<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 September 30, 1998
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 November 13, 1998, 44,600 shares of the common stock, par value $0.01
per share, of Moran Transportation Company, were issued and outstanding.
1
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MORAN TRANSPORTATION COMPANY
FORM 10 - Q
INDEX
<TABLE>
<CAPTION>
PAGE
<S> <C> <C>
PART 1. FINANCIAL INFORMATION
Item 1. Financial Statements of Moran Transportation
Company and Subsidiaries
Consolidated Balance Sheets at December 31, 1997 and
September 30, 1998 .......................................... 3
Consolidated Statements of Income for the nine
months ended September 30, 1997 and September 30, 1998 ...... 5
Consolidated Statements of Income for the three
months ended September 30, 1997 and September 30, 1998 ...... 6
Consolidated Statements of Cash Flows for the nine
months ended September 30, 1997 and September 30, 1998 ...... 7
Notes to Consolidated Financial Statements ......................... 8
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations ......................... 10
PART II. OTHER INFORMATION .................................................. 12
</TABLE>
2
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PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
MORAN TRANSPORTATION COMPANY
AND SUBSIDIARIES
Consolidated Balance Sheets
(Dollars in Thousands)
<TABLE>
<CAPTION>
Dec 31, Sept. 30,
1997 1998
-------- --------
(unaudited)
<S> <C> <C>
ASSETS
Current Assets
Cash and cash equivalents ........................... $ 9,945 $ 8,093
Accounts receivable, less allowance for doubtful
accounts of $288 and $433 at December 31, 1997
and September 30, 1998, respectively ............ 14,319 13,121
Inventory ........................................... 4,161 4,023
Unexpired insurance and other prepaid expenses ...... 2,487 2,823
-------- --------
Total Current Assets ............................ 30,912 28,060
Investment in joint venture .............................. 3,164 3,283
Insurance claims receivable .............................. 2,563 3,094
Fixed assets, net ........................................ 119,920 124,643
Other assets ............................................. 3,731 3,187
-------- --------
Total Assets .................................... $160,290 $162,267
-------- --------
-------- --------
</TABLE>
See accompanying notes to consolidated financial statements
3
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MORAN TRANSPORTATION COMPANY
AND SUBSIDIARIES
Consolidated Balance Sheets
(Dollars in Thousands)
<TABLE>
<CAPTION>
Dec 31, Sept. 30,
1997 1998
-------- --------
(unaudited)
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Trade accounts payable ................................................ $ 3,602 $ 5,372
Current portion of long-term debt ..................................... 168 179
Accounts payable to joint venture ..................................... 477 2,052
Accrued interest payable .............................................. 4,331 1,990
Other accrued liabilities ............................................. 3,936 2,572
Backpay liability ..................................................... 837 837
Income taxes payable .................................................. -- 485
-------- --------
Total current liabilities ......................................... 13,351 13,487
Long-term debt ............................................................. 83,252 83,116
Insurance claims reserves .................................................. 7,227 6,638
Deferred income taxes ...................................................... 32,450 32,482
Postretirement benefits other than pensions ................................ 4,321 4,647
Other liabilities .......................................................... 5,045 4,482
-------- --------
Total liabilities ................................................. 145,646 144,851
--------
Commitments and contingencies (Note 4)
Mandatorily redeemable capital stock-4,000 shares outstanding .............. 1,000 1,000
-------- --------
Stockholders' Equity
Common stock, par value $0.01 per share authorized - 100,000 shares
issued and outstanding - 40,600 shares ............................ 1 1
Capital surplus ....................................................... 10,149 10,149
Retained earnings ..................................................... 3,494 6,265
-------- --------
Total Stockholders' Equity ............................................ 13,644 16,415
-------- --------
Total Liabilities and Stockholders' Equity ............................ $160,290 $162,267
-------- --------
-------- --------
</TABLE>
See accompanying notes to consolidated financial statements
4
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MORAN TRANSPORTATION COMPANY
AND SUBSIDIARIES
Consolidated Statements of Income
For the Nine Months Ended September 30,
(Dollars in Thousands, except per share amounts)
(Unaudited)
<TABLE>
<CAPTION>
1997 1998
-------- --------
<S> <C> <C>
Operating revenue .......................................... $ 75,948 $ 78,790
Cost of operations
Operating expenses .................................... 48,280 49,884
Depreciation .......................................... 5,831 6,009
-------- --------
Total cost of operations ................................... 54,111 55,893
-------- --------
Gross profit ............................................... 21,837 22,897
General and administrative expenses ........................ 10,883 11,232
-------- --------
Operating income ........................................... 10,954 11,665
Interest expense ........................................... (7,512) (7,701)
Interest income ............................................ 204 356
Equity in (loss)/income from joint venture ................. (564) 119
Other (expense) income ..................................... (36) 48
-------- --------
Income before provision for income taxes ................... 3,046 4,487
Provision for income taxes ................................. 810 1,716
-------- --------
Net income ............................................ $ 2,236 $ 2,771
-------- --------
-------- --------
Earnings per share
Basic ................................................. $ 50.13 $ 62.13
-------- --------
-------- --------
Diluted ............................................... $ 48.61 $ 59.98
-------- --------
-------- --------
Weighted average number of shares outstanding (in thousands)
Basic ................................................. 44.6 44.6
-------- --------
-------- --------
Diluted ............................................... 46.0 46.2
-------- --------
-------- --------
</TABLE>
See accompanying notes to consolidated financial statements
5
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MORAN TRANSPORTATION COMPANY
AND SUBSIDIARIES
Consolidated Statements of Income
For the Three Months Ended September 30,
(Dollars in Thousands, except per share amounts)
(Unaudited)
<TABLE>
<CAPTION>
1997 1998
-------- --------
<S> <C> <C>
Operating revenue .......................................... $ 25,900 $ 26,397
Cost of operations
Operating expenses .................................... 16,172 16,933
Depreciation .......................................... 1,908 2,055
-------- --------
Total cost of operations ................................... 18,080 18,988
-------- --------
Gross profit ............................................... 7,820 7,409
General and administrative expenses ........................ 3,548 3,578
-------- --------
Operating income ........................................... 4,272 3,831
Interest expense ........................................... (2,492) (2,594)
Interest income ............................................ 108 108
Equity in (loss)/income from joint venture ................. (296) 31
Other (expense) income ..................................... (37) --
-------- --------
Income before provision for income taxes ................... 1,555 1,376
Provision for income taxes ................................. 274 595
-------- --------
Net income ............................................ $ 1,281 $ 781
-------- --------
-------- --------
Earnings per share
Basic ................................................. $ 28.72 $ 17.51
-------- --------
-------- --------
Diluted ............................................... $ 27.85 $ 16.90
-------- --------
-------- --------
Weighted average number of shares outstanding (in thousands)
Basic ................................................. 44.6 44.6
-------- --------
-------- --------
Diluted ............................................... 46.0 46.2
-------- --------
-------- --------
</TABLE>
See accompanying notes to consolidated financial statements
6
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MORAN TRANSPORTATION COMPANY
AND SUBSIDIARIES
Consolidated Statements of Cash Flows
For the Nine Months Ended September 30,
(Dollars in Thousands)
(Unaudited)
<TABLE>
<CAPTION>
1997 1998
-------- --------
<S> <C> <C>
Cash flows from operating activities:
Net income .................................... $ 2,236 $ 2,771
-------- --------
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization ................. 8,726 9,726
Deferred income taxes ......................... (2,383) 32
Equity in loss/(income) from joint venture .... 564 (119)
Loss on disposal of floating equipment ........ 90 --
Changes in operating assets and liabilities:
Accounts receivable ........................... (158) 1,198
Other current assets .......................... (13) (198)
Accounts payable and accrued expenses ......... (4,640) (360)
Income taxes payable .......................... 416 485
Insurance claims receivable ................... 64 (531)
Insurance claims reserves ..................... 706 (589)
Other assets and liabilities .................. (418) (253)
-------- --------
Net cash provided by operating activities .......... 5,190 12,162
Cash flows from investing activities:
Capital expenditures .......................... (4,461) (13,889)
Capital contribution to joint venture ......... (750) --
Net proceeds from constructive total loss ..... 2,800 --
Proceeds from sale of leasehold interest ...... 2,850 --
-------- --------
Net cash provided by/(used for) investing activities 439 (13,889)
Cash flows from financing activities:
Repayment of debt ............................. -- (125)
-------- --------
Net cash used for financing activities ............. -- (125)
-------- --------
Net increase (decrease) in cash and cash equivalents 5,629 (1,852)
Cash and cash equivalents at beginning of period ... 5,827 9,945
-------- --------
Cash and cash equivalents at end of period ......... $ 11,456 $ 8,093
-------- --------
-------- --------
</TABLE>
See accompanying notes to consolidated financial statements
7
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MORAN TRANSPORTATION COMPANY
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in Thousands, unless otherwise noted)
(UNAUDITED)
NOTE 1 - MORAN TRANSPORTATION COMPANY
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, 1997.
NOTE 2 - CHANGES IN STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
Common Capital Retained
Stock Surplus Earnings Total
----- ------- -------- -----
<S> <C> <C> <C> <C>
Balance at December 31, 1997 $ 1 $10,149 $ 3,494 $13,644
Net Income ................. -- -- 2,771 2,771
------- ------- ------- -------
Balance at September, 1998 . $ 1 $10,149 $ 6,265 $16,415
------- ------- ------- -------
------- ------- ------- -------
</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.
NOTE 4 - CONTINGENT LIABILITIES
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 subsidiary of the Company and several other potentially
responsible parties ("PRP"). 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 $25,000 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.
8
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While the current state of law imposes joint and several liability upon PRPs, as
a practical matter, costs of these sites are typically shared with other PRPs.
The Company believes that its subsidiary's portion of the hazardous materials
disposed of at the site, if any, is insignificant when compared to that of the
other PRPs. While management is unable to estimate the Company'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.
NOTE 5 - FINANCIAL STATEMENTS OF GUARANTORS
All of the Company's subsidiaries ("Guarantors") have guaranteed the Company's
$80 million of 11-3/4% First Preferred Ship Mortgage Notes due 2004 (the
"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.
NOTE 6 - SUBSEQUENT EVENT
On October 30, 1998, the Company completed a combination (the "Combination")
with Turecamo Maritime, Inc., a Delaware corporation, and certain of its
affiliated entities (the "Turecamo Entities"). The Turecamo Entities operate
32 tugboats along the East Coast of the United States. Pursuant to the
relevant agreements, the existing equityholders of the Company contributed
all of their shares of capital stock of the Company to Moran Enterprises
Corporation ("Moran Enterprises") in exchange for (i) newly-issued shares of
common stock of Moran Enterprises which represent a substantial majority (but
less than 80%) of the common stock of Moran Enterprises and (ii) newly-issued
shares of Moran Enterprises preferred stock. As a result, Moran Enterprises
became the new parent of both the Company and the Turecamo Entities. The
Notes are not guaranteed by Moran Enterprises or the Turecamo Entities.
9
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RECENT DEVELOPMENTS
On October 30, 1998, the Company completed a combination (the "Combination")
with Turecamo Maritime, Inc., a Delaware corporation, and certain of its
affiliated entities (the "Turecamo Entities"). The Turecamo Entities operate
32 tugboats along the East Coast of the United States. Pursuant to the
relevant agreements, the existing equityholders of the Company contributed
all of their shares of capital stock of the Company to Moran Enterprises
Corporation ("Moran Enterprises") in exchange for (i) newly-issued shares of
common stock of Moran Enterprises which represent a substantial majority (but
less than 80%) of the common stock of Moran Enterprises and (ii) newly-issued
shares of Moran Enterprises preferred stock. Simultaneously, the existing
stockholders of the Turecamo Entities contributed all of their shares of
capital stock of each of the Turecamo Entities to Moran Enterprises in
exchange for (i) newly-issued shares of common stock of Moran Enterprises,
including certain shares which vest if certain financial criteria are met,
which represent a minority interest in the common stock of Moran Enterprises,
and (ii) an aggregate cash amount of $45.0 million. As a result, Moran
Enterprises became the new parent of both the Company and the Turecamo
Entities. The Company's 11-3/4% First Preferred Ship Mortgage Notes due 2004
(the "Notes") are not guaranteed by Moran Enterprises or the Turecamo
Entities.
The Combination was financed through a $200 million syndicated Credit Agreement
among Moran Enterprises, certain participating financial institutions and Fleet
Bank, N.A., as administrative agent (the "New Senior Credit Facility"). A
portion of the New Senior Credit Facility has been used (i) to finance the
Combination and to pay related fees and expenses and (ii) to repay existing debt
of the Turecamo Entities. In addition, the Company repaid a $3.5 million term
loan from its cash reserves as part of the transaction. The Company's Notes
remain outstanding. See "Liquidity and Capital Resources".
RESULTS OF OPERATIONS
Nine months ended September 30, 1997 compared to nine months ended September 30,
1998
Operating Revenues: Operating revenues increased by $2.8 million or 3.7% during
the first nine months of 1998 as compared to the comparable period in 1997. Tug
services revenues increased by 10.4%, to $48.1 million, primarily due to strong
shipdocking in the majority of the Company's ports. Marine transportation
revenues decreased by 5.2% to $30.7 million primarily due to the drydocking of
the barge Florida in the first half of the year. In addition, coal
transportation was lower primarily due to the four month temporary closure of
one customer's power generating facility. This facility is now reopened. The
decrease in revenue caused by this closure was partially replaced by increased
transportation of scrap and other cargos.
Operating Expenses: Operating expenses increased by $1.6 million, or 3.3%, to
$48.3 million in the first nine months of 1998. The increase is primarily due to
increased costs for labor and outside towing due to the increased activity
discussed above. Partially offsetting these increased costs have been lower fuel
costs and lower outside charter hire due to the purchase of the tug April in
December of 1997. The Company also had higher drydocking amortization expense,
compared to the first nine months of 1997.
General and Administrative Expenses: General and administrative expenses
increased by $0.3 million, or 3.2%, to $11.2 million in the first nine months of
1998. No individual expense categories have increased or decreased materially.
Operating Income: Operating income increased by $0.7 million, or 6.4%, to $11.7
million in the first nine months of 1998. This improvement is primarily due to
the increased revenues described above, partially offset by higher operating and
general and administrative costs.
10
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Equity in income/(loss) in joint venture - Equity income/(loss) from the
Company's joint venture increased from a loss of $564,000 in the nine months of
1997 to a profit of $119,000 in the first nine months of 1998. This increase was
due to higher rates and utilization compared to the first nine months of 1997.
The joint venture's barge had a drydocking in 1997 which began in the second
quarter and continued into the third quarter.
Taxes: In 1997 taxes were favorably impacted by the realization of a deferred
tax asset. The Company applied a capital loss carry forward to offset the tax
gain associated with the termination of the Jakobson Shipyard lease. This tax
asset had been valued at zero due to the uncertainty associated with the
utilization of the deferred tax asset. The Company determined in the third
quarter of 1997 that it was more likely than not that the asset could be
utilized.
Net Income: Net income increased by $0.5 million, to $2.8 million in the first
nine months of 1998. The improvement in overall profitability was principally
driven by higher operating profit, together with higher equity income in joint
venture, partially offset by higher taxes.
Three months ended September 30, 1997 compared to three months ended September
30, 1998
Operating Revenues: Operating revenues increased by $0.5 million or 1.9% during
the third quarter of 1998 as compared to the comparable period in 1997. Tug
services revenues increased by 14.6%, to $16.3 million, primarily due to strong
shipdocking in the majority of the Company's ports. Marine transportation
revenues decreased by 13.5% to $10.1 million primarily due to less coal
transportation resulting from the four month temporary closure of one customer's
power generating facility. This decrease was partially replaced by increased
transportation of scrap and other cargos.
Operating Expenses: Operating expenses increased by $0.8 million, or 4.7%, to
$16.9 million in the third quarter of 1998. The increase is primarily due to
increased costs for labor and outside towing due to the increased activity
discussed above. Partially offsetting this increase has been the impact of lower
fuel prices as compared to the comparable period last year.
General and Administrative Expenses: General and administrative expenses
remained effectively flat at $3.6 million.
Operating Income: Operating income decreased by $0.4 million or 10.3%, to $3.8
million in the second quarter of 1998. This decrease was due to higher operating
and general and administrative costs, which more than offset the increased
revenues described above.
Equity in income/(loss) in joint venture - Equity income/(loss) from the
Company's joint venture increased from a loss of $296,000 in the third quarter
of 1997 to a profit of $31,000 in the third quarter of 1998. This increase was
due to higher rates and utilization compared to the comparable period in 1997.
The joint venture's barge had a drydocking in 1997, which began in the second
quarter and continued into the third quarter.
Taxes: In 1997 taxes were favorably impacted by the realization of a deferred
tax asset. The Company applied a capital loss carry forward to offset the tax
gain associated with the termination of the Jakobson Shipyard lease. This tax
asset had been valued at zero due to the uncertainty associated with the
utilization of deferred tax asset. The Company determined in the third
quarter that it was more likely than not that the asset could be utilized.
Net Income: Net income decreased by $0.5 million, or 39.0%, to $0.8 million in
the third quarter of 1998. The decreases in overall profitability was
principally driven by lower operating profit and higher taxes, partially offset
by higher equity income in joint venture.
LIQUIDITY AND CAPITAL RESOURCES
11
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The New Senior Credit Facility includes two $80 million term loan facilities,
one of which was used to finance the Combination and the other of which may be
drawn upon to redeem in full the Company's Notes when they become eligible for
redemption under the applicable indenture. The indenture permits redemption of
all such Notes commencing on July 15, 1999 at a redemption price equal to 108%
of principal amount, with the redemption price decreasing over time thereafter.
Under the New Senior Credit Facility, several conditions must be satisfied prior
to drawing on the term loan facility to redeem the Notes, including that no
event of default shall have occurred or be continuing, that certain
representations and warranties are true and correct, and that there shall have
been no material adverse change in the condition of the vessels owned by Moran
Enterprises and its subsidiaries. The New Senior Credit Facility also includes a
$40 million revolving credit facility. Until the Notes are redeemed and the
applicable term loan facility is drawn upon, however, the maximum amount that
may be outstanding under the revolving credit facility is $20 million, no more
than $15 million of which may be drawn upon for the benefit of the Company and
its subsidiaries. The revolving credit facility includes a letter of credit
subfacility of a separate sublimit which is available to the Company and its
subsidiaries and which reduces the available credit under the revolving credit
facility by the amount of any outstanding letter of credit and any unreimbursed
drawings under letters of credit. The New Senior Credit Facility bears interest
at rates linked to the prime rate and/or a Eurodollar rate, at Moran
Enterprises's option. The term loan facility which may be drawn upon to redeem
the Notes matures on June 30, 2004; the other $80 million term loan facility
matures on December 31, 2005. The revolving credit facility has a term of six
years.
The New Senior Credit Facility is secured by substantially all of the
personal property of Moran Enterprises and the Turecamo Entities, including
floating equipment (i.e., vessels) and a pledge of all the capital stock of
Moran Enterprises, the Company and the Turecamo Entities. The Company and its
domestic subsidiaries have guaranteed the revolving credit facility to the
extent that funds are drawn for their benefit, and in that regard, have
granted a first priority lien on accounts receivable and inventory to secure
the guaranty. If and when the Notes are redeemed in full, the Company and its
subsidiaries will grant security interests in substantially all of their
assets, including floating equipment, to secure the New Senior Credit
Facility. The Company's floating equipment presently continues to secure its
Notes.
The New Senior Credit Facility contains customary affirmative and negative
covenants, including compliance with law, maintenance of insurance, and
limitations on incurrence of debt, liens, investments, sales of assets and
mergers. The revolving credit facility thereunder may be used on an ongoing
basis to finance working capital and for general corporate purposes.
Concurrently with the closing of the Combination, the Company used available
cash to pay the following outstanding indebtedness of the Company: (i)
outstanding amounts due under the Company's previous revolving credit
facility, totaling $1,823, inclusive of principal, interest and any fees, and
(ii) outstanding amounts due under a separate term loan facility of the
Company, totaling $3,422,434, inclusive of principal, interest and any fees.
Cash and cash equivalents for the nine months ended September 30, 1998 decreased
by $1.9 million. This decrease was attributable to the factors discussed below:
In the nine months ending September 30, 1998, net cash provided by operating
activities was $12.2 million. This was used to fund capital expenditures of
$13.9 million (primarily the capital associated with the vessels built for the
Florida Power & Light contract together with drydockings) and to repay debt of
$0.1 million, resulting in a net increase of cash and cash equivalents of $1.9
million.
The Company believes that cash flow from current levels of operations and, to a
lesser extent, availability under the New 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.
A subsidiary of the Company has entered into a long-term contract to provide tug
and barge services to Florida Power & Light, a major Florida utility. The five
year contract began on October 1, 1998. Under the terms of the contract, the
subsidiary built a number of tug and barge units. Capital expenditures
associated with the project
12
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are approximately $10 million. The Company has financed this expenditure with
internally generated cash flow.
Under the terms of the indenture applicable to the Notes, the Company is
obligated to offer to purchase the Notes within 30 days after a "Change of
Control," as defined in the indenture. The consummation of the Combination
may be deemed to be a "Change of Control" under the indenture. Accordingly,
in order to satisfy its obligations, the Company expects to commence an offer
(the "Change of Control Offer") to purchase the Notes at a purchase price of
101% of principal amount (as prescribed by the indenture) within 30 days
after October 30, 1998. However, as disclosed above, the Company anticipates
that it will redeem the Notes at a price of 108% of principal amount when it
is able to do so in July 1999. Moreover, although recent sale price
information is not available, recent quotes for the Notes have exceeded 101%
of principal amount. Accordingly, management does not currently expect that a
substantial amount of Notes will be tendered to the Company pursuant to the
Change of Control Offer, and the Company has not entered into any
arrangements to finance purchases of any Notes which are actually tendered
pursuant to the Change of Control Offer.
Year 2000 Update
Moran has been aware of the Year 2000 problem for some time. Over the past year
Moran has increased the resources dedicated to evaluating Year 2000 exposure and
to developing solutions to any potential Year 2000 problems. A Year 2000
Compliance Committee has been established, chaired by the Vice President,
Finance and Administration. This committee, which provides regular reports to
the Board of Directors, is responsible for coordinating all Year 2000 compliance
efforts and ensuring that Year 2000 and related date problems will not impact
Moran's operations or the services that Moran provides to customers. Moran
believes that it is taking all reasonable steps to address the Year 2000
problem, but offers no assurances that the problem will be avoided in every
instance.
Moran has initiated the following multi-step program (the "Year 2000 Program")
to ensure Year 2000 compliance:
1. Develop a comprehensive catalog of all systems (both at sea and ashore)
that directly or indirectly utilize a date function;
2. Request statements of compliance or suggested methods of achieving
compliance from all vendors of date dependent systems;
3. Repair, replace, or correct non-compliant systems as applicable;
4. Actively unit test all hardware and software components individually to
ensure compliance;
5. Perform integrated testing of systems as applicable;
6. Correct or replace any systems as required;
The Company's goal is to complete Moran's Year 2000 readiness program by March
31, 1999. Moran will continue to monitor new systems, vendors, and customers as
the Year 2000 approaches. Management believes that implementation of the Year
2000 Program is on schedule and approximately 75-80% complete, as of September
30, 1998. The estimated total cost of the Year 2000 Program is not expected to
exceed $100,000.
Management does not believe that the Company's normal business activities and
operations materially rely on information technology or electronic data
interchange with third parties. Nevertheless, applicable requirements of the
Securities and Exchange Commission require that the Company disclose a "most
reasonably likely worst case scenario" for Year 2000 problems. Applying this
requirement, management believes that the area of business operations that could
most reasonably be expected to be affected by a Year 2000 problem is the
Company's accounting system. However, if any such problem were to arise,
management believes that the accounting currently being electronically processed
could be completed manually. Management has not formulated any specific
contingency plans because management believes the Company's Year 2000 Program
will be completed by March 1999.
The information contained herein regarding the Company's efforts to deal with
the Year 2000 problem are intended as Year 2000 Statements and Year 2000
Readiness Disclosures and are subject to the Year 2000 Information Readiness
Disclosure Act.
CAUTIONARY STATEMENT. The Company is including the following cautionary
statement to take advantage of the "safe
13
<PAGE>
harbor" provisions of the Private Securities Litigation Reform Act of 1995 for
any forward-looking statement made by, or on behalf of, the Company. The factors
identified in this cautionary statement are important factors (but not
necessarily all important factors) that could cause actual results to differ
materially from those expressed in any forward-looking statement made by, or on
behalf of, the Company. Where any such forward-looking statement includes a
statement of the assumptions or bases underlying such forward-looking statement,
the Company cautions that, while it believes such assumptions or bases to be
reasonable and makes them in good faith, assumed facts or bases almost always
vary from actual results, and the differences between assumed facts or bases and
actual results can be material, depending on the circumstances. Where, in any
forward-looking statement, the Company, or its management, expresses an
expectation or belief as to future results, such expectation or belief is
expressed in good faith and believed to have a reasonable basis, but there can
be no assurance that the statement of expectation or belief will result, or be
achieved or accomplished. Taking into account the foregoing, the following are
identified as important risk factors that could cause actual results to differ
materially from those expressed in any forward-looking statement made by, or on
behalf of, the Company:
The status of the Year 2000 Program and the dates on which the Company believes
the Year 2000 Program will be completed are based on management's best
estimates, which were derived utilizing numerous assumptions of future events;
however, there can be no guarantee that these estimates will be achieved, or
that there will not be a delay in, or increased costs associated with, the
implementation of the Year 2000 Program. Specific factors that might cause
differences between the estimates and actual results include, but are not
limited to, the availability and cost of personnel trained in these areas, the
ability to locate and correct all relevant computer code, timely responses to
and corrections by third-parties and suppliers, the ability to implement
interfaces between any new systems and any systems not being replaced, and
similar uncertainties. Due to the general uncertainty inherent in the Year 2000
problem, resulting in part from the uncertainty of the Year 2000 readiness of
third-parties and the interconnection of global businesses, the Company cannot
ensure its ability to timely and cost-effectively resolve problems associated
with the Year 2000 issue that may affect its operations and business, or expose
it to third-party liability.
The Company's expectations as to whether Notes will be tendered pursuant to
the Change in Control Offer are based upon management's assumptions, based
upon recent quotes to purchase the Notes. Factors which might cause
differences between expectations and actual results include any future
changes in trading prices of the Company's Notes before expiration of the
Change in Control Offer.
14
<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
None
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
10.1 Stock Exchange Agreement, dated as of August 31, 1998, among
Moran Enterprises Corporation, Moran Transportation Company,
the Moran Stockholders named therein, Turecamo Maritime, Inc.,
White Stack Maritime Corp., Turecamo of Savannah, Inc.,
Turecamo Environmental Services, Inc., and the Turecamo
Stockholders named therein (schedules and exhibits
omitted--the Company agrees to furnish a copy of any schedule
or exhibit to the Securities and Exchange Commission (the
"Commission") upon request)
10.2 Credit Agreement, dated as of October 30, 1998, among Moran
Enterprises Corporation, the financial institutions named
therein, and Fleet Bank, N.A., as administrative agent
(schedules and exhibits omitted--the Company agrees to furnish
a copy of any schedule or exhibit to the Commission upon
request)
10.3 Old Moran Security Agreement, dated October 30, 1998, from
Moran Transportation Company and certain of its
subsidiaries to Fleet Bank, N.A., as administrative agent
(schedules and exhibits omitted--the Company agrees to
furnish a copy of any schedule or exhibit to the Commission
upon request)
10.4 Subsidiary Guaranty, dated October 30, 1998, from certain
subsidiaries of Moran Enterprises Corporation, in favor of
Fleet Bank, N.A., as administrative agent (schedules and
exhibits omitted--the Company agrees to furnish a copy of
any schedule or exhibit to the Commission upon request)
27 Financial data schedule
(b) Reports on Form 8-K
(i) The Company filed a current report on Form 8-K dated August
31, 1998, with respect to the Company's proposed combination
with Turecamo Maritime, Inc. and certain of its affiliated
entities.
15
<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: 11/13/98 By:/s/ Jeffrey J. McAulay
--------- ----------------------
Name: Jeffrey J. McAulay
Title: Vice President, Finance
and Administration
(principal financial officer)
16
<PAGE>
Exhibit Index
<TABLE>
<CAPTION>
Exhibit No. Description of the Document Page No.
- ----------- --------------------------- --------
<S> <C> <C>
10.1 Stock Exchange Agreement, dated as of August 31, 1998,
among Moran Enterprises Corporation, Moran Transportation
Company, the Moran Stockholders named therein, Turecamo
Maritime, Inc., White Stack Maritime Corp., Turecamo of
Savannah, Inc., Turecamo Environmental Services, Inc., and the
Turecamo Stockholders named therein (schedules and exhibits
omitted--the Company agrees to furnish a copy of any schedule
or exhibit to the Securities and Exchange Commission (the
"Commission") upon request)
10.2 Credit Agreement, dated as of October 30, 1998, among Moran
Enterprises Corporation, the financial institutions named
therein, and Fleet Bank, N.A., as administrative agent (schedules
and exhibits omitted--the Company agrees to furnish a copy of any
schedule or exhibit to the Commission upon request)
10.3 Old Moran Security Agreement, dated October 30, 1998, from
Moran Transportation Company and certain of its subsidiaries
to Fleet Bank, N.A., as administrative agent (schedules and
exhibits omitted--the Company agrees to furnish a copy of any
schedule or exhibit to the Commission upon request)
10.4 Subsidiary Guaranty, dated October 30, 1998, from certain
subsidiaries of Moran Enterprises Corporation, in favor of
Fleet Bank, N.A., as administrative agent (schedules and
exhibits omitted--the Company agrees to furnish a copy of any
schedule or exhibit to the Commission upon request)
27 Financial data schedule
</TABLE>
<PAGE>
- --------------------------------------------------------------------------------
STOCK EXCHANGE AGREEMENT
AMONG
MORAN ENTERPRISES CORPORATION,
MORAN TRANSPORTATION COMPANY,
THE MORAN STOCKHOLDERS NAMED HEREIN,
THE TURECAMO ENTITIES NAMED HEREIN
AND
THE TURECAMO STOCKHOLDERS NAMED HEREIN
AUGUST 31, 1998
- --------------------------------------------------------------------------------
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
<S> <C>
1. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .-2-
2. CONTRIBUTION TRANSACTIONS . . . . . . . . . . . . . . . . . . . . . . . . . .-2-
(a) TURECAMO STOCKHOLDERS. . . . . . . . . . . . . . . . . . . . . . . . . .-2-
(b) MORAN STOCKHOLDERS . . . . . . . . . . . . . . . . . . . . . . . . . . .-3-
(c) THE CLOSING. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .-3-
(d) DELIVERIES AT THE CLOSING. . . . . . . . . . . . . . . . . . . . . . . .-3-
(e) ADJUSTMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .-4-
(f) CASH ESCROW. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .-4-
(g) STOCK ESCROW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .-5-
3. REPRESENTATIONS AND WARRANTIES CONCERNING THE TRANSACTION . . . . . . . . . .-9-
(a) REPRESENTATIONS AND WARRANTIES OF THE TURECAMO STOCKHOLDERS. . . . . . .-9-
(b) REPRESENTATIONS AND WARRANTIES OF THE TURECAMO ENTITIES. . . . . . . . .-9-
(c) REPRESENTATIONS AND WARRANTIES OF THE MORAN STOCKHOLDERS . . . . . . . -10-
(d) REPRESENTATIONS AND WARRANTIES OF MORAN ENTERPRISES. . . . . . . . . . -10-
(e) REPRESENTATIONS AND WARRANTIES OF MORAN. . . . . . . . . . . . . . . . -10-
4. PRE-CLOSING COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . -10-
(a) GENERAL. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -10-
(b) NOTICES AND CONSENTS . . . . . . . . . . . . . . . . . . . . . . . . . -10-
(c) OPERATION OF BUSINESS. . . . . . . . . . . . . . . . . . . . . . . . . -11-
(d) PRESERVATION OF BUSINESS . . . . . . . . . . . . . . . . . . . . . . . -11-
(e) FULL ACCESS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -11-
(f) NOTICE OF DEVELOPMENTS . . . . . . . . . . . . . . . . . . . . . . . . -12-
(g) EXCLUSIVITY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -12-
5. POST-CLOSING COVENANTS. . . . . . . . . . . . . . . . . . . . . . . . . . . -13-
(a) GENERAL. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -13-
(b) LITIGATION SUPPORT . . . . . . . . . . . . . . . . . . . . . . . . . . -13-
(c) CONFIDENTIALITY. . . . . . . . . . . . . . . . . . . . . . . . . . . . -13-
(d) COVENANT NOT TO COMPETE. . . . . . . . . . . . . . . . . . . . . . . . -14-
(e) TURECAMO STOCKHOLDER TAX LIABILITY . . . . . . . . . . . . . . . . . . -15-
6. CONDITIONS TO OBLIGATION TO CLOSE . . . . . . . . . . . . . . . . . . . . . -15-
(a) CONDITIONS TO OBLIGATION OF MORAN ENTERPRISES AND THE MORAN
STOCKHOLDERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -15-
(b) CONDITIONS TO OBLIGATION OF THE TURECAMO STOCKHOLDERS. . . . . . . . . -19-
7. REMEDIES FOR BREACHES OF THIS AGREEMENT . . . . . . . . . . . . . . . . . . -21-
(a) SURVIVAL OF REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . -21-
(b) INDEMNIFICATION BY THE TURECAMO STOCKHOLDERS . . . . . . . . . . . . . -22-
(c) INDEMNIFICATION AND ADJUSTMENT BY MORAN ENTERPRISES. . . . . . . . . . -24-
(d) INDEMNIFICATION BY MORAN STOCKHOLDERS. . . . . . . . . . . . . . . . . -26-
(e) MATTERS INVOLVING THIRD PARTIES. . . . . . . . . . . . . . . . . . . . -27-
(f) LIMITATION ON REMEDIES . . . . . . . . . . . . . . . . . . . . . . . . -29-
<PAGE>
(g) INDEMNIFICATION OF DIRECTORS AND OFFICERS. . . . . . . . . . . . . . . -30-
(h) OTHER INDEMNIFICATION PROVISIONS . . . . . . . . . . . . . . . . . . . -30-
(i) EXCLUSIVITY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -30-
(j) COVERED PERSONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . -30-
8. TAX MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -30-
(a) TAX PERIODS ENDING ON OR BEFORE THE CLOSING DATE . . . . . . . . . . . -31-
(b) TAX PERIODS BEGINNING BEFORE AND ENDING AFTER THE CLOSING DATE . . . . -31-
(c) COOPERATION ON TAX MATTERS . . . . . . . . . . . . . . . . . . . . . . -31-
(d) TAX SHARING AGREEMENTS . . . . . . . . . . . . . . . . . . . . . . . . -32-
(e) CERTAIN TAXES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . -32-
9. TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -32-
(a) TERMINATION OF AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . -32-
(b) EFFECT OF TERMINATION. . . . . . . . . . . . . . . . . . . . . . . . . -33-
10. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -33-
(a) PRESS RELEASES AND PUBLIC ANNOUNCEMENTS. . . . . . . . . . . . . . . . -33-
(b) NO THIRD-PARTY BENEFICIARIES . . . . . . . . . . . . . . . . . . . . . -34-
(c) ENTIRE AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . -34-
(d) SUCCESSION AND ASSIGNMENT. . . . . . . . . . . . . . . . . . . . . . . -34-
(e) COUNTERPARTS; FACSIMILE EXECUTION. . . . . . . . . . . . . . . . . . . -34-
(f) HEADINGS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -34-
(g) NOTICES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -35-
(h) GOVERNING LAW. . . . . . . . . . . . . . . . . . . . . . . . . . . . . -35-
(i) AMENDMENTS AND WAIVERS . . . . . . . . . . . . . . . . . . . . . . . . -36-
(j) SEVERABILITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -36-
(k) EXPENSES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -36-
(l) CONSTRUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -36-
(m) INCORPORATION OF EXHIBITS, ANNEXES, AND SCHEDULES. . . . . . . . . . . -37-
(n) SPECIFIC PERFORMANCE . . . . . . . . . . . . . . . . . . . . . . . . . -37-
(o) ARBITRATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -37-
(p) TURECAMO STOCKHOLDER REPRESENTATIVE. . . . . . . . . . . . . . . . . . -38-
</TABLE>
Appendix A - Definitions
Schedule 1 - List of Turecamo Stockholders and Moran Stockholders
Schedule l(b) - List of Automobiles
Schedule 2(g) - Procedures to be Used in Preparing Adjustment Schedule and in
calculating EBITDA
Schedule 2(g)(iii) - Sample Calculation
Schedule 5(d) - Certain Affiliates
<PAGE>
Schedule 6(a)(xviii) - Commitment Letter
Schedule 6(b)(xvi) - Terms of Certain Put Arrangements
Exhibit A - Form of Stock Escrow Agreement
Exhibit B - Form of Cash Escrow Agreement
Exhibits C-1 to C-4 - Forms of Employment Agreement
Exhibit D - Form of Opinion of Cummings & Lockwood
Exhibit E - Forms of Release
Exhibit F - [INTENTIONALLY OMITTED]
Exhibit G - [INTENTIONALLY OMITTED]
Exhibit H - Form of Opinion of Finn Dixon & Herling LLP
Exhibit I - Form of Restated Certificate
Exhibit J - Form of Stockholders Agreement
Exhibit K - Turecamo Financial Statements
Annex I - Representations and Warranties of the Turecamo Stockholders
Annex II - Representations and Warranties of the Turecamo Entities
Annex III - Representations and Warranties of the Moran Stockholders
Annex IV - Representations and Warranties of Moran Enterprises
Annex V - Representations and Warranties of Moran
Turecamo Stockholder Disclosure Schedule - Exceptions to Representations and
Warranties of the Turecamo Stockholders
Turecamo Disclosure Schedule - Exceptions to Representations and Warranties of
the Turecamo Entities
Moran Stockholder Disclosure Schedule - Exceptions to Representations and
Warranties of the Moran Stockholders
Moran Enterprises Disclosure Schedule - Exceptions to Representations and
Warranties of Moran Enterprises
Moran Disclosure Schedule - Exceptions to Representations and Warranties of
Moran
<PAGE>
STOCK EXCHANGE AGREEMENT
STOCK EXCHANGE AGREEMENT, dated as of August 31, 1998 (this "AGREEMENT"),
among MORAN ENTERPRISES CORPORATION, a Delaware corporation ("MORAN
ENTERPRISES"), MORAN TRANSPORTATION COMPANY, a Delaware corporation ("MORAN"),
the Stockholders of Moran listed on Schedule 1 attached hereto, constituting all
of the stockholders of Moran (each a "MORAN STOCKHOLDER" and, collectively, the
"MORAN STOCKHOLDERS"), TURECAMO MARITIME, INC., a Delaware corporation
("MARITIME"), WHITE STACK MARITIME CORP., a Delaware corporation ("WHITE
STACK"), TURECAMO OF SAVANNAH, INC., a Georgia corporation ("TOS"), TURECAMO
ENVIRONMENTAL SERVICES, INC., a Delaware corporation ("TES" and, together with
Maritime, White Stack and TOS, each, a "TURECAMO ENTITY" and, collectively, the
"TURECAMO ENTITIES"), and the stockholders of the Turecamo Entities listed on
Schedule 1 attached hereto, constituting all of the stockholders of the Turecamo
Entities (each, a "TURECAMO STOCKHOLDER" and, collectively, the "TURECAMO
STOCKHOLDERS"). Moran Enterprises, Moran, the Moran Stockholders, the Turecamo
Entities and the Turecamo Stockholders are referred to collectively herein as
the "PARTIES".
RECITALS
WHEREAS, the Turecamo Entities are engaged in the businesses of providing
tug services, including ship docking and undocking and barge towing services,
and marine and land clean-up services in connection with environmental spills
(the "TURECAMO BUSINESS");
WHEREAS, the Turecamo Stockholders own all of the issued and outstanding
capital stock of the Turecamo Entities (collectively, the "TURECAMO STOCK") in
the respective amounts set forth on Schedule 1;
WHEREAS, Moran is engaged in the businesses of providing tug services,
including ship docking and undocking and barge towing services and of providing
transportation of bulk cargoes with Moran's fleet of barges (the "MORAN
BUSINESS");
WHEREAS, the Moran Stockholders own all of the issued and outstanding
capital stock of Moran (the "MORAN STOCK") in the respective amounts set forth
on Schedule 1;
WHEREAS, each Turecamo Stockholder wishes to contribute to Moran
Enterprises the shares of Turecamo Stock held by him or her and Moran
Enterprises wishes to accept such shares of Turecamo Stock, in consideration of
which Moran Enterprises shall (a) issue to each Turecamo Stockholder shares of
Moran Enterprises Common Stock, and (b) pay to each Turecamo Stockholder cash,
each in the amounts specified below;
WHEREAS, (a) the number of shares of Moran Enterprises Common Stock
issuable to the Turecamo Stockholders will represent, in the aggregate, 29% of
the Moran Enterprises Common Stock (on a fully-diluted basis as of the Closing,
assuming the exercise of employee stock options of Moran that are converted into
employee stock options of Moran Enterprises as of the Closing), of which the
Escrow Shares (as defined below) shall be delivered into escrow as described in
Section 2(g), and (b) the cash
<PAGE>
amount payable to the Turecamo Stockholders (the "CASH PORTION") shall equal
$45,000,000 (subject to increase as provided in Section 2(e)), of which
$2,000,000 shall be delivered into escrow as described in Section 2(f);
WHEREAS, each of the Moran Stockholders wishes to contribute to Moran
Enterprises the shares of Moran Stock held by him, her or it, and Moran
Enterprises wishes to accept such shares of Moran Stock, in consideration of
which Moran Enterprises shall issue to each Moran Stockholder (a) shares of
Moran Enterprises Common Stock and (b) shares of Moran Enterprises Preferred
Stock, each in the amounts specified below; and
WHEREAS, (a) the number of shares of Moran Enterprises Common Stock
issuable to the Moran Stockholders (and to holders of options to purchase Moran
Common Stock, whose options will be converted into options to acquire Moran
Enterprises Common Stock) will represent, in the aggregate, 71% of the Moran
Enterprises Common Stock (on a fully-diluted basis as of the Closing, assuming
the exercise of employee stock options of Moran that are converted into employee
stock options of Moran Enterprises), and (b) the number of shares of Moran
Enterprises Preferred Stock issuable to the Moran Stockholders will represent,
in the aggregate, 100% of the Moran Enterprises Preferred Stock outstanding as
of the Closing.
NOW, THEREFORE, in consideration of the premises and the mutual promises
herein made, and in consideration of the representations, warranties, and
covenants herein contained, the Parties, intending to be legally bound, hereby
agree as follows:
1. DEFINITIONS. Capitalized terms used, but not otherwise defined, herein
have the meanings ascribed to such terms in Appendix A hereto.
2. CONTRIBUTION TRANSACTIONS.
(a) TURECAMO STOCKHOLDERS. On and subject to the terms and
conditions of this Agreement, at the Closing each of the Turecamo Stockholders
shall contribute to Moran Enterprises the shares of Turecamo Stock set forth
opposite his or her name on Schedule 1 attached hereto, and, in exchange
therefor, Moran Enterprises shall:
(i) issue and deliver to each Turecamo Stockholder the number
of shares of Moran Enterprises Common Stock set forth opposite his or her
name on Schedule 1 attached hereto, of which the number of Escrow Shares
set forth opposite such Turecamo Stockholder's name on Schedule 1 attached
hereto shall be deposited with the Escrow Agent to be held in escrow
pursuant to the Stock Escrow Agreement (as described in Section 2(g)
below); and
(ii) subject to increase or decrease pursuant to Section 2(e)
below, pay to each Turecamo Stockholder cash in the amount set forth
opposite his or her name on Schedule 1 attached hereto, of which:
(A) such Turecamo Stockholder's share of the Escrow Cash
Portion (allocated among the Turecamo Stockholders as set forth on
Schedule 1) shall be deposited with the Escrow Agent into the Cash
Escrow Account to be held pursuant to the Cash Escrow Agreement (as
described in Section 2(f) below), and
<PAGE>
(B) the balance shall be paid by wire transfer or delivery
of immediately available funds to an account specified by such
Turecamo Stockholder in writing at least two (2) Business Days prior
to the Closing Date.
(b) MORAN STOCKHOLDERS. On and subject to the terms and conditions
of this Agreement, at the Closing each of the Moran Stockholders shall
contribute to Moran Enterprises the shares of Moran Stock set forth opposite
his, her or its name on Schedule 1 attached hereto, and, in exchange therefor,
Moran Enterprises shall deliver to each such Moran Stockholder:
(i) the number of shares of Moran Enterprises Common Stock set
forth opposite his, her or its name on Schedule 1 attached hereto; and
(ii) the number of shares of Moran Enterprises Preferred Stock
set forth opposite his, her or its name on Schedule 1 attached hereto.
(c) THE CLOSING. The closing of the transactions contemplated by
this Agreement (the "CLOSING") shall take place at the offices of Finn Dixon &
Herling LLP, One Landmark Square, Stamford, Connecticut, commencing at 9:00 a.m.
local time on the second Business Day following the satisfaction or waiver of
all conditions to the obligations of the Parties to consummate the transactions
contemplated hereby (other than conditions with respect to actions the
respective Parties will take at the Closing itself) or such other date as the
Parties may mutually determine (the "CLOSING DATE").
(d) DELIVERIES AT THE CLOSING. At the Closing:
(i) the Turecamo Stockholders shall deliver to Moran
Enterprises the various certificates, instruments, and documents referred
to in Section 6(a) below;
(ii) Moran Enterprises, Moran and/or the Moran Stockholders, as
applicable, shall deliver to the Turecamo Stockholders the various
certificates, instruments and documents referred to in Section 6(b) below;
(iii) each of the Turecamo Stockholders shall deliver to
Moran Enterprises stock certificates representing all of his or her shares
of Turecamo Stock, endorsed in blank or accompanied by duly executed
assignment documents, signatures guaranteed;
(iv) Moran Enterprises shall issue and/or deliver to each of
the Turecamo Stockholders the consideration specified in Section 2(a)
above;
(v) The Turecamo Stockholders shall deposit into escrow with
the Escrow Agent the Escrow Shares and the Escrow Cash Portion specified in
Section 2(a) above;
(vi) each of the Moran Stockholders shall deliver to Moran
Enterprises the stock certificates representing all of his, her or its
shares of Moran Stock, endorsed in blank or accompanied by duly executed
assignment documents, signatures guaranteed; and
(vii) Moran Enterprises shall issue to each of the Moran
Stockholders the shares of Moran Enterprises Common Stock and Moran
Enterprises Preferred Stock specified in
<PAGE>
Section 2(b) above.
(e) ADJUSTMENT.
(i) In the event that the Closing does not occur on or prior
to September 1, 1998, the Cash Portion shall be increased by an amount of
interest equal to $10,000 per day for each day during the period from (and
including) September 2, 1998 through and including the actual Closing Date,
such additional cash to be paid to the Turecamo Stockholders pro rata based
upon their respective interests in the cash payments to be made by Moran
Enterprises pursuant to Section 2(a)(ii).
(ii) In the event that since the Most Recent Fiscal Year End
and on or prior to the Closing Date, the Turecamo Entities make or declare,
set aside or pay, any dividend, or make any distribution with respect to
the capital stock (whether in cash or in kind) of the Turecamo Entities, or
redeem, purchase or otherwise acquire any of the capital stock of the
Turecamo Entities (collectively, "DISTRIBUTIONS"), and the aggregate
consideration paid or set aside by the Turecamo Entities with respect to
such Distributions exceeds the Aggregate Distributions, the Cash Portion
shall be decreased by such amount, or if such excess is not known until
after the Closing Date, the Turecamo Stockholders shall promptly upon
receipt of notice of such excess Distributions, each pay their pro rata
share of such excess Distributions to the applicable Turecamo Entity.
(f) CASH ESCROW. At Closing, as contemplated by Section 2(a)(ii),
Moran Enterprises shall deposit, on behalf of the Turecamo Stockholders, an
aggregate of $2,000,000 in cash from the Cash Portion (allocated among the
Turecamo Stockholders as set forth on Schedule 1) (collectively, the "ESCROW
CASH PORTION") into an escrow account (the "CASH ESCROW ACCOUNT") maintained
with a mutually agreed upon independent escrow agent (the "ESCROW AGENT"). Such
Escrow Cash Portion will be held for the Turecamo Stockholders (or, if
applicable, Moran Enterprises) as specified in an escrow agreement substantially
in the form of Exhibit B hereto (the "CASH ESCROW AGREEMENT") to be executed by
Moran Enterprises, the Turecamo Stockholders and the Escrow Agent. Interest
earned on such Escrow Cash Portion shall be paid to the Turecamo Stockholders on
a quarterly basis and shall not constitute a part of the Escrow Cash Portion.
Moran Enterprises and the Turecamo Stockholders agree that the Cash Escrow
Account shall be used solely to satisfy any obligations of the Turecamo
Stockholders set forth in Section 7(b) hereof, including, with respect to all
Third Party Claims for which the Turecamo Stockholders are the Indemnifying
Parties, reimbursement of the fees and expenses (including court costs and
attorneys' fees and expenses) of the Party conducting the defense of such Third
Party Claims in accordance with Section 7(e) hereof. With respect to each
Third Party Claim for which the Turecamo Stockholders are the Indemnifying
Parties, the Cash Escrow Account may be used for the reimbursement of the fees
and expenses of only one counsel for all of the Turecamo Stockholders. If and
to the extent that not all the Escrow Cash Portion is used to satisfy
obligations of the Turecamo Stockholders pursuant to this Section 2(f), then any
remaining funds in the Cash Escrow Account shall be released to the Turecamo
Stockholders by the Escrow Agent in accordance with the terms of the Cash Escrow
Agreement. The fees and expenses of the Escrow Agent shall be paid by Moran
Enterprises.
(g) STOCK ESCROW.
(i) At Closing, as contemplated by Section 2(a)(i), the
Turecamo Stockholders shall deposit
<PAGE>
an aggregate of 8,448 shares of Moran Enterprises Common Stock
(allocated among the Turecamo Stockholders as set forth on Schedule 1)
(collectively, the "ESCROW SHARES") into an escrow account (the "STOCK
ESCROW ACCOUNT") maintained with the Escrow Agent. Such Escrow Shares
will be held for, and dividends distributed on such Escrow Shares will
be paid to the Escrow Agent for distribution to, the Turecamo
Stockholders (or, if applicable, Moran Enterprises) as specified in a
stock escrow agreement substantially in the form of Exhibit A hereto
(the "STOCK ESCROW AGREEMENT") to be executed by Moran Enterprises, the
Turecamo Stockholders and the Escrow Agent. The Turecamo Stockholders
as to whom Escrow Shares have been placed into escrow (the "EARNOUT
HOLDERS") shall be entitled to voting rights with respect to the Escrow
Shares while they are held in escrow.
(ii) The Earnout Holders will have the right to receive the
Escrow Shares out of escrow if, when and to the extent that the cumulative
consolidated "EBITDA" (consolidated earnings before interest, taxes,
depreciation and amortization of Moran Enterprises and its Subsidiaries, as
set forth on the audited financial statements of Moran Enterprises and its
Subsidiaries during the applicable period (which financial statements shall
be prepared in accordance with GAAP, consistently applied; provided that
EBITDA, for purposes of this Section 2(g)(ii), shall be calculated based
upon Moran's accounting practices as in effect on December 31, 1997),
excluding the impact of any extraordinary items as defined by GAAP) of
Moran Enterprises and its Subsidiaries exceeds certain thresholds for the
five full fiscal years ending December 31, 2002 (including, for the period
beginning January 1, 1998 through the Closing Date, the combined EBITDA of
Moran and its Subsidiaries and the Turecamo Entities (after excluding the
operations related to the Balance Sheet Distributions on a pro forma basis
for such period)) (the "EARNOUT PERIOD"). The cumulative EBITDA thresholds
set forth in Section 2(g)(iii) below shall be subject to further
adjustment, as set forth in Section 7(c)(ii).
In connection with the foregoing:
(A) As soon as available and in any event within 90 days
after the close of its fiscal year ending December 31, 1998, Moran
Enterprises shall prepare and deliver to the Turecamo Stockholders
audited financial statements of Moran Enterprises and its Subsidiaries
for such fiscal year. In addition, as soon as available and in any
event within 45 days after the delivery of such audited financial
statements, Moran Enterprises shall prepare and deliver to the Earnout
Holders (x) a schedule (the "ADJUSTMENT SCHEDULE") setting forth the
pro forma adjustments to such financial statements made to exclude the
operations related to the Balance Sheet Distributions as contemplated
by this Section 2(g)(ii) above and such other agreed-upon pro forma
adjustments described in this Section 2(g)(ii) above and on Schedule
2(g) attached hereto, and (y) the amount of cumulative consolidated
EBITDA for such fiscal year (including the computation thereof), in
each case together with a certificate of the Chief Financial Officer
of Moran Enterprises stating that such Adjustment Schedule and the
amount (and computation) of cumulative consolidated EBITDA were
prepared in accordance with this Section 2(g) and Schedule 2(g)
attached hereto.
(B) As soon as available and in any event within 90 days
after the close of each of the final four fiscal years during the
Earnout Period (the fiscal years ending on December 31 in the years
1999, 2000, 2001 and 2002), Moran Enterprises shall prepare and
deliver to the Turecamo Stockholders (x) audited financial statements
of Moran Enterprises
<PAGE>
and its Subsidiaries for each such fiscal year, and (y) the amount
of cumulative consolidated EBITDA for each such fiscal year
(including the computation thereof), in each case together with a
certificate of the Chief Financial Officer of Moran Enterprises
stating that the amount (and computation) of cumulative
consolidated EBITDA were prepared in accordance with this Section
2(g) and Schedule 2(g) attached hereto. In addition, the Turecamo
Stockholder Representative and its accounting advisor shall have
reasonable access to the books and records of Moran Enterprises,
including the audit work papers, for purposes of reviewing the
foregoing.
(C) In the event that, with respect to each fiscal year,
the Turecamo Stockholders do not agree (x) with the Adjustment
Schedule or any adjustment reflected thereon and/or (y) with the
calculation of cumulative consolidated EBITDA for any such fiscal year
and/or (z) that the amount (and computation) of cumulative
consolidated EBITDA were prepared in accordance with this Section 2(g)
and Schedule 2(g) attached hereto, the Turecamo Stockholder
Representative shall so inform Moran Enterprises in writing within 30
days after the Earnout Holders' receipt of all of the items specified
in Section 2(g)(ii)(A) or (B), as applicable, such writing to set
forth the objections of the Earnout Holders in reasonable detail and
the position of the Earnout Holders on the manner in which such
objections should be resolved and the cumulative consolidated EBITDA
which the Earnout Holders believe is appropriate (the "TURECAMO
STOCKHOLDER POSITION"). Within ten (10) days after receipt by Moran
Enterprises of the Turecamo Stockholder Position, Moran Enterprises
shall inform the Earnout Holders of its position on the manner in
which the objections of the Earnout Holders should be resolved (the
"MORAN POSITION"). If the Turecamo Stockholder Representative and
Moran Enterprises cannot reach agreement as to any disputed matter
within 15 days following the exchange of their respective positions,
then either or both of the Turecamo Stockholder Representative and
Moran Enterprises may forthwith refer the dispute to a big five
accounting firm mutually agreeable to the Turecamo Stockholder
Representative and Moran Enterprises (the "ARBITRATING ACCOUNTANT")
for resolution. The Turecamo Stockholder Representative and Moran
Enterprises shall furnish such Arbitrating Accountant with a copy of
this Agreement, the audited financial statements of Moran Enterprises
and its Subsidiaries for the applicable fiscal year (including all
work papers related thereto), the Adjustment Schedule, if applicable,
the amount and computation of cumulative consolidated EBITDA, the
Turecamo Stockholder Position and the Moran Position and any other
relevant correspondence between the Turecamo Stockholder
Representative and Moran Enterprises, and such other written
submittals upon which each party intends to rely (which shall also be
exchanged with the other party). Such Arbitrating Accountant will be
granted access to the books and records of Moran Enterprises and its
Subsidiaries and such other documents or information as such
Arbitrating Accountant deems appropriate.
The Arbitrating Accountant's review shall be limited to the
purpose of determining, in respect of the dispute, the EBITDA amount,
as set forth in either the Moran Position or the Turecamo Stockholder
Position, which is more nearly in accordance with the terms of this
Agreement. In arriving at its determination, such Arbitrating
Accountant must select either the EBITDA amount set forth in the Moran
Position or the EBITDA amount set forth in the Turecamo Stockholder
Position. Such Arbitrating Accountant shall finally resolve all
disputed items and render a written report to the Turecamo
Stockholders and Moran
<PAGE>
Enterprises setting forth its determination in writing within 60 days
after such disputed matters are referred to it. The determination of
the Arbitrating Accountant with respect to all such disputed matters
shall be deemed final and conclusive and shall be binding upon Moran
Enterprises and the Earnout Holders and may be entered and enforced in
any court of competent jurisdiction. In addition, if the Turecamo
Stockholder Representative does not object to the Adjustment Schedule
and/or the EBITDA calculation within the time periods specified in
this Section 2(g)(ii)(C), such matters not objected to shall be deemed
final and conclusive and binding upon Moran Enterprises and the
Earnout Holders. The procedures specified in this Section 2(g)(ii)(C)
shall be the sole and exclusive procedure for resolution of disputes
concerning (x) the Adjustment Schedule and/or (y) the amount and
computation of cumulative consolidated EBITDA for each fiscal year
during the Earnout Period and/or (z) whether the amount (and
computation) of cumulative consolidated EBITDA were prepared in
accordance with this Section 2(g) and Schedule 2(g) attached hereto.
The costs of the dispute resolution procedure specified in this
Section 2(g)(ii)(C) with respect to each disputed matter, including
the fees and expenses of such Arbitrating Accountant and the
respective attorneys' and accountants' fees of each party, shall be
borne by the losing party. The losing party shall be deemed to be the
party whose suggested EBITDA amount was not selected in the final
decision of such Arbitrating Accountant. The procedures specified in
this Section 2(g)(ii)(C) shall be the sole and exclusive procedure for
resolution of disputes concerning the Adjustment Schedule and/or the
amount and computation of cumulative consolidated EBITDA for each
fiscal year during the Earnout Period.
(iii) The following chart lists the applicable cumulative
consolidated EBITDA thresholds (subject to adjustment, as set forth in
Schedule 2(g)(iii)) and the corresponding number of Escrow Shares (together
with all dividends and distributions thereon and proceeds thereof), subject
to adjustments for stock splits, combinations, stock dividends and similar
events, which will be deliverable out of escrow to the Earnout Holders in
the aggregate if, when and to the extent that the applicable threshold is
achieved for the Earnout Period:
<TABLE>
<CAPTION>
Percentage of Fully-
Diluted Shares (computed
Aggregate Number of as of Closing, after giving effect
Escrow Shares Cumulative EBITDA to the delivery of such Escrow
Deliverable Threshold (in thousands) Shares)
- ------------------------------------------------------------------------------------
<S> <C> <C>
1,316 shares $263,462 1%
2,667 shares 266,441 2%
4,054 shares 269,426 3%
5,480 shares 272,400 4%
6,944 shares 275,390 5%
8,448 shares 278,372 (and above) 6%
</TABLE>
<PAGE>
In the event that cumulative consolidated EBITDA for the Earnout Period
exceeds $263,462,000, but is between any two thresholds set forth above (it
being understood that $278,372,000 is the highest threshold) then the
aggregate number of Escrow Shares that the Earnout Holders shall receive
out of escrow shall be computed as follows:
1. Identify the two cumulative EBITDA thresholds between which
the actual cumulative consolidated EBITDA falls, then
compute the difference between such two cumulative EBITDA
thresholds.
2. Compute the difference between the actual cumulative
consolidated EBITDA and the lower of the two thresholds.
3. Divide (2) by (1).
4. Divide (3) by 100.
5. Compute the sum of 0.23 PLUS (4) (expressed as a decimal)
PLUS the percentage (expressed as a decimal) applicable to
the lower cumulative threshold (as set forth in the third
column of the above table).
6. Solve the following equation:
X = ((P * A) - B)/(1-P)
Where:
X= Number of Escrow Shares Deliverable
P= The amount obtained in (5), above
A= The total number of shares of Moran Enterprises
Common Stock outstanding at the Closing (including
shares issuable pursuant to options, warrants,
convertible securities, exchangeable securities
and the like which are outstanding at the Closing,
but excluding the Escrow Shares)
B= Number of shares of Moran Enterprises Common Stock
held by Turecamo Stockholders at the Closing
(excluding the Escrow Shares)
A sample calculation is set forth on Schedule 2(g)(iii). No certificates
or scrip representing fractional shares shall be issued, and no cash in lieu of
fractional shares shall be paid. Instead, any fractional share amounts that
would be issued to an Earnout Holder shall be rounded (with 0.5 and above being
rounded upward to the next highest whole share, and all other fractions being
rounded down to the next lowest whole share).
(iv) Subject to the offset provisions described in Section
7(b)(i)(C) with respect to Escrow Shares that have been put or called and
the put and call provisions contemplated by the
<PAGE>
Stockholders Agreement, that portion of the Escrow Shares (together with
all dividends and distributions thereon and all proceeds thereof) which
are deliverable out of escrow in accordance with Section 2(g)(iii) (the
"EARNED SHARES") will be distributed to the Earnout Holders to the extent
provided above (and to the extent not so deliverable to the Earnout
Holders as provided above, shall be forfeited to Moran Enterprises for
cancellation) promptly following the delivery by Moran Enterprises of (A)
Moran Enterprises' audited financial statements for the fiscal year ending
December 31, 2002, (B) the amount and computation of cumulative
consolidated EBITDA for such fiscal year and (C) the aggregate amount and
computation of cumulative consolidated EBITDA for the five full fiscal
years ending December 31, 2002; PROVIDED, HOWEVER, that no such shares
shall be forfeited to Moran Enterprises until after expiration of the 30
day period for notices from the Turecamo Stockholder Representative of
disputed matters set forth in Section 2(g)(ii)(C) above and until after
resolution of such disputed matters, if any. The Earned Shares shall be
delivered to the Earnout Holders in proportion to the number of shares of
Moran Enterprises Common Stock distributed to each such Earnout Holder (as
compared to all Earnout Holders as a group) at the Closing, all as set
forth on Schedule 1.
(v) Moran Enterprises shall not enter into any merger in which
Moran Enterprises is not the surviving entity, consolidation, sale of all
or substantially all of its assets, or any similar transaction to which
Moran Enterprises is a party, or of any liquidation or dissolution of Moran
Enterprises or similar transaction, in any case, occurring on or prior to
December 31, 2002 (a "TRANSACTION"), unless either (A) in the case of a
merger, consolidation or similar transaction, the acquiror or other party
in such Transaction shall be obligated to assume the obligations of Moran
Enterprises with respect to the provisions set forth in Section 2(g)
governing the Escrow Shares and the acquiror or other party shall have
agreed in writing for the benefit of the Turecamo Stockholders that
appropriate provisions will be made following the closing of the
Transaction to ensure that the computation of EBITDA following the
consummation of the Transaction shall, at a minimum, be computed based upon
the operations and activities of substantially all of the assets and
operations of the assets of Moran Enterprises and its Subsidiaries, as
constituted immediately prior to such closing or (B) the escrow and
forfeiture provisions with respect to the Escrow Shares shall be deemed to
have been terminated immediately prior to the consummation of such
Transaction and all such Escrow Shares shall be deemed Earned Shares and
shall be distributed to the Earnout Holders (subject to the offset
provisions described in Section 7(b)(i)(C) with respect to Escrow Shares
that have been put or called and the put and call provisions contemplated
by the Stockholders Agreement).
3. REPRESENTATIONS AND WARRANTIES CONCERNING THE TRANSACTION.
(a) REPRESENTATIONS AND WARRANTIES OF THE TURECAMO STOCKHOLDERS.
Each of the Turecamo Stockholders, SEVERALLY AND NOT JOINTLY, represents and
warrants to Moran Enterprises that the statements contained in Annex I attached
hereto are correct and complete as of the date of this Agreement with respect to
himself or herself, except as set forth in the disclosure schedule of the
Turecamo Stockholders attached hereto (the "TURECAMO STOCKHOLDER DISCLOSURE
SCHEDULE"). The Turecamo Stockholder Disclosure Schedule will be arranged in
paragraphs corresponding to the lettered and numbered paragraphs contained in
Annex I.
(b) REPRESENTATIONS AND WARRANTIES OF THE TURECAMO ENTITIES. The
Turecamo Entities, JOINTLY AND SEVERALLY, represent and warrant to Moran
Enterprises that the statements contained in Annex II attached hereto are
correct and complete as of the date of this Agreement, except as set forth in
the disclosure schedule of the Turecamo Entities attached hereto (the "TURECAMO
DISCLOSURE SCHEDULE").
<PAGE>
The Turecamo Disclosure Schedule will be arranged in paragraphs corresponding
to the lettered and numbered paragraphs contained in Annex II.
(c) REPRESENTATIONS AND WARRANTIES OF THE MORAN STOCKHOLDERS. Each
of the Moran Stockholders, SEVERALLY AND NOT JOINTLY, represents and warrants to
Moran Enterprises that the statements contained in Annex III attached hereto are
correct and complete as of the date of this Agreement with respect to himself,
herself or itself, except as set forth in the disclosure schedule of the Moran
Stockholders attached hereto (the "MORAN STOCKHOLDER DISCLOSURE SCHEDULE"). The
Moran Stockholder Disclosure Schedule will be arranged in paragraphs
corresponding to the lettered and numbered paragraphs contained in Annex III.
(d) REPRESENTATIONS AND WARRANTIES OF MORAN ENTERPRISES. Moran
Enterprises represents and warrants to the Turecamo Stockholders that the
statements contained in Annex IV attached hereto are correct and complete as of
the date of this Agreement, except as set forth in the disclosure schedule of
Moran Enterprises attached hereto (the "MORAN ENTERPRISES DISCLOSURE SCHEDULE").
The Moran Enterprises Disclosure Schedule will be arranged in paragraphs
corresponding to the lettered and numbered paragraphs contained in Annex IV.
(e) REPRESENTATIONS AND WARRANTIES OF MORAN. Moran represents and
warrants to Moran Enterprises and the Turecamo Stockholders that the statements
contained in Annex V attached hereto are correct and complete as of the date of
this Agreement, except as set forth in the disclosure schedule of Moran attached
hereto (the "MORAN DISCLOSURE SCHEDULE"). The Moran Disclosure Schedule will be
arranged in paragraphs corresponding to the lettered and numbered paragraphs
contained in Annex V.
4. PRE-CLOSING COVENANTS. The Parties agree as follows with respect to
the period between the execution of this Agreement and the Closing.
(a) GENERAL. Each of the Parties will use his, her or its best
efforts to take all action and to do all things necessary, proper, or advisable
in order to consummate and make effective the transactions contemplated by this
Agreement (including satisfaction, but not waiver, of the closing conditions set
forth in Section 6 below); PROVIDED, HOWEVER, that with respect to the
conditions set forth in Section 6(a)(iii), (iv), (xix), (xxi) (with respect to
Columbia Coastal only), (xxiv) and (xxxi) and Section 6(b)(iv), (v) and (xvii),
this Section 4(a) shall not impose upon any Party any obligation to incur
unreasonable expenses or obligations under the circumstances.
(b) NOTICES AND CONSENTS.
(i) The Turecamo Entities will give any notices to third
parties, and will use best efforts to obtain any third party consents, that
Moran Enterprises may reasonably request in connection with the matters
referred to in Section (c) of Annex II attached hereto.
(ii) Moran Enterprises will give any notices to third parties,
and will use best efforts to obtain any third party consents, that are
listed in Section (c) of Annex IV attached hereto.
(iii) Moran and its Subsidiaries will give any notices to
third parties and will use best efforts to obtain any third party consents,
that are listed in Section (c) of Annex V attached hereto.
(iv) The Turecamo Entities will give any notices to, make any
filings with, and use their respective best efforts to obtain any material
authorizations, consents, and approvals of
<PAGE>
Governmental Authorities that Moran Enterprises may reasonably request in
connection with the matters referred to in Section (c) of Annex II
attached hereto.
(v) Moran Enterprises and Moran will give any notices to, make
any filings with, and use their best efforts to obtain all material
authorizations, consents, and approvals of Governmental Authorities that
the Turecamo Stockholders may reasonably request in connection with the
matters referred to in Section (c) of Annex IV attached hereto and Section
(c) of Annex V attached hereto.
(vi) Each Turecamo Stockholder will give any notices to third
parties, and will use his or her best efforts to obtain any third party
consents, that Moran Enterprises may reasonably request in connection with
the matters referred to in Section (c) of Annex I.
(vii) Each Moran Stockholder will give any notices to third
parties, and will use his or her best efforts to obtain any third party
consents, that the Turecamo Stockholders may reasonably request in
connection with the matters referred to in Section (c) of Annex III.
(c) OPERATION OF BUSINESS.
(i) The Turecamo Entities shall not engage in any practice, take
any action, or enter into any transaction outside the Ordinary Course of
Business. Without limiting the generality of the foregoing, the Turecamo
Entities shall not, without the consent of Moran, (x) declare, set aside,
or pay any dividend or make any distribution with respect to its capital
stock (other than the Balance Sheet Distributions and Tax Distributions) or
redeem, purchase, or otherwise acquire any of its capital stock or (y)
otherwise engage in any practice, take any action, or enter into any
transaction of the sort described in Section (g) of Annex II or (z) reverse
any accruals previously taken with respect to certain insurance reserves.
(ii) Moran shall not be operated outside the Ordinary Course of
Business. Without limiting the generality of the foregoing, Moran shall
not declare, set aside, or pay any dividend or make any distribution with
respect to its capital stock or redeem, purchase, or otherwise acquire any
of its capital stock. Moran agrees that it shall not, directly or
indirectly, enter into, or agree to enter into, any merger, consolidation,
share exchange, stock or asset sale or acquisition or any similar
transaction, or any liquidation, dissolution or recapitalization
transaction, or any financing transaction, which adversely affects or
impairs the ability of Moran or Moran Enterprises to consummate the
transactions contemplated hereby or the ability of Moran or Moran
Enterprises to fully perform all of its obligations hereunder.
(d) PRESERVATION OF BUSINESS. Each of Moran and the Turecamo
Entities shall keep its respective business and properties substantially intact,
including its respective present operations, physical facilities, working
conditions, and relationships with customers, suppliers, lessors, licensors and
employees. Notwithstanding anything to the contrary contained in this
Agreement, the Turecamo Entities may distribute both the Balance Sheet
Distributions pursuant to the Distribution Agreement and the Tax Distributions.
(e) FULL ACCESS. Each of the Parties will permit representatives of
the other Parties to have full access at all reasonable times, to all premises,
properties, personnel, accountants, customers (subject to the condition that any
Party may require that one of its officers or employees be present at any such
contact), suppliers (subject to the condition that any Party may require that
one of its officers
<PAGE>
or employees be present at any such contact), third party lenders (subject to
the condition that any Party may require that one of its officers or employees
be present at any such contact), other third parties whose consent is required
in order to consummate the transactions contemplated hereby and by the
Ancillary Agreements, books, records (including Tax records), contracts, and
documents of or pertaining to each of the Turecamo Entities, Moran Enterprises,
or Moran and its Subsidiaries. The Parties agree that performance of this
covenant is necessary in order, among other things, to determine whether the
conditions to Closing have been satisfied. Without limiting the foregoing, the
Parties understand that the condition to Closing set forth in Section
6(a)(xiii) contains a time limitation and that TIME IS OF THE ESSENCE with
respect to this covenant.
(f) NOTICE OF DEVELOPMENTS. Each Party will give prompt written
notice to the others of any material adverse development causing a breach of any
of his, her or its representations and warranties in Annexes I-V hereto. No
disclosure by any Party pursuant to this Section 4(f), however, shall be deemed
to amend or supplement any disclosure schedule or to prevent or cure any
misrepresentation, breach of warranty, or breach of covenant.
(g) EXCLUSIVITY. During the period commencing upon full execution of
this Agreement and ending upon the termination of this Agreement (the
"EXCLUSIVITY PERIOD"), none of the Turecamo Stockholders or the Turecamo
Entities will (and the Turecamo Stockholders will not cause or permit any of the
Turecamo Entities to):
(i) solicit, encourage, or facilitate, including by way of
furnishing information, any inquiries concerning or proposals for a merger,
consolidation, share exchange or similar transaction involving any of the
Turecamo Entities, or for the liquidation, dissolution or recapitalization
of any of the Turecamo Entities, or for the acquisition of any equity
interest in any of the Turecamo Entities or of any portion of the assets of
any of the Turecamo Entities outside the Ordinary Course of Business, or
for any tender offer, sale of securities, acquisition of beneficial
ownership of or the right to vote securities (any of the foregoing being
referred to as a "TAKEOVER", and any inquiries or proposals with respect to
a takeover being referred to below as a "TAKEOVER PROPOSAL");
(ii) substantively discuss with or enter into conversations with
any Person concerning any such Takeover Proposal; or
(iii) except in the Ordinary Course of Business, disclose any
nonpublic information to any Person concerning the business and properties
of the Turecamo Entities, afford any Person access to the properties, books
and records of the Turecamo Entities or otherwise assist or encourage any
Person in connection with any of the foregoing. The Turecamo Entities
shall promptly notify Moran orally (to be confirmed in writing as soon as
practicable thereafter) of any inquiries or proposals that any of them may
receive during the Exclusivity Period relating to any such matters and all
the relevant details (including proposed terms and conditions, if any)
relating thereto. Each of the Turecamo Entities and the Turecamo
Stockholders agrees that, during the Exclusivity Period, he, she or it
shall suspend any discussions with any prospective purchaser, investor or
financing source in respect of the assets or capital stock of the Turecamo
Entities (whether by Takeover, purchase, merger or otherwise). Nothing
contained in this proposal shall be deemed to prohibit the Turecamo
Entities or the Turecamo Stockholders from initiating discussions with
third parties (including attorneys, accountants, bankers, suppliers and
other persons) with respect to the separation of Columbia Coastal from the
Turecamo Entities.
<PAGE>
In the event that, during the Exclusivity Period, any of the Turecamo Entities,
Turecamo Stockholders or any of their employees, agents or representatives
violates the provisions of this Section 4(g), then the Turecamo Entities shall,
on demand by Moran Enterprises and/or Moran or any of their respective
Subsidiaries or Affiliates, promptly assume and pay, or reimburse Moran
Enterprises and/or Moran or any of their respective Subsidiaries or Affiliates
for, all reasonable fees and expenses incurred by or on behalf of Moran
Enterprises and/or Moran or any of their respective Subsidiaries or Affiliates
in connection with the transactions contemplated by this Agreement and the
Ancillary Agreements, including all reasonable legal, investment banking,
accounting, financing commitment and other fees and expenses, and all fees and
expenses incurred by banks and other lending or financial institutions and
advanced, assumed or reimbursed by Moran Enterprises and/or Moran or any of
their respective Subsidiaries or Affiliates which assumption, payment or
reimbursement shall in no event exceed $750,000 in the aggregate.
Notwithstanding the foregoing, in the event that this Agreement is terminated
pursuant to Section 9(a)(i) or (iii), then the Turecamo Entities shall have no
obligation to effect reimbursement under this paragraph (so long as none of the
Turecamo Entities or any of their employees, agents or representatives shall
have previously violated this Section during the Exclusivity Period).
5. POST-CLOSING COVENANTS. The Parties agree as follows with respect to
the period following the Closing.
(a) GENERAL. In case at any time after the Closing any further
action is necessary or desirable to carry out the purposes of this Agreement,
each of the Parties will take such further action (including the execution and
delivery of such further instruments and documents) as any other Party may
reasonably request, all at the sole cost and expense of the requesting Party
(except to the extent the requesting Party is entitled to indemnification or
adjustment therefor under Section 7 below). The Turecamo Stockholders
acknowledge and agree that from and after the Closing Moran Enterprises will be
entitled to possession of all documents, books, records, agreements, and
financial data of any sort relating to the Turecamo Entities (except books and
records with respect to Tax matters pertinent to the Turecamo Entities or
Turecamo Stockholders, which are addressed in Section 8).
(b) LITIGATION SUPPORT. In the event and for so long as any Party
actively is contesting or defending against any action, suit, proceeding,
hearing, investigation, charge, complaint, claim, or demand in connection with
(i) any transaction contemplated under this Agreement or any of the Ancillary
Agreements or (ii) any fact, situation, circumstance, status, condition,
activity, practice, plan, occurrence, event, incident, action, failure to act,
or transaction on or prior to the Closing Date involving any of the Turecamo
Entities, each of the other Parties will use reasonable efforts to cooperate
with him, her or it and his, her or its counsel in the contest or defense, make
available their personnel, and provide such testimony and access to their books
and records as shall be necessary in connection with the contest or defense, all
at the sole cost and expense of the contesting or defending Party (except to the
extent that the contesting or defending Party is entitled to indemnification or
adjustment therefor under Section 7 below).
(c) CONFIDENTIALITY. Each of the Turecamo Stockholders will treat
and hold as such all of the Confidential Information, refrain from using any of
the Confidential Information except in connection with this Agreement and the
Ancillary Agreements or in their capacity as employees of Moran Enterprises and
its Subsidiaries following Closing, and deliver promptly to Moran Enterprises or
destroy, at the request and option of Moran Enterprises, all tangible
embodiments (and all copies) of the Confidential Information which are in his,
her or its possession. In the event that any of the Turecamo Stockholders is
requested or required (by oral question or request for information or documents
in any legal proceeding, interrogatory, subpoena, civil investigative demand, or
similar process) to disclose any Confidential Information, that Turecamo
Stockholder will notify Moran Enterprises promptly of the
<PAGE>
request or requirement so that Moran Enterprises may seek an appropriate
protective order or waive compliance with the provisions of this Section 5(c).
If, in the absence of receipt of a protective order or a waiver hereunder, any
of the Turecamo Stockholders is, on the advice of counsel, compelled to
disclose any Confidential Information, that Turecamo Stockholder may disclose
the Confidential Information without liability hereunder. The foregoing
provisions shall not apply to any Confidential Information which (i) is
generally available to the public immediately prior to the time of disclosure,
(ii) is necessary to satisfy the Turecamo Stockholders' obligations under this
Agreement and the other agreements entered into in connection herewith, (iii)
in the reasonable determination of the Turecamo Stockholders, is or may be
necessary or appropriate to enforce their rights under, or defend any claim
under, this Agreement or any other agreements entered into in connection
herewith or (iv) subject to the preceding sentence, is necessary or appropriate
to disclose to any regulatory authority or Governmental Authority having
jurisdiction over the Turecamo Stockholders; PROVIDED, HOWEVER, that copies of
books and other records relating to tax matters, including Tax Returns, may be
retained in accordance with the provisions of Section 8 and may be disclosed to
any regulatory authority or Governmental Authority, if either the Turecamo
Stockholders are required to disclose such information or the Turecamo
Stockholders reasonably believe that such disclosure is necessary to accurately
determine a Tax Liability.
(d) COVENANT NOT TO COMPETE. Each Turecamo Stockholder agrees that,
for a period ending on the first anniversary of the date on which such Turecamo
Stockholder (directly or through Turecamo Permitted Transferees thereof) ceases
to hold shares of Moran Enterprises Stock (the "NONCOMPETITION PERIOD") such
Turecamo Stockholder shall not engage directly or indirectly in any business
that competes in any way with any business then being conducted by Moran
Enterprises or any Subsidiary or Affiliate thereof; PROVIDED, HOWEVER, that no
owner of less than 1% of the outstanding stock of any publicly-traded
corporation shall be deemed to engage solely by reason thereof in any of its
businesses and PROVIDED, FURTHER, HOWEVER, that this Section 5(d) shall have no
applicability to, and the Turecamo Stockholders may engage directly or
indirectly, but only through Columbia Coastal (whether as owner, officer or
director), in the business of transporting containerized cargo wherever located.
Subject to the provisions of Section 8(b) of the Stockholders Agreement with
respect to Columbia Coastal, during the Noncompetition Period applicable to him
or her, none of the Turecamo Stockholders shall induce or attempt to induce any
customer or supplier, or any potential customer or supplier, of Moran
Enterprises or any of its Subsidiaries or Affiliates to terminate its
relationship with or refrain from establishing a relationship with Moran
Enterprises or any of its Subsidiaries or Affiliates. Subject to the provisions
of Section 8(b) of the Stockholders Agreement with respect to Columbia Coastal,
during the Noncompetition Period applicable to him or her, none of the Turecamo
Stockholders shall directly or indirectly, on behalf of any entity other than
Moran Enterprises or any of its Subsidiaries or Affiliates, hire or retain, or
attempt to hire or retain, in any capacity any person who is, or was at any time
during the preceding twelve (12) months, an employee or officer of Moran
Enterprises or a Subsidiary or an Affiliate. Each of the Turecamo Stockholders
covenants that he or she will not use the names "Turecamo" or "White Stack" in
connection with any maritime business or any business associated with assets
owned or once owned by the Turecamo Entities. Each of the Turecamo Stockholders
acknowledges and agrees that the covenants contained in this Section 5(d) are
reasonable in duration and scope, will not pose an undue hardship on such
Turecamo Stockholder, and are material to Moran Enterprises. If the final
judgment of a court of competent jurisdiction declares that any term or
provision of this Section 5(d) is invalid or unenforceable, the Parties agree
that the court making the determination of invalidity or unenforceability shall
have the power to reduce the scope, duration, or area of the term or provision,
to delete specific words or phrases, or to replace any invalid or unenforceable
term or provision with a term or provision that is valid and enforceable and
that comes closest to expressing the intention of the invalid or unenforceable
term or provision, and this Agreement shall be enforceable as so modified after
the expiration of the time within which the judgment may be
<PAGE>
appealed. In order to permit the Turecamo Stockholders to accurately identify
the Affiliates of Moran Enterprises, for purposes of this Section 5(d) only,
the "Affiliates" of Moran Enterprises shall be deemed to be Lakes Shipping
Company, Inc. and its Subsidiaries, Interlake Holding Company, Inc. and its
Subsidiaries, and Mormac Marine Group, Inc. and its respective Subsidiaries, as
listed on Schedule 5(d) hereto, together with any other Affiliates identified
from time to time by Moran Enterprises in a written notice to the Turecamo
Stockholders.
(e) TURECAMO STOCKHOLDER TAX LIABILITY. Each of the Turecamo
Stockholders hereby agrees to pay his or her pro rata share of any Turecamo
Stockholder Tax Liability and to indemnify Moran Enterprises and each of the
Turecamo Entities from and against such Turecamo Stockholder's pro rata share of
such Turecamo Stockholder Tax Liability.
