the Vessel upon Transfer. Upon any transfer by the
-----------------------------------
Owner Trustee of the Vessel pursuant to Sections 11, 12 or 15(a) of the Charter
or any retention by the Owner Trustee of the Vessel pursuant to Section 12 of
the Charter and receipt by the Indenture Trustee of all amounts of Charter Hire
therefor that constituted a part of the Indenture Estate due and payable by the
Charterer and the concurrent redemption of Secured Notes as set forth in
Sections 3.02 and 4.02 and the payment of any other amounts then due and owing
hereunder, the Liens of the Indenture and of the Ship Mortgage shall terminate
and the Indenture Trustee, upon the written request of the Owner Trustee or the
Charterer, shall execute and deliver to, or as directed by, the Owner Trustee or
the Charterer, all appropriate instruments (in due form for recording or filing)
releasing the Vessel, and all property relating thereto and then constituting a
portion of the Indenture Estate from the Liens of this Indenture and of the Ship
Mortgage. The cost and expense associated with any action taken by the
Indenture Trustee pursuant to the provisions of this Section 6.03(b) shall be
borne by the Charterer.
(c) Release of Lien upon Full Payment of Secured Notes. Upon payment
--------------------------------------------------
in full of the principal of and interest on and all other amounts due and
payable under the Secured Notes, and all other amounts due and payable to any
Holder or the Indenture Trustee hereunder
<PAGE>
42
or under any other Operative Document, the Indenture Trustee, upon the written
request of the Owner Trustee, shall execute and deliver to, or as directed by,
the Owner Trustee or the Charterer, all appropriate instruments (in due form for
recording or filing) releasing the Vessel, and all other property relating
thereto and then constituting a portion of the Indenture Estate from the Liens
of this Indenture and of the Ship Mortgage. The cost and expense associated
with any action taken by the Indenture Trustee pursuant to the provisions of
this Section 6.03(c) shall be borne by the Charterer.
(d) Disposition, Substitution and Release of Vessel Included in the
---------------------------------------------------------------
Indenture Estate During Continuation of Charter. So long as the Charter is in
- -----------------------------------------------
effect, any alterations, improvements and Modifications in and additions to the
Vessel shall, to the extent required or specified by the Charter, become subject
to the Lien of this Indenture and of the Ship Mortgage and be leased to the
Charterer under the Charter; provided that, to the extent permitted by and as
--------
provided in the Charter, the Charterer shall have the right, at any time and
from time to time, without any release from or consent by the Owner Trustee or
the Indenture Trustee or any other Person, to remove and/or replace any item of
property constituting part of the Vessel and to make alterations, improvements
and Modifications in, and additions to, the Vessel to the extent set forth in
the Charter. Each of the Indenture Trustee and the Owner Trustee agrees that,
to the extent permitted by and as provided in the Charter, title to any such
removed or replaced item of property, shall vest in the Charterer. The
Indenture Trustee shall from time to time execute an appropriate written
instrument or instruments to confirm the release of the security interest of the
Indenture Trustee in any such replaced item of property, as provided in this
Section 6.03(d) in each case upon receipt by the Indenture Trustee of a request
of a Charterer stating that said action was duly taken by the Charterer in
conformity with this Section 6.03(d) and that the execution of such written
instrument or instruments is appropriate to evidence such release of a security
interest under this Section 6.03(d). The reasonable cost and expense associated
with any action taken by the Indenture Trustee pursuant to the provisions of
this Section 6.03(d) shall be borne by the Charterer.
SECTION 6.04. Indemnification. The Indenture Trustee shall not be
---------------
required to take any action or refrain from taking any action instructed to be
taken or refrained from being taken pursuant to Section 6.02 or under Article V
unless the Indenture Trustee shall have been indemnified to the Indenture
Trustee's reasonable satisfaction against any liability (including, without
limitation, environmental liability), cost or expense (including, without
limitation, the reasonable fees and expenses of counsel) which may be incurred
in connection therewith, other than any such liability, cost or expense which
results from the willful misconduct or gross negligence of the Indenture Trustee
and for the failure of the Indenture Trustee to exercise ordinary care in
distributing funds in accordance with the terms of the Operative Documents.
Except with respect to actions required by the first sentence of Section 6.01
hereof, the Indenture Trustee shall be under no obligation to take any action
under this Indenture and nothing contained in this Indenture shall require the
Indenture Trustee to expend or risk the Indenture
<PAGE>
43
Trustee's own funds or otherwise incur any financial liability or any other
liability (including, without limitation, environmental liability) in the
performance of any of the Indenture Trustee's duties hereunder or in the
exercise of any of the Indenture Trustee's rights or powers if it shall have
reasonable grounds for believing that repayment of such funds or adequate
indemnity against such risk or liability is not reasonably assured to it. The
Indenture Trustee shall not be required to take any action under Section 6.02 or
Article V, nor shall any other provision of this Indenture be deemed to impose a
duty on any Indenture Trustee to take any action, if such Indenture Trustee
shall have reasonably determined or been advised by its counsel that such action
is contrary to the terms hereof or of any other Operative Document, or is
contrary to applicable law.
SECTION 6.05. No Implied Duties. No implied duties or obligations of
-----------------
the Indenture Trustee shall be read into this Indenture.
SECTION 6.06. Duties to Remove Certain Liens. The Indenture Trustee,
------------------------------
in its individual capacity, shall comply with Section 11.4(a) of the
Participation Agreement.
SECTION 6.07. No Action Except Under Operative Documents or
---------------------------------------------
Instructions. The Owner Trustee and the Indenture Trustee agree that they will
- ------------
not use, operate, store, lease, control, manage, sell, dispose of or otherwise
deal with the Vessel or any other part of the Indenture Estate except (a) in
accordance with the terms of the Charter or the other Operative Documents or (b)
in accordance with the powers granted to, or the authority conferred upon, the
Owner Trustee and the Indenture Trustee pursuant to the express terms of this
Indenture and the Trust Agreement.
SECTION 6.08. Certain Rights of the Owner Trustee and the Owner
-------------------------------------------------
Participant. Notwithstanding the Granting Clause or any other provision in this
- -----------
Indenture to the contrary:
(a) each of the Owner Trustee and the Owner Participant shall have the
right, to the exclusion of the Indenture Trustee, whether or not an
Indenture Event of Default is continuing and whether or not the Indenture
Trustee has foreclosed on the Lien of the Indenture, (i) to receive
Excepted Payments, (ii) to demand, collect, sue for or waive any notice of
default with respect to Excepted Payments, and (iii) to enforce the payment
of Excepted Payments due and payable to it by appropriate judicial
proceedings and to exercise other remedies as provided under any Operative
Document to the extent and with respect to any portion of the Indenture
Estate which shall have been released pursuant to the terms of this
Indenture; provided that the rights referred to in clause (iii) of this
--------
Section 6.08(a) shall not be deemed to include the exercise of any remedies
provided for in Section 18 of the Charter other than the right to proceed
by appropriate court action or actions, either at law or in equity, to
enforce performance by the Charterer of the applicable covenants or to
recover damages for breach thereof;
<PAGE>
44
(b) at all times prior to the foreclosure of the Lien of the
Indenture, whether or not an Indenture Event of Default is continuing, each
of the Owner Trustee and the Owner Participant shall have the right, but
not to the exclusion of the Indenture Trustee, (i) to receive from the
Charterer all notices, financial statements, certificates, opinions of
counsel and other documents and information which the Charterer is
permitted or required to give or furnish to the Owner Trustee or the Owner
Participant pursuant to the terms of any Operative Document, (ii) to retain
all rights with respect to liability insurance which Section 10 of the
Charter specifically confers upon the Owner Trustee or the Owner
Participant, and (iii) to exercise inspection rights pursuant to Section
10.5 of the Participation Agreement and Section 6(b) of the Charter;
(c) prior to the foreclosure of the Lien of the Indenture and whether
or not an Indenture Event of Default shall have occurred and be continuing,
the Owner Trustee shall have the right, to the exclusion of the Indenture
Trustee, to adjust Base Charter Hire, Stipulated Loss Values and
Termination Values and the EBO Exercise Price pursuant to Section 2.12.1 of
the Participation Agreement but subject to the limitations set forth in
Section 3(h) of the Charter and 2.12.2 of the Participation Agreement; and
(d) so long as no Indenture Event of Default shall have occurred and
be continuing (subject to Section 9.02), the Owner Trustee shall retain (to
the exclusion of the Indenture Trustee) all rights of the "Shipowner" or
the "Owner Trustee" under the Charter or any other Operative Document, as
the case may be, other than the Indenture Trustee's right to receive any
funds assigned to the Indenture Trustee under the terms of this Indenture.
SECTION 6.09. Filing of Financing and Continuation Statements. The
-----------------------------------------------
Indenture Trustee shall, at the expense of the Owner Trustee, execute and file
any continuation or similar statement or document delivered to it by the Owner
Trustee or the Charterer in a form reasonably satisfactory to the Indenture
Trustee and proper for filing.
SECTION 6.10. Publishing of Notices. The Indenture Trustee will
---------------------
furnish to the Owner Trustee and the Owner Participant, promptly upon receipt
thereof, a duplicate or copy of each report, notice, request, demand,
instruction, certificate, financial statement or other instrument furnished to
the Indenture Trustee hereunder or under any other Operative Document.
SECTION 6.11. Taxes; Withholding; Information Reporting. The
-----------------------------------------
Indenture Trustee shall exclude and withhold from each distribution of principal
and interest and other amounts due hereunder or under the Secured Notes any and
all withholding taxes applicable thereto as required by law. The Indenture
Trustee agrees (a) to act as such withholding agent and, in connection
therewith, whenever any present or future taxes or similar charges are required
to be withheld with respect to any amounts payable in respect of the Secured
Notes or otherwise
<PAGE>
45
due hereunder, to withhold such taxes or charges and timely pay the same to the
appropriate authority in the name of and on behalf of the Loan Participants, (b)
that it will file any necessary withholding tax returns or statements when due
and (c) that, as promptly as possible after the payment of such withheld
amounts, it will deliver to each Loan Participant appropriate documentation
showing the payment of such withheld amounts, together with such additional
documentary evidence as such Loan Participants may reasonably request from time
to time. The Indenture Trustee agrees to file any other information reports as
it may be required to file under United States law. No withholding or action
with respect thereto shall constitute or give rise to any Indenture Event of
Default or any other claims against the Owner Participant or the Owner Trustee.
Any tax withheld by the Indenture Trustee pursuant to this Section 6.11 shall be
deemed for all purposes of this Indenture and the Secured Notes to have been
paid to the Holder with respect to which such tax was withheld.
ARTICLE VII
THE INDENTURE TRUSTEE AND THE OWNER TRUSTEE
SECTION 7.01. Acceptance of Trusts and Duties. The Indenture Trustee
-------------------------------
accepts the duties hereby created and applicable to it and agrees to perform the
same upon the terms and conditions set forth in this Indenture and the
Participation Agreement. The Indenture Trustee further agrees to receive and
disburse all moneys constituting part of the Indenture Estate in accordance with
the terms hereof. The Indenture Trustee shall not be answerable or accountable
in its individual capacity under any circumstances, except (a) for its willful
misconduct or gross negligence, (b) for its failure to exercise reasonable care
in safeguarding the security held by it pursuant to the terms hereof, (c) in the
case of the inaccuracy of any representations or warranties, or the breach of
any covenants, made by the Indenture Trustee in its individual capacity and
contained in the Participation Agreement or any other Operative Document or
referred to by reference in Section 7.03 hereof, (d) as provided in Sections
2.03 and 6.06, (e) for any Tax based on or measured by any fees, commissions or
compensation received by it for acting as trustee hereunder, or (f) except as
otherwise expressly provided herein for its failure to use ordinary care in
disbursing funds in accordance with the terms hereof.
SECTION 7.02. Absence of Duties Except as Specified. Except in
-------------------------------------
accordance with written instructions pursuant to Section 6.01 or 6.02, and
except as provided in, and without limiting the generality of, Sections 6.04,
6.05, 6.06, 6.07, 7.01 and 7.03, the Indenture Trustee shall have no duty (a) to
record or file the Ship Mortgage, the Charter or this Indenture or any other
document, or to maintain any such recording or filing, or to rerecord or refile
any such document, (b) to effect or maintain any such insurance, whether or not
the Charterer shall be in default with respect thereto, (c) to discharge any
Lien of any kind against any part of the Trust Estate or the Indenture Estate,
or (d) to inspect the Vessel at any time, or to ascertain or inquire
<PAGE>
46
as to the performance or observance of any of the Charterer's covenants pursuant
to the terms of the Charter.
SECTION 7.03. No Representations or Warranties. NEITHER THE OWNER
--------------------------------
TRUSTEE NOR THE INDENTURE TRUSTEE MAKES (a) ANY REPRESENTATION OR WARRANTY,
WHETHER WRITTEN, ORAL, EXPRESS OR IMPLIED, AS TO THE VALUE, COMPLIANCE WITH
SPECIFICATIONS, DURABILITY, OPERATION, CONSTRUCTION, PERFORMANCE, DESIGN OR
CONDITION OF THE VESSEL OR ANY PART THEREOF, THE MERCHANTABILITY THEREOF OR THE
FITNESS THEREOF FOR ANY PARTICULAR PURPOSE, TITLE TO THE VESSEL OR ANY COMPONENT
OF THE VESSEL, THE QUALITY OF THE MATERIALS OR WORKMANSHIP THEREOF OR CONFORMITY
THEREOF TO SPECIFICATIONS, OR THE PRESENCE OR ABSENCE OF ANY LATENT OR OTHER
DEFECTS, WHETHER OR NOT DISCOVERABLE, OR ANY OTHER REPRESENTATION OR WARRANTY
WHATSOEVER, EXPRESS OR IMPLIED, WITH RESPECT TO THE VESSEL, OR ANY COMPONENT OF
THE VESSEL, or (b) any representation or warranty as to the validity, legality
or enforceability of this Indenture, any of the other Operative Documents or the
Secured Notes, or as to the correctness of any statement contained in any
thereof, except as set forth in Section 7.01 of this Indenture, Sections 7 and 8
of the Participation Agreement, respectively, and Section 7.3 of the Trust
Agreement.
SECTION 7.04. No Segregation of Moneys; No Interest; Investments.
--------------------------------------------------
Any moneys paid to or retained by the Indenture Trustee pursuant to any
provision hereof and not then required to be distributed to the Holders, the
Charterer or the Owner Trustee shall be deposited in a separate, interest
bearing cash collateral account; provided that any payments received or applied
--------
hereunder by the Indenture Trustee shall be accounted for by the Indenture
Trustee so that any portion thereof paid or applied pursuant hereto shall be
identifiable as to the source thereof. Any amounts held by the Indenture
Trustee pursuant to the express terms of this Indenture or any other Operative
Document shall be invested and reinvested by the Indenture Trustee from time to
time in Permitted Investments at the written direction of (i) the Charterer if
such amounts would be payable to the Charterer upon satisfaction of any
applicable conditions; or (ii) the Owner Participant in the case of the
remaining portion of such amounts; provided, however, that in the event there
-------- -------
shall be continuing any Indenture Event of Default, such directions may be given
exclusively by a Majority in Interest of Holders of Notes provided further, that
-------- -------
in the event the Indenture Trustee shall not have received such written
direction from such appropriate party, such amounts shall be invested in
investments of the type described in clause (iv) of the definition of Permitted
Investments. The Indenture Trustee shall have no liability for any loss
resulting from any investment required to be made hereunder other than by reason
of its own willful misconduct or negligence in failing to comply with such
instructions. Any net income or gain realized as a result of any such investment
or reinvestment shall be held as part of the Indenture Estate and shall be
applied by the Indenture Trustee at the same time, on the same conditions and in
the same manner as the amounts in respect of which such income or
<PAGE>
47
gain was realized are required to be distributed in accordance with the
provisions hereof. Any Permitted Investment may be sold or otherwise reduced to
cash (without regard to maturity) by the Indenture Trustee whenever necessary to
make any application as required by the terms of this Indenture or of any
applicable Operative Document.
SECTION 7.05. Reliance; Agents; Advice of Counsel. Neither the Owner
-----------------------------------
Trustee nor the Indenture Trustee (in their respective individual or trust
capacities for the purposes of this Section 7.05) shall incur any liability to
anyone in acting upon any signature, instrument, notice, resolution, request,
consent, order, certificate, report, opinion, bond or other document or paper
reasonably believed by it to be genuine and believed by it to be signed by the
proper party or parties. Either of the Owner Trustee or the Indenture Trustee
may accept a copy of a resolution of the Board of Directors or other governing
body of any party to the Participation Agreement or other Operative Agreement,
certified by the Secretary or any Assistant Secretary thereof as duly adopted
and in full force and effect, as conclusive evidence that such resolution has
been duly adopted and that the same is in full force and effect. As to any fact
or matter the manner of ascertainment of which is not specifically described
herein, the Owner Trustee and the Indenture Trustee may for all purposes hereof
rely on an Officer's Certificate of the relevant party as to such fact or
matter, and such Officer's Certificate shall constitute full protection to the
Owner Trustee or the Indenture Trustee (in their individual or trust
capacities), as the case may be, for any action taken or omitted to be taken by
it in good faith in reliance thereon. The Indenture Trustee shall assume, and
shall be fully protected in assuming, that the Owner Trustee is authorized by
the Trust Agreement to enter into this Indenture and to take all action to be
taken by the Owner Trustee pursuant to the provisions hereof, and shall not
inquire into the authorization of the Owner Trustee with respect thereto. The
Owner Trustee shall assume, and shall be fully protected in assuming, that the
Indenture Trustee is authorized to enter into this Indenture and to take all
action to be taken by the Indenture Trustee pursuant to the provisions hereof,
and shall not inquire into the authorization of the Indenture Trustee with
respect thereto. In the administration of the trusts hereunder, the Indenture
Trustee may execute any of the trusts or powers hereof and perform its powers
and duties hereunder directly or through agents or attorneys and at the expense
of the Indenture Estate may consult with counsel, accountants and other skilled
Persons to be selected and retained by it, and the Indenture Trustee shall not
be liable for anything done, suffered or omitted in good faith by it in
accordance with the advice or opinion of any such counsel, accountant or other
skilled Person acting within such Person's area of competence (so long as the
Indenture Trustee shall have exercised due care in selecting such Persons),
provided that, so long as no Charter Event of Default shall have occurred and be
- --------
continuing, no such Persons (other than counsel to the Indenture Trustee or its
accountants) shall be retained by the Indenture Trustee without the consent of
the Charterer, such consent not to be unreasonably withheld.
SECTION 7.06. No Compensation from Holders or Indenture Estate.
------------------------------------------------
Notwithstanding any other provision hereof, the Indenture Trustee shall have no
right against the
<PAGE>
48
Holders, the Owner Trustee, the Owner Participant or, except as otherwise
provided in Section 4.03, the Indenture Estate for any fee as compensation for
its services hereunder.
SECTION 7.07. Right of the Indenture Trustee to Perform Covenants,
----------------------------------------------------
Etc. If the Owner Trustee or the Charterer shall fail to make any payment or
- ---
perform any act required to be made or performed by it hereunder or under any
Operative Document to which it is a party or if the Owner Trustee or the
Charterer shall fail to release any Lien affecting the Indenture Estate which it
is required to release by the terms of this Indenture or any other Operative
Document to which it is a party, and provided a Charter Event of Default shall
have occurred and be continuing and remedies be exercised under the Charter, the
Indenture Trustee, after notice to and demand upon the Owner Trustee or the
Charterer and affording the Owner Trustee and the Charterer a reasonable
opportunity to cure, and without waiving or releasing any obligation or Charter
Event of Default, may (but shall be under no obligation to) at any time
thereafter make such payment or perform such act for the account of and at the
expense of the Indenture Estate, and may enter upon any property for such
purpose and take all such action with respect thereto as, in the Indenture
Trustee's opinion, may be necessary or appropriate therefor. No such entry
shall be deemed an eviction. All sums so paid by the Indenture Trustee and all
costs and expenses (including, without limitation, legal fees and expenses) so
incurred, shall constitute additional indebtedness secured by this Indenture and
by the Ship Mortgage and shall be paid from the Indenture Estate to the
Indenture Trustee on demand. The Indenture Trustee shall not be liable for any
damages resulting from any such payment or action unless such damages shall be a
consequence of willful misconduct or gross negligence on the part of the
Indenture Trustee.
SECTION 7.08. Moneys for Payments in Respect of Notes to be Held in
-----------------------------------------------------
Trust. In case the Holder of any Secured Note shall fail to present the same for
- -----
payment on any date on which the principal thereof becomes payable, the
Indenture Trustee may set aside in trust the moneys then due thereon uninvested
and shall pay such moneys to any Holder of such Secured Note upon due
presentation for surrender thereof in accordance with the provisions of this
Indenture, subject to the provisions of Section 7.09.
SECTION 7.09. Disposition of Moneys Held for Payments of Notes. (a)
------------------------------------------------
Any money set aside under Section 7.08 and not paid to Holders under Section
7.08 shall be held by the Indenture Trustee in trust until the date three years
after the date of such setting aside, and thereafter shall be paid to the Owner
Trustee by the Indenture Trustee who then shall be released from all further
liability with respect to such moneys, and thereafter the Holders of the Secured
Notes in respect of which such moneys were so paid to the Owner Trustee shall
have no rights in respect thereof except to obtain payment of such moneys from
the Owner Trustee.
(b) All moneys and U.S. Government Obligations deposited with the
Indenture Trustee pursuant to Section 10.01 shall be held in trust and applied
by it, in accordance with the provisions of the Secured Notes and this
Indenture, to the payment to the Holders of all
<PAGE>
49
sums due and to become due thereon for principal and interest, but such money
need not be segregated from other funds except to the extent required by law.
The Indenture Trustee shall promptly pay or return to the Owner
Trustee upon the written request of the Owner Trustee any money or U.S.
Government Obligations held by it at any time that are not required for the
payment of the amounts described in the preceding sentence for which money or
U.S. Government Obligations have been deposited pursuant to Section 10.01.
ARTICLE VIII
SUCCESSOR TRUSTEES AND ADDITIONAL TRUSTEES
SECTION 8.01. Notice of Successor Owner Trustees. In the case of any
----------------------------------
appointment of a successor to the Owner Trustee pursuant to the Trust Agreement,
or any merger, conversion or consolidation or transfer of substantially all of
the corporate trust business of the Owner Trustee, the successor Owner Trustee
shall give prompt written notice thereof to the Indenture Trustee.
SECTION 8.02. Resignation of Indenture Trustee; Appointment of
------------------------------------------------
Successor. (a) The Indenture Trustee or any successor thereto may resign at any
- ---------
time without cause by giving at least thirty (30) days prior written notice to
the Owner Trustee, the Owner Participant, the Charterer and each Holder, such
resignation to be effective upon the acceptance of the trusteeship by a
successor Indenture Trustee as provided in Section 8.02(b). In addition, a
Majority in Interest of Holders of Notes may at any time remove the Indenture
Trustee without cause by an instrument in writing delivered to the Owner
Trustee, the Owner Participant, the Charterer and the Indenture Trustee, such
removal to be effective upon the acceptance of the trusteeship by a successor
Indenture Trustee as provided in Section 8.02(b). The Owner Trustee (acting
pursuant to instructions from the Charterer) may remove the Indenture Trustee
if:
(1) the Indenture Trustee fails to comply with Sections 6.06 or
8.02(c) hereof;
(2) the Indenture Trustee is adjudged as bankrupt or an insolvent;
(3) a receiver or public officer takes charge of the Indenture Trustee
or its property; or
(4) the Indenture Trustee becomes incapable of acting.
<PAGE>
50
In the case of the resignation or removal of the Indenture Trustee, the Owner
Trustee (acting pursuant to instructions from the Charterer) shall promptly
appoint a successor Indenture Trustee. If a successor Indenture Trustee shall
not have been appointed within thirty (30) days of such notice of resignation or
removal, the Indenture Trustee, the Owner Trustee, the Owner Participant, the
Charterer or a Majority in Interest of Holders may apply to any court of
competent jurisdiction to appoint a successor Indenture Trustee qualified under
Section 8.02(c) to act until such time, if any, as a successor shall have been
appointed as above provided in this Section 8.02. The successor Indenture
Trustee so appointed by such court shall immediately and without further act be
superseded by any successor Indenture Trustee appointed as above provided in
this Section 8.02.
(b) Any successor Indenture Trustee, however appointed, shall execute
and deliver to the Owner Trustee and to the predecessor Indenture Trustee an
instrument accepting such appointment, and shall give the Owner Participant, the
Holders and the Charterer written notice of such acceptance. Upon the execution
and delivery of such instrument, such successor Indenture Trustee, without
further act, shall become vested with all the estates, properties, rights,
powers and duties of the predecessor Indenture Trustee hereunder with like
effect as if originally named the Indenture Trustee herein. Notwithstanding and
without limiting the foregoing, the predecessor Indenture Trustee, upon the
written request of the successor Indenture Trustee, shall execute and deliver an
instrument transferring to such successor Indenture Trustee, upon the trusts
herein expressed applicable to it, all the estates, properties, rights and
powers of such predecessor Indenture Trustee, and such predecessor Indenture
Trustee shall duly assign, transfer, deliver and pay over to such successor
Indenture Trustee all moneys or other property then held by such predecessor
Indenture Trustee hereunder and all books and records relating to the
administration of the Indenture Estate.
(c) There shall at all times be an Indenture Trustee hereunder which
shall be a bank or trust company organized and doing business under the laws of
the United States of America or of any State thereof, authorized under such laws
to exercise corporate trust powers, subject to supervision or examination by
Federal or State authority, having a combined capital and surplus of at least
$75,000,000, regularly engaged in or having expertise in leveraged leasing. If
such bank or trust company publishes reports of condition at least annually,
pursuant to applicable law or to the requirements of the aforesaid supervising
or examining authority, then for purposes hereof the combined capital and
surplus of such bank or trust company shall be deemed to be its combined capital
and surplus as set forth in its most recent report of condition so published.
(d) Any corporation into which the Indenture Trustee may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which the Indenture Trustee
shall be a party, or any corporation to which substantially all the corporate
trust business of the Indenture Trustee may be transferred,
<PAGE>
51
shall, subject to the terms of paragraph (c) of this Section 8.02, be the
Indenture Trustee under this Indenture without further act.
SECTION 8.03. Co-Trustees and Separate Trustees. (a) If, at any
---------------------------------
time it shall be necessary or prudent in order to conform to any law of any
jurisdiction in which property shall be held subject to the Lien of this
Indenture and of the Ship Mortgage, the Indenture Trustee shall be advised by
counsel that it is so necessary or prudent in the interest of the Holders, or a
Majority in Interest of Holders of Notes in writing shall so request the
Indenture Trustee and the Owner Trustee, the Indenture Trustee and the Owner
Trustee shall execute and deliver all instruments and agreements necessary or
proper either (i) to constitute another bank or trust company or one or more
Persons approved by the Charterer, the Indenture Trustee and the Owner Trustee,
either to act as co-trustee or co-trustees of all or any portion of the
Indenture Estate, jointly with the Indenture Trustee originally named herein or
any successor or successors, or to act as separate trustee or trustees of all or
any such portion of the Indenture Estate in each case with such rights, powers,
duties and obligations as may be provided in such supplemental indenture or such
instrument of appointment as the Indenture Trustee or a Majority in Interest of
Holders of Notes may deem necessary or advisable, or (ii) to clarify, add to or
subtract from the rights, powers, duties and obligations theretofore granted any
such additional or separate trustee, subject in each case to the remaining
provisions of this Section 8.03. In the event that the Charterer or Owner
Trustee shall not have joined in the execution of such instruments and
agreements within fifteen (15) days after the receipt of a written request from
the Indenture Trustee to do so, or if an Indenture Event of Default shall have
occurred and be continuing, the Indenture Trustee may act under the foregoing
provisions of this Section 8.03 without the concurrence of the Charterer or
Owner Trustee; and the Owner Trustee hereby appoints the Indenture Trustee its
agent and attorney-in-fact to act for it under the foregoing provisions of this
Section 8.03(a) in either of such contingencies. The Indenture Trustee may, in
such capacity, execute deliver and perform any such supplemental indenture, or
any such instrument, as may be required for the appointment of any such co-
trustee(s) or separate trustee(s) or for the clarification of, addition to or
subtraction from the rights, powers, duties or obligations theretofore granted
to any such co-trustee(s) or separate trustee(s). In case any co-trustees or
separate trustee(s) appointed under this Section 8.03(a) shall die, become
incapable of acting, resign or be removed, all the assets, property, rights,
powers, trusts, duties and obligations of such co-trustee(s) or separate
trustee(s) shall revert to and shall vest in and may be exercised by the
Indenture Trustee, to the extent permitted by law until a successor, additional
or separate trustee is appointed as provided in this Section 8.03(a).
(b) Every co-trustee and separate trustee hereunder shall, to the
extent permitted by law and except as otherwise expressly provided in any
Operative Document, be appointed and act, and the Indenture Trustee and its
successors shall act, subject to the following provisions and conditions:
<PAGE>
52
(i) the Secured Notes shall be authenticated and delivered by the
Indenture Trustee, and all powers, duties, obligations and rights conferred
upon the Indenture Trustee in respect of the receipt, custody, control,
payment and management of moneys, papers or securities, shall be exercised,
solely by the Indenture Trustee;
(ii) all other rights, powers, duties and obligations conferred or
imposed upon the Indenture Trustee shall be conferred or imposed upon and
exercised or performed by the Indenture Trustee and such co-trustee or co-
trustees or separate trustee or trustees jointly, except to the extent that
under any applicable law or in any jurisdiction in which any particular act
or acts are to be performed, the Indenture Trustee shall be incompetent or
unqualified to perform such act or acts, in which event such rights,
powers, duties and obligations shall be exercised and performed by such co-
trustee or co-trustees or separate trustee or trustees; but subject to the
same limitations in any exercise of his, her or its power and authority as
those to which the Indenture Trustee is subject under the terms of this
Indenture;
(iii) notwithstanding anything herein contained to the contrary, no
power given hereby to, or which it is provided hereby may be exercised by,
any such co-trustee or co-trustees or separate trustee or trustees, shall
be exercised hereunder by such additional trustee or trustees except
jointly with, or with consent in writing of, the Indenture Trustee;
(iv) no trustee hereunder shall be personally liable by reason of
any act or omission of any other trustee hereunder;
(v) the powers of any co-trustee(s) or separate trustee(s)
appointed pursuant to this Section 8.03 shall not in any case exceed those
of the Indenture Trustee hereunder; and
(vi) the Owner Trustee and the Indenture Trustee, at any time, by
an instrument in writing executed by them jointly, may remove any such
trustee, and in that case, by an instrument in writing executed by them
jointly, may appoint a successor or successors to such co-trustee or co-
trustees or separate trustee or trustees, as the case may be, acceptable to
the Charterer. In the event that the Owner Trustee shall not have joined in
the execution of any such instrument within fifteen (15) days after the
receipt of a written request from the Indenture Trustee to do so, the
Indenture Trustee shall have the power to remove any such co-trustee or
separate trustee and to appoint a successor co-trustee or separate trustee
without the concurrence of the Owner Trustee. In the event that the
Indenture Trustee alone shall have appointed a separate trustee or trustees
or co- trustee or co-trustees as above provided in this Section 8.03, it
may at any time, by an instrument in writing, remove any such separate
trustee or co-trustee, the successor to any
<PAGE>
53
such separate trustee or co-trustee so removed to be appointed by the Owner
Trustee and the Indenture Trustee, or by the Indenture Trustee alone, as
provided in this Section 8.03.
ARTICLE IX
SUPPLEMENTS AND AMENDMENTS TO THIS
INDENTURE AND OTHER DOCUMENTS
SECTION 9.01. Indenture Supplements Without Consent of Holders. The
------------------------------------------------
Owner Trustee and the Indenture Trustee, without the consent of any Holder and
at any time and from time to time, may enter into one or more amendments or
supplements to this Indenture, in form satisfactory to each of the Owner Trustee
and Indenture Trustee, for any of the following purposes:
(a) to subject to the Lien of this Indenture additional property
constituting part of the Indenture Estate pursuant to a supplement to this
Indenture substantially in the form of Exhibit D to this Indenture;
(b) to correct or amplify the description of any property at any time
subject to the Lien of this Indenture;
(c) to add to the covenants of the Owner Trustee for the benefit of
the Holders or to surrender any right or power herein conferred upon the
Owner Trustee, the Owner Participant or the Charterer;
(d) to cure any ambiguity, to correct or supplement any provision
herein or in the Secured Notes which may be defective or inconsistent with
any other provisions of this Indenture, to make any other changes not
inconsistent with the provisions hereof, provided that such action shall
--------
not adversely affect the interests of any Holder;
(e) to provide for the assumption by the Charterer of the obligations
of the Owner Trustee hereunder in accordance with the terms and conditions
applicable thereto specified in Section 3.04, including, without
limitation, such amendments to Exhibit C as may be necessary or desirable
in order to effectuate such assumption and accomplish the purposes thereof
(provided that such amendments to Exhibit C shall not adversely affect the
--------
interests of the Loan Participants);
(f) to evidence the succession of a new Owner Trustee in accordance
with the Trust Agreement or the succession of a new Indenture Trustee
hereunder or the appointment or removal of any co-trustee or separate
trustee thereunder or hereunder;
<PAGE>
54
(g) to convey, transfer, assign, mortgage or pledge any property to or
with the Indenture Trustee or to make any other provisions with respect to
matters or questions arising hereunder so long as such action shall not
adversely affect the interests of the Loan Participants;
(h) to add to the rights of the Loan Participants;
(i) to include on the Secured Notes any legend as may be required by
law; or
(j) to provide for the establishment and issuance of (A) Additional
Notes pursuant to Section 14 of the Participation Agreement or Section 2.08
hereof or (B) Refunding Secured Notes in connection with a refunding or
refinancing pursuant to Section 15 of the Participation Agreement or
Section 3.05 hereof.
SECTION 9.02. Supplements and Amendments to Indenture With Consent of
-------------------------------------------------------
Holders of Notes. (a) Without the consent of a Majority in Interest of Holders
- ----------------
of Notes, the Owner Trustee may not modify, amend or supplement any of the
Charter, the Participation Agreement or the Trust Agreement, or give any
consent, waiver, authorization or approval thereunder, for the purpose of adding
any provisions to or changing in any manner or eliminating any of the provisions
thereof or of modifying in any manner the rights of the respective parties
thereunder; provided, however, that the actions specified in Section 9.02(c) may
-------- -------
be taken without the consent of the Indenture Trustee or any Holder.
(b) Except as provided in Section 9.01 or 9.02(c) or 9.02(d), at any
time and from time to time, with the consent of a Majority in Interest of
Holders of Notes and, whether or not an Indenture Event of Default exists, upon
the written consent of the Owner Trustee and the Owner Participant, the
Indenture Trustee (x) shall execute an amendment or supplement to this Indenture
for the purpose of adding provisions to, or changing in any manner or
eliminating any of the provisions of, this Indenture, or (y) shall execute an
amendment or supplement to, or give a consent, waiver, authorization or
approval, for the purposes of adding any provisions to or changing in any manner
or eliminating any of the provisions of, the Participation Agreement, or (z)
shall consent to any amendment or supplement to, or give a consent, waiver,
authorization or approval, for the purposes of adding any provisions to or
changing in any manner or eliminating any of the provisions of the Charter or
the Trust Agreement; provided, however, that no such amendment or supplement to
-------- -------
this Indenture, or consent, waiver, authorization, approval, amendment or
supplement to the Participation Agreement, the Charter or the Trust Agreement
(whether pursuant to subsection (a) or (c) of this Section 9.02, and anything in
such subsections or elsewhere in this Indenture to the contrary notwithstanding)
shall, without the consent of each Holder of a Secured Note then Outstanding:
<PAGE>
55
(i) change the stated maturity of the principal of, or any
installment of interest on, or the amount of any payment upon any mandatory
or optional repayment, purchase or redemption of any Secured Note, or
change the principal amount thereof or any other amount payable in respect
thereof or reduce the Make-Whole Amount, if any, or interest thereon, or
change the place of payment where, or the coin or currency in which, any
Secured Note or the interest thereon is payable;
(ii) permit the creation of any Lien on the Indenture Estate not
otherwise permitted hereunder or deprive any Holder of the benefit of the
Lien of this Indenture upon the Indenture Estate, or any portion thereof,
for the security of its Secured Notes;
(iii) change the percentage of the aggregate principal amount of
Secured Notes required to take or approve any action hereunder or any other
Operative Document;
(iv) modify the definitions of "Indenture Default", "Indenture
Event of Default", "Majority in Interest of Holders of Notes", "Charter
Default" or "Charter Event of Default";
(v) modify the order of priorities in which distributions are to
be made under Article IV;
(vi) reduce the amount or change the time of any payment of Base
Charter Hire, Stipulated Loss Value, Early Buy-Out Purchase Price or
Termination Value, except as expressly permitted pursuant to the terms of
the Charter or the Participation Agreement as executed on the date hereof,
so that such payments would be insufficient to pay principal of and
interest on the outstanding Secured Notes as they become due hereunder;
(vii) modify, amend or supplement any of the provisions of this
Section 9.02;
(viii) modify, amend or supplement the Charter, or consent to any
assignment of the Charter (other than an assignment pursuant to Section
16(b) of the Charter), in either case releasing the Charterer from its
obligations in respect of the payment of Base Charter Hire, Supplemental
Charter Hire payable pursuant to Section 3(d) of the Charter, Stipulated
Loss Value, EBO Exercise Price or Termination Value, or changing the
absolute and unconditional character of such obligations as set forth in
Section 3(i) of the Charter; or
(ix) adversely affect any indemnities in favor of any Holder as
provided pursuant to the terms of any Operative Document, except as may be
consented to by each Person adversely affected thereby.
<PAGE>
56
(c) Notwithstanding anything to the contrary contained in Section
9.02(b) (except as provided in the proviso to Section 9.02(b)), (x) without the
necessity of the consent of any of the Holders or the Indenture Trustee, the
Owner Trustee may and (y) in the case of clauses (iii) and (iv) of this Section
9.02(c), without the consent of any of the Holders, the Indenture Trustee may,
at the request of the Owner Trustee:
(i) so long as no Indenture Event of Default shall have occurred and
be continuing, modify, amend or supplement the Charter, or give any
consent, waiver, authorization or approval with respect thereto, except
that without compliance with Section 9.02(b), the Owner Trustee shall not
modify, amend or supplement, or give any consent, waiver, authorization or
approval for the purposes of adding any provisions to or changing in any
manner or eliminating any of the provisions thereof or of modifying in any
manner the rights of the respective parties thereunder, with respect to the
following provisions of the Charter as originally executed: Section 2(a)
(if the result thereof would be to shorten the term of the Charter to a
period shorter than the period ending with the maturity date of the Secured
Notes), Sections 3(b), 3(c), 3(d), (except to the extent such Section
relates to amounts payable (whether directly or pursuant to the Indenture)
to persons other than the Loan Participants and the Indenture Trustee in
its individual capacity), Section 3(f) (except insofar as it relates to the
address or account information of the Charterer, the Owner Trustee or the
Indenture Trustee) (other than as such as Section 3(b), 3(c) or 3(d) of the
Charter may be amended pursuant to Sections 3(h) and 9(b) of the Charter),
Section 3(h), Section 3(i), Section 12 (except that the procedures for
soliciting bids may be modified and further restrictions may be imposed on
the ability of the Charterer to terminate the Charter with respect to the
Vessel pursuant to such Section 12), Section 5(e), Section 9(a), Sections
6(a), 6(b), 8(a), the proviso to Section 8(b) (other than with respect to
"limited use property" characterization), Section 8(c)(ii) or 8(b) (except
that additional requirements may be imposed on the Charterer), Section 11
(other than Sections 11(c) and 11(b), and except that additional
requirements may be imposed on the Charterer), Section 10 (except that
additional insurance requirements may be imposed on the Charterer), Section
16, Section 17, Section 18, Section 20(a), Section 21(c) and any definition
of terms used in the Charter, to the extent that any modification of such
definition would result in a modification of the Charter not permitted
pursuant to this Section 9.02(c), provided that, subject to the next
--------
proviso, in the event an Indenture Event of Default shall have occurred and
be continuing, the Indenture Trustee shall have all rights of the Owner
Trustee as "Shipowner" under the Charter to modify, amend or supplement the
Charter or give any consent, waiver, authorization or approval thereunder,
for the purpose of adding any provisions to or changing in any manner or
eliminating any of the provisions thereof or of modifying in any manner the
rights of the "Shipowner" thereunder; provided further that, without the
-------- -------
prior consent of the Owner Trustee, and subject to the Indenture Trustee's
rights hereunder to exercise remedies under Section 18 of the Charter
without the prior consent of the Owner Trustee, whether or not an
<PAGE>
57
Indenture Event of Default shall have occurred and be continuing, no such
action shall be taken with respect to any of the provisions of Sections 1
(if any modification of a definition contained therein would result in a
modification of the Charter not permitted by this proviso), 3, 4(a), 9(a),
9(b), 12, 14, 15, (to the extent such action would reduce Charterer's
obligations), 6, 8, 11, 10 (except to increase the amounts or types of
insurance the Charterer must provide thereunder at its expense), 16, 17,
19, 20 and 21 of the Charter, or any other Section of the Charter
(including Section 18 of the Charter) to the extent such action shall
affect the amount or timing of any amounts payable by the Charterer under
the Charter as originally executed (or as subsequently modified with the
consent of the Owner Trustee) which, absent the occurrence and continuance
of an Indenture Event of Default, would be distributable to the Owner
Trustee or the Owner Participant under Article IV;
(ii) modify, amend or supplement the Trust Agreement, or give any
consent, waiver, authorization or approval with respect thereto, except
that without compliance with Section 9.02(b), the Owner Trustee shall not
modify, amend or supplement, or give any consent, waiver, authorization or
approval for the purpose of adding any provisions to or changing in any
manner or eliminating any of the provisions thereof or of modifying in any
manner the rights of the respective parties thereunder, with respect to the
following provisions of the Trust Agreement as originally executed:
Section 1, Section 3.2, Section 5.1, Section 9.1, Section 10, Section 11.1,
Section 12.7 and any definition of terms used in the Trust Agreement, to
the extent that any modification of such definition would result in a
modification of the Trust Agreement not permitted pursuant to this Section
9.02(c), and in each case only to the extent any such action shall
adversely impact the interests of the Holders;
(iii) modify, amend or supplement the Participation Agreement, or
give any consent, waiver, authorization or approval with respect thereto,
except that without compliance with Section 9.02(b), the Owner Trustee and
the Indenture Trustee shall not modify, amend or supplement, or give any
consent, waiver, authorization or approval for the purpose of adding any
provisions to or changing in any manner or eliminating any of the
provisions thereof or of modifying in any manner the rights of the
respective parties thereunder, with respect to the following provisions of
the Participation Agreement as originally executed: Section 5, Section 6,
Section 8, Section 10 (other than an amendment to add to the covenants of
the Charterer and other than Section 10.10), Section 11.1, Section 11.2,
Section 11.4, Section 11.6, Section 12 (insofar as such Section 12 relates
to the Indenture Trustee, the Indenture Estate and the Holders) and, to the
extent the Loan Participants would be adversely affected thereby, Section
15 and Section 16 and any definition of terms used in the Participation
Agreement to the extent that any modification of such definition would
result in a modification of the Participation Agreement not permitted
pursuant to this Section 9.02(c); and
<PAGE>
58
(iv) modify, amend or supplement any of said agreements in order to
cure any ambiguity, to correct or supplement any provisions thereof which
may be defective or inconsistent with any other provision thereof or of any
provision of this Indenture, or to make any other provision with respect to
matters or questions arising thereunder or under this Indenture which shall
not be inconsistent with the provisions of this Indenture, provided the
making of any such other provision shall not adversely affect the interests
of the Holders unless such provision corrects a mistake or cures an
ambiguity.
(d) The Indenture Trustee, without the consent of any Holder and
at any time and from time to time, may enter into one or more amendments or
supplements to the Participation Agreement, in form satisfactory to the
Indenture Trustee, for any of the following purposes:
(i) to add to the covenants of any other party thereto for the
benefit of the Indenture Trustee or the Holders or to surrender any right
or power therein conferred upon any other party thereto;
(ii) to cure any ambiguity, to correct or supplement any provision
therein which may be defective or inconsistent with any other provisions
thereof, to make any other changes not inconsistent with the provisions
thereof, provided that such action shall not adversely affect the interest
--------
of any Holder;
(iii) to provide for the assumption by the Charterer of the
obligations of the Owner Trustee under this Indenture in accordance with
the terms and conditions applicable thereto specified in Section 3.04,
including, without limitation, such amendments to Exhibit C to this
Indenture or the Participation Agreement as may be necessary or desirable
in order to effectuate such assumption and accomplish the purposes thereof
(provided that such amendments to such Exhibit C or the Participation
--------
Agreement shall not adversely affect the interests of the Loan
Participants);
(iv) to evidence the succession of a new Owner Trustee in
accordance with the Trust Agreement or the succession of a new Indenture
Trustee hereunder or the appointment or removal of any co-trustee or
separate trustee thereunder or hereunder;
(v) to make any other provisions with respect to matters or
questions arising under the Participation Agreement so long as such action
shall not adversely affect the interests of the Loan Participants;
(vi) to add to the rights of the Indenture Trustee or the Holders;
or
<PAGE>
59
(vii) to provide for the establishment and issuance of (1)
Additional Notes pursuant to Section 14 of the Participation Agreement or
Section 2.08 hereof or (2) Refunding Secured Notes in connection with a
refunding or refinancing pursuant to Section 15 of the Participation
Agreement or Section 3.05 hereof.
(e) It shall not be necessary for Holders to approve the
particular form of any proposed amendment or supplement to this Indenture, or
any amendment, consent, waiver or other modification of any other Operative
Document, but it shall be sufficient if such action shall approve the substance
thereof.
SECTION 9.03. Execution of Indenture Supplement, Amendments, Etc. In
--------------------------------------------------
executing or accepting the additional trusts created by any amendment or
supplement to this Indenture, or any amendment, consent, waiver or other
modification permitted by this Article IX or the modifications thereby of the
trusts created by this Indenture, each of the Indenture Trustee and the Owner
Trustee shall be entitled to receive, and (subject to Section 6.01 and Section
6.02) shall be fully protected in relying upon, an opinion of independent
counsel stating that the execution of such amendment or supplement to this
Indenture, or of such amendment, consent, waiver or modification, is authorized
or permitted by this Indenture. Either of the Indenture Trustee or the Owner
Trustee may, but shall not be obligated to, enter into any such amendment or
supplement to this Indenture which affects its own rights, duties or immunities
under this Indenture or otherwise.
SECTION 9.04. Effect of Indenture Supplement. Upon the execution of
------------------------------
any amendment or supplement to this Indenture pursuant to this Article IX, this
Indenture shall be modified in accordance therewith, and such amendment or
supplement shall form a part of this Indenture for all purposes; and every
Holder of a Secured Note theretofore or thereafter authenticated and delivered
hereunder shall be bound thereby.
SECTION 9.05. Reference in Secured Notes to Indenture Supplements.
---------------------------------------------------
Secured Notes authenticated and delivered after the execution of any amendment
or supplement pursuant to this Article IX may, and shall if required by the
Indenture Trustee, bear a notation in form approved by the Indenture Trustee as
to any matter provided for in such amendment or supplement. If the amendment or
supplement to this Indenture shall so provide, new Secured Notes so modified as
to conform, in the opinion of the Indenture Trustee and the Owner Trustee, to
any such amendment or supplement may be prepared and executed by the Owner
Trustee and authenticated and delivered by the Indenture Trustee in exchange for
outstanding Secured Notes.
SECTION 9.06. Notices of Indenture Supplements and Amendments, Etc.
----------------------------------------------------
Promptly after the execution by the Owner Trustee and the Indenture Trustee of
any amendment or supplement to this Indenture, or any amendment, consent, waiver
or other modification pursuant to the provisions hereof, the Indenture Trustee
shall send a conformed copy of such
<PAGE>
60
instrument to the Charterer, the Owner Trustee and the Owner Participant but the
failure of the Indenture Trustee to send such a conformed copy shall not impair
or affect the validity of such document.
SECTION 9.07. Charterer's Rights. Without the consent of the
------------------
Charterer, no amendment or supplement to this Indenture or amendment, waiver or
other modification of any provision of this Indenture shall alter or modify the
provisions of Section 3.04, 3.05, 3.10, 5.09 or 9.02(c) or this Section 9.07 (to
the extent that the Charterer's rights or obligations under the Participation
Agreement would be adversely affected).
ARTICLE X
MISCELLANEOUS
SECTION 10.01. Termination of Indenture. Except as provided in this
------------------------
Section 10.01, this Indenture and the trusts created hereby shall terminate,
and this Indenture shall be of no further force or effect, when:
(a) the principal of and interest on and all other amounts due and
payable under all Secured Notes and all other amounts due and payable to
any Holder or the Indenture Trustee hereunder or under any other Operative
Document shall have been paid in full; or
(b) the Indenture Trustee shall have sold or made other final
disposition of all property and all moneys or other property or proceeds
constituting part of the Indenture Estate in accordance with the terms
hereof; or
(c) all Secured Notes not theretofore delivered to the Indenture
Trustee for cancellation have become due and payable (whether upon stated
maturity, as a result of redemption or upon acceleration), or will become
due and payable (including as a result of redemption in respect of which
irrevocable notice has been given to the Indenture Trustee on or prior to
the date of such deposit) at maturity within one year, and there has been
deposited with the Indenture Trustee in trust for the purpose of paying and
discharging the entire indebtedness on the Secured Notes not theretofore
canceled by the Indenture Trustee or delivered to the Indenture Trustee for
cancellation, an amount in cash sufficient without reinvestment thereof to
discharge such indebtedness, including the principal of and interest on the
Secured Notes to the date of such deposit (in the case of Secured Notes
which have become due and payable), or to the maturity thereof, as the case
may be; or
<PAGE>
61
(d) (i) the Owner Trustee has deposited or caused to be deposited
irrevocably (except as provided in Section 7.09(b)) with the Indenture
Trustee as trust funds in trust, specifically pledged as security for, and
dedicated solely to, the benefit of the Holders, (A) money in an amount, or
(B) U.S. Government Obligations which, through the payment of interest and
principal in respect thereof in accordance with their terms, will provide
(not later than one Business Day before the due date or any payment
referred to below in this clause) money in an amount, or (C) a combination
of money and U.S. Government Obligations referred to in the foregoing
clause (B), sufficient, in the opinion of a nationally recognized firm of
independent certified public accountants expressed in a written
certification thereof delivered to the Indenture Trustee, to pay and
discharge each installment of principal of and interest on the Outstanding
Secured Notes on the dates such payments of principal or interest are due
(including as a result of redemption in respect of which irrevocable notice
has been given to the Indenture Trustee on or prior to the date of such
deposit), and no Charter Event of Default under Section 17(a)(vi) of the
Charter shall have occurred and be continuing on the date of such deposit
or at any time during the period ending on the 91st day after such date;
provided, however, that upon the making of the deposit referred to above in
-------- -------
clause (A), the right of the Owner Trustee to cause the redemption of
Secured Notes (except a redemption in respect of which irrevocable notice
has theretofore been given) shall terminate; and (ii) (A) such deposit will
not constitute an Indenture Event of Default under this Indenture or a
default or event of default under any other agreement or instrument to
which the Owner Trustee or the Charterer is a party or by which it is bound
and (B) the Charterer has delivered to the Indenture Trustee an Officer's
Certificate to the effect that all conditions precedent relating to the
termination of this Indenture under this Section 10.01(d) have been
complied with; and (iii) the Charterer has delivered to the Indenture
Trustee an Officer's Certificate and an Opinion of Counsel to the effect
that there has been published by the Internal Revenue Service a ruling to
the effect that Loan Participants will not recognize income, gain or loss
for Federal income tax purposes as a result of the exercise by the Owner
Trustee of its option under this Section 10.01(d) and will be subject to
Federal income tax on the same amount and in the same manner and at the
same times as would have been the case if such option had not been
exercised; and (iv) all other amounts then due and payable hereunder to any
Holder or the Indenture Trustee have been paid;
provided, however, that the obligations of the Indenture Trustee contained in
- -------- -------
Sections 2.01 through 2.11, 6.11 and 7.09 shall survive.
Except as otherwise provided in the preceding sentence, this Indenture
and the trusts created hereby shall continue in full force and effect in
accordance with the terms hereof.
SECTION 10.02. No Legal Title to Indenture Estate in Holders. No
---------------------------------------------
Holder shall have legal title to any part of the Indenture Estate. No transfer,
by operation of law or otherwise,
<PAGE>
62
of any Secured Note or other right, title and interest of any Holder in and to
the Indenture Estate or hereunder shall operate to terminate this Indenture or
entitle such Holder or any successor or transferee of such Holder to an
accounting or to the transfer to it of any legal title to any part of the
Indenture Estate.
SECTION 10.03. Power of Attorney. The Owner Trustee does hereby
-----------------
constitute the Indenture Trustee its true and lawful attorney-in-fact,
irrevocably and coupled with the interest of the Indenture Trustee created by
this Indenture, so long as any Secured Notes are Outstanding and so long as
there are any other amounts due hereunder, under any other Operative Documents,
or under the Secured Notes, with full power (in the name of and as attorney-in-
fact for the Owner Trustee or otherwise) to ask for, require, demand and receive
any and all moneys and claims for moneys, and all other property, which now or
hereafter constitutes part of the Indenture Estate, to endorse any checks or
other instruments or orders in connection therewith and to file any claims or to
take any action, or to institute any proceedings, which the Indenture Trustee
may deem to be necessary or advisable in the premises. The Owner Trustee has
directed the Indenture Trustee to make all necessary conveyances, assignments,
transfers and deliveries of the Indenture Estate and any rights hereunder
pursuant to the provisions of this Indenture, and for that purpose the Indenture
Trustee may execute all necessary instruments of conveyance, assignment and
transfer, and may substitute one or more persons with like power, and the Owner
Trustee hereby ratifies and confirms all that the Indenture Trustee, acting as
its attorney, or any such substitute, shall lawfully do by virtue hereof and
whether pursuant to the exercise of any remedies hereunder or otherwise.
SECTION 10.04. Regarding the Owner Trustee. (a) Except as expressly
---------------------------
provided herein, all and each of the representations, warranties, undertakings
and agreements herein made on the part of the Owner Trustee are made and
intended not as personal representations, warranties, undertakings and
agreements by or for the purpose or with the intention of binding the Owner
Trustee personally but are made and intended for the purpose of binding only the
Trust Estate, and this Indenture is executed and delivered by the Owner Trustee
solely in the exercise of the powers expressly conferred upon it as trustee
under the Trust Agreement; and no personal liability or responsibility is
assumed hereunder by, or at any time shall be enforceable against, the Owner
Trustee or any successor in trust on account of any representation, warranty,
undertaking or agreement hereunder of the Owner Trustee, either expressed or
implied, all such personal liability, if any, being expressly waived by the
Indenture Trustee; provided, however, that (a) the Indenture Trustee or any
-------- -------
Person claiming by, through or under it, making claim hereunder, may subject to
the terms and conditions hereof, look to the Trust Estate for satisfaction of
such liability or responsibility and (b) the Owner Trustee or its successor in
trust, as applicable, shall be personally liable, for its own gross negligence
and willful misconduct and for the matters described in clauses (i) through (v)
of the last sentence of Section 7.1 of the Trust Agreement and the provisos
contained in Section 16.10(a) of the Participation Agreement. Subject to the
terms and conditions hereof, each time a successor
<PAGE>
63
Owner Trustee is appointed in accordance with the terms of the Trust Agreement,
such successor Owner Trustee shall, without further act, succeed to all the
rights, duties, immunities and obligations of its predecessor Owner Trustee
hereunder and under the other Operative Documents, and the predecessor Owner
Trustee shall be released from all further duties and obligations hereunder and
under the other Operative Documents, all without the necessity of any consent or
approval by the Indenture Trustee and without in any way altering the terms of
this Indenture or such other Operative Documents or the obligations of the
Indenture Trustee hereunder or thereunder.
(b) As to the aggregate unpaid principal amount of Secured Notes
Outstanding as of any date, the Owner Trustee may rely on an Officer's
Certificate of the Indenture Trustee.
(c) No Recourse Against Others. No director, officer, employee or
--------------------------
stockholder, as such, of the Charterer, the Guarantor, the Owner Trustee or the
Owner Participant, as the case may be, shall have any liability for any
obligations of the Charterer, the Guarantor, the Owner Trustee or the Owner
Participant, as the case may be, under this Indenture or for any claim based on,
in respect of or by reason of such obligations or their creation. Each Loan
Participant by accepting a Secured Note waives and releases all such liability.
The waiver and release are part of the consideration for the issue of the
Secured Notes.
SECTION 10.05 Notices. All communications, notices and consents
-------
provided for in this Indenture shall be in writing and shall be given in person
or by courier or by means of telex, telecopy or other wire transmission (with
request for assurance of receipt in a manner typical with respect to
communications of that type), or mailed by first class mail or overnight
courier, addressed, in the case of the Owner Trustee, to First Security Bank, 79
South Main Street, Salt Lake City, Utah 84111, Attention: Corporate Trust
Services (telephone: (801) 246-5819; telecopier: (801) 246-5053) in the case
of the Indenture Trustee, to State Street Bank and Trust Company, Two
International Place, 4th Floor, Boston, Massachusetts 02110, Attention:
Corporate Trust Department (telephone: (617) 664-5340; telecopier: (617) 664-
5371); and, in the case of all other parties, as set forth in Schedule 1 to the
Participation Agreement or at such other address as any such Person may from
time to time designate by notice duly given in accordance with the provisions of
this Section 10.05 to the other parties hereto and shall be deemed given when
received by (or when proffered to, if receipt is not accepted) the party to whom
it is addressed.
SECTION 10.06 Severability of Provisions. Any provision of this
--------------------------
Indenture which may be determined by competent authority to be invalid or
unenforceable in such jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
invalidating or rendering unenforceable any remaining terms and provisions
hereof, and any such invalidity or unenforceability in any jurisdiction shall
not
<PAGE>
64
invalidate or render unenforceable such provision in any other jurisdiction.
The parties shall negotiate in good faith to replace such provision with an
appropriate legal provision. To the extent permitted by applicable law, the
parties hereto waive any provision thereof that renders any term or provision
hereof invalid or unenforceable in any respect.
SECTION 10.07 No Oral Modification or Continuing Waivers. No term or
------------------------------------------
provision of this Indenture or the Secured Notes may be changed, waived,
discharged or terminated orally, but only by an instrument in writing signed by
the party or the person against whom enforcement of the change, waiver,
discharge or termination is sought; and any waiver of the terms hereof or of any
Secured Note shall be effective only in the specific instance and for the
specific purpose given.
SECTION 10.08 Successors and Assigns. All covenants and agreements
----------------------
contained herein shall be binding upon each of the parties hereto and their
respective successors and permitted assigns, and inure to the benefit of each of
the parties hereto and their respective successors and permitted assigns, all as
herein provided. Any request, notice, direction, consent, waiver or other
instrument or action by any Holder shall bind the successors and assigns of such
Holder. This Indenture and the Indenture Estate shall not be affected by any
amendment or supplement to the Trust Agreement or by any other action taken
under or in respect of the Trust Agreement, except as otherwise provided in or
permitted by this Indenture. Each Holder by its acceptance of a Secured Note
agrees to be bound by this Indenture and all provisions of the Operative
Documents applicable to it.
SECTION 10.09 Headings; Table of Contents. The division of this
---------------------------
Indenture into Articles, Sections, subsections and paragraphs, the provision of
a table of contents and the insertion of headings are for convenience of
reference only and shall not affect the construction or interpretation hereof.
SECTION 10.10 Normal Commercial Relations. Notwithstanding anything
---------------------------
contained in this Indenture to the contrary, any Participant, the Indenture
Trustee, the Owner Trustee, or bank or other affiliate of any such Person may
conduct any banking or other financial transactions and have banking or other
commercial relationships with the Charterer or the Guarantor fully to the same
extent as if this Indenture were not in effect.
SECTION 10.11 Governing Law. THIS INDENTURE HAS BEEN DELIVERED IN
-------------
THE STATE OF NEW YORK AND SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF NEW YORK.
SECTION 10.12 Execution. This Indenture may be executed in separate
---------
counterparts by the parties thereto, each of which, when so executed and
delivered, shall be an original, but all such counterparts shall together
constitute but one and the same instrument.
<PAGE>
65
SECTION 10.13 Security Agreement. This Indenture shall constitute a
------------------
security agreement and, in addition to all other rights of the Indenture Trustee
hereunder, the Indenture Trustee shall have for the benefit of the Holders all
of the rights conferred upon secured parties by the UCC.
SECTION 10.14 Benefits of Indenture. Nothing in this Indenture,
---------------------
whether express or implied, shall be construed to give to any Person other than
the parties hereto, the Holders, (to the extent expressly provided herein) the
Owner Participant and the Charterer any legal or equitable right, remedy or
claim under or in respect of this Indenture or the Secured Notes, and this
Indenture shall be held for the sole and exclusive benefit of the parties
hereto, the Holders, (to the extent expressly provided herein) the Owner
Participant and the Charterer.
<PAGE>
66
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to
be duly executed, all effective as of the date first written above, but actually
executed by the parties on the dates of their respective acknowledgments set
forth below.
FIRST SECURITY BANK
NATIONAL ASSOCIATION,
not in its individual capacity, except as
expressly provided herein, but solely as
Owner Trustee
By:
------------------------------------
Its:
THE STATE OF
_________________ (S)
(S)
COUNTY OF
_____________________ (S)
This instrument was acknowledged before me on
-----------------------
, 1997 by
---------------, -----------------------------------
[Name of Officer] [Title of Officer]
of First Security Bank, National Association, a national banking association, on
behalf of said national banking association.
----------------------------
Notary Public in and for
The State of
---------------
- ------------------------------------------------
(Affix Notary's Seal) My Commission Expires:
<PAGE>
STATE STREET BANK & TRUST
COMPANY, not in its individual
capacity, except as expressly
provided herein, but solely as
Indenture Trustee
By:
---------------------------
Its:
THE STATE OF
--------------------- (S)
(S)
COUNTY OF
----------------------- (S)
This instrument was acknowledged before me on 1997 by
-----------------,
- -------------------, ---------------------------------- of
[Name of Officer] [Title of Officer]
State Street Bank and Trust Company, a Massachusetts trust company, on behalf of
said trust company.
------------------------------
Notary Public in and for
The State of
-------------------
- -----------------------------------------------
(Affix Notary's Seal) My Commission Expires:
<PAGE>
Schedule 1
to Indenture
------------
DESCRIPTION OF VESSEL
---------------------
The Vessel is described below:
See definition of "Vessel" in Appendix A.
SCH-2-1
<PAGE>
Exhibit A
to Indenture
------------
FORM OF SERIES 1997-B SECURED NOTE
FIRST SECURITY BANK, NATIONAL ASSOCIATION,
not in its individual capacity but
solely as Owner Trustee under the Trust Agreement
Series 1997-B Secured Non-Recourse Note
Due _____
Sale and Charter of One Double Hulled Product Tanker
----------------------------------------------------
Registered No. ___________
$ ____________ New York, New York
_________, 199__
Interest Rate Per Annum: _____%
FIRST SECURITY BANK, NATIONAL ASSOCIATION, a national banking association, not
in its individual capacity but solely as Owner Trustee under the Trust
Agreement, dated as of September 30, 1997, as amended (the "Trust Agreement"),
---------------
among the Owner Participant named therein and the Owner Trustee, for value
received hereby promises to pay to State Street Bank and Trust Company, or
registered assigns, on or before July 31, 2015, as herein provided, the
principal sum of ($ __________), and to pay interest on this
Secured Note from time to time from the date hereof until the principal amount
hereof shall have been paid in full, at the rate of _____% per annum (based on a
360-day year of twelve 30-day months), and (to the extent not prohibited by
applicable law) to pay interest on any overdue principal and interest at the
Overdue Rate. The principal of this Secured Note shall be payable on each
January 31 or July 31, or both, in accordance with the schedule annexed hereto.
The first payment of accrued and unpaid interest on this Secured Note shall be
payable on January 31, 1998. Thereafter, subject to Section 2.03(b) of the
Indenture (as defined below), all accrued and unpaid interest on this Secured
Note shall be payable on each January 31, and July 31 in each year.
This Secured Note has been issued by the Owner Trustee pursuant to the terms of
the Trust Indenture, Mortgage, Assignment of Charter and Security Agreement,
dated as of September 30, 1997 (the "Indenture"), between the Owner Trustee and
---------
State Street Bank and Trust Company, not in its individual capacity but solely
as Indenture Trustee thereunder (the "Indenture Trustee"). Capitalized terms
-----------------
used in this Secured Note and not otherwise defined shall have the respective
meanings assigned to them in the Indenture.
<PAGE>
A-1-2
Each payment of principal and interest shall be due and payable at the times,
places and in the manner as specified herein and in the Indenture.
Each payment on this Secured Note shall be applied, first, to the payment of
-----
accrued interest on this Secured Note to the date of such payment, and second,
------
to the payment of any principal on this Secured Note then due hereunder.
This Secured Note is the Series 1997-B Secured Note of the Owner Trustee, issued
pursuant to the Indenture, which, together with, any Additional Notes and any
note or notes issued upon a transfer in exchange or substitution for
respectively therefor in accordance with the terms of the Indenture, are equally
and ratably secured by the Indenture, except as expressly provided therein. The
property of the Owner Trustee (excluding Excepted Payments) included in the
Indenture Estate is pledged or mortgaged to the Indenture Trustee to the extent
provided in the Indenture as security for the payment of the principal of and
interest on this Secured Note under the Indenture. Reference is hereby made to
the Indenture for a description of the Indenture Estate, and for a statement of
the rights of the Holders of, and the nature and extent of the security for,
this Secured Note and of the rights of, and the nature and extent of the
security for, the Holders of the other Secured Notes and of certain rights of
the Owner Trustee and the Owner Participant, as well as for a statement of the
terms and conditions of the trust created by the Indenture, to all of which
terms and conditions in the Indenture the Holder agrees by its acceptance of
this Secured Note.
This Secured Note is subject to redemption, in whole, all as specified in
Article III of the Indenture. This Secured Note is also subject to refunding,
assumption or purchase, all as specified in Sections 3.02, 3.04, 3.05 and 3.06
of the Indenture.
In the event an Indenture Event of Default shall occur and be continuing, the
unpaid balance of the principal of the Secured Note, together with all accrued
but unpaid interest, may be declared or may otherwise become due and payable in
the manner and with the effect provided in Article V of the Indenture.
The Secured Note is issuable only as a registered note. There shall be
maintained a note register for the purpose of registering transfers and
exchanges of the Secured Note at the principal corporate trust office of the
Indenture Trustee, or of any successor Indenture Trustee, in the manner provided
in Section 2.05 of the Indenture. The Owner Trustee and the Indenture Trustee
shall deem and treat the Person in whose name this Secured Note is registered on
the Note Register as the absolute owner hereof (whether or not this Secured Note
shall be overdue) for the purpose of receiving payments of principal and
interest and for all other purposes, and neither the Owner Trustee nor the
Indenture Trustee shall be affected by any notice to the contrary.
<PAGE>
A-1-3
All payments of principal and interest to be made by the Owner Trustee and,
except as otherwise provided in the Operative Documents, all payments of any
other amounts payable by or on behalf of the Owner Trustee under the Secured
Note or under the Indenture, shall be made only from the income and proceeds
from the Indenture Estate, and only to the extent that the Indenture Trustee
shall have received sufficient income and proceeds from the Indenture Estate to
make such payments in accordance with the Indenture. The Holder, by its
acceptance of this Secured Note, agrees that it will look solely to the income
and proceeds from the Indenture Estate to the extent available for payment as
provided in the Indenture, and that none of the Owner Participant, the Owner
Trustee, the Trust Company, or the Indenture Trustee (whether in its individual
or trust capacity) shall be personally liable to the Indenture Trustee or to the
Holder for any amounts payable under this Secured Note, nor, except as
specifically provided in the Indenture or any other Operative Document, for any
amounts payable or any liability, under the Indenture.
This Secured Note shall not be valid or become obligatory for any purpose or be
entitled to any security or benefit under the Indenture until the certificate of
authentication hereon shall have been signed by the Indenture Trustee.
No delay or omission of the Holder to exercise its rights hereunder shall impair
any such right or power or shall be construed to be a waiver of any Indenture
Event of Default, or an acquiescence therein. No waiver of any Indenture Event
of Default shall be construed, taken or held to be a waiver of any other
Indenture Event of Default, or a waiver, acquiescence in, or consent to any
further or succeeding Indenture Event of Default. The Owner Trustee waives
demand, notice and protest in any defense by reason of extension of time for
payment or other indulgence granted by the Holder.
THIS SECURED NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS
OF THE STATE OF NEW YORK.
<PAGE>
A-1-4
IN WITNESS WHEREOF, the Owner Trustee has caused this Secured Note to be duly
executed.
FIRST SECURITY BANK,
NATIONAL ASSOCIATION,
not in its individual capacity, but
solely as Owner Trustee under the Trust
Agreement
By: ______________________________
Title: _____________________________
<PAGE>
Certificate of Authentication
-----------------------------
This is the Series 1997-B Secured Note of FIRST SECURITY BANK, NATIONAL
ASSOCIATION, as Owner Trustee described in the within-mentioned Indenture.
STATE STREET BANK AND TRUST COMPANY,
not in its individual capacity but solely as
Indenture Trustee
By: _________________________
Title: ________________________
<PAGE>
Series 1997-B Secured Note
Amortization Schedule
---------------------
Schedule of Principal Payments
- ------------------------------------------------------
- ------------------------------------------------------
SERIES 1997-B SECURED NOTE
- ------------------------------------------------------
Regular Scheduled Payment Scheduled
Distribution Date as a Percentage of Payments
- ------------------- Unpaid Principal of Principal
Amount ------------
- ------------------------------------------------------
January 31, 1998 0.75499537 277,189
- ------------------------------------------------------
July 31, 1998 0 0
- ------------------------------------------------------
January 31, 1999 2.54474246 927,223
- ------------------------------------------------------
July 31, 1999 0 0
- ------------------------------------------------------
January 31, 2000 2.52891135 898,006
- ------------------------------------------------------
July 31, 2000 0 0
- ------------------------------------------------------
January 31, 2001 2.81707146 975,033
- ------------------------------------------------------
July 31, 2001 0 0
- ------------------------------------------------------
January 31, 2002 3.08321166 1,037,086
- ------------------------------------------------------
July 31, 2002 0 0
- ------------------------------------------------------
January 31, 2003 3.39586269 1,107,033
- ------------------------------------------------------
July 31, 2003 0 0
- ------------------------------------------------------
January 31, 2004 3.74998690 1,180,962
- ------------------------------------------------------
July 31, 2004 0.17099139 51,830
- ------------------------------------------------------
January 31, 2005 3.96536138 1,199,904
- ------------------------------------------------------
July 31, 2005 0.01095330 3,183
- ------------------------------------------------------
January 31, 2006 5.08333215 1,477,041
- ------------------------------------------------------
July 31, 2006 0.18376686 50,682
- ------------------------------------------------------
January 31, 2007 6.01508353 1,655,882
- ------------------------------------------------------
July 31, 2007 0 0
- ------------------------------------------------------
<PAGE>
Schedule of Principal Payments
- ------------------------------------------------------
- ------------------------------------------------------
SERIES 1997-B SECURED NOTE
- ------------------------------------------------------
Regular Scheduled Payment Scheduled
Distribution Date as a Percentage of Payments
Unpaid Principal of Principal
Amount
January 31, 2008 8.48319322 2,194,852
- ------------------------------------------------------
July 31, 2008 0 0
- ------------------------------------------------------
January 31, 2009 8.74609671 2,070,909
- ------------------------------------------------------
July 31, 2009 9.06748380 1,959,228
- ------------------------------------------------------
January 31, 2010 14.16159960 2,782,465
- ------------------------------------------------------
July 31, 2010 0 0
- ------------------------------------------------------
January 31, 2011 15.00340458 2,530,398
- ------------------------------------------------------
July 31, 2011 0 0
- ------------------------------------------------------
January 31, 2012 0.23895204 34,254
- ------------------------------------------------------
July 31, 2012 28.50390606 4,076,298
- ------------------------------------------------------
January 31, 2013 26.54485648 2,714,090
- ------------------------------------------------------
July 31, 2013 0 0
- ------------------------------------------------------
January 31, 2014 47.90577185 3,597,940
- ------------------------------------------------------
July 31, 2014 0 0
- ------------------------------------------------------
January 31, 2015 52.78399146 2,065,180
- ------------------------------------------------------
July 31, 2015 100.00000000 1,847,332
- ------------------------------------------------------
<PAGE>
Exhibit B
to Indenture
Maturity Date, Aggregate Principal Amount, Interest Rate,
and Premium Termination Date of Secured Note
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Maturity Aggregate Interest Rate Premium
Date Principal Amount Per Annum Termination Date
- -------------------------------------------------------------------------------
Series 1997-B July 31, 2015 $36,714,000 6.654% June 11, 2009
Secured Note
- -------------------------------------------------------------------------------
EXHB-1
<PAGE>
Exhibit B-1
to Indenture
------------
Schedule of Principal Payments
- ------------------------------------------------------
- ------------------------------------------------------
SERIES 1997-B SECURED NOTE
- ------------------------------------------------------
Regular Scheduled Payment Scheduled
Distribution Date as a Percentage of Payments
- ------------------- Unpaid Principal of Principal
Amount ------------
- ------------------------------------------------------
January 31, 1998 0.75499537 277,189
- ------------------------------------------------------
July 31, 1998 0 0
- ------------------------------------------------------
January 31, 1999 2.54474246 927,223
- ------------------------------------------------------
July 31, 1999 0 0
- ------------------------------------------------------
January 31, 2000 2.52891135 898,006
- ------------------------------------------------------
July 31, 2000 0 0
- ------------------------------------------------------
January 31, 2001 2.81707146 975,033
- ------------------------------------------------------
July 31, 2001 0 0
- ------------------------------------------------------
January 31, 2002 3.08321166 1,037,086
- ------------------------------------------------------
July 31, 2002 0 0
- ------------------------------------------------------
January 31, 2003 3.39586269 1,107,033
- ------------------------------------------------------
July 31, 2003 0 0
- ------------------------------------------------------
January 31, 2004 3.74998690 1,180,962
- ------------------------------------------------------
July 31, 2004 0.17099139 51,830
- ------------------------------------------------------
January 31, 2005 3.96536138 1,199,904
- ------------------------------------------------------
July 31, 2005 0.01095330 3,183
- ------------------------------------------------------
January 31, 2006 5.08333215 1,477,041
- ------------------------------------------------------
July 31, 2006 0.18376686 50,682
- ------------------------------------------------------
January 31, 2007 6.01508353 1,655,882
- ------------------------------------------------------
July 31, 2007 0 0
- ------------------------------------------------------
EXHB1-1
<PAGE>
Schedule of Principal Payments
- ------------------------------------------------------
- ------------------------------------------------------
SERIES 1997-B SECURED NOTE
- ------------------------------------------------------
Regular Scheduled Payment Scheduled
Distribution Date as a Percentage of Payments
- ------------------- Unpaid Principal of Principal
Amount ------------
January 31, 2008 8.48319322 2,194,852
- ------------------------------------------------------
July 31, 2008 0 0
- ------------------------------------------------------
January 31, 2009 8.74609671 2,070,909
- ------------------------------------------------------
July 31, 2009 9.06748380 1,959,228
- ------------------------------------------------------
January 31, 2010 14.16159960 2,782,465
- ------------------------------------------------------
July 31, 2010 0 0
- ------------------------------------------------------
January 31, 2011 15.00340458 2,530,398
- ------------------------------------------------------
July 31, 2011 0 0
- ------------------------------------------------------
January 31, 2012 0.23895204 34,254
- ------------------------------------------------------
July 31, 2012 28.50390606 4,076,298
- ------------------------------------------------------
January 31, 2013 26.54485648 2,714,090
- ------------------------------------------------------
July 31, 2013 0 0
- ------------------------------------------------------
January 31, 2014 47.90577185 3,597,940
- ------------------------------------------------------
July 31, 2014 0 0
- ------------------------------------------------------
January 31, 2015 52.78399146 2,065,180
- ------------------------------------------------------
July 31, 2015 100.00000000 1,847,332
- ------------------------------------------------------
EXHB1-2
<PAGE>
Exhibit B-2
to Indenture
------------
Issuance of Series 1997-B Secured Note
--------------------------------------
The issuance of the Series 1997-B Secured Note issued hereunder shall
be issued, and shall be payable, to the Pass Through Trustee under the Pass
Through Trust Agreement with respect to the grantor trust created thereby, as
set forth below.
1997-B Pass Through Trust:
Series 1997-B Secured Note
EXHB2-1
<PAGE>
Exhibit C
to Indenture
------------
RELEVANT AMENDMENT
------------------
TABLE OF CONTENTS
LISTED BELOW ARE THE DOCUMENTS WHICH ARE AMENDED OR REPLACED BY THE RELEVANT
AMENDMENT AND THE CORRESPONDING PAGE NUMBERS OF THE RELEVANT AMENDMENT ON WHICH
THE AMENDMENT THERETO OR REPLACEMENT THEREOF, AS THE CASE MAY BE, IS MADE. THIS
TABLE OF CONTENTS IS FOR CONVENIENCE OF REFERENCE ONLY AND SHALL NOT AFFECT THE
CONSTRUCTION OR INTERPRETATION OF THE RELEVANT AMENDMENT.
Document Page
------------------------- ----
Definitions C-2
Indenture C-6
Participation Agreement C-39
Pass Through Trust C-40
Agreement
<PAGE>
RELEVANT AMENDMENT
------------------
As provided for in Section 3.04 of the Indenture (to which this is
Exhibit C) and in Section 11.6 of the Participation Agreement, the Indenture,
the other Operative Documents (as defined as amended in (A)(I) below) and the
Pass Through Trust Agreement will, subject to the satisfaction of the conditions
specified in such Section 3.04 (including, without limitation, the execution and
delivery of the Relevant Date Supplement), be deemed to have been amended,
automatically and without the requirement of further action by any Person
effective as of the Relevant Date (provided that such amendments shall not
---------
constitute a waiver by any party to the Operative Documents (as defined in
Appendix A to the originally executed documents) of any claims or rights to
indemnity such party has against any other party to the Operative Documents (as
defined in Appendix A to the originally executed documents) accrued in favor of
such party prior to the Relevant Date arising under the Operative Documents (as
defined in Appendix A to the originally executed documents) as in existence
prior to the Relevant Date) and so that:
(A) (I) Capitalized terms used but not defined in this Relevant
Amendment shall have the meanings described thereto in Appendix A to each of the
Indenture and the other Operative Documents and, otherwise, the following
defined terms in such Appendix A and, to the extent applicable, in Section 1.01
of the Pass Through Trust Agreement shall read as follows:
"Additional Notes" shall mean notes issued pursuant to Section 2.08 of
----------------
the Indenture.
"Appraisal Procedure" shall mean a procedure for determining any
-------------------
amount, value or period. Such procedure shall be commenced by the delivery
of written notification as specified in the Operative Documents by Mobil
Transport Finance Company Inc. ("MTFC") to the Indenture Trustee, or by the
----
Indenture Trustee to MTFC, that it desires to obtain an appraisal with
respect to such amount, value or period. If required by the relevant
provisions of the applicable Operative Document, such parties shall first
attempt to agree on such matter. If such parties are unable to agree on
such matter within the time period specified in the applicable Operative
Document, or if such parties are not required to attempt to agree, such
parties shall thereupon consult for the purpose of selecting a mutually
acceptable Independent appraiser. If within ten (10) days from the date
the parties are required to so consult, they are unable to agree upon the
appointment of a mutually acceptable Independent appraiser, then each of
such parties shall appoint an Independent appraiser, and such Independent
appraisers shall jointly determine such matter. If one party does not so
appoint an Independent appraiser, then the Independent appraiser appointed
by the other shall determine such matter as the sole appraiser. If such
two Independent appraisers cannot agree on such matter within twenty (20)
days after their appointment, such matters shall be determined by such two
Independent appraisers and a third Independent appraiser chosen within ten
(10) days after such twenty (20) day period by such two Independent
appraisers or, if such three (3) Independent appraisers fail to reach an
agreement, the determination of the appraiser that differs most from the
second highest determination shall be excluded (unless such difference is
less than 10% from either of the other determinations), the
EXHC-2
<PAGE>
remaining two determinations shall be averaged (or all three (3) shall be
averaged, if the third determination is not discarded due to the preceding
parenthetical) and such average shall constitute the determination of the
appraisers. If such two Independent appraisers fail to agree upon the
appointment of a third Independent appraiser within the allotted time
period, such appointment shall be made by the New York City office of the
American Arbitration Association or any organization successor thereto,
upon the request of any such parties from a panel of arbitrators having
familiarity with assets similar to the assets comprised by the Vessel. The
determination of the appraisers so chosen shall be given within twenty (20)
days of the appointment of such third appraiser. Except to the extent
expressly provided otherwise in any Operative Document, fees and expenses
of the appraisers appointed in connection with an Appraisal Procedure shall
be paid by MTFC.
"Business Day" shall mean any day other than a Saturday or Sunday or
------------
any other day on which banks located in New York, New York, Fairfax,
Virginia or, so long as any Pass Through Certificate is outstanding, the
city in which the Corporate Trust Office of the Pass Through Trustee is
located, are required or authorized to remain closed.
"Charter Event of Default" shall mean an Indenture Event of Default.
------------------------
"Event of Loss" shall mean any of the following events: (a) the (i)
-------------
actual or constructive loss, theft, destruction or disappearance of, or
(ii) occurrence of damage to the Vessel (which, in MTFC's reasonable, good
faith opinion, renders repair or replacement uneconomic); (b) the permanent
condemnation, confiscation or seizure of, or requisition of title to, the
Vessel by any Governmental Authority; (c) the requisition of use of the
Vessel by any Governmental Authority for a period (i) which has been
ongoing for one year and which is reasonably expected to exceed the
Maturity Date or (ii) which extends beyond the date which is twelve months
prior to the Maturity Date; or (d) the receipt of insurance proceeds based
upon an actual or constructive total loss of the Vessel.
"Fair Market Sales Value" of any property or services as of any date
-----------------------
shall mean the cash rent or cash price that would be obtained in an arm's-
length lease or sale, respectively, between an informed and willing lessee
or buyer (under no compulsion to lease or purchase) and an informed and
willing lessor or seller (under no compulsion to lease or sell) of the
property or service in question disregarding the renewal option set forth
in the Charter and shall be determined on an "as-is" basis, except that
such determination shall assume that the Vessel has been maintained in
accordance with the requirements of the Indenture and in the condition
required by Section 11.01 of Article XI of the Indenture (but otherwise on
an "as-is" basis).
"Independent" shall mean, when used with respect to any specified
-----------
Person, a Person who (1) is in fact independent; (2) does not have any
direct financial interest in MTFC, the Indenture Trustee or any Affiliate
of any of them and (3) is not connected with MTFC, the Indenture Trustee or
any Affiliate of any of them as an officer, employee, promoter,
EXHC-3
<PAGE>
underwriter, trustee, partner, director or person performing similar
functions. Whenever it is provided that any Independent Person's opinion
or certificate shall be furnished to the Indenture Trustee, such Person
shall be appointed by MTFC and approved by the Indenture Trustee in the
exercise of reasonable care and such opinion or certificate shall state
that the signer has read this definition and that the signer is Independent
within the meaning hereof.
"Operative Documents" shall mean the Guaranty, the Indenture, each
-------------------
Indenture Supplement and the Participation Agreement.
"Outstanding" shall mean, when used with respect to the Secured Notes
-----------
as of any date of determination, all Secured Notes theretofore
authenticated and delivered under the Indenture, except:
(i) Secured Notes theretofore canceled by the Indenture Trustee or
delivered to the Indenture Trustee for cancellation;
(ii) Secured Notes or portions thereof for whose payment or redemption
money in the necessary amount has been theretofore deposited with the
Indenture Trustee in trust for the Loan Participants with respect to
such Secured Notes; provided that if such Secured Notes are to be
--------
redeemed or purchased, notice of such redemption or purchase has been
duly given (or provision thereof satisfactory to the Indenture Trustee
has been made) and not revoked or otherwise withdrawn pursuant to the
Indenture; and
(iii) Secured Notes paid or in exchange for or in lieu of which other
Secured Notes have been authenticated and delivered pursuant to the
Indenture;
provided, however, that in determining whether the Holders of the requisite
-------- -------
principal amount of Secured Notes Outstanding have given any request,
demand, authorization, direction, notice, consent or waiver hereunder,
Secured Notes owned or pledged to MTFC or any Affiliate thereof, shall be
disregarded and deemed not to be Outstanding, unless such Person owns 100%
of the Secured Notes owned or pledged by all Persons. In determining
whether the Indenture Trustee shall be protected in relying upon any such
request, demand, authorization, direction, notice, consent or waiver, only
Secured Notes which the Indenture Trustee knows to be so owned or pledged
shall be so disregarded. Secured Notes so owned which have been pledged in
good faith may be regarded as Outstanding if the pledgee establishes to the
satisfaction of the Indenture Trustee the pledgee's right so to act with
respect to such Secured Notes and that the pledgee is not MTFC or any
Affiliate thereof, and;
(b) when used with respect to Pass Through Certificates, shall mean,
as of the date of determination, all Pass Through Certificates theretofore
authenticated and delivered under the Pass Through Trust Agreement, except:
EXHC-4
<PAGE>
(i) Pass Through Certificates theretofore cancelled by the
Registrar or delivered to the Pass Through Trustee or the Registrar
for cancellation;
(ii) all of the Pass Through Certificates if money in the full
amount required to make the final distribution payment to be made
pursuant to Section 11.01 of the Pass Through Trust Agreement has been
theretofore deposited with the Pass Through Trustee in trust for the
Certificateholders as provided in Section 4.01 of the Pass Through
Trust Agreement, pending distribution of such money to the
Certificateholders pursuant to such final distribution payment; and
(iii) Pass Through Certificates in exchange for or in lieu of which
other Pass Through Certificates have been authenticated and delivered
pursuant to the Pass Through Trust Agreement.
