<PAGE>
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ___________ to __________
Commission file number: 33-82624
MORAN TRANSPORTATION COMPANY
(Exact name of registrant as specified in its charter)
DELAWARE 06-1399280
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification
No.)
TWO GREENWICH PLAZA
GREENWICH, CONNECTICUT 06830
(Address of principal executive offices)
(Zip Code)
(203) 625-7800
(Registrant's telephone number, including area code)
Not Applicable
________________________________
(Former name, former address and former fiscal year, if changed since last
report)
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 the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
As of August 8, 1996, 44,600 shares of the common stock, par value
$0.01 per share, of Moran Transportation Company, were issued and
outstanding.
Page 1
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MORAN TRANSPORTATION COMPANY
FORM 10 - Q
INDEX
PAGE
----
PART I. FINANCIAL INFORMATION
<TABLE>
<CAPTION>
Item 1. Financial Statements of Moran Transportation
Company and Subsidiaries
<S> <C> <C>
Consolidated Balance Sheets at December 31, 1995
and June 30, 1996 3
Consolidated Statements of Income for the six
months ended June 30, 1995 and June 30, 1996 5
Consolidated Statements of Income for the three
months ended June 30, 1995 and June 30, 1996 6
Consolidated Statements of Cash Flows for the six
months ended June 30, 1995 and June 30, 1996 7
Notes to Consolidated Financial Statements 8
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 11
PART II. OTHER INFORMATION 13
</TABLE>
Page 2
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1.FINANCIAL STATEMENTS
MORAN TRANSPORTATION COMPANY
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
Dec 31, June 30,
1995 1996
---- ----
(unaudited)
<S> <C> <C>
ASSETS
------
Current Assets
Cash and cash equivalents.......................... $ 3,006 $ 6,121
Accounts receivable, less allowance for doubtful
accounts of $263 and $372 at December 31, 1995
and June 30, 1996, respectively................. 12,047 11,790
Inventory.......................................... 4,330 4,303
Unexpired insurance and other prepaid expenses..... 1,364 1,269
Total Current Assets............................ 20,747 23,483
Investment in joint venture.......................... 2,959 2,976
Insurance claims receivable.......................... 1,717 2,613
Fixed assets, net.................................... 126,771 124,319
Shipyard assets held for sale (Note 5)............... 2,648 2,833
Restricted funds held for
contingent consideration (Note 1).................. 13,600 13,600
Other Assets......................................... 5,068 4,757
----- -----
Total Assets.................................... $173,510 $174,581
======= =======
</TABLE>
See accompanying notes to consolidated financial statements
Page 3
<PAGE>
MORAN TRANSPORTATION COMPANY
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
Dec 31, June 30,
1995 1996
---- ----
<S> <C> <C>
(unaudited)
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Current Liabilities
Current portion of long term debt.................................. $ 566 $ 595
Trade accounts payable............................................. 3,468 3,692
Accrued insurance payable.......................................... 132 1,335
Accrued interest payable........................................... 4,309 4,309
Other accrued liabilities.......................................... 3,368 3,502
Backpay liability.................................................. 885 885
Income taxes payable............................................... 883 1,620
--- -----
Total Current Liabilities....................................... 13,611 15,938
Long-term debt....................................................... 82,848 82,544
Insurance claims reserves............................................ 4,331 4,833
Deferred income taxes................................................ 35,576 34,788
Postretirement benefits other than pensions.......................... 3,729 3,819
Liability for contingent consideration (Note 1)...................... 13,600 13,600
Other liabilities.................................................... 8,095 6,564
----- -----
Total Liabilities............................................... 161,790 162,086
------- -------
Commitments and contingencies (Note 4)
Mandatorily redeemable capital stock
(4,600 and 4,000 shares outstanding, at December 31, 1995
and June 30, 1996, respectively)................................ 1,150 1,000
----- -----
Stockholders' Equity
Common stock, par value $0.01 per share
Authorized - 100,000 shares
Issued and outstanding - 40,000 and 40,600 shares outstanding,
at December 31, 1995 and June 30, 1996, respectively.......... 1 1
Capital surplus.................................................... 9,999 10,149
Retained earnings.................................................. 570 1,345
--- -----
Total Stockholders' Equity 10,570 11,495
------ ------
Total Liabilities and Stockholders' Equity........................... $173,510 $174,581
======= =======
</TABLE>
See accompanying notes to consolidated financial statements
Page 4
<PAGE>
MORAN TRANSPORTATION COMPANY
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
FOR THE SIX MONTHS ENDED JUNE 30,
(UNAUDITED)
<TABLE>
<CAPTION>
1995 1996
---- ----
<S> <C> <C>
Operating revenue............................................. $36,698 $42,105
Cost of operations
Operating expenses.......................................... 21,523 25,039
Depreciation................................................ 3,596 3,846
----- -----
Total cost of operations...................................... 25,119 28,885
------ ------
Gross profit.................................................. 11,579 13,220
General and administrative expenses........................... 7,322 7,066
----- -----
Operating income.............................................. 4,257 6,154
Interest expense.............................................. (5,055) (5,159)
Interest income............................................... 23 59
Equity in income from joint venture........................... 41 17
Other (expense)/income........................................ (16) 205
---- ---
(Loss)/income before provision for income taxes............... (750) 1,276
Provision for income taxes.................................... (146) 501
----- ---
Net (loss)/income........................................... $ (604) $ 775
===== ===
Per share of common stock outstanding:
Net (loss)/income........................................... $(13.54) $17.0
Weighted average number of shares outstanding (in thousands).. 44.6 45.6
==== ====
</TABLE>
See accompanying notes to consolidated financial statements
Page 5
<PAGE>
MORAN TRANSPORTATION COMPANY
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
FOR THE THREE MONTHS ENDED JUNE 30,
(UNAUDITED)
<TABLE>
<CAPTION>
1995 1996
---- ----
<S> <C> <C>
Operating revenue............................................. $18,618 $21,296
Cost of operations
Operating expenses.......................................... 10,188 12,373
Depreciation................................................ 1,800 1,924
----- -----
Total cost of operations...................................... 11,988 14,297
------ ------
Gross profit.................................................. 6,630 6,999
General and administrative expenses........................... 3,747 3,569
----- -----
Operating income.............................................. 2,883 3,430
Interest expense.............................................. (2,465) (2,594)
Interest income............................................... 21 59
Equity in income from joint venture........................... 74 54
Other (expense)/income........................................ (6) 189
--- ---
Income before provision for income taxes...................... 507 1,138
Provision for income taxes.................................... 213 424
--- ---
Net income.................................................. $ 294 $ 714
====== ======
Per share of common stock outstanding:
Net income.................................................. $6.59 $15.66
Weighted average number of shares outstanding (in thousands).. 44.6 45.6
==== ====
</TABLE>
See accompanying notes to consolidated financial statements
Page 6
<PAGE>
MORAN TRANSPORTATION COMPANY
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30,
(DOLLARS IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
1995 1996
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net (loss)/income................................ $ (604) $ 775
-------- -------
Adjustments to reconcile net (loss)/income to net
cash provided by operating activities:
Depreciation and amortization.................... 4,622 5,565
Deferred income taxes............................ (241) (788)
Equity in income from joint venture.............. (161) (17)
Loss on disposal of fixed asset.................. - 128
Changes in operating assets and liabilities:
Accounts receivable.............................. 1,189 257
Other current assets............................. 71 122
Accounts payable and accrued expenses............ 272 1,590
Income taxes payable............................. (157) 737
Insurance claims receivable...................... 36 (896)
Insurance claims reserves........................ 32 502
Other assets and liabilities..................... (46) (1,690)
---- -------
Net cash provided by operating activities.......... 5,013 6,285
Cash flows from investing activities:
Capital expenditures............................. (2,491) (2,824)
------- -------
Net cash used for investing activities............. (2,491) (2,824)
Cash flows from financing activities:
Proceeds from borrowings......................... 1,000 2,250
Repayment of debt................................ (1,249) (2,554)
Debt issuance costs.............................. (140) (42)
----- -------
Net cash used for financing activities............. (389) (346)
Net increase in cash and _____ _____
cash equivalents................................. 2,133 3,115
Cash and cash equivalents at beginning of period... 3,999 3,006
----- -----
Cash and cash equivalents at end of period $ 6,132 $ 6,121
======= =======
</TABLE>
See accompanying notes to consolidated financial statements
Page 7
<PAGE>
MORAN TRANSPORTATION COMPANY
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, UNLESS OTHERWISE NOTED)
(UNAUDITED)
NOTE 1 - MORAN TRANSPORTATION COMPANY
-------------------------------------
Moran Transportation Company ("Moran" or the "Company") is a Delaware
corporation, incorporated on June 2, 1994. Moran was organized to
acquire (the "Acquisition") all of the outstanding common stock of Moran
Towing Corporation (the "Predecessor"), a company whose subsidiaries
provided tug services and marine transportation services, primarily on
the East and Gulf coasts of the United States. On July 11, 1994, the
Acquisition was consummated and was accounted for as a purchase. In
connection with the Acquisition, the Predecessor transferred its 20%
equity interest in four partnerships to entities formed by the
stockholders of the Predecessor. When the Company acquired the
Predecessor, certain contingent liabilities of the Predecessor,
primarily related to certain limited and defined guarantees given by the
Predecessor, were assumed. These liabilities were fully reserved and
funded by placing $13.6 million in escrow. If these liabilities become
due, the escrowed funds will be used to satisfy the liability. If the
guarantees expire without being called, the funds will be paid to
stockholders of Predecessor. There will be no impact on the Company
other than assets and liabilities being reduced.
The accompanying unaudited consolidated financial statements of the
Company have been prepared in accordance with generally accepted
accounting principles for interim financial information. Accordingly,
they do not include all the information and footnotes required by
generally accepted accounting principles for complete financial
statements. In the opinion of management, all adjustments (consisting
of normal recurring accruals) considered necessary for a fair
presentation have been included. Interim results are not necessarily
indicative of the results that may be expected for a full year. These
financial statements should be read in conjunction with the Company's
audited consolidated financial statements for the year ended December
31, 1995.
NOTE 2 - CHANGES IN STOCKHOLDERS' EQUITY
----------------------------------------
<TABLE>
<CAPTION>
Common Capital Retained
Stock Surplus Earnings Total
----- ------- -------- -----
<S> <C> <C> <C> <C>
Balance at December 31, 1995 $1 $ 9,999 $ 570 $10,570
Net Income - - 775 775
Transfer of Mandatorily Redeemable Stock - 150 - 150
-- ------- ------ -------
Balance at June 30, 1996 $1 $10,149 $1,345 $11,495
== ======= ====== =======
</TABLE>
NOTE 3 - INCOME TAXES
---------------------
The Company and its wholly owned domestic subsidiaries file a
consolidated Federal income tax return. The Company accounts for
deferred income taxes using the asset and liability method as prescribed
under Financial Accounting Standard No. 109, "Accounting for Income
Taxes". The Company provides a valuation allowance if it is more likely
than not that some portion or all of the deferred tax asset will not be
realized.
Page 8
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NOTE 4 - CONTINGENT LIABILITIES
-------------------------------
On September 25, 1995, Local 333, United Marine Division, I.L.A., AFL-
CIO ("Local 333") ratified the terms of a three year collective
bargaining agreement with a New York operating subsidiary of the
Company. The agreement is effective as of September 26, 1995. This
subsidiary had been subject to several pending legal proceedings arising
out of a 1988 strike in New York harbor. These proceedings will be
terminated pursuant to a formal settlement agreement executed by the
subsidiary, the union and the regional office of the National Labor
Relations Board ("NLRB"). The settlement agreement was approved by the
NLRB on March 29, 1996 and the resulting NLRB order was enforced by the
United States Court of Appeals for the Second Circuit on May 3, 1996.
In February 1994, a lawsuit was filed in the United States District
Court for the Eastern District of New York by the Town of Oyster Bay
(the "Town"), New York, against a number of potentially responsible
parties ("PRP"), including Jakobson Shipyard Inc. ("Jakobson"), a
subsidiary of the Company. The Town is seeking indemnification for
remediation and investigation costs that have been or will be incurred
for a Federal Superfund site in Syosset, New York, which served as a
Town owned and operated landfill between 1933 and 1975. In a Record of
Decision, issued on or about September 27, 1990, the EPA set forth a
remedial design plan, the cost of which was estimated at $25 million and
is reflected in the Town's lawsuit. In an Administrative Consent Decree
entered into between the EPA and the Town on December 6, 1990, the Town
agreed to undertake remediation at the site.
The Town seeks to hold PRPs liable on a joint and several basis. The
PRPs contend that, as operator of the landfill, the Town bears major
responsibility for the clean-up and PRPs are only liable for their
relative shares. Jakobson believes that its portion of the hazardous
materials disposed at the site, if any, is insignificant when compared
to that of the other PRPs. While management is unable to estimate
Jakobson's future liability, if any, it does not believe such liability
would have a material adverse effect on the Company's financial position
or results of operations.
The Company is a party to routine, marine-related lawsuits arising in
the ordinary course of its business. The claims made in connection with
the Company's marine operations are covered by marine insurance, subject
to applicable policy deductibles. Management believes, based on its
current knowledge, that such lawsuits and claims, even if the outcomes
were to be adverse, would not have a material adverse effect on the
Company's financial condition and results of operations.
NOTE 5 - SHIPYARD ASSETS HELD FOR SALE
--------------------------------------
In 1992, the operations of Jakobson were discontinued. Discussions are
being held with the Town of Oyster Bay and the New York State Department
of Environmental Conservation concerning the purchase of Jakobson's
leasehold interest in the shipyard property. Management expects to
enter into an agreement in principle for the sale of its property within
a year. In anticipation of this sale, the Company has capitalized $2.8
million of environmental remediation costs which, based upon the
Company's estimates, are expected to be recovered from the proceeds of
the sale. Management believes that the sale will not have a material
adverse effect on the Company's financial position or results from
operations upon sale.
Page 9
<PAGE>
NOTE 6 - FINANCIAL STATEMENTS OF GUARANTORS
-------------------------------------------
All of the Company's subsidiaries ("the Guarantors") have guaranteed the
Company's $80 million of First Preferred Ship Mortgage Notes.
Accordingly, the financial statements of the Guarantors have not been
included, individually or on a combined basis, because the Guarantors
have fully and unconditionally guaranteed such Notes on a joint and
several basis, and because the aggregate net assets, earnings and equity
of the Guarantors are substantially equivalent to the net assets,
earnings and equity of the Company on a consolidated basis. Therefore,
separate financial statements concerning the Guarantors are not deemed
material to investors.
Page 10
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
RESULTS OF OPERATIONS
---------------------
SIX MONTHS ENDED JUNE 30, 1996 COMPARED TO SIX MONTHS ENDED JUNE 30,
1995
Operating Revenues: Operating revenues increased 14.7% during the first
six months of 1996 as compared to the comparable period in 1995. Tug
services revenues increased by 7.6%, to $25.3 million, primarily as a
result of increased barge and coastwise towing revenues. Marine
transportation revenues increased by 27.5% to $16.8 million reflecting
both the colder winter weather in the Northeast which increased demand
for coal and a general improvement in the barge markets served by the
Company.
On July 1, 1996, the Company's New York subsidiary began a two year
contract with The New York City Department of Sanitation to provide
marine services. Revenue from this contract will be dependent upon New
York City's requirements.
Operating Expenses: Operating expenses increased by $3.5 million, or
16.3%, to $25.0 million in the first six months of 1996. The increase
is primarily due to increased costs for labor, fuel, outside towing and
charterhire due to the increased activity discussed above. In addition,
average fuel prices increased during the first six months as compared to
last year. The Company also had higher drydocking amortization expense,
compared to the first six months of 1995.
Depreciation: Depreciation expense increased by $0.3 million, to $3.8
million, in the first six months of 1996. This increase was due to
additional depreciation arising from final purchase price adjustments
and depreciation on improvements made to assets.
General and Administrative Expenses: General and administrative
expenses decreased by $0.3 million or 3.5%, to $7.1 million during the
first six months of 1996, primarily due to lower professional fees.
Operating Income: Operating income increased by $1.9 million, or 44.6%,
to $6.2 million in the first six months of 1996. This improvement is
primarily due to the increased revenues described above, partially
offset by higher operating costs.
Net Income/(Loss): Net income increased by $1.4 million as the Company
posted a net profit of $0.8 million during the first six months of 1996
as compared to a loss of $0.6 million during the first six months of
1995. The improvement in overall profitability was principally driven by
higher operating income.
THREE MONTHS ENDED JUNE 30, 1996 COMPARED TO THREE MONTHS ENDED JUNE 30,
1995
Operating Revenues: Operating revenues increased 14.4% during the
second quarter of 1996 as compared to the comparable period in 1995.
Tug services revenues increased by 3.5%, to $12.5 million, primarily as
a result of increased barge and coastwise towing revenues. Marine
transportation revenues increased by 34.7% to $8.8 million reflecting a
general improvement in the barge markets served by the Company.
Operating Expenses: Operating expenses increased by $2.2 million, or
21.4%, to $12.4 million in the second quarter of 1996. The increase is
primarily due to increased costs for labor, outside towing and
charterhire due to the increased activity discussed above. In addition,
fuel prices increased during the first six months as compared to last
year and insurance expense increased because of a favorable adjustment
in the second quarter of 1995.
Page 11
<PAGE>
The Company also had higher drydocking amortization expense, compared to
the first six months of 1995.
Depreciation: Depreciation expense increased by $0.1 million, to $1.9
million, in the second quarter of 1996. This increase was due to
additional depreciation arising from final purchase price adjustments
and depreciation on improvements made to assets.
General and Administrative Expenses: General and administrative
expenses decreased by $0.2 million, or 4.8%, to $3.6 million during the
second quarter, due to lower professional fees.
Operating Income: Operating income increased by $0.5 million, or 19.0%,
to $3.4 million in the second quarter of 1996. This improvement is
primarily due to the increased revenues described above, partially
offset by higher operating costs.
Net Income/(Loss): Net income increased by $0.4 million, or 142.9%, to
$0.7 million in the second quarter. The improvement in overall
profitability was principally driven by higher operating profit.
LIQUIDITY AND CAPITAL RESOURCES
-------------------------------
Cash and cash equivalents for the six months ended June 30, 1996
increased by $3.1 million. This increase was attributable to the
factors discussed below:
In the six months ending June 30, 1996, net cash provided by operating
activities was $6.3 million. The $6.3 million in net cash provided by
operating activities was used to repay debt of $0.4 million and fund
capital expenditures of $2.8 million, resulting in an increase of cash
and cash equivalents of $3.1 million.
As more fully discussed in footnote 4 to the financial statements, the
Company's New York operating subsidiary has reached an agreement with
the union representing its striking marine workers. The Company expects
to have sufficient cash flow to meet any obligations imposed by the
agreement, which among other things, requires payment of $5.6 million in
settlement of claims against it for back pay liability in approximately
equal quarterly installments over a seven year period, which commenced
in April 1996.
The Company believes that cash flow from current levels of operations
and, to a lesser extent, availability under the Senior Credit Facility,
will be adequate to make required payments of interest on the Company's
indebtedness, as well as to fund ongoing capital expenditures.
In December 1995, a wholly owned subsidiary of the Company signed a
contract with Trinity Marine Group to build a 14,500 ton bulk barge for
approximately $8.2 million. the barge is scheduled for delivery during
the fourth quarter of 1996. The Company's subsidiary has obtained a
construction loan for $7.72 million, which the Company and Moran Towing
Corporation, a subsidiary, have guaranteed, and is currently negotiating
permanent financing for the barge. The construction loan matures upon
the earlier of December 31, 1996 or 60 days after delivery of the new
barge. At June 30, 1996, there were no borrowings outstanding under the
construction loan facility. The guaranty by the Company's subsidiary of
the Company's obligations under its First Preferred Ship Mortgage Notes
will not be secured by the newly constructed barge.
Page 12
<PAGE>
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None
ITEM 2. CHANGES IN SECURITIES
None
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
On April 22, 1996, the stockholders of the Company, at
their annual meeting unanimously elected the following
persons to serve as directors:
Paul R. Tregurtha, James R. Barker, Malcolm W. MacLeod,
Jeffrey J. McAulay, Edmond J. Moran, Jr., Andrew Langlois
and Mort Lowenthal
ITEM 5. OTHER INFORMATION
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
10.1 Construction Loan Agreement, dated as of May 16, 1996,
among Moran Bulk Corporation, a Delaware corporation,
as borrower, the Company and Moran Towing Corporation,
a New York corporation, as guarantors, and The First
National Bank of Boston, as lender (the "Bank")
10.2 Construction Loan Note, dated as of May 16, 1996,
payable by Moran Bulk Corporation to the Bank
10.3 Security Agreement, dated as of May 16, 1996, between
Moran Bulk Corporation and the Bank
10.4 Guaranty dated as of May 16, 1996, by the Company and
Moran Towing Corporation, in favor of the Bank
27 Financial data schedule
(b) Reports on Form 8-K.
