<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MARCH 30, 2000
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1999
------------------------
COMMISSION FILE NUMBER 000-11573
MARINE TRANSPORT CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
1200 HARBOR BOULEVARD (9TH FLOOR)
C-901 WEEHAWKEN, NJ 07087-0901
<TABLE>
<S> <C>
DELAWARE 13-2625280
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
</TABLE>
REGISTRANT'S TELEPHONE NUMBER INCLUDING AREA CODE 201-330-0200
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT: NONE
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: NONE
<TABLE>
<CAPTION>
TITLE OF CLASS NAME OF EXCHANGE ON WHICH REGISTERED
-------------- ------------------------------------
<S> <C>
COMMON STOCK, PAR VALUE $.50 PER SHARE NASDAQ STOCK MARKET
</TABLE>
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. YES [X] NO [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. YES [X] NO [ ]
Aggregate market value of Registrant's voting stock, held by
non-affiliates, based on the closing price on the Nasdaq Stock Market as of the
close of business on March 28, 2000:
$17,207,841
Number of shares of the Registrant's Common Stock outstanding as of March
28, 2000:
6,555,368
The following document is hereby incorporated by reference into Part III of
this Form 10-K:
- ---------------
(1) Portions of the Marine Transport Corporation 1999 Proxy Statement to be
filed with the Securities and Exchange Commission.
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- --------------------------------------------------------------------------------
<PAGE> 2
INDEX
<TABLE>
<CAPTION>
ITEMS PAGE(S)
- ----- -------
<S> <C> <C>
Part I
1 & 2. Business and Properties..................................... 1-7
3. Legal Proceedings........................................... 7
4. Submission of Matters to a Vote of Security Holders......... 7
Part II
5. Market for Marine Transport Corporation's Common Stock and
Related Stockholders Matters................................ 8
6. Selected Financial Data..................................... 9-10
7. Management's Discussion and Analysis of Financial Condition
and Results of Operations................................... 10-13
7A. Quantitative and Qualitative Disclosures About Market
Risk........................................................ 14
8. Financial Statements and Supplementary Data................. 14-37
9. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure.................................... 38
Part III
10. Directors and Executive Officers of Marine Transport
Corporation................................................. 38
11. Executive Compensation...................................... 37
12. Security Ownership of Certain Beneficial Owners and
Management.................................................. 39
13. Certain Relationships and Related Transactions.............. 39
Part IV
14. Exhibits, Financial Statement Schedules and Reports on Form
8-K......................................................... 39-41
SIGNATURES........................................................... 42
</TABLE>
1
<PAGE> 3
PART I
ITEM 1. BUSINESS
AND
ITEM 2. PROPERTIES
GENERAL
Marine Transport Corporation ("MTC" or "the Company"), formerly named OMI
Corp., was established in its present form through a series of transactions,
culminating June 17, 1998, through which OMI Corp.: (a) acquired Marine
Transport Lines, Inc. in a stock-for-stock exchange (the "Acquisition") and (b)
distributed to its shareholders the stock of a newly created Marshall Islands
corporation named OMI Corporation containing OMI Corp.'s international
businesses (the "Distribution"). OMI Corp. then changed its name to Marine
Transport Corporation. The Company trades under the symbol "MTLX" and is listed
on the NASDAQ National Market.
Upon completion of the Distribution, the assets, liabilities and equity for
OMI Corp.'s international businesses were removed from the Company's balance
sheet at their recorded values. For periods prior to the Distribution, the
historical financial statements of the Company reflect the financial position
and results of operations of OMI Corp. as reported for such periods including
the international businesses. For periods subsequent to the Acquisition and
Distribution, the Company's financial statements include the assets,
liabilities, equity and operations of OMI Corp.'s domestic business and reflect
the acquisition of Marine Transport Lines, Inc. under the purchase method of
accounting. The financial position and results of operations of the Company
should be read and analyzed with careful consideration of the above transactions
and presentations.
Marine Transport Corporation is a U.S.-based supplier of marine
transportation services. The Company owns and operates a fleet of vessels for
its own account, and it also manages vessels for other vessel owners. It
presently operates one of the largest U.S.-based fleets of ocean-going vessels.
Prior to the Acquisition and Distribution, OMI Corp.'s major business was
providing seaborne transportation services for crude oil and refined petroleum
products in two distinct international market segments: Suezmax tankers and
Handymax product tankers. These businesses were separated from the Company and
distributed to OMI Corp's shareholders in the Distribution. In addition, as a
separate domestic business segment, OMI Corp. provided lightering services in
the Gulf of Mexico, operated four tank vessels in the U.S. Jones Act trade and
provided ship management services to the U.S. Government for its Ready Reserve
Fleet.
As a result of the Acquisition and the Distribution, the major businesses
of MTC are presently:
- marine transportation of chemicals, petroleum products and crude oil for
U.S.-based industrial customers, including lightering services for crude
oil customers in the Gulf of Mexico, and
- ship management services for third-party shipowners, including the U.S.
Government.
On March 6, 2000 Marine Transport Corporation acquired the ocean bulk
transportation businesses of Mormac Marine Group, Inc.("Mormac"), a privately
held company, in exchange for a: (a) cash payment in the amount of $100,000; and
(b) series of fixed and contingent payments to be made over the next five years.
The minimum amount payable to Mormac over the five year period is $7 million. By
entering into bareboat charters for three vessels owned by Mormac and purchasing
the stock of a Company engaged in the business of vessel management, MTC: (a)
became liable for certain costs associated with the three vessels; (b) became
entitled to the benefits of certain contractual arrangements to which these
vessels are subject; and (c) assumed the rights and obligations arising from
vessel management agreements with third parties.
2
<PAGE> 4
As of March 15, 2000, the ocean fleet of Marine Transport Corporation,
including the acquired fleet of Mormac, consisted of the following vessels:
<TABLE>
<CAPTION>
OWNED,
MANAGED YEAR
VESSEL NAME OR CHARTERED BUILT SIZE EMPLOYMENT TRADE/CARGO
- ----------- ------------ ----- ---- ---------- -----------
<S> <C> <C> <C> <C> <C>
TRANSPORTATION SERVICES FOR ENERGY AND CHEMICALS:
Marine Chemist............ Owned 1970 35,491 dwt Affreightment and Spot Chemical Parcel
Chemical Pioneer(a)....... Managed 1983 36,526 dwt Affreightment and Spot Chemical Parcel
MBC-1 (Barge)............. Owned 1973 4,000 dwt Affreightment and Spot Chemical Parcel
Chemical Explorer......... Owned 1981 46,919 dwt Affreightment and Spot Chemical Parcel
Chemical Trader........... Owned 1981 46,177 dwt Affreightment and Spot Chemical Parcel
Captain Downing........... Time Chartered 1996 39,385 dwt Affreightment and Spot Chemical Parcel
Marine Duval(b)(c)........ Owned 1970 25,131 dwt Time Charter Molten Sulphur
Courier................... Owned 1977 35,662 dwt Time Charter Oil Products
Patriot................... Owned 1976 35,662 dwt Spot Oil Products/
Grain
Rover..................... Owned 1977 35,662 dwt Spot Oil Products/
Grain
Mormacsun................. Bareboat Chartered 1975 39,128 dwt Affreightment and Spot Oil Products
Mormacsky................. Bareboat Chartered 1977 39,128 dwt Affreightment and Spot Oil Products
Mormacstar................ Bareboat Chartered 1976 38,128 dwt Affreightment and Spot Oil Products
Marine Columbia(d)........ Bareboat Chartered 1983 138,698 dwt Bareboat Charter out Crude Oil
BT Alaska(e).............. Bareboat Chartered 1978 91,120 dwt Time Charter Crude Oil
Deneb..................... Time Chartered 1985 79,900 dwt Lightering Lightering
Jahre Prince.............. Time Chartered 1986 94,491 dwt Lightering Lightering
Regent (Rich Duke)........ Time Chartered 1986 81,279 dwt Lightering Lightering
Marine Reliance(f)........ Time Chartered 1987 4,000 cars Time Charter Car Carrier
SHIP MANAGEMENT:
Harbel Cutlass............ Managed 1980 11,734 dwt Management Latex
Harbel Tapper............. Managed 1981 11,682 dwt Management Latex
Lykes Explorer............ Managed 1987 3,000 teu Management Container
Lykes Discoverer.......... Managed 1987 3,000 teu Management Container
Lykes Navigator........... Managed 1987 3,000 teu Management Container
Lykes Liberator........... Managed 1987 3,000 teu Management Container
Potomac Trader............ Managed 1983 50,875 dwt Management Crude/Products
Chasapeake Trader......... Managed 1982 50,875 dwt Management Crude/Products
Vessels Managed for U.S. Maritime Administration
</TABLE>
Twenty three vessels, primarily large roll-on/roll-off cargo vessels, are
managed under contracts which expired in June 1998 and have been extended to the
present time; MTC is presently bidding on five year renewal of these contracts.
Notes:
(a) MTC manages this vessel for its owner and provides commercial
management for open parcel space.
(b) Vessel residual value at end of charter term shared with charterer.
(c) Cargo forebody 1970; stern steam/electric 1944.
(d) Bareboat charter in, with fixed purchase option and bareboat chartered
out.
(e) Bareboat charter in and time chartered out, with all operating costs
paid by timecharterer.
(f) Time chartered in and time chartered out.
3
<PAGE> 5
DESCRIPTION OF THE COMPANY'S SERVICES BY SEGMENT
The market for the Company's major business segments are further described
in the following sections.
Transportation Services for Energy and Chemicals: MTC pursues an
industrial shipping philosophy, serving the chemical and petroleum liquid bulk
market for large commercial customers.
In two cases the Company has entered into long-term contracts of
affreightment providing for base amounts of cargo to be shipped on an annual
schedule of voyages on its owned vessels. These contracts are typically arranged
with major oil and chemical companies. Spot market movements are used to fill
out cargo capacity on vessels not fully utilized in the carriage of contract
cargo. The Company's vessels MARINE CHEMIST and MBC-1 are employed on this
basis. The activities of these vessels are complemented by a commercial
agreement between the Company and the owner of the vessel CHEMICAL PIONEER that
is managed both commercially and technically by the Company and is employed on a
basis similar to the above-mentioned vessels.
In August of 1999, MTC and Stolt-Nielsen Transportation Group Inc.
("SNTG"), a subsidiary of Stolt-Nielsen S.A., formed a joint venture company,
Stolt Marine Tankers, LLC ("SMT"), to manage the commercial and technical
operation of two chemical parcel tankers, SMT CHEMICAL TRADER and SMT CHEMICAL
EXPLORER, which were acquired from General Electric Credit Corporation of
Georgia by wholly-owned subsidiaries of MTC on September 28, 1999. Commercial
management services for the ships is provided by SNTG in international markets
and will be provided by MTC when the vessels qualify for participation in the
U.S. Jones Act market. Contemporaneously with the conclusion of this
transaction, SMT and Occidental Chemical Corporation ("Oxy") entered into a
long-term contract for the carriage of certain Oxy cargo in U.S. Jones Act
trade. The Company, with its new partner SNTG, has also concluded a Network
Alliance to provide domestic chemical marine transportation services to their
mutual partners.
During 1999, the Company chartered-in several vessels including CAPTAIN
DOWNING to carry contract cargo in excess of the Company's own vessel
capacities. Contracts are renewed periodically (contract terms range from one to
five years) and rate fluctuations due to a changing market environment are
generally not as large as experienced in the spot market for chemical and
petroleum tankers.
The vessel MARINE DUVAL operates under a long-term contract to a third
party customer who pays all direct costs of operating the vessel. The vessel
COURIER is employed on a two-year time charter to a major oil company. The
vessels PATRIOT and ROVER operate in the spot market for petroleum product bulk
movements or other cargo, which may become available from time to time including
PL-480 grain movements.
The vessels MORMACSUN, MORMACSKY and MORMACSTAR, which are bareboat
chartered in by the Company until the end of their OPA lives, are used to
perform contracts of affreightment for clean oil products. These contracts,
which are renewable each year, utilize a significant amount of the capacity of
the vessels.
The crude petroleum vessel MARINE COLUMBIA is bareboat chartered to Alaska
Tanker Company, LLC and time chartered to an affiliate of BP Amoco for use in
its Alaskan oil operations pursuant to a time charter with an expiration date of
November 2006. Performance by the affiliate of BP Amoco under this time charter
has been guaranteed by the Standard Oil Company of Ohio, a BP Amoco affiliate.
This vessel was sold and leased back by MTC in 1997 and MTC holds a purchase
option for the vessel which, prior to the expiration of the time charter with
the affiliate of BP Amoco, cannot be exercised without the consent of that
affiliate. Revenues from BP were approximately 13 percent of consolidated
revenues for the year ended December 31, 1999. In January 2000, MTC monetized
$48,417,638 of future earnings under the BP Amoco time charter with two banks.
Of this amount, $23,417,638 was used to replace certain indebtedness associated
with the vessel, $1,000,000 was used to settle a claim against an affiliate of
MTC and the remaining $24,000,000 was transferred to an affiliate of MTC for
current operations and growth, as well as for other projects to enhance
shareholder value.
4
<PAGE> 6
The vessel BT ALASKA is bareboat chartered from its owner by an affiliate
of MTC and time chartered to BP Amoco for its Alaska oil operations. All costs
of operation are paid by BP Amoco and the Company is indemnified for
liabilities.
All of the above-mentioned vessels except SMT CHEMICAL TRADER and SMT
CHEMICAL EXPLORER operate in the protected U.S. Jones Act market. SMT CHEMICAL
TRADER and SMT CHEMICAL EXPLORER are subject to operating subsidies which
restrict their domestic employment under the Jones Act until 2001, when they
become eligible for the U.S. domestic trade. The Jones Act restricts
participants in the U.S. coastwise shipping trade to those owners who are
qualified U.S. citizens and to vessels which are built in the United States and
are crewed with U.S. seafarers. Participants in the Jones Act trades are
limited, but competition in most areas of the trade is intense. The Company
attempts to differentiate itself in its energy and chemical segment by
specializing in areas such as chemical parcels where its unique vessel tonnage
meets charterers' specific needs. This differentiation is more difficult in
petroleum product movements, where competitors have similar vessels, cargo
requirements are less demanding and some overcapacity exists at the present
time. Other forms of competition include movement of energy sources and
chemicals by pipeline and rail, and imports and exports of products by
internationally registered vessels to and from geographic areas which are not
restricted by Jones Act requirements.
MTC also provides lightering services in the Gulf of Mexico through its
subsidiary MTL Petrolink Corp. Lightering involves transfer of crude oil from
large crude carriers ("VLCC's" or "ULCC's") to smaller vessels that bring the
crude oil to refinery storage terminals. The Company time charters in three
international flag Aframax tankers, and frequently charters in on a spot basis
other vessels to perform its services. MTL Petrolink Corp. provides workboat
vessels, equipment and personnel to discharge large crude oil vessels offshore
and deliver cargo to ports in the U.S. Gulf. MTL Petrolink Corp. also provides
repair services for its own assist vessels as well as for small vessels engaged
in commercial offshore and fishing trades. MTL Petrolink Corp. has two main
competitors for its services. The methods of competition include price as well
as the quality and safety of services. MTL Petrolink Corp. believes it is the
second largest company providing lightering services in the Gulf of Mexico.
The Transportation Services for Energy and Chemicals segment usually
experiences a slight seasonal downturn in the summer months due to refinery
shutdowns and inventory adjustments by customers. In general, the overall demand
for MTL Petrolink Corp.'s service is driven by the amount of oil imported into
the United States on long-haul vessels.
The Company also charters in and charters out the car carrier MARINE
RELIANCE, retaining a small profit between the charters. Results of operations
of this vessel are included in the Ship Management business segment.
Ship Management: MTC provides ship management services to industrial ship
owners who use vessels in parts of their own businesses, and to the U.S.
Government for its Ready Reserve Fleet. Ship management includes technical
operation and maintenance, crewing, regulatory compliance, and other ship
operating activities. Including vessels managed for its Transportation Services
for Energy and Chemicals segment, MTC manages one of the largest U.S.-based
fleets. External management contracts range in length from one to five years.
Ship management fees from outside customers are the primary component of other
operating revenues. There are a large number of competitors in the ship
management business, and many international ship management companies which are
larger than MTC, however, internationally-owned companies cannot perform ship
management services for Jones Act vessels. Management fees, quality of service,
and experience with particular vessel types are the significant forms of
competition for ship management services.
MEASUREMENT OF SEGMENT PROFITABILITY AND SEGMENT ASSETS
The Company evaluates the performance of each of its vessels engaged in the
Transportation of Energy and Chemicals segment based on the cash contribution of
each vessel in its specific trade. This contribution is determined by
subtracting voyage and vessel operating costs (other than depreciation and
amortization) from voyage revenues. For voyages in process at the measurement
date, the percentage of completion accounting method is used. All of the
Company's owned vessels are included in this business segment. For managed
5
<PAGE> 7
vessels participating in this business segment, the management fee and
commercial management fee, if any, determine their total cash contribution.
Ship management fee revenues, which are determined by contract with
customers, are the measurement of performance used for the Ship Management
segment. The owners of the managed vessels are responsible for their vessel
operating costs.
No allocation of general and administrative expense is made to the business
segments, nor is any inter-company revenue allocated for the management services
performed for the Transportation of Energy and Chemicals segment by the Ship
Management segment.
MTC considers Ship Management to be a core competence for a major ship
owner. However, because the business segments are managed separately within the
Company, and are marketed separately to the Company's potential customers, they
are presented separately herein.
See Note 15 -- Financial Information Relating to Segments of the Notes to
Consolidated Financial Statements for more information concerning industry
segments.
CONTRACTUAL RELATIONSHIPS
With the exception of four vessels operating on the spot market for
petroleum products and PL-480 grain movements, and the vessels operated by the
Company for the Maritime Administration, all of the vessels are employed on
either (a) year to year contracts or vessel operating agreements which renew
annually unless terminated by MTC's customer, or (b) charters or contracts of
affreightment or vessel operating agreements having terms longer than one year.
The termination of any significant contract, charter or operating agreement
could have a material impact on the Company.
The management contracts between MTC and the Maritime Administration
expired in June 1998, but have been extended for the convenience of the
government until new contract awards are made on the basis of a competitive
bidding. This process is expected to be completed by June 2000. MTC cannot
predict the extent to which it will be successful in renewing its contracts to
manage vessels for the Maritime Administration. Net fees derived from these
contracts accounted for 9% of consolidated revenues for the year ended December
31, 1999.
REGULATION AND ENVIRONMENTAL IMPACT
The Company and its vessel operations are subject to numerous U.S. and
international regulations impacting the manner in which vessels are constructed,
operated, and maintained, as well as the operation of the Company, and its
potential liability arising from accidents which result in oil pollution. In
particular, the Oil Pollution Act of 1990 ("OPA 90") provides, among other
things, for the (a) phase-in of the exclusive use of double-hulled tankers in
petroleum trades in United States waters; and (b) potentially unlimited
liability of owners, operators and bareboat charterers for certain oil spills
and other accidents in the U.S. and in U.S. waters.
OPA 90 applies to a number of MTC vessels. The MARINE CHEMIST must be
refitted with a double hull (at an estimated cost of $15-20 million) or be
remeasured by November 2000 in order to be eligible to continue carrying
petroleum products. Remeasurement would have the effect of reducing the vessel's
cubic cargo capacity by approximately 15 percent. The Company's vessels COURIER,
PATRIOT, ROVER and MARINE COLUMBIA will no longer be able to carry petroleum
products in the U.S. under OPA 90 in 2003, 2003, 2004 and 2006, respectively.
The vessels MORMACSUN, MORMACSKY and MORMACSTAR, which are bareboat chartered in
by the Company until the end of their OPA lives, can no longer carry petroleum
products in the U.S. after 2003.
6
<PAGE> 8
OFFICE AND EMPLOYEES
MTC's offices are located at 1200 Harbor Boulevard, Weehawken, New Jersey,
07087-0901. The Company leases approximately 16,500 square feet of space at this
location under a lease, which expires in 2004.
The Company employs approximately 160 people ashore and has approximately
800 positions, or berths, filled on its vessels when all are engaged in
operation. Generally, each berth on a vessel requires full employment of at
least two people during a twelve-month period. Most of the positions filled on
the Company's vessels are covered by multi-year maritime union contracts. The
labor contracts for most of the Company's licensed vessel officers expire in the
year 2000.
ITEM 3. LEGAL PROCEEDINGS
In February 1999, the Company paid $1 million in full settlement of an
income tax indemnity claim by a subsidiary of the Fuji Bank and Trust Company
(the "Bank") in connection with an earlier transaction between a subsidiary of
the Company and the Bank. The settlement amount has been reflected in the
accompanying consolidated financial statements as an adjustment of the purchase
price of MTL, and is included in accrued expenses at December 31, 1998.
As of August 15, 1999, the Company and/or its subsidiary Marine Transport
Lines, Inc. ("MTL" and together with MTC and a number of present or former
affiliates or subsidiaries of MTC or MTL, the "Companies") have been named as
defendants in approximately 8,900 personal injury lawsuits filed in: (a) federal
courts in Ohio (approximately 8,827 cases), Michigan (approximately 97 cases),
and the U.S. Virgin Islands (approximately 39 cases); and (b) state courts in
Texas (approximately 6 cases), Washington (approximately 4 cases), Virginia
(approximately 3 cases) and Louisiana (1 case). The cases have been filed on
behalf of current, retired or deceased seamen who allege that they suffered
unspecified asbestos-related injuries or diseases as a result of occupational
exposure to fibers emitted from asbestos-containing products in the course of
employment aboard vessels owned or operated by the Companies and other vessel
owners. Damages are sought in unspecified amounts in most cases.
The cases filed in Federal courts, which comprise the vast majority of the
suits pending against the Companies, are subject to administration for all
pretrial purposes by the United States District Court for the Eastern District
of Pennsylvania (United States District Judge Charles R. Weiner) pursuant to
orders of the Judicial Panel on Multidistrict Litigation issued commencing in
1991. By order of Judge Weiner, the federal cases have been administratively
dismissed, with the court retaining jurisdiction and the cases subject to later
reinstatement upon submission of proof of the existence of an asbestos-related
disease. Little, if any, activity has occurred since 1991 in the cases filed in
Federal courts, although additional cases continue to be filed.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of security holders of the Company
during the fourth quarter of 1999.
7
<PAGE> 9
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
Marine Transport Corporation's common stock is traded on the Nasdaq Stock
Market under the symbol MTLX. As of March 15, 2000, the number of shareholders
of Marine Transport Corporation stock was approximately 2,298. The Company's
historical stock prices should be analyzed carefully in the context of the
Acquisition and the Distribution, which are more fully described earlier in this
report.
The high and low sales prices of the common stock, as reported by the
Nasdaq Stock Market (New York Stock Exchange prior to Distribution) were as
follows:
<TABLE>
<CAPTION>
1ST 2ND 3RD 4TH
---- ---- ---- ----
<S> <C> <C> <C> <C>
1999 Quarter
High................................................ 3 5/16 4 3/8 4 3 3/8
Low................................................. 2 1/8 2 11/16 2 5/8 2 1/8
1998 Quarter
High................................................ 98 3/4 108 1/8 4 2 15/16
Low................................................. 81 7/8 3 3/4 1 23/32 1 5/8
</TABLE>
In June 1998 the Company completed the Acquisition and the Distribution,
effecting a separation of the Company, and completed a 1 for 10 reverse stock
split. The above prices give effect to the reverse split on a retroactive basis.
Payment of dividends is restricted by the terms of the Company's long term
debt agreements.
8
<PAGE> 10
ITEM 6. SELECTED FINANCIAL DATA
Comparisons of Selected Financial Data for the periods presented should be
made with consideration of the Acquisition and the Distribution. See Notes to
the Consolidated Financial Statements. For pro forma information giving effect
to the Acquisition and the Distribution see Note 2 to the Consolidated Financial
Statements. The Selected Financial Data should be read in conjunction with the
historical Consolidated Financial Statements and Notes thereto and Management's
Discussion and Analysis of Financial Condition and Result of Operations,
appearing elsewhere in this report.
MARINE TRANSPORT CORPORATION AND SUBSIDIARIES
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
----------------------------------------------------
1999 1998 1997 1996 1995
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Revenues:
Voyage revenues............................... $135,513 $173,118 $224,413 $225,578 $232,589
Other operating revenues...................... 20,916 11,660 7,127 7,044 7,520
-------- -------- -------- -------- --------
156,429 184,778 231,540 232,622 240,109
-------- -------- -------- -------- --------
Operating expenses:
Vessel and voyage............................. 124,956 151,930 174,363 167,259 212,963
Depreciation and amortization................. 13,434 22,407 28,944 30,448 34,734
General and administrative.................... 14,301 16,396 23,998 16,438 15,303
Provision for losses:
Impaired value of vessels................... -- -- -- -- 8,707
Lease obligation............................ -- -- -- -- 6,687
-------- -------- -------- -------- --------
152,691 190,733 227,305 214,145 278,394
-------- -------- -------- -------- --------
Operating income (loss)......................... 3,738 (5,955) 4,235 18,477 (38,285)
-------- -------- -------- -------- --------
Other income (expense):
Net gain on disposal of assets................ 18 538 870 11,153 5,480
Interest expense.............................. (2,762) (8,378) (12,249) (26,462) (26,708)
Interest income............................... 1,492 4,529 3,257 2,810 2,076
Equity in income of unconsolidated joint
ventures.................................... -- 2,353 737 2,482 5,528
Other -- net.................................. -- -- -- -- 1,040
-------- -------- -------- -------- --------
Net other expenses............................ (1,252) (958) (7,385) (10,017) (12,584)
-------- -------- -------- -------- --------
Income (loss) before income taxes, extraordinary
item and cumulative effect of change in
accounting principle.......................... 2,486 (6,913) (3,150) 8,460 (50,869)
(Provision) benefit for income taxes............ (862) 39,985 180 (2,271) 18,973
-------- -------- -------- -------- --------
Income (loss) before extraordinary loss and
cumulative effect of changes in accounting
principle..................................... 1,624 33,072 (2,970) 6,189 (31,896)
Extraordinary loss, net of income tax benefit of
$1,493........................................ -- -- -- (2,772) --
Cumulative effect of change in accounting
principle -- net of income tax expense of
$7,429........................................ -- -- 13,797 -- --
-------- -------- -------- -------- --------
Net income (loss)............................... $ 1,624 $ 33,072 $ 10,827 $ 3,417 $(31,896)
======== ======== ======== ======== ========
Basic earnings (loss) per common share:
Income (loss) before extraordinary loss and
cumulative effect of change in accounting
principle................................... $ .26 $ 6.31 $ (0.69) $ 1.85 $ (10.37)
======== ======== ======== ======== ========
Net income (loss)............................. $ .26 $ 6.31 $ 2.52 $ 1.02 $ (10.37)
======== ======== ======== ======== ========
Diluted earnings (loss), per common share:
Income (loss) before extraordinary loss and
cumulative effect of change in accounting
principle................................... $ .26 $ 6.31 $ (0.69) $ 1.83 $ (10.37)
======== ======== ======== ======== ========
Net income (loss)............................. $ .26 $ 6.31 $ 2.52 $ 1.01 $ (10.37)
======== ======== ======== ======== ========
Weighted average shares outstanding............. 6,205 5,244 4,291 3,344 3,075
======== ======== ======== ======== ========
</TABLE>
9
<PAGE> 11
MARINE TRANSPORT CORPORATION AND SUBSIDIARIES
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
----------------------------------------------------
1999 1998 1997 1996 1995
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Other Financial Data:
Cash flows provided (used) by:
Operating activities...................... $ 14,204 $ 15,529 $ 8,279 $ (5,721) $ (4,601)
Investing activities...................... (6,487) (71,455) 49,343 31,989 (9,959)
Financing activities...................... (10,785) 31,915 (73,762) (10,960) 15,332
Balance Sheet Data:
Cash and cash equivalents................. $ 4,658 $ 8,652 $ 32,489 $ 47,877 $ 32,569
Marketable securities and cash held in
capital construction fund.............. 4,125 4,069 10,969 10,283 9,765
Vessel and other property -- net.......... 53,286 38,778 314,193 341,309 368,441
Construction in progress.................. -- -- 56,032 10,754 --
Investments in, and advances to joint
ventures............................... -- -- 28,155 59,322 84,915
Total assets.............................. 121,865 106,470 518,587 552,282 565,486
Total debt................................ 46,213 27,145 162,916 237,148 283,866
Total stockholders' equity................ 17,444 15,969 221,023 207,578 145,415
</TABLE>
FORWARD-LOOKING STATEMENTS
The information below and elsewhere in this document contains certain
forward-looking statements, which reflect the current view of the Company with
respect to future events and financial performance. Wherever used, the words
"expect", "plan", "anticipate" and similar expressions identify forward-looking
statements. Such statements are based on management's current expectations and
are subject to a number of uncertainties and risks that could cause actual
results to differ materially from those described in the forward-looking
statements. The Company does not normally publicly update its forward-looking
statements even if experience or future changes make it clear that any projected
results expressed or implied therein will not be realized.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following presentation of management's discussion and analysis of
Marine Transport Corporation's financial condition and results of operations
should be read in connection with the Consolidated Financial Statements,
accompanying notes thereto and other financial information appearing elsewhere
in this document, as well as the Form S-1 filed on May 15, 1998 which fully
describes the Acquisition and Distribution, and the documents incorporated by
reference thereto. Users of these financial statements should be aware that
results of operations subsequent to the Acquisition and Distribution on June 17,
1998 will differ significantly from the historical results of operations because
of the changes in the Company which occurred as a result of the Acquisition and
the Distribution.
OVERVIEW
The Company's vessels may operate on time, bareboat or voyage ("spot")
charters. Each type of charter denotes a method by which revenues are recorded
and expenses are allocated. Under a time charter, revenue is measured based on a
daily or monthly rate and the charterer assumes certain voyage expenses, such as
fuel and port charges. Under a bareboat charter, the charterer assumes all
voyage and operating expenses. This means that the revenues generated by a
bareboat charter are likely to be lower than those generated by a time charter.
Under a voyage charter, revenue is calculated based on the amount of cargo being
carried. The revenue is offset by expenses charged to the shipowner's account.
The length of a voyage charter is one voyage. Voyage charter revenue may be
higher in the spot market, as the owner is responsible for most of the costs of
10
<PAGE> 12
the voyage. Other factors affecting net voyage revenues for voyage charters are
waiting time between cargoes, port costs, and bunker prices.
Vessel expenses include operating expenses such as crew
payroll/benefits/travel, stores, maintenance and repairs, insurance and
communications. These expenses vary depending on the fleet size, utilization
levels for certain expenses and requirements prescribed by laws, charterers or
Company standards. Insurance expense varies with the overall insurance market
conditions as well as the insured's loss record, level of insurance and desired
coverage.
The Company processes most of the transactions required for operation of
the vessels it manages for other owners, including those related to crew payroll
and transportation, repairs and maintenance, spare parts, drydocking and
overhauls, communications, and insurance. MTC is administratively staffed to
perform these functions for its large fleet of managed vessels; however, only
the management fee is included in revenues for these vessels, not the actual
revenue earned by commercial operation of these vessels by their third party
owners.
SIGNIFICANT ADJUSTMENTS RELATED TO DISTRIBUTION AND CHANGE IN ACCOUNTING
PRINCIPLE
Net income for the year ended December 31, 1999 was $1.6 million compared
to $33.1 million for the year ended December 31, 1998. Included in the 1998
income is a benefit of $39.9 million for Federal income taxes. In connection
with the Distribution, the subsidiary holding the Company's international
business became a decontrolled corporation for income tax purposes and deferred
income taxes, which had previously been recorded, were reversed. Similar
adjustments are not expected to occur in the future. Included in the 1997 net
income is $13.8 million, net of income taxes, from the cumulative effect of a
change in accounting principle.
Year Ended December 31, 1999 Compared to Year Ended December 31, 1998
Voyage revenues in 1999 decreased compared to 1998 because revenues and the
results of operations of the Company's international businesses are no longer
included in the Company's financial statements for periods after the
Distribution. On a pro-forma basis, assuming the Distribution and Acquisition
occurred on January 1, 1998, revenues would have increased by $29.5 million
(23%), primarily resulting from operation of three product tankers which were
placed in service in the third quarter of 1998 and the acquisition of two
chemical parcel tankers from General Electric Credit Corporation of Georgia
which were placed in service in the 3rd quarter of 1999.
Other operating revenues for all periods presented primarily represent
revenues from ship management services. The increases in ship management
revenues for 1999 are attributable to the Acquisition.
Vessel and voyage operating expenses decreased primarily as a result of the
separation of the international businesses from the Company in June 1998. The
decrease in expense was partially offset by the addition of the two vessels
purchased from General Electric Credit Corporation of Georgia to the Marine
Transport Corporation fleet, and the costs associated with taking over the
operation of those vessels.
Operating lease expenses included in vessel and voyage operating expenses
decreased in 1999 compared to 1998 because of chartered vessels which were part
of the international business distributed to shareholders in connection with the
Distribution. This decrease was partially offset by chartering two chemical
parcel vessels in 1999 to satisfy increasing demand from the Company's chemical
parcel customers.
The operating income of $3.7 million for the year ended December 31, 1999
compared to an operating loss of $6.0 million for the year ended December 31,
1998 was a result of several factors: the operation of three product tankers in
domestic and international oil products and PL-480 grain movements (these three
vessels were not in service for most of the year 1998); increasing demand in the
chemical parcel market and the operating income generated by cargo movements in
chartered in vessels; and operating losses on international tankers which were
part of the Distribution.
11
<PAGE> 13
The significant decrease in interest expense results from lower borrowings
by the Company (mostly arising from the transfer to OMI Corporation of certain
long-term debt existing at the time of the Distribution) as well as lower
interest rates for current periods. In October 1998, the Company fixed interest
rates on $19.9 million of floating rate long-term debt for three years through
an interest rate swap (see Item 7A and Notes to the Consolidated Financial
Statements). In September 1998, the Company assumed approximately $22 million of
Title XI debt as partial consideration for purchasing the two vessels from
General Electric Credit Corporation of Georgia.
Equity in income of affiliates in 1998 primarily represents investments the
Company had in vessels used in international trade, which were subject to the
Distribution.
Year Ended December 31, 1998 Compared to Year Ended December 31, 1997
Voyage revenues decreased substantially in 1998 compared to 1997 primarily
as a result of the exclusion of the revenues and the results of operations of
the Company's international businesses for periods after the Distribution. On a
pro-forma basis, assuming the Distribution and Acquisition occurred on January
1, 1997, revenues increased $7 million, primarily resulting from operation of
three product tankers which were placed in service in the third quarter of 1998;
these vessels were idle for most of 1997.
Other operating revenues for all periods presented primarily represent
revenues from ship management services, with the increases for 1998 attributable
to the Acquisition.
Vessel and voyage operating expenses decreased primarily as a result of the
impact of the Distribution (international businesses that were separated from
the Company in June 1998). This decrease in expense was partially offset by the
addition of vessels from Marine Transport Lines, Inc., and the costs of
activating three vessels that had been in extended lay-up periods.
Operating lease expenses included in vessel and voyage operating expenses
increased because of the Company's decision to charter in four Suezmax tankers
during 1998. These chartered vessels were part of the international business
distributed to shareholders with the Distribution.
The operating loss of $6 million for the year ended December 31, 1998
resulted from several factors: the decrease in market charter rates for the
Company's previously-held international Suezmax and Product Tanker fleets;
increased depreciation and amortization charges in connection with the
Acquisition for periods after the Acquisition; and, general and administrative
expense incurred in concluding the Acquisition and the Distribution. The actual
charges for depreciation and amortization and general and administrative expense
were lower in 1998 than 1997 due to the Distribution.
The significant decrease in interest expense results from lower borrowings
by the Company (mostly arising from the transfer to OMI Corporation of long-term
debt with the Distribution) as well as lower interest rates for current periods.
In October 1998, the Company fixed interest rates on $19.9 million of floating
rate long-term debt for three years through an interest rate swap (see Item 7A
and Notes to the Consolidated Financial Statements).
Equity in income of affiliates primarily represents investments the Company
had in vessels used in international trade, which were parts of the
Distribution.
BENEFIT (PROVISION) FOR INCOME TAXES
The income tax benefit for the year ended December 31,1998 represents
principally the reversal of deferred taxes at the Distribution date for the
Company's foreign subsidiaries which became decontrolled corporations though the
Distribution; income taxes are no longer payable on the deferred taxable income
of those companies and the deferred taxes were reversed.
The income tax benefit of $.2 million (excluding the income tax provision
for the cumulative effect of the change in accounting principle) for the year
ended December 31, 1997 varied from statutory rates primarily because deferred
taxes are not recorded for equity in operations of joint ventures, net of
dividends declared,
12
<PAGE> 14
other than Amazon Transport, Inc. ("Amazon") and White Sea Holdings, Ltd.
("White Sea") as management considers such earnings to be invested for an
indefinite period.
LIQUIDITY AND CAPITAL RESOURCES
Cash balances of $4.6 million as of December 31, 1999 include cash of $3
million drawn from the Company's revolving credit lines. Concurrent with the
Acquisition and the Distribution the Company: (a) restructured its loan
agreement between Marine Transport Lines, Inc. and a commercial bank; and (b)
arranged a new loan agreement between MTC and the same commercial bank. At
December 31, 1999, the Company had total borrowings under these agreements of
$18.6 million, including $3 million drawn under its revolving credit lines.
Other forms of cash not available for operations or investment by the Company
include approximately $4 million included in the Marketable Securities and Cash
held in Company's Capital Construction Fund (before applicable income taxes
payable on amounts withdrawn from their current use), which has been pledged as
security for the Title XI debt assumed to conclude the Acquisition of SMT
Chemical Explorer and SMT Chemical Trader. Under certain circumstances, the cash
so pledged may be used to reduce the outstanding principal amount of that debt.
On January 27, 2000 MTC monetized approximately $48 million of future
charter earnings on the vessel MARINE COLUMBIA, which was sold and leased back
in January 1997. Of the amount monetized, approximately $23 million was used to
refinance certain indebtedness associated with the vessel, $1 million was used
to settle a claim against the Company and approximately $24 million was made
available to the Company for investment and other corporate purposes. The
Company used some of the approximately $24 million to retire, at a discount,
$5.9 million of 12 percent debt; retire $1 million of its bank debt; fully repay
its credit lines and pledge $4 million to secure its bank debt. As of March 15,
2000, the Company had cash of approximately $18 million available for operations
and investment and for other corporate purposes, as well as $3 million in
available credit lines.
The Company's existing cash balances, as well the cash received in
connection with the MARINE COLUMBIA and cash flows from operating activities are
expected to be sufficient to meet the Company's normal operating requirements,
including scheduled payments of long-term debt.
AGREEMENTS
As part of the Distribution, the Company is party to certain agreements
with New OMI. Certain provisions of these agreements are summarized in the Notes
to the Consolidated Financial Statements included herein. These agreements are
included in the Company's Form S-1 dated May 15, 1998.
EFFECTS OF INFLATION
The Company does not consider inflation to be a significant risk to the
cost of doing business in the foreseeable future. Inflation has a moderate
impact on operating expenses, drydocking expenditures and corporate overhead.
YEAR 2000
In prior years, the Company discussed the nature and progress of its plans
to become Year 2000 ready. In late 1999, the Company completed its remediation
and testing of systems. As a result of those planning and implementation
efforts, the Company experienced no significant disruptions in mission critical
information technology and non-information technology systems and believes those
systems successfully responded to the Year 2000 date change. The Company is not
aware of any material problems resulting from Year 2000 issues, either with its
internal systems, or software systems on the ships. The total cost of the
implementation exceeds $.6 million and includes hardware and software upgrades,
which may have been made without regard to Year 2000 problems. The Company will
continue to monitor its computer applications and those of its suppliers and
vendors throughout Year 2000 to ensure that any latent Year 2000 matters that
may arise are addressed promptly.
13
<PAGE> 15
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISKS
All of the Company's revenues, and most of its expenses, are denominated in
U.S. dollars. As a leveraged company, MTC is subject to interest rate risks. The
Company uses interest rate swap agreements to manage interest costs and the risk
associated with changing interest rates. At December 31, 1999, the Company was
party to an interest rate swap, with a notional amount of $16.8 million, which
fixed the base LIBOR rate on the Company's term loans at 4.75 percent for a
three-year period ending December 17, 2001. See Notes to the Consolidated
Financial Statements.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
MARINE TRANSPORT CORPORATION AND SUBSIDIARIES
INDEX TO FINANCIAL STATEMENTS
CONTENTS
YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
Reports of Independent Auditors............................. 15-16
Consolidated Balance Sheets as of December 31, 1999 and
1998...................................................... 17
Consolidated Statements of Operations for the years ended
December 31, 1999, 1998 and 1997.......................... 18
Consolidated Statements of Shareholders' Equity for the
years ended December 31, 1999, 1998 and 1997.............. 19
Consolidated Statements of Cash Flows for the years ended
December 31, 1999, 1998 and 1997.......................... 20
Notes to Consolidated Financial Statements.................. 21-36
</TABLE>
14
<PAGE> 16
REPORT OF INDEPENDENT AUDITORS
To the Board of Directors and Shareholders
Marine Transport Corporation
We have audited the accompanying consolidated balance sheets of Marine
Transport Corporation and subsidiaries as of December 31, 1999 and 1998 and the
related consolidated statements of operations, shareholders' equity, and cash
flows for the years then ended. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Marine
Transport Corporation and subsidiaries at December 31, 1999 and 1998 and the
consolidated results of their operations and their cash flows for the years then
ended in conformity with accounting principles generally accepted in the United
States.
ERNST & YOUNG, LLP
New York, New York
February 24, 2000
15
<PAGE> 17
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Shareholders of Marine Transport Corporation
(formerly OMI Corp.):
We have audited the accompanying consolidated statements of operations,
shareholders' equity and cash flows of Marine Transport Corporation (formerly
OMI Corp.) and its subsidiaries for the year ended December 31, 1997. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, such consolidated financial statements present fairly, in
all material respects, the results of the companies' operations and their cash
flows for the year ended December 31, 1997 in conformity with generally accepted
accounting principles.
As disclosed in Note 3 to the consolidated financial statements, effective
January 1, 1997 the Company changed its method of accounting for special survey
and drydock expenses from the accrual method to the prepaid method.
DELOITTE & TOUCHE, LLP
New York, New York
March 9, 1998
16
<PAGE> 18
MARINE TRANSPORT CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
<TABLE>
<CAPTION>
DECEMBER 31
--------------------
1999 1998
-------- --------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents:
Unrestricted........................................... $ 4,658 $ 7,726
Restricted............................................. -- 926
Receivables:
Trade receivables, net of allowances of $165 in 1999
and $509 in 1998...................................... 18,723 12,227
Other.................................................. 1,163 747
Income taxes receivable................................... -- 643
Prepaid expenses and other current assets................. 4,482 6,571
Vessel held for sale...................................... -- 100
-------- --------
Total current assets........................................ 29,026 28,940
-------- --------
Marketable securities and cash held in capital construction
fund...................................................... 4,125 4,069
Vessels and other property:
Vessels................................................... 127,690 104,528
Other property............................................ 1,094 1,953
-------- --------
Total vessels and other property.................. 128,784 106,481
Less: accumulated depreciation............................ 75,498 67,703
-------- --------
Net vessels and other property.................... 53,286 38,778
Vessel drydocking costs..................................... 8,643 7,429
Note receivable............................................. 9,000 9,000
Deferred charges and other assets........................... 6,769 6,602
Goodwill.................................................... 11,016 11,652
-------- --------
Total assets...................................... $121,865 $106,470
======== ========
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable.......................................... $ 16,824 $ 16,011
Other accrued liabilities................................. 1,971 1,685
Accrued income tax........................................ 94 --
Current portion of long-term debt......................... 5,999 3,034
-------- --------
Total current liabilities................................... 24,888 20,730
Advance time charter revenues and other liabilities......... 675 1,500
Long-term debt.............................................. 40,214 24,111
Deferred gain on sale of vessels............................ 17,790 21,258
Deferred income taxes....................................... 20,854 22,902
-------- --------
Total liabilities................................. 104,421 90,501
-------- --------
SHAREHOLDERS' EQUITY
Common stock, $0.50 par value; 15,000,000 shares authorized;
shares issued; 1999 -- 6,555,368, 1998 -- 6,555,368;...... 3,277 3,277
Capital surplus............................................. 25,461 25,461
Retained deficit............................................ (10,372) (11,996)
Accumulated other comprehensive loss........................ (200) (51)
Treasury stock at cost; 350,000 shares...................... (722) (722)
-------- --------
Total shareholders' equity.................................. 17,444 15,969
-------- --------
Total liabilities and shareholders' equity........ $121,865 $106,470
======== ========
</TABLE>
See notes to consolidated financial statements.
17
<PAGE> 19
MARINE TRANSPORT CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
--------------------------------
1999 1998 1997
-------- -------- --------
<S> <C> <C> <C>
Revenues:
Voyage revenues.......................................... $135,513 $173,118 $224,413
Other operating revenues................................. 20,916 11,660 7,127
-------- -------- --------
Total operating revenues......................... 156,429 184,778 231,540
-------- -------- --------
Operating expenses:
Vessel and voyage........................................ 124,956 151,930 174,363
Depreciation and amortization............................ 13,434 22,407 28,944
General and administrative............................... 14,301 16,396 23,998
-------- -------- --------
Total operating expenses......................... 152,691 190,733 227,305
-------- -------- --------
Operating income (loss).................................... 3,738 (5,955) 4,235
Other income (expense):
Net gain on disposal of assets........................... 18 538 870
Interest expense......................................... (2,762) (8,378) (12,249)
Interest income.......................................... 1,492 4,529 3,257
Equity in income of unconsolidated joint ventures........ -- 2,353 737
-------- -------- --------
Net other expense........................................ (1,252) (958) (7,385)
-------- -------- --------
Income (loss) before income taxes and cumulative effect of
change in accounting principle........................... 2,486 (6,913) (3,150)
(Provision) benefit for income taxes....................... (862) 39,985 180
-------- -------- --------
Income (loss) before cumulative effect of change in
accounting principle..................................... 1,624 33,072 (2,970)
Cumulative effect of change in accounting principle -- net
of income tax expense of $7,429.......................... -- -- 13,797
-------- -------- --------
Net income....................................... $ 1,624 $ 33,072 $ 10,827
======== ======== ========
Basic income per common share:
Income (loss) before cumulative effect of change in
accounting principle.................................. $ .26 $ 6.31 $ (0.69)
Cumulative effect of change in accounting principle, net
of income tax provision............................... -- -- 3.21
-------- -------- --------
Net income....................................... $ .26 $ 6.31 $ 2.52
======== ======== ========
Diluted income per common share:
Income (loss) before cumulative effect of change in
accounting principle.................................. $ .26 $ 6.31 $ (0.69)
Cumulative effect of change in accounting principle, net
of income tax provision............................... -- -- 3.21
-------- -------- --------
Net income....................................... $ .26 $ 6.31 $ 2.52
======== ======== ========
</TABLE>
See notes to consolidated financial statements.
18
<PAGE> 20
MARINE TRANSPORT CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(IN THOUSANDS)
<TABLE>
<CAPTION>
ACCUMULATED
COMMON STOCK RETAINED OTHER OTHER
------------------ CAPITAL EARNINGS COMPREHENSIVE COMPREHENSIVE RESTRICTED TREASURY
SHARES(1) AMOUNT SURPLUS (DEFICIT) INCOME (LOSS) INCOME (LOSS) STOCK STOCK
--------- ------ --------- --------- ------------- ------------- ---------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance as of January 1,
1997....................... 4,269 $2,135 $ 203,462 $ (1,848) $ 4,868 $(1,039) --
Comprehensive income:
Net income................. 10,827 $10,827
Net unrealized gain (loss)
on securities, net of tax
benefit of $39........... 22 22
-------
Comprehensive income....... $10,849
=======
Retirement of partner's
equity interest in joint
venture.................... 777
Retirement of minority
stockholders' equity
interest in subsidiary..... (549)
Exercise of stock option and
stock appreciation
rights..................... 33 17 1,979
Issuance of restricted stock
awards..................... 5 2 436 (438)
Amortization of unearned
compensation............... 372
----- ------ --------- -------- ------- ------- -----
Balance at December 31,
1997....................... 4,307 $2,154 $ 206,105 $ 8,979 $ 4,890 $(1,105) --
Comprehensive income:
Net income................. 33,072 $33,072
Net unrealized gain (loss)
on securities, net of tax
benefit of $(12)......... (29) (29)
-------
Comprehensive income....... $33,043
=======
Exercise of stock options.... 5 2 210
Retirement of minority
stockholders' equity
interest in subsidiary..... (681)
Amortization of unearned
compensation............... 1,105
Issuance of common stock..... 2,243 1,121 10,779
Spin-off of foreign
subsidiaries............... (190,952) (54,047) (4,912)
Purchase of treasury stock... (722)
----- ------ --------- -------- ------- ------- -----
Balance at December 31,
1998....................... 6,555 $3,277 $ 25,461 $(11,996) $ (51) $ -- $(722)
Comprehensive income:
Net income................. 1,624 $ 1,624
Net unrealized gain (loss)
on securities, net of tax
benefit of $39........... (149) (149)
-------
Comprehensive income....... $ 1,475
----- ------ --------- -------- ------- ======= ------- -----
Balance at December 31,
1999....................... 6,555 $3,277 $ 25,461 $(10,372) $ (200) $ -- $(722)
===== ====== ========= ======== ======= ======= =====
<CAPTION>
TOTAL
---------
<S> <C>
Balance as of January 1,
1997....................... $ 207,578
Comprehensive income:
Net income................. 10,827
Net unrealized gain (loss)
on securities, net of tax
benefit of $39........... 22
Comprehensive income.......
Retirement of partner's
equity interest in joint
venture.................... 777
Retirement of minority
stockholders' equity
interest in subsidiary..... (549)
Exercise of stock option and
stock appreciation
rights..................... 1,996
Issuance of restricted stock
awards..................... --
Amortization of unearned
compensation............... 372
---------
Balance at December 31,
1997....................... $ 221,023
Comprehensive income:
Net income................. 33,072
Net unrealized gain (loss)
on securities, net of tax
benefit of $(12)......... (29)
Comprehensive income.......
Exercise of stock options.... 212
Retirement of minority
stockholders' equity
interest in subsidiary..... (681)
Amortization of unearned
compensation............... 1,105
Issuance of common stock..... 11,900
Spin-off of foreign
subsidiaries............... (249,911)
Purchase of treasury stock... (722)
---------
Balance at December 31,
1998....................... $ 15,969
Comprehensive income:
Net income................. 1,624
Net unrealized gain (loss)
on securities, net of tax
benefit of $39........... (149)
Comprehensive income.......
---------
Balance at December 31,
1999....................... $ 17,444
=========
</TABLE>
- ---------------
(1) Restated to give retroactive effect to 1 for 10 reverse stock split.
See notes to consolidated financial statements.
19
<PAGE> 21
MARINE TRANSPORT CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------------
1999 1998 1997
-------- -------- ---------
<S> <C> <C> <C>
CASH FLOW PROVIDED BY OPERATING ACTIVITIES:
Net income.................................................. $ 1,624 $ 33,072 $ 10,827
Adjustments to reconcile net income to net cash provided by
operating activities:
Cumulative effect of change in method of accounting, net
of income tax provision................................. -- -- (13,797)
Depreciation and amortization............................. 22,378 34,976 28,944
Amortization of unearned compensation..................... -- 1,052 372
(Decrease) in doubtful accounts........................... -- (286) (152)
Deferred income taxes..................................... (2,011) (39,625) (6,984)
(Gain) loss on sale or disposal of vessels and other
property................................................ -- 522 (870)
Amortization of deferred gain on sale of vessels.......... (3,468) (1,426) (4,377)
Equity in operations of joint ventures in excess of
dividends received...................................... -- (1,783) (2)
Changes in operating assets and liabilities:
(Increase) in accounts receivable....................... (6,262) (3,045) (5,596)
Decrease (increase) in prepaid expenses and other
current assets........................................ 2,045 (1,607) (1,624)
(Decrease) in advance time charter revenues and other
liabilities........................................... (856) (2,442) (1,311)
Other assets and liabilities -- net..................... (439) 114 222
(Decrease) increase in accounts payable................. 813 2,052 2,777
(Decrease) increase in accrued expenses................. 286 (10,091) --
(Decrease) increase in income taxes payable............. 94 4,046 --
Advances (from) to joint ventures -- net................ -- -- (150)
-------- -------- ---------
Net cash provided by operating activities................... 14,204 15,529 8,279
-------- -------- ---------
CASH FLOW PROVIDED (USED) BY INVESTING ACTIVITIES:
Additions to vessels, other property and drydocking costs... (6,982) (68,976) (58,470)
Proceeds and interest received and reinvested in capital
construction fund......................................... (205) (352) (661)
Net proceeds from sale of vessels........................... 700 850 78,972
Purchase of treasury stock.................................. -- (722) --
Cash distributed to UBC..................................... -- (12,601) --
Cash acquired in retirement of partner's equity interests in
joint venture............................................. -- 4,855 32,301
Cash acquired with acquisition of MTL....................... -- 8,091 --
Payments for the retirement of minority stockholder's
interest.................................................. -- (2,600) (2,456)
Other....................................................... -- -- (343)
-------- -------- ---------
Net cash provided (used) by investing activities............ (6,487) (71,455) 49,343
-------- -------- ---------
CASH FLOW PROVIDED (USED) BY FINANCING ACTIVITIES:
Proceeds from long-term debt................................ 1,200 83,007 114,090
Payment of long-term debt................................... (3,502) (45,775) (188,322)
Payments for debt issue costs............................... -- -- (774)
Vessel lease payments....................................... (9,409) (5,869) --
Proceeds from the issuance of common stock.................. -- -- 1,996
Decrease in other assets.................................... -- 726 --
Increase in restricted cash................................. 926 (174) (752)
-------- -------- ---------
Net cash provided (used) by financing activities............ (10,785) 31,915 (73,762)
-------- -------- ---------
(Decrease) in unrestricted cash and cash equivalents........ (3,068) (24,011) (16,140)
Unrestricted cash and cash equivalents at beginning of
year...................................................... 7,726 31,737 47,877
-------- -------- ---------
Unrestricted cash and cash equivalents at end of year....... $ 4,658 $ 7,726 $ 31,737
======== ======== =========
</TABLE>
See notes to consolidated financial statements.
20
<PAGE> 22
MARINE TRANSPORT CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. DESCRIPTION OF BUSINESS
Marine Transport Corporation ("MTC" or the "Company"), formerly OMI Corp.,
is a U.S.-based company that owns and charters a fleet of ocean-going vessels
which it operates in domestic and international markets. The Company also
manages vessels for other ship owners.
On June 17, 1998 the Company distributed to its shareholders, in a tax-free
distribution (the "Distribution"), all of the shares of its wholly-owned
subsidiary Universal Bulk Carriers, Inc. ("UBC"). UBC operated the Company's
former foreign-flagged shipping businesses, and continues to operate those
businesses as OMI Corporation ("New OMI") under the Company's previous
management. A condensed summary of UBC's unaudited results of operations for the
year ended December 31, 1997 and for the period from January 1, 1998 through
June 17, 1998 and a condensed summary of the assets and liabilities of UBC at
June 17, 1998 and December 31, 1997 are as follows:
<TABLE>
<CAPTION>
FOR THE PERIOD FROM FOR THE YEARS
JANUARY 1, ENDED
1998 THROUGH DECEMBER 31,
JUNE 17, 1998 1997
------------------- ------------------
(IN THOUSANDS)
<S> <C> <C>
Results of Operations:
Revenues................................... $ 71,506 $141,985
Operating income........................... 5,816 20,178
Net income................................. 44,333 16,922
</TABLE>
<TABLE>
<CAPTION>
JUNE 17, DECEMBER 31,
1998 1997
------------------- ------------------
<S> <C> <C>
Net Assets:
Current assets........................... $ 27,287 $ 49,520
Vessels and other property -- net........ 393,155 343,028
Investments in and advances to joint
ventures.............................. 29,876 27,810
Other non-current assets................. 11,122 8,587
Goodwill................................. 16,966 11,763
-------- --------
Total assets............................. 478,406 440,708
Less:
Current liabilities...................... 77,001 21,062
Long-term debt........................... 143,879 48,424
Other non-current liabilities............ 2,992 87,664
-------- --------
Total liabilities.......................... 223,872 157,150
-------- --------
Shareholder's and partners equity.......... $254,534 $283,558
======== ========
</TABLE>
Prior to the Distribution, the Company acquired all of the outstanding
common stock of Marine Transport Lines, Inc. ("MTL"), a U.S.-based company that
owns, operates and manages U.S. and foreign flag vessels, in exchange for newly
issued shares of the Company's common stock (the "Acquisition"). The Company is
currently managed by certain former officers and directors of MTL and additional
new directors.
Unless otherwise indicated, amounts reflected in the accompanying
consolidated financial statements include the results of UBC through June 17,
1998, and the results of MTL subsequent to June 17, 1998. Immediately following
the Acquisition and the Distribution, the Company completed a one-for-ten
reverse stock split. All share and per share amounts have been retroactively
restated to reflect the reverse stock split.
21
<PAGE> 23
MARINE TRANSPORT CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
2. ACQUISITION AND DISTRIBUTION
As consideration for the Acquisition of MTL described above, the Company
issued approximately 2,243,000 shares (as adjusted for a one-for-ten reverse
stock split) in exchange for all of the outstanding shares of MTL. The
Acquisition was valued at approximately $11,886,000 representing the Company's
estimate of the fair value of MTL at the date the transaction was completed plus
the fair value of additional shares issued as a purchase price adjustment for
working capital amounts in excess of pre-established levels per the Acquisition
Agreement. The Acquisition has been accounted for as a purchase.
The unaudited pro forma results of operations for the years ended December
31, 1998 and 1997, assuming consummation of the Acquisition and Distribution as
of January 1, 1997 are as follows (in thousands, except per share amounts):
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------
1998 1997
---------- ----------
<S> <C> <C>
Revenues............................................... $126,942 $119,862
Vessel and voyage expense.............................. 120,528 119,502
General and administrative expense..................... 16,073 18,136
Loss before other income (expense), income taxes, and
cumulative effect of change in accounting
principle............................................ (9,659) (17,776)
Loss before cumulative effect of change in accounting
principle............................................ (8,564) (13,172)
Net loss............................................... $ (8,564) $ (9,437)
Basic and diluted loss per common share:
Loss before cumulative effect of change in accounting
principle............................................ $ (1.63) $ (3.07)
Net loss............................................... $ (1.63) $ (2.20)
</TABLE>
As part of the Distribution, MTC is party to certain agreements with New
OMI, including the following:
Distribution Agreement -- The Distribution Agreement provides for, with
certain exceptions, assumptions of liabilities and cross-indemnities designed
principally to place financial responsibility for the domestic-related assets
and liabilities of OMI Corp. with MTC and the foreign-related assets and
liabilities with New OMI. New OMI, however, assumed the obligations of the
Company with respect to the outstanding 10.25 percent senior notes due November
1, 2003 in exchange for a note in the amount of $6.4 million, which was
equivalent in value to the principal amount of the senior notes outstanding. The
Distribution Agreement also provides that each of MTC and New OMI will indemnify
the other in the event of certain liabilities arising under the Federal
securities laws. Each of MTC and New OMI will have sole responsibility for
claims arising out of their respective activities after the Distribution.
As part of the Distribution Agreement, New OMI has, subject to certain
exceptions, provided indemnity to MTC for all taxes attributable to the
Distribution and to certain corporate restructuring transactions preceding the
Distribution.
Tax Cooperation Agreement -- Prior to the Distribution, MTC and New OMI
entered into a Tax Cooperation Agreement which sets forth each party's rights
and obligations with respect to federal, state, local and foreign taxes for
periods prior to and after the Distribution and related matters such as filing
of tax returns and procedures for responding to tax audits and other matters. In
general, the Tax Cooperation Agreement provides that New OMI will be liable for
taxes and be entitled to refunds for each period covered by any such return
which are attributable to New OMI and its subsidiaries. The Tax Cooperation
Agreement, though valid between the parties thereto, is not binding on the IRS
and does not alter either party's tax liability to the IRS.
Acquisition Agreement -- The Acquisition Agreement provides for an
adjustment in the purchase price of MTL based on working capital amounts, as
defined, as of the date of the closing as compared to certain pre-
22
<PAGE> 24
MARINE TRANSPORT CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
established levels. In December 1998, MTC issued approximately 312,000
additional shares of its common stock to former MTL shareholders pursuant to
this provision.
On March 9, 1998, the Company paid $2,600,000 to acquire the remaining 9.29
percent interest in MTL Petrolink Corp. ("Petrolink", formerly OMI Petrolink
Corporation) to make it a wholly-owned subsidiary.
3. ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of Marine
Transport Corporation and its majority-owned subsidiaries. All material
intercompany accounts and transactions have been eliminated. Investments in
subsidiaries and partnerships for which the Company owned more than 20 percent
but less than a majority interest are accounted for using the equity method.
RECLASSIFICATIONS OF PRIOR YEAR FINANCIAL STATEMENTS
Certain prior year balances have been reclassified to conform to the
current year presentation.
CASH EQUIVALENTS
The Company considers all highly-liquid financial instruments with a
maturity of three months or less when purchased to be cash equivalents.
Restricted cash represents cash advanced to the Company by certain customers
under agreements, which restrict the use of such cash.
MARKETABLE SECURITIES AND CASH HELD IN CAPITAL CONSTRUCTION FUND
Marketable securities and cash held in the Capital Construction Fund are
restricted to provide for the replacement of vessels, additional vessels, or
improvement of vessels within strict guidelines established by the U.S. Maritime
Administration for use of these funds. All marketable securities are stated at
estimated fair value based upon market quotes. Any withdrawals of funds for
purposes other than those permitted will result in a taxable event, equivalent
to the statutory tax rate (see Note 10). Marketable securities and cash held in
capital construction fund were pledged in their entirety as collateral for the
debt incurred on September 28, 1999 in connection with the acquisition of
vessels (see Note 5).
VESSELS
Vessels are recorded at cost and depreciated on the straight-line method
over their estimated remaining useful lives to their estimated salvage values.
The useful lives of the vessels range from 20 to 25 years. Expenditures for
maintenance and repairs are expensed. Major expenditures, which are expected to
extend useful lives or reduce future operating expenses, are capitalized.
Salvage value is based upon a vessel's lightweight tonnage multiplied by an
estimated scrap value per ton. Depreciation expense for vessels was $7,917,195
and $6,411,204 at December 31, 1999 and 1998, respectively.
Interest costs incurred during the construction of vessels (until the
vessel is substantially complete and ready for its intended use) are
capitalized. Interest capitalized was $1,721,000 in 1998 and $2,207,000 in 1997.
There were no vessels constructed during 1999.
COMPUTERS, FURNITURE, AND LEASEHOLD IMPROVEMENTS
Computers and furniture are recorded at cost and depreciated on the
straight-line method over their estimated useful lives ranging from 5 to 10
years. Depreciation expense for computers and furniture was $197,470 and
$696,534 at December 31, 1999 and 1998, respectively. Leasehold improvements are
recorded at cost and are amortized on the straight-line method over the shorter
of their estimated useful lives or lease
23
<PAGE> 25
MARINE TRANSPORT CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
term. Amortization expense for leasehold improvements was $51,556 and $7,536 at
December 31, 1999 and 1998, respectively.
CHANGE IN METHOD OF ACCOUNTING FOR DRYDOCKING
Drydocking inspections are required generally every two to three years for
insurance and regulatory purposes to demonstrate that a vessel meets standards
established by the U.S. Coast Guard and the American Bureau of Shipping.
Effective January 1, 1997 the Company changed its method of accounting for
special survey and drydock expenses from the accrual method to the deferral
method. Special survey and drydock expenses had been accrued and charged to
operating expenses over the vessel's survey cycle. Management believes the
deferral method better matches costs with revenues, and minimizes any
significant changes in estimates associated with the accrual method. The
cumulative effect of this accounting change as of January 1, 1997 is shown
separately in the 1997 consolidated statement of operations and resulted in
income of $13,797,000 (net of income tax expense of $7,429,000), or $3.21 per
share. The cumulative effect of this change in accounting principle as of
January 1, 1997 on the Company's balance sheet was to increase total assets by
$11,318,000, decrease total liabilities by $2,479,000 and increase total
shareholder's equity by $13,797,000. Under certain regulations and
classification requirements, the Company may extend the length between
drydockings to a five-year cycle for some vessels. Where this five-year cycle is
expected to be implemented, the Company amortizes such drydock expenses over the
five-year cycle.
GOODWILL
Goodwill recognized in the Acquisition of MTL is being amortized over 20
years using the straight-line method. At December 31, 1999 and 1998, goodwill is
net of accumulated amortization of $599,000 and $321,000 respectively.
LONG-LIVED ASSETS
The Company accounts for its long-lived assets under Statement of Financial
Accounting Standards No. 121, Accounting for the Impairment of Long-Lived Assets
to be Disposed of, which requires recognition of impairment losses for
long-lived assets used in operations when indicators of impairment are present
and the undiscounted cash flows estimated to be generated by those assets are
not sufficient to recover the assets carrying amount.
REVENUE AND EXPENSE RECOGNITION
Voyage and charter revenues and expenses are recognized ratably over the
duration of the voyages and the lives of the charters. Estimated losses are
provided at the time such losses become evident.
STOCK-BASED COMPENSATION
As permitted by Statement of Financial Accounting Standard No. 123,
"Accounting for Stock Based Compensation" ("SFAS 123"), the Company has chosen
to continue to account for stock-based compensation arrangements using the
intrinsic value method prescribed by Accounting Principles Board Opinion No. 25
"Accounting for Stock Issued to Employees" ("APBO 25").
EARNINGS (LOSS) PER COMMON SHARE
Basic income (loss) per common share is based on 6,205,000; 5,241,000; and
4,291,000 weighted average number of common shares outstanding during 1999, 1998
and 1997, respectively. Diluted income (loss) per share, which gives effect to
the assumed exercise of dilutive stock options using the treasury stock method,
is
24
<PAGE> 26
MARINE TRANSPORT CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
based on 6,239,000; 5,241,000; and 4,291,000 weighted average number of shares
during 1999, 1998, and 1997, respectively.
DERIVATIVE FINANCIAL INSTRUMENTS
In June 1998, the Financial Accounting Standards Board issued Statement No.
133, Accounting for Derivative Instruments and Hedging Activities, which is
required to be adopted beginning in fiscal 2001. This statement will require the
Company to recognize all derivatives on the balance sheet at fair value.
Derivatives that are not hedges must be adjusted to fair value through income.
If the derivative is a hedge, depending on the nature of the hedge, changes in
the fair value of the derivative will either be offset against the change in
fair value of the hedged assets, liabilities, or firm commitments through
earnings or recognized in other comprehensive income until the hedged item is
recognized in earnings. Management does not anticipate that the adoption of the
new statement will have a significant effect on earnings or the financial
position of the Company.
INTEREST RATE SWAP AGREEMENTS
Amounts receivable or payable under interest rate swaps (designated as
hedges against increases in interest rates associated with certain existing debt
obligations) are accrued and reflected as adjustments of interest expense. Any
gain or loss realized upon the early termination of an interest rate swap is
recognized as an adjustment of interest expense over the remaining term of the
hedged debt.
ACCOUNTING ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and the
accompanying notes. Actual results could differ from those estimates.
4. INVESTMENTS IN UNCONSOLIDATED AFFILIATES
Prior to the Distribution (see Note 1), the Company had investments in
certain shipping joint ventures with ownership interests ranging from 25 percent
to 50 percent. A condensed summary of the results of operations of these joint
ventures for the year ended December 31, 1997, and for the period from January
1, 1998 through the date of the Distribution, and a condensed summary of the
combined assets and liabilities.
<TABLE>
<CAPTION>
FOR THE PERIOD FROM
JANUARY 1, 1998 FOR THE YEAR
THROUGH ENDED
JUNE 17, 1998 DECEMBER 31, 1997
------------------- -----------------
(IN THOUSANDS)
<S> <C> <C>
Results of Operations:
Revenues........................................... $28,893 $41,804
Operating income................................... 4,878 10,762
(Loss) gain on disposal of assets -- net........... -- (8,765)
Cumulative effect of change in accounting
principle........................................ -- 1,196
Net income......................................... 3,940 2,502
</TABLE>
In September 1997, one of the joint ventures sold a vessel to one of its
joint venture partners (the majority shareholder) at a loss, of which the
Company's proportionate share was $5,244,000.
In connection with the Acquisition, the Company held a 50 percent interest
in Marine Car Carriers, Inc. (M.I.), ("MCCMI") which the Company accounted for
under the equity method through November 12, 1998, at which time MCCMI redeemed
the common stock from the owners of the other 50 percent for its
25
<PAGE> 27
MARINE TRANSPORT CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
respective book value (approximately $8,109,000). Equity in the net earnings of
MCCMI from June 18, 1998 through November 12, 1998 (the date at which MCCMI
became a wholly owned subsidiary of the Company) were approximately $519,000.
5. DEBT
Long-term debt consists of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
------------------
1999 1998
------- -------
(IN THOUSANDS)
<S> <C> <C>
Term loan................................................ $15,663 $18,740
Title XI debt............................................ 21,370 --
Revolving credit facility................................ 3,000 1,800
Debt due to New OMI...................................... 5,918 6,268
Promissory note due to New OMI........................... 262 337
------- -------
Total debt............................................... 46,213 27,145
Less current portion..................................... 5,999 3,034
------- -------
Long-term portion........................................ $40,214 $24,111
======= =======
</TABLE>
The debt due to New OMI was retired in its entirety on February 7, 2000
with a payment of $5,100,000 to OMI Corporation (see Note 13). Prior to its
retirement, the note bore interest at a fixed dollar amount payable
semi-annually over the term of the note resulting in an average annual interest
rate of 12.71 percent per annum. The other promissory note payable to New OMI
bears interest at 8 percent per annum and is payable in semi-annual installments
of principal and interest equal to approximately $37,000 through May 1, 2003.
The term loan and revolving credit facilities of the Company accrue
interest at a floating rate based on LIBOR plus a margin determined by certain
financial ratios (the spread at December 31, 1999 was 1.75 percent). The Company
pays a commitment fee each quarter on the unused and available portion of the
revolving credit facilities. At December 31, 1999, all $3 million available
under the credit facility was drawn. By February 28, 2000, however, the Company
had repaid the entire credit line and the full line was available for use.
The amount outstanding under the term loan is payable in fourteen quarterly
installments through June 18, 2003; the first thirteen installments total
$830,814 each; and the final installment totals $5,330,805. The revolving credit
facility reduces to $2,000,000 on June 18, 2001 and expires completely on June
18, 2003. On February 4, 2000 the Company prepaid $1 million of the term loan
and pledged $4 million of cash as additional security for the term loan.
The Company uses interest rate swap agreements to manage interest costs and
the risk associated with fluctuating interest rates. At December 31, 1999, the
Company had outstanding an interest rate swap, with a notional amount of
$16,762,808, which fixed the base interest rate on the Company's term loans at
4.75 percent until December 17, 2001.
On September 28,1999 the vessels SMT CHEMICAL EXPLORER and SMT CHEMICAL
TRADER (formerly the FRANCES HAMMER and JULIUS HAMMER, respectively) were
acquired by two wholly-owned subsidiaries of the Company. The acquisition price
was $21,884,000 which consist of approximately $514,000 in cash and the
remaining principal on two loans guaranteed by the United States Department of
Transportation Maritime Administration (the "Title XI debt"), which loans were
assumed by the Company's subsidiaries. The loans, which have an interest rate of
8.125 percent, are payable in fourteen semi-annual
26
<PAGE> 28
MARINE TRANSPORT CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
installments, which total $2,385,000 in 2000; $2,719,000 in 2001; $2,962,000 in
2002; $2,938,000 in 2003; $3,348,000 in 2004; $3,823,000 in 2005; and $3,195,000
in 2006. The obligations impose semi-annual declining penalties on any
prepayment until September 2005. Occidental Petroleum Corporation, the former
guarantor of the Title XI debt, continues to provide a reducing guaranty in
favor of the United States of America of up to $6,000,000. The Company
guarantees 75 percent of the Title XI debt and 25 percent of the Title XI debt
is guaranteed by Stolt-Nielsen Transportation Group Ltd. The Company's
Marketable Securities and Cash held in the Capital Construction Fund, which
currently totals $4,125,000, has also been pledged as security for the Title XI
debt and may, under certain circumstances, be used to reduce the outstanding
principal amount of the Title XI debt.
The Company's debt obligations restrict the Company's ability to pay or
declare dividends and require the Company to maintain certain financial ratios,
minimum cash balances, minimum asset values, and to use proceeds of vessel sales
to reduce debt. In addition, all Company assets (except for the recently
acquired SMT CHEMICAL EXPLORER and SMT CHEMICAL TRADER, which are subject to
mortgages in favor of the United States of America and Occidental Petroleum
Corporation; and certain workboats owned by the Company's wholly-owned
subsidiary, MTL Petrolink) are pledged as collateral to secure the borrowings
under the term loan and revolving credit facility agreements.
At December 31, 1999, scheduled debt maturities are as follows (in
thousands):
<TABLE>
<S> <C>
2000..................................................... $ 5,999
2001..................................................... 6,333
2002..................................................... 7,576
2003..................................................... 15,938
2004..................................................... 3,348
-------
Total.................................................... $39,194
=======
</TABLE>
During the years ended December 31, 1999, 1998 and 1997, the Company paid
interest of approximately $2,146,000, $8,478,000 and $16,423,000, respectively.
At December 31, 1999 and 1998 accrued interest of $676,700 and $153,000,
respectively is included in accrued liabilities.
6. FAIR VALUE OF FINANCIAL INSTRUMENTS
The estimated fair values of the Company's financial instruments are as
follows (in thousands):
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------------------------------
1999 1998
-------------------- --------------------
CARRYING FAIR CARRYING FAIR
VALUES VALUES VALUES VALUES
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Financial assets (liabilities):
Cash and cash equivalents....................... $ 4,658 $ 4,658 $ 8,652 $ 8,652
Capital construction fund....................... $ 4,125 $ 4,125 $ 4,069 $ 4,069
Debt obligations................................ $(46,213) $(46,213) $(27,145) $(26,790)
Unrecognized financial instruments:
Interest rate swaps............................. $ -- $ 482 $ -- $ --
</TABLE>
The fair value of long-term debt obligations is estimated based on the
current rates offered to the Company for similar debt of the same remaining
maturities. The fair value of interest rate swaps (used for purposes other than
trading) is the estimated amount the Company would receive or pay to terminate
swap agreements at the reporting date, taking into account the interest rates
and the credit-worthiness of the swap counterparties at that time.
27
<PAGE> 29
MARINE TRANSPORT CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Securities available-for-sale included in marketable securities and cash
held in capital construction fund consist of the following components (in
thousands):
<TABLE>
<CAPTION>
DECEMBER 31,
------------------------------------------------
1999 1998
---------------------- ----------------------
CARRYING UNREALIZED CARRYING UNREALIZED
VALUE LOSS VALUE LOSS
-------- ---------- -------- ----------
<S> <C> <C> <C> <C>
Capital construction fund:
Cash equivalents................................. $3,324 $3,118
Preferred stocks................................. 801 $(239) 951 $(69)
------ ----- ------ ----
Total.............................................. $4,125 (239) $4,069 (69)
====== ======
Deferred income taxes.............................. 39 18
----- ----
Unrealized loss on security -- net................. $(200) $(51)
===== ====
</TABLE>
7. OTHER MATTERS
<TABLE>
<CAPTION>
IN THOUSANDS AT
DECEMBER 31,
----------------
1999 1998
------ ------
<S> <C> <C>
Prepaid expenses and other assets consist of:
Insurance................................................. $3,272 $5,921
Inventory -- fuel......................................... 1,178 492
Other..................................................... 32 158
------ ------
$4,482 $6,571
====== ======
Deferred charges and other assets consist of:
Deposits.................................................. $ 459 $1,461
Deferred financing costs.................................. 2,868 2,325
Other..................................................... 3,442 2,816
------ ------
$6,769 $6,602
====== ======
Accrued liabilities consist of:
Interest.................................................. $ 677 $ 153
Wages, benefits and payroll taxes......................... 691 576
Insurance................................................. 410 588
Other..................................................... 193 368
------ ------
$1,971 $1,685
====== ======
</TABLE>
8. DEFERRED GAIN ON SALE AND LEASEBACK
MARINE COLUMBIA
On January 31, 1997, the Company sold the vessel MARINE COLUMBIA for
$40,000,000 in cash and a note receivable of $9,000,000 that bears interest at
8.172 percent and leased it back under a time charter which was scheduled to
terminate December 31, 2002. On August 26, 1999, the time charter was terminated
and replaced with: (a) a bareboat charter between the owner of the vessel and an
affiliate of the Company; (b) a bareboat charter between the affiliate of the
Company and a third party; and (c) a time charter between the third party and an
affiliate of BP Amoco. The Company has the option to purchase the vessel for
$9,500,000 at anytime after the termination or expiration of the time charter
with the affiliate of BP Amoco.
28
<PAGE> 30
MARINE TRANSPORT CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The gain on the sale of $24,700,000 has been deferred and is being credited to
income as an adjustment to operating lease expense over the term of the lease.
MARINE CAR CARRIERS INC., (M.I.)
On June 4, 1997, Marine Car Carriers, Inc. (M.I.) ("MCCMI"), then a fifty
percent owned subsidiary of MTL, sold its only vessel, the MARINE RELIANCE, for
$18,900,000. Under the terms of the sale agreement, MCCMI had the option to
lease back the vessel for a four-year period. MCCMI exercised the option on June
21, 1997. The Company has deferred the $2,690,000 gain on the sale, which is
being credited to income over four years.
9. LEASES
OPERATING LEASES
Certain vessels are chartered out according to non-cancelable agreements
accounted for as operating leases. The future minimum revenues to be received
subsequent to December 31, 1999 on the chartered-out vessels are as follows (in
thousands):
<TABLE>
<S> <C>
2000..................................................... $22,843
2001..................................................... 11,252
2002..................................................... 12,715
2003..................................................... 6,119
2004..................................................... 12,710
Thereafter............................................... 19,556
-------
$85,195
=======
</TABLE>
Certain vessels are chartered in under non-cancelable lease agreements
accounted for as operating leases. In addition, the Company leases office
facilities under long-term agreements accounted for as operating leases. The
future minimum payments to be made subsequent to December 31, 1999 on the
chartered-in vessels and office leases are as follows (in thousands):
<TABLE>
<S> <C>
2000.................................................... $ 43,989
2001.................................................... 13,478
2002.................................................... 13,161
2003.................................................... 6,158
2004.................................................... 12,710
Thereafter.............................................. 19,556
--------
$109,052
========
</TABLE>
The office lease also requires the Company to make additional payments
based on various escalation clauses relating to increases in maintenance costs
or changes in the consumer price index. Charter and rental expense amounted to
approximately $46,432,000, $49,793,000 and $58,927,000 for the years ended
December 31, 1999, 1998 and 1997, respectively.
29
<PAGE> 31
MARINE TRANSPORT CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
10. INCOME TAXES
A summary of the components of the (provision) benefit for income taxes on
income excluding the cumulative effect in accounting principle is as follows (in
thousands):
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
--------------------------------
1999 1998 1997
-------- -------- --------
<S> <C> <C> <C>
Current (provision)................................... $(2,873) $(5,550) $(6,804)
Deferred tax benefit.................................. 2,011 45,535 6,984
------- ------- -------
Benefit (provision) for income taxes.................. $ (862) $39,985 $ 180
======= ======= =======
</TABLE>
The benefit (provision) for income taxes varies from the statutory rates
due to the following (in thousands):
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
---------------------------------
1999 1998 1997
------- --------- ---------
<S> <C> <C> <C>
(Provision) benefit at statutory rate................... $(848) $ 2,420 $ 1,103
Minority interest in (income) loss of subsidiary........ (9) -- (61)
Equity in income (loss) of unconsolidated joint ventures
net of dividends declared............................. -- 823 (1,114)
Net deferred tax liability no longer required as a
result of the Distribution............................ -- 38,857 --
Non-qualified capital construction fund withdrawal...... -- (1,851) --
Other................................................... (5) (264) 252
----- ------- -------
Benefit (provision) for income taxes.................... $(862) $39,985 $ 180
===== ======= =======
</TABLE>
The components of deferred income taxes relate to the tax effects of
temporary differences as follows (in thousands):
<TABLE>
<CAPTION>
FOR THE YEARS ENDED
DECEMBER 31,
--------------------
1999 1998
-------- --------
<S> <C> <C>
Deferred tax liabilities:
Difference between book and tax basis in assets........... $14,844 $17,767
Marketable securities and cash held in capital
construction fund...................................... 1,444 1,424
Previously excluded foreign income........................ 1,618 1,614
Vessel drydocking costs................................... 3,025 2,600
------- -------
Total deferred tax liability................................ 20,931 23,405
------- -------
Deferred tax assets:
Other..................................................... (77) (503)
------- -------
Total deferred tax assets................................... (77) (503)
------- -------
Deferred income taxes....................................... $20,854 $22,902
======= =======
</TABLE>
The Distribution in 1998 resulted in payment of Federal income taxes of
approximately $3,000,000 on previously excluded foreign ("Subpart F") income and
on the distribution of shares to non-U.S. shareholders. The remaining balance of
deferred income taxes applicable to foreign operations of approximately
$41,000,000 was credited to income in 1998.
30
<PAGE> 32
MARINE TRANSPORT CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
11. SHAREHOLDERS' EQUITY
The Company has reserved the right to issue up to 975,000 shares of its
common stock for the establishment of stock option, stock appreciation rights
and restricted stock plans for employees and outside members of the Company's
Board of Directors.
Accumulated other comprehensive (loss) at December 31, 1999 is $(200,000),
which is comprised of a December 31, 1997 opening balance of $4,890,000, a 1999
and 1998 unrealized (loss) on marketable securities of $(149,000) and $(29,000),
respectively, and a 1998 cumulative foreign currency translation adjustment of
$(4,912,000).
12. PENSION PLANS
The Company's Salaried Employees Retirement Income Plan (the "Plan") for
salaried employees is a defined contribution plan. The Plan permits employees to
contribute a specified percentage of their salary under Section 401(k) of the
Internal Revenue Code. In 1997, the Company allowed employees to make
contributions up to fifteen percent of their annual salaries with the Company
contributing (subject to certain statutory limitations) at least 3 percent of
the annual compensation of each employee, whether or not the employee made a
contribution. Effective January 1, 1999, the Company continued to allow
employees to make contributions up to fifteen percent of their annual salaries
with the Company: (a) matching the first three percent of the annual
compensation of each employee so contributed (subject to certain statutory
limitations); and (b) contributing at least 3 percent (subject to certain
statutory limitations) of the annual compensation of each employee, whether or
not the employee made a contribution. The Company's minimum annual contribution
expense after June 17, 1998 was equal to 3 percent of all individual gross wages
not exceeding $160,000. All salaried employees, employed as of close of business
on December 31, were eligible for the contribution. The Company's expense for
the years ended December 31, 1999, 1998 and 1997 was $324,081, $411,000, and
$528,000, respectively.
Pursuant to collective bargaining agreements with labor unions representing
sea-going personnel, contributions are also made to various defined benefit and
defined contribution pension and welfare plans, including some multi-employer
plans, in accordance with their terms. Pension expense for all plans covered by
collective bargaining agreements for the years ended December 31, 1999, 1998 and
1997 was approximately $269,616, $110,675 and $200,000, respectively.
The Company also administers a: (a) money purchase defined contribution
individual account plan; and (b) 401(K) saving plan for certain deck officers
employed aboard certain vessels. The 401(K) plan permits employees to contribute
a specified percentage of their salary under Section 401(k) of the Internal
Revenue Code but does not require the Company to contribute to this plan.
13. STOCK OPTION AND RESTRICTED STOCK PLANS
Prior to June 17, 1998, the Company had five option plans: the 1995 Equity
Incentive Plan (the "1995 Plan"), the 1995 Stock Option Plan for Non-Employee
Directors, (the "Directors Plan"), the 1990 Equity Incentive Plan (the "1990
Plan"), the 1986 Non-Qualified Option Plan, and the 1984 Incentive Stock Option
Plan. The plans were terminated upon the Acquisition and Distribution.
Following the Acquisition and the Distribution, the OMI Board of Directors,
at the request of the Compensation Committee of MTL's former Board of Directors,
adopted the 1998 Stock Option Plan for Non-Employee Directors (the "1998
Directors Plan"). As originally adopted, the 1998 Directors Plan authorized the
Company automatically to grant options to purchase 7,500 shares of MTC common
stock to each eligible non-employee director of MTC. Up to 100,000 shares of MTC
common stock were originally reserved for issuance pursuant to the 1998
Directors Plan. On May 4, 1999, the Company amended and restated the 1998 Stock
Option Plan for Non-Employee Directors and increased to 150,000 the shares of
MTC Common Stock
31
<PAGE> 33
MARINE TRANSPORT CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
reserved for issuance under the plan. Options granted under the 1998 Directors
Plan, as amended, vest on the first anniversary date of the grant of the option.
Following the Acquisition and the Distribution, the OMI Board of Directors,
at the request of the Compensation Committee of MTL's former Board of Directors,
adopted the 1998 Incentive Equity Plan. (the "1998 Incentive Plan"). As
originally adopted, the 1998 Incentive Plan authorizes the Company to grant to
its employees qualified stock options, stock appreciation rights in tandem with
such options, and restricted stock or bonuses payable in stock for up to 550,000
shares of MTC common stock. On May 4, 1999, the Company amended and restated the
1998 Incentive Equity Plan and increased to 825,000 the shares of MTC common
stock reserved for issuance under the plan. Options granted under the 1998
Incentive Equity Plan, as amended, vest annually in three equal installments
from the date of grant.
On June 18, 1998, the Company awarded options to acquire a total of 52,500
shares under the 1998 Directors Plan at a strike price of $4.61, equal to the
average closing price of the Company's common stock for the 10-day trading
period commencing on June 18, 1998. Each option permits the non-employee
director to purchase shares of the Company's common stock for a period of up to
ten years from the date of grant.
On June 18, 1998, the Company awarded options to employees to acquire a
total of 285,000 shares under the 1998 Incentive Plan at a strike price of
$4.61, equal to the average closing price of the Company's common stock for the
10-day trading period commencing on June 18, 1998. On December 1,1998 the strike
price for such options was reduced to $2.50 for all options except for certain
options awarded to management executives. Each option permits employees to
purchase shares of the Company's common stock for a period of up to ten years
from the date of grant.
In 1999, the Company awarded options to employees to acquire a total of
105,000 shares under the 1998 Incentive Plan equal to the fair-market value of
the common stock on that day. Each option permits employees to purchase shares
of the Company's common stock for a period of up to ten years from the date of
grant.
In 1999, the Company awarded options to acquire a total of 60,000 shares
under the 1998 Directors Plan equal to the fair-market value of common stock on
that day. Each option permits employees to purchase shares of the Company's
common stock for a period of up to ten years from the date of grant.
32
<PAGE> 34
MARINE TRANSPORT CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
A summary of the changes in shares under option for all plans is as follows
(retroactively restated to reflect the one-for-ten reverse stock split):
<TABLE>
<CAPTION>
WEIGHTED
AVERAGE
NUMBER OF RANGE OF OPTION
OPTIONS OPTIONS PRICES PRICE
--------- ----------------------- --------
<S> <C> <C> <C> <C> <C>
Outstanding at December 31, 1996............ 117,600 $45.00 to $98.75 $62.30
Granted................................... 0 0 0
Exercised................................. (32,500) 45.00 to 98.75 61.50
Forfeited................................. (4,000) 63.10 to 98.75 83.00
-------
Outstanding at December 31, 1997............ 81,100 45.00 to 98.75 61.60
Granted................................... 337,500 2.50 to 4.613 3.02
Exercised................................. (5,000) 45.00 to 98.75 48.60
Terminated................................ (76,100) 45.00 to 98.75 61.60
-------
Outstanding at December 31, 1998............ 337,500 2.50 to 4.613 3.02
Granted................................... 165,000 2.875 to 3.50 3.18
Exercised................................. 0 0 0
Terminated................................ (7,500) 2.50 2.50
-------
Outstanding at December 31, 1999............ 495,000 2.50 to 4.613 $ 3.08
=======
</TABLE>
The following table summarizes the status of the stock options outstanding
and exercisable at December 31, 1999:
<TABLE>
<CAPTION>
STOCK OPTIONS OUTSTANDING STOCK OPTIONS EXERCISABLE
------------------------------------ ---------------------------
WEIGHTED WEIGHTED
REMAINING AVERAGE WEIGHTED
NUMBER OF CONTRACTUAL EXERCISE NUMBER OF AVERAGE
RANGE OF EXERCISE PRICES OPTIONS LIFE PRICE OPTIONS EXERCISE PRICE
- ------------------------ --------- ----------- -------- --------- --------------
<S> <C> <C> <C> <C> <C>
$2.50 to $3.31 408,750 8.80 Years $2.77 81,263 $2.50
$3.50 to $4.61 86,250 8.49 Years $4.58 62,813 $4.61
------- ---------- ----- ------- -----
Total 495,000 8.74 Years $3.08 144,075 $3.42
</TABLE>
The Company applies Accounting Principles Board Opinion No. 25 and related
Interpretations in accounting for its stock option plans. Accordingly, no
compensation cost has been recognized for its stock option plans. Had
compensation cost for the Company's stock option plans have been determined
based on the fair value at the grant dates for awards under those plans
consistent with the methods recommended by SFAS 123, the Company's net income
and net income per share for the years ended December 31, 1999, 1998 and 1997
would have been stated at the pro forma amounts indicated below:
<TABLE>
<CAPTION>
1999 1998 1997
------ ------- -------
<S> <C> <C> <C>
Net income
As reported.......................................... $1,624 $33,072 $10,827
Pro forma............................................ $1,306 $32,951 $10,547
Basic and diluted income per common share:
As reported.......................................... $ .26 $ 6.31 $ 2.52
Pro forma............................................ $ .21 $ 6.29 $ 2.46
</TABLE>
33
<PAGE> 35
MARINE TRANSPORT CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The fair value of these options was estimated at the date of grant using
the using the Black-Scholes model with the following assumptions:
<TABLE>
<CAPTION>
1999 1998 1997
---- ---- ----
<S> <C> <C> <C>
Expected dividend yield..................................... 0 0 0
Expected stock price volatility............................. 88% 100% 36%
Risk-free interest rate..................................... 5.6% 5.5% n/a
Expected life of options in years........................... 4 4 5
</TABLE>
The weighted average fair value of options granted during 1999 and 1998 is
$2.10 and $2.16 respectfully.
14. COMMITMENTS AND CONTINGENCIES
The Company is a party to a number of litigation and arbitration
proceedings arising from its operations. Such actions are covered by insurance
or, in the opinion of management are of such a nature that the ultimate
liability, if any, would not have a material adverse effect on the operations or
financial position of the Company.
In February 1999, the Company paid $1 million in full settlement of an
income tax indemnity claim with a subsidiary of a bank (the "Bank") in
connection with an earlier transaction between MTL and the Bank. The settlement
amount has been reflected in the accompanying consolidated financial statements
as an adjustment of the purchase price of MTL, and is included in accrued
liabilities at December 31, 1998.
15. FINANCIAL INFORMATION RELATING TO SEGMENTS
During the years 1999-1997 the Company operated in three districts
operating segments. In connection with the Acquisition and the Distribution, the
Company's Foreign operating segment was spun off to its shareholders and
operates as an independent entity. The three operating segments are:
Ship Management ("Management"): Technical management of vessels owned by
others, including vessels of the U.S. Maritime Administration ("MARAD").
Transportation Services for Energy and Chemicals ("Energy and
Chemicals"): Owned and chartered-in U.S.-based vessels operating under time and
voyage charters with customers, which are primarily chemical and oil-production
companies.
Foreign owned and chartered in vessels in foreign trades operating
short-term and long-term shipping services for third parties.
<TABLE>
<CAPTION>
ENERGY AND
MANAGEMENT CHEMICALS FOREIGN TOTAL
---------- ---------- -------- ---------
<S> <C> <C> <C> <C>
1999
Total revenues.............................. $19,818 $ 136,611 $ -- $ 156,429
Vessel and voyage expenses.................. (9,342) (115,614) -- (124,956)
Depreciation expense........................ (2,594) (10,840) -- (13,434)
------- --------- -------- ---------
Segment profit.............................. $ 7,882 $ 10,157 $ -- 18,039
======= ========= ========
General & administrative expenses........... (14,301)
Interest expense, net....................... (1,270)
Other income................................ 18
---------
Consolidated loss before income taxes....... $ 2,486
=========
Total assets................................ $12,653 $ 90,171 $ -- $ 102,824
======= ========= ======== =========
Expenditures on long-lived assets........... $ 442 $ 6,540 $ -- $ 6,982
======= ========= ======== =========
</TABLE>
34
<PAGE> 36
MARINE TRANSPORT CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
<TABLE>
<CAPTION>
ENERGY AND
MANAGEMENT CHEMICALS FOREIGN TOTAL
---------- ---------- -------- ---------
<S> <C> <C> <C> <C>
1998
Total revenues.............................. $12,722 $ 100,552 $ 71,504 $ 184,778
Vessel and voyage expenses.................. (8,729) (89,110) (54,091) (151,930)
Depreciation expense........................ (1,315) (10,466) (10,626) (22,407)
------- --------- -------- ---------
Segment profit.............................. $ 2,678 $ 976 $ 6,787 10,441
======= ========= ========
General & administrative expenses........... (16,396)
Interest expense, net....................... (3,849)
Other income................................ 538
Equity in income of unconsolidated joint
ventures.................................. 2,353
---------
Consolidated loss before income taxes and
cumulative effect of change in accounting
principle................................. $ (6,913)
=========
Total assets................................ $ 1,888 $ 84,512 $ -- $ 86,400
======= ========= ======== =========
Expenditures on long-lived assets........... $ 21 $ 623 $ 68,332 $ 68,976
======= ========= ======== =========
</TABLE>
<TABLE>
<CAPTION>
ENERGY AND
MANAGEMENT CHEMICALS FOREIGN TOTAL
---------- ---------- -------- ---------
<S> <C> <C> <C> <C>
1997
Total revenues............................... $ 6,568 $ 82,986 $141,986 $ 231,540
Vessel and voyage expenses................... (3,735) (84,281) (86,347) (174,363)
Depreciation expense......................... (987) (5,282) (22,675) (28,944)
------- -------- -------- ---------
Segment profit............................... $ 1,846 $ (6,577) $ 33,078 28,233
======= ======== ========
General & administrative expenses............ (23,998)
Interest expense, net........................ (8,992)
Other income................................. 870
Equity in income of unconsolidated joint
ventures................................... 737
---------
Consolidated income before income taxes and
extraordinary item......................... $ (3,150)
=========
Total assets................................. $ -- $ 94,944 $412,674 $ 507,618
======= ======== ======== =========
Investment in equity investees............... $ -- $ 345 $ 27,810 $ 28,155
======= ======== ======== =========
Expenditures on long-lived assets............ $ -- $ 3,185 $ 55,285 $ 58,470
======= ======== ======== =========
</TABLE>
Reconciliations of total assets of the segments to amounts included in the
consolidated balance sheets follows:
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------------------
1999 1998 1997
-------- -------- --------
<S> <C> <C> <C>
Total assets of all segments....................... $102,824 $ 86,400 $507,618
Marketable securities and cash held in capital
construction fund................................ 4,125 4,069 10,969
Other unallocated assets........................... 14,916 16,001 --
-------- -------- --------
Consolidated total assets.......................... $121,865 $106,470 $518,587
======== ======== ========
</TABLE>
35
<PAGE> 37
MARINE TRANSPORT CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
In 1999 and 1997, revenues from one customer accounted for approximately 13
and 11 percent of voyage revenues, respectively. There were no charterers that
were considered to be major customers in the year ended December 31, 1998.
16. SUBSEQUENT EVENTS
On January 31, 2000, the Company completed a transaction which allowed it
to monetize $48,417,638 in future charter earnings on the vessel MARINE COLUMBIA
under the BP Amoco time charter with two banks. Of this amount, $23,417,638 was
used to replace certain indebtedness associated with the vessel, $1,000,000 was
used to settle a claim against an affiliate of MTC and the remaining $24,000,000
was transferred to an affiliate of MTC for current operations and growth, as
well as for other projects.
On February 7, 2000, Marine Transport Corporation discharged a promissory
note whose original principal indebtedness to OMI Corporation was $6,443,000.
The outstanding balance of $5,918,000, as well as interest accrued to that date,
was extinguished with a payment of $5,100,000. The resulting after tax gain of
approximately $649,000 ($.10 per share) will be reported in the Company's
financial statements for the three months ended March 31, 2000.
On February 10, 2000, Marine Transport Corporation and Mormac Marine Group,
Inc. ("Mormac") announced that Mormac's ocean bulk transportation businesses
will join the MTC group of companies which include Marine Transport Lines,
Intrepid Ship Management, Inc. and MTL Petrolink Corp. The total consideration
to be paid by the Company for the Mormac businesses is based on a series of
fixed and contingent payments over the next five years, with a minimum aggregate
amount of approximately $7,000,000. The acquired operation includes 10 U.S. flag
vessels, including two tankers involved in crude oil transportation for another
owner, three product carriers owned by Mormac employed on time charter and
contracts of affreightment, and five vessels operated for the U.S. Maritime
Administration. The operation of the two tankers trading in crude oil will be
combined with Marine Transport Lines' ship management group. The three Mormac
product carriers are bareboat chartered by a subsidiary of MTC and traded as a
"pooled" fleet with MTC's three similar product tankers, thereby enhancing
overall utilization and providing more flexible service to customers. Mormac's
government operation will be maintained as a separate unit with its Baltimore,
Maryland office. The total consideration to be paid by MTC for the Mormac
business is based on the performance of those businesses over a five-year
period.
36
<PAGE> 38
MARINE TRANSPORT CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
SUPPLEMENTARY DATA
QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
1999 QUARTER ENDED 1998 QUARTER ENDED
-------------------------------------- --------------------------------------
MAR. 31 JUNE 30 SEPT. 30 DEC. 31 MAR. 31 JUNE 30 SEPT. 30 DEC. 31
------- ------- -------- ------- ------- ------- -------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Revenues.......................... $37,553 $38,185 $36,804 $43,887 $62,537 $54,381 $30,428 $37,432
Operating income (loss)........... 110 1,325 358 1,945 3,212 (6,027) (4,099) 959
Net income (loss)................. $ (78) $ 687 $ 95 $ 920 $ 2,245 $33,016 $(2,787) $ 598
======= ======= ======= ======= ======= ======= ======= =======
Basic earnings (loss) per common
share:
Net income (loss) per common
share(1)........................ $ (.01) $ .11 $ .02 $ .15 $ 0.52 $ 7.20 $ (0.46) $ 0.10
======= ======= ======= ======= ======= ======= ======= =======
Weighted average number of shares
of common stock
outstanding -- basic............ 6,205 6,205 6,205 6,205 4,307 4,583 6,049 5,995
======= ======= ======= ======= ======= ======= ======= =======
Diluted earnings (loss) per common
share:
Net income (loss) per common
share(1)........................ $ (.01) $ .10 $ .02 $ .15 $ 0.52 $ 7.20 $ (0.46) $ 0.10
======= ======= ======= ======= ======= ======= ======= =======
Weighted average number of shares
of common stock outstanding --
diluted......................... 6,205 6,567 6,261 6,221 4,307 4,583 6,049 5,995
======= ======= ======= ======= ======= ======= ======= =======
</TABLE>
- ---------------
(1) Earnings per share are based on stand-alone quarters.
37
<PAGE> 39
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
At the annual shareholders meeting held on May 4, 1999, the Company's
shareholders voted to retain Ernst & Young, LLP as the independent accountants
of the Company. The Company's previous auditors Deloitte & Touche LLP, resigned
in connection with the Distribution and Deloitte & Touche became the independent
accountants for the separate international business, OMI Corporation. In the
past two years, there were no disagreements with either auditors on accounting
and financial disclosure, and there have been no reports from auditors which
have been qualified or modified as to uncertainty, audit scope, or accounting
principles, nor has there been an adverse opinion or a disclaimer of opinion.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF MARINE TRANSPORT CORPORATION
Pursuant to General Instruction G(3) the information called for by this
item is hereby incorporated by reference from Marine Transport Corporation's
2000 Proxy Statement to be filed with the Securities and Exchange Commission.
Information with respect to the Company's executive officers as of March
15, 2000 follows:
<TABLE>
<CAPTION>
YEAR
APPOINTED
NAME AGE POSITION TO OFFICE
- ---- --- -------- ---------
<S> <C> <C> <C>
Richard T. du Moulin.......... 53 Chief Executive Officer and June 1998
President
Mark L. Filanowski............ 45 Senior Vice President, Chief June 1998
Financial Officer and Treasurer
Peter N. Popov................ 48 Vice President, General Counsel June 1998
and Secretary
Jeffrey M. Miller............. 45 Vice President Marketing June 1998
</TABLE>
Richard T. du Moulin became Chief Executive Officer and President of the
Company in June 1998. Mr. du Moulin was Chief Executive Officer of Marine
Transport Lines, Inc., from 1989 until it was purchased by the Company in June
1998.
Mark L. Filanowski, became Senior Vice President, Chief Financial Officer
and Treasurer in June 1998. From 1989 to June 1998 Mr. Filanowski held similar
positions at Marine Transport Lines, Inc.
Peter N. Popov became Vice President, General Counsel and Secretary in June
1998. From 1989 to June 1998 Mr. Popov was General Counsel at Marine Transport
Lines, Inc.
Jeffrey M. Miller, became Vice President Marketing in June 1998. From 1994
to June 1998 Mr. Miller was employed by Marine Transport Lines, Inc. in a
similar capacity.
There is no family relationship by blood, marriage or adoption between any
of the above individuals and any executive officer or MTC director. The term of
office of each of the above individuals is determined by contractual
relationship between the Company and the individuals. The contracts have
one-year terms. There is no other arrangement or understanding between the above
individuals and any other person pursuant to which they have been or will be
selected as a director or nominee.
ITEM 11. EXECUTIVE COMPENSATION
Pursuant to General Instruction G(3) the information called for by this
item is hereby incorporated by reference from Marine Transport Corporation's
2000 Proxy Statement to be filed with the Securities and Exchange Commission.
38
<PAGE> 40
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Pursuant to General Instruction G(3) the information called for by this
item is hereby incorporated by reference from Marine Transport Corporation's
2000 Proxy Statement to be filed with the Securities and Exchange Commission.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Pursuant to General Instruction G(3) the information called for by this
item is hereby incorporated by reference from Marine Transport Corporation's
2000 Proxy Statement to be filed with the Securities and Exchange Commission.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a)(1) and (2) Financial Statements are presented in Item 8 of this report.
(a)(3) List of Exhibits (separate page)
(b) There were no reports on Form 8-K filed during the fourth quarter of
1999.
(c) Exhibits are filed as a separate section of this report.
(d) Financial Statement Schedules. All schedules for which provision is
made in the applicable accounting regulation of the Securities and Exchange
Commission are not required under the related instructions or are inapplicable
and, therefore, have been omitted.
39
<PAGE> 41
EXHIBITS
<TABLE>
<CAPTION>
NUMBER INCORPORATED BY REFERENCE TO DESCRIPTION OF EXHIBIT
- ------ ---------------------------- ----------------------
<C> <S> <C>
3.1 Exhibit 3.1 to 1990 Form 10-K Report of Certificate of Incorporation as amended
the Company and Exhibit A to the and restated
Company's Proxy Statement dated May 15,
1998
3.2 Exhibit 3.2 to 1990 Form 10-K Report of By-laws as amended
the Company
4.1 Exhibit 4.1 to 1989 Form 10-K Report of Form of Common Stock Certificate
the Company (Domestic)
4.2 Exhibit 4.2 to 1989 Form 10-K Report of Form of Common Stock Certificate
the Company (Foreign)
4.4 Promissory Note dated June 16, 1998 made
by the Company and payable to the order
of OMI Corporation
10.1 Exhibit B to the Company's Proxy 1998 Stock Option Plan for Non-Employee
Statement dated April 8, 1999 Directors
10.2 Exhibit C to the Company's Proxy 1998 Incentive Equity Plan
Statement dated April 8, 1999
10.3 Employment Agreement dated as of June 18,
1998 between the Company and Richard du
Moulin
10.4 Employment Agreement dated as of June 18,
1998 between the Company and Mark
Filanowski
10.5 Employment Agreement dated as of June 18,
1998 between the Company and Peter Popov
10.6 Employment Agreement dated as of June 18,
1998 between the Company and Jeffrey
Miller
10.7 Exhibit 10.8 to the Company's 10-Q Report Consulting Agreement dated as of June 18,
for the Quarter Ended June 30, 1998 1998 between the Company and Paul Gridley
10.8 Employment Agreement dated as of January
1, 1998 between the Company and Anthony
Naccarato
10.9 Employment Agreement dated as of
September 1, 1997 between the Company and
William Hogg
10.10 Exhibit 10.7 to the Company's 10-Q Report Form of Employment Agreement for
for the Quarter Ended June 30, 1998 Executive Officers
10.11 Amended and Restated Term Loan and
Revolving Credit Facility Agreement dated
as of June 17, 1998 among Marine
Transport Lines, Inc., the financial
institutions listed on Schedule 1 thereto
and Den norske Bank ASA
10.12 Term Loan and Revolving Credit Facility
Agreement dated as of June 17, 1998 among
the Company, the financial institutions
listed on Schedule 1 thereto and Den
norske Bank ASA
10.13 Certain documents dated September 29,
1999 which evidence certain indebtedness
in the amount of $21,370,000.00 (as of
that date) and related obligations
assumed by the company as partial
consideration for the acquisition of SMT
Chemical Explorer and SMT Chemical
Trader.
</TABLE>
40
<PAGE> 42
<TABLE>
<CAPTION>
NUMBER INCORPORATED BY REFERENCE TO DESCRIPTION OF EXHIBIT
- ------ ---------------------------- ----------------------
<C> <S> <C>
10.14 Exhibit G to the Company's Proxy Acquisition Agreement dated as of
Statement dated May 15, 1998 September 15, 1997 by and among OMI
Corp., Universal Bulk Carriers, Inc.,
Marine Transport Lines, Inc. and the
persons set forth on Exhibit A thereof
10.15 Exhibit 10.2 to the Company's Form 8-K Amendment No. 1 to Acquisition Agreement
Report filed July 6, 1998
10.16 Exhibit 10.4 to the Company's Form 8-K Tax Cooperation Agreement dated as of
Report filed July 6, 1998 June 15, 1998 between OMI Corp. and OMI
Corporation
10.17 Exhibit 10.3 to the Company's Form 8-K Distribution Agreement dated as of June
Report filed July 6, 1998 15, 1998 between OMI Corp. and OMI
Corporation
10.18 Salaried Employees Retirement Income Plan
21 Subsidiaries of the Company
23.1 Consent of independent auditors
27.1 Financial Data Schedule
</TABLE>
41
<PAGE> 43
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.
MARINE TRANSPORT CORPORATION
By /s/ RICHARD T. DU MOULIN
------------------------------------
Richard T. du Moulin
Chairman of the Board of Directors,
President and Chief Executive
Officer
March 29, 1999
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ RICHARD T. DU MOULIN Chairman of the Board of March 29, 2000
- --------------------------------------------------- Directors, President and
Richard T. du Moulin Chief Executive Officer
/s/ MARK L. FILANOWSKI Senior Vice President, Chief March 29, 2000
- --------------------------------------------------- Financial Officer, Treasurer
Mark L. Filanowski and Director
/s/ BRENT D. BAIRD Director March 29, 2000
- ---------------------------------------------------
Brent D. Baird
/s/ JONATHAN BLANK Director March 29, 2000
- ---------------------------------------------------
Jonathan Blank
/s/ ELAINE L. CHAO Director March 29, 2000
- ---------------------------------------------------
Elaine L. Chao
/s/ PAUL B. GRIDLEY Director March 29, 2000
- ---------------------------------------------------
Paul B. Gridley
/s/ WILLIAM M. KEARNS, JR. Director March 29, 2000
- ---------------------------------------------------
William M. Kearns, Jr.
/s/ MICHAEL KLEBANOFF Director March 29, 2000
- ---------------------------------------------------
Michael Klebanoff
/s/ STANLEY B. RICH Director March 29, 2000
- ---------------------------------------------------
Stanley B. Rich
/s/ JEROME SHELBY Director March 29, 2000
- ---------------------------------------------------
Jerome Shelby
</TABLE>
42
<PAGE> 44
STOCKHOLDER INFORMATION
ANNUAL MEETING
The annual meeting of shareholders will be held at 9:00am on May 25, 2000,
at the New York Yacht Club, 37 West 44th Street, New York, New York.
TRANSFER AGENT AND REGISTRAR
Marine Transport Corporation's shareholder records are maintained and
dividends, if any, are distributed by ChaseMellon Shareholder Services LLC which
may be contacted by calling (800) 851-9677, or by writing to Marine Transport
Corporation, c/o ChaseMellon Shareholder Services LLC, 85 Challenger Road,
Ridgefield Park, NJ 07660. ChaseMellon's website address is as follows:
http://www.chasemellon.com
AUDITORS
Ernst & Young LLP, 787 Seventh Avenue, New York, New York 10019
CITIZEN REQUIREMENT
United States law requires that to be eligible for U.S. coastwise trade a
corporation owning a vessel must be at least 75% U.S.-owned. In order to assure
compliance with this citizenship requirement, the Certificate of Incorporation
of the Company authorizes, and the Board of Directors has adopted, a By-law
authorizing the Board to determine the minimum percentage of outstanding shares
of capital stock of the Company that must be held by U.S. citizens. The minimum
percentage established by the Board now stands at 77 percent.
The Board has also adopted procedures for establishing the citizenship of
the Company's stockholders. The Company's stock certificates (otherwise
identical) are identified as "Domestic Share Certificates" (certificates
representing shares issued to United States citizens) and "Foreign Share
Certificates" (certificates representing shares issued to persons who are
non-U.S. citizens).
Any purported transfer of shares represented by a Domestic Share
Certificate to a non-U.S. citizen that would cause the level of ownership by
U.S. citizens to drop below the minimum set by the Board of Directors will not
be recorded on the registration books of the Company, will be ineffective to
transfer the shares of any voting, dividend or other rights in respect thereof,
and may be regarded as invalidly issued. The By-laws authorize the Company to
make all determinations with respect to the validity of any transfer under these
provisions and any such decision by the Company is final and binding.
INTERNET SITE:
Information about the Company, as well as a mailbox for shareholder
questions is contained on the MTC website: http://www.mtlx.com
<PAGE> 45
SHAREHOLDER INFORMATION
CORPORATE OFFICE:
Marine Transport Corporation
1200 Harbor Boulevard
C-901
Weehawken, NJ 07087-0901
(201) 330-0200
INTERNET ADDRESS:
www.mtlx.com
STOCK EXCHANGE LISTING:
Marine Transport Corporation's common stock trades on the Nasdaq Stock Market
under the symbol MTLX.
SHARE TRANSFER AGENT AND REGISTRAR:
ChaseMellon Shareholder Services, L.L.C.
85 Challenger Road
Ridgefield Park, NJ 07660
AUDITORS:
Ernst & Young LLP
787 Seventh Avenue
New York, New York 10019
ANNUAL GENERAL MEETING:
The annual general meeting of shareholders will be held May 25, 2000, 9:00am at:
The New York Yacht Club
37 West 44th Street
New York, New York
SHAREHOLDER INFORMATION:
Copies of SEC Form 10-K, the Company's Annual Report, Form 10-Q and other
published financial
information may be obtained by contacting:
Shareholder Relations
Marine Transport Corporation
1200 Harbor Boulevard
C-901
Weehawken NJ, 07087-0901
or, visit the MTC web site:
www.mtlx.com
Messages may be e-mailed to shareholder relations through the web site.
<PAGE> 1
Exhibit 4.4
PROMISSORY NOTE
$373,845.00 New York, New York
June 16, 1998
FOR VALUE RECEIVED, the undersigned, OMI Corp., a Delaware Corporation
("Marine"), hereby promises to pay to the order of OMI Corporation ("OMI"), at
its office at One Station Place, Stamford, CT 06902 (or such other place as OMI
may direct from time to time), in lawful money of the United States and in
immediately available funds, the principal amount of three hundred seventy three
thousand eight hundred forty five Dollars ($373,845.00) plus, interest on said
principal amount, from the date hereof. Payments of principal and interest shall
be made in the amounts and on the dates set forth on the attached Annex A.
Marine may prepay the outstanding principal of this Note, in whole, but
not in part, upon 10 days' prior written notice to the holder of this Note.
Prepayment hereunder shall be accompanied by payment of accrued interest
calculated from the date of the immediately prior installment payment to the
date of the next scheduled payment adjusted, pro rata, to the date of
prepayment.
Marine shall pay on demand interest on the outstanding unpaid principal
amount of this Note that is not paid within 5 business days of when due and on
the unpaid amount of all interest fees and other amounts then due and payable
hereunder that is not paid within 5 business days of when due from the due date
thereof to the date paid, at a rate per annum equal to 3% per annum above the
rate of interest per annum borne by this Note.
Marine is a duly organized and validly existing corporation, and is in
good standing under the laws of Delaware and has the corporate power and
authority to execute, deliver and carry out the terms and provisions of this
Note and has taken all necessary corporate action to authorize the execution,
delivery and performance of this Note. This Note constitutes the legal, valid
and binding obligation of Marine enforceable in accordance with its terms,
except to the extent that the enforceability thereof may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
generally affecting creditors' rights and by equitable principles (regardless of
whether enforcement is sought in equity or at law).
Neither the execution, delivery or performance by Marine of this Note, nor
compliance by it with the terms and provisions hereof, (i) will contravene any
applicable provision of any law, statute, rule or regulation, or any order,
writ, injunction or decree of any court or governmental instrumentality, (ii)
will conflict or be inconsistent with or result in any breach of, any of the
terms, covenants, conditions or provisions of, or constitute a default under, or
result in the creation or imposition of (or the obligation to create or impose)
any Lien upon any of the property or assets of Marine pursuant to the terms of
any indenture, mortgage, deed of trust, credit agreement or loan agreement, or
any other material agreement, contact or instrument to which Marine is a party
or by which it or any of its property or assets are bound or to which it may be
subject or
<PAGE> 2
(iii) will violate any provision of the certificate or articles of incorporation
or by-laws (or equivalent organizational documents), as the case may be, of
Marine.
Upon the occurrence of any of the following specified events (each an
"Event of Default"):
1. Marine shall fail to pay any of the principal of this Note on the
date when due or fail to pay any of the interest on this Note within
5 business days of the date when due; or
2. Marine shall (i) default in any payment of principal of or interest
on any indebtedness or contingent obligation (other than its
obligation under this Note) or (ii) default in the observance or
performance of any agreement or condition relating to any
indebtedness or contingent obligation (other than this Note) or
contained in any instrument or agreement evidencing, securing or
relating thereto, or any other event shall occur, the effect of
which is to permit such indebtedness or contingent obligation to be
declared due and payable or such indebtedness or contingent
obligation shall otherwise become due or required to be prepaid
prior to its stated maturity (determined without regard to whether
any notice is required); provided, that is shall not constitute an
Event of Default pursuant to clause (i) or (ii) above unless the
aggregate principal amount of all such indebtedness or contingent
obligations as described in clauses (i) and (ii), inclusive, exceeds
$100,000 at any one time; or
3. (a) Marine shall (i) commence any case, proceeding or other action
under any existing or future law of any jurisdiction, domestic or
foreign, relating to bankruptcy, insolvency, reorganization, or
relief of debtors, seeking to have an order for relief entered with
respect to it, or seeking to adjudicate it a bankrupt or insolvent,
or seeking reorganization, arrangement, adjustment, winding-up,
liquidation, dissolution, composition, or other relief with respect
to it or its debts, or (ii) commence any case, proceeding, or other
action seeking appointment of a receiver, trustee, custodian, or
other similar official for it or for all or any substantial part of
its assets, or (iii) make a general assignment for the benefit of
its creditors; (b) there shall be commenced against Marine any case,
proceeding or other action of a nature referred to in clause (a)
above that (i) results in the entry of an order for relief or any
such adjudication or appointment, or (ii) remains undismissed,
undischarged, or unbonded for a period of sixty (60) days; (c) there
shall be commenced against Marine any case, proceeding or other
action seeking issuance of a warrant of attachment, execution,
distraint, or similar process against all or any substantial part of
its assets that results in the entry of an order for any such relief
that shall not have been vacated, discharged, or stayed or bonded
pending appeal within sixty (60) days from the entry thereof; (d)
Marine shall take any action in furtherance of, or indicating its
consent to, approval of, or acquiescence in, any of the acts set
forth in clause (a), (b), or (c) previously; or (e) Marine shall
generally not, or shall be unable to, or shall admit in writing its
inability to, pay its debts as they become due; or
-2-
<PAGE> 3
4. One or more final judgments or decrees shall be entered against
Marine involving a liability not paid or fully covered by insurance
in excess of $100,000 for all such judgments and decrees and all
such judgments or decrees shall not have been vacated, discharged,
or stayed or bonded pending appeal within sixty (60) days from the
entry thereof.
THEN, the holder hereof may declare the outstanding principal balance hereof
immediately due and payable and Marine shall immediately pay to the holder all
such amounts, with interest accrued but unpaid thereon to the date of payment in
full at the applicable rate provided herein.
Marine, for itself, its successors and assigns, hereby waives diligence,
presentment, protest, and demand and notice of protest, demand, dishonor, and
nonpayment of this Note.
Neither acceptance by the holder hereof of partial or delinquent payment
nor any failure on the part of the holder to exercise, or any delay in
exercising, any right under this Note shall operate as a waiver of any
obligation of Marine or any right of the holder, and no single or partial
exercise of any right under this Note shall preclude any other or further
exercise thereof or the exercise of any other right. No waiver, amendment,
alteration or other modification of any provision of this Note shall in any
event be effective unless the same shall be in writing and signed by the holder.
The remedies provided in this Note are cumulative and not exclusive of any
remedies provided by law. All of the covenants, provisions, and conditions
herein contained are made on behalf of, and shall apply to and bind the
respective distributees, personal representatives, successors, and assigns of
Marine, jointly and severally. Marine agrees to pay all collection expenses,
court costs, and reasonable attorney fees and disbursements (whether or not
litigation is commenced) that may be incurred in connection with the collection
or enforcement of this Note.
This Note shall be governed by and construed in accordance with the laws
of the State of New York, without giving effect to conflicts of laws or
principles thereof.
OMI CORP.
a Delaware Corporation
By: /s/ V. de Sostca
-------------------------------------
Name: Vincent de Sostca
Title: S.V.P.
-3-
<PAGE> 4
ANNEX A
<TABLE>
<CAPTION>
Total Payment
Outstanding Principal Due (Interest
Payment Date Principal Payment Interest Payment Plus Principal)
- ------------ --------- ------- ---------------- ---------------
<C> <C> <C> <C> <C>
l6 June 1998 373,845.00 0
01 November 1998 373,845.00 37,384.50 14,954.00 52,338.50
01 May 1999 336,460.50 37,384.50 13,458.00 50,842.50
01 November 1999 299,076.00 37,384.50 11,963.00 49,347.50
01 May 2000 261,691.50 37,384.50 10,468.00 47,852.50
01 November 2000 224,307.00 37,384.50 8,972.00 46,356.50
01 May 2001 186,922.50 37,384.50 7,477.00 44,861.50
01 November 2001 149,538.00 37,384.50 5,982.00 43,366.50
01 May 2002 112,153.50 37,384.50 4,486.00 41,870.50
01 November 2002 74,769.00 37,384.50 2,991.00 40,375.50
01 May 2003 37,384.50 37,384.50 1,495.00 38,879.50
----------- ----------- -------- -----------
Total: $373,845.00 $82,246.00 $456,091.00
</TABLE>
<PAGE> 1
Exhibit 10.3
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement"), dated as of June 18,
1998, is by and between Marine Transport Corporation, a Delaware corporation
(the "Company") and Richard T. du Moulin ("Executive").
W I T N E S S E T H
WHEREAS, the Company desires to employ the Executive; and
WHEREAS, the Executive is willing to be employed by the Company, as
President and Chief Executive Officer of the Company, for the period and upon
the terms and conditions hereinafter set forth;
NOW THEREFORE, in consideration of the mutual covenants and
conditions contained herein, the Company and the Executive hereby agree as
follows:
1. Employment. The Company shall employ the Executive, and the
Executive accepts employment by the Company, as President and Chief Executive
Officer of the Company upon the terms and conditions herein, for the period
commencing as of June 17, 1998, and ending on June 16, 1999, subject to
termination as hereinafter provided (the period from June 17, 1998 through June
16, 1999, as such period may be extended as described in this paragraph, being
herein referred to as the "Employment Period"). The initial term of employment
shall be automatically extended for an additional period of one year unless 90
days written notice of termination is given by either party, and for additional
periods of one year thereafter unless 90 days written notice of termination is
given by either party.
2. Duties. (a) Throughout the Employment Period, the Executive shall
be President and Chief Executive Officer of the Company and shall report to the
Board of Directors (the "Board") of the Company. The Executive shall at all
times comply with Company policies and guidelines as in effect from time to time
and with the lawful and responsible instructions of the Board.
(b) During the Employment Period, the Executive shall devote his
full-time working hours to his duties hereunder, except during vacation time,
any periods of illness and authorized leaves of absence. The Executive shall
have such responsibilities and authorities consistent with the status, title and
reporting requirements set forth herein as are appropriate to said position,
subject to change (other than diminution in position, authority, duties or
responsibilities) from time to time by the Board.
(c) Throughout the Employment Period, the Executive shall faithfully
and diligently perform his duties under this Agreement and shall use his best
efforts to promote the interests of the Company.
<PAGE> 2
3. Compensation. During the Employment Period, as full compensation
to the Executive for his performance of the services hereunder and for his
acceptance of the responsibilities described herein, the Company agrees to pay
the Executive, and the Executive agrees to accept, the following salary and
other benefits:
(a) Salary
The Company shall pay the Executive a salary (the "Base Salary") at
the annual rate of $295,000. The Compensation Committee of the Board shall
review such Base Salary on an annual basis and may increase it, from time to
time, in its sole discretion. The Base Salary due the Executive hereunder shall
be payable in equal monthly installments less any amounts required to be
withheld by the Company from such Base Salary pursuant to the benefit plans of
Section 3(d) and applicable laws and regulations described under Section 10(e).
(b) Bonus
The Executive shall be eligible to receive bonuses (each a "Bonus")
at the discretion of, and in the amounts and at the times determined by, the
Compensation Committee of the Board.
(c) Long Term Incentives
The Executive shall be entitled to receive grants of restricted
stock, stock options and other stock awards and/or other stock and cash awards
granted pursuant to any other long term incentive plans implemented by the
Company for the benefit of senior executives of the Company at the discretion
of, and in the amounts and at the times determined by, the Compensation
Committee of the Board.
(d) Other Benefit Plans
Subject to all eligibility requirements, and to the extent permitted
by law, the Executive shall be entitled to participate in any and all employee
benefit plans (including, but not limited to, retirement, life insurance,
medical, dental, disability, and savings plans) established or maintained by the
Company from time to time for the benefit of its employees (or its executives)
in general.
(e) Further Benefits
The Executive shall be entitled to a minimum of four weeks per annum
paid vacation.
(f) Deferred Compensation
Notwithstanding any other provision of the Agreement, the Executive
shall have the right to request any lawful means (including, without limitation,
any deferred compensation arrangement requested by the Executive) by which he
wishes to receive any portion of his Base Salary, Bonus, or other payments, and
the Company shall reasonably cooperate with the
-2-
<PAGE> 3
Executive to grant such request, provided that the granting of such request does
not represent inequitable treatment as concerns other senior employees or
executives (in the Company's sole judgment), and does not impose additional
costs on the Company other than insignificant administrative costs.
4. Reasonable Expenses. The Company will reimburse the Executive for
all reasonable business expenses, including travel and lodging, which are
properly incurred by him in the performance of his duties hereunder, upon
presentation of proper vouchers therefor and in accordance with written policies
established from time to time by the Company for such reimbursements.
5. Executive Covenants. The Executive acknowledges that as a result
of the services to be rendered to the Company hereunder, the Executive will be
brought into close contact with many confidential affairs of the Company, its
subsidiaries and affiliates, not readily available to the public. The Executive
further acknowledges that the services to be performed under this Agreement are
of a special, unique, unusual, extraordinary and intellectual character; that
the business of the Company is international in scope; that its services are
marketed throughout the world; and that the Company competes with other
organizations that are or could be located in nearly any part of the United
States or elsewhere. In recognition of the foregoing:
(a) Except with the consent of or as directed by the Company, or
except if compelled by judicial or legal authorities, the Executive will keep
confidential and not divulge to any other person, during the Employment Period
or thereafter, any Confidential Information and Trade Secrets regarding the
Company, its subsidiaries and affiliates, except for information which is or
becomes publicly available other than as a result of disclosure by the
Executive. For the purposes of this Agreement "Confidential Information and
Trade Secrets" means information which is confidential and secret to the
Company, its subsidiaries and affiliates. It may include, but is not limited to,
information relating to new and future concepts and business of the Company, its
subsidiaries and affiliates, in the form of memoranda, reports, computer
software and data banks, customer lists, employee lists, books, records,
financial statements, manuals, papers, contracts and strategic plans. As a
guide, the Executive is to consider information originated, owned, controlled or
possessed by the Company, its subsidiaries or affiliates which is not disclosed
in printed publications stated to be available for distribution outside the
Company, its subsidiaries and affiliates as being secret and confidential. In
instances where doubt does or should reasonably be understood to exist in the
Executive's mind as to whether information is secret and confidential to the
Company, its subsidiaries and affiliates, the Executive agrees to request an
opinion, in writing, from the Company.
(b) All papers, books and records of every kind and description
relating to the business and affairs of the Company, its subsidiaries and
affiliates, whether or not prepared by the Executive, and all property owned by
the Company, its subsidiaries and affiliates shall be the sole and exclusive
property of the Company, and the Executive shall surrender them to the Company,
at any time upon request, during or after the Employment Period.
-3-
<PAGE> 4
(c) During the Employment Period and for one year following
termination of this Agreement pursuant to Sections~6(a) or 6(c), the Executive
will not, without the prior written consent of the Company, compete, directly or
indirectly, with the Company, its subsidiaries and affiliates or participate as
a director, officer, employee, agent, representative, stockholder or partner, or
have any direct or indirect financial interest, in any business which directly
or indirectly competes with the Company, its subsidiaries and affiliates;
provided, however, that this paragraph (c) shall not restrict the Executive from
holding up to 5% of the publicly traded securities of any entity.
(d) During the Employment Period and for one year following
termination of this Agreement pursuant to Sections 6(a) or 6(c), the Executive
shall not either for his or her own account or for any person, firm or company
(i) solicit any customers of the Company, its subsidiaries and affiliates or
(ii) solicit or endeavor to cause any employee of the Company, its subsidiaries
and affiliates to leave his employment or induce or attempt to induce any such
employee to breach any employment agreement with the Company, its subsidiaries
and affiliates, or otherwise interfere with the employment of any employee by
the Company, its subsidiaries and affiliates.
(e) Without limiting any other provision of this Agreement, the
Executive hereby agrees to be bound by and to comply with any obligations known
to the Executive and imposed on the Company, its subsidiaries and affiliates, by
law, rule, regulation, ordinance, order, decree, instrument, agreement,
understanding or other restriction of any kind.
(f) The Executive hereby agrees to provide reasonable cooperation to
the Company, its subsidiaries and affiliates during the Employment Period and
thereafter in any litigation between the Company, its subsidiaries and
affiliates, and third parties.
(g) The parties agree that the Company shall, in addition to other
remedies provided by law, have the right and remedy to have the provisions of
this Section 5 specifically enforced by any court having equity jurisdiction, it
being acknowledged and agreed that any breach or threatened breach of the
provisions of this Section 5 will cause irreparable injury to the Company and
that money damages will not provide an adequate remedy to the Company. Nothing
contained herein shall be construed as prohibiting the Company from pursuing any
other remedies available to it for such breach or threatened breach, including
the recovery of damages from the Executive.
(i) Although the restrictions contained in Sections 5(a), (b), (c)
and (d) above are considered by the parties hereto to be fair and reasonable in
the circumstances, it is recognized that restrictions of such nature may fail
for technical reasons, and accordingly it is hereby agreed that if any of such
restrictions shall be adjudged to be void or unenforceable for whatever reason,
but would be valid if part of the wording thereof were deleted, or the period
thereof reduced or the area dealt with thereby reduced in scope, the
restrictions contained in Sections 5(a), (b), (c) and (d) shall be enforced to
the maximum extent permitted by law, and the parties consent and agree that such
scope or wording may be accordingly judicially modified in any proceeding
brought to enforce such restrictions.
-4-
<PAGE> 5
(ii) Notwithstanding that the Executive's employment hereunder may
expire or be terminated as provided in Section 1 or Section 6 hereof, this
Agreement shall continue in full force and effect insofar as is necessary to
enforce the covenants and agreements of the Executive contained in this Section
5.
6. Termination of Employment Period and Severance.
(a) Termination by the Company without Cause. If for any reason
other than the provisions of Section 6(d) hereof, the Company wishes to
terminate the Employment Period and the Executive's employment hereunder or
fails to extend the Employment Period for additional one year periods as
provided in Section 1, the Company shall give a written notice to the Executive
of such termination upon termination and shall pay to Executive an amount equal
to 150% of the Base Salary then in effect. Upon receipt of such notice by the
Executive or upon expiration of the employment period that is not extended, the
Employment Period shall terminate (and the Executive shall have no further
duties under Section 2 hereof). The Executive agrees that the payment described
in this Section 6(a) shall be full and adequate compensation to the Executive
for all damages the Executive may suffer as a result of the termination of his
employment pursuant to this Section 6(a), and hereby waives and releases the
Company from any and all obligations or liabilities to the Executive arising
from or in connection with the Executive's employment with the Company or the
termination and claims the Executive may have under federal, state or local
statutes, regulations or ordinances or under any common law principles or breach
of contract or the covenant of good faith and fair dealing, defamation, wrongful
discharge, intentional infliction of emotional distress or promissory estoppel;
provided, however, that any rights and benefits the Executive may have under the
employee benefit plans and programs of the Company in which the Executive is a
participant, shall be determined in accordance with the terms and provisions of
such plans and programs.
(b) Death. If the Executive dies during the Employment Period, the
Employment Period shall automatically terminate and the obligations of the
parties shall terminate effective the date of death.
(c) Disability. If the Executive becomes Disabled (as hereinafter
defined) during the Employment Period, the Company shall be entitled to
terminate his or her employment and the Employment Period upon written notice to
the Executive from the Company. In the event of such termination, the Executive
shall be released from any duties hereunder and the Company shall pay to
Executive an amount equal to 150% of the Base Salary then in effect. For
purposes of this Agreement, "Disabled" shall mean mental or physical impairment
or incapacity rendering the Executive substantially unable to perform his duties
under this Agreement for a period of longer than 90 days out of any 360-day
period during the Employment Period. A determination of whether the Executive is
Disabled shall be made by the Company in its sole discretion upon its own
initiative or upon request of the Executive or a person acting on his behalf.
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(d) Termination by the Company for Cause. The Company by written
notice to the Executive, shall have the right to terminate the Employment Period
in the event of any of the following (which shall constitute "Cause"):
(i) The Executive's breach in respect of his duties under this
Agreement, such breach continuing unremedied for 10 days after
written notice thereof from the Company to the Executive
specifying the acts constituting the breach and requesting
that they be remedied;
(ii) Any misconduct, dishonesty, breach of fiduciary duty,
insubordination or other act by the Executive which other act
is materially detrimental to the assets, business or goodwill
of the Company, or materially damaging to the Company's, its
subsidiaries' and/or affiliates' relationships with their
customers or employees, including, without limitation, the
Executive having been indicted for or convicted of (including
entry of a no contest plea) in respect of a felony or of any
crime involving moral turpitude or fraud during the Employment
Period, provided such indictment or conviction has resulted or
is likely to result in substantial detriment to the Company,
its subsidiaries and/or affiliates;
(iii) misappropriation (or attempted misappropriation) of any
of the Company's funds or property or of a business
opportunity of the Company, including attempting to secure or
securing any personal profit in connection with any
transaction entered into on behalf of the Company;
(iv) Executive's gross negligence in connection with the
performance of Executive's obligations hereunder; or
(v) Executive's excessive alcohol abuse or abuse of any
controlled substance.
Any termination under this Section 6(d) shall be without damages or
liability to the Company for compensation and other benefits which would have
accrued to the Executive hereunder after termination, but all compensation,
benefits and reimbursements accrued through the date of termination shall be
paid to the Executive at the times normally paid by the Company. In this event,
there shall be no severance period.
(e) Voluntary Termination by the Executive. In the event of
voluntary termination of employment by the Executive, the terms of the last
paragraph of Section 6(d) shall apply, except in the event that Executive
terminates for Good Reason. Good Reason shall
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mean voluntary termination by Executive that occurs within ninety days of (i) a
relocation of the Company's offices (or the location of the performance of work
by the Executive) beyond a fifty mile radius of New York City, (ii) a material
diminution of the Executive's position, authority, duties or responsibilities as
provided in Section 2, including, without limitation, termination of his
position as Chairman of the Board, President and Chief Executive Officer of the
Company or (iii) a reduction in Base Salary. If Executive terminates for Good
Reason, the provisions of Section 6(a) shall apply and Executive will be bound
by the provisions of Section 5, including, without limitation, Sections 5(c) and
5(d).
(f) Termination Following a Change in Control. (i) Subject to
Section 6(f)(ii), should the Executive's employment hereunder be terminated by
the Company without Cause (other than for reason of the Executive becoming
Disabled) or by Executive for Good Reason within two years of a Change in
Control (as defined below), the Company shall pay and the Executive shall
receive in cash an amount equal to 300% of (A) Executive's then current Base
Salary plus (B) the average of the last three annual bonuses received by
Executive, and any options held by Executive to purchase Company securities
shall immediately vest, notwithstanding anything to the contrary in any other
agreement between Executive and the Company. Upon termination under this
paragraph (f), the Executive shall no longer be bound by the provisions of
Section 5 of this Agreement.