"Overdue Rate" shall mean a rate per annum equal to (i) with respect
------------
to amounts owing to any Loan Participant constituting payments or
prepayments of any Secured Note, the rate of interest on such Secured Note;
and (ii) with respect to amounts owing to MTFC, the rate of interest
publicly announced from time to time by Citibank, N.A. in New York City as
its "prime" or "base" rate plus 1% (computed on the basis of the actual
days elapsed during the relevant period and a 365-day year).
"Permitted Liens" shall have the meaning set forth in Appendix A to
---------------
the Participation Agreement.
"Relevant Amendment" shall have the meaning specified in Section 3.04
------------------
of the Indenture, as originally executed.
"Relevant Date" shall have the meaning specified in Section 3.04 of
-------------
the Indenture, as originally executed.
"Responsible Officer", when used with respect to the Indenture Trustee
-------------------
or the Pass Through Trustee, shall mean an officer in its corporate trust
administration department (or any successor group of the Indenture Trustee
or the Pass Through Trustee, as the case may be) or any other officer
customarily performing functions similar to those performed by any of the
above designated officers and also means, with respect to a particular
corporate trust matter, any other officer to whom such matter is referred
because of such officer's knowledge of and familiarity with the particular
subject.
"Severable Modification" shall mean any Modification to the Vessel
----------------------
permitted under Section 11 of Article XI of the Indenture and which can be
readily removed from the Vessel without causing material damage to the
Vessel.
EXHC-5
<PAGE>
(B) (I) Section 2.01(e) of the Indenture shall read as follows:
(e) Each Secured Note issued after the Relevant Date shall be signed
on behalf of MTFC by the Chairman, the President, any Senior Vice President,
any Vice President, any Assistant Vice President, the Controller, the Treasurer
or the Secretary (or any other officer or employee authorized in writing by one
of the foregoing officers) of MTFC, manually. No Secured Note shall be secured
by or entitled to any benefit under this Indenture, or be valid for any purpose,
unless there appears thereon a certificate of authentication executed by or on
behalf of the Indenture Trustee by the manual signature of a Responsible Officer
of the Indenture Trustee, and such certificate on any Secured Note shall be
conclusive evidence that such Secured Note has been duly authenticated and
delivered hereunder. Notwithstanding any provision to the contrary contained
herein, any Secured Note issued after the Relevant Date shall be issued
substantially in the form set forth in Exhibit A to Exhibit C hereto.
(II) Sections 2.02 and 2.08 of the Indenture shall read as
follows:
SECTION 2.02. Payments from Indenture Estate and MTFC. All payments
---------------------------------------
of principal, Make-Whole Amount, if any, and interest to be made by MTFC and,
except as otherwise provided in the Operative Documents, all payments of any
other amounts payable by, or on behalf of MTFC under the Secured Notes and this
Indenture, shall be payable from the income and proceeds from the Indenture
Estate and shall be direct obligations of MTFC. Each Holder, by its acceptance
of a Secured Note, agrees that it will look solely to MTFC, the Guarantor and
the income and proceeds from the Indenture Estate to the extent available for
payment as herein provided and that the Indenture Trustee (whether in its
individual or trust capacity) shall not be personally liable to such Holder for
any amounts payable under the Secured Notes, or, except as specifically provided
herein or in the other Operative Documents, for any amounts payable or any
liability under this Indenture.
SECTION 2.08. Additional Notes. (a) So long as no Indenture Event
----------------
of Default shall have occurred and be continuing, Additional Notes of one or
more series may be issued under and secured by this Indenture at any time or
from time to time, and subject to the conditions hereinafter provided in this
Section 2.08, for the purpose of financing all or a portion of the cost of any
Modification to the Vessel.
(b) Prior to the issuance of any Additional Notes of any series
pursuant to this Section 2.08, MTFC shall have delivered to the Indenture
Trustee, not less than thirty (30) days prior to the proposed date of issuance
of such Additional Notes, a request and authorization to issue Additional Notes
(a "Request"), which Request shall include the amount and series of such
-------
Additional Notes, the proposed date of issuance of such Additional Notes, and
other details with respect thereto which are not inconsistent with this Section
2.08. Such Additional Notes shall have a designation so as to distinguish such
Additional Notes from the Initial Secured Notes and Additional Notes of any
other series, but otherwise shall be substantially similar in form to the
Initial Secured Notes, with such omissions therefrom, variations therein and
additions thereto as shall be
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<PAGE>
appropriate. Such Additional Notes shall not rank senior in any respect to, but
may be subordinate to the Initial Secured Notes and other Secured Notes issued
pursuant to the terms hereof.
(c) The terms, conditions and designations of such Additional
Notes (which shall be consistent with the Request and with the terms of this
Indenture) shall be set forth in a supplement to this Indenture, substantially
in the Form of Exhibit D, which shall be executed by MTFC and the Indenture
Trustee. Such indenture supplement shall set forth:
(i) after giving effect to the issuance of the Additional Notes,
the aggregate principal amount outstanding of all Secured Notes which shall
not exceed 85% of the total Fair Market Sales Value of the Vessel at such
time (as determined pursuant to the Appraisal Procedure) after giving
effect to such Modifications;
(ii) the text of such Additional Notes (which, except for the terms
of payment thereof, shall be of substantially the same effect as the text
of the Initial Secured Notes set forth in this Indenture, with such changes
as are consistent with and permitted by this Indenture and which in all
events shall provide that such Additional Notes are never more than pari
passu in priority of payment, in right of security and in all other
respects with the Initial Secured Notes);
(iii) the date of maturity of such Additional Notes;
(iv) the date from which, and the date or dates on which, interest
is payable (which shall be Interest Payment Dates);
(v) the terms for the repayment of the principal amount of such
Additional Notes (each regularly scheduled payment of principal shall be an
Interest Payment Date);
(vi) the terms, if any, as to prepayment or redemption of such
Additional Notes at the option of MTFC, and as to the premium, if any,
payable on any redemption or prepayment of such Additional Notes; and
(vii) any other terms and agreements in respect thereof as required
or permitted by this Indenture or necessary to specify the terms and
conditions on which such Additional Notes shall be issued.
(d) Such Additional Notes shall be executed by MTFC as provided in
Section 2.01 and deposited with the Indenture Trustee for authentication and
delivery, but before such Additional Notes shall be authenticated and delivered
by the Indenture Trustee, there shall be delivered to or deposited with the
Indenture Trustee the following:
(i) the Request;
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<PAGE>
(ii) the supplement to this Indenture described in Section 2.08(c),
duly executed by MTFC;
(iii) such instruments as may be necessary to perfect the security
interest in such Modification under this Indenture;
(iv) such evidence of the due filing of financing statements and
other filings with respect to the Modification as may be required to
subject such property to the Lien of this Indenture, subject to no Liens
except Permitted Liens;
(v) originals or certified copies of all corporate actions
necessary for the due and valid issue of such Additional Notes, the due and
valid authorization, execution, delivery and performance by MTFC of the
supplement to this Indenture relating thereto, and the creation of the Lien
and security interest thereon referred to above, all of which corporate
actions shall have been duly obtained and shall be in full force and
effect; together with reasonable evidence as to the due occurrence of all
such authorization, execution, delivery and performance;
(vi) documentation, duly executed and delivered to the extent
practicable, by the respective parties thereto, whereby the proposed
holders of the Additional Notes agree to be bound by the terms of the
Operative Documents (including, without limitation, representations and
covenants corresponding to those contained in Section 7 of the
Participation Agreement);
(vii) an Officer's Certificate of MTFC certifying as to the cost of
such Modification; and
(viii) opinions of counsel to MTFC as to the due authorization,
execution, delivery and enforceability of such supplement to the Indenture
and such Additional Notes and the creation and perfection of the security
interest in such Modification (subject to usual or customary exceptions,
qualifications and assumptions) and such Additional Notes and such other
certificates and other documents as may be reasonably requested by the
Indenture Trustee to evidence the validity and binding effect of such
supplement to this Indenture and such Additional Notes and compliance with
this Section 2.08.
(e) When the documents referred to in Section 2.08(d) shall have
been delivered to or deposited with the Indenture Trustee and when such
Additional Notes described in the Request and the supplement to this Indenture
have been executed by MTFC as required by this Indenture, the Indenture Trustee
shall authenticate and deliver such Additional Notes in the manner described in
such Request, but only upon payment to MTFC of the sum or sums specified in such
Request.
SECTION 2.12. Certain References and Obligations. Notwithstanding
----------------------------------
any provision to the contrary contained herein, Sections 2.01, 2.03, 2.05, 2.06
and 2.07 shall be deemed amended
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<PAGE>
to provide that any reference to, or right or obligation of the Owner Trustee
contained in such Sections shall after the Relevant Date be deemed to be a
reference to, or right or obligation of MTFC.
(C) Sections 3.02, 3.04, 3.06, 3.08 and 3.11 of the Indenture shall
read as follows:
SECTION 3.02. Mandatory Redemption. Casualty Redemption. (i) If an
-------------------- -------------------
Event of Loss shall occur with respect to the Vessel, unless MTFC shall have
elected to rebuild or replace the Vessel in accordance with Section 12.02(b) of
Article XI, then, MTFC shall redeem on the date of payment of the amount
required to be paid as a result of such Event of Loss pursuant to Section 12.02
of Article XI (the date of any redemption under this Section 3.02 being herein
called a "Casualty Redemption Date") the entire unpaid principal amount of the
------------------------
Secured Notes Outstanding on such Casualty Redemption Date, at a redemption
price equal to 100% of such unpaid principal amount of such Secured Notes,
together with any accrued and unpaid interest thereon to, but not including,
such Casualty Redemption Date and without Make-Whole Amount or any other
premium.
SECTION 3.04. [Intentionally Omitted]
SECTION 3.06. [Intentionally Omitted]
SECTION 3.08. [Intentionally Omitted]
SECTION 3.11. Certain References and Obligations. Notwithstanding
----------------------------------
any provision to the contrary contained herein, Sections 3.05 and 3.10 shall be
deemed amended to provide that any reference to, or right or obligation of the
Owner Trustee contained in such Section shall after the Relevant Date be deemed
to be a reference to, or right or obligation of MTFC.
(D) Article IV of the Indenture shall read as follows:
ARTICLE IV
RECEIPT, DISTRIBUTION AND APPLICATION
OF INCOME FROM THE INDENTURE ESTATE
SECTION 4.01. [Intentionally Omitted]
SECTION 4.02. Certain Distributions. (a) Any payment received by
---------------------
the Indenture Trustee (i) pursuant to Section 12 of Article XI as a result of
the occurrence of an Event of Loss with respect to the Vessel or (ii) pursuant
to Section 3.05, shall be distributed on the Redemption Date in the following
order of priority:
first, in the manner provided in clause "first" of Section 4.03;
-----
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<PAGE>
second, so much of the proceeds remaining as shall be required to pay
------
in full the aggregate unpaid principal amount of each Secured Note then
Outstanding and Make-Whole Amount, if any, and all accrued but unpaid
interest thereon to, but not including, the date of distribution, shall be
distributed to the Holder of such Secured Note, and if the proceeds
remaining are insufficient to pay all such amounts in full, they shall be
distributed to all Holders ratably, without priority of any Holder over any
other Holder (except as otherwise expressly provided herein), in the
proportion that the aggregate amount due each such Holder under this clause
"second" bears to the aggregate amount due all such Holders under this
------
clause "second";
------
third, in the manner provided in clause "second" of Section 4.03;
-----
fourth, in the manner provided in clause "fourth" of Section 4.03; and
------
fifth, in the manner provided in clause "fifth" of Section 4.03.
-----
(b) The portion of each payment referred to in this Section 4.02
distributed to a Holder on account of principal or interest on any Secured Note
held by such Holder shall be applied by such Holder in payment of such Secured
Note in accordance with the terms of Section 4.04.
(c) Notwithstanding Section 4.03, any amounts held by the Indenture
Trustee, including, without limitation, pursuant to Section 12 of Article XI
herein, which are payable to MTFC pursuant to the terms of this Indenture or
held by the Indenture Trustee in accordance with Section 7.04 herein shall be
(i) so paid to MTFC, or (ii) held by the Indenture Trustee as security for the
obligations of MTFC.
SECTION 4.03. Distribution After Indenture Event of Default. Except
---------------------------------------------
as otherwise provided in Section 4.02(c) or in Section 4.05, if (a) an Indenture
Event of Default shall have occurred and be continuing, and (b) either the
Indenture Trustee shall have given notice to declare this Indenture to be in
default pursuant to Section 5.04(a), or any of the Secured Notes shall have been
declared or otherwise shall have become immediately due and payable pursuant to
Section 5.04 then, to the extent that each such declaration shall not have been
rescinded or the Secured Notes shall remain immediately due and payable, (i) all
amounts then held by the Indenture Trustee pursuant to Section 4.01 or otherwise
under the Indenture (but not including funds described in Sections 4.02(c) and
4.05 excluded from the operation of this 4.03) in each case hereunder or under
any Operative Document (other than amounts held for its own account), and (ii)
all payments and amounts thereafter realized by the Indenture Trustee through
the exercise of remedies hereunder or under any of the agreements assigned or
pledged to the Indenture Trustee under this Indenture or otherwise as trustee
under this Indenture (for purposes of this Section 4.03, all such amounts and
payments held or realized being herein called "proceeds"), other than amounts
--------
expressly paid to it for its own account, shall be distributed forthwith by the
Indenture Trustee in the following order of priority:
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<PAGE>
first, so much of such proceeds as shall be required to reimburse the
-----
Indenture Trustee for any unpaid fees for its services under this Indenture
and any unreimbursed tax, expense (including reasonable legal fees) or
other loss incurred by it (in each case to the extent reimbursable under
the Operative Documents) shall be distributed to the Indenture Trustee for
application to itself;
second, so much of the remaining proceeds as shall be required to
------
reimburse the then existing or prior Holders for amounts paid or advanced
by the Holders pursuant to Section 6.04 (to the extent not previously
reimbursed), shall be distributed to the then existing and prior Holders as
their respective interests may appear, and if the proceeds remaining are
insufficient to pay all such amounts in full, they shall be distributed
ratably, without priority of any recipient over any other recipient (except
as otherwise expressly provided herein), in the proportion the aggregate
amount due each such Person under this clause "second" bears to the
aggregate amount and interest due all such Persons under this clause
"second";
third, so much of the proceeds remaining as shall be required to pay
-----
in full the aggregate unpaid principal amount of each Secured Note then
Outstanding and all accrued but unpaid interest thereon to, but not
including, the date of distribution, shall be distributed to the Holder of
such Secured Note, and if the proceeds remaining are insufficient to pay
all such principal and/or interest (as the case may be) amounts in full,
they shall be distributed to all Holders ratably, without priority of any
Holder over any other Holder (except as otherwise expressly provided
herein), in the proportion that the aggregate amount due each such Holder
under this clause "third" bears to the aggregate amount due all such
Holders under this clause "third";
fourth, so much of the proceeds remaining as shall be required to pay
------
to each Holder all other amounts payable pursuant to the indemnification
provisions of Section 12 of the Participation Agreement or pursuant to any
other provision of any Operative Document and secured hereunder to such
Holder or to its predecessors and remaining unpaid shall be distributed to
such Holder for distribution to itself and such predecessors, as their
respective interests may appear, and if the proceeds remaining are
insufficient to pay all such amounts in full, they shall be distributed
ratably, without priority of any Holder over any other Holder (except as
otherwise expressly provided herein), in the proportion that the aggregate
amount due each such Holder under this clause "fourth" bears to the
aggregate amount due all such Holders under this clause "fourth"; and
fifth, the balance, if any, of the proceeds remaining shall be
-----
distributed to MTFC.
For the avoidance of doubt, no Make-Whole Amount or any other premium
shall be due and payable on the Secured Notes as a consequence of the
acceleration of the Secured Notes as a result of an Indenture Event of Default.
EXHC-11
<PAGE>
All amounts distributed to any Holder pursuant to clause "third" of
-----
this Section 4.03 shall be applied by such Holder in payment of the Secured
Notes held by it in accordance with the terms of Section 4.04.
SECTION 4.04. Application of Payments on Secured Notes. Each payment
----------------------------------------
on a Secured Note shall be applied, first, to the payment of accrued interest on
-----
such Secured Note to the date of such payment, and second, to the payment of any
------
principal on such Secured Note then due thereunder.
SECTION 4.05. Applications of Payments According to Applicable
------------------------------------------------
Operative Document Provisions. (a) Notwithstanding Section 4.03 or any other
- -----------------------------
provision of this Indenture to the contrary, any payments or amounts received by
the Indenture Trustee, provision for the application of which is made in any
Operative Document, shall be applied promptly as provided in such Operative
Document.
SECTION 4.06. Amounts Received for Which No Provision Is Made. (a)
-----------------------------------------------
Any payment received or amounts realized by the Indenture Trustee for which no
provision as to the application thereof is made elsewhere in this Indenture or
in any other Operative Document, except as provided in Section 4.03, and (b) all
payments received and amounts realized by the Indenture Trustee under this
Indenture including, without limitation, Section 11.7 of Article XI or otherwise
with respect to the Vessel, to the extent received or realized at any time after
payment in full of the principal of and interest on all Secured Notes issued
hereunder or the conditions set forth in Section 10.01 for the defeasance of the
Secured Notes shall have been satisfied, as well as any other amounts remaining
as part of or as proceeds of the Indenture Estate after payment in full of the
principal of and interest on all such Secured Notes or the conditions set forth
in Section 10.01 for the defeasance of the Secured Notes shall have been
satisfied, shall be distributed forthwith by the Indenture Trustee in the
following order of priority:
first, so much of such aggregate amount as shall be required to pay
-----
the Indenture Trustee all amounts then due it pursuant to Section 6.04
shall be applied to pay the Indenture Trustee such amounts; and
second, the balance, if any, of such aggregate amount remaining
------
thereafter shall be distributed to MTFC to be held or distributed in
accordance with the terms of the Participation Agreement.
SECTION 4.07. Payment Procedures. All amounts which are
------------------
distributable from time to time by the Indenture Trustee to MTFC or any Holder
shall be paid by the Indenture Trustee in immediately available funds promptly
after such amounts become immediately available to it, and the Indenture Trustee
shall not be obligated to see to the application of any such payment made by it.
All payments made by the Indenture Trustee to MTFC shall be made in the manner
and to the address set forth in Schedule 1 to the Participation Agreement or to
such other address as may be specified from time to time by notice to the
Indenture Trustee from MTFC.
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<PAGE>
SECTION 4.08. Application of Payments Under Guaranty. All payments
--------------------------------------
received by the Indenture Trustee pursuant to the Guaranty shall be distributed
forthwith by the Indenture Trustee in the same order of priority, and in the
same manner, as it would have distributed the payment on the underlying
obligation in respect of which such payment under the Guaranty was received.
(E) Sections 5.01, 5.02, 5.03, 5.04, 5.05, 5.09 and 5.12 of the
Indenture shall read as follows:
SECTION 5.01. [Intentionally Omitted]
SECTION 5.02. Indenture Events of Default. "Indenture Event of
--------------------------- -------------------
Default" means any of the following events (whatever the reason for such
- -------
Indenture Event of Default and whether such event shall be voluntary or
involuntary or come about or be effected by operation of law or be pursuant to
or in compliance with any judgment, decree or order of any court or any
Governmental Rule):
(a) any payment of principal of, Make-Whole Amount, if any, or
interest on any Secured Note shall not have been made on or prior to the
tenth (10th) Business Day after the same shall have become due and payable;
or
(b) MTFC shall fail to maintain the insurance required to be
maintained pursuant to Section 13.01(a) of Article XI of this Indenture; or
(c) MTFC shall fail in any material respect to perform or observe
any material covenant or agreement to be performed or observed by it under
this Indenture or any other Operative Document (but in the case of the
Participation Agreement, only as such covenant or agreement relates to the
Indenture Trustee and the Loan Participants and other than any failure to
make any payment referred to in Section 5.02(a)) and such failure shall
continue for a period of thirty (30) days after receipt by MTFC of a
written notice from the Indenture Trustee or from Holders of Secured Notes
owning at least 25% in principal amount of Outstanding Secured Notes
specifying such failure and requiring it to be remedied; provided, however,
-------- -------
that the continuation of any such failure for such period of thirty (30)
days or such longer period (not to exceed 365 days) after receipt of such
notice shall not constitute an Indenture Event of Default so long as (i)
such failure is curable or correctable and (ii) MTFC is diligently pursuing
the cure or correction of such failure; or
(d) the Guarantor shall fail in any material respect to perform or
observe any covenant or agreement to be performed or observed by it under
the Guaranty (other than any covenant or agreement in respect of MTFC's
obligations under the Operative Documents) and such failure shall continue
for a period of thirty (30) days after receipt by the Guarantor of a
written notice from the Indenture Trustee or from Holders of Secured Notes
owning at
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<PAGE>
least 25% in principal amount of Outstanding Secured Notes specifying such
failure and requiring it to be remedied; provided, however, that the
-------- -------
continuation of any such failure for such period of thirty (30) days or
such longer period (not to exceed 365 days) after receipt of such notice
shall not constitute an Indenture Event of Default so long as (i) such
failure is curable or correctable and (ii) the Guarantor is diligently
pursuing the cure or correction of such failure; or
(e) any material representation or warranty made by MTFC in Section 5
of the Participation Agreement or in any Officer's Certificate of MTFC
delivered pursuant to the Participation Agreement shall prove to have been
inaccurate in any material respect when made, unless such inaccuracy shall
not be material to the recipient at the time when the notice referred to
below shall have been received by MTFC or any adverse material impact
thereof shall have been cured within thirty (30) days after receipt by MTFC
of a written notice thereof from the Indenture Trustee or from Holders of
Secured Notes owning at least 25% in principal amount of Outstanding
Secured Notes; provided, however, that the continuation of any such
-------- -------
inaccuracy for such period of thirty (30) days or such longer period (not
to exceed 365 days) after receipt of such notice shall not constitute an
Indenture Event of Default so long as (i) any material adverse impact of
such inaccuracy is curable or correctable and (ii) MTFC is diligently
pursuing the cure or correction of such material adverse impact; or
(f) any material representation or warranty made by the Guarantor in
the Guaranty or in any Officer's Certificate of the Guarantor delivered
pursuant to the Participation Agreement shall prove to have been inaccurate
in any material respect when made, unless such inaccuracy shall not be
material to the recipient at the time when the notice referred to below
shall have been received by the Guarantor or any material adverse impact
thereof shall have been cured or corrected within thirty (30) days after
receipt by MTFC of a written notice thereof from the Indenture Trustee;
provided, however, that the continuation of any such inaccuracy for such
-------- -------
period of thirty (30) days or such longer period (not to exceed 365 days)
after receipt of such notice shall not constitute an Indenture Event of
Default so long as (i) any material adverse impact of such inaccuracy is
curable or correctable and (ii) the Guarantor is diligently pursuing the
cure or correction of such material adverse impact;
(g) MTFC or the Guarantor shall commence a voluntary case or other
proceeding seeking liquidation, reorganization or other relief with respect
to itself or its debts under any bankruptcy, insolvency or other similar
law now or hereafter in effect or seeking the appointment of a trustee,
receiver, liquidator, custodian or other similar official of it or any
substantial part of its property, or shall consent to any such relief or to
the appointment or taking possession by any such official or agency in an
involuntary case or other proceeding commenced against it, or shall make a
general assignment for the benefit of creditors, or shall take any
corporate action to authorize any of the foregoing, or an involuntary case
or other proceeding shall be commenced against MTFC or the Guarantor
seeking liquidation,
EXHC-14
<PAGE>
reorganization or other relief with respect to it or its debts under any
bankruptcy, insolvency or other similar law now or hereafter in effect or
seeking the appointment of a trustee, receiver, liquidator, custodian or
other similar official or agency of it or any substantial part of its
property, and such involuntary case or other proceeding shall remain
undismissed and unstayed for a period of ninety (90) days; or
(h) the Guaranty shall cease to be in full force and effect or to be
valid, binding and enforceable agreement of the Guarantor;
provided, however, that notwithstanding anything to the contrary contained in
- -------- -------
this Section 5.02, any failure of MTFC to perform or observe any covenant or
agreement specified in Section 5.02(c) shall not constitute an Indenture Event
of Default if such failure is caused solely by reason of any event that
constitutes an Event of Loss to the Vessel (or any event which with lapse of
time would constitute such an Event of Loss) so long as MTFC is continuing to
comply with all the applicable terms of Section 12 of Article XI.
SECTION 5.03. [Intentionally Omitted]
SECTION 5.04. Remedies. (a) If an Indenture Event of Default shall
--------
have occurred and be continuing and so long as the same shall be unremedied,
then and in every such case the Indenture Trustee subject to Sections 5.04(d),
5.05 and 6.01 may declare this Indenture to be in default by written notice to
such effect given to MTFC, and at any time thereafter; provided that such
--------
declaration shall not have been rescinded, the Indenture Trustee, to the extent
permitted by applicable law and subject to Sections 5.05 and 5.09 may: (i) upon
at least ten (10) days' written notice, exercise any or all of the rights and
powers and pursue any and all of the remedies herein provided or available under
applicable law, (ii) upon at least ten (10) days' written notice, take
possession of all or any part of the Indenture Estate and exclude MTFC and all
Persons claiming under MTFC wholly or partly therefrom, (iii) upon at least 25
days' prior written notice to MTFC, invoke and exercise the power of sale and
sell (or cause to be sold) any or all of the Indenture Estate in the manner for
non-judicial foreclosure sales pursuant to the applicable law, or, in lieu of
sale pursuant to the power of sale, foreclose the Indenture Estate and (iv)
exercise all rights and remedies of a secured party under the Uniform Commercial
Code as in effect in any applicable jurisdiction. The Indenture Trustee shall
notify MTFC as soon as is reasonably practicable after its commencement of the
exercise of any remedy pursuant to this Section 5.04.
(b) If an Indenture Event of Default (other than an Indenture Event of
Default specified in Section 5.02(g)) shall have occurred and be continuing,
then the Indenture Trustee may at any time (or shall when instructed by a
Majority Interest of Holders of Notes), by five (5) days' written notice to
MTFC, declare all (but not less than all) of the Secured Notes to be due and
payable. Upon such declaration the unpaid principal of all Secured Notes then
Outstanding, together with accrued but unpaid interest thereon and any other
amounts due thereunder, shall immediately become due and payable without
presentment, demand, protest further notice of intention to
EXHC-15
<PAGE>
accelerate maturity or other notice of intention to accelerate maturity or other
or notice, all of which are hereby waived.
(c) If an Indenture Event of Default of the type specified in Section
5.02(g) shall have occurred and be continuing, the principal of all Secured
Notes then Outstanding, together with accrued but unpaid interest thereon and
any other amounts due thereunder, shall become and be due and payable
automatically, without declaration, notice, demand or any other action on the
part of the Indenture Trustee or any Holder, all of which are hereby waived.
Each of Section 5.04(a), Section 5.04(b) and this Section 5.04(c), however, is
subject to the condition that, if at any time after the principal of the Secured
Notes shall have become due and payable upon a declared or automatic
acceleration thereof as provided herein, and before any judgment or decree for
the payment of the money so due, or any portion thereof, shall be entered, all
overdue payments of interest upon the Secured Notes and all other amounts
payable under the Secured Notes (except the principal of the Secured Notes which
by such declaration shall have become payable) shall have been duly paid, and
every other Indenture Event of Default with respect to any covenant or provision
of this Indenture shall have been cured or waived, then and in every such case a
Majority in Interest of Holders of Notes, by written instrument filed with the
Indenture Trustee, may (but shall not be obligated to) rescind and annul the
Indenture Trustee's declaration and its consequences; but no such rescission or
annulment shall extend to or affect any subsequent Indenture Event of Default or
impair any right consequent thereon.
(d) Notwithstanding any provision in any document or instruction that
purports to require the Indenture Trustee to acquire title to any or all of the
Indenture Estate upon foreclosure, or pursuant to instructions, the Indenture
Trustee shall not be obligated to acquire any such title unless: (i) the
Indenture Trustee is provided with such security or indemnity as it shall deem
satisfactory to it, (ii) such acquisition of title complies with all applicable
Operative Documents, laws, rules and regulations, which shall be evidenced by an
opinion of counsel to such effect in form and substance satisfactory to the
Indenture Trustee and (iii) the Indenture Trustee shall have obtained such
executed certificates, instruments or other documents, in accordance with its
reasonable inquiries or requests.
SECTION 5.05. Suit; Possession; Title; Sale of Indenture Estate. (a)
-------------------------------------------------
MTFC agrees that, if an Indenture Event of Default shall have occurred and be
continuing and the Indenture Trustee shall be entitled to exercise remedies
hereunder as provided in Section 5.04, the Indenture Trustee may take possession
of all or any part of the Indenture Estate and may exclude MTFC, and all Persons
claiming under MTFC, wholly or partly therefrom; provided, however, that at
-------- --------
least ten (10) Business Days' prior notice of such taking of possession shall be
given to MTFC. If an Indenture Event of Default shall have occurred and be
continuing and the Indenture Trustee shall be entitled to exercise remedies
hereunder as provided in Section 5.04, at the request of the Indenture Trustee,
MTFC shall promptly execute and deliver to the Indenture Trustee such
instruments of title and other documents as the Indenture Trustee may deem
necessary or advisable to enable the Indenture Trustee or any agent or
representative designated by the Indenture Trustee, at such time or times and
place or places as the Indenture Trustee may specify, to obtain possession of
all or any
EXHC-16
<PAGE>
part of the Indenture Estate to which the Indenture Trustee shall at the time be
entitled hereunder. If MTFC shall for any reason fail to execute and deliver
such instruments and documents after such request by the Indenture Trustee, the
Indenture Trustee may (i) obtain a judgment conferring on the Indenture Trustee
the right to immediate possession of any property, comprising a portion of the
Indenture Estate and requiring MTFC to execute and deliver such instruments and
documents to the Indenture Trustee or (ii) pursue all or part of such property
wherever it may be found, and the Indenture Trustee may enter any of the
premises where such property or any portion thereof may be or is supposed to be
and search for such property; provided, further, that notwithstanding any
-------- -------
provision herein to the contrary, the Indenture Trustee shall not sell, assign,
transfer or deliver any of the Indenture Estate or take possession of the
Indenture Estate unless the Secured Notes shall have been accelerated pursuant
to Section 5.04(b) or 5.04(c). All expenses of obtaining such judgment or of
pursuing, searching for and taking such property shall, until paid, be secured
by the Lien of this Indenture.
(b) Upon every such taking of possession, the Indenture Trustee may
make, from time to time and at the expense of the Indenture Estate, such
expenditures for maintenance, insurance, repairs, replacements, alterations,
additions and improvements to and of the Indenture Estate as it may deem proper.
In each such case, the Indenture Trustee shall have the right to maintain, use,
operate, store, lease, control or manage the Indenture Estate and to exercise
all rights and power of MTFC relating to the Indenture Estate as the Indenture
Trustee shall deem to be in the best interest of the Holders. The Indenture
Trustee shall be entitled to collect and receive directly all tolls, rents,
revenue, issues, income, products and profits of the Indenture Estate and every
part thereof, other than Excepted Payments. Such tolls, rents, revenues,
issues, income, products and profits shall be applied (i) to pay the expenses of
the use, operation, storage, leasing, control, management or disposition of the
Indenture Estate, (ii) to pay the expense of all maintenance, repairs,
replacements, alterations, additions and improvements, (iii) to make all
payments which the Indenture Trustee may be required or may elect to make, if
any, for taxes, assessments, insurance or other proper charges upon the
Indenture Estate or any portion thereof, including, without limitation, the
employment of engineers and accountants to examine, inspect and make reports
upon the properties and books and records of MTFC, and (iv) to pay amounts owing
in respect of the Secured Notes in accordance with the provisions thereof and
hereof and to make all other payments which the Indenture Trustee may be
required or authorized to make under any provision of this Indenture, as well as
just and reasonable compensation for the services of the Indenture Trustee and
of all Persons properly engaged and employed by the Indenture Trustee.
(c) Any of the Indenture Trustee, any Holder or MTFC may be a
purchaser of the Indenture Estate or any portion thereof or any interest therein
at any sale thereof, whether pursuant to foreclosure or power of sale or
otherwise. The Indenture Trustee may apply against the purchase price therefor
the amount then due to it hereunder or under any of the Secured Notes secured
hereby and any Holder may apply against the purchase price therefor the amount
then due to it hereunder or under the Secured Notes held by such Holder, to the
extent of such portion of the purchase price as it would have received had it
been entitled to share in any distribution thereof. The Indenture Trustee or
any Holder or any nominee of any such Holder shall acquire, upon any such
purchase,
EXHC-17
<PAGE>
good title to the property so purchased, free of the Lien of this Indenture and,
to the extent permitted by applicable law, free of all rights of redemption in
MTFC in respect of the property so purchased.
(d) Any sale or other conveyance of any of the Indenture Estate by the
Indenture Trustee made pursuant to the terms of this Indenture shall bind MTFC
and the Holders and shall be effective to transfer or convey all right, title
and interest of the Indenture Trustee, MTFC and the Holders in and to such
Indenture Estate or portion thereof, as the case may be. No purchaser or other
grantee shall be required to inquire as to the authorization, necessity,
expediency or regularity of such sale or conveyance, or as to the application of
any sale or other proceeds with respect thereto by the Indenture Trustee. In
the event of any such sale, MTFC shall execute any and all such bills of sale
and other documents, and perform and do all other acts and things requested by
the Indenture Trustee in order to permit continuation of such sale and to
effectuate the transfer or conveyance referred to in the first sentence of this
Section 5.05 (d). MTFC shall ratify and confirm any such sale or sales by
executing and delivering to the Indenture Trustee or to such purchaser or
purchasers all instruments as may reasonably be requested for such purpose. Any
such sale or sales made hereunder shall operate to divest all the estate, right,
title, interest, claim and demand whatsoever, whether at law or in equity, of
MTFC in and to the properties and rights so sold, and shall be a perpetual bar
both at law and in equity against MTFC and against any and all persons claiming
or who may claim the same, or any part thereof from, through or under MTFC.
Upon any sale or other disposition of the Indenture Estate by the Indenture
Trustee, the Indenture Trustee will promptly account in writing, in reasonable
detail, to MTFC for the amount of such sale, the costs and expenses incurred in
connection therewith and any surplus proceeds.
(e) The Indenture Trustee shall as a matter of right, be entitled to
the appointment of a receiver (who may be the Indenture Trustee or any successor
or nominee thereof), at any time after an Indenture Event of Default either
before or after declaring due and payable the principal of all Secured Notes
then Outstanding, together with accrued but unpaid interest thereon and any
other amounts due thereunder, for all or any portion of the Indenture Estate,
whether such receivership be incidental to a proposed sale of the Indenture
Estate or the taking of possession thereof or otherwise, and, to the extent
permitted by applicable law, MTFC hereby consents to the appointment of such a
receiver, and agrees that it will not oppose any such appointment. Any receiver
appointed for all or any portion of the Indenture Estate shall be entitled in
addition to any powers available under applicable law, to exercise all the
rights and powers of the Indenture Trustee with respect to the Indenture Estate.
(f) To the extent now or at any time hereafter enforceable under
applicable law, MTFC covenants that it will not at any time insist upon or
plead, or in any manner whatsoever claim or take any benefit or advantage of any
stay, extension, moratorium, any exemption from execution or sale or other
similar law or from any law now or hereafter in force providing for the
valuation or appraisement of the Indenture Estate or any part thereof, prior to
any sale or sales thereof to be made pursuant to any provision herein contained,
or prior to any applicable decree, judgment or order of any court of competent
jurisdiction; nor, after such sale or sales, claim or exercise any right under
any statute now or hereafter made or enacted by any state or any right to have a
portion of the
EXHC-18
<PAGE>
Indenture Estate or the security for the Secured Notes marshalled or otherwise
redeem the property so sold or any part thereof, and hereby expressly waives for
itself and on behalf of each and every Person, except decree or judgment
creditors of MTFC acquiring any interest in or title to the Indenture Estate or
any part thereof subsequent to the date of this Indenture, all benefit and
advantage of any such law or laws, and covenants that it will not invoke or use
any such law or laws, but will suffer and permit the execution of every such
power as though no such law or laws had been made or enacted.
The Indenture Trustee may maintain such a pleading, or, in any manner
whatsoever, claim or take any benefit or advantage of or from any law now or
hereafter in force even if it does not possess any of the Secured Notes or does
not produce any of them in the proceeding. A delay or omission by the Indenture
Trustee or any Holder in exercising any right or remedy accruing upon an
Indenture Event of Default under this Indenture shall not impair the right or
remedy or constitute a waiver of or acquiescence in such Indenture Event of
Default.
(g) The Indenture Trustee may adjourn from time to time any sale to be
made under or by virtue of this Indenture for such sale or for such adjourned
sale or sales, and, except as otherwise provided by any applicable provision of
law, the Indenture Trustee, without further notice or publication, may make such
sale at the time and place to which the same shall be so adjourned.
(h) Any recovery of any judgment by the Indenture Trustee under the
Secured Notes and any levy of any execution under any such judgment upon the
Indenture Estate shall not affect in any manner or to any extent the security
title and security interest conveyed hereby upon the Indenture Estate or any
part thereof, or any conveyances, powers, rights and remedies of the Indenture
Trustee hereunder, but such conveyances, powers, rights and remedies shall
continue unimpaired as before.
(i) Notwithstanding anything contained herein, so long as the relevant
Pass Through Trustee or a registered Holder, the Indenture Trustee is not
authorized or empowered to acquire title to all or any portion of the Indenture
Estate or take any action with respect to all or any portion of the Indenture
Estate so acquired by it if such acquisition or action would cause the relevant
Pass Through Trust to fail to qualify as a "grantor trust" for federal income
tax purposes.
(j) MTFC shall be liable for all reasonable legal fees and other
reasonable costs and expenses incurring by each Loan Participant and the
Indenture Trustee by reason of the occurrence of any Indenture Event of Default
or the exercise of remedies with respect thereto.
SECTION 5.09. Quiet Enjoyment. Notwithstanding any other provision
---------------
of this Indenture or any other Operative Document, including, without
limitation, Sections 5.04 and 5.05, unless an Indenture Event of Default shall
have occurred and be continuing and this Indenture shall have been declared in
default pursuant to Section 5.04 (a), MTFC shall be entitled to the quiet use
and enjoyment of the benefits of the Vessel including the right to uninterrupted
possession, use and operation of the Vessel, and the Indenture Trustee shall not
take or permit any Person claiming by,
EXHC-19
<PAGE>
through or under it to take any action inconsistent with MTFC's rights hereunder
or under any of the other Operative Documents or otherwise, through its own
actions or inactions, interfere or permit any such Person to interfere with such
quiet use or enjoyment or such possession, use or operation or the rights of any
permitted sublessee or assignee to such quiet use or enjoyment or such
possession, use or operation under any sublease or assignment permitted
hereunder (including, without limitation, the rights of the Operator under the
Initial Subcharter).
SECTION 5.12. Certain References and Obligations. Notwithstanding
----------------------------------
any provision to the contrary contained herein, (a) the reference to the
Charterer in Section 5.07 shall after the Relevant Date be deemed to be deleted
and (b) Sections 5.07 and 5.10 shall be deemed amended to provide that any
reference to, or right or obligation of the Owner Trustee contained in such
Sections shall after the Relevant Date be deemed to be a reference to, or right
or obligation of MTFC.
(F) Sections 6.01, 6.02, 6.03, 6.07, 6.08, 6.10 and 6.12 of the
Indenture shall read as follows:
SECTION 6.01. Certain Actions. If the Indenture Trustee shall
---------------
have Actual Knowledge of any Indenture Event of Default or any Indenture Default
or any material fact relating to the Vessel, the Indenture Trustee shall (a)
give prompt telephonic notice (promptly confirmed in writing) to MTFC and (b)
within 90 days after obtaining such Actual Knowledge, mail to each Holder,
notice of all Indenture Events of Default unless, in each case, such Indenture
Event of Default has been remedied before the giving of such notice and the
Indenture Trustee has Actual Knowledge that such Indenture Event of Default has
been so remedied; provided, however, that the failure by the Indenture Trustee
-------- -------
to provide such notice shall not invalidate any actions subsequently taken by
the Indenture Trustee in connection with such Indenture Event of Default.
Except in the case of a default in the payment of the principal or interest on
any Secured Note, the Indenture Trustee shall be protected in withholding the
notice required under clause (b) above if and so long as Responsible Officers of
the Indenture Trustee in good faith determine that withholding such notice is in
the interest of the Holders.
SECTION 6.02. Action Upon Instructions. The Indenture Trustee shall,
------------------------
upon the written instruction at any time and from time to time of a Majority in
Interest of Holders of Notes, give such notice, consent or direction or exercise
such right, remedy or power hereunder or any other agreement constituting part
of the Indenture Estate as shall be specified in such instruction; provided,
--------
however, that nothing set forth in this Section 6.02 shall entitle the Holders
- -------
to cause the Indenture Trustee to give any notice or exercise any right, power
or remedy that is not elsewhere authorized by, or is otherwise restricted or
prohibited by, this Indenture or any other Operative Document. If the Indenture
Trustee shall not have received instructions as above provided within twenty
(20) calendar days after mailing of the notice pursuant to Section 6.01 to the
Holders, the Indenture Trustee may take such action, or refrain from taking such
action, but shall be under no duty to take or refrain from taking any action,
with respect to such Indenture Event of Default or fact as it shall determine to
be advisable and in the best interest of the Holders. If the Indenture Trustee
receives
EXHC-20
<PAGE>
any instructions after the expiration of the aforementioned 20 day period, the
Indenture Trustee shall use its best efforts to conform any action being taken
to comply with those instructions.
SECTION 6.03. Release of Lien of Indenture. (a) Release of
---------------------------- ----------
Indenture Estate. Upon satisfaction of the conditions for termination of this
- ----------------
Indenture set forth in Section 10.01, the Lien of the Indenture on the Indenture
Estate shall terminate and the Indenture Trustee, upon the written request of
MTFC, shall execute and deliver to, or as directed by, MTFC, all appropriate
instruments provided by MTFC (in due form for recording or filing) releasing the
Indenture Estate from the Lien of this Indenture, and the Indenture Trustee
shall pay all moneys or other properties or proceeds held by it under this
Indenture to MTFC. The reasonable cost and expense associated with any action
taken by the Indenture Trustee pursuant to the provisions of this Section
6.03(a) shall be borne by MTFC.
(b) Release of Vessel Upon Event of Loss. Upon the occurrence of an
------------------------------- ----
Event of Loss with respect to the Vessel and receipt by the Indenture Trustee of
all or any amounts due and payable by MTFC as a result of such Event of Loss
pursuant to Section 12.02 of Article XI and the concurrent redemption of Secured
Notes as set forth in Section 3.02, the Indenture Trustee, upon the written
request of MTFC, shall execute and deliver to, or as directed by, MTFC, all
appropriate instruments provided by MTFC (in due form for recording or filing)
releasing the Vessel and all other property solely relating thereto and then
constituting a portion of the Indenture Estate (or if not solely relating
thereto, but such other property can be reasonably partitioned without undue
burden or delay, such other property), as the case may be, from the Lien of this
Indenture. The reasonable cost and expense associated with any action taken by
the Indenture Trustee pursuant to the provisions of this Section 6.03 (b) shall
be borne by MTFC.
(c) Release of Liens Upon Full Payment of Secured Notes. Upon payment
---------------------------------------------------
in full of the principal of and interest on and all other amounts due and
payable under the Secured Notes, and all other amounts due and payable to any
Holder or the Indenture Trustee hereunder or under any other Operative Document,
the Indenture Trustee, upon the written request of MTFC, shall execute and
deliver to, or as directed by, MTFC, all appropriate instruments provided by
MTFC (in due form for recording or filing) releasing the Vessel, and all other
property relating thereto and then constituting a portion of the Indenture
Estate from the Lien of this Indenture. The cost and expense associated with
any action taken by the Indenture Trustee pursuant to the provisions of this
Section 6.03 (c) shall be borne by MTFC.
(d) Disposition, Substitution and Release of Vessel Included in the
---------------------------------------------------------------
Indenture Estate. Any alterations, improvements and modifications in and
- ----------------
additions to the Vessel shall, to the extent required or specified in Section
11.07 of Article XI, become subject to the Lien of this Indenture; provided
--------
that, to the extent permitted by and as provided in Section 11.07 of Article XI,
MTFC shall have the right, at any time and from time to time, without any
release from or consent by the Indenture Trustee, to remove and/or replace any
item of property constituting part of the Vessel, and, to make alterations,
improvements and Modifications in, and additions to, the Vessel. The Indenture
Trustee agrees that, to the extent permitted by and as provided in Section 11.07
of
EXHC-21
<PAGE>
Article XI, the title to any such removed or replaced item of property, shall
vest in MTFC. The Indenture Trustee shall from time to time execute an
appropriate written instrument or instruments to confirm the release of the
security interest of the Indenture Trustee in any replaced item of property, as
provided in this Section 6.03(d) in each case upon receipt by the Indenture
Trustee of a request of MTFC stating that said action was duly taken by MTFC in
conformity with this Section 6.03(d) and that the execution of such written
instrument or instruments is appropriate to evidence such release of a security
interest under this Section 6.03(d). The reasonable cost and expense associated
with any action taken by the Indenture Trustee pursuant to the provisions of
this Section 6.03(d) shall be borne by MTFC.
SECTION 6.07. No Action Except Under Operative Documents or
---------------------------------------------
Instructions. The Indenture Trustee agrees that it will not use, operate, store,
- ------------
lease, control, manage, sell, dispose of or otherwise deal with the Vessel or
any other part of the Indenture Estate except (a) in accordance with the terms
of the Operative Documents or (b) in accordance with the powers granted to, or
the authority conferred upon, the Indenture Trustee pursuant to the express
terms of this Indenture.
SECTION 6.08. [Intentionally Omitted]
SECTION 6.10. [Intentionally Omitted]
SECTION 6.12. Certain References and Obligations. Notwithstanding
----------------------------------
any provision to the contrary contained herein, (a) the reference to the
Charterer in Section 6.09 shall after the Relevant Date be deemed to be deleted,
(b) Sections 6.09 and 6.11 shall be deemed amended to provide that any reference
to, or right or obligation of the Owner Trustee contained in any such Section
shall after the Relevant Date be deemed to be a reference to, or right or
obligation of MTFC and (c) the phrase "the Owner Participant or" in Section 6.11
shall after the Relevant Date be deemed to be deleted.
(G) Sections 7.02, 7.03, 7.04, 7.05, 7.07 and 7.10 of the Indenture
shall read as follows:
SECTION 7.02. Absence of Duties Except as Specified. Except in
-------------------------------------
accordance with written instructions furnished pursuant to Section 6.01 or 6.02,
and except as provided in, and without limiting the generality of, Sections
6.04, 6.05, 6.06, 6.07, 7.01 and 7.03, the Indenture Trustee shall have no duty
(a) to record or file this Indenture, the Ship Mortgage or any other document,
or to maintain any such recording or filing, or to rerecord or refile any such
document, (b) to effect or maintain any such insurance, whether or not MTFC
shall be in default with respect thereto, (c) to discharge any Lien of any kind
against any part of the Indenture Estate, or (d) to inspect the Vessel at any
time, or to ascertain or inquire as to the performance or observance of any of
MTFC's covenants hereunder.
SECTION 7.03. No Representations or Warranties. NEITHER MTFC NOR
--------------------------------
THE INDENTURE TRUSTEE MAKES (a) ANY REPRESENTATION OR WARRANTY, WHETHER
EXHC-22
<PAGE>
WRITTEN, ORAL, EXPRESS OR IMPLIED, AS TO THE VALUE, COMPLIANCE WITH
SPECIFICATIONS, DURABILITY, OPERATION, CONSTRUCTION, PERFORMANCE, DESIGN OR
CONDITION OF THE FACILITY OR ANY COMPONENT THEREOF, THE MERCHANTABILITY THEREOF
OR THE FITNESS THEREOF FOR ANY PARTICULAR PURPOSE, TITLE TO THE VESSEL OR ANY
PART THEREOF, THE QUALITY OF THE MATERIALS OR WORKMANSHIP THEREOF OR CONFORMITY
THEREOF TO SPECIFICATIONS, OR THE PRESENCE OR ABSENCE OF ANY LATENT OR OTHER
DEFECTS, WHETHER OR NOT DISCOVERABLE, OR ANY OTHER REPRESENTATION OR WARRANTY
WHATSOEVER, EXPRESS OR IMPLIED, WITH RESPECT TO THE VESSEL, OR ANY PART THEREOF,
except, in the case of MTFC, as expressly provided in Section 5 of the
Participation Agreement, or (b) any representation or warranty as to the
validity, legality or enforceability of this Indenture, any of the other
Operative Documents or the Secured Notes, or as to the correctness of any
statement contained in any thereof, except as set forth in Section 7.01 of this
Indenture, or Sections 5 and 9 of the Participation Agreement.
SECTION 7.04. No Segregation of Moneys; No Interest; Investments.
--------------------------------------------------
Any moneys paid to or retained by the Indenture Trustee as security hereunder
that would be payable to MTFC upon satisfaction of any applicable conditions
shall be invested and reinvested by the Indenture Trustee from time to time in
Permitted Investments at the written direction of MTFC. The Indenture Trustee
shall have no liability for any loss resulting from any investment required to
be made hereunder other than by reason of its own willful misconduct or
negligence in failing to comply with such instructions. Any net income or gain
realized as a result of any such investment or reinvestment shall be held as
part of the Indenture Estate and shall be applied by the Indenture Trustee at
the same time, on the same conditions and in the same manner as the amounts in
respect of which such income or gain was realized are required to be distributed
in accordance with the provisions hereof. MTFC shall be responsible for any net
loss realized as a result of any such investment or reinvestment and shall
reimburse the Indenture Trustee therefor on demand. Any Permitted Investment
may be sold or otherwise reduced to cash (without regard to maturity) by the
Indenture Trustee whenever necessary to make any application as required by the
terms of this Indenture or of any applicable Operative Document.
SECTION 7.05. Reliance; Agents; Advice of Counsel. The Indenture
-----------------------------------
Trustee (in its individual or trust capacity) shall not incur any liability to
anyone in acting upon any signature, instrument, notice, resolution, request,
consent, order, certificate, report, opinion, bond or other document or paper
reasonably believed by it to be genuine and believed by it to be signed by the
proper party or parties. The Indenture Trustee may accept a copy of a
resolution of the Board of Directors or other governing body of any party to the
Participation Agreement or other Operative Document, certified by the Secretary
or any Assistant Secretary thereof as duly adopted and in full force and effect,
as conclusive evidence that such resolution has been duly adopted and that the
same is in full force and effect. As to any fact or matter relating to MTFC the
manner of ascertainment of which is not specifically described herein, the
Indenture Trustee may for all purposes hereof rely on an Officer's Certificate
of MTFC as to such fact or matter, and such Officer's Certificate shall
constitute full protection to the Indenture Trustee (in its individual or trust
capacity), for any action
EXHC-23
<PAGE>
taken or omitted to be taken by it in good faith in reliance thereon. In the
administration of the trusts hereunder, the Indenture Trustee may execute any of
the trusts or powers hereof and perform its powers and duties hereunder directly
or through agents or attorneys and at the expense of the Indenture Estate may
consult with counsel, accountants and other skilled Persons to be selected and
retained by it, and the Indenture Trustee shall not be liable for anything done,
suffered or omitted in good faith by, it in accordance with the advice or
opinion of any such counsel, accountant or other skilled Person acting within
such Person' s area of competence (so long as the Indenture Trustee shall have
exercised due care in selecting such Persons, provided that, so long as no
-------------
Indenture Event of Default shall have occurred and be continuing, no such
Persons (other than counsel to the Indenture Trustee or its accountants) shall
be retained by the Indenture Trustee without the consent of MTFC, such consent
not to be unreasonably withheld.
SECTION 7.10. Certain References and Obligations. Notwithstanding
----------------------------------
any provision to the contrary contained herein, Sections 7.06 and 7.09 shall be
deemed amended to provide that any reference to, or right or obligation of the
Owner Trustee contained in such Section shall after the Relevant Date be deemed
to be a reference to, or right or an obligation of MTFC.
(H) Sections 8.01 and 8.04 of the Indenture shall read as follows:
SECTION 8.01. [Intentionally Omitted]
SECTION 8.04. Certain References and Obligations. Notwithstanding
----------------------------------
any provision to the contrary contained herein, (a) Sections 8.02 and 8.03 shall
be deemed amended to provide that any reference to, or right or obligation of
the Owner Trustee contained in any such Section shall after the Relevant Date be
deemed to be a reference to, or right or obligation of MTFC and (b) Section 8.02
shall be deemed amended to provide that any reference to the Charterer or the
Owner Participant contained in such Section shall be deemed to be deleted.
(I) (I) Sections 9.02(a), 9.02(b) and 9.02(c) of the Indenture shall
read as follows:
(a) [Intentionally Omitted]
(b) Except as provided in Section 9.01 or 9.02(c) or 9.02(d), at any
time and from time to time, with the written consent of a Majority in Interest
of Holders of Notes and, whether or not an Indenture Event of Default exists,
upon the written consent of MTFC, the Indenture Trustee (x) shall execute an
amendment or supplement to this Indenture for the purpose of adding provisions
to, or changing in any manner or eliminating any of the provisions of, this
Indenture or (y) shall execute an amendment or supplement to, or give a consent,
waiver, authorization or approval, for the purposes of adding any provisions to
or changing in any manner or eliminating any of the provisions of, the
Participation Agreement; provided, however, that no such amendment or
-------- -------
supplement to this Indenture, or consent, waiver, authorization, approval,
amendment or supplement to the Participation Agreement shall, without the
consent of each Holder of a Secured Note then Outstanding:
EXHC-24
<PAGE>
(i) change the stated maturity of the principal of, or any
installment of interest on, or the amount of any payment upon any mandatory
or optional repayment, purchase or redemption of any Secured Note, or
change the principal amount thereof or any other amount payable in respect
thereof or reduce the Make-Whole Amount, if any, or interest thereon, or
change the place of payment where, or the coin or currency in which, any
Secured Note or the interest thereon is payable;
(ii) permit the creation of any Lien on the Indenture Estate not
otherwise permitted hereunder or deprive any Holder of the benefit of the
Lien of this Indenture upon the Indenture Estate, or any portion thereof,
for the security of its Secured Notes;
(iii) change the percentage of the aggregate principal amount of
Secured Notes required to take or approve any action hereunder or any other
Operative Document or to waive compliance therewith;
(iv) modify the definitions of "Indenture Default", "Indenture
Event of Default" or "Majority in Interest of Holders of Notes";
(v) modify the order of priorities in which distributions are to
be made under Article IV;
(vi) [Intentionally Omitted]
(vii) modify, amend or supplement any of the provisions of this
Section 9.02;
(viii) [Intentionally Omitted]
(ix) adversely affect any indemnities in favor of any Holder as
provided pursuant to the terms of any Operative Document, except as may be
consented to by each Person adversely affected thereby.
(c) Notwithstanding anything to the contrary contained in Section
9.02(b) (except as provided in the proviso to Section 9.02(b)), without the
necessity of the consent of any of the Holders, the Indenture Trustee shall, at
the request of MTFC:
(i) [Intentionally Omitted]
(ii) [Intentionally Omitted]
(iii) modify, amend or supplement the Participation Agreement, or
give any consent, waiver, authorization or approval with respect thereto,
except that without compliance with Section 9.02(b), the Indenture Trustee
shall not modify, amend or supplement, or give any consent, waiver,
authorization or approval for the purpose of adding
EXHC-25
<PAGE>
any provisions to or changing in any manner or eliminating any of the
provisions thereof or of modifying in any manner the rights of the
respective parties thereunder, with respect to the following provisions of
the Participation Agreement as originally executed: Section 5 (insofar as
such Section 5 relates to the Indenture Trustee, the Indenture Estate and
the Holders), Section 10 (other than an amendment to add to the covenants
of MTFC and other than Section 10.10), Section 11.4, Section 12 (insofar as
such Section 12 relates to the Indenture Trustee, the Indenture Estate and
the Holders) and, to the extent the Loan Participant would be adversely
affected thereby, Section 15 and any definitions of terms used in the
Participation Agreement to the extent that any modification of such
definition would result in a modification of the Participation Agreement
not permitted pursuant to this Section 9.02(c);
(iv) [Intentionally Omitted]
(v) modify, amend or supplement any of said agreements in order to
cure any ambiguity, to correct or supplement any provisions thereof which
may be defective or inconsistent with any other provision thereof or of any
provision of this Indenture, or to make any other provision with respect to
matters or questions arising thereunder or under this Indenture which shall
not be inconsistent with the provisions of this Indenture, provided the
making of any such other provision shall not adversely affect the interests
of the Holders unless such provision corrects a mistake.
(II) Sections 9.07 and 9.08 of the Indenture shall read as follows:
SECTION 9.07. [Intentionally Omitted]
SECTION 9.08. Certain References and Obligations. Notwithstanding
----------------------------------
any provision to the contrary contained herein:
(a) the phrase "the assumption by the Charterer of the obligations
of the Owner Trustee hereunder in accordance with the terms and conditions
applicable thereto specified in Section 3.04, including, without limitation, in
Sections 9.01(e) and 9.02(d), and the phrases "the succession of a new Owner
Trustee in accordance with the Trust Agreement or" and "thereunder or" in each
of Sections 9.01(f) and 9.02(d) (iv) shall after the Relevant Date be deemed to
be deleted;
(b) the reference to the Charterer in each of Sections 9.01(c),
9.02(d)(iii) and 9.06 shall after the Relevant Date be deemed to be deleted; and
Sections 9.01, 9.03, 9.05 and 9.06 shall be deemed amended to provide that any
reference to, or right or obligation of the Owner Trustee contained in such
Sections shall after the Relevant Date be deemed to be a reference to, or right
or obligation of MTFC; and
(c) all provisions requiring delivery of documents to the Owner
Participant in Section 9.06 shall be deemed to be deleted.
EXHC-26
<PAGE>
(J) Sections 10.01, 10.04, 10.05, 10.08, 10.10, and 10. 14 of the
Indenture shall read as follows:
SECTION 10.01. Termination of Indenture. This Indenture and the
------------------------
trusts created hereby shall terminate, and this Indenture shall be of no further
force or effect, when:
(a) the principal of and interest on and all other amounts due and
payable under all Secured Notes and all other amounts due and payable to
any Holder or the Indenture Trustee hereunder or under any other Operative
Document shall have been paid in full; or
(b) the Indenture Trustee shall have sold or made other final
disposition of all property and all moneys or other property or proceeds
constituting part of the Indenture Estate in accordance with the terms
hereof; or
(c) all Secured Notes not theretofore delivered to the Indenture
Trustee for cancellation have become due and payable (whether upon stated
maturity, as a result of redemption or upon acceleration), or will become
due and payable (including as a result of redemption in respect of which
irrevocable notice has been given to the Indenture Trustee on or prior to
the date of such deposit) at maturity within one year, and there has been
deposited with the Indenture Trustee in trust for the purpose of paying and
discharging the entire indebtedness on the Secured Notes not theretofore
cancelled by the Indenture Trustee or delivered to the Indenture Trustee
for cancellation, an amount in cash sufficient without reinvestment thereof
to discharge such indebtedness, including the principal of and interest on
the Secured Notes to the date of such deposit (in the case of Secured Notes
which have become due and payable), or to the maturity thereof, as the case
may be; or
(d) (i) MTFC has deposited or caused to be deposited irrevocably
(except as provided in Section 7.09(b)) with the Indenture Trustee as trust
funds in trust, specifically pledged as security for, and dedicated solely
to, the benefit of the Loan Participants, (A) money in an amount, or (B)
United States Government Obligations which, through the payment of interest
and principal in respect thereof in accordance with their terms, will
provide (not later than one Business Day before the due date or any payment
referred to below in this clause) money in an amount, or (C) a combination
of money and United States Government Obligations referred to in the
foregoing clause (B), sufficient, in the opinion of a nationally recognized
firm of independent certified public accountants expressed in a written
certification thereof delivered to the Indenture Trustee, to pay and
discharge each installment of principal of and interest on the Outstanding
Secured Notes on the dates such payments of principal or interest are due
(including as a result of redemption in respect of which irrevocable notice
has been given to the Indenture Trustee on or prior to the date of such
deposit), and no Indenture Event of Default under Section 5.02(g) shall
have occurred and be continuing on the date of such deposit or at any time
during the period ending on the 91st day after such date; provided,
--------
however, that upon the making of the deposit referred to above in clause
(A), the right of MTFC to cause the redemption of Secured Notes (except
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<PAGE>
a redemption in respect of which irrevocable notice has theretofore been
given) shall terminate; and (ii) MTFC has delivered to the Indenture
Trustee an Officer's Certificate of MTFC to the effect that (A) such
deposit will not constitute an Indenture Event of Default under this
Indenture or a default or event of default under any other agreement or
instrument to which MTFC is a party or by which it is bound and (B) all
conditions precedent relating to the termination of this Indenture under
this Section 10.01(d) have been complied with; and (iii) MTFC has delivered
to the Indenture Trustee an Officer's Certificate of MTFC and an Opinion of
Counsel to the effect that there has been published by the Internal Revenue
Service a ruling to the effect that Loan Participants will not recognize
income, gain or loss for Federal income tax purposes as a result of the
exercise by MTFC of its option under this Section 10.01(d) and will be
subject to Federal income tax in respect of the interest received from such
deposit on the same amount and in the same manner and at the same times as
would have been the case if such option had not been exercised; and (iv)
all other amounts then due and payable hereunder to any Holder or the
Indenture Trustee have been paid;
provided, however, that the obligations of the Indenture Trustee contained in
- -------- -------
Sections 2.01 through 2.11, 6.11 and 7.09 shall survive. Except as otherwise
provided in the preceding sentence, this Indenture and the trusts created hereby
shall continue in full force and effect in accordance with the terms hereof.
SECTION 10.03. [Intentionally Omitted]
SECTION 10.04. (a) Aggregate Unpaid Principal Amount of Secured Notes
--------------------------------------------------
Outstanding. As to the aggregate unpaid principal amount of Secured Notes
- -----------
Outstanding as of any date, MTFC may rely on an Officer's Certificate of the
Indenture Trustee.
(b) No director, officer, employee or stockholder (other than the
Guarantor as stockholder of MTFC), as such, of MTFC or the Guarantor, as the
case may be, shall have any liability for any obligations of MTFC or the
Guarantor, as the case may be, under this Indenture or for any claim based on,
in respect of or by reason of such obligations or their creation. Each Loan
Participant by accepting a Secured Note waives and releases all such liability.
The waiver and release are part of the consideration for the issue of the
Secured Notes.
SECTION 10.05. Notices. All communications, notices and consents
-------
provided for in this Indenture shall be in writing and shall be given in person
or by courier or by means of telex, telecopy or other wire transmission (with
request for assurance of receipt in a manner typical with respect to
communications of that type), or mailed by first class mail, addressed, in the
case of MTFC, to Mobil Transport Finance Company Inc., 3225 Gallows Road,
Fairfax, Virginia 22037- 0001 Attention: Treasurer; telecopier (703) 846-1469,
in the case of the Indenture Trustee, to State Street Bank and Trust Company,
Two International Place, 4th Floor, Boston, Massachusetts 02110, Attention:
Corporate Trust Department (telephone: (617) 664-5340; telecopier: (617) 664-
5371); and, in the case of all other parties, as set forth in Schedule 1 to the
Participation Agreement or at such other address as any such Person may from
time to time designate by notice duly given in
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<PAGE>
accordance with the provisions of this Section 10.05 to the other parties hereto
and shall be deemed given when received by (or when proffered to, if receipt is
not accepted) the party to whom it is addressed.
SECTION 10.08. Successors and Assigns. All covenants and agreements
----------------------
contained herein shall be binding upon each of the parties hereto and their
respective successors and permitted assigns, and inure to the benefit of each of
the parties hereto and their respective successors and permitted assigns, all as
herein provided. Any request, notice, direction, consent, waiver or other
instrument or action by any Holder shall bind the successors and assigns of such
Holder. Each Holder by its acceptance of a Secured Note agrees to be bound by
this Indenture and all provisions of the Operative Documents applicable to it.
SECTION 10.10. Normal Commercial Relations. Notwithstanding anything
---------------------------
contained in this Indenture to the contrary, any Loan Participant, the Indenture
Trustee or bank or other affiliate of any such Person may conduct any banking or
other financial transactions and have banking or other commercial relationships
with MTFC fully to the same extent as if this Indenture were not in effect.
SECTION 10.14. Benefits of Indenture. Nothing in this Indenture,
---------------------
whether express or implied, shall be construed to give to any Person other than
the parties hereto and the Holders any legal or equitable right, remedy or claim
under or in respect of this Indenture or the Secured Notes, and this Indenture
shall be held for the sole and exclusive benefit of the parties hereto and the
Holders.
(K) The Indenture shall include the following Article XI:
ARTICLE XI
CERTAIN ADDITIONAL PROVISIONS
This Article XI consists of Sections 10 through 14 and 20. Sections 1
through 9 and 15 through 19 are intentionally omitted.
SECTION 10. LIENS.
-----
MTFC will not, directly or indirectly, create, incur, assume or suffer
to exist any Liens on or with respect to all or any part of the Vessel or the
Indenture Estate title thereto or any interest therein, other than Permitted
Liens, and MTFC promptly, at its own expense, will take such actions as may be
necessary duly to discharge any such Lien not excepted above.
SECTION 11. OPERATION AND MAINTENANCE;
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<PAGE>
INSPECTION; REPLACEMENTS AND
MODIFICATIONS.
-------------
11.01 Vessel Maintenance, Compliance with Governmental Rules. MTFC
------------------------------------------------------
shall throughout the Charter Term, maintain the Vessel, or cause it to be
maintained, at its own cost and expense, in accordance with the established
maintenance and repair programs of MTFC or any Affiliate thereof for similar
vessels owned or chartered thereby so as to keep the Vessel in (i) good working
order and condition, ordinary wear and tear excepted, and (ii) in compliance, in
all material respects, with applicable Governmental Rules or ABS requirements;
provided, however, that MTFC will not be required to comply with any
- -------- -------
Governmental Rule or ABS requirement:
(A) whose application or validity is being contested diligently and
in good faith by appropriate proceedings;
(B) compliance with which shall have been excused or exempted by a
nonconforming use permit, waiver, extension or forbearance exempting it
from such Governmental Rule or ABS requirement but only to the extent that
MTFC's noncompliance is in accordance with such permit, waiver, extension
or forbearance; or
(C) if good faith efforts and appropriate steps are being taken to
comply;
so long as, if in the case of clauses (A) and (B) above, neither such
failure of compliance nor such contest shall result in the material risk of
(I) sale, forfeiture or loss of the Vessel or title thereto;
(II) any interference with the payment of Base Charter Hire
when due; or
(III) the imposition of any criminal liability on the Owner
Participant or the Indenture Trustee.
11.02 Indenture Trustee's Inspection. Subject to any applicable laws
------------------------------
and regulations, the Indenture Trustee shall have the right, at its risk and
expense (including, without limitation, as to personal injury and death) and
under conditions reasonably acceptable to MTFC (including, without limitation,
with respect to time and place of inspection, the execution of waivers of
liability reasonably acceptable to MTFC and the provision of proof of insurance
reasonably acceptable to MTFC) and subject to confidentiality provisions, to
visit and inspect the Vessel, and MTFC will use reasonable efforts to make
available its books and records related thereto, all upon reasonable notice and
at such reasonable times during normal business hours and as may be reasonably
requested; provided, however, that unless there is an existing Indenture Event
-------- -------
of Default, the Indenture Trustee may not make more than one (1) inspection in
any calendar year without MTFC's prior written consent; provided, further, that
-------- -------
such inspection rights must be exercised subject to the supervision of MTFC or
its designee. Unless a Indenture Event of Default shall have occurred and be
EXHC-30
<PAGE>
continuing, MTFC shall not be required to disclose any confidential information
or allow anyone to inspect confidential materials. For the purposes of this
Section 11.02, the Vessel's logs shall not be deemed to be confidential
materials.
11.03 Required Modifications. MTFC shall make or cause to be made at
----------------------
its sole cost and expense all Severable and Nonseverable Modifications to the
Vessel as may be required from time to time to meet the requirements of clause
(ii) of Section 11.01 of this Article XI (all such Modifications, "Required
Modifications"). MTFC shall complete (or cause to be completed) all such
Required Modifications in a good and workmanlike manner, with reasonable
dispatch and (but only to the extent practicable) in a manner which does not
decrease the Fair Market Sales Value and utility of the Vessel or the remaining
useful life or residual value of the Vessel or cause the Vessel to become
"limited use property" within the meaning of Revenue Procedure 76-30, and any
amendment or modification thereto.
11.04 Optional Modifications. In addition to any Required
----------------------
Modifications, MTFC shall have the right to make (or cause or allow to be made)
such alterations, modifications, additions and improvements to the Vessel as
MTFC, in its sole discretion, deems desirable in the proper conduct of its
business (all such Modifications, "Optional Modifications"); provided that such
--------
Optional Modifications (i) are done in a good and workmanlike manner, (ii) shall
not reduce the Fair Market Sales Value and utility, or the remaining useful life
or residual value (except, in each case, to a de minimus extent) of the Vessel,
-- -------
and (iii) shall not cause the Vessel to become limited use property within the
meaning of Revenue Procedure 76-30.
11.05. Title to Modifications. (a) Title to all Severable
----------------------
Modifications to the Vessel not required by any Governmental Rule or
Governmental Action shall vest in MTFC or any Person designated by MTFC, free
and clear of the Lien of this Indenture. MTFC may remove (or allow to be
removed) any such Severable Modification prior to or on the latest Maturity
Date.
(b) All of (i) Severable Modifications to the Vessel required by any
Governmental Rule or Governmental Action and (ii) Nonseverable Modifications to
the Vessel shall without further act be subject to the Lien of this Indenture.
11.06. Payment for Modifications and Replacement Components. (a)
----------------------------------------------------
MTFC shall be permitted at any time to finance its share of the cost of any
Severable Modification to the Vessel not required by any Governmental Rule or
Governmental Action, directly or indirectly, including, without limitation, on a
third party ownership basis.
(b) MTFC shall be permitted at any time to finance its share of the
cost of any Modification whether or not any such Modification is required by any
Governmental Rule or Governmental Action to be made to the Vessel through the
issuance of Additional Notes in accordance with Section 2.08 or any alternative
means of financing; provided, however, that such alternative financing does not
-------- -------
and will not result in any Lien (other than Permitted Liens) on or with respect
to the Vessel as modified by such Modification.
EXHC-31
<PAGE>
11.07 Removal of Property. (a) In the ordinary course of
-------------------
maintenance, service, repair or testing, any item of property constituting a
part of the Vessel may be removed and replaced with an item of property which is
free and clear of all Liens, except Permitted Liens, and in as good operating
condition as, and with a value and utility, and remaining useful life and
residual value at least equal to, the item of property replaced, assuming such
item of property replaced was in at least the operating condition and repair
required to be maintained hereunder. Immediately upon any item of property
becoming incorporated in the Vessel, without further act, (A) title to such item
of property thereupon shall vest in the Indenture Trustee and be subject to the
Lien of the Indenture, (B) such item of property shall become subject to the
Charter and be deemed a part of the Vessel for all purposes hereof to the same
extent as the item of property it replaced and (C) title to such removed item of
property shall vest in MTFC or such Person as shall be designated by MTFC, free
and clear of all rights of the Indenture Trustee and any Person claiming through
the Indenture Trustee, and shall no longer be subject to the Charter or
considered to be a part of the Vessel.
(b) If, at any time during the Charter Term, MTFC shall conclude that
any item of property constituting a part of the Vessel is obsolete, redundant or
unnecessary and can be removed without diminution of the Fair Market Sales
Value, utility, reduction of the remaining useful life, or residual value of the
Vessel and without causing the Vessel to become "limited use property" within
the meaning of Revenue Procedure 76-30, MTFC may remove (or allow to be removed)
such property and upon such removal, without further act, title to such property
shall vest in MTFC in such Person as shall be designated by MTFC, free of the
Lien of this Indenture. In addition, notwithstanding anything contained in the
Charter to the contrary but subject to Section 4 thereof, if an event occurs
with respect to any item of property constituting part of the Vessel (or any
item of property replaced) which would constitute an Event of Loss if such event
occurred with respect to the Vessel, MTFC shall have no obligation to redeem or
pay any amounts with respect to a redemption (including without limitation,
principal, Make-Whole Amount, if any, or interest) of any Secured Note in
respect of, or to otherwise replace, repair or rebuild, such item of property,
so long as the absence or condition of such item of property is not material to
the overall operation of the Vessel.
SECTION 12. EVENT OF LOSS.
-------------
12.01. Notice of Event of Loss. If there shall occur an Event of
-----------------------
Loss with respect to the Vessel during the Charter Term, MTFC shall promptly,
upon the obtaining of Actual Knowledge thereof, notify the Owner Participant and
the Indenture Trustee of the occurrence thereof.
12.02. Payment Upon Event of Loss, Etc. (a) If an Event of Loss
-------------------------------
with respect to the Vessel shall occur, unless MTFC shall have elected to
rebuild the Vessel pursuant to Section 12.02(b), MTFC shall pay to the Indenture
Trustee as compensation for such Event of Loss, on the date which is the latest
monthly anniversary of the Base Charter Term Commencement Date not later than
180 days after the date of such Event of Loss, an amount in cash which is
sufficient to pay the
EXHC-32
<PAGE>
entire unpaid principal amount of the Secured Notes Outstanding pursuant to
Section 3.02 as a result of such Event of Loss.
(b) Upon the occurrence of an Event of Loss, except an Event of Loss
of the type described in clause (vii) of the definition thereof, MTFC shall have
the option, in lieu of making payments pursuant to Section 12.02(a), within 180
days of the Event of Loss, of substituting a vessel of at least equal Fair
Market Sales Value and utility and with a remaining useful life and residual
value as the Vessel had immediately prior to such Event of Loss (assuming the
Vessel has been maintained in accordance with the terms of the Charter), and
which is not "limited use property" within the meaning of Revenue Procedure 76-
30 and any amendment or modification thereof. In the event that MTFC shall have
elected the option set forth in this Section 12.02(b), no amounts shall be
payable under Section 11(b)(i), and the Vessel shall remain subject to the Lien
of this Indenture. Prior to or at the time that MTFC determines to substitute a
vessel in accordance with this Section 12.02(b), MTFC will (A) enter into such
amendments to the Operative Documents as may be reasonably necessary to effect
such substitution, (B) furnish the Indenture Trustee with an appraisal as to the
Fair Market Sales Value, utility, residual value and remaining useful life of
such vessel and (C) so long as the Indenture shall not have been satisfied and
discharged, cause a financing statement or statements with respect to such
substitute vessel or other requisite documents or instruments to be filed in
such place or places as may be necessary in order to perfect the security
interest created by or pursuant to the Indenture or the Ship Mortgage.
12.03. Application of Other Payments upon the Occurrence of an Event
-------------------------------------------------------------
of Loss. Any amounts of condemnation or requisition proceeds received at any
- -------
time by the Indenture Trustee, MTFC or the Operator as a result of the
occurrence of an Event of Loss shall be paid over to or retained, as the case
may be, by MTFC.
12.04. Application of Payments Not Relating to an Event of Loss.
--------------------------------------------------------
Payments (except for payments under insurance policies described in Section 13
of this Article XI) received at any time by the Indenture Trustee, MTFC or the
Operator from any Governmental Authority or other Person with respect to any
destruction, damage, loss, condemnation, confiscation, theft or seizure of or
requisition of title to or use of the Vessel or any part thereof not
constituting an Event of Loss shall be paid over to MTFC or as it may direct.
12.05. Other Dispositions. Notwithstanding the foregoing provisions
------------------
of this Section 12, so long as any Indenture Event of Default described in
Section 5.02(a) [and (b)] shall have occurred and be continuing, any amount
(except for payments under insurance policies described in Section 13) that
otherwise would be payable to or for the account of, or that otherwise would be
retained by, MTFC pursuant to this Section 12 shall be paid to the Indenture
Trustee as security for the obligations of MTFC under this Indenture and, at
such time thereafter as no Indenture Event of Default described in Section
5.02(a) [and (b)] shall be continuing, such amount shall be paid promptly to
MTFC or as it may direct; provided that if any such amount has been so held as
--------
security for more than ninety (90) days after an Indenture Event of Default
described in Section 5.02(a) [and (b)] shall have occurred and during which
period, (i) the Indenture Trustee shall not have been
EXHC-33
<PAGE>
limited by operation of law or otherwise from exercising remedies hereunder or
(ii) the Indenture Trustee shall not have commenced to exercise any remedy
available to it under Section 5.04, then such amount shall be paid to MTFC or as
it may direct.
SECTION 13. INSURANCE.
---------
13.01. Coverage. (i) MTFC, at its own cost and expense, shall carry
--------
and maintain or cause to be carried and maintained at all times during the
Charter Term protection and indemnity insurance (including pollution liability
insurance), to the extent such insurance is commercially available, on or with
respect to the Vessel and the operation thereof in such amounts, and with such
deductibles or self-insurance amounts, and in such forms as is consistent with
MTFC's practices for other similar vessels owned or chartered by it or its
Affiliates. The provisions of Rule 16 (Fleet Entry) of the Britannia Steam Ship
Insurance Association Limited (the "Association") will apply (or similar
requirements of any other insurer providing protection and indemnity insurance
with respect to the Vessel may apply) to the entry of the Vessel with the
Association save that the Association may not require the Owner Participant or
the Shipowner to pay outstanding calls on other ships in the fleet;
(ii) Any liability insurance carried in accordance with Section 13.01
shall provide in the policy or by special endorsement that :
(A) the Shipowner, the Owner Participant, the Indenture Trustee
and the Pass Through Trustee are included as additional insureds in
respect of all public liability policies, if any, carried in
accordance with Section 13.01(i);
(B) such insurance shall be primary without right of contribution
of any other insurance carried by or on behalf of the Shipowner, the
Indenture Trustee, the Owner Participant and the Loan Participant;
13.02 Adjustment of Losses. Losses, if any, with respect to the
--------------------
Vessel under all insurances or entires in protection and indemnity association,
whether or not required to be carried under Section 10.01, shall be adjusted
with the insurance companies, including the filing of appropriate proceedings,
by MTFC.
13.03. Application of Insurance Proceeds. All proceeds of insurance
---------------------------------
maintained pursuant to Section 13.01(i) on account of any damage to or
destruction of the Vessel or any part thereof shall be paid over to MTFC or as
it may direct.
13.04. Additional Insurance. Nothing in this Section 13 shall
--------------------
prohibit MTFC, the Owner Participant, the Indenture Trustee, the Pass Through
Trustee or the Operator from acquiring or maintaining, at its own expense,
additional insurance in such amounts with respect to such risks as each such
Person, as the case may be, shall determine; provided that no such insurance
carried by the Indenture Trustee, the Pass Through Trustee or the Owner
Participant shall prevent MTFC or the
EXHC-34
<PAGE>
Operator or any subcharterer from, or increase the cost to MTFC or the Operator
or any subcharter of, obtaining insurance respecting the Vessel as MTFC or the
Operator or any subcharterer wishes. The proceeds of any such additional
insurance will be for the account of the party maintaining such additional
insurance.
SECTION 14. RIGHTS TO SUBCHARTER.
--------------------
14.01. [Intentionally Omitted]
14.02. MTFC may, without the consent of the Indenture Trustee, at any
time and from time to time, subcharter the Vessel to another Person (including
to Operator pursuant to the Initial Subcharter); provided that (i) such
--------
subcharter shall be subject and subordinate to this Indenture (and such
subcharter shall contain a provision providing that any subcharter permitted
thereunder shall be so subject and subordinate), (ii) MTFC shall remain
primarily liable under this Indenture, and all terms and conditions hereof and
of the other Operative Documents shall be complied with as though no such
subcharter was in existence and (iii) the Guaranty shall remain in full force
and effect. Any subcharterer under a subcharter permitted hereunder may sub-
subcharter the Vessel to another Person under a sub-subcharter that otherwise
complies with the provisions hereunder applicable to a subcharter hereunder.
MTFC shall give prompt written notice to the Indenture Trustee of any subcharter
or sub-subcharter of the Vessel.
18.01. [Intentionally Omitted]
18.02 Performance by Affiliates, Etc.; Rights. Any payment by the
---------------------------------------
Operator, Guarantor, any Affiliate of MTFC, or any subcharterer of any amount
payable by MTFC under any Operative Document shall constitute, as between the
Indenture Trustee and MTFC, payment of such amount by MTFC for all purposes of
this Indenture (including, without limitation, Section 5.02), and any
performance by the Operator, Guarantor, any Affiliate of the MTFC, or any
subcharterer of any obligation required to be performed by MTFC under any
Operative Document shall constitute, as between MTFC and the Indenture Trustee,
performance by MTFC of such obligation for all purposes of this Indenture.
Except as otherwise expressly provided herein, any right granted to MTFC in this
Indenture shall grant MTFC the right to exercise such right or permit such right
to be exercised by any assignee, subcharterer or transferee or MTFC permitted
hereunder or the Operator. The inclusion of specific references to obligations
or rights of any such assignee, subcharterer or transferee or the Operator in
certain provisions of this Indenture shall not in any way prevent or diminish
the application of the provisions of the sentences immediately preceding with
respect to obligations or rights in respect of which specific reference to any
such assignee, subcharterer or transferee or the Operator has not been made in
this Indenture.
SECTION 20. General. (a) As provided in the Relevant Date
-------
Supplement, effective upon the execution and delivery by MTFC and the Indenture
Trustee of the Relevant Date Supplement on the Relevant Date, MTFC assumed on a
full recourse basis all of the obligations of the Owner Trustee under this
Indenture and the Secured Notes and shall be entitled to all the rights
EXHC-35
<PAGE>
and benefits of the Owner Trustee hereunder and thereunder, in each case to the
extent provided for in Exhibit C hereto, and the Owner Trustee is, effective
upon such execution and delivery on the Relevant Date, released from all
obligations and rights under this Indenture and the Secured Notes; provided,
--------
however, that any obligations or liabilities of the Owner Trustee in its
- -------
individual capacity incurred on or prior to the Relevant Date or arising out of
or based upon events occurring on or prior to the Relevant Date, shall remain
the responsibility of the Owner Trustee.
(b) As provided in Section 2 of the Relevant Date Supplement, MTFC
confirmed and ratified the security interest which the Owner Trustee granted to
the Indenture Trustee pursuant to the Granting Clause of this Indenture in all
of the Owner Trustee's right, title and interest in and to the Indenture Estate
and MTFC explicitly agreed that MTFC is acquiring the Vessel identified in such
Section 2 subject to such security interest, which shall remain in full force
and effect until the Lien of this Indenture on the Vessel is discharged in
accordance with the terms hereof, and the Indenture Trustee acknowledges that
the Charter and the obligations of MTFC thereunder as the Charterer have been
terminated, except as specifically provided for therein. Each of MTFC and the
Indenture Trustee hereby agree that: MTFC is acquiring the Vessel identified in
such Section 2 subject to such security interest, which shall remain in full
force and effect until the Lien of this Indenture on the Vessel is discharged in
accordance with the terms hereof, and the Indenture Trustee acknowledges that
the Charter and the obligations of MTFC thereunder as the Charterer have been
terminated, except as specifically provided for therein. Each of MTFC and the
Indenture Trustee hereby agrees that:
(i) the comma at the end of clause (i) of the paragraph preceding the
Granting Clause of this Indenture shall after the Relevant Date be deemed
to be "and"; the reference to the Owner Trustee in clause (ii) of the
paragraph preceding the Granting Clause of this Indenture shall after the
Relevant Date be deemed to be a reference to MTFC; the phrase "(other than
the Tax Indemnity Agreement)" shall after the Relevant Date be deleted, the
phrase ", and (iii) the performance and observance by the Owner Participant
of its covenants and agreements in the Operative Documents (other than the
Tax Indemnity Agreement)" in the paragraph preceding the Granting Clause of
this Indenture shall after the Relevant Date be deemed to be deleted; and
the phrase "(the obligations described in the above clauses (i), (ii) and
(iii) collectively, the "Indenture Indebtedness")" in the paragraph
----------------------
preceding the Granting Clause of this Indenture shall after the Relevant
Date be deemed to be "(the obligations described in the above clauses (i)
and (ii) collectively, the "Indenture Indebtedness")";
----------------------
(ii) the paragraph preceding clause (a) of the Granting Clause of this
Indenture shall be deemed amended to provide that any reference to the
Owner Trustee contained in such paragraph shall after the Relevant Date be
deemed to be a reference to MTFC;
(iii) clauses (a) through (j) of the Granting Clause of this
Indenture and the two paragraphs following clause (j) of such Granting
Clause shall be deemed amended to read as follows after the Relevant Date:
EXHC-36
<PAGE>
(a) the Vessel, which is both (x) described in Schedule 1 or as
may be described in any Indenture Supplement or any other supplement to
this Indenture and (y) as to which MTFC agrees, pursuant to Section 2 of
the Relevant Date Supplement, is subject to the security interest and Lien
of the Indenture, including, without limitation, any Component or
Replacement Component thereof or Modification thereto which, pursuant to
the terms of Article XI of this Indenture, are at any time subject to the
Lien of this Indenture; and
(b) all rights or property which may be received upon the
exercise of any remedy or option contained in any of the above-described
instruments and all proceeds in whatever form of all or any part of any of
the foregoing;
(c) [Intentionally Omitted]
(d) [Intentionally Omitted]
(e) [Intentionally Omitted]
(f) [Intentionally Omitted]
(g) [Intentionally Omitted]
(h) [Intentionally Omitted]
SUBJECT to the rights of MTFC hereunder.