None
Page 13
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
MORAN TRANSPORTATION COMPANY
By:/s/ Malcolm W. MacLeod
-----------------------
Name: Malcolm W. MacLeod
Title: President and Chief Executive
Officer
Date: 8/8/96 By:/s/ Jeffrey J. McAulay
-----------------------
Name: Jeffrey J. McAulay
Title: Vice President, Finance
and Administration
(principal financial officer)
Page 14
<PAGE>
Exhibit 10.1
CONSTRUCTION LOAN AGREEMENT
dated as of May 16, 1996
among
MORAN BULK CORPORATION
(THE "BORROWER")
MORAN TRANSPORTATION COMPANY
AND
MORAN TOWING CORPORATION
(THE "GUARANTORS")
and
THE FIRST NATIONAL BANK OF BOSTON
(THE "BANK")
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C>
1. DEFINITIONS AND RULES OF INTERPRETATION.................................. 1
1.1. Definitions....................................................... 1
1.2. Rules of Interpretation........................................... 13
2. THE CONSTRUCTION LOAN.................................................... 13
2.1. Agreement to Make Construction Advances........................... 13
2.2. Commitment Fee.................................................... 14
2.3. Reduction of Total Commitment..................................... 14
2.4. The Note.......................................................... 15
2.5. Interest on Construction Advances................................. 15
2.6. Requests for Construction Advances................................ 15
2.7. Conversion Options................................................ 16
2.7.1. Conversion to Different Type of Construction Advance....... 16
2.7.2. Continuation of Type of Construction Advance............... 16
2.7.3. Eurodollar Rate Advances................................... 17
2.8. Funds for Construction Advances................................... 17
2.8.1. Funding Procedures......................................... 17
2.8.2. Construction Advances to Borrower or Builder............... 17
2.8.3. Construction Advances to Others............................ 18
2.8.4. Advances Pursuant to Contract.............................. 18
2.8.5. Construction Advances Do Not Constitute a Waiver........... 18
3. REPAYMENT OF THE CONSTRUCTION LOAN....................................... 19
3.1. Maturity.......................................................... 19
3.2. Mandatory Repayments of Construction Loan......................... 19
3.3. Optional Repayments of Construction Loan.......................... 19
4. CERTAIN GENERAL PROVISIONS............................................... 19
4.1. Closing Fee....................................................... 19
4.2. Funds for Payments................................................ 19
4.2.1. Payments to Bank........................................... 19
4.2.2. No Offset, etc............................................. 20
4.3. Computations...................................................... 20
4.4. Inability to Determine Eurodollar Rate............................ 20
4.5. Illegality........................................................ 21
4.6. Additional Costs, etc............................................. 21
4.7. Capital Adequacy.................................................. 22
4.8. Certificate....................................................... 23
4.9. Indemnity......................................................... 23
4.10. Interest After Default........................................... 23
4.10.1. Overdue Amounts........................................... 23
4.10.2. Amounts Not Overdue....................................... 23
4.11. Right to Retain the Construction Inspector....................... 24
5. SECURITY AND GUARANTIES.................................................. 24
5.1. Security of Borrower.............................................. 24
5.2. Guaranties of the Guarantors...................................... 24
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
6. REPRESENTATIONS AND WARRANTIES........................................... 24
6.1. Corporate Authority............................................... 25
6.1.1. Incorporation; Good Standing............................... 25
6.1.2. Authorization.............................................. 25
6.1.3. Enforceability............................................. 25
6.2. Governmental Approvals............................................ 25
6.3. Title to Properties............................................... 26
6.4. Financial Statements and Projections.............................. 26
6.4.1. Financial Statements....................................... 26
6.4.2. Budget..................................................... 26
6.5. No Material Changes, etc.......................................... 26
6.6. Franchises, Patents, Copyrights, etc.............................. 27
6.7. Litigation........................................................ 27
6.8. No Materially Adverse Contracts, etc.............................. 27
6.9. Compliance With Other Instruments, Laws, etc...................... 27
6.10. Tax Status....................................................... 28
6.11. No Event of Default.............................................. 28
6.12. Holding Company and Investment Company Acts...................... 28
6.13. Absence of Financing Statements, etc............................. 28
6.14. Perfection of Security Interest.................................. 28
6.15. Certain Transactions............................................. 29
6.16. Employee Benefit Plans........................................... 29
6.16.1. In General................................................ 29
6.16.2. Terminability of Welfare Plans............................ 29
6.16.3. Guaranteed Pension Plans.................................. 29
6.16.4. Multiemployer Plans....................................... 30
6.17. Purpose; Regulations U and X..................................... 30
6.18. Subsidiaries, etc................................................ 30
6.19. Real Property.................................................... 30
6.20. Disclosure....................................................... 30
6.21. Fiscal Year...................................................... 31
6.22. Insurance........................................................ 31
6.23. Contract......................................................... 31
7. AFFIRMATIVE COVENANTS OF THE BORROWER AND THE GUARANTORS................. 31
7.1. Punctual Payment.................................................. 31
7.2. Maintenance of Office............................................. 31
7.3. Records and Accounts.............................................. 32
7.4. Financial Statements, Certificates and Information................ 32
7.5. Notices........................................................... 33
7.5.1. Defaults................................................... 33
7.5.2. Environmental Events....................................... 33
7.5.3. Notification of Claims Against Collateral.................. 34
7.5.4. Notice of Litigation and Judgments......................... 34
7.5.5. Notice of Nonpayment....................................... 34
7.6. Corporate Existence; Maintenance of Properties.................... 34
</TABLE>
ii
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
7.7. Insurance......................................................... 35
7.8. Taxes............................................................. 35
7.9. Inspection of Properties and Books, etc........................... 35
7.9.1. General.................................................... 35
7.9.2. Communication with Accountants............................. 36
7.10. Compliance with Laws, Contracts, Licenses, and Permits........... 36
7.11. Employee Benefit Plans........................................... 36
7.12. Use of Proceeds.................................................. 37
7.13. Commencement, Pursuit and Completion of Construction............. 37
7.14. Approvals........................................................ 37
7.15. Laborers, Subcontractors and Materialmen......................... 37
7.16. Classification................................................... 37
7.17. Further Assurances............................................... 38
8. CERTAIN NEGATIVE COVENANTS OF THE BORROWER AND THE GUARANTORS............ 38
8.1. Restrictions on Indebtedness...................................... 38
8.2. Restrictions on Liens............................................. 39
8.3. Restrictions on Investments....................................... 40
8.4. Distributions; Restricted Prepayments............................. 41
8.4.1. The Borrower............................................... 41
8.4.2. The Guarantors............................................. 41
8.5. Merger; Consolidation; Subsidiaries............................... 42
8.5.1. Mergers and Acquisitions................................... 42
8.5.2. Disposition of Assets...................................... 42
8.5.3. Subsidiaries............................................... 42
8.6. Sale and Leaseback................................................ 42
8.7. Compliance with Environmental Laws................................ 42
8.8. Employee Benefit Plans............................................ 43
8.9. Change of Principal Place of Business or Corporate Name........... 43
8.10. Fiscal Year...................................................... 44
8.11. Restriction on Change Orders..................................... 44
8.12. Transactions with Affiliates..................................... 44
8.13. Business Activities.............................................. 44
8.14. Negative Pledge.................................................. 44
9. FINANCIAL COVENANTS OF THE BORROWER AND THE GUARANTORS................... 44
9.1. Debt Service...................................................... 44
9.2. Leverage.......................................................... 44
10. CLOSING CONDITIONS...................................................... 45
10.1. Loan Documents................................................... 45
10.2. Certified Copies of Charter Documents............................ 45
10.3. Corporate Action................................................. 45
10.4. Incumbency Certificate........................................... 45
10.5. Validity of Liens................................................ 45
10.6. Perfection Certificates and UCC Search Results................... 45
</TABLE>
iii
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
10.7. Certificates of Insurance........................................ 46
10.8. Solvency Certificate............................................. 46
10.9. Permits.......................................................... 46
10.10. Opinions of Counsel............................................. 46
10.11. Payment of Fees................................................. 46
10.12. Construction Inspector Letter................................... 46
11. CONDITIONS TO ALL BORROWINGS............................................ 46
11.1. Representations True; No Event of Default; No Material Changes... 46
11.2. No Legal Impediment.............................................. 47
11.3. Governmental Regulation.......................................... 47
11.4. Proceedings and Documents........................................ 47
11.5. Events Relating to Construction.................................. 47
11.5.1. Loan Documents............................................ 47
11.5.2. Lien Waivers.............................................. 47
11.5.3. Construction Inspector.................................... 47
11.5.4. Effectiveness of Documents................................ 48
11.5.5. Relating to Final Construction Advance.................... 48
12. EVENTS OF DEFAULT; ACCELERATION; ETC.................................... 48
12.1. Events of Default and Acceleration............................... 48
12.2. Termination of Commitment........................................ 52
12.3. Remedies......................................................... 52
12.4. Distribution of Collateral Proceeds.............................. 53
13. SETOFF.................................................................. 54
14. EXPENSES................................................................ 54
15. INDEMNIFICATION......................................................... 55
16. SURVIVAL OF COVENANTS, ETC.............................................. 55
17. ASSIGNMENT AND PARTICIPATION............................................ 56
17.1. Assignment by the Bank........................................... 56
17.2. Participations................................................... 56
17.3. Disclosure....................................................... 56
17.4. Miscellaneous Assignment Provisions.............................. 56
17.5. Assignment by Borrower........................................... 57
18. NOTICES, ETC............................................................ 57
19. GOVERNING LAW........................................................... 57
20. HEADINGS................................................................ 58
21. COUNTERPARTS............................................................ 58
22. ENTIRE AGREEMENT, ETC................................................... 58
23. WAIVER OF JURY TRIAL.................................................... 58
24. CONSENTS, AMENDMENTS, WAIVERS, ETC...................................... 59
25. SEVERABILITY............................................................ 59
</TABLE>
iv
<PAGE>
SCHEDULES
Schedule 1.1 Project Budget
Schedule 1.1(u) Unrestricted
Subsidiaries
Schedule 6.3 Title to Properties;
Leases
Schedule 6.16 Employee Benefit
Plans
Schedule 6.18 Subsidiaries; Joint
Ventures
Schedule 6.19 Real Property
Schedule 6.22 Insurance
Schedule 7.2 Chief Executive
Offices
Schedule 8.1 Existing Indebtedness
Schedule 8.2 Existing Liens
Schedule 8.3 Existing Investments
Schedule 8.4.2 Individuals Holding
Redeemable Stock
EXHIBITS
Exhibit A Form of Note
Exhibit B Form of Construction Advance Request
Exhibit C Plans and Specifications
Exhibit D Form of Security Agreement
Exhibit E Form of Guaranty
Exhibit F Trinity Guaranty
Exhibit G Form of Collateral Assignment
Exhibit H Form of Compliance Certificate
v
<PAGE>
CONSTRUCTION LOAN AGREEMENT
---------------------------
This CONSTRUCTION LOAN AGREEMENT (together with the exhibits and
schedules hereto, this "Loan Agreement") is made as of May 16, 1996, by and
among MORAN BULK CORPORATION (the "Borrower") a Delaware corporation having its
principal place of business at Two Greenwich Plaza, Greenwich, Connecticut
06830, MORAN TRANSPORTATION COMPANY ("Moran"), MORAN TOWING CORPORATION
("Towing" and together with Moran, referred to herein as the "Guarantors"), and
THE FIRST NATIONAL BANK OF BOSTON, a national banking association (the "Bank").
DEFINITIONS AND RULES OF INTERPRETATION.
---------------------------------------
1.1 DEFINITIONS. The following terms shall have the meanings set forth
-----------
in this (S)1 or elsewhere in the provisions of this Loan Agreement referred to
below:
Advance(s). Any advances of the Construction Loan.
----------
Affiliate. Any Person that would be considered to be an affiliate of
---------
the Borrower or a Guarantor under Rule 144(a) of the Rules and Regulations of
the Securities and Exchange Commission, as in effect on the date hereof, if the
Borrower or such Guarantor were issuing securities.
Balance Sheet Date. December 31, 1995.
------------------
Bank. As defined in the preamble hereto.
----
Bank's Head Office. The Bank's head office located at 100 Federal
------------------
Street, Boston, Massachusetts 02110, or at such other location as the Bank may
designate by written notice to the Borrower from time to time.
Bank's Special Counsel. Bingham, Dana & Gould LLP, or such other
----------------------
counsel as may be approved by the Bank.
Base Rate. The higher of (a) the annual rate of interest announced
---------
from time to time by the Bank at its head office in Boston, Massachusetts, as
its "base rate" or (b) one-half of one percent (1/2%) above the Federal Funds
Effective Rate. For the purposes of this definition, "Federal Funds Effective
Rate" shall mean, for any day, the rate per annum equal to the weighted average
of the rates on overnight federal funds transactions with members of the Federal
Reserve System arranged by federal funds brokers, as published for such day (or
if such day is not a Business Day, for the next preceding Business Day) by the
Federal Reserve Bank of New York, or, if such rate is not so published for any
day that is a Business Day, the average of the quotations for such day on such
transactions received by the Bank from three funds brokers of recognized
standing selected by the Bank.
<PAGE>
2
Base Rate Advance. Any Construction Advance or portion thereof
-----------------
bearing interest calculated by reference to the Base Rate.
Borrower. As defined in the preamble hereto.
--------
Builder. Trinity Marine Group, Inc., a Nevada corporation, which will
--------
perform the construction of the Vessel pursuant to the Contract.
Business Day. Any day on which banking institutions in Boston,
------------
Massachusetts are open for the transaction of banking business and, in the case
of Eurodollar Rate Advances, also a day which is a Eurodollar Business Day.
Capitalized Leases. Leases under which the Borrower or a Guarantor is
------------------
the lessee or obligor, the discounted future rental payment obligations under
which are required to be capitalized on the balance sheet of the lessee or
obligor in accordance with GAAP.
CERCLA. See (S)6.18 hereof.
------
Closing Date. The first date on which the conditions set forth in
------------
(S)10 have been satisfied and the first Construction Advance is to be made.
Closing Fee. See (S)4.1.
-----------
Code. The Internal Revenue Code of 1986.
----
Collateral. All of the property, rights and interests of the Borrower
----------
that are or are intended to be subject to the security interests created by the
Security Documents.
Collateral Assignment. The Collateral Assignment of Construction
---------- ----------
Contract and Trinity Guaranty, dated as of the date hereof, entered into among
the Borrower, the Builder, Trinity and the Bank, substantially in the form of
Exhibit G hereto.
- ---------
Commitment. The Bank's commitment to make Construction Advances to
----------
the Borrower, as the same may be reduced from time to time; or if such
commitment is terminated pursuant to the provisions hereof, zero.
Compliance Certificate. See (S)7.4(d) hereof.
----------------------
Consolidated or consolidated. With reference to any term defined
----------------------------
herein, shall mean that term as applied to the accounts of Moran and its
Restricted Subsidiaries, consolidated in accordance with GAAP.
Consolidated Debt Service. As of the end of each fiscal quarter of
-------------------------
Moran, the aggregate amount of Debt Service of Moran and its Restricted
Subsidiaries
<PAGE>
3
for the period of the four consecutive fiscal quarters then ending, determined
on a consolidated basis for such Persons in accordance with GAAP.
Consolidated EBITDA. As of the end of each fiscal quarter of Moran,
------------ ------
the aggregate amount of EBITDA of Moran and its Restricted Subsidiaries for the
period of the four consecutive fiscal quarters then ending, determined on a
consolidated basis for such Persons in accordance with GAAP.
Consolidated Funded Debt. As at the end of each fiscal quarter of
------------ ------ ----
Moran, the aggregate amount of Funded Debt of Moran and its Restricted
Subsidiaries as at such date, determined on a consolidated basis for such
Persons in accordance with GAAP.
Consolidated Operating Cash Flow. As of the end of each fiscal
--------------------------------
quarter of Moran, the aggregate amount of Operating Cash Flow of Moran and its
Restricted Subsidiaries for the period of the four consecutive fiscal quarters
then ending, determined on a consolidated basis for such Persons in accordance
with GAAP.
Construction Advance. See (S)2.1 hereof.
---------------------
Construction Advance Request. See (S)2.6 hereof.
----------------------------
Construction Inspector. Denholm Ship Management or, if the Bank so
----------------------
elects from time to time, the consulting architect, engineer or inspector
appointed by the Bank.
Construction Loan. See (S)2.1 hereof.
-----------------
Construction Loan Advance Date. Each of the dates on which the
------------------------------
Borrower makes a Construction Advance Request under (S)2.1.
Contract. The Vessel Construction Agreement dated as of December 21,
--------
1995, between the Borrower and the Builder, as may be amended from time to time
with the consent of the Bank or changed pursuant to (S)8.11, providing for the
construction of the Vessel, a copy of which has been furnished to the Bank.
Contract Price. The total construction price payable for the
--------------
construction of the Vessel pursuant to the Contract, provided, however, that in
-------- -------
no event shall the Contract Price for the Vessel exceed $7,970,000 without the
prior written consent of the Bank.
Conversion Request. A notice given by the Borrower to the Bank of the
------------------
Borrower's election to convert or continue an Advance in accordance with (S)2.7.
Debt Service. For any fiscal period of any Person, an amount equal to
------------
the sum of (a) the Total Interest Expense of such Person for such period plus
--- ----
(b) the
<PAGE>
4
Total Financial Obligations of such Person for such period, as determined in
accordance with GAAP.
Debt Service Coverage Ratio. The ratio of (a) Consolidated Operating
---------------------------
Cash Flow to (b) Consolidated Debt Service.
Default. See (S)12 hereof.
-------
Distribution. The declaration or payment of any dividend on or in
------------
respect of any shares of any class of capital stock of the Borrower or the
Guarantors, other than dividends payable solely in shares of common stock of the
Borrower or the Guarantors; the purchase, redemption, or other retirement by the
issuer thereof of any shares of any class of capital stock of the Borrower or
the Guarantors, directly or indirectly; the return of capital by the Borrower or
the Guarantors to their shareholders as such; or any other distribution on or in
respect of any shares of any class of capital stock of the Borrower or the
Guarantors.
Dollars or $. Dollars in lawful currency of the United States of
------- -
America.
Domestic Lending Office. Initially the Bank's Head Office, thereafter
-----------------------
such other office as the Bank may, from time to time, designate by written
notice to the Borrower.
Drawdown Date. The date on which any Construction Advance is made or
-------------
is to be made, and the date on which any Construction Advance is converted or
continued in accordance with (S)2.7.
EBITDA. With respect to any Person, and for any period, the Net
------
Income of such Person for such period, after all expenses and other proper
charges but before payment or provision for any income taxes, tax distributions,
interest expense, depreciation or amortization for such period, determined in
accordance with GAAP, and after eliminating therefrom all extraordinary
nonrecurring items of income (or deficit).
Employee Benefit Plan. Any employee benefit plan within the meaning
---------------------
of (S)3(2) of ERISA maintained or contributed to by the Borrower, either
Guarantor or any ERISA Affiliate, other than a Multiemployer Plan.
Environmental Laws. Any federal, state, county, regional or local
------------------
law, statute, or regulation pertaining to environmental matters, including
without limitation, the Resource Conservation and Recovery Act of 1976, the
Comprehensive Environmental Response Compensation and Liability Act of 1980, the
Superfund Amendments and Reauthorization Act of 1986, the Federal Clean Water
Act, the Federal Clean Air Act, the Toxic Substances Control Act, in each case
as amended, and all rules, regulations, judgments, decrees, orders
<PAGE>
5
and licenses arising under or relating to such laws or relating to environmental
matters and which are applicable to the Borrower or the Guarantors.
ERISA. The Employee Retirement Income Security Act of 1974.
-----
ERISA Affiliate. Any Person which is treated as a single employer
---------------
with the Borrower or either Guarantor under (S)414 of the Code.
ERISA Reportable Event. A reportable event with respect to a
----------------------
Guaranteed Pension Plan within the meaning of (S)4043 of ERISA and the
regulations promulgated thereunder as to which the requirement of notice has not
been waived.
Eurocurrency Reserve Rate. For any day with respect to a Eurodollar
-------------------------
Rate Advance, the maximum rate (expressed as a decimal) at which any lender
subject thereto would be required to maintain reserves under Regulation D of the
Board of Governors of the Federal Reserve System (or any successor or similar
regulations relating to such reserve requirements) against "Eurocurrency
Liabilities" (as that term is used in Regulation D), if such liabilities were
outstanding. The Eurocurrency Reserve Rate shall be adjusted automatically on
and as of the effective date of any change in the Eurocurrency Reserve Rate.
Eurodollar Business Day. Any day on which commercial banks are open
-----------------------
for international business (including dealings in Dollar deposits) in London or
such other eurodollar interbank market as may be selected by the Bank in its
sole discretion acting in good faith.
Eurodollar Lending Office. Initially, the Head Office; thereafter,
-------------------------
such other office of the Bank, if any, that shall be making or maintaining
Eurodollar Rate Advances.
Eurodollar Rate. For any Interest Period with respect to a Eurodollar
---------------
Rate Advance, the rate of interest equal to (a) the rate per annum (rounded
upwards to the nearest 1/16 of one percent) at which the Bank's Eurodollar
Lending Office is offered Dollar deposits two (2) Eurodollar Business Days prior
to the beginning of such Interest Period in the interbank eurodollar market
where the eurodollar and foreign currency and exchange operations of such
Eurodollar Lending Office are customarily conducted at or about 10:00 a.m.,
Boston time, for delivery on the first day of such Interest Period for the
number of days comprised therein and in an amount comparable to the amount of
the Eurodollar Rate Advance to which such Interest Period applies, divided by
----------
(b) a number equal to 1.00 minus the Eurocurrency Reserve Rate, if applicable.
Eurodollar Rate Advances. Any Construction Advance or portion thereof
------------------------
bearing interest calculated by reference to the Eurodollar Rate.
<PAGE>
6
Event of Default. See (S)12 hereof.
----------------
Funded Debt. With respect to any Person, the aggregate amount of all
------ ----
Indebtedness of such Person for borrowed money (other than short-term trade
credit), the deferred purchase price of assets (other than short-term trade
credit) and Capitalized Leases.
GAAP. (a) When used in (S)9, whether directly or indirectly through
----
reference to a capitalized term used therein, means (i) principles that are
consistent with the principles promulgated or adopted by the Financial
Accounting Standards Board and its predecessors, in effect for the fiscal year
ended on the Balance Sheet Date, and (ii) to the extent consistent with such
principles, the accounting practice of Moran reflected in its financial
statements for the year ended on the Balance Sheet Date, and (b) when used in
general, other than as provided above, means principles that are (i) consistent
with the principles promulgated or adopted by the Financial Accounting Standards
Board and its predecessors, as in effect from time to time and (ii) consistently
applied with past financial statements of Moran adopting the same principles,
provided that in each case referred to in this definition of "GAAP" a certified
- --------
public accountant would, insofar as the use of such accounting principles is
pertinent, be in a position to deliver an unqualified opinion (other than a
qualification regarding changes in GAAP) as to financial statements in which
such principles have been properly applied.
Governmental Authority. The United States of America, any State
----------------------
thereof, any political subdivision thereof, and any agency, authority,
department, commission, board, bureau, or instrumentality of any of them
(including without limitation the Federal Maritime Commission, MARAD, and the
United States Coast Guard).
Guaranteed Pension Plan. Any employee pension benefit plan within the
-----------------------
meaning of (S)3(2) of ERISA maintained or contributed to by the Borrower, either
Guarantor or any ERISA Affiliate the benefits of which are guaranteed on
termination in full or in part by the PBGC pursuant to Title IV of ERISA, other
than a Multiemployer Plan.
Guarantors. As defined in the preamble hereto.
----------
Guaranty. The Guaranty, dated as of the date hereof, made by the
--------
Guarantors in favor of the Bank, pursuant to which the Guarantors have
guaranteed to the Bank the payment and performance of the Obligations,
substantially in the form of Exhibit E attached hereto.
---------
Hazardous Substances. See (S)6.18(b) hereof.
--------------------
Indebtedness. With respect to any Person, (a) every obligation of
------------
such Person for money borrowed, (b) every obligation of such Person evidenced by
<PAGE>
7
bonds, debentures, notes or other similar instruments, including obligations
incurred in connection with the acquisition of property, assets or businesses,
(c) every reimbursement obligation of such Person with respect to letters of
credit, bankers' acceptances or similar facilities issued for the account of
such Person, (d) every obligation of such Person issued or assumed as the
deferred purchase price of property or services (but excluding (i) trade
accounts payable or accrued liabilities arising in the ordinary course of
business which are not overdue by 60 days or more or are being contested in good
faith and (ii) obligations arising under construction contracts for the
construction of qualified vessels substituted pursuant to the terms of the
Senior Indenture), (e) interest accrued after the commencement of any
bankruptcy, insolvency, receivership or similar proceedings and other interest
that would have accrued but for the commencement of such proceedings, (f) every
Capitalized Lease of such Person, (g) the maximum fixed redemption or repurchase
price of preferred stock of such Person at the time of determination, (h) every
obligation of the type referred to in clauses (a) through (g) of another Person
and all dividends of another Person the payment of which, in either case, such
Person has guaranteed or is responsible or liable, directly or indirectly, as
obligor, guarantor or otherwise. Any reference in this definition to
indebtedness shall be deemed to include any renewals, extensions, refundings,
amendments and modifications to any such indebtedness or any indebtedness issued
in exchange for such indebtedness.
Interest Payment Date. (a) As to any Base Rate Advance, the last day
---------------------
of the calendar quarter which includes the Drawdown Date thereof; and (b) as to
any Eurodollar Rate Advance in respect of which the Interest Period is (i) three
(3) months or less, the last day of such Interest Period and (ii) more than
three (3) months, the date that is three (3) months from the first day of such
Interest Period and, in addition, the last day of such Interest Period.
Interest Period. With respect to each Construction Advance, (a)
---------------
initially, the period commencing on the Drawdown Date of such Advance and ending
on the last day of one of the periods set forth below, as selected by the
Borrower in a Construction Advance Request (i) for any Base Rate Advance, the
last day of the calendar quarter; and (ii) for any Eurodollar Rate Advance, 1,
2, 3, or 6 months; and (b) thereafter, each period commencing on the last day of
the next preceding Interest Period applicable to such Advance and ending on the
last day of one of the periods set forth above, as selected by the Borrower in a
Conversion Request; provided that all of the foregoing provisions relating to
--------
Interest Periods are subject to the following:
(a) if any Interest Period with respect to a Eurodollar Rate Advance
would otherwise end on a day that is not a Eurodollar Business Day, that
Interest Period shall be extended to the next succeeding Eurodollar
Business Day unless the result of such extension would be to carry such
Interest Period into another calendar month, in which event
<PAGE>
8
such Interest Period shall end on the immediately preceding Eurodollar
Business Day;
(b) if any Interest Period with respect to a Base Rate Advance would
end on a day that is not a Business Day, that Interest Period shall end on
the next succeeding Business Day;
(c) if the Borrower shall fail to give notice as provided in (S)2.7,
the Borrower shall be deemed to have requested a conversion of the affected
Eurodollar Rate Advance to a Base Rate Advance and the continuance of all
Base Rate Advances as Base Rate Advances on the last day of the then
current Interest Period with respect thereto;
(d) any Interest Period that begins on the last Eurodollar Business
Day of a calendar month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of such Interest Period)
shall end on the last Eurodollar Business Day of a calendar month; and
(e) any Interest Period relating to any Eurodollar Rate Advance that
would otherwise extend beyond the Maturity Date shall end on the Maturity
Date.
Investments. All expenditures made and all liabilities incurred
-----------
(contingently or otherwise) for the acquisition of stock or Indebtedness of, or
for loans, advances, capital contributions or transfers of property to, or in
respect of any guaranties (or other commitments as described under
Indebtedness), or obligations of, any Person. In determining the aggregate
amount of Investments outstanding at any particular time: (a) the amount of any
Investment represented by a guaranty shall be taken at not less than the
principal amount of the obligations guaranteed and still outstanding; (b) there
shall be included as an Investment all interest accrued with respect to
Indebtedness constituting an Investment unless and until such interest is paid;
(c) there shall be deducted in respect of each such Investment any amount
received as a return of capital (but only by repurchase, redemption, retirement,
repayment, liquidating dividend or liquidating distribution); (d) there shall
not be deducted in respect of any Investment any amounts received as earnings on
such Investment, whether as dividends, interest or otherwise, except that
accrued interest included as provided in the foregoing clause (b) may be
deducted when paid; and (e) there shall not be deducted from the aggregate
amount of Investments any decrease in the value thereof.
Leverage Ratio. The ratio of (a) Consolidated Funded Debt to (b)
--------------
Consolidated EBITDA.
Loan Agreement. As defined in the preamble hereto.
--------------
<PAGE>
9
Loan Documents. This Loan Agreement, the Note and the Security Documents.
--------------
MARAD. The United States Maritime Administration.
-----
Maturity Date. The earlier of (a) sixty (60) days after the "Delivery
-------------
Date" (as such term is defined in the Contract) and (b) December 31, 1996.
Moran. As defined in the preamble hereto.
-----
Multiemployer Plan. Any multiemployer plan within the meaning of (S)3(37)
------------------
of ERISA maintained or contributed to by the Borrower, either Guarantor or any
ERISA Affiliate.
Note. See (S)2.4 hereof.
----
Note Record. The grid attached to the Note, or the continuation of such
-----------
grid, or any other similar record, including computer records, maintained by the
Bank with respect to any Advance referred to in the Note.
Net Income. The consolidated net income (or deficit) of Moran and its
----------
Restricted Subsidiaries, determined in accordance with GAAP, provided that (a)
--------
the net income of any Person which is not a wholly-owned Subsidiary of Moran or
any of its Restricted Subsidiaries but which is consolidated with Moran or any
of its Restricted Subsidiaries or is accounted for by Moran or any of its
Restricted Subsidiaries by the equity method of accounting shall be included for
the purpose of determining net income only to the extent of the amount of cash
dividends or cash distributions paid to Moran or its Restricted Subsidiaries;
(b) the net income of any Person acquired by Moran or any of its Restricted
Subsidiaries or a Subsidiary of Moran or any of its Restricted Subsidiaries in a
pooling of interests transaction for any period prior to the date of such
acquisition shall be excluded; (c) the net income of any Restricted Subsidiary
of Moran that is subject to restrictions at such time, direct or indirect, on
the payment of dividends or the making of distributions to Moran or any of its
Restricted Subsidiaries shall be excluded to the extent of such restrictions
(other than restrictions imposed by applicable law); (d) the net income of (i)
any Unrestricted Subsidiary and (ii) any Subsidiary of which less than 80% of
whose securities having the right (apart from the right under special
circumstances) to vote in the election of directors are owned by Moran or its
wholly-owned Restricted Subsidiaries shall be included only to the extent of the
amount of cash dividends or cash distributions actually paid by such Subsidiary
to Moran or a wholly-owned Restricted Subsidiary of Moran net of any amounts
invested in or otherwise transferred to any Unrestricted Subsidiaries by Moran
or its Restricted Subsidiaries in excess of $5,000,000; (e) in the case of
Moran, the net income attributable to any business, properties or assets
acquired (by way of merger, consolidation, purchase or otherwise) by Moran or
any Restricted Subsidiary of Moran for any period prior to the date of
<PAGE>
10
such acquisition shall be excluded; and (f) all extraordinary gains and losses,
and any gain or loss realized upon the termination of any employee pension
benefit plan, in respect of dispositions of assets other than in the ordinary
course of business and any one-time increase or decrease to net income which is
required to be recorded because of the adoption of new accounting policies,
practices or standards required by GAAP, shall be excluded.