6. CONDITIONS TO OBLIGATION TO CLOSE.
(a) CONDITIONS TO OBLIGATION OF MORAN ENTERPRISES AND THE MORAN
STOCKHOLDERS. The obligation of Moran Enterprises and the Moran Stockholders to
consummate the transactions to be performed by him, her or it in connection with
the Closing is subject to satisfaction of the following conditions:
(i) the representations and warranties set forth in Sections
3(a) and (b) above shall be true and correct in all material respects at
and as of the Closing Date (other than representations and warranties which
speak as of another date, which shall be true and correct as of such date);
(ii) the Turecamo Stockholders and the Turecamo Entities shall
have performed and complied with all of their covenants hereunder through
the Closing;
(iii) the Turecamo Stockholders and the Turecamo Entities
shall have procured all of the material third party consents specified in
Section 4(b)(i) and (vi) to be procured by them;
(iv) the Parties shall have received all other material
authorizations, consents, and approvals of the Governmental Authorities
referred to in Section 4(b), and none of the terms or conditions of any
such authorization, consent or approval shall (A) prevent consummation of
any of the transactions contemplated by this Agreement or by the Ancillary
Agreements, (B) cause any of the transactions contemplated by this
Agreement or by the Ancillary Agreements to be rescinded following
consummation, (C) affect materially adversely the right of Moran
Enterprises to own the Turecamo Stock, the Moran Stock or the stock of any
of the Subsidiaries of Moran and to control any of the Turecamo Entities,
Moran, Moran Enterprises or any Subsidiaries of Moran (or any of their
respective assets), (D) affect materially adversely the right of any of the
Turecamo Entities, Moran or any Subsidiaries of Moran or Moran Enterprises
to own its assets and to operate its businesses, or (E) be materially
burdensome to Moran Enterprises or any of its Subsidiaries or any of the
Turecamo Entities;
(v) no action, suit, or proceeding shall be pending or, to the
Knowledge of the Parties, threatened before any Governmental Authority or
before any arbitrator wherein an unfavorable injunction, judgment, order,
decree, ruling, or charge would (A) prevent consummation of any of the
transactions contemplated by this Agreement or by the Ancillary Agreements,
(B) cause any of the transactions contemplated by this Agreement or by the
Ancillary Agreements to be rescinded following consummation, (C) affect
materially adversely the right of Moran Enterprises to own the Turecamo
Stock, the Moran Stock or the stock of any
<PAGE>
of the Subsidiaries of Moran and to control any of the Turecamo Entities,
Moran, or any Subsidiaries of Moran (or any of their respective assets),
(D) affect materially adversely the right of any of the Turecamo Entities,
Moran or any Subsidiaries of Moran or Moran Enterprises to own its assets
and to operate its businesses, or (E) be materially burdensome to Moran
Enterprises or any of its Subsidiaries or any of the Turecamo Entities
(and no such injunction, judgment, order, decree, ruling, or charge shall
be in effect);
(vi) the Turecamo Stockholders and the Turecamo Entities shall
have delivered to Moran Enterprises certificates of each Turecamo
Stockholder (as to such Turecamo Stockholder) and an officers' certificate
of the Chairman, President and Chief Financial Officer (in such capacity
and not individually) of each Turecamo Entity to the effect that each of
the conditions specified above in Section 6(a)(i)-(v) is satisfied in all
respects;
(vii) no action shall have been instituted by the Department
of Justice or Federal Trade Commission or any state attorney general or
other state official having jurisdiction challenging or seeking to enjoin
the consummation of the transactions contemplated hereby, which action
shall not have been withdrawn or terminated;
(viii) each of Gregory F. McGinty, James Newman, Peter Nistad and
Bart Turecamo shall have executed an employment and non-competition
agreement in the form of Exhibits C-1 through C-4, respectively, hereto;
(ix) Moran Enterprises shall have received from Cummings &
Lockwood, counsel to the Turecamo Stockholders and the Turecamo Entities,
and from Georgia counsel and maritime counsel reasonably acceptable to
Moran Enterprises, opinions in form and substance as set forth in Exhibit D
attached hereto, addressed to Moran Enterprises, and dated as of the
Closing Date;
(x) Moran Enterprises shall have received, at Moran Enterprises'
expense, from environmental consultants, environmental assessments with
respect to the present and former businesses and real property (owned and
leased) of the Turecamo Entities located in Charleston, South Carolina and
Savannah, Georgia, in substance reasonably satisfactory to Moran
Enterprises, provided that Moran Enterprises shall not have any drilling or
testing performed at such locations without the prior consent of the
Turecamo Entities (it being understood that, upon request by the Turecamo
Entities, Moran Enterprises shall, prior to Closing, provide updates of the
progress of any such assessments);
(xi) Moran Enterprises shall have received, at Moran Enterprises'
expense, from consultants, engineers or employees of Moran Enterprises,
assessments with respect to the Turecamo Vessels in substance reasonably
satisfactory to Moran Enterprises;
(xii) there shall not have been any occurrence, event,
incident, action, failure to act, or transaction since the Most Recent
Fiscal Year End which has had or is reasonably likely to cause a Turecamo
Material Adverse Effect;
(xiii) by September 21, 1998, Moran Enterprises shall have
completed its business, accounting and legal due diligence review of the
Turecamo Entities and the Turecamo Business, including contacts with key
customers, and the results thereof shall be reasonably satisfactory to
Moran Enterprises;
<PAGE>
(xiv) the Turecamo Entities and the lessor of the Leased Real
Property located in Savannah, Georgia shall have entered into a new,
arms'-length lease reasonably satisfactory in form and substance to Moran
Enterprises, and sufficient to evidence such lease of record;
(xv) Moran Enterprises shall have received such pay-off letters,
termination statements, releases of ship mortgages and other releases to be
delivered against repayment by Moran Enterprises of the Indebtedness of the
Turecamo Entities as it shall have reasonably requested, all in form and
substance satisfactory to the lender(s) to Moran Enterprises (in their sole
discretion) and reasonably satisfactory to Moran Enterprises (it being
understood that no such pay-off letters, termination statements and
releases shall be required to be delivered in the absence of repayment by
Moran Enterprises of the relevant underlying Indebtedness of the Turecamo
Entities; PROVIDED, HOWEVER, that in no event shall this Section 6(a)(xv)
be construed to require repayment by the Turecamo Entities or Moran
Enterprises of any guarantees by any of the Turecamo Entities of any
Indebtedness or other obligations of the Related Parties, as to which
Section 6(a)(xxv) shall apply);
(xvi) Moran Enterprises shall have received UCC, judgment lien
and tax lien searches with respect to the Turecamo Stockholders and the
Turecamo Entities, the results of which indicate no liens on the Turecamo
Stock or on the assets of the Turecamo Entities (it being understood that
if the results of lien searches reveal liens with respect to Indebtedness
of the Turecamo Entities that will be paid off and terminated at Closing
(all such Indebtedness listed on Sections (m) and (n) of the Turecamo
Disclosure Schedule) or liens which are satisfactory to the lender(s) to
Moran Enterprises in their sole discretion, the presence of such liens
shall not negate satisfaction of this condition 6(a)(xvi));
(xvii) each of the Turecamo Entities shall have delivered (i)
copies of the Certificate of Incorporation of each Turecamo Entity,
including all amendments thereto, certified by the Secretary of State of
the state of its jurisdiction of incorporation; (ii) certificates from the
Secretary of State of the state of its jurisdiction of incorporation to the
effect that each Turecamo Entity is in good standing and subsisting in such
jurisdiction and listing all charter documents of the Company on file in
such state; (iii) a certificate from the Secretary of State or other
appropriate official in each state in which each Turecamo Entity is
qualified to do business to the effect that each Turecamo Entity is in good
standing in such state; and (iv) a certificate as to the Tax status of each
Turecamo Entity from the appropriate official in the state of its
jurisdiction of incorporation and each state in which each Turecamo Entity
is qualified to do business, in each case, dated as of a date not more than
five days prior to the Closing Date.
(xviii) Moran Enterprises shall have obtained on terms and
conditions reasonably satisfactory to Moran Enterprises financing in the
amount set forth in the draft Commitment Letter, dated July 9, 1998,
attached hereto as Schedule 6(a)(xviii).
(xix) Columbia Coastal shall have executed and delivered a right
of first refusal agreement, in form and substance reasonably satisfactory
to Moran Enterprises, pursuant to which Columbia Coastal shall agree that
Moran Enterprises and its Subsidiaries shall have a first refusal right to
provide all of the tug services requirements of Columbia Coastal on market
terms (it being understood that neither Moran Enterprises nor Moran have
reviewed the Towage Agreement between Columbia Coastal Transport and
Maritime, as executed by Maritime on June 15, 1998 and countersigned by
Columbia Coastal Transport on July 27, 1998, and that they do not hereby
acknowledge whether such Towage Agreement is reasonably satisfactory and
that
<PAGE>
it is possible that such right of first refusal agreement may amend,
supplement, replace or terminate such Towage Agreement);
(xx) the relevant parties shall have executed amendments, waivers
or terminations of any Contracts listed on Section (o) and Section (v) of
the Turecamo Disclosure Schedule in order to ensure that such Contracts are
on arms'-length terms or are terminated, as applicable;
(xxi) each Turecamo Stockholder and the Escrow Agent (as
applicable) shall have executed and delivered the Stockholders Agreement,
the Cash Escrow Agreement and the Stock Escrow Agreement and each Turecamo
Stockholder (and each spouse thereof who is an employee of a Turecamo
Entity), Columbia Coastal, Turecamo Properties, Ltd. and a newly formed
Turecamo entity (the "DISTRIBUTION ENTITY", and together with each Turecamo
Stockholder, Columbia Coastal, and Turecamo Properties, Ltd., the "RELATED
PARTIES") shall have executed a Release in the form of Exhibit E attached
hereto;
(xxii) the Restated Certificate shall have been accepted for
filing by the Secretary of State of the State of Delaware;
(xxiii) the Balance Sheet Distributions shall have been effected
in a manner and pursuant to the agreements (collectively, the "DISTRIBUTION
AGREEMENT") reasonably satisfactory to Moran Enterprises, including that
the assets being distributed are accepted by the Distribution Entity,
subject to all Liabilities associated therewith;
(xxiv) Moran Enterprises shall be reasonably satisfied that
neither Moran Enterprises nor any of the Turecamo Entities will be subject
to or responsible for any Excluded Liabilities (it being understood that,
upon request by the Turecamo Entities, Moran Enterprises shall, prior to
Closing, provide updates as to the progress of any analysis of the Excluded
Liabilities);
(xxv) the relevant Related Parties, the Turecamo Entities and the
relevant lending institutions or counterparties shall have executed and
delivered releases or terminations, at no cost to the Turecamo Entities or
to Moran Enterprises, with respect to all guarantees of Indebtedness or
other obligations of the Related Parties by the Turecamo Entities;
(xxvi) all agreements between the Related Parties and the
Turecamo Entities or among the Related Parties, the Turecamo Entities and
any third party (other than agreements delivered at the Closing or
agreements for the provision of services at arms-length terms or pursuant
to the agreement referred to in clause (xix) above) shall have been
terminated;
(xxvii) Moran Enterprises and the Turecamo Entities shall have
received written confirmation, in form and substance reasonably
satisfactory to Moran Enterprises, from Columbia Coastal that the Turecamo
Entities do not owe any amounts to Columbia Coastal as of the Closing,
except for amounts that may be owed to Columbia Coastal in connection with
the claims or litigation disclosed on Exhibit A to the Release by Columbia
Coastal attached as Exhibit E hereto;
(xxviii) the White Stack Stockholders' Agreement, dated December,
1983, among the Turecamo Stockholders, shall have been terminated;
(xxix) any advance to Bart Turecamo, Jr. or any Related Party
shall have been paid in full, or arrangements for the payment in full of
such amount at the Closing shall have otherwise
<PAGE>
been made;
(xxx) Moran Enterprises shall have received acknowledgement from
the Turecamo Entities that the insurance policies listed in Section (q) of
the Turecamo Disclosure Schedule will continue in full force and effect
after giving effect to the transactions contemplated hereby (or, in the
case of Protection and Indemnity and Hull insurance, substantially
equivalent replacement coverage reasonably satisfactory to Moran
Enterprises shall be in effect); and
(xxxi) all actions to be taken by the Turecamo Stockholders and
the Turecamo Entities in connection with consummation of the transactions
contemplated hereby and all certificates, opinions, instruments, and other
documents required to effect the transactions contemplated hereby will be
reasonably satisfactory in form and substance to Moran Enterprises.
Moran Enterprises and the Moran Stockholders may waive any condition specified
in this Section 6(a) if they execute a written instrument so stating at or prior
to the Closing.
(b) CONDITIONS TO OBLIGATION OF THE TURECAMO STOCKHOLDERS. The
obligation of the Turecamo Stockholders to consummate the transactions to be
performed by them in connection with the Closing is subject to satisfaction of
the following conditions:
(i) the representations and warranties set forth in Sections
3(c), (d) and (e) above shall be true and correct in all material respects
at and as of the Closing Date (other than representations and warranties
which speak as of another date, which shall be true and correct as of such
date);
(ii) Moran Enterprises, Moran and the Moran Stockholders shall
have performed and complied with all of their respective covenants
hereunder through the Closing;
(iii) no action, suit, or proceeding shall be pending or, to
the Knowledge of the Parties, threatened before any Governmental Authority
or before any arbitrator wherein an unfavorable injunction, judgment,
order, decree, ruling, or charge would (A) prevent consummation of any of
the transactions contemplated by this Agreement or by the Ancillary
Agreements or (B) cause any of the transactions contemplated by this
Agreement or by the Ancillary Agreements to be rescinded following
consummation, or (C) affect materially adversely the right of Moran
Enterprises to own the Turecamo Stock, the Moran Stock or the stock of any
of the Subsidiaries of Moran and to control any of the Turecamo Entities,
Moran or any Subsidiaries of Moran (or any of their respective assets), or
(D) affect materially adversely the right of any of the Turecamo Entities,
Moran or any Subsidiaries of Moran or Moran Enterprises to own its assets
and to operate its businesses, or (E) be materially burdensome to Moran
Enterprises or any of its Subsidiaries or any of the Turecamo Entities (and
no such injunction, judgment, order, decree, ruling, or charge shall be in
effect);
(iv) Moran Enterprises, Moran and the Moran Stockholders shall
have received all of the material third party consents specified in Section
4(b)(ii), Section 4(b)(iii), Section 4(b)(v), and Section 4(b)(vii) (only
as to authorizations, consents, and approvals to be given, made or obtained
by Moran Enterprises, Moran and its Subsidiaries or the Moran
Stockholders);
(v) Moran Enterprises, Moran and Moran's Subsidiaries shall
have received all authorizations, consents, and approvals of the
Governmental Authorities referred to in Section 4(b)(v) to be procured
by them, and none of the terms or conditions of any such authorization,
consent
<PAGE>
or approval shall (A) prevent consummation of any of the transactions
contemplated by this Agreement or by the Ancillary Agreements, (B) cause
any of the transactions contemplated by this Agreement or by the
Ancillary Agreements to be rescinded following consummation, (C) affect
materially adversely the right of Moran Enterprises to own the Turecamo
Stock, the Moran Stock or the stock of any of the Subsidiaries of Moran
and to control any of the Turecamo Entities, Moran or any Subsidiaries
of Moran (or any of their respective assets), (D) affect materially
adversely the right of any of the Turecamo Entities, Moran or any
Subsidiaries of Moran or Moran Enterprises to own its assets and to
operate its businesses, or (E) be materially burdensome to Moran
Enterprises or any of its Subsidiaries or any of the Turecamo Entities;
(vi) (A) Moran Enterprises and Moran shall have delivered to the
Turecamo Stockholders officers' certificates of the Chairman, President and
Vice President-Finance and Administration of each of Moran Enterprises and
Moran to the effect that each of the conditions specified above in Section
6(b)(i)-(v) is satisfied in all respects and (B) each Moran Stockholder
shall have delivered to the Turecamo Stockholders certificates to the
effect that each of the conditions specified in Section 6(b)(i)-(iv), as it
applies to him, her or it, is satisfied in all respects;
(vii) no action shall have been instituted by the Department
of Justice or Federal Trade Commission or any state attorney general or
other state official having jurisdiction challenging or seeking to enjoin
the consummation of such transactions, which action shall not have been
withdrawn or terminated;
(viii) the Turecamo Stockholders shall have received from Finn
Dixon & Herling LLP, counsel to Moran Enterprises, Moran and the Moran
Stockholders, an opinion in form and substance as set forth in Exhibit H
attached hereto, addressed to the Turecamo Stockholders, and dated as of
the Closing Date;
(ix) Moran Enterprises shall have executed each of the employment
and non-competition agreements in the form of Exhibits C-1 through C-4
attached hereto;
(x) the Turecamo Stockholders shall have received from employees
of the Turecamo Entities assessments with respect to the Moran Vessels in
substance reasonably satisfactory to the Turecamo Stockholders;
(xi) there shall not have been any occurrence, event, incident,
action, failure to act, or transaction since the Most Recent Fiscal Year
End which has had or is reasonably likely to cause a Moran Material Adverse
Effect;
(xii) Moran shall have delivered (i) copies of its and Moran
Towing's Certificate of Incorporation, including all amendments thereto,
certified by the Secretary of State of the state of Delaware; (ii)
certificates from the Secretary of State of the state of Delaware to the
effect that each of Moran and Moran Towing is in good standing and
subsisting in such jurisdiction and listing all charter documents of Moran
and Moran Towing on file in such state; (iii) a certificate from the
Secretary of State or other appropriate official in each state in which
each of Moran and Moran Towing is qualified to do business to the effect
that each of Moran and Moran Towing is in good standing in such state; and
(iv) a certificate as to the Tax status of each of Moran and Moran Towing
from the appropriate official in the state of Delaware and each state in
which each of Moran and Moran Towing is qualified to do business, in each
case, dated
<PAGE>
as of a date not more than five days prior to the Closing Date;
(xiii) Moran Enterprises shall have obtained financing on terms
and conditions substantially similar to those set forth in Schedule
6(a)(xviii) hereto;
(xiv) Moran Enterprises, the Moran Stockholders, each holder of
options to purchase Moran Enterprises Common Stock and the Escrow Agent, as
applicable, shall have executed and delivered the Stockholders Agreement,
the Cash Escrow Agreement and the Stock Escrow Agreement;
(xv) the Restated Certificate shall have been accepted for
filing by the Secretary of State of the State of Delaware;
(xvi) arrangements reasonably satisfactory to the Turecamo
Stockholder Representative shall have been made with Alan L. Marchisotto
and Edmond J. Moran, Jr., on terms and conditions consistent with those set
forth on Schedule 6(b)(xvi) hereto; and
(xvii) all actions to be taken by Moran Enterprises, Moran and
the Moran Stockholders in connection with consummation of the
transactions contemplated hereby and all certificates, opinions,
instruments, and other documents required to effect the transactions
contemplated hereby will be reasonably satisfactory in form and
substance to the Turecamo Stockholders.
The Turecamo Stockholders may waive any condition specified in this Section 6(b)
if they execute a written instrument so stating at or prior to the Closing.
7. REMEDIES FOR BREACHES OF THIS AGREEMENT.
(a) SURVIVAL OF REPRESENTATIONS AND WARRANTIES.
(i) All of the representations and warranties of the Turecamo
Entities and the Turecamo Stockholders contained in Annexes I and II shall
survive the Closing hereunder (even if Moran Enterprises or Moran knew or
had reason to know of any misrepresentation or breach of warranty at the
time of Closing) and continue in full force and effect for a period of two
years thereafter; PROVIDED, HOWEVER, that the representations and
warranties of each Turecamo Stockholder contained in Section (a) of Annex I
shall survive the Closing (even if the damaged Party knew or had reason to
know of any misrepresentation or breach of warranty at the time of Closing)
and continue in full force and effect forever thereafter (subject to any
applicable statutes of limitations).
(ii) All of the representations and warranties of Moran
Enterprises, Moran and the Moran Stockholders contained in Annexes III-V
shall survive the Closing hereunder (even if the Turecamo Stockholders knew
or had reason to know of any misrepresentation or breach of warranty at the
time of Closing) and continue in full force and effect for a period of two
years thereafter; PROVIDED, HOWEVER, that the representations and
warranties of each Moran Stockholder contained in Section (a) of Annex III
shall survive the Closing (even if the damaged Party knew or had reason to
know of any misrepresentation or breach of warranty at the time of Closing)
and continue in full force and effect forever thereafter (subject to any
applicable statutes of limitations).
<PAGE>
(b) INDEMNIFICATION BY THE TURECAMO STOCKHOLDERS.
(i) LIMITATIONS:
(A) DEDUCTIBLE. Notwithstanding the following provisions of
this Section 7(b), from and after the Closing, the Turecamo
Stockholders shall only be responsible for any Adverse Consequences
attributable to a breach or alleged breach described in this Section
7(b) or any Excluded Liabilities if and to the extent that the sum of
all Adverse Consequences attributable to breaches or alleged breaches
described in this Section 7(b) for which the Turecamo Stockholders or
any of them are responsible (other than breaches or alleged breaches
arising out of fraud or willful misrepresentation or breach and other
than breaches or alleged breaches of the representations and
warranties contained in Section (a) of Annex I, as to all of which the
$300,000 deductible described in this paragraph shall not apply) plus
Excluded Liabilities shall exceed $300,000 in the aggregate (it being
understood that if such Adverse Consequences exceed $300,000 in the
aggregate, the Turecamo Stockholders shall not be responsible for the
first $300,000 of Adverse Consequences), provided that such deductible
shall not apply to Adverse Consequences attributable to any Tax
Liability directly related to the payment or receipt of the Balance
Sheet Distributions (the "TURECAMO STOCKHOLDER TAX LIABILITY"), as to
which Turecamo Stockholder Tax Liability the Turecamo Stockholders
shall have sole responsibility.
(B) CAP. Notwithstanding the following provisions of this
Section 7(b) (other than the proviso at the end of this Section
7(b)(i)(B)), from and after the Closing, the Turecamo Stockholders
shall not be liable for Adverse Consequences attributable to breaches
or alleged breaches described in this Section 7(b) or Excluded
Liabilities to the extent that the sum of all such Adverse
Consequences for which the Turecamo Stockholders are responsible
(other than breaches or alleged breaches arising out of fraud or
willful misrepresentation or breach and other than breaches or alleged
breaches of the representations and warranties contained in Section
(a) of Annex I, as to all of which the cap in this Section 7(b)(i)(B)
shall not be applicable) plus such Excluded Liabilities exceeds
$5,000,000 in the aggregate (in excess of the deductible specified in
Section 7(b)(i)(A)), provided that any Adverse Consequences
attributable to any Turecamo Stockholder Tax Liability, as to which
Turecamo Stockholder Tax Liability the Turecamo Stockholders shall
have sole responsibility, shall not be included in the amounts against
which the cap shall be applicable.
(C) MEANS OF RECOVERY. Any recovery under this Section 7(b)
(other than (i) breaches or alleged breaches of the representations
and warranties contained in Section (a) of Annex I and (ii) any
recovery in respect of any Turecamo Stockholder Tax Liability, as to
all of which this subsection shall not apply) shall only be effected,
FIRST, by recourse against the remaining Escrow Cash Portion in the
Cash Escrow Account, and SECOND, in the event such Cash Escrow Account
is exhausted, by offset against up to an aggregate of $3,000,000 (the
"AGGREGATE OFFSET AMOUNT") otherwise payable to the Turecamo
Stockholders upon exercise of the put/calls, as set forth in Section
6(h) of the Stockholders Agreement, PROVIDED, HOWEVER, that such
offset with respect to each Turecamo Stockholder shall be limited to
such Turecamo Stockholder's PRO RATA share of such Adverse
Consequences (allocated among the Turecamo Stockholders as set forth
on Schedule 1), all in accordance with the terms and conditions of the
Cash Escrow Agreement and the Stockholders Agreement. It is
specifically understood that the Cash Escrow Account may be used, with
<PAGE>
respect to all Third Party Claims for which the Turecamo
Stockholders are the Indemnifying Parties, for the reimbursement of
the fees and expenses (including court costs and reasonable
attorneys' fees and expenses) of the Party conducting the defense
of such Third Party Claims in accordance with Section 7(e) hereof.
With respect to each Third Party Claim for which the Turecamo
Stockholders are the Indemnifying Parties, the Cash Escrow Account
may be used for the reimbursement of the fees and expenses of only
one counsel for all of the Turecamo Stockholders.
(ii) In the event that any of the Turecamo Entities breaches (or
in the event that any third party alleges facts that, if true, would mean
that any of the Turecamo Entities has breached) any of their
representations or warranties contained herein (other than (A) a breach or
alleged breach of the representations and warranties contained in Sections
(f), (r), (s), (t), (u) and/or (y) of Annex II, as to which the Turecamo
Stockholders shall ONLY be obligated to indemnify the Moran Enterprises
Indemnified Parties under this Section 7(b) if the Turecamo Entities had
Knowledge of such breach or alleged breach at or prior to the Closing and
(B) other than the representations and warranties in Annex I, as to which
Section 7(b)(iii) shall apply) and, if there is an applicable survival
period pursuant to Section 7(a) above, provided that a Moran Enterprises
Indemnified Party makes a written claim for indemnification against the
Turecamo Stockholders pursuant to Section 10(g) below within such survival
period, then, subject to Section 7(b)(i), each of the Turecamo Stockholders
shall, from and after the Closing, (A) to the extent of the remaining
Escrow Cash Portion, jointly and severally, and (B) to the extent of such
Turecamo Stockholder's PRO RATA share (allocated among the Turecamo
Stockholders as set forth on Schedule 1) of such Adverse Consequences in
excess of the remaining Escrow Cash Portion, severally and not jointly,
indemnify the Moran Enterprises Indemnified Parties from and against such
Adverse Consequences (including Adverse Consequences that the Moran
Enterprises Indemnified Parties may suffer through and after the date of
the claim for indemnification and after the end of the two-year survival
period) attributable to such breach or alleged breach.
(iii) In the event that any of the Turecamo Stockholders
breaches (or in the event that any third party alleges facts that, if true,
would mean that any of the Turecamo Stockholders has breached) any of his
or her representations and warranties in Annex I, and, if there is an
applicable survival period pursuant to Section 7(a) above, provided that
the Moran Enterprises Indemnified Parties make a written claim for
indemnification against such Turecamo Stockholder pursuant to Section 10(g)
below within such survival period, then, subject to Section 7(b)(i), such
Turecamo Stockholder shall, from and after the Closing, severally and not
jointly, indemnify the Moran Enterprises Indemnified Parties from and
against the entirety of any Adverse Consequences that the Moran Enterprises
Indemnified Parties may suffer through and after the date of the claim for
indemnification (including any Adverse Consequences that the Moran
Enterprises Indemnified Parties may suffer after the end of any applicable
survival period) attributable to such breach or alleged breach.
(iv) Subject to Section 7(b)(i), each of the Turecamo
Stockholders shall, from and after the Closing, jointly and severally,
indemnify the Moran Enterprises Indemnified Parties from and against any
Adverse Consequences attributable to any Excluded Liability it being hereby
understood that Moran Enterprises shall only be entitled to indemnification
from the Turecamo Stockholders, subject to the cap, deductible and means of
recovery set forth in Section 7(b)(i).
(c) INDEMNIFICATION AND ADJUSTMENT BY MORAN ENTERPRISES.
<PAGE>
(i) LIMITATIONS.
(A) DEDUCTIBLE. Notwithstanding the following provisions of
this Section 7(c), from and after the Closing, Moran Enterprises shall
only be responsible for any Adverse Consequences attributable to a
breach or alleged breach described in this Section 7(c) if and to the
extent that the sum of all Adverse Consequences attributable to
breaches or alleged breaches described in this Section 7(c) for which
Moran Enterprises is responsible plus all Adverse Consequences
attributable to a breach or alleged breach described in Section 7(d)
for which a Moran Stockholder is responsible (other than breaches or
alleged breaches arising out of fraud or willful misrepresentation or
breach and other than breaches or alleged breaches of the
representations and warranties contained in Section (a) of Annex III,
as to all of which the $300,000 deductible described in this paragraph
shall not apply) shall exceed $300,000 in the aggregate (it being
understood that if such aggregate Adverse Consequences exceed $300,000
in the aggregate, Moran Enterprises shall not be responsible for the
first $300,000 of Adverse Consequences). For ease of administration,
in the event that Adverse Consequences attributable to breaches or
alleged breaches by both Moran Enterprises and the Moran Stockholders
are realized at approximately the same time, such Adverse Consequences
shall be totalled in the following order for purposes of determining
fulfillment of the deductible specified in this Section 7(c)(i)(A)
until such deductible is fulfilled: first, the Adverse Consequences
attributable to breaches or alleged breaches by the Moran Stockholders
shall be taken into account and second, the Adverse Consequences
attributable to breaches or alleged breaches by Moran Enterprises
shall be taken into account.
(B) CAP ON ADJUSTMENTS. Notwithstanding the following
provisions of this Section 7(c), from and after the Closing, Moran
Enterprises shall not be responsible to make adjustments under Section
7(c)(ii)(A) for Adverse Consequences attributable to any breach or
alleged breach described in this Section 7(c) to the extent that the
sum of all Adverse Consequences for which Moran Enterprises is
responsible to make adjustments (other than breaches or alleged
breaches arising out of fraud or willful misrepresentation or breach
and other than breaches or alleged breaches of the representations and
warranties contained in Section (a) of Annex I, as to all of which the
cap in this Section 7(c)(i)(B) shall not be applicable) exceed
$5,000,000 (in excess of the deductible specified in Section
7(c)(i)(A)).
(C) CAP ON INDEMNIFICATION. Notwithstanding the following
provisions of this Section 7(c), from and after the Closing, Moran
Enterprises shall not be liable to indemnify under Section 7(c)(ii)(B)
for Adverse Consequences attributable to any breach or alleged breach
described in this Section 7(c) to the extent that the sum of all
Adverse Consequences for which Moran Enterprises is responsible under
Section 7(c)(ii)(B), plus all Adverse Consequences for which the Moran
Stockholders are responsible to indemnify Moran Enterprises under
Section 7(d) (other than breaches or alleged breaches arising out of
fraud or willful misrepresentation or breach and other than breaches
or alleged breaches of the representations and warranties contained in
Section (a) of Annex III, as to all of which the cap in this Section
7(c)(i)(C) shall not be applicable) exceed $5,000,000 (in excess of
the deductible specified in Section 7(c)(i)(A)).
(ii) In the event that Moran Enterprises or Moran breaches (or in
the event any third party alleges facts that, if true, would mean that
Moran Enterprises or Moran has breached) any of its representations and
warranties contained herein (other than the representations and warranties
of Moran contained in Sections (f), (r), (s), (t), (u) and/or (y) of Annex
V, as to which
<PAGE>
Moran Enterprises shall ONLY be obligated to make adjustments and/or
indemnify the Turecamo Stockholders pursuant to this Section 7(c) if
Moran Enterprises or Moran had Knowledge of such breach or alleged
breach at or prior to the Closing), and, if there is an applicable
survival period pursuant to Section 7(a) above, provided that the
Turecamo Stockholder Representative makes a written claim for
indemnification against Moran Enterprises or Moran pursuant to Section
10(g) below within such survival period, then Moran Enterprises shall,
from and after the Closing, have the following obligations:
(A) First, subject to Section 7(c)(i), Moran Enterprises
shall, from and after the Closing, negotiate in good faith with the
Turecamo Stockholder Representative appropriate pro forma reductions
in the Cumulative EBITDA Thresholds set forth in Section 2(g)(iii) in
amounts (subject to Section 7(c)(i)(B)) equal to any actual reductions
in the EBITDA of Moran Enterprises and its Subsidiaries during the
Earnout Period which are directly attributable to such breach. If
Moran Enterprises and the Turecamo Stockholder Representative are
unable to agree upon any such reductions, then they shall forthwith
refer the dispute to an Arbitrating Accountant for resolution,
pursuant to the procedures set forth in Section 2(g)(ii)(C).
(B) Second, subject to Section 7(c)(i) but in addition to
Section 7(c)(ii)(A), Moran Enterprises shall, from and after the
Closing, indemnify the Turecamo Stockholders from and against 29% of
any Adverse Consequences that Moran Enterprises may suffer through and
after the date of the claim for indemnification (including any Adverse
Consequences that the Turecamo Stockholders may suffer after the end
of any applicable survival period) resulting from, arising out of,
relating to, in the nature of, or caused by such breach (or such
alleged breach). Any such indemnity obligation of Moran Enterprises
under this Section 7(c)(ii)(B) shall be satisfied solely by the
issuance to the Turecamo Stockholders of shares of Series A Preferred
Stock of Moran Enterprises having identical terms as, and which are
PARI PASSU with, the shares of Series A Preferred Stock being issued
to the Moran Stockholders at the Closing, in an amount equal to 29% of
such Adverse Consequences. When issued, such shares shall be duly
authorized, validly issued, fully paid, nonassessable and free from
preemptive or other rights of third parties. The aggregate "Original
Cost" (as defined in the Restated Certificate) of all such shares of
Preferred Stock issued to the Turecamo Stockholders shall not exceed
$1,450,000 and the maximum indemnification obligation of Moran
Enterprises under this Section 7(c)(ii)(B) shall be to issue shares of
Series A Preferred Stock having an aggregate Original Cost equal to
$1,450,000 (representing 29% of the $5,000,000 cap set forth in
Section 7(c)(i)(C)).
(d) INDEMNIFICATION BY MORAN STOCKHOLDERS.
(i) LIMITATIONS.
(A) DEDUCTIBLE. Notwithstanding the following provisions of
this Section 7(d), from and after the Closing, the Moran Stockholders
shall only be responsible for any Adverse Consequences attributable to
a breach or alleged breach described in this Section 7(d) if and to
the extent that the sum of all Adverse Consequences attributable to a
breach or alleged breach described in this Section 7(d) for which the
Moran Stockholders or any of them are responsible plus all Adverse
Consequences attributable to a breach or alleged breach described in
Section 7(c) for which Moran Enterprises is responsible (other than
breaches or alleged breaches arising out of fraud or willful
misrepresentation or breach and other than breaches or alleged
breaches of the representations and warranties contained in Section
(a) of Annex III, as to all of
<PAGE>
which the $300,000 deductible described in this paragraph shall
not apply) shall exceed $300,000 in the aggregate (it being
understood that if such aggregate Adverse Consequences exceed
$300,000, the Moran Stockholders shall not be responsible to
indemnify Moran Enterprises under Section 7(d)(ii) for the first
$300,000 of Adverse Consequences). For ease of administration, in
the event that Adverse Consequences attributable to breaches or
alleged breaches by both Moran Enterprises and the Moran
Stockholders are realized at approximately the same time, such
Adverse Consequences shall be totalled in the following order for
purposes of determining fulfillment of the deductible specified in
this Section 7(d)(i)(A) until such deductible is fulfilled: first,
the Adverse Consequences attributable to breaches or alleged
breaches by the Moran Stockholders shall be taken into account and
second, the Adverse Consequences attributable to breaches or
alleged breaches by Moran Enterprises shall be taken into account.
(B) CAP. From and after the Closing, the Moran Stockholders
shall not be liable to indemnify Moran Enterprises under Section
7(d)(ii) for Adverse Consequences attributable to any breach or
alleged breach described in this Section 7(d) to the extent that the
sum of the Adverse Consequences for which the Moran Stockholders are
responsible to indemnify Moran Enterprises under this Section 7(d)
plus the Adverse Consequences attributable to any breach or alleged
breach described in Section 7(c) for which Moran Enterprises is
responsible to indemnify the Turecamo Stockholders under Section 7(c)
(other than breaches or alleged breaches arising out of fraud or
willful misrepresentation or breach and other than breaches or alleged
breaches of the representations and warranties contained in Section
(a) of Annex III, as to all of which the cap in this Section
7(d)(i)(B) shall not be applicable) exceed $5,000,000 (in excess of
the deductible specified in Section 7(d)(i)(A)). Except for breaches
or alleged breaches of the representations and warranties contained in
Section (a) of Annex III, as to which this sentence shall not be
applicable, in no event shall any Moran Stockholder be liable under
this Section 7(d) for more than that percentage of the cap as
corresponds to his, her or its percentage stock ownership of Moran, as
amongst the Moran Stockholders.
(ii) In the event that one or more executive officers or
Directors of Moran Enterprises becomes aware that a Moran Stockholder has
breached (or in the event any third party alleges facts that, if true,
would mean that such Moran Stockholder has breached) any of his, her or its
representations and warranties contained in Annex III, and, if there is an
applicable survival period pursuant to Section 7(a) above, the Board of
Directors of Moran Enterprises shall provide prompt written notice of such
breach or alleged breach to the Turecamo Stockholder Representative, and
provided that the Turecamo Stockholder Representative makes a written
demand for indemnification to Moran Enterprises pursuant to Section 10(g)
below within such survival period, such Moran Stockholder shall, severally
and not jointly, subject to Section 7(d)(i), from and after the Closing,
indemnify Moran Enterprises from and against the entirety of any Adverse
Consequences that Moran Enterprises may suffer through and after the date
of the claim for indemnification (including any Adverse Consequences that
Moran Enterprises may suffer after the end of any applicable survival
period) to the extent resulting from, arising out of, relating to, in the
nature of, or caused by such breach by such Moran Stockholder (or the
alleged breach) and Moran Enterprises shall diligently enforce such
indemnification obligation.
(e) MATTERS INVOLVING THIRD PARTIES.
(i) If any third party shall notify any party entitled to
indemnification or adjustment under this Section 7 (the "INDEMNIFIED
PARTY") of any matter (a "THIRD PARTY CLAIM") which may give
<PAGE>
rise to a claim for indemnification or adjustment against any other
Party (the "INDEMNIFYING PARTY") under this Section 7, then the
Indemnified Party shall notify each Indemnifying Party thereof in
writing together with a statement of any available information regarding
such claim, within 20 days after learning of such claim (or such shorter
time as may be necessary to give the Indemnifying Party a reasonable
opportunity to respond to such claim); PROVIDED, HOWEVER, that no delay
on the part of the Indemnified Party in notifying any Indemnifying Party
shall relieve the Indemnifying Party from any obligation hereunder
unless (and then solely to the extent that) the Indemnifying Party
thereby is prejudiced.
(ii) Any Indemnifying Party will have the right to defend the
Indemnified Party against the Third Party Claim with counsel of its choice
reasonably satisfactory to the Indemnified Party so long as (A) the
Indemnifying Party notifies the Indemnified Party in writing within 20 days
after the Indemnified Party has given notice of the Third Party Claim that
the Indemnifying Party will, subject to the limitations (including
deductibles, caps and other provisions) set forth in this Section 7,
indemnify the Indemnified Party from and against the entirety of any
Adverse Consequences that the Indemnified Party may suffer resulting from,
arising out of, relating to, in the nature of, or caused by the Third Party
Claim, (B) if Moran Enterprises is the Indemnified Party, the Third Party
Claim involves only money damages and/or does not seek an injunction or
other equitable relief that Moran Enterprises reasonably believes will
substantially impair its business, assets or operations, taken as a whole,
(C) settlement of, or an adverse judgment with respect to, the Third Party
Claim is not, in the reasonable good faith judgment of Moran Enterprises,
likely to establish a precedential custom or practice materially adverse to
the continuing business interests of Moran Enterprises, taken as a whole,
(D) the Third Party Claim does not involve any suit, action, claim,
proceeding or investigation by any material customer of Moran Enterprises
taken as a whole with respect to business conducted by the Turecamo
Entities prior to the Closing as to which Moran Enterprises has reasonably
determined that it is necessary for Moran Enterprises to conduct such
defense in order not to materially impair the relationship of Moran
Enterprises and its Subsidiaries with such material customer and (E) the
Indemnifying Party conducts the defense of the Third Party Claim in a
reasonably active and diligent fashion.
(iii) Regardless of which party is conducting the defense of the
Third Party Claim in accordance with Section 7(e)(ii) above, (A) the other
Party may retain separate counsel of its own choosing at its sole cost and
expense and participate in the defense of the Third Party Claim (including
the right to consult with (but not to instruct) counsel to the defending
party regarding the defense, to be provided access to all appropriate
records and materials relating to such defense and to be provided prompt
notice of all material developments in connection with such defense), (B)
the Indemnified Party will not consent to the entry of any judgment or
enter into any settlement or compromise with respect to the Third Party
Claim without the prior written consent of the Indemnifying Party (not to
be withheld unreasonably), and (C) the Indemnifying Party will not consent
to the entry of any judgment or enter into any settlement or compromise
with respect to the Third Party Claim without the prior written consent of
the Indemnified Party (not to be withheld unreasonably) if such judgment,
settlement or compromise would lead to liability (civil or criminal) or
create any other financial or other obligation on the part of the
Indemnified Party for which the Indemnified Party is not entitled to
indemnification hereunder or if the effect of such judgment, settlement or
compromise would be to permit any injunctive relief against the Indemnified
Party. If an offer is made to settle a Third Party Claim, which offer the
Indemnifying Party desires to accept, the Indemnifying Party will give at
least five (5) days' prior written notice to the Indemnified Party to that
effect, setting forth in reasonable detail
<PAGE>
the terms and conditions of any such settlement (the "SETTLEMENT
NOTICE"). If the Indemnified Party objects to such offer within ten
(10) calendar days after its receipt of such Settlement Notice, the
Indemnified Party may continue to contest or defend such Third Party
Claim and, in such event, the maximum liability of the Indemnifying
Party as to such Third Party Claim will not exceed the amount of such
settlement offer described in the Settlement Notice.
(iv) In the event any of the conditions in Section 7(e)(ii) above
is or becomes unsatisfied, however, (A) subject to Section 7(e)(iii), the
Indemnified Party may defend against the Third Party Claim in any manner it
reasonably may deem appropriate provided that if the Indemnified Party
undertakes to defend against such Third Party Claim, it shall do so in a
reasonably active and diligent manner, and may consent to the entry of any
judgment or enter into any settlement or compromise with respect to the
Third Party Claim with the prior written consent of the Indemnifying Party
(not to be withheld unreasonably), (B) subject to the monetary limitations
in this Section 7, the defending party may be reimbursed out of the Cash
Escrow Account promptly and periodically for the costs of defending against
the Third Party Claim (including attorneys' fees and expenses) in
accordance with the Cash Escrow Agreement, and (C) the Indemnifying Parties
will remain responsible for any Adverse Consequences the Indemnified Party
may suffer resulting from, arising out of, relating to, in the nature of,
or caused by the Third Party Claim to the fullest extent provided in (and
subject to the limitations set forth in) this Section 7. With respect to
each Third Party Claim for which the Turecamo Stockholders are the
Indemnifying Parties, the Cash Escrow Account may be used for the
reimbursement of the fees and expenses of only one counsel for all of the
Turecamo Stockholders.
(v) Any judgment entered or settlement or compromise agreed upon
in the manner provided herein shall be binding upon the Indemnifying Party,
and shall be conclusively deemed to be an obligation with respect to which
the Indemnified Party is entitled to prompt indemnification hereunder,
subject to the Indemnifying Party's right to appeal an appealable judgment
or order and subject to the limitations in this Section 7. To the extent
that the consent or approval of either the Indemnifying Party or the
Indemnified Party is required in this Section 7(e), any such consent or
approval shall not be unreasonably withheld and will be deemed given in the
absence of a written response within twenty (20) days of any written
request therefor.
(f) LIMITATION ON REMEDIES.
(i) The amount of any Adverse Consequences payable hereunder
shall be net of any Tax benefit derived (or reasonably expected to be
derived) by the Indemnified Party on account of such Adverse
Consequences after taking into account any income or other Tax that
the Indemnified Party may incur as a result of the receipt of any
indemnification payment.
(ii) The parties shall use reasonable efforts to collect the
proceeds of any insurance which would have the effect of reducing an
Adverse Consequence (in which case such proceeds shall reduce such
Adverse Consequences) and, if indemnification payments shall have been
received prior to the collection of such proceeds, shall remit to the
Escrow Agent or Indemnifying Party, as the case may be, the amount of
such proceeds (net of the cost of collection thereof) to the extent of
indemnification payments received in respect of such Adverse
Consequences. To the extent that any Adverse Consequences are reduced
by receipt of payment (i) under insurance policies, or (ii) from third
parties not affiliated with the Indemnified Party, such payments (net
of the expenses of the recovery thereof) shall be
<PAGE>
credited against such Adverse Consequences.
(iii) The Indemnifying Party shall be subrogated to the
Indemnified Party's rights of recovery to the extent of any Adverse
Consequences actually satisfied by the Indemnifying Party; PROVIDED,
HOWEVER, that, if the Turecamo Stockholders are the Indemnifying
Parties, such right of subrogation shall be available unless Moran
Enterprises shall have reasonably concluded that exercise of the right
of subrogation would materially and adversely affect a material
business relationship of Moran Enterprises and its Subsidiaries and
Affiliates taken as a whole. Subject to the foregoing proviso, the
Indemnified Party shall execute and deliver such instruments and
papers as are necessary to assign such rights and assist in the
exercise thereof, including access at reasonable business hours upon
prior notice to relevant books and records of the Indemnified Party.
(iv) (A) Notwithstanding anything in this Agreement to the
contrary, no claim for indemnification may be made by a Moran
Enterprises Indemnified Party and no indemnification shall be required
of the Turecamo Stockholders to the extent that the Adverse
Consequences sustained or incurred by such Moran Enterprises
Indemnified Party for which indemnification is sought were
specifically accrued for as a liability on the Balance Sheet of the
Turecamo Entities as of December 31, 1997 (as evidenced by the records
and work papers supporting such Balance Sheet).
(B) Notwithstanding anything in this Agreement to the
contrary, no claim for indemnification may be made by a Turecamo
Stockholder and no indemnification shall be required of Moran
Enterprises to the extent that the Adverse Consequences sustained or
incurred by such Turecamo Stockholder or Moran Enterprises for which
indemnification is sought were specifically accrued for as a liability
on the balance sheets included within the Most Recent Moran SEC
Reports (as evidenced by the records and work papers supporting such
balance sheets).
(v) No Party(ies) entitled to indemnification hereunder shall
recover more than once in respect of the same Adverse Consequences,
provided that the same Adverse Consequences may result in both
indemnification and adjustment of the EBITDA Threshold pursuant to Sections
7(c) and 7(d).
(g) INDEMNIFICATION OF DIRECTORS AND OFFICERS. To the extent that
each of the Turecamo Entities' articles or certificate of incorporation,
by-laws, resolutions of its board of directors or stockholders, or other
corporate acts, agreements or instruments, each as in effect on the date
hereof, confer rights to indemnification, contribution and/or advancement of
expenses of its directors, officers, agents and others, each of the Turecamo
Entities shall, and Moran Enterprises shall cause each of the Turecamo
Entities to, continue in full force and effect, for a period of seven years
from and after the Closing, all such rights, which rights may not be
diminished by subsequent modification or amendment.
(h) OTHER INDEMNIFICATION PROVISIONS. Notwithstanding Section 7(g),
each of the Turecamo Stockholders hereby agrees that he or she will not make any
claim for indemnification against any of Moran Enterprises or its Subsidiaries
by reason of the fact that he or she was a director, officer, employee, or agent
of any such entity or was serving at the request of any such entity as a
partner, trustee, director, officer, employee, or agent of another entity
(whether such claim is for judgments, damages, penalties, fines, costs, amounts
paid in settlement, losses, expenses, or otherwise and whether such claim is
pursuant to any statute, charter document, bylaw, agreement, or otherwise) with
respect to
<PAGE>
any action, suit, proceeding, complaint, claim, or demand with respect to
which a Moran Enterprises Indemnified Party is entitled to indemnification
hereunder (disregarding, for purposes of this Section 7(h), all deductibles
and caps in Section 7(b)(i)); provided, that pending the resolution of
whether a Moran Enterprises Indemnified Party is so entitled to
indemnification, Moran Enterprises shall undertake the defense of such
Turecamo Stockholder if requested to do so by such Turecamo Stockholder.
(i) EXCLUSIVITY. The foregoing provisions of this Section 7 are the
sole and exclusive means of recovery of a Party hereto or any other Person
entitled to indemnification under this Section 7, and shall preclude the
exercise of any other rights or remedies available to a Party hereto or any
other Person hereunder at law or in equity, except in the case of (i) fraud,
(ii) willful misrepresentation or breach or (iii) a breach or alleged breach of
the covenants of a Party contained herein, in which case the foregoing
provisions of this Section 7 shall NOT be exclusive, but shall be in addition to
any other rights or remedies to which a Party hereto or any other Person
entitled to indemnification under this Section 7 and his, her or its assigns, as
the case may be, may be entitled at law or in equity.
(j) COVERED PERSONS. The obligations of the Turecamo Stockholders
under this Section 7 shall extend, upon the same terms and conditions, to Moran
Enterprises, Moran, their Subsidiaries and to each person, if any, who controls
Moran Enterprises, Moran, and their Subsidiaries and each of their respective
assigns, within the meaning of Section 15 of the Securities Act or Section 20 of
the Securities Exchange Act, and to directors, officers, employees, consultants
and agents of Moran Enterprises, Moran, their Subsidiaries and each of their
respective assigns, and their controlling persons (collectively, the "MORAN
ENTERPRISES INDEMNIFIED PARTIES"). Notwithstanding the foregoing, only Moran
Enterprises shall be entitled to receive any indemnification pursuant to Section
7(b) for any diminution in value of Moran Enterprises and its Subsidiaries
(including the Turecamo Entities) attributable to a breach or alleged breach
subject to indemnification under Section 7(b), and no Moran Stockholder shall be
entitled to receive indemnification for any such diminution in value.
8. TAX MATTERS. The following provisions shall govern the allocation of
responsibility as between Moran Enterprises and the Turecamo Stockholders for
certain tax matters following the Closing Date:
(a) TAX PERIODS ENDING ON OR BEFORE THE CLOSING DATE. The Turecamo
Stockholders shall prepare or cause to be prepared and file or cause to be filed
all Tax Returns for the Turecamo Entities for all periods ending on or prior to
the Closing Date which are filed after the Closing Date including all requisite
state and federal income Tax Returns for the Turecamo Entities for their 1997
fiscal year and for the period from January 1, 1998 through and including the
day prior to the Closing Date. The Turecamo Stockholders shall permit Moran
Enterprises to review and comment on each such Tax Return described in the
preceding sentence prior to filing.
(b) TAX PERIODS BEGINNING BEFORE AND ENDING AFTER THE CLOSING
DATE. Moran Enterprises shall prepare or cause to be prepared and file or
cause to be filed all Tax Returns for the Turecamo Entities for Tax periods
which begin before the Closing Date and end after the Closing Date. Moran
Enterprises shall permit the Turecamo Stockholder Representative to review
and comment on each such Tax Return described in the preceding sentence prior
to filing. The Turecamo Stockholders shall be solely responsible for the
payment of all Taxes based upon or related to income or receipts of the
Turecamo Entities (except to the extent such Taxes are based upon or related
to income or receipts subject to tax in a jurisdiction in which the relevant
Turecamo Entity is not a pass-through entity or is subject to tax on
"built-in gains" under Section 1374 of the Code or comparable provisions of
the applicable Tax laws of such jurisdiction, provided such exception shall
not relieve the Turecamo
<PAGE>
Stockholders from responsibility for Taxes directly related to payment or
receipt of the Balance Sheet Distributions to the extent the Moran Enterprises
Indemnified Parties are entitled to indemnification therefor under Section 5(e))
which relate to the portion of such Taxable Period ending on the day prior to
the Closing Date. For purposes of the preceding sentence, such Taxes for the
portion of such tax period up to and including the day prior to the Closing Date
and for the period from and after the Closing Date shall be determined on the
basis of an interim closing of the books as of the Closing Date, in the manner
prescribed by (or, if not prescribed, consistent with) Sections 1362(e)(1) and
1362 (e)(6)(D) of the Code, as if such taxable period consisted of one taxable
period ending on the day prior to the Closing Date followed by a taxable period
beginning on the Closing Date, provided that the Turecamo Stockholders shall be
solely responsible for all Taxes directly related to payment or receipt of the
Balance Sheet Distributions (whether made prior to, on or after the Closing
Date).
(c) COOPERATION ON TAX MATTERS.
(i) Moran Enterprises and its Subsidiaries and the Turecamo
Stockholders shall cooperate fully, as and to the extent reasonably
requested by the other Parties, in connection with the filing of Tax
Returns pursuant to this Section 8 and any audit, litigation or other
proceeding with respect to Taxes. Such cooperation shall include the
retention and (upon the other party's request) the provision of records and
information which are reasonably relevant to any such audit, litigation or
other proceeding and making employees available on a mutually convenient
basis to provide additional information and explanation of any material
provided hereunder. Moran Enterprises and its Subsidiaries and the
Turecamo Stockholders agree (A) to retain all books and records with
respect to Tax matters pertinent to the Turecamo Entities relating to any
taxable period beginning before the Closing Date until the expiration of
the statute of limitations (and, to the extent notified by Moran
Enterprises or the Turecamo Stockholders, any extensions thereof) of the
respective taxable periods, and to abide by all record retention agreements
entered into with any taxing authority, and (B) to give the other Parties
reasonable written notice prior to transferring, destroying or discarding
any such books and records and, if such other party so requests, to allow
such other party to take possession of such books and records in lieu of
destroying or discarding the same.
(ii) Moran Enterprises and the Turecamo Stockholders further
agree, upon request, to use their best efforts to obtain any certificate or
other document from any Governmental Authority or any other Person as may
be necessary to mitigate, reduce or eliminate any Tax that could be imposed
(including, but not limited to, with respect to the transactions
contemplated hereby) without the imposition of a countervailing Tax or loss
of Tax attributes on or by the Party to whom such request is directed.
(iii) Moran Enterprises and the Turecamo Stockholders further
agree, upon request, to provide the other party with all information that
either party may be required to report pursuant to Section 6043 of the Code
and all Treasury Department Regulations promulgated thereunder.
(iv) Moran Enterprises and the Turecamo Stockholders further
agree that neither Party shall make any assertion, take any position or
perform any act which is inconsistent with or contrary to the conclusion
that the Moran Enterprises Common Stock issued to the Turecamo Stockholders
in exchange for the Turecamo Stock qualifies for nonrecognition treatment
under Section 351 of the Code.
(d) TAX SHARING AGREEMENTS. All tax sharing agreements or similar
agreements with
<PAGE>
respect to or involving the Turecamo Entities shall be terminated as of the
Closing Date and, after the Closing Date, Moran Enterprises and its
Subsidiaries shall not be bound thereby or have any liability thereunder.
(e) CERTAIN TAXES. All transfer, documentary, sales, use, stamp,
registration and other such Taxes and fees (including any penalties and
interest) arising out of the transfer of the Turecamo Stock or the Moran Stock
incurred in connection with this Agreement shall be paid by the respective
Turecamo Stockholders and the Moran Stockholders, respectively, when due, and
the Turecamo Stockholders and the Moran Stockholders, respectively, will, at
their own expense, file all necessary Tax Returns and other documentation with
respect to all such transfer, documentary, sales, use, stamp, registration and
other Taxes and fees, and, if required by applicable law, Moran Enterprises
will, and will cause its affiliates to, join in the execution of any such Tax
Returns and other documentation.
9. TERMINATION.
(a) TERMINATION OF AGREEMENT. Certain of the Parties may terminate
this Agreement as provided below:
(i) the Parties may terminate this Agreement by mutual written
consent at any time prior to the Closing;
(ii) Moran Enterprises may terminate this Agreement by giving
written notice to the Turecamo Stockholders and the Turecamo Entities at
any time prior to the Closing (A) in the event that any of the Turecamo
Stockholders or any of the Turecamo Entities has breached any
representation, warranty, or covenant contained in this Agreement, Moran
Enterprises has notified the Turecamo Stockholders and the Turecamo
Entities of the breach, the breach has continued without cure for a period
of 15 days after the notice of breach, and such breach is reasonably likely
to cause the failure of any condition precedent under Section 6(a), or (B)
if the Closing shall not have occurred on or before November 1, 1998 by
reason of the failure of any condition precedent under Section 6(a) hereof
(unless the failure results primarily from Moran Enterprises, Moran or the
Moran Stockholders breaching any representation, warranty, or covenant
contained in this Agreement);
(iii) Moran Enterprises may terminate this Agreement by
giving written notice to the Turecamo Stockholders on or before September
21, 1998 if Moran Enterprises is not reasonably satisfied with the results
of its continuing business, accounting and legal due diligence regarding
the Turecamo Entities; and
(iv) the Turecamo Stockholders may terminate this Agreement by
giving written notice to Moran Enterprises at any time prior to the Closing
(A) in the event that Moran Enterprises, Moran or any Moran Stockholder has
breached any representation, warranty, or covenant contained in this
Agreement, any of the Turecamo Stockholders has notified Moran Enterprises
of the breach, the breach has continued without cure for a period of 15
days after the notice of breach, and such breach is reasonably likely to
cause the failure of any condition precedent under Section 6(b) or (B) if
the Closing shall not have occurred on or before November 1, 1998, by
reason of the failure of any condition precedent under Section 6(b) hereof
(unless the failure results primarily from any of the Turecamo Stockholders
or the Turecamo Entities breaching any representation, warranty, or
covenant contained in this Agreement).
<PAGE>
(b) EFFECT OF TERMINATION. If any Party terminates this Agreement
pursuant to Section 9(a) above, all rights and obligations of the Parties
hereunder shall terminate without any Liability of any Party to any other Party
(except for any Liability of any Party then in breach). Without limiting the
foregoing, the fee and expense reimbursement provisions of Section 4(g) (but
none of the other provisions of Section 4(g)) shall continue in full force and
effect. Moreover, Sections 5(c) and 10 shall survive any such termination.
10. MISCELLANEOUS.
(a) PRESS RELEASES AND PUBLIC ANNOUNCEMENTS.
(i) The Parties hereto agree that no Party nor any of their
respective representatives or agents shall make any announcement with
respect to the transactions contemplated hereby without the prior written
consent of the others, unless, and to the extent set forth in, the written
opinion of counsel for the subject party, such announcement otherwise is
required by law. Notwithstanding the foregoing, each of the Turecamo
Stockholders and the Turecamo Entities acknowledges that Moran shall not be
required to obtain the prior written consent of the Turecamo Stockholders
and the Turecamo Entities in connection with: (A) the filing by Moran of a
Form 10-K, Form 10-Q, registration statement or other report or schedule
with the Securities and Exchange Commission (the "COMMISSION") which
discloses any or all of the terms of the transactions contemplated hereby
(so long as such disclosure is, in the opinion of counsel to Moran,
required by law); or (B) the filing by Moran of a Form 8-K with the
Commission (in each case, a "FORM 8-K") in connection with the proposed
transaction (so long as such disclosure is, in the opinion of counsel to
Moran, required by law); or (C) the preparation of and distribution of any
offering memorandum in respect of the financing of the transactions
contemplated hereby on terms substantially similar to Schedule
(6)(a)(xviii); PROVIDED, HOWEVER, that Moran agrees that it shall: (i)
submit any such Form 10-K, Form 10-Q, registration statement or other
report or schedule (in each case, if and only to the extent that it relates
to the proposed transaction) and such Form 8-K or offering memorandum to
the Turecamo Entities for their review prior to its filing or release for
dissemination, as the case may be; (ii) provide the Turecamo Entities with
a reasonable opportunity to comment on any such Form 10-K, Form 10-Q,
registration statement or other report or schedule (in each case, if and
only to the extent that it relates to the proposed transaction) and such
Form 8-K or offering memorandum; and (iii) consider in good faith any
comments that the Turecamo Entities may have with respect to any such Form
10-K, Form 10-Q, registration statement or other report or schedule (in
each case, if and only to the extent that it relates to the proposed
transaction) and such Form 8-K or offering memorandum; PROVIDED, FURTHER,
that any final determination with respect to the form or content of any
such Form 10-K, Form 10-Q, registration statement, report or schedule, Form
8-K or offering memorandum shall be within the absolute discretion of
Moran.
(ii) Each of the Turecamo Stockholders and the Turecamo Entities
hereby acknowledges that he, she or it is aware, and that he, she or it has
advised those directors, officers, employees, shareholders, agents or
representatives of the Turecamo Entities who are informed as to the
existence and/or subject matter of this Agreement, that, in general, the
federal securities law prohibits any person who has material, non-public
information relating to Moran or otherwise concerning the matters which are
the subject of this Agreement from purchasing, selling or otherwise trading
securities of Moran or from communicating such information to any other
person under circumstances in which it is reasonably foreseeable that such
person is likely
<PAGE>
to purchase, sell or otherwise trade such securities.
(b) NO THIRD-PARTY BENEFICIARIES. Except as set forth in Section
7(g) and Section 7(j), this Agreement shall not confer any rights or remedies
upon any Person other than the Parties and their respective successors and
permitted assigns.
(c) ENTIRE AGREEMENT. This Agreement (including the documents
referred to herein), together with the Confidentiality Agreement, dated as of
January 29, 1998 between Moran and the Turecamo Entities, constitute the entire
agreement among the Parties and supersede any prior understandings, agreements,
or representations by or among the Parties, written or oral (including the
letter agreement, dated May 19, 1998, between Moran and the Turecamo Entities,
as extended by the letters dated July 14, 1998, July 29, 1998, August 7, 1998,
August 14, 1998, August 18, 1998 and August 28, 1998), to the extent they
related in any way to the subject matter hereof.
(d) SUCCESSION AND ASSIGNMENT. This Agreement shall be binding upon
and inure to the benefit of the Parties named herein and their respective
successors and permitted assigns. No Party may assign either this Agreement or
any of his or its rights, interests, or obligations hereunder without the prior
written approval of the other Parties; PROVIDED, HOWEVER, that Moran Enterprises
may (i) concurrently with, or following, the Closing, collaterally assign any or
all of its rights and interests hereunder to one or more lenders of Moran
Enterprises and/or its Subsidiaries, or (ii) following the Closing, assign any
or all of its rights, interests and obligations in connection with a Transaction
described in Section 2(g)(v)(A).
(e) COUNTERPARTS; FACSIMILE EXECUTION. This Agreement may be
executed in one or more counterparts, each of which shall be deemed an original
but all of which together will constitute one and the same instrument.
Facsimile execution of this Agreement shall be valid and binding for all
purposes.
(f) HEADINGS. The section headings contained in this Agreement are
inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
(g) NOTICES. All notices, requests, demands, claims, and other
communications hereunder will be in writing. Any notice, request, demand,
claim, or other communication hereunder shall be deemed duly given if (and then
two business days after) it is sent by registered or certified mail, return
receipt requested, postage prepaid, and addressed to the intended recipient as
set forth below:
If to the Turecamo Stockholders, to each of them at the address set forth
on Schedule 1, or if to the Turecamo Stockholder Representative, to him or her
at the address set forth on Schedule 1,
WITH A COPY TO:
Cummings & Lockwood
Four Stamford Plaza
Stamford, Connecticut 06904
Fax: (203) 351-4499
Attention: Vincent M. Kiernan, Esq.
IF TO MORAN ENTERPRISES, MORAN OR A MORAN STOCKHOLDER, TO HIM, HER OR IT:
c/o Moran Transportation Company
<PAGE>
Two Greenwich Plaza
Greenwich, Connecticut 06830
Fax: 203-625-7857
Attention: Chairman of the Board
cc: General Counsel
WITH A COPY TO:
Finn Dixon & Herling LLP
One Landmark Square
Suite 1400
Stamford, Connecticut 06901
Fax: 203-348-5777
Attention: Charles J. Downey III, Esq. and Michael J. Herling, Esq.
Any Party may send any notice, request, demand, claim, or other communication
hereunder to the intended recipient at the address set forth above using any
other means (including personal delivery, expedited courier, messenger service,
telecopy, telex, ordinary mail, or electronic mail), but no such notice,
request, demand, claim, or other communication shall be deemed to have been duly
given unless and until it actually is received by the intended recipient. Any
Party may change the address to which notices, requests, demands, claims, and
other communications hereunder are to be delivered by giving the other Parties
notice in the manner herein set forth.
(h) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE DOMESTIC LAWS OF THE STATE OF NEW YORK WITHOUT GIVING
EFFECT TO ANY CHOICE OR CONFLICT OF LAW PROVISION OR RULE (WHETHER OF THE STATE
OF NEW YORK OR ANY OTHER JURISDICTION) THAT WOULD CAUSE THE APPLICATION OF THE
LAWS OF ANY JURISDICTION OTHER THAN THE STATE OF NEW YORK.
(i) AMENDMENTS AND WAIVERS. No amendment of any provision of this
Agreement shall be valid unless the same shall be in writing and signed by the
Parties. No waiver by any Party of any default, misrepresentation, or breach of
warranty or covenant hereunder, whether intentional or not, shall be deemed to
extend to any prior or subsequent default, misrepresentation, or breach of
warranty or covenant hereunder or affect in any way any rights arising by virtue
of any prior or subsequent such occurrence.
(j) SEVERABILITY. Any term or provision of this Agreement that is
invalid or unenforceable in any situation in any jurisdiction shall not affect
the validity or enforceability of the remaining terms and provisions hereof or
the validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction.
(k) EXPENSES. Each of the Parties will bear his or its own costs and
expenses (including investment banking, accounting and legal fees and expenses)
incurred in connection with this Agreement and the transactions contemplated
hereby; PROVIDED, HOWEVER, that the Turecamo Entities, or in the event not paid
prior to Closing, Moran Enterprises, shall, from and after the Closing, be
responsible for and pay, in accordance with the instructions of the Turecamo
Entities and against invoices or statements for services rendered, an aggregate
amount up to two million dollars ($2,000,000) of the investment bankers',
attorneys' and accountants' and other fees and expenses payable by the
<PAGE>
Turecamo Stockholders or the Turecamo Entities to Beacon, Cummings & Lockwood
and Urbach Kahn & Werlin PC in connection with the negotiation, preparation
and execution of this Agreement and the consummation of the transactions
contemplated hereby (the "COVERED CLOSING COSTS"), and the Turecamo
Stockholders shall pay all investment bankers', attorneys', accountants' and
other fees and expenses of the Turecamo Stockholders and the Turecamo
Entities related to the negotiation, preparation and execution of this
Agreement and the consummation of the transactions contemplated hereby, in
excess of two million dollars ($2,000,000). Payment of the Covered Closing
Costs shall be in addition to the Aggregate Distributions and shall not
reduce the purchase price.
(l) CONSTRUCTION. The Parties have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the Parties and no presumption or burden of proof shall
arise favoring or disfavoring any Party by virtue of the authorship of any of
the provisions of this Agreement. Any reference to any federal, state or local
statute or law shall be deemed also to refer to all rules and regulations
promulgated thereunder, unless the context requires otherwise. The word
"including" shall mean including without limitation. The Parties intend that
each representation, warranty, and covenant contained herein shall have
independent significance. If any Party has breached any representation,
warranty, or covenant contained herein in any respect, the fact that there
exists another representation, warranty, or covenant relating to the same
subject matter (regardless of the relative levels of specificity) which the
Party has not breached shall not detract from or mitigate the fact that the
Party is in breach of the first representation, warranty, or covenant. Nothing
in any disclosure schedule shall be deemed adequate to disclose an exception to
a representation or warranty made herein, however, unless the applicable
disclosure schedule identifies the exception with particularity. Any disclosure
in any one section of a disclosure schedule shall constitute disclosure as to
another section of such disclosure schedule, so long as the relevance of such
disclosure to the latter section is reasonably apparent from the face of the
disclosure schedule, and so long as the applicable disclosure identifies the
exception with particularity. Notwithstanding the foregoing, the Parties make
no representation or warranty as to the accuracy or completeness of any
financial projections contained in any materials distributed to either party in
contemplation of or in connection with the transactions contemplated hereby.
(m) INCORPORATION OF EXHIBITS, ANNEXES, AND SCHEDULES. The Exhibits,
Annexes, and Schedules identified in this Agreement are incorporated herein by
reference and made a part hereof.
(n) SPECIFIC PERFORMANCE. Each of the Parties acknowledges and
agrees that the other Parties would be damaged irreparably in the event any of
the provisions of this Agreement are not performed in accordance with their
specific terms or otherwise are breached. Accordingly, each of the Parties
agrees that the other Parties shall be entitled to an injunction or injunctions
to prevent breaches of the provisions of this Agreement and to enforce
specifically this Agreement and the terms and provisions hereof in any action
instituted in any court of the United States or any state thereof having
jurisdiction over the Parties and the matter (subject to the provisions set
forth in Section 10(o) below), in addition to any other remedy to which they may
be entitled, at law or in equity.
(o) ARBITRATION. Any dispute ("DISPUTE") arising out of or relating
to this Agreement or the parties' respective rights and duties hereunder ((other
than disputes under Sections 2(g)(ii)(C), 5(c), 5(d) and 7(c)(ii)(A)) shall be
resolved in accordance with the procedures specified in this Section 10(o),
which shall be the sole and exclusive procedures for the resolution of any such
Disputes.
<PAGE>
(i) Either Moran Enterprises or the Turecamo Stockholder
Representative (on behalf of any or all of the Turecamo Stockholders) may
at any time deliver to the other a written notice identifying a Dispute
(the "DISPUTE NOTICE"). The Dispute Notice shall initiate the dispute
resolution mechanism contemplated by this Section 10(o). Within fifteen
(15) days after delivery of the Dispute Notice, the receiving party shall
submit to the other a written response. The Dispute Notice and response
thereto shall state with particularity the facts and conditions giving rise
to the Dispute and shall include (i) a statement of each party's position
and a summary of arguments supporting that position and (ii) in the case of
Moran Enterprises, Moran and the Moran Stockholders, the name and title of
the persons who will represent those parties in the negotiations
contemplated by Section 10(o)(ii) below (the "MORAN DESIGNEE").
(ii) Within thirty (30) days after delivery of the Dispute
Notice, the Moran Designee and the Turecamo Stockholder Representative
shall attempt in good faith to resolve the Dispute and shall meet at a
mutually acceptable time and place, and thereafter as they reasonably deem
necessary, to attempt to resolve the Dispute. In attempting to resolve the
dispute, the parties may consult with a neutral third party mediator if
both the Moran Designee and the Turecamo Stockholder Representative agree
in writing. All negotiations pursuant to this Section 10(o)(ii) shall be
confidential and shall be treated as compromise and settlement negotiations
for purposes of applicable rules of evidence.
(iii) Any dispute arising out of or relating to this contract
or the breach, termination or validity thereof (except for disputes
submitted to the Arbitrating Accountant under Sections 2(g)(ii)(C) and
7(c)(ii)(A)) which has not been resolved by negotiation within ninety (90)
days after delivery of the Dispute Notice, shall be settled by arbitration
in accordance with the CPR Rules for Non-Administered Arbitration in effect
on the date of this Agreement, by three independent and impartial
arbitrators, of whom each party shall appoint one and the two arbitrators
so selected shall select the third; provided, however, that if either party
will not participate in negotiations, the other party may initiate
arbitration before expiration of the above period. The arbitration shall
be governed by the Federal Arbitration Act, 9 U.S.C. Sections 1-16, to the
exclusion of state laws inconsistent therewith, and judgment upon the award
rendered by the arbitrators may be entered by any court having jurisdiction
thereof. The place of arbitration shall be New York, New York. The
arbitrators are not empowered to award damages in excess of compensatory
damages and each party hereby irrevocably waives any right to recover such
damages with respect to any dispute resolved by arbitration under this
Section 10(o). The costs of the arbitration specified in this Section
10(o), including the fees and expenses of the arbitrators and the
attorneys' fees and accountants' fees of each party shall be borne by the
losing party, as determined by the arbitrators.
(iv) This Section 10(o) shall not apply to any disputes under
Sections 2(g)(ii)(C) and 7(c)(ii)(A), which are to be resolved by the
Arbitrating Accountant as set forth therein. This Section 10(o) shall not
apply to breaches or alleged breaches of Sections 5(c) and (d), as to which
a Party may enforce any rights or seek any remedies available to it at law
or in equity.
(v) The procedures specified in this Section 10(o) shall be the
sole and exclusive procedures for the resolution of a Dispute (other than
disputes submitted to the Arbitrating Accountant under Sections 2(g)(ii)(C)
and 7(c)(ii)(A); PROVIDED, HOWEVER, that a Party may, without prejudice to
the above procedures, seek a preliminary injunction or other provisional
judicial
<PAGE>
relief, if in its sole judgment such action is necessary to avoid
irreparable damage or to preserve the status quo.
(p) TURECAMO STOCKHOLDER REPRESENTATIVE.
(i) By written notice to Moran Enterprises signed by each
Turecamo Stockholder and delivered within ten (10) days after the date hereof,
the Turecamo Stockholders shall appoint a representative (the "TURECAMO
STOCKHOLDER REPRESENTATIVE").
(ii) In the event the Turecamo Stockholder Representative shall
cease to hold shares of Moran Enterprises Common Stock or shall die or resign or
otherwise terminate his or her status as such, his or her successor shall be any
Turecamo Stockholder or spouse thereof appointed by the Turecamo Stockholder
Representative or, in the case of the death of the Turecamo Stockholder
Representative or where the Turecamo Stockholder Representative fails to appoint
a successor after a vacancy has been created, elected by the vote or written
consent of a majority in interest of the Turecamo Stockholders (based upon the
pro rata interests in shares of Moran Enterprises Common Stock, as set forth on
Schedule 1 hereto). If the Turecamo Stockholders fail for any reason to elect a
new Turecamo Stockholder Representative, then during any period in which a
vacancy exists, a person who shall be designated by written notice to Moran
Enterprises signed by each Turecamo Stockholder and delivered within ten (10)
days after the date hereof shall serve as the Turecamo Stockholder
Representative until a new Turecamo Stockholder Representative is elected. All
decisions of the Turecamo Stockholder Representative shall be binding upon the
Turecamo Stockholders. The Turecamo Stockholder Representative shall keep the
Turecamo Stockholders reasonably informed of his decisions of a material nature.
The Turecamo Stockholder Representative shall not be subject to removal except
upon permanent disability or commission of a crime.
(iii) The Turecamo Stockholder Representative is authorized
to take any action deemed by him or her appropriate or necessary to carry out
the provisions of, and to determine the rights of the Turecamo Stockholders
under this Agreement. Upon the Closing and in consideration of the payments by
Moran Enterprises hereunder, each Turecamo Stockholder shall be deemed to have
irrevocably appointed the Turecamo Stockholder Representative as his or her
attorney-in-fact to bind each Turecamo Stockholder and to contest, settle,
compromise or otherwise dispose of any claim made by a Moran Enterprises
Indemnified Party in accordance with this Agreement. This power of attorney is
coupled with an interest and irrevocable. Without limiting the foregoing, the
Turecamo Stockholder Representative shall serve as the agent of the Turecamo
Stockholders for all purposes related to this Agreement, including without
limitation service of process upon the Turecamo Stockholders. By his or her
execution of this Agreement, the Turecamo Stockholder Representative accepts and
agrees to diligently discharge the duties and responsibilities of the Turecamo
Stockholder Representative set forth in this Agreement. The authorization and
designation of the Turecamo Stockholder Representative under this Section 10(p)
shall be binding upon the successors and assigns of each Turecamo Stockholder.
Each of Moran Enterprises and its Subsidiaries and Affiliates and the Escrow
Agent shall be entitled to rely upon such authorization and designation and
shall be fully protected in dealing with the Turecamo Stockholder
Representative, and shall have no duty to inquire into the authority of any
person reasonably believed by any of them to be the Turecamo Stockholder
Representative.
(iv) The Turecamo Stockholder Representative (A) shall not be
liable to any of the Turecamo Stockholders for any error of judgment, act done
or omitted by him or her in good faith, or
<PAGE>
mistake of fact or law unless caused by his or her own gross negligence,
recklessness or willful misconduct; (B) shall be entitled to treat as genuine
any letter or other document furnished to him or her by Moran Enterprises or
any of the Turecamo Stockholders and believed by him or her to be genuine and
have been signed and presented by the proper party or parties; and (C) shall
be reimbursed by the other Turecamo Stockholders for counsel fees and other
out-of-pocket expenses incurred by the Turecamo Stockholder Representative in
connection with this Agreement. The Turecamo Stockholder Representative
shall not be entitled to any compensation for services hereunder.
* * *
(Remainder of Page Intentionally Left Blank)
<PAGE>
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement on as
of the date first above written.
MORAN ENTERPRISES:
MORAN ENTERPRISES CORPORATION
By: /s/ Paul R. Tregurtha
-------------------------------
Name: Paul R. Tregurtha
Title: Chairman
MORAN:
MORAN TRANSPORTATION COMPANY
By: /s/ Paul R. Tregurtha
-------------------------------
Name: Paul R. Tregurtha
Title: Chairman
<PAGE>
MORAN STOCKHOLDERS:
LAKES SHIPPING CO., INC.
By: /s/ Paul R. Tregurtha
-------------------------------
Name: Paul R. Tregurtha
Title: Vice Chairman
/s/ James R. Barker
------------------------------------
James R. Barker
/s/ Karen E. Barker
------------------------------------
Karen E. Barker
/s/ James A. Barker
------------------------------------
James A. Barker
/s/ Mark W. Barker
------------------------------------
Mark W. Barker
LAFAYETTE AMERICAN BANK,
CUSTODIAN FOR ANDREW P. LANGLOIS IRA ROLLOVER
By: /s/ Charles P. Gallagher
-------------------------------
Name: Charles P. Gallagher
Title: Vice President
/s/ Malcolm W. MacLeod
------------------------------------
Malcolm W. MacLeod
/s/ Alan L. Marchisotto
------------------------------------
Alan L. Marchisotto
/s/ Edmond J. Moran, Jr.
------------------------------------
Edmond J. Moran, Jr.
/s/ Paul R. Tregurtha
------------------------------------
Paul R. Tregurtha
TURECAMO ENTITIES:
<PAGE>
TURECAMO MARITIME, INC.
By: /s/ Gregory F. McGinty
-------------------------------
Name: Gregory F. McGinty
Title: President
WHITE STACK MARITIME CORP.
By: /s/ Gregory F. McGinty
-------------------------------
Name: Gregory F. McGinty
Title: Vice President
TURECAMO OF SAVANNAH, INC.
By: /s/ Gregory F. McGinty
-------------------------------
Name: Gregory F. McGinty
Title: Vice President
TURECAMO ENVIRONMENTAL SERVICES, INC.
By: /s/ Gregory F. McGinty
-------------------------------
Name: Gregory F. McGinty
Title: Vice President
<PAGE>
TURECAMO STOCKHOLDERS:
/s/ Mary DiGiovanni
------------------------------------
Mary DiGiovanni
/s/ Joan McGinty
------------------------------------
Joan McGinty
/s/ Helen Newman
------------------------------------
Helen Newman
/s/ Kathleen A. Nistad
------------------------------------
Kathleen A. Nistad
/s/ Bart Turecamo, Jr.
------------------------------------
Bart Turecamo, Jr.
/s/ Margaret M. Turecamo
------------------------------------
Margaret M. Turecamo
<PAGE>
APPENDIX A
DEFINITIONS
As used herein, the following terms have the respective meanings set forth
below:
"ABS" means the American Bureau of Shipping.
"ADVERSE CONSEQUENCES" means all actions, suits, proceedings, hearings,
investigations, charges, complaints, claims, demands, injunctions, judgments,
orders, decrees, rulings, damages, dues, penalties, fines, costs, amounts paid
in settlement, Liabilities, obligations, Taxes, liens, losses, lost value
(excluding the time value of money), expenses, and fees, including court costs
and attorneys' fees and expenses.
"ADJUSTMENT SCHEDULE" has the meaning set forth in Section 2(g)(ii)(A)
above.
"AFFILIATE" has the meaning set forth in Rule 12b-2 of the regulations
promulgated under the Securities Exchange Act.
"AFFILIATED GROUP" means any affiliated group within the meaning of Code
Section 1504(a) or any similar group defined under a similar provision of state
or local law.
"AGGREGATE DISTRIBUTIONS" means, collectively, (i) the Balance Sheet
Distributions, (ii) the Tax Distributions and (iii) the permitted distribution
of cash in the amount of $1,904,000 which was distributed on or prior to April
30, 1998 by the Turecamo Entities to the Turecamo Stockholders.
"AGGREGATE OFFSET AMOUNT" has the meaning set forth in Section 7(b)(i)(C)
above.
"AGREEMENT" has the meaning set forth in the preface above.
"ANCILLARY AGREEMENTS" means the Cash Escrow Agreement, the Stock Escrow
Agreement, the Stockholders Agreement, the Releases and the Distribution
Agreements.
"ARBITRATING ACCOUNTANT" has the meaning set forth in Section 2(g)(ii)(C)
above.
"BALANCE SHEET DISTRIBUTION" means the distribution to the Turecamo
Stockholders or entities controlled by them, directly or indirectly, of (i) cash
in the amount of $3,532,000, (ii) the interest of the Turecamo Entities in
Columbia Coastal, the Charleston, South Carolina property and a certain real
estate accounts receivable relating to the Bonnie Heights, Brooklyn property (in
each case, subject to all Liabilities associated with such assets), (iii) the
Power Packs used in the business of Columbia Coastal and any associated
Liabilities and (iv) the automobiles listed on Schedule 1(b) hereto and any
associated Liabilities.
"BEACON" has the meaning set forth in Section (w) of Annex II below.
"BUSINESS DAY" means each Monday, Tuesday, Wednesday, Thursday and Friday
which is not a
<PAGE>
day in which banking institutions in New York, New York are authorized or
obligated by law or executive order to close.
"CASH ESCROW ACCOUNT" has the meaning set forth in Section 2(f) above.
"CASH ESCROW AGREEMENT" has the meaning set forth in Section 2(f) above.
"CASH PORTION" has the meaning set forth in the recitals above.
"CLOSING" has the meaning set forth in Section 2(c) above.
"CLOSING DATE" has the meaning set forth in Section 2(c) above.
"CODE" means the Internal Revenue Code of 1986, as amended.
"COLUMBIA COASTAL" means Columbia Coastal Transport, Inc., Columbia Coastal
Transport, LLC, Columbia Leasing, LLC, and Columbia Southern Container Services,
Inc..
"COMMISSION" has the meaning set forth in Section 10(a)(i) above.
"CONFIDENTIAL INFORMATION" means any information concerning the businesses
and affairs of the Turecamo Entities and Moran Enterprises, Moran and their
Subsidiaries and Affiliates that is not already generally available to the
public at the time of disclosure and shall include any and all information
relating to the price and terms of this Agreement.
"CONTRACTS" has the meaning set forth in Section (o) Annex II below.
"COVERED CLOSING COSTS" has the meaning set forth in Sections 10(k) above.
"DISPUTE" has the meaning set forth in Section 10(o) above.
"DISPUTE NOTICE" has the meaning set forth in Section 10(o)(i) above.
"DISTRIBUTION" has the meaning set forth in Section 2(e)(ii) above.
"DISTRIBUTION AGREEMENT" has the meaning set forth in Section 6(a)(xxiii)
above.
"DISTRIBUTION ENTITY" has the meaning set forth in Section 6(a)(xxi) above.
"EARNED SHARES" has the meaning set forth in Section 2(g)(iv) above.
"EARNOUT HOLDERS" has the meaning set forth in Section 2(g)(i) above.
"EARNOUT PERIOD" has the meaning set forth in Section 2(g)(ii) above.
"EMPLOYEE BENEFIT PLAN" means any (a) Employee Pension Benefit Plan
(including any Multiemployer Plan), (b) Employee Welfare Benefit Plan, or (c)
fringe benefit plan or program whether
<PAGE>
written or oral.
"EMPLOYEE PENSION BENEFIT PLAN" has the meaning set forth in ERISA Section
3(2).
"EMPLOYEE WELFARE BENEFIT PLAN" has the meaning set forth in ERISA Section
3(1).
"ENVIRONMENTAL CLAIM" has the meaning set forth in Section (u) of Annex II
below.
"ENVIRONMENTAL LAWS" has the meaning set forth in Section (u) of Annex II
below.
"ENVIRONMENTAL PERMIT" has the meaning set forth in Section (u) of Annex II
below.
"EBITDA" has the meaning set forth in Section 2(g)(ii) above.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"ESCROW AGENT" has the meaning set forth in Section 2(f) above.
"ESCROW CASH PORTION" has the meaning set forth in Section 2(f) above.
"ESCROW SHARES" has the meaning set forth in Section 2(g)(i) above.
"EXCLUDED LIABILITIES" means (i) any Liabilities associated with the assets
comprising the Balance Sheet Distributions and (ii) any Liabilities of, relating
to, or arising out of, Columbia Coastal.
"EXCLUSIVITY PERIOD" has the meaning set forth in Section 4(g) above.
"FINANCIAL STATEMENTS" has the meaning set forth in Section (e) of Annex II
below.
"FORM 8-K" has the meaning set forth in Section 10(a) above.
"GAAP" means United States generally accepted accounting principles as in
effect from time to time.
"GOVERNMENTAL AUTHORITY" means any federal, state, municipal or other
governmental or quasi-governmental department, commission, board, bureau, agency
or instrumentality, or any court of the United States of America or any
political subdivision thereof, or of any other country.
"HARDY HARRIS" has the meaning set forth in Section (w) of Annex V below.
"HART-SCOTT-RODINO ACT" means the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended.
"INDEBTEDNESS" of any Person means, in each case whether or not accrued on
the books of such Person, (a) all indebtedness of such Person for borrowed money
or for the deferred purchase price of property or services, (b) all obligations
of such Person upon which interest charges are customarily paid or which are
evidenced by notes, bonds, debentures, credit agreements or similar agreements
or
<PAGE>
investments, (c) all obligations of such Person under conditional sale or
other title retention agreements relating to property or assets purchased by
such Person, (d) all obligations of such Person under capitalized leases, (e)
all obligations of such Person in respect of acceptances, letters of credit or
letters of guaranty issued or created for the account of such Person, and (f)
all liabilities secured by any Security Interest on any property owned by such
Person, whether or not such Person has assumed or otherwise become liable for
the payment thereof.
"INDEMNIFIED PARTY" has the meaning set forth in Section 7(e)(i) above.
"INDEMNIFYING PARTY" has the meaning set forth in Section 7(e)(i) above.
"INTELLECTUAL PROPERTY" means (a) all inventions (whether patentable or
unpatentable and whether or not reduced to practice), all improvements thereto,
and all patents, patent applications, and patent disclosures, together with all
reissuances, continuations, continuations-in-part, revisions, extensions, and
reexaminations thereof, (b) all trademarks, service marks, trade dress, logos,
trade names, and corporate names, together with all translations, adaptations,
derivations, and combinations thereof and including all goodwill associated
therewith, and all applications, registrations, and renewals in connection
therewith, (c) all copyrightable works, all copyrights, and all applications,
registrations, and renewals in connection therewith, (d) all mask works and all
applications, registrations, and renewals in connection therewith, (e) all trade
secrets and confidential business information (including research and
development, formulas, compositions, manufacturing and production processes and
techniques, technical data, designs, drawings, diagrams, specifications,
customer and supplier lists, catalogs, pricing and cost information, and
business and marketing plans and proposals), (f) all computer software
(including data and related documentation) (whether purchased or internally
developed), (g) all information systems and management procedures, (h) all other
similar proprietary rights, and (i) all copies and tangible embodiments thereof
(in whatever form or medium).
"KNOWLEDGE" means (i) with respect to the Turecamo Entities, the knowledge
that Gregory F. McGinty, Peter J. Nistad, John Armstrong, and the senior
employees of the Turecamo Entities having responsibility for a particular matter
have, or in the exercise of their duties reasonably should have had, (ii) with
respect to the Turecamo Stockholders, the actual knowledge of such Turecamo
Stockholder, (iii) with respect to Moran, the knowledge that Paul R. Tregurtha,
Malcolm W. MacLeod, Jeffrey J. McAulay, Alan L. Marchisotto and the senior
employees of Moran having responsibility for a particular matter have, or in the
exercise of their duties reasonably should have had, and (iv) with respect to
the Moran Stockholders, the actual knowledge of such Moran Stockholder.
"LAW" means any foreign, federal, state or local constitution, statute,
regulation, rule, ordinance, code, plan, injunction, order, decree, ruling,
charge or treaty.
"LEASED REAL PROPERTY" has the meaning set forth in Section (j)(ii) of
Annex II below.
"LEASES" has the meaning set forth in Section (j)(ii) of Annex II below.
"LIABILITY" means any liability (whether known or unknown, whether asserted
or unasserted, whether absolute or contingent, whether accrued or unaccrued,
whether liquidated or unliquidated, and whether due or to become due), including
any liability for Taxes.
<PAGE>
"MARITIME" has the meaning set forth in the preface above.