Section 21. Statement of Intention. The Indenture Trustee, MTFC and
----------------------
the Owner Trustee acknowledge that the intent of the provisions contained in
this Article XI is, following the termination of the Charter pursuant to Section
6.1 thereof or 16.2(d) of the Participation Agreement, to provide for the
Indenture Trustee to have rights similar to those enjoyed by the Owner Trustee
under the Charter and for MTFC to have rights similar to those enjoyed by it
under the Charter. The Indenture Trustee and MTFC hereby agree that this
Article XI shall be construed and interpreted in a manner consistent with the
intent expressed in this Section 21.
(L) Sections 10.6 and 14 of the Participation Agreement shall read as
follows:
10.6. Further Assurances. MTFC, at its own cost and expense, will
------------------
cause to be promptly and duly taken, executed, acknowledged and delivered all
such further acts, documents and assurances as the Owner Trustee, the Owner
Participant, the Pass Through Trustee and the Indenture Trustee reasonably may
request from time to time in order to carry out more effectively the intent and
purposes of this Agreement, the Pass Through Trust Agreement and the other
Operative Documents and the transactions contemplated hereby and thereby. MTFC,
at its own cost and expense, will cause the Indenture and supplements or
amendments thereto and restatements thereof
EXHC-37
<PAGE>
and all financing statements, fixture filings and other documents, to be
recorded or filed at such places and times and in such manner, as may be
necessary or as may be reasonably requested so long as any Secured Notes are
Outstanding, by the Indenture Trustee or the Pass Through Trustees in order to
establish, preserve, protect and perfect the mortgage and security interest of
the Indenture Trustee in the Indenture Estate granted or intended to be created
under the Indenture and the Indenture Trustee's rights under this Agreement and
the other Operative Documents, subject only to Permitted Liens.
10.13. Certain References and Obligations. (a) After the Relevant
----------------------------------
Date, the provisions of Section 10 which require or permit any action by, any
consent, approval or authorization of, the furnishing of any document, paper or
information to, or the performance of any other obligation to, the Owner Trustee
or the Owner Participant shall not be effective, and the Sections containing
such provisions shall be read as though there were no such references to any
such requirements or permissions.
Section 14. [Intentionally Omitted]
(M) (I) Section 1.4(c) of the Pass Through Trust Agreement shall read
as follows:
(c) In determining whether the Certificateholders of the requisite
Fractional Undivided Interests of Certificates Outstanding have given any
direction, consent or waiver (a "Direction"), under this Agreement, Certificates
---------
owned by the Guarantor, MTFC or any Affiliate thereof shall be disregarded and
deemed not to be Outstanding for purposes of any such determination. In
determining whether the Trustee shall be protected in relying upon any such
Direction, only Certificates about which the Trustee knows to be so owned shall
be so disregarded. Notwithstanding the foregoing, (i) if any such Person owns
100% of the Certificates Outstanding, such Certificates shall not be so
disregarded as aforesaid, and (ii) if any amount of Certificates so owned by any
such Person have been pledged in good faith, such Certificates shall not be
disregarded as aforesaid if the pledgee establishes to the satisfaction of the
Trustee the pledgee's right so to act with respect to such Certificates and that
the pledgee is not the Guarantor, MTFC or any Affiliate thereof.
(II) Sections 6.3 and 12.12 of the Pass Through Trust Agreement shall
read as follows:
Section 6.03. Judicial Proceedings Instituted by Trustee
------------------------------------------
(a) Trustee May Bring Suit. If there shall be a failure to make
----------------------
payment of the principal of or interest on any Secured Note held in the Trust
when due and payable, then the Trustee, in its own name, and as trustee of an
express trust, as holder of such Secured Notes, shall be, to the extent
permitted by and in accordance with the terms of the Note Documents, entitled
and empowered to institute any suits, actions or proceedings at law, in equity
or otherwise, for the collection of the sums so due and unpaid on such Secured
Notes and may prosecute any such claim
EXHC-38
<PAGE>
or proceeding to judgment or final decree with respect to the whole amount of
any such sums so due and unpaid.
(b) Trustee May File Proofs of Claim; Appointment of Trustee as
-----------------------------------------------------------
Attorney-in-Fact in Judicial Proceedings. The Trustee in its own name, or as
- ----------------------------------------
trustee of an express trust, or as attorney-in-fact for the Certificateholders,
or in any one or more of such capacities (irrespective of whether distributions
on the Certificates shall then be due and payable, or the payment of the
principal on the Secured Notes shall then be due and payable, as therein
expressed or by declaration or otherwise and irrespective of whether the Trustee
shall have made any demand to the Indenture Trustee for the payment of overdue
principal, premium (if any) or interest on the Secured Notes), shall be entitled
and empowered to file such proofs of claim and other papers or documents as may
be necessary or advisable in order to have the claims of the Trustee and of the
Certificateholders allowed in any receivership, insolvency, bankruptcy,
liquidation, readjustment, reorganization or any other judicial proceedings
relative to the Guarantor or the Indenture Trustee, their respective creditors
or property. Any receiver, assignee, trustee, liquidator, sequestrator (or
similar official) in any such judicial proceeding is hereby authorized by each
Certificateholder to make payments in respect of such claim to the Trustee, and
in the event that the Trustee shall consent to the making of such payments
directly to the Certificateholders, to pay to the Trustee any amount due to it
for the reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel. Nothing contained in this Agreement shall be
deemed to give to the Trustee any right to accept or consent to any plan of
reorganization or otherwise by action of any character for any such proceeding
to waive or change in any way any right of any Certificateholder.
Section 12.12. Certain References and Obligations. Notwithstanding
----------------------------------
any provision to the contrary contained herein:
(a) The phrase "(with the consent of the Owner Trustee, if any,
relating to such Certificates, which consent shall not be unreasonably
withheld)" in Section 9.2 shall after the Relevant Date be deemed to be deleted;
and
(b) Sections 1.2, 7.2, 7.8(b), 7.8(c), 7.8(e), 7.8(f), 7.11(a),
7.11(d), 9.2, 11.1 and 12.3 shall be deemed amended to provide that any
reference to the Owner Trustee contained in such Sections (but not any reference
to the "Owner Trustee or its designee the Company" in such Sections) shall after
the Relevant Date be deemed to be deleted.
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
All provisions of this Indenture, the other Operative Documents and
the Pass Through Trust Agreement not specifically amended by operation of this
Exhibit C shall remain in full force and effect.
EXHC-39
<PAGE>
Exhibit A to Exhibit C
to Indenture
------------
(FORM OF SERIES 1997-B SECURED NOTE)
MOBIL TRANSPORT FINANCE COMPANY INC.
Series 1997-B Secured Non-Recourse Note
Due _________ __, ____
Sale and Charter of Certain Double-Hulled Product Tanker
--------------------------------------------------------
Registered No. _____
$ New York, New York
________, 199__
Interest Rate Per Annum: ___%
MOBIL TRANSPORT FINANCE COMPANY INC., a Delaware Corporation ("MTFC"),
----
for value received hereby promises to pay to State Street Bank and Trust
Company, or registered assigns, on or before _________ __, ____, as herein
provided, the principal sum of ____ DOLLARS ($_____), and to pay interest on
this Secured Note from time to time from the date hereof until the principal
amount hereof shall have been paid in full at the rate of [ ]% per annum (based
on a 360-day year of twelve 30-day months), and (to the extent not prohibited by
applicable law) to pay interest on any overdue principal and interest at the
Overdue Rate. The principal of this Secured Note shall be payable on each
January 31 and July 31, or both, in accordance with the schedule annexed hereto.
Subject to 2.03(b) of the Indenture, all accrued and unpaid interest on this
Secured Note shall be payable on each January 31 and July 31 in each year
commencing _________ __, ____.
This Secured Note is one of the Secured Notes issued by MTFC pursuant
to the terms of the Trust Indenture, Mortgage, Assignment of Charter and
Security Agreement, dated as of September 30, 1997, between the Owner Trustee
and State Street Bank and Trust Company, not in its individual capacity but
solely as Indenture Trustee thereunder for the Holder of this Secured Note and
the Holders of all other Secured Notes Outstanding thereunder (the "Indenture
---------
Trustee"), as such Trust Indenture, Mortgage, Assignment of Charter and Security
- -------
Agreement has been assumed by MTFC pursuant to the Indenture Supplement dated
the date hereof between MTFC and the Indenture Trustee and as such Trust
Indenture, Mortgage, Assignment of Charter and Security Agreement has been
amended pursuant to the Relevant Amendment (such Trust Indenture, Mortgage,
Assignment of Charter and Security Agreement as so assumed and amended, the
"Indenture"). Capitalized terms
- ----------
EXHC-40
<PAGE>
used in this Secured Note and not otherwise defined shall have the respective
meanings assigned to them in the Indenture.
Each payment of principal and interest shall be due and payable at the
times, places and in the manner as specified herein and in the Indenture.
Each payment on this Secured Note shall be applied, first, to the
-----
payment of accrued interest on this Secured Note to the date of such payment and
second, to the payment of any principal on this Secured Note then due hereunder.
- ------
This is MTFC's Series 1997-B Secured Notes issued pursuant to the
Indenture, which together with any Additional Notes and any note or notes issued
upon a transfer of, in exchange or substitution respectively therefor in
accordance with the terms of the Indenture, are equally and ratably secured by
the Indenture, except as expressly provided therein. The property of MTFC
(excluding Excepted Payments) included in the Indenture Estate are pledged or
mortgaged to the Indenture Trustee to the extent provided in the Indenture as
security for the payment of the principal of and interest on this Secured Note
and all other Secured Notes issued and Outstanding from time to time under the
Indenture. Reference is hereby made to the Indenture for a description of the
Indenture Estate, and for a statement of the rights of the Holders of, and the
nature and extent of the security for, this Secured Note and of the rights of,
and the nature and extent of the security for, the Holders of the other Secured
Notes and of certain rights of MTFC, as well as for a statement of the terms and
conditions of the trust created by the Indenture, to all of which terms and
conditions in the Indenture the Holder agrees by its acceptance of this Secured
Note.
This Secured Note is subject to redemption, in whole, all as specified
in Article III of the Indenture. This Secured Note is also subject to
refunding, or purchase, all as specified in Sections 3.02 and 3.05 of the
Indenture.
In the event an Indenture Event of Default shall occur and be
continuing, the unpaid balance of the principal of the Secured Notes, together
with all accrued but unpaid interest, may be declared or may otherwise become
due and payable in the manner and with the effect provided in Article V of the
Indenture.
The Secured Notes are issuable only as registered notes. There shall
be maintained a note register for the purpose of registering transfers and
exchanges of the Secured Notes at the principal corporate trust office of the
Indenture Trustee, or of any successor Indenture Trustee, in the manner provided
in Section 2.05 of the Indenture. MTFC and the Indenture Trustee shall deem and
treat the Person in whose name this Secured Note is registered on the Note
Register as the absolute owner hereof (whether or not this Secured Note shall be
overdue) for the purpose of receiving payments of principal and interest and for
all other purposes, and neither MTFC nor the Indenture Trustee shall be affected
by any notice to the contrary.
EXHC-41
<PAGE>
All payments of principal and interest to be made by MTFC and, except
as otherwise provided in the Operative Documents, all payments of any other
amounts payable by or on behalf of MTFC under the Secured Notes or under the
Indenture, shall be made only from the income and proceeds from the Indenture
Estate, and only to the extent that the Indenture Trustee shall have received
sufficient income and proceeds from the Indenture Estate to make such payments
in accordance with the Indenture. The Holder, by its acceptance of this Secured
Note, agrees that it will look solely to the income and proceeds from the
Indenture Estate to the extent available for payment as provided in the
Indenture, and that the Indenture Trustee (whether in its individual or trust
capacity) shall not be personally liable to the Indenture Trustee or to the
Holder for any amounts payable under this or any Secured Note, nor, except as
specifically provided in the Indenture or any other Operative Document, for any
amounts payable or any liability, under the Indenture.
This Secured Note shall not be valid or become obligatory for any
purpose or be entitled to any security or benefit under the Indenture until the
certificate of authentication hereon shall have been signed by the Indenture
Trustee.
No delay or omission of the Holder to exercise its rights hereunder
shall impair any such right or power or shall be construed to be a waiver of any
Indenture Event of Default, or an acquiescence therein. No waiver of any
Indenture Event of Default shall be construed, taken or held to be a waiver of
any other Indenture Event of Default, or a waiver, acquiescence in, or consent
to any further or succeeding Indenture Event of Default. MTFC waives demand,
notice and protest in any defense by reason of extension of time for payment or
other indulgence granted by the Holder.
THIS SECURED NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK.
EXHC-42
<PAGE>
IN WITNESS WHEREOF, Mobil Transport Finance Company Inc. has caused
this Secured Note to be duly executed.
MOBIL TRANSPORT FINANCE COMPANY INC.
By:
--------------------------------
Title:
-----------------------------
EXHC-43
<PAGE>
Certificate of Authentication
-----------------------------
This is the Series 1997-B Secured Note of Mobil Transport Finance
Company Inc. described in the within-mentioned Indenture.
STATE STREET BANK AND TRUST COMPANY, not
in its individual capacity but solely as Indenture
Trustee
By:
-------------------------------------------------
Title:
----------------------------------------------
EXHC-44
<PAGE>
Series 1997-B Secured Note
Amortization Schedule
---------------------
Regular Scheduled Payment
Distribution Percentage of Remaining
Date Unpaid Principal Amount
---- -----------------------
EXHC-45
<PAGE>
Exhibit D
to Indenture
------------
TRUST INDENTURE, MORTGAGE, ASSIGNMENT OF
CHARTER AND SECURITY AGREEMENT
SUPPLEMENT NO. ____
This Trust Indenture Supplement No. ____, dated ____________, between FIRST
SECURITY BANK, NATIONAL ASSOCIATION, a national banking association, not in its
individual capacity, except as expressly provided herein, but solely as Owner
Trustee under the Trust Agreement (the "Owner Trustee") and STATE STREET BANK
-------------
AND TRUST COMPANY, a Massachusetts trust company, not in its individual
capacity, except as expressly provided herein, but solely as Indenture Trustee
(the "Indenture Trustee"):
-----------------
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, terms used herein and not otherwise defined shall have the respective
meanings assigned to them in the Indenture;
WHEREAS, the Indenture was recorded in [ ]; and
WHEREAS, the Indenture provides for the execution and delivery of one or more
supplements substantially in the form of this Indenture Supplement, which
supplement shall describe the property from time to time included in the
Indenture Estate;
NOW, THEREFORE, THIS INDENTURE SUPPLEMENT WITNESSETH, that, to secure (i) the
prompt payment when and as due and payable of the principal of and interest on
all the Secured Notes from time to time Outstanding under the Indenture and all
other amounts payable to the Holders thereunder, under the Participation
Agreement and under the Secured Notes, (ii) the performance and observance by
the Owner Trustee of all its covenants and agreements for the benefit of the
Indenture Trustee or the Holders in the Indenture, in the Participation
Agreement and in the Secured Notes contained, and (iii) the performance and
observance by the Owner Participant of its covenants and agreements in the
Participation Agreement contained, and for the uses and purposes and subject to
the terms and provisions of the Indenture, and in consideration of the premises
and of the covenants contained in the Indenture and of the acceptance of the
Secured Notes by the Holders thereof, the Owner Trustee, for valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, has
granted, assigned, bargained, released, conveyed, transferred, mortgaged,
hypothecated, pledged, confirmed and created a security interest in and hereby
presently grants, assigns, bargains, releases, conveys, transfers, mortgages,
hypothecates, pledges, confirms and creates a security interest in, to and for
the benefit of the Indenture Trustee in all of the estate right, title and
interest of the Owner Trustee in and to the Vessel described in Annex I to this
Indenture Supplement, including, without limitation, any Component or
Replacement Component
<PAGE>
thereof or Modification thereto which, pursuant to the terms of the Charter, are
at any time the property of the Owner Trustee, and any Charter Supplement
covering such Asset.
TO HAVE AND TO HOLD the aforesaid property unto the Indenture Trustee, its
successors and assigns, for the benefit and security of the Holders, without any
priority of any Secured Note over any other except as otherwise expressly
provided in the Indenture, and for the uses and purposes and subject to the
terms and provisions set forth in the Indenture.
This Indenture Supplement shall be construed as supplemental to the Indenture
and shall form a part thereof, and the Indenture is hereby incorporated by
reference in this Indenture Supplement and is hereby ratified, approved and
confirmed.
This Indenture Supplement may be executed by the Owner Trustee and the Indenture
Trustee in separate counterparts, each of which, when so executed and delivered,
shall be an original, but all such counterparts shall together constitute but
one and the same instrument.
This Indenture Supplement has been delivered in the State of New York and shall
be governed by, and shall be construed in accordance with, the laws of the State
of New York.
EXHD-2
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Indenture
Supplement to be duly executed, all as of the date first written above.
FIRST SECURITY BANK, NATIONAL ASSOCIATION, not in
its individual capacity, except as expressly
provided herein, but solely as Owner Trustee
By:________________________________
Its:________________________________
STATE STREET BANK AND TRUST COMPANY, not in its
individual capacity, except as expressly provided
herein, but solely as Indenture Trustee
By:________________________________
Its: ________________________________
EXHD-3
<PAGE>
Exhibit E
to Indenture
------------
RELEVANT DATE SUPPLEMENT
This Relevant Date Supplement, dated _________, between Mobil
Transport Finance Company Inc., a Delaware corporation ("MTFC"), and STATE
----
STREET BANK AND TRUST COMPANY, a Massachusetts trust company, not in its
individual capacity, except as expressly provided herein, but solely as
Indenture Trustee (the "Indenture Trustee"):
-----------------
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, terms used herein and not otherwise defined shall have the
respective meanings assigned to them in the Indenture;
WHEREAS, the Indenture was recorded in [ ]; and
WHEREAS, the Indenture provides for the execution and delivery of a
supplement substantially in the form of this Supplement, which supplement shall
provide for certain matters relating to the assumption by MTFC of the
obligations of the Owner Trustee pursuant to Section 3.04 of the Indenture;
NOW, THEREFORE, the parties hereto agree as follows:
1. Effective as of the date of this Supplement (the "Relevant Date"),
-------------
MTFC assumes on a full recourse basis all of the obligations of the Owner
Trustee under the Indenture and the Secured Notes and shall be entitled to all
the rights and benefits of the Owner Trustee thereunder, in each case to the
extent provided for in Exhibit C thereto, and the Owner Trustee is, effective
upon the Relevant Date, released from all obligations and rights under the
Indenture and the Secured Notes; provided, however, that any obligations or
-------- -------
liabilities of the Owner Trustee in its individual capacity incurred on or prior
to the Relevant Date or arising out of or based upon events occurring on or
prior to the Relevant Date, shall remain the responsibility of the Owner
Trustee.
2. MTFC confirms and ratifies the security interest and Lien which the
Owner Trustee granted to the Indenture Trustee pursuant to the Granting Clause
of the Indenture in all of the Owner Trustee's right, title and interest in and
to the Indenture Estate and MTFC explicitly agrees that MTFC is acquiring the
Vessel, and all property relating thereto, constituting a portion of the
Indenture Estate, subject to such security interest and Lien, which shall remain
in full force and effect until the Lien of the Indenture on the Vessel is
discharged in accordance with the terms thereof, and the Indenture Trustee
acknowledges that the Charter and the obligations of MTFC thereunder as the
Charterer have been terminated, except as specifically provided for therein.
<PAGE>
2. MTFC confirms and ratifies the security interest and Lien which
the Owner Trustee granted to the Indenture Trustee pursuant to the Granting
Clause of the Indenture in all of the Owner Trustee's right, title and interest
in and to its undivided interest in the Vessel and MTFC explicitly agrees that
MTFC is acquiring the Owner Trustee's interest in the Vessel, and all property
relating thereto subject to the Lien of the Indenture, subject to such security
interest and Lien, which shall remain in full force and effect until the Lien of
the Indenture in the Vessel is discharged in accordance with the terms thereof,
and the Indenture Trustee acknowledges that the Charter and the obligations of
MTFC thereunder as the Charterer have been terminated, except as specifically
provided for therein.
3. This Supplement shall be construed as supplemental to the
Indenture and shall form a part thereof, and the Indenture is hereby
incorporated by reference in this Supplement and is hereby ratified, approved
and confirmed.
4. This Supplement may be executed by MTFC, and the Indenture Trustee
in separate counterparts, each of which, when so executed and delivered, shall
be an original, but all such counterparts shall together constitute but one and
the same instrument.
5. This Supplement has been delivered in the State of New York and
shall be governed by, and shall be construed in accordance with, the laws of the
State of New York.
EXHE-2
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Indenture
Supplement to be duly executed, all as of the date first written above.
MOBIL TRANSPORT FINANCE COMPANY INC.
By:________________________________
Its:________________________________
STATE STREET BANK AND TRUST COMPANY, not in its individual
capacity, except as expressly provided herein, but solely as Indenture
Trustee
By:________________________________
Its: ________________________________
EXHE-3
<PAGE>
EXHIBIT 4.3
Exhibit A
to Indenture
------------
FORM OF SERIES 1997-B SECURED NOTE
FIRST SECURITY BANK, NATIONAL ASSOCIATION,
not in its individual capacity but
solely as Owner Trustee under the Trust Agreement
Series 1997-B Secured Non-Recourse Note
Due _____
Sale and Charter of One Double Hulled Product Tanker
----------------------------------------------------
Registered No. ___________
$ ____________ New York, New York
_________, 199_
Interest Rate Per Annum: _____%
FIRST SECURITY BANK, NATIONAL ASSOCIATION, a national banking association, not
in its individual capacity but solely as Owner Trustee under the Trust
Agreement, dated as of September 30, 1997, as amended (the "Trust Agreement"),
---------------
among the Owner Participant named therein and the Owner Trustee, for value
received hereby promises to pay to State Street Bank and Trust Company, or
registered assigns, on or before July 31, 2015, as herein provided, the
principal sum of ($ __________), and to pay interest on this
Secured Note from time to time from the date hereof until the principal amount
hereof shall have been paid in full, at the rate of _____% per annum (based on a
360-day year of twelve 30-day months), and (to the extent not prohibited by
applicable law) to pay interest on any overdue principal and interest at the
Overdue Rate. The principal of this Secured Note shall be payable on each
January 31 or July 31, or both, in accordance with the schedule annexed hereto.
The first payment of accrued and unpaid interest on this Secured Note shall be
payable on January 31, 1998. Thereafter, subject to Section 2.03(b) of the
Indenture (as defined below), all accrued and unpaid interest on this Secured
Note shall be payable on each January 31, and July 31 in each year.
This Secured Note has been issued by the Owner Trustee pursuant to the terms of
the Trust Indenture, Mortgage, Assignment of Charter and Security Agreement,
dated as of September 29, 1997 (the "Indenture"), between the Owner Trustee and
---------
State Street Bank and Trust Company, not in its individual capacity but solely
as Indenture Trustee thereunder (the "Indenture Trustee"). Capitalized terms
-----------------
used in this Secured Note and not otherwise defined shall have the respective
meanings assigned to them in the Indenture.
<PAGE>
Each payment of principal and interest shall be due and payable at the times,
places and in the manner as specified herein and in the Indenture.
Each payment on this Secured Note shall be applied, first, to the payment of
-----
accrued interest on this Secured Note to the date of such payment, and second,
------
to the payment of any principal on this Secured Note then due hereunder.
This Secured Note is the Series 1997-B Secured Note of the Owner Trustee, issued
pursuant to the Indenture, which, together with, any Additional Notes and any
note or notes issued upon a transfer in exchange or substitution for
respectively therefor in accordance with the terms of the Indenture, are equally
and ratably secured by the Indenture, except as expressly provided therein. The
property of the Owner Trustee (excluding Excepted Payments) included in the
Indenture Estate is pledged or mortgaged to the Indenture Trustee to the extent
provided in the Indenture as security for the payment of the principal of and
interest on this Secured Note under the Indenture. Reference is hereby made to
the Indenture for a description of the Indenture Estate, and for a statement of
the rights of the Holders of, and the nature and extent of the security for,
this Secured Note and of the rights of, and the nature and extent of the
security for, the Holders of the other Secured Notes and of certain rights of
the Owner Trustee and the Owner Participant, as well as for a statement of the
terms and conditions of the trust created by the Indenture, to all of which
terms and conditions in the Indenture the Holder agrees by its acceptance of
this Secured Note.
This Secured Note is subject to redemption, in whole, all as specified in
Article III of the Indenture. This Secured Note is also subject to refunding,
assumption or purchase, all as specified in Sections 3.02, 3.04, 3.05 and 3.06
of the Indenture.
In the event an Indenture Event of Default shall occur and be continuing, the
unpaid balance of the principal of the Secured Note, together with all accrued
but unpaid interest, may be declared or may otherwise become due and payable in
the manner and with the effect provided in Article V of the Indenture.
The Secured Note is issuable only as a registered note. There shall be
maintained a note register for the purpose of registering transfers and
exchanges of the Secured Note at the principal corporate trust office of the
Indenture Trustee, or of any successor Indenture Trustee, in the manner provided
in Section 2.05 of the Indenture. The Owner Trustee and the Indenture Trustee
shall deem and treat the Person in whose name this Secured Note is registered on
the Note Register as the absolute owner hereof (whether or not this Secured Note
shall be overdue) for the purpose of receiving payments of principal and
interest and for all other purposes, and neither the Owner Trustee nor the
Indenture Trustee shall be affected by any notice to the contrary.
All payments of principal and interest to be made by the Owner Trustee and,
except as otherwise provided in the Operative Documents, all payments of any
other amounts payable by or on
A-1-2
<PAGE>
behalf of the Owner Trustee under the Secured Note or under the Indenture, shall
be made only from the income and proceeds from the Indenture Estate, and only to
the extent that the Indenture Trustee shall have received sufficient income and
proceeds from the Indenture Estate to make such payments in accordance with the
Indenture. The Holder, by its acceptance of this Secured Note, agrees that it
will look solely to the income and proceeds from the Indenture Estate to the
extent available for payment as provided in the Indenture, and that none of the
Owner Participant, the Owner Trustee, the Trust Company, or the Indenture
Trustee (whether in its individual or trust capacity) shall be personally liable
to the Indenture Trustee or to the Holder for any amounts payable under this
Secured Note, nor, except as specifically provided in the Indenture or any other
Operative Document, for any amounts payable or any liability, under the
Indenture.
This Secured Note shall not be valid or become obligatory for any purpose or be
entitled to any security or benefit under the Indenture until the certificate of
authentication hereon shall have been signed by the Indenture Trustee.
No delay or omission of the Holder to exercise its rights hereunder shall impair
any such right or power or shall be construed to be a waiver of any Indenture
Event of Default, or an acquiescence therein. No waiver of any Indenture Event
of Default shall be construed, taken or held to be a waiver of any other
Indenture Event of Default, or a waiver, acquiescence in, or consent to any
further or succeeding Indenture Event of Default. The Owner Trustee waives
demand, notice and protest in any defense by reason of extension of time for
payment or other indulgence granted by the Holder.
THIS SECURED NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS
OF THE STATE OF NEW YORK.
A-1-3
<PAGE>
IN WITNESS WHEREOF, the Owner Trustee has caused this Secured Note to be duly
executed.
FIRST SECURITY BANK,
NATIONAL ASSOCIATION,
not in its individual capacity, but solely as
Owner Trustee under the Trust Agreement
By: ______________________________
Title: _____________________________
A-1-4
<PAGE>
Certificate of Authentication
-----------------------------
This is the Series 1997-B Secured Note of FIRST SECURITY BANK, NATIONAL
ASSOCIATION, as Owner Trustee described in the within-mentioned Indenture.
STATE STREET BANK AND TRUST COMPANY,
not in its individual capacity but solely as
Indenture Trustee
By: _________________________
Title: ________________________
<PAGE>
Series 1997-B Secured Note
Amortization Schedule
---------------------
Schedule of Principal Payments
- -----------------------------------------------------------
- -----------------------------------------------------------
SERIES 1997-B SECURED NOTE
- -----------------------------------------------------------
Scheduled Payment
as a Percentage of Scheduled
Regular Unpaid Principal Payments
Distribution Date Amount of Principal
----------------- ------ ------------
- -----------------------------------------------------------
January 31, 1998 0.75499537 277,189
- -----------------------------------------------------------
July 31, 1998 0 0
- -----------------------------------------------------------
January 31, 1999 2.54474246 927,223
- -----------------------------------------------------------
July 31, 1999 0 0
- -----------------------------------------------------------
January 31, 2000 2.52891135 898,006
- -----------------------------------------------------------
July 31, 2000 0 0
- -----------------------------------------------------------
January 31, 2001 2.81707146 975,033
- -----------------------------------------------------------
July 31, 2001 0 0
- -----------------------------------------------------------
January 31, 2002 3.08321166 1,037,086
- -----------------------------------------------------------
July 31, 2002 0 0
- -----------------------------------------------------------
January 31, 2003 3.39586269 1,107,033
- -----------------------------------------------------------
July 31, 2003 0 0
- -----------------------------------------------------------
January 31, 2004 3.74998690 1,180,962
- -----------------------------------------------------------
July 31, 2004 0.17099139 51,830
- -----------------------------------------------------------
January 31, 2005 3.96536138 1,199,904
- -----------------------------------------------------------
July 31, 2005 0.01095330 3,183
- -----------------------------------------------------------
January 31, 2006 5.08333215 1,477,041
- -----------------------------------------------------------
July 31, 2006 0.18376686 50,682
- -----------------------------------------------------------
January 31, 2007 6.01508353 1,655,882
- -----------------------------------------------------------
July 31, 2007 0 0
- -----------------------------------------------------------
January 31, 2008 8.48319322 2,194,852
- -----------------------------------------------------------
<PAGE>
EXHB-1
Schedule of Principal Payments
- -----------------------------------------------------------
- -----------------------------------------------------------
SERIES 1997-B SECURED NOTE
- -----------------------------------------------------------
Scheduled Payment
as a Percentage of Scheduled
Regular Unpaid Principal Payments
Distribution Date Amount of Principal
----------------- ------ ------------
- -----------------------------------------------------------
July 31, 2008 0 0
- -----------------------------------------------------------
January 31, 2009 8.74609671 2,070,909
- -----------------------------------------------------------
July 31, 2009 9.06748380 1,959,228
- -----------------------------------------------------------
January 31, 2010 14.16159960 2,782,465
- -----------------------------------------------------------
July 31, 2010 0 0
- -----------------------------------------------------------
January 31, 2011 15.00340458 2,530,398
- -----------------------------------------------------------
July 31, 2011 0 0
- -----------------------------------------------------------
January 31, 2012 0.23895204 34,254
- -----------------------------------------------------------
July 31, 2012 28.50390606 4,076,298
- -----------------------------------------------------------
January 31, 2013 26.54485648 2,714,090
- -----------------------------------------------------------
July 31, 2013 0 0
- -----------------------------------------------------------
January 31, 2014 47.90577185 3,597,940
- -----------------------------------------------------------
July 31, 2014 0 0
- -----------------------------------------------------------
January 31, 2015 52.78399146 2,065,180
- -----------------------------------------------------------
July 31, 2015 100.00000000 1,847,332
- -----------------------------------------------------------
<PAGE>
EXECUTION COPY
FIRST PREFERRED SHIP MORTGAGE
Dated September 30, 1997
by
FIRST SECURITY BANK, NATIONAL ASSOCIATION,
not in its individual
capacity but solely
as owner trustee/
Shipowner and Mortgagor
to
STATE STREET BANK AND TRUST COMPANY,
not in its individual
capacity but solely as
Indenture Trustee/
Mortgagee
<PAGE>
TABLE OF CONTENTS
Page No.
--------
ARTICLE I - REPRESENTATIONS OF THE SHIPOWNER............................. 3
(1) Organization................................................... 3
(2) Documentation.................................................. 3
ARTICLE II - COVENANTS OF THE SHIPOWNER.................................. 3
(1) Maintenance of Entity Status................................... 3
(2) Liens.......................................................... 3
(3) Maintenance of Mortgage........................................ 3
ARTICLE III - EVENTS OF DEFAULT AND REMEDIES............................. 3
(1) Event of Default............................................... 3
(2) Remedies....................................................... 3
(3) Conveyance after Sale.......................................... 5
(4) Shipowner Barred............................................... 5
(5) Arrest By Third Party.......................................... 5
(6) Powers of the Mortgagee........................................ 6
(7) Application of Proceeds........................................ 6
(8) No Exclusivity................................................. 6
ARTICLE IV - SUNDRY PROVISIONS........................................... 6
(1) Recording...................................................... 6
(2) Successors and Assigns......................................... 7
(3) Agents......................................................... 7
(4) Notices........................................................ 7
(5) Governing Law.................................................. 7
EXHIBIT 1 Indenture (with attached Appendix A and Exhibits A, B and D)
EXHIBIT 2 Sections 17 and 18 of the Charter
<PAGE>
THIS FIRST PREFERRED SHIP MORTGAGE, made and dated as of the 30th day
of September 1997, by (a) First Security Bank, National Association, not in its
individual capacity but solely as Owner Trustee under the Trust Agreement for
the benefit of the Owner Participants named therein (the "Shipowner"), with an
address at 79 South Main Street, Salt Lake City, Utah 84111, in favor of (b)
State Street Bank and Trust Company, with an address at Two International Place,
4th Floor, Corporate Trust Department, Boston Massachusetts 02110 not in its
individual capacity but solely as Indenture Trustee (the "Mortgagee") under a
Trust Indenture, Mortgage, Assignment of Charter and Security Agreement, dated
as of the date hereof (the "Indenture") between the Shipowner and the Mortgagee.
WHEREAS:
A. The Shipowner is the registered owner of the United States flag
double hulled product tanker "AMERICAN PROGRESS" (the "Vessel"), Official No.
1053997, duly documented in the name of the Shipowner under the laws and flag of
the United States with her home port at the port of Norfolk, Virginia.
B. Pursuant to the terms of the Indenture, the Shipowner has issued
and sold to the Pass Through Trustee (as defined in the Indenture) its Series
1997-B Secured Note dated the date hereof (the "Secured Note") in the initial
principal amount of U.S. $36,714,000. The form of the Indenture (together with
Appendix A, Definitions, and Exhibits A, B and D (including the form of the
Secured Notes but not including the form of this Mortgage)) is attached hereto
as Exhibit 1 and hereby made a part hereof as though set forth fully herein.
The term "Indenture" as used in this Mortgage shall mean the Indenture and
Appendix A (Definitions) and Exhibit A (Form of Secured Note) as attached hereto
and as each may be amended, supplemented or modified from time to time.
C. The Shipowner has entered into the Demise Charter Party dated as
of the date hereof between the Shipowner and Mobil Transport Finance Company
Inc. (the "Charterer") (as the same may be amended, supplemented, or modified
from time to time, the "Charter") respecting the Vessel pursuant to which the
Charterer has covenanted and agreed with the Shipowner, inter alia, to operate,
maintain, and insure the Vessel. The form of Sections 17 and 18 of the Charter
defining Charter Events of Default and Remedies is attached hereto as Exhibit 2
and hereby made a part hereof as though set forth fully herein.
D. To secure payment of principal of, interest on, Make-Whole
Amount, if any, and any other amounts which may become
<PAGE>
due to the Mortgagee or the holder of the Secured Note pursuant to the terms of
the Indenture, the Secured Note and the other Operative Documents, the Shipowner
has duly authorized the execution, delivery and recording of this First
Preferred Ship Mortgage under and pursuant to the laws of the United States.
E. Terms used herein and not otherwise defined herein are used as
defined in, or by reference in, the Indenture.
NOW, THEREFORE, THIS MORTGAGE, WITNESSETH:
That in consideration of the premises and other valuable
consideration, the receipt whereof is hereby acknowledged, and in order to
secure the payment of principal of, interest on, Make-Whole Amount, if any,
respecting the Secured Note, and all other amounts which may become due under
the Indenture or hereunder (collectively, the "Indebtedness hereby secured") and
to secure the performance and observance of and compliance with the covenants,
terms and conditions herein and in the Secured Note and the Indenture contained,
the Shipowner has granted, conveyed, mortgaged, pledged, assigned, transferred,
set over and confirmed and does by these presents grant, convey, mortgage,
pledge, assign, transfer, set over and confirm unto the Mortgagee, its
successors and assigns, the whole of the Vessel which term shall include all of
the boilers, engines, machinery, bowsprits, masts, spars, sails, rigging, boats,
anchors, propellers, cables, apparel, furniture, fitting, equipment, spares, and
all other appurtenances to the Vessel appertaining or belonging, whether now
owned or hereafter acquired, whether on board or not, and all additions,
improvements and replacements hereafter made in or to the Vessel, or any part
thereof, or in or to the equipment and appurtenances aforesaid, but excluding
any leased equipment;
TO HAVE AND TO HOLD the same unto the Mortgagee, its successors and
assigns, to its and its successors' and assigns' own use and behoof forever;
PROVIDED only, and the condition of these presents is such that if the
Shipowner, or its successors or assigns, shall pay or cause to be paid to the
Mortgagee the Indebtedness hereby secured as and when the same shall become due
and payable in accordance with the terms of this Mortgage, the Secured Note and
the Indenture, and shall perform, observe and comply with the covenants, terms
and conditions in this Mortgage and in the Secured Note and the Indenture
contained, expressed or implied, to be performed, observed or complied with, by
and on the part of the Shipowner, then these presents and the rights hereunder
shall cease, determine and be void; otherwise to be and remain in full force and
effect.
-2-
<PAGE>
ARTICLE I
REPRESENTATIONS OF THE SHIPOWNER
(1) Organization. First Security Bank, National Association, a
------------
United States national banking association, in its capacity as trustee under the
Trust Agreement is Owner Trustee and the Shipowner.
(2) Documentation. The Vessel is, and the Shipowner covenants that
-------------
it will remain, duly documented in the name of the Shipowner as owner thereof
under the laws and flag of the United States, free and clear of all Liens and
encumbrances except Permitted Liens.
ARTICLE II
COVENANTS OF THE SHIPOWNER
(1) Maintenance of Entity Status. The Shipowner covenants that it
----------------------------
will remain duly qualified to own a United States flag vessel engaged in the
coastwise trade pursuant to 46 U.S.C. (S)12106(e)(1)(B) and (E).
(2) Liens. None of the Shipowner, the Charterer, any permitted
-----
subcharterer, any Operator, the master of the Vessel or any other Person has or
shall have any right, power or authority to create, incur or permit to be placed
or imposed upon the Vessel any Lien whatsoever, other than the Lien of this
Mortgage and Permitted Liens.
(3) Maintenance of Mortgage. The Shipowner (or the Charterer under
-----------------------
the Charter) shall, at its expense and at no cost to the Mortgagee, comply with
and satisfy all of the provisions of the laws of the United States, in order to
establish, record and maintain this Mortgage as a preferred mortgage thereunder
on the Vessel except to the extent provided by the Indenture.
ARTICLE III
EVENTS OF DEFAULT AND REMEDIES
(1) Event of Default. An Indenture Event of Default shall
----------------
constitute an event of default hereunder.
(2) Remedies. If an Indenture Event of Default shall have occurred
--------
and be continuing, subject to the Indenture, (x) the Mortgagee shall have the
rights and remedies provided in the Indenture, (y) the Mortgagee shall have all
of the rights and
-3-
<PAGE>
remedies provided mortgagees under the laws of the United States and, in
addition, (z) the Mortgagee may:
(a) enforce and exercise all or any of its rights and powers as a
first mortgagee at law, in equity, or in admiralty;
(b) exercise all the rights and remedies in foreclosure and otherwise
given to mortgagees by the laws of the United States, or by the applicable laws
of any jurisdiction where the Vessel may be found, and initiate and prosecute
such other judicial, extra-judicial, or administrative proceedings as it may
consider appropriate to recover any or all sums due, or declared due, on the
Indebtedness hereby secured out of the Vessel, with the right to enforce payment
of said sum against any assets of the Indenture Estate, and in connection
therewith obtain a decree ordering the sale of the Vessel in accordance with
Section 2(e) of this Article III;
(c) have a receiver of the Vessel appointed as a matter of right in
any suit hereunder (and any such receiver may have the rights of the Mortgagee
set forth in, or by reference in, this Article III);
(d) take possession of the Vessel, with or without legal proceedings,
at any place where the Vessel may be found (and the Shipowner, the Charterer or
other Person in possession of the Vessel shall forthwith surrender possession of
the Vessel to the Mortgagee on demand), and the Mortgagee shall have the right,
but shall not be obligated, to manage, insure, maintain, repair, employ, lay up,
hold, charter, lease, operate or otherwise use the Vessel for such period and
under such terms as it may reasonably deem most expedient for its interest,
accounting only for the net profits, if any, arising from such use and charging
against all receipts from such use of the Vessel, all reasonable charges and
expenses in connection with such use;
(e) sell the Vessel at private sale, on such terms and conditions as
it deems best, free of any Claim of the Shipowner and, except as provided by
law, any other Person, upon advance notice of twenty-five (25) consecutive days
published in a newspaper authorized to publish legal notices of that kind in New
York, New York, and by sending notice (with a copy to the Charterer) of such
sale no later than the date of first publication, by telecopy to the Shipowner
as provided in Section 10.05 of the Indenture. Any such sale may be held at
such place and at such time as the Mortgagee by notice may have specified, or
may be adjourned by the Mortgagee from time to time by announcement at the time
and place appointed for such sale or for such adjourned sale, and without
further notice or publication the Mortgagee may make any such sale at the time
and place to which the same shall be so adjourned. Any such sale may be
-4-
<PAGE>
conducted without bringing the Vessel to the place designated for such sale.
The Mortgagee or any holder of the Secured Note may become the purchaser at any
such sale, and shall have the right to credit on the purchase price any and all
sums of money due in respect of the Secured Note and any other Indebtedness
hereby secured;
(f) accept a conveyance of title to, and to take without legal process
(and the Shipowner or other Person in possession shall forthwith surrender
possession to the Mortgagee), the whole or any part of the Vessel wherever the
same may be, and to take possession of and hold the same.
Notwithstanding the foregoing, so long as the Charter is in effect and
no Charter Event of Default shall have occurred and be continuing, and the
Charter shall not have been declared to be in default pursuant to Section 18(a)
thereof, the Mortgagee shall not, without the prior written consent of the
Charterer, exercise any remedy resulting in the interference with the
Charterer's quiet enjoyment and use of the Vessel.
(3) Conveyance after Sale. The Shipowner hereby irrevocably appoints
---------------------
the Mortgagee the true and lawful attorney of the Shipowner, in its name and
stead, to make all necessary transfers of the whole or any part of the Vessel in
connection with a sale, use or other disposition pursuant to Section 2 of
Article III hereof, and for that purpose to execute all necessary instruments of
assignment and transfer. Nevertheless, the Shipowner shall, if so requested by
the Mortgagee, ratify and confirm any sale, assignment, transfer or delivery by
executing and delivering such proper bill of sale, assignment, conveyance,
instrument of transfer or other instrument as may be designated in such request.
(4) Shipowner Barred. A sale of the Vessel made pursuant hereto
----------------
whether under the power of sale hereby granted or any judicial proceedings,
shall operate to divest all right, title and interest of any nature whatsoever
of the Shipowner therein and thereto, and shall bar the Shipowner, its
successors and assigns, and all Persons claiming by, through or under them. No
purchaser shall be bound to inquire whether notice has been given or whether any
Indenture Event of Default or event of default hereunder has occurred, or as to
the propriety of the sale, or as to application of the proceeds thereof.
(5) Arrest By Third Party. Subject to the rights of the Charterer
---------------------
under the Charter, in the event that an Indenture Event of Default shall have
occurred and be continuing and the Vessel shall be arrested or detained by a
marshal or other officer of any court of law, equity or admiralty jurisdiction
in any country of the world or by any government or other authority and shall
not be released from arrest or detention within thirty
-5-
<PAGE>
(30) days from the date of arrest or detention, the Shipowner hereby authorizes
the Mortgagee, in the name of the Shipowner, to apply for and receive possession
of and to take possession of the Vessel with all of the rights and powers that
the Shipowner might have, possess and exercise in any such event. This
authorization is irrevocable.
(6) Powers of the Mortgagee. The Mortgagee is hereby appointed as
-----------------------
attorney-in-fact of the Shipowner, during the continuance of any Indenture Event
of Default, and upon compliance with the terms of the Indenture, in the name of
the Shipowner to demand, collect, receive, compromise and sue for, so far as may
be permitted by law, all freights, hire, earnings, issues, revenues,
compensation, income and profits of the Vessel, and all amounts (to the extent
assigned under the Indenture) due from underwriters under any insurance thereon
as payment of losses or as return premiums or otherwise, salvage awards and
recoveries, recoveries in general average or otherwise, and to make, give and
execute in the name of the Shipowner acquittances, receipts, releases or other
discharges for the same, whether under seal or otherwise, and to endorse and
accept in the name of the Shipowner all checks, notes, drafts, warrants,
agreements and all other instruments in writing with respect to the foregoing.
(7) Application of Proceeds. Any monies collected by the Mortgagee
-----------------------
pursuant to any sale of the Vessel or other enforcement of any of its rights
hereunder on account of the occurrence of an Indenture Event of Default shall be
distributed in accordance with the provisions of Section 4.03 of the Indenture.
(8) No Exclusivity. No right or remedy herein conferred upon or
--------------
reserved to the Mortgagee is intended to be exclusive of any other right or
remedy, and every right and remedy shall, to the extent permitted by law, be
cumulative and in addition to every other right and remedy given hereunder or
under the Indenture or now or hereafter existing at law, in equity, in
admiralty, by statute or otherwise. The assertion or employment of any right or
remedy hereunder or otherwise shall not prevent the concurrent or subsequent
assertion or employment of any other right or remedy hereunder or otherwise.
ARTICLE IV
SUNDRY PROVISIONS
(1) Recording. For the purposes of recording this First Preferred
---------
Ship Mortgage as required by 46 U.S.C. Chapter 313, the total amount of this
Mortgage is (i) US$36,714,000 and (ii) interest, Make-Whole Amount, if any, and
performance of
-6-
<PAGE>
mortgage covenants. The discharge amount is the same as the total amount.
(2) Successors and Assigns. All the covenants, promises,
----------------------
stipulations and agreements of the Shipowner contained in this Mortgage shall
bind the Shipowner, its successors and assignees, and shall inure to the benefit
of the Mortgagee, its successors and assigns.
(3) Agents. Wherever and whenever herein any right, power or
------
authority is granted or given to the Mortgagee, such right, power or authority
may be exercised in all cases by the Mortgagee or such agent or agents as it may
appoint; and the authorized acts of such agent or agents when taken shall
constitute the act of the Mortgagee hereunder.
(4) Notices. Any notice or demand or other communication to the
-------
Shipowner or the Mortgagee under this Mortgage shall be made in accordance with
Section 10.05 of the Indenture.
(5) Governing Law. The provisions of this Mortgage shall, with
-------------
respect to its validity, effect, recordation and enforcement, be governed by and
construed in accordance with the applicable laws of the United States, and to
the extent such laws are not applicable, the substantive laws of the State of
New York.
(6) Preferred Status. No Provision of this Mortgage or of the
----------------
Indenture shall be deemed to constitute a waiver by the Mortgagee of the
preferred status of this Mortgage or of the Indenture which would otherwise
constitute such a waiver shall to such extent be of no force or effect.
-7-
<PAGE>
IN WITNESS WHEREOF, the Shipowner has caused this Mortgage to be duly
executed by its authorized representative the day and year first above written.
FIRST SECURITY BANK, NATIONAL ASSOCIATION,
not in its individual capacity but solely as
the Owner Trustee
By:
-------------------------------
Name:
Title:
STATE OF UTAH )
) ss.:
COUNTY OF )
On this ___ day of September, 1997, before me personally appeared
________________, known to me, and known to be the person who executed the
foregoing instrument, who, being by me duly sworn, did depose and say that he
resides at _______________________________; that he is ________________ of First
Security Bank, National Association, not in its individual capacity but solely
as the Owner Trustee, the party described in and which executed the foregoing
instrument; that he signed his name thereto by authority of the Trust Agreement
dated as of the date hereof and of the by-laws of First Security Bank, National
Association; and he further acknowledged such mortgage is the free act and deed
of such Owner Trustee.
---------------------------------------
Notary Public
-8-
<PAGE>
EXHIBIT 4.5
EXHIBIT B
TO
PARTICIPATION AGREEMENT
================================================================================
DEMISE CHARTER PARTY
between
FIRST SECURITY BANK, NATIONAL ASSOCIATION,
not in its individual capacity but solely
as Owner Trustee under the Trust Agreement
for the Owner Participant named therein,
Shipowner,
and
MOBIL TRANSPORT FINANCE COMPANY INC.,
Charterer.
M.T. AMERICAN PROGRESS
__________________________________
Dated as of September 30, 1997
___________________________________
================================================================================
<PAGE>
TABLE OF CONTENTS
-----------------
Page
----
Recitals.....................................................................1
SECTION 1. Definitions; Interpretation......................................1
SECTION 2. Acceptance and Charter of Vessel.................................1
(a) Acceptance; Warranties...............................2
(b) Assignment of Warranties.............................2
(c) Documentation of Vessel..............................3
SECTION 3. Term; Charter Hire...............................................3
(a) Term.................................................3
(b) Interim Charter Hire.................................3
(c) Base Charter Hire....................................3
(d) Supplemental Charter Hire............................3
(e) Renewal Hire.........................................4
(f) Method of Payment....................................4
(g) Late Payment.........................................4
(h) Minimum Payment......................................4
(i) Net Charter..........................................5
(j) Premium..............................................6
SECTION 4. Redelivery of Vessel.............................................7
(a) Redelivery; Redelivery Condition.....................7
(b) Redelivery Inspection............................... 8
(c) Additional Charter Hire..............................8
SECTION 5. Use and Operation; Citizenship...................................8
(a) Use of Vessel........................................8
(b) Exclusive Possession; Manning etc. of
Vessel...............................................8
(c) Maintenance of Vessel Documentation..................9
(d) Citizenship..........................................9
(e) Quiet Enjoyment.....................................10
SECTION 6. Maintenance, Compliance with Governmental Rules; Inspection.....10
(a) Vessel Maintenance, Compliance with
Governmental Rules..................................10
(b) Indenture Trustee's and Owner
Participant's Inspection............................11
(c) No Obligation to Inspect............................11
-i-
<PAGE>
SECTION 7. Use of Stores and Equipment; Spares and
Replacement Parts.............................................11
(a) Stores..............................................11
(b) Use of Equipment....................................12
(c) Spares and Replacement Parts........................12
SECTION 8. Charterer's Modifications; Removal of Property..................12
(a) Required Modifications..............................13
(b) Optional Modifications..............................13
(c) Title to Modifications; Purchase Option for
Severable Modifications.............................13
(d) Payment for Modifications ..........................14
(e) Removal of Property.................................14
(f) Marking of Vessel...................................15
SECTION 9. Liens, Etc......................................................16
(a) No Liens; Permitted Liens...........................16
(b) Notice of Ship Mortgage.............................16
(c) Charterer's Benefits................................16
Section 10. Insurance......................................................16
(a) Coverage............................................16
(b) Adjustment of Losses................................17
(c) Application of Insurance Proceeds...................17
(d) Additional Insurance................................18
Section 11. Event of Loss..................................................18
(a) Notice of Event of Loss.............................18
(b) Payment of Stipulated Loss Value, Etc...............18
(c) Application of Other Payments upon the
Occurrence of an Event of Loss......................20
(d) Application of Payments Not Relating to an
Event of Loss.......................................20
(e) Other Dispositions..................................21
SECTION 12. Early Termination; Special Termination.........................21
(a) Early Termination...................................21
(b) Notice of Termination...............................21
(c) Retention of Vessel by Shipowner upon an
Obsolescence Termination............................22
(d) Sale of Vessel; Termination Payments................23
(e) Special Termination.................................25
SECTION 13. Requisition for Use by the United States.......................27
-ii-
<PAGE>
SECTION 14. Renewal of Charter.............................................28
(a) Renewal.............................................28
(b) Notice; Manner of Renewal...........................28
(c) Renewal Hire........................................28
(d) Stipulated Loss Values and Termination
Values..............................................28
SECTION 15. Purchase Options...............................................29
(a) Purchase Options....................................29
(b) Notice of Election; Manner of Purchase;
Transfer After Purchase.............................30
(c) Assumption of Secured Notes.........................31
SECTION 16. Assignment and Subcharter......................................32
(a) Assignment by Shipowner; Security for Shipowner's
Obligations to Indenture
Trustee.............................................32
(b) Assignment and Subcharter by Charterer..............33
SECTION 17. Events of Default..............................................34
(a) Events of Default...................................34
(b) Specified Charter Event of Default..................36
SECTION 18. Remedies.......................................................36
(a) In General..........................................36
(b) Continuing Obligations..............................39
(c) Remedies Cumulative.................................39
SECTION 19. Notices........................................................40
SECTION 20. Other Rights...................................................40
(a) Shipowner's Right to Cure...........................40
(b) Performance by Affiliates, Etc.; ...................41
SECTION 21. Miscellaneous..................................................41
(a) Amendments in Writing...............................41
(b) Severability of Provisions..........................41
(c) Governing Law.......................................41
(d) Headings............................................41
(e) Counterpart Execution; Filing. .....................42
(f) Successors and Assigns. ............................42
(g) Investment of Security Funds. ......................42
(h) Immunities; Satisfaction of Undertakings;
Successor Owner Trustee.............................43
(i) Performance of Obligations to Indenture
Trustee and Holders.................................44
-iii-
<PAGE>
(j) True Charter........................................ 44
(k) Survival of Agreements.............................. 44
(l) No Merger........................................... 44
(m) Usury................................................45
(n) No Joint Venture.....................................45
(o) Waiver of Jury Trial.................................45
Schedule 1 Base Charter Hire Accrual
Schedule 2 Stipulated Loss Values and Stipulated Loss Value
Determination Dates
Schedule 3 Termination Values
Schedule 4 EBO Exercise Price Installment Schedule
Schedule 5 Interim Charter Hire
Schedule 6 Fixed Price Purchase Option Amount
Appendix A Definitions
-iv-
<PAGE>
DEMISE CHARTER PARTY
THIS DEMISE CHARTER PARTY, dated as of September 30 , 1997 (the
"Charter") for the United States flagged vessel M/T AMERICAN PROGRESS, Official
Number 1053997, and as further described in Appendix A hereto (the "Vessel"), is
between First Security Bank, National Association, a national banking
association, not in its individual capacity but solely as Owner Trustee under
the Trust Agreement for the benefit of the Owner Participant named therein, and
its successors and assigns (herein called the "Shipowner"), and Mobil Transport
Finance Company Inc., a corporation organized and existing under the laws of
Delaware (herein called the "Charterer").
RECITALS:
WHEREAS, the Shipowner desires to demise charter the Vessel to the
Charterer, and the Charterer desires to demise charter the Vessel from the
Shipowner, in each case on the terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Shipowner agrees to let and
demise charter and the Charterer agrees to hire and demise charter the Vessel on
the terms and conditions hereinafter set forth.
SECTION 1. Definitions; Interpretation.
---------------------------
For the purposes hereof, capitalized terms used herein (including
those used in the preamble and in the foregoing recitals) and not otherwise
defined herein shall have the meanings assigned to them in Appendix A, which
Appendix A shall for all purposes constitute part of this Charter and shall be
subject to amendment in accordance with the terms and provisions hereof.
References in this Charter to Sections, subsections, Schedules, Appendices and
Exhibits are to Sections and subsections of, and Schedules, Appendices and
Exhibits to, this Charter unless otherwise indicated.
<PAGE>
SECTION 2. Acceptance and Charter of Vessel.
--------------------------------
(a) Acceptance; Warranties. Neither the Shipowner, in its individual
----------------------
capacity or as Owner Trustee, nor the Owner Participant makes any
representations or warranties whether written, oral or implied with respect to
the Vessel, except as expressly set forth herein, in Section 6 or 8 of the
Participation Agreement, in any other Operative Document or in any Officer's
Certificate of the Trust Company, the Owner Trustee or the Owner Participant, in
each case delivered pursuant to the Participation Agreement. As between the
Shipowner and the Charterer, simultaneously with the delivery of the Vessel by
the Seller to the Shipowner pursuant to the Participation Agreement and
acceptance by the Shipowner of the Vessel, the Shipowner shall be deemed to have
tendered, and the Charterer shall be deemed to have accepted, delivery of the
Vessel for all purposes hereof "as is and where is" and the commencement of this
Charter with respect thereto and that the Vessel is satisfactory to the
Charterer in all respects. IT IS AGREED THAT NEITHER THE TRUST COMPANY IN ITS
INDIVIDUAL CAPACITY OR THE SHIPOWNER AS OWNER TRUSTEE OR THE OWNER PARTICIPANT
SHALL BE DEEMED TO HAVE MADE, AND THE TRUST COMPANY IN ITS INDIVIDUAL CAPACITY
AND THE SHIPOWNER AS OWNER TRUSTEE HEREBY DISCLAIMS, ANY WARRANTY OR
REPRESENTATION, OTHER THAN THOSE REFERRED TO IN THE SECOND PRECEDING SENTENCE,
EITHER EXPRESS OR IMPLIED, AS TO TITLE TO, AS TO THE DESIGN, CONDITION,
MERCHANTABILITY OR SEAWORTHINESS OF, AS TO THE QUALITY OF THE MATERIAL,
EQUIPMENT OR WORKMANSHIP IN OR THE CONFORMITY THEREOF TO THE PLANS AND
SPECIFICATIONS, OR AS TO THE CONSUMABLE STORES ON BOARD, THE VESSEL, OR AS TO
THE FITNESS OF THE VESSEL FOR ANY PARTICULAR PURPOSE OR AS TO ELIGIBILITY OF THE
VESSEL FOR ANY PARTICULAR TRADE, OR THE PRESENCE OR ABSENCE OF ANY LATENT OR
OTHER DEFECTS, WHETHER OR NOT DISCOVERABLE, OR ANY OTHER WARRANTY OR
REPRESENTATION WHATSOEVER (except that the Trust Company hereby represents and
warrants that on the Funding Date the Vessel shall be free and clear of all
Shipowner's Liens and Owner Participant's Liens). Nothing in this Section 2(a)
shall be construed as a waiver of any right that either the Shipowner or the
Charterer may have against any person other than the Charterer, the Shipowner or
the Owner Participant.
(b) Assignment of Warranties. The Shipowner hereby affirms that,
------------------------
effective on the Funding Date, it has assigned under the Conveyancing
Instrument, to the initial Operator, certain rights and warranties conveyed to
the Shipowner by the Conveyancing Instrument in respect of the Vessel under or
in connection with the Construction Contract. The Shipowner shall use all
reasonable efforts to deliver to the Charterer (or the Operator) such further
documents and assurances and to take such other action requested by the
Charterer or the Operator, at their expense, as may be necessary to confirm the
assignments made by virtue of the preceding sentence and to enable the Charterer
or the Operator to enforce any rights so assigned in the name of the
-2-
<PAGE>
Shipowner or otherwise. The Shipowner (or the Seller on behalf of the
Shipowner) has delivered to the Charterer a full set of general and detailed
Plans and Specifications correct to the Vessel on the Funding Date, except for
such variations in the Vessel as outfitted on the day of delivery, which shall
be returned to the Shipowner at the end of the Charter Term.
(c) Documentation of Vessel. Upon delivery of the Vessel to the
-----------------------
Charterer hereunder, the Charterer shall cause the Vessel to be documented in
the name of the Shipowner under the laws and flag of the United States and
enrolled and licensed to engage in the United States registry and coastwise
trade.
SECTION 3. Term; Charter Hire.
------------------
(a) Term. The interim charter term of this Charter (the "Interim
----
Charter Term") shall commence on the Funding Date and shall terminate one day
before the Base Charter Commencement Date. The Base Charter Term of this
Charter shall commence on the Base Charter Commencement Date and, subject to
earlier termination pursuant to the terms of this Charter, shall expire at
midnight (New York time) on the Base Charter Termination Date. Subject and
pursuant to Section 14, the Charterer may elect one or more Renewal Terms.
(b) Charterer shall pay Interim Charter Hire to the Shipowner as set
forth in Schedule 5 hereto.
(c) Base Charter Hire. The Charterer shall pay to the Shipowner, as
-----------------
Base Charter Hire for the Vessel, thirty-six (36) consecutive semi-annual
installments of Base Charter Hire on the Base Charter Payment Dates during the
Base Charter Term. Each payment of Base Charter Hire during the Base Charter
Term shall be in an amount equal to the product of the Total Vessel Cost
multiplied by the percentage set forth opposite the applicable Base Charter
Payment Date on Schedule 1 hereto (as such Schedule 1 shall be adjusted pursuant
to Section 2.12 of the Participation Agreement). Each installment of Base
Charter Hire shall be in advance or in arrears and shall apply to a specific
semi-annual period as specified in Schedule 1.
(d) Supplemental Charter Hire. The Charterer shall pay to the
-------------------------
Shipowner, for its own account, or to the Person entitled thereto, as provided
herein or in any other Operative Document, any and all Supplemental Charter
Hire, promptly as the same shall become due and payable, and, in the event of
any failure on the part of the Charterer to pay any Supplemental Charter Hire,
subject to the provisions of Section 17(a)(ii), the Shipowner shall have all
rights, powers and remedies provided for herein in the case of non-payment of
Base Charter Hire.
-3-
<PAGE>
(e) Renewal Hire. The Charterer hereby agrees to pay to the Shipowner
------------
with respect to the Vessel throughout each Renewal Term pursuant to Section 14
hereof Renewal Hire in the amount set forth therein.
(f) Method of Payment. Subject to Section 16(a), all payments of Base
-----------------
Charter Hire, Supplemental Charter Hire, and Renewal Hire payable to the
Shipowner shall be paid to the Shipowner's account specified in Schedule 1 to
the Participation Agreement or to such other account at such other place in the
United States of America as the Shipowner shall specify in writing to the
Charterer at least five (5) Business Days prior to the due date thereof. All
payments of Supplemental Charter Hire payable to any Person other than the
Shipowner pursuant to any Operative Document shall be paid directly to such
Person as provided in such Operative Document. Each payment of Charter Hire
shall be made by the Charterer in immediately available funds, on or before
12:00 noon, New York time, at the place of receipt, on the scheduled date on
which such payment shall be due, unless such scheduled date shall not be a
Business Day in which case such payment shall be due and payable on the next
succeeding Business Day with the same force and effect as if made on such
scheduled date and (provided such payment is made on such next succeeding
Business Day) no interest shall accrue on the amount of such payment from and
after such scheduled date.
(g) Late Payment. If any payment of Charter Hire shall not be paid
------------
when due, the Charterer shall pay to the Shipowner (or, in the case of
Supplemental Charter Hire, to the Shipowner for its own account or to the Person
entitled thereto as provided herein or in any other Operative Document), as
Supplemental Charter Hire, interest (to the extent permitted by applicable law)
on such overdue amount from and including the due date thereof to but excluding
the date of payment thereof (unless payment is made after 12:00 noon, New York
time at the place of receipt, in which event such date of payment shall be
included) at the Overdue Rate.
(h) Minimum Payment. Notwithstanding any other provision of this
---------------
Charter or any other Operative Document (i) the amount of Base Charter Hire
payable on each Base Charter Payment Date, as the same may be adjusted pursuant
to Section 2.12 of the Participation Agreement, shall be at least equal to the
aggregate amount of scheduled principal and accrued interest due and payable on
the Secured Notes Outstanding on such Base Charter Payment Date, and (ii) the
amount of Stipulated Loss Value and Termination Value as of any date and the
amount of the initial installment of the EBO Exercise Price as of any EBO
Exercise Date, as each such amount may be adjusted pursuant to Section 2.12 of
the Participation Agreement, together with the payment of Charter Hire payable
under this Charter on such date (excluding, in each case, any portion thereof
constituting an Excepted
-4-
<PAGE>
Payment), shall be at least equal to the aggregate amount of principal and
accrued interest which would be due and payable on the Secured Notes Outstanding
on such date, assuming such date or EBO Exercise Date, as the case may be, was
the date such payment was due on the Secured Notes in respect of any payment by
the Charterer of Stipulated Loss Value, Termination Value or EBO Exercise Price.
(i) Net Charter. Notwithstanding any other provision of this Charter
-----------
and to the extent permitted by law, the obligation of the Charterer to pay
Charter Hire, Stipulated Loss Value, and Termination Value pursuant to the terms
hereunder shall be absolute and unconditional until the Charter Termination
Date, and such obligation shall not be affected by any circumstance of any
character, including (i) the right to abatement, reduction, set off, defense,
counterclaim or recoupment respecting Charter Hire, Stipulated Loss Value or
Termination Value for any reason based upon any claim the Charterer may have
against the Trust Company, Shipowner, Owner Participant, Builder, the Indenture
Trustee or any other person whatsoever, including without limitation (A) any
act, omission or breach on the part of the Trust Company, Shipowner, Owner
Participant, the Builder, the Indenture Trustee, or any other Person; (B) any
amendment or modification of, or supplement to, the Charter, the Initial
Subcharter, any other subcharter, the Participation Agreement, any agreements
relating to the Vessel or any other instrument or agreement applicable to the
Vessel or any part thereof, or any assignment or transfer of any part thereof,
or any furnishing or acceptance of additional security or any release of any
security or any failure or inability to perfect any security; (C) any waiver,
consent, change, extension, indulgence or other action or inaction under or in
respect of the Charter, the Initial Subcharter, any other subcharter or any
other such instrument or agreement, or any exercise or nonexercise of any right,
remedy, power or privilege under or in respect of any such instrument or
agreement; (D) any bankruptcy, insolvency, liquidation or similar proceeding
with respect to the Trust Company, the Shipowner, the Owner Participant, the
Indenture Trustee, Charterer, Guarantor, Operator, or any subcharterers or any
Affiliate of any of them; (E) any limitation on the liability or obligations of
Charterer under the Charter or any termination, cancellation, frustration,
invalidity, irregularity or unenforceability, in whole or in part, of the
Charter, the Initial Subcharter, any other subcharter or any term of any thereof
or any lack of power or authority of Shipowner, Charterer, Operator, or any
other subcharterer to enter into the Charter, the Initial Subcharter, or any
other subcharter; (F) any assignment or other transfer of the Charter, the
Initial Subcharter, or any other subcharter by Charterer, Operator, or a
subcharterer or any lien, charge or encumbrance, from whatever source arising or
affecting Charterer's or Operator's estate in, or any other subchartering of,
all or any part of the Vessel
-5-
<PAGE>
(whether or not pursuant to the express provisions of the Charter); (G) any
damage to, or loss, destruction, requisition, seizure, forfeiture or marshal's
or other sale of the Vessel or any interruption or prevention of or restriction
on or interference with the use or possession of the Vessel; (H) any defect in
the title to the Vessel or any encumbrance on the Vessel; (I) any libel, arrest,
attachment, levy, detention, sequestration or taking into custody of the Vessel,
or any interruption or prevention of, or restriction on, or interference with
the use or possession of the Vessel; (J) any defect in the seaworthiness,
condition, design operation or fitness for use of the Vessel or the
ineligibility of the Vessel for any particular trade; or (K) any event of force
majeure or any frustration; and (ii) any right conferred by law to terminate the
Charter except in accordance with the express terms hereof. Nothing contained
in this Section 3(i) shall be construed as (a) a guaranty of the value of the
Vessel upon the expiration or termination of the Base Charter Term or any
Renewal Term, the useful life of the Vessel or the payment of any of the Secured
Notes, (b) a prohibition of assertion by the Charterer, the Operator, or any
affiliate thereof, of any claim against the Builder or any other manufacturer,
supplier, vendor, dealer, contractor, subcontractor or installer with respect to
the Vessel or any part thereof, or (c) a waiver by the Charterer of (x) any of
its rights or remedies against the Trust Company, the Shipowner, Owner
Participant, Owner Participant Guarantor, Indenture Trustee, or Loan Participant
for any breach of any undertaking or representation made to or for the benefit
of the Charterer, or (y) any of its rights under any of the Operative Documents
or of its right to assert and sue upon any claims it may have against any other
Person in one or more separate actions.
(j) Premium. The Charterer shall also pay to the Indenture Trustee
-------
on behalf of the Shipowner, as Supplemental Charter Hire, an amount on an After-
Tax Basis equal to any amount payable by the Shipowner as Premium, as and when
any such Premium shall be due and payable under the Indenture; provided,
--------
however, that the Charterer shall have no obligation to pay on behalf of the
- -------
Shipowner or the Owner Participant any Premium payable by the Shipowner or the
Owner Participant (or to otherwise reimburse the Shipowner or the Owner
Participant, whether hereunder or under any of the other Operative Documents,
for any Premium paid by the Shipowner or the Owner Participant) (x) pursuant to
Section 3.06 of the Indenture or (y) with respect to any Indenture Event of
Default that is not a Charter Event of Default.
-6-
<PAGE>
SECTION 4. Redelivery of Vessel.
--------------------
(a) Redelivery; Redelivery Condition. On the last day of the Charter
--------------------------------
Term, unless (i) an Event of Loss has occurred, or (ii) use of the Vessel has
been requisitioned as described in Section 13 hereof and such requisition is
continuing or (iii) the Charterer has exercised any purchase option granted
herein or (iv) the Charterer has terminated the Charter in accordance with the
provisions of Section 12 and the Shipowner has elected to retain the Vessel, at
the Charterer's cost and expense, and upon not fewer than 180 days' prior
written notice to the Shipowner, the Charterer shall be deemed to have
redelivered the Vessel or caused the Vessel to be redelivered to the Shipowner
by making the Vessel available to the Shipowner at a U.S. port designated by the
Shipowner; provided that such port shall be on the coast of the United States
--------
designated by the Charterer and shall be a safe port, which is a port that is
physically able to accommodate the Vessel and that is safe for the Vessel to
reach, remain at and leave. Thereafter, the Charterer shall have no further
liability or obligation with respect to the Vessel, and the Shipowner shall be
responsible for all Vessel-related Claims arising after the redelivery of the
Vessel. The Charterer agrees that at the time of such redelivery, the Vessel
will be in the good order, condition and repair required by all of the terms of
Section 6(a) hereof, ordinary wear and tear excepted, and no additional repair
to the Vessel shall be required to permit the Vessel to be fully operational and
fit for use as a product tanker in U.S. coastwise trade; provided, however, that
-------- -------
the Charterer shall not be required to redeliver the Vessel fully operational
and fit for use as a product tanker in U.S. coastwise trade if this Charter is
terminated for economic obsolescence in accordance with the terms of Section
12(a) hereof as a result of a change in law or a Governmental Rule that makes
the Vessel ineligible for U.S. coastwise trade ("Redelivery Condition").
Notwithstanding anything herein to the contrary, in the event this Charter is
terminated by reason of economic obsolescence in accordance with the terms of
Section 12(a) hereof, the Charterer shall not be obligated to make any repair,
change or Modification if such repair, change or Modification is a basis for the
Charterer's decision to terminate this Charter in accordance with the terms of
such Section 12(a). The Charterer will redeliver the Vessel free and clear of
all Liens except Permitted Liens described in clause (iii) of the definition
thereof. Upon the redelivery of the Vessel by the Charterer, the Charterer will
not represent or warrant that the Vessel is free and clear of Liens of which it
is not aware; provided, that the foregoing shall not release the Charterer of
--------
any liability in respect of such Liens to the extent that the Charterer is
required to discharge such Liens under the Operative Documents. In no event
will the Shipowner fail to take control of the Vessel more than thirty (30) days
after it is made available to the Shipowner by the Charterer.
-7-
<PAGE>
(b) Redelivery Inspection. Not earlier than 90 days prior to the
---------------------
Vessel's redelivery, the Vessel shall be inspected by an independent naval
architect, appointed by the Charterer and approved by the Shipowner, such
approval not to be unreasonably withheld, to determine the Vessel's compliance
with the Redelivery Condition. The Vessel shall not be drydocked for such
inspection unless required by the naval architect. If the Vessel is not in
compliance with the Redelivery Condition, the Charterer will correct or repair
(at its own expense) any condition disclosed by such inspection to the extent
necessary to cause the Vessel to comply with the Redelivery Condition, and
further the Charterer shall pay for the cost of the inspection and drydocking,
if any. The Charter Term shall be extended for any period necessary to make
such repairs or to remove any property of the Charterer prior to redelivery and,
notwithstanding the provisions of Section 4(a) relating to the port of
redelivery, redelivery shall take place at the port where such repairs are made;
provided that such port shall be on the coast of the 48 contiguous states of the
- --------
United States.
(c) Additional Charter Hire. The Charterer will pay additional
-----------------------
Charter Hire hereunder for any period for which the Charter Term may be extended
pursuant to the terms of Section 4(b) hereof or which may be necessary to
complete any voyage in progress, which Charter Hire shall be in addition to any
other payments due hereunder, and shall be payable quarterly from the scheduled
Charter Term Termination Date and on the last day of the Charter Term, as
extended, at a rate per day equal to the number of days from the last payment in
arrears of Charter Hire through the end of the Charter Term times an amount
equal to the average daily equivalent of (i) all Charter Hire paid during the
Base Charter Term if such extended Charter Term is immediately following the
last day of the Base Charter Term or (ii) all payments of Renewal Hire during
the Renewal Term then terminating if such extended Charter Term is immediately
following the last day of a Renewal Term; provided, however, that no additional
-------- -------
Charter Hire shall be paid by the Charterer for any period during which work,
ordered solely by the Shipowner and not required by this Section 4, is being
performed.
SECTION 5. Use and Operation; Citizenship.
------------------------------
(a) Use of Vessel. Subject to the terms and conditions of this
-------------
Charter, the Charterer shall have the full use of the Vessel and may employ the
Vessel as required to perform the Charter and any subcharter in any part of the
world and in such lawful trades as Charterer may direct.
(b) Exclusive Possession; Manning etc. of Vessel. Subject to the terms
--------------------------------------------
and conditions of this Charter, the Charterer and any permitted subcharterer
shall have exclusive
-8-
<PAGE>
possession and control of the Vessel, and shall man, victual, equip, supply,
furnish, outfit, maintain and repair, navigate and operate the Vessel at its own
expense or by its own procurement throughout the Charter Term. The master,
officers and crew of the Vessel shall be engaged and employed by the Charterer
or the Operator and shall remain the Charterer's or the Operator's servants,
navigating and working the Vessel on behalf of and at the risk of the Charterer
or the Operator. The Shipowner shall not have any interest in any salvage
moneys earned by the Vessel or received by the Charterer before redelivery of
the Vessel to the Shipowner under Section 4 hereof. The Shipowner shall not be
required to pay any port charges, pilotages or any other costs, charges and
expenses whatsoever incident to the use, operation and maintenance of the Vessel
during the Charter Term.
(c) Maintenance of Vessel Documentation. The Charterer shall, without
-----------------------------------
expense to the Shipowner, throughout the Charter Term maintain, or cause to be
maintained, the documentation of the Vessel in the name of the Shipowner under
the laws and flag of the United States qualified to engage in the United States
coastwise trade, and the Shipowner shall upon the request of the Charterer
execute such documents and furnish such information as the Charterer may
reasonably require to enable the Charterer to maintain, or cause to be
maintained, such documentation. The Shipowner shall, at the request of the
Charterer, immediately execute or file all documents necessary to maintain such
documentation and to effect any name change(s). The Charterer may, at any time,
instruct the Shipowner to change the name of the Vessel, it being understood
that the costs of changing the name of the Vessel shall be payable by the
Charterer. Notwithstanding anything to the contrary herein, no action or
inaction by the Owner Participant or the Shipowner, or any of their respective
Affiliates, that results in the loss (whether temporary or permanent) or other
termination of the eligibility of the Vessel for documentation under the laws
and flag of the United States or the qualification of the Vessel to engage in
United States coastwise trade shall be a default with respect to the obligation
of the Charterer to maintain, or cause to be maintained, the documentation of
the Vessel under the laws and flag of the United States qualified to engage in
the United States coastwise trade, and the Charterer shall have no
responsibility for costs, expenses or other Claims arising from such termination
of eligibility or qualification.
(d) Citizenship. Each of the Trust Company and the Charterer,
-----------
respectively, hereby represents that it is, and covenants that it shall remain
during the Charter Term, citizens of the United States pursuant to Section 2 of
the Shipping Act qualified to engage in the United States coastwise trade, and
any regulations promulgated thereunder. The Shipowner represents that it is,
and covenants that it will remain during the Charter Term, a citizen of the
United States pursuant to 46 U.S.C.
-9-
<PAGE>
(S) 12102(a)(2) and 46 U.S.C. (S) 12106(e)(1)(B). In the event that the Trust
Company, the Shipowner or the Charterer shall fail to remain, or an event shall
occur which will cause any of them no longer to remain, a citizen of the United
States as set forth in the preceding two sentences, respectively, then it shall
notify the other party hereto as soon as it obtains knowledge of such fact, and
the provisions of Sections 10.8 and 11.2(j) of the Participation Agreement shall
be applicable.
(e) Quiet Enjoyment. The Shipowner warrants and covenants that,
---------------
unless a Charter Event of Default shall have occurred and be continuing and this
Charter shall have been declared to be in default pursuant to Section 18(a), the
Charterer shall be entitled to the quiet use and enjoyment of the benefits of
the Vessel including the right to uninterrupted possession, use and operation of
the Vessel, and the Shipowner shall not take or permit any Person claiming by,
through or under it to take any action inconsistent with the Charterer's rights
hereunder or under any of the other Operative Documents or otherwise, through
its own actions or inactions, interfere or permit any such Person to interfere
with such quiet use or enjoyment or such possession, use or operation or the
rights of the Operator or any other permitted subcharterer or assignee to such
quiet use or enjoyment or such possession, use or operation under the Initial
Subcharter or any other subcharter or assignment permitted hereunder.
SECTION 6. Maintenance, Compliance with Governmental Rules;
------------------------------------------------
Inspection.
- ----------
(a) Vessel Maintenance, Compliance with Governmental Rules. Charterer
------------------------------------------------------
shall throughout the Charter Term, maintain the Vessel, or cause it to be
maintained, at its own cost and expense, in accordance with the established
maintenance and repair programs of the Charterer or any Affiliate thereof for
similar vessels owned or chartered thereby so as to keep the Vessel in (i) good
working order and condition, ordinary wear and tear excepted, and (ii) in
compliance, in all material respects, with applicable Governmental Rules or ABS
requirements; provided, however, that the Charterer will not be required to
-------- -------
comply with any Governmental Rule or ABS requirement:
(A) whose application or validity is being contested diligently and
in good faith by appropriate proceedings;
(B) compliance with which shall have been excused or exempted by a
nonconforming use permit, waiver, extension or forbearance exempting it
from such Governmental Rule or ABS requirement but only to the extent that
the Charterer's noncompliance is in accordance with such permit, waiver,
extension or forbearance; or
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<PAGE>
(C) if good faith efforts and appropriate steps are being taken to
comply;
so long as, if in the case of clauses (A) and (B) above, neither such
failure of compliance nor such contest shall result in the material risk of
(I) sale, forfeiture or loss of the Vessel or title thereto;
(II) any interference with the payment of Base Charter Hire when
due; or
(III) the imposition of any criminal liability on the Shipowner,
the Owner Participant or the Indenture Trustee.
(b) Indenture Trustee's and Owner Participant's Inspection. Subject
------------------------------------------------------
to any applicable laws and regulations, the Shipowner, the Indenture Trustee and
the Owner Participant shall have the right, at such person's risk and expense
(including, without limitation, as to personal injury and death) and under
conditions reasonably acceptable to the Charterer (including, without
limitation, with respect to time and place of inspection, the execution of
waivers of liability reasonably acceptable to the Charterer and the provision of
proof of insurance reasonably acceptable to Charterer) and subject to
confidentiality provisions, to visit and inspect the Vessel, and the Charterer
will use reasonable efforts to make available its books and records related
thereto, all upon reasonable notice and at such reasonable times during normal
business hours and as may be reasonably requested; provided, however, that
-------- -------
unless there is an existing Charter Event of Default, the Indenture Trustee and
Owner Participant may not make more than one (1) inspection in any calendar year
without the Charterer's prior written consent; provided, further, that such
-------- -------
inspection rights must be exercised subject to the supervision of the Charterer
or its designee. Unless a Charter Event of Default shall have occurred and be
continuing, the Charterer shall not be required to disclose any confidential
information or allow anyone to inspect confidential materials. For the purposes
of this Section 6(b), the Vessel's logs shall not be deemed to be confidential
materials.
(c) No Obligation to Inspect. No Person entitled to make any
------------------------
inspection or examination referred to in this Section 6 shall have any
obligation hereunder to make any inspection or examination or shall incur any
liability or obligation by reason of not making any such inspection or
examination. No inspection pursuant to this Section 6 shall interfere with the
use, operation or maintenance of the Vessel or any part thereof, or the rights
of any Person permitted under the Charter, and the
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<PAGE>
Charterer shall not be required to undertake or incur any additional liabilities
in connection therewith.
SECTION 7. Use of Stores and Equipment.
---------------------------
(a) Stores. The Shipowner acknowledges that such fuel, diesel oil,
------
fresh water, lubricating oil, greases and consumable stores as may be on board
the Vessel at the time of delivery thereof to the Charterer will be the property
of the Charterer. On redelivery or retaking of the Vessel any such fuel, diesel
oil, fresh water, lubricating oil, greases and consumable stores that may be on
board the Vessel shall become the property of the Shipowner upon payment by the
Shipowner to the Charterer at the actual costs to the Operator or the Charterer
for such fuel, diesel oil, fresh water, lubricating oil, greases and consumable
stores as then remain on board the Vessel.
(b) Use of Equipment. The Charterer shall have the use, without
----------------
additional payment to the Shipowner, of all outfit, equipment (including cabin,
crew and galley equipment), furniture, furnishings, appliances, spare and
replacement parts and non-consumable stores as shall have been on board the
Vessel at the time of delivery thereof to the Charterer. The same or their
substantial equivalent shall be returned to the Shipowner upon redelivery in the
same good order and condition as received, ordinary wear and tear excepted. Any
such items damaged or so worn in service as to be unfit for use or for use as a
spare part for replacement purposes, or lost or destroyed, shall be replaced or
made good by the Charterer in kind at or before redelivery or, at the
Charterer's option, subject to the provisions of Section 4, the Charterer may
pay the Shipowner for said items at the current market prices therefor
(including transportation and installation costs) at the port and time of
redelivery.
(c) Spares and Replacement Parts. Subject to Section 8 below, during
----------------------------
the Charter Term, the Charterer shall, at its expense and on its time, provide
such additional equipment, outfit, tools, spare and replacement parts, crockery
and linen as may be required for Charterer's operation of the Vessel. Spare and
replacement parts ordered for, but not delivered to, the Vessel by or for the
Charterer on or before the date that the Vessel is redelivered to the Shipowner
shall be taken over and paid for by the Shipowner when delivered to the Vessel,
and such equipment shall remain the property of the Shipowner.
SECTION 8. Charterer's Modifications; Removal of Property.
----------------------------------------------
-12-
<PAGE>
(a) Required Modifications. The Charterer shall make or cause to be
----------------------
made at its sole cost and expense all Severable and Nonseverable Modifications
to the Vessel as may be required from time to time to meet the requirements of
clause (ii) of Section 6(a) (all such Modifications, "Required Modifications").
The Charterer shall complete (or cause to be completed) all such Required
Modifications in a good and workmanlike manner, with reasonable dispatch and
(but only to the extent practicable) in a manner which does not decrease the
Fair Market Sales Value and utility of the Vessel or the remaining useful life
or residual value of the Vessel or cause the Vessel to become "limited use
property" within the meaning of Revenue Procedure 76-30, and any amendment or
modification thereto.
(b) Optional Modifications. In addition to any Required
----------------------
Modifications, the Charterer shall have the right to make (or cause or allow to
be made) such alterations, modifications, additions and improvements to the
Vessel as the Charterer, in its sole discretion, deems desirable in the proper
conduct of its business (all such Modifications, "Optional Modifications");
provided that such Optional Modifications (i) are done in a good and workmanlike
- --------
manner, (ii) shall not reduce the Fair Market Sales Value and utility, or the
remaining useful life or residual value (except, in each case, to a de minimus
-- -------
extent) of the Vessel, and (iii) shall not cause the Vessel to become limited
use property within the meaning of Revenue Procedure 76-30.
(c) Title to Modifications; Purchase Option for Severable
-----------------------------------------------------
Modifications. (i)(A) Subject to Section 8(c)(ii), title to all Severable
- -------------
Optional Modifications to the Vessel shall vest in the Charterer or any Person
designated by the Charterer. The Charterer may remove (or allow to be removed)
any such Severable Optional Modification prior to or upon the expiration of the
Charter Term.
(B) Subject to Section 8(c)(ii), at the time the Vessel is
redelivered to the Shipowner, the Shipowner may offer to purchase, at the
sole discretion of the Charterer, for fair market value (as agreed to by
the Charterer in its sole discretion) any Severable Modifications. If the
Shipowner shall have purchased any such Severable Modification pursuant to
this Section 8(c)(i)(B), the Charterer, if requested by the Shipowner,
shall furnish to the Shipowner, at no cost or expense to the Charterer, a
bill of sale or assignment in form and substance reasonably satisfactory to
the Shipowner, conveying the right, title and interest of the Charterer in
and to such Severable Modification. Any purchase of a Severable
Modification by the Shipowner hereunder shall be solely at the discretion
of the Charterer. The Charterer shall have no obligation to
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<PAGE>
convey to the Shipowner any Severable Modification that is not a Required
Modification.