Obligations. All indebtedness, obligations and liabilities of any of the
-----------
Borrower, the Guarantors and/or their affiliates to the Bank, individually or
collectively, existing on the date of this Loan Agreement or arising thereafter,
direct or indirect, joint or several, absolute or contingent, matured or
unmatured, liquidated or unliquidated, secured or unsecured, arising by
contract, operation of law or otherwise, arising or incurred under this Loan
Agreement or any of the other Loan Documents or in respect of any of the
Advances, the Note or any other instruments at any time evidencing any thereof.
Operating Cash Flow. With respect to any Person and for any period, an
-------------------
amount equal to (a) EBITDA of such Person during such period minus (b) cash
-----
payments for all income taxes paid by such Person during such period.
Outstanding. With respect to the Advances, the aggregate unpaid principal
-----------
thereof as of any date of determination.
Parent Credit Agreement. The Revolving Credit Agreement, dated as of July
------ ------ ---------
11, 1994 among Moran, the Restricted Subsidiaries named therein, the Bank and
The First National Bank of Boston, as agent for the banks which are or may
become a party thereto.
PBGC. The Pension Benefit Guaranty Corporation created by (S)4002 of ERISA
----
and any successor entity or entities having similar responsibilities.
Perfection Certificate. The "Perfection Certificate" as defined in the
----------------------
Security Agreement.
Permitted Liens. Liens, security interests and other encumbrances
---------------
permitted by (S)8.2.
Person. Any individual, corporation, partnership, trust, unincorporated
------
association, business, or other legal entity, and any government or any
governmental agency or political subdivision thereof.
Plans and Specifications. All plans and specifications in connection with
------------------------
the construction and design of the Vessel, a copy of which are attached hereto
as Exhibit C.
---------
<PAGE>
11
Project. As the context may require, the design, construction and finish
---------
of the construction of the Vessel including, without limitation, the
installation of fixtures, furniture and equipment thereon.
Project Budget. The estimated Project Costs as set forth on Schedule 1.1
-------------- ------------
hereto.
Project Costs. The total cost to complete the Project, including the
-------------
Contract Price, costs and expenses under and associated with the Contract,
architects' fees and miscellaneous fees and expenses as set forth in the Project
Budget; provided, however, that the aggregate amount of such Project Costs for
-------- -------
the Vessel shall not exceed $8,400,000 without the prior written consent of the
Bank.
Requirements. Any law, ordinance, code, order, rule or regulation of any
------------
Governmental Authority relating in any way to the construction or ownership of
the Vessel, or the use, occupancy and operation of the Vessel following the
completion of its construction.
Restricted Prepayment. As to any Person, any payment or prepayment of
---------------------
principal or repurchase of any Indebtedness of such Person in advance of the
scheduled maturity thereof (as the terms of such Indebtedness are in effect on
the Closing Date).
Restricted Subsidiary. Any Subsidiary of Moran that is designated as a
---------------------
Restricted Subsidiary under the Parent Credit Agreement.
Security Agreement. The Security Agreement, dated as of the date hereof,
------------------
between the Borrower and the Bank and substantially in the form of Exhibit D
---------
attached hereto.
Security Documents. The Guaranty, the Collateral Assignment and the
------------------
Security Agreement.
Senior Indenture. The Indenture, dated as of July 11, 1994, between Moran
----------------
and Fleet National Bank, as successor to Shawmut Bank, N.A., as trustee.
Subsidiary. Any corporation, trust, association, or other business entity
----------
of which the designated parent shall at any time own, directly or indirectly, at
least a majority (by number of votes) of the outstanding voting stock.
Title XI. Title XI of the Merchant Marine Act of 1936, as amended.
----- --
Total Commitment. $7,720,000, as the same may be reduced pursuant to the
----------------
provisions hereof.
<PAGE>
12
Total Financial Obligations. With respect to any fiscal period and any
---------------------------
Person, an amount equal to the sum of all principal payments on long-term
Indebtedness that become due and payable or that are to become due and payable
during such fiscal period pursuant to any agreement or instrument to which such
Person is a party relating to the borrowing of money or the obtaining of credit
or in respect of Capitalized Leases.
Total Interest Expense. For any Person, for any period the aggregate
----------------------
amount of interest in respect of Indebtedness (including amortization of
original issue discount on any Indebtedness and amortization of deferred
financing costs, in each case calculated in accordance with GAAP) and the
interest component of Indebtedness in respect of Capitalized Leases, paid or
accrued (without duplication) by such Person and its Restricted Subsidiaries
during such period, determined on a consolidated basis in accordance with GAAP.
For purposes of this definition, (a) interest on Indebtedness determined on a
fluctuating basis for periods succeeding the date of determination shall be
deemed to accrue at a rate equal to the rate of interest on such Indebtedness as
in effect on the date of determination and (b) interest on Indebtedness in
respect of Capitalized Leases shall be deemed to accrue at an interest rate
reasonably determined by the chief financial officer of such Person to be the
rate of interest implicit in such Indebtedness in respect of Capitalized Leases
in accordance with GAAP.
Towing. As defined in the preamble hereto.
------
Trinity. Trinity Industries, Inc., a Delaware corporation.
-------
Trinity Guaranty. The Parent Guaranty, dated as of January 11, 1996,
------- --------
executed by Trinity in favor of the Borrower, a copy of which is attached hereto
as Exhibit F.
---------
Type. As to any Advance its nature as a Base Rate Advance or a Eurodollar
----
Rate Advance.
Unrestricted Subsidiary. Those Subsidiaries of Moran listed on Schedule
----------------------- --------
1.1(u) hereto and any designated as such pursuant to the Senior Indenture.
- ------
Vessel. The dry bulk carrying barge to be designed, engineered and built
------
in accordance with the Contract and the Plans and Specifications and which shall
be U.S. flagged and eligible for operation in the coastwise trade of the United
States of America.
1.2 RULES OF INTERPRETATION.
-----------------------
(a) A reference to any document or agreement shall include such
document or agreement as amended, modified or supplemented from time
<PAGE>
13
to time in accordance with its terms and the terms of this Loan Agreement.
(b) The singular includes the plural and the plural includes the
singular.
(c) A reference to any law includes any amendment or modification to
such law.
(d) A reference to "the Guarantors" or "either Guarantor" means both
(i) the Guarantors collectively and (ii) each Guarantor individually.
(e) A reference to any Person includes its permitted successors and
permitted assigns.
(f) Accounting terms not otherwise defined herein have the meanings
assigned to them by GAAP applied on a consistent basis by the accounting
entity to which they refer.
(g) The words "include", "includes" and "including" are not limiting.
(h) All terms not specifically defined herein or by GAAP, which terms
are defined in the Uniform Commercial Code as in effect in the Commonwealth
of Massachusetts, have the meanings assigned to them therein, with the term
"instrument" being that defined under Article 9 of the Uniform Commercial
Code.
(i) Reference to a particular "(S)" refers to that section of this
Loan Agreement unless otherwise indicated.
(j) The words "herein", "hereof", "hereunder" and words of like
import shall refer to this Loan Agreement as a whole and not to any
particular section or subdivision of this Loan Agreement.
2 THE CONSTRUCTION LOAN.
---------------------
2.1. AGREEMENT TO MAKE CONSTRUCTION ADVANCES. Subject to the terms and
---------------------------------------
conditions set forth in this Loan Agreement, the Bank agrees to advance to the
Borrower on each Construction Loan Advance Date, upon notice by the Borrower to
the Bank given in accordance with (S)2.6 hereof, an amount equal to the
Construction Advance requested in such notice, provided that (i) the amount
--------
requested shall not exceed the amount required to be paid at such time in
accordance with the payment terms of the Contract and (ii) the sum of the
Outstanding amount of all Construction Advances made by the Bank to the Borrower
pursuant to this (S)2.1 (after giving effect to all amounts requested) shall not
at any time exceed the Total Commitment and, provided further, the
----------------
<PAGE>
14
proceeds of such Construction Advance shall be used to finance the Project Costs
incurred as of such Construction Loan Advance Date in accordance with the
Contract. The aggregate principal amount requested pursuant to (S)2.6 hereof to
be advanced by the Bank to the Borrower on any given Construction Loan Advance
Date is referred to herein, in each instance, as a "Construction Advance", and
the aggregate cumulative principal amount of all sums advanced by the Bank to
the Borrower from time to time pursuant to this (S)2.1 is referred to herein as
the "Construction Loan". Each request for a Construction Advance hereunder shall
constitute a representation and warranty by the Borrower that the conditions set
forth in (S)10 and (S)11 hereof, in the case of the initial Construction Advance
to be made on the Closing Date, and (S)11 hereof, in the case of all other
Construction Advances, have been satisfied on the date of such request.
2.2. COMMITMENT FEE. The Borrower agrees to pay to the Bank a commitment
--------------
fee calculated at the rate of one-half of one percent (1/2%) per annum on the
average daily amount during each calendar quarter or portion thereof from the
Closing Date to the Maturity Date by which the Total Commitment exceeds the
Outstanding amount of the Construction Loan during such calendar quarter. The
commitment fee shall be payable quarterly in arrears on the first day of each
calendar quarter for the immediately preceding calendar quarter commencing on
the first such date following the date hereof, with a final payment on the
Maturity Date or any earlier date on which the Commitment shall terminate.
2.3. REDUCTION OF TOTAL COMMITMENT. The Borrower shall have the right at
-----------------------------
any time and from time to time upon three (3) Business Days prior written notice
to the Bank to reduce by $500,000 or an integral multiple thereof or terminate
entirely the unborrowed portion of the Total Commitment, whereupon the Total
Commitment shall be reduced by the amount specified in such notice or, as the
case may be, terminated. In the case of a reduction of the Total Commitment, the
amount of each remaining Construction Advance shall be reduced pro rata as a
result of such reduction of the Total Commitment. Upon the effective date of any
such reduction or termination, the Borrower shall pay to the Bank the full
amount of any commitment fee then accrued on the amount of the reduction. No
reduction of the Total Commitment may be reinstated.
2.4. THE NOTE. The Construction Loan shall be evidenced by a promissory
--------
note of the Borrower, substantially in the form of Exhibit A attached hereto
------- -
(the "Note"), dated as of the Closing Date and completed with appropriate
insertions. The Note shall be payable to the order of the Bank in a principal
amount equal to the Total Commitment or, if less, the Outstanding amount of all
Construction Advances made by the Bank, plus interest accrued thereon, as set
----
forth below. The Borrower irrevocably authorizes the Bank to make or cause to be
made, at or about the time of the Drawdown Date of any
<PAGE>
15
Construction Advance or at the time of receipt of any payment of principal on
the Note, an appropriate notation on the Note Record reflecting the making of
such Construction Advance or (as the case may be) the receipt of such payment.
The Outstanding amount of the Construction Advances set forth on the Note Record
shall be prima facie evidence of the principal amount thereof owing and unpaid
to the Bank, but the failure to record, or any error in so recording, any such
amount on the Note Record shall not limit or otherwise affect the obligations of
the Borrower hereunder or under the Note to make payments of principal of or
interest on the Note when due.
2.5. INTEREST ON CONSTRUCTION ADVANCES. Except as otherwise provided in
---------------------------------
(S)4.10,
(a) Each Base Rate Advance shall bear interest for the period
commencing with the Drawdown Date thereof and ending on the last day of the
Interest Period with respect thereto at the rate per annum equal to the
Base Rate plus one-quarter percent ( 1/4%).
----
(b) Each Eurodollar Rate Advance shall bear interest for the period
commencing with the Drawdown Date thereof and ending on the last day of the
Interest Period with respect thereto at the rate per annum equal to the
Eurodollar Rate for such Interest Period plus two and one-quarter percent
----
(2 1/4%).
(c) The Borrower promises to pay interest on each Construction
Advance in arrears on each Interest Payment Date with respect thereto.
2.6. REQUESTS FOR CONSTRUCTION ADVANCES. The Borrower shall give to the
----------------------------------
Bank written notice in the form of Exhibit B attached hereto (or telephonic
------- -
notice confirmed in a writing in the form of Exhibit B attached hereto) of each
------- -
Construction Advance requested hereunder (a "Construction Advance Request") no
less than (a) two (2) Business Days prior to any Drawdown Date of any Base Rate
Advance or (b) three (3) Eurodollar Business Days prior to any Drawdown Date of
any Eurodollar Rate Advance. Each such notice shall specify (i) the principal
amount of the Construction Advance; (ii) the amount of the Project Costs to be
funded by the requested Construction Advance (with reference to the Builder's,
subcontractor's or supplier's invoices relating to such Project Costs and/or
other supporting documentation, a copy of which shall have been delivered to the
Bank prior to or together with the Construction Advance Request); (iii) the
aggregate principal amount of the Construction Loan outstanding after giving
effect to the Construction Advance requested; (iv) the Interest Period for such
Construction Advance; and (v) the Type of such Construction Advance. Each such
notice shall be irrevocable and binding on the Borrower and shall obligate the
Borrower to accept from the Bank on the applicable Construction Loan Advance
Date the requested Construction Advance provided in such notice. The amount of
each Base Rate
<PAGE>
16
Advance requested pursuant to each Construction Advance Request shall be in a
minimum aggregate amount of $50,000. The amount of each Eurodollar Rate Advance
requested pursuant to each Construction Advance Request shall be in a minimum
aggregate amount of $250,000.
2.7. CONVERSION OPTIONS.
------------------
2.7.1. CONVERSION TO DIFFERENT TYPE OF CONSTRUCTION ADVANCE.
------ ----------------------------------------------------
The Borrower may elect from time to time to convert any Outstanding
Construction Advance to a Construction Advance of another Type, provided
--------
that (a) with respect to any such conversion of a Eurodollar Rate Advance
to a Base Rate Advance, (i) the Borrower shall give the Bank at least two
(2) Business Days prior written notice of such election and (ii) such
conversion shall only be made on the last day of the Interest Period with
respect thereto; (b) with respect to any such conversion of a Base Rate
Advance to a Eurodollar Rate Advance, the Borrower shall give the Bank at
least three (3) Eurodollar Business Days prior written notice of such
election and (c) no Construction Advance may be converted into a Eurodollar
Rate Advance when any Default or Event of Default has occurred and is
continuing. On the date on which such conversion is being made the Bank
shall take such action as is necessary to transfer such Construction
Advances to its Domestic Lending Office or its Eurodollar Lending Office,
as the case may be. All or any part of Outstanding Construction Advances
of any Type may be converted as provided herein, provided that partial
--------
conversions shall be in an aggregate principal amount of $250,000 or a
whole multiple of $100,000 in excess thereof. Each Conversion Request
relating to the conversion of a Construction Advance to a Eurodollar Rate
Advance shall be irrevocable by the Borrower.
2.7.2. CONTINUATION OF TYPE OF CONSTRUCTION ADVANCE. Any
------ ----------------------------------------------
Construction Advances of any Type may be continued as such upon the
expiration of an Interest Period with respect thereto by compliance by the
Borrower with the notice provisions contained in (S)2.7.1; provided that no
--------
Eurodollar Rate Advance may be continued as such when any Default or Event
of Default has occurred and is continuing, but shall be automatically
converted to a Base Rate Advance on the last day of the first Interest
Period relating thereto ending during the continuance of any Default or
Event of Default of which the officers of the Bank active upon the
Borrower's account have actual knowledge. In the event that the Borrower
fails to provide any such notice with respect to the continuation of any
Eurodollar Rate Advance as such, then such Eurodollar Rate Advance shall be
automatically converted to a Base Rate Advance on the last day of the first
Interest Period relating thereto.
<PAGE>
17
2.7.3. EURODOLLAR RATE ADVANCES. Any conversion to or from
------ -------------------------
Eurodollar Rate Advances shall be in such amounts and be made pursuant to
such elections so that, after giving effect thereto, the aggregate
principal amount of all Eurodollar Rate Advances having the same Interest
Period shall not be less than $250,000 or a whole multiple of $100,000 in
excess thereof.
2.8. FUNDS FOR CONSTRUCTION ADVANCES.
-------------------------------
2.8.1. FUNDING PROCEDURES. Upon the satisfaction of the conditions
------ ------------------
set forth in (S)10 and (S)11 the Bank will make available to the Borrower
the requested Construction Advance in the manner provided in (S)2.8.2.
2.8.2. CONSTRUCTION ADVANCES TO BORROWER OR BUILDER. All
------ --------------------------------------------
Construction Advances made pursuant to this (S)2.8.2 shall be made, at the
sole and absolute discretion of the Bank, either directly to the Borrower
or directly to the Builder for deposit in an appropriately designated
special bank account. In the event that a Construction Advance is made to
the Borrower, the Borrower covenants and agrees that it will, within three
(3) Business Days after the Drawdown Date of such Construction Advance,
provide the Bank with evidence, in form and substance reasonably
satisfactory to the Bank, that the Borrower shall have paid the invoices
for work performed or materials supplied which were submitted by the
Borrower to the Bank with the Construction Advance Request corresponding to
such Construction Advance. In addition, the execution of this Loan
Agreement by the Borrower shall, and hereby does, constitute an irrevocable
authorization to disburse the proceeds of the Construction Advances to fund
progress payments to the Builder when due, in accordance with the
provisions of the Contract. No further authorization from the Borrower
shall be necessary to warrant such direct disbursements of the proceeds of
the Construction Advances to the Builder and all such disbursements shall
(i) be deemed to be Construction Advances hereunder, (ii) satisfy the
obligations of the Bank hereunder and (iii) be secured by the Security
Documents as fully as if made directly to the Borrower.
2.8.3. CONSTRUCTION ADVANCES TO OTHERS. Upon the occurrence and
------ -------------------------------
during the continuance of any Default or Event of Default and following
five (5) days prior written notice to the Borrower (provided that such
prior notice is not required if in the reasonable opinion of the Bank such
prior notice would adversely affect the Collateral or the rights and
benefits of the Bank in respect of the Collateral), the Bank may disburse
all or any portion of the proceeds of any Construction Advance to any
Person to whom the Bank after reasonable inquiry and in good faith
determines payment is due for goods delivered, services rendered or
<PAGE>
18
expenditures incurred in connection with the Project, or in order to
preserve and protect the Collateral in relation to the Project, and any
portion of a Construction Advance so disbursed by the Bank shall be deemed
disbursed as of the date on which the Bank makes such disbursement. Subject
to the provisions of this paragraph, the execution of this Loan Agreement
by the Borrower shall, and hereby does, constitute an irrevocable
authorization so to disburse the proceeds of any Construction Advance and
no further authorization from the Borrower shall be necessary to warrant
such direct disbursements and all such disbursements shall (i) be deemed to
be Construction Advances hereunder, (ii) satisfy the obligations of the
Bank hereunder and (iii) be secured by the Security Documents as fully as
if made directly to the Borrower.
2.8.4. ADVANCES PURSUANT TO CONTRACT. Upon the occurrence and
------ -----------------------------
during the continuance of any Event of Default, the Bank may fund
additional Construction Advances to the Builder or any other Person the
Bank deems necessary to continue and complete all or a portion of the
construction of the Vessel (the Bank hereby agreeing to promptly notify the
Borrower of any such funding). The execution of this Loan Agreement by the
Borrower shall, and hereby does, constitute an irrevocable authorization to
make such Construction Advances and disburse the proceeds in accordance
with this (S)2.8.4, and such Advances shall (i) be deemed to be
Construction Advances hereunder, and (ii) be secured by the Security
Documents as fully as if requested directly by the Borrower and made
directly to the Borrower.
2.8.5. CONSTRUCTION ADVANCES DO NOT CONSTITUTE A WAIVER.
------ ------------------------------------------------
No Construction Advance made by the Bank shall constitute a waiver of any
of the conditions to the obligation of the Bank to make further
Construction Advances nor, in the event that the Borrower or either of the
Guarantors fails to satisfy any such condition, shall any such Construction
Advance have the effect of precluding the Bank from thereafter declaring
such failure to satisfy a condition to be an Event of Default.
Notwithstanding anything to the contrary herein, the Bank shall have no
obligation to make a Construction Advance if the conditions set forth in
(S)10 and (S)11 have not been satisfied.
<PAGE>
19
3. REPAYMENT OF THE CONSTRUCTION LOAN.
----------------------------------
3.1. MATURITY. The Borrower promises to pay on the Maturity Date, and
--------
there shall become absolutely due and payable on the Maturity Date, the entire
unpaid principal balance Outstanding of the Construction Loan on such date,
together with any and all accrued and unpaid interest and commitment fees
thereon.
3.2. MANDATORY REPAYMENTS OF CONSTRUCTION LOAN. If at any time the
-----------------------------------------
Outstanding amount of the Construction Loan exceeds the Total Commitment, then
the Borrower shall immediately pay the amount of such excess to the Bank for
application to the Construction Loan.
3.3. OPTIONAL REPAYMENTS OF CONSTRUCTION LOAN. The Borrower shall have the
----------------------------------------
right, at its election, to repay the Outstanding amount of the Construction
Loan, as a whole or in part, at any time without penalty or premium, provided
--------
that the full or partial prepayment of the Outstanding amount of any Eurodollar
Rate Advance pursuant to this (S)3.3 may be made only on the last day of the
Interest Period relating thereto. The Borrower shall give the Bank, no later
than 10:00 a.m., Boston time, at least two (2) Business Days prior written
notice, of any proposed repayment of Base Rate Advances pursuant to this (S)3.3,
and three (3) Eurodollar Business Days notice of any proposed repayment of
Eurodollar Rate Advances pursuant to this (S)3.3, in each case, specifying the
proposed date of payment of Construction Advances and the principal amount to be
paid. Each such partial prepayment of the Construction Loan shall be in an
integral multiple of $100,000, shall be accompanied by the payment of accrued
interest on the principal repaid to the date of payment and shall be applied, in
the absence of instruction by the Borrower, first to the principal of Base Rate
Advances and then to the principal of Eurodollar Rate Advances.
4. CERTAIN GENERAL PROVISIONS.
--------------------------
4.1. CLOSING FEE. The Borrower agrees to pay to the Bank on the Closing
-----------
Date a closing fee (the "Closing Fee") in an amount equal to (a) 0.005
multiplied by (b) the Total Commitment.
- ---------- --
4.2. FUNDS FOR PAYMENTS.
------------------
4.2.1. PAYMENTS TO BANK. All payments of principal, interest,
------ -----------------
commitment fees and any other amounts due hereunder or under any of the
other Loan Documents shall be made to the Bank at the Bank's Head Office or
at such other location in the Boston, Massachusetts, area that the Bank may
from time to time designate by written notice to the Borrower, in each case
in immediately available funds.
<PAGE>
20
4.2.2. NO OFFSET, ETC. All payments by the Borrower hereunder and
------ --------- ---
under any of the other Loan Documents shall be made without setoff or
counterclaim and free and clear of and without deduction for any taxes,
levies, imposts, duties, charges, fees, deductions, withholdings,
compulsory loans, restrictions or conditions of any nature now or hereafter
imposed or levied by any jurisdiction or any political subdivision thereof
or taxing or other authority therein unless the Borrower is compelled by
law to make such deduction or withholding. If any such obligation is
imposed upon the Borrower with respect to any amount payable by it
hereunder or under any of the other Loan Documents, the Borrower will pay
to the Bank, on the date on which such amount is due and payable hereunder
or under such other Loan Document, such additional amount in Dollars as
shall be necessary to enable the Bank to receive the same net amount which
the Bank would have received on such due date had no such obligation been
imposed upon the Borrower. The Borrower will deliver promptly to the Bank
certificates or other valid vouchers for all taxes or other charges
deducted from or paid with respect to payments made by the Borrower
hereunder or under such other Loan Document.
4.3. COMPUTATIONS. All computations of interest on the Construction
------------
Advances and of commitment or other fees shall be based on a 360-day year and
paid for the actual number of days elapsed. Except as otherwise provided in the
definition of the term "Interest Period" with respect to Eurodollar Rate
Advances, whenever a payment hereunder or under any of the other Loan Documents
becomes due on a day that is not a Business Day, the due date for such payment
shall be extended to the next succeeding Business Day, and interest shall accrue
during such extension. The Outstanding amount of the Advances as reflected on
the Note Record from time to time shall be prima facie evidence of the amounts
so Outstanding.
4.4. INABILITY TO DETERMINE EURODOLLAR RATE. In the event that, prior to
---- --------------------------------------
the commencement of any Interest Period relating to any Eurodollar Rate Advance,
the Bank shall determine that adequate and reasonable methods do not exist for
ascertaining the Eurodollar Rate that would otherwise determine the rate of
interest to be applicable to any Eurodollar Rate Advance during any Interest
Period, the Bank shall forthwith give notice of such determination (which shall
be conclusive and binding on the Borrower) to the Borrower. In such event (a)
each Construction Advance Request or Conversion Request with respect to each
Eurodollar Rate Advance shall be automatically withdrawn and shall be deemed a
request for a Base Rate Advance, (b) each Eurodollar Rate Advance will
automatically, on the last day of the then current Interest Period thereof,
become a Base Rate Advance, and (c) the obligations of the Bank to make
Eurodollar Rate Advances shall be suspended until the Bank determines that the
circumstances giving rise to such suspension no longer exist, whereupon the Bank
shall so notify the Borrower.
<PAGE>
21
4.5. ILLEGALITY. Notwithstanding any other provisions herein, if any
----------
present or future law, regulation, treaty or directive or the interpretation or
application thereof shall make it unlawful for the Bank to make or maintain
Eurodollar Rate Advances, the Bank shall forthwith give notice of such
circumstances to the Borrower and thereupon (a) the commitment of the Bank to
make Eurodollar Rate Advances or convert Advances of another Type to Eurodollar
Rate Advances shall forthwith be suspended and (b) the Advances then Outstanding
as Eurodollar Rate Advances, if any, shall be converted automatically to Base
Rate Advances on the last day of each Interest Period applicable to such
Eurodollar Rate Advances or within such earlier period as may be required by
law. The Borrower hereby agrees to promptly pay the Bank, upon demand, any
additional amounts necessary to compensate the Bank for any costs incurred by
the Bank in making any conversion in accordance with this (S)4.5, including any
interest or fees payable by the Bank to lenders of funds obtained by it in order
to make or maintain its Eurodollar Rate Advances hereunder.
