<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MARCH 10, 1995
REGISTRATION STATEMENT NO. 33-56377
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
AMENDMENT NO. 1
FORMS* S-3, S-1 AND F-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
CHEVRON CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
----------------
DELAWARE 94-0890210
(STATE OR OTHER JURISDICTION (I.R.S. EMPLOYER
OF INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER)
225 BUSH STREET M.J. MCAULEY
SAN FRANCISCO, CALIFORNIA 94104 225 BUSH STREET
(415) 894-7700 SAN FRANCISCO, CALIFORNIA 94104
(ADDRESS, INCLUDING ZIP CODE, AND (415) 894-7700
TELEPHONE NUMBER, INCLUDING AREA CODE, (NAME, ADDRESS, INCLUDING ZIP CODE, AND
OF REGISTRANT'S PRINCIPAL EXECUTIVE TELEPHONE NUMBER, INCLUDING AREA CODE,
OFFICES) OF AGENT FOR SERVICE)
CHEVRON TRANSPORT CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
----------------
REPUBLIC OF LIBERIA 94-2280244
(STATE OR OTHER JURISDICTION (I.R.S. EMPLOYER
OF INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER)
CHEVRON HOUSE M.J. MCAULEY
11 CHURCH STREET 225 BUSH STREET
HAMILTON, BERMUDA HM11 SAN FRANCISCO, CALIFORNIA 94104
(809) 295-1774 (415) 894-7700
(ADDRESS AND TELEPHONE NUMBER OF (NAME, ADDRESS, INCLUDING ZIP CODE,
REGISTRANT'S PRINCIPAL EXECUTIVE AND TELEPHONE NUMBER, INCLUDING
OFFICES) AREA CODE, OF AGENT FOR SERVICE)
SEE TABLE OF ADDITIONAL REGISTRANTS
----------------
COPIES TO:
BLAIR W. WHITE, ESQ. CHARLES A. DIETZGEN, JAMES D. PHYFE, ESQ.
PILLSBURY MADISON & ESQ. DAVIS POLK & WARDWELL
SUTRO THACHER PROFFITT & WOOD 450 LEXINGTON AVENUE
P.O. BOX 7880 2 WORLD TRADE CENTER NEW YORK, N.Y. 10017
SAN FRANCISCO, NEW YORK, N.Y. 10048 (212) 450-4598
CALIFORNIA 94120 (212) 912-7443
(415) 983-1000
----------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after this Registration Statement becomes effective.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box: [_]
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, please check the following box: [_]
----------------
THE REGISTRANTS HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANTS
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
- --------------------
* This Registration Statement constitutes a filing on Form S-3 by Chevron
Corporation and Chevron Transport Corporation, a filing on Form S-1 by
California Petroleum Transport Corporation and a filing on Form F-1 by the
other Additional Registrants.
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<PAGE>
ADDITIONAL REGISTRANTS
CALIFORNIA PETROLEUM TRANSPORT CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
----------------
DELAWARE 6159 04-3232976
(STATE OR OTHER (PRIMARY STANDARD (I.R.S. EMPLOYER
JURISDICTION INDUSTRIAL IDENTIFICATION NUMBER)
OF INCORPORATION OR CLASSIFICATION CODE
ORGANIZATION) NUMBER)
C/O JH MANAGEMENT CT CORPORATION SYSTEM
CORPORATION 1633 BROADWAY
ROOM 6/9 NEW YORK, N.Y. 10019
ONE INTERNATIONAL PLACE (212) 664-1666
BOSTON, M.A. 02110-2624
(617) 951-7727
(ADDRESS, INCLUDING ZIP (NAME, ADDRESS,
CODE, AND TELEPHONE INCLUDING ZIP CODE, AND
NUMBER, INCLUDING AREA TELEPHONE NUMBER,
CODE, OF REGISTRANT'S INCLUDING AREA CODE, OF
PRINCIPAL EXECUTIVE AGENT FOR SERVICE)
OFFICES)
CALPETRO TANKERS THE BAHAMAS NOT 4412
(BAHAMAS I) LIMITED APPLICABLE
CALPETRO TANKERS THE BAHAMAS NOT 4412
(BAHAMAS II) LIMITED APPLICABLE
CALPETRO TANKERS THE BAHAMAS NOT 4412
(BAHAMAS III) LIMITED APPLICABLE
(EXACT NAME OF (STATE OR OTHER (I.R.S. (PRIMARY STANDARD
REGISTRANT AS JURISDICTION EMPLOYER INDUSTRIAL
SPECIFIED IN ITS OR INCORPORATION OR IDENTIFICATION
CHARTER) ORGANIZATION) NO.)
MAREVA HOUSE CLASSIFICATION CODE
4 GEORGE STREET NUMBER)
NASSAU, BAHAMAS CT CORPORATION SYSTEM
(809) 322-4195 1633 BROADWAY
NEW YORK, N.Y. 10019
(212) 664-1666
(ADDRESS AND TELEPHONE (NAME, ADDRESS,
NUMBER OF PRINCIPAL INCLUDING ZIP CODE, AND
EXECUTIVE OFFICES OF TELEPHONE NUMBER, OF
CALPETRO TANKERS AGENT FOR SERVICE)
(BAHAMAS I) LIMITED,
CALPETRO TANKERS
(BAHAMAS II) LIMITED,
AND
CALPETRO TANKERS
(BAHAMAS III) LIMITED)
CALPETRO TANKERS ISLE OF MAN NOT 4412
(IOM) LIMITED APPLICABLE
(EXACT NAME OF (STATE OR OTHER (I.R.S. (PRIMARY STANDARD
REGISTRANT AS JURISDICTION EMPLOYER INDUSTRIAL
SPECIFIED IN ITS OR INCORPORATION OR IDENTIFICATION
CHARTER) ORGANIZATION) NO.)
CLASSIFICATION CODE
NUMBER)
UNITED HOUSE CT CORPORATION SYSTEM
14-16 NELSON STREET 1633 BROADWAY
DOUGLAS, ISLE OF MAN NEW YORK, N.Y. 10019
BRITISH ISLES (212) 664-1666
011-44-624-623422
(NAME, ADDRESS,
(ADDRESS AND TELEPHONE INCLUDING ZIP CODE, AND
NUMBER OF PRINCIPAL TELEPHONE NUMBER, OF
EXECUTIVE OFFICES OF AGENT FOR SERVICE)
CALPETRO TANKERS (IOM)
LIMITED)
<PAGE>
CROSS REFERENCE SHEET
(PURSUANT TO ITEM 501(b) OF REGULATION S-K)
<TABLE>
<CAPTION>
ITEM NO. AND CAPTION CAPTION IN PROSPECTUS
<S> <C>
1. Forepart of Registration Statement
and Outside Front Cover Page of
Prospectus......................... Outside Front Cover Page
2. Inside Front and Outside Back Cover
Pages of Prospectus................ Inside Front Cover Page of Prospectus,
Available Information, Enforceability
of Civil Liabilities
3. Summary Information, Risk Factors
and Ratio of Earnings to Fixed
Charges............................ Prospectus Summary, Investment
Considerations, Management's
Discussion and Analysis of Financial
Condition
4. Use of Proceeds..................... Use of Proceeds
5. Determination of Offering Price..... Outside Front Cover Page of
Prospectus, Underwriting
6. Dilution............................ *
7. Selling Security Holders............ *
8. Plan of Distribution................ Underwriting
9. Description of Securities to be Reg-
istered............................ Description of the Notes
10. Interests of Named Experts and Coun-
sel................................ *
11. Information with Respect to the Reg-
istrants
(a)(1) Description of Business...... Prospectus Summary, Investment
Considerations, California Petroleum
and the Owners, Management's
Discussion and Analysis of Financial
Condition
(2) Description of Property...... California Petroleum and the Owners
(3) Legal Proceedings............ *
(4) Control of Registrant........ Prospectus Summary, California
Petroleum and the Owners
(5) Nature of Trading Market..... *
(6) Exchange Controls and Other
Limitations Affecting
Security Holders............ *
(7) Taxation..................... *
(8) Selected Financial Data...... Selected Financial Data, Index to
Financial Statements
(9) Management's Discussion and
Analysis of Financial
Condition and Results of
Operations.................. Management's Discussion and Analysis
of Financial Condition
(10) Directors and Officers of
Registrants.................. Management
(11) Compensation of Directors and
Officers.................... Management
(12) Options to Purchase Securities
from Registrant or
Subsidiaries................ *
(13) Interest of Management in
Certain Transactions........ Certain Transactions with Related
Parties
(b) Financial Statements......... Index to Financial Statements
12. Disclosure of Commission Position on
Indemnification for Securities Act
Liabilities........................ *
</TABLE>
- --------------------
* Indicates that item is omitted from Prospectus because it is not applicable
or the answer is in the negative.
<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A +
+REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE +
+SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY +
+OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT +
+BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR +
+THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE +
+SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE +
+UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF +
+ANY SUCH STATE. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION, DATED MARCH 10, 1995
PROSPECTUS
, 1995
$167,500,000
CALIFORNIA PETROLEUM TRANSPORT CORPORATION
SERIAL FIRST PREFERRED MORTGAGE NOTES
MATURING SERIALLY FROM 1996 TO 2006
Payable from Charterhire Payments by
CHEVRON TRANSPORT CORPORATION
CHEVRON
LOGO
Whose Charter Obligations are Guaranteed by
CHEVRON CORPORATION
The Serial First Preferred Mortgage Notes designated below in the aggregate
principal amount of $167,500,000 (the "Serial Mortgage Notes") are being issued
as full recourse obligations of California Petroleum Transport Corporation, a
Delaware corporation ("California Petroleum"), by California Petroleum as agent
on behalf of the Owners named below. Interest on the Serial Mortgage Notes will
be payable semi-annually on and of each year, commencing on , 1995,
at the rates per annum set forth below. Principal will be payable on the Serial
Mortgage Notes on their respective maturity dates (each, a "Maturity Date").
Concurrent with this offering, % First Preferred Mortgage Notes Due 2015 in an
aggregate principal amount of $117,900,000 (the "Term Mortgage Notes" and,
together with the Serial Mortgage Notes, the "Notes"), are being offered
pursuant to a separate prospectus. The consummation of the sale of the Serial
Mortgage Notes is dependent on the consummation of the sale of the Term
Mortgage Notes.
The proceeds from the sale of the Serial Mortgage Notes, together with the
proceeds from the sale of the Term Mortgage Notes, will be loaned by California
Petroleum to CalPetro Tankers (Bahamas I) Limited, CalPetro Tankers (Bahamas
II) Limited, CalPetro Tankers (Bahamas III) Limited and CalPetro Tankers (IOM)
Limited (each, an "Owner") on a non-recourse basis, secured jointly and
severally by the collateral discussed
(continued on next page)
SEE "INVESTMENT CONSIDERATIONS" FOR A DISCUSSION OF CERTAIN FACTORS WHICH
INVESTORS SHOULD CONSIDER IN CONNECTION WITH AN INVESTMENT IN THE SERIAL
MORTGAGE NOTES.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
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<TABLE>
<CAPTION>
UNDERWRITING PROCEEDS TO
INTEREST AGGREGATE PRICE TO DISCOUNTS AND CALIFORNIA
RATE AMOUNT PUBLIC(1) COMMISSIONS(2) PETROLEUM(1)(3)
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<S> <C> <C> <C> <C> <C>
1996 Serial
Mortgage
Notes % $ 17,160,000 100% % %
1997 Serial
Mortgage
Notes 18,160,000 100%
1998 Serial
Mortgage
Notes 18,160,000 100%
1999 Serial
Mortgage
Notes 18,160,000 100%
2000 Serial
Mortgage
Notes 18,160,000 100%
2001 Serial
Mortgage
Notes 18,160,000 100%
2002 Serial
Mortgage
Notes 18,160,000 100%
2003 Serial
Mortgage
Notes 18,160,000 100%
2004 Serial
Mortgage
Notes 12,950,000 100%
2005 Serial
Mortgage
Notes 7,740,000 100%
2006 Serial
Mortgage
Notes 2,530,000 100%
------------ ----- -----
Total $167,500,000 $167,500,000 $ $
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</TABLE>
(1)Plus accrued interest, if any, from the date of issuance.
(2)See "Underwriting" for compensation and indemnity arrangements with the
Underwriter.
(3) Before deducting expenses payable from the proceeds of the offering
estimated at $300,000. Expenses payable in connection with the concurrent
offering of the Term Mortgage Notes are estimated at $211,000.
The Serial Mortgage Notes are offered by the Underwriter, when, as and if
delivered to and accepted by the Underwriter, and subject to various prior
conditions, including its right to reject orders in whole or in part. It is
expected that delivery of the Serial Mortgage Notes will be made through the
facilities of The Depository Trust Company upon payment therefor in immediately
available funds in New York, New York on or about , 1995.
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
<PAGE>
[insert tanker picture]
2
<PAGE>
(cover page continued)
below, to fund, after paying certain fees and expenses, the acquisition by
each Owner of a recently constructed oil tanker (each, a "Vessel") from
Chevron Transport Corporation ("Chevron Transport"). The Vessels consist of
one double-hulled, 130,000 deadweight tonne oil tanker, two double-hulled,
150,000 deadweight tonne oil tankers and one single-hulled, 150,000 deadweight
tonne oil tanker, each of which was constructed to the specifications of
Chevron Transport. Initially, each Owner will enter into a bareboat charter
(each, an "Initial Charter") with Chevron Transport with a term expiring on
, 2015, subject to earlier termination at the option of Chevron Transport.
The obligations of Chevron Transport under each Initial Charter will be
guaranteed by Chevron Corporation ("Chevron"). Chevron Transport is an
indirect, wholly-owned subsidiary of Chevron. The Serial Mortgage Notes will
not be obligations of, or guaranteed by, Chevron Transport or Chevron,
although California Petroleum and the Owners expect that the amounts payable
by Chevron Transport, and guaranteed by Chevron, under the Initial Charters
(whether or not the termination options are exercised), together with an
allocable amount of anticipated earnings on the Permitted Investments (as
defined herein), will be sufficient to pay in full when due all principal of
and interest on the Serial Mortgage Notes. See "Investment Considerations--
Certain Risks Not Related to Chevron Transport or Chevron." The Serial
Mortgage Notes will be obligations of California Petroleum and will be
secured, equally and ratably with the Term Mortgage Notes, by an assignment of
a first preferred ship mortgage on each Vessel, an assignment of each Initial
Charter, as well as by certain other collateral. Upon payment in full of the
Allocated Principal Amount of Serial Mortgage Notes (as defined herein) with
respect to a Vessel, the collateral relating to such Vessel will be released
from the Lien of the Serial Indenture. California Petroleum has agreed not to
incur any indebtedness other than its obligations under the Notes and the
related Indentures and the Owners have agreed not to incur any indebtedness
other than Permitted Indebtedness so long as any Serial Mortgage Notes are
outstanding. See "Description of the Notes--Certain Covenants" and "The
Mortgages--Certain Covenants" for a discussion of Permitted Indebtedness.
The Serial Mortgage Notes will not be subject to optional redemption prior
to their respective maturity dates. If certain casualty or other events occur
with respect to a Vessel, the Serial Mortgage Notes will be subject to
mandatory redemption in part, equally and ratably with any Term Mortgage Notes
then outstanding, in an aggregate principal amount equal to the Allocated
Principal Amount of Serial Mortgage Notes then outstanding and allocable to
such Vessel. See "Description of the Notes--Redemption." The Term Mortgage
Notes may be redeemed, in whole or in part, at the direction of California
Petroleum on any Payment Date on or after , 2006, the final Maturity Date
for any Serial Mortgage Notes.
The Serial Mortgage Notes will be debt obligations of California Petroleum
secured solely by the Collateral and will not be share capital, debentures or
general obligations of any Owner or the Owners and this Prospectus does not
constitute an offering of any such security of any Owner or the Owners.
Recourse under the Serial Indenture against the incorporators, directors,
officers and stockholders of California Petroleum and its stockholders has
been expressly waived by the Indenture Trustee, on behalf of all Holders of
the Serial Mortgage Notes and, accordingly, the incorporators, directors,
officers and stockholders of California Petroleum and its stockholders will
not be liable for any payments of debt service on the Serial Mortgage Notes.
California Petroleum's capitalization is nominal and it has no source of
income other than payments to it by the Owners.
----------------
No action has been or will be taken in any jurisdiction by California
Petroleum, Chevron Transport, Chevron, any Owner or the Underwriter that would
permit a public offering of the Serial Mortgage Notes or possession or
distribution of this Prospectus in any jurisdiction where action for that
purpose is required, other than the United States of America.
All references in this Prospectus to "$" or "Dollars" shall be to the
currency of the United States of America.
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITER MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE SERIAL
MORTGAGE NOTES OFFERED HEREBY AND THE TERM MORTGAGE NOTES AT A LEVEL ABOVE
THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH TRANSACTIONS MAY
BE EFFECTED IN THE OVER-THE-COUNTER MARKET OR OTHERWISE. SUCH STABILIZING, IF
COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
3
<PAGE>
AVAILABLE INFORMATION
California Petroleum, Chevron Transport, Chevron and the Owners have filed
with the Securities and Exchange Commission (the "Commission") a combined
registration statement under the Securities Act of 1933, as amended (the
"Securities Act") with respect to the securities offered hereby (the
"Registration Statement"). This Prospectus, which constitutes a part of the
Registration Statement, does not contain all the information set forth in the
Registration Statement, certain parts of which are omitted in accordance with
the rules and regulations of the Commission. For further information with
respect to California Petroleum, Chevron Transport, Chevron and the Owners and
the securities offered hereby, reference is made to the Registration Statement,
including the exhibits thereto, and the financial statements and notes filed as
a part thereof. All of these documents may be inspected and copied at
prescribed rates at the public reference facilities maintained by the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, and at the
Regional Offices of the Commission located at 7 World Trade Center, New York,
New York 10048, and Northwestern Atrium Center, 500 West Madison Street, Suite
1400, Chicago, Illinois 60661.
Chevron is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the
Commission. All of the reports, proxy statements and other documents filed by
Chevron with the Commission, including the documents incorporated by reference
herein, may be inspected and copied at the public reference facilities
maintained by the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549
and at the following Regional Offices of the Commission: 7 World Trade Center,
New York, New York 10048; and Northwestern Atrium Center, 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661. Copies of all such reports, proxy
statements and other documents can also be obtained from the Public Reference
Section of the Commission, 450 Fifth Street, N.W., Washington, D.C. 20549, at
prescribed rates. In addition, certain reports, proxy statements and other
information concerning Chevron may be inspected and copied at the offices of
the New York Stock Exchange, Inc., 20 Broad Street, New York, New York 10015;
the Chicago Stock Exchange, 440 South LaSalle Street, Chicago, Illinois 60605;
and The Pacific Stock Exchange, Inc., 301 Pine Street, San Francisco,
California 94104 and 618 South Spring Street, Los Angeles, California 90014.
Chevron is not required to, and will not, provide annual reports to Holders of
the Serial Mortgage Notes unless specifically requested to do so by such a
Holder.
Chevron Transport is currently not subject to the informational requirements
of the Exchange Act. Chevron Transport will not be subject to such requirements
upon effectiveness of the Registration Statement pursuant to an exemption
therefrom.
Upon written or oral request, Chevron will provide, without charge, to each
person to whom a copy of this Prospectus has been delivered a copy of any or
all of the documents (without exhibits other than exhibits specifically
incorporated by reference into such documents) incorporated by reference into
this Prospectus. Requests for such copies should be directed to: Chevron
Corporation, 225 Bush Street, San Francisco, California 94104, Attention:
Office of the Comptroller (telephone: (415) 894-7700).
4
<PAGE>
Neither California Petroleum nor any of the Owners is currently subject to
the informational requirements of the Exchange Act. California Petroleum and
each Owner will be subject to such requirements upon effectiveness of the
Registration Statement and will provide copies of reports filed under the
Exchange Act to the Holders of the Serial Mortgage Notes upon request. During
any time that California Petroleum or any Owner is not subject to the reporting
and informational requirements of the Exchange Act, under the terms of the
Serial Indenture and the Mortgages, California Petroleum and the Owners have
agreed that, so long as the Serial Mortgage Notes remain outstanding, they will
file with the Indenture Trustee and the Commission and distribute to Holders of
the Serial Mortgage Notes, upon request, copies of the financial and other
information that would have been contained in such annual reports and periodic
reports that California Petroleum and the Owners would have been required to
file with the Commission pursuant to the Exchange Act.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by Chevron with the Commission are incorporated
by reference in this Prospectus:
(1) Chevron's Annual Report on Form 10-K for the year ended December
31, 1993.
(2) Chevron's Quarterly Report on Form 10-Q for the quarter ended March
31, 1994.
(3) Chevron's Quarterly Report on Form 10-Q for the quarter ended June
30, 1994.
(4) Chevron's Quarterly Report on Form 10-Q for the quarter ended
September 30, 1994.
(5) Chevron's Current Report on Form 8-K, dated July 26, 1994.
(6) Chevron's Current Report on Form 8-K, dated August 1, 1994.
(7) Chevron's Current Report on Form 8-K/A, dated August 1, 1994.
(8) Chevron's Current Report on Form 8-K, dated August 3, 1994.
(9) Chevron's Current Report on Form 8-K, dated October 25, 1994.
(10) Chevron's Current Report on Form 8-K, dated October 28, 1994.
(11) Chevron's Current Report on Form 8-K, dated January 24, 1995.
(12) Chevron's Current Report on Form 8-K, dated February 27, 1995.
(13) Chevron's Current Report on Form 8-K, dated March 10, 1995.
(14) Chevron's Current Report on Form 8-K, dated March 10, 1995.
All documents filed by Chevron pursuant to Sections 13, 14 or 15(d) of the
Exchange Act after the date hereof and prior to the termination of the
distribution of the Serial Mortgage Notes shall also be deemed to be
incorporated by reference herein and be a part hereof from the date of filing
of such documents. Any statement contained herein or in a document incorporated
or deemed to be incorporated by reference herein shall be deemed to be modified
or superseded for purposes of this Prospectus to the extent that a statement
contained herein or in any subsequently filed document which also is or is
deemed to be incorporated by reference herein modifies or supersedes such
statement. Any such statement so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute a part of this Prospectus.
5
<PAGE>
ENFORCEABILITY OF CIVIL LIABILITIES
Each of CalPetro Tankers (Bahamas I) Limited, CalPetro Tankers (Bahamas II)
Limited and CalPetro Tankers (Bahamas III) Limited is a special purpose company
organized under the laws of the Commonwealth of the Bahamas (the "Bahamas").
CalPetro Tankers (IOM) Limited is organized under the laws of the Isle of Man.
A substantial portion of the assets of each Owner is or may be located outside
the United States. As a result, it may be difficult for investors to enforce
outside the United States judgments against each such Owner obtained in the
United States in any actions, including actions predicated on the civil
liability provisions of the federal securities laws of the United States.
Certain directors of each such Owner are residents of jurisdictions other than
the United States, and all or a significant portion of the assets of such
persons are or may be located outside the United States. As a result, it may be
difficult for investors to effect service of process within the United States
upon such persons or to enforce against them in United States courts judgments
predicated upon the civil liability provisions of the federal securities laws
of the United States. There is currently no treaty between the United States
and the Bahamas or between the United States and the Isle of Man providing for
reciprocal recognition and enforcement of judgments in civil and commercial
matters and a final judgment for the payment of money rendered by any federal
or state court in the United States based on civil liability, whether or not
predicated solely upon the federal securities laws, would, therefore, not be
automatically enforceable in the Bahamas or in the Isle of Man. Each Owner has
irrevocably submitted to the jurisdiction of the federal and state courts in
The City of New York for the purpose of any legal suit, action or proceeding
against each such Owner in connection with the offering and sale of the Serial
Mortgage Notes.
The foregoing discussion is based on the advice of McKinney, Bancroft &
Hughes, counsel to CalPetro Tankers (Bahamas I) Limited, CalPetro Tankers
(Bahamas II) Limited, and CalPetro Tankers (Bahamas III) Limited with respect
to matters of Bahamian law, and Cains, counsel to CalPetro Tankers (IOM)
Limited with respect to matters of Isle of Man law.
Chevron Transport is organized under the laws of the Republic of Liberia
("Liberia") and a substantial portion of its assets are or may be located
outside the United States. Certain directors of Chevron Transport are residents
of jurisdictions other than the United States, and all or a significant portion
of the assets of these directors of Chevron Transport may be located outside
the United States. As a result, it may not be possible for investors to effect
service of process within the United States upon such persons or to enforce
against them or against Chevron Transport in the United States judgments
predicated upon the civil liability provisions of the federal securities laws
of the United States. There is currently no treaty between the United States
and Liberia providing for reciprocal recognition and enforcement of judgments
in civil and commercial matters, and a final judgment for the payment of money
rendered by any federal or state court in the United States based on civil
liability, whether or not predicted solely upon the federal securities laws,
would, therefore, not be automatically enforceable in Liberia. However, such
judgment would be admissible in evidence and would be enforceable by the courts
of Liberia without re-trial or examination of the merits of the case if the
court which rendered the judgment had jurisdiction over the parties and subject
matter, the judgment was for a fixed or definite sum, the judgment was not a
default judgment and if enforcement of the judgment is not contrary to the
public policy of Liberia. Chevron Transport has irrevocably submitted to the
jurisdiction of the federal and state courts in New York City for the purpose
of any legal suit, action or proceeding against Chevron Transport in connection
with the offering and sale of the Serial Mortgage Notes.
6
<PAGE>
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the more detailed
information and financial statements, including the notes thereto, appearing
elsewhere in this Prospectus. Definitions of certain shipping terms and a
glossary of certain other significant terms used in this Prospectus are
included as Appendix A hereto.
CHEVRON AND CHEVRON TRANSPORT
Chevron Transport Corporation, a Liberian corporation ("Chevron Transport"),
is principally engaged in the marine transportation of oil and refined
petroleum products. As of December 31, 1994, Chevron Transport operated 30
internationally flagged vessels which it owned or bareboat chartered. In
addition, at any given time, Chevron Transport typically has an additional 35
to 45 ships on time or single-voyage charters. Chevron Transport's primary
transportation routes are from the Middle East, Indonesia, Mexico, West Africa
and the North Sea to ports in the United States, Europe, the United Kingdom and
Asia. Refined petroleum products are transported worldwide. Chevron Transport
expects to use each Vessel worldwide as permitted under the Initial Charters.
Chevron Corporation, a Delaware corporation ("Chevron"), a major
international oil company, will guarantee the payment and performance
obligations of Chevron Transport under each Initial Charter. Chevron provides
administrative, financial and management support for, and manages its
investment in, domestic and foreign subsidiaries and affiliates, which engage
in fully integrated petroleum operations, chemical operations, real estate
development and other mineral and energy related activities in the United
States and approximately 100 other countries. Petroleum operations consist of
exploring for, developing and producing crude oil and natural gas; transporting
crude oil, natural gas and petroleum products by pipelines, marine vessels and
motor equipment; refining crude oil into finished petroleum products; and
marketing crude oil, natural gas and the many products derived from petroleum.
Chemical operations include the manufacture and marketing of a wide range of
chemicals primarily for industrial uses. Chevron Transport is an indirect,
wholly-owned subsidiary of Chevron.
Chevron's executive offices are located at 225 Bush Street, San Francisco,
California 94104. Chevron's telephone number is (415) 894-7700. Chevron
Transport's executive offices are located at Chevron House, 11 Church Street,
Hamilton, Bermuda HM11, and its telephone number is (809) 295-1774.
CALIFORNIA PETROLEUM
California Petroleum Transport Corporation, a Delaware corporation
("California Petroleum"), is a special purpose corporation that has been
recently organized solely for the purpose of issuing, as agent on behalf of the
Owners, the Serial Mortgage Notes and the Term Mortgage Notes as full recourse
obligations of California Petroleum and loaning the proceeds of the sale of the
Notes to the Owners to facilitate the funding of the acquisition of the four
Vessels described below from Chevron Transport. Recourse under the Serial
Indenture against the incorporators, directors, officers and stockholders of
California Petroleum and its stockholders has been expressly waived by the
Indenture Trustee, on behalf of all Holders of the Serial Mortgage Notes and,
accordingly, the incorporators, directors, officers and stockholders of
California Petroleum and its stockholders will not be liable for any payments
of debt service on the Serial Mortgage Notes. California Petroleum's
capitalization is nominal and it has no source of income other than payments to
it by the Owners. All the shares of California Petroleum are held by The
California Trust, a Massachusetts charitable lead trust formed by JH Holdings,
a Massachusetts corporation, for the benefit of certain charitable institutions
in Massachusetts.
7
<PAGE>
California Petroleum's executive offices are located at Room 6/9, One
International Place, Boston, Massachusetts 02110-2624, and its telephone number
is (617) 951-7727.
THE OWNERS
Each of CalPetro Tankers (Bahamas I) Limited ("CalPetro Bahamas I"), CalPetro
Tankers (Bahamas II) Limited ("CalPetro Bahamas II") and CalPetro Tankers
(Bahamas III) Limited ("CalPetro Bahamas III"), has been recently organized as
a special purpose company under the laws of the Bahamas for the purpose of
acquiring and chartering one of the Vessels. Similarly, CalPetro Tankers (IOM)
Limited ("CalPetro IOM") has been recently organized as a special purpose
company organized under the laws of the Isle of Man for the purpose of
acquiring and chartering one of the Vessels. Each of the foregoing companies
also is referred to in this Prospectus as an "Owner." Each Owner, either
pursuant to the terms of its Memorandum of Association and/or pursuant to the
terms of the related Mortgage, will engage in no business other than the
ownership and chartering of its Vessel and activities resulting from or
incidental to such ownership and chartering. Each Owner is wholly-owned by
California Tankers Investments Limited, a company organized under the laws of
the Bahamas, which is a wholly-owned subsidiary of CalPetro Holdings Limited,
an Isle of Man company. None of the Owners is owned by or is an affiliate of
California Petroleum and none of California Petroleum or any Owner is owned by
or is an affiliate of Chevron Transport or Chevron.
Each of CalPetro Bahamas I, CalPetro Bahamas II and CalPetro Bahamas III has
executive offices located at Mareva House, 4 George Street, Nassau, Bahamas,
and each such Owner's telephone number is (809) 322-4195.
CalPetro IOM's executive offices are located at United House, 14-16 Nelson
Street, Douglas, Isle of Man, British Isles and its telephone number is 011-44-
624-623422.
THE VESSELS
Each Vessel to be acquired by the respective Owner listed below is a Suezmax
oil tanker, which is currently owned and operated by Chevron Transport.
Suezmax-size tankers are medium-sized vessels ranging from approximately
120,000 to 200,000 deadweight tonnes ("dwt"), and of maximum length, breadth
and draft capable of passing fully loaded through the Suez Canal.
<TABLE>
<CAPTION>
APPROXIMATE
DEADWEIGHT
VESSEL NAME OWNER TONNES CONSTRUCTION DELIVERY DATE
<S> <C> <C> <C> <C>
Samuel Ginn ("S. Ginn") CalPetro Bahamas I 150,000 Double Hull March 1993
Condoleezza Rice ("C. Rice") CalPetro Bahamas II 130,000 Double Hull August 1993
Chevron Mariner ("Chevron Mari-
ner") CalPetro IOM 150,000 Double Hull October 1994
William E. Crain ("W.E. Crain") CalPetro Bahamas III 150,000 Single Hull February 1992
</TABLE>
8
<PAGE>
Each Vessel has been constructed under the supervision of Chevron Transport
and has been designed to Chevron Transport's specifications to enhance safety
and reduce operating and maintenance costs, including such features as high
performance rudders, extra steel (minimal use of high tensile steels),
additional fire safety equipment, redundant power generation equipment, extra
coating and electrolytic corrosion monitoring and protection systems,
additional crew quarters to facilitate added manning and, for three of the
Vessels, a double-hull design patented by one of Chevron's subsidiaries. The
builder of three of the Vessels, C. Rice, Chevron Mariner and W.E. Crain, was
Ishikawajima do Brasil Estaleiros S.A. ("Ishibras"), and the builder of S. Ginn
was Ishikawajima-Harima Heavy Industries Co., Ltd. ("IHI").
<TABLE>
<CAPTION>
VESSEL TECHNICAL INFORMATION
LENGTH BEAM DRAFT
VESSEL BUILDER REGISTRATION (METERS) (METERS) (METERS)
<S> <C> <C> <C> <C> <C>
S. Ginn IHI Bahamas 274.50 50.00 17.205
C. Rice Ishibras Bahamas 258.90 48.30 16.79
Chevron Mariner Ishibras Liberia 274.50 50.00 17.205
W.E. Crain Ishibras Liberia 274.50 50.00 16.79
</TABLE>
9
<PAGE>
THE OFFERING
Securities Offered...... $167,500,000 aggregate principal amount of Serial
First Preferred Mortgage Notes issued under an
indenture (the "Serial Indenture") in the principal
amounts and maturities stated below:
$17,160,000 principal amount of %
Serial First Preferred Mortgage Notes Due
1996(the "1996 Serial Mortgage Notes").
$18,160,000 principal amount of %
Serial First Preferred Mortgage Notes Due
1997(the "1997 Serial Mortgage Notes").
$18,160,000 principal amount of %
Serial First Preferred Mortgage Notes Due
1998(the "1998 Serial Mortgage Notes").
$18,160,000 principal amount of %
Serial First Preferred Mortgage Notes Due
1999(the "1999 Serial Mortgage Notes").
$18,160,000 principal amount of %
Serial First Preferred Mortgage Notes Due
2000(the "2000 Serial Mortgage Notes").
$18,160,000 principal amount of %
Serial First Preferred Mortgage Notes Due
2001(the "2001 Serial Mortgage Notes").
$18,160,000 principal amount of %
Serial First Preferred Mortgage Notes Due
2002(the "2002 Serial Mortgage Notes").
$18,160,000 principal amount of %
Serial First Preferred Mortgage Notes Due
2003(the "2003 Serial Mortgage Notes").
$12,950,000 principal amount of %
Serial First Preferred Mortgage Notes Due
2004(the "2004 Serial Mortgage Notes").
$7,740,000 principal amount of %
Serial First Preferred Mortgage Notes Due
2005(the "2005 Serial Mortgage Notes").
$2,530,000 principal amount of %
Serial First Preferred Mortgage Notes Due
2006(the "2006 Serial Mortgage Notes").
The foregoing are collectively referred to in this
Prospectus as the "Serial Mortgage Notes."
Scheduled Principal
Payment Dates.......... The principal amount of each Serial Mortgage Note
will be payable in full on the maturity date for such
Serial Mortgage Note, which will be of the
respective year of maturity (each, a "Maturity
Date").
Interest Payment Dates.. and , commencing , 1995.
10
<PAGE>
Denominations........... The Serial Mortgage Notes will be issued in minimum
denominations of $100,000 and multiples of $1,000 in
excess thereof.
Form.................... The Serial Mortgage Notes will be issued in the form
of one or more fully registered global notes (each, a
"Global Note") which will be issued to The Depository
Trust Company ("DTC") and registered in the name of a
nominee of DTC. The Indenture Trustee will act as
custodian of each Global Note for DTC. Except as
otherwise described herein, the Serial Mortgage Notes
will be available for purchase in book-entry form
only and each person owning a beneficial interest in
a Global Note must rely on the procedures of the
institutions having accounts with DTC to exercise or
be entitled to any of the rights of a registered
holder of any Serial Mortgage Notes (a "Holder").
Concurrent Offering..... Concurrent with the offering of the Serial Mortgage
Notes, California Petroleum is offering for sale to
the public pursuant to a separate prospectus
$117,900,000 aggregate principal amount of % First
Preferred Mortgage Notes Due 2015 (the "Term Mortgage
Notes") issued under a separate indenture (the "Term
Indenture"). The consummation of the sale of the
Serial Mortgage Notes is dependent on the
consummation of the sale of the Term Mortgage Notes.
Purchase of Vessels..... The Vessels are currently owned by Chevron Transport.
The sale of the Vessels to the respective Owners and
the commencement of the Initial Charters with respect
to the Vessels will occur on the closing date (the
"Closing Date") for the offering of the Notes.
The Initial Charters
and Chevron
Guarantees............. On the Closing Date, the Vessels will be purchased by
their respective Owner and will be chartered to
Chevron Transport. The bareboat charter for each
Vessel (each, an "Initial Charter") will have a term
expiring on , 2015, subject to Chevron Transport's
right to terminate each of the Initial Charters on
specified dates commencing on the date that the
Allocated Principal Amount of Serial Mortgage Notes
relating to such Vessel is scheduled to have been
paid in full. The obligations of Chevron Transport
under each Initial Charter will be guaranteed by
Chevron pursuant to a guarantee (each, a "Chevron
Guarantee"). See "The Initial Charters--Termination
Options."
Security................ The obligations of California Petroleum under the
Serial Mortgage Notes will be secured, equally and
ratably with the Term Mortgage Notes (except as
described under "Description of the Notes--Security--
After First Optional Termination Date"), by the
assignment of a first preferred ship mortgage (each,
a "Mortgage") on each Vessel between the respective
Owner, as mortgagor, and California Petroleum, as
mortgagee, an assignment of each Initial Charter, as
well as certain other collateral, including an
assignment of the related Chevron Guarantee, an
assignment of the earnings and insurance proceeds, an
assignment of the Management Agreements relating to
the Vessels and by a pledge of all of the outstanding
stock of the Owners. The Serial
11
<PAGE>
Mortgage Notes are also secured by an assignment of
the Serial Loan Agreements and certain other Security
Documents (collectively, with the collateral
described in the preceding sentence, at any time, the
"Collateral"). Recourse under the Serial Indenture
against the incorporators, directors, officers and
stockholders of California Petroleum and its
stockholders has been expressly waived by the
Indenture Trustee on behalf of all Holders of the
Serial Mortgage Notes and, accordingly, the
incorporators, directors, officers and stockholders
of California Petroleum and its stockholders will not
be liable for any payments of debt service on the
Serial Mortgage Notes. California Petroleum's
capitalization is nominal and it has no source of
income other than payments to it by the Owners. The
Indenture Trustee, as indenture trustee under the
Term Indenture and the Serial Indenture, California
Petroleum and Chemical Trust Company of California,
as collateral trustee (the "Collateral Trustee"),
will enter into a collateral trust agreement (the
"Collateral Agreement") pursuant to which the
Collateral Trustee will hold the Collateral for the
benefit of the holders of the Term Mortgage Notes and
the Holders of the Serial Mortgage Notes. In
accordance with the Collateral Agreement, the
Collateral Trustee will exercise remedies with
respect to the Collateral, including the sale or
other disposition of the Collateral, upon receipt of
notice of the occurrence of an event of default (an
"Enforcement Notice") under the Term Indenture or the
Serial Indenture, or both, as the case may be. The
right of the Collateral Trustee to enforce the
Mortgages, however, will be subject to the rights of
Chevron Transport under each Initial Charter to the
continued use and operation of the related Vessel
under such Initial Charter, so long as no event of
default has occurred and is continuing under such
Initial Charter and so long as Chevron Transport is
performing its obligations thereunder. If the
Allocated Principal Amount of Serial Mortgage Notes
relating to a Vessel is paid in full, the Collateral
(including the related Initial Charter, if it remains
in effect) relating to such Vessel will be released
from the Lien of the Serial Indenture. See
"Description of the Notes--Security."
Termination Options
Under the Initial
Charters............... Under each Initial Charter, Chevron Transport may
elect to terminate such Initial Charter on any of
four, in the case of the double-hulled Vessels, or
three, in the case of the single-hulled Vessel,
termination dates and make a termination payment (a
"Termination Payment") in connection with such
termination. The earliest such optional termination
date for any Vessel is , 2003. Chevron Transport
is required to pay the Termination Payment to the
Collateral Trustee (by virtue of the Collateral
Trustee's receipt of the assignment of the Initial
Charters) on or prior to the termination date.
Whether or not the termination options are exercised,
California Petroleum and the Owners expect that the
amounts payable by Chevron Transport (other than the
related Termination Payment, if any), and guaranteed
by Chevron, under the Initial Charters, together with
an allocable amount of anticipated earnings on
Permitted Investments (as defined herein), will be
sufficient to pay in full when due all principal of
and interest on the
12
<PAGE>
Serial Mortgage Notes. See "Investment
Considerations--Certain Risks Not Related to Chevron
Transport or Chevron." The Termination Payments, if
any, will not secure the obligations of California
Petroleum under the Serial Indenture.
Redemption.............. If a casualty or certain other events occur with
respect to a Vessel as result of which the Vessel is
a Total Loss, then the Serial Mortgage Notes will be
subject to mandatory redemption in part, equally and
ratably with the Term Mortgage Notes, in an aggregate
principal amount equal to the Allocated Principal
Amount of Notes for such Vessel together with accrued
but unpaid interest thereon and certain other amounts
described herein. The Serial Mortgage Notes are not
subject to optional redemption prior to their
respective Maturity Dates. See "Description of the
Notes--Redemption."
Certain Covenants....... The Indentures will include certain covenants that,
among other things, prohibit California Petroleum
from (i) incurring any indebtedness other than the
Notes, (ii) making any investments, loans or advances
other than the loans to the Owners of the proceeds
from the sale of the Notes or (iii) creating any
Liens other than its obligations under the Notes, the
Collateral Agreement and the related Indentures. The
Mortgages will include certain covenants that, among
other things, limit the type and amount of additional
indebtedness that may be incurred by the Owners and
impose limitations on investments, loans, advances,
the payment of dividends and the making of certain
other payments, the creation of Liens, certain
transactions with affiliates and mergers.
Under each Mortgage, the related Owner is required to
keep its Vessel free and clear of all Liens other
than liens arising under the Indentures and the
Collateral Agreement and liens for crew's wages
accrued for not more than three months, suppliers' or
other similar liens arising in the ordinary course of
its business and accrued for not more than three
months, liens for collision or salvage, or liens for
loss, damage or expense that are fully covered by
insurance or bonded. Notwithstanding the preceding
sentence, during the term of the related Initial
Charter, any Lien permitted under the Initial Charter
will be permitted under the related Mortgage. Under
each Initial Charter, Chevron Transport may not
allow, or permit to be continued, any Lien incurred
by it that might have priority over the title and
interest of the Owner in the related Vessel. See "The
Mortgages--Certain Covenants" and "The Initial
Charters--Covenants."
Restricted Payments..... None of the Owners may (i) declare or pay any
dividend or other distribution on any shares of its
capital stock, (ii) make any loans or advances to any
affiliate of such Owner or (iii) purchase, redeem or
otherwise acquire or retire for value any shares of
its capital stock (each, a "Restricted Payment")
unless, among other things, the Serial Mortgage Notes
shall have been repaid in full. California Petroleum
may not make any Restricted Payments in excess of
$15,000 per annum so long as any Notes are
outstanding.
13
<PAGE>
Certain Liabilities..... Under each Initial Charter, Chevron Transport will be
liable for oil or other pollution damage resulting
from its operation of the related Vessel under such
Initial Charter and will be liable to indemnify and
hold harmless the related Owner against any and all
losses, damages and expenses incurred by such Owner
as a result of any oil or other pollution damage
resulting from Chevron Transport's operation of such
Vessel under such Initial Charter (including, without
limitation, such Owner's liability under the United
States Oil Pollution Act of 1990, as amended ("OPA
90"), or under the laws of any other jurisdiction
relating to oil spills).
Use of Proceeds......... See "Use of Proceeds" for a discussion of the
application of the net proceeds of the offering of
the Serial Mortgage Notes to the cost of acquiring
the Vessels.
Ratings................. The Serial Mortgage Notes have been prospectively
rated by Moody's Investors Service, Inc.
("Moody's"), by Standard & Poor's Rating Group, a
division of McGraw-Hill, Inc. ("Standard & Poor's")
and by Duff & Phelps Credit Rating Co. ("Duff &
Phelps") at their initial issuance. A security rating
is not a recommendation to buy, sell or hold
securities and may be subject to revision or
withdrawal at any time.
Investment
Considerations......... Prospective purchasers of the Serial Mortgage Notes
should carefully consider the matters set forth in
this Prospectus under the caption "Investment
Considerations."
14
<PAGE>
SOURCES AND USES OF FUNDS
<TABLE>
<S> <C>
Sources of Funds:
Proceeds from Serial Mortgage Notes........................... $167,500,000
Proceeds from Term Mortgage Notes............................. 117,900,000
------------
Total Sources............................................... 285,400,000
============
Uses of Funds:
Owner's Purchase Price for S. Ginn............................ 80,666,667
Owner's Purchase Price for C. Rice............................ 80,666,667
Owner's Purchase Price for Chevron Mariner.................... 80,666,666
Owner's Purchase Price for W.E. Crain......................... 40,000,000
Underwriting Fees and Commissions............................. 1,989,000*
Legal, Printing, Rating and Other Fees........................ 511,000*
Coordinator's Fees............................................ 450,000(1)
Broker's Fees................................................. 450,000(1)
------------
Total Uses.................................................. $285,400,000
============
</TABLE>
- -------------------
* Estimated
(1) The coordinator's fee is payable to Xenon Shipping AS and Merrimac Shipping
Ltd. and the broker's fee is payable to McQuilling Brokerage Partners, Inc.
15
<PAGE>
INVESTMENT CONSIDERATIONS
Prospective purchasers of the Serial Mortgage Notes should carefully consider
the following investment considerations as well as the other information set
forth in this Prospectus.
CERTAIN RISKS NOT RELATED TO CHEVRON TRANSPORT OR CHEVRON
The Indenture Events of Default specified in the Serial Indenture include, in
addition to a default by Chevron Transport under any Initial Charter or the
termination of the related Chevron Guarantee of any Initial Charter other than
pursuant to its terms, certain other events which do not depend on Chevron
Transport's compliance with the Initial Charters or the effectiveness of the
related Chevron Guarantees. Such Indenture Events of Default include (i) the
occurrence and continuance of a Mortgage Event of Default, (ii) a breach of any
representation, warranty or covenant of California Petroleum in the Serial
Indenture which continues uncured for a specified period, (iii) the occurrence
of specified events of bankruptcy with respect to California Petroleum and (iv)
the termination of any of the Security Documents other than pursuant to their
terms. See "Description of the Notes--Indenture Events of Default." The
activities of California Petroleum and the Owners have been limited as
described under "California Petroleum and the Owners," and California Petroleum
and each Owner will covenant to engage in no activities other than those
permitted. See "Description of the Notes--Certain Covenants" and "The
Mortgages--Certain Covenants" for a description of the applicable covenants.
Any of the Indenture Events of Default discussed above could occur even if
Chevron Transport is in full compliance with the terms of the Initial Charters.
For example, California Petroleum and the Owners will rely entirely on Chevron
Transport's charterhire payments under the Initial Charters and any earnings on
Permitted Investments to pay their expenses and make scheduled payments of
principal and interest on the Serial Mortgage Notes and interest on the Term
Mortgage Notes until the first termination date for each Initial Charter. Such
expenses will include Recurring Fees and Taxes and any other expenses for which
Chevron Transport is not responsible under the Initial Charters. Under each
Initial Charter, Chevron Transport will be responsible for, among other things,
all costs and expenses of operating and maintaining the related Vessel and
under certain circumstances, the costs and expenses of maintaining the
documentation of the related Vessel under the laws of the jurisdiction in which
the related Vessel is or will be registered (the "Registration Jurisdiction")
in excess of a specified amount. See "The Initial Charters--Flag and Name of
Vessel" and "--Indemnity." While the Owners expect that such charterhire
payments and earnings will be sufficient to meet their requirements,
substantial unanticipated expenses or increases in expenses that are not
payable by Chevron Transport under the Initial Charters could result in the
bankruptcy of any Owner, which would result in an Indenture Event of Default
and a corresponding event of default under the Term Indenture. See
"Management's Discussion and Analysis of Financial Condition of California
Petroleum and the Owners--Capital Resources and Liquidity." Upon the occurrence
and continuance of such an Indenture Event of Default and event of default
under the Term Indenture, all principal and accrued interest on the Serial
Mortgage Notes, as well as the Term Mortgage Notes, would become immediately
due and payable. Thereafter, any amounts received by the Collateral Trustee in
the exercise of its remedies, including for example charterhire payments from
Chevron Transport or proceeds from the sale of the Vessels, would be subject to
the claims of the holders of the Serial Mortgage Notes and the Term Mortgage
Notes, equally and ratably, except as described under "Description of the
Notes--Security--After First Optional Termination Date." There can be no
assurance that amounts received by the Collateral Trustee following an
Indenture Event of Default would be sufficient to pay the principal of and
accrued interest on the outstanding Serial Mortgage Notes.
LACK OF PUBLIC MARKET FOR THE SERIAL MORTGAGE NOTES
There has not previously been any public market for the Serial Mortgage
Notes. California Petroleum does not intend to list the Serial Mortgage Notes
on any securities exchange or to seek approval for quotation through any
automated quotation system. There can be no assurance that an active market for
the Serial Mortgage Notes will develop. To the extent that a market for the
Serial Mortgage Notes does develop, the market value of the Serial Mortgage
Notes will depend on prevailing interest rates, the market for similar
16
<PAGE>
securities and other factors, including the financial condition, performance
and prospects of the charterers of the Vessels and the value of the Vessels.
California Petroleum has been advised by the Underwriter that the Underwriter
presently intends to make a market in the Serial Mortgage Notes, as permitted
by applicable laws and regulations. The Underwriter is not obligated, however,
to make a market in the Serial Mortgage Notes, and any such market-making may
be discontinued at any time at the sole discretion of the Underwriter.
Accordingly, no assurance can be given as to the liquidity of, or trading
markets for, the Serial Mortgage Notes.
USE OF PROCEEDS
The proceeds from the sale of the Serial Mortgage Notes, together with the
proceeds from the Term Mortgage Notes, will be loaned to the Owners to fund the
acquisition of the Vessels from Chevron Transport and to pay the underwriting
commissions and the other fees and expenses referred to above under "Prospectus
Summary--Sources and Uses of Funds." The Vessels are currently owned by Chevron
Transport and will be acquired by the related Owners and chartered by Chevron
Transport on the Closing Date. The net proceeds of the sale of the Notes to be
applied by the respective Owners to purchase the Vessels from Chevron Transport
will be approximately $80,666,667 for each double-hulled Vessel and $40,000,000
for the single-hulled Vessel.
17
<PAGE>
CAPITALIZATION OF CHEVRON
The capitalization of Chevron and its consolidated subsidiaries as of
December 31, 1994 is set forth in the following table. This table should be
read in conjunction with the consolidated financial statements of Chevron and
the related notes thereto incorporated by reference herein.
<TABLE>
<CAPTION>
DECEMBER 31, 1994
---------------------
(DOLLARS IN MILLIONS)
<S> <C>
Short-term debt........................................... $ 4,014
Long-term debt and capital lease obligations:
Long-term debt.......................................... 3,955
Capital lease obligations............................... 173
-------
Total debt............................................ $ 8,142
=======
Stockholders' equity:
Preferred stock--$1.00 par value........................ --
Authorized--100,000,000 shares
Issued--None
Common stock--$1.50 par value........................... $ 1,069
Authorized--1,000,000,000 shares
Issued--712,487,068 shares
Capital in excess of par value.......................... 1,858
Deferred compensation--Employee Stock Ownership Plan.... (900)
Currency translation adjustment and other............... 175
Retained earnings....................................... 14,457
Treasury stock, at cost (60,736,435 shares)............. (2,063)
-------
Total stockholders' equity............................ $14,596
-------
Total debt and stockholders' equity................... $22,738
=======
</TABLE>
18
<PAGE>
SELECTED FINANCIAL DATA OF CHEVRON
The selected financial information presented in the table below should be
read in conjunction with the consolidated financial statements and related
notes contained in Chevron's Current Report on Form 8-K, dated March 10, 1995,
referred to under "Incorporation of Certain Documents by Reference." The
selected financial information for each of the five years in the period ended
December 31, 1994 has been derived from audited financial statements. Chevron
adopted Statements of Financial Accounting Standards No. 106, "Employers'
Accounting for Postretirement Benefits Other Than Pensions," and No. 109,
"Accounting for Income Taxes," effective January 1, 1992.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------------
1994 1993 1992 1991 1990
------- ------- ------- ------- -------
(DOLLARS IN MILLIONS, EXCEPT FOR PER-
SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C>
Sales and other operating revenues.... $35,130 $36,191 $38,212 $38,118 $41,540
Equity in net income of affiliates and
other income......................... 724 891 1,465 825 1,026
Total costs........................... 33,051 34,656 36,214 36,691 38,353
------- ------- ------- ------- -------
Income before income tax expense and
cumulative effect of changes in
accounting principles................ $ 2,803 $ 2,426 $ 3,463 $ 2,252 $ 4,213
Income tax expense.................... 1,110 1,161 1,253 959 2,056
------- ------- ------- ------- -------
Income before cumulative effect of
changes in accounting principles..... $ 1,693 $ 1,265 $ 2,210 $ 1,293 $ 2,157
Cumulative effect of changes in
accounting principles................ -- -- (641) -- --
------- ------- ------- ------- -------
Net income............................ $ 1,693 $ 1,265 $ 1,569 $ 1,293 $ 2,157
======= ======= ======= ======= =======
Per share of common stock(1)
Income before cumulative effect of
changes in accounting principles.... $ 2.60 $ 1.94 $ 3.26 $ 1.85 $ 3.05
Cumulative effect of changes in
accounting principles............... -- -- (.95) -- --
------- ------- ------- ------- -------
Net income per share of common stock. $ 2.60 $ 1.94 $ 2.31 $ 1.85 $ 3.05
======= ======= ======= ======= =======
Cash dividends per share of common
stock............................... $ 1.85 $ 1.75 $ 1.65 $ 1.63 $ 1.48
Ratio of earnings to fixed charges of
Chevron on a total enterprise basis.. 5.31 5.23 6.35 4.34 6.07
</TABLE>
- --------------------
(1) All per share amounts reflect a two-for-one stock split in May 1994.
The ratios of earnings to fixed charges set forth in the table above are
computed using amounts for Chevron as a whole, including its majority owned
subsidiaries and its proportionate share of 50 percent owned entities
(primarily the Caltex Group of Companies). For the purpose of determining
earnings in the calculation of the ratios, equity in net income of less than 50
percent owned affiliates is adjusted to the amount of distributions received
(but not undistributed amounts). In addition, consolidated income before
cumulative effect of changes in accounting principles is increased by income
taxes, previously capitalized interest charged to earnings during the period,
the minority interest's share of net income, and fixed charges, excluding
capitalized interest. Fixed charges consist of interest on debt (including
capitalized interest and amortization of debt discount and expense) and a
portion of rentals determined to be representative of interest.
SUMMARIZED FINANCIAL DATA OF CHEVRON TRANSPORT
Summarized financial information for Chevron Transport for each of the three
years ended December 31, 1994 is contained in Chevron's Current Report on Form
8-K, dated March 10, 1995, referred to under "Incorporation of Certain
Documents By Reference."
19
<PAGE>
CAPITALIZATION OF CALIFORNIA PETROLEUM
The following unaudited table sets forth the capitalization and cash of
California Petroleum at December 31, 1994, and as adjusted to give effect to
the sale of the Notes and the application of the estimated net proceeds
therefrom. This table should be read in conjunction with the financial
statements of California Petroleum and the related notes thereto set forth
elsewhere in this Prospectus. See also "Use of Proceeds" and "Management's
Discussion and Analysis of Financial Condition of California Petroleum and the
Owners."
<TABLE>
<CAPTION>
DECEMBER 31, 1994
-------------------
ACTUAL AS ADJUSTED
<S> <C> <C>
Cash....................................................... $1,000 $ 1,000
====== ============
Long-term Debt:
Serial Mortgage Notes.................................... -- $167,500,000
Term Mortgage Notes...................................... -- 117,900,000
------ ------------
Total Long-term Debt................................... -- 285,400,000
------ ------------
Stockholder's Equity:
Capital Stock............................................ $1,000 1,000
Additional Paid-in Capital............................... 0 0
Retained Earnings........................................ 0 0
------ ------------
Total Stockholder's Equity............................. 1,000 1,000
------ ------------
Total Capitalization................................... $1,000 $285,401,000
====== ============
</TABLE>
20
<PAGE>
SELECTED FINANCIAL AND PRO FORMA DATA OF CALIFORNIA PETROLEUM
Neither California Petroleum nor any of the Owners has an operating history.
Financial data for comparable accounting periods is not available for any of
them. The financial statements set forth in this Prospectus for California
Petroleum and each of the Owners include their beginning balance sheets. See
"Index to Financial Statements."
The following unaudited pro forma balance sheet of California Petroleum at
December 31, 1994 was prepared as if the sale of the Notes and the application
of the estimated net proceeds therefrom had occurred on such date. The
following unaudited pro forma income statement of California Petroleum for the
year ended December 31, 1994 gives effect to the sale of the Notes and the
application of the estimated net proceeds therefrom as if it had occurred on
January 1, 1994, the beginning of California Petroleum's fiscal year. The
unaudited pro forma financial data are based upon assumptions and adjustments
described in the accompanying notes. The unaudited pro forma income statement
does not purport to represent what California Petroleum's results of operations
actually would have been if the transaction had occurred as of the dates
indicated or what such results will be for any future periods. The unaudited
pro forma financial data are based upon assumptions that California Petroleum
believes are reasonable and should be read in conjunction with the financial
statements, including the Owners' pro forma condensed combined financial data,
and accompanying notes thereto included elsewhere in this Prospectus.
UNAUDITED PRO FORMA BALANCE SHEET
OF CALIFORNIA PETROLEUM
<TABLE>
<CAPTION>
AT DECEMBER 31, 1994
---------------------------------------
PRO FORMA
HISTORICAL ADJUSTMENTS PRO FORMA
<S> <C> <C> <C>
ASSETS
Current assets.........................
Cash................................. $1,000 $ -- $ 1,000
Current portion of Serial loans re-
ceivable............................ -- 17,160,000(c) 17,160,000
------ ------------ ------------
Total current assets............... 1,000 17,160,000 17,160,000
Term loans receivable.................. -- 116,138,200(c) 116,138,200
Serial loans receivable less current
portion............................... -- 148,701,800(c) 148,701,800
Other assets........................... -- 3,400,000(b) 3,400,000
------ ------------ ------------
TOTAL ASSETS........................... $1,000 $285,400,000 $285,401,000
====== ============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Current portion of Serial Mortgage
Notes............................... $ -- $ 17,160,000(a) $ 17,160,000
------ ------------ ------------
Total current liabilities.......... -- 17,160,000 17,160,000
Term Mortgage Notes.................... -- 117,900,000(a) 117,900,000
Serial Mortgage Notes less current por-
tion.................................. -- 150,340,000(a) 150,340,000
------ ------------ ------------
Total liabilities................ -- 285,400,000 285,400,000
Stockholders' equity
Common stock issued.................. 1,000 -- 1,000
------ ------------ ------------
Total stockholders' equity......... 1,000 -- 1,000
------ ------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQ-
UITY.................................. $1,000 $285,400,000 $285,401,000
====== ============ ============
</TABLE>
21
<PAGE>
<TABLE>
<CAPTION>
FOR THE YEAR ENDED
DECEMBER 31, 1994
-------------------------------------
PRO FORMA
HISTORICAL ADJUSTMENTS PRO FORMA
<S> <C> <C> <C>
UNAUDITED PRO FORMA INCOME STATEMENT
Interest income............................ $ -- $23,076,256(c) $23,076,256
Other income............................... -- 60,000(d) 60,000
----- ----------- -----------
Total income............................. -- 23,136,256 23,136,256
Interest expense........................... -- 22,842,532(a) 22,842,532
General and administrative expenses........ -- 60,000(d) 60,000
Amortization of debt issue costs........... -- 233,724(b) 233,724
----- ----------- -----------
Net income................................. $ -- $ 0 $ 0
===== =========== ===========
</TABLE>
- --------------------
Pro forma adjustments are made to reflect:
(a) The issuance of $117,900,000 in Term Mortgage Notes and $167,500,000 in
Serial Mortgage Notes. The Term Mortgage Notes bear interest at an assumed
rate of 8.45% per annum. The Serial Mortgage Notes bear interest at assumed
rates ranging from 7.00% to 8.03% through maturity. Such assumed interest
rates are based on market interest rates as of February 21, 1995. Principal
will be payable on the Term Mortgage Notes in accordance with a twelve year
sinking fund schedule commencing nine years from the issuance date. Serial
Mortgage Notes will mature over an eleven year period beginning one year
from the issuance date. Interest is assumed to be payable semi-annually on
July 1 and January 1 of each year.
(b) Capitalization of debt issue costs. The costs represent commissions, broker
fees and other costs relating to the issuance of the Term Mortgage Notes
and the Serial Mortgage Notes described in (a) above. $3,400,000 of
proceeds derived from the sale of the Term Mortgage Notes and Serial
Mortgage Notes discussed in (a) above are assumed to be used to pay these
costs at the time of issuance. These costs will be amortized over the term
of the Notes to which they relate.
(c) Lending of the proceeds from the issuance of the Term Mortgage Notes and
Serial Mortgage Notes described in (a) above. The principal balances of the
Term Loans totalling $117,900,000 earn interest at an assumed rate of 8.45%
per annum and are to be repaid over a twelve year period beginning nine
years from the issuance date in accordance with the Term Loan Agreements
between California Petroleum and the Owners. The principal balances of the
Serial Loans totalling $167,500,000 earn interest at assumed rates ranging
from 7.00% to 8.03% and mature over an eleven year period beginning one
year from the issuance date in accordance with the Serial Loan Agreements
between California Petroleum and the Owners. Such assumed interest rates
are based on market interest rates as of February 21, 1995. The Term Loans
and Serial Loans are reported net of the related debt discounts which total
$1,761,800 and $1,638,200, respectively. The discounts will be amortized
over the term of the loans to which they relate. Interest is assumed to be
due semi-annually on July 1 and January 1 of each year.
(d) General and administrative expenses comprising trustee fees, legal fees,
agency fees and other costs estimated by management of California Petroleum
to be incurred by California Petroleum during the year ended December 31,
1994. These costs will be billed to the Owners.
22
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION OF CALIFORNIA
PETROLEUM AND THE OWNERS
As of the date of this Prospectus, neither California Petroleum nor the
Owners had any operating history. On the Closing Date, California Petroleum
will loan the proceeds from the sale of the Notes to the Owners to fund the
acquisition of the Vessels and to pay the underwriting commissions and certain
fees and expenses as discussed under "Use of Proceeds."
CAPITAL RESOURCES AND LIQUIDITY.
California Petroleum expects that all of its expenses will consist of
interest payments due on the Notes issued by it and audit, legal, trustee and
other administrative expenses. So long as all of the Vessels remain subject to
the Initial Charters, the Collateral to be pledged to the Collateral Trustee in
connection with the issuance of the Notes, assuming that the anticipated rate
of return on the Permitted Investments discussed below is realized, has been
structured to provide California Petroleum with sufficient funds to make timely
payments of all such anticipated expenses, plus amounts necessary to pay
principal of and interest on the Notes when due.
The foregoing determination assumes that amounts remaining in the Trust
Accounts on each Payment Date will be invested in Permitted Investments that
will provide a 7.5% annual rate of return for periods prior to the first
termination date for each Initial Charter and a 5.0% annual rate of return for
subsequent periods. The Owners believe that on the Closing Date, guaranteed
investment contracts rated at least "Aa" or "AA" by Moody's, Standard & Poor's
or Duff & Phelps, respectively, will be available with at least the assumed
annual rate of return for such amounts until the first optional termination
date under any Initial Charter. The annual rate of return on Permitted
Investments of amounts remaining in any Trust Account on or after such first
optional termination date is not predictable.
Charterhire payments under each Initial Charter have been structured so that
approximately $100,000 annually will be available to pay anticipated expenses
with respect to the related Vessel which are not directly payable by Chevron
Transport under such Initial Charter and the pro rata expenses of California
Petroleum. For each Vessel such expenses, including Recurring Fees and Taxes,
the related Management Fee and Technical Advisor's Fee, an allocable amount of
the fees and expenses of the Indenture Trustee, Collateral Trustee and the
Designated Representative (as defined below) and a provision for miscellaneous
or unexpected expenses, are estimated to equal approximately $72,500 annually
for the first three years. See "Business--Operations" and "Certain
Relationships and Transactions--The Management Agreements." The Recurring Fees
and Taxes also are subject to change as a result of governmental action,
inflation or unanticipated expenses incurred by the related Owner or California
Petroleum which are not directly payable by Chevron Transport under the related
Initial Charter. If the costs and expenses of maintaining the documentation of
a Vessel under the laws of the Registration Jurisdiction exceed a specified
amount, however, Chevron Transport will either pay such excess amount or
cooperate with the related Owner to change the registry or port of
documentation of such Vessel. See "The Initial Charters--Flag and Name of
Vessel." Neither the Owners nor California Petroleum have, nor will they have
in the future, any source of capital for the payment of expenses which are not
directly payable by Chevron Transport under the Initial Charters other than the
charterhire payments, and any income from the reinvestment thereof. See
"Description of the Notes--Trust Accounts."
California Petroleum's only sources of funds with respect to the Notes will
be payments of interest and principal on the related loans ("Acquisition
Loans") from California Petroleum to each Owner of a portion of the proceeds
from the sale of the Notes. California Petroleum does not have, nor will it
have in the future, any source of capital for payment of the Notes other than
the Acquisition Loans to the Owners.
23
<PAGE>
The Owners expect that substantially all of their expenses will consist of
payments due on their Acquisition Loans, Recurring Fees and Taxes for the
Vessels, Management Fees, Technical Advisor's Fees and an allocable portion of
the fees and expenses of the Indenture Trustee, the Collateral Trustee and the
Designated Representative. The Owners' sources of funds with respect to their
Acquisition Loans will be charterhire payments for the Vessels, any Termination
Payments and any proceeds from the sale of a Vessel and earnings on Permitted
Investments. The Owners do not have, nor will they have in the future, any
other source of capital for payment of the Acquisition Loans.
Under each Initial Charter, Chevron Transport has the right to terminate such
Initial Charter on specified termination dates. The first optional termination
date with respect to each Initial Charter occurs on the payment date on which
the Allocated Principal Amount of Serial First Preferred Mortgage Notes with
respect to the related Vessel is scheduled to be paid in full.
RESULTS OF OPERATIONS.
California Petroleum's results of operations will depend on the amount of
interest paid by the Owners on the Acquisition Loans and the rate at which
payments of principal are made on such Acquisition Loans. Each Owner's results
of operations will depend on the charterhire payments for its Vessel under the
related Initial Charter or, upon any termination of such Initial Charter, any
Termination Payment, charterhire under any subsequent charter or proceeds from
any sale of such Vessel, earnings on Permitted Investments and the level of
operating expenses.
EARNINGS TO FIXED CHARGES.
Because neither California Petroleum nor any of the Owners has an operating
history, no historical or pro forma ratio of earnings to fixed charges for
California Petroleum or the Owners has been included in this Prospectus.
24
<PAGE>
CHEVRON TRANSPORT AND CHEVRON
Chevron Transport, an indirect, wholly-owned subsidiary of Chevron, is
principally engaged in the marine transportation of oil and refined petroleum
products. As of December 31, 1994, Chevron Transport operated 30
internationally flagged vessels which it owned or bareboat chartered. In
addition, at any given time, Chevron Transport typically has an additional 35
to 45 ships on time or single-voyage charters. Chevron Transport's primary
transportation routes are from the Middle East, Indonesia, Mexico, West Africa
and the North Sea to ports in the United States, Europe, the United Kingdom and
Asia. Refined petroleum products are transported worldwide. Chevron Transport
expects to use each Vessel worldwide as permitted under the Initial Charters.
Chevron is a major international oil company. Chevron provides
administrative, financial and management support for, and manages its
investment in, domestic and foreign subsidiaries and affiliates, which engage
in fully integrated petroleum operations, chemical operations, real estate
development and other mineral and energy related activities in the United
States and approximately 100 other countries. Petroleum operations consist of
exploring for, developing and producing crude oil and natural gas; transporting
crude oil, natural gas and petroleum products by pipelines, marine vessels and
motor equipment; refining crude oil into finished petroleum products; and
marketing crude oil, natural gas and the many products derived from petroleum.
Chemical operations include the manufacture and marketing of a wide range of
chemicals primarily for industrial uses.
25
<PAGE>
CALIFORNIA PETROLEUM AND THE OWNERS
CALIFORNIA PETROLEUM
California Petroleum Transport Corporation, a Delaware corporation, is a
special purpose corporation that has been recently organized solely for the
purpose of issuing, as agent on behalf of the Owners, the Serial Mortgage Notes
and the Term Mortgage Notes as full recourse obligations of California
Petroleum in order to facilitate the acquisition of the Vessels by the Owners
and the charter of the Vessels as described herein. Recourse under the Serial
Indenture against the incorporators, directors, officers and stockholders of
California Petroleum and its stockholders has been expressly waived by the
Indenture Trustee, on behalf of all Holders of the Serial Mortgage Notes and,
accordingly, the incorporators, directors, officers and stockholders of
California Petroleum and its stockholders will not be liable for any payments
of debt service on the Serial Mortgage Notes. California Petroleum's actual
capitalization is nominal and it has no source of income other than payments to
it by the Owners. All the shares of California Petroleum are held by The
California Trust, a Massachusetts charitable lead trust formed by JH Holdings
Corporation, a Massachusetts corporation, for the benefit of certain charitable
institutions in Massachusetts. All of the stock of JH Holdings Corporation is
held by The 1960 Trust, a charitable trust, and by The Glendale Company, a
private investment partnership. California Petroleum does not have any
subsidiaries.
THE OWNERS
Each of CalPetro Bahamas I, CalPetro Bahamas II and CalPetro Bahamas III has
been recently organized as a special purpose corporation under the laws of the
Bahamas for the purpose of acquiring and chartering one of the Vessels.
Similarly, CalPetro IOM has been recently organized as a special purpose
company under the laws of the Isle of Man for the purpose of acquiring and
chartering one of the Vessels. Each Owner is wholly-owned by California Tankers
Investments Limited, a company organized under the laws of the Bahamas, which
is a wholly-owned subsidiary of CalPetro Holdings Limited, an Isle of Man
company. None of the Owners has any subsidiaries. None of the Owners is owned
by or is an affiliate of California Petroleum, nor is any Owner owned by or an
affiliate of Chevron Transport or Chevron. See "Business--Operations" and
"Certain Relationships and Transactions--The Management Agreements."
The activities of each of the Owners, either pursuant to the terms of the
related Mortgage or the terms of its Memorandum of Association, shall be
limited to (i) borrowing money from California Petroleum pursuant to the
related loan agreements between California Petroleum and such Owner (each a
"Loan Agreement"), (ii) carrying out any other activity relating to or
contemplated by such Loan Agreements, but not to incur any indebtedness for
borrowed money or create any lien, security interest, charge or other
encumbrance over all or any part of the assets or interests of such Owner other
than as contemplated by and pursuant to the terms of such Mortgage or its
Memorandum of Association and such Loan Agreements, (iii) exercising and
enforcing all rights and powers conferred by, incidental to or arising out of
such Loan Agreements and the transactions contemplated thereby, (iv) entering
into, performing and delivering a purchase agreement with Chevron Transport
with respect to the purchase of its Vessel with a portion of the borrowings
under such Loan Agreements, (v) registering its Vessel under and pursuant to
the laws of the Registration Jurisdiction, (vi) entering into, performing and
delivering its Initial Charter, (vii) entering into any other agreement
contemplated by such Loan Agreements, including the Security Documents, (viii)
entering into other charters, contracts of affreightment or sale agreements
relating to the Vessel upon the termination of the Initial Charter in a form
conforming to the requirements of such Loan Agreements, (ix) carrying out,
entering into, performing and delivering any and all applications, licenses,
agreements and instruments related to and in the furtherance of the foregoing
and (x) engaging in those activities, including the entering into of
agreements, necessary, suitable or convenient to accomplish the foregoing or
incidental thereto or connected therewith.
26
<PAGE>
BUSINESS
THE VESSELS
SUEZMAX-SIZED TANKERS.
All of the Vessels are Suezmax-sized tankers which are capable of calling at
a large number of ports. The main trading patterns of Suezmax tankers are as
follows: from West Africa to the United States, Europe or Northeast Asia, from
the North Sea to the United States, from the Mediterranean to Western Europe
and the United States and from the Arabian Gulf to Europe or Southeast Asia. In
contrast to very large crude carriers ("VLCCs") and ultra-large crude carriers
("ULCCs"), Suezmax tankers are not dependent on the longer-haul routes from the
Arabian Gulf.
VESSEL QUALITY.
All of the Vessels are modern, high-quality tankers, three of which are of
double-hull construction, and all of which have been designed to Chevron
Transport's specifications to enhance safety and reduce operating and
maintenance costs, including such features as high performance rudders, extra
steel (minimal use of high tensile steels), additional fire safety equipment,
redundant power generation equipment, extra coating and electrolytic corrosion
monitoring and protection systems and additional crew quarters to facilitate
added manning. C. Rice, Chevron Mariner and W.E. Crain have been recently
constructed by Ishibras in its Brazilian shipyards. S. Ginn has been recently
constructed by IHI in its Japanese shipyard. Chevron Transport has advised the
Owners that an affiliate of Chevron Transport supervised the construction of
each of the Vessels. Personnel of this affiliate have been present at the
shipyards during the construction periods, monitoring construction to ensure
compliance with Chevron Transport's specifications. The Vessels have been
designed and constructed to increase fuel efficiency, lower operating costs and
meet the stringent operating and safety standards of charterers, including
Chevron Transport, and regulatory agencies.
VESSEL MAINTENANCE.
The Vessels will be maintained during the term of the Initial Charters by
Chevron Transport in accordance with good commercial maintenance practice
commensurate with other vessels in Chevron Transport's fleet of similar size
and trade, as required by the Initial Charters. See "The Initial Charters--
Covenants." Although not required by the Initial Charters, currently Chevron
Transport utilizes the maintenance and repair division within the engineering
department of one of its affiliates. In addition, California Petroleum has been
advised by Chevron Transport that, in an effort to promote high standards of
quality control, Chevron Transport (through its affiliate) currently has
agreements with two shipyards, located in Europe and Asia, to perform all
scheduled maintenance for its fleet, including the Vessels, although such
agreements are not required under the Initial Charters. The Initial Charters
require Chevron Transport to return any Vessel whose Initial Charter has been
terminated to its respective Owner in class under the rules of the American
Bureau of Shipping (or other classification society previously approved by the
Owner). In addition, the Owner has the right to inspect the Vessel and to
require surveys upon redelivery, and Chevron Transport will be responsible for
making or compensating the Owner for certain necessary repairs in connection
with such redelivery.
PREVIOUS OPERATION OF THE VESSELS BY CHEVRON TRANSPORT.
Chevron Transport took delivery, as purchaser, of W.E. Crain in February
1992, of S. Ginn in March 1993, of C. Rice in August 1993 and of Chevron
Mariner in October 1994. Chevron Transport has informed California Petroleum
and the Owners that, since their delivery, W.E. Crain and S. Ginn have been
operating in the Pacific region, primarily carrying Mideast or Indonesian
crudes to Chevron's El Segundo and Richmond refineries in California. Chevron
Mariner's maiden voyage was from West Africa to Taiwan, after which the Vessel
has been operating in the Pacific region in service similar to W.E. Crain and
S. Ginn. C. Rice has traded in the Atlantic region, carrying Mexican crude to
Chevron's U.S. Gulf refinery in
27
<PAGE>
Pascagoula, Mississippi and West African crude to Chevron's Philadelphia
refinery until the sale of that refinery in August 1994. As a result of Chevron
Transport's near-term forecasts of its crude oil transportation requirements,
it began spot chartering C. Rice in September 1994 and expects to enter into a
one-year charter arrangement with a third party in April 1995. Under the
Initial Charters, Chevron Transport will have the right to operate the Vessels
worldwide during the term thereof.
OPERATIONS
CHARTER AND OPERATION OF THE VESSELS.
California Petroleum has been organized for the sole purpose of issuing, as
agent on behalf of the Owners, the Serial Mortgage Notes and the Term Mortgage
Notes as full recourse obligations of California Petroleum, and loaning the
proceeds of the sale of the Notes to the Owners in order to fund the
acquisition of the Vessels by the Owners. Upon the acquisition of a Vessel by
the related Owner and the acceptance of the Vessel under the related Initial
Charter, the Vessel will be operated by Chevron Transport in the business of
marine transportation of oil. See "The Initial Charters" for a discussion of
the terms of the Initial Charters regarding the use and operation of the
Vessels.
MANAGEMENT.
Each Owner will enter into a Management Agreement pursuant to which P.D. Gram
a.s. (the "Manager") will manage the day-to-day business of such Owner and will
provide administrative, management and advisory services to the Owner in return
for a management fee ("Management Fee") equal to the sum of (i) for each
Vessel, $13,625 per annum during the period from the Closing Date to the third
anniversary of the Closing Date plus (ii) $3,000 per annum, during such three-
year period. Thereafter, the Management Fee will be increased each year by an
amount equal to 4%. See "Certain Relationships and Transactions--The Management
Agreements." Each Initial Charter provides that Chevron Transport will operate
the related Vessel, except under certain circumstances, during the term of the
Initial Charter. See "The Initial Charters--Covenants."
Pursuant to the Management Agreements, the Owners have commissioned Barber
Ship Management a.s. ("Barber Ship Management") to provide certain maritime
operational services during the term of the Initial Charters in return for a
technical advisor's fee ("Technical Advisor's Fee"), for each Vessel, equal to
$10,000 per annum during the period from the Closing Date to the third
anniversary of the Closing Date. Thereafter, the Technical Advisor's Fee will
be increased each year by an amount equal to 4%. In addition, the Technical
Adviser shall be entitled to be reimbursed for the fees, costs and expenses of
conducting periodic inspections of the Vessels. If Chevron Transport exercises
its option to terminate the Initial Charter for any Vessel, Barber Ship
Management has agreed to provide, if necessary, certain technical management
services for such Vessel. Either the Manager or Barber Ship Management may
terminate its obligations under the Management Agreement on 30 days' notice to
the Owner. Barber Ship Management, founded in 1987 and headquartered in Oslo,
Norway, is a ship management group with over 200 shore staff and approximately
5,900 sea staff. Barber Ship Management currently provides professional ship
management services to a fleet of 170 vessels. Barber Ship Management has
operational bases in Norway, the Arabian Gulf, Hong Kong, London and the United
States and manning agencies in India, Malaysia, the Philippines and Poland. The
Owners believe that, assuming that Barber Ship Management remains obligated to
provide technical services if the Initial Charter for any of the Vessels is
terminated, the technical services of Barber Ship Management will enable them
to continue to meet the operating and safety standards of charterers and
regulatory agencies.
BUSINESS STRATEGY
The Owners' strategy is to acquire the Vessels and charter them to Chevron
Transport under the Initial Charters which are expected to provide (a)
charterhire payments which California Petroleum and the Owners expect will be
sufficient to pay, so long as the Initial Charters are in effect (i) the
Owners' obligations under the Acquisition Loans, (ii) the Management Fees and
the Technical Advisor's Fees under the Management Agreements, (iii) the
estimated Recurring Fees and Taxes, (iv) the estimated fees payable to the
Indenture Trustee and the Collateral Trustee and the Designated
Representative's Fee, and (v) any other costs and
28
<PAGE>
expenses incidental to the ownership and chartering of the Vessels that are to
be paid by the Owners, (b) Termination Payments sufficient to make sinking fund
and interest payments on the Term Mortgage Notes, to the extent allocable to
the Vessel for which the related Initial Charter has been terminated, for at
least two years following any such termination, during which time the Vessel
may be sold or rechartered and (c) that the Vessels will be maintained in
accordance with the good commercial maintenance practices required by the
Initial Charters; and to arrange for vessel management and remarketing services
to be available in case any Initial Charter is terminated by Chevron Transport
or any Vessel is for any other reason returned to the possession and use of the
Owners. However, there can be no assurance that the Management Agreements will
be in effect at the time any Initial Charter is terminated. See "The Initial
Charters" for a discussion of the terms of the Initial Charters.
29
<PAGE>
MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS--CALIFORNIA PETROLEUM AND THE OWNERS
<TABLE>
<CAPTION>
DIRECTORS AND EXECUTIVE
OFFICERS OF CALIFORNIA PETROLEUM AGE POSITION
<S> <C> <C>
Nancy D. Smith..................................... 26 President
Louise E. Colby.................................... 46 Secretary and Treasurer
</TABLE>
Nancy D. Smith has been the president of California Petroleum since 1994. She
has been a director since 1994. Her term expires in 1995. She has been the
President of JH Management Corporation, a Massachusetts business corporation
that engages in the management of special purpose corporations for structured
financial transactions, since 1993. From 1987 to 1992, she was a legal
secretary at Ropes & Gray, a law firm in Boston, MA. From 1992 to 1993, she was
a personal assistant at Bob Woolf Associates, Inc.
Louise E. Colby has been the secretary and treasurer of California Petroleum
since 1994. She has been a director since 1994. Her term expires in 1995. She
has been the Director, Secretary and Treasurer of JH Management Corporation
since 1989. She also has served as Trustee of The Cazenove Street Realty Trust
since 1983.
<TABLE>
<CAPTION>
DIRECTOR AND EXECUTIVE OFFICERS
OF CALPETRO BAHAMAS I, CALPETRO BAHAMAS II
AND CALPETRO BAHAMAS III AGE POSITION
<S> <C> <C>
Peter D. Gram....................................... 51 Director and President
Lourey C. Smith..................................... 40 Secretary
<CAPTION>
DIRECTORS AND EXECUTIVE OFFICERS
OF CALPETRO IOM AGE POSITION
<S> <C> <C>
Peter D. Gram....................................... 51 Director
Bernard Z. Galka.................................... 43 Director
John D. Clarke...................................... 48 Secretary
</TABLE>
Peter D. Gram has been the president of CalPetro Bahamas I, Calpetro Bahamas
II and CalPetro Bahamas III since 1994. Mr. Gram has been the sole director of
each of CalPetro Bahamas I, CalPetro Bahamas II and CalPetro Bahamas III since
1994. His term as director of CalPetro Bahamas I, CalPetro Bahamas II and
CalPetro Bahamas III will expire only upon his death, resignation or removal.
Mr. Gram also has been a director of CalPetro IOM since 1994. His term as
director of IOM expires in 1995.
Lourey C. Smith has been the secretary of CalPetro Bahamas I, CalPetro
Bahamas II and CalPetro Bahamas III since 1994. She has been an attorney with
the law firm of McKinney, Bancroft & Hughes since 1986.
Bernard Z. Galka is a Chartered Accountant. He has been a director of
CalPetro IOM since 1994. His term expires in 1995.
John D. Clarke has been the secretary of CalPetro IOM since 1994. He is a
Chartered Accountant.
EXECUTIVE COMPENSATION
The directors and officers of California Petroleum are not compensated.
Each of CalPetro Bahamas I, CalPetro Bahamas II and CalPetro Bahamas III
annually will pay Peter Gram $3,000. Lourey Smith will not be compensated.
CalPetro IOM annually will pay Peter Gram $3,000, Bernard Galka $1,200 and
John Clarke $500.
30
<PAGE>
SECURITIES OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT OF CALIFORNIA
PETROLEUM
The following table summarizes the beneficial ownership of California
Petroleum as of September 30, 1994:
<TABLE>
<CAPTION>
NAME AND ADDRESS TITLE OF CLASS NUMBER OF PERCENT OF
OF BENEFICIAL OWNER OF SECURITIES SHARES CLASS
<S> <C> <C> <C>
The California Trust(1)..................... Common Stock 1,000 100%
c/o JH Holdings Corporation
P.O. Box 4024
Room 6/8
Boston, MA 02101
</TABLE>
- --------------------
(1) JH Holdings Corporation serves as Trustee of The California Trust and has
sole voting and investment powers over all securities owned by The
California Trust. Steven M. Loring is the President of JH Holdings
Corporation and may be deemed to control it. The 1960 Trust and The
Glendale Company together own 100% of JH Holdings Corporation. The address
of The Glendale Company is P.O. Box 6339, Lincoln Center, MA 01773-6339.
The 1960 Trust and The Glendale Company disclaim beneficial ownership of
the Common Stock of California Petroleum owned by The CalPet Trust within
the meaning of Rule 13d-3 under the Exchange Act.
31
<PAGE>
CERTAIN RELATIONSHIPS AND TRANSACTIONS
THE MANAGEMENT AGREEMENTS
P.D. Gram & Co. a.s. (the "Manager"), will enter into a Management Agreement
with each Owner and Barber Ship Management. The Manager is a Norwegian
privately-owned firm, established in 1982, which arranges and manages shipping
investments. Peter D. Gram, who is the sole director and an executive officer
of three of the Owners and a director of the fourth Owner, is the managing
director of the Manager. Since 1982, the Manager and its owner have been the
syndicators of approximately 30 vessels, with an investment value of over $300
million. As of January 1, 1995 the Manager and its associated companies had
seven vessels under commercial management. Under each Management Agreement, the
Manager will agree to provide administrative, management and advisory services
to the Owners and Barber Ship Management will agree to provide technical
advisory services to the Owners. In addition, in the event of termination of
the Initial Charters, Barber Ship Management will agree to provide, if
necessary, all technical management services to the Owners. Under each
Management Agreement, the Manager will be entitled to the Management Fee in
consideration of its services and Barber Ship Management shall be entitled to
the Technical Advisor's Fee. The Management Fee equals (i) an annual fee per
Vessel, payable semi-annually in arrears, in an amount equal to $13,625 per
annum during the period from the Closing Date to the third anniversary of the
Closing Date, plus (ii) a fee of $3,000 per annum, payable annually in arrears,
during such three-year period. The Management Fee after the third anniversary
of the Closing Date will increase each year by an amount equal to 4%. The
Technical Advisor's Fee equals $10,000 per annum, for each Vessel, payable
semi-annually in arrears, during such three-year period. In addition, the
Technical Advisor shall be entitled to be reimbursed for the fees, costs and
expenses of conducting periodic inspections of the Vessels. Thereafter, the
Technical Advisor's Fee will increase each year by an amount equal to 4%. The
Owners believe that the fees payable under the Management Agreements are at
rates comparable to market terms for comparable management services.
OTHER RELATIONSHIPS AND TRANSACTIONS
The Underwriter will enter into an agreement with the Manager to perform
certain financial advisory services for any Owner upon the optional termination
of the related Initial Charter or at the end of the term of such Initial
Charter.
Pursuant to a Designated Representative Agreement between California
Petroleum and CalPetro Holdings Limited (the "Designated Representative"),
California Petroleum will appoint the Designated Representative to act on its
behalf with respect to certain administrative matters (e.g., the filing of
certain reports and financial statements with the Commission and the Indenture
Trustee) and certain obligations under the Indentures and the Collateral
Agreement (e.g., providing certain notices and requests). The Designated
Representative is the holding company of the shareholder of the Owners. As
compensation for its services, the Designated Representative will receive a fee
(the "Designated Representative's Fee") during the period from the Closing Date
until the third anniversary of the Closing Date, in an amount equal to $15,000
per annum. Thereafter, the Designated Representative's Fee will increase each
year by an amount equal to 4%.
32
<PAGE>
DESCRIPTION OF THE NOTES
GENERAL
The Serial Mortgage Notes will be issued under an indenture (the "Serial
Indenture") among California Petroleum, Chemical Trust Company of California,
as indenture trustee (the "Indenture Trustee"), and, solely for purposes of the
Trust Indenture Act of 1939, as amended (the "Trust Indenture Act"), Chevron.
The Serial Indenture will be governed by New York law. The form of the Serial
Indenture has been filed as an exhibit to the Registration Statement of which
this Prospectus is a part. The statements under this caption are summaries of
certain provisions of the Serial Indenture and do not purport to be complete.
The summaries make use of terms defined in, and are qualified in their entirety
by reference to, all the provisions of the Serial Indenture and the Trust
Indenture Act, including the definitions of certain terms in the Serial
Indenture and those terms made a part of the Serial Indenture by reference to
the Trust Indenture Act.
The Serial Indenture will not contain any covenants specifically designed to
protect the Holders against a reduction in the creditworthiness of California
Petroleum in the event of a highly leveraged transaction. California Petroleum
will be prohibited under its Certificate of Incorporation from incurring, and
will covenant under the Serial Indenture not to incur, any indebtedness other
than the Serial Mortgage Notes and the Term Mortgage Notes so long as any of
the Notes are outstanding. Each Owner will covenant under the related Mortgage
not to incur any indebtedness other than the related Acquisition Loans.
The Serial Indenture will not contain any covenants specifically designed to
protect the Holders against a reduction in the creditworthiness of Chevron in
the event of a highly leveraged transaction. The Serial Indenture will not
limit the amount of additional indebtedness that may be incurred by Chevron
Transport or by Chevron or any of its subsidiaries.
The Serial Mortgage Notes will be originally issued in fully registered book-
entry form and will be represented by one or more global notes (each, a "Global
Note") registered in the name of Cede & Co. ("Cede") as the nominee of The
Depository Trust Company ("DTC") and no person acquiring an interest in a
Serial Mortgage Note (a "Beneficial Owner") will be entitled to receive a
certificated Serial Mortgage Note unless such certificates are issued as
described below. Unless certificated Serial Mortgage Notes are issued, all
references to actions by the Holders shall refer to actions taken by DTC upon
instructions from DTC Participants (as defined below), and all references
herein to distributions, notices, reports and statements to Holders shall
refer, as the case may be, to distributions, notices, reports and statements to
DTC or Cede, as the registered holder of the Serial Mortgage Notes, or to DTC
Participants for distribution to Beneficial Owners in accordance with DTC
procedures. See "--Book-Entry System."
THE SERIAL MORTGAGE NOTES.
The Serial Mortgage Notes will be issued as full recourse obligations of
California Petroleum in the aggregate principal amount of $167,500,000, and
will be secured equally and ratably with the Term Mortgage Notes (except as
described under "--Security--After First Optional Termination Date") by the
assignment of a Mortgage on each Vessel, an assignment of any charters for the
Vessel including, so long as the Initial Charter relating to a Vessel has not
reached its first optional termination date, an assignment of such Initial
Charter, as well as by certain other property and contract rights. The
Collateral relating to a Vessel may be released from the Lien of the Serial
Indenture under certain circumstances prior to the final Maturity Date of the
Serial Mortgage Notes if such Vessel is subject to a casualty or certain other
events occur with respect to such Vessel and such Vessel is a Total Loss as
described below under "The Initial Charters--Payment on Total Loss," or if the
Allocated Principal Amount of Serial Mortgage Notes with respect to such Vessel
is paid in full as described under "--Security--After First Optional
Termination Date."
The Serial Mortgage Notes will not be obligations of, or guaranteed by,
Chevron Transport or Chevron, and will not be share capital, debentures or
general obligations of any Owner or the Owners. California Petroleum and the
Owners, however, expect that the amounts payable by Chevron Transport (other
than the
33
<PAGE>
related Termination Payment, if any), and guaranteed by Chevron, under the
Initial Charters (whether or not the termination options are exercised),
together with an allocable amount of anticipated earnings on the Permitted
Investments, will be sufficient to pay in full when due all principal of and
interest on the Serial Mortgage Notes. See "Investment Considerations--Certain
Risks Not Related to Chevron Transport or Chevron." The foregoing determination
assumes that, during the term of the Serial Mortgage Notes, amounts remaining
in the Initial Revenue Account on each Payment Date will be invested in
Permitted Investments that will provide a 7.5% annual rate of return for
periods prior to the first termination date for each Initial Charter and a 5.0%
annual rate of return for subsequent periods. The Owners believe that
guaranteed investment contracts rated at least "Aa" or "AA" by Moody's,
Standard & Poor's or Duff & Phelps will be available with at least the assumed
annual rate of return. See "--Trust Accounts" below for a discussion of the
Initial Revenue Account and Permitted Investments.
Interest on each series of Serial Mortgage Notes will accrue from the date of
issuance thereof at the rate per annum set forth on the cover of this
Prospectus for the respective Maturity Date, and will be payable on the unpaid
principal amount thereof on each and , commencing on , 1995, to
holders of record on the immediately preceding and , respectively,
until the respective Maturity Date for such series of Serial Mortgage Notes.
Interest on the Serial Mortgage Notes will be calculated on the basis of a 360-
day year consisting of twelve 30-day months. Any overdue payment of principal,
interest or any other amount payable on any Serial Mortgage Note will accrue
interest from the due date for such amount to the date such amount is paid in
full at a rate per annum equal to 1.50% above LIBOR (the "Default Rate"). There
can be no assurance that, at any time, the Default Rate will at least equal the
rate of interest applicable to the Serial Mortgage Notes.
Each series of Serial Mortgage Notes will be issued in the aggregate
principal amount set forth below for the respective Maturity Date thereof,
which in each case will be payable in full on the Maturity Date for such series
of Serial Mortgage Notes. Set forth below is the Allocated Principal Amount of
Serial Mortgage Notes payable on each Maturity Date for each Vessel and the
aggregate amount of such Allocated Principal Amount payable on each Maturity
Date.
ALLOCATED PRINCIPAL AMOUNT OF SERIAL MORTGAGE NOTES
<TABLE>
<CAPTION>
AGGREGATE
MATURITY DATE S. GINN C. RICE CHEVRON MARINER W.E. CRAIN PRINCIPAL AMOUNT
<S> <C> <C> <C> <C> <C>
, 1996.... $4,940,000 $4,940,000 $4,940,000 $2,340,000 $17,160,000
, 1997.... 5,210,000 5,210,000 5,210,000 2,530,000 18,160,000
, 1998.... 5,210,000 5,210,000 5,210,000 2,530,000 18,160,000
, 1999.... 5,210,000 5,210,000 5,210,000 2,530,000 18,160,000
, 2000.... 5,210,000 5,210,000 5,210,000 2,530,000 18,160,000
, 2001.... 5,210,000 5,210,000 5,210,000 2,530,000 18,160,000
, 2002.... 5,210,000 5,210,000 5,210,000 2,530,000 18,160,000
, 2003.... 5,210,000 5,210,000 5,210,000 2,530,000 18,160,000
, 2004.... 5,210,000 5,210,000 2,530,000 12,950,000
, 2005.... 5,210,000 2,530,000 7,740,000
, 2006.... 2,530,000 2,530,000
</TABLE>
For each Vessel, Chevron Transport has the option to terminate the Initial
Charter for such Vessel, exercisable on the dates and under the circumstances
described below under "The Initial Charters--Termination Options." The earliest
such termination date for any Initial Charter is , 2003. The first
optional termination date with respect to each Initial Charter occurs on the
payment date on which the Allocated Principal Amount of Serial Mortgage Notes
with respect to the related Vessel is scheduled to be paid in full. Prior to
the respective Maturity Dates of the 2004 Serial Mortgage Notes, the 2005
Serial Mortgage Notes or the 2006 Serial Mortgage Notes, upon payment in full
of the Allocated Principal Amount of Serial Mortgage Notes for a Vessel, the
related Initial Charter, whether or not terminated by Chevron Transport, will
no longer be available as security for payments on the Serial Mortgage Notes.
Even if Chevron
34
<PAGE>
Transport exercises each of the termination options available during the term
of the Serial Mortgage Notes, California Petroleum and the Owners expect that
amounts payable by Chevron Transport, and guaranteed by Chevron, under the
Initial Charters prior to the final Maturity Date for the Serial Mortgage
Notes, together with an allocable amount of anticipated earnings on the
Permitted Investments, will be sufficient to pay in full when due all principal
of and interest on the Serial Mortgage Notes outstanding after any such
termination.
The Serial Mortgage Notes will not be subject to optional redemption prior to
the respective maturity dates thereof. If a casualty or certain other events
occur with respect to a Vessel and such Vessel is a Total Loss, then the Serial
Mortgage Notes will be subject to redemption in part, equally and ratably with
the Term Mortgage Notes, under the circumstances and subject to the conditions
described below under "--Redemption".
The Serial Indenture will not provide for any additional payment by
California Petroleum in the event that California Petroleum is required by any
applicable law to make, with respect to any payment to be made pursuant to the
Serial Mortgage Notes, any deduction or withholding for or on account of any
taxes, assessments or other governmental charges imposed on such payment by any
governmental or taxing authority. See "The Mortgages--Certain Covenants."
THE TERM MORTGAGE NOTES.
The Term Mortgage Notes will be issued under a separate indenture (the "Term
Indenture" and, together with the Serial Indenture, the "Indentures")
concurrently with the issuance of the Serial Mortgage Notes. The Term Mortgage
Notes will be full recourse obligations of California Petroleum in the
aggregate principal amount of $117,900,000. The Term Mortgage Notes will be
secured by the Collateral equally and ratably (except as described below under
"--Security--After First Optional Termination Date") with the Serial Mortgage
Notes. The Term Mortgage Notes will not be obligations of, or guaranteed by,
Chevron Transport or Chevron and will not be share capital, debentures or
general obligations of any Owner or the Owners.
The Term Mortgage Notes are subject to redemption through the operation of
the mandatory sinking fund on of each year, commencing on , 2004 to and
including , 2014 according to the applicable schedule of sinking fund
redemption payments set forth below. The Term Mortgage Notes will mature on
, 2015. Under each Initial Charter, Chevron Transport may elect to terminate
such Initial Charter on any of four, in the case of the double-hulled Vessels,
or three, in the case of the single-hulled Vessel, termination dates which, for
each Vessel, occur at two-year intervals beginning in 2003, 2004, 2005 or 2006,
as the case may be. See "The Initial Charters--Termination Options." The
exercise of such termination right under each Initial Charter is completely
within Chevron Transport's discretion.
If an Initial Charter is terminated, the scheduled sinking fund payments on
the Term Mortgage Notes will be revised so that the Allocated Principal Amount
of Term Mortgage Notes for the related Vessel's sinking fund will be redeemed
on the remaining sinking fund redemption dates on a schedule that approximates
level debt service with an additional principal payment on the final maturity
date of $7,000,000 for any of the double-hulled Vessels, or $5,500,000 for the
single-hulled Vessel. The table below provides the scheduled sinking fund
redemption amounts on the Term Mortgage Notes (assuming an interest rate per
annum on the Term Mortgage Notes of 8.45% which is based on market interest
rates as of February 21, 1995) prior to the final Maturity Date for any Serial
Mortgage Notes if none of the Initial Charters is terminated and if all of the
Initial Charters are terminated on the earliest termination dates.
<TABLE>
<CAPTION>
SINKING FUND REDEMPTION
--------------------------------------
SCHEDULED NO INITIAL ALL INITIAL
PAYMENT DATE CHARTERS TERMINATE CHARTERS TERMINATE*
<S> <C> <C>
, 2004............................... $ 3,355,000 $ 1,710,000
, 2005............................... 6,542,000 3,500,000
, 2006............................... 9,526,000 5,330,000
----------- -----------
$19,423,000 $10,540,000
=========== ===========
</TABLE>
- --------------------
* The actual interest rate and the sinking fund redemption amount will depend
on final pricing information.
35
<PAGE>
Set forth below are tables of the semi-annual charterhire payments under the
Initial Charters, anticipated earnings on Permitted Investments and the
scheduled payments of principal (including, in the case of the Term Mortgage
Notes, mandatory sinking fund payments) and interest on the Term Mortgage Notes
and the Serial Mortgage Notes (in each case, assuming for illustrative purposes
only that the interest rate per annum on the Term Mortgage Notes is 8.45% and
that the Serial Mortgage Notes bear interest at rates ranging from 7.00% to
8.03% through maturity) (such interest rates are based on market interest rates
as of February 21, 1995) to the Maturity Date of all series of Serial Mortgage
Notes if (i) none of the Initial Charters is terminated and (ii) all of the
Initial Charters are terminated on the earliest optional termination dates.
NO INITIAL CHARTER IS TERMINATED*
(DOLLARS IN MILLIONS)
<TABLE>
<CAPTION>
CHARTERHIRE ANTICIPATED SCHEDULED SCHEDULED
UNDER EARNINGS PAYMENTS ON PAYMENTS ON
PAYMENT INITIAL ON PERMITTED SERIAL MORTGAGE TERM MORTGAGE
DATE CHARTERS INVESTMENTS NOTES NOTES
<S> <C> <C> <C> <C>
, 1995................ $20.045 $0.000 $6.440 $4.981
, 1996................ 20.045 0.316 23.600 4.981
, 1996................ 19.935 0.000 5.839 4.981
, 1997................ 19.935 0.334 23.999 4.981
, 1997................ 19.262 0.000 5.166 4.981
, 1998................ 19.262 0.334 23.326 4.981
, 1998................ 18.575 0.000 4.479 4.981
, 1999................ 18.575 0.334 22.639 4.981
, 1999................ 17.877 0.000 3.781 4.981
, 2000................ 17.877 0.334 21.941 4.981
, 2000................ 17.170 0.000 3.075 4.981
, 2001................ 17.170 0.334 21.235 4.981
, 2001................ 16.461 0.000 2.364 4.981
, 2002................ 16.461 0.334 20.524 4.981
, 2002................ 15.746 0.000 1.650 4.981
, 2003................ 15.746 0.334 19.810 4.981
, 2003................ 14.122 0.000 0.927 4.981
, 2004................ 14.122 0.280 13.877 8.336
, 2004................ 12.481 0.000 0.410 4.840
, 2005................ 12.481 0.223 8.150 11.382
, 2005................ 10.813 0.000 0.102 4.563
, 2006................ 10.813 0.164 2.632 14.089
</TABLE>
- --------------------
* The actual interest rates, charterhire payments, anticipated earnings and
scheduled payments will depend on final pricing information.
36
<PAGE>
ALL INITIAL CHARTERS ARE TERMINATED ON THE EARLIEST
OPTIONAL TERMINATION DATES*
(DOLLARS IN MILLIONS)
<TABLE>
<CAPTION>
SCHEDULED
CHARTERHIRE ANTICIPATED PAYMENTS ON SCHEDULED
UNDER EARNINGS ON SERIAL PAYMENTS ON
PAYMENT INITIAL TERMINATION PERMITTED MORTGAGE TERM MORTGAGE
DATE CHARTERS PAYMENTS INVESTMENTS NOTES NOTES
<S> <C> <C> <C> <C> <C>
, 1995........ $20.045 $ 0.000 $0.000 $ 6.440 $ 4.981
, 1996........ 20.045 0.000 0.316 23.600 4.981
, 1996........ 19.935 0.000 0.000 5.839 4.981
, 1997........ 19.935 0.000 0.334 23.999 4.981
, 1997........ 19.262 0.000 0.000 5.166 4.981
, 1998........ 19.262 0.000 0.334 23.326 4.981
, 1998........ 18.575 0.000 0.000 4.479 4.981
, 1999........ 18.575 0.000 0.334 22.639 4.981
, 1999........ 17.877 0.000 0.000 3.781 4.981
, 2000........ 17.877 0.000 0.334 21.941 4.981
, 2000........ 17.170 0.000 0.000 3.075 4.981
, 2001........ 17.170 0.000 0.334 21.235 4.981
, 2001........ 16.461 0.000 0.000 2.364 4.981
, 2002........ 16.461 0.000 0.334 20.524 4.981
, 2002........ 15.746 0.000 0.000 1.650 4.981
, 2003........ 15.746 13.350 0.334 19.810 4.981
, 2003........ 10.714 0.000 0.334 0.927 4.981
, 2004........ 10.714 12.152 0.537 13.877 6.691
, 2004........ 6.109 0.000 0.523 0.410 4.909
, 2005........ 6.109 10.888 0.598 8.150 8.409
, 2005........ 1.932 0.000 0.572 0.102 4.761
, 2006........ 1.932 5.032 0.523 2.632 10.091
</TABLE>
- --------------------
* The actual interest rates, charterhire payments, Termination Payments,
anticipated earnings and scheduled payments will depend on final pricing
information.
BOOK-ENTRY SYSTEM
DTC has advised California Petroleum, Chevron Transport and Chevron that DTC
is a limited-purpose trust company organized under the laws of the State of New
York, a member of the Federal Reserve System, a "clearing corporation" within
the meaning of the New York Uniform Commercial Code and a "clearing agency"
registered pursuant to Section 17A of the Exchange Act. DTC was created to hold
securities for its participants ("DTC Participants") and to facilitate the
clearance and settlement of securities transactions among DTC Participants
through electronic book-entries, thereby eliminating the need for physical
movement of certificates. DTC Participants include securities brokers and
dealers, banks, trust companies, clearing corporations and certain other
organizations. Access to DTC's book-entry system is also available to others,
such as banks, brokers, dealers and trust companies that clear through or
maintain a custodial relationship with a DTC Participant, either directly or
indirectly ("Indirect Participants").
Beneficial Owners that are not DTC Participants but desire to purchase, sell
or otherwise transfer ownership of, or other interests in, Serial Mortgage
Notes may do so only through DTC Participants or Indirect Participants. In
addition, Beneficial Owners will receive all distributions of principal and
interest from the Indenture Trustee or any paying agent through the DTC
Participants. Under the rules, regulations and procedures creating and
affecting DTC and its operation, DTC is required to make book-entry transfers
of the Serial Mortgage Notes among DTC Participants on whose behalf it acts and
to receive and transmit distributions of principal of, and interest on, the
Serial Mortgage Notes. Under the book-entry system,
37
<PAGE>
Beneficial Owners may experience some delay in their receipt of payments, since
such payments will be forwarded by the Indenture Trustee or any paying agent to
Cede, as nominee for DTC, and DTC in turn will forward the payments to the
appropriate DTC Participants. Distributions by DTC Participants to Beneficial
Owners will be the sole responsibility of such DTC Participants and will be
made in accordance with customary industry practices. Accordingly, although
Beneficial Owners will not have possession of the Serial Mortgage Notes, the
rules of DTC provide a mechanism by which DTC Participants will receive
payments and will be able to transfer their interests. Although the DTC
Participants are expected to convey the rights represented by their interests
in any global security to the related Beneficial Owners, because DTC can only
act on behalf of DTC Participants, the ability of Beneficial Owners to pledge
Serial Mortgage Notes to persons or entities that are not DTC Participants, or
to otherwise act with respect to such Serial Mortgage Notes, may be limited due
to the lack of physical certificates for such Serial Mortgage Notes.
Neither California Petroleum, Chevron, Chevron Transport, the Indenture
Trustee nor any other agent of any of them will have any responsibility or
liability for any aspect of the records relating to, or payments made on
account of, beneficial ownership interests in the Serial Mortgage Notes or for
supervising or reviewing any records relating to such beneficial interests.
Since the only "Holder" will be Cede, as nominee of DTC, Beneficial Owners will
not be recognized by the Indenture Trustee as Holders, as such term is used in
the Serial Indenture, and Beneficial Owners will be permitted to exercise the
rights of Holders only indirectly through DTC and DTC Participants.
The Serial Mortgage Notes will be issued in fully registered, certificated
form to Beneficial Owners, or their nominees, rather than to DTC or its
nominee, only if DTC advises the Indenture Trustee in writing that it is no
longer willing or able or qualified to discharge properly its responsibilities
as depository with respect to the Serial Mortgage Notes and California
Petroleum is unable to locate a qualified successor or if California Petroleum,
at its option, elects to terminate the book-entry system through DTC. In such
event, the Indenture Trustee will notify all Beneficial Owners through DTC
Participants of the availability of such certificated Serial Mortgage Notes.
Upon surrender by DTC of the registered global certificates representing the
Serial Mortgage Notes and receipt of instructions for reregistration, the
Indenture Trustee will reissue the Serial Mortgage Notes in certificated form
to Beneficial Owners or their nominees. Such certificated Serial Mortgage Notes
will be freely transferable and exchangeable at the office of the Indenture
Trustee upon compliance with the requirements set forth in the Indenture. No
service charge will be imposed for any registration of transfer or exchange,
but payment of a sum sufficient to cover any tax or other governmental charge
may be required.
SECURITY
At any time, the security described below for the payment and performance of
the obligations of California Petroleum under the Serial Indenture, the Term
Indenture or both, as the case may be, at such time shall be referred to in
this Prospectus as the "Collateral." The Indenture Trustee, as indenture
trustee under the Serial Indenture and the Term Indenture, California Petroleum
and Chemical Trust Company of California, as collateral trustee (the
"Collateral Trustee"), will enter into a collateral trust agreement (the
"Collateral Agreement") pursuant to which the Collateral Trustee will hold the
Collateral for the benefit of the Holders of the Serial Mortgage Notes and the
Indenture Trustee under the Serial Indenture and the holders of the Term
Mortgage Notes and the Indenture Trustee under the Term Indenture, and under
which the Trust Accounts will be established and maintained for the deposit and
application of Trust Funds as described under "--Trust Accounts."
The Vessels are currently owned and operated by Chevron Transport. Upon the
sale of each Vessel to the related Owner and the commencement of the related
Initial Charter on the Closing Date, the Initial Charter and other Collateral
described below under "--Prior to First Optional Termination Date" will be
assigned to California Petroleum as security for the Acquisition Loans and
California Petroleum will assign the Initial Charter and the other Collateral
to the Collateral Trustee as security for the payment of principal of and
interest on the Serial Mortgage Notes and the Term Mortgage Notes, equally and
ratably.
38
<PAGE>
PRIOR TO FIRST OPTIONAL TERMINATION DATE.
On the Closing Date, each Owner will grant or assign and pledge, as the case
may be, to California Petroleum, which will in turn assign and pledge to the
Collateral Trustee, for the benefit of the Holders of the Serial Mortgage Notes
and the holders of the Term Mortgage Notes, equally and ratably, each of the
following assets owned by such Owner on the Closing Date or acquired by such
Owner thereafter: (a) the mortgage of such Owner's Vessel; (b) such Owner's
right, title and interest in the Initial Charter relating to such Vessel,
including the right to receive all monies that become due thereunder or in
respect of such Vessel and all claims for damages arising under such Initial
Charter or relating to such Vessel; (c) the related Chevron Guarantee; (d) the
freights and hires relating to such Vessel; (e) all policies and contracts of
insurance in effect from time to time in respect of such Vessel; (f) such
Owner's right, title and interest in the Management Agreement relating to such
Vessel; (g) such Owner's right, title and interest in the purchase agreement
relating to its Vessel (each, a "Vessel Purchase Agreement"); and (h) all
income, proceeds and products of any of the foregoing. In addition, all of the
capital stock of such Owner will be pledged to California Petroleum which will
in turn pledge it to the Collateral Trustee. In addition, on the Closing Date,
California Petroleum will assign and pledge to the Collateral Trustee, for the
benefit of the Holders of the Serial Mortgage Notes and the holders of the Term
Mortgage Notes, equally and ratably, all cash, securities and other property
held by the Collateral Trustee as Trust Funds from time to time and all income,
proceeds and products of any of the foregoing.
Each Owner will mortgage its Vessel to California Petroleum pursuant to a
Mortgage and California Petroleum will in turn assign such Mortgage to the
Collateral Trustee. The earnings and insurance relating to each Vessel will be
collaterally assigned pursuant to an Assignment of Earnings and Insurances
between the related Owner and California Petroleum, which will in turn assign
such Assignment of Earnings and Insurances to the Collateral Trustee. The
Initial Charter and Chevron Guarantee relating to each Vessel will be
collaterally assigned pursuant to an Assignment of Initial Charter and
Assignment of Initial Charter Guarantee between the related Owner and
California Petroleum, which will in turn assign such Assignment of Initial
Charter and Assignment of Initial Charter Guarantee to the Collateral Trustee.
The Trust Funds will be pledged pursuant to the Collateral Agreement. The
capital stock of each Owner will be pledged pursuant to the Stock Pledge
Agreement.
AFTER FIRST OPTIONAL TERMINATION DATE.
For each Vessel, Chevron Transport has the option to terminate the Initial
Charter, exercisable on the dates and under the circumstances described below
under "The Initial Charters--Termination Options." If the Allocated Principal
Amount of Serial Mortgage Notes relating to a Vessel is paid in full, the
Collateral (including the related Initial Charter, whether or not terminated by
Chevron Transport) relating to such Vessel will no longer secure California
Petroleum's obligations under the Serial Indenture, but will continue to secure
California Petroleum's obligations under the Term Indenture. Although the term
of an Initial Charter with respect to which Chevron Transport exercises its
termination option will be extended for certain periods with respect to Chevron
Transport's obligation to make the related Termination Payment, such extension
would not benefit the Holders of the Serial Mortgage Notes since any such
Termination Payment will not secure the obligations of California Petroleum
under the Serial Indenture. See "Trust Accounts-- Termination Account" below
and "The Initial Charters--Term of the Initial Charters."
So long as any Serial Mortgage Notes are outstanding, if an event of default
under a subsequent charter or Mortgage Event of Default occurs with respect to
a Vessel for which the Allocated Principal Amount of Serial Mortgage Notes has
been paid in full, the Collateral Trustee may not pursue remedies upon receipt
of an Enforcement Notice (as defined herein) under the Term Indenture with
respect to any Initial Charter that has not reached its first optional
termination date and that is not then in default, including amounts paid or
payable thereunder, and the related Security Documents. If any Initial Charter
is terminated and an Acceptable Replacement Charter or other charter for the
related Vessel has been entered into by the related Owner, then such Owner will
assign and pledge its right, title and interest in such Acceptable Replacement
Charter or other charter to California Petroleum, which will in turn assign
such Acceptable Replacement Charter or other charter to the Collateral Trustee
for the benefit of the Indenture Trustee and the holders of the Term Mortgage
Notes.
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TRUST ACCOUNTS
GENERAL.
Each Initial Charter provides for semi-annual charterhire payments on each
and , commencing on , 1995. So long as the Allocated Principal Amount
of Serial Mortgage Notes relating to a Vessel has not been paid in full, the
related Owner will direct Chevron Transport to deposit the charterhire payments
under the related Initial Charter directly into an account established and
maintained for such purpose by the Collateral Trustee (the "Initial Revenue
Account"). Each Owner will direct, as the case may be, (i) the charterer under
any Acceptable Replacement Charter or other charter for such Owner's Vessel
entered into after the payment in full of the Allocated Principal Amount of
Serial Mortgage Notes for such Vessel or (ii) Chevron Transport, if such
Initial Charter continues in effect after all of the Allocated Principal Amount
of the Serial Mortgage Notes for such Vessel has been paid in full, to deposit
the charterhire payments under such Acceptable Replacement Charter, other
charter or Initial Charter, as the case may be, directly into an account
established and maintained for such purpose by the Collateral Trustee (the
"Second Revenue Account"). Each Owner will direct Chevron Transport to deposit
the Termination Payment, if any, payable under the Initial Charter for such
Owner's Vessel directly into an account established and maintained for such
purpose by the Collateral Trustee (the "Termination Account"). The Collateral
Trustee also will deposit into the Termination Account any net proceeds from
the sale, if any, of a Vessel for which the related Initial Charter has been
terminated that are in excess of the amount necessary to pay all amounts due
and payable in connection with the related mandatory redemption. The Collateral
Trustee will establish and maintain an account into which, on each Payment Date
that is not a sinking fund redemption date or a date on which the final payment
of principal on the Term Mortgage Notes is due, an amount, if any, not to
exceed one-half of the aggregate sinking fund redemption amount or amount of
principal due and payable on the Term Mortgage Notes on the next succeeding
Payment Date will be deposited (the "Sinking Fund Reserve Account") in
accordance with the order of payments for the applicable Payment Date. The
Collateral Trustee will establish and maintain an account into which the
Recurring Fees and Taxes, the Management Fee and the Technical Advisor's Fee
relating to each Vessel will be deposited (the "Operating Account") in
accordance with the order of payments for the applicable Payment Date. The
Collateral Trustee will establish and maintain an account into which the Equity
Remainder, if any, for each Vessel will be deposited (the "Equity Account") in
accordance with the order of payments for each Equity Transfer Date. The
Collateral Trustee will establish and maintain an account into which any
insurance proceeds or other payments in connection with the occurrence of a
Total Loss to any Vessel then subject to an Initial Charter that has not
reached its first optional termination date shall be deposited in accordance
with the related Mortgage (the "Casualty Account"). The Collateral Trustee will
establish and maintain an account into which the Collateral Trustee will
deposit (i) any proceeds received upon the exercise of remedies with respect to
the Collateral, (ii) other amounts received with respect to the Collateral
following receipt by the Collateral Trustee of an Enforcement Notice, subject
to the exceptions described in the fourth paragraph under "--Collateral
Agreement Remedies" below and (iii) any other amount received by the Collateral
Trustee pursuant to any of the Security Documents for which the Collateral
Agreement does not specify another Trust Account into which such amount is to
be deposited (the "Collateral Account"). The Initial Revenue Account, the
Second Revenue Account, the Termination Account, the Operating Account, the
Equity Account, the Casualty Account, the Sinking Fund Reserve Account and the
Collateral Account will be maintained by the Collateral Trustee as collateral
agent for the equal and ratable benefit of the holders of the Term Mortgage
Notes and (except for the Second Revenue Account, the Termination Account and
the Sinking Fund Reserve Account) the Holders of the Serial Mortgage Notes in
accordance with the Collateral Agreement, and are from time to time referred to
in this Prospectus as the "Trust Accounts." The funds deposited in the Trust
Accounts are from time to time referred to herein as the "Trust Funds."
PAYMENT DATES.
On each Payment Date on or prior to , 2003 (the first optional termination
date for any of the Initial Charters), the Collateral Trustee will withdraw
funds first from the Initial Revenue Account and
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then from the Equity Account (except for clause (g) below) and make the
payments set forth below in the following order, in each case to the extent
funds are available after the preceding payment has been made in full:
(a) to deposit into the Operating Account the amount of the Recurring
Fees and Taxes then due and payable for each Vessel, or which will become
due and payable prior to the next succeeding Payment Date;
(b) to pay all interest then due and payable on the Serial Mortgage Notes
to the Holders of the Serial Mortgage Notes, ratably in the proportion that
the amount of such payment then due under each such Serial Mortgage Note
bears to the aggregate amount of the payments then due under all such
Serial Mortgage Notes;
(c) if such Payment Date is the Maturity Date for any Serial Mortgage
Notes, to pay the aggregate amount of principal then due and payable on
such Serial Mortgage Notes to the Holders of such Serial Mortgage Notes,
ratably in the proportion that the amount of such principal then due under
each such Serial Mortgage Note bears to the aggregate amount of such
principal then due under all such Serial Mortgage Notes;
(d) to pay all interest then due and payable on the Term Mortgage Notes
to the holders of the Term Mortgage Notes, ratably in the proportion that
the amount of such payment then due under each such Term Mortgage Note
bears to the aggregate amount of the payments then due under all such Term
Mortgage Notes;
(e) to pay to the Indenture Trustee, the Collateral Trustee and the
Designated Representative, respectively, the fees and expenses then due and
payable under the Indentures to the Indenture Trustee and under the
Collateral Agreement to the Collateral Trustee and the Designated
Representative's Fee;
(f) to deposit into the Operating Account the Management Fee and the
Technical Advisor's Fee then due and payable for each Vessel; and
(g) if such Payment Date is an Equity Transfer Date, to the extent funds
are available, to deposit the Equity Remainder for each Vessel into the
Equity Account.
After the foregoing payments have been made, the Collateral Trustee will
invest (and reinvest, as applicable) any balance remaining in the Initial
Revenue Account and the Equity Account in Permitted Investments that will
mature on or before the next succeeding Payment Date.