(ii) In the event that any payment received or to be received by the
Executive in connection with a Change in Control or the termination of the
Executive's employment (whether payable pursuant to the terms of this Agreement
or any other plan, arrangement or agreement with the Company, any person whose
actions result in a Change in Control or any person affiliated with the Company
or such person (together with the payment pursuant to Section 6(f)(i), the
"Total Payments")) would not be deductible by the Company (in whole or in part)
as a result of Section 280G of the Internal Revenue Code of 1986, as amended
(the "Code"), the payment pursuant to Section 6(f)(i) shall be reduced until no
portion of the Total Payments are not deductible as a result of Section 280G of
the Code, or the payment pursuant to Section 6(f)(i) is reduced to zero. For
purposes of this limitation (A) no portion of the Total Payments the receipt or
enjoyment of which the Executive shall have effectively waived in writing prior
to the date of payment of the payment pursuant to Section 6(f)(i) shall be taken
into account, (B) no portion of the Total Payments shall be taken into account
which, in the opinion of tax counsel selected by the Company's independent
auditors and acceptable to the Executive, does not constitute a "parachute
payment" within the meaning of Section 280G(b)(2) of the Code, and (C) the value
of any non-cash benefit or any deferred payment or benefit included in the Total
Payments shall be determined or benefit included in the Total Payments shall be
determined by the Company's independent auditors servicing the Company
immediately prior to the time of a Change in Control in accordance with the
principles of Sections 280G(d)(3) and (4) of the Code.
(iii) For purposes of this Section 6(f) the following definitions
shall apply:
"Change in Control" shall mean a change in control with respect to
the Company that would be required to be reported in response to Item 1(a) of
the Current Report
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on Form 8-K, as in effect on the date hereof, pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934, as amended (the "Exchange Act"); provided
that, without limitation, such a Change in Control shall be deemed to have
occurred at such time as any Person is or becomes the "beneficial owner" (as
defined in Rule 13d-3 under the Exchange Act), directly or indirectly of 35% or
more of the outstanding securities of the Company ordinarily having the right to
vote at an election of directors. A change in control shall be deemed to have
occurred if individuals who constitute the Incumbent Board cease for any reason
to constitute at least a majority of the Board.
Notwithstanding anything aforesaid to the contrary, a Change in
Control shall not be deemed to have occurred if prior to the time the Change in
Control would have otherwise occurred, the Board shall have approved the event
or transaction that would otherwise result in a Change in Control for purposes
of this Agreement.
"Incumbent Board" shall mean those individuals who constitute the
Board on the date hereof, or any successor or additional individual who becomes
a member of the Board and whose election, or nomination for election, by the
members of the Board was approved by a vote of at least two-thirds of the
members of the Board comprising the Incumbent Board (either by a specific vote
or by approval of the proxy statement of the Company in which such individual
was named as nominee for member of the Board without objection to such
nomination).
"Person" shall mean and include any individual, corporation,
partnership, group, association or other "person", as such term is used in
Section 14(d) of the Exchange Act, other than the Company or any subsidiary or
any employee benefit plan sponsored by the Company or any subsidiary.
7. Conflicting Agreements. The Executive hereby represents and
warrants to the Company that his entering into this Agreement, and the
obligations and duties undertaken by him hereunder, will not conflict with,
constitute a breach of, or otherwise violate the terms of any other employment
of other agreement to which he is a party.
8. Assignment.
(a) By the Executive. This Agreement, any part thereof and any
rights (including compensation) or obligation hereunder shall not be assigned,
pledged, alienated, sold, attached, charged, encumbered or transferred in any
way by the Executive and any attempt to do so shall be void except that (i) the
Executive may designate any of his beneficiaries to receive (and such
beneficiaries shall receive) any compensation, payments or other benefits
payable hereunder upon his death, (ii) any assignment by will or by laws of
descent and distribution or following the occurrence of the Executive's legal
incompetence is permitted and (iii) the Executive's executors, administrators or
other legal representatives may assign any rights hereunder to the person or
persons entitled thereto.
(b) By the Company. Provided the substance of the Executive's duties
set forth in Section 2 shall not change, and provided that the Executive's
compensation as set forth
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in Section 3 shall not be adversely affected, the Company may assign or
otherwise transfer this Agreement to any succeeding entity without limitation,
which entity shall assume all rights and obligations hereunder.
9. Notices. All notices, requests, demands and other communications
hereunder must be in writing and shall be deemed to have been duly given if
delivered by hand or mailed within the continental United States by first class,
registered mail, return receipt requested, or sent by overnight mail, such as
Federal Express, postage and registry fees prepaid, to the applicable party and
addressed as follows:
If to the Company:
Board of Directors
Marine Transport Corporation
1200 Harbor Boulevard
Weehawken, NJ 07087
With a copy (which will constitute notice to the Company) to:
Cadwalader, Wickersham & Taft
100 Maiden Lane
New York, New York 10038
Attention: Louis J. Bevilacqua, Esq.
If to Executive:
Richard T. du Moulin
Marine Transport Corporation
1200 Harbor Boulevard
Weehawken, NJ 07087
Addresses may be changed by notice in writing signed by the addressee.
10. Miscellaneous.
(a) If any provision or portion of this Agreement shall, for any
reason, be adjudged by any court of competent jurisdiction to be invalid or
unenforceable, such judgment shall not affect, impair or invalidate the
remainder of this Agreement but shall be confined in its operation to the
jurisdiction in which made and to the provisions of this Agreement directly
involved in the controversy in which such judgment shall have been rendered.
(b) No course of dealing and no delay on the part of any party
hereto in exercising any right, power or remedy under or relating to this
Agreement shall operate as a waiver thereof or otherwise prejudice such party's
rights, powers and remedies. No single or partial exercise of any rights, powers
or remedies under or relating to this Agreement shall
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<PAGE> 10
preclude any other or further exercise thereof or the exercise of any other
right, power or remedy.
(c) This Agreement may be executed by the parties hereto in
counterparts, each of which shall be deemed to be an original, but all such
counterparts shall together constitute one and the same instrument, and all
signatures need not appear on any one counterpart.
(d) (i) Any other agreement, rule or regulation to the contrary,
notwithstanding, the parties hereby agree that any action or proceeding relating
to this Agreement or its subject matter shall be brought in a state or federal
court situated in the County of New York, State of New York and such court shall
have exclusive jurisdiction thereof; provided, however, any court with
jurisdiction over the parties may, at the election of Company, have jurisdiction
over any action brought with regard to or any action brought to enforce any
violation or claimed violation of Section 5. The parties each hereby
specifically submit to the jurisdiction of such court and further agree that
service of process may be made within or without the State of New York by giving
notice in the manner provided in Section 9. Each party further agrees to waive
and hereby waives any right to a trial by jury, and to any objection it or he
may have in any such action, based on lack of personal jurisdiction or venue, or
inconvenient forum.
(ii) In any such action or proceeding, the prevailing party shall be
entitled to recover from the other party reasonable costs, including attorneys'
fees and expenses. In any action or proceeding before a court or other tribunal
relating to this Agreement with respect to which damages are an adequate remedy,
the parties agree that no damages other than compensatory damages shall be
sought or claimed by either party and each party waives any claim, right or
entitlement to punitive, exemplary or consequential damages, or any statutory
damages, or any other damages of any kind or nature in excess of compensatory
damages, and any court or arbitration tribunal is specifically divested of any
power to award any damages in the nature of punitive, exemplary, or
consequential damages, or any statutory damages, or any other damages of any
kind or nature in excess of compensatory damages.
(e) All payments required to be made by the Company hereunder to the
Executive or his beneficiaries, including his estate, shall be subject to
withholding and deductions as the Company may reasonably determine it should
withhold or deduct pursuant to any applicable law or regulation. In lieu of
withholding or deducting such amounts in whole or in part, the Company may, in
its sole discretion, accept other provision for payment as permitted by law,
provided it is satisfied in its sole discretion that all requirements of law
affecting its responsibilities to withhold such taxes have been satisfied.
(f) This Agreement embodies the entire understanding, and supersedes
all other oral or written agreements or understandings, between the parties
regarding the subject matter hereof. No change, alteration or modification
hereof may be made except in writing signed by both parties hereto. The headings
in this Agreement are for convenience of reference only and shall not be
considered part of this Agreement or limit or otherwise affect
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<PAGE> 11
the meaning hereof. This Agreement and the rights and obligations of the parties
hereunder shall be construed in accordance with and governed by the laws of the
State of New York (disregarding any choice of law rules which might look to the
laws of any other jurisdiction).
(g) The Executive acknowledges that the terms of this Agreement have
been fully explained to him, that the Executive understands the nature and
extent of the rights and obligations provided under this Agreement, and that the
Executive has been given the opportunity to be represented by legal counsel in
the negotiation and preparation of this Agreement.
(h) Nothing herein contained shall be construed to prevent or limit
any acquisition, consolidation or merger of the Company.
[SIGNATURE PAGE FOLLOWS]
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<PAGE> 12
IN WITNESS WHEREOF, the parties hereto have executed and delivered
this Agreement as of the day and year first above written.
MARINE TRANSPORT CORPORATION
By:
-------------------------------------
Name:
Title:
-------------------------------------
Richard T. du Moulin
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<PAGE> 1
Exhibit 10.4
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement"), dated as of June 18,
1998, is by and between Marine Transport Corporation, a Delaware corporation
(the "Company") and Mark L. Filanowski ("Executive").
W I T N E S S E T H
WHEREAS, the Company desires to employ the Executive; and
WHEREAS, the Executive is willing to be employed by the Company, as
Senior Vice President and Chief Financial Officer of the Company, for the period
and upon the terms and conditions hereinafter set forth;
NOW THEREFORE, in consideration of the mutual covenants and
conditions contained herein, the Company and the Executive hereby agree as
follows:
1. Employment. The Company shall employ the Executive, and the
Executive accepts employment by the Company, as Senior Vice President and Chief
Financial Officer of the Company upon the terms and conditions herein, for the
period commencing as of June 17, 1998, and ending on June 16, 1999, subject to
termination as hereinafter provided (the period from June 17, 1998 through June
16, 1999, as such period may be extended as described in this paragraph, being
herein referred to as the "Employment Period"). The initial term of employment
shall be automatically extended for an additional period of one year unless 90
days written notice of termination is given by either party, and for additional
periods of one year thereafter unless 90 days written notice of termination is
given by either party.
2. Duties. (a) Throughout the Employment Period, the Executive shall
be Senior Vice President and Chief Financial Officer of the Company and shall
report to the Chief Executive Officer (the "CEO") of the Company. The Executive
shall at all times comply with Company policies and guidelines as in effect from
time to time and with the lawful and responsible instructions of the CEO.
(b) During the Employment Period, the Executive shall devote his
full-time working hours to his duties hereunder, except during vacation time,
any periods of illness and authorized leaves of absence. The Executive shall
have such responsibilities and authorities consistent with the status, title and
reporting requirements set forth herein as are appropriate to said position,
subject to change (other than diminution in position, authority, duties or
responsibilities) from time to time by the CEO.
(c) Throughout the Employment Period, the Executive shall faithfully
and diligently perform his duties under this Agreement and shall use his best
efforts to promote the interests of the Company.
<PAGE> 2
3. Compensation. During the Employment Period, as full compensation
to the Executive for his performance of the services hereunder and for his
acceptance of the responsibilities described herein, the Company agrees to pay
the Executive, and the Executive agrees to accept, the following salary and
other benefits:
(a) Salary
The Company shall pay the Executive a salary (the "Base Salary") at
the annual rate of $225,000. The Compensation Committee of the Board of
Directors of the Company (the "Compensation Committee") shall review such Base
Salary on an annual basis and may increase it, from time to time, in its sole
discretion. The Base Salary due the Executive hereunder shall be payable in
equal monthly installments less any amounts required to be withheld by the
Company from such Base Salary pursuant to the benefit plans of Section~3(d) and
applicable laws and regulations described under Section 10(e).
(b) Bonus
The Executive shall be eligible to receive bonuses (each a "Bonus")
at the discretion of, and in the amounts and at the times determined by, the
Compensation Committee.
(c) Long Term Incentives
The Executive shall be entitled to receive grants of restricted
stock, stock options and other stock awards and/or other stock and cash awards
granted pursuant to any other long term incentive plans implemented by the
Company for the benefit of senior executives of the Company at the discretion
of, and in the amounts and at the times determined by, the Compensation
Committee.
(d) Other Benefit Plans
Subject to all eligibility requirements, and to the extent permitted
by law, the Executive shall be entitled to participate in any and all employee
benefit plans (including, but not limited to, retirement, life insurance,
medical, dental, disability, and savings plans) established or maintained by the
Company from time to time for the benefit of its employees (or its executives)
in general.
(e) Further Benefits
The Executive shall be entitled to a minimum of four weeks per annum
paid vacation.
(f) Deferred Compensation
Notwithstanding any other provision of the Agreement, the Executive
shall have the right to request any lawful means (including, without limitation,
any deferred compensation arrangement requested by the Executive) by which he
wishes to receive any portion of his Base
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<PAGE> 3
Salary, Bonus, or other payments, and the Company shall reasonably cooperate
with the Executive to grant such request, provided that the granting of such
request does not represent inequitable treatment as concerns other senior
employees or executives (in the Company's sole judgment), and does not impose
additional costs on the Company other than insignificant administrative costs.
4. Reasonable Expenses. The Company will reimburse the Executive for
all reasonable business expenses, including travel and lodging, which are
properly incurred by him in the performance of his duties hereunder, upon
presentation of proper vouchers therefor and in accordance with written policies
established from time to time by the Company for such reimbursements.
5. Executive Covenants. The Executive acknowledges that as a result
of the services to be rendered to the Company hereunder, the Executive will be
brought into close contact with many confidential affairs of the Company, its
subsidiaries and affiliates, not readily available to the public. The Executive
further acknowledges that the services to be performed under this Agreement are
of a special, unique, unusual, extraordinary and intellectual character; that
the business of the Company is international in scope; that its services are
marketed throughout the world; and that the Company competes with other
organizations that are or could be located in nearly any part of the United
States or elsewhere. In recognition of the foregoing:
(a) Except with the consent of or as directed by the Company, or
except if compelled by judicial or legal authorities, the Executive will keep
confidential and not divulge to any other person, during the Employment Period
or thereafter, any Confidential Information and Trade Secrets regarding the
Company, its subsidiaries and affiliates, except for information which is or
becomes publicly available other than as a result of disclosure by the
Executive. For the purposes of this Agreement "Confidential Information and
Trade Secrets" means information which is confidential and secret to the
Company, its subsidiaries and affiliates. It may include, but is not limited to,
information relating to new and future concepts and business of the Company, its
subsidiaries and affiliates, in the form of memoranda, reports, computer
software and data banks, customer lists, employee lists, books, records,
financial statements, manuals, papers, contracts and strategic plans. As a
guide, the Executive is to consider information originated, owned, controlled or
possessed by the Company, its subsidiaries or affiliates which is not disclosed
in printed publications stated to be available for distribution outside the
Company, its subsidiaries and affiliates as being secret and confidential. In
instances where doubt does or should reasonably be understood to exist in the
Executive's mind as to whether information is secret and confidential to the
Company, its subsidiaries and affiliates, the Executive agrees to request an
opinion, in writing, from the Company.
(b) All papers, books and records of every kind and description
relating to the business and affairs of the Company, its subsidiaries and
affiliates, whether or not prepared by the Executive, and all property owned by
the Company, its subsidiaries and affiliates shall
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be the sole and exclusive property of the Company, and the Executive shall
surrender them to the Company, at any time upon request, during or after the
Employment Period.
(c) During the Employment Period and for one year following
termination of this Agreement pursuant to Sections 6(a) or 6(c), the Executive
will not, without the prior written consent of the Company, compete, directly or
indirectly, with the Company, its subsidiaries and affiliates or participate as
a director, officer, employee, agent, representative, stockholder or partner, or
have any direct or indirect financial interest, in any business which directly
or indirectly competes with the Company, its subsidiaries and affiliates;
provided, however, that this paragraph (c) shall not restrict the Executive from
holding up to 5% of the publicly traded securities of any entity.
(d) During the Employment Period and for one year following
termination of this Agreement pursuant to Sections 6(a) or 6(c), the Executive
shall not either for his or her own account or for any person, firm or company
(i) solicit any customers of the Company, its subsidiaries and affiliates or
(ii) solicit or endeavor to cause any employee of the Company, its subsidiaries
and affiliates to leave his employment or induce or attempt to induce any such
employee to breach any employment agreement with the Company, its subsidiaries
and affiliates, or otherwise interfere with the employment of any employee by
the Company, its subsidiaries and affiliates.
(e) Without limiting any other provision of this Agreement, the
Executive hereby agrees to be bound by and to comply with any obligations known
to the Executive and imposed on the Company, its subsidiaries and affiliates, by
law, rule, regulation, ordinance, order, decree, instrument, agreement,
understanding or other restriction of any kind.
(f) The Executive hereby agrees to provide reasonable cooperation to
the Company, its subsidiaries and affiliates during the Employment Period and
thereafter in any litigation between the Company, its subsidiaries and
affiliates, and third parties.
(g) The parties agree that the Company shall, in addition to other
remedies provided by law, have the right and remedy to have the provisions of
this Section 5 specifically enforced by any court having equity jurisdiction, it
being acknowledged and agreed that any breach or threatened breach of the
provisions of this Section 5 will cause irreparable injury to the Company and
that money damages will not provide an adequate remedy to the Company. Nothing
contained herein shall be construed as prohibiting the Company from pursuing any
other remedies available to it for such breach or threatened breach, including
the recovery of damages from the Executive.
(i) Although the restrictions contained in Sections 5(a), (b), (c)
and (d) above are considered by the parties hereto to be fair and reasonable in
the circumstances, it is recognized that restrictions of such nature may fail
for technical reasons, and accordingly it is hereby agreed that if any of such
restrictions shall be adjudged to be void or unenforceable for whatever reason,
but would be valid if part of the wording thereof were deleted, or the period
thereof reduced or the area dealt with thereby reduced in scope, the
restrictions contained in Sections 5(a), (b), (c) and (d) shall be enforced to
the maximum extent permitted by law, and
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<PAGE> 5
the parties consent and agree that such scope or wording may be accordingly
judicially modified in any proceeding brought to enforce such restrictions.
(ii) Notwithstanding that the Executive's employment hereunder may
expire or be terminated as provided in Section 1 or Section 6 hereof, this
Agreement shall continue in full force and effect insofar as is necessary to
enforce the covenants and agreements of the Executive contained in this Section
5.
6. Termination of Employment Period and Severance.
(a) Termination by the Company without Cause. If for any reason
other than the provisions of Section 6(d) hereof, the Company wishes to
terminate the Employment Period and the Executive's employment hereunder or
fails to extend the Employment Period for additional one year periods as
provided in Section 1, the Company shall give a written notice to the Executive
of such termination upon termination and shall pay to Executive an amount equal
to 150% of the Base Salary then in effect. Upon receipt of such notice by the
Executive or upon expiration of the employment period that is not extended, the
Employment Period shall terminate (and the Executive shall have no further
duties under Section 2 hereof). The Executive agrees that the payment described
in this Section 6(a) shall be full and adequate compensation to the Executive
for all damages the Executive may suffer as a result of the termination of his
employment pursuant to this Section 6(a), and hereby waives and releases the
Company from any and all obligations or liabilities to the Executive arising
from or in connection with the Executive's employment with the Company or the
termination and claims the Executive may have under federal, state or local
statutes, regulations or ordinances or under any common law principles or breach
of contract or the covenant of good faith and fair dealing, defamation, wrongful
discharge, intentional infliction of emotional distress or promissory estoppel;
provided, however, that any rights and benefits the Executive may have under the
employee benefit plans and programs of the Company in which the Executive is a
participant, shall be determined in accordance with the terms and provisions of
such plans and programs.
(b) Death. If the Executive dies during the Employment Period, the
Employment Period shall automatically terminate and the obligations of the
parties shall terminate effective the date of death.
(c) Disability. If the Executive becomes Disabled (as hereinafter
defined) during the Employment Period, the Company shall be entitled to
terminate his or her employment and the Employment Period upon written notice to
the Executive from the Company. In the event of such termination, the Executive
shall be released from any duties hereunder and the Company shall pay to
Executive an amount equal to 150% of the Base Salary then in effect. For
purposes of this Agreement, "Disabled" shall mean mental or physical impairment
or incapacity rendering the Executive substantially unable to perform his duties
under this Agreement for a period of longer than 90 days out of any 360-day
period during the Employment Period. A determination of whether the Executive is
Disabled
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shall be made by the Company in its sole discretion upon its own initiative or
upon request of the Executive or a person acting on his behalf.
(d) Termination by the Company for Cause. The Company by written
notice to the Executive, shall have the right to terminate the Employment Period
in the event of any of the following (which shall constitute "Cause"):
(i) The Executive's breach in respect of his duties under this
Agreement, such breach continuing unremedied for 10 days after
written notice thereof from the Company to the Executive
specifying the acts constituting the breach and requesting
that they be remedied;
(ii) Any misconduct, dishonesty, breach of fiduciary duty,
insubordination or other act by the Executive which other act
is materially detrimental to the assets, business or goodwill
of the Company, or materially damaging to the Company's, its
subsidiaries' and/or affiliates' relationships with their
customers or employees, including, without limitation, the
Executive having been indicted for or convicted of (including
entry of a no contest plea) in respect of a felony or of any
crime involving moral turpitude or fraud during the Employment
Period, provided such indictment or conviction has resulted or
is likely to result in substantial detriment to the Company,
its subsidiaries and/or affiliates;
(iii) misappropriation (or attempted misappropriation) of any
of the Company's funds or property or of a business
opportunity of the Company, including attempting to secure or
securing any personal profit in connection with any
transaction entered into on behalf of the Company;
(iv) Executive's gross negligence in connection with the
performance of Executive's obligations hereunder; or
(v) Executive's excessive alcohol abuse or abuse of any
controlled substance.
Any termination under this Section 6(d) shall be without damages or
liability to the Company for compensation and other benefits which would have
accrued to the Executive hereunder after termination, but all compensation,
benefits and reimbursements accrued through the date of termination shall be
paid to the Executive at the times normally paid by the Company. In this event,
there shall be no severance period.
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(e) Voluntary Termination by the Executive. In the event of
voluntary termination of employment by the Executive, the terms of the last
paragraph of Section 6(d) shall apply, except in the event that Executive
terminates for Good Reason. Good Reason shall mean voluntary termination by
Executive that occurs within ninety days of (i) a relocation of the Company's
offices (or the location of the performance of work by the Executive) beyond a
fifty mile radius of New York City, (ii) a material diminution of the
Executive's position, authority, duties or responsibilities as provided in
Section 2, including, without limitation, termination of his position as a
Director, Senior Vice President and Chief Financial Officer of the Company or
(iii) a reduction in Base Salary in which cases the provisions of Section 6(a)
shall apply and Executive will be bound by the provisions of Section 5,
including, without limitation, Sections 5(c) and 5(d).
(f) Termination Following a Change in Control. (i) Subject to
Section 6(f)(ii), should the Executive's employment hereunder be terminated by
the Company without Cause (other than for reason of the Executive becoming
Disabled) or by Executive for Good Reason within two years of a Change in
Control (as defined below), the Company shall pay and the Executive shall
receive in cash an amount equal to 300% of (A) Executive's then current Base
Salary plus (B) the average of the last three annual bonuses received by
Executive, and any options held by Executive to purchase Company securities
shall immediately vest, notwithstanding anything to the contrary in any other
agreement between Executive and the Company. Upon termination under this
paragraph (f), the Executive shall no longer be bound by the provisions of
Section 5 of this Agreement.
(ii) In the event that any payment received or to be received by the
Executive in connection with a Change in Control or the termination of the
Executive's employment (whether payable pursuant to the terms of this Agreement
or any other plan, arrangement or agreement with the Company, any person whose
actions result in a Change in Control or any person affiliated with the Company
or such person (together with the payment pursuant to Section 6(f)(i), the
"Total Payments")) would not be deductible by the Company (in whole or in part)
as a result of Section 280G of the Internal Revenue Code of 1986, as amended
(the "Code"), the payment pursuant to Section 6(f)(i) shall be reduced until no
portion of the Total Payments are not deductible as a result of Section 280G of
the Code, or the payment pursuant to Section 6(f)(i) is reduced to zero. For
purposes of this limitation (A) no portion of the Total Payments the receipt or
enjoyment of which the Executive shall have effectively waived in writing prior
to the date of payment of the payment pursuant to Section 6(f)(i) shall be taken
into account, (B) no portion of the Total Payments shall be taken into account
which, in the opinion of tax counsel selected by the Company's independent
auditors and acceptable to the Executive, does not constitute a "parachute
payment" within the meaning of Section 280G(b)(2) of the Code, and (C) the value
of any non-cash benefit or any deferred payment or benefit included in the Total
Payments shall be determined or benefit included in the Total Payments shall be
determined by the Company's independent auditors servicing the Company
immediately prior to the time of a Change in Control in accordance with the
principles of Sections 280G(d)(3) and (4) of the Code.
(iii) For purposes of this Section 6(f) the following definitions
shall apply:
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"Change in Control" shall mean a change in control with respect to
the Company that would be required to be reported in response to Item 1(a) of
the Current Report on Form 8-K, as in effect on the date hereof, pursuant to
Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"); provided that, without limitation, such a Change in Control
shall be deemed to have occurred at such time as any Person is or becomes the
"beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly
or indirectly of 35% or more of the outstanding securities of the Company
ordinarily having the right to vote at an election of directors. A change in
control shall be deemed to have occurred if individuals who constitute the
Incumbent Board cease for any reason to constitute at least a majority of the
Board of Directors of the Company (the "Board").
Notwithstanding anything aforesaid to the contrary, a Change in
Control shall not be deemed to have occurred if prior to the time the Change in
Control would have otherwise occurred, the Board shall have approved the event
or transaction that would otherwise result in a Change in Control for purposes
of this Agreement.
"Incumbent Board" shall mean those individuals who constitute the
Board on the date hereof, or any successor or additional individual who becomes
a member of the Board and whose election, or nomination for election, by the
members of the Board was approved by a vote of at least two-thirds of the
members of the Board comprising the Incumbent Board (either by a specific vote
or by approval of the proxy statement of the Company in which such individual
was named as nominee for member of the Board without objection to such
nomination).
"Person" shall mean and include any individual, corporation,
partnership, group, association or other "person", as such term is used in
Section 14(d) of the Exchange Act, other than the Company or any subsidiary or
any employee benefit plan sponsored by the Company or any subsidiary.
7. Conflicting Agreements. The Executive hereby represents and
warrants to the Company that his entering into this Agreement, and the
obligations and duties undertaken by him hereunder, will not conflict with,
constitute a breach of, or otherwise violate the terms of any other employment
of other agreement to which he is a party.
8. Assignment.
(a) By the Executive. This Agreement, any part thereof and any
rights (including compensation) or obligation hereunder shall not be assigned,
pledged, alienated, sold, attached, charged, encumbered or transferred in any
way by the Executive and any attempt to do so shall be void except that (i) the
Executive may designate any of his beneficiaries to receive (and such
beneficiaries shall receive) any compensation, payments or other benefits
payable hereunder upon his death, (ii) any assignment by will or by laws of
descent and distribution or following the occurrence of the Executive's legal
incompetence is permitted and (iii) the Executive's executors, administrators or
other legal representatives may assign any rights hereunder to the person or
persons entitled thereto.
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(b) By the Company. Provided the substance of the Executive's duties
set forth in Section 2 shall not change, and provided that the Executive's
compensation as set forth in Section 3 shall not be adversely affected, the
Company may assign or otherwise transfer this Agreement to any succeeding entity
without limitation, which entity shall assume all rights and obligations
hereunder.
9. Notices. All notices, requests, demands and other communications
hereunder must be in writing and shall be deemed to have been duly given if
delivered by hand or mailed within the continental United States by first class,
registered mail, return receipt requested, or sent by overnight mail, such as
Federal Express, postage and registry fees prepaid, to the applicable party and
addressed as follows:
If to the Company:
Board of Directors
Marine Transport Corporation
1200 Harbor Boulevard
Weehawken, NJ 07087
With a copy (which will constitute notice to the Company) to:
Cadwalader, Wickersham & Taft
100 Maiden Lane
New York, New York 10038
Attention: Louis J. Bevilacqua, Esq.
If to Executive:
Mark L. Filanowski
Marine Transport Corporation
1200 Harbor Boulevard
Weehawken, NJ 07087
Addresses may be changed by notice in writing signed by the addressee.
10. Miscellaneous.
(a) If any provision or portion of this Agreement shall, for any
reason, be adjudged by any court of competent jurisdiction to be invalid or
unenforceable, such judgment shall not affect, impair or invalidate the
remainder of this Agreement but shall be confined in its operation to the
jurisdiction in which made and to the provisions of this Agreement directly
involved in the controversy in which such judgment shall have been rendered.
(b) No course of dealing and no delay on the part of any party
hereto in exercising any right, power or remedy under or relating to this
Agreement shall operate as a
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<PAGE> 10
waiver thereof or otherwise prejudice such party's rights, powers and remedies.
No single or partial exercise of any rights, powers or remedies under or
relating to this Agreement shall preclude any other or further exercise thereof
or the exercise of any other right, power or remedy.
(c) This Agreement may be executed by the parties hereto in
counterparts, each of which shall be deemed to be an original, but all such
counterparts shall together constitute one and the same instrument, and all
signatures need not appear on any one counterpart.
(d) (i) Any other agreement, rule or regulation to the contrary,
notwithstanding, the parties hereby agree that any action or proceeding relating
to this Agreement or its subject matter shall be brought in a state or federal
court situated in the County of New York, State of New York and such court shall
have exclusive jurisdiction thereof; provided, however, any court with
jurisdiction over the parties may, at the election of Company, have jurisdiction
over any action brought with regard to or any action brought to enforce any
violation or claimed violation of Section 5. The parties each hereby
specifically submit to the jurisdiction of such court and further agree that
service of process may be made within or without the State of New York by giving
notice in the manner provided in Section 9. Each party further agrees to waive
and hereby waives any right to a trial by jury, and to any objection it or he
may have in any such action, based on lack of personal jurisdiction or venue, or
inconvenient forum.
(ii) In any such action or proceeding, the prevailing party shall be
entitled to recover from the other party reasonable costs, including attorneys'
fees and expenses. In any action or proceeding before a court or other tribunal
relating to this Agreement with respect to which damages are an adequate remedy,
the parties agree that no damages other than compensatory damages shall be
sought or claimed by either party and each party waives any claim, right or
entitlement to punitive, exemplary or consequential damages, or any statutory
damages, or any other damages of any kind or nature in excess of compensatory
damages, and any court or arbitration tribunal is specifically divested of any
power to award any damages in the nature of punitive, exemplary, or
consequential damages, or any statutory damages, or any other damages of any
kind or nature in excess of compensatory damages.
(e) All payments required to be made by the Company hereunder to the
Executive or his beneficiaries, including his estate, shall be subject to
withholding and deductions as the Company may reasonably determine it should
withhold or deduct pursuant to any applicable law or regulation. In lieu of
withholding or deducting such amounts in whole or in part, the Company may, in
its sole discretion, accept other provision for payment as permitted by law,
provided it is satisfied in its sole discretion that all requirements of law
affecting its responsibilities to withhold such taxes have been satisfied.
(f) This Agreement embodies the entire understanding, and supersedes
all other oral or written agreements or understandings, between the parties
regarding the subject matter hereof. No change, alteration or modification
hereof may be made except in writing
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<PAGE> 11
signed by both parties hereto. The headings in this Agreement are for
convenience of reference only and shall not be considered part of this Agreement
or limit or otherwise affect the meaning hereof. This Agreement and the rights
and obligations of the parties hereunder shall be construed in accordance with
and governed by the laws of the State of New York (disregarding any choice of
law rules which might look to the laws of any other jurisdiction).
(g) The Executive acknowledges that the terms of this Agreement have
been fully explained to him, that the Executive understands the nature and
extent of the rights and obligations provided under this Agreement, and that the
Executive has been given the opportunity to be represented by legal counsel in
the negotiation and preparation of this Agreement.
(h) Nothing herein contained shall be construed to prevent or limit
any acquisition, consolidation or merger of the Company.
[SIGNATURE PAGE FOLLOWS]
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<PAGE> 12
IN WITNESS WHEREOF, the parties hereto have executed and delivered
this Agreement as of the day and year first above written.
MARINE TRANSPORT CORPORATION
By:
-------------------------------------
Name:
Title:
-------------------------------------
Mark L. Filanowski
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<PAGE> 1
Exhibit 10.5
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement"), dated as of June 18,
1998, is by and between Marine Transport Corporation, a Delaware corporation
(the "Company") and Peter N. Popov ("Executive").
W I T N E S S E T H
WHEREAS, the Company desires to employ the Executive; and
WHEREAS, the Executive is willing to be employed by the Company, as
Vice President, Secretary and General Counsel of the Company, for the period and
upon the terms and conditions hereinafter set forth;
NOW THEREFORE, in consideration of the mutual covenants and
conditions contained herein, the Company and the Executive hereby agree as
follows:
1. Employment. The Company shall employ the Executive, and the
Executive accepts employment by the Company, as Vice President, Secretary and
General Counsel of the Company upon the terms and conditions herein, for the
period commencing as of June 17, 1998, and ending on June 16, 1999, subject to
termination as hereinafter provided (the period from June 17, 1998 through June
16, 1999, as such period may be extended as described in this paragraph, being
herein referred to as the "Employment Period"). The initial term of employment
shall be automatically extended for an additional period of one year unless 90
days written notice of termination is given by either party, and for additional
periods of one year thereafter unless 90 days written notice of termination is
given by either party.
2. Duties. (a) Throughout the Employment Period, the Executive shall
be Vice President, Secretary and General Counsel of the Company and shall report
to the Chief Executive Officer (the "CEO") of the Company, or other senior
officer of the Company as the CEO may direct. The Executive shall at all times
comply with Company policies and guidelines as in effect from time to time and
with the lawful and responsible instructions of the CEO.
(b) During the Employment Period, the Executive shall devote his
full-time working hours to his duties hereunder, except during vacation time,
any periods of illness and authorized leaves of absence. The Executive shall
have such responsibilities and authorities consistent with the status, title and
reporting requirements set forth herein as are appropriate to said position,
subject to change (other than diminution in position, authority, duties or
responsibilities) from time to time by the CEO.
(c) Throughout the Employment Period, the Executive shall faithfully
and diligently perform his duties under this Agreement and shall use his best
efforts to promote the interests of the Company.
<PAGE> 2
3. Compensation. During the Employment Period, as full compensation
to the Executive for his performance of the services hereunder and for his
acceptance of the responsibilities described herein, the Company agrees to pay
the Executive, and the Executive agrees to accept, the following salary and
other benefits:
(a) Salary
The Company shall pay the Executive a salary (the "Base Salary") at
the annual rate of $175,000. The Compensation Committee of the Board of
Directors of the Company (the "Compensation Committee") shall review such Base
Salary on an annual basis and may increase it, from time to time, in its sole
discretion. The Base Salary due the Executive hereunder shall be payable in
equal monthly installments less any amounts required to be withheld by the
Company from such Base Salary pursuant to the benefit plans of Section 3(d) and
applicable laws and regulations described under Section 10(e).
(b) Bonus
The Executive shall be eligible to receive bonuses (each a "Bonus")
at the discretion of, and in the amounts and at the times determined by, the
Compensation Committee.
(c) Long Term Incentives
The Executive shall be entitled to receive grants of restricted
stock, stock options and other stock awards and/or other stock and cash awards
granted pursuant to any other long term incentive plans implemented by the
Company for the benefit of senior executives of the Company at the discretion
of, and in the amounts and at the times determined by, the Compensation
Committee.
(d) Other Benefit Plans
Subject to all eligibility requirements, and to the extent permitted
by law, the Executive shall be entitled to participate in any and all employee
benefit plans (including, but not limited to, retirement, life insurance,
medical, dental, disability, and savings plans) established or maintained by the
Company from time to time for the benefit of its employees (or its executives)
in general.
(e) Further Benefits
The Executive shall be entitled to a minimum of four weeks per annum
paid vacation.
(f) Deferred Compensation
Notwithstanding any other provision of the Agreement, the Executive
shall have the right to request any lawful means (including, without limitation,
any deferred compensation arrangement requested by the Executive) by which he
wishes to receive any portion of his Base
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<PAGE> 3
Salary, Bonus, or other payments, and the Company shall reasonably cooperate
with the Executive to grant such request, provided that the granting of such
request does not represent inequitable treatment as concerns other senior
employees or executives (in the Company's sole judgment), and does not impose
additional costs on the Company other than insignificant administrative costs.
4. Reasonable Expenses. The Company will reimburse the Executive for
all reasonable business expenses, including travel and lodging, which are
properly incurred by him in the performance of his duties hereunder, upon
presentation of proper vouchers therefor and in accordance with written policies
established from time to time by the Company for such reimbursements.
5. Executive Covenants. The Executive acknowledges that as a result
of the services to be rendered to the Company hereunder, the Executive will be
brought into close contact with many confidential affairs of the Company, its
subsidiaries and affiliates, not readily available to the public. The Executive
further acknowledges that the services to be performed under this Agreement are
of a special, unique, unusual, extraordinary and intellectual character; that
the business of the Company is international in scope; that its services are
marketed throughout the world; and that the Company competes with other
organizations that are or could be located in nearly any part of the United
States or elsewhere. In recognition of the foregoing:
(a) Except with the consent of or as directed by the Company, or
except if compelled by judicial or legal authorities, the Executive will keep
confidential and not divulge to any other person, during the Employment Period
or thereafter, any Confidential Information and Trade Secrets regarding the
Company, its subsidiaries and affiliates, except for information which is or
becomes publicly available other than as a result of disclosure by the
Executive. For the purposes of this Agreement "Confidential Information and
Trade Secrets" means information which is confidential and secret to the
Company, its subsidiaries and affiliates. It may include, but is not limited to,
information relating to new and future concepts and business of the Company, its
subsidiaries and affiliates, in the form of memoranda, reports, computer
software and data banks, customer lists, employee lists, books, records,
financial statements, manuals, papers, contracts and strategic plans. As a
guide, the Executive is to consider information originated, owned, controlled or
possessed by the Company, its subsidiaries or affiliates which is not disclosed
in printed publications stated to be available for distribution outside the
Company, its subsidiaries and affiliates as being secret and confidential. In
instances where doubt does or should reasonably be understood to exist in the
Executive's mind as to whether information is secret and confidential to the
Company, its subsidiaries and affiliates, the Executive agrees to request an
opinion, in writing, from the Company.
(b) All papers, books and records of every kind and description
relating to the business and affairs of the Company, its subsidiaries and
affiliates, whether or not prepared by the Executive, and all property owned by
the Company, its subsidiaries and affiliates shall
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<PAGE> 4
be the sole and exclusive property of the Company, and the Executive shall
surrender them to the Company, at any time upon request, during or after the
Employment Period.
(c) During the Employment Period and for one year following
termination of this Agreement pursuant to Sections 6(a) or 6(c), the Executive
will not, without the prior written consent of the Company, compete, directly or
indirectly, with the Company, its subsidiaries and affiliates or participate as
a director, officer, employee, agent, representative, stockholder or partner, or
have any direct or indirect financial interest, in any business which directly
or indirectly competes with the Company, its subsidiaries and affiliates;
provided, however, that this paragraph (c) shall not restrict the Executive from
holding up to 5% of the publicly traded securities of any entity.
(d) During the Employment Period and for one year following
termination of this Agreement pursuant to Sections 6(a) or 6(c), the Executive
shall not either for his or her own account or for any person, firm or company
(i) solicit any customers of the Company, its subsidiaries and affiliates or
(ii) solicit or endeavor to cause any employee of the Company, its subsidiaries
and affiliates to leave his employment or induce or attempt to induce any such
employee to breach any employment agreement with the Company, its subsidiaries
and affiliates, or otherwise interfere with the employment of any employee by
the Company, its subsidiaries and affiliates.
(e) Without limiting any other provision of this Agreement, the
Executive hereby agrees to be bound by and to comply with any obligations known
to the Executive and imposed on the Company, its subsidiaries and affiliates, by
law, rule, regulation, ordinance, order, decree, instrument, agreement,
understanding or other restriction of any kind.
(f) The Executive hereby agrees to provide reasonable cooperation to
the Company, its subsidiaries and affiliates during the Employment Period and
thereafter in any litigation between the Company, its subsidiaries and
affiliates, and third parties.
(g) The parties agree that the Company shall, in addition to other
remedies provided by law, have the right and remedy to have the provisions of
this Section 5 specifically enforced by any court having equity jurisdiction, it
being acknowledged and agreed that any breach or threatened breach of the
provisions of this Section 5 will cause irreparable injury to the Company and
that money damages will not provide an adequate remedy to the Company. Nothing
contained herein shall be construed as prohibiting the Company from pursuing any
other remedies available to it for such breach or threatened breach, including
the recovery of damages from the Executive.
(i) Although the restrictions contained in Sections 5(a), (b), (c)
and (d) above are considered by the parties hereto to be fair and reasonable in
the circumstances, it is recognized that restrictions of such nature may fail
for technical reasons, and accordingly it is hereby agreed that if any of such
restrictions shall be adjudged to be void or unenforceable for whatever reason,
but would be valid if part of the wording thereof were deleted, or the period
thereof reduced or the area dealt with thereby reduced in scope, the
restrictions contained in Sections 5(a), (b), (c) and (d) shall be enforced to
the maximum extent permitted by law, and
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<PAGE> 5
the parties consent and agree that such scope or wording may be accordingly
judicially modified in any proceeding brought to enforce such restrictions.
(ii) Notwithstanding that the Executive's employment hereunder may
expire or be terminated as provided in Section 1 or Section 6 hereof, this
Agreement shall continue in full force and effect insofar as is necessary to
enforce the covenants and agreements of the Executive contained in this Section
5.
6. Termination of Employment Period and Severance.
(a) Termination by the Company without Cause. If for any reason
other than the provisions of Section 6(d) hereof, the Company wishes to
terminate the Employment Period and the Executive's employment hereunder or
fails to extend the Employment Period for additional one year periods as
provided in Section 1, the Company shall give a written notice to the Executive
of such termination upon termination and shall pay to Executive an amount equal
to the Base Salary then in effect. Upon receipt of such notice by the Executive
or upon expiration of the employment period that is not extended, the Employment
Period shall terminate (and the Executive shall have no further duties under
Section 2 hereof). The Executive agrees that the payment described in this
Section 6(a) shall be full and adequate compensation to the Executive for all
damages the Executive may suffer as a result of the termination of his
employment pursuant to this Section 6(a), and hereby waives and releases the
Company from any and all obligations or liabilities to the Executive arising
from or in connection with the Executive's employment with the Company or the
termination and claims the Executive may have under federal, state or local
statutes, regulations or ordinances or under any common law principles or breach
of contract or the covenant of good faith and fair dealing, defamation, wrongful
discharge, intentional infliction of emotional distress or promissory estoppel;
provided, however, that any rights and benefits the Executive may have under the
employee benefit plans and programs of the Company in which the Executive is a
participant, shall be determined in accordance with the terms and provisions of
such plans and programs.
(b) Death. If the Executive dies during the Employment Period, the
Employment Period shall automatically terminate and the obligations of the
parties shall terminate effective the date of death.
(c) Disability. If the Executive becomes Disabled (as hereinafter
defined) during the Employment Period, the Company shall be entitled to
terminate his or her employment and the Employment Period upon written notice to
the Executive from the Company. In the event of such termination, the Executive
shall be released from any duties hereunder and the Company shall pay to
Executive an amount equal to the Base Salary then in effect. For purposes of
this Agreement, "Disabled" shall mean mental or physical impairment or
incapacity rendering the Executive substantially unable to perform his duties
under this Agreement for a period of longer than 90 days out of any 360-day
period during the Employment Period. A determination of whether the Executive is
Disabled shall be made by
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the Company in its sole discretion upon its own initiative or upon request of
the Executive or a person acting on his behalf.
(d) Termination by the Company for Cause. The Company by written
notice to the Executive, shall have the right to terminate the Employment Period
in the event of any of the following (which shall constitute "Cause"):
(i) The Executive's breach in respect of his duties under this
Agreement, such breach continuing unremedied for 10 days after
written notice thereof from the Company to the Executive
specifying the acts constituting the breach and requesting
that they be remedied;
(ii) Any misconduct, dishonesty, breach of fiduciary duty,
insubordination or other act by the Executive which other act
is materially detrimental to the assets, business or goodwill
of the Company, or materially damaging to the Company's, its
subsidiaries' and/or affiliates' relationships with their
customers or employees, including, without limitation, the
Executive having been indicted for or convicted of (including
entry of a no contest plea) in respect of a felony or of any
crime involving moral turpitude or fraud during the Employment
Period, provided such indictment or conviction has resulted or
is likely to result in substantial detriment to the Company,
its subsidiaries and/or affiliates;
(iii) misappropriation (or attempted misappropriation) of any
of the Company's funds or property or of a business
opportunity of the Company, including attempting to secure or
securing any personal profit in connection with any
transaction entered into on behalf of the Company;
(iv) Executive's gross negligence in connection with the
performance of Executive's obligations hereunder; or
(v) Executive's excessive alcohol abuse or abuse of any
controlled substance.
Any termination under this Section 6(d) shall be without damages or
liability to the Company for compensation and other benefits which would have
accrued to the Executive hereunder after termination, but all compensation,
benefits and reimbursements accrued through the date of termination shall be
paid to the Executive at the times normally paid by the Company. In this event,
there shall be no severance period.
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<PAGE> 7
(e) Voluntary Termination by the Executive. In the event of
voluntary termination of employment by the Executive, the terms of the last
paragraph of Section 6(d) shall apply, except in the event that Executive
terminates for Good Reason. Good Reason shall mean voluntary termination by
Executive that occurs within ninety days of (i) a relocation of the Company's
offices (or the location of the performance of work by the Executive) beyond a
fifty mile radius of New York City, (ii) a material diminution of the
Executive's position, authority, duties or responsibilities as provided in
Section 2, including, without limitation, termination of his position as Vice
President, Secretary and General Counsel of the Company or (iii) a reduction in
Base Salary. If Executive terminates for Good Reason, the provisions of Section
6(a) shall apply and Executive will be bound by the provisions of Section 5,
including, without limitation, Sections 5(c) and 5(d).
(f) Termination Following a Change in Control. (i) Subject to
Section 6(f)(ii), should the Executive's employment hereunder be terminated by
the Company without Cause (other than for reason of the Executive becoming
Disabled) or by Executive for Good Reason within two years of a Change in
Control (as defined below), the Company shall pay and the Executive shall
receive in cash an amount equal to 300% of (A) Executive's then current Base
Salary plus (B) the average of the last three annual bonuses received by
Executive, and any options held by Executive to purchase Company securities
shall immediately vest, notwithstanding anything to the contrary in any other
agreement between Executive and the Company. Upon termination under this
paragraph (f), the Executive shall no longer be bound by the provisions of
Section 5 of this Agreement.
(ii) In the event that any payment received or to be received by the
Executive in connection with a Change in Control or the termination of the
Executive's employment (whether payable pursuant to the terms of this Agreement
or any other plan, arrangement or agreement with the Company, any person whose
actions result in a Change in Control or any person affiliated with the Company
or such person (together with the payment pursuant to Section 6(f)(i), the
"Total Payments")) would not be deductible by the Company (in whole or in part)
as a result of Section 280G of the Internal Revenue Code of 1986, as amended
(the "Code"), the payment pursuant to Section 6(f)(i) shall be reduced until no
portion of the Total Payments are not deductible as a result of Section 280G of
the Code, or the payment pursuant to Section 6(f)(i) is reduced to zero. For
purposes of this limitation (A) no portion of the Total Payments the receipt or
enjoyment of which the Executive shall have effectively waived in writing prior
to the date of payment of the payment pursuant to Section 6(f)(i) shall be taken
into account, (B) no portion of the Total Payments shall be taken into account
which, in the opinion of tax counsel selected by the Company's independent
auditors and acceptable to the Executive, does not constitute a "parachute
payment" within the meaning of Section 280G(b)(2) of the Code, and (C) the value
of any non-cash benefit or any deferred payment or benefit included in the Total
Payments shall be determined or benefit included in the Total Payments shall be
determined by the Company's independent auditors servicing the Company
immediately prior to the time of a Change in Control in accordance with the
principles of Sections 280G(d)(3) and (4) of the Code.
(iii) For purposes of this Section 6(f) the following definitions
shall apply:
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"Change in Control" shall mean a change in control with respect to
the Company that would be required to be reported in response to Item 1(a) of
the Current Report on Form 8-K, as in effect on the date hereof, pursuant to
Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"); provided that, without limitation, such a Change in Control
shall be deemed to have occurred at such time as any Person is or becomes the
"beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly
or indirectly of 35% or more of the outstanding securities of the Company
ordinarily having the right to vote at an election of directors. A change in
control shall be deemed to have occurred if individuals who constitute the
Incumbent Board cease for any reason to constitute at least a majority of the
Board of Directors of the Company (the "Board").
Notwithstanding anything aforesaid to the contrary, a Change in
Control shall not be deemed to have occurred if prior to the time the Change in
Control would have otherwise occurred, the Board shall have approved the event
or transaction that would otherwise result in a Change in Control for purposes
of this Agreement.
"Incumbent Board" shall mean those individuals who constitute the
Board on the date hereof, or any successor or additional individual who becomes
a member of the Board and whose election, or nomination for election, by the
members of the Board was approved by a vote of at least two-thirds of the
members of the Board comprising the Incumbent Board (either by a specific vote
or by approval of the proxy statement of the Company in which such individual
was named as nominee for member of the Board without objection to such
nomination).
"Person" shall mean and include any individual, corporation,
partnership, group, association or other "person", as such term is used in
Section 14(d) of the Exchange Act, other than the Company or any subsidiary or
any employee benefit plan sponsored by the Company or any subsidiary.
7. Conflicting Agreements. The Executive hereby represents and
warrants to the Company that his entering into this Agreement, and the
obligations and duties undertaken by him hereunder, will not conflict with,
constitute a breach of, or otherwise violate the terms of any other employment
of other agreement to which he is a party.
8. Assignment.
(a) By the Executive. This Agreement, any part thereof and any
rights (including compensation) or obligation hereunder shall not be assigned,
pledged, alienated, sold, attached, charged, encumbered or transferred in any
way by the Executive and any attempt to do so shall be void except that (i) the
Executive may designate any of his beneficiaries to receive (and such
beneficiaries shall receive) any compensation, payments or other benefits
payable hereunder upon his death, (ii) any assignment by will or by laws of
descent and distribution or following the occurrence of the Executive's legal
incompetence is permitted and (iii) the Executive's executors, administrators or
other legal representatives may assign any rights hereunder to the person or
persons entitled thereto.
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(b) By the Company. Provided the substance of the Executive's duties
set forth in Section 2 shall not change, and provided that the Executive's
compensation as set forth in Section 3 shall not be adversely affected, the
Company may assign or otherwise transfer this Agreement to any succeeding entity
without limitation, which entity shall assume all rights and obligations
hereunder.
9. Notices. All notices, requests, demands and other communications
hereunder must be in writing and shall be deemed to have been duly given if
delivered by hand or mailed within the continental United States by first class,
registered mail, return receipt requested, or sent by overnight mail, such as
Federal Express, postage and registry fees prepaid, to the applicable party and
addressed as follows:
If to the Company:
Board of Directors
Marine Transport Corporation
1200 Harbor Boulevard
Weehawken, NJ 07087
With a copy (which will constitute notice to the Company) to:
Cadwalader, Wickersham & Taft
100 Maiden Lane
New York, New York 10038
Attention: Louis J. Bevilacqua, Esq.
If to Executive:
Peter N. Popov
Marine Transport Corporation
1200 Harbor Boulevard
Weehawken, NJ 07087
Addresses may be changed by notice in writing signed by the addressee.
10. Miscellaneous.
(a) If any provision or portion of this Agreement shall, for any
reason, be adjudged by any court of competent jurisdiction to be invalid or
unenforceable, such judgment shall not affect, impair or invalidate the
remainder of this Agreement but shall be confined in its operation to the
jurisdiction in which made and to the provisions of this Agreement directly
involved in the controversy in which such judgment shall have been rendered.
(b) No course of dealing and no delay on the part of any party
hereto in exercising any right, power or remedy under or relating to this
Agreement shall operate as a
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waiver thereof or otherwise prejudice such party's rights, powers and remedies.
No single or partial exercise of any rights, powers or remedies under or
relating to this Agreement shall preclude any other or further exercise thereof
or the exercise of any other right, power or remedy.
(c) This Agreement may be executed by the parties hereto in
counterparts, each of which shall be deemed to be an original, but all such
counterparts shall together constitute one and the same instrument, and all
signatures need not appear on any one counterpart.
(d) (i) Any other agreement, rule or regulation to the contrary,
notwithstanding, the parties hereby agree that any action or proceeding relating
to this Agreement or its subject matter shall be brought in a state or federal
court situated in the County of New York, State of New York and such court shall
have exclusive jurisdiction thereof; provided, however, any court with
jurisdiction over the parties may, at the election of Company, have jurisdiction
over any action brought with regard to or any action brought to enforce any
violation or claimed violation of Section 5. The parties each hereby
specifically submit to the jurisdiction of such court and further agree that
service of process may be made within or without the State of New York by giving
notice in the manner provided in Section 9. Each party further agrees to waive
and hereby waives any right to a trial by jury, and to any objection it or he
may have in any such action, based on lack of personal jurisdiction or venue, or
inconvenient forum.
(ii) In any such action or proceeding, the prevailing party shall be
entitled to recover from the other party reasonable costs, including attorneys'
fees and expenses. In any action or proceeding before a court or other tribunal
relating to this Agreement with respect to which damages are an adequate remedy,
the parties agree that no damages other than compensatory damages shall be
sought or claimed by either party and each party waives any claim, right or
entitlement to punitive, exemplary or consequential damages, or any statutory
damages, or any other damages of any kind or nature in excess of compensatory
damages, and any court or arbitration tribunal is specifically divested of any
power to award any damages in the nature of punitive, exemplary, or
consequential damages, or any statutory damages, or any other damages of any
kind or nature in excess of compensatory damages.
(e) All payments required to be made by the Company hereunder to the
Executive or his beneficiaries, including his estate, shall be subject to
withholding and deductions as the Company may reasonably determine it should
withhold or deduct pursuant to any applicable law or regulation. In lieu of
withholding or deducting such amounts in whole or in part, the Company may, in
its sole discretion, accept other provision for payment as permitted by law,
provided it is satisfied in its sole discretion that all requirements of law
affecting its responsibilities to withhold such taxes have been satisfied.
(f) This Agreement embodies the entire understanding, and supersedes
all other oral or written agreements or understandings, between the parties
regarding the subject matter hereof. No change, alteration or modification
hereof may be made except in writing
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signed by both parties hereto. The headings in this Agreement are for
convenience of reference only and shall not be considered part of this Agreement
or limit or otherwise affect the meaning hereof. This Agreement and the rights
and obligations of the parties hereunder shall be construed in accordance with
and governed by the laws of the State of New York (disregarding any choice of
law rules which might look to the laws of any other jurisdiction).
(g) The Executive acknowledges that the terms of this Agreement have
been fully explained to him, that the Executive understands the nature and
extent of the rights and obligations provided under this Agreement, and that the
Executive has been given the opportunity to be represented by legal counsel in
the negotiation and preparation of this Agreement.
(h) Nothing herein contained shall be construed to prevent or limit
any acquisition, consolidation or merger of the Company.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the parties hereto have executed and delivered
this Agreement as of the day and year first above written.
MARINE TRANSPORT CORPORATION
By:
-------------------------------------
Name:
Title:
-------------------------------------
Peter N. Popov
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Exhibit 10.6
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement"), dated as of June 18,
1998, is by and between Marine Transport Corporation, a Delaware corporation
(the "Company") and Jeffrey M. Miller ("Executive").
W I T N E S S E T H
WHEREAS, the Company desires to employ the Executive; and
WHEREAS, the Executive is willing to be employed by the Company, as
Vice President, Marketing of the Company, for the period and upon the terms and
conditions hereinafter set forth;
NOW THEREFORE, in consideration of the mutual covenants and
conditions contained herein, the Company and the Executive hereby agree as
follows:
1. Employment. The Company shall employ the Executive, and the
Executive accepts employment by the Company, as Vice President, Marketing of the
Company upon the terms and conditions herein, for the period commencing as of
June 17, 1998, and ending on June 16, 1999, subject to termination as
hereinafter provided (the period from June 17, 1998 through June 16, 1999, as
such period may be extended as described in this paragraph, being herein
referred to as the "Employment Period"). The initial term of employment shall be
automatically extended for an additional period of one year unless 90 days
written notice of termination is given by either party, and for additional
periods of one year thereafter unless 90 days written notice of termination is
given by either party.
2. Duties. (a) Throughout the Employment Period, the Executive shall
be Vice President, Marketing of the Company and shall report to the Chief
Executive Officer (the "CEO") of the Company, or other senior officer of the
Company as the CEO may direct. The Executive shall at all times comply with
Company policies and guidelines as in effect from time to time and with the
lawful and responsible instructions of the CEO.
(b) During the Employment Period, the Executive shall devote his
full-time working hours to his duties hereunder, except during vacation time,
any periods of illness and authorized leaves of absence. The Executive shall
have such responsibilities and authorities consistent with the status, title and
reporting requirements set forth herein as are appropriate to said position,
subject to change (other than diminution in position, authority, duties or
responsibilities) from time to time by the CEO.
(c) Throughout the Employment Period, the Executive shall faithfully
and diligently perform his duties under this Agreement and shall use his best
efforts to promote the interests of the Company.
<PAGE> 2
3. Compensation. During the Employment Period, as full compensation
to the Executive for his performance of the services hereunder and for his
acceptance of the responsibilities described herein, the Company agrees to pay
the Executive, and the Executive agrees to accept, the following salary and
other benefits:
(a) Salary
The Company shall pay the Executive a salary (the "Base Salary") at
the annual rate of $135,000. The Compensation Committee of the Board of
Directors of the Company (the "Compensation Committee") shall review such Base
Salary on an annual basis and may increase it, from time to time, in its sole
discretion. The Base Salary due the Executive hereunder shall be payable in
equal monthly installments less any amounts required to be withheld by the
Company from such Base Salary pursuant to the benefit plans of Section 3(d) and
applicable laws and regulations described under Section 10(e).
(b) Bonus
The Executive shall be eligible to receive bonuses (each a "Bonus")
at the discretion of, and in the amounts and at the times determined by, the
Compensation Committee.
(c) Long Term Incentives
The Executive shall be entitled to receive grants of restricted
stock, stock options and other stock awards and/or other stock and cash awards
granted pursuant to any other long term incentive plans implemented by the
Company for the benefit of senior executives of the Company at the discretion
of, and in the amounts and at the times determined by, the Compensation
Committee.
(d) Other Benefit Plans
Subject to all eligibility requirements, and to the extent permitted
by law, the Executive shall be entitled to participate in any and all employee
benefit plans (including, but not limited to, retirement, life insurance,
medical, dental, disability, and savings plans) established or maintained by the
Company from time to time for the benefit of its employees (or its executives)
in general.
(e) Further Benefits
The Executive shall be entitled to a minimum of four weeks per annum
paid vacation.
(f) Deferred Compensation
Notwithstanding any other provision of the Agreement, the Executive
shall have the right to request any lawful means (including, without limitation,
any deferred compensation arrangement requested by the Executive) by which he
wishes to receive any portion of his Base
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<PAGE> 3
Salary, Bonus, or other payments, and the Company shall reasonably cooperate
with the Executive to grant such request, provided that the granting of such
request does not represent inequitable treatment as concerns other senior
employees or executives (in the Company's sole judgment), and does not impose
additional costs on the Company other than insignificant administrative costs.
4. Reasonable Expenses. The Company will reimburse the Executive for
all reasonable business expenses, including travel and lodging, which are
properly incurred by him in the performance of his duties hereunder, upon
presentation of proper vouchers therefor and in accordance with written policies
established from time to time by the Company for such reimbursements.
5. Executive Covenants. The Executive acknowledges that as a result
of the services to be rendered to the Company hereunder, the Executive will be
brought into close contact with many confidential affairs of the Company, its
subsidiaries and affiliates, not readily available to the public. The Executive
further acknowledges that the services to be performed under this Agreement are
of a special, unique, unusual, extraordinary and intellectual character; that
the business of the Company is international in scope; that its services are
marketed throughout the world; and that the Company competes with other
organizations that are or could be located in nearly any part of the United
States or elsewhere. In recognition of the foregoing:
(a) Except with the consent of or as directed by the Company, or
except if compelled by judicial or legal authorities, the Executive will keep
confidential and not divulge to any other person, during the Employment Period
or thereafter, any Confidential Information and Trade Secrets regarding the
Company, its subsidiaries and affiliates, except for information which is or
becomes publicly available other than as a result of disclosure by the
Executive. For the purposes of this Agreement "Confidential Information and
Trade Secrets" means information which is confidential and secret to the
Company, its subsidiaries and affiliates. It may include, but is not limited to,
information relating to new and future concepts and business of the Company, its
subsidiaries and affiliates, in the form of memoranda, reports, computer
software and data banks, customer lists, employee lists, books, records,
financial statements, manuals, papers, contracts and strategic plans. As a
guide, the Executive is to consider information originated, owned, controlled or
possessed by the Company, its subsidiaries or affiliates which is not disclosed
in printed publications stated to be available for distribution outside the
Company, its subsidiaries and affiliates as being secret and confidential. In
instances where doubt does or should reasonably be understood to exist in the
Executive's mind as to whether information is secret and confidential to the
Company, its subsidiaries and affiliates, the Executive agrees to request an
opinion, in writing, from the Company.
(b) All papers, books and records of every kind and description
relating to the business and affairs of the Company, its subsidiaries and
affiliates, whether or not prepared by the Executive, and all property owned by
the Company, its subsidiaries and affiliates shall
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be the sole and exclusive property of the Company, and the Executive shall
surrender them to the Company, at any time upon request, during or after the
Employment Period.
(c) During the Employment Period and for one year following
termination of this Agreement pursuant to Sections 6(a) or 6(c), the Executive
will not, without the prior written consent of the Company, compete, directly or
indirectly, with the Company, its subsidiaries and affiliates or participate as
a director, officer, employee, agent, representative, stockholder or partner, or
have any direct or indirect financial interest, in any business which directly
or indirectly competes with the Company, its subsidiaries and affiliates;
provided, however, that this paragraph (c) shall not restrict the Executive from
holding up to 5% of the publicly traded securities of any entity.
(d) During the Employment Period and for one year following
termination of this Agreement pursuant to Sections 6(a) or 6(c), the Executive
shall not either for his or her own account or for any person, firm or company
(i) solicit any customers of the Company, its subsidiaries and affiliates or
(ii) solicit or endeavor to cause any employee of the Company, its subsidiaries
and affiliates to leave his employment or induce or attempt to induce any such
employee to breach any employment agreement with the Company, its subsidiaries
and affiliates, or otherwise interfere with the employment of any employee by
the Company, its subsidiaries and affiliates.
(e) Without limiting any other provision of this Agreement, the
Executive hereby agrees to be bound by and to comply with any obligations known
to the Executive and imposed on the Company, its subsidiaries and affiliates, by
law, rule, regulation, ordinance, order, decree, instrument, agreement,
understanding or other restriction of any kind.
(f) The Executive hereby agrees to provide reasonable cooperation to
the Company, its subsidiaries and affiliates during the Employment Period and
thereafter in any litigation between the Company, its subsidiaries and
affiliates, and third parties.
(g) The parties agree that the Company shall, in addition to other
remedies provided by law, have the right and remedy to have the provisions of
this Section 5 specifically enforced by any court having equity jurisdiction, it
being acknowledged and agreed that any breach or threatened breach of the
provisions of this Section 5 will cause irreparable injury to the Company and
that money damages will not provide an adequate remedy to the Company. Nothing
contained herein shall be construed as prohibiting the Company from pursuing any
other remedies available to it for such breach or threatened breach, including
the recovery of damages from the Executive.
(i) Although the restrictions contained in Sections 5(a), (b), (c)
and (d) above are considered by the parties hereto to be fair and reasonable in
the circumstances, it is recognized that restrictions of such nature may fail
for technical reasons, and accordingly it is hereby agreed that if any of such
restrictions shall be adjudged to be void or unenforceable for whatever reason,
but would be valid if part of the wording thereof were deleted, or the period
thereof reduced or the area dealt with thereby reduced in scope, the
restrictions contained in Sections 5(a), (b), (c) and (d) shall be enforced to
the maximum extent permitted by law, and
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the parties consent and agree that such scope or wording may be accordingly
judicially modified in any proceeding brought to enforce such restrictions.
(ii) Notwithstanding that the Executive's employment hereunder may
expire or be terminated as provided in Section 1 or Section 6 hereof, this
Agreement shall continue in full force and effect insofar as is necessary to
enforce the covenants and agreements of the Executive contained in this Section
5.
6. Termination of Employment Period and Severance.
(a) Termination by the Company without Cause. If for any reason
other than the provisions of Section 6(d) hereof, the Company wishes to
terminate the Employment Period and the Executive's employment hereunder or
fails to extend the Employment Period for additional one year periods as
provided in Section 1, the Company shall give a written notice to the Executive
of such termination upon termination and shall pay to Executive an amount equal
to 50% of the Base Salary then in effect. Upon receipt of such notice by the
Executive or upon expiration of the employment period that is not extended, the
Employment Period shall terminate (and the Executive shall have no further
duties under Section 2 hereof). The Executive agrees that the payment described
in this Section 6(a) shall be full and adequate compensation to the Executive
for all damages the Executive may suffer as a result of the termination of his
employment pursuant to this Section 6(a), and hereby waives and releases the
Company from any and all obligations or liabilities to the Executive arising
from or in connection with the Executive's employment with the Company or the
termination and claims the Executive may have under federal, state or local
statutes, regulations or ordinances or under any common law principles or breach
of contract or the covenant of good faith and fair dealing, defamation, wrongful
discharge, intentional infliction of emotional distress or promissory estoppel;
provided, however, that any rights and benefits the Executive may have under the
employee benefit plans and programs of the Company in which the Executive is a
participant, shall be determined in accordance with the terms and provisions of
such plans and programs.
(b) Death. If the Executive dies during the Employment Period, the
Employment Period shall automatically terminate and the obligations of the
parties shall terminate effective the date of death.
(c) Disability. If the Executive becomes Disabled (as hereinafter
defined) during the Employment Period, the Company shall be entitled to
terminate his or her employment and the Employment Period upon written notice to
the Executive from the Company. In the event of such termination, the Executive
shall be released from any duties hereunder and the Company shall pay to
Executive an amount equal to 50% of the Base Salary then in effect. For purposes
of this Agreement, "Disabled" shall mean mental or physical impairment or
incapacity rendering the Executive substantially unable to perform his duties
under this Agreement for a period of longer than 90 days out of any 360-day
period during the Employment Period. A determination of whether the Executive is
Disabled shall be made by
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the Company in its sole discretion upon its own initiative or upon request of
the Executive or a person acting on his behalf.
(d) Termination by the Company for Cause. The Company by written
notice to the Executive, shall have the right to terminate the Employment Period
in the event of any of the following (which shall constitute "Cause"):
(i) The Executive's breach in respect of his duties under this
Agreement, such breach continuing unremedied for 10 days after
written notice thereof from the Company to the Executive
specifying the acts constituting the breach and requesting
that they be remedied;
(ii) Any misconduct, dishonesty, breach of fiduciary duty,
insubordination or other act by the Executive which other act
is materially detrimental to the assets, business or goodwill
of the Company, or materially damaging to the Company's, its
subsidiaries' and/or affiliates' relationships with their
customers or employees, including, without limitation, the
Executive having been indicted for or convicted of (including
entry of a no contest plea) in respect of a felony or of any
crime involving moral turpitude or fraud during the Employment
Period, provided such indictment or conviction has resulted or
is likely to result in substantial detriment to the Company,
its subsidiaries and/or affiliates;
(iii) misappropriation (or attempted misappropriation) of any
of the Company's funds or property or of a business
opportunity of the Company, including attempting to secure or
securing any personal profit in connection with any
transaction entered into on behalf of the Company;
(iv) Executive's gross negligence in connection with the
performance of Executive's obligations hereunder; or
(v) Executive's excessive alcohol abuse or abuse of any
controlled substance.
Any termination under this Section 6(d) shall be without damages or
liability to the Company for compensation and other benefits which would have
accrued to the Executive hereunder after termination, but all compensation,
benefits and reimbursements accrued through the date of termination shall be
paid to the Executive at the times normally paid by the Company. In this event,
there shall be no severance period.
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(e) Voluntary Termination by the Executive. In the event of
voluntary termination of employment by the Executive, the terms of the last
paragraph of Section 6(d) shall apply, except in the event that Executive
terminates for Good Reason. Good Reason shall mean voluntary termination by
Executive that occurs within ninety days of (i) a relocation of the Company's
offices (or the location of the performance of work by the Executive) beyond a
fifty mile radius of New York City, (ii) a material diminution of the
Executive's position, authority, duties or responsibilities as provided in
Section 2 or (iii) a reduction in Base Salary in which cases the provisions of
Section 6(a) shall apply and Executive will be bound by the provisions of
Section 5, including, without limitation, Sections 5(c) and 5(d).
(f) Termination Following a Change in Control. (i) Subject to
Section 6(f)(ii), should the Executive's employment hereunder be terminated by
the Company without Cause (other than for reason of the Executive becoming
Disabled) or by Executive for Good Reason within two years of a Change in
Control (as defined below), the Company shall pay and the Executive shall
receive in cash an amount equal to 300 % of (A) Executive's then current Base
Salary plus (B) the average of the last three annual bonuses received by
Executive, and any options held by Executive to purchase Company securities
shall immediately vest, notwithstanding anything to the contrary in any other
agreement between Executive and the Company. Upon termination under this
paragraph (f), the Executive shall no longer be bound by the provisions of
Section 5 of this Agreement.
(ii) In the event that any payment received or to be received by the
Executive in connection with a Change in Control or the termination of the
Executive's employment (whether payable pursuant to the terms of this Agreement
or any other plan, arrangement or agreement with the Company, any person whose
actions result in a Change in Control or any person affiliated with the Company
or such person (together with the payment pursuant to Section 6(f)(i), the
"Total Payments")) would not be deductible by the Company (in whole or in part)
as a result of Section 280G of the Internal Revenue Code of 1986, as amended
(the "Code"), the payment pursuant to Section 6(f)(i) shall be reduced until no
portion of the Total Payments are not deductible as a result of Section 280G of
the Code, or the payment pursuant to Section 6(f)(i) is reduced to zero. For
purposes of this limitation (A) no portion of the Total Payments the receipt or
enjoyment of which the Executive shall have effectively waived in writing prior
to the date of payment of the payment pursuant to Section 6(f)(i) shall be taken
into account, (B) no portion of the Total Payments shall be taken into account
which, in the opinion of tax counsel selected by the Company's independent
auditors and acceptable to the Executive, does not constitute a "parachute
payment" within the meaning of Section 280G(b)(2) of the Code, and (C) the value
of any non-cash benefit or any deferred payment or benefit included in the Total
Payments shall be determined or benefit included in the Total Payments shall be
determined by the Company's independent auditors servicing the Company
immediately prior to the time of a Change in Control in accordance with the
principles of Sections 280G(d)(3) and (4) of the Code.
(iii) For purposes of this Section 6(f) the following definitions
shall apply:
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"Change in Control" shall mean a change in control with respect to
the Company that would be required to be reported in response to Item 1(a) of
the Current Report on Form 8-K, as in effect on the date hereof, pursuant to
Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"); provided that, without limitation, such a Change in Control
shall be deemed to have occurred at such time as any Person is or becomes the
"beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly
or indirectly of 35% or more of the outstanding securities of the Company
ordinarily having the right to vote at an election of directors. A change in
control shall be deemed to have occurred if individuals who constitute the
Incumbent Board cease for any reason to constitute at least a majority of the
Board of Directors of the Company (the "Board").
Notwithstanding anything aforesaid to the contrary, a Change in
Control shall not be deemed to have occurred if prior to the time the Change in
Control would have otherwise occurred, the Board shall have approved the event
or transaction that would otherwise result in a Change in Control for purposes
of this Agreement.
"Incumbent Board" shall mean those individuals who constitute the
Board on the date hereof, or any successor or additional individual who becomes
a member of the Board and whose election, or nomination for election, by the
members of the Board was approved by a vote of at least two-thirds of the
members of the Board comprising the Incumbent Board (either by a specific vote
or by approval of the proxy statement of the Company in which such individual
was named as nominee for member of the Board without objection to such
nomination).
"Person" shall mean and include any individual, corporation,
partnership, group, association or other "person", as such term is used in
Section 14(d) of the Exchange Act, other than the Company or any subsidiary or
any employee benefit plan sponsored by the Company or any subsidiary.
7. Conflicting Agreements. The Executive hereby represents and
warrants to the Company that his entering into this Agreement, and the
obligations and duties undertaken by him hereunder, will not conflict with,
constitute a breach of, or otherwise violate the terms of any other employment
of other agreement to which he is a party.
8. Assignment.
(a) By the Executive. This Agreement, any part thereof and any
rights (including compensation) or obligation hereunder shall not be assigned,
pledged, alienated, sold, attached, charged, encumbered or transferred in any
way by the Executive and any attempt to do so shall be void except that (i) the
Executive may designate any of his beneficiaries to receive (and such
beneficiaries shall receive) any compensation, payments or other benefits
payable hereunder upon his death, (ii) any assignment by will or by laws of
descent and distribution or following the occurrence of the Executive's legal
incompetence is permitted and (iii) the Executive's executors, administrators or
other legal representatives may assign any rights hereunder to the person or
persons entitled thereto.
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(b) By the Company. Provided the substance of the Executive's duties
set forth in Section 2 shall not change, and provided that the Executive's
compensation as set forth in Section 3 shall not be adversely affected, the
Company may assign or otherwise transfer this Agreement to any succeeding entity
without limitation, which entity shall assume all rights and obligations
hereunder.
9. Notices. All notices, requests, demands and other communications
hereunder must be in writing and shall be deemed to have been duly given if
delivered by hand or mailed within the continental United States by first class,
registered mail, return receipt requested, or sent by overnight mail, such as
Federal Express, postage and registry fees prepaid, to the applicable party and
addressed as follows:
If to the Company:
Board of Directors
Marine Transport Corporation
1200 Harbor Boulevard
Weehawken, NJ 07087
With a copy (which will constitute notice to the Company) to:
Cadwalader, Wickersham & Taft
100 Maiden Lane
New York, New York 10038
Attention: Louis J. Bevilacqua, Esq.
If to Executive:
Jeffrey M. Miller
Marine Transport Corporation
1200 Harbor Boulevard
Weehawken, NJ 07087
Addresses may be changed by notice in writing signed by the addressee.
10. Miscellaneous.
(a) If any provision or portion of this Agreement shall, for any
reason, be adjudged by any court of competent jurisdiction to be invalid or
unenforceable, such judgment shall not affect, impair or invalidate the
remainder of this Agreement but shall be confined in its operation to the
jurisdiction in which made and to the provisions of this Agreement directly
involved in the controversy in which such judgment shall have been rendered.
(b) No course of dealing and no delay on the part of any party
hereto in exercising any right, power or remedy under or relating to this
Agreement shall operate as a
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waiver thereof or otherwise prejudice such party's rights, powers and remedies.
No single or partial exercise of any rights, powers or remedies under or
relating to this Agreement shall preclude any other or further exercise thereof
or the exercise of any other right, power or remedy.
(c) This Agreement may be executed by the parties hereto in
counterparts, each of which shall be deemed to be an original, but all such
counterparts shall together constitute one and the same instrument, and all
signatures need not appear on any one counterpart.
(d) (i) Any other agreement, rule or regulation to the contrary,
notwithstanding, the parties hereby agree that any action or proceeding relating
to this Agreement or its subject matter shall be brought in a state or federal
court situated in the County of New York, State of New York and such court shall
have exclusive jurisdiction thereof; provided, however, any court with
jurisdiction over the parties may, at the election of Company, have jurisdiction
over any action brought with regard to or any action brought to enforce any
violation or claimed violation of Section 5. The parties each hereby
specifically submit to the jurisdiction of such court and further agree that
service of process may be made within or without the State of New York by giving
notice in the manner provided in Section 9. Each party further agrees to waive
and hereby waives any right to a trial by jury, and to any objection it or he
may have in any such action, based on lack of personal jurisdiction or venue, or
inconvenient forum.
(ii) In any such action or proceeding, the prevailing party shall be
entitled to recover from the other party reasonable costs, including attorneys'
fees and expenses. In any action or proceeding before a court or other tribunal
relating to this Agreement with respect to which damages are an adequate remedy,
the parties agree that no damages other than compensatory damages shall be
sought or claimed by either party and each party waives any claim, right or
entitlement to punitive, exemplary or consequential damages, or any statutory
damages, or any other damages of any kind or nature in excess of compensatory
damages, and any court or arbitration tribunal is specifically divested of any
power to award any damages in the nature of punitive, exemplary, or
consequential damages, or any statutory damages, or any other damages of any
kind or nature in excess of compensatory damages.
(e) All payments required to be made by the Company hereunder to the
Executive or his beneficiaries, including his estate, shall be subject to
withholding and deductions as the Company may reasonably determine it should
withhold or deduct pursuant to any applicable law or regulation. In lieu of
withholding or deducting such amounts in whole or in part, the Company may, in
its sole discretion, accept other provision for payment as permitted by law,
provided it is satisfied in its sole discretion that all requirements of law
affecting its responsibilities to withhold such taxes have been satisfied.
(f) This Agreement embodies the entire understanding, and supersedes
all other oral or written agreements or understandings, between the parties
regarding the subject matter hereof. No change, alteration or modification
hereof may be made except in writing
-10-
<PAGE> 11
signed by both parties hereto. The headings in this Agreement are for
convenience of reference only and shall not be considered part of this Agreement
or limit or otherwise affect the meaning hereof. This Agreement and the rights
and obligations of the parties hereunder shall be construed in accordance with
and governed by the laws of the State of New York (disregarding any choice of
law rules which might look to the laws of any other jurisdiction).
(g) The Executive acknowledges that the terms of this Agreement have
been fully explained to him, that the Executive understands the nature and
extent of the rights and obligations provided under this Agreement, and that the
Executive has been given the opportunity to be represented by legal counsel in
the negotiation and preparation of this Agreement.
(h) Nothing herein contained shall be construed to prevent or limit
any acquisition, consolidation or merger of the Company.
[SIGNATURE PAGE FOLLOWS]
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<PAGE> 12
IN WITNESS WHEREOF, the parties hereto have executed and delivered
this Agreement as of the day and year first above written.
MARINE TRANSPORT CORPORATION
By:
-------------------------------------
Name:
Title:
-------------------------------------
Jeffrey Miller
-12-
<PAGE> 1
CONSULTING AGREEMENT
This CONSULTING AGREEMENT (the "AGREEMENT") is made and entered into by
and between F. ANTHONY NACCARATO ("CONSULTANT"), and OMI CORP., a corporation
organized and existing under the laws of the State of Delaware and having its
principal place of business at 90 Park Avenue, New York, New York 10016 ("OMI").
W I T N E S S E T H
WHEREAS, CONSULTANT was employed by OMI for nearly 30 years; and
WHEREAS, OMI is willing to retain CONSULTANT as an independent consultant
to provide certain labor relations services to OMI upon the terms and conditions
set forth herein;
NOW, THEREFORE, in consideration of the premises and mutual promises
herein contained, it is agreed as follows:
1. OMI hereby engages CONSULTANT, and CONSULTANT hereby agrees to serve,
as a consultant to OMI to provide such labor relations services as OMI may
request of CONSULTANT, provided, however, that CONSULTANT may not be required to
perform services at OMI's offices more than 60 days per year. As used in this
AGREEMENT, "labor relations services" shall mean, but not be limited to,
consultation and advice on wages, hours and terms and conditions of employment,
1
<PAGE> 2
negotiation of union contracts and agreements, meetings with union officials,
business agents, port agents, personnel and members and administration of the
grievance procedures.
2. The term of this AGREEMENT shall commence as of January 1, 1998 and
shall expire on December 31, 2000 unless otherwise terminated prior to the
expiration of its term pursuant to Paragraph 11 of this AGREEMENT. However, OMI
may call upon CONSULTANT to perform labor relations services prior to such
commencement date and CONSULTANT will perform such services at no additional
charge to OMI. Upon the expiration of the term of this AGREEMENT, this AGREEMENT
may be renewed only upon the written consent and agreement of both parties.
3. During the term of this AGREEMENT, OMI agrees to pay CONSULTANT as
compensation for his services the sum of $92,500 per annum, payable in equal
monthly installments. OMI agrees that it will continue to make the payments due
hereunder in the event CONSULTANT dies or becomes disabled.
4. In addition, OMI shall reimburse CONSULTANT for all reasonable and
necessary travel (except commutation to and from OMI's office), entertainment,
telephone and postage expenses incurred on behalf of OMI, provided, however, (i)
such expenses are incurred in accordance with OMI's expense policy and (ii)
CONSULTANT submits such receipts and other documentation as may be required by
OMI. In the event that this AGREEMENT is terminated pursuant to Paragraph 11
2
<PAGE> 3
hereof, OMI shall reimburse CONSULTANT for all reasonable and necessary expenses
incurred by him up to the date of termination as specified in this Paragraph.
5. This AGREEMENT does not constitute an employment contract, end OMI
shall have no obligation to provide CONSULTANT with medical insurance, life,
accident, health, disability or workman's compensation insurance or other
employee benefits of any kind. OMI will provide CONSULTANT with general business
support at OMI's office location, including office and support space, furniture,
telephone, secretarial, word processing and photocopying services and such other
support services as the parties may agree upon to enable CONSULTANT to complete
the agreed upon assignments pursuant to this AGREEMENT.
6. OMI shall not be responsible for any payroll related taxes and Federal,
state or local deductions. CONSULTANT certifies that he is an independent
contractor and, as such, will prepare and file all tax information, forms and
returns with the appropriate Federal, state and local government agencies or
authorities as required by law.
7. (a) CONSULTANT represents and warrants that he is not under any
obligation, contractual or otherwise, to any person or entity which would
prohibit or impede him from performing the services and that he is free to enter
into and perform the terms of this AGREEMENT. CONSULTANT hereby represents and
warrants that he has full power to perform his obligations hereunder, and that
this AGREEMENT constitutes a legal, valid and binding obligation of CONSULTANT,
enforceable against CONSULTANT in accordance with his terms, except as
3
<PAGE> 4
enforcement may be limited by bankruptcy, insolvency moratorium or other laws
affecting the enforcement of creditors' rights generally.
(b) OMI represents and warrants that it is not under any obligation,
contractual or otherwise, to any person or entity which would prohibit or impede
CONSULTANT from performing the services contemplated under this AGREEMENT. OMI
hereby represents and warrants that it has full power, authority and capacity to
execute and deliver this AGREEMENT and perform its obligations hereunder, and
that this AGREEMENT constitutes a legal, valid and binding obligation of OMI,
enforceable against OMI in accordance with his terms, except as enforcement may
be limited by bankruptcy, insolvency moratorium or other laws affecting the
enforcement of creditors' rights generally.
8. (a) OMI agrees to indemnify and hold harmless CONSULTANT from and
against any losses, claims, damages or liabilities (including the costs,
expenses and legal fees) related to or arising out of activities performed or
services furnished by CONSULTANT pursuant to this AGREEMENT other than any loss,
claim, damage or liability (or action or proceeding in respect thereof)
determined by a final judgment of a court of competent jurisdiction to have been
caused, in whole or in part, by the willful misconduct, bad faith or gross
negligence of CONSULTANT.
(b) CONSULTANT agrees to indemnify and hold harmless OMI and OMI's
affiliates, directors, officers, agents and employees from and against any
losses, claims, damages or liabilities (including costs, expenses and legal
fees) which are determined by a final judgment of a court of competent
jurisdiction to have resulted
4
<PAGE> 5
solely from wilful misconduct, bad-faith or gross negligence of CONSULTANT.
Notwithstanding the foregoing, CONSULTANT shall indemnify OMI only to the extent
of the aggregate amount of Consulting Fees received by CONSULTANT.
9. CONSULTANT shall not disclose, duplicate, copy, or use for any purpose
other than the performance of this AGREEMENT and shall treat as confidential and
as proprietary to OMI all information which relates to OMI's client information,
systems, trade secrets or business affairs; and which CONSULTANT has obtained
from OMI under this AGREEMENT provided, however, the obligation to treat as
proprietary and confidential shall not apply to information which shall be
publicly available or shall be obtained rightfully from third parties.
10. This AGREEMENT may be terminated at any time for "cause" by either
party. The term "cause" shall mean (i) any material breach by either party or
any provision of this AGREEMENT and (ii) any disloyal or dishonest act or
conduct by either party to the other.
11. Any activities performed by CONSULTANT pursuant to this AGREEMENT will
be done as an independent contractor and CONSULTANT will at no time make any
representation or statement, verbal or in writing, that he is employed by OMI.
Nothing contained herein shall be construed to constitute a principal-agent
relationship between CONSULTANT and OMI, nor shall this AGREEMENT be deemed to
confer upon CONSULTANT any authority, express or implied, to bind OMI or
represent to anyone that it is acting either as a representative of, or in any
other capacity for OMI except as set forth in this AGREEMENT.
5
<PAGE> 6
12. This AGREEMENT shall inure to the benefit of OMI's successors and
assigns. This AGREEMENT may not be assigned by CONSULTANT without the prior
written consent of OMI.
13. The validity, interpretation, construction and performance of this
AGREEMENT shall be governed by the laws of the State of New York.
14. All notices, requests, demands and other communications hereunder
shall be in writing and shall be deemed duly given when delivered, either by
hand, by facsimile or by overnight courier or by certified mail, return receipt
requested as follows:
if to OMI, to:
Fredric S. London, Esq.
OMI Corp.
90 Park Avenue
New York, New York 10016
if to CONSULTANT, to:
F. Anthony Naccarato
7 Lawrence Court
Syosset, New York 11791-2632
or to such other address as either party shall have designated by like notice to
the other party hereto.
15. No provision of this AGREEMENT may be modified, altered, waived or
discharged unless such modification, waiver, discharge or alteration is agreed
to in writing and signed by OMI and CONSULTANT. No waiver by either party hereto
of or compliance with any condition or provision of this AGREEMENT to be
performed by such other party shall be deemed a waiver of similar of dissimilar
provisions or
6
<PAGE> 7
conditions at the same or at any prior or subsequent time.
16. This AGREEMENT sets forth the entire agreement between the parties
with respect to the matters contained herein. There are no other agreements or
understandings with respect to the subject matter of this AGREEMENT. Any and all
prior discussions, agreements or understandings, whether oral or written, are
merged into and subsumed by this AGREEMENT.
IN WITNESS WHEREOF, the parties have executed this AGREEMENT on August
___, 1997.
WITNESS:
/s/ F. Anthony Naccarato
- ------------------------------- -----------------------------------------
F. ANTHONY NACCARATO
WITNESS: OMI CORP.
/s/ [ILLEGIBLE] By: /s/ Frederic S. London
- ------------------------------- -------------------------------------
FREDERIC S. LONDON
STATE OF NEW YORK )
) ss.:
COUNTY OF NASSAU )
On Sept. 11, 1997 F. ANTHONY NACCARATO personally came to me known, and
known to me to be the individual described in, and who executed the foregoing
Agreement and duly acknowledged to me that she executed the same.
/s/ Robert Sereno
-----------------------------------------
NOTARY PUBLIC
ROBERT SERENO
Notary Public, State of New York
No. 01SE065092
Qualified in Nassau County
Commission Expires September 3, 1998
7
<PAGE> 8
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On August 12, 1997, FREDRIC S. LONDON, ESQ., Senior Vice-President and
General Counsel of OMI Corp., personally came to me known, and known to me to be
the individual described in, and who executed the foregoing Agreement in behalf
of OMI Corp., and duly acknowledged to me that he had authority to and that he
executed the same.
/s/ Monique Henderson
-----------------------------------------
NOTARY PUBLIC
MONIQUE HENDERSON
Notary Public, State at New York
No. 01HE5076668
Qualified in New York County
Commission Expires April 28, 1999
8
<PAGE> 1
Exhibit 10.9
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") dated as of September 1, 1997
between OMI Corp., a Delaware corporation (the "Company") and William A.G. Hogg
(the "Executive").
W I T N E S S E T H
WHEREAS, the Company desires to continue to employ the Executive; and
WHEREAS, the Executive is willing to continue to be employed by the
Company, as a senior executive of the Company, for the period and upon the terms
and conditions hereinafter set forth;
NOW THEREFORE, in consideration of the mutual covenants and conditions
contained herein, the Company and the Executive hereby agree as follows:
1. Employment
The Company shall employ the Executive, and the Executive accepts
employment by the Company, at the discretion of the Company, as President or
Senior Vice President of OMI Ship Management, Inc. ("OSM"), or any successor
thereof upon the terms and conditions herein, for the period commencing on the
date the Company acquires Marine Transport Lines, Inc. (the "Commencement Date")
and terminating on the third anniversary of the Commencement Date subject to
termination as hereinafter provided (such period, as such period may be extended
as described in this paragraph, being herein referred to as the "Employment
Period"). The Executive term of employment shall be automatically extended for
an additional period of one year unless written notice of termination is given
by either party no later than the second anniversary of the Commencement Date.
If, upon expiration of this Agreement, the Company desires to continue to employ
the Executive and the Executive desires to continue in the employ of the
Company, such employment shall be continued on terms and conditions which the
Company and the Executive find mutually satisfactory and which are consistent
with the employment policies of the Company.
2. Duties
(a) Throughout the Employment Period, the Executive shall be President or
Senior Vice President of OSM and shall report to the person or position
designated by the Chief Executive Officer of the Company. The Executive shall at
all times comply with Company policies as established by the Chief Executive
Officer.
(b) During the Employment Period, the Executive shall devote his full-time
working hours to his duties hereunder, except during vacation time, any periods
of illness and authorized leaves of absence. The Executive shall have such
responsibilities and authorities consistent with the status, title and reporting
requirements set forth herein as are appropriate to said position,
<PAGE> 2
subject to change (other than diminution in position, authority, duties or
responsibilities) from time to time by the Chief Executive Officer.
(c) Throughout the Employment Period, the Executive shall faithfully and
diligently perform his duties under this Agreement and shall use his best
efforts to promote the interests of the Company.
3. Compensation
During the Employment Period, as full compensation to the Executive for
his performance of the services hereunder and for his acceptance of the
responsibilities described herein, the Company agrees to pay the Executive, and
the Executive agrees to accept, the following salary and other benefits:
(a) Salary
The Company shall pay the Executive a salary (the "Base Salary") for the
annual periods following the Commencement date (a) Year 1: $110,000; (b) Year 2:
$115,000; (c) Year 3: $120,000 and (d) Additional Year: $125,000. The Base
Salary due the Executive hereunder shall be payable in equal installments at the
times other executives are paid less any amounts required to be withheld by the
Company from such Base Salary pursuant to the benefit plans of Section 3(d) and
applicable laws and regulations described under Section 9(e).
(b) Bonus
The Executive shall be eligible to receive bonuses (each a "Bonus") at the
discretion, in the amount and at the times determined by the Board of Directors
of the Company (the "Board").
(c) Long Term Incentives
The Executive shall be entitled to receive grants of restricted stock,
stock options and other stock awards at the discretion of the Compensation
Committee of the Board of Directors of the Company and/or other stock and cash
awards granted pursuant to any other long term incentive plans implemented by
the Company for the benefit of senior executives of the Company.
(d) Other Benefit Plans
Subject to all eligibility requirements, and to the extent permitted by
law, the Executive shall be entitled to participate in any and all employee
welfare and benefit plans (including, but not limited to, retirement security,
life insurance, medical, dental, disability, and savings plans) established by
the Company from time to time for the general and overall benefit of executives
of the Company.
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<PAGE> 3
(e) Further Benefits
The Executive shall be entitled to a minimum of four weeks per annum paid
vacation.
(f) Deferred Compensation
Notwithstanding any other provision of the Agreement, the Executive shall
have the right to request any lawful means (including, without limitation, any
deferred compensation arrangement requested by the Executive) by which he wishes
to receive any portion of his or her Base Salary, Bonus, or other payments, and
the Company shall reasonably cooperate with the Executive to grant such request,
provided that the granting of such request does not represent inequitable
treatment as concerns other senior employees or executives (in the Company's
sole judgment), and does not impose additional costs on the Company other than
insignificant administrative costs.
In the event the Company (but not the Executive) (i) gives the notice of
termination described in Section 1 above or (ii) terminates the employment of
the Executive at any time after the Employment Period (as the same may be
extended), the Company shall pay to the Executive promptly upon the termination
of employment an amount equal to 50% of the Executive's then applicable Base
Salary, less the amounts required to be withheld as described in Section 3(a).
No amount shall be payable in the event the Executive terminates employment
hereunder.
4. Reasonable Expenses
The Company will reimburse the Executive for all reasonable business
expenses, including travel and lodging, which are properly incurred by him in
the performance of his duties hereunder, upon presentation of proper vouchers
therefor and in accordance with written policies established from time to time
by the Company for such reimbursements.
5. Executive Covenants
The Executive acknowledges that as a result of the services to be rendered
to the Company hereunder, the Executive will be brought into close contact with
many confidential affairs of the Company, its subsidiaries and affiliates, not
readily available to the public. The Executive further acknowledges that the
services to be performed under this Agreement are of a special, unique, unusual,
extraordinary and intellectual character; that the business of the Company is
international in scope; that its goods and services are marketed throughout the
world; and that the Company competes with other organizations that are or could
be located in nearly any part of the United States or elsewhere. In recognition
of the foregoing:
(a) Except with the consent of or as directed by the Company, or except if
compelled by judicial or legal authorities, the Executive will keep confidential
and not divulge to any other person, during the Employment Period or thereafter,
any Confidential Information and Trade Secrets regarding the Company, its
subsidiaries and affiliates, except for information which is or
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<PAGE> 4
becomes publicly available other than as a result of disclosure by the
Executive. For the purposes of this Agreement "Confidential Information and
Trade Secrets" means information which is secret to the Company, its
subsidiaries and affiliates. It may include, but is not limited to, information
relating to new and future concepts and business of the Company, its
subsidiaries and affiliates, in the form of memoranda, reports, computer
software and data banks, customer lists, employee lists, books, records,
financial statements, manuals, papers, contracts and strategic plans. As a
guide, the Executive is to consider information originated, owned, controlled or
possessed by the Company, its subsidiaries or affiliates which is not disclosed
in printed publications stated to be available for distribution outside the
Company, its subsidiaries and affiliates as being secret and confidential. In
instances where doubt does or should reasonably be understood to exist in the
Executive's mind as to whether information is secret and confidential to the
Company, its subsidiaries and affiliates, the Executive agrees to request an
opinion, in writing, from the Company.
(b) All papers, books and records of every kind and description relating
to the business and affairs of the Company, its subsidiaries and affiliates,
whether or not prepared by the Executive, and all property owned by the Company,
its subsidiaries and affiliates shall be the sole and exclusive property of the
Company, and the Executive shall surrender them to the Company, at any time upon
request, during or after the Employment Period.
(c) During the Employment Period and during any Severance Period (as
hereinafter defined), the Executive will not, without the prior written consent
of the Company, compete, directly or indirectly, with the Company, its
subsidiaries and affiliates or participate as a director, officer, employee,
agent, representative, stockholder, or partner, or have any direct or indirect
financial interest as a creditor, in any business which directly or indirectly
competes with the Company its subsidiaries and affiliates; provided, however,
that this paragraph (c) shall not restrict the Executive from holding up to 5%
of the publicly traded securities of any entity.
(d) During the Employment Period and during any Severance Period (as
hereinafter defined), the Executive shall not either for his own account or for
any person, firm or company (i) solicit any customers of the Company, its
subsidiaries and affiliates or (ii) solicit or endeavor to cause any employee of
the Company, its subsidiaries and affiliates to leave his employment or induce
or attempt to induce any such employee to breach any employment agreement with
the Company, its subsidiaries and affiliates, or otherwise interfere with the
employment of any employee by the Company, its subsidiaries and affiliates.
(e) Without limiting any other provision of this Agreement, the Executive
hereby agrees to be bound by and to comply with any obligations known to the
Executive and imposed on the Company, its subsidiaries and affiliates, by law,
rule, regulation, ordinance, order, decree, instrument, agreement, understanding
or other restriction of any kind.
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<PAGE> 5
(f) The Executive hereby agrees to provide reasonable cooperation to the
Company, its subsidiaries and affiliates during the Employment Period and any
Severance Period (as hereinafter defined) in any litigation between the Company,
its subsidiaries and affiliates, and third parties.
(g) The parties agree that the Company shall, in addition to other
remedies provided by law, have the right and remedy to have the provisions of
this Section 5 specifically enforced by any court having equity jurisdiction, it
being acknowledged and agreed that any breach or threatened breach of the
provisions of this Section 5 will cause irreparable injury to the Company and
that money damages will not provide an adequate remedy to the Company. Nothing
contained herein shall be construed as prohibiting the Company from pursuing any
other remedies available to it for such breach or threatened breach, including
the recovery of damages from the Executive.
(i) although the restrictions contained in Sections 5(a), (b), (c) and
(d) above are considered by the parties hereto to be fair and
reasonable in the circumstances, it is recognized that restrictions
of such nature may fail for technical reasons, and accordingly it is
hereby agreed that if any of such restrictions shall be adjudged to
be void or unenforceable for whatever reason, but would be valid if
part of the wording thereof were deleted, or the period thereof
reduced or the area dealt with thereby reduced in scope, the
restrictions contained in Sections 5(a), (b), (c) and (d) shall be
enforced to the maximum extent permitted by law, and the parties
consent and agree that such scope or wording may be accordingly
judicially modified in any proceeding brought to enforce such
restrictions.
(ii) Notwithstanding that the Executive's employment hereunder may expire
or be terminated as provided in Section 1 or Section 6 hereof, this
Agreement shall continue in full force and effect insofar as is
necessary to enforce the covenants and agreements of the Executive
contained in this Section 5.
6. Termination of Employment Period and Severance
(a) Termination by the Company without Cause. If for any reason other than
the provisions of Section 6(d) hereof, the Company wishes to terminate the
Employment Period and the Executive's employment hereunder, the Company shall
give a written notice to the Executive of such termination stating that a
severance period (the "Severance Period") will commence upon receipt of such
notice by the Executive. The Severance Period shall be for the balance of the
then current term of this Agreement or, unless the Executive shall have given
the notice described in Section 1, twelve months, whichever is greater. Upon
receipt of such notice by the Executive, the Employment Period shall terminate
(and the Executive shall have no further duties under Section 2 hereof). During
the entire Severance Period, the Executive shall continue to receive all salary,
compensation, payments and benefits under Sections 3(a) and 3(d) of this
Agreement (including, to the extent allowable under applicable law, the accrual
of additional service credits or Company contributions under pension and thrift
plans, and any benefits under the Company's
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<PAGE> 6
long term disability and life insurance plans) available upon the date of the
commencement of the Severance Period as if the Employment Period continued
throughout the Severance Period. The Executive agrees that the payments
described in this Section 6(a) shall be full and adequate compensation to the
Executive for all damages the Executive may suffer as a result of the
termination of his employment pursuant to this Section 6(a), and hereby waives
and releases the Company from any and all obligations or liabilities to the
Executive arising from or in connection with the Executive's employment with the
Company or the termination and claims the Executive may have under federal,
state or local statutes, regulations or ordinances or under any common law
principles or breach of contract or the covenant of good faith and fair dealing,
defamation, wrongful discharge, intentional infliction of emotional distress or
promissory estoppel; provided, however, that any rights and benefits the
Executive may have under the employee benefit plans and programs of the Company
in which the Executive is a participant, shall be determined in accordance with
the terms and provisions of such plans and programs.
(b) Death. If the Executive dies during the Employment Period, the
Severance Period or during the period when payments are being made pursuant to
Section 6(c), the Employment Period shall automatically terminate and the
obligations of the parties shall terminate effective the date of death.
(c) Disability. If the Executive becomes Disabled (as hereinafter defined)
during the Employment Period, the Company shall be entitled to terminate his
employment and the Employment Period upon written notice to the Executive from
the Company. In the event of such termination, the Executive shall be released
from any duties hereunder, and the Severance Period described in Section 6(a)
hereof shall immediately commence. The duties, rights, benefits and other
matters during the Severance Period shall be as set forth in Section 6(a), and
the Executive (and his or her heirs, beneficiaries and estate) shall be entitled
to all compensation, payments and benefits during the Severance Period without
any offset or reduction except by such amounts, if any, as are paid to the
Executive in lieu of compensation for services under any applicable insurance
policies of the Company (or by the Company under any self insurance plan). For
purposes of this Agreement, "Disabled" shall mean mental or physical impairment
or incapacity rendering the Executive substantially unable to perform his duties
under this Agreement for a period of longer than 180 days out of any 360-day
period during the Employment Period. A determination of whether the Executive is
Disabled shall be made by the Company in its sole discretion upon its own
initiative or upon request of the Executive or a person acting on his behalf. If
the Executive becomes Disabled during a Severance Period, he shall continue to
receive the compensation, payments and benefits of this Agreement during the
entire Severance Period without any offset or reduction, except by such amounts,
if any, as are paid to the Executive in lieu of compensation for services under
any applicable insurance policies of the Company (or by the Company under any
self insurance plan).
(d) Termination by the Company for Cause. The Company by written notice to
the Executive, shall have the right to terminate the Employment Period in the
event of any of the following (which shall constitute "Cause"):
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<PAGE> 7
(i) The Executive's breach in respect of his duties under this
Agreement, such breach continuing unremedied for thirty days after
written notice thereof from the Company to the Executive specifying
the acts constituting the breach and requesting that they be
remedied; or
(ii) Any misconduct, dishonesty, insubordination or other act by the
Executive materially detrimental to the goodwill of the Company, or
materially damaging to the Company's, its subsidiaries' and/or
affiliates' relationships with their customers or employees,
including without limitation, the Executive having been convicted of
a felony during the Employment Period, provided such conviction has
resulted or is likely to result in substantial detriment to the
Company, its subsidiaries and/or affiliates.
Any termination under this Section 6(d) shall be without damages or
liability to the Company for compensation and other benefits which would have
accrued to the Executive hereunder after termination, but all compensation,
benefits and reimbursements accrued through the date of termination shall be
paid to the Executive at the times normally paid by the Company. In this event,
there shall be no Severance Period.
(e) Voluntary Termination by the Executive. In the event of voluntary
termination of employment by the Executive, the terms of the last paragraph of
Section 6(d) shall apply, except in the event that such voluntary termination
occurs within ninety days of (i) a relocation of the OSM's offices (or the
location of the performance of work by the Executive) beyond a fifty mile radius
of New York City, (ii) a material diminution of the Executive's duties and
responsibilities as provided in Section 2, or (iii) a reduction in Base Salary
in which cases the provisions of Section 6(a) shall apply.
7. Conflicting Agreements
The Executive hereby represents and warrants to the Company that he is
entering into this Agreement, and the obligations and duties undertaken by him
hereunder, will not conflict with, constitute a breach of, or otherwise violate
the terms of any other employment of other agreement to which he is a party.
8. Assignment
(a) By the Executive. This Agreement, any part thereof and any rights
(including compensation) or obligation hereunder shall not be assigned, pledged,
alienated, sold, attached, charged, encumbered or transferred in any way by the
Executive and any attempt to do so shall be void except that (i) the Executive
may designate any of his beneficiaries to receive (and such beneficiaries shall
receive) any compensation, payments or other benefits payable hereunder upon his
death, (ii) any assignment by will or by laws of descent and distribution or
following the
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<PAGE> 8
occurrence of the Executive's legal incompetence is permitted and (iii) the
Executive's executors, administrators or other legal representatives may assign
any rights hereunder to the person or persons entitled thereto.
(b) By the Company. Provided the substance of the Executive's duties set
forth in Section 2 shall not change, and provided that the Executive's
compensation as set forth in Section 3 shall not be adversely affected, the
Company may assign or otherwise transfer this Agreement to any succeeding entity
without limitation, which entity shall assume all rights and obligations
hereunder.
9. Notices
All notices, requests, demands and other communications hereunder must be
in writing and shall be deemed to have been duly given if delivered by hand or
mailed within the continental United States by first class, registered mail,
return receipt requested, or sent by overnight mail, such as Federal Express,
postage and registry fees prepaid, to the applicable party and addressed as
follows:
(a) if to the Company:
President
Marine Transport Lines, Inc.
1200 Harbor Boulevard
Weehawken, NJ 07087
(b) if to the Executive:
67-11 166th Street
Flushing, NY 11365
Addresses may be changed by notice in writing signed by the addressee.
10. Miscellaneous
(a) If any provision or portion of this Agreement shall, for any reason,
be adjudged by any court of competent jurisdiction to be invalid or
unenforceable, such judgment shall not affect, impair or invalidate the
remainder of this Agreement but shall be confined in its operation to the
jurisdiction in which made and to the provisions of this Agreement directly
involved in the controversy in which such judgment shall have been rendered.
(b) No course of dealing and no delay on the part of any parry hereto in
exercising any right, power or remedy under or relating to this Agreement shall
operate as a waiver thereof or otherwise prejudice such party's rights, powers
and remedies. No single or partial exercise of any
-8-
<PAGE> 9
rights, powers or remedies under or relating to this Agreement shall preclude
any other or further exercise thereof or the exercise of any other right, power
or remedy.
(c) This Agreement may be executed by the parties hereto in counterparts,
each of which shall be deemed to be an original, but all such counterparts shall
together constitute one and the same instrument, and all signatures need not
appear on any one counterpart.
(d) (i) Any other agreement, rule or regulation to the contrary,
notwithstanding, the parties hereby agree that any action or proceeding relating
to this Agreement or its subject matter shall be brought in a state or federal
court situated in the County of New York, State of New York and such court shall
have exclusive jurisdiction thereof; provided, however, any court with
jurisdiction over the parties may, at the election of Company, have jurisdiction
over any action brought with regard to or any action brought to enforce any
violation or claimed violation of Section 5. The parties each hereby
specifically submit to the jurisdiction of such court and further agree that
service of process may be made within or without the State of New York by giving
notice in the manner provided in Section 9. Each party further agrees to waive
and hereby waives any right to a trial by jury, and to any objection it or he
may have in any such action, based on lack of personal jurisdiction or venue, or
inconvenient forum.
(ii) In any such action or proceeding, the prevailing party shall be
entitled to recover from the other party reasonable costs, including attorney's
fees and expenses. In any action or proceeding before a court or other tribunal
relating to this Agreement with respect to which damages are an adequate remedy,
the parties agree that no damages other than compensatory damages shall be
sought or claimed by either party and each party waives any claim, right or
entitlement to punitive, exemplary, or consequential damages, or any statutory
damages, or any other damages of any kind or nature in excess of compensatory
damages, and any court or arbitration tribunal is specifically divested of any
power to award any damages in the nature of punitive, exemplary, or
consequential damages, or any statutory damages, or any other damages of any
kind or nature in excess of compensatory damages.
(e) All payments required to be made by the Company hereunder to the
Executive or his beneficiaries, including his estate, shall be subject to
withholding and deductions as the Company may reasonably determine it should
withhold or deduct pursuant to any applicable law or regulation. In lieu of
withholding or deducting such amounts in whole or in part, the Company may, in
its sole discretion, accept other provision for payment as permitted by law,
provided it is satisfied in its sole discretion that all requirements of law
affecting its responsibilities to withhold such taxes have been satisfied.
(f) This Agreement embodies the entire understanding, and supersedes all
other oral or written agreements or understandings, between the parties
regarding the subject matter hereof. No change, alteration or modification
hereof may be made except in writing signed by both parties hereto. The headings
in this Agreement are for convenience of reference only and shall not be
considered part of this Agreement or limit or otherwise affect the meaning
hereof. This Agreement and the rights and obligations of the parties hereunder
shall be construed in accordance
-9-
<PAGE> 10
with and governed by the laws of the State of New York (disregarding any choice
of law rules which might look to the laws of any other jurisdiction).
(g) The Executive acknowledges that the terms of this Agreement have been
fully explained to him, that the Executive understands the nature and extent of
the rights and obligations provided under this Agreement, and that the Executive
has been given the opportunity to be represented by legal counsel in the
negotiation and preparation of this Agreement.
(h) Nothing herein contained shall be construed to prevent or limit any
acquisition, consolidation or merger of the Company.
11. Condition Precedent
In the event that the Company does not acquire Marine Transport
Lines, Inc. on or before December 31, 1998, this Agreement shall be null and
void and neither party shall have any rights hereunder.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the day and year first above written.
By
-------------------------------------
William A.G. Hogg
OMI CORP.
By
-------------------------------------
-10-
<PAGE> 1
Exhibit 10.11
AMENDED AND RESTATED
TERM LOAN AND REVOLVING CREDIT FACILITY AGREEMENT
- --------------------------------------------------------------------------------
MARINE TRANSPORT LINES, INC.
Borrower
The Financial Institutions Listed on Schedule 1,
Lenders
and
DEN NORSKE BANK ASA,
Agent
- --------------------------------------------------------------------------------
as of June 17, 1998
<PAGE> 2
INDEX
PAGE
----
SECTION 1 DEFINITIONS...................................................... 1
1.1 Defined Terms........................................ 1
1.2 Construction......................................... 23
1.3 Accounting Terms..................................... 23
SECTION 2 REPRESENTATIONS AND WARRANTIES................................... 23
2.1(a) Due Organization and Power........................... 23
2.1(b) Authorization and Consents........................... 23
2.1(c) Binding Obligations.................................. 24
2.1(d) No Violation......................................... 24
2.1(e) Litigation........................................... 24
2.1(f) No Default........................................... 24
2.1(g) Vessels.............................................. 24
2.1(h) Insurance............................................ 25
2.1(i) Citizenship and Qualification
as Owner.......................................... 25
2.1(j) Financial Information................................ 25
2.1(k) Tax Returns.......................................... 26
2.1(l) ERISA................................................ 26
2.1(m) Chief Executive Office............................... 26
2.1(n) Foreign Trade Control Regulations.................... 26
2.1(o) Equity Ownership..................................... 27
2.1(p) Environmental Matters................................ 27
2.1(q) Pending, Threatened or Potential
Environmental Claims.............................. 28
2.1(r) Compliance with ISM Code............................. 28
2.1(s) Threatened Withdrawal of DOC or SMC.................. 28
2.1(t) Year 2000 Issue...................................... 28
SECTION 3 ADVANCES......................................................... 28
3.1 Purposes............................................. 28
3.2 Term Loan Advances................................... 29
3.3 Revolving Credit Facility Advances................... 29
3.4 Drawdown Notice...................................... 29
3.5 Effect of Drawdown Notices........................... 29
3.6 Notation of Advances................................. 30
i
<PAGE> 3
SECTION 4 CONDITIONS....................................................... 30
4.1 Conditions to Restructure the Term Loan
and Revolving Credit Facility..................... 30
4.2 Further Conditions Precedent......................... 35
4.3 Satisfaction After Drawdown.......................... 36
4.4 Breakfunding Costs................................... 36
SECTION 5 REPAYMENT, PREPAYMENT AND
REDUCTION OF FACILITY............................. 36
5.1 Repayment of Term Loan............................... 36
5.2 Revolving Credit Facility............................ 36
5.3 Voluntary Prepayment of Term Loan.................... 37
5.4 Mandatory Prepayment of Term Loan.................... 37
5.5 Prepay Term Loans Pro Rata........................... 37
5.6 Application of Prepayments........................... 37
5.7 Voluntary Reduction of Revolving
Credit Facility................................... 37
SECTION 6 INTEREST AND RATE................................................ 38
6.1 Term Loan Applicable Rate
and Default Rate.................................. 38
6.2 Revolving Credit Facility Applicable
Rate and Default Rate............................. 38
6.3 Determination of Applicable Margin................... 38
6.4 Determination of LIBOR............................... 38
6.5 Interest Periods..................................... 39
6.6 Interest Payments.................................... 39
6.7 Payment on Banking Day............................... 39
6.8 Calculation of Interest.............................. 39
SECTION 7 PAYMENTS......................................................... 39
7.1 Place of Payments, No Set Off........................ 39
7.2 Tax Credits.......................................... 40
SECTION 8 EVENTS OF DEFAULT................................................ 40
8.1(a) Non-Payment of Principal............................. 40
8.1(b) Non-Payment of Interest or
Other Amounts..................................... 40
8.1(c) Representations...................................... 40
8.1(d) Covenants............................................ 40
8.1(e) Indebtedness......................................... 41
ii
<PAGE> 4
8.1(f) Change of Control; Ownership or
Management of Other Security Parties.............. 41
8.1(g) U.S. Citizenship..................................... 41
8.1(h) Bankruptcy........................................... 41
8.1(i) Termination of Operations;
Sale of Assets.................................... 42
8.1(j) Judgments............................................ 42
8.1(k) Inability to Pay Debts............................... 42
8.1(l) Change in Financial Position......................... 42
8.1(m) Relevant Contracts................................... 42
8.1(n) Key Management Agreements............................ 42
8.1(o) Related Credit Agreement; OMI COLUMBIA Loan
Documents and Mortgage Securing OMI Debt............. 42
8.2 Indemnification...................................... 43
8.3 Application of Moneys................................ 43
SECTION 9 COVENANTS........................................................ 44
9.1(A)(i) Performance of Agreements............................ 44
9.1(A)(ii) Notice of Default; Litigation
and Adverse Change................................ 44
9.1(A)(iii) Obtain Consents...................................... 45
9.1(A)(iv) Financial Information................................ 45
9.1(A)(v) U.S. Citizenship; Qualification
to Own Foreign Flag Vessels....................... 46
9.1(A)(vi) Corporate Existence.................................. 46
9.1(A)(vii) Books and Records.................................... 46
9.1(A)(viii) Taxes and Assessments................................ 46
9.1(A)(ix) Inspection........................................... 46
9.1(A)(x) Compliance with Statutes, etc........................ 46
9.1(A)(xi) Environmental Matters................................ 47
9.1(A)(xii) ERISA................................................ 47
9.1(A)(xiii) Vessel Management.................................... 47
9.1(A)(xiv) Cash................................................. 47
9.1(A)(xv) Working Capital...................................... 48
9.1(A)(xvi) Debt Service Coverage Ratio.......................... 48
9.1(A)(xvii) Total Debt to EBITDA................................. 48
9.1(A)(xviii) Brokerage Commissions, etc........................... 48
9.1(A)(xix) Deposit Accounts; Assignment......................... 48
9.1(A)(xx) Proceeds of Marine Car Carriers (MI)................. 49
9.1(A)(xxi) Year 2000 Issue...................................... 49
9.1(A)(xxii) ISM Code Matter...................................... 49
9.1(A)(xxiii) OMI COLUMBIA......................................... 49
9.1(B)(i) Liens................................................ 50
9.1(B)(ii) Loans, Advances and Investments...................... 51
9.1(B)(iii) Indebtedness ........................................ 51
iii
<PAGE> 5
9.1(B)(iv) Permitted Third Party Debt........................... 51
9.1(B)(v) Guarantees, etc...................................... 52
9.1(B)(vi) Changes in Business.................................. 52
9.1(B)(vii) Use of Corporate Funds............................... 52
9.1(B)(viii) Issuance of Shares................................... 52
9.1(B)(ix) Sale of Shares....................................... 52
9.1(B)(x) Sale of Assets....................................... 52
9.1(B)(xi) Capital Expenditures................................. 52
9.1(B)(xii) Changes in Offices or Names.......................... 52
9.1(B)(xiii) Changes in Management................................ 53
9.1(B)(xiv) Consolidation and Merger............................. 53
9.1(B)(xv) Chartering-in of Vessels............................. 53
9.1(B)(xvi) Dividends ........................................ 53
9.1(B)(xvii) Loan From Marine Car Carriers (MI)................... 53
9.2 Vessel Valuations........................................... 53
9.3 Asset Maintenance........................................... 53
9.4 Inspection and Survey Reports............................... 54
SECTION 10 ASSIGNMENT...................................................... 54
SECTION 11 ILLEGALITY, INCREASED COST,
NON-AVAILABILITY, ETC............................... 55
11.1 Illegality ........................................ 55
11.2 Increased Cost....................................... 55
11.3 Nonavailability of Funds............................. 56
11.4 Agent's Certificate Conclusive....................... 56
11.5 Compensation for Losses.............................. 56
SECTION 12 CURRENCY INDEMNITY.............................................. 58
12.1 Currency Conversion.................................. 58
12.2 Change in Exchange Rate.............................. 58
12.3 Additional Debt Due.................................. 58
12.4 Rate of Exchange..................................... 58
SECTION 13 FEES AND EXPENSES............................................... 58
13.1 Commitment Fee....................................... 58
13.2 Facility Fee......................................... 58
13.3 Other Fees........................................... 59
13.4 Expenses............................................. 59
SECTION 14 APPLICABLE LAW, JURISDICTION AND WAIVER......................... 59
14.1 Applicable Law....................................... 59
iv
<PAGE> 6
14.2 Jurisdiction ........................................ 59
14.3 Waiver Of Jury Trial................................. 60
SECTION 15 THE AGENT....................................................... 60
15.1(a) Appointment of Agent................................. 60
15.1(b) Appointment of Security Trustee...................... 60
15.2 Distribution of Payments............................. 61
15.3 Holder of Interest in Note........................... 61
15.4 No Duty to Examine, Etc.............................. 61
15.5 Agent as Lender...................................... 61
15.6(a) Obligations of Agent................................. 61
15.6(b) No Duty to Investigate............................... 61
15.7(a) Discretion of Agent.................................. 61
15.7(b) Instructions of Majority Lenders..................... 61
15.8 Assumption re Event of Default....................... 62
15.9 No Liability of Agent or Lenders..................... 62
15.10 Indemnification of Agent............................. 62
15.11 Consultation with Counsel............................ 63
15.12 Resignation ........................................ 63
15.13 Representations of Lenders........................... 63
15.14 Notification of Event of Default..................... 63
SECTION 16 NOTICES AND DEMANDS............................................. 63
16.1 Notices in Writing................................... 63
16.2 Addresses for Notice................................. 64
16.3 Notices Deemed Received.............................. 64
SECTION 17 MISCELLANEOUS................................................... 64
17.1 Time of Essence...................................... 64
17.2 Unenforceable, etc., Provisions -
Effect............................................ 64
17.3 Indemnification...................................... 65
17.4 References........................................... 65
17.5 Further Assurances................................... 65
17.6 Prior Agreements, Merger............................. 65
17.7 Entire Agreement, Amendments......................... 66
17.8 Headings............................................. 66
CONSENT AND AGREEMENT AND ACCOUNT ASSIGNMENT................................ 67
v
<PAGE> 7
SCHEDULES
1 LENDERS
2 GUARANTORS
3 OTHER SUBSIDIARIES
4 MORTGAGED VESSELS
5 OTHER VESSELS
6 MANAGEMENT AGREEMENTS
7 LITIGATION, SUITS, PROCEEDINGS AND
ENVIRONMENTAL CLAIMS
EXHIBITS
1 AMENDED AND RESTATED TERM LOAN NOTE
2 AMENDED AND RESTATED REVOLVING CREDIT FACILITY NOTE
3 AMENDED AND RESTATED GUARANTY
4 U.S. MORTGAGE
5 U.S. MORTGAGE AMENDMENT
6 LIBERIAN MORTGAGE
7 LIBERIAN MORTGAGE AMENDMENT
8 EARNINGS ASSIGNMENTS
9 INSURANCES ASSIGNMENTS
10 GENERAL SECURITY AGREEMENT
11 ASSIGNMENT OF VESSEL MANAGEMENT RECEIVABLES
12 ASSIGNMENT OF JOINT VENTURE PROCEEDS
13 ASSIGNMENT OF GOVERNMENT RECEIVABLES
vi
<PAGE> 8
14 NEGATIVE PLEDGE
15 DRAWDOWN NOTICE
16 COMPLIANCE CERTIFICATE
17 ASSIGNMENT AND ASSUMPTION AGREEMENT
18 WESTHAMPTON INDENTURE
vii
<PAGE> 9
AMENDED AND RESTATED
TERM LOAN AND REVOLVING CREDIT FACILITY AGREEMENT
THIS AMENDED AND RESTATED TERM LOAN AND REVOLVING CREDIT FACILITY
AGREEMENT (this "Agreement") is made as of the day of June, 1998, by and between
(1) MARINE TRANSPORT LINES, INC., a corporation incorporated under the laws of
the State of Delaware with offices at 1200 Harbour Boulevard, 9th Floor,
Weehawken, New Jersey (the "Borrower"), (2) the financial institutions listed on
Schedule 1 hereto (together with their respective successors and assigns
hereinafter called the "Lenders") and (3) DEN NORSKE BANK ASA, acting through
its New York branch, with offices at 200 Park Avenue, New York, New York 10166
(the "Agent") and amends and restates that certain term loan and revolving
credit facility agreement, dated as of July 23, 1996 (the "Original Credit
Agreement"), among the parties.
WITNESSETH THAT:
WHEREAS:
A. Pursuant to the terms and conditions of the Original Credit
Agreement, the Lenders made (1) the Term Loan to the Borrower in respect of
which, as of the date hereof, the principal amount of Twelve Million One Hundred
Thirteen Thousand Dollars ($12,113,000) remains outstanding and (2) the
Revolving Credit Facility available to the Borrower; and
B. The Borrower has requested and the Lender, subject to the terms
and conditions hereof, has agreed to restructure the Term Loan and the Revolving
Credit Facility
NOW, THEREFORE, in consideration of the premises and of other good
and valuable consideration, the receipt and adequacy whereof are hereby
acknowledged, the parties agree as follows:
1. DEFINITIONS
1.1 Defined Terms. The words and expressions specified in this Agreement shall,
except where the context otherwise requires, have the meanings attributed to
them below:
"Acceptable Accounting Firm" Ernst & Young, or such other
recognized international accounting
firm as shall be approved by the
Agent, such approval not to be
unreasonably withheld;
"Acquisition Agreement" that certain acquisition agreement,
dated as of September 15, 1997,
among OMI Corp.,
<PAGE> 10
Universal Bulk Carriers, Inc., the
Borrower and the persons set forth
on Exhibit A attached thereto,
together with any and all
amendments, modifications or
waivers of provisions thereof and
supplements thereto;
"Advance" each Term Loan Advance and each
Revolving Credit Facility Advance;
"Affiliate" as to any Person, any other Person
that, directly or indirectly,
controls or is controlled by or is
under common control with such
Person. (For purposes of this
definition, the term "control",
including the terms "controlling",
"controlled by" and "under common
control with", of a Person means
the possession, direct or indirect,
of the power to vote 5% or more of
the securities having ordinary
voting power for the election of
directors of such Person or to
direct or cause the direction of
the management and policies of such
Person, whether through the
ownership of voting securities, by
contract or otherwise);
"AMELINA" that certain 10,922 dwt Liberian
flag ammonia tanker named AMELINA,
Official No. 2015 documented under
the laws and flag of the Republic
of Liberia in the name of Oswego
Chemical Carriers Corporation;
"Argosy" Argosy Ventures Ltd., a Delaware
not-for-profit corporation
"Assignment and Assumption the Assignment and Assumption
Agreement(s)" Agreement(s) executed pursuant to
Section 10 substantially in the
form of Exhibit 17;
"Assignment Notices" notices for the (a) Earnings
Assignments substantially in the
form set out in Exhibit 1 thereto
or in such other form as the Agent
may agree;
2
<PAGE> 11
(b) Insurances Assignments
substantially in the form set out
in Exhibit 3 thereto or in such
other form as the Agent may agree;
(c) Assignments of Vessel
Management Receivables
substantially in the form set out
in Exhibit 1 thereto or in such
other form as the Agent may agree;
(d) Assignment of Joint Venture
Proceeds substantially in the form
set out in Exhibit 1 thereto or in
such other form as the Agent may
agree; and
(e) Assignments of Government
Receivables substantially in the
forms set out in Exhibits 1 and 2
thereto or in such other form as
the Agent may agree;
"Assignment of Government the assignments of receivables
Receivables" payable to the Borrower or Intrepid
Ship Management, Inc., as the case
may be, for their respective
contracts with MARAD executed or to
be executed by the Borrower in
favor of the Agent pursuant to, in
the case of the Borrower, the
Original Credit Agreement and, in
the case of Intrepid Ship
Management, Inc., Section 4.1 of
this Agreement, substantially in
the form of Exhibit 13 or in such
other form as the Agent may agree;
"Assignment of Joint Venture the assignment of those proceeds to
Proceeds" which Marine Car Carriers (Del) is
entitled based upon its shares in
Marine Car Carriers (MI) to be
executed by Marine Car Carriers
(Del) in favor of the Agent
pursuant to Section 4.1 of this
Agreement in the form set out in
Exhibit 12 or in such other form as
the Agent may agree;
"Assignment of Vessel the assignments executed or to be
Management Receivables" executed by Marine Transport
Management and Intrepid Ship
Management, Inc. in favor of the
Agent of
3
<PAGE> 12
all right, title and interest of
such Guarantors in their respective
receivables pursuant to, in the
case of Marine Transport
Management, the Original Credit
Agreement and, in the case of
Intrepid Ship Management, Inc.,
Section 4.1 of this Agreement,
substantially in the form set out
in Exhibit 11 or in such other form
as the Agent may require;
"Assignments" the Earnings Assignments, the
Insurances Assignments, the
Assignments of Government
Receivables, the General Security
Agreements, the Assignments of
Vessel Management Receivables and
the Assignment of Joint Venture
Proceeds;
"Banking Day(s)" day(s) on which banks are open for
the transaction of business of the
nature required by this Agreement
or any other documents executed in
connection herewith in London,
England and New York, New York;
"CALINA" that certain 15,661 dwt Liberian
flag ammonia tanker named CALINA,
Official No. 2774 documented under
the laws and flag of the Republic
of Liberia in the name of Oswego
Chemical Carriers Corporation;
"Cash Equivalents" (i) securities issued or directly
and fully guaranteed or insured by
the United States of America or any
agency or instrumentality thereof
(provided that the full faith and
credit of the United States of
America is pledged in support
thereof) having maturities of not
more than ninety (90) days from the
date of acquisition, (ii) time
deposits and certificates of
deposit, denominated in Dollars, of
the Agent, of any Lender or of any
commercial bank of recognized
standing organized under the laws
of any country which is a member of
the Organization of Economic
Cooperation and Development or any
governmental subdivision or taxing
authority of any such
4
<PAGE> 13
country having capital and surplus
in excess of Five Hundred Million
Dollars ($500,000,000) or its
equivalent in such country's
currency, (any such commercial
bank, a "Qualified Bank"), (iii)
repurchase obligations with a term
of not more than seven (7) days for
underlying securities of the types
described in (i) above entered into
with the Agent, any Lender or any
Qualified Bank, and (iv) commercial
paper, denominated in Dollars,
issued by the Agent, any Lender or
by the parent corporation of any
Qualified Bank, and commercial
paper rated at least A-1 or the
equivalent thereof by Standard &
Poor's Corporation or at least P-1
or the equivalent thereof by
Moody's Investor Services, Inc.,
and in each case maturing within
ninety (90) days after the date of
acquisition;
"Code" the Internal Revenue Code of 1986,
as amended, and any successor
statute and regulations promulgated
thereunder;
"Collateral Vessel Value" the aggregate, as calculated from
time to time in the manner provided
in Sections 9.2 and 9.3, of (a) the
FMVs of each of the Vessels then
mortgaged to secure obligations
owed to the Lenders under or in
connection with either this
Agreement or the Related Credit
Agreement and (b) the value of the
OMI COLUMBIA;
"Commitment(s)" that portion of the Term Loan and
the Revolving Credit Facility set
out opposite a Lender's name in
Schedule 1 hereto or, as the case
may be, in any relevant Assignment
and Assumption Agreement, as
reduced from time to time pursuant
to the terms of this Agreement;
"Compliance Certificate" a certificate of the Chief
Financial Officer of Marine
Transport Corporation certifying
the compliance with all of the
covenants of the Borrower and
Marine Transport
5
<PAGE> 14
Corporation contained herein,
delivered to the Agent from time to
time pursuant to Section 9.1(A)(iv)
hereof in the form set out in
Exhibit 16, or in such other form
as the Agent may require;
"Consents and Agreements" such third party consents as may be
required under any contract to
which a Security Party is a party
in order for a Security Party to
grant a security interest pursuant
to any Security Document;
"COURIER" that certain 1977 built 35,662 dwt
product tanker named COURIER,
Official No. 578746, documented
under the laws and flag of the
United States in the name of
Courier Transport, Inc.;
"DOC" means a document of compliance
issued to an Operator in accordance
with rule 13 of the ISM Code;
"Dollars" and the sign "$" the legal currency, at any relevant
time hereunder, of the United
States of America and, for all
payments hereunder, in same day
funds settled through the New York
Clearing House Interbank Payments
system (or such other Dollar funds
as may be determined by the Agent
to be customary for the settlement
in New York City of banking
transactions of the type herein
involved);
"Drawdown Date" each Term Loan Drawdown Date and
each Revolving Credit Facility
Drawdown Date;
"Drawdown Notice" the meaning ascribed thereto in
Section 3.4;
"Earnings Assignments" assignments of the earnings of the
Mortgaged Vessels executed or to be
executed by the appropriate
Shipowning Guarantor or OMI
Challenger Transport, in favor of
the Agent pursuant to, in the case
of Existing Guarantors, the
Original Credit Agreement as
amended and restated
6
<PAGE> 15
hereby and, in the case of New
Guarantors, Section 4.1
substantially in the form set out
in Exhibit 8 or in such other form
as the Agent may require;
"EBITDA" means, on a consolidated basis,
Marine Transport Corporation's
earnings before interest, taxes,
depreciation and amortization
(calculated in accordance with
GAAP) less income from 50% or less,
directly or indirectly, owned
affiliates, based on the preceding
twelve (12) months actual operating
income (for purposes of calculating
EBITDA for the period commencing
from the date hereof and ending on
the first anniversary of the date
hereof, the results for each
quarterly reporting period shall be
annualized);
"Environmental Affiliate" any person or entity liable for
Environmental Claims, which claims
any Security Party may have assumed
by contract or operation of law;
"Environmental Approvals" the meaning ascribed thereto in
Section 2.1(p);
"Environmental Claim" the meaning ascribed thereto in
Section 2.1(p);
"Environmental Laws" the meaning ascribed thereto in
Section 2.1(p);
"ERISA" the Employee Retirement Income
Security Act of 1974, as amended;
"ERISA Affiliate" a trade or business (whether or not
incorporated) which is under common
control with, or part of a
controlled group of corporations
with, any Security Party within the
meaning of Sections 414(b), (c),
(m) or (o) of the Code;
"Events of Default" any of the events set out in
Section 8.1;
7
<PAGE> 16
"Existing Guarantors" each of the companies listed on
Part A of Schedule 2;
"Final Payment Date" June ____, 2003, or if such day is
not a Banking Day, the next
following Banking Day unless such
next following Banking Day falls in
the following month, in which case
the Final Payment Date shall be the
immediately preceding Banking Day;
"Financing Documents" this Agreement, the Notes, the
Guaranty and the Security
Documents;
"FMV" with respect to a Vessel, fair
market value as determined in
accordance with Section 9.2 hereof;
"FNBM" The First National Bank of
Maryland, a bank organized and
existing under the laws of the
United States of America;
"Former Lenders" FNBM, Harrowston and Wolfson;
"Former Lenders Indebtedness: the indebtedness of the Borrower
and/or its Affiliates formerly owed
to the Former Lenders in the
aggregate principal amount of
Twelve Million Five Hundred Twenty
Eight Thousand Dollars
($12,528,000), plus accrued and
unpaid interest thereon;
"GAAP" the meaning ascribed thereto in
Section 1.3;
"General Security Agreements" general security agreements to be
executed by each of the New
Guarantors which does not own a
Mortgaged Vessel in favor of the
Agent pursuant to Section 4.1
substantially in the form set out
in Exhibit 10 or in such other form
as the Agent may require;
"Guarantor(s)" each of the Existing Guarantors and
the New Guarantors;
"Guaranty" the amended and restated guaranty
of the obligations of the Borrower
under this
8
<PAGE> 17
Agreement and under the Notes to be
executed by each Guarantor in favor
of the Agent pursuant to Section
4.l substantially in the form set
out in Exhibit 3 or in such other
form as the Agent may require;
"Harrowston" Harrowston Corporation, a company
organized under the laws of Canada;
"Indebtedness" for any Person at any date of
determination (without
duplication), all (i) indebtedness
of such Person for borrowed money,
(ii) obligations of such Person
evidenced by bonds, debentures,
notes or other similar instruments,
(iii) obligations of such Person
arising from letters of credit or
other similar instruments
(including reimbursement
obligations with respect thereto),
(iv) except trade payables,
obligations of such Person to pay
the deferred and unpaid purchase
price of property or services,
which purchase price is due more
than six (6) months after the date
of placing such property in service
or taking delivery thereof or the
completion of such services, (v)
obligations on account of principal
of such Person as lessee under
capitalized leases, (vi)
indebtedness of other Persons
secured by a lien on any asset of
such Person, whether or not such
indebtedness is assumed by such
Person; provided that the amount of
such indebtedness shall be the
lesser of (a) the fair market value
of such asset at such date of
determination and (b) the amount of
such indebtedness, and (vii)
indebtedness of other Persons
guaranteed by such Person to the
extent such indebtedness is so
guaranteed. The amount of
Indebtedness of any Person at any
date shall be the outstanding
balance at such date of all
unconditional obligations as
described above and, with respect
to contingent obligations, the
maximum liability upon the
occurrence of the contingency
giving rise to the obligation,
9
<PAGE> 18
provided that the amount
outstanding at any time of any
indebtedness issued with original
issue discount is the face amount
of such indebtedness less the
remaining unamortized portion of
the original issue discount of such
indebtedness at such time as
determined in conformity with GAAP;
and provided further that
Indebtedness shall not include any
liability for federal, state, local
or other taxes;
"Insurances Assignments" assignments of the insurances of
the Mortgaged Vessels to be
executed by the appropriate
Shipowning Guarantor in favor of
the Agent or the Westhampton
Trustee, as the case may be,
pursuant to in the case of Existing
Guarantors, the Original Credit
Agreement as amended and restated
hereby and, in the case of the New
Guarantors, Section 4.1
substantially in the form set out
in Exhibit 9 or in such other form
as the Agent may require;
"Interest Notice" a notice delivered to the Agent
pursuant to Section 6.5 specifying
the duration of any relevant
Interest Period;
"Interest Period(s)" period(s) of one (1), two (2),
three (3) or six (6) months
selected by the Borrower or such
other period(s) as may be agreed
between the Borrower and the
Lenders;
"Intrepid Ship Management, Inc." Intrepid Ship Management, Inc., a
corporation organized and existing
under the laws of the State of
Delaware;
"ISM Code" means the International Safety
Management Code for the Safe
Operating of Ships and for
Pollution Prevention constituted
pursuant to Resolution A.741(18)
of the International Maritime
Organization and incorporated into
the Safety of Life at Sea
Convention including any amendments
or extensions thereto and any
regulation issued pursuant thereto;
10
<PAGE> 19
"Key Management Agreements" a) that certain vessel operating
agreement between Marine Transport
Management and Union Carbide
Corporation, dated as of January 1,
1996, for the United States flag
vessel CHEMICAL PIONEER (Official
No. 661060) and any renewals or
extensions thereof,
b) that certain operating
agreement, dated December 18, 1979
between Marine Alaska and Marine
Transport Management, relating to
the United States flag vessel B.T.