4.6. ADDITIONAL COSTS, ETC. If any present or future applicable law, which
---------------------
expression, as used herein, includes statutes, rules and regulations thereunder
and interpretations thereof by any competent court or by any governmental or
other regulatory body or official charged with the administration or the
interpretation thereof and requests, directives, instructions and notices at any
time or from time to time hereafter made upon or otherwise issued to the Bank by
any central bank or other fiscal, monetary or other authority (whether or not
having the force of law), shall:
(a) subject the Bank to any tax, levy, impost, duty, charge, fee,
deduction or withholding of any nature with respect to this Loan Agreement,
the other Loan Documents, the Commitment or the Advances (other than taxes
based upon or measured by the revenue, income or profits of the Bank), or
(b) materially change the basis of taxation (except for changes in
taxes on revenue, income or profits) of payments to the Bank of the
principal of or the interest on the Advances or any other amounts payable
to the Bank under this Loan Agreement or the other Loan Documents, or
(c) impose or increase or render applicable (other than to the extent
specifically provided for elsewhere in this Loan Agreement) any special
deposit, reserve, assessment, liquidity, capital adequacy or other similar
requirements (whether or not having the force of law) against assets held
by, or deposits in or for the account of, or loans by, or commitments of an
office of the Bank, or
(d) impose on the Bank any other conditions or requirements with
respect to this Loan Agreement, the other Loan Documents, the
<PAGE>
22
Advances, the Commitment, or any class of loans or commitments of which the
Advances or the Commitment forms a part, and the result of any of the
foregoing is
(i) to increase the cost to the Bank of making, funding,
issuing, renewing, extending or maintaining the Advances or the
Commitment, or
(ii) to reduce the amount of principal, interest or other amount
payable to the Bank hereunder on account of the Commitment or the
Advances, or
(iii) to require the Bank to make any payment or to forego any
interest or other sum payable hereunder, the amount of which payment
or foregone interest or other sum is calculated by reference to the
gross amount of any sum receivable or deemed received by the Bank from
the Borrower hereunder,
then, and in each such case, the Borrower will, upon demand made by the Bank at
any time and from time to time and as often as the occasion therefor may arise,
pay to the Bank such additional amounts as will be sufficient to compensate the
Bank for such additional cost, reduction, payment or foregone interest or other
sum.
4.7. CAPITAL ADEQUACY. If after the date hereof the Bank determines that
----------------
(a) the adoption of or change in any law, governmental rule, regulation, policy,
guideline or directive (whether or not having the force of law) regarding
capital requirements for banks or bank holding companies or any change in the
interpretation or application thereof by a court or governmental authority with
appropriate jurisdiction, or (b) compliance by the Bank or any corporation
controlling the Bank with any law, governmental rule, regulation, policy,
guideline or directive (whether or not having the force of law) of any such
entity regarding capital adequacy, has the effect of reducing the return on the
Commitment or the Advances to a level below that which the Bank could have
achieved but for such adoption, change or compliance (taking into consideration
the Bank's then existing policies with respect to capital adequacy and assuming
full utilization of the Bank's capital) by any amount deemed by the Bank to be
material, then the Bank may notify the Borrower of such fact. To the extent that
the amount of such reduction in the return on capital is not reflected in the
Base Rate, the Borrower agrees to pay the Bank for the amount of such reduction
in the return on capital as and when such reduction is determined upon
presentation by the Bank of a certificate in accordance with (S)4.8 hereof. The
Bank shall allocate such cost increases among its customers in good faith and on
an equitable basis.
4.8. CERTIFICATE. A certificate setting forth any additional amounts
-----------
payable pursuant to (S)4.6 or 4.7 and a brief explanation of such amounts which
<PAGE>
23
are due, submitted by the Bank to the Borrower, shall be conclusive evidence,
absent manifest error, that such amounts are due and owing.
4.9. INDEMNITY. Except to the extent of breakage costs arising from a
---------
prepayment of a Eurodollar Rate Advance as a result of an event set forth in
(S)4.4, the Borrower agrees to indemnify the Bank and to hold the Bank harmless
from and against any loss, cost or expense (including loss of anticipated
profits) that the Bank may sustain or incur as a consequence of (a) default by
the Borrower in payment of the principal amount of or any interest on any
Eurodollar Rate Advances as and when due and payable, including any such loss or
expense arising from interest or fees payable by the Bank to lenders of funds
obtained by it in order to maintain its Eurodollar Rate Advances, (b) default by
the Borrower in making a borrowing after the Borrower has given (or is deemed to
have given) a Construction Advance Request or a Conversion Request relating
thereto in accordance with (S)2.6 or (S)2.7 or (c) the making of any payment on
a Eurodollar Rate Advance or the making of any conversion of any such Advance to
a Base Rate Advance on a day that is not the last day of the applicable Interest
Period with respect thereto, including interest or fees payable by the Bank to
lenders of funds obtained by it in order to maintain any such Advances.
4.10. INTEREST AFTER DEFAULT.
----------------------
4.10.1. OVERDUE AMOUNTS. Overdue principal and (to the extent
------- ----------------
permitted by applicable law) interest on the Advances and all other overdue
amounts payable hereunder or under any of the other Loan Documents shall
bear interest compounded monthly and payable on demand at a rate per annum
equal to two percent (2%) above the rate applicable to Base Rate Advances
until such amount shall be paid in full (after as well as before judgment).
4.10.2. AMOUNTS NOT OVERDUE. During the continuance of an Event of
------- -------------------
Default the principal of the Advances not overdue shall, from and after the
fifth day after such Event of Default and until such Event of Default has
been cured or remedied or such Event of Default has been waived by the Bank
pursuant to (S)24, bear interest at a rate per annum equal to the greater
of (i) two percent (2%) above the rate of interest otherwise applicable to
the Advances pursuant to (S)2.5 and (ii) the rate of interest applicable to
overdue principal pursuant to (S)4.10.1.
<PAGE>
24
4.11. RIGHT TO RETAIN THE CONSTRUCTION INSPECTOR.
-------------------------------------------
The Bank shall have the right to retain, at the Borrower's cost and expense
(not to exceed $8,000), the Construction Inspector to perform the following
services on behalf of the Bank:
(a) to make periodic inspections (i) for the purpose of providing the Bank
with an opinion to satisfy the conditions set forth in (S)10.12 and (S)11.5
hereof, and (ii) otherwise for the purpose of assuring that construction of the
Vessel to the date thereof is in accordance with the Plans and Specifications,
and to advise the Bank of the anticipated cost of and time for completion of
construction of the vessel; and
(b) to review and advise the Bank on any proposed change orders or
construction change directives.
Any such review and inspection for the purposes of (S)10.12 or (S)11.5
hereof shall be performed in a timely manner.
The fees of the Construction Inspector shall be paid by the Borrower
forthwith upon billing therefor and expenses incurred by the Bank on account
thereof shall be reimbursed to the Bank forthwith upon request therefor, but the
Bank shall not have any liability to the Borrower on account of (i) the services
performed by the Construction Inspector, (ii) any neglect or failure on the part
of the Construction Inspector to properly perform its services, or (iii) any
approval by the Construction Inspector of construction of the Vessel. Neither
the Bank nor the Construction Inspector assumes any obligation to the Borrower
or any other Person concerning the quality of construction of the Vessel or the
absence therefrom of defects.
5. SECURITY AND GUARANTIES.
-----------------------
5.1. SECURITY OF BORROWER. The Obligations shall be secured by a perfected
--------------------
first priority security interest (subject only to Permitted Liens entitled to
priority under applicable law) in the Vessel and certain other assets of the
Borrower pursuant to the terms of the Security Documents.
5.2. GUARANTIES OF THE GUARANTORS. The Obligations shall also be
----------------------------
guaranteed by the Guarantors pursuant to the terms of the Guaranty.
6. REPRESENTATIONS AND WARRANTIES.
------------------------------
The Borrower and the Guarantors represent and warrant to the Bank as
follows:
<PAGE>
25
6.1. CORPORATE AUTHORITY.
-------------------
6.1.1. INCORPORATION; GOOD STANDING. Each of the Borrower and the
------ -----------------------------
Guarantors (a) is a corporation duly organized, validly existing and in
good standing under the laws of its state of incorporation, (b) has all
requisite corporate power to own its property and conduct its business as
now conducted and as presently contemplated, and (c) is in good standing as
a foreign corporation and is duly authorized to do business in each
jurisdiction where such qualification is necessary except where a failure
to be so qualified would not have a materially adverse effect on the
business, assets or financial condition of the Borrower or the Guarantors.
6.1.2. AUTHORIZATION. The execution, delivery and performance of
------ -------------
this Loan Agreement and the other Loan Documents to which the Borrower or
either of the Guarantors is or is to become a party and the transactions
contemplated hereby and thereby (a) are within the corporate authority of
such Persons, (b) have been duly authorized by all necessary corporate
proceedings, (c) do not conflict with or result in any breach or
contravention of any provision of law, statute, rule or regulation to which
such Persons are subject or any judgment, order, writ, injunction, license
or permit applicable to such Persons and (d) do not conflict with any
provision of the corporate charter or bylaws of, or any agreement or other
instrument binding upon, such Persons.
6.1.3. ENFORCEABILITY. The execution and delivery of this Loan
------ ---------------
Agreement and the other Loan Documents to which the Borrower or either of
the Guarantors is or is to become a party will result in valid and legally
binding obligations of each such Person enforceable against it in
accordance with the respective terms and provisions hereof and thereof,
except as enforceability is limited by bankruptcy, insolvency,
reorganization, moratorium or other laws relating to or affecting generally
the enforcement of creditors' rights and except to the extent that
availability of the remedy of specific performance or injunctive relief is
subject to the discretion of the court before which any proceeding therefor
may be brought.
6.2. GOVERNMENTAL APPROVALS. The execution, delivery and performance by the
----------------------
Borrower and the Guarantors of this Loan Agreement and the other Loan Documents
to which the Borrower or either of the Guarantors is or is to become a party and
the transactions contemplated hereby and thereby do not require the approval or
consent of, or filing with, any Governmental Authority other than the filing of
Uniform Commercial Code financing statements as contemplated by the Loan
Documents.
6.3. TITLE TO PROPERTIES. Except as indicated on Schedule 6.3 hereto,
------------------- ------------
Moran and its consolidated subsidiaries own all of the assets reflected in the
<PAGE>
26
consolidated balance sheet of Moran referred to in (S)6.4.1 or acquired since
the date thereof (except property and assets sold or otherwise disposed of in
the ordinary course of business since that date), subject to no rights of
others, including any mortgages, leases, conditional sales agreements, title
retention agreements, liens or other encumbrances except Permitted Liens.
6.4. FINANCIAL STATEMENTS AND PROJECTIONS.
-------------------------------------
6.4.1. FINANCIAL STATEMENTS. There has been furnished to the Bank a
------ ---------------------
consolidated balance sheet of Moran and its consolidated subsidiaries as at
the Balance Sheet Date, and a consolidated statement of income for the
fiscal year then ended, certified by Moran's independent certified public
accountants. Such balance sheet and statement of income have been prepared
in accordance with GAAP and fairly present the consolidated financial
condition of Moran and its consolidated subsidiaries as at the Balance
Sheet Date and the consolidated results of operations for the fiscal year
then ended. There are no contingent liabilities of Moran or any of its
subsidiaries as of such date involving material amounts, known to the
officers of the Borrower or either of the Guarantors not disclosed in said
balance sheet and the related notes thereto.
6.4.2. BUDGET. The annual operating budget of Moran and its
------ ------
consolidated subsidiaries for the 1996 fiscal year, a copy of which has
been delivered to the Bank, was prepared on the basis of the assumptions
stated therein. To the knowledge of the Borrower and the Guarantors, no
facts exist that (individually or in the aggregate) would reasonably be
expected to result in any material change in such budget.
6.5. NO MATERIAL CHANGES, ETC.
------------------------
(a) Since the Balance Sheet Date there has occurred no materially
adverse change in the financial condition or business of (i) the Borrower
or (ii) Moran and its Restricted Subsidiaries, determined on a consolidated
basis for such Persons, as shown on or reflected in the consolidated
balance sheet of Moran and its Restricted Subsidiaries as at the Balance
Sheet Date, or on the consolidated statement of income for the fiscal year
then ended. Since the Balance Sheet Date, neither the Borrower nor either
of the Guarantors has made any Distributions or Restricted Prepayments.
(b) The Borrower and the Guarantors (before and after giving effect
to the transactions contemplated by this Loan Agreement and the other Loan
Documents) (i) are solvent, (ii) have assets having a fair value in excess
of their liabilities, (iii) have assets having a fair value in excess of
the amount required to pay their liabilities on existing debts as such
<PAGE>
27
debts become absolute and matured, and (iv) have, and expect to continue to
have, access to adequate capital for the conduct of their respective
businesses and the ability to pay their debts from time to time incurred in
connection with the operation of their respective businesses as such debts
mature.
6.6. FRANCHISES, PATENTS, COPYRIGHTS, ETC. The Borrower and the Guarantors
------------------------------------
possess all franchises, patents, copyrights, trademarks, trade names, licenses
and permits, and rights in respect of the foregoing, adequate for the conduct of
their respective businesses substantially as now conducted without known
conflict with any rights of others.
6.7. LITIGATION. There are no actions, suits, proceedings, orders,
----------
injunctions, decisions or investigations of any kind pending, threatened or
issued against the Borrower or the Guarantors before any court, tribunal,
administrative agency or board which (a) if adversely determined, would
reasonably be expected to materially adversely affect or materially impair (i)
the properties, assets, financial condition or business of the Borrower or of
the Guarantors and their subsidiaries on a consolidated basis, (ii) the ability
of the Borrower or the Guarantors to perform their respective obligations under
the Loan Documents, (iii) the right of the Borrower or of the Guarantors and
their subsidiaries on a consolidated basis, to carry on their respective
businesses substantially as now conducted by them, or (iv) the ability of the
Bank to exercise its rights hereunder or under the other Loan Documents; or (b)
question the validity of this Loan Agreement or any of the other Loan Documents
or any action taken or to be taken pursuant hereto or thereto.
6.8. NO MATERIALLY ADVERSE CONTRACTS, ETC. Neither the Borrower nor either
------------------------------------
of the Guarantors is subject to any charter, corporate or other legal
restriction, or any judgment, decree, order, rule or regulation that has or is
expected in the future to have a materially adverse effect on the respective
businesses, assets or financial condition of the Borrower or of the Guarantors
and their subsidiaries on a consolidated basis. Neither the Borrower nor either
of the Guarantors is a party to any contract or agreement that has or is
expected, in the judgment of the officers of the Borrower and the Guarantors, to
have any materially adverse effect on the business of the Borrower or of the
Guarantors and their subsidiaries on a consolidated basis.
6.9. COMPLIANCE WITH OTHER INSTRUMENTS, LAWS, ETC. Neither the Borrower
--------------------------------------------
nor either of the Guarantors is in violation of (i) any provision of their
respective charter documents, bylaws, or (ii) any agreement or instrument to
which they may be subject or by which they or any of their properties may be
bound or (iii) any law (including without limitation, any Environmental Law),
decree, order, judgment, statute, license, rule or regulation, in any of the
foregoing cases in a manner that would reasonably be expected to materially and
adversely affect the respective financial conditions, properties or
<PAGE>
28
businesses of the Borrower or the of Guarantors and their Restricted
Subsidiaries on a consolidated basis.
6.10. TAX STATUS. The Borrower and each of the Guarantors (a) have filed
----------
all federal and state income and all other tax returns, reports and declarations
required by any jurisdiction to which any of them is subject, (b) have paid all
taxes and other governmental assessments and charges shown or determined to be
due on such returns, reports and declarations, except those being contested in
good faith and by appropriate proceedings and (c) have set aside on their books,
to the extent required by GAAP, reserves for taxes for periods subsequent to the
periods to which such returns, reports or declarations apply. There are no
unpaid taxes in any material amount claimed to be due from the Borrower or the
Guarantors by the taxing authority of any jurisdiction.
6.11. NO EVENT OF DEFAULT. No Default or Event of Default has occurred and
-------------------
is continuing.
6.12. HOLDING COMPANY AND INVESTMENT COMPANY ACTS. Neither the Borrower
-------------------------------------------
nor either of the Guarantors is a "holding company", or a "subsidiary company"
of a "holding company", or an "affiliate" of a "holding company", as such terms
are defined in the Public Utility Holding Company Act of 1935; nor is it an
"investment company", or an "affiliated company" or a "principal underwriter" of
an "investment company", as such terms are defined in the Investment Company Act
of 1940.
6.13. ABSENCE OF FINANCING STATEMENTS, ETC. Except with respect to
------------------------------------
Permitted Liens, there is no financing statement, security agreement, chattel
mortgage, real estate mortgage or other document filed or recorded with any
filing records, registry, or other public office, that purports to cover, affect
or give notice of any lien on, or security interest in, any assets or property
of the Borrower or the Guarantors.
6.14. PERFECTION OF SECURITY INTEREST. All filings, assignments, pledges
-------------------------------
and deposits of documents or instruments have been made and all other actions
have been taken that are necessary, under applicable law, to establish and
perfect the Bank's security interest in the Collateral. The Collateral and the
Bank's rights with respect to the Collateral are not subject to any setoff,
claims, withholdings or other defenses. The Borrower is the owner of the
Collateral free from any lien, security interest, encumbrance and any other
claim or demand, except for Permitted Liens. All of the Obligations of the
Borrower will, from and after the execution and delivery of each of the Security
Documents, be entitled to the benefits of and be secured by each of the Security
Documents.
<PAGE>
29
6.15. CERTAIN TRANSACTIONS. Except for transactions permitted under the
--------------------
Parent Credit Agreement, none of the officers, directors, or employees of the
Borrower or either of the Guarantors is currently a party to any transaction
with Borrower or either of the Guarantors (other than for services as employees,
officers and directors), including any contract, agreement or other arrangement
providing for the furnishing of services to or by, providing for rental of real
or personal property to or from, or otherwise requiring payments to or from any
officer, director or such employee or, to the knowledge of the Borrower or
either of the Guarantors, any corporation, partnership, trust or other entity in
which any officer, director, or any such employee has a substantial interest or
is an officer, director, trustee or partner.
6.16. EMPLOYEE BENEFIT PLANS.
----------------------
6.16.1. IN GENERAL. Except as disclosed on Schedule 6.16, each
------- ---------- -------- ----
Employee Benefit Plan has been maintained and operated in compliance in all
material respects with the provisions of ERISA and, to the extent
applicable, the Code, including but not limited to the provisions
thereunder respecting prohibited transactions. The Borrower has heretofore
delivered to the Bank the most recently completed annual report, Form 5500,
with all required attachments, and actuarial statement required to be
submitted under (S)103(d) of ERISA, with respect to each Guaranteed Pension
Plan.
6.16.2. TERMINABILITY OF WELFARE PLANS. Under each Employee Benefit
------- ------------------------------
Plan which is an employee welfare benefit plan within the meaning of
(S)3(1) or (S)3(2)(B) of ERISA, no benefits are due unless the event giving
rise to the benefit entitlement occurs prior to plan termination (except as
required by Title I, Part 6 of ERISA). The Borrower, each Guarantor or an
ERISA Affiliate, as appropriate, may terminate each such plan at any time
(or at any time subsequent to the expiration of any applicable bargaining
agreement) in the discretion of the Borrower, such Guarantor or such ERISA
Affiliate without liability to any Person other than for premiums, payments
and contributions accrued but unpaid as of such date of termination or
subsequently accrued for periods prior to such date.
6.16.3. GUARANTEED PENSION PLANS. Each contribution required to be
------- ------------------------
made to a Guaranteed Pension Plan, whether required to be made to avoid the
incurrence of an accumulated funding deficiency, the notice or lien
provisions of (S)302(f) of ERISA, or otherwise, has been timely made. No
waiver of an accumulated funding deficiency or extension of amortization
periods has been received with respect to any Guaranteed Pension Plan. No
liability to the PBGC (other than required insurance premiums, all of which
have been paid) has been incurred by the Borrower, either Guarantor or any
ERISA Affiliate with respect to any
<PAGE>
30
Guaranteed Pension Plan and since January 1, 1991 there has not been any
ERISA Reportable Event, or any other event or condition which presents a
material risk of termination of any Guaranteed Pension Plan by the PBGC.
Based on the latest valuation of each Guaranteed Pension Plan (which in
each case occurred within twelve months of the date of this
representation), and on the actuarial methods and assumptions employed for
that valuation, the aggregate benefit liabilities of all such Guaranteed
Pension Plans within the meaning of (S)4001 of ERISA did not exceed the
aggregate value of the assets of all such Guaranteed Pension Plans,
disregarding for this purpose the benefit liabilities and assets of any
Guaranteed Pension Plan with assets in excess of benefit liabilities.
6.16.4. MULTIEMPLOYER PLANS. Neither the Borrower, either Guarantor
------- -------------------
nor any ERISA Affiliate has incurred any material liability (including
secondary liability) to any Multiemployer Plan as a result of a complete or
partial withdrawal from such Multiemployer Plan under (S)4201 of ERISA or
as a result of a sale of assets described in (S)4204 of ERISA. Neither the
Borrower, either Guarantor nor any ERISA Affiliate has been notified that
any Multiemployer Plan is in reorganization or insolvent under and within
the meaning of (S)4241 or (S)4245 of ERISA or that any Multiemployer Plan
intends to terminate or has been terminated under (S)4041A of ERISA.
6.17. PURPOSE; REGULATIONS U AND X. The proceeds of the Construction Loan
------- -------------------
shall be used to finance the construction of the Vessel. No portion of the
Construction Loan is to be used for the purpose of purchasing or carrying any
"margin security" or "margin stock" as such terms are used in Regulations U and
X of the Board of Governors of the Federal Reserve System, 12 C.F.R. Parts 221
and 224.
6.18. SUBSIDIARIES, ETC. Moran and Towing have only those Subsidiaries
-----------------
listed on Schedule 6.18 hereto. The Borrower has no Subsidiaries. Except as set
-------------
forth on Schedule 6.18 hereto, neither the Borrower nor either Guarantor is
-------------
engaged in any joint venture or partnership with any other person.
6.19. REAL PROPERTY. Except as set forth on Schedule 6.19, neither of the
------------- -------------
Guarantors nor the Borrower owns or leases (as lessee or sublessee) any real
property.
6.20. DISCLOSURE. Neither this Loan Agreement nor any of the other Loan
----------
Documents contains any untrue statement of a material fact or omits to state a
material fact necessary in order to make the statements herein or therein not
misleading. There is no fact known to either the Borrower or either of the
Guarantors which materially adversely affects, or which would reasonably be
expected to materially adversely affect in the future, exclusive of
<PAGE>
31
effects resulting from changes in general economic or industry conditions, the
business, assets, financial condition or prospects of the Borrower or of the
Guarantors and their subsidiaries on a consolidated basis.
6.21. FISCAL YEAR. The fiscal year of the Borrower, Moran and the other
-----------
Guarantors is the twelve months ending December 31 of each year.
6.22. INSURANCE. Schedule 6.23 attached hereto lists the P&I and hull
--------- -------------
policies and types and amounts of coverage (including deductibles) owned or held
by the Borrower and the Guarantors on the date hereof. Such policies of
insurance are maintained with financially sound and reputable insurance
companies, funds, underwriters or mutual indemnification associations and are of
the kinds, cover such risks and are in such amounts, with such deductibles and
exclusions, as are required under (S)7.7 hereof and under the Security
Documents. All such policies are in full force and effect; are sufficient for
compliance by the Borrower and the Guarantors with all requirements of law and
all agreements to which the Borrower or the Guarantors are a party; are by their
terms valid and enforceable policies that will remain in full force and effect
through the respective dates set forth in such schedule; and coverage thereunder
will not be reduced by, or terminate or lapse by reason of, the transactions
contemplated by this Loan Agreement.
6.23. CONTRACT. The Contract is in full force and effect and both the
--------
Borrower and the Builder are in compliance in all material respects with their
respective obligations under such contract. The work to be performed under the
Contract is the work called for by the Plans and Specifications. All work
required to complete the construction in accordance with the Plans and
Specifications is provided for under the Contract.
7. AFFIRMATIVE COVENANTS OF THE BORROWER AND THE GUARANTORS.
--------------------------------------------------------
The Borrower and the Guarantors covenant and agree that, so long as the
Construction Loan or the Note is Outstanding or the Bank has any obligation to
make any Construction Advance:
7.1. PUNCTUAL PAYMENT. The Borrower will duly and punctually pay or cause
----------------
to be paid the principal and interest on the Advances and the commitment fees
provided for in this Loan Agreement, all in accordance with the terms of this
Loan Agreement and the Note.
7.2. MAINTENANCE OF OFFICE. The Borrower and each of the Guarantors will
----------------------
maintain its chief executive office at those locations listed on Schedule 7.2,
or at such other place in the United States of America as the Borrower or the
Guarantors shall designate upon written notice to the Bank, where notices,
presentations and demands to or upon the Borrower and the Guarantors in respect
of the Loan Documents may be given or made.
<PAGE>
32
7.3. RECORDS AND ACCOUNTS. The Borrower and each of the Guarantors will
--------------------
(a) keep true and accurate records and books of account in which full, true and
correct entries will be made in accordance with GAAP and (b) maintain adequate
accounts and reserves for all taxes (including income taxes), depreciation,
depletion, obsolescence and amortization of its properties contingencies, and
other reserves.
7.4. FINANCIAL STATEMENTS, CERTIFICATES AND INFORMATION. The Borrower will
--------------------------------------------------
cause to be delivered to the Bank:
(a) as soon as practicable, but in any event not later than ninety
(90) days after the end of each fiscal year of Moran, the consolidated
balance sheet of Moran and its subsidiaries as at the end of such year, and
the related consolidated statements of income and of cash flow for such
year, each setting forth in comparative form the figures for the previous
fiscal year, all such statements to be in reasonable detail, prepared in
accordance with GAAP, and certified without qualification by Price
Waterhouse LLP or by other independent certified public accountants
satisfactory to the Bank, together with a written statement from such
accountants to the effect that they have read a copy of this Loan
Agreement, and that, in making the examination necessary to said
certification, they have obtained no knowledge of any Default or Event of
Default, or, if such accountants shall have obtained knowledge of any then
existing Default or Event of Default they shall disclose in such statement
any such Default or Event of Default; provided that such accountants shall
--------
not be liable to the Bank for failure to obtain knowledge of any Default or
Event of Default;
(b) as soon as practicable, but in any event not later than forty-
five (45) days after the end of each of the fiscal quarters of Moran, a
copy of the unaudited consolidated balance sheet of Moran and its
subsidiaries as at the end of such quarter, and the related consolidated
statements of income and cash flow for the portion of Moran's fiscal year
then elapsed, all in reasonable detail and prepared in accordance with
GAAP, together with a certification by the principal financial or
accounting officer of Moran that the information contained in such
financial statements fairly presents the financial position of Moran and
its consolidated subsidiaries on the date thereof (subject to year-end
adjustments);
(c) as soon as practicable, but in any event not later than ninety
(90) days after the end of each fiscal year, the annual budget for Moran
and its consolidated subsidiaries for the next succeeding fiscal year, such
annual budget to be set forth in reasonable detail on a month-to-month
basis;
<PAGE>
33
(d) simultaneously with the delivery of the financial statements
referred to in subsections (a) and (b) above, a statement certified by the
principal financial or accounting officer of Moran (the "Compliance
Certificate"), substantially in the form of Exhibit H hereto and setting
------- -
forth in reasonable detail computations evidencing compliance with the
covenants contained in (S)9 and (if applicable) reconciliations to reflect
changes in GAAP since the Balance Sheet Date;
(e) contemporaneously with the filing or mailing thereof, copies of
all material of a financial nature filed with the Securities and Exchange
Commission or sent to the stockholders of the Borrower or either of the
Guarantors; and
(f) from time to time such other financial data and information
(including accountants' management letters) as the Bank may reasonably
request.