"MATERIAL ADVERSE EFFECT" means a material adverse effect on the business,
assets, properties, operations, results of operations, condition (financial or
otherwise) or prospects of a Person or Persons, as the context requires
(including, in the case of Turecamo, the Turecamo Entities, taken as a whole,
and in the case of Moran, Moran and its Subsidiaries, taken as a whole).
"MATERIALS OF ENVIRONMENTAL CONCERN" has the meaning set forth in Section
(u) of Annex II below.
"MORAN" has the meaning set forth in the preface above.
"MORAN BUSINESS" has the meaning set forth in the recitals.
"MORAN CONTRACTS" has the meaning set forth in Section (o) of Annex V
below.
"MORAN DESIGNEE" has the meaning set forth in Section 10(o)(i) above.
"MORAN DISCLOSURE SCHEDULE" has the meaning set forth in Section 3(e)
above.
"MORAN EMPLOYEE BENEFIT PLANS" has the meaning set forth in Section (t) of
Annex V below.
"MORAN ENTERPRISES" has the meaning set forth in the preface above.
"MORAN ENTERPRISES COMMON STOCK" has the meaning set forth in Section (d)
of Annex IV below.
"MORAN ENTERPRISES DISCLOSURE SCHEDULE" has the meaning set forth in
Section 3(d) above.
"MORAN ENTERPRISES INDEMNIFIED PARTY" has the meaning set forth in Section
7(j) above.
"MORAN ENTERPRISES PREFERRED STOCK" has the meaning set forth in Section
(d) of Annex IV below.
"MORAN LEASED REAL PROPERTY" has the meaning set forth in Section (j)(ii)
of Annex V below.
"MORAN LEASES" has the meaning set forth in Section (j)(ii) of Annex V
below.
"MORAN POSITION" has the meaning set forth in Section 2(g)(ii)(C) above.
"MORAN SEC REPORTS" has the meaning set forth in Section (e) of Annex V
below.
"MORAN STOCK" has the meaning set forth in the recitals.
"MORAN STOCKHOLDER" has the meaning set forth in the preface above.
"MORAN STOCKHOLDER DISCLOSURE SCHEDULE" has the meaning set forth in
Section 3(c) above.
"MORAN TANGIBLE PROPERTY" has the meaning set forth in Section (l) of Annex
V below.
<PAGE>
"MORAN TOWING" means Moran Towing Corporation, a New York corporation.
"MORAN VESSELS" has the meaning set forth in Section (m) of Annex V below.
"MOST RECENT BALANCE SHEET" means the balance sheet contained within the
Most Recent Financial Statements.
"MOST RECENT FORM 10-K" has the meaning set forth in Section (e) of Annex V
below.
"MOST RECENT FINANCIAL STATEMENTS" has the meaning set forth in Section (e)
of Annex II below.
"MOST RECENT FISCAL MONTH END" has the meaning set forth in Section (e) of
Annex II below.
"MOST RECENT FISCAL YEAR END" has the meaning set forth in Section (e) of
Annex II below.
"MOST RECENT FORMS 10-Q" has the meaning set forth in Section (e) of Annex
V below.
"MOST RECENT SEC REPORTS" has the meaning set forth in Section (e) of Annex
V below.
"MULTIEMPLOYER PLAN" has the meaning set forth in ERISA Section 3(37).
"NONCOMPETITION PERIOD" has the meaning set forth in Section 5(d) above.
"ORDINARY COURSE OF BUSINESS" means the ordinary course of business
consistent with past custom and practice (including with respect to quantity and
frequency).
"PARTIES" has the meaning set forth in the preface above.
"PERMITS" has the meaning set forth in Section (h)(ii) of Annex II below.
"PERSON" means an individual, a partnership, a corporation, a limited
liability company, an association, a joint stock company, a trust, a joint
venture, an unincorporated organization, or a governmental entity (or any
department, agency, or political subdivision thereof).
"RELATED PARTIES" has the meaning set forth in Section 6(a)(xxi) above.
"RELEASE" means a Release substantially in the form of Exhibit E attached
hereto.
"RESTATED CERTIFICATE" means the Amended and Restated Certificate of
Incorporation of Moran Enterprises, substantially in the form of Exhibit I
attached hereto.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SECURITIES EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
"SECURITY INTEREST" means any adverse claim, mortgage, pledge, lien,
encumbrance, option, restriction on transfer, easement, right of way, matter of
survey, charge, or other security interest.
<PAGE>
"SETTLEMENT NOTICE" has the meaning set forth in Section 7(e)(iii) above.
"STOCK ESCROW ACCOUNT" has the meaning set forth in Section 2(g)(i) above.
"STOCK ESCROW AGREEMENT" has the meaning set forth in Section 2(g)(i)
above.
"STOCKHOLDERS AGREEMENT" means the Stockholders Agreement, to be dated as
of the Closing Date, by and among Moran Enterprises, the Moran Stockholders, all
holders of options to purchase Moran Enterprises Common Stock and the Turecamo
Stockholders, substantially in the form of Exhibit J hereto.
"SUBSIDIARY" means any Person with respect to which a specified Person (or
a Subsidiary thereof) owns a majority of the voting securities or has the power
to vote or direct the voting of sufficient securities to elect a majority of the
directors (or persons exercising similar functions).
"TAKEOVER" has the meaning set forth in Section 4(g)(i) above.
"TAKEOVER PROPOSAL" has the meaning set forth in Section 4(g)(i) above.
"TANGIBLE PROPERTY" has the meaning set forth in Section (l) of Annex II
below.
"TAX" means any foreign, federal, state or local income, gross receipts,
license, payroll, employment, excise, severance, stamp, occupation, premium,
windfall profits, environmental (including taxes under Code Section 59A),
customs duties, capital stock, franchise, profits, withholding, social security
(or similar), unemployment, disability, real property, personal property, sales,
use, transfer, registration, value added, alternative or add-on minimum,
estimated, or other tax of any kind whatsoever, including any interest, penalty,
or addition thereto, whether disputed or not.
"TAX DISTRIBUTION" shall mean cash distributions to the Turecamo
Stockholders for payment of Taxes by the Turecamo Stockholders in respect of the
income and gain of the Turecamo Entities for the period from January 1, 1998
through and including the day prior to the Closing of the Closing (excluding any
income or gain directly related to payment or receipt of the Balance Sheet
Distributions), which distributions shall be computed at the highest combined
effective tax rate applicable to a Turecamo Stockholder.
"TAX LIABILITY" has the meaning set forth in Section (i)(iii) of Annex II
below.
"TAX RETURN" means any return, declaration, report, claim for refund, or
information return or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof.
"TES" has the meaning set forth in the preface above.
"THIRD PARTY" means any party other than the Parties.
"THIRD PARTY CLAIM" has the meaning set forth in Section 7(e)(i) above.
<PAGE>
"TOS" has the meaning set forth in the preface above.
"TRANSACTION" has the meaning set forth in Section 2(g)(v) above.
"TURECAMO BUSINESS" has the meaning set forth in the recitals above.
"TURECAMO DISCLOSURE SCHEDULE" has the meaning set forth in Section 3(b)
above.
"TURECAMO EMPLOYEE BENEFIT PLANS" has the meaning set forth in Section (t)
of Annex II below.
"TURECAMO ENTITIES" has the meaning set forth in the preface above.
"TURECAMO PERMITTED TRANSFEREES" shall have the meaning set forth in the
Stockholders Agreement.
"TURECAMO STOCK" has the meaning set forth in the recitals above.
"TURECAMO STOCKHOLDER DISCLOSURE SCHEDULE" has the meaning set forth in
Section 3(a) above.
"TURECAMO STOCKHOLDER POSITION" has the meaning set forth in Section
2(g)(ii)(C) above.
"TURECAMO STOCKHOLDER REPRESENTATIVE" has the meaning set forth in Section
10(p)(i) above.
"TURECAMO STOCKHOLDERS" has the meaning set forth in the preface above.
"TURECAMO STOCKHOLDER TAX LIABILITY" has the meaning set forth in Section
7(b)(i)(A) above.
"USCG" has the meaning set forth in Section (m) of Annex II below.
"VESSELS" has the meaning set forth in Section (m) of Annex II below.
"WHITE STACK" has the meaning set forth in the preface above.
<PAGE>
ANNEX I
-------
REPRESENTATIONS AND WARRANTIES OF EACH TURECAMO STOCKHOLDER
-----------------------------------------------------------
(a) TITLE TO SHARES. Such Turecamo Stockholder is the record and
beneficial owner of the shares of Turecamo Stock set forth opposite such
Turecamo Stockholder's name on Schedule 1 hereto, free and clear of any Security
Interest, and has full power and authority to convey such shares set forth
opposite such Turecamo Stockholder's name on Schedule 1 hereto, free and clear
of any Security Interest, and, upon delivery of and payment for such shares as
herein provided and termination of the White Stack Stockholders Agreement, Moran
Enterprises will acquire good, marketable and valid title thereto, free and
clear of any Security Interest (other than Security Interests granted by Moran
Enterprises). Each of the Turecamo Stockholders is a "citizen" within the
meaning of Section 2(c) of the Shipping Act of 1916, as amended.
(b) AUTHORITY RELATIVE TO THIS AGREEMENT. Such Turecamo Stockholder
has the full legal right and power and all authority and approval required to
enter into, execute and deliver this Agreement and the Ancillary Agreements and
to perform fully such Turecamo Stockholder's obligations hereunder and
thereunder. This Agreement has been duly executed and delivered by such
Turecamo Stockholder and constitutes (and upon due execution and delivery, the
Ancillary Agreements to which such Turecamo Stockholder is intended to be party
will constitute) the legal, valid and binding obligation of such Turecamo
Stockholder enforceable against such Turecamo Stockholder in accordance with its
terms.
(c) ABSENCE OF CONFLICTS. The execution and delivery of this
Agreement and the Ancillary Agreements and the consummation of the transactions
contemplated hereby and thereby and the performance by such Turecamo Stockholder
of this Agreement and the Ancillary Agreements in accordance with their
respective terms and conditions will not: (i) require such Turecamo Stockholder
to obtain any Permit, or any notice to, filing or registration with, or permit,
license, variance, waiver, exemption, franchise, order, consent, authorization
or approval of, any other person except for notices and consents disclosed on
Section (c) of the Turecamo Stockholder Disclosure Schedule; (ii) except as set
forth in Section (c) of the Turecamo Stockholder Disclosure Schedule, violate,
conflict with or result in a breach of any provision of or constitute a default
(or an event which, with notice or lapse of time or both, would constitute a
breach or default) under, or result in the termination of, or accelerate the
performance required by, or result in the creation of any Security Interest on
the Turecamo Stock held by such Turecamo Stockholder or upon the assets,
properties or businesses of the Turecamo Entities under any of the terms,
conditions or provisions of any contract or other agreement (written or oral) to
which such Turecamo Stockholder is a party or by or to which such Turecamo
Stockholder or the shares of Turecamo Stock held by such Turecamo Stockholder
are bound or subject; or (iii) subject to compliance with the Hart-Scott-Rodino
Act, (A) to the knowledge of such Turecamo Stockholder, violate any Law or (B)
violate any outstanding judgment, ruling, order, writ, injunction or award of
any Governmental Authority, in the case of (A) or (B), which is applicable to
such Turecamo Stockholder or to the Turecamo Stock held by such Turecamo
Stockholder.
(d) SECURITIES LAW MATTERS. Such Turecamo Stockholder hereby confirms
that he or she has been informed that the shares of the Moran Enterprises Common
Stock being issued to him or her are restricted securities under the Securities
Act and may not be resold or transferred unless first registered under the
federal securities laws or unless an exemption from such registration is
available. Accordingly, such Turecamo Stockholder hereby acknowledges that he
or she is prepared to hold the
<PAGE>
Annex I-Representations &
Warranties of Each Turecamo
Stockholder
Moran Enterprises Common Stock for an indefinite period and that the Turecamo
Stockholder is aware that Rule 144 of the Commission issued under the Securities
Act is not presently available to exempt the resale of the Moran Enterprises
Common Stock from the registration requirements of the Securities Act. Such
Turecamo Stockholder is aware of the adoption of Rule 144 promulgated under the
Securities Act by the Commission, which permits limited public resales of
securities acquired in a nonpublic offering, subject to the satisfaction of
certain conditions. Such Turecamo Stockholder understands that Rule 144 is
conditioned upon, among other things: (i) the availability of certain current
public information about Moran Enterprises, (ii) the resale occurring not
earlier than one (1) year after the party has purchased and paid for the
securities to be sold, (iii) the sale being made through a broker in an
unsolicited "broker's transaction", and (iv) the amount of securities being sold
during any three-month period not exceeding specified limitations. Such
Turecamo Stockholder understands that Moran Enterprises may not be satisfying
the current public information requirement of Rule 144 at the time such Turecamo
Stockholder wishes to sell the Moran Enterprises Common Stock or other
conditions under Rule 144. If so, such Turecamo Stockholder understands that he
or she may be precluded from selling the securities under Rule 144 even if the
one-year holding period of said Rule has been satisfied. Prior to the
acquisition of the shares of Moran Enterprises Common Stock by such Turecamo
Stockholder, each such Turecamo Stockholder acquired sufficient information
about Moran Enterprises to reach an informed and knowledgeable decision to
acquire the Moran Enterprises Common Stock. Such Turecamo Stockholder has such
knowledge and experience in financial and business matters so as to make him or
her capable of utilizing said information to evaluate the risks of the
prospective investment and to make an informed investment decision. Such
Turecamo Stockholder is able to bear the economic risk of his or her investment
in the Moran Enterprises Common Stock. Such Turecamo Stockholder is an
"Accredited Investor," as defined in the rules and regulations promulgated under
the Securities Act, and is a resident of the jurisdiction listed on Schedule 1.
Such Turecamo Stockholder also acknowledges that the shares of Moran Enterprises
Common Stock to be received by him or her will be subject to additional
restrictions on transfer and legend requirements under the Stockholders
Agreement.
(e) INTEREST IN COMPETITORS AND SUPPLIERS. Other than interests in
Columbia Coastal and the lessor of the Leased Real Property located in Savannah,
Georgia, and except as set forth on Section (e) of the Turecamo Stockholder
Disclosure Schedule, neither any Turecamo Stockholder nor any Affiliate of any
Turecamo Stockholder, (i) has any material direct or indirect interest in any
Person (other than, upon the Closing, Moran Enterprises) engaged or involved in
any business which is competitive in any way with the business of Moran
Enterprises and its Subsidiaries or (ii) has any material direct or indirect
interest in any Person which is a lessor of assets or properties to, material
supplier of, or provider of services to, Moran Enterprises or any of its
Subsidiaries.
<PAGE>
ANNEX II
--------
REPRESENTATIONS AND
WARRANTIES OF THE TURECAMO ENTITIES
-----------------------------------
(a) ORGANIZATION, QUALIFICATION, AND CORPORATE POWER. Each of the
Turecamo Entities is a corporation duly organized, validly existing, and in good
standing under the jurisdiction of its incorporation as listed on Section (a) of
the Turecamo Disclosure Schedule. Each of the Turecamo Entities is duly
authorized to conduct business and is in good standing under the laws of each
jurisdiction listed in Section (a) of the Turecamo Disclosure Schedule. Each of
the Turecamo Entities has requisite corporate power and authority to carry on
the businesses in which it is engaged and to own and use the properties owned
and used by it. The Turecamo Entities have delivered to Moran Enterprises
correct and complete copies of the certificates of incorporation and bylaws of
each of the Turecamo Entities (as amended to date). The minute books
(containing the records of meetings of the stockholders, the board of directors,
and any committees of the board of directors) are correct and complete in all
material respects, and the stock certificate books, and the stock record books
of each of the Turecamo Entities are correct and complete in all respects. None
of the Turecamo Entities is in default under or in violation of any provision of
its certificate of incorporation or bylaws. Each of the Turecamo Entities is a
"citizen" within the meaning of Section 2(c) of the Shipping Act of 1916, as
amended.
(b) CAPITALIZATION. The entire authorized capital stock of each Turecamo
Entity is set forth in Section (b) of the Turecamo Disclosure Schedule. Each
outstanding share of capital stock of each Turecamo Entity has been duly
authorized, is validly issued, fully paid, and nonassessable, and is held of
record by the respective Turecamo Stockholders as set forth in Section (b) of
the Turecamo Disclosure Schedule. There are no outstanding or authorized
options, warrants, preemptive rights, purchase rights, subscription rights,
conversion rights, exchange rights, or other contracts or commitments that could
require any Turecamo Entity to issue, sell, or otherwise cause to become
outstanding any of its capital stock. There are no outstanding or authorized
stock appreciation, phantom stock, profit participation, or similar rights with
respect to any Turecamo Entity. Except as set forth in Section (c) of the
Turecamo Disclosure Schedule, there are no voting trusts, proxies, or other
agreements or understandings with respect to the voting of the capital stock of
any Turecamo Entity.
(c) NONCONTRAVENTION. Except as set forth in Section (c) of the Turecamo
Disclosure Schedule, neither the execution and the delivery of this Agreement or
the Ancillary Agreements, nor the consummation of the transactions contemplated
hereby or thereby, will (i) violate any law or any order, decree, ruling,
charge, or other restriction of any Governmental Authority to which any of the
Turecamo Entities is subject or any provision of the certificate of
incorporation or bylaws of any of the Turecamo Entities or (ii) conflict with,
result in a breach of, constitute a default under (or an event which, with
notice or lapse of time, or both, would constitute a breach or default), result
in the acceleration of, create in any party the right to accelerate, terminate,
modify, or cancel, or require any notice under any agreement, Contract, Permit
or other arrangement (written or oral) to which any of the Turecamo Entities is
a party or by which it is bound or to which any of its assets is subject (or
result in the imposition of any Security Interest upon any of its assets).
Except as set forth in Section (c) of the Turecamo Disclosure Schedule, none of
the Turecamo Entities needs to give any notice to, make any filing with, or
obtain any authorization, consent, or approval of any Governmental Authority in
order for the Parties to consummate the transactions contemplated by this
Agreement and the Ancillary Agreements or continue
<PAGE>
Annex II-Reps. & Warranties
of Turecamo Entities
the effectiveness of Permits relating to the Turecamo Business following the
Closing.
(d) SUBSIDIARIES. Except as set forth on Section (d) of the Turecamo
Disclosure Schedule, none of the Turecamo Entities has any Subsidiaries. Except
as set forth on Section (d) of the Turecamo Disclosure Schedule, no Turecamo
Entity, directly or indirectly, owns or controls or has any capital or other
equity interest or participation (or any interest convertible into or
exchangeable or exercisable for, any capital or other equity interest or
participation in) nor is any Turecamo Entity, directly or indirectly, subject to
any obligation or requirement to provide funds to or invest in, any person.
(e) FINANCIAL STATEMENTS. Attached hereto as Exhibit K are the following
financial statements (collectively the "FINANCIAL STATEMENTS"): (i) audited
combined and unaudited combining balance sheets and statements of income,
changes in stockholders' equity, and cash flow as of and for the fiscal years
ended December 31, 1995, 1996, and 1997 (the "MOST RECENT FISCAL YEAR END") for
the Turecamo Entities; and (ii) unaudited combined and combining balance sheets
and statements of income, changes in stockholders' equity, and cash flow (the
"MOST RECENT FINANCIAL STATEMENTS") as of and for the SIX months ended June 30,
1998 (the "MOST RECENT FISCAL MONTH END") for the Turecamo Entities. The
Financial Statements (including the notes thereto) have been prepared in
accordance with GAAP based upon the books and records of the Turecamo Entities
applied on a consistent basis throughout the periods covered thereby, and are
consistent with the books and records of the Turecamo Entities (which books and
records are correct and complete), the Most Recent Fiscal Year End presents
fairly the financial condition of the Turecamo Entities as of such dates and the
results of operations of the Turecamo Entities for such periods, and the Most
Recent Financial Statements presents fairly the financial condition of the
Turecamo Entities as of such dates and the results of operations of the Turecamo
Entities for such periods, in all material respects; PROVIDED, HOWEVER, that the
Most Recent Financial Statements are subject to normal year-end adjustments
(which will not be material individually or in the aggregate) and lack footnotes
and other presentation items. Since the Most Recent Fiscal Year End, there has
been no change in any of the significant accounting (including tax accounting)
policies, practices or procedures of any of the Turecamo Entities.
(f) UNDISCLOSED LIABILITIES. None of the Turecamo Entities has any
Liability, except for (i) Liabilities fully and adequately reflected or reserved
against in the Most Recent Balance Sheet; (ii) Liabilities which have arisen
after the Most Recent Fiscal Year End in the Ordinary Course of Business (none
of which results from, arises out of, relates to, is in the nature of, or was
caused by any breach of contract or, to the Knowledge of the Turecamo Entities,
by any breach of warranty, tort, infringement, or violation of law); and (iii)
Liabilities specifically disclosed in Section (f) of the Turecamo Disclosure
Schedule.
(g) EVENTS SUBSEQUENT TO MOST RECENT FISCAL YEAR END. Since the Most
Recent Fiscal Year End, there has not been any material adverse change in the
business, financial condition, operations, results of operations, or future
prospects of any of the Turecamo Entities. Without limiting the generality of
the foregoing, except as set forth in Section (g) of the Turecamo Disclosure
Schedule, since that date:
(i) none of the Turecamo Entities has sold, leased, transferred,
or assigned any of its assets, tangible or intangible, other than for a
fair consideration in the Ordinary Course of Business;
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(ii) none of the Turecamo Entities has entered into any
agreement, contract, lease, pricing arrangement or license (or series of
related agreements, contracts, leases, arrangements and licenses) either
involving more than $250,000 or outside the Ordinary Course of Business;
(iii) no party (including the Turecamo Entities) has accelerated,
terminated, modified, or cancelled any agreement, contract, lease, or
license (or series of related agreements, contracts, leases, and licenses)
involving more than $250,000 to which any of the Turecamo Entities is a
party or by which any of them or any of their respective assets is bound;
(iv) none of the Turecamo Entities has granted (or, to the
Knowledge of the Turecamo Entities, permitted) any Security Interest upon
any of its assets, tangible or intangible;
(v) none of the Turecamo Entities has made any capital
expenditure (or series of related capital expenditures) either involving
more than $250,000 or outside the Ordinary Course of Business;
(vi) none of the Turecamo Entities has made any capital
investment in, any loan to, or any acquisition of the securities or assets
of, any other Person (or series of related capital investments, loans, and
acquisitions) either involving more than $250,000 or outside the Ordinary
Course of Business;
(vii) none of the Turecamo Entities has issued any note, bond, or
other debt security or created, incurred, assumed, or guaranteed any
indebtedness for borrowed money or capitalized lease obligation either
involving more than $250,000 in the aggregate or outside the Ordinary
Course of Business;
(viii) none of the Turecamo Entities has delayed or postponed the
payment of accounts payable and other Liabilities outside the Ordinary
Course of Business;
(ix) none of the Turecamo Entities has cancelled, compromised,
waived, or released any right or claim (or series of related rights and
claims) either involving more than $250,000 or outside the Ordinary Course
of Business;
(x) there has been no change made or authorized in the
certificate of incorporation or bylaws of any of the Turecamo Entities;
(xi) none of the Turecamo Entities has issued, sold, or otherwise
disposed of any of its capital stock, or granted any options, warrants,
preemptive or other rights to purchase or obtain (including upon
conversion, exchange, or exercise) any of its capital stock;
(xii) none of the Turecamo Entities has declared, set aside, or
paid any dividend or made any distribution with respect to its capital
stock (whether in cash or in kind) or redeemed, purchased, or otherwise
acquired any of its capital stock;
(xiii) none of the Turecamo Entities has experienced any damage,
destruction, or loss (whether or not covered by insurance) individually, or
in the aggregate, more than $250,000 to
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its property;
(xiv) except for the Balance Sheet Distributions and the Tax
Distributions and the lease of the Leased Real Property in Savannah,
Georgia, none of the Turecamo Entities has made any loan to, or entered
into any other transaction with, any of its directors, officers, employees
or stockholders outside the Ordinary Course of Business;
(xv) none of the Turecamo Entities has entered into any
employment contract or collective bargaining agreement, written or oral, or
modified the terms of any existing such contract or agreement;
(xvi) none of the Turecamo Entities has granted any increase in
the base compensation of any of its directors, officers, and employees
outside the Ordinary Course of Business or made any other change in
employment terms or any advances or payments for or to any of its
directors, officers, or employees outside the Ordinary Course of Business;
(xvii) none of the Turecamo Entities has adopted, amended,
modified, or terminated any bonus, profit-sharing, incentive, severance, or
other plan, contract, or commitment for the benefit of any of its
directors, officers, and employees (or taken any such action with respect
to any other Employee Benefit Plan);
(xviii) none of the Turecamo Entities has made or pledged to make
any charitable or other capital contribution outside the Ordinary Course of
Business;
(xix) no material customer, supplier, representative, lessee, or
lessor has terminated or given notice of its intent to terminate its
relationship with any of Turecamo Entities; and
(xx) none of the Turecamo Entities has committed to any of the
foregoing.
(h) LEGAL COMPLIANCE.
(i) Except as set forth on Section (h) of the Turecamo
Disclosure Schedule, each of the Turecamo Entities has complied in all
material respects with all applicable Laws and no action, suit, proceeding,
hearing, investigation, charge, complaint, claim, demand, or notice has
been filed or commenced against any of them alleging any failure so to
comply. Section (h) of the Turecamo Disclosure Schedule lists all
non-compliances with laws for which any of the Turecamo Entities has been
cited by a Governmental Authority during the past 3 years (other than USCG
citations involving fines not exceeding $5,000, individually).
(ii) The Turecamo Entities possess, and are in material
compliance with, the terms and conditions of, all franchises, consents,
approvals, licenses, permits, certificates and other authorizations
("PERMITS") from any Governmental Authority that are necessary for the
ownership of their respective assets and the conduct of the Turecamo
Business as presently conducted in the Ordinary Course of Business. With
respect to each such Permit which is material: (A) the Permit is in full
force and effect; (B) none of the Turecamo Entities is in breach or
default, and, to the Knowledge of the Turecamo Entities, no event has
occurred which, with
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notice or lapse of time, or both, would constitute a breach or default, or
permit termination or modification of the Permit; and (C) the Permit will
continue in full force and effect on identical terms for the benefit of
Moran Enterprises and/or the Turecamo Entities following the consummation
of the transactions contemplated hereby and by the Ancillary Agreements.
(iii) To the Knowledge of the Turecamo Entities, none of the
Turecamo Entities, the Turecamo Stockholders, or any officer, director,
employee, consultant or agent of the Turecamo Entities has made, directly
or indirectly, any payment or promise to pay, or gift or promise to give or
authorized such a promise or gift, of any money or anything of value,
directly or indirectly, to any governmental official, customer or supplier
for the purpose of influencing any official act or decision of such
official, customer or supplier or inducing him, her or it to use his, her
or its influence to affect any act or decision of a Governmental Authority
or customer, under circumstances which could subject any Turecamo Entity or
any Turecamo Stockholder or any officers, directors, employees or
consultants of any Turecamo Entity to administrative or criminal penalties
or sanctions or termination of such customer relationship.
(i) TAX MATTERS.
(i) Except as set forth in Section (i) of the Turecamo
Disclosure Schedule, each of the Turecamo Entities has filed all Tax
Returns that it was required to file. All such Tax Returns were correct
and complete in all material respects. All Taxes owed by any of the
Turecamo Entities reflected on such Tax Returns have been paid. Except as
set forth in Section (i) of the Turecamo Disclosure Schedule, none of the
Turecamo Entities is currently the beneficiary of any extension of time
within which to file any Tax Return. Within the prior eight years, no
claim has ever been made by an authority in a jurisdiction where any of the
Turecamo Entities does not file Tax Returns that it is or may be subject to
taxation by that jurisdiction. There are no Security Interests on any of
the assets of any of the Turecamo Entities that arose in connection with
any failure (or alleged failure) to pay any Tax.
(ii) Each of the Turecamo Entities has withheld and paid all
Taxes required to have been withheld and paid in connection with amounts
paid or owing to any employee, independent contractor, creditor,
stockholder, or other third party, except to the extent that a failure to
withhold or make such payment could not be reasonably expected to have a
Turecamo Material Adverse Effect.
(iii) None of the Turecamo Entities expects any authority to
assess any additional Taxes for any period for which Tax Returns have been
filed by any of the Turecamo Entities. Except as set forth in Section (i)
of the Turecamo Disclosure Schedule, there is no dispute or claim
concerning any Liability with respect to any Taxes (a "TAX LIABILITY") of
any of the Turecamo Entities either (A) claimed or raised by any
Governmental Authority in writing or (B) as to which any of the Turecamo
Entities has Knowledge. Section (i) of the Turecamo Disclosure Schedule
lists all federal, state, local, and foreign income Tax Returns filed with
respect to any of the Turecamo Entities for taxable periods ended on or
after December 31, 1996, indicates those Tax Returns that have been
audited, and indicates those Tax Returns that currently are the subject of
audit. The Turecamo Entities have delivered to Moran Enterprises correct
and complete copies of all federal and state income and other material Tax
Returns, examination
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reports, and statements of deficiencies assessed against or agreed to by
any of the Turecamo Entities since December 31, 1996.
(iv) None of the Turecamo Entities has waived any statute of
limitations in respect of Taxes or agreed to any extension of time with
respect to a Tax assessment or deficiency.
(v) None of the Turecamo Entities has filed a consent under Code
Section 341(f) concerning collapsible corporations. None of the Turecamo
Entities has made any payments, is obligated to make any payments, or is a
party to any agreement that under certain circumstances could obligate it
to make any payments that will not be deductible under Code Section 280G.
None of the Turecamo Entities has been a United States real property
holding corporation within the meaning of Code Section 897(c)(2) during the
applicable period specified in Code Section 897(c)(1)(A)(ii). None of the
Turecamo Entities is a party to any Tax allocation or sharing agreement.
Since December 31, 1989 none of the Turecamo Entities (A) is and has been a
member of an Affiliated Group filing a consolidated federal income Tax
Return and (B) has any Liability for the Taxes of any Person (other than
any of the Turecamo Entities) under Reg. Section 1.1502-6 (or any similar
provision of state, local, or foreign law), as a transferee or successor,
by contract, or otherwise, except as set forth in Section (i) of the
Turecamo Disclosure Schedule.
(vi) Section (i) of the Turecamo Disclosure Schedule sets forth
the following information with respect to each of Turecamo Entities as of
the most recent practicable date (as well as on an estimated pro forma
basis as of the Closing giving effect to the consummation of the
transactions contemplated hereby): (A) the basis of each Turecamo Entity in
its assets; (B) the basis of each Turecamo Stockholder in his or her
Turecamo Stock and (C) the amount of any net operating loss, net capital
loss, unused investment or other credit, allocable to each Turecamo Entity.
(vii) Except as set forth on Section (i) of the Turecamo
Disclosure Schedule, the unpaid Taxes of the Turecamo Entities (A) did not,
as of the Most Recent Fiscal Month End, exceed the reserve for Tax
Liability (rather than any reserve for deferred Taxes established to
reflect timing differences between book and Tax income) set forth on the
Most Recent Fiscal Year End and (B) do not exceed that reserve as adjusted
for the passage of time through the Closing Date in accordance with the
past custom and practice of the Turecamo Entities in filing their Tax
Returns.
(viii) Each Turecamo Entity has elected to be an "S corporation"
pursuant to Section 1362(a) of the Code beginning with the tax year listed
in Section (i) of the Turecamo Disclosure Schedule, and such election has
at all times remained in effect. Each Turecamo Entity has elected (and
such election has at all times remained in effect), or is otherwise
entitled, to be treated in a manner comparable to the federal tax treatment
under Section 1362(a) of the Code, for purposes of the tax imposed on a
corporation by the State of Delaware and in the other specified
jurisdictions set forth on Section (i) of the Turecamo Disclosure Schedule.
Each Turecamo Entity is subject to a tax imposed on a corporation in the
specified jurisdictions set forth on Section (i) of the Turecamo Disclosure
Schedule, with respect to which no analogous election has been made or is
available. Other than upon the consummation of the transactions
contemplated hereby, no action has been taken by any Turecamo Entity which
has resulted, or will result, in
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the termination of the status of such Turecamo Entity as an "S corporation"
pursuant to Section 1362(a) of the Code, or any comparable status with
respect to any other jurisdiction.
(j) REAL PROPERTY.
(i) None of the Turecamo Entities owns or has owned any real
property, other than real property in Charleston, SC owned by White Stack
and to be included in the Balance Sheet Distributions.
(ii) Section (j)(ii) of the Turecamo Disclosure Schedule lists
and describes briefly all real property leased or subleased to, or
otherwise occupied by, any of the Turecamo Entities (all such real
property, together with all buildings and other improvements thereon, the
"LEASED REAL PROPERTY"). As to all existing leases, subleases or other
contracts with respect to the Leased Real Property (the "LEASES"):
(A) each of the Leases is, and, at Closing, each of the
Leases will be, legal, valid, binding, enforceable, and in full force
and effect following the consummation of the transactions contemplated
hereby;
(B) none of the Turecamo Entities is, and to the Knowledge
of the Turecamo Entities, no other party to any of the Leases is, in
breach or default, and no event has occurred which, with notice or
lapse of time, would constitute a breach or default or permit
termination, modification, or acceleration thereunder;
(C) no party to any of the Leases has repudiated any
provision thereof;
(D) there are no disputes, oral agreements, or forbearance
programs in effect as to any of the Leases;
(E) with respect to any of the Leases which is a sublease,
the representations and warranties set forth in subsections (A)
through (E) above are true and correct with respect to the underlying
lease(s);
(F) none of the Turecamo Entities has assigned,
transferred, conveyed, mortgaged, deeded in trust, or encumbered any
interest in any of the Leases;
(G) to the Knowledge of the Turecamo Entities, the
landlords of their respective Leased Real Properties have provided,
and as tenants of their respective Leased Real Properties, the
Turecamo Entities have provided, all approvals of Governmental
Authorities (including licenses and permits) required in connection
with the operation thereof and have been operated and maintained in
accordance with material applicable laws, rules, and regulations; and
(H) all Leased Real Property is supplied with utilities and
other services necessary for the operation of said Leased Real
Property as currently operated.
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(k) INTELLECTUAL PROPERTY.
(i) The Turecamo Entities own or have the right to use pursuant
to license, sublicense, agreement, or permission all material Intellectual
Property necessary for the operation of the Turecamo Business as presently
conducted. The Turecamo Entities possess all right, title and interest in
and to the each material item of owned Intellectual Property, free and
clear of any Security Interest or other restriction or claim. With respect
to each material item of Intellectual Property that any third party owns
and that any Turecamo Entity uses, the license, sublicense, agreement or
permission pursuant to which any Turecamo Entity has the right to use such
item is legal, valid, binding, enforceable and in full force and effect.
Except as disclosed on Section (k) of the Turecamo Disclosure Schedule,
each material item of Intellectual Property owned or used by the Turecamo
Entities immediately prior to the Closing hereunder will be owned or
available for use by the Turecamo Entities on identical terms and
conditions immediately subsequent to the Closing hereunder.
(ii) Section (k) of the Turecamo Disclosure Schedule identifies
each material item of Intellectual Property (excluding Section (e) of the
definition of Intellectual Property) owned or used by the Turecamo Entities
in the Turecamo Business. Section (k)(ii) of the Turecamo Disclosure
Schedule identifies each license, agreement, or other permission which any
Turecamo has granted to any third party with respect to any of its material
Intellectual Property (together with any exceptions). The Turecamo Entities
have delivered to Moran Enterprises correct and complete copies of all such
licenses, agreements, and permissions (as amended to date).
(iii) To the Knowledge of the Turecamo Entities, none of the
Turecamo Entities has interfered with, infringed upon, misappropriated, or
otherwise come into conflict with any Intellectual Property rights of third
parties, nor has any Turecamo Entity ever received any charge, complaint,
claim, demand, or notice alleging any such interference, infringement,
misappropriation, or violation (including any claim that any Turecamo
Entity must license or refrain from using any Intellectual Property rights
of any third party, except where such interference, infringement,
misappropriation would not reasonably be expected to have a Turecamo
Material Adverse Effect). To the Knowledge of the Turecamo Entities, no
third party has interfered with, infringed upon, misappropriated, or
otherwise come into conflict with any Intellectual Property rights of any
Turecamo Entity, except where such interference, infringement,
misappropriation would not reasonably be expected to have a Turecamo
Material Adverse Effect.
(l) TANGIBLE PROPERTY. Section (l) of the Disclosure Schedule sets forth
all interests owned or claimed by each Turecamo Entity (including, without
limitation, options) in or to Tangible Property (as defined below) which are
material to the Turecamo Business and are not reflected on the Most Recent
Balance Sheet and have not been sold or disposed of in the ordinary course of
business since the Most Recent Fiscal Month End. The Tangible Property of the
Turecamo Entities that is material to the Turecamo Business is in good operating
condition and repair. For purposes hereof, "TANGIBLE PROPERTY" means equipment
(other than Vessels), furniture, leasehold improvements, fixtures, vehicles,
structures, any related capitalized items and other tangible property and which
is treated by any Turecamo Entity as depreciable or amortizable property.
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(m) VESSELS. Each of the Turecamo Entities owns and is lawfully possessed
of (i) good and marketable title to the whole of each of the vessels listed in
Section (m)(i) of the Turecamo Disclosure Schedule as being owned by such entity
(except such vessels which are indicated as being owned jointly with others on
the Turecamo Disclosure Schedule), free and clear of any Security Interest or
any commitment to make such vessel available for charter or sale or use by any
governmental authority, except for the mortgages listed on Section (m)(i) of the
Turecamo Disclosure Schedule and other liens expressly permitted by such
mortgages, and (ii) good and valid bareboat charters of the vessels listed in
Section (m)(ii) of the Turecamo Disclosure Schedule identifying such charters.
True, complete and correct copies of such mortgages and charters have been
delivered to Moran Enterprises. The vessels listed on Section (m) of the
Turecamo Disclosure Schedule are referred to in this Agreement as the "VESSELS".
Each of the Vessels is duly documented in the applicable Turecamo Entity's name
under the laws and flag of the United States of America and satisfies the
citizenship, place of construction and/or repair requirements and other similar
requirements for coastwise documentation, and all necessary coastwise
certificates, licenses and permits relating thereto are valid and current. Each
of the Vessels is well and sufficiently tackled, apparelled, furnished and
equipped and, except as set forth on Section 4(n)(iii) of the Turecamo
Disclosure Schedule, is free of outstanding requirements of the United States
Coast Guard ("USCG"), and is in good operating condition, suitable to its
intended trade and has no deficiencies to correct a condition customarily
considered to be necessary to the safety or operation of such Vessel or her crew
or which must be corrected before such Vessel is acceptable for customary marine
insurance. Except as set forth in Section (m) of the Turecamo Disclosure
Schedule, each of the Vessels now has valid and current USCG Inspection
Certificates, where applicable, and all other certificates, licenses and permits
(including, Certificates of Financial Responsibility (Water Pollution)), which
are required by applicable law or regulation. Set forth on Section (m) of the
Turecamo Disclosure Schedule is a list of the current ABS Classification of each
Turecamo Vessel, if any.
(n) TITLE TO ASSETS. The Turecamo Entities have good and marketable title
to, or a valid leasehold interest in, the properties and assets used by them or
shown on the Most Recent Balance Sheet or acquired after the date thereof, free
and clear of all Security Interests, except for those Security Interests set
forth in Section (n) of the Turecamo Disclosure Schedule or permitted by the
mortgages listed on Section (m)(i) of the Turecamo Disclosure Schedule.
(o) CONTRACTS. Section (o) of the Turecamo Disclosure Schedule lists all
purchase orders, contracts, commitments, obligations, plans, agreements,
instruments, arrangements, understandings, bids, undertakings and proposals,
written or oral, including all amendments and supplements thereto, or series of
any of the foregoing, to which any Turecamo Entity is a party or by which any of
their respective assets or the Turecamo Business are bound involving
consideration in excess of $250,000 per year or which are otherwise material to
any Turecamo Entity (the "CONTRACTS"), including, without limitation, the
following contracts and agreements (written or oral) but excluding, in each
case, shipdocking contracts cancellable on 30 days or less notice:
(i) agreements with any current or former officer, director or
shareholder;
(ii) agreements with any labor union or association representing
any employee;
(iii) agreements involving the provision of services by any
Turecamo Entity, whether or not material to the Turecamo Business, under
which the payments to such Turecamo
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Entity are inadequate to cover the cost of providing such services;
(iv) agreements for the grant to any person of any rights to
purchase any of the assets, properties or businesses of any Turecamo
Entity;
(v) joint venture, partnership, and other similar agreements;
(vi) agreements under which any Turecamo Entity has guaranteed
the obligations of any Person;
(vii) agreements relating to any indebtedness or deferred purchase
obligation of any Turecamo Entity;
(viii) agreements under which any Turecamo Entity agrees to
indemnify any person or to share Liability with any person, other than the
TES standard form contract, an example of which is included in Section (o)
of the Turecamo Disclosure Schedule;
(ix) agreements limiting the freedom of any Turecamo Entity to
engage in any line of business, compete with any person or carry on its
business in any geographic area;
(x) Employee Benefit Plans;
(xi) agreements relating to the acquisition by any Turecamo
Entity of any operating business or the capital stock of any Person; and
(xii) agreements for the payment of fees or other consideration to
any Turecamo Stockholder, officer or director of any Turecamo Entity or any
other entity in which any of the foregoing has an interest.
The Turecamo Entities have made available to Moran and Moran Enterprises a
correct and complete copy of each written Contract listed in Section (o) of the
Turecamo Disclosure Schedule (as amended to date) and a written summary setting
forth the terms and conditions of each oral Contract referred to in Section (o)
of the Turecamo Disclosure Schedule. Other than purchase orders cancelable upon
30 days' or fewer notice, with respect to each such Contract: (A) the Contract
is legal, valid, binding, enforceable, and in full force and effect; (B) no
Turecamo Entity is, and, to the Knowledge of the Turecamo Entities, no other
party is, in breach or default, and no event has occurred which with notice or
lapse of time would constitute a breach or default, or permit termination,
modification, or acceleration, under the Contract; and (C) no Turecamo Entity,
has and, to the Knowledge of the Turecamo Entities, no other party has,
repudiated any provision of any Contract. Except as set forth in Section (o) of
the Turecamo Disclosure Schedule, no purchase Contracts of any of the Turecamo
Entities are in excess of the normal and ordinary requirements of the Turecamo
Business. There are no outstanding powers of attorney executed on behalf of any
Turecamo Entity. Except as listed on Section (o) of the Turecamo Disclosure
Schedule, no Turecamo Entity is a guarantor or otherwise liable for any
Liability or obligation (including Indebtedness) of any other Person.
(p) NOTES AND ACCOUNTS RECEIVABLE. Except as set forth in Section (p) of
the Turecamo Disclosure
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Schedule, all notes and accounts receivable of the Turecamo Entities are
reflected properly on their books and records, are valid receivables subject to
no set off or counterclaim, are subject to adequate reserves established in a
manner consistent with past practice, and were incurred in the Ordinary Course
of Business of the Turecamo Entities for bona fide services rendered.
(q) INSURANCE. Section (q) of the Turecamo Disclosure Schedule sets forth
the following information with respect to each insurance policy (including
protection and indemnity policies and policies providing property, casualty,
liability, and workers' compensation coverage and bond and surety arrangements)
to which any of the Turecamo Entities has been a party at any time within the
past 3 years:
(i) the name, address, and telephone number of the agent;
(ii) the name of the insurer, the name of the policyholder, and
the name of each covered insured;
(iii) the policy number and the period of coverage;
(iv) the scope (including an indication of whether the coverage
was on a claims made, occurrence, or other basis) and amount (including a
description of how deductibles and ceilings are calculated and operate) of
coverage;
(v) a description of annual premiums payable, deductibles and
limits with respect thereto and any retroactive premium adjustments or
other loss-sharing arrangements; and
(vi) the claims history of the Turecamo Entities with respect to
such policy.
With respect to each such insurance policy which is an occurrence based policy
or which is in effect for the current policy year: (A) the policy is legal,
valid, binding, enforceable, and in full force and effect; (B) except as set
forth in Section (q) of the Turecamo Disclosure Schedule, the policy will not be
adversely affected by the consummation of the transactions contemplated hereby;
(C) no Turecamo Entity nor any other party to the policy is in breach or default
(including with respect to the payment of premiums or the giving of notices),
and no event has occurred which, with notice or the lapse of time, would
constitute such a breach or default, or permit termination, modification, or
acceleration, under the policy; and (D) no party to the policy has repudiated
any provision thereof. Without limiting the foregoing, the Turecamo Entities
have kept all Vessels owned or operated by them insured in accordance with
customary practices in the industry. Section (q) of the Turecamo Disclosure
Schedule describes any self-insurance arrangements affecting any of the Turecamo
Entities.
(r) LITIGATION. Section (r) of the Turecamo Disclosure Schedule sets
forth each instance in which any of the Turecamo Entities (i) is subject to any
outstanding injunction, judgment, order, decree, ruling, or charge or (ii) is a
party or, to the Knowledge of any of the Turecamo Entities is threatened to be
made a party to any action, suit, proceeding, hearing, or investigation of, in,
or before any Governmental Authority or before any arbitrator. None of the
actions, suits, proceedings, hearings, and investigations set forth in Section
(r) of the Turecamo Disclosure Schedule would reasonably be expected to have a
Turecamo Material Adverse Effect. None of the Turecamo Entities has any
Knowledge that any
<PAGE>
Annex II-Reps. & Warranties
of Turecamo Entities
such action, suit, proceeding, hearing, or investigation may be brought or
threatened against any of the Turecamo Entities.
(s) EMPLOYEES. To the Knowledge of the Turecamo Entities, no executive,
key employee, or group of employees has any plans to terminate employment with
any of the Turecamo Entities. Except as set forth on Section (s) of the
Turecamo Disclosure Schedule, no Turecamo Entity is a party to or bound by any
collective bargaining agreement, nor is any of them experiencing any strikes,
grievances, claims of unfair labor practices, or other collective bargaining
disputes. No Turecamo Entity nor any stockholder of any Turecamo Entity has
committed any unfair labor practice. No Turecamo Entity has any Knowledge of
any organizational effort presently being made or threatened by or on behalf of
any labor union with respect to employees of any of the Turecamo Entities. All
salaried employees of the Turecamo Entities are listed in Section (s) of the
Turecamo Disclosure Schedule, which includes the salary level of each such
employee. The qualifications of each employee of the Turecamo Entities for
employment under applicable immigration laws have been reviewed, a properly
completed Form I-9 is on file with respect to each such employee, as applicable,
and each of the Turecamo Entities has complied with the Immigration and
Nationality Act, as amended from time to time, and the rules and regulations
promulgated thereunder, and the Turecamo Entities have no Knowledge of any basis
for any claim that any Turecamo Entity is not in compliance with the terms
thereof.
(t) EMPLOYEE BENEFITS. Section (t) of the Turecamo Disclosure Schedule
lists each Employee Benefit Plan maintained by any of the Turecamo Entities or
to which any of the Turecamo Entities is obligated (or at any time within the
last six years, has been obligated) to contribute or with respect to which any
of the Turecamo Entities has any Liability (the "TURECAMO EMPLOYEE BENEFIT
PLANS"). None of the Turecamo Employee Benefit Plans that are not qualified
plans under Section 401(a) of the Code and exempt from income taxation under
Section 501(a) of the Code provides or promises benefits to ex-employees
(including retirees) of any of the Turecamo Entities and their dependents and
beneficiaries, except as specifically required under Section 4980B of the Code
with respect to continuation of coverage. All Turecamo Employee Benefit Plans
have been operated in accordance with their terms. All Turecamo Employee
Benefit Plans that are not Multiemployer Plans and that are subject to the terms
of ERISA, the Code, or other statutes, laws, ordinances, codes, rules and
regulations comply in all material respects with ERISA, the Code, and such other
statutes, laws, ordinances, codes, rules and regulations, as applicable. In the
case of each Turecamo Employee Benefit Plan which is intended to be a qualified
plan under Section 401(a) of the Code and exempt from income taxation under
Section 501(a) of the Code, a determination has been received from the
appropriate District Director of the Internal Revenue Service that such plan is
qualified under Section 401(a) of the Code and the trust created thereunder is
exempt from federal taxation under Section 501(a) of the Code. No such Turecamo
Employee Benefit Plan has incurred any accumulated funding deficiency (within
the meaning of ERISA or the Code) and no Turecamo Entity has Liability or
potential Liability on account of an accumulated funding deficiency with respect
to any Turecamo Employee Benefit Plan. There has been no transaction involving
any Turecamo Employee Benefit Plan which is a "prohibited transaction" under
ERISA or the Code in connection with which any of the Turecamo Entities would be
subject to Liability under ERISA or any Tax Liability imposed by the Code, or
which would subject any Turecamo Employee Benefit Plan or any of the Turecamo
Entities to a penalty under ERISA, the Code or any other statute, law,
ordinance, code, rule or regulation. There has been no complete or partial
termination of any Turecamo Employee Benefit Plan. None of the Turecamo
Employee Benefit Plans provides for additional or accelerated payments or other
consideration to be made on account of the transactions
<PAGE>
Annex II-Reps. & Warranties
of Turecamo Entities
contemplated hereby.
The market value of assets under each Turecamo Employee Benefit Plan
equals or exceeds the present value of all vested and nonvested liabilities
thereunder determined in accordance with the provisions of ERISA and the Code
applicable to an Employee Benefit Plan terminating on the date such
determination is made.
No suit, action, claim, proceeding, investigation or arbitration has
been made or instituted or, to the Knowledge of the Turecamo Entities,
threatened, with respect to any Turecamo Employee Benefit Plan or any assets
thereof; except for routine claims for benefits made in accordance with the
terms thereof.
All contributions or payments required to be made to such Turecamo
Employee Benefit Plans by their terms, the terms of any relevant collective
bargaining agreement(s) or any other applicable law, before or after the Closing
Date, with respect to all periods or events occurring prior to the Closing Date
(including all insurance premiums) have been properly paid or accrued (to the
extent required under GAAP, ERISA or the Code) on the books of account of the
Turecamo Entities prior to the Closing Date (including, without limitation, a
PRO RATA share with respect to any period including the Closing Date based on
the ratio of the number of days in such period to the total number of days in
the fiscal year of the applicable Turecamo Employee Benefit Plan). The
Liabilities for all benefits provided pursuant to the Turecamo Employee Benefit
Plans have been truly and accurately provided for on the books of account of the
Turecamo Entities.
True, complete and accurate copies of the documents setting forth the
terms of each Turecamo Employee Benefit Plan, including, without limitation,
plans, agreements, amendments, trusts and all related contracts and other
agreements (including, without limitation, corporate resolutions and minutes
relating to any Turecamo Employee Benefit Plan) and, where applicable, copies of
each Turecamo Employee Benefit Plan's: (i) most recent summary plan
descriptions and modifications thereto; (ii) notices distributed to employees,
consultants, agents, dependents and other beneficiaries with regard to any
Turecamo Employee Benefit Plan and any continuation of coverage required under
law; (iii) most recent favorable Internal Revenue Service determination letters;
(iv) two most recent annual reports (IRS Forms 5500), including, without
limitation, audited financial statements (if any) and all schedules thereto; and
(v) two most recent actuarial reports, have heretofore been delivered or made
available to Moran and Moran Enterprises. There are no oral modifications to
any of such Turecamo Employee Benefit Plans.
For purposes of this Section (t), "Turecamo" includes Maritime and
any trade or business (whether or not incorporated) that is a member of the same
"controlled group" of corporations as, or is treated as being under "common
control" with, within the meaning of Sections 414(b), (c), (m) and (o) of the
Code and the Treasury Regulations promulgated thereunder, Maritime.
(u) ENVIRONMENTAL, HEALTH, AND SAFETY MATTERS.
(i) Except as set forth on Section (u) of the Turecamo
Disclosure Schedule:
(A) each Turecamo Entity is in material compliance with
applicable
<PAGE>
Annex II-Reps. & Warranties
of Turecamo Entities
Environmental Laws, and within the period of all applicable statutes
of limitation has been in such compliance; and there are no
circumstances that are reasonably likely to prevent or interfere with
such compliance in the future;
(B) each Turecamo Entity holds Environmental Permits
necessary to conduct its operations as they are currently conducted;
Section (u)(i) of the Turecamo Disclosure Schedule is a true and
complete list of all such Environmental Permits and, where applicable,
their expiration dates; no Turecamo Entity has reason to believe that
any such Environmental Permits (1) will not be renewed, or (2) will be
renewed under terms that are reasonably likely to have a Turecamo
Material Adverse Effect;
(C) there are no Materials of Environmental Concern in
violation of Environmental Laws or Environmental Permits present at,
and no Materials of Environmental Concern are or have been in any way
released or threatened to be released from, any property currently or
formerly owned, leased or otherwise operated by the Turecamo Entities
in violation of Environmental Laws or Environmental Permits, or as a
result of present or former operations of the Turecamo Entities;
(D) no Turecamo Entity is currently in receipt of any
Environmental Claim, and no Environmental Claim against any Turecamo
Entity is currently being threatened;
(E) no Turecamo Entity has entered into, agreed to, nor is
any Turecamo Entity otherwise subject to any judgment, decree, order
or similar requirement under any Environmental Law, nor is any
Turecamo Entity negotiating any such judgment, decree, order or
requirement;
(F) no Turecamo Entity has contractually assumed or
retained any liabilities or obligations, contingent or otherwise, in
connection with any Environmental Law;
(G) neither this Agreement nor the consummation of the
transactions contemplated hereby will result in any obligations for
site investigation or cleanup, or notification to or consent of
Governmental Authorities or third parties, pursuant to any of the
so-called "transaction-triggered" or "responsible property transfer"
Environmental Laws; and
(H) for purposes of this Agreement, the following terms
shall have the following meanings:
"ENVIRONMENTAL CLAIM" means any written notice from any Person
alleging potential liability (including, without limitation, potential
liability for investigatory costs, cleanup costs, governmental response
costs, natural resources damages, property damages, personal injuries,
fines or penalties) arising out of, based on or resulting from (a) the
presence, or release into the environment, of any Material of Environmental
Concern at any location, whether or not owned, leased or otherwise operated
by any of the Turecamo Entities or (b) circumstances forming the basis of
any violation, or alleged violation, of any Environmental Law.
<PAGE>
Annex II-Reps. & Warranties
of Turecamo Entities
"ENVIRONMENTAL LAWS" means any and all Laws, any Governmental
Authority regulating, relating to or imposing liability or standards of
conduct concerning protection of the environment or of human health, or
employee health and safety.
"ENVIRONMENTAL PERMIT" means any Permit required under any
Environmental Law.
"MATERIALS OF ENVIRONMENTAL CONCERN" means any gasoline or petroleum
(including crude oil or any fraction thereof) or petroleum products,
polychlorinated biphenyls, urea-formaldehyde insulation, asbestos,
pollutants, contaminants, radioactivity, whether or not any such substance
or force is defined as hazardous or toxic under any Environmental Law, that
is regulated pursuant to or could give rise to liability under any
Environmental Law.
(ii) Set forth on Section (u)(ii) of the Turecamo Disclosure
Schedule is a complete list of reports, studies, assessments, audits, and
other similar documents in the possession or control of the Turecamo
Entities that address any issues of actual or potential noncompliance with,
or actual or potential liability under, any Environmental Laws that may
affect the Turecamo Entities. True, correct and complete copies of all
such reports have been provided or made available to Moran and Moran
Enterprises prior to the signing hereof.
(iii) Except as set forth on Section (u)(iii) of the Turecamo
Disclosure Schedule, no Environmental Law requires any Permit, consent, or
other authorization to be obtained from, or any application, filing, or
other notice to be given to, any person in connection with this Agreement
or any action contemplated by this Agreement.
(iv) None of the matters set forth on Section (u)(i) of the
Turecamo Disclosure Schedule, or any aggregation thereof, could reasonably
be expected to result in a Turecamo Material Adverse Effect.
(v) CERTAIN BUSINESS RELATIONSHIPS WITH THE TURECAMO ENTITIES. Except as
set forth in Section (v) of the Turecamo Disclosure Schedule, none of the
Turecamo Stockholders or any of their Affiliates has been involved in any
business arrangement or relationship with any of the Turecamo Entities within
the past 36 months, and none of the Turecamo Stockholders or any of their
Affiliates owns any asset, tangible or intangible, which is used in the Turecamo
Business.
(w) BROKERS' FEES. None of the Turecamo Entities or any of its
stockholders has any Liability or obligation to pay any fees or commissions to
any broker, finder, or agent with respect to the transactions contemplated by
this Agreement or by the Ancillary Agreements, except to The Beacon Group
Capital Services, LLC ("BEACON"), whose fees shall be paid as described in
Section 10(k) of this Agreement. Except for such obligations to Beacon, none of
the Turecamo Entities, the Turecamo Stockholders or any of their officers or
directors have incurred any liability for any brokerage, finder's, financial
advisory or other fee or commission or similar form of compensation in
connection with this Agreement or the Ancillary Agreements or the transactions
contemplated hereby or thereby.
(x) CUSTOMERS; SUPPLIERS. Section (x) of the Turecamo Disclosure Schedule
lists, for each of the fiscal years ended December 31, 1996 and 1997, each
customer or group of affiliated customers which accounted for more than five
percent (5%) of the revenues of the Turecamo Entities as a group
<PAGE>
Annex II-Reps. & Warranties
of Turecamo Entities
during such period and each supplier or group of affiliated suppliers which
provided more than five percent (5%) of the requirements of the Turecamo
Entities as a group during such period. The relationships of the Turecamo
Entities with their respective customers and suppliers set forth in Section (x)
of the Turecamo Disclosure Schedule are good commercial working relationships
and, except as set forth on Section (x) of the Turecamo Disclosure Schedule,
during the last twelve months, no such customer or supplier of any Turecamo
Entity listed on Section (x) of the Turecamo Disclosure Schedule has cancelled
or otherwise terminated, or, to the Knowledge of the Turecamo Entities,
threatened to cancel or otherwise terminate, its relationship with any Turecamo
Entity or decreased, or threatened to decrease or limit in any material respect,
its usage of the services of any Turecamo Entity or its provision of services to
any Turecamo Entity. None of the Turecamo Entities or any of the Turecamo
Stockholders has any notice that any customer or supplier set forth in Section
(x) of the Turecamo Disclosure Schedule intends to cancel or otherwise modify
its relationship with any Turecamo Entity or to decrease or limit its usage of
the services of any Turecamo Entity or its provision of services to any Turecamo
Entity, and the transactions contemplated hereby will not, to the Knowledge of
the Turecamo Entities, adversely affect the relationship of any Turecamo Entity
with any of its respective customers or suppliers set forth in Section (x) of
the Turecamo Disclosure Schedule.
(y) DISCLOSURE. The representations and warranties contained in this
Annex II do not contain any untrue statement of a material fact or omit to state
any material fact necessary in order to make the statements and information
contained in this Annex II not misleading.
<PAGE>
Annex III-Representations
& Warranties of Each
Moran Stockholder
ANNEX III
REPRESENTATIONS AND WARRANTIES OF EACH MORAN STOCKHOLDER
(a) TITLE TO SHARES. Such Moran Stockholder is the record and beneficial
owner of the shares of Moran Stock set forth opposite such Moran Stockholder's
name on Schedule 1 hereto, free and clear of any Security Interest, and has full
power and authority to convey such shares set forth opposite such Moran
Stockholder's name on Schedule 1 hereto, free and clear of any Security Interest
(other than as may be contained in any applicable stockholder agreement), and,
upon delivery of such shares as herein provided, Moran Enterprises will acquire
good, marketable and valid title thereto, free and clear of any Security
Interest (other than Security Interests granted by Moran Enterprises). Such
Moran Stockholder is a "citizen" within the meaning of Section 2(c) of the
Shipping Act of 1916, as amended.
(b) AUTHORITY RELATIVE TO THIS AGREEMENT. Such Moran Stockholder has the
full legal right and power and all authority and approval required to enter
into, execute and deliver this Agreement and any applicable Ancillary Agreements
and to perform fully such Moran Stockholder's obligations hereunder and
thereunder. This Agreement has been duly executed and delivered by such Moran
Stockholder and constitutes (and upon due execution and delivery, each of the
Ancillary Agreements to which such Moran Stockholder is intended to be a party
will constitute) the legal, valid and binding obligation of such Moran
Stockholder enforceable against such Moran Stockholder in accordance with its
terms.
(c) ABSENCE OF CONFLICTS. The execution and delivery of this Agreement and
the Ancillary Agreements and the consummation of the transactions contemplated
hereby and thereby and the performance by such Moran Stockholder of this
Agreement and the Ancillary Agreements in accordance with their respective terms
and conditions will not: (i) require such Moran Stockholder to obtain any
Permit, or any notice to, filing or registration with, or permit, license,
variance, waiver, exemption, franchise, order, consent, authorization or
approval of, any other person except for notices and consents disclosed on
Section (c) of the Moran Stockholder Disclosure Schedule; (ii) violate, conflict
with or result in a breach of any provision of or constitute a default (or an
event which, with notice or lapse of time or both, would constitute a breach or
default) under, or result in the termination of, or accelerate the performance
required by, or result in the creation of any Security Interest on the Moran
Stock held by such Moran Stockholder or upon the assets, properties or
businesses of Moran under any of the terms, conditions or provisions of any
contract or other agreement (written or oral) to which such Moran Stockholder is
a party (and to which Moran or any Subsidiary is not a party) or by or to which
such Moran Stockholder or the shares of Moran Stock held by such Moran
Stockholder are bound or subject; or (iii) subject to compliance with the
Hart-Scott-Rodino Act, (A) to the knowledge of such Moran Stockholder, violate
any Law or (B) violate any outstanding judgment, ruling, order, writ, injunction
or award of any Governmental Authority, in the case of (A) or (B), which is
applicable to such Moran Stockholder or to the Moran Stock held by such Moran
Stockholder.
(d) SECURITIES LAW MATTERS. Such Moran Stockholder hereby confirms that he
or she has been informed that the shares of the Moran Enterprises Common Stock
being issued to him, her or it are restricted securities under the Securities
Act and may not be resold or transferred unless first registered under the
federal securities laws or unless an exemption from such registration is
available.
<PAGE>
Accordingly, such Moran Stockholder hereby acknowledges that he or she is
prepared to hold the Moran Enterprises Common Stock for an indefinite period
and that the Moran Stockholder is aware that Rule 144 of the Commission
issued under the Securities Act is not presently available to exempt the
resale of the Moran Enterprises Common Stock from the registration
requirements of the Securities Act. Such Moran Stockholder is aware of the
adoption of Rule 144 promulgated under the Securities Act by the Commission,
which permits limited public resales of securities acquired in a nonpublic
offering, subject to the satisfaction of certain conditions. Such Moran
Stockholder understands that Rule 144 is conditioned upon, among other
things: (i) the availability of certain current public information about
Moran Enterprises, (ii) the resale occurring not earlier than one (1) year
after the party has purchased and paid for the securities to be sold, (iii)
the sale being made through a broker in an unsolicited "broker's
transaction", and (iv) the amount of securities being sold during any
three-month period not exceeding specified limitations. Such Moran
Stockholder understands that Moran Enterprises may not be satisfying the
current public information requirement of Rule 144 at the time such Moran
Stockholder wishes to sell the Moran Enterprises Common Stock or other
conditions under Rule 144. If so, such Moran Stockholder understands that he
or she may be precluded from selling the securities under Rule 144 even if
the one-year holding period of said Rule has been satisfied. Prior to the
acquisition of the shares of Moran Enterprises Common Stock by such Moran
Stockholder, each such Moran Stockholder acquired sufficient information
about Moran Enterprises to reach an informed and knowledgeable decision to
acquire the Moran Enterprises Common Stock. Such Moran Stockholder has such
knowledge and experience in financial and business matters so as to make him
or her capable of utilizing said information to evaluate the risks of the
prospective investment and to make an informed investment decision. Such
Moran Stockholder is able to bear the economic risk of his or her investment
in the Moran Enterprises Common Stock. Such Moran Stockholder is an
"Accredited Investor", as defined in the rules and regulations promulgated
under the Securities Act, and is a resident of the jurisdiction listed on
Schedule 1. Such Moran Stockholder also acknowledges that the shares of Moran
Enterprises Common Stock to be received by him, her or it will be subject to
additional restrictions on transfer and legend requirements under the
Stockholders Agreement.
(e) INTEREST IN COMPETITORS AND SUPPLIERS. Except as set forth on Section
(e) of the Moran Stockholder Disclosure Schedule, neither such Moran Stockholder
nor any Affiliate of such Moran Stockholder (i) has any material direct or
indirect interest in any Person (other than, upon the Closing, Moran
Enterprises) engaged or involved in any business which is competitive in any way
with the business of Moran Enterprises and its Subsidiaries or (ii) has any
material direct or indirect interest in any Person which is a lessor of assets
or properties to, material supplier of, or provider of services to, Moran
Enterprises or any of its Subsidiaries.
<PAGE>
ANNEX IV
REPRESENTATIONS AND WARRANTIES OF MORAN ENTERPRISES
(a) ORGANIZATION. Moran Enterprises is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware, and has the requisite corporate power and lawful authority to own,
lease and operate its assets, properties and business and to carry on its
business as it is now being conducted. Moran Enterprises is a "citizen" within
the meaning of Section 2(c) of the Shipping Act of 1916 as amended.
(b) AUTHORITY RELATIVE TO THIS AGREEMENT. Moran Enterprises
has the requisite corporate power and authority to enter into, execute and
deliver this Agreement and the Ancillary Agreements and to perform fully its
obligations hereunder and thereunder. The execution and delivery of this
Agreement and the Ancillary Agreements, and the consummation by Moran
Enterprises of the transactions contemplated hereby and thereby have been duly
authorized by the Board of Directors of Moran Enterprises and no other corporate
proceedings on the part of Moran Enterprises are necessary to authorize the
execution, delivery and performance of this Agreement or the Ancillary
Agreements and the transactions contemplated hereby and thereby. This Agreement
has been duly executed and delivered by Moran Enterprises and constitutes (and,
upon due execution and delivery, each of the Ancillary Agreements constitutes or
will constitute) the legal, valid and binding obligation of Moran Enterprises
enforceable against Moran Enterprises in accordance with its terms.
(c) ABSENCE OF CONFLICTS. The execution and delivery of this
Agreement and the Ancillary Agreements, the consummation of the transactions
contemplated hereby and thereby and compliance with the provisions hereof and
thereof will not: (i) require any Permit, or any notice to, filing or
registration with, or permit, license, variance, waiver, exemption, franchise,
order, consent, authorization or approval of, any other person except for
notices and consents disclosed on Section(c) of the Moran Enterprises Disclosure
Schedule; (ii) violate, conflict with or result in a breach of any provision of
or constitute a default (or an event which, with notice or lapse of time or
both, would constitute a default) under, or result in the termination of, or
accelerate the performance required by, or result in a creation of any Security
Interest upon any of the assets, properties or businesses of Moran Enterprises
or any of its Subsidiaries under, any of the terms, conditions or provisions of
(x) the Certificate of Incorporation or By-laws of Moran Enterprises or (y) any
contract or other agreement (written or oral) to which Moran Enterprises or any
of its assets, properties or businesses is subject; or (iii) subject to
compliance with the Securities Act, the Securities Exchange Act, the
Hart-Scott-Rodino Act, and applicable blue sky laws, violate any order, writ,
injunction or Law of any Governmental Authority which is applicable to Moran
Enterprises or any of its assets, properties or businesses, except, in the case
of clauses (ii) (y) and (iii) above, for such violations, conflicts, breaches,
defaults, terminations, accelerations or creations of Security Interest which
would not, individually or in the aggregate, have a material adverse effect on
Moran Enterprises or the consummation of the transactions contemplated hereby or
by the Ancillary Agreements.
(d) CAPITALIZATION OF MORAN ENTERPRISES. The authorized
capital stock of Moran Enterprises will, upon the filing of the Restated
Certificate, consist of 7,350,000 shares, (i) 200,000 of which are designated
Moran Enterprises Common Stock, par value $0.001 per share (the "Moran
Enterprises Common Stock"), and (ii) 7,150,000 of which are designated Moran
Enterprises Preferred Stock, par value $0.001 per share (the "Moran Enterprises
Preferred Stock"). Immediately prior to the Closing, 10 shares of Moran
Enterprises Common Stock and no Moran Enterprises Preferred Stock will be issued
and outstanding. Upon consummation of the transactions contemplated by this
Agreement, the
<PAGE>
Annex IV-Representations
& Warranties of Moran Enterprises
capitalization of Moran Enterprises as of the Closing Date shall be as set forth
in Schedule 1 hereto. The relative rights, privileges, and preferences of the
Moran Enterprises Common Stock and Moran Enterprises Preferred Stock will be as
stated in the Restated Certificate. The shares of Moran Enterprises Common Stock
issuable to the Turecamo Stockholders pursuant to the Agreement will, when so
issued and delivered in accordance with Section2(a) of the Agreement, be duly
authorized, validly issued, fully paid and nonassessable, free from preemptive
or other rights of third parties, and free from all liens and encumbrances
(other than as set forth in the Stockholders Agreement). Except as set forth in
Section(d) of the Moran Enterprises Disclosure Schedule, there are no options,
warrants, conversion privileges, or preemptive or other rights or agreements
presently outstanding to purchase or otherwise acquire any shares of the capital
stock or other debt or equity securities of Moran Enterprises. Moran Enterprises
is not a party or subject to any agreement or understanding, and, to Moran
Enterprises's knowledge, except as contemplated hereby and by the Ancillary
Agreements, there is no agreement or understanding that affects or relates to
the transfer, voting or giving of written consents with respect to any security,
or the voting by a director, of Moran Enterprises.
(e) PURCHASE FOR INVESTMENT. Moran Enterprises acknowledges
that the Turecamo Stock has not been registered under the Securities Act or
under any state securities Laws. Moran Enterprises is not an "underwriter" (as
such term is defined under the Securities Act), and is acquiring the Turecamo
Stock solely for investment with no present intention to distribute any of the
Turecamo Stock to any person, and Moran Enterprises will not sell or otherwise
dispose of any of the Turecamo Stock, except in compliance with the registration
requirements or exemption provisions under the Securities Act and the rules and
regulations promulgated thereunder, and any other applicable securities laws.
(f) CONDUCT OF BUSINESS. Prior to the Closing Date, Moran
Enterprises has not engaged in any business activity or held any assets.
<PAGE>
ANNEX V
REPRESENTATIONS AND
WARRANTIES OF MORAN
(a) ORGANIZATION, QUALIFICATION, AND CORPORATE POWER. Moran
and each of its Subsidiaries is a corporation duly organized, validly existing,
and in good standing under the jurisdiction of its incorporation as listed on
Section(a) of the Moran Disclosure Schedule. Each of Moran and its Subsidiaries
is duly authorized to conduct business and is in good standing under the laws of
each jurisdiction listed in Section(a) of the Moran Disclosure Schedule. Each of
Moran and its Subsidiaries has requisite corporate power and authority to carry
on the businesses in which it is engaged and to own and use the properties owned
and used by it. Moran has delivered to the Turecamo Stockholders correct and
complete copies of the certificates of incorporation and bylaws of Moran (as
amended to date). The minute books (containing the records of meetings of the
stockholders, the board of directors, and any committees of the board of
directors), the stock certificate books, and the stock record books of Moran are
correct and complete. Moran is not in default under or in violation of any
provision of its certificate of incorporation or bylaws. Moran is a "citizen"
within the meaning of Section 2(c) of the Shipping Act of 1916, as amended.
(b) CAPITALIZATION. The authorized capital stock of Moran
consisted of 100,000 shares of Moran Common Stock. There were issued and
outstanding 44,600 shares of Moran Common Stock and no other voting securities
of Moran. Each outstanding share of capital stock of Moran has been duly
authorized, is validly issued, fully paid, and nonassessable, and is held of
record by the respective Moran Stockholders as set forth in Section(b) of the
Moran Disclosure Schedule. All of the outstanding shares of capital stock of the
Moran Subsidiaries have been duly authorized and validly issued and are fully
paid and nonassessable, and are held of record and beneficially by Moran, free
and clear of all liens and other adverse claims. Except as set forth in
Section(b) of the Moran Disclosure Schedule, there are no outstanding or
authorized options, warrants, preemptive rights, purchase rights, subscription
rights, conversion rights, exchange rights, or other contracts or commitments
that could require Moran to issue, sell, or otherwise cause to become
outstanding any of its capital stock. There are no outstanding or authorized
stock appreciation, phantom stock, profit participation, or similar rights with
respect to Moran. Except as set forth in Section(b) of the Moran Disclosure
Schedule, there are no voting trusts, proxies, or other agreements or
understandings with respect to the voting of the capital stock of Moran.
(c) NONCONTRAVENTION. Except as set forth in Section(c) of the
Moran Disclosure Schedule, neither the execution and the delivery of this
Agreement or the Ancillary Agreements, nor the consummation of the transactions
contemplated hereby or thereby, will (i) violate any law or any order, decree,
ruling, charge, or other restriction of any Governmental Authority to which
Moran or any of its Subsidiaries is subject or any provision of the certificate
of incorporation or bylaws of Moran or any of its Subsidiaries or (ii) conflict
with, result in a breach of, constitute a default under (or an event which, with
notice or lapse of time, or both, would constitute a breach or default), result
in the acceleration of, create in any party the right to accelerate, terminate,
modify, or cancel, or require any notice under any agreement, Contract, Permit
or other arrangement (written or oral) to which Moran or any of its Subsidiaries
is a party or by which any of them is bound or to which any of their respective
assets is subject (or result in the imposition of any Security Interest upon any
of their respective assets). Except as set forth in Section(c) of the Moran
Disclosure Schedule, none of Moran or any of its Subsidiaries needs to give any
notice to,
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of Moran
make any filing with, or obtain any authorization, consent, or approval of any
Governmental Authority in order for the Parties to consummate the transactions
contemplated by this Agreement and the Ancillary Agreements or continue the
effectiveness of Permits relating to the Moran Business following the Closing.
(d) SUBSIDIARIES. Sections (a) and/or (d) of the Moran
Disclosure Schedule lists each Subsidiary of Moran. Except as set forth on
Section(a) and/or Section(d) of the Moran Disclosure Schedule, neither Moran nor
any of its Subsidiaries directly or indirectly, owns or controls or has any
capital or other equity interest or participation (or any interest convertible
into or exchangeable or exercisable for, any capital or other equity interest or
participation in) nor are any of Moran or any of its Subsidiaries, directly or
indirectly, subject to any obligation or requirement to provide funds to or
invest in, any person.
(e) FINANCIAL STATEMENTS AND SEC REPORTS. Moran has timely
filed all required forms, reports, statements and documents with the SEC since
October 19, 1994, all of which have complied in all material respects with all
applicable requirements of the Securities Act or the Exchange Act. Moran
heretofore has delivered to the Turecamo Stockholders true and complete copies
of (i) its Annual Reports on Form 10-K for the fiscal years ended December 31,
1996 and 1997 (the "Most Recent Form 10-K"), (ii) its Quarterly Reports on Form
10-Q for the fiscal quarters ended March 31, 1998 and June 30, 1998 (the "Most
Recent Forms 10- Q", and the Most Recent Forms 10-Q and the Most Recent Form
10-K, the "Most Recent SEC Reports"), and (iii) all other reports, statements
and registration statements filed by it with the SEC at any time or required to
be filed by it with the SEC since October 19, 1994 (the documents referred to in
clauses (i), (ii) and (iii) being hereinafter referred to as "Moran SEC
Reports"). As of their respective dates, the Moran SEC Reports did not contain
any untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements made therein, in light of the
circumstances under which they were made, not misleading. The financial
statements (including any related notes) of Moran and its Subsidiaries included
in the Moran SEC Reports were prepared in conformity with GAAP applied on a
consistent basis, and present fairly the consolidated financial position,
results of operations, cash flows and changes in stockholders equity of Moran
and its consolidated Subsidiaries as of the dates and for the periods indicated,
subject, in the case of unaudited interim consolidated financial statements, to
condensation, the absence of certain notes thereto and normal year-end audit
adjustments. Since December 31, 1997, there has been no change in any of the
significant accounting (including tax accounting) policies, practices or
procedures of Moran or any of its consolidated Subsidiaries.
(f) UNDISCLOSED LIABILITIES. None of Moran or its Subsidiaries
has any material Liability, except for (i) Liabilities fully and adequately
reflected or reserved against in the financial statements included in the Most
Recent SEC Reports; (ii) Liabilities which have arisen after December 31, 1997
in the Ordinary Course of Business (none of which results from, arises out of,
relates to, is in the nature of, or was caused by any breach of contract or, to
the Knowledge of Moran, by any breach of warranty, tort, infringement, or
violation of law); and (iii) Liabilities specifically disclosed in Section(f) of
the Moran Disclosure Schedule.
(g) EVENTS SUBSEQUENT TO MOST RECENT FISCAL YEAR END. Since
December 31, 1997, there has not been any adverse change in the business,
financial condition, operations, results of operations, or future prospects of
Moran or any of its Subsidiaries. Without limiting the generality of the
foregoing,
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of Moran
except as set forth in Section(g) of the Moran Disclosure Schedule, since that
date:
(i) none of Moran or any of its Subsidiaries has sold, leased,
transferred, or assigned any of its assets, tangible or intangible,
other than for a fair consideration in the Ordinary Course of Business;
(ii) none of Moran or any of its Subsidiaries has entered into
any agreement, contract, lease, pricing arrangement or license (or
series of related agreements, contracts, leases, arrangements and
licenses) either involving more than $500,000 or outside the Ordinary
Course of Business;
(iii) no party (including Moran) has accelerated, terminated,
modified, or cancelled any agreement, contract, lease, or license (or
series of related agreements, contracts, leases, and licenses)
involving more than $500,000 to which any of Moran or any of its
Subsidiaries is a party or by which any of them or any of their
respective assets is bound;
(iv) none of Moran or any of its Subsidiaries has granted (or,
to the Knowledge of Moran or any of its Subsidiaries, permitted) any
Security Interest upon any of its assets, tangible or intangible;
(v) none of Moran or its Subsidiaries has made any capital
expenditure (or series of related capital expenditures) either
involving more than $500,000 or outside the Ordinary Course of
Business;
(vi) none of Moran or its Subsidiaries has made any capital
investment in, any loan to, or any acquisition of the securities or
assets of, any other Person (or series of related capital investments,
loans, and acquisitions) either involving more than $500,000 or outside
the Ordinary Course of Business;
(vii) none of Moran or its Subsidiaries has issued any note,
bond, or other debt security or created, incurred, assumed, or
guaranteed any indebtedness for borrowed money or capitalized lease
obligation either involving more than $500,000 in the aggregate or
outside the Ordinary Course of Business;
(viii) none of Moran or its Subsidiaries has delayed or
postponed the payment of accounts payable and other Liabilities outside
the Ordinary Course of Business;
(ix) none of Moran or its Subsidiaries has cancelled,
compromised, waived, or released any right or claim (or series of
related rights and claims) either involving more than $500,000 or
outside the Ordinary Course of Business;
(x) there has been no change made or authorized in the
certificate of incorporation or bylaws of any of Moran or any of its
Subsidiaries;
(xi) none of Moran or any of its Subsidiaries has issued,
sold, or otherwise disposed of any of its capital stock, or granted any
options, warrants, preemptive or other rights to
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purchase or obtain (including upon conversion, exchange, or
exercise) any of its capital stock;
(xii) none of Moran or its Subsidiaries has declared, set
aside, or paid any dividend or made any distribution with respect to
its capital stock (whether in cash or in kind) or redeemed, purchased,
or otherwise acquired any of its capital stock;
(xiii) none of Moran or its Subsidiaries has experienced any
damage, destruction, or loss (whether or not covered by insurance)
individually, or in the aggregate, more than $500,000 to its property;
(xiv) except as set forth in Section(g) of the Moran
Disclosure Schedule, none of Moran or any of its Subsidiaries has made
any loan to, or entered into any other transaction with, any of its
directors, officers, employees or stockholders outside the Ordinary
Course of Business;
(xv) none of Moran or any of its Subsidiaries has entered into
any employment contract or collective bargaining agreement, written or
oral, or modified the terms of any existing such contract or agreement;
(xvi) none of Moran or any of its Subsidiaries has granted any
increase in the base compensation of any of its directors, officers,
and employees outside the Ordinary Course of Business or made any other
change in employment terms or any advances or payments for or to any of
its directors, officers, or employees outside the Ordinary Course of
Business;
(xvii) none of Moran or any of its Subsidiaries has adopted,
amended, modified, or terminated any bonus, profit-sharing, incentive,
severance, or other plan, contract, or commitment for the benefit of
any of its directors, officers, and employees (or taken any such action
with respect to any other Employee Benefit Plan);
(xviii) none of Moran or any of its Subsidiaries has made or
pledged to make any charitable or other capital contribution outside
the Ordinary Course of Business;
(xix) no material customer, supplier, representative, lessee,
or lessor has terminated or given notice of its intent to terminate its
relationship with Moran or any of its Subsidiaries; and
(xx) none of Moran and each of its Subsidiaries has committed
to any of the foregoing.
(h) LEGAL COMPLIANCE.
(i) Moran and each of its Subsidiaries has complied in all
material respects with all applicable Laws and no action, suit,
proceeding, hearing, investigation, charge, complaint, claim, demand,
or notice has been filed or commenced against any of them alleging any
failure so to comply. Section (h) of the Moran Disclosure Schedule
lists all non-compliances with laws for which Moran has been cited by a
Governmental Authority during the past 3 years (other than USCG
citations involving fines not exceeding $5,000, individually).
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(ii) Moran and each of its Subsidiaries possess, and are in
material compliance with, the terms and conditions of, all Permits from
any Governmental Authority that are necessary for the ownership of
their respective assets and the conduct of the Moran Business as
presently conducted in the Ordinary Course of Business. With respect to
each such Permit which is material: (A) the Permit is in full force and
effect; (B) none of Moran or any of its Subsidiaries is in breach or
default, and, to the Knowledge of Moran, no event has occurred which,
with notice or lapse of time, or both, would constitute a breach or
default, or permit termination or modification of the Permit; and (C)
the Permit will continue in full force and effect on identical terms
for the benefit of Moran Enterprises and/or its Subsidiaries following
the consummation of the transactions contemplated hereby and by the
Ancillary Agreements.
(iii) To the Knowledge of Moran, none of Moran, any of its
Subsidiaries, the Moran Stockholders, or any officer, director,
employee, consultant or agent of Moran has made, directly or
indirectly, any payment or promise to pay, or gift or promise to give
or authorized such a promise or gift, of any money or anything of
value, directly or indirectly, to any governmental official, customer
or supplier for the purpose of influencing any official act or decision
of such official, customer or supplier or inducing him, her or it to
use his, her or its influence to affect any act or decision of a
Governmental Authority or customer, under circumstances which could
subject Moran, any of its Subsidiaries or any Moran Stockholder or any
officers, directors, employees or consultants of Moran to
administrative or criminal penalties or sanctions or termination of
such customer relationship.
(i) TAX MATTERS.
(i) Except as set forth on Section(i) to the Moran Disclosure
Schedule, each of Moran and its Subsidiaries has filed all Tax Returns
that it was required to file. All such Tax Returns were correct and
complete in all material respects. All Taxes owed by any of Moran and
its Subsidiaries reflected on such Tax Returns have been paid. Except
as set forth in Section(i) of the Moran Disclosure Schedule, none of
Moran or its Subsidiaries is currently the beneficiary of any extension
of time within which to file any Tax Return. Except as set forth on
Section(i) to the Moran Disclosure Schedule, no claim has ever been
made by an authority in a jurisdiction where any of Moran and its
Subsidiaries does not file Tax Returns that it is or may be subject to
taxation by that jurisdiction. There are no Security Interests on any
of the assets of any of Moran and its Subsidiaries that arose in
connection with any failure (or alleged failure) to pay any Tax.
(ii) Each of Moran and its Subsidiaries has withheld and paid
all Taxes required to have been withheld and paid in connection with
amounts paid or owing to any employee, independent contractor,
creditor, stockholder, or other third party, except to the extent that
a failure to withhold or make such payment could not be reasonably
expected to have a Moran Material Adverse Effect.
(iii) Except as set forth on Section(i) of the Moran
Disclosure Schedule, none of Moran or its Subsidiaries expects any
authority to assess any additional Taxes for any period for which Tax
Returns have been filed by any of Moran and its Subsidiaries. There is
no dispute or claim
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of Moran
concerning any Liability with respect to any Taxes of any of Moran and
its Subsidiaries either (A) claimed or raised by any Governmental
Authority in writing or (B) as to which Moran has Knowledge. Section
(i) of the Moran Disclosure Schedule lists all federal, state, local,
and foreign income Tax Returns filed with respect to any of Moran and
its Subsidiaries for taxable periods ended on or after December 31,
1996, indicates those Tax Returns that have been audited, and indicates
those Tax Returns that currently are the subject of audit. Moran has
delivered to the Turecamo Stockholders correct and complete copies of
all federal and state income and other material Tax Returns,
examination reports, and statements of deficiencies assessed against or
agreed to by any of Moran and its Subsidiaries since December 31, 1996.
(iv) Except as set forth on Section(i) of the Moran Disclosure
Schedule, none of Moran or its Subsidiaries has waived any statute of
limitations in respect of Taxes or agreed to any extension of time with
respect to a Tax assessment or deficiency.