ALASKA (Official No. 590208) and
any renewals or extensions thereof,
c) that certain vessel management
agreement between .Marine Transport
Corporation and OMI Challenger
Transport, dated as of January 29,
1997, as amended, for the OMI
COLUMBIA and any renewals or
extensions thereof ,
d) that certain contract No.
DTMA98-98-C-00004, awarded June 12,
1998, between the Borrower and
MARAD relating to the United States
flag vessels CAPE COD and CAPE
CHALMERS and any renewals or
extensions thereof,
e) that certain contract No.
DTMA98-98-C-00009, awarded June 12,
1998, between the Borrower and
MARAD relating to the United States
flag vessels CAPE EDMONT and CAPE
DUCATO and any renewals or
extensions thereof,
f) that certain contract No.
DTMA98-98-C-00010, awarded June 12,
1998, between the Borrower and
MARAD relating to the United States
flag vessels CAPE DECISION and CAPE
DOUGLAS and any renewals or
extensions thereof,
11
<PAGE> 20
g) that certain contract No.
DTMA98-98-C-00011, awarded June 12,
1998, between the Borrower and
MARAD relating to the United States
flag vessels CAPE DIAMOND, and CAPE
DOMINGO and any renewals or
extensions thereof, and
h) that certain contract NO:
DTMA98-98-C-00033, awarded June 12,
1998, between the Borrower and
MARAD relating to the United States
flag vessels CAPE BON and NORTHERN
LIGHT and any renewals or
extensions thereof;
"Liberian Mortgages" those first preferred Liberian ship
mortgages on the each Mortgaged
Vessel registered under the laws
and flag of the Republic of Liberia
to be executed by the appropriate
Shipowning Guarantor in favor of
the Agent pursuant to the Original
Credit Agreement as amended and
restated hereby substantially in
the form set out in Exhibit 6 or in
such other form as the Agent may
require;
"LIBOR" the rate (rounded upward to the
nearest 1/16th of one percent) for
deposits of Dollars for a period
equivalent to the relevant Interest
Period at or about 11:00 a.m.
(London time) on the second London
Banking Day before the first day of
such period as displayed on
Telerate page 3750 (British
Bankers' Association Interest
Settlement Rates) (or such other
page as may replace such page 3750
on such system or on any other
system of the information vendor
for the time being designated by
the British Bankers' Association to
calculate the BBA Interest
Settlement Rate (as defined in the
British Bankers' Association's
Recommended Terms and Conditions
("BBAIRS" terms) dated August
1985)), provided that if on such
date no such rate is so displayed
for the relevant Interest Period,
LIBOR for
12
<PAGE> 21
such period shall be the rate
offered by the Agent for deposits
of Dollars in an amount
approximately equal to the amount
for which LIBOR is to be determined
for a period equivalent to the
relevant Interest Period to prime
banks in the London Interbank
Market at or about 11:00 a.m.
(London time) on the second Banking
Day before the first day of such
period;
"Majority Lenders" Lenders whose Commitments exceed
sixty-seven percent (67%) of the
total Commitments;
"Management Agreements" the management and/or operating
contracts listed on Schedule 6
hereto;
"MARAD" the United States Maritime
Administration:
"Marine Alaska" Marine Alaska, Inc., a Delaware
corporation;
"Marine Car Carriers (Del) " Marine Car Carriers, Inc., a
Delaware corporation;
"Marine Car Carriers (MI) " Marine Car Carriers, Inc. (M.I.), a
Marshall Islands corporation;
"Marine Transport Corporation" Marine Transport Corporation, a
corporation incorporated under the
laws of the State Delaware and
formerly named OMI Corp.;
"Marine Transport Management" Marine Transport Management, Inc.,
a corporation incorporated under
the laws of the State of Delaware;
"Margin" the meaning ascribed thereto in
Section 6.3;
"MARINE CHEMIST" that certain 1970 built 36,526 dwt
chemical tanker named MARINE
CHEMIST, Official No. 529399,
documented under the laws and flag
of the United States in the name of
Marine Chemical Navigation
Corporation;
13
<PAGE> 22
"MARINE DUVAL" that certain 1970 rebuilt 25,131
dwt molten sulphur carrier named
MARINE DUVAL, Official No. 245851,
documented under the laws and flag
of the United States in the name of
Marine Sulphur Shipping
Corporation;
"Materials of Environmental Concern" the meaning ascribed thereto in
Section 2.1(p);
"MCCMI Shareholders Agreement" that certain shareholders agreement
among the shareholders of Marine
Car Carriers (MI) dated as of March
1, 1995;
"Mortgage Amendments" those certain amendments to the
Mortgages to be executed by each of
the Shipowning Guarantors in
respect of its Mortgaged Vessel in
the forms set out in Exhibits 5 and
7 or in such other form as the
Agent may agree;
"Mortgaged Vessels" the Vessels identified on Schedule
4;
"Mortgages" the U.S. Mortgages and the Liberian
Mortgages as amended by the
Mortgage Amendments, and the
Mortgages over the New Mortgaged
Vessels;
"Mortgages Securing the those certain first preferred ship
OMI Debt" mortgages over the Workboats in
favor of the OMI and securing the
OMI Debt;
"Negative Pledge" the negative pledge by OMI
Challenger Transport of any of its
interest in the OMI COLUMBIA or any
Vessel Agreement relating to such
Vessel substantially in the form of
Exhibit 16.
"New Guarantors" each of the companies listed on
Part B of Schedule 2;
"New Mortgaged Vessels" the COURIER, PATRIOT, ROVER, OMS
MAVERICK and OMS TRAVIS;
14
<PAGE> 23
"Notes" the Term Loan Note and the
Revolving Credit Facility Note;
"OMI" OMI Corporation, a corporation
incorporated under the laws of the
Marshall Islands;
"OMI Challenger Transport" OMI Challenger Transport, Inc., a
corporation incorporated under the
laws of the State of Delaware;
"OMI COLUMBIA" that certain 1974 built 138,698 dwt
oil tanker named OMI COLUMBIA,
Official No. 663428, documented
under the laws and flag of the
United States in the name of
Argosy;
"OMI Debt" Indebtedness of Marine Transport
Corporation to OMI in the original
principal amount of Six Million
Four Hundred Forty-Three Thousand
Dollars ($6,443,000);
"OMI COLUMBIA Loan Documents" that certain credit agreement dated
as of January 29, 1997 among
Citicorp North American, Inc., as
agent, the Lenders (as defined
therein), Argosy, et al, and any
documents executed in connection
therewith or securing any
obligation owing thereunder;
"OMS MAVERICK" the United States flag vessel OMS
MAVERICK, Official No. 517406,
registered in the name of OMI
Petrolink Corp.;
"OMS TRAVIS" the United States flag vessel OMS
TRAVIS, Official No. 587445,
registered in the name of OMI
Petrolink Corp.;
"Operator" means any Person approved by the
Agent who is from, time to time
during the Security Period,
concerned with the operation of a
Vessel and falls within the
15
<PAGE> 24
definition of "Company" set out in
rule 1.1.2 of the ISM Code;
"Other Vessels" the vessels identified on Schedule
5;
"PATRIOT" that certain 1976 built 35,662 dwt
product tanker named PATRIOT,
Official No. 571049, documented
under the laws and flag of the
United States in the name of
Patriot Transport, Inc.;
"Permitted Indebtedness" collectively, the Indebtedness
incurred under this Agreement, the
Related Indebtedness, the OMI
Indebtedness and Permitted Third
Party Debt;
"Permitted Liens" the meaning ascribed thereto in
Section 9.1(B)(i);
"Permitted Third Party Debt" Indebtedness, incurred with
recourse to any Security Party or
any other party owned directly or
indirectly by Marine Transport
Corporation and for the purposes of
acquiring new assets or supporting
MARAD vessel management contracts,
not to exceed, in the aggregate,
the principal amount of Twenty
Million Dollars ($20,000,000)
outstanding at any time;
"Person" means any individual, sole
proprietorship, corporation,
partnership (general or limited),
business trust, bank, trust
company, joint venture,
association, joint stock company,
trust or other unincorporated
organization, whether or not a
legal entity, or any government or
agency or political subdivision
thereof;
"Plan" any employee benefit plan covered
by Title IV of ERISA;
"Related Credit Agreement" that certain term loan and
revolving credit agreement of even
date herewith among Marine
Transport Corporation, as borrower,
the Lenders and the Agent, as
16
<PAGE> 25
the same may hereafter be amended
or supplemented;
"Related Indebtedness" the Indebtedness of the Security
Parties owed under and in
connection with the Related Credit
Agreement;
"Related Security Documents" the "Security Documents" as defined
in the Related Credit Agreement;
"Related Term Loan" the "Term Loan" as defined in the
Related Credit Agreement;
"Relevant Contracts" a) that certain time charter, dated
April 31, 1982, of the MARINE DUVAL
to Freeport MacMoran Resource
Partners, Limited Partnership and
any renewals or extensions thereof;
b) the contract of affreightment,
dated as of January 1, 1996, with
Shell Oil Company for the MARINE
CHEMIST and any renewals or
extensions thereof;
c) the contract of affreightment,
dated September 24, 1994, with PPG
Industries, Inc. for the MARINE
CHEMIST and any renewals or
extensions thereof;
d) the contract of affreightment,
dated as of July 1, 1996, with ARCO
Products Company for the MARINE
CHEMIST and any renewals or
extensions thereof;
e) that certain bareboat charter
dated on or about July 29, 1965, of
the CALINA between Oswego Chemical
Carriers Corporation, as owner, and
Oswego Corporation, as charterer
and any renewals or extensions
thereof;
f) that certain time charter, dated
as of March 14, 1978 between Marine
Alaska, Inc. and BP Oil Shipping
Company, USA, for the United States
flag vessel B.T.
17
<PAGE> 26
ALASKA (Official No. 590208) and
any renewals or extensions thereof;
g) that certain time charter, dated
as of June 1, 1994 between OMI
Challenger Transport and BP Oil
Shipping Company, USA for the OMI
COLUMBIA, and
h) that certain time charter, dated
as of January 29, 1997 between
Argosy and OMI Challenger Transport
in respect of the OMI COLUMBIA and
any renewals or extensions thereof;
"Revolving Credit Facility" the sums heretofore advanced and
still outstanding and hereafter to
be advanced by the Lenders to the
Borrower in an aggregate amount not
to exceed at any one time
outstanding One Million Dollars
($1,000,000) pursuant to Section
3.3;
"Revolving Credit Facility Advance" any amount advanced to the Borrower
under the Revolving Credit Facility
on any Revolving Credit Facility
Drawdown Date;
"Revolving Credit Facility Applicable Rate" any rate of interest on the
Revolving Credit Facility Balance
from time to time prescribed by
Section 6.2;
"Revolving Credit Facility Balance" the outstanding Dollar amount of
the Revolving Credit Facility
Advances at any relevant time;
"Revolving Credit Facility Default Rate" has the meaning ascribed thereto in
Section 6.2;
"Revolving Credit Facility Drawdown Date" each date which is a Banking Day
not later than May ____, 2003, upon
which the Borrower has requested
any Revolving Credit Facility
Advance as provided in Section 3.3;
"Revolving Credit Facility Note" the amended and restated promissory
note, amending and restating the
"Revolving Credit Facility Note"
(as defined in the
18
<PAGE> 27
Original Credit Agreement) to be
executed by the Borrower to the
order of the Lenders to evidence
the Revolving Credit Facility
substantially in the form set out
in Exhibit 2 or in such other form
as the Agent may require;
"ROVER" that certain 1977 built 35,662 dwt
product tanker named ROVER,
Official No. 577241, documented
under the laws and flag of the
United States in the name of Rover
Transport, Inc.;
"SAVONETTA" that certain 10,947 dwt Liberian
flag ammonia tanker named
SAVONETTA, Official No. 2129,
documented under the laws and flag
of the Republic of Liberia in the
name of Oswego Chemical Carriers
Corporation;
"Security Documents" the Mortgages, the Assignments, the
Assignment Notices, the Consents
and Agreements, the Negative Pledge
and any other documents that may be
executed as security for the Term
Loan and/or the Revolving Credit
Facility and the Borrower's
obligations arising therefrom;
"Security Parties" the Borrower and each Guarantor;
"Security Period" the period from the initial
Drawdown Date of the initial Term
Loan Advance to the date upon which
all amounts owing under the Term
Loan and the Revolving Credit
Facility and all other amounts due
to the Lenders, the Agent and the
Westhampton Trustee pursuant to the
Financing Documents are prepaid in
full or become repayable and are
repaid in full and no further
Revolving Credit Facility Advances
are available;
"Shipowning Guarantors" each of the Guarantors which owns a
Mortgaged Vessel;
19
<PAGE> 28
"SMC" means a safety management
certificate issued for a Vessel in
accordance with rule 13 of the ISM
Code;
7
"Taxes" any present or future income or
other taxes, levies, duties,
charges, fees, deductions, or
withholdings of any nature now or
hereafter imposed, levied,
collected, withheld or assessed by
any taxing authority whatsoever,
except for taxes on or measured by
the income of the Agent or any
Lender imposed by the Agent's or
such Lender's jurisdiction of
organization, the jurisdiction of
the principal place of business of
the Agent or such Lender, the
United States of America, the State
or City of New York or any
governmental subdivision or taxing
authority of any of them or by any
other jurisdiction or taxing
authority having jurisdiction over
the Agent or such Lender (unless
such jurisdiction is asserted by
reason of the activities of the
Security Parties or any of them);
"Term Loan" the sum advanced by the Lenders
pursuant to the Original Credit
Agreement in the current
outstanding principal amount of
Twelve Million One Hundred Thirteen
Thousand Dollars ($12,113,000);
"Term Loan Advance" the amount advanced to the Borrower
pursuant to Section 3.2 on a Term
Loan Drawdown Date;
"Term Loan Applicable Rate" any rate of interest on the Term
Loan Balance from time to time
applicable pursuant to Section 6.1;
"Term Loan Balance" the Dollar amount of the Term Loan
at any relevant time as reduced by
payments pursuant to the terms of
this Agreement;
"Term Loan Default Rate" has the meaning ascribed thereto in
Section 6.1;
20
<PAGE> 29
"Term Loan Drawdown Date" each date, which is a Banking Day
not later than August 15, 1996,
upon which the Borrower has
requested that a Term Loan Advance
be made available to the Borrower
as provided in Section 3.2;
"Term Loan Note" the amended and restated promissory
note, amending and restating "Term
Loan Note A" (as defined in the
Original Credit Agreement) to be
executed by the Borrower to the
order of the Lenders to evidence
the Term Loan substantially in the
form set out in Exhibit 1 or in
such other form as the Agent may
require;
"Term Loan Payment Dates" (i) September ____, 1998 and (ii)
each of the dates falling at
intervals of three (3) months after
such date up to and including the
Final Payment Date, provided,
however, that if any such day is
not a Banking Day, the next
following Banking Day, unless such
next following Banking Day falls in
the following calendar month, in
which case the relevant Term Loan
Payment Date shall be the
immediately preceding Banking Day;
"Total Debt" the Indebtedness of Marine
Transport Corporation on a
consolidated basis;
"Total Loss" the actual, agreed, arranged or
compromised total loss of any
Vessel;
"Unrestricted Cash and Cash
Equivalents" cash or Cash Equivalents
(excluding, however, undrawn
amounts available under the
Revolving Credit Facility or under
the Related Credit Agreement) which
are free of liens and unencumbered
to any party other than the Agent,
the Lenders and the Westhampton
Trustee in connection herewith;
"U.S. Mortgages" the first preferred United States
ship mortgages on each Mortgaged
Vessel registered under the laws
and flag of the
21
<PAGE> 30
United States of America to be
executed by the appropriate
Shipowning Guarantor in favor of
the Westhampton Trustee pursuant
to, in the case of Existing
Guarantors, the Original Credit
Agreement as amended and restated
and, in the case of New Guarantors,
Section 4.1 substantially in the
form set out in Exhibit 4 or in
such other form as the Agent may
require;
"Vessel Agreements" a) the Relevant Contracts;
b) that certain time charter, dated
January 1, 1985 (as amended), of
the SAVONETTA to Hydro Agri
Ammonia, Inc.;
c) that certain time charter, dated
September 16, 1987 (as amended), of
the CALINA to Hydro Agri Ammonia,
Inc.;
d) that certain time charter, dated
January 1, 1985 (as amended), of
the AMELINA to Hydro Agri Ammonia,
Inc.;
e) the Mortgage(s) securing the OMI
Debt; and
f) the OMI COLUMBIA Loan Documents.
"Vessels" the Mortgaged Vessels and the Other
Vessels;
"Westhampton Trustee" Fleet National Bank, a national
banking association, as trustee
pursuant to the Westhampton
Indenture;
"Westhampton Indenture" the Trust Indenture, dated as of
July 23, 1996, between the Lenders
and the Westhampton Trustee
pursuant to the Original Credit
Agreement substantially in the form
set out in Exhibit 18 or in such
other form as the Agent may
require;
22
<PAGE> 31
"Wolfson" The Wolfson Descendants' 1983
Trust, a grantor trust established
under the laws of New Jersey; and
"Work Boats" the United States flag vessels
OMS HARRIS (Official No. 650997),
OMS NUECES (Official No. 570688),
OMS LIBERTY (Official No. 602050)
and
OMS SHELBY (Official No. 603076)
"Year 2000 Issue" the failure of computer software,
hardware and firmware systems and
equipment containing embedded
computer chips properly to receive,
transmit or in any other way
utilize data and information due to
the occurrence of the year 2000 or
the inclusion of dates on or after
January 1, 2000.
1.2 Construction. Words importing the singular number only shall include the
plural and vice versa. Words importing persons shall include companies, firms,
corporations, partnerships, unincorporated associations and their respective
successors and assigns.
1.3 Accounting Terms. All accounting terms not specifically defined herein shall
be construed in accordance with generally accepted accounting principles as in
effect from time to time in the United States of America consistently applied
("GAAP") and all financial statements submitted pursuant to this Agreement shall
be prepared in accordance with, and all historical financial data submitted
pursuant hereto shall be derived from financial statements prepared in
accordance with, GAAP.
2. REPRESENTATIONS AND WARRANTIES
2.1 In order to induce the Agent and the Lenders to amend and restate the
Original Credit Agreement as provided herein and to continue to maintain the
Term Loan and the availability of the Revolving Credit Facility, the Borrower
hereby represents and warrants to the Agent and the Lenders (which
representations and warranties shall survive the execution and delivery of this
Agreement and the Notes and the making of such advances) that:
(a) Due Organization and Power. Each of the Security Parties is duly
formed and is validly existing in good standing under the laws of its
jurisdiction of incorporation, has full power to carry on its business as now
being conducted and to enter into and perform its obligations under those
Financing Documents to which is or is to be a party pursuant to this Agreement,
and has complied with all (i) statutory, regulatory and other requirements
relative to such business; and (ii) such agreements which if not
23
<PAGE> 32
complied with, could reasonably be expected to have a material adverse effect on
its business, assets or operations, financial or otherwise;
(b) Authorization and Consents. All necessary corporate action has
been taken to authorize, and all necessary consents and authorities have been
obtained and remain in full force and effect to permit, each Security Party to
enter into and perform its obligations under those Financing Documents to which
it is or is to be a party pursuant to this Agreement and, in the case of the
Borrower, to borrow, service and repay the Term Loan and the Revolving Credit
Facility and, as of the date of this Agreement, no further consents or
authorities are necessary for the borrowing, service and repayment of the Term
Loan and/or the Revolving Credit Facility or any part thereof;
(c) Binding Obligations. Each of the Financing Documents constitutes
or, when executed will constitute, the legal, valid and binding obligation of
each Security Party which is a party thereto enforceable against such Security
Party in accordance with its terms, except to the extent that such enforcement
may be limited by applicable bankruptcy, insolvency, reorganization, moratorium
or other laws affecting generally the enforcement of creditors' rights;
(d) No Violation. The execution and delivery of, and the performance
of the provisions of, each Financing Document by each Security Party which is a
party thereto do not, and will not during the Security Period, contravene any
applicable law or regulation existing at the date hereof or any contractual
restriction binding on such Security Party or its certificate of incorporation,
by-laws or equivalent documents;
(e) Litigation. Except as set forth on Schedule 7 hereto, no action,
suit or proceeding is pending or threatened against any Security Party before
any court, board of arbitration or administrative agency which (after taking
into account the benefits of any applicable insurance which can reasonably be
expected to be recovered by the relevant Security Party, as the case may be)
could or might result in any material adverse change in the business or
condition (financial or otherwise) of any thereof;
(f) No Default. No Security Party or Marine Car Carriers (MI) is in
default under any material agreement by which it is bound, or is in default in
respect of any material financial commitment or obligation;
(g) Vessels. As of the date hereof:
(i) each of the Mortgaged Vessels is in the sole and
absolute ownership of the respective Guarantor, as
listed opposite its name in Schedule 4, unencumbered,
save and except for, the respective Mortgage recorded
thereagainst, the relevant Related Security Documents
and the respective Vessel Agreements, and duly
registered in the name of such Guarantor under the
respective flag as set forth in Schedule 4;
24
<PAGE> 33
(ii) each of the Other Vessels is in the sole and absolute
ownership of an Affiliate of the Borrower or, in the
case of OMI COLUMBIA, Argosy, as listed opposite its
name in Schedule 5, unencumbered, save and except for,
the respective Vessel Agreements, and duly registered in
the name of such Affiliate of the Borrower under the
respective flag as set forth in Schedule 5;
(iii) each Vessel will be classed in the highest
classification and rating for vessels of the same age
and type with the respective classification society as
set forth in Schedules 4 and 5 without any material
outstanding recommendations;
(v) each Vessel will be operationally seaworthy and in all
material respects fit for its intended service;
(v) each of the Mortgaged Vessels will be insured in
accordance with the provisions of the governing Mortgage
in favor of the Agent or the Westhampton Trustee, as the
case may be, and the requirements thereof for such
insurances will have been complied with and each of the
Other Vessels will be insured against such risks, in
such amounts and with such insurance companies as would
a reasonably prudent shipowner engaged in the same
trades; and
(vi) each Vessel subject to a charter or other contract of
carriage constituting a Vessel Agreement has been
accepted by its respective charterer and is in service
under such Vessel Agreement;
(h) Insurance. Each of the Security Parties has insured its
properties and assets against such risks and in such amounts as are customary
for companies engaged in similar businesses;
(i) Citizenship and Qualification as Owner. Each Security Party or
other Affiliate of the Borrower owning a United States flag Vessel is a United
States citizen within the meaning of Section 2 of the United States Shipping
Act, 1916, as amended (46 U.S.C. ss.802), qualified to own and operate vessels
in the coastwise trade of the United States of America and each Security Party
or other Affiliate of the Borrower which is the registered owner of a Vessel
registered under a flag other than the United States of America is duly
qualified under the laws of such flag to be the registered owner and operator of
a vessel registered under such flag;
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(j) Financial Information. Except as otherwise disclosed in writing
to the Agent on or prior to the date hereof, all financial statements,
information and other data furnished by the Borrower to the Agent are complete
and correct, and such financial statements have been prepared in accordance with
GAAP and accurately and fairly present the financial condition of the parties
covered thereby as of the respective dates thereof and the results of the
operations thereof for the period or respective periods covered by such
financial statements and since such date or dates, there has been no material
adverse change in the financial condition or results of the operations of any of
such parties and none thereof has any contingent obligations, liabilities for
taxes or other outstanding financial obligations which are material in the
aggregate except as disclosed in (a) such statements, information and data or
(b) in Schedule 7 prepared pursuant to Section 2.1(e) of this Agreement;
(k) Tax Returns. Except as previously advised to the Lender in
writing, each Security Party has filed all tax returns required to be filed
thereby and has paid all taxes payable thereby which have become due, other than
those (a) not yet delinquent or the nonpayment of which would not have a
material adverse effect on such Security Party; and (b) being contested in good
faith and by appropriate proceedings or other acts and for which adequate
reserves have been set aside on its books;
(l) ERISA. The execution and delivery of this Agreement and the
consummation of the transactions hereunder will not involve any prohibited
transaction within the meaning of ERISA or Section 4975 of the Code and no
condition exists or event or transaction has occurred in connection with any
Plan maintained or contributed to by any Security Party or any ERISA Affiliate
(as such term is hereinafter defined) resulting from the failure of any such
party to comply with ERISA insofar as ERISA applies thereto which is reasonably
likely to result in such Security Party or any ERISA Affiliate incurring any
liability, fine or penalty which individually or in the aggregate would have a
material adverse effect on such Security Party or ERISA Affiliate. As used
herein the term "ERISA Affiliate" means a trade or business (whether or not
incorporated) which is under common control with the Security Party in question
within the meaning of Sections 414(b), (c), (m) or (o) of the Code. Prior to the
date hereof, the Borrower has delivered to the Agent a list of all the employee
benefit plans to which each Security Party or any ERISA Affiliate is a "party in
interest" (within the meaning of Section 3(14) of ERISA) or a "disqualified
person" (within the meaning of Section 4975(e)(2) of the Code);
(m) Chief Executive Office. Each Security Party's chief executive
office and chief place of business and the office in which the records relating
to the earnings and other receivables of such Security Party are kept is, and
will continue to be, located at 1200 Harbour Boulevard, 9th Floor, Weehawken,
New Jersey or, in the case of OMI Petrolink Corp. and its Subsidiaries, 4606 FM
1960 West Suite 200, Houston, Texas and. in the case of Intrepid Ship Management
Inc., 370 Seventh Avenue, 11th Floor, New York, New York;
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(n) Foreign Trade Control Regulations. None of the transactions
contemplated herein will violate any of the provisions of the Foreign Assets
Control Regulations of the United States of America (Title 31, Code of Federal
Regulations, Chapter V, Part 500, as amended), any of the provisions of the
Cuban Assets Control Regulations of the United States of America (Title 31, Code
of Federal Regulations, Chapter V, Part 515, as amended), any of the provisions
of the Libyan Assets Control Regulations of the United States of America (Title
31, Code of Federal Regulations, Chapter V, Part 550, as amended), any of the
provisions of the Iraqi Sanctions Regulations (Title 31, Code of Federal
Regulations, Chapter V, Part 575, as amended), any of the provisions of the
Iranian Transactions Regulations of the United States of America (Title 31, Code
of Federal Regulations, Chapter V, part 560, as amended), any of the provisions
of the Federal Republic of Yugoslavia (Serbia and Montenegro) Assets Control
Regulations (Title 31, Code of Federal Regulations, Chapter V, Part 585 as
amended) or any of the provisions of the Regulations of the United States of
America Governing Transactions in Foreign Shipping of Merchandise (Title 31,
Code of Federal Regulations, Chapter V, Part 505, as amended);
(o) Equity Ownership. Each of the Security Parties (other than
Marine Transport Corporation) is a direct or indirect wholly-owned subsidiary of
the Marine Transport Corporation. As of the date hereof, Marine Transport
Corporation will not own any shares of capital stock, partnership interest or
any other direct or indirect equity interest in any corporation, partnership or
other entity except the Security Parties and the companies listed on Schedule 3;
(p) Environmental Matters. Except as heretofore disclosed on
Schedule 7, (i) each of the Security Parties and their Environmental Affiliates
will, when required, be in full compliance with all applicable United States
federal and state, local, foreign and international laws, regulations,
conventions and agreements relating to pollution prevention or protection of
human health or the environment (including, without limitation, ambient air,
surface water, ground water, navigable waters, waters of the contiguous zone,
ocean waters and international waters), including, without limitation, laws,
regulations, conventions and agreements relating to (1) emissions, discharges,
releases or threatened releases of chemicals, pollutants, contaminants, wastes,
toxic substances, hazardous materials, oil, hazardous substances, petroleum and
petroleum products and by-products ("Materials of Environmental Concern"), or
(2) the manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling of Materials of Environmental Concern
("Environmental Laws"); (ii) each of the Security Parties and their
Environmental Affiliates will, when required, have all permits, licenses,
approvals, rulings, variances, exemptions, clearances, consents or other
authorizations required under applicable Environmental Laws ("Environmental
Approvals") and will, when required, be in full compliance with all
Environmental Approvals required to operate their business as then being
conducted; (iii) none of the Security Parties or their Environmental Affiliates
has received any notice of any claim, action, cause of action, investigation or
demand by any person, entity, enterprise or government, or any political
subdivision, intergovernmental body or agency, department or instrumentality
thereof, alleging potential liability for, or a requirement to incur,
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investigatory costs, cleanup costs, response and/or remedial costs (whether
incurred by a governmental entity or otherwise), natural resources damages,
property damages, personal injuries, attorneys' fees and expenses, or fines or
penalties, in each case arising out of, based on or resulting from (1) the
presence, or release or threat of release into the environment, of any Materials
of Environmental Concern at any location, whether or not owned by such person,
or (2) circumstances forming the basis of any violation, or alleged violation,
of any Environmental Law or Environmental Approval ("Environmental Claim")
(other than Environmental Claims that have been fully and finally adjudicated or
otherwise determined and all fines, penalties and other costs, if any, payable
by the Security Parties or any Environmental Affiliate any thereof in respect
thereof have been paid in full or are fully covered by insurance (including
permitted deductibles)); and (iv) there are no circumstances existing as of the
date hereof that may prevent or interfere with such full compliance in the
future;
(q) Pending, Threatened or Potential Environmental Claims. Except as
heretofore disclosed on Schedule 7 there are no (1) Environmental Claims pending
or threatened against any Security Party or its Environmental Affiliates and (2)
past or present actions, activities, circumstances, conditions, events or
incidents, including, without limitation, the release, emission, discharge or
disposal of any Materials of Environmental Concern, that could form the basis of
any Environmental Claim against any Security Party or its Environmental
Affiliates;
(r) Compliance with ISM Code. Each Vessel and any Operator complies
with the requirements of the ISM Code, including (but not limited to) the
maintenance and renewal of valid certificates pursuant thereto;
(s) Threatened Withdrawal of DOC or SMC. There is no threatened or
actual withdrawal of any Operator's DOC or the SMC in respect of any Vessel; and
(t) Year 2000 Issue. The Borrower and each of the guarantors have
reviewed the effect of the Year 2000 Issue on the computer software, hardware
and firmware systems and equipment containing embedded microchips owned or
operated by or for the Borrower and the Guarantors or used or relied upon in the
conduct of their business (including systems and equipment supplied by others or
with which such computer systems of the Borrower and the guarantors interface).
The costs to the Borrower and the Guarantors of any reprogramming required as a
result of the Year 2000 Issue to permit the proper functioning of such systems
and equipment and the proper processing of data, and the testing of such
reprogramming, and of the reasonably foreseeable consequence of the year 2000
Issue to the Borrower or any of the Guarantors (including reprogramming errors
and the failure of systems or equipment supplied by others) are not reasonably
expected to result in a Default or Event of Default or to have a material
adverse effect on the business, assets, operations, prospects or condition
(financial or otherwise) of the Borrower or any of the Guarantors.
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3. ADVANCES
3.1 Purposes. (a) The proceeds of Term Loan shall be applied solely and
exclusively for the purpose of refinancing the Former Lenders Indebtedness
together with a portion of the indebtedness owed to Harrowston and Wolfson and
previously repaid by the Borrower, on a pro rata basis, to Harrowston and
Wolfson in the principal amount of approximately One Million Three Hundred
Thirty-Five Thousand Dollars ($1,335,000)and
(b) the proceeds of Revolving Credit Facility shall be applied
solely and exclusively for working capital purposes of the Borrower and the
Guarantors.
3.2 Term Loan Advances. Each of the Lenders, relying upon each of the
representations and warranties set out in Section 2, hereby agrees with the
Borrower that, subject to and upon the terms of this Agreement, it will on the
Term Loan Drawdown Dates, make the Term Loan Advances available to the Borrower
in an aggregate amount not to exceed, on a pro rata basis, its Commitment for
its respective portion of the Term Loan, provided, however, that (a) the Term
Loan may only be drawn down in a single Advance and (b) to the extent that any
portion of the Term Loan remains undrawn as of 12:00 noon (New York time) on
October 31, 1996, each Lender's commitment to advance such undrawn portion of
its Commitment thereunder shall expire.
3.3 Revolving Credit Facility Advances. Each of the Lenders, relying upon each
of the representations and warranties set out in Section 2, hereby agrees with
the Borrower that, subject to the terms of this Agreement, it will on or before
12:00 noon New York time on the Revolving Credit Facility Drawdown Dates make
the Revolving Credit Facility Advances available to the Borrower in an aggregate
amount not to exceed, on a pro rata basis, its Commitment for its respective
portion of the Revolving Credit Facility, provided, however, that (a) each such
Advance shall be in the minimum amount of One Hundred Thousand Dollars
($100,000) and (b) the maximum aggregate amount of all Revolving Credit Facility
Advances which may be outstanding under this Agreement is One Million Dollars
($1,000,000), as the same may be reduced pursuant to Section 5.7. Within the
limits of the Revolving Credit Facility and upon the conditions herein provided,
the Borrower may from time to time, and on as many occasions as the Borrower may
deem appropriate, borrow pursuant to this Section 3.3, repay pursuant to Section
5.2 and reborrow pursuant to this Section 3.3.
3.4 Drawdown Notice. The Borrower shall not less than three (3) Banking Days
before any Drawdown Date serve a notice (a "Drawdown Notice") on the Agent,
substantially in the form set out in Exhibit 15 or in such other form as the
Agent may agree, which notice shall (a) be in writing addressed to the Agent,
(b) be effective upon receipt by the Agent as aforesaid, provided it is received
before 11:00 a.m. New York time (otherwise it shall be deemed to have been
received on the next Banking Day), (c) specify the Banking Day on which the
relevant Advance is to be drawn down, (d) specify the initial Interest Period,
(e) specify the disbursement instructions and (f) be irrevocable.
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3.5 Effect of Drawdown Notice. Each Drawdown Notice shall be deemed to
constitute a warranty by the Borrower that (a) the representations and
warranties stated in Section 2 (updated mutatis mutandis) are true and correct
in all material respects on the date of such Drawdown Notice and will be true
and correct in all material respects on such drawdown date as if made on such
date, and (b) that no Event of Default or any event which with the giving of
notice or lapse of time or both would constitute an Event of Default has
occurred and is continuing.
3.6 Notation of Advances. Each Revolving Credit Facility Advance made by the
Lenders to the Borrower may be evidenced by a notation of the same made by the
Agent on the grid attached to the Revolving Credit Facility Note, which
notation, absent manifest error, shall be prima facie evidence of the amount of
the relevant Advance.
4. CONDITIONS
4.1 Conditions to Restructure the Term Loan and Revolving Credit Facility. The
obligation of the Lenders to restructure the Term Loan and the Revolving Credit
Facility as provided in this Agreement is expressly subject to the satisfaction
of the following conditions precedent:
(a) the Agent shall have received the following documents in form
and substance satisfactory to the Agent and its legal advisors:
(i) copies, certified as true and complete by an officer of
each Security Party, of the resolutions of the board of
directors and, in the case of the Guarantors (other than
Marine Transport Corporation), the shareholders thereof
evidencing approval of this Agreement and the other
Financing Documents called for hereby to which such
Security Party is a party and authorizing an appropriate
officer or officers or attorney-in-fact or
attorneys-in-fact to execute the same on its behalf;
(ii) copies, certified as true and complete by an officer of
the Borrower or other party acceptable to the Agent, of
all documents evidencing any other necessary action
(including actions by such parties thereto other than
the Borrower as may be required by the Agent), approvals
or consents with respect to the Financing Documents;
(iii) copies, certified as true and complete by an officer of
the respective Security Party of the certificate of
incorporation and by-laws (or equivalent instruments)
thereof;
(iv) a certificate of the Secretary of the Marine Transport
Corporation certifying that it legally and beneficially,
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directly or indirectly, owns all of the issued and
outstanding shares of the capital stock of each of the
Borrower and the other Guarantors, in each case, free
and clear of any liens, claims, pledges or other
encumbrances;
(v) a certificate of the Secretary of Marine Car Carriers
(Del) certifying that it legally and beneficially owns
fifty percent (50%) of the issued and outstanding shares
of Marine Car Carriers (MI), free and clear of any
liens, claims, pledges or other encumbrances whatsoever
except for a pledge in favor of the Agent;
(vi) certificate of the Secretary of each Security Party
(other than Marine Transport Corporation) certifying as
to the record ownership of all of its issued and
outstanding capital stock;
(vii) certificates of the jurisdiction of incorporation of
each Security Party as to the good standing of such
corporation;
(viii) copies of each Vessel Agreement, Management Agreement,
the MCCMI Shareholders Agreement, all agreements and
other documents evidencing Permitted Indebtedness and
Permitted Liens outstanding and existing as of the date
hereof and the Acquisition Agreement each certified by
an officer of Marine Transport Corporation to be a true
and complete copy thereof;
(ix) letters, in form and substance satisfactory to the
Agent, from counsel representing the Borrower (or its
relevant Affiliate) in connection with each action, suit
or proceeding listed on Schedule 7 or in connection with
any Environmental Claim disclosed to the Agent,
regarding details of such action, suit, proceeding or
claim including a description of the nature of the
claim, and the Borrower's (or its Affiliate's) potential
liabilities and an opinion as to the likely outcome of
the relevant matter; and
(x) a pro forma consolidated balance sheet for Marine
Transport Corporation, certified to be true and correct
by the chief financial officer of such Guarantor,
demonstrating that, as of the date hereof and after
giving effect to the transactions contemplated hereby
and by the Related Credit Agreement and the Acquisition
Agreement, such Guarantor has Unrestricted Cash and Cash
Equivalents in an amount at least equal to Two Million
Dollars ($2,000,000) (for
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purposes of determining compliance with this condition,
Unrestricted Cash or Cash Equivalents held by Marine Car
Carriers (MI) for the benefit of Marine Car Carriers
(Del) shall be calculated on the basis of the Borrower's
share of such sums after deduction of any taxes that
would be payable (as of the time of determination) upon
the distribution and repatriation of such sums by Marine
Car Carriers (MI) to Marine Car Carriers (Del) or any of
the Affiliate of the Borrower).
(b) the Agent shall have received evidence satisfactory to it and
its legal advisors that:
(i) each of the Mortgaged Vessels is in the sole and
absolute ownership of the respective Guarantors, other
Affiliates of the Borrower as set forth in Schedules 4
and 5 or Argosy save and except for, in the case of the
Mortgaged Vessels, the respective Mortgage recorded
thereagainst and for the respective Vessel Agreements
and Related Security Documents, and duly registered in
the name of such Guarantor or such Affiliate under the
respective flag as set forth in Schedules 4 and 5;
(ii) each Vessel is classed in the highest classification and
rating for vessels of the same age and type with the
respective classification society as set forth in
Schedules 4 and 5 without any material outstanding
recommendations;
(iii) each of the Vessels is operationally seaworthy and in
every material respect fit for its intended service;
(iv) each of the Mortgaged Vessels will be insured in
accordance with the provisions of the Mortgage on her in
favor of the Agent or the Westhampton Trustee, as the
case may be, and the requirements thereof in respect of
such insurances will have been met and each of the Other
Vessels will be insured against such risks, in such
amounts and with such insurance companies as would be
required by a reasonably prudent shipowner engaged in
the same trades;
(v) each Vessel subject to a charter or other contract of
carriage constituting a Vessel Agreement has been
accepted by its respective charterer and is in service
under such Vessel Agreement; and
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(vi) that, except as provided in the Financing Documents,
there are no restrictions or limitations on the
Borrower's ability to withdraw or apply any the funds of
Marine Car Carriers (MI) held for the benefit of Marine
Car Carriers (Del) and payable to the Borrower for such
purposes as the Borrower may deem fit.
(c) the Borrower shall have duly executed and delivered:
(i) this Agreement and
(ii) the Notes;
(d) each Guarantor shall have executed and delivered:
(i) the Guaranty,
(ii) the Consent and Agreement and Account Assignment
provided at the end of this Agreement, and
(iii) Uniform Commercial Code Financing Statements for filing
in New Jersey;
(e) each Shipowning Guarantor shall have duly executed and
delivered:
(i) in the case of Existing Guarantors, its Mortgage
Amendment;
(ii) in the case of New Guarantors:
(A) the Mortgage over its Mortgaged Vessel(s),
(B) an Insurances Assignment with respect to such
Vessel(s),
(C) an Earnings Assignment with respect to such
Vessel(s),
(D) its Assignment Notices, and
(E) Uniform Commercial Code Financing Statements for
filing in New Jersey and, for Guarantors
incorporated in Delaware, Delaware;
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(f) OMI Challenger Transport shall have duly executed and delivered
the Negative Pledge:
(g) the New Guarantors which do not own a Mortgaged Vessel (other
than OMI Challenger Transport) shall have executed and delivered:
(i) its General Security Agreement, and
(ii) Uniform Commercial Code Financing Statements for filing
in New Jersey and in its jurisdiction of incorporation;
(h) Intrepid Ship Management, Inc. shall have executed and
delivered:
(i) its Assignment of Government Receivables,
(ii) its Assignment Notices, and
(iii) Uniform Commercial Code Financing Statements for filing
in New Jersey and in its jurisdiction of incorporation;
(i) Marine Transport Corporation shall have executed and delivered:
(i) its Assignment of Vessel Management Receivables;
(ii) its Assignment Notices and
(iii) Uniform Commercial Code Financing Statements for filing
in New Jersey and in its jurisdiction of incorporation;
(j) the Agent shall have received appraisals, in form and substance
satisfactory to the Agent, from two independent shipbrokers acceptable to the
Agent evidencing that the Borrower is in compliance with Section 9.3, each of
which appraisals shall be dated, and the appraisals contained therein shall be
as of a date, no earlier than ninety (90) days prior to the date hereof;
(k) the Agent shall have received a certificate of the chief
financial officer of each Guarantor (other than Marine Transport Corporation)
confirming the representations and warranties with respect to solvency set forth
in its Guaranty and containing conclusions as to the solvency of such Guarantor;
(l) the Agent shall be satisfied that no Security Party is subject
to any Environmental Claim (except as set forth on Schedule 7) which could have
a material adverse effect on the business, assets or results of operations of
any thereof;
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<PAGE> 43
(m) the Agent shall have received payment in full of all fees and
expenses due to the Agent and the Lenders on or prior to the date thereof under
Section 13;
(n) the Agent shall have received evidence satisfactory to it and to
its legal advisors that, save for the liens created by the Mortgages, the
Assignments, the Related Security Agreements and the Vessel Agreements there are
no liens, charges or encumbrances of any kind whatsoever on any of the Vessels
or on their respective earnings except as permitted hereby or by any of the
Security Documents;
(o) each party which the Agent shall have required to execute a
Consent and Agreement shall have executed a Consent and Agreement, in each case,
in form and substance satisfactory to the Agent;
(p) the Westhampton Trustee shall have duly authorized, executed and
delivered any trust receipts in respect of collateral provided by the New
Guarantors owning Mortgaged Vessels under the Westhampton Indenture and shall
have duly accepted the trust in respect thereof created by the Westhampton
Indenture;
(q) all conditions precedent to the advancement of the term loan
under the Related Credit Agreement shall have been met or waived to the
satisfaction of the Lenders;
(r) the transactions contemplated by the Acquisition Agreement shall
subject only to consummation of this Agreement and the Related Credit Agreement,
have been consummated in accordance with the provisions thereof, and the legal
status and corporate structure of Marine Transport Corporation shall be
satisfactory to the Agent and its legal counsel
(s) the terms and conditions of the Permitted Indebtedness and
Permitted Liens shall be in form and substance acceptable to the Agent; and
(t) the Agent shall have received legal opinions from (i) Peter N.
Popov, Esq., in-house counsel for the Security Parties, (ii) Kaye, Scholer,
Fierman, Hays & Handler, L.L.P., special counsel to the Security Parties (iii)
Shipman & Goodwin, special counsel to the Westhampton Trustee and (iv) Seward &
Kissel, special counsel to the Agent and the Lenders, in each case in such form
as the Agent may require, as well as such other legal opinions as the Agent
shall have required as to all or any matters under the laws of the United States
of America, the States of New York, New Jersey and Texas covering the
representations and conditions which are the subjects of Sections 2 and 4.1.
4.2 Further Conditions Precedent. The obligation of the Lenders to enter into
this Agreement or to make any Advance available to the Borrower shall be
expressly and separately from the foregoing conditional upon, as of the date
hereof and at each Drawdown Date:
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(a) the Agent having received the Drawdown Notice in accordance with
the terms of Section 3.4;
(b) the representations stated in Section 2 (updated mutatis
mutandis to such date) being true and correct as if made on that date;
(c) no Event of Default having occurred and being continuing and no
event having occurred and being continuing which, with the giving of notice or
lapse of time, or both, would constitute such an Event of Default;
(d) the Agent being satisfied that no change in any applicable laws,
regulations, rules or in the interpretation thereof shall have occurred which
make it unlawful for the Borrower or any other of the parties thereto to make
any payment as required under the terms of the Financing Documents or any of
them; and
(e) there having been no material adverse change in the financial
condition of the Security Parties taken as a whole since the date hereof.
4.3 Satisfaction after Drawdown. Without prejudice to any of the terms and
conditions of this Agreement, in the event the Lenders, in their sole
discretion, makes any Advance prior to the satisfaction of all or any of the
conditions precedent set forth in Sections 4.1 and 4.2, the Borrower hereby
covenants and undertakes to satisfy or procure the satisfaction of such
condition or conditions within fourteen (14) days after the relevant Drawdown
Date (or such longer period as the Lenders, in their sole discretion, may
agree).
4.4 Breakfunding Costs. In the event that, on any date specified for the making
of an Advance in any Drawdown Notice, the Lenders shall not be required under
this Agreement to make such advance available under this Agreement, the Borrower
shall indemnify and hold the Lenders fully harmless against any losses which the
Lenders or any thereof may sustain as a result of borrowing or agreeing to
borrow funds to meet the drawdown requirement of the Borrower and the
certificate of the relevant Lender(s) shall, absent manifest error, be
conclusive and binding on the Borrower as to the extent of any such losses.
5. REPAYMENT, PREPAYMENT AND REDUCTION OF FACILITIES.
5.1 Repayment of Term Loan. The Borrower shall repay the principal of the Term
Loan in twenty (20) quarterly installments in Dollars in freely available-same
day funds on the Term Loan Payment Dates, the first four (4) installments shall
each be in the principal amount of Two Hundred Fifty Thousand Dollars
($250,000), the next fifteen (15) of which shall be in the principal amount of
Four Hundred Thirteen Thousand Three Hundred Twelve and 50/100 Dollars
($413,312.50) and twentieth such installment shall be in the amount necessary to
repay the Term Loan in full.
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5.2 Revolving Credit Facility. Subject to the provisions of Section 3.3, any
outstanding Revolving Credit Facility Advances (a) may be repaid (together with
any and all actual costs or expenses incurred by any Lender as the result of any
breaking of funding (as certified by the relevant Lender, which certification
shall, absent any manifest error, be conclusive and binding on the Borrower) on
any Banking Day (in Dollars in freely available-same day funds equal to or
exceeding One Hundred Thousand Dollars ($100,000), each such repayment to be in
an integral multiple of One Hundred Thousand Dollars ($100,000)) and (b) must be
repaid (i) on the last date of then prevailing Interest Period in respect of
such Advance and (ii) on or before the Final Payment Date.
5.3 Voluntary Prepayment of Term Loan. The Borrower may prepay any Term Loan
Advance on any Banking Day, in whole or in part, without penalty or premium (in
Dollars in freely available-same day funds equal to or exceeding One Hundred
Thousand Dollars ($100,000), each such repayment to be in an integral multiple
of One Hundred Thousand Dollars ($100,000)), on any Banking Day upon giving the
Agent not less than five (5) Banking Days prior written notice (which notice
shall be irrevocable and shall specify the amount and date of prepayment).
5.4 Mandatory Prepayment of Term Loan. Upon the sale, disposition or Total Loss
of any Vessel or any other asset (having a fair market value equal or exceeding
One Hundred Thousand Dollars ($100,000) directly or indirectly owned by the
Borrower, the Borrower shall prepay the Term Loan, in part and without penalty,
in amount equal to the proceeds of the sale, disposition or insurance net of
taxes payable as a result of any such sale or disposition.
5.5 Prepay Term Loans Pro Rata. Any prepayment made hereunder (including,
without limitation, those made pursuant to Sections 5.3 and 5.4, but excluding a
prepayment under Section 9.3) or under the Related Credit Agreement shall be
applied against the Term Loan and the Related Term Loan, pro rata.
5.6 Application of Prepayments. Any prepayment of the Term Loan made hereunder
(including, without limitation, those made pursuant to Sections 5.3, 5.4 and
9.3), shall be subject to the condition that:
(a) any partial prepayment made shall be applied in or towards
satisfaction of the repayment installments of the Term Loan in inverse order of
maturity;
(b) any amounts prepaid shall not be available for re-borrowing; and
(c) on the date of prepayment all accrued interest to the date of
such prepayment shall be paid in full with respect to the portion of the
principal being prepaid, together with any and all actual costs or expenses
incurred by any Lender as the result of any breaking of funding (as certified by
the relevant Lender, which certification shall, absent any manifest error, be
conclusive and binding on the Borrower).
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5.7 Voluntary Reduction of Revolving Credit Facility. The Borrower shall have
the right, at any time and from time to time, upon giving to the Agent not less
than five (5) Banking Days prior written notice (which notice shall be
irrevocable) to terminate in whole, or reduce the available unused portion of,
the Revolving Credit Facility; provided, however, that each partial reduction
shall be equal to or shall exceed One Hundred Thousand Dollars ($100,000) and
shall be an integral multiple of One Hundred Thousand Dollars ($100,000). Upon
any reduction of the Revolving Credit Facility as provided in this Section, each
Lender's Commitment to make Revolving Credit Facility Advances shall be reduced
pro rata.
6. INTEREST AND RATE
6.1 Term Loan Applicable Rate and Default Rate. The Term Loan Balance shall bear
interest at the Term Loan Applicable Rate which shall be the rate per annum
which is equal to the aggregate of (a) LIBOR for the applicable Interest Period
(determined in accordance with Section 6.5) plus (b) the then prevailing Margin.
Any principal payment with respect to the Term Loan not paid when due, whether
on a Term Loan Payment Date or by acceleration, shall bear interest thereafter
at a rate per annum of two percent (2.0%) over the Term Loan Applicable Rate in
effect with respect to such payment at the time of such default (the "Term Loan
Default Rate").
6.2 Revolving Credit Facility Applicable Rate and Default Rate. The Revolving
Credit Facility Balance shall bear interest at the Revolving Credit Facility
Applicable Rate which shall be equal to the aggregate of (a) LIBOR for the
applicable Interest Period (determined in accordance with Section 6.5) plus (b)
the then prevailing Margin plus (c) one quarter of one percent (0.25%) per
annum. Any principal payment with respect to the Revolving Credit Facility not
paid when due, whether by acceleration or otherwise, shall bear interest
thereafter at a rate per annum of two percent (2.0%) over the Revolving Credit
Facility Applicable Rate in effect with respect to such payment at the time of
such default (the "Revolving Credit Facility Default Rate").
6.3 Determination of Applicable Margin. The Margin shall be determined by the
Agent two (2) Banking Days prior to the first day of the relevant Interest
Period. Prior to the day falling two (2) Banking Days after the date on which
Marine Transport Corporation delivers its first quarterly financial report to
the Agent in accordance with Section 9.1(A)(iv), the Margin shall be equal to
one and three quarters of one percent (1.75%) per annum. Thereafter, the Margin
shall be based upon the then prevailing ratio of Marine Transport Corporation's
Total Debt to EBITDA, as determined in accordance with Section 9.1(A)(xvii) as
follows:
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<PAGE> 47
<TABLE>
<CAPTION>
Applicable Margin Total Debt to EBITDA
----------------- --------------------
<S> <C>
2.25% > 3.0x
2.00% <=3.0x but >2.5x
1.75% <=2.5x but >2.0x
1.50% <=2.0x but >=1.0x
1.25% <1.0x
</TABLE>
6.4 Determination of LIBOR. LIBOR shall be determined by the Agent two (2)
Banking Days prior to the first day of the relevant Interest Period and together
with any and all actual costs or expenses incurred by any Lender as the result
of any breaking of funding (as certified by the relevant Lender, which
certification shall, absent any manifest error, be conclusive and binding on the
Borrower). The Borrower shall be promptly notified in writing of such
determination of the Term Loan Applicable Rate and the Revolving Credit Facility
Applicable Rate, as the case may be. Absent manifest error, such determination
shall be conclusive and binding upon the Borrower.
6.5 Interest Periods. For purposes of funding any Advance, the Borrower may
select Interest Periods of one (1), two (2), three (3) or six (6) months (or for
such longer periods as the Lenders may, in their sole discretion agree),
provided, however, that (a) at all times the Borrower must select an Interest
Period for a portion of each Advance so that sufficient deposits shall mature on
each Payment Date to cover the principal installments due on such dates and (b)
no more than two (2) Interest Periods may be running simultaneously for the
entire Term Loan Balance and no more than three (3) Interest Periods may be
running at any one time for the entire Revolving Credit Facility Balance. No
Interest Period may extend beyond the Final Payment Date. The Borrower shall
give the Agent an Interest Notice specifying the Interest Period selected at
least three (3) Banking Days prior to the end of any then existing Interest
Period. If at the end of any then existing Interest Period the Borrower fails to
give an Interest Notice, the relevant Interest Period shall be three (3) months.
The Borrower's right to select an Interest Period shall be subject to the
restriction that no selection of an Interest Period shall be effective unless
the Lenders are satisfied that the necessary funds will be available to the
Lenders for such period and that no Event of Default or event which, with the
giving of notice or lapse of time, or both, would constitute an Event of Default
shall have occurred and be continuing.
6.6 Interest Payments. The Borrower agrees to pay interest on each Advance on
the last day of each Interest Period applicable to such Advance and at such
other times as interest is required to be paid by each Lender on the deposits
acquired thereby to fund the relevant Advance, or any portion thereof, as the
case may be, and, in the event any Interest Period shall extend beyond three (3)
months, three (3) months after the commencement of such Interest Period and each
three (3) month anniversary thereafter until the end of the Interest Period; and
6.7 Payment on Banking Day. If interest would, under Section 6.6, be payable on
a day which is not a Banking Day, it shall then be payable on the next following
Banking
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<PAGE> 48
Day, unless such next following Banking Day falls in the following month in
which case it shall be payable on the Banking Day immediately preceding the day
on which such interest would otherwise be payable.
6.8 Calculation of Interest. All interest shall accrue and be calculated on the
actual number of days elapsed and on the basis of a three hundred sixty (360)
day year.
7. PAYMENTS
7.1 Place of Payments, No Set Off. All payments to be made hereunder by the
Borrower shall be made to the Agent, not later than 11 a.m. New York time (any
payment received after 11 a.m. New York time shall be deemed to have been paid
on the next Banking Day) on the due date of such payment, at its office located
at 200 Park Avenue, New York, New York 10166 or to such other office of the
Agent as the Agent may direct, without set-off or counterclaim and free from,
clear of, and without deduction for, any Taxes, provided, however, that if the
Borrower shall at any time be compelled by law to withhold or deduct any Taxes
from any amounts payable to the Agent or the Lenders hereunder, then the
Borrower shall pay such additional amounts in Dollars as may be necessary in
order that the net amounts received after any such withholding or deduction
shall equal the amounts which would have been received if such withholding or
deduction were not required and, in the event any withholding or deduction is
made, whether for Taxes or otherwise, the Borrower shall promptly send to the
Agent and the Lenders such documentary evidence for such withholding or
deduction as may be required from time to time by the Agent or the relevant
Lender, as the case may be.
7.2 Tax Credits. If any Lender obtains the benefit of a credit against the
liability thereof for federal income taxes imposed by any taxing authority for
all or part of the Taxes as to which the Borrower has paid additional amounts as
aforesaid (and such Lender agrees to use its best efforts to obtain the benefit
of any such credit which may be available to it, provided it has knowledge that
such credit is in fact available to it), then such Lender shall reimburse the
Borrower for the amount of the credit so obtained. Each Lender agrees that in
the event that Taxes are imposed on account of the situs of its loans hereunder,
such Lender, upon acquiring knowledge of such event, shall, if commercially
reasonable, shift such loans on its books to another office of such Lender so as
to avoid the imposition of such Taxes.
8. EVENTS OF DEFAULT
8.1 In the event that any of the following events shall occur and be continuing:
(a) Non-Payment of Principal. Any principal of the Term Loan or the
Revolving Credit Facility is not paid on the due date; or
(b) Non-Payment of Interest or Other Amounts. Any interest on the
Term Loan, the Revolving Credit Facility or any other amount becoming payable to
the Agent, the Lenders or the Westhampton Trustee under any Financing Document
is not
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<PAGE> 49
paid on the due date or date of demand (as the case may be), and such default
continues unremedied for a period of five (5) Banking Days; or
(c) Representations. Any representation, warranty or other statement
made by any Security Party in any Financing Document or in any other instrument,
document or other agreement delivered in connection with any thereof proves to
have been untrue or misleading in any material respect as of the date when made
or confirmed; or
(d) Covenants. Any Security Party defaults in the due and punctual
observance or performance of any other term, covenant or agreement contained in
any Financing Document or in any other instrument, document or other agreement
delivered in connection herewith or therewith, or it becomes impossible or
unlawful for any Security Party to fulfill any such term, covenant or agreement
or there occurs any other event which constitutes a default under any Financing
Document, in each case other than an Event of Default referred to elsewhere in
this Section 8.1, and such default, impossibility and/or unlawfulness, in the
reasonable opinion of the Majority Lenders, would be likely to have a material
adverse effect on the rights of the Lenders, the Agent or the Westhampton
Trustee under any Financing Document or on the rights of the Lenders, the Agent
or the Westhampton Trustee to enforce any Financing Document, and continues
unremedied or unchanged, as the case may be, for a period of thirty (30) days;
or
(e) Indebtedness. Any Security Party, Marine Car Carriers (MI) or
any wholly owned subsidiary of any such party shall default in the payment when
due (subject to any applicable grace period) of any Indebtedness in an amount in
excess of Two Hundred Fifty Thousand Dollars ($250,000) or such Indebtedness is,
or by reason of such default is subject to being, accelerated or any party
becomes entitled to enforce the security for any such Indebtedness and such
party takes steps to enforce the same, unless such default or enforcement is
being contested in good faith and by appropriate proceedings or other acts and
the Security Party, Marine Car Carriers (MI) or subsidiary, as the case may be,
shall set side on its books adequate reserves with respect thereto; or
(f) Change of Control; Ownership or Management of Other Security
Parties. There is a change of control of any Security Party and the Lenders have
not prior thereto consented in writing to such change. As used herein, "change
of control" means (i) with respect to Marine Transport Corporation, (A) any
"person" (as such term is used in Sections 13(d) and 14(d) of the Securities
Exchange Act of 1934 (the "Exchange Act")) is or becomes the beneficial owner
(as defined in Rules 13d-3 and 13d-5 promulgated pursuant to the Exchange Act),
directly or indirectly, of more than fifty percent (50%) of the total voting
power of the voting stock of Marine Transport Corporation or (B) the Board of
Directors of Marine Transport Corporation ceases to consist of a majority of the
existing directors or directors elected by the existing directors (as used
herein, "existing director" means each of the Directors of Marine Transport
Corporation as of the date immediately following consummation of the
transactions contemplated by the Acquisition Agreement) or (ii), with respect to
any other Security
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<PAGE> 50
Party, any material change in the beneficial stock ownership, voting control or
senior management of any of the Security Parties; or
(g) US Citizenship. Any Security Party owning a United States flag
Vessel ceases to be a United States of America citizen within the meaning of
Section 2 of the United States Shipping Act of 1916, as amended, qualified to
operate vessels in the coastwise trade; or
(h) Bankruptcy. Any Security Party or Marine Car Carriers (MI)
commences any proceeding under any reorganization, arrangement or readjustment
of debt, dissolution, winding up, adjustment, composition, bankruptcy or
liquidation law or statute of any jurisdiction, whether now or hereafter in
effect ("Proceeding"), or there is commenced against any thereof any Proceeding
and such Proceeding remains undismissed or unstayed for a period of thirty (30)
days or any receiver, trustee, liquidator or sequestrator of, or for, any
thereof or any substantial portion of the property of any thereof is appointed
and is not discharged within a period of thirty (30) days or any thereof by any
act indicates consent to or approval of or acquiescence in any Proceeding or the
appointment of any receiver, trustee, liquidator or sequestrator of, or for,
itself or of, or for, any substantial portion of its property; or
(i) Termination of Operations; Sale of Assets. Without the Agent's
prior written consent, any Security Party ceases its operations or sells or
otherwise disposes of all or substantially all of its assets or all or
substantially all of the assets of the any Security Party are seized or
otherwise appropriated; or
(j) Judgments. Any judgment or order is made which would render
ineffective or invalid any Financing Documents; or
(k) Inability to Pay Debts. Any Security Party or Marine Car
Carriers (MI) is unable to pay or admits its inability to pay its debts as they
fall due or a moratorium shall be declared in respect of any material
indebtedness of any Security Party or Marine Car Carriers (MI); or
(l) Change in Financial Position. Any change in the financial
position of the Security Parties (taken as a whole) which, in the reasonable
opinion of the Majority Lenders, shall have a material adverse effect on the
ability of any Security Parties to perform its respective material obligations
under any Financing Document; or
(m) Relevant Contracts. Any of the Relevant Contracts or the MCCMI
Shareholders Agreement is terminated or is materially amended or modified
without the prior written consent of the Majority Lenders, or any party to a
Relevant Contract defaults or ceases to perform under such agreement for any
reason whatsoever and, with regard to any such termination, default or
nonperformance of a Relevant Contract, the relevant Vessel shall not be engaged
in an alternative employment, acceptable to the Lenders, under a contract,
acceptable to the Lenders, within ninety (90) days of such termination, default
or nonperformance; or
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<PAGE> 51
(n) Key Management Agreements. Any of the Key Management Agreements
(including any extensions or renewals thereof) is terminated prior to its stated
termination date or is materially amended or modified without the prior written
consent of the Majority Lenders, or any party to a Key Management Agreement
defaults or ceases to perform under such agreement for any reason whatsoever
and, as a result of such default or non-performance, the obligor under such
agreement ceases to pay or be obligated to pay to the relevant Security Party,
as the case may be, amounts payable by such obligor under such agreement; or
(o) Related Credit Agreement, OMI COLUMBIA Loan Documents and
Mortgage Securing OMI Debt. An "Event of Default" (as defined in any of the
Related Credit Agreement, the OMI COLUMBIA Loan Documents or the Mortgage
Securing the OMI Debt) shall have occurred and be continuing
then the Lenders' obligation to make any Advances available shall cease and the
Lenders may, by notice to the Borrower, declare the entire unpaid balance of the
Term Loan, accrued interest, the entire Revolving Credit Facility Balance,
accrued interest, and any other sums payable by the Borrower hereunder and under
any other Financing Document due and payable, whereupon, the same shall
forthwith be due and payable without presentment, demand, protest or notice of
any kind, all of which are hereby expressly waived; provided that upon the
occurrence of an event specified in subsections (h) or (k) of this Section 8.1,
the Notes shall be immediately due and payable without declaration or other
notice to the Borrower. In such event, the Lenders may proceed to protect and
enforce their rights by action at law, suit in equity or in admiralty or other
appropriate proceeding, whether for specific performance of any covenant
contained in any Financing Document, or in aid of the exercise of any power
granted in any thereof, or the Lenders may proceed to enforce the payment of the
Notes or to enforce any other legal or equitable right of the Lenders, or
proceed to take any action authorized or permitted under the terms of any of the
Security Documents or by applicable law for the collection of all sums due, or
so declared due, on the Notes, including, without limitation, the right to
appropriate and hold, or apply (directly, by way of set-off or otherwise) to the
payment of the obligations of the Borrower to the Lenders, the Agent or the
Westhampton Trustee under any Financing Document (whether or not then due) all
moneys and other amounts of the Borrower then or thereafter in possession of any
Lender, the Agent or the Westhampton Trustee, the balance of any deposit account
(demand or time, matured or unmatured) of the Borrower then or thereafter with
any Lender, the Agent or the Westhampton Trustee and every other claim of the
Borrower then or thereafter against any Lender, the Agent or the Westhampton
Trustee.
8.2 Indemnification. The Borrower agrees to, and shall, indemnify and hold the
Lenders, the Agent and the Westhampton Trustee harmless against any loss
(excluding any consequential damages), as well as against any reasonable costs
or expenses (including reasonable legal fees and expenses), which the Lenders,
the Agent or the Westhampton Trustee sustains or incurs as a consequence of any
default in payment of the principal amount of the Term Loan, the Revolving
Credit Facility, interest accrued
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<PAGE> 52
thereon or any other amount payable under any Financing Document, including, but
not limited to, all actual losses incurred in liquidating or re-employing fixed
deposits made by third parties or funds acquired to effect or maintain the Term
Loan and/or the Revolving Credit Facility and/or any portion of either thereof.
The certification of each Lender, the Agent or the Westhampton Trustee of such
costs and expenses shall, absent any manifest error, be conclusive and binding
on the Borrower.
8.3 Application of Moneys. Except as otherwise provided in any Security
Document, all moneys received by the Lenders, the Agent or the Westhampton
Trustee under or pursuant to this Agreement, any Notes, any Guaranty or any of
the Security Documents after the occurrence and continuation of any Event of
Default (unless cured to the satisfaction of the Lenders) shall be applied by
the Lenders in the following manner:
(a) first, in or towards the payment or reimbursement of any
expenses or liabilities incurred by the Lenders, the Agent or the Westhampton
Trustee in connection with the ascertainment, protection or enforcement of its
rights and remedies under any Financing Documents,
(b) second, in or towards payment of any interest owing on the Term
Loan and the Revolving Credit Facility,
(c) third, in or towards repayment of principal owing in respect of
the Term Loan and the Revolving Credit Facility,
(d) fourth, in or towards payment of all other sums which may be
owing to the Lenders, the Agent or the Westhampton Trustee under any Financing
Document, and
(e) fifth, the surplus (if any) shall be paid to the Borrower or to
whosoever else may be entitled thereto.
9. COVENANTS
9.1 The Borrower and, by their execution of the consent and agreement and
assignment of account provided below, each of the Guarantors hereby covenants
and undertakes with the Lenders and the Agent that, from the date hereof and so
long as any principal, interest or other moneys are owing in respect of the Term
Loan, the Revolving Credit Facility or are otherwise owing under any Financing
Document:
(A) it will, and will procure that each other Security Party will:
(i) Performance of Agreements. Duly perform and observe, and
procure the observance and performance by all other parties thereto (other than
the Lenders, the Agent and the Westhampton Trustee) of, the terms of the
Financing Documents;
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(ii) Notice of Default, Litigation and Adverse Change. Promptly
upon obtaining knowledge thereof, inform the Lenders of the occurrence of any
(a) Event of Default or of any event which, with the giving of notice or lapse
of time, or both, would constitute an Event of Default, (b) their respective
litigation or governmental proceeding pending or threatened against it or
against any of the Security Parties or Marine Car Carriers (MI) which could
reasonably be expected to have a material adverse effect on the business,
assets, operations, property or financial condition of any thereof, and (c)
other event or condition which is reasonably likely to have a material adverse
effect on its ability, or the ability of the Security Parties as a group, to
perform their respective obligations under any Financing Document;
(iii) Obtain Consents. Without prejudice to Section 2.1(b) and this
Section 9.1, obtain every consent and do all other acts and things which may
from time to time be necessary or advisable for the continued due performance of
all its and the other Security Parties' respective obligations under the
Financing Documents;
(iv) Financial Information. At the expense of the Borrower,
deliver to the Agent:
(a) as soon as available but not later than ninety (90) days
after the end of each fiscal year of Marine Transport
Corporation, a complete copy of the 10K report of Marine
Transport Corporation filed with the United States
Securities and Exchange Commission (including audited
annual financial statements of Marine Transport
Corporation together with a report thereon by an
Acceptable Accounting Firm), which shall be prepared by
Marine Transport Corporation and certified by the chief
financial officer of Marine Transport Corporation
together with a Compliance Certificate;
(b) as soon as available but not later than forty-five (45)
days after the end of each quarter of each fiscal year
of Marine Transport Corporation, a copy of the 10Q
report of Marine Transport Corporation filed with the
United States Securities and Exchange Commission which
shall be prepared by Marine Transport Corporation and
certified by the chief financial officer of Marine
Transport Corporation, together, in each instance, with
a Compliance Certificate of such chief financial officer
in such form as the Lender may reasonably require;
(c) as soon as available, copies of all 8K reports filed by
Marine Transport Corporation with the United States
Securities and Exchange Commission;
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<PAGE> 54
(d) as soon as available but not later than thirty (30) days
after the end of each month of each fiscal year of
Marine Transport Corporation, unaudited monthly
operating statements showing actual versus budgeted cash
flow (itemized for each Vessel, Management Agreement and
Vessel Agreement), accounts receivable and accounts
payable balances and cash position for Marine Transport
Corporation and its Subsidiaries, certified to be true
and complete by the Chief Financial Officer of Marine
Transport Corporation; and
(e) such other statements, lists of assets and accounts,
budgets, forecasts, reports and other financial
information with respect to its business as the Agent
may from time to time reasonably request, certified to
be true and complete by the Chief Financial Officer of
Marine Transport Corporation;
(v) U.S. Citizenship; Qualification to Own Foreign Flag Vessels.
Continue to be, and cause each other Security Party or other Affiliate of the
Borrower owning a United States flag Vessel to continue to be, a United States
citizen within the meaning of Section 2 of the United States Shipping Act, 1916,
as amended (46 U.S.C. ss.802), qualified to own and operate vessels in the
coastwise trade of the United States of America and to cause each other Security
Party or other Affiliate of the Borrower which is the registered owner of a
Vessel registered under a flag other than the United States of America to
continue to be duly qualified under the laws of such flag to be the registered
owner and operator of a Vessel registered under such flag;
(vi) Corporate Existence. Do or cause to be done, and procure that
each Security Party shall do or cause to be done, all things necessary to
preserve and keep in full force and effect its corporate existence, and all
licenses, franchises, permits and assets necessary to the conduct of its
business;
(vii) Books and Records. Keep, and cause each other Security Party
to keep, proper books of record and account into which full and correct entries
shall be made in accordance with GAAP throughout the Security Period;
(viii) Taxes and Assessments. Pay and discharge, and cause each
other Security Party to pay and discharge, all taxes, assessments and
governmental charges or levies imposed upon it or upon its income or property
prior to the date upon which penalties attach thereto; provided, however, that
it shall not be required to pay and discharge, or cause to be paid and
discharged, any such tax, assessment, charge or levy so long as (a) the legality
thereof shall be contested in good faith and by appropriate proceedings or other
acts and it shall set aside on its books adequate reserves with respect thereto
or (b) where such failure to pay or discharge is not reasonably likely to,
individually or in the aggregate, have a material adverse effect on the
business, prospects
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<PAGE> 55
or financial condition of the Marine Transport Corporation and its Subsidiaries
taken as a whole;
(ix) Inspection. Allow, and cause each other Security Party to
allow, any representative or representatives designated by any Lender, subject
to applicable laws and regulations, to visit and inspect any of its properties,
and, on request, to examine its books of account, records, reports and other
papers and to discuss its affairs, finances and accounts with its officers, all
at such reasonable times and as often as any Lender may reasonably request;
(x) Compliance with Statutes, etc. Do or cause to be done, and
cause each other Security Party to do and cause to be done, all things necessary
to comply with all material laws, and the rules and regulations thereunder,
applicable to the Borrower or such other Security Party, including, without
limitation, those laws, rules and regulations relating to employee benefit plans
and environmental matters;
(xi) Environmental Matters. Promptly upon the occurrence of any of
the following conditions, provide to the Agent a certificate of the chief
executive officer thereof, specifying in detail the nature of such condition and
its proposed response or the response of its Environmental Affiliate: (a) its
receipt or the receipt by any other Security Party or any Environmental
Affiliate of the Borrower or any other Security Party of any written
communication whatsoever that alleges that such person is not in compliance with
any applicable environmental law or environmental approval, if such
noncompliance could reasonably be expected to have a material adverse effect on
the business, assets, operations, property or financial condition of the
Borrower or any other Security Party, (b) knowledge by it, or by any other
Security Party or any Environmental Affiliate of the Borrower or any other
Security Party that there exists any Environmental Claim pending or threatened
against any such person, which could reasonably be expected to have a material
adverse effect on the business, assets or operations, property or financial
condition of the Borrower or any other Security Party, or (c) any release,
emission, discharge or disposal of any material that could form the basis of any
Environmental Claim against it, any other Security Party or against any
Environmental Affiliate of the Borrower or any other Security Party, if such
Environmental Claim could reasonably be expected to have a material adverse
effect on the business, assets or operations, property or financial condition of
the Borrower or any other Security Party. Upon the written request by the Agent,
it will submit to the Agent at reasonable intervals, a report providing an
update of the status of any issue or claim identified in any notice or
certificate required pursuant to this subsection;
(xii) ERISA. Forthwith upon learning of the occurrence of any
material liability of the any Security Party or any ERISA Affiliate pursuant to
ERISA in connection with the termination of any Plan or withdrawal or partial
withdrawal of any multi-employer plan (as defined in ERISA) or of a failure to
satisfy the minimum funding standards of Section 412 of the Code or Part 3 of
Title I of ERISA by any Plan for which any Security Party or any ERISA Affiliate
is plan administrator (as defined in ERISA), furnish or cause to be furnished to
the Agent written notice thereof;
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(xiii) Vessel Management. Cause each of the Vessels to be managed by
Marine Transport Corporation, by a wholly-owned subsidiary thereof or by third
party manager reasonably acceptable to the Agent and procure that no agreements
providing or governing the management of such vessels shall be amended or
modified without the prior written consent of the Agent unless (in the case of
management agreements other than Key Management Agreements) such amendment or
modification would not, in the reasonable opinion of the Agent, adversely affect
the economic interests of the Borrower or any other Security Party thereunder;
(xiv) Cash. Maintain at all times on a consolidated basis, readily
available Unrestricted Cash or Cash Equivalents of not less than the greater of
(a) Two Million Dollars ($2,000,000) and (b) ten percent (10%) of the Total Debt
of Marine Transport Corporation (for purposes of determining compliance with
this covenant, Unrestricted Cash or Cash Equivalents held by Marine Car Carriers
(MI) for the benefit of Marine Car Carriers (Del) shall be calculated on the
basis of the Borrower's share of such sums after deduction of any taxes that
would be payable (as of the time of determination) consequent upon the
distribution and repatriation of such sums by Marine Car Carriers (MI) to Marine
Car Carriers (Del));
(xv) Working Capital. Maintain at all times on a consolidated
basis, a positive working capital position (for purposes of determining
compliance with this covenant, Unrestricted Cash or Cash Equivalents held by
Marine Car Carriers (MI) shall be calculated on the basis of the Borrower's
share of such sums after deduction of any taxes that would be payable (as of the
time of determination) consequent upon the distribution and repatriation of such
sums by Marine Car Carriers (MI) to Marine Car Carriers (Del));
(xvi) Debt Service Coverage Ratio. Maintain on a consolidated
basis, a ratio of EBITDA to scheduled payments of principal and interest in
respect of consolidated Indebtedness of not less than, during the period
commencing from the date hereof and ending on the second anniversary of the date
hereof, 1.25 to 1.0, and, thereafter, 1.5 to 1.0, such ratio to be determined
quarterly based on the scheduled principal and interest (assuming the then
prevailing interest rates shall remain in effect for the next twelve (12)
months) payments payable over the next twelve (12) month period;
(xvii) Total Debt to EBITDA. Maintain on a consolidated basis, a
ratio of Total Debt to EBITDA of not greater than, (x) during the period
commencing from the date hereof and ending on the first anniversary of the date
hereof, 3.25 to 1.0, (y) during the period commencing from the first anniversary
of the date hereof and ending on the second anniversary of the date hereof, 3.0
to 1.0 and (z) thereafter, 2.5 to1.0;
(xviii) Brokerage Commissions, etc. Indemnify and hold the Lenders,
the Agent and the Westhampton Trustee harmless from any claim for any
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<PAGE> 57
brokerage commission, fee, or compensation from any broker or third party
resulting from the transactions contemplated hereby;
(xix) Deposit Accounts; Assignment. Throughout the Security Period,
maintain, and procure that each Security Party shall maintain its primary
collection and revenue accounts with the Agent and shall procure, and shall
cause each Security Party to procure that, all earnings of any Vessels shall be
paid (without set-off or counterclaim) into such collection accounts. As
security for the obligations of the Borrower hereunder, the Borrower hereby
pledges, assigns and grants the Agent, on behalf of the Lenders, a security
interest in all the Borrowers' right, title and interest in and to the aforesaid
collection and disbursement accounts and consents that if an Event of Default
shall occur and so long as the same shall be continuing, all moneys held in the
said accounts and all moneys thereafter received by the Agent may be applied as
provided in Section 8.3;
(xx) Proceeds of Marine Car Carriers (MI). Promptly upon the
direct or indirect acquisition, in the aggregate, by the Borrower, the
Guarantors or any affiliate of any thereof of one hundred percent (100%) of the
equity of Marine Car Carriers (MI) or one hundred percent (100%) of the assets
thereof, grant, or procure the grant, to the Agent of a security interest in the
assets of Marine Car Carriers (MI) in form and substance satisfactory to the
Agent, it being hereby agreed by the Agent and the Lenders that, simultaneous
with the investment of the assets of Marine Car Carriers (MI) into a new joint
venture with a third party not affiliated with the Borrower or the Guarantors,
such security interest shall be released and replaced with a negative pledge in
form and substance satisfactory to the Agent;
(xxi) Year 2000 Issue. The Borrower shall take, and shall cause each
of the Guarantors to take, all necessary action to complete in all materials
respects by September, 1999, the reprogramming of computer software, hardware
and firmware systems and equipment containing embedded microchips owned or
operated by or for the Borrower and the guarantors or used or relied upon in the
conduct of their business (including systems and equipment supplied by others or
with which such systems of the Borrower or any of the Guarantors interface)
required as a result of the Year 2000 Issue to permit the proper functioning of
such computer systems and other equipment and the testing of such systems and
equipment, as so reprogrammed. At the request of the Agent, the Borrower shall
provide, and shall cause each of the guarantors to provide, to the Agent
reasonable assurance of its compliance with the preceding sentence; and
(xxii) ISM Code Matters. (a) Procure that the relevant Operator
will, comply with, and ensure that (i) each Vessel will comply with the
requirements of the ISM Code by not later than July 1, 1998, and (ii) any
newly-acquired Vessel will comply with the requirements of the ISM Code within
six (6) months (or such shorter period as may be required by applicable law or
regulation) of its acquisition, including (but not limited to) the maintenance
and renewal of valid certificates pursuant thereto throughout the Security
Period;
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(b) Procure that any Operator will, immediately inform the
Agent if there is any threatened or actual withdrawal of
its, DOC or the SMC in respect of any Vessel; and
(c) Procure that the relevant Operator will, promptly inform
the Agent upon the issuance (i) to such Operator of a
DOC and (ii) to the relevant Vessel of an SMC; and
(xxiii) OMI COLUMBIA. Procure that promptly upon the acquisition of
ownership of OMI COLUMBIA by OMI Challenger Transport (or any other Affiliate of
the Borrower), such Guarantor shall execute and deliver a first preferred
mortgage and assignments of earnings and insurances in respect of such Vessel in
form and substance satisfactory to the Agent.
(B) The Borrower will not, and will procure that no other Security
Party will, without the prior written consent of the Agent:
(i) Liens. Create, assume or permit to exist, any mortgage,
pledge, lien, charge, encumbrance or any security interest whatsoever upon any
of such party's property or other assets, real or personal, tangible or
intangible, whether now owned or hereafter acquired except:
(a) liens for taxes not yet payable for which adequate
reserves have been maintained;
(b) the Financing Documents and other liens granted in
connection herewith in favor of the Lenders, the Agent
or the Westhampton Trustee, as the case may be;
(c) liens, charges and encumbrances against their respective
Vessels except those of the type and amounts permitted
to exist under the terms of the Mortgages;
(d) pledges of certificates of deposit or other cash
collateral securing any Security Party's reimbursement
obligations in connection with letters of credit now or
hereafter issued for the account of such Security Party
in connection with the establishment of the financial
responsibility of the Security Parties under 33 C.F.R.
Part 130 or 46 C.F.R. Part 540, as the case may be, as
the same may be amended or replaced;
(e) pledges or deposits to secure obligations under
workmen's compensation laws or similar legislation,
deposits to secure public or statutory obligations,
warehousemen's or other like liens, or deposits to
obtain the release of such liens and deposits to secure
surety, appeal or customs bonds on
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which any of the Security Parties is the principal, as
to all of the foregoing, only to the extent arising and
continuing in the ordinary course of business;
(f) liens on assets acquired with Permitted Third Party Debt
and securing only the Permitted Third Party Debt
incurred to acquire such assets;
(g) the Mortgages Securing the OMI Debt (and related
assignments of marine insurances for the Vessels subject
to such mortgages);
(h) other liens, charges and encumbrances incidental to the
conduct of the business of each such party, the
ownership of any such party's property and assets and
which do not in the aggregate materially detract from
the value of each such party's property or assets or
materially impair the use thereof in the operation of
its business
(items (a) through (h) are hereinafter collectively referred to as "Permitted
Liens");
(ii) Loans, Advances and Investments. Make any loans or advances
to, or any investments in any Person, firm, corporation, joint venture or other
entity (including, without limitation, any loan or advance to any officer,
director, stockholder, employee or customer of any company affiliated with any
Security Party) except for advances and investments in the ordinary course of
its business and loans or advances to any Security Party;
(iii) Indebtedness. Incur any Indebtedness except Permitted
Indebtedness;
(iv) Permitted Third Party Debt. Incur any Permitted Third Party
Debt, unless in the case of any such indebtedness other than that supporting
MARAD vessel management contracts;
(a) the Borrower and the Security Parties are in compliance
with their covenants set forth in this Agreement,
(b) no Event of Default (or any event or condition which,
with the giving of notice or passage of time or both,
would constitute an Event of Default) shall have
occurred or will occur and be continuing before or after
the incurrence of such Permitted Third Party Debt,
(c) the Borrower demonstrates to the satisfaction of the
Agent, in its sole discretion, that the ratio of (1)
projected EBITDA
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to be generated by the particular asset to be acquired
with such Permitted Third Party Debt to (2) projected
scheduled payments of interest and principal for such
Permitted Third Party Debt shall be at least 1.0 to 1.0
over the entire term of such Permitted Third Party Debt
and
(d) the Borrower demonstrates to the satisfaction of the
Agent, in its sole discretion, that following the
incurrence of such Permitted Third Party Debt, the
Borrower and the Guarantors shall be in compliance with
the financial covenants set forth in Sections
9.1(A)(xiv), (xv), (xvi) and (xvii) (for purposes of the
calculations required by this clause (z), (1) EBITDA
shall include the projected EBITDA to be generated by
the particular asset to be acquired with such Permitted
Third Party Debt, (2) Total Debt shall include the
Permitted Third Party Debt to be incurred and (3)
scheduled payments of interest and principal on Total
Debt shall include projected scheduled payments of
interest and principal for such Permitted Third Party
Debt;
(v) Guarantees, etc. Assume, guarantee or (other than in the
ordinary course of its business) endorse or otherwise become or remain liable,
in connection with any obligation of any person, firm, company or other entity
except for guarantees, in connection herewith, in favor of the Lenders, the
Agent or the Westhampton Trustee or guarantees of Permitted Indebtedness;
(vi) Changes in Business. Change the nature of its business or
engage in any businesses other than domestic and international marine
transportation;
(vii) Use of Corporate Funds. Pay out any funds to any company or
Person except (a) as contemplated by the Acquisition Agreement (b) in the
ordinary course of business in connection with the management of the business of
the Security Parties, including the operation and/or repair of the Vessels and
other vessels owned, managed or operated by such parties and (c) the servicing
of Permitted Indebtedness provided, however, it shall not prepay any such
Permitted Indebtedness (excluding the Indebtedness hereunder and under the
Related Credit Agreement);
(viii) Issuance of Shares. Permit any subsidiaries to issue or
dispose of any shares of its own capital stock to any Person;
(ix) Sale of Shares. Sell, assign, transfer, pledge or otherwise
convey or dispose of any of the shares of the capital stock of any Security
Parties or Marine Car Carriers (MI);
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(x) Sale of Assets. Sell, or otherwise dispose of, any Vessel,
any shares in any subsidiary corporation or any other asset which represents all
or a substantial portion of its assets taken as a whole; or
(xi) Capital Expenditures. Make or commit to make any capital
expenditures provided, however, that in no event shall this subsection (xi)
preclude the Borrower or any other Security Party from undertaking necessary
repairs and improvements to any Vessel the cost of which, for accounting
purposes, is treated by the Borrower as a capital expenditure;
(xii) Changes in Offices or Names. Change the location of the chief
executive office of any Security Party, the office of the chief place of
business of any such parties, the office of the Security Parties in which the
records relating to the earnings or insurances of the Vessels are kept unless
the Agent shall have received thirty (30) days prior written notice of such
change;
(xiii) Changes in Management. Make any material changes in the
existing management of any Security Party;
(xiv) Consolidation and Merger. Consolidate with, or merge into,
any corporation or other entity, or merge any corporation or other entity into
it unless, in the case of the relevant Security Party, such company shall be the
surviving entity;
(xv) Chartering-in of Vessels. Except for the chartering-in of oil
tankers by OMI Petrolink Corp., a Delaware corporation, in connection with the
operation of its lightering business, charter-in any vessel under a charter
having a term (inclusive of all extensions and renewals) of twelve (12) months
or more;
(xvi) Dividends. (x) Declare or make, and procure that no other
Security Party shall declare or make to any party other than another Security
Party, any distributions to its shareholders, by dividend or otherwise, or
otherwise dispose of any assets to its shareholders in cash or in any other
manner or (y) enter into, and procure that no other Security Party shall enter
into, any agreement or arrangement (other than this Agreement and the Related
Credit Agreement) which restricts or limits it or such other Security Party from
making any such distributions to its immediate parent; and
(xvii) Loan from Marine Car Carriers (MI). Procure that Marine Car
Carriers (MI) shall not make any loans or advances to Marine Transport
Corporation or any subsidiary, officer, director, shareholder or Affiliate
thereof.
9.2 Vessel Valuations. At least every twelve (12) months commencing on the day
falling twelve (12) months from the date hereof and in any event upon the
request of the Agent, the Borrower shall obtain, at the Borrower's cost,
valuations of the Vessels OMI COLUMBIA, charter-free, in Dollars from two
independent shipbrokers satisfactory to the Agent. In the event the Borrower
fails or refuses to obtain the valuations requested
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pursuant to this Section 9.2 within ten (10) days of the Agent's request
therefor, the Agent shall be authorized to obtain such valuations, at the
Borrower's cost, from two independent shipbrokers selected by the Agent, which
valuations shall be deemed the equivalent of valuations duly obtained by the
Borrower pursuant to this Section 9.2, but the Agent's actions in doing so shall
not excuse any default of the Borrower under this Section 9.2. The average of
such two (2) valuations shall be the FMV of each Vessel.
9.3 Asset Maintenance. If at any time the Collateral Vessel Value (together with
the value of any additional collateral theretofore provided under this Section)
falls below one hundred fifty percent (150%) (the "Required Percentage") of an
amount (the "Principal Exposure") equal to the aggregate of (a) the Term Loan
Balance, (b) any Revolving Credit Facility Advances then outstanding, (c) any
undrawn amounts then available under the Revolving Credit Facility, (d) the
Related Indebtedness then outstanding and (e) any amounts then available to be
drawn down pursuant to the Related Credit Agreement, the Borrower shall, within
a period of thirty (30) days following receipt by the Borrower of written notice
from the Agent notifying the Borrower of such shortfall and specifying the
amount thereof (which amount shall, in the absence of manifest error, be deemed
to be conclusive and binding on the Borrower), either (a) deliver to the
Lenders, the Agent or the Westhampton Trustee as the case may be, such
additional collateral, as may be satisfactory to the Agent in its sole
discretion, of sufficient value to restore compliance with the Required
Percentage or (b) prepay such part of the Term Loan (together with interest
thereon and other moneys payable in respect of such prepayment pursuant to
Section 5.6) as shall result in the restoration of compliance with the Required
Percentages. Any such prepayment of the Term Loan shall be applied as provided
in Section 5.6. For purposes of calculating the Collateral Vessels Value under
this Section 9.3, the value of the OMI COLUMBIA shall be deemed to be equal to
the product of (1) the lightweight tonnage of such Vessel multiplied by (2)(x)
One Hundred Twenty-Five Dollars or (y) if such Vessel is hereafter subject to
legal restrictions as to the geographic location where such Vessel may be
scrapped, a scrap price, reasonably deemed by the Agent to reflect a
conservative average market scrap price for those jurisdictions in which, in the
Agent's reasonable opinion, such Vessel may be scrapped in a commercially
reasonable manner.
9.4 Inspection and Survey Reports. If the Agent shall so request, the Borrower
shall provide the Agent with copies of all internally generated inspection or
survey reports on the Vessels.
10. ASSIGNMENT
This Agreement shall be binding upon, and inure to the benefit of, the
Borrower, the Lenders, the Agent and the Westhampton Trustee and their
respective successors and assigns, except that the Borrower may not assign any
of its rights or obligations hereunder without the prior written consent of the
Majority Lenders. In giving any consent as aforesaid to any assignment by the
Borrower, the Lenders shall be entitled to impose such conditions as they shall
deem advisable. Each Lender shall be entitled to assign the whole or any part of
its rights or obligations under this Agreement or grant
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participation(s) in the Term Loan and the Revolving Credit Facility to any
subsidiary, holding company or other affiliate of such Lender, to any subsidiary
or other affiliate company of any thereof or to any other bank or financial
institution, and such Lender shall forthwith give notice of any such assignment
or participation to the Borrower provided, that, the relevant Lender assigns or
participates, as the case may be, to its assignee or participant, (a) equal
proportionate shares of such Lender's interest in both the Term Loan and the
Revolving Credit Facility and (b), simultaneously with its assignment or
participation of a share in the Indebtedness provided hereunder, an equal
proportionate share in the Related Indebtedness in accordance with the
provisions of the Related Credit Agreement and, provided, further, that in the
event of any assignment by any Lender, such assignment (but not any
participation) is to be made pursuant to an Assignment and Assumption Agreement.
The Borrower will take all reasonable actions requested by the Agent, on behalf
of such Lender.
11. ILLEGALITY, INCREASED COST, NON-AVAILABILITY, ETC.
11.1 Illegality. In the event that by reason of any change in any applicable
law, regulation or regulatory requirement or in the interpretation thereof (any
such change or interpretation), a Lender has a good faith reasonable basis to
conclude that it has become unlawful for it to maintain or give effect to its
obligations as contemplated by this Agreement, such Lender shall inform the
Borrower to that effect, whereafter the liability of such Lender to make its
portion of the Term Loan and/or the Revolving Credit Facility available shall
forthwith cease and the Borrower shall be required either to repay to such
Lender that portion of the outstanding balance of the Term Loan and/or the
Revolving Credit Facility funded by such Lender immediately or, with respect to
the Term Loan, if the relevant Lender so agrees, to repay such portion of the
Term Loan to such Lender on the last day of any then current Interest Period in
accordance with and subject to the provisions of Section 11.5. In any such
event, but without prejudice to the aforesaid obligations of the Borrower to
repay the Term Loan and/or the Revolving Credit Facility, the Borrower and the
relevant Lender shall negotiate in good faith with a view to agreeing on terms
for making such portion of the Term Loan and/or the Revolving Credit Facility
available from another jurisdiction or otherwise restructuring such portion of
the Term Loan and/or the Revolving Credit Facility on a basis which is not
unlawful.
11.2 Increased Costs. If any change in applicable law, regulation or regulatory
requirement, or in the interpretation or application thereof by any governmental
or other authority, shall:
(i) subject the Agent or any Lender to any Taxes with
respect to its income from the Term Loan and/or the
Revolving Credit Facility, or any part of either
thereof, or
(ii) change the basis of taxation to the Agent or any Lender
of payments of principal or interest or any other
payment due or to become due pursuant to this Agreement
(other than a change in the basis effected by the
jurisdiction of
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organization of the Agent or such Lender, the
jurisdiction of the principal place of business of the
Agent or such Lender, the United States of America, the
State or City of New York or any governmental
subdivision or other taxing authority having
jurisdiction over the Agent or Lender (unless such
jurisdiction is asserted by reason of the activities of
any of the Security Parties) or such other jurisdiction
where the Term Loan and/or the Revolving Credit Facility
may be payable), or
(iii) impose, modify or deem applicable any reserve
requirements or require the making of any special
deposits against or in respect of any assets or
liabilities of, deposits with or for the account of, or
loans by, the Lender, or
(iv) impose on the Agent or any Lender any other condition
affecting the Term Loan and/or the Revolving Credit
Facility or any part of either thereof,
and the result of the foregoing is either to increase the cost to such Lender of
making available or maintaining its Commitment or any part of either thereof or
to reduce the amount of any payment received by the Agent or such Lender, then
and in any such case if such increase or reduction in the opinion of the Agent
or such Lender materially affects the interests of the Agent or such Lender
under or in connection with this Agreement:
(a) the Agent or such Lender, as the case may be, shall notify the
Borrower of the occurrence of such event, and
(b) the Borrower agrees forthwith upon demand to pay to the Agent
or such Lender such amount as the Agent or such Lender
certifies to be necessary to compensate the Agent or such
Lender for such additional cost or such reduction.
11.3 Nonavailability of Funds. If the Agent shall determine that, by reason of
circumstances affecting the London Interbank Market generally, adequate and
reasonable means do not or will not exist for ascertaining the LIBOR for any
Interest Period, the Agent shall give notice of such determination to the
Borrower. The Borrower and the Agent shall then negotiate in good faith in order
to agree upon a mutually satisfactory interest rate and/or Interest Period to be
substituted for LIBOR which would otherwise have applied under this Agreement.
If the Borrower and Agent are unable to agree upon such a substituted interest
rate and/or Interest Period within thirty (30) days of the giving of such
determination notice, the Agent shall set an interest rate and Interest Period
to take effect from the expiration of the Interest Period in effect at the date
of determination, which rate shall be equal to the aggregate of (a) the cost to
each Lender (as certified by such Lender) of funding the relevant Advance, (b)
the then prevailing Margin and (c) in the case of Revolving Credit Facility
Advances, one quarter of one percent (0.25%). In
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the event the state of affairs to which this Section 11.3 refers shall extend
beyond the end of the Interest Period, the foregoing procedure shall continue to
apply until circumstances are such that LIBOR may be determined pursuant to
Section 6.
11.4 Agent's Certificate Conclusive. A certificate or determination notice of
the Agent or any Lender as to any of the matters referred to in this Section 11
shall, absent manifest error, be conclusive and binding on the Borrower.
11.5 Compensation for Losses. Where the Term Loan and/or the Revolving Credit
Facility or a portion of either thereof is to be repaid by the Borrower pursuant
to this Section 11, the Borrower agrees simultaneously with such repayment to
pay to the relevant Lender all accrued interest to the date of actual payment on
the amount repaid and all other sums then payable by the Borrower to the
relevant Lender pursuant to this Agreement together with such amounts as may be
certified by the relevant Lender to be necessary to compensate the Lender for
any actual loss, premium or penalties incurred or to be incurred thereby on
account of funds borrowed to make, fund or maintain its Commitment or such
portion of either thereof for the remainder (if any) of the then current
Interest Period or Periods, if any, but otherwise without penalty or premium.
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12. CURRENCY INDEMNITY
12.1 Currency Conversion. If for the purpose of obtaining or enforcing a
judgment in any court in any country it becomes necessary to convert into any
other currency (the "Judgment Currency") an amount due in Dollars under any
Financing Document then the conversion shall be made, in the discretion of the
Agent at the rate of exchange prevailing either on the date of default or on the
day before the day on which the judgment is given or the order for enforcement
is made, as the case may be (the "Conversion Date"), provided that the Agent
shall not be entitled to recover under this clause any amount in the Judgment
Currency which exceeds at the Conversion Date the amount in Dollars due under
any Financing Document.
12.2 Change in Exchange Rate. If there is a change in the rate of exchange
prevailing between the Conversion Date and the date of actual payment of the
amount due, the Borrower shall pay such additional amounts (if any, but in any
event not a lesser amount) as may be necessary to ensure that the amount paid in
the Judgment Currency when converted at the rate of exchange prevailing on the
date of payment will produce the amount then due under any Financing Document in
Dollars; any excess over the amount due received or collected by the Lenders
shall be remitted to the Borrower.
12.3 Additional Debt Due. Any amount due from the Borrower under this Section 12
shall be due as a separate debt and shall not be affected by judgment being
obtained for any other sums due under or in respect of the Financing Documents.
12.4. Rate of Exchange. The term "rate of exchange" in this Section 12 means the
rate at which the Agent in accordance with its normal practices is able on the
relevant date to purchase Dollars with the Judgment Currency and includes any
premium and costs of exchange payable in connection with such purchase.
13 FEES AND EXPENSES
13.1 Commitment Fee. The Borrower will pay to the Lenders a Commitment Fee at a
rate, per annum, equal to forty percent (40%) of the aggregate of (a) the then
applicable Margin and (b) one quarter of one percent (0.25%), accruing from the
date hereof, payable quarterly in arrears from the date hereof and on the Final
Payment Date, on the available but undrawn amount of the Revolving Credit
Facility. The Commitment Fee shall accrue from day to day and be calculated on
the actual number of days elapsed and a three hundred sixty (360) day year.
13.2 Facilities Fee. A Facilities Fee payable to the Lenders on the earlier of
(a) the date on which the Term Loans are repaid or prepaid in full or refinanced
and (b) the second anniversary of the date hereof. The Facilities Fee shall be
equal to the product of (x) Twenty-Four Million Dollars ($24,000,000) and (y),
if such fee is payable on or before the day falling (i) six (6) months after the
date hereof, one quarter of one percent (0.25%), (ii) twelve (12) months after
the date hereof, one half of one percent (0.50%) or
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(iii) twelve (12) months and one (1) day after the date hereof, three-quarters
of one percent (0.75%).
13.3 Other Fees. The Borrower shall pay the fees set forth in the fee letter
between the Borrower and the Agent dated the date hereof.
13.4 Expenses. The Borrower agrees, whether or not the transactions hereby
contemplated are consummated, on demand to pay, or reimburse the Lenders, the
Agent and the Westhampton Trustee for their payment of, the reasonable expenses
of the Lenders, the Agent and the Westhampton Trustee incident to said
transactions (and in connection with any supplements, amendments, waivers or
consents relating thereto or incurred in connection with the enforcement or
defense of any of the rights and remedies of any Lender, the Agent or the
Westhampton Trustee with respect thereto or in the preservation of the
priorities of the Lenders, the Agent or the Westhampton Trustee under the
documentation executed and delivered in connection therewith) including, without
limitation, all reasonable costs and expenses of preparation, negotiation,
execution and administration of this Agreement and the documents referred to
herein, the reasonable fees and disbursements of the counsel of the Lenders, the
Agent and the Westhampton Trustee in connection therewith, as well as the
reasonable fees and expenses of any independent appraisers, surveyors, engineers
and other consultants retained by the Lenders, the Agent or the Westhampton
Trustee for this transaction, all reasonable costs and expenses, if any, for the
enforcement of the Financing Documents and stamp and other similar taxes, if
any, incident to the execution and delivery of the documents (including, without
limitation, the Notes) herein contemplated and to hold the Lenders, the Agent
and the Westhampton Trustee free and harmless in connection with any liability
arising from the nonpayment of any such stamp or other similar taxes. Such taxes
and, if any, interest and penalties related thereto as may become payable after
the date hereof shall be paid immediately by the Borrower to the relevant
Lender, the Agent or the Westhampton Trustee, as the case may be, when liability
therefor is no longer contested by the Lenders, the Agent or the Westhampton
Trustee, as the case may be, or reimbursed immediately by the Borrower to such
Lender, the Agent or the Westhampton Trustee, as the case may be.
14. APPLICABLE LAW, JURISDICTION AND WAIVER
14.1 Applicable Law. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of New York without any reference to the
conflicts of laws principles of such State.
14.2 Jurisdiction. The Borrower hereby irrevocably submits to the jurisdiction
of the courts of the State of New York and of the United States District Court
for the Southern District of New York in any action or proceeding brought
against it by the Agent, any Lender or the Westhampton Trustee under this
Agreement or under any document delivered hereunder and hereby irrevocably
agrees that valid service of summons or other legal process on it may be
effected by serving a copy of the summons and other legal process in any such
action or proceeding on the Borrower by mailing or delivering the
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same by hand to the Borrower at the address indicated for notices in Section
16.2. The service, as herein provided, of such summons or other legal process in
any such action or proceeding shall be deemed personal service and accepted by
the Borrower as such, and shall be legal and binding upon the Borrower for all
the purposes of any such action or proceeding. Final judgment (a certified or
exemplified copy of which shall be conclusive evidence of the fact and of the
amount of any indebtedness of the Borrower to the Agent, the Lenders or the
Westhampton Trustee) against the Borrower in any such legal action or proceeding
shall be conclusive and may be enforced in other jurisdictions by suit on the
judgment. The Borrower will advise the Agent promptly of any change of address
for the purpose of service of process. Notwithstanding anything herein to the
contrary, the Lenders, the Agent or the Westhampton Trustee may bring any legal
action or proceeding in any other appropriate jurisdiction.
14.3 WAIVER OF JURY TRIAL. IT IS MUTUALLY AGREED BY AND AMONG THE BORROWER, THE
OTHER SECURITY PARTIES, THE AGENT, THE WESTHAMPTON TRUSTEE AND THE LENDERS THAT
EACH OF THEM HEREBY WAIVES TRIAL BY JURY IN ANY ACTION, PROCEEDING OR
COUNTERCLAIM BROUGHT BY ANY PARTY TO ANY FINANCING DOCUMENT AGAINST ANY OTHER
PARTY TO ANY FINANCING DOCUMENT ON ANY MATTER WHATSOEVER ARISING OUT OF OR IN
ANY WAY CONNECTED WITH ANY FINANCING DOCUMENT.
15. THE AGENT
15.1 (a) Appointment of Agent. Each of the Lenders hereby irrevocably appoints
and authorizes the Agent (which for purposes of this Section 15 shall be deemed
to include the Agent acting in its capacity as security trustee pursuant to
Section 15.1(b)) to take such action as agent on its behalf and to exercise such
powers under the Financing Documents as are delegated to the Agent by the terms
hereof and thereof. Neither the Agent nor any of its directors, officers,
employees or agents shall be liable for any action taken or omitted to be taken
by it or them under the Financing Documents or in connection therewith, except
for its or their own gross negligence or willful misconduct.
(b) Appointment of Security Trustee. Each of the Lenders irrevocably
appoints the Agent as security trustee on their respective behalf with regard to
the (i) security, powers, rights, titles, benefits and interests (both present
and future) constituted by and conferred on the Lenders or any of them or for
the benefit thereof under or pursuant to the Financing Documents (including,
without limitation, the benefit of all covenants, undertakings, representations,
warranties and obligations given, made or undertaken to any Lender in any
Financing Document), (ii) all moneys, property and other assets paid or
transferred to or vested in any Lender or any agent of any Lender or received or
recovered by any Lender or any agent of any Lender pursuant to, or in connection
with, the Financing Documents whether from any Security Party or any other
person and (iii) all money, investments, property and other assets at any time
representing or deriving from any of the foregoing, including all interest,
income and other sums at
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any time received or receivable by any Lender or any agent of any Lender in
respect of the same (or any part thereof). The Agent hereby accepts such
appointment.
15.2 Distribution of Payments. Whenever any payment is received by the Agent
from any Security Party for the account of the Lenders, or any of them, whether
of principal or interest on the Notes, commissions, fees under Sections 13.1 or
13.2 and expenses under Section 13.4, or otherwise, it will thereafter cause to
be distributed on the same day if received before 11 a.m. New York time, or on
the next day if received thereafter, like funds relating to such payment ratably
to the Lenders according to their respective Commitments, in each case to be
applied according to the terms of this Agreement.
15.3 Holder of Interest in Note. The Agent may treat each Lender as the holder
of all of the interest of such Lender in the Note, until, in the case of an
assignment, the Agent has received an original Assignment and Assumption
Agreement executed by such Lender and its assignee.
15.4 No Duty to Examine, Etc. The Agent shall not be under a duty to examine or
pass upon the validity, effectiveness or genuineness of any of the Financing
Documents or any instrument, document or communication furnished pursuant to or
in connection with any Financing Document, and the Agent shall, in the absence
of gross negligence, be entitled to assume that the same are valid, effective
and genuine, have been signed or sent by the proper parties and are what they
purport to be.
15.5 Agent as Lender. With respect to that portion of the Term Loan and the
Revolving Credit Facility made available by it, the Agent shall have the same
rights and powers hereunder as any other Lender and may exercise the same as
though it were not the Agent, and the term "Lender" or "Lenders" shall include
the Agent in its capacity as a Lender. The Agent and its affiliates may accept
deposits from, lend money to and generally engage in any kind of business with,
the Security Parties as if it were not the Agent.
15.6 (a) Obligations of Agent. The obligations of the Agent under the Financing
Documents are only those expressly set forth herein and therein.
(b) No Duty to Investigate. The Agent shall not at any time be under any
duty to investigate whether an Event of Default, or an event which with the
giving of notice or lapse of time, or both, would constitute an Event of
Default, has occurred or to investigate the performance of any Financing
Document by any Security Party.
15.7 (a) Discretion of Agent. The Agent shall be entitled to use its discretion
with respect to exercising or refraining from exercising any rights which may be
vested in it by, and with respect to taking or refraining from taking any action
or actions which it may be able to take under or in respect of, the Financing
Documents, unless the Agent shall have been instructed by the Majority Lenders
to exercise such rights or to take or refrain from taking such action; provided,
however, that the Agent shall not be required
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<PAGE> 70
to take any action which exposes the Agent to personal liability or which is
contrary to this Agreement or applicable law.
(b) Instructions of Majority Lenders. The Agent shall in all cases be
fully protected in acting or refraining from acting under any Financing Document
in accordance with the instructions of the Majority Lenders, and any action
taken or failure to act pursuant to such instructions shall be binding on all of
the Lenders.
15.8 Assumption re Event of Default. Unless the Agent has been notified by any
Security Party that an Event of Default, or event which with the giving of
notice or lapse of time, or both, would constitute an Event of Default, has
occurred and is continuing, or has been notified by a Lender that such Lender
considers that an Event of Default or such an event (specifying in detail the
nature thereof) has occurred and is continuing, except as otherwise provided in
Section 15.14 hereof, the Agent shall be entitled to assume that no Event of
Default, or event which with the giving of notice or lapse of time, or both,
would constitute an Event of Default, has occurred and is continuing. In the
event that the Agent shall have been notified by any Security Party or any
Lender in the manner set forth in the preceding sentence of any Event of Default
or of an event which with the giving of notice or lapse of time, or both, would
constitute an Event of Default, the Agent shall notify the Lenders and shall
take action and assert such rights under the Financing Documents as the Majority
Lenders shall request in writing.
15.9 No Liability of Agent or Lenders. Neither the Agent nor any of the Lenders
shall be under any liability or responsibility whatsoever:
(a) to any Security Party or any other person or entity as a consequence
of any failure or delay in performance by, or any breach by, any other Lenders
or any other person of any of its or their obligations under any Financing
Document;
(b) to any Lender or Lenders, as a consequence of any failure or delay in
performance by, or any breach by, any Security Party of any of its respective
obligations under the Financing Documents; or
(c) to any Lender or Lenders, for any statements, representations or
warranties contained in any Financing Document or any document or instrument
delivered in connection with the transaction hereby contemplated; or for the
validity, effectiveness, enforceability or sufficiency of any Financing Document
or any document or instrument delivered in connection with the transactions
hereby contemplated.
15.10 Indemnification of Agent. The Lenders agree to indemnify the Agent (to the
extent not reimbursed by the Security Parties or any thereof), pro rata
according to the respective amounts of their Commitments, from and against any
and all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements of any kind or nature
whatsoever (including legal fees and expenses incurred in investigating claims
and defending itself against such liabilities) which may be imposed on, incurred
by or asserted against, the Agent in any way relating to or arising
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<PAGE> 71
out of any Financing Document, any action taken or omitted by the Agent
thereunder or the preparation, administration, amendment or enforcement of, or
waiver of any provision of, any Financing Document, except that no Lender shall
be liable for any portion of such liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements resulting
from the Agent's gross negligence or willful misconduct.
15.11 Consultation with Counsel. The Agent may consult with legal counsel
selected by the Agent and shall not be liable for any action taken, permitted or
omitted by it in good faith in accordance with the advice or opinion of such
counsel.
15.12 Resignation. The Agent may resign at any time by giving sixty (60) days'
written notice thereof to the Lenders and the Borrower. Upon any such
resignation, the Lenders shall have the right to appoint a successor Agent. If
no successor Agent shall have been so appointed by the Lenders and shall have
accepted such appointment within sixty (60) days after the retiring Agent's
giving notice of resignation, then the retiring Agent may, on behalf of the
Lenders, appoint a successor Agent which shall be a bank or trust company of
recognized standing. The appointment of any successor Agent shall be subject to
the prior written consent of the Borrower, such consent not be unreasonably
withheld. After any retiring Agent's resignation as Agent hereunder, the
provisions of this Section 15 shall continue in effect for its benefit with
respect to any actions taken or omitted by it while acting as Agent.
15.13 Representations of Lenders. Each Lender represents and warrants to each
other Lender and the Agent that:
(i) In making its decision to enter into this Agreement and to make its
Commitment available hereunder, it has independently taken whatever steps it
considers necessary to evaluate the financial condition and affairs of the
Security Parties, that it has made an independent credit judgment and that it
has not relied upon any statement, representation or warranty by any other
Lender or the Agent; and
(ii) So long as any portion of its Commitment remain outstanding, it will
continue to make its own independent evaluation of the financial condition and
affairs of the Security Parties.
15.14 Notification of Event of Default. The Agent hereby undertakes to notify
promptly the Lenders, and the Lenders hereby undertake to notify promptly the
Agent and the other Lenders, of the existence of any Event of Default which
shall have occurred and be continuing of which the Agent or any Lender has
actual knowledge.
16. NOTICES AND DEMANDS
16.1 Notices in Writing. Every notice or demand under this Agreement shall be in
writing and may be given or made by facsimile.
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16.2 Addresses for Notice. Every notice or demand shall be sent as follows:
If to the Borrower:
c/o Marine Transport Corporation
1200 Harbour Boulevard, 9th Floor,
Weehawken, New Jersey 07087
Fax No.: 201-330-9645
Attn: General Counsel, P.N. Popov
If to the Agent (with copies to the Lenders):
200 Park Avenue
New York, New York 10166
Fax No.: 212-681-3900
Attn: Nikolai Nachamkin
If to the Lenders, to such Lender's address and fax number as set forth in
Schedule 1 (with a copy to the Agent).
Any notice sent by facsimile shall be confirmed by letter dispatched as soon as
practicable thereafter.
16.3 Notices Deemed Received. Every notice or demand shall, except so far as
otherwise expressly provided by this Agreement, be deemed to have been received
(provided that it is received prior to 2 p.m. New York time; otherwise it shall
be deemed to have been received on the next following Banking Day), in the case
of a facsimile at the time of dispatch thereof (provided further that if the
date of dispatch is not a Banking Day in the locality of the party to whom such
notice or demand is sent it shall be deemed to have been received on the next
following Banking Day in such locality) and, in the case of a letter, at the
time of receipt thereof.
17. MISCELLANEOUS
17.1 Time of Essence. Time is of the essence of this Agreement but no failure or
delay on the part of the Lenders, the Agent or the Westhampton Trustee to
exercise any power or right under this Agreement shall operate as a waiver
thereof, nor shall any single or partial exercise by the Lenders, the Agent or
the Westhampton Trustee of any power or right hereunder preclude any other or
further exercise thereof or the exercise of any other power or right. The
remedies provided herein are cumulative and are not exclusive of any remedies
provided by law.
17.2 Unenforceable, etc., Provisions - Effect. In case any one or more of the
provisions contained in any Financing Document would, if given effect, be
invalid, illegal or unenforceable in any respect under any law applicable in any
relevant jurisdiction, said provision shall not be enforceable against the
relevant Security Party,
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<PAGE> 73
but the validity, legality and enforceability of the remaining provisions herein
or therein contained shall not in any way be affected or impaired thereby.
17.3 Indemnification. The Borrower and, by its execution and delivery of the
Consent and Agreement set forth below, each of the other Security Parties
jointly and severally agree to indemnify the Lenders, the Agent, the Westhampton
Trustee, their respective successors and assigns, and their respective officers,
directors, employees, representatives and agents (each an "Indemnitee") from,
and hold each of them harmless against, any and all losses, liabilities, claims,
damages, expenses, obligations, penalties, actions, judgments, suits, costs or
disbursements of any kind or nature whatsoever (including, without limitation,
the fees and disbursements of counsel for such Indemnitee in connection with any
investigative, administrative or judicial proceeding commenced or threatened,
whether or not such Indemnitee shall be designated a party thereto) that may at
any time (including, without limitation, at any time following the repayment of
the Term Loan and the Revolving Credit Facility Advances) be imposed on,
asserted against or incurred by, any Indemnitee as a result of, or arising out
of or in any way related to or by reason of, (a) any violation by any Security
Party (or any charterer or other operator of any Vessel) of any applicable
Environmental Law, (b) any Environmental Claim arising out of the management,
use, control, ownership or operation of property or assets by any Security Party
(or, after foreclosure, by the Lenders, the Agent, the Westhampton Trustee or
their respective successors or assigns after any such foreclosure) and (3) the
breach of any representation, warranty or covenant set forth in Sections 2.1 (p)
or (q) or 9.1(A)(xi). If and to the extent that the obligations of the Security
Parties under this Section are unenforceable for any reason, the Borrower and,
by its execution and delivery of the Consent and Agreement set forth below, each
of the other Security Parties jointly and severally agree to make the maximum
contribution to the payment and satisfaction of such obligations which is
permissible under applicable law. The obligations of the Security Parties under
this Section 17.3 shall survive the termination of this Agreement and the
repayment to the Lender, the Agent and the Westhampton Trustee of all amounts
owing to each thereof under or in connection herewith.
17.4 References. References herein to Sections and Schedules are to be construed
as references to sections of, and schedules to, this Agreement.
17.5 Further Assurances. The Borrower agrees that if any Financing Document
shall, in the reasonable opinion of the Agent, at any time be deemed by the
Agent for any reason insufficient in whole or in part to carry out the true
intent and spirit hereof or thereof, it will execute or cause to be executed
such other and further assurances and documents as in the opinion of the Agent
may be required in order more effectively to accomplish the purposes of such
Financing Document.
17.6 Prior Agreements, Merger. Any and all prior understandings and agreements
heretofore entered into between the Security Parties on the one part, and the
Lenders, the Agent or the Westhampton Trustee, on the other part, whether
written or oral, are superseded by and merged into this Agreement and the other
agreements (the forms of which are exhibited hereto) to be executed and
delivered in connection herewith to which
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any Security Party and/or the Lenders, the Agent or the Westhampton Trustee are
parties, which alone fully and completely express the agreements between the
Security Parties, the Lenders, the Agent and the Westhampton Trustee.
17.7 Entire Agreement; Amendments. This Agreement constitutes the entire
agreement of the parties hereto including all parties added hereto pursuant to
an Assignment and Assumption Agreement and cannot be amended other than by
written agreement signed by all such parties.
17.8 Headings. In this Agreement, Section headings are inserted for convenience
of reference only and shall not be taken into account in the interpretation of
this Agreement.
IN WITNESS whereof, each party hereto has caused this Agreement to
be duly executed by its duly authorized representative on the day and year first
above written.
MARINE TRANSPORT LINES, INC.
By:____________________________
Name:
Title:
By Special Authority for
DEN NORSKE BANK ASA
By:____________________________
Theodore S. Jadick
Senior Vice President
New York Branch
By:____________________________
Nikolai Nachamkin
Vice President
New York Branch
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<PAGE> 75
CONSENT AND AGREEMENT
AND ACCOUNT ASSIGNMENT
Each of the undersigned, referred to in the foregoing Amended and
Restated Term Loan and Revolving Credit Facility Agreement as the "Guarantors",
hereby consents and agrees to said Agreement and to the documents contemplated
thereby and to the provisions contained therein relating to conditions to be
fulfilled and obligations to be performed by the undersigned pursuant to or in
connection with said Agreement and particularly agree to be bound by the
representations, warranties and covenants relating to the undersigned contained
in Sections 2 and 9 of said Agreement to the same extent as if the undersigned
were a party to said Agreement.
In particular, but without limitation of the foregoing, each of the
undersigned hereby covenants and agrees to maintain its primary collection and
revenue accounts with the Agent and shall procure that all earnings of any
Vessels shall be paid into such collection accounts. As security for its
obligations under the Financing Documents, each of the undersigned hereby
pledges, assigns and grants the Agent, on behalf of the Lenders, a security
interest in all the undersigned's right, title and interest in and to the
aforesaid collection and disbursement accounts and consents that if an Event of
Default shall occur and so long as the same shall be continuing, all moneys held
in the said accounts and all moneys thereafter received by the Agent may be
applied as provided in Section 8.3 of the Agreement.
Each of the undersigned which are Existing Guarantors, as defined in
the Agreement hereby covenants and agrees that each of the Security Documents
executed thereby pursuant to the Original Credit Agreement shall be amended to
the extent that all references therein to the Credit Agreement, the Notes, the
Guaranty, the Mortgages and the other Security Documents shall be deemed to
refer to the Agreement, the Notes, the Guaranty and the Security Documents as
the same are amended and restated or amended in accordance with the terms of the
foregoing Agreement.
MARINE TRANSPORT OSWEGO CORPORATION
MANAGEMENT, INC.
By:_________________________ By:___________________________
Peter N. Popov Peter N. Popov
Secretary Secretary
OSWEGO CHEMICAL CARRIERS MARINE BARGE COMPANY
CORPORATION
By:_________________________ By:___________________________
Peter N. Popov Peter N. Popov
Secretary Secretary
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MARINE CHEMICAL NAVIGATION MARINE NAVIGATION SULPHUR
CORPORATION CARRIERS, INC.
By:_________________________ By:___________________________
Peter N. Popov Peter N. Popov
Secretary Secretary
MARINE SULPHUR SHIPPING MARINE ALASKA, INC.
CORPORATION
By:_________________________ By:_________________________
Peter N. Popov Peter N. Popov
Secretary Secretary
OMI CHALLENGER TRANSPORT, INC. OMI PETROLINK, CORP.
By:_________________________ By:_________________________
Peter N. Popov Peter N. Popov
Secretary Secretary
COURIER TRANSPORT, INC. INTREPID SHIP MANAGEMENT, INC.
By:_________________________ By:_________________________
Peter N. Popov Peter N. Popov
Secretary Secretary
PATRIOT TRANSPORT, INC. ROVER TRANSPORT, INC.
By:_________________________ By:_________________________
Peter N. Popov Peter N. Popov
Secretary Secretary
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HARLINK CORP. OMIP, INC.
By:_________________________ By:_________________________
Peter N. Popov Peter N. Popov
Secretary Secretary
NUELINK CORP. OMI OFFSHORE MARINE SERVICES
INC.
By:_________________________ By:_________________________
Peter N. Popov Peter N. Popov
Secretary Secretary
MARINE TRANSPORT CORPORATION MARINE CAR CARRIERS INC., a
Delaware corporation
By:_________________________ By:_________________________
Peter N. Popov Peter N. Popov
Secretary Secretary
69
<PAGE> 1
Exhibit 10.12
TERM LOAN AND REVOLVING CREDIT FACILITY AGREEMENT
- --------------------------------------------------------------------------------
MARINE TRANSPORT CORPORATION
Borrower
The Financial Institutions Listed on Schedule 1,
Lenders
and
DEN NORSKE BANK ASA,
Agent
- --------------------------------------------------------------------------------
as of June 17, 1998
<PAGE> 2
INDEX
PAGE
----
SECTION 1 DEFINITIONS.................................................... 1
1.1 Defined Terms........................................ 1
1.2 Construction......................................... 21
1.3 Accounting Terms..................................... 22
SECTION 2 REPRESENTATIONS AND WARRANTIES................................. 22
2.1(a) Due Organization and Power........................... 22
2.1(b) Authorization and Consents........................... 22
2.1(c) Binding Obligations.................................. 22
2.1(d) No Violation......................................... 22
2.1(e) Litigation........................................... 23
2.1(f) No Default........................................... 23
2.1(g) Vessels.............................................. 23
2.1(h) Insurance............................................ 24
2.1(i) Citizenship and Qualification as Owner............... 24
2.1(j) Financial Information................................ 24
2.1(k) Tax Returns.......................................... 24
2.1(l) ERISA................................................ 24
2.1(m) Chief Executive Office............................... 25
2.1(n) Foreign Trade Control Regulations.................... 25
2.1(o) Equity Ownership..................................... 25
2.1(p) Environmental Matters................................ 26
2.1(q) Pending, Threatened or Potential Environmental Claims 26
2.1(r) Compliance with ISM Code............................. 27
2.1(s) Threatened Withdrawal of DOC or SMC.................. 27
2.1(t) Year 2000 Issue...................................... 27
SECTION 3 ADVANCES....................................................... 27
3.1 Purposes............................................. 27
3.2 Term Loan Advances................................... 27
3.3 Revolving Credit Facility Advances................... 27
3.4 Drawdown Notice...................................... 28
3.5 Effect of Drawdown Notices........................... 28
3.6 Notation of Advances................................. 28
SECTION 4 CONDITIONS..................................................... 28
4.1 Conditions to Advance of Term Loan and the Initial
Revolving Credit Facility Advance................. 28
i
<PAGE> 3
4.2 Further Conditions Precedent......................... 34
4.3 Satisfaction After Drawdown.......................... 35
4.4 Breakfunding Costs................................... 35
SECTION 5 REPAYMENT, PREPAYMENT AND REDUCTION
OF FACILITY............................................ 35
5.1 Repayment of Term Loan............................... 35
5.2 Revolving Credit Facility............................ 35
5.3 Voluntary Prepayment of Term Loan.................... 35
5.4 Mandatory Prepayment of Term Loan.................... 36
5.5 Prepay Term Loans Pro Rata........................... 36
5.6 Application of Prepayments........................... 36
5.7 Mandatory Reduction of Revolving Credit Facility..... 36
5.8 Voluntary Reduction of Revolving Credit Facility..... 36
SECTION 6 INTEREST AND RATE.............................................. 37
6.1 Term Loan Applicable Rate and Default Rate........... 37
6.2 Revolving Credit Facility Applicable Rate and
Default Rate...................................... 37
6.3 Determination of Applicable Margin................... 37
6.4 Determination of LIBOR............................... 37
6.5 Interest Periods..................................... 38
6.6 Interest Payments.................................... 38
6.7 Payment on Banking Day............................... 38
6.8 Calculation of Interest.............................. 38
SECTION 7 PAYMENTS....................................................... 39
7.1 Place of Payments, No Set Off........................ 39
7.2 Tax Credits.......................................... 39
SECTION 8 EVENTS OF DEFAULT.............................................. 39
8.1(a) Non-Payment of Principal............................. 39
8.1(b) Non-Payment of Interest or Other Amounts............. 39
8.1(c) Representations...................................... 39
8.1(d) Covenants............................................ 40
8.1(e) Indebtedness......................................... 40
8.1(f) Change of Control; Ownership or Management of
Other Security.................................... 40
8.1(g) U.S. Citizenship..................................... 40
8.1(h) Bankruptcy........................................... 41
8.1(i) Termination of Operations; Sale of Assets............ 41
8.1(j) Judgments............................................ 41
ii
<PAGE> 4
8.1(k) Inability to Pay Debts............................... 41
8.1(l) Change in Financial Position......................... 41
8.1(m) Relevant Contracts................................... 41
8.1(n) Key Management Agreements............................ 41
8.1(o) Related Credit Agreement; OMI COLUMBIA
Loan Documents and Mortgage Securing
OMI Debt.......................................... 42
8.2 Indemnification...................................... 42
8.3 Application of Moneys................................ 42
SECTION 9 COVENANTS...................................................... 43
9.1(A)(i) Performance of Agreements............................ 43
9.1(A)(ii) Notice of Default; Litigation and Adverse Change .... 43
9.1(A)(iii) Obtain Consents...................................... 44
9.1(A)(iv) Financial Information................................ 44
9.1(A)(v) U.S. Citizenship; Qualification to Own
Foreign Flag Vessels.............................. 45
9.1(A)(vi) Corporate Existence.................................. 45
9.1(A)(vii) Books and Records.................................... 45
9.1(A)(viii) Taxes and Assessments................................ 45
9.1(A)(ix) Inspection........................................... 45
9.1(A)(x) Compliance with Statutes, etc........................ 45
9.1(A)(xi) Environmental Matters................................ 46
9.1(A)(xii) ERISA................................................ 46
9.1(A)(xiii) Vessel Management.................................... 46
9.1(A)(xiv) Cash................................................. 46
9.1(A)(xv) Working Capital...................................... 47
9.1(A)(xvi) Debt Service Coverage Ratio.......................... 47
9.1(A)(xvii) Total Debt to EBITDA................................. 47
9.1(A)(xviii) Brokerage Commissions, etc........................... 47
9.1(A)(xix) Deposit Accounts; Assignment......................... 47
9.1(A)(xx) MARINE DUVAL, AMELINA, CALINA and SAVONETTA.......... 48
9.1(A)(xxi) Proceeds of Marine Car Carriers (MI).............. 48
9.1(A)(xxi) Year 2000 Issue...................................... 48
9.1(A)(xxii) ISM Code Matter...................................... 48
9.1(A)(xxiii) OMI Columbia......................................... 49
9.1(B)(i) Liens ............................................... 49
9.1(B)(ii) Loans, Advances and Investments...................... 50
9.1(B)(iii) Indebtedness......................................... 50
9.1(B)(iv) Permitted Third Party Debt........................... 50
9.1(B)(v) Guarantees, etc...................................... 51
9.1(B)(vi) Changes in Business.................................. 51
9.1(B)(vii) Use of Corporate Funds............................... 51
9.1(B)(viii) Issuance of Shares................................... 51
iii
<PAGE> 5
9.1(B)(ix) Sale of Shares....................................... 51
9.1(B)(x) Sale of Assets....................................... 51
9.1(B)(xi) Capital Expenditures................................. 51
9.1(B)(xii) Changes in Offices or Names.......................... 52
9.1(B)(xiii) Changes in Management................................ 52
9.1(B)(xiv) Consolidation and Merger............................. 52
9.1(B)(xv) Chartering-in of Vessels............................. 52
9.1(B)(xvi) Dividends............................................ 52
9.1(B)(xvii) Loan From Marine Car Carriers (MI)................... 52
9.2 Vessel Valuations.................................... 52
9.3 Asset Maintenance.................................... 53
9.4 Inspection and Survey Reports........................ 53
SECTION 10 ASSIGNMENT.................................................... 53
SECTION 11 ILLEGALITY, INCREASED COST,
NON-AVAILABILITY, ETC.................................... 54
11.1 Illegality........................................... 54
11.2 Increased Cost....................................... 54
11.3 Nonavailability of Funds............................. 55
11.4 Agent's Certificate Conclusive....................... 55
11.5 Compensation for Losses.............................. 56
SECTION 12 CURRENCY INDEMNITY............................................ 56
12.1 Currency Conversion.................................. 56
12.2 Change in Exchange Rate.............................. 56
12.3 Additional Debt Due.................................. 56
12.4 Rate of Exchange..................................... 56
SECTION 13 FEES AND EXPENSES............................................. 56
13.1 Commitment Fee....................................... 56
13.2 Facility Fee......................................... 57
13.3 Other Fees........................................... 57
13.4 Expenses............................................. 57
SECTION 14 APPLICABLE LAW, JURISDICTION AND WAIVER....................... 57
14.1 Applicable Law....................................... 57
14.2 Jurisdiction......................................... 58
14.3 Waiver Of Jury Trial................................. 58
iv
<PAGE> 6
SECTION 15 THE AGENT..................................................... 58
15.1(a) Appointment of Agent................................. 58
15.1(b) Appointment of Security Trustee...................... 58
15.2 Distribution of Payments............................. 59
15.3 Holder of Interest in Note........................... 59
15.4 No Duty to Examine, Etc.............................. 59
15.5 Agent as Lender...................................... 59
15.6(a) Obligations of Agent................................. 59
15.6(b) No Duty to Investigate............................... 59
15.7(a) Discretion of Agent.................................. 60
15.7(b) Instructions of Majority Lenders..................... 60
15.8 Assumption re Event of Default....................... 60
15.9 No Liability of Agent or Lenders..................... 60
15.10 Indemnification of Agent............................. 61
15.11 Consultation with Counsel............................ 61
15.12 Resignation.......................................... 61
15.13 Representations of Lenders........................... 61
15.14 Notification of Event of Default..................... 61
SECTION 16 NOT ICES AND DEMANDS...................................... 62
16.1 Notices in Writing................................... 62
16.2 Addresses for Notice................................. 62
16.3 Notices Deemed Received.............................. 62
SECTION 17 MISCELLANEOUS................................................. 62
17.1 Time of Essence...................................... 62
17.2 Unenforceable, etc., Provisions - Effect............. 63
17.3 Indemnification...................................... 63
17.4 References........................................... 63
17.5 Further Assurances................................... 63
17.6 Prior Agreements, Merger............................. 64
17.7 Entire Agreement, Amendments......................... 64
17.8 Headings............................................. 64
CONSENT AND AGREEMENT AND ACCOUNT ASSIGNMENT.............................. 65
v
<PAGE> 7
SCHEDULES
1 LENDERS
2 GUARANTORS
3 OTHER SUBSIDIARIES
4 MORTGAGED VESSELS
5 OTHER VESSELS
6 MANAGEMENT AGREEMENTS
7 LITIGATION, SUITS, PROCEEDINGS AND
ENVIRONMENTAL CLAIMS
EXHIBITS
1 TERM LOAN NOTE
2 REVOLVING CREDIT FACILITY NOTE
3 GUARANTY
4 U.S. MORTGAGE
5 LIBERIAN MORTGAGE
6 EARNINGS ASSIGNMENTS
7 INSURANCES ASSIGNMENTS
8 GENERAL SECURITY AGREEMENT
9 ASSIGNMENT OF VESSEL MANAGEMENT RECEIVABLES
10 ASSIGNMENT OF JOINT VENTURE PROCEEDS
11 ASSIGNMENT OF GOVERNMENT RECEIVABLES
12 NEGATIVE PLEDGE
13 DRAWDOWN NOTICE
14 COMPLIANCE CERTIFICATE
vi
<PAGE> 8
15 ASSIGNMENT AND ASSUMPTION AGREEMENT
vii
<PAGE> 9
TERM LOAN AND REVOLVING CREDIT FACILITY AGREEMENT
THIS TERM LOAN AND REVOLVING CREDIT FACILITY AGREEMENT (this
"Agreement") is made as of the day of June, 1998, by and between (1) MARINE
TRANSPORT CORPORATION, a corporation incorporated under the laws of the State of
Delaware with offices at 1200 Harbour Boulevard, 9th Floor, Weehawken, New
Jersey (the "Borrower"), (2) the financial institutions listed on Schedule 1
hereto (together with their respective successors and assigns hereinafter called
the "Lenders") and (3) DEN NORSKE BANK ASA, acting through its New York branch,
with offices at 200 Park Avenue, New York, New York 10166 (the "Agent").
WITNESSETH THAT:
1. DEFINITIONS
1.1 Defined Terms. The words and expressions specified in this Agreement shall,
except where the context otherwise requires, have the meanings attributed to
them below:
"Acceptable Accounting Firm" Ernst & Young, or such other recognized
international accounting firm as shall be
approved by the Agent, such approval not to be
unreasonably withheld;
"Acquisition Agreement" that certain acquisition agreement, dated as of
September 15, 1997, among OMI Corp., Universal
Bulk Carriers, Inc., Marine Transport Lines and
the persons set forth on Exhibit A attached
thereto, together with any and all amendments,
modifications or waivers of provisions thereof
and supplements thereto;
"Advance" each Term Loan Advance and each Revolving
Credit Facility Advance;
"Affiliate" as to any Person, any other Person that,
directly or indirectly, controls or is
controlled by or is under common control with
such Person. (For purposes of this definition,
the term "control", including the terms
"controlling", "controlled by" and "under
common control with", of a Person means the
possession, direct or indirect, of the power to
vote 5% or more of the securities having
ordinary voting power for
<PAGE> 10
the election of directors of such Person or to
direct or cause the direction of the management
and policies of such Person, whether through
the ownership of voting securities, by contract
or otherwise);
"AMELINA" that certain 10,922 dwt Liberian flag ammonia
tanker named AMELINA, Official No. 2015
documented under the laws and flag of the
Republic of Liberia in the name of Oswego
Chemical Carriers Corporation;
"Argosy" Argosy Ventures Ltd., a Delaware not-for-profit
corporation.