On each Payment Date that occurs after , 2003 (the first optional
termination date under any of the Initial Charters) and on or before , 2006
(the final Maturity Date for any series of Serial Mortgage Notes), the
Collateral Trustee will withdraw funds from the Initial Revenue Account, the
Second Revenue Account, the Termination Account, the Sinking Fund Reserve
Account, the Equity Account, or the applicable combination of the foregoing
indicated below, as the case may be, and make the payments set forth below in
the following order, in each case to the extent funds are available in the
applicable Trust Accounts after the preceding payment has been made in full:
(a) to deposit into the Operating Account the amount of the Recurring
Fees and Taxes then due and payable, or which will become due and payable
prior to the next succeeding Payment Date for each Vessel then subject to
an Initial Charter through its first optional termination date, first from
the Initial Revenue Account and then from the Equity Account, in each case
to the extent of the funds available therein;
(b) to pay first from the Initial Revenue Account and then from the
Equity Account, in each case to the extent of the funds available therein,
all interest then due and payable on the Serial Mortgage Notes to the
Holders of the Serial Mortgage Notes, ratably in the proportion that the
amount of such payment then due under each such Serial Mortgage Note bears
to the aggregate amount of the payments then due under all such Serial
Mortgage Notes;
(c) if such Payment Date is the Maturity Date for any Serial Mortgage
Notes, to pay first from the Initial Revenue Account and then from the
Equity Account, in each case to the extent of the funds available therein,
the aggregate amount of principal then due and payable on such Serial
Mortgage Notes
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to the Holders of such Serial Mortgage Notes, ratably in the proportion
that the amount of such principal then due under each such Serial Mortgage
Note bears to the aggregate amount of such principal then due under all
such Serial Mortgage Notes;
(d) to pay first from the Initial Revenue Account and then from the
Equity Account, in each case to the extent of the funds available therein,
all interest then due and payable on the Allocated Principal Amount of Term
Mortgage Notes for each Vessel subject to an Initial Charter through its
first optional termination date to the holders of the Term Mortgage Notes,
ratably in the proportion that the amount of such payment then due under
each such Term Mortgage Note bears to the aggregate amount of the payments
then due under all such Term Mortgage Notes;
(e) to deposit into the Operating Account the amount of the Recurring
Fees and Taxes then due and payable, or which will become due and payable
prior to the next succeeding Payment Date for each Vessel after the first
optional termination date for the related Initial Charter, first from the
Second Revenue Account, then from the Termination Account and then from the
Equity Account, in each case to the extent of the funds available therein;
(f) to pay first from the Second Revenue Account, then from the
Termination Account and then from the Equity Account, in each case to the
extent of the funds available therein, all interest then due and payable
(A) on the Allocated Principal Amount of the Term Mortgage Notes for each
Vessel subject to an Initial Charter after the first optional termination
date thereof and (B) on the Allocated Principal Amount of the Term Mortgage
Notes for each Vessel not subject to an Initial Charter, to the holders of
the Term Mortgage Notes, ratably in the proportion that the amount of such
payment then due under each such Term Mortgage Note bears to the aggregate
amount of the payments then due under all such Term Mortgage Notes;
(g)(A) if such Payment Date is a sinking fund redemption date or a date
for the payment of principal on the Term Mortgage Notes, to pay first from
the Sinking Fund Reserve Account, then from the Second Revenue Account,
then from the Termination Account and then from the Equity Account, in each
case to the extent of the funds available therein, the aggregate sinking
fund redemption amount or amount of principal then due and payable on the
Term Mortgage Notes, ratably, in the case of payment due on maturity, in
the proportion that the amount of such payments then due under each such
Term Mortgage Note bears to the aggregate amount of the payment then due
under all such Term Mortgage Notes and (B) if such Payment Date is not a
sinking fund redemption date or a date for the payment of principal on the
Term Mortgage Notes, to deposit into the Sinking Fund Reserve Account first
from the Second Revenue Account, then from the Termination Account and then
from the Equity Account, in each case to the extent of the funds available
therein, an amount, if any, equal to one-half of the aggregate sinking fund
redemption amount or amount of principal due and payable on the Term
Mortgage Notes on the next succeeding Payment Date;
(h) to pay first from the Initial Revenue Account and then from the
Equity Account, in each case to the extent of the funds available therein,
to the Indenture Trustee, the Collateral Trustee and the Designated
Representative, respectively, the portion of the aggregate amount of the
fees and expenses then due under the Indentures to the Indenture Trustee
and under the Collateral Agreement to the Collateral Trustee and the
Designated Representative's Fee, calculated by multiplying the aggregate
amount of such fees and expenses by a fraction, the numerator of which is
the number of Vessels then subject to Initial Charters through their
respective first optional termination date and the denominator of which is
the total number of Vessels then subject to a Mortgage;
(i) to pay to the Indenture Trustee, the Collateral Trustee and the
Designated Representative respectively, first from the Second Revenue
Account, then from the Termination Account and then from the Equity
Account, in each case to the extent of the funds therein, the portion of
the aggregate amount of the fees and expenses then due under the Indentures
to the Indenture Trustee and under the Collateral Agreement to the
Collateral Trustee and the Designated Representative's Fee, calculated by
multiplying the aggregate amount of such fees and expenses by a fraction,
the numerator of which is the number of
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Vessels after the first optional termination date for the respective
Initial Charters and the denominator of which is the total number of
Vessels then subject to a Mortgage;
(j) to deposit into the Operating Account first from the Initial Revenue
Account and then from the Equity Account, to the extent of the funds
available therein, the Management Fee and the Technical Advisor's Fee then
due and payable for each Vessel then subject to an Initial Charter through
its first optional termination date;
(k) to deposit into the Operating Account first from the Second Revenue
Account, then from the Termination Account and then from the Equity
Account, in each case to the extent of the funds available therein, the
Management Fee and the Technical Advisor's Fee then due and payable for
each Vessel after the first optional termination date for the related
Initial Charter;
(l) if such Payment Date is an Equity Transfer Date, to withdraw from the
Initial Revenue Account, to the extent funds are available, and to deposit
into the Equity Account the Equity Remainder for each Vessel then subject
to an Initial Charter through its first optional termination date; and
(m) if such Payment Date is an Equity Transfer Date, to withdraw first
from the Second Revenue Account and then from the Termination Account, in
each case to the extent of the funds available therein, and to deposit into
the Equity Account the Equity Remainder for each Vessel after the first
optional termination date for which the related Initial Charter has reached
its first optional termination date.
After the foregoing payments have been made, the Collateral Trustee will
invest (and reinvest, as applicable) any balance remaining in each of the
Initial Revenue Account (if such Payment Date is not the date upon which all
series of Serial Mortgage Notes are paid in full), the Second Revenue Account,
the Equity Account, the Termination Account and the Sinking Fund Reserve
Account in Permitted Investments that will mature on or before the next
succeeding Payment Date.
On the final Maturity Date for all series of Serial Mortgage Notes, after all
payments have been made in full to the Holders of the Serial Mortgage Notes,
any balance remaining in the Initial Revenue Account will be transferred to the
Second Revenue Account.
On each Payment Date after , 2006 (the final Maturity Date for all series
of Serial Mortgage Notes), the Collateral Trustee will withdraw funds first
from the Sinking Fund Reserve Account (only in the case of clause (c) below),
then from the Second Revenue Account, then from the Termination Account and
then (except for clause (f) below) from the Equity Account, in each case to the
extent of the funds available therein, and make the payments set forth below in
the following order, in each case to the extent funds are available after the
preceding payment has been made in full:
(a) to deposit into the Operating Account the Recurring Fees and Taxes
then due and payable for each Vessel, or which will become due and payable
prior to the next succeeding Payment Date;
(b) to pay all interest then due and payable on the Term Mortgage Notes
to the holders of the Term Mortgage Notes, ratably in the proportion that
the amount of such payment then due under each Term Mortgage Note bears to
the aggregate amount of the payments then due under all such Term Mortgage
Notes;
(c)(A) if such Payment Date is a sinking fund redemption date or a date
for the payment of principal on the Term Mortgage Notes, to pay the
aggregate sinking fund redemption amount or amount of principal then due
and payable on the Term Mortgage Notes to the holders of the Term Mortgage
Notes, ratably, in the case of payment due on maturity, in the proportion
that the amount of such principal then due under each Term Mortgage Note
bears to the aggregate amount of such principal then due under all the Term
Mortgage Notes; and (B) if such Payment Date is not a sinking fund
redemption date or a date for the payment of principal on the Term Mortgage
Notes, to deposit into the Sinking Fund Reserve Account first from the
Second Revenue Account, then from the Termination Account and then from the
Equity Account, in each case to the extent of the funds available therein,
an
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amount, if any, equal to one-half of the aggregate sinking fund redemption
amount or amount of principal due and payable on the Term Mortgage Notes on
the next succeeding Payment Date;
(d) to pay to the Indenture Trustee, the Collateral Trustee and the
Designated Representative respectively, the fees and expenses then due and
payable under the Term Indenture to the Indenture Trustee and under the
Collateral Agreement to the Collateral Trustee and the Designated
Representative's Fee;
(e) to deposit into the Operating Account the Management Fee and the
Technical Advisor's Fee then due and payable for each Vessel; and
(f) if such Payment Date is an Equity Transfer Date, to the extent funds
are available, to deposit the Equity Remainder for each Vessel into the
Equity Account.
After the foregoing payments have been made, the Collateral Trustee will
invest (and reinvest, as applicable) any balance remaining in each of the
Second Revenue Account, the Termination Account, the Sinking Fund Reserve
Account and the Equity Account in Permitted Investments that will mature on or
before the next succeeding Payment Date. If so directed by California Petroleum
and if no Indenture Event of Default has occurred and is continuing, the
Indenture Trustee will purchase Term Mortgage Notes in the open market from
funds, if any, available in the Sinking Fund Reserve Account, provided that (a)
the purchase price of such Term Mortgage Notes is less than 100% of the
principal amount thereof plus accrued and unpaid interest to the date of such
purchase and (b) such Term Mortgage Notes are delivered to the Indenture
Trustee to satisfy California Petroleum's sinking fund obligations on the Term
Mortgage Notes on the next succeeding Payment Date.
If on any Payment Date the Notes are to be redeemed (other than by operation
of the mandatory sinking fund) in whole or in part, such redemption will occur
immediately prior to the payments described above for such Payment Date.
On each Payment Date occurring after the date on which each Vessel either (i)
has been sold, (ii) is subject to an Acceptable Replacement Charter or (iii) is
subject to an Initial Charter for which the last optional termination date has
occurred and the related Initial Charter has not been terminated, the
Collateral Trustee shall if so directed by the Manager disburse excess funds
contained in the Second Revenue Account and Termination Account to the Owners,
pro rata in proportion to the amount of such funds deposited in such Trust
Accounts in respect of such Owner's Vessel. For purposes of the foregoing,
amounts contained in the Second Revenue Account and Termination Account shall
on any date of determination be deemed excess funds to the extent, if any, that
charterhire payments under all Initial Charters and Acceptable Replacement
Charters then in effect during the non-cancellable term of such charters, after
giving effect to (1) any "gross up" of such amounts as a result of any
withholding tax on such charterhire payments, (2) the amounts then held in the
Termination Account, (3) the amounts then held in the Second Revenue Account
and (4) all fees and expenses, if any, incurred but unpaid in connection with
the recharter of the Vessels, provide sufficient funds for the payment in full
when due of (A) sinking fund payments and payments of principal and interest on
the then outstanding Term Mortgage Notes in accordance with the revised
schedule of sinking fund and principal payments that is applicable on such date
of determination, (B) the amount of Recurring Fees and Taxes for all such
Vessels, (C) the amount of Management Fees and Technical Advisor's Fees for all
such Vessels, (D) the amount of fees and expenses of the Indenture Trustee,
Collateral Trustee and Designated Representative's Fees and (E) an amount at
least equal to 30% of the estimated amounts, on a per annum basis, referred to
in clauses (B), (C) and (D) above for miscellaneous or unexpected expenses.
OPERATING ACCOUNT.
Funds deposited into the Operating Account on each Payment Date will be
disbursed by the Collateral Trustee (i) from time to time, to pay the Recurring
Fees and Taxes as such amounts become due and payable
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upon presentation of invoices therefor pursuant to the Management Agreements,
(ii) to pay the Management Fee to the Manager and (iii) to pay the Technical
Advisor's Fee to Barber Ship Management, provided that the Management Fee and
the Technical Advisor's Fee shall be payable only to the extent that the funds
remaining in the Operating Account after any such payment would be sufficient
to pay the Recurring Fees and Taxes for the applicable period. Funds remaining
in the Operating Account will be invested by the Collateral Trustee in
Permitted Investments maturing on or before the next succeeding Payment Date.
See "Business--Operations" for a discussion of the services provided under the
Management Agreements.
EQUITY ACCOUNT.
Funds remaining in the Equity Account will be invested by the Collateral
Trustee in Permitted Investments. Any balance remaining in the Equity Account
after payment in full of all amounts on the Notes will be disbursed promptly to
the Owners upon payment in full of all obligations due under the Indentures.
CASUALTY ACCOUNT.
Any insurance proceeds or other payments received by the Collateral Trustee
in connection with the occurrence of a Total Loss to any Vessel then subject to
an Initial Charter that has not reached its first optional termination date
will be deposited pursuant to the provisions of the related Security Documents
into the Casualty Account, and invested in Permitted Investments until such
funds are disbursed by the Collateral Trustee in accordance with the
Indentures. All such amounts paid with respect to a Vessel that has reached its
first optional termination date and any balance remaining in the Casualty
Account upon the release of all Liens of the Serial Indenture will be deposited
into the Termination Account. See "Trust Accounts--Termination Account."
TERMINATION ACCOUNT.
If the Initial Charter for a Vessel is terminated by Chevron Transport, the
Termination Payment payable under such Initial Charter will be deposited into
the Termination Account for the benefit of the Term Indenture Trustee for the
ratable benefit of holders of the Term Mortgage Notes. Any net proceeds from
the sale, if any, of a Vessel for which the related Initial Charter has reached
its first optional termination date, any insurance proceeds or other payments
received by the Collateral Trustee in connection with the occurrence of a Total
Loss to any Vessel that has reached its first optional termination date, and
any funds transferred from the Casualty Account or the Collateral Account upon
the release of all Liens of the Serial Indenture will be deposited into the
Termination Account to be used along with the related Termination Payment (and
any excess amounts referred to in the next succeeding sentence arising from
previous Vessel sales and remaining in the Termination Account) in connection
with the related mandatory redemption, if any, of Term Mortgage Notes pursuant
to the Term Indenture. The excess, if any, relating to such Vessel over the
amount necessary to pay all amounts due and payable in connection with such
related mandatory redemption will be disbursed by the Collateral Trustee, to
the extent necessary on each succeeding Payment Date, to make payments
designated to be made from the Termination Account on such Payment Date.
Any Termination Payment deposited into the Termination Account will be
disbursed by the Collateral Trustee (i) if a notice of mandatory redemption is
delivered by the Owners as a result of such termination, in accordance with the
Term Indenture or (ii) if a notice of mandatory redemption is not delivered by
the Owners as a result of such termination, to the extent necessary on each
succeeding Payment Date, to make payments designated to be made from the
Termination Account on such Payment Date. Funds in the Termination Account will
be invested (and reinvested, as applicable) by the Collateral Trustee in
Permitted Investments prior to being disbursed as described above.
SINKING FUND RESERVE ACCOUNT.
Funds deposited into the Sinking Fund Reserve Account on each applicable
Payment Date (1) if so directed by California Petroleum and if no Indenture
Event of Default has occurred and is continuing, will
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be used to purchase Term Mortgage Notes in the open market provided that (a)
the purchase price of such Term Mortgage Notes is less than 100% of the
principal amount thereof plus accrued and unpaid interest to the date of such
purchase and (b) such Term Mortgage Notes are delivered to the Indenture
Trustee to satisfy California Petroleum's sinking fund obligations on the Term
Mortgage Notes on the next succeeding Payment Date and (2) if not so used as
described in clause (1) above, will be used to satisfy, in part, California
Petroleum's sinking fund obligations on the Term Mortgage Notes on such Payment
Date. Funds in the Sinking Fund Reserve Account will be invested (and
reinvested, as applicable) by the Collateral Trustee in Permitted Investments
maturing on or before the next succeeding Payment Date prior to being disbursed
as described above.
COLLATERAL ACCOUNT.
The cash proceeds of any sale of, or other realization upon, all or any part
of the Collateral upon the exercise by the Collateral Trustee of any of the
rights and remedies described below (see "Collateral Agreement Remedies") upon
receipt of an Enforcement Notice, and any other amounts received by the
Collateral Trustee pursuant to any of the Security Documents for which the
Collateral Agreement does not specify another trust account into which such
amount is to be deposited, will be deposited in the Collateral Account. While
an Enforcement Notice is in effect, all moneys which are required by any
Security Document to be delivered to the Collateral Trustee or which are
received by the Collateral Trustee or any agent or nominee of the Collateral
Trustee in respect of the Collateral, whether in connection with the exercise
of the remedies provided in any Security Document or otherwise, shall be
deposited in the Collateral Account and held by the Collateral Trustee and
applied in accordance with the terms of the Collateral Agreement;
notwithstanding the foregoing, any moneys received by the Collateral Trustee
for deposit in any other Trust Account which are received pursuant to any
Initial Charter that is not then in default and that has not reached its first
optional termination date or the related Security Documents shall be deposited
in such other Trust Account and applied in accordance with the provisions
applicable to such other Trust Account; provided, however, that notwithstanding
anything in this paragraph to the contrary, all such moneys relating to
Collateral with respect to which the Lien of the Serial Indenture has been
released shall be deposited in the Termination Account and applied in
accordance with the terms of the Collateral Agreement.
Upon the release of all Liens of the Serial Indenture, any balance remaining
in the Collateral Account shall be transferred to the Termination Account. See
"Trust Accounts--Termination Account."
PERMITTED INVESTMENTS.
Permitted Investments include any of the following:
(a) direct general obligations of, or obligations fully and
unconditionally guaranteed as to the timely payment of principal and
interest by, the United States or any agency or instrumentality thereof,
provided such obligations are backed by the full faith and credit of the
United States, Federal Housing Administration debentures, FHLMC senior debt
obligations or FNMA senior debt obligations, but excluding any of such
securities whose terms do not provide for payment of a fixed dollar amount
upon maturity or call for redemption;
(b) federal funds, certificates of deposit, time and demand deposits and
banker's acceptances (having original maturities of not more than one year)
of any bank or trust company incorporated under the laws of the United
States or any state thereof, provided that the short-term debt obligations
of such bank or trust company at the date of acquisitions thereof have been
rated at least "A-1" or "P-1" by Standard & Poor's and Moody's,
respectively;
(c) commercial paper (having original maturities of not more than one
year) rated at least "A-1" or "P-1" by Standard & Poor's and Moody's,
respectively; or
(d) guaranteed investment contracts, investment agreements or similar
agreements rated at least "Aa" or "AA" by Moody's, Standard & Poor's or
Duff & Phelps, respectively, that are treated as indebtedness for United
States federal income tax purposes.
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For purposes of determining whether a Permitted Investment matures on or
before the next succeeding Payment Date, each payment received under a
Permitted Investment described in clause (d) above will be considered to be the
maturity of such Permitted Investment.
REDEMPTION
If a Total Loss occurs or is declared by Chevron Transport, then the
outstanding Notes will be redeemed in part in an aggregate principal amount
equal to the Allocated Principal Amount of Serial Notes and the Allocated
Principal Amount of Term Notes for such Vessel. Any such redemption shall occur
90 days after the occurrence of the Total Loss and shall be at a redemption
price for each Note equal to the principal amount of such Note to be redeemed,
together with interest on such principal amount of each such Note at the rate
applicable to such Note to the date of payment of such redemption price and all
other amounts then due and payable any holder of Notes under the Indentures.
The Serial Mortgage Notes are not subject to optional redemption. The Term
Mortgage Notes may be redeemed in whole or in part at the direction of
California Petroleum on any Payment Date on or after , 2006, the final
Maturity Date for any Serial Mortgage Notes.
SELECTION AND NOTICE.
In the event that the Serial Mortgage Notes are to be redeemed at any time in
part, the Indenture Trustee shall select Serial Mortgage Notes to be redeemed
ratably from each Holder such that the ratio of the principal amount of each
series of Serial Mortgage Notes to be redeemed from each Holder to the
aggregate principal amount of each series of Serial Mortgage Notes held by such
Holder shall, as nearly as practicable and subject to rounding, equal the ratio
of the aggregate principal amount of Serial Mortgage Notes to be redeemed on
such redemption date to the aggregate principal amount of Serial Mortgage Notes
then outstanding, provided that Serial Mortgage Notes of $1,000 principal
amount or less shall not be redeemed in part. Notice of redemption shall be
mailed by first class mail by the Indenture Trustee at least 30 but not more
than 60 days before the redemption date to each Holder of Serial Mortgage Notes
to be redeemed at its registered address. If any Serial Mortgage Note is to be
redeemed in part only, the notice of redemption that relates to such Serial
Mortgage Note shall state the portion of the principal amount thereof to be
redeemed. On and after the redemption date, interest will cease to accrue on
Serial Mortgage Notes or portions thereof called for redemption.
CERTAIN COVENANTS
The Serial Indenture contains certain covenants pursuant to which California
Petroleum will agree, among other things, that:
(a) California Petroleum will not create, incur, assume or issue,
directly or indirectly, guarantee or in any manner become, directly or
indirectly, liable for or with respect to the payment of any indebtedness,
except for its obligations under the Notes and the Indentures;
(b) California Petroleum will not engage in any business other than the
issuance of the Notes and making the loans to the Owners in accordance with
California Petroleum's charter and by-laws;
(c) California Petroleum will not (i) commence any case, proceeding or
other action under any existing or future bankruptcy, insolvency or similar
law seeking to have an order for relief entered with respect to it, or
seeking reorganization, arrangement, adjustment, winding up, liquidation,
dissolution, composition or other relief with respect to it or its debts,
(ii) seek appointment of a receiver, trustee, custodian or other similar
official for it or any part of its assets, (iii) make a general assignment
for the benefit of creditors or (iv) take any action in furtherance of, or
consenting to or acquiescing in, any of the foregoing;
(d) California Petroleum will not create, incur, assume or suffer to
exist any Lien on any of its assets or properties or on any of the
Collateral, except pursuant to the Collateral Agreement;
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(e) California Petroleum will not consolidate with, or merge with or
into, any other Person or convey or transfer to any Person all or any part
of the Collateral except to the Collateral Trustee in accordance with the
Collateral Agreement;
(f) California Petroleum will not (i) declare or pay any dividend or
other distribution on any shares of its capital stock in excess of $15,000
per annum, (ii) make any loans or advances to any affiliate of California
Petroleum or (iii) purchase, redeem or otherwise acquire or retire for
value any shares of its capital stock; and
(g) California Petroleum will not make any capital contributions,
advances or loans to, or investments or purchases of capital stock in, any
Person (as defined in the Serial Indenture), except for its loan to each
Owner.
INDENTURE EVENTS OF DEFAULT
Events of default under the Serial Indenture (each, an "Indenture Event of
Default") include the following events and occurrences:
(a) any Mortgage Event of Default shall have occurred and be continuing
(see "The Mortgages--Mortgage Events of Default");
(b) default in the payment of all or any part of the principal of or
interest on any of the Serial Mortgage Notes as and when such payment
becomes due and payable and the continuance of such default for a period of
two Business Days (as defined in the Serial Indenture);
(c) failure on the part of California Petroleum to observe or perform in
any material respect any of the other agreements or covenants contained in
the Serial Indenture, the Serial Mortgage Notes, the Security Documents or
any document or certificate delivered pursuant thereto, continued for a
period of 30 days after the earlier of (i) actual knowledge by California
Petroleum of such failure and (ii) the date on which written notice
specifying such failure and stating that such notice is a "Notice of
Default" under the Serial Indenture has been given to California Petroleum
by the Indenture Trustee or to California Petroleum and the Indenture
Trustee by the Holders of at least 25% in aggregate principal amount of the
Serial Mortgage Notes then outstanding;
(d) any representation or warranty of California Petroleum made in the
Serial Indenture, any Security Document or any document or certificate
delivered pursuant thereto proves to have been inaccurate in any material
respect when made, remains inaccurate in such material respect for a period
of 30 days after the earlier of (x) actual knowledge by California
Petroleum of such misrepresentation and (y) the date on which written
notice specifying such inaccuracy and stating that such notice is a "Notice
of Default" under the Serial Indenture has been given to California
Petroleum by the Indenture Trustee, or to California Petroleum and the
Indenture Trustee by the Holders of at least 25% in aggregate principal
amount of the Serial Mortgage Notes then outstanding;
(e) the occurrence of specified events of bankruptcy, insolvency,
reorganization, winding up or liquidation with respect to California
Petroleum;
(f) any of the Initial Charters is repudiated or ceases to be in full
force and effect, other than pursuant to the terms thereof;
(g) any of the Security Documents is repudiated or ceases to be in full
force and effect or any of the Security Documents ceases to give the
Collateral Trustee, in any material respect, the Liens, rights, powers and
privileges purported to be created thereby, in each case other than
pursuant to the terms thereof; or
(h) any of the Chevron Guarantees is repudiated or ceases to be in full
force and effect, other than pursuant to the terms thereof.
If an Indenture Event of Default referred to in clause (e) of the preceding
paragraph occurs and is continuing then the entire principal of and interest
accrued on all the Serial Mortgage Notes shall immediately and without further
act become due and payable, without presentment, demand, protest or notice by
the
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Indenture Trustee or any Holder. If an Indenture Event of Default (other than
an Indenture Event of Default referred to in clause (e) of the preceding
paragraph) occurs and is continuing, then the Indenture Trustee or the Holders
of at least 25% in aggregate principal amount of the outstanding Serial
Mortgage Notes may, by written notice, declare the entire principal of and
interest accrued on all the Serial Mortgage Notes to be due and payable
immediately, and upon any such declaration such amounts shall become due and
payable immediately.
After a declaration of acceleration and before any judgment or decree for
the payment of money due has been obtained or entered, if California Petroleum
shall pay or deposit with the Indenture Trustee a sum sufficient to pay all
matured installments of interest upon all of the Serial Mortgage Notes and the
principal of all the Serial Mortgage Notes that shall have become due
otherwise than by acceleration (with interest on such principal and, to the
extent permitted by law, on overdue installments of interest, at the same rate
for each Serial Mortgage Note applicable to such Serial Mortgage Note, to the
date of such payment or deposit) and all amounts payable to the Indenture
Trustee under the Serial Indenture, and if any and all Indenture Events of
Default, other than the non-payment of the principal of the Serial Mortgage
Notes that shall have become due by acceleration, shall have been cured,
waived or otherwise remedied, then the Holders of a majority in aggregate
principal amount of outstanding Serial Mortgage Notes may, by written notice,
rescind and annul such declaration of acceleration and its consequences, but
no such rescission and annulment shall extend to or shall affect any
subsequent default or shall impair any right consequent thereon. The Holders
of a majority in aggregate principal amount of the outstanding Serial Mortgage
Notes also have the right to waive any past default or Indenture Event of
Default, except a default in the payment of the principal of or interest on
any Serial Mortgage Note, or in respect of a covenant or provision of the
Serial Indenture which cannot be modified or amended without the consent of
the Holder of each affected Serial Mortgage Note.
If an Indenture Event of Default has occurred and is continuing, the
Indenture Trustee may pursue any available remedy by proceeding at law or in
equity to collect the payment of principal of and interest on the Serial
Mortgage Notes or to enforce the performance of any provision of the Serial
Mortgage Notes or the Serial Indenture.
The Serial Indenture contains certain covenants pursuant to which the
Indenture Trustee will agree that, prior to the date which is one year and one
day after the payment in full of all outstanding Notes, it will not institute
against, or join any other person in instituting against, California Petroleum
any bankruptcy, reorganization, arrangement, insolvency or liquidation
proceeding or other similar proceeding under the laws of the United States or
any state of the United States.
No Holder has any right to institute any proceeding with respect to the
Serial Indenture or any remedy thereunder, unless the Holders of at least 25%
in aggregate principal amount of the outstanding Serial Mortgage Notes have
made written request, and offered reasonable indemnity, to the Indenture
Trustee to institute such proceeding as Indenture Trustee, the Indenture
Trustee has failed to institute such proceeding within 60 days after receipt
of such notice and the Indenture Trustee has not within such 60-day period
received directions inconsistent with such written request by the Holders of a
majority in aggregate principal amount of the outstanding Serial Mortgage
Notes. Such limitations do not apply, however, to a suit instituted by a
Holder of a Serial Mortgage Note for the enforcement of the payment of the
principal of or accrued interest on, such Serial Mortgage Note on or after the
respective due dates expressed in such Serial Mortgage Note.
The Holders of a majority in aggregate principal amount of the outstanding
Serial Mortgage Notes have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Indenture Trustee,
or exercising any trust, or power conferred on the Indenture Trustee by the
Serial Indenture. The Indenture provides that, subject to the duty of the
Indenture Trustee during a default to act with the required standard of care,
the Indenture Trustee is entitled to reasonable security or indemnity from the
Holders before proceeding to exercise any right or power under the Serial
Indenture at the request of the Holders. The Indenture Trustee may decline to
follow any such direction from the Holders if it determines that the action so
directed would result in liability to the Indenture Trustee, would be unduly
prejudicial to Holders not joining in such direction or would be unlawful.
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COLLATERAL AGREEMENT REMEDIES
If an Indenture Event of Default has occurred and is continuing and if such
Indenture Event of Default is actually known by a responsible officer of the
Indenture Trustee charged with the administration of the Serial Indenture, the
Indenture Trustee must mail a notice of such Indenture Event of Default (an
"Enforcement Notice") to the Collateral Trustee and each Holder within 90 days.
Except in the case of a default in the payment of principal of or interest on
any Serial Mortgage Note, the Indenture Trustee will be protected in
withholding such notice if and so long as the board of directors, the executive
committee or a trust committee of directors or responsible officers of the
Indenture Trustee in good faith determines that the withholding of such notice
is in the interest of the Holders. If the Collateral Trustee and the Indenture
Trustee are the same entity, an Enforcement Notice will be deemed to have been
delivered to the Collateral Trustee and to have become effective with respect
to the Collateral Trustee immediately upon the occurrence of an Indenture Event
of Default described in clause (b) in the first paragraph under "Indenture
Events of Default" above or upon written notice to or actual knowledge by a
responsible officer of the Indenture Trustee that an Indenture Event of Default
has occurred, and will be deemed to have been canceled with respect to the
Collateral Trustee at such time as the Indenture Trustee would have been
required to cancel such Enforcement Notice upon the rescission and annulment or
waiver by the Holders, as described above.
So long as an Enforcement Notice is in effect, the Collateral Trustee (to the
extent directed to do so by the appropriate Holders, as discussed above),
whether in its own right or as assignee of California Petroleum, will proceed
to exercise all the powers, remedies and rights available under the Collateral
Agreement and the Security Documents, including, without limitation, taking
possession of and selling the Collateral thereunder or any portion thereof or
rights or interests therein, at one or more public or private sales called and
conducted in any manner permitted by law and, during the continuance of a
Mortgage Event of Default, exercising any of its remedies under such Mortgage.
Pursuant to the terms of the Initial Charters and the Mortgages, the right of
the Collateral Trustee to enforce each Mortgage is subject to the right of
Chevron Transport to the continued use and operation of the related Vessel
under such Initial Charter so long as no Charter Event of Default shall have
occurred and be continuing under such Initial Charter and so long as Chevron
Transport is performing its obligations thereunder.
If an Enforcement Notice is delivered and becomes effective under the Term
Indenture, but not under the Serial Indenture, the holders of a majority in
aggregate principal amount of the outstanding Term Mortgage Notes (the
"Majority Term Noteholders") will have the right to direct the time, method and
place of conducting any proceeding for any right or remedy available to the
Collateral Trustee, or exercising any trust or power conferred on the
Collateral Trustee, or for the appointment of a receiver, or to direct the
taking or refraining from taking of any action authorized by any Security
Document. If an Enforcement Notice is delivered and becomes effective under the
Serial Indenture, but not under the Term Indenture, the Holders of a majority
in aggregate principal amount of the outstanding Serial Mortgage Notes (the
"Majority Serial Noteholders") will have the right to direct the actions to be
taken or not taken with respect to the Collateral under the Collateral
Agreement and the other Security Documents. If an Enforcement Notice is
delivered and becomes effective under both Indentures, the holders of a
majority in aggregate principal amount of the outstanding Term Mortgage Notes
and Serial Mortgage Notes (the "Majority Noteholders") will have the right to
direct the actions to be taken or not taken with respect to the Collateral
under the Collateral Agreement and the other Security Documents. The Collateral
Trustee is entitled to be indemnified by the holders of the Term Mortgage
Notes, or the Holders of the Serial Mortgage Notes, or all of such holders, as
the case may be, before proceeding to act at their direction under the
Collateral Agreement.
There can be no assurance that the proceeds of the sale of any Vessel in
connection with the Collateral Trustee's exercise of remedies following an
Indenture Event of Default would be sufficient to redeem the Allocated
Principal Amount of Notes for such Vessel or that any buyers would be available
under the circumstances in which such sale would occur. Chevron Transport has
advised California Petroleum that its original tax basis for the Vessels, based
on the aggregate purchase price paid by Chevron Transport for the
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Vessels and capitalized interest during construction of such Vessels, was
approximately $285 million. Chevron Transport's original book value for
financial reporting purposes (which amount excludes capitalized interest) was
approximately $274 million. The depreciated tax basis and book basis for
accounting purposes for the Vessels was approximately $262 million and
approximately $260 million, respectively, as of December 31, 1994. Based on
industry data provided by R.S. Platou, Economic Research a.s., the current
market value of an unchartered recently built double-hulled Suezmax tanker is
in the range of $55 to $60 million and the current market value of an
unchartered single-hulled Suezmax tanker similar to W.E. Crain is in the range
of $40 to $45 million. None of the preceding amounts are indicative of the
current or future fair market value of the Vessels and related Initial
Charters. No appraisal of the fair market value of any Vessel has been
commissioned in connection with the purchase of such Vessel by the related
Owner from Chevron Transport. There can be no assurance that the price to be
paid by each Owner for its respective Vessel and the related Initial Charter
will reflect the fair market value of such Vessel and such Initial Charter at
the time such Vessel will be acquired by the related Owner and such Initial
Charter commences, or that the aggregate fair market value of such Vessel and
such Initial Charter will at any time exceed the Allocated Principal Amount of
Notes for such Vessel. The fair market value of oil tankers, including the
Vessels, can be expected to fluctuate, depending upon general economic and
market conditions affecting the tanker industry and competition from other
shipping companies, types and sizes of vessels, and other modes of
transportation. In addition, as vessels grow older, they may be expected to
decline significantly in value.
If the Allocated Principal Amount of Serial Mortgage Notes relating to a
Vessel is paid in full, the Collateral (including the related Initial Charter,
whether or not terminated by Chevron Transport) relating to such Vessel will no
longer secure California Petroleum's obligations under the Serial Indenture. So
long as any Serial Mortgage Notes are outstanding, if an event of default under
a subsequent charter or a Mortgage Event of Default occurs with respect to any
Vessel for which the Allocated Principal Amount of the Serial Mortgage Notes is
paid in full, the Collateral Trustee may not pursue remedies upon receipt of an
Enforcement Notice under the Term Indenture with respect to any Initial Charter
that has not reached its first optional termination date and that is not then
in default, including amounts paid or payable thereunder, and the related
Security Documents. In addition, the right of the Collateral Trustee to enforce
the Mortgages will be subject to the rights of a charterer under its charter to
the continued use and operation of the related Vessel, so long as no event of
default has occurred and is continuing under such charter and so long as the
charterer is performing its obligations thereunder. So long as the same
institution or an affiliate of such institution serves as indenture trustee
under the Serial Indenture and the Term Indenture, an Indenture Event of
Default that is not an event of default under the Serial Indenture, such as
described in the preceding sentence, may result in a conflicting interest for
such institution or affiliate which would require it to seek an exemption under
the Trust Indenture Act or require it to be replaced as trustee under one or
more of the Indentures and the Collateral Agreement.
The Collateral Trust Agreement contains certain covenants pursuant to which
the Collateral Trustee will agree that, prior to the date which is one year and
one day after the payment in full of all outstanding Notes, it will not
institute against, or join any other person in instituting against, California
Petroleum any bankruptcy, reorganization, arrangement, insolvency or
liquidation proceeding or other similar proceeding under the laws of the United
States or any state of the United States.
MODIFICATIONS OF THE SERIAL INDENTURE
The Serial Indenture provides that California Petroleum, Chevron and the
Indenture Trustee may enter into a supplemental indenture to amend the Serial
Indenture or the Serial Mortgage Notes without the consent of any Holder: (a)
to convey, transfer, assign, mortgage or pledge to the Collateral Trustee as
security for the Serial Mortgage Notes any property or assets; (b) to evidence
the succession of another corporation to Chevron, or successive successions,
and the assumption by the successor corporation of the covenants, agreements
and obligations of Chevron; (c) to cure any ambiguity, defect or inconsistency;
or (d) to comply with the requirements of the Commission in order to maintain
the qualification of the Serial Indenture under the Trust Indenture Act.
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The Serial Indenture and the rights and obligations of California Petroleum,
the Indenture Trustee and the Holders may be modified or amended at any time
with the consent of the Holders of not less than a majority in aggregate
principal amount of all outstanding Serial Mortgage Notes; provided that
without the consent of the Holder of each Serial Mortgage Note affected, no
such modification or amendment shall, among other things, change the fixed
maturity or redemption date thereof, reduce the rate of interest thereon,
extend the time of payment of interest, reduce the principal amount thereof,
reduce any amount payable upon the redemption thereof, or impair the right to
institute suit for the enforcement of any such payment, or reduce the
percentage of the Holders of such Serial Mortgage Notes whose consent is
required for any such modification or amendment or modify any provisions of the
Serial Indenture relating to the amendment thereof or the creation of a
supplemental indenture (unless the change increases the rights of the Holders).
Each of the Serial Indenture and the Term Indenture provide that certain
provisions contained therein may not be modified or amended without the consent
of the Collateral Trustee and the requisite Holders of the Serial Mortgage
Notes and holders of the Term Mortgage Notes.
SATISFACTION AND DISCHARGE
The Serial Indenture will be discharged and will cease to be of further
effect (except as to surviving rights or registration of transfer or exchange
of the Serial Mortgage Notes) as to all outstanding Serial Mortgage Notes when
either (a) California Petroleum shall have paid or caused to be paid the
principal of and interest on all the Serial Mortgage Notes outstanding under
the Serial Indenture, as and when the same shall have become due and payable;
(b) California Petroleum shall have delivered to the Indenture Trustee for
cancellation all Serial Mortgage Notes theretofore authenticated (except lost,
stolen or destroyed Serial Mortgage Notes which have been replaced or paid); or
(c) (i) all such Serial Mortgage Notes not theretofore delivered to the
Indenture Trustee for cancellation have become due and payable, or are by their
terms to become due and payable within one year or are to be called for
redemption under arrangements satisfactory to the Indenture Trustee for the
giving of notice of redemption and California Petroleum shall have irrevocably
deposited or caused to be deposited with the Indenture Trustee as trust funds
in trust for the purpose an amount of money sufficient to pay at maturity or
upon redemption all such Serial Mortgage Notes not theretofore delivered to the
Indenture Trustee for cancellation, including principal and interest due or to
become due to such date of maturity as the case may be; and (ii) California
Petroleum has paid all other sums payable by it under the Serial Indenture. In
addition, California Petroleum must deliver an Officers' Certificate and an
Opinion of Counsel (each as defined in the Serial Indenture) stating that all
conditions precedent to satisfaction and discharge have been complied with.
On the earlier of the payment in full of the Allocated Principal Amount of
Serial Mortgage Notes allocated to a Vessel and the discharge of the Serial
Indenture pursuant to the terms thereof, the Collateral for the related Vessel
will be released from the Lien of the Serial Indenture.
THE INDENTURE TRUSTEE; THE COLLATERAL TRUSTEE
Chemical Trust Company of California will serve as Indenture Trustee under
the Serial Indenture and as Collateral Trustee under the Collateral Agreement.
GOVERNING LAW
The Serial Indenture and each of the Security Documents, other than the
Mortgages, provide that they will be governed by the laws of the State of New
York.
CONSENT TO JURISDICTION AND SERVICE
Each Owner will irrevocably appoint CT Corporation System as its agent for
service of process in any suit, action or proceeding with respect to the
Indentures, the Notes or the Security Documents, brought in any federal or
state court located in New York City and will submit to such jurisdiction.
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THE MORTGAGES
GENERAL
California Petroleum will loan a portion of the proceeds from the sale of
the Notes to each Owner pursuant to two loan agreements (for each Owner, a
"Term Loan Agreement" and a "Serial Loan Agreement" and, together, the "Loan
Agreements"). See "Use of Proceeds." Under each Term Loan Agreement,
California Petroleum will make a loan (the "Term Loan") to the related Owner
which will accrue interest at the same rate as the Term Mortgage Notes, and
upon which payments of interest will be scheduled to coincide with interest
Payment Dates for the Term Mortgage Notes and principal will be scheduled to
coincide with the Payment Dates for the Term Mortgage Notes. The aggregate
principal amount of Term Mortgage Notes outstanding will equal the aggregate
principal amount outstanding under all Term Loans on any Payment Date on which
a sinking fund payment is made to Holders of Term Mortgage Notes plus the
aggregate principal payments on such Term Loans since the last date on which
payment of principal of the Term Mortgages Notes was made. Under each Serial
Loan Agreement, California Petroleum will make a series of loans (the "Serial
Loans" and, together with the Owner's Term Loan, the "Acquisition Loans") to
the related Owner, each of which will correspond in maturity date and interest
rate with the Serial Mortgage Notes of a specific maturity date, to and
including the date of the first optional termination date for the related
Initial Charter, on which date such Owner's Serial Loans will be scheduled to
be repaid in full. The aggregate principal amount of Serial Mortgage Notes
outstanding will equal the aggregate principal amount outstanding under all
Serial Loans on any date on which a series of Serial Mortgage Notes matures.
Each Owner will grant to California Petroleum a Mortgage on its Vessel to
secure the payment of the Acquisition Loans from California Petroleum to the
Owners. California Petroleum will assign each Mortgage to the Collateral
Trustee to secure the payment of the Notes. The Mortgages will be recorded in
accordance with the provisions of the law of the applicable Registration
Jurisdiction.
CERTAIN COVENANTS
So long as Chevron Transport is the charterer of a Vessel, the related
Mortgage will provide that the provisions of the related Initial Charter,
including, without limitation, provisions regarding the trade, operation,
documentation, registration, use, maintenance and insurance of such Vessel,
will supersede the Owner's covenants with respect to such matters in the
related Mortgage. Certain Initial Charter requirements differ materially from
the Mortgage covenants described below. See "The Initial Charters."
Each Mortgage or the related Security Documents will contain certain
covenants of the Owner of the related Vessel, including the following:
(a) such Owner will not cause or permit its Vessel to be operated in any
manner contrary to law, will not engage in unlawful trade, violate any
applicable law or carry any cargo that would expose the Vessel to penalty,
confiscation, forfeiture, capture or condemnation and will not do, suffer
or permit to be done anything which can or may injuriously affect the
registration or enrollment of its Vessel under the laws and regulations of
the Registration Jurisdiction;
(b) except for the lien of the Mortgage, the Indentures and the
Collateral Agreement and other Permitted Liens, the Owner will not have any
right, power or authority to create, incur or permit to be placed or
imposed or continued any Lien on its Vessel and will keep such Vessel free
from any such Lien;
(c) such Owner will at all times and without cost or expense to the
Collateral Trustee maintain and preserve, or cause to be maintained and
preserved, its Vessel in good running order and repair, so that its Vessel
shall be, insofar as due diligence can make her so, tight, staunch, strong
and well and sufficiently tackled, apparelled, furnished, equipped and in
every respect seaworthy and in good operating condition, as will entitle
her to the highest classification of Det norske Veritas (the
"Classification Society") or such other classification society of like
standing agreeable to California Petroleum and the Collateral Trustee, and
annually will furnish California Petroleum and the Collateral Trustee a
certificate by the Classification Society or such other classification
society that such classification is maintained in the highest category
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for ships of the same type as the Owner's Vessel free of recommendations
and notations which have not been complied with in accordance with their
terms and shall furnish the Collateral Trustee, from time to time and at
any time upon demand, with all such information and copies of all such
documents as the Collateral Trustee may require concerning the
classification of the Owner's Vessel;
(d) such Owner will not change the flag or port of documentation of its
Vessel or through any action or inaction cause the registration of its
Vessel under the laws of the Registration Jurisdiction to be void or
voidable or to lapse;
(e) such Owner will not, without the prior written consent of the
Collateral Trustee, charter its Vessel by demise charter or by period, time
or voyage charter for any period other than to Chevron Transport under the
Initial Charter or any other charterer under an Acceptable Replacement
Charter. The Owner will not modify or amend the terms of the related
Initial Charter without the prior written consent of the Collateral
Trustee;
(f) such Owner will not directly or indirectly, create, incur, issue,
assume, guarantee or otherwise become directly or indirectly liable with
respect to, or become responsible for the payment of any indebtedness,
except for Permitted Indebtedness;
(g) such Owner will not engage in any business other than the ownership
and operation of its Vessel as described in the related Mortgage and in
accordance with such Owner's charter and by-laws;
(h) such Owner will not (i) commence any case, proceeding or other action
under any existing or future bankruptcy, insolvency or similar law seeking
to have an order for relief entered with respect to it, or seeking
reorganization, arrangement, adjustment, winding up, liquidation,
dissolution, composition or other relief with respect to its debt, (ii)
seek appointment of a receiver, trustee, custodian or other similar
official for it or any part of its assets, (iii) make a general assignment
for the benefit of creditors or (iv) take any action in furtherance of, or
consenting or acquiescing in, any of the foregoing;
(i) such Owner will not (i) declare or pay any dividend or other
distribution on any shares of its respective capital stock, (ii) make any
loans or advances to any affiliate of such Owner or (iii) purchase, redeem
or otherwise acquire or retire for value any shares of its respective
capital stock (a "Restricted Payment") unless: (A) no default under the
Mortgage shall have occurred and be continuing, (B) the Serial Mortgage
Notes shall have been repaid in full and (C) the Vessel shall be on charter
to Chevron Transport or under one or more Acceptable Replacement Charters
to one or more charterers whose unsecured credit ratings from the Rating
Agencies are at least equal to the respective unsecured ratings of Chevron
and the terms of such charters shall be at least sufficient to pay in full
all of the remaining payments of principal and interest on the Term
Mortgage Notes;
(j) such Owner will not make any capital contributions, advances or loans
to, or investments or purchases of capital stock in, any Person, except for
Allowable Investments and Permitted Investments; and
(k) such Owner will take any lawful action to the extent necessary to
prevent or avoid the imposition of any withholding taxes (other than any
withholding tax with respect to charterhire to the extent required to be
paid or reimbursed by any charterer pursuant to a charter) by any taxing
jurisdiction (including the Registration Jurisdiction for such Owner) with
respect to any payments under its Acquisition Loans, including changing its
jurisdiction of incorporation or residence; provided that it shall not be
required to take, or fail to take, any action (i) if in the Opinion of
Counsel (as defined in the related Mortgage) such act or failure to act
would violate applicable law or (ii) if in the reasonable opinion of the
Owner the actions necessary to avoid or prevent imposition of such
withholding taxes would be unduly burdensome. For purposes of clause (ii)
above, a requirement to change the jurisdiction of the Owner's
incorporation or residence shall not be treated as unduly burdensome.
"Permitted Indebtedness" means for each Owner, the obligations under such
Owner's Acquisition Loans. "Permitted Liens" means for each Owner, liens
created under the related Mortgage and Security Documents, the Initial Charter
for the related Vessel and any Acceptable Replacement Charter or other charter
for such Vessel permitted under the Mortgage, liens for crew's wages accrued
for not more than
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three months or for collision or salvage, liens in favor of suppliers of
necessaries or other similar liens arising in the ordinary course of business
(accrued for not more than three months) or liens for loss, damage or expense,
which are fully covered by insurance or, in respect of which, a bond or other
security has been posted by the Owner with the appropriate court or other
tribunal to prevent the arrest or secure the release of the Vessel from arrest
on account of such claim or lien; provided that, so long as the related Initial
Charter is in effect, "Permitted Liens" shall mean those liens permitted under
the Initial Charter (i.e., any lien or encumbrance other than a lien or
encumbrance incurred by Chevron Transport or its agents, which might have
priority over the title and interest of the Owner in the Vessel). The Initial
Charter requires that Chevron Transport indemnify and hold the Owners harmless
against any lien of whatsoever nature arising upon the Vessel during the term
of the Initial Charter while the Vessel is under the control of Chevron
Transport, and against any claims against the Owners arising out of or in
relation to the operation of the Vessel by Chevron Transport. Should the Vessel
be arrested by reason of claims or liens arising out of its operation by
Chevron Transport, Chevron Transport shall at its own expense take all
reasonable steps (including, at its own expense, providing bail) to secure the
Vessel's release within a reasonable time. "Allowable Investments" means for
each Owner, its investment in the related Vessel, and in each case, any
Restricted Payment permitted to be made by such Owner and certain obligations
incurred in the ordinary course of the performance of the Management Agreement.
The related Owner may not transfer or assign to any other company all or part
of its rights or obligations under any Initial Charter, except to California
Petroleum (which assignment includes the reassignment by California Petroleum
of such Initial Charter to the Collateral Trustee), unless such transferee or
assignee also assumes the obligations of such Owner under the related Security
Documents and the Collateral Trustee shall have given its prior written consent
to such assignment and assumption, which consent shall not be unreasonably
withheld.
INSURANCE
So long as a Vessel is subject to an Initial Charter or Acceptable
Replacement Charter, the insurance requirements of the related Initial Charter
or Acceptable Replacement Charter will supersede the Owner's covenants
regarding insurance in the related Mortgage. The insurance requirements of the
Initial Charters differ materially from the Owner's Mortgage covenants
described below, and the insurance requirements of any Acceptable Replacement
Charter may also differ materially from such Mortgage covenants. Under the
Initial Charters, Chevron Transport may self-insure against the risks required
to be covered thereunder. Therefore, there can be no assurance that any
insurance for such risks will be carried during the term of any Initial Charter
or, if it is carried, as to the amount of such insurance. See "The Initial
Charters--Insurance."
If a Vessel is no longer subject to the Initial Charter and is not subject to
an Acceptable Replacement Charter, the requirements under the related Mortgage,
which are summarized in this paragraph, would be applicable to insurance
coverage. Each Owner, at its own expense, will maintain hull and machinery
insurance (including coverage for war risks) and will insure its Vessel against
all customary risks arising from the usage and trading of the Vessel. In
addition, each Owner shall also keep its Vessel insured against all customary
protection and indemnity risks. The protection and indemnity insurance shall
include coverage against liabilities to persons who have suffered any loss,
damage or injury whatsoever in connection with anything done or not done by the
Vessel, any charterer or the Owner in connection with the Vessel or the
employment or use thereof (including in connection with any oil or other
substance emanating from the Vessel or any other vessel with which the Vessel
may be involved in collision) and against liability under OPA 90 or any
reenactment or modification thereof under the law of any country into whose
jurisdiction the Vessel is permitted to come under the terms of the related
charter. In addition, such Owner must maintain mortgagee additional perils (oil
pollution) insurance in an amount equal to the aggregate outstanding principal
amount of the Term Loan allocable to such Vessel. Each insurance policy shall
include a provision agreeing that no breach of warranty or condition or want of
due diligence on the part of the Owner or any agent of such Owner shall defeat
recovery of any claim by the Collateral Trustee unless such provision shall
conflict with the available reinsurance arrangements of the issuers of such
policy. Each insurance policy shall
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also provide that fourteen days' written notice be given to California
Petroleum and the Collateral Trustee prior to the cancellation or modification
of any insurance. In addition, the insurance coverage required under an
Acceptable Replacement Charter or maintained by the Owner or charterer in
connection with any other charter entered into after the termination of the
related Initial Charter must be sufficient to maintain the credit rating of the
Term Mortgage Notes by Standard & Poor's, Moody's and Duff & Phelps at least at
the rating applicable to the Term Mortgage Notes immediately prior to the
effectiveness of such Acceptable Replacement Charter or other charter.
INSURANCE PROCEEDS
Pursuant to the assignment of each Mortgage to the Collateral Trustee, which
will be acknowledged by the related Owner, the proceeds of any insurance or
entries referred to in the Mortgage will be applied as follows:
Until the occurrence of a Mortgage Event of Default:
(a) any claim under any such insurance (other than in respect of a Total
Loss) whether or not such claim is under the terms of the relevant loss
payable clause payable directly to the Owner, will be applied by the Owner
in making good the loss or damage in respect of which it has been paid to
the Owner in reimbursement of money expended by it for such purpose; and
(b) any claim in respect of protection and indemnity insurance shall be
paid directly to the person, firm or company to which the liability covered
by such insurance was incurred or the Owner in reimbursement of moneys
expended by it in satisfaction of such liability;
provided always that for as long as the Initial Charter in respect of the
Vessel remains in force, all payments other than in respect of a Total Loss
(which will be made to the Collateral Trustee) shall be made to Chevron
Transport.
Upon the occurrence of a Mortgage Event of Default, subject as provided
above, any claim under any such insurance and entry will be paid to the
Collateral Trustee, as assignee of California Petroleum, and will be applied by
the Collateral Trustee pursuant to the terms of the Initial Charter unless
Chevron Transport is in default thereunder, in which event the Collateral
Trustee shall apply such proceeds against payment of the Notes.
Any claim under such insurance and entry in respect of a Total Loss will be
paid to the Collateral Trustee, as assignee of California Petroleum, and will
be applied by the Collateral Trustee, after payment of the costs of collecting
such claim, as follows:
(a) to the payment of all reasonable expenses and charges, including the
expenses of any taking, attorney's fees, court costs and other expenses or
advances made or incurred by the Collateral Trustee or the Indenture
Trustee in the protection of its right or the pursuance of its remedies
under the Collateral Agreement, the Indentures, any Security Document or
the Mortgage;
(b) to the payment of all amounts due to the Collateral Trustee or the
Indenture Trustee in respect of taxes, indemnities, fees, expenses,
premiums, purchase of liens or otherwise under the provisions of the
Mortgage;
(c) to the payment of interest on each Term Mortgage Note and Serial
Mortgage Note, pro rata in an amount equal to interest calculated at the
rate applicable to such Note;
(d) to the payment of principal on each Term Mortgage Note and Serial
Mortgage Note, pro rata in an aggregate amount up to the Allocated
Principal Amount for the related Vessel; and
(e) to the payment of any surplus thereafter remaining to the Owner or
whomsoever may be lawfully entitled thereto.
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The Owner will not alter so as to in any way restrict the coverage of any
insurance or entries referred to in the Mortgage except to the extent expressly
permitted by the Collateral Trustee.
MORTGAGE EVENTS OF DEFAULT
The following constitute events of default under each Mortgage ("Mortgage
Events of Default"):
(a) an event of default shall occur under any Serial Loan Agreement or
Term Loan Agreement relating to any Owner;
(b) failure to pay any amount payable under the Mortgage within two
business days after such amount is due;
(c) default by the related Owner in the due observance or performance of
any covenant with respect to merging, maintaining its corporate existence,
maintaining insurance on its Vessel, maintaining the Vessel free of all
Liens other than Permitted Liens, chartering the Vessel, changing the flag
of the Vessel and making Restricted Payments or maintaining the Mortgage as
a First Preferred Ship Mortgage under the laws of the Registration
Jurisdiction;
(d) default in any material respect in the performance, or breach in any
material respect, of any covenant of the Owner (other than those described
above) in the Mortgage or if any representation or warranty of the Owner
made in the Mortgage or in any certificate or other writing delivered
pursuant thereto or in connection therewith with respect to or affecting
the Vessel shall prove to be inaccurate in any material respect as of the
time when the same shall have been made, and, if such breach or default or
inaccuracy is curable, continuance of such default or breach or inaccuracy
for a period of 30 days after the earlier to occur of (a) actual knowledge
of such default, breach or inaccuracy by the Owner or (b) the date on which
there has been given by registered or certified mail to the Owner by the
Collateral Trustee a written notice thereof;
(e) the entry of a decree or order for relief by a court having
jurisdiction in the premises in respect of the Owner in any involuntary
case under any applicable bankruptcy, insolvency, or other similar law now
or hereafter in effect, or appointing a receiver, liquidator, assignee,
custodian, trustee, or sequestrator (or other similar official) for the
Owner or for any substantial part of its property, or ordering the winding
up or liquidation of its respective affairs, and the continuance of any
such decree or order unstayed and in effect for a period of 60 consecutive
days;
(f) the commencement by the Owner of a voluntary case under any
applicable bankruptcy, insolvency, or other similar law now or hereafter in
effect in any jurisdiction, or the consent by the Owner to the appointment
of or taking possession by a receiver, liquidator, assignee, custodian,
trustee or sequestrator (or other similar official) of the Owner or any
substantial part of its property, or the making by the Owner of any general
assignment for the benefit of creditors, or the failure by the Owner
generally to pay its debts as they become due, or the taking of action by
the Owner in furtherance of any such action;
(g) the Vessel is deemed a Total Loss and the insurance proceeds thereof
have not been received by the Collateral Trustee within 60 days after the
date on which the Vessel was deemed a Total Loss; provided, however, if the
Vessel is under charter to Chevron Transport pursuant to the Initial
Charter, such an event shall be a Mortgage Event of Default if the
Collateral Trustee has not received the amounts payable by Chevron
Transport in the event of a Total Loss pursuant to the Initial Charter
within 5 business days of the date on which such amounts are due pursuant
to the terms of the Initial Charter;
(h) the Owner shall abandon its Vessel;
(i) a default shall have occurred under the Initial Charter; or
(j) the Mortgage or any material provision thereof shall be deemed
invalidated in whole or in part by any present or future law of the
Registration Jurisdiction, or by any decision of any competent court.
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REMEDIES
In the event any one or more Mortgage Events of Default shall have occurred
and be continuing then, in each and every such case the Collateral Trustee, as
assignee of California Petroleum, will have the right, subject in all instances
to the rights of Chevron Transport under the related Initial Charter, to:
(a) declare immediately due and payable all of the related Owner's
Acquisition Loans (in which case all of the same shall be immediately due),
and bring suit at law, in equity or in admiralty, as it may be advised, to
recover judgment for the Acquisition Loans and collect the same out of any
and all property of the Owners whether covered by the Mortgage or
otherwise;
(b) exercise all of the rights and remedies in foreclosure and otherwise
given to mortgagees by the provisions of applicable law;
(c) take and enter into possession of the Vessel, at any time, wherever
the same may be, without court decision or other legal process and without
being responsible for loss or damage and the Collateral Trustee may,
without being responsible for loss or damage, hold, lay-up, lease, charter,
operate or otherwise use such Vessel for such time and upon such terms as
it may deem to be for its best advantage, and demand, collect and retain
all hire, freights, earnings, issues, revenues, income, profits, return
premiums, salvage awards or recoveries, recoveries in general average, and
all other sums due or to become due in respect of such Vessel or in respect
of any insurance thereon from any person whomsoever, accounting only for
the net profits, if any, arising from such use of the Vessel and charging
upon all receipts from use of the Vessel or from the sale thereof by court
proceedings or by private sale all costs, expenses, charges, damages or
losses by reason of such use, and if at any time the Collateral Trustee
avails itself of the right given to it to take the Vessel: (i) the
Collateral Trustee will have the right to dock the Vessel for a reasonable
time at any dock, pier or other premises of the Owner without charge, or to
dock her at any other place at the cost and expense of the Owner, and (ii)
the Collateral Trustee will have the right to require the Owner to deliver,
and the Owner will on demand, at its own cost and expense, deliver to the
Collateral Trustee the Vessel as demanded; and the Owner will irrevocably
instruct the master of the Vessel so long as the Mortgage is outstanding to
deliver the Vessel to the Collateral Trustee as demanded; and
(d) sell the Vessel or any share therein with or without the benefit of
any charter party or other engagement by public auction or private contract
without legal process at any place in the world and upon such terms as the
Collateral Trustee in its absolute discretion may determine with power to
postpone any such sale and without being answerable for any loss occasioned
by such sale or resulting from the postponement thereof and at any such
public auction the Collateral Trustee may become the purchaser and shall
have the right to set off the purchase price against the Notes. Any sale of
the Vessel or any shares therein made by the Collateral Trustee in
pursuance of the Mortgage will operate to divest all title, right and
interest of any nature whatsoever of the Owner therein and thereto and
shall bar the Owner, its successors and assigns, and all persons claiming
by, through or under them, provided such sale is by auction. Upon any such
sale, the purchaser will not be bound to see or inquire whether the
Collateral Trustee's power of sale has risen in the manner provided by the
Mortgage and the sale will be within the power of the Collateral Trustee
and the receipt of the Collateral Trustee for the purchase money will
effectively discharge the purchaser who will not be concerned with the
manner of application of the proceeds of sale or be in any way answerable
or otherwise liable therefor.
The Vessels will be registered under the laws of Liberia or the Bahamas, as
the case may be. In addition, in order to perfect the Mortgage granted by
CalPetro IOM thereunder, the Mortgage on Chevron Mariner will also be filed in
the Isle of Man. The Mortgages on the Vessels registered under Liberian law
will be preferred mortgage liens under Liberian maritime law. The Mortgages on
the Vessels registered under Bahamian law will have similar status under
Bahamian law. Liberian and Bahamian law provide that such mortgages may be
enforced by the mortgagee by a proceeding substantially identical to a suit in
rem in admiralty in a proceeding against the vessel covered by the mortgage.
The priority with respect to sale proceeds that such a mortgage would have
vis-a-vis the claims of other lien creditors in an enforcement proceeding is
generally determined by, and will vary in accordance with, the
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law of the country where the proceeding is brought. Liberian maritime law
provides that a "preferred mortgage lien" is prior to all claims other than the
following: (i) liens arising prior in time to the recording of the preferred
mortgage; (ii) liens arising out of tort; (iii) liens for tonnage taxes and
annual fees payable under the Liberian Maritime Regulations; (iv) liens for
crew's wages; (v) liens for general average; (vi) liens for salvage; and (vii)
liens for expenses and fees allowed and costs imposed by courts of competent
jurisdiction. Bahamian law provides that a first priority ship mortgage has
priority over all other claims except: (i) costs allowed by the court arising
out of the arrest and sale proceedings; (ii) wages and other sums due to the
master, officers and other members of the vessel's complement in respect of
their employment on the vessel; (iii) port, canal, and other waterway dues and
pilotage dues and any other outstanding fees payable under the Merchant
Shipping Act of the Bahamas in respect of the vessel; (iv) claims against the
owner in respect of loss of life or personal injury occurring, whether on land
or on water, in direct communication with the operation of the vessel; (v)
claims against the owner, based on tort and not capable of being based on
contract, in respect of loss of or damage to property occurring, whether on
land or on water, in direct connection with the operation of the vessel; and
(vi) claims for salvage, wreck removal and contribution in general average.
Liberian and Bahamian ship mortgages may be enforced against a vessel
physically present in the United States, but the claim under the mortgage would
rank behind certain preferred maritime liens as defined under the laws of the
United States, including those for supplies and necessaries provided in the
United States. Since the Vessels will be trading throughout the world, there is
no assurance that, if enforcement proceedings must be commenced against a
Vessel, such Vessel will be located in a jurisdiction having the same
procedures and lien priorities as Liberia, the Bahamas or the United States.
Other jurisdictions may provide no legal remedy at all for the enforcement of
the Mortgages, or a remedy dependent on court proceedings so expensive and time
consuming as to be impractical. Furthermore, certain jurisdictions, unlike
Liberia, the Bahamas or the United States, may not permit a Vessel to be sold
prior to entry of a judgment, entailing a long waiting time that could result
in increased custodial costs, deterioration in the condition of the Vessel and
substantial reduction in her value.
Since the Notes are also secured by a pledge of all of the stock of each
Owner, enforcement of this pledge, including foreclosure, subject to any
concerns that upon such enforcement the Collateral Trustee or the holders of
the Notes may be deemed "owners" or "operators" of the Vessel for liability
purposes, may provide in effect an alternative method to transfer control over
a Vessel.
FRAUDULENT CONVEYANCE STATUTES
The granting of the Mortgages might be subject to review under relevant
fraudulent conveyance statutes and other applicable insolvency laws (the
"Fraudulent Conveyance Laws") in a bankruptcy proceeding involving one or more
of the Owners. Due to the nature of the business of the Owners and uncertainty
as to where a vessel foreclosure or bankruptcy proceeding might be commenced,
it is not possible to predict where any such proceeding or attack might be
brought or made or the law that the court might apply, although applicable law
would likely be the law of the Bahamas or the Isle of Man, as the case may be.
Under Bahamian or the Isle of Man fraudulent conveyance law, if a court were
to find that, with respect to any particular Owner, at the time the Mortgages
were granted as joint and several obligations of the Owners (the "Transfer"),
it (a) made such Transfer with actual intent to hinder, delay or defraud any
present or future creditor or (b) received less than a reasonably equivalent
value or fair consideration for the Transfer and (i) was insolvent at the time
such Transfer was made or was rendered insolvent by virtue of such Transfer,
(ii) was engaged in a business or transaction, or was about to engage in a
business or transaction for which any property remaining with such Owner was an
unreasonably small capital or (iii) intended to incur, or believed that it
would incur, debts beyond its ability to pay as they matured (as the foregoing
terms are defined in or interpreted under the relevant Fraudulent Conveyance
Laws), such court could avoid the Transfer in whole or in part. Generally, for
the purposes of the Fraudulent Conveyance Laws, a company is considered
insolvent at a particular time if the sum of its debts is greater than all of
its property at a fair valuation or if the present fair salable value of its
assets was then less than the amount that would be required to pay its probable
liabilities on its existing debts as they became absolute and matured.
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To the extent that a Transfer by any Owner exceeds the consideration received
by it, the determination of whether the Transfer in question is a fraudulent
conveyance depends on (1) whether the Transfer so exceeds the value and benefit
received by such Owner that, at least to the extent of such excess, the Owner
did not receive reasonably equivalent value or fair consideration for the
Transfer; and, if the answer to the foregoing question is "yes," then (2)
whether following the valuation of the assets and liabilities of such Owner it
is determined that such Owner is or has been rendered insolvent. While there
can be no assurance that a court, viewing the transaction with hindsight, would
determine that a particular Owner received fair value for its Transfer, or was
not rendered insolvent by the pertinent Transfer, to the extent it exceeded the
value of the consideration received by that Owner, the Owners believe that each
of the Owners will receive proper consideration for its respective Transfer and
that no such Owner will be rendered insolvent by the contemplated Transfers. No
assurance, however, can be given that a court would concur with such belief.
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THE INITIAL CHARTERS
GENERAL
The Vessels are currently owned and operated by Chevron Transport in the
business of maritime transportation of oil. Each Vessel is a Suezmax oil tanker
designed to Chevron Transport's specifications. Under OPA 90, vessel owners,
operators and demise charterers are "responsible parties" with strict liability
on a joint and several basis (subject to certain exceptions and qualifications)
for all oil spill containment and clean-up costs and other damages arising from
actual or threatened oil spills pertaining to these vessels. Although OPA 90
does not by its terms impose liability on lenders or the holders of mortgages
on vessels, there is no specific exclusion for such entities under OPA 90. In
addition, if the Collateral Trustee or any Holder exercises remedies and
becomes an "owner" or "operator" or "demise charterer" of a Vessel following a
Mortgage Event of Default, such entities may be subject to liability as
responsible parties under OPA 90. OPA 90 limits the liability of responsible
parties to the greater of $1,200 per gross ton or $10 million per tanker
(subject to possible adjustment for inflation); however, that limit would not
apply if the incident were proximately caused by violation of applicable United
States federal safety, construction or operating regulations or by the
responsible party's gross negligence or willful misconduct, or if the
responsible party fails or refuses to report the incident or to cooperate and
assist in connection with oil removal activities.
TERM OF THE INITIAL CHARTERS
On the Closing Date, the Owners will each purchase a Vessel from Chevron
Transport, and Chevron Transport will charter each such Vessel from its Owner
under an Initial Charter commencing on such date. Each Initial Charter will
expire on , 2015, subject to Chevron Transport's right to terminate each
Initial Charter as described below. See "--Termination Options." If (a) Chevron
Transport exercises its termination option with respect to an Initial Charter
for any Vessel and makes the related Termination Payment or (b) a Total Loss
occurs with respect to a Vessel and Chevron Transport makes the payments
required under the related Initial Charter, then such Initial Charter will
continue in effect with respect to Chevron Transport's obligation to make such
Termination Payment or payment upon Total Loss, as the case may be, until the
expiration of certain periods specified in the Initial Charter during which
periods such Termination Payment or payment upon Total Loss, as the case may
be, might be a voidable payment under applicable bankruptcy, insolvency,
creditor's rights or similar laws. For any Initial Charter, the period from the
date of commencement of such Initial Charter to the expiration or earlier
termination of such Initial Charter will be referred to in this Prospectus as
the "Initial Charter Period."
USE AND TRADE OF THE VESSEL
Chevron Transport will have full use of each Vessel during the term of the
Initial Charter Period and will have the right to operate the Vessel throughout
the world (within Institute Warranty Limits) in the carriage of suitable lawful
merchandise. As to those trades in which a Vessel is employed, Chevron
Transport shall comply with any and all requirements regarding financial
responsibility or security in respect of oil or other pollution damage as
required by any government, any state or other political subdivision thereof,
or any entity exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government and any other
governmental entity with authority over Chevron Transport or the related Owner,
as the case may be, or ownership, use and operation of such Vessel (whether or
not such requirement has been lawfully imposed or not) to enable such Vessel,
without penalty or charges, lawfully to enter, remain at, or leave any port,
place, territorial or contiguous waters of any country, state or municipality
in performance of the related Initial Charter without delay. Chevron Transport
shall make and maintain all arrangements for a security bond or otherwise as
may be necessary to satisfy such requirements at Chevron Transport's sole
expense and Chevron Transport shall indemnify the related Owner against any and
all losses, damages, claims, expenses or liabilities incurred by reason of
Chevron Transport's failure to comply with the requirements described in this
paragraph. Chevron Transport shall enter and maintain each Vessel under the
TOVALOP Scheme or under any similar compulsory scheme during the term of each
Initial Charter. In no
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event will Chevron Transport carry on board a Vessel nuclear fuels or
radioactive products during the term of the related Initial Charter; provided,
however, with the prior written consent of the related Owner, Chevron Transport
may carry on board a Vessel radioisotopes used or intended to be used for any
industrial, agricultural, medical or scientific purposes.
FLAG AND NAME OF VESSEL
Chevron Transport shall, throughout the term of each Initial Charter,
maintain the documentation of the Vessel under the laws of the Registration
Jurisdiction at the related Owner's cost and expense; provided, however, in the
event that the costs and expenses of maintaining such documentation are in
excess of $10,000 per annum, then Chevron Transport shall either (i) pay all
amounts in excess of $10,000 per annum or (ii) cooperate with the Owner to
change the registry or port of documentation of the Vessel. Chevron Transport
will not change the registry or port of documentation of the Vessel without
prior written consent of the related Owner, which consent shall not be
unreasonably withheld, or do or suffer or permit to be done anything which will
injuriously affect the documentation of the Vessel as a vessel documented under
the laws and regulations of the Registration Jurisdiction. If Chevron Transport
changes the registry or port of documentation of the Vessel, it shall, at the
time of redelivery, if the related Owner so requests and at Chevron Transport's
expense, change the registry and port of documentation back to that of the
Registration Jurisdiction.
Chevron Transport shall have the right to re-name each Vessel, to paint each
Vessel in its own colors, install and display its funnel insignia and fly its
own house flag.
COVENANTS
Each Initial Charter will contain certain covenants pursuant to which Chevron
Transport will agree, among other things, that:
(a) Chevron Transport will maintain at its expense the Vessel in a good
state of repair and in efficient operating condition in accordance with
good commercial maintenance practice commensurate with other vessels in
Chevron Transport's fleet of similar size and trade, ordinary wear and tear
excepted;
(b) Chevron Transport will keep the Vessel with unexpired classification
in accordance with the highest classification of the American Bureau of
Shipping (or such other classification society as shall previously have
been approved in writing by the related Owner) and other required
certificates in force and shall make any improvement or structural changes
or acquire equipment necessary to comply with the requirements of such
classification;
(c) Chevron Transport shall not permit the Vessel to proceed to any port
which shall have been the subject of a prohibition by the Registration
Jurisdiction;
(d) in the event of hostilities in any part of the world Chevron
Transport will not employ the Vessel nor suggest her employment in carrying
any goods which are declared contraband nor suffer her to enter to trade to
any zone which is declared a "war zone" by the war risks insurers unless
Chevron Transport has made arrangements with the said insurers for the
payment of such additional premiums as said insurers may require to
maintain the relevant insurances in force or in any zone in respect of
which the war risks insurers have withdrawn coverage for the Vessel;
(e) Chevron Transport will not use the Vessel in any manner or for any
purpose excepted from any insurance policy or policies taken out in
compliance with the Initial Charter or for the purpose of carriage of goods
of any description excepted from such insurance policy or policies and
shall not do or permit to be done anything which could reasonably be
expected to invalidate any of such insurance policy or policies;
(f) Chevron Transport shall man, victual, navigate, operate, supply, fuel
and repair the Vessel whenever required and shall be responsible for all
charges and expenses of every kind and nature whatsoever incidental to its
use and operation of the Vessel under the Initial Charter, including any
foreign, general, municipal, value added or other taxes, except that
Chevron Transport shall not be
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responsible for documentation costs (except as otherwise provided for in
the Initial Charters) or for Owner Taxes; and
(g) Chevron Transport shall drydock the Vessel and clean and paint her
underwater parts in accordance with good commercial practice, but not less
than as may be required by the American Bureau of Shipping (or such other
classification society as shall previously have been approved in writing by
the related Owner) in order to maintain the Vessel's highest
classification.
(h) Chevron Transport will not allow, nor permit to be continued, any
Lien incurred by Chevron Transport or its agents, which might have priority
over the title and interest of the Owner in the related Vessel, and will
indemnify and hold the Owner harmless against any Lien arising upon such
Vessel during the Initial Charter Period while the Vessel is under the
control of Chevron Transport and against any claims against the Owner
arising out of or in relation to the operation of the Vessel by Chevron
Transport.
In general, all amounts, excluding certain indemnification payments and
documentation costs for the Owners' account, payable by Chevron Transport
shall be made without deduction for any taxes (including value added,
turnover, sales and use taxes) except as required by law and Chevron Transport
shall, in addition to the sums payable by Chevron Transport under each Initial
Charter, pay such taxes as aforesaid as are required from time to time by law
to be paid by Chevron Transport; provided, Chevron Transport shall not be
liable for documentation costs (except as otherwise provided for in the
Initial Charters). Under each Initial Charter, the related Owner will agree to
take any lawful action to the extent necessary to prevent or avoid the
imposition of any taxes, including any withholding tax with respect to
charterhire, by any taxing jurisdiction (including the Registration
Jurisdiction for such Owner), including changing its jurisdiction of
incorporation or residence; provided that it shall not be required to take, or
fail to take, any action (i) if in the opinion of counsel such act or failure
to act would violate applicable law or (ii) if in the reasonable opinion of
the Owner the actions necessary to avoid or prevent imposition of such taxes
would be unduly burdensome. For purposes of clause (ii) above, a requirement
to change the jurisdiction of the Owner's incorporation or residence shall not
be treated as unduly burdensome.
CHARTERHIRE
During the Initial Charter Period for each Vessel, Chevron Transport shall
pay charterhire for the use and hire of such Vessel on each and ,
commencing on the first such date to occur following the commencement of the
related Initial Charter. During any extension of the Initial Charter Period,
the rate of hire shall be calculated on the basis of the then current
charterhire rate converted to a daily rate using a 365-day year. If any
payment of charterhire under the Initial Charter shall not be paid when due
interest shall accrue thereon at the Default Rate from and including the due
date to the date of actual payment (after as well as before judgment).
INSURANCE
Each Initial Charter provides that during the Initial Charter Period the
insurance arrangements in effect with respect to Chevron Transport's fleet at
the time of the commencement of such Initial Charter will be applicable to the
related Vessel and will satisfy the insurance requirements of the Initial
Charter, subject to adjustments of such insurance arrangements in light of
changes in market practice and in accepted tanker practice. Currently, Chevron
Transport's hull and machinery insurance includes a deductible of $15 million
per occurrence and its protection and indemnity insurance is subject to a $1
million deductible per occurrence (other than with respect to liabilities
involving pollution, as to which there is a nominal or no deductible). In
addition, each Initial Charter provides that Chevron Transport may self-insure
against the risks required to be covered thereunder. Therefore, there can be
no assurance that any insurance for such risks will be carried during the
Initial Charter Period for any Vessel or, if it is carried, as to the amount
of such insurance.
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<PAGE>
INSURANCE PROCEEDS
The proceeds of any insurances or entries referred to in the Initial Charters
will be applied as follows:
Until the termination of an Initial Charter, any claim under any such
insurance proceeds in respect of the related Vessel (other than in respect of
Total Loss) shall be paid directly to Chevron Transport. Chevron Transport
shall be liable for any loss of any part of or damage to the Vessel (other than
a Total Loss) during the Initial Charter Period from whatsoever cause such loss
or damage may arise, unless the same shall have been caused by the negligence
or wilful act of the Owners, their servants or agents (except where Chevron
Transport or its servants and agents are acting as agents of the Owners).
Any claim in respect of a Total Loss shall be paid directly to the related
Owner or the Collateral Trustee, as assignee.
PAYMENT ON TOTAL LOSS
The amount payable on the date which is 90 days after the occurrence of a
Total Loss with respect to a Vessel (the "Loss Date") by Chevron Transport
shall be the sum of (i) any deficiency between (A) the Stipulated Loss Value
(which is an amount at least sufficient to redeem the Allocated Principal
Amount of Notes with respect to such Vessel) in relation to the period in
question and (B) all insurance proceeds for damage to or loss of the Vessel and
amounts paid by any governmental authority in connection with any requisition,
seizure or forfeiture actually received in hand by the related Owner or the
Collateral Trustee, as assignee of California Petroleum, prior to or on such
Loss Date; and (ii) all charterhire accrued (on a daily basis) but unpaid under
the Initial Charter to such Loss Date and any other sums due under any
provisions of the Initial Charter, together with interest thereon at the
Default Rate from the date upon which any such charterhire or other sums was
due until the date upon which such calculations are made. In the event of a
Total Loss, the Initial Charter and the obligation of Chevron Transport to pay
charterhire shall continue and be payable until Chevron Transport has paid the
amounts described above. The obligations of Chevron Transport described above
will apply regardless of whether or not any moneys are payable under the
insurances effected in compliance with the Initial Charter in respect of the
Vessel, regardless also of the amount payable thereunder, regardless also of
the cause of the Total Loss and regardless of whether or not any of such
compensation shall be payable.
CHARTER EVENTS OF DEFAULT
The following constitute events of default under each Initial Charter
("Charter Events of Default"):
(a) Chevron Transport shall default for two business days in the payment
of charterhire due under the terms of the Initial Charter;
(b) Chevron Transport shall fail for a period of 30 business days after
written notice to perform and observe any of the covenants, conditions,
agreements or stipulations on the part of Chevron Transport to be performed
or observed contained in the Initial Charter, other than those referred to
in clause (a) or (e) of this paragraph;
(c) Chevron Transport ceases doing business as a going concern or
generally ceases to pay its debts as they become due or any proceedings
under any bankruptcy or insolvency laws are instituted against Chevron
Transport or if a receiver or trustee is appointed for Chevron Transport
for any of its assets or properties, and such proceeding is not dismissed,
vacated or fully stayed within 60 days;
(d) Chevron Transport shall create or suffer to exist any mortgage,
charge, pledge or other like encumbrance over the Vessel or any part
thereof or shall have abandoned the Vessel (not including any notice of
abandonment which Chevron Transport may give to insurers under the
provisions of the Initial Charter regarding insurance in the event of a
Total Loss);
(e) Chevron Transport fails to comply with any of its obligations as to
insurance contained in the Initial Charter; and
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<PAGE>
(f) Chevron Transport shall within 30 days of any scheduled date of
redelivery under the Initial Charter fail to provide adequate bail or
security when required to do so in respect of any maritime lien, possessory
lien or statutory right in rem which may be acquired over the Vessel in
order to prevent the Vessel being arrested, impounded or seized or if any
such lien, right or claim over the Vessel is exercised by the arrest,
attachment, detention, impounding or seizure of the Vessel under any
distress, execution or other process, or any distress or execution is
levied thereon, and Chevron Transport fails to use its best endeavors to
procure the release of the Vessel therefrom within 30 days of any scheduled
date of redelivery under the Initial Charter.
REMEDIES
If any Charter Event of Default shall have occurred and be continuing, the
Owner under the related Initial Charter may, by written notice to Chevron
Transport, declare such Initial Charter to be in default and enforce any or all
of the remedies under such Initial Charter, including:
(a) requiring Chevron Transport, at its expense, to redeliver the Vessel
to the related Owner with Chevron Transport to have the same obligations in
connection with such redelivery as described below in connection with
redelivery of the Vessel at the termination of the Initial Charter;
(b) retaking the Vessel by the related Owner or its agent, without prior
demand or legal process;
(c) holding Chevron Transport liable for all charterhire payments payable
before, during or after exercise of the foregoing remedies and the remedy
described in paragraph (d) below and for all reasonable costs and expenses
incurred by the related Owner (including legal fees) by reason of the
occurrence of any default or the exercise of remedies by the related Owner;
and
(d) the related Owner or its agent may sell the Vessel at public or
private sale, with or without notice to Chevron Transport, advertisement or
publication, as such Owner may determine, or otherwise may dispose of,
hold, use, operate, charter to others or keep the Vessel idle.
The Collateral Trustee, as assignee of California Petroleum, would have the
right to exercise the rights of an Owner under an Initial Charter upon the
occurrence of a Charter Event of Default.
LIQUIDATED DAMAGES
Whether or not the related Owner shall have exercised, or shall thereafter at
any time exercise, any options, rights or remedies described above, upon or as
a consequence of a breach of contract by Chevron Transport amounting to
repudiation by Chevron Transport of the Initial Charter, the related Owner may
immediately require Chevron Transport to pay to such Owner as liquidated
damages for loss of a bargain and not as a penalty, an amount equal to (i) the
sum of (A) the applicable Stipulated Loss Value, (B) all outstanding accrued
and unpaid charterhire and (C) any other amounts due to such Owner under the
Initial Charter on or prior to the date of payment and (ii) interest thereon
(before and after judgment) at the Default Rate from the date such amounts were
payable to the actual date of payment. Chevron Transport shall not be entitled
to any part of the net proceeds of the Vessel (if any) whether by way of rebate
of charterhire or otherwise.
REDELIVERY
Unless a Vessel is a Total Loss or Chevron Transport purchases such Vessel
pursuant to the terms of the Initial Charter, Chevron Transport shall at the
termination of the Initial Charter redeliver the Vessel to the related Owner at
a safe and ice-free port or a place selected by Chevron Transport within the
Vessel's trading limits (within 10 steaming days from a recognized loading
area) or at such other safe port as shall be agreed between Chevron Transport
and the related Owner.
At or about the time of redelivery if the related Owner so requires, a survey
shall be made to determine the condition and fitness of the Vessel, her
machinery and equipment. In the event that such Vessel has been
65
<PAGE>
dry-docked within 30 months prior to redelivery and Chevron Transport certifies
in writing that, to the best of its knowledge, the Vessel has had no bottom
touching since such dry-docking, such survey may be conducted while the Vessel
is afloat. The related Owner may require a divers' survey of the Vessel.
Chevron Transport shall bear all expenses of any such survey. Chevron Transport
shall at its expense make all such repairs and do all such work so found to be
necessary before redelivery or, at the related Owner's option, shall discharge
its obligations by payment of a sum sufficient to provide, at the prices
current at the time of redelivery, for the work and repairs necessary to place
the Vessel in the required structure, state and condition. The Initial Charter
Period shall be extended until the completion of any such repairs and work
found to be necessary or the payment of the amounts described above. Each
Vessel upon redelivery shall have her survey cycles up to date and class
certificates valid for at least six calendar months and Chevron Transport shall
ensure that Vessel shall have been dry-docked within 30 months prior to
redelivery.
ASSIGNMENT AND SUB-CHARTER
Chevron Transport may not assign all or part of its rights and obligations
under any Initial Charter nor may it charter the related Vessel by demise to
any other entity without the prior written consent of the related Owner, such
consent not to be unreasonably withheld, subject always to the Vessel being
maintained and insured to the same standards as are adopted by Chevron
Transport in respect of the vessels owned by it; provided, however, that
Chevron Transport may assign its rights and obligations under any Initial
Charter to a corporation more than 50% of which is owned directly or indirectly
by Chevron so long as Chevron Transport remains responsible as principal for
the due fulfillment of the Initial Charter. Chevron Transport may otherwise
charter the Vessel without the prior consent of the related Owner provided that
Chevron Transport remains responsible as principal (or appoints another person
to be responsible in its stead) for navigating and managing the Vessel
throughout the period of such charter and for defraying all expenses in
connection with the Vessel throughout such period or substantially all such
expenses other than those directly incidental to a particular voyage or to the
employment of the Vessel during that period.
For each Initial Charter, the related Owner may not transfer or assign to any
other person or entity all or part of its rights or obligations under such
Initial Charter, except to California Petroleum (which assignment includes the
reassignment by California Petroleum of such Initial Charter as Collateral to
the Collateral Trustee), unless such transferee or assignee also assumes the
obligations of such Owner under the related Security Documents and Chevron
Transport shall have given its prior written consent to such assignment and
assumption, which consent shall not be unreasonably withheld.
INDEMNITY
Pursuant to each Initial Charter, Chevron Transport will indemnify the
related Owner against the following:
(a) all costs and expenses of operating and maintaining the related
Vessel and of operating, maintaining and replacing all parts including (but
without prejudice to the generality of the foregoing) all fuel, oil, port
charges, fees, taxes, levies, fines, penalties, charges, insurance
premiums, victualing, crew, navigation, manning, operating and freight
expenses and all other outgoings whatsoever payable by the Owner or Chevron
Transport in respect of the possession or operation of a Vessel or any part
thereof, or the purchase, ownership, delivery, chartering, possession and
operation, import to or export from any country, return, sale or
disposition of such Vessel or any part thereof or upon the hire, receipts
or earnings arising therefrom (other than Owner Taxes or documentation
costs except as otherwise provided for in the Initial Charter);
(b) all liabilities, claims, proceedings (whether civil or criminal),
penalties, fines or other sanctions, judgements, charges, taxes,
impositions, liens, salvage, general average, costs and expenses whatsoever
which may at any time be made or claimed by Chevron Transport or any
employee, servant, agent or sub-contractor, passenger, owner, shipper,
consignee, and receiver of goods or any third party (including
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governments or other authorities) or by their respective dependents arising
directly or indirectly in any manner out of the design, construction,
possession, management, repair, certification, manning, provisioning,
supply or servicing of the Vessel (whether at sea or not) or the chartering
thereof under the Initial Charter whether such liability, claims,
proceedings, penalties, fines, sanctions, judgments, charges, taxes,
impositions, liens, salvage, general average, costs or expenses may be
attributable to any defect in such Vessel or the design, construction,
testing or use thereof from any maintenance, service, repair, overhaul or
otherwise and regardless of when or where the same shall arise and whether
or not such Vessel or the relevant part thereof is in the possession or
control of Chevron Transport (other than Owner Taxes or documentation costs
except as otherwise provided for in the Initial Charter); and
(c) any and all losses, damages and expenses which Owner may incur as a
result of any oil or other pollution damage resulting from Chevron
Transport's operation of the Vessel under the Initial Charter, including,
but not limited to, such Owner's liability under OPA 90 or the laws of any
other jurisdiction relating to oil spills.
Chevron Transport's indemnity under each Initial Charter shall extend to
claims of persons (including governments or other bodies whether corporate or
otherwise) who have suffered or allege that they have suffered loss, damage or
injury in connection with any thing done or not done by a Vessel, including in
connection with any oil or other substance emanating or threatening to emanate
from such Vessel, and shall extend to levies, impositions, calls or
contributions on or required to be made by the Owner during or in respect of
the Initial Charter Period.
TERMINATION OPTIONS
Under each Initial Charter, Chevron Transport has the right to terminate such
Initial Charter on any of four, in case of the double-hulled Vessels, or three,
in the case of the single-hulled Vessel, termination dates which, for each
Vessel, occur at two-year intervals beginning in 2003, 2004, 2005 or 2006, as
the case may be. Chevron Transport is required to give the related Owner (i)
non-binding notice of its intent to exercise such option, determined on a good
faith basis, at least 12 months prior to such termination date and (ii)
irrevocable notice of such exercise nine months prior to such termination date,
if such termination date is the first of the termination dates for such Vessel,
or seven months prior to such termination date, if such termination date is
subsequent to the first such termination date. Chevron Transport is required to
pay the Termination Payment to such Owner on or prior to the termination date.
PURCHASE OPTION
On the Term Mortgage Notes Maturity Date, so long as the related Initial
Charter has not been terminated earlier and no Charter Event of Default has
occurred and is continuing and all payments due under such Initial Charter have
been paid in full, Chevron Transport shall have the right to purchase the
related Vessel at a purchase price equal to $1.00. Chevron Transport is
required to give the related Owner at least 90 days' prior written notice of
its election to so purchase the related Vessel.
CHEVRON GUARANTEES
Chevron will fully and unconditionally guarantee the due and faithful
performance by Chevron Transport under each Initial Charter of all of Chevron
Transport's liabilities and responsibilities thereunder and under any
supplement, amendment, change or modification thereof agreed to by Chevron
Transport.
GOVERNING LAW
Each Initial Charter and each Chevron Guarantee shall be governed by and be
construed in accordance with the federal laws of the United States of America
and the laws of the State of New York.
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<PAGE>
NON-DISTURBANCE
Pursuant to the terms of each Initial Charter, each Owner agrees that the
related Mortgage and any other mortgage thereafter placed on the Vessel by such
Owner will contain a provision to the effect that throughout the term of the
related Initial Charter, so long as no Charter Event of Default shall have
occurred and be continuing and so long as Chevron Transport shall have
performed its obligations thereunder, Chevron Transport shall be entitled to
the quiet enjoyment of the Vessel.
UNDERWRITING
The Underwriter has agreed, subject to the terms and conditions of the
Underwriting Agreement, to purchase $167,500,000 aggregate principal amount of
the Serial Mortgage Notes.
The Underwriting Agreement provides that the Underwriter will be obligated to
purchase all of the Serial Mortgage Notes offered hereby if any are purchased.
The Underwriter has advised California Petroleum and Chevron that the
Underwriter proposes to offer the Serial Mortgage Notes to the public initially
at the Price to the Public set forth on the cover page of this Prospectus and
to certain dealers at such price less a concession not in excess of $ per
Serial Mortgage Note. The Underwriter may allow, and such dealers may reallow,
a discount not in excess of $ per Serial Mortgage Note on sales to certain
other dealers. After the initial public offering, the Price to the Public and
other selling terms may be changed by the Underwriter. The Underwriter does not
intend to confirm sales to any account over which they exercise discretionary
authority.
In the Underwriting Agreement, the Owners have agreed, jointly and severally,
and Chevron and Chevron Transport have separately agreed, to indemnify the
Underwriter, and the Underwriter has agreed to indemnify each of the foregoing
parties against certain liabilities, including liabilities under the Securities
Act.
Concurrently with the offering of the Serial Mortgage Notes, California
Petroleum is offering for sale to the public pursuant to a separate prospectus
$117,900,000 aggregate principal amount of % First Preferred Mortgage Notes
Due 2015. The consummation of the sale of the Serial Mortgage Notes is
dependent on the consummation of the sale of the Term Mortgage Notes.
See "Certain Relationships and Transactions" for a discussion of certain
services to be provided by the Underwriter at the end of any Initial Charter
Period.
RATINGS
The Serial Mortgage Notes have been prospectively rated by Moody's, by
Standard & Poor's and by Duff & Phelps at their initial issuance. A security
rating is not a recommendation to buy, sell or hold securities and may be
subject to revision or withdrawal at any time by the assigning rating agency.
There can be no assurance as to whether any rating agency not requested to
rate the Serial Mortgage Notes will nonetheless issue a rating and, if so, what
such rating would be. A rating assigned to the Serial Mortgage Notes by a
rating agency that has not been requested to do so may be lower than the
ratings assigned by the rating agencies mentioned above.
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<PAGE>
LEGAL MATTERS
Certain legal matters in connection with the securities offered hereby will
be passed upon for California Petroleum by Ropes & Gray, Boston, Massachusetts
and Thacher Proffitt & Wood, New York, New York. Certain legal matters will be
passed upon for the Owners by Thacher Proffitt & Wood, New York, New York.
Certain legal matters will be passed upon for CalPetro Bahamas I, CalPetro
Bahamas II and CalPetro Bahamas III by McKinney, Bancroft & Hughes, Nassau,
Bahamas, with respect to Bahamian law. Certain legal matters will be passed
upon for CalPetro IOM by Cains, Douglas, Isle of Man, with respect to Isle of
Man law. Certain legal matters will be passed upon for Chevron and Chevron
Transport by Pillsbury Madison & Sutro, San Francisco, California. Certain
legal matters will be passed upon for the Underwriter by Davis Polk & Wardwell,
New York, New York.
EXPERTS
The financial statements of California Petroleum as of December 31, 1994,
included in this Prospectus, have been so included in reliance on the report of
Price Waterhouse LLP, independent accountants, given on the authority of said
firm as experts in auditing and accounting. The financial statements of the
Owners as of December 31, 1994, included in this Prospectus, have been so
included in reliance on the reports of Price Waterhouse, chartered accountants,
given on the authority of said firm as experts in auditing and accounting.
The financial statements of Chevron incorporated in this Prospectus by
reference to Chevron's Annual Report on Form 10-K for the year ended December
31, 1993 and by reference to Chevron's Current Report on Form 8-K, dated March
10, 1995 have been audited by Price Waterhouse LLP, independent accountants.
The financial statements of the Caltex Group of Companies incorporated in this
Prospectus by reference to Chevron's Annual Report on Form 10-K for the year
ended December 31, 1993 have been audited by KPMG Peat Marwick LLP, independent
accountants. Such financial statements have been so incorporated in reliance on
the reports of the respective independent accountants given on the authority of
such firms as experts in auditing and accounting.
69
<PAGE>
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
California Petroleum Transport Corporation
Report of Independent Accountants........................................ F-2
Balance Sheet at December 31, 1994
Note to the Balance Sheet................................................ F-3
Unaudited Combined Balance Sheet of Owners at December 31, 1994............ F-4
CalPetro Tankers (Bahamas I) Limited
Report of Independent Accountants........................................ F-5
Balance Sheet at December 31, 1994
Note to the Balance Sheet................................................ F-6
CalPetro Tankers (Bahamas II) Limited
Report of Independent Accountants........................................ F-7
Balance Sheet at December 31, 1994
Note to the Balance Sheet................................................ F-8
CalPetro Tankers (IOM) Limited
Report of Independent Accountants........................................ F-9
Balance Sheet at December 31, 1994
Note to the Balance Sheet................................................ F-10
CalPetro Tankers (Bahamas III) Limited
Report of Independent Accountants........................................ F-11
Balance Sheet at December 31, 1994
Note to the Balance Sheet................................................ F-12
The Owners' Pro Forma Condensed Combined Financial Data.................... F-13
</TABLE>
F-1
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
February 28, 1995
To the Board of Directors and Shareholders of California Petroleum Transport
Corporation
In our opinion, the accompanying balance sheet presents fairly, in all
materials respects, the financial position of California Petroleum Transport
Corporation at December 31, 1994, in conformity with generally accepted
accounting principles. This financial statement is the responsibility of the
Company's management; our responsibility is to express an opinion on this
financial statement based on our audit. We conducted our audit of this
statement in accordance with generally accepted auditing standards which
require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statement is free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for the opinion expressed above.
/s/ Price Waterhouse LLP
PRICE WATERHOUSE LLP
Boston, Massachusetts
F-2
<PAGE>
CALIFORNIA PETROLEUM TRANSPORT CORPORATION
BALANCE SHEET AS AT DECEMBER 31, 1994
<TABLE>
<S> <C>
ASSETS
Current Assets
Cash.................................................................. $1,000
------
Total assets........................................................ $1,000
======
STOCKHOLDERS' EQUITY
Common Stock; 1,000 shares authorized, issued and outstanding........... $1,000
------
Stockholders' Equity................................................ $1,000
======
</TABLE>
- --------------------
NOTE TO THE BALANCE SHEET:
California Petroleum Transport Corporation (the "Company") was incorporated
as a Delaware company on May 18, 1994, and has had no operations since that
date.
F-3
<PAGE>
THE OWNERS
UNAUDITED COMBINED BALANCE SHEET AS AT 31 DECEMBER 1994
<TABLE>
<S> <C>
ASSETS
Cash.................................................................... $1,300
------
Total assets............................................................ $1,300
======
COMBINED SHAREHOLDERS' EQUITY
TOTAL COMBINED SHAREHOLDERS' EQUITY..................................... $1,300
======
</TABLE>
- --------------------
NOTES TO THE COMBINED BALANCE SHEET
The combined balance sheet represents the aggregated assets and shareholders
equity of the following companies (the "Owners"):
Calpetro Tankers (IOM) Limited
Calpetro Tankers (Bahamas I) Limited
Calpetro Tankers (Bahamas II) Limited
Calpetro Tankers (Bahamas III) Limited
The above companies were incorporated as follows:
Calpetro Tankers (IOM) Limited was incorporated as an Isle of Man company
on 13 May 1994 and has had no operations since that date. The company is a
wholly owned subsidiary of California Tankers Investments Limited, a
company incorporated under the laws of the Bahamas.
Calpetro Tankers (Bahamas I) Limited was incorporated as a Bahamian
company on 13 May 1994 and has had no operations since that date. The
company is a wholly owned subsidiary of California Tankers Investments
Limited, a company incorporated under the laws of the Bahamas.
Calpetro Tankers (Bahamas II) Limited was incorporated as a Bahamian
company on 13 May 1994 and has had no operations since that date. The
company is a wholly owned subsidiary of California Tankers Investments
Limited, a company incorporated under the laws of the Bahamas.
Calpetro Tankers (Bahamas III) Limited was incorporated as a Bahamian
company on 13 May 1994 and has had no operations since that date. The
company is a wholly owned subsidiary of California Tankers Investments
Limited, a company incorporated under the laws of the Bahamas.
F-4
<PAGE>
AUDITORS' REPORT TO THE DIRECTORS OF CALPETRO TANKERS (BAHAMAS I) LIMITED
We have audited the balance sheet and accompanying note of Calpetro Tankers
(Bahamas I) Limited at 31 December 1994 which have been prepared under the
historical cost convention and in accordance with applicable accounting
standards in the United States of America.
RESPECTIVE RESPONSIBILITIES OF DIRECTORS AND AUDITORS
It is the directors' responsibility to prepare financial statements for each
financial year which give a true and fair view of the state of affairs of the
company and of the profit and loss of the company for that period. In preparing
those financial statements, it is the directors' responsibility to:
. select suitable accounting policies and then apply them consistently;
. make judgments and estimates that are reasonable and prudent;
. prepare the financial statements on the going concern basis;
The directors are responsible for keeping proper accounting records which
disclose with reasonable accuracy at any time the financial position of the
company. They are also responsible for safeguarding the assets of the company
and hence for taking reasonable steps for the prevention and detection of fraud
and other irregularities.
It is our responsibility to form an independent opinion, based on our audit,
on those statements and to report our opinion to you.
BASIS OF OPINION
We conducted our audit in accordance with Auditing Standards issued by the
Auditing Practices Board in the United Kingdom, which do not differ in any
significant respect from United States generally accepted auditing standards.
An audit includes examination, on a test basis, of evidence relevant to the
amounts and disclosures in the financial statements. It also includes an
assessment of the significant estimates and judgments made by the directors in
the preparation of the financial statements, and of whether the accounting
policies are appropriate to the company's circumstances, consistently applied
and adequately disclosed.
We planned and performed our audit so as to obtain all the information and
explanations which we considered necessary in order to provide us with
sufficient evidence to give reasonable assurance that the balance sheet and
accompanying note are free from material misstatement, whether caused by fraud
or other irregularity or error. In forming our opinion we also evaluated the
overall adequacy of the presentation of information in the balance sheet and
accompanying note.
OPINION
In our opinion the balance sheet and accompanying note give a true and fair
view of the state of the company's affairs as at 31 December 1994.
/s/ Price Waterhouse
Price Waterhouse
Chartered Accountants 28 February 1995
Douglas
Isle of Man
F-5
<PAGE>
CALPETRO TANKERS (BAHAMAS I) LIMITED
BALANCE SHEET AS AT 31 DECEMBER 1994
<TABLE>
<S> <C>
ASSETS
Cash...................................................................... $100
----
Total assets.......................................................... $100
====
SHAREHOLDERS' EQUITY
Unclassified stock of $1 par value
Authorised--1,000 shares
Issued--100 shares...................................................... $100
====
Total Shareholders' Equity............................................ $100
====
</TABLE>
- --------------------
NOTE TO THE BALANCE SHEET
Incorporation of the company
Calpetro Tankers (Bahamas I) Limited was incorporated as a Bahamian company
of 13 May 1994 and has had no operations since that date. The company is a
wholly owned subsidiary of California Tankers Investments Limited, a company
incorporated under the laws of the Bahamas.
/s/ P. D. Gram
_____________________________________
Director
28 February 1995
See accompanying note to the balance sheet
F-6
<PAGE>
AUDITORS' REPORT TO THE DIRECTORS OF
CALPETRO TANKERS (BAHAMAS II) LIMITED
We have audited the balance sheet and accompanying note of Calpetro Tankers
(Bahamas II) Limited at 31 December 1994 which have been prepared under the
historical cost convention and in accordance with applicable accounting
standards in the United States of America.
RESPECTIVE RESPONSIBILITIES OF DIRECTORS AND AUDITORS
It is the directors' responsibility to prepare financial statements for each
financial year which give a true and fair view of the state of affairs of the
company and of the profit and loss of the company for that period. In preparing
those financial statements, it is the directors' responsibility to:
. select suitable accounting policies and then apply them consistently;
. make judgments and estimates that are reasonable and prudent;
. prepare the financial statements on the going concern basis;
The directors are responsible for keeping proper accounting records which
disclose with reasonable accuracy at any time the financial position of the
company. They are also responsible for safeguarding the assets of the company
and hence for taking reasonable steps for the prevention and detection of fraud
and other irregularities.
It is our responsibility to form an independent opinion, based on our audit,
on those statements and to report our opinion to you.
BASIS OF OPINION
We conducted our audit in accordance with Auditing Standards issued by the
Auditing Practices Board in the United Kingdom, which do not differ in any
significant respect from United States generally accepted auditing standards.
An audit includes examination, on a test basis, of evidence relevant to the
amounts and disclosures in the financial statements. It also includes an
assessment of the significant estimates and judgments made by the directors in
the preparation of the financial statements, and of whether the accounting
policies are appropriate to the company's circumstances, consistently applied
and adequately disclosed.
We planned and performed our audit so as to obtain all the information and
explanations which we considered necessary in order to provide us with
sufficient evidence to give reasonable assurance that the balance sheet and
accompanying note are free from material misstatement, whether caused by fraud
or other irregularity or error. In forming our opinion we also evaluated the
overall adequacy of the presentation of information in the balance sheet and
accompanying note.
OPINION
In our opinion the balance sheet and accompanying note give a true and fair
view of the state of the company's affairs as at 31 December 1994.
/s/ Price Waterhouse
Price Waterhouse
Chartered Accountants 28 February 1995
Douglas
Isle of Man
F-7
<PAGE>
CALPETRO TANKERS (BAHAMAS II) LIMITED
BALANCE SHEET AS AT 31 DECEMBER 1994
<TABLE>
<S> <C>
ASSETS
Cash...................................................................... $100
----
Total assets.......................................................... $100
====
SHAREHOLDERS' EQUITY
Unclassified stock of $1 par value
Authorized--1,000 shares
Issued--100 shares...................................................... $100
====
Total Shareholders' Equity............................................ $100
====
</TABLE>
- --------------------
NOTE TO THE BALANCE SHEET
Incorporation of the company
Calpetro Tankers (Bahamas II) Limited was incorporated as a Bahamian company
of 13 May 1994 and has had no operations since that date. The company is a
wholly owned subsidiary of California Tankers Investments Limited, a company
incorporated under the laws of the Bahamas.
/s/ P. D. Gram
_____________________________________
Director
28 February 1995
See accompanying note to the balance sheet
F-8
<PAGE>
AUDITORS' REPORT TO THE DIRECTORS OF
CALPETRO TANKERS (IOM) LIMITED
We have audited the balance sheet and accompanying note of Calpetro Tankers
(IOM) Limited at 31 December 1994 which have been prepared under the historical
cost convention and in accordance with applicable accounting standards in the
United States of America.
RESPECTIVE RESPONSIBILITIES OF DIRECTORS AND AUDITORS
Company law requires the directors to prepare financial statements for each
financial year which give a true and fair view of the state of affairs of the
company and of the profit and loss of the company for that period. In preparing
those financial statements, the directors are required to:
. select suitable accounting policies and then apply them consistently;
. make judgments and estimates that are reasonable and prudent;
. prepare the financial statements on the going concern basis;
The directors are responsible for keeping proper accounting records which
disclose with reasonable accuracy at any time the financial position of the
company and to enable them to ensure that the financial statements comply with
the Isle of Man Companies Acts 1931 to 1993. They are also responsible for
safeguarding the assets of the company and hence for taking reasonable steps
for the prevention and detection of fraud and other irregularities.
It is our responsibility to form an independent opinion, based on our audit,
on those statements and to report our opinion to you.
BASIS OF OPINION
We conducted our audit in accordance with Auditing Standards issued by the
Auditing Practices Board in the United Kingdom, which do not differ in any
significant respect from United States generally accepted auditing standards.
An audit includes examination, on a test basis, of evidence relevant to the
amounts and disclosures in the financial statements. It also includes an
assessment of the significant estimates and judgments made by the directors in
the preparation of the financial statements, and of whether the accounting
policies are appropriate to the company's circumstances, consistently applied
and adequately disclosed.
We planned and performed our audit so as to obtain all the information and
explanations which we considered necessary in order to provide us with
sufficient evidence to give reasonable assurance that the balance sheet and
accompanying note are free from material misstatement, whether caused by fraud
or other irregularity or error. In forming our opinion we also evaluated the
overall adequacy of the presentation of information in the balance sheet and
accompanying note.
OPINION
In our opinion the balance sheet and accompanying note give a true and fair
view of the state of the company's affairs as at 31 December 1994 and have been
properly prepared in accordance with the Isle of Man Companies Acts 1931 to
1993.
/s/ Price Waterhouse
Price Waterhouse 28 February 1995
Chartered Accountants
Douglas
Isle of Man
F-9
<PAGE>
CALPETRO TANKERS (IOM) LIMITED
BALANCE SHEET AS AT 31 DECEMBER 1994
<TABLE>
<S> <C>
ASSETS
Cash..................................................................... $1,000
------
Total assets......................................................... $1,000
======
SHAREHOLDERS' EQUITY
Unclassified stock of (Pounds)1 (pound sterling)
Authorized--2,000 shares
Issued--2 shares....................................................... $1,000
======
Total Shareholders' Equity........................................... $1,000
======
</TABLE>
- --------------------
NOTE TO THE BALANCE SHEET
Incorporation of the company
Calpetro Tankers (IOM) Limited was incorporated as an Isle of Man company on
13 May 1994 and has had no operations since that date. The company is a wholly
owned subsidiary of California Tankers Investments Limited, a company
incorporated under the laws of the Bahamas.
/s/ P.D. Gram
_____________________________________
Director
/s/ Z.B. Galka
_____________________________________
Director
28 February 1995
F-10
<PAGE>
AUDITORS' REPORT TO THE DIRECTORS OF CALPETRO TANKERS (BAHAMAS III) LIMITED
We have audited the balance sheet and accompanying note of Calpetro Tankers
(Bahamas III) Limited at 31 December 1994 which have been prepared under the
historical cost convention and in accordance with applicable accounting
standards in the United States of America.
RESPECTIVE RESPONSIBILITIES OF DIRECTORS AND AUDITORS
It is the directors' responsibility to prepare financial statements for each
financial year which give a true and fair view of the state of affairs of the
company and of the profit and loss of the company for that period. In preparing
those financial statements, it is the directors' responsibility to:
. select suitable accounting policies and then apply them consistently;
. make judgments and estimates that are reasonable and prudent;
. prepare the financial statements on the going concern basis;
The directors are responsible for keeping proper accounting records which
disclose with reasonable accuracy at any time the financial position of the
company. They are also responsible for safeguarding the assets of the company
and hence for taking reasonable steps for the prevention and detection of fraud
and other irregularities.
It is our responsibility to form an independent opinion, based on our audit,
on those statements and to report our opinion to you.
BASIS OF OPINION
We conducted our audit in accordance with Auditing Standards issued by the
Auditing Practices Board in the United Kingdom, which do not differ in any
significant respect from United States generally accepted auditing standards.
An audit includes examination, on a test basis, of evidence relevant to the
amounts and disclosures in the financial statements. It also includes an
assessment of the significant estimates and judgments made by the directors in
the preparation of the financial statements, and of whether the accounting
policies are appropriate to the company's circumstances, consistently applied
and adequately disclosed.
We planned and performed our audit so as to obtain all the information and
explanations which we considered necessary in order to provide us with
sufficient evidence to give reasonable assurance that the balance sheet and
accompanying note are free from material misstatement, whether caused by fraud
or other irregularity or error. In forming our opinion we also evaluated the
overall adequacy of the presentation of information in the balance sheet and
accompanying note.
OPINION
In our opinion the balance sheet and accompanying note give a true and fair
view of the state of the company's affairs as at 31 December 1994.
/s/ Price Waterhouse
Price Waterhouse
Chartered Accountants 28 February 1995
Douglas
Isle of Man
F-11
<PAGE>
CALPETRO TANKERS (BAHAMAS III) LIMITED
BALANCE SHEET AS AT 31 DECEMBER 1994
<TABLE>
<S> <C>
ASSETS
Cash...................................................................... $100
----
Total assets.......................................................... $100
====
SHAREHOLDERS' EQUITY
Unclassified stock of $1 par value
Authorized--1,000 shares
Issued--100 shares....................................................... $100
====
Total Shareholders' Equity............................................ $100
====
</TABLE>
- --------------------
NOTE TO THE BALANCE SHEET
Incorporation of the company
Calpetro Tankers (Bahamas III) Limited was incorporated as a Bahamian company
of 13 May 1994 and has had no operations since that date. The company is a
wholly owned subsidiary of California Tankers Investments Limited, a company
incorporated under the laws of the Bahamas.
/s/ P.D. Gram
_____________________________________
Director
28 February 1995
See accompanying note to the balance sheet
F-12
<PAGE>
THE OWNERS
PRO FORMA CONDENSED COMBINED FINANCIAL DATA
The following pro forma condensed combined financial data presents pro forma
financial data for each of the four vessel owners, CalPetro Tankers (Bahamas I)
Limited, CalPetro Tankers (Bahamas II) Limited, CalPetro Tankers (IOM) Limited
and CalPetro Tankers (Bahamas III) Limited (the "Owners").
The following unaudited pro forma condensed combined income statement for the
year ended December 31, 1994 gives effect to the transaction as if it had
occurred on January 1, 1994, the beginning of the Company's fiscal year. The
unaudited pro forma financial data are based on the assumptions and adjustments
described in the accompanying notes. The unaudited pro forma condensed combined
income statement does not purport to represent what the Company's results of
operations actually would have been if the transaction had occurred as of the
dates indicated or what such results will be for any future periods. The
following unaudited pro forma condensed combined balance sheet at December 31,
1994 was prepared as if the transaction had occurred on such date. The
unaudited pro forma financial data are based upon assumptions that the Company
believes are reasonable and should be read in conjunction with the Financial
Statements and accompanying notes thereto included elsewhere in this
Prospectus.
F-13
<PAGE>
THE OWNERS
UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET
DECEMBER 31, 1994
<TABLE>
<CAPTION>
PRO FORMA ADJUSTMENTS
-----------------------------------------------------------------------------------
COMBINED COMBINED
HISTORICAL BAHAMAS I BAHAMAS II IOM BAHAMAS III PRO FORMA
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Current assets
Cash................... $1,300 $ $ $ $ $ 1,300
Current portion of net
investment in direct
financing leases...... 11,516,000(A) 11,492,000(A) 11,468,000(A) 5,614,000(A) 40,090,000
------ ----------- ----------- ----------- ----------- ------------
Total current assets... 1,300 11,516,000 11,492,000 11,468,000 5,614,000 40,091,300
Net investment in direct
financing leases....... 70,156,000(A) 70,180,000(A) 70,204,000(A) 34,770,000(A) 245,310,000
------ ----------- ----------- ----------- ----------- ------------
Total assets............ $1,300 $81,672,000 $81,672,000 $81,672,000 $40,384,000 $285,401,300
====== =========== =========== =========== =========== ============
LIABILITIES AND
SHAREHOLDERS' EQUITY
Current Liabilities
Current portion of
serial loans.......... $ $ 4,940,000(B) $ 4,940,000(B) $ 4,940,000(B) $ 2,340,000(B) $ 17,160,000
------ ----------- ----------- ----------- ----------- ------------
Total current
liabilities........... 4,940,000 4,940,000 4,940,000 2,340,000 17,160,000
Term loans.............. 40,262,000(B) 35,052,000(B) 29,842,000(B) 12,744,000(B) 117,900,000
Serial loans............ 36,470,000(B) 41,680,000(B) 46,890,000(B) 25,300,000(B) 150,340,000
------ ----------- ----------- ----------- ----------- ------------
Total liabilities....... 81,672,000 81,672,000 81,672,000 $40,384,000 $285,400,000
Shareholders' equity
Common stock issued.... 1,300 1,300
------ ----------- ----------- ----------- ----------- ------------
Total shareholders'
equity................. 1,300 1,300
------ ----------- ----------- ----------- ----------- ------------
Total liabilities and
shareholders' equity... $1,300 $81,672,000 $81,672,000 $81,672,000 $40,384,000 $285,401,300
====== =========== =========== =========== =========== ============
</TABLE>
F-14
<PAGE>
THE OWNERS
UNAUDITED PRO FORMA CONDENSED COMBINED INCOME STATEMENT FOR THE YEAR ENDED
DECEMBER 31, 1994
<TABLE>
<CAPTION>
PRO FORMA ADJUSTMENTS
---------------------------------------------------------------------------------------
COMBINED COMBINED
HISTORICAL BAHAMAS I BAHAMAS II IOM BAHAMAS III PRO FORMA
<S> <C> <C> <C> <C> <C> <C>
Income from direct
financing leases....... $ -- $ 107,278 (C) $ 97,897 (C) $ 88,207 (C) $ 65,530 (C) $ 358,912
Operating costs and
expenses
Ship expenses......... -- 85,000 (D) 85,000 (D) 85,000 (D) 85,000 (D) 340,000
----- ----------- ----------- ----------- ----------- ------------
Income from operations.. -- 22,278 12,897 3,207 (19,470) 18,912
Interest income......... -- 6,725,401 (E) 6,710,516 (E) 6,695,122 (E) 3,345,655 (E) 23,476,694
Interest expense........ -- (6,635,981)(F) (6,609,574)(F) (6,583,069)(F) (3,247,634)(F) (23,076,258)
----- ----------- ----------- ----------- ----------- ------------
Net income.............. $ -- $ 111,698 $ 113,839 $ 115,260 $ 78,551 $ 419,348
===== =========== =========== =========== =========== ============
</TABLE>
F-15
<PAGE>
THE OWNERS
NOTES TO THE PRO FORMA CONDENSED COMBINED FINANCIAL DATA
Pro forma adjustments are made to reflect:
(A) Represents the net investment value of the direct financing leases.
Proceeds from the borrowings discussed in (B) are used to purchase four oil
tankers, one tanker purchase by each of the four vessel owners. The purchased
tankers are then leased to Chevron Transport Corporation. The leases between
the four vessel owners, CalPetro Tankers (Bahamas I) Limited, CalPetro Tankers
(Bahamas II) Limited, CalPetro Tankers (Bahamas III) Limited and CalPetro
Tankers (IOM) Limited and Chevron Transport Corporation contain bargain
purchase options and as such are recorded as direct financing leases in
accordance with Financial Accounting Standards No. 13.
(B) Represents the borrowings by each of the four vessel owners. The term
loans bear interest at an assumed rate of 8.45% per annum. The serial loans
bear interest at assumed rates ranging from 7.00% to 8.03% through maturity.
Such interest rates are based on market interest rates as of February 21, 1995.
Principal will be payable on the term notes in accordance with a twelve year
sinking fund schedule commencing nine years from the issuance date. Serial
notes will mature over an eleven year period beginning one year from the
issuance date. Interest is assumed to be payable semi-annually on July 1 and
January 1 of each year.
(C) Represents the amortization of unearned income in accordance with
Financial Accounting Standards No. 13.
(D) Represents management's estimate of ship expenses which include tonnage
taxes, ship registration fees, accounting fees and other general and
administrative expenses including the reimbursement of general and
administrative expenses of California Petroleum Transport Corporation.
(E) Represents the following components of assumed interest income:
<TABLE>
<CAPTION>
BAHAMAS I BAHAMAS II IOM BAHAMAS III
<S> <C> <C> <C> <C>
Interest income relating to the
direct financing leases recorded
in accordance with Financial
Accounting Standard No. 13...... $6,634,481 $6,619,596 $6,604,202 $3,302,588
Interest income computed on the
expected excess cash on hand
during the period............... 90,920 90,920 90,920 43,067
---------- ---------- ---------- ----------
$6,725,401 $6,710,516 $6,695,122 $3,345,655
========== ========== ========== ==========
</TABLE>
(F) Represents the following components of assumed interest expense:
<TABLE>
<CAPTION>
BAHAMAS I BAHAMAS II IOM BAHAMAS III
<S> <C> <C> <C> <C>
Interest on term loans and serial $6,566,550 $6,542,062 $6,517,576 $3,216,346
loans............................
Amortization of discount on loans. 69,431 67,512 65,493 31,288
---------- ---------- ---------- ----------
$6,635,981 $6,609,574 $6,583,069 $3,247,634
========== ========== ========== ==========
</TABLE>
F-16
<PAGE>
APPENDIX A
CERTAIN SHIPPING TERMS
The following shipping terms are used in this Prospectus.
"Bareboat charter" means the contract for hire of a ship for a certain period
of time during which the Charterer is responsible for the operating costs and
voyage costs of the ship. Sometimes called a demise charter.