(v) None of Moran or its Subsidiaries has filed a consent
under Code Section341(f) concerning collapsible corporations. None of
Moran or its Subsidiaries has made any payments, is obligated to make
any payments, or is a party to any agreement that under certain
circumstances could obligate it to make any payments that will not be
deductible under Code Section280G. Except as set forth on Section(i) of
the Moran Disclosure Schedule, none of Moran or its Subsidiaries has
been a United States real property holding corporation within the
meaning of Code Section897(c)(2) during the applicable period specified
in Code Section897(c)(1)(A)(ii). None of Moran or its Subsidiaries is a
party to any Tax allocation or sharing agreement. None of Moran and its
Subsidiaries (A) is and has been a member of an Affiliated Group filing
a consolidated federal income Tax Return, other than the Affiliated
Group of which Moran is the common parent and the Affiliated Group of
which Moran Towing Corporation was the common parent prior to July
1994, and (B) has any Liability for the Taxes of any Person (other than
any of Moran and its Subsidiaries) under Reg. Section1.1502-6 (or any
similar provision of state, local, or foreign law), as a transferee or
successor, by contract, or otherwise.
(vi) Section (i) of the Moran Disclosure Schedule sets forth,
as of December 31, 1997, the net book value and tax basis, if any, of
Moran and its Subsidiaries in their floating equipment.
(vii) The unpaid Taxes of Moran and its Subsidiaries (A) did
not, as of March 31, 1998 exceed the reserve for Tax Liability (rather
than any reserve for deferred Taxes established to reflect timing
differences between book and Tax income) set forth on the Most Recent
Form 10-Q and (B) do not exceed that reserve as adjusted for the
passage of time through the Closing Date in accordance with the past
custom and practice of Moran and its Subsidiaries in filing their Tax
Returns.
(j) REAL PROPERTY.
(i) With respect to all material real property that any of
Moran or its Subsidiaries owns, the owner has good and marketable title
to the parcel of real property, free and clear of any Security
Interest, easement, covenant, or other restriction, except for
installments of special assessments not yet delinquent and recorded
easements, covenants, and other restrictions which
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of Moran
do not materially impair the current use, occupancy, or value, or the
marketability of title, of the property subject thereto.
(ii) Section (j)(ii) of the Moran Disclosure Schedule lists
and describes briefly all real property leased or subleased to, or
otherwise occupied by, any of Moran and its Subsidiaries (all such real
property, together with all buildings and other improvements thereon,
the "Moran Leased Real Property"). As to all existing leases, subleases
or other contracts with respect to the Moran Leased Real Property (the
"Moran Leases"):
(A) each of the Moran Leases is, and, at Closing,
each of the Moran Leases will be, legal, valid, binding,
enforceable, and in full force and effect following the
consummation of the transactions contemplated hereby;
(B) none of Moran or its Subsidiaries is, and to the
Knowledge of Moran, no other party to any of the Moran Leases
is, in breach or default, and no event has occurred which,
with notice or lapse of time, would constitute a breach or
default or permit termination, modification, or acceleration
thereunder;
(C) no party to any of the Moran Leases has
repudiated any provision thereof;
(D) there are no disputes, oral agreements, or
forbearance programs in effect as to any of the Moran Leases,
other than as described on Section(j)(ii) of the Moran
Disclosure Schedule;
(E) with respect to any of the Moran Leases which is
a sublease, the representations and warranties set forth in
subsections (A) through (E) above are true and correct with
respect to the underlying lease(s);
(F) none of Moran or its Subsidiaries has assigned,
transferred, conveyed, mortgaged, deeded in trust, or
encumbered any interest in any of the Moran Leases;
(G) to the knowledge of Moran, the landlords of the
Moran Leased Real Properties have provided, and as a tenant of
Moran Leased Real Property, Moran has provided all approvals
of Governmental Authorities (including licenses and permits)
required in connection with the operation thereof and have
been operated and maintained in accordance with applicable
laws, rules, and regulations; and
(H) all Moran Leased Real Property is supplied with
utilities and other services necessary for the operation of
said Moran Leased Real Property.
(k) INTELLECTUAL PROPERTY.
(i) Moran and its Subsidiaries own or have the right to use
pursuant to license, sublicense, agreement, or permission all material
Intellectual Property necessary for the operation of the Moran Business
as presently conducted. Moran and its Subsidiaries possess all
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of Moran
right, title and interest in and to the each material item of owned
Intellectual Property, free and clear of any Security Interest or other
restriction or claim. With respect to each material item of
Intellectual Property that any third party owns and that any of Moran
and its Subsidiaries uses, the license, sublicense, agreement or
permission pursuant to which any of Moran and its Subsidiaries has the
right to use such item is legal, valid, binding, enforceable and in
full force and effect. Except as disclosed on Section(k) of the Moran
Disclosure Schedule, each material item of Intellectual Property owned
or used by Moran and its Subsidiaries immediately prior to the Closing
hereunder will be owned or available for use by Moran Enterprises and
its Subsidiaries on identical terms and conditions immediately
subsequent to the Closing hereunder.
(ii) Section (k) of the Moran Disclosure Schedule identifies
each material item of Intellectual Property (excluding Section(e) of
the definition of Intellectual Property) owned or used by Moran and its
Subsidiaries in the Moran Business. Section (k)(ii) of the Moran
Disclosure Schedule identifies each license, agreement, or other
permission which any of Moran and its Subsidiaries has granted to any
third party with respect to any of its material Intellectual Property
(together with any exceptions). Moran has delivered to the Turecamo
Stockholders correct and complete copies of all such licenses,
agreements, and permissions (as amended to date).
(iii) To the Knowledge of Moran, none of Moran or its
Subsidiaries has interfered with, infringed upon, misappropriated, or
otherwise come into conflict with any Intellectual Property rights of
third parties, nor has any Moran or its Subsidiaries ever received any
charge, complaint, claim, demand, or notice alleging any such
interference, infringement, misappropriation, or violation (including
any claim that any of Moran or its Subsidiaries must license or refrain
from using any Intellectual Property rights of any third party), except
where such interference, infringement, misappropriation or conflict
would not reasonably expect to have a Moran Material Adverse Effect. To
the Knowledge of Moran, no third party has interfered with, infringed
upon, misappropriated, or otherwise come into conflict with any
Intellectual Property rights of any of Moran or its Subsidiaries,
except where such interference, infringement, misappropriation or
conflict would not reasonably expect to have a Moran Material Adverse
Effect.
(l) TANGIBLE PROPERTY. Section (l) of the Moran Disclosure Schedule
sets forth all interests owned or claimed by each of Moran and its Subsidiaries
(including, without limitation, options) in or to Moran Tangible Property (as
defined below) which are material to the Moran Business and are not reflected in
the Moran SEC Reports and have not been sold or disposed of in the Ordinary
Course of Business since the Most Recent Form 10-Q. The Moran Tangible Property
of Moran and its Subsidiaries that is material to the Moran Business is in good
operating condition and repair. For purposes hereof, "Moran Tangible Property"
means equipment (other than Moran Vessels), furniture, leasehold improvements,
fixtures, vehicles, structures, any related capitalized items and other tangible
property and which is treated by Moran as depreciable or amortizable property.
(m) VESSELS. Each of Moran and its Subsidiaries owns and is lawfully
possessed of (i) good and marketable title to the whole of each of the vessels
identified in the Moran SEC Reports as being owned by such entity (except such
vessels which are indicated as being owned jointly with others on the Moran
Disclosure Schedule), free and clear of any Security Interest or any commitment
to make such
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of Moran
vessel available for charter or sale or use by any governmental authority,
except for the mortgages identified in the Moran SEC Reports and other liens
expressly permitted by such mortgages, and (ii) good and valid bareboat charters
of the vessels identified in the Moran SEC Reports as being chartered by Moran
or its Subsidiaries. True, complete and correct copies of such mortgages and
charters have been delivered or made available to the Turecamo Stockholders.
Such vessels are referred to in this Agreement as the "Moran Vessels". Each of
the Moran Vessels is duly documented in the name of Moran or its Subsidiaries
under the laws and flag of the United States of America, is eligible for
coastwise documentation, and all necessary coastwise certificates, licenses and
permits relating thereto are valid and current. Each of the Moran Vessels is
well and sufficiently tackled, apparelled, furnished and equipped and, except as
set forth on Section(m)(iii) of the Moran Disclosure Schedule, is free of
outstanding requirements of the USCG, and is in good operating condition,
suitable to its intended trade and has no deficiencies to correct a condition
customarily considered to be necessary to the safety or operation of such Moran
Vessel or her crew or which must be corrected before such Moran Vessel is
acceptable for customary marine insurance. Each of the Moran Vessels now has
valid and current USCG Inspection Certificates, where applicable, and all other
certificates, licenses and permits (including, Certificates of Financial
Responsibility (Water Pollution)), which are required by applicable law or
regulation. Set forth on Section(m)(iv) of the Moran Disclosure Schedule is a
list of the current ABS Classification, if any, of each Moran Vessel.
(n) TITLE TO ASSETS. Moran and its Subsidiaries have good and
marketable title to, or a valid leasehold interest in, the properties and assets
used by them or shown in the financials contained in the Most Recent Form 10-Q
or acquired after the date thereof, free and clear of all Security Interests,
except for those Security Interests set forth in Section(n) of the Moran
Disclosure Schedule, identified in the Moran SEC Reports or permitted by the
mortgages identified in the Most Recent SEC Reports.
(o) CONTRACTS. All purchase orders, contracts, commitments,
obligations, plans, agreements, instruments, arrangements, understandings,
undertakings, including all amendments and supplements thereto, or series of any
of the foregoing, but excluding, in each case, ship-docking contracts
cancellable on 30 days or less notice, to which Moran or any of its Subsidiaries
is a party or by which any of their respective assets or the Moran Business are
bound which are material to Moran or its Subsidiaries (the "Moran Contracts")
are listed as exhibits in the Moran SEC Reports or disclosed on Section(o) of
the Moran Disclosure Schedule. Moran and its Subsidiaries have made available to
the Turecamo Stockholders a correct and complete copy of each Moran Contract.
Other than purchase orders cancelable upon less than 30 days' notice, with
respect to each such Moran Contract: (A) the Moran Contract is legal, valid,
binding, enforceable, and in full force and effect; (B) none of Moran or its
Subsidiaries is, and, to the Knowledge of Moran and its Subsidiaries, no other
party is, in breach or default, and no event has occurred which with notice or
lapse of time would constitute a breach or default, or permit termination,
modification, or acceleration, under the Moran Contract; and (C) Moran and its
Subsidiaries have not and, to the Knowledge of Moran, no other party has,
repudiated any provision of any Moran Contract. Except as set forth in
Section(o) of the Moran Disclosure Schedule, no purchase contracts of Moran and
any of its Subsidiaries are in excess of the normal and ordinary requirements of
the Moran Business. Except as disclosed in the Moran SEC Reports or as listed on
Section(o) of the Moran Disclosure Schedule, neither Moran nor any of its
Subsidiaries is a guarantor or otherwise liable for any Liability or obligation
(including Indebtedness) of any other Person other than a Subsidiary.
(p) NOTES AND ACCOUNTS RECEIVABLE. All notes and accounts receivable of
Moran and its
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of Moran
Subsidiaries are reflected properly on their books and records, are valid
receivables subject to no set off or counterclaim, are subject to adequate
reserves established in a manner consistent with past practice, and were
incurred in the Ordinary Course of Business of Moran and its Subsidiaries for
bona fide services rendered.
(q) INSURANCE. Section (q) of the Moran Disclosure Schedule sets forth
the following information with respect to each insurance policy (including
protection and indemnity policies and policies providing property, casualty,
liability, and workers' compensation coverage and bond and surety arrangements)
to which any of Moran and its Subsidiaries has been a party, a named insured, or
otherwise the beneficiary of coverage at any time within the past 3 years:
(i) the name, address, and telephone number of the agent;
(ii) the name of the insurer, the name of the policyholder,
and the name of each covered insured;
(iii) the policy number and the period of coverage;
(iv) the scope (including an indication of whether the
coverage was on a claims made, occurrence, or other basis) and amount
(including a description of how deductibles and ceilings are calculated
and operate) of coverage;
(v) a description of annual premiums payable, deductibles and
limits with respect thereto and any retroactive premium adjustments or
other loss-sharing arrangements; and
(vi) the claims history of Moran and its Subsidiaries with
respect to such policy.
With respect to each such insurance policy: (A) the policy is legal, valid,
binding, enforceable, and in full force and effect; (B) the policy will continue
to be legal, valid, binding, enforceable, and in full force and effect on
identical terms following the consummation of the transactions contemplated
hereby; (C) neither Moran nor any of its Subsidiaries nor any other party to the
policy is in breach or default (including with respect to the payment of
premiums or the giving of notices), and no event has occurred which, with notice
or the lapse of time, would constitute such a breach or default, or permit
termination, modification, or acceleration, under the policy; and (D) no party
to the policy has repudiated any provision thereof. Without limiting the
foregoing, Moran and its Subsidiaries have kept all Moran Vessels owned or
operated by them insured in accordance with customary practices in the industry.
The Moran SEC Reports describe any self-insurance arrangements affecting Moran
and its Subsidiaries.
(r) LITIGATION. The Most Recent SEC Reports and Section(r) of the Moran
Disclosure Schedule set forth each instance in which any of Moran and its
Subsidiaries (i) is subject to any outstanding injunction, judgment, order,
decree, ruling, or charge or (ii) is a party or, to the Knowledge of Moran is
threatened to be made a party to any action, suit, proceeding, hearing, or
investigation of, in, or before any Governmental Authority or before any
arbitrator. None of the actions, suits, proceedings, hearings, and
investigations set forth in the Most Recent SEC Reports or Section(r) of the
Moran Disclosure Schedule would reasonably be expected to have a Moran Material
Adverse Effect. Moran has no Knowledge that any such action, suit, proceeding,
hearing, or investigation may be brought or threatened against any of
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of Moran
Moran and its Subsidiaries.
(s) EMPLOYEES. Except as set forth on Section(s) of the Moran
Disclosure Schedule, to the Knowledge of Moran, no executive, key employee, or
group of employees has any plans to terminate employment with Moran or any of
its Subsidiaries. Except as set forth in the Most Recent SEC Reports or on
Section(s) of the Moran Disclosure Schedule, neither Moran nor any of its
Subsidiaries is a party to or bound by any collective bargaining agreement, nor
is any of them experiencing any strikes, grievances, claims of unfair labor
practices, or other collective bargaining disputes. Except as disclosed in the
Most Recent SEC Reports, neither Moran nor any of its Subsidiaries nor any
stockholder of Moran has committed any unfair labor practice. Neither Moran nor
any of its Subsidiaries has any Knowledge of any organizational effort presently
being made or threatened by or on behalf of any labor union with respect to
employees of Moran. The qualifications of each employee of Moran and its
Subsidiaries for employment under applicable immigration laws have been
reviewed, a properly completed Form I-9 is on file with respect to each such
employee, as applicable, and each of Moran and its Subsidiaries has complied
with the Immigration and Nationality Act, as amended from time to time, and the
rules and regulations promulgated thereunder, and neither Moran nor any of its
Subsidiaries has any Knowledge of any basis for any claim that Moran and its
Subsidiaries are not in compliance with the terms thereof.
(t) EMPLOYEE BENEFITS. Section (t) of the Moran Disclosure Schedule
lists each Employee Benefit Plan maintained by Moran and its Subsidiaries or to
which Moran and its Subsidiaries are obligated (or at any time within the last
six years, have been obligated) to contribute or with respect to which Moran and
its Subsidiaries have any Liability (the "Moran Employee Benefit Plans"). None
of the Moran Employee Benefit Plans that are not qualified plans under Section
401(a) of the Code and exempt from income taxation under Section 501(a) of the
Code provides or promises benefits to ex-employees (including retirees) of any
of Moran and its Subsidiaries and their dependents and beneficiaries, except as
specifically required under Section 4980B of the Code with respect to
continuation of coverage. All Moran Employee Benefit Plans have been operated in
accordance with their terms. All Moran Employee Benefit Plans that are not
Multiemployer Plans and that are subject to the terms of ERISA, the Code, or
other statutes, laws, ordinances, codes, rules and regulations comply in all
material respects with ERISA, the Code, and such other statutes, laws,
ordinances, codes, rules and regulations, as applicable. In the case of each
Moran Employee Benefit Plan which is intended to be a qualified plan under
Section 401(a) of the Code and exempt from income taxation under Section 501(a)
of the Code, a determination has been received from the appropriate District
Director of the Internal Revenue Service that such plan is qualified under
Section 401(a) of the Code and the trust created thereunder is exempt from
federal taxation under Section 501(a) of the Code. No such Moran Employee
Benefit Plan has incurred any accumulated funding deficiency (within the meaning
of ERISA or the Code) and neither Moran nor any of its Subsidiaries has any
Liability or potential Liability on account of an accumulated funding deficiency
with respect to any Moran Employee Benefit Plan. There has been no transaction
involving any Moran Employee Benefit Plan which is a "prohibited transaction"
under ERISA or the Code in connection with which any of Moran and its
Subsidiaries would be subject to Liability under ERISA or any Tax Liability
imposed by the Code, or which would subject any Moran Employee Benefit Plan or
any of Moran and its Subsidiaries to a penalty under ERISA, the Code or any
other statute, law, ordinance, code, rule or regulation. There has been no
complete or partial termination of any Moran Employee Benefit Plan. None of the
Moran Employee Benefit Plans provides for additional or accelerated payments or
other consideration to be made on account of the transactions contemplated
hereby.
<PAGE>
Annex V-Reps. & Warranties
of Moran
The market value of assets under each Moran Employee Benefit
Plan equals or exceeds the present value of all vested and nonvested liabilities
thereunder determined in accordance with the provisions of ERISA and the Code
applicable to an Employee Benefit Plan terminating on the date such
determination is made.
No suit, action, claim, proceeding, investigation or
arbitration has been made or instituted or, to the Knowledge of Moran,
threatened, with respect to any Moran Employee Benefit Plan or any assets
thereof; except for routine claims for benefits made in accordance with the
terms thereof.
All contributions or payments required to be made to such
Moran Employee Benefit Plans by their terms, the terms of any relevant
collective bargaining agreement(s) or any other applicable law, before or after
the Closing Date, with respect to all periods or events occurring prior to the
Closing Date (including all insurance premiums) have been properly paid or
accrued (to the extent required under GAAP, ERISA or the Code) on the books of
account of Moran and its Subsidiaries prior to the Closing Date (including,
without limitation, a pro rata share with respect to any period including the
Closing Date based on the ratio of the number of days in such period to the
total number of days in the fiscal year of the applicable Moran Employee Benefit
Plan). The Liabilities for all benefits provided pursuant to the Moran Employee
Benefit Plans have been truly and accurately provided for on the books of
account of Moran and its Subsidiaries.
True, complete and accurate copies of the documents setting
forth the terms of each Moran Employee Benefit Plan, including, without
limitation, plans, agreements, amendments, trusts and all related contracts and
other agreements (including, without limitation, corporate resolutions and
minutes relating to any Moran Employee Benefit Plan) and, where applicable,
copies of each Moran Employee Benefit Plan's: (i) most recent summary plan
descriptions and modifications thereto; (ii) notices distributed to employees,
consultants, agents, dependents and other beneficiaries with regard to any Moran
Employee Benefit Plan and any continuation of coverage required under law; (iii)
most recent favorable Internal Revenue Service determination letters; (iv) two
most recent annual reports (IRS Forms 5500), including, without limitation,
audited financial statements (if any) and all schedules thereto; and (v) two
most recent actuarial reports, have heretofore been delivered or made available
to Turecamo Stockholders. There are no oral modifications to any of such Moran
Employee Benefit Plans.
For purposes of this Section (t), "Moran" includes Moran and
any trade or business (whether or not incorporated) that is a member of the same
"controlled group" of corporations as, or is treated as being under "common
control" with, within the meaning of Sections 414(b), (c), (m) and (o) of the
Code and the Treasury Regulations promulgated thereunder, Moran.
(u) ENVIRONMENTAL, HEALTH, AND SAFETY MATTERS.
(i) Except as set forth in the Moran SEC Reports or on
Section(u) of the Moran Disclosure Schedule:
(A) each of Moran and its Subsidiaries is in material
compliance with applicable Environmental Laws, and within the
period of all applicable statutes of limitation has been in
such compliance; and there are no circumstances that are
<PAGE>
Annex V-Reps. & Warranties
of Moran
reasonably likely to prevent or interfere with such compliance
in the future;
(B) each of Moran and its Subsidiaries holds
Environmental Permits necessary to conduct its operations as
they are currently conducted; Section(u)(i) of the Moran
Disclosure Schedule is a true and complete list of all such
Environmental Permits and, where applicable,
(C) their expiration dates; neither Moran nor any of
its Subsidiaries has reason to believe that any such
Environmental Permits (1) will not be renewed, or (2) will be
renewed under terms that are reasonably likely to have a Moran
Material Adverse Effect;
(D) there are no Materials of Environmental Concern
in violation of Environmental Laws or Environmental Permits
present at, and no Materials of Environmental Concern are or
have been in any way released or threatened to be released
from, any property currently or formerly owned, leased or
otherwise operated by the Moran and its Subsidiaries in
violation of Environmental Laws or Environmental Permits, or
as a result of present or former operations of Moran and its
Subsidiaries;
(E) neither Moran nor any of its Subsidiaries is
currently in receipt of any Environmental Claim, and no
Environmental Claim against Moran or any of its Subsidiaries
is currently being threatened;
(F) neither Moran nor any of its Subsidiaries has
entered into, agreed to, nor is Moran or any of its
Subsidiaries otherwise subject to any judgment, decree, order
or similar requirement under any Environmental Law, nor is
Moran or any of its Subsidiaries negotiating any such
judgment, decree, order or requirement;
(G) neither Moran nor any of its Subsidiaries has
contractually assumed or retained any liabilities or
obligations, contingent or otherwise, in connection with any
Environmental Law; and neither this Agreement nor the
consummation of the transactions contemplated hereby will
result in any obligations for site investigation or cleanup,
or notification to or consent of Governmental Authorities or
third parties, pursuant to any of the so-called
"transaction-triggered" or "responsible property transfer"
Environmental Laws; and
(ii) Set forth on Section(u)(ii) of the Moran Disclosure
Schedule is a complete list of reports, studies, assessments, audits,
and other similar documents in the possession or control of Moran and
its Subsidiaries that address any issues of actual or potential
noncompliance with, or actual or potential liability under, any
Environmental Laws that may affect Moran and its Subsidiaries. True,
correct and complete copies of all such reports have been provided or
made available to the Turecamo Stockholders prior to the signing
hereof.
(iii) Except as set forth on Section(u)(iii) of the Moran
Disclosure Schedule, no Environmental Law requires any Permit, consent,
or other authorization to be obtained from, or any application, filing,
or other notice to be given to, any person in connection with this
<PAGE>
Annex V-Reps. & Warranties
of Moran
Agreement or any action contemplated by this Agreement.
(iv) None of the matters set forth in the Most Recent SEC
Reports or on Section(u)(i) of the Moran Disclosure Schedule, or any
aggregation thereof, could reasonably be expected to result in a Moran
Material Adverse Effect.
(v) CERTAIN BUSINESS RELATIONSHIPS WITH MORAN. Except as set forth in
Section(v) of the Moran Disclosure Schedule, none of the Moran Stockholders or
any of their Affiliates has been involved in any business arrangement or
relationship with Moran or any of its Subsidiaries within the past 36 months,
and none of the Moran Stockholders owns any asset, tangible or intangible, which
is used in the business of Moran or any of its Subsidiaries.
(w) BROKERS' FEES. None of Moran or its Subsidiaries or any of its
stockholders has any Liability or obligation to pay any fees or commissions to
any broker, finder, or agent with respect to the transactions contemplated by
this Agreement or by the Ancillary Agreements, except to Hardy Harris
Incorporated ("Hardy Harris"). Except for such obligations to Hardy Harris, none
of Moran or its Subsidiaries, the Moran Stockholders or any of their officers or
directors have incurred any liability for any brokerage, finder's, financial
advisory or other fee or commission or similar form of compensation in
connection with this Agreement or the Ancillary Agreements or the transactions
contemplated hereby or thereby.
(x) CUSTOMERS; SUPPLIERS. Section (x) of the Moran Disclosure Schedule
lists, for each of the fiscal years ended December 31, 1996 and 1997, each
customer or group of affiliated customers which accounted for more than five
percent (5%) of the consolidated revenues of Moran and its Subsidiaries during
such period and each supplier or group of affiliated suppliers which provided
more than five percent (5%) of the requirements of Moran and its Subsidiaries
during such period. The relationships of Moran and its Subsidiaries with their
respective customers and suppliers are good commercial working relationships
and, except as set forth on Section(x) of the Moran Disclosure Schedule, during
the last twelve months, no material customer or supplier of Moran and its
Subsidiaries listed on Section(x) of the Moran Disclosure Schedule has cancelled
or otherwise terminated, or threatened to cancel or otherwise terminate, its
relationship with any of Moran or its Subsidiaries or decreased, or threatened
to decrease or limit in any material respect, its usage of the services of Moran
or any of its Subsidiaries or its provision of services to Moran and its
Subsidiaries. None of Moran or its Subsidiaries has any notice that any material
customer or supplier intends to cancel or otherwise modify its relationship with
Moran and its Subsidiaries or to decrease or limit in any material respect its
usage of the services of Moran and its Subsidiaries or its provision of services
to Moran and its Subsidiaries, and the transactions contemplated hereby will
not, to the knowledge of Moran, adversely affect the relationship of Moran with
any of its respective customers or suppliers.
(y) DISCLOSURE. The representations and warranties contained in this
Annex V and the information in the Moran SEC Reports, taken together, do not
contain any untrue statement of a material fact or omit to state any material
fact necessary in order to make the statements and information contained in this
Annex V and in the Moran SEC Reports, taken together, not misleading.
<PAGE>
CREDIT AGREEMENT
AMONG
MORAN ENTERPRISES CORPORATION,
AS BORROWER,
THE BANKS, FINANCIAL INSTITUTIONS AND
OTHER INSTITUTIONAL LENDERS NAMED HEREIN,
AS INITIAL LENDERS,
FLEET BANK, N.A.,
AS INITIAL ISSUING BANK AND AS ADMINISTRATIVE AGENT,
NATIONSBANK, N.A.,
AS DOCUMENTATION AGENT,
THE INDUSTRIAL BANK OF JAPAN, LIMITED,
AS SYNDICATION AGENT
AND
BANKBOSTON, N.A.,
AS MANAGING AGENT
DATED AS OF OCTOBER 30, 1998
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
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<S> <C>
ARTICLE 1. DEFINITIONS AND ACCOUNTING TERMS. . . . . . . . . . . . . . . . . . . .2
Section 1.1 Certain Defined Terms . . . . . . . . . . . . . . . . . . . . . . . . .2
Section 1.2 Computation of Time Periods . . . . . . . . . . . . . . . . . . . . . 33
Section 1.3 Accounting Terms. . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Section 1.4 Other Definitional Provisions . . . . . . . . . . . . . . . . . . . . 34
ARTICLE 2. AMOUNTS AND TERMS OF THE ADVANCES
AND THE LETTERS OF CREDIT . . . . . . . . . . . . . . . . . . . . . . 34
Section 2.1 The Advances. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Section 2.2 Making the Advances . . . . . . . . . . . . . . . . . . . . . . . . . 36
Section 2.3 Issuance of and Drawings and Reimbursement
Under Letters of Credit . . . . . . . . . . . . . . . . . . . . . . 37
Section 2.4 Repayment of Advances . . . . . . . . . . . . . . . . . . . . . . . . 39
Section 2.5 Termination or Reduction of the Commitments . . . . . . . . . . . . . 43
Section 2.6 Prepayments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Section 2.7 Interest. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Section 2.8 Fees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Section 2.9 Conversion of Advances. . . . . . . . . . . . . . . . . . . . . . . . 49
Section 2.10 Increased Costs, Etc. . . . . . . . . . . . . . . . . . . . . . . . . 50
Section 2.11 Payments and Computations . . . . . . . . . . . . . . . . . . . . . . 52
Section 2.12 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
Section 2.13 Sharing of Payments, Etc. . . . . . . . . . . . . . . . . . . . . . . 56
Section 2.14 Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
Section 2.15 Defaulting Lenders. . . . . . . . . . . . . . . . . . . . . . . . . . 57
Section 2.16 Removal of Lender . . . . . . . . . . . . . . . . . . . . . . . . . . 59
Section 2.17 Borrowing Base Determination. . . . . . . . . . . . . . . . . . . . . 60
ARTICLE 3. CONDITIONS OF LENDING . . . . . . . . . . . . . . . . . . . . . . . . 61
Section 3.1 Conditions Precedent to Initial Extension of Credit . . . . . . . . . 61
Section 3.2 Conditions Precedent to Each Borrowing Other than
a Term A Borrowing and Letter of Credit Advances. . . . . . . . . . 70
Section 3.3 Determinations Under Section 3.1. . . . . . . . . . . . . . . . . . . 70
Section 3.4 Conditions Precedent to the Term A Borrowing. . . . . . . . . . . . . 71
<PAGE>
ARTICLE 4. REPRESENTATIONS AND WARRANTIES. . . . . . . . . . . . . . . . . . . . 72
Section 4.1 Organization. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
Section 4.2 Subsidiaries. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
Section 4.3 Corporate Power, Authorization. . . . . . . . . . . . . . . . . . . . 73
Section 4.4 Governmental Authorizations, Approvals. . . . . . . . . . . . . . . . 74
Section 4.5 Due Execution, Validity, Enforceability . . . . . . . . . . . . . . . 74
Section 4.6 Financial Statements. . . . . . . . . . . . . . . . . . . . . . . . . 74
Section 4.7 Pro Forma Financial Statements. . . . . . . . . . . . . . . . . . . . 75
Section 4.8 Accurate Information. . . . . . . . . . . . . . . . . . . . . . . . . 75
Section 4.9 Litigation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
Section 4.10 Regulation U. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
Section 4.11 ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
Section 4.12 Casualty. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
Section 4.13 Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . 76
Section 4.14 Intentionally Omitted.. . . . . . . . . . . . . . . . . . . . . . . . 77
Section 4.15 Priority of Liens . . . . . . . . . . . . . . . . . . . . . . . . . . 77
Section 4.16 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
Section 4.17 Compliance with Securities Laws . . . . . . . . . . . . . . . . . . . 78
Section 4.18 Solvency. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
Section 4.19 Debt. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
Section 4.20 No Defaults, Compliance with Laws . . . . . . . . . . . . . . . . . . 79
Section 4.21 Owned Real Property . . . . . . . . . . . . . . . . . . . . . . . . . 79
Section 4.22 Leased Real Property. . . . . . . . . . . . . . . . . . . . . . . . . 79
Section 4.23 Material Contracts. . . . . . . . . . . . . . . . . . . . . . . . . . 79
Section 4.24 Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
Section 4.25 Intellectual Property . . . . . . . . . . . . . . . . . . . . . . . . 80
Section 4.26 Moran Acquisition Documents . . . . . . . . . . . . . . . . . . . . . 80
Section 4.27 Fees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
Section 4.28 Government Consents for Conduct of Business . . . . . . . . . . . . . 81
Section 4.29 Vessels . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
ARTICLE 5. AFFIRMATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . 82
Section 5.1 Compliance with Law . . . . . . . . . . . . . . . . . . . . . . . . . 82
Section 5.2 Payment of Taxes, Etc . . . . . . . . . . . . . . . . . . . . . . . . 82
Section 5.3 Compliance with Environmental Laws. . . . . . . . . . . . . . . . . . 82
Section 5.4 Intentionally Omitted . . . . . . . . . . . . . . . . . . . . . . . . 82
Section 5.5 Maintenance of Insurance. . . . . . . . . . . . . . . . . . . . . . . 83
Section 5.6 Preservation of Corporate Existence, Etc. . . . . . . . . . . . . . . 83
Section 5.7 Visitation Rights . . . . . . . . . . . . . . . . . . . . . . . . . . 83
Section 5.8 Keeping of Books. . . . . . . . . . . . . . . . . . . . . . . . . . . 84
<PAGE>
Section 5.9 Maintenance of Properties, Etc. . . . . . . . . . . . . . . . . . . . 84
Section 5.10 Compliance with Terms of Leaseholds . . . . . . . . . . . . . . . . . 84
Section 5.11 Intentionally Omitted . . . . . . . . . . . . . . . . . . . . . . . . 84
Section 5.12 Transactions with Affiliates. . . . . . . . . . . . . . . . . . . . . 84
Section 5.13 Agreement to Grant Additional Security. . . . . . . . . . . . . . . . 84
Section 5.14 Interest Rate Protection. . . . . . . . . . . . . . . . . . . . . . . 86
Section 5.15 Performance of Moran Acquisition Documents. . . . . . . . . . . . . . 86
Section 5.16 Year 2000 Compatibility . . . . . . . . . . . . . . . . . . . . . . . 86
Section 5.17 Certain Affirmative Covenants Relating to the Vessels . . . . . . . . 87
ARTICLE 6. NEGATIVE COVENANTS. . . . . . . . . . . . . . . . . . . . . . . . . . 87
Section 6.1 Liens, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
Section 6.2 Debt. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
Section 6.3 Intentionally Omitted . . . . . . . . . . . . . . . . . . . . . . . . 89
Section 6.4 Fundamental Changes . . . . . . . . . . . . . . . . . . . . . . . . . 89
Section 6.5 Sales, Etc. of Assets . . . . . . . . . . . . . . . . . . . . . . . . 90
Section 6.6 Investments in Other Persons. . . . . . . . . . . . . . . . . . . . . 90
Section 6.7 Dividends, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . 92
Section 6.8 Change in Nature of Business. . . . . . . . . . . . . . . . . . . . . 93
Section 6.9 Charter Amendments. . . . . . . . . . . . . . . . . . . . . . . . . . 93
Section 6.10 Accounting Changes. . . . . . . . . . . . . . . . . . . . . . . . . . 93
Section 6.11 Prepayments, Etc. of Debt . . . . . . . . . . . . . . . . . . . . . . 94
Section 6.12 Amendment, Etc. of Moran Acquisition Documents. . . . . . . . . . . . 94
Section 6.13 Intentionally Omitted . . . . . . . . . . . . . . . . . . . . . . . . 94
Section 6.14 Negative Pledge . . . . . . . . . . . . . . . . . . . . . . . . . . . 94
Section 6.15 Partnerships, New Subsidiaries. . . . . . . . . . . . . . . . . . . . 95
Section 6.16 Speculative Transactions. . . . . . . . . . . . . . . . . . . . . . . 95
Section 6.17 Investment Capital Expenditures . . . . . . . . . . . . . . . . . . . 95
Section 6.18 Issuance of Stock . . . . . . . . . . . . . . . . . . . . . . . . . . 95
Section 6.19 Redemption and Retirement Payments. . . . . . . . . . . . . . . . . . 96
ARTICLE 7. REPORTING REQUIREMENTS. . . . . . . . . . . . . . . . . . . . . . . . 96
Section 7.1 Default Notice. . . . . . . . . . . . . . . . . . . . . . . . . . . . 96
Section 7.2 Intentionally Omitted . . . . . . . . . . . . . . . . . . . . . . . . 96
Section 7.3 Quarterly Financials. . . . . . . . . . . . . . . . . . . . . . . . . 96
Section 7.4 Annual Financials . . . . . . . . . . . . . . . . . . . . . . . . . . 97
Section 7.5 Annual Forecasts. . . . . . . . . . . . . . . . . . . . . . . . . . . 98
Section 7.6 ERISA Events and ERISA Reports. . . . . . . . . . . . . . . . . . . . 98
Section 7.7 Plan Terminations . . . . . . . . . . . . . . . . . . . . . . . . . . 98
Section 7.8 Actuarial Reports . . . . . . . . . . . . . . . . . . . . . . . . . . 98
Section 7.9 Plan Annual Reports . . . . . . . . . . . . . . . . . . . . . . . . . 98
<PAGE>
Section 7.10 Annual Plan Summaries . . . . . . . . . . . . . . . . . . . . . . . . 98
Section 7.11 Multiemployer Plan Notices. . . . . . . . . . . . . . . . . . . . . . 99
Section 7.12 Litigation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99
Section 7.13 Securities Reports. . . . . . . . . . . . . . . . . . . . . . . . . . 99
Section 7.14 Creditor Reports. . . . . . . . . . . . . . . . . . . . . . . . . . . 99
Section 7.15 Intentionally Omitted . . . . . . . . . . . . . . . . . . . . . . . . 99
Section 7.16 Revenue Agent Reports . . . . . . . . . . . . . . . . . . . . . . . . 99
Section 7.17 Environmental Conditions. . . . . . . . . . . . . . . . . . . . . . . 99
Section 7.18 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .100
Section 7.19 Borrowing Base Certificate. . . . . . . . . . . . . . . . . . . . . .100
Section 7.20 Management Letters. . . . . . . . . . . . . . . . . . . . . . . . . .100
Section 7.21 Visual Surveys and Desk Top Appraisals. . . . . . . . . . . . . . . .100
Section 7.22 Vessels . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .100
Section 7.23 Other Information . . . . . . . . . . . . . . . . . . . . . . . . . .100
ARTICLE 8. FINANCIAL COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . .100
Section 8.1 Consolidated Funded Debt to EBITDA Ratio. . . . . . . . . . . . . . .101
Section 8.2 Interest Coverage Ratio . . . . . . . . . . . . . . . . . . . . . . .101
Section 8.3 Fixed Charge Coverage Ratio . . . . . . . . . . . . . . . . . . . . .102
Section 8.4 Minimum Net Worth . . . . . . . . . . . . . . . . . . . . . . . . . .102
ARTICLE 9. EVENTS OF DEFAULT . . . . . . . . . . . . . . . . . . . . . . . . . .103
Section 9.1 Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .103
Section 9.2 Representations and Warranties. . . . . . . . . . . . . . . . . . . .103
Section 9.3 Certain Covenants . . . . . . . . . . . . . . . . . . . . . . . . . .103
Section 9.4 Other Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . .103
Section 9.5 Other Defaults. . . . . . . . . . . . . . . . . . . . . . . . . . . .104
Section 9.6 Bankruptcy, Etc.. . . . . . . . . . . . . . . . . . . . . . . . . . .104
Section 9.7 Judgments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .104
Section 9.8 Loan Documents. . . . . . . . . . . . . . . . . . . . . . . . . . . .105
Section 9.9 Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .105
Section 9.10 Change of Control . . . . . . . . . . . . . . . . . . . . . . . . . .105
Section 9.11 ERISA Events. . . . . . . . . . . . . . . . . . . . . . . . . . . . .105
Section 9.12 Borrowing Base Deficiency . . . . . . . . . . . . . . . . . . . . . .105
Section 9.13 The Vessels . . . . . . . . . . . . . . . . . . . . . . . . . . . . .106
ARTICLE 10. THE ADMINISTRATIVE AGENT . . . . . . . . . . . . . . . . . . . . . .107
Section 10.1 Authorization and Action . . . . . . . . . . . . . . . . . . . . . .107
Section 10.2 Agent's Reliance, Etc. . . . . . . . . . . . . . . . . . . . . . . .107
Section 10.3 Fleet and Affiliates . . . . . . . . . . . . . . . . . . . . . . . .108
<PAGE>
Section 10.4 Lender Party Credit Decision . . . . . . . . . . . . . . . . . . . .108
Section 10.5 Indemnification. . . . . . . . . . . . . . . . . . . . . . . . . . .109
Section 10.6 Successor Administrative Agents. . . . . . . . . . . . . . . . . . .110
Section 10.7 Events of Default. . . . . . . . . . . . . . . . . . . . . . . . . .111
ARTICLE 11. MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . . . . . .111
Section 11.1 Amendments, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . .111
Section 11.2 Notices Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . .112
Section 11.3 No Waiver; Remedies; Counterclaims . . . . . . . . . . . . . . . . .113
Section 11.4 Costs and Expenses . . . . . . . . . . . . . . . . . . . . . . . . .114
Section 11.5 Right of Set-off . . . . . . . . . . . . . . . . . . . . . . . . . .116
Section 11.6 Binding Effect . . . . . . . . . . . . . . . . . . . . . . . . . . .116
Section 11.7 Assignments and Participations . . . . . . . . . . . . . . . . . . .116
Section 11.8 Execution in Counterparts. . . . . . . . . . . . . . . . . . . . . .119
Section 11.9 No Liability of the Issuing Bank . . . . . . . . . . . . . . . . . .120
Section 11.10 Confidentiality. . . . . . . . . . . . . . . . . . . . . . . . . . .120
Section 11.11 Survival of Agreements and Representations; Construction . . . . . .120
Section 11.12 Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . .120
Section 11.13 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . .121
Section 11.14 JURISDICTION, ETC. . . . . . . . . . . . . . . . . . . . . . . . . .121
Section 11.15 GOVERNING LAW. . . . . . . . . . . . . . . . . . . . . . . . . . . .122
Section 11.16 WAIVER OF JURY TRIAL . . . . . . . . . . . . . . . . . . . . . . . .122
Section 11.17 FINAL AGREEMENT. . . . . . . . . . . . . . . . . . . . . . . . . . .122
</TABLE>
EXHIBITS
<TABLE>
<S> <C>
Exhibit A - Form of Assignment and Acceptance
Exhibit B - Form of Borrowing Base Certificate
Exhibit C - Form of Revolving Credit Note
Exhibit D - Form of Term A Note
Exhibit E - Form of Term B Note
Exhibit F - Form of Notice of Borrowing
Exhibit G - Form of Security Agreement
Exhibit H - Form of Old Moran Security Agreement
Exhibit I - Form of Intellectual Property Security Agreement
Exhibit J - Form of Borrowers Stockholders Pledge Agreement
Exhibit K - Form of Subsidiary Guaranty
</TABLE>
<PAGE>
SCHEDULES
<TABLE>
<S> <C>
Schedule I Commitments and Applicable Lending Offices
Schedule 4.2 Organization and Subsidiaries
Schedule 4.3 Certain Contract Matters
Schedule 4.4 Required Authorizations and Approvals
Schedule 4.9 Disclosed Litigation
Schedule 4.11 Welfare Plans
Schedule 4.13 Environmental Assessment Reports
Schedule 4.16 Open Tax Years
Schedule 4.19(a) Existing Debt
Schedule 4.19(b) Surviving Debt
Schedule 4.20 No Defaults
Schedule 4.21 Owned Real Estate
Schedule 4.22 Leased Real Estate
Schedule 4.23 Material Contracts
Schedule 4.24 Investments
Schedule 4.25 Intellectual Property
Schedule 4.27 Fees
Schedule 4.29 Vessels
Schedule 6.1(c) Liens
Schedule 6.6(f) Existing Investments
Schedule 6.18 Existing Issuances, Etc. of Stock
</TABLE>
<PAGE>
CREDIT AGREEMENT
CREDIT AGREEMENT, dated as of October 30, 1998, by and among MORAN
ENTERPRISES CORPORATION, a Delaware corporation (the "BORROWER"), the banks,
financial institutions and other institutional lenders listed on the signature
pages hereof as the Initial Lenders (the "INITIAL LENDERS"), FLEET BANK, N.A.,
as Initial Issuing Bank (the "INITIAL ISSUING BANK") AND FLEET BANK, N.A., as
administrative agent (together with any successor appointed pursuant to Article
10, the "ADMINISTRATIVE AGENT") for the Lender Parties (as hereinafter defined).
PRELIMINARY STATEMENTS:
(1) Pursuant to the Stock Exchange Agreement dated as of August 31, 1998
(the "MORAN ACQUISITION AGREEMENT" by and among the Borrower, Moran
Transportation Company, a Delaware corporation ("OLD MORAN"), the Moran
Stockholders (as defined below), the Turecamo Entities (as defined below) and
the Turecamo Stockholders (as defined below) pursuant to which (i) the Turecamo
Stockholders will contribute to the Borrower the shares of Turecamo Stock (as
defined in the Moran Acquisition Agreement) held by them in consideration of
which the Borrower shall issue to each Turecamo Stockholder shares of Moran
Enterprises Common Stock (as such term is defined in the Moran Acquisition
Agreement) and pay to each Turecamo Stockholder a certain amount of cash, and
(ii) the Moran Stockholders (as defined below) will contribute to the Borrower
shares of Moran Stock (as defined in the Moran Acquisition Agreement) held by
them in consideration of which the Borrower shall issue to each Moran
Stockholder (a) shares of Moran Enterprises Common stock and (b) shares of Moran
Enterprises Preferred Stock (as defined in the Moran Acquisition Agreement)
(such transaction being hereinafter referred to as the "MORAN ACQUISITION").
(2) The Borrower has requested that the Lender Parties (as hereinafter
defined) make loans to the Borrower and issue letters of credit having an
aggregate principal and face amount at any one time outstanding of up to Two
Hundred Million Dollars ($200,000,000), to be used by the Borrower (i) to
finance, in part, the Moran Acquisition, (ii) to pay fees and expenses incurred
in connection with the Moran Acquisition, (iii) to redeem in full the Senior
Notes, (iv) to finance working capital and capital expenditures and general
corporate purposes (including, without limitation, payment of any prepayment
premium incurred in connection with the prepayment of the Senior Notes), and the
Lender Parties have agreed to make such loans and issue such letters of credit
all on and subject to the terms and conditions of this Agreement.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and agreements contained herein, the parties hereto hereby agree as
follows:
<PAGE>
ARTICLE 1
DEFINITIONS AND ACCOUNTING TERMS
SECTION 1.1 CERTAIN DEFINED TERMS. As used in this Agreement, the
following terms shall have the following meanings (such meanings to be equally
applicable to both the singular and plural forms of the terms defined):
"ADDITIONAL COLLATERAL DOCUMENTS" has the meaning specified in Section
5.13(e).
"ADMINISTRATIVE AGENT" has the meaning specified in the recital of parties
to this Agreement.
"ADMINISTRATIVE AGENT'S ACCOUNT" means the account of the
Administrative Agent maintained by the Administrative Agent with Fleet at its
office at Fleet, 1185 Avenue of the Americas, New York, New York 10036,
Account No. 1510352-03102, Attention: Loan Administration.
"ADVANCE" means a Term A Advance, a Term B Advance, a Revolving Credit
Advance or a Letter of Credit Advance.
"AFFECTED LENDER" has the meaning specified in Section 2.16.
"AFFILIATE" means, as to any Person, any other Person that, directly or
indirectly, controls, is controlled by or is under common control with such
Person. For purposes of this definition, the term "control" (including the
terms "controlling," "controlled by" and "under common control with") of a
Person means the possession, direct or indirect, of the power to vote 50% or
more of the Voting Stock of such Person or to direct or cause the direction of
the management and policies of such Person, whether through the ownership of
Voting Stock, by contract or otherwise.
"APPLICABLE LENDING OFFICE" means, with respect to each Lender Party, such
Lender Party's Domestic Lending Office in the case of a Prime Rate Advance and
such Lender Party's Eurodollar Lending Office in the case of a Eurodollar Rate
Advance.
"APPLICABLE MARGIN" means at any time and from time to time a percentage
per annum determined pursuant to the last paragraph of this definition by
reference to the ratio of Consolidated Debt to EBITDA at such time, as set forth
below:
APPLICABLE MARGIN FOR EURODOLLAR RATE ADVANCES
<PAGE>
<TABLE>
<CAPTION>
REVOLVING CREDIT ADVANCES
CONSOLIDATED DEBT TO EBITDA RATIO AND TERM A ADVANCES TERM B ADVANCES
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Equal to or greater than 3.75 to 1.00 2.75% 3.25%
Less than 3.75 to 1.00 but 2.50% 3.00%
equal to or greater than 3.50 to 1.00
Less than 3.50 to 1.00 but equal to or greater than 3.25 2.25% 3.00%
to 1.00
Less than 3.25 to 1.00 but 2.00% 3.00%
equal to or greater than 3.00 to 1.00
Less than 3.00 to 1.00 1.75% 2.75%
</TABLE>
APPLICABLE MARGIN FOR PRIME RATE ADVANCES
<TABLE>
<CAPTION>
REVOLVING CREDIT ADVANCES
CONSOLIDATED DEBT TO EBITDA RATIO AND TERM A ADVANCES TERM B ADVANCES
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Equal to or greater than 3.75 to 1.00 1.50% 2.00%
Less than 3.75 to 1.00 but 1.25% 1.75%
equal to or greater than 3.50 to 1.00
Less than 3.50 to 1.00 but equal to or greater than 3.25 1.00% 1.50%
to 1.00
Less than 3.25 to 1.00 but 0.75% 1.50%
equal to or greater than 3.00 to 1.00
Less than 3.00 to 1.00 0.50% 1.50%
</TABLE>
The Applicable Margin for each Prime Rate Advance and each Eurodollar Rate
Advance shall be determined by reference to the ratio of Consolidated Debt to
EBITDA which shall be determined three (3) Business Days after the date on which
the Administrative Agent receives financial statements pursuant to Section 7.3
or 7.4 and a certificate of the Chief Financial Officer of the Borrower
demonstrating the ratio of Consolidated Debt to EBITDA. If the Borrower has not
submitted to the Administrative Agent the information described above as and
when required under Section 7.3 or 7.4, as the case may be, the Applicable
Margin shall be as determined (as among the various applicable margin levels
set forth above) by the Administrative Agent in its good faith discretion for so
long as such information has not been received by the Administrative Agent. The
Applicable Margin shall be adjusted, if applicable, as of the first day of the
month following the date of determination described in the two preceding
sentences. In the event that the financial statements received pursuant to
Section 7.4 indicate that the Applicable Margin determined on the basis of
financial statements theretofore received pursuant to Section 7.3 is different
from the Applicable Margin that would have been determined on the basis of the
Section 7.4 financial statements, the Applicable Margin shall be adjusted
retroactively for the relevant period.
<PAGE>
"ASSET DISPOSITION" shall mean the disposition of any or all of the fixed
assets of the Borrower or any of its Subsidiaries whether by sale, lease,
transfer or otherwise (but excluding damage, destruction, loss or condemnation);
PROVIDED, HOWEVER, that for purposes of Section 2.6(b), the term "ASSET
DISPOSITION" shall not include any sale, lease, transfer or other disposition of
(i) Inventory in the ordinary course of business; (ii) obsolete or worn out
equipment; (iii) traded-in equipment, (iv) assets by the Borrower to a Guarantor
or by a Guarantor to the Borrower or another Guarantor; or (v) prior to the Term
A Draw Date, any Vessel owned by Old Moran or its Subsidiaries to the extent
that the proceeds therefrom are used to purchase new Vessels or prepay the
Senior Notes as provided in Section 5.10 of the Senior Note Indenture.
"ASSIGNMENT AND ACCEPTANCE" means an assignment and acceptance entered into
by a Lender Party and an Eligible Assignee, and accepted by the Administrative
Agent and, so long as no Event of Default shall have occurred and be continuing,
by the Borrower, in accordance with Section 11.7 and in substantially the form
of EXHIBIT A hereto.
"ASSIGNMENT" and "ASSIGNMENTS" has the meaning specified in Section 3.1(a).
"AVAILABLE AMOUNT" of any Letter of Credit means, at any time, the maximum
amount available to be drawn under such Letter of Credit at such time (assuming
compliance at such time with all conditions to drawing).
"BANK HEDGE AGREEMENT" means any interest rate Hedge Agreement required or
permitted under Section 5.14 that is entered into by and between the Borrower
and any Hedge Bank.
"BORROWER" has the meaning specified in the recital of parties to this
Agreement.
"BORROWER'S ACCOUNT" means the account of the Borrower maintained by the
Borrower with Fleet at its office at 1185 Avenue of the Americas, New York, New
York 10036, Account No. 9417535159.
"BORROWER STOCKHOLDERS" means the Persons that are holders of the capital
stock (and of warrants or options with respect to the capital stock) of the
Borrower.
"BORROWER STOCKHOLDERS PLEDGE AGREEMENT" has the meaning specified in
Section 3.1(a).
"BORROWER/TURECAMO SECURITY AGREEMENT" has the meaning specified in
Section 3.1(a).
"BORROWING" means a Term A Borrowing, a Term B Borrowing or a Revolving
Credit Borrowing.
<PAGE>
"BORROWING BASE" has the meaning specified in Section 2.17.
"BORROWING BASE CERTIFICATE" means a certificate in substantially the form
of EXHIBIT B hereto, duly certified, on behalf of the Borrower, by the chief
financial officer of the Borrower.
"BORROWING BASE DEFICIENCY" means the failure of the Borrowing Base to
equal or exceed (i) at any time prior the Term A Draw Date, the sum of (a) the
aggregate principal amount of the Revolving Credit Advances and the Letter of
Credit Advances outstanding at such time PLUS (b) the aggregate Available Amount
of all Letters of Credit outstanding at such time; and (ii) at any time on or
after the Term A Draw Date, the sum (without duplication) of (a) the aggregate
principal amount of the Revolving Credit Advances and the Letter of Credit
Advances outstanding at such time, PLUS (b) the aggregate Available Amount of
all Letters of Credit outstanding at such time, PLUS (c) the aggregate principal
amount of the Term A Advances outstanding at such time, PLUS (d) the aggregate
principal amount of the Term B Advances outstanding at such time.
"BUSINESS DAY" means a day of the year on which banks are not required or
authorized by law to close in Boston, Massachusetts and New York, New York and,
if the applicable Business Day relates to any Eurodollar Rate Advances, on which
dealings are carried on in the London interbank market.
"CAPITAL EXPENDITURES" means, for any Person for any period, the sum of all
expenditures (including, without limitations, dry dock expenditures) made,
directly or indirectly, by such Person or any of its Subsidiaries during such
period for the Vessels, Equipment, real property or improvements, other fixed
assets or for replacements or substitutions therefor or additions thereto, that
have been or should be, in accordance with GAAP, reflected as additions to the
Vessels, property, plant or Equipment on a Consolidated balance sheet of such
Person.
"CAPITALIZED LEASES" means all leases that have been or should be, in
accordance with GAAP, recorded as capitalized leases.
"CASH EQUIVALENTS" means any of the following, to the extent owned by the
Borrower or any of its Subsidiaries, free and clear of all Liens other than
Liens created under the Collateral Documents: (a) readily marketable direct
obligations of the Government of the United States or any agency or
instrumentality thereof or obligations unconditionally guaranteed by the full
faith and credit of the Government of the United States having a maturity of not
greater than 365 days from the date of issuance thereof, (b) certificates of
deposit or bankers acceptances of, or time deposits having a maturity of, not
greater than 365 days from the date of issuance thereof with any commercial bank
that is a Lender Party or a member of the Federal Reserve System that issues (or
the parent of which issues) commercial paper rated as described in clause (c)
and is organized under the laws of the United States or any State thereof and
has combined capital and surplus of at least $1 billion, (c) commercial paper
having a maturity of not greater than 365 days from the date of issuance thereof
in an aggregate amount of no more than $2,500,000 per issuer
<PAGE>
outstanding at any time, issued by any corporation organized under the laws
of any State of the United States and rated at least "Prime-1" (or the then
equivalent grade) by Moody's Investors Service, Inc. or "A-1" (or the then
equivalent grade) by Standard & Poor's Ratings Group or (d) shares of any
money market or mutual fund, substantially all of the assets of which are
invested in securities and instruments of the types set forth in clauses (a)
through (c) above (except that the requirement of $2,500,000 per issuer shall
not have to be complied with).
"CERCLA" means the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, 42 U.S.C. Section 9601 et seq., as amended from time to
time.
"CERCLIS" means the Comprehensive Environmental Response, Compensation and
Liability Information System maintained by the U.S. Environmental Protection
Agency.
"CHANGE OF CONTROL" means the Lakes Transfer Group ceases to beneficially,
and of record, own and control at least 50.1% of the issued and outstanding
shares of capital stock of the Borrower. For purposes of this definition
"control", when used with respect to any specified Person, means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract, by family
relationship or otherwise; and the terms "controlling" and "controlled" have the
meanings correlative to the foregoing.
"CLOSING DATE" means the date on which all of the conditions precedent set
forth in Section 3.1 to the Initial Extension of Credit shall have been
satisfied or waived.
"COASTWISE CITIZEN" means a citizen of the United States within the meaning
of Section 2 of the Shipping Act, 1916, as amended (46 U.S.C. App Sec. 801) for
purposes of operation of a vessel in the coastwise trade.
"COLLATERAL" means all "COLLATERAL" referred to in the Collateral Documents
and all other property that is or is intended to be subject to any Lien in favor
of the Administrative Agent for the benefit of the Secured Parties.
"COLLATERAL DOCUMENTS" means each Security Agreement, the Borrower
Stockholders Pledge Agreement, each Intellectual Property Security Agreement,
the Vessel Collateral Documents and any other agreement that creates or purports
to create a Lien in favor of the Administrative Agent for the benefit of the
Secured Parties, including the Additional Collateral Documents delivered
pursuant to Section 5.13, as, with respect to each of the foregoing, amended,
restated, supplemented or otherwise modified from time to time.
"COMMITMENT" means a Term A Commitment, a Term B Commitment, a Revolving
Credit Commitment or a Letter of Credit Commitment.
"COMPENSATION PAYMENTS" has the meaning specified in Section 6.19.
<PAGE>
"COMPLIANCE CERTIFICATE" with respect to the Borrower and its
Subsidiaries, a certificate to the effect that: (a) as of the effective date of
the certificate, and except as may be disclosed in such certificate, no Default
or Event of Default under this Agreement exists or would exist immediately after
giving effect to the action intended to be taken by any Loan Party, as described
in such certificate, including, without limitation, that the covenants set forth
in Article 8 hereof would not be breached after giving effect to such action,
together with a calculation in reasonable detail, and in form satisfactory to
the Administrative Agent, of such compliance, and (b) as of the effective date
of the certificate, and except as may be disclosed in such certificate, the
representations and warranties contained in Article 4 hereof are true in all
material respects and with the same effect as though such representations and
warranties were made on the date of such certificate, unless stated to relate to
a specific earlier date in which case such specified representations and
warranties shall be true and correct as of such earlier date, and, except for
representations and warranties which are no longer true as a result of a
transaction expressly permitted hereby, which certificate shall be executed and
delivered on behalf of the Borrower by the chief financial officer of the
Borrower.
"CONFIDENTIAL INFORMATION" means financial statements, agreements, reports,
certificates and other information that the Borrower or any of its Subsidiaries,
or any of their agents, furnishes to the Administrative Agent or any Lender
Party in a writing designated as confidential (but including, regardless of
whether or not so designated, any information relating to (i) the economic and
legal (including contractual) arrangements between (a) the Borrower and its
Subsidiaries and (b) their customers, (ii) details with respect to cast
information of the Borrower and its Subsidiaries, and (iii) acquisition and
other investment opportunities available to the Borrower and its Subsidiaries),
but does not include any such information that is or becomes generally available
to the public other than as a result of a breach by the Administrative Agent or
any Lender Party of its obligations hereunder or that is or becomes available to
the Administrative Agent or such Lender Party from a source other than the
Borrower that is not, to the best of the Administrative Agent's or such Lender
Party's knowledge, acting in violation of a confidentiality agreement with the
Borrower or any of its Subsidiaries.
"CONSOLIDATED" refers to the consolidation of accounts, in accordance with
GAAP, of any Person and all of its Subsidiaries, and if not specified, the
Borrower and all of its Subsidiaries.
"CONSOLIDATED DEBT TO EBITDA" means, for any fiscal quarter of the
Borrower, a ratio of (a) Debt of the Borrower and its Subsidiaries as at the end
of such fiscal quarter to (b) EBITDA for the most recently completed four fiscal
quarters of the Borrower and its Subsidiaries.
"CONVERSION", "CONVERT" and "CONVERTED" each refer to a conversion of
Advances of one Type into Advances of the other Type pursuant to Section 2.9 or
2.10.
"DEBT" of any Person means, without duplication, the following:
<PAGE>
(a) all indebtedness of such Person for borrowed money;
(b) all Obligations of such Person for the deferred purchase price of
property or services (but excluding (whether under this clause (b) or otherwise)
the following: (i) trade accounts payable arising, and accrued expenses
incurred, in the ordinary course of business and payable on ordinary business
terms, and (ii) until the Term A Draw Date, obligations arising under
construction contracts for the construction of qualified vessels substituted
pursuant to the terms of the Senior Notes Indenture);
(c) all Obligations of such Person evidenced by notes, bonds,
debentures or other similar instruments;
(d) all Obligations of such Person created or arising under any
conditional sale or other title retention agreement with respect to property
acquired by such Person (even though the rights and remedies of the seller or
lender under such agreement in the event of default are limited to repossession
or sale of such property);
(e) all Obligations of such Person as lessee under Capitalized
Leases;
(f) all Obligations, contingent or otherwise, of such Person under
acceptance, letter of credit or similar facilities;
(g) all Obligations of such Person to purchase, redeem, retire,
defease or otherwise make any payment in respect of any capital stock of or
other ownership or profit interest in such Person or any other Person or any
warrants, rights or options to acquire such capital stock (but excluding the Put
Payments (and the related capital stock to be redeemed in connection therewith)
and the Compensation Payments (and the related capital stock to be redeemed in
connection therewith) and any preferred stock the redemption of which is
prohibited by this Agreement);
(h) all Obligations of such Person in respect of Hedge Agreements but
excluding (i) the Bank Hedge Agreements; (ii) Hedge Agreements with respect to
permitted purchase money Debt and permitted Capitalized Lease Obligations, and
(iii) Hedge Agreements with respect to fuel used in the Borrowers and its
Subsidiaries business;
(i) all Debt of others referred to in clauses (a) through (h) above
or clause (j) below guaranteed directly or indirectly in any manner by such
Person, or in effect guaranteed directly or indirectly by such Person through an
agreement (A) to pay or purchase such Debt or to advance or supply funds for the
payment or purchase of such Debt, (B) to purchase, sell or lease (as lessee or
lessor) property, or to purchase or sell services, primarily for the purpose of
enabling the debtor to make payment of such Debt or to assure the holder of such
Debt against loss, (C) to supply funds to or in any other manner invest in the
debtor (including any agreement
<PAGE>
to pay for property or services irrespective of whether such property is
received or such services are rendered) or (D) otherwise to assure a creditor
against loss; and
(j) all Debt referred to in clauses (a) through (i) above of another
Person secured by (or for which the holder of such Debt has an existing right,
contingent or otherwise, to be secured by) any Lien on property (including,
without limitation, accounts, contract rights or inventory) owned by such
Person, even though such Person has not assumed or become liable for the payment
of such Debt.
The definition of "Debt" shall not include (i) any indebtedness of the
Garbage Subsidiary (or any Subsidiary of the Garbage Subsidiary), (ii) any
deferred liability with respect to the possible termination of the contract
between one or more of the Turecamo Entities and Mobil Oil Corporation with
respect to the barge Iroquois, or (iii) the financing of insurance premiums.
"DEBT ISSUANCE" means any issuance or sale or other incurrence by the
Borrower or any of its Subsidiaries (excluding the Garbage Subsidiary or any
Subsidiary of the Garbage Subsidiary) of any Debt; PROVIDED, HOWEVER, that for
purposes of determination of Net Cash Proceeds under Section 2.6(b)(iii), the
term "Debt Issuance" shall not include the incurrence of Debt permitted under
Section 6.2.
"DEFAULT" means any Event of Default or any event that would constitute an
Event of Default but for the requirement that notice be given or time elapse or
both.
"DEFAULTED ADVANCE" means, with respect to any Lender Party at any time,
the portion of any Advance required to be made by such Lender Party to the
Borrower pursuant to Section 2.1 or 2.2 at or prior to such time which has not
been made by such Lender Party or by the Administrative Agent for the account of
such Lender Party pursuant to Section 2.2(d) as of such time. In the event that
a portion of a Defaulted Advance shall be deemed made pursuant to Section
2.15(a), the remaining portion of such Defaulted Advance shall be considered a
Defaulted Advance originally required to be made pursuant to Section 2.1 on the
same date as the Defaulted Advance so deemed made in part.
"DEFAULTED AMOUNT" means, with respect to any Lender Party at any time, any
amount required to be paid by such Lender Party to the Administrative Agent or
any other Lender Party hereunder or under any other Loan Document at or prior to
such time which has not been so paid as of such time, including, without
limitation, any amount required to be paid by such Lender Party to (a) the
Issuing Bank pursuant to Section 2.3(c) to purchase a portion of a Letter of
Credit Advance made by the Issuing Bank, (b) the Administrative Agent pursuant
to Section 2.2(d) to reimburse the Administrative Agent for the amount of any
Advance made by the Administrative Agent for the account of such Lender Party,
(c) any other Lender Party pursuant to Section 2.13 to purchase any
participation in Advances owing to such other Lender Party and (d) the
Administrative Agent or the Issuing Bank pursuant to Section 10.5 to reimburse
the
<PAGE>
Administrative Agent or the Issuing Bank for such Lender Party's ratable
share of any amount required to be paid by the Lender Parties to the
Administrative Agent or the Issuing Bank as provided therein. In the event that
a portion of a Defaulted Amount shall be deemed paid pursuant to Section
2.15(b), the remaining portion of such Defaulted Amount shall be considered a
Defaulted Amount originally required to be paid hereunder or under any other
Loan Document on the same date as the Defaulted Amount so deemed paid in part.
"DEFAULTING LENDER" means, at any time, any Lender Party that, at such
time, (a) owes a Defaulted Advance or a Defaulted Amount or (b) shall take any
action or be the subject of any action or proceeding of a type described in
Section 9.6.
"DESK TOP APPRAISAL" means a "desk top" appraisal, in form and substance
reasonably acceptable to the Administrative Agent, of all of the Vessels owned
by the Borrower and its Subsidiaries performed by a nationally recognized
maritime appraiser reasonably acceptable to the Administrative Agent.
"DISCLOSED LITIGATION" has the meaning specified in Section 4.9.
"DISPOSAL" means the discharge, deposit, injection, dumping, spilling,
leaking or placing of any solid waste or hazardous waste, as those terms are
defined by any federal, state, local or foreign law, into or on any land or
water so that such solid waste or hazardous waste or any constituents thereof
may enter the environment or be emitted into the air or discharged into any
waters, including ground waters.
"DOMESTIC LENDING OFFICE" means, with respect to any Lender Party, the
office of such Lender Party specified as its "Domestic Lending Office" opposite
its name on SCHEDULE I hereto or in the Assignment and Acceptance pursuant to
which it became a Lender Party, as the case may be, or such other office of such
Lender Party as such Lender Party may from time to time specify to the Borrower
and the Administrative Agent.
"DOMESTIC SUBSIDIARY" means any Subsidiary organized under the laws of the
United States of America or any State thereof.
"EARNINGS ASSIGNMENT" and "EARNINGS ASSIGNMENTS" has the meaning specified
in Section 3.1(a).
"EBITDA" means, for any period, the sum, determined on a Consolidated
basis, without duplication, of (A) (i) net income (or net loss) PLUS (ii) but
only to the extent such items shall have been deducted in determining net
income, the sum of (1) Interest Expense, (2) income tax expense, (3)
depreciation expense, (4) amortization expense, and (5) extraordinary or
nonrecurring losses (including, in any event, the payment of the redemption
premium relating to the redemption of the Senior Notes and any charges relating
to deferred costs for the Senior Notes in connection with the redemption
thereof), in each case determined in accordance with
<PAGE>
GAAP for such period, plus (B) if requested by the Borrower to be included in
the computation of EBITDA, the pro forma effect (i.e. assuming that the
applicable acquisition was consummated at the beginning of such period) on
EBITDA for such period of any stock (or other applicable equity interest) or
asset acquisition permitted hereunder consummated by the Borrower or any of
its Subsidiaries during the most recent twelve month period preceding the
date of determination, but solely for the number of months immediately
preceding the consummation of the applicable acquisition, which number equals
twelve (12) less the number of months following the consummation of the
applicable acquisition to such date of determination (as reflected in the
audited financial statements covering the applicable target company (or
applicable business thereof), prepared by an independent certified public
accountant of recognized national standing acceptable to the Administrative
Agent, or if such audited financial statements are not available, then at the
request of the Administrative Agent, as reflected in financial statements
covering such company (or business), examined by an independent certified
public accountant of recognized national standing acceptable to the
Administrative Agent), plus (C) if requested by the Borrower to be included
in the computation of EBITDA, the projected EBITDA for such period with
respect to any proposed acquisition or construction of a new Vessel by the
Borrower or any of its Subsidiaries for which an executed written contract
has been delivered to the Administrative Agent, which contract is reasonably
satisfactory to the Administrative Agent (but in any event not to exceed (in
the case of this clause (C)) $3,000,000 in the aggregate during any period of
twelve (12) consecutive months).
"ELIGIBLE ASSIGNEE" means with respect to any Facility (other than the
Letter of Credit Facility), (a) a Lender; (b) an Affiliate of a Lender; and (c)
subject to the prior approval of the Administrative Agent and, so long as no
Event of Default shall have occurred and be continuing, the Borrower, such
approval by the Administrative Agent or the Borrower not to be unreasonably
withheld or delayed, (i) a commercial bank organized under the laws of the
United States, or any State thereof, and having total assets in excess of
$500,000,000; (ii) a savings and loan association or savings bank organized
under the laws of the United States, or any State thereof, and having total
assets in excess of $500,000,000; (iii) a commercial bank organized under the
laws of any other country that is a member of the OECD or has concluded special
lending arrangements with the International Monetary Fund associated with its
General Arrangements to Borrow or of the Cayman Islands, or a political
subdivision of any such country, and having total assets in excess of
$500,000,000, so long as such bank is acting through a branch or agency located
in the United States; (iv) the central bank of any country that is a member of
the OECD; and (v) a finance company, insurance company or other financial
institution or fund (whether a corporation, partnership, trust or other entity)
that is engaged in making, purchasing or otherwise investing in commercial loans
(of a size similar to the Advances) in the ordinary course of its business and
having total assets in excess of $500,000,000; and, with respect to the Letter
of Credit Facility, a Person that is an Eligible Assignee under subclause (i) or
(iii) of clause (C) of this definition and is approved by the Administrative
Agent and the Borrower, such approval by the Administrative Agent or the
Borrower not to be unreasonably withheld or delayed; PROVIDED, HOWEVER, that no
Loan Party or Affiliate of a Loan Party shall qualify as an Eligible Assignee
under this definition; provided, further, however, that no Person shall be an
Eligible Assignee
<PAGE>
who is not a Coastwise Citizen if the assignment to such Person under Section
11.7 hereof shall result in the Borrower or any of its Subsidiaries not being
permitted to operate any of its Vessels in the coastwise trade.
"ELIGIBLE INVENTORY" means with respect to the Borrowers and its
Domestic Subsidiaries, the aggregate net book value of finished goods and
component parts inventory owned by any of them; PROVIDED that Eligible
Inventory shall not include any inventory: (a) held on consignment, or not
otherwise owned by the Borrower or a Domestic Subsidiary; (b) which has been
returned by a customer or is damaged or subject to any legal encumbrance; (c)
except for the Non-Possession/Lease Excepted Inventory, which is not in the
possession of the Borrower or a Domestic Subsidiary unless the Administrative
Agent has received a waiver from the party in possession of such inventory in
form and substance satisfactory to the Administrative Agent, PROVIDED that
the aggregate net book value of Eligible Inventory (including any
Non-Possession/Lease Excepted Inventory) at machine repair shops does not
exceed $1,500,000; (d) except for the Non-Possession/Lease Excepted
Inventory, which is held by the Borrower or a Domestic Subsidiary on property
leased by the Borrower or a Domestic Subsidiary, unless the Administrative
Agent has received a waiver from the lessor of such leased property and, if
any, sublessor thereof in form and substance satisfactory to the
Administrative Agent; (e) as to which appropriate Uniform Commercial Code
financing statements showing the Borrower or such Domestic Subsidiary as
debtor and the Administrative Agent as secured party have not been filed in
the proper filing office or offices in order to perfect the Administrative
Agent's security interest therein; (f) which has been shipped to a customer
of the Borrower or a Domestic Subsidiary regardless of whether such shipment
is on a consignment basis; (g) which is not so-called "shoreside inventory"
located within the United States of America; or (h) which the Administrative
Agent reasonably deems to be obsolete.
"ELIGIBLE RECEIVABLES" means the aggregate of the unpaid portions of
Receivables: (a) that the Borrower reasonably and in good faith determines to be
collectible; (b) that are with account debtors that (i) are not Affiliates of
the Borrower or its Subsidiaries other than Mormac Marine Transport, Inc.,
PROVIDED that the aggregate amount of Eligible Receivables with Mormac Marine
Transport, Inc. shall not exceed $90,000 at any time, (ii) purchased or leased
the goods or services giving rise to the relevant Receivables in an arm's length
transaction, (iii) are not insolvent or involved in any case or proceeding,
whether voluntary or involuntary, under any bankruptcy, reorganization,
arrangement, insolvency, adjustment of debt, dissolution, liquidation or similar
law of any jurisdiction, and (iv) are, in the Administrative Agent's reasonable
judgment, creditworthy; (c) that are in payment of obligations that have been
fully performed and are not subject to dispute or any other similar claims that
would reduce the cash amount payable therefor; (d) that are not subject to any
pledge, restriction, security interest or other lien or encumbrance other than
those created by the Loan Documents; (e) in which the Administrative Agent has a
valid and perfected first priority security interest; (f) that are not
outstanding for more than one hundred twenty(120) days past the earlier to occur
of (i) the date of the respective invoices therefor, and (ii) the date of
shipment thereof in the case of goods or the end of the calendar month following
the provision thereof in the case of services; (g) that are not due from
<PAGE>
any single account debtor (other than the United States government or any
agency thereof) if more than forty (40%) of the aggregate amount of all
Receivables owing from such account debtor would otherwise not be Eligible
Receivables; (h) that are payable in Dollars; and (i) that are not secured by
a letter of credit unless the Administrative Agent has a prior perfected
security interest in such letter of credit.
"ENVIRONMENTAL ACTION" means any action, suit, demand, demand letter,
claim, notice of non-compliance or violation, notice of liability or potential
liability, investigation, proceeding, consent order or consent agreement
relating in any way to any Environmental Law, any Environmental Permit or
Hazardous Material or arising from alleged injury or threat to public health and
safety or the environment, including, without limitation, (a) by any
governmental or regulatory authority or third party for enforcement, cleanup,
Removal, Response, Remedial or other actions or damages and (b) by any
governmental or regulatory authority or third party for damages, contribution,
indemnification, cost recovery, compensation or injunctive relief.
"ENVIRONMENTAL LAW" means any international or transnational law, federal,
state, local or foreign statute, law, ordinance, rule, regulation, code, order,
writ, judgment, injunction, decree or judicial or agency interpretation, policy
or guidance relating to pollution or protection of the environment or natural
resources, including, without limitation, those relating to the use, handling,
transportation, treatment, storage, disposal, threatened release, release or
discharge of Hazardous Materials.
"ENVIRONMENTAL PERMIT" means any permit, approval, identification number,
license or other authorization required under any Environmental Law.
"EQUIPMENT" has the meaning specified in Section 1(a) of the Security
Agreement.
"EQUITY ISSUANCE" means any issuance or sale by the Borrower or any of its
Subsidiaries, on or after the date hereof, of its capital stock or other equity
securities or any obligations convertible into or exchangeable for, or giving
any Person a right, option or warrant to acquire such stock, securities or such
convertible or exchangeable obligations; PROVIDED, HOWEVER, that for purposes of
Section 2.6(b)(iii), the term "Equity Issuance" shall not include any issuance
or sale of (a) capital stock of the Borrower issued on or before the Closing
Date in connection with the Moran Acquisition; (b) preferred and common stock of
the Borrower issued to any director of the Borrower required by applicable law
in connection with such Person acting in such capacity; (c) preferred and common
stock of the Borrower issued to management, directors and employees of the
Borrower or its Subsidiaries, respectively, pursuant to any stock option plan
not prohibited hereunder or the exercise of options issued pursuant thereto; (d)
any capital stock of any Subsidiary of the Borrower issued to the Borrower or
any other Subsidiary of the Borrower; and (e) any preferred stock of the
Borrower issued pursuant to Section 7(c)(ii)(B) of the Moran Acquisition
Agreement.
"EQUITY INTERESTS", means, in any Person, any and all shares, interests,
participations,
<PAGE>
rights or other equivalents (however designated) of any capital stock or
other ownership of any profit interest, and any and all warrants, rights,
options, obligations or other securities of or in such Person, and rights to
acquire any of the foregoing, including, without limitation, partnership
interests and joint venture (whether general or limited) and any other
interest or participation that confers on a Person the right to receive a
share of the profits and losses of, or distributions of assets of, such
partnership or joint venture, but excluding debt for borrowed money and
excluding any debt security that is convertible into, or exchangeable for any
of the foregoing equity interests.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and the regulations promulgated and rulings issued
thereunder.
"ERISA AFFILIATE" means any Person that for purposes of Title IV of ERISA
is a member of the controlled group of any Loan Party, or under common control
with any Loan Party, within the meaning of Section 414 of the Internal Revenue
Code.
"ERISA EVENT" means:
(a) (i) the occurrence of a reportable event, within the meaning of
Section 4043 of ERISA, with respect to any Plan unless the 30-day notice
requirement with respect to such event has been waived by the PBGC, or
(ii) the requirements of subsection (1) of Section 4043(b) of
ERISA (without regard to subsection (2) of such Section) are met with respect to
a contributing sponsor, as defined in Section 4001(a)(13) of ERISA, of a Plan,
and an event described in paragraph (9), (10), (11), (12) or (13) of Section
4043(c) of ERISA is reasonably expected to occur with respect to such Plan
within the following 30 days;
(b) the application for a minimum funding waiver with respect to a
Plan;
(c) the provision by the administrator of any Plan of a notice of
intent to terminate such Plan under ERISA Section 4041(c), pursuant to Section
4041(a)(2) of ERISA (including any such notice with respect to a plan amendment
referred to in Section 4041(e) of ERISA);
(d) the cessation of operations at a facility of any Loan Party or
any ERISA Affiliate in the circumstances described in Section 4062(e) of ERISA;
(e) the withdrawal by any Loan Party or any ERISA Affiliate from a
Multiple Employer Plan during a plan year for which it was a substantial
employer, as defined in Section 4001(a)(2) of ERISA;
(f) the conditions for imposition of a lien under Section 302(f) of
ERISA shall
<PAGE>
have been met with respect to any Plan;
(g) the adoption of an amendment to a Plan requiring the provision of
security to such Plan pursuant to Section 307 of ERISA; or
(h) the institution by the PBGC of proceedings to terminate a Plan
pursuant to Section 4042 of ERISA, or the occurrence of any event or condition
described in Section 4042 of ERISA that constitutes grounds for the termination
of, or the appointment of a trustee to administer, such Plan.
"EUROCURRENCY LIABILITIES" has the meaning specified in Regulation D of the
Board of Governors of the Federal Reserve System, as in effect from time to
time.
"EURODOLLAR LENDING OFFICE" means, with respect to any Lender Party, the
office of such Lender Party specified as its "Eurodollar Lending Office"
opposite its name on SCHEDULE I hereto or in the Assignment and Acceptance
pursuant to which it became a Lender Party (or, if no such office is specified,
its Domestic Lending Office), or such other office of such Lender Party as such
Lender Party may from time to time specify to the Borrower and the
Administrative Agent.
"EURODOLLAR RATE" means, for any Interest Period for all Eurodollar Rate
Advances comprising part of the same Borrowing, an interest rate per annum
(rounded upward, if necessary, to the nearest 1/32 of one percent) as determined
on the basis of the offered rates for deposits in U.S. dollars, for a period of
time comparable to such Interest Period which appears on the Telerate Page 3750
as of 11:00 a.m. (London) two (2) Business Days before the first day of such
Interest Period; PROVIDED, HOWEVER, that if the rate described above does not
appear on the Telerate System on any applicable interest determination date, the
Eurodollar Rate shall be the rate (rounded upward as described above, if
necessary) for deposits in U.S. dollars for a period substantially equal to the
interest period on the Reuters Page "LIBO" (or such other page as may replace
the LIBO page on that service for the purpose of displaying such rates), as of
11:00 a.m. (London time) two (2) Business Days before the first day of such
Interest Period.
If both the Telerate and Reuters system are unavailable, then the rate for
that date will be determined on the basis of the offered rates for deposits in
U.S. dollars for a period of time comparable to such Interest Period which are
offered by four major banks in the London interbank market at approximately
11:00 a.m. (London) two (2) Business Days before the first day of such Interest
Period as selected by the Administrative Agent. The principal London office of
each of the four major London banks will be requested to provide a quotation of
its U.S. dollar deposit offered rate. If at least two such quotations are
provided, the rate for that date will be the arithmetic mean of the quotations.
If fewer than two quotations are provided as requested, the rate for that date
will be determined on the basis of the rates quoted for loans in U.S. dollars to
leading European banks for a period of time comparable to such Interest Period
offered by major banks in New York City at approximately 11:00 a.m. (New York
time) two (2) Business Days
<PAGE>
before the first day of such Interest Period. In the event that the
Administrative Agent is unable to obtain any such quotation as provided
above, it will be deemed that the Eurodollar Rate for such Interest Rate
cannot be determined.
In the event that the Board of Governors of the Federal Reserve System
shall impose, with respect to any Interest Period, a Eurodollar Rate Reserve
Percentage with respect to Eurocurrency Liabilities, the Eurodollar Rate for
such Interest Period shall be equal to the amount determined above for such
Interest Period divided by a percentage equal to 100% minus the Eurodollar Rate
Reserve Percentage for such Interest Period.
"EURODOLLAR RATE ADVANCE" means an Advance that bears interest as provided
in Section 2.7(a)(ii).
"EURODOLLAR RATE RESERVE PERCENTAGE" means, for any Interest Period for all
Eurodollar Rate Advances comprising part of the same Borrowing, the reserve
percentage applicable two Business Days before the first day of such Interest
Period under regulations issued from time to time by the Board of Governors of
the Federal Reserve System (or any successor) for determining the maximum
reserve requirement (including, without limitation, any emergency, supplemental
or other marginal reserve requirement) for a member bank of the Federal Reserve
System in New York City with respect to liabilities or assets consisting of or
including Eurocurrency Liabilities (or with respect to any other category of
liabilities that includes deposits by reference to which the interest rate on
Eurodollar Rate Advances is determined) having a term equal to such Interest
Period.
"EVENTS OF DEFAULT" has the meaning specified in Article 9.
"EXCESS CASH FLOW" means, for any period the sum of (a) EBITDA of the
Borrower and its Subsidiaries for such period, LESS (b) the sum of (1) Interest
Expense, PLUS (2) the aggregate amount of mandatory and optional prepayments or
repayments of principal (other than the Senior Notes Redemption Payments) made
by the Borrower and its Subsidiaries on any Debt of the Borrower and its
Subsidiaries during such period; PROVIDED, HOWEVER, that, with respect to any
optional prepayment of the Revolving Credit Advances, the amount of such
prepayment shall be expressly excluded from the determination of the amount in
this clause (2) if the Revolving Credit Facility is not, upon such repayment,
permanently reduced by the amount of such prepayment, PLUS (3) Maintenance
Capital Expenditures and Investment Capital Expenditures of the Borrower and its
Subsidiaries during such period, PLUS (4) the aggregate amount of all federal,
state, local and foreign taxes paid by the Borrower and its Subsidiaries during
such period PLUS (5) dividends paid by the Borrower to the holders of its common
stock during such period to the extent that the Borrower is expressly permitted
to pay such dividends under this Agreement, PLUS (6) Compensation Payments to
the extent that the Borrower is expressly permitted to make such Compensation
Payments under this Agreement, PLUS (7) Put Payments to the extent that the
Borrower is expressly permitted to make such Put Payments under this Agreement,
PLUS (8) that portion of such EBITDA consisting of amounts under clause (5) of
<PAGE>
the definition of EBITDA.
"EXISTING DEBT" has the meaning specified in Section 4.19(a).
"EXTRAORDINARY RECEIPT" means any cash received by or paid to or for the
account of any Person consisting of proceeds of casualty type insurance (other
than proceeds of business interruption insurance to the extent such proceeds
constitute compensation for lost earnings), and condemnation awards (and
payments in lieu thereof) and indemnity payments relating to third party claims;
PROVIDED, HOWEVER, that an Extraordinary Receipt shall not include cash receipts
received from proceeds of insurance, condemnation awards (and payments in lieu
thereof) or indemnity payments to the extent that such proceeds, awards or
payments (a) in respect of loss or damage to Vessels, Equipment, fixed assets or
real property are applied (or in respect of which expenditures were previously
incurred) to replace or repair the Vessels, Equipment, fixed assets or real
property in respect of which such proceeds, awards or payments were received in
accordance with the terms of the Loan Documents, so long as such application, or
commitment to make such application, is made within twelve (12) months after the
occurrence of such damage or loss; (b) are received by any Person in respect of
any third party claim against such Person and applied to pay (or to reimburse
such Person for its prior payment of) such claim and the costs and expenses of
such Person with respect thereto; or (c) prior to the Term A Draw Date, in
respect of loss or damage to Vessels that are subject to a mortgage pursuant to
the Senior Note Indenture are applied (or in respect of which expenditures were
previously incurred) in accordance with the Senior Note Indenture.
"FACILITY" means the Term A Facility, the Term B Facility, the Revolving
Credit Facility or the Letter of Credit Facility.
"FEDERAL FUNDS RATE" means, for any period, a fluctuating interest rate per
annum equal for each day during such period 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 for such
transactions received by the Administrative Agent from three Federal funds
brokers of recognized standing selected by it.
"FISCAL YEAR" means a fiscal year of the Borrower and its Consolidated
Subsidiaries ending on December 31 in any calendar year.
"FIXED CHARGE COVERAGE RATIO" means, with respect to any period, a ratio of
(a) EBITDA of the Borrower and the Guarantors for such period LESS the sum of
(1) Maintenance Capital Expenditures made in cash by the Borrower and its
Subsidiaries during such period, and (2) the aggregate amount of federal, state,
local and foreign income taxes paid in cash by the Borrower and its Subsidiaries
during such period, to (b) the sum of (1) Consolidated cash Interest
<PAGE>
Expense payable by the Borrower and its Subsidiaries during such period, and
(2) scheduled principal amounts of all Debt payable by the Borrower and its
Subsidiaries during such period (other than the Senior Notes Redemption
Payments).