"Assignment and Assumption the Assignment and Assumption Agreement(s)
Agreement(s)" executed pursuant to Section 10 substantially
in the form of Exhibit 15;
"Assignment Notices" notices for the (a) Earnings Assignments
substantially in the form set out in Exhibit 1
thereto or in such other form as the Agent may
agree;
(b) Insurances Assignments substantially in the
form set out in Exhibit 3 thereto or in such
other form as the Agent may agree;
(c) Assignments of Vessel Management
Receivables substantially in the form set out
in Exhibit 1 thereto or in such other form as
the Agent may agree;
(d) Assignment of Joint Venture Proceeds
substantially in the form set out in Exhibit 1
thereto or in such other form as the Agent may
agree; and
(e) Assignments of Government Receivables
substantially in the forms set out in Exhibits
1 and 2 thereto or in such other form as the
Agent may agree;
2
<PAGE> 11
"Assignment of Government the assignments of receivables payable to
Receivables" Marine Transport Lines or Intrepid Ship
Management, Inc., as the case may be, for their
respective contracts with MARAD executed or to
be executed by Marine Transport Lines and
Intrepid Ship Management, Inc. in favor of the
Agent pursuant to Section 4.1 of this
Agreement, substantially in the form of Exhibit
11 or in such other form as the Agent may
agree;
"Assignment of Joint Venture the second assignment of those proceeds to
Proceeds" which Marine Car Carriers (Del) is entitled
based upon its shares in Marine Car Carriers
(MI) such assignment to be executed by Marine
Car Carriers (Del) in favor of the Agent
pursuant to the Original Credit Agreement in
the form set out in Exhibit 12 or in such other
form as the Agent may agree;
"Assignment of Vessel the assignments executed or to be executed by
Management Receivables" Marine Transport Management and Intrepid Ship
Management, Inc. in favor of the Agent of all
right, title and interest of such Guarantors in
its receivables pursuant to Section 4.1 of this
Agreement, substantially in the form set out in
Exhibit 11 or in such other form as the Agent
may require;
"Assignments" the Earnings Assignments, the Insurances
Assignments, the Assignments of Government
Receivables, the General Security Agreements,
the Assignments of Vessel Management
Receivables and the Assignment of Joint Venture
Proceeds;
"Banking Day(s)" day(s) on which banks are open for the
transaction of business of the nature required
by this Agreement or any other documents
executed in connection herewith in London,
England and New York, New York;
3
<PAGE> 12
"CALINA" that certain 15,661 dwt Liberian flag ammonia
tanker named CALINA, Official No. 2774
documented under the laws and flag of the
Republic of Liberia in the name of Oswego
Chemical Carriers Corporation;
"Cash Equivalents" (i) securities issued or directly and fully
guaranteed or insured by the United States of
America or any agency or instrumentality
thereof (provided that the full faith and
credit of the United States of America is
pledged in support thereof) having maturities
of not more than ninety (90) days from the date
of acquisition, (ii) time deposits and
certificates of deposit, denominated in
Dollars, of the Agent, of any Lender or of any
commercial bank of recognized standing
organized under the laws of any country which
is a member of the Organization of Economic
Cooperation and Development or any governmental
subdivision or taxing authority of any such
country having capital and surplus in excess of
Five Hundred Million Dollars ($500,000,000) or
its equivalent in such country's currency, (any
such commercial bank, a "Qualified Bank"),
(iii) repurchase obligations with a term of not
more than seven (7) days for underlying
securities of the types described in (i) above
entered into with the Agent, any Lender or any
Qualified Bank, and (iv) commercial paper,
denominated in Dollars, issued by the Agent,
any Lender or by the parent corporation of any
Qualified Bank, and commercial paper rated at
least A-1 or the equivalent thereof by Standard
& Poor's Corporation or at least P-1 or the
equivalent thereof by Moody's Investor
Services, Inc., and in each case maturing
within ninety (90) days after the date of
acquisition;
4
<PAGE> 13
"Code" the Internal Revenue Code of 1986, as amended,
and any successor statute and regulations
promulgated thereunder;
"Collateral Vessel Value" the aggregate, as calculated from time to time
in the manner provided in Sections 9.2 and 9.3,
of (a) the FMVs of each of the Vessels then
mortgaged to secure obligations owed to the
Lenders under or in connection with either this
Agreement or the Related Credit Agreement and
(b) the value of the OMI COLUMBIA;
"Commitment(s)" that portion of the Term Loan and the Revolving
Credit Facility set out opposite a Lender's
name in Schedule 1 hereto or, as the case may
be, in any relevant Assignment and Assumption
Agreement, as reduced from time to time
pursuant to the terms of this Agreement;
"Compliance Certificate" a certificate of the Chief Financial Officer of
the Borrower certifying the compliance with all
of the covenants of the Borrower contained
herein, delivered to the Agent from time to
time pursuant to Section 9.1(A)(iv) hereof in
the form set out in Exhibit 14, or in such
other form as the Agent may require;
"Consents and Agreements" such third party consents as may be required
under any contract to which a Security Party is
a party in order for a Security Party to grant
a security interest pursuant to any Security
Document;
"COURIER" that certain 1977 built 35,662 dwt product
tanker named COURIER, Official No. 578746,
documented under the laws and flag of the
United States in the name of Courier Transport,
Inc.;
"DOC" means a document of compliance issued to an
Operator in accordance with rule 13 of the ISM
Code;
5
<PAGE> 14
"Dollars" and the sign "$" the legal currency, at any relevant time
hereunder, of the United States of America and,
for all payments hereunder, in same day funds
settled through the New York Clearing House
Interbank Payments system (or such other Dollar
funds as may be determined by the Agent to be
customary for the settlement in New York City
of banking transactions of the type herein
involved);
"Drawdown Date" each Term Loan Drawdown Date and each Revolving
Credit Facility Drawdown Date;
"Drawdown Notice" the meaning ascribed thereto in Section 3.4;
"Earnings Assignments" assignments of the earnings of the Mortgaged
Vessels executed or to be executed by the
appropriate Shipowning Guarantor or OMI
Challenger Transport, in favor of the Agent
pursuant to Section 4.1 substantially in the
form set out in Exhibit 8 or in such other form
as the Agent may require;
"EBITDA" means, on a consolidated basis, the Borrower's
earnings before interest, taxes, depreciation
and amortization (calculated in accordance with
GAAP) less income from 50% or less, directly or
indirectly, owned affiliates, based on the
preceding twelve (12) months actual operating
income (for purposes of calculating EBITDA for
the period commencing from the date hereof and
ending on the first anniversary of the date
hereof, the results for each quarterly
reporting period shall be annualized);
"Environmental Affiliate" any person or entity liable for Environmental
Claims, which claims any Security Party may
have assumed by contract or operation of law;
6
<PAGE> 15
"Environmental Approvals" the meaning ascribed thereto in Section 2.1(p);
"Environmental Claim" the meaning ascribed thereto in Section 2.1(p);
"Environmental Laws" the meaning ascribed thereto in Section 2.1(p);
"ERISA" the Employee Retirement Income Security Act of
1974, as amended;
"ERISA Affiliate" a trade or business (whether or not
incorporated) which is under common control
with, or part of a controlled group of
corporations with, any Security Party within
the meaning of Sections 414(b), (c), (m) or (o)
of the Code;
"Events of Default" any of the events set out in Section 8.1;
"Final Payment Date" June , 2003, or if such day is not a
Banking Day, the next following Banking Day
unless such next following Banking Day falls in
the following month, in which case the Final
Payment Date shall be the immediately preceding
Banking Day;
"Financing Documents" this Agreement, the Notes, the Guaranty and the
Security Documents;
"FMV" with respect to a Vessel, fair market value as
determined in accordance with Section 9.2
hereof;
"Former Lenders" Harrowston and Wolfson;
"Former Lenders Indebtedness" the indebtedness of the Borrower and/or its
Affiliates formerly owed to the Former Lenders
in the aggregate principal amount of Two
Million Eight Hundred Ninety Thousand] Dollars
($2,890,000), plus accrued and unpaid interest
thereon;
"GAAP" the meaning ascribed thereto in Section 1.3;
7
<PAGE> 16
"General Security Agreements" general security agreements to be executed by
each of the Guarantors which does not own a
Mortgaged Vessel in favor of the Agent pursuant
to Section 4.1 substantially in the form set
out in Exhibit 10 or in such other form as the
Agent may require;
"Guarantor(s)" each of the companies listed on Schedule 2;
"Guaranty" the guaranty of the obligations of the Borrower
under this Agreement and under the Notes to be
executed by each Guarantor in favor of the
Agent pursuant to Section 4.l substantially in
the form set out in Exhibit 3 or in such other
form as the Agent may require;
"Harrowston" Harrowston Corporation, a company organized
under the laws of Canada;
"Indebtedness" for any Person at any date of determination
(without duplication), all (i) indebtedness of
such Person for borrowed money, (ii)
obligations of such Person evidenced by bonds,
debentures, notes or other similar instruments,
(iii) obligations of such Person arising from
letters of credit or other similar instruments
(including reimbursement obligations with
respect thereto), (iv) except trade payables,
obligations of such Person to pay the deferred
and unpaid purchase price of property or
services, which purchase price is due more than
six (6) months after the date of placing such
property in service or taking delivery thereof
or the completion of such services, (v)
obligations on account of principal of such
Person as lessee under capitalized leases, (vi)
indebtedness of other Persons secured by a lien
on any asset of such Person, whether or not
such indebtedness is assumed by such Person;
provided that the amount of such indebtedness
shall be the lesser of (a) the
8
<PAGE> 17
fair market value of such asset at such date of
determination and (b) the amount of such
indebtedness, and (vii) indebtedness of other
Persons guaranteed by such Person to the extent
such indebtedness is so guaranteed. The amount
of Indebtedness of any Person at any date shall
be the outstanding balance at such date of all
unconditional obligations as described above
and, with respect to contingent obligations,
the maximum liability upon the occurrence of
the contingency giving rise to the obligation,
provided that the amount outstanding at any
time of any indebtedness issued with original
issue discount is the face amount of such
indebtedness less the remaining unamortized
portion of the original issue discount of such
indebtedness at such time as determined in
conformity with GAAP; and provided further that
Indebtedness shall not include any liability
for federal, state, local or other taxes;
"Insurances Assignments" assignments of the insurances of the Mortgaged
Vessels to be executed by the appropriate
Shipowning Guarantor in favor of the Agent,
pursuant to Section 4.1 substantially in the
form set out in Exhibit 9 or in such other form
as the Agent may require;
"Interest Notice" a notice delivered to the Agent pursuant to
Section 6.5 specifying the duration of any
relevant Interest Period;
"Interest Period(s)" period(s) of one (1), two (2), three (3) or six
(6) months selected by the Borrower or such
other period(s) as may be agreed between the
Borrower and the Lenders;
"Intrepid Ship Management, Intrepid Ship Management, Inc., a corporation
Inc." organized and existing under the laws of the
State of Delaware;
9
<PAGE> 18
"ISM Code" means the International Safety Management Code
for the Safe Operating of Ships and for
Pollution Prevention constituted pursuant to
Resolution A. 741(18) of the International
maritime organization and incorporated into the
Safety of Life at Sea Convention including any
amendments or extensions thereto and any
regulation issued pursuant thereto;
"Key Management Agreements" a) that certain vessel operating agreement
between Marine Transport Management and Union
Carbide Corporation, dated as of January 1,
1996, for the United States flag vessel
CHEMICAL PIONEER (Official No. 661060) and any
renewals or extensions thereof,
b) that certain operating agreement, dated
December 18, 1979 between Marine Alaska and
Marine Transport Management, relating to the
United States flag vessel B.T. ALASKA (Official
No. 590208) and any renewals or extensions
thereof,
c) that certain vessel management agreement
between the Borrower and OMI Challenger
Transport, dated as of January 29, 1997, as
amended, for the OMI COLUMBIA and any renewals
or extensions thereof,
d) that certain contract No. DTMA98-98-C-00004,
awarded June 12, 1998, between MTL and MARAD
relating to the United States flag vessels CAPE
COD and CAPE CHALMERS and any renewals or
extensions thereof,
e) that certain contract No. DTMA98-98-C-00009,
awarded June 12, 1998, between MTL and MARAD
relating to the United States flag vessels CAPE
EDMONT and CAPE DUCATO and any renewals or
extensions thereof,
10
<PAGE> 19
f) that certain contract No. DTMA98-98-C-00010,
awarded June 12, 1998, between MTL and MARAD
relating to the United States flag vessels CAPE
DECISION and CAPE DOUGLAS and any renewals or
extensions thereof,
g) that certain contract No. DTMA98-98-C-00011,
awarded June 12, 1998, between MTL and MARAD
relating to the United States flag vessels CAPE
DIAMOND and CAPE DOMINGO and any renewals or
extensions thereof, and
h) that certain contract No. DTMA98-98-C-00033,
awarded June 12, 1998, between MTL and MARAD
relating to the United States vessels CAPE BON
and NORTHERN LIGHT and any renewals or
extensions thereof;
"Liberian Mortgages" those second preferred Liberian ship mortgages
on the each Mortgaged Vessel registered under
the laws and flag of the Republic of Liberia to
be executed by the appropriate Shipowning
Guarantor in favor of the Agent pursuant to
Section 9.1(A)(xx) substantially in the form
set out in Exhibit 6 or in such form as the
Agent may require;
"LIBOR" the rate (rounded upward to the nearest 1/16th
of one percent) for deposits of Dollars for a
period equivalent to the relevant Interest
Period at or about 11:00 a.m. (London time) on
the second London Banking Day before the first
day of such period as displayed on Telerate
page 3750 (British Bankers' Association
Interest Settlement Rates) (or such other page
as may replace such page 3750 on such system or
on any other system of the information vendor
for the time being designated by the British
Bankers' Association to calculate the BBA
Interest
11
<PAGE> 20
Settlement Rate (as defined in the British
Bankers' Association's Recommended Terms and
Conditions ("BBAIRS" terms) dated August
1985)), provided that if on such date no such
rate is so displayed for the relevant Interest
Period, LIBOR for such period shall be the rate
offered by the Agent for deposits of Dollars in
an amount approximately equal to the amount for
which LIBOR is to be determined for a period
equivalent to the relevant Interest Period to
prime banks in the London Interbank Market at
or about 11:00 a.m. (London time) on the second
Banking Day before the first day of such
period;
"Majority Lenders" Lenders whose Commitments exceed sixty-seven
percent (67%) of the total Commitments;
"Management Agreements" the management and/or operating contracts
listed on Schedule 6 hereto;
"MARAD" the United States Maritime Administration:
"Marine Alaska" Marine Alaska, Inc., a Delaware corporation;
"Marine Car Carriers (Del)" Marine Car Carriers, Inc., a Delaware
corporation;
"Marine Car Carriers (MI)" Marine Car Carriers, Inc. (MI), a Marshall
Islands corporation;
"Marine Transport Lines" Marine Transport Lines, Inc., a corporation
incorporated under the laws of the State
Delaware;
"Marine Transport Management" Marine Transport Management, Inc., a
corporation incorporated under the laws of the
State of Delaware;
"Margin" the meaning ascribed thereto in Section 6.3;
12
<PAGE> 21
"MARINE CHEMIST" that certain 1970 built 36,526 dwt chemical
tanker named MARINE CHEMIST, Official No.
529399, documented under the laws and flag of
the United States in the name of Marine
Chemical Navigation Corporation;
"MARINE DUVAL" that certain 1970 rebuilt 25,131 dwt molten
sulphur carrier named MARINE DUVAL, Official
No. 245851, documented under the laws and flag
of the United States in the name of Marine
Sulphur Shipping Corporation;
"Materials of Environmental the meaning ascribed thereto in Section 2.1(p);
Concern"
"MCCMI Shareholders Agreement" that certain
shareholders agreement among the shareholders
of Marine Car Carriers (MI) dated as of March
1, 1995;
"Mortgaged Vessels" the vessels identified on Schedule 4;
"Mortgages" the U.S. Mortgages and the Liberian Mortgages;
"Mortgages Securing the those certain first preferred ship mortgages
OMI Debt" over the Workboats in favor of and securing the
OMI Debt;
"Negative Pledge" the negative pledge by OMI Challenger Transport
of all of its interest in OMI COLUMBIA or any
Vessel Agreement relating to such Vessel,
substantially in the form of Exhibit 12.
"New Workboats" the United States flag vessels OMS TRAVIS
(Official No. 587445) and OMS MAVERICK
(Official No. 517406);
"Notes" the Term Loan Note and the Revolving Credit
Facility Note;
"OMI" OMI Corporation, a corporation incorporated
under the laws of the Marshall Islands;
13
<PAGE> 22
"OMI Challenger Transport" OMI Challenger Transport, Inc., a corporation
incorporated under the laws of the State of
Delaware;
"OMI COLUMBIA" that certain 1974 built 138,698 dwt oil tanker
named OMI COLUMBIA, Official No. 663428,
documented under the laws and flag of the
United States in the name of Argosy;
"OMI COLUMBIA Loan Documents" that certain credit agreement, dated as of
January 29, 1997, among Citicorp North America
Inc., as agent, the Lenders (as defined
therein), Argosy, et al., and any documents
executed in connection therewith or securing
any obligation owing thereunder;
"OMI Debt" Indebtedness of the Borrower to OMI in the
original principal amount of Six Million Four
Hundred Forty-Three Thousand Dollars
($6,443,000);
"Operator" means any Person approved by the Agent who is
from time to time during the Security Period,
concerned with the operation of a Vessel and
falls within the definition of "Company" set
out in rule 1.1.2 of the ISM Code;
"Other Vessels" the vessels identified on Schedule 5;
"PATRIOT" that certain 1976 built 35,662 dwt product
tanker named PATRIOT, Official No. 571049,
documented under the laws and flag of the
United States in the name of Patriot Transport,
Inc.;
"Permitted Indebtedness" collectively, the Indebtedness incurred under
this Agreement, the Related Indebtedness, the
OMI Indebtedness and Permitted Third Party
Debt;
"Permitted Liens" the meaning ascribed thereto in Section
9.1(B)(i);
14
<PAGE> 23
"Permitted Third Party Debt" Indebtedness, incurred with recourse to any
Security Party or any other party owned
directly or indirectly by the Borrower and for
the purposes of acquiring new assets or
supporting MARAD vessel management contracts,
not to exceed, in the aggregate, the principal
amount of US$20,000,000 outstanding at any
time;
"Person" means any individual, sole proprietorship,
corporation, partnership (general or limited),
business trust, bank, trust company, joint
venture, association, joint stock company,
trust or other unincorporated organization,
whether or not a legal entity, or any
government or agency or political subdivision
thereof;
"Plan" any employee benefit plan covered by Title IV
of ERISA;
"Reduction Date" June , 2001, or if such day is not a
Banking Day, the next following Banking Day
unless such next following Banking Day falls in
the following month, in which case the
Revolving Credit Facility Termination Date
shall be the immediately preceding Banking Day;
"Related Credit Agreement" that certain amended and restated term loan and
revolving credit agreement of even date
herewith among Marine Transport Lines, as
borrower, the Lenders and the Agent, as the
same may hereafter be amended or supplemented;
"Related Indebtedness" the Indebtedness of the Security Parties owed
under and in connection with the Related Credit
Agreement;
"Related Security Documents" the "Security Documents" as defined in the
Related Credit Agreement;
"Related Term Loan" the "Term Loan" as defined in the Related
Credit Agreement;
15
<PAGE> 24
"Relevant Contracts" a) that certain time charter, dated April 31,
1982, of the MARINE DUVAL to Freeport MacMoran
Resource Partners, Limited Partnership and any
renewals or extensions thereof;
b) the contract of affreightment, dated as of
January 1, 1996, with Shell Oil Company for the
MARINE CHEMIST and any renewals or extensions
thereof;
c) the contract of affreightment, dated
September 24, 1994, with PPG Industries, Inc.
for the MARINE CHEMIST and any renewals or
extensions thereof;
d) the contract of affreightment, dated as of
July 1, 1996, with ARCO Products Company for
the MARINE CHEMIST and any renewals or
extensions thereof;
e) that certain bareboat charter dated on or
about July 29, 1965, of the CALINA between
Oswego Chemical Carriers Corporation, as owner,
and Oswego Corporation, as charterer and any
renewals or extensions thereof; and
f) that certain time charter, dated as of March
14, 1978 between Marine Alaska, Inc. and BP Oil
Shipping Company, USA, for the United States
flag vessel B.T. ALASKA (Official No. 590208)
and any renewals or extensions thereof;
g) that certain time charter, dated as of June
1, 1994 between OMI Challenger Transport and BP
Oil Shipping Company, USA for the OMI COLUMBIA
and any renewals or extensions thereof; and
h) that certain time charter, dated as of
January 29, 1997, between Argosy and OMI
Challenger Transport for the OMI
16
<PAGE> 25
COLUMBIA and any renewals or extensions
thereof;
"Revolving Credit Facility" the sums to be advanced by the Lenders to the
Borrower in an aggregate amount not to exceed
at any one time outstanding Two Million Dollars
($2,000,000) pursuant to Section 3.3 as the
same may be reduced as provided in this
Agreement;
"Revolving Credit Facility any amount advanced to the Borrower under the
Advance" Revolving Credit Facility on any Revolving
Credit Facility Drawdown Date;
"Revolving Credit Facility Applicable Rate" any rate of
interest on the Revolving Credit Facility
Balance from time to time prescribed by Section
6.2;
"Revolving Credit Facility the outstanding Dollar amount of the Revolving
Balance" Credit Facility Advances at any relevant time;
"Revolving Credit Facility has the meaning ascribed thereto in Section
Default Rate" 6.2;
"Revolving Credit Facility each date which is a Banking Day not later
Drawdown Date" than May , 2000, upon which the Borrower has
requested any Revolving Credit Facility
Advance as provided in Section 3.3;
"Revolving Credit Facility the promissory note, to be executed by the
Note" Borrower to the order of the Lenders to
evidence the Revolving Credit Facility
substantially in the form set out in Exhibit 2
or in such other form as the Agent may require;
"Revolving Credit Facility June , 2002, or if such day is not a
Termination Date" Banking Day, the next following Banking Day
unless such next following Banking Day falls in
the following month, in which case the
Revolving Credit Facility Termination Date
shall be the immediately preceding Banking Day;
17
<PAGE> 26
"ROVER" that certain 1977 built 35,662 dwt product
tanker named ROVER, Official No. 577241,
documented under the laws and flag of the
United States in the name of Rover Transport,
Inc.;
"SAVONETTA" that certain 10,947 dwt Liberian flag ammonia
tanker named SAVONETTA, Official No. 2129,
documented under the laws and flag of the
Republic of Liberia in the name of Oswego
Chemical Carriers Corporation;
"Security Documents" the Mortgages, the Assignments, the Assignment
Notices, the Subordination Agreement, the
Consents and Agreements. the Negative Pledge
and any other documents that may be executed as
security for the Term Loan and/or the Revolving
Credit Facility and the Borrower's obligations
arising therefrom;
"Security Parties" the Borrower and each Guarantor;
"Security Period" the period from the initial Drawdown Date of
the initial Term Loan Advance to the date upon
which all amounts owing under the Term Loan and
the Revolving Credit Facility and all other
amounts due to the Lenders and the Agent
pursuant to the Financing Documents are prepaid
in full or become repayable and are repaid in
full and no further Revolving Credit Facility
Advances are available;
"Shipowning Guarantors" each of the Guarantors which owns a Mortgaged
Vessel;
`SMC" means a safety management certificate issued
for a Vessel in Accordance with rule 13 of the
ISM Code;
"Taxes" any present or future income or other taxes,
levies, duties, charges, fees, deductions, or
withholdings of any nature now or hereafter
imposed, levied,
18
<PAGE> 27
collected, withheld or assessed by any taxing
authority whatsoever, except for taxes on or
measured by the income of the Agent or any
Lender imposed by the Agent's or such Lender's
jurisdiction of organization, the jurisdiction
of the principal place of business of the Agent
or such Lender, the United States of America,
the State or City of New York or any
governmental subdivision or taxing authority of
any of them or by any other jurisdiction or
taxing authority having jurisdiction over the
Agent or such Lender (unless such jurisdiction
is asserted by reason of the activities of the
Security Parties or any of them);
"Term Loan" the sum advanced by the Lenders pursuant to
this Agreement in the principal amount of Eight
Million Eight Hundred Eighty-Seven Thousand
Dollars ($8,887,000);
"Term Loan Advance" the amount advanced to the Borrower pursuant to
Section 3.2 on a Term Loan Drawdown Date;
"Term Loan Applicable Rate" any rate of interest on the Term Loan Balance
from time to time applicable pursuant to
Section 6.1;
"Term Loan Balance" the Dollar amount of the Term Loan at any
relevant time as reduced by payments pursuant
to the terms of this Agreement;
"Term Loan Default Rate" has the meaning ascribed thereto in Section
6.1;
"Term Loan Drawdown Date" each date, which is a Banking Day not later
than June 30, 1998, upon which the Borrower has
requested that a Term Loan Advance be made
available to the Borrower as provided in
Section 3.2;
"Term Loan Note" the promissory note to be executed by the
Borrower to the order of the Lenders to
evidence the Term Loan substantially in
19
<PAGE> 28
the form set out in Exhibit 1 or in such other
form as the Agent may require;
"Term Loan Payment Dates" (i) September , 1998 and (ii) each of
the dates falling at intervals of three (3)
months after such date up to and including the
Final Payment Date, provided, however, that if
any such day is not a Banking Day, the next
following Banking Day, unless such next
following Banking Day falls in the following
calendar month, in which case the relevant Term
Loan Payment Date shall be the immediately
preceding Banking Day;
"Total Debt" the Indebtedness of the Borrower on a
consolidated basis;
"Total Loss" the actual, agreed, arranged or compromised
total loss of any Vessel;
"Unrestricted Cash and Cash Equivalents" cash or Cash
Equivalents (excluding, however, undrawn
amounts available under the Revolving Credit
Facility or under the Related Credit Agreement)
which are free of liens and unencumbered to any
party other than the Agent and the Lenders in
connection herewith;
"U.S. Mortgages" the second preferred United States ship
mortgages on each Mortgaged Vessel registered
under the laws and flag of the United States of
America to be executed by the appropriate
Shipowning Guarantor in favor of the Agent
pursuant to Section 4.1 substantially in the
form set out in Exhibit 4 or in such other form
as the Agent may require;
"Vessel Agreements" a) the Relevant Contracts;
b) that certain time charter, dated January 1,
1985 (as amended), of the SAVONETTA to Hydro
Agri Ammonia, Inc.;
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c) that certain time charter, dated September
16, 1987 (as amended), of the CALINA to Hydro
Agri Ammonia, Inc.;
d) that certain time charter, dated January 1,
1985 (as amended), of the AMELINA to Hydro Agri
Ammonia, Inc.;
e) the Mortgage(s) Securing the OMI Debt; and
f) the OMI COLUMBIA Loan Documents.
"Vessels" the Mortgaged Vessels and the Other Vessels;
"Wolfson" The Wolfson Descendants' 1983 Trust, a grantor
trust established under the laws of New Jersey;
and
"Work Boats" the United States flag vessels OMS HARRIS
(Official No. 650997), OMS NUECES (Official No.
570688), OMS LIBERTY (Official No. 602050) and
OMS SHELBY (Official No. 603076).
"Year 2000 Issue" the failure of computer software, hardware and
firmware systems and equipment containing
embedded computer chips properly to receive,
transmit, process, manipulate, store, retrieve,
re-transmit or in any other way utilize data
and information due to the occurrence of the
year 2000 or the inclusion of dates on or after
January1, 2000.
1.2 Construction. Words importing the singular number only shall include the
plural and vice versa. Words importing persons shall include companies, firms,
corporations, partnerships, unincorporated associations and their respective
successors and assigns.
1.3 Accounting Terms. All accounting terms not specifically defined herein shall
be construed in accordance with generally accepted accounting principles as in
effect from time to time in the United States of America consistently applied
("GAAP") and all financial statements submitted pursuant to this Agreement shall
be prepared in
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accordance with, and all historical financial data submitted pursuant hereto
shall be derived from financial statements prepared in accordance with, GAAP.
2. REPRESENTATIONS AND WARRANTIES
2.1 In order to induce the Agent and the Lenders to enter into this Agreement
and to make the Term Loan and Revolving Credit Facility available to the
Borrower, the Borrower hereby represents and warrants to the Agent and the
Lenders (which representations and warranties shall survive the execution and
delivery of this Agreement and the Notes and the making of such advances) that:
(a) Due Organization and Power. Each of the Security Parties is duly
formed and is validly existing in good standing under the laws of its
jurisdiction of incorporation, has full power to carry on its business as now
being conducted and to enter into and perform its obligations under those
Financing Documents to which it is or is to be a party pursuant to this
Agreement, and has complied with all (i) statutory, regulatory and other
requirements relative to such business; and (ii) such agreements which if not
complied with, could reasonably be expected to have a material adverse effect on
its business, assets or operations, financial or otherwise;
(b) Authorization and Consents. All necessary corporate action has
been taken to authorize, and all necessary consents and authorities have been
obtained and remain in full force and effect to permit, each Security Party to
enter into and perform its obligations under those Financing Documents to which
it is or is to be a party pursuant to this Agreement and, in the case of the
Borrower, to borrow, service and repay the Term Loan and the Revolving Credit
Facility and, as of the date of this Agreement, no further consents or
authorities are necessary for the borrowing, service and repayment of the Term
Loan and/or the Revolving Credit Facility or any part thereof;
(c) Binding Obligations. Each of the Financing Documents constitutes
or, when executed will constitute, the legal, valid and binding obligation of
each Security Party which is a party thereto enforceable against such Security
Party in accordance with its terms, except to the extent that such enforcement
may be limited by applicable bankruptcy, insolvency, reorganization, moratorium
or other laws affecting generally the enforcement of creditors' rights;
(d) No Violation. The execution and delivery of, and the performance
of the provisions of, each Financing Document by each Security Party which is a
party thereto do not, and will not during the Security Period, contravene any
applicable law or regulation existing at the date hereof or any contractual
restriction binding on such Security Party or its certificate of incorporation,
by-laws or equivalent documents;
(e) Litigation. Except as set forth on Schedule 7 hereto, no action,
suit or proceeding is pending or threatened against any Security Party before
any court, board of arbitration or administrative agency which (after taking
into account the benefits of any applicable insurance which can reasonably be
expected to be recovered by the
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<PAGE> 31
relevant Security Party, as the case may be) could or might result in any
material adverse change in the business or condition (financial or otherwise) of
any thereof;
(f) No Default. No Security Party or Marine Car Carriers (MI) is in
default under any material agreement by which it is bound, or is in default in
respect of any material financial commitment or obligation;
(g) Vessels. As of the date hereof:
(i) each of the Mortgaged Vessels is in the sole and
absolute ownership of the respective Guarantor, as
listed opposite its name in Schedule 4, unencumbered,
save and except for, the respective Mortgage recorded
thereagainst, the relevant Related Security Documents
and the respective Vessel Agreements,] and duly
registered in the name of such Guarantor under the
respective flag as set forth in Schedule 4;
(ii) each of the Other Vessels is in the sole and absolute
ownership of an Affiliate of the Borrower or, in the
case of OMI COLUMBIA, Argosy, as listed opposite its
name in Schedule 5, unencumbered, save and except for,
the respective Vessel Agreements and the relevant
Related Security Documents, and duly registered in the
name of such Affiliate of the Borrower under the
respective flag as set forth in Schedule 5;
(iii) each Vessel will be classed in the highest
classification and rating for vessels of the same age
and type with the respective classification society as
set forth in Schedules 4 and 5 without any material
outstanding recommendations;
(v) each Vessel will be operationally seaworthy and in all
material respects fit for its intended service;
(v) each of the Mortgaged Vessels will be insured in
accordance with the provisions of the governing Mortgage
and the requirements thereof for such insurances will
have been complied with and each of the Other Vessels
will be insured against such risks, in such amounts and
with such insurance companies as would a reasonably
prudent shipowner engaged in the same trades; and
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<PAGE> 32
(vi) each Vessel subject to a charter or other contract of
carriage constituting a Vessel Agreement has been
accepted by its respective charterer and is in service
under such Vessel Agreement;
(h) Insurance. Each of the Security Parties has insured its
properties and assets against such risks and in such amounts as are customary
for companies engaged in similar businesses;
(i) Citizenship and Qualification as Owner. Each Security Party or
other Affiliate of the Borrower owning a United States flag Vessel is a United
States citizen within the meaning of Section 2 of the United States Shipping
Act, 1916, as amended (46 U.S.C. ss.802), qualified to own and operate vessels
in the coastwise trade of the United States of America and each Security Party
or other Affiliate of the Borrower which is the registered owner of a Vessel
registered under a flag other than the United States of America is duly
qualified under the laws of such flag to be the registered owner and operator of
a vessel registered under such flag;
(j) Financial Information. Except as otherwise disclosed in writing
to the Agent on or prior to the date hereof, all financial statements,
information and other data furnished by the Borrower to the Agent are complete
and correct, and such financial statements have been prepared in accordance with
GAAP and accurately and fairly present the financial condition of the parties
covered thereby as of the respective dates thereof and the results of the
operations thereof for the period or respective periods covered by such
financial statements and since such date or dates, there has been no material
adverse change in the financial condition or results of the operations of any of
such parties and none thereof has any contingent obligations, liabilities for
taxes or other outstanding financial obligations which are material in the
aggregate except as disclosed in (a) such statements, information and data or
(b) in Schedule 7 prepared pursuant to Section 2.1(e) of this Agreement;
(k) Tax Returns. Except as previously advised to the Lender in
writing, each Security Party has filed all tax returns required to be filed
thereby and has paid all taxes payable thereby which have become due, other than
those (a) not yet delinquent or the nonpayment of which would not have a
material adverse effect on such Security Party; and (b) being contested in good
faith and by appropriate proceedings or other acts and for which adequate
reserves have been set aside on its books;
(l) ERISA. The execution and delivery of this Agreement and the
consummation of the transactions hereunder will not involve any prohibited
transaction within the meaning of ERISA or Section 4975 of the Code and no
condition exists or event or transaction has occurred in connection with any
Plan maintained or contributed to by any Security Party or any ERISA Affiliate
(as such term is hereinafter defined) resulting from the failure of any such
party to comply with ERISA insofar as ERISA applies thereto which is reasonably
likely to result in such Security Party or any ERISA Affiliate incurring any
liability, fine or penalty which individually or in the aggregate
24
<PAGE> 33
would have a material adverse effect on such Security Party or ERISA Affiliate.
As used herein the term "ERISA Affiliate" means a trade or business (whether or
not incorporated) which is under common control with the Security Party in
question within the meaning of Sections 414(b), (c), (m) or (o) of the Code.
Prior to the date hereof, the Borrower has delivered to the Agent a list of all
the employee benefit plans to which each Security Party or any ERISA Affiliate
is a "party in interest" (within the meaning of Section 3(14) of ERISA) or a
"disqualified person" (within the meaning of Section 4975(e)(2) of the Code);
(m) Chief Executive Office. Each Security Party's chief executive
office and chief place of business and the office in which the records relating
to the earnings and other receivables of such Security Party are kept is, and
will continue to be, located at 1200 Harbour Boulevard, 9th Floor, Weehawken,
New Jersey or, in the case of OMI Petrolink Corp. and its Subsidiaries, 4606 FM
1960 West Suite 200, Houston, Texas and, in the case of Intrepid Ship Management
Inc., 370 Seventh Avenue, 11th Floor, New York, New York;
(n) Foreign Trade Control Regulations. None of the transactions
contemplated herein will violate any of the provisions of the Foreign Assets
Control Regulations of the United States of America (Title 31, Code of Federal
Regulations, Chapter V, Part 500, as amended), any of the provisions of the
Cuban Assets Control Regulations of the United States of America (Title 31, Code
of Federal Regulations, Chapter V, Part 515, as amended), any of the provisions
of the Libyan Assets Control Regulations of the United States of America (Title
31, Code of Federal Regulations, Chapter V, Part 550, as amended), any of the
provisions of the Iraqi Sanctions Regulations (Title 31, Code of Federal
Regulations, Chapter V, Part 575, as amended), any of the provisions of the
Iranian Transactions Regulations of the United States of America (Title 31, Code
of Federal Regulations, Chapter V, part 560, as amended) any of the provisions
of the Federal Republic of Yugoslavia (Serbia and Montenegro) Assets Control
Regulations (Title 31, Code of Federal Regulations, Chapter V, Part 585 as
amended) or any of the provisions of the Regulations of the United States of
America Governing Transactions in Foreign Shipping of Merchandise (Title 31,
Code of Federal Regulations, Chapter V, Part 505, as amended);
(o) Equity Ownership. Each of the Security Parties (other than the
Borrower) is a, direct or indirect, wholly-owned subsidiary of the Borrower. As
of the date hereof, the Borrower does not own any shares of capital stock,
partnership interest or any other direct or indirect equity interest in any
corporation, partnership or other entity except the Security Parties and the
companies listed on Schedule 3;
(p) Environmental Matters. Except as heretofore disclosed on
Schedule 7, (i) each of the Security Parties and their Environmental Affiliates
will, when required, be in full compliance with all applicable United States
federal and state, local, foreign and international laws, regulations,
conventions and agreements relating to pollution prevention or protection of
human health or the environment (including, without limitation, ambient air,
surface water, ground water, navigable waters, waters of
25
<PAGE> 34
the contiguous zone, ocean waters and international waters), including, without
limitation, laws, regulations, conventions and agreements relating to (1)
emissions, discharges, releases or threatened releases of chemicals, pollutants,
contaminants, wastes, toxic substances, hazardous materials, oil, hazardous
substances, petroleum and petroleum products and by-products ("Materials of
Environmental Concern"), or (2) the manufacture, processing, distribution, use,
treatment, storage, disposal, transport or handling of Materials of
Environmental Concern ("Environmental Laws"); (ii) each of the Security Parties
and their Environmental Affiliates will, when required, have all permits,
licenses, approvals, rulings, variances, exemptions, clearances, consents or
other authorizations required under applicable Environmental Laws
("Environmental Approvals") and will, when required, be in full compliance with
all Environmental Approvals required to operate their business as then being
conducted; (iii) none of the Security Parties or their Environmental Affiliates
has received any notice of any claim, action, cause of action, investigation or
demand by any person, entity, enterprise or government, or any political
subdivision, intergovernmental body or agency, department or instrumentality
thereof, alleging potential liability for, or a requirement to incur,
investigatory costs, cleanup costs, response and/or remedial costs (whether
incurred by a governmental entity or otherwise), natural resources damages,
property damages, personal injuries, attorneys' fees and expenses, or fines or
penalties, in each case arising out of, based on or resulting from (1) the
presence, or release or threat of release into the environment, of any Materials
of Environmental Concern at any location, whether or not owned by such person,
or (2) circumstances forming the basis of any violation, or alleged violation,
of any Environmental Law or Environmental Approval ("Environmental Claim")
(other than Environmental Claims that have been fully and finally adjudicated or
otherwise determined and all fines, penalties and other costs, if any, payable
by the Security Parties or any Environmental Affiliate any thereof in respect
thereof have been paid in full or are fully covered by insurance (including
permitted deductibles)); and (iv) there are no circumstances existing as of the
date hereof that may prevent or interfere with such full compliance in the
future;
(q) Pending, Threatened or Potential Environmental Claims. Except as
heretofore disclosed on Schedule 7 there are no (1) Environmental Claims pending
or threatened against any Security Party or its Environmental Affiliates and (2)
past or present actions, activities, circumstances, conditions, events or
incidents, including, without limitation, the release, emission, discharge or
disposal of any Materials of Environmental Concern, that could form the basis of
any Environmental Claim against any Security Party or its Environmental
Affiliates;
(r) Compliance with ISM Code. Each Vessel and any Operator complies
with the requirement s of the ISM Code, including (but not limited to) the
maintenance and renewal of valid certificates pursuant thereto;
(s) Threatened Withdrawal of DOC or SMC. There is no threatened or
actual withdrawal of any Operator's DOC or the SMC in respect of any Vessel; and
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<PAGE> 35
(t) Year 2000 Issue. The Borrower and each of the guarantors have
reviewed the effect of the Year 2000 Issue on the computer software, hardware
and firmware systems and equipment containing embedded microchips owned or
operated by or for the Borrower and the Guarantors or used or relied upon in the
conduct of their business (including systems and equipment supplied by others or
with which such computer systems of the Borrower and the guarantors interface).
The costs to the Borrower and the Guarantors of any reprogramming required as a
result of the Year 2000 Issue to permit the proper functioning of such systems
and equipment and the proper processing of data, and the testing of such
reprogramming, and of the reasonably foreseeable consequences of the Year 2000
Issue to the Borrower or any of the Guarantors (including reprogramming errors
and the failure of systems or equipment supplied by others) are not reasonably
expected to result in a Default or Event of Default or to have a material
adverse effect on the business, assets, operations, prospects or condition
(financial or otherwise) of the Borrower or any of the Guarantors.
3. ADVANCES
3.1 Purposes. (a) The proceeds of Term Loan shall be applied solely and
exclusively for the purposes of (i) refinancing, in full, the Former Lenders
Indebtedness and (ii) to pay transaction expenses, financing fees and other
expenses or obligations payable in connection with the transactions contemplated
by this Agreement, the Related Credit Agreement and the Acquisition Agreement;
and
(b) the proceeds of Revolving Credit Facility shall be applied
solely and exclusively for working capital purposes of the Borrower and the
Guarantors.
3.2 Term Loan Advances. Each of the Lenders, relying upon each of the
representations and warranties set out in Section 2, hereby agrees with the
Borrower that, subject to and upon the terms of this Agreement, it will on the
Term Loan Drawdown Dates, make the Term Loan Advances available to the Borrower
in an aggregate amount not to exceed, on a pro rata basis, its Commitment for
its respective portion of the Term Loan, provided, however, that (a) the Term
Loan may only be drawn down in a single Advance and (b) to the extent that any
portion of the Term Loan remains undrawn as of 12:00 noon (New York time) on
June 25, 1998, each Lender's commitment to advance such undrawn portion of its
Commitment thereunder shall expire.
3.3 Revolving Credit Facility Advances. Each of the Lenders, relying upon each
of the representations and warranties set out in Section 2, hereby agrees with
the Borrower that, subject to the terms of this Agreement, it will on or before
12:00 noon New York time on the Revolving Credit Facility Drawdown Dates make
the Revolving Credit Facility Advances available to the Borrower in an aggregate
amount not to exceed, on a pro rata basis, its Commitment for its respective
portion of the Revolving Credit Facility, provided, however, that (a) each such
Advance shall be in the minimum amount of One Hundred Thousand Dollars
($100,000) and (b) the maximum aggregate amount of all Revolving Credit Facility
Advances which may be outstanding under this Agreement is Two Million Dollars
($2,000,000), as the same may be reduced from time to time as
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<PAGE> 36
provided in Sections 5.7 and 5.8. Within the limits of the Revolving Credit
Facility and upon the conditions herein provided, the Borrower may from time to
time, and on as many occasions as the Borrower may deem appropriate, borrow
pursuant to this Section 3.3, repay pursuant to Section 5.2 and reborrow
pursuant to this Section 3.3.
3.4 Drawdown Notice. The Borrower shall not less than three (3) Banking Days
before any Drawdown Date serve a notice (a "Drawdown Notice") on the Agent,
substantially in the form set out in Exhibit 13 or in such other form as the
Agent may agree, which notice shall (a) be in writing addressed to the Agent,
(b) be effective upon receipt by the Agent as aforesaid, provided it is received
before 11:00 a.m. New York time (otherwise it shall be deemed to have been
received on the next Banking Day), (c) specify the Banking Day on which the
relevant Advance is to be drawn down, (d) specify the initial Interest Period,
(e) specify the disbursement instructions and (f) be irrevocable.
3.5 Effect of Drawdown Notice. Each Drawdown Notice shall be deemed to
constitute a warranty by the Borrower that (a) the representations and
warranties stated in Section 2 (updated mutatis mutandis) are true and correct
in all material respects on the date of such Drawdown Notice and will be true
and correct in all material respects on such drawdown date as if made on such
date, and (b) that no Event of Default or any event which with the giving of
notice or lapse of time or both would constitute an Event of Default has
occurred and is continuing.
3.6 Notation of Advances. Each Revolving Credit Facility Advance made by the
Lenders to the Borrower may be evidenced by a notation of the same made by the
Agent on the grid attached to the Revolving Credit Facility Note, which
notation, absent manifest error, shall be prima facie evidence of the amount of
the relevant Advance.
4. CONDITIONS
4.1 Conditions to Advance of Term Loan and the Initial Revolving Credit Facility
Advance. The obligations of the Lenders to advance the Term Loan and the initial
Revolving Credit Facility Advance are expressly subject to the satisfaction of
the following conditions precedent:
(a) the Agent shall have received the following documents in form and
substance satisfactory to the Agent and its legal advisors:
(i) copies, certified as true and complete by an officer of
each Security Party, of the resolutions of the board of
directors and, in the case of the Guarantors, the
shareholders thereof evidencing approval of this
Agreement and the other Financing Documents called for
hereby to which such Security Party is a party and
authorizing an appropriate officer or officers or
attorney-in-fact or attorneys-in-fact to execute the
same on its behalf;
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<PAGE> 37
(ii) copies, certified as true and complete by an officer of
the Borrower or other party acceptable to the Agent, of
all documents evidencing any other necessary action
(including actions by such parties thereto other than
the Borrower as may be required by the Agent), approvals
or consents with respect to the Financing Documents;
(iii) copies, certified as true and complete by an officer of
the respective Security Party of the certificate of
incorporation and by-laws (or equivalent instruments)
thereof;
(iv) a certificate of the Secretary of the Borrower
certifying that it legally and beneficially, directly or
indirectly, owns all of the issued and outstanding
shares of the capital stock of each of the other
Security Parties, in each case, free and clear of any
liens, claims, pledges or other encumbrances;
(v) a certificate of the Secretary of Marine Car Carriers
(Del) certifying that it legally and beneficially owns
fifty percent (50%) of the issued and outstanding shares
of Marine Car Carriers (MI), free and clear of any
liens, claims, pledges or other encumbrances whatsoever
except for a pledge in favor of the Agent;
(vi) certificate of the Secretary of each Security Party
(other than the Borrower) certifying as to the record
ownership of all of its issued and outstanding capital
stock;
(vii) certificates of the jurisdiction of incorporation of
each Security Party as to the good standing of such
corporation;
(viii) copies of each Vessel Agreement, Management Agreement,
the MCCMI Shareholders Agreement, all agreements and
other documents evidencing Permitted Indebtedness and
Permitted Liens outstanding and existing as of the date
hereof and the Acquisition Agreement each certified by
an officer of the Borrower to be a true and complete
copy thereof;
(ix) letters, in form and substance satisfactory to the
Agent, from counsel representing the Borrower (or its
relevant Affiliate) in connection with each action, suit
or proceeding listed on Schedule 7 or in connection with
any Environmental Claim disclosed to the Agent,
regarding details of such action, suit, proceeding or
claim including a description of the nature of the
claim, and the Borrower's
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(or its Affiliate's) potential liabilities and an
opinion as to the likely outcome of the relevant matter;
and
(x) a pro forma consolidated balance sheet for the Borrower,
certified to be true and correct by its chief financial
officer, demonstrating that, as of the date hereof and
after giving effect to the transactions contemplated
hereby and by the Related Credit Agreement and the
Acquisition Agreement, the Borrower has Unrestricted
Cash and Cash Equivalents in an amount at least equal to
Two Million Dollars ($2,000,000) (for purposes of
determining compliance with this condition, Unrestricted
Cash or Cash Equivalents held by Marine Car Carriers
(MI) for the benefit of Marine Car Carriers (Del) shall
be calculated on the basis of the Borrower's share of
such sums after deduction of any taxes that would be
payable (as of the time of determination) upon the
distribution and repatriation of such sums by Marine Car
Carriers (MI) to Marine Car Carriers (Del) or any other
Affiliate of the Borrower).
(b) the Agent shall have received evidence satisfactory to it and
its legal advisors that:
(i) each of the Mortgaged Vessels is in the sole and
absolute ownership of the respective Guarantors, other
Affiliates of the Borrower as set forth in Schedules 4
and 5 or Argosy save and except for, in the case of the
Mortgaged Vessels, the respective Mortgage recorded
thereagainst and for the respective Vessel Agreements
and Related Security Documents, and duly registered in
the name of such Guarantor or such Affiliate under the
respective flag as set forth in Schedules 4 and 5;
(ii) each Vessel is classed in the highest classification and
rating for vessels of the same age and type with the
respective classification society as set forth in
Schedules 4 and 5 without any material outstanding
recommendations;
(iii) each of the Vessels is operationally seaworthy and in
every material respect fit for its intended service;
(iv) each of the Mortgaged Vessels will be insured in
accordance with the provisions of the Mortgage on her in
favor of the Agent, as the case may be, and the
requirements thereof in respect of such insurances will
have been met and each of the Other Vessels will be
insured
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<PAGE> 39
against such risks, in such amounts and with such
insurance companies as would be required by a reasonably
prudent shipowner engaged in the same trades;
(v) each Vessel subject to a charter or other contract of
carriage constituting a Vessel Agreement has been
accepted by its respective charterer and is in service
under such Vessel Agreement; and
(vi) that, except as provided in the Financing Documents,
there are no restrictions or limitations on the
Borrower's ability to withdraw or apply any funds of
Marine Car Carriers (MI) held for the benefit of Marine
Car Carriers (Del) and payable to the Borrower for such
purposes as the Borrower may deem fit.
(c) the Borrower shall have duly executed and delivered:
(i) this Agreement and
(ii) the Notes;
(iii) its Assignment of Vessel Management Receivables;
(iv) its Assignment Notices, and
(v) Uniform Commercial Code Financing Statements for filing
in New Jersey and its jurisdiction of incorporation;
(d) each Guarantor shall have executed and delivered:
(i) the Guaranty,
(ii) the Consent and Agreement and Account Assignment
provided at the end of this Agreement, and
(iii) Uniform Commercial Code Financing Statements for filing
in New Jersey;
(e) each Shipowning Guarantor shall have duly executed and
delivered:
(i) the Mortgage over its Mortgaged Vessel(s),
(ii) an Insurances Assignment with respect to such Vessel(s),
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<PAGE> 40
(iii) an Earnings Assignment with respect to such Vessel(s),
(iv) its Assignment Notices, and
(v) Uniform Commercial Code Financing Statements for filing
in New Jersey and its jurisdiction of Incorporation;
(f) OMI Challenger Transport shall have duly executed and delivered
the Negative Pledge.
(g) the Guarantors which do not own a Mortgaged Vessel (other than
OMI Challenger Transport) shall have executed and delivered:
(i) its General Security Agreement, and,
(ii) Uniform Commercial Code Financing Statements for filing
in New Jersey and in its jurisdiction of incorporation;
(h) Intrepid Ship Management, Inc. shall have executed and
delivered:
(i) its Assignment of Government Receivables,
(ii) its Assignment Notices, and
(iv) Uniform Commercial Code Financing Statements for filing
in New Jersey and in its jurisdiction of incorporation;
(i) Marine Transport Lines shall have executed and delivered:
(i) its Assignment of Government Receivables,
(ii) its Assignment Notices, and
(iii) Uniform Commercial Code Financing Statements for filing
in New Jersey and in its jurisdiction of incorporation;
(j) Marine Transport Management shall have executed and delivered:
(i) its Assignment of Vessel Management Receivables,
(ii) its Assignment Notices, and
(iii) Uniform Commercial Code Financing Statements for filing
in New Jersey and in its jurisdiction of incorporation;
(k) Marine Car Carriers (Del) shall have executed and delivered:
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<PAGE> 41
(i) the Assignment of Joint Venture Proceeds,
(ii) its Assignment Notices, and]
(iiiv) Uniform Commercial Code Financing Statements for filing
in New Jersey and in its jurisdiction of incorporation;
(l) the Agent shall have received appraisals, in form and substance
satisfactory to the Agent, from two independent shipbrokers acceptable to the
Agent evidencing that the Borrower is in compliance with Section 9.3, each of
which appraisals shall be dated, and the appraisals contained therein shall be
as of a date, no earlier than ninety (90) days prior to the date hereof;
(m) the Agent shall have received a certificate of the chief
financial officer of each Guarantor confirming the representations and
warranties with respect to solvency set forth in its Guaranty and containing
conclusions as to the solvency of such Guarantor;
(n) the Agent shall be satisfied that no Security Party is subject
to any Environmental Claim (except as set forth on Schedule 7) which could have
a material adverse effect on the business, assets or results of operations of
any thereof;
(o) the Agent shall have received payment in full of all fees and
expenses due to the Agent and the Lenders on or prior to the date thereof under
Section 13;
(p) the Agent shall have received evidence satisfactory to it and to
its legal advisors that, save for the liens created by the Mortgages, the
Assignments, the Related Security Agreements and the Vessel Agreements there are
no liens, charges or encumbrances of any kind whatsoever on any of the Vessels
or on their respective earnings except as permitted hereby or by any of the
Security Documents;
(q) each party which the Agent shall have required to execute a
Consent and Agreement shall have executed a Consent and Agreement, in each case,
in form and substance satisfactory to the Agent;
(r) all conditions precedent to the advancement of the term loan
under the Related Credit Agreement shall have been met or waived to the
satisfaction of the Lenders;
(s) the transactions contemplated by the Acquisition Agreement shall
subject only to consummation of this Agreement and the Related Credit Agreement,
have been consummated in accordance with the provisions thereof, and the legal
status and corporate structure of the Borrower shall be satisfactory to the
Agent and its legal counsel;
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(t) the terms and conditions of the Permitted Indebtedness and
Permitted Liens shall be in form and substance acceptable to the Agent; and
(u) the Agent shall have received legal opinions from (i) Peter N.
Popov, Esq., in-house counsel for the Security Parties, (ii) Kaye, Scholer,
Fierman, Hays & Handler, L.L.P., special counsel to the Security Parties and
(iii) Seward & Kissel, special counsel to the Agent and the Lenders, in each
case in such form as the Agent may require, as well as such other legal opinions
as the Agent shall have required as to all or any matters under the laws of the
United States of America, the States of New York, New Jersey and Texas covering
the representations and conditions which are the subjects of Sections 2 and 4.1.
4.2 Further Conditions Precedent. The obligation of the Lenders to enter into
this Agreement or to make any Advance available to the Borrower shall be
expressly and separately from the foregoing conditional upon, as of the date
hereof and at each Drawdown Date:
(a) the Agent having received the Drawdown Notice in accordance with
the terms of Section 3.4;
(b) the representations stated in Section 2 (updated mutatis
mutandis to such date) being true and correct as if made on that date;
(c) no Event of Default having occurred and being continuing and no
event having occurred and being continuing which, with the giving of notice or
lapse of time, or both, would constitute such an Event of Default;
(d) the Agent being satisfied that no change in any applicable laws,
regulations, rules or in the interpretation thereof shall have occurred which
make it unlawful for the Borrower or any other of the parties thereto to make
any payment as required under the terms of the Financing Documents or any of
them; and
(e) there having been no material adverse change in the financial
condition of the Security Parties taken as a whole since the date hereof.
4.3 Satisfaction after Drawdown. Without prejudice to any of the terms and
conditions of this Agreement, in the event the Lenders, in their sole
discretion, makes any Advance prior to the satisfaction of all or any of the
conditions precedent set forth in Sections 4.1 and 4.2, the Borrower hereby
covenants and undertakes to satisfy or procure the satisfaction of such
condition or conditions within fourteen (14) days after the relevant Drawdown
Date (or such longer period as the Lenders, in their sole discretion, may
agree).
4.4 Breakfunding Costs. In the event that, on any date specified for the making
of an Advance in any Drawdown Notice, the Lenders shall not be required under
this Agreement to make such advance available under this Agreement, the Borrower
shall
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<PAGE> 43
indemnify and hold the Lenders fully harmless against any losses which the
Lenders or any thereof may sustain as a result of borrowing or agreeing to
borrow funds to meet the drawdown requirement of the Borrower and the
certificate of the relevant Lender(s) shall, absent manifest error, be
conclusive and binding on the Borrower as to the extent of any such losses.
5. REPAYMENT, PREPAYMENT AND REDUCTION OF FACILITIES.
5.1 Repayment of Term Loan. The Borrower shall repay the principal of the Term
Loan in twenty (20) quarterly installments in Dollars in freely available-same
day funds on the Term Loan Payment Dates, the first four (4) installments shall
each be in the principal amount of Two Hundred Fifty Thousand Dollars
($250,000), the next fifteen (15) of which shall be in the principal amount of
Four Hundred Ninety-Two Thousand Nine Hundred Thirty-Seven and 50/100 Dollars
($492,937.50) and twentieth such installment shall be in the amount necessary to
repay the Term Loan in full.
5.2 Revolving Credit Facility. Subject to the provisions of Section 3.3, any
outstanding Revolving Credit Facility Advances (a) may be repaid (together with
any and all actual costs or expenses incurred by any Lender as the result of any
breaking of funding (as certified by the relevant Lender, which certification
shall, absent any manifest error, be conclusive and binding on the Borrower) on
any Banking Day (in Dollars in freely available-same day funds equal to or
exceeding One Hundred Thousand Dollars ($100,000), each such repayment to be in
an integral multiple of One Hundred Thousand Dollars ($100,000)) and (b) must be
repaid (i) on the last date of then prevailing Interest Period in respect of
such Advance, (ii) as required pursuant to Section 5.7 on the Reduction Date and
(iii) on or before the Revolving Credit Facility Termination Date.
5.3 Voluntary Prepayment of Term Loan. The Borrower may prepay any Term Loan
Advance on any Banking Day, in whole or in part, without penalty or premium (in
Dollars in freely available-same day funds equal to or exceeding One Hundred
Thousand Dollars ($100,000), each such repayment to be in an integral multiple
of One Hundred Thousand Dollars ($100,000)), on any Banking Day upon giving the
Agent not less than five (5) Banking Days prior written notice (which notice
shall be irrevocable and shall specify the amount and date of prepayment).
5.4 Mandatory Prepayment of Term Loan. Upon the sale, disposition or Total Loss
of any Vessel or any other asset (having a fair market value equal or exceeding
One Hundred Thousand Dollars ($100,000) directly or indirectly owned by the
Borrower, the Borrower shall prepay the Term Loan, in part and without penalty,
in an amount equal to the proceeds of the sale, disposition or insurance net of
taxes payable as a result of any such sale or disposition.
5.5 Prepay Term Loans Pro Rata. Any prepayment made hereunder (including,
without limitation, those made pursuant to Sections 5.3 and 5.4, but excluding a
prepayment under Sections 5.7 and 9.3) or under the Related Credit Agreement
shall be applied against the Term Loan and the Related Term Loan, pro rata.
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<PAGE> 44
5.6 Application of Prepayments. Any prepayment of the Term Loan made hereunder
(including, without limitation, those made pursuant to Sections 5.3, 5.4, 5.7
and 9.3), shall be subject to the condition that:
(a) in the case of Term Loan Advances, any partial prepayment made
shall be applied in or towards satisfaction of the repayment installments of the
Term Loan in inverse order of maturity;
(b) in the case of Term Loan Advances and an amount prepaid pursuant
to Section 5.7, any amounts prepaid shall not be available for re-borrowing; and
(c) on the date of prepayment all accrued interest to the date of
such prepayment shall be paid in full with respect to the portion of the
principal being prepaid, together with any and all actual costs or expenses
incurred by any Lender as the result of any breaking of funding (as certified by
the relevant Lender, which certification shall, absent any manifest error, be
conclusive and binding on the Borrower).
5.7 Mandatory Reduction of Revolving Credit Facility. On the Reduction Date: (a)
the maximum principal amount of Advances which may be outstanding shall be
reduced to One Million Dollars ($1,000,000); and (b) the Borrower shall
immediately repay the Revolving Credit Facility Advances to the extent the
aggregate Revolving Credit Facility Advances outstanding on the Reduction Date
exceeds One Million Dollars ($1,000,000). Upon the reduction of the Revolving
Credit Facility as provided in this Section, each Lender's Commitment to make
Revolving Credit Facility Advances shall be reduced pro rata.
5.8 Voluntary Reduction of Revolving Credit Facility. The Borrower shall have
the right, at any time and from time to time, upon giving to the Agent not less
than five (5) Banking Days prior written notice (which notice shall be
irrevocable) to terminate in whole, or reduce the available unused portion of,
the Revolving Credit Facility; provided, however, that each partial reduction
shall be equal to or shall exceed One Hundred Thousand Dollars ($100,000) and
shall be an integral multiple of One Hundred Thousand Dollars ($100,000). Upon
any reduction of the Revolving Credit Facility as provided in this Section, each
Lender's Commitment to make Revolving Credit Facility Advances shall be reduced
pro rata.
6. INTEREST AND RATE
6.1 Term Loan Applicable Rate and Default Rate. The Term Loan Balance shall bear
interest at the Term Loan Applicable Rate which shall be the rate per annum
which is equal to the aggregate of (a) LIBOR for the applicable Interest Period
(determined in accordance with Section 6.5) plus (b) the then prevailing Margin.
Any principal payment with respect to the Term Loan not paid when due, whether
on a Term Loan Payment Date or by acceleration, shall bear interest thereafter
at a rate per annum of two percent (2.0%)
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<PAGE> 45
over the Term Loan Applicable Rate in effect with respect to such payment at the
time of such default (the "Term Loan Default Rate").
6.2 Revolving Credit Facility Applicable Rate and Default Rate. The Revolving
Credit Facility Balance shall bear interest at the Revolving Credit Facility
Applicable Rate which shall be equal to the aggregate of (a) LIBOR for the
applicable Interest Period (determined in accordance with Section 6.5) plus (b)
the then prevailing Margin plus (c) one quarter of one percent (0.25%) per
annum. Any principal payment with respect to the Revolving Credit Facility not
paid when due, whether by acceleration or otherwise, shall bear interest
thereafter at a rate per annum of two percent (2.0%) over the Revolving Credit
Facility Applicable Rate in effect with respect to such payment at the time of
such default (the "Revolving Credit Facility Default Rate").
6.3 Determination of Applicable Margin. The Margin shall be determined by the
Agent two (2) Banking Days prior to the first day of the relevant Interest
Period. Prior to the day falling two (2) Banking Days after the date on which
the Borrower delivers its first quarterly financial report to the Agent in
accordance with Section 9.1(A)(iv), the Margin shall be equal to one and three
quarters of one percent (1.75--%) per annum. Thereafter, the Margin shall be
based upon the then prevailing ratio of the Borrower's Total Debt to EBITDA, as
determined in accordance with Section 9.1(A)(xvii) as follows:
<TABLE>
Applicable Margin Total Debt to EBITDA
<S> <C>
2.25% > 3.0x
2.00% <=3.0x but >2.5x
1.75% <=2.5x but >2.0x
1.50% <=2.0x but >=1.0x
1.25% <1.0x
</TABLE>
6.4 Determination of LIBOR. LIBOR shall be determined by the Agent two (2)
Banking Days prior to the first day of the relevant Interest Period and together
with any and all actual costs or expenses incurred by any Lender as the result
of any breaking of funding (as certified by the relevant Lender, which
certification shall, absent any manifest error, be conclusive and binding on the
Borrower). The Borrower shall be promptly notified in writing of such
determination of the Term Loan Applicable Rate and the Revolving Credit Facility
Applicable Rate, as the case may be. Absent manifest error, such determination
shall be conclusive and binding upon the Borrower.
6.5 Interest Periods. For purposes of funding any Advance, the Borrower may
select Interest Periods of one (1), two (2), three (3) or six (6) months (or for
such longer periods as the Lenders may, in their sole discretion agree),
provided, however, that (a) at all times the Borrower must select an Interest
Period for a portion of each Advance so that sufficient deposits shall mature on
each Payment Date (and, in the case of Revolving
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<PAGE> 46
Credit Facility Advances, on the Reduction Date so as to comply with the
provisions of Section 5.7) to cover the principal installments due on such dates
and (b) no more than two (2) Interest Periods may be running simultaneously for
the entire Term Loan Balance and no more than three (3) Interest Periods may be
running simultaneously for the entire Revolving Credit Facility Balance. No
Interest Period may extend beyond, in the case of Revolving Credit Facility
Advances, the Revolving Credit Facility Termination Date and, to the extent
necessary to comply with Section 5.7, the Reduction Date and, in the case of
Term Loan Advances, the Final Payment Date. The Borrower shall give the Agent an
Interest Notice specifying the Interest Period selected at least three (3)
Banking Days prior to the end of any then existing Interest Period. If at the
end of any then existing Interest Period the Borrower fails to give an Interest
Notice, the relevant Interest Period shall be three (3) months. The Borrower's
right to select an Interest Period shall be subject to the restriction that no
selection of an Interest Period shall be effective unless the Lenders are
satisfied that the necessary funds will be available to the Lenders for such
period and that no Event of Default or event which, with the giving of notice or
lapse of time, or both, would constitute an Event of Default shall have occurred
and be continuing.
6.6 Interest Payments. The Borrower agrees to pay interest on each Advance on
the last day of each Interest Period applicable to such Advance and at such
other times as interest is required to be paid by each Lender on the deposits
acquired thereby to fund the relevant Advance, or any portion thereof, as the
case may be, and, in the event any Interest Period shall extend beyond three (3)
months, three (3) months after the commencement of such Interest Period and each
three (3) month anniversary thereafter until the end of the Interest Period; and
6.7 Payment on Banking Day. If interest would, under Section 6.6, be payable on
a day which is not a Banking Day, it shall then be payable on the next following
Banking Day, unless such next following Banking Day falls in the following month
in which case it shall be payable on the Banking Day immediately preceding the
day on which such interest would otherwise be payable.
6.8 Calculation of Interest. All interest shall accrue and be calculated on the
actual number of days elapsed and on the basis of a three hundred sixty (360)
day year.
7. PAYMENTS
7.1 Place of Payments, No Set Off. All payments to be made hereunder by the
Borrower shall be made to the Agent, not later than 11 a.m. New York time (any
payment received after 11 a.m. New York time shall be deemed to have been paid
on the next Banking Day) on the due date of such payment, at its office located
at 200 Park Avenue, New York, New York 10166 or to such other office of the
Agent as the Agent may direct, without set-off or counterclaim and free from,
clear of, and without deduction for, any Taxes, provided, however, that if the
Borrower shall at any time be compelled by law to withhold or deduct any Taxes
from any amounts payable to the Agent or the Lenders hereunder, then the
Borrower shall pay such additional amounts in Dollars as may be
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<PAGE> 47
necessary in order that the net amounts received after any such withholding or
deduction shall equal the amounts which would have been received if such
withholding or deduction were not required and, in the event any withholding or
deduction is made, whether for Taxes or otherwise, the Borrower shall promptly
send to the Agent and the Lenders such documentary evidence for such withholding
or deduction as may be required from time to time by the Agent or the relevant
Lender, as the case may be.
7.2 Tax Credits. If any Lender obtains the benefit of a credit against the
liability thereof for federal income taxes imposed by any taxing authority for
all or part of the Taxes as to which the Borrower has paid additional amounts as
aforesaid (and such Lender agrees to use its best efforts to obtain the benefit
of any such credit which may be available to it, provided it has knowledge that
such credit is in fact available to it), then such Lender shall reimburse the
Borrower for the amount of the credit so obtained. Each Lender agrees that in
the event that Taxes are imposed on account of the situs of its loans hereunder,
such Lender, upon acquiring knowledge of such event, shall, if commercially
reasonable, shift such loans on its books to another office of such Lender so as
to avoid the imposition of such Taxes.
8. EVENTS OF DEFAULT
8.1 In the event that any of the following events shall occur and be continuing:
(a) Non-Payment of Principal. Any principal of the Term Loan or the
Revolving Credit Facility is not paid on the due date; or
(b) Non-Payment of Interest or Other Amounts. Any interest on the
Term Loan, the Revolving Credit Facility or any other amount becoming payable to
the Agent or the Lenders under any Financing Document is not paid on the due
date or date of demand (as the case may be), and such default continues
unremedied for a period of five (5) Banking Days; or
(c) Representations. Any representation, warranty or other statement
made by any Security Party in any Financing Document or in any other instrument,
document or other agreement delivered in connection with any thereof proves to
have been untrue or misleading in any material respect as of the date when made
or confirmed; or
(d) Covenants. Any Security Party defaults in the due and punctual
observance or performance of any other term, covenant or agreement contained in
any Financing Document or in any other instrument, document or other agreement
delivered in connection herewith or therewith, or it becomes impossible or
unlawful for any Security Party to fulfill any such term, covenant or agreement
or there occurs any other event which constitutes a default under any Financing
Document, in each case other than an Event of Default referred to elsewhere in
this Section 8.1, and such default, impossibility and/or unlawfulness, in the
reasonable opinion of the Majority Lenders, would be likely to have a material
adverse effect on the rights of the Lenders or the Agent
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under any Financing Document or on the rights of the Lenders or the Agent to
enforce any Financing Document, and continues unremedied or unchanged, as the
case may be, for a period of thirty (30) days; or
(e) Indebtedness. Any Security Party, Marine Car Carriers (MI) or
any wholly owned subsidiary of any such party shall default in the payment when
due (subject to any applicable grace period) of any Indebtedness in an amount in
excess of Two Hundred Fifty Thousand Dollars ($250,000) or such Indebtedness is,
or by reason of such default is subject to being, accelerated or any party
becomes entitled to enforce the security for any such Indebtedness and such
party takes steps to enforce the same, unless such default or enforcement is
being contested in good faith and by appropriate proceedings or other acts and
the Security Party, Marine Car Carriers (MI) or subsidiary, as the case may be,
shall set side on its books adequate reserves with respect thereto; or
(f) Change of Control; Ownership or Management of Other Security
Parties. There is a change of control of any Security Party and the Lenders have
not prior thereto consented in writing to such change. As used herein, "change
of control" means (i) with respect to the Borrower, (A) any "person" (as such
term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934
(the "Exchange Act")) is or becomes the beneficial owner (as defined in Rules
13d-3 and 13d-5 promulgated pursuant to the Exchange Act), directly or
indirectly, of more than fifty percent (50%) of the total voting power of the
voting stock of the Borrower or (B) the Board of Directors of the Borrower
ceases to consist of a majority of the existing directors or directors elected
by the existing directors (as used herein, "existing director" means each of the
Directors of the Borrower as of the date immediately following consummation of
the transactions contemplated by the Acquisition Agreement) or (ii), with
respect to any other Security Party, any material change in the beneficial stock
ownership, voting control or senior management of any of the Security Parties;
or
(g) US Citizenship. Any Security Party owning a United States flag
Vessel ceases to be a United States of America citizen within the meaning of
Section 2 of the United States Shipping Act of 1916, as amended, qualified to
operate vessels in the coastwise trade; or
(h) Bankruptcy. Any Security Party or Marine Car Carriers (MI)
commences any proceeding under any reorganization, arrangement or readjustment
of debt, dissolution, winding up, adjustment, composition, bankruptcy or
liquidation law or statute of any jurisdiction, whether now or hereafter in
effect ("Proceeding"), or there is commenced against any thereof any Proceeding
and such Proceeding remains undismissed or unstayed for a period of thirty (30)
days or any receiver, trustee, liquidator or sequestrator of, or for, any
thereof or any substantial portion of the property of any thereof is appointed
and is not discharged within a period of thirty (30) days or any thereof by any
act indicates consent to or approval of or acquiescence in any Proceeding or the
appointment of any receiver, trustee, liquidator or sequestrator of, or for,
itself or of, or for, any substantial portion of its property; or
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(i) Termination of Operations; Sale of Assets. Without the Agent's
prior written consent, any Security Party ceases its operations or sells or
otherwise disposes of all or substantially all of its assets or all or
substantially all of the assets of the any Security Party are seized or
otherwise appropriated; or
(j) Judgments. Any judgment or order is made which would render
ineffective or invalid any Financing Documents; or
(k) Inability to Pay Debts. Any Security Party or Marine Car
Carriers (MI) is unable to pay or admits its inability to pay its debts as they
fall due or a moratorium shall be declared in respect of any material
indebtedness of any Security Party or Marine Car Carriers (MI); or
(l) Change in Financial Position. Any change in the financial
position of the Security Parties (taken as a whole) which, in the reasonable
opinion of the Majority Lenders, shall have a material adverse effect on the
ability of any Security Parties to perform its respective material obligations
under any Financing Document; or
(m) Relevant Contracts. Any of the Relevant Contracts or the MCCMI
Shareholders Agreement is terminated or is materially amended or modified
without the prior written consent of the Majority Lenders, or any party to a
Relevant Contract defaults or ceases to perform under such agreement for any
reason whatsoever and, with regard to any such termination, default or
nonperformance of a Relevant Contract, the relevant Vessel shall not be engaged
in an alternative employment, acceptable to the Lenders, under a contract,
acceptable to the Lenders, within ninety (90) days of such termination, default
or nonperformance; or
(n) Key Management Agreements. Any of the Key Management Agreements
(including any extensions or renewals thereof) is terminated prior to its stated
termination date or is materially amended or modified without the prior written
consent of the Majority Lenders, or any party to a Key Management Agreement
defaults or ceases to perform under such agreement for any reason whatsoever
and, as a result of such default or non-performance, the obligor under such
agreement ceases to pay or be obligated to pay to the relevant Security Party,
as the case may be, amounts payable by such obligor under such agreement; or
(o) Related Credit Agreement; OMI COLUMBIA Loan Documents and
Mortgage Securing OMI Debt. An "Event of Default" (as defined in any of the
Related Credit Agreement, the OMI COLUMBIA Loan Documents or the Mortgage
Securing the OMI Debt) shall have occurred and be continuing
then the Lenders' obligation to make any Advances available shall cease and the
Lenders may, by notice to the Borrower, declare the entire unpaid balance of the
Term Loan, accrued interest, the entire Revolving Credit Facility Balance,
accrued interest, and any other sums payable by the Borrower hereunder and under
any other Financing Document due and payable, whereupon, the same shall
forthwith be due and payable without
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presentment, demand, protest or notice of any kind, all of which are hereby
expressly waived; provided that upon the occurrence of an event specified in
subsections (h) or (k) of this Section 8.1, the Notes shall be immediately due
and payable without declaration or other notice to the Borrower. In such event,
the Lenders may proceed to protect and enforce their rights by action at law,
suit in equity or in admiralty or other appropriate proceeding, whether for
specific performance of any covenant contained in any Financing Document, or in
aid of the exercise of any power granted in any thereof, or the Lenders may
proceed to enforce the payment of the Notes or to enforce any other legal or
equitable right of the Lenders, or proceed to take any action authorized or
permitted under the terms of any of the Security Documents or by applicable law
for the collection of all sums due, or so declared due, on the Notes, including,
without limitation, the right to appropriate and hold, or apply (directly, by
way of set-off or otherwise) to the payment of the obligations of the Borrower
to the Lenders or the Agent under any Financing Document (whether or not then
due) all moneys and other amounts of the Borrower then or thereafter in
possession of any Lender or the Agent, the balance of any deposit account
(demand or time, matured or unmatured) of the Borrower then or thereafter with
any Lender or the Agent and every other claim of the Borrower then or thereafter
against any Lender or the Agent.
8.2 Indemnification. The Borrower agrees to, and shall, indemnify and hold the
Lenders and the Agent harmless against any loss (excluding any consequential
damages), as well as against any reasonable costs or expenses (including
reasonable legal fees and expenses), which the Lenders or the Agent sustains or
incurs as a consequence of any default in payment of the principal amount of the
Term Loan, the Revolving Credit Facility, interest accrued thereon or any other
amount payable under any Financing Document, including, but not limited to, all
actual losses incurred in liquidating or re-employing fixed deposits made by
third parties or funds acquired to effect or maintain the Term Loan and/or the
Revolving Credit Facility and/or any portion of either thereof. The
certification of each Lender or the Agent of such costs and expenses shall,
absent any manifest error, be conclusive and binding on the Borrower.
8.3 Application of Moneys. Except as otherwise provided in any Security
Document, all moneys received by the Lenders or the Agent under or pursuant to
this Agreement, any Notes, any Guaranty or any of the Security Documents after
the occurrence and continuation of any Event of Default (unless cured to the
satisfaction of the Lenders) shall be applied by the Lenders in the following
manner:
(a) first, in or towards the payment or reimbursement of any
expenses or liabilities incurred by the Lenders or the Agent in connection with
the ascertainment, protection or enforcement of its rights and remedies under
any Financing Documents,
(b) second, in or towards payment of any interest owing on the Term
Loan and the Revolving Credit Facility,
(c) third, in or towards repayment of principal owing in respect of
the Term Loan and the Revolving Credit Facility,
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<PAGE> 51
(d) fourth, in or towards payment of all other sums which may be
owing to the Lenders or the Agent under any Financing Document, and
(e) fifth, the surplus (if any) shall be paid to the Borrower or to
whosoever else may be entitled thereto.
9. COVENANTS
9.1 The Borrower and, by their execution of the consent and agreement and
assignment of account provided below, each of the Guarantors hereby covenants
and undertakes with the Lenders and the Agent that, from the date hereof and so
long as any principal, interest or other moneys are owing in respect of the Term
Loan, the Revolving Credit Facility or are otherwise owing under any Financing
Document:
(A) it will, and will procure that each other Security Party will:
(i) Performance of Agreements. Duly perform and observe, and
procure the observance and performance by all other parties thereto (other than
the Lenders and the Agent) of, the terms of the Financing Documents;
(ii) Notice of Default, Litigation and Adverse Change.
Promptly upon obtaining knowledge thereof, inform the Lenders of the occurrence
of any (a) Event of Default or of any event which, with the giving of notice or
lapse of time, or both, would constitute an Event of Default, (b) their
respective litigation or governmental proceeding pending or threatened against
it or against any of the Security Parties or Marine Car Carriers (MI) which
could reasonably be expected to have a material adverse effect on the business,
assets, operations, property or financial condition of any thereof, and (c)
other event or condition which is reasonably likely to have a material adverse
effect on its ability, or the ability of the Security Parties as a group, to
perform their respective obligations under any Financing Document;
(iii) Obtain Consents. Without prejudice to Section 2.1(b) and
this Section 9.1, obtain every consent and do all other acts and things which
may from time to time be necessary or advisable for the continued due
performance of all its and the other Security Parties' respective obligations
under the Financing Documents;
(iv) Financial Information. At the expense of the Borrower,
deliver to the Agent:
(a) as soon as available but not later than ninety (90) days
after the end of each fiscal year of the Borrower, a
complete copy of the 10K report of the Borrower filed
with the United States Securities and Exchange
Commission (including audited annual financial
statements of the Borrower together with a report
thereon by an Acceptable
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<PAGE> 52
Accounting Firm), which shall be prepared by the
Borrower and certified by the chief financial officer of
the Borrower together with a Compliance Certificate;
(b) as soon as available but not later than forty-five (45)
days after the end of each quarter of each fiscal year
of the Borrower, a copy of the 10Q report of the
Borrower filed with the United States Securities and
Exchange Commission which shall be prepared by the
Borrower and certified by the chief financial officer of
the Borrower, together, in each instance, with a
Compliance Certificate of such chief financial officer
in such form as the Lender may reasonably require;
(c) as soon as available, copies of all 8K reports filed by
the Borrower with the United States Securities and
Exchange Commission;
(d) as soon as available but not later than thirty (30) days
after the end of each month of each fiscal year of the
Borrower, unaudited monthly operating statements showing
actual versus budgeted cash flow (itemized for each
Vessel, Management Agreement and Vessel Agreement),
accounts receivable and accounts payable balances and
cash position for the Borrower and its Subsidiaries,
certified to be true and complete by the Chief Financial
Officer of the Borrower; and
(e) such other statements, lists of assets and accounts,
budgets, forecasts, reports and other financial
information with respect to its business as the Agent
may from time to time reasonably request, certified to
be true and complete by the Chief Financial Officer of
the Borrower;
(v) U.S. Citizenship; Qualification to Own Foreign Flag
Vessels. Continue to be, and cause each other Security Party or other Affiliate
of the Borrower owning a United States flag Vessel to continue to be, a United
States citizen within the meaning of Section 2 of the United States Shipping
Act, 1916, as amended (46 U.S.C. ss.802), qualified to own and operate vessels
in the coastwise trade of the United States of America and to cause each other
Security Party or other Affiliate of the Borrower which is the registered owner
of a Vessel registered under a flag other than the United States of America to
continue to be duly qualified under the laws of such flag to be the registered
owner and operator of a Vessel registered under such flag;
(vi) Corporate Existence. Do or cause to be done, and procure
that each Security Party shall do or cause to be done, all things necessary to
preserve and
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keep in full force and effect its corporate existence, and all licenses,
franchises, permits and assets necessary to the conduct of its business;
(vii) Books and Records. Keep, and cause each other Security
Party to keep, proper books of record and account into which full and correct
entries shall be made in accordance with GAAP throughout the Security Period;
(viii) Taxes and Assessments. Pay and discharge, and cause
each other Security Party to pay and discharge, all taxes, assessments and
governmental charges or levies imposed upon it or upon its income or property
prior to the date upon which penalties attach thereto; provided, however, that
it shall not be required to pay and discharge, or cause to be paid and
discharged, any such tax, assessment, charge or levy so long as (a) the legality
thereof shall be contested in good faith and by appropriate proceedings or other
acts and it shall set aside on its books adequate reserves with respect thereto
or (b) where such failure to pay or discharge is not reasonably likely to,
individually or in the aggregate, have a material adverse effect on the
business, prospects or financial condition of the Borrower and its Subsidiaries
taken as a whole;
(ix) Inspection. Allow, and cause each other Security Party to
allow, any representative or representatives designated by any Lender, subject
to applicable laws and regulations, to visit and inspect any of its properties,
and, on request, to examine its books of account, records, reports and other
papers and to discuss its affairs, finances and accounts with its officers, all
at such reasonable times and as often as any Lender may reasonably request;
(x) Compliance with Statutes, etc. Do or cause to be done, and
cause each other Security Party to do and cause to be done, all things necessary
to comply with all material laws, and the rules and regulations thereunder,
applicable to the Borrower or such other Security Party, including, without
limitation, those laws, rules and regulations relating to employee benefit plans
and environmental matters;
(xi) Environmental Matters. Promptly upon the occurrence of
any of the following conditions, provide to the Agent a certificate of the chief
executive officer thereof, specifying in detail the nature of such condition and
its proposed response or the response of its Environmental Affiliate: (a) its
receipt or the receipt by any other Security Party or any Environmental
Affiliate of the Borrower or any other Security Party of any written
communication whatsoever that alleges that such person is not in compliance with
any applicable environmental law or environmental approval, if such
noncompliance could reasonably be expected to have a material adverse effect on
the business, assets, operations, property or financial condition of the
Borrower or any other Security Party, (b) knowledge by it, or by any other
Security Party or any Environmental Affiliate of the Borrower or any other
Security Party that there exists any Environmental Claim pending or threatened
against any such person, which could reasonably be expected to have a material
adverse effect on the business, assets or operations, property or financial
condition of the Borrower or any other Security Party, or (c) any release,
emission, discharge or disposal of any material that could form the basis of any
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Environmental Claim against it, any other Security Party or against any
Environmental Affiliate of the Borrower or any other Security Party, if such
Environmental Claim could reasonably be expected to have a material adverse
effect on the business, assets or operations, property or financial condition of
the Borrower or any other Security Party. Upon the written request by the Agent,
it will submit to the Agent at reasonable intervals, a report providing an
update of the status of any issue or claim identified in any notice or
certificate required pursuant to this subsection;
(xii) ERISA. Forthwith upon learning of the occurrence of any
material liability of the any Security Party or any ERISA Affiliate pursuant to
ERISA in connection with the termination of any Plan or withdrawal or partial
withdrawal of any multi-employer plan (as defined in ERISA) or of a failure to
satisfy the minimum funding standards of Section 412 of the Code or Part 3 of
Title I of ERISA by any Plan for which any Security Party or any ERISA Affiliate
is plan administrator (as defined in ERISA), furnish or cause to be furnished to
the Agent written notice thereof;
(xiii) Vessel Management. Cause each of the Vessels to be
managed by the Borrower, by a wholly-owned subsidiary thereof or by third party
manager reasonably acceptable to the Agent and procure that no agreements
providing or governing the management of such vessels shall be amended or
modified without the prior written consent of the Agent unless (in the case of
management agreements other than Key Management Agreements) such amendment or
modification would not, in the reasonable opinion of the Agent, adversely affect
the economic interests of the Borrower or any other Security Party thereunder;
(xiv) Cash. Maintain at all times on a consolidated basis,
readily available Unrestricted Cash or Cash Equivalents of not less than the
greater of (a) Two Million Dollars ($2,000,000) and (b) ten percent (10%) of the
Total Debt of the Borrower (for purposes of determining compliance with this
covenant, Unrestricted Cash or Cash Equivalents held by Marine Car Carriers (MI)
for the benefit of Marine Car Carriers (Del) shall be calculated on the basis of
the Borrower's share of such sums after deduction of any taxes that would be
payable (as of the time of determination) consequent upon the distribution and
repatriation of such sums by Marine Car Carriers (MI) to Marine Car Carriers
(Del));
(xv) Working Capital. Maintain at all times on a consolidated
basis, a positive working capital position (for purposes of determining
compliance with this covenant, Unrestricted Cash or Cash Equivalents held by
Marine Car Carriers (MI) shall be calculated on the basis of the Borrower's
share of such sums after deduction of any taxes that would be payable (as of the
time of determination) consequent upon the distribution and repatriation of such
sums by Marine Car Carriers (MI) to Marine Car Carriers (Del));
(xvi) Debt Service Coverage Ratio. Maintain on a consolidated
basis, a ratio of EBITDA to scheduled payments of principal and interest in
respect of consolidated Indebtedness of not less than, during the period
commencing from the date
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hereof and ending on the second anniversary of the date hereof, 1.25 to 1.0,
and, thereafter, 1.5 to 1.0, such ratio to be determined quarterly based on the
scheduled principal and interest (assuming the then prevailing interest rates
shall remain in effect for the next twelve (12) months) payments payable over
the next twelve (12) month period;
(xvii) Total Debt to EBITDA. Maintain on a consolidated basis,
a ratio of Total Debt to EBITDA of not greater than, (x) during the period
commencing from the date hereof and ending on the first anniversary of the date
hereof, 3.25 to 1.0, (y) during the period commencing from the first anniversary
of the date hereof and ending on the second anniversary of the date hereof, 3.0
to 1.0 and (z) thereafter, 2.5 to1.0;
(xviii) Brokerage Commissions, etc. Indemnify and hold the
Lenders and the Agent harmless from any claim for any brokerage commission, fee,
or compensation from any broker or third party resulting from the transactions
contemplated hereby;
(xix) Deposit Accounts; Assignment. Throughout the Security
Period, maintain, and procure that each Security Party shall maintain its
primary collection and revenue accounts with the Agent and shall procure, and
shall cause each Security Party to procure that, all earnings of any Vessels
shall be paid (without set-off or counterclaim) into such collection accounts.
As security for the obligations of the Borrower hereunder, the Borrower hereby
pledges, assigns and grants the Agent, on behalf of the Lenders, a security
interest in all the Borrowers' right, title and interest in and to the aforesaid
collection and disbursement accounts and consents that if an Event of Default
shall occur and so long as the same shall be continuing, all moneys held in the
said accounts and all moneys thereafter received by the Agent may be applied as
provided in Section 8.3;
(xx) MARINE DUVAL, AMELINA, CALINA and SAVONETTA. Promptly
upon termination of the respective charter over the MARINE DUVAL, AMELINA,
CALINA or SAVONETTA, procure that the Guarantor owning such Vessel shall, unless
otherwise agreed by the Agent in writing, grant a United States or Liberian
Mortgage, as the case may be, together with the appropriate Earnings Assignment
and Insurances Assignment over such Vessel in favor of the Agent;
(xxi) Proceeds of Marine Car Carriers (MI). Promptly upon the
direct or indirect acquisition, in the aggregate, by the Borrower, the
Guarantors or any affiliate of any thereof of one hundred percent (100%) of the
equity of Marine Car Carriers (MI) or one hundred percent (100%) of the assets
thereof, grant, or procure the grant, to the Agent of a security interest in the
assets of Marine Car Carriers (MI) in form and substance satisfactory to the
Agent, it being hereby agreed by the Agent and the Lenders that, simultaneous
with the investment of the assets of Marine Car Carriers (MI) into a new joint
venture with a third party not affiliated with the Borrower or the
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Guarantors, such security interest shall be released and replaced with a
negative pledge in form and substance satisfactory to the Agent];
(xxii) Year 2000 Issue. The Borrower shall take, and shall
cause each of the Guarantors to take, all necessary action to complete in all
materials respects by September, 1999, the reprogramming of computer software,
hardware and firmware systems and equipment containing embedded microchips owned
or operated by or for the Borrower and the Guarantors or used or relied upon in
the conduct of their business (including systems and equipment supplied by
others or with which such systems of the Borrower or any of the Guarantors
interface) required as a result of the Year 2000 Issue to permit the proper
functioning of such computer systems and other equipment and the testing of such
systems and equipment, as so reprogrammed. At the request of the Agent, the
Borrower shall provide, and shall cause each of the Guarantors to provide, to
the Agent reasonable assurance of its compliance with the preceding sentence;
(xxiii) ISM Code Matters. (a) Procure that the relevant
Operator will, comply with, and ensure that (i) each Vessel will comply with the
requirements of the ISM Code by not later than July 1, 1998, and (ii) any
newly-acquired Vessel will comply with the requirements of the ISM Code within
three months of its acquisition, including (but not limited to) the maintenance
and renewal of valid certificates pursuant thereto throughout the Security
Period;
(b) Procure that any Operator will, immediately inform the
agent if there is any threatened or actual withdrawal of
its, DOC or the SMC for any Vessel; and
(c) Procure that the relevant Operator will, promptly inform
the Agent upon the issuance (i) to such Operator of a
DOC and (ii) to the relevant Vessel of an SMC; and
(xxiv) OMI COLUMBIA. Procure that promptly upon the
acquisition of ownership of OMI COLUMBIA by OMI Challenger Transport (or any
other Affiliate of the Borrower), such Guarantor shall execute and deliver a
second preferred mortgage and assignments of earnings and insurance in respect
of such Vessel in form and substance satisfactory to the Agent.
(B) The Borrower will not, and will procure that no other Security
Party will, without the prior written consent of the Agent:
(i) Liens. Create, assume or permit to exist, any mortgage,
pledge, lien, charge, encumbrance or any security interest whatsoever upon any
of such party's property or other assets, real or personal, tangible or
intangible, whether now owned or hereafter acquired except:
(a) liens for taxes not yet payable for which adequate
reserves have been maintained;
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(b) the Financing Documents and other liens granted in
connection herewith in favor of the Lenders or the
Agent, as the case may be;
(c) liens, charges and encumbrances against their
respective Vessels except those of the type and amounts
permitted to exist under the terms of the Mortgages;
(d) pledges of certificates of deposit or other cash
collateral securing any Security Party's reimbursement
obligations in connection with letters of credit now or
hereafter issued for the account of such Security Party
in connection with the establishment of the financial
responsibility of the Security Parties under 33 C.F.R.
Part 130 or 46 C.F.R. Part 540, as the case may be, as
the same may be amended or replaced;
(e) pledges or deposits to secure obligations under
workmen's compensation laws or similar legislation,
deposits to secure public or statutory obligations,
warehousemen's or other like liens, or deposits to
obtain the release of such liens and deposits to secure
surety, appeal or customs bonds on which any of the
Security Parties is the principal, as to all of the
foregoing, only to the extent arising and continuing in
the ordinary course of business;
(f) liens on assets acquired with Permitted Third Party
Debt and securing only the Permitted Third Party Debt
incurred to acquire such assets;
(g) the Mortgages securing the OMI Debt (and related
assignments of marine insurances for the Vessels subject
to such mortgages);
(h) other liens, charges and encumbrances incidental to
the conduct of the business of each such party, the
ownership of any such party's property and assets and
which do not in the aggregate materially detract from
the value of each such party's property or assets or
materially impair the use thereof in the operation of
its business
(items (a) through (h) are hereinafter collectively referred to as "Permitted
Liens");
(ii) Loans, Advances and Investments. Make any loans or
advances to, or any investments in any Person, firm, corporation, joint venture
or other
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entity (including, without limitation, any loan or advance to any officer,
director, stockholder, employee or customer of any company affiliated with any
Security Party) except for advances and investments in the ordinary course of
its business and loans or advances to any Security Party;
(iii) Indebtedness. Incur any Indebtedness except Permitted
Indebtedness;
(iv) Permitted Third Party Debt. Incur any Permitted Third
Party Debt, unless, in the case of any such Indebtedness other than that
supporting MARAD vessel management contracts:
(a) the Borrower and the Security Parties are in
compliance with their covenants set forth in this
Agreement,
(b) no Event of Default (or any event or condition
which, with the giving of notice or passage of time or
both, would constitute an Event of Default) shall have
occurred or will occur and be continuing before or after
the incurrence of such Permitted Third Party Debt,
(c) the Borrower demonstrates to the satisfaction of the
Agent, in its sole discretion, that the ratio of (1)
projected EBITDA to be generated by the particular asset
to be acquired with such Permitted Third Party Debt to
(2) projected scheduled payments of interest and
principal for such Permitted Third Party Debt shall be
at least 1.0 to 1.0 over the entire term of such
Permitted Third Party Debt and
(d) the Borrower demonstrates to the satisfaction of the
Agent, in its sole discretion, that following the
incurrence of such Permitted Third Party Debt, the
Borrower and the Guarantors shall be in compliance with
the financial covenants set forth in Sections
9.1(A)(xiv), (xv), (xvi) and (xvii) (for purposes of the
calculations required by this clause (z), (1) EBITDA
shall include the projected EBITDA to be generated by
the particular asset to be acquired with such Permitted
Third Party Debt, (2) Total Debt shall include the
Permitted Third Party Debt to be incurred and (3)
scheduled payments of interest and principal on Total
Debt shall include projected scheduled payments of
interest and principal in respect of such Permitted
Third Party Debt;
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(v) Guarantees, etc. Assume, guarantee or (other than in the
ordinary course of its business) endorse or otherwise become or remain liable,
in connection with any obligation of any person, firm, company or other entity
except for guarantees, in connection herewith, in favor of the Lenders or the
Agent or guarantees of Permitted Indebtedness;
(vi) Changes in Business. Change the nature of its business or
engage in any businesses other than domestic and international marine
transportation;
(vii) Use of Corporate Funds. Pay out any funds to any company
or Person except (a) as contemplated by the Acquisition Agreement; (b) in the
ordinary course of business in connection with the management of the business of
the Security Parties, including the operation and/or repair of the Vessels and
other vessels owned, managed or operated by such parties and (c) the servicing
of Permitted Indebtedness provided, however, it shall not prepay any such
Permitted Indebtedness (excluding the Indebtedness hereunder and under the
Related Credit Agreement);
(viii) Issuance of Shares. Permit any subsidiaries to issue or
dispose of any shares of its own capital stock to any Person;
(ix) Sale of Shares. Sell, assign, transfer, pledge or
otherwise convey or dispose of any of the shares of the capital stock of any
Security Parties or Marine Car Carriers (MI);
(x) Sale of Assets. Sell, or otherwise dispose of, any Vessel,
any shares in any subsidiary corporation or any other asset which represents all
or a substantial portion of its assets taken as a whole;
(xi) Capital Expenditures. Make or commit to make any capital
expenditures provided, however, that in no event shall this subsection (xi)
preclude the Borrower or any other Security Party from undertaking necessary
repairs and improvements to any Vessel the cost of which, for accounting
purposes, is treated by the Borrower as a capital expenditure;
(xii) Changes in Offices or Names. Change the location of the
chief executive office of any Security Party, the office of the chief place of
business of any such parties, the office of the Security Parties in which the
records relating to the earnings or insurances of the Vessels are kept unless
the Agent shall have received thirty (30) days prior written notice of such
change;
(xiii) Changes in Management. Make any material changes in the
existing management of any Security Party;
(xiv) Consolidation and Merger. Consolidate with, or merge
into, any corporation or other entity, or merge any corporation or other entity
into it
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unless, in the case of the relevant Security Party, such company shall be the
surviving entity;
(xv) Chartering-in of Vessels. Except for the chartering-in of
oil tankers by OMI Petrolink Corp., a Delaware corporation, in connection with
the operation of its lightering business, charter-in any vessel under a charter
having a term (inclusive of all extensions and renewals) of twelve (12) months
or more;
(xvi) Dividends. (x) Declare or make, and procure that no
other Security Party shall declare or make to any party other than another
Security Party, any distributions to its shareholders, by dividend or otherwise,
or otherwise dispose of any assets to its shareholders- in cash or in any other
manner or (y) enter into, and procure that no other Security Party shall enter
into, any agreement or arrangement (other than this Agreement and the Related
Credit Agreement) which restricts or limits it or such other Security Party from
making any such distributions to its immediate parent; and
(xvii) Loans From Marine Car Carriers (MI). Procure that
Marine Car Carriers (MI) shall not make any loans or advances to the Borrower,
or any subsidiary, officer, director, shareholder or Affiliate thereof.
9.2 Vessel Valuations. At least every twelve (12) months commencing on the day
falling twelve (12) months from the date hereof and in any event upon the
request of the Agent, the Borrower shall obtain, at the Borrower's cost,
valuations of the Vessels, charter-free, in Dollars from two independent
shipbrokers satisfactory to the Agent. In the event the Borrower fails or
refuses to obtain the valuations requested pursuant to this Section 9.2 within
ten (10) days of the Agent's request therefor, the Agent shall be authorized to
obtain such valuations, at the Borrower's cost, from two independent shipbrokers
selected by the Agent, which valuations shall be deemed the equivalent of
valuations duly obtained by the Borrower pursuant to this Section 9.2, but the
Agent's actions in doing so shall not excuse any default of the Borrower under
this Section 9.2. The average of such two (2) valuations shall be the FMV of
each Vessel.
9.3 Asset Maintenance. If at any time the Collateral Vessel Value (together with
the value of any additional collateral theretofore provided under this Section)
falls below one hundred fifty percent (150%) (the "Required Percentage") of an
amount (the "Principal Exposure") equal to the aggregate of (a) the Term Loan
Balance, (b) any Revolving Credit Facility Advances then outstanding, (c) any
undrawn amounts then available under the Revolving Credit Facility, (d) the
Related Indebtedness then outstanding and (e) any amounts then available to be
drawn down pursuant to the Related Credit Agreement, the Borrower shall, within
a period of thirty (30) days following receipt by the Borrower of written notice
from the Agent notifying the Borrower of such shortfall and specifying the
amount thereof (which amount shall, in the absence of manifest error, be deemed
to be conclusive and binding on the Borrower), either (a) deliver to the Lenders
or the Agent as the case may be, such additional collateral, as may be
satisfactory to the Agent in its sole discretion, of sufficient value to restore
compliance with the Required Percentage or (b)(i) prepay such part of the Term
Loan (together with interest thereon and other moneys
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payable in respect of such prepayment pursuant to Section 5.6) or (ii) procure
the prepayment of such part of the Related Term Loan in accordance with the
terms of the Related Credit Agreement as shall result in the restoration of
compliance with the Required Percentages. Any such prepayment of the Term Loan
shall be applied as provided in Section 5.6. For purposes of calculating the
Collateral Vessel Value under this Section 9.3, the value of the OMI COLUMBIA
shall be deemed to be equal to the product of (1) the lightweight tonnage of
such Vessel multiplied by (2) (x) One Hundred Twenty-Five Dollars ($125) or (y)
if such Vessel is hereafter subject to legal restrictions as to the geographic
location where such Vessel may be scrapped, a scrap price, reasonably deemed by
the Agent to reflect a conservative average market scrap price for those
jurisdictions which, in the Agent's reasonable opinion, such Vessel may be
scrapped in a commercially reasonable manner.
9.4 Inspection and Survey Reports. If the Agent shall so request, the Borrower
shall provide the Agent with copies of all internally generated inspection or
survey reports on the Vessels.
10. ASSIGNMENT
This Agreement shall be binding upon, and inure to the benefit of, the
Borrower, the Lenders and the Agent and their respective successors and assigns,
except that the Borrower may not assign any of its rights or obligations
hereunder without the prior written consent of the Majority Lenders. In giving
any consent as aforesaid to any assignment by the Borrower, the Lenders shall be
entitled to impose such conditions as they shall deem advisable. Each Lender
shall be entitled to assign the whole or any part of its rights or obligations
under this Agreement or grant participation(s) in the Term Loan and the
Revolving Credit Facility to any subsidiary, holding company or other affiliate
of such Lender, to any subsidiary or other affiliate company of any thereof or
to any other bank or financial institution, and such Lender shall forthwith give
notice of any such assignment or participation to the Borrower provided, that,
the relevant Lender assigns or participates, as the case may be, to its assignee
or participant, (a) equal proportionate shares of such Lender's interest in both
the Term Loan and the Revolving Credit Facility and (b), simultaneously with its
assignment or participation of a share in the Indebtedness provided hereunder,
an equal proportionate share in the Related Indebtedness in accordance with the
provisions of the Related Credit Agreement and, provided, further, that in the
event of any assignment by any Lender, such assignment (but not any
participation) is to be made pursuant to an Assignment and Assumption Agreement.
The Borrower will take all reasonable actions requested by the Agent, on behalf
of such Lender.
11. ILLEGALITY, INCREASED COST, NON-AVAILABILITY, ETC.
11.1 Illegality. In the event that by reason of any change in any applicable
law, regulation or regulatory requirement or in the interpretation thereof (any
such change or interpretation), a Lender has a good faith reasonable basis to
conclude that it has become unlawful for it to maintain or give effect to its
obligations as contemplated by this
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Agreement, such Lender shall inform the Borrower to that effect, whereafter the
liability of such Lender to make its portion of the Term Loan and/or the
Revolving Credit Facility available shall forthwith cease and the Borrower shall
be required either to repay to such Lender that portion of the outstanding
balance of the Term Loan and/or the Revolving Credit Facility funded by such
Lender immediately or, with respect to the Term Loan, if the relevant Lender so
agrees, to repay such portion of the Term Loan to such Lender on the last day of
any then current Interest Period in accordance with and subject to the
provisions of Section 11.5. In any such event, but without prejudice to the
aforesaid obligations of the Borrower to repay the Term Loan and/or the
Revolving Credit Facility, the Borrower and the relevant Lender shall negotiate
in good faith with a view to agreeing on terms for making such portion of the
Term Loan and/or the Revolving Credit Facility available from another
jurisdiction or otherwise restructuring such portion of the Term Loan and/or the
Revolving Credit Facility on a basis which is not unlawful.
11.2 Increased Costs. If any change in applicable law, regulation or regulatory
requirement, or in the interpretation or application thereof by any governmental
or other authority, shall:
(i) subject the Agent or any Lender to any Taxes with respect to
its income from the Term Loan and/or the Revolving Credit
Facility, or any part of either thereof, or
(ii) change the basis of taxation to the Agent or any Lender of
payments of principal or interest or any other payment due or
to become due pursuant to this Agreement (other than a change
in the basis effected by the jurisdiction of organization of
the Agent or such Lender, the jurisdiction of the principal
place of business of the Agent or such Lender, the United
States of America, the State or City of New York or any
governmental subdivision or other taxing authority having
jurisdiction over the Agent or Lender (unless such
jurisdiction is asserted by reason of the activities of any of
the Security Parties) or such other jurisdiction where the
Term Loan and/or the Revolving Credit Facility may be
payable), or
(iii) impose, modify or deem applicable any reserve requirements or
require the making of any special deposits against or in
respect of any assets or liabilities of, deposits with or for
the account of, or loans by, the Lender, or
(iv) impose on the Agent or any Lender any other condition
affecting the Term Loan and/or the Revolving Credit Facility
or any part of either thereof,
and the result of the foregoing is either to increase the cost to such Lender of
making available or maintaining its Commitment or any part of either thereof or
to reduce the
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amount of any payment received by the Agent or such Lender, then and in any such
case if such increase or reduction in the opinion of the Agent or such Lender
materially affects the interests of the Agent or such Lender under or in
connection with this Agreement:
(a) the Agent or such Lender, as the case may be, shall notify the
Borrower of the occurrence of such event, and
(b) the Borrower agrees forthwith upon demand to pay to the Agent
or such Lender such amount as the Agent or such Lender
certifies to be necessary to compensate the Agent or such
Lender for such additional cost or such reduction.
11.3 Nonavailability of Funds. If the Agent shall determine that, by reason of
circumstances affecting the London Interbank Market generally, adequate and
reasonable means do not or will not exist for ascertaining the LIBOR for any
Interest Period, the Agent shall give notice of such determination to the
Borrower. The Borrower and the Agent shall then negotiate in good faith in order
to agree upon a mutually satisfactory interest rate and/or Interest Period to be
substituted for LIBOR which would otherwise have applied under this Agreement.
If the Borrower and Agent are unable to agree upon such a substituted interest
rate and/or Interest Period within thirty (30) days of the giving of such
determination notice, the Agent shall set an interest rate and Interest Period
to take effect from the expiration of the Interest Period in effect at the date
of determination, which rate shall be equal to the aggregate of (a) the cost to
each Lender (as certified by such Lender) of funding the relevant Advance, (b)
the then prevailing Margin and (c) in the case of Revolving Credit Facility
Advances, one quarter of one percent (0.25%). In the event the state of affairs
to which this Section 11.3 refers shall extend beyond the end of the Interest
Period, the foregoing procedure shall continue to apply until circumstances are
such that LIBOR may be determined pursuant to Section 6.
11.4 Agent's Certificate Conclusive. A certificate or determination notice of
the Agent or any Lender as to any of the matters referred to in this Section 11
shall, absent manifest error, be conclusive and binding on the Borrower.
11.5 Compensation for Losses. Where the Term Loan and/or the Revolving Credit
Facility or a portion of either thereof is to be repaid by the Borrower pursuant
to this Section 11, the Borrower agrees simultaneously with such repayment to
pay to the relevant Lender all accrued interest to the date of actual payment on
the amount repaid and all other sums then payable by the Borrower to the
relevant Lender pursuant to this Agreement together with such amounts as may be
certified by the relevant Lender to be necessary to compensate the Lender for
any actual loss, premium or penalties incurred or to be incurred thereby on
account of funds borrowed to make, fund or maintain its Commitment or such
portion of either thereof for the remainder (if any) of the then current
Interest Period or Periods, if any, but otherwise without penalty or premium.
12. CURRENCY INDEMNITY
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12.1 Currency Conversion. If for the purpose of obtaining or enforcing a
judgment in any court in any country it becomes necessary to convert into any
other currency (the "Judgment Currency") an amount due in Dollars under any
Financing Document then the conversion shall be made, in the discretion of the
Agent at the rate of exchange prevailing either on the date of default or on the
day before the day on which the judgment is given or the order for enforcement
is made, as the case may be (the "Conversion Date"), provided that the Agent
shall not be entitled to recover under this clause any amount in the Judgment
Currency which exceeds at the Conversion Date the amount in Dollars due under
any Financing Document.
12.2 Change in Exchange Rate. If there is a change in the rate of exchange
prevailing between the Conversion Date and the date of actual payment of the
amount due, the Borrower shall pay such additional amounts (if any, but in any
event not a lesser amount) as may be necessary to ensure that the amount paid in
the Judgment Currency when converted at the rate of exchange prevailing on the
date of payment will produce the amount then due under any Financing Document in
Dollars; any excess over the amount due received or collected by the Lenders
shall be remitted to the Borrower.
12.3 Additional Debt Due. Any amount due from the Borrower under this Section 12
shall be due as a separate debt and shall not be affected by judgment being
obtained for any other sums due under or in respect of the Financing Documents.
12.4. Rate of Exchange. The term "rate of exchange" in this Section 12 means the
rate at which the Agent in accordance with its normal practices is able on the
relevant date to purchase Dollars with the Judgment Currency and includes any
premium and costs of exchange payable in connection with such purchase.
13. FEES AND EXPENSES
13.1 Commitment Fee. The Borrower will pay a Commitment Fee at a rate, per
annum, equal to forty percent (40%) of the aggregate of (a) the then applicable
Margin and (b) one quarter of one percent (0.25%), accruing from the date
hereof, payable quarterly in arrears from the date hereof and on the Revolving
Credit Facility Termination Date, on the available but undrawn amount of the
Revolving Credit Facility. The Commitment Fee shall accrue from day to day and
be calculated on the actual number of days elapsed and a three hundred sixty
(360) day year.
13.2 Facilities Fee. A Facilities Fee payable to the Lenders on the earlier of
(a) the date on which the Term Loans are repaid or prepaid in full or refinanced
and (b) the second anniversary of the date hereof. The Facilities Fee shall be
equal to the product of (x) Twenty-Four Million Dollars ($24,000,000) and (y),
if such fee is payable on or before the day falling (i) six (6) months after the
date hereof, one quarter of one percent (0.25%), (ii) twelve (12) months after
the date hereof, one half of one percent (0.50%) or (iii) twelve (12) months and
one (1) day after the date hereof, three-quarters of one percent (0.75%).
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13.3 Other Fees. The Borrower shall pay the fees set forth in the fee letter
between the Borrower and the Agent dated the date hereof.
13.4 Expenses. The Borrower agrees, whether or not the transactions hereby
contemplated are consummated, on demand to pay, or reimburse the Lenders and the
Agent for their payment of, the reasonable expenses of the Lenders and the Agent
incident to said transactions (and in connection with any supplements,
amendments, waivers or consents relating thereto or incurred in connection with
the enforcement or defense of any of the rights and remedies of any Lender or
the Agent with respect thereto or in the preservation of the priorities of the
Lenders or the Agent under the documentation executed and delivered in
connection therewith) including, without limitation, all reasonable costs and
expenses of preparation, negotiation, execution and administration of this
Agreement and the documents referred to herein, the reasonable fees and
disbursements of the counsel of the Lenders and the Agent in connection
therewith, as well as the reasonable fees and expenses of any independent
appraisers, surveyors, engineers and other consultants retained by the Lenders
or the Agent for this transaction, all reasonable costs and expenses, if any,
for the enforcement of the Financing Documents and stamp and other similar
taxes, if any, incident to the execution and delivery of the documents
(including, without limitation, the Notes) herein contemplated and to hold the
Lenders and the Agent free and harmless in connection with any liability arising
from the nonpayment of any such stamp or other similar taxes. Such taxes and, if
any, interest and penalties related thereto as may become payable after the date
hereof shall be paid immediately by the Borrower to the relevant Lender or the
Agent, as the case may be, when liability therefor is no longer contested by the
Lenders or the Agent, as the case may be, or reimbursed immediately by the
Borrower to such Lender or the Agent, as the case may be.
14. APPLICABLE LAW, JURISDICTION AND WAIVER
14.1 Applicable Law. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of New York without any reference to the
conflicts of laws principles of such State.
14.2 Jurisdiction. The Borrower hereby irrevocably submits to the jurisdiction
of the courts of the State of New York and of the United States District Court
for the Southern District of New York in any action or proceeding brought
against it by the Agent or any Lender under this Agreement or under any document
delivered hereunder and hereby irrevocably agrees that valid service of summons
or other legal process on it may be effected by serving a copy of the summons
and other legal process in any such action or proceeding on the Borrower by
mailing or delivering the same by hand to the Borrower at the address indicated
for notices in Section 16.2. The service, as herein provided, of such summons or
other legal process in any such action or proceeding shall be deemed personal
service and accepted by the Borrower as such, and shall be legal and binding
upon the Borrower for all the purposes of any such action or proceeding. Final
judgment (a certified or exemplified copy of which shall be conclusive evidence
of the fact and of the amount of any indebtedness of the Borrower to the Lenders
or the Agent) against the
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Borrower in any such legal action or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment. The Borrower will
advise the Agent promptly of any change of address for the purpose of service of
process. Notwithstanding anything herein to the contrary, the Lenders or the
Agent may bring any legal action or proceeding in any other appropriate
jurisdiction.
14.3 WAIVER OF JURY TRIAL. IT IS MUTUALLY AGREED BY AND AMONG THE BORROWER, THE
OTHER SECURITY PARTIES, THE AGENT AND THE LENDERS THAT EACH OF THEM HEREBY
WAIVES TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM BROUGHT BY ANY
PARTY TO ANY FINANCING DOCUMENT AGAINST ANY OTHER PARTY TO ANY FINANCING
DOCUMENT ON ANY MATTER WHATSOEVER ARISING OUT OF OR IN ANY WAY CONNECTED WITH
ANY FINANCING DOCUMENT.
15. THE AGENT
15.1 (a) Appointment of Agent. Each of the Lenders hereby irrevocably appoints
and authorizes the Agent (which for purposes of this Section 15 shall be deemed
to include the Agent acting in its capacity as security trustee pursuant to
Section 15.1(b)) to take such action as agent on its behalf and to exercise such
powers under the Financing Documents as are delegated to the Agent by the terms
hereof and thereof. Neither the Agent nor any of its directors, officers,
employees or agents shall be liable for any action taken or omitted to be taken
by it or them under the Financing Documents or in connection therewith, except
for its or their own gross negligence or willful misconduct.
(b) Appointment of Security Trustee. Each of the Lenders irrevocably
appoints the Agent as security trustee on their respective behalf with regard to
the (i) security, powers, rights, titles, benefits and interests (both present
and future) constituted by and conferred on the Lenders or any of them or for
the benefit thereof under or pursuant to the Financing Documents (including,
without limitation, the benefit of all covenants, undertakings, representations,
warranties and obligations given, made or undertaken to any Lender in any
Financing Document), (ii) all moneys, property and other assets paid or
transferred to or vested in any Lender or any agent of any Lender or received or
recovered by any Lender or any agent of any Lender pursuant to, or in connection
with, the Financing Documents whether from any Security Party or any other
person and (iii) all money, investments, property and other assets at any time
representing or deriving from any of the foregoing, including all interest,
income and other sums at any time received or receivable by any Lender or any
agent of any Lender in respect of the same (or any part thereof). The Agent
hereby accepts such appointment.
15.2 Distribution of Payments. Whenever any payment is received by the Agent
from any Security Party for the account of the Lenders, or any of them, whether
of principal or interest on the Notes, commissions, fees under Sections 13.1 or
13.2and expenses under Section 13.4, or otherwise, it will thereafter cause to
be distributed on the same day if received before 11 a.m. New York time, or on
the next day if received thereafter, like
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funds relating to such payment ratably to the Lenders according to their
respective Commitments, in each case to be applied according to the terms of
this Agreement.
15.3 Holder of Interest in Note. The Agent may treat each Lender as the holder
of all of the interest of such Lender in the Note, until, in the case of an
assignment, the Agent has received an original Assignment and Assumption
Agreement executed by such Lender and its assignee.
15.4 No Duty to Examine, Etc. The Agent shall not be under a duty to examine or
pass upon the validity, effectiveness or genuineness of any of the Financing
Documents or any instrument, document or communication furnished pursuant to or
in connection with any Financing Document, and the Agent shall, in the absence
of gross negligence, be entitled to assume that the same are valid, effective
and genuine, have been signed or sent by the proper parties and are what they
purport to be.
15.5 Agent as Lender. With respect to that portion of the Term Loan and the
Revolving Credit Facility made available by it, the Agent shall have the same
rights and powers hereunder as any other Lender and may exercise the same as
though it were not the Agent, and the term "Lender" or "Lenders" shall include
the Agent in its capacity as a Lender. The Agent and its affiliates may accept
deposits from, lend money to and generally engage in any kind of business with,
the Security Parties as if it were not the Agent.
15.6 (a) Obligations of Agent. The obligations of the Agent under the Financing
Documents are only those expressly set forth herein and therein.
(b) No Duty to Investigate. The Agent shall not at any time be under any
duty to investigate whether an Event of Default, or an event which with the
giving of notice or lapse of time, or both, would constitute an Event of
Default, has occurred or to investigate the performance of any Financing
Document by any Security Party.
15.7 (a) Discretion of Agent. The Agent shall be entitled to use its discretion
with respect to exercising or refraining from exercising any rights which may be
vested in it by, and with respect to taking or refraining from taking any action
or actions which it may be able to take under or in respect of, the Financing
Documents, unless the Agent shall have been instructed by the Majority Lenders
to exercise such rights or to take or refrain from taking such action; provided,
however, that the Agent shall not be required to take any action which exposes
the Agent to personal liability or which is contrary to this Agreement or
applicable law.
(b) Instructions of Majority Lenders. The Agent shall in all cases be
fully protected in acting or refraining from acting under any Financing Document
in accordance with the instructions of the Majority Lenders, and any action
taken or failure to act pursuant to such instructions shall be binding on all of
the Lenders.
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15.8 Assumption re Event of Default. Unless the Agent has been notified by any
Security Party that an Event of Default, or event which with the giving of
notice or lapse of time, or both, would constitute an Event of Default, has
occurred and is continuing, or has been notified by a Lender that such Lender
considers that an Event of Default or such an event (specifying in detail the
nature thereof) has occurred and is continuing, except as otherwise provided in
Section 15.14 hereof, the Agent shall be entitled to assume that no Event of
Default, or event which with the giving of notice or lapse of time, or both,
would constitute an Event of Default, has occurred and is continuing. In the
event that the Agent shall have been notified by any Security Party or any
Lender in the manner set forth in the preceding sentence of any Event of Default
or of an event which with the giving of notice or lapse of time, or both, would
constitute an Event of Default, the Agent shall notify the Lenders and shall
take action and assert such rights under the Financing Documents as the Majority
Lenders shall request in writing.
15.9 No Liability of Agent or Lenders. Neither the Agent nor any of the Lenders
shall be under any liability or responsibility whatsoever:
(a) to any Security Party or any other person or entity as a consequence
of any failure or delay in performance by, or any breach by, any other Lenders
or any other person of any of its or their obligations under any Financing
Document;
(b) to any Lender or Lenders, as a consequence of any failure or delay in
performance by, or any breach by, any Security Party of any of its respective
obligations under the Financing Documents; or
(c) to any Lender or Lenders, for any statements, representations or
warranties contained in any Financing Document or any document or instrument
delivered in connection with the transaction hereby contemplated; or for the
validity, effectiveness, enforceability or sufficiency of any Financing Document
or any document or instrument delivered in connection with the transactions
hereby contemplated.
15.10 Indemnification of Agent. The Lenders agree to indemnify the Agent (to the
extent not reimbursed by the Security Parties or any thereof), pro rata
according to the respective amounts of their Commitments, from and against any
and all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements of any kind or nature
whatsoever (including legal fees and expenses incurred in investigating claims
and defending itself against such liabilities) which may be imposed on, incurred
by or asserted against, the Agent in any way relating to or arising out of any
Financing Document, any action taken or omitted by the Agent thereunder or the
preparation, administration, amendment or enforcement of, or waiver of any
provision of, any Financing Document, except that no Lender shall be liable for
any portion of such liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements resulting from the
Agent's gross negligence or willful misconduct.
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15.11 Consultation with Counsel. The Agent may consult with legal counsel
selected by the Agent and shall not be liable for any action taken, permitted or
omitted by it in good faith in accordance with the advice or opinion of such
counsel.
15.12 Resignation. The Agent may resign at any time by giving sixty (60) days'
written notice thereof to the Lenders and the Borrower. Upon any such
resignation, the Lenders shall have the right to appoint a successor Agent. If
no successor Agent shall have been so appointed by the Lenders and shall have
accepted such appointment within sixty (60) days after the retiring Agent's
giving notice of resignation, then the retiring Agent may, on behalf of the
Lenders, appoint a successor Agent which shall be a bank or trust company of
recognized standing. The appointment of any successor Agent shall be subject to
the prior written consent of the Borrower, such consent not be unreasonably
withheld. After any retiring Agent's resignation as Agent hereunder, the
provisions of this Section 15 shall continue in effect for its benefit with
respect to any actions taken or omitted by it while acting as Agent.
15.13 Representations of Lenders. Each Lender represents and warrants to each
other Lender and the Agent that:
(i) In making its decision to enter into this Agreement and to make its
Commitment available hereunder, it has independently taken whatever steps it
considers necessary to evaluate the financial condition and affairs of the
Security Parties, that it has made an independent credit judgment and that it
has not relied upon any statement, representation or warranty by any other
Lender or the Agent; and
(ii) So long as any portion of its Commitment remain outstanding, it will
continue to make its own independent evaluation of the financial condition and
affairs of the Security Parties.
15.14 Notification of Event of Default. The Agent hereby undertakes to notify
promptly the Lenders, and the Lenders hereby undertake to notify promptly the
Agent and the other Lenders, of the existence of any Event of Default which
shall have occurred and be continuing of which the Agent or any Lender has
actual knowledge.
16. NOTICES AND DEMANDS
16.1 Notices in Writing. Every notice or demand under this Agreement shall be in
writing and may be given or made by facsimile.
16.2 Addresses for Notice. Every notice or demand shall be sent as follows:
If to the Borrower:
1200 Harbour Boulevard, 9th Floor,
Weehawken, New Jersey 07087
Fax No.: 201-330-9645
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Attn: General Counsel, P.N. Popov
If to the Agent (with copies to the Lenders):
200 Park Avenue
New York, New York 10166
Fax No.: 212-681-3900
Attn: Nikolai Nachamkin
If to the Lenders, to such Lender's address and fax number as set forth in
Schedule 1 (with a copy to the Agent).
Any notice sent by facsimile shall be confirmed by letter dispatched as soon as
practicable thereafter.
16.3 Notices Deemed Received. Every notice or demand shall, except so far as
otherwise expressly provided by this Agreement, be deemed to have been received
(provided that it is received prior to 2 p.m. New York time; otherwise it shall
be deemed to have been received on the next following Banking Day), in the case
of a facsimile at the time of dispatch thereof (provided further that if the
date of dispatch is not a Banking Day in the locality of the party to whom such
notice or demand is sent it shall be deemed to have been received on the next
following Banking Day in such locality) and, in the case of a letter, at the
time of receipt thereof.
17. MISCELLANEOUS
17.1 Time of Essence. Time is of the essence of this Agreement but no failure or
delay on the part of the Lenders or the Agent to exercise any power or right
under this Agreement shall operate as a waiver thereof, nor shall any single or
partial exercise by the Lenders or the Agent of any power or right hereunder
preclude any other or further exercise thereof or the exercise of any other
power or right. The remedies provided herein are cumulative and are not
exclusive of any remedies provided by law.
17.2 Unenforceable, etc., Provisions - Effect. In case any one or more of the
provisions contained in any Financing Document would, if given effect, be
invalid, illegal or unenforceable in any respect under any law applicable in any
relevant jurisdiction, said provision shall not be enforceable against the
relevant Security Party, but the validity, legality and enforceability of the
remaining provisions herein or therein contained shall not in any way be
affected or impaired thereby.
17.3 Indemnification. The Borrower and, by its execution and delivery of the
Consent and Agreement set forth below, each of the other Security Parties
jointly and severally agree to indemnify the Lenders, the Agent, their
respective successors and assigns, and their respective officers, directors,
employees, representatives and agents (each an "Indemnitee") from, and hold each
of them harmless against, any and all losses, liabilities, claims, damages,
expenses, obligations, penalties, actions, judgments, suits,
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costs or disbursements of any kind or nature whatsoever (including, without
limitation, the fees and disbursements of counsel for such Indemnitee in
connection with any investigative, administrative or judicial proceeding
commenced or threatened, whether or not such Indemnitee shall be designated a
party thereto) that may at any time (including, without limitation, at any time
following the repayment of the Term Loan and the Revolving Credit Facility
Advances) be imposed on, asserted against or incurred by, any Indemnitee as a
result of, or arising out of or in any way related to or by reason of, (a) any
violation by any Security Party (or any charterer or other operator of any
Vessel) of any applicable Environmental Law, (b) any Environmental Claim arising
out of the management, use, control, ownership or operation of property or
assets by any Security Party (or, after foreclosure, by the Lenders, the Agent
or their respective successors or assigns after any such foreclosure) and (3)
the breach of any representation, warranty or covenant set forth in Sections 2.1
(p) or (q) or 9.1(A)(xi). If and to the extent that the obligations of the
Security Parties under this Section are unenforceable for any reason, the
Borrower and, by its execution and delivery of the Consent and Agreement set
forth below, each of the other Security Parties jointly and severally agree to
make the maximum contribution to the payment and satisfaction of such
obligations which is permissible under applicable law. The obligations of the
Security Parties under this Section 17.3 shall survive the termination of this
Agreement and the repayment to the Lender and the Agent of all amounts owing to
each thereof under or in connection herewith.
17.4 References. References herein to Sections and Schedules are to be construed
as references to sections of, and schedules to, this Agreement.
17.5 Further Assurances. The Borrower agrees that if any Financing Document
shall, in the reasonable opinion of the Agent, at any time be deemed by the
Agent for any reason insufficient in whole or in part to carry out the true
intent and spirit hereof or thereof, it will execute or cause to be executed
such other and further assurances and documents as in the opinion of the Agent
may be required in order more effectively to accomplish the purposes of such
Financing Document.
17.6 Prior Agreements, Merger. Any and all prior understandings and agreements
heretofore entered into between the Security Parties on the one part, and the
Lenders or the Agent, on the other part, whether written or oral, are superseded
by and merged into this Agreement and the other agreements (the forms of which
are exhibited hereto) to be executed and delivered in connection herewith to
which any Security Party and/or the Lenders or the Agent are parties, which
alone fully and completely express the agreements between the Security Parties,
the Lenders and the Agent.
17.7 Entire Agreement; Amendments. This Agreement constitutes the entire
agreement of the parties hereto including all parties added hereto pursuant to
an Assignment and Assumption Agreement and cannot be amended other than by
written agreement signed by all such parties.
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17.8 Headings. In this Agreement, Section headings are inserted for convenience
of reference only and shall not be taken into account in the interpretation of
this Agreement.
IN WITNESS whereof, each party hereto has caused this Agreement to
be duly executed by its duly authorized representative on the day and year first
above written.
MARINE TRANSPORT CORPORATION
By:____________________________
Name:
Title:
By Special Authority for
DEN NORSKE BANK ASA
By:____________________________
Theodore S. Jadick
Senior Vice President
New York Branch
By:____________________________
Nikolai Nachamkin
Vice President
New York Branch
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CONSENT AND AGREEMENT
AND ACCOUNT ASSIGNMENT
Each of the undersigned, referred to in the foregoing Term Loan and
Revolving Credit Facility Agreement as the "Guarantors", hereby consents and
agrees to said Agreement and to the documents contemplated thereby and to the
provisions contained therein relating to conditions to be fulfilled and
obligations to be performed by the undersigned pursuant to or in connection with
said Agreement and particularly agree to be bound by the representations,
warranties and covenants relating to the undersigned contained in Sections 2 and
9 of said Agreement to the same extent as if the undersigned were a party to
said Agreement.
In particular, but without limitation of the foregoing, each of the
undersigned hereby covenants and agrees to maintain its primary collection and
revenue accounts with the Agent and shall procure that all earnings of any
Vessels shall be paid into such collection accounts. As security for its
obligations under the Financing Documents, each of the undersigned hereby
pledges, assigns and grants the Agent, on behalf of the Lenders, a security
interest in all the undersigned's right, title and interest in and to the
aforesaid collection and disbursement accounts and consents that if an Event of
Default shall occur and so long as the same shall be continuing, all moneys held
in the said accounts and all moneys thereafter received by the Agent may be
applied as provided in Section 8.3 of the Agreement.
MARINE TRANSPORT OSWEGO CORPORATION
MANAGEMENT, INC.
By:_________________________ By:___________________________
Peter N. Popov Peter N. Popov
Secretary Secretary
OSWEGO CHEMICAL CARRIERS MARINE BARGE COMPANY
CORPORATION
By:_________________________ By:___________________________
Peter N. Popov Peter N. Popov
Secretary Secretary
MARINE CHEMICAL NAVIGATION MARINE NAVIGATION SULPHUR
CORPORATION CARRIERS, INC.
By:_________________________ By:___________________________
Peter N. Popov Peter N. Popov
Secretary Secretary
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MARINE SULPHUR SHIPPING MARINE ALASKA, INC.
CORPORATION
By:_________________________ By:_________________________
Peter N. Popov Peter N. Popov
Secretary Secretary
OMI CHALLENGER TRANSPORT, INC. OMI PETROLINK, CORP.
By:_________________________ By:_________________________
Peter N. Popov Peter N. Popov
Secretary Secretary
COURIER TRANSPORT, INC. INTREPID SHIP MANAGEMENT INC.
By:_________________________ By:_________________________
Peter N. Popov Peter N. Popov
Secretary Secretary
PATRIOT TRANSPORT, INC. ROVER TRANSPORT, INC.
By:_________________________ By:_________________________
Peter N. Popov Peter N. Popov
Secretary Secretary
HARLINK CORP. OMIP, INC.
By:_________________________ By:_________________________
Peter N. Popov Peter N. Popov
Secretary Secretary
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NUELINK CORP. OMI OFFSHORE MARINE SERVICES
INC.
By:_________________________ By:_________________________
Peter N. Popov Peter N. Popov
Secretary Secretary
MARINE TRANSPORT LINES, INC. MARINE CAR CARRIERS, INC. a
Delaware corporation
By:_________________________ By:_________________________
Peter N. Popov Peter N. Popov
Secretary Secretary
<PAGE> 1
4.01.01(a)
ASSIGNMENT, ASSUMPTION AND SUPPLEMENT NO. 2
TO THE
TRUST INDENTURE
DATED NOVEMBER 25, 1980
BETWEEN
STATE STREET BANK AND TRUST COMPANY,
NOT IN ITS INDIVIDUAL CAPACITY BUT SOLELY AS
OWNER TRUSTEE UNDER THE TRUST AGREEMENT
DATED AS OF NOVEMBER 13, 1980, AS AMENDED, FOR
THE BENEFIT OF THE OWNER PARTICIPANT NAMED THEREIN,
ASSIGNING SHIPOWNER
FRANCES OWNER CORPORATION,
ASSUMING SHIPOWNER
AND
U.S. BANK TRUST NATIONAL ASSOCIATION,
INDENTURE TRUSTEE
SEPTEMBER 29, 1999
ITB FRANCES HAMMER
(TO BE RENAMED SMT CHEMICAL EXPLORER)
<PAGE> 2
ASSUMPTION, ASSIGNMENT,
AND SUPPLEMENT NO. 2
TO TRUST INDENTURE
ITB FRANCES HAMMER
(TO BE RENAMED SMT CHEMICAL EXPLORER)
THIS ASSUMPTION, ASSIGNMENT, AND SUPPLEMENT NO. 2 (this "Agreement") to
the Trust Indenture dated November 25, 1980, as supplemented by Supplement No. 1
thereto dated October 18, 1991 (the "Original Indenture", and, as supplemented
hereby, the "Indenture"), among (i) STATE STREET BANK AND TRUST COMPANY, a
Massachusetts trust company, not in its individual capacity but solely as owner
trustee under the Trust Agreement dated as of November 13, 1980, as amended, for
the benefit of the owner participant named therein (the "Assigning Shipowner"),
FRANCES OWNER CORPORATION, a Delaware corporation (the "Assuming Shipowner"),
and U.S. BANK TRUST NATIONAL ASSOCIATION (successor trustee to Bankers Trust
Company of California National Association), a national banking association (the
"Indenture Trustee"), is made on _____________ _____, 1999.
WITNESSETH:
WHEREAS, the Assigning Shipowner has heretofore entered into the
Original Indenture and issued its Obligations for the purpose of financing a
portion of the cost of construction of the Vessel, and the Obligations are
guaranteed by the United States of America, represented by the Secretary of
Transportation, acting by and through the Maritime Administrator, successor to
the Secretary of Commerce, acting by and through the Assistant Secretary of
Commerce for Maritime Affairs (the "Secretary");
WHEREAS, the Secretary has guaranteed, under Title XI of the Merchant
Marine Act, 1936, as amended (the "Act"), all unpaid interest on, and the unpaid
balance of the principal of, the Bonds as provided in an Authorization Agreement
dated November 25, 1980, Contract No. MA-9891 (the "Original Authorization
Agreement");
WHEREAS, the Assigning Shipowner is selling all of its right, title,
and interest in and to the Vessel to the Assuming Shipowner, on the terms and
conditions, among other things, that the (x) Assuming Shipowner shall assume,
subject to the terms hereof, all obligations and liabilities under the Original
Indenture and the Outstanding Obligations, and (y) the Assigning Shipowner be
released from such obligations and liabilities;
WHEREAS, subject to the terms hereof, the Assuming Shipowner is willing
to assume all obligations and liabilities of the Assigning Shipowner under the
Original Indenture and the Obligations in consideration of the transfer of all
right, title and interest in and to the Vessel;
<PAGE> 3
WHEREAS, Section 10.01 of Exhibit 1 to the Original Indenture provides
that the Assigning Shipowner and the Indenture Trustee may, without the consent
of or notice to any of the Obligees, enter into a Supplemental Indenture to
evidence the succession pursuant to Article VIII of said Exhibit 1 of another
corporation or entity to obligations and liabilities of the Assigning Shipowner
under the Original Indenture, provided that such Supplemental Indenture does not
adversely affect the interests of the Obligees;
WHEREAS, pursuant to said Section 10.01 the Assigning Shipowner and the
Indenture Trustee desire to enter into this agreement for the purpose of
supplementing and carrying out the terms of Article VIII of Exhibit 1 to the
Original Indenture to set forth the provisions necessary for the assumption and
release referred to above;
WHEREAS, the Secretary is willing to consent to this Agreement pursuant
to Section 10.05 of Exhibit 1 to the Original Indenture;
WHEREAS, all requirements of law and of the Original Indenture and of
the respective Certificates of Incorporation and By-laws of the Assigning
Shipowner and the Assuming Shipowner have been fully complied with, and all
other acts and things necessary to make this instrument a valid, binding and
legal instrument have been done and performed.
NOW THEREFORE, in consideration of the premises and the mutual and
dependent covenants, promises and agreements hereinafter set forth, the parties
agree as follows:
ARTICLE I
ASSIGNMENT AND ASSUMPTION
SECTION 1. The Assigning Shipowner hereby transfers, assigns, sets
over, confirms and conveys to the Assuming Shipowner, without limitation, all of
its right, title, and interest in, and all of its duties and obligations under
the Original Indenture, and the Assuming Shipowner hereby accepts such transfer,
assignment and conveyance, without limitation, subject to the terms and
conditions of the Original Indenture and accepts and assumes all of the right,
title, interest, duties and obligations of the Assigning Shipowner under the
Original Indenture with the same force and effect as if the Assuming Shipowner
had been named as Shipowner therein, including without limitation, the
obligation to pay any amounts which, but for this Agreement, would have been
payable after the Effective Date by the Assigning Shipowner under the Original
Indenture and the Obligations. As of the Effective Date, the Assigning Shipowner
shall have no further obligations under the Indenture.
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<PAGE> 4
SECTION 2. From and after the Effective Date, the term "Shipowner" as
used in the Original Indenture and the Obligations or any other agreement or
instrument related to the transactions contemplated thereby shall mean and refer
to the Assuming Shipowner and its successors and assigns.
SECTION 3. The transfer, assignment, conveyance, acceptance, assumption
and release provided in Section 1 above shall become effective on the Effective
Date and shall be of no force or effect prior thereto. Notwithstanding any
provision of this Agreement to the contrary (i) the rights of the respective
parties under the Original Indenture which shall have unconditionally accrued at
any time up to and including the Effective Date shall survive the Effective Date
and (ii) neither the assignment, assumption, and release effected hereby nor any
proceedings arising from the Original Indenture shall (x) relieve any party
thereto from the observance or performance of any obligation required to be
performed on or prior to the Effective Date, or from liability for any acts or
omissions of such party which were performed or required to be performed on or
prior to the Effective Date, or (y) serve as a defense against any claim for
breach of or failure to perform any such obligation, or against any claim for
indemnification under the Indenture arising out of any matter occurring on or
prior to the Effective Date.