(ii) Title to (A) Severable Required Modifications to the Vessel, (B)
Nonseverable Modifications to the Vessel and (C) any Severable
Modifications that are financed by the Shipowner pursuant to Section
8(d)(ii) hereof and Section 14 of the Participation Agreement shall vest in
the Shipowner free and clear of all Liens except Permitted Liens.
(d) Payment for Modifications. (i) The Charterer shall be permitted
-------------------------
at any time to finance the cost of any Severable Modification to the Vessel,
including without limitation, with respect to Severable Optional Modifications,
on a third-party ownership basis.
(ii) The Charterer shall have the right to seek financing from the
Shipowner as provided in Section 14 of the Participation Agreement for the
cost of any Modification whether or not such Modification is a Required
Modification. If the Charterer intends to seek financing for any such
Modification under Section 14 of the Participation Agreement, the Charterer
shall first provide the Shipowner and the Owner Participant with written
notice of such Modification at least sixty (60) days (to the extent
practicable) prior to the date of such proposed financing. If mutually
acceptable terms for any such financing shall not have been agreed to
between the Owner Participant and the Charterer within sixty (60) days
after the receipt by the Owner Participant of the notice from the Charterer
referred to in the second sentence of this Section 8(d)(ii), the cost of
such Modification may, at the Charterer's option, be financed by the
Shipowner as provided in the third sentence of Section 14 of the
Participation Agreement and subject to the conditions set forth therein.
(e) Removal of Property. (i) In the ordinary course of
-------------------
maintenance, service, repair or testing, any item of property constituting
a part of the Vessel may be removed and replaced with an item of property
which is free and clear of all Liens, except Permitted Liens, and in as
good operating condition as, and with a value and utility, and remaining
useful life and residual value at least equal to, the item of property
replaced, assuming such item of property replaced was in at least the
operating condition and repair required to be maintained hereunder.
Immediately upon any item of property becoming incorporated in the Vessel,
without further act, (A) title to such item of property thereupon shall
vest in the Shipowner and be subject to the Lien of the Ship Mortgage, (B)
such item of property shall become subject to this Charter and be deemed a
part of the Vessel for all purposes hereof to the same
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<PAGE>
extent as the item of property it replaced and (C) title to such removed
item of property shall vest in the Charterer or such Person as shall be
designated by the Charterer, free and clear of all rights of the Shipowner,
the Indenture Trustee and any Person claiming through the Shipowner or the
Indenture Trustee and of all Shipowner's Liens and Owner Participant's
Liens, and shall no longer be subject to this Charter or considered to be a
part of the Vessel.
(ii) If, at any time during the Charter Term, the Charterer shall
conclude that any item of property constituting a part of the Vessel is
obsolete, redundant or unnecessary and can be removed without diminution of
the Fair Market Sales Value, utility, reduction of the remaining useful
life, or residual value of the Vessel and without causing the Vessel to
become "limited use property" within the meaning of Revenue Procedure 76-
30, the Charterer may remove (or allow to be removed) such property and
upon such removal, without further act, title to such property shall vest
in the Charterer or in such Person as shall be designated by the Charterer,
free of the Lien of the Ship Mortgage. In addition, notwithstanding
anything contained in this Charter to the contrary but subject to Section 4
hereof, if an event occurs with respect to any item of property
constituting part of the Vessel (or any item of property replaced) which
would constitute an Event of Loss if such event occurred with respect to
the Vessel, the Charterer shall have no obligation to pay any Stipulated
Loss Value in respect of, or to otherwise replace, repair or rebuild, such
item of property, so long as the absence or condition of such item of
property is not material to the overall operation of the Vessel. The
Charterer acknowledges and agrees that this Section 8(e)(ii) does not
reduce the Charterer's maintenance obligations under Section 6(a).
(f) Marking of Vessel. The Charterer shall have the right to paint
-----------------
the Vessel in its own colors or those of the Operator or any subcharterer
permitted hereunder, to name or re-name the Vessel, to install and display its
or the Operator's or any subcharterer's stack insignia and to fly its or the
Operator's or any subcharterer's house flag or to use the colors, insignia or
flag of any person directly or indirectly controlling, or controlled by, or
under direct or indirect common control with, the Charterer or the Operator or
any subcharterer permitted hereunder, all without expense to the Shipowner. The
Charterer shall have its, the Operator's or any subcharterer's insignia or flag
removed, without expense to the Shipowner, prior to redelivery of the Vessel to
the Shipowner under Section 4(a). The Charterer agrees to notify the Shipowner
and the Owner Participant of any change in name of the Vessel.
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<PAGE>
SECTION 9. Liens, Etc.
----------
(a) No Liens; Permitted Liens. The Charterer will not, directly or
-------------------------
indirectly, create, incur, assume or suffer to exist any Liens on or with
respect to any part of the Vessel, title thereto or any interest therein, other
than Permitted Liens, and the Charterer promptly, at its own expense, will take
such actions as may be necessary duly to discharge any such Lien not excepted
above.
(b) Notice of Ship Mortgage. A notice, reading as follows (or
-----------------------
containing such other information as may be approved by the Shipowner), printed
in plain type of such size that the paragraph of reading matter shall cover a
space not less than six inches wide by nine inches high, shall be placed and
kept prominently displayed in the chart room and in the master's cabin of the
Vessel:
"NOTICE OF FIRST PREFERRED SHIP MORTGAGE AND CHARTERS
This Vessel is owned by the Shipowner, a national banking association,
not in its individual capacity but solely as owner trustee (the
"Shipowner") under a trust agreement dated as of September 30, 1997 and (i)
is covered by a First Preferred Ship Mortgage in favor of State Street Bank
and Trust Company, as Indenture Trustee, Mortgagee, under authority of the
Ship Mortgage Act, 1920, as amended, (ii) is under demise charter to [NAME
OF CHARTERER] and (iii) is under a demise subcharter to [NAME OF
SUBCHARTERER]. Under the terms of said Ship Mortgage, said demise charter,
and said subcharter, neither the Shipowner, the charterer, any
subcharterer, the master or agent of this Vessel nor any other person has
any right, power or authority to create, incur or permit to be placed or
imposed upon this Vessel any lien whatsoever other than the liens of the
Ship Mortgage and Permitted Liens under the Charter."
(c) Charterer's Benefits. Anything herein to the contrary
--------------------
notwithstanding, none of the Shipowner or any Person claiming thereunder shall
interfere with the benefits afforded to the Charterer or the Operator by the
provisions of Chapter 8 of Title 46 of the United States Code, including without
limitation 46 U.S.C.A. Section 186, or otherwise by law, except for Claims
arising from or after a termination of the Charter under Section 18 hereof.
Section 10. Insurance
---------
(a) Coverage. (i) Charterer, at its own cost and expense, shall
--------
carry and maintain or cause to be carried and
-16-
<PAGE>
maintained at all times during the Charter Term protection and indemnity
insurance (including pollution liability insurance), to the extent such
insurance is commercially available, on or with respect to the Vessel and the
operation thereof in such amounts, and with such deductibles or self-insurance
amounts, and in such forms as is consistent with Charterer's practices for other
similar vessels owned or chartered by it or its Affiliates. The provisions of
Rule 16 (Fleet Entry) of the Britannia Steam Ship Insurance Association Limited
(the "Association") will apply (or similar requirements of any other insurer
providing protection and indemnity insurance with respect to the Vessel may
apply) to the entry of the Vessel with the Association save that the Association
may not require the Owner Participant or the Shipowner to pay outstanding calls
on other ships in the fleet.
(ii) Any liability insurance carried in accordance with Section
10(a)(i) shall provide in the policy or by special endorsement that:
(A) the Shipowner, the Owner Participant, the Indenture Trustee and
the Pass Through Trustee are included as additional insureds in respect of
all public liability policies, if any, carried in accordance with Section
10(a)(i);
(B) such insurance shall be primary without right of contribution of
any other insurance carried by or on behalf of the Shipowner, the Indenture
Trustee, the Owner Participant and the Loan Participant;
(b) Adjustment of Losses. Losses, if any, with respect to the Vessel
--------------------
under all insurances or entries in protection and indemnity associations,
whether or not required to be carried under Section 10(a), shall be adjusted
with the insurance companies, including the filing of appropriate proceedings,
by the Charterer. The Shipowner shall cooperate with the Charterer in making
all proofs of loss and take all other reasonable steps necessary to effect such
adjustment with the insurance companies.
(c) Application of Insurance Proceeds. All insurance proceeds in
---------------------------------
respect of insurance, if any, maintained by Charterer with respect to the Vessel
and payable under circumstances not constituting an Event of Loss shall be
payable to the Charterer. All insurance proceeds (up to an amount not exceeding
the applicable Stipulated Loss Value) in respect of hull insurance, if any,
maintained by the Charterer with respect to the Vessel pursuant to Section
10(a)(i) and payable as a result of an Event of Loss will be paid to Shipowner
and shall be applied in reduction of the Charterer's obligation to pay
Stipulated Loss Value in connection with such Event of Loss if not already paid
by the Charterer or, if already paid by the Charterer, shall be
-17-
<PAGE>
applied to reimburse the Charterer for its payment of such Stipulated Loss
Value, and the balance, if any, in each case, of such proceeds remaining
thereafter shall be paid over to, or retained by Charterer. Notwithstanding the
foregoing, the proceeds of any protection and indemnity or other liability
insurance shall be payable to the Person to whom such amount is due.
(d) Additional Insurance. Nothing in this Section 10 shall prohibit
--------------------
the Shipowner, the Owner Participant, the Charterer, the Indenture Trustee, the
Pass Through Trustee or the Operator from acquiring or maintaining, at its own
expense, additional insurance in such amounts with respect to such risks as each
such Person, as the case may be, shall determine; provided that no such
--------
insurance carried by the Shipowner, the Indenture Trustee, the Pass Through
Trustee or the Owner Participant shall prevent Charterer or the Operator or any
subcharterer from, or increase the cost to Charterer or the Operator or any
subcharterer of, obtaining insurance respecting the Vessel as Charterer or the
Operator or any subcharterer wishes. The proceeds of any such additional
insurance will be for the account of the party maintaining such additional
insurance.
Section 11. Event of Loss.
-------------
(a) Notice of Event of Loss. If there shall occur an Event of Loss
-----------------------
with respect to the Vessel during the Charter Term, the Charterer shall
promptly, upon the obtaining of Actual Knowledge thereof, notify the Shipowner,
the Owner Participant and the Indenture Trustee of the occurrence thereof.
(b) Payment of Stipulated Loss Value, Etc. (i) If an Event of Loss
--------------------------------------
with respect to the Vessel shall occur during the Charter Term, unless the
Charterer shall have elected to substitute a vessel pursuant to Section
11(b)(ii), the Charterer shall pay to the Shipowner compensation for such Event
of Loss, on the date which is the latest Stipulated Loss Value Determination
Date occurring not later than 180 days after the date of such Event of Loss (the
"Loss Termination Date"), the Stipulated Loss Value for the Vessel as of such
Stipulated Loss Value Determination Date. The Charterer shall pay,
simultaneously therewith, all Base Charter Hire or Renewal Hire, as the case may
be, due and owing prior to such Loss Termination Date, and Supplemental Charter
Hire which is agreed to be due and owing with respect to the Vessel on or prior
to the Loss Termination Date, and if such Loss Termination Date is a Base
Charter Payment Date, all Base Charter Hire payable in arrears on such Base
Charter Payment Date (but, for the avoidance of doubt, not Base Charter Hire
payable in advance on such Base Charter Payment Date), whereupon (A) this
Charter and the obligations of
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<PAGE>
the Charterer hereunder shall terminate as of the Loss Termination Date (other
than those provisions which by their terms survive the termination or expiration
of the Charter), (B) the Shipowner shall transfer all right, title and interest
of the Shipowner in and to the Vessel, "as is and where is" to the Charterer or
as the Charterer shall direct, and the Shipowner shall warrant that it is
transferring whatever title that it received on the Funding Date and that the
Vessel is free and clear of Shipowner's Liens and Owner Participant's Liens, but
otherwise without representation or warranty, (C) the Shipowner shall, at the
Charterer's expense, execute and deliver to the Charterer or as the Charterer
shall direct a bill of sale and assignment and such other instruments and
documents as the Charterer may reasonably request to evidence the valid
consummation of such transfer and shall, at the Charterer's expense, take such
actions under Section 6.03 of the Indenture as the Charterer may reasonably
request, and (D) the Charterer shall be entitled to all awards and insurance and
other proceeds with respect to any Event of Loss.
(ii) Upon the occurrence of an Event of Loss, except an Event of Loss
of the type described in clause (vii) of the definition thereof, the
Charterer shall have the option, in lieu of paying the Stipulated Loss
Value pursuant to Section 11(b)(i), within 180 days of the Event of Loss,
of substituting a vessel of at least equal Fair Market Sales Value and
utility and with a remaining useful life and residual value as the Vessel
had immediately prior to such Event of Loss (assuming the Vessel has been
maintained in accordance with the terms of this Charter), and which is not
"limited use property" within the meaning of Revenue Procedure 76-30 and
any amendment or modification thereof, and title to the substitute vessel
shall immediately vest in the Shipowner to the same extent as the Vessel.
In the event that the Charterer shall have elected the option set forth in
this Section 11(b)(ii), no amounts shall be payable under Section 11(b)(i)
and this Charter shall remain in full force and effect with respect to the
substitute vessel. Prior to or at the time that the Charterer determines to
substitute a vessel in accordance with this Section 11(b)(ii), the
Charterer will (A) furnish the Shipowner with a bill of sale in favor of
the Shipowner with respect to such substitute vessel (B) enter into such
amendments to the Operative Documents as may be reasonably necessary to
effect such substitution, (C) furnish the Shipowner with an opinion of the
Charterer's counsel (which may be Charterer's general counsel) to the
effect that the bill of sale referred to in clause (A) above constitutes an
effective instrument for the conveyance of title to such Vessel, (D)
furnish the Shipowner with an appraisal as to the Fair Market Sales Value,
utility, residual value and remaining useful life of such Vessel and (E) so
long as the Indenture shall not have
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<PAGE>
been satisfied and discharged, cause a financing statement or statements
with respect to such substitute vessel or other requisite documents or
instruments to be filed in such place or places as may be necessary in
order to perfect the security interest created by or pursuant to the
Indenture or the Ship Mortgage. Upon transfer of the substituted vessel to
Shipowner, the Shipowner shall transfer all right, title and interest of
the Shipowner in and to the Vessel, "as is and where is," to the Charterer
or as the Charterer shall direct, free and clear of Shipowner's and Owner
Participant's Liens, and the Shipowner shall warrant that it is
transferring whatever title it received on the Funding Date, but otherwise
without representation or warranty, and the Shipowner shall, at the
Charterer's expense, execute and deliver to the Charterer or as the
Charterer shall direct a bill of sale and assignment and such other
instruments and documents as the Charterer may reasonably request to
evidence the valid consummation of such transfer and shall, at the
Charterer's expense, take such actions under Section 6.03 of the Indenture
as the Charterer may reasonably request.
(c) Application of Other Payments upon the Occurrence of an Event of
----------------------------------------------------------------
Loss. Any amounts of condemnation or requisition proceeds received at any time
- ----
by the Shipowner, the Indenture Trustee, the Charterer or the Operator as a
result of the occurrence of an Event of Loss shall be paid to, or retained by,
the Charterer; provided that any amounts of condemnation or requisition proceeds
--------
received at any time by the Shipowner, the Owner Participant, the Indenture
Trustee or the Charterer as a result of the occurrence of an Event of Loss
described in clause (v) of the definition thereof shall be divided between the
Charterer and the Shipowner as their respective interests may appear and the
amount, if any, paid to or retained by the Shipowner shall reduce the amount
that the Charterer is required to pay to the Shipowner (but not below zero) in
respect of such Event of Loss (or, if the amount payable by the Charterer in
respect of the Event of Loss has already been paid by the Charterer, the
Charterer shall be entitled to retain or be paid out of the amounts otherwise
payable to or retainable by the Shipowner under this sentence, the amount that
would have been applied in reduction of the amount payable by the Charterer in
respect of the Event of Loss).
(d) Application of Payments Not Relating to an Event of Loss.
--------------------------------------------------------
Payments received at any time by the Shipowner, the Indenture Trustee, the
Charterer or the Operator from any Governmental Authority or other Person with
respect to any destruction, damage, loss, condemnation, confiscation, theft or
seizure of or requisition of title to or use of the Vessel not constituting an
Event of Loss with respect to the Vessel shall be paid over to, or retained by,
the Charterer or as it may direct.
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<PAGE>
(e) Other Dispositions. Notwithstanding the foregoing provisions of
------------------
this Section 11, so long as any Specified Charter Event of Default shall have
occurred and be continuing, any amount that otherwise would be payable to or for
the account of, or that otherwise would be retained by, the Charterer pursuant
to this Section 11 shall be paid to the Owner Trustee (or to the Indenture
Trustee so long as the Vessel is subject to the Lien of the Ship Mortgage) as
security for the obligations of the Charterer under this Charter and, subject to
the Ship Mortgage, applied against the Charterer's payment obligations hereunder
when and as they become due and payable. At such time thereafter as no
Specified Charter Event of Default shall be continuing, such amount shall, to
the extent not theretofore applied as provided herein or in the Ship Mortgage,
be paid promptly to the Charterer or as it may direct, provided that if any such
--------
amount has been so held as security for more than ninety (90) days after a
Specified Charter Event of Default shall have occurred and during which period
(i) the Shipowner shall not have been limited by operation of law or otherwise
from exercising remedies hereunder or (ii) the Shipowner shall not have
commenced to exercise any remedy available to it under Section 18, then such
amount shall be paid to the Charterer or as it may direct.
SECTION 12. Early Termination; Special Termination.
--------------------------------------
(a) Early Termination. If, in the opinion of a Responsible Officer
-----------------
of the Charterer, the Vessel is, at any time on or after the fifth anniversary
of the Funding Date hereunder, obsolete, uneconomic or surplus to the needs of
the Charterer for any reason (including, without limitation, because of the
imposition of burdensome Governmental Rules or any change in law or a
Governmental Rule that makes the Vessel ineligible for U.S. coastwise trade) in
each case, the Charterer may elect (a "Termination Election") to terminate this
Charter with respect to the Vessel in accordance with this Section 12.
(b) Notice of Termination. (i) In order to exercise its right to
---------------------
terminate this Charter with respect to the Vessel pursuant to Section 12(a), the
Charterer shall provide the Shipowner with notice in writing at least 120 days
prior to the date as of which the Charterer is electing to terminate this
Charter with respect to the Vessel (the "Termination Date"), which such notice
shall (A) specify the Termination Date, and (B) identify the applicable
Termination Value as of such Termination Date, in accordance with Schedule 3, as
adjusted pursuant to Section 2.12 of the Participation Agreement.
(ii) The Charterer may, at its option, by written notice to the
Shipowner at any time prior to the date that is twenty-five (25) days prior
to the scheduled Termination Date, revoke any Termination Election with
respect to the
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<PAGE>
Vessel, in which event this Charter shall not terminate, and the reasonable
out-of-pocket expenses incurred by the Shipowner, the Owner Participant and
the Indenture Trustee in connection with such Termination Election shall be
borne by the Charterer; provided that the Charterer may not exercise its
--------
right to revoke a Termination Election more than two times; provided
--------
further, however, that if such notice of revocation is given (or deemed to
------- -------
have been given pursuant to Section 12(c)) as a result of the Shipowner's
failure to make the payments required to be made by it under Section 12(c),
the Charterer shall have no obligation to so reimburse the Shipowner, the
Owner Participant or the Indenture Trustee for any out-of-pocket expenses
incurred in connection with such Termination Election and the revocation
shall not be deemed to be a revocation of a Termination Election for
purposes of the penultimate proviso to this sentence.
(c) Retention of Vessel by Shipowner upon an Obsolescence
-----------------------------------------------------
Termination. (i) If the Charterer shall have made a Termination Election under
Section 12(a) and the Charterer has not exercised its right of revocation
pursuant to Section 12(b) or this Section 12(c), the Shipowner may elect to
retain the Vessel, rather than sell it pursuant to Section 12(d), by giving
irrevocable notice to the Charterer and the Indenture Trustee within forty-five
(45) days of Charterer's Termination Election. If the Shipowner so elects to
retain the Vessel and if the Charterer does not revoke its Termination Election:
(A) the Shipowner shall pay to the Indenture Trustee an amount equal
to the unpaid principal amount of, the Premium, if any, and accrued and unpaid
interest on, the Secured Notes Outstanding as of the Termination Date;
(B) the Charterer shall pay to the Shipowner or the Person entitled
thereto as provided in the Operative Documents (A) all Base Charter Hire with
respect to the Vessel due and owing on or prior to the Termination Date (but
excluding any Base Charter Hire, if any, payable in advance on the Termination
Date) and (B) all Supplemental Charter Hire with respect to the Vessel, but the
Charterer shall not be required to pay any amounts pursuant to Section 12(d);
(C) the Charter, the Guaranty, the obligations of the Charterer
hereunder, including the obligation to pay the Termination Value, and the
Charterer's obligations under the other Operative Documents shall terminate with
respect to the Vessel (except for provisions which by their terms survive the
termination of the Charter);
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<PAGE>
(D) the Charterer shall deliver the Vessel to the Shipowner, subject
to the terms of the fourth sentence of Section 4(a) hereof.
(ii) The Shipowner shall, at the Charterer's expense, execute and
deliver to the Charterer on the Termination Date such instruments as the
Charterer shall reasonably request to evidence such termination of this Charter;
provided that the Charterer shall only be required to pay the reasonable costs
- --------
and expenses incurred by the Shipowner and the other parties to the Operative
Documents in connection with the execution and delivery of the documents
terminating this Charter.
(iii) In the event the Shipowner fails to pay the amounts specified
in 12(c)(i)(A) or the Charterer fails to pay the amounts specified in
12(c)(i)(B), the Charterer shall be deemed to have revoked its Termination
Election pursuant to Section 12(b). If the Shipowner shall fail to perform any
of its obligations pursuant to this Section 12(c) and, as a result thereof, this
Charter shall not be terminated, the Charterer shall have no obligation to pay
the costs and expenses set forth in 12(c)(ii), and the Shipowner shall
thereafter no longer be entitled to exercise its election to retain the Vessel
upon any subsequent Termination Election pursuant to this Section 12. The
Charterer may at its option, at any time thereafter, submit a new Termination
Election pursuant to Section 12(b)(i).
(d) Sale of Vessel; Termination Payments. (i) If the Charterer shall
------------------------------------
have made a Termination Election under Section 12(a), the Charterer has not
exercised its right of revocation pursuant to Section 12(b) or this Section
12(c), and the Shipowner does not elect to retain the Vessel pursuant to Section
12(c), then the Charterer shall, as agent for the Shipowner, use commercially
reasonable efforts to solicit bids from third parties unaffiliated with the
Charterer, the Shipowner and the Owner Participant qualified under Governmental
Rule to own the Vessel for the cash purchase of the Vessel on the Termination
Date. The Shipowner may also solicit such bids for the cash purchase of the
Vessel on the Termination Date independent of the Charterer. The Charterer and
the Shipowner, as the case may be, shall certify to the other in writing the
amount and terms of each bid received by it and the name and address of the
Person submitting such bid. Subject to Section 12(c), in the event that the
Charterer or the Shipowner shall have obtained any such bids from any Person
other than the Charterer, the Shipowner, the Owner Participant or an Affiliate
of any thereof, the Shipowner shall sell the Vessel on the Termination Date to
the Person qualified under Governmental Rule to own the Vessel that shall have
submitted the highest bona fide cash bid. Each of the Shipowner and the Owner
---- ----
Participant, by the signature of the Shipowner hereto, agrees that the Charterer
shall have no liability to the Shipowner or the Owner Participant with respect
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<PAGE>
to the price at which the Vessel is sold other than as provided in this Section
12(d)(i).
(ii) Upon payment to the Shipowner of the applicable purchase price in
immediately available funds (and all other amounts due from the Charterer
pursuant to subsections (B) and (C) below):
(A) In consideration of the purchase price of the Vessel, the
Shipowner shall transfer to such buyer, all right, title and interest of the
Shipowner in and to the Vessel, "as is and where is" free and clear of
Shipowner's Liens and Owner Participant's Liens, and the Shipowner shall warrant
that it is transferring whatever title it received on the Funding Date, but
otherwise without representation or warranty by the Shipowner.
(B) On the Termination Date, this Charter, the Guaranty, and the
obligations of the Charterer hereunder shall terminate concurrently with such
sale and such payment, other than those provisions which by their terms survive
the termination or expiration of this Charter, and the Shipowner shall execute
and deliver to the proposed purchaser a bill of sale and assignment and such
other instruments, documents and opinions as such Person or the Charterer may
reasonably request to evidence the valid consummation of such transfer and, at
the Charterer's expense, shall execute and deliver to the Charterer on the
Termination Date such instruments as the Charterer shall reasonably request to
evidence the termination of the Charter and take such actions under Section 6.03
of the Indenture as the Charterer may reasonably request; provided that the
--------
Charterer shall only be required to pay the reasonable costs and expenses of the
Shipowner and the other parties to the Operative Documents in connection with
the execution and delivery of the documents terminating the charter.
(C) The Charterer shall pay the Shipowner (x) all Base Charter Hire
for the Vessel due and owing on or prior to the Termination Date (but excluding
any Base Charter Hire, if any, payable in advance on the Termination Date); (y)
all Supplemental Charter Hire due and owing on or prior to the Termination Date
and Premium, if any; and (z) the reasonable out-of-pocket expenses incurred by
the Shipowner and the Owner Participant in connection with such sale (other than
the fees of any broker or finder appointed by the Shipowner or the Owner
Participant, except a contingent fee payable only upon successful completion of
the sale arranged by such broker or finder). The Charterer shall not be
required to pay the amounts described in (z) above if the sale of the Vessel
shall not be effected due to the failure of the Shipowner or the Owner
Participant to execute and deliver the instruments as required in Section
12(d)(ii)(B). In the event that the proceeds received by the Shipowner from the
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sale of the Vessel net of sales and other transfer taxes and net of reasonable
out-of-pocket expenses incurred by the Shipowner and the Owner Participant in
connection with such sale (other than the fees of any broker or finder appointed
by the Shipowner or the Owner Participant, except a contingent fee payable only
upon successful completion of the sale arranged by such broker or finder)(the
"Net Proceeds") shall be less than the Termination Value of the Vessel at the
time of the Termination Date, the Charterer shall pay the Shipowner an amount
equal to the difference between the Net Proceeds and such Termination Value. In
the event that the Net Proceeds exceeds the applicable Termination Value of the
Vessel at the time of the Termination Date, the amount of expenses described in
(z) above due and payable by the Charterer shall be reduced by an amount equal
to the difference between the Net Proceeds and such Termination Value.
(iii) The Charterer agrees that neither the Charterer, the Guarantor nor a
Person in which the Guarantor holds, directly or indirectly, either (i) a 51%
ownership interest or (ii) a 50% ownership interest and (directly or indirectly)
control of such Person's determination of whether to enter into transactions
such as the purchase or charter of the Vessel, shall purchase or charter the
Vessel from the third party, which purchases the Vessel pursuant to this Section
12(d), for a period of two years from the Termination Date.
(iv) In the event that (A) the Charterer exercises the right to revoke a
Termination Election pursuant to Section 12(b)(ii) (or shall be deemed to have
exercised a right to revoke a Termination Election pursuant to the first
sentence of Section 12(c)(iii), (B) the highest bona fide final bidder qualified
---- ----
under Governmental Rule to purchase the Vessel under Section 12(d) does not
purchase the Vessel pursuant to Section 12(d), then, unless the Shipowner
retains the Vessel pursuant to Section 12(c), this Charter shall remain in full
force and effect with respect thereto and the Charterer's right to effect a
Termination Election shall not be prejudiced or affected.
(e) Special Termination. (i) At any time during the Charter Term, if,
-------------------
in the reasonable judgment of a Responsible Officer of the Charterer, the Vessel
is ineligible for U.S. coastwise trade, the Charterer shall be entitled to
terminate this Charter with respect to the Vessel in accordance with this
Section 12 (any such termination, "Special Termination"), and the Charterer, or
its nominee, shall have the right to purchase the Vessel as herein set forth.
(ii) In order to exercise its right to terminate this Charter with
respect to the Vessel pursuant to Section 12(e)(i), the Charterer shall
provide the Shipowner, the
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<PAGE>
Owner Participant, and the Indenture Trustee with at least 30 days prior
written notice of its intent to exercise its option to terminate the
Charter under Section 12(e)(i) (any such notice a "Special Termination
Notice"). Such notice shall state the date of termination (any such date,
the "Special Termination Date") and the Termination Value (or, if required
by subsection (iv) of this Section 12, the Termination Value and the Fair
Market Sales Value of the Vessel). The Charterer shall have the right to
revoke any Special Termination Notice given by it no later than ten (10)
days prior to the scheduled Special Termination Date.
(iii) On the date of purchase of the Vessel pursuant to this Section
12(e), upon the payment of the amounts required hereby (A) the Shipowner
shall transfer all right, title and interest of the Shipowner in and to the
Vessel, "as is and where is" to the Charterer or as the Charterer may
direct, and the Shipowner shall warrant that it is transferring whatever
title it received on the Funding Date and that the Vessel is free and clear
of Shipowner's Liens and Owner Participant's Liens, but otherwise without
any representation or warranty, upon payment to the Shipowner (or, if the
Lien of the Ship Mortgage is still in effect, to the Indenture Trustee) of
the Termination Value and Premium, if any, and (B) the Shipowner shall, at
the Charterer's expense, execute and deliver to the Charterer or its
designee a bill of sale and assignment, and such other instruments,
documents and opinions as the Charterer may reasonably request to evidence
the valid consummation of such transfer and shall, at the Charterer's
expense, take such actions under Section 6.03 of the Indenture as the
Charterer may reasonably request.
(iv) If in the reasonable judgment of a Responsible Officer of the
Charterer, the Vessel shall be ineligible for U.S. coastwise trade as a
result of (A) a change in Governmental Rule after the Funding Date or (B)
any action or inaction by the Trust Company, the Shipowner or the Owner
Participant, the Charterer shall pay to the Shipowner the Termination
Value. If, in the reasonable judgment of a Responsible Officer of the
Charterer, the Vessel shall be ineligible for U.S. coastwise trade for any
other reason, the Charterer shall pay to the Shipowner the higher of
Termination Value and the Fair Market Sales Value of the Vessel as of the
Termination Date as the purchase price of the Vessel. If the Charterer and
the Shipowner shall fail to agree on the Fair Market Sales Value of the
Vessel as of the Termination Date within thirty (30) days after the giving
of the Special Termination Notice, such Fair Market Sales Value shall be
determined pursuant to the Appraisal procedure. In addition to the amounts
required by the first or second sentence hereof, the Charterer shall pay
the
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Shipowner all Base Charter Hire due and owing to such date of purchase (but
excluding any Base Charter Hire payable in advance on such date of
purchase) and Supplemental Charter Hire due and owing on or prior to such
date of purchase.
(v) Notwithstanding the provisions of Section 12(e)(iii) and (iv) and
subject to compliance with Section 3.04 of the Indenture, so long as no
Specified Charter Event of Default exists, if in connection with the
purchase by the Charterer of the Vessel pursuant to Section 12(e), the
Charterer assumes the Secured Notes on a full recourse basis which are
outstanding on the Special Termination Date, pursuant to Section 11.6 of
the Participation Agreement, the obligation of the Charterer to pay the
purchase price pursuant to Section 12(e)(iv) shall be satisfied by such
assumption of the Secured Notes to the extent of the principal amount of
and accrued but unpaid interest, if any, on the Secured Notes so assumed
and payment to the Shipowner of the remaining portion of the Termination
Value in cash. In the event the Charterer assumes the Secured Notes with
respect to the Vessel in accordance with the preceding sentence, the
Guarantor shall guarantee such Secured Notes, or, at the Charterer's
option, purchase or cause another Person to purchase) the Owner
Participant's beneficial interest in the Owner Trust pursuant to Section 17
of the Participation Agreement.
SECTION 13. Requisition for Use by the United States.
----------------------------------------
In the event that during the Charter Term the use of the Vessel shall
be taken or requisitioned and an Event of Loss of the type described in clause
(vi) of the definition thereof shall occur, the Charterer shall have the right
to declare an Event of Loss and to terminate this Charter in accordance with the
provisions of Section 11 of this Charter. Unless and until this Charter is
terminated pursuant to Section 11, this Charter shall nevertheless continue in
effect for the duration of the Charter Term, and the Charterer will continue to
pay Base Charter Hire and Supplemental Charter Hire without interruption or
abatement and shall remain liable for all other obligations under this Charter,
other than those obligations the performance of which cannot be performed by
reason of such requisition of use. The time the Vessel is under such requisition
will count as part of the Charter Term.
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<PAGE>
SECTION 14. Renewal of Charter.
------------------
(a) Renewal. The Charterer shall have the right to renew this
-------
Charter for any Renewal Term with respect to the Vessel at the expiration of the
Base Charter Term or any Renewal Term for a Fair Market Renewal Term, provided
--------
that each Fair Market Renewal Term shall be at least one year; and further
-------
provided that each Fair Market Renewal Term may be in integral multiples of six
- --------
months and may extend for a period to the end of the Vessel's economic useful
life (any such renewal, a "Fair Market Renewal Term"). It shall be a condition
to the renewal of this Charter for any Renewal Term that no Specified Charter
Event of Default or Charter Event of Default specified in Section 17(a)(iii)
hereto shall have occurred and be continuing at the time of notice or the
commencement of such Renewal Term.
(b) Notice; Manner of Renewal. At any time at least 180 days prior
-------------------------
to the scheduled expiration of the Base Charter Term or any Renewal Term, the
Charterer may notify the Shipowner that it desires to obtain an appraisal with
respect to the Fair Market Charter Value of the Vessel as of such expiration.
Promptly after the Charterer shall have delivered such notice, the Charterer and
the Shipowner shall attempt to agree upon the Fair Market Charter Value for the
period or periods specified by the Charterer. If the Charterer and the
Shipowner shall fail to agree within thirty (30) days after the giving of such
notice, such amount shall be determined pursuant to the Appraisal Procedure, the
cost of which appraisal shall be shared equally by the Shipowner and the
Charterer). If the Charterer elects to renew this Charter for a Fair Market
Renewal Term, the Charterer shall provide the Shipowner with a written notice of
its intention to renew this Charter (any such notice, a "Renewal Notice"). The
--------------
Renewal Notice shall become irrevocable 120 days prior to the expiration of the
Base Charter Term or any Renewal Term.
(c) Renewal Hire. All of the terms and provisions of this Charter
------------
shall be applicable during any Renewal Term, except that in lieu of Base Charter
Hire, the Charterer shall pay to the Shipowner for any Fair Market Renewal Term
an amount equal to the Fair Market Charter Hire for such Renewal Term, payable
in arrears.
(d) Stipulated Loss Values and Termination Values. Concurrently with
---------------------------------------------
the Charterer's exercise of its option to renew this Charter pursuant to this
Section 14, Schedules 2 and 3 shall be modified to restate the Stipulated Loss
Values and Termination Values for the Vessel which shall equal the Fair Market
Sales Value at the end of the Base Charter Term or the prior Renewal Term, as
the case may be. The amounts which are payable at any given time during a
Renewal Term as Stipulated Loss Value and Termination Value shall be determined
by calculating the Fair
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<PAGE>
Market Sales Value of the Vessel at the beginning of any Renewal Term reduced on
a straight-line basis to the projected Fair Market Sales Value of the Vessel at
the end of such Renewal Period.
SECTION 15. Purchase Options.
----------------
(a) Purchase Options. So long as no Specified Charter Event of
----------------
Default shall have occurred and be continuing, and subject to Sections 15(b) and
15(c), the Charterer shall have the right to purchase the Vessel:
(i) on the EBO Exercise Date specified by the Shipowner at the
purchase price equal to the EBO Exercise Price (such purchase, the "Early
Buy Out Option"); or
(ii) at the expiration of the Base Charter Term, at a purchase
price equal to the lesser of the then Fair Market Sales Value for the
Vessel or the Fixed Price Purchase Option Amount; or
(iii) at the expiration of any Renewal Term, at a purchase price
equal to its then Fair Market Sales Value; or
(iv) if
(A) Charterer elects to make Optional Modifications
pursuant to a modification plan with a total cumulative
cost of Five Million Dollars ($5,000,000), or
(B) Charterer is required to make Required Modifications
with a total cumulative cost exceeding Five Million
Dollars ($5,000,000),
and, in either case, the Shipowner does not participate in
financing such Modifications or the Charterer is prevented from
making such Modifications by the terms of the Charter or such
Modifications are prohibited by Rev. Proc. 79-48, 1979-2 CB 529,
then the Charterer shall have the right, but not the obligation,
to purchase the Vessel on the first or second next succeeding
Base Charter Payment Date for, in the case of clause (A) the
higher of the applicable Termination Value or the Vessel's Fair
Market Sales Value on such Base Charter Payment Date or, in the
case of clause (B) above, the applicable Termination Value on
such Base Charter Payment Date (without, in
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<PAGE>
each case, taking into account such Modifications) (each, an
"Extraordinary Purchase Option"); or
(v) on the Special Purchase Option Dates at any time after the
fifth anniversary of the Funding Date at a purchase price equal to the
higher of the applicable Termination Value or the Fair Market Sales Value
of the Vessel on such date (any such purchase, "Special Purchase Option").
(b) Notice of Election; Manner of Purchase; Transfer After Purchase.
---------------------------------------------------------------
(i) In order to exercise its right to purchase the Vessel pursuant to Section
15(a)(i), (ii), and (iii), the Charterer shall notify the Shipowner in writing
at least 90 days prior to (x) the EBO Exercise Date, (y) the scheduled
expiration of the Base Charter Term, or (z) the scheduled expiration of any
Renewal Term then in effect, as the case may be, stating that the Charterer will
purchase the Vessel pursuant to Section 15(a)(i), 15(a)(ii), or 15(a)(iii), as
the case may be (any such notice, a "Purchase Notice"), and that it desires, in
respect of clause (i)(z) hereof, to obtain an appraisal of the Fair Market Sales
Value of the Vessel as of such scheduled expiration. Promptly after the
Charterer shall have delivered such notice, the Charterer and the Shipowner
shall attempt to agree upon such Fair Market Sales Value. If the Charterer and
the Shipowner shall fail to agree within thirty (30) days after the giving of
such notice, such Fair Market Sales Value shall be determined pursuant to the
Appraisal Procedure. The Purchase Notice shall become irrevocable, in the case
of the Early Buy-Out Option, 20 days prior to the EBO Exercise Date.
(ii) In order to exercise its right to purchase the Vessel
pursuant to Section 15(a)(iv), the Charterer shall give at least 60 days
but not more than 540 days' prior written notice to the Shipowner stating
that the Charterer will purchase the Vessel pursuant to Section 15(a)(iv)
(any such notice, a "Purchase Notice"). Promptly after the Charterer shall
have delivered such notice with respect to a Purchase Notice for a purchase
under Section 15(a)(iv)(A), the Charterer and the Shipowner shall attempt
to agree upon such Fair Market Sales Value. If the Charterer and the
Shipowner shall fail to agree within thirty (30) days after the giving of
such notice with respect to a Purchase Notice for a purchase under Section
15(a)(iv)(A), such Fair Market Sales Value shall be determined pursuant to
the Appraisal Procedure.
(iii) In order to exercise its right to purchase the Vessel
pursuant to Section 15(a)(v), the Charterer shall give at least 90 days
prior written notice to the Shipowner stating that the Charterer will
purchase the Vessel pursuant to Section 15(a)(v) (any such notice, a
"Purchase Notice").
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<PAGE>
Promptly after the Charterer shall have delivered such Purchase Notice, the
Charterer and the Shipowner shall attempt to agree upon such Fair Market
Sales Value. If the Charterer and the Shipowner shall fail to agree within
thirty (30) days after the giving of such notice, such Fair Market Sales
Value shall be determined pursuant to the Appraisal Procedure.
(iv) On the date of purchase of the Vessel pursuant to this
Section 15, (A) the Shipowner shall transfer all right, title and interest
of the Shipowner in and to the Vessel, "as is and where is" to the
Charterer or as the Charterer may direct, and the Shipowner shall warrant
that it is transferring whatever title it received on the Funding Date and
that the Vessel is free and clear of Shipowner's Liens and Owner
Participant's Liens, but otherwise without any representation or warranty,
upon payment to the Shipowner of the purchase price therefor or, if the
Charterer shall have elected to pay the EBO Exercise Price in accordance
with the last sentence of this Section 15(b)(iv), upon payment of the first
installment of such EBO Exercise Price, together with (i) all Base Charter
Hire due and owing prior to such date of purchase (but excluding any Base
Charter Hire, if any, payable in advance), (ii) all Supplemental Charter
Hire due and owing on or prior to such date of purchase, (iii) Premium, if
any, and (iv) if such date of purchase is a Base Charter Payment Date, all
Base Charter Hire payable in arrears on such Base Charter Payment Date,
and (B) the Shipowner shall, at the Charterer's expense, execute and
deliver to the Charterer or its designee a bill of sale and assignment, and
such other instruments, documents and opinions as the Charterer may
reasonably request to evidence the valid consummation of such transfer and
shall, at the Charterer's expense, take such actions under Section 6.03 of
the Indenture as the Charterer may reasonably request. Notwithstanding
anything to the contrary contained herein, so long as no Specified Charter
Event of Default exists, the Charterer may, in connection with the exercise
by the Charterer of its purchase option under Section 15(a)(i) elect to pay
the EBO Exercise Price in installments, which installments shall be paid as
specified in Schedule 4 hereto.
(c) Assumption of Secured Notes. Notwithstanding the provisions of
---------------------------
Sections 15(a) and 15(b) and subject to compliance with Section 3.04 of the
Indenture, if, in connection with a purchase by the Charterer of the Vessel
pursuant to Section 15(a)(i), 15(a)(iv) or 15(a)(v), as the case may be, the
Charterer shall elect to assume the Secured Notes on a full recourse basis which
are outstanding (x) on the EBO Exercise Date, (y) on the exercise date of the
Extraordinary Purchase Option, or (z) on the exercise date of the Special
Purchase
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<PAGE>
Option, pursuant to Section 11.6 of the Participation Agreement, the obligation
of the Charterer to pay the purchase price pursuant to Section 15(a)(i),
15(a)(iv), or 15(a)(v), as the case may be, shall be satisfied by such
assumption of the Secured Notes to the extent of the principal amount of and
accrued but unpaid interest, if any, on the Secured Notes so assumed and payment
of the remaining portion of the applicable purchase price in cash. In the event
the Charterer assumes the Secured Notes with respect to the Vessel in accordance
with the preceding sentence, the Guarantor shall guarantee such Secured Notes,
or, at the Charterer's option, purchase (or cause another Person to purchase)
the Beneficial Interest in the Owner Trust pursuant to Section 17 of the
Participation Agreement.
SECTION 16. Assignment and Subcharter.
-------------------------
(a) Assignment by Shipowner; Security for Shipowner's Obligations to
----------------------------------------------------------------
Indenture Trustee. (i) EXCEPT AS SET FORTH IN SECTION 16(a)(ii) OR IN SECTION
- -----------------
21(h)(ii), OR UNLESS THE CHARTERER AND THE LOAN PARTICIPANT SHALL HAVE GIVEN
THEIR PRIOR WRITTEN CONSENT, THE SHIPOWNER MAY NOT ASSIGN, TRANSFER OR ENCUMBER
THIS CHARTER OR ALL OR ANY PART OF ITS INTERESTS AND RIGHTS HEREUNDER EXCEPT IN
CONNECTION WITH THE EXERCISE OF REMEDIES BY THE SHIPOWNER PURSUANT TO SECTION
18(a) FOLLOWING A DECLARATION BY THE SHIPOWNER PURSUANT TO SUCH SECTION THAT
THIS CHARTER IS IN DEFAULT.
(ii) In order to secure the indebtedness evidenced by the Secured
Notes and certain other obligations as provided in the Indenture, the
Indenture provides, among other things, for the assignment by the Shipowner
to the Indenture Trustee of its right, title and interest in, to and under
this Charter to the extent set forth in the Indenture, and for the creation
by the Ship Mortgage of liens on and security interests in the Vessel in
favor of the Indenture Trustee. The Charterer hereby consents to such
assignment and to the creation of such liens and security interests
pursuant to the terms and provisions of the Indenture and the Ship Mortgage
and to any assignment or other transfer of the Shipowner's right, title and
interest in, to and under this Charter, which may occur pursuant to the
exercise of any remedy set forth in the Indenture. The Charterer (i)
acknowledges that such assignment, liens and security interests provide for
the exercise by the Indenture Trustee of all rights of the Shipowner
hereunder to give any consents, approvals, waivers, notices or the like, to
make any elections, demands or the like or to take any other discretionary
action hereunder, but only in accordance with the Indenture; (ii)
acknowledges receipt of an executed counterpart of the Indenture as in
effect on the date hereof and (iii) agrees that, to the extent provided in
the
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Indenture, the Indenture Trustee shall have all the rights of the Shipowner
hereunder and, in exercising any right or performing any obligation of the
Shipowner hereunder, shall be subject to the terms hereof, including,
without limitation, Section 5(f) hereof. The Charterer will furnish to the
Indenture Trustee counterparts of all notices, certificates, opinions or
other documents of any kind required to be delivered hereunder by the
Charterer to the Shipowner. Notwithstanding any other provision herein, so
long as any Secured Notes remain Outstanding, the Shipowner hereby directs,
and the Charterer agrees that all payments of Base Charter Hire and all
other Charter Hire payable hereunder to the Shipowner, other than Excepted
Payments, shall be paid directly to the Indenture Trustee at its account
specified in Schedule 1 to the Participation Agreement or to such other
account in the United States of America as may be specified in writing by
the Indenture Trustee to the Charterer at least five (5) Business Days
prior to the due date thereof.
(b) Assignment and Subcharter by Charterer. (i) The Charterer may,
--------------------------------------
without the consent of the Shipowner, the Owner Participant, the Indenture
Trustee, the Loan Participant or any other Person, at any time and from time to
time, assign this Charter and all or any of its interests and rights hereunder
to any Person or Persons so long as (A) after giving effect to such assignment,
the Guaranty shall remain in full force and effect and shall constitute a full
and unconditional guaranty of the obligations of the assignee hereunder to the
same extent as the guaranty of the Charterer's obligations hereunder prior to
giving effect to any such assignment; (B) no Specified Charter Event of Default
shall be continuing on the date any such assignment is effected or after giving
effect thereto; and (C) such assignment shall not subject the Shipowner or the
Owner Participant to regulation by any Governmental Authority to which the
Shipowner or the Owner Participant would not have been subject but for such
assignment.
(ii) The Charterer may, at any time and from time to time, assign
this Charter and all or any of its interests and rights hereunder to any
Person or Persons without the Guaranty remaining in full force and effect,
provided that such assignment shall be subject to the consent of each of
--------
the Shipowner, Owner Participant and the Loan Participant.
(iii) The Charterer may, without the consent of the Shipowner, the
Owner Participant, the Indenture Trustee or any other Person, at any time
and from time to time, subcharter the Vessel on a demise or other basis to
another Person or Persons; provided that (A) such subcharter shall be
--------
expressly subject and subordinate to this Charter (and such subcharter
shall contain a provision providing that any
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<PAGE>
subcharter permitted thereunder shall be so subject and subordinate) and
shall in no event continue beyond the Charter Term, (B) the Charterer shall
remain primarily liable under the Charter and all terms and conditions
hereof and of the other Operative Documents shall be complied with as
though no such subcharter was in existence, and (C) the Guaranty shall
remain in full force and effect. The Charterer hereby gives notice to the
Shipowner of, and the Shipowner hereby acknowledges and agrees to, the
initial subcharter of the Vessel by Charterer to an Affiliate of the
Charterer dated as of the date hereof (the "Initial Subcharter") providing
for the demise chartering of the Vessel by the Charterer to the Operator.
Any subcharterer under a subcharter permitted hereunder may sub-subcharter
the Vessel to another Person or Persons under a sub-subcharter that
otherwise complies with the provisions hereunder applicable to a subcharter
hereunder.
SECTION 17. Events of Default.
-----------------
(a) Events of Default. The following shall constitute Events of
-----------------
Default (each, a "Charter Event of Default"; collectively, "Charter Events of
Default"):
(i) Charterer shall fail to pay any Interim Charter Hire, Base
Charter Hire, Renewal Hire, Stipulated Loss Value, Termination Value, or
any purchase price payable pursuant to any of the Purchase Options
described herein, in each case within ten (10) Business Days after the same
shall become due and payable (for the avoidance of doubt, past due payments
shall accrue interest at the Overdue Rate); or
(ii) Charterer shall fail to pay any Supplemental Charter Hire or any
other payment required to be made by the Charterer under the Operative
Documents for more than thirty (30) days after the Charterer shall have
received written notice from the Shipowner stating that such payment is
due; or
(iii) the Charterer shall fail to perform or observe any other material
covenant or agreement to be performed or observed by it under the Operative
Documents (other than a failure caused by an event that constitutes, or
with the lapse of time would constitute, an Event of Loss) and such failure
shall continue for a period of 30 days after receipt by the Charterer of a
written notice from the Shipowner specifying such failure and requiring it
to be remedied; provided, however, that the continuation of any such
-------- -------
failure for such period of 30 days or a longer period (not to exceed 270
days) after receipt of notice shall not constitute a Charter Event of
Default so long as (x) such failure is
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curable or correctable and (y) the Charterer is diligently pursuing the
cure or correction of such failure; or
(iv) the Guarantor shall fail in any material respect to perform or
observe any agreement to be performed or observed by it in the Guaranty
(other than any covenant or agreement in respect of the Charterer's
obligations under the Operative Documents) and such failure shall continue
for a period of 30 days after receipt by the Guarantor of a written notice
from the Shipowner specifying such failure and requiring it to be remedied;
provided, however, that the continuation of any such failure for such
-------- -------
period of 30 days or a longer period (not to exceed 270 days) after receipt
of notice shall not constitute a Charter Event of Default so long as (a)
such failure is curable or correctable and (b) the Guarantor is diligently
pursuing the cure or correction of such failure; or
(v) any representation or warranty made by the Charterer or the
Guarantor under the Operative Documents (other than the Tax Indemnity
Agreement) shall prove to have been inaccurate in any material respect when
made, unless such inaccuracy shall not be material to the recipient at the
time or any material adverse impact thereof shall have been cured or
corrected within 30 days after receipt by Charterer or Guarantor, as the
case may be, of written notice; provided, however, that the continuation of
-------- -------
any such inaccuracy for such period of 30 days or a longer period (not to
exceed 270 days) after receipt of notice shall not constitute a Charter
Event of Default so long as (a) any material adverse impact of such
inaccuracy is curable or correctable and (b) the Charterer or the
Guarantor, as the case may be, is diligently pursuing the cure or
correction of such material adverse impact; or
(vi) the Charterer or the Guarantor shall commence a voluntary case or
other proceeding seeking liquidation, reorganization or other relief with
respect to itself or its debts under any bankruptcy, insolvency or other
similar law now or hereafter in effect or seeking the appointment of a
trustee, receiver, liquidator or other similar official of it or any
substantial part of its property or shall consent to any such relief or to
the appointment or taking possession by any such official or agency in an
involuntary case or other proceeding commenced against it, or shall make a
general assignment for the benefit of its creditors, or shall take any
corporate action to authorize any of the foregoing, or an involuntary case
or other proceeding shall be commenced against the Charterer or the
Guarantor seeking liquidation, reorganization or other relief with respect
to itself or its debts under any bankruptcy, insolvency or other similar
law now or hereafter in effect or seeking the
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<PAGE>
appointment of a trustee, receiver, liquidator or other similar official or
agency of it or any substantial portion of its property, and such
involuntary case or other proceeding shall remain undismissed and unstayed
for a period of 90 days; or
(vii) the Guaranty shall cease to be in full force and effect or to be
the valid, binding and enforceable agreement of the Guarantor, or the
Guarantor shall repudiate in writing its material obligations thereunder.
(b) A Specified Charter Event of Default shall mean a Charter Event
----------------------------------
of Default as described in (i), (vi) and (vii) above.
SECTION 18. Remedies.
--------
(a) In General. Upon the occurrence of any Charter Event of Default
----------
and so long as the same shall be continuing, the Shipowner, at its option, may
declare this Charter to be in default by written notice to such effect given to
the Charterer (provided that this Charter shall be deemed to have been declared
in default without the necessity of such written notice upon the occurrence of
any Charter Event of Default described in paragraph (vi) of Section 17), and at
any time thereafter, provided such Charter Event of Default shall be continuing,
the Shipowner may, to the extent permitted by applicable Governmental Rules,
exercise one or more of the following remedies, as the Shipowner in its sole
discretion shall elect:
(i) the Shipowner, by notice to the Charterer, may rescind, cancel or
terminate this Charter;
(ii) whether or not this Charter has been terminated, the Shipowner
may terminate the Charterer's right to possession and demand that the
Charterer, and upon the written demand of the Shipowner, the Charterer
shall, surrender and return possession of the Vessel promptly to the
Shipowner in the manner and condition required by, and otherwise in
accordance with the provisions of, this Charter as if the Vessel were being
returned at the end of the Charter Term and the Shipowner shall not be
liable for the reimbursement of the Charterer for any costs and expenses
incurred by the Charterer in connection therewith;
(iii) the Shipowner may (whether or not the Shipowner has taken
possession thereof) sell the Vessel at public or private sale, as the
Shipowner may determine, free and clear of any rights of the Charterer with
respect thereto and without any duty to account to the Charterer with
respect to such sale or any proceeds with respect thereto (except to
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<PAGE>
the extent required by paragraph (v) or (vi) of this Section 18(a) if the
Shipowner shall elect to exercise its rights thereunder), in which event if
the Charterer has returned possession of the Vessel pursuant to Section
18(a)(ii) hereof the Charterer's obligation to pay Base Charter Hire with
respect to the interest sold accruing after the date of such sale shall be
terminated or proportionately reduced, as the case may be (except to the
extent that Base Charter Hire is to be included in computations under
paragraph (v) or (vi) of this Section 18(a) if the Shipowner shall elect to
exercise its rights thereunder);
(iv) the Shipowner may hold or charter to others the Vessel, as the
Shipowner in its sole discretion may determine, free and clear of any
rights of the Charterer with respect thereto and without any duty to
account to the Charterer with respect to such action or inaction or for any
proceeds with respect to such action or inaction, except that, if the
Charterer has returned possession of the Vessel pursuant to Section
18(a)(ii) hereof, the Charterer's obligation to pay Base Charter Hire after
the Charterer shall have been deprived of use of the Vessel pursuant to
this paragraph (iv) shall be reduced by the net proceeds, if any, received
by the Shipowner from chartering the Vessel to any Person other than the
Charterer for the same periods or any portion thereof;
(v) whether or not the Shipowner shall have exercised or thereafter
at any time shall exercise its rights under paragraph (i), (ii), (iii) or
(iv) of this Section 18(a), the Shipowner may demand, by written notice to
the Charterer specifying a payment date which shall be a Stipulated Loss
Value Determination Date not earlier than ten (10) Business Days after the
date of such notice, that the Charterer pay to the Shipowner, and the
Charterer shall pay to the Shipowner, on such specified payment date, as
liquidated damages for loss of a bargain and not as a penalty (in lieu of
the Base Charter Hire accruing on or after such specified payment date)
and, in the case of the payment described in clause (C) below, as
consideration for the transfer to the Charterer of the Vessel, any unpaid
Base Charter Hire due and owing on or prior to such specified payment date
(but excluding any Base Charter Hire payable in advance on such payment
date) and any unpaid Supplemental Charter Hire (to whomsoever payable) due
and owing on or prior to the date of such payment, plus whichever of the
following amounts the Shipowner, in its sole discretion, shall specify in
such notice (together with interest (to the extent permitted by applicable
law) on such amount at the Overdue Rate from such specified payment date to
the date of actual payment):
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<PAGE>
(A) an amount equal to the excess, if any, of Stipulated Loss
Value for the Vessel as of such specified payment date over the Fair
Market Sales Value of the Vessel as of such specified payment date (or
the last day of the Base Charter Term, if earlier); provided, if the
--------
Charterer has failed to return the Vessel, the Fair Market Sales Value
shall equal zero;
(B) an amount equal to the excess of (1) the present value as of
such specified payment date of all installments of Base Charter Hire
payable on or after such specified payment date during the remaining
balance of the Base Charter Term (or any Renewal Term then in effect),
discounted semi-annually at a rate per annum equal to the Debt Rate,
over (2) the present value as of such specified payment date of the
Fair Market Charter Value of the Vessel during the remaining balance
of the Base Charter Term (or any Renewal Term then in effect),
discounted semi-annually at a rate per annum equal to the Debt Rate;
provided, if the Charterer has failed to return the Vessel, the Fair
--------
Market Charter Value shall equal zero;
(C) an amount equal to the Stipulated Loss Value for the Vessel
determined as of such specified payment date, and, in this event, upon
full payment by the Charterer of all sums due hereunder, the Shipowner
shall, without recourse, representation or warranty (other than the
absence of Owner Participant's Liens and Shipowner's Liens and that
the Shipowner is transferring whatever title it received on the
Funding Date) transfer the Vessel to the Charterer, "as is and where
is," whereupon this Charter and the Charterer's obligations hereunder
shall terminate. The Shipowner shall, at the Charterer's expense, (1)
execute and deliver to the Charterer a bill of sale and assignment and
such other instruments, documents and opinions as the Charterer may
reasonably request to evidence the valid consummation of such
transfer, and (2) take such actions under Section 6.03 of the
Indenture as the Charterer may reasonably request;
(D) an amount equal to the excess, if any, of Stipulated Loss
Value for the Vessel, computed as of such specified payment date, over
the Fair Market Charter Value of the Vessel during the remaining Base
Charter Term (or any Renewal Term then in effect), after discounting
such Fair Market Charter Value semi-annually to present value as of
such specified payment date at a rate per annum equal to the Debt
Rate; provided, if the Charterer has failed to return the
--------
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<PAGE>
Vessel, the Fair Market Charter Value shall equal zero; or
(vi) if the Shipowner shall have sold the Vessel pursuant to paragraph
(iii) of this Section 18(a) or other right of sale, the Shipowner, in lieu
of exercising its rights under paragraph (v) of this Section 18(a), may, if
it shall so elect, demand that the Charterer pay to the Shipowner, and the
Charterer shall pay to the Shipowner on the date of such sale, as
liquidated damages for loss of a bargain and not as a penalty (in lieu of
Base Charter Hire accruing on or after the next preceding Base Charter
Payment Date to the date of such sale), any unpaid Base Charter Hire due
and owing on or prior to such next preceding Base Charter Payment Date (but
excluding any Base Charter Hire payable in advance on such Base Charter
Payment Date and accruing with respect to any period from and including the
date of such sale) and any other Supplemental Charter Hire due and owing on
or prior to the date of such sale, plus the amount of any deficiency
between Stipulated Loss Value for the Vessel, computed as of such next Base
Charter Payment Date, and the proceeds of such sale, together with interest
(to the extent permitted by applicable law) at the Overdue Rate on the
amount of such Charter Hire, from the due date or dates thereof, and on the
amount of such deficiency from the date of such sale, until the date of
actual payment.
(b) Continuing Obligations. No rescission or termination of this
----------------------
Charter, in whole or in part, or repossession of the Vessel or exercise of any
remedy under Section 18(a) shall, except as specifically provided herein,
relieve the Charterer of any of its liabilities and obligations hereunder. The
Charterer shall be liable (i) for all reasonable legal fees and other reasonable
costs and expenses incurred by the Shipowner, the Owner Participant, the Loan
Participant or the Indenture Trustee by reason of the occurrence of any Charter
Event of Default or the exercise of the Shipowner's remedies with respect
thereto, including all costs and expenses reasonably incurred in placing the
Vessel in the condition required by Section 6 and (ii) except as otherwise
provided herein, for any and all other accrued and unpaid Charter Hire due
hereunder before, after or during the exercise of any of the foregoing remedies.
At any sale of the Vessel pursuant to Section 18(a), the Shipowner, the Owner
Participant, the Loan Participant or the Indenture Trustee may bid for and
purchase such property.
(c) Remedies Cumulative. To the extent permitted by applicable law
-------------------
and except as provided herein, no remedy under Section 18(a) is intended to be
exclusive, but each shall be cumulative and in addition to any other remedy
provided under Section 18(a) or otherwise available to the Shipowner at law or
in equity. No express or implied waiver by the Shipowner of any
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<PAGE>
Charter Default or Charter Event of Default shall in any way be, or be construed
to be, a waiver of any future or subsequent Charter Default or Charter Event of
Default. The failure or delay of the Shipowner in exercising any rights granted
it hereunder upon the occurrence of any of the contingencies set forth herein
shall not constitute a waiver of any such right upon the continuation or
recurrence of any such contingencies or similar contingencies and any single or
partial exercise of any particular right by the Shipowner shall not exhaust the
same or constitute a waiver of any other right provided herein.
SECTION 19. Notices. Unless otherwise specified herein, all
-------
communications, notices and consents provided for in this Charter shall be in
writing and given in person or by courier or by means of electronic transmission
(with provision for assurance of receipt in a manner typical with respect to
communications of that type), or mailed by registered or certified first class
mail, return receipt requested, addressed to the respective addresses set forth
in Schedule 1 to the Participation Agreement, or in each case at such other
address as the Person entitled thereto shall from time to time designate by
notice in writing to the Charterer and the Shipowner. All such communications,
notices and consents given in such manner shall be deemed given when received by
(or when proffered to, if receipt is refused) the party to whom it is addressed.
SECTION 20. Other Rights.
------------
(a) Shipowner's Right to Cure. If the Charterer shall fail to make
-------------------------
any payment to be made by it hereunder or shall fail to perform or comply with
any of its other agreements contained herein or in any other Operative Document
relating to the Vessel or this Charter, following written notice to the
Charterer, the Shipowner may, but shall not be obligated to, cure any default
under this Charter that can be cured with the payment of money, other than a
failure to make a payment of Base Charter Hire; provided, that the aggregate of
--------
the amounts previously expended and that would be expended in connection with
the exercise of such right does not exceed 2% of the Total Vessel Cost. The
Shipowner also shall have the right to cure up to an aggregate of five (5)
cumulative or three (3) consecutive semi-annual defaults in the payment of Base
Charter Hire. The amount of such cure payments and the amount of all reasonable
costs and expenses (including, without limitation, reasonable attorneys' and
other professionals' fees and expenses) incurred in connection with such cure
payments, together with interest thereon (to the extent permitted by applicable
law) at the Overdue Rate, shall be deemed Supplemental Charter Hire payable by
the Charterer upon demand.
-40-
<PAGE>
(b) Performance by Affiliates, Etc.. Any payment by the Operator,
-------------------------------
Guarantor, any Affiliate of the Charterer or any subcharterer of any amount
payable by the Charterer under any Operative Document shall constitute, as
between the Charterer and the Shipowner, payment of such amount by the Charterer
for all purposes of this Charter (including, without limitation, Section 17),
and any performance by the Operator, Guarantor, any Affiliate of the Charterer
or any subcharterer of any obligation required to be performed by the Charterer
under any Operative Document shall constitute, as between the Charterer and the
Shipowner, performance by the Charterer of such obligation for all purposes of
this Charter. Except as otherwise expressly provided herein, any right granted
to the Charterer in this Charter shall grant the Charterer the right to exercise
such right or permit such right to be exercised by any assignee, subcharterer or
transferee of the Charterer permitted hereunder. The inclusion of specific
references to obligations or rights of any such assignee, subcharterer or
transferee in certain provisions of this Charter shall not in any way prevent or
diminish the application of the provisions of the sentences immediately
preceding with respect to obligations or rights in respect of which specific
reference to any such assignee, subcharterer or transferee has not been made in
this Charter.
SECTION 21. Miscellaneous.
-------------
(a) Amendments in Writing. Neither this Charter nor any of the terms
---------------------
hereof may be amended, supplemented, waived or modified orally, but only by an
instrument in writing signed by the party against which enforcement of such
change is sought.
(b) Severability of Provisions. Any provision of this Charter which
--------------------------
may be determined by competent authority to be invalid or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such invalidity or unenforceability without invalidating or rendering
unenforceable any remaining provisions hereof, and any such invalidity or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction. To the extent permitted
by applicable law, the parties hereto hereby waive any provision of law which
renders any provision hereof invalid or unenforceable in any respect.
(c) Governing Law. THIS CHARTER SHALL IN ALL RESPECTS BE GOVERNED
-------------
BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK
APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED ENTIRELY WITHIN SUCH STATE,
INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE.
(d) Headings. The division of this Charter into sections, the
--------
provision of a table of contents and the insertion
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<PAGE>
of headings are for convenience of reference only and shall not affect the
construction or interpretation of this Charter.
(e) Counterpart Execution; Filing. This Charter may be executed in
-----------------------------
any number of counterparts and by each of the parties hereto on separate
counterparts, all such counterparts together constituting but one and the same
instrument, with the counterpart containing the receipt therefor executed by the
Indenture Trustee on or immediately following the signature page thereof being
deemed the "original executed counterpart" and all other counterparts being
deemed duplicates. Prior to or on the Funding Date, the Charterer will cause a
copy of this Charter to be duly filed with the United States Coast Guard. The
Charterer will, from time to time, execute and acknowledge any and all further
instruments required by law or reasonably requested by the Shipowner or the
Indenture Trustee, for the purpose of protecting, preserving and maintaining
Shipowner's title to, or the Indenture Trustee's interest in, the Vessel to the
satisfaction of Owner Participant or the Indenture Trustee or their respective
counsel, or for the purposes of carrying out the intentions of this Charter.
(f) Successors and Assigns. This Charter, including all the terms
----------------------
and provisions hereof, shall be binding upon the Shipowner and the Charterer and
their respective successors and permitted assigns and inure to the benefit of
the Shipowner and the Charterer and their respective successors and permitted
assigns.
(g) Investment of Security Funds. Any amounts held by the Shipowner
----------------------------
as security hereunder that would be payable to the Charterer upon satisfaction
of any applicable conditions shall be invested and reinvested by the Shipowner
(or, so long as the Vessel shall be subject to the Lien of the Ship Mortgage,
the Indenture Trustee), from time to time in Permitted Investments at the
written direction of the Charterer. The Shipowner shall have no liability for
any loss resulting from any investment required to be made other than by reason
of its willful misconduct or gross negligence. Any net income or gain realized
as a result of any such investment or reinvestment shall be applied by the
Shipowner at the same time, on the same conditions and in the same manner as the
amounts in respect of which such income or gain was realized are required to be
distributed in accordance with the provisions hereof, or of any other Operative
Document pursuant to which such amounts were required to be held. The Charterer
shall be responsible for any net loss realized as a result of any such
investment or reinvestment in accordance with the terms hereof and shall
reimburse the Shipowner (or the Indenture Trustee, as the case may be) therefor
on demand. Any Permitted Investment may be sold or otherwise reduced to cash
(without regard to maturity) by the Shipowner or the Indenture Trustee whenever
necessary to make any application as required by
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<PAGE>
the terms of this Charter or of any applicable Operative Document.
(h) Immunities; Satisfaction of Undertakings; Successor Owner
---------------------------------------------------------
Trustee. (i) Except as provided in Section 2(a), all and each of the
representations, warranties, undertakings and agreements herein made on the part
of the Shipowner are made and intended not as personal representations,
warranties, undertakings and agreements by or for the purpose or with the
intention of binding the Shipowner personally but are made and intended for the
purpose of binding only the Trust Estate, and this Charter is executed and
delivered by the Shipowner solely in the exercise of the powers expressly
conferred upon it as trustee under the Trust Agreement. Notwithstanding anything
in this Charter to the contrary, no personal liability or responsibility is
assumed hereunder by, or at any time shall be enforceable against, the Trust
Company or any successor in trust on account of any representation, warranty,
undertaking or agreement hereunder of the Shipowner, either expressed or
implied, all such personal liability, if any, being expressly waived by the
Charterer; provided, however, that (A) the Charterer or any Person claiming by,
-------- -------
through or under it, making claim hereunder, may, subject to the terms and
conditions hereof, look to the Trust Estate for satisfaction of such liability
or responsibility and (B) the Trust Company or its successor in trust, as
applicable, shall be personally liable for its own gross negligence, wilful
misconduct, and its failure to distribute funds in accordance with the terms of
the Operative Documents (including, without limitation, willful breach of
contract) with respect to any Operative Document to which it is a party and for
the matters described in clauses (i) through (v) of the last sentence of Section
7.1 of the Trust Agreement.
(ii) Subject to the terms and conditions hereof, each time a
successor Owner Trustee is appointed in accordance with the terms of the
Trust Agreement, such successor Owner Trustee shall, without further act,
succeed to all the rights, duties, immunities and obligations of the
predecessor Owner Trustee hereunder and under the other Operative Documents
and shall be deemed to be the Shipowner for all purposes hereof, all
without in any way altering the terms of this Charter or such other
Operative Documents or the obligations of the Charterer hereunder or
thereunder. The Charterer upon receipt of written notice of the appointment
of a successor Owner Trustee in accordance with the Operative Documents, at
the expense of such successor Owner Trustee, promptly shall cause the
Vessel to be redocumented in the name of the successor Owner Trustee and
make such modifications and changes to reflect such appointment as
reasonably shall be requested by such successor Owner Trustee in such
insurance policies required hereunder, schedules, certificates and other
instruments
-43-
<PAGE>
relating to the Vessel or this Charter or the other Operative Documents,
all in form and substance reasonably satisfactory to such successor Owner
Trustee; provided, however, that the Charterer shall not be required to
-------- -------
deliver any such policies, schedules, certificates or other instruments
except as expressly required by the Operative Documents to which it is a
party. Such appointment and designation of a successor Owner Trustee shall
not exhaust the right to appoint and designate further successor owner
trustees pursuant to the Trust Agreement, and such right may be exercised
repeatedly as long as this Charter shall be in effect.
(i) Performance of Obligations to Indenture Trustee and Holders.
-----------------------------------------------------------
After the Vessel shall no longer be subject to the Lien of the Ship Mortgage,
the provisions of this Charter which require or permit any action by, any
consent, approval or authorization of, the furnishing of any document, paper or
information to or the performance of any other obligation to, the Indenture
Trustee or any Holder shall not be effective, and the Sections hereof containing
such provisions shall be read as though there were no such references to any
such requirements or permissions.
(j) True Charter. This Charter is intended as and shall constitute
------------
an agreement of charter, and nothing herein shall be construed as conveying to
the Charterer any right, title or interest in or to the Vessel other than as
Charterer hereunder, it being expressly understood by the parties hereto that
the foregoing does not constitute a covenant, representation or warranty of the
Charterer.
(k) Survival of Agreements. The representations, warranties,
----------------------
covenants and indemnities of the parties provided for in the Operative
Documents, and the parties' obligations under any and all thereof, shall survive
the execution and delivery of this Charter, the Investment by the Owner
Participant and the purchase of the Secured Notes by the Loan Participant and
any disposition of any interest of the Owner Participant or the Shipowner in the
Vessel and shall be and continue in effect notwithstanding any investigation
made by any of such parties and the fact that compliance with any of the other
terms, provisions or conditions of any of the Operative Documents shall have
been waived.
(l) No Merger. There shall be no merger of the Charter interests,
---------
estates or rights granted to the Charterer under this Charter with any
interests, estates or rights of the Shipowner in the Vessel, it being understood
and agreed that such Charter interests, estates and rights of the Charterer
shall be deemed separate and distinct from the Shipowner's interests, estates
and rights in the Vessel, notwithstanding that any such
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<PAGE>
interests, estates or rights shall at any time be held by or vested in the same
Person.
(m) Usury. No provision of this Charter or any other instrument
-----
relating to this Charter shall require the payment or permit the collection of
interest in excess of the maximum nonusurious rate of interest per annum which
may be contracted for, charged, taken, received or reserved by the Shipowner or
any other Person under applicable United States Federal or state law (whichever
is higher) now or hereafter enforced with respect to the Charter (the "Maximum
Rate"). If any excess interest in such respect is so provided for, or shall be
adjudicated to be so provided for, the provisions of this Section 21(m) shall
govern, and neither the Charterer nor its successors or assigns shall be
obligated to pay the amount of such interest to the extent it is in excess of
the Maximum Rate, and if any excess interest has theretofore been paid, the
excess amount shall, at the option of the Shipowner, be (i) applied against the
next installment or installments of Base Charter Hire or (ii) refunded to the
Charterer.
(n) No Joint Venture. Any intention to create a joint venture or
----------------
partnership relation between the Shipowner and the Charterer is hereby expressly
disclaimed.
(o) Waiver of Jury Trial. BY ITS SIGNATURE BELOW WRITTEN, EACH PARTY
--------------------
HERETO HEREBY IRREVOCABLY WAIVES ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION,
PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS CHARTER OR THE
OTHER OPERATIVE DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
-45-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have each caused this Charter
to be duly executed as of the date first above written.
FIRST SECURITY BANK, NATIONAL
ASSOCIATION,
not in its individual
capacity but solely as
Owner Trustee under the
Trust Agreement
By:_____________________
Name:
Title:
MOBIL TRANSPORT FINANCE
COMPANY INC.
By:_____________________
Name:
Title:
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<PAGE>
AS SET FORTH IN SECTION 16(a) OF THIS CHARTER, CERTAIN OF THE RIGHT, TITLE AND
INTEREST OF THE SHIPOWNER IN AND TO THIS CHARTER HAVE BEEN ASSIGNED TO AND ARE
SUBJECT TO A SECURITY INTEREST IN FAVOR OF STATE STREET BANK AND TRUST COMPANY,
AS INDENTURE TRUSTEE, UNDER THE TRUST INDENTURE, ASSIGNMENT OF CHARTER AND
SECURITY AGREEMENT, DATED AS OF SEPTEMBER 30, 1997, BETWEEN THE SHIPOWNER AND
THE INDENTURE TRUSTEE, AS SUCH INDENTURE MAY BE AMENDED, MODIFIED OR
SUPPLEMENTED FROM TIME TO TIME IN ACCORDANCE WITH THE PROVISIONS THEREOF. THIS
CHARTER HAS BEEN EXECUTED IN SEVERAL COUNTERPARTS. TO THE EXTENT, IF ANY, THAT
THIS CHARTER CONSTITUTES CHATTEL PAPER (AS SUCH TERM IS DEFINED IN THE UNIFORM
COMMERCIAL CODE AS IN EFFECT IN ANY APPLICABLE JURISDICTION), NO SECURITY
INTEREST IN THIS CHARTER MAY BE CREATED THROUGH THE TRANSFER OF POSSESSION OF
ANY EXECUTED COUNTERPART OTHER THAN THE ORIGINAL EXECUTED COUNTERPART, WHICH
SHALL BE IDENTIFIED AS THE COUNTERPART THAT CONTAINS THE RECEIPT THEREFOR
EXECUTED BY THE INDENTURE TRUSTEE ON OR IMMEDIATELY FOLLOWING THE SIGNATURE PAGE
THEREOF. THIS COUNTERPART IS NOT THE ORIGINAL EXECUTED COUNTERPART.
Receipt Acknowledged:
State Street Bank And
Trust Company,
as Indenture Trustee
By:______________________
Name:
Title:
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<PAGE>
Schedule 1 to the Demise Charter Party
BASE CHARTER HIRE ACCRUAL
-------------------------
<TABLE>
<CAPTION>
Column A Column B Column C
<S> <C> <C> <C>
Arrears Base Advance Base Total Base
Charter Payment Charter Payment Charter Payment
Payment (As a Percentage (As a Percentage (As a Percentage
Date of Shipowner's Cost of Shipowner's Cost of Shipowner's Cost
- --------- ------------------- ------------------- -------------------
</TABLE>
<PAGE>
Schedule 2 to the Demise Charter Party
STIPULATED LOSS VALUE SCHEDULE/1/
------------------------------
Date [monthly] Percentage of
----
Total Vessel Cost
-----------------
/1/ NOTE: If the event giving rise to an obligation to pay any Stipulated
Loss Value occurs and the actual date of the loss of tax benefits
resulting from such event shall be earlier or later than the date
assumed in calculating the Federal income tax consequences reflected in
the applicable Stipulated Loss Value, such Stipulated Loss Value shall
be appropriately adjusted upwards or downwards to reflect the actual
timing of the loss of such tax benefits, but otherwise based on the same
original assumptions.
<PAGE>
Schedule 3 to the Demise Charter Party
TERMINATION VALUE PERCENTAGES
-----------------------------
Date [Monthly] Percentage of
----
Total Vessel Cost
-----------------
<PAGE>
Schedule 4 to the Demise Charter Party
EBO DATE, EBO PERCENTAGE AND INSTALLMENT SCHEDULE *
-------------------------------------------------
Initial EBO Date:
Initial EBO Percentage:
______________________________________
* If the Charterer elects to pay the EBO Purchase Price in installments
pursuant to Section 15(b)(iv) of the Charter, the installments shall be in the
amounts and payable on the dates set forth below (the first installment of which
shall be reduced, in the case of an election by the Charterer to purchase the
Beneficial Interest pursuant to Section 17 of the Participation Agreement):
EBO Installment EBO Installment Percentage
Payment Dates (as a percentage of Total Vessel Cost
--------------- -------------------------------------
<PAGE>
Schedule 5 to the Demise Charter Party
Interim Charter Hire (Payable in Arrears)
--------------------
January 30, 1998 __________________
-2-
<PAGE>
Schedule 6 to the Demise Charter Party
Fixed Price Purchase Option Amount
----------------------------------
-3-
<PAGE>
EXECUTION COPY
================================================================================
TRUST AGREEMENT
between
SBCM MARINE FINANCE, INC.,
Owner Participant
and
FIRST SECURITY BANK, NATIONAL ASSOCIATION,
Owner Trustee
Dated as of September 30, 1997
================================================================================
Double-Hulled Tanker
American Progress
================================================================================
<PAGE>
TABLE OF CONTENTS
-----------------
Page
----
Section 1. Definitions................................................1
Section 2. Authority to Execute and Perform Various Documents.........1
Section 3. Declaration of Trust.......................................2
3.1 Appointment of Owner Trustee...............................2
3.2 Declaration of Trust by Owner Trustee......................2
Section 4. Payments...................................................2
4.1 Payments from Trust Estate Only............................2
4.2 Method of Payment..........................................2
Section 5. Distributions..............................................3
5.1 Payments to Indenture Trustee..............................3
5.2 Payments to Owner Trustee..................................3
5.3 Excepted Payments..........................................4
5.4 Certain Distributions to Owner Participant.................4
5.5 Certain Distributions to Charterer.........................4
Section 6. Certain Duties of Owner Trustee............................4
6.1 Notice of Certain Events...................................4
6.2 Action Upon Instructions...................................5
6.3 Indemnification............................................5
6.4 No Duties Except as Specified..............................6
6.5 No Action Except Under Specified Documents or Instructions.6
6.6 Tax Returns; Records.......................................7
6.7 Absence of Certain Duties..................................7
6.8 Place of Administration....................................8
Section 7. The Owner Trustee..........................................8
7.1 Acceptance of Trust and Duties.............................8
7.2 Furnishing of Documents....................................8
7.3 No Representations or Warranties as
to the Vessel or Documents...............................8
7.4 No Segregation of Moneys; No Interest......................9
7.5 Reliance...................................................9
7.6 Not Act in Individual Capacity............................10
Section 8. Indemnification; Compensation.............................10
8.1 Indemnification of Trust Company..........................10
8.2 Compensation and Expenses.................................11
-i-
<PAGE>
Section 9. Termination of Trust Agreement............................12
9.1 Termination of Trust Agreement............................12
9.2 Termination at Option of Owner Participant................12
9.3 Distribution of Trust Estate Upon Termination.............13
Section 10. Successor Owner Trustee, Additional and Separate Owner
Trustees................................................13
10.1 Resignation and Successors................................13
10.2 Additional and Separate Trustees..........................15
Section 11. Supplements and Amendments................................17
11.1 Supplements and Amendments................................17
11.2 Limitation on Amendments..................................18
11.3 Discretion as to Execution of Documents...................18
Section 12. Miscellaneous.............................................18
12.1 No Legal Title to Trust Estate in the Owner Participant...18
12.2 Sale of the Vessel by Owner Trustee Is Binding............18
12.3 Notices...................................................19
12.4 Severability of Provisions................................19
12.5 Separate Counterparts.....................................19
12.6 Successors and Assigns....................................19
12.7 Transfer of Owner Participant's Interest..................19
12.8 Headings; Table of Contents...............................20
12.9 Governing Law.............................................20
12.10 Performance by Owner Participant..........................20
12.11 The Owner Trustee Documents...............................20
12.12 Performance of Obligations to Indenture Trustee...........20
12.13 Trust Agreement for Benefit of Parties Only...............20
12.14 Limitation on Owner Participant's Liability...............21
12.15 Waiver of Jury Trial......................................21
-ii-
<PAGE>
TRUST AGREEMENT
---------------
THIS TRUST AGREEMENT, dated as of September 30, 1997, is between SBCM
Marine Finance, Inc., a Delaware corporation, as Owner Participant (the "Owner
-----
Participant"), and First Security Bank, National Association, a national banking
- -----------
association, in its individual capacity (the "Trust Company") and as Owner
Trustee (the "Owner Trustee"). In consideration of the mutual agreements herein
-------------
contained, the agreements contained in the other Operative Documents and the
acceptance by the Trust Company of the trust hereby created, and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
Section 1. Definitions. For the purposes hereof, terms used herein
-----------
and not otherwise defined shall have the respective meanings assigned to them in
Appendix A to the Participation Agreement, dated as of September 30, 1997, among
the Owner Trustee, the Owner Participant, Mobil Transport Finance Company Inc.
(the "Charterer") and State Street Bank and Trust Company, as Indenture Trustee,
---------
Pass Through Trustee and Loan Participant (as the same may be modified, amended
or supplemented from time to time, the "Participation Agreement"). Unless
-----------------------
otherwise indicated, references in this Trust Agreement to Sections,
subsections, paragraphs and Appendices are to Sections, subsections, paragraphs
and Appendices of this Trust Agreement.
Section 2. Authority to Execute and Perform Various Documents. The
--------------------------------------------------
Owner Participant hereby authorizes and directs the Owner Trustee and the Owner
Trustee agrees for the benefit of the Owner Participant (i) on the date hereof,
-
to execute and deliver the Participation Agreement; (ii) on the Funding Date,
--
upon receipt of the authorization and direction by the Owner Participant
pursuant to Section 2.10 of the Participation Agreement, to execute and deliver
the Operative Documents contemplated to be executed and delivered by the Owner
Trustee on the Funding Date and take the other actions contemplated to be taken
by the Owner Trustee on the Funding Date in the Operative Documents; (iii) to
---
execute and deliver any other agreement, instrument or certificate contemplated
by the Operative Documents (collectively, with the Operative Documents, the
"Owner Trustee Documents"); (iv) subject to the terms of this Trust Agreement
- ------------------------ --
and of the other Operative Documents to which the Owner Trustee is a party, to
take whatever action shall be required to be taken by the Owner Trustee by the
terms of, and exercise its rights (upon instructions received from the Owner
Participant) and perform its duties under, each of the documents, agreements,
instruments and certificates referred to in clauses (i), (ii) and (iii) of this
Section 2 as set forth in such documents, agreements, instruments and
certificates and (v) subject to the terms of this Trust Agreement and the other
-
Operative Documents
<PAGE>
to which it is a party, to take such other action in connection with the
foregoing as the Owner Participant may from time to time direct in written
instructions to the Owner Trustee.
Section 3. Declaration of Trust.
--------------------
3.1 Appointment of Owner Trustee. The Owner Participant hereby
----------------------------
appoints and constitutes the Trust Company as the Owner Trustee hereunder to act
as trustee of the Trust Estate for the purposes and in accordance with the terms
set forth herein.
3.2 Declaration of Trust by Owner Trustee. The Trust Company
-------------------------------------
hereby declares that it will hold as Owner Trustee all estate, right, title and
interest of the Owner Trustee in and to the Vessel and the Owner Trustee
Documents, including without limitation, all amounts of Charter Hire, insurance
proceeds, received by it, sales proceeds, rental proceeds and indemnity or other
payments of any kind to which the Owner Trustee is entitled pursuant to the
terms of the Owner Trustee Documents, but specifically excluding Excepted
Payments (collectively, the "Trust Estate"), upon the trust set forth herein and
------------
for the use and benefit of the Owner Participant as sole beneficiary, subject,
however, to the provisions of and the Liens created by the Indenture.
Section 4. Payments.
--------
4.1 Payments from Trust Estate Only. All payments to be made by
-------------------------------
the Owner Trustee under this Trust Agreement shall be made only from the assets
of or income and proceeds from the Trust Estate and only to the extent that the
Owner Trustee shall have received income or proceeds from the Trust Estate to
make such payments in accordance with the terms hereof, except as specifically
provided herein. The Owner Participant agrees that it will look solely to the
assets of or the income and proceeds from the Trust Estate to the extent
available for payment as herein provided and that, except as expressly provided
herein or in any other Owner Trustee Document, the Trust Company shall not be
liable for any amounts payable under this Trust Agreement and shall not be
subject to any liability under this Trust Agreement.
4.2 Method of Payment. (a) All amounts payable to the Owner
-----------------
Participant, to the Indenture Trustee or to the Charterer pursuant to this Trust
Agreement shall be paid by the Owner Trustee, (i) if to the Owner Participant,
-
by transferring such amount in immediately available funds as set forth in
Schedule 1 to the Participation Agreement or such other account at such
financial institution as the Owner Participant from time to time may direct; or
(ii) if to the Indenture Trustee, in the manner specified in the Indenture; or
--
(iii) if to the Charterer,
- ----
-2-
<PAGE>
by transferring such amount in immediately available funds as set forth in
Schedule 1 to the Participation Agreement or such other account at such
financial institution as the Charterer from time to time may direct.