"FLEET" means Fleet Bank, N.A. in its capacity as a Lender or Issuing Bank.
"FOREIGN SUBSIDIARY" means any Subsidiary organized under the laws of any
jurisdiction other than the United States of America or any State thereof.
"FUNDED DEBT" means, with respect to the Borrower, the Advances, and with
respect to the Borrower and the other Loan Parties and any other Person, all
other Debt of such Person.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board that are applicable to the
circumstances as of the date of determination.
"GARBAGE INVESTMENT" has the meaning specified in Section 6.6(i).
"GARBAGE SUBSIDIARY" has the meaning specified in Section 6.6(i).
"GUARANTEED OBLIGATIONS" has the meaning specified in the Guaranties.
"GUARANTORS" means (a) each Domestic Subsidiary of the Borrower, but
expressly excluding the Garbage Subsidiary and Moran Insurance, and (b) each
Person which shall have executed and delivered or become a party to a Subsidiary
Guaranty hereunder.
"GUARANTY" means each of the Subsidiary Guaranty.
"HAZARDOUS MATERIALS" means (a) petroleum or petroleum products,
by-products or breakdown products, radioactive materials, asbestos-containing
materials, polychlorinated biphenyls and radon gas and (b) any other chemicals,
materials or substances designated, classified or regulated as hazardous or
toxic or as a pollutant or contaminant under any Environmental Law.
"HEDGE AGREEMENTS" means interest rate swap, cap or collar agreements,
interest rate future or option contracts, currency swap agreements, currency
future or option contracts and other similar agreements.
"HEDGE BANK" means any Lender Party in its capacity as a party to a Bank
Hedge Agreement.
"INDEMNIFIED PARTY" has the meaning specified in Section 11.4(b).
<PAGE>
"INDENTURE LIENS" means the security interests, liens and mortgages in, on
and to all right, title and interest of the Old Moran Entities in the Vessels
and certain other assets (other
<PAGE>
than the Old Moran Collateral) of the Old Moran Entities, which security
interests, liens and mortgages were created and granted under and pursuant to
the Senior Notes Documents.
"INFORMATION MEMORANDUM" means the information memorandum, dated October,
1998, delivered by the Administrative Agent to the Lenders.
"INITIAL EXTENSION OF CREDIT" means the earlier to occur of the initial
Borrowing and the initial issuance of a Letter of Credit.
"INITIAL ISSUING BANK" has the meaning specified in the recital of parties
to this Agreement.
"INITIAL LENDERS" has the meaning specified in the recital of parties to
this Agreement.
"INITIAL TURECAMO STOCKHOLDERS" means each of the holders of the Turecamo
Stock as at the Closing Date (or otherwise immediately prior to the consummation
of the Moran Acquisition) who, pursuant to the terms of the Moran Acquisition
Agreement, received as compensation, among other things certain number of shares
of the common stock of the Borrower.
"INSUFFICIENCY" means, with respect to any Plan, the amount, if any, of its
unfunded benefit liabilities, as defined in Section 4001(a)(18) of ERISA.
"INSURANCE ASSIGNMENT" and "INSURANCE ASSIGNMENTS" has the meaning
specified in Section 3.1(a).
"INTELLECTUAL PROPERTY SECURITY AGREEMENT" has the meaning specified in
Section 3.1(a).
"INTEREST EXPENSE" means, with respect to any Person for any period,
interest expense on all Debt of such Person for such period, determined on a
Consolidated basis for such Person and its Subsidiaries and in accordance with
GAAP, and including, without limitation, but without duplication, (a) in the
case of the Borrower, interest expense in respect of Debt resulting from
Advances, (b) the interest component of all obligations under Capitalized
Leases, (c) commissions, discounts and other fees and charges payable in
connection with letters of credit (including, without limitation, Letters of
Credit), and (d) all fees paid by the Borrower pursuant to Section 2.8(a).
"INTEREST PERIOD" means, for each Eurodollar Rate Advance comprising part
of the same Borrowing, the period commencing on the date of such Eurodollar Rate
Advance or the date of the Conversion of any Prime Rate Advance into such
Eurodollar Rate Advance, and ending on the last day of the period selected by
the Borrower pursuant to the provisions below and, thereafter, each subsequent
period commencing on the last day of the immediately preceding
<PAGE>
Interest Period and ending on the last day of the period selected by the
Borrower pursuant to the provisions below. The duration of each such
Interest Period shall be one, two, three or six months, as the Borrower may,
upon notice received by the Administrative Agent not later than 11:00 A.M.
(New York time) on the third Business Day prior to the first day of such
Interest Period, select; PROVIDED, HOWEVER, that:
(a) The Borrower may not select any Interest Period with respect to
any Eurodollar Rate Advance under a Facility that ends after any principal
repayment installment date for such Facility unless, after giving effect to such
selection, the aggregate principal amount of Prime Rate Advances and of
Eurodollar Rate Advances having Interest Periods that end on or prior to such
principal repayment installment date for such Facility shall be at least equal
to the aggregate principal amount of Advances under such Facility due and
payable on or prior to such date;
(b) Whenever the last day of any Interest Period would otherwise
occur on a day other than a Business Day, the last day of such Interest Period
shall be extended to occur on the next succeeding Business Day, PROVIDED,
HOWEVER, that, if such extension would cause the last day of such Interest
Period to occur in the next following calendar month, the last day of such
Interest Period shall occur on the next preceding Business Day;
(c) Whenever the first day of any Interest Period occurs on a day of
an initial calendar month for which there is no numerically corresponding day in
the calendar month that succeeds such initial calendar month, such Interest
Period shall end on the last Business Day of such succeeding calendar month; and
(d) Until the earlier of (i) one hundred twenty (120) days after the
Closing Date, or (ii) the date on which the Administrative Agent notifies the
Borrower that the syndication of the Facilities has been completed, only
Interest Periods with a duration of seven (7) days, if available to all the
Lenders, shall be available to the Borrower for Eurodollar Rate Advances, or if
such Interest Periods are not available to all the Lenders, Interest Periods of
such duration as may be reasonably selected by the Administrative Agent and are
reasonably acceptable to the other Lenders and the Borrower.
"INTERNAL REVENUE CODE" means the Internal Revenue Code of 1986, as amended
from time to time, and the regulations promulgated and rulings issued
thereunder.
"INVENTORY" of any person means all of such Person's now owned and
hereafter acquired inventory, goods, merchandise and other personal property,
wherever located, to be furnished under any contract of service or held for sale
or lease, all returned goods, raw materials, other materials and supplies of any
kind, nature or description which are or might be consumed in such Person's
business or used in connection with the packing, shipping, advertising, selling
or finishing of such goods, merchandise and such other personal property, and
all documents of title or other documents representing them.
<PAGE>
"INVESTMENT" in any Person means any loan or advance to such Person, any
purchase or other acquisition of any capital stock or other ownership or profit
interest, warrants, rights, options, obligations or other securities of such
Person, any capital contribution to such Person or any other investment in such
Person, including, without limitation, any arrangement pursuant to which the
investor incurs Debt of the types referred to in clause (i) or (j) of the
definition of in respect of such Person.
"INVESTMENT CAPITAL EXPENDITURES" means Capital Expenditures but only to
the extent such Capital Expenditures constitute expenditures for the purchase or
construction (including, without limitation, reasonable construction costs) of
new Vessels but excluding dry dock expenditures; PROVIDED, that Capital
Expenditures shall not include (i) capital expenditures to the extent that such
expenditures constitute a reinvestment of Net Cash Proceeds from any Asset
Disposition not prohibited by this Agreement in, or the investment of casualty
insurance or condemnation proceeds in, Vessels, (ii) the Garbage Investment
and/or any capital expenditures made by the Garbage Subsidiary or any Subsidiary
owned by the Garbage Subsidiary, (iii) any capital expenditures made to purchase
the barge named "Portsmouth" (Official No. 1047057), or (iv) any Investment
incurred under Section 6.6(k).
"ISSUING BANK" means the Initial Issuing Bank and each Eligible Assignee to
which Letter of Credit Commitment hereunder has been assigned pursuant to
Section 11.7.
"LAKES TRANSFER GROUP" means (a) any member(s) of the Lakes Group, (b) any
Subsidiary of such member, (c) any Person who is in the immediate family of any
such member, and (d) any trust(s) for the benefit of any Person(s) referred to
in clauses (a) or (c) of this definition.
"LAKES GROUP" means Lakes Shipping Company, Inc., James R. Barker and
members of his immediate family and Paul R. Tregurtha and members of his
immediate family.
"L/C CASH COLLATERAL ACCOUNT" has the meaning specified in the Security
Agreement.
"L/C RELATED DOCUMENTS" has the meaning specified in Section 2.4(e)(ii)(A).
"LENDER PARTY" means any Lender or the Issuing Bank.
"LENDERS" means the Initial Lenders and each Person that shall become a
Lender hereunder pursuant to Section 11.7.
"LETTER OF CREDIT" means any Letter of Credit issued hereunder (as
specified in Section 2.3(a)).
"LETTER OF CREDIT ADVANCE" means an advance made by the Issuing Bank or any
Revolving Credit Lender pursuant to Section 2.3(c).
<PAGE>
"LETTER OF CREDIT AGREEMENT" has the meaning specified in Section 2.3(a).
"LETTER OF CREDIT COMMITMENT" means, with respect to the Issuing Bank, the
amount set forth opposite the Issuing Bank's name on SCHEDULE I hereto under the
caption "Letter of Credit Commitment" or, if the Issuing Bank has entered into
one or more Assignments and Acceptances, set forth for the Issuing Bank in the
Register maintained by the Administrative Agent pursuant to Section 11.7(d) as
the Issuing Bank's "Letter of Credit Commitment", as such amount may be reduced
at or prior to such time pursuant to Section 2.5.
"LETTER OF CREDIT FACILITY" means, at any time, an amount equal to the
amount of the Issuing Bank's Letter of Credit Commitment at such time, as such
amount may be reduced pursuant to Section 2.5.
"LIEN" means any lien, security interest or other charge or encumbrance of
any kind, or any other type of preferential arrangement, including, without
limitation, the lien or retained security title of a conditional vendor and any
encumbrance on title to real property.
"LOAN DOCUMENTS" means (a) this Agreement, (b) the Notes, (c) each
Guaranty, (d) the Collateral Documents, (e) each Letter of Credit Agreement, (f)
each Bank Hedge Agreement, (g) each Additional Collateral Document, and all
other agreements, instruments and documents executed in connection therewith, in
each case as the same may at any time be amended, supplemented, restated or
otherwise modified and in effect.
"LOAN PARTIES" means the Borrower, each Guarantor, and each other Person
who shall, at any time, have executed and delivered a Loan Document to the
Administrative Agent, but expressly excluding the Lender Parties, the Hedge
Banks and the Borrower Stockholders.
"MAINTENANCE CAPITAL EXPENDITURES" means Capital Expenditures excluding
Investment Capital Expenditures but including dry dock expenditures.
"MARGIN STOCK" has the meaning specified in Regulation U.
"MARKET VALUE" has the meaning specified in Section 2.17.
"MATERIAL ADVERSE EFFECT" has the meaning specified in Section 3.1(e).
"MATERIAL CONTRACT" means, with respect to any Person, each contract to
which such Person is a party which is material to the business, condition
(financial or otherwise), operations, performance, properties or prospects of
such Person, and each contract which is a replacement or a substitute for any
such contract.
"MORAN ACQUISITION" has the meaning specified in the Preliminary
Statements.
<PAGE>
"MORAN ACQUISITION AGREEMENT" has the meaning specified in the Preliminary
Statements.
"MORAN ACQUISITION DATE" means the date on which the Moran Acquisition
shall have been consummated in accordance with the Moran Acquisition Documents.
"MORAN ACQUISITION DOCUMENTS" means the Moran Acquisition Agreement and all
schedules and exhibits related thereto.
"MORAN ACQUISITION PURCHASE PRICE" means the aggregate purchase price
payable by the Borrower under the Moran Acquisition Agreement.
"MORAN INDIVIDUALS" means Malcolm W. McLeod, Edmond J. Moran, Jr., Alan L.
Marchisotto, and any officers and employees of the Borrower or its Subsidiaries.
"MORAN INSURANCE" means Moran Insurance Company Limited, a Bermuda
corporation.
"MORAN STOCKHOLDERS" has the meaning given that term in the Moran
Acquisition Agreement.
"MORTGAGED VESSEL" means each Vessel registered with the United States
Coast Guard subject to a Preferred Ship Mortgage granted to the Administrative
Agent for the benefit of the Secured Parties.
"MULTIEMPLOYER PLAN" means a multiemployer plan, as defined in Section
4001(a)(3) of ERISA, to which any Loan Party or any ERISA Affiliate is making or
accruing an obligation to make contributions, or has within any of the preceding
five plan years made or accrued an obligation to make contributions.
"MULTIPLE EMPLOYER PLAN" means a single employer plan, as defined in
Section 4001(a)(15) of ERISA, that (a) is maintained for employees of any Loan
Party or any ERISA Affiliate and at least one Person other than the Loan Parties
and the ERISA Affiliates or (b) was so maintained and in respect of which any
Loan Party or any ERISA Affiliate could have liability under Section 4064 or
4069 of ERISA in the event such plan has been or were to be terminated.
"NET CASH PROCEEDS" means, with respect to any sale, lease, transfer or
other disposition of any asset or any Debt Issuance or Equity Issuance by any
Person, or any Extraordinary Receipt received by or paid to or for the
account of any Person, the aggregate amount of cash received from time to
time (whether as initial consideration or through payment or disposition of
deferred consideration) by or on behalf of such Person in connection with
such transaction after deducting therefrom only (without duplication) (a)
reasonable and customary brokerage commissions, investment banking fees,
underwriting fees and discounts, legal fees, accounting fees, finder's fees
and other similar out-of-pocket costs, (b) the amount of taxes paid or
payable
<PAGE>
in connection with or as a result of such transaction and (c) with respect to
any asset, the amount of any Debt secured by a Lien on such asset that, by
the terms of such transaction, is repaid upon such disposition, in each case
to the extent, but only to the extent, that the amounts so deducted are, at
the time of receipt of such cash, actually paid to a Person that is not an
Affiliate of such Person or any Loan Party or any Affiliate of any Loan Party
and are properly attributable to such transaction or to the asset that is the
subject thereof.
"NON-POSSESSION/LEASE EXCEPTED INVENTORY" means inventory, having an
aggregate net book value not in excess, at any one time, of $1,000,000, which is
not in the possession of the Borrower or its Domestic Subsidiaries and/or is
held on property leased by the Borrower or a Domestic Subsidiary.
"NON-REDEEMABLE PREFERRED STOCK" has the meaning specified in Section 8.4.
"NOTE" means a Term A Note, a Term B Note or a Revolving Credit Note.
"NOTICE OF BORROWING" has the meaning specified in Section 2.2(a).
"NOTICE OF ISSUANCE" has the meaning specified in Section 2.3(a).
"NOTICE OF TERMINATION" has the meaning specified in Section 2.1(d).
"NPL" means the National Priorities List under CERCLA.
"OBLIGATION" means, with respect to any Person, any payment, performance or
other obligation of such Person of any kind, including, without limitation, any
liability of such Person on any claim, whether or not the right of any creditor
to payment in respect of such claim is reduced to judgment, liquidated,
unliquidated, fixed, contingent, matured, disputed, undisputed, legal,
equitable, secured or unsecured, and whether or not such claim is discharged,
stayed or otherwise affected by any proceeding referred to in Section 9.4.
Without limiting the generality of the foregoing, the Obligations of the Loan
Parties under the Loan Documents include (a) the obligation to pay principal,
interest, Letter of Credit commissions, charges, expenses, fees, attorneys' fees
and disbursements, indemnities and other amounts payable by any Loan Party under
any Loan Document, (b) the obligation of any Loan Party to reimburse any amount
in respect of any of the foregoing that any Lender Party may, after the
occurrence and during the continuance of an Event of Default, elect to pay or
advance on behalf of such Loan Party, and (c) any other obligations arising out
of or under, based upon or relating to the Loan Documents.
"OECD" means the Organization for Economic Cooperation and Development.
"OLD MORAN" has the meaning specified in the Preliminary Statements to this
Agreement.
"OLD MORAN COLLATERAL" means all Receivables and Inventory (and the
proceeds thereof) of the Old Moran Entities.
<PAGE>
"OLD MORAN ENTITIES" means, collectively, the following:
(a) Old Moran;
(b) Moran Towing Corporation, a New York corporation;
(c) Moran Towing of Texas, Inc., a Texas corporation;
(d) Seaboard Barge Corporation, a Delaware corporation;
(e) Petroleum Transport Corporation, a Delaware corporation;
(f) Moran Towing of Delaware, Inc., a Delaware corporation;
(g) Moran Services Corporation, a Delaware corporation;
(h) Moran Shipyard Corporation, a New York corporation;
(i) Hampton Roads Land Co., Inc., a Delaware corporation;
(j) Portsmouth Navigation Corporation, a New Hampshire corporation;
(k) Jakobson Shipyard, Inc., a New York corporation;
(l) Moran Barge Corp., a Delaware corporation;
(m) Moran Insurance;
(n) Curtis Bay Towing Company of Pennsylvania, a Pennsylvania
corporation;
(o) Curtis Bay Towing Company of Virginia, a Virginia Corporation;
(p) Florida Towing Company, a Florida corporation; and
(q) MCF Subsidiary, Inc., a Delaware corporation.
"OLD MORAN SECURITY AGREEMENT" has the meaning specified in Section 3.1(a).
"OPEN YEAR" has the meaning specified in Section 4.16.
"OTHER TAXES" has the meaning specified in Section 2.12(b).
"PBGC" means the Pension Benefit Guaranty Corporation (or any successor).
"PERMITTED LIENS" means any of the following: (a) Liens for taxes,
assessments and governmental charges or levies (i) not yet due and payable or
(ii) that are due and payable and that are being contested in good faith and by
appropriate proceedings diligently conducted, PROVIDED that in the case of Liens
under this clause (ii), reserves or other appropriate provisions shall have been
established therefor in accordance with GAAP (or, in the case of a Foreign
Subsidiary, the equivalent of GAAP); (b) Liens imposed by law, such as
materialmen's, vendor's, mechanics', carriers', landlord's, vendors, workmen's
and repairmen's Liens and other similar Liens arising in the ordinary course of
business securing obligations that are not overdue for a period of more than
sixty (60) days or which are being contested in good faith and by appropriate
proceedings diligently conducted, PROVIDED that reserves or other appropriate
provisions shall have been established therefor in accordance with GAAP (or, in
the case of a Foreign Subsidiary, the equivalent of GAAP); (c) pledges or
deposits to secure (i) obligations under workers' compensation laws,
unemployment insurance, pension, social security or similar
<PAGE>
legislation or to secure public or statutory obligations (ii) liability to
insurance carriers or clubs under insurance or self-insurance arrangements,
(iii) the performance of bids, tenders, trade contracts, leases, surety and
appeal bonds, performance bonds, and other obligations of a like nature, and
(iv) fuel hedging obligations; (d) Permitted Real Property Encumbrances; (e)
the Indenture Liens; (f) Liens permitted under the Preferred Ship Mortgages
and, with respect to the Vessels covered by the Indenture Liens, the Ship
Mortgages (as defined in the Senior Notes Indenture); and (g) rights of the
United States Government to requisition any of the Vessels. Notwithstanding
the foregoing in clause (e) above, at such time when the Senior Notes are
redeemed in full and the Indenture Liens has been released and terminated,
and thereafter, such clause (e) shall be deemed to be excluded from this
definition.
"PERMITTED REAL PROPERTY ENCUMBRANCES" means, with respect to any
particular real property, easements, zoning and building restrictions or other
restrictions, rights-of-way, minor liens or encroachments, covenants or
encumbrances on real property imposed by law or arising in the ordinary course
of business that do not arise out of the incurrence of any Debt and that do not
and could not reasonably be expected to materially interfere with the ordinary
conduct of business of the Borrower or any of its Subsidiaries or materially
impair the use thereof to the Borrower or any Subsidiary.
"PERSON" means an individual, partnership, corporation (including a
business trust), limited liability company, joint stock company, trust,
unincorporated association, joint venture or other entity, or a government or
any political subdivision or agency thereof.
"PLAN" means a Single Employer Plan or a Multiple Employer Plan.
"PRE-COMMITMENT INFORMATION" has the meaning specified in Section 3.1(g).
"PREFERRED SHIP MORTGAGE" means a first preferred ship mortgage covering a
Vessel (or first-preferred fleet mortgages covering more than one Vessel) to be
executed and delivered by the Loan Party that is the owner of such Vessel, in
form and substance acceptable to the Administrative Agent, in order to assure
that the Administrative Agent for the benefit of the Secured Parties has a
perfected security interest in or lien on such Vessel, as amended, supplemented
or otherwise modified from time to time.
"PRIME RATE" means a fluctuating interest rate per annum in effect from
time to time, which rate per annum shall at all times be equal to the higher of:
(a) the rate of interest announced publicly by Fleet in Boston,
Massachusetts, from time to time, as Fleet's prime rate, which is not
necessarily the lowest rate made available by Fleet; or
(b) one-half (1/2) of one percent per annum above the Federal Funds
Rate.
<PAGE>
"PRIME RATE ADVANCE" means an Advance that bears interest as provided in
Section 2.7(a)(i).
"PRO RATA SHARE" of any amount means, with respect to any Revolving Credit
Lender at any time, the product of such amount times a fraction the numerator of
which is the amount of such Lender's Revolving Credit Commitment at such time
and the denominator of which is the Revolving Credit Facility at such time.
"PUT PAYMENTS" has the meaning specified in Section 6.7(e).
"RECEIVABLES" means all Receivables referred to in the Security Agreement.
"REDUCTION AMOUNT" has the meaning specified in Section 2.6(b)(v).
"REGISTER" has the meaning specified in Section 11.7(d).
"REGULATION T" means Regulation T of the Board of Governors of the Federal
Reserve System, as in effect from time to time.
"REGULATION U" means Regulation U of the Board of Governors of the Federal
Reserve System, as in effect from time to time.
"REGULATION X" means Regulation X of the Board of Governors of the Federal
Reserve System, as in effect from time to time.
"REGULATORY AUTHORITY" means any federal, state, local or other U.S. or
foreign governmental authority, bureau or agency.
"RELEASE" means any release, spill, emission, leaking, pumping, pouring,
emitting, emptying, discharging, injecting, escaping, leaching, dumping or
disposing into the environment (including the abandonment or discarding of
barrels, containers and other closed receptacles containing any Hazardous
Materials) or into or from any property, including, without limitation, the
movement of any Hazardous Materials through the air, soil, surface waters or
ground water.
"REMEDIAL" shall have the meaning as set forth in CERCLA at 42 U.S.C.
Section 9601(24) and/or any other applicable Environmental Laws.
"REMOVAL" shall have the meaning as set forth in CERCLA at 42 U.S.C.
Section 9601(23) and/or any other applicable Environmental Laws.
"REQUIRED LENDERS" means at any time the Lenders owed or holding greater
than 66-2/3% of the sum of (a) the aggregate principal amount of the Advances
outstanding at such time and (b) the aggregate Available Amount of all Letters
of Credit outstanding at such time, or,
<PAGE>
if no such principal amount and no Letters of Credit are outstanding at such
time, the Administrative Agent and the Lenders holding greater than 51% of
the aggregate of the Term A Commitments, Term B Commitments and Revolving
Credit Commitments; PROVIDED, HOWEVER, that if any Lender shall be a
Defaulting Lender at such time, there shall be excluded from the
determination of Required Lenders at such time (i) the aggregate principal
amount of the Advances owing to such Lender (in its capacity as a Lender) and
outstanding at such time, and (ii) the aggregate Term A Commitment, Term B
Commitment and Revolving Credit Commitment of such Lender at such time. For
purposes of this definition, the aggregate principal amount of Letter of
Credit Advances owing to the Issuing Bank and the Available Amount of each
Letter of Credit shall be considered to be owed to the Revolving Credit
Lenders ratably in accordance with their respective Revolving Credit
Commitments.
"RESPONSE" shall have the meaning as set forth in CERCLA at 42 U.S.C.
Section 9601(25) and/or any other applicable Environmental Laws.
"RESPONSIBLE OFFICER" means, with respect to any Loan Party, the Chief
Executive Officer, the President, the Chief Financial Officer, any Vice
President, the Controller or the Treasurer of such Loan Party.
"REVOLVING CREDIT ADVANCE" has the meaning specified in Section 2.1(c).
"REVOLVING CREDIT AVAILABILITY" means, at any time, the lesser of (a) the
Revolving Credit Facility and (b) the Borrowing Base.
"REVOLVING CREDIT BORROWING" means a borrowing consisting of simultaneous
Revolving Credit Advances of the same Type made by the Revolving Credit Lenders.
"REVOLVING CREDIT COMMITMENT" means, with respect to any Revolving Credit
Lender at any time, the amount set forth opposite such Lender's name on SCHEDULE
I hereto under the caption "Revolving Credit Commitment" or, if such Lender has
entered into one or more Assignments and Acceptances, set forth for such Lender
in the Register maintained by the Administrative Agent pursuant to Section
11.7(d) as such Lender's "Revolving Credit Commitment," as such amount may be
reduced at or prior to such time pursuant to Section 2.5. The initial aggregate
amount of the Revolving Credit Lenders' Revolving Credit Commitments is
$40,000,000.
"REVOLVING CREDIT FACILITY" means, at any time, the aggregate amount of the
Revolving Credit Lenders' Revolving Credit Commitments at such time.
"REVOLVING CREDIT LENDER" means any Lender that has a Revolving Credit
Commitment.
"REVOLVING CREDIT NOTE" means a promissory note of the Borrower payable to
the order
<PAGE>
of any Revolving Credit Lender, in substantially the form of EXHIBIT C
hereto, evidencing the aggregate indebtedness of the Borrower to such Lender
resulting from the Revolving Credit Advances made by such Lender.
"REVOLVING CREDIT TERMINATION DATE" means the earlier of (a) the sixth
anniversary of the Closing Date, and (b) the Termination Date.
"SECURED OBLIGATIONS" has the meaning specified in the Security Agreement.
"SECURED PARTIES" means the Administrative Agent, the Lender Parties, and
the Hedge Banks and the other Persons the Obligations owing to which are or are
purported to be secured by the Collateral under the terms of the Collateral
Documents.
"SECURITY AGREEMENT" has the meaning specified in Section 3.1(a) and, for
purposes of this definition, Security Agreement shall also include each of the
Old Moran Security Agreement and the Borrower/Turecamo Security Agreement.
"SENIOR NOTES REDEMPTION PAYMENTS" means the principal amount payable in
respect of the Senior Notes to redeem such Senior Notes.
"SENIOR NOTES" means Old Moran's 11-3/4% First Preferred Ship Mortgage
Notes due 2004 issued under and pursuant to the Senior Notes Indenture.
"SENIOR NOTES DOCUMENTS" means, collectively, the Senior Notes, the Senior
Notes Indenture, the preferred ship mortgages granted on vessels in connection
therewith, and any other documents, agreements and instruments executed and
delivered by the parties thereto in connection therewith, in each case, as
amended, supplemented or otherwise modified from time to time.
"SENIOR NOTES INDENTURE" means the Indenture dated as of July 11, 1994, by
and between Old Moran, the guarantors a party thereto, and State Street Bank &
Trust Company (as successor to Shawmut Bank Connecticut, National Association)
as trustee, executed and delivered by the parties thereto in connection with the
issuance of the Senior Notes, as amended, supplemented or otherwise modified.
"SINGLE EMPLOYER PLAN" means a single employer plan, as defined in Section
4001(a)(15) of ERISA, that (a) is maintained for employees of any Loan Party or
any ERISA Affiliate and no Person other than the Loan Parties and the ERISA
Affiliates or (b) was so maintained and in respect of which any Loan Party or
any ERISA Affiliate could have liability under Section 4069 of ERISA in the
event such plan has been or were to be terminated.
"SOLVENT" and "SOLVENCY" mean, with respect to any Person on a particular
date, that on such date (a) the fair value of the assets of such Person (on a
going-concern basis) is greater than
<PAGE>
the total amount of liabilities, including, without limitation, contingent
liabilities, of such Person, (b) the present fair salable value of the assets
of such Person (on a going-concern basis) is not less than the amount that
will be required to pay the probable liability of such Person on its debts as
they become absolute and matured, (c) such Person does not intend to, and
does not believe that it will, incur debts or liabilities beyond such
Person's ability to pay such debts and liabilities as they mature and (d)
such Person is not engaged in business or a transaction, and is not about to
engage in business or a transaction, for which such Person's property would
constitute an unreasonably small capital. The amount of contingent
liabilities at any time shall be computed as the amount that, in the light of
all the facts and circumstances existing at such time, represents the amount
that can reasonably be expected to become an actual or matured liability.
Contribution rights shall be considered assets under this definition.
"STANDBY LETTER OF CREDIT" means any Letter of Credit other than a Trade
Letter of Credit.
"SUBSIDIARY" of any Person means any corporation, partnership, joint
venture, limited liability company, trust or estate of which (or in which) more
than 50% of (a) the issued and outstanding capital stock having ordinary voting
power to elect a majority of the Board of Directors of such corporation
(irrespective of whether at the time capital stock of any other class or classes
of such corporation shall or might have voting power upon the occurrence of any
contingency), (b) the interest in the capital or profits or distributions or
general or limited partnership interests of such partnership, joint venture or
limited liability company or (c) the beneficial interest in such trust or
estate, is at the time directly or indirectly owned or controlled by such
Person, by such Person and one or more of its other Subsidiaries or by one or
more of such Person's other Subsidiaries. Unless otherwise specified herein,
the term Subsidiary shall mean a Subsidiary of the Borrower.
"SUBSIDIARY GUARANTY" has the meaning specified in Section 3.1.
"SURVIVING DEBT" shall have the meaning specified in Section 4.19(b).
"TAXES" has the meaning specified in Section 2.12(a).
"TERM A ADVANCE" has the meaning specified in Section 2.1(a).
"TERM A BORROWING" means a borrowing consisting of simultaneous Term A
Advances of the same Type made by the Term A Lenders.
"TERM A COMMITMENT" means, with respect to any Term A Lender at any time,
the amount set forth opposite such Lender's name on SCHEDULE I hereto under the
caption "Term A Commitment" or, if such Lender has entered into one or more
Assignments and Acceptances, set forth for such Lender in the Register
maintained by the Administrative Agent pursuant to Section 11.7(d) as such
Lender's "Term A Commitment," as such amount may be reduced at or prior to
<PAGE>
such time pursuant to Section 2.5. The initial aggregate amount of the Term
A Lenders' Term A Commitments is $80,000,000.
"TERM A DRAW DATE" means the date on which the Term A Advances are made to
the Borrower pursuant to and in accordance with the terms of this Agreement.
"TERM A FACILITY" means, at any time, the aggregate amount of the Term A
Lenders' Term A Commitments at such time.
"TERM A FACILITY TERMINATION DATE" means the first anniversary of the
Closing Date.
"TERM A LENDER" means any Lender that has a Term A Commitment.
"TERM A NOTE" means a promissory note of the Borrower payable to the order
of any Term A Lender, in substantially the form of EXHIBIT D hereto, evidencing
the indebtedness of the Borrower to such Lender resulting from the Term A
Advance made by such Lender.
"TERM B ADVANCE" has the meaning specified in Section 2.1(b).
"TERM B BORROWING" means a borrowing consisting of simultaneous Term B
Advances of the same Type made by the Term B Lenders.
"TERM B COMMITMENT" means, with respect to any Term B Lender at any time,
the amount set forth opposite such Lender's name on SCHEDULE I hereto under the
caption "Term B Commitment" or, if such Lender has entered into one or more
Assignments and Acceptances, set forth for such Lender in the Register
maintained by the Administrative Agent pursuant to Section 11.7 as such Lender's
"Term B Commitment", as such amount may be reduced at or prior to such time
pursuant to Section 2.5. The initial aggregate amount of the Term B Lenders'
Commitments is $80,000,000.
"TERM B FACILITY" means, at any time, the aggregate amount of the Term B
Lenders' Term B Commitments at such time.
"TERM B LENDER" means any Lender that has a Term B Commitment.
"TERM B NOTE" means a promissory note of the Borrower payable to the order
of any Term B Lender, in substantially the form of EXHIBIT E hereto, evidencing
the indebtedness of the Borrower to such Lender resulting from the Term B
Advance made by such Lender.
"TERM FACILITIES" means the Term A Facility and the Term B Facility.
"TERMINATION DATE" means the date of termination in whole of the
Commitments pursuant to Section 2.5 or Article 9.
<PAGE>
"TES" means Turecamo Environmental Services, Inc., a Delaware corporation.
"TOS" means Turecamo of Savannah, Inc., a Georgia corporation.
"TRADE LETTER OF CREDIT" means any Letter of Credit that is issued for the
benefit of a supplier of Inventory to the Borrower or any of its Subsidiaries to
effect payment for such Inventory, the conditions to drawing under which include
the presentation to the Issuing Bank of negotiable bills of lading, invoices and
related documents sufficient, in the judgment of the Issuing Bank, to create a
valid and perfected lien on or security interest in such Inventory, bills of
lading, invoices and related documents in favor of the Issuing Bank.
"TRANSACTION" means the transactions contemplated by the Moran Acquisition
Documents and the Loan Documents.
"TURECAMO ENTITIES" means, collectively, Turecamo Maritime, White Stack,
TOS and TES.
"TURECAMO MARITIME" means Turecamo Maritime, Inc., a Delaware corporation.
"TURECAMO STOCK" has the meaning given that term in the Moran Acquisition
Agreement.
"TURECAMO STOCKHOLDERS" has the meaning given that term in the Moran
Acquisition Agreement.
"TYPE" refers to the distinction between Advances bearing interest at the
Prime Rate and Advances bearing interest at the Eurodollar Rate.
"UNUSED AVAILABILITY" means, as of any date, the amount (if any) by which
the aggregate amount of the Revolving Credit Availability exceeds all Revolving
Credit Advances, PLUS all Letter of Credit Advances, PLUS the aggregate
Available Amount of all Letters of Credit, in each case outstanding at such
date.
"UNUSED REVOLVING CREDIT COMMITMENT" means, with respect to any Revolving
Credit Lender, at any time, (a) such Lender's Revolving Credit Commitment at
such time MINUS (b) the sum (without duplication) of (i) the aggregate principal
amount of all Revolving Credit Advances and Letter of Credit Advances made by
such Lender (in its capacity as a Lender) and outstanding at such time, and (ii)
such Lender's Pro Rata Share of (A) the aggregate Available Amount of all
Letters of Credit outstanding at such time and (B) the aggregate principal
amount of all Letter of Credit Advances made by the Issuing Bank pursuant to
Section 2.3(c) and outstanding at such time.
"VESSEL" means each of the following: (a) each vessel identified on
Schedule 4.29, and
<PAGE>
(b) each additional tugboat or barge acquired or constructed and owned by
the Borrower or any of its Subsidiaries after the Closing Date.
"VESSEL COLLATERAL DOCUMENTS" means, collectively, the Earnings
Assignments, the Insurance Assignments and the Preferred Ship Mortgages.
"VISUAL SURVEY" means a "visual survey and appraisal", in form and
substance acceptable to the Administrative Agent, of all of the Vessels owned by
the Borrower and its Subsidiaries performed by a nationally recognized maritime
"appraiser and surveyor" reasonably acceptable to the Administrative Agent.
"VOTING STOCK" means capital stock issued by a corporation, or equivalent
interests in any other Person, the holders of which are ordinarily, in the
absence of contingencies, entitled to vote for the election of directors (or
persons performing similar functions) of such Person, even if the right so to
vote has been suspended by the happening of such a contingency.
"WELFARE PLAN" means a welfare plan, as defined in Section 3(1) of ERISA,
that is maintained for employees of any Loan Party or in respect of which any
Loan Party could have liability.
"WHITE STACK" means White Stack Maritime Corp., a Delaware corporation.
"WHOLLY-OWNED SUBSIDIARY" of any Person means a Subsidiary of such Person
all of the outstanding Equity Interests of which shall at the time be owned by
such Person or by one or more Wholly-Owned Subsidiaries of that Person or a
combination thereof.
"WITHDRAWAL LIABILITIES" has the meaning specified in Part I of Subtitle E
of Title IV of ERISA.
SECTION 1.2 COMPUTATION OF TIME PERIODS. In this Agreement in the
computation of periods of time from a specified date to a later specified date,
the word "from" means "from and including" and the words "to" and "until" each
mean "to but excluding."
SECTION 1.3 ACCOUNTING TERMS.
(a) For purposes of this Agreement, all accounting terms not
otherwise defined herein shall have the meanings assigned to such terms in
conformity with GAAP. Financial statements and other information furnished to
Lender pursuant to Article 7 shall be prepared in accordance with GAAP (as in
effect at the time of such preparation) on a consistent basis. In the event any
"Accounting Changes" (as defined below) shall occur and such changes affect
financial covenants, standards or terms in this Agreement, then the Borrower and
the Lenders agree to enter into negotiations in order to amend such provisions
of this Agreement so
<PAGE>
as to equitably reflect such Accounting Changes with the desired result that
the criteria for evaluating the financial condition of the Borrower shall be
the same after such Accounting Changes as if such Accounting Changes had not
been made, and until such time as such an amendment shall have been executed
and delivered by the Borrower and the Lenders, (a) all financial covenants,
standards and terms in this Agreement shall be calculated and/or construed as
if such Accounting Changes had not been made, and (b) the Borrower shall
prepare footnotes to each Compliance Certificate and the financial statements
required to be delivered hereunder that show the differences between the
financial statements delivered (which reflect such Accounting Changes) and
the basis for calculating financial covenant compliance (without reflecting
such Accounting Changes). "ACCOUNTING CHANGES" means: (a) changes in
accounting principles required by GAAP and implemented by Borrower; (b)
changes in accounting principles recommended by Borrower's certified public
accountants; and (c) changes in carrying value of the Borrower's or any of
its Subsidiaries' assets, liabilities or equity accounts resulting from
adjustments that, in each case, were applicable to, but not included in, the
Pro Forma Financials; provided, however, that "Accounting Changes" shall not
include changes required to be made to accounting principles used by Turecamo
to conform with those of Old Moran. All such adjustments resulting from
expenditures made subsequent to the Closing Date (including, but not limited
to, capitalization of costs and expenses or payment of pre-Closing Date
liabilities) shall be treated as expenses in the period the expenditures are
made and deducted as part of the calculation of EBITDA in such period.
(b) For purposes of determining the computation of all financial
covenants and the Applicable Margin, the term "Subsidiary" shall be deemed to
include the Turecamo Entities and the Old Moran Entities for all periods prior
to the Closing Date.
SECTION 1.4 OTHER DEFINITIONAL PROVISIONS. References to "Sections",
"subsections", "Exhibits" and "Schedules" shall be to Sections, subsections,
Exhibits and Schedules, respectively, of this Agreement unless otherwise
specifically provided. Any of the terms defined in Section 1.1 may, unless the
context otherwise requires, be used in the singular or the plural depending on
the reference. In this Agreement, words importing any gender include the other
genders; the words "including," "includes" and "include" shall be deemed to be
followed by the words "without limitation"; references to agreements and other
contractual instruments shall be deemed to include subsequent amendments,
assignments, and other modifications thereto, but only to the extent such
amendments, assignments and other modifications are not prohibited by the terms
of this Agreement or any other Loan Document; references to Persons include
their respective permitted successors and assigns or, in the case of
governmental Persons, Persons succeeding to the relevant functions of such
Persons; and all references to statutes and related regulations shall include
any amendments of same and any successor statutes and regulations.
ARTICLE 2
AMOUNTS AND TERMS OF
THE ADVANCES AND THE LETTERS OF CREDIT
<PAGE>
SECTION 2.1 THE ADVANCES.
(a) THE TERM A ADVANCES. Each Term A Lender severally agrees, on the
terms and conditions hereinafter set forth, to make a single advance (a "TERM A
ADVANCE") to the Borrower at any time on or after June 30, 1999 (but in no event
later than the Term A Facility Termination Date) in an amount equal to such
Lender's Term A Commitment at such time. The Term A Borrowing shall consist of
Term A Advances made simultaneously by the Term A Lenders ratably according to
their Term A Commitments. Amounts borrowed under this Section 2.1(a) and repaid
or prepaid may not be reborrowed.
(b) THE TERM B ADVANCES. Each Term B Lender severally agrees, on the
terms and conditions hereinafter set forth, to make a single advance (a "TERM B
ADVANCE") to the Borrower on the Closing Date in an amount equal to such
Lender's Term B Commitment at such time. The Term B Borrowing shall consist of
Term B Advances made simultaneously by the Term B Lenders ratably according to
their Term B Commitments. Amounts borrowed under this Section 2.1(b) and repaid
or prepaid may not be reborrowed.
(c) THE REVOLVING CREDIT ADVANCES. Each Revolving Credit Lender
severally agrees, on the terms and conditions hereinafter set forth, to make
advances (each a "REVOLVING CREDIT ADVANCE") to the Borrower from time to time
on any Business Day during the period from the date hereof until the Revolving
Credit Termination Date in an amount for each such Advance not to exceed such
Lender's Unused Revolving Credit Commitment at such time; PROVIDED, HOWEVER,
that no Revolving Credit Lender shall have any obligation to make a Revolving
Credit Advance under this Section 2.1(c) to the extent such Revolving Credit
Advance would (after giving effect to any immediate application of the proceeds
thereof) exceed the Unused Availability. Each Revolving Credit Borrowing shall
be in an aggregate amount of $500,000 or an integral multiple of $100,000 (other
than, in each case, a Borrowing the proceeds of which shall be used solely to
repay or prepay in full outstanding Letter of Credit Advances) and shall consist
of Revolving Credit Advances made simultaneously by the Revolving Credit Lenders
ratably according to their Revolving Credit Commitments. Within the limits of
each Revolving Credit Lender's Unused Revolving Credit Commitment in effect from
time to time, the Borrower may borrow, repay and reborrow Revolving Credit
Advances.
(d) LETTERS OF CREDIT. The Issuing Bank agrees, on the terms and
conditions hereinafter set forth, to issue letters of credit for the account of
the Borrower (or any Subsidiary of the Borrower provided, that, for purposes of
the Borrower's reimbursement and other obligations hereunder with respect to any
Letter of Credit issued for the account of a Subsidiary, the Borrower shall be
considered the account party) from time to time on any Business Day during the
period from the Closing Date until sixty (60) days before the Revolving Credit
Termination Date (i) in an aggregate Available Amount for all Letters of Credit
not to exceed at any time the Issuing Bank's Letter of Credit Commitment at such
time and (ii) in an Available
<PAGE>
Amount for each such Letter of Credit not to exceed (after giving effect to
any immediate application of the proceeds thereof) the Unused Availability.
No Letter of Credit shall have an expiration date (including all rights of
the Borrower or the beneficiary to require renewal) later than (A) the
earlier of sixty (60) days before the Revolving Credit Termination Date, (B)
in the case of a Standby Letter of Credit, 365 days after the date of
issuance thereof and (C) in the case of a Trade Letter of Credit, 180 days
after the date of issuance thereof. The foregoing notwithstanding, any
Standby Letter of Credit may, by its terms, be renewable annually upon
fulfillment of the applicable conditions set forth in Article 3 unless such
Issuing Bank shall have notified the Borrower (with a copy to the
Administrative Agent) on or prior to the date for notice of termination set
forth in such Letter of Credit (but in any event at least sixty (60) Business
Days prior to the date of automatic renewal) of its election not to renew
such Standby Letter of Credit (a "NOTICE OF TERMINATION"); PROVIDED that the
terms of each Standby Letter of Credit that is automatically renewable
annually shall not permit the expiration date (after giving effect to any
renewal) of such Standby Letter of Credit in any event to be extended to a
date later than sixty (60) days before the Revolving Credit Termination Date.
If a Notice of Termination is given by the Issuing Bank pursuant to the
immediately preceding sentence, such Standby Letter of Credit shall expire on
the date on which it otherwise would have been automatically renewed. Within
the limits of the Letter of Credit Facility, and subject to the limits
referred to above, the Borrower may request the issuance of Letters of Credit
under this Section 2.1(d), repay any Letter of Credit Advances resulting from
drawings under Letters of Credit pursuant to Section 2.3(c) and request the
issuance of additional Letters of Credit under this Section 2.1(d).
SECTION 2.2 MAKING THE ADVANCES.
(a) Except as otherwise provided in Section 2.3, each Borrowing shall
be made on notice, given not later than 11:00 A.M. (New York time) on the third
Business Day prior to the date of the proposed Borrowing in the case of
Eurodollar Rate Advances and on the Business Day of the proposed Borrowing in
the case of Prime Rate Advances by the Borrower to the Administrative Agent,
which shall give to each appropriate Lender prompt notice thereof by telex or
telecopier. Each such notice of a Borrowing (a "NOTICE OF BORROWING") may be by
telephone, confirmed immediately in writing, or telex or telecopier in
substantially the form of EXHIBIT F hereto, specifying therein the requested (i)
date of such Borrowing, (ii) Facility under which such Borrowing is to be made,
(iii) Type of Advances comprising such Borrowing, (iv) aggregate amount of such
Borrowing and (v) in the case of a Borrowing consisting of Eurodollar Rate
Advances, initial Interest Period for each such Advance. Each appropriate
Lender shall, before 1:00 P.M. (New York time) on the date of such Borrowing,
make available for the account of its Applicable Lending Office to the
Administrative Agent at the Administrative Agent's Account, in same day funds,
such Lender's ratable portion of such Borrowing in accordance with the
respective Commitments under the applicable Facility of such Lender and the
other appropriate Lenders. After the Administrative Agent's receipt of such
funds and upon fulfillment of the applicable conditions set forth in Article 3,
the Administrative Agent will make such funds available to the Borrower by
crediting the Borrower's Account; PROVIDED, HOWEVER, that in the case of any
Revolving Credit Borrowing, the Administrative Agent shall
<PAGE>
first make a portion of such funds equal to the aggregate principal amount of
any Letter of Credit Advances made by the Issuing Bank and by any other
Revolving Credit Lender and outstanding on the date of such Revolving Credit
Borrowing, PLUS interest accrued and unpaid thereon to and as of such date,
available to the Issuing Bank and such other Revolving Credit Lenders for
repayment of such Letter of Credit Advances.
(b) Anything in subsection (a) above to the contrary notwithstanding,
(i) the Borrower may not select Eurodollar Rate Advances if the obligation of
the appropriate Lenders to make Eurodollar Rate Advances shall then be suspended
pursuant to Section 2.9 or Section 2.10, and (ii) the Eurodollar Rate Advances
made on any date may not be outstanding as part of more than ten (10) separate
Borrowings.
(c) Each Notice of Borrowing shall be irrevocable and binding on the
Borrower. In the case of any Borrowing that the related Notice of Borrowing
specifies is to be comprised of Eurodollar Rate Advances, the Borrower shall
indemnify each appropriate Lender against any loss, cost or expense incurred by
such Lender as a result of any failure to fulfill on or before the date
specified in such Notice of Borrowing for such Borrowing the applicable
conditions set forth in Article 3, including, without limitation, any loss
(including loss of anticipated profits as reasonably determined by such Lender),
cost or expense incurred by reason of the liquidation or redeployment of
deposits or other funds acquired by such Lender to fund the Advance to be made
by such Lender as part of such Borrowing when such Advance, as a result of such
failure, is not made on such date.
(d) Unless the Administrative Agent shall have received notice from
an appropriate Lender prior to the date of any Borrowing under a Facility under
which such Lender has a Commitment that such Lender will not make available to
the Administrative Agent such Lender's ratable portion of such Borrowing, the
Administrative Agent may assume that such Lender has made such portion available
to the Administrative Agent on the date of such Borrowing in accordance with
subsection (a) or (b) of this Section 2.2 and the Administrative Agent may, in
reliance upon such assumption, make available to the Borrower on such date a
corresponding amount. If and to the extent that such Lender shall not have so
made such ratable portion available to the Administrative Agent, such Lender and
the Borrower severally agree to repay or pay to the Administrative Agent
forthwith on demand such corresponding amount and to pay interest thereon, for
each day from the date such amount is made available to the Borrower until the
date such amount is repaid or paid to the Administrative Agent, at (i) in the
case of the Borrower, the interest rate applicable at such time under Section
2.7 to Advances comprising such Borrowing and (ii) in the case of such Lender,
the Federal Funds Rate. If such Lender shall pay to the Administrative Agent
such corresponding amount, such amount so paid shall constitute such Lender's
Advance as part of such Borrowing for all purposes.
(e) The failure of any Lender to make the Advance to be made by it as
part of any Borrowing shall not relieve any other Lender of its obligation, if
any, hereunder to make its Advance on the date of such Borrowing, but no Lender
shall be responsible for the failure of any
<PAGE>
other Lender to make the Advance to be made by such other Lender on the date
of any Borrowing.
SECTION 2.3 ISSUANCE OF AND DRAWINGS AND REIMBURSEMENT UNDER LETTERS OF
CREDIT.
(a) REQUEST FOR ISSUANCE. Each Letter of Credit shall be issued upon
notice, given not later than 11:00 A.M. (New York time) on the fifth Business
Day prior to the date of the proposed issuance of such Letter of Credit, by the
Borrower to the Issuing Bank, which shall give to the Administrative Agent and
each Revolving Credit Lender prompt notice thereof by telex or telecopier. Each
such notice of issuance of a Letter of Credit (a "NOTICE OF ISSUANCE") shall be
by telephone, confirmed immediately in writing, or telex or telecopier,
specifying therein the requested (i) date of such issuance (which shall be a
Business Day), (ii) Available Amount of such Letter of Credit, (iii) expiration
date of such Letter of Credit, (iv) name and address of the beneficiary of such
Letter of Credit and (v) form of such Letter of Credit, and shall be accompanied
by such application and agreement for letter of credit as the Issuing Bank may
specify to the Borrower for use in connection with such requested Letter of
Credit (a "LETTER OF CREDIT AGREEMENT"). If the requested form of such Letter
of Credit is acceptable to the Issuing Bank, in its sole discretion, the Issuing
Bank will, upon fulfillment of the applicable conditions set forth in Article 3,
make such Letter of Credit available to the Borrower at its office referred to
in Section 11.2 or as otherwise agreed with the Borrower in connection with such
issuance. In the event and to the extent that the provisions of any such Letter
of Credit Agreement shall conflict with this Agreement, the provisions of this
Agreement shall govern.
(b) LETTER OF CREDIT REPORTS. The Issuing Bank shall furnish (i) to
the Administrative Agent on the first Business Day of each week a written report
summarizing issuance and expiration dates of Letters of Credit issued during the
previous week and drawings during such week under all Letters of Credit, (ii) to
the Administrative Agent, the Borrower and each Revolving Credit Lender on the
first Business Day of each month a written report summarizing issuance and
expiration dates of Letters of Credit issued during the preceding month and
drawings during such month under all Letters of Credit and (iii) to the
Administrative Agent, the Borrower and each Revolving Credit Lender on the first
Business Day of each calendar quarter a written report setting forth the average
daily aggregate Available Amount during the preceding calendar quarter of all
Letters of Credit.
(c) DRAWING AND REIMBURSEMENT. The payment by the Issuing Bank of a
draft drawn under any Letter of Credit shall constitute for all purposes of this
Agreement the making by the Issuing Bank of a Letter of Credit Advance which
shall be a Prime Rate Advance in the amount of such draft. Each of the
Borrower, the Administrative Agent and each Revolving Credit Lender hereby
acknowledges and agrees that Letter of Credit Advances may be made, or deemed
made, by the Issuing Bank in respect of any Letter of Credit and to participate
in all Letter of Credit Advances made hereunder as provided herein. Upon
written demand by the Issuing Bank, with a copy of such demand to the
Administrative Agent, each Revolving Credit Lender shall purchase from the
Issuing Bank, and the Issuing Bank shall sell and assign to each
<PAGE>
such Revolving Credit Lender, such Lender's Pro Rata Share of such
outstanding Letter of Credit Advance as of the date of such purchase, by
making available (for the account of its Applicable Lending Office) to the
Administrative Agent (for the account of the Issuing Bank), by deposit to the
Administrative Agent's Account, in same day funds, an amount equal to the
portion of the outstanding principal amount of such Letter of Credit Advance
to be purchased by such Lender. Promptly after receipt thereof, the
Administrative Agent shall transfer such funds to the Issuing Bank. The
Borrower hereby agrees to each such sale and assignment. Each Revolving
Credit Lender agrees to purchase its Pro Rata Share of an outstanding Letter
of Credit Advance on (i) the Business Day on which demand therefor is made by
the Issuing Bank; PROVIDED that notice of such demand is given not later than
11:00 A.M. (New York time) on such Business Day or (ii) the first Business
Day next succeeding such demand if notice of such demand is given after such
time. Upon any such assignment by the Issuing Bank to any other Revolving
Credit Lender of a portion of a Letter of Credit Advance, the Issuing Bank
represents and warrants to such other Lender that (i) the Issuing Bank is the
legal and beneficial owner of such interest being assigned by it, free and
clear of any liens, and (ii) the conditions set forth in 3.2 have been
satisfied, but makes no other representation or warranty and assumes no
responsibility with respect to such Letter of Credit Advance, the Loan
Documents or any Loan Party. If and to the extent that any Revolving Credit
Lender shall not have so made the amount of such Letter of Credit Advance
available to the Administrative Agent, such Revolving Credit Lender agrees to
pay to the Administrative Agent forthwith on demand such amount together with
interest thereon, for each day from the date of demand by the Issuing Bank
until the date such amount is paid to the Administrative Agent, at the
Federal Funds Rate for its account or the account of the Issuing Bank, as
applicable. If such Lender shall pay to the Administrative Agent such amount
for the account of the Issuing Bank on any Business Day, such amount so paid
in respect of principal shall constitute a Letter of Credit Advance made by
such Lender on such Business Day for purposes of this Agreement, and the
outstanding principal amount of the Letter of Credit Advance made by the
Issuing Bank shall be reduced by such amount on such Business Day.
(d) FAILURE TO MAKE LETTER OF CREDIT ADVANCES. The failure of any
Lender to make any Letter of Credit Advance to be made by it on the date
specified in Section 2.3(c) shall not relieve any other Lender of its obligation
hereunder to make its Letter of Credit Advance on such date, but no Lender shall
be responsible for the failure of any other Lender to make the Letter of Credit
Advance to be made by such other Lender on such date.
SECTION 2.4 REPAYMENT OF ADVANCES.
(a) TERM A ADVANCES. If any amounts are borrowed under Section
2.1(a), then the Borrower shall repay to the Administrative Agent for the
ratable account of the Term A Lenders the aggregate outstanding principal amount
of the Term A Advances on the following dates in the amounts indicated (which
amounts shall be reduced as a result of the application of prepayments in
accordance with the order of priority set forth in Section 2.6):
<TABLE>
<CAPTION>
DATE AMOUNTS
---- ---------
<PAGE>
<S> <C>
September 30, 1999 $2,500,000
December 31, 1999 $2,500,000*
March 31, 2000 $2,500,000
June 30, 2000 $2,500,000
September 30, 2000 $3,125,000
December 31, 2000 $3,125,000
March 31, 2001 $3,125,000
June 30, 2001 $3,125,000
September 30, 2001 $3,625,000
December 31, 2001 $3,625,000
March 31, 2002 $3,625,000
June 30, 2002 $3,625,000
September 30, 2002 $4,500,000
December 31, 2002 $4,500,000
March 31, 2003 $4,500,000
June 30, 2003 $4,500,000
September 30, 2003 $6,250,000
December 31, 2003 $6,250,000
March 31, 2004 $6,250,000
June 30, 2004 $6,250,000
</TABLE>
PROVIDED, HOWEVER, that the final principal installment shall be in an amount
equal to the aggregate principal amount of the Term A Advances outstanding on
such date.
(b) TERM B ADVANCES. The Borrower shall repay to the Administrative
Agent for the ratable account of the Term B Lenders the aggregate outstanding
principal amount of the Term B Advances on the following dates in the amounts
indicated (which amounts shall be reduced as a result of the application of
prepayments in accordance with the order of priority set forth in Section 2.6):
<TABLE>
<CAPTION>
DATE AMOUNTS
---- ---------
<S> <C>
March 31, 1999 $ 200,000
June 30, 1999 $ 200,000
</TABLE>
- -----------
(*) In the event that the Term A Draw Date occurs on or after September 30,
1999 (but prior to the Term A Facility Termination Date), the $2,500,000 payment
which would have been payable on September 30, 1999 shall be added to the
payment due on December 31, 1999, and thus, the principal amount of the Term A
Advance due on December 31, 1999 shall be $5,000,000.
<PAGE>
<TABLE>
<S> <C>
September 30, 1999 $ 200,000
December 31, 1999 $ 200,000
March 31, 2000 $ 200,000
June 30, 2000 $ 200,000
September 30, 2000 $ 200,000
December 31, 2000 $ 200,000
March 31, 2001 $ 200,000
June 30, 2001 $ 200,000
September 30, 2001 $ 200,000
December 31, 2001 $ 200,000
March 31, 2002 $ 200,000
June 30, 2002 $ 200,000
September 30, 2002 $ 200,000
December 31, 2002 $ 200,000
March 31, 2003 $ 200,000
June 30, 2003 $ 200,000
September 30, 2003 $ 200,000
December 31, 2003 $ 200,000
March 31, 2004 $ 200,000
June 30, 2004 $ 200,000
September 30, 2004 $ 200,000
December 31, 2004 $ 200,000
March 31, 2005 $ 6,250,000
June 30, 2005 $ 6,250,000
September 30, 2005 $ 6,250,000
December 31, 2005 $56,450,000
</TABLE>
PROVIDED, HOWEVER, that the final principal installment shall be equal to the
aggregate principal amount of the Term B Advances outstanding on such date.
(c) REVOLVING CREDIT ADVANCES. The Borrower shall repay to the
Administrative Agent for the ratable account of the Revolving Credit Lenders on
the Revolving Credit Termination Date the aggregate principal amount of the
Revolving Credit Advances then outstanding.
(d) LETTER OF CREDIT ADVANCES. (i) The Borrower shall repay to the
Administrative Agent for the account of the Issuing Bank and each other
Revolving Credit Lender that has made a Letter of Credit Advance on the earlier
of demand and the Revolving Credit Termination Date the outstanding principal
amount of each Letter of Credit Advance made by each of them.
<PAGE>
(ii) The Obligations of the Borrower under this Agreement, any
Letter of Credit Agreement and any other agreement or instrument relating to any
Letter of Credit shall be unconditional and irrevocable, and shall be paid
strictly in accordance with the terms of this Agreement, such Letter of Credit
Agreement and such other agreement or instrument under all circumstances,
including, without limitation, the following circumstances:
(A) any lack of validity or enforceability of any Loan
Document, any Letter of Credit Agreement, any Letter of Credit or any other
agreement or instrument relating to any of the foregoing (all of the foregoing
being, collectively, the "L/C RELATED DOCUMENTS");
(B) any change in the time, manner or place of payment of,
or in any other term of, all or any of the Obligations of the Borrower in
respect of any L/C Related Document or any other amendment or waiver of or any
consent to departure from all or any of the L/C Related Documents;
(C) the existence of any claim, set-off, defense or other
right that the Borrower may have at any time against any beneficiary or any
transferee of a Letter of Credit (or any Persons for whom any such beneficiary
or any such transferee may be acting), the Issuing Bank, or any other Person,
whether in connection with the transactions contemplated by the L/C Related
Documents or any unrelated transaction;
(D) any statement or any other document presented under a
Letter of Credit proving to be forged, fraudulent, invalid or insufficient in
any respect or any statement therein being untrue or inaccurate in any respect;
or
(E) any exchange, release or non-perfection of any
Collateral or other collateral, or any release or amendment or waiver of or
consent to departure from any Guaranty or any other guarantee, for all or any of
the Obligations of the Borrower in respect of the L/C Related Documents;
provided that, nothing contained herein shall be interpreted to waive any right
which the Borrower may have, in the event of the Issuing Bank's gross negligence
or willful misconduct, under Section 11.09.
SECTION 2.5 TERMINATION OR REDUCTION OF THE COMMITMENTS.
(a) OPTIONAL. The Borrower may, upon at least three (3) Business
Days' notice to the Administrative Agent, terminate in whole or reduce in part
the unused portions of the Unused Revolving Credit Commitments HOWEVER, that
each partial reduction of a Facility (i) shall be in an aggregate amount of
$1,000,000 or an integral multiple of $1,000,000 in excess thereof, and (ii)
shall be made ratably among the appropriate Lenders in accordance with their
Commitments with respect to such Facility.
<PAGE>
(b) MANDATORY.
(i) The Term A Commitments shall automatically terminate in
whole on the Term A Facility Termination Date and all Advances made thereunder
shall be repaid in full, no later than the fifth anniversary of the Term A Draw
Date.
(ii) On the date of the Term B Borrowing, after giving effect
to such Term B Borrowing, and from time to time thereafter upon each
repayment or prepayment of the Term B Advances, the aggregate Term B
Commitments of the Term B Lenders shall be automatically and permanently
reduced, on a pro rata basis, by an amount equal to the amount by which the
aggregate Term B Commitments immediately prior to such reduction exceed the
aggregate unpaid principal amount of the Term B Advances then outstanding;
PROVIDED, HOWEVER, that the Term B Commitments shall terminate, and all
Advances made thereunder shall be repaid in full, no later than December 31,
2005.
(iii) On and after the date that all Term A Advances and Term
B Advances shall have been repaid in full the Revolving Credit Facility shall
be automatically and permanently reduced on each date on which prepayment
thereof is required to be made pursuant to Section 2.6(b)(i), (ii), (iii) or
(iv) in an amount equal to the applicable Reduction Amount, PROVIDED that
each such reduction of the Revolving Credit Facility shall be made ratably
among the Revolving Credit Lenders in accordance with their Revolving Credit
Commitments.
(iv) The Letter of Credit Facility shall be permanently
reduced from time to time on the date of each reduction in the Revolving
Credit Facility by the amount, if any, by which the amount of the Letter of
Credit Facility exceeds the Revolving Credit Facility after giving effect to
such reduction of the Revolving Credit Facility.
(v) In the event the Closing Date shall not have occurred by
October 30, 1998, then all of the Commitments shall be automatically
terminated and this Agreement shall be of no further force or effect.
(vi) Notwithstanding the foregoing in clauses (i), (ii),
(iii), (iv) and (v) of this Section 2.5(b), in the event the Term A Borrowing
is not consummated on or prior to the Term A Facility Termination Date other
than by reason of the breach, if any, by any Lender(s) of its obligation
hereunder to make its Term A Advance), then all of the Commitments shall
automatically and immediately terminate and all the outstanding Advances
shall be payable in accordance with clause (ix) of Section 2.6(b).
SECTION 2.6 PREPAYMENTS.
(a) OPTIONAL. The Borrower may, without premium or penalty, upon
at least one (1) Business Day's notice in the case of Prime Rate Advances and
three (3) Business Days' notice in the case of Eurodollar Rate Advances, in
each case to the Administrative Agent stating
<PAGE>
the proposed date and aggregate principal amount of the prepayment, and if
such notice is given, the Borrower shall, prepay the outstanding aggregate
principal amount of the Advances, in whole or ratably in part, together with
accrued interest to the date of such prepayment on the aggregate principal
amount prepaid; PROVIDED, HOWEVER, that (i) (x) in the case of a prepayment
of the Term A Advances or Term B Advances, each partial prepayment shall be
in an aggregate principal amount of $1,000,000 or an integral multiple of
$1,000,000 in excess thereof and (y) in the case of a prepayment of the
Revolving Credit Advances, each partial prepayment shall be in an aggregate
principal amount of $250,000 or an integral multiple of $50,000 in excess
thereof and (ii) no such prepayment of a Eurodollar Rate Advance shall be
made other than on the last day of an Interest Period therefor without
payment by the Borrower of the amounts provided for in Section 11.4(c). Each
prepayment made pursuant to this Section 2.6(a) shall, at the Borrower's
option, be applied to either (i) repay the Facilities in the following
manner: FIRST, to prepay Letter of Credit Advances then outstanding until
such Letter of Credit Advances are paid in full; and SECOND, to prepay
Revolving Credit Advances then outstanding until such Revolving Credit
Advances are paid in full; or (ii) be applied to repay the Facilities in the
following manner: FIRST, ratably to the Term A Facility and the Term B
Facility, and ratably to each unpaid installment of principal of each of the
Term Facilities until such installments are paid in full; SECOND, to prepay
Letter of Credit Advances then outstanding until such Letter of Credit
Advances are paid in full; THIRD, to prepay Revolving Credit Advances then
outstanding (whereupon the Revolving Credit Facility shall be permanently
reduced as set forth in Section 2.5(b)(iii)) until such Revolving Credit
Advances are paid in full; and FOURTH, deposited in the L/C Cash Collateral
Account to cash collateralize 100% of the Available Amount of the Letters of
Credit then outstanding. Upon the drawing of any Letter of Credit for which
funds are on deposit in the L/C Cash Collateral Account, such funds shall be
applied to reimburse the Issuing Bank or the Revolving Credit Lenders, as
applicable.
(b) MANDATORY.
(i) Within ninety-five (95) days following the end of each
Fiscal Year, commencing with the Fiscal Year ending December 31, 1999, in
which the ratio of Consolidated Debt to EBITDA at the end of such Fiscal Year
is greater than or equal to 3.00 to 1.00, the Borrower shall execute and
deliver to the Administrative Agent a certificate of the Borrower's chief
executive officer or chief financial officer demonstrating its calculation of
Excess Cash Flow for such Fiscal Year along with a prepayment of the then
outstanding Advances equal to seventy-five percent (75%) of the annual Excess
Cash Flow; PROVIDED, HOWEVER, that if the ratio of Consolidated Debt to
EBITDA, measured at the end of such Fiscal Year of the Borrower, for such
Fiscal Year of the Borrower, is less than 3.00 to 1.00, then the required
prepayment of the then outstanding Advances shall be in the amount of fifty
percent (50%) of the annual Excess Cash Flow for such Fiscal Year rather than
seventy-five percent (75%) of such annual Excess Cash Flow.
(ii) Within fifteen (15) days after receipt by any Loan Party
or any of its Subsidiaries of Net Cash Proceeds from any Asset Disposition
(other than Extraordinary
<PAGE>
Receipts the disposition of which shall be governed by the terms of Section
2.6(b)(iv) below), the Borrower shall prepay the then outstanding Advances in
an amount equal to one-hundred percent (100%) of such Net Cash Proceeds;
PROVIDED, HOWEVER, that no prepayment of the then outstanding Advances will
be required under this Section 2.6(b)(ii) with respect to Net Cash Proceeds
from Asset Dispositions, not exceeding $15,000,000 in any Fiscal Year, to the
extent that such Net Cash Proceeds with respect to Vessels are reinvested (or
are committed, pursuant to a binding written commitment, to be reinvested) in
new or used vessels and, with respect to non-vessel assets, are reinvested
(or are committed, pursuant to a binding written commitment, to be
reinvested) in assets of a similar type and nature of those subject to such
disposition, in each case, within twelve (12) months after receipt thereof;
PROVIDED FURTHER, HOWEVER, that the Borrower shall prepay the then
outstanding Advances in an amount equal to (x) all Net Cash Proceeds from
Asset Dispositions received in any Fiscal Year in excess of $15,000,000,
plus, without duplication, (y) all Net Cash Proceeds not so reinvested (or
committed to be reinvested) within twelve (12) months after receipt thereof
(which amounts shall be repaid not later than the date that is twelve (12)
months after the date of receipt thereof).
(iii) Within fifteen (15) days after receipt by any Loan Party
or any of its Subsidiaries of Net Cash Proceeds from any Debt Issuance or
Equity Issuance, the Borrower shall prepay the then outstanding Advances in
an amount equal to, (x) with respect to any Debt Issuance, one hundred
percent (100%) of such Net Cash Proceeds and (y) with respect to any Equity
Issuance, one hundred percent (100%) of such Net Cash Proceeds.
(iv) Within fifteen (15) days after receipt of Net Cash
Proceeds by any Loan Party or any of its Subsidiaries from any Extraordinary
Receipt received by or paid to or for the account of any Loan Party or any of
its Subsidiaries and not otherwise included in clause (i), (ii) or (iii)
above, the Borrower shall prepay the then outstanding Advances in an amount
equal to one hundred percent (100%) of such Net Cash Proceeds in excess of
$250,000 in the aggregate in any fiscal year.
(v) Each prepayment made pursuant to clause (i), (ii), (iii) or
(iv) shall be subject to the provisions of Section 11.4(c) and shall be applied
to prepay the Facilities in the following manner: FIRST, ratably to the Term A
Facility and the Term B Facility, and ratably to each unpaid installment of
principal of each of the Term Facilities until such installments are paid in
full; SECOND, to prepay Letter of Credit Advances then outstanding until such
Letter of Credit Advances are paid in full; THIRD, to prepay Revolving Credit
Advances then outstanding (whereupon the Revolving Credit Facility shall be
permanently reduced as set forth in Section 2.5(b)(iv)) until such Revolving
Credit Advances are paid in full; and FOURTH, deposited in the L/C Cash
Collateral Account to cash collateralize 100% of the Available Amount of the
Letters of Credit then outstanding. Upon the drawing of any Letter of Credit
for which funds are on deposit in the L/C Cash Collateral Account, such funds
shall be applied to reimburse the Issuing Bank or the Revolving Credit Lenders,
as applicable. The amount remaining (if any) after the required prepayment of
the Advances then outstanding and the 100% cash collateralization of the
aggregate Available Amount of Letters of Credit then outstanding (the
<PAGE>
sum of such prepayment amounts, cash collateralization amounts and remaining
amount being referred to herein as the "REDUCTION AMOUNT") may be retained by
the Borrower. Upon the drawing of any Letter of Credit for which funds are
on deposit in the L/C Cash Collateral Account, such funds shall be applied to
reimburse the Issuing Bank or the Revolving Credit Lenders, as applicable.
Upon the termination of all of the Commitments and the indefeasible payment
in full of all Obligations, including, without limitation, termination or
expiration of all Letters of Credit and the indefeasible payment in full of
all Obligations in respect of all Letters of Credit, then all amounts
remaining on deposit in the L/C Cash Collateral Account shall be returned to
the Borrower.
(vi) Intentionally omitted.
(vii) At any time that the aggregate amount of Revolving
Credit Advances outstanding exceeds the Revolving Credit Availability, the
Borrower shall immediately repay Revolving Credit Advances to the extent
necessary to reduce the principal balance of Revolving Credit Borrowings to an
amount equal to or less than the Revolving Credit Availability.
(viii) The foregoing notwithstanding, the provisions of this
Section 2.6(b) shall not be construed to permit any Equity Issuance, Debt
Issuance or Asset Disposition otherwise prohibited under the terms of this
Agreement.
(ix) Upon the termination of all of the Commitments pursuant to
clause (vi) of Section 2.5(b), the Borrower shall immediately repay all the
outstanding Advances, together with any accrued and unpaid interest, and all
other Obligations owing.
(c) APPLICATION OF PREPAYMENTS TO THE TERM A FACILITY AND THE TERM
B FACILITY. Upon receipt of any amounts to be applied to the prepayment in
respect of the Term A Facility and the Term B Facility pursuant to this
Section 2.6, the Administrative Agent shall apply such amounts to the
prepayment of the Term A Advances and Term B Advances ratably; PROVIDED,
HOWEVER, that if within five (5) Business Days of receiving notice from the
Administrative Agent of a prepayment any Term B Lender notifies the
Administrative Agent that it elects to refuse to accept the prepayment of its
Term B Advances, and the Borrower upon five (5) Business Days' notice
consents to such refusal, the Administrative Agent shall apply the portion of
such prepayment that would have been allocated to the repayment of such
Lender's Term B Advances, to the prepayment of the Advances of the Lenders
under the Term A Facility and of the Advances of the Term B Lenders which
have not so refused ratably to each unpaid installment of principal of each
such Facility (and, if all Lenders under the Term B Facility elect to refuse
their ratable share of such prepayment, only to the Advances of the Lenders
under the Term A Facility). If any Term B Lender shall not give notice to
the Administrative Agent within such five (5) Business Day period, the
Administrative Agent shall assume that such Lender shall have accepted such
prepayment.
<PAGE>
SECTION 2.7 INTEREST.
(a) SCHEDULED INTEREST. The Borrower shall pay to the
Administrative Agent, for the benefit of the Lenders, interest on the unpaid
principal amount of each Advance owing to each Lender from the date of such
Advance until such principal amount shall be paid in full, at the following
rates per annum:
(i) PRIME RATE ADVANCES. During such periods as such Advance
is a Prime Rate Advance, a rate per annum equal at all times to the sum of
(x) the Prime Rate in effect from time to time PLUS (y) the Applicable Margin
for such Advance in effect from time to time, payable in arrears monthly on
the last day of each month during such periods and on the date such Prime
Rate Advance shall be Converted or paid in full.
(ii) EURODOLLAR RATE ADVANCES. During such periods as such
Advance is a Eurodollar Rate Advance, a rate per annum equal at all times
during each Interest Period for such Advance to the sum of (x) the Eurodollar
Rate for such Interest Period for such Advance PLUS (y) the Applicable Margin
for such Advance in effect on the first day of such Interest Period, payable
in arrears on the last day of such Interest Period and, if such Interest
Period has a duration of more than three months, on each day that occurs
during such Interest Period every three months from the first day of such
Interest Period and on the date such Eurodollar Rate Advance shall be
Converted or paid in full.
(b) DEFAULT INTEREST. Upon the occurrence and during the
continuance of a Default, the Borrower shall pay interest on (i) the unpaid
principal amount of each Advance owing to each Lender, payable in arrears on
the dates referred to in clause (a)(i) or (a)(ii) above and on demand, at a
rate per annum equal at all times to two percent (2%) per annum above the
rate per annum required to be paid on such Advance pursuant to clause (a)(i)
or (a)(ii) above and (ii) to the fullest extent permitted by law, the amount
of any interest, fee or other amount payable hereunder that is not paid when
due (whether at the stated maturity, by acceleration or otherwise), from the
date such amount shall be due until such amount shall be paid in full,
payable in arrears on the date such amount shall be paid in full and on
demand, at a rate per annum equal at all times to two percent (2%) per annum
above the rate per annum required to be paid, in the case of interest, on the
Type of Advance on which such interest has accrued pursuant to clause (a)(i)
or (a)(ii) above, and, in all other cases, on Prime Rate Advances pursuant to
clause (a)(i) above.
(c) NOTICE OF INTEREST RATE. Promptly after receipt of a Notice
of Borrowing pursuant to Section 2.2(a), the Administrative Agent shall give
notice to the Borrower and each appropriate Lender of the applicable interest
rate determined by the Administrative Agent.
(d) LIMITATIONS ON INTEREST. All agreements between and among the
Borrower, any Guarantors, any other Loan Party and the Lenders and/or the
Administrative Agent are hereby expressly limited so that in no contingency
or event whatsoever, whether by
<PAGE>
reason of acceleration of maturity of the Indebtedness evidenced hereby or
otherwise, shall the amount paid or agreed to be paid to any Lender for the
use or the forbearance of the Indebtedness incurred hereunder exceed the
maximum permissible under applicable law. As used herein the term
"APPLICABLE LAW" shall mean the law in effect as of the date hereof;
PROVIDED, HOWEVER, that in the event there is a change in the law which
results in a higher permissible rate of interest, then this Agreement and the
Notes issued hereunder shall be governed by such new law as of its effective
date. In this regard it is expressly agreed that it is the intent of the
Borrower, the Lenders and the Administrative Agent in execution, delivery and
acceptance of this Agreement to contract in strict compliance with the laws
of the State of New York from time to time in effect. If under any
circumstances whatsoever, fulfillment of any provision hereof or of any of
the Loan Documents at the time performance of such provision shall be due
shall involve transcending the limits of such validity prescribed by
applicable law, then the obligation to be fulfilled shall automatically be
reduced to the limits of such validity, and if under or from any circumstance
whatsoever the Administrative Agent or any Lender should ever receive as
interest any amount which would exceed the highest lawful rate, such amount
which would be excessive interest shall be applied to the reduction of the
principal balance evidenced by the Notes issued hereunder and not to the
payment of interest. This provision shall control every other provision of
all agreements between and among the Borrower, any Guarantors, any other Loan
Party, the Administrative Agent and the Lenders.
SECTION 2.8 FEES.
(a) COMMITMENT FEES.
(i) With respect to the Revolving Credit Facility, the
Borrower shall pay to the Administrative Agent, for the account of the
Lenders, commitment fees, from the Closing Date in the case of each Initial
Lender and from the effective date specified in the Assignment and Acceptance
pursuant to which it became a Lender in the case of each other Lender until
the Revolving Credit Termination Date payable in arrears quarterly on the
last Business Day of each December, March, June and September, commencing
December 31, 1998, and on the Revolving Credit Termination Date at a rate per
annum equal to .50% per annum on the average daily Unused Revolving Credit
Commitment of such Lender; PROVIDED, HOWEVER, that the commitment fee
referred to in this clause (i) of Section 2.8(a) shall be (A) decreased to
.375% per annum for any periods when the ratio of Consolidated Debt to EBITDA
is equal to or greater than 3.25 to 1.00 but less than 3.75 to 1.00 or (B)
decreased to .25% per annum for any periods when the ratio of Consolidated
Debt to EBITDA is less than 3.25 to 1.00, in each case determined in the same
manner and with the same method for adjustments as is the Applicable Margin
for the Revolving Credit Facility.
(ii) With respect to the Term A Facility, the Borrower shall
pay to the Administrative Agent for the account of the Lenders, commitment
fees, from the Closing Date in the case of the Initial Lenders and from the
effective date specified in the Assignment and Acceptance pursuant to which
it became a Lender in the case of each other Lender until the
<PAGE>
earlier of (x) the Term A Facility Termination Date or (y) the Term A Draw
Date payable in arrears quarterly on the last Business Day of each December,
March, June, and September, commencing on December 31, 1998 and ending on the
earlier of (x) the Term A Facility Termination Date or (y) the Term A Draw
Date at a rate per annum equal to 1.00% per annum on the average daily Term A
Commitment of such Lender.
(b) LETTER OF CREDIT FEES.
(i) The Borrower shall pay to the Administrative Agent for
the account of each Revolving Credit Lender a commission, payable in arrears
quarterly on the last Business Day of each December, March, June and
September commencing December 31, 1998 and on the earliest to occur of the
full drawing, expiration, termination or cancellation of any such Letter of
Credit and on the Revolving Credit Termination Date, on such Lender's Pro
Rata Share of the average daily aggregate Available Amount during such
quarter of all Letters of Credit outstanding from time to time at the rate
per annum equal to the Applicable Margin then in effect for Eurodollar
Advances under the Revolving Credit Facility.
(ii) In addition to the foregoing fees described in (i) above,
the Borrower shall pay to the Issuing Bank, for its own account, (x) on the
Available Amount of each Letter of Credit, a fronting fee, for the period
from the date of issuance of such Letter of Credit to and including the
termination thereof, computed at the rate of one quarter of one percent
(1/4%) per annum, payable in arrears quarterly on the last Business Day of
each December, March, June and September of each year and on the date of
termination thereof and (y) transfer fees and other customary fees and
charges in connection with the issuance or administration of each Letter of
Credit as the Borrower and the Issuing Bank shall agree.
(d) ADMINISTRATIVE AGENT'S FEES. The Borrower shall pay to the
Administrative Agent for its own account such fees as may from time to time be
agreed between the Borrower and the Administrative Agent.
SECTION 2.9 CONVERSION OF ADVANCES.
(a) OPTIONAL. The Borrower may on any Business Day, upon notice
given to the Administrative Agent not later than 11:00 A.M. (New York time)
on the third Business Day prior to the date of the proposed Conversion and
subject to the provisions of Sections 2.7 and 2.10, Convert all or any
portion of the Advances of one Type comprising the same Borrowing into
Advances of the other Type; PROVIDED, HOWEVER, that any Conversion of
Eurodollar Rate Advances into Prime Rate Advances shall be made only on the
last day of an Interest Period for such Eurodollar Rate Advances unless the
Borrower pays the amounts, if any, provided for in Section 11.4(c), any
Conversion of Prime Rate Advances into Eurodollar Rate Advances shall be in
an amount not less than the minimum amount specified in Section 2.1(c), no
Conversion of any Advances shall result in more separate Borrowings than
permitted under Section 2.2(b) and each Conversion of Advances comprising
part of the same Borrowing under any Facility shall be
<PAGE>
made ratably among the appropriate Lenders in accordance with their
Commitments under such Facility. Each such notice of Conversion shall,
within the restrictions specified above, specify (i) the date of such
Conversion, (ii) the Advances to be Converted and (iii) if such Conversion is
into Eurodollar Rate Advances, the duration of the initial Interest Period
for such Advances. Each notice of Conversion shall be irrevocable and
binding on the Borrower.
(b) MANDATORY.
(i) On the date on which the aggregate unpaid principal
amount of Eurodollar Rate Advances comprising any Borrowing shall be reduced,
by payment or prepayment or otherwise, to less than $500,000, such Advances
shall automatically Convert into Prime Rate Advances.
(ii) If the Borrower shall fail to select the duration of any
Interest Period for any Eurodollar Rate Advances in accordance with the
provisions contained in the definition of "Interest Period" in Section 1.1,
the Administrative Agent will forthwith so notify the Borrower and the
appropriate Lenders, whereupon each such Eurodollar Rate Advance will
automatically, on the last day of the then existing Interest Period therefor,
Convert into a Prime Rate Advance.
(iii) Upon the occurrence and during the continuance of
any Event of Default and the acceleration of the Notes, interest thereon and
other amounts payable by the Borrower under this Agreement and the other Loan
Documents pursuant to Article 9, (x) each Eurodollar Rate Advance will
automatically, on the last day of the then existing Interest Period therefor,
Convert into a Prime Rate Advance and (y) the obligation of the Lenders to
make, or to Convert Advances into, Eurodollar Rate Advances shall be
suspended.
SECTION 2.10 INCREASED COSTS, ETC.
(a) If due to (i) the introduction or effectiveness, after the
date hereof, of any change in, or any changes in the interpretation of,
reserve requirements included in the Eurodollar Rate Reserve Percentage or
any law or regulation, or (ii) the compliance with any guideline or request,
adopted or issued after the date hereof, from any central bank or other
governmental authority (whether or not having the force of law), there shall
be any increase in the cost to any Lender Party of agreeing to make or of
making, funding or maintaining Eurodollar Rate or Prime Rate Advances or of
agreeing to issue or of issuing or maintaining Letters of Credit or of
agreeing to make or of making or maintaining Letter of Credit Advances
(excluding for purposes of this Section 2.10 any such increased costs
resulting from (x) Taxes or Other Taxes (as to which Section 2.12 shall
govern) and (y) changes in the basis of taxation of overall net income or
overall gross income by the United States or by the foreign jurisdiction or
state under the laws of which such Lender Party is organized or has its
Applicable Lending Office or any political subdivision thereof), then the
Borrower shall from time to time, upon demand by such Lender Party (with a
copy of such demand to the Administrative Agent), pay to
<PAGE>
the Administrative Agent for the account of such Lender Party additional
amounts sufficient to compensate such Lender Party for such increased cost;
PROVIDED, HOWEVER, that a Lender Party claiming additional amounts under this
Section 2.10(a) agrees to use reasonable efforts (consistent with its
internal policy and legal and regulatory restrictions) to designate a
different Applicable Lending Office if the making of such a designation would
avoid the need for, or reduce the amount of, such increased cost that may
thereafter accrue and would not, in the reasonable judgment of such Lender
Party, be otherwise disadvantageous to such Lender Party. A certificate as
to the amount of such increased cost, submitted to the Borrower by such
Lender Party, shall be conclusive and binding for all purposes, absent
manifest error.
(b) If due to (i) the introduction or effectiveness, after the
date hereof, of, any change in, any change or in the interpretation of any
law or regulation or (ii) the compliance with any guideline or request
adopted or issued after the date hereof, from any central bank or other
governmental authority (whether or not having the force of law), there shall
be any increase in the amount of capital required or reasonably expected to
be maintained by any Lender Party or any corporation controlling such Lender
Party as a result of or based upon the existence of such Lender Party's
commitment to lend or to issue Letters of Credit hereunder and other
commitments of such type or the issuance or maintenance of the Letters of
Credit and any Lender Party shall determine that same has or would have the
effect of reducing the rate of return of such Lender Party with respect such
capital, then, upon demand by such Lender Party (with a copy of such demand
to the Administrative Agent), the Borrower shall pay to the Administrative
Agent for the account of such Lender Party, from time to time as specified by
such Lender Party, additional amounts sufficient to compensate such Lender
Party in the light of such circumstances, to the extent that such Lender
Party reasonably determines such increase in capital (and resulting reduction
in return) to be allocable to the existence of such Lender Party's commitment
to lend or to issue Letters of Credit hereunder or to the issuance or
maintenance of any Letters of Credit. A certificate as to such amounts
submitted to the Borrower by such Lender Party shall be conclusive and
binding for all purposes, absent manifest error.
(c) If, with respect to any Eurodollar Rate Advances under any
Facility, Lenders owed greater than fifty percent (50%) of the then aggregate
unpaid principal amount thereof notify the Administrative Agent that the
Eurodollar Rate for any Interest Period for such Advances will not adequately
reflect the cost to such Lenders of making, funding or maintaining their
Eurodollar Rate Advances for such Interest Period, the Administrative Agent
shall forthwith so notify the Borrower and the appropriate Lenders, whereupon
(i) each such Eurodollar Rate Advance under any Facility will automatically,
on the last day of the then existing Interest Period therefor, Convert into a
Prime Rate Advance and (ii) the obligation of the appropriate Lenders to
make, or to Convert Advances into, Eurodollar Rate Advances shall be
suspended until the Administrative Agent shall notify the Borrower that such
Lenders have determined that the circumstances causing such suspension no
longer exist.