SECTION 5. The Original Indenture and the Original Authorization
Agreement and the terms thereof are and shall be deemed to be hereby amended in
all respects to conform with the provisions of this Agreement, and all
provisions thereof inconsistent with the provisions hereof shall be read and
interpreted so as to conform to the provisions hereof. The rights and
obligations of all Persons respecting the Obligations shall continue to be
governed by the Original Indenture, as amended hereby.
ARTICLE II
THE OBLIGATIONS
SECTION 1. The Assigning Shipowner hereby certifies to the Indenture
Trustee and the Assuming Shipowner that the total principal amount of
Outstanding Obligations on the date hereof is $10,969,000. The Indenture Trustee
and the Assuming Shipowner shall be entitled to rely conclusively on such
certification.
SECTION 2. (a) This Section 2 is entered into pursuant to Section 10.01
of Exhibit 1 to the Original Indenture as a Supplemental Indenture for the
purpose of supplementing and carrying out the provisions of Article VIII of
Exhibit 1 to the Original Indenture and to provide for (i) the assumption by the
Assuming Shipowner of the payment of the principal of, and interest (and
premium, if any) on, the Outstanding Obligations in accordance with the terms of
the Obligations and of the Indenture and of the performance of the agreements of
the Assigning Shipowner in the
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<PAGE> 5
Original Indenture and (ii) the release of the Assigning Shipowner as of the
Effective Date from all such obligations with respect to the Obligations up to
and including the Effective Date.
(b) The Indenture Trustee shall (i) place a notation in the Obligation
Register that payment of the Outstanding Obligations has been assumed on the
date hereof by the Assuming Shipowner and (ii) within 10 days of the date
hereof, notify the Holders of such assumption.
(c) When at any time after the Effective Date a Holder of an
Outstanding Obligation shall surrender such Obligation to the Indenture Trustee
for any purpose other than payment in full of the principal thereof in
accordance with Sections 2.09, 2.10, 2.12 and 3.09(b) of Exhibit 1 to the
Indenture (and such Obligation has not previously been cancelled and replaced
pursuant to the provisions of said sections and this Section 2.02(c)), the
Indenture Trustee shall cancel such Obligation and issue to the Holder or his
assigns in exchange therefor a new Obligation showing the Assuming Shipowner as
the Shipowner.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 1. The Assigning Shipowner hereby represents and warrants in its
individual capacity, and in its capacity as owner trustee under the Trust
Agreement, that:
(a) The Assigning Shipowner is a trust company duly organized,
validly existing and in good standing under the laws of the
Commonwealth of Massachusetts, with full power, authority and legal
right to execute and deliver this Agreement and to perform its
obligations hereunder, and this Agreement has been duly authorized,
executed and delivered by the Assigning Shipowner and, assuming the due
authorization, execution and delivery by the other parties hereto,
constitutes the legal, valid and binding obligation of the Assigning
Shipowner enforceable in accordance with its terms.
(b) The Assigning Shipowner has all necessary approvals,
authorizations, licenses and permits, under the laws of the State of
Connecticut, the Commonwealth of Massachusetts, and the United States
regulating banking or trust powers, to enter into and perform its
obligations under this Agreement. Other than the approvals of the
Secretary and the Board and the instruction of the Owner Participant,
no consent, authorization or approval of, or filing with, any federal,
state, municipal or other governmental department, commission, board,
bureau, agency or instrumentality, domestic or foreign, is or has been
required in connection with any of the transactions contemplated hereby
in respect of it.
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<PAGE> 6
(c) The execution and delivery of this Agreement, and the
performance by the Assigning Shipowner of its obligations under this
Agreement will not result in a violation of, or be in conflict with, or
constitute a default or any event which would with notice or lapse of
time or both become a default under, any provision of the charter
documents or the by-laws of the Assigning Shipowner, or a default under
any indenture, contract, agreement or other instrument to which the
Assigning Shipowner is a party or by which it or its property is bound,
and the execution and delivery of this Agreement and the performance by
the Assigning Shipowner of its obligations under this Agreement will
not result in a violation of any statute, rule or regulation applicable
to the Assigning Shipowner or its property or by which it or its
property may be bound and will not result in a violation of or be in
conflict with, or result in a breach of, any term or provision of any
judgment, order, decree or award of any court, arbitrator or
governmental or public instrumentality binding upon the Assigning
Shipowner or its property.
(d) The Assigning Shipowner is not in default in any material
way, and no condition exists which with notice or lapse of time or both
will constitute a material default, under the Original Indenture or any
indenture, agreement, instrument or evidence of indebtedness to which
it is a party or by which it is bound, and it is not in default in any
material respect under any judgment, order, writ, injunction, decree,
rule or regulation of any court or governmental department, commission,
board, agency or instrumentality, domestic or foreign.
(e) There is no action, suit, proceeding, inquiry or
investigation, at law or in equity, or before or by any court, public
board or body, pending against the Assigning Shipowner or of which it
has otherwise received official notice or which to its knowledge is
threatened against it wherein an unfavorable decision, ruling or
finding would materially adversely affect its ability to perform its
obligations under this Agreement.
(f) The location of the office at which the Assigning
Shipowner keeps or will keep its records concerning this Agreement is:
Goodwin Square, 23rd Floor, 225 Asylum Street, Hartford, CT 06103.
(g) The Assigning Shipowner is a "citizen of the United
States" within the meaning of Section 2 of the Shipping Act, 1916, as
amended, qualified to engage in the coastwise trade and has been such a
citizen at all relevant times qualified to operate the Vessel in the
trades in which the Vessel has operated from time to time.
(h) The Assigning Shipowner is the sole legal owner of the
Vessel and the Vessel is duly and validly documented in the name of the
Assigning Shipowner.
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<PAGE> 7
(i) The Original Indenture and the Obligations are the only
agreements, undertakings, understandings, or arrangements concerning
the payment of the Outstanding Obligations, and there are no other
agreements, undertakings, understandings, or arrangements that provide
for the payment of additional consideration to the Holder of an
Obligation or otherwise relating to the Obligations.
SECTION 2. The Assuming Shipowner hereby represents and warrants that:
(a) The Assuming Shipowner is a corporation duly organized,
validly existing and in good standing under the laws of the State of
Delaware, and has full power, authority and legal right to execute and
deliver this Agreement and to perform its obligations hereunder and
under the Indenture, and this Agreement has been duly authorized,
executed and delivered by the Assuming Shipowner and, assuming the due
authorization, execution and delivery by the other parties hereto,
constitutes the legal, valid and binding obligation of the Assuming
Shipowner enforceable in accordance with its terms.
(b) Other than the approvals of the Secretary and the Board
and the instruction of the Owner Participant, no consent, authorization
or approval of, or filing with, any federal, state, municipal or other
governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, is or has been required in
connection with any of the transactions contemplated hereby in respect
of it.
(c) The execution and delivery of this Agreement and the
performance by the Assuming Shipowner of its obligations under this
Agreement will not result in a violation of, or be in conflict with, or
constitute a default or any event which would with notice or lapse of
time or both become a default under, any provision of the certificate
of incorporation or the by-laws of the Assuming Shipowner, or a default
under any mortgage, indenture, contract, agreement or other instrument
to which the Assuming Shipowner is a party or by which it or its
property is bound, and the execution and delivery of this Agreement and
the performance by the Assuming Shipowner of its obligations under this
Agreement will not result in a violation of any statute, rule or
regulation applicable to the Assuming Shipowner or its property or by
which it or its property may be bound and will not result in a
violation of or be in conflict with, or result in a breach of, any term
or provision of any judgment, order, decree or award of any court,
arbitrator or governmental or public instrumentality binding upon the
Assuming Shipowner or its property.
(d) The Assuming Shipowner is not in default in any material
way, and no condition exists which with notice or lapse of time or both
will constitute a material default, under any mortgage, loan agreement,
indenture, evidence of indebtedness or other instrument to which it is
a party or by which it is bound, and it is not in default in
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<PAGE> 8
any material respect under any judgment, order, writ, injunction,
decree, rule or regulation of any court or governmental department,
commission, board, agency or instrumentality, domestic or foreign.
(e) There is no action, suit, proceeding, inquiry or
investigation, at law or in equity, or before or by any court, public
board or body, pending against the Assuming Shipowner or of which it
has otherwise received official notice or which to its knowledge is
threatened against it wherein an unfavorable decision, ruling or
finding would materially adversely affect its ability to perform its
obligations under this Agreement (including the operation of the
Vessel).
(f) The location of the office at which the Assuming Shipowner
keeps or will keep its records concerning this Agreement is: 1200
Harbor Boulevard, 9th Floor, C-901, Weehawken, New Jersey 07087,
Attention: General Counsel.
(g) The Assuming Shipowner is a "citizen of the United States"
within the meaning of Section 2 of the Shipping Act, 1916, as amended,
qualified to engage in the coastwise trade and covenants that it shall
remain such a citizen for operation in the trades in which the Vessel
is operated from time to time.
ARTICLE IV
AMENDMENTS TO THE ORIGINAL INDENTURE
SECTION 1. Article Fifth (a) of the Special Provisions of the Original
Indenture is amended by changing the addresses for the giving of notice to the
Shipowner and Indenture Trustee to read:
The Shipowner as: FRANCES OWNER CORPORATION
1200 Harbor Boulevard, 9th Floor, C-901
Weehawken, New Jersey 07087
Attention: General Counsel.
The Indenture Trustee as: U.S. BANK TRUST NATIONAL ASSOCIATION
One California Street, 4th Floor
San Francisco, CA 94111
Attention: Corporate Trust
Reference: Vessel SMT CHEMICAL EXPLORER
(formerly ITB FRANCES HAMMER)
7
<PAGE> 9
SECTION 2. Schedule A to the Original Indenture is amended by changing
the definitions of "Indenture Trustee" and "Shipowner" to conform to this
Agreement.
8
<PAGE> 10
SECTION 3. Article Fifth (r) of the Special Provisions of the Original
Indenture is hereby deleted in its entirety, and Article Fifth (s) is hereby
amended by re-lettering it as Article Fifth (r).
ARTICLE V
GENERAL
SECTION 1. Except as otherwise expressly provided herein, all terms
which are defined in the Original Indenture, including Schedule A thereto, when
used herein, shall have the meanings specified in said Original Indenture,
including Schedule A thereto, unless the context otherwise requires.
SECTION 2. This Agreement shall be construed in connection with and as
part of the Original Indenture.
SECTION 3. The recitals and statements contained in this Agreement
shall be taken as the recitals and statements of the Assigning Shipowner or the
Assuming Shipowner, as the case may be, and the Indenture Trustee assumes no
responsibility for the correctness of the same.
SECTION 4. This Agreement may be executed in any number of
counterparts. All such counterparts shall be deemed to be originals and shall
together constitute but one and the same instrument.
SECTION 5. The Original Indenture, as amended and supplemented by this
Agreement, is in all respects confirmed and shall, as so amended and
supplemented, remain in full force and effect.
SECTION 6. From and after the Effective Date, the Indenture, this
Agreement and the rights and obligations of the parties hereto, shall in all
respects be governed by, construed and enforced in accordance with the federal
laws of the United States of America, but if they are inapplicable, then in
accordance with the laws of the State of New York, including Section 5-1401 of
the General Obligations Law of the State of New York.
SECTION 7. If any term of the Indenture, or any application thereof
shall be invalid or unenforceable, the remainder of the Indenture and any other
application of such term shall not be affected thereby.
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<PAGE> 11
ARTICLE VI
GUARANTEES
The assumption of all obligations with respect to the Outstanding
Obligations by the Assuming Shipowner, and the release therefrom of the
Assigning Shipowner, pursuant to the terms of this Agreement shall not discharge
or in any manner affect the obligations of the United States to honor the
Guarantees on all of the Outstanding Obligations, after demand duly made in
accordance with the provisions of the Indenture.
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<PAGE> 12
IN WITNESS WHEREOF, this Agreement has been duly executed and delivered
by the parties hereto to be effective as of the day and year first above
written.
STATE STREET BANK AND TRUST
COMPANY, not in its
individual capacity but
solely as owner trustee under
the Trust Agreement dated as
of November 13, 1980, as
amended, for the benefit of
the owner participant named
therein,
Assigning Shipowner
By: ------------------------------------
Attest: Name: ----------------------------------
Title: ----------------------------------
- ------------------------------------
<PAGE> 13
COUNTY OF _________________ )
) ss:
STATE OF ___________________ )
On this ----- day of -------------_, 1999, before me personally
appeared------------------------, to me known, who being by me duly sworn, did
depose and say that he is -----------------------------_ of State Street Bank
and Trust Company, the Massachusetts trust company which is described in and
executed the instrument annexed hereto, and that he signed the instrument
annexed hereto by order of the Board of Directors of the said trust company and
acknowledged the instrument annexed hereto to be the free act and deed of the
said trust company.
In testimony whereof, I have hereunto set my hand and seal this------
day of--------------------, 1999.
------------------------------------
Notary Public
(Notarial Stamp and Seal)
<PAGE> 14
FRANCES OWNER CORPORATION,
Assuming Shipowner
By: ---------------------------------
Attest: Name: -------------------------------
Title:--------------------------------
- -----------------------
<PAGE> 15
WASHINGTON )
) ss:
DISTRICT OF COLUMBIA )
On this ------day of ----------------, 1999, before me personally
appeared------------------------, to me known, who being by me duly sworn, did
depose and say that he resides at----------------------------------; that he is
the----------------------- of Frances Owner Corporation; that he knows the seal
of said corporation; that the seal affixed to said instrument is such
corporation's seal; that it was so affixed by authority of the Board of
Directors of said corporation, and that he signed his name thereto by like
authority.
In testimony whereof, I have hereunto set my hand and seal this _____
day of--------------------, 1999.
------------------------------------
Notary Public
(Notarial Stamp and Seal)
<PAGE> 16
U.S. BANK TRUST
NATIONAL ASSOCIATION,
Indenture Trustee
By: --------------------------
Name:--------------------------
Title:-------------------------
<PAGE> 17
ACKNOWLEDGEMENT
COUNTY OF ------------)
) ss:
STATE OF CALIFORNIA )
I, the undersigned, a Notary Public in and for the County of
- --------------, do hereby certify that ------------------------------ of
- ----------------------------, personally appeared before me in said County, the
aforesaid officer being personally well known to me as the person who executed
the instrument annexed hereto, and acknowledged the same to be his act and deed
as said officer.
Given my hand and seal this ------ day of ---------------, 1999.
-----------------------
Notary Public
(Notarial Stamp and Seal)
My Commission expires:-------------------
<PAGE> 18
CONSENT
The United States of America, represented by the Secretary of
Transportation, acting by and through the Maritime Administrator, hereby (i)
approves the form of the Agreement, (ii) consents to the execution and delivery
by STATE STREET BANK AND TRUST COMPANY, not in its individual capacity but
solely as owner trustee under the Trust Agreement dated as of November 13, 1980,
as amended, for the benefit of the owner participant named therein, FRANCES
OWNER CORPORATION, and U.S. BANK TRUST NATIONAL ASSOCIATION, of the Agreement,
and (iii) affirms that the Guarantees will remain in full force and effect
following execution of the Agreement.
UNITED STATES OF AMERICA
SECRETARY OF TRANSPORTATION
Maritime Administrator
By: --------------------------------
Attest: Name:--------------------------------
Assistant Secretary
Maritime Administration
- -------------------------
<PAGE> 19
4.01.01(b)
===============================================================================
ASSIGNMENT, ASSUMPTION AND SUPPLEMENT NO. 2
TO THE
TRUST INDENTURE
Dated November 25, 1980
between
STATE STREET BANK AND TRUST COMPANY,
NOT IN ITS INDIVIDUAL CAPACITY BUT SOLELY AS
OWNER TRUSTEE UNDER THE TRUST AGREEMENT
DATED AS OF NOVEMBER 13, 1980, AS AMENDED, FOR
THE BENEFIT OF THE OWNER PARTICIPANT NAMED THEREIN,
ASSIGNING SHIPOWNER
JULIUS OWNER CORPORATION,
ASSUMING SHIPOWNER
and
U.S. BANK TRUST NATIONAL ASSOCIATION,
INDENTURE TRUSTEE
SEPTEMBER 29, 1999
ITB JULIUS HAMMER
(TO BE RENAMED SMT CHEMICAL TRADER)
===============================================================================
<PAGE> 20
ASSUMPTION, ASSIGNMENT,
AND SUPPLEMENT NO. 2
TO TRUST INDENTURE
ITB JULIUS HAMMER
(TO BE RENAMED SMT CHEMICAL TRADER)
THIS ASSUMPTION, ASSIGNMENT, AND SUPPLEMENT NO. 2 (this "Agreement") to
the Trust Indenture dated November 25, 1980, as supplemented by Supplement No. 1
thereto dated October 18, 1991 (the "Original Indenture", and, as supplemented
hereby, the "Indenture"), among (i) STATE STREET BANK AND TRUST COMPANY, a
Massachusetts trust company, not in its individual capacity but solely as owner
trustee under the Trust Agreement dated as of November 13, 1980, as amended, for
the benefit of the owner participant named therein (the "Assigning Shipowner"),
JULIUS OWNER CORPORATION, a Delaware corporation (the "Assuming Shipowner"), and
U.S. BANK TRUST NATIONAL ASSOCIATION (successor trustee to Bankers Trust Company
of California National Association), a national banking association (the
"Indenture Trustee"), is made on _____________ _____, 1999.
WITNESSETH:
WHEREAS, the Assigning Shipowner has heretofore entered into the
Original Indenture and issued its Obligations for the purpose of financing a
portion of the cost of construction of the Vessel, and the Obligations are
guaranteed by the United States of America, represented by the Secretary of
Transportation, acting by and through the Maritime Administrator, successor to
the Secretary of Commerce, acting by and through the Assistant Secretary of
Commerce for Maritime Affairs (the "Secretary");
WHEREAS, the Secretary has guaranteed, under Title XI of the Merchant
Marine Act, 1936, as amended (the "Act"), all unpaid interest on, and the unpaid
balance of the principal of, the Bonds as provided in an Authorization Agreement
dated November 25, 1980, Contract No. MA-9879 (the "Original Authorization
Agreement");
WHEREAS, the Assigning Shipowner is selling all of its right, title,
and interest in and to the Vessel to the Assuming Shipowner, on the terms and
conditions, among other things, that the (x) Assuming Shipowner shall assume,
subject to the terms hereof, all obligations and liabilities under the Original
Indenture and the Outstanding Obligations, and (y) the Assigning Shipowner be
released from such obligations and liabilities;
WHEREAS, subject to the terms hereof, the Assuming Shipowner is willing
to assume all obligations and liabilities of the Assigning Shipowner under the
Original Indenture and the Obligations in consideration of the transfer of all
right, title and interest in and to the Vessel;
<PAGE> 21
WHEREAS, Section 10.01 of Exhibit 1 to the Original Indenture provides
that the Assigning Shipowner and the Indenture Trustee may, without the consent
of or notice to any of the Obligees, enter into a Supplemental Indenture to
evidence the succession pursuant to Article VIII of said Exhibit 1 of another
corporation or entity to obligations and liabilities of the Assigning Shipowner
under the Original Indenture, provided that such Supplemental Indenture does not
adversely affect the interests of the Obligees;
WHEREAS, pursuant to said Section 10.01 the Assigning Shipowner and the
Indenture Trustee desire to enter into this agreement for the purpose of
supplementing and carrying out the terms of Article VIII of Exhibit 1 to the
Original Indenture to set forth the provisions necessary for the assumption and
release referred to above;
WHEREAS, the Secretary is willing to consent to this Agreement pursuant
to Section 10.05 of Exhibit 1 to the Original Indenture;
WHEREAS, all requirements of law and of the Original Indenture and of
the respective Certificates of Incorporation and By-laws of the Assigning
Shipowner and the Assuming Shipowner have been fully complied with, and all
other acts and things necessary to make this instrument a valid, binding and
legal instrument have been done and performed.
NOW THEREFORE, in consideration of the premises and the mutual and
dependent covenants, promises and agreements hereinafter set forth, the parties
agree as follows:
ARTICLE I
ASSIGNMENT AND ASSUMPTION
SECTION 1. The Assigning Shipowner hereby transfers, assigns, sets
over, confirms and conveys to the Assuming Shipowner, without limitation, all of
its right, title, and interest in, and all of its duties and obligations under
the Original Indenture, and the Assuming Shipowner hereby accepts such transfer,
assignment and conveyance, without limitation, subject to the terms and
conditions of the Original Indenture and accepts and assumes all of the right,
title, interest, duties and obligations of the Assigning Shipowner under the
Original Indenture with the same force and effect as if the Assuming Shipowner
had been named as Shipowner therein, including without limitation, the
obligation to pay any amounts which, but for this Agreement, would have been
payable after the Effective Date by the Assigning Shipowner under the Original
Indenture and the Obligations. As of the Effective Date, the Assigning Shipowner
shall have no further obligations under the Indenture.
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<PAGE> 22
SECTION 2. From and after the Effective Date, the term "Shipowner" as
used in the Original Indenture and the Obligations or any other agreement or
instrument related to the transactions contemplated thereby shall mean and refer
to the Assuming Shipowner and its successors and assigns.
SECTION 3. The transfer, assignment, conveyance, acceptance, assumption
and release provided in Section 1 above shall become effective on the Effective
Date and shall be of no force or effect prior thereto. Notwithstanding any
provision of this Agreement to the contrary (i) the rights of the respective
parties under the Original Indenture which shall have unconditionally accrued at
any time up to and including the Effective Date shall survive the Effective Date
and (ii) neither the assignment, assumption, and release effected hereby nor any
proceedings arising from the Original Indenture shall (x) relieve any party
thereto from the observance or performance of any obligation required to be
performed on or prior to the Effective Date, or from liability for any acts or
omissions of such party which were performed or required to be performed on or
prior to the Effective Date, or (y) serve as a defense against any claim for
breach of or failure to perform any such obligation, or against any claim for
indemnification under the Indenture arising out of any matter occurring on or
prior to the Effective Date.
SECTION 4. The Original Indenture and the Original Authorization
Agreement and the terms thereof are and shall be deemed to be hereby amended in
all respects to conform with the provisions of this Agreement, and all
provisions thereof inconsistent with the provisions hereof shall be read and
interpreted so as to conform to the provisions hereof. The rights and
obligations of all Persons respecting the Obligations shall continue to be
governed by the Original Indenture, as amended hereby.
ARTICLE II
THE OBLIGATIONS
SECTION 1. The Assigning Shipowner hereby certifies to the Indenture
Trustee and the Assuming Shipowner that the total principal amount of
Outstanding Obligations on the date hereof is $10,401,000. The Indenture Trustee
and the Assuming Shipowner shall be entitled to rely conclusively on such
certification.
SECTION 2. (a) This Section 2 is entered into pursuant to Section 10.01
of Exhibit 1 to the Original Indenture as a Supplemental Indenture for the
purpose of supplementing and carrying out the provisions of Article VIII of
Exhibit 1 to the Original Indenture and to provide for (i) the assumption by the
Assuming Shipowner of the payment of the principal of, and interest (and
premium, if any) on, the Outstanding Obligations in accordance with the terms of
the Obligations and of the Indenture and of the performance of the agreements of
the Assigning Shipowner in the
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<PAGE> 23
Original Indenture and (ii) the release of the Assigning Shipowner as of the
Effective Date from all such obligations with respect to the Obligations up to
and including the Effective Date.
(b) The Indenture Trustee shall (i) place a notation in the Obligation
Register that payment of the Outstanding Obligations has been assumed on the
date hereof by the Assuming Shipowner and (ii) within 10 days of the date
hereof, notify the Holders of such assumption.
(c) When at any time after the Effective Date a Holder of an
Outstanding Obligation shall surrender such Obligation to the Indenture Trustee
for any purpose other than payment in full of the principal thereof in
accordance with Sections 2.09, 2.10, 2.12 and 3.09(b) of Exhibit 1 to the
Indenture (and such Obligation has not previously been cancelled and replaced
pursuant to the provisions of said sections and this Section 2.02(c)), the
Indenture Trustee shall cancel such Obligation and issue to the Holder or his
assigns in exchange therefor a new Obligation showing the Assuming Shipowner as
the Shipowner.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 1. The Assigning Shipowner hereby represents and warrants in
its individual capacity, and in its capacity as owner trustee under the Trust
Agreement, that:
(a) The Assigning Shipowner is a trust company duly organized,
validly existing and in good standing under the laws of the
Commonwealth of Massachusetts, with full power, authority and legal
right to execute and deliver this Agreement and to perform its
obligations hereunder, and this Agreement has been duly authorized,
executed and delivered by the Assigning Shipowner and, assuming the due
authorization, execution and delivery by the other parties hereto,
constitutes the legal, valid and binding obligation of the Assigning
Shipowner enforceable in accordance with its terms.
(b) The Assigning Shipowner has all necessary approvals,
authorizations, licenses and permits, under the laws of the State of
Connecticut, the Commonwealth of Massachusetts, and the United States
regulating banking or trust powers, to enter into and perform its
obligations under this Agreement. Other than the approvals of the
Secretary and the Board and the instruction of the Owner Participant,
no consent, authorization or approval of, or filing with, any federal,
state, municipal or other governmental department, commission, board,
bureau, agency or instrumentality, domestic or foreign, is or has been
required in connection with any of the transactions contemplated hereby
in respect of it.
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<PAGE> 24
(c) The execution and delivery of this Agreement, and the
performance by the Assigning Shipowner of its obligations under this
Agreement will not result in a violation of, or be in conflict with, or
constitute a default or any event which would with notice or lapse of
time or both become a default under, any provision of the charter
documents or the by-laws of the Assigning Shipowner, or a default under
any indenture, contract, agreement or other instrument to which the
Assigning Shipowner is a party or by which it or its property is bound,
and the execution and delivery of this Agreement and the performance by
the Assigning Shipowner of its obligations under this Agreement will
not result in a violation of any statute, rule or regulation applicable
to the Assigning Shipowner or its property or by which it or its
property may be bound and will not result in a violation of or be in
conflict with, or result in a breach of, any term or provision of any
judgment, order, decree or award of any court, arbitrator or
governmental or public instrumentality binding upon the Assigning
Shipowner or its property.
(d) The Assigning Shipowner is not in default in any material
way, and no condition exists which with notice or lapse of time or both
will constitute a material default, under the Original Indenture or any
indenture, agreement, instrument or evidence of indebtedness to which
it is a party or by which it is bound, and it is not in default in any
material respect under any judgment, order, writ, injunction, decree,
rule or regulation of any court or governmental department, commission,
board, agency or instrumentality, domestic or foreign.
(e) There is no action, suit, proceeding, inquiry or
investigation, at law or in equity, or before or by any court, public
board or body, pending against the Assigning Shipowner or of which it
has otherwise received official notice or which to its knowledge is
threatened against it wherein an unfavorable decision, ruling or
finding would materially adversely affect its ability to perform its
obligations under this Agreement.
(f) The location of the office at which the Assigning
Shipowner keeps or will keep its records concerning this Agreement is:
Goodwin Square, 23rd Floor, 225 Asylum Street, Hartford, CT 06103.
(g) The Assigning Shipowner is a "citizen of the United
States" within the meaning of Section 2 of the Shipping Act, 1916, as
amended, qualified to engage in the coastwise trade and has been such a
citizen at all relevant times qualified to operate the Vessel in the
trades in which the Vessel has operated from time to time.
(h) The Assigning Shipowner is the sole legal owner of the
Vessel and the Vessel is duly and validly documented in the name of the
Assigning Shipowner.
(i) The Original Indenture and the Obligations are the only agreements,
undertakings, understandings, or arrangements concerning the payment of
the Outstanding Obligations,
5
<PAGE> 25
and there are no other agreements, undertakings, understandings, or arrangements
that
6
<PAGE> 26
provide for the payment of additional consideration to the Holder of an
Obligation or otherwise relating to the Obligations.
SECTION 2. The Assuming Shipowner hereby represents and warrants that:
(a) The Assuming Shipowner is a corporation duly organized,
validly existing and in good standing under the laws of the State of
Delaware, and has full power, authority and legal right to execute and
deliver this Agreement and to perform its obligations hereunder and
under the Indenture, and this Agreement has been duly authorized,
executed and delivered by the Assuming Shipowner and, assuming the due
authorization, execution and delivery by the other parties hereto,
constitutes the legal, valid and binding obligation of the Assuming
Shipowner enforceable in accordance with its terms.
(b) Other than the approvals of the Secretary and the Board
and the instruction of the Owner Participant, no consent, authorization
or approval of, or filing with, any federal, state, municipal or other
governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, is or has been required in
connection with any of the transactions contemplated hereby in respect
of it.
(c) The execution and delivery of this Agreement and the
performance by the Assuming Shipowner of its obligations under this
Agreement will not result in a violation of, or be in conflict with, or
constitute a default or any event which would with notice or lapse of
time or both become a default under, any provision of the certificate
of incorporation or the by-laws of the Assuming Shipowner, or a default
under any mortgage, indenture, contract, agreement or other instrument
to which the Assuming Shipowner is a party or by which it or its
property is bound, and the execution and delivery of this Agreement and
the performance by the Assuming Shipowner of its obligations under this
Agreement will not result in a violation of any statute, rule or
regulation applicable to the Assuming Shipowner or its property or by
which it or its property may be bound and will not result in a
violation of or be in conflict with, or result in a breach of, any term
or provision of any judgment, order, decree or award of any court,
arbitrator or governmental or public instrumentality binding upon the
Assuming Shipowner or its property.
(d) The Assuming Shipowner is not in default in any material
way, and no condition exists which with notice or lapse of time or both
will constitute a material default, under any mortgage, loan agreement,
indenture, evidence of indebtedness or other instrument to which it is
a party or by which it is bound, and it is not in default in any
material respect under any judgment, order, writ, injunction, decree,
rule or regulation of any court or governmental department, commission,
board, agency or instrumentality, domestic or foreign.
7
<PAGE> 27
(e) There is no action, suit, proceeding, inquiry or
investigation, at law or in equity, or before or by any court, public
board or body, pending against the Assuming Shipowner or of which it
has otherwise received official notice or which to its knowledge is
threatened against it wherein an unfavorable decision, ruling or
finding would materially adversely affect its ability to perform its
obligations under this Agreement (including the operation of the
Vessel).
(f) The location of the office at which the Assuming Shipowner
keeps or will keep its records concerning this Agreement is: 1200
Harbor Boulevard, 9th Floor, C-901, Weehawken, New Jersey 07087,
Attention: General Counsel.
(g) The Assuming Shipowner is a "citizen of the United States"
within the meaning of Section 2 of the Shipping Act, 1916, as amended,
qualified to engage in the coastwise trade and covenants that it shall
remain such a citizen for operation in the trades in which the Vessel
is operated from time to time.
ARTICLE IV
AMENDMENTS TO THE ORIGINAL INDENTURE
SECTION 1. Article Fifth (a) of the Special Provisions of the Original
Indenture is amended by changing the addresses for the giving of notice to the
Shipowner and Indenture Trustee to read:
The Shipowner as: JULIUS OWNER CORPORATION
1200 Harbor Boulevard, 9th Floor, C-901
Weehawken, New Jersey 07087
Attention: General Counsel.
The Indenture Trustee as: U.S. BANK TRUST NATIONAL ASSOCIATION
One California Street, 4th Floor
San Francisco, CA 94111
Attention: Corporate Trust
Reference: Vessel SMT CHEMICAL TRADER
(formerly ITB JULIUS HAMMER)
SECTION 2. Schedule A to the Original Indenture is amended by changing
the definitions of "Indenture Trustee" and "Shipowner" to conform to this
Agreement.
8
<PAGE> 28
SECTION 3. Article Fifth (r) of the Special Provisions of the Original
Indenture is hereby deleted in its entirety, and Article Fifth (s) is hereby
amended by re-lettering it as Article Fifth (r).
ARTICLE V
GENERAL
SECTION 1. Except as otherwise expressly provided herein, all terms
which are defined in the Original Indenture, including Schedule A thereto, when
used herein, shall have the meanings specified in said Original Indenture,
including Schedule A thereto, unless the context otherwise requires.
SECTION 2. This Agreement shall be construed in connection with and as
part of the Original Indenture.
SECTION 3. The recitals and statements contained in this Agreement
shall be taken as the recitals and statements of the Assigning Shipowner or the
Assuming Shipowner, as the case may be, and the Indenture Trustee assumes no
responsibility for the correctness of the same.
SECTION 4. This Agreement may be executed in any number of
counterparts. All such counterparts shall be deemed to be originals and shall
together constitute but one and the same instrument.
SECTION 5. The Original Indenture, as amended and supplemented by this
Agreement, is in all respects confirmed and shall, as so amended and
supplemented, remain in full force and effect.
SECTION 6. From and after the Effective Date, the Indenture, this
Agreement and the rights and obligations of the parties hereto, shall in all
respects be governed by, construed and enforced in accordance with the federal
laws of the United States of America, but if they are inapplicable, then in
accordance with the laws of the State of New York, including Section 5-1401 of
the General Obligations Law of the State of New York.
SECTION 7. If any term of the Indenture, or any application thereof
shall be invalid or unenforceable, the remainder of the Indenture and any other
application of such term shall not be affected thereby.
9
<PAGE> 29
ARTICLE VI
GUARANTEES
The assumption of all obligations with respect to the Outstanding
Obligations by the Assuming Shipowner, and the release therefrom of the
Assigning Shipowner, pursuant to the terms of this Agreement shall not discharge
or in any manner affect the obligations of the United States to honor the
Guarantees on all of the Outstanding Obligations, after demand duly made in
accordance with the provisions of the Indenture.
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<PAGE> 30
IN WITNESS WHEREOF, this Agreement has been duly executed and delivered by the
parties hereto to be effective as of the day and year first above written.
STATE STREET BANK AND TRUST COMPANY,
not in its individual capacity but
solely as owner trustee under the Trust
Agreement dated as of November 13,
1980, as amended, for the benefit of
the owner participant named therein,
Assigning Shipowner
By:
Attest: Name:
Title:
<PAGE> 31
COUNTY OF___________________)
) ss:
STATE OF____________________)
On this _____ day of ______________, 1999, before me personally
appeared _______________________, to me known, who being by me duly sworn, did
depose and say that he is ______________________________ of State Street Bank
and Trust Company, the Massachusetts trust company which is described in and
executed the instrument annexed hereto, and that he signed the instrument
annexed hereto by order of the Board of Directors of the said trust company and
acknowledged the instrument annexed hereto to be the free act and deed of the
said trust company.
In testimony whereof, I have hereunto set my hand and seal this _____
day of ___________________, 1999.
__________________________
Notary Public
(Notarial Stamp and Seal)
<PAGE> 32
JULIUS OWNER CORPORATION,
Assuming Shipowner
By:
Attest: Name:
Title:
<PAGE> 33
WASHINGTON )
) ss:
DISTRICT OF COLUMBIA )
On this _____ day of ________________, 1999, before me personally
appeared _______________________, to me known, who being by me duly sworn, did
depose and say that he resides at _________________________________; that he is
the ______________________ of Julius Owner Corporation; that he knows the seal
of said corporation; that the seal affixed to said instrument is such
corporation's seal; that it was so affixed by authority of the Board of
Directors of said corporation, and that he signed his name thereto by like
authority.
In testimony whereof, I have hereunto set my hand and seal this _____
day of ___________________, 1999.
_________________________
Notary Public
(Notarial Stamp and Seal)
<PAGE> 34
U.S. BANK TRUST
NATIONAL ASSOCIATION,
Indenture Trustee
By:
Name:
Title:
<PAGE> 35
ACKNOWLEDGEMENT
COUNTY OF__________________)
) ss:
STATE OF CALIFORNIA )
I, the undersigned, a Notary Public in and for the County of
______________, do hereby certify that ______________________________ of
____________________________, personally appeared before me in said County, the
aforesaid officer being personally well known to me as the person who executed
the instrument annexed hereto, and acknowledged the same to be his act and deed
as said officer.
Given my hand and seal this ______ day of _______________, 1999.
_______________________
Notary Public
(Notarial Stamp and Seal)
My Commission expires:___________________
<PAGE> 36
CONSENT
The United States of America, represented by the Secretary of
Transportation, acting by and through the Maritime Administrator, hereby (i)
approves the form of the Agreement, (ii) consents to the execution and delivery
by STATE STREET BANK AND TRUST COMPANY, not in its individual capacity but
solely as owner trustee under the Trust Agreement dated as of November 13, 1980,
as amended, for the benefit of the owner participant named therein, JULIUS
OWNER CORPORATION, and U.S. BANK TRUST NATIONAL ASSOCIATION, of the Agreement,
and (iii) affirms that the Guarantees will remain in full force and effect
following execution of the Agreement.
UNITED STATES OF AMERICA
SECRETARY OF TRANSPORTATION
Maritime Administrator
By:
Attest: Name:
Assistant Secretary
Maritime Administration
<PAGE> 37
4.02(a)
CONTRACT NO.
MA-9892
ASSIGNMENT, ASSUMPTION AND AMENDMENT NO. 2
TO THE
SECURITY AGREEMENT
RELATING TO UNITED STATES GOVERNMENT
GUARANTEED SHIP FINANCING OBLIGATIONS
BETWEEN
STATE STREET BANK AND TRUST COMPANY,
NOT IN ITS INDIVIDUAL CAPACITY BUT SOLELY AS
OWNER TRUSTEE UNDER THE TRUST AGREEMENT
DATED AS OF NOVEMBER 13, 1980, AS AMENDED, FOR
THE BENEFIT OF THE OWNER PARTICIPANT NAMED THEREIN,
ASSIGNING SHIPOWNER
FRANCES OWNER CORPORATION,
ASSUMING SHIPOWNER
AND
THE UNITED STATES OF AMERICA
SEPTEMBER 29, 1999
ITB FRANCES HAMMER
(TO BE RENAMED SMT CHEMICAL EXPLORER)
<PAGE> 38
ASSIGNMENT, ASSUMPTION, AND AMENDMENT NO. 2
TO THE
SECURITY AGREEMENT
ITB FRANCES HAMMER
(to be renamed SMT CHEMICAL EXPLORER (tug)
and SMT ONE (barge))
THIS ASSIGNMENT, ASSUMPTION, AND AMENDMENT NO. 2 (this "Amendment"), to the
SECURITY AGREEMENT, Contract No. MA-9892, dated as of November 25, 1980, by
STATE STREET BANK AND TRUST COMPANY, a Massachusetts trust company, not in its
individual capacity but solely as owner trustee under the Trust Agreement dated
as of November 13, 1980, as amended, for the benefit of the owner participant
named therein (the "Assigning Shipowner"), FRANCES OWNER CORPORATION, a Delaware
corporation (the "Assuming Shipowner"), and the UNITED STATES OF AMERICA (the
"United States"), represented by the Secretary of Transportation, acting by and
through the Maritime Administrator (the "Secretary"), pursuant to the provisions
of Title XI of the Merchant Marine Act, 1936, as amended, is made on
_____________ _____, 1999.
WITNESSETH:
WHEREAS, the Assigning Shipowner is the sole legal owner of the Vessel;
WHEREAS, the Assigning Shipowner and the Secretary are parties to the
Security Agreement, Contract No. MA-9892, dated as of November 25, 1980,
pursuant to which the Assigning Shipowner granted to the Secretary a security
interest in the Security as collateral security for the obligations of the
United States upon Guarantees made by the Secretary pursuant to Title XI with
respect to the Obligations and for the payment of the principal of and interest
on the Secretary's Note;
WHEREAS, the Assigning Shipowner has, as further security to the Secretary
pursuant to the provisions of the Security Agreement, executed and delivered on
the Delivery Date to the Secretary, as mortgagee, a first preferred fleet
mortgage, Contract No. MA-9893 (as the same may have been amended, modified or
supplemented, the "Mortgage"), covering the Vessel;
WHEREAS, Suwannee River Phosphate Lines, Inc., a California corporation
(the "Original Bareboat Charterer"), entered into a Bareboat Charter of the
Vessel dated as of September 16, 1981 (as supplemented and amended to date, the
"Original Bareboat Charter"), with the Assigning Shipowner, and the Original
Bareboat Charter was assigned to the Secretary as further security pursuant to
the provisions of the Security Agreement;
<PAGE> 39
WHEREAS, Occidental Petroleum Corporation, a Delaware corporation (as
successor to Occidental Petroleum Corporation, a California corporation, herein
"Occidental"), is the guarantor under a Bareboat Charter Guarantee dated as of
September 16, 1981, relating to the Original Bareboat Charter (the "Old Bareboat
Charter Guarantee"), and the Old Bareboat Charter Guarantee has been assigned to
the Secretary as further security under the Security Agreement;
WHEREAS, simultaneously with the execution and delivery of this Amendment,
the Assigning Shipowner is transferring 100% of its interest in the Vessel to
the Assuming Shipowner on the terms and conditions, among others, that the
Assuming Shipowner shall assume all obligations and liabilities of the Assigning
Shipowner under the Mortgage, the Security Agreement, the Obligations, and the
Secretary's Note, and that the Assigning Shipowner shall, simultaneously with
such assumption, be released from all obligations and liabilities under the
Mortgage, the Security Agreement, the Obligations and the Secretary's Note;
WHEREAS, by an Assignment, Assumption and Supplement No. 2 to Trust
Indenture dated the date hereof between and among the Indenture Trustee, the
Assigning Shipowner and the Assuming Shipowner (the "Indenture Assumption
Agreement"), the Assuming Shipowner has, with the written consent of the
Secretary, assumed responsibility for payment of the principal of and interest
on the Outstanding Obligations and the performance of the agreements of the
Assigning Shipowner under the Original Indenture and the Assigning Shipowner has
been released from such payment obligations and the performance of such
agreements;
WHEREAS, on the date hereof, the Original Bareboat Charter is being
terminated and the Original Bareboat Charterer is being released from its
obligations thereunder and the Assuming Shipowner is entering into a new
bareboat charter (the "Bareboat Charter") with Frances ODS Corporation, a
Delaware corporation (the "Bareboat Charterer") and the same is being assigned
to the Secretary hereunder as security for the Guarantees;
WHEREAS, concurrently with termination of the Original Bareboat Charter and
the release of the Original Bareboat Charterer from its obligations thereunder,
Occidental is being released from its obligations under the Old Bareboat Charter
Guarantee and (i) Marine Transport Corporation, a Delaware corporation ("MTC")
is entering into a guarantee of 75% of the obligations of the Assuming Shipowner
under the Secretary's Note (the "MTC Guarantee"), (ii) Stolt-Nielsen
Transportation Group Ltd., a Liberian corporation ("SNTG"), is entering into a
guarantee of 25% of the obligations of the Assuming Shipowner under the
Secretary's Note (the "SNTG Guarantee"), the liability of MTC and SNTG under
such guarantees being several but not joint, and (iii) Occidental is entering
into a Contingent Guarantee of certain of the obligations of the Bareboat
Charterer under the Bareboat Charter (the "Contingent Guarantee");
WHEREAS, this Amendment is made for the purpose of confirming, affirming,
and reaffirming the Security Agreement as hereby amended and continuing the
grant of the collateral security interest of the Secretary in the Security to
secure the payment of the principal of and
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<PAGE> 40
interest on the Secretary's Note in accordance with the terms of the Security
Agreement, as amended by this Amendment and as provided in the Secretary's Note;
WHEREAS, the execution and delivery of this Amendment has been duly
authorized and all conditions and requirements necessary to make this instrument
a legal, valid, and binding agreement have been duly performed and complied
with; and
WHEREAS, on the date hereof, the Assuming Shipowner is changing the name of
the Vessel from ITB FRANCES HAMMER to SMT CHEMICAL EXPLORER (tug) and SMT ONE
(barge).
NOW THEREFORE, in consideration of the premises and the mutual covenants
herein contained, and of other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the parties hereby agree as follows:
ARTICLE FIRST
ASSIGNMENT, ASSUMPTION AND RELEASE
SECTION 1. The Assigning Shipowner hereby transfers, assigns, sets over,
confirms and conveys to the Assuming Shipowner, without limitation, all of its
right, title, and interest in, and all of its duties and obligations under the
Security Agreement, and the Assuming Shipowner hereby accepts such transfer,
assignment and conveyance, without limitation, subject to the terms and
conditions of the Security Agreement and accepts and assumes all of the right,
title, interest, duties and obligations of the Assigning Shipowner under the
Security Agreement with the same force and effect as if the Assuming Shipowner
had been named as Shipowner therein, including without limitation, the grant of
the security interests in the Granting Clause thereof and the obligation to pay
any amounts payable by the Assigning Shipowner under the Security Agreement. As
of the Effective Date, the Assigning Shipowner shall have no further obligations
under the Security Agreement.
SECTION 2. From and after the Effective Date, the term "Shipowner" as used
in the Security Agreement or any other agreement or instrument related to the
transactions contemplated thereby shall mean and refer to the Assuming Shipowner
and its successors and assigns.
SECTION 3. The Assuming Shipowner (i) acknowledges receipt of notice of and
hereby confirms, consents and agrees in all respects to the grant, sale,
conveyance, assignment, transfer, mortgage and pledge to the Secretary of all of
the Assigning Shipowner's right, title and interest in and to the Security and
all monies payable thereunder to the extent set forth in the Security Agreement,
and (ii) agrees, pursuant to this Amendment, to assume all of the duties and
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<PAGE> 41
obligations of the Assigning Shipowner prescribed by the Security Agreement.
SECTION 4. The transfer, assignment, conveyance, acceptance, assumption and
release provided in Section 1 above shall become effective on the Effective Date
and shall be of no force or effect prior thereto. Notwithstanding any provision
of this Amendment to the contrary (i) the rights and obligations of the
respective parties under the Security Agreement which shall have unconditionally
vested at any time up to and including the Effective Date shall survive the
Effective Date, and (ii) neither the assignment, assumption, and release
effected hereby nor any proceedings arising from the Security Agreement shall
(x) relieve any party thereto from the observance or performance of any
obligation required to be performed on or prior to the Effective Date, or from
liability for any acts or omissions of such party which were performed or
required to be performed on or prior to the Effective Date, or (y) serve as a
defense against any claim for breach of or failure to perform any such
obligation, or against any claim for indemnification under the Security
Agreement arising out of any matter occurring on or prior to the Effective Date.
ARTICLE SECOND
REPRESENTATIONS AND WARRANTIES
SECTION 1. The Assigning Shipowner hereby represents and warrants in its
individual capacity and in its capacity as owner trustee under the Trust
Agreement, that:
(a) The Assigning Shipowner is a trust company duly organized, validly
existing and in good standing under the laws of the Commonwealth of
Massachusetts, with full power, authority and legal right to execute and
deliver this Amendment and to perform its obligations hereunder, and this
Amendment has been duly authorized, executed and delivered by the Assigning
Shipowner and, assuming the due authorization, execution and delivery by
the other parties hereto, constitutes the legal, valid and binding
obligation of the Assigning Shipowner enforceable in accordance with its
terms.
(b) The Assigning Shipowner has obtained all necessary approvals,
authorizations, licenses and permits, under the laws of the State of
Connecticut, the Commonwealth of Massachusetts and the United States
regulating banking or trust powers, to enter into and perform its
obligations under this Amendment. Other than the approval of the Secretary
and the Board and the instruction of the Owner Participant, no consent,
authorization or approval of, or filing with, any federal, state, municipal
or other governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, is or has been required in connection
with any of the transactions contemplated hereby in respect of the
Assigning Shipowner.
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<PAGE> 42
(c) The execution and delivery of this Amendment, and the performance
by the Assigning Shipowner of its obligations under this Amendment will not
result in a violation of, or be in conflict with, or constitute a default
or any event which would with notice or lapse of time or both become a
default under, any provision of the charter documents or the by-laws of the
Assigning Shipowner, or a default under any indenture, contract, agreement
or other instrument to which the Assigning Shipowner is a party or by which
it or its property is bound, and the execution and delivery of this
Amendment and the performance by the Assigning Shipowner of its obligations
under this Amendment will not result in a violation of any statute, rule or
regulation applicable to the Assigning Shipowner or its property or by
which it or its property may be bound and will not result in a violation of
or be in conflict with, or result in a breach of, any term or provision of
any judgment, order, decree or award of any court, arbitrator or
governmental or public instrumentality binding upon the Assigning Shipowner
or its property.
(d) The Assigning Shipowner is not in default in any material way, and
no condition exists which with notice or lapse of time or both will
constitute a material default, under the Security Agreement or any
indenture, agreement, instrument or evidence of indebtedness to which it is
a party or by which it is bound, and it is not in default in any material
respect under any judgment, order, writ, injunction, decree, rule or
regulation of any court or governmental department, commission, board,
agency or instrumentality, domestic or foreign.
(e) There is no action, suit, proceeding, inquiry or investigation, at
law or in equity, or before or by any court, public board or body, pending
against the Assigning Shipowner or of which it has otherwise received
official notice or which to its knowledge is threatened against it wherein
an unfavorable decision, ruling or finding would materially adversely
affect its ability to perform its obligations under this Amendment.
(f) The location of the office at which the Assigning Shipowner keeps
or will keep its records concerning this Amendment is: Goodwin Square, 23rd
Floor, 225 Asylum Street, Hartford, CT 06103.
(g) The Assigning Shipowner is a "citizen of the United States" within
the meaning of Section 2 of the Shipping Act, 1916, as amended, qualified
to engage in the coastwise trade and has been such a citizen at all
relevant times qualified to operate the Vessel in the trades in which the
Vessel has operated from time to time.
(h) The Assigning Shipowner is the sole legal owner of the Vessel and
the Vessel is duly and validly documented in the name of the Assigning
Shipowner.
SECTION 2. The Assuming Shipowner hereby represents and warrants that:
5
<PAGE> 43
(a) The Assuming Shipowner is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware, and
has full power, authority and legal right to execute and deliver this
Amendment and to perform its obligations hereunder and under the Security
Agreement, and this Amendment has been duly authorized, executed and
delivered by the Assuming Shipowner and, assuming the due authorization,
execution and delivery by the other parties hereto, constitutes the legal,
valid and binding obligation of the Assuming Shipowner enforceable in
accordance with its terms.
(b) Other than the approvals of the Secretary and the Board and the
instruction of the Owner Participant, no consent, authorization or approval
of, or filing with, any federal, state, municipal or other governmental
department, commission, board, bureau, agency or instrumentality, domestic
or foreign, is or has been required in connection with any of the
transactions contemplated hereby in respect of the Assuming Shipowner.
(c) The execution and delivery of this Amendment and the performance
by the Assuming Shipowner of its obligations under this Amendment will not
result in a violation of, or be in conflict with, or constitute a default
or any event which would with notice or lapse of time or both become a
default under, any provision of the certificate of incorporation or the
by-laws of the Assuming Shipowner, or a default under any mortgage,
indenture, contract, agreement or other instrument to which the Assuming
Shipowner is a party or by which it or its property is bound, and the
execution and delivery of this Amendment and the performance by the
Assuming Shipowner of its obligations under this Amendment will not result
in a violation of any statute, rule or regulation applicable to the
Assuming Shipowner or its property or by which it or its property may be
bound and will not result in a violation of or be in conflict with, or
result in a breach of, any term or provision of any judgment, order, decree
or award of any court, arbitrator or governmental or public instrumentality
binding upon the Assuming Shipowner or its property.
(d) The Assuming Shipowner is not in default in any material way, and
no condition exists which with notice or lapse of time or both will
constitute a material default, under any mortgage, loan agreement,
indenture, evidence of indebtedness or other instrument to which it is a
party or by which it is bound, and it is not in default in any material
respect under any judgment, order, writ, injunction, decree, rule or
regulation of any court or governmental department, commission, board,
agency or instrumentality, domestic or foreign.
(e) There is no action, suit, proceeding, inquiry or investigation, at
law or in equity, or before or by any court, public board or body, pending
against the Assuming Shipowner or of which it has otherwise received
official notice or which to its knowledge is threatened against it wherein
an unfavorable decision, ruling or finding would materially adversely
affect its ability to perform its obligations under this Amendment
6
<PAGE> 44
(including the ability to own and operate the Vessel).
(f) The location of the office at which the Assuming Shipowner keeps
or will keep its records concerning this Amendment is: 1200 Harbor
Boulevard, 9th Floor, C-901, Weehawken, New Jersey 07087, Attention:
General Counsel.
(g) The Assuming Shipowner is a "citizen of the United States" within
the meaning of Section 2 of the Shipping Act, 1916, as amended, qualified
to engage in the coastwise trade and covenants that it shall remain such a
citizen for operation in the trades in which the Vessel is operated from
time to time.
ARTICLE THIRD
CONDITIONS PRECEDENT TO ASSIGNMENT,
ASSUMPTION AND RELEASE
The Secretary hereby consents to and approves the transfer of the Vessel by
the Assigning Shipowner to the Assuming Shipowner, the termination of the
Original Bareboat Charter and the release of the Assigning Shipowner and the
Original Bareboat Charterer from their respective obligations thereunder on the
following conditions:
1. The Vessel shall be transferred by the Assigning Shipowner to the
Assuming Shipowner by a Bill of Sale on Coast Guard form CG-1340, warranteeing
the Assigning Shipowner's title to the Vessel and its freedom from liens,
charges and encumbrances of any kind other than the Mortgage and liens permitted
by the Security Agreement, and such Bill of Sale shall otherwise be in form and
substance satisfactory to the Secretary, and shall be recorded in the National
Vessel Documentation Center.
2. The Vessel shall be duly and properly documented in the name of the
Assuming Shipowner.
3. The parties thereto shall execute the Indenture Assumption Agreement
referred to in the Seventh Recital above.
4. The Assuming Shipowner shall assume the Mortgage and an instrument
evidencing such assumption shall be executed, delivered and duly recorded in the
National Vessel Documentation Center.
5. The Assuming Shipowner, the Bareboat Charterer, and the Time Charterer
shall have assumed the Title XI Reserve Fund and Financial Agreement, Contract
No. 9894, by an instrument in form and substance satisfactory to the Secretary.
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<PAGE> 45
6. The Assuming Shipowner shall execute and deliver an appropriate
endorsement to the Secretary's Note to evidence its assumption of the Assigning
Shipowner's obligations thereunder.
7. The Vessel shall be free and clear of any and all liens, claims, charges
and encumbrances (except for the Mortgage) and the Assuming Shipowner and the
Secretary shall have received such evidence thereof as they may reasonably
request.
8. All other matters incident to the transfer of the Vessel and the
assignment and assumption of the obligations contemplated by this Amendment
shall be reasonably satisfactory to the Secretary and the Assuming Shipowner.
9. The Contingent Guarantee and the Second Mortgage shall have been
executed and delivered by the parties thereto.
ARTICLE FOURTH
GRANTING CLAUSE
In order to create a present security interest in favor of the Secretary,
the Assuming Shipowner does hereby grant, sell, convey, assign, transfer,
mortgage, pledge, set over, and confirm unto the Secretary continuing security
interests in all of the right, title, and interest of the Shipowner in and to
all of the following, whether now owned or existing or hereafter arising or
acquired:
I. The Bareboat Charter and all moneys payable to the Assuming Shipowner
thereunder and the Time Charter and any future time charter and all moneys
payable to the Bareboat Charterer thereunder. Said right, title and interest in
and to (a) the Bareboat Charter and all moneys payable thereunder, together with
the Consent to Bareboat Charter Assignment and (b) the Time Charter and any
future time charter and all moneys payable thereunder as pledged by Bareboat
Charterer in the Assignment of Time Charter effective as of the Effective Date,
are herein collectively referred to as the "Rights Under the Bareboat Charter
and Related Contracts". The Secretary agrees that, pursuant to the terms of the
Security Agreement as amended hereby and the Consent to Bareboat Charter
Assignment all moneys payable to the Assuming Shipowner hereunder, under the
Time Charter and under the Bareboat Charter will be paid directly to the
Depository for application in accordance with the Security Agreement as amended
hereby and the Depository Agreement.
II. All proceeds of the collateral described in Paragraph I above.
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The right, title, and interest of the Secretary mentioned in Paragraphs I
and II constitute and shall be considered part of the "Security," as such term
is defined in the Security Agreement as amended hereby and shall be held by the
Secretary pursuant to the provisions of the Security Agreement as amended
hereby.
Irrespective of the foregoing, (1) the Secretary shall not, by virtue of
this Amendment, have any obligations under any of the documents referred to in
Paragraph I or be required to make any payment owing by the Shipowner
thereunder, and (2) if there is no existing Default, the Shipowner shall
(subject to the rights of the Secretary hereunder) be entitled to exercise all
of its rights under each of the documents referred to in Paragraph I above and
with respect to other property referred to in the Granting Clauses hereof, and
shall be entitled to receive all of the benefits accruing to it thereunder as if
the foregoing were not applicable.
ARTICLE FIFTH
SECURITY AGREEMENT CONFIRMED
The Security Agreement as amended hereby is in all respects confirmed,
affirmed, and reaffirmed, including all of the covenants and agreements and
representations on the part of the Shipowner which are set forth therein and all
the rights, privileges, powers and immunities of the Secretary which are
provided for therein, and the grant of the collateral security interest of the
Secretary in the Security is continued.
ARTICLE SIXTH
AMENDMENTS TO SECURITY AGREEMENT
SECTION 1. Section 2.04(b) of Exhibit 1 to the Security Agreement - General
Provisions Incorporated into the Security Agreement ("Exhibit 1") is hereby
amended by deleting the word "or" before clause (F) thereof and inserting the
following before the period at the end thereof: ", or (G) the Second Mortgage."
SECTION 2. Section 6.01 of Exhibit 1 is hereby amended by adding the
following paragraph to the end of such section:
"In the event that a Default shall occur, the Secretary shall be
entitled, but not be required, to deliver to the Depository a written
notice that the Secretary is thereby exercising exclusive control over the
Securities Accounts (as such term is defined in the Depository Agreement)
("Notice of Exclusive Control"). As further provided in the Depository
Agreement following the Depository's receipt
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<PAGE> 47
of and pursuant to said Notice of Exclusive Control, the Secretary and the
Shipowner hereby acknowledge and agree that (i) the Secretary shall be
entitled, but not be required, to issue to the Depository an instruction,
notice or any other type of directive that would constitute an "entitlement
order" within the meaning of Section 8-102(a)(8) of the New York Uniform
Commercial Code (collectively, an "Entitlement Order") concerning the
Securities Accounts and (ii) the Depository shall immediately cease
complying with any Request, Request for Payment, instruction, notice or any
other type of directive that would constitute an Entitlement Order from the
Shipowner. In the event that a Default has been cured or waived as provided
in Article VI hereof, the Secretary and the Shipowner hereby acknowledge
and agree that the Secretary shall deliver a written notice to the
Depository that (i) the Secretary is no longer exercising exclusive control
over the Securities Accounts and that the Notice of Exclusive Control
previously delivered is theretofore without effect and (ii) the Depository
shall thereafter comply with any Request, Request for Payment, instruction,
notice or any other type of directive that would constitute an Entitlement
Order from the Shipowner."
SECTION 3. The "Notice of Preferred Mortgages and Charter" referred to in
Section 2.12 of Exhibit 1 of the Security Agreement is hereby amended in its
entirety to conform to the form of such notice set forth in the Bareboat Charter
of even date herewith.
SECTION 4. Article Fifth (y) of the Special Provisions of the Security
Agreement is hereby deleted in its entirety and Article Fifth (z) is hereby
amended by re-lettering it as Article Fifth (y).
ARTICLE SEVENTH
MISCELLANEOUS
SECTION 1. Schedule X to the Security Agreement is hereby deleted and
substituted by Schedule X in the form attached hereto.
SECTION 2. This Amendment is executed as and shall constitute an amendment
to and be incorporated into and made a part of the Security Agreement. All of
the terms and provisions of the Security Agreement as supplemented hereby shall
continue to be and shall remain in full force and effect.
SECTION 3. For all purposes of this Amendment, unless otherwise expressly
provided or unless the context otherwise requires, the terms used herein which
are defined in Schedule X to the Security Agreement, Contract No. MA-9892, dated
as of November 25, 1980, including Amendment No. 1 thereto dated October 18,
1991, and this Amendment, between the United States
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<PAGE> 48
and the Assuming Shipowner, or by reference therein to other instruments or
agreements, shall have the respective meanings stated in said Schedule X to the
Security Agreement or such other instruments or agreements.
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<PAGE> 49
SECTION 4. This Amendment may be executed in any number of counterparts,
and each such counterpart shall for all purposes be deemed to be an original.
SECTION 5. This Amendment and the rights and obligations of the parties
hereto, shall in all respects be governed by, construed and enforced in
accordance with the federal laws of the United States of America, but if they
are inapplicable, then in accordance with the laws of the State of New York,
including Section 5-1401 of the General Obligations Law of the State of New
York.
SECTION 6. If any term of the Security Agreement, as amended by this
Amendment, or any application thereof shall be invalid or unenforceable, the
remainder of the Security Agreement, as amended hereby, and any other
application of such term shall not be affected thereby.
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<PAGE> 50
IN WITNESS WHEREOF, this Amendment has been executed by the parties hereto
as of the day and year first above written.
STATE STREET BANK AND TRUST COMPANY,
not in its individual capacity but
solely as owner trustee under the
Trust Agreement dated as of November
13, 1980, as amended, for the benefit
of the owner participant named
therein, Assigning Shipowner
By: ______________________________
Name:_________________________
Title:________________________
Attest:
By: ________________________
<PAGE> 51
FRANCES OWNER CORPORATION,
Assuming Shipowner
By:____________________________
Name:______________________
Title:_____________________
Attest:
By:______________________
<PAGE> 52
UNITED STATES OF AMERICA
SECRETARY OF TRANSPORTATION
By: MARITIME ADMINISTRATION
(Seal) By: __________________________
Attest:
By:________________________
<PAGE> 53
4.02(b)
CONTRACT NO.
MA-9880
ASSIGNMENT, ASSUMPTION AND AMENDMENT NO. 2
TO THE
SECURITY AGREEMENT
RELATING TO UNITED STATES GOVERNMENT
GUARANTEED SHIP FINANCING OBLIGATIONS
BETWEEN
STATE STREET BANK AND TRUST COMPANY,
NOT IN ITS INDIVIDUAL CAPACITY BUT SOLELY AS
OWNER TRUSTEE UNDER THE TRUST AGREEMENT
DATED AS OF NOVEMBER 13, 1980, AS AMENDED, FOR
THE BENEFIT OF THE OWNER PARTICIPANT NAMED THEREIN,
ASSIGNING SHIPOWNER
JULIUS OWNER CORPORATION,
ASSUMING SHIPOWNER
AND
THE UNITED STATES OF AMERICA
SEPTEMBER 29, 1999
ITB JULIUS HAMMER
(TO BE RENAMED SMT CHEMICAL TRADER)
<PAGE> 54
ASSIGNMENT, ASSUMPTION, AND AMENDMENT NO. 2
TO THE
SECURITY AGREEMENT
ITB JULIUS HAMMER
(TO BE RENAMED SMT CHEMICAL TRADER (tug)
AND SMT TWO (barge))
THIS ASSIGNMENT, ASSUMPTION, AND AMENDMENT NO. 2 (this "Amendment"), to the
SECURITY AGREEMENT, Contract No. MA-9880, dated as of November 25, 1980, by
STATE STREET BANK AND TRUST COMPANY, a Massachusetts trust company, not in its
individual capacity but solely as owner trustee under the Trust Agreement dated
as of November 13, 1980, as amended, for the benefit of the owner participant
named therein (the "Assigning Shipowner"), JULIUS OWNER CORPORATION, a Delaware
corporation (the "Assuming Shipowner"), and the UNITED STATES OF AMERICA (the
"United States"), represented by the Secretary of Transportation, acting by and
through the Maritime Administrator (the "Secretary"), pursuant to the provisions
of Title XI of the Merchant Marine Act, 1936, as amended, is made on
_____________ _____, 1999.
WITNESSETH:
WHEREAS, the Assigning Shipowner is the sole legal owner of the Vessel;
WHEREAS, the Assigning Shipowner and the Secretary are parties to the
Security Agreement, Contract No. MA-9880, dated as of November 25, 1980,
pursuant to which the Assigning Shipowner granted to the Secretary a security
interest in the Security as collateral security for the obligations of the
United States upon Guarantees made by the Secretary pursuant to Title XI with
respect to the Obligations and for the payment of the principal of and interest
on the Secretary's Note;
WHEREAS, the Assigning Shipowner has, as further security to the Secretary
pursuant to the provisions of the Security Agreement, executed and delivered on
the Delivery Date to the Secretary, as mortgagee, a first preferred fleet
mortgage, Contract No. MA-9881 (as the same may have been amended, modified or
supplemented, the "Mortgage"), covering the Vessel;
WHEREAS, Suwannee River Lines, Inc., a California corporation (the
"Original Bareboat Charterer"), entered into a Bareboat Charter of the Vessel
dated as of March 18, 1981 (as supplemented and amended to date, the "Original
Bareboat Charter"), with the Assigning Shipowner, and the Original Bareboat
Charter was assigned to the Secretary as further security pursuant to the
provisions of the Security Agreement;
<PAGE> 55
WHEREAS, Occidental Petroleum Corporation, a Delaware corporation (as
successor to Occidental Petroleum Corporation, a California corporation, herein
"Occidental"), is the guarantor under a Bareboat Charter Guarantee dated as of
March 18, 1981, relating to the Original Bareboat Charter (the "Old Bareboat
Charter Guarantee"), and the Old Bareboat Charter Guarantee has been assigned to
the Secretary as further security under the Security Agreement;
WHEREAS, simultaneously with the execution and delivery of this Amendment,
the Assigning Shipowner is transferring 100% of its interest in the Vessel to
the Assuming Shipowner on the terms and conditions, among others, that the
Assuming Shipowner shall assume all obligations and liabilities of the Assigning
Shipowner under the Mortgage, the Security Agreement, the Obligations, and the
Secretary's Note, and that the Assigning Shipowner shall, simultaneously with
such assumption, be released from all obligations and liabilities under the
Mortgage, the Security Agreement, the Obligations and the Secretary's Note;
WHEREAS, by an Assignment, Assumption and Supplement No. 2 to Trust
Indenture dated the date hereof between and among the Indenture Trustee, the
Assigning Shipowner and the Assuming Shipowner (the "Indenture Assumption
Agreement"), the Assuming Shipowner has, with the written consent of the
Secretary, assumed responsibility for payment of the principal of and interest
on the Outstanding Obligations and the performance of the agreements of the
Assigning Shipowner under the Original Indenture and the Assigning Shipowner has
been released from such payment obligations and the performance of such
agreements;
WHEREAS, on the date hereof, the Original Bareboat Charter is being
terminated and the Original Bareboat Charter is being released from its
obligations thereunder and the Assuming Shipowner is entering into a new
bareboat charter (the "Bareboat Charter") with Frances ODS Corporation, a
Delaware corporation (the "Bareboat Charterer") and the same is being assigned
to the Secretary hereunder as security for the Guarantees;
WHEREAS, concurrently with termination of the Original Bareboat Charter and
the release of the Original Bareboat Charterer from its obligations thereunder,
Occidental is being released from its obligations under the Old Bareboat Charter
Guarantee and (i) Marine Transport Corporation, a Delaware corporation ("MTC")
is entering into a guarantee of 75% of the obligations of the Assuming Shipowner
under the Secretary's Note (the "MTC Guarantee"), (ii) Stolt-Nielsen
Transportation Group Ltd., a Liberian corporation ("SNTG"), is entering into a
guarantee of 25% of the obligations of the Assuming Shipowner under the
Secretary's Note (the "SNTG Guarantee"), the liability of MTC and SNTG under
such guarantees being several but not joint, and (iii) Occidental is entering
into a Contingent Guarantee of certain of the obligations of the Bareboat
Charterer under the Bareboat Charter (the "Contingent Guarantee");
WHEREAS, this Amendment is made for the purpose of confirming, affirming,
and reaffirming the Security Agreement as hereby amended and continuing the
grant of the collateral security interest of the Secretary in the Security to
secure the payment of the principal of and interest on the Secretary's Note in
accordance with the terms of the Security Agreement, as amended by this
Amendment and as provided in the Secretary's Note;
2
<PAGE> 56
WHEREAS, the execution and delivery of this Amendment has been duly
authorized and all conditions and requirements necessary to make this instrument
a legal, valid, and binding agreement have been duly performed and complied
with; and
3
<PAGE> 57
WHEREAS, on the date hereof, the Assuming Shipowner is changing the
name of the Vessel from ITB JULIUS HAMMER to SMT CHEMICAL TRADER (tug) and SMT
TWO (barge).
NOW THEREFORE, in consideration of the premises and the mutual
covenants herein contained, and of other good and valuable consideration, the
receipt and adequacy of which are hereby acknowledged, the parties hereby agree
as follows:
ARTICLE FIRST
ASSIGNMENT, ASSUMPTION AND RELEASE
SECTION 1. The Assigning Shipowner hereby transfers, assigns, sets
over, confirms and conveys to the Assuming Shipowner, without limitation, all of
its right, title, and interest in, and all of its duties and obligations under
the Security Agreement, and the Assuming Shipowner hereby accepts such transfer,
assignment and conveyance, without limitation, subject to the terms and
conditions of the Security Agreement and accepts and assumes all of the right,
title, interest, duties and obligations of the Assigning Shipowner under the
Security Agreement with the same force and effect as if the Assuming Shipowner
had been named as Shipowner therein, including without limitation, the grant of
the security interests in the Granting Clause thereof and the obligation to pay
any amounts payable by the Assigning Shipowner under the Security Agreement. As
of the Effective Date, the Assigning Shipowner shall have no further obligations
under the Security Agreement.
SECTION 2. From and after the Effective Date, the term "Shipowner" as
used in the Security Agreement or any other agreement or instrument related to
the transactions contemplated thereby shall mean and refer to the Assuming
Shipowner and its successors and assigns.
SECTION 3. The Assuming Shipowner (i) acknowledges receipt of notice of
and hereby confirms, consents and agrees in all respects to the grant, sale,
conveyance, assignment, transfer, mortgage and pledge to the Secretary of all of
the Assigning Shipowner's right, title and interest in and to the Security and
all monies payable thereunder to the extent set forth in the Security Agreement,
and (ii) agrees, pursuant to this Amendment, to assume all of the duties and
obligations of the Assigning Shipowner prescribed by the Security Agreement.
SECTION 4. The transfer, assignment, conveyance, acceptance, assumption
and release provided in Section 1 above shall become effective on the Effective
Date and shall be of no force or effect prior thereto. Notwithstanding any
provision of this Amendment to the contrary (i) the rights and obligations of
the respective parties under the Security Agreement which shall have
unconditionally vested at any time up to and including the Effective Date shall
survive the Effective Date, and (ii) neither the assignment, assumption, and
release effected hereby nor any
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<PAGE> 58
proceedings arising from the Security Agreement shall (x) relieve any party
thereto from the observance or performance of any obligation required to be
performed on or prior to the Effective Date, or from liability for any acts or
omissions of such party which were performed or required to be performed on or
prior to the Effective Date, or (y) serve as a defense against any claim for
breach of or failure to perform any such obligation, or against any claim for
indemnification under the Security Agreement arising out of any matter occurring
on or prior to the Effective Date.
ARTICLE SECOND
REPRESENTATIONS AND WARRANTIES
SECTION 1. The Assigning Shipowner hereby represents and warrants in
its individual capacity and in its capacity as owner trustee under the Trust
Agreement, that:
(a) The Assigning Shipowner is a trust company duly
organized, validly existing and in good standing under the laws of the
Commonwealth of Massachusetts, with full power, authority and legal
right to execute and deliver this Amendment and to perform its
obligations hereunder, and this Amendment has been duly authorized,
executed and delivered by the Assigning Shipowner and, assuming the due
authorization, execution and delivery by the other parties hereto,
constitutes the legal, valid and binding obligation of the Assigning
Shipowner enforceable in accordance with its terms.
(b) The Assigning Shipowner has obtained all necessary
approvals, authorizations, licenses and permits, under the laws of the
State of Connecticut, the Commonwealth of Massachusetts and the United
States regulating banking or trust powers, to enter into and perform
its obligations under this Amendment. Other than the approval of the
Secretary and the Board and the instruction of the Owner Participant,
no consent, authorization or approval of, or filing with, any federal,
state, municipal or other governmental department, commission, board,
bureau, agency or instrumentality, domestic or foreign, is or has been
required in connection with any of the transactions contemplated hereby
in respect of the Assigning Shipowner.
(c) The execution and delivery of this Amendment, and the
performance by the Assigning Shipowner of its obligations under this
Amendment will not result in a violation of, or be in conflict with, or
constitute a default or any event which would with notice or lapse of
time or both become a default under, any provision of the charter
documents or the by-laws of the Assigning Shipowner, or a default under
any indenture, contract, agreement or other instrument to which the
Assigning Shipowner is a party or by which it or its property is bound,
and the execution and delivery of this Amendment and the performance by
the Assigning Shipowner of its obligations under this Amendment will
not result in a violation of any statute, rule or regulation applicable
to the Assigning Shipowner or its property or by which it or its
property may be bound and
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<PAGE> 59
will not result in a violation of or be in conflict with, or result in
a breach of, any term or provision of any judgment, order, decree or
award of any court, arbitrator or governmental or public
instrumentality binding upon the Assigning Shipowner or its property.
(d) The Assigning Shipowner is not in default in any
material way, and no condition exists which with notice or lapse of
time or both will constitute a material default, under the Security
Agreement or any indenture, agreement, instrument or evidence of
indebtedness to which it is a party or by which it is bound, and it is
not in default in any material respect under any judgment, order, writ,
injunction, decree, rule or regulation of any court or governmental
department, commission, board, agency or instrumentality, domestic or
foreign.
(e) There is no action, suit, proceeding, inquiry or
investigation, at law or in equity, or before or by any court, public
board or body, pending against the Assigning Shipowner or of which it
has otherwise received official notice or which to its knowledge is
threatened against it wherein an unfavorable decision, ruling or
finding would materially adversely affect its ability to perform its
obligations under this Amendment.
(f) The location of the office at which the Assigning
Shipowner keeps or will keep its records concerning this Amendment is:
Goodwin Square, 23rd Floor, 225 Asylum Street, Hartford, CT 06103.
(g) The Assigning Shipowner is a "citizen of the United
States" within the meaning of Section 2 of the Shipping Act, 1916, as
amended, qualified to engage in the coastwise trade and has been such a
citizen at all relevant times qualified to operate the Vessel in the
trades in which the Vessel has operated from time to time.
(h) The Assigning Shipowner is the sole legal owner of
the Vessel and the Vessel is duly and validly documented in the name of
the Assigning Shipowner.
SECTION 2. The Assuming Shipowner hereby represents and warrants that:
(a) The Assuming Shipowner is a corporation duly
organized, validly existing and in good standing under the laws of the
State of Delaware, and has full power, authority and legal right to
execute and deliver this Amendment and to perform its obligations
hereunder and under the Security Agreement, and this Amendment has been
duly authorized, executed and delivered by the Assuming Shipowner and,
assuming the due authorization, execution and delivery by the other
parties hereto, constitutes the legal, valid and binding obligation of
the Assuming Shipowner enforceable in accordance with its terms.
(b) Other than the approvals of the Secretary and the
Board and the instruction of the Owner Participant, no consent,
authorization or approval of, or filing with, any federal, state,
municipal or other governmental department, commission, board, bureau,
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<PAGE> 60
agency or instrumentality, domestic or foreign, is or has been required
in connection with any of the transactions contemplated hereby in
respect of the Assuming Shipowner.
(c) The execution and delivery of this Amendment and the
performance by the Assuming Shipowner of its obligations under this
Amendment will not result in a violation of, or be in conflict with, or
constitute a default or any event which would with notice or lapse of
time or both become a default under, any provision of the certificate
of incorporation or the by-laws of the Assuming Shipowner, or a default
under any mortgage, indenture, contract, agreement or other instrument
to which the Assuming Shipowner is a party or by which it or its
property is bound, and the execution and delivery of this Amendment and
the performance by the Assuming Shipowner of its obligations under this
Amendment will not result in a violation of any statute, rule or
regulation applicable to the Assuming Shipowner or its property or by
which it or its property may be bound and will not result in a
violation of or be in conflict with, or result in a breach of, any term
or provision of any judgment, order, decree or award of any court,
arbitrator or governmental or public instrumentality binding upon the
Assuming Shipowner or its property.
(d) The Assuming Shipowner is not in default in any
material way, and no condition exists which with notice or lapse of
time or both will constitute a material default, under any mortgage,
loan agreement, indenture, evidence of indebtedness or other instrument
to which it is a party or by which it is bound, and it is not in
default in any material respect under any judgment, order, writ,
injunction, decree, rule or regulation of any court or governmental
department, commission, board, agency or instrumentality, domestic or
foreign.
(e) There is no action, suit, proceeding, inquiry or
investigation, at law or in equity, or before or by any court, public
board or body, pending against the Assuming Shipowner or of which it
has otherwise received official notice or which to its knowledge is
threatened against it wherein an unfavorable decision, ruling or
finding would materially adversely affect its ability to perform its
obligations under this Amendment (including the ability to own and
operate the Vessel).
(f) The location of the office at which the Assuming
Shipowner keeps or will keep its records concerning this Amendment is:
1200 Harbor Boulevard, 9th Floor, C-901, Weehawken, New Jersey 07087,
Attention: General Counsel.
(g) The Assuming Shipowner is a "citizen of the United
States" within the meaning of Section 2 of the Shipping Act, 1916, as
amended, qualified to engage in the coastwise trade and covenants that
it shall remain such a citizen for operation in the trades in which the
Vessel is operated from time to time.
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<PAGE> 61
ARTICLE THIRD
CONDITIONS PRECEDENT TO ASSIGNMENT,
ASSUMPTION AND RELEASE
The Secretary hereby consents to and approves the transfer of the
Vessel by the Assigning Shipowner to the Assuming Shipowner, the termination of
the Original Bareboat Charter and the release of the Assigning Shipowner and the
Original Bareboat Charterer from their respective obligations thereunder on the
following conditions:
1. The Vessel shall be transferred by the Assigning Shipowner to
the Assuming Shipowner by a Bill of Sale on Coast Guard form CG-1340,
warranteeing the Assigning Shipowner's title to the Vessel and its freedom from
liens, charges and encumbrances of any kind other than the Mortgage and liens
permitted by the Security Agreement, and such Bill of Sale shall otherwise be in
form and substance satisfactory to the Secretary, and shall be recorded in the
National Vessel Documentation Center.
2. The Vessel shall be duly and properly documented in the name
of the Assuming Shipowner.
3. The parties thereto shall execute the Indenture Assumption
Agreement referred to in the Seventh Recital above.
4. The Assuming Shipowner shall assume the Mortgage and an
instrument evidencing such assumption shall be executed, delivered and duly
recorded in the National Vessel Documentation Center.
5. The Assuming Shipowner, the Bareboat Charterer, and the Time
Charterer shall have assumed the Title XI Reserve Fund and Financial Agreement,
Contract No. 9882, by an instrument in form and substance satisfactory to the
Secretary.
6. The Assuming Shipowner shall execute and deliver an
appropriate endorsement to the Secretary's Note to evidence its assumption of
the Assigning Shipowner's obligations thereunder.
7. The Vessel shall be free and clear of any and all liens,
claims, charges and encumbrances (except for the Mortgage) and the Assuming
Shipowner and the Secretary shall have received such evidence thereof as they
may reasonably request.
8. All other matters incident to the transfer of the Vessel and
the assignment and assumption of the obligations contemplated by this Amendment
shall be reasonably satisfactory to the Secretary and the Assuming Shipowner.
9. The Contingent Guarantee and the Second Mortgage shall have
been executed and delivered by the parties thereto.
8
<PAGE> 62
ARTICLE FOURTH
GRANTING CLAUSE
In order to create a present security interest in favor of the
Secretary, the Assuming Shipowner does hereby grant, sell, convey, assign,
transfer, mortgage, pledge, set over, and confirm unto the Secretary continuing
security interests in all of the right, title, and interest of the Shipowner in
and to all of the following, whether now owned or existing or hereafter arising
or acquired:
I. The Bareboat Charter and all moneys payable to the Assuming
Shipowner thereunder and the Time Charter and any future time charter and all
moneys payable to the Bareboat Charterer thereunder. Said right, title and
interest in and to (a) the Bareboat Charter and all moneys payable thereunder,
together with the Consent to Bareboat Charter Assignment and (b) the Time
Charter and any future time charter and all moneys payable thereunder as pledged
by Bareboat Charterer in the Assignment of Time Charter effective as of the
Effective Date, are herein collectively referred to as the "Rights Under the
Bareboat Charter and Related Contracts". The Secretary agrees that, pursuant to
the terms of the Security Agreement as amended hereby and the Consent to
Bareboat Charter Assignment all moneys payable to the Assuming Shipowner
hereunder, under the Time Charter and under the Bareboat Charter will be paid
directly to the Depository for application in accordance with the Security
Agreement as amended hereby and the Depository Agreement.
II. All proceeds of the collateral described in Paragraph I above.
The right, title, and interest of the Secretary mentioned in Paragraphs
I and II constitute and shall be considered part of the "Security," as such term
is defined in the Security Agreement as amended hereby and shall be held by the
Secretary pursuant to the provisions of the Security Agreement as amended
hereby.
Irrespective of the foregoing, (1) the Secretary shall not, by virtue
of this Amendment, have any obligations under any of the documents referred to
in Paragraph I or be required to make any payment owing by the Shipowner
thereunder, and (2) if there is no existing Default, the Shipowner shall
(subject to the rights of the Secretary hereunder) be entitled to exercise all
of its rights under each of the documents referred to in Paragraph I above and
with respect to other property referred to in the Granting Clauses hereof, and
shall be entitled to receive all of the benefits accruing to it thereunder as if
the foregoing were not applicable.
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<PAGE> 63
ARTICLE FIFTH
SECURITY AGREEMENT CONFIRMED
The Security Agreement as amended hereby is in all respects confirmed,
affirmed, and reaffirmed, including all of the covenants and agreements and
representations on the part of the Shipowner which are set forth therein and all
the rights, privileges, powers and immunities of the Secretary which are
provided for therein, and the grant of the collateral security interest of the
Secretary in the Security is continued.
ARTICLE SIXTH
AMENDMENTS TO SECURITY AGREEMENT
SECTION 1. Section 2.04(b) of Exhibit 1 to the Security Agreement -
General Provisions Incorporated into the Security Agreement ("Exhibit 1") is
hereby amended by deleting the word "or" before clause (F) thereof and inserting
the following before the period at the end thereof: ", or (G) the Second
Mortgage."
SECTION 2. Section 6.01 of Exhibit 1 is hereby amended by adding the
following paragraph to the end of such section:
"In the event that a Default shall occur, the Secretary shall
be entitled, but not be required, to deliver to the Depository a
written notice that the Secretary is thereby exercising exclusive
control over the Securities Accounts (as such term is defined in the
Depository Agreement) ("Notice of Exclusive Control"). As further
provided in the Depository Agreement following the Depository's receipt
of and pursuant to said Notice of Exclusive Control, the Secretary and
the Shipowner hereby acknowledge and agree that (i) the Secretary shall
be entitled, but not be required, to issue to the Depository an
instruction, notice or any other type of directive that would
constitute an "entitlement order" within the meaning of Section
8-102(a)(8) of the New York Uniform Commercial Code (collectively, an
"Entitlement Order") concerning the Securities Accounts and (ii) the
Depository shall immediately cease complying with any Request, Request
for Payment, instruction, notice or any other type of directive that
would constitute an Entitlement Order from the Shipowner. In the event
that a Default has been cured or waived as provided in Article VI
hereof, the Secretary and the Shipowner hereby acknowledge and agree
that the Secretary shall deliver a written notice to the Depository
that (i) the Secretary is no longer exercising exclusive control over
the Securities Accounts and that the Notice of Exclusive Control
previously delivered is theretofore without effect and (ii) the
Depository shall thereafter comply with any Request, Request for
Payment, instruction, notice or any other
10
<PAGE> 64
type of directive that would constitute an Entitlement Order from the
Shipowner."
SECTION 3. The "Notice of Preferred Mortgages and Charter" referred to
in Section 2.12 of Exhibit 1 of the Security Agreement is hereby amended in its
entirety to conform to the form of such notice set forth in the Bareboat Charter
of even date herewith.
SECTION 4. Article Fifth (y) of the Special Provisions of the Security
Agreement is hereby deleted in its entirety and Article Fifth (z) is hereby
amended by re-lettering it as Article Fifth (y).
ARTICLE SEVENTH
MISCELLANEOUS
SECTION 1. Schedule X to the Security Agreement is hereby deleted and
substituted by Schedule X in the form attached hereto.
SECTION 2. This Amendment is executed as and shall constitute an
amendment to and be incorporated into and made a part of the Security Agreement.
All of the terms and provisions of the Security Agreement as supplemented hereby
shall continue to be and shall remain in full force and effect.
SECTION 3. For all purposes of this Amendment, unless otherwise
expressly provided or unless the context otherwise requires, the terms used
herein which are defined in Schedule X to the Security Agreement, Contract No.
MA-9880, dated as of November 25, 1980, including Amendment No. 1 thereto dated
October 18, 1991, and this Amendment, between the United States and the Assuming
Shipowner, or by reference therein to other instruments or agreements, shall
have the respective meanings stated in said Schedule X to the Security Agreement
or such other instruments or agreements.
SECTION 4. This Amendment may be executed in any number of
counterparts, and each such counterpart shall for all purposes be deemed to be
an original.
SECTION 5. This Amendment and the rights and obligations of the parties
hereto, shall in all respects be governed by, construed and enforced in
accordance with the federal laws of the United States of America, but if they
are inapplicable, then in accordance with the laws of the State of New York,
including Section 5-1401 of the General Obligations Law of the State of New
York.
SECTION 6. If any term of the Security Agreement, as amended by this
Amendment, or any application thereof shall be invalid or unenforceable, the
remainder of the Security Agreement, as amended hereby, and any other
application of such term shall not be affected thereby.
11
<PAGE> 65
IN WITNESS WHEREOF, this Amendment has been executed by the parties
hereto as of the day and year first above written.
STATE STREET BANK AND TRUST COMPANY, not in
its individual capacity but solely as owner
trustee under the Trust Agreement dated as
of November 13, 1980, as amended, for the
benefit of the owner participant named
therein,
Assigning Shipowner
By: ______________________________
Name:_________________________
Title:________________________
Attest:
By: ________________________
<PAGE> 66
JULIUS OWNER CORPORATION,
Assuming Shipowner
By:_____________________________
Name:________________________
Title:_________________________
Attest:
By:______________________
<PAGE> 67
UNITED STATES OF AMERICA
SECRETARY OF TRANSPORTATION
By: MARITIME ADMINISTRATION
(Seal) By: ______________________________
Attest:
By: ________________________
<PAGE> 68
4.02.01(a)
SECOND ENDORSEMENT
TO SECRETARY'S NOTE
(ITB FRANCES HAMMER)
(TO BE RENAMED SMT CHEMICAL EXPLORER)
The undersigned, Frances Owner Corporation, a Delaware corporation (the
"Assuming Shipowner"), hereby assumes the obligations of State Street Bank and
Trust Company, a Massachusetts trust company, not in its individual capacity but
solely as owner trustee under the Trust Agreement dated as of November 13, 1980,
as amended (the "Trust Agreement"), for the benefit of the owner participant
named therein, as shipowner, under the promissory note dated September 16, 1981
(the "Secretary's Note"), made by Hartford National Bank and Trust Company, not
in its individual capacity but solely as owner trustee under the Trust Agreement
to the United States of America represented by the Secretary of Transportation,
acting by and through the Maritime Administrator (the "Secretary"), which
Secretary's Note was made pursuant to the provisions of the Security Agreement
hereinafter referred to, and was previously endorsed in a First Endorsement to
Secretary's Note dated October 18, 1991, by The Connecticut National Bank, not
in its individual capacity but solely as owner trustee under the Trust
Agreement.
Capitalized terms used herein and not separately defined herein have
the respective meanings set forth in Schedule X to the Security Agreement,
Contract No. MA-9892, dated as of November 25, 1980, including Amendment No. 1
thereto dated October 18, 1991, and Amendment No. 2 thereto dated the date
hereof, between the Shipowner and the Secretary.
The Assuming Shipowner hereby confirms that as assumed hereby the
Secretary's Note remains in full force and effect. As of the date of this Second
Endorsement, the Assuming Shipowner and the Secretary agree that the outstanding
amount of the Secretary's Note is $10,969,000.
Dated: _________________, 1999
FRANCES OWNER CORPORATION,
Assuming Shipowner
By:_____________________________
Name:________________________
Title:_________________________
Attest:
______________________
<PAGE> 69
4.02.01(b)
SECOND ENDORSEMENT
TO SECRETARY'S NOTE
(ITB JULIUS HAMMER)
(TO BE RENAMED SMT CHEMICAL TRADER)
The undersigned, Julius Owner Corporation, a Delaware corporation (the
"Assuming Shipowner"), hereby assumes the obligations of State Street Bank and
Trust Company, a Massachusetts trust company, not in its individual capacity but
solely as owner trustee under the Trust Agreement dated as of November 13, 1980,
as amended (the "Trust Agreement"), for the benefit of the owner participant
named therein, as shipowner, under the promissory note dated March 18, 1981 (the
"Secretary's Note"), made by Hartford National Bank and Trust Company, not in
its individual capacity but solely as owner trustee under the Trust Agreement to
the United States of America represented by the Secretary of Transportation,
acting by and through the Maritime Administrator (the "Secretary"), which
Secretary's Note was made pursuant to the provisions of the Security Agreement
hereinafter referred to, and was previously endorsed in a First Endorsement to
Secretary's Note dated October 18, 1991, by The Connecticut National Bank, not
in its individual capacity but solely as owner trustee under the Trust
Agreement.
Capitalized terms used herein and not separately defined herein have
the respective meanings set forth in Schedule X to the Security Agreement,
Contract No. MA-9880, dated as of November 25, 1980, including Amendment No. 1
thereto dated October 18, 1991, and Amendment No. 2 thereto dated the date
hereof, between the Shipowner and the Secretary.
The Assuming Shipowner hereby confirms that as assumed hereby the
Secretary's Note remains in full force and effect. As of the date of this Second
Endorsement, the Assuming Shipowner and the Secretary agree that the outstanding
amount of the Secretary's Note is $10,401,000.
Dated: _________________, 1999
JULIUS OWNER CORPORATION,
Assuming Shipowner
By:_____________________________
Name:________________________
Title:_________________________
Attest:
______________________
<PAGE> 70
4.03(a)
BAREBOAT CHARTER
BETWEEN
FRANCES OWNER CORPORATION,
OWNER
AND
FRANCES ODS CORPORATION,
BAREBOAT CHARTERER
SEPTEMBER 29, 1999
ITB FRANCES HAMMER
(TO BE RENAMED SMT CHEMICAL EXPLORER)
<PAGE> 71
TABLE OF CONTENTS
BAREBOAT CHARTER
ARTICLE 1 -- DEFINITIONS................................................... 1
ARTICLE 2 -- DELIVERY AND ACCEPTANCE OF THE VESSEL......................... 2
ARTICLE 3 -- USE AND OPERATION OF THE VESSEL; COMPLIANCE WITH LAWS......... 3
ARTICLE 4 -- MAINTENANCE, CLASSIFICATION AND REPAIRS, INSPECTION........... 6
ARTICLE 5 -- USE OF STORES AND EQUIPMENT................................... 9
ARTICLE 6 -- BAREBOAT CHARTERER'S CHANGES; INSTALLATION OF EQUIPMENT
AND REMOVAL OF PARTS......................................... 11
ARTICLE 7 -- LIENS AND ATTACHMENTS......................................... 13
ARTICLE 8 -- INSURANCE..................................................... 16
ARTICLE 9 -- TERM OF BAREBOAT CHARTER, OPTION TO RENEW AND BASIC HIRE...... 28
ARTICLE 10 -- EVENT OF LOSS AND RIGHT TO TERMINATE.......................... 33
ARTICLE 11 -- [RESERVED].................................................... 37
ARTICLE 12 -- REQUISITION OF USE............................................ 37
ARTICLE 13 -- REDELIVERY.................................................... 42
ARTICLE 14 -- ASSIGNMENTS................................................... 44
ARTICLE 15 -- EVENTS OF BAREBOAT DEFAULT.................................... 46
ARTICLE 16 -- REPLACEMENT OF THE BAREBOAT CHARTERER......................... 55
ARTICLE 17 -- MISCELLANEOUS................................................. 55
ARTICLE 18 -- NOTICES....................................................... 58
<PAGE> 72
BAREBOAT CHARTER
ITB FRANCES HAMMER
(TO BE RENAMED SMT CHEMICAL EXPLORER)
THIS BAREBOAT CHARTER is made on __________, 1999, by and between
Frances Owner Corporation, a Delaware corporation (the "Shipowner"), and Frances
ODS Corporation, a Delaware corporation (the "Bareboat Charterer").
WITNESSETH
WHEREAS, the Shipowner desires to demise charter the Vessel to the
Bareboat Charterer and the Bareboat Charterer desires to demise charter the
Vessel from the Shipowner, in each case on the terms and conditions hereinafter
set forth; and
WHEREAS, the Shipowner, on the date hereof, is changing the name of the
Vessel to SMT CHEMICAL EXPLORER (tug) and SMT ONE (barge);
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, and for other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the Shipowner agrees to let and
demise charter and the Bareboat Charterer agrees to hire and demise charter the
Vessel on the terms and conditions hereinafter set forth.
ARTICLE 1
DEFINITIONS
The capitalized terms used herein which are defined in, or defined by
reference to, Schedule X attached hereto, as said Schedule X may be amended from
time to time as herein provided, have the meanings specified in said Schedule X.
<PAGE> 73
ARTICLE 2
DELIVERY AND ACCEPTANCE OF THE VESSEL
(a) Notwithstanding any other provision in this Bareboat Charter, the
Shipowner shall be deemed to have tendered, and the Bareboat Charterer shall be
deemed to have unconditionally accepted, delivery of the Vessel under this
Bareboat Charter "as is, where is" in whatever condition it may be, AND IT IS
AGREED THAT SHIPOWNER DOES NOT MAKE NOR SHALL BE DEEMED TO HAVE MADE ANY
WARRANTY OR REPRESENTATION, EITHER EXPRESS OR IMPLIED, AS TO THE TITLE, DESIGN,
CONDITION, VALUE, MERCHANTABILITY, OPERATION OR SEAWORTHINESS OF THE VESSEL OR,
AS TO THE QUALITY OF THE MATERIAL, EQUIPMENT OR WORKMANSHIP IN, OR AS TO THE
CONSUMABLE STORES ON BOARD, THE VESSEL, OR AS TO THE FITNESS OF THE VESSEL FOR
ANY PARTICULAR USE OR AS TO THE ELIGIBILITY OF THE VESSEL FOR ANY PARTICULAR
TRADE, OR ANY OTHER WARRANTY OR REPRESENTATION WHATSOEVER, EXPRESS OR IMPLIED,
WITH RESPECT TO THE VESSEL. The Bareboat Charterer's acceptance of the Vessel
under this Bareboat Charter, as provided in this Article 2(a), shall confirm and
be conclusive evidence, as between the Shipowner and the Bareboat Charterer,
that the Vessel is in all respects satisfactory to the Bareboat Charterer and in
compliance with all requirements of this Bareboat Charter, and the Bareboat
Charterer will not assert any claim of any nature whatsoever against the
Shipowner based on any of the foregoing matters in this Article 2(a). Nothing in
this Article 2(a) shall be construed as a waiver of any right that either the
Bareboat Charterer or the Shipowner may have against any person other than the
Shipowner or the Bareboat Charterer.
2
<PAGE> 74
(b) The Shipowner hereby agrees to provide to the Bareboat Charterer a
full set of general and detailed Plans and Specifications correct to the Vessel
as built, which shall be returned to the Shipowner upon termination of this
Bareboat Charter or replacement of the Bareboat Charterer as bareboat charterer
of the Vessel.
ARTICLE 3
USE AND OPERATION OF THE VESSEL;
COMPLIANCE WITH LAWS
(a) Subject to the terms and conditions of this Bareboat Charter, the
Bareboat Charterer shall have the full use of the Vessel and may employ the
Vessel in any part of the world and in such lawful trades and carrying such
lawful cargoes as the Time Charterer may direct and as otherwise required to
perform the Time Charter, subject to the limits of the American Institute of
Trade Warranties (the "Institute Warranties"). However, upon reasonable advance
notice to the Shipowner, the Bareboat Charterer may breach those Institute
Warranties, provided that the Bareboat Charterer shall pay any additional
premiums assessed by the Vessel's insurers for breach of the Institute's
Warranties, provided further that the Vessel shall not be operated in any area
in which the insurance required by Article 8 of this Bareboat Charter would not
be in full force and effect.
(b) Subject to the terms and conditions of this Bareboat Charter, the
Bareboat Charterer shall have exclusive 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 Period. The Master, officers and crew of the Vessel shall
be engaged and employed as directed by the Bareboat Charterer and
3
<PAGE> 75
shall remain the Bareboat Charterer's servants, navigating and working the
Vessel on behalf of and at the risk of the Bareboat Charterer. The Shipowner
shall not have any interest in any salvage moneys earned by the Vessel or
received by the Bareboat Charterer during the Charter Period. The Bareboat
Charterer assumes and shall satisfy all costs and liabilities incurred in
connection with all salvage services rendered by the Vessel. 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 Period.
(c) The Bareboat Charterer shall, at the Bareboat Charterer's expense,
throughout the Charter Period maintain, or cause to be maintained, the
documentation of the Vessel under the laws and flag of the United States in the
name of the Shipowner, and the Shipowner shall upon the request of the Bareboat
Charterer execute such documents and furnish such information, or cause to be
executed or furnished by the Shipowner or the Secretary, as the Bareboat
Charterer may reasonably require to enable the -Bareboat Charterer to maintain,
or cause to be maintained, such documentation.
(d) The Vessel shall, and the Bareboat Charterer covenants that it
will, at the Bareboat Charterer's cost and expense, at all times comply with the
requirements of all applicable laws, treaties and conventions, and all
applicable rules, regulations and orders issued thereunder, including
particularly, but without limitation by this enumeration, the International
Convention for Safety of Life at Sea, 1960, as amended, and all applicable laws,
rules, regulations and orders administered by the United States Maritime
Administration, Coast Guard, Federal Maritime Commission, Customs Service,
Environmental Protection Agency,
4
<PAGE> 76
ABS and any other United States agency, or their respective successors, having
jurisdiction in connection with the use, operation and maintenance of the Vessel
and the Bareboat Charterer covenants that it will have on board, when required
thereby, valid certificates showing compliance therewith. The Bareboat Charterer
will not suffer or permit anything to be done which might injuriously affect the
documentation of the Vessel under the laws and regulations of the United States
or the validity or the preferred status of the Mortgage or the Second Mortgage
on the Vessel under the Ship Mortgage Act, and the Bareboat Charterer will not
abandon the Vessel in a foreign port (unless advisable in connection with an
Event of Loss), engage in any unlawful trade under, or violate, any applicable
law, treaty, convention, rule, regulation or order or carry any cargo that may
expose the Vessel to penalty, forfeiture or seizure or expose the Shipowner to
penalty.
(e) The cargo principally to be carried shall be superphosphoric acid.
However, the Bareboat Charterer shall have the option of shipping petroleum
products or any other lawful cargo in bulk for which the Vessel and its tanks
are suitable, as well as any lawful merchandise in containers in the Vessel's
forehold, between decks or other suitable space available, subject to the
Master's approval as to kind, character, amount and stowage.
(f) The Shipowner and the Bareboat Charterer, each respectively, hereby
represents that it is, and covenants that it shall remain during the Charter
Period, a Citizen of the United States. In the event that the Shipowner or the
Bareboat Charterer shall fail to remain, or an event shall occur which will
cause either to no longer remain, a Citizen of the United States, then it shall
notify the other party hereto as soon as it obtains knowledge of such fact.
5
<PAGE> 77
(g) The Bareboat Charterer agrees that it shall, to the extent the
Shipowner reasonably requests, assist the Shipowner in enforcing and asserting
all rights of warranty, guarantee, indemnity, royalty, liability, patent
liability and claims of patent infringement and any other rights which it may
have with respect to the Vessel or its equipment. The Bareboat Charterer further
agrees that it shall, to the extent it has knowledge, notify the Shipowner of
any information in connection with such rights or claims.
ARTICLE 4
MAINTENANCE; CLASSIFICATION
AND REPAIRS; INSPECTION
(a) The Bareboat Charterer shall be charged with full responsibility
for and repair of the Vessel throughout the Charter Period and shall
at all times, at its own risk, expense and procurement, without expense to the
Shipowner, maintain and preserve, or cause to be maintained and preserved, the
Vessel in good condition, working order and repair, ordinary wear and tear
excepted, so that the Vessel shall be, insofar as due diligence can make it so,
tight, staunch, strong and well and sufficiently tackled, appareled, furnished,
equipped and supplied and in every respect seaworthy and in a good operating
condition. Furthermore, the Bareboat Charterer shall maintain, or cause to be
maintained, the Vessel so as to entitle it to the highest classification and
rating of ABS for vessels of the same age and type, submitting the Vessel to all
required surveys of ABS (giving the Shipowner prior written notice thereof, 45
days in advance if practicable, but otherwise as long in advance as may be
practicable under the circumstances), and annually, during the Charter Period,
shall furnish to the Shipowner copies of all certificates issued by ABS, within
20 days from receipt, evidencing the maintenance of
6
<PAGE> 78
such classification and rating. The Bareboat Charterer shall also furnish to the
Shipowner copies of all other survey and inspection reports within 20 days of
the Bareboat Charterer's receipt thereof. The cost of all repairs or changes
necessary to cause the Vessel to comply with the requirements of ABS, including
changes or additions to such requirements, shall be for the Bareboat Charterer's
account.
(b) The Vessel shall be repaired and overhauled, or caused to be
repaired and overhauled, by the Bareboat Charterer, and for the Bareboat
Charterer's account, whenever reasonably necessary, but at least as often as may
be required by applicable regulations of both the United States Coast Guard and
by ABS. The Bareboat Charterer shall, at its expense, promptly and duly comply
with all requirements of ABS in order to maintain class as provided in this
Article, including those resulting from each special survey of the Vessel. The
Vessel shall be drydocked, cleaned and the bottom painted, whenever necessary to
keep the Vessel in the condition required by the first sentence of Article 4(a)
hereof by the Bareboat Charterer, but at least as often as may be required by
applicable regulations of both the United States Coast Guard and by ABS and at
such intervals thereafter as the Shipowner shall from time to time determine.
The Bareboat Charterer shall give the Shipowner written notice of the time and
place of each such proposed drydocking 45 days in advance if practicable, but
otherwise as long in advance as may be practicable under the circumstances, in
order that the Shipowner may, if it so desires, have authorized representatives
present at such drydocking and otherwise inspect the Vessel at its own expense.
(c) Subject to any applicable laws and regulations, the Shipowner, the
Time Charterer, the Secretary, Occidental, or their authorized representatives,
shall have the right at
7
<PAGE> 79
reasonable times, on reasonable notice and at their own expense, without causing
undue delay to the Vessel's operation, to inspect the Vessel in order to
ascertain its condition and to ascertain that the Vessel is being properly
repaired and maintained in accordance with this Article 4, but inspection in
drydock shall be made only when the Vessel shall be in drydock under the
provisions of Article 4(b) hereof. The Bareboat Charterer shall make, or cause
to be made, all repairs, without expense to the Shipowner, as such inspection
may show to be required in order to meet the requirements of this Article 4. The
Bareboat Charterer shall (i) permit the Shipowner, the Secretary, Occidental, or
the Time Charterer, or their authorized representatives, to inspect the Vessel's
logs and papers whenever requested, on reasonable notice, and to a reasonable
extent, without causing undue delay to the Vessel's operation, and (ii) furnish
the Shipowner, the Secretary, Occidental, and the Time Charterer with full
information regarding any casualties or other accidents or damage to the Vessel.
(d) Within 45 days after the end of each calendar year, the Bareboat
Charterer shall deliver an Officer's Certificate to the Shipowner stating for
the portion of the Calendar Year ended during which Bareboat Charterer had
possession of the Vessel pursuant to the provisions of this Bareboat Charter:
(i) whether the Vessel has been maintained and repaired in
accordance with this Bareboat Charter;
(ii) the specifics of any material changes and any repairs
involving an amount in excess of $250,000 which have been made to the Vessel;
and
(iii) whether any drydocking occurred and the actions taken during
such drydocking.
8
<PAGE> 80
(e) Neither the Shipowner nor the Time Charterer shall have any
obligation hereunder to make any inspection or examination or shall incur any
liability or obligation by reason of not making any inspection or examination
under this Article 4.
ARTICLE 5
USE OF STORES AND EQUIPMENT
(a) A complete inventory of the Vessel's entire equipment, outfit,
appliances and of all consumable stores on board the Vessel shall be made by the
Bareboat Charterer in conjunction with the Shipowner or its designee on or
before the commencement of this Bareboat Charter and again upon termination of
this Bareboat Charter or replacement of the Bareboat Charterer as bareboat
charterer of the Vessel. The Shipowner and the Bareboat Charterer acknowledge
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
Bareboat Charterer will be the property of the Time Charterer, but may be
utilized by the Bareboat Charterer in performing its obligations under the
provisions of this Bareboat Charter. 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.
(b) The Bareboat 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 Bareboat Charterer, as evidenced by the
inventory of such items supplied by the Shipowner on the Delivery Date. The same
or
9
<PAGE> 81
their substantial equivalent shall be returned to the Shipowner upon
redelivery of the Vessel pursuant to Article 13 hereof 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 Bareboat Charterer in kind at or before redelivery or, at the Shipowner's
option, the Bareboat Charterer may pay the Shipowner for such items which are
not required for the operation of the Vessel at the current market prices
therefor (including transportation and installation costs) at the port and time
of redelivery.
(c) The Bareboat Charterer shall provide, or cause to be provided, at
its own expense, such additional outfit, furniture, furnishings, appliances,
spare and replacement parts, tools and stores, not required by Articles 3(d) or
4(a) hereof, as may be required for the operation of the Vessel under the Time
Charter. Such additional property so provided shall not become part of the
Vessel but shall remain the property of the Bareboat Charterer, and the Bareboat
Charterer may, but need not, remove the same, without expense to the Shipowner,
at or before such redelivery, provided that if such property is removed the
Vessel shall be restored prior to redelivery to the condition it would have been
in if such property had never been installed, ordinary wear and tear excepted.
Any item of such property which is on board the Vessel and not so removed at the
time of such redelivery shall become the property of the Shipowner.
(d) All outfit, equipment, furniture, furnishings, appliances, spare
and replacement parts, tools and stores as shall be installed or placed on board
the Vessel in order to comply with Articles 3(d) or 4(a) hereof shall,
immediately upon such installation or replacement on
10
<PAGE> 82
board and without necessity of further act, become part of the Vessel and the
property of the Shipowner.
ARTICLE 6
BAREBOAT CHARTERER'S CHANGES; INSTALLATION
OF EQUIPMENT AND REMOVAL OF PARTS
(a) The Bareboat Charterer shall make, or cause to be made, at its sole
cost and expense, any structural change or alteration in the Vessel and install
any additional equipment on the Vessel, which is required by Articles 3(d) or
4(a) hereof. In addition to any changes in the Vessel required to comply with
the provisions of Articles 3(d) or 4(a) hereof, the Bareboat Charterer may,
subject to the approval of the Secretary to the extent required by the Security
Agreement or of Occidental to the extent required by the Second Mortgage, at its
sole cost and expense, make any additional structural changes and alterations in
the Vessel, but with the prior written consent of the Shipowner; provided,
however, that such changes and alterations do not (i) diminish the
seaworthiness, utility or market value of the Vessel, (ii) adversely affect the
ABS classification and rating required to be maintained hereunder, (iii)
conflict with or result in a violation of any other provisions of this Bareboat
Charter or (iv) require the Vessel to be re-documented. All such changes and
alterations shall be expeditiously completed in good and workmanlike manner, and
all equipment and material installed in connection therewith shall, without
necessity of further act, become part of the Vessel and the property of the
Shipowner.
(b) Subject to the provisions of Articles 3(d) and 4(a) hereof and with
the written permission of the Time Charterer, the Bareboat Charterer may install
or cause to be installed any pumps, gear or equipment it may require in addition
to that on board the Vessel at the time
11
<PAGE> 83
of delivery thereof, provided that such installations are accomplished without
expense to the Shipowner. Pumps, gear and equipment so installed shall without
necessity of further act, become part of the Vessel and the property of the
Shipowner; provided, however, that any time prior to redelivery of the Vessel
pursuant to Article 13 hereof, and so long as no event of Bareboat Default shall
have occurred and be continuing, any such pumps, gear or equipment not required
to be installed in order to meet the requirements of Article 3(d) or of Article
4(a) hereof and not installed as replacement for property on board the Vessel at
the time of delivery thereof, may be removed by the Bareboat Charterer, at its
own expense, provided that the Vessel is restored prior to such redelivery to
the condition it would have been in if such pumps, gear or other equipment had
never been installed, ordinary wear and tear excepted; otherwise such pumps,
gear and equipment remaining on board at such redelivery shall, without
necessity of further act, remain the property of the Shipowner.
(c) Subject to provisions of Articles 3(d) and 4(a) hereof, the
Bareboat Charterer may, in the ordinary course of maintenance, repair or
overhaul of the Vessel, remove or cause to be removed any item of property
constituting a part of the Vessel, provided such item of property, other than
pumps, gear or equipment installed pursuant to Article 6(b) hereof, is replaced
as promptly as possible by an item of property which is free and clear of all
security interests, liens, encumbrances and rights of others, is in a good
operating condition, renders the Vessel as seaworthy and has a value and utility
at least equal to the item of property being replaced. Any item of property
removed from the Vessel as provided in the preceding sentence shall be disposed
of in a good faith manner with any proceeds resulting therefrom being
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credited against Operating Costs. Any such replacement item of property shall,
without necessity of further act, become part of the Vessel and the property of
the Shipowner.
(d) The Bareboat Charterer shall have the right to paint the Vessel in
its own colors or those of any subcharterer or other user of the Vessel, to name
or re-name the Vessel or permit any such subcharterer or user to name or re-name
the Vessel, to install and display its or such subcharterer's or user's stack
insignia and to fly its or such subcharterer's or user's house flag, all without
expense to the Shipowner, and the Bareboat Charterer shall remove, or cause to
be removed, such flag and insignia, and, at its own expense, if requested by the
Shipowner, shall remove, or cause to be removed, any distinctive colors, prior
to redelivery.
(e) Basic Hire shall continue unabated during any construction
undertaken to change the Vessel. The Shipowner, the United States, and
Occidental shall be named as additional assureds on any builder's risks or other
insurance policy entered into by or for the benefit of the Bareboat Charterer
incident to construction undertaken to change the Vessel.
ARTICLE 7
LIENS AND ATTACHMENTS
(a) If the Vessel is ever libeled or otherwise attached, levied upon or
taken into custody, or detained or sequestered, by virtue of any proceeding in
any court or tribunal, or by any governmental or other authority, in any country
or nation of the world, on account of any mortgage, pledge, lien, encumbrance or
claim on or with respect to the Vessel or its profits, the Bareboat Charterer
shall immediately give notice thereof to the Shipowner, the Secretary and
Occidental by electronic means, confirmed by letter, and, subject to the
obligations of the Bareboat Charterer under the next sentence of this Article
7(a), the Time Charterer in the Time
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Charter has agreed, at its sole cost and expense promptly to take or cause to be
taken such action as may be necessary to cause the Vessel to be released, and
such liens or claims to be discharged, within a reasonable time not exceeding 30
days. If any such mortgage, pledge, lien, encumbrance or claim arises, or in the
event that the Vessel shall be libeled or otherwise attached, levied upon or
taken into custody, or detained or sequestered, by virtue of any proceeding in
any court or tribunal, or by any governmental or other authority, on account of
any liens or claims against the Bareboat Charterer, any person or entity related
to the Bareboat Charterer or any other Person operating the Vessel on behalf of
the Bareboat Charterer, which such liens or claims are unrelated to the Bareboat
Charterer's chartering of the Vessel or, if related, result from the Bareboat
Charterer's failure properly to apply funds paid by the Time Charterer as
Operating Costs, the Bareboat Charterer agrees that it shall promptly, at its
own cost and expense, remove or cause to be removed such mortgage, pledge, lien,
encumbrance or claim, and cause the Vessel to be released, and cause all liens
and claims on the Vessel in connection with such libel or other action to be
discharged (whether by furnishing a surety bond or otherwise), within a
reasonable time not exceeding 30 days.
(b) After the execution of this Bareboat Charter, no additional
mortgage, lien, charge or other encumbrance shall be placed on the Vessel or its
profits by the Bareboat Charterer without the prior written consent of the
Shipowner, the Secretary and Occidental.
(c) Neither the Shipowner, the Bareboat Charterer, any sub-bareboat
charterer, time charterer, the Master of the Vessel, nor 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 mortgage, lien, charge or other
encumbrance whatsoever except:
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(1) the liens of the Mortgage and the Second Mortgage; and
(2) this Bareboat Charter and any assignments and subcharters permitted
under this Bareboat Charter; and
(3) liens for Crew's Wages, for salvage (including contract salvage)
and general average which are:
(i) not yet due and payable, or
(ii) either unclaimed or covered by insurance, or
(iii) being contested by appropriate proceedings diligently
conducted so long as such proceedings do not involve a significant risk of a
sale, forfeiture or loss of the Vessel; and
(4) contract and tort liens arising out of or incident to current
operations of, or repairs to, the Vessel (except for liens for Crew's Wages,
salvage and general average) which are subordinate to the liens of the Mortgage
and the Second Mortgage or liens covered by insurance or includable in any
deductible applicable thereto and which are:
(i) based on claims not yet due and payable, or
(ii) being contested by appropriate proceedings diligently
conducted so long as such proceedings do not involve a significant risk of a
sale, forfeiture or loss of the Vessel.
(d) The Bareboat Charterer agrees to warrant and defend the title to,
and the possession of, the Vessel against the claims of all persons arising
during the Charter Period. The Bareboat Charterer agrees to cause a true copy of
this Bareboat Charter, and a certified copy of the Mortgage and the Second
Mortgage, as furnished by the Shipowner, to be placed with the Vessel's papers
on board the Vessel and to exhibit, or cause to be exhibited, the same,
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on demand, to any person having business with the Vessel which may give rise to
a maritime lien upon the Vessel or to the sale, conveyance, mortgage or charter
thereof, and, on demand, to any representative of the Shipowner.
(e) The Bareboat Charterer shall cause to be placed and prominently
displayed in the Master's cabin or office and the chart room of the tug a framed
printed notice, of such size that the printed matter covers a space not less
than six inches in width and nine inches in length, and on the barge, a notice
not less than six inches in width and nine inches in length, affixed by means of
a durable plate, in both cases reading as follows:
"NOTICE OF PREFERRED MORTGAGES AND CHARTER
This Vessel is owned by Frances Owner Corporation, a Delaware
corporation and (i) is covered by a First Preferred Fleet
Mortgage dated as of Sept. 16, 1981, in favor of the United
States of America, under authority of Chapter 313, Title 46 of
the United States Code, as amended and supplemented, (ii) is
covered by a Second Preferred Fleet Mortgage dated ____, 1999,
in favor of Occidental Petroleum Corporation, under authority
of Chapter 313, Title 46 of the United States Code, and (iii)
is under bareboat charter (the "Bareboat Charter") dated ____,
1999, to Frances ODS Corporation (the "Bareboat Charterer").
Under the terms of said Mortgages and said Bareboat Charter,
neither the Shipowner, Bareboat Charterer, the Master of this
Vessel, nor any other person has any right, power or authority
to create, incur or impose, or permit to be placed, or
imposed, upon this Vessel any lien other than statutory liens
of the Mortgages or incident to current operations of this
Vessel and certain liens in favor of the United States of
America."
ARTICLE 8
INSURANCE
(a) The Bareboat Charterer shall provide and maintain, or cause to be
provided and maintained, at its own expense, insurance on or with respect to the
Vessel and the operation thereof during the Charter Period as follows:
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(1) Marine navigating risk hull and machinery insurance or port risk
hull and machinery insurance (when permitted under this Article 8 (a)) and
marine war navigating risk hull and machinery insurance, together with increased
value and total loss only insurance, in each case to the extent permitted by
such policies. During the Original Term, such insurance (including such
increased value and total loss only insurance) shall be in amounts aggregating
at all times not less than the greater of 105 percent of the then Stipulated
Loss Value or the full commercial value (as determined by the Secretary pursuant
to the Security Agreement, until the Security Agreement shall have been
discharged) of the Vessel, but in no event less than 110 percent of the
aggregate unpaid principal amount of Obligations then Outstanding, including
obligations under the Second Mortgage. During any Renewal Term, such insurance
shall be in amounts aggregating at all times not less than the full commercial
value of the Vessel. While being operated, the Vessel shall always be covered by
marine navigating risk hull and machinery insurance and marine war navigating
risk hull and machinery insurance. When and while the Vessel is idle or laid up,
in lieu of the aforesaid marine navigating risk hull and machinery insurance and
increased value and other forms of total loss insurance, the Bareboat Charterer
may take out port risk hull and machinery insurance; provided, however, that at
all times the Vessel shall be covered by marine war navigating risk hull and
machinery insurance. Any of the foregoing insurance may provide for a deductible
amount approved by the Secretary, Occidental, and the Shipowner, but no consent
or approval shall be required for a deductible amount of up to an aggregate of
$500,000 with respect to any accident, occurrence or event other than an actual
or constructive total loss of the Vessel in any one year. Any such deductible
amount provided for in insurance required to be provided and maintained during
the
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Renewal Term shall be agreed in advance of such Renewal Term by the Bareboat
Charterer and the Shipowner.
All policies of insurance required under this Article 8(a)(1) shall,
unless the Secretary, Occidental, and the Shipowner shall otherwise consent in
writing, provide that in the event of an actual or constructive total loss of
either of the hulls of the Vessel, the full aggregate amount for which both
hulls are insured under any such policies shall be payable (i) until the
Security Agreement shall have been discharged, to the Secretary, except as
provided in Article 8(c)(2) hereof, and (ii) thereafter, to the Shipowner.
(2) Marine and war risk protection and indemnity insurance and, at the
Bareboat Charterer's option, excess protection and indemnity insurance and
marine multi-liability insurance. During the Charter Period, the foregoing
insurance shall be against such risks and in such form as are, and the amount of
such insurance shall be not less than such amounts as are, in the opinion of the
insurance broker expressed in its most recent report delivered in accordance
with, but subject to, the provisions of Article 8(g) hereof, necessary or
advisable for the protection of the interests of the Shipowner; provided,
however, that during the Original Term such insurance to the extent obtainable
shall be in amounts aggregating not less than the greater of (i) 105 percent of
the then Stipulated Loss Value of the Vessel, (ii) the full commercial value
(as determined by the Secretary) of the Vessel, (iii) 110 percent of the
aggregate principal amount of the obligations then Outstanding, including the
obligations under the Second Mortgage, or (iv) such amount, which is then
reasonably obtainable by prudent shipowners and managing agents, as may be
approved from time to time by the Secretary, and provided further, that during
any Renewal Term such insurance to the extent obtainable shall be
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in amounts aggregating not less than the full commercial value of the Vessel (as
determined by the Bareboat Charterer and not disapproved by the Shipowner in the
reasonable exercise of its discretion within 30 days after its receipt of a
notice of such determination, or in the absence of agreement, as determined by
the Appraisal Procedure). The Shipowner shall have the right to require that
such insurance provide for deductibles in amounts approved by the Secretary, but
that no consent or approval shall be required if such deductibles aggregate not
more than $250,000 with respect to any accident, occurrence or event and
$250,000 with respect to each cargo or property carried. (3) Insurance against
liability under law or international convention arising out of pollution,
spillage or leakage. Subject to the provisions of the next sentence, during the
Charter Period, the foregoing insurance shall be against such risks and in such
forms as are, and the amount of such insurance shall be not less than such
amounts as are, in the opinion of the insurance broker expressed in its most
recent report delivered in accordance with, but subject to, the provisions of
Article 8(g) hereof, necessary or advisable for the protection of the interests
of the Shipowner. During the Charter Period, such insurance to the extent
obtainable shall be in an amount equaling at all times not less than
$700,000,000 with respect to any occurrence.
(4) Such insurance to the extent obtainable on or with respect to the
Vessel and the operation thereof as the Shipowner is required to provide and
maintain pursuant to the terms of the Security Agreement and the Second
Mortgage.
(b) (1) All insurance required to be taken out and maintained pursuant
to the terms of this Bareboat Charter shall include the United States (as
Mortgagee under the Mortgage), Occidental (as Mortgagee under the Second
Mortgage), the Shipowner, the
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Bareboat Charterer, the Time Charterer, and any sub-charterer and operator of
the Vessel which is an Affiliate of the Bareboat Charterer as additional
assureds as their interests may appear, and the policies or certificates of
insurance shall provide that there shall be no recourse against the Shipowner,
the Bareboat Charterer, the United States or Occidental for the payment of
premiums, commissions, club calls, assessments or advances.
(2) All insurance carried pursuant to Article 8(a) hereof shall contain
provisions or endorsements (A) waiving the insurer's right to subrogation
against the United States (as Mortgagee under the Mortgage), Occidental (as
Mortgagee under the Second Mortgage), the Shipowner, the Bareboat Charterer, the
Time Charterer, and any sub-charterer and operator of the Vessel which is an
Affiliate of the Bareboat Charterer and, to the extent obtainable, such of its
corporate Affiliates as the Bareboat Charterer shall designate, unless any such
Person shall request that a waiver of subrogation in favor of it not be
obtained, in which event it need not be, (B) stating that such insurance is
primary insurance without any right of contribution with respect to any
insurance carried by or on behalf of the Shipowner , other than as provided
pursuant to this Bareboat Charter, on the same interest insured and (C) stating
that inasmuch as such insurance covers more than one insured person, all terms,
conditions and exclusions shall be treated as if a separate policy of insurance
were issued to each insured, and the inclusion in the policies of more than one
assured shall not operate to increase the liability of the insurers.
(3) Except with respect to the Hull War Risks and Strikes Clauses to
which 14 days' notice or Automatic Termination provisions apply and except with
respect to the Protection and Indemnity insurance to which a 14 day notice
provision applies, the policies in
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respect of insurance carried pursuant to Article 8(a) hereof shall provide that
at least 10 days (and to the extent reasonably available, 30 days') prior notice
by United States certified mail, return receipt requested, shall be given to the
Shipowner, the Bareboat Charterer, the Secretary and Occidental by the
underwriters of any cancellation for the nonpayment of premiums, commissions,
club calls, assessments or advances. Each policy in respect of such insurance
shall further provide, to the extent reasonably available from the underwriter
of such policy, that at least 30 days' prior notice by United States certified
mail, return receipt requested, shall be given to the Shipowner, the Bareboat
Charterer, the Secretary and Occidental by the underwriter of any termination,
cancellation, lapse or material modification of the terms of such policy. If the
Bareboat Charterer receives, but the Shipowner does not receive, any notice
referred to in the preceding sentence, the Bareboat Charterer shall promptly
deliver a copy of such notice to the Shipowner, the Secretary and Occidental.
(c) All policies of insurance required to be taken out and maintained
pursuant to the terms of this Bareboat Charter or other evidence thereof shall
provide that losses thereunder shall be payable (i) until the Security Agreement
shall have been discharged, to the Secretary for application pursuant to the
Security Agreement and thereafter to Occidental pursuant to the Second Mortgage,
and (ii) thereafter, to the Shipowner; provided, however, that such policies of
insurance or other evidence thereof shall provide that:
(1) in the case of insurance carried pursuant to Article 8(a)(2) hereof
or Section 2.07(e) of Exhibit 1 to the Security Agreement or the provisions of
the Second Mortgage:
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(i) if neither the Shipowner nor the Bareboat Charterer has incurred
the loss, damage or expense in question, any loss under such insurance may be
paid directly to the Person by whom any liability covered by such policies or
certificates has been incurred (whether or not a Default under the security
Agreement then exists), and
(ii) if the Shipowner or the Bareboat Charterer shall have incurred the
loss, damage or expense in, question, and shall have presented to the
underwriters satisfactory evidence that the liability insured against has been
discharged or is being discharged simultaneously with such payment, any such
loss under such insurance shall be paid to the Shipowner or the Bareboat
Charterer, as the case may be, in reimbursement, if there is no existing Default
under the Security Agreement or the Second Mortgage of which the underwriter has
written notice from the Shipowner, the Bareboat Charterer or the Secretary, or,
if there is such an existing Default, to the Secretary to be held and applied
pursuant to the Security Agreement; and thereafter to Occidental pursuant to the
Second Mortgage; and
(2) in the case of insurance carried pursuant to Article 8(a)(1) hereof
or Section 2.07(b) of Exhibit 1 to the Security Agreement or the Second
Mortgage, so long as the accident, occurrence or event does not result in an
Event of Loss, payment of all losses up to $250,000 (or such higher figure as
the Secretary may from time to time approve) by all insurance underwriters with
respect to any one accident, occurrence or event may be made (i) directly for
the repair or other charges involved, or (ii) directly to the Bareboat Charterer
as reimbursement if the Bareboat Charterer shall have first fully repaired the
damage and paid the cost thereof and the other charges involved, and the
underwriters shall have received evidence of such repair and payment or that
such payment will be made simultaneously with the payment
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<PAGE> 94
by the underwriters; provided, however, that the underwriters shall not have
received written notice from the Secretary, Occidental, the Bareboat Charterer
or the Shipowner as to the occurrence of a Default under the Security Agreement
or the Second Mortgage or, if so, have been notified by the Secretary in writing
that such Default under the Security Agreement or by Occidental in writing that
such Default under the Second Mortgage has been cured or waived.
(d) In the event that a claim is made against the Vessel for loss,
damage or expense which is covered by insurance, and it is necessary for the
Bareboat Charterer to obtain a bond or to supply other security to prevent
arrest of the Vessel or to release the Vessel from arrest on account of said
claim, the Shipowner shall on request of the Bareboat Charterer, assign to any
person executing a surety or guarantee bond or other agreement to save or
release the Vessel from such arrest, all right, title and interest of the
Shipowner in and to said insurance covering said loss, damage or expense as
collateral security to indemnify against liability under said bond or other
agreement; provided, however, that (i) the Secretary shall have advised the
Shipowner that the United States has so assigned its right, title and interest
in and to such insurance proceeds and (ii) no Event of Bareboat Default shall
have occurred and be continuing.
(e) The Bareboat Charterer shall have the duty and responsibility to
make, or cause to be made, at its own expense, all proofs of loss and take or
cause to be taken any and all other steps necessary to effect prompt collections
from underwriters for any loss under any insurance on or with respect to the
Vessel or the operation thereof pursuant to Article 8(a) hereof. The Shipowner
shall cooperate in making all proofs of loss and take all other reasonable steps
necessary to effect collection from underwriters.
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(f) The insurance provided and maintained on or with respect to the
Vessel or the operation thereof in accordance with this Bareboat Charter shall
be on such forms of policies or other evidence thereof as are required by
Section 2.07 of Exhibit 1 to the Security Agreement until the Security Agreement
shall have been satisfied and discharged and thereafter as required by the
Second Mortgage, and thereafter as are recommended by the insurance brokers
referred to in Article 8(g) hereof as being customary at the time for vessels of
similar size, type, trade and cargo.
(g) (1) The Bareboat Charterer shall furnish, or cause to be furnished,
to the Shipowner, the Secretary (so long as the Security Agreement shall not
have been satisfied and discharged), and Occidental (so long as the Second
Mortgage shall not have been satisfied and discharged) on the Delivery Date and
on each annual anniversary thereafter, a detailed report, signed by marine
insurance brokers designated by the Bareboat Charterer satisfactory to the
Shipowner and the Secretary (so long as the Security Agreement shall not have
been satisfied and discharged) and Occidental (so long as the Second Mortgage
shall not have been satisfied and discharged), describing the insurance carried
and maintained on or with respect to the Vessel and the operation thereof and
stating, in effect, that such insurance complies in all respects with the
applicable requirements of this Bareboat Charter, the Security Agreement and the
Second Mortgage.
(2) Such report shall state that in the opinion of such insurance
broker, the liability insurance referred to in Articles 8(a)(2) and 8(a)(3)
hereof then carried on the Vessel is against such respective risks and in such
respective forms as are, and the respective amounts of such insurance are not
less than such amounts as are, necessary or advisable for the protection
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of the interest of the Shipowner. Such report shall further state that, in the
opinion of such insurance broker, all insurance carried pursuant to Article 8(a)
hereof is underwritten by satisfactory insurance companies, underwriters
associations or underwriting funds.
(3) In connection with any insurance obtained by the Bareboat Charterer
under this Article 8, the Bareboat Charterer will cause such insurance broker to
agree (i) to advise the Shipowner, the Secretary and Occidental promptly of any
default in the payment of any premium, commission, club call, assessment or
advance required (whether for new insurance or for insurance replacing, renewing
or extending existing insurance) and of any other act, omission or event of
which such insurance broker has knowledge and which in its sole judgement (A)
might invalidate or render unenforceable, or cause the cancellation or lapse or
prevent the renewal or extension of, in whole or in part, any insurance carried
pursuant to Article 8(a) hereof, (B) or might result in any material
modification of the terms of any such insurance or (C) has or might result in
any such insurance not being in compliance with the applicable requirements of
this Bareboat Charter, the Security Agreement and the Second Mortgage, and (ii)
to furnish the Shipowner, the Secretary and Occidental from time to time, upon
request, detailed information with respect to any of the insurance carried on or
with respect to the Vessel or the operation thereof.
(4) At any time during the Charter Period, the Bareboat Charterer's
insurance broker which is then acting pursuant to Article 8(g)(1) hereof may
(but shall not be obligated hereto to do so) furnish to the Secretary,
Occidental, and the Shipowner a report, in addition to the report required
pursuant to Article 8(g)(1) hereof, to the effect that, in the opinion of such
insurance broker, the amount of any liability insurance referred to in Articles
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8(a)(2) or 8(a)(3) hereof then carried on the Vessel is either higher or lower
than an amount (the "New Amount"), specified in such additional report, which is
necessary or advisable for the protection of the interests of the Shipowner. If
any such additional report is received and the New Amount specified therein for
any such liability insurance is higher than that then carried on the Vessel, the
Bareboat Charterer shall obtain, as promptly as practicable, an additional
amount of such liability insurance so that the amount thereof is at least equal
to such New Amount. If any such additional report is received and the New Amount
specified therein for any such liability insurance is lower than that then
carried on the Vessel, the Bareboat Charterer may reduce the amount of such
liability insurance, so long as the reduced amount thereof is at least equal to
such New Amount and, if such additional report relates to any liability
insurance referred to in Articles 8(a)(2) or 8(a)(3) hereof, such reduced amount
thereof is not less than the minimum amount of such insurance required to be
carried by such Articles 8(a)(2) or 8(a)(3) hereof.
(h) The Bareboat Charterer shall deliver, or cause to be delivered, to
the Secretary (so long as the Security Agreement shall not have been satisfied
and discharged) and to Occidental (so long as the Second Mortgage shall not have
been satisfied and discharged) and to the Shipowner, evidence satisfactory to
each of them that the insurance required to be provided and maintained pursuant
to this Bareboat Charter has been issued and in full force and effect.
(i) Nothing in this Article 8 shall prohibit the Bareboat Charterer, or
if the Bareboat Charterer does not in the first instance, the Shipowner, from
placing, at the expense of the Bareboat Charterer, insurance on or with respect
to the Vessel or the operation thereof in an
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amount exceeding the full commercial value of the Vessel, or 110 percent of the
aggregate principal amount of the Obligations then Outstanding or 105 percent of
the then Stipulated Loss Value, as provided in Article 8(a)(1) hereof, unless
such insurance would conflict with or otherwise limit the insurance to be
provided or maintained in accordance with Article 8(a) hereof. The Bareboat
Charterer agrees, upon receipt of a Request of, and payment of the premium
therefor by the Shipowner, to apply for and carry, or cause to be applied for
and carried, any insurance permitted to be carried by the Shipowner pursuant to
the preceding sentence, to the extent such insurance is available, with the
Shipowner named as the sole loss payee. The Bareboat Charterer agrees to furnish
the Shipowner and the Secretary, as the case may be, until the Security
Agreement shall have been discharged, promptly with copies of all policies
relating to such insurance.
(j) The Bareboat Charterer will cause all insurance required to be
provided and maintained by this Bareboat Charter with marine insurance
companies, underwriters associations or underwriting funds approved by the
Shipowner and, until the Security Agreement shall have been discharged, the
Secretary, which approval of the Shipowner shall not be unreasonably withheld or
delayed.
(k) The Bareboat Charterer shall not declare or agree upon a
compromised, constructive or agreed total loss of the Vessel without the prior
written consent of the Shipowner, and, until the Security Agreement shall have
been discharged, the Secretary and thereafter Occidental while the Second
Mortgage is in effect.
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ARTICLE 9
TERM OF BAREBOAT CHARTER, OPTION
TO RENEW AND BASIC HIRE
(a) Unless sooner terminated in accordance with its terms, this
Bareboat Charter shall be in effect from the Effective Date for the balance of
the Original Term then remaining and shall be extended for the same period as
the Time Charter is extended pursuant to the provisions of Section 3.2 of the
Time Charter.
(b) The Bareboat Charterer shall, on each Charter Hire Payment Date,
pay in immediately available funds to the Shipowner as hire for the use and
services of the Vessel during the continuance of this Bareboat Charter Basic
Hire an amount equal to the amount of principal and interest then due on the
Obligations. The Bareboat Charterer shall also pay as Supplemental Hire when the
same shall become due: directly to the Indenture Trustee during the period any
Obligations are outstanding, the Indenture Trustee Fees; directly to the
Secretary during the period any Obligations are outstanding, the Guarantee Fees
and directly to the Depository during the period any Obligations are
outstanding, the Depository Fees. Payments made by a Guarantor pursuant to its
Guarantee shall, to the extent of such payments, be deemed payments made by
Bareboat Charterer to the Shipowner pursuant to this Article 9(b). Payment of
Indenture Trustee Fees, Guarantee Fees and Depository Fees need not be paid in
immediately available funds.
(c) In the event any amount of Basic Hire payable pursuant to the first
sentence of this Article 9 is not paid when due as provided in this Article 9,
the Bareboat Charterer promises to pay promptly, upon demand, in addition to
such amount of Basic Hire, interest (i) to, or on the order of the Shipowner in
an amount equal to the amount of the penalty interest
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due for the nonpayment of principal of, and interest specified in the
Obligations as a result of non-payment when due of such principal of, premium,
if any, and interest on such Obligations, and (ii) to the Shipowner at the
Interest Rate as applied to the amount of such unpaid Basic Hire (other than any
unpaid Basic Hire payable in respect of principal of, premium, if any, and
interest on the Obligations), for the period from the due date of such Basic
Hire until the date of payment thereof. Payments of such interest made by a
Guarantor pursuant to its Guarantee shall, to the extent of such payments, be
deemed payments made by Bareboat Charterer pursuant to this Article 9(c).