7.5. NOTICES.
-------
7.5.1. DEFAULTS. The Borrower will promptly notify the Bank in
------ ---------
writing of the occurrence of any Default or Event of Default. If any Person
shall give any notice or take any other action in respect of a claimed
default (whether or not constituting an Event of Default) under this Loan
Agreement, the Note, or any other note, evidence of indebtedness, indenture
or other obligation to which or with respect to which the Borrower or the
Guarantors are a party or obligor, whether as principal or surety, the
Borrower or such Guarantor shall forthwith give written notice thereof to
the Bank, describing the notice or action and the nature of the claimed
default.
7.5.2. ENVIRONMENTAL EVENTS. The Borrower and the Guarantors will
------ --------------------
promptly give notice to the Bank (a) of any violation of any Environmental
Law that the Borrower or either Guarantor reports in writing or that is
reportable by such Person in writing (or for which any written report
supplemental to any oral report is made) to any federal, state or local
environmental agency and (b) upon becoming aware thereof, of any inquiry,
proceeding, investigation, or other action, including a notice from any
agency of potential environmental liability, or any federal, state or local
environmental agency or board, that would reasonably be expected to
materially affect the respective assets, liabilities, financial conditions
or operations of the Borrower or of the Guarantors and their subsidiaries
on a consolidated basis, or the Bank's security interests pursuant to the
Security Documents.
7.5.3. NOTIFICATION OF CLAIMS AGAINST COLLATERAL. The Borrower will,
------ -----------------------------------------
immediately upon becoming aware thereof, notify the
<PAGE>
34
Bank in writing of any setoff, claims, withholdings or other defenses to
which any of the Collateral, or the Bank's rights with respect to the
Collateral, are subject.
7.5.4. NOTICE OF LITIGATION AND JUDGMENTS. The Borrower and the
------ ----------------------------------
Guarantors will give notice to the Bank in writing within fifteen (15) days
after becoming aware of any litigation or proceedings threatened in writing
or any pending litigation and proceedings affecting the Borrower or the
Guarantors or to which the Borrower or the Guarantors is or becomes a party
involving an uninsured claim against the Borrower or the Guarantors that
would reasonably be expected to have a materially adverse effect on the
respective businesses, assets or financial conditions of the Borrower or of
the Guarantors and their subsidiaries on a consolidated basis, stating the
nature and status of such litigation or proceedings. The Borrower and the
Guarantors will give notice to the Bank, in writing, in form and detail
satisfactory to the Bank, within ten (10) days after any judgment not
covered by insurance, final or otherwise, against the Borrower or the
Guarantors in an amount in excess of $1,000,000.
7.5.5. NOTICE OF NONPAYMENT. The Borrower and the Guarantors will
------ --------------------
immediately notify the Bank in writing if they receive any written or other
formal notice from the Builder or any laborer, subcontractor or materialman
to the effect that the Builder, such laborer, subcontractor or materialman
has not been paid an amount in excess of $200,000 when due for labor or
materials furnished in connection with the construction of the Vessel.
7.6. CORPORATE EXISTENCE; MAINTENANCE OF PROPERTIES. The Borrower and each
----------------------------------------------
of the Guarantors will do or cause to be done all things necessary to preserve
and keep in full force and effect their respective corporate existence, rights
and franchises. Each (a) will cause all of its properties used or useful in the
conduct of its business to be maintained and kept in good condition, repair and
working order, subject to normal wear and tear, and supplied with all necessary
equipment, (b) will cause to be made all necessary repairs, renewals,
replacements, betterments and improvements thereof, all as in the judgment of
the Borrower or the Guarantors, as the case may be, may be necessary so that the
business carried on in connection therewith may be properly and advantageously
conducted at all times, and (c) will continue to engage primarily in the
businesses now conducted by them and in related businesses; provided that
--------
nothing in this (S)7.6 shall prevent the Borrower or the Guarantors from
discontinuing the operation and maintenance of any of their respective
properties if such discontinuance is, in the judgment of the Borrower or the
Guarantors, as the case may be, desirable in the conduct of its or their
business and does not in the aggregate materially adversely affect the business
of the Borrower or of the Guarantors.
<PAGE>
35
7.7. INSURANCE. The Borrower and each of the Guarantors will maintain with
---------
financially sound and reputable insurers insurance with respect to their
respective properties and businesses against such casualties and contingencies
as shall be in accordance with general practices of businesses engaged in
similar activities in similar geographic areas. In addition, the Borrower will
require the Builder to obtain and maintain at all times during the construction
of the Vessel the insurance required by the Contract; all such insurance shall
contain the written agreement of the insurer to give the Bank thirty (30) days
prior written notice of cancellation, nonrenewal, modification or expiration
thereof. The Borrower will, at its expense, cause the Bank to be named as
additional insured and loss payee under each of the policies providing such
insurance coverage, without recourse against the Bank for payment of premiums,
and with the right to prior notice of any cancellation or termination of
coverage. The Borrower will provide or will cause the Builder to provide the
Bank with certificates evidencing such insurance.
7.8. TAXES. The Borrower and each of the Guarantors will duly pay and
-----
discharge, or cause to be paid and discharged, before the same shall become
overdue, all federal taxes, charges and assessments and, except where the
failure to pay could not reasonably be expected to have a material adverse
effect on the business, assets or financial condition of Moran and its
Restricted Subsidiaries, taken as a whole, all other taxes, assessments and
other governmental charges, in each case imposed upon each of them and their
respective real properties, sales and activities, or any part thereof, or upon
the income or profits therefrom, as well as all claims for labor, materials, or
supplies that if unpaid might by law become a lien or charge upon any of their
respective property; provided that any such tax, assessment, charge, levy or
--------
claim need not be paid if the validity or amount thereof shall currently be
contested in good faith by appropriate proceedings and if the Borrower or the
Guarantors shall have set aside on its books adequate reserves with respect
thereto; and provided further that the Borrower and the Guarantors will pay all
-------- -------
such taxes, assessments, charges, levies or claims forthwith upon the
commencement of proceedings to foreclose any lien that may have attached as
security therefor.
7.9. INSPECTION OF PROPERTIES AND BOOKS, ETC.
----------------------------------------
7.9.1. GENERAL. The Borrower and each of the Guarantors shall permit
--------
the Bank or any of its designated representatives, to visit and inspect any
of the properties of the Borrower or the Guarantors to examine the books of
account of the Borrower or the Guarantors (and to make copies thereof and
extracts therefrom), and to discuss the affairs, finances and accounts of
the Borrower or the Guarantors with, and to be advised as to the same by,
its and their officers, all at such reasonable times and intervals as the
Bank may reasonably request.
<PAGE>
36
7.9.2. COMMUNICATION WITH ACCOUNTANTS. The Borrower and the
-------------------------------
Guarantors authorize the Bank to, in the presence of representatives of the
Borrower or the Guarantors, communicate directly with the Guarantors' and
the Borrower's independent certified public accountants and authorize such
accountants to disclose to the Bank any and all financial statements and
other supporting financial documents and schedules including copies of any
management letter with respect to the business, financial condition and
other affairs of the Borrower or the Guarantors. At the request of the
Bank, the Borrower and the Guarantors shall deliver a letter addressed to
such accountants instructing them to comply with the provisions of this
(S)7.9.2.
7.10. COMPLIANCE WITH LAWS, CONTRACTS, LICENSES, AND PERMITS. The Borrower
------------------------------------------------------
and each of the Guarantors will comply with (a) the applicable laws and
regulations wherever its business is conducted, including all Environmental
Laws, except where the failure to comply could not have a material adverse
effect on the business, assets or financial condition of Moran and its
Restricted Subsidiaries taken as a whole, (b) the provisions of their respective
charter documents and by-laws, (c) all agreements and instruments by which they
or any of their respective properties may be bound, except where the failure to
comply could not have a material adverse effect on the business, assets or
financial condition of Moran and its Restricted Subsidiaries taken as a whole
and (d) all applicable decrees, orders, and judgments, except where the failure
to comply could not have a material adverse effect on the business, assets or
financial condition of Moran and its Restricted Subsidiaries taken as a whole.
If at any time while any Advance or Note is Outstanding or the Bank has any
obligation to make Advances hereunder, any authorization, consent, approval,
permit or license from any officer, agency or instrumentality of any government
shall become necessary or required in order that the Borrower or the Guarantors
may fulfill any of their obligations hereunder, the Borrower and the Guarantors
will immediately take or cause to be taken all reasonable steps within the power
of the Borrower and the Guarantors to obtain such authorization, consent,
approval, permit or license and furnish the Bank with evidence thereof.
7.11. EMPLOYEE BENEFIT PLANS. The Borrower and the Guarantors will (a)
----------------------
promptly upon filing the same with the Department of Labor or Internal Revenue
Service furnish to the Bank, upon its request, a copy of the most recent
actuarial statement required to be submitted under (S)103(d) of ERISA and Annual
Report, Form 5500, with all required attachments, in respect of each Guaranteed
Pension Plan and (b) promptly upon receipt or dispatch, furnish to the Bank any
notice, report or demand sent or received in respect of a Guaranteed Pension
Plan under (S)(S)302, 4041, 4042, 4043, 4063, 4065, 4066 and 4068 of ERISA, or
in respect of a Multiemployer Plan, under (S)(S)4041A, 4202, 4219, 4242, or 4245
of ERISA.
<PAGE>
37
7.12. USE OF PROCEEDS. The Borrower will use the proceeds of the
---------------
Construction Loan solely to finance the construction of the Vessel.
7.13. COMMENCEMENT, PURSUIT AND COMPLETION OF CONSTRUCTION. Pursuant to
----------------------------------------------------
the Contract, the Borrower will cause the Builder to do all work in connection
with the Project in a good and workmanlike manner and without any material
defects. The Borrower will pay all such sums and perform all such acts as may be
appropriate to complete the Project (i) in accordance with the Plans and
Specifications, (ii) in compliance in all material respects with the
Requirements and with all terms and conditions of the Loan Documents, (iii)
without material deviation from the Plans and Specifications unless the Borrower
has obtained the prior approval of the Bank, and (iv) free from any liens,
claims or assessments (actual or contingent) asserted against the Vessel for any
material, labor or other items furnished in connection with the Project.
7.14. APPROVALS. The Borrower will give, or cause the Builder to give, all
---------
such notices to, and take all such other actions with respect to, each
Governmental Authority as may be required in order to comply with all applicable
Requirements in the completion of the construction of the Vessel and the use and
operation of the Vessel.
7.15. LABORERS, SUBCONTRACTORS AND MATERIALMEN. The Borrower shall use its
----------------------------------------
best efforts to cause the Builder to furnish to the Bank, upon request at any
time, and from time to time, evidence, satisfactory to the Bank, of all
laborers, subcontractors, materialmen, and any other Persons who might or could
claim statutory or common law liens, and who are furnishing or have furnished
labor or material in connection with the Project, or any part thereof, in each
case in excess of $100,000 and in the aggregate in excess of $250,000, together
with affidavits or other evidence satisfactory to the Bank, showing that such
parties have been paid all amounts then due for labor and materials furnished in
connection with the Project. The Borrower shall use its best efforts to cause
the Builder to furnish to the Bank, at any time and from time to time upon
demand by the Bank, lien waivers bearing a then current date and prepared on a
form satisfactory to the Bank from the Builder and any such subcontractors or
materialmen to whom amounts equal to or exceeding $100,000 are owed, in each
case, and $250,000 in the aggregate, as the Bank may request.
7.16. CLASSIFICATION. When completed, the Vessel will be in compliance
--------------
with the requirements of the American Bureau of Shipping or any other recognized
classification society selected by the Borrower and reasonably acceptable to the
Bank, for the classification specified in the Contract.
7.17. FURTHER ASSURANCES. The Borrower and each of the Guarantors will
------------------
cooperate with the Bank and execute such further instruments and
<PAGE>
38
documents as the Bank shall reasonably request to carry out to its satisfaction
the transactions contemplated by this Loan Agreement and the other Loan
Documents.
8. CERTAIN NEGATIVE COVENANTS OF THE BORROWER AND THE GUARANTORS
-------------------------------------------------- ----------
The Borrower and the Guarantors covenant and agree that, so long as any
Advance or Note is Outstanding or the Bank has any obligation to make any
Construction Advances:
8.1. RESTRICTIONS ON INDEBTEDNESS.
----------------------------
Neither the Borrower nor the Guarantors will create, incur, assume,
guarantee or be or remain liable, contingently or otherwise, with respect to any
Indebtedness other than:
(a) Indebtedness to the Bank arising under any of the Loan Documents;
(b) current liabilities of the Borrower and the Guarantors incurred
in the ordinary course of business not incurred through (i) the borrowing
of money, or (ii) the obtaining of credit except for credit on an open
account basis customarily extended and in fact extended in connection with
normal purchases of goods and services;
(c) Indebtedness in respect of taxes, assessments, governmental
charges or levies and claims for labor, materials and supplies to the
extent that payment therefor shall not at the time be required to be made
in accordance with the provisions of (S)7.8;
(d) Indebtedness in respect of judgments or awards that have been in
force for less than the applicable period for taking an appeal so long as
execution is not levied thereunder or in respect of which the Borrower or
the Guarantors, as the case may be, shall at the time in good faith be
prosecuting an appeal or proceedings for review and in respect of which a
stay of execution shall have been obtained pending such appeal or review;
(e) endorsements for collection, deposit or negotiation and
warranties of products or services, in each case incurred in the ordinary
course of business;
(f) Indebtedness incurred in connection with the acquisition after
the date hereof of any real or personal property (other than the Vessel or
equipment associated therewith) by the Guarantors, provided that the
--------
aggregate principal amount of such Indebtedness incurred in connection with
the acquisition after the date hereof of any real or personal property of
the Guarantors shall not exceed the aggregate amount of $20,000,000 at any
one time;
<PAGE>
39
(g) Indebtedness of the Guarantors otherwise permitted under the
Parent Credit Agreement; and
(h) Indebtedness existing on the date of this Loan Agreement and
listed and described on Schedule 8.1 hereto and renewals, extensions or
-------- ---
refinancings thereof, provided that such renewals, extensions or
--------
refinancings shall not increase the aggregate amount of such Indebtedness,
increase the amount of collateral securing such Indebtedness or materially
change the terms thereof.
8.2. RESTRICTIONS ON LIENS. Neither the Borrower nor the Guarantors will
---------------------
(a) create or incur or suffer to be created or incurred or to exist any lien,
encumbrance, mortgage, pledge, charge, restriction or other security interest of
any kind upon any of its property or assets of any character whether now owned
or hereafter acquired, or upon the income or profits therefrom; (b) transfer any
of such property or assets or the income or profits therefrom for the purpose of
subjecting the same to the payment of Indebtedness or performance of any other
obligation in priority to payment of its general creditors; (c) except as set
forth in (S)8.1, acquire, or agree or have an option to acquire, any property or
assets upon conditional sale or other title retention or purchase money security
agreement, device or arrangement; (d) suffer to exist for a period of more than
sixty (60) days after the same shall have been incurred any Indebtedness or
claim or demand against it that if unpaid might by law or upon bankruptcy or
insolvency, or otherwise, be given any priority whatsoever over its general
creditors; or (e) except as permitted under the Parent Credit Agreement, sell,
assign, pledge or otherwise transfer any accounts, contract rights, general
intangibles, chattel paper or instruments, with or without recourse; provided
--------
that the Borrower and the Guarantors may create or incur or suffer to be created
or incurred or to exist:
(a) liens to secure taxes, assessments and other government charges
in respect of obligations not overdue or liens on properties to secure
claims for labor, material or supplies in respect of obligations not
overdue;
(b) deposits or pledges made in connection with, or to secure payment
of, workmen's compensation, unemployment insurance, old age pensions or
other social security obligations;
(c) liens on properties other than the Vessel in respect of judgments
or awards, the Indebtedness with respect to which is permitted by
(S)8.1(d);
(d) liens of carriers, warehousemen, mechanics and materialmen, and
other like liens on properties other than the Vessel in existence less than
120 days from the date of creation thereof in respect of obligations not
overdue;
<PAGE>
40
(e) encumbrances consisting of easements, rights of way, zoning
restrictions, restrictions on the use of real property and defects and
irregularities in the title thereto, landlord's or lessor's liens under
leases to which the Borrower or the Guarantors are a party, and other minor
liens or encumbrances none of which in the reasonable opinion of the
Borrower interferes materially with the use of the property affected in the
ordinary conduct of the business of the Borrower or the Guarantors, which
defects do not individually or in the aggregate have a materially adverse
effect on the business of the Borrower individually or of the Borrower and
the Guarantors on a consolidated basis;
(f) currently outstanding liens listed on Schedule 8.2 hereto and
-------- ---
renewals or extensions thereof;
(g) purchase money security interests in or purchase money mortgages
on real or personal property other than the Vessel acquired after the date
hereof to secure purchase money Indebtedness of the type and amount
permitted by (S)8.1(f) or (g), incurred in connection with the acquisition
of such property, which security interests or mortgages cover only the real
or personal property so acquired, and any renewals or extensions thereof;
(h) liens on property of the Guarantors otherwise permitted under the
Parent Credit Agreement; and
(i) liens in favor of the Bank under the Loan Documents.
8.3. RESTRICTIONS ON INVESTMENTS. Neither the Borrower nor the Guarantors
---------------------------
will make or permit to exist or to remain outstanding any Investment except
Investments in:
(a) marketable direct or guaranteed obligations of the United States
of America that mature within one (1) year from the date of purchase by the
Borrower or the Guarantors;
(b) demand deposits, certificates of deposit, bankers acceptances and
time deposits of United States banks having total assets in excess of
$1,000,000,000;
(c) securities commonly known as "commercial paper" issued by a
corporation organized and existing under the laws of the United States of
America or any state thereof that at the time of purchase have been rated
and the ratings for which are not less than "P 1" if rated by Moody's
Investors Services, Inc., and not less than "A 1" if rated by Standard and
Poor's;
<PAGE>
41
(d) Investments existing on the date hereof and listed on Schedule
--------
8.3 hereto;
---
(e) Investments consisting of the Guaranty;
(f) Investments of the Guarantors and the Borrower otherwise
permitted under the Parent Credit Agreement; and
(g) Investments of the Guarantors constituting the repurchase of the
promissory notes issued by Moran pursuant to the Senior Indenture, provided
--------
that, the aggregate amount of Investments permitted pursuant to this
----
(S)8.3(g) plus the aggregate amount of Restricted Prepayments permitted
----
pursuant to (S)8.4.2 shall not exceed $3,000,000 in any one fiscal year.
8.4. DISTRIBUTIONS; RESTRICTED PREPAYMENTS.
-------------------------------------
8.4.1. THE BORROWER. The Borrower shall not make any Restricted
Prepayments or Distributions other than (a) Restricted Prepayments set
forth in (S)3 hereof, (b) Distributions constituting dividends payable by
the Borrower to Towing, and (c) Restricted Prepayments of Indebtedness of
the Borrower owed to Moran or any Restricted Subsidiary.
8.4.2. THE GUARANTORS.
------ --------------
(a) Neither of the Guarantors shall make any Restricted Prepayment
constituting the repurchase of the promissory notes issued by Moran
pursuant to the Senior Indenture if, after making such Restricted
Prepayment and after giving effect thereto, the aggregate amount of
Restricted Prepayments permitted pursuant to this (S)8.4.2 plus the
----
aggregate amount of Investments permitted pursuant to (S)8.3(g) shall
exceed $3,000,000 in any one fiscal year.
(b) Neither of the Guarantors shall make any Distributions other than
Distributions (i) constituting dividends payable by Towing to Moran, (ii)
constituting the redemption of any capital stock of Moran from those
individuals set forth on Schedule 8.4.2 hereto upon such person's death,
-------- -----
incapacity, resignation, retirement or termination of employment provided
--------
that no Default or Event of Default has occurred and is continuing or would
----
result therefrom and provided further that the aggregate amount of all such
-------- -------
redemptions permitted pursuant to this clause (ii) shall not exceed Three
Million Dollars ($3,000,000), or (iii) otherwise permitted under the Parent
Credit Agreement.
<PAGE>
42
8.5. MERGER; CONSOLIDATION; SUBSIDIARIES.
-----------------------------------
8.5.1. MERGERS AND ACQUISITIONS. The Borrower shall not become a
------ ------------------------
party to any merger or consolidation, or agree to or effect any asset
acquisition or stock acquisition (other than the acquisition of assets in
the ordinary course of business consistent with past practices). Neither of
the Guarantors will become a party to any merger or consolidation, or agree
to or effect any asset acquisition or stock acquisition, except as
permitted under the Parent Credit Agreement.
8.5.2. DISPOSITION OF ASSETS. The Borrower may sell, transfer or
otherwise dispose of (collectively, "Transfer") any of the Collateral
provided that (a) such Transfer is made expressly subject to the security
-------- ----
interest of the Bank in such Collateral, and (b) such Transfer is in the
---
ordinary course of business, consistent with past practices or is otherwise
permitted under the Parent Credit Agreement, and (c) contemporaneously with
---
such Transfer, the transferee of such Collateral shall guaranty (if it has
not already done so) the Borrower's obligations hereunder and under the
Note and the other Loan Documents pursuant to such instruments and
documents as shall be acceptable to the Bank. Neither of the Guarantors
will become a party to or agree to or effect any disposition of assets,
except as permitted under the Parent Credit Agreement.
8.5.3. SUBSIDIARIES. The Borrower shall not have any Subsidiaries.
------ ------------
8.6. SALE AND LEASEBACK. Neither the Borrower nor the Guarantors will
------------------
enter into any arrangement, directly or indirectly, whereby the Borrower or
either Guarantor shall sell or transfer any property owned by it in order then
or thereafter to lease such property or lease other property that the Borrower
or either Guarantor intends to use for substantially the same purpose as the
property being sold or transferred.
8.7. COMPLIANCE WITH ENVIRONMENTAL LAWS. Neither the Borrower nor the
----------------------------------
Guarantors will (a) use any real property owned or leased by them or any portion
thereof for the handling, processing, storage or disposal of Hazardous
Substances (other than in compliance with all applicable Environmental Laws),
(b) cause or permit to be located on any of such real property any underground
tank or other underground storage receptacle for Hazardous Substances (other
than in compliance with all applicable Environmental Laws), (c) generate any
Hazardous Substances on any of such real property (other than in compliance with
all applicable Environmental Laws), (d) conduct any activity on any such real
property or use any such real property in any manner so as to cause a release
(i.e. releasing, spilling, leaking,
<PAGE>
43
pumping, pouring, emitting, emptying, discharging, injecting, escaping,
leaching, disposing or dumping) or threatened release of Hazardous Substances
on, upon or into such real property which could reasonably be expected to have a
material adverse effect on the business, assets or financial condition of the
Borrower or Moran and its Restricted Subsidiaries taken as a whole, or (e)
otherwise conduct any activity at any such real property or use any such real
property in any manner that would violate any Environmental Law or bring such
real property in violation of any Environmental Law, in each case if such
violation would have a material adverse effect on the business, assets or
financial condition of the Borrower or Moran and its Restricted Subsidiaries
taken as a whole.
8.8. EMPLOYEE BENEFIT PLANS. Neither the Borrower, the Guarantors nor any
----------------------
ERISA Affiliate will:
(a) engage in any "prohibited transaction" within the meaning of
(S)406 of ERISA or (S)4975 of the Code which could result in a material
liability for the Borrower or the Guarantors; or
(b) permit any Guaranteed Pension Plan to incur an "accumulated
funding deficiency", as such term is defined in (S)302 of ERISA, whether or
not such deficiency is or may be waived; or
(c) fail to contribute to any Guaranteed Pension Plan to an extent
which, or terminate any Guaranteed Pension Plan in a manner which, could
result in the imposition of a lien or encumbrance on the assets of the
Borrower or the Guarantors pursuant to (S)302(f) or (S)4068 of ERISA; or
(d) permit or take any action which would result in the aggregate
benefit liabilities (with the meaning of (S)4001 of ERISA) of all
Guaranteed Pension Plans exceeding the value of the aggregate assets of
such Plans, disregarding for this purpose the benefit liabilities and
assets of any such Plan with assets in excess of benefit liabilities.
8.9. CHANGE OF PRINCIPAL PLACE OF BUSINESS OR CORPORATE NAME. The Borrower
-------------------------------------------------------
will not change its principal place of business or its corporate name unless it
shall have (a) given the Bank at least thirty (30) days' advance written notice
of such change, and (b) filed in all necessary jurisdictions such documents as
may be necessary to continue without impairment or interruption the perfection
and priority of the liens on the Collateral in favor of the Bank pursuant to the
Security Documents.
8.10. FISCAL YEAR. Neither the Guarantors nor the Borrower will change its
-----------
fiscal year from that set forth in (S)6.22 hereof.
<PAGE>
44
8.11. RESTRICTION ON CHANGE ORDERS. The Borrower will not cause, permit or
----------------------------
suffer to exist any deviations from the Plans and Specifications, nor approve or
consent to any change order or construction change directive, without the prior
approval of the Bank, except for deviations or change orders not exceeding
$100,000 individually and $250,000 in the aggregate.
8.12. TRANSACTIONS WITH AFFILIATES. Neither the Borrower nor the
----------------------------
Guarantors will (a) engage in any transaction with any Affiliate on terms more
favorable to such Affiliate than would have been obtainable on an arms'-length
basis, considered from the perspective of the Borrower or such Guarantor or (b)
pay, or enter into any agreement requiring the Borrower or such Guarantor to
pay, salary or bonus or other compensation payments to any officer or management
employee of the Borrower or such Guarantor or holder of any title or office, in
an amount in excess of reasonable compensation paid for similar service by
similar businesses similarly situated, provided that, the Guarantors shall be
--------
permitted to engage in those transactions permitted under (S)9.12 of the Parent
Credit Agreement.