"Charter" means the hire of a ship for a specified period of time or to carry
a cargo for a fixed fee from a loading port to a discharging port. The contract
for a charter is called a charterparty.
"Classification society" means a private organization which has as its
purpose the supervision of vessels during their construction and afterward, in
respect to their seaworthiness and upkeep, and the placing of vessels in grades
or "classes" according to the society's rules for each particular type of
vessel.
"Double hull" means hull construction technique by which a ship has an inner
and outer hull separated by void space, usually several feet in width.
"dwt (Deadweight tonne)" means a unit of a vessel's capacity, for cargo, fuel
oil, stores and crew, measured in metric tonnes of 1,000 kilograms. A vessel's
dwt or total deadweight is the total weight the vessel can carry when loaded to
a particular load line.
"Freight" means the compensation for carriage of cargo.
"IMO" means International Maritime Organization, a United Nations agency that
issues, inter alia, international trade standards for shipping.
"Lay-up" means mooring a ship at a protected anchorage, shutting down
substantially all of its operating systems and taking measures to protect
against corrosion and other deterioration.
"OPA 90" means the United States Oil Pollution Act of 1990, as amended.
"Protection and indemnity insurance" means the insurance obtained through a
mutual association formed by shipowners to provide protection from financial
loss to one member by contribution towards that loss by all members.
"Registration Jurisdiction" means the Republic of Liberia or the Commonwealth
of the Bahamas as applicable to each Vessel.
"Suezmax tanker" means a vessel of approximately 120,000 to 200,000 dwt, of a
maximum length, breadth and draught capable of passing through the Suez Canal.
"Tanker" means a ship designed for the carriage of liquid cargoes in bulk,
her cargo space consisting of many tanks. Tankers carry a variety of products
including crude oil, refined products, liquid chemicals and liquid gas. Tankers
load their cargo by gravity from the shore or by pumps and discharge using
their own pumps.
"Tonne" means a metric tonne of 1,000 kilograms.
"TOVALOP Scheme" means the Tankers Owners Voluntary Agreement concerning
Liability for Oil Pollution dated January 7, 1969, as amended.
"Voyage charter" means a contract of carriage in which the charterer pays for
the use of a ship's cargo capacity for one, or sometimes more than one, voyage.
Under this type of charter, the shipowner pays all the operating costs of the
ship (including bunkers, canal and port changes, pilotage, towage and ship's
agency) while payment for cargo handling charges are subject of agreement
between the parties. Freight is generally paid per unit of cargo, such as a
tonne, based on an agreed quantity, or as a lump sum irrespective of the
quantity loaded.
Shipping terms supplied by the Dictionary of Shipping Terms and other
sources.
A-1
<PAGE>
GLOSSARY OF CERTAIN TERMS
The following is a glossary of certain terms used in this Prospectus. The
definitions of terms used in this glossary that are also used in the Serial
Indenture, the Initial Charters or the Mortgages are qualified in their
entirety by reference to the definition of such terms contained therein.
"Acceptable Replacement Charter" means any replacement charter which
satisfies each of the following requirements: (i) the charter is a bareboat
charter and requires that the charterer thereunder "gross up" charterhire
payments to indemnify and hold the holders of the Term Mortgage Notes harmless
from any withholding tax imposed on the charterhire payments or on the payments
of the Term Mortgage Notes, (ii) the charterhire payments payable during the
non-cancellable term of such replacement charter, after giving effect to (1)
any "gross up" of such amounts as a result of any withholding tax on such
charterhire payments, (2) the receipt of the Termination Payment and (3) all
fees and expenses incurred in connection with the recharter of the Vessel,
provide sufficient funds for the payment in full when due of (A) the Allocated
Principal Amount of the Term Mortgage Notes for the related Vessel and interest
thereon in accordance with the revised schedule of sinking fund and principal
payments, that is applicable upon termination of the related Initial Charter,
(B) the amount of Recurring Fees and Taxes for such Vessel, (C) the amount of
Management Fees and Technical Advisor's Fees for such Vessel, (D) the amount of
fees and expenses of the Indenture Trustee and Collateral Trustee and
Designated Representative allocable to such Vessel and (E) an amount at least
equal to 30% of the estimated amounts, on a per annum basis, referred to in
clauses (B), (C) and (D) above for miscellaneous or unexpected expenses and
(iii) the Rating Agencies shall have confirmed in writing to the Indenture
Trustee that the terms and conditions of such proposed charter will not result
in the withdrawal or reduction of the then current ratings of the Term Mortgage
Notes.
"Acquisition Loans" means, for any Owner, the Term Loan and Serial Loans by
California Petroleum to such Owner.
"Allocated Principal Amount of the Serial Mortgage Notes" means, when used
with reference to the Serial Mortgage Notes relating to any Vessel at any time,
an aggregate principal amount of outstanding Serial Mortgage Notes equal to the
aggregate principal amount of Serial Loans of the related Owner then
outstanding.
"Allocated Principal Amount of the Term Mortgage Notes" means, when used with
reference to the Term Mortgage Notes relating to any Vessel at any time, an
aggregate principal amount of outstanding Term Mortgage Notes equal to the
aggregate principal amount of the Term Loans of the related Owner then
outstanding plus any payment of principal, if any, on such Term Loans since the
last date on which payment of principal on the Term Mortgage Notes was made.
"Allowable Investments" means for each Owner, its investment in the related
Vessel, and in each case, any Restricted Payment permitted to be made by such
Owner or California Petroleum and certain obligations incurred in the ordinary
course of the performance of the Management Agreement.
"Beneficial Owner" means a person owning a beneficial interest in Global
Note.
"Casualty Account" means the account established and maintained by the
Collateral Trustee into which any insurance proceeds or other payments in
connection with the occurrence of a Total Loss to any Vessel then subject to an
Initial Charter that has not reached its first optional termination date shall
be deposited in accordance with the related Mortgage.
"Charter Event of Default" means, for each Initial Charter, each of the
events designated as an event of default in such Initial Charter. For a
description of certain events constituting Charter Events of Default, see "The
Initial Charters--Charter Events of Default."
"Charter Period" means the period from the date of commencement of such
Initial Charter to the expiration or earlier termination of such Initial
Charter pursuant to the terms and conditions thereof.
"Chevron" means Chevron Corporation, a Delaware corporation.
"Chevron Transport" means Chevron Transport Corporation, a Liberian
corporation.
A-2
<PAGE>
"Chevron Guarantee" means for each Initial Charter, the guarantee of the
obligations of Chevron Transport thereunder given by Chevron.
"Collateral" shall have the meaning set forth in "Description of the Notes--
Security."
"Collateral Account" means the account established and maintained by the
Collateral Trustee into which the Collateral Trustee will deposit (i) any
proceeds received upon exercise of remedies with respect to the Collateral,
(ii) other amounts, with certain exceptions, received with respect to the
Collateral after receipt of an Enforcement Notice and (iii) any other amount
received by the Collateral Trustee pursuant to any of the Security Documents
for which the Collateral Agreement does not specify another Trust Account into
which such amount is to be deposited.
"Collateral Agreement" means the collateral trust agreement among the
Collateral Trustee, California Petroleum, the Indenture Trustee under the Term
Indenture and the Indenture Trustee under the Serial Indenture, pursuant to
which California Petroleum assigns and pledges to the Collateral Trustee all of
its right, title and interest in the Collateral for the benefit of the holders
of the Term Mortgage Notes and the Holders of the Serial Mortgage Notes.
"Collateral Trustee" means Chemical Trust Company of California, not in its
individual capacity but solely as Collateral Trustee under the Collateral
Agreement.
"Compulsory Acquisition" means requisition for title or other compulsory
acquisition of any Vessel (otherwise than by requisition for hire), capture,
seizure, condemnation, destruction, detention or confiscation of such Vessel by
any government or by persons acting or purporting to act on behalf of any
governmental authority.
"Default Period" means the period commencing on the due date of the
charterhire payment until such payment shall be paid in full.
"Default Rate" means a rate per annum for each day during the Default Period
until such payment shall be paid in full equal to 1.50% above LIBOR at the
commencement of such period.
"DTC" means The Depository Trust Company.
"Enforcement Notice" means a notice of an Indenture Event of Default
delivered to the Collateral Trustee and the Holders pursuant to the Serial
Indenture or the Term Indenture.
"Equity Account" means the account established and maintained by the
Collateral Trustee into which the Equity Remainder, if any, relating to each
Vessel will be deposited in accordance with the order of payments on each
Equity Transfer Date.
"Equity Remainder" means, for any Vessel on the applicable Payment Date for
so long as the Initial Charter with respect to such Vessel remains in effect,
the positive difference, if any, between (a) $100,000 and (b) the sum of (i)
the Management Fee and the Technical Advisor's Fee for such Vessel deposited
into the Operating Account on such Payment Date and the immediately preceding
Payment Date, (ii) the aggregate amount of Recurring Fees and Taxes for such
Vessel deposited into the Operating Account on such Payment Date and the
immediately preceding Payment Date and (iii) the allocable portion of the fees
and expenses of the Indenture Trustee and the Collateral Trustee and the
Designated Representative. On and after the termination of such Initial
Charter, the "Equity Remainder" for such Vessel on the applicable Payment Date
shall be zero.
"Equity Transfer Date" means the Payment Date scheduled to occur on of
each year, commencing , 1996.
"Holder" means the Person in whose name a Serial Mortgage Note is registered
in the securities register maintained by the Indenture Trustee.
A-3
<PAGE>
"Indentures" means the Serial Indenture and the Term Indenture, collectively.
"Indenture Event of Default" means each of the events designated as an event
of default under the Serial Indenture. For a description of certain events
constituting Indenture Events of Default, see "Description of the Notes--
Indenture Events of Default."
"Indenture Trustee" means Chemical Trust Company of California, not in its
individual capacity but solely as Indenture Trustee under the Serial Indenture
or the Term Indenture, or both, as the case may be.
"Initial Charter" means, for each Vessel, the bareboat charter between the
related Owner and Chevron Transport.
"Initial Charter Period" means for any Initial Charter the period from the
date of commencement of such Initial Charter to the expiration or earlier
termination of such Initial Charter pursuant to the terms and conditions
thereof.
"Initial Revenue Account" means, so long as the Serial Mortgage Notes are
outstanding, the account established and maintained by the Collateral Trustee
for deposits of charterhire payments by Chevron Transport under each Initial
Charter until the first optional termination date thereunder.
"LIBOR" means the rate calculated on the basis of the offered rates for
deposits in dollars for a month period which appear on the Reuters Screen LIBO
Page as of 11:00 A.M., London time, on the date that is two London Banking Days
preceding the date of calculation. If at least two such offered rates appear on
the Reuters Screen LIBO Page, LIBOR will be the arithmetic mean of such offered
rates (rounded to the nearest .0001 percentage point). If, at any time of
determination, the Reuters Screen LIBO Page is not available, LIBOR will be
calculated as the average (rounded upward, if necessary, to the next higher
1/16 of 1%) of the respective ratio per annum at which deposits in dollars for
a one month period are offered to each of three reference banks in the London
interbank market at approximately 11:00 A.M., London time, on the date that is
two London Banking Days preceding the date of calculation. Each of Chevron
Transport and the Collateral Trustee (as assignee of the Owner) will select a
reference bank and the third reference bank will be selected by Chevron
Transport and the Collateral Trustee together or, failing agreement, by the
previously selected reference banks together.
"Lien" means any mortgage, pledge, lien (statutory or other), charge,
encumbrance, lease, claim, security interest, hypothecation, assignment for
security, deposit arrangement or preference or other security agreement of any
kind or nature whatsoever.
"London Banking Day" means any day on which dealings in deposits in United
States dollars are carried on in the London interbank market and on which
commercial banks are open for domestic and international business (including
dealings in dollar deposits) in London and New York.
"Majority Noteholders" means the holders of a majority in aggregate principal
amount of the outstanding Notes.
"Majority Serial Noteholders" means the Holders of a majority in aggregate
principal amount of the outstanding Serial Mortgage Notes.
"Majority Term Noteholders" means the holders of a majority in aggregate
principal amount of the outstanding Term Mortgage Notes.
"Management Agreement" means, for each Owner, the management agreement
between such Owner, the Manager and Barber Ship Management.
"Management Fee" means the sum of (i) for each Vessel, an annual fee payable
to the Manager, semi-annually in arrears, which shall be an amount equal to
$13,625 per annum during the period from the Closing
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<PAGE>
Date to the third anniversary of the Closing Date plus (ii) a fee of $3,000 per
annum, payable annually in arrears, during such three-year period. Thereafter,
the Management Fee will be increased each year by an amount equal to 4%.
"Manager" means P.D. Gram & Co. a.s.
"Maturity Date" means, for any Serial Mortgage Notes, of the respective
year of maturity.
"Mortgage" means, for each Vessel, the first preferred ship mortgage on such
Vessel granted by the related Owner to California Petroleum and assigned by
California Petroleum to the Collateral Trustee.
"Mortgage Event of Default" means, for any Mortgage, each of the events
designated as an event of default in such Mortgage. For a description of
certain events constituting Mortgage Events of Default, see "The Mortgages--
Mortgage Events of Default."
"Notes" means the Serial Mortgage Notes together with the Term Mortgage
Notes.
"Operating Account" means the account established and maintained by the
Collateral Trustee into which the Recurring Fees and Expenses, the Management
Fee and the Technical Advisor's Fee relating to each Vessel will be deposited
in accordance with the order of payments for the applicable Payment Date.
"Owners" means, collectively, CalPetro Tankers (Bahamas I) Limited, CalPetro
Tankers (Bahamas II) Limited, CalPetro Tankers (IOM) Limited and CalPetro
Tankers (Bahamas III) Limited.
"Owner Taxes" means any income, franchise or equivalent tax, imposed upon or
measured by the net income, stated capital or earned surplus of an Owner by any
federal, state, local or other taxing authority of any jurisdiction worldwide,
or any tax imposed pursuant to Section 887 of the United States Internal
Revenue Code of 1986, as amended, or any taxes that result from the willful
misconduct or gross negligence of such Owner or from the inaccuracy or breach
of any representation, warranty or covenant of such Owner contained in certain
clauses of the related Initial Charter or in any document furnished in
connection with such clauses by such Owner, or any taxes that would not have
been imposed but for the failure of such Owner (a) to provide to Chevron
Transport (for filing by Chevron Transport with the taxing jurisdiction
imposing such taxes or retention in Chevron Transport's records) upon Chevron
Transport's timely request such certifications, information, documentation or
reports concerning such Owner's identity, jurisdiction of incorporation or
residency, or in connection with such taxing jurisdiction or (b) to promptly
file upon Chevron Transport's timely request such reports or returns (which
shall be prepared with reasonable care in accordance with Chevron Transport's
written instructions) claiming (or availing itself of) any applicable
extensions or exemptions (to the extent that timely notice thereof is provided
by Chevron Transport); provided that Owner Taxes shall not include any such tax
imposed on any amount that is (i) an indemnity or reimbursement of an Owner,
(ii) an operating or maintenance expense or (iii) a tax for which Chevron
Transport is otherwise liable under the related Initial Charter; and provided
further that Owner Taxes shall not include any such tax imposed by any
government, jurisdiction or taxing authority other than the United States
Federal government solely as a result of the location of the Vessel or the
Vessel's use by Chevron Transport.
"Payment Dates" means each and , commencing , 1995.
"Permitted Indebtedness" means for each Owner, (i) the obligations under such
Owner's Acquisition Loans, (ii) certain trade payables and expense accruals
incurred in the ordinary course and (iii) other indebtedness contemplated by
the Loan Agreements or any other Security Document.
"Permitted Investments" means any of the following: (a) direct general
obligations of, or obligations fully and unconditionally guaranteed as to the
timely payment of principal and interest by, the United States or any agency or
instrumentality thereof, provided such obligations are backed by the full faith
and credit of the
A-5
<PAGE>
United States, Federal Housing Administration debentures, FHLMC senior debt
obligations or FNMA senior debt obligations, but excluding any of such
securities whose terms do not provide for payment of a fixed dollar amount upon
maturity or call for redemption; (b) federal funds, certificates of deposit,
time and demand deposits and banker's acceptances (having original maturities
of not more than one year) of any bank or trust company incorporated under the
laws of the United States or any state thereof, provided that the short-term
debt obligations of such bank or trust company at the date of acquisitions
thereof have been rated at least "A-1" or "P-1" by Standard & Poor's and
Moody's respectively; (c) commercial paper (having original maturities of not
more than one year) rated at least "A-1" or "P-1" by Standard & Poor's and
Moody's, respectively; or (d) guaranteed investment contracts, investment
agreements or similar agreements rated at least "Aa" or "AA" by Moody's,
Standard & Poor's or Duff & Phelps, respectively, that are treated as
indebtedness for United States federal income tax purposes.
"Permitted Liens" means for each Owner, Liens created under the related
Mortgage and Security Documents, the Initial Charter for the related Vessel and
any Acceptable Replacement Charter or other charter for such Vessel permitted
under the Mortgage, Liens for crew's wages accrued for not more than three
months or for collision or salvage, Liens in favor of suppliers of necessaries
or other similar Liens arising in the ordinary course of its business (accrued
for not more than three months) or Liens for loss, damage or expense, which are
fully covered by insurance, in respect of which, a bond or other security has
been posted by the Owner with the appropriate court or other tribunal to
prevent the arrest or secure the release of any Vessel from arrest on account
of such claim or Lien; provided that, so long as the related Initial Charter is
in effect, "Permitted Liens" shall mean those Liens, claims and encumbrances
permitted under the Initial Charter.
"Rating Agencies" means Moody's Investors Service, Inc., Standard & Poor's
Rating Group and Duff & Phelps Credit Rating Co.
"Recurring Fees and Taxes" means, for any Vessel, any registration fees and
tonnage taxes necessary to maintain the documentation of the Vessel under the
laws of the registry or port of documentation of the Vessel, any periodic fees
necessary to maintain the corporate status of the related Owner, any filing or
other fees necessary to maintain the status of such Owner as a reporting
company under the Exchange Act and to comply with any covenants of such Owner
under the related Mortgage, any fees and expenses (including the cost of
insurance required by the related Mortgage and not maintained by the charterer
under the charter to which such Vessel is then subject) necessary to comply
with any covenants under the related Mortgage, any other fees and expenses
contemplated to be paid pursuant to the Management Agreement which the Manager
certifies to the Collateral Trustee are qualified to be paid thereunder and any
accounting or other professional fees and other expenses, including any fees
and expenses of the Rating Agencies, incurred in connection with the foregoing.
In addition, each Owner's Recurring Fees and Taxes will include a pro rata
portion of the fees and expenses, including any accounting, administrative or
other professional fees, necessary to maintain the registration of the Notes
under the Securities Act, to maintain the corporate status of California
Petroleum and the status of California Petroleum as a reporting company (if
necessary) under the Exchange Act, to pay any facilitation or management fees
and to comply with any covenants under the Indenture or the Collateral
Agreement.
"Restricted Payments" means the restriction imposed on (A) the Owners
prohibiting each Owner from (i) declaring or paying any dividend or other
distribution on any shares of its capital stock, (ii) making any loans or
advances to any affiliate of such Owner or (iii) purchasing, redeeming or
otherwise acquiring or retiring for value any shares of its capital stock
(each, a "Restricted Payment") unless, among other things, the Serial Mortgage
Notes shall have been repaid in full, and (B) California Petroleum prohibiting
it from making any Restricted Payments in excess of $15,000 per annum so long
as any Notes are outstanding.
"Second Revenue Account" means the account established and maintained by the
Collateral Trustee for deposits of charterhire payments under an Acceptable
Replacement Charter, other charter or Initial Charter (if such Initial Charter
continues in effect after the Allocated Principal Amount of the Serial Mortgage
Notes relating to the related Vessel have been paid in full), as the case may
be.
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<PAGE>
"Security Documents" means, for each Vessel and Owner, the Loan Agreements,
the Mortgage, the Assignment of Initial Charter, the Assignment of Earnings and
Insurances, the Assignment of Initial Charter Guarantee, the Assignment of
Management Agreement, the Issue of One Debenture, the Stock Pledge, the
Assignment of Vessel Purchase Agreement,and any additional security agreement,
assignment or mortgage document entered into by any Owner or its shareholder
from time to time in connection with such Owner's Loan Agreements.
"Serial Indenture" means the indenture among California Petroleum, the
Indenture Trustee and, solely for purposes of the Trust Indenture Act, Chevron,
pursuant to which the Serial Mortgage Notes will be issued.
"Serial Loan Agreement" means, for any Owner, one of two loan agreements
pursuant to which California Petroleum will loan to such Owner a portion of the
proceeds of the sale of the Notes.
"Serial Loans" means, for any Owner, the series of loans, each of which will
correspond in maturity date and interest rate with the Serial Mortgage Notes of
a specific maturity date, to and including the first optional termination date
for the related Initial Charter, made by California Petroleum to such Owner
under the related Serial Loan Agreement.
"Serial Mortgage Notes" means the Serial First Preferred Term Mortgage Notes
which will mature serially from , 1996 to , 2006 issued in the initial
aggregate amount of $167,500,000 concurrently with the offering of the Term
Mortgage Notes.
"Sinking Fund Reserve Account" means the account established and maintained
by the Collateral Trustee for deposits on each Payment Date that is not a
sinking fund redemption date or a date for the payment of principal on the Term
Mortgage Notes of an amount, if any, equal to one-half of the aggregate sinking
fund redemption amount or amount of principal due and payable on the Term
Mortgage Notes on the next succeeding Payment Date.
"Stipulated Loss Value" means, for any Vessel on any date, the amount
specified in the related Initial Charter as the "Stipulated Loss Value" for
such date, which amount will be at least sufficient to redeem in full the
Allocated Principal Amount of Notes for such Vessel.
"Technical Advisor's Fee" means, for each Vessel, an annual fee payable to
Barber Ship Management, semi-annually in arrears, which shall be an amount
equal to $10,000 per annum during the period from the Closing Date to the third
anniversary of the Closing Date. Thereafter, the Technical Advisor's Fee will
be increased each year by an amount equal to 4%.
"Term Indenture" means the indenture between California Petroleum and the
Indenture Trustee pursuant to which the Term Mortgage Notes will be issued.
"Term Loan Agreement" means, for any Owner, one of two loan agreements
pursuant to which California Petroleum will loan to such Owner a portion of the
proceeds of the sale of the Notes.
"Term Loans" means, for any Owner, the loan made by California Petroleum to
such Owner under the related Term Loan Agreement, which will accrue interest at
the same rate as the Term Mortgage Notes, and
A-7
<PAGE>
upon which payments of principal and interest will be scheduled to coincide
with principal Payment Dates for the Term Mortgage Notes.
"Term Mortgage Notes" means % First Preferred Mortgage Notes Due 2015 issued
in the initial aggregate amount of $117,900,000 by California Petroleum
concurrently with the offering of the Serial Mortgage Notes.
"Term Mortgage Notes Maturity Date" means , 2015.
"Termination Account" means the account established and maintained by the
Collateral Trustee for deposits of the Termination Payment payable under the
Initial Charter for such Owner's Vessel by Chevron Transport.
"Termination Payment" means the payment that Chevron Transport is required to
make pursuant to the applicable Initial Charter if Chevron Transport elects to
terminate the Initial Charter for any Vessel on a specified termination date.
"Total Loss" means (a) an actual or constructive or compromised or arranged
total loss of a Vessel, (b) a Compulsory Acquisition of a Vessel or (c) if so
declared by Chevron Transport at any time and in its sole discretion a
requisition for hire of the Vessel for a period in excess of 180 days.
"Trust Accounts" means the Initial Revenue Account, the Second Revenue
Account, the Termination Account, the Operating Account, the Equity Account,
the Casualty Account, the Collateral Account and the Sinking Fund Reserve
Account which will be maintained by the Collateral Trustee as collateral agent
for the benefit of the holders of the Term Mortgage Notes and the Holders of
the Serial Mortgage Notes in accordance with the Collateral Agreement.
"Trust Funds" means the funds deposited in the Trust Accounts.
"Vessels" means, collectively, the Suezmax-size tankers S. Ginn, C. Rice,
Chevron Mariner and W.E. Crain.
A-8
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRE-
SENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, AND IF GIVEN OR MADE,
SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AU-
THORIZED BY CALIFORNIA PETROLEUM, CHEVRON TRANSPORT, CHEVRON, THE OWNERS OR THE
UNDERWRITER. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICI-
TATION OF AN OFFER TO BUY ANY SECURITIES OTHER THAN THOSE TO WHICH IT RELATES
OR AN OFFER TO ANY PERSON IN ANY JURISDICTION WHERE SUCH OFFERS WOULD BE UNLAW-
FUL. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE HEREUNDER SHALL UNDER
ANY CIRCUMSTANCES CREATE ANY IMPLICATION THAT THE INFORMATION CONTAINED HEREIN
IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF.
---------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
Available Information..................................................... 4
Incorporation of Certain Documents by Reference........................... 5
Enforceability of Civil Liabilities....................................... 6
Prospectus Summary........................................................ 7
Investment Considerations................................................. 16
Use of Proceeds........................................................... 17
Capitalization of Chevron................................................. 18
Selected Financial Data of Chevron........................................ 19
Summarized Financial Data of Chevron Transport............................ 19
Capitalization of California Petroleum.................................... 20
Selected Financial and Pro Forma Data of California Petroleum............. 21
Management's Discussion and Analysis of Financial Condition of California
Petroleum and the Owners................................................. 23
Chevron Transport and Chevron............................................. 25
California Petroleum and the Owners....................................... 26
Business.................................................................. 27
Management................................................................ 30
Certain Relationships and Transactions.................................... 32
Description of the Notes.................................................. 33
The Mortgages............................................................. 53
The Initial Charters...................................................... 61
Underwriting.............................................................. 68
Ratings................................................................... 68
Legal Matters............................................................. 69
Experts................................................................... 69
Index to Financial Statements............................................. F-1
Appendix A
Definitions of Shipping Terms............................................ A-1
Glossary................................................................. A-2
</TABLE>
---------------
UNTIL , 1995 (90 DAYS AFTER THE COMMENCEMENT OF THE OFFERING OF THE SERIAL
MORTGAGE NOTES), ALL DEALERS EFFECTING TRANSACTIONS IN THE SERIAL MORTGAGE
NOTES, WHETHER OR NOT PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO
DELIVER A PROSPECTUS. THIS DELIVERY REQUIREMENT IS IN ADDITION TO THE OBLIGA-
TIONS OF DEALERS TO DELIVER A PROSPECTUS WHEN ACTING AS UNDERWRITERS AND WITH
RESPECT TO THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
$167,500,000
CALIFORNIA PETROLEUM TRANSPORT CORPORATION
SERIAL FIRST PREFERRED MORTGAGE NOTES
MATURING SERIALLY FROM 1996 TO 2006
Payable from Charterhire Payments by
CHEVRON TRANSPORT CORPORATION
Whose Charter Obligations are Guaranteed by
CHEVRON CORPORATION
LOGO CHEVRON
---------------
PROSPECTUS
---------------
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
, 1995
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
Expenses in connection with the issuance and distribution of the securities
being registered, other than underwriting discounts and commissions, are
estimated as follows:
<TABLE>
<S> <C>
SEC registration fee........................................... $58,103.86
Blue Sky and legal investment fees and expenses................ 6,362
Printing and engraving expenses................................ 38,175
Legal fees and expenses........................................ 101,799
Rating agency fees............................................. 44,537
Accountants' fees and expenses................................. 17,306
Trustee's fees and expenses.................................... 1,527
Miscellaneous costs............................................ 32,190
----------
Total........................................................ $ 300,000*
==========
</TABLE>
- --------------------
* The Serial Mortgage Notes are being registered concurrently with the Term
Mortgage Notes (Registration Statement No. 33-79220). The expenses listed
above, other than the SEC registration fee, have been allocated to the Serial
Mortgage Notes based on (i) the total amount of expenses to be paid by
California Petroleum in connection with the issuance of the Notes multiplied
by (ii) the aggregate principal amount of the Serial Mortgage Notes over the
total aggregate principal amount of the Notes.
All of the expenses listed in the table above will be paid by California
Petroleum. This table does not include (i) $316,119 of additional expenses
incurred in connection with the issuance and distribution of the Serial
Mortgage Notes to be paid by others and (ii) $117,380 of estimated legal fees
and expenses and $49,887 of estimated accounting fees and expenses to be paid
by Chevron; such fees and expenses have been allocated to the Serial Mortgage
Notes in the manner described above.
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
CHEVRON TRANSPORT
Article N of Chevron Transport's Certificate of Incorporation, as amended,
provides as follows:
"N. The Corporation shall indemnify its directors or officers, or former
directors or officers, or any person who may have served at its request as
a director or officer of another corporation in which it owns shares of
capital stock or of which it is a creditor, against expenses actually and
necessarily incurred by them in connection with the defense of any action,
suit or proceeding in which they, or any of them, are made parties, or a
party by reason of being or having been directors or officers of the
Corporation, except in relation to matters as to which any such director or
officer or person shall be adjudged in such action, suit or proceeding to
be liable for negligence or misconduct in performance of duty. Such
indemnification shall not be deemed exclusive of any other rights to which
those indemnified may be entitled, under any by-law, agreement, vote of
stockholders or otherwise."
Chevron Transport is a corporation organized under the laws of the Republic
of Liberia. Section 6.13 of the Liberian Business Corporation Act of 1976
provides that a Liberian corporation shall have the power to indemnify any
person who was or is a party or is threatened to made a party to any
threatened, pending or completed action, suit or proceeding whether civil,
criminal, administrative or investigative (other than an action by or in the
right of the corporation) by reason of the fact that he is or was a director or
officer of the corporation, or is or was serving at the request of the
corporation as a director or officer of another corporation, partnership, joint
venture, trust or other enterprise, against expenses (including attorneys'
fees),
II-1
<PAGE>
judgments, fines and amounts paid in settlement actually and reasonably
incurred by him in connection with such action, suit or proceeding if he acted
in good faith and in a manner he reasonably believed to be in or not opposed to
the best interests of the corporation, and, with respect to any criminal action
or proceeding, had no reasonable cause to believe his conduct was unlawful. The
termination of any action, suit or proceeding by judgment, order, settlement,
conviction, or upon a plea of no contest, or its equivalent, shall not, of
itself, create a presumption that the person did not act in good faith and in a
manner which he reasonably believed to be in or not opposed to the best
interests of the corporation, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his conduct was unlawful. A
Liberian corporation also has the power to indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action or suit by or in the right of the corporation to procure a
judgment in its favor by reason of the fact that he is or was a director or
officer of the corporation, or is or was serving at the request of the
corporation as a director or officer of another corporation, partnership, joint
venture, trust or other enterprise against expenses (including attorneys' fees)
actually and reasonably incurred by him or in connection with the defense or
settlement of such action or suit if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
corporation and except that no indemnification shall be made in respect of any
claim, issue or matter as to which such person shall have been adjudged to be
liable for negligence or misconduct in the performance of its duty to the
corporation unless and only to the extent that the court in which such action
or suit was brought shall determine upon application that, despite the
adjudication of liability but in view of all the circumstances of the case,
such person is fairly and reasonably entitled to indemnity for such expense
which the court shall deem proper.
To the extent that a director or officer of a Liberian corporation has been
successful on the merits or otherwise in defense of any action, suit or
proceeding referred to in the preceding paragraph, or in the defense of a
claim, issue or matter therein, he shall be indemnified against expenses
(including attorneys' fees) actually and reasonably incurred by him in
connection therewith. Expenses incurred in defending a civil or criminal
action, suit or proceeding may be paid in advance of the final disposition of
such action, suit or proceeding as authorized by the board of directors in the
specific case upon receipt of an undertaking by or on behalf of the director or
officer to repay such amount unless it shall ultimately be determined that he
is entitled to be indemnified by the corporation as authorized in this section.
In addition, a Liberian corporation has the power to purchase and maintain
insurance on behalf of any person who is or was a director or officer of the
corporation or is or was serving at the request of the corporation as a
director or officer against any liability asserted against him and incurred by
him in such capacity whether or not the corporation would have the power to
indemnify him against such liability under the provisions of Section 6.13.
CHEVRON
Article IX of Chevron's restated Certificate of Incorporation provides as
follows:
1. A director of the Corporation shall not be liable to the Corporation
or its stockholders for monetary damages for breach of fiduciary duty as a
director, except for liability (a) for any breach of the director's duty of
loyalty to the Corporation or its stockholders; (b) for acts or omissions
not in good faith or which involve intentional misconduct or a knowing
violation of law; (c) pursuant to section 174 of the Corporation Law; or
(d) for any transaction from which the director derived an improper
personal benefit.
2. To the fullest extent authorized by the Corporation Law, the
Corporation shall indemnify any Corporate Servant who was or is a party or
is threatened to be made a party to any proceeding by reason of the fact
that such person was or is a Corporate Servant.
3. In serving or continuing to serve the Corporation, a Corporate Servant
is entitled to rely and shall be presumed to have relied on the rights
granted pursuant to the foregoing provisions of this Article IX, which
shall be enforceable as contract rights and inure to the benefit of heirs,
executors and administrators of the Corporate Servant; and no repeal or
modification of the foregoing provisions of this Article IX shall adversely
affect any right existing at the time of such repeal or modification.
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<PAGE>
4. The Board of Directors is authorized, to the extent permitted by the
Corporation Law, to cause the Corporation to pay expenses incurred by
Corporate Servants in defendant Proceedings and to purchase and maintain
insurance on their behalf whether or not the Corporation would have the
power to indemnify them under the provisions of this Article IX or
otherwise.
5. Any right or privilege conferred by or pursuant to the provisions of
this Article IX shall not be exclusive of any other rights to which any
Corporate Servant may otherwise be entitled.
6. As used in this Article IX:
(a) "Corporate Servant" means any natural person who is or was a
director, officer, employee or agent of the Corporation, or is or was
serving at the request of the Corporation as a director, officer,
manager, partner, trustee, employee or agent of another corporation,
partnership, joint venture, trust or other organization or enterprise,
nonprofit or otherwise, including an employee benefit plan;
(b) "Corporation Law" means the General Corporation Law of the State
of Delaware, as from time to time amended;
(c) "indemnify" means to hold harmless against expenses (including
attorneys' fees), judgments, fines (including excise taxes assessed
with respect to an employee benefit plan) and amounts paid in
settlement actually and reasonably incurred by the Corporate Servant in
connection with a Proceeding;
(d) "Proceeding" means any threatened, pending or completed action,
suit or proceeding, whether civil, criminal or administrative; and
(e) "request of the Corporation" includes any written authorization
by an officer of the Corporation."
Section 145 of the General Corporation Law of the State of Delaware, in which
Chevron is incorporated, permits, subject to certain conditions, the
indemnification of directors or officers of a Delaware corporation for expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement
incurred in connection with the defense of any action, suit or proceeding in
relation to certain matters against them as such directors or officers.
The directors and officers of Chevron are covered by policies of insurance
under which they are insured, within limits and subject to limitations, against
certain expenses in connection with the defense of actions, suits or
proceedings, and certain liabilities which might be imposed as a result of such
actions, suits or proceedings, in which they are parties by reason of being or
having been directors or officers; Chevron is similarly insured with respect to
certain payments it might be required to make to its directors or officers
under the applicable statutes and Chevron's by-law provisions.
CALIFORNIA PETROLEUM
California Petroleum is a corporation organized under the General Corporation
Law of the State of Delaware. Reference is made to Section 145 of the Delaware
General Corporation Law as to indemnification by California Petroleum of
officers and directors.
Section II of the Certificate of Incorporation of California Petroleum
provides for indemnification of directors and officers as follows:
"11. This corporation shall, to the maximum extent permitted from time to
time under the law of the State of Delaware, indemnify and upon request
shall advance expenses to any person who is or was a party or is threatened
to be made a party to any threatened, pending or completed action, suit,
proceeding or claim, whether civil, criminal, administrative or
investigative, by reason of the fact that such person is or was or has
agreed to be a director or officer of this corporation or while a director
or officer is or was serving at the request of this corporation as a
director, officer, partner, trustee, employee or agent of any corporation,
partnership, joint venture, trust or other enterprise, including service
with respect to employee benefit plans, against expenses (including
attorney's fees and expenses), judgments, fines, penalties and amounts paid
in settlement incurred in connection with the investigation, preparation
II-3
<PAGE>
to defend or defense of such action, suit, proceeding or claim; provided,
however, that the foregoing shall not require this corporation to indemnify
or advance expenses to any person in connection with any action, suit,
proceeding, claim or counterclaim initiated by or on behalf of such person.
Such indemnification shall not be exclusive of other indemnification rights
arising under any by-law, agreement, vote of directors or stockholders or
otherwise and shall inure to the benefit of the heirs and legal
representatives of such person. Any person seeking indemnification under
this paragraph 11 shall be deemed to have met the standard of conduct
required for such indemnification unless the contrary shall be established.
Any repeal or modification of the foregoing provisions of this paragraph 11
shall not adversely affect any right or protection of a director or officer
of this corporation with respect to any acts or omissions of such director
or officer occurring prior to such repeal or modification."
CALPETRO BAHAMAS I, CALPETRO BAHAMAS II AND CALPETRO BAHAMAS III
Each of CalPetro Bahamas I, CalPetro Bahamas II and CalPetro Bahamas III is a
company organized under the laws of the Commonwealth of the Bahamas.
Section 7 of the International Business Act 1989 provides that "no member,
director, officer, agent or liquidator of a company incorporated under this Act
shall be liable for any debt, obligation or default of the company unless it is
proved that he did not act in good faith or unless it is specifically provided
in this Act or in any other law for the time being in force in The Bahamas and
except in so far as he may be liable for his own conducts or acts".
Section 56 of the Act further states that:
"(1) Subject to subsection (2) and any limitation in its Memorandum or
Articles, a company incorporated under this Act may indemnify against all
expenses, including legal fees, and against all judgments, fines and
amounts paid in settlement and reasonably incurred in connection with
legal, administrative or investigative proceedings any person who:--
(a) is or was a party or is threatened to be made a party to any
threatened, pending or completed proceedings, whether civil, criminal,
administrative or investigative, by reason of the fact that the person
is or was a director, an officer or a liquidator of the company; or
(b) is or was, at the request of the company, serving as a director,
officer or liquidator of, or in any other capacity is or was acting
for, another company or a partnership, joint venture, trust or other
enterprise.
(2) Subsection (1) only applies to a person referred to in that
subsection if the person acted honestly and in good faith with a view to
the best interests of the company and, in the case of criminal proceedings,
the person had no reasonable cause to believe that his conduct was
unlawful.
(3) The decision of the directors as to whether the person acted honestly
and in good faith and with a view to the best interests of the company and
as to whether the person has no reasonable cause to believe that his
conduct was unlawful is, in the absence of fraud, sufficient for the
purposes of this section, unless a question of law is involved.
(4) The termination of any proceedings by any judgment, order,
settlement, conviction or the entering of a nolle prosequi does not, by
itself, create a presumption that the person did not act honestly and in
good faith and with a view to the best interests of the company or that the
person had reasonable cause to believe that his conduct was unlawful.
(5) If a person referred to in subsection (1) has been successful in
defense of any proceedings referred to in subsection (1), the person is
entitled to be indemnified against all expenses, including legal fees, and
against all judgments, fines and amounts paid in settlement and reasonably
incurred by the person in connection with the proceedings."
Articles 90-95 of the Articles of Association of [CalPetro Bahamas I]
[CalPetro Bahamas II] [CalPetro Bahamas III] provides for indemnification of
directors and officers as follows:
"90. Subject to Article 91 the Company may indemnify against all expenses
including legal fees, and against all judgements, fines and amounts paid in
settlement and reasonably incurred in connection with legal, administrative
or investigative proceedings any person who:--
II-4
<PAGE>
(a) is or was a party or is threatened to be made a party to any
threatened, pending or completed proceedings, whether civil, criminal,
administrative or investigative, by reason of the fact that the person
is or was a director, an officer or liquidator of the Company; or
(b) is or was, at the request of the Company, serving as a director,
officer or liquidator of, or in any other capacity is or was acting
for, another company or a partnership, joint venture, trust or other
enterprise.
91. Article 90 only applies to a person referred to in that Article if
the person acted honestly and in good faith with a view to the best
interests of the Company and, in the case of criminal proceedings, the
person had no reasonable cause to believe that his conduct was unlawful.
92. The decision of the directors as to whether the person acted honestly
and in good faith and with a view to the best interest of the Company and
as to whether the person had no reasonable cause to believe that his
conduct was unlawful, is in the absence of fraud, sufficient for the
purposes of these Articles, unless a question of law is involved.
93. The termination of any proceedings by any judgement, order,
settlement, convictions or the entering of a nolle prosequi does not, by
itself, create a presumption that the person did not act honestly and in
good faith and with a view to the best interest of the Company or that the
person had reasonable cause to believe that his conduct was unlawful.
94. If a person referred to in Article 90 has been successful in defence
of any proceedings referred to in that Article the person is entitled to be
indemnified against all expenses, including legal fees, and against all
judgements, fines and amounts paid in settlement and reasonably incurred by
the person in connection with the proceedings.
95. The Company may purchase and maintain insurance in relation to any
person who is or was a director, an officer or a liquidator of the Company,
or who at the request of the Company is or was serving as a director, an
officer or a liquidator of, or in any other capacity is or was acting for,
another company or a partnership, joint venture, trust or other enterprise,
against any liability asserted against the person and incurred by the
person in that capacity, whether or not the Company has or would have had
the power to indemnify the person against the liability under Article 90."
CALPETRO IOM
CalPetro Tankers (IOM) Limited is a corporation incorporated under the laws
of the Isle of Man. Section 151 of the Isle of Man Companies Act 1931 provides
that any provision (whether contained in the articles of association of the
corporation or elsewhere) exempting any director, officer or auditor (together
"Officer") or indemnifying him against any liability which would attach to him
in relation to any negligence, default, breach of duty or breach of trust is
void. However, Section 151 also provides that an Isle of Man corporation may
indemnify any Officer against any liability incurred by him in defending any
proceedings, whether civil or criminal, in which judgment is given in his
favour or in which he is acquitted or in connection with any application under
Section 337 of the Companies Act 1931 in which relief is granted by the Court.
Section 337 provides that if in any proceedings for negligence, default, breach
of duty or breach of trust against any Officer it appears to the court hearing
the case that person is or may be liable in respect of the negligence, default,
breach of duty or breach of trust, but that he has acted honestly and
reasonably and that having regard to all the circumstances of the case,
including those connected with his appointment, he ought fairly be excused,
that court may relieve him either wholly or partly from his liability on such
terms as the court thinks fit. Additionally, under Section 337, where any
Officer has reason to believe that any claim will or might be made against him,
he may apply to court for relief as if an action had already been brought
against him.
An Isle of Man corporation has the power to purchase and maintain insurance
on behalf of an Officer against any liability alleged against him for
negligence, default, breach of duty or breach of trust.
II-5
<PAGE>
Article 146 of the Articles of Association of CalPetro IOM provides for
indemnification of directors and officers as follows:
"146. Every director or other officer of the Company shall be entitled to
be indemnified out of the assets of the Company against all losses or
liabilities (including any such liability as is mentioned in paragraph (c)
of the proviso to Section 151 of the Companies Act, 1931) which he may
sustain or incur in or about the execution of the duties of his office or
otherwise in relation thereto, and no director or other officer shall be
liable for any loss, damage or misfortune which may happen to or be
incurred by the Company in the execution of the duties of his office or in
relation thereto, but this Article shall only have effect in so far as its
provisions are not avoided by the said section.
The directors may execute, in the name on or behalf of the Company, in
favour of any director or other person who may incur or be about to incur
any personal liability for the benefit of the Company such debentures or
mortgages of the company's property (present and future) as they think fit,
and such mortgages may contain a power of sale and such other powers,
covenants and provisions as shall be agreed upon."
The effectiveness of such article is subject to the provisions of Section 151
of the Isle of Man Companies Act 1931 as set out above.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.
Not Applicable.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULE.
(a) Exhibits
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
1.1 Form of Underwriting Agreement
3.1 Certificate of Incorporation of California Petroleum Transport
Corporation (filed as Exhibit 3.1 to Registrant's Registration
Statement on Form S-1, Commission File Number 33-79220, and
incorporated herein by reference)*
3.2 Bylaws of California Petroleum Transport Corporation (filed as Exhibit
3.2 to Registrant's Registration Statement on Form S-1, Commission
File Number 33-79220, and incorporated herein by reference)*
3.3 Certificate of Incorporation and Memorandum of Association of CalPetro
Tankers (Bahamas I) Limited (filed as Exhibit 3.3 to Registrant's
Registration Statement on Form F-1, Commission File Number 33-79220,
and incorporated herein by reference)*
3.4 Articles of Association of CalPetro Tankers (Bahamas I) Limited (filed
as Exhibit 3.4 to Registrant's Registration Statement on Form F-1,
Commission File Number 33-79220, and incorporated herein by
reference)*
3.5 Certificate of Incorporation and Memorandum of Association of CalPetro
Tankers (Bahamas II) Limited (filed as Exhibit 3.5 to Registrant's
Registration Statement on Form F-1, Commission File Number 33-79220,
and incorporated herein by reference)*
3.6 Articles of Association of CalPetro Tankers (Bahamas II) Limited
(filed as Exhibit 3.6 to Registrant's Registration Statement on Form
F-1, Commission File Number 33-79220, and incorporated herein by
reference)*
</TABLE>
II-6
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
3.7 Certificate of Incorporation of CalPetro Tankers (IOM) Limited (filed
as Exhibit 3.7 to Registrant's Registration Statement on Form F-1,
Commission File Number 33-79220, and incorporated herein by
reference)*
3.8 Memorandum and Articles of Association of CalPetro Tankers (IOM)
Limited (filed as Exhibit 3.8 to Registrant's Registration Statement
on Form F-1, Commission File Number 33-79220, and incorporated herein
by reference)*
3.9 Certificate of Incorporation and Memorandum of Association of CalPetro
Tankers (Bahamas III) Limited (filed as Exhibit 3.9 to Registrant's
Registration Statement on Form F-1, Commission File Number 33-79220,
and incorporated herein by reference)*
3.10 Articles of Association of CalPetro Tankers (Bahamas III) Limited
(filed as Exhibit 3.10 to Registrant's Registration Statement on Form
F-1, Commission File Number 33-79220, and incorporated herein by
reference)*
4.1 Form of Serial Indenture between California Petroleum Transport
Company and Chemical Trust Company of California, as Indenture Trustee
4.2 Form of Serial Mortgage Notes (included in Exhibit 4.1)
4.3 Form of First Preferred Ship Mortgage by [CalPetro Tankers (Bahamas
III) Limited] [CalPetro Tankers (IOM) Limited] to California Petroleum
Transport Corporation (including the form of assignment of such
Mortgage to Chemical Trust Company of California, as Collateral
Trustee by California Petroleum Transport Corporation)
4.4 Form of Bahamian Statutory Ship Mortgage and Deed of Covenants by
[CalPetro Tankers (Bahamas I) Limited] [CalPetro Tankers (Bahamas II)
Limited] to California Petroleum Transport Corporation (including the
form of assignment of such Mortgage to Chemical Trust Company of
California, as Collateral Trustee by California Petroleum Transport
Corporation)
4.5 Form of Bermudian Statutory Ship Mortgage and Deed of Covenants by
CalPetro Tankers (IOM) Limited to California Petroleum Transport
Corporation (including the form of assignment of such Mortgage to
Chemical Trust Company of California, as Collateral Trustee by
California Petroleum Transport Corporation)**
4.6 Form of Stock Pledge Agreement*
4.7 Form of Assignment of Initial Charter Guarantee by [CalPetro Tankers
(Bahamas I) Limited] [CalPetro Tankers (Bahamas II) Limited] [CalPetro
Tankers (IOM) Limited] [CalPetro Tankers (Bahamas III) Limited] to
California Petroleum Transport Corporation (including the form of
Collateral Assignment of such Initial Charter Guarantee to Chemical
Trust Company of California, as Collateral Trustee by California
Petroleum Transport Corporation)
4.8 Form of Assignment of Earnings and Insurances from [CalPetro Tankers
(Bahamas I) Limited] [CalPetro Tankers (Bahamas II) Limited] [CalPetro
Tankers (IOM) Limited] [CalPetro Tankers (Bahamas III) Limited] to
California Petroleum Transport Corporation*
4.9 Form of Assignment of Initial Charter from [CalPetro Tankers (Bahamas
I) Limited] [CalPetro Tankers (Bahamas II) Limited] [CalPetro Tankers
(IOM) Limited] [CalPetro Tankers (Bahamas III) Limited] to California
Petroleum Transport Corporation (including the form of Collateral
Assignment of such Initial Charter to Chemical Trust Company of
California, as Collateral Trustee by California Petroleum Transport
Corporation)
</TABLE>
II-7
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
4.10 Form of Management Agreement between P.D. Gram & Co., and [CalPetro
Tankers (Bahamas I) Limited] [CalPetro Tankers (Bahamas II) Limited]
[CalPetro Tankers (IOM) Limited] [CalPetro Tankers (Bahamas III)
Limited]
4.11 Form of Assignment of Management Agreement from [CalPetro Tankers
(Bahamas I) Limited] [CalPetro Tankers (Bahamas II) Limited] [CalPetro
Tankers (IOM) Limited] [CalPetro Tankers (Bahamas III) Limited] to
California Petroleum Transport Corporation*
4.12 Form of Serial Loan Agreement between California Petroleum Transport
Corporation and [CalPetro Tankers (Bahamas I) Limited] [CalPetro
Tankers (Bahamas II) Limited] [CalPetro Tankers (IOM) Limited]
[CalPetro Tankers (Bahamas III) Limited]*
4.13 Form of Term Loan Agreement between California Petroleum Transport
Corporation and [CalPetro Tankers (Bahamas I) Limited] [CalPetro
Tankers (Bahamas II) Limited] [CalPetro Tankers (IOM) Limited]
[CalPetro Tankers (Bahamas III) Limited]
4.14 Form of Collateral Agreement between California Petroleum Transport
Corporation, [CalPetro Tankers (Bahamas I) Limited] [CalPetro Tankers
(Bahamas II) Limited] [CalPetro Tankers (IOM) Limited] [CalPetro
Tankers (Bahamas III) Limited], the Indenture Trustee under the Serial
Indenture, the Indenture Trustee under the Term Indenture and Chemical
Trust Company of California, as Collateral Trustee
4.15 Form of Issue of One Debenture From [CalPetro Tankers (Bahamas I)
Limited] [CalPetro Tankers (Bahamas II) Limited] [CalPetro Tankers
(IOM) Limited] [CalPetro Tankers (Bahamas III) Limited] to California
Petroleum Transport Corporation
5.1 Opinion of Thacher Proffitt & Wood regarding the legality of the
Serial Mortgage Notes
10.1 Form of Initial Charter Guarantee by Chevron Corporation*
10.2 Form of Bareboat Charter between [CalPetro Tankers (Bahamas I)
Limited] [CalPetro Tankers (Bahamas II) Limited] [CalPetro Tankers
(IOM) Limited] [CalPetro Tankers (Bahamas III) Limited] and Chevron
Transport Corporation
10.3 Form of Vessel Purchase Agreement between [CalPetro Tankers (Bahamas
I) Limited] [CalPetro Tankers (Bahamas II) Limited] [CalPetro Tankers
(IOM) Limited] [CalPetro Tankers (Bahamas III) Limited] and Chevron
Transport Corporation (including the form of Assignment of such Vessel
Purchase Agreement to California Petroleum Transport Corporation by
[CalPetro Tankers (Bahamas I) Limited] [CalPetro Tankers (Bahamas II)
Limited] [CalPetro Tankers (IOM) Limited] [CalPetro Tankers (Bahamas
III) Limited])*
10.4 Designated Representative Agreement
23.1 Consent of Thacher Proffitt & Wood (included in Exhibit 5.1)
23.2 Consent of Price Waterhouse LLP, independent accountants, for Form S-3
23.3 Consent of KPMG Peat Marwick LLP, independent accountants, for Form S-
3
23.4 Consent of Price Waterhouse LLP, independent accountants, for Form S-1
23.5 Consent of Price Waterhouse, chartered accountants, for Form F-1
23.6 Consent of McKinney, Bancroft & Hughes*
23.7 Consent of Cains*
24.1 Powers of Attorney for directors and certain officers of Chevron
Corporation*
24.2 Powers of Attorney for directors and certain officers of Chevron
Transport Corporation*
24.3 Powers of Attorney for directors and certain officers of CalPetro
Tankers (Bahamas I) Limited*
</TABLE>
II-8
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
24.4 Powers of Attorney for directors and certain officers of CalPetro
Tankers (Bahamas II) Limited*
24.5 Powers of Attorney for directors and certain officers of CalPetro
Tankers (IOM) Limited*
24.6 Powers of Attorney for directors and certain officers of CalPetro
Tankers (Bahamas III) Limited*
24.7 Certified copy of resolutions of Chevron Corporation authorizing
signature pursuant to power of attorney*
25.1 Statement of Eligibility on Form T-1 of Chemical Trust Company of
California, as Indenture Trustee*
</TABLE>
- --------------------
*Previously filed.
**No longer applicable.
(b) Financial Statement Schedules
All schedules for which provision is made in the applicable accounting
regulations of the commission are either not required, are inapplicable or have
been disclosed in the notes to the consolidated financial statements and
therefore have been omitted.
ITEM 17. UNDERTAKINGS.
Insofar as indemnifications for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrant or co-registrants pursuant to the foregoing provisions or otherwise,
the registrant and co-registrants have been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the registrants of expenses incurred or paid by a director, officer
or controlling person of the registrant or co-registrants in the successful
defense of any action, suit or proceeding) is asserted by such director,
officer or controlling person in connection with the securities being
registered, the registrant or co-registrants will, unless in the opinion of
their respective counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
The undersigned registrants hereby undertake that:
(1) For purposes of determining any liability under the Securities Act of
1933, the information omitted from the form of the prospectus filed as part
of this registration statement in reliance upon Rule 430A and contained in
a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act shall be deemed to be part of this
registration statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities Act
of 1933, each post-effective amendment that contains a form of prospectus
shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
Chevron Corporation hereby undertakes that, for purposes of determining any
liability under the Securities Act of 1933, each filing of Chevron
Corporation's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
II-9
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, CHEVRON
CORPORATION CERTIFIES THAT IT HAS REASONABLE GROUNDS TO BELIEVE THAT IT MEETS
ALL OF THE REQUIREMENTS FOR FILING ON FORM S-3 AND HAS DULY CAUSED THIS
AMENDMENT NO. 1 TO THE REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE
UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY AND COUNTY OF SAN
FRANCISCO, STATE OF CALIFORNIA, ON THE 10TH DAY OF MARCH, 1995.
Chevron Corporation
/s/ Kenneth T. Derr*
By: _________________________________
KENNETH T. DERR
Chairman of the Board and Chief
Executive Officer
/s/ Malcolm J. McAuley
By: _________________________________
MALCOLM J. MCAULEY
(Attorney-in-fact)
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS AMENDMENT
NO. 1 TO THE REGISTRATION STATEMENT HAS BEEN SIGNED BELOW BY THE FOLLOWING
PERSONS IN THE CAPACITIES INDICATED ON THE 10TH DAY OF MARCH, 1995:
Principal Executive Officers:
SIGNATURE TITLE
/s/ Kenneth T. Derr* Chairman of the Board and Director
_____________________________________
KENNETH T. DERR
/s/ J. Dennis Bonney* Vice-Chairman of the Board and
_____________________________________ Director
J. DENNIS BONNEY
/s/ James N. Sullivan* Vice-Chairman of the Board and
_____________________________________ Director
JAMES N. SULLIVAN
Principal Financial Officer:
/s/ Martin R. Klitten* Vice-President, Finance
_____________________________________
MARTIN R. KLITTEN
Principal Accounting Officer:
/s/ Donald G. Henderson* Vice-President and Comptroller
_____________________________________
DONALD G. HENDERSON
II-10
<PAGE>
Directors:
SIGNATURE
/s/ Samuel H. Armacost*
_____________________________________
SAMUEL H. ARMACOST
/s/ Sam Ginn*
_____________________________________
SAM GINN
/s/ Carla A. Hills*
_____________________________________
CARLA A. HILLS
/s/ Charles M. Pigott*
_____________________________________
CHARLES M. PIGOTT
/s/ Condoleezza Rice*
_____________________________________
CONDOLEEZZA RICE
/s/ S. Bruce Smart, Jr.*
_____________________________________
S. BRUCE SMART, JR.
/s/ George H. Weyerhaeuser*
_____________________________________
GEORGE H. WEYERHAEUSER
/s/ John A. Young*
_____________________________________
JOHN A. YOUNG
/s/ Malcolm J. McAuley
*By__________________________________
MALCOLM J. MCAULEY
Attorney-in-Fact
II-11
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, CHEVRON TRANSPORT
CORPORATION CERTIFIES THAT IT HAS REASONABLE GROUNDS TO BELIEVE THAT IT MEETS
ALL OF THE REQUIREMENTS FOR FILING ON FORM S-3 AND HAS DULY CAUSED THIS
AMENDMENT NO. 1 TO THE REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE
UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF HAMILTON, COLONY OF
BERMUDA, ON THE 10TH DAY OF MARCH, 1995.
Chevron Transport Corporation
/s/ J.C. Wilcox-Black
By:__________________________________
J.C. WILCOX-BLACK
SECRETARY
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS AMENDMENT
NO. 1 TO THE REGISTRATION STATEMENT HAS BEEN SIGNED BELOW BY THE FOLLOWING
PERSONS IN THE CAPACITIES AND ON THE DATES INDICATED.
SIGNATURE TITLE DATE
President (Principal
*/s/ G.R. Pitman Executive Officer), March 10, 1995
_____________________________________ Treasurer
G.R. PITMAN (Principal
Financial Officer),
and Director
Vice-President
*/s/ P.I. Martin (Principal March 10, 1995
_____________________________________ Accounting Officer)
P.I. MARTIN and Director
*/s/ T.R. Moore Director and March 10, 1995
_____________________________________ Authorized
T.R. MOORE Representative in
the United States
of Chevron
Transport
Corporation
/s/ J.C. Wilcox-Black Director
_____________________________________ March 10, 1995
J.C. WILCOX-BLACK
Director
*/s/ L.A. Gyorfi March 10, 1995
_____________________________________
L.A. GYORFI
/s/ J.C. Wilcox-Black March 10, 1995
* By: _______________________________
(ATTORNEY-IN-FACT)
II-12
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
HAS DULY CAUSED THIS AMENDMENT NO. 1 TO THE REGISTRATION STATEMENT ON FORM S-1
TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN
THE CITY OF BOSTON, STATE OF MASSACHUSETTS, ON THE 10TH DAY OF MARCH, 1995.
California Petroleum Transport
Corporation
/s/ Nancy D. Smith
By:_______________________________________
NANCY D. SMITH
PRESIDENT
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS REGISTRATION
STATEMENT OR AMENDMENT THERETO HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES INDICATED ON THE 10TH DAY OF MARCH, 1995.
SIGNATURE TITLE
/s/ Nancy D. Smith President (Principal Executive
_____________________________________ Officer) and Director
NANCY D. SMITH
/s/ Louise E. Colby Secretary and Treasurer (Principal
_____________________________________ Financial and Accounting Officer)
LOUISE E. COLBY and Director
II-13
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED, THE
REGISTRANT CERTIFIES THAT IT HAS REASONABLE GROUNDS TO BELIEVE THAT IT MEETS
ALL OF THE REQUIREMENTS FOR FILING A FORM F-1 AND HAS DULY CAUSED THIS
AMENDMENT NO. 1 TO THE REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE
UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF NEW YORK, STATE OF NEW
YORK, ON THE 10TH DAY OF MARCH, 1995.
CalPetro Tankers (Bahamas I) Limited
/s/ Peter D. Gram
*By:____________________________
PETER D. GRAM
PRESIDENT AND DIRECTOR
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATES INDICATED.
SIGNATURE TITLE DATE
President and
*/s/ Peter D. Gram Director (Principal March 10, 1995
_____________________________________ Executive,
PETER D. GRAM Financial and
Accounting Officer)
/s/ Nancy D. Smith Authorized
_____________________________________ Representative in March 10, 1995
NANCY D. SMITH the United States
/s/ Maria M. Livanos March 10, 1995
*By:_________________________________
MARIA M. LIVANOS
(ATTORNEY-IN-FACT)
II-14
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED, THE
REGISTRANT CERTIFIES THAT IT HAS REASONABLE GROUNDS TO BELIEVE THAT IT MEETS
ALL OF THE REQUIREMENTS FOR FILING A FORM F-1 AND HAS DULY CAUSED THIS
AMENDMENT NO. 1 TO THE REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE
UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF NEW YORK, STATE OF NEW
YORK, ON THE 10TH DAY OF MARCH, 1995.
CalPetro Tankers (Bahamas II)
Limited
/s/ Peter D. Gram
*By:____________________________
PETER D. GRAM
PRESIDENT AND DIRECTOR
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATES INDICATED.
SIGNATURE TITLE DATE
President and
*/s/ Peter D. Gram Director (Principal March 10, 1995
_____________________________________ Executive,
PETER D. GRAM Financial and
Accounting Officer)
Authorized
/s/ Nancy D. Smith Representative in March 10, 1995
_____________________________________ the United States
NANCY D. SMITH
/s/ Maria M. Livanos March 10, 1995
_____________________________________
MARIA M. LIVANOS
II-15
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED, THE
REGISTRANT CERTIFIES THAT IT HAS REASONABLE GROUNDS TO BELIEVE THAT IT MEETS
ALL OF THE REQUIREMENTS FOR FILING A FORM F-1 AND HAS DULY CAUSED THIS
AMENDMENT NO. 1 TO THE REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE
UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF NEW YORK, STATE OF NEW
YORK, ON THE 10TH DAY OF MARCH, 1995.
CalPetro Tankers (IOM) Limited
/s/ Peter D. Gram
*By: ___________________________
PETER D. GRAM
DIRECTOR
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATES INDICATED.
SIGNATURE TITLE DATE
Director (Principal
*/s/ Peter D. Gram Executive, Financial March 10, 1995
_____________________________________ and Accounting Officer)
PETER D. GRAM
Director
*/s/ Bernard Galka March 10, 1995
_____________________________________
BERNARD GALKA
/s/ Nancy D. Smith Authorized
_____________________________________ Representative in the March 10, 1995
NANCY D. SMITH United States
/s/ Maria M. Livanos
*By: ________________________________ March 10, 1995
(ATTORNEY-IN-FACT)
II-16
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED, THE
REGISTRANT CERTIFIES THAT IT HAS REASONABLE GROUNDS TO BELIEVE THAT IT MEETS
ALL OF THE REQUIREMENTS FOR FILING A FORM F-1 AND HAS DULY CAUSED THIS
AMENDMENT NO. 1 TO THE REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE
UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF NEW YORK, STATE OF NEW
YORK, ON THE 10TH DAY OF MARCH, 1995.
CalPetro Tankers (Bahamas III)
Limited
/s/ Peter D. Gram
*By:____________________________
PETER D. GRAM
PRESIDENT AND DIRECTOR
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATES INDICATED.
SIGNATURE TITLE DATE
President and
*/s/ Peter D. Gram Director (Principal March 10, 1995
_____________________________________ Executive,
PETER D. GRAM Financial and
Accounting Officer)
/s/ Nancy D. Smith Authorized
_____________________________________ Representative in March 10, 1995
NANCY D. SMITH the United States
/s/ Maria M. Livanos
March 10, 1995
*By:____________________________
(ATTORNEY-IN-FACT)
II-17
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION PAGE NO.
------- ----------- --------
<C> <S> <C>
1.1 Form of Underwriting Agreement
3.1 Certificate of Incorporation of California Petroleum
Transport Corporation (filed as Exhibit 3.1 to Registrant's
Registration Statement on Form S-1, Commission File Number
33-79220, and incorporated herein by reference)*
3.2 Bylaws of California Petroleum Transport Corporation (filed
as Exhibit 3.2 to Registrant's Registration Statement on
Form S-1, Commission File Number 33-79220, and incorporated
herein by reference)*
3.3 Certificate of Incorporation and Memorandum of Association
of CalPetro Tankers (Bahamas I) Limited (filed as Exhibit
3.3 to Registrant's Registration Statement on Form F-1,
Commission File Number 33-79220, and incorporated herein by
reference)*
3.4 Articles of Association of CalPetro Tankers (Bahamas I)
Limited (filed as Exhibit 3.4 to Registrant's Registration
Statement on Form F-1, Commission File Number 33-79220, and
incorporated herein by reference)*
3.5 Certificate of Incorporation and Memorandum of Association
of CalPetro Tankers (Bahamas II) Limited (filed as Exhibit
3.5 to Registrant's Registration Statement on Form F-1,
Commission File Number 33-79220, and incorporated herein by
reference)*
3.6 Articles of Association of CalPetro Tankers (Bahamas II)
Limited (filed as Exhibit 3.6 to Registrant's Registration
Statement on Form F-1, Commission File Number 33-79220, and
incorporated herein by reference)*
3.7 Certificate of Incorporation of CalPetro Tankers (IOM)
Limited (filed as Exhibit 3.7 to Registrant's Registration
Statement on Form F-1, Commission File Number 33-79220, and
incorporated herein by reference)*
3.8 Memorandum and Articles of Association of CalPetro Tankers
(IOM) Limited (filed as Exhibit 3.8 to Registrant's
Registration Statement on Form F-1, Commission File Number
33-79220, and incorporated herein by reference)*
3.9 Certificate of Incorporation and Memorandum of Association
of CalPetro Tankers (Bahamas III) Limited (filed as Exhibit
3.9 to Registrant's Registration Statement on Form F-1,
Commission File Number 33-79220, and incorporated herein by
reference)*
3.10 Articles of Association of CalPetro Tankers (Bahamas III)
Limited (filed as Exhibit 3.10 to Registrant's Registration
Statement on Form F-1, Commission File Number 33-79220, and
incorporated herein by reference)*
4.1 Form of Serial Indenture between California Petroleum
Transport Company and Chemical Trust Company of California,
as Indenture Trustee
4.2 Form of Serial Mortgage Notes (included in Exhibit 4.1)
4.3 Form of First Preferred Ship Mortgage by [CalPetro Tankers
(Bahamas III) Limited] [CalPetro Tankers (IOM) Limited] to
California Petroleum Transport Corporation (including the
form of assignment of such Mortgage to Chemical Trust
Company of California, as Collateral Trustee by California
Petroleum Transport Corporation)
4.4 Form of Bahamian Statutory Ship Mortgage and Deed of
Covenants by [CalPetro Tankers (Bahamas I) Limited]
[CalPetro Tankers (Bahamas II) Limited] to California
Petroleum Transport Corporation (including the form of
assignment of such Mortgage to Chemical Trust Company of
California, as Collateral Trustee by California Petroleum
Transport Corporation)
4.5 Form of Bermudian Statutory Ship Mortgage and Deed of
Covenants by CalPetro Tankers (IOM) Limited to California
Petroleum Transport Corporation (including the form of
assignment of such Mortgage to Chemical Trust Company of
California, as Collateral Trustee by California Petroleum
Transport Corporation)**
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION PAGE NO.
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<C> <S> <C>
4.6 Form of Stock Pledge Agreement*
4.7 Form of Assignment of Initial Charter Guarantee by
[CalPetro Tankers (Bahamas I) Limited] [CalPetro Tankers
(Bahamas II) Limited] [CalPetro Tankers (IOM) Limited]
[CalPetro Tankers (Bahamas III) Limited] to California
Petroleum Transport Corporation (including the form of
Collateral Assignment of such Initial Charter Guarantee to
Chemical Trust Company of California, as Collateral Trustee
by California Petroleum Transport Corporation)
4.8 Form of Assignment of Earnings and Insurances from
[CalPetro Tankers (Bahamas I) Limited] [CalPetro Tankers
(Bahamas II) Limited] [CalPetro Tankers (IOM) Limited]
[CalPetro Tankers (Bahamas III) Limited] to California
Petroleum Transport Corporation*
4.9 Form of Assignment of Initial Charter from [CalPetro
Tankers (Bahamas I) Limited] [CalPetro Tankers (Bahamas II)
Limited] [CalPetro Tankers (IOM) Limited] [CalPetro Tankers
(Bahamas III) Limited] to California Petroleum Transport
Corporation (including the form of Collateral Assignment of
such Initial Charter to Chemical Trust Company of
California, as Collateral Trustee by California Petroleum
Transport Corporation)
4.10 Form of Management Agreement between P.D. Gram & Co., and
[CalPetro Tankers (Bahamas I) Limited] [CalPetro Tankers
(Bahamas II) Limited] [CalPetro Tankers (IOM) Limited]
[CalPetro Tankers (Bahamas III) Limited]
4.11 Form of Assignment of Management Agreement from [CalPetro
Tankers (Bahamas I) Limited] [CalPetro Tankers (Bahamas II)
Limited] [CalPetro Tankers (IOM) Limited] [CalPetro Tankers
(Bahamas III) Limited] to California Petroleum Transport
Corporation*
4.12 Form of Serial Loan Agreement between California Petroleum
Transport Corporation and [CalPetro Tankers (Bahamas I)
Limited] [CalPetro Tankers (Bahamas II) Limited] [CalPetro
Tankers (IOM) Limited] [CalPetro Tankers (Bahamas III)
Limited]*
4.13 Form of Term Loan Agreement between California Petroleum
Transport Corporation and [CalPetro Tankers (Bahamas I)
Limited] [CalPetro Tankers (Bahamas II) Limited] [CalPetro
Tankers (IOM) Limited] [CalPetro Tankers (Bahamas III)
Limited]
4.14 Form of Collateral Agreement between California Petroleum
Transport Corporation, [CalPetro Tankers (Bahamas I)
Limited] [CalPetro Tankers (Bahamas II) Limited] [CalPetro
Tankers (IOM) Limited] [CalPetro Tankers (Bahamas III)
Limited], the Indenture Trustee under the Serial Indenture,
the Indenture Trustee under the Term Indenture and Chemical
Trust Company of California, as Collateral Trustee
4.15 Form of Issue of One Debenture From [CalPetro Tankers
(Bahamas I) Limited] [CalPetro Tankers (Bahamas II)
Limited] [CalPetro Tankers (IOM) Limited] [CalPetro Tankers
(Bahamas III) Limited] to California Petroleum Transport
Corporation
5.1 Opinion of Thacher Proffitt & Wood regarding the legality
of the Serial Mortgage Notes
10.1 Form of Initial Charter Guarantee by Chevron Corporation*
10.2 Form of Bareboat Charter between [CalPetro Tankers (Bahamas
I) Limited] [CalPetro Tankers (Bahamas II) Limited]
[CalPetro Tankers (IOM) Limited] [CalPetro Tankers (Bahamas
III) Limited] and Chevron Transport Corporation
10.3 Form of Vessel Purchase Agreement between [CalPetro Tankers
(Bahamas I) Limited] [CalPetro Tankers (Bahamas II)
Limited] [CalPetro Tankers (IOM) Limited] [CalPetro Tankers
(Bahamas III) Limited] and Chevron Transport Corporation
(including the form of Assignment of such Vessel Purchase
Agreement to California Petroleum Transport Corporation by
[CalPetro Tankers (Bahamas I) Limited] [CalPetro Tankers
(Bahamas II) Limited] [CalPetro Tankers (IOM) Limited]
[CalPetro Tankers (Bahamas III) Limited])*
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION PAGE NO.
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<C> <S> <C>
10.4 Designated Representative Agreement
23.1 Consent of Thacher Proffitt & Wood (included in Exhibit
5.1)
23.2 Consent of Price Waterhouse LLP, independent accountants,
for Form S-3
23.3 Consent of KPMG Peat Marwick LLP, independent accountants,
for Form S-3
23.4 Consent of Price Waterhouse LLP, independent accountants,
for Form S-1
23.5 Consent of Price Waterhouse, chartered accountants, for
Form F-1
23.6 Consent of McKinney, Bancroft & Hughes*
23.7 Consent of Cains*
24.1 Powers of Attorney for directors and certain officers of
Chevron Corporation*
24.2 Powers of Attorney for directors and certain officers of
Chevron Transport Corporation*
24.3 Powers of Attorney for directors and certain officers of
CalPetro Tankers (Bahamas I) Limited*
24.4 Powers of Attorney for directors and certain officers of
CalPetro Tankers (Bahamas II) Limited*
24.5 Powers of Attorney for directors and certain officers of
CalPetro Tankers (IOM) Limited*
24.6 Powers of Attorney for directors and certain officers of
CalPetro Tankers (Bahamas III) Limited*
24.7 Certified copy of resolutions of Chevron Corporation
authorizing signature pursuant to power of attorney*
25.1 Statement of Eligibility on Form T-1 of Chemical Trust
Company of California, as Indenture Trustee*
</TABLE>
- ------------------
*Previously filed.
**No longer applicable.
<PAGE>
EXHIBIT 1.1
$167,500,000
CALIFORNIA PETROLEUM TRANSPORT CORPORATION
CALPETRO TANKERS (BAHAMAS I) LIMITED
CALPETRO TANKERS (BAHAMAS II) LIMITED
CALPETRO TANKERS (BAHAMAS III) LIMITED
CALPETRO TANKERS (IOM) LIMITED
PAYABLE FROM CHARTERHIRE PAYMENTS BY
CHEVRON TRANSPORT CORPORATION
WHOSE OBLIGATIONS ARE GUARANTEED
BY CHEVRON CORPORATION
$17,160,000 __ % Serial First Preferred Mortgage Notes Due 1996
$18,160,000 __ % Serial First Preferred Mortgage Notes Due 1997
$18,160,000 __ % Serial First Preferred Mortgage Notes Due 1998
$18,160,000 __ % Serial First Preferred Mortgage Notes Due 1999
$18,160,000 __ % Serial First Preferred Mortgage Notes Due 2000
$18,160,000 __ % Serial First Preferred Mortgage Notes Due 2001
$18,160,000 __ % Serial First Preferred Mortgage Notes Due 2002
$18,160,000 __ % Serial First Preferred Mortgage Notes Due 2003
$12,950,000 __ % Serial First Preferred Mortgage Notes Due 2004
$ 7,740,000 __ % Serial First Preferred Mortgage Notes Due 2005
$ 2,530,000 __ % Serial First Preferred Mortgage Notes Due 2006
UNDERWRITING AGREEMENT
----------------------
___________ __, 1995
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
140 Broadway
New York, New York 10005
Dear Sirs:
California Petroleum Transport Corporation, a Delaware corporation
("California Petroleum"), proposes to issue and sell $167,500,000 principal
amount of its Serial First Preferred Mortgage Notes Maturing Serially from 1996
to 2006 (the "Serial Mortgage Notes") to Donaldson, Lufkin & Jenrette Securities
Corporation (the "Underwriter"). The Serial Mortgage Notes are to be issued
pursuant to the
<PAGE>
provisions of an Indenture to be dated as of __________ __, 1995 (the "Serial
Indenture") among California Petroleum, Chemical Trust Company of California, as
Serial Indenture Trustee (the "Serial Indenture Trustee") and, solely for
purposes of the Trust Indenture Act of 1939, as amended, Chevron Corporation
("Chevron"). Concurrent with this offering, California Petroleum proposes to
issue and sell $117,900,000 principal amount of its __% First Preferred Mortgage
Notes Due 2015 (the "Term Mortgage Notes") to the Underwriter pursuant to an
Underwriting Agreement dated the date hereof relating to the Term Mortgage Notes
(the "Term Mortgage Notes Underwriting Agreement).
The proceeds from the sale of the Serial Mortgage Notes, together with
the proceeds from the sale of the Term Mortgage Notes, will be loaned by
California Petroleum to CalPetro Tankers (Bahamas I) Limited, CalPetro Tankers
(Bahamas II) Limited, CalPetro Tankers (Bahamas III) Limited and CalPetro
Tankers (IOM) Limited (each, an "Owner") (California Petroleum, and the Owners
each, a "Company", and collectively, the "Companies") on a joint and several
basis to fund, after paying certain fees and expenses, the acquisition by each
Owner of a recently constructed oil tanker from Chevron Transport Corporation
("Chevron Transport"). Initially, each Owner will enter into a bareboat charter
(each, an "Initial Charter") with Chevron Transport with a term expiring on
_______, 2015, subject to earlier termination at the option of Chevron
Transport. The obligations of Chevron Transport under each Initial Charter will
be guaranteed by Chevron.
The terms "Chevron Registration Statement" and "Chevron Prospectus"
have the meanings specified in the Term Mortgage Notes Underwriting Agreement.
Unless otherwise defined in this Agreement, capitalized terms have the meanings
specified or referred to in the Collateral Trust Agreement to be dated as of
_________, 1995 (the "Collateral Trust Agreement") among California Petroleum,
Chemical Trust Company of California, as Collateral Trustee, the Serial
Indenture Trustee as Serial Indenture Trustee and Chemical Trust Company of
California, as Term Indenture Trustee.
1. Registration Statement and Prospectus. California Petroleum, the
Owners, Chevron and Chevron Transport have prepared and filed with the
Securities and Exchange Commission (the "Commission") in accordance with the
provisions of the Securities Act of 1933, as amended, and the rules and
regulations of the Commission thereunder (collectively called the "Act"), a
joint registration statement on Forms S-3, S-1 and F-1 including a prospectus
relating to the Serial Mortgage Notes, which may be amended. The registration
statement with respect to the Serial Mortgage Notes as amended at the time when
it becomes effective, including information (if any) deemed to be part of such
registration statement at the time of effectiveness pursuant to Rule 430A under
the Act, is hereinafter referred to as the Registration Statement; and the
prospectus in the form first used to confirm sales of Serial Mortgage Notes is
hereinafter referred as the Prospectus (including, in the case
2
<PAGE>
of all references to the Registration Statement and the Prospectus, documents
incorporated therein by reference). The terms "supplement" and "amendment" or
"amend" as used in this Agreement shall include all documents filed after the
date of this Agreement pursuant to the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), that are deemed to be incorporated by reference in
the Prospectus.
2. Agreements to Sell and Purchase. On the basis of the
representations and warranties contained in this Agreement, and subject to its
terms and conditions, California Petroleum agrees to issue and sell, and the
Underwriter agrees to purchase from California Petroleum, the entire principal
amount of Serial Mortgage Notes, at percentages of the principal amount thereof
set forth below (the "Purchase Price") plus accrued interest thereon, if any,
from ________ __, 1995 to the date of payment and delivery.
Percentage of
Principal Amount
----------------
Serial Mortgage Notes due 1996 _____%
Serial Mortgage Notes due 1997 _____%
Serial Mortgage Notes due 1998 _____%
Serial Mortgage Notes due 1999 _____%
Serial Mortgage Notes due 2000 _____%
Serial Mortgage Notes due 2001 _____%
Serial Mortgage Notes due 2002 _____%
Serial Mortgage Notes due 2003 _____%
Serial Mortgage Notes due 2004 _____%
Serial Mortgage Notes due 2005 _____%
Serial Mortgage Notes due 2006 _____%
3. Terms of Public Offering. California Petroleum, the Owners,
Chevron and Chevron Transport are advised by the Underwriter that the
Underwriter proposes (i) to make a public offering of the Serial Mortgage Notes
as soon after the effective date of the Registration Statement as in the
Underwriter's judgment is advisable and (ii) initially to offer the Serial
Mortgage Notes for sale to the public upon the terms and conditions set forth in
the Prospectus.
4. Delivery and Payment. Delivery to the Underwriter of and payment
for the Serial Mortgage Notes shall be made at 9:30 A.M., New York City time, on
the fifth business day (the "Closing Date") following the date of the initial
public offering, at such place as the Underwriter shall designate. The Closing
Date may be varied by agreement among the Underwriter, California Petroleum and
Chevron, and the location of delivery of and the form of payment for the Serial
3
<PAGE>
Mortgage Notes may be varied by agreement between the Underwriter and California
Petroleum.
Certificates for the Serial Mortgage Notes shall be registered in the
name of Cede & Co., as nominee of The Depository Trust Company, or in such names
and issued in such denominations as the Underwriter shall request in writing not
later than two full business days prior to the Closing Date. Such certificates
shall be made available to you for inspection not later than 9:30 A.M., New York
City time, on the business day next preceding the Closing Date. Certificates in
definitive form evidencing the Serial Mortgage Notes shall be delivered to the
Underwriter on the Closing Date with any transfer taxes thereon duly paid by
California Petroleum, for the account of the Underwriter, against payment of the
Purchase Price therefor by wire transfer of immediately available funds to an
account designated by California Petroleum.
5. Agreements of California Petroleum and each Owner. California
Petroleum and each Owner agree with the Underwriter, Chevron and Chevron
Transport:
(a) To use their best efforts to cause the Registration Statement to
become effective at the earliest possible time.
(b) To advise the Underwriter and Chevron promptly and, if requested
by the Underwriter or Chevron, to confirm such advice in writing, (i) when
the Registration Statement has become effective and when any post-effective
amendment to it becomes effective, (ii) of any request by the Commission
for amendments to the Registration Statement or amendments or supplements
to the Prospectus or for additional information, (iii) of the issuance by
the Commission of any stop order suspending the effectiveness of the
Registration Statement or of the suspension of qualification of the Serial
Mortgage Notes for offering or sale in any jurisdiction, or the initiation
of any proceeding for such purposes, and (iv) of the happening of any event
during the period referred to in paragraph (e) below which makes any
statement of a material fact made in the Registration Statement or the
Prospectus untrue or which requires the making of any additions to or
changes in the Registration Statement or the Prospectus in order to make
the statements therein not misleading. If at any time the Commission shall
issue any stop order suspending the effectiveness of the Registration
Statement, California Petroleum and each Owner will make every reasonable
effort to obtain the withdrawal or lifting of such order at the earliest
possible time.
(c) To furnish to the Underwriter and Chevron, without charge, two
signed copies of the Registration Statement as first filed with the
Commission and of each amendment to it, including all exhibits and
documents
4
<PAGE>
incorporated by reference, and to furnish to the Underwriter and Chevron
such number of conformed copies of the Registration Statement as so filed
and of each amendment to it, without exhibits but including documents
incorporated by reference, as the Underwriter and Chevron may reasonably
request.
(d) Not to file any amendment or supplement to the Registration
Statement, whether before or after the time when it becomes effective, or
to make any amendment or supplement to the Prospectus of which the
Underwriter and Chevron shall not previously have been advised or to which
the Underwriter or Chevron shall reasonably object; and to prepare and file
with the Commission, promptly upon the Underwriter's reasonable request,
any amendment to the Registration Statement or supplement to the Prospectus
which may be necessary or advisable in connection with the distribution of
the Serial Mortgage Notes by the Underwriter, and to use its best efforts
to cause the same to become promptly effective.
(e) Promptly after the Registration Statement becomes effective, and
from time to time thereafter for such period as in the opinion of counsel
for the Underwriter a prospectus is required by law to be delivered in
connection with sales by the Underwriter or a dealer, to furnish to the
Underwriter and dealer as many copies of the Prospectus (and of any
amendment or supplement to the Prospectus) as the Underwriter or dealer may
reasonably request.
(f) If during the period specified in paragraph (e) above any event
shall occur as a result of which, in the opinion of counsel for the
Underwriter or Chevron, it becomes necessary to amend or supplement the
Prospectus in order to make the statements therein, in the light of the
circumstances when the Prospectus is delivered to a purchaser, not
misleading, or if it is necessary to amend or supplement the Prospectus to
comply with any law, forthwith to prepare and file with the Commission an
appropriate amendment or supplement to the Prospectus so that the
statements in the Prospectus, as so amended or supplemented, will not in
the light of the circumstances when it is so delivered, be misleading, or
so that the Prospectus will comply with law, and to furnish to the
Underwriter and to such dealers as the Underwriter shall specify, such
number of copies thereof as the Underwriter or dealers may reasonably
request.
(g) Prior to any public offering of the Serial Mortgage Notes, to
cooperate with the Underwriter and counsel for the Underwriter in
connection with the registration or qualification of the Serial Mortgage
Notes for offer and sale by the Underwriter and by dealers under the state
securities or Blue Sky laws of such jurisdictions as the Underwriter may
request, to continue such qualification in effect so long as required for
distribution of the Serial Mortgage Notes; provided, however, that
California Petroleum and each
5
<PAGE>
Owner shall not be required to qualify to do business in any jurisdiction
where they are not now qualified or to take any action which would subject
them to general or unlimited service of process in any jurisdiction where
they are not now so subject.
(h) To mail and make generally available to its security holders as
soon as reasonably practicable an earnings statement of California
Petroleum and each Owner covering a period of at least twelve months after
the effective date of the Registration Statement (but in no event
commencing later than 90 days after such date) which shall satisfy the
provisions of Section 11(a) of the Act, and to advise the Underwriter in
writing when such statement has been so made available.
(i) During the period of five years after the date of this Agreement,
(i) to mail as soon as reasonably practicable after the end of each fiscal
year to the record holders of its Serial Mortgage Notes a separate
financial report of California Petroleum and each Owner and their
respective subsidiaries on a consolidated basis (and a similar financial
report of all unconsolidated subsidiaries, if any), all such financial
reports to include a consolidated balance sheet, a consolidated statement
of operations, a consolidated statement of cash flows and a consolidated
statement of shareholders' equity as of the end of and for such fiscal
year, together with comparable information as of the end of and for the
preceding year, certified by independent certified public accountants, and
(ii) to mail and make generally available as soon as practicable after the
end of each quarterly period (except for the last quarterly period of each
fiscal year) to such holders, a consolidated balance sheet, a consolidated
statement of operations and a consolidated statement of cash flows (and
similar financial reports of all unconsolidated subsidiaries, if any) as of
the end of and for such period, and for the period from the beginning of
such year to the close of such quarterly period, together with comparable
information for the corresponding periods of the preceding year.
(j) During the period referred to in paragraph (i) above, to furnish
to the Underwriter as soon as available a copy of each report or other
publicly available information of California Petroleum and each Owner
mailed to the security holders of California Petroleum or filed with the
Commission and such other publicly available information concerning
California Petroleum and each Owner and their respective subsidiaries as
the Underwriter may reasonably request.
(k) To use the proceeds from the sale of the Serial Mortgage Notes in
the manner described in the Prospectus under the caption "Sources and Uses
of Funds."
6
<PAGE>
(l) California Petroleum will pay all costs, expenses, disbursements,
fees and taxes incident to the registration of the Serial Mortgage Notes
and the sale of the Serial Mortgage Notes, including but not limited to
costs, expenses, disbursements, fees and taxes (i) incident to the
registration or qualification of the Term Mortgage Notes and the Serial
Mortgage Notes for offer and sale under the securities or Blue Sky laws of
the several states (including in each case the fees and disbursements of
counsel for the Underwriter relating to such registration or qualification
and memoranda relating thereto), (ii) incident to the filing under the Act
of the Chevron Registration Statement, the Registration Statement and the
registration statement with respect to the Term Mortgage Notes, (iii) paid
to rating agencies in connection with the rating of the Term Mortgage
Notes and the Serial Mortgage Notes, or (iv) paid to the Term Indenture
Trustee, the Serial Indenture Trustee and the Collateral Trustee, except
that California Petroleum shall have no obligation to pay any of the costs,
expenses, disbursements and fees of Pillsbury Madison & Sutro or Price
Waterhouse LLP (San Francisco), accountants for Chevron and Chevron
Transport, which Chevron has agreed to pay pursuant to Section 6(g) of this
Agreement.
(m) To use its best efforts to do and perform all things required or
necessary to be done and performed under this Agreement by California
Petroleum and each Owner prior to the Closing Date and to satisfy all
conditions precedent to the delivery of the Serial Mortgage Notes.
6. Agreements of Chevron Transport and Chevron. Chevron
Transportation and Chevron agree with the Underwriter:
(a) Chevron Transport and Chevron will use their best efforts to
cause the Registration Statement to become effective at the earliest
possible time.
(b) Chevron Transport and Chevron will promptly advise the
Underwriter (i) when the Registration Statement has become effective and
when any amendment to it becomes effective, (ii) of any request by the
Commission for any amendment of the Registration Statement or the
Prospectus or for any additional information, (iii) of the issuance by the
Commission of any stop order suspending the effectiveness of the
Registration Statement or the institution of any proceeding for that
purpose, and (iv) of the receipt by Chevron Transport or Chevron of any
notification with respect to the suspension of the qualification of the
Term Mortgage Notes for sale in any jurisdiction or the initiation or
threatening of any proceeding for such purpose. Chevron Transport and
Chevron will use their best efforts to prevent the issuance of any such
stop order and, if issued, to obtain as soon as possible the withdrawal
thereof. Chevron Transport and Chevron will not file any amendment or
supplement to the Chevron Registration Statement or Chevron
7
<PAGE>
Prospectus unless they have furnished the Underwriter a copy prior to
filing and will not file any such proposed amendment to which the
Underwriter reasonably objects.
(c) If, at any time when a prospectus relating to the Serial Mortgage
Notes is required to be delivered under the Act or any other applicable
securities law, any event shall occur as a result of which the Prospectus
as then amended or supplemented would include any untrue statement of a
material fact or omit to state any material fact necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, or if it is necessary to amend or supplement the
Prospectus to comply with the Act or the Exchange Act or the respective
rules thereunder, Chevron Transport and Chevron will promptly prepare and
file with the Commission, subject to paragraph (b) of this Section 6, an
amendment or supplement to the Prospectus which will correct such statement
or omission or an amendment which will effect such compliance.
(d) Chevron Transport and Chevron will, if requested, furnish to the
Underwriter copies of the Registration Statement as first filed with the
Commission and of each amendment to it (including, if requested, the
exhibits and documents incorporated by reference in the Prospectus) and
each amendment or supplement thereto which is thereafter filed pursuant to
paragraph (b) or (c) of this Section 6 and, so long as delivery of a
prospectus by the Underwriter or a dealer may, in the opinion of counsel
for the Underwriter, be required by the Act or other applicable securities
laws, as many copies of the Prospectus and any amendments thereof and
supplements thereto, as the Underwriter may reasonably request.
(e) Chevron Transport and Chevron will cooperate with the Underwriter
and counsel for the Underwriter in connection with the registration or
qualification of the Serial Mortgage Notes for offer and sale by the
Underwriter and by dealers under the state securities or Blue Sky laws of
such jurisdictions as the Underwriter may request, and will cooperate with
the Underwriter and counsel for the Underwriter to continue such
qualification in effect so long as required for the distribution of the
Serial Mortgage Notes; provided, however, that Chevron Transport and
Chevron shall not be required to qualify to do business in any jurisdiction
where they are not now qualified or to take any action which would subject
them to general or unlimited service of process in any jurisdiction where
they are not now so subject.
(f) Chevron will make generally available to its security holders as
soon as reasonably practicable, but not later than 45 days after the end of
the twelve-month period beginning at the end of the fiscal quarter of
Chevron during which the filing of the Registration Statement (or
Prospectus pursuant
8
<PAGE>
to Rule 424 under the Act, if later) first occurs (except not later than 90
days if such filing date is in the last fiscal quarter), an earnings
statement (which need not be audited) of Chevron and its subsidiaries
covering such twelve-month period which shall satisfy the provisions of
Section 11(a) of the Act.
(g) Chevron will pay all costs, expenses, disbursements and fees of
(i) Pillsbury Madison & Sutro, counsel for Chevron and Chevron Transport,
in connection with the issuance of the Term Mortgage Notes and the Serial
Mortgage Notes and (ii) Price Waterhouse LLP (San Francisco), accountants
for Chevron and Chevron Transport, in connection with the delivery of the
comfort letter required by Section 11(l)(ii) hereof. Other than the
foregoing, Chevron and Chevron Transport shall have no obligation to pay
any costs, expenses, disbursements, fees or taxes incident to the
registration of the Serial Mortgage Notes and the sale of the Serial
Mortgage Notes, including but not limited to costs, expenses,
disbursements, fees or taxes (i) incident to the registration or
qualification of the Serial Mortgage Notes and the Term Mortgage Notes for
offer and sale under the securities or Blue Sky laws of the several states
(including in each case the fees and disbursements of counsel for the
Underwriter relating to such registration or qualification and memoranda
relating thereto), (ii) incident to the filing under the Act of the Chevron
Registration Statement, the Registration Statement and the registration
statement with respect to the Term Mortgage Notes, (iii) paid to rating
agencies in connection with the rating of the Serial Mortgage Notes and the
Term Mortgage Notes, or (iv) paid to the Serial Indenture Trustee, the Term
Indenture Trustee and the Collateral Trustee.
The Underwriter agrees with Chevron Transport and Chevron that if a
letter delivered to the Underwriter pursuant to paragraph (l) of Section 11 of
this Agreement has attached thereto a copy of unaudited interim financial
statements for a period ending after the latest financial statements included in
the Registration Statement, and if such financial statements have not been
publicly disclosed, the Underwriter shall keep such attachment in strict
confidence and not furnish such attachment to any other person.
7. Representations and Warranties. (i) Chevron and Chevron
Transport represent and warrant that the Registration Statement and the
Prospectus conform, and any amendments thereof and supplements thereto relating
to the Serial Mortgage Notes will conform, in all material respects to the
requirements of the Act, each document filed pursuant to the Exchange Act and
incorporated by reference in the Prospectus complied when so filed as to form
with the Exchange Act and the rules and regulations thereunder, the Serial
Indenture conforms in all material respects to the requirements of the Trust
Indenture Act of 1939, as amended and the rules and regulations of the
Commission thereunder and none of the above listed documents included or will
include any untrue statement of a material fact or omitted or will
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<PAGE>
omit to state any material fact required to be stated therein or necessary to
make the statements therein not misleading; provided, however, that Chevron and
Chevron Transport make no representations and warranties as to (i) that part of
the Registration Statement which shall constitute the Trustee's Statement of
Eligibility and Qualification (Form T-1) under the Trust Indenture Act of 1939,
as amended, or (ii) any statements or omissions made in reliance upon and in
conformity with information furnished to Chevron or Chevron Transport by or on
behalf the Underwriter, California Petroleum or any of the Owners for use in
connection with the preparation of such documents.
(ii) California Petroleum and each Owner represent and warrant to the
Underwriter, Chevron and Chevron Transport that:
(a) (i) the Registration Statement and any amendments thereto will
comply in all material respects with the provisions of the Act and will not
contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the
statements therein not misleading; and (ii) the Prospectus and any
supplements thereto will not contain any untrue statement of a material
fact or omit to state any material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, except that the representations and warranties
contained in this paragraph (a) shall not apply to statements or omissions
in the Registration Statement or the Prospectus (or any supplement or
amendment to them) based upon information relating to the Underwriter,
Chevron or Chevron Transport furnished to California Petroleum in writing
by the Underwriter, Chevron or Chevron Transport, respectively, expressly
for use therein or to that part of the Registration Statement that
constitutes the Statement of Eligibility and Qualification (Form T-1) under
the Trust Indenture Act of 1939, as amended, of the Serial Indenture
Trustee.
(b) Each preliminary prospectus filed as part of the registration
statement with respect to the Serial Mortgage Notes as originally filed or
as part of any amendment thereto, or filed pursuant to Rule 424 under the
Act, complied when so filed in all material respects with the Act.
(c) California Petroleum and each Owner has been duly incorporated,
is validly existing as a corporation in good standing under the laws of its
jurisdiction of incorporation and has the corporate power and authority to
carry on its business as it is currently being conducted and to own, lease
and operate its properties, and each is duly qualified and is in good
standing as a foreign corporation authorized to do business in each
jurisdiction in which the nature of its business or its ownership or
leasing of property requires such qualification, except where the failure
to be so qualified would not have a material adverse effect on such
Company.
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(d) Any taxes, fees and other governmental charges which are due and
payable on the Closing Date in connection with the execution, delivery and
performance of this Agreement, the Serial Indenture, the Mortgages and
other Security Documents being executed on or before the Closing Date and
the execution, delivery and sale of the Serial Mortgage Notes shall have
been paid by California Petroleum or the Owners, at or prior to the Closing
Date.
(e) The Serial Mortgage Notes have been duly authorized and, when
executed and authenticated in accordance with the provisions of the Serial
Indenture and delivered to the Underwriter against payment therefor as
provided by this Agreement, will be entitled to the benefits of the Serial
Indenture, and will be valid and binding obligations of California
Petroleum, enforceable in accordance with their terms except as (i) the
enforceability thereof may be limited by bankruptcy, insolvency or similar
laws affecting creditors' rights generally and (ii) rights of acceleration
and the availability of equitable remedies may be limited by equitable
principles of general applicability.
(f) This Agreement has been duly authorized, executed and delivered
by California Petroleum and each Owner and is a valid and binding agreement
of California Petroleum and each Owner enforceable in accordance with its
terms (except as rights to indemnity and contribution hereunder may be
limited by applicable law).
(g) The Serial Indenture has been duly qualified under the Trust
Indenture Act of 1939, as amended, and has been duly authorized, executed
and delivered by California Petroleum and is a valid and binding agreement
of California Petroleum, enforceable in accordance with its terms except as
(i) the enforceability thereof may be limited by bankruptcy, insolvency or
similar laws affecting creditors' rights generally and (ii) rights of
acceleration and the availability of equitable remedies may be limited by
equitable principles of general applicability.
(h) The Serial Mortgage Notes conform in all material respects to the
description thereof contained in the Prospectus.
(i) Neither California Petroleum nor any Owner is in violation of its
respective organizational documents or by-laws or in default in the
performance of any obligation, agreement or condition contained in any
bond, debenture, note or any other evidence of indebtedness or in any other
agreement, indenture or instrument material to the conduct of the business
of such Company, to which such Company is a party or by which such Company
or its property is bound.
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(j) The execution, delivery and performance of this Agreement, the
Serial Indenture and the Serial Mortgage Notes and compliance by California
Petroleum with all the provisions hereof and thereof and the consummation
of the transactions contemplated hereby and thereby will not require any
consent, approval, authorization or other order of any court, regulatory
body, administrative agency or other governmental body (except as such may
be required under the securities or Blue Sky laws of the various states)
and will not conflict with or constitute a breach of any of the terms or
provisions of, or a default under, the organizational documents or by-laws
of California Petroleum or any agreement, indenture or other instrument to
which it is a party or by which it or its property is bound, or violate or
conflict with any laws, administrative regulations or rulings or court
decrees applicable to California Petroleum or its property.
(k) The execution, delivery and performance of this Agreement and
compliance by the Owners with all the provisions hereof and the
consummation of the transactions contemplated hereby will not require any
consent, approval, authorization or other order of any court, regulatory
body, administrative agency or other governmental body (except as such may
be required under the securities or Blue Sky laws of the various states)
and will not conflict with or constitute a breach of any of the terms or
provisions of, or a default under, the charter or by-laws of any of the
Owners or any agreement, indenture or other instrument to which such Owner
is a party or by which such Owner or its property is bound, or violate or
conflict with any laws, administrative regulations or rulings or court
decrees applicable to such Owner or its property.
(l) Except as otherwise set forth in the Prospectus, there are no
material legal or governmental proceedings pending to which California
Petroleum or any Owner is a party or of which any of their respective
property is the subject, and, to the best of such Company's knowledge, no
such proceedings are threatened or contemplated. No contract or document
of a character required to be described in the Registration Statement or
the Prospectus or to be filed as an exhibit to the Registration Statement
is not so described or filed as required.
(m) To such Company's knowledge, neither California Petroleum nor any
Owner has violated any foreign, federal, state or local law or regulation
relating to the protection of human health and safety, the environment or
hazardous or toxic substances or wastes, pollutants or contaminants
("Environmental Laws"), which in each case might result in any material
adverse change in the business, prospects, financial condition or results
of operation of such Company.
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<PAGE>
(n) Except as otherwise set forth in the Prospectus or such as are
not material to the business, prospects, financial condition or results of
operation of such Company, California Petroleum and each Owner has good and
marketable title, free and clear of all liens, claims, encumbrances and
restrictions except liens for taxes not yet due and payable, to all
property and assets described in the Registration Statement as being owned
by such Company.
(o) California Petroleum and each of the Owners maintains the various
insurance required of it under the financing documents to which it is a
party.
(p) Neither California Petroleum nor any Owner is an "investment
company" or a company "controlled" by an "investment company" within the
meaning of the Investment Company Act of 1940, as amended.
(q) All tax returns required to be filed by California Petroleum or
any of the Owners, in all jurisdictions, have been so filed, except insofar
as the failure to file such returns would not have a material adverse
effect on such Company. All taxes, including withholding taxes, penalties
and interest, assessments, fees and other charges due or claimed to be due
from such entities or that are due and payable have been paid, other than
those being contested in good faith and for which adequate reserves have
been provided or those currently payable without penalty or interest,
except insofar as the failure to pay such taxes would not have a material
adverse effect on such Company.
(r) The laws, governmental rules, regulations and decrees of the
Bahamas and the Isle of Man and any political sub-division thereof permit
the transfer of United States Dollars as required by this Agreement.
(s) Except for the fees payable as provided in the Prospectus,
neither California Petroleum nor the Owners has become obligated to pay any
fee or commission to or any expenses of any broker, finder or investment
banker or anyone else acting in the capacity of a broker, finder or
investment banker in connection with the transactions contemplated hereby.
(t) California Petroleum and the Owners shall pay amounts payable
hereunder in United States dollars in New York City as may be necessary in
order that every net payment by such Company of any fees or expenses
payable or reimbursable hereunder, after deduction or withholding for or on
account of any present or future tax, assessment or other governmental
charge (including, without limitation, value added tax) imposed upon or as
a result of such payment by any political subdivision or taxing authority
thereof or any non-U.S. jurisdiction from which such payment or
reimbursement may be
13
<PAGE>
made, will not be less than the amount provided for herein to be paid or
reimbursed by such Company.
(u) California Petroleum and each Owner have complied with all
provisions of Section 517.075, Florida Statutes (Chapter 92-198, Laws of
Florida).
(v) All of the representations and warranties by (i) California
Petroleum contained in each Security Document to which it is a party and
(ii) the Owners contained in the Vessel Purchase Agreement to which such
Owner is a party and each Security Document to which such Owner is a party
are incorporated by reference in this Agreement as if set forth herein, and
California Petroleum and the Owners represent and warrant that such
representations and warranties are true and correct as of the date of this
Agreement, except to the extent that such representations and warranties
relate solely to an earlier date or later date (in which case such
representations and warranties are correct on and as of such earlier date
or will be correct on and as of such later date, as the case may be).
8. Indemnification Among California Petroleum, the Owners and the
Underwriter. (a) California Petroleum and each Owner agree to indemnify and
hold harmless the Underwriter and each person, if any, who controls the
Underwriter within the meaning of Section 15 of the Act or Section 20 of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), from and
against any and all losses, claims, damages, liabilities and judgments caused by
any untrue statement or alleged untrue statement of a material fact contained in
the Registration Statement or the Prospectus (as amended or supplemented if the
Companies shall have furnished any amendments or supplements thereto) or any
preliminary prospectus, or caused by any omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, except insofar as such losses, claims,
damages, liabilities or judgments are caused by any such untrue statement or
omission or alleged untrue statement or omission based upon (i) information
relating to the Underwriter furnished in writing to California Petroleum by the
Underwriter expressly for use therein or (ii) information furnished in writing
to the Underwriter by Chevron or Chevron Transport expressly for use therein.
This indemnity agreement will be in addition to any liability which California
Petroleum or any Owner may otherwise have.
(b) In case any action shall be brought against the Underwriter
or any person controlling the Underwriter, based upon any preliminary
prospectus, the Registration Statement or the Prospectus or any amendment or
supplement thereto and with respect to which indemnity may be sought against any
of the Companies, the Underwriter shall promptly notify the Companies in writing
and the Companies shall assume the defense thereof, including the employment of
counsel reasonably
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<PAGE>
satisfactory to such indemnified party and payment of all fees and expenses.
The Underwriter or any such controlling person shall have the right to employ
separate counsel in any such action and participate in the defense thereof, but
the fees and expenses of such counsel shall be at the expense of the Underwriter
or such controlling person unless (i) the employment of such counsel shall have
been specifically authorized in writing by the indemnifying party, (ii) the
indemnifying party shall have failed to assume the defense and employ counsel
within 30 days after notice of commencement of such action or (iii) the named
parties to any such action (including any impleaded parties) include both the
Underwriter or such controlling person and Chevron, Chevron Transport or one or
more of the Companies and the Underwriter or such controlling person shall have
been advised by such counsel that there may be one or more legal defenses
available to it which are different from or additional to those available to the
other party or parties named in such action (in which case the indemnifying
party shall not have the right to assume the defense of such action on behalf of
the Underwriter or such controlling person, it being understood, however, that
the indemnifying party shall not, in connection with any one such action or
separate but substantially similar or related actions in the same jurisdiction
arising out of the same general allegations or circumstances, be liable for the
fees and expenses of more than one separate firm of attorneys (in addition to
any local counsel) for the Underwriter and all controlling persons, which firm
shall be designated in writing by the Underwriter and that all such fees and
expenses shall be reimbursed as they are incurred). The indemnifying party
shall not be liable for any settlement of any such action effected without its
written consent but if settled with the written consent of the indemnifying
party, the indemnifying party agrees to indemnify and hold harmless the
Underwriter and any such controlling person from and against any loss or
liability by reason of such settlement. Notwithstanding the foregoing sentence,
if at any time an indemnified party shall have requested an indemnifying party
to reimburse the indemnified party for fees and expenses of counsel as
contemplated by the second sentence of this paragraph, the indemnifying party
agrees that it shall be liable for any settlement of any proceeding effected
without its written consent if (i) such settlement is entered into more than 10
business days after receipt by such indemnifying party of the aforesaid request
and (ii) such indemnifying party shall not have reimbursed the indemnified party
in accordance with such request prior to the date of such settlement. No
indemnifying party shall, without the prior written consent of the indemnified
party, effect any settlement of any pending or threatened proceeding in respect
of which any indemnified party is or could have been a party and indemnity could
have been sought hereunder by such indemnified party, unless such settlement
includes an unconditional release of such indemnified party from all liability
on claims that are the subject matter of such proceeding.
(c) The Underwriter agrees to indemnify and hold harmless California
Petroleum and each Owner, their directors, their officers who sign the
Registration Statement and any person controlling such Companies within the
meaning of Section
15
<PAGE>
15 of the Act or Section 20 of the Exchange Act, to the same extent as the
foregoing indemnity from the Companies to the Underwriter but only with
reference to information relating to the Underwriter furnished in writing by the
Underwriter expressly for use in the Registration Statement, the Prospectus or
any preliminary prospectus. In case any action shall be brought against any
Company, any of its directors, any such officer or any person controlling any
Company based on the Registration Statement, the Prospectus or any preliminary
prospectus and in respect of which indemnity may be sought against the
Underwriter, the Underwriter shall have the rights and duties given to the
Companies (except that if the Companies shall have assumed the defense thereof,
the Underwriter shall not be required to do so, but may employ separate counsel
therein and participate in the defense thereof but the fees and expenses of such
counsel shall be at the expense of the Underwriter), and the Companies, their
directors, any such officers and any person controlling the Companies shall have
the rights and duties given to the Underwriter, by Section 8(b) hereof. This
indemnity agreement will be in addition to any liability which the Underwriter
may otherwise have.
(d) If the indemnification provided for in this Section 8 is
unavailable to an indemnified party in respect of any losses, claims, damages,
liabilities or judgments referred to therein, then each indemnifying party, in
lieu of indemnifying such indemnified party, shall contribute to the amount paid
or payable by such indemnified party as a result of such losses, claims,
damages, liabilities and judgments (i) in such proportion as is appropriate to
reflect the relative benefits received by the Companies, on the one hand and the
Underwriter on the other hand from the offering of the Serial Mortgage Notes or
(ii) if the allocation provided by clause (i) above is not permitted by
applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause (i) above but also the relative fault of
the Companies, and the Underwriter in connection with the statements or
omissions which resulted in such losses, claims, damages, liabilities or
judgments, as well as any other relevant equitable considerations. The relative
benefits received by the Companies on the one hand and the Underwriter on the
other hand shall be deemed to be in the same proportion as the total net
proceeds from the offering (before deducting expenses) received by California
Petroleum, and the total underwriting discounts and commissions received by the
Underwriter, bear to the total price to the public of the Serial Mortgage Notes,
in each case as set forth in the table on the cover page of the Prospectus. The
relative fault of the Companies on the one hand and the Underwriter on the other
hand shall be determined by reference to, among other things, whether the untrue
or alleged untrue statement of a material fact or the omission to state a
material fact relates to information supplied by the Companies or the
Underwriter and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or omission.
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<PAGE>
The Companies and the Underwriter agree that it would not be just and
equitable if contribution pursuant to this Section 8(d) were determined by pro
rata allocation or by any other method of allocation which does not take account
of the equitable considerations referred to in the immediately preceding
paragraph. The amount paid or payable by an indemnified party as a result of
the losses, claims, damages, liabilities or judgments referred to in the
immediately preceding paragraph shall be deemed to include, subject to the
limitations set forth above, any legal or other expenses reasonably incurred by
such indemnified party in connection with investigating or defending any such
action or claim. Notwithstanding the provisions of this Section 8, the
Underwriter shall not be required to contribute any amount in excess of the
amount of underwriting discount of the Serial Mortgage Notes underwritten by it
and distributed to the public. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation.
9. Indemnification Among Chevron, Chevron Transport and the
Underwriter. (a) Chevron and Chevron Transport agree to indemnify and hold
harmless the Underwriter and each person, if any, who controls the Underwriter
within the meaning of either the Act or the Exchange Act against any and all
losses, claims, damages or liabilities, joint or several, to which they or any
of them may become subject under the Act, the Exchange Act or other federal or
state statutory law or regulation, at common law or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement or the Prospectus, or in
any amendment thereof or supplement thereto relating to the Serial Mortgage
Notes, or arise out of or are based upon the omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, and agree to reimburse each such
indemnified party for any legal or other expenses reasonably incurred by them,
as so incurred, in connection with investigating or defending any such loss,
claim, damage, liability, or action; provided, however, that Chevron and Chevron
Transport will not be liable in any such case to the extent that any such loss,
claim, damage or liability arises out of or is based upon any such untrue
statement or alleged untrue statement or omission or alleged omission made
therein in reliance upon and in conformity with information furnished to Chevron
or Chevron Transport in writing by or on behalf of the Underwriter for use in
connection with the preparation thereof. This indemnity agreement will be in
addition to any liability which Chevron or Chevron Transport may otherwise have.
(b) The Underwriter agrees to indemnify and hold harmless Chevron
and Chevron Transport, each of their directors, each of their officers who signs
the Registration Statement, and each person who controls Chevron or Chevron
Transport within the meaning of either the Act or the Exchange Act, to the same
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<PAGE>
extent as the foregoing indemnity from Chevron and Chevron Transport to the
Underwriter, but only with reference to information furnished to Chevron or
Chevron Transport in writing by or on behalf of the Underwriter for use in
preparation of the documents referred to in the foregoing indemnity. This
indemnity agreement will be in addition to any liability which the Underwriter
may otherwise have.
(c) Promptly after receipt by an indemnified party under this Section
9 of notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against the indemnifying party under this
Section 9, notify the indemnifying party in writing of the commencement thereof;
but the omission so to notify the indemnifying party will not relieve the
indemnifying party from any liability which it may have to any indemnified party
otherwise than under this Section 9. In case any such action is brought against
any indemnified party, and it notifies the indemnifying party of the
commencement thereof, the indemnifying party will be entitled to participate
therein, and to extent that it may elect by written notice delivered to the
indemnified party promptly after receiving the aforesaid notice from such
indemnified party, to assume the defense thereof, with counsel satisfactory to
such indemnified party; provided that, if the defendants in any such action
include both the indemnified party and the indemnifying party, and the
indemnified party shall have reasonably concluded that there may be legal
defenses available to it and/or other indemnified parties which are different
from or additional to those available to the indemnifying party, the indemnified
party or parties shall have the right to select separate counsel, to assert such
legal defenses and to otherwise participate in the defense of such action on
behalf of such indemnified party or parties. Upon receipt of notice from the
indemnifying party to such indemnified party of its election so to assume the
defense of such action and approval by the indemnified party of counsel, the
indemnifying party will not be liable to such indemnified party under this
Section 9 for any legal or other expenses subsequently incurred by such
indemnified party in connection with the defense thereof unless (i) the
indemnified party shall have employed separate counsel in connection with the
assertion of legal defenses in accordance with the proviso to the next preceding
sentence (it being understood, however, that the indemnifying party shall not be
liable for the expenses of more than one separate counsel, approved by the
representatives representing the indemnified parties who are parties to such
action), (ii) the indemnifying party shall not have employed counsel
satisfactory to the indemnified party to represent the indemnified party within
a reasonable time after notice of commencement of the action or (iii) the
indemnifying party has authorized the employment of counsel for the indemnified
party at the expense of the indemnifying party; and except that, if clause (i)
or (iii) is applicable, such liability shall be only in respect of the counsel
referred to in such clause (i) or (iii).
(d) In order to provide for just and equitable contribution in
circumstances in which the indemnification provided for in this Section 9 is due
in accordance with its terms but is for any reason held by a court to be
unavailable from
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Chevron, Chevron Transport or the Underwriter on grounds of policy or otherwise,
Chevron, Chevron Transport and the Underwriters shall contribute to the
aggregate losses, claims, damages and liabilities (including legal or other
expenses reasonably incurred in connection with investigating or defending same)
to which Chevron, Chevron Transport or the Underwriter may be subject in such
proportion so that the Underwriter is responsible for that portion represented
by the percentage that the underwriting discount appearing on the cover page of
the Prospectus bears to the public offering price appearing thereon and Chevron
or Chevron Transport is responsible for the balance; provided that no person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Act) shall be entitled to contribution from any person who was not guilty of
such fraudulent misrepresentation. For purposes of this Section 9, each person
who controls the Underwriter within the meaning of either the Act or the
Exchange Act shall have the same rights to contribution as the Underwriter, and
each person who controls Chevron or Chevron Transport within the meaning of
either the Act or the Exchange Act, each officer of Chevron or Chevron Transport
who shall have signed the Registration Statement and each director of Chevron or
Chevron Transport shall have the same rights to contribution as Chevron and
Chevron Transport. Any party entitled to contribution will, promptly after
receipt of notice of commencement of any action, suit or proceeding against such
party in respect of which a claim for contribution may be made against another
party or parties under this paragraph (d), notify such party from whom
contribution may be sought, but the omission to so notify in writing such party
or parties shall not relieve the party or parties from whom contribution may be
sought from any other obligation it or they may have hereunder or otherwise than
under this paragraph (d).
10. Indemnification Among Chevron, Chevron Transport, California
Petroleum and the Owners. (a) California Petroleum and each Owner jointly and
severally agree to indemnify and hold harmless Chevron and Chevron Transport,
each of their directors, each of their officers who signs the Registration
Statement and each person controlling Chevron or Chevron Transport within the
meaning of the Act or of the Exchange Act against any and all losses, claims,
damages or liabilities, joint or several, to which they or any of them may
become subject under the Act, the Exchange Act or other federal or state
statutory law or regulation, at common law or otherwise, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise out of or
are based upon any untrue statement or alleged untrue statement of a material
fact contained in the Registration Statement or the Prospectus, or in any
amendment thereof or supplement thereto, or arise out of or are based upon the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, and
agree to reimburse each such indemnified party for any legal or other expenses
reasonably incurred by them, as so incurred, in connection with investigating or
defending any such loss, claim, damage, liability, or action; provided, however,
that California Petroleum and each of the Owners will not be liable in any such
case to the extent
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<PAGE>
that any such loss, claim, damage or liability arises out of or is based upon
any such untrue statement or alleged untrue statement or omission or alleged
omission made therein in reliance upon and in conformity with information
furnished by Chevron or Chevron Transport to California Petroleum or the Owners
in writing for use in connection with the preparation thereof. This indemnity
agreement will be in addition to any liability which California Petroleum or
each Owner may otherwise have.
(b) Chevron and Chevron Transport agree to indemnify and hold harmless
California Petroleum and each Owner, each of their directors, each of their
officers who signs the Registration Statement, and any person controlling such
Companies within the meaning of either the Act or the Exchange Act, to the same
extent as the foregoing indemnity from California Petroleum and each Owner to
Chevron and Chevron Transport, but only with reference to information furnished
to California Petroleum or an Owner by Chevron or Chevron Transport in writing
for use in preparation of the documents referred to in the foregoing indemnity.
This indemnity agreement will be in addition to any liability which Chevron or
Chevron Transport may otherwise have.
(c) Promptly after receipt by an indemnified party under this Section
10 of notice of the commencement of any action, such indemnified party will, if
a claim in respect thereof is to be made against the indemnifying party under
this Section 10, notify the indemnifying party in writing of the commencement
thereof; but the omission so to notify the indemnifying party will not relieve
the indemnifying party from any liability which it may have to any indemnified
party otherwise than under this Section 10. In case any such action is brought
against any indemnified party, and it notifies the indemnifying party of the
commencement thereof, the indemnifying party will be entitled to participate
therein, and to extent that it may elect by written notice delivered to the
indemnified party promptly after receiving the aforesaid notice from such
indemnified party, to assume the defense thereof, with counsel satisfactory to
such indemnified party; provided that, if the defendants in any such action
include both the indemnified party and the indemnifying party, and the
indemnified party shall have reasonably concluded that there may be legal
defenses available to it and/or other indemnified parties which are different
from or additional to those available to the indemnifying party, the indemnified
party or parties shall have the right to select separate counsel, to assert such
legal defenses and to otherwise participate in the defense of such action on
behalf of such indemnified party or parties. Upon receipt of notice from the
indemnifying party to such indemnified party of its election so to assume the
defense of such action and approval by the indemnified party of counsel, the
indemnifying party will not be liable to such indemnified party under this
Section 10 for any legal or other expenses subsequently incurred by such
indemnified party in connection with the defense thereof unless (i) the
indemnified party shall have employed separate counsel in connection with the
assertion of legal defenses in accordance with the proviso to the next preceding
sentence (it being understood, however, that the indemnifying party shall not be
liable
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<PAGE>
for the expenses of more than one separate counsel, approved by the
representatives representing the indemnified parties who are parties to such
action), (ii) the indemnifying party shall not have employed counsel
satisfactory to the indemnified party to represent the indemnified party within
a reasonable time after notice of commencement of the action or (iii) the
indemnifying party has authorized the employment of counsel for the indemnified
party at the expense of the indemnifying party; and except that, if clause (i)
or (iii) is applicable, such liability shall be only in respect of the counsel
referred to in such clause (i) or (iii).