(d) In the event any amount of Stipulated Loss Value or
Supplemental Hire (including any amount payable under Article 15(c) hereof) is
not paid when due pursuant to this Bareboat Charter, the Bareboat Charterer
promises to pay, in addition to such amount of Stipulated Loss Value or
Supplemental Hire, interest promptly upon demand (i) to, or on the order of, the
Shipowner, in an amount equal to the amount of the penalty interest due for the
nonpayment of the principal of, premium, if any, and interest specified in the
Obligations as a result of non-payment when due of such principal of, premium,
if any, and interest on the Obligations, and (ii) to the Shipowner at the
Interest Rate as applied to the amount of such unpaid Stipulated Loss Value or
Supplemental Hire (other than any unpaid portions of such amounts payable in
respect of principal of, premium, if any, and interest on the Obligations) for
the period from the due date of such unpaid Stipulated Loss Value or
Supplemental Hire until the date of payment thereof.
(e) It is understood and agreed that all provisions of this
Bareboat Charter are under all circumstances to be construed and applied so that
the Shipowner will at all times be paid
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when due, whether or not the Shipowner has performed under this Bareboat
Charter, any and all amounts payable to it during the Charter Period pursuant to
any of the provisions of this Bareboat Charter and without setoff or adjustment
for any claim whatsoever of the Bareboat Charterer. In addition, the Bareboat
Charterer hereby agrees that, in the event that the Shipowner fails to perform
any covenant or obligation under this Bareboat Charter, the Bareboat Charterer
shall nevertheless make all payments required to be made by it hereunder, when
due, and otherwise perform all of its obligations hereunder, provided, however,
to the extent that a Guarantor, pursuant to its Guarantee makes any payment
required to be made by the Bareboat Charterer hereunder, or performs any
obligation required to be performed by the Bareboat Charterer hereunder, such
payment or performance shall be deemed, solely as between the Shipowner and the
Bareboat Charterer, to be performance or payment by the Bareboat Charterer
hereunder to the extent of the amounts so paid by such Guarantor or Occidental.
Nothing in this Article 9(e) shall be, or shall be deemed to be, a waiver by the
Bareboat Charterer of any rights against the Shipowner under any specific
indemnity in this Bareboat Charter.
(f) This Bareboat Charter may not be cancelled or terminated,
except in accordance with the express provisions hereof, for any reason
whatsoever, and the Bareboat Charterer shall have no right to be relieved or
discharged from any obligation or liability under this Bareboat Charter, except
as otherwise expressly provided herein, for any reason whatsoever. The Bareboat
Charterer hereby waives, to the extent permitted by applicable law, any and all
rights which it may now have or which at any time hereafter may be conferred
upon it, by statute or otherwise, to terminate, cancel, quit or surrender this
Bareboat Charter except as otherwise
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<PAGE> 102
expressly provided herein. The Bareboat Charterer acknowledges and agrees that
its obligation to pay Basic Hire, Stipulated Loss Value, Supplemental Hire, any
amounts otherwise payable under this Article 9 and any other amount to be paid
by the Bareboat Charterer hereunder shall be absolute and unconditional, under
any and all circumstances, shall not be subject to any counterclaim, setoff,
deduction, abatement or defense based upon any claim the Bareboat Charterer may
have against the Shipowner, the Shipbuilder, the Indenture Trustee or any other
person whatsoever, and shall remain in full force and effect without regard to,
and shall not be released, discharged or in any way affected by any circumstance
or condition (whether or not the Bareboat Charterer shall have any knowledge or
notice thereof), including, but not limited to: (a) any amendment or
modification of or supplement to this Bareboat Charter, any agreements relating
to any part thereof 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, (b) any failure
on the part of the Shipowner, the Indenture Trustee, or any other person to
perform or comply with any term of this Bareboat Charter or any other such
instrument or agreement; (c) any waiver, consent, change, extension, indulgence
or other action or inaction under or in respect of this Bareboat Charter, 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, reorganization, arrangement,
readjustment, composition, liquidation or similar proceeding with respect to the
Shipowner, the Indenture Trustee, the Bareboat Charterer, or any Affiliate of
any thereof, or their respective properties or creditors, or any action taken by
any court, trustee, receiver or
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liquidating agent in any such proceeding, including, without limitation, any
termination or rejection of this Bareboat Charter, or any assignment thereof by
any court, trustee, receiver or liquidating agent of the Bareboat Charterer or
the Shipowner or of any of their respective properties in any such proceeding,
(e) any limitation on the liability or obligations of the Bareboat Charterer
under this Bareboat Charter or any termination, cancellation, frustration,
invalidity, irregularity or unenforceability, in whole or in part, of this
Bareboat Charter or any term thereof or any lack of power or authority of the
Shipowner or the Bareboat Charterer to enter into this Bareboat Charter; (f) any
assignment or other transfer of this Bareboat Charter by the Bareboat Charterer
or any lien, charge or encumbrance, from whatever source arising, on or
affecting the Bareboat Charterer's estate in, or any subchartering of, all or
any part of the Vessel (whether or not pursuant to the express provisions of
this Bareboat Charter); (g) any damage to, or loss, destruction, requisition,
seizure, forfeiture or marshal's or other sale of the Vessel or any exercise of
rights with respect to the Vessel under the Mortgage or the Second Mortgage; (h)
any libel, 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; (i) any title defect or
encumbrance or any dispossession from the Vessel by title paramount or
otherwise; (j) any act, omission, misrepresentation or breach on the part of the
Shipowner or the Bareboat Charterer under this Bareboat Charter, or any other
agreement at any time existing between the Shipowner and the Bareboat Charterer
or under any statute, law or governmental regulation; (k) any other circumstance
whatsoever which might otherwise constitute a legal or equitable discharge or
defense of a bareboat charterer and irrespective of any other circumstance which
might otherwise limit the recourse against the Bareboat
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Charterer, (l) 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; (m) any ineligibility of the Vessel for documentation under
the laws of the United States; or (n) any other occurrence or condition
whatsoever, foreseen or unforeseen, whether similar or dissimilar to the
foregoing, now existing or hereafter occurring. Even though the Bareboat
Charterer shall be deprived of or limited in the use of the Vessel in any
respect or for any length of time, whether or not by reason of some act,
omission or breach on the part of the Shipowner, the Bareboat Charterer or any
other party, whether or not resulting from accident and whether or not without
fault on the part of the Bareboat Charterer, the Bareboat Charterer will
continue to make all payments required of the Bareboat Charterer by the terms of
this Bareboat Charter, whether for Basic Hire, Stipulated Loss Value,
Supplemental Hire or otherwise, without interruption or abatement, unless and
until this Bareboat Charter shall have terminated with respect to the Vessel in
accordance with the express provisions hereof. If for any reason whatsoever this
Bareboat Charter shall be terminated in whole or in part by operation of law or
otherwise, except as specifically provided herein, the Bareboat Charterer
nonetheless agrees to pay an amount equal to each payment of Basic Hire,
Stipulated Loss Value, or other amounts at the time such payment would have
become due and payable in accordance with the terms hereof had this Bareboat
Charter not been terminated in whole or in part.
ARTICLE 10
EVENT OF LOSS AND RIGHT TO TERMINATE
(a) In case an Event of Loss occurs during the Original Term, the
Bareboat Charterer shall give prompt written notice to the Shipowner (with a
copy to the Indenture
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<PAGE> 105
Trustee and the Secretary) of such Event of Loss and the Bareboat Charterer
shall thereafter give written notice to the Shipowner (with a copy to the
Indenture Trustee and the Secretary) of the Loss Termination Date (the "Loss
Termination Date"), which date shall be a Business Day, specified in such
notice, not less than 40 days after the date notice of the Event of Loss is
given, but not more than 180 days after the date on which such Event of Loss
shall be deemed to have occurred, provided, however, that if a constructive or
an agreed or compromised total loss of the Vessel is declared or agreed by the
underwriters under the insurance more than 105 days after the date of the
casualty giving rise to such total loss, then the "Loss Termination Date" shall
be 75 days (or the next succeeding Business Day) after the date on which such
total loss is declared or agreed by the underwriters. Not later than 10:00 a.m.
San Francisco time on such Loss Termination Date, the Bareboat Charterer shall
pay to, or on the order of, the Shipowner, the sum of (i) the Stipulated Loss
Value applicable to the Loss Termination Date, (ii) the final Indenture Trustee
Fees, Guarantee Fees and Depository Fees, (iii) an amount equal to all expenses
(including legal and investigatory fees) incurred by, and not otherwise
reimbursed to, the Shipowner in connection with the occurrence of the Event of
Loss, as set forth in an Officer's Certificate of the Shipowner received by the
Bareboat Charterer at least three Business Days prior to the Loss Termination
Date, (iv) all amounts of Basic Hire and Supplemental Hire which have become due
and payable under this Bareboat Charter but which have not been paid prior to
the Loss Termination Date, and (v) any amounts which have become due and payable
under the Participation Agreement but which have not been paid prior to the Loss
Termination Date.
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(b) In case there occurs an Event of Loss after the Original Term
and prior to the end of the Charter Period, and the Bareboat Charterer shall
have given prompt written notice to the Shipowner of its election to terminate
this Bareboat Charter, then this Bareboat Charter shall terminate on the Loss
Termination Date specified in such written notice. Not later than 10:00 a.m. San
Francisco time on such Loss Termination Date, the Bareboat Charterer will pay to
the Shipowner the sum of (i) all amounts of Basic Hire and Supplemental Hire
which have become due and payable under this Bareboat Charter, but have not been
paid prior to the Loss Termination Date, and (ii) the Shipowner expenses as
described in clause (iii) of Article 10(a) hereof.
(c) Against the payment obligations of Bareboat Charterer under
Article 10(a) hereof, there shall be credited all Event of Loss Proceeds
received prior to the Loss Termination Date by the Indenture Trustee, the
Shipowner, or the Secretary, as the case may be. So long as no Event of Bareboat
Default shall have occurred and be continuing, all Event of Loss Proceeds up to
the amount of payments required to be made by the Bareboat Charterer under
Article 10(a) hereof, received at any time by the Shipowner (and which are not
required to be paid over to the Indenture Trustee during the Original Term)
shall be paid over to the Bareboat Charterer upon payment in full of all amounts
required to be paid by the Bareboat Charterer under Article 10(a) hereof,
provided, however, that during any Renewal Term the Shipowner shall be entitled
to retain an amount equal to the full commercial value of the Vessel as
determined pursuant to Article 8(a) hereof. Until and including the Loss
Termination Date, the Bareboat Charterer shall continue to make all payments of
Basic Hire and Supplemental Hire when due irrespective of the occurrence of the
Event of Loss. This Bareboat Charter shall terminate upon the making
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<PAGE> 107
by, or on behalf of, the Bareboat Charterer of the payments to the Shipowner
required by this Article 10 and all other amounts due and payable under this
Bareboat Charter, but which have not been paid prior to the Loss Termination
Date. Payments of any amounts due pursuant to this Article 10 made by the
Guarantor pursuant to the Bareboat Charter Guarantee shall, to the extent of
such payments, be deemed payments made by the Bareboat Charter pursuant to this
Article 10.
(d) Upon termination of this Bareboat Charterer pursuant to this
Article 10: (i) the Shipowner shall obtain a release of the Vessel from the
liens of the Mortgage and Second Mortgage and of the Secretary under the
Security Agreement; (ii) with the prior written consent, if necessary, of any
governmental authority having jurisdiction, the Vessel or its remains, shall be
transferred by the Shipowner to the Bareboat Charterer or its designee, such
transfer to be without recourse to or warranty by the Shipowner except that the
Shipowner shall warrant that it is transferring whatever title it received to
the Vessel free and clear of any liens, charges or encumbrances created by it;
(iii) the Bareboat Charterer or its designee shall be subrogated to all rights
and claims which the Shipowner shall have with respect to the Vessel or its
remains or which shall arise in connection with the Event of Loss, and the
Bareboat Charterer shall assume all liabilities, if any, with respect to the
Vessel and make payment in satisfaction thereof directly to the persons entitled
thereto; and (iv) the Bareboat Charterer shall have the power to abandon the
Vessel (with the prior written approval of the Secretary, until the Security
Agreement shall have been discharged). All costs and expenses of the Shipowner
in connection with the taking of any action under this Article 10(d) shall be
for the account of, and payable by, the Bareboat Charterer.
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ARTICLE 11
[RESERVED]
ARTICLE 12
REQUISITION OF USE
(a) In the event that during the Charter Period the Vessel is
requisitioned for use by any governmental authority of the United States or any
person acting under color of such governmental authority, on any basis not
involving, or not equivalent to, acquisition of title thereto or forfeiture
thereof, the Bareboat Charterer shall promptly notify or cause to be notified
the Bareboat Charterer by electronic means, confirmed by letter. Unless and
until this Bareboat Charter is terminated pursuant to its terms, this Bareboat
Charter shall nevertheless continue in effect, and the Bareboat Charterer will
continue to remain liable for all other obligations under this Bareboat Charter,
other than those obligations the performance of which physically 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 Period.
(b) (1) In the event that such requisition of use continues for a
period of more than 90 days, and the Bareboat Charterer shall have given a
Requisition Termination Notice specifying the Requisition Termination Date, then
so long as the conditions of Article 12 of the Bareboat Charter have been
satisfied, this Bareboat Charter shall terminate; provided, however, that the
requisition of use shall be continuing on the Requisition Termination Date.
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(2) During the period from the date of the Requisition
Termination Notice until the Requisition Termination Date specified in such
notice, the Bareboat Charterer may, if requested by the Shipowner, as agent for
the Shipowner, solicit bids for the purchase of the Vessel for cash on the
Requisition Termination Date. The Bareboat Charterer shall certify to the
Shipowner in writing the amount and terms of any bid received by it and the name
and address of the person submitting such bid. If no bid is received under
Article 12 hereof during the period ending on the Requisition Termination Date
specified in the Requisition Termination Notice or if the sale of the Vessel to
one of the Persons submitting such a bid during such period cannot be
consummated, the Requisition Termination Notice shall be deemed rescinded, this
Bareboat Charter shall continue in full force and effect and the Bareboat
Charterer may thereafter at any time give one or more further Requisition
Termination Notices.
(c) On the Requisition Termination Date, if there are one
or more bidders certified to the Shipowner pursuant to Article 12(b)(2) hereof
which are qualified pursuant to law to purchase the Vessel, the Shipowner shall
elect, in accordance with Article 11 hereof, either (1) to sell the Vessel and
the rights to any future Requisition of Use Proceeds attributable to the Vessel
to one of such bidders (selected by it in its sole discretion) for cash in the
full amount of its bid or (2) to retain ownership of the Vessel. Any sale shall
be subject to the prior receipt of all necessary governmental approvals and of
the full amount of the purchase price in immediately available funds on the
Requisition Termination Date, and shall be without recourse to or warranty by
the Shipowner except that the Shipowner shall warrant title to and freedom from
liens created by it and persons claiming through it. Except to the extent
excused by the requisition described in Article 12(a) hereof, the Bareboat
Charterer shall redeliver the
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<PAGE> 110
Vessel in accordance with Article 13 hereof. The Shipowner shall be entitled to
the proceeds of any sale pursuant to this Article 12(c).
(d) (1) If the Requisition Termination Date occurs during the
Original Term, on the Requisition Termination Date, the Bareboat Charterer shall
pay to the Depository for deposit into the Bareboat Charter Payment Fund:
(x) if the Shipowner has elected to retain ownership of
the Vessel, an amount equal to the excess, if any, of Termination
Value as of the Requisition Termination Date over the highest bid
certified by the Bareboat Charterer to the Shipowner pursuant to
Article 12(b)(2) hereof, the maker of which bid is financially
competent and qualified pursuant to law to purchase the Vessel; or
(y) if the Shipowner shall have elected to sell the
Vessel, an amount equal to the excess, if any, of Termination Value as
of the Requisition Termination Date over the net proceeds of the sale
of the Vessel pursuant to Article 12(c) hereof (or the amount of the
highest bid of a bidder qualified pursuant to law to purchase the
Vessel if the Shipowner shall have elected to sell the Vessel at a
lower price, net of any expenses of the Shipowner with respect to such
sale).
(2) If the Requisition Termination Date occurs during any Renewal
Term, on the Requisition Termination Date, the Bareboat Charterer shall pay to
the Shipowner an amount, equal to the aggregate amount of Basic Hire determined
pursuant to Article 9(b)(2) hereof, calculated on a daily basis, payable from
the last Charter Hire Payment Date through the Requisition Termination Date.
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(e) The Shipowner shall be under no duty to solicit bids
with respect to the Vessel, to inquire into the efforts of Bareboat Charterer to
obtain bids or otherwise to take any action in connection with any such sale,
other than as expressly provided herein. All costs and expenses of the Shipowner
in connection with any sale of the Vessel made pursuant to this Article 12 shall
be for the account of, and payable by, the Bareboat Charterer.
(f) If an Event of Bareboat Default or a Default under
the Security Agreement shall have occurred and until such Default shall have
been cured or waived, the Secretary (or if the Security Agreement shall have
been discharged, the Shipowner) shall be entitled to receive and retain all
Requisition of Use Proceeds; otherwise the Bareboat Charterer shall be entitled
to receive and retain all such payments. In the event that this Bareboat Charter
is terminated pursuant to this Article 12, the Shipowner, if the Shipowner
retains ownership of the Vessel, or the purchaser of the Vessel, as the case may
be, shall be entitled to receive and retain all Requisition of Use Proceeds
attributable to the period after the Requisition Termination Date.
(g) (1) In the event that during the Charter Period,
the Vessel is requisitioned for use by any governmental authority (other than by
the United States) or any Person or Persons, whether or not acting under color
of such governmental authority, the Bareboat Charterer shall promptly notify or
cause to be notified the Shipowner, the Secretary and Occidental by electronic
means, confirmed by letter. In the case of such requisition, unless such
requisition shall be withdrawn, reversed or released within 90 days, the
Bareboat Charterer, immediately after the 90-day period, shall give a
Requisition Termination Notice
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specifying the Loss Termination Date (as provided in Article 10(a) of this
Bareboat Charter) and thereafter the provisions of Article 10 hereof for an
Event of Loss shall apply.
(2) In the event that during the Charter Period
there shall occur the capture, condemnation, purchase, seizure or forfeiture of,
or any taking of title to, the Vessel by any governmental authority (other than
by the United States) or any Person or Persons, whether or not acting under
color of such governmental authority, the Bareboat Charterer shall promptly
notify or caused to be notified the Shipowner, the Secretary and Occidental by
electronic means, confirmed by letter. In the case of such capture,
condemnation, confiscation, purchase, seizure or forfeiture of, or any taking of
title to, the Vessel, unless such capture, condemnation, confiscation, purchase,
seizure or forfeiture of, or any taking of title to, the Vessel shall be
withdrawn, reversed or released within 90 days, such capture, condemnation,
confiscation, purchase, seizure or forfeiture of, or any taking of title to, the
Vessel shall be deemed to be an Event of Loss and the provisions of Article 10
hereof shall apply.
(h) Until and including the Requisition Termination Date, the
Bareboat Charterer shall continue to make payments of Basic Hire and
Supplemental Hire when due irrespective of the requisition of use of the Vessel.
In addition, on the Requisition Termination Date, the Bareboat Charterer shall
pay to the Shipowner an amount equal to the premium, if any, due in respect of
the redemption of the Obligations as a result of the termination of this
Bareboat Charter pursuant to this Article 12. Notwithstanding any provision to
the contrary in this Article 12, this Bareboat Charter shall not terminate
unless all amounts due under this Bareboat Charter shall have been paid, the
Security Agreement shall have been satisfied and discharged, and, unless the
Shipowner shall have elected to retain ownership of the Vessel, the Vessel shall
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have been sold as provided in Article 12(c) hereof. Payments of amounts due
under this Article 12 made by the Guarantor pursuant to the Bareboat Charter
Guarantee shall, to the extent of such payments, be deemed payments made by the
Bareboat Charterer pursuant to this Article 12.
ARTICLE 13
REDELIVERY
(a) On the last day of the Charter Period, unless (i) an Event of
Loss has occurred, or (ii) this Bareboat Charter has been terminated pursuant to
Article 12(b) hereof, or (iii) use of the Vessel has been requisitioned an
described in Article 12(a) hereof and such requisition is continuing, the
Bareboat Charterer shall, except as provided in Article 13(b) hereof, at the
Bareboat Charterer's cost and expense, redeliver the Vessel or cause the Vessel
to be redelivered to the Shipowner at any safe port in the continental United
States on the coast on or nearest to which the Vessel is trading at the end of
the Charter Period designated by the Shipowner by written notice to the Bareboat
Charterer at least 45 days prior to the end of the Charter Period. The Bareboat
Charterer agrees that at the time of such redelivery the Vessel (i) shall be
free and clear of all liens, charges and encumbrances (except any liens, charges
or encumbrances created by the Shipowner); (ii) shall be entitled to and shall
have the classification and rating required by Article 4(a) hereof; (iii) shall
have, with respect to remaining in class, no recommendations of an ABS surveyor
affecting class outstanding on the date of redelivery; and (iv) shall have no
requirements of any United States governmental agency or department having
jurisdiction unfulfilled and with all required certificates in effect, and if
redelivery shall be at the end of the Original Term, the Vessel shall have been
credited with at least its fifth special survey by ABS.
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(b) Not earlier than 90 days prior to such redelivery, at the
Bareboat Charterer's expense, a joint survey shall be made by the Bareboat
Charterer and, the Shipowner(with drydocking only if required by ABS) to
determine the condition and fitness of the Vessel under the terms of this
Bareboat Charter including, but not limited to, Article 4(b) hereof, during
which survey the Vessel's cargo tanks shall be gas-freed. The Bareboat
Charterer, unless otherwise agreed by the Shipowner, at its own expense, will
fully correct and repair any condition disclosed by such survey to the extent
necessary to cause the Vessel to comply with all of the terms of Article 13(a)
hereof. The Charter Period shall be extended for any period necessary to make
such repairs and notwithstanding the provisions of Article 13(a) hereof relating
to the port of redelivery, redelivery shall take place at the port where such
repairs are made; provided, however, that the Original Term shall not be
extended for more than 180 days to effect repairs and redelivery.
(c) The Bareboat Charterer will pay additional hire hereunder for
any period for which the Charter Period may be extended pursuant to the terms of
Article 13(a) or 13(b) hereof or which may be necessary to complete any voyage
in progress, which hire shall be in addition to any other payments due
hereunder, and shall be payable on the last day of the Charter Period, as
extended, at a rate per day equal to 1/180th of the amount of Basic Hire payable
hereunder on the last Charter Hire Payment Date; provided, however, that no
additional hire shall be paid by the Bareboat Charterer for any period during
which repair work, ordered solely by the Shipowner and not required by this
Article 13, is being performed. Upon redelivery of the Vessel hereunder, the
Bareboat Charterer, if requested in writing by the
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Bareboat Charterer, will provide docking or safe anchorage facilities for the
Vessel for a period not exceeding 30 days after redelivery, at the Shipowner's
expense.
(d) Any property of the Bareboat Charterer remaining aboard the
Vessel upon redelivery may be retained or disposed of by the Shipowner as its
own property once a reasonable opportunity has been given the Bareboat Charterer
to remove such property.
ARTICLE 14
ASSIGNMENTS
(a) The Shipowner shall not have the right to assign, or to permit
any assignment of, or to create a security interest in, or to permit the
creation of a security interest in, this Bareboat Charter or any moneys due and
to become due under this Bareboat Charter, except pursuant to the Security
Agreement. Any assignment or security interest created in violation of this
Article 14(a) shall be void.
(b) Except for the assignment to a successor bareboat charterer
under Article 14(e) hereof, the Bareboat Charterer shall not have the right to
assign, or permit any assignment of, or to create a security interest in, or to
permit the creation of a security interest in, this Bareboat Charter or any
moneys due and to become due under this Bareboat Charter, except pursuant to the
Security Agreement, without the prior written consents of the Shipowner, the
Secretary and, during the Statutory Economic Life of the Vessel, the Board. Any
assignment or security interest created in violation of this Article 14(b) shall
be void.
(c) So long as this Bareboat Charter shall remain in effect, the
Bareboat Charterer shall not:
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(i) merge or consolidate with any other corporation or
business entity of any kind other than with any Affiliate of the Bareboat
Charterer, or
(ii) sell, assign pledge or otherwise dispose of any right
or interest arising out of this Bareboat Charter except in connection with the
assignment provided for in Article 14(e) hereof.
(d) The Bareboat Charterer shall not have the right to subcharter
or otherwise employ the Vessel other than pursuant to the Time Charter.
(e) (1) The Shipowner shall have the right, subject to the
prior consent of the Secretary, to assign this Bareboat Charter to any person
who is a Citizen of the United States and who is a United States Person within
the meaning of Section 7701 of the Code in the event that the Shipowner shall
fail to remain, or an event shall occur which shall cause the Shipowner no
longer to remain, a Citizen of the United States.
(2) The Bareboat Charterer shall have the right, without
the consent of the Shipowner, but subject to the terms of the Security Agreement
and the Second Mortgage so long as each is in effect, to assign this Bareboat
Charter to any Affiliate of the Bareboat Charterer which is a United States
person within the meaning of Section 7701 of the Code (with the consent of the
Secretary). Any such assignment shall be subject to the Bareboat Charterer's
continuing responsibility for full performance of its obligations under this
Bareboat Charter.
(f) This Bareboat Charter is subject and subordinate to the rights
of the Secretary under the Mortgage and the Security Agreement and the rights of
Occidental under the Second Mortgage.
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ARTICLE 15
EVENTS OF BAREBOAT DEFAULT
(a) Each of the following events shall constitute an Event of
Bareboat Default:
(1) The Bareboat Charterer shall fail to pay any Basic
Hire, or Stipulated Loss Value under this Bareboat Charter within 5 days after
the date when due or the Bareboat Charterer shall fail to pay any Supplemental
Hire under this Bareboat Charter and fail to remedy the failure to pay such
Supplemental Hire within 10 days after receipt of notice thereof from the
Shipowner; or
(2) The Bareboat Charterer or the Guarantor shall consent
to the appointment of a receiver, trustee or liquidator of itself or of
substantially all of its property or the Bareboat Charterer or the Guarantor
shall admit in writing its inability to pay its debts generally as they come due
or shall make a general assignment for the benefit of creditors; or
(3) The Bareboat Charterer or the Guarantor shall file a
voluntary petition in bankruptcy or for a reorganization or for an arrangement
in a proceeding under any of the federal bankruptcy laws or other federal or
state insolvency laws as now or hereafter in effect or an answer admitting the
material allegations of a petition filed against the Bareboat Charterer or the
Guarantor in any such proceeding; or
(4) An order, judgment or decree shall be entered in any
proceeding by any court of competent jurisdiction appointing, without the
consent of the Bareboat Charterer or the Guarantor, a receiver, trustee or
liquidator of the Bareboat Charterer or the Guarantor or of substantially all of
its property, and any such order, judgment or decree of appointment shall
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remain in force undismissed, unstayed or unvacated for a period of 90 days after
the date of entry thereof; or
(5) A petition against the Bareboat Charterer or the
Guarantor in a proceeding under the federal bankruptcy laws or other federal or
state insolvency laws as now or hereafter in effect shall be filed and shall not
be withdrawn or dismissed within 90 days thereafter or if, under the provisions
of any law providing for reorganization or winding-up of corporations which may
apply to the Bareboat Charterer or the Guarantor, any court of competent
jurisdiction shall assume jurisdiction, custody or control of the Bareboat
Charterer or the Guarantor or of substantially all of the property of either and
such jurisdiction, custody or control shall remain in force unrelinquished,
unstayed or unterminated for a period of 90 days; or
(6) The failure of the Bareboat Charterer to perform or
comply in any material respect with any of the provisions of Articles 3(a), 7(a)
or 17(b) hereof or to maintain, or cause to be maintained, insurance in the
amounts and forms as and when required under Article 8 hereof; or
(7) The Bareboat Charterer shall fail to remain, or an
event shall occur which will cause the Bareboat Charterer to no longer remain, a
Citizen of the United States, and the Bareboat Charterer shall fail for more
than 30 days after it obtains knowledge of such failure or event, to cause all
necessary governmental approvals, under Sections 9, 37 (if applicable) and 41 of
the Shipping Act, or otherwise, to be obtained; provided, however, that no Event
of Bareboat Default under this Article 15(a)(7) shall be deemed to have occurred
if the Bareboat Charterer shall have made the assignment of this Bareboat
Charter to a Citizen of the United
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States provided for in Article 14(e)(1) hereof within 30 days after it obtains
knowledge of such failure or event; or
(8) (i) Either the MTC Guarantee or the SNTG
Guarantee shall cease to be in full force and effect, or either Guarantor shall
be in default under any of the provisions therein, or (ii) the Contingent
Guarantee shall cease to be in full force and effect (unless the Contingent
Guarantee shall so cease by operation of the provisions of Section 2(c) thereof)
or Occidental shall be in default under any provision therein, and, in each
case, such default shall fail to be remedied within 30 days after written notice
from the Shipowner or the Secretary to such Guarantor or Occidental of the
existence of such default; or
(9) Any Default under the Security Agreement shall have
occurred and be continuing as a result of the Bareboat Charterer's failure to
perform or comply with its obligations under this Bareboat Charter; or
(10) Either the Bareboat Charterer or the Time Charterer
shall fail for more than 30 days after written notice from the Secretary to the
Bareboat Charterer or the Time Charterer to perform or comply with any of the
provisions of the Title XI Reserve Fund and Financial Agreement insofar as such
provisions pertain to the Vessel unless such failure shall have been waived by
the Secretary; or
(11) The Bareboat Charterer shall default in the
performance of any other obligation under this Bareboat Charter and shall fail
to remedy the default within 30 days after receipt of notice thereof from the
Shipowner or the Secretary, specifying the acts or omissions of the Bareboat
Charterer which constitute such default.
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<PAGE> 120
(b) Upon the occurrence of an Event of Bareboat Default, so long
as such Event of Bareboat Default shall be continuing, the Shipowner shall
promptly notify the Secretary of such occurrence and at any time thereafter, so
long as the same shall be continuing, the Shipowner (or the Secretary pursuant
to the Security Agreement) may, at its option, declare this Bareboat Charter to
be in default by notice delivered to the Bareboat Charterer and the Guarantor
and, at any time thereafter, so long as the Bareboat Charterer or the Guarantor,
as the case may be, shall not have remedied all outstanding Events of Bareboat
Default, the Shipowner by notice to the Bareboat Charterer and the Guarantor may
terminate this Bareboat Charter, upon which termination the Shipowner may do,
and the Bareboat Charterer shall comply with, one or more of the following, as
the Shipowner shall elect, to the extent permitted by, and subject to compliance
with, any mandatory requirements of applicable law and the provisions of the
Security Agreement if then in effect:
(1) Upon written demand of the Shipowner, the Bareboat
Charterer shall without expense to the Shipowner, promptly redeliver the Vessel,
or cause the Vessel to be redelivered, to the Shipowner with all reasonable
dispatch to any safe port in the United States selected by the Shipowner (which
port shall be on the coast to which the Vessel is closest at the time of such
demand) in the same manner and in the same condition as if the Vessel were being
redelivered on the Last day of the Charter Period in accordance with the
provisions of Article 13 hereof, and, except as otherwise provided in this
Article 15, all obligations of the Bareboat Charterer under Article 13 hereof
shall apply to such redelivery. The Shipowner or its agent, without further
demand, may, but shall be under no obligation to, withdraw the Vessel from the
service of the Bareboat Charterer wherever found, whether upon the high seas or
at any port,
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<PAGE> 121
harbor or other place and irrespective of whether the Bareboat Charterer or any
other person may be in possession of the Vessel all without prior demand and
without legal process, and for that purpose the Shipowner or its agent may enter
upon any dock, pier or other premises where the Vessel may be and may take
possession thereof, without the Shipowner or its agent incurring any liability
by reason of such retaking, whether for the restoration of damage to property
caused by such withdrawal or otherwise.
(2) If the Event of Bareboat Default resulting in the
termination of this Bareboat Charter shall have occurred during the Original
Term, the Bareboat Charterer will pay to, or on the order of, the Shipowner,
upon request by the Shipowner upon at least 10 days prior written notice, on the
payment date specified in such notice, as liquidated damages for loss of a
bargain and not as a penalty, all unpaid Basic Hire and Supplemental Hire
payable in accordance with the terms hereof on or prior to the Default
Termination Date plus an amount (together with interest on such amount at the
Interest Rate for the period, if any, from but not including, the Charter Hire
Payment Date immediately preceding the payment date specified in such notice to
and including the Default Termination Date) equal to:
(i) the Stipulated Loss Value, computed as of
the Charter Hire Payment Date occurring on or immediately preceding the
Default Termination Date, less
(ii) whichever of the following amounts the
Shipowner, in its sole discretion, shall specify in such notice: (A)
the fair market sales value (determined as hereinafter provided in this
Article 15(b) (2)) of the Vessel as of the Charter Hire Payment Date
immediately preceding the Default Termination
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<PAGE> 122
Date or (B) the fair market demise charter value (determined as
hereinafter provided in this Article 15(b)(2)) of the Vessel for the
period from such Charter Hire Payment Date to the day which would have
been the last day of the Charter Period but for the termination of this
Bareboat Charter pursuant to this Article 15(b), after discounting such
fair market demise charter value to its value on the Charter Hire
Payment Date occurring on or immediately preceding the Default
Termination Date at the Discount Rate.
For the purpose of this Article 15(b)(2), the "fair market sales value"
or "fair market demise charter value" shall be determined by the Appraisal
Procedure; provided, however, that (x) if the Vessel shall have been sold prior
to the Default Termination Date by (i) the Shipowner pursuant to paragraph 4 of
this Article 15(b), or (ii) the Secretary pursuant to Section 6.04(b) of Exhibit
1 to the Security Agreement, the "fair market sales value" shall be the net
proceeds of such sale after deducting all costs and expenses incurred by the
Shipowner or the Secretary, as the case may be, in connection therewith, (y) the
"fair market sales value" or the "fair market demise charter value" shall be
zero if the Vessel is not redelivered or if the Shipowner has expended
reasonable efforts, under the circumstances to take possession of the Vessel but
has been unable to take possession; and (z) there shall be added to "fair market
sales value" and to "fair market demise charter value," as the case may be, the
net proceeds received by the Shipowner (after deducting all costs and expenses
of the Shipowner with respect thereto) from any charter of the Vessel to others
in accordance with Article 15(b)(3) hereto, to the extent such proceeds are
received by the Shipowner prior to the Default Termination Date. Nothing
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<PAGE> 123
contained in the preceding sentence shall require the Shipowner to sell or
charter the Vessel at any time.
(3) If the Event of Bareboat Default resulting in the
termination of this Bareboat Charter shall have occurred during a Renewal Term,
the Bareboat Charterer shall pay to, or on the order of, the Shipowner, upon
request by the Shipowner upon at least 10 days prior written notice, on the date
specified in such notice as the Default Termination Date, as liquidated damages
for loss of a. bargain and not as a penalty, all unpaid Basic Hire and
Supplemental Hire payable in accordance with the terms hereof on or prior to the
Default Termination Date plus an amount, equal to the aggregate amount of Basic
Hire determined pursuant to Article 9(b) hereof, discounted at the Discount Rate
to its value on the Default Termination Date, which would have been paid during
the remainder of the Renewal Term in which the Default Termination Date occurs.
(4) The Shipowner or its agent with or without notice to
the Bareboat Charterer, may sell the Vessel at public or private sale, with or
without advertisement or publication, as the Shipowner may determine, or
otherwise may dispose of, hold, use, operate, charter to others (whether for a
period greater or less than the balance of what would have been the Charter
Period in the absence of the termination of this Bareboat Charter pursuant to
this Article 15(b)) or keep the Vessel idle, all on such terms and conditions
and at such place or places as the Shipowner may determine and all free and
clear of any rights of the Bareboat Charterer and any claim of the Bareboat
Charterer in admiralty, in equity, at law or by statute, whether for loss or
damage or otherwise, and without any duty to account to the Bareboat Charterer
except to the extent provided for in Article 15(b)(2) hereof.
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<PAGE> 124
(c) In addition to the foregoing, the Bareboat Charterer shall pay
to, or on the order of, the Shipowner, all Supplemental Hire hereunder payable
before, during or after the exercise of any remedies exercised by the Shipowner,
and all legal and investigatory fees and any other costs and expenses whatsoever
incurred by the Shipowner by reason of the occurrence of any Event of Bareboat
Default or by reason of the exercise by the Shipowner of any remedy hereunder,
including, without limitation, any costs and expenses incurred by the Shipowner
in connection with the redelivery of the Vessel in accordance with this Article
15 and of placing the Vessel in the condition and seaworthiness required by the
terms of Article 13 hereof.
(d) No remedy referred to in Article 15(b) hereof is intended to
be exclusive, but each shall be cumulative and is in addition to, and may be
exercised concurrently with, any other remedy which is referred to in Article
15(b) hereof or which may otherwise be available to the Shipowner at law, in
equity or in admiralty, provided, however, that liquidated damages having been
agreed to by the parties hereto in Articles 15(b)(2) and (3) hereof, the
Shipowner shall not be entitled to recover from the Bareboat Charterer as
damages upon the occurrence of one or more Events of Bareboat Default an amount
in excess of such liquidated damages plus any Supplemental Hire and expenses
referred to above. There shall be deducted from the aggregate amount so
recoverable by the Shipowner the net balance, if any, remaining of any moneys
held by the Shipowner which would have been required by the terms of this
Bareboat Charter to have been paid to the Bareboat Charterer but for the
occurrence of an Event of Bareboat Default. The rights of the Shipowner and the
obligations of the Bareboat Charterer under this Article 15(d) shall be
effective and enforceable regardless of the pendency of any proceeding which has
or might have the effect of preventing the Shipowner or the Bareboat
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<PAGE> 125
Charterer from complying with the terms of this Bareboat Charter. No express or
implied waiver by the Shipowner of any Event of Bareboat Default shall in any
way be, or be construed to be, a waiver of any further or subsequent Event of
Bareboat Default. The Bareboat Charterer hereby agrees that to the extent that
the Shipowner shall sell charter or otherwise use the Vessel pursuant to Article
15 (b)(4) hereof in good faith, the Shipowner shall have no liability to the
Bareboat Charterer for any such sale, charter or other use except as
specifically provided in Article 15(b)(2) hereof.
(e) The Bareboat Charterer hereby waives, to the extent permitted
by applicable law, any and all rights which it may now have or which at any time
hereafter may be conferred upon it, by statute or otherwise, which may require
the Shipowner to sell charter or otherwise use the Vessel in mitigation of the
Shipowner's damages, or which may otherwise limit or modify any of the rights or
remedies of the Shipowner provided for in this Article 15.
(f) If the Bareboat Charterer shall fail to perform or observe any
of the other terms of this Bareboat Charter which do not give rise to an Event
of Bareboat Default, the Shipowner may (but in its discretion shall not be
obligated to) give written notice (which notice may be given by electronic means
and shall be effective upon receipt thereof) to the Bareboat Charterer of its
intention to exercise its rights under this Article 15. Unless the Bareboat
Charterer shall have then commenced to use due diligence, to the reasonable
satisfaction of the Shipowner, to cause such failure to be cured, the Shipowner
may, in its discretion, do all acts and make all expenditures necessary to
remedy such failure, including, without limitation, the taking out of insurance
on the Vessel and entry upon the Vessel to make repairs. The Bareboat Charterer
agrees to reimburse the Shipowner promptly on demand for all costs and expenses
incurred in
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<PAGE> 126
connection with the exercise of its rights under this Article 15(f), together
with interest thereon at the Interest Rate from the date of such expenditures to
the date of payment by the Bareboat Charterer. The Bareboat Charterer agrees to
permit the agents and servants of the Shipowner reasonable access to the Vessel
as shall be necessary under this Article 15(f).
ARTICLE 16
REPLACEMENT OF THE BAREBOAT CHARTERER
If at any time during the Charter Period, the Time Charterer shall have
given the notice of replacement of the Bareboat Charterer referred to in Section
14.2 of the Time Charter to cause the Bareboat Charterer to be replaced because
of the occurrence of an Event of Bareboat Charterer Default under the Time
Charter, and if the Shipowner shall approve in writing of such replacement, the
Bareboat Charterer shall be replaced as Bareboat Charterer hereunder.
ARTICLE 17
MISCELLANEOUS
(a) The Shipowner and the Bareboat Charterer severally agree to
perform, or cause to be performed, such action, and to execute, deliver or
furnish or to cause to be executed, delivered or furnished, all such further
assurances, certificates and other documents, necessary or proper to carry out
this Bareboat Charter.
(b) The terms of this Bareboat Charter and Schedule X attached
hereto shall not be altered, modified, amended, supplemented or terminated in
any manner whatsoever except by written instrument signed by the parties hereto
and with the written consent of the Secretary and Occidental.
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(c) The invalidity of any provision of this Bareboat Charter shall
not affect the remainder hereof, which shall in such event be construed as if
such invalid provision had not been inserted.
(d) The table of contents and headings of this Bareboat Charter
are for purposes of reference only, and shall in no way limit or otherwise
affect any of the terms or provisions hereof.
(e) Subject to the provisions of Article 14 hereof, the terms of
this Bareboat Charter shall be binding upon, and inure to the benefit of, the
parties hereto and their respective successors and assigns.
(f) ALL QUESTIONS ARISING UNDER THIS BAREBOAT CHARTER SHALL IN ALL
RESPECTS BE GOVERNED BY, CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE GENERAL
MARITIME LAWS OF THE UNITED STATES AND TO THE EXTENT FEDERAL LAW DOES NOT APPLY,
THE LAWS OF THE STATE OF NEW YORK, INCLUDING SECTION 5-1401 OF THE GENERAL
OBLIGATIONS LAW OF THE STATE OF NEW YORK. ANY CLAIM OR DISPUTE ARISING UNDER
THIS BAREBOAT CHARTER SHALL, PROVIDED THAT THE COURT HAS SUBJECT MATTER
JURISDICTION, BE DECIDED IN THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN
DISTRICT OF NEW YORK, TO THE JURISDICTION OF WHICH THE SHIPOWNER AND THE
BAREBOAT CHARTERER HEREBY SUBMIT THEMSELVES FOR THE PURPOSES OF ANY SUCH
PROCEEDING. IN THE EVENT THAT THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN
DISTRICT OF NEW YORK LACKS SUBJECT MATTER JURISDICTION OVER ANY
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<PAGE> 128
CLAIM OR DISPUTE ARISING UNDER THIS BAREBOAT CHARTER, THE SHIPOWNER AND THE
BAREBOAT CHARTERER HEREBY SUBMIT THEMSELVES TO THE JURISDICTION OF THE SUPREME
COURT FOR THE COUNTY OF NEW YORK FOR THE PURPOSES OF ANY SUCH PROCEEDING AND
WAIVE ANY CLAIM OF FORUM NON CONVENIENS RELATING TO SUCH CHOICE OF COURT.
(g) (1) The Bareboat Charterer and the Shipowner mutually
acknowledge that, during the Statutory Economic Life of the Vessel, the Vessel
and its operation are, or may be, subject to certain requirements contained in
the Title V Contract and in the ODS Contract. Unless waived (and the Bareboat
Charterer shall not request any waiver without the prior written consent of the
Shipowner) the Bareboat Charterer and the Shipowner agree to comply with any
such requirements notwithstanding anything to the contrary in this Bareboat
Charter.
(2) The Bareboat Charterer and Shipowner severally agree
not to make, or permit to be made, any alteration in the National Defense
Features of the Vessel in a manner which adversely affects the value of the
National Defense Features without the prior written consent of the Board.
(3) Nothing in this Article 16(g) shall affect the
absolute and unconditional obligation of the Bareboat Charterer to pay Basic
Hire, Supplemental Hire and amounts in respect of Stipulated Loss Value pursuant
to the terms of this Bareboat Charter.
(h) This Bareboat Charter is not a personal contract. The Bareboat
Charterer and the Shipowner shall have the benefit of all limitations of, and
exemptions from, liability accorded to the owner or chartered owner of vessels
by any statute or rule of law for the time being in force.
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<PAGE> 129
(i) This Bareboat Charter may be executed in several counterparts,
each of which shall be an original, but all of which together shall constitute
one agreement.
(j) No person other than the Bareboat Charterer and the Shipowner,
and their successors and assigns as permitted hereunder, shall enforce or
attempt to enforce the obligations of the Bareboat Charterer or the Shipowner
hereunder without the prior written consent of the Bareboat Charterer and the
Shipowner.
(k) All interest payments to be computed under this Bareboat
Charter shall be computed on the basis of a 360-day year of twelve 30-day
months.
(1) The provisions of this Bareboat Charter which require or
permit action by the Secretary and Occidental, the consent, approval or
authorization of the Secretary and Occidental or the furnishing of any document,
paper or information to the Secretary and Occidental shall not be effective, and
such provisions shall be read, unless otherwise required by law, as though there
were no such requirements or permissions, after: (i) termination of the
Guarantees, except a termination pursuant to clause (b) of Section 6.04 of
Exhibit 1 to the Security Agreement and the discharge of the Second Mortgage; or
(ii) payment in full of the principal of and interest on each Secretary's Note.
ARTICLE 18
NOTICES
All notices and other communications hereunder shall be effective when
received except that all notices and other communications sent by prepaid United
States certified mail, return receipt requested, shall become effective on the
third Business Day after such mailing
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<PAGE> 130
and shall be addressed as follows or, to each party, at such other address as
shall be designated by such party in a written notice to the other persons named
below:
To the Shipowner:
Frances Owner Corporation
c/o Marine Transport Corporation
1200 Harbor Boulevard
Weehawken, NJ 07087-0901
To the Bareboat Charterer:
Frances ODS Corporation
c/o Marine Transport Corporation
1200 Harbor Boulevard
Weehawken, NJ 07087-0901
To the Secretary:
c/o Maritime Administrator
Maritime Administration
Department of Transportation
400 7th Street, SW
Washington, D.C. 20590
To Occidental:
10889 Wilshire Boulevard
Los Angeles, CA 90024
Attention: Vice President & Treasurer
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<PAGE> 131
IN WITNESS WHEREOF, the parties have caused this Bareboat
Charter to be signed as of the day and year first above written.
FRANCES OWNER CORPORATION,
Shipowner
By: ______________________________
Name: ________________________
Title: ________________________
<PAGE> 132
FRANCES ODS CORPORATION,
Bareboat Charterer
By: ______________________________
Name: ________________________
Title: ________________________
THE ABOVE CHARTER AND CERTAIN HIRE DERIVED THEREFROM ARE SUBJECT TO A SECURITY
INTEREST IN FAVOR OF THE UNITED STATES OF AMERICA, REPRESENTED BY THE SECRETARY
OF TRANSPORTATION, ACTING BY AND THROUGH THE MARITIME ADMINISTRATOR (THE
"SECRETARY") IN ACCORDANCE WITH THE PROVISIONS OF A SECURITY AGREEMENT BETWEEN
THE ABOVE NAMED SHIPOWNER AND THE SECRETARY AS SECURED PARTY.
<PAGE> 133
4.03(b)
BAREBOAT CHARTER
BETWEEN
JULIUS OWNER CORPORATION,
OWNER
AND
JULIUS ODS CORPORATION,
BAREBOAT CHARTERER
SEPTEMBER 29, 1999
ITB JULIUS HAMMER
(TO BE RENAMED SMT CHEMICAL TRADER)
<PAGE> 134
TABLE OF CONTENTS
BAREBOAT CHARTER
<TABLE>
<S> <C>
ARTICLE 1 - DEFINITIONS .......................................................................... 1
ARTICLE 2 - DELIVERY AND ACCEPTANCE OF THE VESSEL ................................................ 2
ARTICLE 3 - USE AND OPERATION OF THE VESSEL; COMPLIANCE WITH LAWS ................................ 3
ARTICLE 4 - MAINTENANCE, CLASSIFICATION AND REPAIRS, INSPECTION .................................. 6
ARTICLE 5 - USE OF STORES AND EQUIPMENT .......................................................... 9
ARTICLE 6 - BAREBOAT CHARTERER'S CHANGES; INSTALLATION OF EQUIPMENT AND REMOVAL OF PARTS ......... 11
ARTICLE 7 - LIENS AND ATTACHMENTS ................................................................ 13
ARTICLE 8 - INSURANCE ............................................................................ 16
ARTICLE 9 - TERM OF BAREBOAT CHARTER, OPTION TO RENEW AND BASIC HIRE ............................. 27
ARTICLE 10 - EVENT OF LOSS AND RIGHT TO TERMINATE ................................................ 32
ARTICLE 11 - [RESERVED] .......................................................................... 35
ARTICLE 12 - REQUISITION OF USE .................................................................. 36
ARTICLE 13 - REDELIVERY .......................................................................... 40
ARTICLE 14 - ASSIGNMENTS ......................................................................... 42
ARTICLE 15 - EVENTS OF BAREBOAT DEFAULT .......................................................... 44
ARTICLE 16 - REPLACEMENT OF THE BAREBOAT CHARTERER ............................................... 53
ARTICLE 17 - MISCELLANEOUS ....................................................................... 53
ARTICLE 18 - NOTICES ............................................................................. 56
</TABLE>
<PAGE> 135
BAREBOAT CHARTER
ITB JULIUS HAMMER
(TO BE RENAMED SMT CHEMICAL TRADER)
THIS BAREBOAT CHARTER is made on __________, 1999, by and between
Julius Owner Corporation, a Delaware corporation (the "Shipowner"), and Julius
ODS Corporation, a Delaware corporation (the "Bareboat Charterer").
WITNESSETH
WHEREAS, the Shipowner desires to demise charter the Vessel to the
Bareboat Charterer and the Bareboat Charterer desires to demise charter the
Vessel from the Shipowner, in each case on the terms and conditions hereinafter
set forth; and
WHEREAS, the Shipowner, on the date hereof, is changing the name of the
Vessel to SMT CHEMICAL TRADER (tug) and SMT TWO (barge);
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, and for other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the Shipowner agrees to let and
demise charter and the Bareboat Charterer agrees to hire and demise charter the
Vessel on the terms and conditions hereinafter set forth.
ARTICLE 1
DEFINITIONS
The capitalized terms used herein which are defined in, or defined by
reference to, Schedule X attached hereto, as said Schedule X may be amended from
time to time as herein provided, have the meanings specified in said Schedule X.
<PAGE> 136
ARTICLE 2
DELIVERY AND ACCEPTANCE OF THE VESSEL
(a) Notwithstanding any other provision in this Bareboat Charter,
the Shipowner shall be deemed to have tendered, and the Bareboat Charterer shall
be deemed to have unconditionally accepted, delivery of the Vessel under this
Bareboat Charter "as is, where is" in whatever condition it may be, AND IT IS
AGREED THAT SHIPOWNER DOES NOT MAKE NOR SHALL BE DEEMED TO HAVE MADE ANY
WARRANTY OR REPRESENTATION, EITHER EXPRESS OR IMPLIED, AS TO THE TITLE, DESIGN,
CONDITION, VALUE, MERCHANTABILITY, OPERATION OR SEAWORTHINESS OF THE VESSEL OR,
AS TO THE QUALITY OF THE MATERIAL, EQUIPMENT OR WORKMANSHIP IN, OR AS TO THE
CONSUMABLE STORES ON BOARD, THE VESSEL, OR AS TO THE FITNESS OF THE VESSEL FOR
ANY PARTICULAR USE OR AS TO THE ELIGIBILITY OF THE VESSEL FOR ANY PARTICULAR
TRADE, OR ANY OTHER WARRANTY OR REPRESENTATION WHATSOEVER, EXPRESS OR IMPLIED,
WITH RESPECT TO THE VESSEL. The Bareboat Charterer's acceptance of the Vessel
under this Bareboat Charter, as provided in this Article 2(a), shall confirm and
be conclusive evidence, as between the Shipowner and the Bareboat Charterer,
that the Vessel is in all respects satisfactory to the Bareboat Charterer and in
compliance with all requirements of this Bareboat Charter, and the Bareboat
Charterer will not assert any claim of any nature whatsoever against the
Shipowner based on any of the foregoing matters in this Article 2(a). Nothing in
this Article 2(a) shall be construed as a waiver of any right that either the
Bareboat Charterer or the Shipowner may have against any person other than the
Shipowner or the Bareboat Charterer.
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<PAGE> 137
(b) The Shipowner hereby agrees to provide to the Bareboat
Charterer a full set of general and detailed Plans and Specifications correct to
the Vessel as built, which shall be returned to the Shipowner upon termination
of this Bareboat Charter or replacement of the Bareboat Charterer as bareboat
charterer of the Vessel.
ARTICLE 3
USE AND OPERATION OF THE VESSEL;
COMPLIANCE WITH LAWS
(a) Subject to the terms and conditions of this Bareboat Charter,
the Bareboat Charterer shall have the full use of the Vessel and may employ the
Vessel in any part of the world and in such lawful trades and carrying such
lawful cargoes as the Time Charterer may direct and as otherwise required to
perform the Time Charter, subject to the limits of the American Institute of
Trade Warranties (the "Institute Warranties"). However, upon reasonable advance
notice to the Shipowner, the Bareboat Charterer may breach those Institute
Warranties, provided that the Bareboat Charterer shall pay any additional
premiums assessed by the Vessel's insurers for breach of the Institute's
Warranties, provided further that the Vessel shall not be operated in any area
in which the insurance required by Article 8 of this Bareboat Charter would not
be in full force and effect.
(b) Subject to the terms and conditions of this Bareboat Charter,
the Bareboat Charterer shall have exclusive 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 Period. The Master, officers and crew of the
Vessel shall be engaged and employed as directed by the Bareboat Charterer and
shall remain the Bareboat Charterer's servants, navigating and working the
Vessel on behalf of
3
<PAGE> 138
and at the risk of the Bareboat Charterer. The Shipowner shall not have any
interest in any salvage moneys earned by the Vessel or received by the Bareboat
Charterer during the Charter Period. The Bareboat Charterer assumes and shall
satisfy all costs and liabilities incurred in connection with all salvage
services rendered by the Vessel. 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
Period.
(c) The Bareboat Charterer shall, at the Bareboat Charterer's
expense, throughout the Charter Period maintain, or cause to be maintained, the
documentation of the Vessel under the laws and flag of the United States in the
name of the Shipowner, and the Shipowner shall upon the request of the Bareboat
Charterer execute such documents and furnish such information, or cause to be
executed or furnished by the Shipowner or the Secretary, as the Bareboat
Charterer may reasonably require to enable the -Bareboat Charterer to maintain,
or cause to be maintained, such documentation.
(d) The Vessel shall, and the Bareboat Charterer covenants that
it will, at the Bareboat Charterer's cost and expense, at all times comply with
the requirements of all applicable laws, treaties and conventions, and all
applicable rules, regulations and orders issued thereunder, including
particularly, but without limitation by this enumeration, the International
Convention for Safety of Life at Sea, 1960, as amended, and all applicable laws,
rules, regulations and orders administered by the United States Maritime
Administration, Coast Guard, Federal Maritime Commission, Customs Service,
Environmental Protection Agency, ABS and any other United States agency, or
their respective successors, having jurisdiction in connection with the use,
operation and maintenance of the Vessel and the Bareboat Charterer
4
<PAGE> 139
covenants that it will have on board, when required thereby, valid certificates
showing compliance therewith. The Bareboat Charterer will not suffer or permit
anything to be done which might injuriously affect the documentation of the
Vessel under the laws and regulations of the United States or the validity or
the preferred status of the Mortgage or the Second Mortgage on the Vessel under
the Ship Mortgage Act, and the Bareboat Charterer will not abandon the Vessel in
a foreign port (unless advisable in connection with an Event of Loss), engage in
any unlawful trade under, or violate, any applicable law, treaty, convention,
rule, regulation or order or carry any cargo that may expose the Vessel to
penalty, forfeiture or seizure or expose the Shipowner to penalty.
(e) The cargo principally to be carried shall be superphosphoric
acid. However, the Bareboat Charterer shall have the option of shipping
petroleum products or any other lawful cargo in bulk for which the Vessel and
its tanks are suitable, as well as any lawful merchandise in containers in the
Vessel's forehold, between decks or other suitable space available, subject to
the Master's approval as to kind, character, amount and stowage.
(f) The Shipowner and the Bareboat Charterer, each respectively,
hereby represents that it is, and covenants that it shall remain during the
Charter Period, a Citizen of the United States. In the event that the Shipowner
or the Bareboat Charterer shall fail to remain, or an event shall occur which
will cause either to no longer remain, a Citizen of the United States, then it
shall notify the other party hereto as soon as it obtains knowledge of such
fact.
(g) The Bareboat Charterer agrees that it shall, to the extent the
Shipowner reasonably requests, assist the Shipowner in enforcing and asserting
all rights of warranty, guarantee, indemnity, royalty, liability, patent
liability and claims of patent infringement and any other rights which it may
have with respect to the Vessel or its equipment. The Bareboat
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Charterer further agrees that it shall, to the extent it has knowledge, notify
the Shipowner of any information in connection with such rights or claims.
ARTICLE 4
MAINTENANCE; CLASSIFICATION
AND REPAIRS; INSPECTION
(a) The Bareboat Charterer shall be charged with full
responsibility for maintenance and repair of the Vessel throughout the Charter
Period and shall at all times, at its own risk, expense and procurement, without
expense to the Shipowner, maintain and preserve, or cause to be maintained and
preserved, the Vessel in good condition, working order and repair, ordinary wear
and tear excepted, so that the Vessel shall be, insofar as due diligence can
make it so, tight, staunch, strong and well and sufficiently tackled, appareled,
furnished, equipped and supplied and in every respect seaworthy and in a good
operating condition. Furthermore, the Bareboat Charterer shall maintain, or
cause to be maintained, the Vessel so as to entitle it to the highest
classification and rating of ABS for vessels of the same age and type,
submitting the Vessel to all required surveys of ABS (giving the Shipowner prior
written notice thereof, 45 days in advance if practicable, but otherwise as long
in advance as may be practicable under the circumstances), and annually, during
the Charter Period, shall furnish to the Shipowner copies of all certificates
issued by ABS, within 20 days from receipt, evidencing the maintenance of such
classification and rating. The Bareboat Charterer shall also furnish to the
Shipowner copies of all other survey and inspection reports within 20 days of
the Bareboat Charterer's receipt thereof. The cost of all repairs or changes
necessary to cause the Vessel to comply with the requirements of ABS, including
changes or additions to such requirements, shall be for the Bareboat Charterer's
account.
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(b) The Vessel shall be repaired and overhauled, or caused to be
repaired and overhauled, by the Bareboat Charterer, and for the Bareboat
Charterer's account, whenever reasonably necessary, but at least as often as may
be required by applicable regulations of both the United States Coast Guard and
by ABS. The Bareboat Charterer shall, at its expense, promptly and duly comply
with all requirements of ABS in order to maintain class as provided in this
Article, including those resulting from each special survey of the Vessel. The
Vessel shall be drydocked, cleaned and the bottom painted, whenever necessary to
keep the Vessel in the condition required by the first sentence of Article 4(a)
hereof by the Bareboat Charterer, but at least as often as may be required by
applicable regulations of both the United States Coast Guard and by ABS and at
such intervals thereafter as the Shipowner shall from time to time determine.
The Bareboat Charterer shall give the Shipowner written notice of the time and
place of each such proposed drydocking 45 days in advance if practicable, but
otherwise as long in advance as may be practicable under the circumstances, in
order that the Shipowner may, if it so desires, have authorized representatives
present at such drydocking and otherwise inspect the Vessel at its own expense.
(c) Subject to any applicable laws and regulations, the Shipowner, the
Time Charterer, the Secretary, Occidental, or their authorized representatives,
shall have the right at reasonable times, on reasonable notice and at their own
expense, without causing undue delay to the Vessel's operation, to inspect the
Vessel in order to ascertain its condition and to ascertain that the Vessel is
being properly repaired and maintained in accordance with this Article 4, but
inspection in drydock shall be made only when the Vessel shall be in drydock
under the provisions of Article 4(b) hereof. The Bareboat Charterer shall make,
or cause to be made, all repairs, without expense to the Shipowner, as such
inspection may show to be
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required in order to meet the requirements of this Article 4. The Bareboat
Charterer shall (i) permit the Shipowner, the Secretary, Occidental, or the Time
Charterer, or their authorized representatives, to inspect the Vessel's logs and
papers whenever requested, on reasonable notice, and to a reasonable extent,
without causing undue delay to the Vessel's operation, and (ii) furnish the
Shipowner, the Secretary, Occidental, and the Time Charterer with full
information regarding any casualties or other accidents or damage to the Vessel.
(d) Within 45 days after the end of each calendar year, the Bareboat
Charterer shall deliver an Officer's Certificate to the Shipowner stating for
the portion of the Calendar Year ended during which Bareboat Charterer had
possession of the Vessel pursuant to the provisions of this Bareboat Charter:
(i) whether the Vessel has been maintained and repaired in
accordance with this Bareboat Charter;
(ii) the specifics of any material changes and any repairs
involving an amount in excess of $250,000 which have been made to the Vessel;
and
(iii) whether any drydocking occurred and the actions taken
during such drydocking.
(e) Neither the Shipowner nor the Time Charterer shall have any
obligation hereunder to make any inspection or examination or shall incur any
liability or obligation by reason of not making any inspection or examination
under this Article 4.
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ARTICLE 5
USE OF STORES AND EQUIPMENT
(a) A complete inventory of the Vessel's entire equipment, outfit,
appliances and of all consumable stores on board the Vessel shall be made by the
Bareboat Charterer in conjunction with the Shipowner or its designee on or
before the commencement of this Bareboat Charter and again upon termination of
this Bareboat Charter or replacement of the Bareboat Charterer as bareboat
charterer of the Vessel. The Shipowner and the Bareboat Charterer acknowledge
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
Bareboat Charterer will be the property of the Time Charterer, but may be
utilized by the Bareboat Charterer in performing its obligations under the
provisions of this Bareboat Charter. 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.
(b) The Bareboat 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 Bareboat Charterer, as evidenced by the
inventory of such items supplied by the Shipowner on the Delivery Date. The same
or their substantial equivalent shall be returned to the Shipowner upon
redelivery of the Vessel pursuant to Article 13 hereof 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
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good by the Bareboat Charterer in kind at or before redelivery or, at the
Shipowner's option, the Bareboat Charterer may pay the Shipowner for such items
which are not required for the operation of the Vessel at the current market
prices therefor (including transportation and installation costs) at the port
and time of redelivery.
(c) The Bareboat Charterer shall provide, or cause to be provided, at
its own expense, such additional outfit, furniture, furnishings, appliances,
spare and replacement parts, tools and stores, not required by Articles 3(d) or
4(a) hereof, as may be required for the operation of the Vessel under the Time
Charter. Such additional property so provided shall not become part of the
Vessel but shall remain the property of the Bareboat Charterer, and the Bareboat
Charterer may, but need not, remove the same, without expense to the Shipowner,
at or before such redelivery, provided that if such property is removed the
Vessel shall be restored prior to redelivery to the condition it would have been
in if such property had never been installed, ordinary wear and tear excepted.
Any item of such property which is on board the Vessel and not so removed at the
time of such redelivery shall become the property of the Shipowner.
(d) All outfit, equipment, furniture, furnishings, appliances, spare
and replacement parts, tools and stores as shall be installed or placed on board
the Vessel in order to comply with Articles 3(d) or 4(a) hereof shall,
immediately upon such installation or replacement on board and without necessity
of further act, become part of the Vessel and the property of the Shipowner.
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ARTICLE 6
BAREBOAT CHARTERER'S CHANGES; INSTALLATION
OF EQUIPMENT AND REMOVAL OF PARTS
(a) The Bareboat Charterer shall make, or cause to be made, at its sole
cost and expense, any structural change or alteration in the Vessel and install
any additional equipment on the Vessel, which is required by Articles 3(d) or
4(a) hereof. In addition to any changes in the Vessel required to comply with
the provisions of Articles 3(d) or 4(a) hereof, the Bareboat Charterer may,
subject to the approval of the Secretary to the extent required by the Security
Agreement or of Occidental to the extent required by the Second Mortgage, at its
sole cost and expense, make any additional structural changes and alterations in
the Vessel, but with the prior written consent of the Shipowner; provided,
however, that such changes and alterations do not (i) diminish the
seaworthiness, utility or market value of the Vessel, (ii) adversely affect the
ABS classification and rating required to be maintained hereunder, (iii)
conflict with or result in a violation of any other provisions of this Bareboat
Charter or (iv) require the Vessel to be re-documented. All such changes and
alterations shall be expeditiously completed in good and workmanlike manner, and
all equipment and material installed in connection therewith shall, without
necessity of further act, become part of the Vessel and the property of the
Shipowner.
(b) Subject to the provisions of Articles 3(d) and 4(a) hereof and with
the written permission of the Time Charterer, the Bareboat Charterer may install
or cause to be installed any pumps, gear or equipment it may require in addition
to that on board the Vessel at the time of delivery thereof, provided that such
installations are accomplished without expense to the Shipowner. Pumps, gear and
equipment so installed shall without necessity of further act, become part of
the Vessel and the property of the Shipowner; provided, however, that any time
prior to redelivery of the Vessel pursuant to Article 13 hereof, and so long as
no event of
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Bareboat Default shall have occurred and be continuing, any such pumps, gear or
equipment not required to be installed in order to meet the requirements of
Article 3(d) or of Article 4(a) hereof and not installed as replacement for
property on board the Vessel at the time of delivery thereof, may be removed by
the Bareboat Charterer, at its own expense, provided that the Vessel is restored
prior to such redelivery to the condition it would have been in if such pumps,
gear or other equipment had never been installed, ordinary wear and tear
excepted; otherwise such pumps, gear and equipment remaining on board at such
redelivery shall, without necessity of further act, remain the property of the
Shipowner.
(c) Subject to provisions of Articles 3(d) and 4(a) hereof, the
Bareboat Charterer may, in the ordinary course of maintenance, repair or
overhaul of the Vessel, remove or cause to be removed any item of property
constituting a part of the Vessel, provided such item of property, other than
pumps, gear or equipment installed pursuant to Article 6(b) hereof, is replaced
as promptly as possible by an item of property which is free and clear of all
security interests, liens, encumbrances and rights of others, is in a good
operating condition, renders the Vessel as seaworthy and has a value and utility
at least equal to the item of property being replaced. Any item of property
removed from the Vessel as provided in the preceding sentence shall be disposed
of in a good faith manner with any proceeds resulting therefrom being credited
against Operating Costs. Any such replacement item of property shall, without
necessity of further act, become part of the Vessel and the property of the
Shipowner.
(d) The Bareboat Charterer shall have the right to paint the Vessel in
its own colors or those of any subcharterer or other user of the Vessel, to name
or re-name the Vessel or permit any such subcharterer or user to name or re-name
the Vessel, to install and display its or such subcharterer's or user's stack
insignia and to fly its or such subcharterer's or user's house
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flag, all without expense to the Shipowner, and the Bareboat Charterer shall
remove, or cause to be removed, such flag and insignia, and, at its own expense,
if requested by the Shipowner, shall remove, or cause to be removed, any
distinctive colors, prior to redelivery.
(e) Basic Hire shall continue unabated during any construction
undertaken to change the Vessel. The Shipowner, the United States, and
Occidental shall be named as additional assureds on any builder's risks or other
insurance policy entered into by or for the benefit of the Bareboat Charterer
incident to construction undertaken to change the Vessel.
ARTICLE 7
LIENS AND ATTACHMENTS
(a) If the Vessel is ever libeled or otherwise attached, levied upon or
taken into custody, or detained or sequestered, by virtue of any proceeding in
any court or tribunal, or by any governmental or other authority, in any country
or nation of the world, on account of any mortgage, pledge, lien, encumbrance or
claim on or with respect to the Vessel or its profits, the Bareboat Charterer
shall immediately give notice thereof to the Shipowner, the Secretary and
Occidental by electronic means, confirmed by letter, and, subject to the
obligations of the Bareboat Charterer under the next sentence of this Article
7(a), the Time Charterer in the Time Charter has agreed, at its sole cost and
expense promptly to take or cause to be taken such action as may be necessary to
cause the Vessel to be released, and such liens or claims to be discharged,
within a reasonable time not exceeding 30 days. If any such mortgage, pledge,
lien, encumbrance or claim arises, or in the event that the Vessel shall be
libeled or otherwise attached, levied upon or taken into custody, or detained or
sequestered, by virtue of any proceeding in any court or tribunal, or by any
governmental or other authority, on account of
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any liens or claims against the Bareboat Charterer, any person or entity related
to the Bareboat Charterer or any other Person operating the Vessel on behalf of
the Bareboat Charterer, which such liens or claims are unrelated to the Bareboat
Charterer's chartering of the Vessel or, if related, result from the Bareboat
Charterer's failure properly to apply funds paid by the Time Charterer as
Operating Costs, the Bareboat Charterer agrees that it shall promptly, at its
own cost and expense, remove or cause to be removed such mortgage, pledge, lien,
encumbrance or claim, and cause the Vessel to be released, and cause all liens
and claims on the Vessel in connection with such libel or other action to be
discharged (whether by furnishing a surety bond or otherwise), within a
reasonable time not exceeding 30 days.
(b) After the execution of this Bareboat Charter, no additional
mortgage, lien, charge or other encumbrance shall be placed on the Vessel or its
profits by the Bareboat Charterer without the prior written consent of the
Shipowner, the Secretary and Occidental.
(c) Neither the Shipowner, the Bareboat Charterer, any sub-bareboat
charterer, time charterer, the Master of the Vessel, nor 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 mortgage, lien, charge or other
encumbrance whatsoever except:
(1) the liens of the Mortgage and the Second Mortgage; and
(2) this Bareboat Charter and any assignments and subcharters permitted
under this Bareboat Charter; and
(3) liens for Crew's Wages, for salvage (including contract salvage)
and general average which are:
(i) not yet due and payable, or
(ii) either unclaimed or covered by insurance, or
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(iii) being contested by appropriate proceedings diligently
conducted so long as such proceedings do not involve a significant risk of a
sale, forfeiture or loss of the Vessel; and
(4) contract and tort liens arising out of or incident to current
operations of, or repairs to, the Vessel (except for liens for Crew's Wages,
salvage and general average) which are subordinate to the liens of the Mortgage
and the Second Mortgage or liens covered by insurance or includable in any
deductible applicable thereto and which are:
(i) based on claims not yet due and payable, or
(ii) being contested by appropriate proceedings diligently
conducted so long as such proceedings do not involve a significant risk of a
sale, forfeiture or loss of the Vessel.
(d) The Bareboat Charterer agrees to warrant and defend the title to,
and the possession of, the Vessel against the claims of all persons arising
during the Charter Period. The Bareboat Charterer agrees to cause a true copy of
this Bareboat Charter, and a certified copy of the Mortgage and the Second
Mortgage, as furnished by the Shipowner, to be placed with the Vessel's papers
on board the Vessel and to exhibit, or cause to be exhibited, the same, on
demand, to any person having business with the Vessel which may give rise to a
maritime lien upon the Vessel or to the sale, conveyance, mortgage or charter
thereof, and, on demand, to any representative of the Shipowner.
(e) The Bareboat Charterer shall cause to be placed and prominently
displayed in the Master's cabin or office and the chart room of the tug a framed
printed notice, of such size that the printed matter covers a space not less
than six inches in width and nine inches in length, and on the barge, a notice
not less than six inches in width and nine inches in length, affixed by means of
a durable plate, in both cases reading as follows:
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"NOTICE OF PREFERRED MORTGAGES AND CHARTER
This Vessel is owned by Julius Owner Corporation, a Delaware
corporation and (i) is covered by a First Preferred Fleet
Mortgage dated as of March 18, 1981, in favor of the United
States of America, under authority of Chapter 313, Title 46 of
the United States Code, as amended and supplemented, (ii) is
covered by a Second Preferred Fleet Mortgage dated ____, 1999,
in favor of Occidental Petroleum Corporation, under authority
of Chapter 313, Title 46 of the United States Code, and (iii)
is under bareboat charter (the "Bareboat Charter") dated ____,
1999, to Julius ODS Corporation (the "Bareboat Charterer").
Under the terms of said Mortgages and said Bareboat Charter,
neither the Shipowner, Bareboat Charterer, the Master of this
Vessel, nor any other person has any right, power or authority
to create, incur or impose, or permit to be placed, or
imposed, upon this Vessel any lien other than statutory liens
of the Mortgages or incident to current operations of this
Vessel and certain liens in favor of the United States of
America."
ARTICLE 8
INSURANCE
(a) The Bareboat Charterer shall provide and maintain, or cause to be
provided and maintained, at its own expense, insurance on or with respect to the
Vessel and the operation thereof during the Charter Period as follows:
(1) Marine navigating risk hull and machinery insurance or
port risk hull and machinery insurance (when permitted under this Article 8 (a))
and marine war navigating risk hull and machinery insurance, together with
increased value and total loss only insurance, in each case to the extent
permitted by such policies. During the Original Term, such insurance (including
such increased value and total loss only insurance) shall be in amounts
aggregating at all times not less than the greater of 105 percent of the then
Stipulated Loss Value or the full commercial value (as determined by the
Secretary pursuant to the Security Agreement, until the Security Agreement shall
have been discharged) of the Vessel, but in no event less than 110
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percent of the aggregate unpaid principal amount of Obligations then
Outstanding, including obligations under the Second Mortgage. During any Renewal
Term, such insurance shall be in amounts aggregating at all times not less than
the full commercial value of the Vessel. While being operated, the Vessel shall
always be covered by marine navigating risk hull and machinery insurance and
marine war navigating risk hull and machinery insurance. When and while the
Vessel is idle or laid up, in lieu of the aforesaid marine navigating risk hull
and machinery insurance and increased value and other forms of total loss
insurance, the Bareboat Charterer may take out port risk hull and machinery
insurance; provided, however, that at all times the Vessel shall be covered by
marine war navigating risk hull and machinery insurance. Any of the foregoing
insurance may provide for a deductible amount approved by the Secretary,
Occidental, and the Shipowner, but no consent or approval shall be required for
a deductible amount of up to an aggregate of $500,000 with respect to any
accident, occurrence or event other than an actual or constructive total loss of
the Vessel in any one year. Any such deductible amount provided for in insurance
required to be provided and maintained during the Renewal Term shall be agreed
in advance of such Renewal Term by the Bareboat Charterer and the Shipowner.
All policies of insurance required under this Article 8(a)(1)
shall, unless the Secretary, Occidental, and the Shipowner shall otherwise
consent in writing, provide that in the event of an actual or constructive total
loss of either of the hulls of the Vessel, the full aggregate amount for which
both hulls are insured under any such policies shall be payable (i) until the
Security Agreement shall have been discharged, to the Secretary, except as
provided in Article 8(c)(2) hereof, and (ii) thereafter, to the Shipowner.
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(2) Marine and war risk protection and indemnity insurance
and, at the Bareboat Charterer's option, excess protection and indemnity
insurance and marine multi-liability insurance. During the Charter Period, the
foregoing insurance shall be against such risks and in such form as are, and the
amount of such insurance shall be not less than such amounts as are, in the
opinion of the insurance broker expressed in its most recent report delivered in
accordance with, but subject to, the provisions of Article 8(g) hereof,
necessary or advisable for the protection of the interests of the Shipowner;
provided, however, that during the Original Term such insurance to the extent
obtainable shall be in amounts aggregating not less than the greater of (i) 105
percent of the then Stipulated Loss Value of the Vessel, (ii) the full
commercial value (as determined by the Secretary) of the Vessel, (iii) 110
percent of the aggregate principal amount of the obligations then Outstanding,
including the obligations under the Second Mortgage, or (iv) such amount, which
is then reasonably obtainable by prudent shipowners and managing agents, as may
be approved from time to time by the Secretary; and provided further, that
during any Renewal Term such insurance to the extent obtainable shall be in
amounts aggregating not less than the full commercial value of the Vessel (as
determined by the Bareboat Charterer and not disapproved by the Shipowner in the
reasonable exercise of its discretion within 30 days after its receipt of a
notice of such determination, or in the absence of agreement, as determined by
the Appraisal Procedure). The Shipowner shall have the right to require that
such insurance provide for deductibles in amounts approved by the Secretary, but
that no consent or approval shall be required if such deductibles aggregate not
more than $250,000 with respect to any accident, occurrence or event and
$250,000 with respect to each cargo or property carried. (3) Insurance against
liability under law or international convention arising out of pollution,
spillage or leakage. Subject to the provisions of the next sentence,
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during the Charter Period, the foregoing insurance shall be against such risks
and in such forms as are, and the amount of such insurance shall be not less
than such amounts as are, in the opinion of the insurance broker expressed in
its most recent report delivered in accordance with, but subject to, the
provisions of Article 8(g) hereof, necessary or advisable for the protection of
the interests of the Shipowner. During the Charter Period, such insurance to the
extent obtainable shall be in an amount equaling at all times not less than
$700,000,000 with respect to any occurrence.
(4) Such insurance to the extent obtainable on or with respect
to the Vessel and the operation thereof as the Shipowner is required to provide
and maintain pursuant to the terms of the Security Agreement and the Second
Mortgage.
(b) (1) All insurance required to be taken out and maintained
pursuant to the terms of this Bareboat Charter shall include the United States
(as Mortgagee under the Mortgage), Occidental (as Mortgagee under the Second
Mortgage), the Shipowner, the Bareboat Charterer, the Time Charterer, and any
sub-charterer and operator of the Vessel which is an Affiliate of the Bareboat
Charterer as additional assureds as their interests may appear, and the policies
or certificates of insurance shall provide that there shall be no recourse
against the Shipowner, the Bareboat Charterer, the United States or Occidental
for the payment of premiums, commissions, club calls, assessments or advances.
(2) All insurance carried pursuant to Article 8(a) hereof
shall contain provisions or endorsements (A) waiving the insurer's right to
subrogation against the United States (as Mortgagee under the Mortgage),
Occidental (as Mortgagee under the Second Mortgage), the Shipowner, the Bareboat
Charterer, the Time Charterer, and any sub-charterer and operator of the Vessel
which is an Affiliate of the Bareboat Charterer and, to the extent
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obtainable, such of its corporate Affiliates as the Bareboat Charterer shall
designate, unless any such Person shall request that a waiver of subrogation in
favor of it not be obtained, in which event it need not be, (B) stating that
such insurance is primary insurance without any right of contribution with
respect to any insurance carried by or on behalf of the Shipowner , other than
as provided pursuant to this Bareboat Charter, on the same interest insured and
(C) stating that inasmuch as such insurance covers more than one insured person,
all terms, conditions and exclusions shall be treated as if a separate policy of
insurance were issued to each insured, and the inclusion in the policies of more
than one assured shall not operate to increase the liability of the insurers.
(3) Except with respect to the Hull War Risks and Strikes
Clauses to which 14 days' notice or Automatic Termination provisions apply and
except with respect to the Protection and Indemnity insurance to which a 14 day
notice provision applies, the policies in respect of insurance carried pursuant
to Article 8(a) hereof shall provide that at least 10 days (and to the extent
reasonably available, 30 days') prior notice by United States certified mail,
return receipt requested, shall be given to the Shipowner, the Bareboat
Charterer, the Secretary and Occidental by the underwriters of any cancellation
for the nonpayment of premiums, commissions, club calls, assessments or
advances. Each policy in respect of such insurance shall further provide, to the
extent reasonably available from the underwriter of such policy, that at least
30 days' prior notice by United States certified mail, return receipt requested,
shall be given to the Shipowner, the Bareboat Charterer, the Secretary and
Occidental by the underwriter of any termination, cancellation, lapse or
material modification of the terms of such policy. If the Bareboat Charterer
receives, but the Shipowner does not receive, any notice
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referred to in the preceding sentence, the Bareboat Charterer shall promptly
deliver a copy of such notice to the Shipowner, the Secretary and Occidental.
(c) All policies of insurance required to be taken out and maintained
pursuant to the terms of this Bareboat Charter or other evidence thereof shall
provide that losses thereunder shall be payable (i) until the Security Agreement
shall have been discharged, to the Secretary for application pursuant to the
Security Agreement and thereafter to Occidental pursuant to the Second Mortgage,
and (ii) thereafter, to the Shipowner; provided, however, that such policies of
insurance or other evidence thereof shall provide that:
(1) in the case of insurance carried pursuant to Article
8(a)(2) hereof or Section 2.07(e) of Exhibit 1 to the Security Agreement or the
provisions of the Second Mortgage:
(i) if neither the Shipowner nor the Bareboat
Charterer has incurred the loss, damage or expense in question, any loss under
such insurance may be paid directly to the Person by whom any liability covered
by such policies or certificates has been incurred (whether or not a Default
under the security Agreement then exists), and
(ii) if the Shipowner or the Bareboat Charterer shall
have incurred the loss, damage or expense in, question, and shall have presented
to the underwriters satisfactory evidence that the liability insured against has
been discharged or is being discharged simultaneously with such payment, any
such loss under such insurance shall be paid to the Shipowner or the Bareboat
Charterer, as the case may be, in reimbursement, if there is no existing Default
under the Security Agreement or the Second Mortgage of which the underwriter has
written notice from the Shipowner, the Bareboat Charterer or the Secretary, or,
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if there is such an existing Default, to the Secretary to be held and applied
pursuant to the Security Agreement; and thereafter to Occidental pursuant to the
Second Mortgage; and
(2) in the case of insurance carried pursuant to Article
8(a)(1) hereof or Section 2.07(b) of Exhibit 1 to the Security Agreement or the
Second Mortgage, so long as the accident, occurrence or event does not result in
an Event of Loss, payment of all losses up to $250,000 (or such higher figure as
the Secretary may from time to time approve) by all insurance underwriters with
respect to any one accident, occurrence or event may be made (i) directly for
the repair or other charges involved, or (ii) directly to the Bareboat Charterer
as reimbursement if the Bareboat Charterer shall have first fully repaired the
damage and paid the cost thereof and the other charges involved, and the
underwriters shall have received evidence of such repair and payment or that
such payment will be made simultaneously with the payment by the underwriters;
provided, however, that the underwriters shall not have received written notice
from the Secretary, Occidental, the Bareboat Charterer or the Shipowner as to
the occurrence of a Default under the Security Agreement or the Second Mortgage
or, if so, have been notified by the Secretary in writing that such Default
under the Security Agreement or by Occidental in writing that such Default under
the Second Mortgage has been cured or waived.
(d) In the event that a claim is made against the Vessel for loss,
damage or expense which is covered by insurance, and it is necessary for the
Bareboat Charterer to obtain a bond or to supply other security to prevent
arrest of the Vessel or to release the Vessel from arrest on account of said
claim, the Shipowner shall on request of the Bareboat Charterer, assign to any
person executing a surety or guarantee bond or other agreement to save or
release the Vessel from such arrest, all right, title and interest of the
Shipowner in and to said insurance covering said loss, damage or expense as
collateral security to indemnify against liability under said
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bond or other agreement; provided, however, that (i) the Secretary shall have
advised the Shipowner that the United States has so assigned its right, title
and interest in and to such insurance proceeds and (ii) no Event of Bareboat
Default shall have occurred and be continuing.
(e) The Bareboat Charterer shall have the duty and responsibility to
make, or cause to be made, at its own expense, all proofs of loss and take or
cause to be taken any and all other steps necessary to effect prompt collections
from underwriters for any loss under any insurance on or with respect to the
Vessel or the operation thereof pursuant to Article 8(a) hereof. The Shipowner
shall cooperate in making all proofs of loss and take all other reasonable steps
necessary to effect collection from underwriters.
(f) The insurance provided and maintained on or with respect to the
Vessel or the operation thereof in accordance with this Bareboat Charter shall
be on such forms of policies or other evidence thereof as are required by
Section 2.07 of Exhibit 1 to the Security Agreement until the Security Agreement
shall have been satisfied and discharged and thereafter as required by the
Second Mortgage, and thereafter as are recommended by the insurance brokers
referred to in Article 8(g) hereof as being customary at the time for vessels of
similar size, type, trade and cargo.
(g) (1) The Bareboat Charterer shall furnish, or cause to be furnished,
to the Shipowner, the Secretary (so long as the Security Agreement shall not
have been satisfied and discharged), and Occidental (so long as the Second
Mortgage shall not have been satisfied
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and discharged) on the Delivery Date and on each annual anniversary thereafter,
a detailed report, signed by marine insurance brokers designated by the Bareboat
Charterer satisfactory to the Shipowner and the Secretary (so long as the
Security Agreement shall not have been satisfied and discharged) and Occidental
(so long as the Second Mortgage shall not have been satisfied and discharged),
describing the insurance carried and maintained on or with respect to the Vessel
and the operation thereof and stating, in effect, that such insurance complies
in all respects with the applicable requirements of this Bareboat Charter, the
Security Agreement and the Second Mortgage.
(2) Such report shall state that in the opinion of such
insurance broker, the liability insurance referred to in Articles 8(a)(2) and
8(a)(3) hereof then carried on the Vessel is against such respective risks and
in such respective forms as are, and the respective amounts of such insurance
are not less than such amounts as are, necessary or advisable for the protection
of the interest of the Shipowner. Such report shall further state that, in the
opinion of such insurance broker, all insurance carried pursuant to Article 8(a)
hereof is underwritten by satisfactory insurance companies, underwriters
associations or underwriting funds.
(3) In connection with any insurance obtained by the Bareboat
Charterer under this Article 8, the Bareboat Charterer will cause such insurance
broker to agree (i) to advise the Shipowner, the Secretary and Occidental
promptly of any default in the payment of any premium, commission, club call,
assessment or advance required (whether for new insurance or for insurance
replacing, renewing or extending existing insurance) and of any other act,
omission or event of which such insurance broker has knowledge and which in its
sole judgement (A) might invalidate or render unenforceable, or cause the
cancellation or lapse or prevent the renewal or extension of, in whole or in
part, any insurance carried pursuant to Article 8(a) hereof, (B) or might result
in any material modification of the terms of any such insurance or (C) has or
might result in any such insurance not being in compliance with the applicable
requirements of this Bareboat Charter, the Security Agreement and the Second
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Mortgage, and (ii) to furnish the Shipowner, the Secretary and Occidental from
time to time, upon request, detailed information with respect to any of the
insurance carried on or with respect to the Vessel or the operation thereof.
(4) At any time during the Charter Period, the Bareboat
Charterer's insurance broker which is then acting pursuant to Article 8(g)(1)
hereof may (but shall not be obligated hereto to do so) furnish to the
Secretary, Occidental, and the Shipowner a report, in addition to the report
required pursuant to Article 8(g)(1) hereof, to the effect that, in the opinion
of such insurance broker, the amount of any liability insurance referred to in
Articles 8(a)(2) or 8(a)(3) hereof then carried on the Vessel is either higher
or lower than an amount (the "New Amount"), specified in such additional report,
which is necessary or advisable for the protection of the interests of the
Shipowner. If any such additional report is received and the New Amount
specified therein for any such liability insurance is higher than that then
carried on the Vessel, the Bareboat Charterer shall obtain, as promptly as
practicable, an additional amount of such liability insurance so that the amount
thereof is at least equal to such New Amount. If any such additional report is
received and the New Amount specified therein for any such liability insurance
is lower than that then carried on the Vessel, the Bareboat Charterer may reduce
the amount of such liability insurance, so long as the reduced amount thereof is
at least equal to such New Amount and, if such additional report relates to any
liability insurance referred to in Articles 8(a)(2) or 8(a)(3) hereof, such
reduced amount thereof is not less than the minimum amount of such insurance
required to be carried by such Articles 8(a)(2) or 8(a)(3) hereof.
(h) The Bareboat Charterer shall deliver, or cause to be delivered, to
the Secretary (so long as the Security Agreement shall not have been satisfied
and discharged) and to
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Occidental (so long as the Second Mortgage shall not have been satisfied and
discharged) and to the Shipowner, evidence satisfactory to each of them that the
insurance required to be provided and maintained pursuant to this Bareboat
Charter has been issued and in full force and effect.
(i) Nothing in this Article 8 shall prohibit the Bareboat Charterer, or
if the Bareboat Charterer does not in the first instance, the Shipowner, from
placing, at the expense of the Bareboat Charterer, insurance on or with respect
to the Vessel or the operation thereof in an amount exceeding the full
commercial value of the Vessel, or 110 percent of the aggregate principal amount
of the Obligations then Outstanding or 105 percent of the then Stipulated Loss
Value, as provided in Article 8(a)(1) hereof, unless such insurance would
conflict with or otherwise limit the insurance to be provided or maintained in
accordance with Article 8(a) hereof. The Bareboat Charterer agrees, upon receipt
of a Request of, and payment of the premium therefor by the Shipowner, to apply
for and carry, or cause to be applied for and carried, any insurance permitted
to be carried by the Shipowner pursuant to the preceding sentence, to the extent
such insurance is available, with the Shipowner named as the sole loss payee.
The Bareboat Charterer agrees to furnish the Shipowner and the Secretary, as the
case may be, until the Security Agreement shall have been discharged, promptly
with copies of all policies relating to such insurance.
(j) The Bareboat Charterer will cause all insurance required to be
provided and maintained by this Bareboat Charter with marine insurance
companies, underwriters associations or underwriting funds approved by the
Shipowner and, until the Security Agreement shall have been discharged, the
Secretary, which approval of the Shipowner shall not be unreasonably withheld or
delayed.
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(k) The Bareboat Charterer shall not declare or agree upon a
compromised, constructive or agreed total loss of the Vessel without the prior
written consent of the Shipowner, and, until the Security Agreement shall have
been discharged, the Secretary and thereafter Occidental while the Second
Mortgage is in effect.
ARTICLE 9
TERM OF BAREBOAT CHARTER, OPTION
TO RENEW AND BASIC HIRE
(a) Unless sooner terminated in accordance with its terms, this
Bareboat Charter shall be in effect from the Effective Date for the balance of
the Original Term then remaining and shall be extended for the same period as
the Time Charter is extended pursuant to the provisions of Section 3.2 of the
Time Charter.
(b) The Bareboat Charterer shall, on each Charter Hire Payment Date,
pay in immediately available funds to the Shipowner as hire for the use and
services of the Vessel during the continuance of this Bareboat Charter Basic
Hire an amount equal to the amount of principal and interest then due on the
Obligations. The Bareboat Charterer shall also pay as Supplemental Hire when the
same shall become due: directly to the Indenture Trustee during the period any
Obligations are outstanding, the Indenture Trustee Fees; directly to the
Secretary during the period any Obligations are outstanding, the Guarantee Fees
and directly to the Depository during the period any Obligations are
outstanding, the Depository Fees. Payments made by a Guarantor pursuant to its
Guarantee shall, to the extent of such payments, be deemed payments made by
Bareboat Charterer to the Shipowner pursuant to this Article 9(b). Payment of
Indenture Trustee Fees, Guarantee Fees and Depository Fees need not be paid in
immediately available funds.
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(c) In the event any amount of Basic Hire payable pursuant to the first
sentence of this Article 9 is not paid when due as provided in this Article 9,
the Bareboat Charterer promises to pay promptly, upon demand, in addition to
such amount of Basic Hire, interest (i) to, or on the order of the Shipowner in
an amount equal to the amount of the penalty interest due for the nonpayment of
principal of, and interest specified in the Obligations as a result of
non-payment when due of such principal of, premium, if any, and interest on such
Obligations, and (ii) to the Shipowner at the Interest Rate as applied to the
amount of such unpaid Basic Hire (other than any unpaid Basic Hire payable in
respect of principal of, premium, if any, and interest on the Obligations), for
the period from the due date of such Basic Hire until the date of payment
thereof. Payments of such interest made by a Guarantor pursuant to its Guarantee
shall, to the extent of such payments, be deemed payments made by Bareboat
Charterer pursuant to this Article 9(c).
(d) In the event any amount of Stipulated Loss Value or Supplemental
Hire (including any amount payable under Article 15(c) hereof) is not paid when
due pursuant to this Bareboat Charter, the Bareboat Charterer promises to pay,
in addition to such amount of Stipulated Loss Value or Supplemental Hire,
interest promptly upon demand (i) to, or on the order of, the Shipowner, in an
amount equal to the amount of the penalty interest due for the nonpayment of the
principal of, premium, if any, and interest specified in the Obligations as a
result of non-payment when due of such principal of, premium, if any, and
interest on the Obligations, and (ii) to the Shipowner at the Interest Rate as
applied to the amount of such unpaid Stipulated Loss Value or Supplemental Hire
(other than any unpaid portions of such amounts payable in respect of principal
of, premium, if any, and interest on the Obligations) for
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the period from the due date of such unpaid Stipulated Loss Value or
Supplemental Hire until the date of payment thereof.
(e) It is understood and agreed that all provisions of this Bareboat
Charter are under all circumstances to be construed and applied so that the
Shipowner will at all times be paid when due, whether or not the Shipowner has
performed under this Bareboat Charter, any and all amounts payable to it during
the Charter Period pursuant to any of the provisions of this Bareboat Charter
and without setoff or adjustment for any claim whatsoever of the Bareboat
Charterer. In addition, the Bareboat Charterer hereby agrees that, in the event
that the Shipowner fails to perform any covenant or obligation under this
Bareboat Charter, the Bareboat Charterer shall nevertheless make all payments
required to be made by it hereunder, when due, and otherwise perform all of its
obligations hereunder, provided, however, to the extent that a Guarantor,
pursuant to its Guarantee makes any payment required to be made by the Bareboat
Charterer hereunder, or performs any obligation required to be performed by the
Bareboat Charterer hereunder, such payment or performance shall be deemed,
solely as between the Shipowner and the Bareboat Charterer, to be performance or
payment by the Bareboat Charterer hereunder to the extent of the amounts so paid
by such Guarantor or Occidental. Nothing in this Article 9(e) shall be, or shall
be deemed to be, a waiver by the Bareboat Charterer of any rights against the
Shipowner under any specific indemnity in this Bareboat Charter.
(f) This Bareboat Charter may not be cancelled or terminated, except in
accordance with the express provisions hereof, for any reason whatsoever, and
the Bareboat Charterer shall have no right to be relieved or discharged from any
obligation or liability under this Bareboat Charter, except as otherwise
expressly provided herein, for any reason whatsoever. The
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Bareboat Charterer hereby waives, to the extent permitted by applicable law, any
and all rights which it may now have or which at any time hereafter may be
conferred upon it, by statute or otherwise, to terminate, cancel, quit or
surrender this Bareboat Charter except as otherwise expressly provided herein.
The Bareboat Charterer acknowledges and agrees that its obligation to pay Basic
Hire, Stipulated Loss Value, Supplemental Hire, any amounts otherwise payable
under this Article 9 and any other amount to be paid by the Bareboat Charterer
hereunder shall be absolute and unconditional, under any and all circumstances,
shall not be subject to any counterclaim, setoff, deduction, abatement or
defense based upon any claim the Bareboat Charterer may have against the
Shipowner, the Shipbuilder, the Indenture Trustee or any other person
whatsoever, and shall remain in full force and effect without regard to, and
shall not be released, discharged or in any way affected by any circumstance or
condition (whether or not the Bareboat Charterer shall have any knowledge or
notice thereof), including, but not limited to: (a) any amendment or
modification of or supplement to this Bareboat Charter, any agreements relating
to any part thereof 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, (b) any failure
on the part of the Shipowner, the Indenture Trustee, or any other person to
perform or comply with any term of this Bareboat Charter or any other such
instrument or agreement; (c) any waiver, consent, change, extension, indulgence
or other action or inaction under or in respect of this Bareboat Charter, 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, reorganization, arrangement,
readjustment, composition, liquidation or similar proceeding with respect to the
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Shipowner, the Indenture Trustee, the Bareboat Charterer, or any Affiliate of
any thereof, or their respective properties or creditors, or any action taken by
any court, trustee, receiver or liquidating agent in any such proceeding,
including, without limitation, any termination or rejection of this Bareboat
Charter, or any assignment thereof by any court, trustee, receiver or
liquidating agent of the Bareboat Charterer or the Shipowner or of any of their
respective properties in any such proceeding, (e) any limitation on the
liability or obligations of the Bareboat Charterer under this Bareboat Charter
or any termination, cancellation, frustration, invalidity, irregularity or
unenforceability, in whole or in part, of this Bareboat Charter or any term
thereof or any lack of power or authority of the Shipowner or the Bareboat
Charterer to enter into this Bareboat Charter; (f) any assignment or other
transfer of this Bareboat Charter by the Bareboat Charterer or any lien, charge
or encumbrance, from whatever source arising, on or affecting the Bareboat
Charterer's estate in, or any subchartering of, all or any part of the Vessel
(whether or not pursuant to the express provisions of this Bareboat Charter);
(g) any damage to, or loss, destruction, requisition, seizure, forfeiture or
marshal's or other sale of the Vessel or any exercise of rights with respect to
the Vessel under the Mortgage or the Second Mortgage; (h) any libel, 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; (i) any title defect or encumbrance or any
dispossession from the Vessel by title paramount or otherwise; (j) any act,
omission, misrepresentation or breach on the part of the Shipowner or the
Bareboat Charterer under this Bareboat Charter, or any other agreement at any
time existing between the Shipowner and the Bareboat Charterer or under any
statute, law or governmental regulation; (k) any other circumstance whatsoever
which might otherwise constitute a legal or equitable discharge or defense of a
bareboat charterer and irrespective of
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any other circumstance which might otherwise limit the recourse against the
Bareboat Charterer, (l) 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; (m) any ineligibility of the Vessel for documentation
under the laws of the United States; or (n) any other occurrence or condition
whatsoever, foreseen or unforeseen, whether similar or dissimilar to the
foregoing, now existing or hereafter occurring. Even though the Bareboat
Charterer shall be deprived of or limited in the use of the Vessel in any
respect or for any length of time, whether or not by reason of some act,
omission or breach on the part of the Shipowner, the Bareboat Charterer or any
other party, whether or not resulting from accident and whether or not without
fault on the part of the Bareboat Charterer, the Bareboat Charterer will
continue to make all payments required of the Bareboat Charterer by the terms of
this Bareboat Charter, whether for Basic Hire, Stipulated Loss Value,
Supplemental Hire or otherwise, without interruption or abatement, unless and
until this Bareboat Charter shall have terminated with respect to the Vessel in
accordance with the express provisions hereof. If for any reason whatsoever this
Bareboat Charter shall be terminated in whole or in part by operation of law or
otherwise, except as specifically provided herein, the Bareboat Charterer
nonetheless agrees to pay an amount equal to each payment of Basic Hire,
Stipulated Loss Value, or other amounts at the time such payment would have
become due and payable in accordance with the terms hereof had this Bareboat
Charter not been terminated in whole or in part.
ARTICLE 10
EVENT OF LOSS AND RIGHT TO TERMINATE
(a) In case an Event of Loss occurs during the Original Term, the
Bareboat Charterer shall give prompt written notice to the Shipowner (with a
copy to the Indenture
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Trustee and the Secretary) of such Event of Loss and the Bareboat Charterer
shall thereafter give written notice to the Shipowner (with a copy to the
Indenture Trustee and the Secretary) of the Loss Termination Date (the "Loss
Termination Date"), which date shall be a Business Day, specified in such
notice, not less than 40 days after the date notice of the Event of Loss is
given, but not more than 180 days after the date on which such Event of Loss
shall be deemed to have occurred, provided, however, that if a constructive or
an agreed or compromised total loss of the Vessel is declared or agreed by the
underwriters under the insurance more than 105 days after the date of the
casualty giving rise to such total loss, then the "Loss Termination Date" shall
be 75 days (or the next succeeding Business Day) after the date on which such
total loss is declared or agreed by the underwriters. Not later than 10:00 a.m.
San Francisco time on such Loss Termination Date, the Bareboat Charterer shall
pay to, or on the order of, the Shipowner, the sum of (i) the Stipulated Loss
Value applicable to the Loss Termination Date, (ii) the final Indenture Trustee
Fees, Guarantee Fees and Depository Fees, (iii) an amount equal to all expenses
(including legal and investigatory fees) incurred by, and not otherwise
reimbursed to, the Shipowner in connection with the occurrence of the Event of
Loss, as set forth in an Officer's Certificate of the Shipowner received by the
Bareboat Charterer at least three Business Days prior to the Loss Termination
Date, (iv) all amounts of Basic Hire and Supplemental Hire which have become due
and payable under this Bareboat Charter but which have not been paid prior to
the Loss Termination Date, and (v) any amounts which have become due and payable
under the Participation Agreement but which have not been paid prior to the Loss
Termination Date.
(b) In case there occurs an Event of Loss after the Original Term and
prior to the end of the Charter Period, and the Bareboat Charterer shall have
given prompt written notice to
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the Shipowner of its election to terminate this Bareboat Charter, then this
Bareboat Charter shall terminate on the Loss Termination Date specified in such
written notice. Not later than 10:00 a.m. San Francisco time on such Loss
Termination Date, the Bareboat Charterer will pay to the Shipowner the sum of
(i) all amounts of Basic Hire and Supplemental Hire which have become due and
payable under this Bareboat Charter, but have not been paid prior to the Loss
Termination Date, and (ii) the Shipowner expenses as described in clause (iii)
of Article 10(a) hereof.
(c) Against the payment obligations of Bareboat Charterer under Article
10(a) hereof, there shall be credited all Event of Loss Proceeds received prior
to the Loss Termination Date by the Indenture Trustee, the Shipowner, or the
Secretary, as the case may be. So long as no Event of Bareboat Default shall
have occurred and be continuing, all Event of Loss Proceeds up to the amount of
payments required to be made by the Bareboat Charterer under Article 10(a)
hereof, received at any time by the Shipowner (and which are not required to be
paid over to the Indenture Trustee during the Original Term) shall be paid over
to the Bareboat Charterer upon payment in full of all amounts required to be
paid by the Bareboat Charterer under Article 10(a) hereof, provided, however,
that during any Renewal Term the Shipowner shall be entitled to retain an amount
equal to the full commercial value of the Vessel as determined pursuant to
Article 8(a) hereof. Until and including the Loss Termination Date, the Bareboat
Charterer shall continue to make all payments of Basic Hire and Supplemental
Hire when due irrespective of the occurrence of the Event of Loss. This Bareboat
Charter shall terminate upon the making by, or on behalf of, the Bareboat
Charterer of the payments to the Shipowner required by this Article 10 and all
other amounts due and payable under this Bareboat Charter, but which have not
been paid prior to the Loss Termination Date. Payments of any amounts due
pursuant to
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this Article 10 made by the Guarantor pursuant to the Bareboat Charter Guarantee
shall, to the extent of such payments, be deemed payments made by the Bareboat
Charter pursuant to this Article 10.
(d) Upon termination of this Bareboat Charterer pursuant to this Article
10: (i) the Shipowner shall obtain a release of the Vessel from the liens of the
Mortgage and Second Mortgage and of the Secretary under the Security Agreement;
(ii) with the prior written consent, if necessary, of any governmental authority
having jurisdiction, the Vessel or its remains, shall be transferred by the
Shipowner to the Bareboat Charterer or its designee, such transfer to be without
recourse to or warranty by the Shipowner except that the Shipowner shall warrant
that it is transferring whatever title it received to the Vessel free and clear
of any liens, charges or encumbrances created by it; (iii) the Bareboat
Charterer or its designee shall be subrogated to all rights and claims which the
Shipowner shall have with respect to the Vessel or its remains or which shall
arise in connection with the Event of Loss, and the Bareboat Charterer shall
assume all liabilities, if any, with respect to the Vessel and make payment in
satisfaction thereof directly to the persons entitled thereto; and (iv) the
Bareboat Charterer shall have the power to abandon the Vessel (with the prior
written approval of the Secretary, until the Security Agreement shall have been
discharged). All costs and expenses of the Shipowner in connection with the
taking of any action under this Article 10(d) shall be for the account of, and
payable by, the Bareboat Charterer.
ARTICLE 11
[RESERVED]
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ARTICLE 12
REQUISITION OF USE
(a) In the event that during the Charter Period the Vessel is
requisitioned for use by any governmental authority of the United States or any
person acting under color of such governmental authority, on any basis not
involving, or not equivalent to, acquisition of title thereto or forfeiture
thereof, the Bareboat Charterer shall promptly notify or cause to be notified
the Bareboat Charterer by electronic means, confirmed by letter. Unless and
until this Bareboat Charter is terminated pursuant to its terms, this Bareboat
Charter shall nevertheless continue in effect, and the Bareboat Charterer will
continue to remain liable for all other obligations under this Bareboat Charter,
other than those obligations the performance of which physically 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 Period.
(b) (1) In the event that such requisition of use continues for a
period of more than 90 days, and the Bareboat Charterer shall have given a
Requisition Termination Notice specifying the Requisition Termination Date, then
so long as the conditions of Article 12 of the Bareboat Charter have been
satisfied, this Bareboat Charter shall terminate; provided, however, that the
requisition of use shall be continuing on the Requisition Termination Date.
(2) During the period from the date of the Requisition Termination
Notice until the Requisition Termination Date specified in such notice, the
Bareboat Charterer may, if requested by the Shipowner, as agent for the
Shipowner, solicit bids for the purchase of the Vessel for cash on the
Requisition Termination Date. The Bareboat Charterer shall certify to
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the Shipowner in writing the amount and terms of any bid received by it and the
name and address of the person submitting such bid. If no bid is received under
Article 12 hereof during the period ending on the Requisition Termination Date
specified in the Requisition Termination Notice or if the sale of the Vessel to
one of the Persons submitting such a bid during such period cannot be
consummated, the Requisition Termination Notice shall be deemed rescinded, this
Bareboat Charter shall continue in full force and effect and the Bareboat
Charterer may thereafter at any time give one or more further Requisition
Termination Notices.
(c) On the Requisition Termination Date, if there are one or more
bidders certified to the Shipowner pursuant to Article 12(b)(2) hereof which are
qualified pursuant to law to purchase the Vessel, the Shipowner shall elect, in
accordance with Article 11 hereof, either (1) to sell the Vessel and the rights
to any future Requisition of Use Proceeds attributable to the Vessel to one of
such bidders (selected by it in its sole discretion) for cash in the full amount
of its bid or (2) to retain ownership of the Vessel. Any sale shall be subject
to the prior receipt of all necessary governmental approvals and of the full
amount of the purchase price in immediately available funds on the Requisition
Termination Date, and shall be without recourse to or warranty by the Shipowner
except that the Shipowner shall warrant title to and freedom from liens created
by it and persons claiming through it. Except to the extent excused by the
requisition described in Article 12(a) hereof, the Bareboat Charterer shall
redeliver the Vessel in accordance with Article 13 hereof. The Shipowner shall
be entitled to the proceeds of any sale pursuant to this Article 12(c).
(d) (1) If the Requisition Termination Date occurs during the Original
Term, on the Requisition Termination Date, the Bareboat Charterer shall pay to
the Depository for deposit into the Bareboat Charter Payment Fund:
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(x) if the Shipowner has elected to retain ownership of the
Vessel, an amount equal to the excess, if any, of Termination Value as
of the Requisition Termination Date over the highest bid certified by
the Bareboat Charterer to the Shipowner pursuant to Article 12(b)(2)
hereof, the maker of which bid is financially competent and qualified
pursuant to law to purchase the Vessel; or
(y) if the Shipowner shall have elected to sell the Vessel, an
amount equal to the excess, if any, of Termination Value as of the
Requisition Termination Date over the net proceeds of the sale of the
Vessel pursuant to Article 12(c) hereof (or the amount of the highest
bid of a bidder qualified pursuant to law to purchase the Vessel if the
Shipowner shall have elected to sell the Vessel at a lower price, net of
any expenses of the Shipowner with respect to such sale).
(2) If the Requisition Termination Date occurs during any Renewal Term,
on the Requisition Termination Date, the Bareboat Charterer shall pay to the
Shipowner an amount, equal to the aggregate amount of Basic Hire determined
pursuant to Article 9(b)(2) hereof, calculated on a daily basis, payable from
the last Charter Hire Payment Date through the Requisition Termination Date.
(e) The Shipowner shall be under no duty to solicit bids with
respect to the Vessel, to inquire into the efforts of Bareboat Charterer to
obtain bids or otherwise to take any action in connection with any such sale,
other than as expressly provided herein. All costs and expenses of the Shipowner
in connection with any sale of the Vessel made pursuant to this Article 12 shall
be for the account of, and payable by, the Bareboat Charterer.
(f) If an Event of Bareboat Default or a Default under the
Security Agreement shall have occurred and until such Default shall have been
cured or waived, the
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Secretary (or if the Security Agreement shall have been discharged, the
Shipowner) shall be entitled to receive and retain all Requisition of Use
Proceeds; otherwise the Bareboat Charterer shall be entitled to receive and
retain all such payments. In the event that this Bareboat Charter is terminated
pursuant to this Article 12, the Shipowner, if the Shipowner retains ownership
of the Vessel, or the purchaser of the Vessel, as the case may be, shall be
entitled to receive and retain all Requisition of Use Proceeds attributable to
the period after the Requisition Termination Date.
(g) (1) In the event that during the Charter Period, the
Vessel is requisitioned for use by any governmental authority (other than by the
United States) or any Person or Persons, whether or not acting under color of
such governmental authority, the Bareboat Charterer shall promptly notify or
cause to be notified the Shipowner, the Secretary and Occidental by electronic
means, confirmed by letter. In the case of such requisition, unless such
requisition shall be withdrawn, reversed or released within 90 days, the
Bareboat Charterer, immediately after the 90-day period, shall give a
Requisition Termination Notice specifying the Loss Termination Date (as provided
in Article 10(a) of this Bareboat Charter) and thereafter the provisions of
Article 10 hereof for an Event of Loss shall apply.
(2) In the event that during the Charter Period there
shall occur the capture, condemnation, purchase, seizure or forfeiture of, or
any taking of title to, the Vessel by any governmental authority (other than by
the United States) or any Person or Persons, whether or not acting under color
of such governmental authority, the Bareboat Charterer shall promptly notify or
caused to be notified the Shipowner, the Secretary and Occidental by electronic
means, confirmed by letter. In the case of such capture, condemnation,
confiscation, purchase, seizure or forfeiture of, or any taking of title to, the
Vessel, unless such capture, condemnation,
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confiscation, purchase, seizure or forfeiture of, or any taking of title to, the
Vessel shall be withdrawn, reversed or released within 90 days, such capture,
condemnation, confiscation, purchase, seizure or forfeiture of, or any taking of
title to, the Vessel shall be deemed to be an Event of Loss and the provisions
of Article 10 hereof shall apply.
(h) Until and including the Requisition Termination Date, the Bareboat
Charterer shall continue to make payments of Basic Hire and Supplemental Hire
when due irrespective of the requisition of use of the Vessel. In addition, on
the Requisition Termination Date, the Bareboat Charterer shall pay to the
Shipowner an amount equal to the premium, if any, due in respect of the
redemption of the Obligations as a result of the termination of this Bareboat
Charter pursuant to this Article 12. Notwithstanding any provision to the
contrary in this Article 12, this Bareboat Charter shall not terminate unless
all amounts due under this Bareboat Charter shall have been paid, the Security
Agreement shall have been satisfied and discharged, and, unless the Shipowner
shall have elected to retain ownership of the Vessel, the Vessel shall have been
sold as provided in Article 12(c) hereof. Payments of amounts due under this
Article 12 made by the Guarantor pursuant to the Bareboat Charter Guarantee
shall, to the extent of such payments, be deemed payments made by the Bareboat
Charterer pursuant to this Article 12.
ARTICLE 13
REDELIVERY
(a) On the last day of the Charter Period, unless (i) an Event of Loss
has occurred, or (ii) this Bareboat Charter has been terminated pursuant to
Article 12(b) hereof, or (iii) use of the Vessel has been requisitioned an
described in Article 12(a) hereof and such requisition is continuing, the
Bareboat Charterer shall, except as provided in Article 13(b) hereof, at the
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Bareboat Charterer's cost and expense, redeliver the Vessel or cause the Vessel
to be redelivered to the Shipowner at any safe port in the continental United
States on the coast on or nearest to which the Vessel is trading at the end of
the Charter Period designated by the Shipowner by written notice to the Bareboat
Charterer at least 45 days prior to the end of the Charter Period. The Bareboat
Charterer agrees that at the time of such redelivery the Vessel (i) shall be
free and clear of all liens, charges and encumbrances (except any liens, charges
or encumbrances created by the Shipowner); (ii) shall be entitled to and shall
have the classification and rating required by Article 4(a) hereof; (iii) shall
have, with respect to remaining in class, no recommendations of an ABS surveyor
affecting class outstanding on the date of redelivery; and (iv) shall have no
requirements of any United States governmental agency or department having
jurisdiction unfulfilled and with all required certificates in effect, and if
redelivery shall be at the end of the Original Term, the Vessel shall have been
credited with at least its fifth special survey by ABS.
(b) Not earlier than 90 days prior to such redelivery, at the Bareboat
Charterer's expense, a joint survey shall be made by the Bareboat Charterer and,
the Shipowner(with drydocking only if required by ABS) to determine the
condition and fitness of the Vessel under the terms of this Bareboat Charter
including, but not limited to, Article 4(b) hereof, during which survey the
Vessel's cargo tanks shall be gas-freed. The Bareboat Charterer, unless
otherwise agreed by the Shipowner, at its own expense, will fully correct and
repair any condition disclosed by such survey to the extent necessary to cause
the Vessel to comply with all of the terms of Article 13(a) hereof. The Charter
Period shall be extended for any period necessary to make such repairs and
notwithstanding the provisions of Article 13(a) hereof relating to the port of
redelivery, redelivery shall take place at the port where such repairs are
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made; provided, however, that the Original Term shall not be extended for more
than 180 days to effect repairs and redelivery.
(c) The Bareboat Charterer will pay additional hire hereunder for any
period for which the Charter Period may be extended pursuant to the terms of
Article 13(a) or 13(b) hereof or which may be necessary to complete any voyage
in progress, which hire shall be in addition to any other payments due
hereunder, and shall be payable on the last day of the Charter Period, as
extended, at a rate per day equal to 1/180th of the amount of Basic Hire payable
hereunder on the last Charter Hire Payment Date; provided, however, that no
additional hire shall be paid by the Bareboat Charterer for any period during
which repair work, ordered solely by the Shipowner and not required by this
Article 13, is being performed. Upon redelivery of the Vessel hereunder, the
Bareboat Charterer, if requested in writing by the Bareboat Charterer, will
provide docking or safe anchorage facilities for the Vessel for a period not
exceeding 30 days after redelivery, at the Shipowner's expense.
(d) Any property of the Bareboat Charterer remaining aboard the Vessel
upon redelivery may be retained or disposed of by the Shipowner as its own
property once a reasonable opportunity has been given the Bareboat Charterer to
remove such property.
ARTICLE 14
ASSIGNMENTS
(a) The Shipowner shall not have the right to assign, or to permit any
assignment of, or to create a security interest in, or to permit the creation of
a security interest in, this Bareboat Charter or any moneys due and to become
due under this Bareboat Charter, except pursuant to
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the Security Agreement. Any assignment or security interest created in violation
of this Article 14(a) shall be void.
(b) Except for the assignment to a successor bareboat charterer under
Article 14(e) hereof, the Bareboat Charterer shall not have the right to assign,
or permit any assignment of, or to create a security interest in, or to permit
the creation of a security interest in, this Bareboat Charter or any moneys due
and to become due under this Bareboat Charter, except pursuant to the Security
Agreement, without the prior written consents of the Shipowner, the Secretary
and, during the Statutory Economic Life of the Vessel, the Board. Any assignment
or security interest created in violation of this Article 14(b) shall be void.
(c) So long as this Bareboat Charter shall remain in effect, the
Bareboat Charterer shall not:
(i) merge or consolidate with any other corporation or
business entity of any kind other than with any Affiliate of the Bareboat
Charterer, or
(ii) sell, assign pledge or otherwise dispose of any right or
interest arising out of this Bareboat Charter except in connection with the
assignment provided for in Article 14(e) hereof.
(d) The Bareboat Charterer shall not have the right to subcharter or
otherwise employ the Vessel other than pursuant to the Time Charter.
(e) (1) The Shipowner shall have the right, subject to the prior
consent of the Secretary, to assign this Bareboat Charter to any person who is a
Citizen of the United States and who is a United States Person within the
meaning of Section 7701 of the Code in the event that the Shipowner shall fail
to remain, or an event shall occur which shall cause the Shipowner no longer to
remain, a Citizen of the United States.
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(2) The Bareboat Charterer shall have the right, without the
consent of the Shipowner, but subject to the terms of the Security Agreement and
the Second Mortgage so long as each is in effect, to assign this Bareboat
Charter to any Affiliate of the Bareboat Charterer which is a United States
person within the meaning of Section 7701 of the Code (with the consent of the
Secretary). Any such assignment shall be subject to the Bareboat Charterer's
continuing responsibility for full performance of its obligations under this
Bareboat Charter.
(f) This Bareboat Charter is subject and subordinate to the rights of
the Secretary under the Mortgage and the Security Agreement and the rights of
Occidental under the Second Mortgage.
ARTICLE 15
EVENTS OF BAREBOAT DEFAULT
(a) Each of the following events shall constitute an Event of Bareboat
Default:
(1) The Bareboat Charterer shall fail to pay any Basic Hire,
or Stipulated Loss Value under this Bareboat Charter within 5 days after the
date when due or the Bareboat Charterer shall fail to pay any Supplemental Hire
under this Bareboat Charter and fail to remedy the failure to pay such
Supplemental Hire within 10 days after receipt of notice thereof from the
Shipowner; or
(2) The Bareboat Charterer or the Guarantor shall consent to
the appointment of a receiver, trustee or liquidator of itself or of
substantially all of its property or the Bareboat Charterer or the Guarantor
shall admit in writing its inability to pay its debts generally as they come due
or shall make a general assignment for the benefit of creditors; or
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(3) The Bareboat Charterer or the Guarantor shall file a
voluntary petition in bankruptcy or for a reorganization or for an arrangement
in a proceeding under any of the federal bankruptcy laws or other federal or
state insolvency laws as now or hereafter in effect or an answer admitting the
material allegations of a petition filed against the Bareboat Charterer or the
Guarantor in any such proceeding; or
(4) An order, judgment or decree shall be entered in any
proceeding by any court of competent jurisdiction appointing, without the
consent of the Bareboat Charterer or the Guarantor, a receiver, trustee or
liquidator of the Bareboat Charterer or the Guarantor or of substantially all of
its property, and any such order, judgment or decree of appointment shall remain
in force undismissed, unstayed or unvacated for a period of 90 days after the
date of entry thereof; or
(5) A petition against the Bareboat Charterer or the Guarantor
in a proceeding under the federal bankruptcy laws or other federal or state
insolvency laws as now or hereafter in effect shall be filed and shall not be
withdrawn or dismissed within 90 days thereafter or if, under the provisions of
any law providing for reorganization or winding-up of corporations which may
apply to the Bareboat Charterer or the Guarantor, any court of competent
jurisdiction shall assume jurisdiction, custody or control of the Bareboat
Charterer or the Guarantor or of substantially all of the property of either and
such jurisdiction, custody or control shall remain in force unrelinquished,
unstayed or unterminated for a period of 90 days; or
(6) The failure of the Bareboat Charterer to perform or comply
in any material respect with any of the provisions of Articles 3(a), 7(a) or
17(b) hereof or to maintain,
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or cause to be maintained, insurance in the amounts and forms as and when
required under Article 8 hereof; or
(7) The Bareboat Charterer shall fail to remain, or an event
shall occur which will cause the Bareboat Charterer to no longer remain, a
Citizen of the United States, and the Bareboat Charterer shall fail for more
than 30 days after it obtains knowledge of such failure or event, to cause all
necessary governmental approvals, under Sections 9, 37 (if applicable) and 41 of
the Shipping Act, or otherwise, to be obtained; provided, however, that no Event
of Bareboat Default under this Article 15(a)(7) shall be deemed to have occurred
if the Bareboat Charterer shall have made the assignment of this Bareboat
Charter to a Citizen of the United States provided for in Article 14(e)(1)
hereof within 30 days after it obtains knowledge of such failure or event; or
(8) (i) Either the MTC Guarantee or the SNTG Guarantee shall
cease to be in full force and effect, or either Guarantor shall be in default
under any of the provisions therein, or (ii) the Contingent Guarantee shall
cease to be in full force and effect (unless the Contingent Guarantee shall so
cease by operation of the provisions of Section 2(c) thereof) or Occidental
shall be in default under any provision therein, and, in each case, such default
shall fail to be remedied within 30 days after written notice from the Shipowner
or the Secretary to such Guarantor or Occidental of the existence of such
default; or
(9) Any Default under the Security Agreement shall have
occurred and be continuing as a result of the Bareboat Charterer's failure to
perform or comply with its obligations under this Bareboat Charter; or
(10) Either the Bareboat Charterer or the Time Charterer shall
fail for more than 30 days after written notice from the Secretary to the
Bareboat Charterer or the Time
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Charterer to perform or comply with any of the provisions of the Title XI
Reserve Fund and Financial Agreement insofar as such provisions pertain to the
Vessel unless such failure shall have been waived by the Secretary; or
(11) The Bareboat Charterer shall default in the performance
of any other obligation under this Bareboat Charter and shall fail to remedy the
default within 30 days after receipt of notice thereof from the Shipowner or the
Secretary, specifying the acts or omissions of the Bareboat Charterer which
constitute such default.
(b) Upon the occurrence of an Event of Bareboat Default, so long as
such Event of Bareboat Default shall be continuing, the Shipowner shall promptly
notify the Secretary of such occurrence and at any time thereafter, so long as
the same shall be continuing, the Shipowner (or the Secretary pursuant to the
Security Agreement) may, at its option, declare this Bareboat Charter to be in
default by notice delivered to the Bareboat Charterer and the Guarantor and, at
any time thereafter, so long as the Bareboat Charterer or the Guarantor, as the
case may be, shall not have remedied all outstanding Events of Bareboat Default,
the Shipowner by notice to the Bareboat Charterer and the Guarantor may
terminate this Bareboat Charter, upon which termination the Shipowner may do,
and the Bareboat Charterer shall comply with, one or more of the following, as
the Shipowner shall elect, to the extent permitted by, and subject to compliance
with, any mandatory requirements of applicable law and the provisions of the
Security Agreement if then in effect:
(1) Upon written demand of the Shipowner, the Bareboat
Charterer shall without expense to the Shipowner, promptly redeliver the Vessel,
or cause the Vessel to be redelivered, to the Shipowner with all reasonable
dispatch to any safe port in the United States selected by the Shipowner (which
port shall be on the coast to which the Vessel is closest at the
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time of such demand) in the same manner and in the same condition as if the
Vessel were being redelivered on the Last day of the Charter Period in
accordance with the provisions of Article 13 hereof, and, except as otherwise
provided in this Article 15, all obligations of the Bareboat Charterer under
Article 13 hereof shall apply to such redelivery. The Shipowner or its agent,
without further demand, may, but shall be under no obligation to, withdraw the
Vessel from the service of the Bareboat Charterer wherever found, whether upon
the high seas or at any port, harbor or other place and irrespective of whether
the Bareboat Charterer or any other person may be in possession of the Vessel
all without prior demand and without legal process, and for that purpose the
Shipowner or its agent may enter upon any dock, pier or other premises where the
Vessel may be and may take possession thereof, without the Shipowner or its
agent incurring any liability by reason of such retaking, whether for the
restoration of damage to property caused by such withdrawal or otherwise.
(2) If the Event of Bareboat Default resulting in the
termination of this Bareboat Charter shall have occurred during the Original
Term, the Bareboat Charterer will pay to, or on the order of, the Shipowner,
upon request by the Shipowner upon at least 10 days prior written notice, on the
payment date specified in such notice, as liquidated damages for loss of a
bargain and not as a penalty, all unpaid Basic Hire and Supplemental Hire
payable in accordance with the terms hereof on or prior to the Default
Termination Date plus an amount (together with interest on such amount at the
Interest Rate for the period, if any, from but not including, the Charter Hire
Payment Date immediately preceding the payment date specified in such notice to
and including the Default Termination Date) equal to:
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(i) the Stipulated Loss Value, computed as of the Charter
Hire Payment Date occurring on or immediately preceding the
Default Termination Date, less
(ii) whichever of the following amounts the Shipowner, in
its sole discretion, shall specify in such notice: (A) the
fair market sales value (determined as hereinafter provided in
this Article 15(b)(2)) of the Vessel as of the Charter Hire
Payment Date immediately preceding the Default Termination
Date or (B) the fair market demise charter value (determined
as hereinafter provided in this Article 15(b)(2)) of the
Vessel for the period from such Charter Hire Payment Date to
the day which would have been the last day of the Charter
Period but for the termination of this Bareboat Charter
pursuant to this Article 15(b), after discounting such fair
market demise charter value to its value on the Charter Hire
Payment Date occurring on or immediately preceding the Default
Termination Date at the Discount Rate.
For the purpose of this Article 15(b)(2), the "fair market
sales value" or "fair market demise charter value" shall be determined by the
Appraisal Procedure; provided, however, that (x) if the Vessel shall have been
sold prior to the Default Termination Date by (i) the Shipowner pursuant to
paragraph 4 of this Article 15(b), or (ii) the Secretary pursuant to Section
6.04(b) of Exhibit 1 to the Security Agreement, the "fair market sales value"
shall be the net proceeds of such sale after deducting all costs and expenses
incurred by the Shipowner or the Secretary, as the case may be, in connection
therewith, (y) the "fair market sales value" or the "fair market demise charter
value" shall be zero if the Vessel is not redelivered or if the Shipowner has
expended reasonable efforts, under the circumstances to take possession of the
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Vessel but has been unable to take possession; and (z) there shall be added to
"fair market sales value" and to "fair market demise charter value," as the case
may be, the net proceeds received by the Shipowner (after deducting all costs
and expenses of the Shipowner with respect thereto) from any charter of the
Vessel to others in accordance with Article 15(b)(3) hereto, to the extent such
proceeds are received by the Shipowner prior to the Default Termination Date.
Nothing contained in the preceding sentence shall require the Shipowner to sell
or charter the Vessel at any time.
(3) If the Event of Bareboat Default resulting in the
termination of this Bareboat Charter shall have occurred during a Renewal Term,
the Bareboat Charterer shall pay to, or on the order of, the Shipowner, upon
request by the Shipowner upon at least 10 days prior written notice, on the date
specified in such notice as the Default Termination Date, as liquidated damages
for loss of a. bargain and not as a penalty, all unpaid Basic Hire and
Supplemental Hire payable in accordance with the terms hereof on or prior to the
Default Termination Date plus an amount, equal to the aggregate amount of Basic
Hire determined pursuant to Article 9(b) hereof, discounted at the Discount Rate
to its value on the Default Termination Date, which would have been paid during
the remainder of the Renewal Term in which the Default Termination Date occurs.
(4) The Shipowner or its agent with or without notice to the
Bareboat Charterer, may sell the Vessel at public or private sale, with or
without advertisement or publication, as the Shipowner may determine, or
otherwise may dispose of, hold, use, operate, charter to others (whether for a
period greater or less than the balance of what would have been the Charter
Period in the absence of the termination of this Bareboat Charter pursuant to
this Article 15(b)) or keep the Vessel idle, all on such terms and conditions
and at such place or
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places as the Shipowner may determine and all free and clear of any rights of
the Bareboat Charterer and any claim of the Bareboat Charterer in admiralty, in
equity, at law or by statute, whether for loss or damage or otherwise, and
without any duty to account to the Bareboat Charterer except to the extent
provided for in Article 15(b)(2) hereof.
(c) In addition to the foregoing, the Bareboat Charterer shall pay to,
or on the order of, the Shipowner, all Supplemental Hire hereunder payable
before, during or after the exercise of any remedies exercised by the Shipowner,
and all legal and investigatory fees and any other costs and expenses whatsoever
incurred by the Shipowner by reason of the occurrence of any Event of Bareboat
Default or by reason of the exercise by the Shipowner of any remedy hereunder,
including, without limitation, any costs and expenses incurred by the Shipowner
in connection with the redelivery of the Vessel in accordance with this Article
15 and of placing the Vessel in the condition and seaworthiness required by the
terms of Article 13 hereof.
(d) No remedy referred to in Article 15(b) hereof is intended to be
exclusive, but each shall be cumulative and is in addition to, and may be
exercised concurrently with, any other remedy which is referred to in Article
15(b) hereof or which may otherwise be available to the Shipowner at law, in
equity or in admiralty, provided, however, that liquidated damages having been
agreed to by the parties hereto in Articles 15(b)(2) and (3) hereof, the
Shipowner shall not be entitled to recover from the Bareboat Charterer as
damages upon the occurrence of one or more Events of Bareboat Default an amount
in excess of such liquidated damages plus any Supplemental Hire and expenses
referred to above. There shall be deducted from the aggregate amount so
recoverable by the Shipowner the net balance, if any, remaining of any moneys
held by the Shipowner which would have been required by the terms of this
Bareboat Charter to have been paid to the Bareboat Charterer but for the
occurrence of an Event of
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Bareboat Default. The rights of the Shipowner and the obligations of the
Bareboat Charterer under this Article 15(d) shall be effective and enforceable
regardless of the pendency of any proceeding which has or might have the effect
of preventing the Shipowner or the Bareboat Charterer from complying with the
terms of this Bareboat Charter. No express or implied waiver by the Shipowner of
any Event of Bareboat Default shall in any way be, or be construed to be, a
waiver of any further or subsequent Event of Bareboat Default. The Bareboat
Charterer hereby agrees that to the extent that the Shipowner shall sell charter
or otherwise use the Vessel pursuant to Article 15(b)(4) hereof in good faith,
the Shipowner shall have no liability to the Bareboat Charterer for any such
sale, charter or other use except as specifically provided in Article 15(b)(2)
hereof.
(e) The Bareboat Charterer hereby waives, to the extent permitted by
applicable law, any and all rights which it may now have or which at any time
hereafter may be conferred upon it, by statute or otherwise, which may require
the Shipowner to sell charter or otherwise use the Vessel in mitigation of the
Shipowner's damages, or which may otherwise limit or modify any of the rights or
remedies of the Shipowner provided for in this Article 15.
(f) If the Bareboat Charterer shall fail to perform or observe any of
the other terms of this Bareboat Charter which do not give rise to an Event of
Bareboat Default, the Shipowner may (but in its discretion shall not be
obligated to) give written notice (which notice may be given by electronic means
and shall be effective upon receipt thereof) to the Bareboat Charterer of its
intention to exercise its rights under this Article 15. Unless the Bareboat
Charterer shall have then commenced to use due diligence, to the reasonable
satisfaction of the Shipowner, to cause such failure to be cured, the Shipowner
may, in its discretion, do all acts and make all expenditures necessary to
remedy such failure, including, without limitation, the taking out of
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insurance on the Vessel and entry upon the Vessel to make repairs. The Bareboat
Charterer agrees to reimburse the Shipowner promptly on demand for all costs and
expenses incurred in connection with the exercise of its rights under this
Article 15(f), together with interest thereon at the Interest Rate from the date
of such expenditures to the date of payment by the Bareboat Charterer. The
Bareboat Charterer agrees to permit the agents and servants of the Shipowner
reasonable access to the Vessel as shall be necessary under this Article 15(f).
ARTICLE 16
REPLACEMENT OF THE BAREBOAT CHARTERER
If at any time during the Charter Period, the Time Charterer shall have
given the notice of replacement of the Bareboat Charterer referred to in Section
14.2 of the Time Charter to cause the Bareboat Charterer to be replaced because
of the occurrence of an Event of Bareboat Charterer Default under the Time
Charter, and if the Shipowner shall approve in writing of such replacement, the
Bareboat Charterer shall be replaced as Bareboat Charterer hereunder.
ARTICLE 17
MISCELLANEOUS
(a) The Shipowner and the Bareboat Charterer severally agree to
perform, or cause to be performed, such action, and to execute, deliver or
furnish or to cause to be executed, delivered or furnished, all such further
assurances, certificates and other documents, necessary or proper to carry out
this Bareboat Charter.
(b) The terms of this Bareboat Charter and Schedule X attached hereto
shall not be altered, modified, amended, supplemented or terminated in any
manner whatsoever except by
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written instrument signed by the parties hereto and with the written consent of
the Secretary and Occidental.
(c) The invalidity of any provision of this Bareboat Charter shall not
affect the remainder hereof, which shall in such event be construed as if such
invalid provision had not been inserted.
(d) The table of contents and headings of this Bareboat Charter are for
purposes of reference only, and shall in no way limit or otherwise affect any of
the terms or provisions hereof.
(e) Subject to the provisions of Article 14 hereof, the terms of this
Bareboat Charter shall be binding upon, and inure to the benefit of, the parties
hereto and their respective successors and assigns.
(f) ALL QUESTIONS ARISING UNDER THIS BAREBOAT CHARTER SHALL IN ALL
RESPECTS BE GOVERNED BY, CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE GENERAL
MARITIME LAWS OF THE UNITED STATES AND TO THE EXTENT FEDERAL LAW DOES NOT APPLY,
THE LAWS OF THE STATE OF NEW YORK, INCLUDING SECTION 5-1401 OF THE GENERAL
OBLIGATIONS LAW OF THE STATE OF NEW YORK. ANY CLAIM OR DISPUTE ARISING UNDER
THIS BAREBOAT CHARTER SHALL, PROVIDED THAT THE COURT HAS SUBJECT MATTER
JURISDICTION, BE DECIDED IN THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN
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DISTRICT OF NEW YORK, TO THE JURISDICTION OF WHICH THE SHIPOWNER AND THE
BAREBOAT CHARTERER HEREBY SUBMIT THEMSELVES FOR THE PURPOSES OF ANY SUCH
PROCEEDING. IN THE EVENT THAT THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN
DISTRICT OF NEW YORK LACKS SUBJECT MATTER JURISDICTION OVER ANY CLAIM OR DISPUTE
ARISING UNDER THIS BAREBOAT CHARTER, THE SHIPOWNER AND THE BAREBOAT CHARTERER
HEREBY SUBMIT THEMSELVES TO THE JURISDICTION OF THE SUPREME COURT FOR THE COUNTY
OF NEW YORK FOR THE PURPOSES OF ANY SUCH PROCEEDING AND WAIVE ANY CLAIM OF FORUM
NON CONVENIENS RELATING TO SUCH CHOICE OF COURT.
(g) (1) The Bareboat Charterer and the Shipowner mutually acknowledge
that, during the Statutory Economic Life of the Vessel, the Vessel and its
operation are, or may be, subject to certain requirements contained in the Title
V Contract and in the ODS Contract. Unless waived (and the Bareboat Charterer
shall not request any waiver without the prior written consent of the Shipowner)
the Bareboat Charterer and the Shipowner agree to comply with any such
requirements notwithstanding anything to the contrary in this Bareboat Charter.
(2) The Bareboat Charterer and Shipowner severally agree not
to make, or permit to be made, any alteration in the National Defense Features
of the Vessel in a manner which adversely affects the value of the National
Defense Features without the prior written consent of the Board.