8.13. BUSINESS ACTIVITIES. Neither the Borrower nor either of the
-------------------
Guarantors will engage in any business activity, joint venture or partnership it
is not otherwise engaged in on the Closing Date or which is not incidental or
related to the lines of business in which they are respectively engaged on the
Closing Date.
8.14. NEGATIVE PLEDGE. Neither the Borrower nor the Guarantors will enter
---------------
into any agreement limiting such Person's right to grant the Bank a lien or
security interest in the Collateral.
9. FINANCIAL COVENANTS OF THE BORROWER AND THE GUARANTORS.
------------------------------------------------------
9.1. DEBT SERVICE. Neither the Borrower nor the Guarantors will permit
------------
the Debt Service Coverage Ratio, calculated as of the end of each fiscal quarter
of Moran, to be less than 1.35:1.00 as of any fiscal quarter end.
9.2. LEVERAGE. Neither the Borrower nor the Guarantors will permit the
--------
Leverage Ratio, calculated as of the end of each fiscal quarter of Moran, to be
greater than 6.00:1.00 as of any fiscal quarter end.
<PAGE>
45
10. CLOSING CONDITIONS.
------------------
The obligations of the Bank to make the initial Construction Advance shall
be subject to the satisfaction of the following conditions precedent on or prior
to May 16, 1996:
10.1. LOAN DOCUMENTS. Each of the Loan Documents shall have been duly
--------------
executed and delivered by the respective parties thereto, shall be in full force
and effect and shall be in form and substance satisfactory to the Bank.
10.2. CERTIFIED COPIES OF CHARTER DOCUMENTS. The Bank shall have received
-------------------------------------
from each of the Guarantors and the Borrower a copy, certified by a duly
authorized officer of each such Person to be true and complete on the Closing
Date, of (a) its charter or other incorporation documents as in effect on such
date of certification, and (b) its by-laws as in effect on such date.
10.3. CORPORATE ACTION. All corporate action necessary for the valid
----------------
execution, delivery and performance by the Guarantors and the Borrower of this
Loan Agreement and the other Loan Documents to which such Person is or is to
become a party shall have been duly and effectively taken, and evidence thereof
satisfactory to the Bank shall have been provided to the Bank.
10.4. INCUMBENCY CERTIFICATE. The Bank shall have received from the
----------------------
Guarantors and the Borrower an incumbency certificate, dated as of the Closing
Date, signed by a duly authorized officer of each such Person and giving the
name and bearing a specimen signature of each individual who shall be
authorized: (a) to sign, in the name and on behalf of each of such Person the
Loan Documents to which each such Person is or is to become a party; (b) in the
case of the Borrower, to make Construction Advance Requests and Conversion
Requests; and (c) to give notices and to take other action on its behalf under
the Loan Documents.
10.5. VALIDITY OF LIENS. The Security Documents shall be effective to
-----------------
create in favor of the Bank a legal, valid and enforceable first priority
(except for Permitted Liens) security interest in the Collateral. All filings,
recordings, deliveries of instruments and other actions necessary or desirable
in the opinion of the Bank to protect and preserve such security interests shall
have been duly effected. The Bank shall have received evidence thereof in form
and substance satisfactory to the Bank.
10.6. PERFECTION CERTIFICATES AND UCC SEARCH RESULTS. The Bank shall have
----------------------------------------------
received from the Borrower a completed and fully executed Perfection Certificate
and the results of UCC searches with respect to its Collateral, indicating no
liens other than Permitted Liens and otherwise in form and substance
satisfactory to the Bank.
<PAGE>
46
10.7. CERTIFICATES OF INSURANCE. The Bank shall have received a
-------------------------
certificate of insurance from an independent insurance broker dated as of the
Closing Date, identifying insurers, types of insurance, insurance limits, and
policy terms, and otherwise describing the insurance obtained in accordance with
the provisions hereof and of the Security Agreement and the Contract.
10.8. SOLVENCY CERTIFICATE The Bank shall have received an officer's
certificate of the Borrower and the Guarantors dated as of the Closing Date as
to the solvency of the Borrower and the Guarantors following the consummation of
the transactions contemplated herein and in form and substance satisfactory to
the Bank.
10.9. PERMITS. The Bank shall have received evidence that all licenses and
-------
permits required for the commencement of construction of the Vessel, if any,
shall have been obtained.
10.10. OPINIONS OF COUNSEL. The Bank shall have received opinions
-------------------
addressed to the Bank, dated as of the Closing Date, in form and substance
satisfactory to the Bank, from (i) Finn, Dixon & Herling, counsel to the
Borrower and the Guarantors and (ii) Gerald & Brand, local Mississippi counsel
to the Borrower and the Guarantors.
10.11. PAYMENT OF FEES. The Borrower shall have paid to the Bank the
---------------
Closing Fee.
10.12. CONSTRUCTION INSPECTOR LETTER The Construction Inspector shall have
-----------------------------
delivered to the Bank a report to the effect that: (a) the Plans and
Specifications relating to the construction of the Vessel by the Builder
pursuant to the Contract satisfactorily provide for the construction of the
Vessel and (b) in the opinion of the Construction Inspector, construction of the
Vessel can be completed on or before the "Delivery Date" (as such term is
defined in the Contract) for an amount not greater than the Contract Price.
11. CONDITIONS TO ALL BORROWINGS.
----------------------------
The obligations of the Bank to make or convert any Construction Advances,
whether on or after the Closing Date, shall also be subject to the satisfaction
of the following conditions precedent:
11.1. REPRESENTATIONS TRUE; NO EVENT OF DEFAULT; NO MATERIAL CHANGES.
--------------------------------------------------------------
Each of the representations and warranties of the Borrower and each of the
Guarantors contained in this Loan Agreement, the other Loan Documents or in any
document or instrument delivered pursuant to or in connection with this Loan
Agreement, and each of the representations and warranties of the Builder
contained in the Contract, shall be true on and as of the date on which they
were made and shall also be true at and as of the time of the making, or
conversion, of such Advances, with the same effect as if made at
<PAGE>
47
and as of that time (except to the extent of changes resulting from transactions
contemplated or permitted by this Loan Agreement and the other Loan Documents
and changes occurring in the ordinary course of business that singly or in the
aggregate are not materially adverse, and except to the extent that such
representations and warranties relate expressly to an earlier date). No Default
or Event of Default shall have occurred and be continuing.
11.2. NO LEGAL IMPEDIMENT. No change shall have occurred in any law or
-------------------
regulation thereunder or interpretations thereof that in the reasonable opinion
of the Bank would make it illegal for the Bank to make or convert such Advances.
11.3. GOVERNMENTAL REGULATION. The Bank shall have received such
-----------------------
statements, in substance and form reasonably satisfactory to it, as it shall
require for the purpose of compliance with any applicable regulations of the
Comptroller of the Currency or the Board of Governors of the Federal Reserve
System.
11.4. PROCEEDINGS AND DOCUMENTS. All proceedings in connection with the
transactions contemplated by this Loan Agreement, the other Loan Documents and
all other documents incident thereto shall be satisfactory in substance and in
form to the Bank and the Bank's Special Counsel, and the Bank and such counsel
shall have received all information and such counterpart originals or certified
or other copies of such documents as the Bank may reasonably request.
11.5. EVENTS RELATING TO CONSTRUCTION.
-------------------------------
11.5.1. LOAN DOCUMENTS. The Borrower shall have delivered to the
------- ---------------
Bank a Construction Advance Request pursuant to (S)2.6 hereof together with
the required supporting documentation (including, without limitation,
invoices for work performed or supplies provided) relating to the progress
payment(s) to the Builder, subcontractor or supplier to be funded with the
proceeds of such Construction Advance.
11.5.2. LIEN WAIVERS. The Borrower shall have delivered to the
------- -------------
Bank written lien waivers, in form and substance reasonably satisfactory to
the Bank, from the Builder and from laborers, subcontractors and
materialmen for work done or materials supplied by them, in each case in
excess of $250,000, and in the aggregate in excess of $1,000,000.
11.5.3. CONSTRUCTION INSPECTOR. The Bank shall be satisfied that,
------- ----------------------
based on on-site observations and on reports by the Builder, the Borrower
and/or the Construction Inspector (as the case may be), the construction of
the Vessel to the date thereof has been performed in a good and workmanlike
manner, in compliance with all Requirements, and in accordance in all
material respects with the Plans and Specifications
<PAGE>
48
and that the requested Construction Advance covers payments required to be
made in accordance with the terms of the Contract.
11.5.4. EFFECTIVENESS OF DOCUMENTS. The Contract and the Trinity
------- --------------------------
Guaranty shall remain in full force and effect, and there shall not be any
default, and no event of default shall have occurred and be continuing,
under the Contract.
11.5.5. RELATING TO FINAL CONSTRUCTION ADVANCE. In connection
------- --------------------------------------
with the Construction Advance corresponding to the final payment to be made
by the Borrower under the Contract, the Borrower shall have (i) caused the
Vessel to be documented with the United States Coast Guard, (ii) executed
and delivered a First Preferred Ship Mortgage on the Vessel in favor of the
Bank, (iii) caused such First Preferred Ship Mortgage to be recorded with
the United States Coast Guard, and (iv) delivered to the Bank evidence (a)
that the Vessel shall then be insured for an amount not less than the
aggregate amount of the Construction Loan outstanding after such
Construction Advance and (b) that the Bank shall be named as loss payee and
additional insured on such insurance.
12. EVENTS OF DEFAULT; ACCELERATION; ETC.
------------------------------------
12.1. EVENTS OF DEFAULT AND ACCELERATION. If any of the following events
----------------------------------
("Events of Default" or, if the giving of notice or the lapse of time or both is
required, then, prior to such notice or lapse of time, "Defaults") shall occur:
(a) the Borrower shall fail to pay any principal of, or interest or
commitment fee on, any Advance or any other sums due hereunder or under the
other Loan Documents, when the same shall become due and payable, whether
at the stated date of maturity or any accelerated date of maturity or at
any other date fixed for payment;
(b) the Borrower or either Guarantor shall fail to comply with any of
its covenants contained in (S)7 (other than those specified in (S)12.1(c)),
(S)8 or (S)9 hereof;
(c) the Borrower or either Guarantor shall fail to comply with any of
its covenants contained in (S)(S)7.3 through 7.5 hereof, the second
sentence of (S)7.6 hereof, (S)(S)7.8 through 7.11 hereof, or (S)(S)7.13
through 7.17 hereof and such failure shall continue for ten (10) days;
(d) the Borrower or either Guarantor shall fail to perform any term,
covenant or agreement contained herein or in any of the other Loan
Documents (other than those specified elsewhere in this (S)12) for fifteen
(15) days after written notice of such failure has been given to the
Borrower by the Bank;
<PAGE>
49
(e) any representation or warranty of either Guarantor or the
Borrower in this Loan Agreement, any of the other Loan Documents, or in any
other document or instrument delivered pursuant to or in connection with
this Loan Agreement or any other Loan Document shall prove to have been
false in any material respect upon the date when made or deemed to have
been made or repeated;
(f) either Guarantor or the Borrower shall fail to pay at maturity,
or within any applicable period of grace, any obligation for borrowed money
or credit received or in respect of any Capitalized Leases in excess,
individually or in the aggregate, of $3,000,000, or fail to observe or
perform any material term, covenant or agreement contained in any agreement
by which it is bound, evidencing or securing borrowed money or credit
received or in respect of any Capitalized Leases in excess, individually or
in the aggregate, of $3,000,000 for such period of time as would permit
(assuming the giving of appropriate notice if required) the holder or
holders thereof or of any obligations issued thereunder to accelerate the
maturity thereof provided that if either of the Guarantors fails to perform
--------
the covenant set forth in (S)5.18 of the Senior Indenture, such failure
shall not constitute an Event of Default under this clause (e) if such
Guarantor and the Holders (as defined in the Senior Indenture) are
negotiating a waiver of such default under the Senior Indenture diligently
and in good faith and such waiver is obtained or such default is cured
within thirty (30) days;
(g) either Guarantor or the Borrower shall make an assignment for the
benefit of creditors, or admit in writing its inability to pay or generally
fail to pay its debts as they mature or become due, or shall petition or
apply for the appointment of a trustee or other custodian, liquidator or
receiver of either Guarantor or the Borrower or of any substantial part of
the assets of either Guarantor or the Borrower or shall commence any case
or other proceeding relating to either Guarantor or the Borrower under the
bankruptcy, reorganization, arrangement, insolvency, readjustment of debt,
dissolution or liquidation or similar law of any jurisdiction, now or
hereafter in effect, or shall take any action to authorize or in
furtherance of any of the foregoing, or if any such petition or application
shall be filed or any such case or other proceeding shall be commenced
against either Guarantor or the Borrower and either Guarantor or the
Borrower shall indicate its approval thereof, consent thereto or
acquiescence therein or such petition or application shall not have been
dismissed within forty-five (45) days following the filing thereof;
(h) a decree or order is entered appointing any such trustee,
custodian, liquidator or receiver or adjudicating either Guarantor or the
Borrower bankrupt or insolvent, or approving a petition in any such case
<PAGE>
50
or other proceeding, or a decree or order for relief is entered in respect
of either Guarantor or the Borrower in an involuntary case under federal
bankruptcy laws as now or hereafter constituted;
(i) there shall remain in force, undischarged, unsatisfied and
unstayed, for more than thirty days, whether or not consecutive, any final
judgment against the Guarantors or the Borrower that, with other
outstanding final judgments, undischarged, against the Guarantors and the
Borrower exceeds in the aggregate $3,000,000;
(j) if any one or more of the Loan Documents, the Contract or the
Trinity Guaranty shall be cancelled, terminated, revoked or rescinded or
the Bank's security interests, mortgages or liens in any material portion
of the Collateral shall cease to be perfected, or shall cease to have the
priority contemplated by the Security Documents, in each case otherwise
than in accordance with the terms thereof or with the express prior written
agreement, consent or approval of the Bank, or any action at law, suit or
in equity or other legal proceeding to cancel, revoke or rescind any of the
Loan Documents, the Contract, or the Trinity Guaranty shall be commenced by
or on behalf of either Guarantor, the Builder, Trinity or the Borrower
party thereto or any of their respective stockholders, or any court or any
other governmental or regulatory authority or agency of competent
jurisdiction shall make a determination that, or issue a judgment, order,
decree or ruling to the effect that, any one or more of the Loan Documents,
the Contract or the Trinity Guaranty is illegal, invalid or unenforceable
in accordance with the terms thereof;
(k) with respect to any Guaranteed Pension Plan, an ERISA Reportable
Event shall have occurred and the Bank shall have determined in its
reasonable discretion that such event reasonably could be expected to
result in liability of the Borrower or either Guarantor to the PBGC or such
Guaranteed Pension Plan in an aggregate amount exceeding $1,000,000 and
such event in the circumstances occurring reasonably could constitute
grounds for the termination of such Guaranteed Pension Plan by the PBGC or
for the appointment by the appropriate United States District Court of a
trustee to administer such Guaranteed Pension Plan; or a trustee shall have
been appointed by the United States District Court to administer such
Guaranteed Pension Plan; or the PBGC shall have instituted proceedings to
terminate such Guaranteed Pension Plan;
(l) either Guarantor or the Borrower shall be enjoined, restrained or
in any way prevented by the order of any court or any administrative or
regulatory agency from conducting any material part of its business and
such order shall continue in effect for more than thirty (30) days;
<PAGE>
51
(m) there shall occur any material damage to, or loss, theft or
destruction of, any Collateral, whether or not insured, or any strike,
lockout, labor dispute, embargo, condemnation, act of God or public enemy,
or other casualty, which in any such case causes, for more than thirty (30)
consecutive days, the cessation or substantial curtailment of revenue
producing activities at any facility of either Guarantor or the Borrower if
such event or circumstance is not covered by business interruption
insurance and would have a material adverse effect on the business or
financial condition of the Borrower, the Guarantors and their Restricted
Subsidiaries on a consolidated basis;
(n) there shall occur the loss, suspension or revocation of, or
failure to renew, any license or permit now held or hereafter acquired by
either Guarantor or the Borrower if such loss, suspension, revocation or
failure to renew would have a material adverse effect on the business or
financial condition of the Borrower, the Guarantors and their Restricted
Subsidiaries on a consolidated basis;
(o) either Guarantor or the Borrower shall be indicted for a state or
federal crime, or any civil or criminal action shall otherwise have been
brought or threatened against either Guarantor or the Borrower, a
punishment for which in any such case could include the forfeiture of any
assets of such Guarantor or the Borrower having a fair market value in
excess of $750,000;
(p) Moran shall at any time, legally or beneficially own, directly or
indirectly, less than one hundred percent (100%) of the common stock of
Towing, or Towing shall at any time, legally or beneficially own, directly
or indirectly, less than one hundred percent (100%) of the common stock of
the Borrower, as adjusted pursuant to any stock split, stock dividend or
recapitalization or reclassification of the capital of such corporation;
(q) the Bank shall have received a report by the Construction
Inspector that construction of the Vessel is not in substantial conformity
with the provisions of the Contract, the Plans and Specifications or the
Requirements and such failure to conform shall not have been corrected
within fifteen (15) days after written notice thereof has been given to the
Borrower by the Bank; or the Bank shall have received a report by the
American Bureau of Shipping or any other classification society, or by any
marine engineer or surveyor following an inspection at the request of the
Bank, that the Vessel is not in compliance with the classification
requirements set forth in the Contract or is not in compliance with the
requirements of applicable law for use as intended and action shall not
have been commenced within fifteen (15) days after written notice thereof
shall have been given by the Bank to the Borrower and such
<PAGE>
52
corrective action shall not be diligently prosecuted or completed in a
manner and time schedule consistent with industry standards;
(r) there shall have occurred any material default or any material
event of default under the Contract or the Trinity Guaranty, or any
material delay by any party in the performance of its obligations under the
Contract or the Trinity Guaranty, which in the case of any such default,
event of default or delay has not been approved by the Bank; or
(s) the Construction Inspector shall, at any time, certify to the
Bank that the Vessel does not conform in any material respect to the
Contract, the Requirements, or the Plans and Specifications;
then, and in any such event, so long as the same may be continuing, the Bank
may, by notice in writing to the Borrower declare all amounts owing with respect
to this Loan Agreement, the Note and the other Loan Documents to be, and they
shall thereupon forthwith become, immediately due and payable without
presentment, demand, protest or other notice of any kind, all of which are
hereby expressly waived by the Borrower and the Guarantors; provided that in the
--------
event of any Event of Default specified in (S)12.1(g) or (S)12.1(h) hereof, all
such amounts shall become immediately due and payable automatically and without
any requirement of notice from the Bank.
12.2. TERMINATION OF COMMITMENT. If any one or more of the Events of
-------------------------
Default specified in (S)12.1(g) or (S)12.1(h) hereof shall occur, any unused
portion of the credit hereunder shall forthwith terminate and the Bank shall be
relieved of all obligations to make Advances to the Borrower. If any other Event
of Default shall have occurred and be continuing, the Bank may, by notice to the
Borrower, terminate the unused portion of the credit hereunder, and upon such
notice being given such unused portion of the credit hereunder shall terminate
immediately and the Bank shall be relieved of all further obligations to make
Advances. No termination of the credit hereunder shall relieve the Borrower of
any of the Obligations or any of its existing obligations to the Bank arising
under other agreements or instruments.
12.3. REMEDIES. In case any one or more of the Events of Default shall
--------
have occurred and be continuing, and whether or not the Bank shall have
accelerated the maturity of the Advances pursuant to (S)12.1 hereof, the Bank,
if owed any amount with respect to the Advances, may, proceed to protect and
enforce its rights by suit in equity, action at law or other appropriate
proceeding, whether for the specific performance of any covenant or agreement
contained in this Loan Agreement and the other Loan Documents or any instrument
pursuant to which the Obligations to the Bank are evidenced, including as
permitted by applicable law the obtaining of the ex parte appointment of a
-- -----
receiver, and, if such amount shall have become due, by declaration or
otherwise, proceed to enforce the payment thereof or any other
<PAGE>
53
legal or equitable right of the Bank. No remedy herein conferred upon the Bank
or on any other holder of the Note is intended to be exclusive of any other
remedy and each and every remedy shall be cumulative and shall be in addition to
every other remedy given hereunder or now or hereafter existing at law or in
equity or by statute or any other provision of law.
12.4. DISTRIBUTION OF COLLATERAL PROCEEDS. In the event that, following
-----------------------------------
the occurrence or during the continuance of any Default or Event of Default, the
Bank receives any monies in connection with the enforcement of any the Security
Documents, or otherwise with respect to the realization upon any of the
Collateral, such monies shall be distributed for application as follows:
(a) First, to the payment of, or (as the case may be) the
reimbursement of the Bank for or in respect of all reasonable costs,
expenses, disbursements and losses which shall have been incurred or
sustained by the Bank in connection with the collection of such monies by
the Bank, for the exercise, protection or enforcement by the Bank of all or
any of the rights, remedies, powers and privileges of the Bank under this
Loan Agreement or any of the other Loan Documents or in respect of the
Collateral and to support the provision of adequate indemnity to the Bank
against all taxes or liens which by law shall have, or may have, priority
over the rights of the Bank to such monies;
(b) Second, to all other Obligations in such order or preference as
the Bank may determine; provided, however, that distributions in respect of
-------- -------
such Obligations shall be made pari passu among Obligations owing to the
---- -----
Bank with respect to each type of Obligation such as interest, principal,
fees and expenses, and provided, further, that the Bank may in its
-------- -------
discretion make proper allowance to take into account any Obligations not
then due and payable;
(c) Third, upon payment and satisfaction in full or other provisions
for payment in full satisfactory to the Bank of all of the Obligations, to
the payment of any obligations required to be paid pursuant to (S)9-
504(1)(c) of the Uniform Commercial Code of the Commonwealth of
Massachusetts; and
(d) Fourth, the excess, if any, shall be returned to the Borrower or
to such other Persons as are entitled thereto.
13. SETOFF.
------
Regardless of the adequacy of any collateral, during the continuance of any
Event of Default, any deposits or other sums credited by or due from the Bank to
the Borrower or either Guarantor and any securities or other property of the
Borrower or either Guarantor in the possession of the Bank may be
<PAGE>
54
applied to or set off by the Bank against the payment of Obligations and any and
all other liabilities, direct, or indirect, absolute or contingent, due or to
become due, now existing or hereafter arising, of the Borrower or either
Guarantor to the Bank.
14. EXPENSES.
--------
The Borrower and the Guarantors agree to pay (a) the reasonable costs of
producing and reproducing this Loan Agreement, the other Loan Documents and the
other agreements and instruments mentioned herein, (b) any taxes (including any
interest and penalties in respect thereto) payable by the Bank (other than taxes
based upon the Bank's revenue or net income) on or with respect to the
transactions contemplated by this Loan Agreement (the Borrower and the
Guarantors hereby agreeing to indemnify the Bank with respect thereto), (c) the
reasonable fees, expenses and disbursements of the Bank's Special Counsel and
any local counsel to the Bank incurred in connection with the preparation,
administration or interpretation of the Loan Documents and the other instruments
mentioned herein, each closing hereunder, and any amendments, modifications,
approvals, consents or waivers hereto or hereunder, (d) the fees, expenses and
disbursements incurred by the Bank in connection with the preparation,
administration or interpretation of the Loan Documents and the other instruments
mentioned herein, including without limitation, the fees and expenses of the
Construction Inspector (not to exceed $8,000), (e) all reasonable out-of-pocket
expenses (including without limitation reasonable attorneys' fees and costs, and
reasonable consulting, accounting, appraisal, investment banking and similar
professional fees and charges, and any fees and costs of marine consultants or
the Construction Inspector) incurred by the Bank in connection with (i) the
enforcement of or preservation of rights under any of the Loan Documents against
the Borrower or the Guarantors or the administration thereof after the
occurrence of a Default or Event of Default and (ii) any litigation, proceeding
or dispute whether arising hereunder or otherwise, in any way related to the
Bank's relationship with the Borrower or the Guarantors and (f) all reasonable
fees, expenses and disbursements of the Bank incurred in connection with UCC
searches, UCC filings or mortgage recordings. The covenants of this (S)14 shall
survive payment or satisfaction of payment of amounts owing with respect to the
Note.
15. INDEMNIFICATION.
---------------
The Borrower and the Guarantors agree to indemnify and hold harmless the
Bank from and against any and all claims, actions and suits whether groundless
or otherwise, and from and against any and all liabilities, losses, damages and
expenses of every nature and character arising out of this Loan Agreement or any
of the other Loan Documents or the transactions contemplated hereby including,
without limitation, (a) any actual or proposed
<PAGE>
55
use by the Borrower of the proceeds of any of the Advances, (b) the Borrower or
the Guarantors entering into or performing this Loan Agreement or any of the
other Loan Documents or (c) with respect to the Borrower or the Guarantors and
their respective properties and assets, the violation of any Environmental Law,
the presence, disposal, escape, seepage, leakage, spillage, discharge, emission,
release or threatened release of any Hazardous Substances or any action, suit,
proceeding or investigation brought or threatened with respect to any Hazardous
Substances (including, but not limited to claims with respect to wrongful death,
personal injury or damage to property), in each case including, without
limitation, the reasonable fees and disbursements of counsel incurred in
connection with any such investigation, litigation or other proceeding. In
litigation, or the preparation therefor, the Bank shall be entitled to select
its own counsel and, in addition to the foregoing indemnity, the Borrower agrees
to pay promptly the reasonable fees and expenses of such counsel. If, and to the
extent that the obligations of the Borrower or the Guarantors under this (S)15
are unenforceable for any reason, the Borrower and the Guarantors hereby agree
to make the maximum contribution to the payment in satisfaction of such
obligations which is permissible under applicable law. The covenants contained
in this (S)15 shall survive payment and satisfaction in full of the Obligations.