(b) Notwithstanding the foregoing, the Owner Trustee will pay, if so
requested by the Owner Participant in writing, any or all amounts payable by the
Owner Trustee hereunder to the Owner Participant either (i) by crediting such
-
amount or amounts to an account or accounts maintained by the Owner Participant
with the Trust Company in immediately available funds; or (ii) by mailing an
--
official bank check or checks in such amount or amounts payable to the Owner
Participant at such address as the Owner Participant shall have designated in
writing to the Owner Trustee.
(c) The Owner Trustee will pay all amounts payable to the Owner
Participant by the Owner Trustee hereunder on the day received (or on the next
succeeding Business Day if the funds to be so distributed shall not have been
received by the Owner Trustee prior to 12:00 p.m., New York City time, and the
Owner Trustee shall not have been reasonably able to distribute such funds to
the Owner Participant on the day received).
Section 5. Distributions.
-------------
5.1 Payments to Indenture Trustee. Until the Lien of the
-----------------------------
Indenture shall have been discharged pursuant to the terms thereof, all Charter
Hire or other payments of any kind (other than Excepted Payments) payable to the
Owner Trustee (other than from the Indenture Trustee) and included in the Trust
Estate shall be payable directly to the Indenture Trustee for distribution in
accordance with the provisions of the Indenture, and if any such amount or
payment is received by the Owner Trustee, such amount or payment upon receipt
thereof shall be paid over to the Indenture Trustee without deduction, set-off
or adjustment of any kind for distribution in accordance with the provisions of
the Indenture; provided, however, that any payments received by the Owner
-------- -------
Trustee from (i) the Charterer with respect to the Owner Trustee's fees and
-
disbursements, or (ii) the Owner Participant pursuant to Section 8, shall not be
--
paid over to the Indenture Trustee but shall be retained by the Owner Trustee
and applied toward the purpose for which such payments were made.
5.2 Payments to Owner Trustee. (a) Any payment of the type
-------------------------
referred to in Section 5.1 received by the Owner Trustee after the Lien of the
Indenture shall have been discharged pursuant to the terms thereof, and (b) any
payment received from the Indenture Trustee other than as specified in Section
5.3 and any other amount received as part of the Trust Estate and for the
application or distribution of which no provision is made herein
-3-
<PAGE>
or in any other Operative Document shall, subject to Section 5.5, be distributed
forthwith upon receipt by the Owner Trustee in the following order of priority:
first, so much of such payment as shall be required to reimburse the Owner
- -----
Trustee for any expenses not otherwise reimbursed as to which the Owner Trustee
is entitled to be so reimbursed pursuant to the provisions hereof shall be
retained by the Owner Trustee; second, so much of the remainder for which
------
provision as to the application thereof is contained in any of the Operative
Documents or any of the other Owner Trustee Documents shall be applied and
distributed in accordance with the terms of such Operative Document or such
other Owner Trustee Document, as the case may be and third, the balance, if any,
-----
shall be paid to the Owner Participant.
5.3 Excepted Payments. Any Excepted Payment or other payment
-----------------
for which specific provision is made in any Operative Document received by the
Owner Trustee shall be paid by the Owner Trustee to the Person to whom such
Excepted Payment is payable or otherwise pursuant to the terms of the Operative
Documents.
5.4 Certain Distributions to Owner Participant. All amounts from
------------------------------------------
time to time distributable by the Indenture Trustee to the Owner Participant
pursuant to the terms of the Indenture shall, if paid to the Owner Trustee, be
distributed by the Owner Trustee to or at the direction of the Owner
Participant.
5.5 Certain Distributions to Charterer. After the Indenture
----------------------------------
shall have been discharged pursuant to the terms thereof, any payment of the
type referred to in Section 5.1 received by the Owner Trustee with respect to
the Vessel, if required by the terms of the Charter, shall be distributed to the
Charterer or shall be held and invested and distributed by the Owner Trustee
pursuant to Section 21(g) of the Charter, as the case may be.
Section 6. Certain Duties of Owner Trustee.
-------------------------------
6.1 Notice of Certain Events. In the event that the Owner
------------------------
Trustee shall have Actual Knowledge of any Charter Event of Default, any
Indenture Event of Default or any Event of Loss, the Owner Trustee shall give
prompt telephonic notice thereof (promptly confirmed in writing) to the Owner
Participant, the Charterer and the Indenture Trustee, unless (in the case of
notice to the Indenture Trustee or the Charterer) such Charter Event of Default,
Indenture Event of Default or Event of Loss, as the case may be, has been
remedied before the giving of such notice and the Owner Trustee has Actual
Knowledge that such Charter Event of Default, Indenture Event of Default or
Event of Loss has been so remedied. Subject to the terms of Section 6.3,
-4-
<PAGE>
the Owner Trustee shall, after the occurrence of any such event, take or refrain
from taking such action with respect thereto, not inconsistent with the
provisions of the Operative Documents, as the Owner Trustee shall be instructed
in writing by the Owner Participant. If the Owner Trustee shall not have
received instructions as above provided within twenty (20) days after such
notice of such event to the Owner Participant, the Owner Trustee may, until it
shall have received such instructions and subject to the provisions of the
Operative Documents, take such action or refrain from taking such action (but
shall be under no duty to take or refrain from taking any action) with respect
to such Charter Event of Default, Indenture Event of Default or Event of Loss,
as it shall deem advisable in the best interests of the Owner Participant.
6.2 Action Upon Instructions. (a) Subject to the terms of
------------------------
Sections 6.1 and 6.3, upon the written instructions at any time and from time to
time of the Owner Participant, the Owner Trustee shall take or refrain from
taking such action or actions, which actions shall not be inconsistent with the
provisions of any of the Operative Documents or the Owner Trustee Documents, as
may be specified in such instructions. In the event that the Owner Trustee is
unsure of the application of any provision of this Trust Agreement or any other
Owner Trustee Document, the Owner Trustee may request and rely upon instructions
of the Owner Participant.
(b) Notwithstanding anything to the contrary set forth in Section 2,
the Owner Trustee shall not, without instructions from the Owner Participant,
(x) exercise any right to retain the Vessel under Section 18 of the Charter, (y)
- -
terminate the Charter or (z) consent to or approve any action or document as
-
being satisfactory to the Owner Trustee, or waive any condition or the
performance of any obligation in favor of the Owner Trustee or the Trust Estate,
or release the Charterer from any obligation under the Operative Documents.
6.3 Indemnification. The Owner Trustee shall not be required to
---------------
take or refrain from taking any action under Section 6.1 or 6.2 (other than the
actions specified in the first sentence of Section 6.1) unless the Owner Trustee
shall have been indemnified by the Owner Participant, in manner and form
reasonably satisfactory to the Owner Trustee, against any liability, fee, cost
or expense (including without limitation reasonable attorneys' fees) which may
be incurred or charged in connection therewith, other than any such liability,
fee, cost or expense which results from the willful misconduct (including
without limitation willful breach of contract) or gross negligence of the Owner
Trustee, or the failure of the Owner Trustee to use ordinary care in the receipt
and disbursement of funds, and, if the Owner Participant shall have directed the
-5-
<PAGE>
Owner Trustee to take or refrain from taking any action under any Operative
Document, the Owner Participant agrees to furnish such indemnity (subject to the
foregoing limitation) as shall be reasonably satisfactory to the Owner Trustee,
and in addition, to the extent not otherwise paid pursuant to the terms of any
other Operative Document or Owner Trustee Document, to pay the reasonable
compensation of the Owner Trustee for the services performed or to be performed
by it pursuant to such direction as set forth in Section 8.2. The Owner Trustee
shall not be required to take any action under any Operative Document or any
Owner Trustee Document if the Owner Trustee reasonably shall determine, or shall
have been advised by counsel, that such action is likely to result in
unindemnified personal liability to the Owner Trustee or is contrary to the
terms hereof or of any Operative Document to which the Owner Trustee is a party,
or otherwise contrary to law, and the Owner Trustee in such case shall deliver
promptly to the Owner Participant written notice of the basis of its refusal to
act.
6.4 No Duties Except as Specified. The Owner Trustee shall not
-----------------------------
have any power, right, authority, duty or obligation to manage, control, use,
make any payment in respect of, register, record, insure, inspect, sell, dispose
of or otherwise deal with the Vessel or any other part of the Trust Estate, or
to otherwise take or refrain from taking any action under, or in connection
with, any Owner Trustee Document or any of the other Operative Documents, except
as expressly provided by the terms of this Trust Agreement, the other Operative
Documents or the Owner Trustee Documents or in written instructions from the
Owner Participant received pursuant to Section 6.1 or 6.2, and no implied duties
or obligations shall be read into this Trust Agreement against the Owner
Trustee. Notwithstanding and without limiting the foregoing, the Trust Company
agrees that it will, in its individual capacity and at its own expense, without
any right to indemnification hereunder, (i) promptly take all action necessary
to discharge and satisfy in full any Shipowner's Lien attributable to it in its
individual capacity on any part of the Trust Estate and will claim no indemnity
therefor hereunder or under the Participation Agreement or under any other
Operative Document and (ii) promptly take all action necessary to maintain, and
refrain from taking any action that would cause it to lose, its status as an
entity eligible to own a vessel in U.S. coastwise trade pursuant to Section 2 of
the Shipping Act, 1916, as amended, and any regulations promulgated thereunder,
and will claim no indemnity hereunder or under the Participation Agreement or
under any other Operative Document for the failure to satisfy its obligations
under this clause (ii).
6.5 No Action Except Under Specified Documents or Instructions.
----------------------------------------------------------
The Owner Trustee shall not have any right, power or authority to, and the Owner
Trustee agrees that it will not,
-6-
<PAGE>
manage, control, use, sell, dispose of or otherwise deal with the Vessel or any
other part of the Trust Estate except as (i) expressly required by the terms of
-
any Owner Trustee Document or (ii) expressly directed or authorized in written
--
instructions from the Owner Participant pursuant to Section 6.1 or 6.2, but
subject always to the provisions of, and the Lien created by, the Indenture and
the Ship Mortgage and the rights of the Charterer under the Charter and other
Operative Documents.
6.6 Tax Returns; Records. The Owner Trustee shall be
--------------------
responsible for the maintaining of all appropriate books and records relating to
the receipt and disbursement of all money which it may receive or be entitled to
hereunder or under any agreement contemplated hereby. The Owner Trustee agrees,
at the request and expense of the Owner Participant, to file an application with
the Internal Revenue Service for a taxpayer identification number with respect
to the trust created hereby and to prepare or cause to be prepared and to sign
and/or file all tax returns with respect to the transactions contemplated hereby
or any agreement referred to herein; provided, however, that the Owner Trustee
-------- -------
shall send a copy of the contemplated return to the Owner Participant not more
than sixty (60) nor less than thirty (30) days prior to the due date of the
return. The Owner Participant, upon request, will furnish the Owner Trustee
with all such information as may be reasonably required from the Owner
Participant in connection with the preparation of such tax returns. The Owner
Trustee shall keep copies of all returns delivered to or filed by it.
6.7 Absence of Certain Duties. Except in accordance with
-------------------------
written instructions furnished pursuant to Sections 6.1 and 6.2, and without
limiting the generality of Section 6.4, the Owner Trustee shall not have any
duty (i) to file, record or deposit any Operative Document or Owner Trustee
-
Document, including without limitation this Trust Agreement, or any other
document, or to maintain any such filing, recording or deposit, or to refile,
re-record or re-deposit any such document; (ii) to obtain insurance with respect
--
to the Vessel or to effect or maintain any such insurance, other than to receive
and forward to the Owner Participant any notices, policies, certificates or
binders furnished to the Owner Trustee by the Charterer or its insurance
brokers; (iii) to maintain or mark the Vessel; (iv) to pay or discharge any tax,
--- --
assessment or other governmental charge, or any Lien or encumbrance of any kind,
owing with respect to or assessed or levied against any part of the Trust
Estate, except as provided in Section 6.4 or 7.1 hereof; (v) to confirm, verify,
-
investigate or inquire into the failure to receive any reports respecting the
Guarantor required pursuant to Section 10.1 of the Participation Agreement; (vi)
--
to inspect the Vessel at any time, or to ascertain or inquire as to the
performance or observance of any of the covenants of the
-7-
<PAGE>
Charterer or any other Person under any Operative Document or Owner Trustee
Document with respect to the Vessel or any other part of the Trust Estate; or
(vii) to manage, control, use, sell, dispose of or otherwise deal with the
---
Vessel or any other part of the Trust Estate, or any part thereof, except as
provided in clauses (i) and (ii) of Section 6.5.
- --
6.8 Place of Administration. The principal place of administration
-----------------------
of the trust created hereby shall be in Salt Lake City, Utah.
Section 7. The Owner Trustee.
-----------------
7.1 Acceptance of Trust and Duties. The Trust Company accepts
------------------------------
the trust hereby created and agrees to perform the same as Owner Trustee on the
terms of this Trust Agreement. The Trust Company also agrees to disburse all
moneys actually received by it constituting part of the Trust Estate pursuant to
the terms of this Trust Agreement. The Trust Company shall not be answerable or
accountable under any circumstances except, and in the case of such exceptions
shall not be entitled to indemnity hereunder or under any other Operative
Document, (i) for its own willful misconduct (including without limitation
-
willful breach of contract) or gross negligence; (ii) in the case of the
--
inaccuracy of any of its representations or warranties contained in Section 7.3
hereof or in Section 7 of the Participation Agreement or in any written
certificate delivered pursuant to any Operative Document given expressly in its
individual capacity and not in its capacity as a trustee hereunder; (iii) as
---
arising from its failure to perform obligations expressly undertaken by it in
the last sentence of Section 6.4 hereof or expressly undertaken by it in Section
11.2 of the Participation Agreement; (iv) for any Tax based on or measured by
--
any fees, commissions or compensation received by it for acting as Owner Trustee
in connection with any of the transactions contemplated by the Operative
Documents or (v) for its failure to use ordinary care in the receipt and
-
disbursement of funds.
7.2 Furnishing of Documents. The Owner Trustee will furnish to
-----------------------
the Owner Participant, promptly upon receipt thereof, duplicates or copies of
all reports, notices, requests, demands, opinions, certificates, financial
statements and any other instruments furnished to the Owner Trustee under any
Operative Document or any Owner Trustee Document, unless the Owner Trustee shall
have determined that the same already has been actually received by the Owner
Participant.
7.3 No Representations or Warranties as to the Vessel or
----------------------------------------------------
Documents. (a) NEITHER THE TRUST COMPANY NOR THE OWNER TRUSTEE MAKES ANY
- ---------
REPRESENTATION OR WARRANTY, EITHER EXPRESS OR IMPLIED, AS TO THE DESIGN OR
CONDITION OF THE VESSEL
-8-
<PAGE>
OR ANY PART THEREOF, THE MERCHANTABILITY THEREOF OR THE FITNESS THEREOF FOR ANY
PARTICULAR PURPOSE, TITLE TO THE VESSEL OR ANY PART THEREOF, THE QUALITY OF THE
MATERIALS OR WORKMANSHIP THEREOF OR CONFORMITY THEREOF TO SPECIFICATIONS, OR THE
PRESENCE OR ABSENCE OF ANY LATENT OR OTHER DEFECTS, WHETHER OR NOT DISCOVERABLE,
EXCEPT THAT THE TRUST COMPANY HEREBY REPRESENTS AND WARRANTS THAT (i) ON THE
-
FUNDING DATE, THE OWNER TRUSTEE SHALL HAVE RECEIVED WHATEVER RIGHT, TITLE AND/OR
INTEREST IN OR TO THE VESSEL AS WAS CONVEYED TO THE OWNER TRUSTEE BY SELLER AND
(ii) THE VESSEL SHALL BE FREE AND CLEAR OF SHIPOWNER'S LIENS ATTRIBUTABLE TO
--
TRUST COMPANY, AND (b) NEITHER THE TRUST COMPANY NOR THE OWNER TRUSTEE MAKES ANY
REPRESENTATION OR WARRANTY AS TO THE VALIDITY OR ENFORCEABILITY OF ANY OPERATIVE
DOCUMENT, OR AS TO THE CORRECTNESS OF ANY STATEMENT THEREIN, EXCEPT TO THE
EXTENT THAT ANY SUCH REPRESENTATION, WARRANTY OR STATEMENT IS EXPRESSLY MADE IN
AN OPERATIVE DOCUMENT OR IN ANY WRITTEN CERTIFICATE DELIVERED PURSUANT THERETO
BY THE OWNER TRUSTEE OR THE TRUST COMPANY AND EXCEPT THAT THE TRUST COMPANY
HEREBY REPRESENTS AND WARRANTS THAT THIS TRUST AGREEMENT HAS BEEN DULY EXECUTED
AND DELIVERED BY THE TRUST COMPANY AND EACH OF THE OWNER TRUSTEE DOCUMENTS HAS
BEEN OR WILL BE EXECUTED AND DELIVERED BY OFFICERS OF THE TRUST COMPANY OR BY
THE OWNER TRUSTEE WHO ARE OR WILL BE DULY AUTHORIZED TO EXECUTE AND DELIVER
DOCUMENTS ON ITS BEHALF.
7.4 No Segregation of Moneys; No Interest. Except as otherwise
-------------------------------------
provided herein, in any other Operative Document or in written instructions from
the Owner Participant, moneys received by the Owner Trustee hereunder need not
be segregated in any manner except to the extent required by law, and may be
deposited under such general conditions as may be prescribed by law, and the
Owner Trustee shall not be liable for any interest thereon.
7.5 Reliance. The Owner Trustee shall not incur any liability
--------
to anyone in acting upon any signature, instrument, notice, resolution, request,
consent, order, certificate, report, opinion, bond or other document or paper
reasonably believed by the Owner Trustee in good faith to be genuine and
reasonably believed by the Owner Trustee in good faith to be signed by the
proper party or parties. Any request, direction, order or demand of the Owner
Participant or the Charterer mentioned herein or in any other Operative Document
to which the Owner Trustee is a party shall be sufficiently evidenced by an
Officer's Certificate of the Owner Participant or the Charterer, as the case may
be. The Owner Trustee may accept in good faith a certified copy of a resolution
of the Board of Directors or other governing body of any corporate party as
conclusive evidence that such resolution has been duly adopted by such body and
that the same is in full force and effect. As to any fact or matter the manner
of ascertainment of which is not specifically prescribed herein, the Owner
Trustee may for all purposes hereof rely on an Officer's
-9-
<PAGE>
Certificate of the relevant party as to such fact or matter, and such Officer's
Certificate shall constitute full protection to the Owner Trustee for any action
taken or omitted to be taken by it in good faith in reliance thereon. In the
administration of the trust hereunder, each of the Trust Company and the Owner
Trustee may execute any of the trusts or powers hereof and perform its powers
and duties hereunder directly or through agents or attorneys and may consult
with counsel, accountants and other skilled Persons to be selected and employed
by it, and neither the Trust Company nor the Owner Trustee shall be liable for
anything done, suffered or omitted: (i) by such agents or attorneys appointed by
-
it in good faith, or (ii) in good faith by it in accordance with the advice or
--
opinion of any such counsel, accountants or other skilled Persons so long as
such advice or opinion pertains to such matters as the Owner Trustee may
reasonably presume to be within the scope of such Person's expertise.
7.6 Not Act in Individual Capacity. Except as provided in this
------------------------------
Trust Agreement, in accepting the trust hereby created the Owner Trustee agrees
to act solely as trustee hereunder and not in its individual capacity, and all
Persons having any claim against the Owner Trustee by reason of the transactions
contemplated by the Operative Documents or the Owner Trustee Documents shall
look only to the Trust Estate (or a part thereof, as the case may be) for
payment or satisfaction thereof, except as specifically provided in this Trust
Agreement or such Operative Document and except to the extent the Owner Trustee
otherwise shall agree in any Owner Trustee Document.
Section 8. Indemnification; Compensation.
-----------------------------
8.1 Indemnification of Trust Company. The Owner Participant
--------------------------------
agrees to assume liability for, and to indemnify and hold harmless the Trust
Company against and from any and all liabilities, obligations, damages, Taxes
(excluding any Taxes, fees or other charges payable by the Trust Company or
measured by any compensation received by the Owner Trustee for its services
hereunder), claims, actions, suits, out-of-pocket costs, expenses and
disbursements of any kind and nature whatsoever, including without limitation
the reasonable fees and expenses of counsel but excluding internal costs and
expenses such as salaries and overhead (collectively, "Trust Expenses") which
--------------
may be imposed on, incurred by or asserted at any time against the Trust Company
(whether or not also indemnified by any other Person; provided, however, that to
-------- -------
the extent the Trust Company shall have actually received any payment in the
nature of an indemnity payment from any such other Person relating to a claim
hereunder, the Trust Company shall not be entitled to the amount of any such
payment pursuant to this Section 8.1 (notwithstanding that the Trust Company may
have returned any such amount to the paying party))
-10-
<PAGE>
in any way relating to or arising out of (i) the administration of the Trust
-
Estate or the action or inaction of the Trust Company hereunder or under the
other Operative Documents; (ii) the Vessel or any part thereof; (iii) the
-- ---
Operative Documents or any of them, the issuance of the Secured Notes or the
making of any investment in the Vessel, payments made pursuant to any thereof or
the enforcement by the Trust Company of any of its rights under the Operative
Documents, or any other transaction contemplated by the Operative Documents or
(iv) the manufacture, financing, construction, purchase, ownership, acquisition,
--
acceptance, rejection, delivery, nondelivery, possession, transportation,
charter, subcharter, mortgaging, granting of a security interest in,
preparation, installation, condition, transfer of title, rental, use, operation,
storage, maintenance, modification, alteration, repair, assembly, sale, return,
abandonment or other application or disposition of all or any part of the Vessel
or any interest therein, including without limitation (A) claims or penalties
-
arising from any violation of law or liability in tort (strict or otherwise);
(B) loss of or damage to any property or the environment or death or injury to
-
any Person; (C) latent or other defects, whether or not discoverable and (D) any
- -
claim for patent, trademark or copyright infringement, except only that the
Owner Participant shall not be required to indemnify the Trust Company for Trust
Expenses arising or resulting from any of the matters (1) described in clauses
-
(i) through (v) of the last sentence of Section 7.1 or (2) for which the
-
Charterer would not have been required to indemnify the Trust Company pursuant
to Section 12.1 or 12.2 of the Participation Agreement. The indemnities
contained in this Section 8.1 shall survive the termination of this Trust
Agreement. To secure the foregoing indemnities, the Owner Trustee shall be
entitled to apply any amount otherwise distributable to the Owner Participant
pursuant to Section 5.2 against any such indemnity which has not been paid when
due. The indemnities contained in this Section 8.1 extend to the Trust Company
only and shall not be construed as indemnities of the Trust Estate. The Trust
Company agrees that, before asserting any right to indemnification under this
Trust Agreement, in its individual capacity, or in its capacity as Owner
Trustee, it shall first demand and pursue by appropriate means, for a reason
able period of time, its corresponding right to indemnification, if any,
pursuant to Section 12 of the Participation Agreement.
8.2 Compensation and Expenses. The Owner Trustee agrees that it
-------------------------
shall have no right against the Owner Participant or the Trust Estate for any
fee as compensation for its services or for its expenses, to the extent the
Charterer or the Owner Trustee has paid such amounts pursuant to Section 2.9 or
12.1(f) of the Participation Agreement. Subject to the preceding sentence, the
Owner Participant shall pay, or reimburse the Owner Trustee for, all reasonable
expenses of the Owner Trustee,
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<PAGE>
together with reasonable compensation for its services hereunder as provided
herein, unless and to the extent that the Owner Trustee otherwise receives
payment or reimbursement pursuant to any Operative Document, whether or not the
transactions contemplated hereby are consummated.
Section 9. Termination of Trust Agreement.
------------------------------
9.1 Termination of Trust Agreement. Subject to the terms of the
------------------------------
Participation Agreement, the Charter, the Indenture and Sections 5 and 8.1, this
Trust Agreement and the trust created hereby shall terminate and the Trust
Estate shall be distributed to the Owner Participant, and this Trust Agreement
shall be of no further force or effect, upon the earlier of the sale or other
final disposition by the Owner Trustee of all property constituting part of the
Trust Estate and the final distribution by the Owner Trustee of all moneys or
other property or proceeds constituting part of the Trust Estate in accordance
with the terms of Section 5.
9.2 Termination at Option of Owner Participant. The provisions
------------------------------------------
of Section 9.1 notwithstanding, but subject to Section 11.2, this Trust
Agreement and the trust created hereby shall terminate and the Trust Estate
shall be distributed to the Owner Participant, and this Trust Agreement shall be
of no further force and effect, upon the election of the Owner Participant by
notice to the Owner Trustee to revoke the trust created hereby; provided that,
--------
in addition to the giving of such notice, the Owner Participant, with the
cooperation of the Owner Trustee, shall execute and deliver such written
agreements and instruments and take such actions as shall be necessary in order
to cause the succession of the Owner Participant to all the rights, title,
interests, duties and liabilities of the Owner Trustee under the Operative
Documents (including without limitation the obligations of the Owner Trustee in
Section 5 herein and other than obligations attributable to any gross negligence
or willful misconduct of the Trust Company or any breach by the Owner Trustee of
its obligations under the Operative Documents); provided, however, that, except
-------- -------
in connection with the exercise of remedies by the Owner Trustee pursuant to
Section 18(a) of the Charter, no such termination shall occur without the
express written consent of the Charterer, and, prior to any such termination,
the Lien of the Indenture on the Indenture Estate shall have been released, and
full payment of the principal of or, premium (if any) and interest on the
Secured Notes shall have been made or the Indenture Trustee shall have consented
to such termination. In addition, the Owner Participant may not withdraw any
part of the Trust Estate subject to the Lien of the Indenture or the Ship
Mortgage prior to the discharge of such Lien with respect to such part of the
Trust Estate without the express written consent of the Indenture
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<PAGE>
Trustee. The written agreements and instruments referred to in the first proviso
to the first sentence of this Section 9.2 shall be reasonably satisfactory in
form and substance to the Owner Trustee and shall release the Owner Trustee from
all further obligations of the Owner Trustee hereunder and under the agreements
and other instruments mentioned in the first sentence of this Section 9.2.
9.3 Distribution of Trust Estate Upon Termination. Upon any
---------------------------------------------
termination of the trust created hereby pursuant to Section 9.1 or 9.2, the
Owner Trustee shall transfer title to the Trust Estate (and assign all its
right, title and interest in, to and under each Operative Document) to the Owner
Participant or its designee. No later than the effective date of termination of
the trust created hereby the Owner Trustee or its designee shall execute and
deliver to the Owner Participant a bill of sale and assignment and other written
instrument or instruments prepared by the Owner Participant in form and
substance reasonably satisfactory to the Owner Trustee evidencing the transfer
of title to the Trust Estate to the Owner Participant and, no later than the
effective date of such termination, the Owner Participant shall execute and
deliver to the Owner Trustee a written instrument in form and substance
reasonably satisfactory to the Owner Trustee evidencing discharge of the Owner
Trustee from its obligations hereunder and under the other Operative Documents
to which the Owner Trustee is a party except those theretofore accrued and its
obligations to release Shipowner's Liens.
Section 10. Successor Owner Trustee, Additional and Separate Owner
------------------------------------------------------
Trustees
--------
10.1 Resignation and Successors. (a) The Owner Trustee may
--------------------------
resign at any time without cause by giving at least thirty (30) days' prior
written notice to the Owner Participant, with a copy to the Indenture Trustee
and the Charterer, such resignation to be effective on the acceptance of
appointment by a successor to the Owner Trustee under paragraph (b) of this
Section 10.1. In addition, the Owner Participant at any time may remove the
Owner Trustee without cause by an instrument in writing delivered to the Owner
Trustee, the Indenture Trustee and the Charterer, such removal to be effective
upon the acceptance of appointment by a successor to the Owner Trustee under
paragraph (b) of this Section 10.1. In case of the resignation or removal of
the Owner Trustee, the Owner Participant may appoint a successor to the Owner
Trustee by an instrument in writing, signed by the Owner Participant. If a
successor to the Owner Trustee shall not have been appointed within thirty (30)
days after the giving of written notice of such resignation or the delivery of
the written instrument with respect to such removal, the Owner Trustee, the
Owner Participant, the Indenture
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<PAGE>
Trustee or the Charterer may apply to any court of competent jurisdiction to
appoint a successor to the Owner Trustee reasonably acceptable to the Owner
Participant and the Charterer to act until such time, if any, as a successor
shall have been appointed as above provided in this Section 10.1. Any successor
so appointed by such court shall immediately and without further act be
superseded by any successor to the Owner Trustee appointed as above provided in
this Section 10.1.
(b) Any successor Owner Trustee, however appointed, shall execute and
deliver to the predecessor Owner Trustee an instrument accepting such
appointment and shall give the Owner Participant, the Indenture Trustee and
Charterer written notice of such acceptance. Upon the execution and delivery of
such instrument, such successor Owner Trustee, without further act (provided
that any required Governmental Actions have been obtained), shall become vested
with all the estates, properties, rights, powers, duties and trusts of the
predecessor Owner Trustee in the trust hereunder with like effect as if
originally named an Owner Trustee herein; provided, however, that upon the
-------- -------
written request of such successor Owner Trustee, such predecessor Owner Trustee
shall execute and deliver an instrument transferring to such successor Owner
Trustee, upon the trust herein expressed, all estates, properties, rights,
powers, duties and trusts of such predecessor trustee as the Owner Trustee
hereunder, and such predecessor trustee shall duly assign, transfer, deliver and
pay over to such successor Owner Trustee all moneys or other property then held
by such predecessor trustee as the Owner Trustee upon the trust herein
expressed, together with all the books and records maintained by such
predecessor trustee with respect to such trust pursuant to Section 6.6. Upon
the appointment of any successor Owner Trustee hereunder, the predecessor
trustee, pursuant to written instructions of the Owner Participant, will execute
all documents and take all reasonable action within its control in order to
cause such title held in the Trust Estate by such predecessor trustee to be
transferred to the successor Owner Trustee.
(c) Any successor to the Owner Trustee, however appointed, shall be a
bank or trust company incorporated and doing business within the United States
of America, shall be, and agree to be throughout the term of the Charter an
entity eligible to own a vessel in U.S. coastwise trade pursuant to Section 2 of
the Shipping Act, 1916, as amended, and any regulations promulgated respectively
thereunder and having a combined capital and surplus of at least $50,000,000.00,
reasonably acceptable to the Owner Participant and the Charterer, and regularly
engaged in or having expertise in leveraged leasing, if there be such an
institution willing, able and legally qualified to perform the duties of the
Owner Trustee hereunder upon reasonable or customary terms.
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<PAGE>
(d) Any corporation into which the Owner Trustee may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which the Owner Trustee shall be
a party, or any corporation to which substantially all the corporate trust
business of the Owner Trustee may be transferred, shall be, subject to
compliance with the terms of paragraph (c) of this Section 10.1 and Section
11.2(d) of the Participation Agreement, the Owner Trustee under this Trust
Agreement without further act.
10.2 Additional and Separate Trustees. (a) If the Owner Trustee
--------------------------------
or the Owner Participant shall conclude that it is necessary or prudent in order
to conform to the law of any jurisdiction in which all or any part of the Trust
Estate shall be situated, or to make or defend any claim or bring or defend any
suit with respect to the Trust Estate, the Secured Notes or any Operative
Document, or pursuant to advice of counsel satisfactory to it, or if the Owner
Trustee shall have been directed to do so by the Owner Participant, the Owner
Trustee shall appoint another Person to act as additional or separate trustee
for all or any part of the Trust Estate with such property, title, right, power
or duty as the Owner Trustee and the Owner Participant may determine. In case
any such additional trustee or separate trustee shall resign or be removed, all
the assets, property, rights, powers or duties of such additional trustee or
separate trustee, as the case may be, so far as permitted by any applicable law,
shall vest in and be exercised by a new successor to such additional trustee,
appointed in the manner otherwise provided in this Trust Agreement.
(b) In the event that either the Owner Participant or the Owner
Trustee shall determine to appoint another Person as additional or separate
trustee, the Owner Trustee and the Owner Participant shall execute and deliver
an agreement supplemental hereto, and all other instruments and agreements
necessary or proper to constitute another bank or trust company, or one or more
Persons approved by the Owner Trustee and the Owner Participant, either to act
as an additional trustee or trustees of all or any part of the Trust Estate,
jointly with the Owner Trustee, or to act as separate trustee or trustees of all
or any part of the Trust Estate, in any such case with such powers as may be
provided in such agreement supplemental hereto, and to vest in such bank, trust
company or Person as such additional trustee or separate trustee, as the case
may be, any property, title, right, or power deemed necessary or proper by the
Owner Trustee or the Owner Participant, subject to the remaining provisions of
this Section 10.2. In the event the Owner Participant shall not have joined in
the execution of such agreement supplemental hereto within fifteen (15) days
after the receipt of a written request from the Owner Trustee so to do without
providing a reasonable basis for such failure to join,
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<PAGE>
the Owner Trustee may act under the foregoing provisions of this Section 10.2
without the concurrence of the Owner Participant, and the Owner Participant
hereby appoints the Owner Trustee its agent and attorney-in-fact to act for the
Owner Participant under the foregoing provisions of this Section 10.2 in the
event of the occurrence of such contingency. The Owner Trustee may execute,
deliver and perform any deed, conveyance, assignment or other instrument in
writing as may be required by an additional trustee or separate trustee for more
fully and certainly vesting in and confirming to such Person any property,
title, right or power which, by the terms of such agreement supplemental hereto,
are expressed to be conveyed or conferred to or upon such additional trustee or
separate trustee, and the Owner Participant shall, upon the Owner Trustee's
request, join therein and execute, acknowledge and deliver the same, and the
Owner Participant hereby appoints the Owner Trustee its agent and attorney-in-
fact to execute, acknowledge and deliver any such deed, conveyance, assignment
or other instrument in the event that such Owner Par ticipant shall not itself
execute and deliver the same within fifteen (15) days after receipt by it of
such request so to do.
(c) Every additional trustee and separate trustee hereunder shall, to
the extent permitted by law, be appointed to act and the Owner Trustee shall
act, subject to the following provisions and conditions:
(i) to the extent permitted by applicable law, all powers, duties,
obligations and rights conferred or imposed upon the Owner Trustee in
respect of the receipt, custody, management, investment and payment of
moneys, shall be exercised solely by the Owner Trustee;
(ii) all other rights, powers, duties, and obligations conferred or
imposed upon the Owner Trustee shall be conferred or imposed upon and
exercised or performed by the Owner Trustee and such additional trustee or
trustees and separate trustee or trustees jointly, except to the extent
that, under any law of the jurisdiction in which any particular act or acts
are to be performed, the Owner Trustee shall be incompetent or unqualified
to perform such act or acts, in which event such rights, powers, duties,
and obligations (including the holding of title to the Trust Estate in any
such jurisdiction) shall be exercised and performed by such additional
trustee or trustees or separate trustee or trustees;
(iii) no power hereby given to, or with respect to which it is hereby
provided may be exercised by, any such additional trustee or separate
trustee shall be exercised hereunder by such additional trustee or separate
trustee
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<PAGE>
except jointly with, or with the consent of, the Owner Trustee and
(iv) no trustee hereunder shall be personally liable by reason of any
act or omission of any other trustee hereunder.
(d) If at any time the Owner Trustee and the Owner Participant shall
deem it no longer necessary or prudent in order to conform to any applicable law
or shall be advised by its counsel that it is no longer necessary or prudent in
the interest of the Owner Trustee and the Owner Participant to maintain the
appointment of such additional or separate trustee as provided herein, the Owner
Trustee and the Owner Participant shall execute and deliver any agreement
supplemental hereto and all other instruments and agreements necessary or proper
to remove any such additional or separate trustee. In the event that the Owner
Participant shall not have joined in the execution of such agree ment
supplemental hereto, instruments and agreements, the Owner Trustee may act on
behalf of the Owner Participant to the same extent provided above in this
Section 10.2.
(e) Any additional trustee or separate trustee may at any time by an
instrument in writing constitute the Owner Trustee as its agent or attorney-in-
fact with full power and authority, to the extent which may be authorized by
applicable law, to do all acts and things and exercise all discretion which it
is authorized or permitted to do or exercise, for and in its behalf and in its
name. In case any such additional trustee or separate trustee shall die, become
incapable of acting, resign or be removed, all the assets, property, rights,
powers, trusts, duties and obligations of such additional trustee or separate
trustee, as the case may be, so far as permitted by law, shall vest in and be
exercised by the Owner Trustee without necessity of any act by any party and
without the appointment of a new suc cessor to such additional or separate
trustee, unless and until a successor is appointed in the manner provided in
this Section 10.2.
(f) Each additional or separate trustee appointed pursuant to this
Section 10.2 shall be subject to, and shall have the benefit of, Sections 6.1
through 6.7 and Sections 7.1, 8.1 and 11.2 insofar as they apply to the Owner
Trustee. No additional separate trustee shall be appointed pursuant to this
Section 10.2 without the consent of the Charterer, such consent not to be
unreasonably withheld. No appointing of, or action by, any additional trustee
will relieve the Owner Trustee of any of its or his obligations hereunder or
under any other Operative Document.
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Section 11. Supplements and Amendments.
--------------------------
11.1 Supplements and Amendments. Subject to the terms of the
--------------------------
Operative Documents at any time and from time to time, upon the written request
of the Owner Participant, (i) the Owner Trustee, together with the Owner
-
Participant, shall execute a supplement to this Trust Agreement for the purpose
of adding provisions to, or changing or eliminating provisions of, this Trust
Agreement as specified in such request, and (ii) the Owner Trustee shall,
--
subject to compliance with the applicable provisions of Article IX of the
Indenture, enter into such written amendment of or supplement to any other
Operative Document to which the Owner Trustee is a party as the Indenture
Trustee and the Charterer may agree to and as may be specified in such request,
or execute and deliver such written waiver or modification of or consent under
the terms of any such Operative Document as the Charterer and, unless the Lien
of the Indenture has been discharged, the Indenture Trustee may agree to and as
may be specified in such request.
11.2 Limitation on Amendments. The provisions of Section 11.1
------------------------
notwithstanding, but subject to Sections 11.1(g) and 16.6(b) of the
Participation Agreement, (i) this Trust Agreement may not be revoked or
-
terminated by the Owner Participant and (ii) the Owner Participant shall not
--
request the Trust Company to execute any amendment which would result in the
trust created hereunder being terminated or which would materially adversely
affect the Indenture Estate, in either case prior to the release of the Lien of
the Indenture on the Indenture Estate or prior to the payment in full of the
principal of, premium (if any) and interest on the Secured Notes unless the
Indenture Trustee shall have consented to any such revocation, termination or
amendment.
11.3 Discretion as to Execution of Documents. If in the
---------------------------------------
reasonable opinion of the Owner Trustee any document required to be executed
pursuant to the terms of Section 11.1 (i) adversely affects any right, duty,
-
immunity, or indemnity in favor of the Owner Trustee hereunder or under any
other Operative Document to which the Owner Trustee is a party or (ii) would
--
cause or result in any conflict with or any breach of any term, condition or
provision of, or default under, its charter documents or by-laws or any document
contemplated hereby to which it is a party, the Owner Trustee may in its
discretion decline to execute such document.
Section 12. Miscellaneous.
-------------
12.1 No Legal Title to Trust Estate in the Owner Participant.
-------------------------------------------------------
The Owner Participant shall not have legal title to any part of the Trust
Estate. No transfer, by operation of law or otherwise, of any right, title and
interest of the Owner
-18-
<PAGE>
Participant in and to the Trust Estate or hereunder shall
operate to terminate this Trust Agreement or the trust created hereby or entitle
any successor or transferee to an accounting or to the transfer to it of legal
title to any part of the Trust Estate.
12.2 Sale of the Vessel by Owner Trustee Is Binding. Any sale,
----------------------------------------------
transfer or other conveyance of the Vessel, any part thereof, or other property
included in the Trust Estate or any part thereof by the Owner Trustee made
pursuant to the terms of this Trust Agreement or any other Operative Document
shall bind the Owner Participant and shall be effective to transfer or convey
all right, title and interest of the Owner Trustee and the Owner Participant in
and to the Vessel or other property included in the Trust Estate or part
thereof, as the case may be. No purchaser or other grantee shall be required to
inquire as to the authorization, necessity, expediency or regularity of such
sale or conveyance or as to the application of any sale or other proceeds with
respect thereto by the Owner Trustee.
12.3 Notices. Unless otherwise expressly specified or permitted
-------
by the terms hereof, all notices hereunder shall be given as provided in Section
16.3 of the Participation Agreement.
12.4 Severability of Provisions. Any provision of this Trust
--------------------------
Agreement which may be determined by competent authority to be invalid or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such invalidity or unenforceability without invalidating or
rendering unenforceable any remaining terms and provisions hereof, and any such
invalidity or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction. The parties
shall negotiate in good faith to replace such provision with an appropriate
legal provision. To the extent permitted by applicable law, the parties hereto
hereby waive any provision thereof that renders any term or provision hereof
invalid or unenforceable in any respect.
12.5 Separate Counterparts. This Trust Agreement may be executed
---------------------
by the parties hereto in separate counterparts, each of which when so executed
and delivered shall be an original, but all such counterparts shall together
constitute but one and the same instrument.
12.6 Successors and Assigns. This Trust Agreement, including the
----------------------
terms and provisions hereof, shall be binding upon the Owner Participant, the
Trust Company or the Owner Trustee, whichever is applicable pursuant to the
terms hereof, and their respective successors and permitted assigns, and inure
to the benefit of the Owner Participant, the Trust Company or the Owner Trustee,
whichever is applicable pursuant to the terms hereof,
-19-
<PAGE>
and their respective successors and permitted assigns, all as herein provided.
Any request, notice, direction, consent, waiver or other instrument or action by
the Owner Participant shall bind the successors and assigns of the Owner
Participant.
12.7 Transfer of Owner Participant's Interest. (a) All
----------------------------------------
provisions of Section 13 of the Participation Agreement shall (with the same
force and effect as if set forth in full, mutatis mutandis, in this Section
----------------
12.7) be applicable to any assignment, conveyance or other transfer by any Owner
Participant of any of its right, title or interest in and to the Trust Estate or
this Trust Agreement or any other Operative Document.
(b) In the event that at any time there shall be more than one Owner
Participant pursuant to the provisions of Section 13 of the Participation
Agreement, then in each such case, as used herein, the term "Owner Participant"
shall be deemed to refer to each such Owner Participant, except that any
reference to consents, approvals or waivers of the "Owner Participant" as used
herein shall require the consent, approval or waiver of each such Owner
Participant. At any time that there shall be required to be made hereunder any
distribution, disbursement, assignment or other transfer of monies or any other
item whatsoever, then such distribution, disbursement, assignment or other
transfer shall be made pro rata to each Owner Participant existing at such time
in accordance with their respective interests hereunder. If there shall be more
than one Owner Participant, no Owner Participant shall be liable for performance
by any other Owner Participant of such other Owner Participant's obligations
under the Operative Documents or in respect of actions taken by any other Owner
Participant except as otherwise expressly so set forth.
12.8 Headings; Table of Contents. The division of this Trust
---------------------------
Agreement into sections, the provision of a table of contents and the insertion
of headings are for convenience of reference only and shall not affect the
construction or interpretation hereof.
12.9 GOVERNING LAW. THIS TRUST AGREEMENT SHALL BE GOVERNED BY,
-------------
AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK APPLICABLE
TO CONTRACTS MADE AND TO BE PERFORMED ENTIRELY WITHIN SUCH STATE.
12.10 Performance by Owner Participant. Any obligation of the
--------------------------------
Trust Company or the Owner Trustee hereunder or under any other Operative
Document or other document contemplated hereby may be performed by the Owner
Participant and any such performance shall not be construed as a revocation of
the trust created hereby.
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<PAGE>
12.11 The Owner Trustee Documents. If any provision in this Trust
---------------------------
Agreement shall conflict with or otherwise be inconsistent with the terms of any
Owner Trustee Document, the terms of the Owner Trustee Document shall control.
12.12 Performance of Obligations to Indenture Trustee. After the
--------------------------------------- -------
Indenture shall have been discharged pursuant to the terms thereof, the
provisions of this Trust Agreement which require or permit any action by, any
consent, approval or authorization of, the furnishing of any document, paper or
information to, or the performance of any other obligation to, the Indenture
Trustee shall not be effective, and the Sections hereof containing such
provisions shall be read as though there were no such references to any such
requirements or permissions.
12.13 Trust Agreement for Benefit of Parties Only. Unless
-------------------------------------------
otherwise expressly provided herein, nothing herein shall be construed to give
any Person other than the Owner Trustee and the Owner Participant any legal or
equitable right, remedy or claim under or in respect of this Trust Agreement,
and this Trust Agreement shall be held to be for the sole and exclusive benefit
of the Owner Trustee and the Owner Participant, provided, however that it is
-------- -------
intended that (i) the Indenture Trustee be a third party beneficiary with
-
respect to Sections 4.2(a)(ii), 5.1, 6.1, 9.2, 11.2 and 12.13 hereof and (ii)
--
the Charterer be a third party beneficiary with respect to Sections 4.2(a)(iii),
5.3, 5.5, 6.1, 9.2, 10.1(c), 11.2, 12.2 and 12.13 hereof.
12.14 Limitation on Owner Participant's Liability. Except as
-------------------------------------------
expressly set forth herein, the Owner Participant shall not have any liability
for the performance of this Trust Agreement.
12.15 Waiver of Jury Trial. BY ITS SIGNATURE BELOW WRITTEN, EACH
--------------------
PARTY HERETO HEREBY IRREVOCABLY WAIVES ALL RIGHT TO A TRIAL BY JURY IN ANY
ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS TRUST
AGREEMENT OR THE OTHER OPERATIVE DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED
HEREBY OR THEREBY.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have each caused this Trust
Agreement to be duly executed as of the date first above written.
FIRST SECURITY BANK, NATIONAL ASSOCIATION, not
in its individual capacity, except as expressly
provided herein,
but as Owner Trustee
By:
------------------------------
Name:
Title:
SBCM MARINE FINANCE, INC.,
By:
------------------------------
Name:
Title:
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EXECUTION COPY
PARTICIPATION AGREEMENT
among
MOBIL TRANSPORT FINANCE COMPANY INC.,
Charterer,
SBCM MARINE FINANCE, INC.
Owner Participant,
FIRST SECURITY BANK, NATIONAL ASSOCIATION,
Owner Trustee,
STATE STREET BANK AND TRUST COMPANY,
Indenture Trustee,
and
STATE STREET BANK AND TRUST COMPANY,
Pass Through Trustee and Loan Participant
Dated as of September 30, 1997
Double-Hulled Tanker
AMERICAN PROGRESS
<PAGE>
TABLE OF CONTENTS
-----------------
Page
RECITALS.....................................................................1
Section 1. Definitions; Interpretation.................................3
Section 2. Commitments of Participants; Funding;
Transaction Expenses........................................3
2.1. Commitment of Owner Participant.............................3
2.2. Commitments of Pass Through Trustee; Secured
Notes.......................................................3
2.3. Expiration of Commitments...................................4
2.4. Notice of Funding Date......................................4
2.5. Time and Place of Closing...................................4
2.6. Delivery of Funds...........................................4
2.7. Application of Funds by Owner Trustee.......................5
2.8. Actions on Funding Date.....................................5
2.9. Transaction Expenses........................................6
2.10. Authorization to Owner Trustee..............................7
2.11. Registration Statement......................................8
2.12. Recomputation of Base Charter Hire, Termination Values,
Stipulated Loss Values and EBO Exercise Price...............8
2.12.1. Adjustments to Base Charter Hire, Termination
Values, Stipulated Loss Values and EBO Exercise
Price.......................................................8
2.12.2. Limitations on Adjustments..................................9
2.12.3. Timing of Adjustments......................................11
2.12.4. Confirmation of Adjustments................................11
Section 3. Conditions to Closing by Charterer.........................12
3.1. Closing Documents..........................................12
3.2. Legality, Etc..............................................13
3.3. Event of Loss..............................................13
3.4. Consents and Approvals.....................................13
3.5. Opinions...................................................14
3.6. Litigation.................................................14
3.7. Appraisal..................................................15
3.8. Equity Offering............................................15
3.9. Payment of Total Vessel Cost...............................15
3.10. Sale of Pass Through Certificates..........................15
3.11. No Uneconomic Change; Other Changes........................15
3.12. Officer's Certificates.....................................15
3.13. Resolutions, Etc...........................................17
3.14. Coast Guard Documentation..................................18
Section 4. Conditions to Closing by Participants......................18
4.1. Notice of Funding Date.....................................18
4.2. Closing Documents..........................................18
4.3. Legality, Etc..............................................19
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4.4. Event of Loss..............................................19
4.5. Consents and Approvals.....................................20
4.6. Opinions...................................................21
4.7. Litigation.................................................21
4.8. Appraisal..................................................21
4.9. Equity Offering............................................22
4.10. Insurance..................................................22
4.11. Taxes......................................................22
4.12. Officer's Certificates.....................................22
4.13. Resolutions, Etc...........................................24
4.14. Investment and Loans.......................................25
4.15. Title; Filings and Recordings..............................25
4.16. Sale of Pass Through Certificates..........................26
4.17. No Default Under Charter...................................26
4.18. Completion Certificate.....................................26
Section 5. Representations and Warranties of the
Charterer..................................................26
5.1. Due Organization...........................................26
5.2. Authorization..............................................26
5.3. Execution; Enforceability..................................27
5.4. No Violation...............................................27
5.5. Consents and Approvals.....................................28
5.6. Securities Act.............................................28
5.7. Title; Filings and Recordings..............................29
5.8. Chief Place of Business....................................29
5.9. Litigation.................................................29
5.10. No Default.................................................30
5.11. Event of Loss..............................................30
5.12. Citizenship................................................30
5.13. Description of Vessel......................................30
5.14. Investment Company Act.....................................30
5.15. No Brokers' Fees...........................................30
5.16. Holding Company............................................30
5.17. DISCLAIMER OF REPRESENTATIONS AND WARRANTIES...............30
Section 6. Representations and Warranties of Owner
Participant................................................31
6.1. Due Organization...........................................31
6.2. Authorization..............................................31
6.3. Execution; Enforceability .................................31
6.4. No Violation...............................................32
6.5. Owner Participant's Liens..................................32
6.6. Acquisition for Investment.................................32
6.7. Securities Act.............................................32
6.8. ERISA......................................................33
6.9. Investment Company Act.....................................33
6.10. Litigation.................................................33
6.11. No Default.................................................33
6.12. No Brokers' Fees...........................................33
6.13. Citizenship................................................33
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<PAGE>
Section 7. Representations and Warranties of the
Trust Company and the Owner Trustee........................34
7.1. Due Organization...........................................34
7.2. Authorization; Execution; Enforceability...................34
7.3. No Violation...............................................35
7.4. No Default.................................................36
7.5. Litigation.................................................36
7.6. Shipowner's Liens..........................................37
7.7. Securities Act.............................................37
7.8. Chief Place of Business....................................37
7.9. No Taxes Payable...........................................37
7.10. Title......................................................38
7.11. Citizenship................................................38
Section 8. Representations and Warranties of the
Indenture Trustee..........................................38
8.1. Due Organization...........................................38
8.2. Authorization; Execution; Enforceability...................38
8.3. No Violation...............................................39
8.4. Litigation.................................................40
8.5. Indenture Trustee's Liens..................................40
8.6. No Taxes Payable...........................................40
Section 9. Representations and Warranties of Pass Through Trustee.....40
9.1. Due Organization...........................................40
9.2. Authorization; Execution; Enforceability...................41
9.3. No Violation...............................................42
9.4. Litigation.................................................42
9.5. Pass Through Trustee's Liens...............................42
9.6. Securities Act.............................................43
9.7. No Taxes Payable...........................................43
Section 10. Charterer Covenants........................................43
10.1. Maintenance of Corporate Existence, Etc....................43
10.2. Merger, Consolidation, Sale, Etc...........................43
10.3. Change in Name or Chief Place of Business..................44
10.4. Filings....................................................44
10.5. Inspection.................................................44
10.6. Citizenship................................................45
Section 11. Other Covenants and Agreements.............................46
11.1. Agreements of Owner Participant............................46
11.2. Agreements of the Trust Company and the Owner Trustee......50
11.3. Agreements of Pass Through Trustee and Loan Participant....53
11.4. Agreements of Indenture Trustee............................54
11.5. Confidentiality............................................55
11.6. Assumption of Secured Notes................................57
11.7. Certain Agreements Relating to the Charter.................57
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<PAGE>
Section 12. Indemnification............................................57
12.1. General Indemnification....................................57
12.2. General Tax Indemnification................................65
12.3. No Guarantee...............................................76
Section 13. Transfer of Owner Participant's Interest...................76
13.1. Restrictions on Transfer...................................76
13.2. Permitted Transfers........................................76
13.3. Effect of Transfer.........................................78
Section 14. Financing for Modifications................................79
Section 15. Refinancing of Secured Notes...............................80
15.1. Refinancing of Secured Notes...............................80
15.2. Notice.....................................................82
Section 16. Miscellaneous..............................................82
16.1. Survival...................................................82
16.2. Binding Effect.............................................82
16.3. Notices....................................................83
16.4. Counterpart Execution......................................83
16.5. GOVERNING LAW..............................................83
16.6. Amendments, Supplements, Etc...............................83
16.7. Headings; Table of Contents................................83
16.8. Severability of Provisions.................................84
16.9. Entire Agreement...........................................84
16.10. Limitation of Liability of Trust Company, Indenture Trustee
and Pass Through Trustee...................................84
16.11. Jurisdiction; Service of Process...........................87
16.12. Instructions...............................................87
16.13. WAIVER OF JURY TRIAL.......................................87
16.14. Owner for Federal Income Tax Purposes......................87
Section 17. Beneficial Interest Purchase Option........................87
17.1. Option to Purchase.........................................88
17.2. Notice of Election; Manner of Purchase;
Transfer After Purchase....................................88
Appendix A Definitions
SCHEDULES
Schedule 1 Addresses for Notices and Payments
Schedule 2 Pricing Assumptions
Schedule 3 Filings and Recordings
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<PAGE>
EXHIBITS
Exhibit A Forms of Bill of Sale and Conveyancing Instrument from Seller
in favor of Owner Trustee
Exhibit B Form of Charter
Exhibit C Form of Indenture
Exhibit D Form of First Preferred Ship Mortgage
Exhibit E Form of Guaranty
Exhibit F Form of Owner Participant Guaranty
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<PAGE>
PARTICIPATION AGREEMENT
-----------------------
THIS PARTICIPATION AGREEMENT, dated as of September 30, 1997, is among (a)
MOBIL TRANSPORT FINANCE COMPANY INC., a Delaware corporation, as the Charterer
(the "Charterer"),(b) SBCM MARINE FINANCE, INC., a Delaware corporation, as the
---------
Owner Participant (the "Owner Participant"), (c) FIRST SECURITY BANK, NATIONAL
-----------------
ASSOCIATION, a national banking association (the "Trust Company"), not in its
-------------
individual capacity except to the extent expressly set forth herein, but solely
as Owner Trustee under the Trust Agreement (in such capacity, the "Owner
-----
Trustee"), (d) STATE STREET BANK AND TRUST COMPANY, a Massachusetts trust
company, not in its individual capacity except to the extent expressly set forth
herein, but solely as Indenture Trustee under the Indenture (in such capacity,
the "Indenture Trustee"), and (e) STATE STREET BANK AND TRUST COMPANY, a
-----------------
Massachusetts trust company, not in its individual capacity except to the extent
expressly set forth herein, but solely as Pass Through Trustee under the Pass
Through Trust Documents (in such capacity, the "Pass Through Trustee") and as
--------------------
Loan Participant.
RECITALS:
A. Mobil Oil Corporation, a New York corporation (the "Seller"), is the
registered and beneficial owner of all right, title and interest in and to the
Vessel.
B. Subject to the terms and conditions set forth herein, on the Funding
Date (1) the Seller shall sell its right, title and interest in and to the
-
Vessel in accordance with the terms of the Bill of Sale to the Owner Trustee,
and the Owner Trustee shall purchase all of the Seller's right, title and
interest in and to the Vessel pursuant to the Bill of Sale, and the Seller shall
execute and deliver the Conveyancing Instrument respecting Vessel warranties of
the Builder to the Owner Trustee, each substantially in the form set forth in
Exhibit A hereto; (2) the Owner Trustee and the Charterer shall execute and
-
deliver the Charter, substantially in the form set forth in Exhibit B hereto,
whereby the Owner Trustee shall charter the Vessel to the Charterer and the
Charterer shall charter the Vessel from the Owner Trustee pursuant to the
Charter; and (3) the Charterer and the Seller shall execute and deliver the
-
Initial Subcharter, whereby the Charterer shall subcharter the Vessel to the
Seller and the Seller shall subcharter the Vessel from the Charterer pursuant to
the Initial Subcharter.
C. Concurrently with the execution and delivery of this Participation
Agreement, the Guarantor has entered into the
<PAGE>
Guaranty, substantially in the form of Exhibit E hereto whereby the Guarantor
will guarantee the Charterer's obligations under the Operative Documents.
D. Concurrently with the execution and delivery of this Participation
Agreement, the Owner Participant Guarantor shall execute and deliver the Owner
Participant Guaranty, substantially in the form of Exhibit F hereto, whereby the
Owner Participant Guarantor will guarantee the Owner Participant's obligations
under the Operative Documents.
E. Concurrently with the execution and delivery of this Participation
Agreement, the Owner Participant and the Trust Company have entered into the
Trust Agreement, pursuant to which Trust Agreement the Owner Trustee has agreed,
among other things, to hold the Trust Estate for the benefit of the Owner
Participant on the terms specified therein, subject, however, to the Liens
created under the Indenture and the Ship Mortgage.
F. Subject to the terms and conditions herein, on the Funding Date, the
Owner Trustee and the Indenture Trustee shall execute and deliver the Indenture
and the Ship Mortgage, each to be dated as of the Funding Date, substantially in
the form of Exhibits C and D, respectively, hereto, pursuant to which Indenture
and Ship Mortgage the Owner Trustee, for the benefit of the Loan Participant,
has agreed, among other things, to mortgage and pledge unto the Indenture
Trustee, all of the Owner Trustee's right, title and interest in and to the
Indenture Estate.
G. Concurrently with the execution and delivery of this Participation
Agreement, the Charterer and the Owner Participant have entered into the Tax
Indemnity Agreement, pursuant to which Tax Indemnity Agreement the Charterer has
agreed to provide, in addition to the indemnities provided to the Indemnitees
pursuant to Section 12 hereof, certain indemnities to the Owner Participant.
H. The Pass Through Trustee, the Guarantor, the Charterer and certain
other Persons have executed the Pass Through Trust Agreement and, subject to the
terms and conditions herein, the Pass Through Trustee, the Guarantor and the
Charterer shall execute and deliver, on the Funding Date, Pass Through Trust
Supplements relating to the Pass Through Certificates.
I. Subject to the terms and conditions herein, the Owner Participant
desires to participate in the payment of Shipowner's Cost on the Funding Date by
providing its Investment to the Owner Trustee, and the Pass Through Trustee, as
Loan Participant, desires to participate in the payment of Shipowner's
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<PAGE>
Cost on the Funding Date by purchasing the Secured Notes from the Owner Trustee
in such principal amounts as shall be set forth in the written notice given by
the Charterer pursuant to Section 2.4 hereof, subject to the terms of the
Indenture.
Accordingly, in consideration of the premises and of other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree as follows:
Section 1. Definitions; Interpretation. For the purposes hereof,
---------------------------
capitalized terms used herein (including those used in the preamble and the
foregoing recitals) and not otherwise defined herein shall have the meanings
assigned to them in Appendix A. References in this Participation Agreement to
Sections, subsections, paragraphs, Schedules, Appendices and Exhibits are to
Sections, subsections and paragraphs in, and Schedules, Appendices and Exhibits
to, this Participation Agreement unless otherwise indicated.
Section 2. Commitments of Participants; Funding; Transaction Expenses.
----------------------------------------------------------
2.1. Commitment of Owner Participant. Subject to the terms and
-------------------------------
conditions of this Participation Agreement, the Owner Participant agrees to
participate on the Funding Date in the payment of the Total Vessel Cost by
making an equity investment (the "Investment") in the beneficial ownership of
----------
the Vessel in an amount equal to the sum of (x) the product of (i) Total Vessel
- -
Cost and (ii) the Equity Percentage and (y) Transaction Expenses to be paid on
--
the Funding Date, and shall, on the Funding Date, take and cause the Owner
Trustee to take the respective actions specified in Sections 2.7 and 2.8 to be
taken by the Owner Participant and the Owner Trustee and shall cause the Owner
Trustee to take the actions set forth in Section 2.9.
2.2. Commitments of Pass Through Trustee; Secured Notes. Subject to the
-------------------------------------------- -----
terms and conditions of this Participation Agreement, the Pass Through Trustee,
as Loan Participant, agrees to participate on the Funding Date in the payment of
the Total Vessel Cost by purchasing from the Owner Trustee the Secured Notes in
the principal amount set forth in the written notice given by the Charterer
pursuant to Section 2.4 hereof, subject to the terms of the Indenture, at a
purchase price equal to 100% of the aggregate original principal amount of the
Secured Notes, and shall, on the Funding Date, take and cause the Indenture
Trustee to take the respective actions specified in Section 2.8 to be taken by
the Pass Through Trustee, as Loan Participant, and the Indenture Trustee. The
Secured Notes shall be issued to the Pass
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<PAGE>
Through Trustee, as Loan Participant, under, and in accordance with, the terms
of the Indenture.
2.3. Expiration of Commitments. Unless the Owner Participant shall agree
-------------------------
to a later date, the Owner Participant's commitment to make the Investment on
the Funding Date pursuant to Section 2.1 shall expire if the Funding Date shall
not have occurred before midnight, New York City time, on the Cut-off Date.
Unless the Pass Through Trustee, as Loan Participant, shall agree to a later
date, the Pass Through Trustee's commitment, as Loan Participant, to purchase
the Secured Notes pursuant to Section 2.2 shall expire if the Funding Date shall
not have occurred before midnight, New York City time, on the Cut-Off Date.
2.4. Notice of Funding Date. On or before the second Business Day prior
----------------------
to the Funding Date, the Charterer shall deliver to each Participant written
notice of the Funding Date, which notice shall contain (a) the date of the
-
Funding Date, (b) the amount of Total Vessel Cost and Transaction Expenses to be
-
paid on the Funding Date, (c) the amount of the Investment and (d) the principal
- -
amount of the Secured Notes to be purchased by the Pass Through Trustee, as Loan
Participant, on the Funding Date; provided, however, that the funding of the
-------- -------
Investment or the funding of the purchase price for the Secured Notes to be
purchased by the Pass Through Trustee, as Loan Participant, on the Funding Date,
as the case may be, and the taking of the other actions contemplated to be taken
hereby, in each case on the Funding Date, shall be deemed a waiver of the
requirement of notice of the Funding Date set forth in this Section 2.4.
2.5. Time and Place of Closing. The closing on the Funding Date shall
-------------------------
commence at 10:00 a.m., New York City time, at the offices of Haight Gardner
Holland & Knight, a law office of Holland & Knight LLP, New York, New York, or
at such other location in New York City and time as the Charterer may specify in
the notice of the Funding Date delivered pursuant to Section 2.4.
2.6. Delivery of Funds. Subject to the terms and conditions of this
-----------------
Agreement, at or before 11:00 a.m., New York City time, on the Funding Date:
(1) the Owner Participant shall deliver to the Owner Trustee by wire transfer of
immediately available funds an amount equal to the Investment to be made by the
Owner Participant on the Funding Date; and (2) the Pass Through Trustee, as Loan
Participant, shall deliver to the Owner Trustee by wire transfer of immediately
available funds an amount equal to the purchase price of the Secured Notes to be
purchased by the Pass Through Trustee, as Loan Participant, on the Funding
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<PAGE>
Date, in each case to the account of the Owner Trustee specified in Schedule 1
or to such other account as shall be specified in writing by the Owner Trustee
to the Owner Participant and the Pass Through Trustee, as Loan Participant, at
least one Business Day prior to the Funding Date. Such amounts shall be held by
the Owner Trustee in trust, solely on behalf of the Participant delivering or
transferring such amount (and not as part of the Trust Estate), until such
Participant shall have instructed the Owner Trustee that such amount is
available to be applied by the Owner Trustee pursuant to Section 2.7. No
Participant shall be obligated to deliver such instruction if the conditions to
its participation set forth in Section 4 have not been met to its satisfaction
or waived by it. In the event that (on any scheduled Funding Date) the Loan
Participant fails or refuses to make available to the Owner Trustee, by 1:30
p.m. New York City time on the Funding Date, an amount equal to the purchase
price of the Secured Notes to be purchased by the Pass Through Trustee on the
Funding Date, the Owner Participant may direct the Owner Trustee to return the
Owner Participant's funds held by the Owner Trustee in trust and the Funding
Date shall be postponed to a Business Day on or before the Cut-off Date and the
term "Funding Date" as used in this Agreement shall mean such postponed "Funding
Date."
2.7. Application of Funds by Owner Trustee. On the Funding Date, upon
-------------------------------------
receipt by the Owner Trustee of (a) the amount of the Investment to be made by
-
the Owner Participant on the Funding Date; (b) the purchase price of the Secured
-
Notes to be paid by the Pass Through Trustee, as Loan Participant, on the
Funding Date and (c) the instruction pursuant to Section 2.6 that each of such
-
amounts is available to be applied by the Owner Trustee pursuant to this Section
2.7, the Owner Trustee shall pay to Seller by wire transfer of immediately
available funds to the account of Seller specified in Schedule 1, an amount
equal to Total Vessel Cost and shall pay such Transaction Expenses which have
been approved by the Charterer in accordance with the provisions of Section
2.9(c) to the Person entitled thereto.
2.8. Actions on Funding Date. Subject to satisfaction of the applicable
-----------------------
conditions precedent set forth in Sections 3 and 4, on the Funding Date:
(a) the Owner Participant shall make the Investment required to be made by
it on the Funding Date;
(b) the Pass Through Trustee, as Loan Participant, shall pay to the Owner
Trustee the purchase price for the Secured Notes required to be purchased by it
on the Funding Date, the Owner Trustee shall execute and deliver to the
Indenture Trustee
-5-
<PAGE>
the Secured Notes, and the Indenture Trustee shall authenticate and register the
Secured Notes and shall deliver the Secured Notes to the Pass Through Trustee,
as Loan Participant;
(c) for a purchase price equal to Total Vessel Cost, the Owner Trustee
shall purchase from Seller and Seller shall sell to the Owner Trustee all of
Seller's right, title and interest in and to the Vessel pursuant to the Bill of
Sale, and Seller shall assign to the Owner Trustee its right in and to any
Builder's warranties applicable to the Vessel or any part thereof (except to the
extent such warranties may not be assigned or otherwise transferred, and subject
to any limitations of liability therein) pursuant to the Conveyancing Instrument
(the Builder's warranties with respect to the Vessel assigned by Seller to the
Owner Trustee are limited to Article X of the contract for the construction of
the Vessel dated January 30, 1997 between the Builder and Seller);
(d) the Charterer will cause the Vessel to be duly documented in the name
of the Owner Trustee, in accordance with the laws and regulations of the United
States, with a coastwise trade endorsement;
(e) simultaneously with the transfer of title to the Vessel to the Owner
Trustee, the Owner Trustee shall charter to the Charterer, and the Charterer
shall charter from the Owner Trustee, the Vessel pursuant to the Charter;
(f) immediately after the actions set forth in Section 2.8(e), the
Charterer shall subcharter the Vessel to the Seller pursuant to the Initial
Subcharter; and
(g) the Owner Trustee and the Indenture Trustee will execute and deliver
the Indenture and the Ship Mortgage, and the Charterer shall cause the Ship
Mortgage to be duly recorded in the offices of the National Vessel Documentation
Center.
2.9. Transaction Expenses. (a)(i) If the transactions contemplated by
--------------------
this Participation Agreement are consummated, on the Funding Date or as soon as
practicable thereafter, but not later than 90 days after the Funding Date (or
not later than 60 days after the Funding Date for Transaction Expenses invoiced
no later than 40 days after the Funding Date), the Owner Trustee shall pay, or
reimburse the parties for, all Transaction Expenses (subject to paragraphs (b)
and (c) of this Section 2.9), and the Owner Participant will provide to the
Owner Trustee funds therefor and instructions with respect to the payment
thereof; (ii) if the transactions shall not be consummated as a result of
failure to agree on mutually
-6-
<PAGE>
acceptable documentation, except as provided in the following sentences,
Charterer and Owner Participant shall each pay their own fees and expenses
(including any agreed upon counsel fees and expenses). The Owner Participant
shall pay its own and Charterer's fees and expenses described above (including
any agreed upon counsel's fees and expenses) if the transaction shall not be
consummated as a result of Owner Trustee's or Owner Participant's failure to
perform in accordance with the Commitment Letter. The Charterer shall pay its
own and Owner Participant's fees and expenses described above (including any
agreed upon counsel's fees and expenses) if the transaction shall not be
consummated as a result of Charterer's failure to perform in accordance with the
Commitment Letter.
(b) If the final actual amount of Transaction Expenses exceeds the
estimated amount thereof set forth in Schedule 2, in lieu of any adjustment to
the Base Charter Hire as provided in Section 2.12.1 resulting from the
Transaction Expenses exceeding the amount assumed, the Charterer shall have the
right to pay such excess or any portion thereof, in which event an adjustment
based only on the amount of such excess actually paid by the Owner Participant
(or no such adjustment, if all such excess is paid by the Charterer) shall be
made.
(c) Each of the Transaction Expenses (other than de minimis amounts) will
----------
be subject to the prior written approval of the Charterer (such approval not to
be unreasonably withheld). Each of the Transaction Expenses shall be evidenced
by appropriate bills, invoices or other substantiation as the Charterer may
reasonably request, and such bills, invoices and substantiation for all such
fees, expenses, disbursements and costs shall have been presented for
Charterer's approval on or prior to the 90th day following the Funding Date.
2.10. Authorization to Owner Trustee. Each of the Owner Participant and
------------------------------
the Loan Participant agrees that on the Funding Date the receipt by the Owner
Trustee of an instruction from each Participant pursuant to Section 2.6 making
the amount delivered by each such Participant to the Owner Trustee available for
application pursuant to Section 2.7 shall constitute, without further act,
authorization and direction by each such Participant to the Owner Trustee to
take the actions contemplated to be taken by the Owner Trustee on the Funding
Date in the Operative Documents, including, without limitation, the execution
and delivery of all other documents and instruments contemplated to be executed
and delivered by the Owner Trustee on or prior to the Funding Date in the
Operative Documents.
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<PAGE>
2.11. Registration Statement. Each of the Owner Participant, the Owner
----------------------
Trustee, the Indenture Trustee and the Pass Through Trustee, as Loan
Participant, acknowledges that the Charterer and the Guarantor intend to file
with the SEC one or more prospectus supplements to the prospectus contained in
the Registration Statement with respect to the Pass Through Certificates to be
issued in connection with the transactions contemplated hereby. If, in
connection with the review by the SEC of such prospectus supplement or any
amendments to the Registration Statement with respect thereto, any modifications
or additions are required to be made in the Operative Documents or any Pass
Through Trust Document, each of the parties named above in this Section 2.11
agrees to, at the Charterer's expense, negotiate in good faith with respect
to, and to enter into amendments, supplements or modifications to the Operative
Documents or the Pass Through Trust Documents, as the case may be, reflecting
such modifications or additions; provided that no party hereto shall be required
--------
to agree to any such modification or addition that adversely affects the rights
of, or increases the obligations of, such party under any of the Operative
Documents or any Pass Through Trust Documents.
2.12. Recomputation of Base Charter Hire, Termination Values,
-------------------------------------------------------
Stipulated Loss Values and EBO Exercise Price.
---------------------------------------------
2.12.1. Adjustments to Base Charter Hire, Termination Values,
-----------------------------------------------------
Stipulated Loss Values and EBO Exercise Percentages. Subject to the following
- ---------------------------------------------------
provisions of this Section 2.12, the Base Charter Hire, Termination Values,
Stipulated Loss Values and EBO Exercise Percentages (collectively, the "Economic
--------
Factors") set forth in Schedule 2 shall be appropriately increased or decreased
- -------
by such amounts and in such a manner as shall preserve the Owner Participant's
Net Economic Return in the event that:
(a) prior to the Funding Date:
(i) any of the Non-tax Pricing Assumptions set forth in Schedule 2
shall have become incorrect and after having received a written notice
prior to the Funding Date from the Owner Participant of such incorrectness
and the proposed adjustment to Base Charter Hire (and other adjustments
hereunder) resulting therefrom, the Charterer shall have waived its right
under Section 3 of this Participation Agreement to decline to proceed with
the transactions contemplated hereby, or
(ii) there shall have occurred a change (whether proposed, temporary
or final) in the Code (other than with
-8-
<PAGE>
respect to the alternative minimum tax), any regulation thereunder or the
issuance of any IRS revenue ruling, revenue procedure or other
pronouncement of general applicability or any court decision, issued or
rendered after August 28, 1997 and prior to the Funding Date, and after
having received a written notice prior to the Funding Date from the Owner
Participant of such change and the proposed adjustment to Base Charter Hire
(and other adjustments hereunder) resulting therefrom, the Charterer shall
have waived its right under Section 3 of this Participation Agreement to
decline to proceed with the transactions contemplated hereby; or
(b) after the Funding Date:
(i) Transaction Expenses paid by the Owner Participant, as a
percentage of Total Vessel Cost, are other than the percentage set forth in
Schedule 2;
(ii) the Owner Trustee finances (either with additional equity and/or
debt) the cost of any Modifications to the Vessel; or
(iii) the Secured Notes are refinanced at the request of the Charterer.
No Economic Factor adjustment described in (a) above shall result from a Change
in Tax Law occurring after August 28, 1997 and prior to the Funding Date to the
extent Mayer, Brown & Platt or such other independent tax counsel selected by
the Owner Participant (and reasonably acceptable to the Charterer) delivers to
the Owner Participant its opinion to the effect that, notwithstanding such
change, a realistic possibility of success exists for a position that would
eliminate the necessity for or reduce the magnitude of an Economic Factor
adjustment otherwise resulting from such Change in Tax Law, and the Tax
Indemnity Agreement is amended in a manner satisfactory to the Owner Participant
to provide indemnification for the adoption by the Owner Participant of such
position.
2.12.2. Limitations on Adjustments. (a) Any adjustment made to any
--------------------------
of the Economic Factors pursuant to Section 2.12.1 shall be made in such a
manner as to (i) comply in all respects with the provisions of Section 3(h) of
-
the Charter, (ii) to the extent consistent with the foregoing provisions of
--
Section 2.12.1 (including preserving the Owner Participant's Net Economic
Return), minimize (to the greatest extent possible) the Charterer's Net Present
Value Cost and (iii) satisfy Section 467 of the Code and the Treasury
---
Regulations thereunder and the
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<PAGE>
90/110 test described therein on a prospective basis, taking into account only
Base Charter Hire payable on or after the date such adjustments take effect to
the extent permitted by Section 467 of the Code and the regulations thereto as
then in effect.
(b) In making any adjustment pursuant to Section 2.12.1, each of
the Non-tax Pricing Assumptions and Tax Pricing Assumptions set forth in
Schedule 2 and the other assumptions and methods of calculation employed in the
calculation of the Economic Factors, as reflected in Schedule 2 (as such pricing
assumptions shall have been modified as a result of the event giving rise to the
adjustment under this Section 2.12 or previous adjustments under this Section
2.12) shall be used consistently in such adjustment subject to the constraints
specifically provided in this Section 2.12.
(c) Notwithstanding any other provision of this Participation
Agreement or any other Operative Document (i) the amount of Base Charter Hire
payable on each Base Charter Payment Date, as the same may be adjusted pursuant
to Section 2.12, shall be at least equal to the aggregate amount of scheduled
principal and accrued interest due and payable on the Secured Notes Outstanding
on such Base Charter Payment Date, and (ii) the amount of Stipulated Loss Value
and Termination Value as of any date and the amount of the initial installment
of the EBO Exercise Price as of any EBO Exercise Date, as each such amount may
be adjusted pursuant to Section 2.12, together with the payment of Charter Hire
payable under the Charter on such date (excluding, in each case, any portion
thereof constituting an Excepted Payment), shall be at least equal to the
aggregate amount of principal and accrued interest which would be due and
payable on the Secured Notes Outstanding on such date, assuming such date or EBO
Exercise Date, as the case may be, was the date such payment was due on the
Secured Notes in respect of any payment by the Charterer of Stipulated Loss
Value, Termination Value or EBO Exercise Price.
(d) Any such adjustments will also result in an adjustment of the EBO
Exercise Date, if necessary, on the same basis as stated above for the Economic
Factors (subject to receipt by the Charterer and the Owner Participant of a
satisfactory appraisal confirmation of such change).
(e) No such adjustment to the Economic Factors shall result in the
Charter not qualifying for Financial Accounting Standards Board Statement No. 13
(FAS 13) operating lease treatment for the Charterer.
-10-
<PAGE>
2.12.3. Timing of Adjustments. All adjustments to be made pursuant
---------------------
to Section 2.12.1(a) or 2.12.1(b)(i) shall be made before the first Base Charter
Payment Date and in any event as soon as practicable after the event giving rise
to the adjustment; provided that no adjustment shall be final, if subject to
--------
verification pursuant to Section 2.12.4, until such verification is completed.
2.12.4. Confirmation of Adjustments. (a) The Owner Participant
---------------------------
shall promptly provide to the Charterer, the Owner Trustee and the Indenture
Trustee notice of any adjustment under this Section 2.12, together with an
Officer's Certificate of the Owner Participant, which Officer's Certificate
shall set forth the amount of and the reason for any such adjustment, specify in
reasonable detail (but without disclosure of confidential information) the basis
of the calculation of such adjustment (which basis shall be consistent with the
provisions of this Section 2.12) and confirm that such adjustment was made in
accordance with the provisions of this Section 2.12.
(b) The Charterer may request that any such adjustment and
confirmation be verified by a nationally recognized, Independent public
accounting firm that regularly audits the financial statements of, or is
selected by, the Owner Participant and reasonably acceptable to the Charterer.
In performing such verification, such accounting firm shall be given access by
the Owner Participant to the assumptions, methods, computations, programs and
files utilized by the Owner Participant in calculating such proposed adjustment
and employed in the calculation of the Economic Factors, subject to the
execution of such confidentiality agreements as the Owner Participant shall
reasonably request (which agreements may prohibit disclosure of the Owner
Participant's assumptions, methodology, programs or files to any third party,
including the Charterer). Under no circumstances shall such independent public
accounting firm or any other Person be entitled to review the tax returns of the
Owner Participant. Any revised adjustment resulting from such verification
shall become effective as of the date on which the original adjustment would
have become effective but for such revision.
(c) Any such verification by an accounting firm pursuant to Section
2.12.4(b) shall be at the expense of the Charterer; provided, however, that if
-------- -------
an error is discovered, which: 1) results from a change in the methodology
employed by the Owner Participant in making such adjustment from the methodology
employed in preparation of the original Owner Participant's proposal dated July
15, 1997 to Charterer, as further clarified by the facsimile dated August 18,
1997 from
-11-
<PAGE>
Gary Civello of Helm Financial Corporation to Richard E. Sliwinski of Mobil
Corporation, and such methodology should have remained unchanged, or 2) causes
Charterer's Net Present Value Cost to increase by five (5) basis points or more,
then such verification expense will be paid by the Owner Participant. The
Economic Factors will, in any case, be sufficient to repay the outstanding
principal amount of the Outstanding Secured Notes and any interest due and
payable and accrued thereon since the last scheduled interest payment date
unless, in the case of Base Charter Hire, otherwise agreed to by the Charterer
and the Loan Participant.
Section 3. Conditions to Closing by Charterer. The obligations of
----------------------------------
the Charterer pursuant to Section 2 to (a) cause the Seller to transfer its
-
right, title and interest in and to the Vessel to the Owner Trustee and (b)
-
charter the Vessel from the Owner Trustee and take the other actions
contemplated by Section 2 to be taken by it on the Funding Date is subject only
to the fulfillment on the Funding Date to the satisfaction of or waiver by the
Charterer of each of the conditions precedent described below, except that the
obligations of the Charterer shall not be subject to the Charterer's, Seller's,
or Guarantor's own performance or, if the Charterer shall have the power to
cause another Person to perform, the Charterer's failure to cause such
performance.
3.1. Closing Documents. Each of the following documents shall have
-----------------
been duly authorized, executed and delivered by the respective parties thereto
(other than the Charterer, Seller or the Guarantor):
(a) this Participation Agreement;
(b) the Charter;
(c) the Bill of Sale and the Conveyancing Instrument;
(d) the Tax Indemnity Agreement;
(e) the Trust Agreement;
(f) the Owner Participant Guaranty;
(g) the Guaranty;
(h) the Indenture;
(i) the Secured Notes;
-12-
<PAGE>
(j) the Ship Mortgage;
(k) the Pass Through Trust Documents; and
(l) the Underwriting Agreement;
and each such document shall be in full force and effect on the Funding Date and
no event or condition shall have occurred that, with or without the lapse of
time or the giving of notice or both, would give the Charterer, the Guarantor or
the Owner Trustee, as the case may be, the right to terminate such document, and
an executed counterpart of each of the same shall have been delivered to the
Charterer (except that each original Secured Note shall be delivered only to the
Pass Through Trustee).
3.2. Legality, Etc. No change shall have occurred after August 28,
-------------
1997 in Governmental Rules that, in the reasonable opinion of the Charterer,
would make it illegal or unduly burdensome for the Charterer, the Guarantor, the
Seller, the Owner Trustee, the Owner Participant, the Owner Participant
Guarantor, the Indenture Trustee, the Pass Through Trustee or any other
Participant to participate in any of the transactions contemplated by the
Operative Documents or the Pass Through Trust Documents to be consummated on the
Funding Date.
3.3. Event of Loss. There shall not have occurred an Event of Loss
-------------
to the Vessel or any event described in the definition of Event of Loss that
with the passage of time would be an Event of Loss.
3.4. Consents and Approvals. All Governmental Actions that are
----------------------
required to be taken, given, obtained, filed or recorded, as the case may be, on
or prior to the Funding Date, by, from or with any Governmental Authority, and
all other consents, filings or approvals that are required to have been taken,
given, obtained, filed or recorded, as the case may be, on or prior to the
Funding Date by, from or with any Person in each case, (a) in connection with
-
the transactions contemplated by the Operative Documents or the Pass Through
Trust Documents, or to authorize the execution, delivery and performance by the
Charterer, the Seller, and/or the Guarantor, as the case may be, of the Pass
Through Trust Documents, the Underwriting Agreement and the Operative Documents
to which it is a party, other than those that may be required under the
securities laws or blue sky laws of any state in connection with the offering or
sale of the Pass Through Certificates or those constituting filings, recordings
or other actions of the types referred to in Section 4.15 or (b) in order that
-
the Vessel may be operated as of the
-13-
<PAGE>
Funding Date for the purposes intended by the Charterer (including, without
limitation, all approvals, certificates, permits, authorizations, licenses or
other actions relating to the operation and maintenance of the Vessel), shall
have been duly taken, given, obtained, filed or recorded, as the case may be,
shall be in full force and effect on the Funding Date, shall not be subject to
any pending proceedings or appeals (administrative, judicial or otherwise) and
shall be adequate to authorize the consummation of the transactions contemplated
by the Pass Through Trust Documents, the Underwriting Agreement and the
Operative Documents and the performance by each of the Charterer and the
Guarantor of its obligations under such thereof to which it is a party, except
(i) such as may be required to be taken, obtained, given, accomplished or
- --
renewed from time to time after the Funding Date in connection with the
maintenance or operation of the Vessel or (ii) such as are otherwise required in
--
connection with the transactions contemplated by the Pass Through Trust
Documents, the Underwriting Agreement and the Operative Documents which have
been applied for but which cannot be obtained, or which are not normally applied
for or taken, given or obtained, prior to the Funding Date, and which in the
normal course would, in the Charterer's reasonable determination, likely be
granted or obtained or (iii) any Governmental Actions or other consents, filings
---
or approvals referred to in this Section 3.4 that, if not obtained, granted or
taken by the Funding Date, would not materially adversely affect the ability of
(x) the Charterer to perform its obligations under this Agreement, any other
-
Operative Document to which it is a party or any Pass Through Trust Document or
(y) the Guarantor to perform its obligations under the Guaranty.
-
3.5. Opinions. A signed original of each opinion referred to in
--------
Section 4.6 (other than in Sections 4.6(a) and 4.6(g)) (each such opinion
substantially in the form and addressed as previously agreed) shall have been
addressed and delivered to the Charterer. In addition to the opinion referred
to in Section 4.6(b), the Charterer shall have received an opinion from Haight
Gardner Holland & Knight, a law office of Holland & Knight LLP, in form and
substance satisfactory to the Charterer as to such tax matters related to the
transactions contemplated hereby as the Charterer may reasonably request.
3.6. Litigation. There shall be no actions, suits or proceedings
----------
before any Governmental Authority pending or, to the knowledge of the respective
parties, threatened against the Seller, the Charterer, the Guarantor, the Owner
Participant, the Owner Participant Guarantor, the Pass Through Trustee, the
Owner Trustee or the Indenture Trustee or the properties of any of such Persons,
nor shall any order, judgment or decree have been issued
-14-
<PAGE>
by a Governmental Authority to set aside, restrain, enjoin or prevent the
consummation of this Participation Agreement, any other Operative Document, any
Pass Through Trust Document, the Underwriting Agreement, the Owner Participant
Guaranty, or the transactions contemplated hereby or thereby.