(d) In order to provide for just and equitable contribution in
circumstances in which the indemnification provided for in this Section 10 is
due in accordance with its terms but is for any reason held by a court to be
unavailable from Chevron, Chevron Transport, California Petroleum or each Owner
on grounds of policy or otherwise, Chevron, Chevron Transport, California
Petroleum and each Owner shall contribute to the aggregate losses, claims,
damages and liabilities (including legal or other expenses reasonably incurred
in connection with investigating or defending same) to which Chevron, Chevron
Transport, California Petroleum and each Owner may be subject in such proportion
so that Chevron or Chevron Transport is responsible for that portion represented
by (A)(i) the principal amount of the Serial Mortgage Notes over (ii) the
principal amount of the Notes, multiplied by (B) purchase price of the Vessels,
and California Petroleum and each Owner is responsible for the balance; provided
that no person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Act) shall be entitled to contribution from any person who
was not guilty of such fraudulent misrepresentation. For purposes of this
Section 10, each person who controls Chevron, Chevron Transport, California
Petroleum or each Owner within the meaning of either the Act or the Exchange
Act, each officer of Chevron, Chevron Transport, California Petroleum or each
Owner who shall have signed the Registration Statement and each director of
Chevron, Chevron Transport, California Petroleum or each Owner shall have the
same rights to contribution as Chevron, Chevron Transport, California Petroleum
or each Owner. Any party entitled to contribution will, promptly after receipt
of notice of commencement of any action, suit or proceeding against such party
in respect of which a claim for contribution may be made against another party
or parties under this paragraph (d), notify such party from whom contribution
may be sought, but the omission to so notify in writing such party or parties
shall not relieve the party or parties from whom contribution may be sought from
any other obligation it or they may have hereunder or otherwise than under this
paragraph (d).
11. Conditions of Underwriter's Obligation. The obligation of the
Underwriter to purchase the Serial Mortgage Notes under this Agreement is
subject to the satisfaction of each of the following conditions:
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(a) All the representations and warranties of the Companies contained
in this Agreement and the Term Mortgage Notes Underwriting Agreement shall
be true and correct on the Closing Date with the same force and effect as
if made on and as of the Closing Date.
(b) The Registration Statement shall have become effective not later
than 5:00 P.M., New York City time, on the date of this Agreement or at
such later date and time as you may approve in writing, and at the Closing
Date no stop order suspending the effectiveness of the Registration
Statement or the Chevron Registration Statement shall have been issued and
no proceedings for that purpose shall have been commenced or shall be
pending before or threatened by the Commission.
(c) Subsequent to the execution and delivery of this Agreement and
prior to the Closing Date, there shall not have been any downgrading, nor
shall any notice have been given of any intended or potential downgrading
or of any review for a possible change that does not indicate the direction
of the possible change, in the rating accorded any of California
Petroleum's securities by any "nationally recognized statistical rating
organization", as such term is defined for purposes of Rule 436(g)(2) under
the Act.
(d)(i) Since the date of the latest balance sheet included in the
Registration Statement and the Prospectus, there shall not have been any
material adverse change, or any development involving a prospective
material adverse change, in the condition, financial or otherwise, or in
the earnings, affairs or business prospects, whether or not arising in the
ordinary course of business, of any of the Companies, (ii) since the date
of the latest balance sheet included in the Registration Statement and the
Prospectus there shall not have been any change, or any development
involving a prospective material adverse change, in the capital stock or in
the long-term debt of any of the Companies from that set forth in the
Registration Statement and Prospectus, (iii) the Companies and any of their
respective subsidiaries shall have no liability or obligation, direct or
contingent, which is material to such company and its respective
subsidiaries, taken as a whole, other than those reflected in the
Registration Statement and the Prospectus and (iv) on the Closing Date the
Underwriter shall have received certificates dated the Closing Date, signed
by an authorized representative of each of the Companies, confirming the
matters set forth in paragraphs (a), (b), (c) and (d) of this Section 11.
(e) Chevron Transport and Chevron shall have furnished to the
Underwriter a certificate, dated the Closing Date, of Chevron Transport and
Chevron, signed by one or more executive officers of Chevron Transport and
Chevron, to the effect that the signers of such certificate have carefully
22
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examined the Registration Statement, the Prospectus and this Agreement and
that:
(i) The representations and warranties of Chevron Transport and
Chevron in this Agreement are true and correct in all material
respects on and as of the Closing Date with the same effect as if made
on the Closing Date, and Chevron Transport and Chevron have complied
with all the agreements and satisfied all the conditions on their part
to be performed or satisfied at or prior to the Closing Date;
(ii) No stop order suspending the effectiveness of the
Registration Statement has been issued and no proceedings for that
purpose have been instituted and are pending or, to their knowledge,
threatened as of such date; and
(iii) Since the date of the most recent financial statements
included in the Prospectus, there has been no material adverse change
in the condition (financial or otherwise) of Chevron and its
consolidated subsidiaries, taken as a whole, nor any material increase
in the debt of Chevron and its consolidated subsidiaries, except as
set forth in or contemplated by the Prospectus or as described in the
certificate.
(f) Pillsbury Madison & Sutro, counsel for Chevron and Chevron
Transport, shall have furnished to the Underwriter their opinion, dated the
Closing Date, substantially in the form attached hereto as Exhibit A.
(g) The Underwriter shall have received on the Closing Date an
opinion (satisfactory to the Underwriter and its counsel), dated the
Closing Date, of Thacher Proffitt & Wood, special counsel for California
Petroleum and the Owners, to the effect set forth in Exhibit B.
(h) The Underwriter shall have received on the Closing Date an
opinion (satisfactory to the Underwriter and its counsel), dated the
Closing Date, of McKinney, Bancroft & Hughes, special Bahamian counsel for
CalPetro Tankers (Bahamas I) Limited, CalPetro Tankers (Bahamas II)
Limited, and CalPetro Tankers (Bahamas III) Limited, to the effect set
forth in Exhibit C.
(i) The Underwriter shall have received on the Closing Date an
opinion (satisfactory to the Underwriter and its counsel), dated the
Closing Date, of Cains, special Isle of Man counsel for CalPetro Tankers
(IOM) Limited, to the effect set forth in Exhibit D.
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<PAGE>
(j) The Underwriter shall have received on the Closing Date an
opinion (satisfactory to the Underwriter and its counsel), dated the
Closing Date, of The Henries Law Firm, special Liberian counsel for Chevron
Transport, to the effect set forth in Exhibit E.
(k) The Underwriter shall have received on the Closing Date an
opinion, dated the Closing Date, of Davis Polk & Wardwell, special counsel
for the Underwriter, to the effect set forth in Exhibit F.
(l) The Underwriter shall have received on and as of the Closing
Date, in form and substance satisfactory to you, (i) a letter from Price
Waterhouse LLP, independent public accountants, with respect to the
financial statements and certain financial information of California
Petroleum and the Owners relating to California Petroleum and the Owners
contained in the Registration Statement and the Prospectus and
substantially in the form and substance of the letter delivered to you by
Price Waterhouse on the date of this Agreement and (ii) a letter from Price
Waterhouse LLP, independent public accountants for Chevron and Chevron
Transport, dated the Closing Date, with respect to the financial statements
and certain financial information of Chevron and Chevron Transport
contained in the Registration Statement and the Prospectus, which letter
shall be in such form as may be agreed upon among the Underwriter and Price
Waterhouse LLP, and shall cover such matters as may be reasonably requested
by the Underwriter.
(m) The Companies shall not have failed at or prior to the Closing
Date to perform or comply with any of the agreements herein contained and
required to be performed or complied with by such company at or prior to
the Closing Date.
(n) All of the conditions specified in the Term Mortgage Notes
Underwriting Agreement shall have been satisfied or waived in writing on
the Closing Date.
12. Conditions to Obligations of Chevron and Chevron Transport. The
obligations of Chevron and Chevron Transport under this Agreement, and the
obligations of Chevron and Chevron Transport to consummate the sale and
chartering of the Vessels pursuant to the Vessel Purchase Agreements and the
Initial Charters and the guarantee of the Initial Charters pursuant to the
Initial Charter Guarantee (all as described in the Prospectus and the Chevron
Prospectus), are subject to the satisfaction of each of the following
conditions:
24
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(a) All the representations and warranties of the Companies
contained in this Agreement and the Term Mortgage Notes Underwriting Agreement
shall be true and correct on the Closing Date with the same force and effect as
if made on and as of the Closing Date.
(b) The Registration Statement and the Chevron Registration Statement
shall have become effective not later than 5:00 P.M., New York City time, on the
date of this Agreement or at such later date and time as the Underwriter may
approve in writing, and at the Closing Date no stop order suspending the
effectiveness of the Registration Statement or the Chevron Registration
Statement shall have been issued and no proceedings for that purpose shall have
been commenced or shall be pending before or threatened by the Commission.
(c) Subsequent to the execution and delivery of this Agreement and
prior to the Closing Date, there shall not have been any downgrading, nor shall
any notice have been given of any intended or potential downgrading or of any
review for a possible change that does not indicate the direction of the
possible change, in the rating accorded any of California Petroleum's securities
by any "nationally recognized statistical rating organization", as such term is
defined for purposes of Rule 436(g)(2) under the Act.
(d) (i) Since the date of the latest balance sheet included in the
Registration Statement and the Prospectus, there shall not have been any
material adverse change, or any development involving a prospective material
adverse change, in the condition, financial or otherwise, or in the earnings,
affairs or business prospects, whether or not arising in the ordinary course of
business, of any of the Companies, (ii) since the date of the latest balance
sheet included in the Registration Statement and the Prospectus there shall not
have been any change, or any development involving a prospective material
adverse change, in the capital stock or in the long-term debt of the Companies
from that set forth in the Registration Statement and Prospectus, (iii) the
Companies and any of their respective subsidiaries shall have no liability or
obligation, direct or contingent, which is material to such company and its
respective subsidiaries, taken as a whole, other than those reflected in the
Registration Statement and the Prospectus; and (iv) on the Closing Date, Chevron
and Chevron Transport shall have received certificates dated the Closing Date,
signed by an authorized representative of each of the Companies, confirming the
matters set forth in paragraphs (a), (b), (c) and (d) of this Section 12;
(e) Chevron and Chevron Transport shall have received on the Closing
Date the opinions (satisfactory to Chevron, Chevron Transport and their counsel)
described in paragraphs (g), (h), (i) and (j) of Section 11 hereof;
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<PAGE>
(f) Chevron and Chevron Transport shall have received on and as of
the Closing Date, in form and substance satisfactory to Chevron and Chevron
Transport, the letter from Price Waterhouse LLP, independent public accountants,
described in Section 11(l)(i) hereof;
(g) The Companies shall not have failed at or prior to the Closing
Date to perform or comply with any of the agreements herein contained and
required to be performed or complied with by such Company at or prior to the
Closing Date; and
(h) Each of the Collateral Trust Agreement, the Vessel Purchase
Agreements, the Initial Charters, the Management Agreements and any Security
Document providing for execution by parties other than Chevron or Chevron
Transport shall have been executed and delivered by all such parties; and
(i) All of the conditions to the obligations of Chevron and Chevron
Transport specified in this Section 12 shall have been satisfied or waived in
writing by Chevron and Chevron Transport.
13. Effective Date of Agreement and Termination. This Agreement
shall become effective upon the latest of (i) execution of this Agreement, (ii)
when notification of the effectiveness of the Registration Statement has been
released by the Commission, (iii) when notification of the effectiveness of the
registration statement with respect to the Chevron Obligations (as defined in
the Term Mortgage Notes Underwriting Agreement) has been released by the
Commission and (iv) when notification of the effectiveness of the registration
statement with respect to the Term Mortgage Notes has been released by the
Commission.
This Agreement may be terminated at any time prior to delivery of and
payment for the Serial Mortgage Notes by you by written notice to Chevron,
Chevron Transport and the Companies if any of the following has occurred: (i)
since the respective dates as of which information is given in the Registration
Statement and the Prospectus, any adverse change or development involving a
prospective adverse change in the condition, financial or otherwise, of any of
the Companies or the earnings, affairs, or business prospects of any of the
Companies, whether or not arising in the ordinary course of business, which
would, in your reasonable judgment, make it impracticable to market the Serial
Mortgage Notes on the terms and in the manner contemplated in the Prospectus,
(ii) any outbreak or escalation of hostilities or other national or
international calamity or crisis or change in economic conditions or in the
financial markets of the United States or elsewhere that, in your reasonable
judgment, is material and adverse and would, in your judgment, make it
impracticable to market the Serial Mortgage Notes on the terms and in the manner
contemplated in the Prospectus, (iii) the suspension or material limitation of
trading in securities on the New York Stock Exchange or limitation on prices for
securities on such exchange, (iv) the enactment, publication, decree or other
promulgation of any federal or state
26
<PAGE>
statute, regulation, rule or order of any court or other governmental authority
which in your opinion materially and adversely affects, or will materially and
adversely affect, the business or operations of any of the Companies or (v) the
declaration of a general moratorium on commercial banking activities by either
federal or New York State authorities.
14. Consent to Jurisdiction. Any legal suit, action or proceeding
against Chevron Transport or any of the Owners arising out of or relating to
this Agreement, the Serial Indenture or any Security Document, or any
transaction contemplated hereby or thereby, may be instituted in any federal or
state court in The City of New York, State of New York and each of the Owners
and Chevron Transport hereby waives any objection which it may now or hereafter
have to the laying of venue of any such suit, action or proceeding, and each of
the Owners and Chevron Transport hereby irrevocably submits to the jurisdiction
of any such court in any such suit, action or proceeding. Each of the Owners
and Chevron Transport hereby irrevocably appoints and designates CT Corporation
System, having an address at 1633 Broadway, New York, New York, its true and
lawful attorney-in-fact and duly authorized agent for the limited purpose of
accepting service of legal process in connection with any such suit, action or
proceeding and each of the Owners and Chevron Transport agrees that service of
process upon such party shall constitute personal service of such process on it.
Each of the Owners shall maintain the designation and appointment of such
authorized agent until all amounts payable under this Agreement, the Serial
Indenture and the Security Documents shall have been paid in full. Chevron
Transport shall maintain the designation and appointment of such authorized
agent until all amounts payable by Chevron Transport under this Agreement, the
Serial Indenture and the Security Documents shall have been paid in full. If
such agent shall cease to so act, each of the Owners and Chevron Transport shall
immediately designate and appoint another such agent satisfactory to you in the
City of New York, State of New York, and shall promptly deliver to you evidence
in writing of such other agent's acceptance of such appointment.
15. Miscellaneous. Notices given pursuant to any provision of this
Agreement shall be addressed as follows: (a) if to California Petroleum, to
California Petroleum Transport Corporation, c/o JH Management Corporation, Room
6/9, One International Place, Boston, M.A. 02110-2624, (b) if to Chevron
Transport, to Chevron Transport Corporation, c/o Chevron House, 11 Church
Street, Hamilton, Bermuda HM11, Attention: Secretary, (c) if to Chevron, to
Chevron Corporation, 225 Bush Street, San Francisco, California 94104,
Attention: Secretary, (d) if to CalPetro Tankers (Bahamas I) Limited, CalPetro
Tankers (Bahamas II) Limited or CalPetro Tankers (Bahamas III) Limited, to such
entity, c/o Mareva House, 4 George Street, Nassau, Bahamas, Attention:
____________, (e) if to CalPetro Tankers (IOM) Limited, to CalPetro Tankers
(IOM) Limited, c/o United House 14-16 Nelson Street, Douglas, Isle of Man,
British Isles, Attention: ____________ and (f) if to the Underwriter, to
Donaldson, Lufkin & Jenrette Securities Corporation, 140 Broadway,
27
<PAGE>
New York, New York 10005, Attention: Syndicate Department, or in any case to
such other address as the person to be notified may have requested in writing.
No recourse under or upon any obligation, covenant or agreement
contained in this Underwriting Agreement, shall be had against any past, present
or future stockholder, director, officer or agent of California Petroleum or of
any successor, either directly or through California Petroleum or any successor.
The respective indemnities, contribution agreements, representations,
warranties and other statements of Chevron, Chevron Transport and the Companies,
their officers and directors and of the Underwriter set forth in or made
pursuant to this Agreement shall remain operative and in full force and effect,
and will survive delivery of and payment for the Serial Mortgage Notes,
regardless of (i) any investigation, or statement as to the results thereof,
made by or on behalf of the Underwriter or by or on behalf of such company, the
officers or directors of such company or any controlling person of such company,
(ii) acceptance of the Serial Mortgage Notes and payment for them hereunder and
(iii) termination of this Agreement.
If the Underwriter shall refuse to purchase the Term Mortgage Notes
solely because of any failure or refusal by Chevron or Chevron Transport to
perform any of the agreements set forth in Section 6 hereof (except for any
failure so to perform engendered by a failure, refusal or inability on the part
of the Underwriter or any Company to perform any agreement or fulfill any
condition to be performed or fulfilled by such party under the terms of this
Agreement), then Chevron and Chevron Transport agree to reimburse the
Underwriter for all out-of-pocket expenses (including the reasonable fees and
disbursements of counsel) reasonably incurred by it in connection with the
transactions contemplated by this Agreement.
If this Agreement shall be terminated by the Underwriter because of
any failure or refusal on the part of any Company to comply with the terms or to
fulfill any of the conditions of this Agreement, (except for any failure so to
perform on the part of any Company engendered by a failure, refusal or inability
on the part of the Underwriter to perform any agreement on the Underwriter's
part to be performed) each Company agrees to reimburse the Underwriter for all
out-of-pocket expenses (including the reasonable fees and disbursements of
counsel) reasonably incurred by it.
Except as otherwise provided, this Agreement has been and is made
solely for the benefit of and shall be binding upon Chevron, Chevron Transport
and the Companies, the Underwriter, any controlling persons referred to herein
and their respective successors and assigns, all as and to the extent provided
in this Agreement, and no other person shall acquire or have any right under or
by virtue of this
28
<PAGE>
Agreement. The term "successors and assigns" shall not include a purchaser of
any of the Serial Mortgage Notes from the Underwriter merely because of such
purchase.
This Agreement shall be governed and construed in accordance with the
laws of the State of New York.
This Agreement may be signed in various counterparts which together
shall constitute one and the same instrument.
29
<PAGE>
Please confirm that the foregoing correctly sets forth the agreement
between California Petroleum, Chevron Transport, Chevron, each of the Owners and
the Underwriter.
Very truly yours,
CALIFORNIA PETROLEUM TRANSPORT CORPORATION
By___________________________________________________
Name:
Title:
CHEVRON TRANSPORT CORPORATION
By___________________________________________________
Name:
Title:
CHEVRON CORPORATION
By___________________________________________________
Name:
Title:
CALPETRO TANKERS (BAHAMAS I) LIMITED
By___________________________________________________
Name:
Title:
30
<PAGE>
CALPETRO TANKERS (BAHAMAS II) LIMITED
By___________________________________________________
Name:
Title:
CALPETRO TANKERS (BAHAMAS III) LIMITED
By___________________________________________________
Name:
Title:
CALPETRO TANKERS (IOM) LIMITED
By___________________________________________________
Name:
Title:
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
By ______________________________
Name:
Title:
31
<PAGE>
EXHIBIT A
Opinion of Pillsbury Madison & Sutro,
Counsel for Chevron and Chevron Transport
Donaldson, Lufkin & Jenrette
Securities Corporation
140 Broadway
New York, NY 10005
Gentlemen and Mesdames:
We have acted as counsel to Chevron Corporation ("Chevron") and
Chevron Transport ("Chevron Transport") in connection with your purchase from
California Petroleum Transport Corporation ("California Petroleum") of
$167,500,000 aggregate principal amount of its Serial First Preferred Mortgage
Notes Maturing Serially from 1996 to 2006 (the "Serial Mortgage Notes") and
$117,900,000 aggregate principal amount of its ____% First Preferred Mortgage
Notes Due 2015 (the "Term Mortgage Notes," and together with the Serial Mortgage
Notes, the "Notes"). Such purchase of Serial Mortgage Notes is made pursuant to
the Underwriting Agreement dated ___________ __, 1995 (the "Serial Underwriting
Agreement") among California Petroleum, Chevron, Chevron Transport, certain
other parties and you, and such purchase of Term Mortgage Notes is made pursuant
to the Underwriting Agreement dated __________ __, 1995 (the "Term Underwriting
Agreement," and together with the Serial Underwriting Agreement, the
"Underwriting Agreements") among California Petroleum, Chevron, Chevron
Transport, certain other parties and you. The Serial Mortgage Notes are being
issued under a Serial Indenture dated as of ___________ __, 1995 (the "Serial
Indenture"), among California Petroleum, as issuer, Chevron, solely for purposes
of compliance with the Trust Indenture Act of 1939, and Chemical Trust Company
of California, as Trustee (the "Indenture Trustee"). This opinion is furnished
pursuant to Section 11(f) of the Serial Underwriting Agreement and Section 11(f)
of the Term Underwriting Agreement. Terms not otherwise defined herein shall
have the meaning set forth in the Serial Indenture.
We have examined executed copies of the Serial Indenture, the Serial
Mortgage Notes, the Underwriting Agreements, the Serial Registration Statement
and the Chevron Registration Statement (as hereinafter defined) and we have also
examined the Serial Prospectus (as hereinafter defined) and the Chevron
Prospectus (as hereinafter defined). We have also examined such other documents
and certificates of public officials and representatives of Chevron and Chevron
Transport
<PAGE>
as we have deemed necessary as a basis for the opinions expressed herein. As to
questions of fact material to such opinions, we have, when relevant facts were
not independently established, relied upon certificates of officers or
authorized representatives of Chevron and Chevron Transport.
We have assumed the genuineness of all signatures and documents
submitted to us as originals, that all copies submitted to us conform to the
originals, the legal capacity of all natural persons, and as to documents
executed by entities other than Chevron or Chevron Transport, that each of such
entities has the power to enter into and perform its respective obligations
thereunder, and that such documents have been duly authorized, executed and
delivered by, and are binding upon and enforceable against, each of such
entities.
We express no opinion as to the laws of any jurisdiction other than
California and the general corporate law of Delaware and the Federal laws of the
United States of America.
Based upon the foregoing and subject to the qualifications set forth
below, it is our opinion that:
1. Chevron is validly existing and in good standing under the laws
of the State of Delaware and is duly qualified and in good standing to do
business in each other state in which its ownership or leasing of properties
requires such qualification and in which a consequence of the failure to be so
qualified would be materially adverse to the business or financial condition of
Chevron and its subsidiaries taken as a whole and possesses the requisite
corporate power and authority to own its properties and conduct its businesses
consistent with any description thereof in the prospectus dated _____________,
1995, with respect to the offer and sale of the Serial Mortgage Notes filed with
the Securities and Exchange Commission (the "Commission") pursuant to Rule
424(b)(___) of Regulation C under the Securities Act of 1933, as amended (the
"Act") (such prospectus, including the documents incorporated by reference
therein, is herein referred to as the "Serial Prospectus"), and consistent with
any description thereof in the prospectus dated ____________, 1995, with respect
to the Chevron Obligations (as defined in the Term Underwriting Agreement) filed
with the Commission pursuant to Rule 424(b)(____) of Regulation C under the Act
(such prospectus, including the documents incorporated by reference therein, is
herein referred to as the "Chevron Prospectus").
2. The Serial Indenture has been duly authorized, executed and
delivered by Chevron.
3. Each Initial Charter Guarantee has been duly authorized, executed
and delivered by Chevron.
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4. The Underwriting Agreements have been duly authorized, executed
and delivered by Chevron.
5. The Registration Statement on Form S-3 (File No. 33-56373) first
filed by Chevron Transport and Chevron with the Commission on November 9, 1994
(such Registration Statement including the exhibits thereto and the documents
incorporated by reference therein being herein referred to as the "Chevron
Registration Statement") and the Registration Statement on Form S-1/F-1/S-3
(File No. 33-56377) first filed by California Petroleum, Chevron Transport,
Chevron and certain additional registrants with the Commission on November 9,
1994 (such Registration Statement including the exhibits thereto and the
documents incorporated by reference therein being herein collectively referred
to as the "Serial Registration Statement") have become effective under the Act,
and, to the best of our knowledge, no stop order suspending the effectiveness of
the Chevron Registration Statement or the Serial Registration Statement has been
issued and no proceedings for that purpose have been instituted or are pending
or contemplated under the Act, and, except as may be otherwise indicated in the
Chevron Prospectus or the Serial Prospectus or required by the blue sky or
securities laws of jurisdictions in which the Notes are offered or sold, no
further authorization, consent, approval of or filing with any governmental or
regulatory body, Federal or state, is required to be obtained by Chevron or
Chevron Transport in connection with their respective execution, delivery and
performance of the terms of the Underwriting Agreements, the Vessel Purchase
Agreements, the Initial Charters and the Initial Charter Guarantees as described
in the Serial Prospectus and the Chevron Prospectus other than in connection
with the registration and operation of the Vessels, and the execution, delivery
and performance of the terms of the Underwriting Agreements, the Vessel Purchase
Agreements, the Initial Charters and the Initial Charter Guarantees by Chevron
or Chevron Transport, as the case may be, will not contravene any provision of
the Restated Certificate of Incorporation, as amended, or By-Laws of Chevron,
the charter documents of Chevron Transport, any Federal law or regulation or, to
the best of our knowledge, any applicable state law or any material agreement or
instrument binding upon Chevron.
6. The Chevron Registration Statement and the Chevron Prospectus
comply as to form in all material respects with the requirements of the Act and
the rules and regulations of the Commission thereunder; the Serial Registration
Statement and the Serial Prospectus (insofar as they relate to Chevron and
Chevron Transport) comply as to form in all material respects with the
requirements of the Act and the rules and regulations of the Commission
thereunder; each document filed by Chevron under the Securities Exchange Act of
1934, as amended (the "Exchange Act"), and incorporated by reference in the
Chevron Prospectus and the Serial Prospectus complied as to form in all material
respects when so filed with the requirements of the Exchange Act and the rules
and regulations of the Commission thereunder; the statements in the Chevron
Prospectus with respect to the terms of the Initial Charters
3
<PAGE>
and the Chevron Guarantees fairly summarize the terms of such instruments and to
the best of our knowledge there are no other agreements or instruments binding
upon Chevron or Chevron Transport required to be described or referred to in the
Chevron Registration Statement which have not been described or referred to
therein; the statements in the Serial Prospectus with respect to the terms of
the Initial Charters and the Chevron Guarantees fairly summarize the terms of
such instruments; and while we have not ourselves checked the accuracy or
completeness of, or otherwise verified the information furnished by Chevron
Transport and Chevron in the Chevron Registration Statement and the Serial
Registration Statement, we have considered the information required to be
furnished therein by Chevron Transport and Chevron and have generally reviewed
and had discussions with certain officers and employees of Chevron and Chevron
Transport concerning the information so furnished, whether or not subject to our
checking and verification, and on the basis of such consideration, review and
discussions, but without independent checking or verification, we have no reason
to believe that the Chevron Registration Statement, the Chevron Prospectus, the
Serial Registration Statement or the Serial Prospectus as of [pricing date],
1995, contained any untrue statement of a material fact with respect to Chevron
Transport or Chevron or omitted to state any material fact with respect to
Chevron Transport or Chevron required to be stated therein or necessary to make
the statements therein, in the light of the circumstances in which they were
made, not misleading or that the Chevron Registration Statement, the Chevron
Prospectus, the Serial Registration Statement or the Serial Prospectus, as of
[closing date], 1995, contained any untrue statement of a material fact with
respect to Chevron Transport or Chevron or omitted to state any material fact
with respect to Chevron Transport or Chevron required to be stated therein or
necessary to make the statements therein, in the light of the circumstances in
which they were made, not misleading; it being understood that with respect to
the matters covered by this paragraph 6, we express no opinion: (i) as to the
financial statements or other financial or numerical data contained in the
Chevron Registration Statement, the Chevron Prospectus, the Serial Registration
Statement or the Serial Prospectus; and (ii) with respect to any registrant
under the Serial Registration Statement other than Chevron Transport or Chevron
or the respective obligations of any such registrant.
The opinions set forth in the foregoing are subject to the following
qualifications:
Whenever a statement herein is qualified by "to the best of our
knowledge" or similar phrase, it indicates that in the course of our
representation of Chevron and Chevron Transport no information that would give
us current actual knowledge of the inaccuracy of such statement has come to the
attention of the attorneys in this firm who have rendered legal services in
connection with this transaction, including the principal partners of this firm
who are familiar with matters relating to Chevron and Chevron Transport. We
have not made any independent investigation to determine the accuracy of such
statement, except as expressly
4
<PAGE>
described herein. No inference as to our knowledge of any matters bearing on
the accuracy of such statement should be drawn from the fact of our
representation of Chevron and Chevron Transport in other matters in which such
attorneys are not involved.
This opinion is rendered by us as counsel for Chevron and Chevron
Transport solely for your benefit in connection with the transaction referred to
herein and may not be relied upon by you in connection with any other
transaction and may not be relied upon by any other person without our prior
written consent.
Very truly yours,
5
<PAGE>
EXHIBIT B
Opinion of Thacher Proffitt & Wood,
Special Counsel for
California Petroleum and the Owners
___________, 1995
Donaldson, Lufkin & Jenrette
Securities Corporation
140 Broadway
New York, New York 10005
California Petroleum Transport Corporation
Serial First Preferred Mortgage Notes
Dear Sirs:
We have acted as counsel to California Petroleum Transport Corporation
("California Petroleum"), CalPetro Tankers (Bahamas I) Limited ("CalPetro I"),
CalPetro Tankers (Bahamas II) Limited ("CalPetro II"), CalPetro Tankers (Bahamas
III) Limited ("CalPetro III") and CalPetro Tankers (IOM) Limited ("CalPetro
IOM"; CalPetro I, CalPetro II, CalPetro III and CalPetro IOM, each, an "Owner",
and collectively, the "Owners"), in connection with the issuance of California
Petroleum Transport Corporation Serial First Preferred Mortgage Notes maturing
serially from 1996 to 2006 (the "Serial Mortgage Notes"). The Serial Mortgage
Notes were issued pursuant to a Serial Indenture, dated as of ________ 1, 1995
(the "Serial Indenture"), among California Petroleum as issuer, Chemical Trust
Company of California as the indenture trustee (the "Trustee") and, solely for
purposes of the Trust Indenture Act of 1939, as amended, Chevron Corporation
("Chevron"). The Serial Mortgage Notes were offered pursuant to a Prospectus,
dated ___________, 1995 (the "Prospectus"), filed pursuant to a Registration
Statement, as amended, on Forms F-1, S-1 and S-3 (No. 33-56377) (the
"Registration Statement") by California Petroleum and the Owners. California
Petroleum will sell the Serial Mortgage Notes to Donaldson, Lufkin & Jenrette
Securities Corporation (the "Underwriter") pursuant to an Underwriting
Agreement, dated ___________, 1995 (the "Underwriting Agreement"; the
Underwriting Agreement and the Serial Indenture, together, "the Agreements"),
among California Petroleum, the Owners, Chevron, Chevron Transport Corporation
("Chevron Transport") and the Underwriter. Contemporaneously with the issuance
of the Serial Mortgage Notes, California Petroleum proposes to issue California
<PAGE>
Petroleum Transport Corporation Term First Preferred Mortgage Notes Due 2015
(the "Term Mortgage Notes") pursuant to a Term Indenture, dated the date hereof
(the "Term Indenture").
The proceeds from the sale of the Serial Mortgage Notes, together with the
proceeds from the sale of the Term Mortgage Notes, will be loaned by California
Petroleum to the Owners on a joint and several basis to fund, after paying
certain fees and expenses, the acquisition by each Owner of a recently
constructed oil tanker from Chevron Transport pursuant to a Vessel Purchase
Agreement, dated ___________, 1995 (the "Vessel Purchase Agreements"), between
such Owner and Chevron Transport. Initially, each Owner will enter into a
bareboat charter (each, an "Initial Charter") with Chevron Transport with a term
expiring on ______________, 2015, subject to earlier termination at the option
of Chevron Transport. The obligations of Chevron Transport under each Initial
Charter will be guaranteed by Chevron. Capitalized terms not defined herein
have the meanings set forth in the Agreements. This opinion is rendered
pursuant to Section 10(f) of the Underwriting Agreement.
In connection with rendering this opinion letter, we have examined the
Agreements, the Security Documents, the Initial Charters, the Vessel Purchase
Agreements, the Registration Statement and the Prospectus, the Serial Mortgage
Notes and such other documents as we have deemed necessary. As to matters of
fact, we have examined and relied upon representations of parties to the
Agreements, the Initial Charters, the Vessel Purchase Agreements and the
Security Documents contained in such documents and, where we have deemed
appropriate, representations or certifications of officers or public officials.
We have assumed the authenticity of all documents submitted to us as originals,
the genuineness of all signatures, the legal capacity of natural persons and the
conformity to the originals of all documents submitted to us as copies. We have
assumed that all parties had the corporate power and authority to enter into and
perform all obligations thereunder. As to such parties, we also have assumed
the due authorization by all requisite corporate action, the due execution and
delivery and the enforceability of such documents. We have further assumed that
there is not and will not be any other agreement that modifies or supplements
the agreements expressed in the Agreements, the Initial Charters, the Vessel
Purchase Agreements and the Security Documents.
In rendering this opinion letter, we do not express any opinion concerning any
law other than the law of the State of New York, the law of the Republic of
Liberia and the federal laws of the United States. We do not express any
opinion concerning the "doing business" laws or the securities laws of any
jurisdiction other than the federal securities laws of the United States. We do
not express any opinion on any subject not expressly addressed herein. With
respect to the law of the Republic of Liberia, we are not admitted to practice
in the courts of the Republic of Liberia. However, we have dealt regularly with
matters relating to the maritime laws of the Republic of Liberia. We are also
familiar with the current compilations of the
2
<PAGE>
Liberian Maritime Law as furnished to us by Liberian Services, Inc. in New York
City.
Based upon and subject to the foregoing, it is our opinion that:
1. The Serial Mortgage Notes, when executed and authenticated in accordance
with the provisions of the Serial Indenture and delivered to and paid for by the
Underwriter in accordance with the terms of the Underwriting Agreement, will be
entitled to the benefits of the Serial Indenture and will be valid and binding
obligations of California Petroleum, enforceable against California Petroleum in
accordance with their terms except as enforceability may be limited by (i)
bankruptcy, insolvency, liquidation, receivership, moratorium, reorganization or
other similar laws affecting the rights of creditors and (ii) general principles
of equity, whether enforcement is sought in a proceeding in equity or at law.
2. The Underwriting Agreement is a valid and binding agreement of California
Petroleum, enforceable against California Petroleum in accordance with its
terms.
3. The Underwriting Agreement is a valid and binding agreement of each of
CalPetro I, CalPetro II, CalPetro III and CalPetro IOM, enforceable against each
in accordance with its terms.
4. The Serial Indenture has been duly qualified under the Trust Indenture
Act of 1939, as amended, has been duly authorized, executed and delivered by
California Petroleum and is a valid and binding agreement of California
Petroleum, enforceable against it in accordance with its terms, except as
enforceability may be limited by (i) bankruptcy, insolvency, liquidation,
receivership, moratorium, reorganization or other similar laws affecting the
rights of creditors and (ii) general principles of equity, whether enforcement
is sought in a proceeding in equity or at law.
5. Each of the Security Documents to which California Petroleum is a party
is a valid and binding agreement of California Petroleum, enforceable against it
in accordance with its terms, except as enforceability may be limited by (i)
bankruptcy, insolvency, liquidation, receivership, moratorium, reorganization or
other similar laws affecting the rights of creditors and (ii) general principles
of equity, whether enforcement is sought in a proceeding in equity or at law.
6. Each of the Vessel Purchase Agreements, the Initial Charters and the
Security Documents governed by New York law, to which CalPetro I, CalPetro II,
CalPetro III or CalPetro IOM is a party, is a valid and binding agreement of
such Owner, enforceable against it in accordance with its terms, except as
enforceability may be limited by (i) bankruptcy, insolvency, liquidation,
receivership, moratorium,
3
<PAGE>
reorganization or other similar laws affecting the rights of creditors and (ii)
general principles of equity, whether enforcement is sought in a proceeding in
equity or at law.
7. The Registration Statement has become effective under the Securities Act
of 1933, as amended (the "Act"). To the best of our knowledge, no stop order
suspending the effectiveness of the Registration Statement has been issued and
not withdrawn, and no proceedings for that purpose have been instituted or
threatened under Section 8(d) of the Act.
8. The statements under the captions "Description of Notes" and "The
Mortgages" in the Prospectus, as amended, insofar as such statements constitute
a summary of legal matters documents or proceedings referred to therein, fairly
present the information called for with respect to such legal matters, documents
and proceedings.
9. No consent, approval, authorization or order of any federal or State of
New York court or governmental agency or body is required for the consummation
by each Owner of the transactions contemplated by the terms of the Agreements,
the Vessel Purchase Agreements, the Initial Charters and the Security Documents,
except (a) such as have been obtained under the Act and (b) such as may be
required under the blue sky laws of any jurisdiction in connection with the
purchase and the offer and sale of the Serial Mortgage Notes by the Underwriter,
as to which we express no opinion.
10. Neither the sale of the Serial Mortgage Notes to the Underwriter pursuant
to, nor the consummation of any other of the transactions contemplated by or the
fulfillment by each Owner of the terms of, the Agreements will result in a
breach of any federal or State of New York statute or regulation or, to the best
of our knowledge, conflict with, result in a breach, violation or acceleration
of or constitute a default under any order of any federal or State of New York
court, regulatory body, administrative agency or other governmental body having
jurisdiction over any Owner.
11. Neither California Petroleum nor any Owner is an "investment company" or
a company "controlled" by an "investment company" within the meaning of the
Investment Company Act of 1940, as amended.
12. CalPetro III is duly registered as a Foreign Maritime Entity in the
Republic of Liberia and has obtained a waiver, pursuant to Section 51(6) of the
Liberian Maritime Law, of the Liberian ownership requirements set forth in
Section 51(2) of the Liberian Maritime Law.
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<PAGE>
13. Based upon the records of the Deputy Commissioner of Maritime Affairs of
the Republic of Liberia maintained in New York, New York, the Vessel "W.E.
Crain" and the Vessel "Chevron Mariner" are registered under the laws of the
Republic of Liberia in the ownership of CalPetro III and CalPetro IOM,
respectively, free of all mortgages, liens and encumbrances of record other than
the Mortgage recorded against such Vessel.
14. Based upon the records of the Deputy Commission of Maritime Affairs of
the Republic of Liberia maintained in New York, New York, the mortgage on the
Vessel "W.E. Crain" and the mortgage on the Vessel "Chevron Mariner" have been
duly recorded in the Office of Deputy Commissioner of Maritime Affairs of the
Republic of Liberia in New York on the date hereof in Book PM _____ at Page
______, and each such Mortgage constitutes a first preferred mortgage lien on
the Vessel "W.E. Crain" and Vessel "Chevron Mariner", respectively, in favor of
the Collateral Trustee. The Collateral Trustee has all the rights of a holder
of a first preferred ship mortgage on the Vessel "W.E. Crain" and the Vessel
"Chevron Mariner".
This opinion letter is rendered for the sole benefit of the addressee hereof,
and no other person or entity is entitled to rely hereon. Copies of this
opinion letter may not be furnished to any other party or entity, nor may any
portion of this letter be quoted, circulated or referred to in any other
document.
Very truly yours,
Thacher, Proffitt & Wood
By
5
<PAGE>
Opinion of Thacher Proffitt & Wood,
Special Counsel for
California Petroleum and the Owners
___________, 1995
Donaldson, Lufkin & Jenrette
Securities Corporation
140 Broadway
New York, New York 10005
California Petroleum Transport Corporation
Serial First Preferred Mortgage Notes
-------------------------------------
Dear Sirs:
We have acted as counsel to California Petroleum Transport Corporation
("California Petroleum"), CalPetro Tankers (Bahamas I) Limited ("CalPetro I"),
CalPetro Tankers (Bahamas II) Limited ("CalPetro II"), CalPetro Tankers (Bahamas
III) Limited ("CalPetro III") and CalPetro Tankers (IOM) Limited ("CalPetro
IOM"; CalPetro I, CalPetro II, CalPetro III and CalPetro IOM, each, an "Owner",
and collectively, the "Owners"), in connection with the issuance of California
Petroleum Transport Corporation Serial First Preferred Mortgage Notes maturing
serially from 1996 to 2006 (the "Serial Mortgage Notes"). The Serial Mortgage
Notes were issued pursuant to a Serial Indenture, dated as of _________ 1, 1995
(the "Serial Indenture"), among California Petroleum as issuer, Chemical Trust
Company of California as the indenture trustee (the "Serial Trustee") and,
solely for purposes of the Trust Indenture Act of 1939, as amended, Chevron
Corporation ("Chevron"). The Serial Mortgage Notes are being offered pursuant
to a Prospectus, dated ___________, 1995, filed pursuant to a Registration
Statement, as amended, on Forms F-1, S-1 and S-3 (No. 33-56377) by California
Petroleum and the Owners. California Petroleum will sell the Serial Mortgage
Notes to Donaldson, Lufkin & Jenrette Securities Corporation (the "Underwriter")
pursuant to an Underwriting Agreement, dated ___________, 1995 (the
"Underwriting Agreement"), among California Petroleum, the Owners, Chevron,
Chevron Transport Corporation ("Chevron Transport") and the Underwriter.
Contemporaneously with the issuance of the Serial Mortgage Notes, California
Petroleum proposes to issue California Petroleum Transport Corporation Term
First Preferred Mortgage Notes Due 2015 (the "Term Mortgage Notes") pursuant to
a Term Indenture, dated the date hereof (the "Term Indenture").
<PAGE>
The proceeds from the sale of the Serial Mortgage Notes, together with the
proceeds from the sale of the Term Mortgage Notes, will be loaned by California
Petroleum to the Owners on a joint and several basis to fund, after paying
certain fees and expenses, the acquisition by each Owner of a recently
constructed oil tanker from Chevron Transport. Initially, each Owner will enter
into a bareboat charter (each, an "Initial Charter") with Chevron Transport with
a term expiring on ______________, 2015, subject to earlier termination at the
option of Chevron Transport. The obligations of Chevron Transport under each
Initial Charter will be guaranteed by Chevron. Capitalized terms used but not
defined herein have the meanings set forth in the Agreements. This opinion is
rendered pursuant to Section 10(f) of the Underwriting Agreement.
The primary purpose of our professional engagement was not to establish
factual matters. Many wholly or partially non-legal determinations were
involved in the preparation of the Prospectus and the Registration Statement.
Accordingly, we are not advising in this letter with respect to and do not
assume any responsibility for the accuracy, completeness or fairness of the
statements contained in the Prospectus and the Registration Statement and make
no representation that we have otherwise independently verified the accuracy,
completeness or fairness of such statements. In particular and without limiting
the foregoing, we have not examined any accounting, financial or statistical
records not included in the Prospectus and the Registration Statement from which
the information and statements included therein are derived. We express no
advice as to any such accounting, financial or statistical information contained
in the Prospectus and the Registration Statement. We also note that we are not
experts with respect to any portion of the Registration Statement, including
without limitation such financial and statistical information, except to the
extent we may be deemed to be "experts" within the meaning of the Securities Act
of 1933 or the rules and regulations of the Securities and Exchange Commission
issued thereunder, with respect to the matters specifically mentioned in our
opinion letter referred to above in this paragraph.
We do not act as general counsel to the Owners or California Petroleum.
However, in the course of our acting as counsel to California Petroleum and the
Owners in connection with its preparation of the Prospectus and the Registration
Statement, we met in conferences and participated in telephone conversations
with representatives of California Petroleum, Ropes & Gray in their capacity as
counsel to California Petroleum, the Owners, the Underwriter, Davis Polk &
Wardwell in their capacity as counsel to the Underwriter, the Indenture Trustee
and White and Case in their capacity as counsel to the Indenture Trustee.
During those conferences and telephone conversations the contents of the
Prospectus and the Registration Statement and related matters were discussed.
In addition, we reviewed certain corporate documents furnished to us by
California Petroleum and the Owners or otherwise in our possession. We have not
otherwise undertaken any procedures, other than the review of documents
delivered to the Underwriter on the date hereof pursuant to the
2
<PAGE>
Underwriting Agreement, which were intended or likely to elicit information
concerning the accuracy, completeness or fairness of the statements made in the
Prospectus and the Registration Statement.
Based upon and subject to the foregoing, our understanding of applicable law
and the experience we have gained in our practice thereunder, we hereby advise
you that no information has come to our attention that causes us to believe that
(i) the Registration Statement, as of the effective date of the most recent
amendment thereto, as of the date of the Prospectus or as of the date hereof,
contained or contains any untrue statement of a material fact or omitted or
omits to state a material fact required to be stated therein or necessary to
make the statements therein not misleading, or (ii) the Prospectus as of the
effective date of the most recent amendment to the Registration Statement or as
of the date hereof, contained or contains any untrue statement of a material
fact or omitted or omits to state a material fact necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading.
This letter is provided for the sole benefit of the addressee hereof, and no
other person or entity is entitled to rely hereon. Copies of this letter may
not be furnished to any other party or entity, nor may any portion of this
letter be quoted, circulated or referred to in any other document.
Very truly yours,
THACHER PROFFITT & WOOD
By
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EXHIBIT C
Opinion of McKinney, Bancroft & Hughes,
Special Bahamian Counsel for
CalPetro Tankers (Bahamas I) Limited,
CalPetro Tankers (Bahamas II) Limited,
CalPetro Tankers (Bahamas III) Limited
The Opinion of McKinney, Bancroft & Hughes,
Special Bahamian Counsel for CalPetro Tankers (Bahamas I) Limited, CalPetro
Tankers (Bahamas II) Limited and CalPetro Tankers (Bahamas III) Limited, to be
delivered pursuant to Section 11(h) of the Underwriting Agreement shall be to
the effect that:
(a) Each of CalPetro Tankers (Bahamas I) Limited, CalPetro Tankers
(Bahamas II) Limited and CalPetro Tankers (Bahamas III) Limited
(collectively, the "Owners") has been duly incorporated, is validly
existing as a corporation in good standing under the laws of its
jurisdiction of incorporation and has the corporate power and authority
required to carry on its business as it is currently being conducted and to
own, lease and operate its properties;
(b) Each of the Owners is duly qualified and is in good standing as a
foreign corporation authorized to do business in each jurisdiction in which
the nature of its business or its ownership or leasing of property requires
such qualification, except where the failure to be so qualified would not
have a material adverse effect on such Company;
(c) the Underwriting Agreement has been duly authorized, executed and
delivered by each Owner;
(d) each of the Vessel Purchase Agreements, the Initial Charters and the
Security Documents to which each Owner is a party has been duly authorized,
executed and delivered by each Owner;
(e) none of the Owners is in violation of its respective charter or by-
laws and, to the best of such counsel's knowledge after due inquiry, no
Owner is in default in the performance of any obligation, agreement or
condition contained in any bond, debenture, note, or any other evidence of
indebtedness or in any other agreement, indenture or instrument material to
the conduct of
<PAGE>
the business of such Owner, to which such Owner is a party or by which such
Owner or its property is bound;
(f) the execution, delivery and performance of the Underwriting
Agreement, the Vessel Purchase Agreements, the Initial Charters and the
Security Documents to which each Owner is a party and compliance by each
Owner with all the provisions thereof and the consummation of the
transactions contemplated thereby will not require any consent, approval,
authorization or other order of any court, regulatory body, administrative
agency or other governmental body of the Commonwealth of The Bahamas and
will not conflict with or constitute a breach of any of the terms or
provisions of, or a default under, the charter or by-laws of such Owner or
any agreement, indenture or other instrument to which such Owner is a party
or by which such Owner or its properties is bound, or violate or conflict
with any laws, administrative regulations or rulings or court decrees
applicable to such Owner or any of its property;
(g) after due inquiry, such counsel does not know of any legal or
governmental proceeding pending or threatened to which any Owner is a party
or to which any of their respective property is subject which is required
to be described in the Registration Statement or the Prospectus and is not
so described, or of any contract or other document which is required to be
described in the Registration Statement or the Prospectus or is required to
be filed as an exhibit to the Registration Statement which is not described
or filed as required;
(h) The choice of the law of the State of New York to govern the
Underwriting Agreement, the Vessel Purchase Agreements, the Initial
Charters and the Security Documents governed by New York law to which each
Owner is a party is valid under the laws of the Commonwealth of The Bahamas
and a court in the Commonwealth of The Bahamas would uphold such choice of
law in a suit, action or other proceeding on such agreement or document
brought in a court of the Commonwealth of The Bahamas;
(i) Any final and conclusive judgement obtained in the United States,
which is not subject to appeal and is enforceable in the United States,
with respect to the obligations of the Owners under the Underwriting
Agreement, the Vessel Purchase Agreements, the Initial Charters and the
Security Documents would be given effect and would be enforceable by the
competent courts of the Commonwealth of The Bahamas without a review of the
merits;
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<PAGE>
(j) the statements under the caption "CalPetro Bahamas I, CalPetro
Bahamas II and CalPetro Bahamas III" in Item 14 of Part II of the
Registration Statement insofar as such statements constitute a summary of
legal matters documents or proceedings referred to therein, fairly present
the information called for with respect to such legal matters, documents
and proceedings;
(k) the Deed of Covenants is a valid and binding agreement of CalPetro
Tankers (Bahamas I) Limited and CalPetro Tankers (Bahamas II) Limited
enforceable in accordance with its terms except as (a) the enforceability
thereof may be limited by bankruptcy, insolvency or similar laws affecting
creditors' rights generally and (b) rights of acceleration and the
availability of equitable remedies may be limited by equitable principles
of general applicability;
[(l) the S. Ginn and the C. Rice are registered under the laws of the
Commonwealth of The Bahamas in the ownership of CalPetro Tankers (Bahamas
I) Limited and CalPetro Tankers (Bahamas II) Limited, respectively, free of
all mortgages, liens and encumbrances of record other than the Mortgage
recorded against such Vessel;]
[(m) the S. Ginn Mortgage and the C. Rice Mortgage have been duly
recorded in the [Name of Maritime Affairs Office] of the Commonwealth of
The Bahamas on the date hereof in, in the case of the S. Ginn Mortgage, in
__________ at __________, and in the case of the C. Rice Mortgage, in
_________ at _________, and each such Mortgage constitutes a first
preferred mortgage lien on the applicable Vessel in favor of the Collateral
Trustee and the Collateral Trustee has all the rights of a holder of a
first preferred ship mortgage on the Vessel;]
[(n) We understand that Section 105(a) of the United States Bankruptcy
Code (the "Code") gives the U.S. Courts a general equitable jurisdiction to
treat the assets of a group of companies as a single "pool" for
distribution amongst all the creditors of each separate company within the
group ("substantive consolidation"). The insolvency law of the
Commonwealth of The Bahamas does not have any equivalent of the doctrine of
substantive consolidation. Where several Bahamian companies comprising a
group (whether sharing a common parent or common shareholders) are placed
into liquidation, the Bahamian court does not have jurisdiction to "pool"
the assets of all of the group companies but is bound to treat each company
as a separate legal entity whose assets fall to be distributed amongst that
particular company's creditors (pro for rata amongst the company's
unsecured creditors to the extent that the assets of the company are
insufficient to pay all its unsecured creditors in full).
3
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The common law doctrine of separate corporate personality enshrined in
the old case of Salomon v. Salomon & Co. [1897] AC 22 under which the
English courts refuse to "lift the veil" of separate corporate entities in
order to allow creditors of a company to recover from the person(s) who
control the company in question is followed by the courts of the
Commonwealth of The Bahamas. Attempts to "pierce the corporate veil" in
the courts of The United Kingdom under the common law are also followed by
the courts of the Commonwealth of The Bahamas.
Until relatively recently there was considerable debate as to the extent
to which the English courts, hence the Bahamian courts, would be prepared
to "pierce the veil" to overturn the doctrine of Salomon v. Salomon & Co.
The position was clarified by the English Court of Appeals in the case of
Adams v Cape Industries Inc. [1990] 2 WLR 657. As a result of that ruling,
the English courts are only prepared to look behind the corporate "veil" in
exceptional circumstances and this decision mirrors the legal position of
the Bahamian courts. The exceptional circumstances include where the
corporate vehicle is used in an attempt to avoid the consequences of a
fraud or breach of contract or other legal obligation. However, the
English Court of Appeal clearly rejected the argument that the English
courts should look at the commercial realities of a group of companies and,
where appropriate, treat the group as a single unit for legal purposes.
This position is reinforced by a number of recent cases where the English
courts have been unwilling to permit creditors of a subsidiary company to
recover against the company's parent: Re Southard [1979] 1 WLR 1988 and
Kleinwort Benson Ltd. v Malaysia Mining Corporation Berhad [1989] 1 WLR
379. The position adopted by the English courts is equally applicable
within the Bahamas although there have been no recent decisions of the
courts of the Commonwealth of The Bahamas with regard to that issue.
Accordingly, absent the exceptional circumstances referred to above, the
common law position is now relatively settled such that the Bahamian courts
will not treat a group of companies as a single unit.
Based on the facts set forth above it is our opinion that the courts of
the Commonwealth of The Bahamas would not order substantive consolidation
of the assets of the Companies with those of the other Companies or with
those of its shareholders as it is a concept which is foreign to Bahamian
law.]
The opinion of McKinney, Bancroft & Hughes described above shall be
limited to the laws of the Bahamas and rendered to you at the request of
CalPetro Tankers (Bahamas I) Limited, CalPetro Tankers (Bahamas II) Limited and
CalPetro Tankers (Bahamas III) Limited and shall so state therein.
4
<PAGE>
EXHIBIT D
Opinion of Cains,
Special Isle of Man Counsel for
CalPetro Tankers (IOM) Limited,
CalPetro Tankers (IOM) Limited
c/o Thacher Proffit & Wood
2 World Trade Centre
New York, New York 10048 [ ] March, 1995
Dear Sirs:
Re: Chevron Tanker Financing
------------------------
We have acted as your legal advisors in the Isle of Man in connection with the
above. The following documents ("the Documents") have been considered by us:
1. Vessel purchase agreement dated [ ] March, 1995 between CalPetro Tankers
(IOM) Limited ("Calpetro" or "the Owner") and Chevron Transport Corporation
("CTC") ("the Vessel Purchase Agreement");
2. bareboat charter dated [ ] March, 1995 between CalPetro and CTC (the
"Initial Charter");
3. aerial loan agreement dated [ ] March, 1995 between Calpetro and
California Petroleum Transport Corporation ("CPTC");
4. term loan agreement dated [ ] March, 1995 between CalPetro and CPTC;
5. first preferred ship mortgage dated [ ] March, 1995 between CalPetro and
CPTC;
6. assignment of earnings dated [ ] March, 1995 and insurances from CalPetro
to CPTC;
7. assignment of charter dated [ ] March, 1995 between CalPetro and CPTC;
8. assignment of purchase agreement dated [ ] March, 1995 between CalPetro
and CPTC;
<PAGE>
9. assignment of guaranty dated [ ] March, 1995 by CalPetro in favour of
CPTC;
10. issue of one debenture dated [ ] March, 1995 to which CalPetro and CPTC
are parties ("the Issue of One Debenture");
11. a management and re-marketing agreement dated [ ] March, 1995 between P.D.
Gram & Co. ANS, Barber Ship Management Group and CalPetro;
12. assignment of management agreement dated [ ] March, 1995 between CPTC and
CalPetro;
13. an underwriting agreement for value US$117,900,000 dated [ ] March, 1995
to which, inter alia, Donaldson, Lufkin & Jenrette Securities Corporation
and CalPetro are parties;
14. an underwriting agreement for value US$168,500,000 dated [ ] March, 1995
to which, inter alia, Donaldson, Lufkin & Jenrette Securities Corporation
and CalPetro are parties (together with document 13 "the Underwriting
Agreement"); and
15. board minutes of a meeting ("the Meeting") of the board of directors of
CalPetro dated [ ] March, 1995.
Documents numbered 5, 6, 7, 8, 9, 10 and 12 are together hereinafter referred to
as "the Security Documents".
In arriving at the opinion expressed below, in addition to examining the
Documents, we have examined such other documents as have been revealed by
searches of the Isle of Man Companies and General Registries ("the Registries")
undertaken on [ ] March, 1995 in respect of CalPetro.
In arriving at our opinion we have assumed:
(a) the genuineness of all signatures on original documents; the correctness of
all facts stated in and representations made in the documents which we have
examined (except as otherwise opined upon herein) and the conformity to
original documents of all copy documents;
(b) that each of the parties to the Documents (other than CalPetro) is duly
incorporated, validly existing and fully authorised, qualified and
empowered under their respective constitutions and any applicable laws to
carry on business and to enter into and perform their respective
obligations and exercise their respective rights under each of the
Documents;
2
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(c) that each of the parties to the Documents (other than CalPetro) has taken
all corporate and other action required to authorise the execution of the
Documents and the performance of their respective obligations thereunder;
(d) that there are no provisions of the laws of any jurisdiction outside the
Isle of Man or any agreement to which any of the parties to the Documents
ar a party which would be contravened by such execution or delivery and
that, insofar as any obligation under the Documents falls to be performed
in any jurisdiction outside the Isle of Man, its performance will not be
unlawful by virtue of the laws of that jurisdiction;
(e) that the Documents are valid and legally binding under the laws by which
they are expressed to be governed;
(f) the accuracy and currency of the records and filing systems maintained at
the public offices where we have searched or inquired or have caused
searches or inquiries to be conducted;
(g) that all necessary consents or approvals of, and all necessary
registrations or other action by or with, any regulatory authority or any
other person or entity outside the Isle of Man have been or will be
obtained, performed or taken in relation to the execution, delivery and
performance of each of the Documents by each of the parties thereto;
(h) that the Meeting was duly convened and held with proper notice being given
to each of the Directors of CalPetro;
(i) that all appropriate notices of and consents to assignment required to be
given or which it is desirable are given in connection with any of the
Documents are, in fact, given in timely fashion; and
(j) that entering into the Documents and performing the obligations which
CalPetro undertakes is to its commercial benefit.
Based on and subject to the foregoing and subject to the further qualifications
set out below, we are of the opinion that:
(a) the Owner has been duly incorporated in the Isle of Man, is validly
existing as a corporation in good standing under the laws of the Isle of
Man and has the corporate power and authority required to carry on its
business and to own, lease and operate its properties;
(b) pursuant to the Meeting, entry into the Underwriting Agreement has been
duly authorised and executed by the Owner;
3
<PAGE>
(c) pursuant to the Meeting, entry into each of the Vessel Purchase Agreement,
the Initial Charter and the Security Documents has been duly authorised and
executed by the Owner;
(d) to the best of our knowledge and belief (having made enquiry only of the
Company Secretary of the Owner upon whom we have relied), the Owner is not
in violation of its memorandum and articles of association and the Owner is
not in default in the performance of any obligation, agreement or condition
contained in any bond, debenture, note, or any other evidence of
indebtedness or in any other agreement, indenture or instrument material to
the conduct of the business of the Owner, to which it is a party or by
which it or its property is bound;
(e) the execution, delivery and performance of each of the Underwriting
Agreement, the Vessel Purchase Agreement, the Initial Charter and the
Security Documents by the Owner and compliance by the Owner with all the
provisions thereof and the consummation of the transactions contemplated
thereby will not require any consent, approval, authorisation or other
order of any court, regulatory body, administrative agency or other
governmental body of the Isle of Man and will not conflict with or
constitute a breach of any of the terms or provisions of, or a default
under, the memorandum and articles of association of the Owner or, we are
informed by the Company Secretary of the Owner: (i) any agreement,
indenture or other instrument to which the Owner is a party or to which any
of its properties is bound; or (ii) violate or conflict with any laws,
administrative regulations or rulings or court decrees applicable to the
Owner or any of its property;
(f) after enquiry of the Company Secretary of the Owner upon whom we have
relied, there are no legal or governmental proceedings pending or
threatened to which the Owner is a party or to which any of its property is
subject which is material for inclusion in the Registration Statement or
the Prospectus (as the same are defined in the Underwriting Agreement) and
is not so described, or of any contract or other document which is material
for inclusion in the Registration Statement or the Prospectus or is
required to be filed as an exhibit to the Registration Statement which is
not described or filed as required;
(g) the choice of the law of the State of New York to govern the Underwriting
agreement and the Security Documents governed by New York law to which the
Owner is a party is valid under the laws of the Isle of Man and a court in
the Isle of Man would uphold such choice of law in a suit, action or other
proceeding on such agreement or document in a court of the Isle of Man;
4
<PAGE>
(h) the Issue of One Debenture to which the Owner is a party creates, for the
benefit of the Collateral Trustee, as secured party on behalf of the
holders from time to time of the Secured Obligations (as therein defined),
a valid, perfected security interest in the assets of the Owner and the
proceeds thereof, which security interest is prior to all liens arising by,
through or under the Owner of which we are aware, except for those other
liens that by operation of law take priority over a previously perfected
security interest or lien; and
(i) on the principle laid down in Saloman v A Saloman and Co. Limited [1897]
AC 22 it is our opinion that the courts of the Isle of Man are unlikely to
order substantive consolidation of the assets of the Owner with those of
third parties or with those of its shareholders, save in the case of fraud.
The opinions expressed above are given subject to the following reservations:
(a) enforcement of any of the Documents may be limited by bankruptcy,
insolvency, liquidation, reorganization, court schemes, moratoriums, the
doctrine of frustration and laws relating to or affecting the rights of
creditors generally;
(b) enforcement of any of the Documents may be limited by general principles of
equity, and, in particular, equitable remedies are available only at the
discretion of the Court and are not available where damages are considered
to be an adequate remedy;
(c) claims may be or become barred in the Isle of Man under the Limitation Acts
1984 and 1988 (Acts of Tynwald) or become subject to a defence of set-off
or counterclaim;
(d) under Isle of Man law the terms of an agreement under hand may be varied by
oral or written agreement of the parties;
(e) a foreign judgment would not be enforced by an Isle of Man Court; however
an action brought in the Isle of Man based upon a foreign judgment may be
brought without a re-trial or re-examination of the matters thereby
adjudicated upon (provided that the foreign judgment is not obtained by or
contrary to Isle of Man public policy. Effective enforcement of the
foreign judgment may also be withheld if the relevant judgment is not a
final and conclusive money judgment being both unrelated to taxation and
free of conflict with any other judgment in the same cause of action;
5
<PAGE>
(f) provisions relating to set-off contained in any of the Documents will only
be enforceable in a liquidation of the Company insofar as they do not
purport to contract out of the mandatory set-off rules imposed by the
Bankruptcy Code 1892;
(g) if proceedings are commenced in the Isle of Man Courts any provision in any
of the Documents to the effect that calculations and/or certifications will
be conclusive and binding will not be effective in Manx law if such
calculations and/or certifications are fraudulent or erroneous on their
face and will not necessarily prevent judicial enquiry into the merits of
any claim respecting any such calculation or certification;
(h) if proceedings are commenced in the Isle of Man Courts, where in any of the
Documents a party is vested with a discretion or may determine a matter in
its opinion, the law of the Isle of Man may require that such discretion is
exercised reasonably or that such opinion is based on reasonable grounds;
(i) if the Security Documents have been registered at Companies Registry in the
Isle of Man pursuant to Section 79 of the Companies Act 1931 (an Act of
Tynwald) within one month from their respective dates of creation therefore
they will not be void against a liquidator or creditor of CalPetro and
priority over other creditors will not be lost;
(j) provisions as to severability in any of the Documents may not be binding
and the question of whether or not provisions relating to invalidity may be
severed from other provisions in order to save such other provisions would
be determined by the Manx Courts at their discretion;
(k) no opinion is expressed: (i) as to whether the Manx Courts would construe
any of the Documents without giving effect to principles of conflict of
laws; or (ii) as to whether the obligations of CalPetro under the Issue of
One Debenture may be discharged, released, prejudiced or otherwise affected
by any act, omission or circumstance which, but for Section 4.2 of the
Issue of One Debenture might so operate or otherwise release or discharge
the Owner from the Term Obligations or the Serial Obligations as therein
defined; and
(l) this opinion addresses matters of law not fact and is confined entirely to
Isle of Man law.
6
<PAGE>
This opinion may be relied upon by you and may not be disclosed to or relied
upon by any other person without our prior written consent.
Yours faithfully,
CAINS
- -----
7
<PAGE>
Opinion of Cains,
Special Isle of Man Counsel for
CalPetro Tankers (IOM) Limited,
[ ] March, 1995
CalPetro Tankers (Bahamas I) Limited
c/o Thacher Proffit & Wood
2 World Trade Centre
New York
New York 10048
Dear Sirs,
Re: Chevron Tanker Financing - Samuel Ginn ("the Financing")
We have acted as your legal advisers in the Isle of Man in connection with the
above.
Pursuant to Isle of Man law, we confirm that, in connection with the Financing,
charges over property in the Isle of Man created by a foreign company which has
established a place of business in the Isle of Man (as has CalPetro Tankers
(Bahamas I) Limited ("CalPetro")) require to be registered within one month from
the date of their creation. Failure to effect such registration will, inter
alia, render the charge void against a liquidator of CalPetro.
We further confirm that WE HAVE FILED the following duly executed and dated
documents with the Registrar of Companies in the Isle of Man:
1. first preferred ship mortgage dated [ ] March, 1995 between CalPetro and
California Petroleum Transport Corporation ("CPTC") (with deed of
covenants) and statutory mortgage;
2. assignment of earnings dated [ ] March, 1995 and insurances from CalPetro
to CPTC;
3. assignment of charter dated [ ] March, 1995 between CalPetro and CPTC;
4. assignment of purchase agreement dated [ ] March, 1995 between CalPetro
and CPTC;
5. assignment of guaranty dated [ ] March, 1995 by CalPetro in favour of
CPTC;
<PAGE>
6. issue of one debenture dated [ ] March, 1995 to which CalPetro and CPTC are
parties;
7. assignment of management agreement dated [ ] March, 1995 between CPTC and
CalPetro.
Please note that the documents listed above ("the Documents") WHICH HAVE BEEN
filed at Companies Registry in the Isle of Man MAY ALSO NEED TO BE FILED to
protect the security interests which the Documents create in other
jurisdictions.
Yours faithfully,
CAINS
- -----
2
<PAGE>
Opinion of Cains,
Special Isle of Man Counsel for
CalPetro Tankers (IOM) Limited,
[ ] March, 1995
CalPetro Tankers (Bahamas III) Limited
c/o Thacher Proffit & Wood
2 World Trade Centre
New York
New York 10048
Dear Sirs:
Re: Chevron Tanker Financing - William E. Crain (the "Financing")
We have acted as your legal advisers in the Isle of Man in connection with the
above.
Pursuant to Isle of Man law, we confirm that, in connection with the Financing,
charges over property in the Isle of Man created by a foreign company which has
established a place of business in the Isle of Man (as has CalPetro Tankers
(Bahamas III) Limited ("CalPetro")) require to be registered within one month
from the date of their creation. Failure to effect such registration will,
inter alia, render the charge void against a liquidator of CalPetro.
We further confirm that we have filed the following duly executed and dated
documents with the Registrar of Companies in the Isle of Man:
1. first preferred ship mortgage dated [ ] March, 1995 between CalPetro and
California Petroleum Transport Corporation ("CPTC") (with deed of
covenants) and statutory mortgage;
2. assignment of earnings dated [ ] March, 1995 and insurances from CalPetro
to CPTC;
3. assignment of charter dated [ ] March, 1995 between CalPetro and CPTC;
4. assignment of purchase agreement dated [ ] March, 1995 between CalPetro
and CPTC;
<PAGE>
5. assignment of guaranty dated [ ] March, 1995 by CalPetro in favour of CPTC;
6. issue of one debenture dated [ ] March, 1995 to which CalPetro and CPTC
are parties;
7. assignment of management agreement dated [ ] March, 1995 between CPTC and
CalPetro.
Please note that the documents listed above (the "Documents") which have been
filed at Companies Registry in the Isle of Man may also need to be filed to
protect the security interests which the Documents create in other
jurisdictions.
Yours faithfully,
CAINS
- -----
2
<PAGE>
Opinion of Cains,
Special Isle of Man Counsel for
CalPetro Tankers (IOM) Limited,
[ ] March, 1995
CalPetro Tankers (Bahamas II) Limited
c/o Thacher Proffit & Wood
2 World Trade Centre
New York
New York 10048
Dear Sirs,
Re: Chevron Tanker Financing - Condoleezza Rice ("the Financing")
We have acted as your legal advisers in the Isle of Man in connection with the
above.
Pursuant to Isle of Man law, we confirm that, in connection with the Financing,
charges over property in the Isle of Man created by a foreign company which has
established a place of business in the Isle of Man (as has CalPetro Tankers
(Bahamas II) Limited ("CalPetro")) require to be registered within one month
from the date of their creation. Failure to effect such registration will,
inter alia, render the charge void against a liquidator of CalPetro.
We further confirm that we have filed the following duly executed and dated
documents with the Registrar of Companies in the Isle of Man:
1. first preferred ship mortgage dated [ ] March, 1995 between CalPetro
and California Petroleum Transport Corporation ("CPTC") (with deed of
covenants) and statutory mortgage;
2. assignment of earnings dated [ ] March, 1995 and insurances from
CalPetro to CPTC;
3. assignment of charter dated [ ] March, 1995 between CalPetro and
CPTC;
<PAGE>
4. assignment of purchase agreement dated [ ] March, 1995 between
CalPetro and CPTC;
5. assignment of guaranty dated [ ] March, 1995 by CalPetro in favour of
CPTC;
6. issue of one debenture dated [ ] March, 1995 to which CalPetro and
CPTC are parties;
7. assignment of management agreement dated [ ] March, 1995 between CPTC
and CalPetro.
Please note that the documents listed above ("the Documents") which have been
filed at Companies Registry in the Isle of Man may also need to be filed to
protect the security interests which the Documents create in other
jurisdictions.
Yours faithfully,
CAINS
- -----
2
<PAGE>
EXHIBIT E
Opinion of The Henries Law Firm,
Special Liberian Counsel for Chevron Transport
________ __, 1995
Donaldson, Lufkin & Jenrette
Securities Corporation
140 Broadway
New York, NY 10005
Gentlemen and Mesdames:
We have acted as counsel to Chevron Transport Corporation ("Chevron
Transport") in connection with your purchase from California Petroleum Transport
Corporation ("California Petroleum") of $167,500,000 aggregate principal amount
of its Serial First Preferred Mortgage Notes Maturing Serially from 1996 to 2006
(the "Serial Mortgage Notes") and $117,900,000 aggregate principal amount of its
___% First Preferred Mortgage Notes Due 2015 (the "Term Mortgage Notes," and
together with the Serial Mortgage Notes, the "Notes"). Such purchase of Serial
Mortgage Notes is made pursuant to the Underwriting Agreement dated _____ __,
1995 (the "Serial Underwriting Agreement") among California Petroleum, Chevron
Corporation ("Chevron"), Chevron Transport, certain other parties and you, and
such purchase of Term Mortgage Notes is made pursuant to the Underwriting
Agreement dated as of ________ __, 1995 (the "Term Underwriting Agreement," and
together with the Serial Underwriting Agreement, the "Underwriting Agreements")
among California Petroleum, Chevron, Chevron Transport, certain other parties
and you. The sale of the Notes is being effected in connection with the
execution and delivery of four Vessel Purchase Agreements (the "Vessel Purchase
Agreements") dated as of the date hereof between Chevron Transport and each of
CalPetro Tankers (Bahamas I) Limited, CalPetro Tankers (Bahamas II) Limited,
CalPetro Tankers (Bahamas III) Limited and CalPetro Tankers (IOM) Limited (the
"Owners"), and four Bareboat Charters (the "Initial Charters") dated as of the
date hereof between Chevron Transport and each of the Owners. This opinion is
furnished pursuant to Section 11(j) of the Serial Underwriting Agreement and
Section 11(j) of the Term Underwriting Agreement.
<PAGE>
We have examined executed copies of the Vessel Purchase Agreements, the
Initial Charters and the Underwriting Agreements. We have also examined such
other documents and certificates of public officials and representatives of
Chevron Transport as we have deemed necessary as a basis for the opinions
expressed herein. As to questions of fact material to such opinions, we have,
when relevant facts were not independently established, relied upon certificates
of officers or authorized representatives of Chevron Transport.
We have assumed the genuineness of all signatures and documents submitted
to us as originals, that all copies submitted to us conform to the originals,
the legal capacity of all natural persons, and as to documents executed by
entities other than Chevron Transport, that each of such entities has the power
to enter into and perform its respective obligations thereunder, and that such
documents have been duly authorized, executed and delivered by, and are binding
upon and enforceable against, each of such entities.
We express no opinion as to the laws of any jurisdiction other than
Liberia.
Based upon the foregoing and subject to the qualifications set forth
below, it is our opinion that:
1. Chevron Transport is validly existing as a corporation in good
standing under the laws of Liberia.
2. Each of the Initial Charters and the Vessel Purchase Agreements has
been duly authorized, executed and delivered by Chevron Transport and
constitutes a valid and binding obligation of Chevron Transport, enforceable in
accordance with its terms.
3. The Underwriting Agreements have been duly authorized, executed and
delivered by Chevron Transport.
4. The execution, delivery and performance of the terms of the
Underwriting Agreements, the Vessel Purchase Agreements and the Initial Charters
by Chevron Transport will not contravene any provision of the charter documents
of Chevron Transport.
5. The statements under the caption "Chevron Transport" in Item 15 of
Part II of the Registration Statement on Form S-3 (File No. 33-56373) filed by
Chevron Transport and Chevron with the Securities and Exchange Commission,
insofar as such statements constitute a summary of legal matters, documents or
proceedings referred to therein, fairly present the information called for with
respect to such legal matters, documents an proceedings.
2
<PAGE>
Our opinion in paragraph 2 is subject to and limited by: (i) the effect
of bankruptcy, insolvency, reorganization, receivership, conservatorship,
arrangement, moratorium or other laws affecting or relating to the rights of
creditors generally; and (ii) the rules governing the availability of specific
performance, injunctive relief or other equitable remedies and general
principles of equity, regardless of whether considered in a proceeding in equity
or at law.
This opinion is rendered by us as counsel for Chevron Transport solely
for your benefit in connection with the transaction referred to herein and may
not be relied upon by you in connection with any other transaction and may not
be relied upon by any other person without our prior written consent.
Very truly yours,
3
<PAGE>
EXHIBIT F
Opinion of Davis Polk & Wardwell,
Special Counsel for the Underwriter
The Opinion of Davis Polk & Wardwell, Special Counsel for the
Underwriter, to be delivered pursuant to Section 11(k) of the Underwriting
Agreement shall be to the effect that:
(a) the Serial Mortgage Notes have been duly authorized and, when
executed and authenticated in accordance with the provisions of the Serial
Indenture and delivered to and paid for by the Underwriter in accordance
with the terms of the Underwriting Agreement, will be entitled to the
benefits of the Serial Indenture and will be valid and binding obligations
of California Petroleum enforceable in accordance with their terms except
as (a) the enforceability thereof may be limited by bankruptcy, insolvency
or similar laws affecting creditors' rights generally and (b) rights of
acceleration and the availability of equitable remedies may be limited by
equitable principles of general applicability;
(b) Assuming that the execution, delivery and performance by Chevron,
Chevron Transport and each Company of the Underwriting Agreement are within
such company's corporate powers and have been duly authorized by all
necessary corporate action then the Underwriting Agreement is a valid and
binding agreement of Chevron, Chevron Transport and each Company
enforceable in accordance with its terms (except as rights to indemnity and
contribution hereunder may be limited by applicable law);
(c) the Serial Indenture has been duly qualified under the Trust
Indenture Act of 1939, as amended, and has been duly authorized, executed
and delivered by California Petroleum and Chevron and is a valid and
binding agreement of California Petroleum and Chevron, enforceable in
accordance with its terms except as (a) the enforceability thereof may be
limited by bankruptcy, insolvency or similar laws affecting creditors'
rights generally and (b) rights of acceleration and the availability of
equitable remedies may be limited by equitable principles of general
applicability;
(d) the statements under the captions "Description of Notes" and
"Underwriting" in the Prospectus, as amended or supplemented, insofar as
such statements constitute a summary of legal matters documents or
proceedings referred to therein, fairly present the information called for
with respect to such legal matters, documents and proceedings; and
<PAGE>
(e) (1) the Registration Statement and the Prospectus and any supplement
or amendment thereto (except for financial statements as to which no
opinion need be expressed) comply as to form in all material respects with
the Act, and (2) such counsel believes that (except for financial
statements, as aforesaid and except for that part of the Registration
Statement that constitutes the Form T-1) the Registration Statement and the
Prospectus included therein at the time the Registration Statement became
effective did not contain any untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary to make
the statements therein not misleading, and that the Prospectus, as amended
or supplemented, if applicable (except for financial statements, as
aforesaid) does not contain any untrue statement of a material fact or omit
to state a material fact necessary in order to make the statements therein,
in the light of the circumstances under which they were made, not
misleading.
In giving such opinion with respect to the matters covered by clause (e)
such counsel may state that their opinion and belief are based upon their
participation in the preparation of the Registration Statement and Prospectus
and any amendments or supplements thereto (but not including documents
incorporated therein by reference) and review and discussion of the contents
thereof (including documents incorporated therein by reference), but are without
independent check or verification except as specified.
Insofar as the foregoing opinion involves matters governed by the laws of
the Bahamas, the Isle of Man or Liberia such counsel may rely, without
independent investigation, upon the opinions of McKinney, Bancroft & Hughes,
Cains and The Henries Law Firm, respectively.
2
<PAGE>
EXHIBIT 4.1
================================================================================
Serial Indenture
Dated as of {DATE}, 1995
AMONG
CALIFORNIA PETROLEUM TRANSPORT CORPORATION,
CHEMICAL TRUST COMPANY OF CALIFORNIA,
as Indenture Trustee,
AND
CHEVRON CORPORATION
__________
$167,500,000
Serial First Preferred Mortgage Notes
Maturing Serially from 1996 to 2006
================================================================================
<PAGE>
TABLE OF CONTENTS
__________
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PARTIES..................................................................... 1
RECITALS.................................................................... 1
ARTICLE ONE
DEFINITIONS.
SECTION 1.1 Certain Terms Defined.......................................... 2
ARTICLE TWO
ISSUE, EXECUTION, FORM AND
REGISTRATION OF SERIAL MORTGAGE NOTES.
SECTION 2.1. Authentication and Delivery of
Serial Mortgage Notes........................................ 10
SECTION 2.2. Execution of Serial Mortgage Notes............................. 11
SECTION 2.3. Certificate of Authentication.................................. 12
SECTION 2.4. Form, Denomination and Date of
Serial Mortgage Notes; Payments of Interest.................. 12
SECTION 2.5. Registration, Transfer and Exchange............................ 13
SECTION 2.6. Mutilated, Defaced, Destroyed, Lost and
Stolen Serial Mortgage Notes................................. 14
SECTION 2.7. Cancellation of Serial Mortgage Notes;
Destruction Thereof.......................................... 15
SECTION 2.8. Temporary Serial Mortgage Notes................................ 16
SECTION 2.9. Serial Mortgage Notes Issuable in Global
Form; Depository............................................. 16
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ARTICLE THREE
COVENANTS
<S> <C>
SECTION 3.1. Payment of Principal and Interest.............................. 18
SECTION 3.2. Offices for Payments, etc...................................... 19
SECTION 3.3. Appointment to Fill a Vacancy in Office of
Indenture Trustee............................................ 19
SECTION 3.4. Paying Agents.................................................. 19
SECTION 3.5. Reports by California Petroleum................................ 20
SECTION 3.6. Reports by the Indenture Trustee............................... 21
SECTION 3.7. Serial Noteholders' Lists...................................... 21
SECTION 3.8. Negative Covenants............................................. 21
SECTION 3.9. Reports by Chevron............................................. 22
ARTICLE FOUR
REMEDIES OF THE INDENTURE TRUSTEE AND
SERIAL NOTEHOLDERS ON INDENTURE EVENT OF DEFAULT.
SECTION 4.1. Indenture Event of Default Defined; Acceleration
of Maturity; Waiver of Default............................... 23
SECTION 4.2. Collection of Indebtedness by Indenture Trustee;
Indenture Trustee May Prove Debt............................. 26
SECTION 4.3. Application of Proceeds....................................... 28
SECTION 4.4. Suits for Enforcement......................................... 29
SECTION 4.5. Restoration of Rights on Abandonment of Proceedings........... 29
SECTION 4.6. Limitations on Suits by Serial Noteholders.................... 29
SECTION 4.7. Powers and Remedies Cumulative; Delay or Omission Not
Waiver of Default............................................ 30
SECTION 4.8. Control by Serial Noteholders................................. 31
SECTION 4.9. Waiver of Past Defaults....................................... 31
SECTION 4.10. Enforcement Notice............................................ 32
ARTICLE FIVE
CONCERNING THE INDENTURE TRUSTEE.
SECTION 5.1. Duties and Responsibilities of the Indenture Trustee;
During Default; Prior to Default............................. 33
SECTION 5.2. Certain Rights of the Indenture Trustee....................... 35
</TABLE>
ii
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SECTION 5.3. Indenture Trustee Not Responsible for Recitals,
Disposition of Serial Mortgage Notes or
Application of Proceeds Thereof.............................. 36
SECTION 5.4. Indenture Trustee and Agents May Hold Serial,
Mortgage Notes; Collections, etc............................. 36
SECTION 5.5. Moneys Held by Indenture Trustee.............................. 36
SECTION 5.6. Compensation and Expenses..................................... 37
SECTION 5.7. Right of Indenture Trustee to Rely
on Officers' Certificate, etc................................ 38
SECTION 5.8. Persons Eligible for Appointment
as Indenture Trustee......................................... 38
SECTION 5.9. Resignation and Removal; Appointment
of Successor Indenture Trustee............................... 39
SECTION 5.10. Acceptance of Appointment by
Successor Indenture Trustee.................................. 40
SECTION 5.11. Merger, Conversion, Consolidation
or Succession to Business of
Indenture Trust.............................................. 41
ARTICLE SIX
CONCERNING THE SERIAL NOTEHOLDERS.
SECTION 6.1. Evidence of Action Taken by Serial
Noteholder................................................... 41
SECTION 6.2. Proof of Execution of Instruments
and of Holding of Serial Mortgage
Notes; Record Date........................................... 42
SECTION 6.3. Holders to Be Treated as Owners................................ 42
SECTION 6.4. Serial Mortgage Notes Deemed Not
Outstanding.................................................. 42
SECTION 6.5. Right of Revocation of Action Taken............................ 43
ARTICLE SEVEN
SUPPLEMENTAL INDENTURES.
SECTION 7.1. Supplemental Indentures Without
Consent of Serial Noteholders................................ 43
SECTION 7.2. Supplemental Indentures With Consent
of Serial Noteholders........................................ 44
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SECTION 7.3. Effect of Supplemental Indenture............................... 45
SECTION 7.4. Documents to Be Given to Indenture Trustee..................... 46
SECTION 7.5. Notation on Serial Mortgage Notes
in Respect of Supplemental Indentures........................ 46
ARTICLE EIGHT
CONSOLIDATION, MERGER, SALE OR CONVEYANCE.
SECTION 8.1. Covenant Not to Merge, Consolidate,
Sell or Convey Property Except
Under Certain Conditions..................................... 46
SECTION 8.2. Successor Corporation Substituted.............................. 47
SECTION 8.3. Opinion of Counsel to Indenture Trustee........................ 47
ARTICLE NINE
SATISFACTION AND DISCHARGE OF
SERIAL INDENTURE; UNCLAIMED MONEYS.
SECTION 9.1. Satisfaction and Discharge
of Serial Indenture.......................................... 47
SECTION 9.2. Application by Indenture Trustee
of Funds Deposited for Payment
of Serial Mortgage Notes..................................... 48
SECTION 9.3. Repayment of Moneys Held by Paying Agent....................... 48
SECTION 9.4. Return of Moneys Held by Indenture Trustee
And Paying Agent Unclaimed for
Two Years.................................................... 48
ARTICLE TEN
MISCELLANEOUS PROVISIONS.
SECTION 10.1. Incorporators, Stockholders,
Officers and Directors of California
Petroleum Exempt from Individual
Liability; Chevron and Chevron
Transport not obligated on
Serial Mortgage Notes........................................ 49
SECTION 10.2. Provisions of Serial Indenture for the
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iv
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Sole Benefit of Parties and Serial
Noteholders.................................................. 49
SECTION 10.3. Successors and Assigns of California
Petroleum Bound by Serial Indenture.......................... 49
SECTION 10.4. Notices and Demands on California
Petroleum Indenture Trustee and Serial
Noteholders.................................................. 50
SECTION 10.5. Officers' Certificates and Opinions
of Counsel; Statements to Be Contained
Therein 50
SECTION 10.6. Payments Due on Saturdays, Sundays and
Holidays..................................................... 51
SECTION 10.7. Conflict of Any Provision of Serial Indenture
with Trust Indenture Act..................................... 52
SECTION 10.8. New York Law to Govern....................................... 52
SECTION 10.9. Counterparts................................................. 52
SECTION 10.10. Effect of Headings........................................... 52
SECTION 10.11. Designated Representative.................................... 52
ARTICLE ELEVEN
REDEMPTION OF SERIAL MORTGAGE NOTES.
SECTION 11.1. Mandatory Redemption; Prices.................................. 53
SECTION 11.2. Notice of Redemption; Partial Redemptions..................... 53
SECTION 11.3. Payment of Serial Mortgage Notes Called
for Redemption............................................... 54
ARTICLE TWELVE
SECURITY.
SECTION 12.1. Security...................................................... 55
SECTION 12.2. Recording, etc................................................ 55
SECTION 12.3. Protection of the Trust Estate................................ 57
SECTION 12.4. Release of Lien............................................... 57
</TABLE>
v
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EXHIBITS
Page
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EXHIBIT A - Form of Serial Mortgage Note
EXHIBIT B - Form of Collateral Agreement
vi
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THIS Serial Indenture, dated as of {DATE}, 1995 among CALIFORNIA
PETROLEUM TRANSPORT CORPORATION, a Delaware corporation ("California
Petroleum"), CHEMICAL TRUST COMPANY OF CALIFORNIA (the "Indenture Trustee") and
CHEVRON CORPORATION, a Delaware corporation ("Chevron"),
W I T N E S E T H :
WHEREAS, capitalized terms used herein shall have the respective
meanings set forth or referred to in Article One hereof;
WHEREAS, California Petroleum has duly authorized the issue of its
Serial Mortgage Notes and, to provide, among other things, for the
authentication, delivery and administration thereof, California Petroleum has
duly authorized the execution and delivery of this Serial Indenture.
WHEREAS, in order to secure its obligations under this Serial
Indenture and the Term Indenture, California Petroleum is entering into the
Collateral Agreement concurrently with this Serial Indenture;
WHEREAS, in order to comply with the provisions of the Trust Indenture
Act, it is necessary that Chevron be a party to this Serial Indenture;
AND WHEREAS, all things necessary to make the Serial Mortgage Notes,
when executed by California Petroleum and authenticated and delivered by the
Indenture Trustee as in this Serial Indenture provided, the valid, binding and
legal obligations of California Petroleum, and to constitute these presents a
valid indenture and agreement according to its terms, have been done;
NOW, THEREFORE:
In consideration of the premises and the purchases of the Serial
Mortgage Notes by the holders thereof, California Petroleum, Chevron and the
Indenture Trustee mutually covenant and agree for the equal and proportionate
benefit of the respective holders from time to time of the Serial Mortgage Notes
as follows:
<PAGE>
ARTICLE ONE
DEFINITIONS.
SECTION 1.1 Certain Terms Defined. The following terms (except as
otherwise expressly provided or unless the context otherwise clearly requires)
for all purposes of this Serial Indenture and of any indenture supplemental
hereto shall have the respective meanings specified in this Section. All other
terms used in this Serial Indenture which are defined in the Trust Indenture Act
or the definitions of which in the Securities Act are referred to in the Trust
Indenture Act (except as herein otherwise expressly provided or unless the
context otherwise clearly requires), shall have the meanings assigned to such
terms in said Trust Indenture Act and in said Securities Act as in force at the
date of this Serial Indenture. All accounting terms used herein and not
expressly defined shall have the meanings given to them in accordance with
generally accepted accounting principles, and the term "generally accepted
accounting principles" shall mean such accounting principles which are generally
accepted at the date or time of any computation or at the date hereof. The
words "herein", "hereof" and "hereunder" and other words of similar import refer
to this Serial Indenture as a whole and not to any particular Article, Section
or other subdivision. All references to Articles or Sections refer to Articles
or Sections of this Serial Indenture unless otherwise indicated. The terms
defined in this Article include the plural as well as the singular.
"Affiliate" means with respect to any Person (the "relevant Person")
(i) any other Person that directly, or indirectly through one or more
intermediaries, controls the relevant Person (a "Controlling Person") or (ii)
any Person (other than the relevant Person) which is controlled by or is under
common control with a Controlling Person. As used herein, the term "control"
means possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of a Person, whether through the
ownership of voting securities, by contract or otherwise.
"Allocated Principal Amount" means when used with reference to the
Serial Mortgage Notes relating to any Vessel at any time, an aggregate principal
amount of outstanding Serial Mortgage Notes equal to the aggregate principal
amount of Serial Loans of the related Owner then outstanding.
"Assignment of Earnings and Insurances" has the meaning set forth
in the Collateral Agreement.
"Assignment of Initial Charter" has the meaning set forth in the
Collateral Agreement.
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<PAGE>
"Assignment of Management Agreement" has the meaning set forth
in the Collateral Agreement.
"Assignment of Mortgage" has the meaning set forth in the
Collateral Agreement.
"Assignment of Vessel Purchase Agreement" has the meaning set forth
in the Collateral Agreement.
"Authorized Financial Officer" of any Person means the Chief Financial
Officer, Treasurer or Controller of such Person.
"Bankruptcy Code" means the United States Bankruptcy Code of
1978, as amended.
"Board of Directors" means either the Board of Directors of California
Petroleum or any committee of such Board duly authorized to act hereunder.
"Business Day" means any day except a Saturday or a Sunday or other
day on which commercial banks are authorized by law to close in New York City or
in the city and state where the principal offices of the paying agent appointed
pursuant to Section 3.4 are located.
"California Petroleum" means California Petroleum Transport
Corporation, a Delaware corporation.
"Casualty Account" has the meaning set forth in the Collateral
Agreement.
"Chevron" means Chevron Corporation, a Delaware corporation and,
subject to Article Eight, its successors and assigns.
"Chevron Transport" means Chevron Transport Corporation, a
Liberian corporation.
"Closing Date" means ____________, 1995.
"Collateral" means the property in which the Collateral Trustee, in
its own right or as assignee of California Petroleum, is granted a Lien from
time to time under any Security Document, which lien or security interest has
not been released in accordance with the terms of the Collateral Agreement or
thereof.
"Collateral Account" has the meaning set forth in the
Collateral Agreement.
3
<PAGE>
"Collateral Agreement" means the Collateral Trust Agreement dated as
of the date hereof among California Petroleum, the Owners, the Collateral
Trustee, the Indenture Trustee and the Term Indenture Trustee, as the same may
be amended from time to time.
"Collateral Assignment of Initial Charter" has the meaning set
forth in the Collateral Agreement.
"Collateral Assignment of Initial Charter Guarantee" has
the meaning set forth in the Collateral Agreement.
"Collateral Trustee" means Chemical Trust Company of California, in
its capacity as trustee under the Collateral Agreement, or any other Person
acting from time to time as trustee under the Collateral Agreement.
"Commission" means the Securities and Exchange Commission.
"Compulsory Acquisition" means requisition for title or other
compulsory acquisition of any Vessel (otherwise than by requisition for hire),
capture, seizure, condemnation, destruction, detention or confiscation of such
Vessel by any government or by persons acting or purporting to act on behalf of
any governmental authority.
"Corporate Trust Office" means the office of the Indenture Trustee at
which the corporate trust business of the Indenture Trustee shall, at any
particular time, be principally administered, which office is, at the date as of
which this Serial Indenture is dated, located at 50 California Street, 10th
Floor, San Francisco, California, 94111.
"Default" means any Indenture Event of Default or any event or
condition which, with the giving of notice or lapse of time, or both would
constitute an Indenture Event of Default.
"Default Rate" means a rate per annum for each day from the date of a
default in any payment hereunder until such payment shall be paid in full equal
to 1.50% above LIBOR at the commencement of such period.
"Depository" means the depository of the Global Securities
representing the Serial Mortgage Notes and any successor to such Depository
appointed pursuant to Section 2.9(c). The Depository initially shall be
Depository Trust Company, a New York corporation.
4
<PAGE>
"Designated Representative" means the Person designated by California
Petroleum pursuant to the Designated Representative Agreement, dated the date
hereof, between California Petroleum and CalPetro Holdings to be California
Petroleum's representative under Section 10.11 of this Serial Indenture.
Initially, the Designated Representative is CalPetro Holdings Limited.
"Enforcement Notice" means a notice delivered to the Collateral
Trustee pursuant to Section 4.10.
"Equity Account" has the meaning set forth in the Collateral
Agreement.
"Exchange Act" means the United States Securities Exchange Act
of 1934, as amended.
"Global Security" means the Serial Mortgage Note or Notes registered
in the name of the Depository or its nominee in accordance with Article Two and
bearing the legend prescribed in Section 2.9(a).
"Holder", "holder of Serial Mortgage Notes", "Serial Noteholder" or
other similar terms means the registered holder of any Serial Mortgage Note.
"Indenture Event of Default" means any event or condition specified as
such in Section 4.1 which shall have continued for the period of time, if any,
therein designated.
"Indenture Trustee" means Chemical Trust Company of California, in its
capacity as trustee under this Serial Indenture, or any other Person acting from
time to time as trustee hereunder.
"Initial Charter" has the meaning set forth in the Collateral
Agreement.
"Initial Charter Guarantee" has the meaning set forth in the
Collateral Agreement.
"Initial Charterer" means, for each Initial Charter, Chevron Transport
as the charterer thereunder, and any permitted successor or assignee thereof.
"Initial Revenue Account" has the meaning set forth in the
Collateral Agreement.
"Issue of One Debenture" has the meaning set forth in the
Collateral Agreement.
5
<PAGE>
"LIBOR" means the rate calculated on the basis of the offered rates
for deposits in dollars for a month period which appear on the Reuters Screen
LIBO Page as of 11:00 a.m., London time, on the date that is two London Banking
Days preceding the date of calculation. If at least two such offered rates
appear on the Reuters Screen LIBO Page, LIBOR will be the arithmetic mean of
such offered rates (rounded to the nearest .0001 percentage point). If, at any
time of determination, the Reuters Screen LIBO Page is not available, LIBOR will
be calculated as the average (rounded upward, if necessary, to the next higher
1/16 of 1%) of the respective ratio per annum at which deposits in dollars for a
one month period are offered to each of three reference banks in the London
interbank market at approximately 11:00 a.m., London time, on the date that is
two London Banking Days preceding the date of calculation. Each of Chevron and
the Indenture Trustee will select a reference bank and the third reference bank
will be selected by Chevron and the Indenture Trustee together or, failing
agreement, by the previously selected reference banks together.
"Lien" means with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset.
For the purposes of this Serial Indenture, a Person shall be deemed to own
subject to a Lien any asset which it has acquired or holds subject to the
interest of a vendor or lessor under any conditional sale agreement, capital
lease or other title retention agreement relating to such asset.
"Loan Agreements" means the Serial Loan Agreements and the Term Loan
Agreements, collectively.
"London Banking Day" means any day on which dealings in deposits in
United States dollars are carried on in the London interbank market and on which
commercial banks are open for domestic and international business (including
dealings in dollar deposits) in London and New York.
"Management Agreement" has the meaning set forth in the Collateral
Agreement.
"Mortgage" means, for each Vessel, the First Preferred Ship Mortgage
or Statutory Mortgage and Deed of Covenants for such Vessel, as applicable,
dated the date of the related Initial Charter, between the related Owner and
California Petroleum, as the same may be amended from time to time.
"Mortgage Event of Default" means, for any Mortgage, each of the
events designated as an "Event of Default" in Section 5.01 of such Mortgage.
6
<PAGE>
"Officers' Certificate" means a certificate signed by a Responsible
Officer of California Petroleum or Chevron, as the case may be, and delivered to
the Indenture Trustee. Each such certificate shall comply with Section 314 of
the Trust Indenture Act and include the statements provided for in Section 10.5.
"Operating Account" has the meaning set forth in the Collateral
Agreement.
"Opinion of Counsel" means an opinion in writing signed by legal
counsel satisfactory to the Indenture Trustee (who may be an employee of or
counsel to Chevron). Each such opinion shall comply with Section 314 of the
Trust Indenture Act and include the statements provided for in Section 10.5, if
and to the extent required hereby.
"Original issue date" of any Serial Mortgage Note (or portion thereof)
means the earlier of (a) the date of such Serial Mortgage Note or (b) the date
of any Serial Mortgage Note (or portion thereof) for which such Serial Mortgage
Note was issued (directly or indirectly) on registration of transfer, exchange
or substitution.
"Outstanding", when used with reference to Serial Mortgage Notes,
shall, subject to the provisions of Section 6.4, mean, as of any particular
time, all Serial Mortgage Notes authenticated and delivered by the Indenture
Trustee under this Serial Indenture, except
(a) Serial Mortgage Notes theretofore canceled by the Indenture
Trustee or delivered to the Indenture Trustee for cancellation;
(b) Serial Mortgage Notes, or portions thereof, for the payment or
redemption of which moneys in the necessary amount shall have been
deposited in trust with the Indenture Trustee or with any paying agent,
provided that if such Serial Mortgage Notes are to be redeemed prior to the
maturity thereof, notice of such redemption shall have been given as herein
provided, or provision satisfactory to the Indenture Trustee shall have
been made for giving such notice; and
(c) Serial Mortgage Notes in substitution for which other Serial
Mortgage Notes shall have been authenticated and delivered, or which shall
have been paid, pursuant to the terms of Section 2.6 (unless proof
satisfactory to the Indenture Trustee is presented that any of such Serial
Mortgage Notes is held by a person in whose hands such Serial Mortgage Note
is a legal, valid and binding obligation of California Petroleum).
7
<PAGE>
"Owner" means CalPetro Tankers (Bahamas I) Limited, in the case of the
Vessel m.t. Samuel Ginn, CalPetro Tankers (Bahamas II) Limited, in the case of
the Vessel m.t. Condoleezza Rice, CalPetro Tankers (IOM) Limited, in the case of
the Vessel m.t. Chevron Mariner, or CalPetro Tankers (Bahamas III) Limited, in
the case of the Vessel m.t. William E. Crain.
"Permitted Investments" has the meaning set forth in the Collateral
Agreement.
"Person" means an individual, a corporation, a partnership, an
association, a trust or any other entity or organization, including a government
or political subdivision or an agency or instrumentality thereof.
"Pledged Stock" has the meaning set forth in the Collateral Agreement.
"Rating Agencies" means Moody's Investors Service, Inc., Standard &
Poor's Ratings Group and Duff & Phelps Credit Rating Co.
"Related Security Documents" means, at any time, the Security
Documents relating to an Owner and its Vessel for which the Initial Charters are
in effect at such time and under which the first termination date has not
occurred.
"Responsible Officer" means the president or any other officer with
authority of at least a vice president; or, in the case of the Indenture Trustee
means an officer or assistant officer of the Indenture Trustee in its Corporate
Trust Department.
"Second Revenue Account" has the meaning set forth in the Collateral
Agreement.
"Secured Instruments" has the meaning set forth in the Collateral
Agreement.
"Securities Act" means the United States Securities Act of 1933, as
amended.
"Security Documents" means the Collateral Agreement, the Loan
Agreements, the Mortgages, the Assignments of Mortgage, the Assignments of
Initial Charter, the Collateral Assignments of Initial Charter, the Assignments
of Earnings and Insurances, the Assignments of Initial Charter Guarantee, the
Collateral Assignments of Initial Charter Guarantee, the Assignments of
Management Agreement, each Issue of One Debenture, the Stock Pledge, the
Assignments of Vessel Purchase Agreements, and any additional security
agreement, assignment or mortgage document entered into by California Petroleum
from time to time in
8
<PAGE>
connection with the Secured Instruments or received by California Petroleum from
any Owner in connection with such Owner's Loan Agreements.
"Serial Indenture" means this Serial Indenture dated as of {DATE},
1995 among California Petroleum, the Indenture Trustee, and, solely for purposes
of the Trust Indenture Act, Chevron, as the same may be amended from time to
time.
"Serial Loan Agreement" means, for any Owner, the Serial Loan
Agreement dated as of {DATE}, 1995 between such Owner and California Petroleum,
as the same may be amended from time to time.
"Serial Loans" has, for any Owner, the meaning set forth in the Serial
Loan Agreement entered into by such Owner.
"Serial Mortgage Note" or "Serial Mortgage Notes" means any Serial
First Preferred Mortgage Note or Notes, as the case may be, authenticated and
delivered under this Serial Indenture.
"Stock Pledge" has the meaning set forth in the Collateral Agreement.
"Term Indenture" means the Term Indenture dated as of {DATE}, 1995
between California Petroleum and the Term Indenture Trustee, as the same may be
amended from time to time.
"Term Indenture Trustee" means Chemical Trust Company of California or
any other Person from time to time acting as the trustee under the Term
Indenture.
"Term Loan Agreement" means, for any Owner, the Term Loan Agreement
dated as of {DATE}, 1995 between such Owner and California Petroleum, as the
same may be amended from time to time.
"Term Mortgage Notes" has the meaning set forth in the Term Indenture.
"Termination Account" has the meaning set forth in the Collateral
Agreement.
"Total Loss" means (a) an actual or constructive or compromised or
arranged total loss of a Vessel, (b) a Compulsory Acquisition of a Vessel or (c)
if so declared by Chevron Transport at any time and in its sole discretion a
requisition for hire of the Vessel for a period in excess of 180 days.
9
<PAGE>
"Trust Accounts" means the Initial Revenue Account, the Second Revenue
Account, the Termination Account, the Operating Account, the Equity Account, the
Sinking Fund Reserve Account, the Casualty Account and the Collateral Account.
"Trust Estate" means the property rights and privileges described in
the Granting Clause of the Collateral Agreement.
"Trust Funds" means the funds deposited in the Trust Accounts.
"Trust Indenture Act" means the United States Trust Indenture Act of
1939, as amended.
"UCC" means the Uniform Commercial Code as in effect on the date
hereof in the State of New York or any other applicable jurisdiction.
"Vessel Purchase Agreement" has the meaning set forth in the
Collateral Agreement.
"Vessels" means, collectively, the four Suezmax-size tankers to be
acquired by the Owners and chartered to the Initial Charterer pursuant to the
Initial Charters.
ARTICLE TWO
ISSUE, EXECUTION, FORM AND
REGISTRATION OF SERIAL MORTGAGE NOTES.
SECTION 2.1 Authentication and Delivery of Serial Mortgage Notes.
Upon the execution and delivery of this Serial Indenture, or from time to time
thereafter, Serial Mortgage Notes in an aggregate principal amount not in excess
of $167,500,000 (except as otherwise provided in Section 2.6) may be executed by
California Petroleum and delivered to the Indenture Trustee for authentication,
and an authorized officer of the Indenture Trustee shall thereupon authenticate
and deliver said Serial Mortgage Notes to or upon the written order of
California Petroleum, signed by both (a) its President or any Vice President and
(b) by its Treasurer or any Assistant Treasurer without any further action by
California Petroleum.
10
<PAGE>
The Serial Mortgage Notes initially shall be issued in the aggregate
principal amounts, interest rates and maturities stated below:
$17,160,000 aggregate principal amount of __%
Serial First Preferred Mortgage Notes Due 1996;
$18,160,000 aggregate principal amount of __%
Serial First Preferred Mortgage Notes Due 1997;
$18,160,000 aggregate principal amount of __%
Serial First Preferred Mortgage Notes Due 1998;
$18,160,000 aggregate principal amount of __%
Serial First Preferred Mortgage Notes Due 1999;
$18,160,000 aggregate principal amount of __%
Serial First Preferred Mortgage Notes Due 2000;
$18,160,000 aggregate principal amount of __%
Serial First Preferred Mortgage Notes Due 2001;
$18,160,000 aggregate principal amount of __%
Serial First Preferred Mortgage Notes Due 2002;
$18,160,000 aggregate principal amount of __%
Serial First Preferred Mortgage Notes Due 2003;
$12,950,000 aggregate principal amount of __%
Serial First Preferred Mortgage Notes Due 2004;
$7,740,000 aggregate principal amount of __%
Serial First Preferred Mortgage Notes Due 2005; and
$2,530,000 aggregate principal amount of __%
Serial First Preferred Mortgage Notes Due 2006.
SECTION 2.2 Execution of Serial Mortgage Notes. The Serial Mortgage
Notes shall be signed on behalf of California Petroleum by both (a) its
President or any Vice President and (b) by its Treasurer or any Assistant
Treasurer or its Secretary or any Assistant Secretary, under its corporate seal
which may, but need not, be attested. Such signatures may be the manual or
facsimile signatures of the present or any future such officers. The seal of
California Petroleum may be in the form of a facsimile thereof and may be
impressed, affixed, imprinted or otherwise reproduced on the Serial Mortgage
Notes. Typographical and other minor errors or
11
<PAGE>
defects in any such reproduction of the seal or any such signature shall not
affect the validity or enforceability of any Serial Mortgage Note which has been
duly authenticated and delivered by the Indenture Trustee.
In case any officer of California Petroleum who shall have signed any
of the Serial Mortgage Notes shall cease to be such officer before the Serial
Mortgage Note so signed shall be authenticated and delivered by the Indenture
Trustee or disposed of by California Petroleum, such Serial Mortgage Note
nevertheless may be authenticated and delivered or disposed of as though the
person who signed such Serial Mortgage Note had not ceased to be such officer of
California Petroleum; and any Serial Mortgage Note may be signed on behalf of
California Petroleum by such persons as, at the actual date of the execution of
such Serial Mortgage Note, shall be the proper officers of California Petroleum,
although at the date of the execution and delivery of this Serial Indenture any
such person was not such officer.
SECTION 2.3 Certificate of Authentication. Only such Serial Mortgage
Notes as shall bear thereon a certificate of authentication substantially in the
form set forth in Exhibit A hereto executed by the Indenture Trustee by manual
signature of one of its authorized officers, shall be entitled to the benefits
of this Serial Indenture or be valid or obligatory for any purpose. Such
certificate by the Indenture Trustee upon any Serial Mortgage Note executed by
California Petroleum shall be conclusive evidence that the Serial Mortgage Note
so authenticated has been duly authenticated and delivered hereunder and that
the holder is entitled to the benefits of this Serial Indenture.
SECTION 2.4 Form, Denomination and Date of Serial Mortgage Notes;
Payments of Interest. The Serial Mortgage Notes and the Indenture Trustee's
certificates of authentication shall be substantially in the form attached
hereto as Exhibit A and incorporated by reference herein. The Serial Mortgage
Notes shall be issuable as registered securities without coupons and in
denominations provided for in such form of Serial Mortgage Note. The Serial
Mortgage Notes shall be numbered, lettered, or otherwise distinguished in such
manner or in accordance with such plans as the officers of California Petroleum
executing the same may determine with the approval of the Indenture Trustee.
Any of the Serial Mortgage Notes may be issued with appropriate
insertions, omissions, substitutions and variations, and may have imprinted or
otherwise reproduced thereon such legend or legends, not inconsistent with the
provisions of this Serial Indenture, as may be required to comply with any law
or with any rules or regulations pursuant thereto, or with the rules of any
securities market in which the Serial Mortgage Notes are admitted to trading, or
to conform to general usage.
12
<PAGE>
Each Serial Mortgage Note shall be dated the date of its
authentication, shall bear interest from the applicable date and shall be
payable on the dates specified on the face of the form of Serial Mortgage Note.
Interest will accrue at the Default Rate on any overdue payment of principal of,
interest or any other amount payable on any Serial Mortgage Note from the due
date for such payment to the date such amount is paid in full and shall be
payable on demand.
The person in whose name any Serial Mortgage Note is registered at the
close of business on any record date with respect to any interest payment date
shall be entitled to receive the interest, if any, payable on such interest
payment date notwithstanding any transfer or exchange of such Serial Mortgage
Note subsequent to the record date and prior to such interest payment date,
except if and to the extent California Petroleum shall default in the payment of
the interest due on such interest payment date, in which case such defaulted
interest shall be paid to the persons in whose names Outstanding Serial Mortgage
Notes are registered at the close of business on a subsequent record date (which
shall be not less than five business days prior to the date of payment of such
defaulted interest) established by notice given by mail by or on behalf of
California Petroleum to the holders of Serial Mortgage Notes not less than 15
days preceding such subsequent record date. The term "record date" as used with
respect to any interest payment date (except a date for payment of defaulted
interest) shall mean if such interest payment date is the first day of a
calendar month, the fifteenth day of the next preceding calendar month and shall
mean, if such interest payment date is the fifteenth day of a calendar month,
the first day of such calendar month, whether or not such record date is a
business day.
SECTION 2.5 Registration, Transfer and Exchange. The Indenture
Trustee will keep or cause to be kept at each office or agency to be maintained
for the purpose as provided in Section 3.2 a register or registers in which,
subject to such reasonable regulations as it may prescribe, it will register,
and will register the transfer of, Serial Mortgage Notes as provided in this
Article. Such register shall be in written form in the English language or in
any other form capable of being converted into such form within a reasonable
time. At all reasonable times such register or registers shall be open for
inspection by the Indenture Trustee. Initially, California Petroleum designates
the Indenture Trustee as registrar and transfer agent of the Serial Mortgage
Notes.
Upon due presentation for registration of transfer of any Serial
Mortgage Note at each such office or agency, California Petroleum shall execute
and the Indenture Trustee shall authenticate and deliver in the name of the
transferee or transferees a new Serial Mortgage Note or Serial Mortgage Notes in
authorized denominations for a like aggregate principal amount.
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<PAGE>
Any Serial Mortgage Note or Serial Mortgage Notes may be exchanged for
a Serial Mortgage Note or Serial Mortgage Notes in other authorized
denominations, in an equal aggregate principal amount. Serial Mortgage Notes to
be exchanged shall be surrendered at each office or agency to be maintained by
California Petroleum for the purpose as provided in Section 3.2, and California
Petroleum shall execute and the Indenture Trustee shall authenticate and deliver
in exchange therefor the Serial Mortgage Note or Serial Mortgage Notes which the
Serial Noteholder making the exchange shall be entitled to receive, bearing
numbers not contemporaneously outstanding.
All Serial Mortgage Notes presented for registration of transfer,
exchange, redemption or payment shall (if so required by California Petroleum or
the Indenture Trustee) be duly endorsed by, or be accompanied by a written
instrument or instruments of transfer in form satisfactory to California
Petroleum and the Indenture Trustee duly executed by, the holder or his attorney
duly authorized in writing.
California Petroleum may require payment of a sum sufficient to cover
any tax or other governmental charge that may be imposed in connection with any
exchange or registration of transfer of Serial Mortgage Notes. No service
charge shall be made for any such transaction.
California Petroleum shall not be required to exchange or register a
transfer of (a) any Serial Mortgage Notes for a period of 15 days next preceding
the first mailing of notice of redemption of Serial Mortgage Notes to be
redeemed, or (b) any Serial Mortgage Notes selected, called or being called for
redemption except, in the case of any Serial Mortgage Note where public notice
has been given that such Serial Mortgage Note is to be redeemed in part, the
portion thereof not so to be redeemed.
All Serial Mortgage Notes issued upon any transfer or exchange of
Serial Mortgage Notes shall be valid obligations of California Petroleum,
evidencing the same debt, and entitled to the same benefits under this Serial
Indenture, as the Serial Mortgage Notes surrendered upon such transfer or
exchange.
SECTION 2.6 Mutilated, Defaced, Destroyed, Lost and Stolen Serial
Mortgage Notes. In case any temporary or definitive Serial Mortgage Note shall
become mutilated, defaced or be apparently destroyed, lost or stolen, California
Petroleum in its discretion may execute, and upon the written request of any
officer of California Petroleum, the Indenture Trustee shall authenticate and
deliver, a new Serial Mortgage Note, bearing a number not contemporaneously
outstanding, in exchange and substitution for the mutilated or defaced Serial
Mortgage Note, or in lieu of and substitution for the Serial Mortgage Note so
apparently destroyed, lost or stolen. In every case the applicant for a
substitute Serial Mortgage Note shall furnish to California Petroleum and to the
Indenture Trustee and any agent of California
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<PAGE>
Petroleum or the Indenture Trustee such security or indemnity as may be required
by them to indemnify and defend and to save each of them harmless and, in every
case of destruction, loss or theft evidence to their satisfaction of the
apparent destruction, loss or theft of such Serial Mortgage Note and of the
ownership thereof.
Upon the issuance of any substitute Serial Mortgage Note, California
Petroleum may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto and any other
expenses (including the fees and expenses of the Indenture Trustee) connected
therewith. In case any Serial Mortgage Note which has matured or is about to
mature, or has been called for redemption in full, shall become mutilated or
defaced or be apparently destroyed, lost or stolen, California Petroleum may,
instead of issuing a substitute Serial Mortgage Note, pay or authorize the
payment of the same (without surrender thereof except in the case of a mutilated
or defaced Serial Mortgage Note), if the applicant for such payment shall
furnish to California Petroleum and to the Indenture Trustee and any agent of
California Petroleum or the Indenture Trustee such security or indemnity as any
of them may require to save each of them harmless from all risks, however
remote, and, in every case of apparent destruction, loss or theft, the applicant
shall also furnish to California Petroleum and the Indenture Trustee and any
agent of California Petroleum or the Indenture Trustee evidence to their
satisfaction of the apparent destruction, loss or theft of such Serial Mortgage
Note and of the ownership thereof.
Every substitute Serial Mortgage Note issued pursuant to the
provisions of this Section by virtue of the fact that any Serial Mortgage Note
is apparently destroyed, lost or stolen shall constitute an additional
contractual obligation of California Petroleum, whether or not the apparently
destroyed, lost or stolen Serial Mortgage Note shall be at any time enforceable
by anyone and shall be entitled to all the benefits of (but shall be subject to
all the limitations of rights set forth in) this Serial Indenture equally and
proportionately with any and all other Serial Mortgage Notes duly authenticated
and delivered hereunder. All Serial Mortgage Notes shall be held and owned upon
the express condition that, to the extent permitted by law, the foregoing
provisions are exclusive with respect to the replacement or payment of
mutilated, defaced, or apparently destroyed, lost or stolen Serial Mortgage
Notes and shall preclude any and all other rights or remedies notwithstanding
any law or statute existing or hereafter enacted to the contrary with respect to
the replacement or payment of negotiable instruments or other securities without
their surrender.
SECTION 2.7 Cancellation of Serial Mortgage Notes; Destruction
Thereof. All Serial Mortgage Notes surrendered for payment, redemption,
registration of transfer or exchange, if surrendered to California Petroleum or
any agent of California Petroleum or the Indenture Trustee, shall be delivered
to the Indenture Trustee for cancellation or, if surrendered to the Indenture
Trustee, shall be canceled by it; and no Serial Mortgage Notes shall be issued
in lieu thereof except as
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expressly permitted by any of the provisions of this Serial Indenture. The
Indenture Trustee shall destroy canceled Serial Mortgage Notes held by it and
deliver a certificate of destruction to California Petroleum. If California
Petroleum shall acquire any of the Serial Mortgage Notes, such acquisition shall
not operate as a redemption or satisfaction of the indebtedness represented by
such Serial Mortgage Notes unless and until the same are delivered to the
Indenture Trustee for cancellation.
SECTION 2.8 Temporary Serial Mortgage Notes. Pending the preparation
of definitive Serial Mortgage Notes, California Petroleum may execute and the
Indenture Trustee shall authenticate and deliver temporary Serial Mortgage Notes
(printed, lithographed, typewritten or otherwise reproduced, in each case in
form satisfactory to the Indenture Trustee). Temporary Serial Mortgage Notes
shall be issuable as registered Serial Mortgage Notes without coupons, of any
authorized denomination, and substantially in the form of the definitive Serial
Mortgage Notes but with such omissions, insertions and variations as may be
appropriate for temporary Serial Mortgage Notes, all as may be determined by
California Petroleum with the concurrence of the Indenture Trustee. Temporary
Serial Mortgage Notes may contain such reference to any provisions of this
Serial Indenture as may be appropriate. Every temporary Serial Mortgage Note
shall be executed by California Petroleum and be authenticated by the Indenture
Trustee upon the same conditions and in substantially the same manner, and with
like effect, as the definitive Serial Mortgage Notes. Without unreasonable
delay California Petroleum shall execute and shall furnish definitive Serial
Mortgage Notes and thereupon temporary Serial Mortgage Notes may be surrendered
in exchange therefor without charge at each office or agency to be maintained by
California Petroleum for the purpose pursuant to Section 3.2, and the Indenture
Trustee shall authenticate and deliver in exchange for such temporary Serial
Mortgage Notes a like aggregate principal amount of definitive Serial Mortgage
Notes of authorized denominations. Until so exchanged the temporary Serial
Mortgage Notes shall be entitled to the same benefits under this Serial
Indenture as definitive Serial Mortgage Notes.
SECTION 2.9 Serial Mortgage Notes Issuable in Global Form;
Depository. At the sole option of California Petroleum, this Section shall
apply to the Serial Mortgage Notes, and to the extent that the provisions of
this Section conflict with any other provisions of this Serial Indenture, the
provisions of this Section shall control.
(a) California Petroleum shall execute, and the Indenture Trustee
shall authenticate and deliver, in each case in accordance with this Article,
one or more Global Securities for each maturity specified in Section 2.1 which
shall: (i) represent and be denominated in an aggregate amount equal to the
aggregate principal amount of the Serial Mortgage Notes to be represented
thereby, (ii) be registered in the name of the Depository or its nominee, (iii)
be deposited with the Indenture
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Trustee as custodian for the Depository and (iv) bear a legend substantially to
the following effect: "Unless and until this Serial Mortgage Note is presented
by an authorized representative of the Depository Trust Company ("DTC"), to
California Petroleum Transport Corporation or its agents for registration of
transfer, exchange or payment, and any Serial Mortgage Note issued is registered
in the name of Cede & Co. or to such other entity or such other name as is
requested by an authorized representative of DTC (and any payment hereon is made
to Cede & Co.), any transfer, pledge or other use hereof for value or otherwise
by or to any Person is wrongful since the registered owner hereof, Cede & Co.,
has an interest herein." The notation of the record owner's interest in such
Global Security upon the original issuance thereof shall be deemed to be
delivered in connection with the original issuance of each beneficial owner's
interest in such Global Security. Without limiting the foregoing, Chevron,
California Petroleum and the Indenture Trustee shall have no responsibility,
obligation or liability with respect to: (x) the maintenance, review or accuracy
of the records of the Depository or of any of its participating organizations
with respect to any ownership interest in or payments with respect to such
Global Security, (y) any communication with or delivery of any notice (including
notices of redemption) with respect to the Serial Mortgage Notes represented by
the Global Security to any Person having any ownership interest in such Global
Security or to any of the Depository's participating organizations or (z) any
payment made on account of any beneficial ownership interest in such Global
Security.
(b) If any Serial Mortgage Note is issuable in the form of a Global
Security or Securities, each such Global Security may provide that it shall
represent the aggregate amount of Outstanding Serial Mortgage Notes from time to
time endorsed thereon and may also provide that the aggregate amount of
Outstanding Serial Mortgage Notes represented thereby may from time to time be
reduced to reflect exchanges. Any endorsement of a Global Security to reflect
the amount of Outstanding Serial Mortgage Notes represented thereby shall be
made by the Indenture Trustee and in such a manner as shall be specified on such
Global Security. Any instructions by California Petroleum with respect to a
Global Security, after its initial issuance, shall be in writing but need not
comply with Section 10.5 of this Serial Indenture.