(d) Notwithstanding any other provision of this Agreement, if the
introduction or effectiveness of, any change in, or any change in the
interpretation of any law or regulation
<PAGE>
shall make it unlawful, or any central bank or other governmental authority
shall assert that it is unlawful, for any Lender or its Eurodollar Lending
Office to perform its obligations hereunder to make Eurodollar Rate Advances
or to continue to fund or maintain Eurodollar Rate Advances hereunder, then,
on notice thereof and demand therefor by such Lender to the Borrower through
the Administrative Agent, (i) each Eurodollar Rate Advance under each
Facility under which such Lender has a Commitment will automatically, upon
such demand, Convert into a Prime Rate Advance and (ii) the obligation of the
appropriate Lenders to make, or to Convert Advances into, Eurodollar Rate
Advances shall be suspended until the Administrative Agent shall notify the
Borrower that such Lender has determined that the circumstances causing such
suspension no longer exist; PROVIDED, HOWEVER, that before making any such
demand, such Lender agrees to use reasonable efforts (consistent with its
internal policy and legal and regulatory restrictions) to designate a
different Eurodollar Lending Office if the making of such a designation would
allow such Lender or its Eurodollar Lending Office to continue to perform its
obligations to make Eurodollar Rate Advances or to continue to find or
maintain Eurodollar Rate Advances and would not, in the judgment of such
Lender, be otherwise disadvantageous to such Lender.
(e) Failure or delay on the part of any Lender Party to demand
compensation pursuant to Sections 2.10(a) or (b) shall not constitute a
waiver of such Lender Party's right to demand such compensation; PROVIDED,
HOWEVER, that the Borrower shall not be required to compensate a Lender Party
pursuant to such Sections for any increased costs or reductions incurred more
than 120 days prior to the date such Lender Party notifies the Borrower of
the applicable change or other event giving rise to such increased
compensation therefor; PROVIDED, FURTHER, HOWEVER, that, if such change or
other event giving rise to increased costs or reductions is retroactive, then
the 120 day period referred to above shall be extended to include the period
of retroactive effect thereof.
SECTION 2.11 PAYMENTS AND COMPUTATIONS.
(a) The Borrower shall make each payment hereunder and under the
Notes, irrespective of any right of counterclaim or set-off (except as
otherwise provided in Section 2.15), not later than 11:00 A.M. (New York
time) on the day when due in U.S. dollars to the Administrative Agent at the
Administrative Agent's Account in same day funds. The Administrative Agent
will promptly thereafter cause like funds to be distributed (i) if such
payment by the Borrower is in respect of principal, interest, commitment fees
or any other Obligation then payable hereunder and under the Notes to more
than one Lender Party, to such Lender Parties for the account of their
respective Applicable Lending Offices ratably in accordance with the amounts
of such respective Obligations then payable to such Lender Parties and (ii)
if such payment by the Borrower is in respect of any Obligation then payable
hereunder to one Lender Party, to such Lender Party for the account of its
Applicable Lending Office, in each case to be applied in accordance with the
terms of this Agreement. Upon its acceptance of an Assignment and Acceptance
and recording of the information contained therein in the Register pursuant
to Section 11.7(d), from and after the effective date of such Assignment and
Acceptance, the Administrative Agent shall make all payments hereunder and
under the Notes in
<PAGE>
respect of the interest assigned thereby to the Lender Party assignee
thereunder, and the parties to such Assignment and Acceptance shall make all
appropriate adjustments in such payments for periods prior to such effective
date directly between themselves.
(b) If the Administrative Agent receives funds for application to
the Obligations under the Loan Documents under circumstances for which the
Loan Documents do not specify the Advances or the Facility to which, or the
manner in which, such funds are to be applied, the Administrative Agent may,
but shall not be obligated to, elect to distribute such funds to each Lender
Party ratably in accordance with such Lender Party's proportionate share of
the principal amount of all outstanding Advances and the Available Amount of
all Letters of Credit then outstanding in repayment or prepayment of such of
the outstanding Advances or other Obligations owed to such Lender Party, and
for application to such principal installments, as the Administrative Agent
shall direct.
(c) The Borrower hereby authorizes each Lender Party, if and to
the extent payment owed to such Lender Party is not made when due hereunder
or, in the case of a Lender, under the Note held by such Lender, to charge
from time to time against any or all of the Borrower's accounts with such
Lender Party any amount so due.
(d) All computations of interest, fees and Letter of Credit
commissions shall be made by the Administrative Agent on the basis of a year
of 360 days, in each case for the actual number of days (including the first
day but excluding the last day) occurring in the period for which such
interest, fees or commissions are payable. Each determination by the
Administrative Agent of an interest rate, fee or commission hereunder shall
be conclusive and binding for all purposes, absent manifest error.
(e) Whenever any payment hereunder or under the Notes shall be
stated to be due on a day other than a Business Day, such payment shall be
made on the next succeeding Business Day, and such extension of time shall in
such case be included in the computation of payment of interest or commitment
fee, as the case may be; PROVIDED, HOWEVER, that, if such extension would
cause payment of interest on or principal of Eurodollar Rate Advances to be
made in the next following calendar month, such payment shall be made on the
next preceding Business Day.
(f) Unless the Administrative Agent shall have received notice
from the Borrower prior to the date on which any payment is due to any Lender
Party hereunder that the Borrower will not make such payment in full, the
Administrative Agent may assume that the Borrower has made such payment in
full to the Administrative Agent on such date and the Administrative Agent
may, in reliance upon such assumption, cause to be distributed to each such
Lender Party on such due date an amount equal to the amount then due such
Lender Party. If and to the extent the Borrower shall not have so made such
payment in full to the Administrative Agent, each such Lender Party shall
repay to the Administrative Agent forthwith on demand such amount distributed
to such Lender Party together with interest thereon, for each
<PAGE>
day from the date such amount is distributed to such Lender Party until the
date such Lender Party repays such amount to the Administrative Agent, at the
Federal Funds Rate.
SECTION 2.12 TAXES.
(a) Any and all payments by the Borrower hereunder or under the
Notes shall be made, in accordance with Section 2.11, free and clear of and
without deduction for any and all present or future taxes, levies, imposts,
deductions, charges or withholdings, and all liabilities with respect
thereto, excluding, in the case of each Lender Party and the Administrative
Agent, net income taxes that are imposed by the United States and income
taxes (or franchise taxes imposed in lieu thereof) that are imposed on such
Lender Party or the Administrative Agent by the state or foreign jurisdiction
under the laws of which such Lender Party or the Administrative Agent (as the
case may be) is organized or any political subdivision thereof and, in the
case of each Lender Party, income taxes (or franchise taxes imposed in lieu
thereof) that are imposed as a result of a present, former or future
connection between the jurisdiction of the governmental authority imposing
such tax or any political subdivision or taxing authority thereof or therein
and such Lender Party (other than a connection resulting solely from the
entering into, and/or making of the Advances or any other payments or
transactions under, the Loan Documents) (all such non-excluded taxes, levies,
imposts, deductions, charges, withholdings and liabilities in respect of
payments hereunder or under the Notes being hereinafter referred to as
"TAXES"). If the Borrower shall be required by law to deduct any Taxes from
or in respect of any sum payable hereunder or under any Note to any Lender
Party or the Administrative Agent, (i) the sum payable shall be increased as
may be necessary so that after making all required deductions (including
deductions applicable to additional sums payable under this Section 2.12)
such Lender Party or the Administrative Agent (as the case may be) receives
an amount equal to the sum it would have received had no such deductions been
made, (ii) the Borrower shall make such deductions and (iii) the Borrower
shall pay the full amount deducted to the relevant taxation authority or
other authority in accordance with applicable law.
(b) In addition, the Borrower shall pay any present or future
stamp, documentary, excise, property or similar taxes, charges or levies that
arise from any payment made hereunder or under the Notes or from the
execution, delivery or registration of, performing under, or otherwise with
respect to, this Agreement or the Notes (hereinafter referred to as "OTHER
TAXES").
(c) The Borrower shall indemnify each Lender Party and the
Administrative Agent for the full amount of Taxes and Other Taxes, and for
the full amount of taxes imposed by any jurisdiction on amounts payable under
this Section 2.12, imposed on or paid by such Lender Party or the
Administrative Agent (as the case may be) and any liability (including
penalties, additions to tax, interest and expenses) arising therefrom or with
respect thereto, except with respect to any Lender Party or the
Administrative Agent, as the case may be, for such a liability arising from
such Lender Party's or the Administrative Agent's, as the case may be,
willful misconduct or gross negligence. This indemnification shall be made
within thirty (30) days from the date on which such Lender Party or the
Administrative Agent, as the case may be, makes
<PAGE>
written demand specifying in reasonable detail the basis therefor.
(d) Within thirty (30) days after the date of any payment by the
Borrower of Taxes, the Borrower shall furnish to the Administrative Agent, at
its address referred to in Section 11.2, the original receipt of payment
thereof or a certified copy of such receipt. In the case of any payment
hereunder or under the Notes by or on behalf of the Borrower through an
account or branch outside the United States or by or on behalf of the
Borrower by a payor that is not a United States person, if the Borrower
determines that no Taxes are payable in respect thereof, the Borrower shall
furnish, or shall cause such payor to furnish, to the Administrative Agent,
at such address, an opinion of counsel acceptable to the Administrative Agent
stating that such payment is exempt from Taxes. For purposes of this
subsection (d) and subsection (e), the terms "United States" and "United
States person" shall have the meanings specified in Section 7701 of the
Internal Revenue Code.
(e) Each Lender Party organized under the laws of a jurisdiction
outside the United States shall, on or prior to the date of its execution and
delivery of this Agreement in the case of each Initial Lender or Initial
Issuing Bank, as the case may be, and on the date of the Assignment and
Acceptance pursuant to which it became a Lender Party in the case of each
other Lender Party, and from time to time thereafter as requested in writing
by the Borrower or the Administrative Agent (but only so long thereafter as
such Lender Party remains lawfully able to do so), provide each of the
Administrative Agent and the Borrower with two (2) original Internal Revenue
Service forms 1001 or 4224, as appropriate, or any successor or other form
prescribed by the Internal Revenue Service, certifying that such Lender is
exempt from or entitled to a reduced rate of United States withholding tax on
payments pursuant to this Agreement or the Notes. If the forms provided by a
Lender Party at the time such Lender Party first becomes a party to this
Agreement indicates a United States interest withholding tax rate in excess
of zero, withholding tax at such rate shall be considered excluded from Taxes
unless and until such Lender Party provides the appropriate form certifying
that a lesser rate applies, whereupon withholding tax at such lesser rate
only shall be considered excluded from Taxes for periods governed by such
form; PROVIDED, HOWEVER, that, if at the date of the Assignment and
Acceptance pursuant to which a Lender Party becomes a party to this
Agreement, the Lender Party assignor was entitled to payments under
subsection (a) in respect of United States withholding tax with respect to
interest paid at such date, then, to such extent, the term Taxes shall
include (in addition to withholding taxes that may be imposed in the future
or other amounts otherwise includable in Taxes) United States withholding
tax, if any, applicable with respect to the Lender Party assignee on such
date. If any form or document referred to in this subsection (e) requires
the disclosure of information, other than information necessary to compute
the tax payable and information required on the date hereof by Internal
Revenue Service form 1001 or 4224, that the Lender Party reasonably considers
to be confidential, the Lender Party shall give notice thereof to the
Borrower and shall not be obligated to include in such form or document such
confidential information.
(f) For any period with respect to which a Lender Party has failed
to provide
<PAGE>
the Borrower with the appropriate form described in subsection (e) (other
than if such failure is due to a change in law occurring after the date on
which a form originally was required to be provided or if such form otherwise
is not required under subsection (e)), such Lender Party shall not be
entitled to indemnification under subsection (a) or (c) with respect to Taxes
imposed by the United States by reason of such failure; PROVIDED, HOWEVER,
that should a Lender Party become subject to Taxes because of its failure to
deliver a form required hereunder, the Borrower shall take such steps as such
Lender Party shall reasonably request to assist such Lender Party to recover
such Taxes.
(g) Any Lender Party claiming any additional amounts payable
pursuant to this Section 2.12 agrees to use reasonable efforts (consistent
with its internal policy and legal and regulatory restrictions) to change the
jurisdiction of its Eurodollar Lending Office if the making of such a change
would avoid the need for, or reduce the amount of, any such additional
amounts that may thereafter accrue and would not, in the reasonable judgment
of such Lender Party, be otherwise disadvantageous to such Lender Party.
SECTION 2.13 SHARING OF PAYMENTS, ETC. If any Lender Party shall obtain
at any time any payment (whether voluntary, involuntary, through the exercise
of any right of set-off, or otherwise) (i) on account of Obligations due and
payable to such Lender Party hereunder or under the Notes at such time in
excess of its ratable share (according to the proportion of (x) the amount of
such Obligations due and payable to such Lender Party at such time to (y) the
aggregate amount of the Obligations due and payable to all Lender Parties
hereunder and under the Notes at such time) of payments on account of the
Obligations due and payable to all Lender Parties hereunder or under the
Notes at such time obtained by all the Lender Parties at such time or (ii) on
account of Obligations owing (but not due and payable) to such Lender Party
hereunder and under the Notes at such time in excess of its ratable share
(according to the proportion of (x) the amount of such Obligations owing to
such Lender Party at such time to (y) the aggregate amount of the Obligations
owing (but not due and payable) to all Lender Parties hereunder and under the
Notes at such time) of payments on account of the Obligations owing (but not
due and payable) to all Lender Parties hereunder and under the Notes at such
time obtained by all of the Lender Parties at such time, such Lender Party
shall forthwith purchase from the other Lender Parties such participations in
the Obligations due and payable or owing to them, as the case may be, as
shall be necessary to cause such purchasing Lender Party to share the excess
payment ratably with each of them; PROVIDED, HOWEVER, that if all or any
portion of such excess payment is thereafter recovered from such purchasing
Lender Party, such purchase from each other Lender Party shall be rescinded
and each such other Lender Party shall repay to the purchasing Lender Party
the purchase price to the extent of such Lender Party's ratable share
(according to the proportion of (x) the purchase price paid to such Lender
Party to (y) the aggregate purchase price paid to all Lender Parties) of such
recovery together with an amount equal to such Lender Party's ratable share
(according to the proportion of (x) the amount of such other Lender Party's
required repayment to (y) the total amount of such required repayments to the
purchasing Lender Party) of any interest or other amount paid or payable by
the purchasing Lender Party in respect of the total amount so recovered.
<PAGE>
The Borrower agrees that any Lender Party so purchasing a participation from
another Lender Party pursuant to this Section 2.13 may, to the fullest extent
permitted by law, exercise all its rights of payment (including the right of
set-off) with respect to such participation as fully as if such Lender Party
were the direct creditor of the Borrower in the amount of such participation.
SECTION 2.14 USE OF PROCEEDS.
The proceeds of the Advances and issuances of Letters of Credit
shall be available, and the Borrower shall use such proceeds and Letters of
Credit solely (i) to finance in part the Moran Acquisition, (ii) to pay fees
and expenses incurred in connection with the Moran Acquisition, (iii) to
finance working capital and capital expenditures of the Borrower and its
Subsidiaries (provided that, prior to the Term A Draw Date, the aggregate
amount of outstanding Revolving Credit Advances (or applicable portion
thereof) and Letter of Credit Advances (or applicable portion thereof) the
proceeds or credit of which (in the case of Revolving Credit Advances), or
credit represented by which (in the case of Letters of Credit) has been
advanced or made available by the Borrower to the Old Moran Entities, shall
not, at any one time, exceed $15,000,000), and (iv) to finance general
corporate purposes of the Borrower and its Subsidiaries (including, without
limitation, payment of any prepayment premium incurred in connection with the
prepayment of the Senior Notes); PROVIDED, HOWEVER, that the Term A Facility
(and no other Facility) shall be available solely for the purpose of funding
the redemption of the Senior Notes.
SECTION 2.15 DEFAULTING LENDERS.
(a) In the event that, at any one time, (i) any Lender Party shall
be a Defaulting Lender, (ii) such Defaulting Lender shall owe a Defaulted
Advance to the Borrower and (iii) the Borrower shall be required to make any
payment hereunder or under any other Loan Document to or for the account of
such Defaulting Lender, then the Borrower may, so long as no Default shall
occur or be continuing at such time and to the fullest extent permitted by
applicable law, set off and otherwise apply the obligation of the Borrower to
make such payment to or for the account of such Defaulting Lender against the
obligation of such Defaulting Lender to make such Defaulted Advance. In the
event that, on any date, the Borrower shall so set off and otherwise apply
its obligation to make any such payment against the obligation of such
Defaulting Lender to make any such Defaulted Advance on or prior to such
date, the amount so set off and otherwise applied by the Borrower shall
constitute for all purposes of this Agreement and the other Loan Documents an
Advance by such Defaulting Lender made on the date under the Facility
pursuant to which such Defaulted Advance was originally required to have been
made pursuant to Section 2.1. Such Advance shall be a Prime Rate Advance and
shall be considered, for all purposes of this Agreement, to comprise part of
the Borrowing in connection with which such Defaulted Advance was originally
required to have been made pursuant to Section 2.1, even if the other
Advances comprising such Borrowing shall be Eurodollar Rate Advances on the
date such Advance is deemed to be made pursuant to this subsection (a). The
Borrower shall notify the Administrative Agent at any time the Borrower
exercises its right of set-off pursuant to this subsection (a) and shall set
forth in such notice (i) the name of the
<PAGE>
Defaulting Lender and the Defaulted Advance required to be made by such
Defaulting Lender and (ii) the amount set off and otherwise applied in
respect of such Defaulted Advance pursuant to this subsection (a). Any
portion of such payment otherwise required to be made by the Borrower to or
for the account of such Defaulting Lender which is paid by the Borrower,
after giving effect to the amount set off and otherwise applied by the
Borrower pursuant to this subsection (a), shall be applied by the
Administrative Agent as specified in subsection (b) or (c) of this Section
2.15.
(b) In the event that, at any one time, (i) any Lender Party shall
be a Defaulting Lender, (ii) such Defaulting Lender shall owe a Defaulted
Amount to the Administrative Agent or any of the other Lender Parties and
(iii) the Borrower shall make any payment hereunder or under any other Loan
Document to the Administrative Agent for the account of such Defaulting
Lender, then the Administrative Agent may, on its behalf or on behalf of such
other Lender Parties and to the fullest extent permitted by applicable law,
apply at such time the amount so paid by the Borrower to or for the account
of such Defaulting Lender to the payment of each such Defaulted Amount to the
extent required to pay such Defaulted Amount. In the event that the
Administrative Agent shall so apply any such amount to the payment of any
such Defaulted Amount on any date, the amount so applied by the
Administrative Agent shall constitute for all purposes of this Agreement and
the other Loan Documents, payment, to such extent, of such Defaulted Amount
on such date (provided that, the Borrower shall, for purposes of its
obligation to the Defaulting Lender, still be deemed to have made payment to
the Defaulting Lender). Any such amount so applied by the Administrative
Agent shall be retained by the Administrative Agent or distributed by the
Administrative Agent to such other Lender Parties, ratably in accordance with
the respective portions of such Defaulted Amounts payable at such time to the
Administrative Agent and such other Lender Parties and, if the amount of such
payment made by the Borrower shall at such time be insufficient to pay all
Defaulted Amounts owing at such time to the Administrative Agent and the
other Lender Parties, in the following order of priority:
(i) FIRST, to the Administrative Agent for any Defaulted
Amount then owing to the Administrative Agent; and
(ii) SECOND, to the Lender Parties for any Defaulted Amounts
then owing to such Lender Parties, ratably in accordance with such respective
Defaulted Amounts then owing to such Lender Parties.
Any portion of such amount paid by the Borrower for the account of such
Defaulting Lender remaining, after giving effect to the amount applied by the
Administrative Agent pursuant to this subsection (b), shall be applied by the
Administrative Agent as specified in subsection (c) of this Section 2.15.
(c) In the event that, at any one time, (i) any Lender Party shall
be a Defaulting Lender, (ii) such Defaulting Lender shall not owe a Defaulted
Advance or a Defaulted Amount and (iii) the Borrower, the Administrative
Agent or any other Lender Party shall be
<PAGE>
required to pay or distribute any amount hereunder or under any other Loan
Document to or for the account of such Defaulting Lender, then the Borrower
or such other Lender Party shall pay such amount to the Administrative Agent
to be held by the Administrative Agent, to the fullest extent permitted by
applicable law, in escrow or the Administrative Agent shall, to the fullest
extent permitted by applicable law, hold in escrow such amount otherwise held
by it. Any funds held by the Administrative Agent in escrow under this
subsection (c) shall be deposited by the Administrative Agent in an account
with Fleet, in the name and under the control of the Administrative Agent,
but subject to the provisions of this subsection (c). The terms applicable
to such account, including the rate of interest payable with respect to the
credit balance of such account from time to time, shall be Fleet's standard
terms applicable to escrow accounts maintained with it. Any interest
credited to such account from time to time shall be held by the
Administrative Agent in escrow under, and applied by the Administrative Agent
from time to time in accordance with the provisions of, this subsection (c).
The Administrative Agent shall, to the fullest extent permitted by applicable
law, apply all funds so held in escrow from time to time to the extent
necessary to make any Advances required to be made by such Defaulting Lender
and to pay any amount payable by such Defaulting Lender hereunder and under
the other Loan Documents to the Administrative Agent or any other Lender
Party, as and when such Advances or amounts are required to be made or paid
and, if the amount so held in escrow shall at any time be insufficient to
make and pay all such Advances and amounts required to be made or paid at
such time, in the following order of priority:
(i) FIRST, to the Administrative Agent for any amount then
due and payable by such Defaulting Lender to the Administrative Agent
hereunder;
(ii) SECOND, to the Lender Parties for any amount then due and
payable by such Defaulting Lender to such Lender Parties hereunder, ratably
in accordance with such respective amounts then due and payable to such
Lender Parties; and
(iii) THIRD, to the Borrower for any Advance then required to
be made by such Defaulting Lender pursuant to a Commitment of such Defaulting
Lender.
In the event that any Lender Party that is a Defaulting Lender shall, at any
time, cease to be a Defaulting Lender, any funds held by the Administrative
Agent in escrow at such time with respect to such Lender Party shall be
distributed by the Administrative Agent to such Lender Party and applied by
such Lender Party to the Obligations owing to such Lender Party at such time
under this Agreement and the other Loan Documents in such manner as the
Administrative Agent shall reasonably direct.
(d) The rights and remedies against a Defaulting Lender under this
Section 2.15 are in addition to other rights and remedies that the Borrower
may have against such Defaulting Lender with respect to any Defaulted Advance
and that the Administrative Agent or any Lender Party may have against such
Defaulting Lender with respect to any Defaulted Amount.
<PAGE>
SECTION 2.16 REMOVAL OF LENDER. In the event that any Lender Party (an
"AFFECTED LENDER") (a) demands payment of costs or additional amounts
pursuant to Section 2.10 or Section 2.12, (b) asserts, pursuant to Section
2.10(d) that it is unlawful for such Affected Lender to make Eurodollar Rate
Advances, or (c) which was a Coastwise Citizen at the time it became a Lender
hereunder but thereafter lost its status as such, then (subject, with respect
to clauses (a) and (b) hereof, to such Affected Lender's right to rescind
such demand or assertion within 10 days after the notice from the Borrower
referred to below and so long as no Event of Default exists) the Borrower
may, upon 20 days' prior written notice to such Affected Lender and the
Administrative Agent, with the reasonable assistance of the Administrative
Agent, elect to cause such Affected Lender to assign all of its rights and
obligations under the Agreement (including, without limitation, all of its
Commitment or Commitments, the Advances owing to it and the Note or Notes
held by it) to an Eligible Assignee selected by the Borrower which is
reasonably satisfactory to the Administrative Agent, so long as such Affected
Lender receives payment in full in cash of the outstanding principal amount
of all Advances made by it and all accrued and unpaid interest thereon and
all other amounts due and payable to such Affected Lender as of the effective
date of such assignment (including, without limitation, amounts owing to such
Affected Lender pursuant to Section 2.3, 2.4, 2.7, 2.8, 2.10 or 2.12) and in
such case such Affected Lender agrees to make such assignment, and such
assignee shall agree to accept such assignment and assume all the obligations
of such Affected Lender hereunder, in accordance with Section 11.7. Until
the consummation of an assignment in accordance with the foregoing provisions
of this Section 2.16, the Borrower shall continue to pay to the Affected
Lender any Obligations as they become due and payable.
SECTION 2.17 BORROWING BASE DETERMINATION. The Borrowing Base shall be
determined, as of the date of the most recent Borrowing Base Certificate
received by the Administrative Agent, as follows:
(a ) "BORROWING BASE" means:
(1) for the period commencing on the Closing Date and ending
on the day immediately preceding the Term A Draw Date, the lesser of (i)
$20,000,000 and (ii) eighty percent (80%) of Eligible Receivables; and
(2) for the period from and after the Term A Draw Date, an
amount equal to the sum of (i) eighty percent (80%) of Eligible Receivables,
PLUS (ii) fifty percent (50%) of Eligible Inventory, PLUS (iii) eighty
percent (80%) of the Market Value of Mortgaged Vessels, PLUS (iv) the lesser
of (A) fifty percent (50%) of all the reasonable construction costs in
respect of the construction of new Vessels and (B) $7,500,000, PROVIDED,
HOWEVER, that, if the construction of such a new Vessel is not fully
completed in all material respects and deemed seaworthy by an appraiser
reasonably acceptable to the Administrative Agent within twenty-four (24)
months after the date on which a Revolving Credit Advance was made for such
construction, then such Vessel shall be excluded from the calculation of
clause (iv) of clause (2) of this definition.
<PAGE>
(b) "MARKET VALUE" means the fair market value as determined by
Midland Marine or any other appraiser reasonably satisfactory to the
Administrative Agent.
(c) With respect to each Vessel that is acquired used or newly
constructed, the Administrative Agent, based on a Visual Survey of such
Vessel, shall determine, using its reasonable judgment, whether such Vessel
shall be included in the calculation of the Borrowing Base. A Visual Survey
of such Vessel must be performed and delivered to the Administrative Agent
and the Lender Parties so as to enable the Administrative Agent to make such
determination.
ARTICLE 3
CONDITIONS OF LENDING
SECTION 3.1 CONDITIONS PRECEDENT TO INITIAL EXTENSION OF CREDIT. The
obligation of each Lender to make an Advance, or of the Issuing Bank to issue
a Letter of Credit, in each case, on the occasion of the Initial Extension of
Credit hereunder is subject to the satisfaction of each of the following
conditions precedent before or concurrently with the Initial Extension of
Credit:
(a) The Administrative Agent shall have received on or before the
day of the Initial Extension of Credit the following, each dated such day
(unless otherwise specified), in form and substance satisfactory to the
Administrative Agent and the Lenders, and in sufficient copies (except for
the Notes), for each Lender Party:
(i) (A) the Term A Notes payable to the order of the Term A
Lenders, (B) the Term B Notes payable to the order of the Term B Lenders and
(C) the Revolving Credit Notes payable to the order of the Revolving Credit
Lenders, in each case duly executed by the Borrower.
(ii) A security agreement in substantially the form of EXHIBIT
G granting to the Administrative Agent, for the ratable benefit of the
Secured Parties, a first and only priority security interest in all of the
personal property and assets (excluding real property, the capital stock of
the Garbage Subsidiary or any Subsidiary of the Garbage Subsidiary, Vessels,
and customer contracts (including, without limitation, charters and contracts
of affreightment) of the Borrower and each Turecamo Entity (together with the
Old Moran Security Agreement and each other security agreement delivered
pursuant to Section 5.13, in each case as amended, supplemented or otherwise
modified from time to time in accordance with its terms, whether one or more,
each a "SECURITY AGREEMENT"), duly executed by the Borrower and each Turecamo
Entity, together with:
(A) proper, duly executed financing statements under the
Uniform Commercial Code of all jurisdictions that the Administrative Agent may
deem
<PAGE>
necessary or desirable in order to perfect and protect the first and only
priority Liens and security interests created under the Security Agreement,
covering the Collateral described in the Security Agreement;
(B) completed requests for information, dated on or before
the date of the Initial Extension of Credit, listing all effective financing
statements filed that name the Borrower or any other Loan Party as debtor,
together with copies of such financing statements;
(C) evidence of the completion of all other recordings
and filings of or with respect to the Security Agreement that the
Administrative Agent may deem necessary or desirable in order to perfect and
protect the Liens created thereby;
(D) evidence of the insurance required by the terms of the
Security Agreement;
(E) copies of the Assigned Agreements, if any, referred
to in the Security Agreement, together with a consent to such assignments, if
any, in substantially the form of Exhibit C to the Security Agreement, duly
executed by each party to such Assigned Agreements other than the Borrower;
(F) certificates representing the Pledged Shares
referred to in the Security Agreement, accompanied by undated stock powers
executed in blank and irrevocable proxies;
(G) in the case of the Borrower's Foreign Subsidiaries
(other than Moran Insurance), all action necessary to allow the
Administrative Agent to obtain a valid and enforceable, first priority,
perfected security interest in 65% of the stock of each Foreign Subsidiary
and a memorandum to the Administrative Agent from appropriate foreign counsel
confirming that the Administrative Agent, on behalf of the Secured Parties,
has obtained a valid and enforceable first priority perfected security
interest in the relevant Pledged Stock or outlining the steps necessary to
obtain a perfected security interest in the relevant Pledged Stock; and
(H) evidence that all other action that the
Administrative Agent may reasonably deem necessary or desirable in order to
perfect and protect the first and only priority liens and security interests
created under the Security Agreement has been taken.
The security agreement executed and delivered pursuant to this clause (ii) by
the Borrower and the Turecamo Entities, as amended, supplemented or otherwise
modified from time to time in accordance with its terms, is referred to as
the "BORROWER/TURECAMO SECURITY AGREEMENT".
(iii) A security agreement in substantially the form of
EXHIBIT H granting to the Administrative Agent, for the ratable benefit of the
Secured Parties, a first and
<PAGE>
only priority security interest in all of the Old Moran Collateral (as
amended, supplemented or otherwise modified from time to time in accordance
with its terms, the "OLD MORAN SECURITY AGREEMENT"), duly executed by the Old
Moran Entities, together with:
(A) proper, duly executed financing statements under the
Uniform Commercial Code of all jurisdictions that the Administrative Agent
may deem necessary or desirable in order to perfect and protect the first and
only priority Liens and security interests created under the Old Moran
Security Agreement, covering the Collateral described in the Old Moran
Security Agreement;
(B) completed requests for information, dated on or
before the date of the Initial Extension of Credit, listing all effective
financing statements filed that name each of the Old Moran Entities as
debtor, together with copies of such financing statements;
(C) evidence of the completion of all other recordings
and filings of or with respect to the Old Moran Security Agreement that the
Administrative Agent may deem necessary or desirable in order to perfect and
protect the Liens created thereby;
(D) evidence of the insurance required by the terms of the
Old Moran Security Agreement;
(E) copies of the Assigned Agreements, if any, referred
to in the Old Moran Security Agreement, together with a consent to such
assignments, if any, in substantially the form of Exhibit C to the Old Moran
Security Agreement, duly executed by each party to such Assigned Agreements
other than the Old Moran Entities;
(F) evidence that all other action that the
Administrative Agent may reasonably deem necessary or desirable in order to
perfect and protect the first and only priority liens and security interests
created under the Old Moran Security Agreement has been taken.
(iv) An intellectual property security agreement in
substantially the form of EXHIBIT I hereto granting to the Administrative
Agent for the ratable benefit of the Lenders a first and only priority
security interest in all of the Borrower's and each Turecamo Entity's
intellectual property (together with each other intellectual property
security agreement delivered pursuant to Section 3.4 or Section 5.13, in each
case as amended, supplemented or otherwise modified from time to time in
accordance with its terms, each an "INTELLECTUAL PROPERTY SECURITY
AGREEMENT"), duly executed by the Borrower and each Guarantor, together with
evidence that all action that the Administrative Agent may deem necessary or
desirable in order to perfect and protect the first and only priority Liens
and security interests created under the Intellectual Property Security
Agreement has been taken.
(v) A pledge agreement substantially in the form of EXHIBIT J
hereto
<PAGE>
(as hereafter amended, supplemented or otherwise modified from time to time
in accordance with its terms, the "BORROWER STOCKHOLDERS PLEDGE AGREEMENT")
duly executed by the Borrower Stockholders pursuant to which all of the
issued and outstanding capital stock of the Borrower shall be pledged to the
Administrative Agent for the benefit of the Secured Parties as security for
the Obligations, together with (i) the certificates representing all shares
pledged thereunder, undated stock powers executed in blank and proxies with
respect thereto and (ii) proper, duly executed financing statements under the
Uniform Commercial Code of all jurisdictions that the Administrative Agent
may deem necessary in order to perfect and protect the first and only
priority Liens and security interests created under the Borrower Stockholders
Pledge Agreement covering the shares pledged pursuant thereto.
(vi) A guaranty in substantially the form of EXHIBIT K
(together with each other guaranty executed and delivered pursuant to Section
3.4 or Section 5.13, in each case as amended, supplemented or otherwise
modified from time to time in accordance with its terms, whether one or more,
the "SUBSIDIARY GUARANTY"), duly executed by the Guarantors, to the extent
provided therein.
(vii) With respect to each Vessel described in Part I
(Vessels owned by the Loan Parties other than the Old Moran Entities) of
Schedule 4.29, the following:
(A) a Preferred Ship Mortgage covering such Vessel duly
executed by the Loan Party that is the owner of such Vessel and, in
connection therewith, such Vessel shall have been duly documented in the name
of the Loan Party holding title thereto under the laws of the United States,
such Preferred Ship Mortgage shall have been duly recorded by the United
States Coast Guard, and such Preferred Ship Mortgage shall constitute a
preferred mortgage on the Vessel subject thereto, subject only to existing
first preferred mortgages in favor of the Administrative Agent for the
benefit of the Secured Party;
(B) an assignment covering the earnings and requisition
compensation, if any, of such Vessel, in form and substance satisfactory to
the Administrative Agent (hereinafter sometimes referred to individually as
an "EARNINGS ASSIGNMENT", and together as the "EARNINGS ASSIGNMENTS"), duly
executed by the Loan Party that is the owner of such Vessel and, in
connection therewith, such Loan Party shall have executed and delivered to
the Administrative Agent notices of assignment and authorizations to collect
insurance claims and to collect general average contributions, in such form
and in such number of counterparts as may be reasonably requested by the
Administrative Agent;
(C) an assignment covering the insurances of such
Vessel, in form and substance satisfactory to the Administrative Agent
(hereinafter sometimes referred to individually as an "INSURANCE ASSIGNMENT,"
and together as the "INSURANCE ASSIGNMENTS"; the Earnings Assignments and the
Insurance Assignments are hereinafter sometimes referred to individually as
an "ASSIGNMENT" and, together, as the "ASSIGNMENTS"), duly executed by the
Loan Party that is the owner of such Vessel;
<PAGE>
(D) copies of cover notes and certificates of entry
evidencing the insurance covered by such Vessel;
(E) authorizations to inspect class records of such Vessel
owned by the Loan Party that is the owner thereof, in such form and such number
of counterparts as may be reasonably requested by the Administrative Agent, duly
executed by such Loan Party;
(F) a true and complete copy of a certificate of ownership
and encumbrance issued by the United States Coast Guard showing such Loan Party
to be the sole owner of such Vessel free and clear of all Liens of record except
(i) the Preferred Ship Mortgage covering such Vessel in favor of the
Administrative Agent for the benefit of the Secured Parties, and (ii) the
Permitted Liens;
(G) for each Vessel to the extent it is required to be
maintained in class in order to operate in the service in which it is operating,
the certificate of American Bureau of Shipping for such Vessel, dated not more
than fourteen (14) days prior to the Closing Date, confirming that such Vessel
is in such class without material recommendation (except for such
recommendations which, when taken together with other recommendations for all
Vessels, could not reasonably be expected to have a Material Adverse Effect);
(H) a copy of the current certificate of inspection issued
by the United States Coast Guard for such Vessel, if available, and reflecting
no outstanding recommendations (except for such recommendations which, when
taken together with other recommendations for all Vessels, could not reasonably
be expected to have a Material Adverse Effect); and
(I) (1) written advice from J&H Marsh & McLennan,
Inc., insurance brokers, of the placement of the insurances covering such
Vessel; (2) written confirmation from such brokers, that they have received
no notice of the assignment (except to the Administrative Agent) of the
insurances or any claim covering such Vessel; (3) an opinion of such brokers
to the effect that such insurance complies with the applicable provisions of
this Agreement and of the Preferred Ship Mortgage covering such Vessel, where
applicable; and (4) an agreement by such brokers, in form and substance
satisfactory to the Administrative Agent, whereunder the insurances of such
Vessel, and claims thereunder, will not be affected by nonpayment of premiums
on any other insurances.
(viii) Certified copies of resolutions of the Board of
Directors of each Loan Party approving the Moran Acquisition, this Agreement,
the Notes, and each other Loan Document and Moran Acquisition Document to
which it is or is to be a party, and of all documents evidencing other
necessary corporate action and governmental and other third party approvals
and consents, if any, with respect to the Moran Acquisition, this Agreement,
the Notes, and each other Loan Document and Moran Acquisition Document.
<PAGE>
(ix) A copy of the charter of each Loan Party and each
amendment thereto, certified (as of a date reasonably near the date of the
Initial Extension of Credit) by the Secretary of State of the jurisdiction of
its incorporation as being a true and correct copy thereof.
(x) A copy of a certificate of the Secretary of State of the
jurisdiction of its incorporation, dated reasonably near the date of the
Initial Extension of Credit, listing the charter of each Loan Party and each
amendment thereto on file in its office and certifying that (A) such
amendments are the only amendments to such Loan Party's charter on file in
its office, (B) such Loan Party has paid all franchise taxes to the date of
such certificate and (C) such Loan Party is duly incorporated and in good
standing under the laws of the State of the jurisdiction of its incorporation.
(xi) A copy of a certificate of the Secretary of State of each
State listed on SCHEDULE 4.2, dated reasonably near the date of the Initial
Extension of Credit, stating that each Loan Party is duly qualified and in
good standing as a foreign corporation in such State and has filed all annual
reports required to be filed to the date of such certificate.
(xii) A certificate of each Loan Party signed on behalf of
such Loan Party by a Responsible Officer and/or the Secretary or an Assistant
Secretary of such Loan Party, as the case may be, dated the date of the
Initial Extension of Credit (the statements made in such certificate shall be
true on and as of the date of the Initial Extension of Credit), certifying as
to (A) the absence of any amendments to the charter of such Loan Party since
the date of the Secretary of State's certificate referred to in Section
3.1(a)(xi), (B) a true and correct copy of the by-laws of such Loan Party as
in effect on the date of the Initial Extension of Credit, (C) the due
incorporation and good standing of such Loan Party as a corporation organized
under the laws of the jurisdiction of its incorporation, and the absence of
any proceeding for the dissolution or liquidation of such Loan Party, (D) the
truth of the representations and warranties contained in the Loan Documents
as though made on and as of the date of the Initial Extension of Credit and
(E) the absence of any event occurring and continuing, or resulting from the
Initial Extension of Credit, that constitutes a Default or an Event of
Default.
(xiii) A certificate of the Secretary or an Assistant
Secretary of each Loan Party certifying the names and true signatures of the
officers of such Loan Party authorized to sign this Agreement, the Notes,
each other Loan Document to which they are or are to be parties and the other
documents to be delivered hereunder and thereunder.
(xiv) Such financial, business and other information regarding
each Loan Party and each such Person's Subsidiaries as any of the Lenders
shall have reasonably requested, including, without limitation, information
as to possible contingent liabilities, tax matters, Environmental Actions,
Environmental Permits, obligations under Plans, Multiemployer Plans and
Welfare Plans, collective bargaining agreements and other arrangements with
employees, audited annual financial statements dated December 31, 1997,
interim financial
<PAGE>
statements dated the end of the most recent fiscal quarter for which
financial statements are available (or, in the event the Initial Lenders due
diligence review reveals material changes since such financial statements, as
of a later date within thirty (30) days of the day of the Initial Extension
of Credit), pro forma financial statements as to each of the Borrower and its
Subsidiaries and forecasts prepared by management of the Borrower, all in
form and substance reasonably satisfactory to the Lenders.
(xv) A Notice of Borrowing with respect to each Facility
pursuant to which the Borrower shall request an Initial Extension of Credit.
(b) The Administrative Agent and the Initial Lenders shall be
satisfied with the corporate and legal structure and capitalization of each
Loan Party and each of its Subsidiaries after giving effect to the
consummation of the Moran Acquisition, including, without limitation, the
terms and conditions of the charter, by-laws and each class of capital stock
of each Loan Party and each such Subsidiary and of each agreement or
instrument relating to such structure or capitalization.
(c) The Initial Lenders shall be satisfied that all Existing Debt
other than the Surviving Debt has been (or, upon consummation of the Moran
Acquisition will be) prepaid, redeemed or defeased in full or otherwise
satisfied and extinguished and that all Surviving Debt shall be on terms and
conditions satisfactory to the Initial Lenders.
(d) There shall have occurred no material adverse change in the
business, condition (financial or otherwise), operations, performance,
properties or prospects of either (i) the Borrower and the Old Moran
Entities, taken as a whole, since March 31, 1998 or (ii) the Turecamo
Entities, taken as a whole, since December 31, 1997.
(e) Other than the Disclosed Litigation, there shall exist no
action, suit, investigation, litigation or proceeding pending or threatened
in any court or before any arbitrator or governmental or regulatory agency or
authority that (i) could reasonably be expected to (A) have a material
adverse effect on the business, condition (financial or otherwise), results
of operations or properties of the Borrower and its Subsidiaries, taken as a
whole, (B) adversely affect the ability of the Borrower or any Guarantor to
perform its obligations under the Loan Documents or (C) materially and
adversely affect the rights and remedies of the Administrative Agent and the
Lender Parties under the Loan Documents or (ii) purports to materially and
adversely affect any aspect of the Transaction or the Facilities
(collectively, a "MATERIAL ADVERSE EFFECT"); and there shall have been no
Material Adverse Change in the status, or financial effect on the Borrower or
any of its Subsidiaries, of the Disclosed Litigation from that described on
SCHEDULE 4.9.
(f) All governmental and third party consents and approvals
necessary in connection with each aspect of the Moran Acquisition and the
Facilities shall have been obtained (without the imposition of any conditions
that are not acceptable to the Initial Lenders) and shall
<PAGE>
remain in effect; all applicable waiting periods shall have expired without
any adverse action being taken by any competent authority; and no law or
regulation shall be applicable in the reasonable judgment of the Initial
Lenders that restrains, prevents or imposes materially adverse conditions
upon any aspect of the Moran Acquisition or the Facilities.
(g) The Initial Lenders shall have completed a due diligence
investigation of the Borrower, the other Loan Parties and their respective
Subsidiaries in scope, and with results, satisfactory to the Initial Lenders;
the Borrower and its Subsidiaries shall have given the Administrative Agent
such access to their respective books and records as the Administrative Agent
may have requested upon reasonable notice in order to carry out its
investigations, appraisals and analyses, including, but not limited to,
calculation of the value of Eligible Receivables and Eligible Inventory, and
the Administrative Agent shall have received all additional financial,
business and other information regarding the Borrower and its Subsidiaries
and properties as they shall have reasonably requested. All of the
information, taken as a whole, provided by the Borrower or any of its
Subsidiaries to the Administrative Agent and the Initial Lenders prior to
their commitment in respect of the Facilities (the "PRE-COMMITMENT
INFORMATION") shall be true and correct in all material respects, and no
development or change shall have occurred, and no additional information
shall have come to the attention of the Administrative Agent or the Initial
Lenders, that (i) has resulted in or could reasonably be expected to result
in a material change in, or material deviation from, the Pre-Commitment
Information, taken as a whole, or (ii) has had or could reasonably be
expected to have a Material Adverse Effect. The Administrative Agent shall be
reasonably satisfied with the results, taken as a whole, of interviews
conducted and other investigations made with respect to the Borrower's
relationships with its customers.
(h) The Borrower and each Guarantor shall have delivered a
certificate, in form and substance satisfactory to the Administrative Agent,
attesting to the Solvency of the Borrower or Guarantor, as applicable, in
each case individually and together with its Subsidiaries, immediately before
and immediately after giving effect to the Transaction, from its respective
chief financial officer.
(i) Intentionally omitted.
(j) The Lenders shall be reasonably satisfied that (i) the
Borrower and its Subsidiaries will be able to meet in all material respects
their respective obligations under all employee and retiree welfare plans,
(ii) the employee benefit plans of the Borrower and its Subsidiaries are, in
all material respects, funded in accordance with the minimum statutory
requirements, (iii) no material "reportable event" (as defined in ERISA, but
excluding events for which reporting has been waived) has occurred as to any
such employee benefit plan and (iv) no termination of, or withdrawal from,
any such employee benefit plan has occurred or is contemplated that could
reasonably be expected to result in a material liability. The Borrower shall
have delivered to the Administrative Agent certified copies of each
employment agreement and other compensation arrangement with each executive
officer of each Loan Party.
<PAGE>
(k) The Administrative Agent shall be reasonably satisfied with
the amount, types and terms and conditions of all insurance maintained by the
Borrower and its Subsidiaries, and the Administrative Agent shall have
received endorsements naming the Administrative Agent, on behalf of the
Lenders, as loss payee or an additional insured, as applicable, under all
insurance policies to be maintained with respect to the properties of the
Borrower and its Subsidiaries forming any part of the Lenders' Collateral
under the Security Agreement and the other Loan Documents and Collateral
Documents.
(l) The Administrative Agent shall have received satisfactory
opinions of counsel for the Borrower, the other Loan Parties and the Borrower
Stockholders and local and special counsel (including, without limitation,
maritime counsel) to the extent requested by the Administrative Agent, as to
the Transaction and the Moran Acquisition.
(m) There shall exist no Default or Event of Default under any of
the Loan Documents, and all legal matters incident to the Initial Extension
of Credit shall be reasonably satisfactory to counsel for the Administrative
Agent.
(n) All accrued reasonable fees and expenses of the Administrative
Agent (including the reasonable fees and expenses of counsel for the
Administrative Agent and local counsel for the Administrative Agent) shall
have been paid.
(o) The Moran Acquisition shall have been consummated (prior to or
contemporaneously with the Initial Extension of Credit) pursuant to the terms
and conditions of the Moran Acquisition Agreement (and none of the material
terms or conditions of the Moran Acquisition Agreement shall have been waived
or modified except with the prior written consent of the Administrative Agent
and the Required Lenders) and in compliance with all applicable laws and with
all necessary consents and approvals. The final terms and conditions of the
Moran Acquisition Documents and the resulting corporate structure of the
Borrower and its Subsidiaries following the Moran Acquisition shall be
reasonably satisfactory in all material respects to the Administrative Agent
and the Initial Lenders.
(p) The Administrative Agent shall have received certified copies
of each of the material Moran Acquisition Documents, each of which shall be
satisfactory to the Initial Lenders and in full force and effect.
(q) The Administrative Agent shall be satisfied that there are no
state takeover laws and no supermajority charter provisions applicable to the
Moran Acquisition, or that any conditions to avoiding such restrictions have
been satisfied.
(r) The Administrative Agent shall have received a Visual Survey,
which Visual Survey shall reflect in the aggregate a fair market value of all
of the Vessels identified on Schedule 4.29 of not less than $200,000,000 as
at the Closing Date.
<PAGE>
(s) The Administrative Agent shall have received copies of all of
the Senior Notes Documents all of which shall be satisfactory in form and
substance to the Administrative Agent, and certified as true and complete by
a Responsible Officer.
(t) All Advances made under this Agreement shall be in full
compliance with all applicable requirements of law, including, without
limitation, Federal Reserve Regulations T, U, and X.
(u) The Administrative Agent shall have received such bank consent
agreements, third party consents, intercreditor agreements or other
agreements, as deemed necessary or desirable in the Administrative Agent's
sole discretion, to preserve or otherwise in respect of the Administrative
Agent's rights in the Collateral.
(v) The Administrative Agent shall have received such other
approvals, opinions or documents as any Lender through the Administrative
Agent may reasonably request, and all legal matters incident to such
Borrowing shall be reasonably satisfactory to counsel for the Administrative
Agent.
SECTION 3.2 CONDITIONS PRECEDENT TO EACH BORROWING OTHER THAN A TERM A
BORROWING AND LETTER OF CREDIT ADVANCES. The obligation of each appropriate
Lender to make an Advance (other than (i) a Term A Borrowing, or (ii) a
Letter of Credit Advance made by the Issuing Bank or a Revolving Credit
Lender pursuant to Section 2.3(c)), and the obligation of the Issuing Bank to
issue a Letter of Credit (including the initial issuance thereof) or renew a
Letter of Credit and the right of the Borrower to request the issuance or
renewal of a Letter of Credit, shall each be subject to the further
conditions precedent that on the date of each such Borrowing or issuance or
renewal:
(a) The following statements shall be true and the Administrative
Agent shall have received a certificate signed by a duly authorized
Responsible Officer of the Borrower, on behalf of the Borrower, dated the
date of such Borrowing or issuance or renewal, stating that (and each of the
giving of the applicable Notice of Borrowing or Notice of Issuance and the
acceptance by the Borrower of the proceeds of a Borrowing or of a Letter of
Credit or the renewal of a Letter of Credit shall constitute a representation
and warranty by the Borrower that both on the date of such notice and on the
date of such Borrowing or issuance or renewal such statements are true):
(i) the representations and warranties contained in each Loan
Document are true and correct in all material respects on and as of such
date, before and after giving effect to such Borrowing or issuance or renewal
and to the application of the proceeds therefrom, as though made on and as of
such date, except for (A) representations or warranties which expressly
relate to an earlier date in which case such representations and warranties
shall be true and correct, in all material respects, as of such earlier date;
or (B) representations or warranties which are no longer true as a result of
a transaction expressly permitted hereunder;
<PAGE>
(ii) no event has occurred and is continuing, or would result
from such Borrowing or issuance or renewal or from the application of the
proceeds therefrom, that constitutes a Default or an Event of Default; and
(iii) for each Revolving Credit Advance or issuance or renewal
of any Letter of Credit, after giving effect to such Advances or issuance or
renewal, respectively, there shall not be a Borrowing Base Deficiency.
(b) The Administrative Agent shall have received such other
approvals, opinions or documents (consistent with the other terms and
provisions hereof) as any appropriate Lender through the Administrative Agent
may reasonably request, and all legal matters incident to such Borrowing or
issuance of such Letter of Credit shall be reasonably satisfactory to counsel
for the Administrative Agent.
SECTION 3.3 DETERMINATIONS UNDER SECTION 3.1. For purposes of
determining compliance with the conditions specified in Section 3.1, each
Initial Lender shall be deemed to have consented to, approved or accepted or
to be satisfied with each document or other matter required thereunder to be
consented to or approved by or acceptable or satisfactory to the Initial
Lenders unless an officer of the Administrative Agent responsible for the
transactions contemplated by the Loan Documents shall have received written
notice from such Initial Lender prior to the Initial Extension of Credit
specifying its objection thereto and, if the Initial Extension of Credit
consists of a Borrowing, such Initial Lender shall not have made available to
the Administrative Agent such Initial Lender's ratable portion of such
Borrowing.
SECTION 3.4 CONDITIONS PRECEDENT TO THE TERM A BORROWING. The
obligation of each Term A Lender to make a Term A Advance shall be subject to
the satisfaction of each of the following conditions precedent before or
concurrently with the extension of the Term A Advances:
(a) The following statements shall be true and the Administrative
Agent shall have received a certificate signed by a duly authorized
Responsible Officer of the Borrower, on behalf of the Borrower, dated the
date of the Term A Borrowing, stating that (and the giving of the applicable
Notice of Borrowing in respect of the Term A Borrowing and the acceptance by
the Borrower of the proceeds of the Term A Borrowing shall constitute a
representation and warranty by the Borrower that both of the date of such
notice and on the date of such Borrowing are true):
(i) the representations and warranties contained in Sections
4.1, 4.3 (other than the last sentence thereof), 4.4, 4.5, 4.6(a), 4.7, 4.10,
4.18 (but not as to any Subsidiary whose insolvency could not reasonably be
expected to have a Material Adverse Effect), and 4.29(a) are true and correct
in all material respects on and as of such date before and after giving
effect to such Term A Borrowing and to the application of the proceeds
therefrom, as though
<PAGE>
made on and as of such date, except for (A) representations or warranties
which expressly relate to an earlier date in which case such representations
and warranties shall be true and correct, in all material respects, as of
such earlier date, or (B) representations or warranties which are no longer
true as a result of a transaction expressly permitted hereunder;
(ii) no event has occurred and is continuing, or would result
from such Term A Borrowing or from the application of the proceeds therefrom
that constitutes a Default or an Event of Default under Section 6.1 (but
excluding any Default or Event of Default due to a non-material Lien), 6.2,
6.4, 6.5, 6.6, 6.7, 6.17, 6.19, 7.3, 7.4 or 7.19, Article 8, or Section 9.1
(except a Default (but not an Event of Default) with respect to any amount
not consisting of principal or interest), 9.6, 9.10, 9.12 or 9.13(b); and
(iii) Since the date of the Closing, there has been no
change in the condition of the Vessels, taken as a whole, which materially
and adversely affects the ability of the Borrower and its Subsidiaries to
conduct their business (taken as a whole) in the ordinary course of business.
(b) All of the Indenture Liens shall have been fully and
completely released and terminated (simultaneously with the making of the
Term A Advance), evidence of which shall be satisfactory to the
Administrative Agent and the Lender Parties;
(c) Each of the Old Moran Entities shall have executed and
delivered Loan Documents similar to those described in clauses (ii) and (iv)
of Section 3.1(a) and/or otherwise shall have amended and restated the Loan
Documents to which it is currently a party, in each case in form and
substance reasonably acceptable to the Administrative Agent and the Lender
Parties (provided that, in the case of the Security Agreement under such
clause (ii), there shall be excluded from the collateral thereunder, in
addition to the other types of exclusions noted in such clause (ii), (A) any
assets of the Garbage Subsidiary (or any Subsidiary of the Garbage Subsidiary
or joint venture of the Garbage Subsidiary) and (B) the capital stock and
assets of Moran Insurance); and
(d) With respect to each Vessel set forth on Part II (Vessels
owned by the Old Moran Entities) of Schedule 4.29 and any additional Vessel
owned by any of the Old Moran Entities, the Borrower shall deliver, or shall
cause to be delivered, to the Administrative Agent the documents described in
clause (vii) of Section 3.1(a) (except that the condition set forth in
Section 3.4(a)(iii) above shall replace the condition set forth in the
parenthetical phrase in Section 3.1(a)(vii)(G) and (H)).
(e) The proceeds from the Term A Borrowing shall be used solely for
the purpose of redeeming in full the Senior Notes.
(f) The Administrative Agent shall have received a Notice of
Borrowing in respect of the Term A Advance in accordance with the terms of
this Agreement.
<PAGE>
(g) In addition to the delivery of a Notice of Borrowing pursuant
to clause (f) above, the Borrower shall give the Administrative Agent and
the Lender Parties not less than fifteen (15) Business Days prior written
notice of its intention to borrow under the Term A Facility so as to redeem
in full the Senior Notes.
(h) The Administrative Agent shall have received (1) opinions of
counsel for the Borrower and the other Loan Parties (including maritime
counsel) reasonably satisfactory to the Administrative Agent and (2) such
corporate resolutions, corporate certificates, corporate documents and other
similar documents as the Administrative Agent and the Lender Parties shall
reasonably request.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants as follows:
SECTION 4.1 ORGANIZATION. Each Loan Party (a) is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation, (b) is duly qualified and in good standing
as a foreign corporation in each other jurisdiction in which it owns or
leases property or in which the conduct of its business requires it to so
qualify or be licensed except where the failure to so qualify or be licensed
could not reasonably be expected to have a Material Adverse Effect and (c)
has all requisite corporate power and authority (including, without
limitation, all governmental licenses, permits and other approvals) to own or
lease and operate its properties and to carry on its business as now
conducted and as proposed to be conducted.
SECTION 4.2 SUBSIDIARIES. Set forth on SCHEDULE 4.2 hereto is a
complete and accurate list of the Borrower and all Subsidiaries of each Loan
Party, showing as of the date hereof (i) the jurisdiction of its
incorporation or formation, (ii) the jurisdictions in which such Loan Party
is duly qualified and in good standing as a foreign corporation or Person,
(iii) the number of shares of each class of capital stock or other equity
interests authorized, and the number outstanding, and as to each of them that
is a legal entity other than a corporation (but not a natural person), and
the owners (other than shares of the Borrower publicly held other than by
Affiliates) of such equity interests (including the identity of any partner
thereof as a general or limited partner), in each case after giving effect to
the Moran Acquisition any other acquisitions to the extent permitted under
this Agreement and the percentage of the outstanding shares or other
interests of each such class owned (directly or indirectly) by such Loan
Party and the number of shares or other interests covered by all outstanding
options, warrants, rights of conversion or purchase and similar rights after
giving effect to the Moran Acquisition and any other acquisitions to the
extent permitted under this Agreement. As of the date hereof, all of the
outstanding capital stock or other equity interests of all of the Borrower
and each of such Subsidiaries has been validly
<PAGE>
issued, is fully paid and non-assessable, and, in the case of the
Subsidiaries, is owned by the Borrower or one or more of its Subsidiaries
free and clear of all Liens, except those created under the Collateral
Documents and except as set forth on Schedule 4.2.
SECTION 4.3 CORPORATE POWER, AUTHORIZATION. The execution, delivery
and performance by each Loan Party of this Agreement, the Notes, each other
Loan Document and each Moran Acquisition Document to which it is or is to be
a party, and the consummation of the Transaction, are within such Loan
Party's corporate powers, have been duly authorized by all necessary
corporate action, and do not (a) contravene such Loan Party's charter or
bylaws, (b) violate any law (including, without limitation, (i) any Foreign,
Cuban or Iranian Assets Control Regulations of the United States contained in
Title 31, Code of Federal Regulations, Subchapter B, Chapter V, as amended,
(ii) the Securities Act of 1933, as amended, (iii) the Securities Exchange
Act of 1934, as amended, and (vi) the Racketeer Influenced and Corrupt
Organizations Chapter of the Organized Crime Control Act of 1970), rule,
regulation (including, without limitation, Regulation T, U or X of the Board
of Governors of the Federal Reserve System), order, writ, judgment,
injunction, decree, determination or award, (c) except as set forth on
Schedule 4.3, conflict with or result in the breach of, or constitute a
default under, any material contract, loan agreement, indenture, mortgage,
deed of trust, lease or other material instrument or agreement binding on or
affecting any Loan Party, any of its Subsidiaries or any of their respective
properties or (d) except for the Liens created under the Collateral
Documents, result in or require the creation or imposition of any Lien upon
or with respect to any of the properties of any Loan Party or any of its
Subsidiaries. No Loan Party or any of its Subsidiaries is in violation of
any such law, rule, regulation, order, writ, judgment, injunction, decree,
determination or award or in breach of any such contract, loan agreement,
indenture, mortgage, deed of trust, lease or other instrument or agreement,
the violation or breach of which could reasonably be expected to have a
Material Adverse Effect.
SECTION 4.4 GOVERNMENTAL AUTHORIZATIONS, APPROVALS. No authorization
or approval or other action by, and no notice to or filing with, any
governmental authority or regulatory body or any other third party is or was
required for (a) the due execution, delivery, recordation, filing or
performance by any Loan Party of this Agreement, the Notes, any other Loan
Document or any Moran Acquisition Document to which it is or is to be a
party, or for the consummation of the Transaction, (b) the grant by any Loan
Party of the Liens granted by it pursuant to the Collateral Documents, (c)
the perfection or maintenance of the Liens created by the Collateral
Documents (including the first and only priority nature thereof) or (d) the
exercise by the Administrative Agent or any Lender Party of its rights under
the Loan Documents or the remedies in respect of the Collateral pursuant to
the Collateral Documents, except for the authorizations, approvals, actions,
notices and filings listed on SCHEDULE 4.4, all of which have been duly
obtained, taken, given or made and are in full force and effect, except to
the extent set forth in Schedule 4.4. All applicable waiting periods in
connection with the Transaction have expired without any action having been
taken by any competent authority restraining, preventing or imposing
materially adverse conditions upon the Transaction or the rights of the Loan
Parties or their Subsidiaries freely to transfer or otherwise dispose of, or
to create any Lien on, any
<PAGE>
properties now owned or hereafter acquired by any of them.
SECTION 4.5 DUE EXECUTION, VALIDITY, ENFORCEABILITY. This Agreement
and each Moran Acquisition Document has been, and each of the Notes and each
other Loan Document has been or when delivered hereunder will have been, duly
executed and delivered by each Loan Party party thereto. This Agreement and
each Moran Acquisition Document is, and each of the Notes and each other Loan
Document has been or when delivered hereunder will be, the legal, valid and
binding obligation of each Loan Party party thereto, enforceable against such
Loan Party in accordance with its terms, except as such enforcement may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium, or
other similar laws, now or hereafter in effect, relating to or affecting the
enforcement of creditors' rights generally and except that the remedy of
specific performance and other equitable remedies are subject to judicial
discretion.
SECTION 4.6 FINANCIAL STATEMENTS.
(a) (i) The consolidated balance sheets of Old Moran and its
Subsidiaries as at December 31, 1997 and the related consolidated statements
of income and consolidated statements of cash flows of Old Moran and its
Subsidiaries for the Fiscal Year then ended, accompanied by an opinion of
Price Waterhouse Coopers, independent public accountants, and the
consolidated balance sheet of Old Moran and its Subsidiaries as at June 30,
1998 and the related consolidated statement of income and Consolidated
statement of cash flows of Old Moran and its Subsidiaries for the six (6)
months then ended, duly certified, on behalf of the Borrower, by the Chief
Financial Officer of Old Moran, copies of which have been furnished to each
Lender Party, fairly present, in all material respects, subject, in the case
of said balance sheet as at June 30, 1998 and said statements of income and
cash flows for the six (6) months then ended, to normal year-end audit
adjustments, the consolidated financial condition of Old Moran and its
Subsidiaries as at such dates and the consolidated results of the operations
of Old Moran and its Subsidiaries for the period ended on such date, all in
accordance with GAAP applied on a consistent basis.
(ii) The combined and combining balance sheets of the
Turecamo Entities and certain of its Affiliates as at December 31, 1997 and
the related combined statements of income and combined statements of cash
flows of the Turecamo Entities for the Fiscal Year then ended, accompanied by
an opinion of Urbach, Kahn & Werlin, P.C., independent public accountants,
and the combined balance sheet of the Turecamo Entities as at June 30, 1998
and the related combined statement of income and combined statement of cash
flows of the Turecamo Entities for the six (6) months then ended, duly
certified by the Chief Financial Officer of the Turecamo Entities, copies of
which have been furnished to each Lender Party, fairly present, in all
material respects, subject, in the case of said balance sheet as at June 30,
1998 and said statements of income and cash flows for the six (6) months then
ended, to normal year-end audit adjustments, the combined financial condition
of the Turecamo Entities as at such dates and the combined results of the
operations of the Turecamo Entities for the period ended on such date, all in
accordance with GAAP applied on a consistent basis.
<PAGE>
(b) Since June 30, 1998, there has been no change with respect to
the financial statements referred to in clause (a) above that could
reasonably be expected to have a Material Adverse Effect.
SECTION 4.7 PRO FORMA FINANCIAL STATEMENTS. The Consolidated pro forma
balance sheet of the Borrower and its Subsidiaries as at June 30, 1998, and
the related Consolidated pro forma statement of income and cash flows of the
Borrower and its Subsidiaries for the period then ended, certified by the
Chief Financial Officer of the Borrower, copies of which have been furnished
to each Initial Lender, fairly present, in all material respects, the
Consolidated pro forma financial condition of the Borrower and its
Subsidiaries as at such date and the Consolidated pro forma results of
operations of the Borrower and its Subsidiaries for the period ended on such
date, in each case after giving effect to the Transaction (assuming the
Transactions were consummated on January 1, 1998), all in accordance with
GAAP.
SECTION 4.8 ACCURATE INFORMATION. No written information, exhibit or
report furnished by any Loan Party to the Administrative Agent or any Lender
Party in connection with the Loan Documents or pursuant to the terms of the
Loan Documents, when taken with all other information furnished in connection
with or pursuant to the Loan Documents, contained any untrue statement of a
material fact or omitted to state a material fact necessary to make the
statements made therein not misleading.
SECTION 4.9 LITIGATION. Other than the litigation disclosed on
Schedule 4.9 (the "DISCLOSED LITIGATION"), there is no action, suit,
investigation, litigation or proceeding affecting the Borrower, any other
Loan Party or any of their respective Subsidiaries, including, without
limitation, any Environmental Action, pending or threatened before any court,
governmental agency or arbitrator that could reasonably be expected to have a
Material Adverse Effect, and, as of the date hereof, there has been no change
in the status, or financial effect on any Loan Party or any of its
Subsidiaries, of the Disclosed Litigation from that described on SCHEDULE 4.9
that could reasonably be expected to have a Material Adverse Effect.
SECTION 4.10 REGULATION U. Neither the Borrower nor any other Loan
Party nor any of their respective Subsidiaries is engaged in the business of
extending credit for the purpose of purchasing or carrying Margin Stock.
SECTION 4.11 ERISA.
(a) Except as set forth on SCHEDULE 4.11 hereto, as of the date
hereof, neither the Borrower nor any of its ERISA Affiliates maintains or has
maintained within the past six (6) years any Plans or Multiemployer Plans.
Set forth on SCHEDULE 4.11 is a complete and accurate list, as of the date
hereof, of all Welfare Plans and all defined contribution plans in respect of
which any Loan Party could have liability.
<PAGE>
(b) Except as set forth in the financial statements referred
to in Section 4.6 and in Article 7, neither the Borrower, any of the other
Loan Parties nor any of their respective Subsidiaries has any material
liability with respect to "expected post retirement benefit obligations"
within the meaning of Statement of Financial Accounting Standards No. 106.
SECTION 4.12 CASUALTY. As of the Closing Date, neither the business nor
the properties of any Loan Party or any of its Subsidiaries are affected by
any fire, explosion, accident, strike, lockout or other labor dispute,
drought, storm, hail, earthquake, embargo, act of God or of the public enemy
or other casualty (whether or not covered by insurance) that could reasonably
be expected to have a Material Adverse Effect.
SECTION 4.13 ENVIRONMENTAL MATTERS.
(a) The operations and properties of each Loan Party and each of
its Subsidiaries comply in all known material respects with all applicable
Environmental Laws and Environmental Permits, all known past non-compliance
with such Environmental Laws and Environmental Permits has been resolved
without ongoing obligations or costs, except where non-compliance could not
reasonably be expected to have a Material Adverse Effect, and no
circumstances exist that could reasonably be expected to (i) form the basis
of an Environmental Action against any Loan Party or any of its Subsidiaries
or any of their properties that could reasonably be expected to have a
Material Adverse Effect or (ii) cause any such property to be subject to any
restrictions on ownership, occupancy, use or transferability under any
Environmental Law which could reasonably be expected to have a Material
Adverse Effect.
(b) (i) None of the properties currently or formerly owned or
operated by any Loan Party or any of its Subsidiaries is listed or proposed
for listing on the NPL or on the CERCLIS or any analogous foreign, state or
local list or is adjacent to any such property; (ii) there are no and, to the
best of its knowledge, never have been any underground or aboveground storage
tanks or any surface impoundments, septic tanks, pits, sumps or lagoons in
which Hazardous Materials are being or, to the best of its knowledge, have
been treated, stored or disposed on any property currently owned or operated
by any Loan Party or any of its Subsidiaries or on any property formerly
owned or operated by any Loan Party or any of its Subsidiaries; (iii) there
is no asbestos or asbestos-containing material on any property currently
owned or operated by any Loan Party or any of its Subsidiaries; and (iv)
Hazardous Materials have not been released, discharged or disposed of on any
property currently owned or operated by any Loan Party or any of its
Subsidiaries, or any property formerly owned or operated by any Loan Party or
any of its Subsidiaries, except, in the case of clauses (i) through (iv),
items, matters or conditions which could not reasonably be expected to have a
Material Adverse Effect.
(c) Except as disclosed on SCHEDULE 4.13, no Loan Party nor any of
its Subsidiaries, as of the date hereof, is undertaking either individually
or together with other potentially responsible parties, any investigation or
assessment or Remedial, Response or Removal action relating to any actual or
threatened release, discharge or disposal of Hazardous
<PAGE>
Materials at any site, location or operation, either voluntarily or pursuant
to the order of any governmental or regulatory authority or the requirements
of any Environmental Law; and all Hazardous Materials generated, used,
treated, handled or stored at, or transported to or from, any property
currently owned or operated by any Loan Party or any of its Subsidiaries or
any property formerly owned or operated by any Loan Party or any of its
Subsidiaries have been disposed of in a manner not reasonably expected to
result in a Material Adverse Effect.
SECTION 4.14 INTENTIONALLY OMITTED.
SECTION 4.15 PRIORITY OF LIENS. The Collateral Documents create in
favor of the Administrative Agent, for the ratable benefit of the Lenders, a
valid and perfected first priority security interest, subject to any
applicable Permitted Lien, in the Collateral (including, without limitation,
the Mortgaged Vessels), securing the payment of the Obligations, and all
filings and other actions necessary or reasonably desirable to perfect and
protect such security interest have been duly taken or shall be taken
promptly after the Closing Date. The Loan Parties are the legal and
beneficial owners of all material Collateral (including, without limitation,
the Mortgaged Vessels) free and clear of any Lien, except for the liens and
security interests created or expressly permitted under the Loan Documents.
SECTION 4.16 TAXES.
(a) As of the date hereof, each Loan Party and each of its
Subsidiaries has filed, has caused to be filed or has been included in all
tax returns (Federal, state, local and foreign) required to be filed and has
paid all taxes shown thereon to be due, together with applicable interest and
penalties.
(b) Set forth on SCHEDULE 4.16 is a complete and accurate list of
each taxable year of each Loan Party and each of its Subsidiaries for which
Federal income tax returns have been filed and for which the expiration of
the applicable statute of limitations for assessment or collection has not
occurred by reason of extension or otherwise (an "OPEN YEAR").
(c) There is no unpaid amount of adjustments to the Federal income
tax liability of each Loan Party and each of its Subsidiaries proposed by the
Internal Revenue Service with respect to Open Years. No issues have been
raised by the Internal Revenue Service (and communicated to the Borrower or
any of its Subsidiaries) in respect of Open Years that, in the aggregate,
could reasonably be expected to have a Material Adverse Effect.
(d) As of the date hereof, there is no unpaid amount of
adjustments to the state, local and foreign tax liability of each Loan Party
and each of its Subsidiaries proposed by any state, local or foreign taxing
authorities (other than amounts arising from adjustments to Federal income
tax returns). As of the date hereof, no issues have been raised by such
taxing authorities that, individually or in the aggregate, could reasonably
be expected to have a Material Adverse Effect.
<PAGE>
SECTION 4.17 COMPLIANCE WITH SECURITIES LAWS. No Loan Party and no Loan
Party's Subsidiaries is an "investment company," or an "affiliated person"
of, or "promoter" or "principal underwriter" for, an "investment company," as
such terms are defined in the Investment Company Act of 1940, as amended.
Neither the making of any Advances, nor the issuance of any Letters of
Credit, nor the application of the proceeds or repayment thereof by the
Borrower, nor the consummation of the Transaction, will violate any provision
of such Act or any rule, regulation or order of the Securities and Exchange
Commission thereunder or any takeover, disclosure or other federal, state or
foreign securities law or Regulations T, U or X of the Federal Reserve Board.
The Borrower is not subject to regulation under any federal, state or foreign
statute or regulation which limits its ability to incur Debt.
SECTION 4.18 SOLVENCY. Each Loan Party is, individually and together
with its Subsidiaries, Solvent.
SECTION 4.19 DEBT.
(a) Set forth on SCHEDULE 4.19(A) is a complete and accurate list
of all Debt of the Borrower and its Subsidiaries the principal amount of each
such Debt which is greater than $500,000 (the "EXISTING DEBT"), showing as of
the date hereof immediately before giving effect to the Transactions the
principal amount outstanding thereunder and the maturity date thereof.
(b) Set forth on SCHEDULE 4.19(B) is a complete and accurate list,
as of the date hereof, of all Debt of the Borrower and its Subsidiaries,
other than Debt under the Loan Documents, which Debt shall remain outstanding
after giving effect to the Transactions (the "SURVIVING DEBT"), showing as of
the date hereof the principal amount outstanding thereunder, the maturity
date thereof and the amortization schedule therefor.
SECTION 4.20 NO DEFAULTS, COMPLIANCE WITH LAWS.
(a) Except as set forth on SCHEDULE 4.20 hereto, no Loan Party is
in default under any agreement, ordinance, resolution, decree, bond, note,
indenture, order or judgment to which it is a party or by which it is bound,
or any other agreement or other instrument by which any of the properties or
assets owned by it or used in the conduct of its business is affected, which
default could have a Material Adverse Effect.
(b) Each Loan Party has complied and is in compliance in all
respects with all applicable laws, rules, ordinances, regulations,
resolutions, orders, writs, decrees and other similar documents and
instruments of all courts and governmental authorities, bureaus and agencies,
domestic and foreign, including, without limitation, any Regulatory Authority
and all applicable provisions of the Americans with Disabilities Act (42
U.S.C. Section 12101-12213) and the regulations issued thereunder and all
applicable Environmental Laws, non-compliance with which could reasonably be
expected to have a Material Adverse Effect.
<PAGE>
SECTION 4.21 OWNED REAL PROPERTY. Set forth on SCHEDULE 4.21 is a complete
and accurate list, as of the date hereof, of all real property owned by any Loan
Party or any of its Subsidiaries or in which any Loan Party has an interest as a
contract vendee, showing as of the date hereof the street address, county or
other relevant jurisdiction, state, record owner and book value thereof. Such
Loan Party or such Subsidiary has good, marketable and insurable fee simple
title to such real property, free and clear of all Liens, other than Permitted
Real Property Encumbrances.
SECTION 4.22 LEASED REAL PROPERTY. Set forth on SCHEDULE 4.22 is a
complete and accurate list, as of the Closing Date, of all leases of real
property under which any Loan Party or any of its Subsidiaries is the lessee,
showing as of the date hereof the street address, county or other relevant
jurisdiction, state, lessor, lessee, expiration date and annual rental cost
thereof. To the best knowledge of each Loan Party, each such lease, as of
the Closing Date, is the legal, valid and binding obligation of the lessor
thereof, enforceable in accordance with its terms.
SECTION 4.23 MATERIAL CONTRACTS. Set forth on SCHEDULE 4.23 is a
complete and accurate list of all Material Contracts of each Loan Party and
its Subsidiaries, showing as of the date hereof the parties, subject matter
and term thereof. Except as could not reasonably be expected to have a
Material Adverse Effect, as of the Closing Date, each Material Contract has
been duly authorized, executed and delivered by all parties thereto, has not
been amended or otherwise modified, is in full force and effect and is
binding upon and enforceable against all parties thereto in accordance with
its terms. There exists, as of the Closing Date, no material default under
any Material Contract by the Borrower or any of its Subsidiaries party
thereto and, to the best knowledge of each Loan Party, there exists, as of
the Closing Date, no material default under any Material Contract by any
other party thereto.
SECTION 4.24 INVESTMENTS. Set forth on SCHEDULE 4.24 is a complete and
accurate list, as of the Closing Date, of all Investments, excluding
Investments in the Subsidiaries, in excess of $250,000 held by any Loan Party
or any of its Subsidiaries, showing as of the date hereof the amount, obligor
or issuer and maturity, if any, thereof.
SECTION 4.25 INTELLECTUAL PROPERTY. Set forth on SCHEDULE 4.25 is a
complete and accurate list, as of the Closing Date, of all material patents,
trademarks, trade names, service marks and copyrights, and all applications
therefor and licenses thereof, of each Loan Party or any of its Subsidiaries,
showing as of the date hereof the jurisdiction in which registered, the
registration number and the expiration date. Each Loan Party and each of
their respective Subsidiaries owns or has rights to use all material patents,
trademarks, trade names, service marks, copyrights and other intellectual
property necessary to conduct its business as now or heretofore conducted by
it or proposed to be conducted by it. Each Loan Party and each of their
respective Subsidiaries conducts its business and affairs without, in any
material respect, infringement of or interference with any patent, trademark,
trade name, service mark, copyright or other intellectual property of any
other Person. The Intellectual Property Security Agreement
<PAGE>
creates, as security for the obligations purported to be secured thereby, a
valid and enforceable perfected security interest in and Lien on all of the
Collateral purported to be covered thereby in favor of the Administrative
Agent for the benefit of the Secured Parties, superior to and prior to the
rights of all third Persons.
SECTION 4.26 MORAN ACQUISITION DOCUMENTS.
(a) Each Moran Acquisition Document to which any Loan Party or any
of its respective Subsidiaries is a party has been duly executed and
delivered by such Loan Party or such Subsidiary, as the case may be, and, to
the best knowledge of the Borrower, each Moran Acquisition Document has been
duly executed and delivered by the parties thereto other than the Borrower
and its Subsidiaries, and is in full force and effect. The representations
and warranties of any Loan Party and each of its respective Subsidiaries
contained in each Moran Acquisition Document to which such Loan Party or such
Subsidiary, as the case may be, is a party are true and correct in all
material respects on the date hereof and will be true and correct in all
material respects on the Closing Date and the Moran Acquisition Date, as if
made on each of such dates, and the Administrative Agent and each Lender
Party shall be entitled to rely upon such representations and warranties with
the same force and effect as if they were incorporated in this Agreement and
made to the Administrative Agent and each Lender Party directly as of the
date hereof, the Closing Date, and the Moran Acquisition Date.
(b) True and correct copies of each of the Moran Acquisition
Documents have been delivered to the Administrative Agent, and as of the
Closing Date, the Moran Acquisition shall have been consummated in accordance
therewith, and no party thereto shall have waived any material term or
condition contained therein.
SECTION 4.27 FEES. Except as set forth in SCHEDULE 4.27, no broker's or
finder's fees or commissions or any similar fees or commissions will be
payable by any Loan Party or any of its Subsidiaries with respect to the
incurrence and maintenance of the Obligations, any other transaction
contemplated by the Loan Documents or any services rendered in connection
with any such transactions. The Borrower hereby covenants and agree to
indemnify the Administrative Agent and each Lender Party against and hold the
Administrative Agent and each Lender Party harmless from any claim, demand or
liability for broker's or finder's fees or similar fees or commissions.
SECTION 4.28 GOVERNMENT CONSENTS FOR CONDUCT OF BUSINESS.
(a) Except as set forth on SCHEDULE 4.4, each Loan Party has, and
is in good standing with respect to, all approvals, permits, licenses,
consents, authorizations, franchises, certificates, and inspections of all
Regulatory Agencies, that are necessary for a Loan Party to continue to
conduct business and own, use, operate, and maintain its property and assets
as heretofore conducted, owned, used, operated, and maintained which, if not
obtained (whether directly or by lawful and effective assignment) or not
maintained in good standing, could reasonably be expected to have a Material
Adverse Effect. No such approval, permit, license,
<PAGE>
consent, authorization, franchise, or certificate is conditioned or limited
any more so than as is generally the case with respect to Persons engaged in
the same or similar lines of business. Each such approval, permit, license,
consent, authorization, franchise, or certificate was duly and validly
granted or issued, is in full force and effect, and, as of the Closing Date,
neither has been, nor has been threatened to be, amended, modified,
suspended, rescinded, revoked, forfeited, or assigned. Further, as of the
Closing Date, no condition(s) exist(s) or event(s) has (have) occurred that,
with the giving of notice or lapse of time or both, could result in the
amendment, modification, suspension, rescission, revocation, forfeiture, or
non-renewal of any such approval, permit, license, consent, authorization,
franchise, or certificate.
SECTION 4.29 VESSELS.
(a) Set forth on SCHEDULE 4.29 is a complete and accurate list, as
of the date hereof, of all Vessels owned by the Loan Parties, showing as of
the date hereof with respect to each such Vessels the following: (i) the
name of the Vessel; (ii) the name of the Registered Owner of the Vessels;
(iii) to the extent applicable, the American Bureau of Shipping certification
number; (iv) the date of the most recent United States Coast Guard inspection
and/or ABS Survey; and (v) to the extent applicable, the next scheduled
inspection date.
(b) Each such Vessel identified on SCHEDULE 4.29 is: (i) to the
extent required in order to operate in the service in which such Vessel is
operating, classified in the highest classification for vessels of the same
age and type in the American Bureau of Shipping required to be maintained in
order to operate in such service and is in class without recommendation
(except for recommendations which, when aggregated with recommendations for
all Vessels, could not reasonably be expected to have a Material Adverse
Effect); (ii) documented under the laws of the United States to permit such
Vessel to operate in the coastwise trade; (iii) covered by hull and
machinery, protection and indemnity and mortgagee's interest insurance in
accordance with the requirements of the Preferred Ship Mortgage, if any,
covering such Vessel, and otherwise reasonably satisfactory to the
Administrative Agent; and (iv) to the extent applicable, subject to a valid
certificate of inspection issued by the United States Coast Guard, each such
certificate of inspection is in full force and effect without recommendation
(except for recommendations which, when aggregated with recommendations for
all Vessels, could not reasonably be expected to have a Material Adverse
Effect).
ARTICLE 5
AFFIRMATIVE COVENANTS
While any of the Commitments is outstanding and, in the event any
Advance remains outstanding, so long as the Borrower or any other Loan Party
are indebted to any of the Lender Parties or the Administrative Agent under
any of the Loan Documents, any Letter of Credit is outstanding and until
payment in full of the Notes and full and complete performance of all of its
other obligations arising hereunder, the Borrower shall:
<PAGE>
SECTION 5.1 COMPLIANCE WITH LAW. Comply, and cause each of its
Subsidiaries to comply with all applicable laws, rules, regulations and orders,
such compliance to include, without limitation, compliance with ERISA, except
where non-compliance could not reasonably be expected to have a Material Adverse
Effect
SECTION 5.2 PAYMENT OF TAXES, ETC. Timely pay and discharge, and cause
each of its Subsidiaries to timely pay and discharge, (a) all taxes, assessments
and governmental charges or levies imposed upon it or upon its property and (b)
all lawful claims that, if unpaid, might by law become a Lien upon its property;
PROVIDED, HOWEVER, that the Borrower and its Subsidiaries shall not be required
to pay or discharge any such tax, assessment, charge or claim that is being
contested in good faith and by proper proceedings and as to which appropriate
reserves are being maintained, unless and until any Lien resulting therefrom
attaches to its property and becomes enforceable against the Borrower or any of
its Subsidiaries.
SECTION 5.3 COMPLIANCE WITH ENVIRONMENTAL LAWS. Comply, and cause each of
its Subsidiaries and all lessees and other Persons operating or occupying its
properties to comply with all applicable Environmental Laws and Environmental
Permits, except where non-compliance could not reasonably be expected to have a
Material Adverse Effect; obtain and renew and cause each of its Subsidiaries to
obtain and renew all Environmental Permits reasonably necessary for its
operations and properties; and conduct, and cause each of its Subsidiaries to
conduct, any investigation, study, sampling and testing, and undertake any
Removal, Remedial or other Response action necessary to remove and clean up all
Hazardous Materials from any of its properties, to the extent required by
Environmental Laws; PROVIDED, HOWEVER, that the Borrower and its Subsidiaries
shall not be required to undertake any such investigation, study, sampling,
testing, cleanup, Removal, Remedial, Response or other action to the extent that
its obligation to do so is being contested in good faith and by proper
proceedings and adequate reserves as determined by the Administrative Agent are
being maintained with respect to such circumstances.
SECTION 5.4 INTENTIONALLY OMITTED.
SECTION 5.5 MAINTENANCE OF INSURANCE.
(a) Maintain, and cause each of their Subsidiaries to maintain,
insurance with responsible and reputable insurance companies or associations
(including clubs) in such amounts and covering such risks as is usually carried
by companies engaged in similar businesses and owning similar properties in the
same general areas in which such Borrower or such Subsidiary operates and, with
respect to each Vessel owned by the applicable the Loan Party, hull and
machinery, protection and indemnity and mortgagee's interest insurance in
accordance with the requirements of the Preferred Ship Mortgage covering such
Vessel; (b) file with the Administrative Agent upon its request a detailed list
of the insurance then in effect, stating the names of the insurance companies,
the amounts and rates of the insurance, the dates of the
<PAGE>
expiration thereof and the properties and risks covered thereby; and (c)
deliver to the Administrative Agent, in form and substance reasonably
satisfactory to the Administrative Agent, endorsements to (A) with respect to
assets other than the Vessels, all "all-risk" and casualty insurance policies
naming the Administrative Agent, on behalf of itself and the Lenders, as loss
payee if permitted thereunder insuring in the case of "all-risk" against loss
or damage by fire, lightening, windstorm, explosion, hail, tornado, and (B)
all general liability and other liability policies naming the Administrative
Agent, on behalf of itself and the Lenders, as additional insured if
permitted thereunder without material additional cost to the Borrower, and
providing, in any event, that such insurance policies shall not be canceled
without thirty (30) days' prior written notice thereof by the respective
insurer to the Administrative Agent and shall contain standard
non-contributory mortgagee clause endorsement in favor of the Administrative
Agent with respect to hazard insurance coverage; PROVIDED, HOWEVER, that
clause (c) of this Section 5.5 shall not be applicable with respect to the
Old Moran Entities until the Term A Draw Date.