(3) Nothing in this Article 16(g) shall affect the absolute
and unconditional obligation of the Bareboat Charterer to pay Basic Hire,
Supplemental Hire and amounts in respect of Stipulated Loss Value pursuant to
the terms of this Bareboat Charter.
(h) This Bareboat Charter is not a personal contract. The Bareboat
Charterer and the Shipowner shall have the benefit of all limitations of, and
exemptions from, liability accorded to the owner or chartered owner of vessels
by any statute or rule of law for the time being in force.
55
<PAGE> 190
(i) This Bareboat Charter may be executed in several counterparts, each
of which shall be an original, but all of which together shall constitute one
agreement.
(j) No person other than the Bareboat Charterer and the Shipowner, and
their successors and assigns as permitted hereunder, shall enforce or attempt to
enforce the obligations of the Bareboat Charterer or the Shipowner hereunder
without the prior written consent of the Bareboat Charterer and the Shipowner.
(k) All interest payments to be computed under this Bareboat Charter
shall be computed on the basis of a 360-day year of twelve 30-day months.
(1) The provisions of this Bareboat Charter which require or permit
action by the Secretary and Occidental, the consent, approval or authorization
of the Secretary and Occidental or the furnishing of any document, paper or
information to the Secretary and Occidental shall not be effective, and such
provisions shall be read, unless otherwise required by law, as though there were
no such requirements or permissions, after: (i) termination of the Guarantees,
except a termination pursuant to clause (b) of Section 6.04 of Exhibit 1 to the
Security Agreement and the discharge of the Second Mortgage; or (ii) payment in
full of the principal of and interest on each Secretary's Note.
ARTICLE 18
NOTICES
All notices and other communications hereunder shall be
effective when received except that all notices and other communications sent by
prepaid United States certified mail, return receipt requested, shall become
effective on the third Business Day after such mailing
56
<PAGE> 191
and shall be addressed as follows or, to each party, at such other address as
shall be designated by such party in a written notice to the other persons named
below:
To the Shipowner:
Julius Owner Corporation
c/o Marine Transport Corporation
1200 Harbor Boulevard
Weehawken, NJ 07087-0901
To the Bareboat Charterer:
Julius ODS Corporation
c/o Marine Transport Corporation
1200 Harbor Boulevard
Weehawken, NJ 07087-0901
To the Secretary:
c/o Maritime Administrator
Maritime Administration
Department of Transportation
400 7th Street, SW
Washington, D.C. 20590
To Occidental:
10889 Wilshire Boulevard
Los Angeles, CA 90024
Attention: Vice President & Treasurer
57
<PAGE> 192
IN WITNESS WHEREOF, the parties have caused this Bareboat
Charter to be signed as of the day and year first above written.
JULIUS OWNER CORPORATION,
Shipowner
By: _________________________
Name: _____________________
Title: _____________________
<PAGE> 193
JULIUS ODS CORPORATION,
Bareboat Charterer
By: _________________________
Name: _______________________
Title: _______________________
THE ABOVE CHARTER AND CERTAIN HIRE DERIVED THEREFROM ARE SUBJECT TO A SECURITY
INTEREST IN FAVOR OF THE UNITED STATES OF AMERICA, REPRESENTED BY THE SECRETARY
OF TRANSPORTATION, ACTING BY AND THROUGH THE MARITIME ADMINISTRATOR (THE
"SECRETARY") IN ACCORDANCE WITH THE PROVISIONS OF A SECURITY AGREEMENT BETWEEN
THE ABOVE NAMED SHIPOWNER AND THE SECRETARY AS SECURED PARTY.
<PAGE> 194
4.05(a)(1)
GUARANTEE
DATED SEPTEMBER 29, 1999
BY
MARINE TRANSPORT CORPORATION,
GUARANTOR
AND
THE UNITED STATES OF AMERICA
ITB FRANCES HAMMER
(TO BE RENAMED SMT CHEMICAL EXPLORER)
<PAGE> 195
GUARANTEE
ITB FRANCES HAMMER
(TO BE RENAMED SMT CHEMICAL EXPLORER)
This GUARANTEE (this "Guaranty Agreement"), is made on _____ _______,
1999, by MARINE TRANSPORT CORPORATION, a Delaware corporation (the "Guarantor")
to the United States of America, represented by the Department of
Transportation, acting by and through the Maritime Administrator (the
"Secretary").
WITNESSETH:
A. WHEREAS, on the date hereof (x) Frances Owner Corporation, a
Delaware corporation (the "Assuming Shipowner"), is assuming certain obligations
of STATE STREET BANK AND TRUST COMPANY, a Massachusetts trust company, not in
its individual capacity but solely as owner trustee under the Trust Agreement
dated as of November 13, 1980, as amended, for the benefit of the owner
participant named therein (the "Assigning Shipowner"), as shipowner under the
Security Agreement, Contract No. MA-9892 (as supplemented and amended to date,
the "Security Agreement"), between the Assigning Shipowner and the Secretary and
(y) the Assigning Shipowner is being released from its obligations thereunder;
B. WHEREAS, concurrently with the release of the Assigning Shipowner
from its obligations under the Security Agreement, (x) Suwannee River Phosphate
Lines, Inc., a California corporation (the "Original Bareboat Charterer"), as
bareboat charterer under a Bareboat Charter dated as of September 16, 1981 (as
supplemented and amended to date, the "Original Bareboat Charter"), between the
Original Bareboat Charterer and the Assigning Shipowner, is being released from
its obligations under the Original Bareboat Charter, (y) Occidental Petroleum
Corporation, a Delaware corporation (as successor to Occidental Petroleum
Corporation, a California corporation, herein "Occidental"), as guarantor under
a Bareboat Charter Guarantee dated as of September 16, 1981, relating to the
Original Bareboat Charter (the "Old Bareboat Charter Guarantee") is being
released from its obligations under such guarantee, and (z) the Secretary has
requested, as a condition to the Secretary's consent to releasing Occidental
from its obligations under the Old Bareboat Charter Guarantee, that (i) the
Guarantor enter into this Guaranty Agreement of 75% of the obligations of the
Assuming Shipowner under the Secretary's Note, (ii) Stolt-Nielsen Transportation
Group Ltd., a Liberian corporation ("SNTG"), enter into a similar guarantee
concurrently herewith of 25% of the obligations of the Assuming Shipowner under
the Secretary's Note (the "SNTG Guarantee"), the liability of the Guarantor and
SNTG under such guarantees being several but not joint, and (iii) Occidental
enter into a Contingent Guarantee of certain of the obligations of the Bareboat
Charterer under the Bareboat Charter; and
<PAGE> 196
C. WHEREAS, the Assuming Shipowner is an Affiliate of the Guarantor.
NOW, THEREFORE, in consideration of the Secretary's consent to the
assumption by the Assuming Shipowner of the Security Agreement and the
Secretary's Note, and the benefits and advantages to be derived therefrom by the
Guarantor, the Guarantor hereby agrees with the Secretary for its benefit as
follows:
1. Guarantee.
(a) The Guarantor hereby absolutely, irrevocably, and
unconditionally guarantees the due and punctual payment of the principal and
interest on the Secretary's Note. The Guarantor shall be required to make said
payments under this Guaranty Agreement upon receipt of a written notice from the
Secretary which states that the Assuming Shipowner has not promptly, completely
or effectively made said payments. The failure of the Guarantor to receive such
a written notice or the failure of the Secretary to send said notice shall not
relieve the Guarantor of its obligations under this Guaranty Agreement. This
Guaranty Agreement shall be enforceable and exercisable by the Secretary from
the first day of any failure by the Assuming Shipowner to make payment or
mandatory prepayment of the principal of and the interest on the Secretary's
Note when the same shall be due. The Guarantor shall immediately pay to the
Secretary or its designee in immediately available funds such payments
guaranteed herein.
(b) The Guarantor hereby consents and agrees that its
obligations under this Guaranty Agreement will not be discharged by any act or
omission to act of any kind by the Secretary or any other person or any other
circumstances whatsoever (including, but not limited to, any extension,
rearrangement, or renewal with respect to any indebtedness or other obligation
of the Assuming Shipowner with or without notice to the Guarantor, any waiver of
any right of the Secretary under the terms of the Secretary's Note, the Security
Agreement, the Mortgage, or this Guaranty Agreement, any release of security,
any transfer or assignment of rights or obligations accruing to the Secretary
under the Secretary's Note, the Security Agreement, the Mortgage, or this
Guaranty Agreement, any corporate reorganization, dissolution, merger,
acquisition of or by or other alteration of the corporate existence or structure
of the Assuming Shipowner or the Guarantor, discharge of the Assuming Shipowner
in bankruptcy, the invalidity, illegality, or unenforceability of the
Secretary's Note, the Security Agreement, the Mortgage, or this Guaranty
Agreement or the absence of any action to enforce the obligations of the
Assuming Shipowner) which might constitute a legal or equitable discharge of the
Guarantor; it being the intention of the Guarantor that this Guaranty Agreement
be absolute, continuing, and unconditional and the guarantee hereunder shall
only be discharged by the payment in full of all sums so guaranteed hereunder.
(c) The Guarantor hereby irrevocably and unconditionally
waives: (1) notice of any of the matters referred to in this Guaranty Agreement
and any action by the Secretary in reliance thereon; (2) all notices which may
be required by statute, rule of law, or otherwise to preserve any rights against
the Guarantor hereunder, including without limitation, any demand, protest,
proof of notice of non-payment of all sums payable under the Secretary's Note or
any notice of any failure on the part of the Assuming Shipowner to perform or
comply with any covenant, term, or obligations of any agreement to which it is a
party; (3) any requirement for the
2
<PAGE> 197
enforcement, assertion, or exercise of any right, remedy, power, or privilege
under or with respect to the Mortgage, the Security Agreement, or the
Secretary's Note; (4) any requirement of diligence; (5) any requirement that the
Assuming Shipowner be joined as a party to any proceedings for the enforcement
of any provision of this Guaranty Agreement, or that the Secretary proceed
against any other guarantor executing this Guaranty Agreement or any other
guaranty agreement; (6) any and all defenses to payment hereunder, except the
defense of payment already made, and agrees to confess without contesting
liability hereunder for any judgment validly entered hereon; (7) presentment,
demand, protest, notice of protest and dishonor, notice of intent to accelerate,
and notice of acceptance; or (8) the right to require the Secretary to pursue
any remedy whatsoever in the Secretary's power.
(d) The Guarantor hereby agrees that this Guaranty Agreement
shall continue to be effective or shall be reinstated, as the case may be, if at
any time payment of any sum hereby guaranteed is rescinded or must be otherwise
restored or returned by the Secretary, upon the insolvency, bankruptcy, or
reorganization of the Assuming Shipowner, or otherwise, all as though such
payment had not been made. The Guarantor further agrees that if the maturity of
any obligations guaranteed herein be accelerated by bankruptcy or otherwise,
such maturity shall also be deemed accelerated for the purpose of this Guaranty
Agreement without demand or notice to the Guarantor.
(e) Any amount payable hereunder shall not be subject to any
reduction by reason of any counterclaim, set-off, deduction, abatement or
otherwise.
(f) The Guarantor shall pay all reasonable costs and expenses
(including, without limitation, attorneys' fees and expenses) incurred in
connection with the enforcement of the obligations of the Guarantor under this
Guaranty Agreement.
(g) The Secretary's Note may be amended, modified, or endorsed
without the consent of the Guarantor.
(h) The Secretary may enforce the Guarantor's obligations
hereunder without in any way first pursuing or exhausting any other rights or
remedies which the Secretary may have against the Assuming Shipowner or any
other person, firm, or corporation or against any security the Secretary may
hold.
(i) The obligations of the Guarantor hereunder shall equal
seventy-five percent (75%) of the obligations of the Assuming Shipowner under
the Secretary's Note. The obligations of the Guarantor hereunder are several but
not joint with the obligations of SNTG under the SNTG Guarantee.
2. Secretary's Rights. The Guarantor authorizes the Secretary, without
notice or demand and without affecting the Guarantor's liability hereunder, to
take and hold security for the payment of this Guaranty Agreement and/or any of
the obligations guaranteed herein and exchange, enforce, waive, and release any
such security; and to apply such security and direct the order or manner of sale
thereof as the Secretary in his discretion may determine; and to obtain a
guarantee of any of the obligations guaranteed herein from any one or more
persons, corporations, or entities
3
<PAGE> 198
whomsoever and at any time or times to enforce, waive, rearrange, modify, limit
or release such other persons, corporations, or entities from their obligations
under such guarantees.
3. Primary Liability. It is expressly agreed that the liability of the
Guarantor for the payment of the obligations guaranteed herein shall be primary
and not secondary.
4. Representations and Warranties. The Guarantor represents and
warrants as follows:
(a) It is a corporation duly organized, validly existing, and
in good standing under the laws of the state of Delaware and has full power and
authority (corporate, legal and other) to execute, deliver, and carry out the
terms of this Guaranty Agreement;
(b) This Guaranty Agreement has been duly authorized,
executed, and delivered by the Guarantor and constitutes the legal, valid, and
binding obligation of the Guarantor enforceable against the Guarantor in
accordance with its terms;
(c) The execution, delivery, and performance by the Guarantor
of this Guaranty Agreement does not require the approval or consent of its
shareholders or of any governmental authority and does not contravene the
Guarantor's Articles of Incorporation, or any mortgage, indenture, or other
agreement binding upon it, or any law, regulation, order, judgment, or decree
applicable to the Guarantor;
(d) The Guarantor's guarantee pursuant to this Guaranty
Agreement may be expected to benefit, directly or indirectly, the Guarantor; and
(e) The Guarantor has fully adequate financial resources,
funds, and assets to satisfy its obligations under this Guaranty Agreement and
the Guarantor will in the future retain sufficient financial resources, funds,
and assets to satisfy fully its obligations under this Guaranty Agreement.
5. Continuing Guarantee. This Guaranty Agreement is a continuing
guarantee of payment and collectability and shall:
(a) Remain in full force and effect so long as any obligation
of the Assuming Shipowner to the Secretary referred to herein exists;
(b) Be binding upon the Guarantor, its successors and assigns;
(c) Be executed and issued for the sole and exclusive benefit
of the United States, and no other party shall be permitted to claim any
benefit, direct or indirect, therefrom. This Guaranty Agreement is
nonassignable, any assignment thereof shall be null and void and have no legal
effect whatsoever; and
(d) Inure to the benefit of, and be enforceable by the
Secretary, his successors and assigns.
4
<PAGE> 199
6. Default. A default under the terms of this Guaranty Agreement shall
be deemed to occur if the Guarantor fails to make any payment guaranteed
hereunder.
7. Notices. All communications may be made or delivered in person or by
certified or registered mail, postage prepaid, addressed to the Guarantor or the
Secretary as provided below or to such other address as the Guarantor or the
Secretary may hereafter specify in a written notice to the other and all notices
or other communications shall be in writing so addressed and shall be effective
upon receipt by the addressee thereof:
Guarantor: MARINE TRANSPORT CORPORATION
1200 Harbor Boulevard, C-901
Weehawken, NJ 07087
Attention: General Counsel
Secretary: SECRETARY OF TRANSPORTATION
c/o Maritime Administration
Department of Transportation
Washington, DC 20590
Attn: Chief, Division of Ship
Financing Contracts
8. Amendments and Supplements. No agreement shall be effective to
change or modify, supplement, amend, or discharge in whole or in part this
Guaranty Agreement unless such agreement is in writing, signed by the Guarantor
and the Secretary.
9. Governing Law. This Guaranty Agreement and the rights and
obligations of the parties thereto shall in all respects be governed by, and
construed and enforced in accordance with the federal law of the United States
of America or in the absence of applicable federal law by the laws of the State
of New York, including Section 5-1401 of the General Obligations Law of the
State of New York.
10. Counterparts. This Guaranty Agreement may be executed in one or
more counterparts. All such counterparts shall be deemed to be originals and
shall together constitute but one and the same instrument.
11. Severability. If any term of this Guaranty Agreement or any
application thereof shall be invalid or unenforceable, the remainder of this
Guaranty Agreement and any other application of such term shall not be affected
thereby.
5
<PAGE> 200
IN WITNESS WHEREOF, the Guarantor has caused this Guaranty Agreement to
be executed and delivered as of the day and year first above written.
MARINE TRANSPORT CORPORATION
Attest: By: ---------------------
Name:---------------------
--------------------- Title:---------------------
<PAGE> 201
ACKNOWLEDGED BY:
UNITED STATES OF AMERICA,
SECRETARY OF TRANSPORTATION
MARITIME ADMINISTRATOR
By: ------------------------------
Its Secretary
(SEAL)
ATTEST:
By: ---------------------------
Its Assistant Secretary
<PAGE> 202
4.05(b)(1)
GUARANTEE
DATED SEPTEMBER 29, 1999
BY
MARINE TRANSPORT CORPORATION,
GUARANTOR
AND
THE UNITED STATES OF AMERICA
ITB JULIUS HAMMER
(TO BE RENAMED SMT CHEMICAL TRADER)
<PAGE> 203
GUARANTEE
ITB JULIUS HAMMER
(to be renamed SMT CHEMICAL TRADER)
This GUARANTEE (this "Guaranty Agreement"), is made on ----- -------,
1999, by MARINE TRANSPORT CORPORATION, a Delaware corporation (the "Guarantor")
to the United States of America, represented by the Department of
Transportation, acting by and through the Maritime Administrator (the
"Secretary").
WITNESSETH:
A. WHEREAS, on the date hereof (x) Julius Owner Corporation, a Delaware
corporation (the "Assuming Shipowner"), is assuming certain obligations of STATE
STREET BANK AND TRUST COMPANY, a Massachusetts trust company, not in its
individual capacity but solely as owner trustee under the Trust Agreement dated
as of November 13, 1980, as amended, for the benefit of the owner participant
named therein (the "Assigning Shipowner"), as shipowner under the Security
Agreement, Contract No. MA-9880 (as supplemented and amended to date, the
"Security Agreement"), between the Assigning Shipowner and the Secretary and (y)
the Assigning Shipowner is being released from its obligations thereunder;
B. WHEREAS, concurrently with the release of the Assigning Shipowner
from its obligations under the Security Agreement, (x) Suwannee River Lines,
Inc., a California corporation (the "Original Bareboat Charterer"), as bareboat
charterer under a Bareboat Charter dated as of March 18, 1981 (as supplemented
and amended to date, the "Original Bareboat Charter"), between the Original
Bareboat Charterer and the Assigning Shipowner, is being released from its
obligations under the Original Bareboat Charter, (y) Occidental Petroleum
Corporation, a Delaware corporation (as successor to Occidental Petroleum
Corporation, a California corporation, herein "Occidental"), as guarantor under
a Bareboat Charter Guarantee dated as of March 18, 1981, relating to the
Original Bareboat Charter (the "Old Bareboat Charter Guarantee") is being
released from its obligations under such guarantee, and (z) the Secretary has
requested, as a condition to the Secretary's consent to releasing Occidental
from its obligations under the Old Bareboat Charter Guarantee, that (i) the
Guarantor enter into this Guaranty Agreement of 75% of the obligations of the
Assuming Shipowner under the Secretary's Note, (ii) Stolt-Nielsen Transportation
Group Ltd., a Liberian corporation ("SNTG"), enter into a similar guarantee
concurrently herewith of 25% of the obligations of the Assuming Shipowner under
the Secretary's Note (the "SNTG Guarantee"), the liability of the Guarantor and
SNTG under such guarantees being several but not joint, and (iii) Occidental
enter into a Contingent Guarantee of certain of the obligations of the Bareboat
Charterer under the Bareboat Charter; and
C. WHEREAS, the Assuming Shipowner is an Affiliate of the Guarantor.
NOW, THEREFORE, in consideration of the Secretary's consent to the
assumption by the Assuming Shipowner of the Security Agreement and the
Secretary's Note, and the benefits
<PAGE> 204
and advantages to be derived therefrom by the Guarantor, the Guarantor hereby
agrees with the Secretary for its benefit as follows:
1. Guarantee.
(a) The Guarantor hereby absolutely, irrevocably, and
unconditionally guarantees the due and punctual payment of the principal and
interest on the Secretary's Note. The Guarantor shall be required to make said
payments under this Guaranty Agreement upon receipt of a written notice from the
Secretary which states that the Assuming Shipowner has not promptly, completely
or effectively made said payments. The failure of the Guarantor to receive such
a written notice or the failure of the Secretary to send said notice shall not
relieve the Guarantor of its obligations under this Guaranty Agreement. This
Guaranty Agreement shall be enforceable and exercisable by the Secretary from
the first day of any failure by the Assuming Shipowner to make payment or
mandatory prepayment of the principal of and the interest on the Secretary's
Note when the same shall be due. The Guarantor shall immediately pay to the
Secretary or its designee in immediately available funds such payments
guaranteed herein.
(b) The Guarantor hereby consents and agrees that its
obligations under this Guaranty Agreement will not be discharged by any act or
omission to act of any kind by the Secretary or any other person or any other
circumstances whatsoever (including, but not limited to, any extension,
rearrangement, or renewal with respect to any indebtedness or other obligation
of the Assuming Shipowner with or without notice to the Guarantor, any waiver of
any right of the Secretary under the terms of the Secretary's Note, the Security
Agreement, the Mortgage, or this Guaranty Agreement, any release of security,
any transfer or assignment of rights or obligations accruing to the Secretary
under the Secretary's Note, the Security Agreement, the Mortgage, or this
Guaranty Agreement, any corporate reorganization, dissolution, merger,
acquisition of or by or other alteration of the corporate existence or structure
of the Assuming Shipowner or the Guarantor, discharge of the Assuming Shipowner
in bankruptcy, the invalidity, illegality, or unenforceability of the
Secretary's Note, the Security Agreement, the Mortgage, or this Guaranty
Agreement or the absence of any action to enforce the obligations of the
Assuming Shipowner) which might constitute a legal or equitable discharge of the
Guarantor; it being the intention of the Guarantor that this Guaranty Agreement
be absolute, continuing, and unconditional and the guarantee hereunder shall
only be discharged by the payment in full of all sums so guaranteed hereunder.
(c) The Guarantor hereby irrevocably and unconditionally
waives: (1) notice of any of the matters referred to in this Guaranty Agreement
and any action by the Secretary in reliance thereon; (2) all notices which may
be required by statute, rule of law, or otherwise to preserve any rights against
the Guarantor hereunder, including without limitation, any demand, protest,
proof of notice of non-payment of all sums payable under the Secretary's Note or
any notice of any failure on the part of the Assuming Shipowner to perform or
comply with any covenant, term, or obligations of any agreement to which it is a
party; (3) any requirement for the enforcement, assertion, or exercise of any
right, remedy, power, or privilege under or with respect to the Mortgage, the
Security Agreement, or the Secretary's Note; (4) any requirement of diligence;
(5) any requirement that the Assuming Shipowner be joined as a party to any
proceedings for the enforcement of any provision of this Guaranty Agreement, or
that the Secretary proceed against any other guarantor executing this Guaranty
Agreement or any other guaranty agreement; (6) any and all
2
<PAGE> 205
defenses to payment hereunder, except the defense of payment already made, and
agrees to confess without contesting liability hereunder for any judgment
validly entered hereon; (7) presentment, demand, protest, notice of protest and
dishonor, notice of intent to accelerate, and notice of acceptance; or (8) the
right to require the Secretary to pursue any remedy whatsoever in the
Secretary's power.
(d) The Guarantor hereby agrees that this Guaranty Agreement
shall continue to be effective or shall be reinstated, as the case may be, if at
any time payment of any sum hereby guaranteed is rescinded or must be otherwise
restored or returned by the Secretary, upon the insolvency, bankruptcy, or
reorganization of the Assuming Shipowner, or otherwise, all as though such
payment had not been made. The Guarantor further agrees that if the maturity of
any obligations guaranteed herein be accelerated by bankruptcy or otherwise,
such maturity shall also be deemed accelerated for the purpose of this Guaranty
Agreement without demand or notice to the Guarantor.
(e) Any amount payable hereunder shall not be subject to any
reduction by reason of any counterclaim, set-off, deduction, abatement or
otherwise.
(f) The Guarantor shall pay all reasonable costs and expenses
(including, without limitation, attorneys' fees and expenses) incurred in
connection with the enforcement of the obligations of the Guarantor under this
Guaranty Agreement.
(g) The Secretary's Note may be amended, modified, or endorsed
without the consent of the Guarantor.
(h) The Secretary may enforce the Guarantor's obligations
hereunder without in any way first pursuing or exhausting any other rights or
remedies which the Secretary may have against the Assuming Shipowner or any
other person, firm, or corporation or against any security the Secretary may
hold.
(i) The obligations of the Guarantor hereunder shall equal
seventy-five percent (75%) of the obligations of the Assuming Shipowner under
the Secretary's Note. The obligations of the Guarantor hereunder are several but
not joint with the obligations of SNTG under the SNTG Guarantee.
2. Secretary's Rights. The Guarantor authorizes the Secretary, without
notice or demand and without affecting the Guarantor's liability hereunder, to
take and hold security for the payment of this Guaranty Agreement and/or any of
the obligations guaranteed herein and exchange, enforce, waive, and release any
such security; and to apply such security and direct the order or manner of sale
thereof as the Secretary in his discretion may determine; and to obtain a
guarantee of any of the obligations guaranteed herein from any one or more
persons, corporations, or entities whomsoever and at any time or times to
enforce, waive, rearrange, modify, limit or release such other persons,
corporations, or entities from their obligations under such guarantees.
3. Primary Liability. It is expressly agreed that the liability of the
Guarantor for the payment of the obligations guaranteed herein shall be primary
and not secondary.
3
<PAGE> 206
4. Representations and Warranties. The Guarantor represents and
warrants as follows:
(a) It is a corporation duly organized, validly existing, and
in good standing under the laws of the state of Delaware and has full power and
authority (corporate, legal and other) to execute, deliver, and carry out the
terms of this Guaranty Agreement;
(b) This Guaranty Agreement has been duly authorized,
executed, and delivered by the Guarantor and constitutes the legal, valid, and
binding obligation of the Guarantor enforceable against the Guarantor in
accordance with its terms;
(c) The execution, delivery, and performance by the Guarantor
of this Guaranty Agreement does not require the approval or consent of its
shareholders or of any governmental authority and does not contravene the
Guarantor's Articles of Incorporation, or any mortgage, indenture, or other
agreement binding upon it, or any law, regulation, order, judgment, or decree
applicable to the Guarantor;
(d) The Guarantor's guarantee pursuant to this Guaranty
Agreement may be expected to benefit, directly or indirectly, the Guarantor; and
(e) The Guarantor has fully adequate financial resources,
funds, and assets to satisfy its obligations under this Guaranty Agreement and
the Guarantor will in the future retain sufficient financial resources, funds,
and assets to satisfy fully its obligations under this Guaranty Agreement.
5. Continuing Guarantee. This Guaranty Agreement is a continuing
guarantee of payment and collectability and shall:
(a) Remain in full force and effect so long as any obligation
of the Assuming Shipowner to the Secretary referred to herein exists;
(b) Be binding upon the Guarantor, its successors and assigns;
(c) Be executed and issued for the sole and exclusive benefit
of the United States, and no other party shall be permitted to claim any
benefit, direct or indirect, therefrom. This Guaranty Agreement is
nonassignable, any assignment thereof shall be null and void and have no legal
effect whatsoever; and
(d) Inure to the benefit of, and be enforceable by the
Secretary, his successors and assigns.
6. Default. A default under the terms of this Guaranty Agreement shall
be deemed to occur if the Guarantor fails to make any payment guaranteed
hereunder.
4
<PAGE> 207
7. Notices. All communications may be made or delivered in person or by
certified or registered mail, postage prepaid, addressed to the Guarantor or the
Secretary as provided below or to such other address as the Guarantor or the
Secretary may hereafter specify in a written notice to the other and all notices
or other communications shall be in writing so addressed and shall be effective
upon receipt by the addressee thereof:
Guarantor: MARINE TRANSPORT CORPORATION
1200 Harbor Boulevard, C-901
Weehawken, NJ 07087
Attention: General Counsel
Secretary: SECRETARY OF TRANSPORTATION
c/o Maritime Administration
Department of Transportation
Washington, DC 20590
Attn: Chief, Division of Ship
Financing Contracts
8. Amendments and Supplements. No agreement shall be effective to
change or modify, supplement, amend, or discharge in whole or in part this
Guaranty Agreement unless such agreement is in writing, signed by the Guarantor
and the Secretary.
9. Governing Law. This Guaranty Agreement and the rights and
obligations of the parties thereto shall in all respects be governed by, and
construed and enforced in accordance with the federal law of the United States
of America or in the absence of applicable federal law by the laws of the State
of New York, including Section 5-1401 of the General Obligations Law of the
State of New York.
10. Counterparts. This Guaranty Agreement may be executed in one or
more counterparts. All such counterparts shall be deemed to be originals and
shall together constitute but one and the same instrument.
11. Severability. If any term of this Guaranty Agreement or any
application thereof shall be invalid or unenforceable, the remainder of this
Guaranty Agreement and any other application of such term shall not be affected
thereby.
5
<PAGE> 208
IN WITNESS WHEREOF, the Guarantor has caused this Guaranty Agreement to
be executed and delivered as of the day and year first above written.
MARINE TRANSPORT CORPORATION
Attest: By: ------------------------------
Name: -----------------------------
- ----------------------- Title:-----------------------------
<PAGE> 209
ACKNOWLEDGED BY:
UNITED STATES OF AMERICA,
SECRETARY OF TRANSPORTATION
MARITIME ADMINISTRATOR
By:----------------------------
Its Secretary
(SEAL)
ATTEST:
By:--------------------------------
Its Assistant Secretary
<PAGE> 210
MTC-STOLT
GUARANTEE AGREEMENT
This Guarantee Agreement (this "Guarantee Agreement"), dated this ____
day of September, 1999, by Marine Transport Corporation, a Delaware corporation
(the "Guarantor"), to Stolt-Nielsen, S.A., a Luxembourg corporation ("Stolt
SA"), and upon the conditions specified below, to Stolt-Nielsen Transportation
Group Ltd., a Liberian company ("Stolt Group").
WITNESSETH:
WHEREAS, as an inducement to Occidental Petroleum Corporation, a
Delaware corporation ("OPC") to enter into the Contingent Guarantee (as defined
in the Stolt-OPC Guarantee hereinafter referred to) of even date herewith
required by the United States of America, represented by the Secretary of
Transportation, acting by and through the Maritime Administrator (the
"Secretary"), to consummate the transactions (the "Transactions") referred to in
the Contingent Guarantee in which Transactions each of MTC, Stolt SA and Stolt
Group has an interest, Stolt SA and Stolt Group have agreed to enter into the
Stolt-OPC Guarantee Agreement of even date herewith (the "Stolt-OPC Guarantee")
in favor of OPC;
WHEREAS, in accordance with the provisions of the Stolt-OPC Guarantee,
Stolt SA and Stolt Group are required to make payments to OPC when OPC is
required to make payments to the Secretary under the Contingent Guarantee; and
WHEREAS, as an inducement to Stolt SA and Stolt Group to enter into the
Stolt-OPC Guarantee, MTC has agreed to enter into this Guarantee Agreement.
NOW, THEREFORE, in consideration of the premises, and of other good and
valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the parties hereto hereby agree as follows:
1. Definitions. Unless otherwise specifically defined herein, the
capitalized terms used herein which are defined in the Stolt-OPC Guarantee and
any reference therein to other instruments have the respective meanings given
such terms in the Stolt-OPC Guarantee or such other instruments.
2. Beneficiary. It is the intent and agreement of the parties hereto
that this Guarantee Agreement shall be in favor of Stolt SA, but if and when
there is a substitution of "Guarantor" (as such term is defined in the Stolt-OPC
Agreement) pursuant to the provisions of the Stolt-OPC Agreement, then this
Guarantee Agreement shall be in favor of such substituted Guarantor.
3. Guarantee.
(a) The Guarantor hereby absolutely, irrevocably and unconditionally
guarantees to Stolt SA the prompt repayment of all amounts Stolt SA pays under
the Stolt-OPC Guarantee, to the extent those amounts paid by Stolt SA thereunder
are due to the failure of MTC to make
<PAGE> 211
payments to the Secretary required by the Transactions and are not due to the
failure by Stolt SA to make payments required by the Transactions. The Guarantor
shall be required to make said payments under this Guarantee Agreement within
five (5) days of the receipt of a written notice from Stolt SA which describes
the payments it has made under the Stolt-OPC Guarantee. The failure of the
Guarantor to receive such a written notice or the failure of Stolt SA to send
said notice shall not relieve the Guarantor of its obligations under this
Guarantee Agreement. The Guarantor shall immediately pay to Stolt SA in
immediately available funds such payments guaranteed herein.
(b) The Guarantor hereby consents and agrees that its obligations under
this Guarantee Agreement will not be discharged by any act or omission to act of
any kind by Stolt SA or any other person or any other circumstances whatsoever
which might constitute a legal or equitable discharge of the Guarantor; it being
the intention of the Guarantor that this Guarantee Agreement be absolute,
continuing and unconditional and the guarantee hereunder shall only be
discharged by the payment in full of all sums so guaranteed hereunder.
(c) The Guarantor hereby irrevocably and unconditionally waives: (i)
notice of any of the matters referred to in this Guarantee Agreement and any
action by Stolt SA in reliance thereon; (ii) all notices which may be required
by statute, rule of law or otherwise to preserve any rights against the
Guarantor hereunder, including, without limitations, any demand, protest, proof
of notice of non-payment of sums once Stolt SA has notified the Guarantor that
payment subject to this Guarantee Agreement was made under the Stolt-OPC
Guarantee; (iii) any requirement for the enforcement, assertion or exercise of
any right, remedy, power or privilege under or with respect to the Stolt-OPC
Guarantee; (iv) any requirement that any party be joined as a party to any
proceedings for the enforcement of any provision of this Guarantee Agreement or
that Stolt SA proceed against any other guarantor executing any other guarantee
agreement; (v) any and all defenses to payment hereunder, except the defense of
payment already made, and agrees to confess without contesting liability
hereunder for any judgment entered hereon; (vi) presentment, demand, protest,
notice of protest and dishonor, notice of intent to accelerate and notice of
acceptance; or (vii) the right to require Stolt SA to pursue any remedy in Stolt
SA's power whatsoever.
(d) The Guarantor hereby agrees that this Guarantee Agreement shall
continue to be effective or shall be reinstated, as the case may be, if at any
time payment of any sum hereby guaranteed is rescinded or must be otherwise
restored or returned by Stolt SA, upon the insolvency, bankruptcy or
reorganization of any person, firm or corporation, or otherwise, all as though
such payment had not been made. The Guarantor further agrees that if the
maturity of any obligations guaranteed herein be accelerated by bankruptcy or
otherwise, such maturity shall also be deemed accelerated for the purpose of
this Guarantee Agreement without demand or notice to the Guarantor.
(e) Any amount payable hereunder shall not be subject to any reduction
by reason of any counterclaim, set-off, deduction, abatement or otherwise.
(f) The Guarantor shall pay all reasonable costs and expenses
(including, without limitation, attorneys' fees and expenses) incurred in
connection with the enforcement of the obligations of the Guarantor under this
Guarantee Agreement.
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<PAGE> 212
(g) Stolt SA may enforce the Guarantor's obligations hereunder without
in any way first pursuing or exhausting any other rights or remedies which Stolt
SA may have against any other person, firm or corporation or against any
security Stolt SA may hold.
4. Agreement to Contingent Guarantee. MTC has been provided a copy of
the Stolt-OPC Guarantee, have reviewed it and found it acceptable in all
respects. A copy of the Stolt-OPC Guarantee is attached to this Guarantee
Agreement. Stolt SA agrees that it will not agree to any amendment of the
Stolt-OPC Guarantee that adversely affects the rights of the Guarantor hereunder
without the prior written approval of the Guarantor.
5. Representations and Warranties. The Guarantor represents and warrants
as follows:
(a) It is a corporation duly authorized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation and has full
power and authority (corporate, legal and other) to execute, deliver and carry
out the terms of this Guarantee Agreement;
(b) This Guarantee Agreement has been duly authorized, executed and
delivered by it and constitutes the legal, valid and binding obligation of it
enforceable against the Guarantor in accordance with its terms;
(c) The execution, delivery and performance by it of this Guarantee
Agreement does not require the approval or consent of its shareholders or of any
governmental authority and does not contravene any of its corporate
organizational documents or any mortgage, indenture or other agreement binding
upon it, or any law, regulation, order, judgment or decree applicable to it;
(d) Its guarantee pursuant to this Guarantee Agreement will be
expected to benefit it, directly or indirectly; and
(e) It has fully adequate financial resources, funds, and assets to
satisfy its obligations under this Guarantee Agreement, and it will in the
future retain financial resources, funds, and assets to satisfy fully its
obligations under this Guarantee Agreement.
6. Continuing Guarantee. This Guarantee Agreement is a continuing
guarantee of payment and collectibility and shall:
(a) Remain in full force and effect so long as any obligation of
Stolt SA exists under the Stolt-OPC Guarantee;
(b) Be binding upon the Guarantor, its successors and assigns;
(c) Be executed and issued for the sole and exclusive benefit of
Stolt SA, and no other party shall be permitted to claim any benefit, direct or
indirect, therefrom. This Guarantee Agreement is nonassignable by the Guarantor
and any assignment thereof by it shall be null and void and have no legal effect
whatsoever; and
(d) Inure to the benefit of, and be enforceable by Stolt SA, its
successors and assigns.
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<PAGE> 213
7. Subrogation.
(a) Upon any payment made by the Guarantor pursuant to this Guarantee
Agreement, the Guarantor, to the extent of such payment, shall be fully
subrogated to all rights of subrogation of Stolt SA, but only to the extent
afforded Stolt SA under the Stolt-OPC Guarantee.
(b) Stolt SA, at the Guarantor's expense, shall promptly and duly
execute and deliver to the Guarantor such further documents and take such
further action as the Guarantor may from time to time reasonably request in
order more effectively to carry out the intent and purpose of these subrogation
rights to establish and protect the rights and remedies created or intended to
be created in this Section 7.
8. Default. A default under the terms of this Guarantee Agreement
shall be deemed to occur if the Guarantor fails to make any payments guaranteed
hereunder within the time provided in Section 3.
9. Notices. All communications may be made or delivered in person or
by certified or registered mail, postage prepaid, or telefax followed by mail,
addressed to Stolt SA or Stolt Group as provided below or to such other address
as any of them may hereafter specify in a written notice to the others and all
notices or other communications shall be in writing so addressed and shall be
effective upon receipt by the addressee thereof:
Stolt SA or
Stolt Group: Stolt-Nielsen S.A. or Stolt- Nielsen
Transportation Group, Ltd.
8 Sound Shore Drive
P.O. Box 2300
Greenwich, CT 06836
Attention: Paul E. O'Brien, Esquire
Vice President and Assistant
General Counsel
Telefax:(203) 625-3920
The Guarantor: Marine Transport Corporation
1200 Harbor Boulevard, C-901
Weehawken, NJ 07087
Attention:General Counsel
Telefax: 201-330-9646
10. Amendments and Supplements. No agreement shall be effective to
change or modify, supplement, amend or discharge in whole or in part this
Guarantee Agreement unless such agreement is in writing, signed by the parties
hereto.
11. Governing Law; Jurisdiction.
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<PAGE> 214
(a) This Guarantee Agreement shall be governed by, and construed in
accordance with, the laws of the State of New York.
(b) Each of the parties hereto hereby submits to the nonexclusive
jurisdiction of the United States District Court for the Southern District of
New York and of the Supreme Court of the State of New York sitting in New York
County (including its appellate division) and of any other appellate court in
the State of New York arising out of or relating to this Guarantee Agreement or
the transactions contemplated hereby. Each of the parties hereto hereby
irrevocably waives, to the fullest extent permitted by applicable law, any
objection that it may now or hereafter have to the laying of the venue of any
such proceeding brought in such a court and any claim that any such proceeding
brought in such a court has been brought in any inconvenient forum. To the
extent that any party has or hereafter may acquire any immunity from
jurisdiction of any court or from any legal process (whether through service or
notice, attachment prior to judgment, attachment in aid of execution, execution
or otherwise) with respect to itself or its property, such party hereby
irrevocably waives such immunity in respect of its obligations under this
Guarantee Agreement.
(c) Each of the parties hereby irrevocably appoints CT Corporation
System (the "Process Agent"), with an office on the date hereof at 1633
Broadway, New York, New York 10019, as its agent to receive on behalf of it and
its property service of copies of the summons and complaint and any other
process which may be served in any suit, action or proceeding arising out of or
relating to this Guarantee Agreement to which it is a party. Such service may be
made by mailing or delivering a copy of such process to each such party in care
of the Process Agent at the Process Agent's above address, together with written
notice of such service given to each such party in the manner provided in
Section 9 hereof, and each such party hereby irrevocably authorizes and directs
the Process Agent to accept such service on its behalf. Each of the parties
agrees that a final judgment in any such suit, action or proceeding shall be
conclusive and may be enforced in other jurisdictions by suit on the judgment or
in any other manner provided by law. Nothing in this Section 11 shall affect the
right of any party to serve legal process in any other manner permitted by law
or affect the right of any party to bring any action or proceeding against any
other party or its property in the courts of any other jurisdictions.
12. Counterparts. This Guarantee Agreement may be executed in one or
more counterparts. All such counterparts shall be deemed to be originals and
shall together constitute but one and the same instrument.
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<PAGE> 215
IN WITNESS WHEREOF, this Guarantee Agreement has been executed on the
day and year first above written.
MARINE TRANSPORT CORPORATION
By:------------------------------------
Name:
Title:
STOLT-NIELSEN S.A.
By:------------------------------------
Name:
Title:
STOLT-NIELSEN TRANSPORTATION GROUP LTD.
By:------------------------------------
Name:
Title:
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<PAGE> 216
4.08(a)
Contract No.
MA-9894
ASSIGNMENT, ASSUMPTION AND AMENDMENT NO. 1
TO
TITLE XI RESERVE FUND AND FINANCIAL AGREEMENT
by
FRANCES OWNER CORPORATION,
ASSUMING COMPANY
FRANCES ODS CORPORATION,
BAREBOAT CHARTERER
STOLT MARINE TANKERS LLC,
TIME CHARTERER
AND
SUWANNEE RIVER PHOSPHATE LINES, INC.,
ORIGINAL BAREBOAT CHARTERER
AND
THE UNITED STATES OF AMERICA
SEPTEMBER 29, 1999
ITB FRANCES HAMMER
(TO BE RENAMED SMT CHEMICAL EXPLORER)
<PAGE> 217
ASSIGNMENT, ASSUMPTION AND AMENDMENT NO. 1
TO
TITLE XI RESERVE FUND AND FINANCIAL AGREEMENT
ITB FRANCES HAMMER
(to be renamed SMT CHEMICAL EXPLORER)
THIS ASSIGNMENT, ASSUMPTION AND AMENDMENT NO. 1 (this "Amendment"), to
TITLE XI RESERVE FUND AND FINANCIAL AGREEMENT (the "Agreement"), Contract No.
MA-9894, dated September 16, 1981, among FRANCES OWNER CORPORATION, a Delaware
corporation (the "Assuming Company"), FRANCES ODS CORPORATION, a Delaware
corporation (the "Bareboat Charterer"), STOLT MARINE TANKERS LLC, a Delaware
limited liability company (the "Time Charterer"), SUWANNEE RIVER PHOSPHATE
LINES, INC., a California corporation (the "Original Bareboat Charterer"), and
the UNITED STATES OF AMERICA (the "United States"), represented by the SECRETARY
OF TRANSPORTATION, acting by and through the MARITIME ADMINISTRATOR (the
"Secretary"), pursuant to the provisions of Title XI of the Merchant Marine Act,
1936, as amended, is made on September 29, 1999.
RECITALS:
A. On September 16, 1981, the Original Bareboat Charterer and the
Secretary entered into the Agreement, in connection with the issuance by the
Secretary of a Guarantee of certain Obligations issued by the Shipowner to
assist in financing the construction of the Vessel; and
B. On the date hereof, State Street Bank and Trust Company, a
Massachusetts trust company, not in its individual capacity but solely as owner
trustee under the Trust Agreement dated as of November 13, 1980, as amended, for
the benefit of the owner participant named therein, as Shipowner, is
transferring the Vessel to the Assuming Company, which is assuming the
obligations of the Shipowner under the Security Agreement hereinafter referred
to, the Original Bareboat Charterer is being released from its obligations under
the Bareboat Charter dated as of September 16, 1981, between the Original
Bareboat Charterer and the Shipowner, and the Assuming Company is entering into
a new bareboat charter of the Vessel (the "Bareboat Charter") with the Bareboat
Charterer and the Bareboat Charterer is time-chartering the Vessel to the Time
Charterer.
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, and of other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the parties hereto agree as follows:
<PAGE> 218
ARTICLE FIRST
ASSUMPTION OF OBLIGATIONS
1. The Original Bareboat Charterer hereby transfers, assigns, sets
over, confirms and conveys to the Assuming Company, the Bareboat Charterer and
the Time Charterer, without limitation, all of its right, title, and interest
in, and all of its duties and obligations under the Agreement, and each of the
Assuming Company, the Bareboat Charterer and the Time Charterer hereby accepts
such transfer, assignment and conveyance, without limitation, subject to the
terms and conditions of the Agreement and accepts and assumes all of the right,
title, interest, duties and obligations of the Original Bareboat Charterer under
the Agreement arising as of or after the Effective Date with the same force and
effect as if each of the Assuming Company, the Bareboat Charterer and the Time
Charterer had been named as a party thereto, including without limitation, the
obligation to pay any amounts which would have been payable by the Original
Bareboat Charterer under the Agreement on or after the Effective Date but for
this Amendment. As of the Effective Date, the Original Bareboat Charterer shall
have no further obligations under the Agreement and the Secretary hereby
releases the Original Bareboat Charterer from its obligations thereunder.
2. The transfer, assignment, conveyance, acceptance, assumption and
release provided in Section 1 above shall become effective on the Effective Date
and shall be of no force or effect prior thereto. Notwithstanding any provision
of this Amendment to the contrary: (i) the rights of the respective parties
under the Agreement which shall have unconditionally accrued at any time up to
and including the Effective Date shall survive the Effective Date, and (ii)
neither the assignment and assumption effected hereby nor any proceedings
arising from the Agreement shall (x) relieve any party thereto from the
observance or performance of any obligation required to be observed or performed
on or prior to the Effective Date, or from liability for any acts or omissions
of such party which were performed or required to be performed on or prior to
the Effective Date, or (y) serve as a defense against any claim for breach of or
failure to perform any such obligation.
3. The Assuming Company, the Bareboat Charterer and the Time Charterer
each hereby expressly confirms and agrees to the Secretary's continuing security
interest in the Bareboat Charter Security Fund, which shall be known as the
Title XI Reserve Fund from and after the Effective Date.
4. From and after the Effective Date all references in the Agreement to
the Company (as such term is defined in the Agreement) shall be deemed to be
references to the Assuming Company, the Bareboat Charterer and the Time
Charterer.
5. The Agreement is hereby amended in all respects to conform to the
provisions in this Amendment, and all provisions thereof inconsistent with the
provisions herein shall be read and interpreted so as to conform to the
provisions hereof.
2
<PAGE> 219
ARTICLE SECOND
REPRESENTATIONS AND WARRANTIES
1. The Assuming Company hereby represents and warrants that:
(a) the Assuming Company was duly organized and is now validly
existing and in good standing under the laws of the State of Delaware;
(b) the Assuming Company has duly authorized, executed and
delivered this Amendment; and
(c) the execution, delivery and performance by the Assuming
Company of this Amendment are not in contravention of any indenture or
undertaking to which the Assuming Company is a party or by which it is
bound.
2. The Bareboat Charterer hereby represents and warrants that:
(a) the Bareboat Charterer was duly organized and is now
validly existing and in good standing under the laws of the State of
Delaware;
(b) the Bareboat Charterer has duly authorized, executed and
delivered this Amendment; and
(c) the execution, delivery and performance by the Bareboat
Charterer of this Amendment are not in contravention of any indenture
or undertaking to which the Bareboat Charterer is a party or by which
it is bound.
3. The Time Charterer hereby represents and warrants that:
(a) the Time Charterer was duly organized and is now validly
existing and in good standing under the laws of the State of Delaware;
(b) the Time Charterer has duly authorized, executed and
delivered this Amendment; and
(c) the execution, delivery and performance by the Time
Charterer of this Amendment are not in contravention of any indenture
or undertaking to which the Time Charterer is a party or by which it is
bound.
4. The Original Bareboat Charterer hereby represents and warrants
that:
(a) the Original Bareboat Charterer was duly organized and is
now validly existing and in good standing under the laws of the State
of California;
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<PAGE> 220
(b) the Original Bareboat Charterer has duly authorized,
executed and delivered this Amendment; and
(c) the execution, delivery and performance by the Original
Bareboat Charterer of this Amendment are not in contravention of any
indenture or undertaking to which the Original Bareboat Charterer is a
party or by which it is bound.
ARTICLE THIRD
ADDITIONS, DELETIONS AND AMENDMENTS TO EXHIBIT 1
(THE GENERAL PROVISIONS OF THE
TITLE XI RESERVE FUND AND FINANCIAL AGREEMENT)
Exhibit 1 to the Agreement, as amended by Article Third of the Special
Provisions of the Agreement, is hereby further amended as follows and as so
amended shall take effect immediately following the assignment by the Original
Bareboat Charterer, the assumption by the Assuming Company, the Bareboat
Charterer and the Time Charterer and the release of the Original Bareboat
Charterer:
(1) Paragraph 4 of Article First of the Special Provisions is hereby
deleted in its entirety in its current form.
(2) Paragraph 1 of Article Third of the Special Provisions is hereby
deleted in its entirety in its current form.
(3) Paragraphs 4, 5, 6 and 8 of Article Third of the Special Provisions
are hereby deleted in their entirety in their respective current forms.
(4) Paragraph 2(b)(2)(D) of the Exhibit 1 to the Title XI Reserve Fund
and Financial Agreement ("Exhibit 1") is hereby amended and restated as follows:
"(D) Irrespective of the Company's deposit requirements into
the Title XI Reserve Fund, the Company shall not be required to make
any deposits into the Title XI Reserve Fund if (i) the Obligations and
the related Secretary's Note with respect to the Vessel shall have been
satisfied and discharged and if the Company shall have paid or caused
to be paid all other sums secured under the Security Agreement or the
Mortgage, (ii) all of the Guarantees on the Outstanding Obligations
shall have been terminated pursuant to the Security Agreement, or (iii)
the amount (including any securities at current market value) in the
Title XI Reserve Fund plus the Other Title XI Reserve Fund, together
with the amount on deposit in the Capital Construction Fund of Marine
Transport Corporation, a Delaware corporation (hereinafter, the "CCF"),
is equal to, or in excess of 50% of the principal amount of the
Outstanding Obligations plus the Other Outstanding Obligations".
4
<PAGE> 221
(5) A new subsection 2(c) is hereby added to Exhibit 1 as follows:
"(c) No later than the time when any withdrawal is made from
the CCF, the Company shall deposit, or cause to be deposited, into the
Title XI Reserve Fund an amount equal to the amount of such withdrawal
from the CCF, provided, however, that the deposits specified in this
subsection shall not be required to be made if the amount (including
any securities at current market value) in the Title XI Reserve Fund
plus the Other Title XI Reserve Fund , together with the amount on
deposit in the CCF is equal to, or in excess of 50% of the principal
amount of the Outstanding Obligations plus the Other Outstanding
Obligations."
(6) Section 3 of Exhibit 1 is hereby amended as follows:
(a) By adding before the period at the end of subsection 3(a)
the following: "; provided, however, that no withdrawal may be made
prior to January 1, 2001."; and
(b) By adding a new section (d) as follows:
"(d) The Secretary hereby approves withdrawals on or after
January 1, 2001, for the purpose of dry-docking expenses only, upon
sixty days prior written notice to the Secretary which, when aggregated
for the SMT CHEMICAL EXPLORER and the SMT CHEMICAL TRADER, shall not
exceed $500,000."
(7) Clauses (i), (ii), and (iii) of subsection 13 (b) of Exhibit 1 in
their present form are hereby deleted and the following is substituted therefor:
"(i) each of the MTC Guarantee, the SNTG Guarantee, and the
Contingent Guarantee are in full force and effect and (ii) MTC's market
capitalization is at least $10 million, the Company shall not, without
the prior written consent of the Secretary:"
(8) Subsection 13(c)(1) of Exhibit 1 in its present form is hereby
deleted and the following is substituted therefor:
"(1) (i) pay any dividend or make any distribution of earnings
so long as the Contingent Guarantee is required to remain in effect and
(ii) after the Contingent Guarantee is no longer required to be in
effect, make any distribution of earnings except as may be permitted by
(A) or (B) below:
(A) From retained earnings in an amount specified in
subsection (C) below, provided that, in the fiscal year in which the
distribution of earnings is made there is no operating loss to the date
of such payment of such distribution of earnings, and (i) there was no
operating loss in the immediately preceding three fiscal years, or (ii)
there was a one-year operating loss during the immediately preceding
three fiscal years, but (a) such loss was not in the immediately
preceding fiscal year, and (b) there was positive net income for the
three year period;
5
<PAGE> 222
(B) If distributions of earnings may not be made
under (A) above, a distribution can be made in an amount equal to the
total operating net income for the immediately preceding three fiscal
year period, provided that, (i) there were no two successive years of
operating losses, (ii) in the fiscal year in which such distribution is
made, there is no operating loss to the date of such distribution, and
(iii) the distribution or earnings made would not exceed an amount
specified in Section 9(a)(1)(C) below;
(C) Distributions of earnings may be made from
earnings of prior years in an aggregate amount equal to (i) 40 percent
of the Company's total net income after tax for each of the prior
years, less any distributions that were made in such years; or (ii) the
aggregate of the Company's total net income after tax for such prior
years, provided that, after making such distribution, the Company's
Long Term Debt does not exceed its Net Worth. In computing net income
for the purposes of this Section, extraordinary gains, such as gains
from the sale of assets, shall be excluded."
(9) Pursuant to subsection 13(a), each of the Company, the Bareboat
Charterer and the Time Charterer, with the consent of the Secretary, hereby
elects to be governed by sub-sections 13(b) and (c) of Exhibit 1 hereto, as
amended herein. From the date hereof, the covenants set forth in Section 12 of
Exhibit 1 hereto shall not apply to the Company, the Bareboat Charterer or the
Time Charterer.
(10) The Secretary hereby approves the Management Agreement and the
Commercial Management Agreement and the provisions of Section 13(c)(2) shall not
apply thereto.
(11) The Secretary hereby consents to the Second Mortgage, the Bareboat
Charter and the Time Charter and the provisions of Section 13(c)(3) shall not
apply thereto.
(12) The provisions of Section 14(c) as amended in Article Third of the
Special Provisions shall apply to each Guarantor and the Time Charterer.
(13) Section 15 of Exhibit 1 in its present form is hereby deleted in
its entirety. Immediately upon the execution and delivery of this Amendment, the
Company shall meet the requirements specified in Section 13(b) of Exhibit 1 as
amended hereby.
(14) Attachment A to the Agreement is hereby amended by deleting the
addresses that appear thereon and inserting in their place the following:
"A. Name and address of Title XI Reserve Fund Depository:
U.S. Bank Trust National Association
One California Street, 4th Floor
San Francisco, CA 94111
Attn: Corporate Trust Administration
Reference: Vessel SMT CHEMICAL EXPLORER
6
<PAGE> 223
(formerly ITB FRANCES HAMMER)
"B. Name and address of the Assuming Company:
Frances Owner Corporation
c/o Marine Transport Corporation
1200 Harbor Boulevard, 9th Floor, C-901
Weehawken, NJ 07087-0901
Attn: General Counsel
"C. Name and address of the Bareboat Charterer:
Frances ODS Corporation
c/o Marine Transport Corporation
1200 Harbor Boulevard, 9th Floor, C-901
Weehawken, NJ 07087-0901
Attn: General Counsel
"D. Name and address of the Time Charterer:
Stolt Marine Tankers LLC
c/o Marine Transport Corporation
1200 Harbor Boulevard, 9th Floor, C-901
Weehawken, NJ 07087-0901
Attn: General Counsel
ARTICLE FOURTH
MISCELLANEOUS
1. This instrument is executed as and shall constitute an
amendment to and be incorporated into and made a part of the Agreement. All of
the terms and provisions of the Agreement as amended hereby shall continue to be
and shall remain in full force and effect.
2. This Amendment may be executed in any number of counterparts.
All such counterparts shall be deemed to be originals and shall together
constitute but one and the same instrument.
3. Capitalized terms used herein which are defined in Schedule X
to the Security Agreement, Contract No. MA-9892, dated as of November 25, 1980,
as amended by Amendment No. 1 thereto dated October 18, 1991, and Assignment,
Assumption and Amendment No. 2 thereto dated the date hereof, between the
Shipowner and the United States of America, or by reference
7
<PAGE> 224
therein to other instruments or agreements, shall have the meanings given to
such terms in said Schedule X or such other instruments or agreements.
4. This Amendment and the rights and obligations of the parties hereto
shall in all respects be governed by, construed and enforced in accordance with
the federal laws of the United States of America, but if they are inapplicable,
then in accordance with the laws of the State of New York, including Section
5-1401 of the General Obligations Law of the State of New York.
5. If any term of the Agreement, as amended by this Amendment, or any
application thereof shall be invalid or unenforceable, the remainder of the
Agreement, as amended, and any other application of such term shall not be
affected thereby.
8
<PAGE> 225
IN WITNESS WHEREOF, this Amendment has been executed by the Assuming
Company, the Bareboat Charterer, the Time Charterer and the Original Bareboat
Charterer and the Secretary as of the day and year first above written.
FRANCES OWNER CORPORATION,
Assuming Company
By: __________________________
Name:
Title:
Attest:
_____________________________
Assistant Secretary
<PAGE> 226
FRANCES ODS CORPORATION,
the Bareboat Charterer
By:
_________________________
Name:
Title:
Attest:
______________________________
Assistant Secretary
<PAGE> 227
STOLT MARINE TANKERS LLC,
Time Charterer
By:---------------------------------
Name:
Title:
Attest:
- ------------------------------
Assistant Secretary
<PAGE> 228
SUWANNEE RIVER PHOSPHATE LINES, INC.,
Original Bareboat Charterer
By: ___________________________________
Name:
Title:
Attest:
______________________________
Assistant Secretary
<PAGE> 229
UNITED STATES OF AMERICA,
SECRETARY OF TRANSPORTATION
BY: MARITIME ADMINISTRATOR
By:-------------------------------
Secretary
Maritime Administration
Attest:
- ------------------------------
Assistant Secretary
Maritime Administration
<PAGE> 230
4.08 (b)
CONTRACT NO.
MA-9882
ASSIGNMENT, ASSUMPTION AND AMENDMENT NO. 1
TO
TITLE XI RESERVE FUND AND FINANCIAL AGREEMENT
BY
JULIUS OWNER CORPORATION,
ASSUMING COMPANY
JULIUS ODS CORPORATION,
BAREBOAT CHARTERER
STOLT MARINE TANKERS LLC,
TIME CHARTERER
AND
SUWANNEE RIVER LINES, INC.,
ORIGINAL BAREBOAT CHARTERER
AND
THE UNITED STATES OF AMERICA
SEPTEMBER 29, 1999
ITB JULIUS HAMMER
(TO BE RENAMED SMT CHEMICAL TRADER)
<PAGE> 231
ASSIGNMENT, ASSUMPTION AND AMENDMENT NO. 1
TO
TITLE XI RESERVE FUND AND FINANCIAL AGREEMENT
ITB JULIUS HAMMER
(TO BE RENAMED SMT CHEMICAL TRADER)
THIS ASSIGNMENT, ASSUMPTION AND AMENDMENT NO. 1 (this "Amendment"), to
TITLE XI RESERVE FUND AND FINANCIAL AGREEMENT (the "Agreement"), Contract No.
MA-9882, dated March 18, 1981, among JULIUS OWNER CORPORATION, a Delaware
corporation (the "Assuming Company"), JULIUS ODS CORPORATION, a Delaware
corporation (the "Bareboat Charterer"), STOLT MARINE TANKERS LLC, a Delaware
limited liability company (the "Time Charterer"), SUWANNEE RIVER LINES, INC., a
California corporation (the "Original Bareboat Charterer"), and the UNITED
STATES OF AMERICA (the "United States"), represented by the SECRETARY OF
TRANSPORTATION, acting by and through the MARITIME ADMINISTRATOR (the
"Secretary"), pursuant to the provisions of Title XI of the Merchant Marine Act,
1936, as amended, is made on September 29, 1999.
RECITALS:
A. On March 18, 1981, the Original Bareboat Charterer and the
Secretary entered into the Agreement, in connection with the issuance by the
Secretary of a Guarantee of certain Obligations issued by the Shipowner to
assist in financing the construction of the Vessel; and
B. On the date hereof, State Street Bank and Trust Company, a
Massachusetts trust company, not in its individual capacity but solely as owner
trustee under the Trust Agreement dated as of November 13, 1980, as amended, for
the benefit of the owner participant named therein, as Shipowner, is
transferring the Vessel to the Assuming Company, which is assuming the
obligations of the Shipowner under the Security Agreement hereinafter referred
to, the Original Bareboat Charterer is being released from its obligations under
the Bareboat Charter dated as of September 16, 1981, between the Original
Bareboat Charterer and the Shipowner, and the Assuming Company is entering into
a new bareboat charter of the Vessel (the "Bareboat Charter") with the Bareboat
Charterer and the Bareboat Charterer is time-chartering the Vessel to the Time
Charterer.
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, and of other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the parties hereto agree as follows:
<PAGE> 232
ARTICLE FIRST
ASSUMPTION OF OBLIGATIONS
1. The Original Bareboat Charterer hereby transfers, assigns,
sets over, confirms and conveys to the Assuming Company, the Bareboat Charterer
and the Time Charterer, without limitation, all of its right, title, and
interest in, and all of its duties and obligations under the Agreement, and each
of the Assuming Company, the Bareboat Charterer and the Time Charterer hereby
accepts such transfer, assignment and conveyance, without limitation, subject to
the terms and conditions of the Agreement and accepts and assumes all of the
right, title, interest, duties and obligations of the Original Bareboat
Charterer under the Agreement arising as of or after the Effective Date with the
same force and effect as if each of the Assuming Company, the Bareboat Charterer
and the Time Charterer had been named as a party thereto, including without
limitation, the obligation to pay any amounts which would have been payable by
the Original Bareboat Charterer under the Agreement on or after the Effective
Date but for this Amendment. As of the Effective Date, the Original Bareboat
Charterer shall have no further obligations under the Agreement and the
Secretary hereby releases the Original Bareboat Charterer from its obligations
thereunder.
2. The transfer, assignment, conveyance, acceptance, assumption
and release provided in Section 1 above shall become effective on the Effective
Date and shall be of no force or effect prior thereto. Notwithstanding any
provision of this Amendment to the contrary: (i) the rights of the respective
parties under the Agreement which shall have unconditionally accrued at any time
up to and including the Effective Date shall survive the Effective Date, and
(ii) neither the assignment and assumption effected hereby nor any proceedings
arising from the Agreement shall (x) relieve any party thereto from the
observance or performance of any obligation required to be observed or performed
on or prior to the Effective Date, or from liability for any acts or omissions
of such party which were performed or required to be performed on or prior to
the Effective Date, or (y) serve as a defense against any claim for breach of or
failure to perform any such obligation.
3. The Assuming Company, the Bareboat Charterer and the Time
Charterer each hereby expressly confirms and agrees to the Secretary's
continuing security interest in the Bareboat Charter Security Fund, which shall
be known as the Title XI Reserve Fund from and after the Effective Date.
4. From and after the Effective Date all references in the
Agreement to the Company (as such term is defined in the Agreement) shall be
deemed to be references to the Assuming Company, the Bareboat Charterer and the
Time Charterer.
5. The Agreement is hereby amended in all respects to conform to
the provisions in this Amendment, and all provisions thereof inconsistent with
the provisions herein shall be read and interpreted so as to conform to the
provisions hereof.
2
<PAGE> 233
ARTICLE SECOND
REPRESENTATIONS AND WARRANTIES
1. The Assuming Company hereby represents and warrants that:
(a) the Assuming Company was duly organized and is now validly
existing and in good standing under the laws of the State of Delaware;
(b) the Assuming Company has duly authorized, executed and
delivered this Amendment; and
(c) the execution, delivery and performance by the Assuming
Company of this Amendment are not in contravention of any indenture or
undertaking to which the Assuming Company is a party or by which it is bound.
2. The Bareboat Charterer hereby represents and warrants that:
(a) the Bareboat Charterer was duly organized and is now validly
existing and in good standing under the laws of the State of Delaware;
(b) the Bareboat Charterer has duly authorized, executed and
delivered this Amendment; and
(c) the execution, delivery and performance by the Bareboat
Charterer of this Amendment are not in contravention of any indenture or
undertaking to which the Bareboat Charterer is a party or by which it is bound.
3. The Time Charterer hereby represents and warrants that:
(a) the Time Charterer was duly organized and is now validly
existing and in good standing under the laws of the State of Delaware;
(b) the Time Charterer has duly authorized, executed and delivered
this Amendment; and
(c) the execution, delivery and performance by the Time Charterer
of this Amendment are not in contravention of any indenture or undertaking to
which the Time Charterer is a party or by which it is bound.
4. The Original Bareboat Charterer hereby represents and warrants that:
(a) the Original Bareboat Charterer was duly organized and is now
validly existing and in good standing under the laws of the State of California;
3
<PAGE> 234
(b) the Original Bareboat Charterer has duly authorized, executed
and delivered this Amendment; and
(c) the execution, delivery and performance by the Original
Bareboat Charterer of this Amendment are not in contravention of any indenture
or undertaking to which the Original Bareboat Charterer is a party or by which
it is bound.
ARTICLE THIRD
ADDITIONS, DELETIONS AND AMENDMENTS TO EXHIBIT 1
(THE GENERAL PROVISIONS OF THE
TITLE XI RESERVE FUND AND FINANCIAL AGREEMENT)
Exhibit 1 to the Agreement, as amended by Article Third of the Special
Provisions of the Agreement, is hereby further amended as follows and as so
amended shall take effect immediately following the assignment by the Original
Bareboat Charterer, the assumption by the Assuming Company, the Bareboat
Charterer and the Time Charterer and the release of the Original Bareboat
Charterer:
(1) Paragraph 4 of Article First of the Special Provisions is
hereby deleted in its entirety in its current form.
(2) Paragraph 1 of Article Third of the Special Provisions is
hereby deleted in its entirety in its current form.
(3) Paragraphs 4, 5, 6 and 8 of Article Third of the Special
Provisions are hereby deleted in their entirety in their respective current
forms.
(4) Paragraph 2(b)(2)(D) of the Exhibit 1 to the Title XI Reserve
Fund and Financial Agreement ("Exhibit 1") is hereby amended and restated as
follows:
"(D) Irrespective of the Company's deposit requirements
into the Title XI Reserve Fund, the Company shall not be required to
make any deposits into the Title XI Reserve Fund if (i) the Obligations
and the related Secretary's Note with respect to the Vessel shall have
been satisfied and discharged and if the Company shall have paid or
caused to be paid all other sums secured under the Security Agreement
or the Mortgage, (ii) all of the Guarantees on the Outstanding
Obligations shall have been terminated pursuant to the Security
Agreement, or (iii) the amount (including any securities at current
market value) in the Title XI Reserve Fund plus the Other Title XI
Reserve Fund, together with the amount on deposit in the Capital
Construction Fund of Marine Transport Corporation, a Delaware
corporation (hereinafter, the "CCF"), is equal to, or in excess of 50%
of the principal amount of the Outstanding Obligations plus the Other
Outstanding Obligations".
4
<PAGE> 235
(5) A new subsection 2(c) is hereby added to Exhibit 1 as follows:
"(c) No later than the time when any withdrawal is made
from the CCF, the Company shall deposit, or cause to be deposited, into
the Title XI Reserve Fund an amount equal to the amount of such
withdrawal from the CCF, provided, however, that the deposits specified
in this subsection shall not be required to be made if the amount
(including any securities at current market value) in the Title XI
Reserve Fund plus the Other Title XI Reserve Fund, together with the
amount on deposit in the CCF is equal to, or in excess of 50% of the
principal amount of the Outstanding Obligations plus the Other
Outstanding Obligations."
(6) Section 3 of Exhibit 1 is hereby amended as follows:
(a) By adding before the period at the end of subsection
3(a) the following: "; provided, however, that no withdrawal may be
made prior to January 1, 2001."; and
(b) By adding a new section (d) as follows:
"(d) The Secretary hereby approves withdrawals on
or after January 1, 2001, for the purpose of dry-docking expenses only,
upon sixty days prior written notice to the Secretary which, when
aggregated for the SMT CHEMICAL EXPLORER and the SMT CHEMICAL TRADER,
shall not exceed $500,000."
(7) Clauses (i), (ii), and (iii) of subsection 13 (b) of Exhibit 1
in their present form are hereby deleted and the following is substituted
therefor:
"(i) each of the MTC Guarantee, the SNTG Guarantee, and the
Contingent Guarantee are in full force and effect and (ii) MTC's market
capitalization is at least $10 million, the Company shall not, without
the prior written consent of the Secretary:"
(8) Subsection 13(c)(1) of Exhibit 1 in its present form is hereby
deleted and the following is substituted therefor:
"(1) (i) pay any dividend or make any distribution of
earnings so long as the Contingent Guarantee is required to remain in
effect and (ii) after the Contingent Guarantee is no longer required to
be in effect, make any distribution of earnings except as may be
permitted by (A) or (B) below:
(A) From retained earnings in an amount
specified in subsection (C) below, provided that, in the fiscal year in
which the distribution of earnings is made there is no operating loss
to the date of such payment of such distribution of earnings, and (i)
there was no operating loss in the immediately preceding three fiscal
years, or (ii) there was a one-year operating loss during the
immediately preceding three fiscal years, but (a) such loss was not in
the immediately preceding fiscal year, and (b) there was positive net
income for the three year period;
5
<PAGE> 236
(B) If distributions of earnings may not be made
under (A) above, a distribution can be made in an amount equal to the
total operating net income for the immediately preceding three fiscal
year period, provided that, (i) there were no two successive years of
operating losses, (ii) in the fiscal year in which such distribution is
made, there is no operating loss to the date of such distribution, and
(iii) the distribution or earnings made would not exceed an amount
specified in Section 9(a)(1)(C) below;
(C) Distributions of earnings may be made from
earnings of prior years in an aggregate amount equal to (i) 40 percent
of the Company's total net income after tax for each of the prior
years, less any distributions that were made in such years; or (ii) the
aggregate of the Company's total net income after tax for such prior
years, provided that, after making such distribution, the Company's
Long Term Debt does not exceed its Net Worth. In computing net income
for the purposes of this Section, extraordinary gains, such as gains
from the sale of assets, shall be excluded."
(9) Pursuant to subsection 13(a), each of the Company, the
Bareboat Charterer and the Time Charterer, with the consent of the Secretary,
hereby elects to be governed by sub-sections 13(b) and (c) of Exhibit 1 hereto,
as amended herein. From the date hereof, the covenants set forth in Section 12
of Exhibit 1 hereto shall not apply to the Company, the Bareboat Charterer or
the Time Charterer.
(10) The Secretary hereby approves the Management Agreement and the
Commercial Management Agreement and the provisions of Section 13(c)(2) shall not
apply thereto.
(11) The Secretary hereby consents to the Second Mortgage, the
Bareboat Charter and the Time Charter and the provisions of Section 13(c)(3)
shall not apply thereto.
(12) The provisions of Section 14(c) as amended in Article Third of
the Special Provisions shall apply to each Guarantor and the Time Charterer.
(13) Section 15 of Exhibit 1 in its present form is hereby deleted
in its entirety. Immediately upon the execution and delivery of this Amendment,
the Company shall meet the requirements specified in Section 13(b) of Exhibit 1
as amended hereby.
(14) Attachment A to the Agreement is hereby amended by deleting
the addresses that appear thereon and inserting in their place the following:
"A. Name and address of Title XI Reserve Fund Depository:
U.S. Bank Trust National Association
One California Street, 4th Floor
San Francisco, CA 94111
Attn: Corporate Trust Administration
Reference: Vessel SMT CHEMICAL TRADER
(formerly JULIUS HAMMER)
6
<PAGE> 237
"B. Name and address of the Assuming Company:
Julius Owner Corporation
c/o Marine Transport Corporation
1200 Harbor Boulevard, 9th Floor, C-901
Weehawken, NJ 07087-0901
Attn: General Counsel
"C. Name and address of the Bareboat Charterer:
Julius ODS Corporation
c/o Marine Transport Corporation
1200 Harbor Boulevard, 9th Floor, C-901
Weehawken, NJ 07087-0901
Attn: General Counsel
"D. Name and address of the Time Charterer:
Stolt Marine Tankers LLC
c/o Marine Transport Corporation
1200 Harbor Boulevard, 9th Floor, C-901
Weehawken, NJ 07087-0901
Attn: General Counsel
ARTICLE FOURTH
MISCELLANEOUS
1. This instrument is executed as and shall constitute an
amendment to and be incorporated into and made a part of the Agreement. All of
the terms and provisions of the Agreement as amended hereby shall continue to be
and shall remain in full force and effect.
2. This Amendment may be executed in any number of counterparts.
All such counterparts shall be deemed to be originals and shall together
constitute but one and the same instrument.
3. Capitalized terms used herein which are defined in Schedule X
to the Security Agreement, Contract No. MA-9880, dated as of November 25, 1980,
as amended by Amendment No. 1 thereto dated October 18, 1991, and Assignment,
Assumption and Amendment No. 2 thereto dated the date hereof, between the
Shipowner and the United States of America, or by reference therein to other
instruments or agreements, shall have the meanings given to such terms in said
Schedule X or such other instruments or agreements.
4. This Amendment and the rights and obligations of the parties
hereto shall in all
7
<PAGE> 238
respects be governed by, construed and enforced in accordance with the federal
laws of the United States of America, but if they are inapplicable, then in
accordance with the laws of the State of New York, including Section 5-1401 of
the General Obligations Law of the State of New York.
5. If any term of the Agreement, as amended by this Amendment, or
any application thereof shall be invalid or unenforceable, the remainder of the
Agreement, as amended, and any other application of such term shall not be
affected thereby.
8
<PAGE> 239
IN WITNESS WHEREOF, this Amendment has been executed by the Assuming
Company, the Bareboat Charterer, the Time Charterer and the Original Bareboat
Charterer and the Secretary as of the day and year first above written.
JULIUS OWNER CORPORATION,
Assuming Company
By: ___________________________________
Name:
Title:
Attest:
________________________________
Assistant Secretary
<PAGE> 240
JULIUS ODS CORPORATION,
the Bareboat Charterer
By:
--------------------------------
Name:
Title:
Attest:
- ------------------------------
Assistant Secretary
<PAGE> 241
STOLT MARINE TANKERS LLC,
Time Charterer
By:
-----------------------------------
Name:
Title:
Attest:
- ------------------------------
Assistant Secretary
<PAGE> 242
SUWANNEE RIVER LINES, INC.,
Original Bareboat Charterer
By: -----------------------------------
Name:
Title:
Attest:
- ------------------------------
Assistant Secretary
<PAGE> 243
UNITED STATES OF AMERICA,
SECRETARY OF TRANSPORTATION
BY: MARITIME ADMINISTRATOR
By:
--------------------------
Secretary
Maritime Administration
Attest:
- ------------------------------
Assistant Secretary
Maritime Administration
<PAGE> 244
5.03(a)
TIME CHARTER
BETWEEN
FRANCES ODS CORPORATION
SUB-BAREBOAT CHARTERER
AND
STOLT MARINE TANKERS LLC
TIME CHARTERER
DATED AS OF ________________ ____, 1999
FRANCES HAMMER
<PAGE> 245
Table of Contents
TIME CHARTER
BETWEEN
FRANCES ODS CORPORATION
SUB-BAREBOAT CHARTERER
AND
STOLT MARINE TANKERS LLC
TIME CHARTERER
<TABLE>
<S> <C>
SECTION 1. Definitions ............................................ 1
SECTION 2. The Vessel ............................................. 1
SECTION 3. Period-Delivery-Redelivery ............................. 3
3.1 Primary Period .................................................. 3
3.2 Extensions ...................................................... 3
3.3 Delivery ........................................................ 4
3.4 Redelivery ...................................................... 4
SECTION 4. Hire, Costs and Fees ................................... 5
4.1 Hire ............................................................ 5
4.2 Operating Costs ................................................. 6
4.3 Payment ......................................................... 13
SECTION 5. The Vessel's Qualities ................................. 15
5.1 General ......................................................... 15
5.2 Fresh Water ..................................................... 16
5.3 Documentation ................................................... 17
5.4 Identification .................................................. 17
SECTION 6. Operational Provisions ................................. 17
6.1 Compliance; Trading Limits ...................................... 17
6.2 Use ............................................................. 18
6.3 Types of Cargo .................................................. 19
6.4 Loading-Discharging ............................................. 19
6.5 General Obligations of Sub-Bareboat Charterer ................... 19
6.6 Certain Obligations of Time Charterer ........................... 20
6.7 Personnel Matters ............................................... 20
6.8 Certain Duties of Master ........................................ 22
6.9 Additional Equipment ............................................ 23
6.10 Tugs and Pilots ................................................. 24
6.11 Claims .......................................................... 24
SECTION 7. Bills of Lading ........................................ 25
SECTION 8. Pollution .............................................. 25
SECTION 9. Insurance .............................................. 26
9.1 Requirements .................................................... 26
9.2 Option .......................................................... 26
9.3 Losses .......................................................... 27
</TABLE>
(i)
<PAGE> 246
<TABLE>
<S> <C>
SECTION 10. Drydocking, Lay-Up ...................................... 27
10.1 Drydocking ...................................................... 27
10.2 Lay-Up ....................................................... 27
10.3 Effect on Costs ................................................. 28
SECTION 11. Improvements ............................................ 28
SECTION 12. Liens and Attachments ................................... 29
12.1 Discharge ....................................................... 29
12.2 Further Encumbrances ............................................ 30
12.3 Power to Impose ................................................. 30
SECTION 13. Exceptions ............................................... 32
SECTION 14. Events and Consequences of Termination of Time Charter
or Replacement of Sub-Bareboat Charterer ................. 33
14.1 Events of Termination ........................................... 33
14.2 Replacement of Sub-Bareboat Charterer ........................... 33
14.3 Payments Upon Termination of Time Charter ....................... 33
SECTION 15. Events of Time Default and Remedies ..................... 33
15.1 Events of Time Default .......................................... 33
15.2 Remedies Upon an Event of Time Default .......................... 35
SECTION 16. Events of Sub-Bareboat Charterer Default and Remedies ... 35
16.1 Events of Sub-Bareboat Charterer Default ........................ 35
16.2 Remedies Upon an Event of Sub-Bareboat Charterer Default ........ 38
SECTION 17. General ................................................. 39
17.1 Ice ............................................................. 39
17.2 Safe Berth ...................................................... 39
17.3 Limitations ..................................................... 39
17.4 Government Direction and Blockade ............................... 39
17.5 No Frustration .................................................. 41
17.6 Salvage Money ................................................... 41
17.7 No Demise ....................................................... 41
17.8 Transfer and Subcharters ........................................ 42
17.9 Governing Law ................................................... 42
17.10 Notice ....................................................... 43
17.11 Changes ...................................................... 44
17.12 Records ...................................................... 44
17.13 Operational Review ........................................... 44
17.14 Procedures ................................................... 45
17.15 Sub-Bareboat Charterer's Contracts ........................... 45
17.16 Headings ..................................................... 45
17.17 Counterparts ................................................. 45
17.18 Separability ................................................. 45
17.19 U.S. Government Aids ......................................... 46
17.20 Subordination ................................................ 47
17.21 Escape or Discharge of Oil or Hazardous Substance ............ 47
17.22 Section References ........................................... 48
</TABLE>
(ii)
<PAGE> 247
TABLE OF CONTENTS
<PAGE> 248
TIME CHARTER
FRANCES HAMMER
This TIME CHARTER is made as of ______________________ ____, 1999, by
and between Frances ODS Corporation, ("Sub-Bareboat Charterer"), a Delaware
corporation, and Stolt Marine Tankers LLC, ("Time Charterer"), a Delaware
limited liability company.
WITNESSETH:
WHEREAS, Sub-Bareboat Charterer desires to time charter the Vessel to
Time Charterer and Time Charterer desires to time charter the Vessel from
Sub-Bareboat Charterer, in each case on the terms and conditions hereinafter set
forth;
NOW THEREFORE, in consideration of the premises and the mutual
covenants herein contained, Sub-Bareboat Charterer agrees to let and time
charter and Time Charterer agrees to hire and time charter the Vessel on the
terms and conditions hereinafter set forth.
SECTION 1. DEFINITIONS.
The capitalized terms used herein which are defined in, or by reference
in Schedule X hereto, as said Schedule X may be amended from time to time as
provided herein have the meanings specified in said Schedule X.
SECTION 2. THE VESSEL.
Sub-Bareboat Charterer hereby lets to Time Charterer, and Time
Charterer hereby hires from Sub-Bareboat Charterer, the use and services of the
Vessel, which shall have the particulars and capabilities specified below in
this Section, but as any thereof may be modified with Time Charterer's approval:
(a) American Bureau of Shipping Classification. Tug: +Al Towing
Service, +AMS, +ACC; Barge: +Ale "Chemical Barge" and "Oil Barge."
<PAGE> 249
(b) Carriage capacity. About 41,250 long tons total dead weight of
cargo, bunkers, stores and water, on a draft of 36 feet 0 inches in salt water;
and permanent bunkers, after deduction of 2 percent for expansion, of 2,633 long
tons of intermediate fuel oil and 661 long tons of light fuel oil.
(c) Speed. Capable of maintaining average speeds of 15.0 knots
loaded and 15.5 knots in ballast, by reference to the observed distance traveled
from seabuoy to seabuoy, and under weather conditions up to and including
Beaufort Scale Force No. 5 except for reductions in speed due to restricted
visibility or traffic conditions.
(d) Fuel. Fitted for burning light or intermediate diesel oil in
main motors, and light diesel oil under boilers. Capable of maintaining, on all
passages from seabuoy to seabuoy, under weather conditions up to and including
Beaufort Scale Force No. 5, an average daily fuel consumption of 57 tons of
intermediate fuel oil of the best commercial grade available with a maximum
viscosity of 180 centistokes at 50 degrees centigrade, excluding auxiliary
engines, cargo recirculating or heating and tank cleaning.
(e) Pumps. Equipped with center tank cargo pumps with
self-stripping features, capable of maintaining an aggregate discharge
throughput of 1600 metric tons per hour of bulk liquid cargoes having specific
gravities of 2.1 and viscosities of 2,000 SSU, with a maximum pressure at the
Vessel's manifold of 125 lbs. per square inch and 10 wing tank cargo pumps with
self-stripping features, each capable of maintaining an aggregate discharge
throughput of 750 gallons per minute, against a maximum pressure at the Vessel's
manifold of 125 lbs. per square inch of petroleum products at a specific gravity
of .86 and a maximum viscosity of 1,000 SSU.
2
<PAGE> 250
(f) Nothing in this Section 2 shall be construed as a waiver of
any rights either Sub-Bareboat Charterer or Time Charterer may have under any
other agreement between Sub-Bareboat Charterer and Time Charterer nor any rights
of Time Charterer against Sub-Bareboat Charterer in connection with the
obligations of Sub-Bareboat Charterer under Section 12 hereof.
SECTION 3. PERIOD-DELIVERY-REDELIVERY.
3.1 PRIMARY PERIOD.
This Time Charter shall be in effect from the Effective Date for the
balance of the Original Term.
3.2 EXTENSIONS.
So long as no Event of Time Default shall exist and be continuing, Time
Charterer shall have options to extend this Time Charter for one or more Renewal
Terms of two to five years each, exercisable by giving Sub-Bareboat Charterer
notice at least one hundred eighty days before the end of the Original Term or
60 days before the end of the then current Renewal Term (as the case may be),
which notice shall specify the period of such Renewal Term. In the event that
Time Charterer does not exercise such option to extend the Time Charter beyond
the Original Term, and an extension of more than 180 days beyond the
twenty-fifth anniversary of the Delivery Date is required for the completion of
a voyage in progress or for necessary repairs in accordance with the redelivery
requirements set forth in Article 13(b) of the Bareboat Charter, then this Time
Charter shall automatically be renewed for a Renewal Term equal to the period
commencing at midnight on the last day of the Original Term and ending at
midnight on the last day of the Charter Period. Upon the extension of this Time
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Charter in accordance with this Section 3.2, the Sub-Bareboat Charter shall
automatically be renewed for the same period.
3.3 DELIVERY.
Time Charterer shall be deemed to have accepted the Vessel hereunder
simultaneously with the delivery to and acceptance of the Vessel by Sub-Bareboat
Charterer pursuant to the Sub-Bareboat Charter. Time Charterer's acceptance of
the Vessel under this Time Charter, as provided in this Section 3.3, shall
confirm and be conclusive evidence, as between Sub-Bareboat Charterer and Time
Charterer, that the Vessel is in all respects satisfactory to Time Charterer and
in compliance with all requirements of this Time Charter, and Time Charterer
will not assert any claim of any nature whatsoever against Sub-Bareboat
Charterer based on any of the foregoing matters in this Section 3.3. Nothing in
this Section 3.3 shall be construed as a waiver of any right that either Time
Charterer or Sub-Bareboat Charterer may have against any person other than
Sub-Bareboat Charterer or Time Charterer.
3.4 REDELIVERY.
(a) On the last day of the Charter Period, unless (i) this Time
Charter has been terminated pursuant to Section 14.1, or (ii) use of the Vessel
has been requisitioned as described in Article 12 of the Sub-Bareboat Charter
and such requisition is continuing, Time Charterer shall, except as provided in
Article 13(b) of the Sub-Bareboat Charter (relating to an extension of the
Charter Period to make redelivery repairs), at Time Charterer's cost and
expense, redeliver the Vessel to Sub-Bareboat Charterer or the purchaser to whom
the Vessel was sold under Article 11 of the Bareboat Charter, at any safe port
in the continental United States on the coast on or nearest which the Vessel is
trading at the end of the Charter Period
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designated by the Bareboat Charterer by written notice to Sub-Bareboat Charterer
and Time Charterer at least 45 days prior to the end of the Charter Period. Time
Charterer agrees that at the time of such redelivery the Vessel shall be free
and clear of all liens, charges and encumbrances created by it.
(b) Any property of Time Charterer remaining aboard the Vessel
upon redelivery may be retained or disposed of by Sub-Bareboat Charterer as its
own property.
SECTION 4. HIRE, COSTS AND FEES.
4.1 HIRE.
The amount Time Charterer shall pay as hire for the use and services of
the Vessel during the continuance of this Time Charter shall comprise the
aggregate of the following:
(a) Basic Hire, Supplemental Hire, Termination Value and
Stipulated Loss Value (or amounts that are determined with Basic Hire,
Supplemental Hire, Termination Value or Stipulated Loss Value as the basis for
such determination) in the same amounts and at the same time and place as shall
be payable by Bareboat Charterer to Shipowner under the Bareboat Charter; and
(b) Operating Hire, which consists of amounts equal to the
following:
(1) Operating Costs. All costs incurred by Sub-Bareboat
Charterer in respect of obligations incident to the operation of the
Vessel and in performance of Sub-Bareboat Charterer's obligations
hereunder and under the Sub-Bareboat Charter, as detailed in Section
4.2(f), below; and
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(2) Operating Fee. A daily Operating Fee to Sub-Bareboat
Charterer in an amount as shall be determined by the parties, such
amount to include the Management Fee included in the Management
Agreement noted in Section 4.2 (e), below.
If an item of Operating Cost is not appropriately budgeted pursuant to
Section 4.2, Sub-Bareboat Charterer is not required to incur such cost or make
any payments, except to the extent necessary to meet operating exigencies where
obtaining prior review by, or the prior approval of, Time Charterer is not
practicable.
4.2 OPERATING COSTS.
(a) Estimates. At least 120 days before the beginning of each
Calendar Year, Sub-Bareboat Charterer shall submit to Time Charterer a written
estimate of the aggregate Operating Costs to be incurred during that forthcoming
Calendar Year. Such estimate shall include itemizations of the estimated
Operating Costs in reasonable detail; shall show how the estimated Operating
Costs were determined, including explanations of any thereof that are
extraordinary and shall be subject to Time Charterer's approval and
verification. Not later than 60 days before the beginning of each Calendar Year,
Sub-Bareboat Charterer and Time Charterer shall agree on an estimate of the
Operating Costs for such Calendar Year, which shall be the basis for payment of
Operating Hire for such Calendar Year, subject, however, to review, at the
request of Time Charterer at any time during the Calendar Year and adjustment to
allow for any previously unanticipated changes in Operating Costs to be
incurred.
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(b) Economy. Sub-Bareboat Charterer shall use its best efforts at
all times to keep Operating Costs at a minimum consistent with the Vessel's full
and efficient performance in the service of Time Charterer.
(c) Audits of Operating Costs. Time Charterer may cause to be made
during regular business hours, after the end of each fiscal year of Sub-Bareboat
Charterer, an audit of Sub-Bareboat Charterer's accounts and records relating to
Operating Costs for the Calendar Year ending during that fiscal year by
certified public auditors selected and paid by Time Charterer. A copy of the
report of each such audit shall be delivered to Sub-Bareboat Charterer as soon
as it is completed, but not later than one hundred and twenty days after the end
of such fiscal year of Sub-Bareboat Charterer.
(d) General Audits. Without limiting the right contained in
Section 4.2(c) hereof, Time Charterer shall have the right to make general
audits of Sub-Bareboat Charterer's operation of the Vessel during regular
business hours, by authorized employees or representatives of Time Charterer or
its Affiliates, at any time but not more often than once every six months. Such
audits may cover all aspects of Sub-Bareboat Charterer's performance hereunder
and its operation of the Vessel, including the determination and control of
Operating Costs, voyage and port performance, cargo handling, maintenance of the
Vessel and its equipment, drydocking of the Vessel and spare gear and stores
inventories. Sub-Bareboat Charterer shall maintain and retain for at least four
Calendar Years (or until Time Charterer's audit thereof, if earlier, but always
for as long as may be required for purposes of the ODS Contract) complete and
accurate records relating to its performance and operation of the Vessel,
including, without limitation: (1) payroll records, cancelled payroll checks and
receipts for cash
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payroll payments which are included in Operating Costs, (2) copies of original
invoices for all purchases and repairs, and copies of purchase orders, if any
(including subcontractors' and other third parties' services) and evidences of
payment thereof, (3) other documents evidencing the receipt and issuance of
equipment, gear and stores for use on the Vessel, (4) the Vessel's logs and
other records of its performance and operation, (5) true and correct copies of
contracts material to any operations hereunder, or as reasonably requested by
Time Charterer including, but not limited to, collective bargaining agreements,
agreements with shipping agents, repair and drydock contracts, and (6) copies of
any competitive bids for major repairs changes or modifications to the Vessel.
(e) If Sub-Bareboat Charterer enters into an agreement, other than
a labor agreement, with another person providing for operation of the Vessel,
Sub-Bareboat Charterer shall first have obtained Time Charterer's consent
thereto and shall cause such agreement to give Time Charterer the right to make
audits of such other person's operation of the Vessel under terms and conditions
equivalent to those contained in Sections 4.2(c) and (d) hereof and shall
contain such person's agreement to maintain complete and accurate books,
accounts and other records as specified in Section 17.12 hereof. Time Charterer
hereby consents to the Management Agreement between Sub-Bareboat Charterer and
Marine Transport Management, Inc., dated the date hereof.
(f) Operating Costs shall include:
(i) Manning costs. All costs incurred and paid by
Sub-Bareboat Charterer pursuant to the terms of any
collective bargaining agreement applicable to the
crew.
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(ii) Insurance costs. All costs incurred and paid by
Sub-Bareboat Charterer, including, but not limited
to, all payments within deductibles or franchises,
all amounts paid for premiums, club costs, fees, dues
or calls, all amounts paid for obtaining (including
marine insurance brokerage fees and expenses),
maintaining and collecting proceeds (including legal
and investigatory fees and expenses) under insurance
to be carried by Sub-Bareboat Charterer pursuant to
Article 8 of the Sub-Bareboat Charter (except
insurance referred to in Article 8(i) of the
Sub-Bareboat Charter) and all expenses incurred in
connection with the collection of such insurance
proceeds in the event of an Event of Loss.
(iii) Maintenance and repair costs. The cost of repairs,
excluding items paid for by insurance, and the cost
of maintenance or improvements required by
governmental authority, ABS or determined to be
necessary or advisable by Time Charterer,
Sub-Bareboat Charterer or Bareboat Charterer,
(subject to the reasonable approval of Time
Charterer, Sub-Bareboat Charterer or Bareboat
Charterer, as the case may be) including, but not
limited to, spare parts, replacement parts, renewals,
alterations, modifications, adjustments, innovations,
improvements and all related expenses whatsoever,
including but not limited to gas
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freeing, tank cleaning, cleaning, painting,
drydocking, towage, pilotage; and other expenses, if
any, while repairing, maintaining, improving,
awaiting repairs or maintenance or improvements and
proceeding to or from the port or place where repairs
or maintenance or improvements are made and in
connection with a general average sacrifice or
expenditure; and all additional expenses during a
lay-up of the Vessel approved or requested by Time
Charterer, agency fees and expenses and supervision
costs and reasonable transportation costs incurred in
connection therewith.
(iv) Stores Costs. The cost of all consumable and
expendable items, including but not limited to deck
and engine room stores, galley and cabin stores,
medical supplies purchased for use aboard the Vessel
and cost of purchasing, transporting, insuring and
loading such items.
(v) Subsistence costs. The cost of all provisions and
food purchased for the use of the Vessel and cost of
purchasing, transporting, insuring and loading
thereof, as well as rubbish removal, and/or any
allowances paid to the crew in lieu of actual food
supplies. Sub-Bareboat Charterer's expenditures for
subsistence shall be consistent with expenditures
which are, or would reasonably be anticipated to be,
made by operators of recognized standing
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engaged in the operation of United States flag
vessels of size, type, trade, cargo and crew most
similar to the Vessel.
(vi) Lube Oil costs. The cost of all lubricating oils for
and additives used in conjunction with the main
engines and auxiliary diesels, reduction gear oil,
hydraulic oil used for the steering gears and the
hydraulic systems on both the tug and barge, and such
other greases and lubricants as may be required for
the operation of the Vessel and its equipment.
(vii) Fuel costs. The cost of all fuels used in conjunction
with the main engines, auxiliary engines, galley fuel
and fuel provided for crew use on both the tug and
barge, except to the extent such fuel costs are paid
by Time Charterer pursuant to Section 6.6 hereof.
(viii) Other costs. The cost of "MARISAT" satellite
communications with the Vessel, outside engineering
consultant fees, outside legal fees (subject to the
approval of Bareboat Charterer or Time Charterer, as
the case may be, which approval shall not be
unreasonably withheld), the cost of an annual audit
of Sub-Bareboat Charterer's financial records by an
independent certified public accounting firm, any
fees paid to any government or regulatory agency, not
otherwise included in Operating Costs, all costs in
connection with salvage activities and all other
costs and expenses incurred in direct connection with
the operation of the
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Vessel (including any costs incurred in connection
with compliance with the provisions of Section 17.22
hereof and Exhibit I to this Time Charter) and in the
performance of Sub-Bareboat Charterer's obligations
under the Sub-Bareboat Charter.
(g) Any amounts received by Sub-Bareboat Charterer in reduction of
Operating Costs, whether pursuant to the ODS Contract or otherwise, shall reduce
operating costs hereunder in the full amount received by Sub-Bareboat Charterer.
(h) Notwithstanding the foregoing, Operating Costs shall NOT
include the following:
(1) Any fines or penalties levied by any governmental
authority against Sub-Bareboat Charterer or any other Person
operating the Vessel on behalf of Sub-Bareboat Charterer as a
result of the negligence, gross negligence, or willful
misconduct of Sub-Bareboat Charterer or any other Person
operating the Vessel on behalf of Sub-Bareboat Charterer;
(2) Any tax or withholding for taxes and any fines,
penalties or interest thereon which is levied on, or measured
by, the net income of Sub-Bareboat Charterer, or any taxes in
lieu thereof;
(3) Any of the direct management costs or direct overhead
costs of the Sub-Bareboat Charterer and any other Person
operating the Vessel; direct management costs, direct overhead
costs, and any other administrative costs incurred in
connection with the operation of the Vessel which are included
in the Operating Fee; and
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(4) Any claims paid by Sub-Bareboat Charterer under the
second sentence of Article 7(a) of the Sub-Bareboat Charter or
the second sentence of Section 12.1 hereof.
(i) Sub-Bareboat Charterer and Time Charterer agree that in the
event Time Charterer pays for any item that is properly considered an Operating
Cost, Time Charterer shall be entitled to reimbursement for such item from
Sub-Bareboat Charterer. Sub-Bareboat Charterer further agrees that in no event
shall it be entitled to recover twice any element of Operating Costs from Time
Charterer.
4.3 PAYMENT.
(a) Basic Hire, Supplemental Hire, Termination Value and
Stipulated Loss Value. Basic Hire, Supplemental Hire, Termination Value and
Stipulated Loss Value shall be paid by Time Charterer at the same place and not
later than the times and the dates on which such Basic Hire, Supplemental Hire,
Termination Value and Stipulated Loss Value are payable by Bareboat Charterer to
Shipowner or other appropriate Person under the Bareboat Charter. Payments of
Basic Hire, Supplemental Hire, Termination Value and Stipulated Loss Value shall
be paid by Time Charterer directly to Bareboat Charterer or any other person
Bareboat Charterer designates, in writing, to Sub-Bareboat Charterer and Time
Charterer.
(b) Operating Hire. Not later than the first day of each month
during each Calendar Year, Time Charterer shall pay Sub-Bareboat Charterer, as
preliminary Operating Hire for that month, an amount equal to one-twelfth of the
estimate of Operating Costs for that Calendar Year, as agreed pursuant to
Section 4.2(a) hereof (excluding any drydocking and insurance elements that Time
Charterer shall have agreed to pay upon invoice of Sub-Bareboat
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Charterer) less any amounts actually received by Sub-Bareboat Charterer pursuant
to the ODS Contract, plus the Operating Fee for that month. Within ninety days
after the end of such Calendar Year: (1) the actual Operating Hire for such
Calendar Year (including modifications or adjustments to the Operating Fee as
agreed to by the parties to the Management Agreement) shall be initially
determined; (2) there shall be credited to the actual Operating Hire: (i) all of
Time Charterer's preliminary payments of Operating Hire during the Calendar
Year, if any, and amounts actually received by Sub-Bareboat Charterer pursuant
to the ODS Contract and (ii) any other credits to which Time Charterer is
entitled under this Time Charter; (3) if there is a deficiency of such aggregate
credits from the actual Operating Hire, such deficiency shall be promptly paid
by Time Charterer; or (4) if there is an excess of such aggregate credits over
the actual Operating Hire, such excess shall be promptly refunded (or credited,
at Time Charterer's option, to future Operating Hire) by Sub-Bareboat Charterer.
Promptly following the annual audit of Operating Costs pursuant to the terms of
Section 4.2(c) hereof, a final adjustment to the Operating Hire shall be
determined based on such audit, subject to further adjustment based on final
resolution of amounts payable under the ODS Contract.
(c) Disputed Amounts. In the event that after an audit has been
conducted for a Calendar Year pursuant to Sections 4.2(c) and (d) hereof,
Sub-Bareboat Charterer and Time Charterer disagree over the amount of actual
Operating Hire due Sub-Bareboat Charterer for such Calendar Year, then
Sub-Bareboat Charterer may deliver to Time Charterer an Officer's Certificate
setting forth in reasonable detail the reasons why Sub-Bareboat Charterer
believes it is entitled to the amount in dispute. Upon receipt of such Officer's
Certificate, Time Charterer shall promptly pay such disputed amount to
Sub-Bareboat Charterer, and may
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thereafter proceed against Sub-Bareboat Charterer, under Section 17.9 hereof, to
obtain a refund of all or part of the disputed amount.
(d) Indemnity for Loss of Use of Vessel. Amounts payable by Time
Charterer under Sections 4.1(a) and 4.1(b) hereof shall be payable without
interruption; provided, however, should the Vessel be in collision with another
vessel or craft or stranded or strike an object or be damaged by fire, explosion
or other causes for which a third party is legally liable, [Sub-Bareboat
Charterer] shall indemnify and hold harmless Time Charterer: (a) by reimbursing
Time Charterer for amounts payable under Sections 4.1(a) and 4.1(b) hereof and
paid from the time the casualty occurred until the Vessel is returned to a fully
efficient state and able to resume its service, from a position not less
favorable to Time Charterer than its former position where the casualty
occurred; and (b) from any losses of profits under any subcharter of the Vessel
or agreement for employment of the Vessel during the period the Vessel is
detained due to such casualty, in each case only to the extent such third party
is held liable and has made payment to Sub-Bareboat Charterer for amounts
payable by Time Charterer under Sections 4.1(a) and 4.1(b) hereof, and the loss
of profits under any subcharter or agreement for employment of the Vessel (net
of any collection costs incurred therefor by Sub-Bareboat Charterer). Loss of
employment of the Vessel shall include steaming at reduced speed, deviations,
and temporary and permanent repair periods.
SECTION 5. THE VESSEL'S QUALITIES.
5.1 GENERAL.
The Sub-Bareboat Charterer shall maintain the Vessel tight, staunch,
strong and sufficiently tackled, appareled, furnished, equipped and supplied and
in every respect
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seaworthy and in good operating condition for the service contemplated by this
Time Charter, with holds, cargo tanks, pipelines, and valves clear, clean, and
tight, and with pumps, heat exchangers, and all other equipment in good working
order. Time Charterer's acceptance of the Vessel under Section 3.3 hereof shall
confirm and be conclusive evidence as between Sub-Bareboat Charterer and Time
Charterer that the Vessel is in all respects satisfactory to Time Charterer and
in compliance with all requirements of the preceding sentence and this Time
Charter. Nothing in this Section 5.1 shall be construed as a waiver of any right
that either Sub-Bareboat Charterer or Time Charterer may have against any person
concerning the Vessel other than Time Charterer or Sub-Bareboat Charterer,
respectively, or as a waiver of any rights either Sub-Bareboat Charterer or Time
Charterer may have under any other agreement between Sub-Bareboat Charterer and
Time Charterer. Such particulars and capabilities of the Vessel, after taking
into account the age and the condition of the Vessel at the commencement of this
Time Charter, shall be maintained by Sub-Bareboat Charterer throughout the
continuance of this Time Charter exercising due diligence and best marine
standards and Time Charterer shall always be entitled to the Vessel's full
capabilities.
5.2 FRESH WATER.
The Vessel when delivered to Time Charterer shall be equipped with a
salt water evaporator which is capable of making sufficient water to supply the
Vessel's domestic needs, and which Sub-Bareboat Charterer shall maintain in good
operating condition after taking into account the age of the Vessel.
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5.3 DOCUMENTATION.
Sub-Bareboat Charterer shall maintain the documentation of the
Vessel under the laws and flag of the United States in the name of the Shipowner
throughout the continuance of this Time Charter. Neither Sub-Bareboat Charterer
nor Time Charterer shall permit the Vessel to be documented or operated under
any foreign flag, or to permit anything which might prejudice the Vessel's
documentation as herein required.
5.4 IDENTIFICATION.
For the purposes of identification, Time Charterer shall have the
right, at its own expense, to have the Vessel painted in colors of its own
selection, to install and display its stack insignia, to fly its own "house
flag" and to utilize the colors, insignia or flag of any person directly or
indirectly controlling, or controlled by, or under direct or indirect common
control with Time Charterer and Time Charterer shall remove such insignia and
flag, at its expense, prior to redelivery.
SECTION 6. OPERATIONAL PROVISIONS.
6.1 COMPLIANCE; TRADING LIMITS.
The Vessel shall, and Sub-Bareboat Charterer covenants that it will, at
Time Charterer's reasonable cost and expense, at all times comply with the
Sub-Bareboat Charter, all applicable laws, treaties and conventions, and all
applicable rules, regulations and orders issued thereunder, particularly, but
without limitation by this enumeration, the International Convention for Safety
of Life at Sea, 1960, as amended, and all applicable laws, rules, regulations
and orders administered by the United States Maritime Administration, Coast
Guard, Federal Maritime Commission, Customs Service, Environmental Protection
Agency,
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ABS and any other United States agency, or their respective successors,
having jurisdiction over matters concerning the use, operation and maintenance
of the Vessel and regulations of the International Maritime Organization and
Sub-Bareboat Charterer covenants that it will have on board, when required
thereby, valid certificates showing compliance therewith. Subject to the
preceding sentence and subject to the American Institute of Trade Warranties,
Time Charterer shall have the full use of the Vessel and may employ the Vessel
as required to perform this Time Charter in any part of the world and in such
lawful trades as Time Charterer may direct. However, upon reasonable advance
notice to Sub-Bareboat Charterer, Time Charterer may breach those Institute
Warranties where said breach is allowable upon approval of the marine
underwriters for the Vessel, provided that Time Charterer shall pay any
additional premiums assessed by the Vessel's insurers for breach of the
Institute's Warranties, provided further that the Vessel shall not be operated
in any area in which the insurance required by Article 8 of the Sub-Bareboat
Charter would not be in full force and effect. Sub-Bareboat Charterer covenants
that it will comply with applicable regulations so as to enable the Vessel to
pass through the Suez and Panama Canals by day or night without delay so long as
the applicable fees have been paid in advance by Time Charterer.
6.2 USE.
The full use of the Vessel (but not more than it can reasonably stow
and safely carry) shall be at Time Charterer's disposal, reserving proper and
sufficient space for the Vessel's officers, crew, Master's cabin, tackle,
apparel, furniture, fuel, water, provisions and stores. Sub-Bareboat Charterer
shall provide proper and sufficient quarters on the Vessel for an
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authorized representative of Time Charterer, upon reasonable advance notice from
Time Charterer that it wishes to have such an authorized representative on board
the Vessel.
6.3 TYPES OF CARGO.
Time Charterer shall have the option of shipping liquid bulk, petroleum
products or any other lawful cargo in bulk for which the Vessel and its tanks
are suitable, as well as any lawful merchandise, between decks or other suitable
space available, subject to the Master's approval as to kind, character, amount
and stowage, and to Time Charterer's payment of all charges for dunnage,
loading, stowing and discharging.
6.4 LOADING-DISCHARGING.
The Vessel shall be loaded, discharged or lightened as rapidly as
possible by night as well as by day, at any safe port, berth, dock, anchorage or
submarine line, or alongside lighters or lightening vessels, (including ship to
ship transfers at anchor or underway, but Time Charterer shall supply all
necessary fenders and equipment together with mooring master and tug assistance,
if available, subject only to the Master's approval of suitable weather
conditions for such ship to ship transfer and subject to obtaining all required
insurance endorsements prior to any such transfers) as Time Charterer may
direct, provided the Vessel can reach, occupy and leave the same, always safely
afloat. Each loading and discharging shall be accomplished expeditiously, and to
that end the Vessel's crew shall work overtime, not to exceed that permitted
under applicable U.S. law, if and whenever requested by Time Charterer.
6.5 GENERAL OBLIGATIONS OF SUB-BAREBOAT CHARTERER.
Sub-Bareboat Charterer shall provide and pay for all provisions, deck
and engine room stores, galley and cabin stores, all fresh water used by the
Vessel, wages and overtime of
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the Master, officers and crew, all certificates and other requirements necessary
to enable the Vessel to be employed throughout the trading limits specified in
Section 6.1 hereof, consular fees pertaining to the Master, officers and crew,
and all other expenses connected with the operation, maintenance and navigation
of the Vessel as such expenses are defined in Section 4.2(f) hereof.
6.6 CERTAIN OBLIGATIONS OF TIME CHARTERER.
Time Charterer shall pay for all fuels required by the Vessel
(including galley fuel and fuel provided for crew use) and all fuels on board
when the Vessel is delivered to Time Charterer pursuant to Section 3.3 hereof
shall be the property of Time Charterer, but all fuels on board when the Vessel
is redelivered to Sub-Bareboat Charterer pursuant to Section 3.4 hereof shall be
the property of Sub-Bareboat Charterer. Time Charterer shall pay for all port
charges, light dues, dock dues, canal dues, consular fees (except those
pertaining to Master, officers and crew), pilotage and tugs necessary for
assisting the Vessel in, about and out of port for the purpose of carrying out
this Time Charter, Time Charterer's agencies and commissions incurred for Time
Charterer's account, crew expense incurred for connecting and disconnecting
cargo hoses and arms, and any transportation taxes. If Sub-Bareboat Charterer
and Time Charterer agree, Sub-Bareboat Charterer may pay such charges, dues,
fees and expenses and shall be reimbursed by Time Charterer therefor.
6.7 PERSONNEL MATTERS.
(a) General. Appointment of the Vessel's personnel shall be wholly
at Sub-Bareboat Charterer's discretion, subject only to compliance with all
requirements of law, including those relating to their citizenship. However, if
Time Charterer ever gives notice to
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Sub-Bareboat Charterer of dissatisfaction with the conduct of the Master, any
officer or crew member, Sub-Bareboat Charterer and Time Charterer shall promptly
jointly investigate the particulars of Time Charterer's complaint and if the
complaint proves to be well-founded, Sub-Bareboat Charterer, without delay,
shall promptly make changes in the appointments.
(b) Protection Against Strikes; Other Labor Agreement Provisions.
From each labor organization representing any of the Vessel's crew, Sub-Bareboat
Charterer shall obtain a "no strike" agreement prohibiting strikes, slowdowns,
boycotts, picketing and any other form of interference with the Vessel's service
at the direction or with the acquiescence of such labor organization.
(c) Manning. Sub-Bareboat Charterer shall man the Vessel and
attend to all matters involving the Vessel's personnel, including the following:
(i) procuring and enlisting for the Vessel, as required
by applicable law, competent, reliable and
duly-licensed personnel and all replacements thereof
as necessary from time to time (collectively "Crew
Members");
(ii) arranging for and procuring all transportation, board
and lodging for the Crew Members as and when
required;
(iii) maintaining complete records of any labor agreements
which may be entered into between Sub-Bareboat
Charterer and Crew Members, in accordance with
collective bargaining agreements at any time in
effect between employee organizations and unions, and
reporting promptly to Time Charterer, as soon as
notice or
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knowledge thereof is received by Sub-Bareboat
Charterer, any actual or proposed material changes in
any of such agreements or other regulations relating
to Crew Members;
(iv) settlement of all wages with Crew Members during the
course and upon termination of their employment, and
handling and settling of all claims of Crew Members,
including those arising out of accidents, sickness or
death, loss of personal effects, or disputes under
articles or contracts of enlistment, pension plans,
insurance policies or fines, provided, however, that
Sub-Bareboat Charterer shall proceed diligently and
cooperate fully with Time Charterer in handling and
settling those claims which are covered by insurance
placed by Time Charterer or Bareboat Charterer or
which are self-insured by Time Charterer or Bareboat
Charterer;
(v) maintaining all administrative and financial records
relative to Crew Members as required by law, labor
agreements or Time Charterer; and making such reports
thereof at such times and in such forms as Time
Charterer may reasonably request; and
(vi) performing other services in connection with the
manning of the Vessel as Time Charterer may
reasonably request.
6.8 CERTAIN DUTIES OF MASTER.
The Master, though appointed and employed by Sub-Bareboat Charterer and
subject to Sub-Bareboat Charterer's direction and control, shall observe Time
Charterer's
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orders in connection with Time Charterer's agencies, arrangements and employment
of the Vessel hereunder. The Master shall: (a) prosecute each voyage with utmost
dispatch (subject to any orders by Time Charterer for slow-steaming); (b) render
all reasonable assistance with the Vessel's crew and equipment; (c) keep a full
and correct log of each voyage in the English language, which shall always be
open to inspection by Time Charterer and its agents, and abstracts of which
shall be furnished to Time Charterer at the end of each voyage; and (d) make
regular weekly reports by telegraph or cable to Sub-Bareboat Charterer, and
Sub-Bareboat Charterer hereby agrees to furnish a copy of such weekly reports to
Time Charterer by electronic means, containing statistics on the Vessel's
performance (including mileage steamed loaded and in ballast, speed and fuel
consumption), accounting for time spent, and such other information as
Sub-Bareboat Charterer or Time Charterer may request.
6.9 ADDITIONAL EQUIPMENT.
Time Charterer shall be at liberty to fit any additional pumps or gear
for loading or discharging cargo, or other equipment which is readily removable
without causing material damage to the Vessel, that Time Charterer may require
beyond that which is on board at the beginning of this Time Charter, and to make
the necessary connections with cargo, steam or water pipes. If not required to
be installed in order to meet the requirements of Section 5.1 or 6.1 hereof and
not installed as replacement for property on board the Vessel at the time of
delivery thereof, pumps, gear and equipment so installed shall remain the
property of Time Charterer, and so long as no Event of Time Default shall have
occurred and be continuing, Time Charterer may instruct Sub-Bareboat Charterer
to remove, or Time Charterer may remove, any such pumps, gear or equipment, at
Time Charterer's expense at any time during or
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at the expiration of this Time Charter, subject only to Time Charterer's leaving
the Vessel in the condition it would have been in if such pumps, gear or other
equipment, had not been installed, ordinary wear and tear excepted.
6.10 TUGS AND PILOTS.
Time Charterer is authorized by Sub-Bareboat Charterer to engage
pilotage and tug assistance on behalf of Sub-Bareboat Charterer on the usual
terms and conditions for such services then prevailing at the ports or places
where such services are engaged, including provisions then prevailing (if any)
making pilots, tug captains or tugs or pilots the borrowed servants of
Sub-Bareboat Charterer. However, Time Charterer shall have the option of using
its own tugs or pilots or tugs or pilots made available or employed by any of
its Affiliates or otherwise related companies, to render towage or pilotage
services to the Vessel. In this event, the terms and conditions of such services
as are rendered and applied by independent tugboat owners or pilots shall be
applicable; and Time Charterer or its Affiliates or otherwise related companies
and their pilots shall be entitled to all exemptions from and limitations of
liability, applicable to such independent tugboat owners or pilots and their
published tariff terms and conditions.
6.11 CLAIMS.
Unless otherwise requested by Time Charterer, Sub-Bareboat Charterer
shall handle and diligently prosecute all claims arising in connection with the
Vessel's operation, whether by or against the Vessel or Bareboat Charterer or
Shipowner, including the following:
(a) investigating, prosecuting or defending, employing counsel,
and effecting settlements of such claims, including those involving any of the
insurances with
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respect to the Vessel, and those that do or might give rise to maritime liens or
other encumbrances on the Vessel;
(b) in cases of general or particular average, assisting in
preparing the average account, done by the general average adjuster, and, in all
ways reasonably possible, protecting the interests of the Vessel, Bareboat
Charterer and Shipowner; and
(c) in cases of particular average, settlement of claims in
conjunction with the Vessel's hull and machinery insurance, and making
disbursements accordingly.
SECTION 7. BILLS OF LADING.
Bills of lading shall be signed at any rate of freight Time Charterer
or its agents may direct, without prejudice to this Time Charter, the Master
attending daily, if required, at the offices of Time Charterer or its agents.
Time Charterer hereby agrees to indemnify Sub-Bareboat Charterer from all
consequences or liabilities that may arise from the Master, Time Charterer or
its agents signing bills of lading or other documents signed at the request of
Time Charterer or its agents, or any irregularity in papers supplied by Time
Charterer or its agents, or from complying with the orders of Time Charterer or
its agents.
SECTION 8. POLLUTION.
Sub-Bareboat Charterer shall comply, and shall use due diligence to
obtain the compliance of Bareboat Charterer and Shipowner with (a) all
applicable governmental laws, regulations, rules and orders (including any
international conventions to which the United States is a party) pertaining to
prevention or cleanup of pollution by escapes or discharges from the Vessel of
liquid cargoes in its custody, including maintenance of any required evidence of
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financial responsibility, or Releases of Hazardous Substances and (b) the
Pollution Provisions set forth in Exhibit I to this Time Charter.
SECTION 9. INSURANCE.
9.1 REQUIREMENTS.
Sub-Bareboat Charterer shall provide and maintain insurance on or with
respect to the Vessel and the operation thereof during the Charter Period as may
be required by Article 8 of the Sub-Bareboat Charter.
9.2 OPTION.
Time Charterer at its option and subject to any approvals under the ODS
Contract may procure and maintain on or with respect to the Vessel and the
operation thereof, such insurance as is required to be procured and maintained
by Sub-Bareboat Charterer pursuant to Section 9.1. Subject to provisions of the
Bareboat Charter and the Sub-Bareboat Charter, Time Charterer, in the first
instance and thereafter, Sub-Bareboat Charterer, may procure and maintain
insurance, at the expense of Time Charterer or Sub-Bareboat Charterer as the
case may be, on the Vessel in excess of such insurance as is required to be
procured and maintained by Sub-Bareboat Charterer unless such excess insurance
would conflict with or otherwise limit the insurance required to be procured and
maintained by Sub-Bareboat Charterer. Time Charterer agrees, upon the placing of
the insurance required by Section 9.1 hereof, promptly to furnish Shipowner and
Sub-Bareboat Charterer with copies of the policies, cover notes or other
evidence of such insurance.
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9.3 LOSSES.
Sub-Bareboat Charterer and Time Charterer shall cooperate to make all
proofs of loss and take all other steps necessary to effect prompt collections
from the insurers for any loss under any insurances on or with respect to the
Vessel or the operation thereof. At Bareboat Charterer's written request (and
only at such request) Time Charterer shall join Shipowner, Bareboat Charterer
and Sub-Bareboat Charterer in a declaration of or agreement on a compromised,
constructive or agreed total loss of the Vessel or tendering abandonment of the
Vessel to the insurers.
SECTION 10. DRYDOCKING, LAY-UP.
10.1 DRYDOCKING.
When required by applicable regulations of the United States Coast
Guard or by ABS, Sub-Bareboat Charterer shall drydock the Vessel, clean and
paint its bottom and make all overhaul and necessary repairs. At least 30 days,
if practicable, before each drydocking commences, Sub-Bareboat Charterer shall
submit to Time Charterer anticipated drydocking work lists and bids thereon for
its review and approval, and Time Charterer shall select the facility where the
drydocking shall be performed and may attend the drydocking to whatever extent
it deems necessary. After each drydocking, Sub-Bareboat Charterer shall submit
to and review with Time Charterer the detailed list and account of all
drydocking work done by the shipyard.
10.2 LAY-UP.
Time Charterer shall have the option of laying up the Vessel
from time to time and for any periods of time during the continuance of this
Time Charter. If Time Charterer,
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having exercised this option, desires the Vessel to be returned to service,
Sub-Bareboat Charterer shall, upon receipt of notice thereof from Time
Charterer, immediately take steps to restore the Vessel to service as promptly
as possible.
10.3 EFFECT ON COSTS.
During each period of drydocking or lay-up, Sub-Bareboat Charterer
shall use its best efforts to effect maximum savings of Operating Costs during
each such period, but always in a manner consistent with its other obligations
under this Time Charter.
SECTION 11. IMPROVEMENTS.
Subject to the terms of Article 6 of the Sub-Bareboat Charter, in order
to maintain or enhance the utility of the Vessel for this Time Charter, at Time
Charterer's request from time to time, but wholly at Time Charterer's risk and
expense, Sub-Bareboat Charterer shall modernize or improve the Vessel by making
changes in any of its equipment which are not readily removable without causing
material damage to the Vessel; provided, however, that such changes do not (a)
diminish the seaworthiness, utility or market value of the Vessel, (b) adversely
affect its United States Coast Guard certification or its ABS classification and
rating required to be maintained by the Bareboat Charter, (c) conflict with or
result in a violation of any provision of the Bareboat Charter, or (d) require
the Vessel to be redocumented. Sub-Bareboat Charterer shall procure all permits
and licenses required for any such changes, and shall exercise due diligence so
that all such changes shall be expeditiously completed in good and workmanlike
manner and in compliance with all applicable legal and classification
requirements, and all equipment and material so installed shall, without
necessity of further act, become part of the Vessel and the property of
Shipowner. Payment by Time Charterer to Sub-
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Bareboat Charterer for improvements made pursuant to this Section 11, including
the cost of necessary permits and licenses, shall be made as agreed upon by Time
Charterer and Sub-Bareboat Charterer, but always in a manner so as to permit the
progress of the work to continue and to minimize the need for payments in
advance by Time Charterer, and Sub-Bareboat Charterer shall be under no
obligation to make or to commence to make such improvements until a method of
payment has been agreed.
SECTION 12. LIENS AND ATTACHMENTS.
12.1 DISCHARGE.
If the Vessel is ever libeled or otherwise attached, levied upon or
taken into custody, or detained or sequestered, by virtue of any proceeding in
any court or tribunal, or by any governmental or other authority, in any country
or nation of the world, on account of any mortgage, pledge, lien, encumbrance or
claim on or with respect to the Vessel or its profits, Sub-Bareboat Charterer
shall immediately give notice thereof to Bareboat Charterer and Time Charterer
by electronic means, confirmed by letter, and, subject to the next sentence of
this Section 12.1, Time Charterer shall, at its sole cost and expense, promptly
take or cause to be taken such action as may be necessary to cause the Vessel to
be released, and such liens or claims to be discharged, within a reasonable time
not exceeding 30 days. However, if any mortgage, pledge, lien, encumbrance or
claim arises, or in the event that the Vessel shall be libeled or otherwise
attached, levied upon or taken into custody, or detained or sequestered by
virtue of any proceeding in any court or tribunal or by any governmental or
other authority on account of any liens or claims against Sub-Bareboat
Charterer, any person or entity related to Sub-Bareboat Charterer or any other
Person operating the Vessel on behalf of the Sub-Bareboat
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Charterer, which such liens or claims are unrelated to Sub-Bareboat Charterer's
chartering of the Vessel or, if related, result from the Sub-Bareboat
Charterer's failure properly to apply funds timely paid by the Time Charterer as
Operating Costs, Sub-Bareboat Charterer agrees that it shall promptly, at its
own cost and expense, remove or cause to be removed such mortgage, pledge, lien,
encumbrance or claim or cause the Vessel to be released and cause all liens and
claims on the Vessel in connection with such libel or other action to be
discharged (whether by furnishing a surety bond or otherwise), within a
reasonable time not exceeding 30 days. In the event that Sub-Bareboat Charterer
fails, at its own cost and expense, promptly to remove or cause to be removed
such mortgage, pledge, lien, encumbrance or claim, Time Charterer may remove
such mortgage, pledge, lien, encumbrance or claim or cause the Vessel to be
released and cause all liens and claims on the Vessel in connection with such
libel or other action to be discharged and Sub-Bareboat Charterer agrees that it
shall promptly reimburse Time Charterer for its costs and expenses incurred in
removing such mortgage, pledge, lien, encumbrance or claim within a reasonable
time not exceeding 30 days after Sub-Bareboat Charterer receives notice from
Time Charterer as to the amount of such costs and expenses.
12.2 FURTHER ENCUMBRANCES.
After the execution of this Time Charter, no mortgage, lien, charge or
other encumbrance shall be placed on the Vessel or its profits by Sub-Bareboat
Charterer without the prior written consent of the Secretary, Occidental, and
Time Charterer.
12.3 POWER TO IMPOSE.
Neither Sub-Bareboat Charterer, Time Charterer nor the Master of the
Vessel, nor any other person has or shall have any right, power or authority,
without the prior written
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consent of Bareboat Charterer, the Secretary, and Occidental, to create, incur
or permit to be placed or imposed upon the Vessel any mortgage, lien, charge or
other encumbrance whatsoever except:
(1) liens for taxes, for crew's and master's wages, for
salvage (including contract salvage) and general average which are:
(i) not yet due and payable, or
(ii) unclaimed, or
(iii) being contested by appropriate proceedings
diligently conducted so long as such
proceedings do not involve a significant
risk of a sale, forfeiture or loss of the
Vessel; and
(2) contract and tort liens arising out of or incident to
current operations of, or repairs to, the Vessel which are subordinate to the
liens of the Mortgage and the Second Mortgage and which are:
(i) based on claims not yet due and payable, or
(ii) being contested by appropriate proceedings
diligently conducted so long as such
proceedings do not involve a significant
risk of a sale, forfeiture or loss of the
Vessel; or
(3) any rights of the United States arising by operation
of law or under the Title V Contract by virtue of the payment of
construction-differential subsidy by the United States pursuant to Title V of
the Act.
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SECTION 13. EXCEPTIONS.
The Vessel, its Master, Shipowner, any Owner Participant, Bareboat
Charterer, Sub-Bareboat Charterer and Time Charterer shall not, unless otherwise
expressly provided in this Time Charter, be responsible for any loss or damage
arising or resulting from: any act, neglect, default or barratry of the Master,
pilots, mariners or other servants of Sub-Bareboat Charterer in the navigation,
management or operation of the Vessel; fire, unless caused by the actual fault
or privity of Sub-Bareboat Charterer; collision or stranding; dangers and
accidents of the sea; explosion, bursting of boilers, breakage of shafts, or any
latent defect in hull, equipment or machinery. The Vessel, its Master,
Shipowner, any Owner Participant, Bareboat Charterer and Sub-Bareboat Charterer
shall not, unless otherwise expressly provided in this Time Charter, be
responsible for any loss or damage or delay or failure in performing hereunder
arising or resulting from: Act of God; act of war; seizure under legal process
provided bond is promptly furnished to release the Vessel or cargo; strike or
lockout or stoppage or restraint of labor from whatever cause, either partial or
general; or riot or civil commotion; and arrest or restraint of princes, rulers
or people. The Vessel shall have liberty to sail with or without pilots, to tow
or to be towed, to go to the assistance of vessels in distress and to deviate
for the purpose of saving life or property or of landing any ill or injured
person on board. This Section 13 is not to be construed as in any way affecting
the provisions for payment of hire as provided in Section 4 hereof.
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SECTION 14. EVENTS AND CONSEQUENCES OF TERMINATION OF TIME CHARTER OR
REPLACEMENT OF SUB-BAREBOAT CHARTERER.
14.1 EVENTS OF TERMINATION.
This Time Charter shall terminate simultaneously upon a termination of
the Sub- Bareboat Charter as set forth in Article 10, 11 and 12 thereof
(relating to an Event of Loss (including requisition of title to the Vessel),
Early Termination for obsolescence and Requisition of Use, respectively) or upon
the election of Time Charterer, with the consent of Bareboat Charterer, for
reasons of a Sub-Bareboat Charterer Default under Section 16 hereof.
14.2 REPLACEMENT OF SUB-BAREBOAT CHARTERER.
Notwithstanding anything to the contrary in this Time Charter, Time
Charterer, with the consent of Bareboat Charterer, shall have the right at any
time and from time to time, to elect to cause the Sub-Bareboat Charterer to be
replaced by a successor sub-bareboat charterer under this Time Charter. The
exercise of such election shall be by written notice from Time Charterer
approved by Bareboat Charterer, the Secretary, and Occidental to Sub-Bareboat
Charterer.
14.3 PAYMENTS UPON TERMINATION OF TIME CHARTER.
In the event that this Time Charter shall be terminated for any of the
reasons set forth in Sections 14.1 or 14.2 hereof, Time Charterer shall pay to
Sub-Bareboat Charterer all reasonable Operating Costs incurred by Sub-Bareboat
Charterer in the termination and cessation of its management and operation of
the Vessel.
SECTION 15. EVENTS OF TIME DEFAULT AND REMEDIES.
15.1 EVENTS OF TIME DEFAULT.
Each of the following shall be an Event of Time Default:
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(a) Time Charterer on an aliquot basis, shall fail to pay any
Operating Hire under this Time Charter and not remedy such failure within 10
days after receipt of notice thereof from Sub-Bareboat Charterer; or
(b) Time Charterer shall fail, for more than 30 days after receipt
of written notice specifying such failure and demanding that the same be cured,
to perform or comply with any of the provisions of this Time Charter; provided,
however, that if Time Charterer shall have undertaken to cure such failure and,
notwithstanding the reasonable diligence of Time Charterer in attempting to cure
such failure, such failure is not cured within said 30 day period but is curable
with future due diligence, there shall be no Event of Time Default under this
Section 15.1(b) as long as Time Charterer is proceeding with due diligence to
cure such failure; or
(c) Time Charterer shall consent to the appointment of a receiver,
trustee or liquidator of itself or of substantially all of its property, or Time
Charterer or the Guarantor shall admit in writing its inability to pay its debts
generally as they come due, or shall make a general assignment for the benefit
of creditors; or
(d) Time Charterer shall file a voluntary petition in bankruptcy
or for a reorganization or for an arrangement in a proceeding under any of the
federal bankruptcy laws or other federal or state insolvency laws as are now or
hereafter in effect or an answer admitting the material allegations of a
petition filed against Time Charterer in any such proceeding; or
(e) an order, judgment or decree shall be entered in any
proceeding by any court of competent jurisdiction appointing, without the
consent of Time Charterer, a receiver, trustee or liquidator of Time Charterer
or of substantially all of its property, and any such order,
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judgment or decree of appointment shall remain in force undismissed, unstayed or
unvacated for a period of 90 days after the date of entry thereof, or
(f) a petition against Time Charterer in a proceeding under the
federal bankruptcy laws or other federal or state insolvency laws as now or
hereafter in effect shall be filed and shall not be withdrawn or dismissed
within 90 days thereafter, or if, under the provisions of any law providing for
reorganization or winding-up of corporations which may apply to Time Charterer,
any court of competent jurisdiction shall assume jurisdiction, custody or
control of Time Charterer or of substantially all of the property of Time
Charterer and such jurisdiction, custody or control shall remain in force
unrelinquished, unstayed or unterminated for a period of 90 days.
15.2 REMEDIES UPON AN EVENT OF TIME DEFAULT.
In the event of an Event of Time Default, this Time Charter shall
terminate and Sub-Bareboat Charterer shall be entitled to full and immediate
payment of the amounts set forth in Section 14.3 hereof, plus any reasonable
costs of collection of such amounts.
SECTION 16. EVENTS OF SUB-BAREBOAT CHARTERER DEFAULT AND REMEDIES.
16.1 EVENTS OF SUB-BAREBOAT CHARTERER DEFAULT.
Each of the following shall be an Event of Sub-Bareboat Charterer
Default:
(a) Sub-Bareboat Charterer's default in performance of any
material obligation under the Sub-Bareboat Charter, this Time Charter, or the
ODS Contract, or the incorrectness, when made, in any material respect, of any
representation made by Sub-Bareboat Charterer in the Sub-Bareboat Charter, or in
this Time Charter or Sub-Bareboat Charterer's failure to remedy the default or
incorrectness by the earlier of: (x) any termination of the
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Bareboat Charter resulting from such default or incorrectness; or (y) within 30
days after receipt of notice thereof from Bareboat Charterer or Time Charterer,
as the case may be, provided, however, that no such default or incorrectness
shall be deemed to be an Event of Sub-Bareboat Charterer Default if Sub-Bareboat
Charterer commences appropriate remedial action within 30 days after receipt of
such notice and prosecutes diligently the same to completion; or
(b) Sub-Bareboat Charterer shall consent to the appointment of a
receiver, trustee or liquidator of itself or of substantially all of its
property, or Sub-Bareboat Charterer shall admit in writing its inability to pay
its debts generally as they come due, or shall make a general assignment for the
benefit of creditors;
(c) Sub-Bareboat Charterer shall file a voluntary petition in
bankruptcy or for a reorganization or for an arrangement in a proceeding under
any of the federal bankruptcy laws or other federal or state insolvency laws as
are now or hereafter in effect or an answer admitting the material allegations
of a petition filed against Sub-Bareboat Charterer in any such proceeding; or
(d) an order, judgment or decree shall be entered in any
proceeding by any court of competent jurisdiction appointing, without the
consent of Sub-Bareboat Charterer, a receiver, trustee or liquidator of
Sub-Bareboat Charterer or of substantially all of its property, and any such
order, judgment or decree of appointment shall remain in force undismissed,
unstayed or unvacated for a period of 90 days after the date of entry thereof,
or
(e) a petition against Sub-Bareboat Charterer in a proceeding
under the federal bankruptcy laws or other federal or state insolvency laws as
are now or hereafter in effect shall be filed and shall not be withdrawn or
dismissed within 90 days thereafter, or if,
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under the provisions of any law providing for reorganization or winding-up of
corporations which may apply to Sub-Bareboat Charterer, any court of competent
jurisdiction shall assume jurisdiction, custody or control of Sub-Bareboat
Charterer or of substantially all of the property of any of them and such
jurisdiction, custody or control shall remain in force unrelinquished, unstayed
or unterminated for a period of 90 days; or
(f) the sale or transfer by Sub-Bareboat Charterer of all or
substantially all of its assets or the transfer of ownership of Sub-Bareboat
Charterer to any other corporation or person, or the consolidation or merger of
Sub-Bareboat Charterer or the Manager into any other corporation or person,
except for sales, transfers, consolidations or mergers either directly or
indirectly with Affiliates, unless such sale, transfer, consolidation or merger
would, in the reasonable judgement of Time Charterer, adversely affect the
Sub-Bareboat Charterer's obligations under the Bareboat Charter, hereunder or
under the ODS Contract or the Manager's performance under the Management
Agreement; or
(g) any amendment of Sub-Bareboat Charterer's articles of
incorporation or by-laws, if any such amendment would have a material effect on
Sub-Bareboat Charterer's obligations under the Sub-Bareboat Charter, hereunder
or under the ODS Contract or the Manager's performance under the Management
Agreement; or
(h) (1) Sub-Bareboat Charterer's receipt of notice from Time
Charterer alleging in detail that Sub-Bareboat Charterer's or the Manager's
management or operating performance (including general administration) is below
commercially acceptable standards, and (2) Sub-Bareboat Charterer's and the
Manager's failure to remedy such alleged substandard
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performance, to Time Charterer's reasonable satisfaction, within 90 days after
receipt of Time Charterer's notice; or
(i) Sub-Bareboat Charterer's failure to remain, or the occurrence
of any event which will cause Sub-Bareboat Charterer to no longer remain a
Citizen of the United States or a United States person within the meaning of
Section 7701 of the Code; or
(j) the failure of Sub-Bareboat Charterer to maintain, or to cause
to be maintained, insurance in the amounts and forms as and when required to be
maintained by Sub-Bareboat Charterer under Article 8 of the Sub-Bareboat
Charter;
(k) an event of default by Sub-Bareboat Charterer shall have
occurred and be continuing under the ODS Contract.