(c) The Depository must at all times be a clearing agency registered
under the Exchange Act, and any other applicable statute or regulation. If at
any time the Depository notifies California Petroleum, Chevron and the Indenture
Trustee that it is unwilling or unable to continue as the depository or if at
any time the Depository shall no longer be eligible under this Section 2.9,
California Petroleum shall appoint a successor Depository. If a successor
Depository is not appointed by California Petroleum within 90 days after
California Petroleum receives such notice or learns of such ineligibility,
California Petroleum shall execute and California Petroleum shall direct the
Indenture Trustee to authenticate and deliver definitive Serial Mortgage Notes
in authorized denominations in exchange for the Global Security or Securities.
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Upon receipt of such direction, the Indenture Trustee shall thereupon
authenticate and deliver the definitive Serial Mortgage Notes in the same
aggregate principal amount as the Global Security or Securities representing
such Serial Mortgage Notes in exchange for such Global Security or Securities,
in accordance with the provisions of subsection (e) of this Section 2.9, without
any further corporate action by California Petroleum.
(d) California Petroleum may at any time and in its sole discretion
determine that the Serial Mortgage Notes issued in the form of one or more
Global Securities shall no longer be represented by such Global Security or
Securities. In such event, California Petroleum will execute and upon receipt
of a written order from California Petroleum, the Indenture Trustee shall
thereupon authenticate and deliver Serial Mortgage Notes in definitive form and
in authorized denominations in an aggregate principal amount equal to the
principal amount of the Global Security or Securities representing such Serial
Mortgage Notes in exchange for such Global Security or Securities, in accordance
with the provisions of subsection (e) of this Section 2.9 without any further
corporate action by California Petroleum.
(e) Upon any exchange hereunder of the Global Security or Securities
for Serial Mortgage Notes in definitive form, such Global Security or Securities
shall be canceled by the Indenture Trustee. Serial Mortgage Notes issued
hereunder in exchange for the Global Security or Securities shall be registered
in such names and in such authorized denominations as the Depository, pursuant
to instructions from its direct or indirect participants or otherwise, shall
instruct the Indenture Trustee. The Indenture Trustee shall deliver such
definitive Serial Mortgage Notes in exchange for Global Security or Securities
to the Persons in whose name such definitive Serial Mortgage Notes have been
registered in accordance with the directions of the Depository.
ARTICLE THREE
COVENANTS
SECTION 3.1. Payment of Principal and Interest. California
Petroleum covenants and agrees that it will duly and punctually pay or cause to
be paid the principal of, and interest on, each of the Serial Mortgage Notes at
the place or places, at the respective times and in the manner provided in this
Serial Indenture and the Serial Mortgage Notes. California Petroleum covenants
and agrees to pay on demand interest at the Default Rate on any overdue payment
of principal of, interest or any other amount payable on any Serial Mortgage
Note from the due date for such payment to the date such amount is paid in full.
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SECTION 3.2 Offices for Payments, etc. So long as any of the Serial
Mortgage Notes remain Outstanding, California Petroleum will maintain in New
York, the following: (a) an office or agency where the Serial Mortgage Notes may
be presented for payment, (b) an office or agency where the Serial Mortgage
Notes may be presented for registration of transfer and for exchange as in this
Serial Indenture provided and (c) an office or agency where notices and demands
to or upon California Petroleum in respect of the Serial Mortgage Notes or of
this Serial Indenture may be served. California Petroleum will give to the
Indenture Trustee written notice of the location of any such office or agency
and of any change of location thereof. California Petroleum hereby initially
designates the office of Chemical Bank at 450 West 33rd Street,
Transfer/Redemption Area, 8th Floor, New York, NY 10001 as the office or agency
for each such purpose. In case California Petroleum shall fail to maintain any
such office or agency or shall fail to give such notice of the location or of
any change in the location thereof, presentations and demands may be made and
notices may be served at the Corporate Trust Office.
SECTION 3.3 Appointment to Fill a Vacancy in Office of Indenture
Trustee. California Petroleum or its Designated Representative, whenever
necessary to avoid or fill a vacancy in the office of Indenture Trustee, will,
with the consent of Chevron, appoint, in the manner provided in Section 5.9, an
Indenture Trustee, so that there shall at all times be an Indenture Trustee
hereunder.
SECTION 3.4 Paying Agents. Whenever the Indenture Trustee shall
appoint a paying agent, it will cause such paying agent to execute and deliver
an instrument in which such agent shall agree with the Indenture Trustee,
subject to the provisions of this Section,
(a) that it will hold all sums received by it as such agent for the
payment of the principal of or interest on the Serial Mortgage Notes
(whether such sums have been paid to it by California Petroleum or by any
other obligor on the Serial Mortgage Notes) in trust for the benefit of the
holders of the Serial Mortgage Notes or of the Indenture Trustee, and
(b) that it will give the Indenture Trustee notice of any failure by
California Petroleum (or by any other obligor on the Serial Mortgage Notes)
to make any payment of the principal of or interest on the Serial Mortgage
Notes when the same shall be due and payable.
So long as the Collateral Agreement is in effect, the paying agent for the
Serial Mortgage Notes shall be the Collateral Trustee pursuant to and in
accordance with the provisions of the Collateral Agreement and hereof.
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Anything in this Section to the contrary notwithstanding, the
agreement to hold sums in trust as provided in this Section are subject to the
provisions of Sections 9.3 and 9.4.
SECTION 3.5 Reports by California Petroleum. California Petroleum
covenants:
(a) to file with the Indenture Trustee, within 15 days after
California Petroleum is required to file the same with the Commission,
copies of the annual reports and of the information, documents, and other
reports (or copies of such portions of any of the foregoing as the
Commission may from time to time by rules and regulations prescribe) which
California Petroleum may be required to file with the Commission pursuant
to Section 13 or 15(d) of the Exchange Act, or, if California Petroleum is
not required to file information, documents, or reports pursuant to either
of such Sections of the Exchange Act, then to file with the Indenture
Trustee and the Commission, in accordance with rules and regulations
prescribed from time to time by the Commission, such of the supplementary
and periodic information, documents, and reports which may be required
pursuant to Section 13 of the Exchange Act in respect of a security listed
and registered on a national securities exchange, as may be prescribed from
time to time in such rules and regulations;
(b) to file with the Indenture Trustee and the Commission, in
accordance with rules and regulations prescribed from time to time by the
Commission, such additional information, documents, and reports with
respect to compliance by California Petroleum with the conditions and
covenants provided for in this Indenture as may be required from time to
time by such rules and regulations;
(c) to transmit to the holders of the Serial Mortgage Notes in the
manner and to the extent required by Section 313(c) of the Trust Indenture
Act, within 30 days after the filing thereof with the Indenture Trustee,
such summaries of any information, documents and reports required to be
filed by California Petroleum pursuant to subsections (a) and (b) of this
Section 3.5 as may be required by rules and regulations prescribed from
time to time by the Commission; and
(d) furnish to the Indenture Trustee, on or before each August 1,
commencing in 1995, a brief certificate from the principal executive
officer, principal financial officer or principal accounting officer of
California Petroleum as to his or her knowledge of California Petroleum's
compliance with all conditions and covenants under this Serial Indenture.
For purposes of this subsection (d), such compliance shall be determined
without regard to any period of grace or requirement of notice provided
under this Serial Indenture.
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SECTION 3.6 Reports by the Indenture Trustee.
(a) The Indenture Trustee shall on or before each August 1,
commencing in 1995, transmit in the manner and to the extent required by
Section 313(c) or 313(d) of the Trust Indenture Act, any report required by
Section 313(a) or Section 313 (b) of the Trust Indenture Act to be
transmitted by the Indenture Trustee to the holders of the Serial Mortgage
Notes.
(b) A copy of each report required under this Section shall, at the
time of such transmission to holders of Serial Mortgage Notes, be filed by
the Indenture Trustee with the Commission and with each securities exchange
upon which the Serial Mortgage Notes are listed. California Petroleum will
notify the Indenture Trustee when the Serial Mortgage Notes are listed on
any securities exchange.
SECTION 3.7 Serial Noteholders' Lists. If and so long as the
Indenture Trustee shall not be the Serial Mortgage Note registrar, California
Petroleum will furnish or cause to be furnished to the Indenture Trustee a list
in such form as the Indenture Trustee may reasonably require of the names and
addresses of the holders of the Serial Mortgage Notes pursuant to Section 312 of
the Trust Indenture Act (a) semi-annually not more than 5 days after each record
date for the payment of semi-annual interest on the Serial Mortgage Notes, as
hereinabove specified, as of such record date, and (b) at such other times as
the Indenture Trustee may request in writing, within thirty days after receipt
by California Petroleum of any such request as of a date not more than 15 days
prior to the time such information is furnished.
SECTION 3.8 Negative Covenants. California Petroleum will maintain
its corporate existence and will not:
(a) create, incur, assume or issue, directly or indirectly, guarantee
or in any manner become, directly or indirectly, liable for or with respect to
the payment of any indebtedness, except for its obligations under this Serial
Indenture and the Serial Mortgage Notes and the Term Indenture and the Term
Mortgage Notes;
(b) engage in any business other than the issuance of the Serial
Mortgage Notes and the Term Mortgage Notes and making the loans to the Owners
under the Loan Agreements in accordance with California Petroleum's charter and
by-laws;
(c) (i) commence any case, proceeding or other action under any
existing or future bankruptcy, insolvency or similar law seeking to have an
order for relief entered with respect to it, or seeking reorganization,
arrangement, adjustment, winding up, liquidation, dissolution, composition or
other relief with respect to it or
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its debts, (ii) seek appointment to a receiver, trustee, custodian or other
similar official for it or any part of its assets, (iii) make a general
assignment for the benefit of creditors or (iv) take any action in furtherance
of, or consenting or acquiescing in, any of the foregoing;
(d) create, incur, assume or suffer to exist any Lien on any of its
assets or properties or on any of the Collateral, except for the Liens created
in connection with the Serial Indenture, the Term Indenture and the Collateral
Agreement;
(e) consolidate with, or merge with or into, any other Person or
convey or transfer to any Person (other than to the Collateral Trustee in
accordance with the Collateral Agreement) all or any part of the Collateral;
(f) (i) declare or pay any dividend or other distribution on any
shares of its capital stock in excess of $15,000 per annum, (ii) make any loans
or advances to any Affiliate of California Petroleum or (iii) purchase, redeem
or otherwise acquire or retire for value any shares of its capital stock; and
(g) make any capital contributions, advances or loans to, or
investments or purchases of capital stock in, any Person, except for its loan to
each Owner under the Loan Agreements.
SECTION 3.9 Reports by Chevron. Chevron covenants:
(a) to file with the Indenture Trustee, within 15 days after Chevron
is required to file the same with the Commission, copies of the annual
reports and of the information, documents, and other reports (or copies of
such portions of any of the foregoing as the Commission may from time to
time by rules and regulations prescribe) which Chevron may be required to
file with the Commission pursuant to Section 13 or 15(d) of the Exchange
Act, or, if Chevron is not required to file information, documents, or
reports pursuant to either of such Sections of the Exchange Act, then to
file with the Indenture Trustee and the Commission, in accordance with
rules and regulations prescribed from time to time by the Commission, such
of the supplementary and periodic information, documents, and reports which
may be required pursuant to Section 13 of the Exchange Act in respect of a
security listed and registered on a national securities exchange, as may be
prescribed from time to time in such rules and regulations;
(b) to file with the Indenture Trustee and the Commission, in
accordance with rules and regulations prescribed from time to time by the
Commission, such additional information, documents, and reports with
respect to compliance by Chevron with the conditions and covenants provided
for in
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this Serial Indenture as may be required from time to time by such rules
and regulations;
(c) to transmit to the holders of the Serial Mortgage Notes in the
manner and to the extent required by Section 313(c) of the Trust Indenture
Act, within 30 days after the filing thereof with the Indenture Trustee,
such summaries of any information, documents and reports required to be
filed by Chevron pursuant to subsections (a) and (b) of this Section 3.9 as
may be required by rules and regulations prescribed from time to time by
the Commission; and
(d) furnish to the Indenture Trustee, on or before each August 1,
commencing in 1995, a brief certificate from the principal executive
officer, principal financial officer or principal accounting officer of
Chevron as to his or her knowledge of Chevron's compliance with all
conditions and covenants under this Serial Indenture. For purposes of this
subsection (d), such compliance shall be determined without regard to any
period of grace or requirement of notice provided under this Serial
Indenture.
ARTICLE FOUR
REMEDIES OF THE INDENTURE TRUSTEE AND
SERIAL NOTEHOLDERS ON INDENTURE EVENT OF DEFAULT.
SECTION 4.1 Indenture Event of Default Defined; Acceleration of
Maturity; Waiver of Default. An Indenture Event of Default means any of the
following events (whatever the reason for such Indenture Event of Default and
whether it shall be voluntary or involuntary or be effected by operation of law
or pursuant to any judgment, decree or order of any court or any order, rule or
regulation of any administrative or governmental body):
(a) any Mortgage Event of Default under a Mortgage that is a Related
Security Document shall have occurred and be continuing;
(b) default in the payment of all or any part of the principal of or
interest on any of the Serial Mortgage Notes as and when such payment
becomes due and payable either at maturity, upon any redemption, by
declaration or otherwise and the continuance of such default for a period
of two Business Days;
(c) failure on the part of California Petroleum duly to observe or
perform in any material respect any of the other agreements or covenants on
the part of California Petroleum contained in the Serial Mortgage Notes,
this
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Serial Indenture, the Related Security Documents or any document or
certificate delivered pursuant thereto for a period of 30 days after the
earlier of (i) actual knowledge by California Petroleum of such failure and
(ii) the date on which written notice specifying such failure and stating
that such notice is a "Notice of Default" hereunder has been given by
registered or certified mail, return receipt requested, to California
Petroleum by the Indenture Trustee, or to California Petroleum and the
Indenture Trustee by the holders of at least 25% in aggregate principal
amount of the Serial Mortgage Notes at the time Outstanding;
(d) any representation or warranty of California Petroleum made in
this Serial Indenture, any Related Security Document or any document or
certificate delivered pursuant thereto proves to have been inaccurate in
any material respect when made, remains inaccurate in such material respect
for a period of 30 days after the earlier of (i) actual knowledge of such
inaccuracy and (ii) the date on which written notice specifying such
inaccuracy and stating that such notice is a "Notice of Default" hereunder
has been given by registered or certified mail, return receipt requested,
to California Petroleum by the Indenture Trustee, or to California
Petroleum and the Indenture Trustee by the holders of at least 25% in
aggregate principal amount of the Serial Mortgage Notes at the time
Outstanding;
(e) a court having jurisdiction in the premises shall enter a decree
or order for relief in respect of California Petroleum in an involuntary
case under any applicable bankruptcy, insolvency or other similar law now
or hereafter in effect, or appointing a receiver, liquidator, assignee,
custodian, trustee, sequestrator (or similar official) of California
Petroleum or for any substantial part of its property or ordering the
winding up or liquidation of its affairs, and such decree or order shall
remain unstayed and in effect for a period of 60 consecutive days;
(f) California Petroleum shall commence a voluntary case under any
applicable bankruptcy, insolvency or other similar law now or hereafter in
effect, or consent to the entry of an order for relief in an involuntary
case under any such law, or consent to the appointment or taking possession
by a receiver, liquidator, assignee, custodian, trustee, sequestrator (or
similar official) of California Petroleum or for any substantial part of
its property, or make any general assignment for the benefit of creditors;
(g) any of the Initial Charters is repudiated or ceases to be in full
force and effect, other than pursuant to the terms thereof;
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(h) any of the Related Security Documents is repudiated or ceases to
be in full force and effect or any of such Security Documents ceases to
give the Collateral Trustee, in any material respect, the Liens, rights,
powers and privileges purported to be created thereby, in each case other
than pursuant to the terms thereof; or
(i) any Initial Charter Guarantee is repudiated or ceases to be in
full force and effect, other than pursuant to the terms thereof.
If an Indenture Event of Default (other than an Indenture Event of
Default specified in clause (e) or (f) above occurs and is continuing, then and
in each and every such case, unless the principal of all of the Serial Mortgage
Notes shall have already become due and payable, either the Indenture Trustee or
the holders of not less than 25% in aggregate principal amount of the Serial
Mortgage Notes then Outstanding hereunder, by notice in writing to California
Petroleum (and to the Indenture Trustee if given by the Serial Noteholders), may
declare the entire principal of all the Serial Mortgage Notes and the interest
accrued thereon, to be due and payable immediately, and upon any such
declaration the same shall become immediately due and payable. If an Indenture
Event of Default specified in clause (e) or (f) above occurs and is continuing,
then and in each and every such case, unless the principal of all of the Serial
Mortgage Notes shall have already become due and payable, the entire principal
of all the Serial Mortgage Notes and the interest accrued thereon, shall
immediately and without further act become due and payable, without presentment,
demand, protest or notice by the Indenture Trustee or any holder of Serial
Mortgage Notes, all of which are hereby waived.
This provision, however, is subject to the condition that if, at any
time after the principal of the Serial Mortgage Notes shall have been so
declared due and payable, and before any judgment or decree for the payment of
the moneys due shall have been obtained or entered as hereinafter provided,
California Petroleum shall pay or shall deposit with the Indenture Trustee a sum
sufficient to pay all matured installments of interest upon all the Serial
Mortgage Notes and the principal of any and all Serial Mortgage Notes which
shall have become due otherwise than by acceleration (with interest upon such
principal and, to the extent that payment of such interest is enforceable under
applicable law, on overdue installments of interest, at the same rate for each
Serial Mortgage Note as the rate of interest specified in such Serial Mortgage
Note, to the date of such payment or deposit) and such amount as shall be
sufficient to cover reasonable compensation to the Indenture Trustee and each
predecessor Indenture Trustee, their respective agents, attorneys and counsel,
and all other expenses and liabilities incurred, and all advances made, by the
Indenture Trustee and each predecessor Indenture Trustee except as a result of
negligence or bad faith, and if any and all Events of Default under this Serial
Indenture, other than the non-payment of the principal of Serial Mortgage Notes
which shall have become due by acceleration, shall have been cured, waived or
otherwise remedied as provided
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herein -- then and in every such case the holders of a majority in aggregate
principal amount of the Serial Mortgage Notes then Outstanding, by written
notice to California Petroleum and to the Indenture Trustee, may waive all
defaults and rescind and annul such declaration and its consequences, but no
such waiver or rescission and annulment shall extend to or shall affect any
subsequent default or shall impair any right consequent thereon.
SECTION 4.2 Collection of Indebtedness by Indenture Trustee;
Indenture Trustee May Prove Debt. California Petroleum covenants that if an
Indenture Event of Default specified in clause (b) of Section 4.1 occurs and is
continuing, then upon demand of the Indenture Trustee, California Petroleum will
pay to the Indenture Trustee for the benefit of the holders of the Serial
Mortgage Notes the whole amount that then shall have become due and payable on
all such Serial Mortgage Notes for principal or interest, as the case may be
(with interest to the date of such payment upon the overdue principal and, to
the extent that payment of such interest is enforceable under applicable law, on
overdue installments of interest at the same rate for each Serial Mortgage Note
as the rate of interest specified in such Serial Mortgage Note); and in addition
thereto, such further amount as shall be sufficient to cover the costs and
expenses of collection, including reasonable compensation to the Indenture
Trustee and each predecessor Indenture Trustee, their respective agents,
attorneys and counsel, and any expenses and liabilities incurred, and all
advances made, by the Indenture Trustee and each predecessor Indenture Trustee
except as a result of its negligence or bad faith.
Until such demand is made by the Indenture Trustee, California
Petroleum may pay the principal of and interest on the Serial Mortgage Notes to
the registered holders, whether or not the Serial Mortgage Notes be overdue.
In case California Petroleum shall fail forthwith to pay such amounts
upon such demand, the Indenture Trustee, in its own name and as trustee of an
express trust, shall be entitled and empowered to institute any action or
proceedings at law or in equity for the collection of the sums so due and
unpaid, and may prosecute any such action or proceedings to judgment or final
decree, and may enforce any such judgment or final decree against California
Petroleum or other obligor upon the Serial Mortgage Notes and collect in the
manner provided by law out of the property of California Petroleum or other
obligor upon the Serial Mortgage Notes, wherever situated, the moneys adjudged
or decreed to be payable.
In case there shall be pending proceedings relative to California
Petroleum or any other obligor upon the Serial Mortgage Notes under Title 11 of
the United States Code or any other applicable Federal or state bankruptcy,
insolvency or other similar law, or in case a receiver, assignee or trustee in
bankruptcy or reorganization, liquidator, sequestrator or similar official shall
have been appointed for or taken possession of California Petroleum or its
property or such other obligor,
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or in case of any other comparable judicial proceedings relative to California
Petroleum or other obligor upon the Serial Mortgage Notes, or to the creditors
or property of California Petroleum or such other obligor, the Indenture
Trustee, irrespective of whether the principal of the Serial Mortgage Notes
shall then be due and payable as therein expressed or by declaration or
otherwise and irrespective of whether the Indenture Trustee shall have made any
demand pursuant to the provisions of this Section, shall be entitled and
empowered, by intervention in such proceedings or otherwise:
(a) to file and prove a claim or claims for the whole amount of
principal and interest owing and unpaid in respect of the Serial Mortgage
Notes, and to file such other papers or documents as may be necessary or
advisable in order to have the claims of the Indenture Trustee (including
any claim for reasonable compensation to the Indenture Trustee and each
predecessor Indenture Trustee, and their respective agents, attorneys and
counsel, and for reimbursement of all expenses and liabilities incurred,
and all advances made, by the Indenture Trustee and each predecessor
Indenture Trustee, except as a result of negligence or bad faith) and of
the Serial Noteholders allowed in any judicial proceedings relative to
California Petroleum or other obligor upon the Serial Mortgage Notes, or to
the creditors or property of California Petroleum or such other obligor,
(b) unless prohibited by applicable law and regulations, to vote on
behalf of the holders of the Serial Mortgage Notes in any election of a
trustee or a standby trustee in arrangement, reorganization, liquidation or
other bankruptcy or insolvency proceedings or person performing similar
functions in comparable proceedings, and
(c) to collect and receive any moneys or other property payable or
deliverable on any such claims, and to distribute all amounts received with
respect to the claims of the Serial Noteholders and of the Indenture
Trustee on their behalf; and any trustee, receiver, or liquidator,
custodian or other similar official is hereby authorized by each of the
Serial Noteholders to make payments to the Indenture Trustee, and, in the
event that the Indenture Trustee shall consent to the making of payments
directly to the Serial Noteholders, to pay to the Indenture Trustee such
amounts as shall be sufficient to cover reasonable compensation to the
Indenture Trustee, each predecessor Indenture Trustee and their respective
agents, attorneys and counsel, and all other expenses and liabilities
incurred, and all advances made, by the Indenture Trustee and each
predecessor Indenture Trustee except as a result of negligence or bad
faith.
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Nothing herein contained shall be deemed to authorize the Indenture
Trustee to authorize or consent to or vote for or accept or adopt on behalf of
any Serial Noteholder any plan of reorganization, arrangement, adjustment or
composition affecting the Serial Mortgage Notes or the rights of any Holder
thereof, or to authorize the Indenture Trustee to vote in respect of the claim
of any Serial Noteholder in any such proceeding except, as aforesaid, to vote
for the election of a trustee in bankruptcy or similar person.
All rights of action and of asserting claims under this Serial
Indenture, or under any of the Serial Mortgage Notes, may be enforced by the
Indenture Trustee without the possession of any of the Serial Mortgage Notes or
the production thereof in any trial or other proceedings relative thereto, and
any such action or proceedings instituted by the Indenture Trustee shall be
brought in its own name as trustee of an express trust, and any recovery of
judgment, subject to the payment of the expenses, disbursements and compensation
of the Indenture Trustee, each predecessor Indenture Trustee and their
respective agents and attorneys, shall be for the ratable benefit of the holders
of the Serial Mortgage Notes.
In any proceedings brought by the Indenture Trustee (and also any
proceedings involving the interpretation of any provision of this Serial
Indenture to which the Indenture Trustee shall be a party), the Indenture
Trustee shall be held to represent all the holders of the Serial Mortgage Notes,
and it shall not be necessary to make any holders of the Serial Mortgage Notes
parties to any such proceedings.
SECTION 4.3 Application of Proceeds. Subject to the terms and
conditions of the Collateral Agreement, any moneys collected by the Indenture
Trustee pursuant to this Article shall be applied in the following order at the
date or dates fixed by the Indenture Trustee and, in case of the distribution of
such moneys on account of principal or interest, upon presentation of the
several Serial Mortgage Notes and stamping (or otherwise noting) thereon the
payment, or issuing Serial Mortgage Notes in reduced principal amounts in
exchange for the presented Serial Mortgage Notes if only partially paid, or upon
surrender thereof if fully paid:
FIRST: To the payment of costs and expenses, including reasonable
compensation to the Indenture Trustee and each predecessor Indenture
Trustee and their respective agents and attorneys and of all expenses and
liabilities incurred, and all advances made, by the Indenture Trustee and
each predecessor Indenture Trustee except as a result of negligence or bad
faith;
SECOND: In case the principal of the Serial Mortgage Notes shall not
have become and be then due and payable, to the payment of interest in
default in the order of the maturity of the installments of such interest,
with interest (to the extent that such interest has been collected by the
Indenture Trustee) upon the overdue installments of interest at the Default
Rate, such payments to
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be made ratably to the persons entitled thereto, without discrimination or
preference;
THIRD: In case the principal of the Serial Mortgage Notes shall have
become and shall be then due and payable, to the payment of the whole
amount then owing and unpaid upon all the Serial Mortgage Notes for
principal and interest, with interest upon the overdue principal, and (to
the extent that such interest has been collected by the Indenture Trustee)
upon overdue installments of interest at the Default Rate; and in case such
moneys shall be insufficient to pay in full the whole amount so due and
unpaid upon the Serial Mortgage Notes, then to the payment of such
principal and interest, without preference or priority of principal over
interest, or of interest over principal, or of any installment of interest
over any other installment of interest, or of any Serial Mortgage Note over
any other Serial Mortgage Note, ratably to the aggregate of such principal
and accrued and unpaid interest; and
FOURTH: To the payment of the remainder, if any, to California
Petroleum or any other person lawfully entitled thereto.
SECTION 4.4 Suits for Enforcement. In case an Indenture Event of
Default has occurred, has not been waived and is continuing, the Indenture
Trustee may in its discretion proceed to protect and enforce the rights vested
in it by this Serial Indenture by such appropriate judicial proceedings as the
Indenture Trustee shall deem most effectual to protect and enforce any of such
rights, either at law or in equity or in bankruptcy or otherwise, whether for
the specific enforcement of any covenant or agreement contained in this Serial
Indenture or in aid of the exercise of any power granted in this Serial
Indenture or to enforce any other legal or equitable right vested in the
Indenture Trustee by this Serial Indenture or by law.
SECTION 4.5 Restoration of Rights on Abandonment of Proceedings. In
case the Indenture Trustee shall have proceeded to enforce any right under this
Serial Indenture and such proceedings shall have been discontinued or abandoned
for any reason, or shall have been determined adversely to the Indenture
Trustee, then and in every such case California Petroleum and the Indenture
Trustee shall be restored respectively to their former positions and rights
hereunder, and all rights, remedies and powers of California Petroleum, the
Indenture Trustee and the Serial Noteholders shall continue as though no such
proceedings had been taken.
SECTION 4.6 Limitations on Suits by Serial Noteholders. Subject to
the provisions of Section 4.11, no holder of any Serial Mortgage Note shall have
any right by virtue or by availing of any provision of this Serial Indenture to
institute any action or proceeding at law or in equity or in bankruptcy or
otherwise upon or under or with respect to this Serial Indenture, or for the
appointment of a trustee, receiver, liquidator, custodian or other similar
official or for any other remedy hereunder,
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unless such holder previously shall have given to the Indenture Trustee written
notice of default and of the continuance thereof, as hereinbefore provided, and
unless also the holders of not less than 25% in aggregate principal amount of
the Serial Mortgage Notes then Outstanding shall have made written request upon
the Indenture Trustee to institute such action or proceedings in its own name as
trustee hereunder and shall have offered to the Indenture Trustee such
reasonable indemnity as it may require against the costs, expenses and
liabilities to be incurred therein or thereby and the Indenture Trustee for 60
days after its receipt of such notice, request and offer of indemnity shall have
failed to institute any such action or proceedings and no direction inconsistent
with such written request shall have been given to the Indenture Trustee
pursuant to Section 4.8; it being understood and intended, and being expressly
covenanted by the taker and holder of every Serial Mortgage Note with every
other taker and holder and the Indenture Trustee, that no one or more holders of
Serial Mortgage Notes shall have any right in any manner whatever by virtue or
by availing of any provision of this Serial Indenture to affect, disturb or
prejudice the rights of any other holder of Serial Mortgage Notes, or to obtain
or seek to obtain priority over or preference to any other such holder or to
enforce any right under this Serial Indenture, except in the manner herein
provided and for the equal, ratable and common benefit of all holders of Serial
Mortgage Notes. For the protection and enforcement of the provisions of this
Section, each and every Serial Noteholder and the Indenture Trustee shall be
entitled to such relief as can be given either at law or in equity.
SECTION 4.7 Powers and Remedies Cumulative; Delay or Omission Not
Waiver of Default. Except as provided in Section 2.6, no right or remedy herein
conferred upon or reserved to the Indenture Trustee or to the Serial Noteholders
is intended to be exclusive of any other right or remedy, and every right and
remedy shall, to the extent permitted by law, be cumulative and in addition to
every other right and remedy given hereunder or now or hereafter existing at law
or in equity or otherwise. The assertion or employment of any right or remedy
hereunder, or otherwise, shall not prevent the concurrent assertion or
employment of any other appropriate right or remedy.
No delay or omission of the Indenture Trustee or of any holder of any
of the Serial Mortgage Notes to exercise any right or power accruing upon any
Indenture Event of Default occurring and continuing as aforesaid shall impair
any such right or power or shall be construed to be a waiver of any such
Indenture Event of Default or an acquiescence therein; and, subject to Section
4.6, every power and remedy given by this Serial Indenture or by law to the
Indenture Trustee or to the Serial Noteholders may be exercised from time to
time, and as often as shall be deemed expedient, by the Indenture Trustee or by
the Serial Noteholders.
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SECTION 4.8 Control by Serial Noteholders. The holders of a majority
in aggregate principal amount of the Serial Mortgage Notes at the time
Outstanding shall have the right to direct the time, method, and place of
conducting any proceeding for any remedy available to the Indenture Trustee, or
exercising any trust or power conferred on the Indenture Trustee by this Serial
Indenture; provided that such direction shall not be otherwise than in
accordance with law and the provisions of this Serial Indenture and provided
further that (subject to the provisions of Section 5.1) the Indenture Trustee
shall have the right to decline to follow any such direction if the Indenture
Trustee, being advised by counsel, shall determine that the action or proceeding
so directed may not lawfully be taken or if the Indenture Trustee in good faith
by its board of directors, the executive committee, or a trust committee of
directors or responsible officers of the Indenture Trustee shall determine that
the action or proceedings so directed would involve the Indenture Trustee in
personal liability or if the Indenture Trustee in good faith shall so determine
that the actions or forebearances specified in or pursuant to such direction
shall be unduly prejudicial to the interests of holders of the Serial Mortgage
Notes not joining in the giving of said direction, it being understood that
(subject to Section 5.1) the Indenture Trustee shall have no duty to ascertain
whether or not such actions or forebearances are unduly prejudicial to such
holders.
Nothing in this Serial Indenture shall impair the right of the
Indenture Trustee in its discretion to take any action deemed proper by the
Indenture Trustee and which is not inconsistent with such direction by Serial
Noteholders.
SECTION 4.9 Waiver of Past Defaults. Prior to the declaration of the
maturity of the Serial Mortgage Notes as provided in Section 4.1, the holders of
a majority in aggregate principal amount of the Serial Mortgage Notes at the
time Outstanding may on behalf of the holders of all the Serial Mortgage Notes
waive any past Default or Indenture Event of Default hereunder and its
consequences, except a Default (a) in the payment of principal of or interest on
any of the Serial Mortgage Notes or (b) in respect of a covenant or provision
hereof which cannot be modified or amended without the consent of the holder of
each Serial Mortgage Note affected. In the case of any such waiver, California
Petroleum, the Indenture Trustee and the holders of the Serial Mortgage Notes
shall be restored to their former positions and rights hereunder, respectively;
but no such waiver shall extend to any subsequent or other Default or impair any
right consequent thereon.
Upon any such waiver, such Default shall cease to exist and be deemed
to have been cured and not to have occurred, and any Indenture Event of Default
arising therefrom shall be deemed to have been cured, and not to have occurred
for every purpose of this Serial Indenture; but no such waiver shall extend to
any subsequent or other Default or Indenture Event of Default or impair any
right consequent thereon.
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SECTION 4.10 Enforcement Notice. (a) If any Indenture Event of
Default occurs and is continuing and if such Indenture Event of Default is
actually known by a Responsible Officer of the Indenture Trustee charged with
administration of this Serial Indenture, the Indenture Trustee shall mail to the
Collateral Trustee and each holder of a Serial Mortgage Note, in the manner and
to the extent provided in Section 313(c) of the Trust Indenture Act, notice of
each Indenture Event of Default within 90 days after it occurs (an "Enforcement
Notice"), unless such Indenture Event of Default has been cured; provided that,
except in the case of a default in the payment of the principal of or interest
on any Serial Mortgage Note, the Indenture Trustee shall be protected in
withholding such notice if and so long as the board of directors, the executive
committee or a trust committee of directors or Responsible Officers of the
Indenture Trustee in good faith determine that the withholding of such notice is
in the interest of the holders of the Serial Mortgage Notes.
(b) So long as an Enforcement Notice is in effect, the Collateral
Agreement provides that the Collateral Trustee shall exercise the rights and
remedies respectively provided in the Collateral Agreement and the Related
Security Documents subject to the direction of the Applicable Secured Parties
(as defined in the Collateral Agreement) as provided herein and therein. The
Collateral Trustee is not empowered to exercise any remedy under the Collateral
Agreement or any of the Related Security Documents unless an Enforcement Notice
is in effect.
(c) Except as otherwise provided by Section 4.10(e), an Enforcement
Notice shall become effective upon receipt thereof by the Collateral Trustee.
An Enforcement Notice, once effective, shall remain in effect unless and until
it is canceled as provided in Section 4.10(d) hereof or deemed canceled as
provided in Section 4.10(e) hereof.
(d) If the Indenture Trustee has given an Enforcement Notice, the
Indenture Trustee shall be required to cancel such Enforcement Notice under the
circumstances set forth in Section 4.1.
(e) Notwithstanding anything to the contrary contained in this
Section 4.10, if the Collateral Trustee and the Indenture Trustee are the same
Person, the Indenture Trustee shall not be required to deliver a notice to the
Collateral Trustee in order for an Enforcement Notice to become effective or to
be canceled. In any such case, an Enforcement Notice shall, for all purposes of
the Collateral Agreement and the Related Security Documents, (i) be deemed to
have been delivered and to have become effective immediately upon the Indenture
Trustee being charged under this Section 4.10 with knowledge that (x) a Serial
Mortgage Note has not been paid in full at the stated final maturity thereof or
(y) an Indenture Event of Default has occurred under the terms of this Serial
Indenture, and (ii) be deemed to have been canceled at such time as the
Indenture Trustee would have been required to deliver a notice of
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cancellation under Section 4.1 pursuant to this Section 4.10 were it not also
the Collateral Trustee.
(f) The Indenture Trustee shall not be deemed to have knowledge of
any Default or Indenture Event of Default except (i) any Indenture Event of
Default occurring pursuant to Section 4.1(b) or (ii) any Default or Indenture
Event of Default of which a Responsible Officer of the Indenture Trustee charged
with administration of this Serial Indenture shall have received written
notification or obtained actual knowledge.
SECTION 4.11 Unconditional Rights of Holders to Receive Principal and
Interest. Notwithstanding any other provision in this Serial Indenture (but
subject to the terms of the Collateral Trust Agreement), other than the
provisions hereof limiting the right to recover amounts due on the Serial
Mortgage Notes to recoveries from the property of the Trust Estate, the Holder
of any Serial Mortgage Note shall have the right, to the extent permitted by
applicable law, which right is absolute and unconditional except to the extent
restricted by applicable law, (i) to receive payments of interest on such Serial
Mortgage Note on each interest payment date, (ii) to receive payments of
principal on such Serial Mortgage Note on such principal payment date (or, in
the case of any Serial Mortgage Note called for redemption, on or after the date
fixed for such redemption) and (iii) to institute suit for the enforcement of
any such payment, and such right shall not be impaired without the consent of
such Holder; provided, however, no Holder of a Serial Mortgage Note shall have
any right to institute any such suit, if and to the extent that the institution
or prosecution thereof or the entry of a judgement therein would, under
applicable law, result in the surrender, impairment or waiver of the lien of
this Serial Indenture upon the Trust Estate.
ARTICLE FIVE
CONCERNING THE INDENTURE TRUSTEE.
SECTION 5.1 Duties and Responsibilities of the Indenture Trustee;
During Default; Prior to Default. The Indenture Trustee, prior to the
occurrence of an Indenture Event of Default and after the curing or waiving of
all Indenture Events of Default which may have occurred, undertakes to perform
such duties and only such duties as are specifically set forth in this Serial
Indenture. In case an Indenture Event of Default has occurred (which has not
been cured or waived) the Indenture Trustee shall exercise such of the rights
and powers vested in it by this Serial Indenture, and use the same degree of
care and skill in their exercise, as a prudent man would exercise or use under
the circumstances in the conduct of his own affairs.
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No provision of this Serial Indenture shall be construed to relieve
the Indenture Trustee from liability for its own negligent action, its own
negligent failure to act or its own willful misconduct, except that
(a) prior to the occurrence of an Indenture Event of Default and
after the curing or waiving of all such Indenture Events of Default which
may have occurred:
(i) the duties and obligations of the Indenture Trustee shall be
determined solely by the express provisions of this Serial Indenture,
and the Indenture Trustee shall not be liable except for the
performance of such duties and obligations as are specifically set
forth in this Serial Indenture, and no implied covenants or
obligations shall be read into this Serial Indenture against the
Indenture Trustee; and
(ii) in the absence of bad faith on the part of the Indenture
Trustee, the Indenture Trustee may conclusively rely, as to the truth
of the statements and the correctness of the opinions expressed
therein, upon any statements, certificates or opinions furnished to
the Indenture Trustee and conforming to the requirements of this
Serial Indenture; but in the case of any such statements, certificates
or opinions which by any provision hereof are specifically required to
be furnished to the Indenture Trustee, the Indenture Trustee shall be
under a duty to examine the same to determine whether or not they
conform to the requirements of this Serial Indenture;
(b) the Indenture Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer or Responsible
Officers of the Indenture Trustee, unless it shall be proved that the
Indenture Trustee was negligent in ascertaining the pertinent facts; and
(c) the Indenture Trustee shall not be liable with respect to any
action taken or omitted to be taken by it in good faith in accordance with
the direction of the holders of not less than a majority in principal
amount of the Serial Mortgage Notes at the time Outstanding relating to the
time, method and place of conducting any proceeding for any remedy
available to the Indenture Trustee, or exercising any trust or power
conferred upon the Indenture Trustee, under this Serial Indenture.
None of the provisions contained in this Serial Indenture shall
require the Indenture Trustee to expend or risk its own funds or otherwise incur
personal financial liability in the performance of any of its duties or in the
exercise of any of its rights or powers, if there shall be reasonable ground for
believing that the
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repayment of such funds or adequate indemnity against such liability is not
reasonably assured to it.
This Section 5.1 is in furtherance of and subject to Sections 315 and
316 of the Trust Indenture Act.
SECTION 5.2 Certain Rights of the Indenture Trustee. In furtherance
of and subject to the Trust Indenture Act, and subject to Section 5.1:
(a) the Indenture Trustee may rely and shall be protected in acting
or refraining from acting upon any resolution, Officers' Certificate or any
other certificate, statement, instrument, opinion, report, notice, request,
consent, order, bond, debenture, note, coupon, security or other paper or
document believed by it to be genuine and to have been signed or presented
by the proper party or parties;
(b) any request, direction, order or demand of California Petroleum
mentioned herein shall be sufficiently evidenced by an Officers'
Certificate (unless other evidence in respect thereof be herein
specifically prescribed); and any resolution of the Board of Directors may
be evidenced to the Indenture Trustee by a copy thereof certified by the
secretary or an assistant secretary of California Petroleum;
(c) the Indenture Trustee may consult with counsel and any advice or
Opinion of Counsel shall be full and complete authorization and protection
in respect of any action taken, suffered or omitted to be taken by it
hereunder in good faith and in accordance with such advice or Opinion of
Counsel;
(d) the Indenture Trustee shall be under no obligation to exercise
any of the trusts or powers vested in it by this Serial Indenture at the
request, order or direction of any of the Serial Noteholders pursuant to
the provisions of this Serial Indenture, unless such Serial Noteholders
shall have offered to the Indenture Trustee reasonable security or
indemnity against the costs, expenses and liabilities which might be
incurred therein or thereby;
(e) the Indenture Trustee shall not be liable for any action taken or
omitted by it in good faith and believed by it to be authorized or within
the discretion, rights or powers conferred upon it by this Serial
Indenture;
(f) prior to the occurrence of an Indenture Event of Default
hereunder and after the curing or waiving of all Indenture Events of
Default, the Indenture Trustee shall not be bound to make any investigation
into the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, consent, order, approval,
appraisal, bond, debenture,
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note, coupon, security, or other paper or document unless requested in
writing so to do by the holders of not less than a majority in aggregate
principal amount of the Serial Mortgage Notes then Outstanding; provided
--------
that, if the payment within a reasonable time to the Indenture Trustee of
the costs, expenses or liabilities likely to be incurred by it in the
making of such investigation is, in the opinion of the Indenture Trustee,
not reasonably assured to the Indenture Trustee by the security afforded to
it by the terms of this Serial Indenture, the Indenture Trustee may require
reasonable indemnity against such expenses or liabilities as a condition to
proceeding; the reasonable expenses of every such examination shall be paid
by California Petroleum or, if paid by the Indenture Trustee or any
predecessor trustee, shall be repaid by California Petroleum upon demand;
and
(g) the Indenture Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or through
agents or attorneys not regularly in its employ and the Indenture Trustee
shall not be responsible for any misconduct or negligence on the part of
any such agent or attorney appointed with due care by it hereunder.
SECTION 5.3 Indenture Trustee Not Responsible for Recitals,
Disposition of Serial Mortgage Notes or Application of Proceeds Thereof. The
recitals contained herein and in the Serial Mortgage Notes, except the Indenture
Trustee's certificates of authentication, shall be taken as the statements of
California Petroleum, and the Indenture Trustee assumes no responsibility for
the correctness of the same. The Indenture Trustee makes no representation as
to the validity or sufficiency of this Serial Indenture or of the Serial
Mortgage Notes. The Indenture Trustee shall not be accountable for the use or
application by California Petroleum of any of the Serial Mortgage Notes or of
the proceeds thereof.
SECTION 5.4 Indenture Trustee and Agents May Hold Serial Mortgage
Notes; Collections, etc. The Indenture Trustee or any agent of California
Petroleum or the Indenture Trustee, in its individual or any other capacity, may
become the owner or pledgee of Serial Mortgage Notes with the same rights it
would have if it were not the Indenture Trustee or such agent and may otherwise
deal with California Petroleum and receive, collect, hold and retain collections
from California Petroleum with the same rights it would have if it were not the
Indenture Trustee or such agent.
SECTION 5.5 Moneys Held by Indenture Trustee. Subject to the
provisions of Section 9.4 hereof, all moneys received by the Indenture Trustee
shall, until used or applied as herein provided, be held in trust for the
purposes for which they were received, but need not be segregated from other
funds except to the extent required by mandatory provisions of law. Neither the
Indenture Trustee nor any agent of California Petroleum or the Indenture Trustee
shall be under any liability for
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interest on any moneys received by it hereunder except as provided in the
Collateral Agreement.
SECTION 5.6 Compensation and Expenses. (a) California Petroleum
shall on demand pay or reimburse the Indenture Trustee for (i) reasonable
compensation to the Indenture Trustee, to the extent permitted by law (which
shall not be limited by any provision of law in regard to compensation of
fiduciaries or of a trustee of an express trust), for its services hereunder and
(ii) all of the reasonable costs and expenses of the Indenture Trustee
(including, without limitation, the reasonable compensation and expenses and
disbursements of its counsel and of all agents and other persons not regularly
in its employ) (A) in connection with the preparation, execution and delivery of
this Serial Indenture, the Collateral Agreement or the other Security Documents,
any waiver or consent thereunder, any modification or termination thereof, or
any Default or alleged Default; (B) if an Indenture Event of Default occurs, in
connection with such Indenture Event of Default and collection, bankruptcy,
insolvency and other enforcement proceedings relating thereto; (C) in connection
with the administration or protection of the Trust Estate, the sale or other
disposition of any Collateral or the preservation, protection or defense of the
Indenture Trustee's or the Collateral Trustee's rights under the Security
Documents or in and to the Trust Estate, whether pursuant to the Collateral
Agreement or pursuant hereto; or (D) in connection with any removal of the
Indenture Trustee pursuant to subsection 5.9(a) hereof or of the Collateral
Trustee pursuant to subsection 6.07(a) of the Collateral Agreement.
(b) California Petroleum shall indemnify and hold harmless the
Indenture Trustee from and against any and all liabilities, obligations, losses,
damages, penalties, judgments, actions, suits, proceedings, reasonable costs and
expenses (including reasonable fees and disbursements of counsel) of any kind
whatsoever which may be incurred by the Indenture Trustee in connection with any
investigative, administrative or judicial proceeding (whether or not such
indemnified party is designated a party to such proceeding) relating to this
Serial Indenture, the Serial Mortgage Notes, the Trust Estate, the Collateral or
the Security Documents, provided that the Indenture Trustee shall not have the
right to be indemnified hereunder for its own negligence or bad faith as
determined by a court of competent jurisdiction. In any suit, proceeding or
action brought by the Indenture Trustee under or with respect to any contract,
agreement, interest or obligation constituting part of the Collateral for any
sum owing thereunder or hereunder, or to enforce any provisions thereof,
California Petroleum agrees to save, indemnify and keep the Indenture Trustee
harmless from and against all expense, loss or damage suffered by reason of any
defense, setoff, counterclaim, recoupment or reduction of liability whatsoever
of California Petroleum thereunder, arising out of a breach by California
Petroleum of any obligation thereunder or arising out of any other agreement,
indebtedness or liability at any time owing to, from or in favor of California
Petroleum or its successors, and all such obligations of California Petroleum
shall be
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and remain enforceable against and only against California Petroleum and shall
not be enforceable against the Indenture Trustee.
(c) In addition to, but without duplication of, its obligations under
subsection (b) above, California Petroleum shall indemnify and hold harmless the
Indenture Trustee from and against any and all losses, damages and expenses
incurred by the Indenture Trustee as a result of any oil or other environmental
damage resulting from the operation of any Vessel, including, without
limitation, any liability under the Oil Pollution Act of 1990, as amended, or
the laws of any other jurisdiction relating to oil spills.
(d) The Indenture Trustee hereby covenants and agrees that, prior to
the date which is one year and one day after the payment in full of all
outstanding Serial Mortgage Notes, it will not institute against, or join any
other Person in instituting against, California Petroleum any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceeding or other
similar proceeding under the laws of the United States or any state of the
United States.
(e) The agreements in this Section 5.6 shall survive the termination
of the other provisions of this Serial Indenture but shall not be secured by any
Lien on the Collateral.
SECTION 5.7 Right of Indenture Trustee to Rely on Officers'
Certificate, etc. Subject to Sections 5.1 and 5.2, whenever in the
administration of the trusts of this Serial Indenture the Indenture Trustee
shall deem it necessary or desirable that a matter be proved or established
prior to taking or suffering or omitting any action hereunder, such matter
(unless other evidence in respect thereof be herein specifically prescribed)
may, in the absence of negligence or bad faith on the part of the Indenture
Trustee, be deemed to be conclusively proved and established by an Officers'
Certificate delivered to the Indenture Trustee, and such certificate, in the
absence of negligence or bad faith on the part of the Indenture Trustee, shall
be full warrant to the Indenture Trustee for any action taken, suffered or
omitted by it under the provisions of this Serial Indenture upon the faith
thereof.
SECTION 5.8 Persons Eligible for Appointment as Indenture Trustee.
The Indenture Trustee hereunder shall at all times be a bank or trust company in
good standing, having power to act as Indenture Trustee hereunder and which is
eligible to do so within the provisions of Section 310(a) of the Trust Indenture
Act, incorporated under the laws of the United States of America or any State
thereof or the District of Columbia and having its principal corporate trust
office within the 48 contiguous States and shall also have capital, surplus and
undivided profits of not less than $10,000,000, if there be such an institution
with such capital, surplus and undivided profits willing, qualified and able to
accept the trust hereunder upon reasonable or customary terms.
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SECTION 5.9 Resignation and Removal; Appointment of Successor
Indenture Trustee. (a) The Indenture Trustee may at any time resign by giving
written notice of resignation to the Owners, California Petroleum, the
Designated Representative, Chevron, the Collateral Trustee and the Term
Indenture Trustee and by mailing notice thereof by first-class mail to holders
of Serial Mortgage Notes at their last addresses as they shall appear on the
Serial Mortgage Note register. Upon receiving such notice of resignation (i)
California Petroleum, with the consent of Chevron, if no Enforcement Notice is
then in effect, or (ii) the holders of a majority in aggregate principal amount
of Serial Mortgage Notes, if an Enforcement Notice is then in effect, shall
promptly appoint a successor trustee by an instrument in writing delivered to
the resigning Indenture Trustee, the successor trustee, Chevron, California
Petroleum and Term Indenture Trustee. If no successor trustee shall have been
so appointed and have accepted appointment within 30 days after the mailing of
such notice of resignation, the resigning trustee may petition any court of
competent jurisdiction for the appointment of a successor trustee, or Chevron,
California Petroleum, the Collateral Trustee or any Serial Noteholder who has
been a bona fide holder of a Serial Mortgage Note or Serial Mortgage Notes for
at least six months may, on behalf of himself and all others similarly situated,
petition any such court for the appointment of a successor trustee. Such court
may thereupon, after such notice, if any, as it may deem proper and prescribe,
appoint a successor trustee.
(b) In case at any time any of the following shall occur:
(i) the Indenture Trustee shall fail to comply with the provisions of
Section 310(b) of the Trust Indenture Act after written request therefor by
California Petroleum or by any Serial Noteholder who has been a bona fide
holder of a Serial Mortgage Note or Serial Mortgage Notes for at least six
months; or
(ii) the Indenture Trustee shall cease to be eligible in accordance
with the provisions of Section 5.8 and shall fail to resign after written
request therefor by California Petroleum or by any such Serial Noteholder;
or
(iii) the Indenture Trustee shall become incapable of acting, or
shall be adjudged a bankrupt or insolvent, or a receiver or liquidator of
the Indenture Trustee or of its property shall be appointed, or any public
officer shall take charge or control of the Indenture Trustee or of its
property or affairs for the purpose of rehabilitation, conservation or
liquidation;
then, in any such case (x) California Petroleum or its Designated
Representative, with the consent of Chevron, if no Enforcement Notice is then in
effect, or (y) the holders of a majority in aggregate principal amount of Serial
Mortgage Notes, if an Enforcement Notice is then in effect, may remove the
Indenture Trustee and appoint a successor trustee by an instrument in writing
delivered to the Indenture Trustee so
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removed, the successor trustee, Chevron, the Collateral Trustee and the Term
Indenture Trustee, or, subject to Section 315(e) of the Trust Indenture Act,
Chevron, the Collateral Trustee or any Serial Noteholder who has been a bona
fide holder of a Serial Mortgage Note or Serial Mortgage Notes for at least six
months may on behalf of himself and all others similarly situated, petition any
court of competent jurisdiction for the removal of the Indenture Trustee and the
appointment of a successor trustee. Such court may thereupon, after such
notice, if any, as it may deem proper and prescribe, remove the Indenture
Trustee and appoint a successor trustee.
(c) The holders of a majority in aggregate principal amount of the
Serial Mortgage Notes at the time Outstanding may at any time remove the
Indenture Trustee and appoint a successor trustee by delivering to the Indenture
Trustee so removed, to the successor trustee so appointed, to California
Petroleum, Chevron, the Collateral Trustee and the Term Indenture Trustee, the
evidence provided for in Section 6.1 of the action in that regard taken by the
Serial Noteholders.
(d) Any resignation or removal of the Indenture Trustee and any
appointment of a successor trustee pursuant to any of the provisions of this
Section 5.9 shall become effective only upon acceptance of appointment by the
successor trustee as provided in Section 5.10.
SECTION 5.10 Acceptance of Appointment by Successor Indenture
Trustee. Any successor indenture trustee appointed as provided in Section 5.9
shall execute and deliver to California Petroleum, Chevron, the Collateral
Trustee, and its predecessor indenture trustee an instrument accepting such
appointment hereunder, and thereupon the resignation or removal of the
predecessor indenture trustee shall become effective and such successor
indenture trustee, without any further act, deed or conveyance, shall become
vested with all rights, powers, duties and obligations of its predecessor
hereunder, with like effect as if originally named as trustee herein; but,
nevertheless, on the written request of California Petroleum, Chevron, or of the
successor indenture trustee, upon payment of its charges then unpaid, the
indenture trustee ceasing to act shall, subject to Section 9.4, pay over to the
successor trustee all moneys at the time held by it hereunder and shall execute
and deliver an instrument transferring to such successor trustee all such
rights, powers, duties and obligations. Upon request of any such successor
trustee, California Petroleum and Chevron shall execute any and all instruments
in writing for more fully and certainly vesting in and confirming to such
successor trustee all such rights and powers. Any indenture trustee ceasing to
act shall, nevertheless, retain a prior claim upon all property or funds held or
collected by such indenture trustee to secure any amounts then due it pursuant
to the provisions of Section 5.6.
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Upon acceptance of appointment by a successor indenture trustee as
provided in this Section 5.10, California Petroleum shall mail notice thereof by
first-class mail to the holders of Serial Mortgage Notes at their last addresses
as they shall appear in the Serial Mortgage Note register. If the acceptance of
appointment is substantially contemporaneous with the resignation, then the
notice called for by the preceding sentence may be combined with the notice
called for by Section 5.9. If California Petroleum fails to mail such notice
within 10 days after acceptance of appointment by the successor indenture
trustee, the successor indenture trustee shall cause such notice to be mailed at
the expense of California Petroleum.
SECTION 5.11 Merger, Conversion, Consolidation or Succession to
Business of Indenture Trustee. Any corporation into which the Indenture Trustee
may be merged or converted or with which it may be consolidated, or any
corporation resulting from any merger, conversion or consolidation to which the
Indenture Trustee shall be a party, or any corporation succeeding to the
corporate trust business of the Indenture Trustee, shall be the successor of the
Indenture Trustee hereunder, provided that such corporation shall be eligible
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under the provisions of Section 5.8, without the execution or filing of any
paper or any further act on the part of any of the parties hereto, anything
herein to the contrary notwithstanding.
In case at the time such successor to the Indenture Trustee shall
succeed to the trusts created by this Serial Indenture any of the Serial
Mortgage Notes shall have been authenticated but not delivered, any such
successor to the Indenture Trustee may adopt the certificate of authentication
of any predecessor Indenture Trustee and deliver such Serial Mortgage Notes so
authenticated; and, in case at that time any of the Serial Mortgage Notes shall
not have been authenticated, any successor to the Indenture Trustee may
authenticate such Serial Mortgage Notes either in the name of any predecessor
hereunder or in the name of the successor Indenture Trustee; and in all such
cases such certificate shall have the full force which it is anywhere in the
Serial Mortgage Notes or in this Serial Indenture provided that the certificate
of the Indenture Trustee shall have; provided, that the right to adopt the
certificate of authentication of any predecessor Indenture Trustee or to
authenticate Serial Mortgage Notes in the name of any predecessor Indenture
Trustee shall apply only to its successor or successors by merger, conversion or
consolidation.
ARTICLE SIX
CONCERNING THE SERIAL NOTEHOLDERS.
SECTION 6.1 Evidence of Action Taken by Serial Noteholders. Any
request, demand, authorization, direction, notice, consent, waiver or other
action provided by this Serial Indenture to be given or taken by Serial
Noteholders may be embodied in and evidenced by one or more instruments of
substantially similar tenor
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signed by such Serial Noteholders in person or by agent duly appointed in
writing; and, except as herein otherwise expressly provided, such action shall
become effective when such instrument or instruments are delivered to the
Indenture Trustee. Proof of execution of any instrument or of a writing
appointing any such agent shall be sufficient for any purpose of this Serial
Indenture and (subject to Sections 5.1 and 5.2) conclusive in favor of the
Indenture Trustee, California Petroleum and Chevron, if made in the manner
provided in this Article.
SECTION 6.2 Proof of Execution of Instruments and of Holding of
Serial Mortgage Notes; Record Date. Subject to Sections 5.1 and 5.2, the
execution of any instrument by a Serial Noteholder or his agent or proxy may be
proved in accordance with such reasonable rules and regulations as may be
prescribed by the Indenture Trustee or in such manner as shall be satisfactory
to the Indenture Trustee. The holding of Serial Mortgage Notes shall be proved
by the Serial Mortgage Note register or by a certificate of the registrar
thereof. California Petroleum may set a record date for purposes of determining
the identity of holders of Serial Mortgage Notes entitled to vote or consent to
any action referred to in Section 6.1, which record date may be set at any time
or from time to time by notice to the Indenture Trustee, for any date or dates
(in the case of any adjournment or resolicitation) not more than 60 days nor
less than five days prior to the proposed date of such vote or consent, and
thereafter, notwithstanding any other provisions hereof, only holders of Serial
Mortgage Notes of record on such record date shall be entitled to so vote or
give such consent or to withdraw such vote or consent.
SECTION 6.3 Holders to Be Treated as Owners. California Petroleum,
Chevron, the Indenture Trustee and any agent of California Petroleum, Chevron or
the Indenture Trustee may deem and treat the person in whose name any Serial
Mortgage Note shall be registered upon the Serial Mortgage Note register as the
absolute owner of such Serial Mortgage Note (whether or not such Serial Mortgage
Note shall be overdue and notwithstanding any notation of ownership or other
writing thereon) for the purpose of receiving payment of or on account of the
principal of and, subject to the provisions of this Serial Indenture, interest
on such Serial Mortgage Note and for all other purposes; and neither California
Petroleum nor Chevron nor the Indenture Trustee nor any agent of California
Petroleum, Chevron or the Indenture Trustee shall be affected by any notice to
the contrary. All such payments so made to any such person, or upon his order,
shall be valid, and, to the extent of the sum or sums so paid, effectual to
satisfy and discharge the liability for moneys payable upon any such Serial
Mortgage Note.
SECTION 6.4 Serial Mortgage Notes Deemed Not Outstanding. In
determining whether the holders of the requisite aggregate principal amount of
Serial Mortgage Notes have concurred in any direction, consent or waiver under
this Serial Indenture, Serial Mortgage Notes which are owned by California
Petroleum or any Affiliate thereof, or Chevron, or any Affiliate thereof, shall
be disregarded and
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deemed not to be Outstanding for the purpose of any such determination, except
that for the purpose of determining whether the Indenture Trustee shall be
protected in relying on any such direction, consent or waiver only Serial
Mortgage Notes which the Indenture Trustee knows are so owned shall be so
disregarded. In case of a dispute as to such right, the advice of counsel shall
be full protection in respect of any decision made by the Indenture Trustee in
accordance with such advice. Upon request of the Indenture Trustee, California
Petroleum or Chevron shall furnish to the Indenture Trustee promptly an
Officers' Certificate listing and identifying all Serial Mortgage Notes, if any,
known by California Petroleum or Chevron, as the case might be, to be owned or
held by or for the account of any of the above-described persons; and, subject
to Sections 5.1 and 5.2, the Indenture Trustee shall be entitled to accept such
Officers' Certificate as conclusive evidence of the facts therein set forth and
of the fact that all Serial Mortgage Notes not listed therein are Outstanding
for the purpose of any such determination.
SECTION 6.5 Right of Revocation of Action Taken. At any time prior
to (but not after) the evidencing to the Indenture Trustee, as provided in
Section 6.1, of the taking of any action by the holders of the percentage in
aggregate principal amount of the Serial Mortgage Notes specified in this Serial
Indenture in connection with such action, any holder of a Serial Mortgage Note
the serial number of which is shown by the evidence to be included among the
serial numbers of the Serial Mortgage Notes the holders of which have consented
to such action may, by filing written notice at the Corporate Trust Office and
upon proof of holding as provided in this Article, revoke such action so far as
concerns such Serial Mortgage Note. Except as aforesaid any such action taken
by the holder of any Serial Mortgage Note shall be conclusive and binding upon
such holder and upon all future holders and owners of such Serial Mortgage Note
and of any Serial Mortgage Notes issued in exchange or substitution therefor,
irrespective of whether or not any notation in regard thereto is made upon any
such Serial Mortgage Note. Any action taken by the holders of the percentage in
aggregate principal amount of the Serial Mortgage Notes specified in this Serial
Indenture in connection with such action shall be conclusively binding upon
California Petroleum, the Indenture Trustee and the holders of all the Serial
Mortgage Notes.
ARTICLE SEVEN
SUPPLEMENTAL INDENTURES.
SECTION 7.1 Supplemental Indentures Without Consent of Serial
Noteholders. Without the consent of any Holder of Serial Mortgage Notes,
California Petroleum, when authorized by a resolution of its Board of Directors,
Chevron and the Indenture Trustee may from time to time and at any time enter
into an indenture or indentures supplemental hereto for one or more of the
following purposes:
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(a) to convey, transfer, assign, mortgage or pledge to the Collateral
Trustee as security for the Serial Mortgage Notes any property or assets;
(b) to evidence the succession of another corporation to Chevron, or
successive successions, and the assumption by the successor corporation of
the covenants, agreements and obligations of Chevron pursuant to Article
Eight;
(c) to cure any ambiguity or to correct or supplement any provision
contained herein or in any supplemental indenture which may be defective or
inconsistent with any other provision contained herein or in any
supplemental indenture; or to make such other provisions in regard to
matters or questions arising under this Serial Indenture or under any
supplemental indenture as they may deem necessary or desirable and which
shall not adversely affect the interests of the holders of the Serial
Mortgage Notes; and
(d) to comply with the requirements of the Commission in order to
maintain the qualification of this Serial Indenture under the Trust
Indenture Act.
The Indenture Trustee is hereby authorized to join in the execution of
any such supplemental indenture, to make any further appropriate agreements and
stipulations which may be therein contained and to accept the conveyance,
transfer, assignment, mortgage or pledge of any property thereunder, but the
Indenture Trustee shall not be obligated to enter into any such supplemental
indenture which affects the Indenture Trustee's own rights, duties or immunities
under this Serial Indenture or otherwise.
Any supplemental indenture authorized by the provisions of this
Section may be executed without the consent of the holders of any of the Serial
Mortgage Notes at the time Outstanding, notwithstanding any of the provisions of
Section 7.2.
SECTION 7.2 Supplemental Indentures With Consent of Serial
Noteholders. With the consent (evidenced as provided in Article Six) of the
holders of a majority in aggregate principal amount of the Serial Mortgage Notes
at the time Outstanding, California Petroleum, when authorized by a resolution
of its Board of Directors, Chevron and the Indenture Trustee may, from time to
time and at any time, enter into an indenture or indentures supplemental hereto
for the purpose of adding any provisions to or changing in any manner or
eliminating any of the provisions of this Serial Indenture or of any
supplemental indenture or of modifying in any manner the rights of the holders
of the Serial Mortgage Notes; provided that no such supplemental indenture shall
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(a) extend the final maturity or redemption date of any Serial Mortgage Note, or
reduce the principal amount thereof, or reduce the rate or extend the time of
payment of interest thereon, or reduce any amount payable on redemption thereof
or impair or affect the right of any Serial Noteholder to
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institute suit for the payment thereof without the consent of the holder of each
Serial Mortgage Note so affected, or (b) reduce the aforesaid percentage of
Serial Mortgage Notes, the consent of the holders of which is required for any
such supplemental indenture, without the consent of the holders of all Serial
Mortgage Notes then Outstanding; and provided further that no such supplemental
indenture shall (i) change in any manner or eliminate Sections 3.5, 3.8 or 3.9
or any of the Indenture Events of Default set forth in Section 4.1 or (ii)
effect any of the modifications described in clause (a) or (b) above, without
the consent pursuant to Section 7.03(b) of the Collateral Agreement of the
Collateral Trustee and the holders of a majority in aggregate principal amount
of Term Mortgage Notes outstanding under the Term Indenture.
Upon the request of California Petroleum, accompanied by a copy of a
resolution of the Board of Directors of California Petroleum certified by the
Secretary or an Assistant Secretary of California Petroleum authorizing the
execution of any such supplemental indenture, and Chevron and upon the filing
with the Indenture Trustee of evidence of the consent of Serial Noteholders, the
consent of Term Mortgage Noteholders (if applicable) and other documents, if
any, required by Section 6.1, the Indenture Trustee shall join with California
Petroleum and Chevron in the execution of such supplemental indenture unless
such supplemental indenture affects the Indenture Trustee's own rights, duties
or immunities under this Serial Indenture or otherwise, in which case the
Indenture Trustee may in its discretion, but shall not be obligated to, enter
into such supplemental indenture.
It shall not be necessary for the consent of the Serial Noteholders
under this Section to approve the particular form of any proposed supplemental
indenture, but it shall be sufficient if such consent shall approve the
substance thereof.
Promptly after the execution by California Petroleum, Chevron and the
Indenture Trustee of any supplemental indenture pursuant to the provisions of
this Section 7.2, California Petroleum shall mail a notice thereof by first-
class mail to the holders of Serial Mortgage Notes at their addresses as they
shall appear on the registry books of California Petroleum, setting forth in
general terms the substance of such supplemental indenture. Any failure of
California Petroleum to mail such notice, or any defect therein, shall not,
however, in any way impair or affect the validity of any such supplemental
indenture.
SECTION 7.3 Effect of Supplemental Indenture. Upon the execution of
any supplemental indenture pursuant to the provisions hereof, this Serial
Indenture shall be and be deemed to be modified and amended in accordance
therewith and the respective rights, limitations of rights, obligations, duties
and immunities under this Serial Indenture of the Indenture Trustee, Chevron,
California Petroleum and the holders of Serial Mortgage Notes shall thereafter
be determined, exercised and enforced hereunder subject in all respects to such
modifications and amendments, and
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all the terms and conditions of any such supplemental indenture shall be and be
deemed to be part of the terms and conditions of this Serial Indenture for any
and all purposes.
SECTION 7.4 Documents to Be Given to Indenture Trustee. The
Indenture Trustee, subject to the provisions of Sections 5.1 and 5.2, may
receive an Officers' Certificate and an Opinion of Counsel as conclusive
evidence that any such supplemental indenture complies with the applicable
provisions of this Serial Indenture.
SECTION 7.5 Notation on Serial Mortgage Notes in Respect of
Supplemental Indentures. Serial Mortgage Notes authenticated and delivered
after the execution of any supplemental indenture pursuant to the provisions of
this Article may bear a notation in form approved by the Indenture Trustee as to
any matter provided for by such supplemental indenture or as to any action taken
at any such meeting. If California Petroleum, Chevron or the Indenture Trustee
shall so determine, new Serial Mortgage Notes so modified as to conform, in the
opinion of the Indenture Trustee, Chevron and California Petroleum, to any
modification of this Serial Indenture contained in any such supplemental
indenture may be prepared by California Petroleum, authenticated by the
Indenture Trustee and delivered in exchange for the Serial Mortgage Notes then
Outstanding.
ARTICLE EIGHT
CONSOLIDATION, MERGER, SALE OR CONVEYANCE.
SECTION 8.1 Covenant Not to Merge, Consolidate, Sell or Convey
Property Except Under Certain Conditions. Chevron covenants that so long as any
of the Serial Mortgage Notes are Outstanding, it will maintain its corporate
existence, will not dissolve, sell or otherwise dispose of all or substantially
all of its assets and will not consolidate with or merge into another
corporation or permit one or more other corporations to consolidate with or
merge into it; provided that Chevron may, without violating the covenants
contained in this Section 8.1, consolidate with or merge into another
corporation or permit one or more other corporations to consolidate with or
merge into it, or sell or otherwise transfer to another corporation all or
substantially all of its assets as an entirety and thereafter dissolve, if the
surviving, resulting or transferee corporation, as the case may be, (i) shall be
incorporated and existing under the laws of one of the States of the United
States of America, (ii) assumes, if such corporation is not Chevron, all of the
obligations of Chevron hereunder and (iii) is not, after such transaction,
otherwise in default under any provisions hereof.
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SECTION 8.2 Successor Corporation Substituted. In case of any such
consolidation, merger, sale or conveyance, and following such an assumption by
the successor corporation, such successor corporation shall succeed to and be
substituted for Chevron, with the same effect as if it had been named herein.
In case of any such consolidation, merger, sale, lease or conveyance
such changes in phraseology and form (but not in substance) may be made in the
Serial Mortgage Notes thereafter to be issued as may be appropriate.
In the event of any such sale or conveyance (other than a conveyance
by way of lease) Chevron or any successor corporation which shall theretofore
have become such in the manner described in this Article shall be discharged
from all obligations and covenants under this Serial Indenture and the Serial
Mortgage Notes and may be liquidated and dissolved.
SECTION 8.3 Opinion of Counsel to Indenture Trustee. The Indenture
Trustee, subject to the provisions of Sections 5.1 and 5.2, may receive an
Opinion of Counsel as conclusive evidence that any such consolidation, merger,
sale, lease or conveyance, and any such assumption, and any such liquidation or
dissolution, complies with the applicable provisions of this Serial Indenture.
ARTICLE NINE
SATISFACTION AND DISCHARGE OF
SERIAL INDENTURE; UNCLAIMED MONEYS.
SECTION 9.1 Satisfaction and Discharge of Serial Indenture. If at
any time (a) California Petroleum shall have paid or caused to be paid the
principal of and interest on all the Serial Mortgage Notes Outstanding
hereunder, as and when the same shall have become due and payable, or (b)
California Petroleum shall have delivered to the Indenture Trustee for
cancellation all Serial Mortgage Notes theretofore authenticated (other than any
Serial Mortgage Notes which shall have been destroyed, lost or stolen and which
shall have been replaced or paid as provided in Section 2.6) or (c) (i) all such
securities not theretofore delivered to the Indenture Trustee for cancellation
shall have become due and payable, or are by their terms to become due and
payable within one year or are to be called for redemption under arrangements
satisfactory to the Indenture Trustee for the giving of notice of redemption,
and (ii) California Petroleum shall have irrevocably deposited or caused to be
deposited with the Indenture Trustee (or the Collateral Trustee on behalf of the
Indenture Trustee) as trust funds the entire amount in cash or direct
obligations of the United States of America, backed by its full faith and
credit, maturing as to principal and interest in such amounts and at such times
as will insure the availability of cash sufficient to pay at maturity or upon
redemption all such Serial Mortgage Notes not
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theretofore delivered to the Indenture Trustee for cancellation, including
principal and interest due or to become due to such date of maturity as the case
may be, and if, in any such case, California Petroleum shall also pay or cause
to be paid all other sums payable hereunder by California Petroleum, then this
Serial Indenture shall cease to be of further effect (except as to (i) rights of
registration of transfer and exchange, (ii) substitution of apparently
mutilated, defaced, destroyed, lost or stolen Serial Mortgage Notes, (iii)
rights of holders to receive payments of principal thereof and interest thereon,
upon the original stated due dates therefor (but not upon acceleration), (iv)
the rights, obligations and immunities of the Indenture Trustee hereunder and
(v) the rights of the Serial Noteholders as beneficiaries hereof with respect to
the property so deposited with or on behalf the Indenture Trustee payable to all
or any of them), and the Indenture Trustee, on demand of California Petroleum
accompanied by an Officers' Certificate and an Opinion of Counsel and at the
cost and expense of California Petroleum, shall execute proper instruments
acknowledging such satisfaction of and discharging this Serial Indenture.
California Petroleum agrees to reimburse the Indenture Trustee for any costs or
expenses thereafter reasonably and properly incurred and to compensate the
Indenture Trustee for any services thereafter reasonably and properly rendered
by the Indenture Trustee in connection with this Serial Indenture or the Serial
Mortgage Notes.
SECTION 9.2 Application by Indenture Trustee of Funds Deposited for
Payment of Serial Mortgage Notes. Subject to Section 9.4, all moneys deposited
with the Indenture Trustee (or the Collateral Trustee on behalf of the Indenture
Trustee) pursuant to Section 9.1 shall be held in trust and applied by it (or
the Collateral Trustee on behalf of the Indenture Trustee) to the payment,
either directly or through any paying agent (including the Collateral Trustee),
to the holders of the particular Serial Mortgage Notes for the payment or
redemption of which such moneys have been deposited with the Indenture Trustee
(or the Collateral Trustee on behalf of the Indenture Trustee), of all sums due
and to become due thereon for principal and interest; but such money need not be
segregated from other funds except to the extent required by law.
SECTION 9.3 Repayment of Moneys Held by Paying Agent. In connection
with the satisfaction and discharge of this Serial Indenture all moneys then
held by any paying agent under the provisions of the Collateral Agreement in
accordance with this Serial Indenture shall be paid to the Persons entitled
thereto pursuant to the Related Security Documents and thereupon such paying
agent shall be released from all further liability with respect to such moneys.
SECTION 9.4 Return of Moneys Held by Indenture Trustee and Paying
Agent Unclaimed for Two Years. Any moneys deposited with or paid to the
Indenture Trustee or any paying agent for the payment of the principal of or
interest on any Serial Mortgage Note and not applied but remaining unclaimed for
two years after the date upon which such principal or interest shall have become
due and
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payable, shall, upon the written request of California Petroleum and unless
otherwise required by mandatory provisions of applicable escheat or abandoned or
unclaimed property law, be repaid to California Petroleum by the Indenture
Trustee or such paying agent, and the holder of such Serial Mortgage Note shall,
unless otherwise required by mandatory provisions of applicable escheat or
abandoned or unclaimed property laws, thereafter look only to California
Petroleum for any payment which such holder may be entitled to collect, and all
liability of the Indenture Trustee or any paying agent with respect to such
moneys shall thereupon cease.
ARTICLE TEN
MISCELLANEOUS PROVISIONS.
SECTION 10.1 Incorporators, Stockholders, Officers and Directors of
California Petroleum Exempt from Individual Liability; Chevron and Chevron
Transport not obligated on Serial Mortgage Notes. No recourse under or upon any
obligation, covenant or agreement contained in this Serial Indenture, or in any
Serial Mortgage Note, or because of any indebtedness evidenced thereby, shall be
had against any incorporator, as such or against any past, present or future
stockholder, officer or director, as such, of California Petroleum or of any
successor, either directly or through California Petroleum or any successor,
under any rule of law, statute or constitutional provision or by the enforcement
of any assessment or by any legal or equitable proceeding or otherwise, all such
liability being expressly waived and released by the acceptance of the Serial
Mortgage Notes by the holders thereof and as part of the consideration for the
issue of the Serial Mortgage Notes. Further, California Petroleum, the
Indenture Trustee, on behalf of the Serial Noteholders and all holders of Serial
Mortgage Notes by acceptance thereof hereby consent and agree that the Serial
Mortgage Notes are not obligations of, and are not guaranteed by, Chevron or
Chevron Transport.
SECTION 10.2 Provisions of Serial Indenture for the Sole Benefit of
Parties and Serial Noteholders. Nothing in this Serial Indenture or in the
Serial Mortgage Notes, expressed or implied, shall give or be construed to give
to any person, firm or corporation, other than the parties hereto and their
successors and the holders of the Serial Mortgage Notes, any legal or equitable
right, remedy or claim under this Serial Indenture or under any covenant or
provision herein contained, all such covenants and provisions being for the sole
benefit of the parties hereto and their successors and of the holders of the
Serial Mortgage Notes.
SECTION 10.3 Successors and Assigns of California Petroleum Bound by
Serial Indenture. All the covenants, stipulations, promises and agreements in
this Serial Indenture contained by or on behalf of California Petroleum shall
bind its successors and assigns, whether so expressed or not.
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SECTION 10.4 Notices and Demands on California Petroleum, Indenture
Trustee and Serial Noteholders. Any notice or demand which by any provision of
this Serial Indenture is required or permitted to be given or served by the
Indenture Trustee or by the holders of Serial Mortgage Notes to or on California
Petroleum may be given or served by being deposited postage prepaid, first-class
mail (except as otherwise specifically provided herein) addressed (until another
address of California Petroleum is filed by California Petroleum with the
Indenture Trustee) to California Petroleum Transport Corporation, c/o J H
Management Corporation, Room 6/9, One International Place, Boston, MA 02110-
2624. Any notice, direction, request or demand by California Petroleum or any
Serial Noteholder to or upon the Indenture Trustee shall be deemed to have been
sufficiently given or made, for all purposes, if given or made at the Corporate
Trust Office at 50 California Street, San Francisco, CA 94111.
Where this Serial Indenture provides for notice to holders, such
notice shall be sufficiently given (unless otherwise herein expressly provided)
if in writing and mailed, first-class postage prepaid, to each holder entitled
thereto, at his last address as it appears in the Serial Mortgage Note register.
In any case where notice to holders is given by mail, neither the failure to
mail such notice, nor any defect in any notice so mailed, to any particular
holder shall affect the sufficiency of such notice with respect to other
holders. Where this Serial Indenture provides for notice in any manner, such
notice may be waived in writing by the person entitled to receive such notice,
either before or after the event, and such waiver shall be the equivalent of
such notice. Waivers of notice by holders shall be filed with the Indenture
Trustee, but such filing shall not be a condition precedent to the validity of
any action taken in reliance upon such waiver.
In case, by reason of the suspension of or irregularities in regular
mail service, it shall be impracticable to mail notice to California Petroleum
and Serial Noteholders when such notice is required to be given pursuant to any
provision of this Serial Indenture, then any manner of giving such notice as
shall be satisfactory to the Indenture Trustee shall be deemed to be a
sufficient giving of such notice.
SECTION 10.5 Officers' Certificates and Opinions of Counsel;
Statements to Be Contained Therein. Upon any application or demand by
California Petroleum to the Indenture Trustee to take any action under any of
the provisions of this Serial Indenture, California Petroleum shall furnish to
the Indenture Trustee an Officers' Certificate stating that all conditions
precedent provided for in this Serial Indenture relating to the proposed action
have been complied with and an Opinion of Counsel stating that in the opinion of
such counsel all such conditions precedent have been complied with, except that
in the case of any such application or demand as to which the furnishing of such
documents is specifically required by any provision of this Serial Indenture
relating to such particular application or demand, no additional certificate or
opinion need be furnished.
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Each certificate or opinion provided for in this Serial Indenture and
delivered to the Indenture Trustee with respect to compliance with a condition
or covenant provided for in this Serial Indenture shall include (a) a statement
that the person making such certificate or opinion has read such covenant or
condition, (b) a brief statement as to the nature and scope of the examination
or investigation upon which the statements or opinions contained in such
certificate or opinion are based, (c) a statement that, in the opinion of such
person, he has made such examination or investigation as is necessary to enable
him to express an informed opinion as to whether or not such covenant or
condition has been complied with and (d) a statement as to whether or not, in
the opinion of such person, such condition or covenant has been complied with.
Any certificate, statement or opinion of an officer of California
Petroleum may be based, insofar as it relates to legal matters, upon a
certificate or opinion of or representations by counsel, unless such officer
knows that the certificate or opinion or representations with respect to the
matters upon which his certificate, statement or opinion may be based as
aforesaid are erroneous, or in the exercise of reasonable care should know that
the same are erroneous. Any certificate, statement or opinion of counsel may be
based, insofar as it relates to factual matters with respect to information
which is in the possession of California Petroleum, upon the certificate,
statement or opinion of or representations by an officer or officers of
California Petroleum, unless such counsel knows that the certificate, statement
or opinion or representations with respect to the matters upon which his
certificate, statement or opinion may be based as aforesaid are erroneous, or in
the exercise of reasonable care should know that the same are erroneous.
Any certificate, statement or opinion of an officer of California
Petroleum or of counsel may be based, insofar as it relates to accounting
matters, upon a certificate or opinion of or representations by an accountant or
firm of accountants in the employ of California Petroleum, unless such officer
or counsel, as the case may be, knows that the certificate or opinion or
representations with respect to the accounting matters upon which his
certificate, statement or opinion may be based as aforesaid are erroneous, or in
the exercise of reasonable care should know that the same are erroneous.
Any certificate or opinion of any independent firm of public
accountants filed with the Indenture Trustee shall contain a statement that such
firm is independent.
SECTION 10.6 Payments Due on Saturdays, Sundays and Holidays. If the
date of maturity of interest on or principal of the Serial Mortgage Notes, the
date fixed for redemption of any Serial Mortgage Note or the date for the
payment of any other amount due thereunder or hereunder shall not be a Business
Day, then such payment need not be made on such date, but may be made on the
next succeeding
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Business Day with the same force and effect as if made on the date of maturity,
the date fixed for redemption or such other date for payment, and, provided that
payment is made on such next succeeding Business Day, no interest shall accrue
for the period of such extension.
SECTION 10.7 Conflict of Any Provision of Serial Indenture with Trust
Indenture Act. If and to the extent that any provision of this Serial Indenture
limits, qualifies or conflicts with another provision included in this Serial
Indenture by operation of Sections 310 to 317, inclusive, of the Trust Indenture
Act (an "incorporated provision"), such incorporated provision shall control.
SECTION 10.8 New York Law to Govern. This Serial Indenture and each
Serial Mortgage Note shall be deemed to be a contract under the laws of the
State of New York, and for all purposes shall be construed in accordance with
the laws of said State, except as may otherwise be required by mandatory
provisions of law.
SECTION 10.9 Counterparts. This Serial Indenture may be executed in
any number of counterparts, each of which shall be an original; but such
counterparts shall together constitute but one and the same instrument.
SECTION 10.10 Effect of Headings. The Article and Section headings
herein and the Table of Contents are for convenience only and shall not affect
the construction hereof.
SECTION 10.11 Designated Representative. For purposes of this Serial
Indenture, all notices, requests, demands or other communications to be given by
California Petroleum hereunder may be given by California Petroleum's Designated
Representative. Notice of the appointment of any such Designated Representative
shall be given to the Indenture Trustee and shall be in writing signed by
California Petroleum and acknowledged by such Designated Representative. The
parties hereto shall be entitled to rely upon any such notices, requests,
demands and other communications given by the Designated Representative as
though the same had been given by California Petroleum.
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ARTICLE ELEVEN
REDEMPTION OF SERIAL MORTGAGE NOTES.
SECTION 11.1 Mandatory Redemption; Prices. (a) Except as provided
in this Section 11.1, the Serial Mortgage Notes may not be redeemed prior to
their respective Maturity Dates.
(b) California Petroleum shall redeem the Outstanding Serial Mortgage
Notes in part at 100% of the principal amount thereof together with accrued
interest to the date fixed for redemption if a Total Loss occurs or is declared
by Chevron Transport with respect to a Vessel. The aggregate principal amount
of Serial Mortgage Notes to be redeemed pursuant to this Section 11.1(b) shall
equal the Allocated Principal Amount of Serial Mortgage Notes for the related
Vessel. The redemption date for any redemption pursuant to this Section 11.1(b)
shall be the date which is 90 days after the occurrence of the Total Loss.
SECTION 11.2 Notice of Redemption; Partial Redemptions. Notice of
redemption to the holders of Serial Mortgage Notes to be redeemed shall be given
by mailing notice of such redemption by first class mail, postage prepaid, at
least 30 days and not more than 60 days prior to the date fixed for redemption
to such holders of Serial Mortgage Notes at their last addresses as they shall
appear upon the registry books. Any notice which is mailed in the manner herein
provided shall be conclusively presumed to have been duly given, whether or not
the holder receives the notice. Failure to give notice by mail, or any defect
in the notice to the holder of any Serial Mortgage Note designated for
redemption as a whole or in part, shall not affect the validity of the
proceedings for the redemption of any other Serial Mortgage Note.
The notice of redemption to each such holder shall specify the
principal amount of each Serial Mortgage Note held by such holder to be
redeemed, the date fixed for redemption, the redemption price, the place or
places of payment, that payment will be made upon presentation and surrender of
such Serial Mortgage Notes, that interest accrued to the date fixed for
redemption will be paid as specified in said notice and that on and after said
date interest thereon or on the portions thereof to be redeemed will cease to
accrue. If any Serial Mortgage Note is to be redeemed in part only the notice
of redemption shall state the portion of the principal amount thereof to be
redeemed and shall state that on and after the date fixed for redemption, upon
surrender of such Serial Mortgage Note, a new Serial Mortgage Note or Serial
Mortgage Notes in principal amount equal to the unredeemed portion thereof will
be issued.
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The notice of redemption of Serial Mortgage Notes to be redeemed shall
be given by California Petroleum or, at California Petroleum's request, by the
Indenture Trustee in the name and at the expense of California Petroleum.
On or before the redemption date specified in the notice of redemption
given as provided in this Section, California Petroleum shall deposit or cause
to be deposited with the Indenture Trustee or with the paying agent an amount of
money sufficient to redeem on the redemption date all the Serial Mortgage Notes
so called for redemption at the appropriate redemption price, together with
accrued interest to the date fixed for redemption. If less than all the
Outstanding Serial Mortgage Notes are to be redeemed California Petroleum will
deliver to the Indenture Trustee at least 45 days prior to the date fixed for
redemption an Officers' Certificate stating the aggregate principal amount of
Serial Mortgage Notes to be redeemed.
If less than all the Serial Mortgage Notes are to be redeemed, the
Indenture Trustee shall select Serial Mortgage Notes to be redeemed ratably from
each holder such that the ratio of the principal amount of each series of Serial
Mortgage Notes to be redeemed from each holder to the aggregate principal amount
of such series of Serial Mortgage Notes Outstanding held by such holder shall,
as nearly as practicable and subject to rounding, equal the ratio of the
aggregate principal amount of all Serial Mortgage Notes to be redeemed on such
redemption date to the aggregate principal amount of all Serial Mortgage Notes
Outstanding. Serial Mortgage Notes may be redeemed in part in multiples of
$1,000 only. The Indenture Trustee shall promptly notify California Petroleum
in writing of the Serial Mortgage Notes selected for redemption and, in the case
of any Serial Mortgage Notes selected for partial redemption, the principal
amount thereof to be redeemed. For all purposes of this Serial Indenture,
unless the context otherwise requires, all provisions relating to the redemption
of Serial Mortgage Notes shall relate, in the case of any Serial Mortgage Note
redeemed or to be redeemed only in part, to the portion of the principal amount
of such Serial Mortgage Note which has been or is to be redeemed.
SECTION 11.3 Payment of Serial Mortgage Notes Called for Redemption.
If notice of redemption has been given as above provided, the Serial Mortgage
Notes or portions of Serial Mortgage Notes specified in such notice shall become
due and payable on the date and at the place stated in such notice at 100% of
the principal amount thereof, together with interest accrued to the date fixed
for redemption, and on and after said date (unless California Petroleum shall
default in the payment of such Serial Mortgage Notes at the redemption price,
together with interest accrued to said date) interest on the Serial Mortgage
Notes or portions of Serial Mortgage Notes so called for redemption shall cease
to accrue and, except as provided in Sections 5.5 and 9.4, such Serial Mortgage
Notes shall cease from and after the date fixed for redemption to be entitled to
any benefit or security under this Serial Indenture, and the holders thereof
shall have no right in respect of such Serial
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Mortgage Notes except the right to receive the redemption price thereof and
unpaid interest to the date fixed for redemption. On presentation and surrender
of such Serial Mortgage Notes at a place of payment specified in said notice,
said Serial Mortgage Notes or the specified portions thereof shall be paid and
redeemed by California Petroleum at 100% of the principal amount thereof,
together with interest accrued thereon to the date fixed for redemption;
provided that any semi-annual payment of interest becoming due on the date fixed
for redemption shall be payable to the holders of such Serial Mortgage Notes
registered as such on the relevant record date subject to the terms and
provisions of Section 2.4 hereof.
If any Serial Mortgage Note called for redemption shall not be so paid
upon surrender thereof for redemption, the principal shall, until paid or duly
provided for, bear interest from the date fixed for redemption at the Default
Rate.
Upon presentation of any Serial Mortgage Note redeemed in part only,
California Petroleum shall execute and the Indenture Trustee shall authenticate
and deliver to or on the order of the holder thereof, at the expense of
California Petroleum, a new Serial Mortgage Note or Serial Mortgage Notes, of
authorized denominations, in principal amount equal to the unredeemed portion of
the Serial Mortgage Note so presented.
ARTICLE TWELVE
SECURITY.
SECTION 12.1 Security. The Serial Mortgage Notes will be secured by
the Collateral pursuant to the Collateral Agreement and the other Security
Documents. Each holder of a Serial Mortgage Note, by its acceptance thereof,
consents and agrees to the terms of the Security Documents (including without
limitation the provisions herein and therein providing for the release of the
Collateral) as the same may be in effect or may be amended from time to time in
accordance with their terms and authorizes and directs the Indenture Trustee and
the Collateral Trustee to perform its respective obligations and exercise its
respective rights under the Collateral Agreement and the other Security
Documents in accordance therewith; provided that in the event the terms thereof
limit, qualify or conflict with the duties imposed by the provisions of the
Trust Indenture Act, the Trust Indenture Act shall control.
SECTION 12.2 Recording, etc. California Petroleum will cause the
applicable Security Documents, including the Mortgages and any financing
statements, all amendments or supplements to each of the foregoing and any other
similar security documents as necessary, to be registered, recorded and filed or
re-recorded, re-filed and renewed in such manner and in such place or places, if
any, as may be required
55
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by law or reasonably requested by the Indenture Trustee or the Collateral
Trustee in order fully to preserve and protect the Lien of the Collateral
Trustee securing the Serial Mortgage Notes (for the ratable benefit of the
Serial Noteholders) and to effectuate and preserve the security of the Serial
Noteholders and all rights of the Collateral Trustee and the Indenture Trustee.
California Petroleum shall furnish the Indenture Trustee:
(a) promptly after the execution and delivery of this Serial
Indenture, and promptly after the execution and delivery of any other
instrument of further assurance or amendment, an Opinion of Counsel either
(i) stating that, in the opinion of such counsel, and as of the dated such
opinion, this Serial Indenture, the Mortgages and applicable Security
Documents and all other instruments of further assurance or amendment have
been properly recorded, registered and filed, as appropriate, to the extent
necessary to make effective the Lien intended to be created by such
Security Documents and reciting the details of such action or referring to
prior Opinions of Counsel in which such details are given, and stating that
as to such Security Documents and such other instruments such recording,
registering and filing are the only recordings, registerings and filings
necessary to give notice thereof and that no re-recordings, re-registerings
or re-filings are necessary to maintain such notice, and further stating
that all financing statements and continuation statements have been
executed and filed that are necessary fully to preserve and protect the
rights of the Serial Noteholders, the Indenture Trustee and the Collateral
Trustee hereunder and under the Security Documents or (ii) stating that, in
the opinion of such counsel, no such action is necessary to make any other
Lien created under any of the Security Documents effective as intended by
such Security Documents.
(b) within 30 days after August 1 in each year beginning with the
year 1995, an Opinion of Counsel, dated as of such date, either (i) stating
that, in the opinion of such counsel, such action has been taken with
respect to the recording, registering, filing, re-recording, re-registering
and re-filing of this Serial Indenture and all supplemental indentures,
financing statements, continuation statements or other instruments of
further assurance as is necessary to maintain the Lien of this Serial
Indenture and the Security Documents and reciting the details of such
action or referring to prior Opinions of Counsel in which such details are
given, and stating that all financing statements and continuation
statements have been executed and filed that are necessary fully to
preserve and protect the rights of the Serial Noteholders, the Indenture
Trustee and the Collateral Trustee hereunder and under the Security
Documents or (ii) stating that, in the opinion of such counsel, no such
action is necessary to maintain such Lien.
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SECTION 12.3 Protection of the Trust Estate. The Indenture Trustee
and the Collateral Trustee shall have the power to enforce the obligations of
California Petroleum and Chevron under this Serial Indenture and California
Petroleum under the Security Documents, to institute and maintain such suits and
proceedings as it may deem expedient to prevent any impairment of the Collateral
under any of the Security Documents and in the profits, rents, revenues and
other income arising therefrom, including the power to institute and maintain
suits or proceedings to restrain the enforcement of or compliance with any
legislative or other governmental enactment, rule or order that may be
unconstitutional or otherwise invalid if the enforcement of, or compliance with,
such enactment, rule or order would impair any Collateral or be prejudicial to
the interests of the Serial Noteholders, the Indenture Trustee or the Collateral
Trustee, to the extent permitted thereunder.
SECTION 12.4 Release of Lien. (a) Subject to the provisions of
Section 7.2 and so long as no Enforcement Notice is in effect, Collateral may be
released from the Lien and security created by this Serial Indenture or the
Collateral Agreement and the Related Security Documents, as the case may be, at
any time or from time to time in accordance with the provisions of the Related
Security Documents, the Trust Indenture Act and as provided hereby. In the case
of Collateral consisting of cash or Permitted Investments in the Trust Accounts,
such Collateral shall be released as provided in the Collateral Agreement
without the need for any Officer's Certificate, Opinion of Counsel, release,
waiver or other action.
(b) Upon the request of California Petroleum pursuant to an Officer's
Certificate and an Opinion of Counsel certifying that all conditions precedent
hereunder have been met (to be provided at the sole cost and expense of
California Petroleum) and upon the satisfaction of such conditions precedent
hereunder, the Indenture Trustee shall release (i) Collateral, as to the release
of which the consent of Serial Noteholders has been obtained, and (ii) all
Collateral (except as provided in Article Nine hereof) upon discharge of this
Serial Indenture in accordance with Article Nine hereof.
(c) Upon receipt of such Officer's Certificate, the Indenture Trustee
must execute, deliver or acknowledge any necessary or proper instruments of
termination, satisfaction or release to evidence the release of any Collateral
permitted to be released pursuant to this Serial Indenture or the Serial
Indenture and the Related Security Documents, as the case may be.
(d) The release of any Collateral from the terms of this Serial
Indenture or this Serial Indenture and the Related Security Documents, as the
case may be, will not be deemed to impair the security under this Serial
Indenture in contravention of the provisions hereof if and to the extent the
Collateral is released pursuant to the terms hereof and of the Related Security
Documents. To the extent
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applicable, California Petroleum and any other obligor shall cause Section
314(d) of the Trust Indenture Act relating to the release of property from the
Lien arising out of the Security Documents to be complied with. Any certificate
or opinion required by Section 314(d) of the Trust Indenture Act may be made by
any Responsible Officer of California Petroleum, provided that to the extent
opinion shall be made by an independent engineer, appraiser or other expert (as
such terms are set forth in Section 314(d) of the Trust Indenture Act), who is
not an Affiliate of California Petroleum or any other obligor.
Whenever Collateral is to be released pursuant to this Section 12.4,
the Indenture Trustee will execute any document or termination statement
reasonably necessary to release the Lien of this Serial Indenture or this Serial
Indenture and the Related Security Documents, as the case may be.
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IN WITNESS WHEREOF, the parties hereto have caused this Serial
Indenture to be duly executed this ____ day of ____, 1995 by their respective
officers thereunto duly authorized and acknowledge that this Serial Indenture
has been made and delivered in The City of New York, and this Serial Indenture
shall be effective only upon such execution and delivery.
CALIFORNIA PETROLEUM
TRANSPORT CORPORATION
By____________________________
[CORPORATE SEAL]
Attest:
By________________________
CHEMICAL TRUST COMPANY
OF CALIFORNIA,
not in its individual capacity,
except as expressly provided herein,
but as Indenture Trustee
By____________________________
59
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CHEVRON CORPORATION
By____________________________
[CORPORATE SEAL]
Attest:
By________________________
60
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EXHIBIT A
[FORM OF FACE OF SERIAL MORTGAGE NOTE]
Unless and until this Serial Mortgage Note is presented by an authorized
representative of the Depository Trust Company ("DTC"), to California Petroleum
Transport Corporation or its agents for registration of transfer, exchange or
payment, and any Serial Mortgage Note issued is registered in the name of Cede &
Co. or such other entity as is requested by an authorized representative of DTC
(and any payment hereon is made to Cede & Co.), any transfer, pledge or other
use hereof for value or otherwise by or to any Person is wrongful since the
registered owner hereof, Cede & Co., has an interest herein.
No. $
California Petroleum Transport Corporation
___% First Preferred Mortgage Notes Due ____
Payable from Charterhire Payments by
CHEVRON TRANSPORT CORPORATION
Whose Charter Obligations are Guaranteed by
CHEVRON CORPORATION
California Petroleum Transport Corporation, a Delaware Corporation
("California Petroleum"), for value received hereby promises to pay to
____________ or registered assigns the principal sum of __________ Dollars at
the office or agency of Chemical Trust Company of California (the "Indenture
Trustee") or its paying agent under the Serial Indenture dated as of {DATE},
1995 among California Petroleum, solely for purposes of the Trust Indenture Act
of 1939, as amended, Chevron Corporation ("Chevron"), and the Indenture Trustee
(the "Serial Indenture"; terms defined in the Serial Indenture are used herein
as so defined) maintained for such purpose in New York on ____, in such coin or
currency of the United States of America as at the time of payment shall be
legal tender for the payment of public and private debts, and to pay interest
(computed on the basis of a 360-day year of twelve 30-day months), semi-annually
on ______ and ________ of each year, on said principal sum in like coin or
currency at the rate per annum set forth above at said office or agency from the
_________ or the __________, as the case may be, next preceding the date of this
Serial Mortgage Note to which interest on the Serial Mortgage Notes has been
paid or duly provided for, unless the date hereof is a date to which interest on
the Serial Mortgage Notes has been paid or duly provided for, in which case from
the date of this Serial Mortgage Note, or unless no interest has been
<PAGE>
paid or duly provided for on the Serial Mortgage Notes, in which case from
________, 1995 until payment of said principal sum has been made or duly
provided for. Notwithstanding the foregoing, if the date hereof is after any
________ or ________ and before the following ________ or _________, as the case
may be, this Serial Mortgage Note shall bear interest from such ________ or
_______; provided that, if California Petroleum shall default in the payment of
interest due on such _________ or ________ then this Serial Mortgage Note shall
bear interest from the next preceding __________ or _________ to which interest
on the Serial Mortgage Notes has been paid or duly provided for, or, if no
interest has been paid or duly provided for on the Serial Mortgage Notes since
the original issue date of this Serial Mortgage Note, from ________, 1995. The
interest so payable on any _________ or _________ will, except as otherwise
provided in the Serial Indenture, be paid to the person in whose name this
Serial Mortgage Note is registered at the close of business on the ________ or
_________ preceding such ________ or ___________, whether or not such day is a
Business Day.
Interest is payable on demand at the Default Rate on any overdue
payment of principal of, interest or any other amount payable on this Serial
Mortgage Note from the due date for such payment to the date such amount is paid
in full.
If any amount payable under this Serial Mortgage Note or under the
Serial Indenture falls due on a day that is not a Business Day, then such amount
shall be payable on the next succeeding Business Day without additional interest
thereon for the period of such extension (provided that payment is made on such
next succeeding Business Day).
Reference is made to the further provisions of this Serial Mortgage
Note set forth on the reverse hereof. Such further provisions shall for all
purposes have the same effect as though fully set forth at this place.
This Serial Mortgage Note shall not be valid or obligatory until the
certificate of authentication hereon shall have been duly signed by the
Indenture Trustee acting under the Serial Indenture.
IN WITNESS WHEREOF, California Petroleum has caused this instrument to
be duly executed under its corporate seal.
Dated:
[Seal]
______________________________
______________________________
A-2
<PAGE>
[FORM OF REVERSE OF SERIAL MORTGAGE NOTE]
California Petroleum Transport Corporation
___% First Preferred Mortgage Notes Due ____
Payable from Charterhire Payments by
CHEVRON TRANSPORT CORPORATION
Whose Charter Obligations are Guaranteed by
CHEVRON CORPORATION
This Serial Mortgage Note is one of a duly authorized issue of debt
securities of California Petroleum maturing serially from 1996 to 2006, limited
as to the maturity hereof to the aggregate principal amount of $_____, and
limited as to all maturities of Serial Mortgage Notes to the aggregate principal
amount of $167,500,000 (except as otherwise provided in the Serial Indenture),
issued or to be issued pursuant to the Serial Indenture. Reference is hereby
made to the Serial Indenture, all indentures supplemental thereto and the
Collateral Agreement for a description of the rights, limitations of rights,
obligations, duties and immunities thereunder of the Indenture Trustee,
California Petroleum, Chevron and the holders of the Serial Mortgage Notes.
This Serial Mortgage Note is secured by the Collateral pursuant to the
Collateral Agreement and the other Security Documents. Each holder of this
Serial Mortgage Note, by its acceptance thereof, consents and agrees to the
terms of the Security Documents (including without limitation the provisions
providing for the release of the Collateral provided for herein and therein) as
the same may be in effect or may be amended from time to time in accordance with
their terms and authorizes and directs the Indenture Trustee and the Collateral
Trustee to perform their respective obligations and exercise their respective
rights under the Collateral Agreement and the other Security Documents in
accordance therewith; provided that in the event the terms thereof limit,
qualify or conflict with the duties imposed by the provisions of the Trust
Indenture Act, the Trust Indenture Act shall control.
In case an Indenture Event of Default shall have occurred and be
continuing, the principal of all the Serial Mortgage Notes may be declared due
and payable, in the manner and with the effect, and subject to the conditions,
provided in the Serial Indenture. The Serial Indenture provides that in certain
events such declaration and its consequences may be waived by the holders of a
majority in aggregate principal amount of the Serial Mortgage Notes then
Outstanding and that, prior to any such declaration, such holders may waive any
past default under the Serial Indenture and its consequences except a default in
the payment of principal of or interest on any of the Serial Mortgage Notes. Any
such consent or waiver by the
A-3
<PAGE>
holder of this Serial Mortgage Note (unless revoked as provided in the Serial
Indenture) shall be conclusive and binding upon such holder and upon all future
holders and owners of this Serial Mortgage Note and any Serial Mortgage Note
which may be issued in exchange or substitution herefor, whether or not any
notation thereof is made upon this Serial Mortgage Note or such other Serial
Mortgage Notes.
The Serial Indenture permits California Petroleum, Chevron and the
Indenture Trustee, with the consent of the holders of not less than a majority
in aggregate principal amount of the Serial Mortgage Notes at the time
Outstanding, evidenced as provided in the Serial Indenture, to execute
supplemental indentures adding any provisions to or changing in any manner or
eliminating any of the provisions of the Serial Indenture or of any supplemental
indenture or modifying in any manner the rights of the holders of the Serial
Mortgage Notes; provided that no such supplemental indenture shall (a) extend
the final maturity or redemption dates of any Serial Mortgage Note, or reduce
the principal amount thereof, or reduce the rate or extend the time of payment
of interest thereon or reduce any amount payable on the redemption hereof, or
impair or affect the rights of any Serial Noteholder to institute suit for the
payment thereof without the consent of the holder of each Serial Mortgage Note
so affected; or (b) reduce the aforesaid percentage of Serial Mortgage Notes,
the consent of the holders of which is required for any such supplemental
indenture, without the consent of the holders of all Serial Mortgage Notes then
Outstanding; provided further that no such supplemental indenture shall (i)
change in any manner or eliminate Sections 3.5, 3.8 or 3.9 of the Serial
Indenture or any of the Indenture Events of Default set forth in Section 4.1
thereof or (ii) effect any of the modifications described in clause (a) or (b)
above, without the consent pursuant to Section 7.03(b) of the Collateral
Agreement of the Collateral Trustee and the holders of a majority in aggregate
principal amount of Term Mortgage Notes outstanding under the Term Indenture.
No reference herein to the Serial Indenture and no provision of this
Serial Mortgage Note or of the Serial Indenture shall alter or impair the
obligation of California Petroleum, which is absolute and unconditional, to pay
the principal of and interest on this Serial Mortgage Note at the place, times,
and rate, and in the currency, herein prescribed.
The Serial Mortgage Notes are issuable only as registered Serial
Mortgage Notes without coupons in denominations of $_____ and any multiple of
$1,000.
Serial Mortgage Notes may be exchanged for a like aggregate principal
amount of Serial Mortgage Notes of other authorized denominations at the office
or agency of the Indenture Trustee maintained for such purpose and in the manner
and subject to the limitations provided in the Serial Indenture.
A-4
<PAGE>
Upon due presentment for registration of transfer of this Serial
Mortgage Note as provided in the Serial Indenture, a new Serial Mortgage Note or
Serial Mortgage Notes of authorized denominations, for a like aggregate
principal amount, will be issued to the transferee as provided in the Serial
Indenture. No service charge shall be made for any such transfer, but the
Indenture Trustee may require payment of a sum sufficient to cover any tax or
other governmental charge that may be imposed in relation thereto.
The Serial Mortgage Notes are also subject to redemption in relevant
part at 100% of the principal amount thereof together with accrued interest to
the date fixed for redemption, all as provided in the Serial Indenture if a
Total Loss occurs or is declared with respect to a Vessel. The aggregate
principal amount of each series of Serial Mortgage Notes to be redeemed pursuant
to this paragraph shall equal the Allocated Principal Amount of such Serial
Mortgage Notes for the related Vessel. The redemption date for any redemption
pursuant to this paragraph shall be the date which is 90 days after the
occurrence of the Total Loss.
Subject to payment by California Petroleum of a sum sufficient to pay
the amount due on redemption, interest on this Serial Mortgage Note (or portion
hereof if this Serial Mortgage Note is redeemed in part) shall cease to accrue
upon the date duly fixed for redemption of this Serial Mortgage Note (or portion
hereof if this Serial Mortgage Note is redeemed in part).
California Petroleum, Chevron, the Indenture Trustee, and any
authorized agent of California Petroleum, Chevron or the Indenture Trustee, may
deem and treat the registered holder hereof as the absolute owner of this Serial
Mortgage Note (whether or not this Serial Mortgage Note shall be overdue and
notwithstanding any notation of ownership or other writing hereon made by anyone
other than California Petroleum or the Indenture Trustee or any authorized agent
of California Petroleum or the Indenture Trustee), for the purpose of receiving
payment of, or on account of, the principal hereof and, subject to the
provisions on the face hereof, interest hereon and for all other purposes, and
neither California Petroleum nor Chevron nor the Indenture Trustee nor any
authorized agent of California Petroleum or Chevron or the Indenture Trustee
shall be affected by any notice to the contrary.
No recourse shall be had for the payment of the principal of or the
interest on this Serial Mortgage Note, for any claim based hereon, or otherwise
in respect hereof, or based on or in respect of the Serial Indenture or any
indenture supplemental thereto, against any incorporator, shareholder, officer
or director, as such, past, present or future, of California Petroleum or of any
successor corporation, either directly or through California Petroleum or any
successor corporation, whether by virtue of any constitution, statute or rule of
law or by the enforcement of any assessment or penalty or otherwise, all such
liability being, by the acceptance hereof
A-5
<PAGE>
and as part of the consideration for the issue hereof, expressly waived and
released. Each holder of this Serial Mortgage Note, by its acceptance thereof,
consents and agrees that the Serial Mortgage Notes are not obligations of, and
are not guaranteed by, Chevron Transport Corporation or Chevron Corporation.
A-6
<PAGE>
[FORM OF INDENTURE TRUSTEE'S CERTIFICATE OF AUTHENTICATION]
This is one of the Serial Mortgage Notes described in the within-
mentioned Serial Indenture.
Chemical Trust Company of
California, as Indenture
Trustee
________________________
Authorized Officer
A-7
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EXHIBIT 4.3
CALPETRO TANKERS (BAHAMAS III) LIMITED
Shipowner
and
CALIFORNIA PETROLEUM TRANSPORT CORPORATION
Mortgagee
--------------------------------
FIRST PREFERRED SHIP MORTGAGE
on the
m.t. "William E. Crain"
--------------------------------
_________ __, 1995
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Table of Contents
Page No.
ARTICLE I
DEFINITIONS.............................. 1
Section 1.01 Definitions.............................................. 1
ARTICLE II
MORTGAGE................................. 2
Section 2.01 Grant of Mortgage........................................ 2
Section 2.02 Indebtedness............................................. 3
ARTICLE III
REPRESENTATIONS AND WARRANTIES........... 3
Section 3.01 Representations and Warranties of the Shipowner.......... 3
ARTICLE IV
COVENANTS................................ 5
Section 4.01 Payment of Indebtedness.................................. 5
Section 4.02 Corporate Existence...................................... 5
Section 4.03 Insurance................................................ 6
Section 4.04 Defense of Title......................................... 12
Section 4.05 Discharge of Liens....................................... 13
Section 4.06. Liens.................................................... 13
Section 4.07 Use of Vessel............................................ 13
Section 4.08 Notifications............................................ 14
Section 4.09 Payment of Crew's Wages and Allotments................... 15
Section 4.10 Charter of Vessel........................................ 15
Section 4.11 Maintenance of Vessel.................................... 15
Section 4.12 Statement of Classification Society...................... 16
Section 4.13 Surveys of Vessel........................................ 16
Section 4.14 Access to Vessel......................................... 16
Section 4.15 Books and Records........................................ 16
Section 4.16 Registration of Mortgage; Recordation of Mortgage........ 16
Section 4.17 Notice of Mortgage....................................... 17
Section 4.18 Further Assurances....................................... 17
Section 4.19. Withholding Tax.......................................... 18
Section 4.20. Expenses................................................. 18
Section 4.21. Indebtedness............................................. 18
Section 4.22. Business of Shipowner.................................... 19
Section 4.23. No Bankruptcy Petition................................... 19
Section 4.24. Consolidation, Merger and Sale of Assets................. 19
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Section 4.25. Loans, Advances and Other Liabilities.................... 19
Section 4.26. Restricted Payment....................................... 19
Section 4.27. Reports by the Shipowner................................. 19
ARTICLE V
EVENTS OF DEFAULT; REMEDIES.............. 20
Section 5.01 Events of Default........................................ 20
Section 5.02 Remedies................................................. 21
Section 5.03 Sale of the Vessel....................................... 24
Section 5.04 Mortgagee as Attorney-in Fact............................ 24
Section 5.05 Appointment of Receiver.................................. 25
Section 5.06 Arrest or Detention of Vessel............................ 25
Section 5.07 Defense of Suits......................................... 25
Section 5.08 Cumulative Rights, Powers and Remedies................... 25
Section 5.09 Application of Proceeds.................................. 26
Section 5.10 Mortgagee's Right to Remedy Defaults..................... 27
Section 5.11 Delegation of Powers..................................... 27
Section 5.12 Legal Actions............................................ 27
Section 5.13 Mortgage Subject to Rights of Initial Charterer under
the Initial Charter.................................... 28
ARTICLE VI
MISCELLANEOUS PROVISIONS................. 28
Section 6.01 Performance by Initial Charterer......................... 28
Section 6.02 Discharge of Mortgage.................................... 29
Section 6.03 Indemnity................................................ 29
Section 6.04 Governing Law............................................ 29
Section 6.05 Severability............................................. 29
Section 6.06 Notices.................................................. 30
Section 6.07 Headings................................................. 30
Section 6.08 General Interpretive Principles.......................... 30
Section 6.09 Successors and Assigns................................... 31
Section 6.10 Consent to Jurisdiction.................................. 31
Section 6.11 Payment.................................................. 31
Section 6.12 Recorded Amount.......................................... 31
Section 6.13 No waiver of Preferred Status............................ 32
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First Preferred Ship Mortgage, dated as of _________ __, 1995 (as
amended or supplemented from time to time, the "Mortgage"), from CalPetro
Tankers (Bahamas III) Limited, a company incorporated with limited liability in
the Bahamas whose registered office is at Mareva House, 4 George Street, Nassau,
Bahamas (hereinafter called "the Shipowner") to California Petroleum Transport
Corporation (the "Mortgagee").
WHEREAS, the Shipowner is the sole and unencumbered owner of the whole
of the motor tanker "William E. Crain" (the "Vessel") duly registered in the
name of the Shipowner under the laws and flag of Liberia on _, 199_,
built in 199_, having the following approximate dimensions and tonnages: length
_ meters, breadth _ meters, depth _ meters, gross tonnage , net tonnage
, and more particularly described in the Certificate of Registration with
Official Number _ and with International Code Signal _____ and home port of
Monrovia, Liberia;
WHEREAS, in order to secure the prompt and due payment to the
Mortgagee of the Indebtedness (as defined herein) and any and all other sums
which may be or become due to the Mortgagee under or pursuant to the Loan
Agreements, this Mortgage and any other Security Document and also to secure the
exact performance and observance and compliance with all and any of the
covenants and agreements and terms and conditions contained in the Loan
Agreements, this Mortgage and in the other Security Documents, the Shipowner has
duly authorized the execution and delivery of this Mortgage in favor of the
Mortgagee under and pursuant to Chapter 3 of Title 22 of the Code of Laws of
1956, as at any time amended, of the laws of the Republic of Liberia.
NOW, THEREFORE, in consideration of the premises and of the covenants
herein contained, the parties hereto covenant and agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01 Definitions.
-----------
Capitalized terms used in this Mortgage and not otherwise defined
herein shall have the meanings assigned to such terms in either Schedule 1 to
this Mortgage or the Loan Agreements, and the definitions of such terms shall be
equally applicable to both the singular and the plural forms of such terms.
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ARTICLE II
MORTGAGE
Section 2.01 Grant of Mortgage.
-----------------
In consideration of the premises and of other good and valuable
consideration, the adequacy and receipt whereof are hereby acknowledged, and in
order to secure the payment of the Indebtedness and the repayment of any costs
of foreclosure or of retaking the Vessel, and the payment of all such other
amounts as may hereafter become secured by this Mortgage in accordance with the
terms hereof, and to secure the performance and observance of and compliance
with the covenants, terms and conditions contained in this Mortgage, the Loan
Agreements, and the other Security Documents to which the Shipowner is a party,
the Shipowner has granted, conveyed, pledged and mortgaged and does by these
presents grant, convey, pledge and mortgage to and in favor of the Mortgagee,
its successors and assigns the whole of the Vessel, together with all of the
boilers, engines, machinery, masts, spars, rigging, boats, cables, anchors,
chains, tackle, apparel, furniture, fittings, freights and equipment thereunto
appertaining or belonging, whether now owned or hereafter acquired, whether on
board or not, and all additions, improvements and replacements hereafter made in
or to the Vessel (the term "Vessel", as used herein, shall include the Vessel
together with all of the foregoing and the Vessel's freights) To Have And To
Hold the same unto the Mortgagee, its successors and assigns, forever upon the
terms set forth in this Mortgage for the enforcement of the payment of the
Indebtedness, the payment of any costs of foreclosure or retaking of the Vessel
and all such other amounts as may hereafter become secured by this Mortgage in
accordance with the terms hereof and to secure the performance and observance of
and compliance with the covenants, terms and conditions contained in this
Mortgage and the Security Documents, it being agreed that if any amount payable
by the Shipowner under either Loan Agreement is not paid on its due date
(whether formally demanded or not) the whole or the balance of the Indebtedness
and all other amounts payable under the Security Documents shall forthwith on
demand become payable; provided, however, and the conditions of these presents
are such that, if the Shipowner shall pay or cause to be paid to the Mortgagee
all of the Indebtedness as set forth in the Security Documents, and if the
Shipowner shall pay all such other amounts as may hereafter become secured by
this Mortgage and all expenses which the Mortgagee shall have paid or incurred
to protect the security granted hereunder, and if the Shipowner shall perform,
observe and comply with all and singular of the covenants, terms and conditions
in this Mortgage, the Loan Agreements and the other Security Documents
contained, expressed or implied, to be performed, observed or complied with by
and on the part of the Shipowner or its successors or assigns, all without delay
or fraud and according to the true intent and meaning hereof and therefor, then
these presents and the rights of the Mortgagee under this Mortgage and the other
Security Documents shall cease and, in such event, the Mortgagee agrees by
accepting this Mortgage to execute, at the expense of the Shipowner, all such
documents as the Shipowner may reasonably require to discharge this Mortgage
under the laws of the Republic of Liberia; otherwise this Mortgage shall remain
in full force and effect; provided further, however, the conditions of these
presents are such that, if the Shipowner shall satisfy or cause
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to be satisfied and pay or cause to be paid to the Mortgagee all of the Serial
Obligations, then these presents and the rights of the Mortgagee under this
Mortgage and the other Security Documents with respect to the Serial Loan
Agreement shall cease and, in such event, this Mortgage shall secure all of the
Indebtedness other than the Serial Obligations.
Section 2.02 Indebtedness.
------------
(a) The Shipowner acknowledges that pursuant to the Loan Agreements it
is jointly and severally liable with the Other Owners to the Mortgagee in the
original principal amount of Two Hundred Eighty-Five Million Four Hundred
Thousand United States Dollars (US$285,400,000). The Shipowner shall repay the
Obligations in accordance with terms and conditions of the Loan Agreements with
the last installment due and payable on ________________, 2015. The Shipowner
further agrees to pay all other sums comprising the Indebtedness in accordance
with the terms, conditions and provisions in the Loan Agreements and in this
Mortgage and to perform, observe and comply with the covenants, terms and
obligations and conditions on its part to be performed, observed and complied
with contained or implied herein and in the Loan Agreements and in the other
Security Documents.
(b) The Shipowner shall also pay to the Mortgagee upon the Mortgagee's
first written demand all stamp duties, registration and/or recording fees,
charges for certificates, valuation fees, costs and expenses (including, the
fees and expenses of its attorneys) of any nature whatsoever incurred by the
Mortgagee in connection with the preparation, completion, execution and
registration of this Mortgage and all other claims, expenses, costs, payments,
disbursements, losses, damages or liabilities which may be incurred by the
Mortgagee by reason of the covenants and conditions contained herein, in the
Loan Agreements or in the other Security Documents, together with interest
thereon as herein or therein provided, and confirms that such obligations are
secured by this Mortgage.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
Section 3.01 Representations and Warranties of the Shipowner.
-----------------------------------------------
The Shipowner hereby represents and warrants to the Mortgagee as
follows:
(a) The Shipowner (i) is a company duly formed, validly existing and
in good standing under the laws of The Bahamas and (ii) is duly authorized, to
the extent necessary, to do business in each jurisdiction where the character of
its properties or the nature of its activities makes such qualification
necessary. The Shipowner has not engaged in any business or activity other than
as set forth in Section 5.04 of the Loan Agreements. The Shipowner has all
requisite corporate power and authority to own and operate the property it
purports to own and to carry on its business as now being conducted and as
proposed to be conducted in respect of the Vessel.
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(b) The Shipowner has all necessary corporate power and authority to
execute, deliver and perform under this Mortgage, the Loan Agreements and each
other Security Document to which it is a party.