SECTION 5.6 PRESERVATION OF CORPORATE EXISTENCE, ETC. Preserve and
maintain, and cause each of its Subsidiaries to preserve and maintain, except as
permitted by Section 6.4, its existence, legal structure, legal name, and
material rights (charter and statutory), permits, licenses, approvals,
privileges and franchises.
SECTION 5.7 VISITATION RIGHTS.
(a) At any reasonable time and from time to time during normal
business hours, upon reasonable notice, permit the Administrative Agent, or,
upon the occurrence and during the continuance of a Default, the Lender Parties,
or any agents or representatives thereof, to examine and make copies of and
abstracts from the records and books of account of and visit the properties of
the Borrower and its Subsidiaries, and to discuss the affairs, finances and
accounts of the Borrower and any such Subsidiaries with any of their officers or
directors.
(b) Permit the Administrative Agent, at the expense of the Borrower,
and the Lender Parties, at their own expense, to conduct such commercial finance
examinations and/or Collateral audits of the Borrower and its Subsidiaries
during each calendar year as the Administrative Agent may reasonably request.
SECTION 5.8 KEEPING OF BOOKS. Keep, and cause each of its Subsidiaries to
keep, proper books of record and account, in which full and correct entries
shall be made of all financial transactions and the assets and business of the
Borrower and each Subsidiary in accordance with GAAP.
SECTION 5.9 MAINTENANCE OF PROPERTIES, ETC. Maintain and preserve, and
cause each of its Subsidiaries to maintain and preserve, all of its material
properties that are reasonably necessary in the conduct of its business in good
working order and condition, ordinary wear and tear excepted.
<PAGE>
SECTION 5.10 COMPLIANCE WITH TERMS OF LEASEHOLDS. Make all payments and
otherwise perform all material obligations in respect of all material leases of
real property to which the Borrower or any of its Subsidiaries is a party,
notify the Administrative Agent of any material default by any party with
respect to such leases and cooperate with the Administrative Agent in all
respects to cure any such default, and cause each of its Subsidiaries to do so
except, in any case, where the failure to do so, either individually or in the
aggregate, could not reasonably be expected to have a Material Adverse Effect.
SECTION 5.11 INTENTIONALLY OMITTED.
SECTION 5.12 TRANSACTIONS WITH AFFILIATES. Conduct, and cause each of its
Subsidiaries to conduct, all transactions otherwise permitted under the Loan
Documents with any of their Affiliates (other than its Subsidiaries) on terms
that are fair and reasonable, in all material respects, and no less favorable,
in any material respect, to the Borrower or such Subsidiary than it would obtain
in a comparable arms-length transaction with a Person not an Affiliate.
SECTION 5.13 AGREEMENT TO GRANT ADDITIONAL SECURITY.
(a) Promptly, and in any event within thirty (30) days after the
acquisition of assets (including, without limitation, any Vessel) not consisting
of Collateral but of the type that would have constituted Collateral at the date
hereof and investments of the type that would have constituted Collateral on the
date hereof (other than assets with a fair market value of less than $50,000),
including the capital stock of any direct or indirect Subsidiary of the Borrower
(but excluding Moran Insurance, the Garbage Subsidiary and any Subsidiary of the
Garbage Subsidiary), notify the Administrative Agent of the acquisition of such
assets or investments and such assets and investments will become additional
Collateral hereunder to the extent the Administrative Agent deems the pledge of
such assets practicable (the "ADDITIONAL COLLATERAL"), and the Borrower will,
and will cause each of its direct and indirect Subsidiaries to, take all
necessary action, including the filing of appropriate financing statements under
the provisions of the UCC, applicable foreign, domestic or local laws, rules or
regulations in each of the offices where such filing is necessary or appropriate
to grant Administrative Agent a perfected Lien in such Collateral (or comparable
interest under foreign law in the case of foreign Collateral) pursuant to and to
the full extent required by the Collateral Documents and this Agreement.
(b) Promptly, and in any event no later than thirty (30) days after a
request with respect thereto, cause each of the Borrower's direct and indirect
Subsidiaries (other than the Garbage Subsidiary or any Subsidiary of the Garbage
Subsidiary, and Moran Insurance) as the Administrative Agent shall request to
become party to, or to execute and deliver, a Subsidiary Guaranty, guarantying
to the Administrative Agent and the Lenders the prompt payment, when and as due,
of all Obligations of the Loan Parties under the Loan Documents, including all
obligations under any Hedge Agreements or other hedging agreements.
<PAGE>
(c) Promptly, and in any event no later than thirty (30) days after a
request with respect thereto, cause each Guarantor created or established after
the date hereof to grant to the Administrative Agent, for the ratable benefit of
the Lenders, a first priority Lien on all property (tangible and intangible) of
such Guarantor, including, without limitation, all of the capital stock of any
of its Domestic Subsidiaries and 65% of the stock of any of its Foreign
Subsidiaries, upon terms similar to those set forth in the Collateral Documents
and otherwise satisfactory in form and substance to Administrative Agent. The
Borrower shall cause each Guarantor, at its own expense, to become a party to a
Security Agreement, an Intellectual Property Security Agreement, a Preferred
Ship Mortgage and any other Collateral Document and to execute, acknowledge and
deliver, or cause the execution, acknowledgment and delivery of, and thereafter
register, file or record in any appropriate governmental office, any document or
instrument reasonably deemed by Administrative Agent to be necessary or
desirable for the creation and perfection of the foregoing Liens (including
legal opinion, consents, corporate documents and any additional or substitute
security agreements or mortgages). The Borrower will cause each such Guarantor
to take all actions requested by Administrative Agent (including, without
limitation, the filing of UCC-1's) in connection with the granting of such
security interests.
(d) Promptly, and in any event not later than thirty (30) days after
a request with respect thereto, (i) deliver to the Administrative Agent the
original of all instruments, documents and chattel paper, and all other
Collateral of which the Administrative Agent determines it should have physical
possession in order to perfect and protect its security interest therein, duly
pledged, endorsed or assigned to the Administrative Agent without restriction;
(ii) when an Event of Default exists, transfer Inventory to locations designated
by the Administrative Agent; (iii) if an Event of Default has occurred and is
continuing, if any Collateral is at any such time in the possession or control
of any warehousemen, bailee or the Borrower's agents or processors, notify the
Administrative Agent thereof and notify such person of the Administrative
Agent's security interest in such Collateral and obtain a landlord waiver or
bailee letter, in form and substance satisfactory to the Administrative Agent,
from such person and instruct such person to hold all such Collateral for the
Administrative Agent's account subject to the Administrative Agent's
instructions; (iv) if an Event of Default has occurred and is continuing, if at
any time any Inventory or other Collateral is located on any real property of
the Borrower which is subject to a mortgage or other Lien, obtain a mortgagee
waiver, in form and substance satisfactory to the Administrative Agent, from the
holder of each mortgage or other Lien on such real property; and (v) take all
such other actions and obtain all such other agreements as the Administrative
Agent may reasonably deem necessary or desirable in respect of any Collateral.
(e) The security interests required to be granted pursuant to this
Section shall be granted pursuant to the Collateral Documents or, in the
Administrative Agent's discretion, such other security documentation (which
shall be substantially similar to the Collateral Documents already executed and
delivered by the Borrower and the Guarantors) as is satisfactory in form and
substance to Administrative Agent (the "Additional Collateral Documents") and
shall constitute valid and enforceable perfected security interests prior to the
rights of all third
<PAGE>
Persons and subject to no other Liens except Liens permitted under Section
6.1. The Additional Collateral Documents and other instruments related
thereto shall be duly recorded or filed in such manner and in such places and
at such times as are required by law to establish, perfect, preserve and
protect the Liens, in favor of Administrative Agent, for the benefit of the
Lender Parties, granted pursuant to the Additional Collateral Documents and,
all taxes, fees and other charges payable in connection therewith shall be
paid in full by the Borrower. At the time of the execution and delivery of
Additional Collateral Documents, the Borrower shall cause to be delivered to
Administrative Agent such agreements, opinions of counsel, and other related
documents as may be reasonably requested by the Administrative Agent or the
Required Lenders to assure themselves that this Section has been complied
with.
SECTION 5.14 INTEREST RATE PROTECTION. On or prior to the Closing Date,
the Borrower shall obtain and thereafter keep in effect one or more interest
rate Bank Hedge Agreements (the terms and other provisions of all such Bank
Hedge Agreements to be subject to the prior written consent of the
Administrative Agent, not to be unreasonably withheld) covering at least
seventy-five percent (75%) of the aggregate of Term A Advances and Term B
Advances outstanding.
SECTION 5.15 PERFORMANCE OF MORAN ACQUISITION DOCUMENTS. Perform and
observe, or cause the relevant Subsidiary to perform and observe, in all
material respects, all of the terms and provisions of each Moran Acquisition
Document to be performed or observed by it or such Subsidiary, maintain each
such Moran Acquisition Document in full force and effect, enforce, in all
material respects, each such Moran Acquisition Document in accordance with its
terms, take all such action to such end as may be from time to time reasonably
requested by the Administrative Agent and, upon request of the Administrative
Agent, make to each other party to each such Moran Acquisition Document such
demands and requests for action or for information and reports as the Borrower
or any Subsidiary is entitled to make under such Moran Acquisition Document.
SECTION 5.16 YEAR 2000 COMPATIBILITY. Take all action necessary to assure
that its computer based systems, hardware and software used in each Loan Party's
business and operations are able to operate and effectively receive, transmit,
process, store, retrieve or retransmit data including dates on and after January
1, 2000, except where failure to so operate and/or so deal with data could not
reasonably be expected to have a Material Adverse Effect, and, at the request of
the Administrative Agent, the Loan Parties shall provide evidence to the
reasonable satisfaction of the Administrative Agent of such year 2000
compatibility.
SECTION 5.17 CERTAIN AFFIRMATIVE COVENANTS RELATING TO THE VESSELS.
(a) Promptly after the date hereof, cause, and cause each of its
Subsidiaries to cause, a certified copy of each of the Preferred Ship Mortgages,
together with a notice thereof, to be placed aboard each of the Mortgaged
Vessels owned by it, and with respect to each, furnish the Administrative Agent
with copies of the masters' signed receipts therefor.
<PAGE>
(b) Maintain the Vessels (which are required to be classed in order
to operate in the service in which they are operating) in the highest
classification required to be maintained in order to operate in such service for
vessels of like age and type by the American Bureau of Shipping or any other
classification society reasonably satisfactory to the Administrative Agent.
(c) Permit the Administrative Agent to have the Vessels owned by the
Borrower or any of its Subsidiaries surveyed by marine engineers or other
surveyors selected by the Administrative Agent, in its sole discretion, at such
times and with such frequency as the Administrative Agent may reasonably request
(but, except with respect to the Visual Survey required to be delivered prior to
the initial Put Payment as provided in Section 6.7(e), not more frequently than
three years after the most recently completed survey and inspection). The costs
of such surveys and inspections shall be allocated as follows: (i) so long as no
Event of Default has occurred and is continuing, the cost of one such survey and
inspection every three years shall be borne by the Borrower, and (ii) whenever
an Event of Default exists hereunder, the costs of all surveys (including,
without limitation, Visual Surveys) and inspections shall be borne by the
Borrower.
ARTICLE 6
NEGATIVE COVENANTS
While any of the Commitments is outstanding and, in the event any Advance
remains outstanding, so long as the Borrower or any other Loan Party is indebted
to any of the Lender Parties or the Administrative Agent under any of the Loan
Documents, any Letter of Credit is outstanding and until payment in full of the
Notes and full and complete performance of all of its other obligations arising
hereunder, the Borrower covenants that it will not, at any time, and will not
permit any Loan Party to do, agree to do or permit to be done, any of the
following without the prior written consent of the Required Lenders:
SECTION 6.1 LIENS, ETC. Create, incur, assume or suffer to exist, or
permit any of its Subsidiaries to create, incur, assume or suffer to exist, any
Lien on or with respect to any of its properties of any character (including,
without limitation, Accounts, Inventory and other Collateral) whether now owned
or hereafter acquired, or sign or file or suffer to exist, or permit any of its
Subsidiaries to sign or file or suffer to exist, under the Uniform Commercial
Code or any other statute of any jurisdiction, a financing statement that names
the Borrower or any of its Subsidiaries as debtor, or sign or suffer to exist,
or permit any of its Subsidiaries to sign or suffer to exist, any security
agreement authorizing any secured party thereunder to file any such financing
statement, or assign, or permit any of its Subsidiaries to assign, any accounts
or other right to receive income, EXCLUDING, HOWEVER, from the operation of the
foregoing restrictions the following:
(a) Liens created and granted under the Loan Documents;
<PAGE>
(b) Permitted Liens;
(c) Liens existing on the date hereof and described on SCHEDULE
6.1(C);
(d) Purchase money Liens securing Debt permitted under Section
6.2(c)(i) upon real property, Equipment or Vessels acquired or held by the
Borrower or any of its Subsidiaries in the ordinary course of business to secure
the purchase price of such real property, Equipment or Vessels or to secure Debt
incurred solely for the purpose of financing the acquisition, construction or
improvement of any such real property, Equipment or Vessels to be subject to
such Liens, or Liens existing on any such real property, Equipment or Vessels
within 90 days from the time of acquisition, or extensions, renewals or
replacements of any of the foregoing for the same or a lesser amount; PROVIDED,
HOWEVER, that no such Lien shall extend to or cover any property other than the
real property, Equipment or Vessels being acquired, constructed or improved (and
the proceeds thereof), and no such extension, renewal or replacement shall
extend to or cover any property not theretofore subject to the Lien being
extended, renewed or replaced;
(e) Liens arising in connection with Capitalized Leases permitted
under Section 6.2(c)(i); PROVIDED, that no such Lien shall extend to or cover
any Collateral or any assets other than the assets subject to such Capitalized
Leases;
(f) The replacement, extension or renewal of any Lien permitted by
clauses (c) through (e) above upon or in the same property theretofore subject
thereto in connection with the replacement, extension or renewal (without
increase in the amount or any change in any direct or contingent obligor) of the
Debt secured thereby;
(g) Liens securing obligations under the Bank Hedge Agreements;
(h) Liens covering the assets of the Garbage Subsidiary or any
Subsidiary of the Garbage Subsidiary;
(i) Liens securing judgments not otherwise prohibited by Section 9.7;
(j) Liens securing Debt permitted under Section 6.2(c)(i)(B); and
(k) Liens of lessors and/or shipowners under operating leases and
charters and Liens of consignors and bailors.
SECTION 6.2 DEBT. Create, incur, assume or suffer to exist, or permit any
of its Subsidiaries to create, incur, assume or suffer to exist, any Debt other
than:
(a) In the case of the Borrower, Debt incurred pursuant to, or
permitted or
<PAGE>
otherwise contemplated by or expressly disclosed in, the Loan Documents;
(b) In the case of any of the Subsidiaries of the Borrower, Debt owed
to the Borrower or to a Wholly-Owned Subsidiary of the Borrower, or Debt owed by
the Borrower to any Guarantor;
(c) In the case of the Borrower and any of its Subsidiaries:
(i) (A) Debt secured by (1) Liens permitted by Section 6.1(d),
and (2) Capitalized Leases, collectively not to exceed in the aggregate
$25,000,000 at any time outstanding, and (B) in addition to the other Debt
permitted under this Section 6.2, Debt in an aggregate amount not to exceed
$1,500,000 outstanding at any time;
(ii) endorsement of negotiable instruments for deposit or
collection or similar transactions in the ordinary course of business;
(iii) the Surviving Debt (other than the Debt in respect of
the Senior Notes), and any Debt extending the maturity of, or refunding or
refinancing, in whole or in part, such Surviving Debt; PROVIDED, that the terms
of any such extending, refunding or refinancing Debt, and of any agreement
entered into and of any instrument issued in connection therewith, are consented
to in writing by the Administrative Agent, with the approval of the Required
Lenders, and otherwise permitted by this Agreement and the other Loan Documents;
and, PROVIDED, FURTHER, that the principal amount of such Surviving Debt shall
not be increased above the principal amount thereof permitted to be outstanding
after the Initial Extension of Credit, and the direct and contingent obligors
therefor shall not be changed, as a result of or in connection with such
extension, refunding or refinancing; and
(iv) Debt in respect of the Senior Notes, PROVIDED such Debt is
redeemed or otherwise repaid in full on or prior to the Term A Facility
Termination Date.
SECTION 6.3 INTENTIONALLY OMITTED.
SECTION 6.4 FUNDAMENTAL CHANGES.
(a) Merge into or consolidate with any Person or permit any Person to
merge into it, or permit any of its Subsidiaries to do so, except that so long
as no Default or Event of Default shall have occurred and be continuing and so
long as no Default or Event of Default would result therefrom, any Subsidiary of
the Borrower may merge with and into or consolidate with the Borrower (PROVIDED
that the Borrower is the surviving entity) or any other Subsidiary of the
Borrower (PROVIDED that a Wholly-Owned Subsidiary of the Borrower is the
surviving entity);
(b) Liquidate, wind-up or dissolve itself (or suffer any liquidation
or
<PAGE>
dissolution), convey, sell, assign, lease, transfer or otherwise dispose of
(or agree to do any of the foregoing at any future time) all or substantially
all of its property, business or assets, or permit any of its Subsidiaries to do
any of the foregoing, except that a Subsidiary may transfer all or substantially
all of its assets to any Guarantor or to the Borrower;
(c) Acquire or permit any Subsidiary to acquire all or substantially
all of the assets or capital stock of any other Person, except that (i) the
Borrower may consummate the Moran Acquisition in accordance with the terms and
conditions of the Moran Acquisition Documents; (ii) as provided in Sections
6.6(a) and 6.6(i); and (iii) as provided in Section 6.6(k) and the Borrower may
form new Subsidiaries in connection therewith.
SECTION 6.5 SALES, ETC. OF ASSETS. Sell, lease, transfer or otherwise
dispose of, or permit any of its Subsidiaries to sell, lease, transfer or
otherwise dispose of, any assets or grant any option or other right to purchase,
lease or otherwise acquire any assets, except:
(a) Sales of Inventory in the ordinary course of business and sales
of obsolete, worn out or traded-in Equipment in the ordinary course of business;
(b) (i) any investments permitted by Section 6.6, and (ii) any
transfer of assets from any Subsidiary to any Guarantor or to the Borrower.
(c) Sales of assets constituting Vessels, subject to compliance with
Section 2.6(b)(ii);
(d) The sale of any asset that does not constitute a Vessel by the
Borrower or any of its Subsidiaries so long as (i) the purchase price paid to
the Borrower or such Subsidiary for such asset shall be no less than the fair
market value of such asset at the time of such sale (as in good faith determined
by the Borrower), (ii) the purchase price for such asset shall be paid to the
Borrower or such Subsidiary solely in cash and (iii) the aggregate purchase
price paid to the Borrower and all of its Subsidiaries for such asset and all
other assets sold by the Borrower and its Subsidiaries (other than an asset
included in Section 6.5(a), (b) or (c)) in any Fiscal Year pursuant to this
clause (d) shall not exceed $250,000; and
(e) Transfers of Vessels described in clause (iv) of the definition
of Asset Disposition.
SECTION 6.6 INVESTMENTS IN OTHER PERSONS. Make or hold, or permit any of
its Subsidiaries to make or hold, any Investment in any Person other than:
(a) Investments by the Borrower and its Subsidiaries in their
Subsidiaries outstanding on the date hereof and additional investments in
Wholly-Owned Subsidiaries of the Borrower that are Guarantors; PROVIDED,
HOWEVER, that, notwithstanding the foregoing, (x) during the period from the
Closing Date to and including the Term A Draw Date the Borrower may
<PAGE>
make Investments in the Old Moran Entities in an aggregate amount not to
exceed $15,000,000 and (y) the Borrower may make Investments in the Garbage
Subsidiary but solely to the extent expressly permitted, and subject to the
limitations set forth, in clause (i) of this Section 6.6; and, PROVIDED,
FURTHER, that with respect to Investments in any newly acquired or created
Wholly-Owned Domestic Subsidiary (other than the Garbage Subsidiary), any
such Subsidiary shall become a Guarantor pursuant to the terms of the
Subsidiary Guaranty and an additional grantor pursuant to the terms of the
Security Agreement and Intellectual Property Security Agreement;
(b) Loans and advances to officers and other employees in the
ordinary course of the business of the Borrower and its Subsidiaries in an
aggregate principal amount not to exceed $500,000 at any time outstanding;
(c) Investments by the Borrower and its Subsidiaries in Cash
Equivalents;
(d) Investments by the Borrower and its Subsidiaries in Bank Hedge
Agreements expressly permitted under Section 5.14, Hedge Agreements with respect
to purchase money Liens and Capitalized Lease Obligations permitted hereunder
and with respect to fuel used in the business of the Borrower and its
Subsidiaries;
(e) Investments consisting of intercompany Debt permitted under
Section 6.2(b) and other applicable Debt permitted under Section 6.2(b);
(f) Investments existing on the date hereof and described on SCHEDULE
6.6(F) hereto;
(g) Investments by the Borrower and its Subsidiaries in deposit
accounts opened in the ordinary course of business;
(h) Investments consisting of accounts receivable in the ordinary
course of business;
(i) At any time after the full redemption of the Senior Notes,
Investment (in the form of a capital contribution (which may be from the
proceeds of a Revolving Credit Advance) (the "GARBAGE INVESTMENT") by the
Borrower in a to be newly created Wholly-Owned Subsidiary owned directly or
indirectly by the Borrower (the "GARBAGE SUBSIDIARY") in an amount not to exceed
$12,500,000 less the aggregate amount of all Investments theretofore made under
subsection (k) of this Section 6.6 (the "GARBAGE INVESTMENT AMOUNT") for the
sole purpose of financing vessels to be owned and operated by such Garbage
Subsidiary (or a Subsidiary of the Garbage Subsidiary or a joint venture or
other Person owned in whole or in part by the Garbage Subsidiary) so as to
enable the Borrower and/or any such Subsidiary or other entity to fulfil its
obligations as a subcontractor under a contract to be entered into between the
City of New York, New York and a to be selected waste
<PAGE>
management firm, which waste management firm shall be acceptable to the
Administrative Agent, for the transportation by water of garbage and other
waste; PROVIDED, HOWEVER, that the Borrower shall not be permitted to make
the Garbage Investment unless (A) the conditions precedent set forth in
Section 3.4 are satisfied or otherwise waived, (B) the Borrower is in
compliance, on a pro-forma basis, with each of the financial covenants set
forth in Section 6.17 and Article 8, and (C) the Unused Revolving
Availability is equal to or greater than $10,000,000, in each case with
respect to clauses (A), (B) and (C) above, after giving effect to the Garbage
Investment;
(j) The Borrower may make Investments as expressly permitted in
Section 6.7; and
(k) In addition to the Investments permitted under subsections (a)
through (j) of this Section 6.6, Investments of the Borrower and its
Subsidiaries which do not in the aggregate exceed the lesser of $5,000,000 or
$12,500,000 minus the Garbage Investment Amount outstanding at any time.
SECTION 6.7 DIVIDENDS, ETC. Declare or pay any dividends, purchase,
redeem, retire, defease or otherwise acquire for value any of its capital stock
or any warrants, rights or options to acquire such capital stock, now or
hereafter outstanding, return any capital to its stockholders as such, make any
distribution of assets, capital stock, warrants, rights, options, obligations or
securities to its stockholders as such, or permit any of its Subsidiaries to do
any of the foregoing or permit any of its Subsidiaries to purchase, redeem,
retire, defease or otherwise acquire for value any capital stock of the Borrower
or any warrants, rights or options to acquire such capital stock, except:
(a) At any time after the redemption in full of the Senior Notes, the
Borrower may declare and pay dividends and distributions payable solely in
capital stock of the Borrower;
(b) A Subsidiary of the Borrower may declare and pay dividends and
distributions to the Borrower or any other Loan Party;
(c) The Borrower may consummate the Moran Acquisition in accordance
with the terms and conditions of the Moran Acquisition Documents;
(d) Issuances of stock expressly permitted by Section 6.18;
(e) The Borrower may make certain put and call payments (including
any interest thereon) to the Initial Turecamo Stockholders and their
permitted transferees in accordance with the terms of the Stockholders
Agreement (as defined in the Moran Acquisition Agreement) (the "PUT
PAYMENTS"); PROVIDED, HOWEVER, that (x) no such Put Payments shall be made to
such Initial Turecamo Stockholders or their Permitted Transferees at any time
prior to April 1, 2001 and (y) no such Put Payments shall be made to such
Initial Turecamo Stockholders
<PAGE>
and their Permitted Transferees who are employees of the Borrower or any of
its Subsidiaries at any time prior to April 1, 2003; PROVIDED, FURTHER, that
the Borrower shall not be permitted to make such Put Payments unless (A) (x)
in the case of the first Put Payment, a new Visual Survey is delivered to the
Administrative Agent and the Lender Parties and (y) in the case of any
subsequent Put Payments, a Desk Top Appraisal is delivered to the
Administrative Agent and the Lender Parties; PROVIDED, HOWEVER, that, in the
case of clause (y) above, if the most recent Visual Survey is more than three
(3) years old at the time any such Put Payments are to be made, then a new
Visual Survey must be completed and delivered to the Administrative Agent and
the Lender Parties prior to the making of such Put Payments; (B) the Borrower
is in compliance, on a pro forma basis, with each of the financial covenants
set forth in Section 6.17 and Article 8, after giving effect to the making of
the Put Payments; and (C) the Unused Revolving Credit Commitment is an amount
equal to or greater than $10,000,000, after giving effect to the making of
the Put Payments. Notwithstanding the foregoing, in the case of the death or
disability (as used or defined in the Stockholders Agreement) of an Initial
Turecamo Stockholder, the restrictions set forth in the provisos in this
clause (e) shall not be applicable with respect to any Put Payments to be
made to such deceased or disabled (as used or defined in the Stockholders
Agreement) Initial Turecamo Stockholder;
(f) The Borrower may redeem or repurchase its capital stock held by
any of the Moran Individuals and may make Compensation Payments to the Moran
Individuals in respect of such redemption or purchase, but solely to the extent
expressly permitted under, and subject to the limitations set forth in, Section
6.19; and
(g) The Borrower or its Subsidiaries may make distributions or
payments to the Initial Turecamo Stockholders in an amount equal to (i) the
aggregate Tax Distributions (as defined in the Moran Acquisition Documents) in
respect of the period from January 1, 1998 through the date of closing of the
transactions as contemplated by the Moran Acquisition Agreement MINUS (ii) all
Tax Distributions previously distributed by the Borrower or its Subsidiaries to
the Initial Turecamo Stockholders in respect of the period from January 1, 1998
through the date of closing of the transactions as contemplated by the Moran
Acquisition Agreement pursuant to the Moran Acquisition Documents.
SECTION 6.8 CHANGE IN NATURE OF BUSINESS. Make, or permit any of its
Subsidiaries to make, any material change in the nature of its business, taken
as a whole, as carried on at the date hereof.
SECTION 6.9 CHARTER AMENDMENTS. Amend, or permit any of its Subsidiaries
to amend, its certificate or articles of incorporation or bylaws if such
amendment could reasonably be expected to impair the interests or rights of the
Administrative Agent or any Lender Party.
SECTION 6.10 ACCOUNTING CHANGES. Make or permit, or permit any of its
Subsidiaries to make or permit, any change in (a) accounting policies or
reporting practices, except as mandated by GAAP or as provided in Section
1.3(b), or (b) its Fiscal Year.
<PAGE>
SECTION 6.11 PREPAYMENTS, ETC. OF DEBT. (a) Prepay, redeem, purchase,
defease or otherwise satisfy prior to the scheduled maturity thereof in any
manner, or make any payment in violation of any subordination terms of, any
Debt, other than (i) the prepayment the Advances in accordance with the terms of
this Agreement, (ii) regularly scheduled or required repayments or redemptions
of Surviving Debt (including the Senior Notes), (iii) redemption of the Senior
Notes with the proceeds of the Term A Advances as contemplated herein and/or
redemption of the Senior Notes by the Borrower and reimbursed with such
proceeds, (iv) any prepayment of any Debt permitted by Section 6.2(b), and (v)
the prepayment of any purchase money Debt or Capitalized Lease Obligations
permitted hereunder (A) as a result of the application of casualty insurance or
condemnation proceeds, or (B) for the purposes of refinancing such purchase
money Debt or Capitalized Lease Obligations, PROVIDED that if such refinancing
is consummated with the proceeds of a Resolving Credit Advance (x) the terms of
any such refinancing, and of any agreement entered into and of any instrument
issued in connection therewith are no more onerous, taken as a whole, than the
purchase money Debt or Capitalized Lease being refinanced or are consented to in
writing by the Administrative Agent, with the approval of the Required Lenders;
and (y) the principal amount of such purchase money Debt or Capitalized Lease
Obligation shall not be increased above the amount which, after giving effect to
all other purchase money Debt or Capitalized Lease Obligations, as applicable,
is permitted hereunder, and the direct and contingent obligors therefor would
not be changed, as a result of or in connection with such refinancing; (b)
amend, modify or change in any manner any term or condition of any Surviving
Debt if such amendment, modification or change could reasonably be expected to
have a Material Adverse Effect, or (c) permit any of its Subsidiaries to do any
of the foregoing other than to repay any Debt payable to the Borrower or any
other Subsidiary.
SECTION 6.12 AMENDMENT, ETC. OF MORAN ACQUISITION DOCUMENTS. Cancel or
terminate any Moran Acquisition Document or consent to or accept any
cancellation or termination thereof, amend, modify or change in any manner any
term or condition of any Moran Acquisition Document or give any consent, waiver
or approval thereunder, waive any default under or any breach of any term or
condition of any Moran Acquisition Document or take any other action in
connection with any Moran Acquisition Document that would, in any such case,
impair the value of the interests or rights of the Borrower thereunder, or would
impair the interests or rights of the Administrative Agent or any Lender Party,
or permit any of its Subsidiaries to do any of the foregoing.
SECTION 6.13 INTENTIONALLY OMITTED.
SECTION 6.14 NEGATIVE PLEDGE. Enter into or suffer to exist, or permit any
of the Subsidiaries of the Borrower to enter into or suffer to exist, any
agreement prohibiting or conditioning the creation or assumption of any Lien
upon any of its properties or assets, other than as provided in the Loan
Documents or expressly permitted in this Agreement and except for prohibitions
(i) against assignment in customer contracts; (ii) restrictions under operating
leases and/or charters (under which charters the Borrower or any Subsidiary
charters a vessel from the
<PAGE>
shipowner) and which restrictions relate to the leased property or chartered
vessel, and (iii) restrictions under agreements or instruments relating to
Debt permitted under Section 6.2(c)(i) provided such restrictions relate only
to the property purchased with the applicable purchase money Debt or to the
property which is the subject of the Capitalized Lease, as the case may be.
SECTION 6.15 PARTNERSHIPS, NEW SUBSIDIARIES.
(a) Become a general partner in any general or limited partnership or
joint venture, or permit any of its Subsidiaries to do so except with respect to
the Garbage Investment and Investments permitted under Section 6.6(f) or 6.6(k),
or
(b) Create any new Subsidiary, unless such newly created Subsidiary
shall become a Guarantor pursuant to the terms of the Subsidiary Guaranty and an
additional grantor pursuant to the terms of the Security Agreement and
Intellectual Property Security Agreement and all shares of the capital stock of
such Subsidiary are pledged to the Administrative Agent pursuant to the Security
Agreement; PROVIDED, HOWEVER, that the Garbage Subsidiary (or any Subsidiary
thereof) and Moran Insurance shall not be required to be a Guarantor under the
Subsidiary Guaranty or an additional grantor under the Security Agreement and
Intellectual Property Security Agreement.
SECTION 6.16 SPECULATIVE TRANSACTIONS. Engage, or permit any of its
Subsidiaries to engage, in any transaction involving commodity options or
futures contracts or derivatives or any similar speculative transactions, except
for (i) Bank Hedge Agreements expressly permitted under Section 5.14; (ii) Hedge
Agreements with respect to permitted purchase money Debt and permitted
Capitalized Lease Obligations, and (iii) Hedge Agreements with respect to fuel
used in the business of the Borrower and its Subsidiaries;
SECTION 6.17 INVESTMENT CAPITAL EXPENDITURES. Make, or permit any of its
Subsidiaries to make, any Investment Capital Expenditures that would cause the
aggregate of all such Investment Capital Expenditures made by the Borrower and
its Subsidiaries in any period set forth below to exceed the amount set forth
below for such period:
<TABLE>
<CAPTION>
PERIOD AMOUNT
------ ------
<S> <C>
Fiscal Year 1998 $24,500,000
Fiscal Year 1999 and each Fiscal Year thereafter $15,000,000
</TABLE>
;PROVIDED, HOWEVER, that amounts permitted to be expended in a Fiscal Year that
are not expended in such Fiscal Year, but not in excess of $5,000,000 of such
prior year's unused amount (not including any amount permitted to be carried
forward from a prior year) shall be permitted to be expended in any subsequent
Fiscal Year, PROVIDED that the aggregate of the Investment Capital Expenditures
made in any Fiscal Year after Fiscal Year 1998 does not exceed $20,000,000.
SECTION 6.18 ISSUANCE OF STOCK. The Borrower will not, and will not permit
any of its
<PAGE>
Subsidiaries to, directly or indirectly, issue, sell, assign, pledge
or otherwise encumber or dispose of any shares of capital stock of the Borrower
or any Subsidiary of the Borrower, except (a) to the Borrower, and in the case
of capital stock of a Subsidiary also to any Wholly-Owned Subsidiary, (b) to
qualify directors if required by applicable law, (c) as set forth in SCHEDULE
6.18, (d) pursuant to the Moran Acquisition in accordance with the Moran
Acquisition Documents, (e) other issuances of the stock of the Borrower so long
as such issuances do not result in a Change of Control or other Default or Event
of Default and the stock issued under this clause (e) is pledged as part of the
Collateral, and (f) issuance of the capital stock of the Garbage Subsidiary or
of a Subsidiary of a Garbage Subsidiary.
SECTION 6.19 REDEMPTION AND RETIREMENT PAYMENTS. Make, or permit any of
its Subsidiaries to make, any payments to redeem or repurchase its capital
stock, except that the Borrower may (a) redeem or repurchase its capital stock
held by any of the Moran Individuals and may make payments in respect of such
redemption or repurchase; PROVIDED, HOWEVER, that (i) the aggregate amount of
all such redemption and repurchase payments made by the Borrower shall not
exceed $5,000,000 (collectively, the "COMPENSATION PAYMENTS") and (ii) after
giving effect to any such Compensation Payments, no Default or Event of Default
shall exist under Section 9.3 as a result of the Borrower's failure to comply
with Article 8, and Unused Availability is not less than $10,000,000; and (b)
make the Put Payments as provided herein.
ARTICLE 7
REPORTING REQUIREMENTS
While any of the Commitments is outstanding and, in the event any Advance
remains outstanding, so long as the Borrower or any other Loan Party is indebted
to any of the Lender Parties or the Administrative Agent under any of the Loan
Documents, any Letter of Credit is outstanding and until payment in full of the
Notes and full and complete performance of all of its other obligations arising
hereunder, the Borrower shall furnish to the Administrative Agent and Lender
Parties:
SECTION 7.1 DEFAULT NOTICE. As soon as possible and in any event within
five (5) Business Days after a Responsible Officer of the Borrower obtains
knowledge of the occurrence of any Default or any event, development or
occurrence reasonably likely to have a Material Adverse Effect, a statement of
the chief financial officer of the Borrower setting forth details of such
Default or event, development or occurrence and the action that the Borrower has
taken and proposes to take with respect thereto.
SECTION 7.2 INTENTIONALLY OMITTED.
SECTION 7.3 QUARTERLY FINANCIALS. As soon as available and in any event
within (x) with respect to the period commencing on the Closing Date and ending
on the last day of the second full fiscal quarter thereafter, sixty (60) days
after the end of such two fiscal quarters, and (y) thereafter, forty-five (45)
days after the end of each fiscal quarter of each Fiscal Year:
<PAGE>
(a) a consolidated (or combined, as applicable) balance sheet of the
Borrower and its Subsidiaries, as of the end of such quarter and a consolidated
(or combined, as applicable) statement of income and a consolidated (or
combined, as applicable) statement of cash flows of the Borrower and its
Subsidiaries, for the period commencing at the end of the previous fiscal
quarter and ending with the end of such fiscal quarter; and
(b) a consolidated (or combined, as applicable) statement of income
and a consolidated (or combined, as applicable) statement of cash flows of the
Borrower and its Subsidiaries for the period commencing at the end of the
previous Fiscal Year and ending with the end of such fiscal quarter, setting
forth in each case in comparative form the corresponding figures for the
corresponding period of the preceding Fiscal Year and the corresponding figures
from the budgets for such period and for the Fiscal Year which includes such
period,
all of the foregoing in reasonable detail and duly certified, on behalf of the
Borrower, by the chief financial officer of the Borrower as having been prepared
in accordance with GAAP (subject to normal year-end audit adjustments), together
with (i) a Compliance Certificate of said officer stating, INTER ALIA, on behalf
of the Borrower, that no Default has occurred and is continuing or, if a Default
has occurred and is continuing, a statement as to the nature thereof and the
action that the Borrower has taken and proposes to take with respect thereto and
(ii) a schedule in form satisfactory to the Administrative Agent of the
computations used by the Borrower in determining compliance with the financial
covenants contained in Article 8, PROVIDED, that in the event of any change in
GAAP used in the preparation of such financial statements, the Borrower shall
also provide, if necessary for the determination of compliance with Article 8, a
statement of reconciliation conforming such financial statements to GAAP.
SECTION 7.4 ANNUAL FINANCIALS. As soon as available and in any event
within (x) with respect to the Fiscal Year ending December 31, 1998, one hundred
twenty (120) days after the end of such Fiscal Year, and (y) thereafter, ninety
(90) days after the end of each Fiscal Year, a copy of the annual audit report
for such year for the Borrower and its Subsidiaries, including therein a
consolidated (or combined, as applicable) balance sheet of the Borrower and its
Subsidiaries, as of the end of such Fiscal Year and a consolidated (or combined,
as applicable) statement of income and a consolidated (or combined, as
applicable) statement of cash flows of the Borrower and its Subsidiaries, for
such Fiscal Year, in each case setting forth in comparative form (in accordance
with GAAP) the corresponding figures for the prior Fiscal Year and in each case
accompanied by an unqualified opinion of an independent certified public
accountant of recognized national standing reasonably acceptable to the
Administrative Agent, together (except for the fiscal year ending December 31,
1998) with (a) a letter of such accounting firm to the Administrative Agent and
Lender Parties stating that in the course of the regular audit of the business
of the Borrower and its Subsidiaries, which audit was conducted by such
accounting firm in accordance with generally accepted auditing standards,
nothing has come to the attention of such accounting firm that caused it to
believe that the Borrower or its Subsidiaries was not in compliance with Article
8 or Section 6.17 of this Agreement, or if, in the opinion of such
<PAGE>
accounting firm, such a Default has occurred and is continuing, a statement
as to the nature thereof; PROVIDED, that in the event of any change in GAAP
used in the preparation of such financial statements, the Borrower shall also
provide, if necessary for the determination of compliance with Article 8, a
statement of reconciliation conforming such financial statements to GAAP and
(b) a certificate of the Chief Financial Officer of the Borrower stating, on
behalf of the Borrower, that no Default has occurred and is continuing or, if
a Default has occurred and is continuing, a statement as to the nature
thereof and the action that the Borrower has taken and proposes to take with
respect thereto. With respect to the financial statements covering the Fiscal
Year ending December 31, 1998, such financial statements shall be accompanied
by a Compliance Certificate and a schedule of the type provided in clauses
(i) and (ii), respectively, of Section 7.3 above.
SECTION 7.5 ANNUAL FORECASTS. As soon as available and in any event no
later than ninety (90) days after the end of each Fiscal Year, (i) an annual
operating budget prepared by management of the Borrower, including projected
consolidated and consolidating balance sheets, income statements and cash flow
statements on a quarterly basis, and (ii) a business plan, in each case for the
Fiscal Year following such Fiscal Year then ended and in form reasonably
satisfactory to the Administrative Agent.
SECTION 7.6 ERISA EVENTS AND ERISA REPORTS. (i) Promptly and in any event
within twenty (20) days after any Loan Party or any ERISA Affiliate knows or has
reason to know that any ERISA Event has occurred, a statement of the Chief
Financial Officer of the Borrower describing such ERISA Event and the action, if
any, that such Loan Party or such ERISA Affiliate has taken and proposes to take
with respect thereto and (ii) on the date any records, documents or other
information must be furnished to the PBGC with respect to any Plan pursuant to
Section 4010 of ERISA, a copy of such records, documents and information.
SECTION 7.7 PLAN TERMINATIONS. Promptly and in any event within five (5)
Business Days after receipt thereof by any Loan Party or any ERISA Affiliate,
copies of each notice from the PBGC stating its intention to terminate any Plan
or to have a trustee appointed to administer any Plan or correspondence from the
PBGC indicating it is considering termination of any Plan.
SECTION 7.8 ACTUARIAL REPORTS. Promptly after same is requested by the
Administrative Agent, a copy of the annual actuarial valuation report for each
Plan the funded current liability percentage (as defined in Section 302(d)(8)(B)
of ERISA) of which is less than 90% or the unfunded current liability (as
defined in Section 302(d)(8)(A) of ERISA) of which exceeds $500,000.
SECTION 7.9 PLAN ANNUAL REPORTS. Upon the request, from time to time, of
the Administrative Agent, copies of each Schedule B (Actuarial Information) to
the annual report (Form 5500 Series) with respect to each Plan.
SECTION 7.10 ANNUAL PLAN SUMMARIES. Promptly after same is requested by
the Administrative Agent, an annual summary of actuarial valuation and other
information with
<PAGE>
respect to each Plan in form, substance and detail reasonably satisfactory to
the Administrative Agent.
SECTION 7.11 MULTIEMPLOYER PLAN NOTICES. Promptly and in any event within
five (5) Business Days after receipt thereof by any Loan Party or any ERISA
Affiliate from the sponsor of a Multiemployer Plan, copies of each notice
concerning, or other correspondence with respect to, (i) the imposition of
Withdrawal Liability by any such Multiemployer Plan, (ii) the reorganization or
termination, within the meaning of Title IV of ERISA, of any such Multiemployer
Plan or (iii) the amount of liability incurred, or that may be incurred, by such
Loan Party or any ERISA Affiliate in connection with any event described in
clause (i) or (ii).
SECTION 7.12 LITIGATION. Promptly after the commencement thereof, notice
of all actions, suits, investigations, litigation and proceedings before any
court or governmental department, commission, board, bureau, agency or
instrumentality, Federal, state, local or foreign, affecting any Loan Party or
any of its Subsidiaries which would reasonably be expected to have a Material
Adverse Effect and, promptly after the occurrence thereof, notice of any change
in the status or the financial effect on any Loan Party or any of its
Subsidiaries of the Disclosed Litigation from that described on SCHEDULE 4.9
that could reasonably be expected to have a Material Adverse Effect.
SECTION 7.13 SECURITIES REPORTS. Promptly after the sending or filing
thereof, copies of all proxy statements, financial statements and reports that
any Loan Party or any of its Subsidiaries sends to its stockholders, and copies
of all regular, periodic and special reports, and all registration statements,
that any Loan Party or any of its Subsidiaries files with the Securities and
Exchange Commission or any other governmental authority or with any national
securities exchange.
SECTION 7.14 CREDITOR REPORTS. Promptly after the furnishing thereof,
copies of any statement or report furnished to any other holder of the
securities of any Loan Party or of any of its Subsidiaries pursuant to the terms
of any indenture, loan or credit agreement or similar agreement or instrument
and not otherwise required to be furnished to the Lender Parties pursuant to any
other clause of this Article 7.
SECTION 7.15 INTENTIONALLY OMITTED.
SECTION 7.16 REVENUE AGENT REPORTS. Promptly after same is requested by
the Administrative Agent, copies of all Revenue Agent Reports (Internal Revenue
Service Form 886), or other written proposals of the Internal Revenue Service,
that propose, determine or otherwise set forth any adjustments to the Federal
income tax liability of the affiliated group (within the meaning of Section
1504(a)(1) of the Internal Revenue Code) of which the Borrower is a member
aggregating $250,000 or more.
SECTION 7.17 ENVIRONMENTAL CONDITIONS. Promptly after the assertion or
occurrence
<PAGE>
thereof, notice of any Environmental Action against or of any noncompliance
by any Loan Party or any of its Subsidiaries with any Environmental Law or
Environmental Permit that could reasonably be expected to have a Material
Adverse Effect.
SECTION 7.18 INSURANCE. Upon the request, from time to time, of the
Administrative Agent, promptly and in any event within thirty (30) days after
any such request, a report summarizing the insurance coverage (specifying type,
amount and carrier) in effect for each Loan Party and its Subsidiaries and
containing such additional information as the Administrative Agent may
reasonably request.
SECTION 7.19 BORROWING BASE CERTIFICATE. As soon as available and in any
event within thirty (30) days after the end of each month, a Borrowing Base
Certificate, as at the end of the previous month, certified by the chief
financial officer of the Borrower.
SECTION 7.20 MANAGEMENT LETTERS. As soon as available and in any event
within ten (10) Business Days after the receipt thereof, copies of any
"management letter" or similar letter received by the Borrower or its Board of
Directors (or any Committee thereof) from its independent public accountants.
SECTION 7.21 VISUAL SURVEYS AND DESK TOP APPRAISALS.
(a) A Desk Top Appraisal, at the expense of the Borrower, but in no
event no more than once per year per Vessel.
(b) A new Visual Survey, at the expense of the Borrower, if the most
recent Visual Survey is more than three (3) years old at the time any Put
Payments are to be made.
SECTION 7.22 VESSELS. Upon the request, from time to time, of the
Administrative Agent, promptly and in any event within ten (10) Business Days
after any such request, a report supplementing Schedule 4.29, including a list
of all Vessels disposed of by the Loan Party that is the owner of such Vessel
during such Fiscal Year and a description of such other changes in the
information included in such Schedule as may be necessary for such Schedule to
remain accurate and complete in all respects.
SECTION 7.23 OTHER INFORMATION. Such other information respecting the
business, condition (financial or otherwise), operations, performance,
properties or prospects of any Loan Party or any of its Subsidiaries or the
Collateral as the Administrative Agent or any Lender Party (through the
Administrative Agent) may from time to time reasonably request.
ARTICLE 8
FINANCIAL COVENANTS
<PAGE>
So long as any Advance shall remain unpaid, any Letter of Credit shall be
outstanding or any Lender Party shall have any Commitment hereunder, the
Borrower will:
SECTION 8.1 CONSOLIDATED FUNDED DEBT TO EBITDA RATIO. Maintain as of the
end of each fiscal quarter of the Borrower a ratio of Consolidated Funded Debt
to EBITDA for the most recently completed four fiscal quarters of the Borrower
of not more than the ratio set forth below:
<TABLE>
<CAPTION>
FOUR FISCAL QUARTERS ENDING ON: RATIO
------------------------------- ------
<S> <C>
December 31, 1998 4.00 to 1.00
March 31, 1999 4.00 to 1.00
June 30, 1999 4.00 to 1.00
September 30, 1999 3.75 to 1.00
December 31, 1999 3.75 to 1.00
March 31, 2000 3.75 to 1.00
June 30, 2000 3.50 to 1.00
September 30, 2000 3.50 to 1.00
December 31, 2000 3.50 to 1.00
March 31, 2001 3.50 to 1.00
June 30, 2001 3.25 to 1.00
September 30, 2001 3.25 to 1.00
December 31, 2001 and each March 31, June 30, 3.00 to 1.00
September 30 and December 31 thereafter
</TABLE>
SECTION 8.2 INTEREST COVERAGE RATIO. Maintain as of each date set forth
below, a ratio of (i) EBITDA for the most recently completed four fiscal
quarters of the Borrower to (ii) Consolidated cash Interest Expense for such
period of not less than the ratio set forth below for such period:
<TABLE>
<CAPTION>
FOUR FISCAL QUARTERS ENDING ON: RATIO
------------------------------- ------
<S> <C>
December 31, 1998 2.50 to 1.00
March 31, 1999 2.50 to 1.00
June 30, 1999 2.50 to 1.00
September 30, 1999 2.50 to 1.00
December 31, 1999 2.50 to 1.00
March 31, 2000 2.75 to 1.00
June 30, 2000 2.75 to 1.00
September 30, 2000 2.75 to 1.00
December 31, 2000 2.75 to 1.00
March 31, 2001 and each June 30, September 30, December 3.00 to 1.00
31 and March 31 thereafter
</TABLE>
<PAGE>
SECTION 8.3 FIXED CHARGE COVERAGE RATIO. Maintain as of the end of each
fiscal quarter of the Borrower a Fixed Charge Coverage Ratio for the most
recently completed four fiscal quarters of the Borrower of not less than the
ratio set forth below for such period:
<TABLE>
<CAPTION>
FOUR FISCAL QUARTERS ENDING ON: RATIO
------------------------------- ------
<S> <C>
December 31, 1998 1.25 to 1.00
March 31, 1999 1.25 to 1.00
June 30, 1999 1.25 to 1.00
September 30, 1999 1.25 to 1.00
December 31, 1999 1.25 to 1.00
March 31, 2000 1.25 to 1.00
June 30, 2000 1.25 to 1.00
September 30, 2000 1.25 to 1.00
December 31, 2000 1.25 to 1.00
March 31, 2001 1.25 to 1.00
June 30, 2001 1.25 to 1.00
September 30, 2001 1.25 to 1.00
December 31, 2001 1.25 to 1.00
March 31, 2002 and each June 30, September 30, December 1.15 to 1.00
31 and March 31 thereafter
</TABLE>
SECTION 8.4 MINIMUM NET WORTH. Maintain, as of the last day of each
fiscal quarter, an excess of Consolidated total assets over Consolidated total
liabilities in accordance with GAAP, of the Borrower and its Subsidiaries of not
less than (i) eighty-five percent (85%) of the excess of Consolidated total
assets over Consolidated total liabilities of the Borrower and its Subsidiaries
at the Closing Date PLUS (ii) 100% of Consolidated positive net income of the
Borrower and its Subsidiaries as at March 31, and each June 30, September 30,
December 31 and March 31 thereafter computed on a cumulative basis for said
entire period.
For purposes of determining net worth in this Section 8.4, (i) the
following shall be excluded from the determination of such net income: (A) 100%
of Consolidated net gain or loss on the sale or other disposition of any Vessel
owned by the Borrower or any of its Subsidiaries; PROVIDED, HOWEVER, that, with
respect to any loss of such Vessels owned by the Borrower or any of its
Subsidiaries, such loss shall be net of any insurance payments received in
connection with such loss, (B) any redemption premiums or charges for deferred
costs incurred in connection with the Senior Notes and/or the redemption
thereof, (C) the Compensation Payments and (D) any Put Payments to the extent
expressly permitted to be made under clause (e) of Section 6.7; and (ii) the
liquidation value, determined as of the date of determination of net worth, of
the non-redeemable preferred stock of the Borrower held by the holders of such
preferred stock as of the Closing Date, together with any such preferred stock
acquired by employees upon the exercise of stock options or acquired by the
Turecamo Stockholders pursuant to the indemnity provisions of the Moran
Acquisition Agreement (the "NON-REDEEMABLE PREFERRED STOCK") and
<PAGE>
the capital stock subject to redemption in connection with the Put Payments
and/or the Compensation Payments shall be included in such determination as
shareholders equity.
ARTICLE 9
EVENTS OF DEFAULT
If any of the following ("EVENTS OF DEFAULT") shall occur and be
continuing:
SECTION 9.1 PAYMENT. (a) The Borrower shall fail to pay any principal of
any Advance when the same shall become due and payable or (b) the Borrower shall
fail to pay any interest on any Advance, or any Loan Party shall fail to make
any other payment under any Loan Document, in each case under this clause (b)
within five (5) Business Days after the same becomes due and payable; or
SECTION 9.2 REPRESENTATIONS AND WARRANTIES. Any representation or
warranty made by any Loan Party (or any of its officers) under or in connection
with any Loan Document shall prove to have been incorrect in any material
respect when made or confirmed; or
SECTION 9.3 CERTAIN COVENANTS. The Borrower shall fail to perform or
observe any term, covenant or agreement contained in Section 2.14, 5.5 or 5.13,
Article 6 or Article 8; or
SECTION 9.4 OTHER COVENANTS. Any Loan Party shall fail to perform any
other term, covenant or agreement contained in any Loan Document on its part to
be performed or observed if such failure shall remain unremedied for thirty (30)
days after the earlier of the date on which (a) a Responsible Officer of any
Loan Party becomes aware of such failure or (b) written notice thereof shall
have been given to the Borrower by the Administrative Agent or any Lender Party;
or
SECTION 9.5 OTHER DEFAULTS. Any Loan Party or any of its Subsidiaries
shall fail after any applicable grace period to pay any principal of, premium
or interest on or any other amount payable in respect of any Debt that is
outstanding in a principal or notional amount of at least $1,000,000 either
individually or in the aggregate (but excluding Debt outstanding hereunder)
of such Loan Party or such Subsidiary (as the case may be), when the same
becomes due and payable (whether by scheduled maturity, required prepayment,
acceleration, demand or otherwise); or any other event shall occur or
condition shall exist (after any applicable grace period) under any agreement
or instrument relating to any such Debt, in each case if the effect of such
event or condition is to accelerate, or to permit the acceleration of, the
maturity of such Debt or otherwise to cause, or to permit the holder thereof
to cause, such Debt to mature, in each case prior to the stated maturity
thereof; or any such Debt shall be declared to be due and payable or required
to be prepaid or redeemed (other than by a regularly scheduled required
prepayment or redemption or as otherwise permitted under Section 6.11),
purchased or defeased, or an offer to prepay, redeem, purchase or defease
such Debt shall be required to be made, in each case prior to the stated
maturity thereof; or
<PAGE>
SECTION 9.6 BANKRUPTCY, ETC.. Any Loan Party or any of its Subsidiaries
shall generally not pay its debts as such debts become due, or shall admit in
writing its inability to pay its debts generally, or shall make a general
assignment for the benefit of creditors; or any proceeding shall be instituted
by or against any Loan Party or any of its Subsidiaries seeking to adjudicate it
a bankrupt or insolvent, or seeking liquidation, winding up, reorganization,
arrangement, adjustment, protection, relief, or composition of it or its debts
under any law relating to bankruptcy, insolvency or reorganization or relief of
debtors, or seeking the entry of an order for relief or the appointment of a
receiver, trustee or other similar official for it or for any substantial part
of its property and, in the case of any such proceeding instituted against it
(but not instituted by it) that is being diligently contested by it in good
faith, either such proceeding shall remain undismissed or unstayed for a period
of sixty (60) days or any of the actions sought in such proceeding (including,
without limitation, the entry of an order for relief against, or the appointment
of a receiver, trustee, custodian or other similar official for, it or any
substantial part of its property) shall occur, or any Loan Party or any of its
Subsidiaries shall take any corporate action to authorize any of the actions set
forth above in this Section 9.6; or
SECTION 9.7 JUDGMENTS. Any judgment or order for the payment of money in
excess of $1,000,000 (excluding that portion of such a judgment or order which
is fully covered by insurance for which the appropriate insurer has acknowledged
responsibility in writing) shall be rendered against any Loan Party or any of
its Subsidiaries and such judgments or orders shall not have been vacated or
discharged within 30 days from entry thereof and the Borrower shall not, within
said period of 30 days, or such longer period during which execution of the same
shall have been stayed, appeal therefrom and cause the execution thereof to be
stayed pending such appeal; or
SECTION 9.8 LOAN DOCUMENTS. Any material provision of any Loan Document
after delivery thereof shall for any reason cease to be valid and binding on or
enforceable against any Loan Party which is party to it, or any such Loan Party
shall so state in writing; or
SECTION 9.9 LIENS. Any Collateral Document after delivery thereof shall
for any reason (other than failure to file continuation statements or other
circumstances not the fault of the Borrower) cease to or otherwise not create a
valid and perfected first and only priority lien, subject to any Lien permitted
hereunder, on and security interest in all material Collateral purported to be
covered thereby; or
SECTION 9.10 CHANGE OF CONTROL. Any Change of Control shall occur; or
SECTION 9.11 ERISA EVENTS.
(a) Any ERISA Event shall have occurred with respect to a Plan and
the sum (determined as of the date of occurrence of the last such ERISA Event)
of the Insufficiency of such Plan and the Insufficiency of any and all other
Plans with respect to which an ERISA Event
<PAGE>
shall have occurred and then exist (or the liability of the Loan Parties and
the ERISA Affiliates related to such ERISA Events) which could reasonably be
expected to have a Material Adverse Effect; or
(b) Any Loan Party or any ERISA Affiliate shall have been notified by
the sponsor of a Multiemployer Plan that it has incurred Withdrawal Liability to
such Multiemployer Plan in an amount that, when aggregated with all other
amounts required to be paid to Multiemployer Plans by the Loan Parties and the
ERISA Affiliates as Withdrawal Liability (determined as of the date of such
notification), could reasonably be expected to have a Material Adverse Effect;
or
(c) Any Loan Party or any ERISA Affiliate shall have been notified by
the sponsor of a Multiemployer Plan that such Multiemployer Plan is in
reorganization or is being terminated, within the meaning of Title IV of ERISA,
and as a result of such reorganization or termination the aggregate annual
contributions of the Loan Parties and the ERISA Affiliates to all Multiemployer
Plans that are then in reorganization or being terminated have been or will be
increased over the amounts contributed to such Multiemployer Plans for the plan
years of such Multiemployer Plans immediately preceding the plan year in which
such reorganization or termination occurs by an amount which could reasonably be
expected to have a Material Adverse Effect; or
SECTION 9.12 BORROWING BASE DEFICIENCY. Any Borrowing Base Deficiency
shall occur and be continuing which is not eliminated by the Borrower's
prepayment within seven (7) Business Days of then outstanding Revolving Credit
Advances in an amount sufficient to eliminate such Borrowing Base Deficiency; or
SECTION 9.13 THE VESSELS.
(a) A proceeding shall have been commenced on behalf of the United
States to effect the forfeiture of any of the Vessels or any notice shall have
been issued on behalf of the United States of the seizure of any of the Vessels
or to the effect that the certificate of documentation of any of the Vessels is
subject to cancellation or revocation, for any reason whatsoever and such
forfeiture could reasonably be expected to have a Material Adverse Effect; or
(b) Any Loan Party which owns a Vessel shall lose its status as a
citizen of the United States for the purpose of operating vessels in the
coastwise trade in accordance with Section 2 of the Shipping Act of 1916, as
amended;
then, and in any such event, the Administrative Agent (i) shall at the request,
or may with the consent, of the Required Lenders, by notice to the Borrower,
declare all of the Commitments of each appropriate Lender (other than the
Commitment in respect of Letter of Credit Advances by the Issuing Bank or a
Revolving Credit Lender pursuant to Section 2.3(c)) and of the Issuing
<PAGE>
Bank to issue Letters of Credit to be terminated, whereupon the same shall
forthwith terminate (PROVIDED, HOWEVER, that with respect to the Term A
Commitment only, such termination may occur only in the event of an Event of
Default arising out of any Section enumerated in Section 3.4(a)(ii)), and
(ii) shall at the request, or may with the consent, of the Required Lenders,
(A) by notice to the Borrower, declare the Notes, all interest thereon and
all other amounts payable under this Agreement and the other Loan Documents
to be forthwith due and payable, whereupon the Notes, all such interest and
all such other amounts shall become and be forthwith due and payable, without
presentment, demand, protest or further notice of any kind, all of which are
hereby expressly waived by the Borrower and (B) by notice to each party
required under the terms of any agreement in support of which a Standby
Letter of Credit is issued, request that all Obligations under such agreement
be declared to be due and payable; PROVIDED, HOWEVER, that in the event of an
actual entry of an order for relief with respect to any Loan Party or any of
its Subsidiaries under the Federal Bankruptcy Code, (x) the obligation of
each Lender to make Advances (other than Letter of Credit Advances by the
Issuing Bank or a Revolving Credit Lender pursuant to Section 2.3(c)) and of
the Issuing Bank to issue Letters of Credit shall automatically be terminated
and (y) the Notes, all such interest and all such amounts shall automatically
become and be due and payable, without presentment, demand, protest or any
notice of any kind, all of which are hereby expressly waived by the Borrower.
If any Event of Default shall have occurred and be continuing, the
Administrative Agent may, or shall at the request of the Required Lenders,
irrespective of whether it is taking any of the actions described in Article 9
or otherwise, make demand upon the Borrower to, and forthwith upon such demand
the Borrower will, pay to the Administrative Agent on behalf of the Lender
Parties in same day funds at the Administrative Agent's office designated in
such demand, for deposit in the L/C Cash Collateral Account, an amount equal to
the aggregate Available Amount of all Letters of Credit then outstanding. If at
any time the Administrative Agent determines that any funds held in the L/C Cash
Collateral Account are subject to any prior right or claim of any Person other
than the Administrative Agent and the Lender Parties or that the total amount of
such funds is less than the aggregate Available Amount of all Letters of Credit,
the Borrower will, forthwith upon demand by the Administrative Agent, pay to the
Administrative Agent, as additional funds to be deposited and held in the L/C
Cash Collateral Account, an amount equal to the excess of (a) such aggregate
Available Amount over (b) the total amount of funds, if any, then held in the
L/C Cash Collateral Account that the Administrative Agent determines to be free
and clear of any such right and claim.
ARTICLE 10
THE ADMINISTRATIVE AGENT
SECTION 10.1 AUTHORIZATION AND ACTION.
(a) Each Lender Party (in its capacities as a Lender, the Issuing
Bank and/or any Hedge Bank) hereby appoints the Administrative Agent as such and
as "Trustee" under the
<PAGE>
Preferred Ship Mortgages and authorizes it to take such action as agent on
its behalf and to exercise such powers and discretion under this Agreement
and the other Loan Documents (including the Preferred Ship Mortgages) as are
delegated to it by the terms hereof and thereof, together with such powers
and discretion as are reasonably incidental thereto. The Administrative
Agent shall have no duties or responsibilities except those expressly set
forth in this Agreement and the other Loan Documents and shall not be a
fiduciary for any Lender Party or Hedge Bank.
(b) As to any matters not expressly provided for by the Loan
Documents (including, without limitation, enforcement or collection of the
Notes), the Administrative Agent shall not be required to exercise any
discretion or take any action, but shall be required to act or to refrain from
acting (and shall be fully protected in so acting or refraining from acting)
upon the instructions of the Required Lenders, and such instructions shall be
binding upon all Lender Parties and all holders of Notes and any action taken or
failure to act pursuant thereto shall be binding on all the Lender Parties;
PROVIDED, HOWEVER, that the Administrative Agent shall not be required to take
any action that exposes the Administrative Agent to personal liability or that
is contrary to this Agreement, any other Loan Document or applicable law and
except for action expressly required by the Administrative Agent hereunder or
under the Loan Documents, the Administrative Agent shall in all cases be fully
justified in failing or refusing to act hereunder or thereunder unless it shall
be indemnified to its satisfaction by the Lender Parties and Hedge Banks against
any and all liability and expense that may be incurred by it by reason of taking
or continuing to take any such action.
SECTION 10.2 AGENT'S RELIANCE, ETC. Neither the Administrative Agent nor
any of its directors, officers, agents or employees shall be liable for any
action taken or omitted to be taken by it or them under or in connection with
the Loan Documents, except for its or their own gross negligence or willful
misconduct. Without limitation of the generality of the foregoing, the
Administrative Agent: (a) may treat the payee of any Note as the holder thereof
until the Administrative Agent receives and accepts an Assignment and Acceptance
entered into by the Lender that is the payee of such Note, as assignor, and an
Eligible Assignee, as assignee, as provided in Section 11.7; (b) may consult
with legal counsel (including counsel for any Loan Party), independent public
accountants and other experts selected by it and shall not be liable for any
action taken or omitted to be taken in good faith by it in accordance with the
advice of such counsel, accountants or experts; (c) makes no warranty or
representation to any Lender Party and shall not be responsible to any Lender
Party for recitals, any statements, warranties or representations (whether
written or oral) made in or in connection with the Loan Documents; (d) shall not
have any duty to ascertain or to inquire as to the performance or observance of
any of the terms, covenants or conditions of any Loan Document on the part of
any Loan Party or to inspect the property (including the books and records) of
any Loan Party; (e) shall not be responsible to any Lender Party for the due
execution, legality, validity, enforceability, genuineness, sufficiency or value
of, or the perfection or priority of any lien or security interest created or
purported to be created under or in connection with, any Loan Document or any
other instrument or document furnished pursuant thereto; (f) shall incur no
liability under or in respect of any Loan Document by acting upon any notice,
consent, certificate or other instrument or
<PAGE>
writing (which may be by telegram, telecopy or telex) believed by it to be
genuine and signed or sent by or on behalf of the proper party or parties;
and (g) may employ agents and attorneys-in-fact and shall not be answerable
for the negligence or misconduct of any such agents or attorneys-in-fact
selected by it with reasonable care.
SECTION 10.3 FLEET AND AFFILIATES. With respect to its Commitments, the
Advances made by it and the Notes issued to it, Fleet shall have the same rights
and powers under the Loan Documents as any other Lender Party and may exercise
the same as though it were not the Administrative Agent; and the term "Lender
Party" or "Lender Parties" shall, unless otherwise expressly indicated, include
Fleet in its individual capacity. Fleet and its affiliates may accept deposits
from, lend money to, act as trustee under indentures of, accept investment
banking engagements from and generally engage in any kind of business with, any
Loan Party, any of its Subsidiaries and any Person who may do business with or
own securities of any Loan Party or any such Subsidiary and may accept fees and
other consideration from the Borrower or its Affiliates, for services in
connection with this Agreement, the other Loan Documents or otherwise, all as if
Fleet were not the Administrative Agent and without any duty to account therefor
to the Lender Parties.
SECTION 10.4 LENDER PARTY CREDIT DECISION. Each Lender Party acknowledges
that it has, independently and without reliance upon the Administrative Agent or
any other Lender Party and based on the financial statements referred to in
Section 4.6 and such other documents and information as it has deemed
appropriate, made its own credit analysis and decision to enter into this
Agreement. Each Lender Party also acknowledges that it will, independently and
without reliance upon the Administrative Agent or any other Lender Party and
based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit decisions in taking or not taking action
under this Agreement.
SECTION 10.5 INDEMNIFICATION.
(a) Each Lender Party severally agrees to indemnify the
Administrative Agent (to the extent not promptly reimbursed by the Borrower)
from and against such Lender Party's ratable share (determined as provided
below) of any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of any kind or
nature whatsoever that may be imposed on, incurred by, or asserted against the
Administrative Agent in any way relating to or arising out of any of the Loan
Documents or any transaction contemplated hereby and thereby or any action taken
or omitted by the Administrative Agent under any of the Loan Documents;
PROVIDED, HOWEVER, that no Lender Party shall be liable for any portion of such
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements to the extent resulting from the Administrative
Agent's gross negligence or willful misconduct. Without limitation of the
foregoing, each Lender Party agrees to reimburse the Administrative Agent
promptly upon demand for its ratable share of any costs and expenses (including,
without limitation, fees and expenses of counsel) payable by the Borrower under
Section 11.4, to the extent that the Administrative Agent is not promptly
<PAGE>
reimbursed for such costs and expenses by the Borrower.
(b) Each Lender Party severally agrees to indemnify the Issuing Bank
(to the extent not promptly reimbursed by the Borrower) from and against such
Lender Party's ratable share (determined as provided below) of any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind or nature whatsoever that may be
imposed on, incurred by, or asserted against the Issuing Bank in any way
relating to or arising out of any of the Loan Documents or any action taken or
omitted by the Issuing Bank under any of the Loan Documents; PROVIDED, HOWEVER,
that no Lender Party shall be liable for any portion of such liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements resulting from the Issuing Bank's gross negligence or
willful misconduct. Without limitation of the foregoing, each Lender Party
agrees to reimburse the Issuing Bank promptly upon demand for its ratable share
of any costs and expenses (including, without limitation, fees and expenses of
counsel) payable by the Borrower under Section 11.4, to the extent that the
Issuing Bank is not promptly reimbursed for such costs and expenses by the
Borrower.
(c) For purposes of Sections 10.5(a) and 10.5(b), the Lender Parties'
respective ratable shares of any amount shall be determined, at any time,
according to the sum of (i) the aggregate principal amount of the Advances
outstanding at such time and owing to the respective Lender Parties, (ii) their
respective Pro Rata Shares of the aggregate Available Amount of all Letters of
Credit outstanding at such time, (iii) the aggregate unused portions of their
respective Term A Commitments and Term B Commitments at such time and (iv) their
respective Unused Revolving Credit Commitments at such time; PROVIDED, that the
aggregate principal amount of Letter of Credit Advances owing to the Issuing
Bank shall be considered to be owed to the Revolving Credit Lenders ratably in
accordance with their respective Revolving Credit Commitments. In the event
that any Defaulted Advance shall be owing by any Defaulting Lender at any time,
such Lender Party's Commitment with respect to the Facility under which such
Defaulted Advance was required to have been made shall be considered to be
unused for purposes of this Section 10.5 to the extent of the amount of such
Defaulted Advance. The failure of any Lender Party to reimburse the
Administrative Agent or the Issuing Bank, as the case may be, promptly upon
demand for its ratable share of any amount required to be paid by the Lender
Parties to the Administrative Agent or the Issuing Bank, as the case may be, as
provided herein shall not relieve any other Lender Party of its obligation
hereunder to reimburse the Administrative Agent or the Issuing Bank, as the case
may be, for its ratable share of such amount, but no Lender Party shall be
responsible for the failure of any other Lender Party to reimburse the
Administrative Agent or the Issuing Bank, as the case may be, for such other
Lender Party's ratable share of such amount. Without prejudice to the survival
of any other agreements of any Lender Party hereunder, the agreement and
obligations of each Lender Party contained in this Section 10.5 shall survive
the payment in full of principal, interest and all other amounts payable
hereunder and under the other Loan Documents.
SECTION 10.6 SUCCESSOR ADMINISTRATIVE AGENTS. The Administrative Agent
may resign
<PAGE>
as to any or all of the Facilities at any time by giving written notice
thereof to the Lender Parties and the Borrower and may be removed as to all
of the Facilities at any time with or without cause by the Required Lenders.
Upon any such resignation or removal, the Required Lenders shall have the
right (subject to the approval of the Borrower, such approval not to be
unreasonably withheld or delayed; provided that the Borrower shall have no
right of approval if at the applicable time of the proposed appointment any
Event of Default shall have occurred and be continuing) to appoint a
successor Administrative Agent as to such of the Facilities as to which the
Administrative Agent has resigned or been removed. If no successor
Administrative Agent shall have been so appointed by the Required Lenders,
and shall have accepted such appointment, within thirty (30) days after the
retiring Administrative Agent's giving of notice of resignation or the
Required Lenders' removal of the retiring Administrative Agent, then the
retiring Administrative Agent may, on behalf of the Lender Parties, appoint a
successor Administrative Agent, which shall be a Lender which is a commercial
bank organized under the laws of the United States or of any State thereof
and having a combined capital and surplus of at least $250,000,000. Upon the
acceptance of any appointment as Administrative Agent hereunder by a
successor Administrative Agent as to all of the Facilities and upon the
execution and filing or recording of such financing statements, or amendments
thereto, and such other instruments or notices, as may be necessary or
desirable, or as the Required Lenders may request, in order to continue the
perfection of the Liens granted or purported to be granted by the Collateral
Documents, such successor Administrative Agent shall succeed to and become
vested with all the rights, powers, discretion, privileges and duties of the
retiring Administrative Agent, and the retiring Administrative Agent shall be
discharged from all of its duties and obligations under this Agreement and
the other Loan Documents. Upon the acceptance of any appointment as
Administrative Agent hereunder by a successor Administrative Agent as to less
than all of the Facilities and upon the execution and filing or recording of
such financing statements, or amendments thereto, and such other instruments
or notices, as may be necessary or desirable, or as the Required Lenders may
request, in order to continue the perfection of the Liens granted or
purported to be granted by the Collateral Documents, such successor
Administrative Agent shall succeed to and become vested with all the rights,
powers, discretion, privileges and duties of the retiring Administrative
Agent as to such Facilities, other than with respect to funds transfers and
other similar aspects of the administration of Borrowings under such
Facilities, issuances of Letters of Credit (notwithstanding any resignation
as Administrative Agent with respect to the Letter of Credit Facility) and
payments by the Borrower in respect of such Facilities, and the retiring
Administrative Agent shall be discharged from its duties and obligations
under this Agreement as to such Facilities, other than as aforesaid. After
any retiring Administrative Agent's resignation or removal hereunder as
Administrative Agent as to all of the Facilities, the provisions of this
Article 10 shall inure to its benefit as to any actions taken or omitted to
be taken by it while it was Administrative Agent as to any Facilities under
this Agreement.
Anything contained in this Section 10.6 to the contrary notwithstanding, no
Person may become a successor Administrative Agent or Mortgagee under the
Preferred Ship Mortgages unless it is a Coastwise Citizen.
<PAGE>
The Administrative Agent (and each successor Administrative Agent) hereby
represents and warrants that it is a Coastwise Citizen and covenants that it
will maintain its status as a Coastwise Citizen.
SECTION 10.7 EVENTS OF DEFAULT. The Administrative Agent shall not be
deemed to have knowledge of the occurrence of a Default (other than the
non-payment of principal of or interest on Loans) unless the Administrative
Agent has received notice from a Lender or the Borrower specifying such
Default and stating that such notice is a "Notice of Default". In the event
that the Administrative Agent receives such a notice of the occurrence of a
Default, the Administrative Agent shall give notice thereof to the Lenders
(and shall give each Lender notice of each such non-payment). The
Administrative Agent shall (subject to Section 10.1(b) hereof) take such
action with respect to such Default as shall be directed by the Required
Lenders.
ARTICLE 11
MISCELLANEOUS
SECTION 11.1 AMENDMENTS, ETC. No amendment or waiver of any provision of
this Agreement or the Notes or any other Loan Document, nor consent to any
departure by the Borrower therefrom, shall in any event be effective unless the
same shall be in writing and signed (or, in the case of the Collateral
Documents, consented to) by the Required Lenders, and then such waiver or
consent shall be effective only in the specific instance and for the specific
purpose for which given; PROVIDED, HOWEVER, that (a) no amendment, waiver or
consent shall, unless in writing and signed by all of the Lenders (other than
any Lender Party that is, at such time, a Defaulting Lender), do any of the
following at any time: (i) change the percentage of (A) the Commitments, (B) the
aggregate unpaid principal amount of the Advances or (C) the aggregate Available
Amount of outstanding Letters of Credit that, in each case, shall be required
for the Lenders or any of them to take any action hereunder; (ii) release all or
substantially all of the Collateral in any transaction or series of related
transactions or permit the creation, incurrence, assumption or existence of any
Lien on a substantial portion of the Collateral in any transaction or series of
related transactions to secure any liabilities or obligations other than
Obligations owing to the Secured Parties under the Loan Documents; (iii) release
any of the Guarantors from their Guaranty; or (iv) amend this Section 11.1 or
the definition of Required Lenders; and (b) no amendment, waiver or consent
shall, unless in writing and signed by the Required Lenders and each Lender that
has a Commitment under the Term A Facility, Term B Facility or Revolving Credit
Facility if affected by such amendment, waiver or consent, (i) increase the
Commitments of such Lender (it being agreed that waiver of a condition(s) to
lend shall not be construed as increasing the Commitments), (ii) reduce the
principal of, or interest on (except for waivers of default interest rates), the
Notes held by such Lender or any fees or other amounts payable hereunder to such
Lender, (iii) change any date fixed for any payment of principal of, or interest
on, the Notes held by such Lender or any fees or other amounts payable hereunder
to such Lender or (iv) change the order of application of any prepayment set
forth in
<PAGE>
Section 2.6 in any manner that materially affects such Lender; PROVIDED,
FURTHER, that no amendment, waiver or consent shall, unless in writing and
signed by the Issuing Bank, as the case may be, in addition to the Lenders
required above to take such action, affect the rights or obligations of the
Issuing Bank, as the case may be, under this Agreement or any other Loan
Document; and PROVIDED, FURTHER, that no amendment, waiver or consent shall,
unless in writing and signed by the Administrative Agent in addition to the
Lenders required above to take such action, affect the rights or duties of
the Administrative Agent under this Agreement or any other Loan Document.
SECTION 11.2 NOTICES ETC. All notices and other communications provided
for hereunder shall be in writing (including telegraphic, telecopy or telex
communication) and mailed, telegraphed, telecopied, telexed or delivered, by
overnight courier services or personally served,
(a) if to the Borrower:
c/o Moran Transportation Company
Greenwich Plaza
Greenwich, Connecticut 06830
Attention: Chief Financial Officer
Telephone No.: (203) 625-7800
Facsimile No.: (203) 625-7857
with a copy to:
Finn Dixon & Herling LLP
One Landmark Square
Stamford, Connecticut 06901
Attention: Michael J. Herling, Esq.
Telephone No.: (203) 325-5000
Facsimile No.: (203) 348-5777
(b) if to the Administrative Agent:
Fleet Bank, N.A.
1185 Avenue of the Americas
New York, New York 10036
Attention: Robert A. Isaksen
Telephone No.: (212) 819-5754
Facsimile No.: (212) 819-4110
with a copy to:
Winston & Strawn
<PAGE>
200 Park Avenue
New York, New York 10166
Attention: Richard S. Talesnick, Esq.
Telephone No.: (212) 294-6729
Facsimile No.: (212) 294-4700
(c) if to any Initial Lender or the Initial Issuing Bank, at its
Domestic Lending Office specified opposite its name on SCHEDULE I attached
hereto.
(d) if to any other Lender Party, at its Domestic Lending Office
specified in the Assignment and Acceptance pursuant to which it became a Lender
Party;
or, as to the Borrower or the Administrative Agent, at such other address as
shall be designated by such party in a written notice to the other parties and,
as to each other party, at such other address as shall be designated by such
party in a written notice to the Borrower and the Administrative Agent. All
such notices and communications shall, (i) when mailed by certified mail, return
receipt requested, be effective three (3) days after mailing, (ii) when
telegraphed, telecopied or telexed be effective upon delivery to the telegraph
company, upon transmission by telecopier or upon confirmation by telex
answerback, (iii) when delivered in person, be effective when delivered, and
(iv) when delivered by overnight courier, be effective two (2) Business Days
after delivery to the courier properly addressed, except that notices and
communications to the Administrative Agent pursuant to Article 2, 3 or 10 shall
not be effective until received by the Administrative Agent. Delivery by
telecopier of an executed counterpart of this Agreement, the Notes or any other
Loan Document or of any Exhibit hereto or thereto or of any amendment or waiver
of any provision thereof shall be as effective as delivery of a manually
executed counterpart thereof.
SECTION 11.3 NO WAIVER; REMEDIES; COUNTERCLAIMS. No failure on the part
of any Lender Party or the Administrative Agent to exercise, and no delay in
exercising, any right hereunder or under any Note or under any other Loan
Document shall operate as a waiver thereof, nor shall any single or partial
exercise of any such right preclude any other or further exercise thereof or the
exercise of any other right. The remedies herein provided are cumulative and
not exclusive of any remedies provided by law or in equity. The due payment and
performance of the Obligations shall be without regard to any counterclaim,
right of offset or any other claim whatsoever that the Borrower or other Loan
Party may have against any Lender Party, Hedge Bank or the Administrative Agent
and, subject to Section 2.15, without regard to any other obligation of any
nature whatsoever that any Lender Party, Hedge Bank or the Administrative Agent
may have to the Borrower or Loan Party, and no such counterclaim or offset shall
be asserted by the Borrower (unless such counterclaim or offset would, under
applicable law, be permanently and irrevocably lost if not brought in such
action) in any action, suit or proceeding instituted by any Lender Party, Hedge
Bank or the Administrative Agent for payment or performance of the Obligations.
<PAGE>
SECTION 11.4 COSTS AND EXPENSES.
(a) The Borrower agrees to pay on demand (i) all reasonable
out-of-pocket costs and expenses of the Administrative Agent in connection
with the preparation, execution, delivery, modification and amendment of the
Loan Documents (including, without limitation, (A) all reasonable due
diligence, collateral review, syndication (including printing, distribution
and bank meetings), transportation, duplication, appraisal, audit, insurance,
consultant, search, filing and recording fees and expenses, and (B) the
reasonable fees and expenses of counsel for the Administrative Agent with
respect thereto, including advising the Administrative Agent as to its rights
and responsibilities, or the perfection, protection or preservation of rights
or interests under the Loan Documents, negotiating with any Loan Party or
with other creditors of any Loan Party or any of its Subsidiaries arising out
of any Default or any events or circumstances that may give rise to a
Default, and presenting claims in or otherwise participating in or monitoring
any bankruptcy, insolvency or other similar proceeding involving creditors'
rights generally and any proceeding ancillary thereto) and (ii) all
reasonable costs and expenses of the Administrative Agent and the Lender
Parties in connection with the enforcement of the Loan Documents, whether in
any action, suit or litigation or any bankruptcy, insolvency or other similar
proceeding affecting creditors' rights generally or otherwise (including,
without limitation, the reasonable fees and expenses of counsel for the
Administrative Agent and each Lender Party with respect thereto).
(b) The Borrower agrees to indemnify and hold harmless the
Administrative Agent, each Lender Party and each of their respective
Affiliates and their respective officers, directors, employees, agents and
advisors (each, an "INDEMNIFIED PARTY") from and against any and all claims,
damages, losses, liabilities and reasonable expenses (including, without
limitation, reasonable fees and expenses of counsel) that may be incurred by
or asserted or awarded against any Indemnified Party, in each case arising
out of or in connection with or by reason of, or in connection with the
preparation for a defense of, any commenced or threatened investigation,
litigation or proceeding arising out of, related to or in connection with any
federal securities law or any other statute of any jurisdiction or any
regulation or at common law or otherwise against any Indemnified Party, (i)
the Transaction or any other transaction of Borrower or any of its
Subsidiaries or other Affiliates and any of the other transactions
contemplated by the Loan Documents, (ii) the Moran Acquisition or any other
acquisition or proposed acquisition or similar business combination or
proposed business combination by the Borrower or any of its Subsidiaries or
other Affiliates of all or any portion of the shares of capital stock or
substantially all of the property and assets of any other Person or any acts,
practices or omissions of the Borrower, any of its Subsidiaries or its agents
related thereto, or any withdrawals, termination or cancellation of any such
proposed transaction for any reason, (iii) the Facilities, the actual or
proposed use of the proceeds of the Advances or the Letters of Credit by the
Borrower or any of its Subsidiaries or other Affiliates and any of the other
transactions contemplated by the Loan Documents, or (iv) the actual or
alleged presence of Hazardous Materials on any property of any Loan Party or
any of its Subsidiaries or any Environmental Action relating in any way to
any Loan Party or any of its Subsidiaries, in each case whether or not such
investigation, litigation or
<PAGE>
proceeding is brought by any Loan Party, its directors, officers, employees,
stockholders or creditors or an Indemnified Party or any Indemnified Party is
otherwise a party thereto and whether or not the Transaction or any other
transaction contemplated hereby is consummated, except to the extent such
claim, damage, loss, liability or expense is found in a final, non-appealable
judgment by a court of competent jurisdiction to have resulted from such
Indemnified Party's gross negligence or willful misconduct. The Borrower
also agrees not to assert any claim against the Administrative Agent, any
Lender Party or any of their respective Affiliates, or any of their
respective officers, directors, employees, attorneys and agents, on any
theory of liability, for punitive damages arising out of or otherwise
relating to the Moran Acquisition, the Facilities, the actual or proposed use
of the proceeds of the Advances or the Letters of Credit, the Loan Documents
or any of the Transaction or other transactions contemplated thereby.
(c) If any payment of principal of, or Conversion of, any Eurodollar
Rate Advance is made by the Borrower to or for the account of a Lender Party
other than on the last day of the Interest Period for such Advance, as a result
of a payment or Conversion pursuant to Section 2.9(b)(i) or 2.10(d) or a
prepayment pursuant to Section 2.6(a) or (b), acceleration of the maturity of
the Notes pursuant to Article 9 or for any other reason, the Borrower shall,
upon demand by such Lender Party (with a copy of such demand to the
Administrative Agent), pay to the Administrative Agent for the account of such
Lender Party any amounts required to compensate such Lender Party for any
additional losses, costs or expenses that it may reasonably incur as a result of
such payment, including, without limitation, any loss (including loss of
anticipated profits), cost or expense incurred by reason of the liquidation or
re-employment of deposits or other funds required by any Lender Party to fund or
maintain such Advance.
(d) If any Loan Party fails to pay when due any costs, expenses or
other amounts payable by it under any Loan Document, including, without
limitation, fees and expenses of counsel and indemnities, such amount may be
paid on behalf of such Loan Party by the Administrative Agent, in its sole
discretion.
(e) Without prejudice to the survival of any other agreement of any
Loan Party hereunder or under any other Loan Document, the agreements and
obligations of the Borrower contained in Sections 2.10 and 2.12 and this Section
11.4 shall survive the payment in full of principal, interest and all other
amounts payable hereunder and under any of the other Loan Documents.