3.7. Appraisal. The Charterer shall have received a copy of the
---------
Appraisal, which shall (a) confirm that Total Vessel Cost is the fair market
value of the Vessel, (b) confirm that the Charter Term is less than 75% of the
useful economic life of the Vessel, (c) identify the anticipated fair market
value of the Vessel at the end of the Base Charter Term, and establish that the
EBO Exercise Price and the Fixed Price Purchase Option Amount are both not less
than the estimated or anticipated fair market value of the Vessel at the point
in time that the Charterer may exercise its Early Buy-Out Option or Fixed Price
Purchase Option, as the case may be.
3.8. Equity Offering. The Charterer and the Guarantor shall have
---------------
received an executed copy of the letter referred to in Section 4.9, which letter
shall be dated the Funding Date.
3.9. Payment of Total Vessel Cost. The Seller shall have received
----------------------------
payment of an amount equal to Total Vessel Cost in accordance with Section 2.7.
3.10. Sale of Pass Through Certificates. The Pass Through
---------------------------------
Certificates shall have been issued pursuant to the Pass Through Trust Documents
and sold pursuant to the Underwriting Agreement, and the Underwriters shall have
transferred to the Pass Through Trustee in immediately available funds an amount
equal to the purchase price for the Pass Through Certificates sold pursuant to
each of the Pass Through Trust Supplements.
3.11. No Uneconomic Change; Other Changes. Prior to the Funding
-----------------------------------
Date, in the event that a proposed adjustment in the Economic Factors would, in
the Charterer's reasonable opinion, cause the transaction to be uneconomic, the
Charterer will have the right, at its option and in its discretion, to terminate
the transaction; provided that an adjustment to the Economic Factors for a
--------
reason other than a Change in Tax Law shall be considered uneconomic only if
such change would result in an increase in Charterer's Net Present Value Cost of
more than ten (10) basis points.
3.12. Officer's Certificates. On the Funding Date, the Charterer
----------------------
shall have received the following (and the statements therein shall be true and
correct):
-15-
<PAGE>
(a) an Officer's Certificate of each of the Owner Participant and
the Owner Participant Guarantor, dated the Funding Date, stating that (i) the
-
representations and warranties of the Owner Participant and the Owner
Participant Guarantor, respectively, contained in Section 6 and the Owner
Participant Guaranty are true and accurate on and as of the Funding Date as
though made on and as of such date except to the extent that such
representations and warranties specifically relate solely to an earlier date (in
which case such representations and warranties shall have been true and accurate
on and as of such earlier date) and (ii) each Operative Document to which each
--
respectively is a party and the Owner Participant Guaranty are or, to the extent
previously executed and delivered, remain in full force and effect with respect
to it;
(b) an Officer's Certificate of each of the Trust Company and the
Owner Trustee, dated the Funding Date, stating that (i) the representations and
-
warranties of the Trust Company and the Owner Trustee, respectively, contained
in Section 7 are true and accurate on and as of the Funding Date as though made
on and as of such date except to the extent that such representations and
warranties specifically relate solely to an earlier date (in which case such
representations and warranties shall have been true and accurate on and as of
such earlier date) and (ii) each Operative Document to which the Trust Company
--
and the Owner Trustee, respectively, is a party is or, to the extent previously
executed and delivered, remains in full force and effect with respect to it;
(c) an Officer's Certificate of the Indenture Trustee, dated the
Funding Date, stating that (i) the representations and warranties of the
-
Indenture Trustee contained in Section 8 are true and accurate on and as of the
Funding Date as though made on and as of such date except to the extent that
such representations and warranties specifically relate solely to an earlier
date (in which case such representations and warranties shall have been true and
accurate on and as of such earlier date) and (ii) each Operative Document to
--
which the Indenture Trustee is a party is or, to the extent previously executed
and delivered, remains in full force and effect with respect to it; and
(d) an Officer's Certificate of State Street Bank and Trust Company
(in its individual capacity and as Pass Through Trustee, as applicable), dated
the Funding Date, stating that (i) the representations and warranties of State
-
Street Bank and Trust Company and the Pass Through Trustee, respectively,
contained in Section 9 are true and accurate on and as of the Funding Date as
though made on and as of such date except to the extent that such
-16-
<PAGE>
representations and warranties specifically relate solely to an earlier date (in
which case such representations and warranties shall have been true and accurate
on and as of such earlier date) and (ii) each of the Participation Agreement and
--
the Pass Through Trust Documents is, or to the extent previously executed and
delivered, remains in full force and effect with respect to it.
3.13. Resolutions, Etc. The Charterer shall have received the
----------------
following, in each case in form and substance reasonably satisfactory to the
Charterer:
(a) a Secretary's or an Assistant Secretary's certificate of each of
the Owner Participant and the Owner Participant Guarantor, dated the Funding
Date, attaching and certifying as to (i) resolutions of its respective Board of
-
Directors duly authorizing the execution, delivery and performance by each of
the Owner Participant and the Owner Participant Guarantor of the Owner
Participant Guaranty and each Operative Document to which each, respectively, is
a party, and the transactions contemplated thereby, certified to be in full
force and effect without modification as of the Funding Date; (ii) its
--
respective charter documents; (iii) its respective by-laws and (iv) the
--- --
incumbency and signature of persons authorized to execute and deliver such
documents on behalf of the Owner Participant and the Owner Participant
Guarantor, respectively;
(b) a Secretary's or an Assistant Secretary's certificate of the
Trust Company, dated the Funding Date, attaching and certifying as to (i)
-
resolutions of the Trust Company's Board of Directors or appropriate committee
thereof duly authorizing the execution, delivery and performance by the Trust
Company and the Owner Trustee of each Operative Document to which each,
respectively, is a party and the transactions contemplated thereby, certified to
be in full force and effect without modification as of the Funding Date; (ii)
--
the Trust Company's charter documents; (iii) the Trust Company's by-laws and
---
(iv) the incumbency and signature of persons authorized to execute and deliver
--
such documents on behalf of the Trust Company and the Owner Trustee;
(c) a Secretary's or an Assistant Secretary's certificate of the
Indenture Trustee, dated the Funding Date, attaching and certifying as to (i)
-
resolutions of its Board of Directors or an appropriate committee thereof duly
authorizing the execution, delivery and performance by the Indenture Trustee of
each Operative Document to which it is a party and the transactions contemplated
thereby, certified to be in full force and effect without modification as of the
Funding Date; (ii) its charter documents; (iii) its by-laws and (iv) the
-- --- --
incumbency and
-17-
<PAGE>
signature of persons authorized to execute and deliver such documents on behalf
of the Indenture Trustee;
(d) a Secretary's or an Assistant Secretary's certificate of State
Street Bank and Trust Company, dated the Funding Date, attaching and certifying
as to (i) resolutions of its Board of Directors or an appropriate committee
-
thereof duly authorizing the execution, delivery and performance by the Pass
Through Trustee of the Pass Through Trust Documents and this Participation
Agreement and the transactions contemplated thereby and hereby, certified to be
in full force and effect without modification as of the Funding Date; (ii) its
--
charter documents; (iii) its by-laws and (iv) the incumbency and signature of
--- --
persons authorized to execute and deliver such documents on behalf of the Pass
Through Trustee; and
(e) appropriate documentation confirming the representations as to
the citizenship of the respective parties contained in Sections 6.13 and 7.11.
3.14. Coast Guard Documentation. The Charterer shall have received a
-------------------------
certificate of documentation with U.S. coastwise trade and registry
endorsements, and any further evidence that the Charterer may reasonably
require, from the United States Coast Guard evidencing that the Vessel is duly
documented in the name of the Owner Trustee qualified to engage in U.S.
coastwise and registry trades.
Section 4. Conditions to Closing by Participants. The obligations of
-------------------------------------
the Owner Participant and the Pass Through Trustee pursuant to Section 2 to
participate in the payment of Shipowner's Cost and to take the other actions
contemplated by Section 2 to be taken by them on the Funding Date are subject
only to the fulfillment on the Funding Date to the satisfaction of or waiver by
such Participant of each of the following conditions precedent (other than in
the case of the Owner Participant, Sections 4.2(l), 4.6(f), 4.12(e), 4.13(e),
4.14 and 4.16), except that the obligations of such Participant shall not be sub
ject to such Participant's own performance or, if such Participant shall have
the power to cause another Person to perform, such Participant's failure to
cause such performance:
4.1. Notice of Funding Date. Such Participant shall have received
----------------------
the notice of the Funding Date required to be delivered pursuant to Section 2.4.
4.2. Closing Documents. Each of the following documents shall have
-----------------
been duly authorized, executed and delivered by the respective parties thereto:
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<PAGE>
(a) this Participation Agreement;
(b) the Charter;
(c) the Bill of Sale and the Conveyancing Instrument;
(d) the Tax Indemnity Agreement;
(e) the Trust Agreement;
(f) the Owner Participant Guaranty;
(g) the Guaranty;
(h) the Indenture;
(i) the Secured Notes;
(j) the Ship Mortgage;
(k) the Pass Through Trust Documents; and
(l) the Underwriting Agreement;
and each such document shall be in full force and effect on the Funding Date,
and no event or condition shall have occurred that, with or without the lapse of
time or the giving of notice, shall give any other party thereto the right to
terminate such document, and an executed counterpart (or, in the case of the
Pass Through Trust Documents, a true, correct and complete copy) of each of the
same shall have been delivered to such Participant (except that the Tax
Indemnity Agreement shall be delivered only to the parties thereto and each
original Secured Note shall be delivered only to the Pass Through Trustee).
4.3. Legality, Etc. No change shall have occurred after August 28,
-------------
1997 in Governmental Rules that, in the reasonable opinion of such Participant,
would make it illegal or unduly burdensome for the Charterer, the Seller, the
Guarantor, the Owner Trustee, the Owner Participant Guarantor, the Indenture
Trustee or any Participant to participate in any of the transactions
contemplated by the Operative Documents to be consummated on the Funding Date.
4.4. Event of Loss. There shall not have occurred an Event of Loss
-------------
to the Vessel or any event described in the definition of Event of Loss that
with the passage of time would be an Event of Loss.
-19-
<PAGE>
4.5. Consents and Approvals. All Governmental Actions that are
----------------------
required to be taken, given, obtained, filed or recorded, as the case may be, on
or prior to the Funding Date by, from or with any Governmental Authority, and
all other consents, filings or approvals which are required to have been taken,
given, obtained, filed or recorded, as the case may be, on or prior to the
Funding Date by, from or with any other Person in each case, (a) in connection
-
with the transactions contemplated by the Operative Documents or the Pass
Through Trust Documents, or to authorize the execution, delivery and performance
by the Charterer, the Seller, the Guarantor, the Owner Participant, the Trust
Company, the Owner Trustee, the Indenture Trustee or the Pass Through Trustee of
each of the Operative Documents or the Pass Through Trust Documents to which it
is a party, other than those that may be required under the securities laws or
blue sky laws of any state in connection with the offering or sale of the Pass
Through Certificates or those constituting filings, recordings or other actions
of the type referred to in Section 4.15 or (b) in order that the Vessel may be
-
operated as of the Funding Date for the purposes intended by the Charterer
(including, without limitation and all approvals, certificates, permits,
authorizations, licenses or other actions relating to the operation and
maintenance of the Vessel), shall have been duly taken, given, obtained, filed
or recorded, as the case may be, shall be in full force and effect on the
Funding Date, shall not be subject to any pending proceedings or appeals
(administrative, judicial or otherwise) and shall be adequate to authorize the
consummation of the transactions contemplated by the Pass Through Trust
Documents and the Operative Documents and the performance by each of the
Charterer, the Seller and the Guarantor of its obligations under such thereof to
which it is a party, except (i) such as may be required to be taken, obtained,
-
given, accomplished or renewed from time to time after the Funding Date in
connection with the maintenance or operation of the Vessel or (ii) such as are
--
otherwise required in connection with the transactions contemplated by the Pass
Through Trust Documents and the Operative Documents which have been applied for
but which cannot be obtained, or which are not normally applied for or taken,
given or obtained, prior to the Funding Date, and which in the normal course
would, in the Charterer's reasonable determination, likely be granted or
obtained or (iii) such Governmental Actions or such other consents, filings or
---
approvals referred to in this Section 4.5 that, if not obtained, granted or
taken by the Funding Date, would not materially adversely affect the ability of
(x) the Charterer or the Seller to perform its obligations under this Agreement,
-
any other Operative Document to which it is a party or any Pass Through Trust
Document or (y) the Guarantor to perform its obligations under the Guaranty.
-
-20-
<PAGE>
4.6. Opinions. Opinions dated the Funding Date of the following
--------
counsel, each such opinion substantially in the form and substance as previously
reasonably agreed and addressed as previously agreed, shall have been executed
and delivered by such counsel:
(a) Ralph N. Johanson, Jr., Esq., Managing Counsel, Corporate,
Finance and Securities to the Guarantor;
(b) Haight Gardner Holland & Knight, a law office of Holland & Knight
LLP, special counsel to the Charterer, the Seller, and the Guarantor;
(c) Mayer, Brown & Platt, special counsel to the Owner Participant
and the Owner Participant Guarantor and the opinion of internal or other local
counsel to the Owner Participant;
(d) Ray, Quinney & Nebeker, special counsel to the Trust Company and
the Owner Trustee;
(e) Bingham, Dana & Gould LLP, special counsel to the Indenture
Trustee;
(f) Bingham, Dana & Gould LLP, special counsel to the Pass Through
Trustee; and
(g) Mayer, Brown & Platt, special counsel to the Owner Participant,
in form and substance satisfactory to the Owner Participant as to such tax
matters related to the transactions contemplated hereby as the Owner Participant
may reasonably request.
4.7. Litigation. There shall be no actions, suits or proceedings
----------
before any Governmental Authority pending or, to the knowledge of the Owner
Participant, the Trust Company, the Owner Trustee, the Indenture Trustee, or the
Pass Through Trustee threatened against the Charterer, the Guarantor, the Owner
Participant, the Trust Company, the Owner Trustee, the Indenture Trustee or the
Pass Through Trustee or the properties of any of such Persons, nor shall any
order, judgment or decree have been issued by any Governmental Authority, in
each case to set aside, restrain, enjoin or prevent the consummation of this
Participation Agreement, any of the other Operative Documents, the Pass Through
Trust Documents or the transactions contemplated hereby or thereby.
4.8. Appraisal. (a) The Owner Participant shall have received the
---------
Appraisal, which Appraisal shall be satisfactory in form and substance to the
Owner Participant.
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<PAGE>
(b) The Indenture Trustee shall have received a letter from the
Appraiser setting forth the conclusions of the Appraiser with respect to the
fair market value of the Vessel as of the Funding Date.
4.9. Equity Offering. The Owner Participant and the Indenture
---------------
Trustee shall have received a letter dated the Funding Date from the Charterer
Financial Advisor with respect to the number of offerees of the beneficial
interest in the Trust Estate and the manner of offering thereof.
4.10. Insurance. Insurance complying with the provisions of Section
---------
10(a) of the Charter shall be in full force and effect, and the Owner
Participant and the Indenture Trustee shall have received an Officer's
Certificate of the Charterer, dated the Funding Date, stating that such
insurance complies with the provisions of Section 10(a) of the Charter.
4.11. Taxes. All Taxes, if any, payable on or prior to the Funding
-----
Date by the Charterer or the Seller in connection with the recordation and
filing of all documents and instruments referred to in Section 4.15 or the
execution and delivery of the Bill of Sale shall have been paid in full on or
before the Funding Date by the Charterer or the Seller, as the case may be.
4.12. Officer's Certificates. On the Funding Date, such Participant,
----------------------
the Owner Trustee and the Indenture Trustee shall have received the following
(and the statements therein shall be true):
(a) an Officer's Certificate of each of the Charterer and the
Guarantor, dated the Funding Date, stating that (i) the representations and
-
warranties of the Charterer and the Guarantor, respectively, contained in
Section 5 and in the Guaranty are true and accurate on and as of the Funding
Date as though made on and as of such date except to the extent that such
representations and warranties specifically relate solely to an earlier date (in
which case such representations and warranties shall have been true and accurate
on and as of such earlier date) and (ii) each Operative Document to which each
--
respectively is a party and each Pass Through Trust Document is or, to the
extent previously executed and delivered, remains in full force and effect with
respect to it;
(b) an Officer's Certificate of each of the Owner Participant and
the Owner Participant Guarantor, dated the Funding Date, stating that (i) the
-
representations and warranties of the Owner Participant and the Owner
Participant Guarantor, respectively, contained in Section 6 and in the Owner
Participant
-22-
<PAGE>
Guaranty are true and accurate on and as of the Funding Date as though made on
and as of such date except to the extent that such representations and
warranties specifically relate solely to an earlier date (in which case such
representations and warranties shall have been true and accurate on and as of
such earlier date) and (ii) each Operative Document to which each respectively
--
is a party and the Owner Participant Guaranty are or, to the extent previously
executed and delivered, remain in full force and effect with respect to it;
(c) an Officer's Certificate of each of the Trust Company and the
Owner Trustee, dated the Funding Date, stating that (i) the representations and
-
warranties of the Trust Company and the Owner Trustee, respectively, contained
in Section 7 are true and accurate on and as of the Funding Date as though made
on and as of such date except to the extent that such representations and
warranties specifically relate solely to an earlier date (in which case such
representations and warranties shall have been true and accurate on and as of
such earlier date) and (ii) each Operative Document to which the Trust Company
--
and the Owner Trustee, respectively, is a party is or, to the extent previously
executed and delivered, remains in full force and effect with respect to it;
(d) an Officer's Certificate of the Indenture Trustee, dated the
Funding Date, stating that (i) the representations and warranties of the
-
Indenture Trustee contained in Section 8 are true and accurate on and as of the
Funding Date as though made on and as of such date except to the extent that
such representations and warranties specifically relate solely to an earlier
date (in which case such representations and warranties shall have been true and
accurate on and as of such earlier date) and (ii) each Operative Document to
--
which the Indenture Trustee is a party is or, to the extent previously executed
and delivered, remains in full force and effect with respect to it; and
(e) an Officer's Certificate of State Street Bank and Trust Company
(in its individual capacity and as Pass Through Trustee, as applicable), dated
the Funding Date, stating that (i) the representations and warranties of State
-
Street Bank and Trust Company and the Pass Through Trustee, respectively,
contained in Section 9 are true and accurate on and as of the Funding Date as
though made on and as of such date except to the extent that such
representations and warranties specifically relate solely to an earlier date (in
which case such representations and warranties shall have been true and accurate
on and as of such earlier date) and (ii) each of the Participation Agreement and
--
the Pass Through
-23-
<PAGE>
Trust Documents is, or to the extent previously executed and delivered, remains
in full force and effect with respect to it.
4.13. Resolutions, Etc. The Owner Participant, the Owner Trustee and
----------------
the Indenture Trustee shall have received the following, in each case in form
and substance reasonably satisfactory to such Person:
(a) a Secretary's or an Assistant Secretary's certificate of each of
the Charterer, the Seller, and the Guarantor dated the Funding Date, attaching
and certifying as to (i) resolutions of its respective Board of Directors or
-
appropriate committee thereof duly authorizing the execution, delivery and
performance by each of the Charterer, the Seller and the Guarantor of each
Operative Document to which each, respectively, is a party and the Pass Through
Trust Documents and the transactions contemplated thereby, certified to be in
full force and effect without modification as of the Funding Date; (ii) its
--
respective charter documents; (iii) its respective by-laws and (iv) the
--- --
incumbency and signature of persons authorized to execute and deliver such
documents on behalf of the Charterer, the Seller and the Guarantor;
(b) a Secretary's or an Assistant Secretary's certificate of each of
the Owner Participant and the Owner Participant Guarantor, dated the Funding
Date, attaching and certifying as to (i) resolutions of its respective Board of
-
Directors duly authorizing the execution, delivery and performance by each of
the Owner Participant and the Owner Participant Guarantor of each Operative
Document to which each, respectively, is a party and the transactions
contemplated thereby, certified to be in full force and effect without
modification as of the Funding Date; (ii) its respective charter documents;
--
(iii) its respective by-laws and (iv) the incumbency and signature of persons
--- --
authorized to execute and deliver such documents on behalf of the Owner
Participant and the Owner Participant Guarantor;
(c) a Secretary's or an Assistant Secretary's certificate of the
Trust Company, dated the Funding Date, attaching and certifying as to (i)
-
resolutions of the Trust Company's Board of Directors or appropriate committee
thereof duly authorizing the execution, delivery and performance by the Trust
Company and the Owner Trustee of each Operative Document to which each,
respectively, is a party and the transactions contemplated thereby, certified to
be in full force and effect without modification as of the Funding Date; (ii)
--
the Trust Company's charter documents; (iii) the Trust Company's by-laws and
---
(iv) the incumbency and signature of persons authorized to
--
-24-
<PAGE>
execute and deliver such documents on behalf of the Trust Company and the Owner
Trustee;
(d) a Secretary's or an Assistant Secretary's certificate of the
Indenture Trustee, dated the Funding Date, attaching and certifying as to (i)
-
resolutions of its Board of Directors or an appropriate committee thereof duly
authorizing the execution, delivery and performance by the Indenture Trustee of
each Operative Document to which it is a party and the transactions contemplated
thereby, certified to be in full force and effect without modification as of the
Funding Date; (ii) its charter documents; (iii) its by-laws and (iv) the
-- --- --
incumbency and signature of persons authorized to execute and deliver such
documents on behalf of the Indenture Trustee;
(e) a Secretary's or an Assistant Secretary's certificate of State
Street Bank and Trust Company, dated the Funding Date, attaching and certifying
as to (i) resolutions of its Board of Directors or an appropriate committee
-
thereof duly authorizing the execution, delivery and performance by the Pass
Through Trustee of the Pass Through Trust Agreement, the Pass Through Trust
Supplement and this Participation Agreement and the transactions contemplated
thereby and hereby, certified to be in full force and effect without
modification as of the Funding Date; (ii) its charter documents; (iii) its by-
-- ---
laws and (iv) the incumbency and signature of persons authorized to execute and
--
deliver such documents on behalf of the Pass Through Trustee.
4.14. Investment and Loans. The Owner Participant shall have made
--------------------
available to the Owner Trustee the full amount of its Investment, and the Pass
Through Trustee shall have purchased the Secured Notes required to be purchased
by it on the Funding Date pursuant to Section 2.
4.15. Title; Filings and Recordings. On the Funding Date, (a) title
----------------------------- -
in and to the Vessel shall have been duly and effectively transferred to the
Owner Trustee pursuant to the Bill of Sale, free and clear of all Liens other
than Permitted Liens described in subsections(ii)-(viii) of the definition of
Permitted Liens; (b) all filings and recordings necessary (i) to establish the
- -
Owner Trustee's right, title and interest in and to the Vessel and the Builder's
warranties transferred by the Conveyancing Instrument and (ii) to perfect the
--
Indenture Trustee's security interest in the Indenture Estate created by the
Indenture and the Ship Mortgage, shall have been duly made or arrangements shall
have been made for the due filing or recording thereof on the Funding Date,
subject to requirements for filing continuation statements at appropriate
intervals and subject to Permitted Liens; (c) no other action shall be required
-
to perfect
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<PAGE>
such right, title and interests (other than the taking of possession by the
Indenture Trustee of the original executed counterpart of the Charter) and (d)
-
there are no sales taxes arising or due in connection with the transfer of title
to the Vessel to the Owner Trustee or the charter of the Vessel to the Charterer
as contemplated by the Operative Documents.
4.16. Sale of Pass Through Certificates. The Charterer and the
---------------------------------
Guarantor shall have entered into the Underwriting Agreement and the Pass
Through Trust Documents; the Pass Through Certificates shall have been issued
pursuant to the Pass Through Trust Documents and sold pursuant to the
Underwriting Agreement, and the Underwriters shall have transferred to the Pass
Through Trustee in immediately available funds an amount equal to the purchase
price for the Pass Through Certificates.
4.17. No Default Under Charter. No Charter Default or Charter Event
------------------------
of Default shall have occurred and be continuing.
4.18. Completion Certificate. Such Participant shall have received a
----------------------
Protocol of Delivery and Acceptance executed by the Seller and the Owner Trustee
evidencing delivery of the Vessel to the Owner Trustee.
Section 5. Representations and Warranties of the Charterer. The
-----------------------------------------------
Charterer represents and warrants to each of the other parties hereto that:
5.1. Due Organization. The Charterer is a corporation duly
----------------
organized, validly existing and in good standing under the laws of the State of
Delaware and has the corporate power and authority to carry on its business as
presently conducted and as it is contemplated it will be conducted in connection
with the Vessel, to own or hold under lease its properties and to execute and
deliver and perform its obligations under this Participation Agreement, each
other Operative Document to which it is a party and each Pass Through Trust
Document, and is duly qualified to do business in any jurisdiction where failure
so to qualify could reasonably be expected to materially adversely affect its
ability to conduct its business as it is presently conducted and as it is
contemplated to be conducted in connection with the Vessel, to own or hold under
Charter its properties or to perform any of its obligations under this
Participation Agreement or any other Operative Document to which it is a party.
5.2. Authorization. The execution, delivery and performance by the
-------------
Charterer of this Participation Agreement, each other Operative Document to
which it is a party and each Pass Through Trust Document and of the transactions
contemplated
-26-
<PAGE>
hereby and thereby have been duly authorized by all necessary corporate action
on the part of the Charterer and do not and will not require the consent or
approval of any shareholder of the Charterer or any trustee or holder of any
indebtedness or other obligation of the Charterer.
5.3. Execution; Enforceability. Each of this Participation
-------------------------
Agreement and each other Operative Document and the Pass Through Trust Documents
to which the Charterer is a party has been duly executed and delivered by the
Charterer and, assuming the due authorization, execution and delivery hereof and
thereof by the other parties hereto and thereto, constitutes a legal, valid and
binding obligation of the Charterer enforceable against the Charterer in
accordance with its respective terms, except as such enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, liquidation,
moratorium or similar laws affecting creditors' or lessors' rights generally and
by the application of general principles of equity and except, in the case of
the Charter and the Ship Mortgage, as limited by applicable laws that may affect
the remedies provided in the Charter or the Ship Mortgage, which laws, however,
do not make the remedies provided in the Charter or the Ship Mortgage inadequate
for the practical realization of the rights and remedies provided thereby and
that, as more fully set forth in the opinion of Haight Gardner Holland & Knight,
a law office of Holland & Knight LLP, delivered pursuant to Section 4.6(b),
certain of the remedies provided for in the Charter and the Ship Mortgage with
regard to the Vessel may not be enforceable in accordance with their terms under
the laws of the State of New York and the federal maritime and admiralty laws of
the United States.
5.4. No Violation. The execution and delivery by the Charterer of
------------
this Participation Agreement, each other Operative Document to which it is a
party and each Pass Through Trust Document do not and will not, and the
performance by the Charterer of its obligations under each thereof does not and
will not, (a) violate or result in a breach of its respective charter documents
-
or by-laws; (b) contravene any Governmental Rule or Governmental Action
-
applicable to it, which, in the case of such performance, noncompliance with
which would materially adversely affect the ability of the Charterer to perform
its obligations under the Operative Documents, provided that no representation
--------
or warranty is made with respect to ERISA; (c) contravene any provision of, or
-
constitute a default under, any indenture, mortgage, contract or other agreement
or instrument to which the Charterer is a party or by which it or any of its
properties are bound or (d) result in or require the creation or imposition of
-
any Lien (other than Permitted Liens) upon the Vessel.
-27-
<PAGE>
5.5. Consents and Approvals. All Governmental Actions that are
----------------------
required to have been taken, given, obtained, filed or recorded, as the case may
be, by the Charterer on or prior to the Funding Date by, from or with any
Governmental Authority and all other consents, filings or approvals which are
required to have been taken, given, obtained, filed or recorded, as the case may
be, on or prior to the Funding Date by, from or with any other Person (a) in
-
connection with the transactions contemplated by the Operative Documents and the
Pass Through Trust Documents, or to authorize the execution, delivery and
performance by the Charterer of the Operative Documents to which it is a party
and the Pass Through Trust Documents, other than those that may be required
under the securities laws or blue sky laws of any state in connection with the
offering or sale of the Pass Through Certificates or those constituting filings,
recordings or other actions of the type referred to in Section 5.7, or (b) in
-
order that the Vessel may be operated as of the Funding Date for the purposes
intended by the Charter (including, without limitation, all approvals,
certificates, permits, authorizations, licenses or other actions relating to the
operation and maintenance of the Vessel in accordance with the terms of the
Charter), shall have been duly taken, given, obtained, filed or recorded, as the
case may be, shall be in full force and effect on the Funding Date, shall not be
subject to any pending proceedings or appeals (administrative, judicial or
otherwise) and shall be adequate to authorize the consummation by the Charterer
of the transactions contemplated by the Pass Through Trust Documents, the
Underwriting Agreement and the Operative Documents to which it is a party and
the performance by the Charterer of its obligations under such thereof to which
it is a party, except (i) such as may be required to be taken, obtained, given,
-
accomplished or renewed from time to time after the Funding Date in connection
with the maintenance or operation of the Vessel, or (ii) such as are otherwise
--
required in connection with the transactions contemplated by the Pass Through
Trust Documents, the Underwriting Agreement and the Operative Documents which
have been applied for but which cannot be obtained, or which are not normally
applied for or taken, given or obtained, prior to the Funding Date, and which in
the normal course, in the Charterer's judgment, would be likely to be granted or
obtained or (iii) any Governmental Actions or other consents, filings and
---
approvals referred to in this Section 5.5 that, if not obtained, granted or
taken by the Funding Date, would not materially adversely affect the ability of
the Charterer to perform its obligations under this Participation Agreement, any
other Operative Document to which it is a party or any Pass Through Trust
Document.
5.6. Securities Act. Neither the Charterer nor any Person authorized
--------------
on its behalf has directly or indirectly
-28-
<PAGE>
offered or sold any interest in the Trust Estate, or in any similar security
relating to the Vessel, to, or solicited any offer to acquire any of the same
from, any Person other than the Owner Participant and the institutions referred
to in the letter referred to in Section 4.9 from the Charterer Financial Advisor
and as contemplated herein or in the other Operative Documents. Neither the
Charterer nor any Person authorized on its behalf has directly or indirectly
offered or sold any Pass Through Certificates to, or solicited any offer to
acquire the same from, any Person other than in a manner required by the
Securities Act.
5.7. Title; Filings and Recordings. On the Funding Date, after
-----------------------------
giving effect to the transactions contemplated hereby (a) title in and to the
-
Vessel will be duly and effectively transferred to the Owner Trustee pursuant to
the Bill of Sale free and clear of all Liens other than Permitted Liens
described in clauses (ii)-(viii) of the definition of Permitted Liens; (b) the
-
filings and recordings listed in Schedule 3 will be all the filings and
recordings necessary (i) to establish the Owner Trustee's right, title and
-
interest in and to the Vessel and the Builder's warranties and (ii) to perfect
--
the Lien of the Ship Mortgage on the Vessel and the Indenture Trustee's security
interest in the Indenture Estate created by the Indenture, and all such filings
and recordings will have been duly made or arrangements shall have been made for
the due filing or recording thereof, subject to requirements for filing
continuation statements at appropriate intervals and (c) no other action will be
-
required to perfect such Ship Mortgage Lien and security interest (other than
the taking of possession by the Indenture Trustee of the original executed
counterpart of the Charter and of any cash proceeds or instruments included in
the Indenture Estate).
5.8. Chief Place of Business. The chief place of business and chief
-----------------------
executive office of the Charterer is in Fairfax, Virginia, and the offices where
it keeps its records concerning the Vessel and its accounts and contract rights
are in Fairfax, Virginia.
5.9. Litigation. There is no action, suit or proceeding before any
----------
Governmental Authority pending or, to the Actual Knowledge of the Charterer
threatened against the Charterer or its properties that questions the validity
of any Operative Document or that, individually or in the aggregate, (A) is
-
reasonably likely materially and adversely to affect (x) the consummation of the
transactions under the Pass Through Trust Documents, this Participation
Agreement or any other Operative Document or any action taken or to be taken by
the Charterer pursuant to any Operative Document to which it is a party or the
-29-
<PAGE>
Pass Through Trust Documents or (y) the Charterer's ability to perform its
-
obligations under any of the Operative Documents to which it is a party or the
Pass Through Trust Documents or (B) would result in the creation or imposition
-
of any Lien (other than a Permitted Lien) upon the Vessel.
5.10. No Default. No Charter Default or Charter Event of Default
----------
has occurred and is continuing.
5.11. Event of Loss. No Event of Loss has occurred and, to the
-------------
Actual Knowledge of the Charterer, no event described the definition of Event of
Loss that with the passage of time would be an Event of Loss has occurred with
respect to the Vessel.
5.12. Citizenship. On the date hereof, the Charterer is, and on the
-----------
Funding Date will be, a citizen of the United States qualified to engage in U.S.
coastwise trade under Section 2 of the Shipping Act.
5.13. Description of Vessel. On the Funding Date, the information
---------------------
concerning the Vessel set forth in the Bill of Sale is true and correct.
5.14. Investment Company Act. The Charterer is not an "investment
----------------------
company" or a company "controlled" by an "investment company" within the meaning
of the Investment Company Act of 1940, as amended.
5.15. No Brokers' Fees. Neither the Charterer nor any Person acting
----------------
on its behalf has taken any actions the effect of which would be to cause the
Owner Trustee, the Indenture Trustee or any Participant to be liable for any
brokers', finders' or agents' fees or commissions or costs of any nature or kind
claimed by or on behalf of brokers, finders or agents in respect of the
transactions contemplated by this Agreement other than fees payable to Charterer
Financial Advisor and Charterer Debt Advisor/Underwriter (such fees being paid
for in accordance with Section 2.9).
5.16. Holding Company. The Charterer is not subject to regulation as
---------------
a "holding company," an "affiliate" of a "holding company" or a "subsidiary
company" of a "holding company," within the meaning of the Public Utility
Holding Company Act of 1935, as amended.
5.17. DISCLAIMER OF REPRESENTATIONS AND WARRANTIES. NOTWITHSTANDING
--------------------------------------------
ANYTHING CONTAINED HEREIN OR IN ANY OTHER OPERATIVE DOCUMENT, EACH OF THE
CHARTERER AND ANY AFFILIATES DOES
-30-
<PAGE>
NOT MAKE NOR SHALL EITHER THE CHARTERER OR ANY AFFILIATES BE DEEMED TO HAVE
MADE, AND EACH OF THE CHARTERER AND ANY AFFILIATES HEREBY DISCLAIMS, ANY
REPRESENTATION OR WARRANTY OTHER THAN THOSE REFERRED TO IN THIS SECTION, IN ANY
OFFICER'S CERTIFICATE OF THE CHARTERER OR EXPRESSLY MADE IN ANY OTHER OPERATIVE
DOCUMENT, EITHER EXPRESS OR IMPLIED, AS TO TITLE TO THE VESSEL, THE VESSEL'S
DESIGN, CONDITION, MERCHANTABILITY OR THE VESSEL'S FITNESS FOR ANY PARTICULAR
TRADE, THE ABILITY OF THE VESSEL OR ANY PART THEREOF TO PERFORM ANY FUNCTION,
THE QUALITY OF THE MATERIALS OR WORKMANSHIP THEREOF OR CONFORMITY THEREOF TO
SPECIFICATIONS, OR THE PRESENCE OR ABSENCE OF ANY LATENT OR OTHER DEFECTS,
WHETHER OR NOT DISCOVERABLE OR ANY OTHER WARRANTY OR REPRESENTATION WHATSOEVER;
PROVIDED THAT THE FOREGOING SHALL NOT EXCUSE THE PERFORMANCE BY THE CHARTERER OF
ITS OBLIGATIONS SET FORTH IN THIS PARTICIPATION AGREEMENT OR ANY OTHER OPERATIVE
DOCUMENT. THIS DISCLAIMER OF REPRESENTATION AND WARRANTIES SHALL SURVIVE ANY
TERMINATION OR RESCISSION OF THIS PARTICIPATION AGREEMENT AND THE OTHER
OPERATIVE DOCUMENTS.
Section 6. Representations and Warranties of Owner Participant. The
--------------------------------- -----------------
Owner Participant represents and warrants to each of the other parties hereto
that:
6.1. Due Organization. The Owner Participant is a corporation duly
----------------
organized, validly existing and in good standing under the laws of the State of
Delaware and has the corporate power and authority to carry on its business as
presently conducted and to enter into and perform its obligations under, and to
execute and deliver, this Participation Agreement and each other Operative
Document to which it is a party and is duly qualified to do business in any
jurisdiction where failure to so qualify could reasonably be expected to
materially, adversely affect its ability to conduct its business as presently
conducted and as it is contemplated to be conducted in connection with the
Vessel or to perform any obligations under this Participation Agreement or any
other Operative Document to which it is a party.
6.2. Authorization. The execution, delivery and performance by the
-------------
Owner Participant of this Participation Agreement and each other Operative
Document to which it is a party and of the transactions contemplated hereby and
thereby have been duly authorized by the Owner Participant and do not and will
not require the consent or approval of any shareholder of the Owner Participant.
6.3. Execution; Enforceability. Each of this Participation Agreement
-------------------------
and each other Operative Document to which the Owner Participant is a party has
been duly executed and delivered by the Owner Participant and, assuming the due
-31-
<PAGE>
authorization, execution and delivery hereof and thereof by the other parties
hereto and thereto, as the case may be, constitutes a legal, valid and binding
obligation of the Owner Participant respectively, enforceable against the Owner
Participant in accordance with their respective terms, except as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, liquidation, receivership, moratorium or similar laws affecting
creditors' rights generally and by the application of general equitable
principles which may limit the availability of certain remedies. Any direction
given by the Owner Participant to the Owner Trustee on the Funding Date pursuant
to the Trust Agreement will have been duly authorized.
6.4. No Violation. The execution and delivery by the Owner
------------
Participant of this Participation Agreement and each other Operative Document to
which it is a party do not and will not, and the performance by the Owner
Participant of its obligations under each thereof does not and will not, (i)
-
violate or result in a breach of its charter documents or by-laws; (ii)
--
contravene any provision of any Governmental Rule or Governmental Action
applicable to it or require any Governmental Action, provided that no
--------
representation or warranty is made with respect to ERISA (except as set forth in
Section 6.8) or (iii) contravene any provision of, or constitute a default or
---
require any consent under, any provision of any indenture, mortgage, contract or
other agreement or instrument to which the Owner Participant is a party or by
which it or any of its property is bound.
6.5. Owner Participant's Liens. There are no Owner Participant's
-------------------------
Liens on the Vessel, the Trust Estate or the Indenture Estate or any part of any
thereof, and the execution, delivery and performance by the Owner Participant of
the Operative Documents to which it is a party will not subject the Trust
Estate, the Indenture Estate or the Vessel or any part of any thereof to any
Owner Participant's Liens.
6.6. Acquisition for Investment. The Owner Participant is acquiring
--------------------------
its interest in the Trust Estate for its own account for investment and not with
a view to, or for sale in connection with, any distribution of any such interest
(it being understood that at all times the disposition of its property shall
remain within its control, subject to any restrictions on transfer herein or in
the Trust Agreement).
6.7. Securities Act. Neither the Owner Participant nor any Person
--------------
authorized by or affiliated with the Owner Participant has directly or
indirectly offered or sold any interest in the Trust Estate, or in any similar
security relating to the Vessel, or solicited any offer to acquire any of the
same
-32-
<PAGE>
from any Person, other than, in the case of the Secured Notes, the Loan
Participant, and neither the Owner Participant nor any Person authorized to act
on its respective behalf has directly or indirectly offered or sold any Pass
Through Certificates to, or solicited any offer to acquire the same from, any
Person other than in a manner required by the Securities Act.
6.8. ERISA. The Owner Participant is not acquiring any part of its
-----
interest in the Trust Estate with any ERISA Plan Assets.
6.9. Investment Company Act. The Owner Participant is not an
----------------------
"investment company" or a company "controlled" by an "investment company" within
the meaning of the Investment Company Act of 1940, as amended.
6.10. Litigation. There is no action, suit or proceeding pending or,
----------
to the Actual Knowledge of the Owner Participant threatened against the Owner
Participant or its properties before any Governmental Authority, that questions
the validity of any Operative Document or that, individually or in the
aggregate, (A) is reasonably likely materially and adversely to affect (x) the
- -
consummation of the transactions under the Pass Through Trust Documents, this
Participation Agreement or any other Operative Document to which it is a party
or any action taken or to be taken by the Owner Participant pursuant to any
Operative Document or (y) the ability of the Owner Participant to perform its
-
obligations under this Participation Agreement or any other Operative Document
to which it is a party or (B) would result in the creation or imposition of any
-
Owner Participant's Liens.
6.11. No Default. No Indenture Default or Indenture Event of Default
----------
attributable to the Owner Participant has occurred and is continuing.
6.12. No Brokers' Fees. Neither the Owner Participant nor any Person
----------------
acting on its behalf has taken any actions the effect of which would be to cause
the Charterer, the Owner Trustee or the Loan Participant to be liable for any
brokers', finders' or agents' fees or commissions or costs of any nature or kind
claimed by or on behalf of brokers, finders or agents in respect of the
transactions contemplated by this Agreement.
6.13. Citizenship. On the date hereof, (a) the Owner Participant is,
-----------
and on the Funding Date will be, a U.S. citizen entitled to own a vessel
operating in the U.S. coastwise trade pursuant to 46 U.S.C. Sections 12102(a)(4)
and 12106(e)(1)(B),
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<PAGE>
and (b) satisfies the citizenship requirements described in Appendix 1 attached
to the Commitment Letter.
Section 7. Representations and Warranties of the Trust Company and
-------------------------------------------------------
the Owner Trustee. The Trust Company represents and warrants in its individual
- -----------------
capacity with respect to Sections 7.1, 7.2(a) and clause (i) of the first
sentence of Section 7.2(b), 7.3(a), 7.4(a), 7.5, 7.6 (with respect to
Shipowner's Liens attributable to it), 7.7 (as specified therein), 7.8, 7.9 and
7.10, and in its capacity as Owner Trustee represents and warrants with respect
to Sections 7.2(b), 7.3(b), 7.4(b), 7.5(b), 7.6 (with respect to Shipowner's
Liens attributable to it) and 7.7 (as specified therein), to each of the other
parties hereto that:
7.1. Due Organization. The Trust Company is a national banking
----------------
association duly organized, validly existing and in good standing under the laws
of the United States and has the corporate power and authority to enter into and
perform its obligations under the Trust Agreement, this Participation Agreement
and each other Operative Document to which it is a party and, assuming due
authorization, execution and delivery by the Owner Participant of the Trust
Agreement and upon due direction by the Owner Participant pursuant thereto, will
have the power and authority to enter into and perform its obligations as Owner
Trustee under the Trust Agreement, this Participation Agreement and each other
Operative Document to which the Owner Trustee is a party.
7.2. Authorization; Execution; Enforceability. (a) The execution,
----------------------------------------
delivery and performance of this Par ticipation Agreement, the Trust Agreement
and each other Operative Document to which the Trust Company is a party have
been duly authorized. Each of this Participation Agreement and the Trust
Agreement has been duly executed and delivered by the Trust Company and,
assuming the due authorization, execution and delivery hereof and thereof by the
other parties hereto or thereto, as the case may be, constitute, and each other
Operative Document to which the Trust Company is a party will, when executed and
delivered by the Trust Company, be duly executed and delivered by the Trust
Company and thereupon will, assuming the due authorization, execution and
delivery thereof by the other parties thereto, constitute, a legal, valid and
binding obligation of the Trust Company, to the extent entered into by the Trust
Company, enforceable against it in accordance with its respective terms, except
as such enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, liquidation, receivership, moratorium or similar laws affecting
creditors'
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<PAGE>
rights generally and by the application of general equitable remedies which may
limit the availability of certain remedies.
(b) This Participation Agreement and the Trust Agreement (assuming
due authorization, execution and delivery by the Owner Participant of the Trust
Agreement and upon due direction by the Owner Participant pursuant thereto), (i)
-
have been duly authorized, executed and delivered by one of the Owner Trustee's
officers who is duly authorized to execute and deliver such Operative Document
on behalf of the Owner Trustee and, (ii) assuming the due authorization,
--
execution and delivery hereof and thereof by the other parties hereto and
thereto, as the case may be, constitute, and each other Operative Document to
which the Owner Trustee is a party will, when executed and delivered by the
Owner Trustee, be duly executed and delivered by an officer of the Owner Trustee
who is duly authorized to execute and deliver such Operative Document on behalf
of the Owner Trustee, and thereupon will, assuming the due authorization,
execution and delivery thereof by the other parties thereto, constitute, a
legal, valid and binding obligation of the Owner Trustee enforceable against
the Owner Trustee in accordance with its respective terms, except as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, liquidation, receivership, moratorium or similar laws affecting
creditors' rights generally and the application of general equitable principles,
which may limit the availability of certain remedies. Upon execution of the
Secured Notes by the Owner Trustee, authentication thereof by the Indenture
Trustee and delivery thereof against payment or the giving of consideration
therefor in accordance with the Indenture and this Agreement, the Secured Notes
will be legal, valid and binding obligations of the Owner Trustee enforceable
against the Owner Trustee in accordance with their respective terms, except as
such enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, liquidation, moratorium or similar laws affecting creditors'
rights generally and the application of general equitable principles which may
limit the availability of certain remedies.
7.3. No Violation. (a) The execution and delivery by the Trust
------------
Company of the Trust Agreement and, to the extent it is a party hereto or
thereto in its individual capacity, this Participation Agreement and each other
Operative Document, do not or will not, and the performance by the Trust Company
of its obligations under each will not, violate or result in a breach of the
charter documents or by-laws of the Trust Company, do not and will not
contravene any United States Federal Governmental Rule governing its banking or
trust powers or Utah Governmental Rule relating to or affecting its capacity to
act as contemplated by the Trust Agreement or the other Operative Documents to
which it
-35-
<PAGE>
is a party and do not and will not contravene any provision of, or constitute a
default under, any indenture, mortgage, contract or other instrument to which
the Trust Company is a party or by which it or any of its property is bound, or
require any United States Federal or Utah Governmental Action relating to or
affecting its capacity to act as contemplated by the Trust Agreement or the
other Operative Documents to which it is a party.
(b) The execution and delivery by the Owner Trustee of each Operative
Document to which the Owner Trustee is a party do not and will not, and the
performance by the Owner Trustee of the Owner Trustee's obligations under each
will not, violate or result in a breach of the charter documents or by-laws of
the Trust Company, do not and will not contravene any Governmental Rule
regulating the Owner Trustee's banking or trust powers relating to or affecting
the Owner Trustee's capacity to act as contemplated by the Trust Agreement or
the Owner Trustee Documents and do not and will not contravene any provision of,
or constitute a default under, any indenture, mortgage, contract or other
instrument to which the Trust Company or the Owner Trustee is a party or by
which the Trust Company or the Owner Trustee or the Owner Trustee's property is
bound or require any Governmental Actions relating to or affecting the Owner
Trustee's capacity to act as contemplated by the Trust Agreement or the Owner
Trustee Documents.
7.4. No Default. (a) No Indenture Default or Indenture Event of
----------
Default attributable to the Trust Company has occurred and is continuing.
(b) No Indenture Default or Indenture Event of Default attributable
to the Owner Trustee has occurred and is continuing.
7.5. Litigation. (a) There is no action, suit or proceeding pending
----------
or, to the Actual Knowledge of the Trust Company, threatened before any
Governmental Authority against the Trust Company that questions the validity of
any Operative Document to which the Trust Company or the Owner Trustee is a
party or that, individually or in the aggregate, (A) is reasonably likely
-
materially and adversely to affect (x) the consummation of the transactions
-
under the Pass Through Trust Documents, this Participation Agreement or any
other Operative Document or any action taken or to be taken by it pursuant to
any Operative Document or (y) the ability of the Trust Company to perform its
-
obligations under this Participation Agreement or any other Operative Document
to which it is a party or (B) would result in the creation or imposition of any
-
Shipowner's Liens.
-36-
<PAGE>
(b) There is no action, suit or proceeding pending or, to the Actual
Knowledge of the Owner Trustee, threatened before any Governmental Authority
against the Owner Trustee that questions the validity of any Operative Document
to which it is a party or that, individually or in the aggregate, is reasonably
likely materially and adversely to affect (x) the consummation of the
-
transactions under the Pass Through Trust Documents, this Participation
Agreement or any other Operative Document or any action taken or to be taken by
it pursuant to any Operative Document or (y) the ability of the Owner Trustee to
-
perform the Owner Trustee's obligations under this Participation Agreement or
any other Operative Document to which the Owner Trustee is a party.
7.6. Shipowner's Liens. There are no Shipowner's Liens attributable
-----------------
to the Owner Trustee or the Trust Company, as the case may be, on the Vessel,
the Trust Estate or the Indenture Estate or on any part of any thereof, and the
execution, delivery and performance by either of the Owner Trustee or the Trust
Company, as the case may be, of the Operative Documents to which it is a party
will not subject the Trust Estate, the Indenture Estate or the Vessel or any
part of any thereof to any such Shipowner's Liens.
7.7. Securities Act. None of the Trust Company, the Owner Trustee or
--------------
any Person authorized by the Trust Company or Owner Trustee to act on its behalf
has directly or indirectly offered or sold any interest in the Trust Estate or
the Secured Notes to, or in any similar security relating to the Vessel, or
solicited any offer to acquire any of the same from, any Person, other than, in
the case of the Secured Notes, the Loan Participant, and none of the Trust
Company, the Owner Trustee or any Person authorized by the Trust Company or the
Owner Trustee to act on its behalf has directly or indirectly offered or sold
any Pass Through Certificates to, or solicited any offer to acquire the same
from, any Person other than in a manner required by the Securities Act.
7.8. Chief Place of Business. The Trust Company's chief place of
-----------------------
business, chief executive office and office where the documents, accounts and
records relating to the transactions contemplated by this Agreement and each
other Operative Document are or will be kept are located in Salt Lake City,
Utah.
7.9. No Taxes Payable. Except for Taxes based upon the income of any
----------------
Person, there are no Taxes payable in the State of Utah which is the state in
which the principal place of business of the Trust Company or of the Owner
Trustee, as the case may be, is located, in connection with the execution,
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delivery, consummation or recordation of this Participation Agreement and the
other Operative Documents, upon or with respect to the Trust Estate or the
Indenture Estate, or in connection with the consummation of the transactions
contemplated hereby and by the other Operative Documents (including, without
limitation, the filing of financing statements with respect thereto or the sale
or transfer of the Vessel or any right in favor of the Owner Trustee created by
the Charter solely because the Trust Company has its principal place of business
in the State of Utah.
7.10. Title. On the Funding Date, the Owner Trustee shall have
-----
received whatever title in and to the Vessel as was conveyed to it by the
Seller.
7.11. Citizenship. On the date hereof and on the Funding Date, the
-----------
Owner Trustee is, and will be, a U.S. citizen entitled to own a vessel operating
in the U.S. coastwise trade pursuant to Section 2 of the Shipping Act.
Section 8. Representations and Warranties of the Indenture Trustee.
-------------------------------------------------------
The Indenture Trustee represents and warrants, in its individual capacity with
respect to Sections 8.1, 8.2(a), 8.3, 8.4, 8.5(a) and 8.6, and in its capacity
as Indenture Trustee with respect to Sections 8.2(b) and 8.5(b), to each of the
other parties hereto that:
8.1. Due Organization. The Indenture Trustee is a Massachusetts
----------------
trust company duly organized, validly existing and in good standing under the
laws of the Commonwealth of Massachusetts and has the corporate power and
authority to enter into and perform its obligations under this Participation
Agreement and each other Operative Document to which it is a party.
8.2. Authorization; Execution; Enforceability. (a) The execution,
----------------------------------------
delivery and performance by the Indenture Trustee of this Participation
Agreement and each other Operative Document to which the Indenture Trustee is a
party have been duly authorized by the Indenture Trustee. This Participation
Agreement has been duly executed and delivered by the Indenture Trustee and,
assuming the due authorization, execution and delivery hereof by the other
parties hereto, constitutes, and each other Operative Document to which the
Indenture Trustee is a party, will when executed and delivered by the Indenture
Trustee, be duly executed and delivered by the Indenture Trustee and thereupon
will, assuming the due authorization, execution and delivery thereof by the
other parties thereto, constitute, a legal, valid and binding obligation of the
Indenture Trustee in its individual capacity (to the extent it is a party hereto
or thereto in such capacity), enforceable against it in accordance
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<PAGE>
with its respective terms, except as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, liquidation, receivership,
moratorium or similar laws affecting creditors' rights generally and the
application of general equitable principles which may limit the availability of
certain remedies. Assuming due authorization, execution and delivery thereof by
the Owner Trustee, each Secured Note issued on the Funding Date pursuant to the
terms of this Agreement and the Indenture on the Funding Date will have been
duly authenticated.
(b) This Participation Agreement has been duly executed and delivered
by the Indenture Trustee and, assuming the due authorization, execution and
delivery hereof by the other parties hereto, constitutes, and each other
Operative Document to which the Indenture Trustee is a party, will, when
executed and delivered by the Indenture Trustee, be duly executed and delivered
by the Indenture Trustee and thereupon will, assuming the due authorization,
execution and delivery thereof by the other parties thereto constitute legal,
valid and binding obligations of the Indenture Trustee, enforceable against the
Indenture Trustee in accordance with its respective terms, except as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, liquidation, receivership, moratorium or similar laws affecting
creditors' rights generally and the application of general equitable principles
which may limit the availability of certain remedies.
8.3. No Violation. The execution and delivery by the Indenture
------------
Trustee of this Participation Agreement and each other Operative Document to
which it is a party do not and will not, and the performance by it of its
obligations under each will not, violate or result in a breach of its charter
documents or by-laws and do not and will not contravene any Governmental Rule of
the Commonwealth of Massachusetts governing with respect to its banking or trust
powers or of the United States of America, and will not contravene any provision
of, or constitute a default under, any indenture, mortgage, contract or other
instrument to which the Indenture Trustee, in its individual capacity, is a
party, or by which it or any of its properties are bound, or require any
Governmental Action of the Commonwealth of Massachusetts governing its banking
or trust powers or of the United States of America.
8.4. Litigation. There is no action, suit or proceeding pending
----------
before any Governmental Authority or, to the Actual Knowledge of the Indenture
Trustee (in its individual capacity or as Indenture Trustee), threatened against
the Indenture Trustee that questions the validity of any Operative Document to
which it is a party or that, individually or in the
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aggregate, (A) is reasonably likely materially and adversely to affect (x) the
- -
consummation of the transactions under the Pass Through Trust Documents, this
Participation Agreement or any other Operative Document or any action taken or
to be taken by it pursuant to any Operative Document or (y) the ability of the
-
Indenture Trustee (in either such capacity) to perform the Indenture Trustee's
obligations under this Participation Agreement or any other Operative Document
to which the Indenture Trustee is a party (in either such capacity) or (B) would
-
result in the creation or imposition of any Indenture Trustee's Liens.
8.5. Indenture Trustee's Liens. (a) There are no Indenture
-------------------------
Trustee's Liens attributable to State Street Bank and Trust Company, in its
individual capacity, on the Trust Estate, the Indenture Estate, the Vessel or on
any part thereof.
(b) There are no Indenture Trustee's Liens on the Trust Estate, the
Indenture Estate or on any part thereof.
8.6. No Taxes Payable. Except for Taxes based upon the income of any
----------------
Person, there are no Taxes payable in the Commonwealth of Massachusetts, the
state in which the principal place of business of the Indenture Trustee is
located, in connection with the execution, delivery, consummation or recordation
of this Participation Agreement and the other Operative Documents, upon or with
respect to the Trust Estate or the Indenture Estate, or in connection with the
consummation of the transactions contemplated hereby and by the other Operative
Documents (including, without limitation, the filing of financing statements
with respect thereto or the sale or transfer of the Vessel or any right in favor
of the Owner Trustee created by the Charter).
Section 9. Representations and Warranties of Pass Through Trustee.
------------------------------------------------------
State Street Bank and Trust Company represents and warrants in its individual
capacity with respect to Sections 9.1, 9.2(a), 9.3, 9.4, 9.5(a), 9.6 and 9.7 and
not in its individual capacity, but solely in its capacity as Pass Through
Trustee under the Pass Through Trust Documents with respect to Sections 9.2(b)
and 9.5(b), to each of the other parties hereto that:
9.1. Due Organization. State Street Bank and Trust Company is a
----------------
Massachusetts trust company duly organized, validly existing and in good
standing under the laws of the Commonwealth of Massachusetts and has the
corporate power and authority to enter into and perform its obligations under
this Participation Agreement and the Pass Through Trust Documents.
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<PAGE>
9.2. Authorization; Execution; Enforceability. (a) The execution,
----------------------------------------
delivery and performance of this Participation Agreement and the Pass Through
Trust Documents, and each of the transactions contemplated to be performed by
State Street Bank and Trust Company or the Pass Through Trustee hereby or
thereby, have been duly authorized by State Street Bank and Trust Company, in
its individual capacity. Each of this Participation Agreement and the Pass
Through Trust Agreement has been duly executed and delivered by State Street
Bank and Trust Company, in its individual capacity, and, assuming the due
authorization, execution and delivery hereof and thereof by the other parties
hereto and thereto, constitutes, and each Pass Through Trust Supplement will,
when executed and delivered by State Street Bank and Trust Company, in its
individual capacity and in its capacity as Pass Through Trustee, be duly
executed and delivered by State Street Bank and Trust Company, in its individual
capacity, and thereupon will, assuming the due authorization, execution and
delivery thereof by the other parties thereto, constitute a legal, valid and
binding obligation of State Street Bank and Trust Company, in its individual
capacity (to the extent it is a party hereto or thereto in such capacity),
enforceable against it in accordance with their respective terms, except as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, liquidation, receivership, moratorium or similar laws affecting
creditors' rights generally and by the application of general equitable
principles which may limit the availability of certain remedies.
(b) The execution, delivery and performance of this Participation
Agreement and each Pass Through Trust Document and each Pass Through Certificate
have been duly authorized by the Pass Through Trustee. Each of this
Participation Agreement and the Pass Through Trust Agreement has been duly
authorized, executed and delivered by the Pass Through Trustee and, assuming the
due authorization, execution and delivery hereof and thereof by the other
parties hereto and thereto, constitutes, each Pass Through Trust Supplement and
each Pass Through Certificate will, when executed, authenticated and delivered
by the Pass Through Trustee, be duly executed, authenticated and delivered by
the Pass Through Trustee and thereupon will, assuming with respect to such Pass
Through Trust Supplement the due authorization, execution and delivery thereof
by the other parties thereto, constitute, a legal, valid and binding obligation
of the Pass Through Trustee, enforceable against it in accordance with their
respective terms, except as such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, liquidation, receivership, moratorium or
similar laws affecting creditors' rights generally and the application of
general equitable principles which may limit the availability of certain
remedies and
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<PAGE>
the Certificate holders, will be entitled to the benefits of the applicable Pass
Through Trust Documents.
9.3. No Violation. The execution, delivery and performance by State
------------
Street Bank and Trust Company of this Participation Agreement and each Pass
Through Trust Document, the purchase by the Pass Through Trustee of the Secured
Notes pursuant to this Participation Agreement and the issuance of the Pass
Through Certificates pursuant to the Pass Through Trust Document, and the
performance of its obligations hereunder and thereunder, do not and will not
violate or result in a breach of its charter documents or by-laws and do not and
will not contravene any Governmental Rule or the Commonwealth of Massachusetts
governing with respect to its banking or trust powers of the United States of
America and do not and will not contravene any provision of, or constitute a
default under, any indenture, mortgage, contract or other instrument to which
State Street Bank and Trust Company, in its individual capacity, is a party, or
by which it or any of its properties are bound, or require any Governmental
Action of the Commonwealth of Massachusetts or the United States of America
governing its banking or trust powers.
9.4. Litigation. There is no action, suit or proceeding pending
----------
before any Governmental Authority or, to the Actual Knowledge of State Street
Bank and Trust Company (in its individual capacity or as Pass Through Trustee),
threatened against the Pass Through Trustee or State Street Bank and Trust
Company or its properties that questions the validity of any Operative Document
or Pass Through Trust Document to which it is a party or that, individually or
in the aggregate, (A) is reasonably likely materially and adversely to affect
-
(x) the consummation of the transactions under the Pass Through Trust Documents,
this Participation Agreement or any other Operative Document or action taken or
to be taken by the Pass Through Trustee (in either such capacity) under any of
the Operative Documents or Pass Through Trust Documents to which it is a party
or (y) the ability of the Pass Through Trustee (in either such capacity) to
-
perform its obligations under this Participation Agreement or the Pass Through
Trust Documents (in either such capacity) or (B) would result in the creation or
-
imposition of any Pass Through Trustee's Liens.
9.5. Pass Through Trustee's Liens. (a) There are no Pass Through
----------------------------
Trustee's Liens attributable to State Street Bank and Trust Company, in its
individual capacity, on the Pass Through Trust Property or on any part thereof.
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<PAGE>
(b) There are no Pass Through Trustee's Liens on the Pass Through
Trust Property or any part thereof.
9.6. Securities Act. State Street Bank and Trust Company has not,
--------------
nor has any Person authorized by State Street Bank and Trust Company, offered or
sold any interest in the Pass Through Certificates or any Secured Note, or in
any similar security relating to the Vessel, for sale to, or solicited any offer
to acquire any of the same from, anyone other than the Owner Trustee, and no
responsible officer or responsible employee of State Street Bank and Trust
Company has knowledge of any such offer or solicitation, except as set forth in
the Operative Documents or the Pass Through Trust Documents.
9.7. No Taxes Payable. Except for Taxes based upon the income of any
----------------
Person, there are no Taxes payable in the Commonwealth of Massachusetts, the
state in which the principal place of business of the Pass Through Trustee is
located, in connection with the execution, delivery, consummation or recordation
of this Participation Agreement and the other Operative Documents or the Pass
Through Trust Documents, upon or with respect to the Trust Estate or the
Indenture Estate, or in connection with the consummation of the transactions
contemplated hereby and by the other Operative Documents or the Pass Through
Trust Documents (including, without limitation, the filing of financing
statements with respect thereto or the sale or transfer of the Vessel).
Section 10. Charterer Covenants. The Charterer covenants and
-------------------
agrees that:
10.1. Maintenance of Corporate Existence, Etc. Subject to the
---------------------------------------
provisions of Section 10.2, the Charterer shall at all times maintain its
corporate existence and preserve and keep in full force and effect its rights
and franchises the loss of which, individually or in the aggregate, would have a
material adverse effect on the Charterer's ability to comply with its
obligations under the Operative Documents or the Pass Through Trust Documents to
which it is a party.
10.2. Merger, Consolidation, Sale, Etc. So long as any of the
--------------------------------
Secured Notes remain Outstanding or any amounts with respect thereto are due and
owing by the Charterer to the Loan Participant under any Operative Document
remain unpaid and so long as the Charter Term shall not have expired or been
terminated, the Charterer shall not consolidate with or merge with or into any
other corporation or sell, assign, convey, transfer, charter or otherwise
dispose of all or substantially all of its assets as an entirety to any Person,
unless:
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<PAGE>
(i) the successor entity formed by such consolidation or into which
the Charterer is merged or the Person which acquires by conveyance,
transfer or charter all or substantially all of the assets of the
Charterer as an entirety shall expressly assume all of the obligations of
the Charterer under the Operative Documents;
(ii) the Vessel is not disqualified from engaging in U.S. coastwise
trade under the Shipping Act by reason of such consolidation, merger or
sale; and
(iii) the Guaranty shall remain in full force and effect, and the
Guarantor shall confirm in writing that such is the case to the Owner
Participant, the Owner Trustee and the Indenture Trustee.
10.3. Change in Name or Chief Place of Business. The Charterer
-----------------------------------------
shall give written notice to the Owner Trustee, the Owner Participant and the
Indenture Trustee promptly after any change in its name or chief place of
business or chief executive office.
10.4. Filings. The Charterer, at its own cost and expense, will
-------
cause the Ship Mortgage and the Charter and all financing statements, other
similar documents, to be recorded or filed at such places and times and in such
manner, and will take all such other actions or cause such actions to be taken,
as may be necessary or as may be reasonably requested (x) by the Owner Trustee,
the Owner Participant or the Indenture Trustee in order to establish, preserve
and protect the interest of the Owner Trustee in and to the Vessel and (y) so
-
long as any Secured Notes are Outstanding, by the Indenture Trustee, the Loan
Participant or (unless the Indenture Trustee objects thereto) the Owner Trustee
in order to establish, preserve, protect and perfect the mortgage and security
interest of the Indenture Trustee in the Indenture Estate granted or intended to
be created under the Indenture and the Ship Mortgage and the Indenture Trustee's
rights under this Participation Agreement and the other Operative Documents,
subject only in each case to Permitted Liens.
10.5. Inspection. (a) The Charterer shall permit the Indenture
----------
Trustee and the Owner Participant (and any authorized representatives of any
thereof), at such Person's risk and expense, including, without limitation, as
to personal injury and death, and under conditions reasonably acceptable to the
Charterer, including, without limitation, with respect to time and place of
inspection, the execution of waivers of liability reasonably acceptable to the
Charterer and the provision of proof
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<PAGE>
of insurance reasonably acceptable to Charterer, and subject to confidentiality
provisions, to visit and inspect the Vessel, and the Charterer will use
reasonable efforts to make available its books and records related thereto, all
upon reasonable notice and at such reasonable times during normal business hours
and as may be reasonably requested; provided, however, that unless there is an
-------- -------
existing Charter Event of Default, the Indenture Trustee and Owner Participant
may not make more than one (1) inspection in any calendar year without the
Charterer's prior written consent; provided, further, that such inspection
-------- -------
rights must be exercised subject to the supervision of the Charterer or its
designee. Unless a Charter Event of Default shall have occurred and be
continuing, the Charterer shall not be required to disclose any confidential
information or allow anyone to inspect confidential materials. For the purposes
of this Section 10.5, the Vessel's logs shall not be deemed to be confidential
materials.
(b) No Person entitled to make any inspection or inquiry referred to
in this Section 10.5 shall have any duty to make such inspection or inquiry, or
shall incur any liability or obligation by reason of not making any such
inspection or inquiry. No inspection pursuant to this Section 10.5 shall
interfere with the use, operation or maintenance of the Vessel or any part
thereof, or the rights of the Charterer or any other Person permitted under the
Charter, the Initial Subcharter, or any other subcharter permitted under the
Charter, and the Charterer shall not be required to undertake or incur any
additional liabilities in connection therewith.
10.6. Citizenship. For the duration of the Charter Term, the
-----------
Charterer, at its sole expense, shall take all actions necessary to remain a
citizen of the United States qualified to engage in U.S. coastwise trade under
Section 2 of the Shipping Act. If at any time during the Charter Term, to the
Actual Knowledge of the Charterer, the Charterer fails to be a U.S. citizen as
provided in this Section, the Charterer shall (i) notify the Owner Trustee and
the Indenture Trustee thereof as soon as it obtains knowledge of such fact, and
(ii) take all actions necessary, at its sole expense, to be a U.S. citizen as
provided in this Section, but in any event prior to the time such non-citizen
status affects the documentation or trading privileges of the Vessel. If the
Charterer cannot (or chooses not to) comply with the covenant contained in the
first sentence of this Section 10.6, the Charterer shall have the options (x) of
complying with the provisions of Section 12(e)(Special Termination) of the
Charter or (y) transferring the Charter, in accordance with the provisions of
Section 16(b) of the Charter to a Person who complies with the covenant
contained in the first sentence of this Section 10.6.
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<PAGE>
Section 11. Other Covenants and Agreements.
------------------------------
11.1. Agreements of Owner Participant. The Owner Participant
-------------------------------
covenants and agrees that:
(a) Discharge of Liens. The Owner Participant will not create or
------------------
permit to exist at any time, and will, at its own cost and expense, promptly
take such action as may be necessary duly to discharge, or to cause to be
discharged, (i) all Owner Participant's Liens and (ii) all Shipowner's Liens
- --
resulting from any act or failure to act by the Owner Trustee at the express
direction of, or with express authorization from, the Owner Participant on all
or any part of the Vessel, the Trust Estate or the Indenture Estate, or title to
any of the foregoing or any interest therein; provided, however, that the Owner
-------- -------
Participant shall not be required to remove any such Owner Participant's Lien or
Shipowner's Lien (other than any such Lien affirmatively imposed by the Owner
Participant) for so long as the same is being diligently contested in good faith
and by appropriate proceedings so long as such proceedings do not involve any
material danger of (1) the sale, forfeiture or loss of any part of any of the
-
Vessel, the Trust Estate or the Indenture Estate, or title to any of the
foregoing or any interest therein, (2) the interference with the use or
-
disposition of any of the foregoing or any part thereof, or title thereto or any
interest therein, or (3) interference with the payment of Charter Hire. The
-
Owner Participant shall indemnify, protect, defend, save and keep harmless the
Charterer, the Guarantor, the Operator, the Loan Participant, any Holder and the
Indenture Trustee from and against any and all Claims that may be imposed on,
incurred by or asserted against such Person or the Vessel arising out of any
such Owner Participant's Liens or any Shipowner's Liens described in clause (ii)
of the first sentence of this Section 11.1.
(b) Prepayment. Unless the Charter shall have been declared in
----------
default pursuant to Section 18(a) thereof, the Owner Participant will not, and
will not cause or permit the Owner Trustee to, directly or indirectly prepay,
defease, redeem, refund, refinance or acquire any Secured Note, or give a notice
of redemption with respect thereto, without the prior written consent of the
Charterer, other than in the event of a redemption or purchase of Secured Notes
by the Owner Trustee or the Owner Participant pursuant to Section 3.06 of the
Indenture or as provided in Section 15. This Section 11.1(b) shall not be
deemed to permit prepayment of Secured Notes except as permitted by the
Indenture. If (i) the Charterer shall have irrevocably elected to exercise a
-
purchase option with respect to the Vessel pursuant to the Charter or to
terminate the Charter pursuant to Sections 12 or 15 of the Charter, and the
Charterer shall not have elected
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<PAGE>
to assume the Secured Notes pursuant to Section 11.6 or (ii) an Event of Loss
--
with respect to the Vessel shall have occurred, then the Owner Participant
agrees, upon request of the Charterer specifying the relevant information, to
instruct the Owner Trustee to give an irrevocable notice of redemption pursuant
to Section 3.10 of the Indenture with respect to the Secured Notes to be
redeemed in connection with such purchase, termination or Event of Loss, which
notice shall specify the date for and amount of such redemption pursuant to, and
shall be given in accordance with, the terms of the Indenture. The date so
specified by the Charterer shall govern any inconsistent date set forth in the
Operative Documents for performance by the Charterer of its obligations in
respect of such purchase, termination or Event of Loss.
(c) Cooperation with Charterer. The Owner Participant shall, to the
--------------------------
extent reasonably so requested by the Charterer, cooperate with the Charterer,
at the Charterer's expense, to enable the Charterer to perform the covenants
contained in Section 10.5 and to make such filings and recordings as may be
reasonably requested by the Charterer to accomplish the purposes of this
Participation Agreement and the other Operative Documents, including, without
limitation, at any time and from time to time, promptly upon the request of the
Charterer, duly executing and delivering any and all such further instruments
and documents as the Charterer may reasonably request in order to perform such
covenants and to make such filings and recordings.
(d) Successor Owner Trustee. Unless the Charter shall have been
-----------------------
declared in default pursuant to Section 18(a) thereof, the Owner Participant
shall not appoint or cause or allow to be appointed a successor to any Owner
Trustee under the Trust Agreement without obtaining the prior written consent of
the Charterer, which consent shall not unreasonably be withheld. In addition,
if requested by the Charterer, the Owner Participant shall appoint a successor
trustee designated by the Charterer and acceptable to the Owner Participant to
any Owner Trustee under the Trust Agreement. The Owner Participant shall (at
the Charterer's expense) cause any such successor trustee, simultaneously with
its assumption of duties in such capacity, to take all actions as may be
reasonably requested by the Indenture Trustee, the Loan Participant or the
Charterer (including, without limitation, the filing of amendments to the
Charter and financing statements) in order to establish, preserve, protect and
perfect the right, title and interest of such successor trustee in and to the
Vessel and, so long as any Secured Notes are Outstanding, the Ship Mortgage and
security interest of the Indenture Trustee in the Indenture Estate granted or
intended to be created under the Ship Mortgage and the Indenture and the
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Indenture Trustee's rights under this Participation Agreement and the other
Operative Documents, subject in each case only to Permitted Liens.
(e) Performance of Obligations. The Owner Participant will perform
--------------------------
and comply with all obligations imposed on the Owner Participant pursuant to the
Operative Documents in accordance with the terms and conditions of each thereof.
In addition, the Owner Participant agrees to pay, or cause the Owner Trustee to
pay, all fees and expenses that are for the account of the Owner Trustee in
connection with an Appraisal Procedure.
(f) Instructions to Owner Trustee. The Owner Participant will not
-----------------------------
instruct or otherwise direct the Owner Trustee to take, or omit to take, any
action in violation of the express covenants and agreements of the Owner Trustee
in any Operative Document. The Owner Participant will not unreasonably withhold
its consent to or authorization of any consent requested of the Owner Trustee
under the terms of any Operative Document which by its express terms is not to
be unreasonably withheld by the Owner Trustee.
(g) Termination of Trust Agreement. The Owner Participant will not
------------------------------
terminate or revoke, or consent to the termination or revocation of, the Trust
Agreement or the trust created thereby, except in connection with the exercise
of remedies by the Owner Trustee pursuant to Section 18(a) of the Charter
following a declaration by the Owner Trustee pursuant to such Section 18(a) that
the Charter is in default, without the express written consent of the Charterer,
and, prior to the release of the Lien of the Ship Mortgage and the Indenture on
the Indenture Estate, the Indenture Trustee. The Owner Participant will not,
prior to the release of the Lien of the Ship Mortgage and the Indenture on the
Indenture Estate, amend or modify the Trust Agreement in any manner that would
affect materially and adversely the Indenture Estate or limit in any material
manner the rights of the Indenture Trustee set forth therein.
(h) Election to Retain Title. If the Owner Trustee shall elect to
------------------------
retain title to the Vessel pursuant to Section 12(c) of the Charter, the Owner
Participant will cause the Owner Trustee to perform its obligations under
Section 12(c) in accordance with the terms thereof.
(i) Citizenship. (a) For the duration of the Charter Term, the
-----------
Owner Participant shall remain eligible to own a vessel operating in U.S.
coastwise trade pursuant to 46 U.S.C. Sections 12102(a)(4) and 12106(e)(1)(B)
and any regulations promulgated thereunder (including successor provisions
thereto). If at any
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time during the Charter Term, the Owner Participant fails to be a U.S. citizen
as provided in this Section, the Owner Participant shall (i) notify the
Charterer and the Indenture Trustee thereof as soon as it obtains knowledge of
such fact, (ii) take all actions necessary, at its sole expense, to be a U.S.
citizen as provided in this Section, but in any event prior to the time such
non-citizen status affects the documentation or trading privileges of the
Vessel, and (iii) unless the failure to qualify as a U.S. Citizen as required by
the preceding sentence results from a change in Applicable Law after the Funding
Date, indemnify the Charterer, the Guarantor, the Operator, the Holders and the
Indenture Trustee against any and all Claims, including, without limit, costs of
substitute service during the Charter Term (to the extent that, solely in the
case of the Indenture Trustee and the Holders, such Claim is caused by the loss
of the benefits afforded preferred ship mortgages under 46 U.S.C. (S)31322, or
any successor provision thereto) as a result of its ceasing to be eligible to
own a vessel operating in U.S. coastwise trade. For the duration of the Charter
Term, the Owner Participant shall provide the Charterer and the Indenture
Trustee on the annual anniversary of the commencement of the Base Charter Term
with an Officer's Certificate certifying that the Owner Participant is in
compliance with this Section 11.1(i). Notwithstanding anything herein to the
contrary, for the avoidance of doubt, to the extent that the indemnification
provided in (iii) above is applicable, the Owner Participant shall bear the cost
and expense of the Charterer, the Shipowner, the Guarantor, the Operator, the
Holders and the Indenture Trustee in connection with any re-documentation of the
Vessel, the Lien of the Indenture and of the Ship Mortgage or the amendment of
any Operative Documents or other agreements in connection with the failure to
comply with Section 11.1(i) hereof.
(b) For the duration of the Charter Term, the Owner Participant shall
not transfer all or any part of its interest in the Vessel or the Trust Estate
to any Person who is not eligible to own a vessel operating in the U.S.
coastwise trade. In the event such a transfer occurs, whether voluntarily or
involuntarily, by merger, sale of assets, consolidation or otherwise, the Owner
Participant shall indemnify the Charterer, the Guarantor, the Operator, the
Holders and the Indenture Trustee against any and all Claims as a result of such
transfer.
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(j) Rebate of Amounts under Section 7.09 of the Indenture. The Owner
-----------------------------------------------------
Participant shall instruct the Owner Trustee to promptly pay over to the
Charterer any amounts described in Section 7.09 of the Indenture that are
received by the Owner Trustee.
11.2. Agreements of the Trust Company and the Owner Trustee. The
-----------------------------------------------------
Trust Company covenants and agrees, in its individual capacity, with respect to
Sections 11.2(a)(i), 11.2(b), and 11.2(i) and the Owner Trustee covenants and
agrees with respect to Sections 11.2(a)(ii), 11.2(c), 11.2(d), 11.2(e), 11.2(f),
11.2(g) and 11.2(h) that:
(a) Discharge of Liens. (i) The Trust Company will not create or
------------------
permit to exist at any time, and will, at its own cost and expense,
promptly take such action as may be necessary duly to discharge all
Shipowner's Liens on all or any part of the Vessel, the Trust Estate, the
Indenture Estate, or title to any of the foregoing or any interest therein
attributable to itself. Except for the Owner Participant's obligation
pursuant to Section 11.1(a)(ii), the Trust Company shall indemnify,
protect, defend, save and keep harmless the Charterer, the Guarantor, the
Operator, the Owner Participant, the Loan Participant and the Indenture
Trustee from and against any and all Claims that may be imposed on,
incurred by or asserted against such Person arising out of or secured by
any such Shipowner's Lien.
(ii) The Owner Trustee will not create or permit to exist at any
time, and will, at its own cost and expense, promptly take such action as
may be necessary duly to discharge all Shipowner's Liens on all or any part
of the Vessel, the Trust Estate, the Indenture Estate, or title thereto or
any interest therein attributable to the Owner Trustee.
(b) Change of Chief Place of Business. The Trust Company shall give
---------------------------------
notice to the Charterer, the Owner Participant and the Indenture Trustee
promptly after any change in its chief place of business or chief executive
office, or the office where the records concerning the accounts, contract
rights or general intangibles relating to the transactions contemplated
hereby are kept.
(c) Cooperation with the Charterer. The Owner Trustee shall, to the
------------------------------
extent reasonably so requested by the Charterer, cooperate with the
Charterer, at the Charterer's expense, to enable the Charterer to perform
the covenants contained in Section 10.5 and to make such filings and
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recordings as may be reasonably requested by the Charterer to accomplish
the purposes of this Participation Agreement and the other Operative
Documents, including, without limitation, at any time and from time to
time, upon the request of the Charterer promptly and duly executing and
delivering any and all such further instruments, documents and financing
statements (and continuation statements related thereto) as the Charterer
may request in order to perform such covenants and to make such filings and
recordings.
(d) Notice of Transfer of Assets. The Owner Trustee shall not
----------------------------
transfer any of the estates, properties, rights, powers, duties or trusts
of the Owner Trustee to any successor trustee or to any additional or
separate trustee under the Trust Agreement without giving prior written
notice of such transfer to the Owner Participant, the Charterer and the
Indenture Trustee in accordance with Section 10.1 of the Trust Agreement.
Unless a Charter Event of Default shall have occurred and be continuing,
the costs and expenses, including reasonable attorneys fees, of any such
transfer (including, but not limited to, amendment or assignment of any
Operative Documents and redocumentation of the Vessel) shall be an expense
of the transferring Owner Trustee.
(e) Certain Transfers; Termination. Except as expressly permitted
------------------------------
hereby or by the terms of any other Operative Document, the Owner Trustee
will not transfer any of its right, title or interest in and to any portion
of the Vessel to any Person without the express prior written consent of
the Charterer prior to the expiration or earlier termination of the Charter
pursuant to its terms, other than to a successor Owner Trustee appointed in
accordance with the provisions of Section 10 of the Trust Agreement, or
terminate the Trust Agreement or distribute all or any part of the Trust
Estate to any Person.
(f) Owner Trustee's Activities. The Owner Trustee will not incur any
--------------------------
indebtedness for money borrowed, or enter into any business or other
activity, except as expressly contemplated by the Operative Documents.
(g) Repayment of Amounts Received under Section 7.09 of the
-------------------------------------------------------
Indenture. The Owner Trustee shall, promptly upon receipt of any amounts
from the Indenture Trustee pursuant to Section 7.09 of the Indenture, pay
such monies to the Charterer.
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(h) Assignment of Builder's Warranties. In connection with the
----------------------------------
purchase by the Charterer or any third party of the Vessel or any part
thereof or the transfer of title to any item of property replaced pursuant
to Section 8(e) of the Charter, all of the Owner Trustee's right, title and
interest in and to any Builder's warranties relating thereto (except to
such extent as such warranties may not be assigned or otherwise
transferred) shall be deemed, without further act, to be assigned to the
Charterer or such third party purchaser simultaneously with such transfer
of title. The Owner Trustee shall execute any assignment agreements or
other documentation, as the Charterer or such third party purchaser may
reasonably request, to evidence such assignment. The obligations set forth
in this Section 11.2(h) shall survive any termination or rescission of this
Participation Agreement or any other Operative Document.
(i) Citizenship. (1) For the duration of the Charter Term, the
-----------
Trust Company shall remain a U.S. citizen entitled to own a vessel
operating in the U.S. coastwise trade pursuant to Section 2 of the Shipping
Act. For the duration of the Charter Term, the Owner Trustee shall provide
the Charterer and the Indenture Trustee on the annual anniversary of the
commencement of the Base Charter Term with an Officer's Certificate
certifying that the Trust Company is in compliance with this Section
11.2(i). If at any time during the Charter Term, the Trust Company fails
to be a U.S. citizen as provided in this Section, the Trust Company shall
(i) notify the Charterer, the Owner Participant, and the Indenture Trustee
thereof as soon as it obtains knowledge of such fact, (ii) take all actions
necessary, at its sole expense, to be a U.S. citizen as provided in this
Section, but in any event prior to the time such non-citizen status affects
the documentation or trading privileges of the Vessel, and (iii) indemnify
the Charterer, the Guarantor, the Operator, the Holders and the Indenture
Trustee against any and all Claims (including, without limit, costs of
substitute service during the Charter Term) as a result of its ceasing to
be eligible to own a vessel operating in U.S. coastwise trade.
(2) For the duration of the Charter Term, the Trust Company shall not
transfer the Owner Trustee's rights, title and interest to the Vessel to
any Person that does not qualify as a U.S. citizen entitled to own a vessel
operating in the U.S. coastwise trade pursuant to Section 2 of the Shipping
Act.
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(3) If the Trust Company should transfer title to the Vessel to any
Person for any reason, whether such transfer is voluntary or involuntary,
by merger, sale of all or part of the Trust Company's assets, consolidation
or otherwise, the Trust Company shall give prior written notice thereof to
the Owner Participant, the Charterer and the Indenture Trustee in
accordance with Section 10.1 of the Trust Agreement and shall take all
necessary action and shall pay or cause to be paid all expenses, including
reasonable legal fees, in connection with such transfer, including, but not
limited to, the amendment or assignment of any Operative Documents and
redocumentation of the Vessel as shall be deemed necessary or appropriate
by the Charterer.
11.3. Agreements of Pass Through Trustee and Loan Participant. Each
-------------------------------------------------------
of the Pass Through Trustee (in its individual capacity to the extent set forth
herein and otherwise as Pass Through Trustee) and the Loan Participant covenants
and agrees that:
(a) Transfer of Secured Notes. Any sale, transfer or assignment
-------------------------
(including, without limitation, a transfer pursuant to the exercise of remedies
with respect to any Secured Note) by the Pass Through Trustee or other Loan
Participant, as the case may be, of any Secured Note or of all or any part of
its interest hereunder or under the Indenture shall be on the express condition
that the purchaser, transferee or assignee, as the case may be, shall agree to
be bound by the terms and provisions applicable to the Pass Through Trustee or
other Loan Participant, as the case may be, contained in this Participation
Agreement, the Secured Notes and the Indenture. The acceptance by any Person of
any Secured Note shall constitute such Person's agreement to be bound by the
terms and provisions of this Participation Agreement and the Indenture. No Pass
Through Trustee or other Loan Participant, as the case may be, will make any
such sale, transfer or assignment to any Person unless such Person delivers to
the Charterer, the Owner Trustee, the Indenture Trustee and the Owner
Participant (i) a written representation and warranty by such Person and an
-
opinion of counsel reasonably satisfactory to the Charterer, the Owner Trustee
and the Owner Participant to the effect that such sale, transfer or assignment
to, and the holding of any such interest by, such Person (1) will not result in
-
a "prohibited transaction" as defined in Section 406 of ERISA or Section 4975 of
the Code, or (2) are covered by an exemption contained in ERISA or an
-
administrative exemption adopted thereunder and (ii) a written undertaking by
--
such Person that is substantially identical to the covenant made by the Pass
Through Trustee or other Loan
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<PAGE>
Participant, as the case may be, in this Section 11.3(a) (including this clause
(ii)).
(b) Instructions to Indenture Trustee. No Pass Through Trustee or
---------------------------------
other Loan Participant, as the case may be, will instruct or otherwise direct
the Indenture Trustee to take, or omit to take, any action in violation of the
express covenants and agreements of the Indenture Trustee in any Operative
Document.