(c) All action on the part of the Shipowner that is required for the
authorization, execution, delivery and performance of this Mortgage, the Loan
Agreements and each other Security Document to which it is a party, in each case
has been duly and effectively taken; and the execution, delivery and performance
of this Mortgage, the Loan Agreements and each such other Security Document do
not require the approval or consent of any Person except for such consents and
approvals as have been obtained on or prior to the date hereof.
(d) This Mortgage, the Loan Agreements and each other Security
Document to which the Shipowner is a party have been duly executed and delivered
by the Shipowner. Each of this Mortgage, the Loan Agreements and each other
Security Document to which the Shipowner is a party constitute a legal, valid
and binding obligation of the Shipowner, enforceable against it in accordance
with the terms thereof, except as such enforceability (i) may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium and other similar
laws affecting the enforcement of creditors' rights and remedies generally and
(ii) is subject to general principles of equity (regardless of whether
enforceability is considered in a proceeding in equity or at law).
(e) Neither the execution, delivery and performance of this Mortgage,
the Loan Agreements or any other Security Document to which the Shipowner is a
party nor the consummation of any of the transactions contemplated hereby or
thereby nor performance of or compliance with the terms and conditions hereof or
thereof (i) contravenes any Requirement of Law applicable to the Shipowner or to
the Vessel, (ii) constitutes a default under any Security Document or (iii)
results in the creation or imposition of any Liens on the Vessel (other than
Permitted Liens) or results in the acceleration of any obligation.
(f) The Shipowner is in compliance with and not in default under any
and all Requirements of Law applicable to the Shipowner and all terms and
provisions of this Mortgage, the Loan Agreements and all Security Documents.
(g) All Governmental Approvals which are required to be obtained in
the name of the Shipowner in connection with the operation and maintenance of
the Vessel and the execution, delivery and performance by the Shipowner of this
Mortgage have been obtained and are in effect as of the date hereof.
(h) There are no actions, suits or proceedings at law or in equity or
by or before any Governmental Authority now pending against the Shipowner or the
Vessel or, to the best of the Shipowner's knowledge, threatened against the
Shipowner or the Vessel or pending or threatened against any property or other
assets or rights of the Shipowner with respect to the Vessel, this Mortgage or
any other Security Document.
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(i) The Shipowner is the sole and lawful owner of the whole of the
Vessel, free from all liens, security interests, mortgages, charges or
encumbrances (other than this Mortgage, the Collateral Trust Agreement, the
Indentures and Permitted Liens). The Shipowner shall defend for the benefit of
the Mortgagee the title and possession of the mortgaged property and every part
thereof against the claims and demands of all Persons.
(j) The Shipowner is, by this Mortgage and the recordation thereof,
constituting in favor of the Mortgagee, among other things, all the rights of a
First Preferred Ship Mortgage of the Vessel to secure the due and punctual
payment of all amounts due and to become due to the Mortgagee pursuant to the
terms and conditions of this Mortgage, the Loan Agreements, the other Security
Documents and the documents contemplated hereby and thereby and the payment of
all commissions and fees, costs, charges, expenses, expenditures and interest
owing to the Mortgagee hereunder and thereunder, and the performance and
observance of and compliance with all the covenants, terms, conditions and
provisions of this Mortgage, the Loan Agreements, the other Security Documents
and the documents contemplated hereby and thereby.
(k) No tax deficiencies and no past due obligations exist that
materially affect the operations of the Shipowner, except those contested in
good faith by appropriate proceedings for which adequate reserves with respect
to such claims so contested have been set aside on the books of the Shipowner.
(l) The Shipowner is not liable for any material amount of sales, use
or other similar tax in connection with the transactions described in this
Mortgage, the Loan Agreements and the other Security Documents.
ARTICLE IV
COVENANTS
So long as any of the Indebtedness is outstanding or any of its
obligations hereunder or under either Loan Agreement remain outstanding, the
Shipowner covenants and agrees, subject to Section 6.01, with the Mortgagee as
follows:
Section 4.01 Payment of Indebtedness.
-----------------------
The Shipowner shall repay to the Mortgagee the Indebtedness and at all
times shall keep, perform and observe the covenants, conditions and agreements
in this Mortgage and the other Security Documents contained, expressed or
implied on its part to be kept, performed and observed for so long as any part
of the Indebtedness remains outstanding.
Section 4.02 Corporate Existence.
-------------------
The Shipowner is and shall remain a corporation qualified as a Foreign
Maritime Entity as defined in Chapter 13 of the Liberian Corporation Business
Act of 1977 as amended.
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Section 4.03 Insurance.
---------
(a) The Shipowner, at its expense (including payment of all premiums,
costs and club calls, if any) shall effect or cause to be effected the following
insurances and keep the following in full force and effect:
(i) hull and machinery insurance equal to the greater of (i) the Vessel's
full commercial value and (ii) one hundred and fifteen percent (115%) of the
aggregate outstanding principal balance of the Term Loan and the Serial Loan.
Such Hull and Machinery insurance shall include the "Institute Pollution Hazard
Clause" and the "Institute Liner Negligence and Additional Perils Clause". If
the Vessel is laid up in port for an extended period, then, with the prior
written consent of the Mortgagee, the Shipowner may obtain in lieu of the hull
and machinery insurance referred to in this Section 4.03(a)(i) port risk
insurance equal to the greater of (A) the Vessel's full commercial value or (B)
one hundred and fifteen per cent (115%) of the aggregate outstanding principal
balance of the Term Loan and Serial Loan. Such Port Risk insurance shall be
effected on Institute of London Underwriters "Institute Port Risk Clauses" or
American Institute "Port Risk Endorsement";
(ii) war risk hull and machinery insurance (including risks of mines) equal
to the greater of (A) the Vessel's full commercial value or (B) one hundred and
fifteen percent (115%) of the aggregate outstanding principal balance of the
Term Loan and Serial Loan. Such war risk insurance shall be effected with a War
Risks Association approved by the Mortgagee or on the full Institute of London
Underwriters "Institute War and Strikes Clauses" or American Institute "Hull War
Risks and Strikes Clauses";
(iii) mortgagee additional perils (oil pollution) insurance in an amount
equal to the aggregate outstanding principal amount of the Term Loan related to
the Vessel;
(iv) confiscation and requisition insurance to the extent and in the
circumstances that a prudent shipowner would obtain and maintain such
insurances;
(v) protection and indemnity insurance in the name of the Shipowner,
which shall include freight, demurrage and defense coverage in an unlimited
amount and coverage in respect of pollution risks for a minimum of five hundred
million dollars ($500,000,000) plus an additional two hundred million dollars
($200,000,000) or such other amount as may be then customary for prudent
shipowners to maintain, including coverage against liabilities to persons who
have suffered any loss, damage or injury whatsoever in connection with anything
done or not done by the Vessel, any charterer or the Shipowner in connection
with the Vessel or the employment or use thereof (including in connection with
any oil or other substance emanating from the Vessel or any other vessel with
which the Vessel may be involved in collision) and against liability under the
United States Oil Pollution Act of 1990 ("OPA") or any re-enactment or
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modification thereof under the law of any country into whose jurisdiction the
Vessel is permitted to come under the terms of the related charter;
(vi) such additional insurance as the Shipowner may deem necessary;
provided, however, that all such additional insurance, including without
limitation "disbursements," "increased value" or other "total loss only"
insurance shall not be in amounts in excess of those permitted by the hull and
machinery or war risk policies. Such hull and machinery insurance shall be
effected on Institute of London Underwriters "Institute Time Clause - (Hulls)"
or American Institute "Time (Hulls) Clauses" including four-fourths (4/4ths)
Running Down Clause, except that three-fourths (3/4ths) Running Down Clause is
allowed provided the remaining one-fourth (1/4th) Running Down Clause is fully
covered by protection and indemnity insurance.
(vii) risks which are likely to arise due to the particular usage and
trading of the Vessel including all risks customarily and usually covered by
prudent shipowners; and
(viii) risks for which the Republic of Liberia may from time to time
require insurance or for which the Mortgagee may from time to time (after
receiving advice from its insurance advisers that a prudent shipowner would
obtain and maintain a type and amount of insurance for such risks) require
insurance.
Provided, however, that if the Vessel is subject to the Initial Charter or
an Acceptable Replacement Charter, the insurance requirements of the related
Initial Charter or Acceptable Replacement Charter will supersede the above
insurance requirements.
(b) All insurance taken out or effected in connection with the Vessel
pursuant to the provisions of Section 4.03(a) hereof shall be in a form and upon
terms acceptable to the Mortgagee and shall, without limitation, be subject to
the following:
(i) all such insurance shall be taken out in the name of the Shipowner with
the Mortgagee's interest noted on the policies and cover notes;
(ii) all such insurance shall be placed in the English or American markets
through first-class brokers and with first-class underwriters, insurance
companies, protection and indemnity associations or protection and indemnity
clubs. All insurance policies or entries shall provide that they are payable in
Dollars. All insurance policies shall be valued policies and none shall provide
for a deductible amount in excess of One Hundred Thousand United States Dollars
(US$100,000) or such other amount as prudent shipowners of vessels similar to
the Vessel shall maintain. No insurance shall exclude liability for negligence
of the master, officers, crew or pilots. Each policy or entry shall contain or
be accompanied by a waiver, as against the Mortgagee, of any and all premiums
and calls for which the Mortgagee might otherwise be or become liable as a loss
payee or otherwise.
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(iii) Each policy shall provide that it may not lapse, be terminated,
cancelled or materially modified without fourteen (14) days' prior telex or
telegraphic notice to the Mortgagee and any assignee, except only such notice as
war risk underwriters shall be required to give pursuant to the automatic
termination clause of current war risk policies.
(iv) Each policy shall include a provision agreeing that no breach of
warranty or condition or want of due diligence on the part of the Shipowner or
any agent of such Shipowner shall defeat recovery of any claim by the Collateral
Trustee unless such provision shall conflict with the available reinsurance
arrangements of the issuers of such policy.
(c) Each insurance policy taken out pursuant to Sections 4.03(a)(i)
through (iii) and Section 4.03(a)(v) through (vii) shall contain the following
notice of assignment and loss payable clause:
Notice of Assignment/Loss Payable Clause
California Petroleum Transport Corporation, as mortgagee (the
"Mortgagee"), and CalPetro Tankers (Bahamas III) Limited (the
"Shipowner"), owner of the m.t. William E. Crain (the "Vessel"),
hereby give notice that by an assignment contained in an Assignment of
Earnings and Insurances, dated as of _________ __, 1995, between the
Shipowner and the Mortgagee, the Shipowner assigned to the Mortgagee
as mortgagee of the Vessel, inter alia, all of its right, title and
interest under, to and in all policies and contracts of insurance of
whatsoever nature and all entries with protection and indemnity clubs
or societies now or hereafter taken out in respect of the Vessel, its
rights, disbursements, profits or otherwise.
All claims payable shall be subject to the following conditions:
(i) Any claim payable in respect of an actual or constructive or
arranged or agreed or compromised total loss, or loss in the event of
the confiscation, compulsory acquisition or requisition of the Vessel,
for title or use, by any government of any country or any department,
agency or representative thereof, pursuant to any present or future
law, proclamation, order, decree or otherwise, shall be payable to the
Mortgagee as mortgagee of the Vessel, provided always that the written
consent of the Mortgagee shall be obtained prior to the arranged or
agreed or compromised total loss being agreed with the underwriters
(insurers);
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(ii) All other claims shall be released to the repairer or salvor
for the repair, salvage or other charges involved or to the Shipowner
as reimbursement if it has fully repaired the damages and paid all of
the salvage and other charges;
Notwithstanding the foregoing, if there exists an Event of
Default under the First Preferred Ship Mortgage, dated _________ __,
1995, on the Vessel given by the Shipowner in favor of the Mortgagee
and the brokers and/or underwriters (insurers) have been so notified
by the Mortgagee, all claims shall be payable to the Mortgagee as
mortgagee of the Vessel.
The underwriters (insurers) agree that the Mortgagee shall be
advised immediately of the variation or termination of this policy
(entry), and in the event of any failure by the Shipowner to pay
premiums (dues or Club calls) as and when due the Mortgagee shall be
given at least fourteen (14) days' prior telegraphic or telex notice
of the cancellation or material alteration of this policy (entry).
The Mortgagee shall have no obligations whatsoever to pay any
premiums or costs (dues or Club calls), but shall have the right to do
so in the event of non-payment by the Shipowner. The underwriters
(insurers) shall promptly advise the Mortgagee of any act of omission
of which the Underwriters (insurers) are aware that might void this
policy (entry) or make the same invalid or unenforceable in whole or
in part.
(d) Each entry or insurance policy taken out pursuant to Section
4.01(a)(iv) shall bear the following Endorsement:
Endorsement
California Petroleum Transport Corporation, as mortgagee (the
"Mortgagee") and CalPetro Tankers (Bahamas III) Limited (the
"Shipowner"), owner of the m.t. William E. Crain (the "Vessel"),
hereby give notice that by an assignment contained in an Assignment of
Earnings and Insurances, dated as of _________ __, 1995, between the
Shipowner and the Mortgagee, the Shipowner assigned to the Mortgagee
as mortgagee of the Vessel all of its right, title and interest under,
to and in all policies and contracts of insurance of whatsoever nature
and all entries with protection and indemnity clubs or societies now
or hereafter taken
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out in respect of the Vessel, its rights, disbursements, profits or
otherwise.
It is hereby noted that all claims shall be paid to the Shipowner
unless and until the Mortgagee shall have given notice in writing that
the Shipowner is in default under the First Preferred Ship Mortgage,
_________ __, 1995, on the Vessel given by the Shipowner in favor of
the Mortgagee in which event such claims shall be payable to the
Mortgagee as mortgagee of the Vessel. Any modification of the terms of
this insurance or cancellation or termination by reason of nonpayment
of premiums, dues, assessments, contributions or other amounts which
may become due shall not become effective against the interests of the
Mortgagee, its successors or assigns until fourteen (14) days' prior
telegraphic or telex notice is given to the Mortgagee, its successors
or assigns of such modification, cancellation or termination.
(e) Certified copies of all binders and cover notes or other
satisfactory written evidence showing that the required insurance of each type
has been placed, maintained or renewed and that the premiums thereon have been
paid shall be submitted to the Mortgagee on or before the date of this Mortgage
and subsequently pro forma policies shall be submitted for approval at least
seven (7) days before liability under any current or renewed insurance expires.
No change shall be made in any insurance without the prior written approval of
the Mortgagee. Certified copies of all policies, certificates of entry,
contracts of insurance, cover notes and renewals thereof shall be delivered to
and held by the Mortgagee, and the Shipowner shall furnish the Mortgagee with
the original of the policies, when and if requested by the Mortgagee. On the
Closing Date, on each date the Insurances are renewed as required by the terms
hereof and each time there is a significant change in the insurance coverage
carried on the Vessel, the Shipowner shall arrange for a detailed report signed
by independent marine insurance brokers acceptable to the Mortgagee, describing
the insurance coverage then carried and maintained on the Vessel (including the
types of risk covered by such policies, the amount insured thereunder and the
expiration date thereof) and stating that in the opinion of said insurance
brokers such insurance is adequate and reasonable for the protection of the
Mortgagee and that the Shipowner is in compliance with the insurance terms
hereof.
(f) The Mortgagee is hereby authorized, but not required, in its own
name and/or the Shipowner's name to demand, collect, give receipt for and
prosecute all necessary actions in the courts to recover any and all insurance
monies which may become due and payable to the Shipowner under any insurance
required or permitted hereunder.
(g) If the Shipowner shall at any time fail to pay or to cause to be
paid when due any insurance premiums, club calls or other costs related to
obtaining or maintaining the insurance required hereunder, or to obtain any
required insurance or to deliver to the Mortgagee all policies, certificates of
entry, contracts of insurance, binders and cover notes and all renewals
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thereof as required by the provisions of this Mortgage, the Mortgagee may, but
shall not be required to, procure such insurances and/or pay unpaid premiums and
other costs, and the cost and expense thereof, with interest at the Default
Rate, shall be an indebtedness due from the Shipowner to the Mortgagee secured
by this Mortgage and shall be paid by the Shipowner promptly on demand.
(h) The Shipowner shall cause each of its insurance brokers to deliver
to the Mortgagee its undertaking substantially in the form of the letter
attached hereto as Exhibit A and made a part hereof.
(i) The Shipowner shall not do any act or cause or permit any act to
be done whereby any insurance shall be or may be suspended, impaired or
defeated.
(j) The Shipowner agrees to do all such things whatsoever and prepare,
execute and deliver all such documents whatsoever to enable the Mortgagee to
collect and recover any monies which may become due in respect of the policies
of insurance and entries and for that purpose (but without limitation) to permit
the Mortgagee if necessary to sue in the name of the Shipowner.
(k) The Shipowner agrees not to employ the Vessel or suffer the Vessel
to be employed otherwise than in conformity with the terms of the instruments of
insurance aforesaid (including any warranties express or implied therein)
without first obtaining the consent to such employment of the insurers and
complying with such requirements as to extra premium or otherwise as the
insurers may prescribe.
(1) The proceeds of any Insurances or entries shall be applied as
follows:
(i) Until the occurrence of an Event of Default:
(A) Any claim under any Insurances (other than in respect of a Total
Loss) or whether or not such claim is under the terms of the
relevant loss payable clause payable directly to the Shipowner,
shall be applied by the Shipowner in making good the loss or
damage in respect of which it has been paid to the Shipowner in
reimbursement of money expended by it for such purpose; and
(B) Any claim in respect of protection and indemnity insurance shall
be paid directly to the person, firm or company to which the
liability covered by such insurance was incurred or the Shipowner
in reimbursement of moneys expended by it in satisfaction of such
liability;
<PAGE>
-12-
provided always that for as long as the Initial Charter in respect of
the Vessel remains in force, all payments other than in respect of a
Total Loss (which shall be made to the Mortgagee) shall be made to the
Initial Charterer.
(ii) Upon the occurrence of an Event of Default, subject as provided
above, any claim under any such insurance and entry shall be paid to the
Mortgagee, as assignee of the related Shipowner, and shall be applied by the
Mortgagee pursuant to the terms of the Initial Charter unless the Initial
Charterer is in default thereunder in which event the Mortgagee shall apply such
proceeds against payment of the Obligations.
(iii) Any claim under such insurance and entry in respect of a Total
Loss shall be paid to the Mortgagee, as assignee of the related Shipowner, and
shall be applied by the Mortgagee, after payment of the costs of collecting such
claim, as follows:
First: To the payment of all reasonable expenses and charges,
including the expenses of any taking, attorney's fees, court costs and
any other expenses or advances made or incurred by the Mortgagee, the
Indenture Trustees and the Collateral Trustee in the protection of its
right or the pursuance of its remedies under this Mortgage, the Loan
Agreements or the other Security Documents;
Second: To the payment of all amounts due to the Mortgagee in
respect of taxes, indemnities, fees, expenses, premiums, purchase of
liens or otherwise under the provisions of this Mortgage;
Third: To the payment of interest on the Term Loan and Serial
Loan, pro rata, in accordance with their respective outstanding
balances, to but not including the Loss Date;
Fourth: To the payment to the Mortgagee in respect of principal
of the Term Loan and Serial Loan, pro rata, in accordance with their
respective outstanding balances; and
Fifth: To the payment of any surplus thereafter remaining to
the Shipowner or whomsoever may be lawfully entitled thereto.
Section 4.04 Defense of Title.
----------------
The Shipowner lawfully owns and is lawfully possessed of the Vessel
free from any Lien whatsoever except this Mortgage and Permitted Liens and shall
warrant and defend the title and possession thereto and to every part thereof
for the benefit of the Mortgagee against the claims and demands of all persons
whomsoever.
<PAGE>
-13-
Section 4.05 Discharge of Liens.
------------------
The Shipowner shall pay and discharge or cause to be paid and
discharged when due and payable unless contested in good faith from time to time
all debts, damages and liabilities whatsoever which may have given or may give
rise to maritime or possessory liens on or claims enforceable against the Vessel
and all taxes, assessments, governmental charges, fines and penalties legally
imposed on the Vessel or any income or proceeds therefrom or on the Shipowner,
the Earnings and in event of arrest of the Vessel pursuant to legal process or
in event of her detention in exercise or purported exercise of any such lien as
aforesaid to procure the release of the Vessel from such arrest or detention as
soon as possible upon receiving notice thereof but in any event within fifteen
(15) days of receiving such notice by providing bail or otherwise as the
circumstances may require.
Section 4.06. Liens.
-----
(a) Neither the Shipowner nor its agent nor the master of the Vessel
nor any charterer of the Vessel has or shall have any right, power or authority
to create, incur or permit to be placed or imposed upon the property or any part
thereof subject or intended to be subject to this Mortgage, any liens whatsoever
without the prior written consent of the Mortgagee, other than for Permitted
Liens, and liens created under the Collateral Trust Agreement and the
Indentures. A properly certified copy of this Mortgage shall be carried with the
ship's papers on board the Vessel, shall be exhibited to any person having
business with the Vessel which might give rise to any lien other than Permitted
Liens and shall be exhibited to any representative of the Mortgagee on
demand.
(b) The Shipowner shall keep the Vessel free and clear of all liens,
security interests, charges or encumbrances (except for the Initial Charter, the
Collateral Trust Agreement, the Indentures and Permitted Liens).
Section 4.07 Use of Vessel.
-------------
(a) The Shipowner shall not cause or permit the Vessel to be operated
in such a way as to jeopardize the safety of the Vessel, its Insurances or in
any manner contrary to law, shall not engage in any unlawful trade or violate
any applicable law, rule or regulation of the Republic of Liberia or any other
jurisdiction in which the Vessel may operate from time to time or which may
otherwise be applicable to the Vessel or the Shipowner or carry any cargo that
shall expose the Vessel to penalty, confiscation, forfeiture, capture or
condemnation, shall not do, suffer or permit to be done anything which can or
may injuriously affect the registration or enrollment of the Vessel under the
laws and regulations of the Republic of Liberia and shall at all times keep the
Vessel duly documented thereunder.
(b) The Shipowner shall not employ the Vessel or suffer her employment
in any trade or business which is forbidden by international law or is otherwise
illicit or in carrying illicit or prohibited goods or otherwise use the Vessel
in any manner whatsoever which renders her liable to condemnation or to
destruction, seizure or confiscation and in event of hostilities in any part of
the world (whether war is declared or not) not allow the Vessel to enter any
zone
<PAGE>
-14-
which is declared a war zone unless the Mortgagee shall have first given its
consent thereto in writing and there shall have been effected by the Shipowner
and at its expense such special insurance cover as the Mortgagee may require.
(c) The Shipowner shall not, during hostilities (whether or not a
state of war shall have been formally declared) between any two or more nations
or in which the United Nations Organization may be involved, or during any civil
war, employ or permit the Vessel to be employed in any manner in carrying any
goods that shall or may be declared to be contraband of war or that shall or may
render her liable to confiscation, seizure, detention or destruction unless
prior to such employment special war risks policies effected with such
underwriters as the Mortgagee may approve and in all respects to the
satisfaction of the Mortgagee shall have been effected, assigned and delivered
to the Mortgagee.
(d) Upon request, the Shipowner shall give to the Mortgagee all
information regarding the Vessel, her position and engagements in the possession
of or available to the Shipowner.
(e) The Shipowner shall comply with and satisfy all of the material
provisions of any applicable law, regulation, proclamation or order concerning
financial responsibility for liabilities imposed on the Shipowner or the Vessel
with respect to pollution by any state or nation or political subdivision
thereof, including, if applicable, the United States Federal Water Pollution
Control Act, OPA and the United States Comprehensive Environmental Response,
Compensation and Liability Act ("CERCLA"), as any of the foregoing may at any
time be amended, and shall maintain all certificates or other evidence of
financial responsibility as may be required by any such law, regulation,
proclamation or order with respect to the trade in which the Vessel is from time
to time engaged and the cargo carried by it and shall upon request, furnish the
Mortgagee with evidence that the Shipowner has acted in compliance with OPA and
CERCLA.
Section 4.08 Notifications.
-------------
The Shipowner shall immediately notify the Mortgagee of:
(a) any marine disaster involving the Vessel that has occurred, or any
serious damage suffered by the Vessel (such notice by the Shipowner to be given
within twenty-four (24) hours after the event shall have come to its knowledge
and shall furnish the Mortgagee with full information regarding any loss of
life, other accidents or damage to the Vessel), and in such event the Mortgagee
shall have the right to have an independent survey of the damage to the Vessel
at the Shipowner's expense provided that the same shall not cause any undue
delay in respect of the operation of the Vessel, and if such survey be
requested, the Shipowner shall lend all needed assistance.
(b) any occurrence in consequence whereof the Vessel has become or is
likely to become a Total Loss;
<PAGE>
-15-
(c) any requirement or recommendation made by any insurer or
classification society or by any competent authority that is not complied
with immediately; and
(d) any complaint or libel filed against the Vessel, or any levy
against the Vessel, or the fact that the Vessel has been taken into custody
or detained by any proceedings in any court or tribunal or by any government
of any country or other authority, any arrest of the Vessel or the exercise
or purported exercise of any lien on the Vessel.
Section 4.09 Payment of Crew's Wages and Allotments.
--------------------------------------
The Shipowner shall promptly pay all tolls, dues and other outgoings
whatsoever in respect of the Vessel and, as and when the Mortgagee may so
require, furnish satisfactory evidence that the wages and allotment and
insurance and pension contributions of the Master and crew are being regularly
paid and that all deductions from crew's wages in respect of any tax liability
are being properly accounted for.
Section 4.10 Charter of Vessel.
-----------------
The Shipowner shall not, without the prior written consent of the
Mortgagee, charter the Vessel by demise charter or by period, time or voyage
charter for any period other than to the Initial Charterer under the Initial
Charter or any other charterer under an Acceptable Replacement Charter. The
Shipowner shall not modify, amend or supplement the terms of the Initial Charter
without the prior written consent of the Mortgagee.
Section 4.11 Maintenance of Vessel.
---------------------
The Shipowner shall at all times and without cost or expense to the
Mortgagee or the Collateral Trustee maintain and preserve, or cause to be
maintained and preserved, the Vessel, her equipment and machinery in good
running order and repair so that the Vessel shall be, in so far as due diligence
can make her so, tight, staunch, strong and well and sufficiently tackled,
apparelled, furnished, equipped and in every respect seaworthy and in good
operating condition as will entitle her to the highest classification of Det
norske Veritas or such other classification society of like standing agreeable
to the Mortgagee and the Collateral Trustee. The Vessel shall, and the Shipowner
covenants that it shall, at all times comply strictly with all applicable laws,
treaties and conventions of Republic of Liberia and rules and regulations issued
thereunder and shall have on board as and when required by such rules and
regulations valid certificates showing compliance therewith. The Shipowner shall
not make or permit to be made any substantial change in the structure, type or
speed of the Vessel or change in any of her rigs without first obtaining the
written approval of the Mortgagee. The Shipowner shall cause all repairs to
and/or replacements of any damaged worn or lost parts or equipment of the Vessel
be effected in such manner both as regards workmanship and quality of materials
so as not to diminish the value or class of the Vessel. The Shipowner shall
submit the Vessel to such periodical or other surveys as may be required for
classification purposes and shall if so required
<PAGE>
-16-
by the Mortgagee supply to the Mortgagee on request copies of all surveys or
reports issued in respect thereof.
Section 4.12 Statement of Classification Society.
-----------------------------------
The Shipowner shall furnish to the Mortgagee and the Collateral
Trustee annually from the date hereof a certificate by Det norske Veritas (the
"Classification Society") or such other classification society acceptable to the
Mortgagee and the Collateral Trustee that such classification is maintained in
the highest category for ships of the same type as the Vessel free of
recommendations and notations which have not been complied with in accordance
with their terms and to furnish the Mortgagee from time to time and at any time
upon demand with all such information and copies of all such documents as the
Mortgagee may require concerning the classification of the Vessel.
Section 4.13 Surveys of Vessel.
-----------------
The Shipowner shall submit the Vessel or cause the Vessel to be
submitted regularly to such periodical or other surveys as may be required for
classification purposes and if so required supply and cause to be supplied to
the Mortgagee copies of all survey reports issued in respect thereof.
Section 4.14 Access to Vessel.
----------------
The Shipowner shall use all reasonable endeavors to afford the
Mortgagee and such Persons as the Mortgagee shall from time to time appoint for
that purpose full and complete access to the Vessel at any time, on reasonable
notice and in a manner which shall not interfere with the Vessel's trading
requirements to view the state and condition thereof and her cargo and papers
and to ascertain whether the Vessel is being properly repaired and maintained,
and if default shall be made in keeping her in such good state of repair and in
such working order and condition as herein mentioned (without prejudice however
to any of the Mortgagee's rights under this Mortgage) the Mortgagee may (but
shall not be obligated to) effect such repairs as shall in its opinion be
necessary, and the Shipowner shall on demand repay to the Mortgagee every sum of
money expended for the above purpose with interest at the Default Rate.
Section 4.15 Books and Records.
-----------------
The Shipowner shall keep proper books of account in respect of the
Vessel and as and when required by the Mortgagee make such books available for
inspection for the Mortgagee and any Noteholder.
Section 4.16 Registration of Mortgage; Recordation of Mortgage.
-------------------------------------------------
(a) The Shipowner shall not change the flag or port of documentation
of the Vessel or through any action or inaction cause the registration of the
Vessel under the laws of the Republic of Liberia to be void or voidable or to
lapse;
<PAGE>
-17-
(b) The Shipowner shall cause this Mortgage to be recorded with the
Deputy Commissioner for Maritime Affairs of the Republic of Liberia as
prescribed by Chapter 3 of Title 22 of the Liberian Code of Laws of 1956 as
amended and otherwise comply with and satisfy all the requirements and
formalities established by the said Liberian Code of Laws and any other
pertinent legislation of the Republic of Liberia to perfect this Mortgage as a
valid and enforceable first and preferred lien upon the Vessel and shall furnish
to the Mortgagee from time to time such evidence to the Mortgagee's satisfaction
with respect to the Shipowner's compliance with the provisions of this Section.
Section 4.17 Notice of Mortgage.
------------------
(a) The Shipowner shall at all times carry on board the Vessel a duly
certified copy of this Mortgage and any assignment thereof (which shall form a
part of the Vessel's papers) and cause the same to be shown to any person having
business with the Vessel which might create or imply any commitment or
encumbrance whatsoever on the Vessel and place and maintain in a frame in a
conspicuous place in the navigation room and in the cabin of the Master of the
Vessel a printed notice such that the printed area covers a space not less than
six inches wide by nine inches high in the following form:
"NOTICE OF FIRST MORTGAGE"
"This Vessel is owned by CalPetro Tankers (Bahamas III) Limited
and is subject to a First Preferred Mortgage in favor of California
Petroleum Transport Corporation, as mortgagee. Under the terms
of the Mortgage, neither the Shipowner nor any charterer nor the
master of this Vessel nor any other person has any power, right or
authority whatever to create, incur or permit to be imposed on this
Vessel any lien or encumbrance except for Master's and crew's
wages for not more than three (3) months and salvage."
(b) Notwithstanding the requirement for the Shipowner to maintain the
Notice of Mortgage described in Section 4.17(a), so long as the Initial Charter
is in effect,the Shipowner shall maintain the Notice of First Mortgage described
in Clause 14 of the Initial Charter.
Section 4.18 Further Assurances.
------------------
(a) The Shipowner shall pay to the Mortgagee on demand on a full
indemnity basis all moneys whatsoever which the Mortgagee shall or may expend,
be put to or become liable for in or about the protection maintenance or
enforcement of the security created by this Mortgage and the other Security
Documents or in or about the exercise by the Mortgagee of any of the powers
vested in the Mortgagee hereunder or thereunder including any and all costs,
charges, legal fees and expenses of the Mortgagee and shall pay interest thereon
at the Default Rate until the date of repayment by the Shipowner both before and
after judgment.
<PAGE>
-18-
(b) The Shipowner shall do and permit to be done each and every act or
thing whatsoever which the Mortgagee may require to be done for the purpose of
enforcing the Mortgagee's rights hereunder and to allow the Mortgagee to use the
Shipowner's name as may be required for that purpose.
Section 4.19. Withholding Tax.
---------------
The Shipowner shall take any lawful action to the extent necessary to
prevent or avoid the imposition of any withholding taxes (other than any
withholding tax with respect to charter hire to the extent required to be paid
or reimbursed by any charterer pursuant to a charter) by any taxing jurisdiction
(including The Bahamas) with respect to any payments under the Obligations,
including changing its jurisdiction of incorporation or residence; provided
however, that it shall not be required to take, or fail to take, any action (i)
if in the opinion of counsel such act or failure to act would violate applicable
law or (ii) if in the reasonable opinion of the Shipowner the actions necessary
to avoid or prevent imposition of such withholding taxes would be unduly
burdensome. For purposes of clause (ii) of this paragraph a requirement to
change the jurisdiction of the Shipowner's incorporation or residence shall not
be treated as unduly burdensome.
Section 4.20. Expenses.
--------
The Shipowner shall upon demand pay to the Mortgagee (or as it may
direct) the amount of all investigation expenses, mortgage taxes, recording
charges, filing fees, revenue and documentary stamps and any other charges
incurred by the Mortgagee in connection with the preparation, completion or
registration of this Mortgage, including without limitation the reasonable
expenses and fees of counsel to the Mortgagee. Likewise any and all expenses
incurred at any time by the Mortgagee with respect to the mortgaged property or
the protection or the enforcement of its rights hereunder or thereunder,
including without limitation the expenses and fees of counsel to the Mortgagee,
shall be paid by the Shipowner or, if paid by the Mortgagee, shall be paid by
the Shipowner promptly upon demand together with interest thereon from the date
of demand until such repayment at the Default Rate in effect from time to time.
The payment of all expenses and other amounts under this Section 4.20 shall be
secured by this Mortgage and no amounts payable by the Shipowner to the
Mortgagee under this Section 4.20 shall in any circumstances be repayable to the
Shipowner.
Section 4.21. Indebtedness.
------------
The Shipowner will not directly or indirectly, create, incur, issue,
assume, guarantee or otherwise become directly or indirectly liable with respect
to, or become responsible for the payment of any indebtedness, except for the
obligations under the Shipowner's Loan Agreements.
<PAGE>
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Section 4.22. Business of Shipowner.
---------------------
The Shipowner will not engage in any business other than the ownership
and operation of its Vessel as described herein and in accordance with the
Shipowner's charter and by-laws.
Section 4.23. No Bankruptcy Petition.
----------------------
The Shipowner will not (i) commence any case, proceeding or other
action under any existing or future bankruptcy, insolvency or similar law
seeking to have an order for relief entered with respect to it, or seeking
reorganization, arrangement, adjustment, winding up, liquidation, dissolution,
composition or other relief with respect to its debt, (ii) seek appointment of a
receiver, trustee, custodian or other similar official for it or any part of its
assets, (iii) make a general assignment for the benefit of creditors or (iv)
take any action in furtherance of, or consenting or acquiescing in, any of the
foregoing.
Section 4.24. Consolidation, Merger and Sale of Assets.
----------------------------------------
The Shipowner shall not consolidate with, or merge with or into, any
other Person or convey or transfer to any Person all or any part of the Vessel.
Section 4.25. Loans, Advances and Other Liabilities.
-------------------------------------
The Shipowner will not make any capital contributions, advances or
loans to, or investments or purchases of capital stock in, any Person, except
for Allowable Investments and Permitted Investments, as defined in the
Collateral Trust Agreement.
Section 4.26. Restricted Payment.
------------------
The Shipowner will not make any Restricted Payment except as set forth
in the Loan Agreements.
Section 4.27. Reports by the Shipowner. The Shipowner covenants:
------------------------
(a) The Shipowner covenants to file with the Mortgagee, within 15 days
after the Shipowner is required to file the same with the Commission, copies of
the annual reports and of the information, documents, and other reports (or
copies of such portions of any of the foregoing as the Commission may from time
to time by rules and regulations prescribe) which the Shipowner may be required
to file with the Commission pursuant to Section 13 or 15(d) of the Exchange Act,
or, if the Shipowner is not required to file information, documents, or reports
pursuant to either of such Sections of the Exchange Act, then to file with the
Mortgagee and the Commission, in accordance with rules and regulations
prescribed from time to time by the Commission, such of the supplementary and
periodic information, documents, and reports which may be required pursuant to
Section 13 of the Exchange Act, or, in respect of a security listed
<PAGE>
-20-
and registered on a national securities exchange, as may be prescribed from time
to time in such rules and regulations;
(b) The Shipowner covenants to file with the Mortgagee and the
Commission, in accordance with rules and regulations prescribed from time to
time by the Commission, such additional information, documents, and reports with
respect to compliance by the Shipowner with the conditions and covenants
provided for in this Indenture as may be required from time to time by such
rules and regulations;
(c) The Shipowner covenants to transmit to the Mortgagee in the manner
and to the extent required by Section 313(c) of the Trust Indenture Act, within
30 days after the filing thereof with the Mortgagee, such summaries of any
information, documents and reports required to be filed by the Shipowner
pursuant to subsections (a) and (b) of this Section 4.27 as may be required by
rules and regulations prescribed form time to time by the Commission; and
(d) The Shipowner covenants to furnish to the Mortgagee, on or before
each August 1, commencing in 1995, a brief certificate from the principal
executive officer, principal financial officer or principal accounting officer
of the Shipowner as to his or her knowledge of the Shipowner's compliance with
all conditions and covenants under this Mortgage. For purposes of this
subsection (d), such compliance shall be determined without regard to any period
of grace or requirement of notice provided under this Mortgage.
ARTICLE V
EVENTS OF DEFAULT; REMEDIES
Section 5.01 Events of Default.
-----------------
The following shall constitute Events of Default hereunder:
(a) An Event of Default shall occur under either the Serial Loan Agreement,
the Term Loan Agreement or any Other Loan Agreement;
(b) Default in the payment of any sums payable under the Mortgage to the
Mortgagee within two (2) Business Days after such amount was due;
(c) Default by the Shipowner in the due observance or performance of any
covenant set forth in Sections 4.02, 4.03, 4.04, 4.06, 4.10, 4.16, 4.24
and 4.26;
(d) Default in any material respect in the performance, or breach in any
material respect, of any covenant of the Shipowner (other than Sections
4.02, 4.03, 4.04, 4.06, 4.10, 4.16, 4.24 and 4.26) or if any
representation or warranty of the Shipowner made in the Mortgage or in
any certificate or other writing delivered pursuant thereto or in
connection therewith with respect to or affecting the Vessel
<PAGE>
-21-
shall prove to be inaccurate in any material respect as of the time
when the same shall have been made, and, if such breach or default or
inaccuracy is curable, continuance of such default or breach or
inaccuracy for a period of 30 days after the earlier to occur of (a)
actual knowledge of such default, breach or inaccuracy by the Shipowner
or (b) the date on which there has been given by registered or
certified mail to the Shipowner by the Mortgagee a written notice
thereof;
(e) The entry of a decree or order for relief by a court having
jurisdiction over the Shipowner and its assets in any involuntary case
under any applicable federal or state bankruptcy, insolvency, or other
similar law of any relevant jurisdiction now or hereafter in effect, or
appointing a receiver, liquidator, assignee, custodian, trustee, or
sequestrator (or other similar official) for the Shipowner or for any
substantial part of its property, or ordering the winding up or
liquidation of its respective affairs, and the continuance of any such
decree or order unstayed and in effect for a period of 60 consecutive
days;
(f) The commencement by the Shipowner of a voluntary case under any
applicable federal or state bankruptcy, insolvency, or other similar
law of any relevant jurisdiction now or hereafter in effect in any
jurisdiction, or the consent by the Shipowner to the appointment of or
taking possession by a receiver, liquidator, assignee, custodian,
trustee or sequestrator (or other similar official) of the Shipowner or
any substantial part of its property, or the making by the Shipowner of
any general assignment for the benefit of creditors, or the failure by
the Shipowner generally to pay its debts as they become due, or the
taking of action by the Shipowner in furtherance of any such action;
(g) The Vessel is deemed a Total Loss and the insurance proceeds thereof
have not been received by the Mortgagee within 60 days after the date
on which the Vessel was deemed a Total Loss; provided, however, if the
Vessel is under charter to the Charterer pursuant to the Charter, such
an event shall be an Event of Default under this Mortgage if the
Mortgagee has not received the amount payable by the Charterer in the
event of a Total Loss pursuant to the Charter within 5 business days of
the date on which such amounts are due pursuant to the Charter;
(h) The Shipowner shall abandon the Vessel;
(i) A default (as described in Clause 18 of the Initial Charter) shall have
occurred under the Initial Charter; or
(j) This Mortgage or any material provision hereof shall be deemed
invalidated in whole or in part by any present or future law of the
Republic of Liberia or decision of any competent court.
Section 5.02 Remedies.
--------
<PAGE>
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In the event any one or more Events of Default shall have occurred and
be continuing, then, in each and every such case the Mortgagee, shall have the
right to:
(a) declare immediately due and payable all of the Obligations (in which
case all of the same shall be immediately due), and bring suit at law,
in equity or in admiralty, as it may be advised, to recover judgment
for the Obligations and collect the same out of any and all property of
the Shipowner whether covered by the Mortgage or otherwise;
(b) exercise all of the rights and remedies in foreclosure and otherwise
given to mortgagees by the provisions of applicable law;
(c) take and enter into possession of the Vessel, at any time, wherever the
same may be, without court decision or other legal process and without
being responsible for loss or damage and the Mortgagee may, without
being responsible for loss or damage, hold, lay-up, lease, charter,
operate or otherwise use such Vessel for such time and upon such terms
as it may deem to be for its best advantage, and demand, collect and
retain all hire, freights, earnings, issues, revenues, income, profits,
return premiums, salvage awards or recoveries, recoveries in general
average, and all other sums due or to become due in respect of such
Vessel or in respect of any insurance thereon from any person
whomsoever, accounting only for the net profits, if any, arising from
such use of the Vessel and charging upon all receipts from use of the
Vessel or from the sale thereof by court proceedings or by private sale
all costs, expenses, charges, damages or losses by reason of such use,
and if at any time the Mortgagee avails itself of the right given to it
to take the Vessel: (i) the Mortgagee shall have the right to dock the
Vessel for a reasonable time at any dock, pier or other premises of the
Shipowner without charge, or to dock her at any other place at the cost
and expense of the Shipowner, and (ii) the Mortgagee shall have the
right to require the Shipowner to deliver, and the Shipowner shall on
demand, at its own cost and expense, deliver to the Mortgagee the
Vessel as demanded; and the Shipowner shall irrevocably instruct the
master of the Vessel so long as the Mortgage is outstanding to deliver
the Vessel to the Mortgagee as demanded;
(d) sell the Vessel or any share therein with or without the benefit of any
charter party or other engagement by public auction or private contract
without legal process at any place in the world and upon such terms as
the Mortgagee in its absolute discretion may determine with power to
postpone any such sale and without being answerable for any loss
occasioned by such sale or resulting from the postponement thereof and
at any such public auction the Mortgagee may become the purchaser and
shall have the right to set off the purchase price against the
Obligations;
<PAGE>
-23-
(e) to require that all policies, contracts and other records relating to
the Insurance (including details of and correspondence concerning
outstanding claims) be forthwith delivered to such brokers as the
Mortgagee may nominate;
(f) to collect, recover, compromise and give a good discharge for all
claims then outstanding or thereafter arising under any of the
Insurance and to take over or institute (if necessary using the name of
the Shipowner) all such proceedings in connection therewith as the
Mortgagee in its absolute discretion thinks fit and to permit the
brokers through whom collection or recovery is effected to charge and
retain the usual brokerage therefor;
(g) to discharge, compound, release or compromise claims in respect of the
Vessel which have given or may give rise to any charge or lien on the
Vessel or which are or may be enforceable by proceedings against the
Vessel under the laws of all countries to whose jurisdiction the Vessel
may from time to time become subject;
(h) pending sale of the Vessel to remove the Vessel or to require the
Vessel to be removed from any place where she may be or be lying to any
port, harbor, dock or other location for the purposes of the Vessel
docking, laying up, repair, management, employment, maintenance, or
sale or to preserve or maintain the Mortgagee's security in the Vessel
in such manner as the Mortgagee may in its complete discretion deem
necessary;
(i) to discharge, store, load, tranship and otherwise handle any cargo for
the time being on board the Vessel without liability to any third party
with regard thereto;
(j) pending sale of the Vessel to manage, insure, maintain and repair the
Vessel and to hold, lease, charter, operate, employ, lay up or
otherwise use the Vessel in such manner and for such period as the
Mortgagee in its absolute discretion deems expedient accounting only
for the net profits (if any) of such use and for the purposes aforesaid
the Mortgagee shall be entitled to do all acts and things incidental or
conducive thereto and in particular to enter into such arrangements
respecting the Vessel, her insurance, management, maintenance, repair,
classification and employment and generally to do and cause to be done
all such acts and things whatsoever and to make all such arrangements
whatsoever in respect of the Vessel or the working of the same in all
respects as if the Mortgagee were the absolute and sole owner of the
Vessel and without being responsible for any loss and damage thereby
incurred; and
(k) to recover from the Shipowner on demand all expenses, payments,
disbursements, costs, losses and damages as may be incurred by the
Mortgagee whether the Mortgagee be in possession of the Vessel or not
or in exercise by the Mortgagee of any of the powers herein contained
together with interest thereon at the Default
<PAGE>
-24-
Rate and such expenses, payments, disbursements, costs, losses and
damages together with the said interest thereon shall, until paid by
the Shipowner to the Mortgagee, be secured on the Vessel by this
Mortgage.
Section 5.03 Sale of the Vessel.
------------------
(a) A sale of the Vessel made in pursuance of this Mortgage whether
under the power of sale hereby granted or any judicial proceedings shall operate
to divest all right, title and interest of any nature whatsoever of the
Shipowner herein and thereto and shall bar the Shipowner, its successors and
assigns and all persons claiming by, through or under them provided such sale is
by auction and that nothing herein shall be deemed to derogate from the
Shipowner's duty to the Mortgagee. Upon any such sale, the purchaser shall not
be bound to see or inquire whether the Mortgagee's power of sale has risen in
the manner provided by the Mortgage and the sale shall be within the power of
the Mortgagee and the receipt of the Mortgagee for the purchase money shall
effectively discharge the purchaser who shall not be concerned with the manner
of application of the proceeds of sale or be in any way answerable or otherwise
liable therefor. The Mortgagee may bid for and purchase the Vessel and upon
compliance with the terms of sale may hold, retain and dispose of the Vessel
without further accountability therefor.
(b) The Shipowner hereby irrevocably appoints the Mortgagee and its
assigns as its true and lawful attorney with full power to act alone and with
full power of substitution until the due discharge of this Mortgage in
accordance with the laws of the Republic of Liberia to make all necessary
transfers of the Vessel sold pursuant to Section 5.02, including, without
limitation, executing and delivering all instruments of assignment and transfer
or quitclaim as the Mortgagee may require and the Shipowner hereby does ratify
and confirm all that its said attorneys shall lawfully do by virtue hereof.
Nevertheless, the Shipowner shall if so requested by the Mortgagee ratify and
confirm any such sale by executing and delivering to the purchaser or purchasers
of the Vessel such proper bills of sale, conveyances, instruments of assignment
and transfer or quitclaim and releases as may be designated in such request.
Section 5.04 Mortgagee as Attorney-in Fact.
-----------------------------
The Mortgagee is hereby appointed attorney-in-fact of the Shipowner
and upon the Indebtedness becoming due and payable in the name of the Shipowner
to demand, collect, receive, compromise and sue for so far as may be permitted
by law all freights, hire, earnings, issues, revenues, income and profits of the
Vessel and all amounts due from underwriters under any insurance thereon as
payment of losses or as return premiums or otherwise salvage awards and
recoveries in general average or otherwise and all other sums due or to become
due upon the Indebtedness becoming due and payable in respect of the Vessel or
in respect of any insurance thereon from any person whomsoever and to make and
give and execute in the name of the Shipowner acquittances, receipts, releases
or other discharges for the same whether under seal or otherwise and to endorse
and accept in the name of the Shipowner all checks, notes, drafts, warrants,
agreements and all other instruments in writing with respect to the foregoing.
<PAGE>
-25-
Section 5.05 Appointment of Receiver.
-----------------------
Whenever any right to enter and take possession of the Vessel accrues
to the Mortgagee, the Mortgagee may require the Shipowner to deliver and the
Shipowner shall on demand at its own cost and expense deliver to the Mortgagee
the Vessel as demanded. If any legal proceedings shall be taken to enforce any
right under this Mortgage, the Mortgagee shall be entitled as a matter of right
to the appointment of a receiver of the Vessel and the freights, hire, earnings,
issues, revenues, income and profits due or to become due and arising from the
operation thereof.
Section 5.06 Arrest or Detention of Vessel.
-----------------------------
In the event that the Vessel shall be arrested or detained by any
marshal or other officer of any court of law, equity or admiralty jurisdiction
in any country or nation of the world or by any government or other authority
and shall not be released from arrest or detention within fifteen (15) days from
the date of arrest or detention, the Shipowner hereby authorizes and empowers
the Mortgagee, its successors or assigns, to apply for and receive possession of
or to take possession of the Vessel with all the rights and powers that the
Shipowner or its successors or assigns may have, possess and exercise in any
such event, and this power of attorney shall be irrevocable and may be exercised
not only by the Mortgagee but also by an assignee or appointee of the Mortgagee
with full power of substitution to the same extent and effect as if such
assignee or appointee has been named by express designation.
Section 5.07 Defense of Suits.
----------------
The Shipowner also authorizes and empowers the Mortgagee, and its
successors, assigns and appointees, to appear in the name of the Shipowner, and
its successors and assigns, in any court of any country or nation of the world
where a suit is pending against the Vessel because of or on account of any
alleged lien against the Vessel from which the Vessel has not been released and
to take such proceedings and do such things as to them or any of them may seem
proper toward the defense of such suit and the discharge of such lien, and all
monies expended by them or any of them for the purpose of such defense and/or
discharge shall be a debt due from the Shipowner, and its successors and
assigns, to the Mortgagee, and its successors and assigns, and payment thereof
together with interest thereon at the Default Rate (to the extent permitted by
law) from time to time in effect shall be secured by the lien of this Mortgage
in like manner and extent as if the amount and description thereof were written
herein.
Section 5.08 Cumulative Rights, Powers and Remedies.
--------------------------------------
(a) Each and every right, power and remedy herein given to the
Mortgagee shall be cumulative and shall be in addition to every other right,
power and remedy herein given or now or hereafter existing at law, in equity,
admiralty or by statute and each and every power and remedy whether herein given
or otherwise existing may be exercised from time to time and as often and in
such order as may be deemed expedient by the Mortgagee, and the exercise or
<PAGE>
-26-
the beginning of the exercise of any right, power or remedy shall not be
construed to be a waiver of the right to exercise at the same time or thereafter
any other power or remedy.
(b) No delay or omission of the Mortgagee to exercise any right or
power vested in it under the Security Documents or any of them shall impair such
right or power or be construed as a waiver of or as acquiescence in any default
by the Shipowner, nor shall the acceptance by the Mortgagee of any security or
any payment on account of the Indebtedness, although made after default, be
deemed a waiver of any right arising out of any future default or of any past
default, and in the event of the Mortgagee at any time agreeing to waive any
such right or power such waiver shall be revocable by the Mortgagee at any time
and the right or power shall henceforth be again exercisable as though there had
been no such waiver.
(c) In the event the Mortgagee shall have proceeded to enforce any
right or pursue any power under this Mortgage by foreclosure, entry or otherwise
and such proceedings shall have been discontinued or abandoned for any reason,
or shall have been determined adversely to the Mortgagee, then and in every such
case the Shipowner and the Mortgagee shall be restored to their former positions
and rights hereunder with respect to the property subject or intended to be
subject to this Mortgage and all rights, remedies and powers of the Mortgagee
shall continue as if no such proceedings had been taken.
Section 5.09 Application of Proceeds.
-----------------------
The proceeds of any sale made either under the power of sale hereby
granted to the Mortgagee or under a judgment or decree in any judicial
proceeding for the foreclosure of this Mortgage or for the enforcement of any
remedy granted to the Mortgagee hereunder, or any net earnings arising from the
management, charter or other use of the Vessel by the Mortgagee under any of the
powers herein reserved, any amounts on deposit to the credit of the Shipowner or
the Mortgagee from earnings of the Vessel as provided herein and any other
moneys received by the Mortgagee pursuant to the terms of this Mortgage or in
any proceeding hereunder other than under Section 4.03(l)(ii), the application
of which is not elsewhere herein specifically provided for, shall be applied as
follows:
First: To the payment of all reasonable expenses and charges,
including the expenses of any taking, attorney's fees, court costs and
any other expenses or advances made or incurred by the Mortgagee in
the protection of its right or the pursuance of its remedies under the
Loan Agreements or this Mortgage;
Second: To the payment of all amounts due to the Mortgagee in
respect of taxes, indemnities, fees, expenses, premiums, purchase of liens or
otherwise under the provisions of this Mortgage;
Third: To the payment of interest on the Term Loan and Serial
Loan, pro rata, in accordance with their respective outstanding
balances;
<PAGE>
-27-
Fourth: To the payment of principal on the Term Loan and Serial
Loan, pro rata, in accordance with their respective outstanding
balance;
Fifth: To the payment of any amount due and owing under the Other
Loans, pro rata, in the event of an acceleration of the principal amount of such
Other Loans; and
Sixth: To the payment of any surplus thereafter remaining to the
Shipowner or whomsoever may be lawfully entitled thereto.
The Shipowner has and shall have no personal liability or obligation
with respect to the amounts specified in paragraphs "FIRST" through "FIFTH"
above, which are payable solely from the income and proceeds received by the
Mortgagee from the Mortgagee's right, title and interest in and to the Vessel.
Section 5.10 Mortgagee's Right to Remedy Defaults.
------------------------------------
If the Shipowner shall default in the performance or observance of any
of the covenants in this Mortgage on its part to be performed or observed, the
Mortgagee may in its discretion do any act or make any expenditures necessary to
remedy such default, and the Shipowner shall promptly reimburse the Mortgagee,
with interest at the Default Rate from time to time in effect, for any and all
expenditures so made or incurred and until the Shipowner has so reimbursed the
Mortgagee for such expenditures, the amount thereof shall be a debt due from the
Shipowner to the Mortgagee and payment thereof shall be secured by the lien of
this Mortgage in like manner and extent as if the amount and description thereof
were written herein, but the Mortgagee, although privileged to do so, shall be
under no obligation to the Shipowner to make any such expenditures and the
making thereof shall not relieve the Shipowner of any default in that or any
other respect. The Shipowner also shall reimburse the Mortgagee promptly with
interest at the rates referred to above for any and all advances and expenses
made or incurred by the Mortgagee at any time in taking the Vessel or otherwise
protecting its rights hereunder and for any and all damages sustained by the
Mortgagee from or by reason of any default or defaults of the Shipowner.
Section 5.11 Delegation of Powers.
--------------------
The Mortgagee may delegate to any person or persons all or any of the
trusts, powers or discretions vested in it pursuant to this Mortgage and any
such delegations may be made upon such terms and conditions and subject to such
regulations (including power to sub-delegate) as the Mortgagee may in its
absolute discretion deem appropriate.
Section 5.12 Legal Actions.
-------------
In addition to the other provisions hereof for enforcement of the
rights of the Mortgagee under this Mortgage, the Mortgagee may, at its option,
in the event of any default
<PAGE>
-28-
by the Shipowner, bring an action, suit or other proceeding in rem against the
-- ---
Vessel to foreclose this Mortgage and sell the Vessel in any court in the
Republic of Liberia or any other country in which the Vessel may be found; or an
action, suit or other proceeding in personam against the Shipowner or any other
-- --------
person obligated under the Loan Agreements or any of the Security Documents to
recover payment of any amount owing by the Shipowner or such other person and/or
to foreclose this Mortgage and sell the Vessel in any country in which the
Vessel or the Shipowner or any person so obligated may be found.
Section 5.13 Mortgage Subject to Rights of Initial Charterer under
-----------------------------------------------------
the Initial Charter.
- -------------------
So long as the Initial Charter is in effect, the rights of the
Mortgagee set forth in this Article V are and shall be subject to the rights of
the Initial Charterer under the Initial Charter. So long as the Initial
Charterer shall not be in default under and pursuant to the terms of the Initial
Charter, the Initial Charterer shall be entitled to quiet enjoyment of the
Vessel.
ARTICLE VI
MISCELLANEOUS PROVISIONS
Section 6.01 Performance by Initial Charterer or Charterer Under an
------------------------------------------------------
Acceptable Replacement Charter.
- ------------------------------
(a) It is hereby agreed by the parties hereto that, for the duration
of the Initial Charter, when the Initial Charterer, or any charterer under an
Acceptable Replacement Charter, performs and discharges its obligations under
the Initial Charter respecting the Vessel, such performance of the said
obligations by the Initial Charterer or by such charterer shall be deemed to be
proper and due performance of the same obligations of the Shipowner under this
Mortgage, the Assignment of Earnings and Insurances and other Security
Documents, notwithstanding that the extent or manner of performance of
Shipowner's obligations may differ from that of the Initial Charterer under the
Initial Charter or of the charterer under an Acceptable Replacement Charter.
(b) So long as the Initial Charter is in effect, to the extent the
Shipowner's approval under the Initial Charter is not to be unreasonably
withheld, the approval by the Mortgagee under the corresponding provisions of
this Mortgage also shall not be unreasonably withheld.
(c) So long as the Initial Charter is in effect, where any obligation
with respect to the Vessel is undertaken by the Shipowner under this Mortgage or
any other of the Security Documents but such obligation is not undertaken by the
Initial Charterer under the Initial Charter, then the Shipowner shall not be
treated as in default under this Mortgage if such obligation cannot be performed
by virtue of the Initial Charter.
<PAGE>
-29-
(d) The insurance coverage required under an Acceptable Replacement
Charter or maintained by the Shipowner or charterer in connection with any other
charter entered into after the termination of the related Initial Charter must
be sufficient to maintain the credit rating of the Term Mortgage Notes by the
Rating Agencies at least at the rating applicable to the Term Mortgage Notes
immediately prior to the effectiveness of such Acceptable Replacement Charter or
other charter.
Section 6.02 Discharge of Mortgage.
---------------------
The Mortgagee agrees that upon payment of the Indebtedness it shall at
the expense of the Shipowner discharge this Mortgage and transfer or release to
the Shipowner all insurance policies and certificates of entry relating to the
Vessel freed and discharged from the provisions herein contained.
Section 6.03 Indemnity.
---------
The Shipowner assumes liability for and agrees to indemnify the
Mortgagee and the Holders and their respective directors, officers, employees
and agents from and against any and all liabilities, losses, damages, penalties,
costs and expenses, including legal expenses, of whatsoever kind or nature,
imposed on or asserted against any of the Mortgagee and the Holders and such
directors, officers, employees and agents in any way relating to or arising out
of the Vessel or the use thereof at any time by any party (other than by the
Mortgagee after such time as the Mortgagee shall have taken possession of the
Vessel pursuant to Section 5.02), including, without limitation, (i) latent and
other defects whether or not discovered or discoverable by the Shipowner or any
other person, (ii) claims for patent, trademark or copyright infringement, (iii)
tort or damage claims of any kind, (iv) claims or penalties arising from any
violation of the laws of any country or political subdivision thereof and (v)
claims for environmental liability or in any way relating to applicable
environmental laws.
Section 6.04 Governing Law.
-------------
THIS MORTGAGE SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
REPUBLIC OF LIBERIA AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES
HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS, WITHOUT GIVING
EFFECT TO PRINCIPLES OF CONFLICTS OF LAW.
Section 6.05 Severability.
------------
If any provision of this Mortgage is held to be in conflict with any
applicable statute or rule of law or is otherwise held to be unenforceable for
any reason whatsoever, such circumstances shall not have the effect of rendering
the provision in question inoperative or unenforceable in any other case or
circumstance, or of rendering any other provision or provisions herein contained
invalid, inoperative, or unenforceable to any extent whatsoever.
<PAGE>
-30-
The invalidity of any one or more phrases, sentences, clauses or
Sections of this Mortgage, shall not affect the remaining portions of this
Mortgage, or any part thereof.
Section 6.06 Notices.
-------
All demands, notices and communications hereunder shall be in writing,
personally delivered or mailed by certified mail-return receipt requested, and
shall be deemed to have been duly given upon receipt (a) in the case of the
Mortgagee, at the following address: California Petroleum Transport Corporation,
c/o JH Management Corporation, Room 6/9, One International Place, Boston,
Massachusetts 02110-2624, (b) in the case of the Shipowner, at the following
address: Mareva House, 4 George Street, Nassau, Bahamas, or at other such
address as shall be designated by such party in a written notice to the other
parties.
Section 6.07 Headings.
--------
The captions or headings in this Mortgage are for convenience only and
in no way define, limit or describe the scope or intent of any provisions or
sections of this Mortgage.
Section 6.08 General Interpretive Principles.
-------------------------------
For purposes of this Mortgage except as otherwise expressly provided
or unless the context otherwise requires:
(a) the defined terms in this Mortgage shall include the plural as
well as the singular, and the use of any gender herein shall be deemed to
include any other gender;
(b) accounting terms not otherwise defined herein have the meanings
assigned to them in accordance with generally accepted accounting principles as
in effect on the date hereof;
(c) references herein to "Articles", "Sections", "Subsections",
"paragraphs", and other subdivisions without reference to a document are to
designated Articles, Sections, Subsections, paragraphs and other subdivisions of
this Mortgage;
(d) a reference to a Subsection without further reference to a Section
is a reference to such Subsection as contained in the same Section in which the
reference appears, and this rule shall also apply to paragraphs and other
subdivisions;
(e) the words "herein", "hereof", "hereunder" and other words of
similar import refer to this Mortgage as a whole and not to any particular
provision; and
(f) the term "include" or "including" shall mean without limitation by
reason of enumeration.
<PAGE>
-31-
Section 6.09 Successors and Assigns.
----------------------
This Mortgage shall inure to the benefit of and be binding upon the
Shipowner and the Mortgagee and their respective successors and assigns.
Section 6.10 Consent to Jurisdiction.
-----------------------
Any legal suit, action or proceeding against the Shipowner arising out
of or relating to this Mortgage, the Loan Agreements or any other Security
Document, or any transaction contemplated hereby or thereby, may be instituted
in any federal or state court in The City of New York, State of New York and the
Shipowner hereby waives any objection which it may now or hereafter have to the
laying of venue of any such suit, action or proceeding, and the Shipowner hereby
irrevocably submits to the jurisdiction of any such court in any such suit,
action or proceeding. The Shipowner hereby irrevocably appoints and designates
CT Corporation System, having an address at 1633 Broadway, New York, New York,
its true and lawful attorney-in-fact and duly authorized agent for the limited
purpose of accepting service of legal process and the Shipowner agrees that
service of process upon such party shall constitute personal service of such
process on the Shipowner. The Shipowner shall maintain the designation and
appointment of such authorized agent until all amounts payable under this
Mortgage, the Loan Agreements and the other Security Documents shall have been
paid in full. If such agent shall cease to so act, the Shipowner shall
immediately designate and appoint another such agent satisfactory to the
Mortgagee and shall promptly deliver to the Mortgagee evidence in writing of
such other agent's acceptance of such appointment.
Section 6.11 Payment.
-------
All monies payable by the Shipowner to the Mortgagee shall be paid in
Dollars without deduction for or on account of any present or future taxes or
imposts whatsoever levied or assessed by or within any state or nation or any
political subdivision or taxing authority thereof or therein and the Shipowner
shall indemnify the Mortgagee against all such taxes or imposts. The Shipowner
shall, subject to the prior written approval of the Mortgagee (such approval not
to be unreasonably withheld), be entitled to take action in the name of the
Mortgagee at the Shipowner's expense against any taxing authority in respect of
any withholding or other taxes for which the Shipowner have indemnified the
Mortgagee, and the Mortgagee agrees to reasonably cooperate with the Shipowner
in taking such action. If as a result of any such action any moneys are
received that are attributable to such indemnified taxes (including any interest
thereon paid by such taxing authority) the same shall be recovered by the
Shipowner.
Section 6.12 Recorded Amount.
---------------
For the purposes of the recording of this First Preferred Ship
Mortgage as required by Chapter 3 of Title 22 (Maritime Law) of the Liberian
Code of Laws of 1956, as amended, the total amount of this Mortgage is Two
Hundred and Eighty-Five Million Four
<PAGE>
-32-
Hundred Thousand United States Dollars (US$285,400,000), and interest and the
performance of the Mortgage covenants; the maturity date is the ___ day of
________, 2015, and the discharge amount is the same as the total amount. It is
not intended that this Mortgage shall include property other than the Vessel,
and it shall not include property other than the Vessel as the term "vessel" is
used in Subsection (2) of Section 106 of the Title 22 of the Liberian Code of
Laws of 1956, as amended. Notwithstanding the foregoing, for property other than
the Vessel, if any should be determined to be covered by this Mortgage, the
discharge amount is zero point zero one percent (0.01 %) of the total amount.
Section 6.13 No waiver of Preferred Status.
-----------------------------
No provision of this Mortgage shall be deemed to be a stipulation that
the Mortgagee waives the preferred status of this Mortgage given by Title 22
(Maritime Law) of the Liberian Code of Laws of 1956, as amended. Any provision
of this Mortgage which would otherwise constitute such a stipulation, to such
extent, shall have no force or effect.
<PAGE>
-33-
IN WITNESS WHEREOF the Shipowner has signed this Mortgage on the day
and year first before written.
CALPETRO TANKERS (BAHAMAS III)
LIMITED
By:___________________________
Name:_________________________
Title:________________________
<PAGE>
ACKNOWLEDGEMENT
---------------
STATE OF NEW YORK )
:ss. :
COUNTY OF NEW YORK )
On this day of _________ __ 1995_, before me personally came
________________________ to me known, and known to me to be the person who
executed the foregoing instrument, who being by me duly sworn, did depose and
say that he resides at ____________________________________________ that he is
the attorney-in-fact for CalPetro Tankers (Bahamas III) Limited the corporation
described in, and which executed the foregoing instrument; that it was so
affixed by order of the Board of Directors of said corporation and that he
signed his name thereto by like order.
-------------------------------
<PAGE>
EXHIBIT A
BROKER'S LETTER OF UNDERTAKING
(date)
- -------------------------------
Re: CalPetro Tankers (Bahamas III) Limited
Owner of m.t. William E. Crain (the "Vessel")
---------------------------------------------
We confirm that we have effected insurances for the account of the
above Owner as set out in Appendix "A" attached hereto.
Pursuant to instructions received from CalPetro Tankers (Bahamas III)
Limited (the "Owner"), and in consideration of your approving our appointment as
Brokers in connection with the insurances covered by this letter, we hereby
undertake:
1. to hold the Insurance Slips or Contracts, the Policies when
issued, and any renewals of such Policies or new Policies or any
Policies substituted (with your consent) therefor and the benefit
of the insurance thereunder to your order in accordance with the
terms of the Notice of Assignment and Loss Payable Clause set out
in Appendix "B" attached hereto; and
2. to have endorsed on each and every Policy as and when the same is
issued a copy of the Notice of Assignment and Loss Payable Clause
in the form of Appendix "B" attached hereto dated and signed by
the Shipowner and acknowledged by Underwriters in accordance with
market practice; and
3. to advise you immediately of any material changes which may be
made to the terms of the insurances or if we cease to be Brokers
for purposes of said insurances; and
4. to advise you, not later than one month before expiry of said
insurances, in the event of our not having received notice of
renewal instructions from the Shipowner and/or its agents, and in
the event of our receiving instructions to renew said insurances
to advise you promptly of the details thereof.
Our above undertakings are given subject to our lien on the Policies
for premiums for the Vessel and subject to our right of cancellation on default
in payment of such premiums. We undertake to advise you immediately if any
premiums are not paid to us by the applicable due date and not to exercise such
rights of cancellation without giving you (i) fourteen (14) days' prior notice
in writing, either by letter to the above address or by telex or cable to
_________________________, respectively, and (ii) a reasonable opportunity of
paying any premiums outstanding
<PAGE>
-2-
except it is understood that in the case of War Risks the terms of the Automatic
Termination of Cover Clause contained in the War Risks Policies shall override
any undertakings given by us as Brokers. We further undertake and agree that in
the event of a total loss of the Vessel, or an arranged, compromised or
constructive total loss, our lien on the Policies and the proceeds thereof shall
be limited to any other premiums or other amounts due in respect of Vessel or
interest insured under the Policies.
Notwithstanding the terms of the said Loss Payable clause and the said
Notice of Assignment, unless and until we receive notice from you to the
contrary, we shall be empowered to arrange for a collision and/or salvage
guaranty to be given in the event of bail being required in order to prevent the
arrest of the Vessel or to secure the release of the Vessel from arrest
following a casualty. We undertake to advise you immediately in the event of our
having arranged for a collision and/or salvage guaranty. Where a guaranty has
been given as aforesaid and the guarantor has paid an amount under the guaranty
in respect of such claim, there shall be payable directly to the guarantor out
of the proceeds of the said Policies an amount equal to the amount so paid.
Finally, it is understood that all claims shall be collected through
us, as Brokers, and that in collecting such claims we are acting on your behalf
as assignee of the insurances covered by this letter.
Yours faithfully,
[insert name of Broker]
By:___________________________
Director
<PAGE>
SCHEDULE 1
DEFINED TERMS USED IN THE MORTGAGE
"Acceptable Replacement Charter" means any replacement charter which
satisfies each of the following requirements: (i) the charter is a bareboat
charter and requires that the charterer thereunder "gross up" charterhire
payments to indemnify and hold the Holders of the Securities harmless from any
withholding tax imposed on the charterhire payments or on the payments on the
Securities; (ii) the charterhire payments payable during the non-cancelable term
of such replacement charter, after giving effect to (1) any "gross up" of such
amounts as a result of any withholding tax on such charterhire payments, (2) the
receipt of the Termination Payment and (3) all fees and expenses incurred in
connection with the rechartering of the Vessel, provide sufficient funds for the
payment in full when due of (A) the Allocated Principal Amount of the Term
Mortgage Notes for the related Vessel and interest thereon in accordance with
the revised schedule of sinking fund and principal payments, that is applicable
upon termination of the related Initial Charter, (B) the amount of Recurring
Fees and Taxes for such Vessel, (C) the amount of Management Fees and Technical
Advisor's Fees for such Vessel, (D) the amount of fees and expenses of the
Indenture Trustee, the Collateral Trustee and the Designated Representative
allocable to such Vessel and (E) an amount at least equal to 30% of the
estimated amounts, on a per annum basis, referred to in clauses (B), (C) and (D)
above for miscellaneous or unexpected expenses; and (iii) the Rating Agencies
shall have confirmed in writing to the Trustee that the terms and conditions of
such proposed charter will not result in the withdrawal or reduction of the then
current ratings of the Term Mortgage Notes.
"Allowable Investments" means for the Shipowner, its investment in the
Vessel and any Restricted Payment permitted to be made by the Shipowner and
certain obligations incurred in the ordinary course of the performance of the
Management Agreement.
"Assignment of Charter" means the assignment between the Shipowner and
the Mortgagee, as amended from time to time in accordance with the terms
thereof, together with the documents contemplated thereby, pursuant to which the
Shipowner assigns to the Mortgagee all of its right, title and interest in, to
and under the Initial Charter.
"Assignment of Earnings and Insurances" means the assignment between
the Shipowner and the Mortgagee, as amended from time to time in accordance with
the terms thereof, pursuant to which the Shipowner assigns to the Mortgagee all
of its right, title and interest in, to and under the freights and hires (as
well as any charters entered into after the Closing Date) with respect to the
Vessel.
"Assignment of Guarantee" means the assignment between the Shipowner
and the Mortgagee, as amended from time to time in accordance with the terms
thereof, pursuant to which the Shipowner assigns to the Mortgagee all of its
right, title and interest in, to and under the Chevron Guarantee.
"Business Day" means any day other than a Saturday, a Sunday or a day
on which banking institutions in New York, New York, or in the city and state
where the Trustee's
<PAGE>
-2-
principal offices are located, are authorized or are obligated by law, executive
order or governmental decree to be closed.
"Chevron" means Chevron Corporation, a Delaware corporation.
"Chevron Guarantee" means the guarantee of the obligations of the
Initial Charterer under the Initial Charter given by Chevron.
"Classification Society" means Det norske Veritas or any other private
organization which has as its purpose the supervision of vessels during their
construction and afterward, in respect to their seaworthiness and upkeep, and
the placing of vessels in grades or "classes" according to the society's rules
for each particular type of vessel.
"Closing Date" means ______, 1995.
"Code" means the United States Internal Revenue Code of 1986 and the
corresponding provisions of any successor statute.
"Collateral Trustee" means Chemical Trust Company of California.
"Commission" means the Securities and Exchange Commission.
"Compulsory Acquisition" means requisition for title or other
compulsory acquisition of the Vessel (otherwise than by requisition for hire),
capture, seizure, detention or confiscation of the Vessel by any government or
by Persons acting or purporting to act on behalf of any government or
governmental authority.
"Default Period " means the period commencing the date any payment
hereunder was due to but not including the date such payment is paid in full.
"Default Rate " means a rate per annum for each day during the Default
Period until such payment shall be paid in full equal to 1.50% above LIBOR at
the commencement of such period.
"Dollar" or "$" means the lawful currency of the United States of
America.
"Earnings" includes all monies whatsoever due or to become due to the
Shipowner at any time arising out of the use or operation of the Vessel or
otherwise including (but without prejudice to the generality of the foregoing)
all sums due and payable to the Shipowner under and pursuant to the Initial
Charter and all freight, hire and passage monies and compensation payable to the
Shipowner in the event of requisition of the Vessel for hire, remuneration for
salvage and towage, services, demurrage and detention moneys and any other
damages for breach (or payments for variation or termination) of any
charterparty or any contract of employment of the Vessel and all earnings of the
Vessel due or to become due to the Shipowner.
<PAGE>
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"Event of Default" means an Event of Default under Section of the
Loan Agreement.
"Exchange Act" means the United States Securities Exchange Act of
1934, as amended.
"Governmental Approval " means any authorization, consent, approval,
license, franchise, lease, ruling, permit, tariff, rate, certification,
exemption, filing or registration by or with any Governmental Authority relating
to the ownership of the Collateral or to the execution, delivery or performance
of the Loan Agreement or any Security Document.
"Governmental Authority" means the federal government, any state or
other political subdivision thereof, and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government and any other governmental entity with authority over the
Shipowner or operation of the Vessels.
"Indebtedness" means the payment, performance or other obligations of
any kind whatsoever of the Shipowner under and pursuant to the Loan Agreements
and the Security Documents, together with interest thereon, and all other sums
which may be or become due to the Mortgagee under or pursuant to the terms
thereof and hereof.
"Initial Charter" means with respect to each Vessel, the Bareboat
Charter, dated as of ________________, between the Charterer and the Shipowner.
"Initial Charterer" means Chevron Transport Corporation.
"Insurance" means any policies and contracts of insurance and entries
in any protection and indemnity or war risks association which are effected by
or on behalf of the Shipowner in respect of the Vessel or otherwise in
connection with the Vessel, including but not limited to any insurance monies
received by the Shipowner pursuant to clauses 12 and 13 of the Initial Charter
and including all claims and returns of premiums thereunder and including any
compensation payable by whomsoever to the Shipowner by virtue of requisition of
the Vessel for title or confiscation or seizure of the Vessel by any government
or person or agency purporting to act on behalf of any government.
"Issue of One Debenture" means each Issue of One Debenture between the
Shipowner and the Mortgagee, as amended from time to time in accordance with the
terms thereof, pursuant to which the Shipowner grants to the Mortgagee a
security interest in all of its assets.
"Law" means any statute, law, rule, regulation, ordinance, order,
code, policy or rule of common law, now or hereafter in effect, and any judicial
or administrative interpretation thereof by a Governmental Authority or
otherwise, including any judicial or administrative order, consent decree or
judgment.
<PAGE>
-4-
"Lien" means any mortgage, lien (statutory or other), pledge, security
interest, encumbrance, claim, hypothecation, assignment for security, deposit
arrangement or preference or other security agreement of any kind or nature
whatsoever. For purposes of the Loan Agreement, a Person shall be deemed to own
subject to a Lien any property which it has acquired or holds subject to the
interest of a vendor or lessor under any conditional sale agreement, capital
lease or other title retention agreement.
"Loan Agreements" means, collectively, the Serial Loan Agreement and
the Term Loan Agreement.
"Management Agreement" means the management agreement between the
Shipowner, the Manager and Barber Ship Management Group.
"Manager" means the Person performing the duties of the Manager under
the Management Agreement, initially P.D. Gram & Co. ans.
"Net Income" means the net income (loss) of the Shipowner for a
period, determined on a consolidated basis, in accordance with generally
accepted accounting principles, together with any related provision for taxes.
"Obligations" means, collectively, the Serial Obligations and the Term
Obligations.
"Other Loan Agreements" means, collectively, the six loan agreements,
two each between the Mortgagee and each of the Other Owners relating to the
Other Loans.
"Other Loans" means each of the loans from California Petroleum
Transport Corporation to each of the Other Owners made on the Closing Date,
having an aggregate initial principal amount of $____________.
"Other Owners" means Calpetro Tankers (Bahamas I) Limited, Calpetro
Tankers (Bahamas II) Limited and Calpetro Tankers (IOM) Limited.
"Payment Date" means each _____ and ______ commencing ________, 1995.
"Permitted Liens" means the Charter, any Acceptable Replacement
Charter or other charter for the Vessel, liens for crew's wages accrued for not
more than three months or for collision or salvage, liens in favor of suppliers
of necessaries or other similar liens arising in the ordinary course of its
business (accrued for not more than three months) or liens for loss, damage or
expense, which are fully covered by insurance or, in respect of which, a bond or
other security has been posted by the Shipowner with the appropriate court or
other tribunal to prevent the arrest or secure the release of the Vessel from
arrest on account of such claim or lien; provided, however, that so long as the
Charter is in effect "Permitted Liens" shall mean those liens, claims and
encumbrances permitted under the Charter.
<PAGE>
-5-
"Person" means an individual, a partnership, a corporation, a joint
venture, an unincorporated association, a joint-stock company, a trust, or other
entity or a government or any agency or political subdivision thereof.
"Proceeding" means any suit in equity, action at law, or other
judicial or administrative proceeding.
"Purchase Agreement" means the Purchase Agreement, dated as of
___________ between the Shipowner and the Initial Charterer wherein the
Shipowner purchases the Vessel from the Initial Charterer.
"Rating Agencies" means Moody's Investors Service, Inc., Standard &
Poor's Rating Group and Duff & Phelps Credit Rating Co.
"Requirement of Law" means, as to any Person, the certificate of
incorporation and bylaws or partnership agreement or other organizational or
governing documents of such Person, and, any Law applicable to or binding upon
such Person or any of its properties or to which such Person or any of its
properties is subject.
"Security Documents" means the Loan Agreements, the Other Loan
Agreements, the Mortgage, the Assignment of Charter, the Assignment of Earnings
and Insurances, the Assignment of Guarantee, the Stock Pledge Agreement, the
Assignment of Management Agreement, the Assignment of Purchase Agreement, the
Issue of One Debenture, collectively.
"Serial Loan" means the loan in the initial principal amount of $
made by the Mortgagee to the Shipowner under the Serial Loan Agreement.
"Serial Loan Agreement" means the Loan Agreement, dated as of
_________ 1, 1995, between the Shipowner and the Mortgagee.
"Serial Obligations" means the payment, performance or obligations of
any kind or nature whatsoever by the Shipowner under and pursuant to the Serial
Loan Agreements, any Security Document and any instrument, agreement or document
referred to therein.
"State" means any state of the United States of America and, in
addition, the District of Columbia.
"Stock Pledge Agreement" means the Stock Pledge Agreement, dated as of
___________, 1, 1995, between the Mortgagee and California Tankers Investments
Limited.
"Term Loan" means the loan in the initial principal amount of $
made by the Mortgagee to the Shipowner under the Term Loan Agreement.
<PAGE>
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"Term Loan Agreement" means the Loan Agreement, dated as of _________
1, 1995, between the Shipowner and the Mortgagee.
"Term Obligations" means the payment, performance or obligations of
any kind or nature whatsoever of the Shipowner under and pursuant to the Term
Loan Agreements, any Security Document and any instrument, agreement or document
referred to therein.
"Total Loss" means either (a) actual or constructive or compromised or
arranged total loss of the Vessel, (b) Compulsory Acquisition of the Vessel or
(c) if so declared by the Initial Charterer at any time and in its sole
discretion a requisition for hire of the Vessel for a period in excess of 180
days.
<PAGE>
EXHIBIT 4.4
DEED OF COVENANTS
TO ACCOMPANY FIRST PRIORITY
STATUTORY MORTGAGE OF A SHIP
by
CALPETRO TANKERS (BAHAMAS I) LIMITED
Shipowner
to
CALIFORNIA PETROLEUM TRANSPORT CORPORATION
Mortgagee
Dated _________ __, 1995
m/t ____________
<PAGE>
Table of Contents
Page No.
ARTICLE I
DEFINITIONS................................ 1
Section 1.01 Definitions.............................................. 1
ARTICLE II
MORTGAGE.................................... 2
Section 2.01 Grant of Mortgage........................................ 2
Section 2.02 Indebtedness............................................. 3
ARTICLE III
REPRESENTATIONS AND WARRANTIES.............. 3
Section 3.01 Representations and Warranties of the Shipowner.......... 3
ARTICLE IV
COVENANTS................................... 5
Section 4.01 Payment of Indebtedness.................................. 5
Section 4.02 Corporate Existence...................................... 6
Section 4.03 Insurance................................................ 6
Section 4.04 Defense of Title......................................... 12
Section 4.05 Discharge of Liens....................................... 13
Section 4.06. Liens.................................................... 13
Section 4.07 Use of Vessel............................................ 13
Section 4.08 Notifications............................................ 14
Section 4.09 Payment of Crew's Wages and Allotments................... 15
Section 4.10 Charter of Vessel........................................ 15
Section 4.11 Maintenance of Vessel.................................... 15
Section 4.12 Statement of Classification Society...................... 16
Section 4.13 Surveys of Vessel........................................ 16
Section 4.14 Access to Vessel......................................... 16
Section 4.15 Books and Records........................................ 16
Section 4.16 Registration of Statutory Mortgage; Recordation of
Statutory Mortgage..................................... 17
Section 4.17 Notice of Mortgage....................................... 17
Section 4.18 Further Assurances....................................... 18
Section 4.19. Withholding Tax.......................................... 18
<PAGE>
Section 4.20. Expenses................................................. 18
Section 4.21. Indebtedness............................................. 19
Section 4.22. Business of Shipowner.................................... 19
Section 4.23. No Bankruptcy Petition................................... 19
Section 4.24. Consolidation, Merger and Sale of Assets................. 19
Section 4.25. Loans, Advances and Other Liabilities.................... 19
Section 4.26. Restricted Payment....................................... 19
Section 4.27. Reports by the Shipowner................................. 19
ARTICLE V
EVENTS OF DEFAULT; REMEDIES................. 20
Section 5.01 Events of Default........................................ 20
Section 5.02 Remedies................................................. 22
Section 5.03 Sale of the Vessel....................................... 24
Section 5.04 Mortgagee as Attorney-in Fact............................ 25
Section 5.05 Appointment of Receiver.................................. 25
Section 5.06 Arrest or Detention of Vessel............................ 25
Section 5.07 Defense of Suits......................................... 25
Section 5.08 Cumulative Rights, Powers and Remedies................... 26
Section 5.09 Application of Proceeds.................................. 26
Section 5.10 Mortgagee's Right to Remedy Defaults..................... 27
Section 5.11 Delegation of Powers..................................... 28
Section 5.12 Legal Actions............................................ 28
Section 5.13 Deed and Statutory Mortgage Subject to Rights of
Charterer under the Charter............................ 28
ARTICLE VI
MISCELLANEOUS PROVISIONS.................... 29
Section 6.01 Performance by Charter................................... 29
Section 6.02 Discharge of Mortgage.................................... 29
Section 6.03 Indemnity................................................ 30
Section 6.04 Governing Law............................................ 30
Section 6.05 Severability............................................. 30
Section 6.06 Notices.................................................. 30
Section 6.07 Headings................................................. 31
Section 6.08 General Interpretive Principles.......................... 31
Section 6.09 Successors and Assigns................................... 31
Section 6.10 Consent to Jurisdiction. ................................ 32
Section 6.11 Payment.................................................. 32
Section 6.12 Recorded Amount.......................................... 32
Section 6.13 No waiver of Preferred Status............................ 33
<PAGE>
Deed of Covenants, dated _________ __, 1995 (as amended or
supplemented from time to time, the "Deed"), from CalPetro Tankers (Bahamas I)
Limited, a company incorporated with limited liability in the Bahamas whose
registered office is at Mareva House, 4 George Street, Nassau, Bahamas
(hereinafter called "the Shipowner") to California Petroleum Transport
Corporation (the "Mortgagee").
WHEREAS, the Shipowner is the absolute and unencumbered owner of the
whole of the motor tanker "Condoleezza Rice" (the "Vessel") duly registered in
the name of the Shipowner under the laws and flag of The Commonwealth of the
Bahamas on ___________ __, 199_, built in 199_, having the following approximate
dimensions and tonnages: length ___ meters, breadth ____ meters, depth __
meters, gross tonnage _______, net tonnage ________, and more particularly
described in the Certificate of Registration with Official Number _____ and with
International Code Signal ______ and home port of Nassau, Bahamas;
WHEREAS, contemporaneously with the execution of this Deed there has
been executed and registered by the Shipowner in favor of the Mortgagee a First
Priority Statutory Bahamian Mortgage (to secure an account current) (the
"Statutory Mortgage") constituting a first priority statutory mortgage of the
whole of the Vessel and the Shipowner has agreed to execute this Deed collateral
thereto and to the security thereby created;
WHEREAS, in order to secure the prompt and due payment to the
Mortgagee of the Indebtedness (as defined herein) and any and all other sums
which may be or become due to the Mortgagee under or pursuant to the Loan
Agreements, this Deed, the Statutory Mortgage and any other Security Document
and also to secure the exact performance and observance and compliance with all
and any of the covenants and agreements and terms and conditions contained in
the Loan Agreements, this Deed, the Statutory Mortgage and in the other Security
Documents, the Shipowner has duly authorized the execution and delivery of this
Deed and the Statutory Mortgage in favor of the Mortgagee under and pursuant to
the laws of the Commonwealth of the Bahamas.
NOW, THEREFORE, in consideration of the premises and of the covenants
herein contained, the parties hereto covenant and agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01 Definitions.
-----------
Capitalized terms used in this Deed and the Statutory Mortgage and not
otherwise defined herein shall have the meanings assigned to such terms in
either Schedule 1 to this Deed or the Loan Agreements, and the definitions of
such terms shall be equally applicable to both the singular and the plural forms
of such terms.
<PAGE>
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ARTICLE II
MORTGAGE
Section 2.01 Grant of Mortgage.
-----------------
In consideration of the premises and of other good and valuable
consideration, the adequacy and receipt whereof are hereby acknowledged, and in
order to secure the payment of the Indebtedness and the repayment of any costs
of foreclosure or of retaking the Vessel, and the payment of all such other
amounts as may hereafter become secured by this Deed and Statutory Mortgage in
accordance with the terms hereof and thereof, and to secure the performance and
observance of and compliance with the covenants, terms and conditions contained
in this Deed, the Statutory Mortgage, the Loan Agreements, and the other
Security Documents to which the Shipowner is a party, the Shipowner has granted,
conveyed, pledged and mortgaged and does by these presents grant, convey, pledge
and mortgage to and in favor of the Mortgagee, its successors and assigns the
whole of the Vessel, together with all of the boilers, engines, machinery,
masts, spars, rigging, boats, cables, anchors, chains, tackle, apparel,
furniture, fittings, freights and equipment thereunto appertaining or belonging,
whether now owned or hereafter acquired, whether on board or not, and all
additions, improvements and replacements hereafter made in or to the Vessel (the
term "Vessel", as used herein, shall include the Vessel together with all of the
foregoing and the Vessel's freights) To Have And To Hold the same unto the
Mortgagee, its successors and assigns, forever upon the terms set forth in this
Deed and the Statutory Mortgage for the enforcement of the payment of the
Indebtedness, the payment of any costs of foreclosure or retaking of the Vessel
and all such other amounts as may hereafter become secured by this Deed and the
Statutory Mortgage in accordance with the terms hereof and thereof and to secure
the performance and observance of and compliance with the covenants, terms and
conditions contained in this Deed, the Statutory Mortgage and the Security
Documents, it being agreed that if any amount payable by the Shipowner under
either Loan Agreement is not paid on its due date (whether formally demanded or
not) the whole or the balance of the Indebtedness and all other amounts payable
under the Security Documents shall forthwith on demand become payable; provided,
however, and the conditions of these presents are such that, if the Shipowner
shall pay or cause to be paid to the Mortgagee all of the Indebtedness as set
forth in the Security Documents, and if the Shipowner shall pay all such other
amounts as may hereafter become secured by this Mortgage and all expenses which
the Mortgagee shall have paid or incurred to protect the security granted
hereunder, and if the Shipowner shall perform, observe and comply with all and
singular of the covenants, terms and conditions in this Deed, the Statutory
Mortgage, the Loan Agreements and the other Security Documents contained,
expressed or implied, to be performed, observed or complied with by and on the
part of the Shipowner or its successors or assigns, all without delay or fraud
and according to the true intent and meaning hereof and therefor, then these
presents and the rights of the Mortgagee under this Mortgage and the other
Security Documents shall cease and, in such event, the Mortgagee agrees by
accepting this Deed and the Statutory Mortgage to execute, at the expense of the
Shipowner, all such documents as the Shipowner may reasonably require to
discharge this Deed and the Statutory Mortgage under the laws of the
Commonwealth of the
<PAGE>
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Bahamas; otherwise this Deed and the Statutory Mortgage shall remain in full
force and effect; provided further, however, the conditions of these presents
are such that, if the Shipowner shall satisfy or cause to be satisfied and pay
or cause to be paid to the Mortgagee all of the Serial Obligations, then these
presents and the rights of the Mortgagee under this Deed and the Statutory
Mortgage and the other Security Documents with respect to the Serial Loan
Agreement shall cease and, in such event, this Deed and the Statutory Mortgage
shall secure all of the Indebtedness other than the Serial Obligations.
Section 2.02 Indebtedness.
------------
(a) The Shipowner acknowledges that pursuant to the Loan Agreements
it is jointly and severally liable with the Other Owners to the Mortgagee in the
original principal amount of Two Hundred Eighty-Five Million Four Hundred
Thousand United States Dollars (US$285,400,000). The Shipowner shall repay the
Obligations in accordance with terms and conditions of the Loan Agreements with
the last installment due and payable on _________, 2015. The Shipowner further
agrees to pay all other sums comprising the Indebtedness in accordance with the
terms, conditions and provisions in the Loan Agreements and in this Deed and the
Statutory Mortgage and to perform, observe and comply with the covenants, terms
and obligations and conditions on its part to be performed, observed and
complied with contained or implied herein and in the Loan Agreements and in the
other Security Documents.
(b) The Shipowner shall also pay to the Mortgagee upon the
Mortgagee's first written demand all stamp duties, registration and/or recording
fees, charges for certificates, valuation fees, costs and expenses (including,
the fees and expenses of its attorneys) of any nature whatsoever incurred by the
Mortgagee in connection with the preparation, completion, execution and
registration of this Deed and the Statutory Mortgage and all other claims,
expenses, costs, payments, disbursements, losses, damages or liabilities which
may be incurred by the Mortgagee by reason of the covenants and conditions
contained herein, in the Loan Agreements or in the other Security Documents,
together with interest thereon as herein or therein provided, and confirms that
such obligations are secured by this Deed and the Statutory Mortgage.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
Section 3.01 Representations and Warranties of the Shipowner.
-----------------------------------------------
The Shipowner hereby represents and warrants to the Mortgagee as
follows:
(a) The Shipowner (i) is a company duly formed, validly existing
and in good standing under the laws of The Bahamas and (ii) is duly authorized,
to the extent necessary, to do business in each jurisdiction where the character
of its properties or the nature of its activities makes such qualification
necessary. The Shipowner has not engaged in any business or activity
<PAGE>
-4-
other than as set forth in Section 5.04 of the Loan Agreements. The Shipowner
has all requisite corporate power and authority to own and operate the property
it purports to own and to carry on its business as now being conducted and as
proposed to be conducted in respect of the Vessel.
(b) The Shipowner has all necessary corporate power and authority
to execute, deliver and perform under this Deed and the Statutory Mortgage, the
Loan Agreements and each other Security Document to which it is a party.
(c) All action on the part of the Shipowner that is required for
the authorization, execution, delivery and performance of this Deed and the
Statutory Mortgage, the Loan Agreements and each other Security Document to
which it is a party, in each case has been duly and effectively taken; and the
execution, delivery and performance of this Deed, the Statutory Mortgage, the
Loan Agreements and each such other Security Document do not require the
approval or consent of any Person except for such consents and approvals as have
been obtained on or prior to the date hereof.
(d) This Deed, the Statutory Mortgage, the Loan Agreements and each
other Security Document to which the Shipowner is a party have been duly
executed and delivered by the Shipowner. Each of this Deed, the Statutory
Mortgage, the Loan Agreements and each other Security Document to which the
Shipowner is a party constitute a legal, valid and binding obligation of the
Shipowner, enforceable against it in accordance with the terms thereof, except
as such enforceability (i) may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium and other similar laws affecting the enforcement of
creditors' rights and remedies generally and (ii) is subject to general
principles of equity (regardless of whether enforceability is considered in a
proceeding in equity or at law).
(e) Neither the execution, delivery and performance of this Deed,
the Statutory Mortgage, the Loan Agreements or any other Security Document to
which the Shipowner is a party nor the consummation of any of the transactions
contemplated hereby or thereby nor performance of or compliance with the terms
and conditions hereof or thereof (i) contravenes any Requirement of Law
applicable to the Shipowner or to the Vessel, (ii) constitutes a default under
any Security Document or (iii) results in the creation or imposition of any
Liens on the Vessel (other than Permitted Liens) or results in the acceleration
of any obligation.
(f) The Shipowner is in compliance with and not in default under
any and all Requirements of Law applicable to the Shipowner and all terms and
provisions of this Deed, the Statutory Mortgage, the Loan Agreements and all
Security Documents.
(g) All Governmental Approvals which are required to be obtained in
the name of the Shipowner in connection with the operation and maintenance of
the Vessel and the execution, delivery and performance by the Shipowner of this
Deed and the Statutory Mortgage have been obtained and are in effect as of the
date hereof.
(h) There are no actions, suits or proceedings at law or in equity
or by or before
<PAGE>
-5-
any Governmental Authority now pending against the Shipowner or the Vessel or,
to the best of the Shipowner's knowledge, threatened against the Shipowner or
the Vessel or pending or threatened against any property or other assets or
rights of the Shipowner with respect to the Vessel, this Deed, the Statutory
Mortgage or any other Security Document.
(i) The Shipowner is the sole and lawful owner of the whole of the
Vessel, free from all liens, security interests, mortgages, charges or
encumbrances (other than this Deed, the Statutory Mortgage, the Collateral Trust
Agreement, the Indentures and Permitted Liens). The Shipowner shall defend for
the benefit of the Mortgagee the title and possession of the mortgaged property
and every part thereof against the claims and demands of all Persons.
(j) The Shipowner is, by this Deed and the Statutory Mortgage and
the recordation thereof, constituting in favor of the Mortgagee, among other
things, all the rights of a First Priority Statutory Mortgage of the Vessel to
secure the due and punctual payment of all amounts due and to become due to the
Mortgagee pursuant to the terms and conditions of this Deed, the Statutory
Mortgage, the Loan Agreements, the other Security Documents and the documents
contemplated hereby and thereby and the payment of all commissions and fees,
costs, charges, expenses, expenditures and interest owing to the Mortgagee
hereunder and thereunder, and the performance and observance of and compliance
with all the covenants, terms, conditions and provisions of this Deed, the
Statutory Mortgage, the Loan Agreements, the other Security Documents and the
documents contemplated hereby and thereby.
(k) No tax deficiencies and no past due obligations exist that
materially affect the operations of the Shipowner, except those contested in
good faith by appropriate proceedings for which adequate reserves with respect
to such claims so contested have been set aside on the books of the Shipowner.
(l) The Shipowner is not liable for any material amount of sales,
use or other similar tax in connection with the transactions described in this
Deed, the Statutory Mortgage, the Loan Agreements and the other Security
Documents.
ARTICLE IV
COVENANTS
So long as any of the Indebtedness is outstanding or any of its
obligations hereunder or under either Loan Agreement remain outstanding, the
Shipowner covenants and agrees, subject to Section 6.01, with the Mortgagee as
follows:
Section 4.01 Payment of Indebtedness.
-----------------------
The Shipowner shall repay to the Mortgagee the Indebtedness and at all
times shall keep, perform and observe the covenants, conditions and agreements
in this Deed, the Statutory Mortgage and the other Security Documents contained,
expressed or implied on its part
<PAGE>
-6-
to be kept performed and observed for so long as any part of the Indebtedness
remains outstanding.
Section 4.02 Corporate Existence.
-------------------
The Shipowner is and shall remain a corporation qualified under the
laws of the Bahamas.
Section 4.03 Insurance.
---------
(a) The Shipowner, at its expense (including payment of all
premiums, costs and club calls, if any) shall effect or cause to be effected the
following insurances and keep the following in full force and effect:
(i) hull and machinery insurance equal to the greater of (i) the
Vessel's full commercial value and (ii) one hundred and fifteen percent
(115%) of the aggregate outstanding principal balance of the Term Loan and
the Serial Loan. Such Hull and Machinery insurance shall include the
"Institute Pollution Hazard Clause" and the "Institute Liner Negligence and
Additional Perils Clause". If the Vessel is laid up in port for an extended
period, then, with the prior written consent of the Mortgagee, the
Shipowner may obtain in lieu of the hull and machinery insurance referred
to in this Section 4.03(a)(i) port risk insurance equal to the greater of
(A) the Vessel's full commercial value or (B) one hundred and fifteen per
cent (115%) of the aggregate outstanding principal balance of the Term Loan
and Serial Loan. Such Port Risk insurance shall be effected on Institute of
London Underwriters "Institute Port Risk Clauses" or American Institute
"Port Risk Endorsement";
(ii) war risk hull and machinery insurance (including risks of
mines) equal to the greater of (A) the Vessel's full commercial value or
(B) one hundred and fifteen percent (115%) of the aggregate outstanding
principal balance of the Term Loan and Serial Loan. Such war risk insurance
shall be effected with a War Risks Association approved by the Mortgagee or
on the full Institute of London Underwriters "Institute War and Strikes
Clauses" or American Institute "Hull War Risks and Strikes Clauses";
(iii) mortgagee additional perils (oil pollution) insurance in an
amount equal to the aggregate outstanding principal amount of the Term Loan
related to the Vessel;
(iv) confiscation and requisition insurance to the extent and in the
circumstances that a prudent shipowner would obtain and maintain such
insurances;
(v) protection and indemnity insurance in the name of the
Shipowner, which shall include freight, demurrage and defense coverage in
an unlimited amount and coverage in respect of pollution risks for a
minimum of five hundred million dollars ($500,000,000) plus an additional
two hundred million dollars ($200,000,000) or such
<PAGE>
-7-
other amount as may be then customary for prudent shipowners to maintain,
including coverage against liabilities to persons who have suffered any
loss, damage or injury whatsoever in connection with anything done or not
done by the Vessel, any charterer or the Shipowner in connection with the
Vessel or the employment or use thereof (including in connection with any
oil or other substance emanating from the Vessel or any other vessel with
which the Vessel may be involved in collision) and against liability under
the United States Oil Pollution Act of 1990 ("OPA") or any re-enactment or
modification thereof under the law of any country into whose jurisdiction
the Vessel is permitted to come under the terms of the related charter;
(vi) such additional insurance as the Shipowner may deem necessary;
provided, however, that all such additional insurance, including without
limitation "disbursements," "increased value" or other "total loss only"
insurance shall not be in amounts in excess of those permitted by the hull
and machinery or war risk polices. Such hull and machinery insurance shall
be effected on Institute of London Underwriters "Institute Time Clause -
(Hulls)" or American Institute "Time (Hulls) Clauses" including four-
fourths (4/4ths) Running Down Clause, except that three-fourths (3/4ths)
Running Down Clause is allowed provided the remaining one-fourth (1/4th)
Running Down Clause is fully covered by protection and indemnity insurance;
(vii) risks which are likely to arise due to the particular usage and
trading of the Vessel including all risks customarily and usually covered
by prudent shipowners; and
(viii) risks for which the Bahamas may from time to time require
insurance or for which the Mortgagee may from time to time (after receiving
advice from its insurance advisers that a prudent shipowner would obtain
and maintain a type and amount of insurance for such risks) require
insurance.
Provided, however, that if the Vessel is subject to the Charter or an
Acceptable Replacement Charter, the insurance requirements of the related
Charter or an Acceptable Replacement Charter will supersede the above insurance
requirements.
(b) All insurance taken out or effected in connection with the Vessel
pursuant to the provisions of Section 4.03(a) hereof shall be in a form and upon
terms acceptable to the Mortgagee and shall, without limitation, be subject to
the following:
(i) all such insurance shall be taken out in the name of the
Shipowner with the Mortgagee's interest noted on the policies and cover
notes;
(ii) all such insurance shall be placed in the English or American
markets through first-class brokers and with first-class underwriters,
insurance companies, protection and indemnity associations or protection
and indemnity clubs. All insurance policies or entries shall provide that
they are payable in Dollars. All insurance policies
<PAGE>
-8-
shall be valued policies and none shall provide for a deductible amount in
excess of One Hundred Thousand United States Dollars (US$100,000) or such
other amount as prudent shipowners of vessels similar to the Vessel shall
maintain. No insurance shall exclude liability for negligence of the
master, officers, crew or pilots. Each policy or entry shall contain or be
accompanied by a waiver, as against the Mortgagee, of any and all premiums
and calls for which the Mortgagee might otherwise be or become liable as a
loss payee or otherwise.
(iii) Each policy shall provide that it may not lapse, be terminated,
cancelled or materially modified without fourteen (14) days' prior telex or
telegraphic notice to the Mortgagee and any assignee, except only such
notice as war risk underwriters shall be required to give pursuant to the
automatic termination clause of current war risk policies.
(iv) Each policy shall include a provision agreeing that no breach
of warranty or condition or want of due diligence on the part of the
Shipowner or any agent of the Shipowner shall defeat recovery of any claim
by the Collateral Trustee, as assignee of the Mortgagee, unless such
provision shall conflict with the available reinsurance arrangements of the
Issuers of such policy.
(c) Each insurance policy taken out pursuant to Sections 4.03(a)(i)
through (iii) and Section 4.03(a)(v) through (vii) shall contain the following
notice of assignment and loss payable clause:
Notice of Assignment/Loss Payable Clause
California Petroleum Transport Corporation, as mortgagee (the
"Mortgagee"), and CalPetro Tankers (Bahamas I) Limited (the
"Shipowner"), owner of the m.t. Condoleezza Rice (the "Vessel"),
hereby give notice that by an assignment contained in an Assignment of
Earnings and Insurances, dated as of _________ __, 1995, between the
Shipowner and the Mortgagee, the Shipowner assigned to the Mortgagee
as mortgagee of the Vessel, inter alia, all of its right, title and
interest under, to and in all policies and contracts of insurance of
whatsoever nature and all entries with protection and indemnity clubs
or societies now or hereafter taken out in respect of the Vessel, its
rights, disbursements, profits or otherwise.
All claims payable shall be subject to the following
conditions:
(i) Any claim payable in respect of an actual or
constructive or arranged or agreed or compromised total loss, or loss
in the event of the confiscation, compulsory acquisition or
<PAGE>
-9-
requisition of the Vessel, for title or use, by any government of any
country or any department, agency or representative thereof, pursuant
to any present or future law, proclamation, order, decree or
otherwise, shall be payable to the Mortgagee as mortgagee of the
Vessel, provided always that the written consent of the Mortgagee
shall be obtained prior to the arranged or agreed or compromised total
loss being agreed with the underwriters (insurers);
(ii) All other claims shall be released to the repairer or
salvor for the repair, salvage or other charges involved or to the
Shipowner as reimbursement if it has fully repaired the damages and
paid all of the salvage and other charges;
Notwithstanding the foregoing, if there exists an Event of Default
under the First Priority Statutory Mortgage and Deed of Covenants
collateral thereto, dated _________ __, 1995, on the Vessel given by
the Shipowner in favor of the Mortgagee and the brokers and/or
underwriters (insurers) have been so notified by the Mortgagee, all
claims shall be payable to the Mortgagee as mortgagee of the Vessel.
The underwriters (insurers) agree that the Mortgagee shall be
advised immediately of the variation or termination of this policy
(entry), and in the event of any failure by the Shipowner to pay
premiums (dues or Club calls) as and when due the Mortgagee shall be
given at least fourteen (14) days' prior telegraphic or telex notice
of the cancellation or material alteration of this policy (entry).
The Mortgagee shall have no obligations whatsoever to pay any
premiums or costs (dues or Club calls), but shall have the right to do
so in the event of non-payment by the Shipowner. The underwriters
(insurers) shall promptly advise the Mortgagee of any act of omission
of which the Underwriters (insurers) are aware that might void this
policy (entry) or make the same invalid or unenforceable in whole or
in part.
(d) Each entry or insurance policy taken out pursuant to Section
4.01(a)(iv) shall bear the following Endorsement:
Endorsement
California Petroleum Transport Corporation, as mortgagee
<PAGE>
-10-
(the "Mortgagee") and CalPetro Tankers (Bahamas I) Limited (the
"Shipowner"), owner of the m.t. Condoleezza Rice (the "Vessel"),
hereby give notice that by an assignment contained in an Assignment of
Earnings and Insurances, dated as of _________ __, 1995, between the
Shipowner and the Mortgagee, the Shipowner assigned to the Mortgagee
as mortgagee of the Vessel all of its right, title and interest under,
to and in all policies and contracts of insurance of whatsoever nature
and all entries with protection and indemnity clubs or societies now
or hereafter taken out in respect of the Vessel, its rights,
disbursements, profits or otherwise.
It is hereby noted that all claims shall be paid to the
Shipowner unless and until the Mortgagee shall have given notice in
writing that the Shipowner is in default under the First Priority
Statutory Mortgage and Deed of Covenants collateral thereto, dated as
of _________ __, 1995, on the Vessel given by the Shipowner in favor
of the Mortgagee in which event such claims shall be payable to the
Mortgagee as mortgagee of the Vessel. Any modification of the terms of
this insurance or cancellation or termination by reason of nonpayment
of premiums, dues, assessments, contributions or other amounts which
may become due shall not become effective against the interests of the
Mortgagee, its successors or assigns until fourteen (14) days' prior
telegraphic or telex notice is given to the Mortgagee, its successors
or assigns of such modification, cancellation or termination.
(e) Certified copies of all binders and cover notes or other satisfactory
written evidence showing that the required insurance of each type has been
placed, maintained or renewed and that the premiums thereon have been paid shall
be submitted to the Mortgagee on or before the date of this Deed and the
Statutory Mortgage and subsequently pro forma policies shall be submitted for
approval at least seven (7) days before liability under any current or renewed
insurance expires. No change shall be made in any insurance without the prior
written approval of the Mortgagee. Certified copies of all policies,
certificates of entry, contracts of insurance, cover notes and renewals thereof
shall be delivered to and held by the Mortgagee, and the Shipowner shall furnish
the Mortgagee with the original of the polices, when and if requested by the
Mortgagee. On the Closing Date, on each date the Insurances are renewed as
required by the terms hereof and each time there is a significant change in the
insurance coverage carried on the Vessel, the Shipowner shall arrange for a
detailed report signed by independent marine insurance brokers acceptable to the
Mortgagee, describing the insurance coverage then carried and maintained on the
Vessel (including the types of risk covered by such polices, the amount insured
thereunder and the expiration date thereof) and stating that in the opinion of
said insurance brokers such insurance is adequate and reasonable for the
protection of the Mortgagee and that the Shipowner is in compliance with the
insurance terms hereof.
<PAGE>
-11-
(f) The Mortgagee is hereby authorized, but not required, in its own name
and/or the Shipowner's name to demand, collect, give receipt for and prosecute
all necessary actions in the courts to recover any and all insurance monies
which may become due and payable to the Shipowner under any insurance required
or permitted hereunder.
(g) If the Shipowner shall at any time fail to pay or to cause to be paid
when due any insurance premiums, club calls or other costs related to obtaining
or maintaining the insurance required hereunder, or to obtain any required
insurance or to deliver to the Mortgagee all policies, certificates of entry,
contracts of insurance, binders and cover notes and all renewals thereof as
required by the provisions of this Deed and the Statutory Mortgage, the
Mortgagee may, but shall not be required to, procure such insurances and/or pay
unpaid premiums and other costs, and the cost and expense thereof, with interest
at the Default Rate, shall be an indebtedness due from the Shipowner to the
Mortgagee secured by this Deed and the Statutory Mortgage and shall be paid by
the Shipowner promptly on demand.
(h) The Shipowner shall cause each of its insurance brokers to deliver to
the Mortgagee its undertaking substantially in the form of the letter attached
hereto as Exhibit A and made a part hereof.
(i) The Shipowner shall not do any act or cause or permit any act to be
done whereby any insurance shall be or may be suspended, impaired or defeated.
(j) The Shipowner agrees to do all such things whatsoever and prepare,
execute and deliver all such documents whatsoever to enable the Mortgagee to
collect and recover any monies which may become due in respect of the policies
of insurance and entries and for that purpose (but without limitation) to permit
the Mortgagee if necessary to sue in the name of the Shipowner.
(k) The Shipowner agrees not to employ the Vessel or suffer the Vessel to
be employed otherwise than in conformity with the terms of the instruments of
insurance aforesaid (including any warranties express or implied therein)
without first obtaining the consent to such employment of the insurers and
complying with such requirements as to extra premium or otherwise as the
insurers may prescribe.
(l) The proceeds of any Insurances or entries shall be applied as follows:
(i) Until the occurrence of an Event of Default:
(A) Any claim under any Insurances (other than in respect of a
Total Loss) or whether or not such claim is under the terms of
the relevant loss payable clause payable directly to the
Shipowner, shall be applied by the Shipowner in making good the
loss or damage in respect of which it has been paid to the
Shipowner in reimbursement of money expended by it for such
purpose; and
<PAGE>
-12-
(B) Any claim in respect of protection and indemnity insurance
shall be paid directly to the person, firm or company to which
the liability covered by such insurance was incurred or the
Shipowner in reimbursement of moneys expended by it in
satisfaction of such liability;
provided always that for as long as the Charter in respect of the Vessel
remains in force, all payments other than in respect of a Total Loss (which
shall be made to the Mortgagee) shall be made to the Charterer.
(ii) Upon the occurrence of an Event of Default, subject as provided
above, any claim under any such insurance and entry shall be paid to the
Mortgagee, as assignee of the related Shipowner, and shall be applied by the
Mortgagee pursuant to the terms of the Charter unless the Charterer is in
default thereunder in which event the Mortgagee shall apply such proceeds
against payment of the Obligations.
(iii) Any claim under such insurance and entry in respect of a Total Loss
shall be paid to the Mortgagee, as assignee of the related Shipowner, and shall
be applied by the Mortgagee, after payment of the costs of collecting such
claim, as follows:
First: To the payment of all reasonable expenses and charges,
including the expenses of any taking, attorney's fees, court costs
and any other expenses or advances made or incurred by the Mortgagee,
the Indenture Trustees and the Collateral Trustee in the protection
of its right or the pursuance of its remedies under this Deed and the
Statutory Mortgage, the Loan Agreements or the other Security
Documents;
Second: To the payment of all amounts due to the Mortgagee in
respect of taxes, indemnities, fees, expenses, premiums, purchase of
liens or otherwise under the provisions of this Deed and the
Statutory Mortgage;
Third: To the payment of interest on the Term Loan and Serial
Loan, pro rata, in accordance with their respective outstanding
balances, to but not including the Loss Date;
Fourth: To the payment to the Mortgagee in respect of principal
of the Term Loan and Serial Loan, pro rata, in accordance with their
respective outstanding balances; and
Fifth: To the payment of any surplus thereafter remaining to
the Shipowner or whomsoever may be lawfully entitled thereto.
Section 4.04 Defense of Title.
----------------
The Shipowner lawfully owns and is lawfully possessed of the Vessel
free from
<PAGE>
-13-
any Lien whatsoever except this Deed, the Statutory Mortgage and Permitted Liens
and shall warrant and defend the title and possession thereto and to every part
thereof for the benefit of the Mortgagee against the claims and demands of all
persons whomsoever.
Section 4.05 Discharge of Liens.
------------------
The Shipowner shall pay and discharge or cause to be paid and
discharged when due and payable unless contested in good faith from time to time
all debts, damages and liabilities whatsoever which may have given or may give
rise to maritime or possessory liens on or claims enforceable against the Vessel
and all taxes, assessments, governmental charges, fines and penalties legally
imposed on the Vessel or any income or proceeds therefrom or on the Shipowner,
the Earnings and in event of arrest of the Vessel pursuant to legal process or
in event of her detention in exercise or purported exercise of any such lien as
aforesaid to procure the release of the Vessel from such arrest or detention as
soon as possible upon receiving notice thereof but in any event within fifteen
(15) days of receiving such notice by providing bail or otherwise as the
circumstances may require.
Section 4.06. Liens.
-----
(a) Neither the Shipowner nor its agent nor the master of the
Vessel nor any charterer of the Vessel has or shall have any right, power or
authority to create, incur or permit to be placed or imposed upon the property
or any part thereof subject or intended to be subject to this Deed and Statutory
Mortgage, any liens whatsoever without the prior written consent of the
Mortgagee, other than for Permitted Liens, and liens created under the
Collateral Trust Agreement and the Indentures. A properly certified copy of this
Deed and the Statutory Mortgage shall be carried with the ship's papers on board
the Vessel, shall be exhibited to any person having business with the Vessel
which might give rise to any lien other than Permitted Liens and shall be
exhibited to any representative of the Mortgagee on demand.
(b) The Shipowner shall keep the Vessel free and clear of all
liens, security interests, charges or encumbrances (except for the Charter, the
Collateral Trust Agreements and the Indentures and Permitted Liens).
Section 4.07 Use of Vessel.
-------------
(a) The Shipowner shall not cause or permit the Vessel to be
operated in such a way as to jeopardize the safety of the Vessel, its Insurances
or in any manner contrary to law, shall not engage in any unlawful trade or
violate any applicable law, rule or regulation of the Bahamas or any other
jurisdiction in which the Vessel may operate from time to time or which may
otherwise be applicable to the Vessel or the Shipowner or carry any cargo that
shall expose the Vessel to penalty, confiscation, forfeiture, capture or
condemnation, shall not do or suffer or permit to be done anything which can or
may injuriously affect the registration or enrolment of the Vessel under the
laws and regulations of Bahamas and shall at all times keep the Vessel duly
documented thereunder.
(b) The Shipowner shall not employ the Vessel or suffer her
employment in
<PAGE>
-14-
any trade or business which is forbidden by international law or is otherwise
illicit or in carrying illicit or prohibited goods or otherwise use the Vessel
in any manner whatsoever which renders her liable to condemnation or to
destruction, seizure or confiscation and in event of hostilities in any part of
the world (whether war is declared or not) not allow the Vessel to enter any
zone which is declared a war zone unless the Mortgagee shall have first given
its consent thereto in writing and there shall have been effected by the
Shipowner and at its expense such special insurance cover as the Mortgagee may
require.
(c) The Shipowner shall not, during hostilities (whether or not a
state of war shall have been formally declared) between any two or more nations
or in which the United Nations Organization may be involved, or during any civil
war, employ or permit the Vessel to be employed in any manner in carrying any
goods that shall or may be declared to be contraband of war or that shall or may
render her liable to confiscation, seizure, detention or destruction unless
prior to such employment special war risks policies effected with such
underwriters as the Mortgagee may approve and in all respects to the
satisfaction of the Mortgagee shall have been effected, assigned and delivered
to the Mortgagee.
(d) Upon request, the Shipowner shall give to the Mortgagee all
information regarding the Vessel, her position and engagements in the possession
of or available to the Shipowner.
(e) The Shipowner shall comply with and satisfy all of the material
provisions of any applicable law, regulation, proclamation or order concerning
financial responsibility for liabilities imposed on the Shipowner or the Vessel
with respect to pollution by any state or nation or political subdivision
thereof, including, if applicable, the United States Federal Water Pollution
Control Act, OPA and the United States Comprehensive Environmental Response,
Compensation and Liability Act ("CERCLA"), as any of the foregoing may at any
time be amended, and shall maintain all certificates or other evidence of
financial responsibility as may be required by any such law, regulation,
proclamation or order with respect to the trade in which the Vessel is from time
to time engaged and the cargo carried by it and shall upon request, furnish the
Mortgagee with evidence that the Shipowner has acted in compliance with OPA and
CERCLA.
Section 4.08 Notifications.
-------------
The Shipowner shall immediately notify the Mortgagee of:
(a) any marine disaster involving the Vessel that has occurred, or
any serious damage suffered by the Vessel (such notice by the Shipowner to
be given within twenty-four (24) hours after the event shall have come to
its knowledge and shall furnish the Mortgagee with full information
regarding any loss of life, other accidents or damage to the Vessel), and
in such event the Mortgagee shall have the right to have an independent
survey of the damage to the Vessel at the Shipowner's expense provided that
the same shall not cause any undue delay in respect of the operation of the
Vessel, and if such
<PAGE>
-15-
survey be requested, the Shipowner shall lend all needed assistance.
(b) any occurrence in consequence whereof the Vessel has become or
is likely to become a Total Loss;
(c) any requirement or recommendation made by any insurer or
classification society or by any competent authority that is not complied
with immediately; and
(d) any complaint or libel filed against the Vessel, or any levy
against the Vessel, or the fact that the Vessel has been taken into custody
or detained by any proceedings in any court or tribunal or by any
government of any country or other authority, any arrest of the Vessel or
the exercise or purported exercise of any lien on the Vessel.
Section 4.09 Payment of Crew's Wages and Allotments.
--------------------------------------
The Shipowner shall promptly pay all tolls, dues and other outgoings
whatsoever in respect of the Vessel and, as and when the Mortgagee may so
require, furnish satisfactory evidence that the wages and allotment and
insurance and pension contributions of the Master and crew are being regularly
paid and that all deductions from crew's wages in respect of any tax liability
are being properly accounted for.
Section 4.10 Charter of Vessel.
-----------------
The Shipowner shall not, without the prior written consent of the
Mortgagee, charter the Vessel by demise charter or by period, time or voyage
charter for any period other than to the Charterer under the Charter or any
other charterer under an Acceptable Replacement Charter. The Shipowner shall
not modify, amend or supplement the terms of the Charter without the prior
written consent of the Mortgagee.
Section 4.11 Maintenance of Vessel.