SECTION 11.5 RIGHT OF SET-OFF. Upon the occurrence and during the
continuance of any Event of Default, each Lender Party and each of its
respective Affiliates is hereby authorized at any time and from time to time, to
the fullest extent permitted by law, to set off and otherwise apply any and all
deposits (general or special, time or demand, provisional or final) at any time
held and other indebtedness at any time owing by such Lender Party or such
Affiliate to or for the credit or the account of the Borrower or any of its
Subsidiaries against any and all of the Obligations of the Borrower now or
hereafter existing under this Agreement and the Note or Notes (if any) held by
such Lender Party, irrespective of whether such Lender Party shall have
<PAGE>
made any demand under this Agreement or such Note or Notes and although such
obligations may be unmatured. Each Lender Party agrees promptly to notify
the Borrower and the Administrative Agent after any such set-off and
application; PROVIDED, HOWEVER, that the failure to give such notice shall
not affect the validity of such set-off and application. The rights of each
Lender Party and its respective Affiliates under this Section are in addition
to other rights and remedies (including, without limitation, other rights of
set-off) that such Lender Party and its respective Affiliates may have at
law, in equity or otherwise.
SECTION 11.6 BINDING EFFECT. This Agreement shall become effective when it
shall have been executed by the Borrower and the Administrative Agent and when
the Administrative Agent shall have been notified by each Initial Lender and the
Initial Issuing Bank that each such Initial Lender and the Initial Issuing Bank
has executed it and thereafter shall be binding upon and inure to the benefit of
the Borrower, the Administrative Agent and each Lender Party and their
respective successors and assigns, except that the Borrower shall not have the
right to assign any of its rights hereunder or any interest herein without the
prior written consent of the Lender Parties.
SECTION 11.7 ASSIGNMENTS AND PARTICIPATIONS.
(a) Each Lender may assign to one or more Eligible Assignees all or a
portion of its rights and obligations under this Agreement (including, without
limitation, all or a portion of its Commitment or Commitments, the Advances
owing to it and the Note or Notes held by it); PROVIDED, HOWEVER, that (i) each
such assignment shall be of a uniform, and not a varying, percentage of all
rights and obligations under and in respect of each of the Facilities on a pro
rata basis with respect to each Facility, and no Facility may be assigned in
full or in part without a contemporaneous assignment to the same assignee of
each of the other Facilities, (ii) except in the case of an assignment to a
Person that, immediately prior to such assignment, was a Lender or an assignment
of all of a Lender's rights and obligations under this Agreement, the amount of
the Commitment of the assigning Lender being assigned pursuant to each such
assignment (determined as of the date of the Assignment and Acceptance with
respect to such assignment) shall in no event be less than $5,000,000, (iii) no
such assignments shall be permitted without the prior consent of the
Administrative Agent (which may be withheld for any reason) until the
Administrative Agent shall have notified the Lender Parties that syndication of
the Commitments hereunder has been completed, but in any event not later than 90
days following the Closing Date, (iv) no such assignment shall be permitted if,
immediately after giving effect thereto, the Borrower would be required to make
payments to or on behalf of the assignee Lender Party pursuant to Section
2.10(a) or (b) and the assignor Lender Party was not, at the time of such
assignment, entitled to receive any payment pursuant to Section 2.10(a) or (b),
and (v) the parties to each such assignment shall execute and deliver to the
Administrative Agent, for its acceptance and recording in the Register, an
Assignment and Acceptance, together with any Note or Notes subject to such
assignment and a processing and recordation fee of $3,500.
(b) Upon such execution, delivery, acceptance and recording, from and
after
<PAGE>
the effective date specified in such Assignment and Acceptance, (x) the
assignee thereunder shall be a party hereto and, to the extent that rights
and obligations hereunder have been assigned to it pursuant to such
Assignment and Acceptance, have the rights and obligations of a Lender or
Issuing Bank, as the case may be, hereunder and (y) the Lender or Issuing
Bank assignor thereunder shall, to the extent that rights and obligations
hereunder have been assigned by it pursuant to such Assignment and
Acceptance, relinquish its rights and be released from its obligations under
this Agreement (and, in the case of an Assignment and Acceptance covering all
or the remaining portion of an assigning Lender's or Issuing Bank's rights
and obligations under this Agreement, such Lender or Issuing Bank shall cease
to be a party hereto).
(c) By executing and delivering an Assignment and Acceptance, the
Lender Party assignor thereunder and the assignee thereunder confirm to and
agree with each other and the other parties hereto as follows: (i) other than as
provided in such Assignment and Acceptance, such assigning Lender Party makes no
representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with this
Agreement or any other Loan Document or the execution, legality, validity,
enforceability, genuineness, sufficiency or value of, or the perfection or
priority of any lien or security interest created or purported to be created
under or in connection with, this Agreement or any other Loan Document or any
other instrument or document furnished pursuant hereto or thereto; (ii) such
assigning Lender Party makes no representation or warranty and assumes no
responsibility with respect to the financial condition of the Borrower or any
other Loan Party or the performance or observance by any Loan Party of any of
its obligations under any Loan Document or any other instrument or document
furnished pursuant thereto; (iii) such assignee confirms that it has received a
copy of this Agreement, together with copies of the financial statements
referred to in Section 4.6 and such other documents and information as it has
deemed appropriate to make its own credit analysis and decision to enter into
such Assignment and Acceptance; (iv) such assignee will, independently and
without reliance upon the Administrative Agent, such assigning Lender Party or
any other Lender Party and based on such documents and information as it shall
deem appropriate at the time, continue to make its own credit decisions in
taking or not taking action under this Agreement; (v) such assignee confirms
that it is an Eligible Assignee; (vi) such assignee appoints and authorizes the
Administrative Agent to take such action as agent on its behalf and to exercise
such powers and discretion under this Agreement and the other Loan Documents as
are delegated to the Administrative Agent by the terms hereof and thereof,
together with such powers and discretion as are reasonably incidental thereto;
and (vii) such assignee agrees that it will perform in accordance with their
terms all of the obligations which by the terms of this Agreement are required
to be performed by it as a Lender or Issuing Bank, as the case may be.
(d) The Administrative Agent shall maintain at its address referred
to in Section 11.2 a copy of each Assignment and Acceptance delivered to and
accepted by it and a register for the recordation of the names and addresses of
the Lender Parties and the Commitment under each Facility of, and principal
amount of the Advances owing under each Facility to, each Lender Party from time
to time (the "REGISTER"). The entries in the Register
<PAGE>
shall be conclusive and binding for all purposes, absent manifest error, and
the Borrower, the Administrative Agent and the Lender Parties may treat each
Person whose name is recorded in the Register as a Lender Party hereunder for
all purposes of this Agreement. The Register shall be available for
inspection by the Borrower or any Lender Party at any reasonable time and
from time to time upon reasonable prior notice.
(e) Upon its receipt of an Assignment and Acceptance executed by an
assigning Lender Party and an assignee, together with any Note or Notes subject
to such assignment and the appropriate processing and reconciliation fee, the
Administrative Agent shall, if such Assignment and Acceptance has been completed
and is in substantially the form of EXHIBIT A hereto, (i) accept such Assignment
and Acceptance, (ii) record the information contained therein in the Register
and (iii) give prompt notice thereof to the Borrower. In the case of any
assignment by a Lender, within five (5) Business Days after its receipt of such
notice, the Borrower, at its own expense, shall execute and deliver to the
Administrative Agent in exchange for the surrendered Note or Notes a new Note to
the order of such Eligible Assignee in an amount equal to the Commitment assumed
by it under a Facility pursuant to such Assignment and Acceptance and, if the
assigning Lender has retained a Commitment hereunder under such Facility, a new
Note to the order of the assigning Lender in an amount equal to the Commitment
retained by it hereunder. Such new Note or Notes shall be in an aggregate
principal amount equal to the aggregate principal amount of such surrendered
Note or Notes, shall be dated the effective date of such Assignment and
Acceptance and shall otherwise be in substantially the form of Exhibit C, D or E
hereto, as the case may be.
(f) The Issuing Bank may assign to an Eligible Assignee which is a
financial institution domiciled in the United States all of its rights and
obligations under the undrawn portion of its Letter of Credit Commitment at any
time; PROVIDED, HOWEVER, that (i) each such assignment shall be to an Eligible
Assignee and (ii) the parties to each such assignment shall execute and deliver
to the Administrative Agent, for its acceptance and recording in the Register,
an Assignment and Acceptance, together with a processing and recordation fee of
$3,500.
(g) Each Lender Party may sell participations to one or more Persons
(other than any Loan Party or any of its Affiliates) in or to all or a portion
of its rights and obligations under this Agreement (including, without
limitation, all or a portion of its Commitments, the Advances owing to it and
the Note or Notes, if any, held by it) at any time and from time to time and
without the consent of or notice to the Borrower or any Guarantor; PROVIDED,
HOWEVER, that (i) such Lender Party's obligations under this Agreement
(including, without limitation, its Commitments) shall remain unchanged, (ii)
such Lender Party shall remain solely responsible to the other parties hereto
for the performance of such obligations, (iii) such Lender Party shall remain
the holder of any such Note for all purposes of this Agreement, (iv) the
Borrower, the Administrative Agent and the other Lender Parties shall continue
to deal solely and directly with such Lender Party in connection with such
Lender Party's rights and obligations under this Agreement and (v) no
participant under any such participation shall have any right to approve any
amendment, waiver or other modification of any provision of this Agreement or
any other
<PAGE>
Loan Document, or any consent to any departure by any Loan Party therefrom,
except to the extent that such amendment, waiver, modification or consent
would reduce the principal of, or interest on, the Notes or any fees or other
amounts payable hereunder, in each case to the extent subject to such
participation, postpone any date fixed for any payment of principal of, or
interest on, the Notes or any fees or other amounts payable hereunder, in
each case to the extent subject to such participation, or release all or
substantially all of the Collateral.
(h) Any Lender Party may, in connection with any assignment or
participation or proposed assignment or participation pursuant to this Section
11.7, disclose to the assignee or participant or proposed assignee or
participant, any information relating to the Borrower furnished to such Lender
Party by or on behalf of the Borrower; PROVIDED, HOWEVER, that, prior to any
such disclosure, the assignee or participant or proposed assignee or participant
shall agree to preserve the confidentiality of any Confidential Information
received by it from such Lender Party.
(i) Notwithstanding any other provision set forth in this Agreement,
any Lender Party may at any time create a security interest in all or any
portion of its rights under this Agreement (including, without limitation, the
Advances owing to it and the Note or Notes held by it) in favor of any Federal
Reserve Bank in accordance with Regulation A of the Board of Governors of the
Federal Reserve System.
(j) Fleet may syndicate the Facilities to other lenders. Any such
syndication will be managed by Fleet and will be treated as Confidential
Information. The Borrower shall assist Fleet in forming such syndication and
shall provide Fleet and any potential lender, assignee or participant, promptly
upon request, with all information deemed reasonably necessary by them to
complete successfully such syndication, including, without limitation, all
information and projections prepared by the Borrower or their officers or
advisers relating to the transactions contemplated herein. The Borrower shall
make appropriate officers and representatives of the Borrower and their
Subsidiaries available to participate in information meetings for potential
syndicate members and participants at such times and places as Fleet may
reasonably request. In connection with such syndication, Fleet may, in its sole
discretion, allocate to other Lenders portions of any fees payable to Fleet in
connection with the Facilities.
SECTION 11.8 EXECUTION IN COUNTERPARTS. This Agreement may be executed in
any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed shall be deemed to be an original
and all of which taken together shall constitute one and the same agreement.
Delivery of an executed counterpart of a signature page to this Agreement by
telecopier shall be as effective as delivery of a manually executed counterpart
of this Agreement.
SECTION 11.9 NO LIABILITY OF THE ISSUING BANK. The Borrower assumes all
risks of the acts or omissions of any beneficiary or transferee of any Letter of
Credit with respect to its use of such Letter of Credit. Neither the Issuing
Bank nor any of its officers, directors, employees or
<PAGE>
agents shall be liable or responsible for: (a) the use that may be made of
any Letter of Credit or any acts or omissions of any beneficiary or
transferee in connection therewith; (b) the validity, sufficiency or
genuineness of documents, or of any endorsement thereon, even if such
documents should prove to be in any or all respects invalid, insufficient,
fraudulent or forged; (c) payment by the Issuing Bank against presentation of
documents that do not comply with the terms of a Letter of Credit, including
failure of any documents to bear any reference or adequate reference to the
Letter of Credit; or (d) any other circumstances whatsoever in making or
failing to make payment under any Letter of Credit, except that the Borrower
shall have a claim against the Issuing Bank, and the Issuing Bank shall be
liable to the Borrower, to the extent of any direct, but not consequential,
damages suffered by the Borrower that the Borrower proves were caused by (i)
the Issuing Bank's willful misconduct or gross negligence in determining
whether documents presented under any Letter of Credit comply with the terms
of the Letter of Credit or (ii) the Issuing Bank's willful failure to make
lawful payment under a Letter of Credit after the presentation to it of a
draft and certificates strictly complying with the terms and conditions of
the Letter of Credit. In furtherance and not in limitation of the foregoing,
the Issuing Bank may accept documents that appear on their face to be in
order, without responsibility for further investigation, regardless of any
notice or information to the contrary.
SECTION 11.10 CONFIDENTIALITY. Neither the Administrative Agent nor any
Lender Party shall disclose any Confidential Information to any Person without
the consent of the Borrower, other than (a) to the Administrative Agent or to
the Administrative Agent's or such Lender Party's Affiliates and their officers,
directors, employees and agents and to actual or prospective Eligible Assignees
and participants, and then only on a confidential basis, (b) as required by any
law, rule or regulation or judicial process and (c) as requested or required by
any state, federal or foreign authority or examiner regulating banks or banking.
SECTION 11.11 SURVIVAL OF AGREEMENTS AND REPRESENTATIONS; CONSTRUCTION. All
agreements, representations and warranties made herein shall survive the
delivery of this Agreement and the Notes. The headings used in this Agreement
and the table of contents are for convenience only and shall not be deemed to
constitute a part hereof
SECTION 11.12 ASSURANCES.
(a) At any time and from time to time, upon the request of the
Administrative Agent, the Borrower and each other Loan Party shall execute,
deliver and acknowledge or cause to be executed, delivered and acknowledged,
such further documents and instruments and do such other acts and things as the
Administrative Agent may reasonably request (and consistent with the other terms
and provisions hereof) in order to fully effect the purposes of this Agreement,
the other Loan Documents and any other agreements, instruments and documents
delivered pursuant hereto or in connection with the Loans or to correct any
error in any Loan Document.
(b) Upon receipt of an affidavit of an officer of the Administrative
Agent or
<PAGE>
any Lender as to the loss, theft, destruction or mutilation of any Note or
Collateral Document which is not of public record, and, in the case of any
such mutilation, upon the surrender and cancellation of such Note or
Collateral Document, and, in the case of any Note (other than a mutilated
Note), upon receipt of an indemnification in form and substance reasonably
satisfactory to the Borrower, the Borrower will issue, in lieu thereof, a
replacement Note or other Collateral Document in the same principal amount
thereof (in the case of any Note) and otherwise of like tenor.
SECTION 11.13 SEVERABILITY. The provisions of this Agreement are
severable, and if any 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 in this Agreement in
any jurisdiction. Each of the covenants, agreements and conditions contained in
this Agreement is independent and compliance by the Borrower with any of them
shall not excuse non-compliance by the Borrower with any other. All covenants
hereunder shall be given independent effect so that if a particular action or
condition is prohibited by any of such covenants, the fact that it would be
permitted within the limitations of another covenant shall not avoid the
occurrence of a Default or an Event of Default if such action is taken or
condition exists.
SECTION 11.14 JURISDICTION, ETC.
(a) EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY AND
UNCONDITIONALLY SUBMITS, FOR ITSELF AND ITS PROPERTY, TO THE NONEXCLUSIVE
JURISDICTION OF ANY NEW YORK STATE COURT OR FEDERAL COURT OF THE UNITED
STATES OF AMERICA SITTING IN NEW YORK CITY, NEW YORK AND ANY APPELLATE COURT
FROM ANY THEREOF, IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO
THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS TO WHICH IT IS A PARTY, OR
FOR RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT, AND EACH OF THE PARTIES
HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY AGREES THAT ALL CLAIMS IN
RESPECT OF ANY SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN ANY
SUCH NEW YORK STATE COURT OR, TO THE EXTENT PERMITTED BY LAW, IN SUCH FEDERAL
COURT. EACH OF THE PARTIES HERETO AGREES THAT A FINAL NON-APPEALABLE
JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE
ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER
MANNER PROVIDED BY LAW. NOTHING IN THIS AGREEMENT SHALL AFFECT ANY RIGHT
THAT ANY LENDER PARTY MAY OTHERWISE HAVE TO BRING ANY ACTION OR PROCEEDING
RELATING TO THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS IN THE COURTS
OF ANY JURISDICTION.
(b) EACH OF THE PARTIES HERETO IRREVOCABLY AND
<PAGE>
UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT IT MAY LEGALLY AND EFFECTIVELY
DO SO, ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE
OF ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS TO WHICH IT IS A PARTY IN ANY
NEW YORK STATE OR SUCH FEDERAL COURT. EACH OF THE PARTIES HERETO HEREBY
IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, THE DEFENSE OF AN
INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING IN ANY
SUCH COURT.
SECTION 11.15 GOVERNING LAW. THIS AGREEMENT, THE NOTES AND THE OTHER
LOAN DOCUMENTS (OTHER THAN THE PREFERRED SHIP MORTGAGES WHICH SHALL BE
GOVERNED BY FEDERAL LAW TO THE EXTENT APPLICABLE AND OTHER THAN THE
PERFECTION OF THE COLLATERAL CONSISTING OF PERSONAL PROPERTY OR FIXTURES
WHICH (UNLESS EXCLUDED FROM THE SCOPE OF ARTICLE 9 OF THE UNIFORM COMMERCIAL
CODE) THE GOVERNING LAW OF WHICH SHALL BE DETERMINED BY THE CONFLICTS OF LAWS
PROVISIONS OF THE UNIFORM COMMERCIAL CODE) SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK WITHOUT REGARD TO ITS RULES PERTAINING TO CONFLICTS OF LAWS OTHER THAN
GENERAL OBLIGATIONS LAW Section 5-1401.
SECTION 11.16 WAIVER OF JURY TRIAL. EACH OF THE BORROWER, THE LOAN
PARTIES, THE ADMINISTRATIVE AGENT AND THE LENDER PARTIES VOLUNTARILY,
INTENTIONALLY AND IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION,
PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE)
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS,
THE ADVANCES OR THE ACTIONS OF THE ADMINISTRATIVE AGENT OR ANY LENDER PARTY IN
THE NEGOTIATION, ADMINISTRATION, PERFORMANCE OR ENFORCEMENT THEREOF. THIS
WAIVER CONSTITUTES A MATERIAL INDUCEMENT FOR THE LENDER PARTIES AND THE
ADMINISTRATIVE AGENT TO ENTER INTO THIS AGREEMENT AND TO MAKE ADVANCES
HEREUNDER.
SECTION 11.17 FINAL AGREEMENT. THIS WRITTEN AGREEMENT, THE NOTES AND THE
OTHER LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY
NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE
PARTIES. THE PARTIES HERETO ACKNOWLEDGE AND AFFIRM THE STATEMENT MADE IN THE
PRECEDING SENTENCE.
[Signature Pages Follow]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized, as of the date
first above written.
MORAN ENTERPRISES
CORPORATION
By: /S/ Jeffrey J. McAulay
---------------------------
Name: Jeffrey J. McAulay
Title: Vice President
FLEET BANK, N.A.
AS ADMINISTRATIVE AGENT AND
AS INITIAL ISSUING BANK
By: /S/ Robert A. Isaksen
---------------------------
Name: Robert A. Isaksen
Title: Senior Vice President
[Signature Page to Credit Agreement]
<PAGE>
INITIAL LENDERS
FLEET BANK, N.A.
By: /s/ Robert A Isaksen
--------------------------------
Name: Robert A. Isaksen
------------------------------
Title: Senior Vice President
-----------------------------
NATIONSBANK, N.A.
By: /s/ Salvador W. Antonetti
--------------------------------
Name: Salvador W. Antonetti
------------------------------
Title: Vice President
-----------------------------
THE INDUSTRIAL BANK OF JAPAN,
LIMITED
By: /s/ John V. Veltri
--------------------------------
Name: John V. Veltri
------------------------------
Title: Joint General Manager
-----------------------------
[Signature Page to Credit Agreement]
<PAGE>
INITIAL LENDERS
BANKBOSTON, N.A.
By: /s/ Alicia Szendivch
-------------------------------
Name: Alicia Szendivch
-----------------------------
Title: Director
----------------------------
[Signature Page to Credit Agreement]
<PAGE>
OLD MORAN SECURITY AGREEMENT
FROM
MORAN TRANSPORTATION COMPANY
AND CERTAIN OF ITS SUBSIDIARIES,
AS GRANTORS
TO
FLEET BANK, N.A.
AS ADMINISTRATIVE AGENT
DATED OCTOBER 30, 1998
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
SECURITY AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
PRELIMINARY STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
Section 1. Grant of Security. . . . . . . . . . . . . . . . . . . . .2
Section 2. Security for Obligations . . . . . . . . . . . . . . . . .2
Section 3. Representations and Warranties . . . . . . . . . . . . . .4
Section 4. Further Assurances . . . . . . . . . . . . . . . . . . . .4
Section 5. As to Inventory. . . . . . . . . . . . . . . . . . . . . .4
Section 6. Insurance. . . . . . . . . . . . . . . . . . . . . . . . .5
Section 7. Place of Perfection; Record; Collection of Receivables . .6
Section 8. Transfers and Other Liens; Additional Shares . . . . . . .7
Section 9. Administrative Agent Appointed Attorney-in-Fact. . . . . .7
Section 10. Administrative Agent May Perform . . . . . . . . . . . . .7
Section 11. Administrative Agent's Duties. . . . . . . . . . . . . . .7
Section 12. Remedies . . . . . . . . . . . . . . . . . . . . . . . . .8
Section 13. Indemnity and Expenses . . . . . . . . . . . . . . . . . .9
Section 14. Security Interest Absolute . . . . . . . . . . . . . . . .9
Section 15. Amendments; Waivers; Etc . . . . . . . . . . . . . . . . 10
Section 16. Addresses for Notices. . . . . . . . . . . . . . . . . . 10
Section 17. Continuing Security Interest; Assignments under
the Credit Agreement. . . . . . . . . . . . . . . . . . 11
Section 18. Release and Termination. . . . . . . . . . . . . . . . . 11
Section 19. Governing Law; Terms . . . . . . . . . . . . . . . . . . 12
Section 20. Counterparts . . . . . . . . . . . . . . . . . . . . . . 12
</TABLE>
<PAGE>
SCHEDULES
Schedule I Intentionally Omitted
Schedule II Intentionally Omitted
Schedule III Locations of Inventory
Schedule IV Trade Names
EXHIBITS
Exhibit A Form of Security Agreement Supplement
<PAGE>
SECURITY AGREEMENT
SECURITY AGREEMENT (this "AGREEMENT"), dated October 30, 1998, by and
among each of the Persons listed on the signature pages hereof, the Additional
Grantors (as defined in Section 24(c) hereof) (such Persons so listed on the
signature pages hereof, together with the Additional Grantors, collectively, the
"GRANTORS") and Fleet Bank, N.A. ("FLEET"), as administrative agent (in such
capacity, together with its successors in such capacity, the "ADMINISTRATIVE
AGENT") for the Secured Parties (as defined in the Credit Agreement referred to
below).
PRELIMINARY STATEMENTS
(1) A. Moran Enterprises Corporation, a Delaware corporation (the
"BORROWER") has entered into a Credit Agreement, dated as of October 30, 1998
(said Credit Agreement, as it may hereafter be amended, restated, supplemented,
extended or otherwise modified from time to time, the "CREDIT AGREEMENT"; the
terms defined therein and not otherwise defined herein being used herein as
therein defined), with the banks, financial institutions and other institutional
lenders party thereto (the "LENDERS"), and Fleet, as Initial Issuing Bank and as
Administrative Agent.
B. The Grantors have entered into a certain Subsidiary Guaranty
dated as of October 30, 1998 (the Subsidiary Guaranty, as it may hereafter be
amended, restated, supplemented, extended or otherwise modified from time to
time, the "SUBSIDIARY GUARANTY") in favor of the Administrative Agent and the
Secured Parties pursuant to which the Grantors have agreed to guaranty certain
of the obligations of the Borrower under the Credit Agreement as set forth
therein.
(2) It is a condition precedent to the Lenders' making of Advances,
the Issuing Bank's issuing of Letters of Credit under the Credit Agreement and
the Hedge Banks' entering into Bank Hedge Agreements with the Borrower from time
to time that each Grantor shall have granted the assignment and security
interest and made the pledge and assignment contemplated by this Agreement.
NOW, THEREFORE, in consideration of the premises and in order to
induce the Lenders to make Advances under the Credit Agreement, the Issuing Bank
to issue Letters of Credit under the Credit Agreement and the Hedge Banks to
enter into Bank Hedge Agreements with the Borrower from time to time, each of
the Grantors hereby agrees with the Administrative Agent, for the benefit of the
Administrative Agent and the ratable benefit of the Secured Parties, as follows:
Section 1. GRANT OF SECURITY. Each of the Grantors hereby assigns
and pledges to the Administrative Agent, for the benefit of the Administrative
Agent and the ratable benefit of the Secured Parties, and hereby grants to the
Administrative Agent, for the benefit of the Administrative Agent and the
ratable benefit of the Secured Parties, a security interest in the following
(collectively, the "COLLATERAL"):
<PAGE>
(a) all of such Grantor's inventory in all of its forms, whether now
owned or hereafter acquired, wherever located, now or hereafter existing
(including, without limitation, (i) raw materials and work in process, (ii)
finished goods, (iii) materials used or consumed in the manufacture or
production thereof, (iv) goods in which such Grantor has an interest in mass or
a joint or other interest or right of any kind (including, without limitation,
goods in which such Grantor has an interest or right as consignee) and (v) goods
that are returned to or repossessed by such Grantor), and all accessions
thereto, products thereof and documents therefor (any and all such inventory,
accessions, products and documents, the "INVENTORY");
(b) all of such Grantor's accounts, contract rights (excluding all
customer contracts ("CUSTOMER CONTRACTS"), which exclusion shall include,
without limitation, charters and contracts of affreightment, but including all
amounts due or to become due under Customer Contracts), chattel paper,
instruments, deposit accounts and other claims of any kind, whether now owned or
hereafter acquired, now or hereafter existing, whether or not arising out of or
in connection with the sale or lease of goods or the rendering of services, and
all rights now or hereafter existing in and to all security agreements, leases
and other contracts securing or otherwise relating to any such accounts,
contract rights, chattel paper, instruments, deposit accounts or claims (any and
all such accounts, contract rights, chattel paper, instruments, deposit accounts
and claims, being the "RECEIVABLES", and any and all such leases, security
agreements and other contracts being the "RELATED CONTRACTS"); and
(c) all proceeds of any and all of the foregoing Collateral
(including, without limitation, proceeds that constitute property of the types
described in clauses (a) and (b) of this Section 1) and, to the extent not
otherwise included, all (i) payments under insurance (whether or not the
Administrative Agent is the loss payee thereof), or any indemnity, warranty or
guaranty, payable by reason of loss or damage to or otherwise with respect to
any of the foregoing Collateral and (ii) cash.
In addition to the exclusion from Collateral of Customer Contracts,
anything contained herein (or any financing statement executed pursuant hereto)
to the contrary notwithstanding, Receivables arising out of the barge Portsmouth
(Official No. 1047057) and Related Contracts with respect to such barge shall
not be part of the Collateral.
Section 2. SECURITY FOR OBLIGATIONS. This Agreement (including
the security interests hereunder) secures the payment of all Guaranteed
Obligations of each Grantor, now or hereafter existing under the Subsidiary
Guaranty to the extent set forth therein, whether for principal, interest, fees,
expenses or otherwise (all such Obligations being the "SECURED OBLIGATIONS").
Without limiting the generality of the foregoing, this Agreement secures the
payment of all amounts that constitute part of the Secured Obligations and would
be owed by such Grantor to the Administrative Agent or the Secured Parties under
the Subsidiary Guaranty but for the fact that they are unenforceable or not
allowable due to the existence of a bankruptcy, reorganization or similar
proceeding involving such Grantor.
<PAGE>
Section 3. REPRESENTATIONS AND WARRANTIES. Each Grantor
represents and warrants as follows:
(a) As of the date hereof, all of such Grantor's Inventory is located
at the places specified for such Grantor on Schedule III hereto. As of the date
hereof, the chief place of business and chief executive office of such Grantor
and the office where such Grantor keeps its records concerning the Receivables,
are located at the address specified below the name of such Grantor on the
signature pages hereof (or in the case of any Additional Grantor at the address
specified below the name of such Additional Grantor on the signature page of the
Security Agreement Supplement (as defined in Section 20(c)) executed and
delivered by such Additional Grantor). As of the date hereof, none of the
Receivables is evidenced by a promissory note or other instrument except for any
notes payable from one Grantor to another Grantor.
(b) Such Grantor is the legal and beneficial owner of the Collateral
pledged by such Grantor hereunder free and clear of any Lien, except for
security interests created or permitted under the Loan Documents (including,
without limitation, any Liens disclosed on Schedule 6.1(c) to the Credit
Agreement). No effective financing statement or other instrument similar in
effect covering all or any part of the Collateral is on file in any recording
office, except such as may have been filed: (i) in favor of the Administrative
Agent relating to this Agreement or (ii) with respect to Permitted Liens.
(c) Set forth below each Grantor's name on Schedule IV hereto is a
complete and accurate list as of the date hereof of (i) all names under which
such Grantor is or has been doing business within the last five years
(including, without limitation, all trade names, division names and fictitious
names), (ii) all trade names that such Grantor owns or is licensed to use
(including the expiration date of such license) and (iii) all trade names that
such Grantor has established the right to use (collectively, the "TRADE NAMES").
Such Grantor has not changed within the past six months its name or identity, by
reorganization or otherwise, or its address set forth below the name of such
Grantor on the signature pages hereof or the Security Agreement Supplement
executed and delivered by it, as the case may be, except as set forth on
Schedule IV hereto.
(d) Such Grantor has exclusive possession and control of the
Inventory pledged by such Grantor hereunder, except for Inventory being
repaired.
(e) Upon the filing by the Administrative Agent or its
representatives of the proper financing statements referred to in Section
3.1(a)(ii) of the Credit Agreement, this Agreement and the pledge of the
Collateral pursuant hereto creates a valid and perfected first and only priority
security interest in the Collateral of such Grantor (except to the extent of any
Liens expressly permitted under Section 6.1 of the Credit Agreement), securing
the payment of the Secured Obligations, and all filings and other actions
necessary or desirable to perfect and protect such security interest shall have
been duly taken.
<PAGE>
(f) No consent of any other Person and no authorization, approval or
other action by, and no notice to or filing with, any governmental authority or
regulatory body or other third party, which has not been obtained or made, is
required either (i) for the grant by such Grantor of the assignment and security
interest granted hereby, the execution, delivery or performance of this
Agreement by such Grantor, (ii) for the perfection or maintenance of the pledge,
assignment and security interest created hereby (including the first and only
priority nature of such pledge, assignment or security interest), except for the
filing of financing and continuation statements under the Uniform Commercial
Code, which financing statements are in proper form and are duly executed, or
(iii) for the exercise by the Administrative Agent of its other rights provided
for in this Agreement or the remedies in respect of the Collateral pursuant to
this Agreement.
(g) The Inventory has been produced by such Grantor (to the extent,
if any, such Grantor produces any Inventory) in compliance with all requirements
of the Fair Labor Standards Act.
Section 4. FURTHER ASSURANCES.
(a) Each of the Grantors agrees that from time to time, at the
expense of the Borrower, such Grantor will promptly execute and deliver all
further instruments and documents, and take all further action, that may be
necessary or desirable, or that the Administrative Agent may reasonably request,
in order to perfect and protect any pledge, assignment or security interest
granted or purported to be granted hereby or following the occurrence of and
during the continuation of an Event of Default to enable the Administrative
Agent to exercise and enforce its rights and remedies hereunder with respect to
any Collateral. Without limiting the generality of the foregoing, such Grantor
will, upon any such request of the Administrative Agent: (i) if any Collateral
pledged by such Grantor hereunder shall be evidenced by a promissory note or
other instrument or chattel paper, deliver and pledge to the Administrative
Agent hereunder such note or instrument or chattel paper duly indorsed and
accompanied by duly executed instruments of transfer or assignment, all in form
and substance satisfactory to the Administrative Agent; and (ii) execute such
financing or continuation statements, or amendments thereto, and such other
instruments or notices as may be requested by the Administrative Agent in order
to perfect and preserve the pledge, assignment and security interest granted or
purported to be granted hereby.
(b) Each Grantor hereby authorizes the Administrative Agent to file
one or more financing or continuation statements, and amendments thereto,
relating to all or any part of the Collateral pledged by such Grantor hereunder,
without the signature of such Grantor where permitted by law. A copy of each
such statement and amendment will be timely provided to such Grantor. A
photocopy or other reproduction of this Agreement or any financing statement
covering its Collateral or any part thereof shall be sufficient as a financing
statement
<PAGE>
where permitted by law.
(c) Each Grantor will furnish to the Administrative Agent from time
to time statements and schedules further identifying and describing the
Collateral and such reports in connection with its Collateral as the
Administrative Agent may reasonably request, all in reasonable detail.
Section 5. AS TO INVENTORY. (a) Each Grantor shall keep the
Inventory (other than Inventory sold in the ordinary course of business or
consumed by a Grantor in the ordinary course of business) pledged by such
Grantor hereunder at the places therefor specified in Section 3(a) or, upon
thirty (30) days' prior written notice to the Administrative Agent, at such
other places in a jurisdiction where all action required by this Agreement to
maintain the security interest of the Administrative Agent in such Inventory
granted hereby shall have been taken with respect to such Inventory.
(b) Each Grantor shall timely pay when due all property and other
taxes, assessments and governmental charges or levies imposed upon, and all
claims (including claims for labor, materials and supplies) against the
Inventory pledged by such Grantor hereunder; PROVIDED, HOWEVER, that such
Grantor shall not be required to pay any such tax, assessment, charge or claim
that is being contested in good faith and by proper proceedings and as to which
appropriate reserves are being maintained, unless and until any Lien resulting
therefrom attaches to its property and becomes enforceable against the Borrower
or any of its Subsidiaries. In producing the Inventory pledged by such Grantor
hereunder, each Grantor shall comply with all requirements of the Fair Labor
Standards Act.
Section 6. INSURANCE.
(a) Each Grantor shall, at its own expense, maintain insurance with
respect to the Inventory pledged by such Grantor hereunder in such amounts,
against such risks, in such form and with such insurers, in accordance with
Section 5.5 of the Credit Agreement. Each policy for liability insurance shall
provide for all losses to be paid on behalf of the Administrative Agent and each
Grantor as their interests may appear and each policy for property damage
insurance shall provide that the Administrative Agent shall be the loss payee as
its interests may appear. Each such policy shall in addition (i) name such
Grantor and the Administrative Agent as insured parties thereunder (without any
representation or warranty by or obligation upon the Administrative Agent) as
their interests may appear, (ii) contain the agreement by the insurer that any
loss thereunder shall be payable to the Administrative Agent notwithstanding any
action, inaction or breach of representation or warranty by such Grantor, (iii)
provide that there shall be no recourse against the Administrative Agent for
payment of premiums or other amounts with respect thereto and (iv) provide that
the insurer shall endeavor to provide at least thirty (30) days' prior written
notice of cancellation or of lapse to the Administrative Agent. Each Grantor
shall, if so requested by the Administrative Agent,
<PAGE>
deliver to the Administrative Agent original or duplicate policies of such
insurance and, as often as the Administrative Agent may request, a report of
a reputable insurance broker with respect to such insurance. Further, each
Grantor shall, at the request of the Administrative Agent, duly exercise and
deliver instruments of assignment of its insurance policies to comply with
the requirements of Section 6 and cause the insurers to acknowledge notice of
such assignment.
(b) Reimbursement under any liability insurance maintained by any
Grantor pursuant to this Section 6 may be paid directly to the Person who
shall have incurred liability covered by such insurance. In case of any loss
involving damage to Inventory when subsection (c) of this Section 6 is not
applicable, the applicable insurance proceeds under any casualty insurance
shall be applied, at the option of the applicable Grantor, to (i)
reinvestment (I.E., repair or replacement) pursuant to the proviso in the
definition of Extraordinary Receipts, or (ii) prepayment pursuant to Section
2.6(b)(iv) of the Credit Agreement.
(c) Upon the occurrence and during the continuance of any Event of
Default, all insurance payments in respect of such Inventory shall be paid to
and applied by the Administrative Agent as specified in Section 12(b).
Section 7. PLACE OF PERFECTION; RECORD; COLLECTION OF RECEIVABLES.
(a) Each of the Grantors shall keep its chief place of business and
chief executive office and the office where it keeps its records concerning the
Collateral, at the location therefor specified in Section 3(a) or, upon thirty
(30) days' prior written notice to the Administrative Agent, at such other
locations in a jurisdiction where all actions required by this Agreement to
maintain the security interest of the Administrative Agent in such Collateral
granted hereby shall have been taken with respect to the Collateral. Each of
the Grantors shall hold and preserve such records, and shall permit
representatives of the Administrative Agent at any time during normal business
hours, upon reasonable prior written notice, to inspect and make abstracts from
such records and chattel paper.
(b) Except as otherwise provided in this subsection (b), each of the
Grantors shall continue to collect, at its own expense, all amounts due or to
become due such Grantor under the Receivables pledged by such Grantor hereunder.
In connection with such collections, each Grantor may take (and, at the
Administrative Agent's direction, shall take) such action as such Grantor or the
Administrative Agent may deem necessary or advisable to enforce collection of
the Receivables pledged by such Grantor hereunder; PROVIDED, HOWEVER, that the
Administrative Agent shall have the right at any time, upon the occurrence and
during the continuance of an Event of Default and upon five (5) days' written
notice to the Borrower of its intention to do so, to notify the obligors under
any Receivables of the assignment of such Receivables to the Administrative
Agent and to direct such Obligors to make payment of all amounts due or to
become due to such Grantor thereunder directly to the Administrative Agent
<PAGE>
and, upon such notification and at the expense of such Grantor, to enforce
collection of any such Receivables, and to adjust, settle or compromise the
amount or payment thereof, in the same manner and to the same extent as such
Grantor might have done. After receipt by any Grantor of the notice from the
Administrative Agent referred to in the PROVISO of the preceding sentence, (i)
all amounts and proceeds (including instruments) received by such Grantor in
respect of the Receivables pledged by such Grantor hereunder during the
continuance of an Event of Default shall be received in trust for the benefit of
the Administrative Agent hereunder, shall be segregated from other funds of such
Grantor and shall be forthwith paid over to the Administrative Agent in the same
form as so received (with any necessary endorsement) to be applied as provided
by Section 12(b) and (ii) without the prior consent of the Administrative Agent,
such Grantor shall not, so long as an Event of Default is continuing, adjust,
settle or compromise the amount or payment of any of its Receivables, release
wholly or partly any Obligor thereof, or allow any credit or discount thereon.
Section 8. TRANSFERS AND OTHER LIENS.
Each of the Grantors agrees that it shall not (i) sell, assign (by
operation of law or otherwise) or otherwise dispose of, or grant any option with
respect to, any of the Collateral, except sales of Inventory in the ordinary
course of business or sales or other dispositions of other assets permitted by
the Credit Agreement, or (ii) create or suffer to exist any Lien upon or with
respect to any of the Collateral except for (A) the pledge, assignment and
security interest created by this Agreement and (B) any other Liens expressly
permitted under Section 6.1 of the Credit Agreement.
Section 9. ADMINISTRATIVE AGENT APPOINTED ATTORNEY-IN-FACT. Each
of the Grantors hereby irrevocably appoints the Administrative Agent such
Grantor's attorney-in-fact, with full authority in its place and stead and in
its name or otherwise, upon the occurrence and during the continuance of an
Event of Default, to take any action and to execute any instrument that the
Administrative Agent may deem necessary or advisable to protect and preserve its
interest in the Collateral and to accomplish the purposes of this Agreement,
including, without limitation:
(a) to obtain and adjust insurance required to be paid to the
Administrative Agent pursuant to Section 6,
(b) to ask for, demand, collect, sue for, recover, compromise,
receive and give acquittance and receipts for moneys due and to become due under
or in respect of any of its Collateral,
(c) to receive, endorse and collect any drafts or other instruments,
documents and chattel paper, in connection with clause (a) or (b) above, and
(d) to file any claims or take any action or institute any
proceedings that the Administrative Agent may deem necessary or desirable for
the collection of any of its Collateral or the rights of the Administrative
Agent with respect to any of its Collateral.
<PAGE>
Section 10. ADMINISTRATIVE AGENT MAY PERFORM. If any of the
Grantors fails to perform any agreement contained herein, the Administrative
Agent may itself, upon reasonable prior notice to such Grantor, perform, or
cause performance of, such agreement, and the reasonable and actual expenses of
the Administrative Agent incurred in connection therewith shall be payable by
such Grantor under Section 13(b).
Section 11. ADMINISTRATIVE AGENT'S DUTIES. The powers conferred on
the Administrative Agent hereunder are solely to protect its interest in the
Collateral and shall not impose any duty upon it to exercise any such powers.
Except for the safe custody of any Collateral in its possession and the
accounting for moneys actually received by it hereunder, the Administrative
Agent shall have no duty as to any Collateral, or as to the taking of any
necessary steps to preserve rights against any parties or any other rights
pertaining to any Collateral. The Administrative Agent shall exercise
reasonable care in the custody and preservation of any Collateral in its
possession and shall accord such Collateral treatment equal to that which the
Administrative Agent accords other similar property in its possession.
Section 12. REMEDIES. If any Event of Default shall have occurred
and be continuing:
(a) The Administrative Agent may exercise in respect of the
Collateral, in addition to other rights and remedies provided for herein or
otherwise available to it, all the rights and remedies of a secured party upon
default under the Uniform Commercial Code in effect in the State of New York at
such time (the "N.Y. UNIFORM COMMERCIAL CODE") (whether or not the N.Y. Uniform
Commercial Code applies to the affected Collateral) and also may (i) require any
or all of the Grantors to, and each Grantor hereby agrees that it will at its
expense and upon request of the Administrative Agent forthwith, assemble all or
part of the Collateral as directed by the Administrative Agent and make it
available to the Administrative Agent at a place to be designated by the
Administrative Agent that is reasonably convenient to both parties and (ii)
without notice except as specified below and as required by law, sell the
Collateral or any part thereof in one or more parcels at public or private sale,
at any of the Administrative Agent's offices or elsewhere, for cash, on credit
or for future delivery, and upon such other terms as the Administrative Agent
may deem commercially reasonable. Each Grantor agrees that, to the extent
notice of sale shall be required by law, at least ten (10) days' notice to such
Grantor of the time and place of any public sale or the time after which any
private sale is to be made shall constitute reasonable notification. The
Administrative Agent shall not be obligated to make any sale of Collateral
regardless of notice of sale having been given. The Administrative Agent may
adjourn any public or private sale from time to time by announcement at the time
and place fixed therefor, and such sale may, without further notice except as
required by law, be made at the time and place to which it was so adjourned.
(b) Any cash held by or on behalf of the Administrative Agent as
Collateral and all cash proceeds received by the Administrative Agent in respect
of any sale of, collection from, or other realization upon all or any part of
the Collateral may, in the discretion of the Administrative Agent, be held by
the Administrative Agent as Collateral for, and/or then or at any time
thereafter applied (after payment of any amounts payable to the Administrative
Agent
<PAGE>
pursuant to Section 13) in whole or in part by the Administrative Agent for the
ratable benefit of the Secured Parties against, all or any part of the Secured
Obligations in such order as is specified by the Credit Agreement and, if the
Credit Agreement does not so specify an order of application against the
Obligations, in such order as the Administrative Agent shall elect. Any surplus
of such cash or cash proceeds held by the Administrative Agent and remaining
after payment in full of all the Secured Obligations shall be paid over to the
applicable Grantors or to whomsoever may be lawfully entitled to receive such
surplus.
(c) Each Grantor will furnish to the Administrative Agent correct and
complete customer lists and updates thereof as the Administrative Agent may
reasonably request, all in reasonable detail.
Section 13. INDEMNITY AND EXPENSES.
(a) Each of the Grantors hereby agrees, jointly and severally, to
indemnify the Administrative Agent from and against any and all claims, losses
and liabilities arising out of or resulting from this Agreement (including,
without limitation, enforcement of this Agreement), except claims, losses or
liabilities resulting from the Administrative Agent's gross negligence or
willful misconduct as determined by a final judgment of a court of competent
jurisdiction.
(b) The Borrower will upon demand pay to the Administrative Agent the
amount of any and all reasonable expenses, including the reasonable fees and
expenses of its counsel and of any experts and agents, that the Administrative
Agent may incur in connection with (i) the custody, preservation, use or
operation of, or the sale of, collection from or other realization upon, any of
the Collateral, (ii) the exercise or enforcement of any of the rights of the
Administrative Agent or the Secured Parties hereunder or (iii) the failure by
any Grantor to perform or observe any of the provisions hereof.
Section 14. SECURITY INTEREST ABSOLUTE. The obligations of each
Grantor under this Agreement are independent of the Secured Obligations, and a
separate action or actions may be brought and prosecuted against each Grantor to
enforce this Agreement, irrespective of whether any action is brought against
the Borrower or any other Grantor or whether the Borrower or any other Grantor
is joined in any such action or actions. All rights of the Administrative Agent
and the pledge, assignment and security interest hereunder, and all obligations
of each Grantor hereunder, shall be absolute and unconditional, irrespective of:
(a) any lack of validity or enforceability of any Loan Document or
any other agreement or instrument relating thereto;
(b) any change in the time, manner or place of payment of, or in any
other term of, all or any of the Secured Obligations or any other amendment or
waiver of or any consent to any departure from any Loan Document;
(c) any taking, exchange, release or non-perfection of any other
collateral, or any taking, release or amendment or waiver of or consent to
departure from any guaranty, for all or any of the Secured Obligations;
<PAGE>
(d) any manner of application of collateral, or proceeds thereof, to
all or any of the Secured Obligations, or any manner of sale or other
disposition of any collateral for all or any of the Secured Obligations or any
other assets of the Borrower or any Guarantor or any of their subsidiaries;
(e) any change, restructuring or termination of the corporate
structure or existence of the Borrower or any Guarantor or any of their
subsidiaries; or
(f) any other circumstance that might otherwise constitute a defense
available to, or a discharge of, any Grantor or a third party grantor of a
security interest.
Section 15. AMENDMENTS; WAIVERS; ETC.
(a) No amendment or waiver of any provision of this Agreement, and no
consent to any departure by any Grantor herefrom, shall in any event be
effective unless the same shall be in writing and signed by the Administrative
Agent, and then such waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given.
(b) No failure on the part of the Administrative Agent 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 such right preclude any
other or further exercise thereof or the exercise of any other right.
(c) Upon the execution and delivery by any Person of a supplement to
this Agreement, in each case in substantially the form of EXHIBIT A hereto (each
a "SECURITY AGREEMENT SUPPLEMENT"), (i) such Person shall be referred to as an
"ADDITIONAL GRANTOR" and shall be and become a Grantor, and each reference in
this Agreement to an "Additional Grantor" or a "Grantor" shall also mean and be
a reference to such Additional Grantor and each reference in any other Loan
Document to a "Grantor" or a "Loan Party" shall also mean and be a reference to
such Additional Grantor, and (ii) the supplements attached to each Security
Agreement Supplement shall be incorporated into and become a part of and
supplement the Schedules to this Agreement, as appropriate, and the
Administrative Agent may attach such supplements to such Schedules, and each
reference to such Schedules shall mean and be a reference to such Schedules, as
supplemented pursuant hereto.
Section 16. ADDRESSES FOR NOTICES. All notices and other
communications provided for hereunder shall be in writing (including
telegraphic, telecopy or telex communication) and mailed, telegraphed,
telecopied, telexed or delivered if to any Grantor addressed to it c/o the
Borrower at the address set forth in Section 11.2 of the Credit Agreement; if to
any Additional Grantor, addressed to it at the address set forth below its name
on the signature pages to the Security Agreement Supplement executed and
delivered by such Additional Grantor; if to the Administrative Agent, addressed
to it at its address set forth in Section 11.2 of the Credit Agreement or, as to
each other party, at such other address as shall be designated by such party in
a written notice to the Grantors and the Administrative
<PAGE>
Agent. All such notices and communications shall, (i) when mailed by certified
mail, return receipt requested, be effective three (3) days after mailing,
(ii) when telegraphed, telecopied or telexed be effective upon delivery to the
telegraph company, upon transmission by telecopier or upon confirmation by telex
answerback, (iii) when delivered in person, be effective when delivered, and
(iv) when delivered by overnight courier, be effective two (2) Business Days
after delivery to the courier properly addressed, except that notices and
communications to the Administrative Agent pursuant to this Agreement shall not
be effective until received by the Administrative Agent. Any party hereto may
change the Person, address or telecopier number to whom or
which notices are to be given hereunder, by notice duly given hereunder;
PROVIDED, HOWEVER, that any such notice shall be deemed to have been given
hereunder only when actually received by the party to which it is addressed.
Section 17. CONTINUING SECURITY INTEREST; ASSIGNMENTS UNDER THE
CREDIT AGREEMENT. This Agreement shall create a continuing security interest in
the Collateral and shall (a) remain in full force and effect until the later of
(i) the indefeasible payment in full in cash of the Secured Obligations, (ii)
the termination of the Revolving Credit Commitment, and (iii) the expiration,
termination or cancellation of all of the Letters of Credit, (b) be binding upon
each Grantor, its successors and assigns and (c) inure, together with the rights
and remedies of the Administrative Agent hereunder, to the benefit of the
Administrative Agent, the Lender Parties and their respective successors,
transferees and assigns. Without limiting the generality of the foregoing
clause (c), any Lender may assign or otherwise transfer all or any portion of
its rights and obligations under the Credit Agreement (including, without
limitation, all or any portion of its Revolving Credit Commitment, the Revolving
Credit Advances owing to it and the Revolving Credit Note(s) held by it) to any
other Person, and such other Person shall thereupon become vested with all the
benefits in respect thereof granted to such Lender herein or otherwise, in each
case as provided in Section 11.7 of the Credit Agreement. Notwithstanding the
foregoing, no Grantor may assign any of its rights or obligations under this
Agreement without the prior written consent of the Administrative Agent, which
consent may be withheld for any reason.
Section 18. RELEASE AND TERMINATION.
(a) Upon any sale, lease, transfer or other disposition of any item
of Collateral in accordance with the express terms of the Loan Documents, the
Administrative Agent will, at the Grantors' expense, execute and deliver to each
Grantor such documents as such Grantor shall reasonably request to evidence the
release of such item of Collateral from the assignment and security interest
granted hereby; PROVIDED, HOWEVER, that (i) at the time of such request and such
release no Default shall have occurred and be continuing, (ii) such Grantor
shall have delivered to the Administrative Agent, at least fifteen (15) days
prior to the date of the proposed release, a written request for release
describing the item of Collateral and the terms of the sale, lease, transfer or
other disposition in reasonable detail, including the price thereof and any
expenses in connection therewith, together with a form of release for execution
by the Administrative Agent and a certification by such Grantor to the effect
that the transaction is in compliance with the Loan Documents and as to such
other matters as the
<PAGE>
Administrative Agent may request, (iii) the proceeds of any such sale, lease,
transfer or other disposition required to be applied in accordance with Section
2.6 or any other applicable provision of the Credit Agreement.
(b) Upon the latest of (i) the indefeasible payment in full in cash
of the Secured Obligations, (ii) the expiration, termination or cancellation of
all of the Letters of Credit and (iii) the termination of the Revolving Credit
Commitment, the pledge, assignment and security interest granted by each of the
Grantors hereby shall terminate and all rights to the Collateral shall revert to
the appropriate Grantor. Upon any such termination, the Administrative Agent
will, at the Grantors' expense, execute and deliver to the appropriate Grantor
such documents as such Grantor shall reasonably request to evidence such
termination.
Section 19. GOVERNING LAW; TERMS. THIS AGREEMENT SHALL BE GOVERNED
BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, EXCEPT TO
THE EXTENT THAT THE VALIDITY OR PERFECTION OF THE SECURITY INTERESTS HEREUNDER,
OR REMEDIES HEREUNDER, IN RESPECT OF ANY PARTICULAR COLLATERAL ARE GOVERNED BY
THE LAWS OF A JURISDICTION OTHER THAN THE STATE OF NEW YORK. Unless otherwise
defined herein or in the Credit Agreement, terms used in Article 9 of the N.Y.
Uniform Commercial Code are used herein as therein defined.
Section 20. COUNTERPARTS. This Agreement may be executed in any
number of several counterparts, each of which shall be deemed an original, but
all of which together shall constitute one and the same instrument.
IN WITNESS WHEREOF, each of the Grantors has caused this Agreement to
be duly executed and delivered by its officer thereunto duly authorized as of
the date first above written.
MORAN TRANSPORTATION COMPANY
MORAN TOWING CORPORATION
MORAN TOWING OF TEXAS, INC.
SEABOARD BARGE CORPORATION
PETROLEUM TRANSPORT CORPORATION
MORAN TOWING OF DELAWARE, INC.
MORAN SERVICES CORPORATION
MORAN SHIPYARD CORPORATION
HAMPTON ROADS LAND CO., INC.
PORTSMOUTH NAVIGATION CORPORATION
JAKOBSON SHIPYARD, INC.
MORAN BARGE CORP.
CURTIS BAY TOWING COMPANY OF PENNSYLVANIA
CURTIS BAY TOWING COMPANY OF VIRGINIA
FLORIDA TOWING COMPANY
MCF SUBSIDIARY, INC.
<PAGE>
FOR EACH OF THE FOREGOING CORPORATIONS:
BY: /s/ Jeffrey J. McAulay
------------------------------------------
JEFFREY J. MCAULAY, VICE PRESIDENT
ACCEPTED:
FLEET BANK, N.A., AS ADMINISTRATIVE AGENT
BY: /s/ Robert A. Isaksen
-------------------------------------------------
ROBERT A. ISAKSEN, SENIOR VICE PRESIDENT
STATE OF NEW YORK )
) SS:
COUNTY OF NEW YORK )
On this 30th day of October, 1998, before me personally came JEFFREY A.
MCAULAY, to me known, who, before me duly sworn, did depose and say that he
is Vice President of each of Moran Transportation Company, Moran Towing
Corporation, Moran Towing of Texas, Inc., Seaboard Barge Corporation,
Petroleum Transport Corporation, Moran Towing of Delaware, Inc., Moran
Services Corporation, Moran Shipyard Corporation, Hampton Roads Land Co.,
Inc., Portsmouth Navigation Corporation, Jakobson Shipyard, Inc., Moran Barge
Corp., Curtis Bay Towing Company of Pennsylvania, Curtis Bay Towing Company
of Virginia, Florida Towing Company and MCF Subsidiary, Inc., the
corporations described in and which executed the above instrument; that he
has been authorized to execute said instrument on behalf of each corporation;
and that he signed said instrument on behalf of each corporation pursuant to
said authority.
/s/ Lori M. Angelone
-------------------------------
NOTARY PUBLIC, State of New York
No. 41-4693738
Qualified in Queens County
Certificate filed in New York County
Commission Expires Jan. 31, 2000
<PAGE>
SUBSIDIARY GUARANTY
FROM
CERTAIN SUBSIDIARIES OF MORAN ENTERPRISES CORPORATION
AS GUARANTORS,
IN FAVOR OF
FLEET BANK, N.A., AS ADMINISTRATIVE AGENT
AND
THE SECURED PARTIES REFERRED TO IN
THE CREDIT AGREEMENT REFERRED TO HEREIN
DATED OCTOBER 30, 1998
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
SECTION PAGE
- ------- ----
<S> <C>
Section 1. Guaranty; Limitation of Liability . . . . . . . . . . . . . . 1
Section 2. Guaranty Absolute . . . . . . . . . . . . . . . . . . . . . . 2
Section 3. Waivers and Acknowledgments . . . . . . . . . . . . . . . . . 3
Section 4. Subrogation . . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 5. Payments Free and Clear of Taxes, Etc.. . . . . . . . . . . . 4
Section 6. Representations and Warranties. . . . . . . . . . . . . . . . 6
Section 7. Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 8. Amendments, Etc.. . . . . . . . . . . . . . . . . . . . . . . 7
Section 9. Notices, Etc. . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 10. No Waiver; Remedies . . . . . . . . . . . . . . . . . . . . . 8
Section 11. Right of Setoff . . . . . . . . . . . . . . . . . . . . . . . 8
Section 12. Indemnification . . . . . . . . . . . . . . . . . . . . . . . 8
Section 13. Continuing Guaranty; Assignments Under the Credit Agreement . 8
Section 14. Governing Law; Jurisdiction; Waiver of Jury Trial, Etc. . . . 9
</TABLE>
<PAGE>
GUARANTY
GUARANTY (this "GUARANTY"), dated October 30, 1998, made by each of
the Persons listed on the signature pages hereof, and the Additional Guarantors
(as defined in Section 8(b)) (such Persons so listed and the Additional
Guarantors being, each, a "GUARANTOR", and collectively, the "GUARANTORS") in
favor of the Secured Parties (as defined in the Credit Agreement referred to
below) and Fleet Bank, N.A., as administrative agent (the "ADMINISTRATIVE
AGENT").
PRELIMINARY STATEMENT.
Moran Enterprises Corporation, a Delaware corporation (the
"BORROWER"), has entered into a Credit Agreement, dated as of October 30, 1998
(said Credit Agreement, as it may hereafter be amended, supplemented, restated
or otherwise modified from time to time, being the "CREDIT AGREEMENT";
capitalized terms used and not otherwise defined herein have the meanings
ascribed to them in the Credit Agreement), with the banks, financial
institutions and other institutions and other institutional lenders party
thereto and Fleet Bank, N.A., as Initial Issuing Bank and as Administrative
Agent. It is a condition precedent to the making of Advances by the Lender
Parties and the issuance of Letters of Credit by the Issuing Bank under the
Credit Agreement, and to the entry by the Hedge Banks into Bank Hedge Agreements
with the Borrower, from time to time, that the Guarantors shall have executed
and delivered this Guaranty.
NOW, THEREFORE, in consideration of the premises and in order to
induce the Lender Parties to make Advances and Issuing Bank to issue Letters of
Credit under the Credit Agreement, and the Hedge Banks to enter into Bank Hedge
Agreements with the Borrower, from time to time, each Guarantor hereby agrees as
follows:
Section 1. GUARANTY; LIMITATION OF LIABILITY.
(a) (i) Each Guarantor hereby jointly, severally,
unconditionally and irrevocably guarantees the punctual payment when due,
whether at stated maturity, by acceleration or otherwise, of all Obligations
of the Borrower or any other Loan Party now or hereafter existing under the
Loan Documents, whether for principal, interest, fees, expenses or otherwise
(such Obligations being the "GUARANTEED OBLIGATIONS"), and agrees to pay any
and all expenses (including counsel fees and expenses) incurred by the
Administrative Agent or any other Secured Party in enforcing any rights under
this Guaranty. Without limiting the generality of the foregoing, each
Guarantor's liability shall extend to all amounts that constitute part of the
Guaranteed Obligations and would be owed by the Borrower or any other Loan
Party to the Administrative Agent or any other Secured Party under the Loan
Documents but for the fact that they are unenforceable or not allowable due
to the existence of a bankruptcy, reorganization or
<PAGE>
similar proceeding involving the Borrower.
(ii) Anything in this Guaranty to the contrary
notwithstanding, prior to the Term A Draw Date, the maximum amount of the
Guaranteed Obligations for which the Old Moran Entities shall be liable
hereunder shall be Fifteen Million ($15,000,000) Dollars in the aggregate plus
interest thereon and further limited to Revolving Credit Advances (and the
interest thereon) the proceeds of which are used by the Old Moran Entities,
notwithstanding the aggregate amount of the Guaranteed Obligations at any time
payable hereunder, and the Old Moran Entities shall be liable hereunder up to
such maximum aggregate amount until all of the Revolving Credit Advances are
fully paid and performed in all respects. Without limiting the generality of
the foregoing, the Administrative Agent or any other Secured Party shall be
entitled, in their discretion, to determine: (i) the order in which it will seek
to collect the liabilities that are, pursuant to this subparagraph (ii),
partially guaranteed hereby; and (ii) the manner in it will seek to collect such
liabilities, including, without limitation, whether by seeking to realize on any
collateral security now or hereafter granted to it, by the enforcement of the
liabilities against the Borrower, by enforcement of any other guaranty by any
other Person or entity of the Guaranteed Obligations, or by a combination of
such methods.
(b) Each Guarantor, and by its acceptance of this
Guaranty, the Administrative Agent and each other Secured Party, hereby
confirms that it is the intention of all such parties that this Guaranty not
constitute a fraudulent transfer or conveyance for purposes of any Bankruptcy
Law, the Uniform Fraudulent Conveyance Act, the Uniform Fraudulent Transfer
Act or any similar federal, state or foreign law which may be applicable to
this Guaranty. To effectuate the foregoing intention, the Administrative
Agent, the other Secured Parties and the Guarantors hereby irrevocably agree
that, anything contained herein to the contrary notwithstanding, the
Obligations of each Guarantor under this Guaranty shall be limited to the
maximum amount as will, after giving effect to such maximum amount and all
other contingent and fixed liabilities of such Guarantor that are relevant
under such laws, and after giving effect to any collections from, rights to
receive contribution from or payments made by or on behalf of any other
Guarantor in respect of the Obligations of such other Guarantor under this
Guaranty, result in the Obligations of such Guarantor under this Guaranty not
constituting a fraudulent transfer or conveyance. For purposes hereof,
"BANKRUPTCY LAW" means Title 11, U.S. Code, or any similar federal or state
law for the relief of debtors.
Section 2. GUARANTY ABSOLUTE. Each Guarantor guarantees that the
Guaranteed Obligations will be paid strictly in accordance with the terms of the
Loan Documents, regardless of any law, regulation or order now or hereafter in
effect in any jurisdiction affecting any of such terms or the rights of the
Administrative Agent or any other Secured Party with respect thereto. The
Obligations of each Guarantor under this Guaranty are independent of the
Guaranteed Obligations or any other Obligations of any other Loan Party under
the Loan Documents, and a separate action or actions may be brought and
prosecuted
<PAGE>
against any Guarantor to enforce this Guaranty, irrespective of whether any
action is brought against the Borrower or any other Loan Party or whether the
Borrower or any other Loan Party is joined in any such action or actions. The
liability of each Guarantor under this Guaranty shall be irrevocable, absolute
and unconditional, irrespective of, and each Guarantor hereby irrevocably waives
any defenses it may now or hereafter have in any way relating to, any or all of
the following:
(a) any lack of validity or enforceability of any Loan Document or
any agreement or instrument relating thereto;
(b) any change in the time, manner or place of payment of, or in
any other term of, all or any of the Guaranteed Obligations or any other
Obligations of any other Loan Party under the Loan Documents, or any amendment
or waiver of or any consent to departure from any Loan Document, including,
without limitation, any increase in the Guaranteed Obligations resulting from
the extension of additional credit to the Borrower or any of its Subsidiaries or
otherwise;
(c) any taking, exchange, release or non-perfection of any
Collateral, or any taking, release or amendment or waiver of or consent to
departure from any other guaranty, for all or any of the Guaranteed Obligations;
(d) any manner of application of Collateral, or proceeds thereof,
to all or any of the Guaranteed Obligations, or any manner of sale or other
disposition of any Collateral for all or any of the Guaranteed Obligations or
any other Obligations of any other Loan Party under the Loan Documents or any
other assets of the Borrower or any of its Subsidiaries;
(e) any change, restructuring or termination of the corporate
structure or existence of the Borrower or any of its Subsidiaries;
(f) any failure of any Secured Party to disclose to the Borrower or
any Guarantor any information relating to the financial condition, operations,
properties or prospects of any other Loan Party now or in the future known to
any Secured Party (each Guarantor waiving any duty on the part of the Secured
Parties to disclose such information); or
(g) any other circumstance (including, without limitation, any
statute of limitations) or any existence of or reliance on any representation by
the Administrative Agent or any other Secured Party that might otherwise
constitute a defense available to, or a discharge of, the Borrower, such
Guarantor or any other guarantor or surety.
This Guaranty shall continue to be effective or be reinstated, as the case may
be, if at any time any payment of any of the Guaranteed Obligations is rescinded
or must otherwise be refused by any Secured Party or any other Person upon the
insolvency, bankruptcy or reorganization of the Borrower or any other Loan Party
or otherwise, all as though such payment had not been made.
<PAGE>
Section 3. WAIVERS AND ACKNOWLEDGMENTS.
(a) Each Guarantor hereby waives promptness, diligence, notice of
acceptance and any other notice with respect to any of the Guaranteed
Obligations and this Guaranty and any requirement that the Administrative Agent
or any other Secured Party protect, secure, perfect or insure any Lien or any
property subject thereto or exhaust any right or take any action against the
Borrower, any Guarantor or any other Person or any Collateral.
(b) Each Guarantor hereby waives any right to revoke this Guaranty,
and acknowledges that this Guaranty is continuing in nature and applies to all
Guaranteed Obligations, whether existing now or in the future.
(c) Each Guarantor acknowledges that it will receive substantial
direct and indirect benefits from the financing arrangements contemplated by the
Loan Documents and that the waivers set forth in this Section 3 are knowingly
made in contemplation of such benefits.
Section 4. SUBROGATION. Each Guarantor will not exercise any
rights that it may now or hereafter acquire against the Borrower or any other
guarantor that arise from the existence, payment, performance or enforcement of
such Guarantor's obligations under this Guaranty or any other Loan Document,
including, without limitation, any right of subrogation, reimbursement,
exoneration, contribution or indemnification and any right to participate in any
claim or remedy of the Administrative Agent or any other Secured Party against
the Borrower or any other guarantor or any Collateral, whether or not such
claim, remedy or right arises in equity or under contract, statute or common
law, including, without limitation, the right to take or receive from the
Borrower or any other guarantor, directly or indirectly, in cash or other
property or by setoff or in any other manner, payment or security on account of
such claim, remedy or right, unless and until all of the Guaranteed Obligations
and all other amounts payable under this Guaranty shall have been independently
paid in full in cash, all Letters of Credit have expired or have been terminated
or canceled, all Bank Hedge Agreements shall have expired or terminated and the
Commitments shall have expired or terminated. If any amount shall be paid to a
Guarantor in violation of the preceding sentence at any time prior to the later
of (i) the indefeasible payment in full in cash of the Guaranteed Obligations
and all other amounts payable under this Guaranty and (ii) the later of (x) the
Termination Date, (y) the expiration, termination or cancellation or all Letters
of Credit, and (z) the expiration or termination of all Bank Hedge Agreements in
accordance with their respective terms, such amount shall be held in trust for
the benefit of the Administrative Agent and the other Secured Parties and shall
forthwith be paid to the Administrative Agent to be credited and applied to the
Guaranteed Obligations and all other amounts payable under this Guaranty,
whether matured or unmatured, in accordance with the terms of the Loan
Documents, or to be held as Collateral for any Guaranteed Obligations or other
amounts payable under this Guaranty thereafter arising. If (i) a Guarantor
shall make payment to the Administrative Agent or any other Secured Party of all
or any part of the Guaranteed Obligations, (ii) all of the Guaranteed
Obligations and all other amounts payable under this Guaranty shall be
indefeasibly paid in full in cash and (iii) the Termination Date shall have
occurred, all Letters of Credit have expired or have been terminated or canceled
and all Bank
<PAGE>
Hedge Agreements shall have expired or terminated, the Administrative Agent and
the other Secured Parties will promptly, at such Guarantor's request and
expense, execute and deliver to such Guarantor appropriate documents, without
recourse and without representation or warranty, necessary to evidence the
transfer by subrogation to such Guarantor of an interest in the Guaranteed
Obligations resulting from such payment by such Guarantor.
Section 5. PAYMENTS FREE AND CLEAR OF TAXES, ETC.
(a) Any and all payments made by each Guarantor hereunder shall be
made, in accordance with Section 2.12 of the Credit Agreement, free and clear of
and without deduction for any and all present or future Taxes. If any Guarantor
shall be required by law to deduct any Taxes from or in respect of any sum
payable hereunder to the Administrative Agent or any other Secured Party, (i)
the sum payable shall be increased as may be necessary so that after making all
required deductions (including deductions applicable to additional sums payable
under this Section) the Administrative Agent or such other Secured Party (as the
case may be) receives an amount equal to the sum it would have received had no
such deductions been made, (ii) such Guarantor shall make such deductions and
(iii) such Guarantor shall pay the full amount deducted to the relevant taxation
authority or other authority in accordance with applicable law.
(b) In addition, each Guarantor agrees to pay any present or future
Other Taxes.
(c) Each Guarantor will indemnify the Administrative Agent and each
other Secured Party for the full amount of Taxes or Other Taxes (including,
without limitation, any Taxes or Other Taxes imposed by any jurisdiction on
amounts payable under this Section) imposed on or paid by the Administrative
Agent or such other Secured Party (as the case may be) and any liability
(including, without limitation, penalties, additions to tax, interest and
expenses) arising therefrom or with respect thereto, except with respect to the
Administrative Agent or any Secured Party, as the case may be, for such a
liability arising from the Administrative Agent's or such Secured Party's, as
the case may be, willful misconduct or gross negligence. This indemnification
shall be made within thirty (30) days from the date on which the Administrative
Agent or such other Secured Party, as the case may be, makes written demand
specifying in reasonable detail the basis therefor.
(d) Within thirty (30) days after the date of any payment of Taxes
by or on behalf of a Guarantor, such Guarantor will furnish to the
Administrative Agent, at its address referred to in Section 11.2 of the Credit
Agreement, the original receipt of payment thereof or a certified copy of such
receipt. In the case of any payment hereunder by or on behalf of a Guarantor
through an account or branch outside the United States or by or on behalf of
such Guarantor by a payor that is not a United States person, if such Guarantor
determines that no Taxes are payable in respect thereof, such Guarantor shall
furnish, or shall cause such payor to furnish, to the Administrative Agent, at
such address, an opinion of counsel acceptable to the Administrative Agent
stating that such payment is exempt from Taxes. For purposes of this
<PAGE>
subsection (d) and subsection (e), the terms "UNITED STATES" and "UNITED STATES
PERSON" shall have the meanings specified in Section 7701 of the Internal
Revenue Code.
(e) Each Secured Party organized under the laws of a jurisdiction
outside the United States shall, on or prior to the date of its execution and
delivery of the Credit Agreement in the case of each Initial Lender or Initial
Issuing Bank, as the case may be, and on the date of the Assignment and
Acceptance or other agreement pursuant to which it became a Secured Party in the
case of each other Secured Party (but only so long thereafter as such Secured
Party remains lawfully able to do so), provide each of the Administrative Agent
and Guarantors with two originals of Internal Revenue Service Form 1001 or 4224,
as appropriate, or any successor or other form prescribed by the Internal
Revenue Service, certifying that such Secured Party is exempt from or is
entitled to a reduced rate of United States withholding tax on payments under
the Credit Agreement or the Notes. If the form provided by a Secured Party at
the time such Secured Party first becomes a party to the Credit Agreement
indicates a United States interest withholding tax rate in excess of zero,
withholding tax at such rate shall be considered excluded from Taxes unless and
until such Secured Party provides the appropriate form certifying that a lesser
rate applies, whereupon withholding tax at such lesser rate only shall be
considered excluded from Taxes for periods governed by such form; provided,
however, that if at the date of the Assignment and Acceptance pursuant to which
a Secured Party assignee becomes a party to the Credit Agreement, the Secured
Party assignor was entitled to payments under subsection (a) in respect of
United States withholding tax with respect to interest paid at such date, then,
to such extent, the term Taxes shall include (in addition to withholding taxes
that may be imposed in the future or other amounts otherwise includable in
Taxes) United States withholding tax, if any, applicable with respect to the
Secured Party assignee on such date. If any form or document referred to in
this subsection (e) and requested by a Guarantor pursuant to this subsection (e)
requires the disclosure of information, other than information necessary to
compute the tax payable and information required on the date hereof by Internal
Revenue Service Form 1001 or 4224, that the Secured Party reasonably considers
to be confidential, the Secured Party shall give notice thereof to such
Guarantor and shall not be obligated to include in such form or document such
confidential information.
(f) For any period with respect to which a Secured Party has failed
to provide any Guarantor, following such Guarantor's request therefor pursuant
to subsection (e) above, with the appropriate form described in subsection (e)
(other than if such failure is due to a change in law occurring after the date
on which a form originally was required to be provided or if such form otherwise
is not required under subsection (e)), such Secured Party shall not be entitled
to indemnification under subsection (a) or (c) with respect to Taxes imposed by
the United States; PROVIDED, HOWEVER, that should a Secured Party become subject
to Taxes because of its failure to deliver a form required hereunder, such
Guarantor shall take all such steps as such Secured Party shall reasonably
request to assist such Secured Party to recover such Taxes.
(g) Any Secured Party claiming any additional amounts payable
pursuant to this Section 5 agrees to use reasonable efforts (consistent with its
internal policy and legal and regulatory restrictions) to change the
jurisdiction of its Eurodollar Lending Office if the making of such a change
would avoid the need for, or reduce the amount of, any such additional amounts
that may thereafter accrue and would not, in the judgment of such Secured Party,
be otherwise
<PAGE>
disadvantageous to such Secured Party.
(h) Without prejudice to the survival of any other agreement of
each Guarantor hereunder or under any other Loan Document, the agreements and
obligations of each Guarantor contained in this Section 5 shall survive the
payment in full of the Guaranteed Obligations and all other amounts payable
under this Guaranty and the other Loan Documents.
Section 6. REPRESENTATIONS AND WARRANTIES. The Guarantors hereby
jointly and severally represent and warrant as follows:
(a) There are no conditions precedent to the effectiveness of this
Guaranty that have not been satisfied or waived.
(b) Each Guarantor has, independently and without reliance upon the
Administrative Agent or any other Secured Party and based on such documents and
information as it has deemed appropriate, made its own credit analysis and
decision to enter into this Guaranty, and each Guarantor has established
adequate means of obtaining from any other Loan Parties on a continuing basis
information pertaining to (and is now, and on a continuing basis will be,
completely familiar with) the financial condition, operations, properties and
prospects of the Borrower and the other Loan Parties.
Section 7. COVENANTS. Each Guarantor hereby covenants and agrees
that, so long as any part of the Guaranteed Obligations shall remain unpaid, any
Letter of Credit shall be outstanding, any Bank Hedge Agreement shall not have
expired or terminated or any Lender Party shall have any Commitment, such
Guarantor will, unless the Administrative Agent and Required Lenders shall
otherwise consent in writing, perform or observe all of the terms, covenants and
agreements that this Guaranty and the other Loan Documents state that such
Guarantor shall perform or observe.
Section 8. AMENDMENTS, ETC. (a) No amendment or waiver of
any provision of this Guaranty, and no consent to any departure by any
Guarantor therefrom, shall in any event be effective unless the same shall be
in writing and signed by the Administrative Agent and Required Lenders, and
then such waiver or consent shall be effective only in the specific instance,
and for the specific purpose for which given; PROVIDED, HOWEVER, that no
amendment, waiver or consent shall, unless in writing and signed by all of
the Lenders (other than any Lender Party which is, at such time, a Defaulting
Lender), (a) release any Guarantor from its liability hereunder or (b)
postpone any date fixed for payment hereunder.
(b) Upon the execution and delivery by any Person of a supplemental
guaranty in substantially the form of EXHIBIT A hereto (each a "GUARANTY
SUPPLEMENT"), such Person shall be referred to as an "ADDITIONAL GUARANTOR" and
shall be and become a Guarantor for all purposes hereunder and each reference in
this Guaranty to a "Guarantor" shall also mean and be a reference to such
Additional Guarantor and each reference in any other Loan Document to a
"Guarantor" or "Subsidiary Guarantor" shall also mean and be a reference to such
Additional Guarantor.
<PAGE>
Section 9. NOTICES, ETC. All notices and other
communications provided for hereunder shall be in writing (including
telegraphic, telecopy or telex communication) and mailed, telegraphed,
telecopied, telexed or delivered to it, if to a Guarantor, addressed to it at
the address listed for such Guarantor on the signature pages hereof (or in
the applicable Guaranty Supplement), if to the Administrative Agent or any
Lender Party, at its address specified in Section 11.2 of the Credit
Agreement, if to any Hedge Bank, at its address specified in the Bank Hedge
Agreement to which it is a party, or, as to any party, at such other address
as shall be designated by such party in a written notice to each other party,
in each case with a copy to Finn Dixon & Herling LLP at its address set forth
in Section 11.2 of the Credit Agreement. All such notices and communications
shall, (i) when mailed by certified mail, return receipt requested, be
effective three (3) days after mailing, (ii) when telegraphed, telecopied or
telexed be effective upon delivery to the telegraph company, upon
transmission by telecopier or upon confirmation by telex answerback, (iii)
when delivered in person, be effective when delivered, and (iv) when
delivered by overnight courier, be effective two (2) Business Days after
delivery to the courier properly addressed, except that notices and
communications to the Administrative Agent pursuant to this Agreement shall
not be effective until received by the Administrative Agent.
Section 10. NO WAIVER; REMEDIES. No failure on the part of the
Administrative Agent or any other Secured Party 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. The remedies herein
provided are cumulative and not exclusive of any remedies provided by law.
Section 11. RIGHT OF SETOFF. Upon the occurrence and during the
continuance of any Event of Default, each Lender Party and each of its
Affiliates is hereby authorized at any time and from time to time, to the
fullest extent permitted by law, to set off and apply any and all deposits
(general or special, time or demand, provisional or final) at any time held and
other indebtedness at any time owing by such Lender Party or such Affiliate to
or for the credit or the account of any Guarantor against any and all of the
Obligations of such Guarantor now or hereafter existing under this Guaranty,
whether or not such Lender Party shall have made any demand under this Guaranty
and although such Obligations may be unmatured. Each Lender Party agrees
promptly to notify such Guarantor after any such setoff and application;
PROVIDED, HOWEVER, that the failure to give such notice shall not affect the
validity of such setoff and application. The rights of each Lender Party and
its Affiliates under this Section are in addition to the other rights and
remedies (including, without limitation, other rights of setoff) that such
Lender Party and its respective Affiliates has.
Section 12. INDEMNIFICATION. Without limitation on any other
Obligations of any Guarantor or the remedies of the Secured Parties under this
Guaranty, each Guarantor shall, and agrees to, jointly and severally, to the
fullest extent permitted by law, indemnify, defend and save and hold harmless
each Secured Party from and against, and shall pay on demand, any and all
losses, liabilities, damages, costs, expenses and charges (including the
reasonable fees and disbursements of such Secured Party's legal counsel)
suffered or incurred by such Secured Party as a result of any failure of any
Guaranteed Obligations to be the legal, valid and binding obligations of the
Borrower or any other Guarantor enforceable against the Borrower or such
<PAGE>
other Guarantor (as the case may be) in accordance with their terms.
Section 13. CONTINUING GUARANTY; ASSIGNMENTS UNDER THE CREDIT
AGREEMENT. This Guaranty is a continuing guaranty and shall (a) remain in full
force and effect until the later of the indefeasible payment in full in cash of
the Guaranteed Obligations and all other amounts payable under this Guaranty and
the later of (i) the Termination Date, (ii) the expiration, termination or
cancellation of all Letters of Credit, and (iii) the expiration or termination
of all Bank Hedge Agreements, (b) be binding upon each Guarantor, its successors
and assigns and (c) inure to the benefit of and be enforceable by the
Administrative Agent and the other Secured Parties and their respective
successors, transferees and assigns. Without limiting the generality of the
foregoing clause (c), any Secured Party may assign or otherwise transfer all or
any portion of its rights and obligations under the Credit Agreement (including,
without limitation, all or any portion of its Commitment, the Advances owing to
it and the Note or Notes held by it) to any other Person, and such other Person
shall thereupon become vested with all the benefits in respect thereof granted
to such Secured Party by this Guaranty or otherwise, in each case to the maximum
extent provided in Section 11.7 of the Credit Agreement.
Section 14. GOVERNING LAW; JURISDICTION; WAIVER OF JURY TRIAL, ETC.
(A) THIS GUARANTY SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF NEW YORK (WITHOUT GIVING EFFECT TO ITS CONFLICTS
OF LAW PRINCIPLES).
(B) EACH GUARANTOR HEREBY IRREVOCABLY AND UNCONDITIONALLY SUBMITS,
FOR ITSELF AND ITS PROPERTY, TO THE NONEXCLUSIVE JURISDICTION OF ANY NEW YORK
STATE COURT OR FEDERAL COURT OF THE UNITED STATES OF AMERICA SITTING IN NEW YORK
CITY, AND ANY APPELLATE COURT FROM ANY THEREOF, IN ANY ACTION OR PROCEEDING
ARISING OUT OF OR RELATING TO THIS GUARANTY OR ANY OF THE OTHER LOAN DOCUMENTS
TO WHICH IT IS OR IS TO BE A PARTY, OR FOR RECOGNITION OR ENFORCEMENT OF ANY
JUDGMENT, AND EACH GUARANTOR HEREBY IRREVOCABLY AND UNCONDITIONALLY AGREES THAT
ALL CLAIMS IN RESPECT OF ANY SUCH ACTION OR PROCEEDING MAY BE HEARD AND
DETERMINED IN ANY SUCH NEW YORK STATE COURT OR IN SUCH FEDERAL COURT LOCATED
WITHIN THE STATE OF NEW YORK. EACH GUARANTOR AGREES THAT A FINAL NON-APPEALABLE
JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE
ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER
PROVIDED BY LAW. NOTHING IN THIS GUARANTY SHALL AFFECT ANY RIGHT THAT THE
ADMINISTRATIVE AGENT OR ANY OTHER SECURED PARTY MAY OTHERWISE HAVE TO BRING ANY
ACTION OR PROCEEDING RELATING TO THIS GUARANTY OR ANY OF THE OTHER LOAN
<PAGE>
DOCUMENTS TO WHICH IT IS OR IS TO BE A PARTY IN THE COURTS OF ANY JURISDICTION.
(C) EACH GUARANTOR IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE
FULLEST EXTENT IT MAY LEGALLY AND EFFECTIVELY DO SO, ANY OBJECTION THAT IT MAY
NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUIT, ACTION OR PROCEEDING
ARISING OUT OF, OR RELATING TO, THIS GUARANTY OR ANY OF THE OTHER LOAN DOCUMENTS
TO WHICH IT IS OR IS TO BE A PARTY, IN ANY NEW YORK STATE OR FEDERAL COURT.
EACH GUARANTOR HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY
LAW, THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR
PROCEEDING IN ANY SUCH COURT.
(D) EACH GUARANTOR HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY
JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT
OR OTHERWISE, IN EQUITY OR AT LAW) ARISING OUT OF OR RELATING TO ANY OF THE LOAN
DOCUMENTS, THE TRANSACTIONS CONTEMPLATED THEREBY OR THE ACTIONS OF THE
ADMINISTRATIVE AGENT OR ANY OTHER SECURED PARTY IN THE NEGOTIATION,
ADMINISTRATION, PERFORMANCE OR ENFORCEMENT THEREOF.
<PAGE>
IN WITNESS WHEREOF, the Guarantors have caused this Guaranty to be duly
executed and delivered by their respective officers thereunto duly authorized as
of the date first above written.
MORAN ENTERPRISES CORPORATION
MORAN TRANSPORTATION COMPANY
TURECAMO MARITIME, INC.
WHITE STACK MARITIME CORP.
TURECAMO OF SAVANNAH, INC.
TURECAMO ENVIRONMENTAL SERVICES, INC.
MORAN TOWING CORPORATION
MORAN TOWING OF TEXAS, INC.
SEABOARD BARGE CORPORATION
PETROLEUM TRANSPORT CORPORATION
MORAN TOWING OF DELAWARE, INC.
MORAN SERVICES CORPORATION
MORAN SHIPYARD CORPORATION
HAMPTON ROADS LAND CO., INC.
PORTSMOUTH NAVIGATION CORPORATION
JAKOBSON SHIPYARD, INC.
MORAN BARGE CORP.
CURTIS BAY TOWING COMPANY OF PENNSYLVANIA
CURTIS BAY TOWING COMPANY OF VIRGINIA
FLORIDA TOWING COMPANY
MCF SUBSIDIARY, INC.
FOR EACH OF THE FOREGOING CORPORATIONS:
BY: /s/JEFFREY J. MCAULAY
------------------------------------
JEFFREY J. MCAULAY, VICE PRESIDENT
ADDRESS: C/O MORAN TRANSPORTATION COMPANY
TWO GREENWICH PLAZA
GREENWICH, CONNECTICUT 06830
[Signature Page to Subsidiary Guaranty]
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FORM MORAN
TRANSPORTATION COMPANY'S UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS AS OF AND
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> SEP-30-1998
<CASH> 8,093
<SECURITIES> 0
<RECEIVABLES> 13,121
<ALLOWANCES> 433
<INVENTORY> 4,203
<CURRENT-ASSETS> 28,060
<PP&E> 124,643
<DEPRECIATION> 38,834
<TOTAL-ASSETS> 162,267
<CURRENT-LIABILITIES> 13,604
<BONDS> 80,000
1,000
0
<COMMON> 1
<OTHER-SE> 16,414
<TOTAL-LIABILITY-AND-EQUITY> 162,267
<SALES> 78,790
<TOTAL-REVENUES> 78,790
<CGS> 55,893
<TOTAL-COSTS> 67,125
<OTHER-EXPENSES> (48)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 7,701
<INCOME-PRETAX> 4,487
<INCOME-TAX> 1,716
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,771
<EPS-PRIMARY> 62.13
<EPS-DILUTED> 59.98
</TABLE>