(c) Discharge of Loan Participant's Liens. To the extent that the
-------------------------------------
Loan Participant is not the Pass Through Trustee, the Loan Participant agrees
that it will not create or permit to exist at any time, and will, at its own
cost and expense, promptly take such action as may be necessary duly to
discharge all Loan Participant's Liens on all or any part of the Vessel, the
Trust Estate, the Indenture Estate or title thereto or to any interest therein
and such Loan Participant covenants and agrees that it shall indemnify, protect,
defend, save and keep harmless the Charterer, the Guarantor, the Operator, the
Owner Participant, the Owner Trustee and the Indenture Trustee from and against
any Claims imposed on, incurred by or asserted against such Person arising out
of any Loan Participant's Lien.
11.4. Agreements of Indenture Trustee. The Indenture Trustee, in its
-------------------------------
individual capacity to the extent set forth herein, and as Indenture Trustee,
covenants and agrees as follows:
(a) Discharge of Liens. The Indenture Trustee, in its individual
------------------
capacity, covenants and agrees that it will not create or permit to exist at any
time, and will, at its own cost and expense, promptly take such action as may be
necessary to discharge, all Indenture Trustee's Liens on all or any part of the
Vessel, the Trust Estate or the Indenture Estate, or title thereto or any
interest therein. The Indenture Trustee, in its individual capacity, covenants
and agrees that it shall indemnify, protect, defend, save and keep harmless the
Charterer, the Guarantor, the Operator, the Owner Participant, the Loan
Participant and the Owner Trustee from and against any and all Claims imposed
on, incurred by or asserted against such Person arising out of any Indenture
Trustee's Lien.
(b) Cooperation With the Charterer. The Indenture Trustee shall, to
------------------------------
the extent reasonably requested by the Charterer, cooperate with the Charterer,
at the Charterer's expense, to enable the Charterer to perform the covenants
contained in Section 10.5 and to make such filings and recordings as the may be
reasonably requested by the Charterer to accomplish
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<PAGE>
the purposes of this Participation Agreement and the other Operative Documents,
including, without limitation, at any time and from time to time, upon request
of the Charterer promptly and duly executing and delivering any and all such
further instruments, documents and financing statements (and continuation
statements related thereto) as the Charterer may request in order to perform
such covenants and to make such filings and recordings.
(c) Original Charter. Except to the extent otherwise required by the
----------------
Indenture and so long as it remains Indenture Trustee, the Indenture Trustee
agrees, in its individual capacity, that it will maintain possession of the
version of the Charter identified in a receipt thereof executed as the original
executed counterpart.
(d) Performance of Obligations. The Indenture Trustee will perform
--------------------------
and comply with the provisions of the Indenture which, upon satisfaction of any
applicable conditions set forth therein, require payment or the tendering of
performance to the Charterer.
(e) Citizenship. Provided no Charter Event of Default shall have
-----------
occurred and be continuing, the Indenture Trustee agrees it will not exercise
any remedies under the Indenture, the Ship Mortgage or any other Operative
Document in such a manner that disqualifies the Vessel from engaging in U.S.
coastwise trade.
11.5. Confidentiality. Each of the Owner Participant, the Trust
---------------
Company, the Owner Trustee, the Indenture Trustee and the Pass Through Trustee
agrees that all matters relating to this Participation Agreement, the other
Operative Documents, the Underwriting Agreement and any instruments and
certificates given in respect of any of the forgoing shall be kept strictly
confidential, including, without limitation, the substance of commercial terms,
and any disclosure of such matters shall be made only with the prior written
consent of the Charterer. The obligations set forth in this Section 11.5 shall
survive any termination or rescission of this Participation Agreement, the other
Operative Documents and the Pass Through Trust Documents, as the case may be.
Nothing in this Section 11.5 or the Pass Through Trust Documents shall prevent,
or require the consent of the Charterer to, any disclosure:
(i) required by any court of competent jurisdiction; or
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<PAGE>
(ii) as may be required by any Governmental Rule or Governmental
Authority; or
(iii) to any potential assignee or transferee of the Owner Participant
who satisfies the requirements for a Transferee under Section 13.2,
provided, however, that such potential assignee or transferee shall execute and
- -------- -------
deliver prior to any such disclosure a confidentiality agreement in favor of the
Charterer and the Guarantor in form and substance satisfactory to the Charterer
and the Guarantor, provided, further, that, in any event, such disclosing party
-------- -------
shall be responsible (in its individual capacity, in the case of the Trust
Company, the Indenture Trustee or the Pass Through Trustee) for any breach of
the terms of this Participation Agreement or such confidentiality agreement by
any such advisor or potential assignee or transferee:
(iv) of information which has otherwise become public information
through no breach of this Section 11.5 by the disclosing party or any legal
or other professional advisors of the disclosing party; or
(v) of information to be made public, as determined by the Charterer,
in connection with the documentation of the Vessel, the Registration
Statement or sale of Pass Through Certificates;
provided, further, that, in the event that any party to this Participation
- -------- -------
Agreement (other than the Charterer) or any of its respective Affiliates,
employees, contractors or agents is requested or required to disclose any such
information by any applicable Governmental Authority acting pursuant to
applicable law or in connection with a proceeding (other than to Federal or
State bank examiners, representatives of the Internal Revenue Service and under
circumstances where the party requested to disclose such information is
prohibited by law from disclosing that such information was requested to be
disclosed), such party will give the other parties to this Participation
Agreement prompt notice of such request or requirement so that any such other
party, an Affiliate of such other party or a disclosing party may seek an
appropriate protective order. If an appropriate protective order cannot be
obtained and such party or such Person is, in the opinion of its counsel,
legally compelled to disclose such information, then, notwithstanding anything
to the contrary in this Participation Agreement, such party or such Person may
disclose that portion of information which its counsel advises must be
disclosed, provided, however, that such party shall give each other party to
-------- -------
this Participation Agreement and
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<PAGE>
each disclosing party written notice of the information to be disclosed as far
in advance of its disclosure as is practicable, and shall use its best efforts
to obtain assurances that confidential treatment will be accorded such
information.
This Section 11.5. shall not apply to any information which (i) was
known to the Person receiving such information prior to its disclosure by the
disclosing party, (ii) was generally known in the industry prior to its
disclosure or becomes public knowledge within the industry after such
disclosure, other than through the actions of such Person or any employee,
officer, adviser or Affiliate of such Person, or (iii) was disclosed to the
Person receiving such information on a non-confidential basis from a source
(other than the disclosing party) which was entitled to disclose the same and
was not known to such Person to be under a duty of confidentiality.
11.6. Assumption of Secured Notes. Each of the Owner Participant,
---------------------------
the Owner Trustee, the Loan Participant and the Indenture Trustee agrees that
if, pursuant to Section 12(e) or 15(a)(i), 15(a)(iv) or 15(a)(v) of the Charter,
the Charterer elects to purchase the Vessel, or in the case of a sale of the
Vessel pursuant to Section 12(d) of the Charter, the Charterer may elect to
assume the obligations of the Owner Trustee under the applicable Secured Notes
and under the Indenture by giving notice of such election at least thirty (30)
days prior to the applicable purchase date in accordance with and with the
effect provided in Section 3.04 of the Indenture. In the event that the
Relevant Amendment becomes effective, this Participation Agreement, the other
Operative Documents to be amended by the Relevant Amendment and the Pass Through
Trust Documents to be amended by the Relevant Amendment shall be deemed amended
as provided in the Relevant Amendment.
11.7. Certain Agreements Relating to the Charter. So long as no
------------------------------------------
Charter Event of Default shall have occurred and be continuing, the parties
hereto agree that the rights of the Charterer under the Charter are prior and
superior in interest to any Lien of the Indenture or the Ship Mortgage, and the
Indenture is subordinate in all respects to the rights of the Charterer under
the Charter; provided that, so long as the Indenture shall remain in effect, the
--------
Charterer shall not amend or modify the Charter except in a manner consistent
with the provisions of the Indenture.
Section 12. Indemnification.
---------------
12.1. General Indemnification.
-----------------------
(a) Indemnification. The Charterer will indemnify, protect, save and
---------------
keep harmless each of the Trust Company, the Owner Trustee, the Owner
Participant, the Indenture Trustee, the
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Pass Through Trustee and the Loan Participant (each an Indemnitee), and its
----------
respective permitted successors, permitted assigns, representatives, directors,
officers, agents, employees and affiliates (the respective representatives,
directors, officers, agents, employees and affiliates of an Indemnitee being
referred to herein as the Related Indemnitee Group of such Indemnitee), on an
------------------------
after-tax basis from and against any and all claims that may be imposed on,
incurred by or asserted against any Indemnitee, in any way arising out of:
(i) the Vessel or any part thereof;
(ii) the Operative Documents or the transactions contemplated thereby
or the issuance or refinancing of the Secured Notes or the making
of any investment in the Vessel, payments made pursuant thereto,
including the negotiation, execution and delivery of amendments
thereto;
(iii) the manufacture, financing, refinancing, design, construction,
purchase, ownership, acquisition, acceptance, rejection,
delivery, nondelivery, possession, charter, mortgaging, granting
of a security interest in, preparation, condition, transfer of
title, rental, use, operation, storage, maintenance, overhaul,
modification, alteration, repair, assembly, sale, return,
registration, abandonment or other acquisition or disposition of
all or any part of the Vessel or any interest therein, including,
without limitation:
(A) claims or penalties arising from any violation of law
or liability in tort (strict or otherwise),
(B) loss or damage to any property or the environment or
death or injury to any person,
(C) latent or other defects, whether or not discoverable,
and
(D) any claim for patent, trademark or copyright
infringement,
(iv) any breach of or failure to perform or observe any covenant,
condition or agreement or other obligation to be performed by the
Charterer or the Guarantor under any Operative Document to which
either respectively is a party, or the falsity of
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<PAGE>
any representation or warranty of the Charterer or the Guarantor
in any of the Operative Documents;
(v) the imposition of any Lien on the Vessel; and
(vi) any violation of any Governmental Rule with respect to the
Charterer, the Guarantor or the Vessel;
provided, however, that the Charterer will not be required to indemnify any
- -------- -------
Indemnitee (or any member of a Related Indemnitee Group) for:
(i) claims to the extent attributable to acts, event, circumstances
or conditions which arise, occur or exist after the earliest of
(A) the return of possession of the Vessel to the Owner Trustee
or its designee pursuant to the terms of the Charter, (B) the
purchase by the Charterer or its designee of the Vessel pursuant
to the Charter, (C) the payment by the Charterer of all amounts
required to be paid under the Charter following an Event of Loss
and (D) sale of the Vessel to a third party as contemplated in
any Operative Document, and which did not exist prior to such
return, purchase, payment or sale or, in each case if such claims
existed concurrently with such return, purchase, payment or sale,
which are attributable to acts of third parties unaffiliated with
the Charterer, the Operator, or the Guarantor;
(ii) any claim to the extent resulting from the willful misconduct or
gross negligence of such Indemnitee or any of such Indemnitee's
Related Indemnitee Group;
(iii) any Transaction Expense or an expense or claim to the extent
expressly to be paid or assumed by an Indemnitee at its own
expense or for which such Indemnitee is expressly not entitled to
indemnity or reimbursement;
(iv) any claim to the extent resulting from the offer, sale,
disposition or transfer by such Indemnitee of all or part of its
interest in the Vessel, the Trust Estate, the Secured Notes or
any Operative Document, other than any such transfer, sale or
disposition (A) resulting from a continuing Charter Event of
Default; (B) in connection with an Event of Loss; (C) pursuant to
the exercise of the Charterer's purchase options under the
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Charter; or (D) pursuant to the sale to a third party under (S)12
of the Charter;
(v) any claim resulting from a breach by any Indemnitee or any member
of its Related Indemnitee Group of any of its representations,
warranties or covenants or to the extent attributable to the non-
compliance by any Indemnitee with the terms of the Operative
Documents or to the extent resulting from a violation of law by
any Indemnitee or any member of its Related Indemnitee Group;
(vi) any claim relating to Taxes whether or not the Charterer is
required to indemnify for such Taxes pursuant to the general tax
indemnity or the Tax Indemnity Agreement;
(vii) any claim to the extent resulting from any business, transaction
or other activity in which such Indemnitee or any of such
Indemnitee's Related Indemnitee Group is engaged, other than the
transaction contemplated by the Operative Documents, except to
the extent resulting solely from a Charter Event of Default;
(viii) any claim to the extent attributable to the authorization or
giving or withholding by such Indemnitee or any of such
Indemnitee's Related Indemnitee Group of any future amendments,
supplements, waivers or consents with respect to any Operative
Document, other than such as have been requested by the
Charterer, or such that occur as a result of a Charter Event of
Default, or such as are expressly required by any Operative
Document or such as are required by any Governmental Rule;
(ix) any claim resulting from any Indenture Event of Default that is
not also a Charter Event of Default;
(x) any claim which is an ordinary and usual operating or overhead
expense of any Indemnitee except such expenses that are incurred
solely as a result of a Charter Event of Default;
(xi) the failure on the part of any Indemnitee to distribute in
accordance with the terms of the Operative Documents any amounts
received and distributable by it thereunder;
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(xii) any claim which constitutes a Permitted Lien or to the extent
resulting from the imposition of any Lien which any Indemnitee is
required to lift and discharge pursuant to any Operative
Document;
(xiii) any claim against such Indemnitee resulting from a violation of
ERISA or Section 4975 of the Code to the extent resulting from
actions by such Indemnitee or its Related Indemnitee Group other
than, in the case of the Owner Participant, the making and
holding of its investment in the Trust Estate, or the taking of
any action at the direction of the Charterer;
(xiv) with respect to the Trust Company and the Owner Participant and
their respective Related Indemnitee Groups, any claim resulting
from the indemnity provided for under the trust agreement to be
entered between them, except to the extent that the Indemnitee
under such trust agreement indemnity is entitled to
indemnification from the Charterer for such claim pursuant to the
general indemnity provisions described herein;
(xv) any inter se disputes between or among Indemnitees or their
----- --
respective Related Indemnitee Groups that arise from (A) a
misrepresentation by an Indemnitee or any member of its Related
Indemnitee Group or a failure by an Indemnitee or any member of
its Related Indemnitee Group to perform such Indemnitee's
obligations, warranties and covenants under the Operative
Documents or (B) a dispute over the interpretation of the
Operative Documents that does not result from a Charter Event of
Default;
(xvi) the claim of any Indemnitee or any member of its Related
Indemnitee Group resulting from, arising out of or in connection
with, or based upon any untrue statement or alleged untrue
statement of a material fact contained in any written information
supplied or made available by such Indemnitee or any member of
its Related Indemnitee Group specifically for inclusion in the
preparation of any offering document or registration statement
relating to the offer, sale or disposition of any Secured Notes
or the Pass Through Certificates, or any omission or alleged
omission to state a material fact required to be stated therein
or necessary to make the statements therein not misleading; or
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<PAGE>
(xvii) any claim that is indemnified for under the Tax Indemnity
Agreement.
(b) Insured Claims. In the case of any Claim indemnified by the
--------------
Charterer hereunder which is covered by a policy of insurance maintained by the
Charterer (or any Affiliate thereof), each Indemnitee and each member of any
Related Indemnitee Group agrees to cooperate with the insurers in the exercise
of the insurers' rights to investigate, defend or compromise such Claim as may
be required to retain the benefits of such insurance with respect to such Claim.
(c) Notices. If the Charterer shall obtain knowledge of any action,
-------
suit, proceeding or written notice of any Claim indemnified against under this
Section 12.1, the Charterer shall give prompt notice thereof to the appropriate
Indemnitee or Indemnitees, as the case may be, and if any Indemnitee shall
obtain any such knowledge, such Indemnitee shall give prompt notice thereof to
the Charterer, provided that the failure of such Indemnitee to so notify the
--------
Charterer shall not affect the Charterer's indemnification obligations under
this Section 12.1 to such Indemnitee except to the extent of any increase in the
amount of such Claim resulting from such failure or to the extent the Charterer
is effectively precluded from contesting such Claim as a result of such failure.
(d) Contests. (i) The Charterer shall have the right, at its sole
--------
cost and expense, to investigate, and the right in its sole discretion to defend
or contest by appropriate proceedings or compromise, any Claim for which
indemnification is sought under this Section 12.1, and each Indemnitee and each
member of a Related Indemnitee Group shall cooperate, at the Charterer's
expense, with all reasonable requests of the Charterer in connection therewith,
provided that the Charterer shall not have the right without the consent of the
- --------
Indemnitee to defend, contest or compromise any Claim with respect to any
Indemnitee or any member of its Related Indemnitee Group:
(A) if a Specified Charter Event of Default shall have occurred and be
continuing; or
(B) if such Claim involves a realistic possibility of criminal sanctions
or criminal liability to such Indemnitee or any member of its Related
Indemnitee Group,
in which event the Indemnitee (or, in the case of clause (B) only, the Owner
Participant and/or the Lenders, as the case may be) shall be entitled to control
and assume responsibility for the defense of such Claim at the expense of the
Charterer but shall consult in good faith with the Charterer regarding such
defense. The Charterer agrees that it will not settle a Claim
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against an Indemnitee without the consent of such Indemnitee if the settlement
requires the admission by such Indemnitee that it has engaged in illegal
conduct. During the continuance of a Charter Event of Default, the Charterer
shall not compromise any claim without the consent of the relevant Indemnitee
unless such claim is simultaneously released or discharged, such consent not to
be unreasonably withheld.
(b) Where the Charterer or the insurers under a policy of insurance
maintained by the Charterer or its affiliates undertake the defense of an
Indemnitee with respect to a Claim, no additional legal fees or expenses of such
Indemnitee in connection with the defense of such claim shall be indemnified
unless such fees or expenses were incurred at the request of the Charterer or
such insurers; provided that, if
--------
(A) in the written opinion of counsel to such Indemnitee an actual or
potential material conflict of interest exists where it is advisable
for such Indemnitee to be represented by separate counsel; or
(B) such Indemnitee or a member or its Related Indemnitee Group has been
indicted or otherwise charged in a criminal complaint in connection
with a claim not excluded by the indemnity contained in the
Participation Agreement, the Tax Indemnity Agreement, or any other
Operative Document and such Indemnitee informs the Charterer that such
Indemnitee desires to be represented by separate counsel,
the reasonable fees and expenses of such separate counsel shall be borne by the
Charterer. If clause (A) above is satisfied and separate counsel for such
Indemnitee determines that the Claims against the Indemnitee for which separate
counsel is retained should be severed from those against the Charterer, the
Charterer agrees, subject to the requirements of any insurance policy, that it
will not object to the severance of such Claims; provided that the Charterer
--------
shall be permitted to participate in any such severed proceedings. Subject to
the requirements of any policy of insurance (and to customary exceptions), an
Indemnitee may participate at its own expense in any judicial proceeding
controlled by the Charterer pursuant to the preceding provisions and such
participation shall not constitute a waiver of the right to receive the
indemnification described above.
(e) Subrogation. So long as no Specified Charter Event of Default
-----------
exists, to the extent that a Claim indemnified by the Charterer pursuant to this
Section 12.1 is paid in full by the Charterer and/or an insurer under a policy
of insurance maintained by the Charterer, the Charterer and/or such insurer, as
the case may be, without any further action, shall be subrogated to any and all
rights and remedies which any
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<PAGE>
Indemnitee or member of a Related Indemnitee Group paid or on whose behalf such
Claim was paid may have in respect of the matters, transactions or events giving
rise to such Claim against which such indemnity was given (other than claims
under any insurance policies maintained by such Indemnitee or any member of its
Related Indemnitee Group). Such Indemnitee agrees to cooperate with the
Charterer and to execute such further instruments or take such further action to
permit the Charterer, at the Charterer's expense, to pursue such claims, to the
extent reasonably requested by the Charterer.
(f) Refunds. Upon receipt by any Indemnitee or any member of its
-------
Related Indemnitee Group of a repayment or reimbursement of all or any part of
any Claim for which the Charterer shall have paid to or on behalf of such
Indemnitee or member of its Related Indemnitee Group or for which the Charterer
shall have reimbursed any Indemnitee or member of its Related Indemnitee Group
pursuant to this Section 12.1, such Indemnitee shall pay to the Charterer, as
promptly as practicable after the receipt thereof, the amount of such repayment
or reimbursement plus any interest received by such Indemnitee or member of its
Related Indemnitee Group on such amount plus the amount of any tax savings
realized (directly or indirectly) by such Indemnitee or member of its Related
Indemnitee Group as a result of such payment made to the Charterer, but not in
excess of the amount of all prior payments made by the Charterer pursuant to
this Section 12.1 with respect to such Claim less the amount of all prior
repayments or reimbursements paid by such Indemnitee or any member of its
Related Indemnitee Group with respect to such Claim pursuant to this subsection
(f).
(g) Payments; Verification. Any amount payable to any Indemnitee or
----------------------
any member of a Related Indemnitee Group pursuant to this Section 12.1 shall be
paid to such Indemnitee or member of a Related Indemnitee Group promptly upon
receipt of a written demand therefor from such Indemnitee, accompanied by a
written statement describing in reasonable detail the basis for such indemnity
and the computation of the amount so payable and, if requested by the Charterer,
such determination shall be verified by a nationally recognized independent
accounting firm mutually acceptable to the Charterer and such Indemnitee or
member of a Related Indemnitee Group at the Charterer's expense, unless such
accounting firm determines that the amount payable by the Charterer is less than
95% of the amount shown on such written statement, in which case such
verification shall be at such Indemnitee's expense.
(h) Trustee's Fees. The Charterer shall pay the reasonable ongoing
--------------
fees and expenses of the Owner Trustee and the Indenture Trustee (including fees
and expenses of their counsel) for acting as such to the extent not included in
Transaction Expenses. The Charterer shall have the right to receive and
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review any substantiation relating to such on-going expenses as the Charterer
may reasonably request.
12.2. General Tax Indemnification. (a) Withholding; Indemnity. If
--------------------------- ----------------------
the Charterer is required by applicable law to withhold any Tax from any payment
of Charter Hire to any Tax Indemnitee pursuant to the Charter:
(v) the Charterer shall pay such additional amount as shall be
-
necessary to enable such Tax Indemnitee to receive, after such withholding,
an amount equal to the Charter Hire it would have received had such
withholding not been required,
(w) the Charterer shall make such withholding, and
-
(x) the Charterer shall pay the full amount withheld to the relevant
-
taxing authority in accordance with applicable law;
provided that:
- --------
(y) if, and to the extent that, the Tax so withheld is not a Tax for
-
which the Charterer is obligated to indemnify such Tax Indemnitee pursuant
to this Section 12.2, then such Tax Indemnitee shall, within ten (10)
Business Days after receipt of the Charterer's written demand therefor
(accompanied by documentary evidence of the Charterer's payment of such
Tax), pay to the Charterer an amount which equals the amount paid by the
Charterer with respect to or as a result of such Tax (including any
expenses or other charges borne by the Charterer) increased by (but subject
to the proviso in Section 12.2(f)) the amount of net tax savings of such
Tax Indemnitee attributable to the making of such payment to the Charterer
after taking into account any income recognized by the Tax Indemnitee
attributable to the payment of the Tax by the Charterer, and
(z) if such Tax Indemnitee obtains a credit for or refund of such
-
Tax, such Tax Indemnitee shall pay to the Charterer (subject to the proviso
in Section 12.2(f)) the amount of such credit or refund within ten (10)
Business Days after receipt of such credit or refund, unless such Tax is
described in clause (y) above and such Tax Indemnitee has paid to the
Charterer the amount described in clause (y).
Except as provided in Section 12.2(b), the Charterer agrees to pay,
and to indemnify, protect, defend, save and keep harmless each Tax Indemnitee,
on an After-Tax Basis, from and against any and all Taxes upon or with respect
to the following:
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<PAGE>
(i) the Vessel or any part thereof or any interest therein, the
-
Charterer or any Tax Indemnitee arising from the transactions contemplated
by the Operative Documents,
(ii) the acquisition, purchase, sale, financing, chartering,
--
subchartering, maintenance, repair, redelivery, alteration, insuring,
control, use, operation, manufacture, assembly, delivery, possession,
repossession, location, storage, importation, exportation, refinancing,
refunding, transfer of title, registration, reregistration, transfer of
registration, return, exchange, substitution, replacement or other
disposition of all or any part of the Vessel or any interest therein,
(iii) the Charter Hire, receipts or earnings arising from the Vessel or
---
any part thereof or any interest therein, or payable pursuant to the
Charter, or any other payment or right to receive payment pursuant to the
Operative Documents (including, without limitation, any payment of
principal, interest, discount or premium on or with respect to the Secured
Notes),
(iv) any Modification or replacement, removal, substitution or repair
--
of an item of property constituting a part of the Vessel,
(v) the Operative Documents and any other documents contemplated
-
thereby and amendments and supplements thereto, or the issuance, refunding
or refinancing of the Secured Notes or the Pass Through Certificates or any
other document executed and delivered in connection with the consummation
of the transactions contemplated by the Operative Documents or the interest
of any Tax Indemnitee in any of the foregoing, or the execution, amendment,
issuance or delivery of any of the foregoing,
(vi) the Indenture Estate or the Trust Estate or the property, or the
--
income or other proceeds received with respect to the property, held by the
Indenture Trustee under the Indenture or the Owner Trustee under the Trust
Agreement, or
(vii) otherwise arising out of, with respect to, or in connection with
---
the transactions contemplated by the Operative Documents.
(b) Exclusions from General Tax Indemnity. The provisions of Section
-------------------------------------
12.2(a) shall not apply to, and the Charterer shall have no liability to a Tax
Indemnitee under Section 12.2(a) with respect to, any of the following Taxes:
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<PAGE>
(1) Certain United States Federal Taxes: In the case of any Tax
-----------------------------------
Indemnitee, any Tax which is imposed by the Federal Government of the
United States and which is imposed on, based on or measured by the gross or
net income, gross or net receipts, earnings, gains, capital, capital stock
or net worth of such Tax Indemnitee (including any such Tax collected by
withholding at source);
(2) Certain U.S. state and local Taxes. In the case of any Tax
----------------------------------
Indemnitee, any Tax (other than a sales, use, rental or value-added tax)
which is imposed by any government or other taxing authority of or in any
state of the United States and which is imposed on, based on or measured by
the gross or net income, gross or net receipts, earnings, gains, capital
stock or net worth of such Tax Indemnitee (including any such Tax collected
by withholding at source);
(3) Certain Taxes in jurisdictions outside the United States:
--------------------------------------------------------
In the case of any Tax Indemnitee, any Tax (other than a sales, use, rental
or value-added Tax) which is imposed by any national, state or local
government or other taxing authority of or in any jurisdiction outside the
United States and which is imposed on, based on or measured by, the gross
or net income, gross or net receipts, earnings, gains, capital, capital
stock or net worth of such Tax Indemnitee, except to the extent that such
Tax results from (A) the location, use or presence of the Vessel in the
jurisdiction imposing the Tax or (B) the situs of organization, any place
of business or any activity of the Charterer or any Affiliate of the
Charterer in the jurisdiction imposing the Tax (including the payment by
the Charterer of any amount payable pursuant to any Operative Document from
the jurisdiction imposing the Tax);
(4) Certain sales, use, rental, property and ad valorem Taxes:
---------------------------------------------------------
In the case of any Tax Indemnitee, any Tax in the nature of a sales, use,
rental, value-added or tangible or intangible property Tax which is imposed
on or payable by such Tax Indemnitee and which is imposed by a jurisdiction
in which such Tax Indemnitee has its situs of organization or any place of
business or in which such Tax Indemnitee is engaged in any activity or has
any presence, except to the extent that such Tax results from (A) the
location, use or presence of the Vessel in the jurisdiction imposing the
Tax or (B) the situs of organization, any place of business or any activity
of the Charterer or any Affiliate of the Charterer in the jurisdiction
imposing the Tax (including the payment by the Charterer or any Affiliate
of the Charterer of any amount payable pursuant to any Operative Document
from the jurisdiction imposing the Tax);
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<PAGE>
(5) Taxes relating to certain dispositions: In the case of any
--------------------------------------
Tax Indemnitee, any Tax imposed on or payable by such Tax Indemnitee with
respect to any sale, assignment, transfer or other disposition of title to
or any interest in the Vessel, any Operative Document, the Trust Estate,
the Indenture Estate, any Secured Note, the Pass Through Trust, any Pass
Through Certificate, any other Tax Indemnitee or any Charter Hire other
than a sale, assignment, transfer or other disposition resulting from (A)
the Charterer's exercise of an option to buy the Vessel or to terminate the
Charter, (B) an exercise of remedies resulting from the occurrence and
during the continuance of a Charter Event of Default, or (C) the bankruptcy
or insolvency of, or any foreclosure against, such Tax Indemnitee that
would not have occurred but for a Charter Event of Default;
(6) Noncompliance with certain exemption requirements: In the
-------------------------------------------------
case of any Tax Indemnitee, the amount by which any Tax is not reduced as a
result of a failure of such Tax Indemnitee to comply with any certification
or other similar procedure that is required by law as a condition precedent
to the allowance of a reduction in the rate of such Tax or any exemption or
other relief from such Tax, provided that (A) such Tax Indemnitee is
--------
otherwise eligible for such relief or exemption from such Tax, (B) such Tax
Indemnitee's compliance with such requirement would not create a risk of a
material adverse consequence to such Tax Indemnitee for which such Tax
Indemnitee is not indemnified and which such Tax Indemnitee would not incur
but for compliance with such requirement, and (C) except in the case of any
exemption forms required by the United States Internal Revenue Code (or any
successor law) or the regulations thereunder (or any successor
regulations), as in effect at the relevant time, the Charterer shall have
notified such Tax Indemnitee of such requirement and shall have delivered
to such Tax Indemnitee all applicable forms a reasonable period of time
before such Tax Indemnitee is required to complete and deliver such form or
forms or to take such other action as a condition precedent to the
allowance of a reduction in rate of or exemption or other relief from such
Tax;
(7) Limitation on applicability of Tax indemnity to transferees:
-----------------------------------------------------------
Any Tax imposed on or payable by an assignee or other transferee of any
interest of any original Tax Indemnitee in the Vessel or any part thereof,
any Secured Note, any Pass Through Certificate, any Operative Document or
any other Tax Indemnitee (or imposed on or payable by any subsequent
assignee or other transferee) to the extent that the amount of such Tax
exceeds the amount of such Tax that would have been payable by the
transferor,
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<PAGE>
determined at the time of the transfer, provided that the exclusion in this
--------
subparagraph (7) shall not apply to (A) any transfer caused by and
occurring during the continuance of a Charter Event of Default or (B) in
the case of a transferee that is (x) a bank or corporation organized under
the laws of the United States of America or any state thereof or (y) a
partnership or limited liability company which is organized under the laws
of a state of the United States of America and each partner or member of
which is an entity described in clause (x) of this subparagraph (7) or is
an individual who is a citizen and resident of the United States of
America, any such excess indemnity amount to the extent attributable to the
fact that the income tax rates used by the transferee for the purpose of
calculating payments on an After-Tax Basis are greater than those used by
the transferor (it being understood and agreed that the term "original Tax
Indemnitee" means a Tax Indemnitee that is a Tax Indemnitee on the Funding
Date);
(8) Taxes resulting from certain breaches, etc.: In the case of
------------------------------------------
any Tax Indemnitee, any Tax imposed on or payable by such Tax Indemnitee to
the extent resulting from:
(A) the willful misconduct or gross negligence of such Tax
Indemnitee or any related Tax Indemnitee (unless attributed to such
Tax Indemnitee solely as the result of its execution of the Operative
Documents), or
(B) the inaccuracy or breach of any representation,
warranty, covenant or agreement of such Tax Indemnitee in any
Operative Document or in any certificate or other document delivered
pursuant to any Operative Document,
except to the extent caused by a failure of the Charterer to perform its
obligations under the Operative Documents;
(9) Certain Taxes after end of Charter Term: Any Tax to the
---------------------------------------
extent arising from an event occurring or imposed with respect to any
period after the date of expiration or earlier termination of the Charter
and, if required by the Charter, the Charterer's return of the Vessel to
the Owner Trustee and the performance of all the obligations of the
Charterer to be performed prior to or concurrently with the expiration or
earlier termination of the Charter (as the case may be);
(10) Certain penalties and interest: In the case of any Tax
------------------------------
Indemnitee, any Tax imposed on or payable by such Tax Indemnitee to the
extent consisting of interest, penalties or additions to tax that would not
have been
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<PAGE>
imposed on or payable by such Tax Indemnitee but for a failure of such Tax
Indemnitee or any related Tax Indemnitee to file any return or to pay any
Tax in a procedurally proper and timely manner, unless such failure is
caused solely by a failure by the Charterer to perform its obligations
under Section 12.2(c) hereof;
(11) Taxes resulting from certain amendments: In the case of any
---------------------------------------
Tax Indemnitee, any Tax imposed on or payable by such Tax Indemnitee to the
extent resulting from any amendment to any Operative Document to which the
Charterer is not a party unless the Charterer has given its prior written
consent to such amendment or unless such amendment is the result of and is
made during the continuance of a Charter Event of Default;
(12) Taxes resulting from certain Liens: Any Tax resulting from
----------------------------------
an Owner Participant's Lien or a Shipowner's Lien or an Indenture Trustee's
Lien or a Loan Participant's Lien or a Pass Through Trustee's Lien;
(13) Certain Taxes relating to the owner trust: Any Tax resulting
-----------------------------------------
from a failure of the trust created by the Trust Agreement or the trust
created by the Pass Through Trust Agreement to be treated as a "grantor
trust" that is subject to Sections 671-679 of the Code or otherwise to be
treated as a pass-through or conduit entity for income tax purposes;
(14) Shipowner's Cost or Transaction Expenses: Any Tax that is
----------------------------------------
included in the Shipowner's Cost of the Vessel or in Transactions Expenses;
(15) Certain unrelated transactions: Any Tax imposed on or
------------------------------
payable by a Tax Indemnitee to the extent resulting from transactions or
activities of such Tax Indemnitee or any related Tax Indemnitee that are
unrelated to the transactions contemplated by the Operative Documents;
(16) Failure to contest: In the case of any Tax Indemnitee, any
------------------
Tax resulting from a failure of such Tax Indemnitee to comply with its
obligations in Section 12.2(e) with respect to any Tax Claim if such Tax
Indemnitee is required to take such action pursuant to Section 12.2(e) and
if and to the extent that such failure (i) precludes the Charterer from
exercising its right to contest (or to require such Tax Indemnitee to
contest) such Tax Claim or (ii) materially impairs the Charterer's rights
to contest such Tax Claim, provided, however, that this Section 12.2(b)(16)
-------- -------
shall not constitute a waiver by the Charterer of its rights, if any, to
assert and sue upon any claims it may have against the Tax Indemnitee by
reason of such Tax
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<PAGE>
Indemnitee's failure to comply with its obligations under Section 12.2(e);
(17) Taxes otherwise indemnified: In the case of any Tax
---------------------------
Indemnitee, any Tax imposed on or payable by such Tax Indemnitee to the
extent that such Tax Indemnitee has been indemnified for such Tax pursuant
to any other provision of the Operative Documents;
(18) Taxes on trustees' fees: Any Tax imposed on or payable by
-----------------------
the Owner Trustee (in its individual capacity), the Indenture Trustee (in
its individual capacity) or the Pass Through Trustee (in its individual
capacity) with respect to or measured by any trustee fee or reimbursement
for expenses for services rendered pursuant to the Trust Agreement, the
Indenture or the Pass Through Trust Agreement;
(19) Certain intangible or similar Taxes: Any Tax in the nature
-----------------------------------
of an intangible tax or similar tax upon or with respect to the value of
the interest of the Owner Participant in the Trust Estate or the value of
any interest in the Indenture Estate, the Secured Notes, the Pass Through
Trust or the Pass Through Certificates, provided that this paragraph (19)
shall not apply to any vessel mortgage tax or any similar tax;
(20) Certain Taxes on foreign persons: In the case of any Tax
--------------------------------
Indemnitee, any Tax if and to the extent that such Tax would not have been
imposed on such Tax Indemnitee if such Tax Indemnitee were a "United States
person" (as defined in Section 7701(a)(30) of the Code);
(21) Taxes being contested: Any Tax that is being contested in
---------------------
accordance with the provisions of Section 12.2(e) during the pendency of
such contest, except to the extent a payment is required pursuant to
Section 12.2(e); or
(22) Taxes relating to prohibited transactions: Any Tax imposed
-----------------------------------------
as a result of, or in connection with, any "prohibited transaction," within
the meaning of Section 4975 of the Code, Section 406 of ERISA, any
successor provisions or any comparable laws of any governmental authority.
If (i) a Tax (including any related interest, fines, penalties or
additions to Tax) results from a failure of any Tax Indemnitee to comply with
its obligations under the Operative Documents, (ii) such failure does not result
from a failure of the Charterer to perform its obligations under the Operative
Documents and (iii) the Charterer is required to indemnify another Tax
Indemnitee against the imposition of such Tax, then the Tax Indemnitee whose
failure resulted in the imposition of
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<PAGE>
such Tax shall, within ten (10) Business Days after receipt of notice of payment
of the Tax and appropriate payment documentation with respect thereto, pay to
the Charterer an amount which equals the amount paid by the Charterer with
respect to or as a result of such Tax (including any expenses or other charges
borne by the Charterer) increased by (but subject to the proviso in Section
12.2(f)) the amount of tax savings to such Tax Indemnitee attributable to the
making of such payment to the Charterer.
(c) Reports. If any report, return, certification, statement or
-------
other document (a "Document") is required to be filed by any Tax Indemnitee with
respect to any Tax for which the Charterer is required to indemnify such Tax
Indemnitee pursuant to this Section 12.2 (an "Indemnified Tax"), the Charterer
shall timely prepare and file such Document (except for any Document which such
Tax Indemnitee notifies the Charterer that such Tax Indemnitee intends to
prepare and file); provided that such Tax Indemnitee furnishes the Charterer, at
--------
the Charterer's written request and expense, with such information within such
Tax Indemnitee's control as the Charterer may reasonably request for the purpose
of preparing and filing such Document. The Charterer shall either file such
Document (showing, if appropriate, the ownership of the Vessel in the Owner
Trustee) and send a copy of such Document to the Owner Participant and the Owner
Trustee, or, if the Charterer is not permitted by applicable law to file such
Document, the Charterer shall notify the Owner Participant and the Owner Trustee
of such requirement within a reasonable period of time prior to the due date for
filing (without regard to any applicable extensions) and prepare and deliver a
form of such Document to the Owner Participant and the Owner Trustee. The
Charterer shall furnish to each Tax Indemnitee, promptly after receipt of such
Tax Indemnitee's written request therefor, such data, records and documents
within the Charterer's control as such Tax Indemnitee may reasonably request to
enable such Tax Indemnitee to comply with its tax reporting, payment, audit and
litigation requirements relating to such Tax Indemnitee's participation in the
transactions contemplated by this Agreement.
(d) Payments. The Charterer shall pay when due each Indemnified Tax
--------
directly to the relevant taxing authority, if direct payment by the Charterer is
permitted by applicable law. If a Tax Indemnitee pays an Indemnified Tax, the
Charterer shall reimburse such Tax Indemnitee within ten (10) Business Days
after receiving such Tax Indemnitee's written request therefor. The Charterer
shall, to the extent permitted by applicable law, cause all billings of
Indemnified Taxes to be addressed to the relevant Tax Indemnitee in care of the
Charterer, make payment thereof and deliver to the relevant Tax Indemnitee
written evidence of such payment. Except as otherwise provided in this Section
12.2, all amounts payable by the Charterer to a Tax Indemnitee under this
Section 12.2 shall be paid in immediately available funds not
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<PAGE>
later than the later of (i) in the case of any Tax which has been asserted
-
against or billed directly to the relevant Tax Indemnitee, ten (10) Business
Days after the day on which the Charterer receives such Tax Indemnitee's written
request therefor (accompanied by a written statement describing in reasonable
detail the amount and basis of the Indemnified Tax and the calculation of the
indemnity being requested), or (ii) two (2) Business Days before the last day
--
for timely payment of such Indemnified Tax. The Tax Indemnitee's written
statement shall, at the Charterer's request, be verified by a nationally
recognized independent accounting firm selected by the Tax Indemnitee and
reasonably acceptable to the Charterer, such verification to be at the
Charterer's expense unless such accountants determine that the amount payable by
the Charterer is less than 95% of the amount shown on such written statement, in
which event the cost of such verification will be paid by the Tax Indemnitee.
In the case of an Indemnified Tax which is subject to a contest pursuant to
Section 12.2(e), the Charterer shall pay such Tax (in the amount, if any,
finally determined to be owing in such contest) at least two (2) Business Days
prior to the last day for timely payment of such Indemnified Tax after a Final
Determination.
(e) Contests. If a Tax Indemnitee receives a written notice from any
--------
taxing authority of a claim for any Tax for which the Charterer may be liable
under this Section 12.2 (a "Tax Claim"), such Tax Indemnitee shall notify the
---------
Charterer promptly in writing of such Tax Claim. If requested by the Charterer
in writing within twenty (20) Business Days after receipt of such notice (or, if
sooner, on or before the last day on which the contest of such Tax Claim can be
initiated, provided that the Tax Indemnitee's notice to the Charterer discloses
such date), such Tax Indemnitee shall, upon receipt of an indemnity satisfactory
to it whereby the Charterer agrees to pay to such Tax Indemnitee all reasonable
costs and expenses (including legal and accountants' fees and disbursements)
incurred by such Tax Indemnitee in connection with contesting such Tax Claim and
at the expense of the Charterer, contest such Tax Claim by (1) resisting payment
-
thereof, if such Tax Indemnitee in its reasonable discretion shall determine
such course of action to be appropriate, (2) not paying the same except under
-
protest, if protest is necessary and proper, and/or (3) if payment shall be
-
made, using reasonable efforts to obtain a refund thereof in appropriate
administrative and judicial proceedings. If such contest requires payment of
the Tax Claim as a condition precedent to initiation of the contest, the
Charterer shall advance to such Tax Indemnitee the amount of such Tax Claim on
an interest-free basis and shall indemnify the Tax Indemnitee on an After-Tax
Basis for any adverse tax consequences resulting from such interest-free
advance. In no event shall any Tax Indemnitee be required, or the Charterer
permitted, to contest any such Tax Claim unless: (i) no Charter Event of
-
Default shall have
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<PAGE>
occurred and be continuing (unless the Charterer shall have provided security
reasonably satisfactory to such Tax Indemnitee securing the Charterer's
performance of its obligations under this Section 12.2) and (ii) the action to
--
be taken will not result in any risk of imposition of criminal penalties or any
substantial danger of sale, forfeiture or loss of the Vessel or any interest
therein. If requested by the Charterer and if permitted by applicable law, the
Charterer may contest, at its own expense, the imposition of any Tax Claim. In
any contest controlled by a Tax Indemnitee, such Tax Indemnitee will consult in
good faith with the Charterer and its counsel and submit to the Charterer and
its counsel for review and comment, and consider in good faith any and all
suggestions made with respect to, any document or other item to be submitted to
a taxing authority or a court in connection with the contest and will permit the
Charterer to participate in a reasonable manner in the conduct of the contest.
Upon the written request of the affected Tax Indemnitee, the Charterer will
advise such Tax Indemnitee of the status of any contest being conducted by the
Charterer pursuant to this Section 12.2(e).
No Tax Indemnitee shall offer, accept or enter into a settlement or
other compromise with respect to any Tax Claim being contested pursuant to this
Section 12.2(e), or forego or terminate any such contest, without the prior
written consent of the Charterer (which consent shall not be unreasonably
withheld based solely on the merits of the Tax Claim). Any refusal or failure
by a Tax Indemnitee to contest a Tax Claim when required under this Section
12.2(e), and any settlement or compromise or other discontinuance by a Tax
Indemnitee of a contest of a Tax Claim required by this Section 12.2(e) without
the prior written consent of the Charterer when required under this Section
12.2(e), shall release and discharge the Charterer from any obligation to
indemnify such Tax Indemnitee for such Tax Claim, and such Tax Indemnitee shall
pay to the Charterer promptly any amounts previously paid or advanced by the
Charterer pursuant to this Agreement with respect to such Tax Claim (other than
amounts paid with respect to costs and expenses of the contest).
(f) Refunds. Upon receipt by any Tax Indemnitee of a repayment or
-------
refund of all or any part of any Indemnified Tax which the Charterer shall have
paid for, or advanced to, such Tax Indemnitee or for which the Charterer shall
have reimbursed such Tax Indemnitee pursuant to this Section 12.2, such Tax
Indemnitee shall pay to the Charterer, as promptly as practicable after the
receipt thereof, the amount of such repayment or refund plus any interest
received by, or credited to, such Tax Indemnitee on such repayment or refund net
of Taxes thereon plus the amount of any net tax saving realized by such Tax
Indemnitee as a result of the payment made to the Charterer; provided, that (i)
--------
the amount payable pursuant to this sentence (other than any amount with respect
to interest) shall not exceed the amount of all prior
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payments made by the Charterer pursuant to this Section 12.2 with respect to
refunded Taxes less the amount of all prior payments by such Tax Indemnitee to
the Charterer under this Section 12.2(f)(and any excess of the amount of the
repayment or refund over the limitation described in this clause (i) shall be
carried forward and applied to reduce any subsequent indemnification obligations
of the Charterer under Section 12.2(a)), and (ii) if such Tax Indemnitee is
subsequently disallowed such refund, such disallowance shall be subject to
indemnification in accordance with the terms of this Section 12.2, excluding
Section 12.2(b)(other than subparagraphs (8), (16) and (21) thereof). The amount
payable to the Charterer in respect of tax savings under Section 12.2(g) or
refunds under this Section 12.2(f) shall, at the Charterer's request, be subject
to verification by independent accountants selected by the Tax Indemnitee and
reasonably acceptable to the Charterer, at the Charterer's expense unless such
accountants determine that the amount payable to the Charterer is at least 5%
more than the amount so computed by the Tax Indemnitee, in which event the cost
of such verification will be paid by the Tax Indemnitee.
(g) Tax Savings. If, by reason of any payment made to or for the
-----------
account of a Tax Indemnitee by the Charterer pursuant to this Section 12.2 or
the circumstances giving rise thereto, such Tax Indemnitee at any time realizes
a reduction in any Tax for which the Charterer is not required to indemnify such
Tax Indemnitee pursuant to this Section 12.2 and which was not taken into
account previously in computing such payment by the Charterer to or for the
account of such Tax Indemnitee, then such Tax Indemnitee shall promptly pay to
the Charterer an amount equal to such tax saving plus the amount of any
additional tax saving realized by such Tax Indemnitee or any related Tax
Indemnitee as a result of any payment made by such Tax Indemnitee pursuant to
this sentence; provided that (i) the amount payable pursuant to this sentence
--------
shall not exceed the amount of all prior payments made by the Charterer pursuant
to this Section 12.2 with respect to Indemnified Taxes that resulted in tax
savings less the amount of all prior payments by such Tax Indemnitee to the
Charterer under this Section 12.2(g)(and any excess of the amount of the tax
saving over the limitation described in this clause (i) shall be carried forward
and applied to reduce any subsequent indemnification obligations of the
Charterer under Section 12.2(a)), and (ii) if such Tax Indemnitee is
subsequently disallowed such tax saving, such disallowance shall be subject to
indemnification in accordance with the terms of this Section 12.2, excluding
Section 12.2(b)(other than subparagraphs (8), (16) and (21) thereof). Each Tax
Indemnitee shall in good faith use diligence in filing its tax returns and in
dealing with the relevant taxing authorities to seek and claim any tax benefit
that would result in any such reduction in Taxes or any refund of any Taxes
payable or indemnifiable by the Charterer hereunder.
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(h) Definition of Owner Participant. For purposes of this Section
-------------------------------
12.2, the term "Owner Participant" and the term "Tax Indemnitee" as applied to
the Owner Participant shall include each group of corporations (and each member
of each such group) that includes the Owner Participant and for which
consolidated, combined, unitary or other group tax returns are filed for
Federal, state or local income tax purposes. The Owner Participant undertakes
on behalf of each other member of each such group to perform or cause to be
performed all obligations of such group hereunder.
(i) No Guarantee. Nothing in Section 12.1 or 12.2 shall be
------------
construed as a guarantee by the Charterer of the residual value or useful life
of the Vessel or as a guarantee of the Secured Notes or the Pass Through
Certificates.
(j) Non-Parties. In the case of any Tax Indemnitee that is not a
-----------
party to this Agreement, the Charterer may require such Tax Indemnitee to agree
in writing, in form and substance reasonably satisfactory to the Charterer, to
the terms of this Section 12.2 before making any payment to such Tax Indemnitee
under this Section 12.2.
12.3. No Guarantee. Nothing in Section 12.1 or 12.2 shall be
------------
construed as a guaranty by the Charterer of any value or residual value in or
useful life of the Vessel or as a guaranty of the Secured Notes or the Pass
Through Certificates.
Section 13. Transfer of Owner Participant's Interest.
----------------------------------------
13.1. Restrictions on Transfer. Without the prior written consent
------------------------
of, so long as the Charter shall be in effect, the Charterer, and, so long as
the Lien of the Indenture shall be in effect, the Indenture Trustee, the Owner
Participant shall not, directly or indirectly, voluntary or involuntarily,
assign, convey or otherwise transfer (whether, by merger, consolidation, sale or
otherwise) any of its right, title or interest in and to the Vessel, the Trust
Estate, this Participation Agreement, the Trust Agreement or any other Operative
Document, except in accordance with the terms and conditions of this Section 13
and Section 11.1(i).
13.2. Permitted Transfers. So long as the Charter is in effect, the
-------------------
Owner Participant may transfer all or part of its right, title and interest in
and to the Vessel, the Trust Estate (whether or not the same shall then have
been pledged or mortgaged under the Indenture or the Ship Mortgage, but subject
to the Lien of the Indenture or the Ship Mortgage if then in effect) and in and
to this Participation Agreement and the other Operative Documents to any Person
(a "Transferee") only in compliance with and upon satisfaction of each and all
----------
of the following conditions and the provisions of Section 11.1(i):
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(a) after giving effect to any such transfer, there shall be no more
than two Owner Participants;
(b) the transferee shall be a financial institution, leasing company
or other institutional investor which meets the requirements of 46 U.S.C.
Section 12102(a)(4) and Section 12106(e)(1)(B), or any successor statute, or
otherwise shall be eligible to hold an ownership interest in a vessel used in
U.S. coastwise trade and, at the time of transfer, shall not be the subject of
any bankruptcy, insolvency or other similar proceedings;
(c) the transferee shall have a combined capital and surplus (in the
case of any banking institution) or a tangible net worth determined in
accordance with generally accepted accounting principles (in the case of any
other transferee or assignee) of at least $50,000,000 or the obligations of such
transferee shall be unconditionally and irrevocably guaranteed (in a manner and
in form and substance reasonably satisfactory to Charterer, Indenture Trustee
and the Guarantor) by an entity that meets such requirements;
(d) the transfer shall not violate and shall not result in a
violation of or create a relationship which would be in violation of, any
Governmental Rules, including but not limited to the Securities Act, any other
applicable securities law, or ERISA, or result in a "prohibited transaction"
under ERISA, and the Charterer, Indenture Trustee and the Guarantor shall have
received an opinion of counsel to such effect reasonably acceptable to Charterer
and the Guarantor;
(e) the Charterer, Indenture Trustee and the Guarantor shall have
received (x) the written agreement from the transferee, duly executed by it and
in form and substance reasonably acceptable to the Charterer, the Indenture
Trustee and the Guarantor (in which the transferee shall, inter alia, make the
----- ----
representations set forth in subclauses (a), (b), (c), (d) and (h) hereof and
explicitly accept the covenants of the transferor under the Operative
Documents), by which such transferee agrees to be bound by and to undertake on
its own behalf all of the terms, representations, warranties and covenants of
the transferring Owner Participant under the Operative Documents and (y) an
opinion of counsel reasonably acceptable to Charterer and the Guarantor as to
the due authorization and enforceability of such agreement;
(f) the Owner Participant shall have provided 60 Business Days' prior
written notice of such transfer to Charterer and the Guarantor, which notice
shall specify (x) such information as shall be reasonably necessary to establish
compliance with this section (including draft certificates, opinions and
agreements) and (y) the name and address of the
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proposed transferee and facts to establish that the transferee's citizenship
complies with Section 11.1(i) and Section 13.2(b);
(g) the Owner Participant shall pay or cause to be paid all
reasonable fees, out-of-pocket expenses, disbursements and costs, including
counsel fees and expenses, incurred by the Owner Trustee, the Indenture Trustee,
the Loan Participant(s), the Charterer and the Guarantor in connection with the
transfer, including any expenses incurred to amend or assign any Operative
Document, redocument the Vessel as required by Governmental Rule or as
determined by the Charterer to be reasonably necessary or appropriate and to
determine that the transferee qualifies as a U.S. citizen in accordance with
Section 11.1(i) and Section 13.2(b);
(h) no Indenture Default or Indenture Event of Default shall occur as
a result of such transfer;
(i) except in the case of a transfer that occurs as the result of and
during the continuation of a Charter Event of Default, neither Charterer nor any
subcharterer will, as a result of such transfer, be required to pay to or for
the benefit of any holder of a Secured Note or any holder of a Pass-Through
Certificate or any other person entitled to indemnification under the Operative
Documents any amount under any indemnification provision of any Operative
Document that is greater than the amount which Charterer or any subcharterer
would be required to pay to such holder or such other person in the absence of
such transfer (an "Increased Indemnity"), unless such transferee shall have
agreed in a manner reasonably satisfactory to Charterer to indemnify Charterer
and any sub-charterer on an after-tax basis for such Increased Indemnity; and
(j) The transferee is not, in Charterer's sole determination, deemed
to engage in any of the businesses of Charterer or in any of the businesses of
any of Charterer's affiliated companies or is considered by Charterer to be a
competitor (in each case, a "Competitor"). A Person primarily engaged in
leasing shall not be considered a Competitor unless it is an Affiliate of a
Person engaged in marketing or refining of petroleum or chemical products or
engaged in the exploration for, or the production of, petroleum or chemical
products.
The foregoing restrictions contained in subsections (a) - (j) on assignments and
transfers by the Owner Participant shall apply with equal force and effect to
transfers or assignments of a controlling or management interest in the Owner
Participant.
13.3. Effect of Transfer. From and after any transfer effected by
------------------
the Owner Participant in accordance with this Section 13, the Owner Participant
making such transfer shall be released, to the extent of the obligations assumed
by the transferee, from
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its liability hereunder and under the other Operative Documents to which it is
or is to be a party in respect of obligations to be performed on or after the
date of such transfer. Upon any transfer by the Owner Participant in accordance
with this Section 13, the transferee shall be deemed an "Owner Participant" for
all purposes of the Operative Documents and each reference herein to the Owner
Participant making such transfer shall thereafter be deemed a reference to such
transferee for all purposes, except as provided in the preceding sentence.
Section 14. Financing for Modifications. The Charterer shall give
---------------------------
the Owner Trustee, the Owner Participant and the Indenture Trustee any required
notice of a Modification (whether proposed, under construction or already in
service) to the Vessel for which it seeks financing from the Owner Trustee
pursuant to Section 8(d) of the Charter. Upon receipt of such notice, the Owner
Participant shall negotiate with the Charterer in good faith to participate in
the financing by the Owner Trustee of the cost of such Modification through an
additional equity investment by the Owner Participant and the issuance of
Additional Notes under the Indenture, on terms and conditions mutually
acceptable to the Owner Participant and the Charterer, and utilizing the
available tax benefits of such Modifications and adjusting the Economic Factors
in a manner agreed upon by Charterer and Owner Participant at the time of such
additional financing; provided that the Owner Participant shall have no
--------
obligation to make such an equity investment. In addition, Charterer shall have
the right to request the Owner Trustee to issue Additional Notes to finance the
cost of Modifications (alone or in combination with additional equity
financing). Such Additional Notes will be secured by the Indenture, pari passu
---- -----
with, or subordinate to, the Secured Notes and will not have a maturity
extending beyond the Base Charter Term. The Owner Trustee will be required to
issue such Additional Notes with respect to the Vessel subject to the
satisfaction of the following conditions:
(a) no Charter Event of Default or Indenture Event of Default shall
have occurred and be continuing;
(b) after the issuance of the Additional Notes, (i) the aggregate
principal amount of all Secured Notes and Additional Notes shall not exceed 80%
of the Fair Market Sales Value of the Vessel including such Modifications and
(ii) the principal amount of the Additional Notes issued in connection with such
Modification(s) shall not exceed 100% of the cost of such Modifications(s);
(c) the Economic Factors shall be adjusted appropriately, as set
forth in Section 2.12.
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<PAGE>
Any right of Charterer to assume any Secured Notes shall include the right to
assume any outstanding Additional Notes. No Additional Notes may be issued
other than at the request of the Charterer.
Section 15. Refinancing of Secured Notes.
----------------------------
15.1. Refinancing of Secured Notes. Upon compliance with the terms
----------------------------
and conditions of this Section 15, including, without limitation, the
satisfaction of the conditions set forth in Section 15.2 and, in the case of a
refinancing of less than all series of Secured Notes Outstanding, in Section
3.05(b) of the Indenture, the Charterer shall have the right on not more than
three (3) occasions to cause the Owner Trustee and the Indenture Trustee to, and
the Owner Trustee and the Indenture Trustee shall, take such steps as may be
necessary to refinance all or all of any series of the Secured Notes then
Outstanding (the "Refunded Secured Notes") through the issuance and sale in the
----------------------
public or private market of secured notes or, in the case of a refinancing of
less than all series of Secured Notes Outstanding, one or more additional series
of Secured Notes (in either such case, the "Refunding Secured Notes"), in an
-----------------------
aggregate principal amount which shall be equal to the unpaid principal amount
of the Refunded Secured Notes, plus any accrued and unpaid interest on the
Refunded Secured Notes not paid by the Charterer as contemplated in clause (e)
of this Section 15.1, plus the amount of any costs to be paid from the proceeds
of such Refunding Secured Notes as permitted by subsection (a) of this Section
15.1, provided that the proceeds of such issuance and sale shall be applied to
--------
the extent necessary to prepay or redeem the principal amount of such Refunded
Secured Notes and such refinancing shall be subject to the following conditions:
(a) the reasonable costs and expenses of any such refinancing
(including, without limitation, any premium payable with respect to the
Refunded Secured Notes) shall be paid by the Charterer or, at Charterer's
option, subject to a cap to be agreed on the amount of reasonable costs and
expenses and clause (b) below, be financed with the proceeds of Refunding
Secured Notes;
(b) after giving effect to any refinancing pursuant to this Section
15, the aggregate principal amount of the Refunding Secured Notes (without
accounting for any Additional Notes under Section 14) shall not be greater
than (i) 80% of the Fair Market Value of the Vessel at the time of such
refinancing, and (ii) no more than 105% of the original aggregate principal
amount of the Secured Note;
(c) the Owner Participant will not suffer any unindemnified adverse
tax consequences (taking into account any increased tax indemnity the
Charterer may offer to
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provide); it being understood that, in the absence of a change in
applicable tax law after the Funding Date, any refinancing that does not
result (i) in an increase in principal amount greater than 5% of the
remaining principal amount of the Secured Notes and any Additional Notes or
(ii) an increase in the term or the average life that exceeds the remaining
term or average life, as the case may be, of the original Secured Notes by
more than six months, does not cause a material adverse tax effect under
Section 861 of the Code or cause the Charter to cease to be deemed a true
lease;
(d) the appropriate parties will enter into a note purchase or other
financing agreement providing for the issuance and sale by the Owner
Trustee or such other party as may be appropriate on the date specified in
such agreement (for the purposes of this Section 15.1, the "Refunding
---------
Date") of Refunding Secured Notes the proceeds of which shall be used to
repay, as contemplated by this Section 15, all of the Outstanding Refunded
Secured Notes on the Refunding Date;
(e) if the Refunding Date is a date during the Base Charter Term that
is not a Base Charter Payment Date, the Charterer and the Owner Trustee
will amend the Charter such that the Charterer shall on the Refunding Date
prepay that portion of the next succeeding installment of Base Charter Hire
to the extent necessary to pay the aggregate interest accrued on the
Refunded Secured Notes not payable with the proceeds of the Refunding
Secured Notes;
(f) the Owner Trustee will enter into an agreement to provide for the
issuance and securing thereunder of the Refunding Secured Notes in like
manner as the Refunded Secured Notes and/or will enter into such amendments
and supplements to the Indenture as may be necessary to effect a
refinancing under this Section 15.1, which agreements, amendments and/or
supplements shall be reasonably satisfactory in form, scope and substance
to the Owner Participant and which, taken as a whole, shall not be less
favorable to the Owner Participant or the Owner Trustee than the terms and
conditions of the Refunded Secured Notes;
(g) the parties hereto shall execute and deliver such amendments to
the Operative Documents and such additional documents, certificates and
opinions as shall be reasonably requested by, and reasonably acceptable to,
the Charterer, the Owner Trustee, the Owner Participant and the Indenture
Trustee, including, but not limited to, such documents, financing
statements and opinions as are reasonably necessary to confirm that the
refinancing of all Secured
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Notes of the series as to which the refinancing is occurring is being
carried out;
(h) the Refunding Secured Notes may not rank senior (but may rank
junior) in any respect to other Secured Notes Outstanding under the
Indenture, will be denominated in U.S. Dollars, and will have a maturity
not exceeding the Base Charter Term;
In connection with any such refinancing, the Economic Factors shall be adjusted
in accordance with Section 2.12 hereof. The Secured Notes may not be refinanced
other than at the request of the Charterer.
15.2. Notice. The Charterer shall give the other parties to this
------
Participation Agreement at least thirty (30) days' prior written notice of any
desired refinancing pursuant to Section 15.1, which notice shall set forth to
the extent practicable the proposed terms and conditions of such refinancing,
including the desired date therefor. The Charterer, the Owner Trustee, the
Owner Participant and, as necessary, the Indenture Trustee and the Loan
Participant, shall consult thereafter in a negotiation of such terms and
conditions to the end that, subject to the terms and conditions of this Section
15, the final terms and conditions of such refinancing shall be agreed to among
the parties thereto in due course thereafter. The Charterer will provide notice
promptly to such Persons in the event that it determines not to proceed with
such proposed refinancing pursuant to Section 15.1.
Section 16. Miscellaneous.
-------------
16.1. Survival. All agreements, representations, warranties and
--------
indemnities contained in this Participation Agreement and the other Operative
Documents and in any agreement, document or certificate delivered pursuant
hereto or thereto or in connection herewith or therewith shall survive and
continue in effect following the execution and delivery of this Participation
Agreement and the other Operative Documents and the participation by the Owner
Participant and the Loan Participant in the payment of Shipowner's Cost
contemplated hereby and by the other Operative Documents and the termination or
expiration of the Charter.
16.2. Binding Effect. All agreements, representations, warranties
--------------
and indemnities in this Participation Agreement and the other Operative
Documents and in any agreement, document or certificate delivered pursuant
hereto or thereto or in connection herewith or therewith shall bind the Person
making the same and its successors and assigns, and shall inure to the benefit
of, the Guarantor, each Person for whom made and their respective successors and
permitted assigns.
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16.3. Notices. All communications, notices and consents provided for
-------
in this Participation Agreement shall be in writing and shall be given in person
or by courier or by means of telecopy or other electronic transmission (with
request for assurance of receipt in a manner typical with respect to
communications of that type), or mailed by registered or certified first class
mail, return receipt requested, or overnight courier, addressed as set forth in
Schedule 1 or at such other address as any such Person may from time to time
designate by notice duly given in accordance with the provisions of this Section
16.3 to the other parties hereto. All such communications, notices and consents
given in such manner shall be deemed given when received in accordance with this
Section 16.3 (or when proffered to a Person if receipt is refused).
16.4. Counterpart Execution. This Participation Agreement may be
---------------------
executed in any number of counterparts and by the different parties hereto on
separate counterparts, each of which, when so executed and delivered, shall be
an original, but all such counterparts shall together constitute but one and the
same instrument.
16.5. GOVERNING LAW. THIS PARTICIPATION AGREEMENT HAS BEEN DELIVERED
-------------
IN THE STATE OF NEW YORK AND SHALL IN ALL RESPECTS BE GOVERNED BY, AND CONSTRUED
IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, APPLICABLE TO AGREEMENTS
MADE AND TO BE PERFORMED ENTIRELY WITHIN THE STATE, INCLUDING ALL MATTERS OF
CONSTRUCTION, VALIDITY AND PERFORMANCE.
16.6. Amendments, Supplements, Etc. (a) Neither this Participation
----------------------------
Agreement nor any of the terms hereof may be amended, supplemented, waived or
modified orally, but only by an instrument in writing signed by the party
against which enforcement of such change is sought.
(b) Prior to the Charter Termination Date, neither the Trust
Agreement nor the Indenture may be amended, waived, supplemented or modified to
permit any action contrary to, or disturb the Charterer's rights under, the
Charter, or otherwise adversely affect the Charterer's rights, or increase the
Charterer's obligations or liabilities, under any Operative Document without the
prior written consent of the Charterer.
16.7. Headings; Table of Contents. The division of this
---------------------------
Participation Agreement into Sections, subsections and paragraphs, the provision
of a table of contents and the insertion of headings are for convenience of
reference only and shall not affect the construction or interpretation hereof.
16.8. Severability of Provisions. Any provision of this
--------------------------
Participation Agreement which may be determined by competent authority to be
invalid or unenforceable in such jurisdiction
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shall, as to such jurisdiction, be ineffective to the extent of such invalidity
or unenforceability without invalidating or rendering unenforceable any
remaining terms and provisions hereof, and any such invalidity or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction. The parties shall
negotiate in good faith to replace such provision with an appropriate legal
provision. To the extent permitted by applicable law, the parties hereto hereby
waive any provision hereof that renders any term or provision hereof invalid or
unenforceable in any respect.
16.9. Entire Agreement. This Participation Agreement (including the
----------------
schedules and exhibits hereto), the other Operative Documents and the Pass
Through Trust Documents, and all certificates, instruments and other documents
relating thereto delivered and to be delivered from time to time pursuant to the
Operative Documents, supersede any and all representations, warranties and
agreements (other than any Operative Document) prior to the date of this
Participation Agreement, written or oral, between or among any of the parties
hereto relating to the transactions contemplated hereby and thereby.
16.10. Limitation of Liability of Trust Company, Indenture Trustee
-----------------------------------------------------------
and Pass Through Trustee. (a) It is expressly understood and agreed by and
- ------------------------
among all of the parties hereto that, except as otherwise expressly provided
herein or in any other Operative Document (other than the Trust Agreement), (i)
-
this Participation Agreement is executed and delivered by the Owner Trustee not
in its individual capacity but solely as trustee under the Trust Agreement in
the exercise of the power and authority conferred and vested in it as Owner
Trustee; (ii) certain of the representations, undertakings and agreements made
--
herein by the Owner Trustee are not personal representations, undertakings and
agreements, but are binding only on the Trust Estate and the Owner Trustee, as
trustee; (iii) except as set forth in the proviso to this sentence, nothing
---
herein contained shall be construed as creating any liability of the Trust
Company or any incorporator or any past, present or future subscriber to the
capital stock of, or stockholder, officer or director of the Trust Company to
perform any covenant, whether express or implied, contained herein, all such
liability, if any, being expressly waived by each of the other parties hereto
and by any Person claiming by, through or under any such party; and (iv) so far
--
as the Owner Trustee is concerned, each of the other parties hereto and any
Person claiming by, through or under any such party shall (other than with
respect to Claims arising from the willful misconduct or gross negligence of the
Trust Company or the failure of the Trust Company to distribute funds in
accordance with the terms of the Operative Documents) look solely to the Trust
Estate and the Indenture Estate for the performance of an obligation under any
of the instruments referred to herein; provided, however, that notwithstanding
-------- -------
anything in this Section
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16.10 to the contrary, the Trust Company shall be liable (A) in its individual
-
capacity and as Owner Trustee to the Owner Participant as expressly set forth in
the Trust Agreement; (B) in its individual capacity, in respect of its
-
representations, warranties and agreements made in its individual capacity as
expressly set forth herein (including, without limitation, Sections 7 and 11) or
in any other Operative Document to which it is a party or in any Officer's
Certificate of the Trust Company, delivered pursuant hereto and (C) in its
-
individual capacity for the consequences of its gross negligence and willful
misconduct and its failure to distribute funds in accordance with the terms of
the Operative Documents (including, without limitation, willful breach of
contract) with respect to any Owner Trustee Document or Operative Document to
which it is a party and for the matters described in clauses (i) through (v) of
the last sentence of Section 7.1 of the Trust Agreement.
(b) It is expressly understood and agreed by and among all of the
parties hereto that, except as otherwise expressly provided herein or in any
other Operative Document (including, without limitation, subsection (c) of this
Section 16.10), (i) this Participation Agreement is executed and delivered by
-
State Street Bank and Trust Company, not in its individual capacity but solely
as trustee under the Indenture, in the exercise of the power and authority
conferred and vested in it as Indenture Trustee; (ii) certain of the
--
representations, undertakings and agreements made herein by the Indenture
Trustee are not personal representations, undertakings and agreements, but are
binding only on the Indenture Trustee, as trustee; (iii) except as set forth in
---
the proviso to this sentence, nothing herein contained shall be construed as
creating any liability of State Street Bank and Trust Company or any
incorporator or any past, present or future subscriber to the capital stock of,
or stockholder, officer or director of, State Street Bank and Trust Company to
perform any covenant, whether express or implied, contained herein, all such
liability, if any, being expressly waived by each of the other parties hereto
and by any Person claiming by, through or under any such party; and (iv) so far
--
as the Indenture Trustee is concerned, each of the other parties hereto and any
Person claiming by, through or under any such party shall (other than with
respect to Claims arising from the willful misconduct or gross negligence of the
Indenture Trustee and for failure of the Indenture Trustee to distribute funds
in accordance with the terms of the Operative Documents) look solely to the
Indenture Trustee, as trustee, for the performance of any obligation under any
of the instruments referred to herein; provided, however, that notwithstanding
-------- -------
anything in this Section 16.10 to the contrary, State Street Bank and Trust
Company shall be liable (A) in its individual capacity, in respect of its
-
representations, warranties and agreements made in its individual capacity as
expressly set forth herein (including, without limitation, in Sections 8 and 11)
or in any other Operative Document to which it
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is a party or in any Officer's Certificate of State Street Bank and Trust
Company, made in its individual capacity delivered pursuant hereto and (B) in
-
its individual capacity for the consequences of its gross negligence or willful
misconduct and for its failure to use ordinary care to disburse funds in
accordance with any Operative Document to which it is a party.
(c) It is expressly understood and agreed by and among all of the
parties hereto that, except as otherwise expressly provided herein (including,
without limitation, subsection (b) of this Section 16.10), or in the Pass
Through Trust Documents, (i) this Participation Agreement is executed and
-
delivered by State Street Bank and Trust Company, not in its individual capacity
but solely as trustee under the Pass Through Trust Document, in the exercise of
the power and authority conferred and vested in it as the Pass Through Trustee,
(ii) certain of the representations, undertakings and agreements made herein by
--
the Pass Through Trustee are not personal representations, undertakings and
agreements, but are binding only on the Pass Through Trustee, as trustee, (iii)
---
except as set forth in the proviso to this sentence, nothing herein contained
shall be construed as creating any liability of State Street Bank and Trust
Company, or any incorporator or any past, present or future subscriber to the
capital stock of, or stockholder, officer or director of, State Street Bank and
Trust Company, to perform any covenant, whether express or implied, contained
herein, all such liability, if any, being expressly waived by each of the other
parties hereto and by any Person claiming by, through or under any such party;
and (iv) so far as the Pass Through Trustee is concerned, each of the other
--
parties hereto and any Person claiming by, through or under any such party shall
(other than with respect to Claims arising from the willful misconduct or gross
negligence of the Pass Through Trustee and for its failure to distribute funds
in accordance with the terms of the Pass Through Trust Documents) look solely
to the Pass Through Trustee, as trustee, for the performance of any obligation
under any of the instruments referred to herein; provided, however, that
-------- -------
notwithstanding anything in this Section 16.10 to the contrary, State Street
Bank and Trust Company shall be liable (A) in its individual capacity, in
-
respect of the representations, warranties and agreements of the Pass Through
Trustee made in its individual capacity as expressly set forth herein
(including, without limitation, in Sections 9 and 11) or in any Officer's
Certificate made in its individual capacity and delivered pursuant hereto, (B)
-
in its individual capacity to the Guarantor and the Charterer, in respect of the
representations, warranties and agreements in the Pass Through Trust Documents
or in any Officer's Certificate made in its individual capacity and delivered
pursuant thereto and (C) in its individual capacity for the consequences of its
-
own gross negligence or willful misconduct and for its failure to use ordinary
care to disburse funds in accordance with the Pass Through Trust Documents.
-86-
<PAGE>
16.11. Jurisdiction; Service of Process. Any legal action or
--------------------------------
proceeding with respect to this Participation Agreement or any other Operative
Document to which any party hereto is a signatory or against any such party or
against the Indenture Estate or Trust Estate may be brought, at the option of
any such party, in any of the courts in the State of New York or the Federal
courts of the United States of America located in the City of New York, and each
party hereto hereby unconditionally accepts the nonexclusive jurisdiction of the
aforesaid courts. To the extent permitted by applicable law, each party hereto
irrevocably waives any objection it may now or hereafter have to the laying of
venue of any such action or proceeding in any of the aforesaid courts and any
claim it may now or hereafter have that any such action or proceeding has been
brought in an inconvenient forum. To the extent permitted by applicable law,
each party hereto further irrevocably consents to the service of process out of
any of the aforesaid courts in any such action or proceeding by the mailing of
copies thereof by registered or certified mail to such party's address for
notices specified herein. Nothing herein shall affect the right to serve
process in any other manner permitted by law.
16.12. Instructions. By their respective execution and delivery of
------------
this Participation Agreement, each of the Owner Participant and the Pass Through
Trustee hereby instructs the Owner Trustee and the Indenture Trustee to execute
and deliver this Participation Agreement.
16.13. WAIVER OF JURY TRIAL. BY ITS SIGNATURE BELOW WRITTEN, EACH
--------------------
PARTY HERETO HEREBY IRREVOCABLY WAIVES ALL RIGHT TO A TRIAL BY JURY IN ANY
ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS
PARTICIPATION AGREEMENT OR THE OPERATIVE DOCUMENTS OR THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY.
16.14 Owner for Federal Income Tax Purposes.
-------------------------------------
It is hereby agreed among the Owner Participant, the Owner Trustee and
the Charterer that for United States Federal income tax purposes, unless the
Charterer purchases the Vessel pursuant to the terms of the Charter, the Owner
Participant will be the owner of the Vessel and the Charterer will be the
charterer thereof. Nothing contained in this Section 16.14 shall be construed
to limit the Charterer's use and operation of the Vessel under the Charter or
the Charterer's right to purchase the Vessel thereunder or shall constitute a
representation by the Charterer as to tax or other consequences of the
transactions contemplated by the Operative Documents.
Section 17. Beneficial Interest Purchase Option.
-----------------------------------
-87-
<PAGE>
17.1. Option to Purchase. To the extent that the Charterer has the
------------------
right to purchase the Vessel pursuant to Section 12(e) or 15(c) of the Charter,
the Charterer, in lieu of exercising such right, may elect to purchase or cause
a designee of the Charterer to purchase the right, title and interest of the
Owner Participant in and to the Trust Estate (the "Beneficial Interest") at a
-------------------
purchase price equal to the excess of (i) the applicable purchase price payable
-
under such Section 12(e) or Section 15(a), as the case may be, (and payable, in
the case of the EBO Purchase Price, in installments at the same times and
subject to the same conditions that the EBO Purchase Price may be paid in
installments under Section 15(b)(iv) of the Charter), over (ii) the Outstanding
--
principal and accrued interest on the Secured Notes as of the applicable
purchase date (after giving effect to the payment of all amounts required to be
paid by the Charterer pursuant to Section 17.2(b)) (the "Beneficial Interest
-------------------
Purchase Price"). It is intended among the parties hereto that the purchase of
- --------------
the Beneficial Interest by the Charterer or any Affiliate thereof shall not
effect a merger of the Charterer's interest, as charterer, in the Charter and
the beneficial interest in the Trust Estate to be purchased by the Charterer
or any such Affiliate.
17.2. Notice of Election; Manner of Purchase; Transfer After
--------------------------------------- --------------
Purchase. (a) In order to exercise the right to purchase the Beneficial
Interest pursuant to Section 17.1, the Charterer shall notify the Owner
Participant irrevocably in writing no later than thirty (30) days prior to the
applicable purchase date under Section 15(b) of the Charter or applicable
Termination Date under Section 12(b) of the Charter that it desires to purchase,
or cause such designee to purchase, the Beneficial Interest, in which case the
purchase of the Vessel pursuant to Section 12(e) or 15(c) of the Charter shall
not occur.
(b) On the date of purchase, upon receipt by the Owner Participant of
the Beneficial Interest Purchase Price, and an amount equal to that portion of
all Base Charter Hire due on or prior to such date of purchase that would be
distributable to the Owner Participant under the Indenture (but excluding any
Base Charter Hire payable in advance on such date of purchase) and all
Supplemental Charter Hire due by the Charterer to or distributable to the Owner
Participant to and including such date of purchase (without giving effect to any
applicable grace periods), the Owner Participant shall transfer the Beneficial
Interest free and clear of all Liens (which term, for the avoidance of doubt,
shall not be deemed to include the Liens of the Indenture and the Ship Mortgage
if the Secured Note is Outstanding) to the Charterer or its designee pursuant to
an instrument of conveyance in form and substance reasonably satisfactory to the
Charterer or its designee, and shall provide to the Charterer or such designee
such other instruments,
-88-
<PAGE>
documents and opinions as the Charterer may reasonably request to evidence the
valid consummation of such transfer.
(c) Each of the Participants, the Owner Trustee and the Indenture
Trustee, at the cost and expense of the Charterer, will cause to be promptly and
duly taken, executed, acknowledged and delivered all such further acts,
documents and assurances as the Charterer reasonably may request in order to
carry out the intent and purposes of this Section 17 and the transactions
contemplated hereby.
(d) As a condition to exercise of the right to purchase the
Beneficial Interest pursuant to Section 17.1 (unless the Charterer shall assume
the obligations of the Owner Trustee pursuant to the next sentence), on the date
of purchase, the Charterer shall have provided to the Indenture Trustee an
opinion of counsel for the Charterer or its designee (which may, in each case,
be internal counsel), dated the date of purchase, which, subject to usual or
customary exceptions, shall be to the effect that, upon consummation of such
purchase, this Participation Agreement and the Trust Agreement constitute the
legal, valid and binding obligations of the Charterer or such designee,
enforceable against the Charterer or such designee, in accordance with their
respective terms except as the same may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting the rights of
creditors generally and by general principles of equity. In the event the
Charterer or such designee is unable to provide such opinion, concurrently with
the purchase of the Beneficial Interest, (i) the Charterer or such designee may
-
assume the obligations of the Owner Trustee under the Secured Notes and under
the Indenture in accordance with and with the effect provided in Section 3.04 of
the Indenture and Section 11.6 hereof, and upon such assumption the Charterer or
such designee shall have the right to terminate the Trust Agreement or (ii) the
--
Charterer may revoke its purchase, election or other notice under the Charter,
in which event the Charter shall continue as set forth therein.
[Remainder of Page Intentionally Left Blank]
-89-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have each caused this Participation
Agreement to be duly executed as of the date first above written.
MOBIL TRANSPORT FINANCE COMPANY INC.
By:
---------------------------------------------
Name:
Title:
SBCM MARINE FINANCE, INC.
By:
---------------------------------------------
Name:
Title:
FIRST SECURITY BANK, NATIONAL ASSOCIATION, not in its
individual capacity, except as provided herein, but
solely as Owner Trustee
By:
---------------------------------------------
Name:
Title:
STATE STREET BANK AND TRUST COMPANY, not in its
individual capacity, except as provided herein, but
solely as Indenture Trustee
By:
---------------------------------------------
Name:
Title:
STATE STREET BANK AND TRUST COMPANY, not in its
individual capacity, except as provided herein, but
solely as Pass Through Trustee
By:
---------------------------------------------
Name:
Title:
-90-
<PAGE>
Schedule 1 to the
Participation Agreement
ADDRESSES FOR NOTICES AND PAYMENTS
----------------------------------
CHARTERER
Address: Mobil Transport Finance Company Inc.
c/o Mobil Oil Corporation
3225 Gallows Road
Fairfax, Virginia 22037-0001
Attention: Treasury
Telephone: (703) 846-3000
Telecopier: (703) 846-1262
with a copy to:
Mobil Corporation
3225 Gallows Road
Fairfax, Virginia 22037-0001
Attention: Treasurer
Payments: [To Be Provided By Written Notice]
SELLER
Address: Mobil Oil Corporation
3225 Gallows Road
Fairfax, Virginia 22037-0001
Attention: Treasury
Telephone: (703) 846-3000
Telecopier: (703) 846-1407
with a copy to:
Mobil Corporation
3225 Gallows Road
Fairfax, Virginia 22037-0001
Attention: Treasurer
Payments: Mobil Oil Corp.
Account #40006896
ABA 021000089
Citibank N.A.
399 Park Ave.
New York, NY 10043
<PAGE>
OWNER PARTICIPANT SBCM Marine Finance, Inc.
Address: 277 Park Avenue
New York, NY 10172
Attn: David A. Ward
Telephone: (212)224-5211
Telecopier: (212) 224-5222
Payments: Chase Manhattan Bank
ABA No. 021000021
SBCM Marine Finance
A/C No. 400802007
Re: Mobil Transport
OWNER TRUSTEE First Security Bank, National
Association
Address: 79 South Main Street
Salt Lake City, Utah 84111
Attention: Corporate Trust Services
Telephone: (801) 246-5630
Telecopier:(801) 246-5053
Payments: ABA# 124000012
Corporate Trust Services
Acct.# 051-0922115
Re: Mobil 33669
PASS THROUGH TRUSTEE
Address: State Street Bank and Trust Company
Two International Place, 4th Floor
Boston, Massachusetts 02110
Attention: Corporate Trust Department
Telephone: (617) 664-5340
Telecopier: (617) 664-5371
Payments: State Street Bank and Trust Company
Boston, MA
ABA#011-0000-28
A/C#9900-314-7
Ref: Mobil Corp. 1997B Pass Through Trust
Attn: Brian Wadman
INDENTURE TRUSTEE
Address: State Street Bank and Trust Company
Two International Place, 4th Floor
Boston, Massachusetts 02110
-2-
<PAGE>
Attention: Corporate Trust
Department
Telephone: (617) 664-5340
Telecopier: (617) 664-5371
Payments: State Street Bank and Trust Company
Boston, MA
ABA#011-0000-28
A/C#9900-314-7
Ref: Mobil Corp. 1997B Pass Through Trust
Attn: Brian Wadman
-3-
<PAGE>
Schedule 2 to the
Participation Agreement
PRICING ASSUMPTIONS AND ECONOMIC FACTORS
Non-tax Pricing Assumptions
- ---------------------------
Funding Date: September 30, 1997
Interim Charter Term:
Base Charter Term:
Transaction Expenses Paid
by the Owner Participant:
Debt Rate:
Shipowner's Cost:
Economic Factors
- ----------------
Interim Charter Term Hire: See Schedule 5 to the Charter
---
Base Charter Hire: See Schedule 1 to the Charter
---
EBO Exercise Date:
EBO Exercise Percentage:
Termination Values: See Schedule 3 to the Charter
---
Stipulated Loss Values: See Schedule 2 to the Charter
---
Tax Pricing Assumptions
- -----------------------
The tax assumption set forth in Section 2 of the Tax Indemnity Agreement.
<PAGE>
Schedule 3 to the
Participation Agreement
FILINGS AND RECORDINGS
----------------------
1. Recording of Bill of Sale with the U.S. Coast Guard at the National Vessel
Documentation Center ("NVDC")
2. Recording of First Preferred Ship Mortgage with the U.S. Coast Guard at
the NVDC
3. Filing of Charter with NVDC pursuant to 46 U.S.C. 12106(e)(2)
4. UCC-1 Financing Statements showing Owner Trustee as debtor and Indenture
Trustee as secured party respecting the security granted under the
Indenture filed with:
4.1 Secretary of State of Utah
5 UCC-1 Financing Statements showing Seller as debtor and Owner Trustee as
secured party respecting Builder's warranties assigned under the
Conveyancing Instrument filed with:
5.1. Secretary of State of New York
5.2 County Clerk - New York County
5.3 Secretary of State of Virginia
5.4 Fairfax County
<PAGE>
EXHIBIT 4.8
EXECUTION COPY
GUARANTY
--------
MOBIL CORPORATION
THIS GUARANTY, dated as of September 30, 1997 (together with any amendments
or supplements hereto, this "Guaranty" or "Parent Guaranty"), by and among MOBIL
-------- ---------------
CORPORATION, a Delaware corporation (together with any successor permitted by
Section 4.1 hereof, the "Guarantor"), and (a) First Security Bank, National
---------
Association, both in its individual capacity and as Owner Trustee, (b) State
Street Bank and Trust Company, both in its individual capacity and as Indenture
Trustee, (c) State Street Bank and Trust Company, as Pass Through Trustee under
the Pass Through Trust Documents and as Loan Participant, (d) the
Certificateholders from time to time, and (e) the Owner Participant referred to
in the Participation Agreement described below (collectively, together with each
other Indemnitee and their successors and permitted assigns, the "Beneficiaries"
-------------
and, individually, a "Beneficiary").
-----------
W I T N E S S E T H:
- - - - - - - - - -
A. Mobil Transport Finance Company Inc., a Delaware corporation, and a
wholly-owned subsidiary of the Guarantor (together with its successors and
permitted assigns as further defined in Appendix A to the Participation
Agreement, the "Charterer"), is entering into that certain Participation
---------
Agreement dated as of September 30, 1997 (the "Participation Agreement"), among
------------- ---------
the Charterer, SBCM Marine Finance, Inc., as Owner Participant, First Security
Bank, National Association, not in its individual capacity except to the extent
expressly set forth therein but solely as Owner Trustee, State Street Bank and
Trust Company not in its individual capacity except to the extent expressly set
forth therein but solely as Indenture Trustee, and State Street Bank and Trust
Company acting not in its individual capacity except as expressly provided
therein, but solely as Pass Through Trustee and as Loan Participant.