16. SURVIVAL OF COVENANTS, ETC.
--------------------------
All covenants, agreements, representations and warranties made herein, in
the Note, in any of the other Loan Documents or in any documents or other papers
delivered by or on behalf of the Borrower or the Guarantors pursuant hereto
shall be deemed to have been relied upon by the Bank, notwithstanding any
investigation heretofore or hereafter made by it, and shall survive the making
by the Bank of the Advances, as herein contemplated, and shall continue in full
force and effect so long as any amount due under this Loan Agreement or the Note
or any of the other Loan Documents remains Outstanding or the Bank has any
obligation to make any Advances, and for such further time as may be otherwise
expressly specified in this Loan Agreement. All statements contained in any
certificate or other paper delivered to the Bank at any time by or on behalf of
either Guarantor or the Borrower pursuant hereto or in connection with the
transactions contemplated hereby shall constitute representations and warranties
by the Borrower or such Guarantor hereunder.
17. ASSIGNMENT AND PARTICIPATION.
----------------------------
17.1. ASSIGNMENT BY THE BANK. The Bank may assign to one or more banks all
----------------------
or a portion of its interests, rights and obligations under this Loan Agreement
(including all or a portion of the Commitment and the same portion of the
Construction Loans at the time owing to it, and the Note held by it), provided
--------
that the Borrower shall have given its prior written consent to such assignment,
which consent will not be unreasonably withheld. Upon the
<PAGE>
56
request of the Bank, the Borrower shall consent to the amendment of this Loan
Agreement and the other Loan Documents in order to enable the Bank to make such
assignments.
17.2. PARTICIPATIONS. The Bank may sell participations to one or more banks
--------------
or other entities in all or a portion of the Bank's rights and obligations under
this Loan Agreement and the other Loan Documents; provided that (a) the Borrower
--------
shall have given its prior written consent to such participation (except for
participations to affiliates of the Bank), (b) each such participation shall be
in an amount of not less than $1,000,000, (c) any such sale or participation
shall not affect the rights and duties of the Bank hereunder to the Borrower,
and (d) the only rights granted to the participant pursuant to such
participation arrangements with respect to waivers, amendments or modifications
of the Loan Documents shall be the rights to approve waivers, amendments or
modifications that would reduce the principal of or the interest rate on any
Construction Loans, extend the term of the Commitment or increase the amount of
the Total Commitment, reduce the amount of any commitment fee to which such
participant is entitled, or extend any regularly scheduled payment date for
principal or interest or release all or substantially all of the Collateral.
17.3. DISCLOSURE. The Borrower agrees that in addition to disclosures made
----------
in accordance with standard and customary banking practices the Bank may
disclose confidential information obtained by the Bank in connection with this
Loan Agreement to assignees and participants and potential assignees and
potential participants hereunder; provided that such assignees or participants
--------
or potential assignees or potential participants shall agree in writing (a) to
treat in confidence such information, (b) not to disclose such information to a
third party and (c) not to make use of such information for purposes of
transactions unrelated to such contemplated assignment or participation.
17.4. MISCELLANEOUS ASSIGNMENT PROVISIONS. Anything contained in this (S)17
------------- ---------- ----------
to the contrary notwithstanding, the Bank may at any time pledge all or any
portion of its interest and rights under this Loan Agreement (including all or
any portion of the Note) to any of the twelve Federal Reserve Banks organized
under (S)4 of the Federal Reserve Act, 12 U.S.C. (S)341. No such pledge or the
enforcement thereof shall release the Bank from its obligations hereunder or
under any of the other Loan Documents.
17.5. ASSIGNMENT BY BORROWER. The Borrower shall not assign or transfer any
---------- -- --------
of its rights or obligations under any of the Loan Documents.
18. NOTICES, ETC.
------------
Except as otherwise expressly provided in this Loan Agreement, all notices
and other communications made or required to be given pursuant to
<PAGE>
57
this Loan Agreement or the Notes shall be in writing and shall be delivered in
hand, mailed by United States registered or certified first class mail, postage
prepaid, sent by overnight courier, or sent by telecopy and confirmed by
delivery via courier or postal service, addressed as follows:
(a) if to the Borrower or the Guarantors, at: Two Greenwich Plaza,
Greenwich, Connecticut 06830, Attention: Alan Marchisotto, Esq., or at
such other address for notice as the Borrower shall last have furnished in
writing to the Person giving the notice; and
(b) if to the Bank, at 100 Federal Street, Boston, Massachusetts
02110, USA, Attention: Mr. Victor Garcia, Transportation Division, or such
other address for notice as the Bank shall last have furnished in writing
to the Person giving the notice.
Any such notice or demand shall be deemed to have been duly given or made
and to have become effective (a) if delivered by hand, overnight courier or
facsimile to a responsible officer of the party to which it is directed, at the
time of the receipt thereof by such officer or the sending of such facsimile and
(b) if sent by registered or certified first-class mail, postage prepaid, on the
third Business Day following the mailing thereof.
19. GOVERNING LAW.
-------------
THIS LOAN AGREEMENT AND EACH OF THE OTHER LOAN DOCUMENTS, EXCEPT AS
OTHERWISE SPECIFICALLY PROVIDED THEREIN, ARE CONTRACTS UNDER THE LAWS OF THE
COMMONWEALTH OF MASSACHUSETTS AND SHALL FOR ALL PURPOSES BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAWS OF SAID COMMONWEALTH OF MASSACHUSETTS
(EXCLUDING THE LAWS APPLICABLE TO CONFLICTS OR CHOICE OF LAW). THE BORROWER AND
EACH OF THE GUARANTORS AGREE THAT ANY SUIT FOR THE ENFORCEMENT OF THIS LOAN
AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS MAY BE BROUGHT IN THE COURTS OF THE
COMMONWEALTH OF MASSACHUSETTS OR ANY FEDERAL COURT SITTING THEREIN AND CONSENT
TO THE NONEXCLUSIVE JURISDICTION OF SUCH COURT AND THE SERVICE OF PROCESS IN ANY
SUCH SUIT BEING MADE UPON THE BORROWER AND THE GUARANTORS BY MAIL AT THE ADDRESS
SPECIFIED IN (S)18 HEREOF. THE BORROWER AND EACH OF THE GUARANTORS HEREBY WAIVE
ANY OBJECTION THAT THEY MAY NOW OR HEREAFTER HAVE TO THE VENUE OF ANY SUCH SUIT
OR ANY SUCH COURT OR THAT SUCH SUIT IS BROUGHT IN AN INCONVENIENT COURT.
20. HEADINGS.
--------
<PAGE>
58
The captions in this Loan Agreement are for convenience of reference only
and shall not define or limit the provisions hereof.
21. COUNTERPARTS.
------------
This Loan Agreement and any amendment hereof may be executed in several
counterparts and by each party on a separate counterpart, each of which when so
executed and delivered shall be an original, and all of which together shall
constitute one instrument. In proving this Loan Agreement it shall not be
necessary to produce or account for more than one such counterpart signed by the
party against whom enforcement is sought.
22. ENTIRE AGREEMENT, ETC.
---------------------
The Loan Documents and any other documents executed in connection herewith
or therewith express the entire understanding of the parties with respect to the
transactions contemplated hereby. Neither this Loan Agreement nor any term
hereof may be changed, waived, discharged or terminated, except as provided in
(S)24 hereof.
23. WAIVER OF JURY TRIAL.
--------------------
The Borrower and each of the Guarantors hereby waive their right to a jury
trial with respect to any action or claim arising out of any dispute in
connection with this Loan Agreement, the Notes or any of the other Loan
Documents, any rights or obligations hereunder or thereunder or the performance
of such rights and obligations. Except as prohibited by law, the Borrower and
each of the Guarantors hereby waive any right they may have to claim or recover
in any litigation referred to in the preceding sentence any special, exemplary,
punitive or consequential damages or any damages other than, or in addition to,
actual damages. The Borrower and each of the Guarantors (a) certify that no
representative, agent or attorney of the Bank has represented, expressly or
otherwise, that the Bank would not, in the event of litigation, seek to enforce
the foregoing waivers and (b) acknowledge that the Bank has been induced to
enter into this Loan Agreement and the other Loan Documents to which it is a
party by, among other things, the waivers and certifications contained herein.
24. CONSENTS, AMENDMENTS, WAIVERS, ETC.
----------------------------------
Except as otherwise expressly provided in this Loan Agreement, any consent
or approval required or permitted by this Loan Agreement to be given by the Bank
may be given, and any term of this Loan Agreement or of any other instrument
related hereto or mentioned herein may be amended, and the performance or
observance by the Borrower or the Guarantors of any terms of this Loan Agreement
or such other instrument or the continuance of any Default or Event of Default
may be waived (either generally or in a particular
<PAGE>
59
instance and either retroactively or prospectively) with, but only with, the
written consent of the Borrower and the written consent of the Bank. No waiver
shall extend to or affect any obligation not expressly waived or impair any
right consequent thereon. No course of dealing or delay or omission on the part
of the Bank in exercising any right shall operate as a waiver thereof or
otherwise be prejudicial thereto. No notice to or demand upon the Borrower shall
entitle the Borrower to other or further notice or demand in similar or other
circumstances.
25. SEVERABILITY.
------------
The provisions of this Loan Agreement are severable and if any one clause
or provision hereof shall be held invalid or unenforceable in whole or in part
in any jurisdiction, then such invalidity or unenforceability shall affect only
such clause or provision, or part thereof, in such jurisdiction, and shall not
in any manner affect such clause or provision in any other jurisdiction, or any
other clause or provision of this Loan Agreement in any jurisdiction.
<PAGE>
60
IN WITNESS WHEREOF, the undersigned have duly executed this Loan Agreement
as a sealed instrument as of the date first set forth above.
MORAN BULK CORPORATION
By: /s/ Alan L. Marchisotto
Name: Alan L . Marchisotto
Title: Secretary
THE FIRST NATIONAL BANK OF BOSTON
By: /s/ Daniel O'Connor
Name: Daniel O'Connor
Title: Managing Director
MORAN TRANSPORTATION COMPANY
By: /s/ Alan L. Marchisotto
Name: Alan L. Marchisotto
Title: Secretary
MORAN TOWING CORPORATION
By: /s/ Jeffrey J. McAulay
Name: Jeffrey J. McAulay
Title: Vice President Finance and
Administration
<PAGE>
Exhibit 10.2
CONSTRUCTION LOAN NOTE
$7,720,000 as of May __, 1996
FOR VALUE RECEIVED, the undersigned MORAN BULK CORPORATION, a Delaware
corporation (the "Borrower"), hereby promises to pay to the order of THE FIRST
NATIONAL BANK OF BOSTON (the "Bank") at the Bank's Head Office (as defined in
the Loan Agreement referred to below):
(a) on or prior to the Maturity Date the principal amount of SEVEN
MILLION SEVEN HUNDRED TWENTY THOUSAND DOLLARS ($7,720,000) or, if less, the
aggregate unpaid principal amount of the Construction Loan advanced by the Bank
to the Borrower pursuant to the Construction Loan Agreement dated as of May __,
1996 (as amended and in effect from time to time, the "Loan Agreement"), among
the Borrower, the Guarantors named therein and the Bank; and
(b) interest on the principal balance hereof from time to time
outstanding from the Closing Date under the Loan Agreement through and including
the maturity date hereof at the times and at the rates provided in the Loan
Agreement.
This Note evidences borrowings under and has been issued by the
Borrower in accordance with the terms of the Loan Agreement. The Bank and any
holder hereof is entitled to the benefits of the Loan Agreement, the Security
Documents and the other Loan Documents, and may enforce the agreements of the
Borrower contained therein, and any holder hereof may exercise the respective
remedies provided for thereby or otherwise available in respect thereof, all in
accordance with the respective terms thereof. All capitalized terms used in
this Note and not otherwise defined herein shall have the same meanings herein
as in the Loan Agreement.
This Note is guaranteed by the Guarantors pursuant to the terms of the
Guaranty, of even date herewith, executed by the Guarantors in favor of the
Bank.
The Borrower irrevocably authorizes the Bank to make or cause to be
made, at or about the time of the Drawdown Date of any Construction Advance or
at the time of receipt of any payment of principal of this Note, an appropriate
notation on the grid attached to this Note, or the continuation of such grid, or
any other similar record, including computer records, reflecting the making of
such Construction Advance or (as the case may be) the receipt of
<PAGE>
2
such payment. The outstanding amount of the Construction Advances set forth on
the grid attached to this Note, or the continuation of such grid, or any other
similar record, including computer records, maintained by the Bank with respect
to any Construction Advances shall be prima facie evidence of the principal
----- -----
amount thereof owing and unpaid to the Bank, but the failure to record, or any
error in so recording, any such amount on any such grid, continuation or other
record shall not limit or otherwise affect the obligation of the Borrower
hereunder or under the Loan Agreement to make payments of principal of and
interest on this Note when due.
The Borrower has the right in certain circumstances and the obligation
under certain other circumstances to prepay the whole or part of the principal
of this Note on the terms and conditions specified in the Loan Agreement.
If any one or more of the Events of Default shall occur, the entire
unpaid principal amount of this Note and all of the unpaid interest accrued
thereon may become or be declared due and payable in the manner and with the
effect provided in the Loan Agreement.
No delay or omission on the part of the Bank or any holder hereof in
exercising any right hereunder shall operate as a waiver of such right or of any
other rights of the Bank or such holder, nor shall any delay, omission or waiver
on any one occasion be deemed a bar or waiver of the same or any other right on
any further occasion.
The Borrower and every endorser and guarantor of this Note or the
obligation represented hereby waives presentment, demand, notice, protest and
all other demands and notices in connection with the delivery, acceptance,
performance, default or enforcement of this Note, and assents to any extension
or postponement of the time of payment or any other indulgence, to any
substitution, exchange or release of the Collateral and any other collateral and
to the addition or release of any other party or person primarily or secondarily
liable.
THIS NOTE AND THE OBLIGATIONS OF THE BORROWER HEREUNDER SHALL FOR ALL
PURPOSES BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF
THE COMMONWEALTH OF MASSACHUSETTS (EXCLUDING THE LAWS APPLICABLE TO CONFLICTS OR
CHOICE OF LAW). THE BORROWER AGREES THAT ANY SUIT FOR THE ENFORCEMENT OF THIS
NOTE MAY BE BROUGHT IN THE COURTS OF THE COMMONWEALTH OF MASSACHUSETTS OR ANY
FEDERAL COURT SITTING THEREIN AND CONSENTS TO THE NONEXCLUSIVE JURISDICTION OF
SUCH COURT AND THE SERVICE OF PROCESS IN ANY SUCH SUIT BEING MADE UPON THE
BORROWER BY MAIL AT THE ADDRESS SPECIFIED IN THE CREDIT AGREEMENT. THE BORROWER
HEREBY WAIVES ANY OBJECTION THAT
<PAGE>
3
IT MAY NOW OR HEREAFTER HAVE TO THE VENUE OF ANY SUCH SUIT OR ANY SUCH COURT OR
THAT SUCH SUIT IS BROUGHT IN AN INCONVENIENT COURT.
This Note shall be deemed to take effect as a sealed instrument under
the laws of the Commonwealth of Massachusetts.
IN WITNESS WHEREOF, the undersigned has caused this Note to be signed
by its duly authorized officer as of the day and year first above written.
MORAN BULK CORPORATION
By: /s/ Alan L. Marchisotto
Name: Alan L. Marchisotto
Title: Secretary
<PAGE>
<TABLE>
<CAPTION>
Amount of Type of Amount of Balance of
Construction Construction Interest Principal Paid Principal Notation
Date Advance Advance Period or Prepaid Unpaid Made By:
- ------ ------------ ------------ -------- -------------- ---------- --------
<S> <C> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
</TABLE>
<PAGE>
Exhibit 10.3
SECURITY AGREEMENT
------------------
SECURITY AGREEMENT, dated as of May 16, 1996, between MORAN BULK
CORPORATION, a Delaware corporation (the "Borrower"), and THE FIRST NATIONAL
BANK OF BOSTON, a national banking association, (the "Bank"). Reference is made
to the Construction Loan Agreement dated as of October 13, 1995 (as amended and
in effect from time to time, the "Loan Agreement") among the Borrower, the
Guarantors named therein and the Bank.
WHEREAS, it is a condition precedent to the Bank making any loans or
otherwise extending credit to the Borrower under the Loan Agreement that the
Borrower execute and deliver to the Bank, a security agreement in substantially
the form hereof; and
WHEREAS, the Borrower wishes to grant security interests in favor of
the Bank, as herein provided;
NOW, THEREFORE, in consideration of the promises contained herein and
for other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto agree as follows:
1. DEFINITIONS. All capitalized terms used herein without definitions
----------
shall have the respective meanings provided therefor in the Loan Agreement. All
terms defined in the Uniform Commercial Code of the Commonwealth of
Massachusetts and used herein shall have the same definitions herein as
specified therein.
2. GRANT OF SECURITY. The Borrower hereby grants to the Bank, to
-----------------
secure the payment and performance in full of all of the Obligations, a security
interest in and so pledges and assigns to the Bank, the following properties,
assets and rights of the Borrower, wherever located, whether now owned or
hereafter acquired or arising, and all proceeds and products thereof (all of the
same being hereinafter called the "Collateral"):
(i) the Vessel, all property used or useful in the construction
thereof and all appurtenances thereto; (ii) all parts, components,
materials, work in process, equipment, machinery, and all other property
that is, or is intended to be, a part of, or used in connection with, the
Vessel or such appurtenances (collectively, the
<PAGE>
2
"Components"); (iii) all contract rights and general intangibles relating to
the construction of the Components and/or the Vessel including, without
limitation, all of the Borrower's rights under the Contract and the Trinity
Guaranty; (iv) all insurance claims, insurance refund claims and other
insurance proceeds and tort claims relating to any damage or other casualty
to the Components and/or the Vessel; and (v) all engineering drawings,
licenses, permits, and other agreements of any kind or nature relating to
or required for construction of the Components and/or the Vessel; and all
recorded data of any kind or nature, regardless of the medium of recording
including, without limitation, all software, writings, plans,
specifications and schematics (including, without limitation, the Plans and
Specifications) relating to the construction of the Vessel.
3. TITLE TO COLLATERAL, ETC. The Borrower is the owner of the Collateral
-------------------------
free from any adverse lien, security interest or other encumbrance, except for
the security interest created by this Security Agreement and other liens
permitted by the Loan Agreement. None of the Collateral constitutes, or is the
proceeds of, "farm products" as defined in (S)9-109(3) of the Uniform Commercial
Code of the Commonwealth of Massachusetts.
4. CONTINUOUS PERFECTION. The Borrower's place of business or, if more
---------------------
than one, chief executive office is indicated on the Perfection Certificate
delivered to the Bank herewith (the "Perfection Certificate"). The Borrower will
not change the same, or the name, identity or corporate structure of the
Borrower in any manner, without providing at least thirty (30) days prior
written notice to the Bank. The Collateral, until the Vessel is delivered to the
Borrower, will be kept at those locations listed on the Perfection Certificate
and the Borrower will not remove the Collateral from such locations, without
providing at least thirty (30) days prior written notice to the Bank.
5. NO LIENS. Except for the security interest herein granted and liens
--------
permitted by the Loan Agreement, the Borrower shall be the owner of the
Collateral free from any lien, security interest or other encumbrance, and the
Borrower shall defend the same against all claims and demands of all persons at
any time claiming the same or any interests therein adverse to the Bank. The
Borrower shall not pledge, mortgage or create, or suffer to exist a security
interest in the Collateral in favor of any person other than the Bank, except
for liens permitted by the Loan Agreement.
<PAGE>
3
6. NO TRANSFERS. The Borrower will not sell or offer to sell or otherwise
------------
transfer the Collateral or any interest therein.
7. INSURANCE.
---------
7.1. MAINTENANCE OF INSURANCE. The Borrower will maintain, with
------------------------
financially sound and reputable insurers insurance with respect to its
properties and business against such casualties and contingencies as shall
be in compliance with the Loan Agreement. The Borrower will require the
Builder to obtain and maintain, at all times during the construction of the
Vessel, the insurance required by the Contract; such insurance shall be
payable to the Bank as loss payee and additional insured.
7.2. INSURANCE PROCEEDS. The proceeds of any casualty insurance in
------------------
respect of any casualty loss of any of the Collateral shall, subject to the
rights, if any, of other parties with a prior interest in the property
covered thereby, (a) so long as no Default or Event of Default has occurred
and is continuing and to the extent that the amount of such proceeds is
less than One Million Dollars ($1,000,000), be disbursed to the Borrower
for direct application by the Borrower solely to the repair or replacement
of the Borrower's property so damaged or destroyed and (b) in all other
circumstances, be held by the Bank as cash collateral for the Obligations.
The Bank may, at its sole option, disburse from time to time all or any
part of such proceeds so held as cash collateral, upon such terms and
conditions as the Bank may reasonably prescribe, for direct application by
the Borrower solely to the repair or replacement of the Borrower's property
so damaged or destroyed, or the Bank may apply all or any part of such
proceeds to the Obligations with the Total Commitment (if not then
terminated) being reduced by the amount so applied to the Obligations.
7.3. NOTICE OF CANCELLATION, ETC. All policies of insurance shall
----------------------------
provide for at least thirty (30) days prior written cancellation notice to
the Bank. In the event of failure by the Borrower or the Builder to provide
and maintain insurance as herein provided, the Bank may, at its option,
provide such insurance and charge the amount thereof to the Borrower. The
Borrower shall, or shall cause the Builder to, furnish the Bank with
certificates of insurance and policies evidencing compliance with the
foregoing insurance provision.
8. MAINTENANCE OF COLLATERAL; COMPLIANCE WITH LAW. The Borrower will keep
----------------------------------------------
the Collateral in good order and repair and will not
<PAGE>
4
use the same in violation of law or any policy of insurance thereon. The Bank,
or its designee, may inspect the Collateral at any reasonable time, wherever
located. The Borrower will pay promptly when due (or contest in good faith and
by appropriate proceedings) all taxes, assessments, governmental charges and
levies upon the Collateral or incurred in connection with the use or operation
of such Collateral or incurred in connection with this Security Agreement. The
Borrower has at all times operated, and the Borrower will continue to operate,
its business in compliance with all applicable provisions of the federal Fair
Labor Standards Act, as amended, and with all applicable provisions of federal,
state and local statutes and ordinances dealing with the control, shipment,
storage or disposal of hazardous materials or substances, except where the
failure to comply would not have a material adverse effect on the business,
assets or financial condition of the Borrower.
9. COLLATERAL PROTECTION EXPENSES; PRESERVATION OF COLLATERAL.
----------------------------------------------------------
9.1. EXPENSES INCURRED BY BANK. In its discretion, the Bank may
-------------------------
discharge taxes and other encumbrances (other than those taxes and
encumbrances which (i) are being contested by the Borrower in good faith
and by appropriate proceedings and (ii) as to which the Borrower shall have
posted adequate security) at any time levied or placed on any of the
Collateral, make repairs thereto and pay any necessary filing fees. The
Borrower agrees to reimburse the Bank on demand for any and all
expenditures so made. In addition, upon the occurrence and during the
continuance of any Event of Default the Bank may, pursuant to and in
accordance with (S)2.8 of the Loan Agreement, in its sole discretion fund
additional Construction Advances to continue and complete all or a portion
of the construction of the Vessel, with such Construction Advances becoming
an Obligation of the Borrower in accordance with (S)2.8 of the Loan
Agreement. The Bank shall have no obligation to the Borrower to make any
such expenditures or such Construction Advances, nor shall the making
thereof relieve the Borrower of any default.
<PAGE>
5
9.2. BANK'S OBLIGATIONS AND DUTIES. Anything herein to the contrary
-----------------------------
notwithstanding, the Borrower shall remain liable under each contract or
agreement comprised in the Collateral to be observed or performed by the
Borrower thereunder. The Bank shall not have any obligation or liability
under any such contract or agreement by reason of or arising out of this
Security Agreement or the receipt by the Bank of any payment relating to
any of the Collateral, nor shall the Bank be obligated in any manner to
perform any of the obligations of the Borrower under or pursuant to any
such contract or agreement, to make inquiry as to the nature or sufficiency
of any payment received by the Bank in respect of the Collateral or as to
the sufficiency of any performance by any party under any such contract or
agreement, to present or file any claim, to take any action to enforce any
performance or to collect the payment of any amounts which may have been
assigned to the Bank or to which the Bank may be entitled at any time or
times. The Bank's sole duty with respect to the custody, safe keeping and
physical preservation of the Collateral in its possession, under (S)9-207
of the Uniform Commercial Code of the Commonwealth of Massachusetts or
otherwise, shall be to deal with such Collateral in substantially the same
manner as the Bank deals with similar property for its own account.
10. SECURITIES AND DEPOSITS. If any Obligations are due, the Bank may
-----------------------
demand, sue for, collect, or make any settlement or compromise which it deems
desirable with respect to the Collateral. Regardless of the adequacy of
Collateral or any other security for the Obligations, any deposits or other sums
at any time credited by or due from the Bank to the Borrower may be applied to
or set off against any of the Obligations then due.
11. NOTIFICATION TO OBLIGORS. If an Event of Default shall have occurred
------------------------
and be continuing, the Borrower shall, at the request of the Bank, notify the
Builder, Trinity, and any other Person reasonably requested by the Bank
(including, without limitation, the Builder and Trinity) of the security
interest of the Bank in the Vessel and the other Collateral and that payment, if
any, owing to the Borrower under the Collateral is to be made directly to the
Bank or to any financial institution designated by the Bank as the Bank's agent
therefor, and the Bank may itself, if an Event of Default shall have occurred
and be continuing, without notice to or demand upon the Borrower, so notify any
such Persons. After the making of such a request or the giving of any such
notification, the Borrower shall hold any proceeds of collection of any of the
Collateral received by the Borrower as trustee for the Bank, for the benefit of
the Bank, without commingling the same with other
<PAGE>
6
funds of the Borrower and shall turn the same over to the Bank in the identical
form received, together with any necessary endorsements or assignments. The Bank
shall apply the proceeds of collection of such Collateral received by the Bank
to the Obligations, such proceeds to be immediately entered after final payment
in cash or solvent credits of the items giving rise to them.
12. FURTHER ASSURANCES. The Borrower, at its own expense, shall (and with
------------------
respect to third parties, shall use its best efforts to cause such third parties
to) do, make, execute and deliver all such additional and further acts, things,
deeds, assurances and instruments as the Bank may require more completely to
vest in and assure to the Bank its rights hereunder or in any of the Collateral,
including, without limitation, (a) executing, delivering and, where appropriate,
filing financing statements and continuation statements under the Uniform
Commercial Code, and (b) obtaining governmental and other third party consents
and approvals.