---------------------
The Shipowner shall at all times and without cost or expense to the
Mortgagee or the Collateral Trustee maintain and preserve, or cause to be
maintained and preserved, the Vessel, her equipment and machinery in good
running order and repair so that the Vessel shall be, in so far as due diligence
can make her so, tight, staunch, strong and well and sufficiently tackled,
apparelled, furnished, equipped and in every respect seaworthy and in good
operating condition as will entitle her to the highest classification of Det
norske Veritas or such other classification society of like standing agreeable
to the Mortgagee and the Trustee. The Vessel shall, and the Shipowner covenants
that it shall, at all times comply strictly with all applicable laws, treaties
and conventions of Bahamas and rules and regulations issued thereunder and shall
have on board as and when required by such rules and regulations valid
certificates showing compliance therewith. The Shipowner shall not make or
permit to be made any substantial change in the structure, type or speed of the
Vessel or change in any of her rigs without first
<PAGE>
-16-
obtaining the written approval of the Mortgagee. The Shipowner shall cause all
repairs to and/or replacements of any damaged worn or lost parts or equipment of
the Vessel be effected in such manner both as regards workmanship and quality of
materials so as not to diminish the value or class of the Vessel. The Shipowner
shall submit the Vessel to such periodical or other surveys as may be required
for classification purposes and shall if so required by the Mortgagee supply to
the Mortgagee on request copies of all surveys or reports issued in respect
thereof.
Section 4.12 Statement of Classification Society.
-----------------------------------
The Shipowner shall furnish to the Mortgagee and the Collateral
Trustee annually from the date hereof a certificate by Det norske Veritas (the
"Classification Society") or such other classification society acceptable to the
Mortgagee and the Collateral Trustee that such classification is maintained in
the highest category for ships of the same type as the Vessel free of
recommendations and notations which have not been complied with in accordance
with their terms and to furnish the Mortgagee from time to time and at any time
upon demand with all such information and copies of all such documents as the
Mortgagee may require concerning the classification of the Vessel.
Section 4.13 Surveys of Vessel.
-----------------
The Shipowner shall submit the Vessel or cause the Vessel to be
submitted regularly to such periodical or other surveys as may be required for
classification purposes and if so required supply and cause to be supplied to
the Mortgagee copies of all survey reports issued in respect thereof.
Section 4.14 Access to Vessel.
----------------
The Shipowner shall use all reasonable endeavors to afford the
Mortgagee and such Persons as the Mortgagee shall from time to time appoint for
that purpose full and complete access to the Vessel at any time, on reasonable
notice and in a manner which shall not interfere with the Vessel's trading
requirements to view the state and condition thereof and her cargo and papers
and to ascertain whether the Vessel is being properly repaired and maintained,
and if default shall be made in keeping her in such good state of repair and in
such working order and condition as herein mentioned (without prejudice however
to any of the Mortgagee's rights under this Deed and the Statutory Mortgage) the
Mortgagee may (but shall not be obligated to) effect such repairs as shall in
its opinion be necessary, and the Shipowner shall on demand repay to the
Mortgagee every sum of money expended for the above purpose with interest at the
Default Rate.
Section 4.15 Books and Records.
-----------------
The Shipowner shall keep proper books of account in respect of the
Vessel and as and when required by the Mortgagee make such books available for
inspection for the Mortgagee.
<PAGE>
-17-
Section 4.16 Registration of Statutory Mortgage; Recordation of
--------------------------------------------------
Statutory Mortgage.
------------------
(a) The Shipowner shall not change the flag or port of
documentation of the Vessel or through any action or inaction cause the
registration of the Vessel under the laws of the Commonwealth of the Bahamas to
be void or voidable or to lapse;
(b) The Shipowner shall cause this Statutory Mortgage to be
recorded or filed in a central office or at the home port of the Vessel and in
accordance with the applicable provisions of the law of the Bahamas and will
otherwise comply with and satisfy all the requirements and formalities
established by the provisions of the law of the Bahamas and any other pertinent
legislation of the Bahamas to perfect this Statutory Mortgage as a valid and
enforceable first and preferred lien upon the Vessel and maintain this Deed as a
first priority assignment of, charge over, and security interest in the Vessel
or other property assigned thereunder and shall furnish to the Mortgagee from
time to time such evidence to the Mortgagee's satisfaction with respect to the
Shipowner's compliance with the provisions of this Section.
Section 4.17 Notice of Mortgage.
------------------
(a) The Shipowner shall at all times carry on board the Vessel a
duly certified copy of this Deed and a properly certified copy of the Statutory
Mortgage and any assignment thereof (which shall form a part of the Vessel's
papers) and cause the same to be shown to any person having business with the
Vessel which might create or imply any commitment or encumbrance whatsoever on
the Vessel and place and maintain in a frame in a conspicuous place in the
navigation room and in the cabin of the Master of the Vessel a printed notice
such that the printed area covers a space not less than six inches wide by nine
inches high in the following form:
"NOTICE OF FIRST MORTGAGE"
"This Vessel is owned by CalPetro Tankers (Bahamas I) Limited and is
subject to a First Priority Statutory Mortgage and Deed of Covenants
collateral thereto in favor of California Petroleum Transport
Corporation, as mortgagee. Under the terms of said Deed, neither the
Shipowner nor any charterer nor the master of this Vessel nor any
other person has any power, right or authority whatever to create
incur or permit to be imposed on this Vessel any lien or encumbrance
except for Master's and crew's wages for not more than three (3)
months and salvage."
(b) Notwithstanding the requirement for the Shipowner to maintain
the Notice of Mortgage described in Section 4.17(a), so long as the Charter is
in effect, the Shipowner shall maintain the Notice of First Mortgage described
in Clause 14 of the Charter.
<PAGE>
-18-
Section 4.18 Further Assurances.
------------------
(a) The Shipowner shall pay to the Mortgagee on demand on a full
indemnity basis all moneys whatsoever which the Mortgagee shall or may expend,
be put to or become liable for in or about the protection maintenance or
enforcement of the security created by this Deed, the Statutory Mortgage and the
other Security Documents or in or about the exercise by the Mortgagee of any of
the powers vested in the Mortgagee hereunder or thereunder including any and all
costs, charges, legal fees and expenses of the Mortgagee and shall pay interest
thereon at the Default Rate until the date of repayment by the Shipowner both
before and after judgment.
(b) The Shipowner shall do and permit to be done each and every act
or thing whatsoever which the Mortgagee may require to be done for the purpose
of enforcing the Mortgagee's rights hereunder and to allow the Mortgagee to use
the Shipowner's name as may be required for that purpose.
Section 4.19. Withholding Tax.
---------------
The Shipowner shall take any lawful action to the extent necessary to
prevent or avoid the imposition of any withholding taxes (other than any
withholding tax with respect to charterhire to the extent required to be paid or
reimbursed by any charterer pursuant to a charter) by any taxing jurisdiction
(including The Bahamas) with respect to any payments under the Obligations,
including changing its jurisdiction of incorporation or residence; provided
however, that it shall not be required to take, or fail to take, any action (i)
if in the opinion of counsel such act or failure to act would violate applicable
law or (ii) if in the reasonable opinion of the Shipowner the actions necessary
to avoid or prevent imposition of such withholding taxes would be unduly
burdensome. For purposes of clause (ii) of this paragraph a requirement to
change the jurisdiction of the Shipowner's incorporation or residence shall not
be treated as unduly burdensome.
Section 4.20. Expenses.
--------
The Shipowner shall upon demand pay to the Mortgagee (or as it may
direct) the amount of all investigation expenses, mortgage taxes, recording
charges, filing fees, revenue and documentary stamps and any other charges
incurred by the Mortgagee in connection with the preparation, completion or
registration of this Deed and the Statutory Mortgage, including without
limitation the reasonable expenses and fees of counsel to the Mortgagee.
Likewise any and all expenses incurred at any time by the Mortgagee with respect
to the mortgaged property or the protection or the enforcement of its rights
hereunder or thereunder, including without limitation the expenses and fees of
counsel to the Mortgagee, shall be paid by the Shipowner or, if paid by the
Mortgagee, shall be paid by the Shipowner promptly upon demand together with
interest thereon from the date of demand until such repayment at the Default
Rate in effect from time to time. The payment of all expenses and other amounts
under this Section 4.20 shall be secured by this Deed and the Statutory Mortgage
and no amounts payable by the Shipowner to
<PAGE>
-19-
the Mortgagee under this Section 4.20 shall in any circumstances be repayable to
the Shipowner.
Section 4.21. Indebtedness.
------------
The Shipowner will not directly or indirectly, create, incur, issue,
assume, guarantee or otherwise become directly or indirectly liable with respect
to, or become responsible for the payment of any indebtedness, except for the
obligations under the Shipowner's Loan Agreements.
Section 4.22. Business of Shipowner.
---------------------
The Shipowner will not engage in any business other than the ownership
and operation of its Vessel as described herein and in accordance with the
Shipowner's charter and by-laws.
Section 4.23. No Bankruptcy Petition.
----------------------
The Shipowner will not (i) commence any case, proceeding or other
action under any existing or future bankruptcy, insolvency or similar law
seeking to have an order for relief entered with respect to it, or seeking
reorganization, arrangement, adjustment, winding up, liquidation, dissolution,
composition or other relief with respect to its debt, (ii) seek appointment of a
receiver, trustee, custodian or other similar official for it or any part of its
assets, (iii) make a general assignment for the benefit of creditors or (iv)
take any action in furtherance of, or consenting or acquiescing in, any of the
foregoing.
Section 4.24. Consolidation, Merger and Sale of Assets.
----------------------------------------
The Shipowner shall not consolidate with, or merge with or into, any
other Person or convey or transfer to any Person all or any part of the Vessel.
Section 4.25. Loans, Advances and Other Liabilities.
-------------------------------------
The Shipowner will not make any capital contributions, advances or
loans to, or investments or purchases of capital stock in, any Person, except
for Allowable Investments and Permitted Investments, as defined in the
Collateral Trust Agreement.
Section 4.26. Restricted Payment.
------------------
The Shipowner will not make any Restricted Payment except as set forth
in the Loan Agreements.
Section 4.27. Reports by the Shipowner. The Shipowner covenants:
------------------------
(a) to file with the Mortgagee, within 15 days after the Shipowner
is required to file the same with the Commission, copies of the
annual reports and of
<PAGE>
-20-
the information, documents, and other reports (or copies of
such portions of any of the foregoing as the Commission may
from time to time by rules and regulations prescribe) which the
Shipowner may be required to file with the Commission pursuant
to Section 13 or 15(d) of the Exchange Act, or, if the
Shipowner is not required to file information, documents, or
reports pursuant to either of such Sections of the Exchange
Act, then to file with the Mortgagee and the Commission, in
accordance with rules and regulations prescribed from time to
time by the Commission, such of the supplementary and periodic
information, documents, and reports which may be required
pursuant to Section 13 of the Exchange Act, or, in respect of a
security listed and registered on a national securities
exchange, as may be prescribed from time to time in such rules
and regulations;
(b) to file with the Mortgagee and the Commission, in accordance
with rules and regulations prescribed from time to time by the
Commission, such additional information, documents, and reports
with respect to compliance by the Shipowner with the conditions
and covenants provided for in this Indenture as may be required
from time to time by such rules and regulations;
(c) to transmit to the Mortgagee in the manner and to the extent
required by Section 313(c) of the Trust Indenture Act, within
30 days after the filing thereof with the Mortgagee, such
summaries of any information, documents and reports required to
be filed by the Shipowner pursuant to subsections (a) and (b)
of this Section 4.27 as may be required by rules and
regulations prescribed form time to time by the Commission; and
(d) furnish to the Mortgagee, on or before each August 1,
commencing in 1995, a brief certificate from the principal
executive officer, principal financial officer or principal
accounting officer of the Shipowner as to his or her knowledge
of the Shipowner's compliance with all conditions and covenants
under this Mortgage. For purposes of this subsection (d), such
compliance shall be determined without regard to any period of
grace or requirement of notice provided under this Mortgage.
ARTICLE V
EVENTS OF DEFAULT; REMEDIES
Section 5.01 Events of Default.
-----------------
The following shall constitute Events of Default hereunder:
<PAGE>
-21-
(a) An Event of Default shall occur under either the Serial Loan
Agreement, the Term Loan Agreement or any Other Loan Agreement;
(b) Default in the payment of any sums payable under the Deed and
the Statutory Mortgage to the Mortgagee within two (2) Business
Days after such amount was due;
(c) Default by the Shipowner in the due observance or performance
of any covenant set forth in Sections 4.02, 4.03, 4.04, 4.06,
4.10, 4.16, 4.24 and 4.26;
(d) Default in any material respect in the performance, or breach
in any material respect, of any covenant of the Shipowner
(other than Sections 4.02, 4.03, 4.04, 4.06, 4.10, 4.16, 4.24
and 4.26) or if any representation or warranty of the Shipowner
made in the Deed or the Statutory Mortgage or in any
certificate or other writing delivered pursuant thereto or in
connection therewith with respect to or affecting the Vessels
shall prove to be inaccurate in any material respect as of the
time when the same shall have been made, and, if such breach or
default or inaccuracy is curable, continuance of such default
or breach or inaccuracy for a period of 30 days after the
earlier to occur of (a) actual knowledge of such default,
breach or inaccuracy by the Shipowner or (b) the date on which
there has been given by registered or certified mail to the
Shipowner by the Mortgagee a written notice thereof;
(e) The entry of a decree or order for relief by a court having
jurisdiction over the Shipowner and its assets in any
involuntary case under any applicable federal or state
bankruptcy, insolvency, or other similar law of any relevant
jurisdiction now or hereafter in effect, or appointing a
receiver, liquidator, assignee, custodian, trustee, or
sequestrator (or other similar official) for the Shipowner or
for any substantial part of its property, or ordering the
winding up or liquidation of its respective affairs, and the
continuance of any such decree or order unstayed and in effect
for a period of 60 consecutive days;
(f) The commencement by the Shipowner of a voluntary case under any
applicable federal or state bankruptcy, insolvency, or other
similar law of any relevant jurisdiction now or hereafter in
effect in any jurisdiction, or the consent by the Shipowner to
the appointment of or taking possession by a receiver,
liquidator, assignee, custodian, trustee or sequestrator (or
other similar official) of the Shipowner or any substantial
part of its property, or the making by the Shipowner of any
general assignment for the benefit of creditors, or the failure
by the Shipowner generally to pay its debts as they become due,
or the taking of action by the Shipowner in furtherance of any
such action;
(g) The Vessel is deemed a Total Loss and the insurance proceeds
thereof have not been received by the Mortgagee within 60 days
after the date on which the Vessel
<PAGE>
-22-
was deemed a Total Loss; provided, however, if the Vessel is
under charter to the Charterer pursuant to the Charter, such an
event shall be an Event of Default under this Deed and the
Statutory Mortgage if the Mortgagee has not received the amount
payable by the Charterer in the event of a Total Loss pursuant
to the Charter within 5 business days of the date on which such
amounts are due pursuant to the Charter;
(h) The Shipowner shall abandon the Vessel;
(i) A default (as described in Clause 18 of the Charter) shall have
occurred under the Charter; or
(j) This Deed and the Statutory Mortgage or any material provision
hereof or thereof shall be deemed invalidated in whole or in
part by any present or future law of the Bahamas or decision of
any competent court.
Section 5.02 Remedies.
--------
In the event any one or more Events of Default shall have
occurred and be continuing, then, in each and every such case the Mortgagee,
shall have the right to:
(a) declare immediately due and payable all of the Obligations (in
which case all of the same shall be immediately due), and bring
suit at law, in equity or in admiralty, as it may be advised,
to recover judgment for the Obligations and collect the same
out of any and all property of the Shipowner whether covered by
the Deed, the Statutory Mortgage or otherwise;
(b) exercise all of the rights and remedies in foreclosure and
otherwise given to mortgagees by the provisions of applicable
law;
(c) take and enter into possession of the Vessel, at any time,
wherever the same may be, without court decision or other legal
process and without being responsible for loss or damage and
the Mortgagee may, without being responsible for loss or
damage, hold, lay-up, lease, charter, operate or otherwise use
such Vessel for such time and upon such terms as it may deem to
be for its best advantage, and demand, collect and retain all
hire, freights, earnings, issues, revenues, income, profits,
return premiums, salvage awards or recoveries, recoveries in
general average, and all other sums due or to become due in
respect of such Vessel or in respect of any insurance thereon
from any person whomsoever, accounting only for the net
profits, if any, arising from such use of the Vessel and
charging upon all receipts from use of the Vessel or from the
sale thereof by court proceedings or by private sale all costs,
expenses, charges, damages or losses by reason of such use, and
if at any time the Mortgagee avails itself of the right given
to it to take the Vessel: (i) the Mortgagee shall have the
right to dock the Vessel for a
<PAGE>
-23-
reasonable time at any dock, pier or other premises of the
Shipowner without charge, or to dock her at any other place at
the cost and expense of the Shipowner, and (ii) the Mortgagee
shall have the right to require the Shipowner to deliver, and
the Shipowner shall on demand, at its own cost and expense,
deliver to the Mortgagee the Vessel as demanded; and the
Shipowner shall irrevocably instruct the master of the Vessel
so long as the Deed and the Statutory Mortgage are outstanding
to deliver the Vessel to the Mortgagee as demanded;
(d) sell the Vessel or any share therein with or without the
benefit of any charter party or other engagement by public
auction or private contract without legal process at any place
in the world and upon such terms as the Mortgagee in its
absolute discretion may determine with power to postpone any
such sale and without being answerable for any loss occasioned
by such sale or resulting from the postponement thereof and at
any such public auction the Mortgagee may become the purchaser
and shall have the right to set off the purchase price against
the Obligations;
(e) to require that all policies, contracts and other records
relating to the Insurance (including details of and
correspondence concerning outstanding claims) be forthwith
delivered to such brokers as the Mortgagee may nominate;
(f) to collect, recover, compromise and give a good discharge for
all claims then outstanding or thereafter arising under any of
the Insurance and to take over or institute (if necessary using
the name of the Shipowner) all such proceedings in connection
therewith as the Mortgagee in its absolute discretion thinks
fit and to permit the brokers through whom collection or
recovery is effected to charge and retain the usual brokerage
therefor;
(g) to discharge, compound, release or compromise claims in respect
of the Vessel which have given or may give rise to any charge
or lien on the Vessel or which are or may be enforceable by
proceedings against the Vessel under the laws of all countries
to whose jurisdiction the Vessel may from time to time become
subject;
(h) pending sale of the Vessel to remove the Vessel or to require
the Vessel to be removed from any place where she may be or be
lying to any port, harbor, dock or other location for the
purposes of the Vessel docking, laying up, repair, management,
employment, maintenance, or sale or to preserve or maintain the
Mortgagee's security in the Vessel in such manner as the
Mortgagee may in its complete discretion deem necessary;
(i) to discharge, store, load, tranship and otherwise handle any
cargo for the time being on board the Vessel without liability
to any third party with regard thereto;
<PAGE>
-24-
(j) pending sale of the Vessel to manage, insure, maintain and
repair the Vessel and to hold, lease, charter, operate, employ,
lay up or otherwise use the Vessel in such manner and for such
period as the Mortgagee in its absolute discretion deems
expedient accounting only for the net profits (if any) of such
use and for the purposes aforesaid the Mortgagee shall be
entitled to do all acts and things incidental or conducive
thereto and in particular to enter into such arrangements
respecting the Vessel, her insurance, management, maintenance,
repair, classification and employment and generally to do and
cause to be done all such acts and things whatsoever and to
make all such arrangements whatsoever in respect of the Vessel
or the working of the same in all respects as if the Mortgagee
were the absolute and sole owner of the Vessel and without
being responsible for any loss and damage thereby incurred; and
(k) to recover from the Shipowner on demand all expenses, payments,
disbursements, costs, losses and damages as may be incurred by
the Mortgagee whether the Mortgagee be in possession of the
Vessel or not or in exercise by the Mortgagee of any of the
powers herein contained together with interest thereon at the
Default Rate and such expenses, payments, disbursements, costs,
losses and damages together with the said interest thereon
shall, until paid by the Shipowner to the Mortgagee, be secured
on the Vessel by this Deed and the Statutory Mortgage.
Section 5.03 Sale of the Vessel.
------------------
(a) A sale of the Vessel made in pursuance of this Deed and
the Statutory Mortgage whether under the power of sale hereby granted or any
judicial proceedings shall operate to divest all right, title and interest of
any nature whatsoever of the Shipowner herein and thereto and shall bar the
Shipowner its successors and assigns and all persons claiming by through or
under them provided such sale is by auction and that nothing herein shall be
deemed to derogate from the Shipowner's duty to the Mortgagee. Upon any such
sale, the purchaser shall not be bound to see or inquire whether the Mortgagee's
power of sale has risen in the manner provided by the Deed and the Statutory
Mortgage and the sale shall be within the power of the Mortgagee and the receipt
of the Mortgagee for the purchase money shall effectively discharge the
purchaser who shall not be concerned with the manner of application of the
proceeds of sale or be in any way answerable or otherwise liable therefor. The
Mortgagee may bid for and purchase the Vessel and upon compliance with the terms
of sale may hold, retain and dispose of the Vessel without further
accountability therefor.
(b) The Shipowner hereby irrevocably appoints the Mortgagee and its
assigns as its true and lawful attorney with full power to act alone and with
full power of substitution until the due discharge of this Deed and the
Statutory Mortgage in accordance with the laws of the Bahamas to make all
necessary transfers of the Vessel sold pursuant to Section 5.02, including,
without limitation, executing and delivering all instruments of assignment and
transfer or quitclaim as the Mortgagee may require and the Shipowner hereby does
ratify and confirm all that its said attorneys shall lawfully do by virtue
hereof. Nevertheless, the Shipowner shall
<PAGE>
-25-
if so requested by the Mortgagee ratify and confirm any such sale by executing
and delivering to the purchaser or purchasers of the Vessel such proper bills of
sale, conveyances, instruments of assignment and transfer or quitclaim and
releases as may be designated in such request.
Section 5.04 Mortgagee as Attorney-in Fact.
-----------------------------
The Mortgagee is hereby appointed attorney-in-fact of the Shipowner
and upon the Indebtedness becoming due and payable in the name of the Shipowner
to demand, collect, receive, compromise and sue for so far as may be permitted
by law all freights, hire, earnings, issues, revenues, income and profits of the
Vessel and all amounts due from underwriters under any insurance thereon as
payment of losses or as return premiums or otherwise salvage awards and
recoveries in general average or otherwise and all other sums due or to become
due upon the Indebtedness becoming due and payable in respect of the Vessel or
in respect of any insurance thereon from any person whomsoever and to make and
give and execute in the name of the Shipowner acquittances, receipts, releases
or other discharges for the same whether under seal or otherwise and to endorse
and accept in the name of the Shipowner all checks, notes, drafts, warrants,
agreements and all other instruments in writing with respect to the foregoing.
Section 5.05 Appointment of Receiver.
-----------------------
Whenever any right to enter and take possession of the Vessel accrues
to the Mortgagee, the Mortgagee may require the Shipowner to deliver and the
Shipowner shall on demand at its own cost and expense deliver to the Mortgagee
the Vessel as demanded. If any legal proceedings shall be taken to enforce any
right under this Deed and the Statutory Mortgage, the Mortgagee shall be
entitled as a matter of right to the appointment of a receiver of the Vessel and
the freights, hire, earnings, issues, revenues, income and profits due or to
become due and arising from the operation thereof.
Section 5.06 Arrest or Detention of Vessel.
-----------------------------
In the event that the Vessel shall be arrested or detained by any
marshal or other officer of any court of law, equity or admiralty jurisdiction
in any country or nation of the world or by any government or other authority
and shall not be released from arrest or detention within fifteen (15) days from
the date of arrest or detention, the Shipowner hereby authorizes and empowers
the Mortgagee, its successors or assigns, to apply for and receive possession of
or to take possession of the Vessel with all the rights and powers that the
Shipowner or its successors or assigns may have, possess and exercise in any
such event, and this power of attorney shall be irrevocable and may be exercised
not only by the Mortgagee but also by an assignee or appointee of the Mortgagee
with full power of substitution to the same extent and effect as if such
assignee or appointee has been named by express designation.
Section 5.07 Defense of Suits.
----------------
The Shipowner also authorizes and empowers the Mortgagee, and its
successors,
<PAGE>
-26-
assigns and appointees, to appear in the name of the Shipowner, and its
successors and assigns, in any court of any country or nation of the world where
a suit is pending against the Vessel because of or on account of any alleged
lien against the Vessel from which the Vessel has not been released and to take
such proceedings and do such things as to them or any of them may seem proper
toward the defense of such suit and the discharge of such lien, and all monies
expended by them or any of them for the purpose of such defense and/or discharge
shall be a debt due from the Shipowner, and its successors and assigns, to the
Mortgagee, and its successors and assigns, and payment thereof together with
interest thereon at the Default Rate (to the extent permitted by law) from time
to time in effect shall be secured by the lien of this Deed and the Statutory
Mortgage in like manner and extent as if the amount and description thereof were
written herein.
Section 5.08 Cumulative Rights, Powers and Remedies.
--------------------------------------
(a) Each and every right, power and remedy herein given to the
Mortgagee shall be cumulative and shall be in addition to every other right,
power and remedy herein given or now or hereafter existing at law, in equity,
admiralty or by statute and each and every power and remedy whether herein given
or otherwise existing may be exercised from time to time and as often and in
such order as may be deemed expedient by the Mortgagee, and the exercise or the
beginning of the exercise of any right, power or remedy shall not be construed
to be a waiver of the right to exercise at the same time or thereafter any other
power or remedy.
(b) No delay or omission of the Mortgagee to exercise any right or
power vested in it under the Security Documents or any of them shall impair such
right or power or be construed as a waiver of or as acquiescence in any default
by the Shipowner, nor shall the acceptance by the Mortgagee of any security or
any payment on account of the Indebtedness, although made after default, be
deemed a waiver of any right arising out of any future default or of any past
default, and in the event of the Mortgagee at any time agreeing to waive any
such right or power such waiver shall be revocable by the Mortgagee at any time
and the right or power shall henceforth be again exercisable as though there had
been no such waiver.
(c) In the event the Mortgagee shall have proceeded to enforce any
right or pursue any power under this Deed and the Statutory Mortgage by
foreclosure, entry or otherwise and such proceedings shall have been
discontinued or abandoned for any reason, or shall have been determined
adversely to the Mortgagee, then and in every such case the Shipowner and the
Mortgagee shall be restored to their former positions and rights hereunder with
respect to the property subject or intended to be subject to this Deed and the
Statutory Mortgage and all rights, remedies and powers of the Mortgagee shall
continue as if no such proceedings had been taken.
Section 5.09 Application of Proceeds.
-----------------------
The proceeds of any sale made either under the power of sale hereby
granted to the Mortgagee or under a judgment or decree in any judicial
proceeding for the foreclosure of this Deed and the Statutory Mortgage or for
the enforcement of any remedy granted to the
<PAGE>
-27-
Mortgagee hereunder, or any net earnings arising from the management, charter or
other use of the Vessel by the Mortgagee under any of the powers herein
reserved, any amounts on deposit to the credit of the Shipowner or the Mortgagee
from earnings of the Vessel as provided herein and any other moneys received by
the Mortgagee pursuant to the terms of this Deed and the Statutory Mortgage or
in any proceeding hereunder other than under Section 4.03(l)(ii), the
application of which is not elsewhere herein specifically provided for, shall be
applied as follows:
First: To the payment of all reasonable expenses and charges,
including the expenses of any taking, attorney's fees, court costs and
any other expenses or advances made or incurred by the Mortgagee in
the protection of its right or the pursuance of its remedies under the
Loan Agreements, this Deed or the Statutory Mortgage;
Second: To the payment of all amounts due to the Mortgagee in
respect of taxes, indemnities, fees, expenses, premiums, purchase of
liens or otherwise under the provisions of this Deed and the Statutory
Mortgage;
Third: To the payment of interest on the Term Loan and Serial
Loan, pro rata, in accordance with their respective outstanding
balances;
Fourth: To the payment of principal on the Term Loan and Serial
Loan, pro rata, in accordance with their respective outstanding
balance;
Fifth: To the payment of any amounts due and owing under the
Other Loans, pro rata, in the event of an acceleration of the
principal amount of such Other Loans; and
Sixth: To the payment of any surplus thereafter remaining to
the Shipowner or whomsoever may be lawfully entitled thereto.
The Shipowner has and shall have no personal liability or obligation
with respect to the amounts specified in paragraphs "FIRST" through "FIFTH"
above, which are payable solely from the income and proceeds received by the
Mortgagee from the Mortgagee's right, title and interest in and to the Vessel.
Section 5.10 Mortgagee's Right to Remedy Defaults.
------------------------------------
If the Shipowner shall default in the performance or observance of any
of the covenants in this Deed or the Statutory Mortgage on its part to be
performed or observed, the Mortgagee may in its discretion do any act or make
any expenditures necessary to remedy such default, and the Shipowner shall
promptly reimburse the Mortgagee, with interest at the Default Rate from time to
time in effect, for any and all expenditures so made or incurred and until the
Shipowner has so reimbursed the Mortgagee for such expenditures, the amount
thereof shall be
<PAGE>
-28-
a debt due from the Shipowner to the Mortgagee and payment thereof shall be
secured by the lien of this Deed and the Statutory Mortgage in like manner and
extent as if the amount and description thereof were written herein, but the
Mortgagee, although privileged to do so, shall be under no obligation to the
Shipowner to make any such expenditures and the making thereof shall not relieve
the Shipowner of any default in that or any other respect. The Shipowner also
shall reimburse the Mortgagee promptly with interest at the rates referred to
above for any and all advances and expenses made or incurred by the Mortgagee at
any time in taking the Vessel or otherwise protecting its rights hereunder and
for any and all damages sustained by the Mortgagee from or by reason of any
default or defaults of the Shipowner.
Section 5.11 Delegation of Powers.
--------------------
The Mortgagee may delegate to any person or persons all or any of the
trusts, powers or discretions vested in it pursuant to this Deed and the
Statutory Mortgage and any such delegations may be made upon such terms and
conditions and subject to such regulations (including power to sub-delegate) as
the Mortgagee may in its absolute discretion deem appropriate.
Section 5.12 Legal Actions.
-------------
In addition to the other provisions hereof for enforcement of the rights of
the Mortgagee under this Deed and the Statutory Mortgage, the Mortgagee may, at
its option, in the event of any default by the Shipowner, bring an action, suit
or other proceeding in rem against the Vessel to foreclose this Deed and the
-- ---
Statutory Mortgage and sell the Vessel in any court in the Bahamas or any other
country in which the Vessel may be found; or an action, suit or other proceeding
in personam against the Shipowner or any other person obligated under the Loan
- -- --------
Agreements or any of the Security Documents to recover payment of any amount
owing by the Shipowner or such other person and/or to foreclose this Deed and
the Statutory Mortgage and sell the Vessel in any country in which the Vessel or
the Shipowner or any person so obligated may be found.
Section 5.13 Deed and Statutory Mortgage Subject to Rights of
------------------------------------------------
Charterer under the Charter.
---------------------------
So long as the Charter is in effect, the rights of the Mortgagee set
forth in this Article V are and shall be subject to the rights of the Charterer
under the Charter. So long as the Charterer shall not be in default under and
pursuant to the terms of the Charter, the Charterer shall be entitled to quiet
enjoyment of the Vessel.
<PAGE>
-29-
ARTICLE VI
MISCELLANEOUS PROVISIONS
Section 6.01 Performance by Charterer or Charterer Under an
----------------------------------------------
Acceptable Replacement Charter.
------------------------------
(a) It is hereby agreed by the parties hereto that, for the
duration of the Charter, when the Charterer or any charterer under an Acceptable
Replacement Charter performs and discharges its obligations under the Charter
respecting the Vessel, such performance of the said obligations by the Charterer
shall be or by such charterer deemed to be proper and due performance of the
same obligations of the Shipowner under this Deed, the Statutory Mortgage, the
Assignment of Earnings, and Insurances and other Security Documents,
notwithstanding that the extent or manner of performance of the Shipowner's
obligations may differ from that of the Charterer under the Charter or of the
charterer under an Acceptable Replacement Charter.
(b) So long as the Charter is in effect, to the extent the
Shipowner's approval under the Charter is not to be unreasonably withheld, the
approval by the Mortgagee under the corresponding provisions of this Deed also
shall not be unreasonably withheld.
(c) So long as the Charter is in effect, where any obligation with
respect to the Vessel is undertaken by the Shipowner under this Deed, the
Statutory Mortgage or any other of the Security Documents but such obligation is
not undertaken by the Charterer under the Charter, then the Shipowner shall not
be treated as in default under this Deed and the Statutory Mortgage if such
obligation cannot be performed by virtue of the Charter.
(d) The insurance coverage required under an Acceptable Replacement
Charter or maintained by the Shipowner or charterer in connection with any other
charter entered into after the termination of the related Charter must be
sufficient to maintain the credit rating of the Term Mortgage Notes by the
Rating Agencies at least at the rating applicable to the Term Mortgage Notes
immediately prior to the effectiveness of such Acceptable Replacement Charter or
other charter.
Section 6.02 Discharge of Mortgage.
---------------------
The Mortgagee agrees that upon payment of the Indebtedness it shall at
the expense of the Shipowner discharge this Deed and the Statutory Mortgage and
transfer or release to the Shipowner all insurance policies and certificates of
entry relating to the Vessel freed and discharged from the provisions herein
contained.
<PAGE>
-30-
Section 6.03 Indemnity.
---------
The Shipowner assumes liability for and agrees to indemnify the
Mortgagee and the Holders and their respective directors, officers, employees
and agents from and against any and all liabilities, losses, damages, penalties,
costs and expenses, including legal expenses, of whatsoever kind or nature,
imposed on or asserted against any of the Mortgagee and the Holders and such
directors, officers, employees and agents in any way relating to or arising out
of the Vessel or the use thereof at any time by any party (other than by the
Mortgagee after such time as the Mortgagee shall have taken possession of the
Vessel pursuant to Section 5.02), including, without limitation, (i) latent and
other defects whether or not discovered or discoverable by the Shipowner or any
other person, (ii) claims for patent, trademark or copyright infringement, (iii)
tort or damage claims of any kind, (iv) claims or penalties arising from any
violation of the laws of any country or political subdivision thereof and (v)
claims for environmental liability or in any way relating to applicable
environmental laws.
Section 6.04 Governing Law.
-------------
THIS DEED SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
COMMONWEALTH OF THE BAHAMAS AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE
PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS, WITHOUT
GIVING EFFECT TO PRINCIPLES OF CONFLICTS OF LAW.
Section 6.05 Severability.
------------
If any provision of this Deed and the Statutory Mortgage is held to be
in conflict with any applicable statute or rule of law or is otherwise held to
be unenforceable for any reason whatsoever, such circumstances shall not have
the effect of rendering the provision in question inoperative or unenforceable
in any other case or circumstance, or of rendering any other provision or
provisions herein contained invalid, inoperative, or unenforceable to any extent
whatsoever.
The invalidity of any one or more phrases, sentences, clauses or
Sections of this Deed or the Statutory Mortgage, shall not affect the remaining
portions of this Deed and the Statutory Mortgage, or any part thereof.
Section 6.06 Notices.
-------
All demands, notices and communications hereunder shall be in writing,
personally delivered or mailed by certified mail-return receipt requested, and
shall be deemed to have been duly given upon receipt (a) in the case of the
Mortgagee, at the following address: California Petroleum Transport Corporation,
c/o JH Management Corporation, Room 6/9, One International Place, Boston,
Massachusetts 02110-2624, (b) in the case of the Shipowner, at the following
address: Mareva House, 4 George Street, Nassau, Bahamas, or at other such
address
<PAGE>
-31-
as shall be designated by such party in a written notice to the other parties.
Section 6.07 Headings.
--------
The captions or headings in this Deed are for convenience only and in
no way define, limit or describe the scope or intent of any provisions or
sections of this Deed or the Statutory Mortgage.
Section 6.08 General Interpretive Principles.
-------------------------------
For purposes of this Deed except as otherwise expressly provided or
unless the context otherwise requires:
(a) the defined terms in this Deed shall include the plural as well
as the singular, and the use of any gender herein shall be deemed to include any
other gender;
(b) accounting terms not otherwise defined herein have the meanings
assigned to them in accordance with generally accepted accounting principles as
in effect on the date hereof;
(c) references herein to "Articles", "Sections", "Subsections",
"paragraphs", and other subdivisions without reference to a document are to
designated Articles, Sections, Subsections, paragraphs and other subdivisions of
this Deed;
(d) a reference to a Subsection without further reference to a
Section is a reference to such Subsection as contained in the same Section in
which the reference appears, and this rule shall also apply to paragraphs and
other subdivisions;
(e) the words "herein", "hereof", "hereunder" and other words of
similar import refer to this Deed and the Statutory Mortgage as a whole and not
to any particular provision; and
(f) the term "include" or "including" shall mean without limitation
by reason of enumeration.
Section 6.09 Successors and Assigns.
----------------------
This Deed and the Statutory Mortgage shall inure to the benefit of and
be binding upon the Shipowner and the Mortgagee and their respective successors
and assigns.
<PAGE>
-32-
Section 6.10 Consent to Jurisdiction.
-----------------------
Any legal suit, action or proceeding against the Shipowner arising out
of or relating to this Deed, the Statutory Mortgage, the Loan Agreements or any
other Security Document, or any transaction contemplated hereby or thereby, may
be instituted in any federal or state court in The City of New York, State of
New York and the Shipowner hereby waives any objection which it may now or
hereafter have to the laying of venue of any such suit, action or proceeding,
and the Shipowner hereby irrevocably submits to the jurisdiction of any such
court in any such suit, action or proceeding. The Shipowner hereby irrevocably
appoints and designates CT Corporation System, having an address at 1633
Broadway, New York, New York, its true and lawful attorney-in-fact and duly
authorized agent for the limited purpose of accepting service of legal process
and the Shipowner agrees that service of process upon such party shall
constitute personal service of such process on the Shipowner. The Shipowner
shall maintain the designation and appointment of such authorized agent until
all amounts payable under this Deed, the Statutory Mortgage, the Loan Agreements
and the other Security Documents shall have been paid in full. If such agent
shall cease to so act, the Shipowner shall immediately designate and appoint
another such agent satisfactory to the Mortgagee and shall promptly deliver to
the Mortgagee evidence in writing of such other agent's acceptance of such
appointment.
Section 6.11 Payment.
-------
All monies payable by the Shipowner to the Mortgagee shall be paid in
Dollars without deduction for or on account of any present or future taxes or
imposts whatsoever levied or assessed by or within any state or nation or any
political subdivision or taxing authority thereof or therein and the Shipowner
shall indemnify the Mortgagee against all such taxes or imposts. The Shipowner
shall, subject to the prior written approval of the Mortgagee (such approval not
to be unreasonably withheld), be entitled to take action in the name of the
Mortgagee at the Shipowner's expense against any taxing authority in respect of
any withholding or other taxes for which the Shipowner have indemnified the
Mortgagee, and the Mortgagee agrees to reasonably cooperate with the Shipowner
in taking such action. If as a result of any such action any moneys are
received that are attributable to such indemnified taxes (including any interest
thereon paid by such taxing authority) the same shall be recovered by the
Shipowner.
Section 6.12 Recorded Amount.
---------------
For the purposes of the recording this First Priority Statutory
Mortgage under the law of the Bahamas, the total amount of this Deed and the
Statutory Mortgage is Two Hundred and Eighty-Five Million Four Hundred Thousand
United States Dollars (US$285,400,000), and interest and the performance of the
Deed and Statutory Mortgage covenants; the maturity date is the ___ day of
_____, 2015, and the discharge amount is the same as the total amount. It is not
intended that this Deed and the Statutory Mortgage shall include property other
than the Vessel, and it shall not include property other than the Vessel as the
term "vessel" is used in the
<PAGE>
-33-
provisions of the law of the Bahamas. Notwithstanding the foregoing, for
property other than the Vessel, if any should be determined to be covered by
this Deed and the Statutory Mortgage, the discharge amount is zero point zero
one percent (0.01%) of the total amount.
Section 6.13 No waiver of Preferred Status.
-----------------------------
No provision of this Deed and the Statutory Mortgage shall be deemed
to be a stipulation that the Mortgagee waives the priority status of the
Statutory Mortgage given by the laws of the Bahamas. Any provision of this
Mortgage which would otherwise constitute such a stipulation, to such extent,
shall have no force or effect.
<PAGE>
-34-
IN WITNESS whereof the Shipowner has signed this Deed on the day and year
first before written.
CALPETRO TANKERS (BAHAMAS I)
LIMITED
By:
---------------------
Name:
-------------------
Title:
------------------
<PAGE>
-35-
ACKNOWLEDGEMENT
---------------
STATE OF NEW YORK )
:ss.:
COUNTY OF NEW YORK )
On this day of _________ __ 1995, before me personally came
__________________ to me known, and known to me to be the person who executed
the foregoing instrument, who being by me duly sworn, did depose and say that he
resides at ______________________________________ that he is the attorney-in-
fact for CalPetro Tankers (Bahamas I) Limited the corporation described in, and
which executed the foregoing instrument; that it was so affixed by order of the
Board of Directors of said corporation and that he signed his name thereto by
like order.
---------------------------------------
<PAGE>
EXHIBIT A
BROKER'S LETTER OF UNDERTAKING
(date)
_____________________
Re: CalPetro Tankers (Bahamas III) Limited
Owner of m.t. Condoleezza Rice (the "Vessel")
---------------------------------------------
We confirm that we have effected insurances for the account of the
above Owner as set out in Appendix "A" attached hereto.
Pursuant to instructions received from CalPetro Tankers (Bahamas III)
Limited (the "Owner"), and in consideration of your approving our appointment as
Brokers in connection with the insurances covered by this letter, we hereby
undertake:
1. to hold the Insurance Slips or Contracts, the Policies when
issued, and any renewals of such Policies or new Policies or any
Policies substituted (with your consent) therefor and the benefit
of the insurance thereunder to your order in accordance with the
terms of the Notice of Assignment and Loss Payable Clause set out
in Appendix "B" attached hereto; and
2. to have endorsed on each and every Policy as and when the same is
issued a copy of the Notice of Assignment and Loss Payable Clause
in the form of Appendix "B" attached hereto dated and signed by
the Shipowner and acknowledged by Underwriters in accordance with
market practice; and
3. to advise you immediately of any material changes which may be
made to the terms of the insurances or if we cease to be Brokers
for purposes of said insurances; and
4. to advise you, not later than one month before expiry of said
insurances, in the event of our not having received notice of
renewal instructions from the Shipowner and/or its agents, and in
the event of our receiving instructions to renew said insurances
to advise you promptly of the details thereof.
Our above undertakings are given subject to our lien on the Policies
for premiums for the Vessel and subject to our right of cancellation on default
in payment of such premiums. We undertake to advise you immediately if any
premiums are not paid to us by the applicable due date and not to exercise such
rights of cancellation without giving you (i) fourteen (14) days' prior notice
in writing, either by letter to the above address or by telex or cable to
________________, respectively, and (ii) a reasonable opportunity of paying any
premiums
<PAGE>
-2-
outstanding except it is understood that in the case of War Risks the
terms of the Automatic Termination of Cover Clause contained in the War Risks
Policies shall override any undertakings given by us as Brokers. We further
undertake and agree that in the event of a total loss of the Vessel, or an
arranged, compromised or constructive total loss, our lien on the Policies and
the proceeds thereof shall be limited to any other premiums or other amounts due
in respect of Vessel or interest insured under the Policies.
Notwithstanding the terms of the said Loss Payable clause and the said
Notice of Assignment, unless and until we receive notice from you to the
contrary, we shall be empowered to arrange for a collision and/or salvage
guaranty to be given in the event of bail being required in order to prevent the
arrest of the Vessel or to secure the release of the Vessel from arrest
following a casualty. We undertake to advise you immediately in the event of
our having arranged for a collision and/or salvage guaranty. Where a guaranty
has been given as aforesaid and the guarantor has paid an amount under the
guaranty in respect of such claim, there shall be payable directly to the
guarantor out of the proceeds of the said Policies an amount equal to the amount
so paid.
Finally, it is understood that all claims shall be collected through
us, as Brokers, and that in collecting such claims we are acting on your behalf
as assignee of the insurances covered by this letter.
Yours faithfully,
[insert name of Broker]
By:
---------------------------
Director
<PAGE>
SCHEDULE 1
DEFINED TERMS USED IN THE DEED
"Acceptable Replacement Charter" means any replacement charter which
satisfies each of the following requirements: (i) the charter is a bareboat
charter and requires that the charterer thereunder "gross up" charterhire
payments to indemnify and hold the Holders of the Securities harmless from any
withholding tax imposed on the charterhire payments or on the payments on the
Securities; (ii) the charterhire payments payable during the non-cancelable term
of such replacement charter, after giving effect to (1) any "gross up" of such
amounts as a result of any withholding tax on such charterhire payments, (2) the
receipt of the Termination Payment and (3) all fees and expenses incurred in
connection with the rechartering of the Vessel, provide sufficient funds for the
payment in full when due of (A) the Allocated Principal Amount of the Term
Mortgage Notes for the related Vessel and interest thereon in accordance with
the revised schedule of sinking fund and principal payments, that is applicable
upon termination of the related Charter, (B) the amount of Recurring Fees and
Taxes for such Vessel, (C) the amount of Management Fees and Technical Advisor's
Fees for such Vessel, (D) the amount of fees and expenses of the Indenture
Trustee, the Collateral Trustee and the Designated Representative allocable to
such Vessel and (E) an amount at least equal to 30% of the estimated amounts, on
a per annum basis, referred to in clauses (B), (C) and (D) above for
miscellaneous or unexpected expenses; and (iii) the Rating Agencies shall have
confirmed in writing to the Trustee that the terms and conditions of such
proposed charter will not result in the withdrawal or reduction of the then
current ratings of the Term Mortgage Notes.
"Allowable Investments" means for the Shipowner, its investment in the
Vessel and any Restricted Payment permitted to be made by the Shipowner and
certain obligations incurred in the ordinary course of the performance of the
Management Agreement.
"Assignment of Charter" means the assignment between the Shipowner and the
Mortgagee, as amended from time to time in accordance with the terms thereof,
together with the documents contemplated thereby, pursuant to which the
Shipowner assigns to the Mortgagee all of its right, title and interest in, to
and under the Charter.
"Assignment of Earnings and Insurances" means the assignment between the
Shipowner and the Mortgagee, as amended from time to time in accordance with the
terms thereof, pursuant to which the Shipowner assigns to the Mortgagee all of
its right, title and interest in, to and under the freights and hires (as well
as any charters entered into after the Closing Date) with respect to the Vessel.
"Assignment of Guarantee" means the assignment between the Shipowner and
the Mortgagee, as amended from time to time in accordance with the terms
thereof, pursuant to which the Shipowner assigns to the Mortgagee all of its
right, title and interest in, to and under the Chevron Guarantee.
"Business Day" means any day other than a Saturday, a Sunday or a day on
which banking institutions in New York, New York, or in the city and state where
the Trustee's
<PAGE>
-2-
principal offices are located, are authorized or are obligated by law, executive
order or governmental decree to be closed.
"Charter" means that certain Bareboat Charter, dated as of July 1, 1995,
between the Charterer and Shipowner.
"Charterer" means Chevron Transport Corporation.
"Chevron" means Chevron Corporation.
"Chevron Guarantee" means the guarantee of the obligations of the Charterer
under the Charter given by Chevron.
"Classification Society" means Det norske Veritas or any other private
organization which has as its purpose the supervision of vessels during their
construction and afterward, in respect to their seaworthiness and upkeep, and
the placing of vessels in grades or "classes" according to the society's rules
for each particular type of vessel.
"Closing Date" means July __, 1995.
"Code" means the United States Internal Revenue Code of 1986 and the
corresponding provisions of any successor statute.
"Collateral Trustee" means Chemical Trust Company of California.
"Commission" means the Securities and Exchange Commission.
"Compulsory Acquisition" means requisition for title or other compulsory
acquisition of the Vessel (otherwise than by requisition for hire), capture,
seizure, detention or confiscation of the Vessel by any other government or by
Persons acting or purporting to act on behalf of any government or governmental
authority.
"Default Period" means the period commencing the date any payment hereunder
was due to but not including the date such payment is paid in full.
"Default Rate" means a rate per annum for each day during the Default
Period until such payment shall be paid in full equal to 1.50% above LIBOR at
the commencement of such period.
"Dollar" or "$" means the lawful currency of the United States of America.
"Earnings" includes all monies whatsoever due or to become due to the
Shipowner at any time arising out of the use or operation of the Vessel or
otherwise including (but without prejudice to the generality of the foregoing)
all sums due and payable to the Shipowner under and pursuant to the Charter and
all freight, hire and passage monies and compensation payable
<PAGE>
-3-
to the Shipowner in the event of requisition of the Vessel for hire,
remuneration for salvage and towage, services, demurrage and detention moneys
and any other damages for breach (or payments for variation or termination) of
any charterparty or any contract of employment of the Vessel and all earnings of
the Vessel due or to become due to the Shipowner.
"Event of Default" means an Event of Default under Section ____ of the Loan
Agreement.
"Exchange Act" means the United States Securities Exchange Act of 1934, as
amended.
"Governmental Approval" means any authorization, consent, approval,
license, franchise, lease, ruling, permit, tariff, rate, certification,
exemption, filing or registration by or with any Governmental Authority relating
to the ownership of the Collateral or to the execution, delivery or performance
of the Loan Agreement or any Security Document.
"Governmental Authority" means the federal government, any state or other
political subdivision thereof, and any entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to government
and any other governmental entity with authority over the Shipowner or operation
of the Vessels.
"Indebtedness" means the payment, performance or other obligations of any
kind whatsoever of the Shipowner under and pursuant to the Loan Agreements and
the Security Documents, together with interest thereon, and all other sums which
may be or become due to the Deed and the Statutory Mortgagee under or pursuant
to the terms thereof and hereof.
"Insurance" means any policies and contracts of insurance and entries in
any protection and indemnity or war risks association which are effected by or
on behalf of the Shipowner in respect of the Vessel or otherwise in connection
with the Vessel, including but not limited to any insurance monies received by
the Shipowner pursuant to clauses 12 and 13 of the Charter and including all
claims and returns of premiums thereunder and including any compensation payable
by whomsoever to the Shipowner by virtue of requisition of the Vessel for title
or confiscation or seizure of the Vessel by any government or person or agency
purporting to act on behalf of any government.
"Issue of One Debenture" means each Issue of One Debenture between the
Shipowner and the Mortgagee, as amended from time to time in accordance with the
terms thereof, pursuant to which the Shipowner grants to the Mortgagee a
security interest in all of its assets.
"Law" means any statute, law, rule, regulation, ordinance, order, code,
policy or rule of common law, now or hereafter in effect, and any judicial or
administrative interpretation thereof by a Governmental Authority or otherwise,
including any judicial or administrative order, consent decree or judgment.
"Lien" means any mortgage, lien (statutory or other), pledge, security
interest,
<PAGE>
-4-
encumbrance, claim, hypothecation, assignment for security, deposit arrangement
or preference or other security agreement of any kind or nature whatsoever. For
purposes of the Loan Agreement, a Person shall be deemed to own subject to a
Lien any property which it has acquired or holds subject to the interest of a
vendor or lessor under any conditional sale agreement, capital lease or other
title retention agreement.
"Loan Agreements" means, collectively, the Serial Loan Agreement and the
Term Loan Agreement.
"Management Agreement" means the management agreement between the
Shipowner, the Manager and Barber Ship Management Group.
"Manager" means the Person performing the duties of the Manager under the
Management Agreement, initially P.D. Gram & Co. ans.
"Obligations" means, collectively, the Serial Obligations and the Term
Obligations.
"Optional Termination Date" means either _________, 2005, ______ 2007 or
_____ 2009.
"Other Loan Agreements" means, collectively, the six loan agreements, two
each between the Mortgagee and each of the Other Owners relating to the Other
Loans.
"Other Loans" means each of the loans from California Petroleum Transport
Corporation to each of the Other Owners made on the Closing Date, having an
aggregate initial principal amount of $______________..
"Other Owners" means Calpetro Tankers (Bahamas I) Limited, Calpetro Tankers
(Bahamas II) Limited and Calpetro Tankers (IOM) Limited.
"Payment Date" means each ________ and ______________ commencing
___________ 1995.
"Permitted Liens" means the Charter, any Acceptable Replacement Charter or
other charter for the Vessel, liens for crew's wages accrued for not more than
three months or for collision or salvage, liens in favor of suppliers of
necessaries or other similar liens arising in the ordinary course of its
business (accrued for not more than three months) or liens for loss, damage or
expense, which are fully covered by insurance or, in respect of which, a bond
or other security has been posted by the Shipowner with the appropriate court or
other tribunal to prevent the arrest or secure the release of the Vessel from
arrest on account of such claim or lien; provided, however, that so long as the
Charter is in effect "Permitted Liens" shall mean those liens, claims and
encumbrances permitted under the Charter.
"Person" means an individual, a partnership, a corporation, a joint
venture, an
<PAGE>
-5-
unincorporated association, a joint-stock company, a trust, or other entity or a
government or any agency or political subdivision thereof.
"Proceeding" means any suit in equity, action at law, or other judicial or
administrative proceeding.
"Purchase Agreement" means the Purchase Agreement, dated as of
_________________, between the Shipowner and the Charterer wherein the Shipowner
purchases the Vessel from the Charterer.
"Rating Agencies" means Moody's Investors Service, Inc., Standard & Poor's
Rating Group and Duff & Phelps Credit Rating Co.
"Requirement of Law" means, as to any Person, the certificate of
incorporation and by-laws or partnership agreement or other organizational or
governing documents of such Person, and, any Law applicable to or binding upon
such Person or any of its properties or to which such Person or any of its
properties is subject.
"Security Documents" means the Loan Agreements, the Other Loan Agreements,
the Deed, the Statutory Mortgage, the Assignment of Charter, the Assignment of
Earnings and Insurances, the Assignment of Guarantee, the Stock Pledge
Agreement, the Assignment of Management Agreement, the Assignment of Purchase
Agreement, the Issue of One Debenture, collectively.
"Serial Loan" means the loan in the initial principal amount of $________
made by the Mortgagee to the Shipowner under the Serial Loan Agreement.
"Serial Loan Agreement" means the Loan Agreement, dated as of _________ 1,
1995, between the Shipowner and the Mortgagee.
"Serial Obligations" means the payment, performance or obligations of any
kind or nature whatsoever by the Shipowner under and pursuant to the Serial Loan
Agreements, any Security Document and any instrument, agreement or document
referred to therein.
"State" means any state of the United States of America and, in addition,
the District of Columbia.
"Stock Pledge Agreement" means the Stock Pledge Agreement, dated as of
_____________, 1 1995, between the Mortgagee and California Tankers Investments
Limited.
"Term Loan" means the loan in the initial principal amount of $_________
made by the Mortgagee to the Shipowner under the Term Loan Agreement.
"Term Loan Agreement" means the Loan Agreement, dated as of _________ 1,
1995,
<PAGE>
-6-
between the Shipowner and the Mortgagee.
"Term Obligations" means the payment, performance or obligations of any
kind or nature whatsoever of the Shipowner under and pursuant to the Term Loan
Agreements, any Security Document and any instrument, agreement or document
referred to therein.
"Total Loss" means either (a) actual or constructive or compromised or
arranged total loss of the Vessel, (b) Compulsory Acquisition of the Vessel or
(c) if so declared by the Charterer at any time and in its sole discretion a
requisition for hire of the Vessel for a period in excess of 180 days.
"Trustee" means Chemical Trust Company of California.
<PAGE>
EXHIBIT 4.7
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
California Petroleum Transport Corporation
and
CalPetro Tankers (Bahamas I) Limited
___________________________________
ASSIGNMENT OF GUARANTEE
Dated as of __________ 1, 1995
___________________________________
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
Page No.
ARTICLE I
DEFINITIONS
.......................................................................... 1
ARTICLE II
ASSIGNMENT
.......................................................................... 1
Section 2.01 Security Interest.......................................... 1
Section 2.02 Assignment................................................. 1
ARTICLE III............................. 2
REPRESENTATIONS AND WARRANTIES OF THE OWNER
.......................................................................... 2
Section 3.01 Organization, Power and Status of the Owner................ 2
Section 3.02 Authorization; Enforceability; Execution and Delivery...... 2
Section 3.03 No Conflicts; Laws and Consents; No Default................ 2
Section 3.04 Governmental Approvals..................................... 3
Section 3.05 Litigation................................................. 3
Section 3.06 No Prior Assignment........................................ 3
ARTICLE IV
COVENANTS OF THE OWNER................ 3
Section 4.01 Consent of Guarantor....................................... 3
Section 4.02 Enforcement of Guarantee................................... 3
Section 4.03 Amendment of Guarantee; Assignment of Guarantee............ 4
Section 4.04 Further Assurances......................................... 4
Section 4.05 Lender as Attorney-in-Fact of Owner........................ 4
ARTICLE V
MISCELLANEOUS PROVISIONS............... 4
Section 5.01 Amendment.................................................. 4
Section 5.02 Severability............................................... 4
Section 5.03 Notices.................................................... 5
<PAGE>
Section 5.04 Consent to Jurisdiction.................................... 5
Section 5.05 Captions................................................... 5
Section 5.06 Governing Law.............................................. 5
Section 5.07 No Partnership............................................. 5
Section 5.08 Counterparts............................................... 5
Section 5.09 Survival................................................... 5
Section 5.10 Integration................................................ 6
Section 5.11 Reproduction of Documents.................................. 6
Section 5.12 Successors and Assigns; Assignment......................... 6
Section 5.13 General Interpretive Principles............................ 6
Section 5.14 Effective Date of Transaction.............................. 7
<PAGE>
Assignment of Guarantee, dated as of __________ 1, 1995 (the
"Assignment"), between California Petroleum Transport Corporation, a corporation
organized under the laws of the State of Delaware (the "Lender") and CalPetro
Tankers (Bahamas I) Limited, a company organized under the laws of The
Commonwealth of the Bahamas (the "Owner").
PRELIMINARY STATEMENT
The Owner has requested that the Lender make two loans to the Owner:
one loan in the aggregate principal amount equal to $____________ (the "Term
Loan") and one series of loans in the aggregate principal amount equal to
$____________ (collectively, the "Serial Loans" and, collectively with the Term
Loan, the "Loans"). The Loans will be made pursuant to the terms and conditions
of two Loan Agreements, each dated as of the date hereof, each between the
Lender and the Owner. The net proceeds of the Serial Loans and the Term Loan
will be used by the Owner to acquire the m.t. _________ (the "Vessel") from
Chevron Transport Corporation (the "Initial Charterer"). The Vessel will be
bareboat chartered to the Initial Charterer pursuant to the Bareboat Charter
(the "Initial Charter"), dated as of the date hereof, between the Owner and the
Initial Charterer. The obligations of the Initial Charterer under the Initial
Charter will be guaranteed by Chevron Corporation (the "Guarantor") pursuant to
a Guarantee, dated as of the date hereof (the "Guarantee"). As collateral
security for its obligations under the Loan Agreements, the Owner will assign,
pledge, mortgage and grant the Lender a security interest in, inter alia, the
Vessel, the Initial Charter and the Guarantee.
NOW, THEREFORE, in consideration of the premises and of the covenants
herein contained, the parties hereto covenant and agree as follows:
ARTICLE I
DEFINITIONS
Capitalized terms used in this Assignment shall have the meanings
assigned to such terms in Schedule 1 to this Assignment, and the definitions of
such terms shall be equally applicable to both the singular and plural forms of
such terms.
ARTICLE II
ASSIGNMENT
Section 2.01 Security Interest. This Assignment is made and
-----------------
delivered as security for the Serial Obligations and the Term Obligations,
equally and ratably; provided, however, in the event that the Serial Obligations
are satisfied and paid in full pursuant to the terms and conditions of the
Serial Loan Agreement, this Assignment will be security solely and exclusively
for the Term Obligations.
Section 2.02 Assignment. (a) In order to provide for the payment of
----------
and as security for the Serial Obligations and the Term Obligations, equally and
ratably, the Owner has sold, assigned, transferred, set over and granted a
security interest and does hereby sell, assign, transfer, set over and grant a
security interest unto the Lender, its successors and assigns, for its and their
respective successors' and assigns' own proper use and benefit, all of the
Owner's
<PAGE>
-2-
right, title and interest in and to the Guarantee, including without limitation
any moneys whatsoever payable to the Owner under the Guarantee, together with
the income and proceeds thereof and all other rights and benefits whatsoever
accruing to the Owner under the Guarantee; provided, however, that the Owner
shall keep the Lender fully and effectively indemnified from and against all
actions, losses, claims, proceedings, costs, demands and liabilities which may
be suffered by the Lender under or by virtue of the Guarantee or this
Assignment; provided further, however, in the event that the Serial Obligations
are satisfied and paid in full pursuant to the terms and conditions of the
Serial Loan Agreement, the sale, assignment, transfer and grant of security
interest made by the Owner pursuant to the terms of this Assignment will be
solely and exclusively for the benefit of the Lender as Lender under the Term
Loan Agreement and this Assignment will be security solely and exclusively for
the Term Obligations.
(b) Any and all rights assigned herein may be further assigned by the
Lender, including, without being limited to, assignments in connection with the
enforcement of the assignments made by this Assignment and any subsequent holder
of this Assignment shall succeed to and have all the rights and powers of the
Lender under this Assignment.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE OWNER
The Owner hereby represents and warrants to the Lender as follows:
Section 3.01 Organization, Power and Status of the Owner. The Owner
-------------------------------------------
(a) is a corporation duly formed, validly existing and in good standing under
the laws of The Bahamas and (b) is duly authorized, to the extent necessary, to
do business in each jurisdiction where the character of its properties or the
nature of its activities makes such qualification necessary. The Owner has all
requisite corporate power and authority to own and operate the property it
purports to own and to carry on its business as now being conducted and as
proposed to be conducted in respect of the Vessel.
Section 3.02 Authorization; Enforceability; Execution and Delivery.
-----------------------------------------------------
(a) The Owner has all necessary corporate power and authority to execute,
deliver and perform under this Assignment.
(b) All action on the part of the Owner that is required for the
authorization, execution, delivery and performance of this Assignment has been
duly and effectively taken; and the execution, delivery and performance of this
Assignment does not require the approval or consent of any Person except for
such consents and approvals as have been obtained on or prior to the Closing
Date.
(c) This Assignment has been duly executed and delivered by the
Owner. This Assignment constitutes the legal, valid and binding obligation of
the Owner, enforceable against it in accordance with the terms thereof.
Section 3.03 No Conflicts; Laws and Consents; No Default. (a)
-------------------------------------------
Neither the execution, delivery and performance of this Assignment nor the
consummation of any of the transactions contemplated hereby nor performance of
or compliance with the terms and
<PAGE>
-3-
conditions hereof (i) contravenes any Requirement of Law applicable to the Owner
or (ii) constitutes a default under any Security Document.
(b) The Owner is in compliance with and not in default under any and
all Requirements of Law applicable to the Owner and all terms and provisions of
this Assignment.
Section 3.04 Governmental Approvals. All Governmental Approvals
----------------------
which are required to be obtained in the name of the Owner in connection with
the execution, delivery and performance by the Owner of this Assignment have
been obtained and are in effect on the Closing Date.
Section 3.05 Litigation. There are no actions, suits or proceedings
----------
at law or in equity or by or before any Governmental Authority now pending
against the Owner or, to the best of the Owner's knowledge, threatened against
the Owner or pending or threatened against any property or other assets or
rights of the Owner with respect to this Assignment.
Section 3.06 No Prior Assignment. The Owner has not assigned or
-------------------
pledged, and hereby covenants that it will not assign or pledge, so long as this
Assignment shall remain in effect, the Guarantee or any part of the rights,
titles and interests hereby assigned, to anyone other than the Lender, or its
successors or assigns.
ARTICLE IV
COVENANTS OF THE OWNER
The Owner hereby covenants and agrees that so long as any of the
Serial Obligations or Term Obligations remains outstanding:
Section 4.01 Consent of Guarantor. On the Closing Date, the Owner
--------------------
shall deliver to the Guarantor a copy of this Assignment and shall procure the
execution by the Guarantor of the Consents and Acknowledgment set out in Exhibit
A hereto and deliver said Consents and Acknowledgment to the Lender on the
Closing Date.
Section 4.02 Enforcement of Guarantee. (a) The Owner will do or
------------------------
permit to be done each and every act or thing which the Lender may from time to
time require to be done for the purpose of enforcing the Lender's rights under
the Guarantee and this Assignment.
(b) If an Event of Default shall occur under either the Term Loan
Agreement or the Serial Loan Agreement, the Owner shall cause all moneys hereby
assigned or agreed to be assigned or arising from or in connection with any of
the rights, title, interest and benefits of the Owner under the Guarantee shall
be paid to the credit of Account No. _____________ of the Lender at Chemical
Trust Company of California, or to such other account as the Lender may from
time to time direct.
(c) The Owner will not exercise any right or powers conferred on it by
the Guarantee in connection with any default or alleged default by the Guarantor
thereunder (including without limitation the right of termination and
substitution) unless and until requested
<PAGE>
-4-
so to do by the Lender whereupon the Owner agrees that it will do so provided
always that the Lender shall not be responsible in any way whatsoever in the
event that the exercise of any right or power (including the right of
termination and substitution) be thereafter adjudged improper or to constitute a
repudiation of the Guarantee by the Owner.
Section 4.03 Amendment of Guarantee; Assignment of Guarantee. (a)
-----------------------------------------------
The Owner will not, except with the previous written consent of the Lender,
agree to any variation of the Guarantee or release the Guarantor from any of its
obligations thereunder or waive any breach of the Guarantor's obligations
thereunder or consent to any such act or omission of the Guarantor as would
otherwise constitute such breach.
(b) The Owner will not, except with the previous written consent of
the Lender, assign the Guarantee to any other Person.
Section 4.04 Further Assurances. The Owner will at any time and from
------------------
time to time, upon the written request of the Lender, promptly and duly execute
and deliver any and all such further instruments and documents and take such
action as the Lender may deem desirable in order to obtain the full benefits of
this Assignment and of the rights and powers herein granted.
Section 4.05 Lender as Attorney-in-Fact of Owner. The Owner hereby
-----------------------------------
constitutes the Lender, and its successors and assigns, its true and lawful
attorney-in-fact, irrevocably, with full power in its own name, in the name of
its agents or nominees or in the name of the Owner or otherwise, to ask,
require, demand, receive, enforce and give acquittance for, any and all moneys
and claims for moneys due and to become due and payable under or arising out of
the Guarantee, to endorse any checks or other instruments or orders in
connection therewith and to file any claims or take any action or institute any
proceedings which to the Lender may seem to be necessary or advisable under this
Assignment. Any action or proceeding brought by the Lender pursuant to any of
the provisions of this Assignment or otherwise and any claim made by the Lender
hereunder may be compromised, withdrawn or otherwise dealt with by the Lender
without any notice to or approval of the Owner.
ARTICLE V
MISCELLANEOUS PROVISIONS
Section 5.01 Amendment. This Assignment may be amended from time to
---------
time by written agreement signed by the parties hereto.
Section 5.02 Severability. If any provision of this Assignment is
------------
held to be in conflict with any applicable statute or rule of law or is
otherwise held to be unenforceable for any reason whatsoever, such circumstances
shall not have the effect of rendering the provision in question inoperative or
unenforceable in any other case or circumstance, or of rendering any other
provision or provisions herein contained invalid, inoperative, or unenforceable
to any extent whatsoever. The invalidity of any one or more phrases, sentences,
clauses or Sections of this Assignment contained, shall not affect the remaining
portions of this Assignment, or any part thereof.
<PAGE>
-5-
Section 5.03 Notices. All demands, notices and communications
-------
hereunder shall be in writing, personally delivered or mailed by certified mail-
return receipt requested, and shall be deemed to have been duly given upon
receipt (a) in the case of the Lender, at the following address: c/o JH
Management Corporation, Room 6/9, One International Place, Boston, Massachusetts
02110-2624, (b) in the case of the Owner, at the following address: United
House, 14-16 Nelson Street, Douglas, Isle of Man, or at other such address as
shall be designated by such party in a written notice to the other parties.
Section 5.04 Consent to Jurisdiction. Any legal suit, action or
-----------------------
proceeding against the Owner arising out of or relating to this Assignment, or
any transaction contemplated hereby, may be instituted in any federal or state
court in The City of New York, State of New York and the Owner hereby waives any
objection which it may now or hereafter have to the laying of venue of any such
suit, action or proceeding, and the Owner hereby irrevocably submits to the
jurisdiction of any such court in any such suit, action or proceeding. The
Owner hereby irrevocably appoints and designates CT Corporation System, having
an address at 1633 Broadway, New York, New York, its true and lawful attorney-
in-fact and duly authorized agent for the limited purpose of accepting servicing
of legal process and the Owner agrees that service of process upon such party
shall constitute personal service of such process on such Person. The Owner
shall maintain the designation and appointment of such authorized agent until
all amounts payable under this Assignment shall have been paid in full. If such
agent shall cease to so act, the Owner shall immediately designate and appoint
another such agent satisfactory to the Lender and shall promptly deliver to the
Lender evidence in writing of such other agent's acceptance of such appointment.
Section 5.05 Captions. The captions or headings in this Assignment
--------
are for convenience only and in no way define, limit or describe the scope or
intent of any provisions or sections of this Assignment.
Section 5.06 Governing Law. This Assignment shall be governed by and
-------------
interpreted in accordance with the laws of the State of New York, without giving
effect to the principles of conflicts of law.
Section 5.07 No Partnership. Nothing herein contained shall be
--------------
deemed or construed to create a partnership or joint venture among the parties
hereto and the services of each party shall be rendered as an independent
contractor and not as agent for any other party.
Section 5.08 Counterparts. This Assignment may be executed in any
------------
number of counterparts and by different parties hereto on separate counterpart,
each of which shall be deemed to be an original. Such counterparts shall
constitute one and the same agreement.
Section 5.09 Survival. The representations, covenants and agreements
--------
contained in or made pursuant to this Assignment in respect of either party
hereto shall survive the execution and delivery of this Assignment and shall
continue in effect so long as such party's obligations hereunder remain
outstanding.
<PAGE>
-6-
Section 5.10 Integration. This Assignment and the Schedule and
-----------
Exhibits hereto constitute the entire agreement and understanding between the
parties hereto with respect to the subject matter hereof and supersedes all
prior agreements, understandings or representations pertaining to the subject
matter hereof, whether oral or written. There are no warranties,
representations or other agreements between the parties in connection with the
subject matter hereof except as specifically set forth or incorporated herein.
Section 5.11 Reproduction of Documents. This Assignment and all
-------------------------
documents relating thereto, including, without limitation, (a) consents, waivers
and modifications which may hereafter be executed, (b) documents received by any
party at the closing, and (c) financial statements, certificates and other
information previously or hereafter furnished, may be reproduced by any
photographic, photostatic, microfilm, micro-card, miniature photographic or
other similar process. The parties agree that any such reproduction shall be
admissible in evidence as the original itself in any judicial or administrative
proceeding (whether or not the original is in existence and whether or not such
reproduction was made in the regular course of business) and that any
enlargement, facsimile or further reproduction of such reproduction shall
likewise be admissible in evidence.
Section 5.12 Successors and Assigns; Assignment. This Assignment
----------------------------------
shall be binding upon and inure to the benefit of the Owner and the Lender and
their respective successors and assigns. The Owner shall not have the right to
assign its rights hereunder or any interest herein without the prior written
consent of the Lender. The Lender, at its sole option, shall have the right to
assign this Assignment, the Serial Loan Agreement, the Term Loan Agreement, the
Security Documents and any of its rights and interest hereunder and thereunder.
Section 5.13 General Interpretive Principles. For purposes of this
-------------------------------
Assignment except as otherwise expressly provided or unless the context
otherwise requires:
(a) the defined terms in this Assignment shall include the plural as
well as the singular, and the use of any gender herein shall be deemed to
include any other gender;
(b) accounting terms not otherwise defined herein have the meanings
assigned to them in accordance with generally accepted accounting principles as
in effect on the date hereof;
(c) references herein to "Articles", "Sections", "Subsections",
"paragraphs", and other subdivisions without reference to a document are to
designated Articles, Sections, Subsections, paragraphs and other subdivisions of
this Assignment;
(d) a reference to a Subsection without further reference to a Section
is a reference to such Subsection as contained in the same Section in which the
reference appears, and this rule shall also apply to paragraphs and other
subdivisions;
(e) the words "herein", "hereof", "hereunder" and other words of
similar import refer to this Assignment as a whole and not to any particular
provision; and
<PAGE>
-7-
(f) the term "include" or "including" shall mean without limitation by
reason of enumeration.
Section 5.14 Effective Date of Transaction. Notwithstanding and the
-----------------------------
fact that this Assignment is dated as of __________ 1, 1995, the transactions
set forth herein shall not be effective until the Closing Date.
<PAGE>
-8-
IN WITNESS WHEREOF, the Owner and the Lender have caused this
Assignment to be duly executed and delivered by their respective officers
thereunto duly authorized all as of the day and year first above written.
CALIFORNIA PETROLEUM TRANSPORT
CORPORATION, as Lender
By:_______________________________
Name:_____________________________
Title:____________________________
CALPETRO TANKERS (BAHAMAS I) LIMITED,
as Owner
By:_______________________________
Name:_____________________________
Title:____________________________
<PAGE>
Exhibit A
LETTER OF ACKNOWLEDGMENT
TO ASSIGNMENT OF GUARANTEE
Chemical Trust Company of California,
as Collateral Trustee
California Petroleum Transport Corporation,
as Lender
Dear Sirs:
Chevron Corporation (the "Guarantor") hereby acknowledges notice of
and consents to the terms of (i) the Assignment of Guarantee (the "Assignment")
dated the ___ day of __________, 1995 and made between Calpetro Tankers (Bahamas
I) Limited (the "Owner") and California Petroleum Transport Corporation (the
"Lender") as adequate notice of such assignment to the Lender of the Guarantee
(as defined in the Assignment) and of all the right, title and interest of the
Owner in, to and under the Guarantee and (ii) the Collateral Assignment of
Guarantee (the "Collateral Assignment") dated the ______ day of ___________,
1995 and made by and between the Lender and Chemical Trust Company of California
(the "Collateral Trustee") as adequate notice of the further assignment of the
Guarantee and all of the right, title and interest of the Lender in, to and
under the Guarantee. Any capitalized term not otherwise defined herein shall
have the meaning assigned to such term in the Assignment.
The Guarantor confirms that it (a) has reviewed the terms of the
Initial Charter and (b) understands the rights and obligations of Chevron
Transport Corporation (the "Charterer") pursuant to the terms and conditions
thereof.
Notwithstanding anything to the contrary contained in the Guarantee
including without limitation the Guarantor's right to terminate the Guarantee as
provided therein, so long as the Initial Charter, the Assignment and the
Collateral Assignment are each in effect and the Collateral Trustee has rights
in the Initial Charter and the Guarantee, the Guarantor hereby agrees the
Guarantee will continue in full force and effect and that, upon notification to
the Guarantor of the occurrence of an Event of Default under the Initial
Charter, the Guarantor shall (i) perform any and all obligations which the
Guarantor is obligated to perform according to the Guarantee and (ii) pay any
and all sums which the Guarantor is obligated to pay according to the Guarantee,
as modified by the terms of this Letter of Consent, directly to the Collateral
Trustee at Account No. ________________, at ______________, or otherwise to such
other account as the Collateral Trustee may, at any time or from time to time,
designate by notice to the Guarantor in writing.
Payments to the Collateral Trustee shall not be subject to any right
of set-off or defense by way of counterclaim or otherwise which the Guarantor
may have against the Owner or any entity substituted for it and all payments
once made to the Collateral Trustee will be final, and once paid the Guarantor
will not, for any reason whatsoever, seek to recover from the
<PAGE>
-2-
Collateral Trustee any such payment made to the Collateral Trustee by virtue of
the Assignment or this Letter of Consent.
The Guarantor confirms to the Lender and the Collateral Trustee that
(a) the Guarantor is a corporation duly organized and existing in good standing
under the laws of the State of Delaware, (b) the making and performance of this
Letter of Consent in accordance with its terms have been duly authorized by all
necessary corporate action on the part of the Guarantor, do not contravene the
Guarantor's Certificate of Incorporation or any indenture, credit agreement or
other contractual agreement to which the Guarantor is a party or by which it is
bound or any law binding on the Guarantor, (c) the making and performance of the
Guarantee in accordance with its terms have been duly authorized by all
necessary corporate action on the part of the Guarantor, do not require any
stockholder approval, do not contravene the Guarantor's Certificate of
Incorporation or any indenture, credit agreement or other contractual agreement
to which the Guarantor is a party or by which it is bound, and do not, as to the
making thereof, contravene any law binding on the Guarantor and, to the best
knowledge of the Guarantor do not, as to the performance thereof, contravene any
law binding on the Guarantor, (d) the Guarantee constituted as of the date
thereof and at all times thereafter, to and including the date of this Letter of
Consent, a binding obligation of the Guarantor enforceable against the Guarantor
in accordance with its terms, and this Letter of Consent is a binding obligation
of the Guarantor enforceable against the Guarantor in accordance with its terms,
(e) the terms of the Guarantee remain in full force and effect and it
constitutes, as modified by this Letter of Consent, the entire agreement between
the parties thereto, (f) the terms of the Guarantee have not been varied or
modified, other than pursuant to the terms of this Letter of Consent, and the
terms of the Guarantee will not after the date hereof be varied or modified
without the prior written consent of the Collateral Trustee and (g) the
Guarantor has received no prior notice of any assignment by the Owner of any
interest in the Guarantee.
The Guarantor covenants, so long as any Initial Charter is in effect:
(a) to file with the Trustee, within 15 days after the Guarantor is
required to file the same with the Commission, copies of the annual reports
and of the information, documents, and other reports (or copies of such
portions of any of the foregoing as the Commission may from time to time by
rules and regulations prescribe) which the Guarantor may be required to
file with the Commission pursuant to Section 13 or 15(d) of the Exchange
Act, or, if the Guarantor is not required to file information, documents,
or reports pursuant to either of such Sections of the Exchange Act, then to
file with the Trustee and the Commission, in accordance with rules and
regulations prescribed from time to time by the Commission, such of the
supplementary and periodic information, documents, and reports which may be
required pursuant to Section 13 of the Exchange Act in respect of a
security listed and registered on a national securities exchange, as may be
prescribed from time to time in such rules and regulations;
(b) to file with the Trustee and the Commission, in accordance with
the rules and regulations prescribed from time to time by the Commission,
such additional information, documents and reports with respect to
compliance by the Guarantor with the conditions and covenants provided for
in the Serial Indenture as may be required from time to time by such rules
and regulations;
<PAGE>
-3-
(c) to transmit to the holders of the Serial Mortgage Notes in the
manner and to the extent required by Section 313(c) of the Trust Indenture
Act, within 30 days after the filing thereof with the Trustee, such
summaries of any information, documents and reports required to be filed by
the Guarantor pursuant to subsections (a) and (b) of this Letter of Consent
as may be required by rules and regulations prescribed from time to time by
the Commission; and
(d) furnish to the Trustee, on or before each August 1, commencing in
1995, a brief certificate from the principal executive officer principal
financial officer or principal accounting officer of the Guarantor as to
his or her knowledge of the Guarantor's compliance with all conditions and
covenants under the Serial Indenture. For purposes of this subsection (d),
such compliance shall be determined without regard to any period of grace
or requirement of notice provided under the Serial Indenture.
CHEVRON CORPORATION, as Guarantor
Dated:_____________________, 1995 By:_______________________________
<PAGE>
SCHEDULE 1
DEFINED TERMS USED IN THE ASSIGNMENT
"Assignment of Charter" means the assignment between the Owner and the
Lender, as amended from time to time in accordance with the terms thereof,
pursuant to which the Owner assigns to the Lender all of its right, title and
interest in, to and under the Initial Charter to secure its obligations under
the Loan Agreements.
"Assignment of Earnings and Insurances" means the assignment between the
Owner and the Lender, as amended from time to time in accordance with the terms
thereof, pursuant to which the Owner assigns to the Lender all of its right,
title and interest in, to and under the freights and hires (as well as any
charters entered into after the Closing Date) with respect to the Vessel to
secure its obligations under the Loan Agreements.
"Assignment" or "Assignment of Guarantee" means the assignment between the
Owner and the Lender, as amended from time to time in accordance with the terms
thereof, pursuant to which the Owner assigns to the Lender all of its right,
title and interest in, to and under the Guarantee to secure its obligations
under the Loan Agreements.
"Assignment of Management Agreement" means the assignment between the Owner
and the Lender, as amended from time to time in accordance with the terms
thereof, pursuant to which the Owner assigns to the Lender all of its right,
title and interest in, to and under the Management Agreement to secure its
obligations under the Loan Agreements.
"Assignment of Purchase Agreement" means the assignment between the Owner
and the Lender, as amended from time to time in accordance with the terms
thereof, pursuant to which the Owner assigns to the Lender all of its right,
title and interest in, to and under the Purchase Agreement to secure its
obligations under the Loan Agreements.
"Business Day" means any day other than a Saturday, a Sunday or a day on
which banking institutions in New York, New York, or in the city and state where
the Trustee's principal offices are located, are authorized or are obligated by
law, executive order or governmental decree to be closed.
"Closing Date" means __________ __, 1995.
"Collateral" means (i) an assignment of the Initial Charter, (ii) a
mortgage on the Vessel, (iii) an assignment of the earnings and insurances on
the Vessel, (iv) an assignment of the Guarantee, (v) an assignment of the
Management Agreement relating to the Vessel, (vi) an assignment of the Purchase
Agreement, (vii) the pledge of the shares of the Owner by Owner's shareholder
and (viii) a blanket security interest on all of the assets of the Owner now
existing or hereafter created, together with all income and proceeds thereof.
"Commission" means the Securities and Exchange Commission.
"Exchange Act" means the United States Securities Exchange Act of 1934, as
amended.
<PAGE>
-2-
"Event of Default" means an Event of Default under Section 6.01 of the Loan
Agreements.
"Governmental Approval" means any authorization, consent, approval,
license, franchise, lease, ruling, permit, tariff, rate, certification,
exemption, filing or registration by or with any Governmental Authority relating
to the ownership of the Collateral or to the execution, delivery or performance
of the Loan Agreement or any Security Document.
"Governmental Authority" means the federal government, any state or other
political subdivision thereof, and any entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to government
and any other governmental entity with authority over the Owner or operation of
the Vessels.
"Guarantor" means Chevron Corporation, a Delaware corporation.
"Guarantee" means the Guarantee, dated ____________ 1, 1995 from the
Guarantor.
"Indentures" means the Indenture, dated as of __________ 1, 1995 between
the Owner and the Trustee pursuant to which the Term Mortgage Notes will be
issued and the Indenture, dated as of __________ 1, 1995 between the Lender and
the Trustee pursuant to which the Serial Mortgage Notes will be issued.
"Initial Charter" means the Bareboat Charter, dated _________ 1, 1995
between the Initial Charterer and the Owner.
"Initial Charterer" means Chevron Transport Corporation, a Liberian
corporation.
"Issue of One Debenture" means each Issue of One Debenture between the
Owner and the Lender, as amended from time to time in accordance with the terms
thereof, pursuant to which the Owner grants to the Lender a security interest in
all of its assets.
"Law" means any statute, law, rule, regulation, ordinance, order, code,
policy or rule of common law, now or hereafter in effect, and any judicial or
administrative interpretation thereof by a Governmental Authority or otherwise,
including any judicial or administrative order, consent decree or judgment.
"Lender" means California Petroleum Transport Corporation, a corporation
organized under the laws of the State of Delaware.
"Loan Agreements" means, collectively, the Serial Loan Agreement and the
Term Loan Agreement.
"Loans" means, collectively, the Serial Loans and the Term Loan.
"Management Agreement" means the agreement, dated the Closing Date, among
the Owner, the Manager and the Technical Adviser.
<PAGE>
-3-
"Manager" means the Person performing the duties of the Manager under the
Management Agreement, initially P.D. Gram & Co. ans.
"Mortgage" means, with respect to the Vessel, the first preferred ship
mortgages on the Vessel granted by the Owner to the Lender, as amended from time
to time in accordance with the terms of such Mortgage.
"Owner" means CalPetro Tankers (Bahamas I) Limited, a company organized
under the laws of The Commonwealth of the Bahamas.
"Payment Date" means each ________ and ______________ commencing
___________ 1995.
"Person" means an individual, a partnership, a corporation, a joint
venture, an unincorporated association, a joint-stock company, a trust, or other
entity or a government or any agency or political subdivision thereof.
"Purchase Agreement" means the Vessel Purchase Agreement, dated as of
_________________, between the Owner and the Initial Charterer wherein the Owner
purchases the Vessel from the Initial Charterer.
"Requirement of Law" means, as to any Person, the certificate of
incorporation and by-laws or partnership agreement or other organizational or
governing documents of such Person, and, any Law applicable to or binding upon
such Person or any of its properties or to which such Person or any of its
properties is subject.
"Securities" means, collectively, the Term Mortgage Notes and the Serial
Mortgage Notes.
"Security Documents" means the Term Loan Agreement, the Serial Loan
Agreement, the Mortgage, the Assignment of Charter, the Assignment of Earnings
and Insurances, the Assignment of Guarantee, the Assignment of Management
Agreement, the Assignment of Purchase Agreement and the Issue of One Debenture,
collectively.
"Serial Loan Agreement" the Loan Agreement, dated as of __________ 1, 1995
between the Lender and the Owner pursuant to which the Lender will make the
Serial Loan to the Owner.
"Serial Loans" shall have the meaning assigned to such term in the
Preliminary Statement of this Assignment.
"Serial Mortgage Notes" means the Serial First Preferred Term Mortgage
Notes which will mature serially from _____________, 1996 to _____________, 2006
in the initial aggregate amount of $167,500,000 issued by the Lender
concurrently with the issuance of the Term Mortgage Notes.
<PAGE>
-4-
"Serial Obligations" means the payment, performance or obligations of any
kind or nature whatsoever of the Owner under and pursuant to the Serial Loan
Agreement, any Security Document and any instrument, agreement or document
referred to therein.
"State" means any state of the United States of America and, in addition,
the District of Columbia.
"Technical Adviser" means the person performing the duties of the Technical
Adviser under the Management Agreement, initially Barber Ship Management Group.
"Term Loan" shall have the meaning assigned to such term in the Preliminary
Statement of this Assignment.
"Term Loan Agreement" means the Loan Agreement, dated as of __________ 1,
1995 between the Owner and the Lender pursuant to which the Lender makes the
Term Loan to the Owner.
"Term Mortgage Notes" means __% First Preferred Mortgage Notes Due 2015 in
the initial aggregate amount of $117,900,000 issued by the Lender concurrently
with the issuance of the Serial Mortgage Notes.
"Term Obligations" means the payment, performance or obligations of any
kind or nature whatsoever of the Owner under and pursuant to the Term Loan
Agreement, any Security Document and any instrument, agreement or document
referred to therein.
"Trustee" means Chemical Trust Company of California.
"Vessel" shall have the meaning assigned to such term in the Preliminary
Statement of this Assignment.
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
California Petroleum Transport Corporation
and
Chemical Trust Company of California
___________________________________
COLLATERAL ASSIGNMENT OF GUARANTEE
Dated as of __________ 1, 1995
___________________________________
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
Table of Contents
Page No.
ARTICLE I
DEFINITIONS
........................................................................... 1
ARTICLE II
ASSIGNMENT
........................................................................... 1
Section 2.01 Security Interest........................................... 1
Section 2.02 Assignment.................................................. 1
Section 2.03 Issuer to Remain Liable..................................... 2
ARTICLE III
........................................................................... 2
REPRESENTATIONS AND WARRANTIES OF THE ISSUER
........................................................................... 2
Section 3.01 Organization, Power and Status of the Issuer................ 2
Section 3.02 Authorization; Enforceability; Execution and Delivery....... 3
Section 3.03 No Conflicts; Laws and Consents; No Default................. 3
Section 3.04 Governmental Approvals...................................... 3
Section 3.05 Litigation.................................................. 3
Section 3.06 No Prior Assignment......................................... 3
Section 3.07 The Assignment of Guarantee................................. 4
ARTICLE IV
COVENANTS OF THE ISSUER................ 4
Section 4.01 Consent of Chevron and Owner................................ 4
Section 4.02 Enforcement of Assignment of Guarantee...................... 4
Section 4.03 Amendment of Assignment of Guarantee; Collateral
Assignment of Guarantee................................... 4
Section 4.04 Performance of Obligations.................................. 5
Section 4.05 Notices..................................................... 5
Section 4.06 Further Assurances.......................................... 5
Section 4.07 Collateral Trustee as Attorney-in-Fact of Issuer............ 5
<PAGE>
ARTICLE V
MISCELLANEOUS PROVISIONS................ 5
Section 5.01 Amendment................................................... 5
Section 5.02 Severability................................................ 5
Section 5.03 Notices..................................................... 6
Section 5.04 Captions.................................................... 6
Section 5.05 Governing Law............................................... 6
Section 5.06 No Partnership.............................................. 6
Section 5.07 Counterparts................................................ 6
Section 5.08 Survival.................................................... 6
Section 5.09 Integration................................................. 6
Section 5.10 Reproduction of Documents................................... 7
Section 5.11 Successors and Assigns; Assignment.......................... 7
Section 5.12 General Interpretive Principles............................. 7
Section 5.13 Effective Date of Transaction............................... 7
<PAGE>
Collateral Assignment of Guarantee, dated as of __________ 1, 1995
(the "Assignment"), between California Petroleum Transport Corporation, a
corporation organized under the laws of the State of Delaware (the "Issuer") and
Chemical Trust Company of California (the "Collateral Trustee").
PRELIMINARY STATEMENT
Issuer has authorized the issue of the Serial Mortgage Notes and the
Term Mortgage Notes (collectively, the "Notes"). The Notes will be issued
pursuant to the terms and conditions of the Indentures, each dated as of the
date hereof, each between the Issuer and the Collateral Trustee, as indenture
trustee. The net proceeds of the Notes will be used by the Issuer to make two
loans to CalPetro Tankers (Bahamas I) Limited (the "Owner") pursuant to the Loan
Agreements, which will be used by the Owner to acquire the m.t. _________ (the
"Vessel") from Chevron Transport Corporation (the "Initial Charterer"). The
Vessel will be bareboat chartered to the Initial Charterer pursuant to the
Bareboat Charter (the "Initial Charter"), dated as of the date hereof, between
the Owner and the Initial Charterer. As collateral security for its obligations
under the Indentures, the Issuer will assign, pledge, mortgage and grant to the
Collateral Trustee a security interest in, inter alia, all of the Issuer's
right, title and interest in and to the Guarantee (the "Guarantee") dated
_________, 1995, from Chevron Corporation ("Chevron") and the Assignment of
Guarantee.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements herein contained and of other valuable consideration, receipt of
which is hereby acknowledged, the Collateral Trustee and the Issuer hereby agree
as follows:
ARTICLE I
DEFINITIONS
Capitalized terms used in this Assignment shall have the meanings
assigned to such terms in Schedule 1 to this Assignment, and the definitions of
such terms shall be equally applicable to both the singular and plural forms of
such terms.
ARTICLE II
ASSIGNMENT
Section 2.01 Security Interest. This Assignment is made and
-----------------
delivered as security for the Serial Obligations and the Term Obligations,
equally and ratably; provided, however, in the event that the Serial Obligations
are satisfied and paid in full pursuant to the terms and conditions of the
Serial Indenture, this Assignment will be security solely and exclusively for
the Term Obligations.
Section 2.02 Assignment. In order to provide for the payment of and
----------
as security for the Serial Obligations and the Term Obligations, equally and
ratably, the Issuer has sold, assigned, transferred, set over and granted a
security interest and does hereby sell, assign, transfer, set over and grant a
security interest unto the Collateral Trustee, its successors and assigns, for
its and their respective successors' and assigns' own proper use and benefit,
all of
<PAGE>
-2-
the Issuer's right, title and interest in and to the Guarantee and the
Assignment of Guarantee, including without limitation any moneys whatsoever
payable to the Issuer under the Guarantee and the Assignment of Guarantee,
together with the income and proceeds thereof and all other rights and benefits
whatsoever accruing to the Issuer under the Guarantee and the Assignment of
Guarantee; provided, however, that the Issuer shall keep the Collateral Trustee
fully and effectively indemnified from and against all actions, losses, claims,
proceedings, costs, demands and liabilities which may be suffered by the
Collateral Trustee under or by virtue of the Guarantee, the Assignment of
Guarantee or this Assignment; provided further, however, in the event that the
Serial Obligations are satisfied and paid in full pursuant to the terms and
conditions of the Serial Indenture, the sale, assignment, transfer and grant of
security interest made by the Issuer pursuant to the terms of this Assignment
will be solely and exclusively for the benefit of the Collateral Trustee as
Collateral Trustee under the Term Indenture and this Assignment will be security
solely and exclusively for the Term Obligations.
Section 2.03 Issuer to Remain Liable. (a) Anything in this
-----------------------
Assignment contained to the contrary notwithstanding, the Issuer shall remain
liable under the Assignment of Guarantee, and shall observe, perform and fulfill
all of the conditions and obligations to be observed, performed and fulfilled by
it thereunder, and the Collateral Trustee shall have no obligation or liability
of any kind whatsoever thereunder or by reason of or arising out of this
Assignment, nor shall the Collateral Trustee be under any liability whatsoever
in the event of any failure by the Issuer to perform its obligations thereunder
or be required or obligated in any manner to observe, perform or fulfill any of
the conditions or obligations of the Issuer thereunder or pursuant thereto, or
to make any payment or to make any inquiry as to the nature or sufficiency of
any payment received by it or the Issuer thereunder, or to present or file any
claim, or to take any other action to collect or enforce the payment of any
amounts which may have been assigned to the Collateral Trustee or to which the
Collateral Trustee may be entitled hereunder at any time or times.
(b) Any and all rights assigned herein may be further assigned by the
Collateral Trustee, including, without being limited to, assignments in
connection with the enforcement of the assignments made by this Assignment and
any subsequent holder of this Assignment shall succeed to and have all the
rights and powers of the Collateral Trustee under this Assignment.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE ISSUER
The Issuer hereby represents and warrants to the Collateral Trustee as
follows:
Section 3.01 Organization, Power and Status of the Issuer. The
--------------------------------------------
Issuer (a) is a corporation duly formed, validly existing and in good standing
under the laws of the State of Delaware and (b) is duly authorized, to the
extent necessary, to do business in each jurisdiction where the character of its
properties or the nature of its activities makes such qualification necessary.
The Issuer has all requisite corporate power and authority to own and operate
the property it purports to own and to carry on its business as now being
conducted and as proposed to be conducted in respect of the Vessel.
<PAGE>
-3-
Section 3.02 Authorization; Enforceability; Execution and Delivery.
-----------------------------------------------------
(a) The Issuer has all necessary corporate power and authority to execute,
deliver and perform under this Assignment.
(b) All action on the part of the Issuer that is required for the
authorization, execution, delivery and performance of this Assignment has been
duly and effectively taken; and the execution, delivery and performance of this
Assignment does not require the approval or consent of any Person except for
such consents and approvals as have been obtained on or prior to the Closing
Date.
(c) This Assignment has been duly executed and delivered by the
Issuer. This Assignment constitutes the legal, valid and binding obligation of
the Issuer, enforceable against it in accordance with the terms thereof.
Section 3.03 No Conflicts; Laws and Consents; No Default. (a)
-------------------------------------------
Neither the execution, delivery and performance of this Assignment nor the
consummation of any of the transactions contemplated hereby nor performance of
or compliance with the terms and conditions hereof (i) contravenes any
Requirement of Law applicable to the Issuer or (ii) constitutes a default under
any Security Document.
(b) The Issuer is in compliance with and not in default under any and
all Requirements of Law applicable to the Issuer and all terms and provisions of
this Assignment.
Section 3.04 Governmental Approvals. All Governmental Approvals
----------------------
which are required to be obtained in the name of the Issuer in connection with
the execution, delivery and performance by the Issuer of this Assignment have
been obtained and are in effect on the Closing Date.
Section 3.05 Litigation. There are no actions, suits or proceedings
----------
at law or in equity or by or before any Governmental Authority now pending
against the Issuer or, to the best of the Issuer's knowledge, threatened against
the Issuer or pending or threatened against any property or other assets or
rights of any of the Issuer with respect to this Assignment.
Section 3.06 No Prior Assignment. The Issuer has not assigned or
-------------------
pledged, and hereby covenants that it will not assign or pledge, so long as this
Assignment shall remain in effect, the Guarantee, the Assignment of Guarantee or
any part of the rights, titles and interests hereby assigned, to anyone other
than the Collateral Trustee, or its successors or assigns.
Section 3.07 The Assignment of Guarantee. The Assignment of
---------------------------
Guarantee constitutes the legal, valid and binding obligation of the Issuer and
of the Issuer as "Lender" thereunder and is in full force and effect in the form
of Exhibit "A" attached hereto; there are no amendments, additions, addenda or
modifications thereto; said Exhibit "A" represents the entirety of the
chartering and other arrangements referred to therein; and neither of the
parties thereto is in default thereunder.
<PAGE>
-4-
ARTICLE IV
COVENANTS OF THE ISSUER
The Issuer hereby covenants and agrees that so long as any of the
Serial Mortgage Notes or Term Mortgage Notes remains outstanding:
Section 4.01 Consent of Chevron and Owner. On the Closing Date, the
----------------------------
Issuer shall deliver to Chevron and the Owner a copy of this Assignment and
shall procure the execution by Chevron and the Owner of the Consents and
Acknowledgment set out in Exhibits A-1 and A-2 hereto and deliver said Consents
and Acknowledgment to the Collateral Trustee on the Closing Date.
Section 4.02 Enforcement of Assignment of Guarantee. (a) The Issuer
--------------------------------------
will do or permit to be done each and every act or thing which the Collateral
Trustee may from time to time require to be done for the purpose of enforcing
the Collateral Trustee's rights under the Guarantee, the Assignment of Guarantee
and this Assignment.
(b) If an Event of Default shall occur under either the Term Indenture
or the Serial Indenture, the Issuer shall cause all moneys hereby assigned or
agreed to be assigned or arising from or in connection with any of the rights,
title, interest and benefits of the Issuer under the Guarantee and the
Assignment of Guarantee to be paid to the credit of Account No. _____________ of
the Collateral Trustee at Chemical Trust Company of California, or to such other
account as the Collateral Trustee may from time to time direct.
(c) The Issuer will not exercise any right or powers conferred on it
by the Assignment of Guarantee in connection with any default or alleged default
by Chevron or the Owner thereunder or under the Guarantee (including without
limitation the right of termination and substitution) unless and until requested
so to do by the Collateral Trustee whereupon the Issuer agrees that it will do
so provided always that the Collateral Trustee shall not be responsible in any
way whatsoever in the event that the exercise of any right or power (including
the right of termination and substitution) be thereafter adjudged improper or to
constitute a repudiation of the Assignment of Guarantee by the Issuer.
Section 4.03 Amendment of Assignment of Guarantee; Collateral
------------------------------------------------
Assignment of Guarantee. (a) The Issuer will not, except with the previous
- -----------------------
written consent of the Collateral Trustee, agree to any variation of the
Guarantee or the Assignment of Guarantee or release Chevron or the Owner from
any of its obligations thereunder or waive any breach of Chevron or the Owner's
obligations thereunder or consent to any such act or omission of Chevron or the
Owner as would otherwise constitute such breach.
(b) The Issuer will not, except with the previous written consent of
the Collateral Trustee, assign the Guarantee or Assignment of Guarantee to any
other Person.
Section 4.04 Performance of Obligations. The Issuer will perform its
--------------------------
obligations under the Assignment of Guarantee and use its best endeavors to
cause the Owner to perform its obligations under the Assignment of Guarantee.
<PAGE>
-5-
Section 4.05 Notices. The Issuer will send a copy of all notices
-------
received or given by it under the Assignment of Guarantee forthwith to the
Collateral Trustee.
Section 4.06 Further Assurances. The Issuer will at any time and
------------------
from time to time, upon the written request of the Collateral Trustee, promptly
and duly execute and deliver any and all such further instruments and documents
and take such action as the Collateral Trustee may deem desirable in order to
obtain the full benefits of this Assignment and of the rights and powers herein
granted.
Section 4.07 Collateral Trustee as Attorney-in-Fact of Issuer. The
------------------------------------------------
Issuer hereby constitutes the Collateral Trustee, and its successors and
assigns, its true and lawful attorney-in-fact, irrevocably, with full power in
its own name, in the name of its agents or nominees or in the name of the Issuer
or otherwise, to ask, require, demand, receive, enforce and give acquittance
for, any and all moneys and claims for moneys due and to become due and payable
under or arising out of the Guarantee or the Assignment of Guarantee, to endorse
any checks or other instruments or orders in connection therewith and to file
any claims or take any action or institute any proceedings which to the
Collateral Trustee may deem to be necessary or advisable under this Assignment.
Any action or proceeding brought by the Collateral Trustee pursuant to any of
the provisions of this Assignment or otherwise and any claim made by the
Collateral Trustee hereunder may be compromised, withdrawn or otherwise dealt
with by the Collateral Trustee without any notice to or approval of the Issuer.
ARTICLE V
MISCELLANEOUS PROVISIONS
Section 5.01 Amendment. This Assignment may be amended from time to
---------
time by written agreement signed by the parties hereto.
Section 5.02 Severability. If any provision of this Assignment is
------------
held to be in conflict with any applicable statute or rule of law or is
otherwise held to be unenforceable for any reason whatsoever, such circumstances
shall not have the effect of rendering the provision in question inoperative or
unenforceable in any other case or circumstance, or of rendering any other
provision or provisions herein contained invalid, inoperative, or unenforceable
to any extent whatsoever. The invalidity of any one or more phrases, sentences,
clauses or Sections of this Assignment contained, shall not affect the remaining
portions of this Assignment, or any part thereof.
Section 5.03 Notices. All demands, notices and communications
-------
hereunder shall be in writing, personally delivered or mailed by certified mail-
return receipt requested, and shall be deemed to have been duly given upon
receipt (a) in the case of the Collateral Trustee, at the following address: c/o
JH Management Corporation, Room 6/9, One International Place, Boston
Massachusetts 02110-2624, (b) in the case of the Issuer, at the following
address: United House, 14-16 Nelson Street, Douglas, Isle of Man, or at other
such address as shall be designated by such party in a written notice to the
other parties.
<PAGE>
-6-
Section 5.04 Captions. The captions or headings in this Assignment
--------
are for convenience only and in no way define, limit or describe the scope or
intent of any provisions or sections of this Assignment.
Section 5.05 Governing Law. This Assignment shall be governed by and
-------------
interpreted in accordance with the laws of the State of New York, without giving
effect to the principles of conflicts of law.
Section 5.06 No Partnership. Nothing herein contained shall be
--------------
deemed or construed to create a partnership or joint venture among the parties
hereto and the services of each party shall be rendered as an independent
contractor and not as agent for any other party.
Section 5.07 Counterparts. This Assignment may be executed in any
------------
number of counterparts and by different parties hereto on separate counterpart,
each of which shall be deemed to be an original. Such counterparts shall
constitute one and the same agreement.
Section 5.08 Survival. The representations, covenants and agreements
--------
contained in or made pursuant to this Assignment in respect of either party
hereto shall survive the execution and delivery of this Assignment and shall
continue in effect so long as such party's obligations hereunder remain
outstanding.
Section 5.09 Integration. This Assignment and the Schedule and
-----------
Exhibits hereto constitute the entire agreement and understanding between the
parties hereto with respect to the subject matter hereof and supersedes all
prior agreements, understandings or representations pertaining to the subject
matter hereof, whether oral or written. There are no warranties,
representations or other agreements between the parties in connection with the
subject matter hereof except as specifically set forth or incorporated herein.
Section 5.10 Reproduction of Documents. This Assignment and all
-------------------------
documents relating thereto, including, without limitation, (a) consents, waivers
and modifications which may hereafter be executed, (b) documents received by any
party at the closing, and (c) financial statements, certificates and other
information previously or hereafter furnished, may be reproduced by any
photographic, photostatic, microfilm, micro-card, miniature photographic or
other similar process. The parties agree that any such reproduction shall be
admissible in evidence as the original itself in any judicial or administrative
proceeding (whether or not the original is in existence and whether or not such
reproduction was made in the regular course of business) and that any
enlargement, facsimile or further reproduction of such reproduction shall
likewise be admissible in evidence.
Section 5.11 Successors and Assigns; Assignment. This Assignment
----------------------------------
shall be binding upon and inure to the benefit of the Issuer and the Collateral
Trustee and their respective successors and assigns. Neither the Issuer nor the
Collateral Trustee shall have the right to assign its rights hereunder or any
interest herein without the prior written consent of the other party.
Section 5.12 General Interpretive Principles. For purposes of this
-------------------------------
Assignment except as otherwise expressly provided or unless the context
otherwise requires:
<PAGE>
-7-
(a) the defined terms in this Assignment shall include the plural as
well as the singular, and the use of any gender herein shall be deemed to
include any other gender;
(b) accounting terms not otherwise defined herein have the meanings
assigned to them in accordance with generally accepted accounting principles as
in effect on the date hereof;
(c) references herein to "Articles", "Sections", "Subsections",
"paragraphs", and other subdivisions without reference to a document are to
designated Articles, Sections, Subsections, paragraphs and other subdivisions of
this Assignment;
(d) a reference to a Subsection without further reference to a Section
is a reference to such Subsection as contained in the same Section in which the
reference appears, and this rule shall also apply to paragraphs and other
subdivisions;
(e) the words "herein", "hereof", "hereunder" and other words of
similar import refer to this Assignment as a whole and not to any particular
provision; and
(f) the term "include" or "including" shall mean without limitation by
reason of enumeration.
Section 5.13 Effective Date of Transaction. Notwithstanding and the
-----------------------------
fact that this Assignment is dated as of __________ 1, 1995, the transactions
set forth herein shall not be effective until the Closing Date.
<PAGE>
-8-
IN WITNESS WHEREOF, the Issuer and the Collateral Trustee have caused
this Assignment to be duly executed and delivered by their respective officers
thereunto duly authorized all as of the day and year first above written.
CALIFORNIA PETROLEUM TRANSPORT
CORPORATION, as Collateral Trustee
By:___________________________________
Name:_________________________________
Title:________________________________
CHEMICAL TRUST COMPANY OF CALIFORNIA,
as Issuer
By:___________________________________
Name:_________________________________
Title:________________________________
<PAGE>
Exhibit A-1
LETTER OF ACKNOWLEDGEMENT
TO COLLATERAL ASSIGNMENT OF GUARANTEE
__________ __, 1995
CHEMICAL TRUST COMPANY OF
CALIFORNIA, as Collateral Trustee
Dear Sirs:
The undersigned hereby consents to and acknowledges receipt of a
signed copy of the Collateral Assignment of Guarantee (the "Assignment"), dated
as of __________ 1, 1995, between California Petroleum Transport Corporation
(the "Issuer") and yourselves as adequate notice of such assignment to you of
the Assignment of Guarantee (as defined in the Assignment) and of all the right,
title and interest of the Issuer in, to and under the Assignment of Guarantee.
So long as the Assignment remains effective, we hereby agree that,
upon your notification to us of the occurrence of an Event of Default under the
Term Indenture or Serial Indenture referred to in the Assignment, we shall pay
any and all sums which we are legally obligated to pay to the Issuer or
otherwise as stated in and according to the Assignment of Guarantee directly to
your Account No. ________________, at ______________, or otherwise to such other
account as you may at any time or from time to time, designate by notice to us
in writing.
Payments of moneys under the Assignment of Guarantee may be adjusted,
reduced or withheld only as expressly provided therein. Payments to you shall
not be subject to any right of set-off or defense by way of counterclaim or
otherwise which the undersigned may have against the Issuer or any entity
substituted for it other than under the Assignment of Guarantee and all payments
once made to you will be final, and once paid we will not, for any reason
whatsoever, seek to recover from you any such payment made to you by virtue of
the Assignment or this Letter of Consent.
We confirm that the terms of the Guarantee (as defined in the
Assignment) remain in full force and effect and constitute the entire agreement
between the parties thereto with respect to the Guarantee and that the
undersigned is not presently in breach of the terms of the Assignment of
Guarantee. We further confirm that the terms of the Guarantee have not been
varied or modified and that the terms of the Guarantee will not after the date
hereof be varied or modified without your prior written consent.
We confirm that we have received no prior notice of any assignment by
the Issuer of any interest in the Assignment of Guarantee.
<PAGE>
-2-
The undersigned will not permit any amendment, modification,
cancellation or other alteration in the Guarantee.
CALPETRO TANKERS (BAHAMAS I) LIMITED,
as Owner
By:___________________________________
Name:_________________________________
Title:________________________________
<PAGE>
Exhibit A-2
LETTER OF ACKNOWLEDGMENT
TO COLLATERAL ASSIGNMENT OF GUARANTEE
Chemical Trust Company of California,
as Collateral Trustee
California Petroleum Transport Corporation,
as Lender
Dear Sirs:
Chevron Corporation (the "Guarantor") hereby acknowledges notice of
and consents to the terms of (i) the Assignment of Guarantee (the "Assignment")
dated the ___ day of __________, 1995 and made between Calpetro Tankers (Bahamas
I) Limited (the "Owner") and California Petroleum Transport Corporation (the
"Lender") as adequate notice of such assignment to the Lender of the Guarantee
(as defined in the Assignment) and of all the right, title and interest of the
Owner in, to and under the Guarantee and (ii) the Collateral Assignment of
Guarantee (the "Collateral Assignment") dated the ______ day of ___________,
1995 and made by and between the Lender and Chemical Trust Company of California
(the "Collateral Trustee") as adequate notice of the further assignment of the
Guarantee and all of the right, title and interest of the Lender in, to and
under the Guarantee. Any capitalized term not otherwise defined herein shall
have the meaning assigned to such term in the Assignment.
The Guarantor confirms that it (a) has reviewed the terms of the
Initial Charter and (b) understands the rights and obligations of Chevron
Transport Corporation (the "Charterer") pursuant to the terms and conditions
thereof.
Notwithstanding anything to the contrary contained in the Guarantee
including without limitation the Guarantor's right to terminate the Guarantee as
provided therein, so long as the Initial Charter, the Assignment and the
Collateral Assignment are each in effect and the Collateral Trustee has rights
in the Initial Charter and the Guarantee, the Guarantor hereby agrees the
Guarantee will continue in full force and effect and that, upon notification to
the Guarantor of the occurrence of an Event of Default under the Initial
Charter, the Guarantor shall (i) perform any and all obligations which the
Guarantor is obligated to perform according to the Guarantee and (ii) pay any
and all sums which the Guarantor is obligated to pay according to the Guarantee,
as modified by the terms of this Letter of Consent, directly to the Collateral
Trustee at Account No. ________________, at ______________, or otherwise to such
other account as the Collateral Trustee may at any time or from time to time,
designate by notice to the Guarantor in writing.
Payments to the Collateral Trustee shall not be subject to any right
of set-off or defense by way of counterclaim or otherwise which the Guarantor
may have against the Owner or any entity substituted for it and all payments
once made to the Collateral Trustee will be final, and once paid the Guarantor
will not, for any reason whatsoever, seek to recover from the
<PAGE>
-2-
Lender any such payment made to the Lender by virtue of the Assignment or this
Letter of Consent.
The Guarantor confirms to the Lender and the Collateral Trustee that
(a) the Guarantor is a corporation duly organized and existing in good standing
under the laws of the State of Delaware, (b) the making and performance of this
Letter of Consent in accordance with its terms have been duly authorized by all
necessary corporate action on the part of the Guarantor, do not contravene the
Guarantor's Certificate of Incorporation or any indenture, credit agreement or
other contractual agreement to which the Guarantor is a party or by which it is
bound or any law binding on the Guarantor, (c) the making and performance of the
Guarantee in accordance with its terms have been duly authorized by all
necessary corporate action on the part of the Guarantor, do not require any
stockholder approval, do not contravene the Guarantor's Certificate of
Incorporation or any indenture, credit agreement or other contractual agreement
to which the Guarantor is a party or by which it is bound, and do not, as to the
making thereof, contravene any law binding on the Guarantor and, to the best
knowledge of the Guarantor do not, as to the performance thereof, contravene any
law binding on the Guarantor, (d) the Guarantee constituted as of the date
thereof and at all times thereafter, to and including the date of this Letter of
Consent, a binding obligation of the Guarantor enforceable against the Guarantor
in accordance with its terms, and this Letter of Consent is a binding obligation
of the Guarantor enforceable against the Guarantor in accordance with its terms,
(e) the terms of the Guarantee remain in full force and effect and it
constitutes, as modified by this Letter of Consent, the entire agreement between
the parties thereto, (f) the terms of the Guarantee have not been varied or
modified, other than pursuant to the terms of this Letter of Consent, and the
terms of the Guarantee will not after the date hereof be varied or modified
without the prior written consent of the Collateral Trustee and (g) the
Guarantor has received no prior notice of any assignment by the Owner of any
interest in the Guarantee.
The Guarantor covenants, so long as any Initial Charter is in effect:
(a) to file with the Trustee, within 15 days after the Guarantor is
required to file the same with the Commission, copies of the annual reports
and of the information, documents, and other reports (or copies of such
portions of any of the foregoing as the Commission may from time to time by
rules and regulations prescribe) which the Guarantor may be required to
file with the Commission pursuant to Section 13 or 15(d) of the Exchange
Act, or, if the Guarantor is not required to file information, documents,
or reports pursuant to either of such Sections of the Exchange Act, then to
file with the Trustee and the Commission, in accordance with rules and
regulations prescribed from time to time by the Commission, such of the
supplementary and periodic information, documents, and reports which may be
required pursuant to Section 13 of the Exchange Act in respect of a
security listed and registered on a national securities exchange, as may be
prescribed from time to time in such rules and regulations;
(b) to file with the Trustee and the Commission, in accordance with
the rules and regulations prescribed from time to time by the Commission,
such additional information, documents and reports with respect to
compliance by the Guarantor with the conditions and covenants provided for
in the Serial Indenture as may be required from time to time by such rules
and regulations;
<PAGE>
-3-
(c) to transmit to the holders of the Serial Mortgage Notes in the
manner and to the extent required by Section 313(c) of the Trust Indenture
Act, within 30 days after the filing thereof with the Trustee, such
summaries of any information, documents and reports required to be filed by
the Guarantor pursuant to subsections (a) and (b) of this Letter of Consent
as may be required by rules and regulations prescribed from time to time by
the Commission; and
(d) furnish to the Trustee, on or before each August 1, commencing in
1995, a brief certificate from the principal executive officer principal
financial officer or principal accounting officer of the Guarantor as to
his or her knowledge of the Guarantor's compliance with all conditions and
covenants under the Serial Indenture. For purposes of this subsection (d),
such compliance shall be determined without regard to any period of grace
or requirement of notice provided under the Serial Indenture.
CHEVRON CORPORATION, as Guarantor
Dated:_________________________, 1995 By:_______________________________
<PAGE>
SCHEDULE 1
DEFINED TERMS USED IN THE ASSIGNMENT
"Assignment of Charter" means the assignment between the Issuer and the
Owner, as amended from time to time in accordance with the terms thereof,
pursuant to which the Owner assigns to the Issuer all of its right, title and
interest in, to and under the Initial Charter to secure its obligations under
the Loan Agreements.
"Assignment of Mortgage" means between the Issuer and the Collateral
Trustee, as amended from time to time in accordance with the terms thereof
pursuant to which the Issuer assigns to the Collateral Trustee all of its right,
title and interest in, to and under the Mortgage to secure its obligations under
the Indenture.
"Business Day" means any day other than a Saturday, a Sunday or a day on
which banking institutions in New York, New York, or in the city and state where
the Trustee's principal offices are located, are authorized or are obligated by
law, executive order or governmental decree to be closed.
"Chevron" means Chevron Corporation, a Delaware corporation.
"Closing Date" means __________ __, 1995.
"Collateral Assignment of Charter" means the assignment between the Issuer
and the Collateral Trustee, as amended from time to time in accordance with the
terms thereof, pursuant to which the Issuer assigns to the Collateral Trustee
all of its right, title and interest in, to and under the Assignment of Charter
to secure its obligations under the Indentures.
"Collateral Assignment of Guarantee" means the assignment between the
Issuer and the Collateral Trustee, as amended from time to time in accordance
with the terms thereof, pursuant to which the Issuer assigns to the Collateral
Trustee all of its right, title and interest in, to and under the Assignment of
Guarantee to secure its obligations under the Indentures.
"Collateral Trustee" means Chemical Trust Company of California.
"Event of Default" means an Event of Default under Section 4.01 of the
Indentures.
"Governmental Approval" means any authorization, consent, approval,
license, franchise, lease, ruling, permit, tariff, rate, certification,
exemption, filing or registration by or with any Governmental Authority relating
to the ownership of the Collateral or to the execution, delivery or performance
of any Security Document.
"Governmental Authority" means the federal government, any state or other
political subdivision thereof, and any entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to government
and any other governmental entity with authority over the Issuer or operation of
the Vessels.
<PAGE>
-2-
"Guarantee" means the guarantee of the obligations of the Initial Charterer
under the Initial Charter given by Chevron.
"Indentures" means the Indenture, dated as of __________ 1, 1995 between
the Issuer and the Collateral Trustee pursuant to which the Term Mortgage Notes
will be issued and the Indenture, dated as of __________ 1, 1995 between the
Collateral Trustee and the Issuer pursuant to which the Serial Mortgage Notes
will be issued.
"Initial Charter" means with respect to each Vessel, the Bareboat Charter,
dated _________, between the Initial Charterer and the Owner.
"Initial Charterer" means Chevron Transport Corporation, a Liberian
corporation.
"Issuer" means California Petroleum Transport Corporation, a corporation
organized under the laws of the State of Delaware.
"Law" means any statute, law, rule, regulation, ordinance, order, code,
policy or rule of common law, now or hereafter in effect, and any judicial or
administrative interpretation thereof by a Governmental Authority or otherwise,
including any judicial or administrative order, consent decree or judgment.
"Mortgage" means, with respect to the Vessel, the first preferred ship
mortgages on the Vessel granted by the Owner to the Issuer, as amended from time
to time in accordance with the terms of such Mortgage.
"Owner" means CalPetro Tankers (Bahamas I) Limited, a company organized
under the laws of The Commonwealth of the Bahamas.
"Person" means an individual, a partnership, a corporation, a joint
venture, an unincorporated association, a joint-stock company, a trust, or other
entity or a government or any agency or political subdivision thereof.
"Requirement of Law" means, as to any Person, the certificate of
incorporation and by-laws or partnership agreement or other organizational or
governing documents of such Person, and, any Law applicable to or binding upon
such Person or any of its properties or to which such Person or any of its
properties is subject.
"Security Documents" means the Collateral Trust Agreement, Collateral
Assignment of Charter, the Collateral Assignment of Guarantee and the Assignment
of Mortgage, collectively.
"Serial Indenture" the Indenture, dated as of __________ 1, 1995 between
the Issuer and the Trustee pursuant to which the Issuer issues the Serial
Mortgage Notes.