B. It is a condition precedent to the obligations of the Beneficiaries to
consummate the transactions contemplated by the Participation Agreement that the
Guarantor execute and deliver this Guaranty.
Accordingly, in consideration of the premises and of other good and
valuable consideration, the Guarantor does
<PAGE>
hereby covenant and agree with the Beneficiaries from and after the execution
and delivery of the Participation Agreement as follows (capitalized terms used
herein (including those used in the foregoing preamble and recitals) and not
otherwise defined herein having the meanings ascribed to them in Appendix A to
the Participation Agreement):
ARTICLE I
REPRESENTATIONS AND WARRANTIES OF GUARANTOR
Section 1.1. Representations and Warranties of
---------------------------------
Guarantor. The Guarantor hereby represents and warrants that:
- ---------
(1) The Guarantor is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware, has the
corporate power and authority to carry on its business as presently
conducted, to own or hold under lease its properties and to enter into and
perform its obligations under this Guaranty, and is duly qualified to do
business in each jurisdiction in which it has operations or a principal
office and where failure to so qualify could reasonably be expected to
materially adversely affect its consolidated financial condition, business
or operations, or its ability to perform any of its obligations under this
Guaranty.
(2) The execution, delivery and performance by the Guarantor of this
Guaranty and the transactions contemplated hereby have been duly authorized
by all necessary corporate action on the part of the Guarantor.
(3) This Guaranty has been duly executed and delivered by the
Guarantor and constitutes the legal, valid and binding obligation of the
Guarantor enforceable against the Guarantor in accordance with the terms
hereof, except as such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, liquidation, moratorium or similar
laws affecting creditors', lessors', or charterers' rights generally and by
the application of general equitable principles which may limit the
availability of certain remedies.
2
<PAGE>
(4) The execution and delivery by the Guarantor of this Guaranty do
not and will not, and the performance by the Guarantor of its obligations
hereunder does not and will not, (i) violate or be inconsistent with its
-
charter documents or by-laws; (ii) contravene any Governmental Rule or
--
Governmental Action applicable to it (except that no representation or
warranty is made herein with respect to the Securities Act, the Trust
Indenture Act and the securities or Blue Sky laws of the various states);
(iii) contravene any provision of, or constitute a default under, any
----
indenture, mortgage, contract or other instrument to which the Guarantor is
a party or by which it or any of its properties are bound or (iv) result in
--
or require the creation or imposition of any Lien (other than Permitted
Liens) upon any of its properties or assets.
(5) No Governmental Action and no consent of any other Person
(including, without limitation, any stockholder or creditor of the
Guarantor) is required in connection with the execution, delivery or
performance of this Guaranty, except such as are required under the
Securities Act, the Trust Indenture Act and the securities or Blue Sky laws
of the various states.
(6) The consolidated financial statements of the Guarantor set forth
in its Annual Report on Form 10-K for the year ended December 31, 1996 and
the consolidated financial statements of the Guarantor set forth in its
Quarterly Reports on Form 10-Q for the quarters ended March 31, 1997 and
June 30, 1997 fairly present the consolidated financial position of the
Guarantor and its Subsidiaries as at the date thereof and the consolidated
results of operations and changes in financial position of the Guarantor
and its Subsidiaries for each of the periods covered thereby (subject, in
the case of any unaudited interim financial statements, to changes
resulting from normal year-end adjustments) in conformity with generally
accepted accounting principles applied on a consistent basis (except as
disclosed in the notes thereto). Since June 30, 1997, there has been no
material adverse change in such consolidated financial position of the
Guarantor and its Subsidiaries, taken as a whole.
(7) Except as disclosed in the Guarantor's Annual Report on Form 10-K
for the year ended December 31,
3
<PAGE>
1996, the Guarantor's Quarterly Report on Form 10-Q for the quarter ended
March 31, 1997, the Guarantor's Quarterly Report on Form 10-Q for the
quarter ended June 30, 1997 or the Guarantor's current reports on Form 8-K,
there is no action, suit, investigation or proceeding pending or, to the
Actual Knowledge of the Guarantor threatened in writing against the
Guarantor or its properties before any Governmental Authority which,
individually or in the aggregate (so far as the Guarantor now can
reasonably foresee), is reasonably likely materially and adversely to
affect the consummation of the transactions under this Guaranty or the
ability of the Guarantor to perform its obligations hereunder or its
business or financial condition.
(8) The Guarantor owns, directly or indirectly, 100% of the equity
interest in the Charterer.
(9) The representations and warranties of the Charterer in Section 5
of the Participation Agreement are true and correct.
ARTICLE II
GUARANTEE OF OBLIGATIONS
Section 2.1. Guarantee of Obligations. (a) The Guarantor hereby
------------------------
guarantees to each of the Beneficiaries, as primary obligor and not as surety,
the full and prompt payment by the Charterer, when due, whether at the stated
payment date thereof, by acceleration or otherwise, of, and the faithful
performance of and compliance with, all payment obligations of the Charterer
under the Participation Agreement, the Charter, the Tax Indemnity Agreement and
the other Operative Documents (collectively, the "Guaranty Documents") owed to
-------- ---------
the Beneficiaries in accordance with the terms thereof, however created, arising
or evidenced, whether direct or indirect, primary or secondary, absolute or
contingent, joint or several, and whether now or hereafter existing or due or to
become due and the full, faithful and timely performance of, and compliance
with, all other obligations of the Charterer owed to the Beneficiaries
thereunder in accordance with the terms thereof, however created, arising or
evidenced, whether direct or indirect, primary or secondary, absolute or
contingent, joint or several, and whether now or hereafter existing or due or to
become due (such payment and other obligations, the "Obligations"). Such
-----------
guarantee is an absolute,
4
<PAGE>
unconditional, irrevocable, present and continuing guarantee of payment and
performance and not of collectibility.
(b) If for any reason any Obligation to be performed or observed by
the Charterer (whether affirmative or negative in character) shall not be
observed or performed or paid strictly in accordance with the terms thereof, the
Guarantor shall, no later than fifteen (15) Business Days following the
Guarantor's receipt of written notice by the relevant Beneficiary of such non-
observance, non-performance or non-payment, and not less than five (5) Business
Days following the Guarantor's receipt of such a notice in the case of non-
payment of Base Charter Hire, perform or observe or cause to be performed or
observed each such Obligation or shall pay the amount of each such unpaid
Obligation at the place and to the Person entitled thereto pursuant to the
relevant Guaranty Documents, as the case may be, regardless of whether or not
any Beneficiary or anyone on behalf of any of them shall have instituted any
suit, action or proceeding or exhausted its remedies or taken any steps to
enforce any rights against the Charterer or any other Person to compel any such
performance or observance or to collect all or any part of such amount pursuant
to the provisions of the relevant Guaranty Documents, as the case may be, or at
law or in equity, or otherwise, and regardless of any other condition or
contingency; provided that notwithstanding the foregoing no notice shall be
required if the Guarantor is subject to any bankruptcy or similar proceeding.
Nothing in this Guaranty shall be construed to be a guarantee of payment of the
Secured Notes.
Section 2.2. Nature of Guarantee. The obligations, covenants,
-------------------
agreements and duties of the Guarantor hereunder shall remain in full force and
effect and enforceable until the Obligations are finally, indefeasibly and
unconditionally paid and performed in full in accordance with the terms of the
Operative Documents, as the case may be, and, to the maximum extent permitted by
law, shall in no way be affected or impaired by reason of the happening from
time to time of any other event, including, without limitation, the following,
whether or not any such event shall have occurred without notice to or the
consent of the Guarantor:
(a) the waiver, compromise, settlement, termination or other release
of the performance or observance by the Guarantor or the Charterer of any
or all of their respective agreements, covenants, terms or
5
<PAGE>
conditions contained in this Guaranty (other than Section 2.1 hereof), or
the Guaranty Documents;
(b) any failure, omission, delay or lack on the part of the
Beneficiaries to enforce, assert or exercise any right, power or remedy
conferred on the Beneficiaries in the Guaranty Documents or this Guaranty
or the inability of the Beneficiaries to enforce any provision of the
Guaranty Documents or this Guaranty for any reason, or any other act or
omission on the part of the Beneficiaries;
(c) the transfer, assignment or mortgaging, or the purported transfer,
assignment or mortgaging, of all or any part of the interest of the
Charterer in the Vessel or the invalidity, unenforceability or termination
for any reason whatsoever of the Guaranty Documents or any defect in the
title of the Vessel or any part thereof or any loss of possession, use or
operational control of the Vessel or any part thereof by the Charterer;
(d) the modification or amendment (whether material or otherwise) of
any obligation, covenant or agreement set forth in the Guaranty Documents;
(e) the voluntary or involuntary liquidation, dissolution, sale of all
or substantially all of the assets, marshaling of assets and liabilities,
receivership, conservatorship, insolvency, bankruptcy, assignment for the
benefit of creditors, reorganization, arrangement, composition or
readjustment of, or other similar proceedings affecting the Charterer or
any of its assets or any allegation or contest of the validity of this
Guaranty or the Guaranty Documents in any such proceeding;
(f) the surrender or impairment of any security for the performance or
observance of any of the Obligations;
(g) any failure of the Guarantor or the Charterer or any other Person
to perform and observe any agreement or covenant, or to discharge any duty
or obligation, arising out of or connected with this Guaranty, the Guaranty
Documents or the occurrence or pendency of any Charter Default or Charter
Event of Default or any proceedings or actions as a result of,
6
<PAGE>
or attendant upon, such Charter Default or Charter Event of Default;
(h) the inability of the Guarantor, the Beneficiaries or the Charterer
or any other Person to enforce any provision of this Guaranty or the
Guaranty Documents for any reason;
(i) the failure to give notice to the Guarantor or the Charterer of
the occurrence of an event of default under the terms and provisions of the
Guaranty Documents;
(j) the disposition by the Guarantor of any or all of its interest in
any capital stock of the Charterer or any change, restructuring or
termination of the corporate structure, ownership or existence of the
Charterer;
(k) any set-off, counterclaim, reduction, or diminution of any
Obligation, or any defense of any kind or nature whatsoever (other than
performance), which the Guarantor or the Charterer may have or assert
against the Beneficiaries; or
(l) any other circumstance (other than performance) that might
otherwise constitute a legal or equitable defense or discharge of the
Guarantor under this Guaranty or of a guarantor or surety with respect to
any Obligation.
Section 2.3. Waivers by Guarantor. The Guarantor waives notice of
--------------------
the acceptance of and reliance on this Guaranty by the Beneficiaries, and the
Guarantor also waives presentment, demand for payment, protest and notice of
nonpayment or dishonor and all other notices and demands whatsoever, except that
the Guarantor does not waive the notices provided for in Section 2.1(b) hereof.
The Guarantor waives any and all right to assert any set-off, counterclaim,
reduction, or diminution of any Obligation, or any defense of any kind or nature
whatsoever (other than performance), which the Guarantor or the Charterer may
have or assert against the Beneficiaries. The Guarantor further waives any
right it may have to (a) require the Beneficiaries to proceed against the
-
Charterer, (b) require the Beneficiaries to proceed against or exhaust any
-
security granted by the Charterer or the Owner Trustee or (c) require the
-
Beneficiaries to pursue any other remedy within the power of the Beneficiaries,
and the Guarantor agrees that
7
<PAGE>
all of its obligations under this Guaranty are independent of the Obligations
and that a separate action may be brought against the Guarantor whether or not
an action is commenced against the Charterer under the Operative Documents.
Section 2.4. Subrogation of Guarantor; Subordina tion.
----------------------------------------
Notwithstanding any payment or payments made by the Guarantor, the Guarantor
shall not be subrogated to any rights of the Beneficiaries against the Charterer
until all of the Obligations then due shall have been finally, indefeasibly and
unconditionally paid and performed in full. Any claim of the Guarantor against
the Charterer arising from payments made by the Guarantor by reason of this
Guaranty shall be in all respects subordinated to the final, indefeasible,
unconditional, full and complete payment or discharge of all of the Obligations
guaranteed hereby, and no payment by the Guarantor shall give rise to any claim
of the Guarantor against the Beneficiaries.
Section 2.5. Reinstatement. This Guaranty shall continue to be
-------------
effective, or be automatically reinstated, as the case may be, if at any time
payment, or any part thereof, made by or on behalf of the Charterer or the
Guarantor of any of the Obligations is rescinded or must otherwise be restored
or returned by any Beneficiary for any reason whatsoever, whether upon the
insolvency, bankruptcy, dissolution, liquidation or reorganization of the
Charterer or Guarantor, or upon or as a result of the appointment of a receiver,
intervenor or conservator of, or trustee or similar officer for, either of the
Charterer or the Guarantor or any substantial part of its property, or
otherwise, all as though such payments had not been made.
Section 2.6. Place and Manner of Payments. All payments to be made
----------------------------
by the Guarantor under this Guaranty to a Beneficiary shall be paid to such
Beneficiary at the address provided for in Schedule 1 of the Participation
Agreement or, if no address, at the address and to the account specified in the
notice demanding payment by the Guarantor; provided, however, that the Guarantor
-------- -------
consents to the assignment by the Owner Trustee to the Indenture Trustee of the
Owner Trustee's right, title and interest in, to and under this Guaranty to the
extent set forth in the Indenture and, notwithstanding anything herein to the
contrary, the Guarantor shall make all payments (other than Excepted Payments)
hereunder directly to the Indenture Trustee until such time as the Indenture
Trustee shall give notice to the Guarantor that the Lien of the Indenture and
the Lien of the Ship Mortgage have been fully discharged, and thereafter to
8
<PAGE>
the Owner Trustee. The Guarantor agrees that it will make all payments due
hereunder by wire transfer at or before 12:00 noon, New York time, on the date
due in immediately available funds to the party to which such payment is to be
made.
ARTICLE III
DEFAULT AND REMEDIES
Section 3.1. Enforcement Provisions. The Beneficiaries shall have
----------------------
the right, power and authority to do all things, including instituting or
appearing in any suit or proceeding, not inconsistent with the express
provisions of the Operative Documents or this Guaranty, which they may deem
necessary or advisable to enforce the provisions of this Guaranty and protect
the interests of the Beneficiaries. Each and every default in the payment or
performance of the Obligations shall give rise to a separate cause of action
hereunder, and separate suits may be brought hereunder as each cause of action
arises.
Section 3.2. No Remedy Exclusive. No remedy conferred upon or
-------------------
reserved to the Beneficiaries herein or in the Guaranty Documents is intended to
be exclusive of any other available remedy or remedies, but each and every such
remedy shall be cumulative and shall be in addition to every other remedy given
under this Guaranty or now or hereafter existing at law or in equity.
Section 3.3. Right to Proceed Against Guarantor. In the event of a
----------------------------------
default in any payment or performance of any Obligation owed to any
Beneficiaries when and as the same shall become due, whether at the stated
maturity thereof, by acceleration or otherwise, such Beneficiaries may proceed
to enforce their respective rights hereunder and such Beneficiaries shall have
the right to proceed first and directly against the Guarantor under this
Guaranty without proceeding against any other Person or exhausting any other
remedies which they may have and without resorting to any collateral security
relating thereto. The provisions of Section 6.7 of the Pass Through Trust
Agreement and Section 5.11 of the Indenture shall apply to any actions proposed
to be commenced hereunder against the Guarantor by the Certificateholders or by
the Pass Through Trustee in its capacity as a Loan Participant.
Section 3.4. Guarantor to Pay Costs of Enforcement. The Guarantor
-------------------------------------
agrees to pay all costs,
9
<PAGE>
expenses and fees, including, without limitation, all reasonable attorneys'
fees, which may be incurred by the Beneficiaries in enforcing or attempting to
enforce this Guaranty following any default on the part of the Guarantor
hereunder, whether the same shall be enforced by suit or otherwise.
Section 3.5. No Waiver of Rights. No delay in exercising or omission
-------------------
to exercise any right or power accruing upon any default, omission or failure of
performance hereunder shall impair any such right or power or shall be construed
to be a waiver thereof, but any such right and power may be exercised from time
to time and as often as may be deemed expedient. Nothing in this Guaranty or
any other document referred to herein shall constitute a waiver by the Guarantor
of any rights to sue for damages or specific performance for breach of any
obligations undertaken by the Owner Trustee, the Charterer or any other Person
mentioned herein or who is a party to any of the other documents referred to
herein.
ARTICLE IV
COVENANTS OF GUARANTOR
Section 4.1. Maintenance of Corporate Existence. So long as any of
----------------------------------
the Obligations remain outstanding or any amounts due and owing by the Charterer
with respect thereto remain unpaid, the Guarantor will maintain its corporate
existence and will not merge or consolidate with any other corporation or
dissolve or otherwise sell or dispose of all or substantially all of its assets
as an entirety, unless the successor or transferee corporation (if other than
the Guarantor) shall expressly and unconditionally assume, in a written
instrument delivered to the Owner Participant, the Owner Trustee, the Indenture
Trustee, and the Pass Through Trustee, the punctual performance and observance
of all covenants, conditions and obligations of this Guaranty to be performed by
the Guarantor.
Section 4.2. Financial Statements. The Guarantor shall provide to
--------------------
the Owner Participant and the Indenture Trustee, within thirty (30) days after
the Guarantor is required to file the same with the Securities and Exchange
Commission (the "SEC") or any successor agency, a copy of each annual report and
---
any amendment to an annual report (currently Form 10-K), filed by the Guarantor
with the SEC pursuant to Section 13 or 15(d) of the Securities Exchange Act of
1934, as the same may be amended from time to time,
10
<PAGE>
and all financial statement reports, notices, proxy statements or other
documents that are sent or made generally available by the Guarantor to holders
of its registered securities and all regular and periodic reports filed by the
Guarantor with the SEC except for reports on SEC Forms 3, 4 or 5 or any
comparable reports.
ARTICLE V
GENERAL
Section 5.1. Benefitted Parties. This Guaranty is entered into by
------------------
the Guarantor for the benefit of the Beneficiaries in accordance with the
provisions of this Guaranty and the Operative Documents. This Guaranty shall
not be deemed to create any right in, or to be in whole or part for the benefit
of, any person other than the Beneficiaries and the Guarantor and their
respective permitted successors and permitted assigns. The Guarantor may not
assign any of its rights or obligations hereunder except in accordance with
Section 4.1 hereof.
Section 5.2. Interpretations. The article and section headings of
---------------
this Guaranty are for reference purposes only and shall not affect its
interpretation in any respect.
Section 5.3. Entire Agreement; Counterpart; Amendments; Governing
----------------------------------------------------
Law; Etc. This Guaranty (a) con stitutes the entire agreement, and supersedes
- -------- -
all prior agreements and understandings, both written and oral, between the
parties with respect to the subject matter hereof; (b) may be executed in
-
several counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument; (c) may be modified
-
only by an instrument in writing signed by the duly authorized representatives
of the parties hereto and (d) has been delivered in the State of New York and
-
shall be governed in all respects, including validity, interpretation and effect
by, and shall be enforceable in accordance with, the laws of the State of New
York (other than the law of the State of New York governing choice of law).
Subject to Section 2.5 hereof, this Guaranty shall terminate when the
Obligations have been fully, indefeasibly and unconditionally paid and performed
in full.
If any provision of this Guaranty shall be held to be invalid by any
court of competent jurisdiction, the invalidity of such provisions shall not
affect any of the remaining provisions, and any such invalidity in any
11
<PAGE>
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction. To the extent permitted by applicable law, the parties
hereto hereby waive any provision thereof that renders any term or provision
hereof invalid or unenforceable in any respect.
Section 5.4. Further Assurances. The Guarantor will execute and
------------------
deliver all such instruments and take all such actions as the Beneficiaries may
from time to time reasonably request in order fully to effectuate the purposes
of this Guaranty.
Section 5.5. Notices. All notices and other communications in
-------
respect of this Guaranty (a) to the Beneficiaries shall be made in the manner
and at the respective addresses set forth in the Participation Agreement and (b)
to the Guarantor shall be made in the manner provided in the Participation
Agreement at the following address (or such other address as the Guarantor may
notify to the Beneficiaries from time to time):
Mobil Corporation
3225 Gallows Road
Fairfax, Virginia 22037
Attention: Treasurer
Telecopier: 703-846-1407
Telephone: 703-846-3000
Section 5.6. Consent to Jurisdiction. Any legal suit, action or
-----------------------
proceeding arising out of or relating to this Guaranty or any transaction
contemplated hereby may be instituted in any state or Federal court in the
County of New York and State of New York and, to the extent permitted by
applicable law, the Guarantor waives any objection which it may now or hereafter
have to the laying of the venue of any such suit, action or proceeding and
irrevocably submits to the jurisdiction of any such court in any such suit,
action or proceeding.
Section 5.7. Waiver of Jury Trial. BY ITS SIGNATURE BELOW WRITTEN,
--------------------
EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES ALL RIGHT TO A TRIAL BY JURY IN ANY
ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS GUARANTY
OR THE OTHER OPERATIVE DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY OR
THEREBY.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.]
12
<PAGE>
IN WITNESS WHEREOF, the Guarantor has caused this Guaranty to be executed in
its name and behalf and its corporate seal to be affixed hereto and attested by
its duly authorized officers, and the Beneficiaries have accepted the same, as
of the date first above written.
ATTEST: MOBIL CORPORATION
By: ______________________ By: _______________________
Name: Name:
Title: Title:
ACCEPTED:
FIRST SECURITY BANK, NATIONAL ASSOCIATION, in both
its individual capacity and as Owner Trustee
By: _________________________
Name:
Title:
STATE STREET BANK AND TRUST COMPANY, in its
individual capacity and as Indenture Trustee
By: _________________________
Name:
Title:
STATE STREET BANK AND TRUST COMPANY, in its
individual capacity and as Pass Through Trustee
under each of the Pass Through Trust Documents and
as Loan Participant
By: _______________________
Name:
Title:
SBCM MARINE FINANCE, INC.
By: _________________________
Name:
Title:
13
<PAGE>
APPENDIX A
DEFINITIONS
-----------
The following terms shall have the following meanings for all purposes
of the Operative Documents referred to below, unless otherwise defined in an
Operative Document or the context thereof shall otherwise require, and such
meanings are equally applicable both to the singular and plural forms of the
terms defined. Any term defined below by reference to any agreement or
instrument shall have such meaning whether or not such agreement or instrument
is in effect. The terms "hereof", "herein", "hereunder" and comparable terms
------ ------ ---------
refer to the entire agreement with respect to which such terms are used and not
to any particular Section, subsection, paragraph or other subdivision thereof.
Unless the context otherwise requires, references to (i) agreements
-
shall include sections, schedules, exhibits and appendices thereto and shall be
deemed to mean and include such agreements (and sections, schedules, exhibits
and appendices) as the same may be amended, supplemented and otherwise modified
from time to time in accordance with the terms thereof; (ii) parties to
--
agreements or government agencies shall be deemed to include the successors and
permitted assigns of such parties and the successors and assigns of such
agencies and (iii) laws or regulations shall be deemed to mean such laws or
---
regulations as the same may be amended from time to time and any superseding
laws or regulations covering the same subject matter.
Unless otherwise specified herein or in any Operative Document, all
accounting terms used in any Operative Document shall be interpreted, all
accounting determinations made pursuant to the terms of any Operative Documents
shall be made, and all financial statements delivered pursuant to the terms of
any Operative Document shall be prepared, in accordance with GAAP.
"ABS" shall mean the American Bureau of Shipping or any successor
---
organizations.
"Actual Knowledge" shall mean, (i) as it applies to the Owner Trustee,
---------------- -
the Indenture Trustee or the Pass Through Trustee, actual knowledge of,
including any information
-1-
<PAGE>
contained in any written notices received by, an officer in its Corporate Trust
Office; (ii) as it applies to the Owner Participant, actual knowledge of,
--
including any information contained in any written notices received by, any
officer of the Owner Participant or any Affiliate thereof whose responsibilities
include administration of the transactions contemplated by the Operative
Documents; (iii) as it applies to the Trust Company, actual knowledge of,
---
including any information contained in written notices received by, any officer
of the Trust Company whose responsibilities include administration of the
transactions contemplated by the Operative Documents; (iv) as it applies to the
--
Charterer, actual knowledge of, including any information contained in any
written notices received by, the Chief Executive Officer, the President or any
Vice President or any other executive officer of the Charterer whose
responsibilities include administration of the transactions contemplated by the
Operative Documents and (v) as it applies to the Guarantor, actual knowledge of,
-
including any information contained in any written notices received by, the
Chief Executive Officer, the President or any Vice President or any other
executive officer of the Guarantor whose responsibilities include administration
of the transactions contemplated by the Operative Documents.
"Additional Notes" shall mean non-recourse Secured Notes issued by the
----------------
Owner Trustee in connection with a Supplemental Financing and in accordance with
Section 2.08 of the Indenture.
"Affiliate" shall mean, with respect to any Person, any other Person,
---------
directly or indirectly controlling or controlled by, or under direct or indirect
common control with, such Person. For purposes of this definition, the term
"control" (including the correlative meanings of the terms "controlling",
- -------- -----------
"controlled by" and "under common control with"), as used with respect to any
- -------------- -------------------------
Person, shall mean the possession, directly or indirectly, of the power to
direct or cause the direction of the management or policies of such Person,
whether through the ownership of voting securities or by contract or otherwise;
provided, however, that the Trust Company shall not be considered to be an
- -------- -------
Affiliate of either the Owner Trustee or the Owner Participant and that neither
the Owner Trustee nor the Owner Participant shall be considered to be an
Affiliate of the Trust Company.
"After-Tax Basis", in the context of determining the amount of a
---------------
payment to be made on such basis, shall mean the payment of an amount which,
after subtraction of the net increase, if any, in United States federal, state
and local income tax liability incurred by the recipient of such payment as a
result of the receipt or accrual of such payment (which net
-2-
<PAGE>
increase shall be calculated by taking into account any reduction in such
taxes resulting from any tax benefits realized or deemed to be realized in any
taxable year by the recipient as a result of the event or circumstances giving
rise to such payment), shall equal the amount that would have been payable if no
such net increase in tax liability had been incurred. In calculating the amount
payable by reason of this provision, all United States Federal, state and local
income taxes payable and tax benefits realized or deemed to be realized shall be
deter mined (except to the extent provided otherwise in any Operative Document)
on the assumptions that (i) the recipient is taxable on all income at the
-
highest marginal federal income tax rate applicable to corporate taxpayers as of
the date of the payment to be made on an After-Tax Basis and the actual marginal
state and local income tax rate applicable as of such date to the recipient, as
determined by the recipient in its reasonable, good faith judgment and certified
by the recipient to the payer in writing and, if requested by the payer, as
verified by a nationally recognized accounting firm mutually acceptable to the
recipient and the payer; (ii) all tax benefits are utilized by the recipient (x)
-- -
at the rates specified in clause (i) and (y) in each of the recipient's taxable
-
years in which such tax benefits are first allowable; and (iii) tax benefits
---
deemed to be realized in any taxable year other than the year of payment are
taken into account at their present value, using a discount rate equal to the
Debt Rate.
"Amortization Schedule" for the Secured Notes shall mean the
---------------------
amortization schedule for the Installment Secured Notes set forth in Exhibit B
to the Indenture.
"Appraisal Procedure" shall mean a procedure for determining any
-------------------
amount, value or period. Such procedure shall be commenced by the delivery of
written notification as specified in the Operative Documents by the Charterer to
the Shipowner, Owner Trustee or the Owner Participant, as the case may be, or by
the Owner Participant or the Owner Trustee, as the case may be, to the
Charterer, that it desires to obtain an appraisal with respect to such amount,
value or period. If required by the relevant provision of the applicable
Operative Document, such parties shall first attempt to agree on such matter.
If such parties are unable to agree on such matter within the time period
specified in the applicable Operative Document, or if such parties are not
required to attempt to agree, the Charterer will identify an appraiser (the
"Appraiser") to conduct an updated appraisal (the "Appraisal"). The Appraisal
will establish: (a) the fair market sales and charter value of the Vessel (the
"Appraisal Value"); (b) the useful life of the Vessel from the Funding Date (the
"Useful Life"); (c) either (i) the sum of the present values at the EBO Date of
the estimated fair market value of the Vessel at the end
-3-
<PAGE>
of the Base Charter Term and the Base Charter Term Payments scheduled to become
due after the EBO Date and on or before the end of the Base Charter Term is less
than the EBO Exercise Price, or (ii) the Base Charter Term Payments scheduled to
become due after the EBO Exercise Date do not exceed the fair market hire for
the Vessel; and (d) any other matters requiring valuation under the terms of the
Charter. If more than one Appraisal is called for, the latest will supersede
earlier versions. Except to the extent expressly provided otherwise in any
Operative Document, fees and expenses of the appraisers appointed in connection
with an Appraisal Procedure shall be paid by the Charterer, except also that, if
the Appraisal Procedure is utilized in connection with the purchase by the
Charterer of the Vessel pursuant to the Charter or in connection with a Renewal
Term actually entered into pursuant to the exercise by the Charterer of a
renewal option pursuant to Section 14(b)(i) of the Charter, all such fees and
expenses shall be borne equally by the Charterer and the Shipowner.
"Appraisal" shall mean the appraisal delivered by the Appraiser
---------
pursuant to Section 4.8(a) of the Participation Agreement.
"Appraiser" shall mean collectively Marshall & Stevens Incorporated
---------
and Sabine Surveyors, Inc.
"Base Charter Commencement Date" shall mean the date of commencement
------------------------------
of the Base Charter Term of the Charter, which shall be January 31, 1998.
"Base Charter Hire" shall mean the amounts payable pursuant to
-----------------
Section 3(c) of the Charter.
"Base Charter Payment Dates" during the Base Charter Term or any
--------------------------
Renewal Term shall mean and include each January 31 and July 31 during the Base
Charter Term or such Renewal Term. The first Base Charter Payment Date shall be
July 31, 1998.
"Base Charter Percentages" shall mean the percentages set forth in
------------------------
Schedule 1 to the Charter, subject to adjustment in accordance with Section 2.12
of the Participation Agreement.
"Base Charter Term" shall mean the period commencing on the day
-----------------
following the last day of the Interim Charter Term and ending on midnight on the
Base Charter Termination Date.
"Base Charter Termination Date" shall mean January 31, 2016 or such
-----------------------------
earlier date as the Base Charter Term shall terminate in accordance with the
terms of the Charter.
-4-
<PAGE>
"Beneficial Interest" shall have the meaning set forth in Section
----------
17.1 of the Participation Agreement.
"Bill of Sale" shall mean the Coast Guard form of Bill of Sale (CG-
------------
1340) from the Seller to the Shipowner dated the Funding Date and delivered
pursuant to Sections 3.1 and 4.2 of the Participation Agreement.
"Board of Directors" shall mean, with respect to any Person, either
------------------
the board of directors of such Person or a duly authorized committee of said
board having power to act for such board with respect to the matter in question.
"Builder" shall mean Newport News Shipbuilding and Dry Dock Company.
-------
"Business Day" shall mean any day other than a Saturday or Sunday or
------------
any other day on which banks located in New York, New York, Fairfax, Virginia,
the city in which the Corporate Trust Office of the Owner Trustee is located or,
so long as any Pass Through Certificate is outstanding, the city in which the
Corporate Trust Office of the Pass Through Trustee is located, are required or
authorized to remain closed.
"Casualty Redemption Date" shall have the meaning specified in
------------------------
Section 3.02(a) of the Indenture.
"Certificate" shall mean any of the Pass Through Certificates.
-----------
"Certificateholder" shall have the meaning specified in the Pass
-----------------
Through Trust Agreement.
"Change in Tax Law" shall mean (i) the enactment of a statute which
-----------------
amends the Code or otherwise relates to United States federal Taxes or (ii) the
promulgation of any regulation to the Code in temporary or final form or (iii)
the publication of any revenue ruling, revenue procedure, notice or other
administrative pronouncement of general applicability or (iv) the publication of
any opinion of any court in the United States of America relating to Taxes.
"Charter" shall mean the Demise Charter Party, dated as of the Funding
-------
Date, between the Owner Trustee and the Charterer for the demise charter of the
Vessel, as the same may be modified, amended or supplemented from time to time.
"Charter Default" shall mean an event which, after giving of notice or
---------------
lapse of time, or both, would become a Charter Event of Default.
-5-
<PAGE>
"Charter Event of Default" shall have the meaning specified in
------------------------
Section 17 of the Charter.
"Charter Hire" shall mean, collectively, Base Charter Hire,
------------
Supplemental Charter Hire, and Renewal Hire, if any.
"Charter Term" shall mean, collectively, the Interim Charter Term, the
------------
Base Charter Term and all Renewal Terms (if any).
"Charter Termination Date" shall mean the last day of the Charter
------------------------
Term, whether occurring by reason of expiration of the Charter Term or upon
earlier termination of the Charter pursuant to the terms thereof (including,
without limitation, termination pursuant to Section 18(a) of the Charter).
"Charterer" shall mean Mobil Transport Finance Company Inc., a
---------
Delaware corporation, or any successor, assignee or other transferee, as
Charterer, under the Charter, as permitted by the Operative Documents.
"Charterer Debt Advisor/Underwriter" shall mean Morgan Stanley & Co.
----------------------------------
Incorporated.
"Charterer Financial Advisor" shall mean Connell Finance Company, Inc.
---------------------------
"Charterer's Net Present Value Cost" shall mean the Charterer's net
----------------------------------
present value of Base Charter Hire to the EBO Exercise Date, and including the
EBO Exercise Price, and to the Base Charter Termination Date, in each case,
discounted at 7.00%, compounded semiannually.
"Claims" shall mean any and all liabilities (including, without
------
limitation, negligence, warranty, statutory, product, strict or absolute
liability, liability in tort or otherwise), obligations, losses, damages,
penalties, fines, sanctions, claims, actions, or suits of whatever kind or
nature, investigations, judgments, Liens and, shall include all reasonable
costs, expenses and disbursements in connection therewith or related thereto, of
any kind or nature, including, without limitation, reasonable legal fees and
expenses and costs of investigation.
"Code" shall mean the Internal Revenue Code of 1986, as amended from
----
time to time.
"Commitment Letter" shall mean the commitment letter dated August 28,
-----------------
1997 between Sumitomo Bank Leasing and Finance, Inc., as agent for Sumitomo Bank
Capital Markets, Inc., and the Charterer.
-6-
<PAGE>
"Common Stock" shall mean, with respect to any Person, any and all
------------
shares, interests, participations and other equivalents (however designated,
whether voting or non-voting) of such Person's common stock, whether now
outstanding or issued after the date of the Participation Agreement, and
includes, without limitation, all series and classes of such common stock.
"Construction Contract" shall mean the contract dated January 30, 1997
---------------------
and any amendments thereto through the Funding Date between the Builder and the
Operator providing for the construction of the Vessel.
"Conveyancing Instrument" shall mean the assignment of warranties,
-----------------------
from the Seller to the Owner Trustee, dated the Funding Date and delivered
pursuant to Sections 3.1 and 4.2 of the Participation Agreement.
"Corporate Trust Office" shall mean (i) when used with respect to the
---------------------- -
Pass Through Trustee, the office of the Pass Through Trustee in the city at
which at any particular time its corporate trust business shall be principally
administered; (ii) when used with respect to the Indenture Trustee, the
--
Indenture Trustee Office and (iii) when used with respect to the Owner Trustee,
---
the Corporate Trust Administration department of the Trust Company or such other
office of the Owner Trustee in the city at which at any particular time its
corporate trust business shall be principally administered.
"Cut-off Date" shall mean July 1, 1998.
------------
"Debt Rate" shall mean the weighted average interest rate borne by the
---------
Secured Notes originally issued under the Indenture.
"Early Buy-Out Option" shall mean Charterer's option, pursuant to
--------------------
Section 15(a)(i) of the Charter, to purchase the Vessel on the EBO Exercise Date
at the EBO Exercise Price.
"EBO Exercise Date" shall mean the date specified by the Shipowner as
-----------------
set forth in Schedule 4 to the Charter, as adjusted pursuant to Section 2.12 of
the Participation Agreement.
"EBO Exercise Price" shall mean an amount which shall equal Total
------------------
Vessel Cost times the EBO Percentage.
"EBO Percentage" shall mean the applicable percentage set forth as an
--------------
"EBO Percentage" in Schedule 4 to the Charter, subject to adjustment in
accordance with Section 4 of the Charter and Section 2.12 of the Participation
Agreement.
-7-
<PAGE>
"Economic Factors" shall mean collectively, the Base Charter Hire, the
----------------
Termination Values, the Stipulated Loss Values and the EBO Exercise Price.
"Eligible Bank" shall mean any bank or trust company, including the
-------------
Indenture Trustee and the Pass Through Trustee, which shall be a member of the
Federal Reserve System and shall have a combined capital, surplus and undivided
profits of not less than $100,000,000.
"Employer Plan" shall mean each plan as to which the Owner Participant
-------------
is a party in interest by virtue of (i) Section 3(14)(C) of ERISA or (ii)
- --
Section 3(14)(E) of ERISA (to the extent it relates to subsection (C)) or (iii)
---
Section 3(14) (G) of ERISA (to the extent it relates to subsection (C) or (E))
(but only to the extent subsection (E) relates to subsection (C)).
"Equity Percentage" shall mean an amount equal to 100% minus the Debt
-----------------
Percentage, which amount shall be not less than 15%.
"ERISA" shall mean the Employee Retirement Income Security Act of
-----
1974, as amended.
"ERISA Plan Assets" shall mean the assets of (i) an employee benefit
----------------- -
plan subject to Part 4 of Subtitle B of Title I of ERISA or (ii) a "Plan" within
--
the meaning of Section 4975(e)(1) of the Code or (iii) any other entity deemed
---
to hold "plan assets" as defined in 29 C.F.R. (S)2510.3-101 of any plan.
"Event of Loss" shall mean any of the following events: (i) there
-------------
shall have occurred the actual or constructive loss of the Vessel in the opinion
of a responsible officer of Charterer; (ii) the Vessel shall become unfit for
commercial use in the reasonable opinion of a responsible officer of Charterer;
(iii) there shall have occurred the theft or disappearance of the Vessel for a
period in excess of 30 days; (iv) in the opinion of a Responsible Officer of
the Charterer, the Vessel becomes worn out, or destroyed, or shall suffer damage
(which damage, in the Charterer's reasonable, good faith opinion renders repair
or replacement uneconomic); (v) title to the Vessel shall be taken by any
governmental entity by condemnation, confiscation, seizure, requisition or
otherwise; (vi) use of the Vessel shall be taken or requisitioned (A) by the
U.S. government or any agency thereof for a period which has been ongoing for
one year and which is reasonably expected to exceed the remaining term of the
Charter, (B) which extends beyond the date which is twelve months prior to the
scheduled expiration of the Charter Term, or (C) by any non-U.S.
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<PAGE>
governmental entity for a period in excess of the lesser of 180 days or the
remaining Charter Term for the Vessel; or (vii) the use of the Vessel in the
normal course the Charterer's business shall have been prohibited for a
continuous period in excess of six (6) months as a result of any rule,
regulation, order or other action by the U.S. government or any agency or
instrumentality thereof, unless the Charterer shall have undertaken and be
carrying forward steps necessary to permit normal use of the Vessel.
"Excepted Payments" shall mean and include (i) any indemnity or other
----------------- -
payment (whether or not Supplemental Charter Hire) payable under any Operative
Document (including, without limitation, any amount payable by the Guarantor
under the Guaranty in respect of indemnity amounts payable by the Charterer
under any Operative Document) directly to any Person (including, without
limitation, the Trust Company or State Street Bank and Trust Company in its
individual capacity) other than the Indenture Trustee, any Holder, the Owner
Trustee, the Trust Estate or the Indenture Estate; (ii) (A) insurance proceeds,
-- -
if any, payable to the Trust Company, the Owner Trustee or the Owner Participant
under insurance separately maintained by the Trust Company, the Owner Trustee or
the Owner Participant as permitted by Section 10(d) of the Charter except to the
extent that the payment of any such proceeds diminishes any recovery available
under an insurance policy maintained by the Charterer or (B) proceeds of
-
personal injury or property damage liability insurance payable to or for the
benefit of the Trust Company, the Owner Trustee or the Owner Participant under
any Operative Document; (iii) any amount payable to the Owner Participant
---
pursuant to the Tax Indemnity Agreement (including any periodic payments
thereunder) or for the account of the Owner Participant pursuant to Section 12.2
of the Participation Agreement (or any amount payable by the Guarantor under the
Guaranty in respect of amounts payable to the Owner Participant pursuant to the
Tax Indemnity Agreement or for the account of the Owner Participant pursuant to
Section 12.2 of the Participation Agreement);(iv) that portion of Stipulated
--
Loss Value, Termination Value and EBO Exercise Price payments attributable to
Tax Indemnity Agreement obligations of the Charterer (or payments by the
Guarantor under the Guaranty in respect of such portion of Stipulated Loss
Value, Termination Value and EBO Exercise Price); (v) if the Charterer exercises
-
a purchase option under the Charter and assumes the Secured Notes on a full
recourse basis pursuant to Section 3.04 of the Indenture, that portion of the
applicable purchase price in excess of the principal of and accrued interest on
the Outstanding Secured Notes; and (vi) interest at the Overdue Rate payable (to
--
the extent permitted by applicable law) by the Charterer (or the Guarantor) to
the Trust Company, the Owner Trustee or the Owner Participant on any of the
amounts described
-9-
<PAGE>
in clauses (i) through (v) above; together with the right to demand, collect,
sue for, exercise remedies to enforce, or otherwise obtain amounts referred to
in clauses (i) through (vi) of this definition.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
------------
amended.
"Extraordinary Purchase Option" shall have the meaning set forth in
-----------------------------
Section 15(a)(iv) of the Charter.
"Fair Market Charter Hire" shall mean an amount equal to the Fair
------------------------
Market Charter Value of the Vessel, as determined in accordance with Section 14
of the Charter, and payable on a semiannual basis on the Base Charter Payment
Dates during a Renewal Term.
"Fair Market Charter Value" or "Fair Market Sales Value" of any
------------------------- -----------------------
property or services as of any date shall mean the cash charter payments or cash
price that would be obtained in an arm's-length charter or sale, respectively,
between an informed and willing charterer or buyer (under no compulsion to
charter or purchase) and an informed and willing seller (under no compulsion to
charter or sell) of the property or services in question; provided that the
--------
"Fair Market Charter Value" or "Fair Market Sales Value" for the Vessel shall
be determined on the assumption that the Vessel (x) is unencumbered by the
-
Charter, including any purchase or renewal options thereunder, and (y) has been
-
maintained in accordance with the requirements of Section 6 of the Charter.
"Fair Market Rates" of any service shall mean the cash price that
-----------------
would be obtained in an arm's-length transaction between an informed and willing
provider of such service (under no compulsion to provide such service) and an
informed and willing user of such service (under no compulsion to use such
service) of the service in question, at the location where such service is to be
provided.
"Final Appraisal" shall mean the appraisal delivered pursuant to
---------------
Section 4.5(a) of the Participation Agreement.
"Final Determination" shall mean (i) a decision, judgment, decree or
------------------- -
other order by any court of competent jurisdiction that resolves the matter,
which decision, judgment, decree or other order has become final (i.e., the
- -
earliest of when (x) all allowable appeals have been exhausted by either party
-
to the action or (y) the time for filing all allowable appeals has expired; (ii)
- --
a closing agreement entered into under Section 7121 of the Code (or any
successor provision) or any other settlement agreement entered into in
connection with the
-10-
<PAGE>
administrative or judicial proceedings, in any case with the Charterer's
consent; (iii) the expiration of the time for instituting an initial suit with
---
respect to a claimed deficiency and for instituting a claim for refund, or, if a
refund claim was filed, the expiration of the time for instituting suit with
respect thereto or (iv) in the case of a Tax subject to indemnification by the
--
Charterer under the Participation Agreement or the Tax Indemnity Agreement,
the point in time when the Tax Indemnitee is no longer required to contest the
imposition of such Tax pursuant to Section 12.2(e) of the Participation
Agreement or Section 7 of the Tax Indemnity Agreement, as the case may be.
"Fixed Price Purchase Option" shall mean Charterer's option, pursuant
---------------------------
to Section 15(a) of the Charter to purchase the Vessel at the end of the Base
Charter Term, at the lesser of then Fair Market Sales Value or the percentage of
Total Vessel Cost established as the Fixed Price Purchase Option Amount.
"Fixed Price Purchase Option Amount" shall mean the amount set forth
----------------------------------
in Schedule 6 to the Charter and confirmed by the Appraisal delivered pursuant
to Section 3.7 of the Participation Agreement as being not less than the
reasonably expected Fair Market Sales Value of the Vessel on the date the Fixed
Price Purchase Option is exercisable, as adjusted pursuant to Section 2.12 of
the Participation Agreement.
"Funding Date" shall mean the date set forth in the notice of the
------------
Funding Date delivered by the Charterer pursuant to Section 2.4 of the
Participation Agreement or such other later date on which the closing of the
transactions contemplated by Section 2 of the Participation Agreement shall
occur.
"GAAP" shall mean generally accepted accounting principles in the
----
United States of America.
"Governmental Actions" shall mean all applicable actions,
--------------------
authorizations, consents, approvals, waivers, exceptions, variances,
franchises, filings, orders, permits, licenses, exemptions, publications,
notices from and declarations of any Governmental Authority.
"Governmental Authority" shall mean any applicable nation or
----------------------
government, any state, county, municipality or other political subdivision
thereof or any entity exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government.
"Governmental Rule" shall mean applicable treaties, conventions,
-----------------
statutes, laws, rules, codes, ordinances, decisions, regulations, permits,
certificates and orders of any
-11-
<PAGE>
Governmental Authority now or hereafter in effect and any interpretation
thereof by competent Governmental Authority, including any judicial or
administrative order, consent decree, settlement agreement or judgment.
"Guarantor" shall mean Mobil Corporation, a Delaware corporation, in
---------
its capacity as guarantor, or any successor, assignee or other transferee, as
guarantor under the Guaranty, as permitted by the terms of the Guaranty.
"Guaranty" or "Parent Guaranty" shall mean the Guaranty, dated as of
-------- ---------------
the Funding Date by the Guarantor in favor of the Owner Trustee, the Trust
Company, the Owner Participant, the Indenture Trustee, the Pass Through Trustee
and the Certificate holders, as the same may be modified, amended or
supplemented from time to time.
"Guaranty Documents" shall mean collectively, the Participation
------------------
Agreement, the Charter and the Tax Indemnity Agreement.
"Holder" shall mean a registered holder of a Secured Note and shall
------
include, so long as the Pass Through Trustee is a registered holder of a Secured
Note, the Pass Through Trustee.
"Increased Indemnity" shall mean any amount that Charterer or any
-------------------
subcharterer will, as a result of a transfer of the interest of the Owner
Participant, be required to pay to or for the benefit of any holder of a Secured
Note or any holder of a Pass-Through Certificate or any other person entitled to
indemnification under the Operative Documents any amount under any
indemnification provision of any Operative Document that is greater than the
amount which Charterer or any subcharterer would be required to pay to such
holder or such other person in the absence of such transfer.
"Indemnitee" shall mean the Owner Trustee (both in its individual and
----------
its trust capacities), the Owner Participant, the Indenture Trustee (both in its
individual and its trust capacities), the Pass Through Trustee (both in its
individual and its trust capacities), and the Loan Participant.
"Indenture" shall mean the Trust Indenture, Mortgage, Assignment of
---------
Charter and Security Agreement, dated as of the Funding Date between the Owner
Trustee and the Indenture Trustee, as the same may be modified, amended or
supplemented from time to time.
"Indenture Default" shall mean an event which, after giving of notice
-----------------
or lapse of time, or both, would become an Indenture Event of Default.
-12-
<PAGE>
"Indenture Estate" shall have the meaning specified in the Granting
----------------
Clause of the Indenture.
"Indenture Event of Default" shall have the meaning specified in
--------------------------
Section 5.02 of the Indenture.
"Indenture Indebtedness" shall have the meaning specified in the
----------------------
Recitals to the Indenture.
"Indenture Trustee" shall have the meaning specified in the preamble
-----------------
to the Indenture.
"Indenture Trustee Fees" shall mean the fees, expenses and
----------------------
disbursements of the Indenture Trustee payable pursuant to the Indenture, as
they are set forth in an invoice of the Indenture Trustee received by the
Shipowner (with copy to the Charterer).
"Indenture Trustee Office" shall mean the office of the Indenture
------------------------
Trustee located at Two International Place, Boston, Massachusetts 02110 or such
other office as may be designated by the Indenture Trustee to the Owner Trustee
and the Charterer.
"Indenture Trustee's Liens" shall mean any Lien on or relating to or
-------------------------
affecting all or any part of the Vessel, the Charter, the Trust Estate, the
Indenture Estate or any payment of Charter Hire (a) which results from any act
-
of, or failure to act by, or any Claim against or affecting, the Indenture
Trustee (in its individual capacity or as trustee) unrelated to the Indenture
Trustee's participation in the transactions contemplated by the Participation
Agreement or any other Operative Document, or which results from any violation
by the Indenture Trustee (in its individual capacity or as trustee) of any of
the terms of the Operative Documents; (b) which results from any Tax owed by the
-
Indenture Trustee (in its individual capacity or as trustee), except that
Indenture Trustee's Liens shall not include any Lien resulting from any Tax for
which the Charterer is obligated to indemnify the Indenture Trustee (in its
individual capacity or as trustee) pursuant to Section 12.2 of the Participation
Agreement until such time as the Charterer shall have already paid to, or on
behalf of, the Indenture Trustee, the Tax or an indemnity with respect to the
same or (c) which results from any Claim against the Indenture Trustee arising
-
out of the voluntary or involuntary transfer (other than pursuant to Section
18(a) of the Charter) by the Indenture Trustee of all or any part of its
interest in the Vessel, the Charter, the Trust Estate, the Indenture Estate or
any payment of Charter Hire.
-13-
<PAGE>
"Independent" shall mean, when used with respect to any specified
-----------
Person, a Person who (1) is in fact independent; (2) does not have any direct
- -
financial interest in the Trust Company, the Owner Trustee, the Owner
Participant or the Charterer or any Affiliate of any of them and (3) is not
-
connected with the Trust Company, the Owner Participant or the Charterer or any
such Affiliate as an officer, employee, promoter, underwriter, trustee, partner,
director or person performing similar functions. Whenever it is provided that
any Independent Person's opinion or certificate shall be furnished to the
Indenture Trustee, such Person shall be appointed by the Charterer and approved
by the Indenture Trustee in the exercise of reasonable care and such opinion or
certificate shall state that the signer has read this definition and that the
signer is Independent within the meaning hereof.
"Independent Investment Banker" shall mean an independent investment
-----------------------------
banking institution of national standing appointed by the Charterer on behalf of
the Owner Trustee; provided that if the Indenture Trustee shall not have
--------
received written notice of such an appointment at least ten (10) days prior to
the relevant Redemption Date or Charter Termination Date or if a Charter Event
of Default shall have occurred and be continuing, "Independent Investment
----------------------
Banker" shall mean such an institution appointed by the Indenture Trustee.
"Initial Secured Notes" shall mean the Secured Notes issued under the
---------------------
Indenture on the Funding Date or any Secured Notes issued in exchange therefore
pursuant to Sections 2.06 and 2.07 of the Indenture.
"Initial Subcharter" shall mean the subcharter agreement for the
------------------
demise charter of the Vessel, dated as of the Funding Date, between the
Charterer and the Operator.
"Interest Payment Date" shall mean each January 31 and July 31.
---------------------
"Interim Charter Hire" shall have the meaning specified in Section
--------------------
3(b) of the Charter.
"Interim Charter Term" shall have the meaning set forth in Section
--------------------
3(a) of the Charter.
"Investment" shall have the meaning specified in Section 2.1 of the
----------
Participation Agreement.
"Lien" shall mean any mortgage, pledge, security interest,
----
encumbrance, lien, right of others or charge of any kind, any right of first
refusal, any title defect, conditional sale or other title retention agreement
or any Charter in the
-14-
<PAGE>
nature thereof or the filing of, or agreement to give, any financing statement
under the UCC (or any similar law) of any jurisdiction.
"Loan Participant" shall mean and include each Holder (including, so
----------------
long as it holds a Secured Note, any Pass Through Trustee).
"Loan Participant's Liens" shall mean any Lien on or relating to, or
------------------------
affecting all or any part of, the Vessel, the Charter, the Trust Estate, the
Indenture Estate or any payment of Charter Hire (a) which results from any act
-
of, or any failure to act by, or any Claim against or affecting, the Loan
Participant unrelated to the Loan Participant's participation in the
transactions contemplated by the Operative Documents or which results from any
violation by the Loan Participant of any of the terms of the Operative
Documents; (b) which results from any Tax owed by the Loan Participant, except
-
that Loan Participant's Liens shall not include any Lien resulting from any Tax
for which the Charterer is obligated to indemnify the Loan Participant until
such time as the Charterer shall have already paid to, or on behalf of, the Loan
Participant the Tax or an indemnity with respect to the same or (c) which
-
results from any Claim against the Loan Participant arising out of the voluntary
or involuntary transfer (other than pursuant to Section 18(a) of the Charter) by
the Loan Participant of all or any part of its interest in the Secured Notes,
the Vessel, the Charter, the Trust Estate, the Indenture Estate or any payment
of Charter Hire.
"Loss Termination Date" shall have the meaning set forth in Section
---------------------
11(b)(i) of the Charter.
"Majority in Interest of Holders of Notes" shall mean, as of any date
----------------------------------------
of determination, Holders holding in aggregate more than 51% of the total
principal amount of the Secured Notes Outstanding.
"Make-Whole Amount" shall mean, with respect to the principal amount
-----------------
of any Outstanding Secured Note of any series to be redeemed or purchased on any
Redemption Date, the amount which the Independent Investment Banker determines
as of the fourth Business Day prior to such Redemption Date to equal the excess,
if any, of (x) the sum of the present values of all the remaining scheduled
-
payments of principal and interest from the Redemption Date to maturity of such
Secured Note, discounted semi-annually on each Interest Payment Date at a rate
equal to the Treasury Rate plus 0.10%, based on a 360-day year of twelve 30-day
months, over (y) the unpaid principal amount of such Secured Note plus accrued
-
but unpaid interest on such Secured Note (but not any accrued interest in
default).
-15-
<PAGE>
"Maturity Date" shall mean, with respect to the Secured Note of any
-------------
series, the date specified as the "Maturity Date" for such series on Exhibit B
to the Indenture.
"Maximum Rate" shall have the meaning set forth in Section 21(m)
------------
of the Charter.
"Modifications" shall mean collectively, Optional Modifications and
-------------
Required Modifications.
"Monthly Date" shall mean any date set forth in the first column of
------------
Schedule 3 to the Charter.
"Nonseverable Modification" shall mean any Modification to the Vessel
-------------------------
which is not a Severable Modification.
"Non-tax Pricing Assumptions" shall have the meaning specified in
---------------------------
Schedule 2 to the Participation Agreement.
"Note Register" shall have the meaning specified in Section 2.04
-------------
of the Indenture.
"Officer's Certificate" and "Officers' Certificate" of any Person
--------------------- ---------------------
shall mean a certificate signed on behalf of such Person by the Chairman, the
President, any Vice President, any Assistant Vice President, Financial Services
Officer, the Controller, Assistant Treasurer or the Treasurer of such Person or
any other individual duly authorized and acting in such capacity or, in the case
of the Owner Trustee, the Pass Through Trustee or the Indenture Trustee, a
Responsible Officer of the Owner Trustee, the Pass Through Trustee or the
Indenture Trustee.
"Operative Documents" shall mean the Conveyancing Instrument, the Bill
-------------------
of Sale, the Guaranty, the Indenture, the Ship Mortgage, the Charter, the
Participation Agreement, the Secured Note, the Tax Indemnity Agreement and the
Trust Agreement.
"Operator" shall mean, Mobil Oil Corporation initially, and any other
--------
subcharterer or operator operating the Vessel (but shall not be deemed to
include the Shipowner or any subcharterer of the Shipowner or operator operating
the Vessel for the Shipowner or such subcharterer of the Shipowner, in each case
other than the Charterer or any operator operating the Vessel on behalf of the
Charterer) under any subcharter, assignment, or other agreement entered into in
accordance with Section 16(b) of the Charter.
-16-
<PAGE>
"Optional Modifications" shall have the meaning specified in Section
----------------------
6(b) of the Charter.
"Outstanding" shall mean, when used with respect to the Secured Notes
-----------
as of any date of determination, all Secured Notes theretofore authenticated and
delivered under the Indenture, except:
(i) Secured Notes theretofore canceled by the Indenture Trustee or
delivered to the Indenture Trustee for cancellation;
(ii) Secured Notes or portions thereof for whose payment or redemption
money in the necessary amount has been theretofore deposited with the
Indenture Trustee in trust for the Loan Participants with respect to such
Secured Notes, provided that if such Secured Notes are to be redeemed or
--------
purchased, notice of such redemption or purchase has been duly given (or
provision thereof satisfactory to the Indenture Trustee has been made) and
not revoked or otherwise withdrawn pursuant to the Indenture; and
(iii) Secured Notes paid or in exchange for which or in lieu of which
other Secured Notes have been authenticated and delivered pursuant to the
Indenture;
provided, however, that in determining whether the Holders of the requisite
- -------- -------
principal amount of Secured Notes Outstanding have given any request, demand,
authorization, direction, notice, consent or waiver hereunder, Secured Notes
owned by or pledged to the Owner Trustee, the Charterer, the Owner Participant,
or any Affiliate of the Charterer, the Owner Trustee or the Owner Participant,
shall be disregarded and deemed not to be Outstanding, unless such Person owns
100% of the Secured Notes owned by all Persons, except that, in determining
whether the Indenture Trustee shall be protected in relying upon any such
request, demand, authorization, direction, notice, consent or waiver, only
Secured Notes which the Indenture Trustee knows to be so owned or pledged shall
be so disregarded. Secured Notes so owned which have been pledged in good faith
may be regarded as Outstanding if the pledgee establishes to the satisfaction of
the Indenture Trustee the pledgee's right so to act with respect to such Secured
Notes and that the pledgee is not the Owner Trustee, the Charterer, the Owner
Participant, or any Affiliate of the Owner Trustee, the Charterer or the Owner
Participant.
"Overdue Rate" shall mean a rate per annum equal to (i) with respect
------------ -
to amounts owing to the Loan Participant constituting payments or prepayments of
any Secured Notes of any series, the rate of interest specified for overdue
amounts on
-17-
<PAGE>
such series of Secured Notes and (ii) with respect to amounts owing to the Owner
--
Participant, the Charterer or the Owner Trustee, the rate of interest publicly
announced from time to time by Citibank, N.A. in New York City as its "prime" or
"base" rate plus 1% (computed on the basis of the actual days elapsed during the
relevant period and a 365-day year).
"Owner Participant" shall mean SBCM Marine Finance, Inc., a Delaware
-----------------
corporation, and each Person to whom a transfer is effected in accordance with
and pursuant to the terms of Section 13 of the Participation Agreement.
"Owner Participant Guarantor" shall mean Sumitomo Bank Capital
---------------------------
Markets, Inc., a Delaware corporation, in its capacity as guarantor, or any
successor, assignee or other transferee, as guarantor under the Owner
Participant Guaranty, as permitted by the terms of the Owner Participant
Guaranty.
"Owner Participant Guaranty" shall mean the Owner Participant
--------------------------
Guaranty, dated as of the Funding Date by the Owner Participant Guarantor in
favor of the Charterer, Mobil Oil Corporation, the Owner Trustee, the Trust
Company, and the Indenture Trustee, as the same may be modified, amended or
supplemented from time to time.
"Owner Participant Guaranty Documents" shall mean collectively, the
------------------------------------
Participation Agreement, the Charter and the Tax Indemnity Agreement
"Owner Participant's Liens" shall mean any Lien on or relating to or
-------------------------
against all or any part of the Vessel, the Charter, the Trust Estate, the
Indenture Estate or any payment of Charter Hire (a) which results from any act
-
of, or any failure to act by, or any Claim against or affecting, the Owner
Participant unrelated to the Owner Participant's participation in the
transactions contemplated by the Operative Documents or which results from any
violation by the Owner Participant of any of the terms of the Operative
Documents; (b) which results from any Tax owed by the Owner Participant, except
-
that Owner Participant's Liens shall not include any Lien resulting from any Tax
for which the Charterer is obligated to indemnify the Owner Participant (or any
member of its consolidated group) until such time as the Charterer shall have
already paid to, or on behalf of, the Owner Participant (or such member of its
consolidated group), the Tax or an indemnity with respect to the same or (c)
-
which results from any Claim against the Owner Participant arising out of the
voluntary or involuntary transfer (other than pursuant to Section 18(a) of the
Charter) by the Owner Participant of all or any part of its interest in the
Vessel, the Charter, the Trust Estate, the Indenture Estate or any payment of
Charter Hire, including, without limitation, by
-18-
<PAGE>
means of granting a security interest therein other than the Lien of the
Indenture.
"Owner Participant's Net Economic Return" shall mean the original
---------------------------------------
Owner Participant's anticipated (i) nominal after-tax yield on the sum of the
-
Investment (on the assumption that none of the Investment is comprised of
borrowed funds) plus the Transaction Expenses paid by the Owner Trustee,
computed using the multiple investment sinking fund method of analysis as
described in FAS 13 and (ii) total (but not periodic) after-tax cash flow as a
--
percentage of Shipowner's Cost, each as computed by the original Owner
Participant in accordance with the assumptions and methods of calculation
employed in the original calculation of the Charter Hire, Termination Values,
Stipulated Loss Values and EBO Exercise Price as of the Funding Date (as such
assumptions may have been modified pursuant to Section 2.12 of the
Participation Agreement) through each of the EBO Exercise Date and the end of
the Base Charter Term; provided that (a) in the case of any Modification to the
-
Vessel financed pursuant to a Supplemental Financing in which the Owner
Participant has made an equity investment, the Owner Participant's Net Economic
Return shall be computed in accordance with the terms and conditions agreed to
by the Owner Participant and the Charterer at the time of such Supplemental
Financing and (b) in the case of any Modification financed pursuant to a
-
Supplemental Financing in which the Owner Participant has not made an equity
investment, the Tax Pricing Assumptions with respect to such Modification and
such Supplemental Financing shall be determined under the law in effect at the
time of such Supplemental Financing and by taking into account the United States
federal, state and local tax posture of the Owner Participant at the time of
such Supplemental Financing, as determined by the Owner Participant in its
reasonable, good faith judgment and certified by the Owner Participant to the
Charterer in writing and, if requested by the Charterer, verified by a
nationally recognized Independent accounting firm mutually acceptable to the
Owner Participant and the Charterer.
"Owner Trustee" shall have the meaning set forth in the preamble to
-------------
the Trust Agreement.
"Owner Trustee Documents" shall have the meaning specified in Section
-----------------------
2 of the Trust Agreement.
"Owner Trustee Fees" shall mean the fees, expenses and disbursements
------------------
of the Owner Trustee, after the Delivery Date, payable pursuant to the Trust
Agreement as they are set forth in an Officer's Certificate of the Owner Trustee
received by the Charterer.
-19-
<PAGE>
"Participant" shall mean the Loan Participant or the Owner Participant
-----------
and "Participants" shall mean all of them.
------------
"Participation Agreement" shall mean the Participation Agreement,
-----------------------
dated as of the Funding Date among the Charterer, the Owner Participant, the
Pass Through Trustee, the Indenture Trustee and the Owner Trustee, as the same
may be modified, amended or supplemented from time to time.
"Pass Through Certificates" shall mean any certificates from time to
-------------------------
time issued and outstanding under and pursuant to the Pass Through Trust
Documents.
"Pass Through Trust" shall mean, with respect to any Pass Through
------------------
Trust Supplement, the trust created by the Pass Through Trust Agreement, as
modified by such Pass Through Trust Supplement.
"Pass Through Trust Agreement" shall mean the Pass Through Trust
----------------------------
Agreement, dated as of the Funding Date among the Guarantor, the Charterer, the
Pass Through Trustee and certain other parties, as the same may be modified,
amended or supplemented from time to time.
"Pass Through Trust Documents" shall mean the Pass Through Trust
----------------------------
Agreement and any other documents entered into in connection with the Pass
Through Trust Documents and the transactions contemplated therein.
"Pass Through Trust Property" in the case of each Pass Through Trust,
---------------------------
shall mean the "Property" as defined in the Pass Through Trust Agreement.
"Pass Through Trust Supplement" shall mean the supplements to the Pass
-----------------------------
Through Trust Agreement relating to the Pass Through Certificates.
"Pass Through Trustee" shall mean State Street Bank and Trust Company,
--------------------
not in its individual capacity except as expressly provided in any Pass Through
Trust Document or in any Operative Document, but solely as Pass Through Trustee
under the Pass Through Trust Documents, or its successor in interest, and any
successor trustee appointed as provided therein.
"Pass Through Trustee's Liens" shall mean the "Trustee's Liens", as
----------------------------
such term is defined in Section 7.16 of the Pass Through Trust Agreement.
"Permitted Investments" shall mean (i) obligations of the United
--------------------- -
States as of America, or obligations fully guaranteed as to interest and
principal by the United States of America;
-20-
<PAGE>
(ii) certificates of deposit issued by an Eligible Bank or interest-bearing
--
insured accounts in an Eligible Bank; (iii) commercial paper, rated at least P-1
---
(or comparable rating) by Moody's Investors Service, Inc. (or any successor
thereto) or at least A-1 (or comparable rating) by Standard and Poor's
Corporation (or any successor thereto) or (iv) a money market fund registered
--
under the Investment Company Act of 1940, the portfolio of which is limited to
U.S. government obligations and U.S. agency obligations.
"Permitted Liens" shall mean
---------------
(i) the respective rights and interests of the Charterer, the
Operator, any subcharterer, Owner Participant, Shipowner, and Indenture
Trustee, as provided in the Operative Documents;
(ii) the rights of the Charterer under this Charter, including,
without limitation, the rights of the Operator or any subcharterer or any
other assignee under a subcharter, assignment or other agreement permitted
by the terms of the Charter;
(iii) Liens attributable to the Owner Trustee, the Trust Company, the
Owner Participant, the Loan Participant(s) and the Indenture Trustee;
(iv) Liens for Taxes either not yet due or which are being contested
in good faith and by appropriate proceedings, so long as such proceedings
do not involve a material danger of the sale, forfeiture or loss of the
Vessel or any material part thereof or title thereto or interest therein;
(v) Salvage, general average, seamen's, materialmen's, mechanics',
workmen's, repairmen's, employees', carriers', warehousemen's or other like
Liens (A) arising in the ordinary course of business of the Charterer, the
Operator, any subcharterer or assignee under any subcharter or assignment
or other agreement permitted by this Charter, or (B) arising in the course
of constructing, repairing, equipping or overhauling or modifying the
Vessel or any part thereof, in each case for amounts not more than sixty
(60) days past due or being contested in good faith by appropriate
proceedings;
(vi) Liens that are being contested in good faith and by appropriate
proceedings so long as such proceedings do not involve any material danger
of the sale, forfeiture or loss of the Vessel or any material part thereof
or title thereto or interest therein;
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<PAGE>
(vii) Liens that arise out of judgments or awards with respect to
which:
(a) at the time an appeal or proceeding for review is being
prosecuted in good faith,
(b) there shall have been secured a stay of execution pending
such appeal or proceeding for review, and
(c) during such proceeding there is no material risk of the
sale, forfeiture or loss of the Vessel or any material part thereof or
title thereto or interest therein;
(viii) Liens that do not materially adversely affect the use of the
Vessel for its intended purpose; and
(ix) Liens that arise upon the occurrence of or after an Event of Loss
or during any period which the use of the Vessel has been requisitioned by
the United States.
"Person" shall mean any individual, partnership, corporation, trust,
------
unincorporated association, joint venture, government or any department or
agency thereof or any other entity.
"Plans and Specifications" shall mean the plans and specifications of
------------------------
the Vessel as identified in Article I of the Construction Contract, as the same
may be modified, amended or supplemented from time to time pursuant to the
Construction Contract.
"Pre-Funding Change in Tax Law" shall mean a Change in Tax Law that
-----------------------------
occurs after August 28, 1997 and before the Funding Date and that affects the
Tax Pricing Assumptions set forth in Schedule 2 to the Participation Agreement.
"Preferred Stock" shall mean, with respect to any Person, any and all
---------------
shares, interests, participations or other equivalents (however designated) of
such Person's preferred or preference stock, whether now outstanding or issued
after the date of the Participation Agreement, and includes, without limitation,
all classes and series of preferred or preference stock.
"Premium" shall mean the Make-Whole Amount, if any, payable pursuant
-------
to Article III of the Indenture.
"Premium Termination Date" shall mean, with respect to any Series
------------------------
1997-B Secured Notes, the date set forth as the
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<PAGE>
"Premium Termination Date" with respect to such series in Exhibit B to the
------------------------
Indenture.
"Purchase Notice" shall have the meaning specified in Section 15(b) of
---------------
the Charter.
"Purchase Redemption Date" shall have the meaning specified in Section
------------------------
3.02(c) of the Indenture.
"Rating Agency" shall mean each of Moody's Investors Service and
-------------
Standard & Poor's, or if Moody's Investors Service or Standard & Poor's shall no
longer perform the function of a securities rating agency, "Rating Agency" shall
be deemed to refer to any other nationally recognized rating agency designated
by the Guarantor.
"Rating Agency Confirmation" shall mean a prior written confirmation
--------------------------
from each Rating Agency that a specified action or event shall not result in the
downgrade or withdrawal of such Rating Agency's then current credit rating of
the Pass Through Certificates.
"Redelivery Condition" shall have the meaning specified in Section
--------------------
4(a) of the Charter.
"Redemption Date" shall mean the date on which the Secured Notes are
---------------
to be redeemed pursuant to Section 3.02, 3.05 or 3.06 of the Indenture.
"Redemption Price" shall have the meaning specified in Section 3.10 of
----------------
the Indenture.
"Refunded Secured Notes" shall have the meaning specified in Section
----------------------
15.1 of the Participation Agreement.
"Refunding Date" shall have the meaning specified in Section 15.19(d)
--------------
of the Participation Agreement.
"Refunding Secured Notes" shall have the meaning specified in Section
-----------------------
15.1 of the Participation Agreement.
"Registration Statement" shall mean the Registration Statement on Form
----------------------
S-3 that was filed by Mobil Corporation and Mobil Transport Finance Company Inc.
with the SEC, and became effective on November 12, 1996, as the same may be
modified and supplemented from time to time with respect to the offering of the
Pass Through Certificates.
"Related Indemnitee Group" shall mean, with respect to each
------------------------
Indemnitee, its Affiliates, officers, directors, employees, agents,
representatives, successors and assigns.
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<PAGE>
"Relevant Amendment" shall have the meaning specified in Section 3.04
------------------
of the Indenture.
"Relevant Date" shall have the meaning specified in Section 3.04 of
-------------
the Indenture.
"Relevant Date Supplement" shall have the meaning specified in Section
------------------------
3.04 of the Indenture.
"Renewal Hire" shall have the meaning set forth in Section 14(c) of
------------
the Charter.
"Renewal Notice" shall have the meaning specified in Section 14(c) of
--------------
the Charter.
"Renewal Term" shall mean a period, during which the Vessel may be
------------
chartered for the Fair Market Charter Value as permitted by Section 14 of the
Charter, commencing at the end of the Base Charter Term or any Renewal Term and
ending on the date chosen by the Charterer pursuant to Section 14 of the Charter
or such shorter period as may result from earlier termination of the Charter.
"Request" shall have the meaning specified in Section 2.08(b) of the
-------
Indenture.
"Required Modifications" shall mean alterations, modifications,
----------------------
additions and improvements of or to the Vessel as may be required by applicable
Governmental Rules, and by Sections 5(d) and 6(a) of the Charter.
"Responsible Officer", when used with respect to the Owner Trustee,
-------------------
the Indenture Trustee or the Pass Through Trustee, shall mean an officer in its
corporate trust administration department (or any successor group of the Owner
Trustee, the Indenture Trustee or the Pass Through Trustee, as the case may be)
or any other officer customarily performing functions similar to those performed
by any of the above designated officers and also shall mean, with respect to a
particular corporate trust matter, any other officer to whom such matter is
referred because of such officer's knowledge of and familiarity with the
particular subject. When used with respect to the Charterer, Responsible
Officer shall mean any officer of the Charterer authorized to act on behalf of
the Charterer.
"SEC" shall mean the Securities and Exchange Commission.
---
"Secured Note" shall mean the note, and "Secured Notes" shall mean all
------------ -------------
notes, and any replacement thereof, and
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<PAGE>
any Additional Notes, from time to time issued and outstanding under and
pursuant to the Indenture.
"Securities Act" shall mean the Securities Act of 1933, as amended.
--------------
"Seller" means Mobil Oil Corporation, a New York corporation.
------
"Series 1997-B Secured Notes" shall mean the Series 1997 B Secured
---------------------------
Notes, issued under Section 2.01 of the Indenture, and shall include any Series
1997 B Secured Notes issued in exchange therefor or replacement thereof pursuant
to Section 2.07 of the Indenture.
"Severable Modification" shall mean any Modification to the Vessel
----------------------
permitted under the Charter which can be readily removed from the Vessel without
causing material damage to the Vessel.
"Ship Mortgage" shall mean the First Preferred Ship Mortgage on the
-------------
Vessel dated the Funding Date, granted by the Shipowner in favor of the
Indenture Trustee.
"Ship Mortgage Act" shall mean the Ship Mortgage Act, 1920, as
-----------------
amended, and any successor laws governing ship mortgages on United States flag
vessels.
"Shipowner" shall mean the Owner Trustee.
---------
"Shipowner's Cost" shall mean the amount set forth in the notice of
----------------
closing delivered by the Charterer pursuant to Section 2.4 of the Participation
Agreement and equals the sum of (a) the Total Vessel Cost and (b) the
Transaction Expenses.
"Shipowner's Liens" shall mean any Lien on or relating to or affecting
-----------------
all or any part of the Vessel, the Charter, the Trust Estate, the Indenture
Estate or any payment of Charter Hire (a) which results from any act of, or any
-
failure to act by, or any Claim against or affecting, the Trust Company or the
Owner Trustee unrelated to the Owner Trustee's interest in the Vessel, the
administration of the Trust Estate or the Trust Company's or the Owner Trustee's
participation in the transactions contemplated by the Participation Agreement
or any other Operative Document, or which results from any violation by the
Trust Company or the Owner Trustee of any of the terms of the Operative
Documents; (b) which results from any Tax owed by the Trust Company or the Owner
-
Trustee, except that Shipowner's Liens shall not include any Lien resulting from
any Tax for which the Charterer is obligated to indemnify the Trust Company or
the Owner Trustee until such time as the Charterer shall have
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<PAGE>
already paid to, or on behalf of, the Trust Company or the Owner Trustee, as the
case may be, the Tax or an indemnity with respect to the same or (c) which
-
results from any Claim against the Trust Company or the Owner Trustee arising
out of the voluntary or involuntary transfer (other than pursuant to Section
18(a) of the Charter) by the Owner Trustee of all or any part of its interest in
the Vessel, the Charter, the Trust Estate, the Indenture Estate or any payment
of Charter Hire, including, without limitation, by means of granting a security
interest therein other than the Lien of the Indenture and the Ship Mortgage.
"Shipping Act" shall mean the Shipping Act, 1916, as amended, and any
------------
successor laws governing citizenship of vessels used in U.S. coastwise trade.
"Special Purchase Option" shall have the meaning specified in Section
-----------------------
15(a)(v) of the Charter.
"Special Purchase Option Dates" shall mean either of two dates (such
-----------------------------
dates to be specified by Charterer prior to the Funding Date).
"Special Termination" shall have the meaning specified in Section
-------------------
12(e)(i) of the Charter.
"Special Termination Date" shall have the meaning specified in Section
------------------------
12(e)(ii) of the Charter.
"Special Termination Notice" shall have the meaning specified in
--------------------------
Section 12(e)(ii) of the Charter.
"Specified Charter Event of Default" shall mean a Charter Event of
----------------------------------
Default described in paragraph (i), (vi) or (vii) of Section 17(a) of the
Charter.
"Stipulated Loss Value", shall mean with respect to the Vessel, as of
---------------------
any Stipulated Loss Value Determination Date, (i) during the Base Charter Term,
-
the amount determined by multiplying Total Vessel Cost by the Stipulation Loss
Value Percentage set forth opposite such Stipulated Loss Value Determination
Date in Schedule 2 to the Charter and (ii) during any Renewal Term, as
--
determined pursuant to Section 14(d) of the Charter.
"Stipulated Loss Value Determination Date" shall mean any of the dates
----------------------------------------
set forth on Schedule 2 to the Charter.
"Stipulated Loss Value Percentages" shall mean the percentages set
---------------------------------
forth in Schedule 2 to the Charter, subject to
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<PAGE>
adjustment in accordance with Section 2.12 of the Participation Agreement.
"Subsidiary" of any Person shall mean any corporation, association or
----------
other business entity of which more than 50% of the total voting power of shares
of Capital Stock entitled to vote in the election of directors, managers or
trustees thereof (without regard to the occurrence of any contingency) is at the
time owned or controlled, directly or indirectly, by such Person or one or more
of the other Subsidiaries (within the meaning of this definition) of that
Person, or a combination thereof.
"Supplemental Charter Hire" shall mean (i) any and all amounts,
------------------------- -
liabilities and obligations (other than Base Charter Hire, Renewal Hire or
Interim Charter Hire) which the Charterer assumes or agrees to pay to or on
behalf of the Owner Trustee, the Owner Participant, the Trust Company, the Loan
Participant or the Indenture Trustee under any Operative Document, including,
without limitation, any payments of indemnification or Stipulated Loss Value or
Termination Value or, to the extent provided in Section 3(j) of the Charter,
Premium and (ii) any amounts which are expressed in the Indenture to be payable
--
as the Charterer's expense.
"Supplemental Financing" shall mean any financing of the cost of any
----------------------
Modification to the Vessel pursuant to Section 14 of the Participation
Agreement.
"Taxes" shall mean any and all taxes, impositions, fees, levies,
-----
assessments, duties, withholdings or other governmental charges of any nature
whatsoever (together with any related interest, fines, penalties or additions to
tax), however imposed or asserted, by any United States Federal, state or local
government or taxing authority (including any possession or territory thereof),
or any foreign government or any taxing authority or subdivision thereof, or any
international taxing authority or any subdivision or taxing authority thereof,
including, without limitation, rental, income, withholding, sales, use,
transfer, leasing, personal property, real property, excise, receipts,
franchise, value-added, stamp, filing, recording, documentation or license
taxes.
"Tax Claim" shall have the meaning specified in Section 12.2(e) of the
---------
Participation Agreement.
"Tax Indemnitee" shall mean the Owner Trustee (both in its individual
--------------
capacity and in its trust capacity), the Owner Participant and the Indenture
Trustee (both in its individual capacity and in its trust capacity) but shall
not include (i) the Loan Participant, (ii) the Pass Through Trustee or (iii) any
- -- ---
Certificateholder.
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<PAGE>
"Tax Indemnity Agreement" shall mean the Tax Indemnity Agreement,
-----------------------
dated as of the Funding Date between the Owner Participant and the Charterer, as
the same may be modified, amended or supplemented from time to time.
"Tax Pricing Assumptions" shall mean the assumptions described as "Tax
-----------------------
Pricing Assumptions" in Schedule 2 to the Participation Agreement.
"Termination Date" shall have the meaning specified in Section 12(b)
----------------
of the Charter.
"Termination Election" shall have the meaning specified in Section
--------------------
12(a) of the Charter.
"Termination Redemption Date" shall have the meaning specified in
---------------------------
Section 3.02(b) of the Indenture.
"Termination Value" shall mean with respect to the Vessel (i) as of
----------------- -
the Funding Date or any Monthly Date during the Base Charter Term, the amount
determined by multiplying Owner Trustee's Cost by the Termination Value
Percentage set forth opposite such date in Schedule 3 to the Charter and (ii)
--
during any Renewal Term, as determined pursuant to Section 14(d) of the Charter.
"Termination Value Percentages" shall mean the percentages set forth
-----------------------------
on Schedule 3 to the Charter, subject to adjustment in accordance with Section
2.12 of the Participation Agreement.
"Total Vessel Cost" shall mean the fair market value of the Vessel as
-----------------
determined by the Appraisal, which is an amount equal to $47,936,794.00.
"Transaction Expenses" shall mean the fees, expenses, disbursements
--------------------
and costs incurred in connection with the preparation, execution and delivery of
the Operative Documents and the Pass Through Trust Documents and the
consummation of the transactions contemplated thereby on the Funding Date,
including, but not limited to:
(i) document preparation, printing and distribution costs, ratings
agency fees and governmental filing fees;
(ii) fees and expenses of counsel to the Underwriter and counsel to
the Holders and up to $100,000 of the fees plus the reasonable
expenses of Mayer, Brown & Platt, counsel to the Owner
Participant;
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<PAGE>
(iii) the initial fees and expenses of the Owner Trustee, the Indenture
Trustee and, if applicable, the Pass Through Trustee, and their
respective counsel;
(iv) the fees and expenses of the Charterer Financial Advisor and the
Charterer Debt Advisor/Underwriter (including underwriting
commissions and/or placement fees); and
(v) the fees and expenses of the Appraiser.
Transaction Expenses will not include any fees and expenses of financial
advisors or brokers retained by or acting on behalf of the Owner Participant or
any Lender. Any such fees and expenses shall be paid separately by the Owner
Participant or such Lender, as the case may be.
"Transferee" shall have the meaning specified in Section 13.2 of the
----------
Participation Agreement.
"Treasury Rate" shall mean, with respect to each Secured Note to be
-------------
redeemed or purchased, a per annum rate (expressed as a semi-annual equivalent
and as a decimal and, in the case of United States Treasury bills, converted to
a bond equivalent yield), determined to be the per annum rate equal to the semi-
annual yield to maturity of United States Treasury securities maturing on the
Average Life Date of such Secured Note, as determined by interpolation between
the most recent weekly average yields to maturity for two series of United
States Treasury securities, (A) one maturing as close as possible to, but
-
earlier than, the Average Life Date of such Secured Note and (B) the other
-
maturing as close as possible to, but later than, the Average Life Date of such
Secured Note, in each case as published in the most recent H.15(519) (or, if a
weekly average yield to maturity of United States Treasury securities maturing
on the Average Life Date of such Secured Note is reported in the most recent
H.15(519), as published in H.15(519)). H.15(519) shall mean "Statistical
Release H.15(519), Selected Interest Rates" or any successor publication,
published by the Board of Governors of the Federal Reserve System. The most
recent H.15(519) shall mean the latest H.15(519) which is published prior to the
close of business on the fourth Business Day preceding the Redemption Date. For
purposes hereof, "Average Life Date" shall mean, with respect to each Secured
-----------------
Note to be redeemed, the date which follows the Redemption Date by a period
equal to the Remaining Weighted Average Life of such Secured Note. For purposes
hereof, "Remaining Weighted Average Life" shall mean, for any Secured Note, as
-------------------------------
of any date of determination, the number of days equal to the quotient obtained
by dividing (a) the sum of the products
-
-29-
<PAGE>
obtained by multiplying (i) the amount of each then remaining installment of
-
principal, including the payment due on the maturity of such Secured Note by
(ii) the number of days from and including the Redemption Date to but excluding
--
the scheduled payment date of such principal payment, by (b) the then unpaid
-
principal amount of such Secured Note.
"Treasury Regulations" shall mean the income tax regulations issued,
--------------------
published or promulgated under the Code by the United States Department of the
Treasury.
"Trust Agreement" shall mean the Trust Agreement dated as of the
---------------
Funding Date between the Owner Participant and the Trust Company, as the same
may be modified, amended or supplemented from time to time.
"Trust Company" shall mean First Security Bank, National Association,
-------------
a national banking association, in its individual capacity.
"Trust Estate" shall have the meaning specified in Section 3.2 of the
------------
Trust Agreement.
"Trust Expenses" shall have the meaning specified in Section 8.1 of
--------------
the Trust Agreement.
"Trust Indenture Act" shall mean the Trust Indenture Act of 1939, as
-------------------
amended.
"UCC" shall mean the Uniform Commercial Code as in effect in the State
---
of New York or in any other applicable jurisdiction.
"Underwriting Agreement" shall mean the Underwriting Agreement to be
----------------------
entered into among the Guarantor, the Charterer and Charterer Debt
Advisor/Underwriter relating to the purchase and sale of the Pass Through
Certificates, as the same may be modified, amended or supplemented from time to
time.
"U.S. Government Obligations" shall mean securities that are direct
---------------------------
obligations of the United States of America for the payment of which its full
faith and credit is pledged which are not callable or redeemable, and shall also
include a depository receipt issued by a bank or trust company as custodian with
respect to any such U.S. Government Obligation or a specific payment of interest
on or principal of any such U.S. Government Obligation held by such custodian
for the account of the holder of a depository receipt so long as such custodian
is not authorized to make any deduction from the amount payable to the holder of
such depository receipt from any amount received by the custodian in respect of
the U.S. Government Obligation or
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<PAGE>
the specific payment of interest on or principal of the U.S. Government
Obligation evidenced by such depository receipt.
"Vessel" shall mean the United States documented double-hulled tanker
------
vessel AMERICAN PROGRESS, Official Number 1053997, of approximately 30,415 gross
tons and 11,125 net tons, built in 1997 by Newport News Shipbuilding and Dry
Dock Company, or any vessel substituted therefor in accordance with Section
11(b)(ii) of the Charter.
-31-