13. POWER OF ATTORNEY.
-----------------
13.1. APPOINTMENT AND POWERS OF BANK. The Borrower hereby irrevocably
------------------------------
constitutes and appoints the Bank and any officer of the Bank thereof, with
full power of substitution, as its true and lawful attorneys-in-fact with
full irrevocable power and authority in the place and stead of the Borrower
or in the Bank's own name, for the purpose of carrying out the terms of
this Security Agreement, to take any and all appropriate action and to
execute any and all documents and instruments that may be necessary or
desirable to accomplish the purposes of this Security Agreement and,
without limiting the generality of the foregoing, hereby gives said
attorneys the power and right, on behalf of the Borrower, without prior
notice to or assent by the Borrower, to do the following:
(a) upon the occurrence and during the continuance of a Default
or an Event of Default, generally to sell, transfer, pledge, make any
agreement with respect to or otherwise deal with any of the Collateral
in such manner as is consistent with the Uniform Commercial Code of
the Commonwealth of Massachusetts and as fully and completely as
though the Bank were the absolute owner thereof for all purposes, and
to do at the Borrower's expense, at any time, or from time to time,
all acts and things which the Bank, in the exercise of its reasonable
discretion, deems necessary to protect, preserve or realize upon the
Collateral and the Bank's security interest therein, in order to
effect the intent
<PAGE>
7
of this Security Agreement, all as fully and effectively as the
Borrower might do; and
(b) to file such financing statements with respect hereto, with
or without the Borrower's signature, or a photocopy of this Security
Agreement in substitution for a financing statement, as the Bank may
deem appropriate and to execute in the Borrower's name such financing
statements and amendments thereto and continuation statements which
may require the Borrower's signature.
13.2. RATIFICATION BY BORROWER. To the extent permitted by law, the
------------------------
Borrower hereby ratifies all that said attorneys shall lawfully do or cause
to be done by virtue hereof. This power of attorney is a power coupled with
an interest and shall be irrevocable.
13.3. NO DUTY ON BANK. The powers conferred on the Bank hereunder are
---------------
solely to protect the interests of the Bank in the Collateral and shall not
impose any duty upon the Bank to exercise any such powers. The Bank shall
be accountable only for the amounts that it actually receives as a result
of the exercise of such powers and neither it nor any of its officers,
directors, employees or agents shall be responsible to the Borrower for any
act or failure to act, except for the Bank's own gross negligence or
willful misconduct. The Bank shall use reasonable efforts to notify the
Borrower within five (5) Business Days of any action taken by the Bank
under this (S)13.
14. REMEDIES. If an Event of Default shall have occurred and be
continuing, the Bank may, without notice to or demand upon the Borrower, declare
this Security Agreement to be in default, and the Bank shall thereafter have in
any jurisdiction in which enforcement hereof is sought, in addition to all other
rights and remedies, the rights and remedies of a secured party under the
Uniform Commercial Code, including, without limitation, the right to take
possession of the Collateral, and for that purpose the Bank may, so far as the
Borrower can give authority therefor, enter upon any premises on which the
Collateral may be situated and remove the same therefrom. The Bank may in its
discretion require the Borrower to assemble all or any part of the Collateral at
such location or locations within the state(s) of the Borrower's principal
office(s) or at such other locations as the Bank may designate. Unless the
Collateral is perishable or threatens to decline speedily in value or is of a
type customarily sold on a recognized market, the Bank shall give to the
Borrower at least ten (10) Business Days prior
<PAGE>
8
written notice of the time and place of any public sale of Collateral or of the
time after which any private sale or any other intended disposition is to be
made. The Borrower hereby acknowledges that ten (10) Business Days prior written
notice of such sale or sales shall be reasonable notice. In addition, the
Borrower waives any and all rights that it may have to a judicial hearing in
advance of the enforcement of any of the Bank's rights hereunder, including,
without limitation, its right following an Event of Default to take immediate
possession of the Collateral and to exercise its rights with respect thereto. To
the extent that any of the Obligations are to be paid or performed by a person
other than the Borrower, the Borrower waives and agrees not to assert any rights
or privileges which it may have under (S)9-112 of the Uniform Commercial Code of
the Commonwealth of Massachusetts.
15. NO WAIVER, ETC. The Borrower waives demand, notice, protest, notice of
---------------
acceptance of this Security Agreement, notice of loans made, credit extended,
Collateral received or delivered or other action taken in reliance hereon and
all other demands and notices of any description. With respect to both the
Obligations and the Collateral, the Borrower assents to any extension or
postponement of the time of payment or any other indulgence, to any
substitution, exchange or release of or failure to perfect any security interest
in any Collateral, to the addition or release of any party or person primarily
or secondarily liable, to the acceptance of partial payment thereon and the
settlement, compromising or adjusting of any thereof, all in such manner and at
such time or times as the Bank, in the exercise of its reasonable discretion,
may deem advisable. The Bank shall have no duty as to the collection or
protection of the Collateral or any income thereon, nor as to the preservation
of rights against prior parties, nor as to the preservation of any rights
pertaining thereto beyond the safe custody thereof as set forth in (S)9.2. The
Bank shall not be deemed to have waived any of its rights upon or under the
Obligations or the Collateral unless such waiver shall be in writing and signed
by the Bank. No delay or omission on the part of the Bank in exercising any
right shall operate as a waiver of such right or any other right. A waiver on
any one occasion shall not be construed as a bar to or waiver of any right on
any future occasion. All rights and remedies of the Bank with respect to the
Obligations or the Collateral, whether evidenced hereby or by any other
instrument or papers, shall be cumulative and may be exercised singularly,
alternatively, successively or concurrently at such time or at such times as the
Bank deems expedient.
16. MARSHALLING. The Bank shall not be required to marshal any present or
-----------
future collateral security (including but not limited to this Security Agreement
and the Collateral) for, or other assurances of
<PAGE>
9
payment of, the Obligations or any of them or to resort to such collateral
security or other assurances of payment in any particular order, and all of the
rights of the Bank hereunder and in respect of such collateral security and
other assurances of payment shall be cumulative and in addition to all other
rights, however existing or arising. To the extent that it lawfully may, the
Borrower hereby agrees that it will not invoke any law relating to the
marshalling of collateral which might cause delay in or impede the enforcement
of the Bank's rights under this Security Agreement or under any other instrument
creating or evidencing any of the Obligations or under which any of the
Obligations is outstanding or by which any of the Obligations is secured or
payment thereof is otherwise assured, and, to the extent that it lawfully may,
the Borrower hereby irrevocably waives the benefits of all such laws.
17. PROCEEDS OF DISPOSITIONS; EXPENSES. The Borrower shall pay to the Bank
----------------------------------
on demand any and all expenses, including reasonable attorneys' fees and
disbursements, incurred or paid by the Bank in protecting, preserving or
enforcing the Bank's rights under or in respect of any of the Obligations or any
of the Collateral. After deducting all of said expenses, the residue of any
proceeds of collection or sale of the Obligations or Collateral shall, to the
extent actually received in cash, be applied to the payment of the Obligations
pursuant to (S)12.4 of the Loan Agreement. Upon the final payment and
satisfaction in full of all of the Obligations and after making any payments
required by Section 9-504(1)(c) of the Uniform Commercial Code of the
Commonwealth of Massachusetts, any excess shall be returned to the Borrower, and
the Borrower shall remain liable for any deficiency in the payment of the
Obligations.
18. OVERDUE AMOUNTS. Until paid, all amounts due and payable by the
Borrower hereunder shall be a debt secured by the Collateral and shall bear,
whether before or after judgment, interest at the rate of interest for overdue
principal set forth in the Loan Agreement.
19. GOVERNING LAW; CONSENT TO JURISDICTION. THIS SECURITY AGREEMENT IS
--------------------------------------
INTENDED TO TAKE EFFECT AS A SEALED INSTRUMENT AND SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE COMMONWEALTH OF
MASSACHUSETTS. The Borrower agrees that any suit for the enforcement of this
Security Agreement may be brought in the courts of the Commonwealth of
Massachusetts or any federal court sitting therein and consents to the non-
exclusive jurisdiction of such court and to service of process in any such suit
being made upon the Borrower by mail at the address specified in the Loan
Agreement. The Borrower hereby waives any objection that it may now
<PAGE>
10
or hereafter have to the venue of any such suit or any such court or that such
suit is brought in an inconvenient court.
20. WAIVER OF JURY TRIAL. THE BORROWER WAIVES ITS RIGHT TO A JURY TRIAL
--------------------
WITH RESPECT TO ANY ACTION OR CLAIM ARISING OUT OF ANY DISPUTE IN CONNECTION
WITH THIS SECURITY AGREEMENT, ANY RIGHTS OR OBLIGATIONS HEREUNDER OR THE
PERFORMANCE OF ANY SUCH RIGHTS OR OBLIGATIONS. Except as prohibited by law, the
Borrower waives any right which it may have to claim or recover in any
litigation referred to in the preceding sentence any special, exemplary,
punitive or consequential damages or any damages other than, or in addition to,
actual damages. The Borrower (a) certifies that neither the Bank nor any
representative, agent or attorney of the Bank has represented, expressly or
otherwise, that the Bank would not, in the event of litigation, seek to enforce
the foregoing waivers and (b) acknowledges that, in entering into the Loan
Agreement and the other Loan Documents to which the Bank is a party, the Bank is
relying upon, among other things, the waivers and certifications contained in
this (S)20.
21. MISCELLANEOUS. The headings of each section of this Security Agreement
-------------
are for convenience only and shall not define or limit the provisions thereof.
This Security Agreement and all rights and obligations hereunder shall be
binding upon the Borrower and its respective successors and assigns, and shall
inure to the benefit of the Bank and its successors and assigns. If any term of
this Security Agreement shall be held to be invalid, illegal or unenforceable,
the validity of all other terms hereof shall in no way be affected thereby, and
this Security Agreement shall be construed and be enforceable as if such
invalid, illegal or unenforceable term had not been included herein. The
Borrower acknowledges receipt of a copy of this Security Agreement.
22. TERMINATION. At such time as all of the Obligations have been finally
-----------
paid and satisfied in full in cash and the Commitment has been terminated in
full, this Agreement shall terminate and the Bank shall, upon the written
request and in each case at the expense of the Borrower, execute and deliver to
the Borrower all such termination documents and other instruments, and take all
such other actions, as may be necessary or proper to release, terminate,
deliver, and reassign to and re-vest in the Borrower the Collateral previously
granted, pledged, and assigned to the Bank by the Borrower pursuant to this
Agreement, subject to any disposition or application of all or any part thereof
that may have been made by the Bank pursuant hereto or the other Security
Documents.
<PAGE>
11
IN WITNESS WHEREOF, intending to be legally bound, the Borrower has caused
this Security Agreement to be duly executed as of the date first above written.
MORAN BULK CORPORATION
By: /s/ Alan L. Marchisotto
Name: Alan L. Marchisotto
Title: Secretary
Accepted:
THE FIRST NATIONAL BANK OF BOSTON
By: /s/ Daniel O'Connor
Name: Daniel O'Connor
Title: Managing Director
<PAGE>
12
CERTIFICATE OF ACKNOWLEDGMENT
COMMONWEALTH OR STATE OF Connecticut)
) ss.
COUNTY OF Fairfield)
Before me, the undersigned, a Notary Public in and for the county
aforesaid, on this 14th day of May, 1996, personally appeared Alan Marchisotto
to me known personally, and who, being by me duly sworn, deposes and says that
(s)he is the Secretary of Moran Bulk Corporation, and that said instrument was
signed and sealed on behalf of said corporation by authority of its Board of
Directors, and said Secretary acknowledged said instrument to be the free act
and deed of said corporation.
/s/ Helaine L. Rich
Notary Public
My commission expires:
Helaine L. Rich
Notary Public, State of Conecticut
No. 77549
Commission Expires July 31, 1996
<PAGE>
Exhibit 10.4
GUARANTY
--------
GUARANTY, dated as of May 16, 1996, by MORAN TRANSPORTATION COMPANY
("Moran"), a Delaware corporation and MORAN TOWING CORPORATION, a New York
corporation ("Towing" and together with Moran, referred to herein, collectively,
as the "Guarantors") in favor of THE FIRST NATIONAL BANK OF BOSTON, a national
banking association (the "Bank").
WHEREAS, MORAN BULK CORPORATION, a Delaware corporation (the
"Borrower"), the Guarantors and the Bank have entered into a Construction Loan
Agreement dated as of May 16, 1996 (as amended and in effect from time to time,
the "Loan Agreement"), pursuant to which the Bank, subject to the terms and
conditions contained therein, is to make loans to the Borrower;
WHEREAS, Moran is the owner of one hundred percent of the issued and
outstanding stock of Towing and Towing is the owner of one hundred percent of
the issued and outstanding stock of the Borrower and the Borrower and the
Guarantors are members of a group of related corporations, the success of any
one of which is dependent in part on the success of the other members of such
group;
WHEREAS, the Guarantors expect to receive substantial direct and
indirect benefits from the extensions of credit to the Borrower by the Bank
pursuant to the Loan Agreement (which benefits are hereby acknowledged);
WHEREAS, it is a condition precedent to the Bank's making any loans to
the Borrower under the Loan Agreement that the Guarantors execute and deliver to
the Bank a guaranty substantially in the form hereof; and
WHEREAS, the Guarantors wish to guaranty the Borrower's obligations to
the Bank under or in respect of the Loan Agreement as provided herein;
NOW, THEREFORE, the Guarantors hereby agree with the Bank as follows:
<PAGE>
2
1. DEFINITIONS.
-----------
The term "Obligations" and all other capitalized terms used herein
without definition shall have the respective meanings provided therefor in the
Loan Agreement.
2. GUARANTY OF PAYMENT AND PERFORMANCE.
-----------------------------------
The Guarantors hereby, jointly and severally, guaranty to the Bank the
full and punctual payment when due (whether at stated maturity, by required pre-
payment, by acceleration or otherwise), as well as the performance, of all of
the Obligations including all such which would become due but for the operation
of the automatic stay pursuant to (S)362(a) of the Federal Bankruptcy Code and
the operation of (S)(S)502(b) and 506(b) of the Federal Bankruptcy Code. This
Guaranty is an absolute, unconditional and continuing guaranty of the full and
punctual payment and performance of all of the Obligations and not of their
collectibility only and is in no way conditioned upon any requirement that the
Bank first attempt to collect any of the Obligations from the Borrower or resort
to any collateral security or other means of obtaining payment. Should the
Borrower default in the payment or performance of any of the Obligations, the
obligations of the Guarantors hereunder with respect to such Obligations in
default shall become immediately due and payable to the Bank, without demand or
notice of any nature, all of which are expressly waived by the Guarantors.
Payments by the Guarantors hereunder may be required by the Bank on any number
of occasions.
3. GUARANTORS' AGREEMENT TO PAY ENFORCEMENT COSTS, ETC.
---------------------------------------------------
The Guarantors further agree, jointly and severally, as principal
obligors and not as guarantors only, to pay to the Bank, on demand, all costs
and expenses (including court costs and legal expenses) incurred or expended by
the Bank in connection with the Obligations, this Guaranty and the enforcement
thereof, together with interest on amounts recoverable under this (S)3 from the
time when such amounts become due until payment, whether before or after
judgment, at the rate of interest for overdue principal set forth in the Loan
Agreement, provided that if such interest exceeds the maximum amount permitted
--------
to be paid under applicable law, then such interest shall be reduced to such
maximum permitted amount.
4. WAIVERS BY GUARANTORS; BANK'S FREEDOM TO ACT.
--------------------------------------------
The Guarantors agree that the Obligations will be paid and performed
strictly in accordance with their respective terms, regardless of any law,
regulation or order now or hereafter in effect in any
<PAGE>
3
jurisdiction affecting any of such terms or the rights of the Bank with respect
thereto. Each Guarantor waives promptness, diligence, presentment, demand,
protest, notice of acceptance, notice of any Obligations incurred and all other
notices of any kind, all defenses which may be available by virtue of any
valuation, stay, moratorium law or other similar law now or hereafter in effect,
any right to require the marshalling of assets of the Borrower or any other
entity or other person primarily or secondarily liable with respect to any of
the Obligations, and all suretyship defenses generally. Without limiting the
generality of the foregoing, each Guarantor agrees to the provisions of any
instrument evidencing, securing or otherwise executed in connection with any
Obligation and agrees that the obligations of such Guarantor hereunder shall not
be released or discharged, in whole or in part, or otherwise affected by (i) the
failure of the Bank to assert any claim or demand or to enforce any right or
remedy against the Borrower or any other entity or other person primarily or
secondarily liable with respect to any of the Obligations; (ii) any extensions,
compromise, refinancing, consolidation or renewals of any Obligation; (iii) any
change in the time, place or manner of payment of any of the Obligations or any
rescissions, waivers, compromise, refinancing, consolidation, amendments or
modifications of any of the terms or provisions of the Loan Agreement, the Note,
the other Loan Documents or any other agreement evidencing, securing or
otherwise executed in connection with any of the Obligations; (iv) the addition,
substitution or release of any entity or other person primarily or secondarily
liable for any Obligation; (v) the adequacy of any rights which the Bank may
have against any collateral security or other means of obtaining repayment of
any of the Obligations; (vi) the impairment of any collateral securing any of
the Obligations, including without limitation the failure to perfect or preserve
any rights which the Bank might have in such collateral security or the
substitution, exchange, surrender, release, loss or destruction of any such
collateral security; or (vii) any other act or omission which might in any
manner or to any extent vary the risk of such Guarantor or otherwise operate as
a release or discharge of either Guarantor, all of which may be done without
notice to the Guarantors. To the fullest extent permitted by law, each Guarantor
hereby expressly waives any and all rights or defenses arising by reason of (A)
any "one action" or "anti-deficiency" law which would otherwise prevent the Bank
from bringing any action, including any claim for a deficiency, or exercising
any other right or remedy (including any right of set-off), against each
Guarantor before or after the Bank's commencement or completion of any
foreclosure action, whether judicially, by exercise of power of sale or
otherwise, or (B) any other law which in any other way would otherwise require
any election of remedies by the Bank.
<PAGE>
4
5. UNENFORCEABILITY OF OBLIGATIONS AGAINST BORROWER.
------------------------------------------------
If for any reason the Borrower has no legal existence or is under no
legal obligation to discharge any of the Obligations, or if any of the
Obligations have become irrecoverable from the Borrower by reason of the
Borrower's insolvency, bankruptcy or reorganization or by other operation of law
or for any other reason, this Guaranty shall nevertheless be binding on each
Guarantor to the same extent as if each such Guarantor at all times had been the
principal obligor on all such Obligations. In the event that acceleration of
the time for payment of any of the Obligations is stayed upon the insolvency,
bankruptcy or reorganization of the Borrower, or for any other reason, all such
amounts otherwise subject to acceleration under the terms of the Loan Agreement,
the Note, the other Loan Documents or any other agreement evidencing, securing
or otherwise executed in connection with any Obligation shall be immediately due
and payable by each such Guarantor.
6. SUBROGATION.
-----------
6.1. WAIVER OF RIGHTS AGAINST BORROWER.
---------------------------------
Until the final payment and performance in full of all of the
Obligations, neither of the Guarantors shall exercise any rights against
the Borrower arising as a result of payment by either Guarantor hereunder,
by way of subrogation, reimbursement, restitution, contribution or
otherwise, and will not prove any claim in competition with the Bank in
respect of any payment hereunder in any bankruptcy, insolvency or
reorganization case or proceedings of any nature; neither of the Guarantors
will claim any setoff, recoupment or counterclaim against the Borrower in
respect of any liability of any such Guarantor to the Borrower; and each of
the Guarantors waives any benefit of and any right to participate in any
collateral security which may be held by the Bank.
6.2. PROVISIONS SUPPLEMENTAL.
-----------------------
The provisions of this (S)6 shall be supplemental to and not in
derogation of any rights and remedies of the Bank under any separate
subordination agreement which the Bank may at any time and from time to
time enter into with either of the Guarantors.
7. SETOFF.
------
Regardless of the adequacy of any collateral security or other means of
obtaining payment of any of the Obligations, the Bank is hereby authorized, upon
the occurrence and during the continuance of an Event
<PAGE>
5
of Default, without notice to either Guarantor (any such notice being expressly
waived by each Guarantor) and to the fullest extent permitted by law, to set off
and apply all deposits (general or special, time or demand, provisional or
final) and other sums credited by or due from the Bank to such Guarantor or
subject to withdrawal by such Guarantor, against the obligations of each of the
Guarantors under this Guaranty, whether or not the Bank shall have made any
demand under this Guaranty and although such obligations may be contingent or
unmatured.
8. FURTHER ASSURANCES.
------------------
Each of the Guarantors agrees to do all such things and execute all such
documents as the Bank may consider necessary or desirable to give full effect to
this Guaranty and to perfect and preserve the rights and powers of the Bank
hereunder. Each of the Guarantors acknowledges and confirms that each such
Guarantor itself has established its own adequate means of obtaining from the
Borrower on a continuing basis all information desired by such Guarantor
concerning the financial condition of the Borrower and that each Guarantor will
look to the Borrower and not to the Bank in order for such Guarantor to keep
adequately informed of changes in the Borrower's financial condition.
9. TERMINATION; REINSTATEMENT.
--------------------------
This Guaranty shall remain in full force and effect until the indefeasible
payment in full, in cash, of the Obligations. This Guaranty shall be reinstated
if at any time any payment made or value received with respect to any Obligation
is rescinded or must otherwise be returned by the Bank upon the insolvency,
bankruptcy or reorganization of the Borrower or either Guarantor, or otherwise,
all as though such payment had not been made or value received.
10. SUCCESSORS AND ASSIGNS.
----------------------
This Guaranty shall be binding upon each of the Guarantors and each of
their respective successors and assigns, and shall inure to the benefit of and
be enforceable by the Bank and its successors, transferees and assigns. Without
limiting the generality of the foregoing sentence, the Bank may assign or
otherwise transfer the Loan Agreement, the Note, the other Loan Documents or any
other agreement or note held by it evidencing, securing or otherwise executed in
connection with the Obligations, or sell participations in any interest therein,
to any other entity or other person, and such other entity or other person shall
thereupon become vested, to the extent set forth in the agreement
<PAGE>
6
evidencing such assignment, transfer or participation, with all the rights in
respect thereof granted to the Bank herein.
11. AMENDMENTS AND WAIVERS.
----------------------
No amendment or waiver of any provision of this Guaranty nor consent to any
departure by either of the Guarantors therefrom shall be effective unless the
same shall be in writing and signed by the Bank. No failure on the part of the
Bank to exercise, and no delay in exercising, any right hereunder shall operate
as a waiver thereof; nor shall any single or partial exercise of any right
hereunder preclude any other or further exercise thereof or the exercise of any
other right.
12. NOTICES.
-------
All notices and other communications called for hereunder shall be made in
the manner and with the effect provided for in the Loan Agreement.
13. GOVERNING LAW; CONSENT TO JURISDICTION.
--------------------------------------
THIS GUARANTY IS INTENDED TO TAKE EFFECT AS A SEALED INSTRUMENT AND SHALL
BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE
COMMONWEALTH OF MASSACHUSETTS. Each Guarantor agrees that any suit for the
enforcement of this Guaranty may be brought in the courts of the Commonwealth of
Massachusetts or any federal court sitting therein and consents to the
nonexclusive jurisdiction of such court and to service of process in any such
suit being made upon each such Guarantor by mail at the address specified by
reference in (S)12. Each Guarantor hereby waives any objection that it may now
or hereafter have to the venue of any such suit or any such court or that such
suit was brought in an inconvenient court.
14. WAIVER OF JURY TRIAL.
--------------------
EACH GUARANTOR HEREBY WAIVES ITS RIGHT TO A JURY TRIAL WITH RESPECT TO ANY
ACTION OR CLAIM ARISING OUT OF ANY DISPUTE IN CONNECTION WITH THIS GUARANTY, ANY
RIGHTS OR OBLIGATIONS HEREUNDER OR THE PERFORMANCE OF ANY OF SUCH RIGHTS OR
OBLIGATIONS. Except as prohibited by law, each Guarantor hereby waives any
right which it may have to claim or recover in any litigation referred to in the
preceding sentence any special, exemplary, punitive or consequential damages or
any damages other than, or in addition to, actual damages. Each Guarantor (i)
certifies that neither the Bank nor any representative, agent or attorney
<PAGE>
7
of the Bank has represented, expressly or otherwise, that the Bank would not, in
the event of litigation, seek to enforce the foregoing waivers and (ii)
acknowledges that, in entering into the Loan Agreement and the other Loan
Documents to which the Bank is a party, the Bank is relying upon, among other
things, the waivers and certifications contained in this (S)14.
15. MISCELLANEOUS.
-------------
This Guaranty constitutes the entire agreement of the Guarantors with
respect to the matters set forth herein. The rights and remedies herein
provided are cumulative and not exclusive of any remedies provided by law or any
other agreement, and this Guaranty shall be in addition to any other guaranty of
or collateral security for any of the Obligations. The invalidity or
unenforceability of any one or more sections of this Guaranty shall not affect
the validity or enforceability of its remaining provisions. Captions are for
ease of reference only and shall not affect the meaning of the relevant
provisions. The meanings of all defined terms used in this Guaranty shall be
equally applicable to the singular and plural forms of the terms defined.
<PAGE>
8
IN WITNESS WHEREOF, the undersigned have caused this Guaranty to be
executed and delivered as of the date first above written.
MORAN TRANSPORTATION COMPANY
By: /s/ Alan L. Marchisotto
Name: Alan L. Marchisotto
Title: Secretary
MORAN TOWING CORPORATION
By: /s/ Jeffrey J. McAulay
Name: Jeffrey J. McAulay
Title: Vice President
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 6,121
<SECURITIES> 0
<RECEIVABLES> 11,790
<ALLOWANCES> 372
<INVENTORY> 4,303
<CURRENT-ASSETS> 23,483
<PP&E> 124,319
<DEPRECIATION> 17,538
<TOTAL-ASSETS> 174,581
<CURRENT-LIABILITIES> 15,938
<BONDS> 80,000
1,000
0
<COMMON> 1
<OTHER-SE> 11,494
<TOTAL-LIABILITY-AND-EQUITY> 174,581
<SALES> 42,105
<TOTAL-REVENUES> 42,105
<CGS> 25,039
<TOTAL-COSTS> 35,951
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 5,159
<INCOME-PRETAX> 1,276
<INCOME-TAX> 501
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 775
<EPS-PRIMARY> 17.0
<EPS-DILUTED> 0
</TABLE>