(l) any Event of Sub-Bareboat Charterer Default under the other
time charter between an Affiliate of the Sub-Bareboat Charterer and the Time
Charterer with respect to the Other Vessel; or
(m) any material change in the financial condition or management
structure of Sub-Bareboat Charterer when such material change would, in the
reasonable judgement of Time Charterer, adversely affect the Sub-Bareboat
Charterer's obligations hereunder.
16.2 REMEDIES UPON AN EVENT OF SUB-BAREBOAT CHARTERER DEFAULT.
Upon the occurrence of an Event of Sub-Bareboat Charterer Default under
Section 16.1 hereof, Time Charterer may, at its option, cause such default to be
cured at its own cost, without prejudice, however, to any other rights or
remedies Time Charterer may have.
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SECTION 17. GENERAL.
17.1 ICE.
Time Charterer shall not send the Vessel to ice-bound waters without
Sub-Bareboat Charterer's consent, but such consent shall not be unreasonably
withheld.
17.2 SAFE BERTH.
The cargo or cargoes shall be laden or discharged by day and by night
in any dock or at any wharf or place or alongside lighters or ocean going
vessels that Time Charterer or its agents may direct where the Vessel can
proceed thereto, lie at, and depart therefrom, always safely afloat. Any
lighterage shall be at the risk and expense of Time Charterer.
17.3 LIMITATIONS.
Sub-Bareboat Charterer shall have the benefit of all limitations of,
and exemptions from, liability accorded to the owner or disponent or chartered
owner of vessels whether construed to be a private carrier, contract carrier or
common carrier, by any statute or rule of law for the time being in force.
Nothing in this Time Charter shall operate to limit or deprive Sub-Bareboat
Charterer of any statutory exemption from or limitation of liability on the
theory of personal contract or otherwise.
17.4 GOVERNMENT DIRECTION AND BLOCKADE.
(a) The Vessel shall have liberty to comply with any directions or
recommendations as to departure, arrival, routes, ports of call, stoppages,
destinations, zones, waters, delivery or in any other ways whatsoever (including
any direction or recommendations not to go to the port of destination or to
delay proceeding thereto or to proceed to some other port) given by the
government of the United States or any other governmental or local authority
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including any de facto government or local authority or by any belligerent or by
any State or organized body engaged in civil war, hostilities or warlike
operations or by any person or body acting or purporting to act as or with the
authority of any such government, authority, State or organized body or by any
committee or person having under the terms of the war risk insurance on the
Vessel the right to give any such directions or recommendations. If by reason of
or in compliance with any such direction or recommendation, anything is done or
is not done such shall not be deemed a deviation or a violation of this Time
Charter.
(b) (1) If any port of loading or of discharge to
which the Vessel may properly be ordered pursuant to the terms of this Time
Charter or the bills of lading be blockaded, or
(2) If owing to any war, hostilities, warlike
operations, civil war, civil commotions, revolutions, or the operation of
international law (i) entry to any such port of loading or of discharge or the
loading or discharge of cargo at any such port shall be considered by the Master
or Sub-Bareboat Charterer in his or its discretion dangerous or prohibited or
(ii) it shall be considered by the Master or Sub-Bareboat Charterer in his or
its discretion dangerous or impossible for the Vessel to reach any such port of
loading or of discharge; Time Charterer shall have the right to order the cargo
or such part of it as may be affected to be loaded or discharged at any other
port of loading or of discharge within the range of loading or discharge ports
respectively established under the provisions of this Time Charter (provided
such other port is not blockaded or that entry thereto or loading or discharge
of cargo thereat is not in the Master's or Sub-Bareboat Charterer's discretion
dangerous or prohibited). In the event of the cargo being loaded or discharged
at any such other port within the respective range of loading
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or discharge ports established under the provisions of this Time Charter, this
Time Charter shall be read in respect of freight and all other conditions
whatsoever as if the voyage performed were that originally designated. However,
if the Vessel discharges the cargo at a port outside the range of discharge
ports established under the provisions of this Time Charter, freight shall be
paid as for the voyage originally designated and all extra expenses involved in
reaching the actual port of discharge and/or discharging the cargo thereat shall
be paid by Time Charterer or cargo owners. In this latter event, Sub-Bareboat
Charterer shall have a lien on the cargo for all such extra expenses.
17.5 NO FRUSTRATION.
Notwithstanding anything in this Time Charter to the contrary, no
circumstances shall be deemed sufficient (a) to frustrate this Time Charter, or
(b), except as provided in Sections 14 and 16 hereof, to terminate this Time
Charter, or (c) except as specifically provided herein, to reduce the amount of
hire payable hereunder during the Charter Period.
17.6 SALVAGE MONEY.
All salvage money earned by the Vessel shall be paid to Time Charterer
after deducting Master's, Officer's and crew's share, legal expenses, repairs of
damage (if any), and any other extraordinary loss or expense sustained as a
result of the service, which shall always be a first charge on such money.
17.7 NO DEMISE.
This Time Charter does not, and nothing herein shall be construed to,
effect a demise of the Vessel to Time Charterer or vest Time Charterer with
possession of the Vessel or any power over the physical condition, ownership or
navigation thereof.
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17.8 TRANSFER AND SUBCHARTERS.
(1) By Sub-Bareboat Charterer. Except for the assignment to a
successor sub-bareboat charterer under Sections 14.2 and 16.2 hereof,
Sub-Bareboat Charterer shall never voluntarily transfer, or permit any transfer
of, or create a security interest in, or permit the creation of a security
interest in the Sub-Bareboat Charter, this Time Charter, or any of its rights or
obligations under either of them, without the prior written consent of Time
Charterer.
(2) By Time Charterer. Time Charterer has the right to transfer
this Time Charter to any Affiliate or to employ the Vessel under subcharter,
contract of affreightment or any other agreement or arrangement relating to the
use or employment of the Vessel, to any person, without Sub-Bareboat Charterer's
consent, but subject to prior receipt of all necessary governmental approvals,
and to Time Charterer's continuing responsibility for full performance of all of
its obligations under this Time Charter.
(3) Succession. Subject to the foregoing, this Time Charter shall
bind and benefit the successors and assigns of the parties hereto.
17.9 GOVERNING LAW.
ALL QUESTIONS ARISING UNDER THIS TIME CHARTER SHALL IN ALL RESPECTS BE
GOVERNED BY, CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE GENERAL MARITIME LAWS
OF THE UNITED STATES OF AMERICA AND, TO THE EXTENT SUCH LAWS DO NOT APPLY, THE
LAWS OF THE STATE OF NEW YORK, INCLUDING SECTION 5-1401 OF THE GENERAL
OBLIGATIONS LAW OF THE STATE OF NEW YORK. ANY CLAIM OR DISPUTE ARISING UNDER
THIS TIME CHARTER SHALL, PROVIDED THAT THE COURT HAS
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SUBJECT MATTER JURISDICTION OVER SUCH CLAIM OR DISPUTE, BE DECIDED IN THE UNITED
STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK, TO WHICH
JURISDICTION THE SUB-BAREBOAT CHARTERER AND TIME CHARTERER HEREBY SUBMIT FOR THE
PURPOSES OF ANY SUCH PROCEEDING. IN THE EVENT THAT THE UNITED STATES DISTRICT
COURT FOR THE SOUTHERN DISTRICT OF NEW YORK LACKS SUBJECT MATTER JURISDICTION
OVER ANY CLAIM OR DISPUTE ARISING UNDER THIS TIME CHARTER, SUB-BAREBOAT
CHARTERER AND TIME CHARTERER HEREBY SUBMIT THEMSELVES TO THE JURISDICTION OF THE
SUPREME COURT FOR THE COUNTY OF NEW YORK FOR THE PURPOSES OF ANY SUCH PROCEEDING
AND WAIVE ANY CLAIM OF FORUM NON CONVENIENS RELATING TO SUCH CHOICE OF COURT.
17.10 NOTICE.
All notices and other communications hereunder shall be effective when
received, except that all notices and other communications sent by prepaid
United States certified mail, return receipt requested, shall become effective
on the third Business Day after mailing, addressed (i) if to Sub-Bareboat
Charterer, 7 Penn Plaza, 370 7th Avenue, Suite 1128, New York, NY 10001,
Attention: President, or (ii) if to Time Charterer, c/o Stolt Marine Tankers
LLC, c/o Marine Transport Corporation, 1200 Harbor Boulevard, Weehawken, New
Jersey 07087, Attention: General Counsel, or (iii) if to Occidental, 10889
Wilshire Boulevard, Los Angeles, California 90021, Attention: Vice President &
Secretary, or (iv) to any of the foregoing, at such other address as any such
person may from time to time designate in writing to such other persons.
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17.11 CHANGES.
No agreement amending, supplementing or partially or wholly terminating
this Time Charter, or Schedule X hereto, or waiving or discharging any
provisions hereof, shall be effective unless such agreement is executed in
writing by the party against whom enforcement of such agreement is sought. No
consent of the Secretary shall be required for any agreement amending,
supplementing, or partially or wholly terminating this Time Charter or Schedule
X hereto so long as payment of the principal and interest on the Obligations and
the Guarantee Fee has been made as required.
17.12 RECORDS.
Sub-Bareboat Charterer and any other person operating the Vessel as
provided in Section 4.2(e), shall maintain complete and accurate books, accounts
and other records relating to Sub-Bareboat Charterer's performance of this Time
Charter, in accordance with generally accepted accounting practices and
principles and as satisfactory to the Board, and all such records may, upon
prior notice, be examined and audited by authorized representatives of Time
Charterer at any time during the usual business hours of Sub-Bareboat Charterer
and Manager. The books, accounts and other records required to be maintained by
this Section 17.12 shall be kept separate and apart from the books, accounts and
records relating to any other business of Sub-Bareboat Charterer and any other
person operating the Vessel pursuant to Section 4.2(e).
17.13 OPERATIONAL REVIEW.
Time Charterer may, upon prior notice, review with Sub-Bareboat
Charterer and Manager, at any time during Sub-Bareboat Charterer's usual
business hours, any aspects of the
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Vessel's operation, including, without limitation, operating costs, operational
procedures and practices, the Vessel's voyage and port performance, and
maintenance and repair.
17.14 PROCEDURES.
Sub-Bareboat Charterer and Time Charterer shall jointly develop an
Operating Manual which shall include written operating procedures. Said
procedures shall describe those areas of administration and operation not
specifically detailed herein and which are related to Sub-Bareboat Charterer's
management of the Vessel and to the conduct of business between Sub-Bareboat
Charterer and Time Charterer.
17.15 SUB-BAREBOAT CHARTERER'S CONTRACTS.
Time Charterer and the Vessel shall have the advantages of any existing
or future contracts of Sub-Bareboat Charterer, its Affiliates or its Parent
Corporation for purchases of stores, supplies, equipment or other materials, or
of repairs or other services.
17.16 HEADINGS.
The table of contents preceding this Time Charter and the headings to
the various sections hereof have been inserted for convenient reference only and
shall not in any way limit or otherwise affect any of the terms or provisions
hereof.
17.17 COUNTERPARTS.
This Time Charter may be executed in several counterparts, each of
which shall be an original, but all of which together shall constitute one
instrument.
17.18 SEPARABILITY.
If any term or provision of this Time Charter or application thereof to
any person or circumstances shall to any extent be invalid or unenforceable, the
remainder of this Time
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Charter, or the application of such term or provision to persons or
circumstances other than those as to which it is invalid or unenforceable, shall
not be affected and each term and provision of this Time Charter shall be valid
and shall be enforceable to the extent permitted by law.
17.19 U.S. GOVERNMENT AIDS.
Sub-Bareboat Charterer and Time Charterer mutually acknowledge that the
Vessel and its operation are, or may be, subject to certain requirements of the
U.S. Government contained in the Title V Contract, the ODS Contract and the
documents relating to the financing of the Vessel under Title XI of the Act.
Unless waived by the U.S. Government (and Sub-Bareboat Charterer shall not
request any waiver without the prior written consent of Time Charterer),
Sub-Bareboat Charterer and Time Charterer agree to comply with any such
requirements notwithstanding anything to the contrary in this Time Charter. Time
Charterer acknowledges that since the Sub-Bareboat Charterer is receiving
subsidy under the ODS Contract, the Sub-Bareboat Charterer may be required by
statute to offer the Vessel for employment by the Military Sealift Command.
Sub-Bareboat Charterer agrees to coordinate each such offer with the Time
Charterer before the offer is made. Sub-Bareboat Charterer further agrees that
proceeds received as a consequence of any employment of the Vessel by the
Military Sealift Command shall be paid over to the Bareboat Charterer in
accordance with Article 12(f) of the Sub-Bareboat Charter and Time Charterer
agrees that payment of Operating Hire shall continue under the Time Charter
notwithstanding any such employment of the Vessel.
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17.20 SUBORDINATION.
This Time Charter is subject and subordinate to the rights of the
Shipowner under the Bareboat Charter and the rights of the Secretary under the
Mortgage and the Security Agreement and the rights of Occidental under the
Second Mortgage.
17.21 ESCAPE OR DISCHARGE OF OIL OR HAZARDOUS SUBSTANCE.
When an escape or discharge of Oil occurs from the Vessel and causes or
threatens to cause Damages, or when there is a substantial threat of a discharge
of Oil or discharge of Oil (i.e., a grave and imminent danger of the escape or
discharge of Oil which, if it occurred, would create a serious danger of
Damages, whether or not an escape or discharge in fact subsequently occurs), or
when any action or occurrence causes or threatens to cause a Release, or a
Hazardous Substance, then the Time Charterer may, at its option, upon notice to
the Sub-Bareboat Charterer or Master, undertake such measures as are reasonably
necessary to prevent or minimize such Damages or Release, to remove the threat
of such Damages or Release, unless the Sub-Bareboat Charterer promptly
undertakes the same. The Time Charterer shall keep Sub-Bareboat Charterer
advised of the nature and result of any such measures taken by it and, if time
permits, the nature of the measures intended to be taken by it. Any of the
aforementioned measures taken by Time Charterer shall be deemed taken on the
Sub-Bareboat Charterer's authority and as the Sub-Bareboat Charterer's agent,
and shall be at the Sub-Bareboat Charterer's expense except to the extent that:
(1) any such Damages or Release or threat of such Damages or
Release was caused or contributed to by the Time Charterer, or
(2) Sub-Bareboat Charterer is exempt from liability under
applicable law; or
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(3) expenses for such measures, when added to the reasonable Cost
of Sub-Bareboat Charterer's own remedial measures, exceed maximum
coverage under Sub-Bareboat Charterer's insurances.
PROVIDED ALWAYS that if Sub-Bareboat Charterer in its absolute
discretion considers said measures should be discontinued, Sub-Bareboat
Charterer shall so notify Time Charterer and thereafter Time Charterer shall
have no right to continue said measures under the provisions of this Clause and
all further liability to Time Charterer under this Clause shall thereupon cease.
The above provisions are not in derogation of such other rights as Time
Charterer or Sub-Bareboat Charterer may have under this Time Charter or
Sub-Bareboat Charterer may otherwise have or acquire by law or any International
Convention.
17.22 SECTION REFERENCES.
The terms "hereof", "hereunder", and "herein", as well as any
references to Section numbers in this Time Charter which do not expressly refer
to another agreement, refer to such sections of this Time Charter.
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IN WITNESS WHEREOF, the parties have caused this Time Charter to be
executed and delivered as of the day and year first above written.
FRANCES ODS CORPORATION,
Sub-Bareboat Charterer,
_____________________ By: __________________________________
Attest: Name: ____________________________
Title:____________________________
STOLT MARINE TANKERS LLC,
Time Charterer,
_____________________ By:___________________________________
Attest: Name: ____________________________
Title: ____________________________
<PAGE> 297
EXHIBIT I
TO
TIME CHARTER
POLLUTION PROVISIONS
A. Remedial Measures. Whenever there is an escape or discharge
from the Vessel of Oil, or a substantial threat of discharge of Oil, or any
action or occurrence that causes or threatens to cause a Release of a Hazardous
Substance, which does or threatens to cause or contribute to any violation of
the laws, regulations, rules or orders referred to in Section 8 of the Time
Charter or which causes Damages: Sub-Bareboat Charterer shall (a) give Time
Charterer immediate notice thereof by telegram, cable or telephone at Stolt
MarineTankers LLC, c/o Marine Transport Corporation, 1200 Harbor Boulevard,
Weehawken, New Jersey 07087, Attention: General Counsel or at such other
address, attention and telephone number as Time Charterer may have designated by
at least fifteen days' prior notice to Sub-Bareboat Charterer and (b) promptly
take such measures as are necessary to prevent, contain and clean up the escape
or discharge, and to remedy any Damages resulting therefrom. Time Charterer
shall have the right, at its option, to participate in such measures taken by
Sub-Bareboat Charterer and to take any such measures which it deems necessary or
expedient to those ends, all in behalf and for the account of Sub-Bareboat
Charterer. Time Charterer shall keep Sub-Bareboat Charterer and the Master
advised, as currently as practicable, of the nature and results of any such
measures taken, or intended to be taken, by Time Charterer. Sub-Bareboat
Charterer shall reimburse Time Charterer for all costs incurred by Time
Charterer on account of its participating in and taking any such measures,
except when and to the extent that the escape or discharge was caused or
contributed to by Time Charterer, or Sub-Bareboat Charterer is exempt from
liability for the escape or discharge under the applicable law, whether national
or international; provided: (1) that such reimbursement, when added to the
reasonable costs of Sub-Bareboat Charterer's own remedial measures, shall not
exceed the maximum coverage thereof afforded by Sub-Bareboat Charterer's
insurances; and (2) that, if Sub-Bareboat Charterer, in its absolute discretion,
believes that such measures should be discontinued, Sub-Bareboat Charterer may
so notify Time Charterer, and thereafter Time Charterer shall have no right to
continue such measures under this clause, and all additional liability to Time
Charterer under this clause shall thereupon cease. The provisions of this clause
are not in derogation of any other rights Sub-Bareboat Charterer or Time
Charterer may have under this Time Charter, or may otherwise have or acquire by
law or any international convention.
B. At Time Charterer's request, Sub-Bareboat Charterer shall
participate in Time Charterer's program covering oil pollution avoidance.
Sub-Bareboat Charterer shall comply with all oil pollution avoidance instruction
provided by Time Charterer to Sub-Bareboat Charterer in writing, together with
any amendments which may be issued in writing or by radio to cover special cases
or changes in international or national regulations or laws. If applicable, the
Master shall contain on board the Vessel all oily residues from consolidated
tank washings, dirty ballast, etc. such residues shall be contained in one
compartment, after the separation of
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all possible water has taken place by safe methods employing the use of
settlement and decanting or mechanic separation to approved and recognized
standards. The oil residue shall be pumped ashore at the loading or discharging
terminal, either as segregated oil, dirty ballast, commingled with cargo, or as
is possible for Time Charterer to arrange with each cargo. If Time Charterer
requires that demulsifiers be used for the separation of oil and water, the cost
of such demulsifiers shall be for Time Charterer's account. The Vessel shall
take all necessary precautions while loading and discharging cargo or bunkers,
as well as ballast, to ensure that no oil will escape overboard. Nothing in Time
Charterer's instructions shall be construed as permission to pollute the sea by
the discharge of oil or oily water, etc. Sub-Bareboat Charterer shall instruct
the Master that, upon arrival at the loading port, the Master shall furnish Time
Charterer with a report covering oil pollution avoidance, together with details
of the quantity of oil residue on board.
C. Sub-Bareboat Charterer or its Parent Corporation shall remain
a member of ITOPF for duration of this Time Charter.
<PAGE> 299
5.03(b)
TIME CHARTER
BETWEEN
JULIUS ODS CORPORATION,
BAREBOAT CHARTERER
AND
STOLT MARINE TANKERS LLC,
TIME CHARTERER
DATED AS OF SEPTEMBER 29, 1999
-------------------------------
ITB JULIUS HAMMER
(TO BE RENAMED SMT CHEMICAL TRADER)
-------------------------------------
<PAGE> 300
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C>
SECTION 1. DEFINITIONS........................................................................................ 1
SECTION 2. THE VESSEL......................................................................................... 1
SECTION 3. PERIOD-DELIVERY-REDELIVERY......................................................................... 3
3.1 PRIMARY PERIOD....................................................................................... 3
3.2 EXTENSIONS........................................................................................... 3
3.3 DELIVERY............................................................................................. 4
3.4 REDELIVERY........................................................................................... 4
SECTION 4. HIRE, COSTS AND FEES............................................................................... 5
4.1 HIRE................................................................................................. 5
4.2 OPERATING COSTS...................................................................................... 6
4.3 PAYMENT.............................................................................................. 13
SECTION 5. THE VESSEL'S QUALITIES....................................................................... 16
5.1 GENERAL.............................................................................................. 16
5.2 FRESH WATER.......................................................................................... 17
5.3 DOCUMENTATION........................................................................................ 17
5.4 IDENTIFICATION....................................................................................... 17
SECTION 6. OPERATIONAL PROVISIONS....................................................................... 18
6.1 COMPLIANCE; TRADING LIMITS........................................................................... 18
6.2 USE.................................................................................................. 19
6.3 TYPES OF CARGO....................................................................................... 19
6.4 LOADING-DISCHARGING.................................................................................. 19
6.5 GENERAL OBLIGATIONS OF BAREBOAT CHARTERER............................................................ 20
6.6 CERTAIN OBLIGATIONS OF TIME CHARTERER................................................................ 20
6.7 PERSONNEL MATTERS.................................................................................... 21
6.8 CERTAIN DUTIES OF MASTER............................................................................. 23
6.9 ADDITIONAL EQUIPMENT................................................................................. 24
6.10 TUGS AND PILOTS...................................................................................... 24
6.11 CLAIMS............................................................................................... 25
SECTION 7. BILLS OF LADING.............................................................................. 25
SECTION 8. POLLUTION.................................................................................... 26
SECTION 9. INSURANCE.................................................................................... 26
9.1 REQUIREMENTS......................................................................................... 26
9.2 OPTION............................................................................................... 26
9.3 LOSSES............................................................................................... 27
SECTION 10. DRYDOCKING, LAY-UP................................................................................ 28
10.1 DRYDOCKING........................................................................................... 28
10.2 LAY-UP............................................................................................. 28
</TABLE>
i
<PAGE> 301
<TABLE>
<CAPTION>
<S> <C>
10.3 EFFECT ON COSTS...................................................................................... 28
SECTION 11. IMPROVEMENTS...................................................................................... 29
SECTION 12. LIENS AND ATTACHMENTS............................................................................. 30
12.1 DISCHARGE............................................................................................ 30
12.2 FURTHER ENCUMBRANCES................................................................................. 31
12.3 POWER TO IMPOSE...................................................................................... 31
SECTION 13. EXCEPTIONS........................................................................................ 32
SECTION 14. EVENTS AND CONSEQUENCES OF TERMINATION OF TIME CHARTER OR REPLACEMENT OF BAREBOAT CHARTERER... 33
14.1 EVENTS OF TERMINATION................................................................................ 33
14.2 REPLACEMENT OF BAREBOAT CHARTERER.................................................................... 34
14.3 PAYMENTS UPON TERMINATION OF TIME CHARTER............................................................ 34
SECTION 15. EVENTS OF TIME DEFAULT AND REMEDIES............................................................... 34
15.1 EVENTS OF TIME DEFAULT............................................................................... 34
SECTION 16. EVENTS OF BAREBOAT CHARTERER DEFAULT AND REMEDIES................................................ 36
16.1 EVENTS OF BAREBOAT CHARTERER DEFAULT................................................................. 36
16.2 REMEDIES UPON AN EVENT OF BAREBOAT CHARTERER DEFAULT................................................. 39
SECTION 17. GENERAL...................................................................................... 40
17.1 ICE.................................................................................................. 40
17.2 SAFE BERTH........................................................................................... 40
17.3 LIMITATIONS.......................................................................................... 40
17.4 GOVERNMENT DIRECTION AND BLOCKADE.................................................................... 40
17.5 NO FRUSTRATION....................................................................................... 42
17.6 SALVAGE MONEY........................................................................................ 42
17.7 NO DEMISE............................................................................................ 42
17.9 GOVERNING LAW........................................................................................ 43
17.10 NOTICE.............................................................................................. 44
17.11 CHANGES............................................................................................. 45
17.12 RECORDS............................................................................................. 45
17.13 OPERATIONAL REVIEW.................................................................................. 46
17.14 PROCEDURES.......................................................................................... 46
17.15 BAREBOAT CHARTERER'S CONTRACTS...................................................................... 46
17.16 HEADINGS............................................................................................ 46
17.17 COUNTERPARTS........................................................................................ 46
17.18 SEPARABILITY........................................................................................ 47
17.19 U.S. GOVERNMENT AIDS................................................................................ 47
17.20 SUBORDINATION....................................................................................... 48
17.21 ESCAPE OR DISCHARGE OF OIL OR HAZARDOUS SUBSTANCE................................................... 48
17.22 SECTION REFERENCES.................................................................................. 49
EXHIBIT I TO TIME CHARTER
</TABLE>
ii
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TIME CHARTER
ITB JULIUS HAMMER
(TO BE RENAMED SMT CHEMICAL TRADER)
This TIME CHARTER is made on ______________________ ____,
1999, by and between Julius ODS Corporation ("Bareboat Charterer"), a Delaware
corporation, and Stolt Marine Tankers LLC ("Time Charterer"), a Delaware limited
liability company.
WITNESSETH:
WHEREAS, Bareboat Charterer desires to time charter the Vessel
to Time Charterer and Time Charterer desires to time charter the Vessel from
Bareboat Charterer, in each case on the terms and conditions hereinafter set
forth;
WHEREAS, the Shipowner, on the date hereof, is changing the
name of the Vessel to SMT CHEMICAL TRADER (tug) and SMT TWO (barge);
NOW THEREFORE, in consideration of the premises and the mutual
covenants herein contained, Bareboat Charterer agrees to let and time charter
and Time Charterer agrees to hire and time charter the Vessel on the terms and
conditions hereinafter set forth.
SECTION 1. DEFINITIONS.
The capitalized terms used herein which are defined in, or by
reference in Schedule X hereto, as said Schedule X may be amended from time to
time as provided herein have the meanings specified in said Schedule X.
<PAGE> 303
SECTION 2. THE VESSEL.
Bareboat Charterer hereby lets to Time Charterer, and Time
Charterer hereby hires from Bareboat Charterer, the use and services of the
Vessel, which shall have the particulars and capabilities specified below in
this Section, but as any thereof may be modified with Time Charterer's approval:
(a) American Bureau of Shipping Classification. Tug: +Al
Towing Service, +AMS, +ACC; Barge: +Ale "Chemical Barge" and "Oil Barge."
(b) Carriage capacity. About 41,250 long tons total dead
weight of cargo, bunkers, stores and water, on a draft of 36 feet 0 inches in
salt water; and permanent bunkers, after deduction of 2 percent for expansion,
of 2,633 long tons of intermediate fuel oil and 661 long tons of light fuel oil.
(c) Speed. Capable of maintaining average speeds of 15.0
knots loaded and 15.5 knots in ballast, by reference to the observed distance
traveled from seabuoy to seabuoy, and under weather conditions up to and
including Beaufort Scale Force No. 5 except for reductions in speed due to
restricted visibility or traffic conditions.
(d) Fuel. Fitted for burning light or intermediate diesel
oil in main motors, and light diesel oil under boilers. Capable of maintaining,
on all passages from seabuoy to seabuoy, under weather conditions up to and
including Beaufort Scale Force No. 5, an average daily fuel consumption of 57
tons of intermediate fuel oil of the best commercial grade available with a
maximum viscosity of 180 centistokes at 50 degrees centigrade, excluding
auxiliary engines, cargo recirculating or heating and tank cleaning.
(e) Pumps. Equipped with center tank cargo pumps with
self-stripping features, capable of maintaining an aggregate discharge
throughput of 1600 metric tons per
2
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hour of bulk liquid cargoes having specific gravities of 2.1 and viscosities of
2,000 SSU, with a maximum pressure at the Vessel's manifold of 125 lbs. per
square inch and 10 wing tank cargo pumps with self-stripping features, each
capable of maintaining an aggregate discharge throughput of 750 gallons per
minute, against a maximum pressure at the Vessel's manifold of 125 lbs. per
square inch of petroleum products at a specific gravity of .86 and a maximum
viscosity of 1,000 SSU.
(f) Nothing in this Section 2 shall be construed as a
waiver of any rights either Bareboat Charterer or Time Charterer may have under
any other agreement between Bareboat Charterer and Time Charterer nor any rights
of Time Charterer against Bareboat Charterer in connection with the obligations
of Bareboat Charterer under Section 12 hereof.
SECTION 3. PERIOD-DELIVERY-REDELIVERY.
3.1 PRIMARY PERIOD.
This Time Charter shall be in effect from the Effective Date
for the balance of the Original Term.
3.2 EXTENSIONS.
So long as no Event of Time Default shall exist and be
continuing, Time Charterer shall have options to extend this Time Charter for
one or more Renewal Terms of two to five years each, exercisable by giving
Bareboat Charterer notice at least one hundred eighty days before the end of the
Original Term or 60 days before the end of the then current Renewal Term (as the
case may be), which notice shall specify the period of such Renewal Term. In the
event that Time Charterer does not exercise such option to extend the Time
Charter beyond the Original Term, and an extension of more than 180 days beyond
the twenty-fifth anniversary of
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<PAGE> 305
the Delivery Date is required for the completion of a voyage in progress or for
necessary repairs in accordance with the redelivery requirements set forth in
Article 13(b) of the Bareboat Charter, then this Time Charter shall
automatically be renewed for a Renewal Term equal to the period commencing at
midnight on the last day of the Original Term and ending at midnight on the last
day of the Charter Period. Upon the extension of this Time Charter in accordance
with this Section 3.2, the Bareboat Charter shall automatically be renewed for
the same period.
3.3 DELIVERY.
Time Charterer shall be deemed to have accepted the Vessel
hereunder simultaneously with the delivery to and acceptance of the Vessel by
Bareboat Charterer pursuant to the Bareboat Charter. Time Charterer's acceptance
of the Vessel under this Time Charter, as provided in this Section 3.3, shall
confirm and be conclusive evidence, as between Bareboat Charterer and Time
Charterer, that the Vessel is in all respects satisfactory to Time Charterer and
in compliance with all requirements of this Time Charter, and Time Charterer
will not assert any claim of any nature whatsoever against Bareboat Charterer
based on any of the foregoing matters in this Section 3.3. Nothing in this
Section 3.3 shall be construed as a waiver of any right that either Time
Charterer or Bareboat Charterer may have against any person other than Bareboat
Charterer or Time Charterer.
3.4 REDELIVERY.
(a) On the last day of the Charter Period, unless (i)
this Time Charter has been terminated pursuant to Section 14.1, or (ii) use of
the Vessel has been requisitioned as described in Article 12 of the Bareboat
Charter and such requisition is continuing, Time Charterer shall, except as
provided in Article 13(b) of the Bareboat Charter (relating to an extension of
the Charter Period to make redelivery repairs), at Time Charterer's cost and
4
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expense, redeliver the Vessel to Bareboat Charterer, at any safe port in the
continental United States on the coast on or nearest to which the Vessel is
trading at the end of the Charter Period designated by the Shipowner by written
notice to Bareboat Charterer and Time Charterer at least 45 days prior to the
end of the Charter Period. Time Charterer agrees that at the time of such
redelivery the Vessel shall be free and clear of all liens, charges and
encumbrances created by it.
(b) Any property of Time Charterer remaining aboard the
Vessel upon redelivery may be retained or disposed of by Bareboat Charterer as
its own property.
SECTION 4. HIRE, COSTS AND FEES.
4.1 HIRE.
The amount Time Charterer shall pay as hire for the use and
services of the Vessel during the continuance of this Time Charter shall
comprise the aggregate of the following:
(a) Basic Hire, Supplemental Hire, and Stipulated Loss
Value (or amounts that are determined with Basic Hire, Supplemental Hire, or
Stipulated Loss Value as the basis for such determination) in the same amounts
and at the same time and place as shall be payable by Bareboat Charterer to
Shipowner under the Bareboat Charter; plus
(b) Operating Hire, which consists of amounts equal to
the following:
(1) Operating Costs. All costs incurred by Bareboat
Charterer incident to the operation of the Vessel and
in performance of Bareboat Charterer's obligations
hereunder and under the Bareboat Charter, as detailed
in Section 4.2(f) below; plus
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(2) Operating Fee. A daily Operating Fee to Bareboat
Charterer in an amount equal to the Management Fee
included in the Management Agreement noted in Section
4.2 (e) below.
If an item of Operating Cost is not appropriately budgeted
pursuant to Section 4.2, Bareboat Charterer is not required to incur such cost
or make any payments, except to the extent necessary to meet operating
exigencies where obtaining prior review by, or the prior approval of, Time
Charterer is not practicable.
4.2 OPERATING COSTS.
(a) Estimates. At least 120 days before the beginning of
each Calendar Year, Bareboat Charterer shall submit to Time Charterer a written
estimate of the aggregate Operating Costs to be incurred during that forthcoming
Calendar Year. Such estimate shall include itemizations of the estimated
Operating Costs in reasonable detail; shall show how the estimated Operating
Costs were determined, including explanations of any thereof that are
extraordinary and shall be subject to Time Charterer's approval and
verification. Not later than 60 days before the beginning of each Calendar Year,
Bareboat Charterer and Time Charterer shall agree on an estimate of the
Operating Costs for such Calendar Year, which shall be the basis for payment of
Operating Hire for such Calendar Year, subject, however, to review, at the
request of Time Charterer at any time during the Calendar Year and adjustment to
allow for any previously unanticipated changes in Operating Costs to be
incurred.
(b) Economy. Bareboat Charterer shall use its best
efforts at all times to keep Operating Costs at a minimum consistent with the
Vessel's full and efficient performance in the service of Time Charterer.
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(c) Audits of Operating Costs. Time Charterer may cause
to be made during regular business hours, after the end of each fiscal year of
Bareboat Charterer, an audit of Bareboat Charterer's accounts and records
relating to Operating Costs for the Calendar Year ending during that fiscal year
by certified public auditors selected and paid by Time Charterer. A copy of the
report of each such audit shall be delivered to Bareboat Charterer as soon as it
is completed, but not later than one hundred and twenty days after the end of
such fiscal year of Bareboat Charterer.
(d) General Audits. Without limiting the right contained
in Section 4.2(c) hereof, Time Charterer shall have the right to make general
audits of Bareboat Charterer's operation of the Vessel during regular business
hours, by authorized employees or representatives of Time Charterer or its
Affiliates, at any time but not more often than once every six months. Such
audits may cover all aspects of Bareboat Charterer's performance hereunder and
its operation of the Vessel, including the determination and control of
Operating Costs, voyage and port performance, cargo handling, maintenance of the
Vessel and its equipment, drydocking of the Vessel and spare gear and stores
inventories. Bareboat Charterer shall maintain and retain for at least four
Calendar Years (or until Time Charterer's audit thereof, if earlier, but always
for as long as may be required for purposes of the ODS Contract) complete and
accurate records relating to its performance and operation of the Vessel,
including, without limitation: (1) payroll records, cancelled payroll checks and
receipts for cash payroll payments which are included in Operating Costs, (2)
copies of original invoices for all purchases and repairs, and copies of
purchase orders, if any (including subcontractors' and other third parties'
services) and evidences of payment thereof, (3) other documents evidencing the
receipt and issuance of equipment, gear and stores for use on the Vessel, (4)
the Vessel's
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logs and other records of its performance and operation, (5) true and correct
copies of contracts material to any operations hereunder, or as reasonably
requested by Time Charterer including, but not limited to, collective bargaining
agreements, agreements with shipping agents, repair and drydock contracts, and
(6) copies of any competitive bids for major repairs, changes or modifications
to the Vessel.
(e) Other Agreements. If Bareboat Charterer enters into
an agreement, other than a labor agreement, with another person providing for
operation of the Vessel, Bareboat Charterer shall first have obtained Time
Charterer's consent thereto and shall cause such agreement to give Time
Charterer the right to make audits of such other person's operation of the
Vessel under terms and conditions equivalent to those contained in Sections
4.2(c) and (d) hereof and shall contain such person's agreement to maintain
complete and accurate books, accounts and other records as specified in Section
17.12 hereof. Time Charterer hereby consents to the Management Agreement between
Bareboat Charterer and Marine Transport Management, Inc. dated the date hereof.
(f) Inclusions in Operating Costs. Operating Costs shall
include:
(i) Manning costs. All costs incurred and paid
by Bareboat Charterer pursuant to the terms
of any collective bargaining agreement
applicable to the crew.
(ii) Insurance costs. All costs incurred and paid
by Bareboat Charterer, including, but not
limited to, all payments within deductibles
or franchises, all amounts paid for
premiums, club costs, fees, dues or calls,
all amounts paid for obtaining (including
marine insurance brokerage fees and
expenses),
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maintaining and collecting proceeds
(including legal and investigatory fees and
expenses) under insurance to be carried by
Bareboat Charterer pursuant to Article 8 of
the Bareboat Charter (except insurance
referred to in Article 8(i) of the Bareboat
Charter) and all expenses incurred in
connection with the collection of such
insurance proceeds in the event of an Event
of Loss.
(iii) Maintenance and repair costs. The cost of
repairs, excluding items paid for by
insurance, and the cost of maintenance or
improvements required by any governmental
authority, ABS or determined to be necessary
or advisable by Time Charterer, Bareboat
Charterer or Shipowner (subject to the
reasonable approval of Time Charterer,
Bareboat Charterer or Shipowner, as the case
may be) including, but not limited to, spare
parts, replacement parts, renewals,
alterations, modifications, adjustments,
innovations, improvements and all related
expenses whatsoever, including but not
limited to gas freeing, tank cleaning,
cleaning, painting, drydocking, towage,
pilotage; and other expenses, if any, while
repairing, maintaining, improving, awaiting
repairs or maintenance or improvements and
proceeding to or from the port or place
where repairs or maintenance or improvements
are made and in connection with a general
average sacrifice or expenditure; and all
additional expenses during a lay-
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up of the Vessel approved or requested by
Time Charterer, agency fees and expenses and
supervision costs and reasonable
transportation costs incurred in connection
therewith.
(iv) Stores Costs. The cost of all consumable and
expendable items, including but not limited
to deck and engine room stores, galley and
cabin stores, medical supplies purchased for
use aboard the Vessel and cost of
purchasing, transporting, insuring and
loading such items.
(v) Subsistence costs. The cost of all
provisions and food purchased for the use of
the Vessel and cost of purchasing,
transporting, insuring and loading thereof,
as well as rubbish removal, and/or any
allowances paid to the crew in lieu of
actual food supplies. Bareboat Charterer's
expenditures for subsistence shall be
consistent with expenditures which are, or
would reasonably be anticipated to be, made
by operators of recognized standing engaged
in the operation of United States flag
vessels of size, type, trade, cargo and crew
most similar to the Vessel.
(vi) Lube Oil costs. The cost of all lubricating
oils for and additives used in conjunction
with the main engines and auxiliary diesels,
reduction gear oil, hydraulic oil used for
the steering gears and the hydraulic systems
on both the tug and barge, and such other
greases and lubricants as may be required
for the operation of the Vessel and its
equipment.
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(vii) Fuel costs. The cost of all fuels used in
conjunction with the main engines, auxiliary
engines, galley fuel and fuel provided for
crew use on both the tug and barge, except
to the extent such fuel costs are paid by
Time Charterer pursuant to Section 6.6
hereof.
(viii) Other costs. The cost of "MARISAT" satellite
communications for the Vessel, outside
engineering consultant fees, outside legal
fees (subject to the approval of Shipowner
or Time Charterer, as the case may be, which
approval shall not be unreasonably
withheld), the cost of an annual audit of
Bareboat Charterer's financial records by an
independent certified public accounting
firm, any fees paid to any government or
regulatory agency, not otherwise included in
Operating Costs, all costs in connection
with salvage activities and all other costs
and expenses incurred in direct connection
with the operation of the Vessel (including
any costs incurred in connection with
compliance with the provisions of Section
17.21 hereof and Exhibit I to this Time
Charter) and in the performance of Bareboat
Charterer's obligations under the Bareboat
Charter.
(g) Reduction of Operating Costs. Any amounts received by
Bareboat Charterer in reduction of Operating Costs, whether pursuant to the ODS
Contract or otherwise, shall reduce operating costs hereunder in the full amount
received by Bareboat Charterer.
(h) Exclusions from Operating Costs. Notwithstanding the
foregoing, Operating Costs shall NOT include the following:
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(1) Any fines or penalties levied by any governmental
authority against Bareboat Charterer or any other
Person operating the Vessel on behalf of Bareboat
Charterer as a result of the negligence, gross
negligence, or willful misconduct of Bareboat
Charterer or any other Person operating the Vessel on
behalf of Bareboat Charterer;
(2) Any tax or withholding for taxes and any fines,
penalties or interest thereon which is levied on, or
measured by, the net income of Bareboat Charterer, or
any taxes in lieu thereof;
(3) Any of the direct management costs or direct
overhead costs of the Bareboat Charterer and any
other Person operating the Vessel;
(4) Direct management costs, direct overhead costs,
and any other administrative costs incurred in
connection with the operation of the Vessel which are
included in the Operating Fee; and
(5) Any claims paid by Bareboat Charterer under the
second sentence of Article 7(a) of the Bareboat
Charter or the second sentence of Section 12.1
hereof.
(i) Reimbursement. Bareboat Charterer and Time Charterer
agree that in the event Time Charterer pays more than once for any item that is
properly considered an Operating Cost, Time Charterer shall be entitled to
reimbursement for such payment from Bareboat Charterer. Bareboat Charterer
further agrees that in no event shall it be entitled to recover more than once
any element of Operating Costs from Time Charterer.
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4.3 PAYMENT.
(a) Basic Hire, Supplemental Hire and Stipulated Loss
Value. Basic Hire, Supplemental Hire, and Stipulated Loss Value shall be paid by
Time Charterer at the same place and not later than the times and the dates on
which such Basic Hire, Supplemental Hire, and Stipulated Loss Value are payable
by Bareboat Charterer to Shipowner or other appropriate Person under the
Bareboat Charter. Payments of Basic Hire, Supplemental Hire, and Stipulated Loss
Value shall be paid by Time Charterer directly to Shipowner or any other person
Shipowner designates, in writing, to Bareboat Charterer and Time Charterer.
(b) Operating Hire. Not later than the first day of each
month during each Calendar Year, Time Charterer shall pay Bareboat Charterer, as
preliminary Operating Hire for that month, an amount equal to one-twelfth of the
estimate of Operating Costs for that Calendar Year, as agreed pursuant to
Section 4.2(a) hereof (excluding any drydocking and insurance elements that Time
Charterer shall have agreed to pay upon invoice of Bareboat Charterer) less any
amounts actually received by Bareboat Charterer pursuant to the ODS Contract,
plus the Operating Fee for that month. Within ninety days after the end of such
Calendar Year: (1) the actual Operating Hire for such Calendar Year (including
modifications or adjustments to the Operating Fee as agreed by the parties to
the Management Agreement) shall be initially determined; (2) there shall be
credited to the actual Operating Hire: (i) all of Time Charterer's preliminary
payments of Operating Hire during the Calendar Year, if any, and amounts
actually received by Bareboat Charterer pursuant to the ODS Contract and (ii)
any other credits to which Time Charterer is entitled under this Time Charter;
(3) if there is a deficiency of such aggregate credits from the actual Operating
Hire,
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such deficiency shall be promptly paid by Time Charterer; or (4) if there is an
excess of such aggregate credits over the actual Operating Hire, such excess
shall be promptly refunded (or credited, at Time Charterer's option, to future
Operating Hire) by Bareboat Charterer. Promptly following the annual audit of
Operating Costs pursuant to the terms of Section 4.2(c) hereof, a final
adjustment to the Operating Hire shall be determined based on such audit,
subject to further adjustment based on final resolution of amounts payable under
the ODS Contract.
(c) Disputed Amounts. In the event that after an audit
has been conducted for a Calendar Year pursuant to Sections 4.2(c) and (d)
hereof, Bareboat Charterer and Time Charterer disagree over the amount of actual
Operating Hire due Bareboat Charterer for such Calendar Year, then Bareboat
Charterer may deliver to Time Charterer an Officer's Certificate setting forth
in reasonable detail the reasons why Bareboat Charterer believes it is entitled
to the amount in dispute. Upon receipt of such Officer's Certificate, Time
Charterer shall promptly pay such disputed amount to Bareboat Charterer, and may
thereafter proceed against Bareboat Charterer, under Section 17.9 hereof, to
obtain a refund of all or part of the disputed amount.
(d) Indemnity for Loss of Use of Vessel. Amounts payable
by Time Charterer under Sections 4.1(a) and 4.1(b) hereof shall be payable
without interruption; provided, however, should the Vessel be in collision with
another vessel or craft or stranded or strike an object or be damaged by fire,
explosion or other causes for which a third party is legally liable, Bareboat
Charterer shall indemnify and hold harmless Time Charterer: (a) by reimbursing
Time Charterer for amounts payable under Sections 4.1(a) and 4.1(b) hereof and
paid from the time the casualty occurred until the Vessel is returned to a fully
efficient state and able to resume its service, from a position not less
favorable to Time Charterer than its former position where the casualty
occurred; and (b) from any losses of profits under any subcharter of
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the Vessel or agreement for employment of the Vessel during the period the
Vessel is detained due to such casualty, in each case only to the extent such
third party is held liable and has made payment to Bareboat Charterer for
amounts payable by Time Charterer under Sections 4.1(a) and 4.1(b) hereof, and
the loss of profits under any subcharter or agreement for employment of the
Vessel (net of any collection costs incurred therefor by Bareboat Charterer).
Loss of employment of the Vessel shall include steaming at reduced speed,
deviations, and temporary and permanent repair periods.
SECTION 5. THE VESSEL'S QUALITIES.
5.1 GENERAL.
Bareboat Charterer shall maintain the Vessel tight, staunch,
strong and sufficiently tackled, appareled, furnished, equipped and supplied and
in every respect seaworthy and in good operating condition for the service
contemplated by this Time Charter, with holds, cargo tanks, pipelines, and
valves clear, clean, and tight, and with pumps, heat exchangers, and all other
equipment in good working order. Time Charterer's acceptance of the Vessel under
Section 3.3 hereof shall confirm and be conclusive evidence as between Bareboat
Charterer and Time Charterer that the Vessel is in all respects satisfactory to
Time Charterer and in compliance with all requirements of the preceding sentence
and this Time Charter. Nothing in this Section 5.1 shall be construed as a
waiver of any right that either Bareboat Charterer or Time Charterer may have
against any person concerning the Vessel other than Time Charterer or Bareboat
Charterer, respectively, or as a waiver of any rights either Bareboat Charterer
or Time Charterer may have under any other agreement between Bareboat Charterer
and Time Charterer. Such particulars and capabilities of the Vessel, after
taking into account
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the age and the condition of the Vessel at the commencement of this Time
Charter, shall be maintained by Bareboat Charterer throughout the continuance of
this Time Charter exercising due diligence and best marine standards and Time
Charterer shall always be entitled to the Vessel's full capabilities.
5.2 FRESH WATER.
The Vessel when delivered to Time Charterer shall be equipped
with a salt water evaporator which is capable of making sufficient water to
supply the Vessel's domestic needs, and which Bareboat Charterer shall maintain
in good operating condition after taking into account the age of the Vessel.
5.3 DOCUMENTATION.
Bareboat Charterer shall maintain the documentation of the
Vessel under the laws and flag of the United States in the name of the Shipowner
throughout the continuance of this Time Charter. Neither Bareboat Charterer nor
Time Charterer shall permit the Vessel to be documented or operated under any
foreign flag, or to permit anything which might prejudice the Vessel's
documentation as herein required.
5.4 IDENTIFICATION.
For the purposes of identification, Time Charterer shall have
the right, at its own expense, to have the Vessel painted in colors of its own
selection, to install and display its stack insignia, to fly its own "house
flag" and to utilize the colors, insignia or flag of any person directly or
indirectly controlling, or controlled by, or under direct or indirect common
control with Time Charterer and Time Charterer shall remove such insignia and
flag, at its expense, prior to redelivery.
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SECTION 6. OPERATIONAL PROVISIONS.
6.1 COMPLIANCE; TRADING LIMITS.
The Vessel shall, and Bareboat Charterer covenants that it
will, at Time Charterer's reasonable cost and expense, at all times comply with
the Bareboat Charter, all applicable laws, treaties and conventions, and all
applicable rules, regulations and orders issued thereunder, particularly, but
without limitation by this enumeration, the International Convention for Safety
of Life at Sea, 1960, as amended, and all applicable laws, rules, regulations
and orders administered by the United States Maritime Administration, Coast
Guard, Federal Maritime Commission, Customs Service, Environmental Protection
Agency, ABS and any other United States agency, or their respective successors,
having jurisdiction over matters concerning the use, operation and maintenance
of the Vessel and regulations of the International Maritime Organization and
Bareboat Charterer covenants that it will have on board, when required thereby,
valid certificates showing compliance therewith. Subject to the preceding
sentence and subject to the American Institute of Trade Warranties, Time
Charterer shall have the full use of the Vessel and may employ the Vessel as
required to perform this Time Charter in any part of the world and in such
lawful trades as Time Charterer may direct. However, upon reasonable advance
notice to Bareboat Charterer, Time Charterer may breach those Institute
Warranties where said breach is allowable upon approval of the marine
underwriters for the Vessel, provided that Time Charterer shall pay any
additional premiums assessed by the Vessel's insurers for breach of the
Institute's Warranties, provided further that the Vessel shall not be operated
in any area in which the insurance required by Article 8 of the Bareboat Charter
would not be in full force and effect. Bareboat Charterer covenants that it will
comply with applicable regulations so as to enable the Vessel to pass through
the Suez and
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Panama Canals by day or night without delay so long as the applicable fees have
been paid in advance by Time Charterer.
6.2 USE.
The full use of the Vessel (but not more than it can
reasonably stow and safely carry) shall be at Time Charterer's disposal,
reserving proper and sufficient space for the Vessel's officers, crew, Master's
cabin, tackle, apparel, furniture, fuel, water, provisions and stores. Bareboat
Charterer shall provide proper and sufficient quarters on the Vessel for an
authorized representative of Time Charterer, upon reasonable advance notice from
Time Charterer that it wishes to have such an authorized representative on board
the Vessel.
6.3 TYPES OF CARGO.
Time Charterer shall have the option of shipping liquid bulk,
petroleum products or any other lawful cargo in bulk for which the Vessel and
its tanks are suitable, as well as any lawful merchandise, between decks or
other suitable space available, subject to the Master's approval as to kind,
character, amount and stowage, and to Time Charterer's payment of all charges
for dunnage, loading, stowing and discharging.
6.4 LOADING-DISCHARGING.
The Vessel shall be loaded, discharged or lightened as rapidly
as possible by night as well as by day, at any safe port, berth, dock, anchorage
or submarine line, or alongside lighters or lightening vessels (including ship
to ship transfers at anchor or underway, but Time Charterer shall supply all
necessary fenders and equipment together with mooring master and tug assistance,
if available, subject only to the Master's approval of suitable weather
conditions for such ship to ship transfer and subject to obtaining all required
insurance endorsements prior to any such transfers) as Time Charterer may
direct, provided the Vessel can reach, occupy and
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leave the same, always safely afloat. Each loading and discharging shall be
accomplished expeditiously, and to that end the Vessel's crew shall work
overtime, not to exceed that permitted under applicable U.S. law, if and
whenever requested by Time Charterer.
6.5 GENERAL OBLIGATIONS OF BAREBOAT CHARTERER.
Bareboat Charterer shall provide and pay for all provisions,
deck and engine room stores, galley and cabin stores, all fresh water used by
the Vessel, wages and overtime of the Master, officers and crew, all
certificates and other requirements necessary to enable the Vessel to be
employed throughout the trading limits specified in Section 6.1 hereof, consular
fees pertaining to the Master, officers and crew, and all other expenses
connected with the operation, maintenance and navigation of the Vessel as such
expenses are defined in Section 4.2(f) hereof.
6.6 CERTAIN OBLIGATIONS OF TIME CHARTERER.
Time Charterer shall pay for all fuels required by the Vessel
(including galley fuel and fuel provided for crew use) and all fuels on board
when the Vessel is delivered to Time Charterer pursuant to Section 3.3 hereof
shall be the property of Time Charterer, but all fuels on board when the Vessel
is redelivered to Bareboat Charterer pursuant to Section 3.4 hereof shall be the
property of Bareboat Charterer. Time Charterer shall pay for all port charges,
light dues, dock dues, canal dues, consular fees (except those pertaining to
Master, officers and crew), pilotage and tugs necessary for assisting the Vessel
in, about and out of port for the purpose of carrying out this Time Charter,
Time Charterer's agencies and commissions incurred for Time Charterer's account,
crew expense incurred for connecting and disconnecting cargo hoses and arms, and
any transportation taxes. If Bareboat Charterer and Time Charterer agree,
Bareboat
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Charterer may pay such charges, dues, fees and expenses and shall be reimbursed
by Time Charterer therefor.
6.7 PERSONNEL MATTERS.
(a) General. Appointment of the Vessel's personnel shall
be wholly at Bareboat Charterer's discretion, subject only to compliance with
all requirements of law, including those relating to their citizenship. However,
if Time Charterer ever gives notice to Bareboat Charterer of dissatisfaction
with the conduct of the Master, any officer or crew member, Bareboat Charterer
and Time Charterer shall promptly jointly investigate the particulars of Time
Charterer's complaint and if the complaint proves to be well-founded, Bareboat
Charterer, without delay, shall promptly make changes in the appointments.
(b) Protection Against Strikes; Other Labor Agreement
Provisions. From each labor organization representing any of the Vessel's crew,
Bareboat Charterer shall obtain a "no strike" agreement prohibiting strikes,
slowdowns, boycotts, picketing and any other form of interference with the
Vessel's service at the direction or with the acquiescence of such labor
organization.
(c) Manning. Bareboat Charterer shall man the Vessel and
attend to all matters involving the Vessel's personnel, including the following:
(i) procuring and enlisting for the Vessel, as
required by applicable law, competent,
reliable and duly-licensed personnel and all
replacements thereof as necessary from time
to time (collectively "Crew Members");
(ii) arranging for and procuring all
transportation, board and lodging for the
Crew Members as and when required;
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(iii) maintaining complete records of any labor
agreements which may be entered into between
Bareboat Charterer and Crew Members, in
accordance with collective bargaining
agreements at any time in effect between
employee organizations and unions, and
reporting promptly to Time Charterer, as
soon as notice or knowledge thereof is
received by Bareboat Charterer, any actual
or proposed material changes in any of such
agreements or other regulations relating to
Crew Members;
(iv) settlement of all wages with Crew Members
during the course and upon termination of
their employment, and handling and settling
of all claims of Crew Members, including
those arising out of accidents, sickness or
death, loss of personal effects, or disputes
under articles or contracts of enlistment,
pension plans, insurance policies or fines,
provided, however, that Bareboat Charterer
shall proceed diligently and cooperate fully
with Time Charterer in handling and settling
those claims which are covered by insurance
placed by Time Charterer or Shipowner or
which are self-insured by Time Charterer or
Shipowner;
(v) maintaining all administrative and financial
records relative to Crew Members as required
by law, labor agreements or Time Charterer;
and making such reports thereof at such
times and in such forms as Time Charterer
may reasonably request; and
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(vi) performing other services in connection with
the manning of the Vessel as Time Charterer
may reasonably request.
6.8 CERTAIN DUTIES OF MASTER.
The Master, though appointed and employed by Bareboat
Charterer and subject to Bareboat Charterer's direction and control, shall
observe Time Charterer's orders in connection with Time Charterer's agencies,
arrangements and employment of the Vessel hereunder. The Master shall: (a)
prosecute each voyage with utmost dispatch (subject to any orders by Time
Charterer for slow-steaming); (b) render all reasonable assistance with the
Vessel's crew and equipment; (c) keep a full and correct log of each voyage in
the English language, which shall always be open to inspection by Time Charterer
and its agents, and abstracts of which shall be furnished to Time Charterer at
the end of each voyage; and (d) make regular weekly reports by telegraph or
cable to Bareboat Charterer, and Bareboat Charterer hereby agrees to furnish a
copy of such weekly reports to Time Charterer by electronic means, containing
statistics on the Vessel's performance (including mileage steamed loaded and in
ballast, speed and fuel consumption), accounting for time spent, and such other
information as Bareboat Charterer or Time Charterer may request.
6.9 ADDITIONAL EQUIPMENT.
Time Charterer shall be at liberty to fit any additional pumps
or gear for loading or discharging cargo, or other equipment which is readily
removable without causing material damage to the Vessel, that Time Charterer may
require beyond that which is on board at the beginning of this Time Charter, and
to make the necessary connections with cargo, steam or water pipes. If not
required to be installed in order to meet the requirements of Section 5.1 or 6.1
hereof and not installed as replacement for property on board the Vessel at the
time of
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delivery thereof, pumps, gear and equipment so installed shall remain the
property of Time Charterer, and so long as no Event of Time Default shall have
occurred and be continuing, Time Charterer may instruct Bareboat Charterer to
remove, or Time Charterer may remove, any such pumps, gear or equipment, at Time
Charterer's expense at any time during or at the expiration of this Time
Charter, subject only to Time Charterer's leaving the Vessel in the condition it
would have been in if such pumps, gear or other equipment, had not been
installed, ordinary wear and tear excepted.
6.10 TUGS AND PILOTS.
Time Charterer is authorized by Bareboat Charterer to engage
pilotage and tug assistance on behalf of Bareboat Charterer on the usual terms
and conditions for such services then prevailing at the ports or places where
such services are engaged, including provisions then prevailing (if any) making
pilots, tug captains or tugs or pilots the borrowed servants of Bareboat
Charterer. However, Time Charterer shall have the option of using its own tugs
or pilots or tugs or pilots made available or employed by any of its Affiliates
or otherwise related companies, to render towage or pilotage services to the
Vessel. In this event, the terms and conditions of such services as are rendered
and applied by independent tugboat owners or pilots shall be applicable; and
Time Charterer or its Affiliates or otherwise related companies and their pilots
shall be entitled to all exemptions from and limitations of liability,
applicable to such independent tugboat owners or pilots and their published
tariff terms and conditions.
6.11 CLAIMS.
Unless otherwise requested by Time Charterer, Bareboat
Charterer shall handle and diligently prosecute all claims arising in connection
with the Vessel's operation, whether by or against the Vessel or Shipowner,
including the following:
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(a) investigating, prosecuting or defending, employing
counsel, and effecting settlements of such claims, including those involving any
of the insurances with respect to the Vessel, and those that do or might give
rise to maritime liens or other encumbrances on the Vessel;
(b) in cases of general or particular average, assisting
in preparing the average account, done by the general average adjuster, and, in
all ways reasonably possible, protecting the interests of the Vessel and
Shipowner; and
(c) in cases of particular average, settlement of claims
in conjunction with the Vessel's hull and machinery insurance, and making
disbursements accordingly.
SECTION 7. BILLS OF LADING.
Bills of lading shall be signed at any rate of freight Time
Charterer or its agents may direct, without prejudice to this Time Charter, the
Master attending daily, if required, at the offices of Time Charterer or its
agents. Time Charterer hereby agrees to indemnify Bareboat Charterer from all
consequences or liabilities that may arise from the Master, Time Charterer or
its agents signing bills of lading or other documents signed at the request of
Time Charterer or its agents, or any irregularity in papers supplied by Time
Charterer or its agents, or from complying with the orders of Time Charterer or
its agents.
SECTION 8. POLLUTION.
Bareboat Charterer shall comply, and shall use due diligence
to obtain the compliance of Shipowner with (a) all applicable governmental laws,
regulations, rules and orders (including any international conventions to which
the United States is a party) pertaining to prevention or cleanup of pollution
by escapes or discharges from the Vessel of liquid cargoes
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in its custody, including maintenance of any required evidence of financial
responsibility, or Releases of Hazardous Substances and (b) the Pollution
Provisions set forth in Exhibit I to this Time Charter.
SECTION 9. INSURANCE.
9.1 REQUIREMENTS.
Bareboat Charterer shall provide and maintain insurance on or
with respect to the Vessel and the operation thereof during the Charter Period
as may be required by Article 8 of the Bareboat Charter.
9.2 OPTION.
Time Charterer at its option and subject to any approvals
under the ODS Contract may procure and maintain on or with respect to the Vessel
and the operation thereof, such insurance as is required to be procured and
maintained by Bareboat Charterer pursuant to Section 9.1. Subject to provisions
of the Bareboat Charter, Time Charterer, in the first instance and thereafter,
Bareboat Charterer, may procure and maintain insurance, at the expense of Time
Charterer or Bareboat Charterer as the case may be, on the Vessel in excess of
such insurance as is required to be procured and maintained by Bareboat
Charterer unless such excess insurance would conflict with or otherwise limit
the insurance required to be procured and maintained by Bareboat Charterer. Time
Charterer agrees, upon the placing of the insurance required by Section 9.1
hereof, promptly to furnish Shipowner and Bareboat Charterer with copies of the
policies, cover notes or other evidence of such insurance.
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9.3 LOSSES.
Bareboat Charterer and Time Charterer shall cooperate to make
all proofs of loss and take all other steps necessary to effect prompt
collections from the insurers for any loss under any insurances on or with
respect to the Vessel or the operation thereof. At Bareboat Charterer's written
request (and only at such request) Time Charterer shall join Shipowner and
Bareboat Charterer in a declaration of or agreement on a compromised,
constructive or agreed total loss of the Vessel or tendering abandonment of the
Vessel to the insurers.
SECTION 10. DRYDOCKING, LAY-UP.
10.1 DRYDOCKING.
When required by applicable regulations of the United States
Coast Guard or by ABS, Bareboat Charterer shall drydock the Vessel, clean and
paint its bottom and make all overhaul and necessary repairs. At least 30 days,
if practicable, before each drydocking commences, Bareboat Charterer shall
submit to Time Charterer anticipated drydocking work lists and bids thereon for
its review and approval, and Time Charterer shall select the facility where the
drydocking shall be performed and may attend the drydocking to whatever extent
it deems necessary. After each drydocking, Bareboat Charterer shall submit to
and review with Time Charterer the detailed list and account of all drydocking
work done by the shipyard.
10.2 LAY-UP.
Time Charterer shall have the option of laying up the Vessel
from time to time and for any periods of time during the continuance of this
Time Charter. If Time Charterer, having exercised this option, desires the
Vessel to be returned to service, Bareboat Charterer
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shall, upon receipt of notice thereof from Time Charterer, immediately take
steps to restore the Vessel to service as promptly as possible.
10.3 EFFECT ON COSTS.
During each period of drydocking or lay-up, Bareboat Charterer
shall use its best efforts to effect maximum savings of Operating Costs during
each such period, but always in a manner consistent with its other obligations
under this Time Charter.
SECTION 11. IMPROVEMENTS.
Subject to the terms of Article 6 of the Bareboat Charter, in
order to maintain or enhance the utility of the Vessel for this Time Charter, at
Time Charterer's request from time to time, but wholly at Time Charterer's risk
and expense, Bareboat Charterer shall modernize or improve the Vessel by making
changes in any of its equipment which are not readily removable without causing
material damage to the Vessel; provided, however, that such changes do not (a)
diminish the seaworthiness, utility or market value of the Vessel, (b) adversely
affect its United States Coast Guard certification or its ABS classification and
rating required to be maintained by the Bareboat Charter, (c) conflict with or
result in a violation of any provision of the Bareboat Charter, or (d) require
the Vessel to be redocumented. Bareboat Charterer shall procure all permits and
licenses required for any such changes, and shall exercise due diligence so that
all such changes shall be expeditiously completed in good and workmanlike manner
and in compliance with all applicable legal and classification requirements, and
all equipment and material so installed shall, without necessity of further act,
become part of the Vessel and the property of Shipowner. Payment by Time
Charterer to Bareboat Charterer for improvements made pursuant to this Section
11, including the cost of necessary permits and licenses, shall be
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made as agreed upon by Time Charterer and Bareboat Charterer, but always in a
manner so as to permit the progress of the work to continue and to minimize the
need for payments in advance by Time Charterer, and Bareboat Charterer shall be
under no obligation to make or to commence to make such improvements until a
method of payment has been agreed.
SECTION 12. LIENS AND ATTACHMENTS.
12.1 DISCHARGE.
If the Vessel is ever libeled or otherwise attached, levied
upon or taken into custody, or detained or sequestered, by virtue of any
proceeding in any court or tribunal, or by any governmental or other authority,
in any country or nation of the world, on account of any mortgage, pledge, lien,
encumbrance or claim on or with respect to the Vessel or its profits, Bareboat
Charterer shall immediately give notice thereof to Shipowner and Time Charterer
by electronic means, confirmed by letter, and, subject to the next sentence of
this Section 12.1, Time Charterer shall, at its sole cost and expense, promptly
take or cause to be taken such action as may be necessary to cause the Vessel to
be released, and such liens or claims to be discharged, within a reasonable time
not exceeding 30 days. However, if any mortgage, pledge, lien, encumbrance or
claim arises, or in the event that the Vessel shall be libeled or otherwise
attached, levied upon or taken into custody, or detained or sequestered by
virtue of any proceeding in any court or tribunal or by any governmental or
other authority on account of any liens or claims against Bareboat Charterer,
any person or entity related to Bareboat Charterer or any other Person operating
the Vessel on behalf of the Bareboat Charterer, which such liens or claims are
unrelated to Bareboat Charterer's chartering of the Vessel or, if related,
result from the Bareboat Charterer's failure properly to apply funds timely paid
by the Time Charterer as
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Operating Costs, Bareboat Charterer agrees that it shall promptly, at its own
cost and expense, remove or cause to be removed such mortgage, pledge, lien,
encumbrance or claim or cause the Vessel to be released and cause all liens and
claims on the Vessel in connection with such libel or other action to be
discharged (whether by furnishing a surety bond or otherwise), within a
reasonable time not exceeding 30 days. In the event that Bareboat Charterer
fails, at its own cost and expense, promptly to remove or cause to be removed
such mortgage, pledge, lien, encumbrance or claim, Time Charterer may remove
such mortgage, pledge, lien, encumbrance or claim or cause the Vessel to be
released and cause all liens and claims on the Vessel in connection with such
libel or other action to be discharged and Bareboat Charterer agrees that it
shall promptly reimburse Time Charterer for its costs and expenses incurred in
removing such mortgage, pledge, lien, encumbrance or claim within a reasonable
time not exceeding 30 days after Bareboat Charterer receives notice from Time
Charterer as to the amount of such costs and expenses.
12.2 FURTHER ENCUMBRANCES.
After the execution of this Time Charter, no mortgage, lien,
charge or other encumbrance shall be placed on the Vessel or its profits by
Bareboat Charterer without the prior written consent of the Secretary,
Occidental, and Time Charterer.
12.3 POWER TO IMPOSE.
Neither Bareboat Charterer, Time Charterer nor the Master of
the Vessel, nor any other person has or shall have any right, power or
authority, without the prior written consent of Shipowner, the Secretary, and
Occidental, to create, incur or permit to be placed or imposed upon the Vessel
any mortgage, lien, charge or other encumbrance whatsoever except:
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(1) liens for taxes, for crew's and master's wages, for
salvage (including contract salvage) and general average which are:
(i) not yet due and payable, or
(ii) unclaimed, or
(iii) being contested by appropriate proceedings
diligently conducted so long as such
proceedings do not involve a significant
risk of a sale, forfeiture or loss of the
Vessel; and
(2) contract and tort liens arising out of or incident to
current operations of, or repairs to, the Vessel which are subordinate to the
liens of the Mortgage and the Second Mortgage and which are:
(i) based on claims not yet due and payable, or
(ii) being contested by appropriate proceedings
diligently conducted so long as such
proceedings do not involve a significant
risk of a sale, forfeiture or loss of the
Vessel; or
(3) any rights of the United States arising by operation
of law or under the Title V Contract by virtue of the payment of
construction-differential subsidy by the United States pursuant to Title V of
the Act.
SECTION 13. EXCEPTIONS.
The Vessel, its Master, Shipowner, Bareboat Charterer, and
Time Charterer shall not, unless otherwise expressly provided in this Time
Charter, be responsible for any loss or damage arising or resulting from: any
act, neglect, default or barratry of the Master, pilots, mariners or other
servants of Bareboat Charterer in the navigation, management or operation of
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the Vessel; fire, unless caused by the actual fault or privity of Bareboat
Charterer; collision or stranding; dangers and accidents of the sea; explosion,
bursting of boilers, breakage of shafts, or any latent defect in hull, equipment
or machinery. The Vessel, its Master, Shipowner, and Bareboat Charterer shall
not, unless otherwise expressly provided in this Time Charter, be responsible
for any loss or damage or delay or failure in performing hereunder arising or
resulting from: Act of God; act of war; seizure under legal process provided
bond is promptly furnished to release the Vessel or cargo; strike or lockout or
stoppage or restraint of labor from whatever cause, either partial or general;
or riot or civil commotion; and arrest or restraint of princes, rulers or
people. The Vessel shall have liberty to sail with or without pilots, to tow or
to be towed, to go to the assistance of vessels in distress and to deviate for
the purpose of saving life or property or of landing any ill or injured person
on board. This Section 13 is not to be construed as in any way affecting the
provisions for payment of hire as provided in Section 4 hereof.
SECTION 14. EVENTS AND CONSEQUENCES OF TERMINATION OF TIME
CHARTER OR REPLACEMENT OF BAREBOAT CHARTERER.
14.1 EVENTS OF TERMINATION.
This Time Charter shall terminate simultaneously upon a
termination of the Bareboat Charter as set forth in Article 10 and 12 thereof
(relating to an Event of Loss (including requisition of title to the Vessel),
and Requisition of Use) or upon the election of Time Charterer, with the consent
of Bareboat Charterer, for reasons of a Bareboat Charterer Default under Section
16 hereof.
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14.2 REPLACEMENT OF BAREBOAT CHARTERER.
Notwithstanding anything to the contrary in this Time Charter,
Time Charterer, with the consent of Shipowner, shall have the right at any time
and from time to time, to elect to cause the Bareboat Charterer to be replaced
by a successor bareboat charterer under this Time Charter. The exercise of such
election shall be by written notice from Time Charterer approved by Shipowner,
the Secretary, and Occidental to Bareboat Charterer.
14.3 PAYMENTS UPON TERMINATION OF TIME CHARTER.
In the event that this Time Charter shall be terminated for
any of the reasons set forth in Sections 14.1 or 14.2 hereof, Time Charterer
shall pay to Bareboat Charterer all reasonable Operating Costs incurred by
Bareboat Charterer in the termination and cessation of its management and
operation of the Vessel.
SECTION 15. EVENTS OF TIME DEFAULT AND REMEDIES.
15.1 EVENTS OF TIME DEFAULT.
Each of the following shall be an Event of Time Default:
(a) Time Charterer on an aliquot basis, shall fail to pay
any Basic Hire, Supplemental Hire or Operating Hire under this Time Charter and
not remedy such failure within 10 days after receipt of notice thereof from
Bareboat Charterer; or
(b) Time Charterer shall fail, for more than 30 days
after receipt of written notice specifying such failure and demanding that the
same be cured, to perform or comply with any of the provisions of this Time
Charter; provided, however, that if Time Charterer shall have undertaken to cure
such failure and, notwithstanding the reasonable diligence of Time Charterer in
attempting to cure such failure, such failure is not cured within said 30 day
period
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but is curable with future due diligence, there shall be no Event of Time
Default under this Section 15.1(b) as long as Time Charterer is proceeding with
due diligence to cure such failure; or
(c) Time Charterer shall consent to the appointment of a
receiver, trustee or liquidator of itself or of substantially all of its
property, or Time Charterer shall admit in writing its inability to pay its
debts generally as they come due, or shall make a general assignment for the
benefit of creditors; or
(d) Time Charterer shall file a voluntary petition in
bankruptcy or for a reorganization or for an arrangement in a proceeding under
any of the federal bankruptcy laws or other federal or state insolvency laws as
are now or hereafter in effect or an answer admitting the material allegations
of a petition filed against Time Charterer in any such proceeding; or
(e) an order, judgment or decree shall be entered in any
proceeding by any court of competent jurisdiction appointing, without the
consent of Time Charterer, a receiver, trustee or liquidator of Time Charterer
or of substantially all of its property, and any such order, judgment or decree
of appointment shall remain in force undismissed, unstayed or unvacated for a
period of 90 days after the date of entry thereof, or
(f) a petition against Time Charterer in a proceeding
under the federal bankruptcy laws or other federal or state insolvency laws as
now or hereafter in effect shall be filed and shall not be withdrawn or
dismissed within 90 days thereafter, or if, under the provisions of any law
providing for reorganization or winding-up of corporations which may apply to
Time Charterer, any court of competent jurisdiction shall assume jurisdiction,
custody or control of Time Charterer or of substantially all of the property of
Time Charterer and such
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jurisdiction, custody or control shall remain in force unrelinquished, unstayed
or unterminated for a period of 90 days.
15.2 REMEDIES UPON AN EVENT OF TIME DEFAULT.
In the event of an Event of Time Default, this Time Charter
shall terminate and Bareboat Charterer shall be entitled to full and immediate
payment of the amounts set forth in Section 14.3 hereof, plus any reasonable
costs of collection of such amounts.
SECTION 16. EVENTS OF BAREBOAT CHARTERER DEFAULT AND REMEDIES.
16.1 EVENTS OF BAREBOAT CHARTERER DEFAULT.
Each of the following shall be an Event of Bareboat Charterer
Default:
(a) Bareboat Charterer's default in performance of any
material obligation under the Bareboat Charter, this Time Charter, or the ODS
Contract, or the incorrectness, when made, in any material respect, of any
representation made by Bareboat Charterer in the Bareboat Charter, or in this
Time Charter or Bareboat Charterer's failure to remedy the default or
incorrectness by the earlier of: (x) any termination of the Bareboat Charter
resulting from such default or incorrectness; or (y) within 30 days after
receipt of notice thereof from Shipowner or Time Charterer, as the case may be,
provided, however, that no such default or incorrectness shall be deemed to be
an Event of Bareboat Charterer Default if Bareboat Charterer commences
appropriate remedial action within 30 days after receipt of such notice and
prosecutes diligently the same to completion; or
(b) Bareboat Charterer shall consent to the appointment
of a receiver, trustee or liquidator of itself or of substantially all of its
property, or Bareboat Charterer shall admit in
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writing its inability to pay its debts generally as they come due, or shall make
a general assignment for the benefit of creditors;
(c) Bareboat Charterer shall file a voluntary petition in
bankruptcy or for a reorganization or for an arrangement in a proceeding under
any of the federal bankruptcy laws or other federal or state insolvency laws as
are now or hereafter in effect or an answer admitting the material allegations
of a petition filed against Bareboat Charterer in any such proceeding; or
(d) an order, judgment or decree shall be entered in any
proceeding by any court of competent jurisdiction appointing, without the
consent of Bareboat Charterer, a receiver, trustee or liquidator of Bareboat
Charterer or of substantially all of its property, and any such order, judgment
or decree of appointment shall remain in force undismissed, unstayed or
unvacated for a period of 90 days after the date of entry thereof, or
(e) a petition against Bareboat Charterer in a proceeding
under the federal bankruptcy laws or other federal or state insolvency laws as
are now or hereafter in effect shall be filed and shall not be withdrawn or
dismissed within 90 days thereafter, or if, under the provisions of any law
providing for reorganization or winding-up of corporations which may apply to
Bareboat Charterer, any court of competent jurisdiction shall assume
jurisdiction, custody or control of Bareboat Charterer or of substantially all
of the property of any of them and such jurisdiction, custody or control shall
remain in force unrelinquished, unstayed or unterminated for a period of 90
days; or
(f) the sale or transfer by Bareboat Charterer of all or
substantially all of its assets or the transfer of ownership of Bareboat
Charterer to any other corporation or person, or the consolidation or merger of
Bareboat Charterer or the Manager into any other corporation or person, except
for sales, transfers, consolidations or mergers either directly or indirectly
with
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Affiliates, unless such sale, transfer, consolidation or merger would, in the
reasonable judgement of Time Charterer, adversely affect the Bareboat
Charterer's obligations under the Bareboat Charter, hereunder or under the ODS
Contract or the Manager's performance under the Management Agreement; or
(g) any amendment of Bareboat Charterer's articles of
incorporation or by-laws, if any such amendment would have a material effect on
Bareboat Charterer's obligations under the Bareboat Charter, hereunder or under
the ODS Contract or the Manager's performance under the Management Agreement; or
(h) (1) Bareboat Charterer's receipt of notice from Time
Charterer alleging in detail that Bareboat Charterer's or the Manager's
management or operating performance (including general administration) is below
commercially acceptable standards, and (2) Bareboat Charterer's and the
Manager's failure to remedy such alleged substandard performance, to Time
Charterer's reasonable satisfaction, within 90 days after receipt of Time
Charterer's notice; or
(i) Bareboat Charterer's failure to remain, or the
occurrence of any event which will cause Bareboat Charterer to no longer remain
a Citizen of the United States or a United States person within the meaning of
Section 7701 of the Code; or
(j) the failure of Bareboat Charterer to maintain, or to
cause to be maintained, insurance in the amounts and forms as and when required
to be maintained by Bareboat Charterer under Article 8 of the Bareboat Charter;
(k) an event of default by Bareboat Charterer shall have
occurred and be continuing under the ODS Contract.
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(l) any Event of Bareboat Charterer Default under the
other time charter between an Affiliate of Bareboat Charterer and Time Charterer
with respect to the Other Vessel; or
(m) any material change in the financial condition or
management structure of Bareboat Charterer when such material change would, in
the reasonable judgement of Time Charterer, adversely affect the Bareboat
Charterer's obligations hereunder.
16.2 REMEDIES UPON AN EVENT OF BAREBOAT CHARTERER DEFAULT.
Upon the occurrence of an Event of Bareboat Charterer Default
under Section 16.1 hereof, Time Charterer may, at its option, cause such default
to be cured at its own cost, without prejudice, however, to any other rights or
remedies Time Charterer may have.
SECTION 17. GENERAL.
17.1 ICE.
Time Charterer shall not send the Vessel to ice-bound waters
without Bareboat Charterer's consent, but such consent shall not be unreasonably
withheld.
17.2 SAFE BERTH.
The cargo or cargoes shall be laden or discharged by day and
by night in any dock or at any wharf or place or alongside lighters or ocean
going vessels that Time Charterer or its agents may direct where the Vessel can
proceed thereto, lie at, and depart therefrom, always safely afloat. Any
lighterage shall be at the risk and expense of Time Charterer.
17.3 LIMITATIONS.
Bareboat Charterer shall have the benefit of all limitations
of, and exemptions from, liability accorded to the owner or disponent or
chartered owner of vessels whether
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construed to be a private carrier, contract carrier or common carrier, by any
statute or rule of law for the time being in force. Nothing in this Time Charter
shall operate to limit or deprive Bareboat Charterer of any statutory exemption
from or limitation of liability on the theory of personal contract or otherwise.
17.4 GOVERNMENT DIRECTION AND BLOCKADE.
(a) The Vessel shall have liberty to comply with any
directions or recommendations as to departure, arrival, routes, ports of call,
stoppages, destinations, zones, waters, delivery or in any other ways whatsoever
(including any direction or recommendations not to go to the port of destination
or to delay proceeding thereto or to proceed to some other port) given by the
government of the United States or any other governmental or local authority
including any de facto government or local authority or by any belligerent or by
any State or organized body engaged in civil war, hostilities or warlike
operations or by any person or body acting or purporting to act as or with the
authority of any such government, authority, State or organized body or by any
committee or person having under the terms of the war risk insurance on the
Vessel the right to give any such directions or recommendations. If by reason of
or in compliance with any such direction or recommendation, anything is done or
is not done such shall not be deemed a deviation or a violation of this Time
Charter.
(b) (1) If any port of loading or of discharge to which
the Vessel may properly be ordered pursuant to the terms of this Time Charter or
the bills of lading be blockaded, or
(2) If owing to any war, hostilities, warlike
operations, civil war, civil commotions, revolutions, or the operation of
international law (i) entry to any such port of loading or of discharge or the
loading or discharge of cargo at any such port shall be considered
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by the Master or Bareboat Charterer in his or its discretion dangerous or
prohibited or (ii) it shall be considered by the Master or Bareboat Charterer in
his or its discretion dangerous or impossible for the Vessel to reach any such
port of loading or of discharge, Time Charterer shall have the right to order
the cargo or such part of it as may be affected to be loaded or discharged at
any other port of loading or of discharge within the range of loading or
discharge ports respectively established under the provisions of this Time
Charter (provided such other port is not blockaded or that entry thereto or
loading or discharge of cargo thereat is not in the Master's or Bareboat
Charterer's discretion dangerous or prohibited). In the event of the cargo being
loaded or discharged at any such other port within the respective range of
loading or discharge ports established under the provisions of this Time
Charter, this Time Charter shall be read in respect of freight and all other
conditions whatsoever as if the voyage performed were that originally
designated. However, if the Vessel discharges the cargo at a port outside the
range of discharge ports established under the provisions of this Time Charter,
freight shall be paid as for the voyage originally designated and all extra
expenses involved in reaching the actual port of discharge and/or discharging
the cargo thereat shall be paid by Time Charterer or cargo owners. In this
latter event, Bareboat Charterer shall have a lien on the cargo for all such
extra expenses.
17.5 NO FRUSTRATION.
Notwithstanding anything in this Time Charter to the contrary,
no circumstances shall be deemed sufficient (a) to frustrate this Time Charter,
or (b), except as provided in Sections 14 and 16 hereof, to terminate this Time
Charter, or (c) except as specifically provided herein, to reduce the amount of
hire payable hereunder during the Charter Period.
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17.6 SALVAGE MONEY.
All salvage money earned by the Vessel shall be paid to Time
Charterer after deducting Master's, Officer's and crew's share, legal expenses,
repairs of damage (if any), and any other extraordinary loss or expense
sustained as a result of the service, which shall always be a first charge on
such money.
17.7 NO DEMISE.
This Time Charter does not, and nothing herein shall be
construed to, effect a demise of the Vessel to Time Charterer or vest Time
Charterer with possession of the Vessel or any power over the physical
condition, ownership or navigation thereof.
17.8 TRANSFER AND SUBCHARTERS.
(1) By Bareboat Charterer. Except for the assignment to a
successor bareboat charterer under Sections 14.2 and 16.2 hereof, Bareboat
Charterer shall never voluntarily transfer, or permit any transfer of, or create
a security interest in, or permit the creation of a security interest in the
Bareboat Charter, this Time Charter, or any of its rights or obligations under
either of them, without the prior written consent of Time Charterer.
(2) By Time Charterer. Time Charterer has the right to
transfer this Time Charter to any Affiliate or to employ the Vessel under
subcharter, contract of affreightment or any other agreement or arrangement
relating to the use or employment of the Vessel, to any person, without Bareboat
Charterer's consent, but subject to prior receipt of all necessary governmental
approvals, and to Time Charterer's continuing responsibility for full
performance of all of its obligations under this Time Charter.
(3) Succession. Subject to the foregoing, this Time
Charter shall bind and benefit the successors and assigns of the parties hereto.
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17.9 GOVERNING LAW.
ALL QUESTIONS ARISING UNDER THIS TIME CHARTER SHALL IN ALL
RESPECTS BE GOVERNED BY, CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE GENERAL
MARITIME LAWS OF THE UNITED STATES OF AMERICA AND, TO THE EXTENT SUCH LAWS DO
NOT APPLY, THE LAWS OF THE STATE OF NEW YORK, INCLUDING SECTION 5-1401 OF THE
GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK. ANY CLAIM OR DISPUTE ARISING
UNDER THIS TIME CHARTER SHALL, PROVIDED THAT THE COURT HAS SUBJECT MATTER
JURISDICTION OVER SUCH CLAIM OR DISPUTE, BE DECIDED IN THE UNITED STATES
DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK, TO WHICH JURISDICTION THE
BAREBOAT CHARTERER AND TIME CHARTERER HEREBY SUBMIT FOR THE PURPOSES OF ANY SUCH
PROCEEDING. IN THE EVENT THAT THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN
DISTRICT OF NEW YORK LACKS SUBJECT MATTER JURISDICTION OVER ANY CLAIM OR DISPUTE
ARISING UNDER THIS TIME CHARTER, BAREBOAT CHARTERER AND TIME CHARTERER HEREBY
SUBMIT THEMSELVES TO THE JURISDICTION OF THE SUPREME COURT FOR THE COUNTY OF NEW
YORK FOR THE PURPOSES OF ANY SUCH PROCEEDING AND WAIVE ANY CLAIM OF FORUM NON
CONVENIENS RELATING TO SUCH CHOICE OF COURT.
17.10 NOTICE.
All notices and other communications hereunder shall be
effective when received, except that all notices and other communications sent
by prepaid United States certified mail, return receipt requested, shall become
effective on the third Business Day after
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mailing, addressed (i) if to Bareboat Charterer, c/o Marine Transport
Corporation, 1200 Harbor Boulevard, Weehawken, New Jersey 07087, Attention:
General Counsel, or (ii) if to Time Charterer, Stolt Marine Tankers LLC, c/o
Marine Transport Corporation, 1200 Harbor Boulevard, Weehawken, New Jersey
07087, Attention: General Counsel, or (iii) if to Occidental, 10889 Wilshire
Boulevard, Los Angeles, California 90021, Attention: Vice President & Secretary,
or (iv) to any of the foregoing, at such other address as any such person may
from time to time designate in writing to such other persons.
17.11 CHANGES.
No agreement amending, supplementing or partially or wholly
terminating this Time Charter, or Schedule X hereto, or waiving or discharging
any provisions hereof, shall be effective unless such agreement is executed in
writing by the party against whom enforcement of such agreement is sought. No
consent of the Secretary shall be required for any agreement amending,
supplementing, or partially or wholly terminating this Time Charter or Schedule
X hereto so long as payment of the principal and interest on the Obligations and
the Guarantee Fee has been made as required.
17.12 RECORDS.
Bareboat Charterer and any other person operating the Vessel
as provided in Section 4.2(e), shall maintain complete and accurate books,
accounts and other records relating to Bareboat Charterer's performance of this
Time Charter, in accordance with generally accepted accounting practices and
principles and as satisfactory to the Board, and all such records may, upon
prior notice, be examined and audited by authorized representatives of Time
Charterer at any time during the usual business hours of Bareboat Charterer and
Manager. The books, accounts and other records required to be maintained by this
Section 17.12 shall be kept
42
<PAGE> 344
separate and apart from the books, accounts and records relating to any other
business of Bareboat Charterer and any other person operating the Vessel
pursuant to Section 4.2(e).
17.13 OPERATIONAL REVIEW.
Time Charterer may, upon prior notice, review with Bareboat
Charterer and Manager, at any time during Bareboat Charterer's usual business
hours, any aspects of the Vessel's operation, including, without limitation,
operating costs, operational procedures and practices, the Vessel's voyage and
port performance, and maintenance and repair.
17.14 PROCEDURES.
Bareboat Charterer and Time Charterer shall jointly develop an
Operating Manual which shall include written operating procedures. Said
procedures shall describe those areas of administration and operation not
specifically detailed herein and which are related to Bareboat Charterer's
management of the Vessel and to the conduct of business between Bareboat
Charterer and Time Charterer.
17.15 BAREBOAT CHARTERER'S CONTRACTS.
Time Charterer and the Vessel shall have the advantages of any
existing or future contracts of Bareboat Charterer, its Affiliates or its Parent
Corporation for purchases of stores, supplies, equipment or other materials, or
of repairs or other services.
17.16 HEADINGS.
The table of contents preceding this Time Charter and the
headings to the various sections hereof have been inserted for convenient
reference only and shall not in any way limit or otherwise affect any of the
terms or provisions hereof.
43
<PAGE> 345
17.17 COUNTERPARTS.
This Time Charter may be executed in several counterparts,
each of which shall be an original, but all of which together shall constitute
one instrument.
17.18 SEPARABILITY.
If any term or provision of this Time Charter or application
thereof to any person or circumstances shall to any extent be invalid or
unenforceable, the remainder of this Time Charter, or the application of such
term or provision to persons or circumstances other than those as to which it is
invalid or unenforceable, shall not be affected and each term and provision of
this Time Charter shall be valid and shall be enforceable to the extent
permitted by law.
17.19 U.S. GOVERNMENT AIDS.
Bareboat Charterer and Time Charterer mutually acknowledge
that the Vessel and its operation are, or may be, subject to certain
requirements of the U.S. Government contained in the Title V Contract, the ODS
Contract and the documents relating to the financing of the Vessel under Title
XI of the Act. Unless waived by the U.S. Government (and Bareboat Charterer
shall not request any waiver without the prior written consent of Time
Charterer), Bareboat Charterer and Time Charterer agree to comply with any such
requirements notwithstanding anything to the contrary in this Time Charter. Time
Charterer acknowledges that since the Bareboat Charterer is receiving subsidy
under the ODS Contract, the Bareboat Charterer may be required by statute to
offer the Vessel for employment by the Military Sealift Command. Bareboat
Charterer agrees to coordinate each such offer with the Time Charterer before
the offer is made. Bareboat Charterer further agrees that proceeds received as a
consequence of any employment of the Vessel by the Military Sealift Command
shall be paid
44
<PAGE> 346
over to the Shipowner in accordance with Article 12(f) of the Bareboat Charter
and Time Charterer agrees that payment of Operating Hire shall continue under
the Time Charter notwithstanding any such employment of the Vessel.
17.20 SUBORDINATION.
This Time Charter is subject and subordinate to the rights of
the Shipowner under the Bareboat Charter and the rights of the Secretary under
the Mortgage and the Security Agreement and the rights of Occidental under the
Second Mortgage.
17.21 ESCAPE OR DISCHARGE OF OIL OR HAZARDOUS SUBSTANCE.
When an escape or discharge of Oil occurs from the Vessel and
causes or threatens to cause Damages, or when there is a substantial threat of a
discharge of Oil or discharge of Oil (i.e., a grave and imminent danger of the
escape or discharge of Oil which, if it occurred, would create a serious danger
of Damages, whether or not an escape or discharge in fact subsequently occurs),
or when any action or occurrence causes or threatens to cause a Release, or a
Hazardous Substance, then Time Charterer may, at its option, upon notice to
Bareboat Charterer or Master, undertake such measures as are reasonably
necessary to prevent or minimize such Damages or Release, to remove the threat
of such Damages or Release, unless Bareboat Charterer promptly undertakes the
same. Time Charterer shall keep Bareboat Charterer advised of the nature and
result of any such measures taken by it and, if time permits, the nature of the
measures intended to be taken by it. Any of the aforementioned measures taken by
Time Charterer shall be deemed taken on Bareboat Charterer's authority and as
Bareboat Charterer's agent, and shall be at Bareboat Charterer's expense except
to the extent that:
45
<PAGE> 347
(1) any such Damages or Release or threat of such Damages
or Release was caused or contributed to by Time Charterer, or
(2) Bareboat Charterer is exempt from liability under
applicable law; or
(3) expenses for such measures, when added to the
reasonable Cost of Bareboat Charterer's own remedial measures, exceed maximum
coverage under Bareboat Charterer's insurances.
PROVIDED ALWAYS that if Bareboat Charterer in its absolute
discretion considers said measures should be discontinued, Bareboat Charterer
shall so notify Time Charterer and thereafter Time Charterer shall have no right
to continue said measures under the provisions of this Clause and all further
liability to Time Charterer under this Clause shall thereupon cease.
The above provisions are not in derogation of such other
rights as Time Charterer or Bareboat Charterer may have under this Time Charter
or Bareboat Charterer may otherwise have or acquire by law or any International
Convention.
17.22 SECTION REFERENCES.
The terms "hereof", "hereunder", and "herein", as well as any
references to Section numbers in this Time Charter which do not expressly refer
to another agreement, refer to such sections of this Time Charter.
46
<PAGE> 348
IN WITNESS WHEREOF, the parties have caused this Time Charter
to be executed and delivered as of the day and year first above written.
JULIUS ODS CORPORATION,
Bareboat Charterer
_____________________ By: ____________________________
Name: ____________________________
Title: ____________________________
STOLT MARINE TANKERS LLC,
Time Charterer
_____________________ By: ____________________________
Name: ____________________________
Title: ____________________________
THE ABOVE CHARTER AND CERTAIN HIRE DERIVED THEREFROM ARE SUBJECT TO A SECURITY
INTEREST IN FAVOR OF THE UNITED STATES OF AMERICA, REPRESENTED BY THE SECRETARY
OF TRANSPORTATION, ACTING BY AND THROUGH THE MARITIME ADMINISTRATOR (THE
"SECRETARY") IN ACCORDANCE WITH THE PROVISIONS OF A SECURITY AGREEMENT BETWEEN
THE SHIPOWNER AND THE SECRETARY A SECURED PARTY.
<PAGE> 349
EXHIBIT I
TO
TIME CHARTER
POLLUTION PROVISIONS
A. Remedial Measures. Whenever there is an escape or discharge from the
Vessel of Oil, or a substantial threat of discharge of Oil, or any action or
occurrence that causes or threatens to cause a Release of a Hazardous Substance,
which does or threatens to cause or contribute to any violation of the laws,
regulations, rules or orders referred to in Section 8 of the Time Charter or
which causes Damages: Bareboat Charterer shall (a) give Time Charterer immediate
notice thereof by telegram, cable or telephone at Stolt MarineTankers LLC, c/o
Marine Transport Corporation, 1200 Harbor Boulevard, Weehawken, New Jersey
07087, Attention: General Counsel or at such other address, attention and
telephone number as Time Charterer may have designated by at least fifteen days'
prior notice to Bareboat Charterer and (b) promptly take such measures as are
necessary to prevent, contain and clean up the escape or discharge, and to
remedy any Damages resulting therefrom. Time Charterer shall have the right, at
its option, to participate in such measures taken by Bareboat Charterer and to
take any such measures which it deems necessary or expedient to those ends, all
in behalf and for the account of Bareboat Charterer. Time Charterer shall keep
Bareboat Charterer and the Master advised, as currently as practicable, of the
nature and results of any such measures taken, or intended to be taken, by Time
Charterer. Bareboat Charterer shall reimburse Time Charterer for all costs
incurred by Time Charterer on account of its participating in and taking any
such measures, except when and to the extent that the escape or discharge was
caused or contributed to by Time Charterer, or Bareboat Charterer is exempt from
liability for the escape or discharge under the applicable law, whether national
or international; provided: (1) that such reimbursement, when added to the
reasonable costs of Bareboat Charterer's own remedial measures, shall not exceed
the maximum coverage thereof afforded by Bareboat Charterer's insurances; and
(2) that, if Bareboat Charterer, in its absolute discretion, believes that such
measures should be discontinued, Bareboat Charterer may so notify Time
Charterer, and thereafter Time Charterer shall have no right to continue such
measures under this clause, and all additional liability to Time Charterer under
this clause shall thereupon cease. The provisions of this clause are not in
derogation of any other rights Bareboat Charterer or Time Charterer may have
under this Time Charter, or may otherwise have or acquire by law or any
international convention.
B. At Time Charterer's request, Bareboat Charterer shall participate in
Time Charterer's program covering oil pollution avoidance. Bareboat Charterer
shall comply with all oil pollution avoidance instruction provided by Time
Charterer to Bareboat Charterer in writing, together with any amendments which
may be issued in writing or by radio to cover special cases or changes in
international or national regulations or laws. If applicable, the Master shall
contain on board the Vessel all oily residues from consolidated tank washings,
<PAGE> 350
dirty ballast, etc. such residues shall be contained in one compartment, after
the separation of all possible water has taken place by safe methods employing
the use of settlement and decanting or mechanic separation to approved and
recognized standards. The oil residue shall be pumped ashore at the loading or
discharging terminal, either as segregated oil, dirty ballast, commingled with
cargo, or as is possible for Time Charterer to arrange with each cargo. If Time
Charterer requires that demulsifiers be used for the separation of oil and
water, the cost of such demulsifiers shall be for Time Charterer's account. The
Vessel shall take all necessary precautions while loading and discharging cargo
or bunkers, as well as ballast, to ensure that no oil will escape overboard.
Nothing in Time Charterer's instructions shall be construed as permission to
pollute the sea by the discharge of oil or oily water, etc. Bareboat Charterer
shall instruct the Master that, upon arrival at the loading port, the Master
shall furnish Time Charterer with a report covering oil pollution avoidance,
together with details of the quantity of oil residue on board.
C. Bareboat Charterer or its Parent Corporation shall remain a member
of ITOPF for duration of this Time Charter.
<PAGE> 1
SUMMARY PLAN DESCRIPTION
MARINE TRANSPORT LINES, INC. SALARIED EMPLOYEES
RETIREMENT INCOME PLAN
[LOGO]
<PAGE> 2
SUMMARY PLAN DESCRIPTION
MARINE TRANSPORT LINES, INC. SALARIED EMPLOYEES
RETIREMENT INCOME PLAN
MARINE TRANSPORT LINES, INC. SALARIED EMPLOYEES RETIREMENT INCOME PLAN
<TABLE>
<S> <C>
I. BASIC PLAN INFORMATION....................................................................... 1
A. Account............................................................................. 2
B. Employer............................................................................ 2
C. Participant......................................................................... 2
D. Plan Administrator.................................................................. 2
E. Plan Number......................................................................... 2
F. Plan Qualification.................................................................. 2
G. Plan Year........................................................................... 2
H. Service of Process.................................................................. 2
I. Trust Fund.......................................................................... 2
J. Trustee............................................................................. 3
II. PARTICIPATION............................................................................... 3
A. Eligibility Requirements............................................................ 3
III. CONTRIBUTIONS.............................................................................. 3
A. Employee Pretax Contributions....................................................... 4
B. Employee After-Tax Contributions.................................................... 5
C. Employer Matching Contributions..................................................... 5
D. Employer Contributions.............................................................. 5
E. Limit on Contributions.............................................................. 5
F. Rollover Contributions.............................................................. 5
IV. INVESTMENTS................................................................................. 6
A. Investments......................................................................... 7
B. Statement of Account................................................................ 8
V. VESTING...................................................................................... 9
VII. HARDSHIP WITHDRAWALS....................................................................... 10
VIII. IN-SERVICE WITHDRAWALS.................................................................... 11
</TABLE>
<PAGE> 3
<TABLE>
<S> <C>
A. Withdrawals After Age 59-1/2........................................................ 11
IX. TOTAL DISTRIBUTION OF BENEFITS.............................................................. 11
A. Benefit on Termination of Employment................................................ 12
B. Death Benefit....................................................................... 12
C. Retirement Benefit.................................................................. 12
D. Payment and Form of Benefits........................................................ 12
X. MISCELLANEOUS INFORMATION.................................................................... 14
A. Benefits Not Insured by PBGC........................................................ 15
B. Nontransferable Account............................................................. 15
C. Plan Amendment...................................................................... 15
D. Plan Termination.................................................................... 15
E. Interpretation of Plan.............................................................. 15
XI. INTERNAL REVENUE SERVICE TEST............................................................... 15
A. Non-Discrimination Test............................................................. 16
B. Top Heavy Test...................................................................... 16
XII. PARTICIPANT RIGHTS......................................................................... 16
A. Claims.............................................................................. 17
B. Statement of ERISA Rights........................................................... 17
</TABLE>
<PAGE> 4
SUMMARY PLAN DESCRIPTION
MARINE TRANSPORT LINES, INC. SALARIED EMPLOYEES RETIREMENT INCOME PLAN
The Marine Transport Lines, Inc. Salaried Employees Retirement Income Plan (the
'Plan') of Marine Transport Lines, Inc. (the 'Employer') has been amended as of
October 1, 1994 (the 'Effective Date'). This Plan is intended to be a qualified
retirement plan under the Internal Revenue Code.
The purpose of the Plan is to enable eligible Employees to save for retirement.
It may also provide certain benefits in the event of death, disability, or other
termination of employment. The Plan is for the exclusive benefit of eligible
Employees and their beneficiaries.
This booklet is called a Summary Plan Description (SPD) and it contains a
summary in understandable language of your rights and benefits under the Plan.
If you have difficulty understanding any part of this SPD, you should contact
the Plan Administrator identified on page two during normal business hours for
assistance.
This SPD is a brief description of the Plan and Trust Agreement (Plan Document).
It is not meant to interpret, extend or change the Plan Document in any way. A
copy of the Plan Document is on file with the Plan Administrator and may be read
by any Employee at any reasonable time. The Plan Document shall govern in the
event of any discrepancy between this SPD and the actual provisions of the Plan.
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Marine Transport Lines, Inc. Salaried Employees Retirement Income Plan 1
<PAGE> 5
I. BASIC PLAN INFORMATION
A. ACCOUNT
This is an Account established by the Trustee for the purpose of recording
contributions made on your behalf and any income, expenses, gains or losses
thereon. It may also be referred to as 'Account' balance.
B. EMPLOYER
The name, address and business telephone number of the Employer is:
Marine Transport Lines, Inc.
1200 Harbor Blvd.
Weehawken, NJ 07087-0901
(201) 330-0200
The Employer's Identification Number is 51-0115513.
C. PARTICIPANT
A participant is an eligible Employee who has satisfied the eligibility and
entry date requirements and is eligible to participate in the Plan.
D. PLAN ADMINISTRATOR
The Plan Administrator is responsible for the administration of the Plan. The
Plan Administrator's duties are specifically identified in the Plan Document.
The name, address and business telephone number of the Plan Administrator is:
Marine Transport Lines, Inc.
1200 Harbor Blvd.
Weehawken, NJ 07087-0901
(201) 330-0200
E. PLAN NUMBER
The Plan number is 001.
F. PLAN QUALIFICATION
The Employer intends to request an individual Determination Letter from the
Internal Revenue Service for the qualification of the Plan.
G. PLAN YEAR
The Plan Year is the twelve-month period ending on the last day of December.
H. SERVICE OF PROCESS
The Plan's agent for service of legal process is the Plan Administrator.
I. TRUST FUND
The Plan is administered under a trust fund arrangement. There is a written Plan
and Trust Agreement entered into between the Trustee and the Employer.
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Marine Transport Lines, Inc. Salaried Employees Retirement Income Plan 2
<PAGE> 6
J. TRUSTEE
The trustee is responsible for holding the Plan assets. The trustee's duties are
specifically identified in the Plan Document and relate only to the assets in
its possession. The name and address of the Plan's Trustee is:
Fidelity Management Trust Company
82 Devonshire Street, L10A
Boston, MA 02109.
II. PARTICIPATION
A. ELIGIBILITY REQUIREMENTS
You are eligible to participate in the Plan if you are an Employee of the
Employer. You will become eligible to participate in the Plan on the first day
of the following month. However, if you are employed as of October 1, 1994 then
you will become eligible to participate on that date.
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Marine Transport Lines, Inc. Salaried Employees Retirement Income Plan 3
<PAGE> 7
III. CONTRIBUTIONS
For purposes of computing contributions under the Plan, as listed below, your
Employer must first define 'compensation'. Eligible compensation generally means
the taxable compensation for a Plan Year reportable by your Employer on your IRS
Form W-2 for a Plan Year. Your compensation will also include any Employee
pretax contributions you made under the Plan and any salary reductions you made
under your Employer's cafeteria plan, 401(k) plan or other similar plan, if any.
Compensation does not include any taxable fringe benefits or taxable Employee
moving and other expense reimbursements reportable on your annual IRS Form W-2.
Compensation for your first year of eligible Plan participation will be based
upon compensation paid for the entire Plan Year. Tax laws limit the amount of
compensation that may be taken into account each Plan Year and the maximum
amount for the 1999 Plan Year is $160,000 (this amount is subject to adjustment
each year).
A. EMPLOYEE PRETAX CONTRIBUTIONS
(1). REGULAR CONTRIBUTIONS
You may elect to contribute a percentage of your eligible compensation
into the Plan after you satisfy the Plan's eligibility requirements.
The percentage of your compensation you elect will be withheld from
each payroll on a pretax basis and contributed to the Plan on your
behalf. You may defer, in whole percentages, up to an annual maximum of
the lesser of 15% of eligible compensation or $10,000 in a calendar
year (in 1999 and thereafter as adjusted by the Secretary of the
Treasury). Your Employee pretax contributions belong to you and cannot
be forfeited for any reason. However, there are special Internal
Revenue Code rules which must be satisfied and may require that the
amount of your contributions be reduced. If a reduction in your
contribution is necessary, you will be notified by the Plan
Administrator. You may increase or decrease the amount you contribute
as of the first day of each month. You may completely suspend your
contributions with sufficient notice to the Plan Administrator.
Thereafter, if you want to resume your Employee pretax contributions as
of January 1 and July 1, you must complete a new election form.
(2). BONUS CONTRIBUTIONS
You may make Employee pretax contributions on any Employer-paid bonus.
You may defer a whole percentage from 1 to 100% of any bonus designated
by the Employer into the Plan on a pretax basis by completing a special
election form. The total amount of your bonus, catch up and Employee
pretax contributions for the Plan Year may not exceed 15% of your
eligible compensation or other applicable Internal Revenue Code limits.
The Employer may refuse to accept any or all of your bonus contribution
if it will have an adverse effect on the Plan's Non-Discrimination
Test.
(3). CATCH UP CONTRIBUTIONS
You may make 'catch up' Employee pretax contributions in December. You
may defer a whole percentage between 1 to 100% of your eligible
compensation in December into the Plan on a pretax basis by completing
a special election form. The total amount of your catch up, bonus, and
Employee pretax contributions for the Plan Year may not exceed 15% of
your eligible compensation or other applicable Internal Revenue Code
limits. The Employer may refuse to accept any or all of your catch up
contribution if it will have an adverse effect on the Plan's
Non-Discrimination Test.
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Marine Transport Lines, Inc. Salaried Employees Retirement Income Plan 4
<PAGE> 8
B. EMPLOYEE AFTER-TAX CONTRIBUTIONS
After you satisfy the Plan's eligibility requirements, you may elect to
contribute a percentage of your compensation into the Plan on an after-tax
basis. You may contribute, in whole percentages, up to an annual maximum of 10%
of eligible compensation. However, there are special Internal Revenue Code rules
which must be satisfied and the maximum may be a lower percentage. If a
reduction in your contribution is necessary, you will be notified by the Plan
Administrator. The Employer may refuse to accept your after-tax contributions if
they will have an adverse effect on the Plan's Non-Discrimination Test. Your
after-tax contributions belong to you and cannot be forfeited for any reason.
C. EMPLOYER MATCHING CONTRIBUTIONS
Each Plan Year the Employer will make matching contributions in an amount equal
to 100% of your employee pretax contributions but subject to a maximum of 3% of
your eligible compensation contributed to the Plan. You become eligible for the
matching contribution only if you make a pretax Employee contribution.
D. EMPLOYER CONTRIBUTIONS
After you satisfy the Plan's eligibility requirements, the Employer will make
profit sharing contributions in an amount equal to 3%. Additionally, the
Employer may make annual discretionary profit sharing contributions in an amount
to be determined at Plan Year-end by the Board of Directors Profit sharing
contributions will be allocated in the ratio that your eligible compensation
bears to the total compensation paid to all eligible participants for the Plan
Year. You must be employed as of the last day of the Plan Year to be eligible
for any profit sharing contributions that may be made for that Plan Year.
Employer contributions must be made within prescribed legal time limits.
E. LIMIT ON CONTRIBUTIONS
Federal law requires that amounts contributed by you and on your behalf by your
Employer for a given limitation year generally may not exceed the lesser of:
- $30,000 (or such amount as may be prescribed by the Secretary
of the Treasury); or
- 25% of your annual compensation, excluding any salary
reductions to an employer sponsored cafeteria plan, a 401(k)
plan, a simplified employee pension or a tax-deferred annuity.
Contributions under this Plan may not exceed the above limits. If this does
occur then excess contributions in your Account may be forfeited or refunded to
you. Income tax consequences may apply to you on any refund. You will be
notified by the Plan Administrator if you will be subject to reduced
contributions on your behalf.
The limitation year for purposes of applying the above limits is the twelve
month period ending December 31. Rollover contributions are not included in the
limits on Employee and Employer contributions.
F. ROLLOVER CONTRIBUTIONS
You can rollover part or all of an 'eligible rollover distribution' you received
from a prior employer's qualified plan, if allowed by the Plan Administrator.
(The Plan Administrator reserves the right to refuse to accept any rollover
contribution.) Alternatively, you may rollover a distribution you received from
a rollover Individual Retirement Account (IRA) which consisted solely of an
eligible rollover distribution and earnings thereon. If the rollover to the Plan
is not a direct rollover (i.e. you received a cash distribution from your prior
employer's plan or from your rollover IRA), then it must be received by the
Trustee within 60 DAYS of your receipt of the distribution.
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Marine Transport Lines, Inc. Salaried Employees Retirement Income Plan 5
<PAGE> 9
You may make a rollover contribution to the Plan before becoming a Participant.
However, you will not become a Participant entitled to make Employee pretax
contributions and share in Employer contributions until you have met the Plan's
eligibility and entry date requirements. Your rollover contribution Account will
be subject to the terms of this Plan and will always be fully vested and
nonforfeitable.
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Marine Transport Lines, Inc. Salaried Employees Retirement Income Plan 6
<PAGE> 10
IV. INVESTMENTS
A. INVESTMENTS
The Employee Retirement Income Security Act of 1974 (ERISA) imposes certain
duties on the parties who are responsible for the operation of the plan. These
parties, called fiduciaries, have a duty to invest plan assets in a prudent
manner. However, an exception exists for plans which comply with ERISA Section
404(c) and permit a participant to exercise control over the assets in his/her
Account and choose from a broad range of investment alternatives. This Plan is
intended to be a Section 404(c) plan. This means that you and not the Plan
fiduciaries are responsible for the investment decisions relating to the assets
in your individual Account under the Plan.
You will have the opportunity to direct the investments of your Account among
the following Fidelity Investments Funds (the Fidelity Fund Number assigned to
each fund is identified in parentheses):
1. Fidelity Retirement Government Money Market Portfolio (0631)
Objective: Seeks a high current income, preservation of capital,
and liquidity from money market instruments issued by
the U.S. Government or its agencies.
2. Managed Income Portfolio (0632)
Objective: Seeks the preservation of capital and high current
income from GIC's, BIC's and money market
instruments.
3. Fidelity Investment Grade Bond Fund (0026)
Objective: Seeks a high current income consistent with
reasonable investment risk. The Fund also seeks
capital appreciation where appropriate.
4 Fidelity Growth & Income Portfolio (0027)
Objective: Seeks high total return through a combination of
current income and capital appreciation. Invests
mainly in equity securities of companies that pay
current dividends and offer potential growth of
earnings.
5. Fidelity Growth Company Fund (0025)
Objective: Seeks long-term capital appreciation through
investments in companies with above-average growth
potential.
6. Fidelity Magellan Fund (0021)
Objective: Seeks growth of capital through investments in common
stocks or securities convertible into common stocks.
7. Fidelity Global Bond Fund (0451)
Objective: Seeks high total return by investing principally in
debt securities issued anywhere in the world.
8. Fidelity Overseas Fund (0094)
Objective: Long-term capital appreciation; invests mainly in
foreign securities of issuers whose principal
activities are outside of the U.S.
9. Fidelity Puritan Fund (0004)
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Marine Transport Lines, Inc. Salaried Employees Retirement Income Plan 7
<PAGE> 11
Objective: High income consistent with preservation of capital;
invests in a broadly diversified portfolio of
high-yeilding common stocks, preferred stocks, and
bonds of any quality.
10. Fidelity Contrafund (0022)
Objective: Capital appreciation; a broad -based stock fund that
seeks out undervalued or out-of-favor companies both
in the U.S. and abroad.
11. Fidelity Low-Priced Stock (0316)
Objective: Capital appreciation; invests mainly in a portfolio
of low-priced stocks ($25 or less at time of
purchase) that may be undervalued,overlooked or
out-of-favor.
12. Spartan U.S. Equity Index Portfolio (0650)
Objective: Seeks investment results that correspond to the total
return performance of the Standard and Poor's 500
Index by duplicating the investment composition.
You may obtain a prospectus or financial report for each of the above mutual
funds by calling Fidelity at 1-800-544-8888. You may redirect the investment of
your future contributions or exchange your existing Account balance among the
above Fidelity mutual funds by calling 1-800-835-5097 on any business day
between 8:30 AM (ET) and 8:00 PM (ET). Exchanges of your existing Account
balance may only be made . You may call this same number 24 hours per day, seven
days per week to check Account balances, prices or yields. All telephone calls
will be recorded. You have the right to vote any mutual funds proxies based on
the number of shares you own.
Exchanges requested before 4:00 PM (ET) will be processed on that same business
day based on the closing price of the mutual fund. Exchanges requested after
4:00 PM (ET) will be processed based on the next business day's closing price of
the mutual fund. The minimum exchange is the lesser of $250 or 100% of your
Account balance in the mutual fund. If your exchange is less than $250 then it
may only be exchanged into one mutual fund. A written confirmation of your
exchange will be mailed to you within seven business days. Fidelity reserves the
right to change, restrict, or terminate participant exchange procedures to
protect mutual fund shareholders.
Exchanges from the Managed Income Portfolio* to certain bond or money market
funds (considered "competing funds"), must first be exchanged to an option that
is "non-competing", such as an equity mutual fund. After 90-days, you can then
exchange to a "competing fund". Please contact your Plan Administrator or a
Fidelity Participant Services Group representative at 1-800-835-5097 for more
information.
* The Managed Income Portfolio is not a mutual fund, but it is a commingled pool
of the Fidelity Group Trust for Employee Benefit Plan. It is managed by Fidelity
Management Trust Company.
B. STATEMENT OF ACCOUNT
Your Account will be updated each business day to reflect any investment
earnings or losses on each Fidelity Investments mutual fund. A quarterly
statement disclosing the value of your Account will be mailed to you within 20
days of the following dates: January 31, April 30, July 31 and October 31
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Marine Transport Lines, Inc. Salaried Employees Retirement Income Plan 8
<PAGE> 12
V. VESTING
The term 'vesting' refers to your nonforfeitable right to the money in your
Account. You receive vesting credit for the number of year(s) that you have
worked for the Employer and any other legally related Employer. If you terminate
your employment with the Employer, then you may be able to receive a portion or
all of your Account based on your vested percentage. You are always 100% vested
in your own Employee pretax Account, after-tax Account, Employer match, Employer
profit sharing contribution Account, rollover Account and earnings thereon.
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Marine Transport Lines, Inc. Salaried Employees Retirement Income Plan 9
<PAGE> 13
VII. HARDSHIP WITHDRAWALS
If approved by the Plan Administrator, you may withdraw your Employee pretax
contributions, and rollover contributions if applicable, to satisfy any of the
following immediate and heavy financial needs: (1) unreimbursed medical expenses
for you, your spouse, children or dependents; (2) the purchase of your principal
residence; (3) to prevent your eviction from or foreclosure on your principal
residence; or (4) to pay for post-secondary education expenses for you, your
spouse, children or dependents for the next twelve months.
In accordance with Internal Revenue Service regulations you must first withdraw
your Employee after-tax contributions Account and exhaust all other assets
available to you prior to obtaining a hardship withdrawal. This includes
obtaining a withdrawal of any Employee after-tax contribution in your Account
and a loan from any other qualified plan maintained by your Employer. Your
Employee pretax contributions to this Plan and any other Employer-sponsored
qualified or non-qualified plan will be suspended for twelve months after your
receipt of the hardship withdrawal. If you are married your spouse's consent
will be required on the hardship withdrawal form. Your spouse's consent must be
witnessed by a Plan representative or a Notary Public. The minimum hardship
withdrawal is $1,000.
The Plan Administrator will provide you with the appropriate form upon request.
Hardship withdrawals will be withdrawn from available investment options in the
order established by the Trustee. Consult your Plan Administrator for more
information.
You will be taxed on the amount of any hardship withdrawal under Internal
Revenue Code rules and a 10% IRS premature distribution penalty tax may also be
imposed on your withdrawal. Your hardship withdrawal will also be subject to the
mandatory 20% Federal income tax withholding. You should refer to the 'Total
Distribution of Benefits' section of this SPD.
- --------------------------------------------------------------------------------
Marine Transport Lines, Inc. Salaried Employees Retirement Income Plan 10
<PAGE> 14
VIII. IN-SERVICE WITHDRAWALS
A. WITHDRAWALS AFTER AGE 59-1/2
If you have reached age 59-1/2 then you may elect to withdraw all or a portion
of your entire Account while you are still employed by your Employer. The Plan
Administrator will provide you with the appropriate form upon request.
- --------------------------------------------------------------------------------
Marine Transport Lines, Inc. Salaried Employees Retirement Income Plan 11
<PAGE> 15
IX. TOTAL DISTRIBUTION OF BENEFITS
A. BENEFIT ON TERMINATION OF EMPLOYMENT
If you terminate your employment with your Employer, then you may elect to
receive a distribution of your vested Account balance from the Plan. You should
contact the Plan Administrator to obtain the appropriate form to complete to
request a distribution.
B. DEATH BENEFIT
If you die while a Participant in the Plan or before any or all benefits are
paid to you, then your beneficiary or beneficiaries will be entitled to receive
your Account balance. You may designate a beneficiary or beneficiaries on a
designation form. The completed beneficiary designation form must be filed with
the Plan Administrator. If you are married and want to designate someone other
than your spouse as your primary beneficiary, then your spouse must consent to
this designation by signing the form. His/her signature must be witnessed by a
Plan representative or a Notary Public. You should contact the Plan
Administrator to obtain a beneficiary designation form.
C. RETIREMENT BENEFIT
You do not have to terminate your employment with your Employer just because you
attain your early retirement age of 55 or you attain your normal retirement age
of 65.
D. PAYMENT AND FORM OF BENEFITS
The Plan is designed to provide you with benefits at the time of your
retirement. However, if your employment with your Employer is terminated because
of death, disability, retirement, or for any other reason, then you may request
a distribution of your vested Account balance upon proper written direction
delivered to the Plan Administrator. You should contact the Plan Administrator
to obtain the appropriate form to request a distribution and a copy of the
'Special Tax Notice Regarding Plan Payments'. Even if your employment with the
Employer has not terminated, the Plan Administrator will direct the Trustee to
begin distributions to you no later than April 1 of the calendar year after you
attain the age of 70-1/2.
The Plan Administrator will direct the Trustee to make a lump sum distribution
to you if you terminate your employment and your vested Account balance is less
than $5,000 regardless of whether you request the distribution. Your written
consent and your spouse's written consent will be required for any distribution
before age 65 if your vested Account balance is greater than $5,000. Properly
authorized distribution requests will be processed by the Trustee on a monthly
basis. The following forms of benefits are available under the Plan:
- - LUMP SUM DISTRIBUTIONS
Your entire vested Account balance will be paid to you within one
calendar year. If your vested Account balance is greater than
$5,000 and you are a married Participant, spousal consent for a
lump sum distribution will be required on the Payout Request Form.
The consent must be witnessed by a Plan representative or a Notary
Public.
- - INSTALLMENT DISTRIBUTIONS
Your vested Account balance will be paid to you in periodic
payments if your Account balance is greater than $5,000. If you are
a married Participant, spousal consent for an installment
distribution will be required on the Payout Request Form and must
be witnessed by a Plan representative or a Notary Public.
- - PURCHASE OF AN ANNUITY
- --------------------------------------------------------------------------------
Marine Transport Lines, Inc. Salaried Employees Retirement Income Plan 12
<PAGE> 16
The normal form of payment under this Plan is an annuity. This
means that your vested Account balance as of your annuity starting
date will be used to purchase a life annuity contract from an
insurance company if you are single, or a qualified joint and
survivor annuity if you are married. (The annuity starting date is
the date that is ninety days prior to the initial annuity payment.)
The insurance company will make monthly payments to you for your
life based upon the type of annuity purchased. Upon your death,
your spouse, if he/she is still living at your death, will receive
50% of the monthly amount you received. The annuity will stop once
your spouse dies and all payments will cease.
You may choose a form of payment other than the annuity only upon
proper election by you and your spouse, if applicable. Any election
to waive the qualified joint and survivor annuity must be made in
writing by you and your spouse. Your spouse's signature must be
witnessed by a Plan representative or a Notary Public. You may
obtain the appropriate waiver election form from the Plan
Administrator.
If you are 35 or older and die while you are still employed by the
Employer then your surviving spouse will be entitled to a qualified
pre-retirement survivor annuity. Your Account balance may be used
to purchase an annuity contract from an insurance company. Monthly
benefit payments will then be made from the insurance company
directly to your spouse for his/her lifetime. You and your spouse
may waive the qualified pre-retirement survivor annuity upon proper
election and choose another form of payment or another beneficiary.
Any waiver must be made in writing by you and your spouse. Your
spouse's signature must be witnessed by a Plan representative or a
Notary Public. You can obtain the appropriate waiver election form
from the Plan Administrator.
Lump sum distributions and in certain situations installment distributions will
be subject to the following rules:
(1). CASH DISTRIBUTION
Any taxable distribution paid by the Trustee directly to you will
be subject to mandatory Federal income tax withholding of 20% of
the requested distribution. You will receive 80% of the taxable
distribution and the other 20% will be sent to the IRS as Federal
income tax withholding for that year. You cannot elect out of this
tax withholding. This withholding is not a penalty but rather a
prepayment of your Federal income taxes.
You may rollover the taxable distribution you receive to an IRA or
your new employer's qualified Plan, if it accepts rollover
contributions. However, you must rollover this distribution within
60 DAYS after receipt. You will not be taxed on any amounts rolled
over directly into the IRA or your new employer's qualified Plan
until those amounts are later distributed to you.
(2). DIRECT ROLLOVER DISTRIBUTION
As an alternative to a cash distribution, you may request that your
entire distribution be rolled directly into a Fidelity IRA, a
non-Fidelity IRA or to your new employer's qualified plan if it
accepts rollover contributions. Federal income taxes will not be
withheld on any direct rollover distribution.
(a). Rollover to a Fidelity IRA - You must complete a Fidelity
'SEE' Rollover IRA application. Attach this application to
the completed Payout form. After authorizing your
distribution, the Plan Administrator will forward this
material to the Trustee. Your vested Account balance will
be transferred to a Fidelity Rollover IRA.
- --------------------------------------------------------------------------------
Marine Transport Lines, Inc. Salaried Employees Retirement Income Plan 13
<PAGE> 17
(b). Rollover to a Non-Fidelity IRA - You must complete a Payout
form and indicate the name and address of the custodian or
trustee, and Account number for your IRA. After authorizing
your distribution, the Plan Administrator will forward the
form to the Trustee. A check will be issued by the Trustee
payable to the IRA custodian or trustee for your benefit.
The check will contain the notation 'Direct Rollover' and
it will be mailed directly to you. You will be responsible
for forwarding it on to the custodian or trustee. You must
provide the Plan Administrator with complete information to
facilitate your direct rollover distribution.
(c). Rollover to your New Employer's Qualified Plan - You
should check with your new employer to determine if
its plan will accept rollover contributions. If
allowed, then you must complete a Payout form and
indicate the name, address and plan number of your
new employer's qualified plan. After authorizing your
distribution, the Plan Administrator will forward the
form to the Trustee. A check will be issued by the
Trustee payable to the trustee of your new employer's
qualified plan. The check will contain the notation
'Direct Rollover' and it will be mailed directly to
you. You will be responsible for forwarding it on to
the new trustee. You must provide the Plan
Administrator with complete information to facilitate
your direct rollover distribution.
(3). COMBINATION CASH DISTRIBUTION AND DIRECT ROLLOVER DISTRIBUTION
You may request that part of your distribution be paid directly to
you and the balance to be rolled into an IRA or your new employer's
qualified Plan. Any cash distribution you receive will be subject
to the Federal income tax withholding rules referred to in (1). Any
direct rollover distribution will be made in accordance with (2).
You will pay income tax on the amount of any taxable distribution
you receive from the Plan unless it is rolled into an IRA or your
new employer's qualified Plan. A 10% IRS premature distribution
penalty tax may also apply to your taxable distribution unless it
is rolled into an IRA or another qualified plan. The 20% Federal
income tax withheld under this section may not cover your entire
income tax liability. Consult with your tax advisor for further
details.
- --------------------------------------------------------------------------------
Marine Transport Lines, Inc. Salaried Employees Retirement Income Plan 14
<PAGE> 18
X. MISCELLANEOUS INFORMATION
A. BENEFITS NOT INSURED BY PBGC
Benefits provided by the Plan are not insured or guaranteed by the Pension
Benefit Guaranty Corporation (PBGC) under Title IV of the Employee Retirement
Income Security Act of 1974 (ERISA) because the insurance provisions under ERISA
are not applicable to this particular Plan. You will only be entitled to the
vested benefits in your Account based upon the provisions of the Plan.
B. NONTRANSFERABLE ACCOUNT
Your Account may not be transferred, assigned or used as collateral for a loan
except to the extent required by law. Creditors may not attach, garnish or
otherwise interfere with your Account balance except in the case of a Qualified
Domestic Relations Order (QDRO). A QDRO is a special order issued by the court
in a divorce, child support or similar proceeding. In this situation, your
spouse (or former spouse) or someone other than you or your beneficiary, may be
entitled to a portion or all of your Account balance.
C. PLAN AMENDMENT
Certain provisions of the Plan are subject to amendment by the Employer that may
directly or indirectly modify certain Plan rights and benefits. Any amendment
changing the vesting schedule cannot reduce the existing vested percentage of
your Account balance derived from Employer contributions. If you have three or
more years of service with the Employer and the vesting schedule is amended then
you will be given a choice to have the vested percentage of future Employer
contributions made to your Account computed under the new or the old vesting
schedule. The Plan Administrator will provide you with the appropriate
information to make an informed decision if the Plan's vesting schedule is
amended.
D. PLAN TERMINATION
The Employer has no legal or contractual obligation to make annual contributions
to or to continue the Plan. With the approval of the Board of Directors, the
Employer may at any time reduce or suspend its contributions, if applicable. In
the event the Plan should terminate, the Plan Administrator will facilitate the
distribution of Account balances under the provisions of the Plan and Trust
Agreement until all assets have been distributed by the Trustee. While the
Employer intends to continue the Plan, it reserves the right to change or
terminate the Plan at any time as circumstances may dictate.
E. INTERPRETATION OF PLAN
The Plan Administrator has the power and discretionary authority to construe the
terms of the Plan and to determine all questions that arise under it. Such power
and authority include, for example, the administrative discretion necessary to
resolve issues with respect to an Employee's eligibility for benefits, credited
services, disability, and retirement, or to interpret any other term contained
in Plan documents. The Plan Administrator's interpretations and determinations
are binding on all participants, employees, former employees, and their
beneficiaries.
- --------------------------------------------------------------------------------
Marine Transport Lines, Inc. Salaried Employees Retirement Income Plan 15
<PAGE> 19
XI. INTERNAL REVENUE SERVICE TEST
A. NON-DISCRIMINATION TEST
Your Plan is intended to qualify under Section 401(k) of the Internal Revenue
Code. The Internal Revenue Service requires the Plan to meet special
non-discrimination test as of the last day of each Plan Year. This test is
intended to ensure that there is a fair level of participation by all eligible
participants.
In order to meet the test, the Employer encourages participation from all
eligible Employees. Depending upon the results of the test, the Plan
Administrator may have to refund Employee pretax contributions contributed to
the Plan to certain highly compensated employees, as determined under Internal
Revenue Service regulations. Employee pretax contributions will be refunded on a
prorata basis from each investment option. You will be notified by the Plan
Administrator if any of your contributions will be refunded to you.
B. TOP HEAVY TEST
The Plan is subject to strict Internal Revenue Service rules. One of these rules
involves a 'Top-Heavy' test. Each Plan Year, the Plan Administrator tests this
Plan together with all other Employer-sponsored qualified plans to make sure
that no more than 60% of the benefits are for 'Key' Employees. If this Plan is
Top-Heavy, then the Employer may be required to make minimum annual
contributions to this Plan for you if you are employed as of Plan Year-end.
- --------------------------------------------------------------------------------
Marine Transport Lines, Inc. Salaried Employees Retirement Income Plan 16
<PAGE> 20
XII. PARTICIPANT RIGHTS
A. CLAIMS
(1). CLAIM PROCEDURE
You or your Beneficiary should make a request to obtain any
benefits you are entitled to under the Plan in the event of your
termination of employment. The Plan Administrator will provide you
with a request form to complete. Your request will be considered a
claim and will be subject to a full and fair review by the Plan
Administrator. If your claim is wholly or partially denied by the
Plan Administrator then you may appeal it in accordance with the
claim review procedure.
(2). CLAIM REVIEW PROCEDURE
You or your Beneficiary may file a claim for benefits under the
Plan with the Plan Administrator on a form supplied by the
Employer. The Plan Administrator will provide you with written
notice of the disposition of your claim within 90 days after it has
been filed (or, in certain circumstances, within 180 days). In the
event the claim is denied then the reasons shall be disclosed
and/or provisions of the Plan shall be cited as appropriate.
You or your Beneficiary upon request to the Plan Administrator may
appeal the denial of your claim. If you wish further consideration
of your position then you must provide the Plan Administrator with
a written request for a hearing. You must also provide a detailed
written statement of your position for your claim and file it with
the Plan Administrator no later than 60 days after requesting a
hearing. The Plan Administrator shall make a decision on your claim
and it will be communicated to you in writing within 60 days (or,
in certain circumstances, within 120 days). It will advise you if
you have any right to appeal the decision.
B. STATEMENT OF ERISA RIGHTS
As a participant in this Plan you are entitled to certain rights and protections
under ERISA that provides that all Plan Participants shall be entitled to the
following:
- Examine, without charge, at the Plan Administrator's office and at
other specified locations such as work sites and union halls, all
Plan Documents, including insurance contracts, collective
bargaining agreements and copies of all documents filed by the Plan
with the U.S. Department of Labor, such as detailed annual reports
and Plan descriptions.
- Obtain copies of all Plan Documents and other Plan information upon
written request to the Plan Administrator; the Plan Administrator
may make a reasonable charge for the copies.
- Receive a summary of the Plan's annual financial report. The Plan
Administrator is required by law to furnish you with a copy of this
summary annual report.
- Obtain a statement of your Account under the Plan. You must direct
this request in writing to the Plan Administrator. You may request
a statement only once a year and the Plan must provide the
statement free of charge.
In addition to creating rights for Plan Participants, ERISA imposes duties upon
the people who are responsible for the operation of the employee benefit plan.
The people who operate your Plan, called 'fiduciaries' of the Plan, have a duty
to do so prudently and in the interest of you and other Plan Participants and
beneficiaries. No one, including your Employer, your union, or any other person,
may fire you or otherwise discriminate against you in any way to prevent you
from obtaining a pension benefit or exercising your rights under ERISA.
- --------------------------------------------------------------------------------
Marine Transport Lines, Inc. Salaried Employees Retirement Income Plan 17
<PAGE> 21
If your claim for a benefit is denied, in whole or in part, you must receive a
written explanation of the reason for the denial. You have the right to have the
Plan Administrator review and reconsider your claim. Under ERISA, there are
steps you can take to enforce the above rights. For instance, if you request
materials from the Plan and do not receive them within 30 days, you may file
suit in a federal court. In such a case, the court may require the Plan
Administrator to provide the materials and pay you up to $100 a day until you
receive the materials, unless the materials were not sent for reasons beyond the
control of the Plan Administrator.
If you have a claim for benefits which is denied or ignored, in whole or in
part, you may file suit in a state or federal court. If it should happen that
Plan fiduciaries misuse the Plan's money, or if you are discriminated against
for asserting your rights, you may seek assistance from the U.S. Department of
Labor, or you may file suit in a federal court. If you are successful, the court
may order the person you have sued to pay these costs and fees. If you lose, the
court may order you to pay these costs and fees; for example, if it finds your
claim frivolous. If you have any questions about your Plan, you should contact
the Plan Administrator. If you have any questions about your rights under ERISA,
you should contact the nearest area office of the U.S. Labor-Management Services
Administration, Department of Labor.
- --------------------------------------------------------------------------------
Marine Transport Lines, Inc. Salaried Employees Retirement Income Plan 18
<PAGE> 1
Exhibit 21
SUBSIDIARIES
OF
MARINE TRANSPORT CORPORATION
DELAWARE SUBSIDIARIES:
Hanover Marine Carriers, Inc.
Harlink Corp.
Intrepid Ship Management, Inc.
Marine Alaska, Inc.
Marine Barge Company
Marine Car Carriers, Inc.
Marine Chemical Carriers Corporation
Marine Chemical Trading, Inc.
Marine Chemical Navigation Corporation
Marine Navigation Company, Inc.
Marine Navigation Sulphur Carriers, Inc.
Marine Personnel & Provisioning, Inc.
Marine Purchasing Corporation
Marine Sulphur Shipping Corporation
Marine Technical Services Corporation
Marine Transport Lines, Inc.
Marine Transport Management, Inc.
MTL Petrolink, Corp.
Nuelink Corp.
Offshore Marine Services, Inc.
OMI Challenger Transport, Inc.
Oswego Shipping Corporation
Patriot Transport, Inc.
Rover Transport, Inc.
LIBERIAN SUBSIDIARIES:
Oswego Chemical Carriers Corporation
Oswego Corporation
Oswego Shipbuilding Corporation
MARSHALLL ISLANDS SUBSIDIARY:
Marine Car Carriers, Inc. (MI)
NEW YORK:
Courier Transport Inc.
TEXAS:
OMIP Inc.
<PAGE> 1
Exhibit 23.1
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration Statements
(Form S-8 No. 333-81073) pertaining to the Amended and Restated 1998 Incentive
Equity Plan and the Amended and Restated 1998 Stock Option Plan for
Non-Employee Directors of Marine Transport Corporation (formerly OMI Corp.), of
our report dated February 24, 2000, with respect to the consolidated financial
statements of Marine Transport Corporation included in this Annual Report (Form
10-K) for the year ended December 31, 1999.
/s/ Ernst & Young LLP
New York, New York
March 29, 2000
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
Exhibit 27 contains summary information extracted from marine transportation
subsidiaries consolidated condensed financial statements qualified in its
entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> DEC-31-1999
<EXCHANGE-RATE> 1
<CASH> 4,658
<SECURITIES> 0
<RECEIVABLES> 19,886
<ALLOWANCES> 165
<INVENTORY> 0
<CURRENT-ASSETS> 29,026
<PP&E> 128,784
<DEPRECIATION> 75,498
<TOTAL-ASSETS> 121,865
<CURRENT-LIABILITIES> 24,888
<BONDS> 40,214
0
0
<COMMON> 3,277
<OTHER-SE> 14,167
<TOTAL-LIABILITY-AND-EQUITY> 121,865
<SALES> 0
<TOTAL-REVENUES> 156,429
<CGS> 0
<TOTAL-COSTS> 124,956
<OTHER-EXPENSES> 27,735
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,762
<INCOME-PRETAX> 2,486
<INCOME-TAX> (862)
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,624
<EPS-BASIC> .26
<EPS-DILUTED> .26
</TABLE>