"Serial Mortgage Notes" means the Serial First Preferred Term Mortgage
Notes which will mature serially from _____________, 1996 to _____________, 2006
in the initial aggregate
<PAGE>
-3-
amount of $167,500,000 issued by the Issuer concurrently with the issuance of
the Term Mortgage Notes.
"Serial Obligations" means the payment, performance or obligations of any
kind or nature whatsoever of the Issuer under and pursuant to the Serial
Indenture, any Security Document and any instrument, agreement or document
referred to therein.
"State" means any state of the United States of America and, in addition,
the District of Columbia.
"Term Indenture" means the Indenture, dated as of __________ 1, 1995
between the Issuer and the Trustee pursuant to which the Issuer issues the Term
Mortgage.
"Term Mortgage Notes" means __% First Preferred Mortgage Notes Due 2015 in
the initial aggregate amount of $117,900,000 issued by the Issuer concurrently
with the issuance of the Serial Mortgage Notes.
"Term Obligations" means the payment, performance or obligations of any
kind or nature whatsoever of the Issuer under and pursuant to the Term
Indenture, any Security Document and any instrument, agreement or document
referred to therein.
"Trustee" means Chemical Trust Company of California.
"Vessel" shall have the meaning assigned to such term in the Preliminary
Statement of this Assignment.
<PAGE>
Exhibit 4.9
______________________________________________________________________________
______________________________________________________________________________
California Petroleum Transport Corporation
and
CalPetro Tankers (Bahamas I) Limited
___________________________________
ASSIGNMENT OF CHARTER
Dated as of __________ 1, 1995
___________________________________
______________________________________________________________________________
______________________________________________________________________________
<PAGE>
Table of Contents
Page No.
ARTICLE I
DEFINITIONS
.......................................................................... 1
ARTICLE II
ASSIGNMENT
.......................................................................... 1
Section 2.01 Security Interest.......................................... 1
Section 2.02 Assignment................................................. 1
Section 2.03 Owner to Remain Liable..................................... 2
ARTICLE III
.......................................................................... 2
REPRESENTATIONS AND WARRANTIES OF THE OWNER
.......................................................................... 2
Section 3.01 Organization, Power and Status of the Owner................ 2
Section 3.02 Authorization; Enforceability; Execution and Delivery...... 3
Section 3.03 No Conflicts; Laws and Consents; No Default................ 3
Section 3.04 Governmental Approvals..................................... 3
Section 3.05 Litigation................................................. 3
Section 3.06 No Prior Assignment........................................ 3
Section 3.07 The Initial Charter........................................ 3
ARTICLE IV
COVENANTS OF THE OWNER........................ 4
Section 4.01 Consent of Initial Charterer............................... 4
Section 4.02 Enforcement of Initial Charter............................. 4
Section 4.03 Amendment of Initial Charter; Assignment of Initial Charter 4
Section 4.04 Performance of Obligations................................. 4
Section 4.05 Notices.................................................... 4
Section 4.06 Further Assurances......................................... 5
Section 4.07 Lender as Attorney-in-Fact of Owner........................ 5
<PAGE>
ARTICLE V
MISCELLANEOUS PROVISIONS...................... 5
Section 5.01 Amendment.................................................. 5
Section 5.02 Severability............................................... 5
Section 5.03 Notices.................................................... 5
Section 5.04 Consent to Jurisdiction.................................... 5
Section 5.05 Captions................................................... 6
Section 5.06 Governing Law.............................................. 6
Section 5.07 No Partnership............................................. 6
Section 5.08 Counterparts............................................... 6
Section 5.09 Survival................................................... 6
Section 5.10 Integration................................................ 6
Section 5.11 Reproduction of Documents.................................. 6
Section 5.12 Successors and Assigns; Assignment......................... 7
Section 5.13 General Interpretive Principles............................ 7
Section 5.14 Effective Date of Transaction.............................. 7
<PAGE>
Assignment of Charter, dated as of __________ 1, 1995 (the
"Assignment"), between California Petroleum Transport Corporation, a corporation
organized under the laws of the State of Delaware (the "Lender") and CalPetro
Tankers (Bahamas I) Limited, a company organized under the laws of The
Commonwealth of the Bahamas (the "Owner").
PRELIMINARY STATEMENT
The Owner has requested that the Lender make two loans to the Owner:
one loan in the aggregate principal amount equal to $____________ (the "Term
Loan") and one series of loans in the aggregate principal amount equal to
$____________ (collectively, the "Serial Loans" and, collectively with the Term
Loan, the "Loans"). The Loans will be made pursuant to the terms and conditions
of two Loan Agreements, each dated as of the date hereof, each between the
Lender and the Owner. The net proceeds of the Serial Loans and the Term Loan
will be used by the Owner to acquire the m.t. _________ (the "Vessel") from
Chevron Transport Corporation (the "Initial Charterer"). The Vessel will be
bareboat chartered to the Initial Charterer pursuant to the Bareboat Charter
(the "Initial Charter"), dated as of the date hereof, between the Owner and the
Initial Charterer. As collateral security for its obligations under the Loan
Agreements, the Owner will assign, pledge, mortgage and grant the Lender a
security interest in, inter alia, the Vessel, the Initial Charter and the
earnings and insurances of the Vessel.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements herein contained and of other valuable consideration, receipt of
which is hereby acknowledged, the Owner and the Lender hereby agree as follows:
ARTICLE I
DEFINITIONS
Capitalized terms used in this Assignment shall have the meanings
assigned to such terms in Schedule 1 to this Assignment, and the definitions of
such terms shall be equally applicable to both the singular and plural forms of
such terms.
ARTICLE II
ASSIGNMENT
Section 2.01 Security Interest. This Assignment is made and
-----------------
delivered as security for the Serial Obligations and the Term Obligations,
equally and ratably; provided, however, in the event that the Serial Obligations
are satisfied and paid in full pursuant to the terms and conditions of the
Serial Loan Agreement, this Assignment will be security solely and exclusively
for the Term Obligations.
Section 2.02 Assignment. In order to provide for the payment of and
----------
as security for the Serial Obligations and the Term Obligations, equally and
ratably, the Owner has sold, assigned, transferred, set over and granted a
security interest and does hereby sell, assign, transfer, set over and grant a
security interest unto the Lender, its successors and assigns, for its and their
respective successors' and assigns' own proper use and benefit, all
of the Owner's
<PAGE>
-2-
right, title and interest in and to the Initial Charter, including without
limitation any moneys whatsoever payable to the Owner under the Initial Charter,
together with the income and proceeds thereof and all other rights and benefits
whatsoever accruing to the Owner under the Initial Charter; provided, however,
that the Owner shall keep the Lender fully and effectively indemnified from and
against all actions, losses, claims, proceedings, costs, demands and liabilities
which may be suffered by the Lender under or by virtue of the Initial Charter or
this Assignment; provided further, however, in the event that the Serial
Obligations are satisfied and paid in full pursuant to the terms and conditions
of the Serial Loan Agreement, the sale, assignment, transfer and grant of
security interest made by the Owner pursuant to the terms of this Assignment
will be solely and exclusively for the benefit of the Lender as Lender under the
Term Loan Agreement and this Assignment will be security solely and exclusively
for the Term Obligations.
Section 2.03 Owner to Remain Liable. (a) Anything in this
----------------------
Assignment contained to the contrary notwithstanding, the Owner shall remain
liable under the Initial Charter, and shall observe, perform and fulfill all of
the conditions and obligations to be observed, performed and fulfilled by it
thereunder, and the Lender shall have no obligation or liability of any kind
whatsoever thereunder or by reason of or arising out of this Assignment, nor
shall the Lender be under any liability whatsoever in the event of any failure
by the Owner to perform its obligations thereunder or be required or obligated
in any manner to observe, perform or fulfill any of the conditions or
obligations of the Owner thereunder or pursuant thereto, or to make any payment
or to make any inquiry as to the nature or sufficiency of any payment received
by it or the Owner thereunder, or to present or file any claim, or to take any
other action to collect or enforce the payment of any amounts which may have
been assigned to the Lender or to which the Lender may be entitled hereunder at
any time or times.
(b) Any and all rights assigned herein may be further assigned by the
Lender, including, without being limited to, assignments in connection with the
enforcement of the assignments made by this Assignment and any subsequent holder
of this Assignment shall succeed to and have all the rights and powers of the
Lender under this Assignment.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE OWNER
The Owner hereby represents and warrants to the Lender as follows:
Section 3.01 Organization, Power and Status of the Owner. The Owner
-------------------------------------------
(a) is a corporation duly formed, validly existing and in good standing under
the laws of The Bahamas and (b) is duly authorized, to the extent necessary, to
do business in each jurisdiction where the character of its properties or the
nature of its activities makes such qualification necessary. The Owner has all
requisite corporate power and authority to own and operate the property it
purports to own and to carry on its business as now being conducted and as
proposed to be conducted in respect of the Vessel.
<PAGE>
-3-
Section 3.02 Authorization; Enforceability; Execution and Delivery.
-----------------------------------------------------
(a) The Owner has all necessary corporate power and authority to execute,
deliver and perform under this Assignment.
(b) All action on the part of the Owner that is required for the
authorization, execution, delivery and performance of this Assignment has been
duly and effectively taken; and the execution, delivery and performance of this
Assignment does not require the approval or consent of any Person except for
such consents and approvals as have been obtained on or prior to the Closing
Date.
(c) This Assignment has been duly executed and delivered by the
Owner. This Assignment constitutes the legal, valid and binding obligation of
the Owner, enforceable against it in accordance with the terms thereof.
Section 3.03 No Conflicts; Laws and Consents; No Default. (a)
-------------------------------------------
Neither the execution, delivery and performance of this Assignment nor the
consummation of any of the transactions contemplated hereby nor performance of
or compliance with the terms and conditions hereof (i) contravenes any
Requirement of Law applicable to the Owner or (ii) constitutes a default under
any Security Document.
(b) The Owner is in compliance with and not in default under any and
all Requirements of Law applicable to the Owner and all terms and provisions of
this Assignment.
Section 3.04 Governmental Approvals. All Governmental Approvals
----------------------
which are required to be obtained in the name of the Owner in connection with
the execution, delivery and performance by the Owner of this Assignment have
been obtained and are in effect on the Closing Date.
Section 3.05 Litigation. There are no actions, suits or proceedings
----------
at law or in equity or by or before any Governmental Authority now pending
against the Owner or, to the best of the Owner's knowledge, threatened against
the Owner or pending or threatened against any property or other assets or
rights of the Owner with respect to this Assignment.
Section 3.06 No Prior Assignment. The Owner has not assigned or
-------------------
pledged, and hereby covenants that it will not assign or pledge, so long as this
Assignment shall remain in effect, the Initial Charter or any part of the
rights, titles and interests hereby assigned, to anyone other than the Lender,
or its successors or assigns.
Section 3.07 The Initial Charter. The Initial Charter constitutes
-------------------
the legal, valid and binding obligation of the Initial Charterer and of the
Owner as "Owners" thereunder and is in full force and effect in the form of
Exhibit "A" attached hereto; there are no amendments, additions, addenda or
modifications thereto; said Exhibit "A" represents the entirety of the
chartering and other arrangements referred to therein; and neither of the
parties thereto is in default thereunder.
<PAGE>
-4-
ARTICLE IV
COVENANTS OF THE OWNER
The Owner hereby covenants and agrees that so long as any of the
Serial Obligations or Term Obligations remains outstanding:
Section 4.01 Consent of Initial Charterer. On the Closing Date, the
----------------------------
Owner shall deliver to the Initial Charterer a copy of this Assignment and shall
procure the execution by the Initial Charterer of the Consents and
Acknowledgment set out in Exhibit A hereto and deliver said Consents and
Acknowledgment to the Lender on the Closing Date.
Section 4.02 Enforcement of Initial Charter. (a) The Owner will do
------------------------------
or permit to be done each and every act or thing which the Lender may from time
to time require to be done for the purpose of enforcing the Lender's rights
under the Initial Charter and this Assignment.
(b) If an Event of Default shall occur under either the Term Loan
Agreement or the Serial Loan Agreement, the Owner shall cause all moneys hereby
assigned or agreed to be assigned or arising from or in connection with any of
the rights, title, interest and benefits of the Owner under the Initial Charter
shall be paid to the credit of Account No. _____________ of the Lender at
Chemical Trust Company of California, or to such other account as the Lender may
from time to time direct.
(c) The Owner will not exercise any right or powers conferred on it by
the Initial Charter in connection with any default or alleged default by the
Initial Charterer thereunder (including without limitation the right of
termination and substitution) unless and until requested so to do by the Lender
whereupon the Owner agrees that it will do so provided always that the Lender
shall not be responsible in any way whatsoever in the event that the exercise of
any right or power (including the right of termination and substitution) be
thereafter adjudged improper or to constitute a repudiation of the Initial
Charter by the Owner.
Section 4.03 Amendment of Initial Charter; Assignment of Initial
---------------------------------------------------
Charter. (a) The Owner will not, except with the previous written consent of
- -------
the Lender, agree to any variation of the Initial Charter or release the Initial
Charterer from any of its obligations thereunder or waive any breach of the
Initial Charterer's obligations thereunder or consent to any such act or
omission of the Initial Charterer as would otherwise constitute such breach.
(b) The Owner will not, except with the previous written consent of
the Lender, assign the Initial Charter to any other Person.
Section 4.04 Performance of Obligations. The Owner will perform its
--------------------------
obligations under the Initial Charter and will use its best efforts to cause the
Initial Charterer to perform its obligations under the Initial Charter.
Section 4.05 Notices. The Owner will send a copy of all notices
-------
received or given by it under the Initial Charter forthwith to the Lender.
<PAGE>
-5-
Section 4.06 Further Assurances. The Owner will at any time and from
------------------
time to time, upon the written request of the Lender, promptly and duly execute
and deliver any and all such further instruments and documents and take such
action as the Lender may deem desirable in order to obtain the full benefits of
this Assignment and of the rights and powers herein granted.
Section 4.07 Lender as Attorney-in-Fact of Owner. The Owner hereby
-----------------------------------
constitutes the Lender, and its successors and assigns, its true and lawful
attorney-in-fact, irrevocably, with full power in its own name, in the name of
its agents or nominees or in the name of the Owner or otherwise, to ask,
require, demand, receive, enforce and give acquittance for, any and all moneys
and claims for moneys due and to become due and payable under or arising out of
the Initial Charter, to endorse any checks or other instruments or orders in
connection therewith and to file any claims or take any action or institute any
proceedings which to the Lender may seem to be necessary or advisable under this
Assignment. Any action or proceeding brought by the Lender pursuant to any of
the provisions of this Assignment or otherwise and any claim made by the Lender
hereunder may be compromised, withdrawn or otherwise dealt with by the Lender
without any notice to or approval of the Owner.
ARTICLE V
MISCELLANEOUS PROVISIONS
Section 5.01 Amendment. This Assignment may be amended from time to
---------
time by written agreement signed by the parties hereto.
Section 5.02 Severability. If any provision of this Assignment is
------------
held to be in conflict with any applicable statute or rule of law or is
otherwise held to be unenforceable for any reason whatsoever, such circumstances
shall not have the effect of rendering the provision in question inoperative or
unenforceable in any other case or circumstance, or of rendering any other
provision or provisions herein contained invalid, inoperative, or unenforceable
to any extent whatsoever. The invalidity of any one or more phrases, sentences,
clauses or Sections of this Assignment contained, shall not affect the remaining
portions of this Assignment, or any part thereof.
Section 5.03 Notices. All demands, notices and communications
-------
hereunder shall be in writing, personally delivered or mailed by certified mail-
return receipt requested, and shall be deemed to have been duly given upon
receipt (a) in the case of the Lender, at the following address: c/o JH
Management Corporation, Room 6/9, One International Place, Boston, Massachusetts
02110-2624, (b) in the case of the Owner, at the following address: United
House, 14-16 Nelson Street, Douglas, Isle of Man, or at other such address as
shall be designated by such party in a written notice to the other parties.
Section 5.04 Consent to Jurisdiction. Any legal suit, action or
-----------------------
proceeding against the Owner arising out of or relating to this Assignment, or
any transaction contemplated hereby, may be instituted in any federal or state
court in The City of New York, State of New York and the Owner hereby waives any
objection which it may now or hereafter have to the laying of venue of any such
suit, action or proceeding, and the Owner hereby irrevocably
<PAGE>
-6-
submits to the jurisdiction of any such court in any such suit, action or
proceeding. The Owner hereby irrevocably appoints and designates CT Corporation
System, having an address at 1633 Broadway, New York, New York, its true and
lawful attorney-in-fact and duly authorized agent for the limited purpose of
accepting servicing of legal process and the Owner agrees that service of
process upon such party shall constitute personal service of such process on
such Person. The Owner shall maintain the designation and appointment of such
authorized agent until all amounts payable under this Assignment shall have been
paid in full. If such agent shall cease to so act, the Owner shall immediately
designate and appoint another such agent satisfactory to the Lender and shall
promptly deliver to the Lender evidence in writing of such other agent's
acceptance of such appointment.
Section 5.05 Captions. The captions or headings in this Assignment
--------
are for convenience only and in no way define, limit or describe the scope or
intent of any provisions or sections of this Assignment.
Section 5.06 Governing Law. This Assignment shall be governed by and
-------------
interpreted in accordance with the laws of the State of New York, without giving
effect to the principles of conflicts of law.
Section 5.07 No Partnership. Nothing herein contained shall be
--------------
deemed or construed to create a partnership or joint venture among the parties
hereto and the services of each party shall be rendered as an independent
contractor and not as agent for any other party.
Section 5.08 Counterparts. This Assignment may be executed in any
------------
number of counterparts and by different parties hereto on separate counterpart,
each of which shall be deemed to be an original. Such counterparts shall
constitute one and the same agreement.
Section 5.09 Survival. The representations, covenants and agreements
--------
contained in or made pursuant to this Assignment in respect of either party
hereto shall survive the execution and delivery of this Assignment and shall
continue in effect so long as such party's obligations hereunder remain
outstanding.
Section 5.10 Integration. This Assignment and the Schedule and
-----------
Exhibits hereto constitute the entire agreement and understanding between the
parties hereto with respect to the subject matter hereof and supersede all prior
agreements, understandings or representations pertaining to the subject matter
hereof, whether oral or written. There are no warranties, representations or
other agreements between the parties in connection with the subject matter
hereof except as specifically set forth or incorporated herein.
Section 5.11 Reproduction of Documents. This Assignment and all
-------------------------
documents relating thereto, including, without limitation, (a) consents, waivers
and modifications which may hereafter be executed, (b) documents received by any
party at the closing, and (c) financial statements, certificates and other
information previously or hereafter furnished, may be reproduced by any
photographic, photostatic, microfilm, micro-card, miniature photographic or
other similar process. The parties agree that any such reproduction shall be
admissible in evidence as the original itself in any judicial or administrative
proceeding (whether or not the original is in existence and whether or not such
reproduction was made in the regular course of
<PAGE>
-7-
business) and that any enlargement, facsimile or further reproduction of such
reproduction shall likewise be admissible in evidence.
Section 5.12 Successors and Assigns; Assignment. This Assignment
----------------------------------
shall be binding upon and inure to the benefit of the Owner and the Lender and
their respective successors and assigns. The Owner shall not have the right to
assign its rights hereunder or any interest herein without the prior written
consent of the Lender. The Lender, at its sole option, shall have the right to
assign this Assignment, the Serial Loan Agreement, the Term Loan Agreement, the
Security Documents and any of its rights and interest hereunder and thereunder.
Section 5.13 General Interpretive Principles. For purposes of this
-------------------------------
Assignment except as otherwise expressly provided or unless the context
otherwise requires:
(a) the defined terms in this Assignment shall include the plural as
well as the singular, and the use of any gender herein shall be deemed to
include any other gender;
(b) accounting terms not otherwise defined herein have the meanings
assigned to them in accordance with generally accepted accounting principles as
in effect on the date hereof;
(c) references herein to "Articles", "Sections", "Subsections",
"paragraphs", and other subdivisions without reference to a document are to
designated Articles, Sections, Subsections, paragraphs and other subdivisions of
this Assignment;
(d) a reference to a Subsection without further reference to a Section
is a reference to such Subsection as contained in the same Section in which the
reference appears, and this rule shall also apply to paragraphs and other
subdivisions;
(e) the words "herein", "hereof", "hereunder" and other words of
similar import refer to this Assignment as a whole and not to any particular
provision; and
(f) the term "include" or "including" shall mean without limitation by
reason of enumeration.
Section 5.14 Effective Date of Transaction. Notwithstanding and the
-----------------------------
fact that this Assignment is dated as of __________ 1, 1995, the transactions
set forth herein shall not be effective until the Closing Date.
<PAGE>
-8-
IN WITNESS WHEREOF, the Owner and the Lender have caused this
Assignment to be duly executed and delivered by their respective officers
thereunto duly authorized all as of the day and year first above written.
CALIFORNIA PETROLEUM TRANSPORT
CORPORATION, as Lender
By: ______________________________________
Name: ____________________________________
Title: ___________________________________
CALPETRO TANKERS (BAHAMAS I) LIMITED, as Owner
By: ______________________________________
Name: ____________________________________
Title: ___________________________________
<PAGE>
Exhibit A
LETTER OF ACKNOWLEDGMENT
TO ASSIGNMENT OF CHARTER
__________ __, 1995
CALIFORNIA PETROLEUM TRANSPORT
CORPORATION, as Lender
CHEMICAL TRUST COMPANY OF CALIFORNIA,
as Collateral Trustee
Dear Sirs:
The undersigned hereby consents to and acknowledges receipt of (i) a
signed copy of the Assignment of Charter (the "Assignment"), dated as of
__________ 1, 1995, between CalPetro Tankers (Bahamas I) Limited (the "Owner")
and California Petroleum Transport Corporation (the "Lender") as adequate notice
of such assignment to the Lender of the Initial Charter (as defined in the
Assignment) and of all the right, title and interest of the Owner in, to and
under the Initial Charter and (ii) a signed copy of the Collateral Assignment of
Charter (the "Collateral Assignment"), dated as of ____________ 1, 1995, between
the Lender and Chemical Trust Company of California (the "Collateral Trustee")
as adequate notice of such further assignment to the Collateral Trustee of the
Initial Charter and all of the right, title and interest of the Lender in, to
and under the Initial Charter.
So long as the Assignment remains effective, we hereby agree that (a)
upon notification to us of the occurrence of an Event of Default under the Term
Loan Agreement or Serial Loan Agreement referred to in the Assignment, we shall
pay any and all sums which we are legally obligated to pay to the Owner or
otherwise as stated in and according to the Initial Charter directly to the
Collateral Trustee's Account No. ________________, at ______________, or
otherwise to such other account as you may at any time or from time to time,
designate by notice to us in writing and (b) with respect to each of the
insurances, if any, obtained pursuant to Clause 11 of the Initial Charter, the
Lender and the Collateral Trustee shall, if possible, be named additional
assureds.
Payments of moneys under the Initial Charter may be adjusted, reduced
or withheld only as expressly provided therein. Payments to the Collateral
Trustee shall not be subject to any right of set-off or defense by way of
counterclaim or otherwise which the undersigned may have against the Owner or
any entity substituted for it other than under the Initial Charter and all
payments once made to you will be final, and once paid we will not, for any
reason whatsoever, seek to recover from the Collateral Trustee any such payment
made to the Collateral Trustee by virtue of the Assignment, the Collateral
Assignment or this Letter of Consent.
<PAGE>
-2-
We confirm that the terms of the Initial Charter remain in full force
and effect and constitute the entire agreement between the parties thereto with
respect to the Vessel and that the Owner is not presently to our knowledge in
breach of the terms of the Initial Charter. We further confirm that the terms
of the Initial Charter have not been varied or modified and that the terms of
the Initial Charter will not after the date hereof be varied or modified without
the prior written consent of the Collateral Trustee.
We confirm that we have received no prior notice of any assignment by
the Owner of any interest in the Initial Charter.
The undersigned will not permit any amendment, modification,
cancellation or other alteration in the Initial Charter, nor will it consent to
or accept the substitution thereunder of any party for the Owner without your
prior written consent.
CHEVRON TRANSPORT CORPORATION, as Initial
Charterer
By: _______________________________
Name: _____________________________
Title: ____________________________
<PAGE>
SCHEDULE 1
DEFINED TERMS USED IN THE ASSIGNMENT
"Assignment" or "Assignment of Charter" means the assignment between the
Owner and the Lender, as amended from time to time in accordance with the terms
thereof, pursuant to which the Owner assigns to the Lender all of its right,
title and interest in, to and under the Initial Charter to secure its
obligations under the Loan Agreements.
"Assignment of Earnings and Insurances" means the assignment between the
Owner and the Lender, as amended from time to time in accordance with the terms
thereof, pursuant to which the Owner assigns to the Lender all of its right,
title and interest in, to and under the freights and hires (as well as any
charters entered into after the Closing Date) with respect to the Vessel to
secure its obligations under the Loan Agreements.
"Assignment of Guarantee" means the assignment between the Owner and the
Lender, as amended from time to time in accordance with the terms thereof,
pursuant to which the Owner assigns to the Lender all of its right, title and
interest in, to and under the Chevron Guarantee to secure its obligations under
the Loan Agreements.
"Assignment of Management Agreement" means the assignment between the Owner
and the Lender, as amended from time to time in accordance with the terms
thereof, pursuant to which the Owner assigns to the Lender all of its right,
title and interest in, to and under the Management Agreement to secure its
obligations under the Loan Agreements.
"Assignment of Purchase Agreement" means the assignment between the Owner
and the Lender, as amended from time to time in accordance with the terms
thereof, pursuant to which the Owner assigns to the Lender all of its right,
title and interest in, to and under the Purchase Agreement to secure its
obligations under the Loan Agreements.
"Business Day" means any day other than a Saturday, a Sunday or a day on
which banking institutions in New York, New York, or in the city and state where
the Trustee's principal offices are located, are authorized or are obligated by
law, executive order or governmental decree to be closed.
"Chevron" means Chevron Corporation, a Delaware corporation.
"Chevron Guarantee" means the guarantee of the obligations of the Initial
Charterer under the Initial Charter under the Initial Charter given by Chevron.
"Closing Date" means __________ __, 1995.
"Collateral" means (i) an assignment of the Initial Charter, (ii) a
mortgage on the Vessel, (iii) an assignment of the earnings and insurances on
the Vessel, (iv) an assignment of the Chevron Guarantee, (v) an assignment of
the Management Agreement relating to the Vessel, (vi) an assignment of the
Purchase Agreement, (vii) the pledge of the shares of the Owner by Owner's
shareholder and (viii) a blanket security interest on all of the assets of the
Owner now existing or hereafter created, together with all income and proceeds
thereof.
<PAGE>
-2-
"Event of Default" means an Event of Default under Section 6.01 of the Loan
Agreements.
"Governmental Approval" means any authorization, consent, approval,
license, franchise, lease, ruling, permit, tariff, rate, certification,
exemption, filing or registration by or with any Governmental Authority relating
to the ownership of the Collateral or to the execution, delivery or performance
of the Loan Agreement or any Security Document.
"Governmental Authority" means the federal government, any state or other
political subdivision thereof, and any entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to government
and any other governmental entity with authority over the Owner or operation of
the Vessels.
"Indentures" means the Indenture, dated as of __________ 1, 1995 between
the Owner and the Trustee pursuant to which the Term Mortgage Notes will be
issued and the Indenture, dated as of __________ 1, 1995 between the Lender and
the Trustee pursuant to which the Serial Mortgage Notes will be issued.
"Initial Charter" means with respect to each Vessel, the Bareboat Charter,
dated _________, between the Initial Charterer and the Owner.
"Initial Charterer" means Chevron Transport Corporation, a Liberian
corporation.
"Issue of One Debenture" means each Issue of One Debenture between the
Owner and the Lender, as amended from time to time in accordance with the terms
thereof, pursuant to which the Owner grants to the Lender a security interest in
all of its assets.
"Law" means any statute, law, rule, regulation, ordinance, order, code,
policy or rule of common law, now or hereafter in effect, and any judicial or
administrative interpretation thereof by a Governmental Authority or otherwise,
including any judicial or administrative order, consent decree or judgment.
"Lender" means California Petroleum Transport Corporation, a corporation
organized under the laws of the State of Delaware.
"Loan Agreements" means, collectively, the Serial Loan Agreement and the
Term Loan Agreement.
"Loans" means, collectively, the Serial Loans and the Term Loan.
"Loss Date" means the date which is 90 days after the occurrence of a Total
Loss of the Vessel.
"Management Agreement" means the agreement, dated the Closing Date, among
the Owner, the Manager and the Technical Adviser.
<PAGE>
-3-
"Manager" means the Person performing the duties of the Manager under the
Management Agreement, initially P.D. Gram & Co. ans.
"Mortgage" means, with respect to the Vessel, the first preferred ship
mortgages on the Vessel granted by the Owner to the Lender, as amended from time
to time in accordance with the terms of such Mortgage.
"Owner" means CalPetro Tankers (Bahamas I) Limited, a company organized
under the laws of The Commonwealth of the Bahamas.
"Payment Date" means each ________ and ______________ commencing
___________ 1995.
"Person" means an individual, a partnership, a corporation, a joint
venture, an unincorporated association, a joint-stock company, a trust, or other
entity or a government or any agency or political subdivision thereof.
"Purchase Agreement" means the Vessel Purchase Agreement, dated as of
_________________, between the Owner and the Initial Charterer wherein the Owner
purchases the Vessel from the Initial Charterer.
"Registration Jurisdiction" means the jurisdiction in which the Vessel is
or will be registered.
"Requirement of Law" means, as to any Person, the certificate of
incorporation and by-laws or partnership agreement or other organizational or
governing documents of such Person, and, any Law applicable to or binding upon
such Person or any of its properties or to which such Person or any of its
properties is subject.
"Securities" means, collectively, the Term Mortgage Notes and the Serial
Mortgage Notes.
"Security Documents" means the Term Loan Agreement, the Serial Loan
Agreement, the Mortgage, the Assignment of Charter, the Assignment of Earnings
and Insurances, the Assignment of Guarantee, the Assignment of Management
Agreement, the Assignment of Purchase Agreement, the Issue of One Debenture,
collectively.
"Serial Loan Agreement" the Loan Agreement, dated as of __________ 1, 1995
between the Lender and the Owner pursuant to which the Lender will make the
Serial Loan to the Owner.
"Serial Loans" shall have the meaning assigned to such term in the
Preliminary Statement of this Assignment.
<PAGE>
-4-
"Serial Mortgage Notes" means the Serial First Preferred Term Mortgage
Notes which will mature serially from _____________, 1996 to _____________, 2006
in the initial aggregate amount of $168,500,000 issued by the Lender
concurrently with the issuance of the Term Mortgage Notes.
"Serial Obligations" means the payment, performance or obligations of any
kind or nature whatsoever of the Owner under and pursuant to the Serial Loan
Agreement, any Security Document and any instrument, agreement or document
referred to therein.
"State" means any state of the United States of America and, in addition,
the District of Columbia.
"Technical Adviser" means the person performing the duties of the Technical
Adviser under the Management Agreement, initially Barber Ship Management Group.
"Term Loan" shall have the meaning assigned to such term in the Preliminary
Statement of this Assignment.
"Term Loan Agreement" means the Loan Agreement, dated as of __________ 1,
1995 between the Owner and the Lender pursuant to which the Lender makes the
Term Loan to the Owner.
"Term Mortgage Notes" means __% First Preferred Mortgage Notes Due 2015 in
the initial aggregate amount of $117,900,000 issued by the Lender concurrently
with the issuance of the Serial Mortgage Notes.
"Term Obligations" means the payment, performance or obligations of any
kind or nature whatsoever of the Owner under and pursuant to the Term Loan
Agreement, any Security Document and any instrument, agreement or document
referred to therein.
"Trustee" means Chemical Trust Company of California.
"Vessel" shall have the meaning assigned to such term in the Preliminary
Statement of this Assignment.
<PAGE>
______________________________________________________________________________
______________________________________________________________________________
California Petroleum Transport Corporation
and
Chemical Trust Company of California
___________________________________
COLLATERAL ASSIGNMENT OF CHARTER
Dated as of __________ 1, 1995
___________________________________
______________________________________________________________________________
______________________________________________________________________________
<PAGE>
Table of Contents
Page No.
ARTICLE I
DEFINITIONS
.......................................................................... 1
ARTICLE II
ASSIGNMENT
.......................................................................... 1
Section 2.01 Security Interest.......................................... 1
Section 2.02 Assignment................................................. 1
Section 2.03 Issuer to Remain Liable.................................... 2
ARTICLE III
.......................................................................... 2
REPRESENTATIONS AND WARRANTIES OF THE ISSUER
.......................................................................... 2
Section 3.01 Organization, Power and Status of the Issuer............... 2
Section 3.02 Authorization; Enforceability; Execution and Delivery...... 3
Section 3.03 No Conflicts; Laws and Consents; No Default................ 3
Section 3.04 Governmental Approvals..................................... 3
Section 3.05 Litigation................................................. 3
Section 3.06 No Prior Assignment........................................ 3
Section 3.07 The Assignment of Charter.................................. 3
ARTICLE IV
COVENANTS OF THE ISSUER....................... 4
Section 4.01 Consent of Initial Charterer and Owner..................... 4
Section 4.02 Enforcement of Assignment of Charter....................... 4
Section 4.03 Amendment of Assignment of Charter; Collateral Assignment
of Charter................................................. 4
Section 4.04 Performance of Obligations................................. 4
Section 4.05 Notices.................................................... 5
Section 4.06 Further Assurances......................................... 5
Section 4.07 Collateral Trustee as Attorney-in-Fact of Issuer........... 5
<PAGE>
ARTICLE V
MISCELLANEOUS PROVISIONS...................... 5
Section 5.01 Amendment.................................................. 5
Section 5.02 Severability............................................... 5
Section 5.03 Notices.................................................... 5
Section 5.04 Captions................................................... 6
Section 5.05 Governing Law.............................................. 6
Section 5.06 No Partnership............................................. 6
Section 5.07 Counterparts............................................... 6
Section 5.08 Survival................................................... 6
Section 5.09 Integration................................................ 6
Section 5.10 Reproduction of Documents.................................. 6
Section 5.11 Successors and Assigns; Assignment......................... 6
Section 5.12 General Interpretive Principles............................ 7
Section 5.13 Effective Date of Transaction.............................. 7
<PAGE>
Collateral Assignment of Charter, dated as of __________ 1, 1995 (the
"Assignment"), between California Petroleum Transport Corporation, a corporation
organized under the laws of the State of Delaware (the "Issuer") and Chemical
Trust Company of California (the "Collateral Trustee").
PRELIMINARY STATEMENT
Issuer has authorized the issuance of the Serial Mortgage Notes and
the Term Mortgage Notes (collectively, the "Notes"). The Notes will be issued
pursuant to the terms and conditions of the Indentures, each dated as of the
date hereof, each between the Issuer and the Collateral Trustee, as indenture
trustee. The net proceeds of the Notes will be used by the Issuer to make two
loans to CalPetro Tankers (Bahamas I) Limited (the "Owner") pursuant to the Loan
Agreements, which will be used by the Owner to acquire the m.t. _________ (the
"Vessel") from Chevron Transport Corporation (the "Initial Charterer"). The
Vessel will be bareboat chartered to the Initial Charterer pursuant to the
Bareboat Charter (the "Initial Charter"), dated as of the date hereof, between
the Owner and the Initial Charterer. As collateral security for its obligations
under the Indentures, the Issuer will assign, pledge, mortgage and grant the
Collateral Trustee a security interest in, inter alia, all of the Issuer's
right, title and interest in and to the Initial Charter and the Assignment of
Charter.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements herein contained and of other valuable consideration, receipt of
which is hereby acknowledged, the Collateral Trustee and the Issuer hereby agree
as follows:
ARTICLE I
DEFINITIONS
Capitalized terms used in this Assignment shall have the meanings
assigned to such terms in Schedule 1 to this Assignment, and the definitions of
such terms shall be equally applicable to both the singular and plural forms of
such terms.
ARTICLE II
ASSIGNMENT
Section 2.01 Security Interest. This Assignment is made and
-----------------
delivered as security for the Serial Obligations and the Term Obligations,
equally and ratably; provided, however, in the event that the Serial Obligations
are satisfied and paid in full pursuant to the terms and conditions of the
Serial Indenture, this Assignment will be security solely and exclusively for
the Term Obligations.
Section 2.02 Assignment. In order to provide for the payment of and
----------
as security for the Serial Obligations and the Term Obligations, equally and
ratably, the Issuer has sold, assigned, transferred, set over and granted a
security interest and does hereby sell, assign, transfer, set over and grant a
security interest unto the Collateral Trustee, its successors and assigns, for
its and their respective successors' and assigns' own proper use and benefit,
all of the Issuer's right, title and interest in and to the Initial Charter and
the Assignment of Charter,
<PAGE>
-2-
including without limitation any moneys whatsoever payable to the Issuer under
the Initial Charter and the Assignment of Charter, together with the income and
proceeds thereof and all other rights and benefits whatsoever accruing to the
Issuer under the Initial Charter and the Assignment of Charter; provided,
however, that the Issuer shall keep the Collateral Trustee fully and effectively
indemnified from and against all actions, losses, claims, proceedings, costs,
demands and liabilities which may be suffered by the Collateral Trustee under or
by virtue of the Initial Charter, Assignment of Charter or this Assignment;
provided further, however, in the event that the Serial Obligations are
satisfied and paid in full pursuant to the terms and conditions of the Serial
Indenture, the sale, assignment, transfer and grant of security interest made by
the Issuer pursuant to the terms of this Assignment will be solely and
exclusively for the benefit of the Collateral Trustee as Collateral Trustee
under the Term Indenture and this Assignment will be security solely and
exclusively for the Term Obligations.
Section 2.03 Issuer to Remain Liable. (a) Anything in this
-----------------------
Assignment contained to the contrary notwithstanding, the Issuer shall remain
liable under the Assignment of Charter, and shall observe, perform and fulfill
all of the conditions and obligations to be observed, performed and fulfilled by
it thereunder, and the Collateral Trustee shall have no obligation or liability
of any kind whatsoever thereunder or by reason of or arising out of this
Assignment, nor shall the Collateral Trustee be under any liability whatsoever
in the event of any failure by the Issuer to perform its obligations thereunder
or be required or obligated in any manner to observe, perform or fulfill any of
the conditions or obligations of the Issuer thereunder or pursuant thereto, or
to make any payment or to make any inquiry as to the nature or sufficiency of
any payment received by it or the Issuer thereunder, or to present or file any
claim, or to take any other action to collect or enforce the payment of any
amounts which may have been assigned to the Collateral Trustee or to which the
Collateral Trustee may be entitled hereunder at any time or times.
(b) Any and all rights assigned herein may be further assigned by the
Collateral Trustee, including, without being limited to, assignments in
connection with the enforcement of the assignments made by this Assignment and
any subsequent holder of this Assignment shall succeed to and have all the
rights and powers of the Collateral Trustee under this Assignment.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE ISSUER
The Issuer hereby represents and warrants to the Collateral Trustee as
follows:
Section 3.01 Organization, Power and Status of the Issuer. The
--------------------------------------------
Issuer (a) is a corporation duly formed, validly existing and in good standing
under the laws of the State of Delaware and (b) is duly authorized, to the
extent necessary, to do business in each jurisdiction where the character of its
properties or the nature of its activities makes such qualification necessary.
The Issuer has all requisite corporate power and authority to own and operate
the property it purports to own and to carry on its business as now being
conducted and as proposed to be conducted in respect of the Vessel.
<PAGE>
-3-
Section 3.02 Authorization; Enforceability; Execution and Delivery.
-----------------------------------------------------
(a) The Issuer has all necessary corporate power and authority to execute,
deliver and perform under this Assignment.
(b) All action on the part of the Issuer that is required for the
authorization, execution, delivery and performance of this Assignment has been
duly and effectively taken; and the execution, delivery and performance of this
Assignment does not require the approval or consent of any Person except for
such consents and approvals as have been obtained on or prior to the Closing
Date.
(c) This Assignment has been duly executed and delivered by the
Issuer. This Assignment constitutes the legal, valid and binding obligation of
the Issuer, enforceable against it in accordance with the terms thereof.
Section 3.03 No Conflicts; Laws and Consents; No Default. (a)
-------------------------------------------
Neither the execution, delivery and performance of this Assignment nor the
consummation of any of the transactions contemplated hereby nor performance of
or compliance with the terms and conditions hereof (i) contravenes any
Requirement of Law applicable to the Issuer or (ii) constitutes a default under
any Security Document.
(b) The Issuer is in compliance with and not in default under any and
all Requirements of Law applicable to the Issuer and all terms and provisions of
this Assignment.
Section 3.04 Governmental Approvals. All Governmental Approvals
----------------------
which are required to be obtained in the name of the Issuer in connection with
the execution, delivery and performance by the Issuer of this Assignment have
been obtained and are in effect on the Closing Date.
Section 3.05 Litigation. There are no actions, suits or proceedings
----------
at law or in equity or by or before any Governmental Authority now pending
against the Issuer or, to the best of the Issuer's knowledge, threatened against
the Issuer or pending or threatened against any property or other assets or
rights of any of the Issuer with respect to this Assignment.
Section 3.06 No Prior Assignment. The Issuer has not assigned or
-------------------
pledged, and hereby covenants that it will not assign or pledge, so long as this
Assignment shall remain in effect, the Initial Charter and the Assignment of
Charter or any part of the rights, titles and interests hereby assigned, to
anyone other than the Collateral Trustee, or its successors or assigns.
Section 3.07 The Assignment of Charter. The Assignment of Charter
-------------------------
constitutes the legal, valid and binding obligation of the Issuer and of the
Issuer as "Lender" thereunder and is in full force and effect in the form of
Exhibit "A" attached hereto; there are no amendments, additions, addenda or
modifications thereto; said Exhibit "A" represents the entirety of the
chartering and other arrangements referred to therein; and neither of the
parties thereto is in default thereunder.
<PAGE>
-4-
ARTICLE IV
COVENANTS OF THE ISSUER
The Issuer hereby covenants and agrees that so long as any of the
Serial Mortgage Notes or Term Mortgage Notes remains outstanding:
Section 4.01 Consent of Initial Charterer and Owner. On the Closing
--------------------------------------
Date, the Issuer shall deliver to the Initial Charterer and the Owner a copy of
this Assignment and shall procure the execution by the Initial Charterer and the
Owner of the Consents and Acknowledgment set out in Exhibits A-1 and A-2 hereto
and deliver said Consents and Acknowledgment to the Collateral Trustee on the
Closing Date.
Section 4.02 Enforcement of Assignment of Charter. (a) The Issuer
------------------------------------
will do or permit to be done each and every act or thing which the Collateral
Trustee may from time to time require to be done for the purpose of enforcing
the Collateral Trustee's rights under the Initial Charter, the Assignment of
Charter and this Assignment.
(b) If an Event of Default shall occur under either the Term Indenture
or the Serial Indenture, the Issuer shall cause all moneys hereby assigned or
agreed to be assigned or arising from or in connection with any of the rights,
title, interest and benefits of the Issuer under the Initial Charter and the
Assignment of Charter to be paid to the credit of Account No. _____________ of
the Collateral Trustee at Chemical Trust Company of California, or to such other
account as the Collateral Trustee may from time to time direct.
(c) The Issuer will not exercise any right or powers conferred on it
by the Assignment of Charter in connection with any default or alleged default
by the Initial Charterer or Owner thereunder or under the Initial Charter
(including without limitation the right of termination and substitution) unless
and until requested so to do by the Collateral Trustee whereupon the Issuer
agrees that it will do so provided always that the Collateral Trustee shall not
be responsible in any way whatsoever in the event that the exercise of any right
or power (including the right of termination and substitution) be thereafter
adjudged improper or to constitute a repudiation of the Assignment of Charter by
the Issuer.
Section 4.03 Amendment of Assignment of Charter; Collateral
----------------------------------------------
Assignment of Charter. (a) The Issuer will not, except with the previous
- ---------------------
written consent of the Collateral Trustee, agree to any variation of the Initial
Charter or the Assignment of Charter or release the Owner or the Initial
Charterer from any of its obligations thereunder or waive any breach of the
Owner's obligations thereunder or under the Initial Charter or consent to any
such act or omission of the Owner or the Initial Charterer as would otherwise
constitute such breach.
(b) The Issuer will not, except with the previous written consent of
the Collateral Trustee, assign the Initial Charter or the Assignment of Charter
to any other Person.
Section 4.04 Performance of Obligations. The Issuer will perform its
--------------------------
obligations under the Assignment of Charter and use its best endeavors to cause
the Owner to perform its obligations under the Assignment of Charter.
<PAGE>
-5-
Section 4.05 Notices. The Issuer will send a copy of all notices
-------
received or given by it under the Assignment of Charter forthwith to the
Collateral Trustee.
Section 4.06 Further Assurances. The Issuer will at any time and
------------------
from time to time, upon the written request of the Collateral Trustee, promptly
and duly execute and deliver any and all such further instruments and documents
and take such action as the Collateral Trustee may deem desirable in order to
obtain the full benefits of this Assignment and of the rights and powers herein
granted.
Section 4.07 Collateral Trustee as Attorney-in-Fact of Issuer. The
------------------------------------------------
Issuer hereby constitutes the Collateral Trustee, and its successors and
assigns, its true and lawful attorney-in-fact, irrevocably, with full power in
its own name, in the name of its agents or nominees or in the name of its agents
or nominees or in the name of the Issuer or otherwise, to ask, require, demand,
receive, enforce and give acquittance for, any and all moneys and claims for
moneys due and to become due and payable under or arising out of the Initial
Charter or the Assignment of Charter, to endorse any checks or other instruments
or orders in connection therewith and to file any claims or take any action or
institute any proceedings which to the Collateral Trustee may deem to be
necessary or advisable under this Assignment. Any action or proceeding brought
by the Collateral Trustee pursuant to any of the provisions of this Assignment
or otherwise and any claim made by the Collateral Trustee hereunder may be
compromised, withdrawn or otherwise dealt with by the Collateral Trustee without
any notice to or approval of the Issuer.
ARTICLE V
MISCELLANEOUS PROVISIONS
Section 5.01 Amendment. This Assignment may be amended from time to
---------
time by written agreement signed by the parties hereto.
Section 5.02 Severability. If any provision of this Assignment is
------------
held to be in conflict with any applicable statute or rule of law or is
otherwise held to be unenforceable for any reason whatsoever, such circumstances
shall not have the effect of rendering the provision in question inoperative or
unenforceable in any other case or circumstance, or of rendering any other
provision or provisions herein contained invalid, inoperative, or unenforceable
to any extent whatsoever. The invalidity of any one or more phrases, sentences,
clauses or Sections of this Assignment contained, shall not affect the remaining
portions of this Assignment, or any part thereof.
Section 5.03 Notices. All demands, notices and communications
-------
hereunder shall be in writing, personally delivered or mailed by certified mail-
return receipt requested, and shall be deemed to have been duly given upon
receipt (a) in the case of the Issuer, at the following address: c/o JH
Management Corporation, Room 6/9, One International Place, Boston, Massachusetts
02110-2624, (b) in the case of the Collateral Trustee, at the following address:
___________________________, or at other such address as shall be designated by
such party in a written notice to the other parties.
<PAGE>
-6-
Section 5.04 Captions. The captions or headings in this Assignment
--------
are for convenience only and in no way define, limit or describe the scope or
intent of any provisions or sections of this Assignment.
Section 5.05 Governing Law. This Assignment shall be governed by and
-------------
interpreted in accordance with the laws of the State of New York, without giving
effect to the principles of conflicts of law.
Section 5.06 No Partnership. Nothing herein contained shall be
--------------
deemed or construed to create a partnership or joint venture among the parties
hereto and the services of each party shall be rendered as an independent
contractor and not as agent for any other party.
Section 5.07 Counterparts. This Assignment may be executed in any
------------
number of counterparts and by different parties hereto on separate counterpart,
each of which shall be deemed to be an original. Such counterparts shall
constitute one and the same agreement.
Section 5.08 Survival. The representations, covenants and agreements
--------
contained in or made pursuant to this Assignment in respect of either party
hereto shall survive the execution and delivery of this Assignment and shall
continue in effect so long as such party's obligations hereunder remain
outstanding.
Section 5.09 Integration. This Assignment and the Schedule and
-----------
Exhibits hereto constitute the entire agreement and understanding between the
parties hereto with respect to the subject matter hereof and supersedes all
prior agreements, understandings or representations pertaining to the subject
matter hereof, whether oral or written. There are no warranties,
representations or other agreements between the parties in connection with the
subject matter hereof except as specifically set forth or incorporated herein.
Section 5.10 Reproduction of Documents. This Assignment and all
-------------------------
documents relating thereto, including, without limitation, (a) consents, waivers
and modifications which may hereafter be executed, (b) documents received by any
party at the closing, and (c) financial statements, certificates and other
information previously or hereafter furnished, may be reproduced by any
photographic, photostatic, microfilm, micro-card, miniature photographic or
other similar process. The parties agree that any such reproduction shall be
admissible in evidence as the original itself in any judicial or administrative
proceeding (whether or not the original is in existence and whether or not such
reproduction was made in the regular course of business) and that any
enlargement, facsimile or further reproduction of such reproduction shall
likewise be admissible in evidence.
Section 5.11 Successors and Assigns; Assignment. This Assignment
----------------------------------
shall be binding upon and inure to the benefit of the Issuer and the Collateral
Trustee and their respective successors and assigns. Neither the Issuer nor the
Collateral Trustee shall have the right to assign its rights hereunder or any
interest herein without the prior written consent of the other party.
<PAGE>
-7-
Section 5.12 General Interpretive Principles. For purposes of this
-------------------------------
Assignment except as otherwise expressly provided or unless the context
otherwise requires:
(a) the defined terms in this Assignment shall include the plural as
well as the singular, and the use of any gender herein shall be deemed to
include any other gender;
(b) accounting terms not otherwise defined herein have the meanings
assigned to them in accordance with generally accepted accounting principles as
in effect on the date hereof;
(c) references herein to "Articles", "Sections", "Subsections",
"paragraphs", and other subdivisions without reference to a document are to
designated Articles, Sections, Subsections, paragraphs and other subdivisions of
this Assignment;
(d) a reference to a Subsection without further reference to a Section
is a reference to such Subsection as contained in the same Section in which the
reference appears, and this rule shall also apply to paragraphs and other
subdivisions;
(e) the words "herein", "hereof", "hereunder" and other words of
similar import refer to this Assignment as a whole and not to any particular
provision; and
(f) the term "include" or "including" shall mean without limitation by
reason of enumeration.
Section 5.13 Effective Date of Transaction. Notwithstanding and the
-----------------------------
fact that this Assignment is dated as of __________ 1, 1995, the transactions
set forth herein shall not be effective until the Closing Date.
<PAGE>
-8-
IN WITNESS WHEREOF, the Issuer and the Collateral Trustee have caused
this Assignment to be duly executed and delivered by their respective officers
thereunto duly authorized all as of the day and year first above written.
CALIFORNIA PETROLEUM TRANSPORT
CORPORATION, as Collateral Trustee
By: ______________________________
Name: ____________________________
Title: ___________________________
CHEMICAL TRUST COMPANY OF CALIFORNIA, as
Issuer
By: ______________________________
Name: ____________________________
Title: ___________________________
<PAGE>
Exhibit A-1
LETTER OF ACKNOWLEDGMENT
TO COLLATERAL ASSIGNMENT OF CHARTER
__________ __, 1995
CALIFORNIA PETROLEUM TRANSPORT
CORPORATION, as Lender
CHEMICAL TRUST COMPANY OF CALIFORNIA,
as Collateral Trustee
Dear Sirs:
The undersigned hereby consents to and acknowledges receipt of (i) a
signed copy of the Assignment of Charter (the "Assignment"), dated as of
__________ 1, 1995, between CalPetro Tankers (Bahamas I) Limited (the "Owner")
and yourselves as adequate notice of such assignment to California Petroleum
Transport Corporation (the "Lender") of the Initial Charter (as defined in the
Assignment) and of all the right, title and interest of the Owner in, to and
under the Initial Charter and (ii) a signed copy of the Collateral Assignment of
Charter (the "Collateral Assignment"), dated as of ______________, 1995, between
the Lender and Chemical Trust Company of California (the "Collateral Trustee")
as adequate notice of such further assignment to the Collateral Trustee of the
Initial Charter and all of the right, title and interest of the Lender in, to
and under the Initial Charter.
So long as the Assignment remains effective, we hereby agree that (a)
upon your notification to us of the occurrence of an Event of Default under the
Term Loan Agreement or Serial Loan Agreement referred to in the Assignment, we
shall pay any and all sums which we are legally obligated to pay to the Owner or
otherwise as stated in and according to the Initial Charter directly to the
Collateral Trustee's Account No. ________________, at ______________, or
otherwise to such other account as you may at any time or from time to time,
designate by notice to us in writing and (b) with respect to each of the
insurances, if any, obtained pursuant to the provisions of Clause 11 of the
Initial Charter the Lender and the Collateral Trustee shall, if possible, be
named additional assureds.
Payments of moneys under the Initial Charter may be adjusted, reduced
or withheld only as expressly provided therein. Payments to the Collateral
Trustee shall not be subject to any right of set-off or defense by way of
counterclaim or otherwise which the undersigned may have against the Owner or
any entity substituted for it other than under the Initial Charter and all
payments once made to you will be final, and once paid we will not, for any
reason whatsoever, seek to recover any such payment made to the Collateral
Trustee by virtue of the Assignment, the Collateral Assignment or this Letter of
Consent.
<PAGE>
-2-
We confirm that the terms of the Initial Charter remain in full force
and effect and constitute the entire agreement between the parties thereto with
respect to the Vessel and that the Owner is not presently to our knowledge in
breach of the terms of the Initial Charter. We further confirm that the terms
of the Initial Charter have not been varied or modified and that the terms of
the Initial Charter will not after the date hereof be varied or modified without
the prior written consent of the Collateral Trustee.
We confirm that we have received no prior notice of any assignment by
the Owner of any interest in the Initial Charter.
The undersigned will not permit any amendment, modification,
cancellation or other alteration in the Initial Charter, nor will it consent to
or accept the substitution thereunder of any party for the Owner without your
prior written consent.
CHEVRON TRANSPORT CORPORATION, as Initial
Charterer
By: _________________________________
Name: _______________________________
Title: ______________________________
<PAGE>
Exhibit A-2
LETTER OF ACKNOWLEDGMENT
TO COLLATERAL ASSIGNMENT OF CHARTER
__________ __, 1995
CHEMICAL TRUST COMPANY OF
CALIFORNIA, as Collateral Trustee
Dear Sirs:
The undersigned hereby consents to and acknowledges receipt of a
signed copy of the Collateral Assignment of Charter (the "Assignment"), dated as
of __________ 1, 1995, between California Petroleum Transport Corporation (the
"Issuer") and yourselves as adequate notice of such assignment to you of the
Assignment of Charter (as defined in the Assignment) and of all the right, title
and interest of the Issuer in, to and under the Assignment of Charter.
So long as the Assignment remains effective, we hereby agree that,
upon your notification to us of the occurrence of an Event of Default under the
Term Indenture or Serial Indenture referred to in the Assignment, we shall pay
any and all sums which we are legally obligated to pay to the Issuer or
otherwise as stated in and according to the Assignment of Charter directly to
your Account No. ________________, at ______________, or otherwise to such other
account as you may at any time or from time to time, designate by notice to us
in writing.
Payments of moneys under the Assignment of Charter may be adjusted,
reduced or withheld only as expressly provided therein. Payments to you shall
not be subject to any right of set-off or defense by way of counterclaim or
otherwise which the undersigned may have against the Issuer or any entity
substituted for it other than under the Assignment of Charter and all payments
once made to you will be final, and once paid we will not, for any reason
whatsoever, seek to recover any such payment made to you by virtue of the
Assignment or this Letter of Consent.
We confirm that the terms of the Assignment of Charter remain in full
force and effect and constitute the entire agreement between the parties thereto
with respect to the Charter and that the Issuer is not presently to our
knowledge in breach of the terms of the Assignment of Charter. We further
confirm that the terms of the Assignment of Charter have not been varied or
modified and that the terms of the Assignment of Charter will not after the date
hereof be varied or modified without your prior written consent.
We confirm that we have received no prior notice of any assignment by
the Issuer of any interest in the Assignment of Charter.
<PAGE>
-2-
The undersigned will not permit any amendment, modification,
cancellation or other alteration in the Assignment of Charter, nor will it
consent to or accept the substitution thereunder of any party for the Issuer
without your prior written consent.
CALPETRO TANKERS (BAHAMAS I) LIMITED, as
Owner
By: ________________________________
Name: ______________________________
Title: _____________________________
<PAGE>
SCHEDULE 1
DEFINED TERMS USED IN THE ASSIGNMENT
"Assignment of Charter" means the assignment between the Issuer and the
Owner, as amended from time to time in accordance with the terms thereof,
pursuant to which the Owner assigns to the Issuer all of its right, title and
interest in, to and under the Initial Charter to secure its obligations under
the Loan Agreements.
"Assignment of Guarantee" means the assignment between the Owner and the
Issuer, as amended from time to time in accordance with the terms thereof,
pursuant to which the Owner assigns to the Issuer all of its right, title and
interest in, to and under the Chevron Guarantee to secure its obligations under
the Loan Agreements.
"Assignment of Mortgage" means the assignment of the Mortgage between the
Issuer and the Owner, as amended from time to time in accordance with the terms
thereof, pursuant to which the Issuer assigns to the Collateral Trustee all of
its right, title and interest in, to and under the Mortgage with respect to
secure its obligations under the Indentures.
"Business Day" means any day other than a Saturday, a Sunday or a day on
which banking institutions in New York, New York, or in the city and state where
the Trustee's principal offices are located, are authorized or are obligated by
law, executive order or governmental decree to be closed.
"Chevron" means Chevron Corporation, a Delaware corporation.
"Chevron Guarantee" means the guarantee of the obligations of the Initial
Charterer under the Initial Charter given by Chevron.
"Closing Date" means __________ __, 1995.
"Collateral Assignment of Charter" means the assignment between the Issuer
and the Collateral Trustee, as amended from time to time in accordance with the
terms thereof, pursuant to which the Issuer assigns to the Collateral Trustee
all of its right, title and interest in, to and under the Assignment of Charter
to secure its obligations under the Indentures.
"Collateral Assignment of Guarantee" means the assignment between the
Issuer and the Collateral Trustee, as amended from time to time in accordance
with the terms thereof, pursuant to which the Issuer assigns to the Collateral
Trustee all of its right, title and interest in, to and under the Assignment of
Guarantee to secure its obligations under the Indentures.
"Collateral Trustee" means Chemical Trust Company of California.
"Event of Default" means an Event of Default under Section 4.01 of the
Indentures.
"Governmental Approval" means any authorization, consent, approval,
license, franchise, lease, ruling, permit, tariff, rate, certification,
exemption, filing or registration by or with any
<PAGE>
-2-
Governmental Authority relating to the ownership of the Collateral or to the
execution, delivery or performance of any Security Document.
"Governmental Authority" means the federal government, any state or other
political subdivision thereof, and any entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to government
and any other governmental entity with authority over the Issuer or operation of
the Vessels.
"Indentures" means the Indenture, dated as of __________ 1, 1995 between
the Issuer and the Trustee pursuant to which the Term Mortgage Notes will be
issued and the Indenture, dated as of __________ 1, 1995 between the Trustee and
the Issuer pursuant to which the Serial Mortgage Notes will be issued.
"Initial Charter" means with respect to each Vessel, the Bareboat Charter,
dated _________, between the Initial Charterer and the Owner.
"Initial Charterer" means Chevron Transport Corporation, a Liberian
corporation.
"Issuer" means California Petroleum Transport Corporation, a corporation
organized under the laws of the State of Delaware.
"Law" means any statute, law, rule, regulation, ordinance, order, code,
policy or rule of common law, now or hereafter in effect, and any judicial or
administrative interpretation thereof by a Governmental Authority or otherwise,
including any judicial or administrative order, consent decree or judgment.
"Mortgage" means, with respect to the Vessel, the first preferred ship
mortgages on the Vessel granted by the Owner to the Issuer, as amended from time
to time in accordance with the terms of such Mortgage.
"Owner" means CalPetro Tankers (Bahamas I) Limited, a company organized
under the laws of The Commonwealth of the Bahamas.
"Person" means an individual, a partnership, a corporation, a joint
venture, an unincorporated association, a joint-stock company, a trust, or other
entity or a government or any agency or political subdivision thereof.
"Requirement of Law" means, as to any Person, the certificate of
incorporation and by-laws or partnership agreement or other organizational or
governing documents of such Person, and, any Law applicable to or binding upon
such Person or any of its properties or to which such Person or any of its
properties is subject.
"Security Documents" means the Collateral Trust Agreement, the Collateral
Assignment of Charter, the Collateral Assignment of Guarantee, and the
Assignment of Mortgage, collectively.
<PAGE>
-3-
"Serial Indenture" the Indenture, dated as of __________ 1, 1995 between
the Owner and the Issuer pursuant to which the Issuer issues the Serial Mortgage
Notes.
"Serial Mortgage Notes" means the Serial First Preferred Term Mortgage
Notes which will mature serially from _____________, 1996 to _____________, 2006
in the initial aggregate amount of $168,500,000 issued by the Issuer
concurrently with the issuance of the Term Mortgage Notes.
"Serial Obligations" means the payment, performance or obligations of any
kind or nature whatsoever of the Issuer under and pursuant to the Serial
Indenture, any Security Document and any instrument, agreement or document
referred to therein.
"State" means any state of the United States of America and, in addition,
the District of Columbia.
"Term Indenture" means the Term Indenture, dated as of __________ 1, 1995
between the Trustee and the Issuer pursuant to which the Issuer issues the Term
Mortgage Notes.
"Term Mortgage Notes" means __% First Preferred Mortgage Notes Due 2015 in
the initial aggregate amount of $117,900,000 issued by the Issuer concurrently
with the issuance of the Serial Mortgage Notes.
"Term Obligations" means the payment, performance or obligations of any
kind or nature whatsoever of the Issuer under and pursuant to the Term
Indenture, any Security Document and any instrument, agreement or document
referred to therein.
"Trustee" means Chemical Trust Company of California.
"Vessel" shall have the meaning assigned to such term in the Preliminary
Statement of this Assignment.
<PAGE>
EXHIBIT 4.10
______________________________________________________________________________
______________________________________________________________________________
P.D. Gram & Co. ans, Manager
Barber Ship Management A.S., Technical Adviser
CalPetro Tankers (Bahamas I) Limited
___________________________________________
Management and Remarketing Agreement
___________________________________________
______________________________________________________________________________
______________________________________________________________________________
<PAGE>
Table Of Contents
<TABLE>
<CAPTION>
Page
ARTICLE I
DEFINITIONS
<C> <S> <C>
ARTICLE II
ADMINISTRATIVE MANAGEMENT OF THE OWNER
Section 2.01 Appointment of Manager as Manager of Administrative Obligations
of Owner................................................................. 1
Section 2.02 Administrative Responsibilities of Manager............................... 2
ARTICLE III
ADMINISTRATIVE MANAGEMENT OF THE VESSEL
Section 3.01 Appointment of Manager as Manager of the Vessel.......................... 2
Section 3.02 Responsibilities of the Manager.......................................... 2
Section 3.03 Manager to Act as Attorney-in-Fact of Owner.............................. 3
Section 3.04 Manager to Act as Owner's Remarketing Agent.............................. 4
Section 3.05 Manager's Remarketing Obligations........................................ 4
Section 3.06 Manager's Activities on Behalf of Owner
ARTICLE IV
TECHNICAL ADVISER OBLIGATIONS
Section 4.01 Appointment of Technical Adviser......................................... 5
Section 4.02 Responsibilities of the Technical Adviser Prior to Termination of
Initial Charter.......................................................... 5
ARTICLE V
GENERAL PROVISIONS REGARDING
THE MANAGER AND THE TECHNICAL ADVISER
Section 5.01 No Duties Except As Specified in Agreement or Instructions............... 6
Section 5.02 Resignation of Manager................................................... 7
Section 5.03 Resignation of Technical Adviser......................................... 7
Section 5.04 Indemnification.......................................................... 7
Section 5.05 Compensation............................................................. 8
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ARTICLE VI
MISCELLANEOUS PROVISIONS
<S> <C> <C>
Section 6.01 Amendment................................................................ 9
Section 6.02 Severability............................................................. 9
Section 6.03 Notices.................................................................. 9
Section 6.04 Captions................................................................. 9
Section 6.05 Governing Law............................................................ 9
Section 6.06 No Demise................................................................ 9
Section 6.07 No Partnership........................................................... 9
Section 6.08 Counterparts............................................................. 9
Section 6.09 Survival................................................................. 10
Section 6.10 Integration.............................................................. 10
Section 6.11 Reproduction of Documents................................................ 10
Section 6.12 General Interpretive Principles.......................................... 10
</TABLE>
<PAGE>
This Management and Remarketing Agreement, dated as of ____________ 1,
1995 (the "Agreement"), among CalPetro Tankers (Bahamas I) Limited, a company
organized under the laws of The Commonwealth of the Bahamas (the "Owner"), P.D.
Gram & Co. ans, a company organized under the laws of the Kingdom of Norway (the
"Manager") and Barber Ship Management A.S., a company organized under the laws
of the Kingdom of Norway (the "Technical Adviser").
PRELIMINARY STATEMENT
Concurrently herewith, the Owner is purchasing the m.t. ___________
(the "Vessel") pursuant to the Purchase Agreement (the "Purchase Agreement"),
dated as of the date hereof, between the Owner and Chevron Transport Corporation
(the "Initial Charterer"). The Owner is obtaining loans (the "Loans") to
finance its acquisition of the Vessel from California Petroleum Transport
Corporation (the "Lender"). As security for the Loans, the Owner is, inter
alia, granting to the Lender a mortgage on the Vessel (the "Mortgage") and an
assignment of this Agreement. The Vessel will be bareboat chartered to the
Initial Charterer pursuant to a Bareboat Charter (the "Initial Charter"), dated
as of the date hereof, between the Owner and the Initial Charterer. The Owner
desires to engage the Manager to provide management services for the Vessel and
the Owner and the Technical Adviser to provide technical advice with respect to
the Vessel.
The Manager and the Technical Adviser are willing to provide such
services as to the Owner pursuant to this Agreement upon the terms and subject
to the conditions set forth herein.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements herein contained and of other good and valuable consideration, the
receipt of which is hereby acknowledged, the Owner, the Manager and the
Technical Adviser hereby agree as follows:
ARTICLE I
DEFINITIONS
Capitalized terms used in this Agreement shall have the meanings
assigned to such terms in Schedule 1 to this Agreement, and the definitions of
such terms shall be equally applicable to both the singular and plural forms of
such terms.
ARTICLE II
ADMINISTRATIVE MANAGEMENT OF THE OWNER
Section 2.01 Appointment of Manager as Manager of Administrative
---------------------------------------------------
Obligations of Owner. The Owner hereby appoints the Manager and the Manager
- --------------------
hereby accepts its appointment as manager of the administrative and corporate
obligations of the Owner.
<PAGE>
Section 2.02 Administrative Responsibilities of Manager. (a) The
------------------------------------------
Manager hereby covenants and agrees with the Owner that the Manager shall or
shall cause its designee to do the following:
(i) issue the shares of the Owner's capital stock;
(ii) maintain the register of shareholders;
(iii) maintain the books and records and the company minutes of the
Owner;
(iv) call and hold the annual general meeting of the shareholders of
the Owner;
(v) prepare and file the annual financial statements and annual tax
returns of the Owner, if required;
(vi) provide all office staff and accommodation of the Owner;
(vii) prepare and submit invoices to the Owner or to the Owner's
assignee for the cost and expense of (A) registering the Vessel in the name of
the Owner under the laws of the Registration Jurisdiction, (B) recording the
Mortgage under the laws of the Registration Jurisdiction, (C) maintaining the
documentation of the Vessel under the laws of the Registration Jurisdiction, (D)
the annual corporate fees of the Owner, (E) the annual fees of the officers and
directors of the Owner, (F) the annual premiums for directors and officers
liability insurance for the directors and officers of the Owner and (G) any
other expenses properly incurred on behalf of the Owner.
(b) The Owner hereby acknowledges that the Manager has designated BDO
Binder to perform the administrative and corporate responsibilities set forth in
Section 2.02(a) hereof.
ARTICLE III
ADMINISTRATIVE MANAGEMENT OF THE VESSEL
Section 3.01 Appointment of Manager as Manager of the Vessel. The
-----------------------------------------------
Owner hereby appoints the Manager and the Manager hereby accepts its appointment
to act as administrative manager of the Vessel from and after the date hereof to
the date the Vessel is disposed of by the Owner.
Section 3.02 Responsibilities of the Manager. From and after the
-------------------------------
Closing Date, the Manager hereby covenants and agrees with the Owner that:
(a) From and after the Closing Date to the date the Initial Charterer
terminates the Initial Charter pursuant to the provisions thereof (the
"Termination Date"), the Manager shall monitor and enforce the performance by
the Initial Charterer of its obligations under and pursuant to the Initial
Charter. Thereafter, if the Owner enters into an Acceptable Replacement Charter
or Substitute Charter, the Manager shall monitor and enforce the performance by
any
-2-
<PAGE>
subsequent charterer (a "Subsequent Charterer") of its obligations under and
pursuant to an Acceptable Replacement Charter or Substitute Charter. In no event
shall the Manager be responsible for the costs and expenses incurred in
connection with the enforcement of the Initial Charter, any Acceptable
Replacement Charter or Substitute Charter.
(b) The Manager shall review the insurance certificates provided by
the Initial Charterer (or Subsequent Charterer) pursuant to the terms of the
Initial Charter (or Acceptable Replacement Charter or Substitute Charter) to
determine whether such certificates comply with the terms of the Initial Charter
(or Acceptable Replacement Charter or Substitute Charter); provided, however,
that in no event shall the Manager be liable for the placement of additional
insurance on the Vessel or the payment or advancement of any premiums or calls.
(c) The Manager shall handle and process any claims arising in
connection with the insurances of the Vessel in accordance with Clause 11 of the
Initial Charter (or the pertinent provisions of the Acceptable Replacement
Charter or Substitute Charter).
(d) The Manager shall review any and all assignments and subcharters
of the Vessel to determine if they meet the requirements of the Initial Charter
(or Acceptable Replacement Charter or Substitute Charter).
(e) The Manager shall review any and all approvals or consents
requested by the Initial Charterer (or Subsequent Charterer) pursuant to the
terms of the Initial Charter (or Acceptable Replacement Charter or Substitute
Charter) and advise the Owner or the Owner's assignee with respect to same.
(f) The Manager shall provide the services of such officers and other
staff of suitable skills and experience from among the members of the staff of
the Manager as may be necessary in order properly to perform the services
referred to herein.
(g) The Manager shall provide office equipment and the use of
accounting or computing equipment when required and the necessary executive,
clerical and secretarial personnel for the performance of the services herein
set out.
(h) The Manager shall keep all such books and records of things done
and transactions performed on behalf of the Owner as the Owner or the Trustee
may require.
(i) The Manager shall prepare and deliver to the Owner and the Trustee
on each __________ of each year commencing ________________, 1996, an annual
report describing the current conditions in the tanker market (e.g., supply of
----
vessels and new buildings, current charterhire rates for the long-term bareboat
market and for the spot market).
Section 3.03 Manager to Act as Attorney-in-Fact of Owner. The Owner
-------------------------------------------
hereby constitutes the Manager, and its successors and assigns, its true and
lawful attorney, irrevocably, with full power in its own name, in the name of
its agents or nominees or in the name of the Owner or otherwise, to execute any
and all documents, instruments, agreements and applications for and on behalf of
the Owner relating to or in connection with (i) the registration of the Vessel
under the laws of the Registration Jurisdiction, (ii) the monitoring and
enforcement of the terms
-3-
<PAGE>
and conditions of the Initial Charter (or Acceptable Replacement Charter or
Substitute Charter) and (iii) the performance by the Owner of its obligations
under the Initial Charter (or Acceptable Replacement Charter or Substitute
Charter) as the Manager may deem to be necessary or advisable.
Section 3.04 Manager to Act as Owner's Remarketing Agent. The Owner
-------------------------------------------
hereby appoints and the Manager accepts appointment as the Owner's exclusive
marketing agent with respect to the sale and/or charter of the Vessel on the
terms and conditions set forth in this Agreement.
Section 3.05 Manager's Remarketing Obligations. (a) The Manager
---------------------------------
shall commence marketing of the Vessel upon receipt of written notice (the
"Commencement Notice") from the Owner (which notice shall also be provided to
the Technical Adviser) stating that the Initial Charterer has given the Owner
notice of the Initial Charter's election to terminate the Initial Charter.
(b) The Manager shall promptly consult with the Nominated Brokers,
solicit bids for and advise the Owner and the Trustee, as assignee of the Owner,
as to the availability of an Acceptable Replacement Charter.
(c) In the event that the Manager notifies the Trustee, as assignee of
the Owner, and the Owner that an Acceptable Replacement Charter is commercially
unavailable, then the Manager shall be directed by notice in writing from the
Owner or the Trustee, as assignee of the Owner, to solicit bids for the sale of
the Vessel, either directly or through the Nominated Brokers or such other
brokers as may be appointed with the consent of the Owner and the Trustee.
(d) The Manager shall forward to the Trustee the highest cash bid for
the sale of such Vessel received after the receipt of the Commencement Notice to
the date which is one week prior to the next succeeding principal payment date
(the "Remarketing Period") that will result when added to the Termination
Payment made by the Initial Charterer in the realization of net proceeds of sale
of such Vessel in an amount of US Dollars that shall be not less than the then
outstanding principal balance of the Term Loan, together with accrued interest
thereon; provided, however, if there are no such bids, the Manager shall forward
to the Trustee all other cash bids received during the Remarketing Period by the
Manager for the sale of the Vessel. The Trustee shall instruct the Manager
whether or not to accept any such bid.
(e) In the event that there are no bids for the sale of the Vessel or
the Trustee instructs the Manager not to accept any bid for the sale of the
Vessel, then the Manager shall consult with the Owner, the Trustee and the
Nominated Brokers, or such other brokers as may be appointed with the consent of
the Owner and the Trustee, and shall attempt to recharter the Vessel upon such
terms as it shall, in its sole discretion, deem appropriate so long as (i) such
charter is an arms' length agreement, (ii) the charterhire payable thereunder
during the term thereof is an amount sufficient to (A) make the mandatory
sinking fund payments, together with all interest payable thereon, due on the
Term Mortgage Notes, (B) pay Recurring Fees and Taxes for such Vessel, (C) to
pay the Management Fees and Technical Advisor's Fees for such Vessel and (D) to
pay the amount of fees and expenses of the Indenture Trustee and Collateral
-4-
<PAGE>
Trustee allocable to such Vessel and (iii) such charter terminates no later than
_____________, 2015.
(f) If the Manager is unable to obtain any bids for the recharter of
the Vessel, it shall promptly advise the Owner and the Trustee and recommend
what alternatives are available for the employment or disposition of the Vessel.
Section 3.06 Manager's Activities on Behalf of Owner. In connection
---------------------------------------
with the performance of its services hereunder on behalf of the Owner, the
Manager shall not perform such services from an office or fixed place of
business in the United States within the meaning of sections 864 or 887(b)(4) of
the Code and shall use its best efforts to avoid treatment of the Owner as being
engaged in a trade or business in the United States or having any such office or
fixed place of business in the United States.
ARTICLE IV
TECHNICAL ADVISER OBLIGATIONS
Section 4.01 Appointment of Technical Adviser. The Owner hereby
--------------------------------
appoints and the Technical Adviser hereby accepts its appointment as Technical
Adviser with respect to the Vessel.
Section 4.02 Responsibilities of the Technical Adviser Prior to
--------------------------------------------------
Termination of Initial Charter. (a) Upon receipt of a notice from the Manager
- ------------------------------
requesting that the Vessel be inspected, the Technical Adviser shall inspect the
Vessel and furnish a copy of the report regarding such inspection to the
Manager, the Owner and the Trustee.
(b) At the time of the special survey of the Vessel, the Technical
Adviser shall inspect the Vessel and furnish a copy of the report regarding such
inspection to the Manager, the Owner and the Trustee.
(c) Immediately after receipt of the Commencement Notice, the
Technical Adviser shall inspect the Vessel and furnish a copy of the report
regarding such inspection to the Manager, the Owner and the Trustee.
(d) In the event the Initial Charterer redelivers the Vessel to the
Owner and if the Manager notifies the Technical Adviser that the Manager deems
an inspection advisable, the Technical Adviser shall inspect the Vessel to
determine the condition and fitness of the Vessel and her machinery and
equipment to determine what repairs or work is necessary in order to place the
Vessel in the same or as good structure, state and condition in which the Vessel
was in as of the Closing Date, ordinary wear and tear excepted; provided,
however, in no event shall the Technical Adviser or the Manager be liable or
responsible for the payment or advancement of any amounts required in connection
with the repair of the Vessel.
(e) In the event a diver's survey is conducted pursuant to the terms
of the Initial Charter, the Technical Adviser shall send a representative to
observe the survey and shall thereafter furnish a copy of the written report
relating to such survey to the Manager, the Owner
-5-
<PAGE>
and the Trustee; provided, however, in no event shall the Technical Adviser or
the Manager be liable or responsible for the payment or advancement of any
amounts required in connection with the repair of the Vessel.
(f) On or about ______________ of each year commencing ___________,
1996, the Technical Adviser shall prepare and deliver to the Manager, the Owner
and the Trustee an annual report on the condition of the Vessel as of such date.
Section 4.03 Responsibilities of the Technical Adviser After
-----------------------------------------------
Termination of Initial Charter. From and after the Initial Charterer terminates
- ------------------------------
the Initial Charter, the Owner may engage the Technical Adviser to provide
technical management services for the Owner. The Owner and the Technical
Adviser shall enter into an agreement at that time with respect to the nature of
the services to be provided by the Technical Adviser and the Technical Adviser's
compensation therefor.
ARTICLE V
GENERAL PROVISIONS REGARDING
THE MANAGER AND THE TECHNICAL ADVISER
Section 5.01 No Duties Except As Specified in Agreement or
---------------------------------------------
Instructions. (a) Neither the Manager nor the Technical Adviser shall have any
- ------------
duty or obligation to manage, make any payment in respect of, register, record,
sell, repair, advance any amounts in connection with the repair of, dispose of
or otherwise deal with the Vessel or any part thereof, or otherwise take or
refrain from taking any action under, or in connection with, any document
contemplated hereby to which either the Manager or the Technical Adviser is a
party, except as expressly provided by the terms of this Agreement. No implied
duties or obligations shall be read into this Agreement against either the
Manager or the Technical Adviser.
(b) Under no circumstances shall either the Manager or the Technical
Adviser be liable for (i) the Owner's obligations under the Loan Agreements, the
Loans, the Security Documents, the Initial Charter or the indebtedness evidenced
by the Securities or (ii) the validity or sufficiency of the Loan Agreements or
any of the Security Documents. Neither the Manager nor the Technical Adviser
shall assume any liability, duty or obligation to any Person, other than as
expressly provided for herein.
(c) Neither the Manager nor the Technical Adviser shall have any duty
to conduct any affirmative investigation, other than as specifically set forth
in this Agreement, as to the Initial Charterer's (or Acceptable Replacement
Charterer's or Subsequent Charterer's) performance of its obligations under the
Initial Charter or the condition of the Vessel.
(d) No provision of this Agreement shall be construed to relieve the
Manager or the Technical Adviser from liability for its own grossly negligent
action, its own grossly negligent failure to act or its own willful misconduct.
The duties and obligations of the Manager and the Technical Adviser shall be
determined solely by the express provisions of this Agreement and neither the
Manager nor the Technical Adviser shall be liable except for the performance of
its respective duties and obligations as specifically set forth in this
Agreement.
-6-
<PAGE>
No implied covenants or obligations shall be read into this Agreement against
the Manager or the Technical Adviser and, in the absence of bad faith on the
part of the Manager and the Technical Adviser, the Manager and the Technical
Adviser may conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon any certificates or opinions
furnished to the Manager or the Technical Adviser, respectively, and conforming
to the requirements of this Agreement.
(e) The Manager and the Technical Adviser may consult with counsel and
any advice or opinion of counsel shall be full and complete authorization and
protection in respect of any action taken or suffered or omitted by it hereunder
in good faith and in accordance with such advice or opinion of counsel.
(f) The right of the Manager and the Technical Adviser to perform any
discretionary act enumerated in this Agreement shall not be construed as a duty,
and neither the Manager nor the Technical Adviser shall be answerable for other
than its gross negligence or willful misconduct in the performance of such act,
and the delivery hereunder to the Manager or the Technical Adviser,
respectively, of any notice, document or report shall not give rise to an
affirmative obligation on the part of the Manager or the Technical Adviser to
take any action with respect thereto, except as otherwise expressly provided
herein.
Section 5.02 Resignation of Manager. The Manager may resign its
----------------------
duties at any time upon 30 days prior written notice to the Owner and the
Trustee. The Manager may be removed by the Owner with or without cause upon 30
days prior written notice to the Manager and the Trustee; provided, however, if
the Owner removes the Manager without cause, the Manager shall be entitled to
receive the compensation described in Section 5.05(a) hereof through the date
which is 90 days after the receipt of such notice. In the event of the
resignation or removal of the Manager, a successor manager shall be appointed by
the Owner. The Owner shall give the Trustee notice of the successor manager's
acceptance of such appointment and shall cause such successor to execute any and
all documents requested by the Trustee to evidence such successor's acceptance
of all of the obligations of the Manager pursuant to this Agreement.
Section 5.03 Resignation of Technical Adviser. The Technical Adviser
--------------------------------
may resign its duties at any time upon 30 days prior written notice to the Owner
and the Trustee. The Technical Adviser may be removed by the Owner with or
without cause upon 30 days prior written notice to the Technical Adviser and the
Trustee; provided, however, if the Owner removes the Technical Adviser without
cause the Technical Adviser shall be entitled to receive the compensation
described in Section 5.05(b) hereof through the date which is 90 days after the
receipt of such notice. In the event of the resignation or removal of the
Technical Adviser, a successor technical adviser shall be appointed by the
Owner. The Owner shall give the Trustee notice of the successor technical
adviser's acceptance of such appointment and shall cause such successor to
execute any and all documents requested by the Trustee to evidence such
successor's acceptance of all of the obligations of the Technical Adviser
pursuant to this Agreement.
Section 5.04 Indemnification. (a) The Owner shall indemnify the
---------------
Manager and its successors and assigns, and hold them harmless against and from,
any and all liabilities, obligations, losses, damages, taxes, penalties, claims,
actions, suits, costs, expenses (including
-7-
<PAGE>
legal fees and expenses) of any kind and nature whatsoever (collectively,
"Expenses") which may be imposed on, incurred by or asserted at any time against
the Manager (whether or not indemnified against by other parties) in any way
relating to or arising out of this Agreement, the Indentures or any Security
Document; provided, however, that the Owner shall not be required to indemnify
the Manager for Expenses arising or resulting from its own willful misconduct or
gross negligence.
(b) The Owner shall indemnify the Technical Adviser and its successors
and assigns, and hold them harmless against and from, any and all Expenses which
may be imposed on, incurred by or asserted at any time against the Technical
Adviser (whether or not indemnified against by other parties) in any way
relating to or arising our of this Agreement, the Indenture or any Security
Document; provided, however, that the Owner shall not be required to indemnify
the Technical Adviser for Expenses arising or resulting from its own willful
misconduct or gross negligence.
Section 5.05 Compensation. (a) For the first three years of the term
------------
of this Agreement, the Manager shall receive as compensation for its services
hereunder an amount equal to $13,625 per annum, payable semi-annually in arrears
on each Payment Date as provided in Section 3.03 of the Collateral Trust
Agreement. In addition, the Manager shall be entitled to a fee equal to the
product of (i) $3,000 and (ii) a fraction the numerator of which is one (1) and
the denominator of which is the number of Vessels subject to the lien of the
Collateral Trust Agreement per annum during such period, payable annually in
arrears. Thereafter, the Manager's compensation for its services hereunder
shall increase by four percent (4%) per annum.
(b) For the first three years of the term of this Agreement, the
Technical Adviser shall receive as compensation for its services hereunder an
amount equal to $10,000 per annum, payable semi-annually in arrears on each
Payment Date as provided in the Section 3.03 of the Collateral Trust Agreement.
Thereafter, the Technical Adviser's compensation for its services shall
increase by four percent (4%) per annum. In addition, the Technical Adviser
shall be entitled to an inspection fee of $600 per inspection together with the
reimbursement of its reasonable travel costs and expenses incurred in connection
with each inspection performed by the Technical Adviser pursuant to the terms of
this Agreement and the fees, charges and reasonable travel costs and expenses of
any sub-contractor hired by the Technical Adviser in connection therewith.
(c) Whenever any payment to the Manager or the Technical Adviser under
this Agreement shall be due on a day other than a Business Day, the date of
payment thereof shall be extended to the next succeeding Business Day, unless
such extension would cause payment to be made in the next succeeding calendar
month, in which case such date shall be advanced to the next preceding Business
Day.
-8-
<PAGE>
ARTICLE VI
MISCELLANEOUS PROVISIONS
Section 6.01 Amendment. This Agreement may be amended from time to
---------
time by written agreement signed by the parties hereto upon the written consent
of the Trustee.
Section 6.02 Severability. If any provision of this Agreement is
------------
held to be in conflict with any applicable statute or rule of law or is
otherwise held to be unenforceable for any reason whatsoever, such circumstances
shall not have the effect of rendering the provision in question inoperative or
unenforceable in any other case or circumstance, or of rendering any other
provision or provisions herein contained invalid, inoperative, or unenforceable
to any extent whatsoever. The invalidity of any one or more phrases, sentences,
clauses or Sections of this Agreement contained, shall not affect the remaining
portions of this Agreement, or any part thereof.
Section 6.03 Notices. All demands, notices and communications
-------
hereunder shall be in writing, personally delivered or mailed by certified mail-
return receipt requested, and shall be deemed to have been duly given upon
receipt (a) in the case of the Manager, at the following address: Bryggegaten 5,
Aker Brygge, P.O. Box 1803 VIKA, 0123 Oslo, Norway, (b) in the case of the
Technical Adviser, at the following address: _____________________________, (c)
in the case of the Owner, at the following address: United House, 14-16 Nelson
Street, Douglas, Isle of Man, (d) in the case of the Trustee, at the following
address: ___________________________, or at other such address as shall be
designated by such party in a written notice to the other parties.
Section 6.04 Captions. The captions or headings in this Agreement
--------
are for convenience only and in no way define, limit or describe the scope or
intent of any provisions or sections of this Agreement.
Section 6.05 Governing Law. This Agreement shall be governed by and
-------------
interpreted in accordance with the laws of the State of New York, without giving
effect to the principles of conflicts of law.
Section 6.06 No Demise. Nothing herein contained shall be construed
---------
as creating a demise of the Vessel to the Manager or to the Technical Adviser.
Section 6.07 No Partnership. Nothing herein contained shall be
--------------
deemed or construed to create a partnership or joint venture among the parties
hereto and the services of each party shall be rendered as an independent
contractor and not as agent for any other party.
Section 6.08 Counterparts. This Agreement may be executed in any
------------
number of counterparts and by different parties hereto on separate counterpart,
each of which shall be deemed to be an original. Such counterparts shall
constitute one and the same agreement.
-9-
<PAGE>
Section 6.09 Survival. The representations, covenants and agreements
--------
contained in or made pursuant to this Agreement in respect of either party
hereto shall survive the execution and delivery of this Agreement and shall
continue in effect so long as such party's obligations hereunder remain
outstanding.
Section 6.10 Integration. This Agreement and the Schedule and
-----------
Exhibits hereto constitute the entire agreement and understanding between the
parties hereto with respect to the subject matter hereof and supersedes all
prior agreements, understandings or representations pertaining to the subject
matter hereof, whether oral or written. There are no warranties,
representations or other agreements between the parties in connection with the
subject matter hereof except as specifically set forth or incorporated herein.
Section 6.11 Reproduction of Documents. This Agreement and all
-------------------------
documents relating thereto, including, without limitation, (a) consents, waivers
and modifications which may hereafter be executed, (b) documents received by any
party at the closing, and (c) financial statements, certificates and other
information previously or hereafter furnished, may be reproduced by any
photographic, photostatic, microfilm, micro-card, miniature photographic or
other similar process. The parties agree that any such reproduction shall be
admissible in evidence as the original itself in any judicial or administrative
proceeding (whether or not the original is in existence and whether or not such
reproduction was made in the regular course of business) and that any
enlargement, facsimile or further reproduction of such reproduction shall
likewise be admissible in evidence.
Section 6.12 General Interpretive Principles. For purposes of this
-------------------------------
Agreement except as otherwise expressly provided or unless the context otherwise
requires:
(a) the defined terms in this Agreement shall include the plural as
well as the singular, and the use of any gender herein shall be deemed to
include any other gender;
(b) accounting terms not otherwise defined herein have the meanings
assigned to them in accordance with generally accepted accounting principles as
in effect on the date hereof;
(c) references herein to "Articles", "Sections", "Subsections",
"paragraphs", and other subdivisions without reference to a document are to
designated Articles, Sections, Subsections, paragraphs and other subdivisions of
this Indenture;
(d) a reference to a Subsection without further reference to a Section
is a reference to such Subsection as contained in the same Section in which the
reference appears, and this rule shall also apply to paragraphs and other
subdivisions;
(e) the words "herein", "hereof", "hereunder" and other words of
similar import refer to this Indenture as a whole and not to any particular
provision; and
(f) the term "include" or "including" shall mean without limitation by
reason of enumeration.
-10-
<PAGE>
IN WITNESS WHEREOF, the Manager, the Technical Adviser and the Owner
have caused this Indenture to be duly executed and delivered by their respective
officers thereunto duly authorized and their respective seals, duly attested, to
be hereunto affixed, all as of the day and year first above written.
P.D. GRAM & CO. AS, as Manager
By:___________________________________
Name:_________________________________
Title:________________________________
BARBER SHIP MANAGEMENT GROUP, as Technical Adviser
By:___________________________________
Name:_________________________________
Title:________________________________
CALPETRO TANKERS (BAHAMAS I) LIMITED, as Owner
By:___________________________________
Name:_________________________________
Title:________________________________
-11-
<PAGE>
SCHEDULE 1
DEFINED TERMS USED IN THE MANAGEMENT AND REMARKETING AGREEMENT
"Acceptable Replacement Charter" means any replacement charter which
satisfies each of the following requirements: (i) the charter is a bareboat
charter and requires that the charterer thereunder "gross up" charterhire
payments to indemnify and hold the Holders of the Securities harmless from any
withholding tax imposed on the charterhire payments or on the payments on the
Securities; (ii) the charterhire payments payable during the non-cancelable term
of such replacement charter, after giving effect to (1) any "gross up" of such
amounts as a result of any withholding tax on such charterhire payments, (2) the
receipt of the Termination Payment and (3) all fees and expenses incurred in
connection with the recharter of the Vessel, provide sufficient funds for the
payment in full of (A) the Allocated Principal Amount of the Term Mortgage Notes
for the related Vessel and interest thereon in accordance with the revised
schedule of sinking fund and principal payments, that is applicable upon
termination of the related Initial Charter, (B) the amount of Recurring Fees and
Taxes for such Vessel, (C) the amount of Management Fees and Technical Advisor's
Fees for such Vessel, (D) the amount of fees and expenses of the Indenture
Trustee, the Collateral Trustee and the Designated Representative allocable to
such Vessel and (E) an amount at least equal to 30% of the estimated amounts, on
a per annum basis, referred to in clauses (B), (C) and (D) above for
miscellaneous or unexpected expenses; and (iii) the Rating Agencies shall have
confirmed in writing to the Trustee that the terms and conditions of such
proposed charter will not result in the withdrawal or reduction of the then
current ratings of the Term Mortgage Notes.
"Agreement" means this Management and Remarketing Agreement, dated as of
____________ 1, 1995, among the Owner, the Manager and the Technical Adviser.
"Business Day" means any day other than a Saturday, a Sunday or a day on
which banking institutions in New York, New York, or in the city and state where
the Trustee's principal offices are located, are authorized or are obligated by
law, executive order or governmental decree to be closed.
"Closing Date" means ____________ __, 1995.
"Collateral Trust Agreement" means the collateral trust agreement, dated as
of the date hereof, among the Lender, the Collateral Trustee and the Trustee.
"Collateral Trustee" means Chemical Trust Company of California, not in its
individual capacity but solely as collateral trustee under the Collateral Trust
Agreement.
"Code" means the United States Internal Revenue Code of 1986 and the
corresponding provisions of any successor statute.
"Commencement Date" means the date on which the Vessel is accepted by the
Initial Charterer under the Initial Charter.
-1-
<PAGE>
"Commencement Notice" shall have the meaning assigned to such term in
Section 3.05(a) of this Agreement.
"Expenses" shall have the meaning assigned to such term in Section 5.04 of
this Agreement.
"Holder" means the Person in whose name a Security is registered in the
related securities register.
"Indentures" means the Indenture, dated as of ____________ 1, 1995 between
the Lender and the Trustee pursuant to which the Term Mortgage Notes will be
issued and the Indenture, dated as of ____________ 1, 1995 between the Lender
and the Trustee pursuant to which the Serial Mortgage Notes will be issued.
"Initial Charter" means with respect to each Vessel, the Bareboat Charter,
dated as of ____________ 1, 1995, between the Initial Charterer and the Owner.
"Initial Charterer" means Chevron Transport Corporation.
"Lender" means California Petroleum Transport Corporation.
"Loan Agreements" means the Loan Agreement, dated as of ____________ 1,
1995, between the Owner and the Lender, as it may be supplemented or amended
from time to time in accordance with its terms, pursuant to which the Lender
makes the Serial Loans to the Owner and the Loan Agreement, dated as of
____________ 1, 1995, between the Owner and the Lender, as it may be
supplemented or amended from time to time in accordance with its terms, pursuant
to which the Lender makes the Term Loan to the Owner.
"Loans" means, collectively, the Serial Loans and the Term Loan.
"Manager" means P.D. Gram & Co. as, a company organized under the laws of
the Kingdom of Norway.
"Mortgage" shall mean the First Preferred Ship Mortgage, dated the Closing
Date, from the Owner to the Lender.
"Nominated Brokers" means McQuilling Brokerage Partners, Inc. and ACM
Shipping Limited.
"Optional Termination Date" means the [8th, 10th, 12th or 14th] [9th, 11th,
13th or 15th] [10th, 12th, 14th or 16th] [11th, 13th or 15th] anniversary of the
Commencement Date.
"Owner" means CalPetro Tankers (Bahamas I) Limited, a company organized
under the laws of The Commonwealth of the Bahamas.
-2-
<PAGE>
"Payment Date" means each __________ and ____________, commencing
___________, 1995.
"Person" means an individual, a partnership, a corporation, a joint
venture, an unincorporated association, a joint-stock company, a trust, or other
entity or a government or any agency or political subdivision thereof.
"Purchase Agreement" means the Vessel Purchase Agreement, dated as of
_________________, 1995 between the Owner and the Initial Charterer wherein the
Owner purchases the Vessel from the Initial Charterer.
"Rating Agencies" means Moody's Investors Service, Inc., Standard & Poor's
Rating Group and Duff & Phelps Credit Rating Co.
"Registration Jurisdiction" means the jurisdiction in which the Vessel is
or will be registered.
"Remarketing Period" shall have the meaning assigned to such term in
Section 3.05(d) of this Agreement.
"Securities" means, collectively, the Term Mortgage Notes and the Serial
Mortgage Notes.
"Serial Mortgage Notes" means the Serial First Preferred Term Mortgage
Notes which will mature serially from _____________, 1996 to _____________, 2006
issued in the initial aggregate amount of $167,500,000 concurrently with the
offering of the Term Mortgage Notes.
"Serial Loans" means the loans from the Lender to the Owner in the amount
of $__________.
"State" means any state of the United States of America and, in addition,
the District of Columbia.
"Subsequent Charterer" shall have the meaning assigned to such term in
Section 3.02(a) of this Agreement.
"Substitute Charter" means a replacement charter after the termination of
the Initial Charter which is not an Acceptable Replacement Charter.
"Technical Adviser" means Barber Ship Management Group, a company organized
under the laws of the Kingdom of Norway.
"Term Loan" means the loan from the Lender to the Owner in the amount of
$__________.
-3-
<PAGE>
"Term Mortgage Notes" means __% First Preferred Mortgage Notes Due 2015 in
the initial aggregate amount of $117,900,000 issued by California Petroleum
under the Indenture.
"Termination Date" means the date on which the Initial Charter is
terminated by the Initial Charterer pursuant to the terms thereof.
"Termination Payment" means the payment made by the Initial Charterer
pursuant to the Initial Charter in the event the Initial Charterer elects to
terminate the Initial Charter on any Optional Termination Date.
"Trustee" means Chemical Trust Company of California, not in its individual
capacity but solely as indenture trustee under the Indentures.
"Vessel" means the m.t. ______________.
-4-
<PAGE>
EXHIBIT 4.13
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
California Petroleum Transport Corporation
and
CalPetro Tankers (Bahamas I) Limited
___________________________________
TERM LOAN AGREEMENT
Dated as of ________ 1, 1995
___________________________________
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
Table Of Contents
ARTICLE I
DEFINITIONS
ARTICLE II
THE TERM LOAN
Page
Section 2.01 The Term Loan.............................................. 2
Section 2.02 Interest................................................... 3
Section 2.03 Repayment of Principal..................................... 3
Section 2.04 Mandatory Prepayment of the Term Loan...................... 3
Section 2.05 Voluntary Prepayment of the Term Loan...................... 3
Section 2.06 Maximum Interest Rate...................................... 3
Section 2.07 Manner of Payment.......................................... 4
Section 2.09 Transfer of Loan Agreement................................. 4
Section 2.10 Joint and Several Obligation............................... 4
Section 2.11 Non-Recourse Obligations................................... 4
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE OWNER
Section 3.01 Organization, Power and Status of the Owner................ 5
Section 3.02 Authorization; Enforceability; Execution and Delivery...... 5
Section 3.03 No Conflicts; Laws and Consents; No Default................ 5
Section 3.04 Governmental Approvals..................................... 6
Section 3.05 Litigation................................................. 6
Section 3.06 Taxes...................................................... 6
ARTICLE IV
CONDITION PRECEDENT
Section 4.01 Condition Precedent........................................ 6
<PAGE>
ARTICLE V
COVENANTS OF THE OWNER
Section 5.01 Payment of Principal and Interest; Payment of Taxes........ 6
Section 5.02 Corporate Existence........................................ 6
Section 5.03 Performance of Obligations................................. 7
Section 5.04 Activities of the Owners................................... 7
Section 5.05 No Bankruptcy Petition..................................... 7
Section 5.06 Other Debt................................................. 7
Section 5.07 Guarantees, Loans, Advances and Other Liabilities.......... 8
Section 5.08 Consolidation, Merger and Sale of Assets................... 8
Section 5.09 Capital Expenditures....................................... 8
Section 5.10 Books and Records.......................................... 8
Section 5.11 Restricted Payments........................................ 8
Section 5.12 Acceptable Replacement Charter............................. 8
Section 5.13 Provision of Reports and Information....................... 9
ARTICLE VI
EVENTS OF DEFAULT; REMEDIES
Section 6.01 Events of Default.......................................... 9
Section 6.02 Enforcement of Remedies.................................... 10
Section 6.03 Acceleration of Term Loan.................................. 10
Section 6.04 Specific Remedies.......................................... 11
Section 6.05 Rights and Remedies Cumulative............................. 12
Section 6.06 Restoration of Rights and Remedies......................... 12
Section 6.07 Waiver of Past Defaults.................................... 13
ARTICLE VII
MISCELLANEOUS PROVISIONS
Section 7.01 Amendment.................................................. 13
Section 7.02 Severability............................................... 13
Section 7.03 Notices.................................................... 13
Section 7.04 Consent to Jurisdiction.................................... 13
Section 7.05 Captions................................................... 14
Section 7.06 Governing Law.............................................. 14
Section 7.07 No Partnership............................................. 14
Section 7.08 Counterparts............................................... 14
Section 7.09 Survival................................................... 14
<PAGE>
Section 7.10 Integration................................................ 14
Section 7.11 Reproduction of Documents.................................. 14
Section 7.12 Successors and Assigns; Assignment......................... 15
Section 7.13 General Interpretive Principles............................ 15
Section 7.14 Effective Date of Transaction.............................. 15
<PAGE>
Term Loan Agreement, dated as of _________ 1, 1995 (the "Loan
Agreement"), between California Petroleum Transport Corporation, a corporation
organized under the laws of the State of Delaware (the "Lender") and CalPetro
Tankers (Bahamas I) Limited, a company organized under the laws of The
Commonwealth of the Bahamas (the "Owner").
PRELIMINARY STATEMENT
The Owner has requested that the Lender make a loan to the Owner in
the aggregate principal amount equal to $____________ (the "Term Loan").
Concurrently herewith, the Owner is requesting that the Lender make a series of
loans to the Owner in the aggregate principal amount equal to $____________
(collectively, the "Serial Loans"). The net proceeds of the Serial Loans and
the Term Loan will be used by the Owner to acquire the m.t. _________ (the
"Vessel") from Chevron Transport Corporation (the "Initial Charterer"). The
Vessel will be bareboat chartered to the Initial Charterer pursuant to the
Bareboat Charter (the "Initial Charter"), dated as of the date hereof, between
the Owner and the Initial Charterer. As collateral security for its obligations
hereunder, the Owner will assign, pledge, mortgage and grant to the Lender a
security interest in, inter alia, the Vessel, the Initial Charter and the
earnings and insurances of the Vessel.
The Lender is willing to make the Term Loan to the Owner pursuant to
this Loan Agreement upon the terms and subject to the conditions contained
herein:
NOW, THEREFORE, in consideration of the mutual covenants and
agreements herein contained and of other valuable consideration, receipt of
which is hereby acknowledged, the Owner and the Lender hereby agree as follows:
ARTICLE I
DEFINITIONS
Capitalized terms used in this Loan Agreement shall have the meanings
assigned to such terms in Schedule 1 to this Loan Agreement, and the definitions
of such terms shall be equally applicable to both the singular and plural forms
of such terms.
ARTICLE II
THE TERM LOAN
Section 2.01 The Term Loan. The Lender agrees upon the terms and
-------------
subject to the conditions hereof to make the Term Loan to the Owner on the
Closing Date in the initial principal amount of $___________.
Section 2.02 Interest. Interest on the outstanding principal balance
--------
of the Term Loan shall be payable at a rate per annum (computed on the basis of
the actual number of days elapsed over a year of 360 days) equal to the ___%
(the "Interest Rate"). Interest shall be
<PAGE>
-2-
payable in arrears on each Payment Date. If the Owner shall default in the
payment of the principal of, or interest on the Term Loan or any other amounts
becoming due thereunder, the Owner shall, on demand, pay interest on such unpaid
amounts, to the extent permitted by applicable law, during the Default Period at
a rate per annum equal to the Default Rate.
Section 2.03 Repayment of Principal. Principal on the Term Loan
----------------------
shall be payable on each Payment Date commencing the First Principal Payment
Date in the amounts set forth in Schedule 2 set forth hereto; provided, however,
if the Initial Charterer terminates the Initial Charter on an Optional
Termination Date, then Principal on the Term Loan shall be payable on each
Payment Date commencing on the next Payment Date on which Principal is due in
the amounts set forth in Schedule 3-A, Schedule 3-B, Schedule 3-C and Schedule
3-D, as applicable.
Section 2.04 Mandatory Prepayment of the Term Loan. (a) In the
-------------------------------------
event the Vessel is a Total Loss, the Owner shall prepay the outstanding
principal balance of the Term Loan on the Loss Date, together with an amount
equal to all accrued interest thereon to but not including the Loss Date;
provided, however, in the event the Total Loss Proceeds are in an amount less
than the sum of the outstanding principal balance of the Term Loan and the
Serial Loans, together with an amount equal to all accrued interest thereon to
but not including the Loss Date, then the Owner shall prepay the outstanding
principal balance of the Term Loan and the Serial Loans, together with an amount
equal to all accrued interest thereon to but not including the Loss Date, pro
rata, in accordance with their respective outstanding principal balances.
(b) In the event the Vessel is sold pursuant to Section 5.12, the
Owner shall use the entire net proceeds of such sale to prepay the outstanding
principal balance of the Term Loan. Such prepayment shall be in full and
complete satisfaction of the Owner's obligations hereunder.
Section 2.05 Voluntary Prepayment of the Term Loan. The Term Loan is
-------------------------------------
not subject to voluntary prepayment by the Owner prior to ________, 2005.
Thereafter, with the prior written consent of the Lender, the Owner may prepay
the Term Loan, in whole or in part, together with all interest accrued and
unpaid thereon.
Section 2.06 Maximum Interest Rate. Nothing herein shall require the
---------------------
Owner to pay interest at a rate exceeding the maximum rate permissible by
applicable law. If the Interest Rate payable by the Owner on any date would
exceed the maximum rate permissible by applicable law, the Interest Rate shall
automatically be reduced to such maximum permitted amount. Any interest
actually received for any period in excess of such maximum allowable amount for
such period shall be deemed to have been applied as a prepayment of principal of
the Term Loan.
Section 2.07 Manner of Payment. (a) All payments due to the Lender
-----------------
under this Loan Agreement shall be made without any reduction or deduction
whatsoever, including any reduction or deduction for any set-off, recoupment or
counterclaim.
<PAGE>
-3-
(b) Whenever any payment to the Lender under this Loan Agreement shall
be due on a day other than a Business Day, the date of payment thereof shall be
extended to the next succeeding Business Day. If the date for any payment under
this Loan Agreement is extended, such payment shall bear interest for such
extended period at the applicable Interest Rate.
(c) Any payment received by the Lender hereunder shall be applied as
follows: first, toward the payment of interest on overdue payments at the
-----
Default Rate, then due and payable; second, toward the payment of all interest
------
then due and payable on the Term Loan; third, toward the payment of the
-----
principal then due and payable on the Term Loan due on the related Payment Date
(or, if the payment relates to the mandatory prepayment of the Term Loan
pursuant to Section 2.04, pro rata, in accordance with the outstanding principal
balance of the Term Loan and the Serial Loans then outstanding); and fourth,
------
toward any unpaid expenses of the Lender in connection with this Loan Agreement
or any other Security Documents.
(d) Payment of sums due under the provisions of this Loan Agreement
shall be made by wire transfer to the Lender's nominated bank and receipt of
such wire transfer by such bank by 10:00 a.m. New York time on the due date for
payment.
Section 2.09 Transfer of Loan Agreement. This Loan Agreement, and
--------------------------
the right to receive all payments of principal, interest and any other amounts
hereunder, may be transferred by the Lender only upon surrender thereof of this
Loan Agreement to the Owner (except to the Collateral Trustee pursuant to the
Collateral Trust Agreement). The Owner shall, upon such surrender, accompanied
by a written request of the Lender, execute and deliver in replacement thereof a
new Loan Agreement with the Lender's transferee.
Section 2.10 Joint and Several Obligation. In consideration of the
----------------------------
Other Owners agreeing to be jointly and severally liable with the Owner for all
the Owner's obligations and liabilities hereunder and under the Serial Loan
Agreement, the Owner hereby covenants and agrees with the Lender that the Owner
will be jointly and severally liable with the Other Owners on the Other Loans,
but only to the extent of the proceeds received by the Lender (or the Lender's
successors and assigns) from the Lender's right, title and interest in and to
the Collateral.
Section 2.11 Non-Recourse Obligations. The Lender, and any
------------------------
subsequent assignee or transferee of this Loan Agreement, hereby agrees that the
Owner has and shall have no personal liability or obligation with respect to the
payment of the Term Loan, the Serial Loans or the Other Loans, and that the Term
Loan, the Serial Loans and the Other Loans are payable solely from the proceeds
received by the Lender (or the Lender's successors and assigns) from the
Lender's right, title and interest in and to the Collateral.
<PAGE>
-4-
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE OWNER
The Owner hereby represents and warrants to the Lender as follows:
Section 3.01 Organization, Power and Status of the Owner. The Owner
-------------------------------------------
(a) is a corporation duly formed, validly existing and in good standing under
the laws of The Bahamas and (b) is duly authorized, to the extent necessary, to
do business in each jurisdiction where the character of its properties or the
nature of its activities makes such qualification necessary. The Owner has all
requisite corporate power and authority to own and operate the property it
purports to own and to carry on its business as now being conducted and as
proposed to be conducted in respect of the Vessel.
Section 3.02 Authorization; Enforceability; Execution and Delivery.
-----------------------------------------------------
(a) The Owner has all necessary corporate power and authority to execute,
deliver and perform under this Loan Agreement and each other Security Document
to which it is a party.
(b) All action on the part of the Owner that is required for the
authorization, execution, delivery and performance of this Loan Agreement and
each other Security Document to which it is a party, in each case has been duly
and effectively taken; and the execution, delivery and performance of this Loan
Agreement and each such other Security Document does not require the approval or
consent of any Person except for such consents and approvals as have been
obtained on or prior to the Closing Date.
(c) This Loan Agreement and each other Security Document to which the
Owner is a party has been duly executed and delivered by it. Each of this Loan
Agreement and each other Security Document to which the Owner is a party
constitutes its legal, valid and binding obligation, enforceable against it in
accordance with the terms thereof.
Section 3.03 No Conflicts; Laws and Consents; No Default. (a)
-------------------------------------------
Neither the execution, delivery and performance of this Loan Agreement and each
other Security Document to which the Owner is a party nor the consummation of
any of the transactions contemplated hereby or thereby nor performance of or
compliance with the terms and conditions hereof or thereof (i) contravenes any
Requirement of Law applicable to the Owner or any of the Collateral, (ii)
constitutes a default under any Security Document or (iii) results in the
creation or imposition of any Lien on any of the Collateral (other than the Lien
created by any of the Security Documents) or results in the acceleration of any
obligation.
(b) The Owner is in compliance with and not in default under any and
all Requirements of Law applicable to the Owner and all terms and provisions of
this Loan Agreement and all other Security Documents.
<PAGE>
-5-
Section 3.04 Governmental Approvals. All Governmental Approvals
----------------------
which are required to be obtained in the name of the Owner in connection with
(a) the construction, operation and maintenance of the Vessel and (b) the
execution, delivery and performance by the Owner of this Loan Agreement and the
Security Documents have been obtained and are in effect on the Closing Date.
Section 3.05 Litigation. There are no actions, suits or proceedings
----------
at law or in equity or by or before any Governmental Authority now pending
against the Owner or, to the best of the Owner's knowledge, threatened against
the Owner or pending or threatened against any property or other assets or
rights of any of the Owner with respect to this Loan Agreement and any other
Security Document.
Section 3.06 Taxes. The Owner has filed, or caused to be filed, all
-----
tax and information returns that are required to have been filed by it in any
jurisdiction and has paid, or caused to be paid, all taxes shown to be due and
payable on such returns and all other taxes and assessments payable by it,
including, without limitation, any taxes payable by the Owner with respect to
its Vessel and its interest in the Initial Charter, to the extent the same have
become due and payable.
ARTICLE IV
CONDITION PRECEDENT
Section 4.01 Condition Precedent. The obligation of the Lender to
-------------------
make the Term Loan hereunder is subject to the issuance of the Securities by the
Lender under the Indentures.
ARTICLE V
COVENANTS OF THE OWNER
The Owner hereby covenants and agrees that so long as this Loan
Agreement remains outstanding:
Section 5.01 Payment of Principal and Interest; Payment of Taxes.
---------------------------------------------------
(a) The Owner will duly and punctually pay the principal of and interest on the
Term Loan in accordance with the terms of this Loan Agreement.
(b) The Owner will take all actions as are necessary to insure that
all taxes and governmental claims, if any, in respect of the Owner's activities
and assets are promptly paid.
Section 5.02 Corporate Existence. (a) The Owner will keep in full
-------------------
effect its existence, rights and franchises as a corporation under the laws of
The Commonwealth of the Bahamas, and will obtain and preserve its qualification
as a foreign entity in each jurisdiction
<PAGE>
-6-
in which such qualification is necessary to protect the validity and
enforceability of this Loan Agreement and any of the other Security Documents to
which it is a party.
(b) The Owner shall not amend its Memorandum of Association or
Articles of Association without the prior written consent of the Lender.
Section 5.03 Performance of Obligations. The Owner will not take, or
--------------------------
fail to take, any action, and will use its best efforts not to permit any action
to be taken by others, which would release any Person from any of such Person's
covenants or obligations under any agreement or instrument included in the
Collateral, or which would result in the amendment, hypothecation,
subordination, termination or discharge of, or impair the validity or
effectiveness of, any such agreement or instrument, except as expressly
permitted in this Loan Agreement.
Section 5.04 Activities of the Owners. The Owner shall not engage in
------------------------
any activities other than (i) to enter into, or become a party to, a Purchase
Agreement with the Initial Charterer for the Vessel, (ii) to register the Vessel
under and pursuant to the laws of the Registration Jurisdiction, (iii) to enter
into, or become a party to, the Initial Charter with the Initial Charterer and
any additional charters or contracts of affreightment occasioned by the
termination of the Initial Charter, (iv) to borrow the Term Loan and the Serial
Loans from the Lender and to become jointly and severally liable with the Other
Owners on the Other Loans, (v) to assign, grant, transfer, pledge, mortgage or
convey its Vessel and its freights and earnings to the Lender, (vi) to enter
into, perform its obligations under, and perform any other activities
contemplated by, the Loan Agreements, the Mortgage, the Initial Charter, the
Assignment of Earnings and Insurances, the Assignment of Charter, the Management
Agreement, the Issue of One Debenture, the Assignment of Management Agreement
and the Assignment of Purchase Agreement and (vii) to engage only in those
activities, including the entering into performing and/or delivering any and all
applications, licenses, agreements, necessary, suitable or convenient to
accomplish the foregoing or incidental thereto or connected therewith.
Section 5.05 No Bankruptcy Petition. The Owner shall not (i)
----------------------
commence any case, proceeding or other action under any existing or future
bankruptcy, insolvency or similar law seeking to have an order for relief
entered with respect to it, or seeking reorganization, arrangement, adjustment,
wind-up, liquidation, dissolution, composition or other relief with respect to
it or its debts, (ii) seek appointment of a receiver, trustee, custodian or
other similar official for it or any part of its assets, (iii) make a general
assignment for the benefit of creditors, or (iv) take any action in furtherance
of, or consenting or acquiescing in, any of the foregoing.
Section 5.06 Other Debt. The Owner shall not after the Closing Date,
----------
contract for, create, incur, assume or suffer to exist any indebtedness other
than the Serial Loans, except (i) trade payables and expense accruals incurred
in the ordinary course and which are incidental to the purposes permitted
pursuant to Section 5.04 hereof and (ii) indebtedness contemplated by this Loan
Agreement or any of the other Security Documents.
<PAGE>
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Section 5.07 Guarantees, Loans, Advances and Other Liabilities. The
-------------------------------------------------
Owner shall not make any loan or advance or credit to, or guarantee (directly or
indirectly or by an instrument having the effect of assuring payment or
performance on any obligation of another Person or such Person's capability of
so doing, or otherwise), endorse (except for the endorsement of checks for
collection or deposit) or otherwise become contingently liable, directly or
indirectly, in connection with the obligations, stock or dividends of, or own,
purchase, repurchase or acquire (or agree contingently to do so) any stock,
obligations or securities of, or any other interest in, or make any capital
contribution to, any other Person except the Owner's obligations as under the
Other Loans.
Section 5.08 Consolidation, Merger and Sale of Assets. The Owner
----------------------------------------
shall not consolidate with, or merge with or into, any other Person or convey or
transfer to any Person all or any part of the Collateral.
Section 5.09 Capital Expenditures. The Owner shall not make any
--------------------
expenditure (by long-term or operating lease or otherwise) for capital assets
(both realty and personalty) other than for the purchase of its Vessel.
Section 5.10 Books and Records. The Owner shall at all times keep
-----------------
proper books and records of all of its business and financial affairs in
accordance with generally accepted accounting principles, as in effect on the
date hereof in the jurisdiction in which its chief executive office is located.
The Owner shall keep books of account or records concerning its accounts,
inventory, contract rights, equipment and proceeds at its offices located at
United House, 14-16 Nelson Street, Douglas, Isle of Man.
Section 5.11 Restricted Payments. Prior to the First Principal
-------------------
Payment Date, the Owner shall not make any Restricted Payment. On and after the
First Principal Payment Date, the Owner may make a Restricted Payment if (a) no
default under the Mortgage shall have occurred and be continuing, (b) the Serial
Notes shall have been repaid in full and (c) the Vessel shall be on charter to
the Initial Charterer or under an Acceptable Replacement Charter to a charterer
whose unsecured credit ratings from the Rating Agencies are at least equal to
the respective unsecured ratings of Chevron and the terms of such charters shall
be at least sufficient to pay in full all of the remaining payments of principal
and interest outstanding on the Term Loan.
Section 5.12 Acceptable Replacement Charter. (a) In the event the
------------------------------
Initial Charterer terminates the Initial Charter, the Owner shall cooperate with
the Manager and the Trustee to locate an Acceptable Replacement Charter. In the
event an Acceptable Replacement Charter is available the Owner shall enter into
such Acceptable Replacement Charter and assign all of its right, title and
interest in, to and under such Acceptable Replacement Charter to the Lender as
collateral for the Owner's obligations hereunder.
<PAGE>
-8-
(b) In the event an Acceptable Replacement Charter is not available,
the Owner shall instruct the Manager to solicit bids for the sale of the Vessel.
In the event the Manager notifies the Owner that the Manager has obtained a cash
bid that results in the realization of net proceeds in an amount that is equal
to or greater than the outstanding principal balance of the Term Loan, together
with accrued interest thereon, the Owner shall execute any and all documents,
instruments and agreements necessary or advisable to effectuate the sale that
would result in the greatest cash net proceeds.
(c) If no bid meets the requirements set forth in Section 5.12(b)
hereof, then the Owner shall consult with the Manager and the Trustee pursuant
to the Management Agreement and consider bids regarding the disposition of the
Vessel. If the Lender, or the Lender's assignee, consents in writing, the Owner
shall accept the highest bid available for the sale of the Vessel. If the
Lender, or the Lender's assignee, does not so consent, the Owner shall recharter
the Vessel pursuant to a charter that the Manager, in its sole discretion, deems
appropriate so long as (i) such charter is an arms' length agreement, (ii) the
charterhire payable thereunder during the term thereof is an amount sufficient
to (A) make the mandatory sinking fund payments, together with all interest
payable thereon, due on the Term Mortgage Notes, (B) pay Recurring Fees and
Taxes for such Vessel, (C) to pay the Management Fees and Technical Advisor's
Fees for such Vessel and (D) to pay the amount of fees and expenses of the
Indenture Trustee and Collateral Trustee allocable to such Vessel and (iii) such
charter terminates no later than ___________, 2014.
Section 5.13 Provision of Reports and Information. The Owner shall
------------------------------------
provide to the Lender any and all information and reports required to be
furnished or provided by it pursuant to the Act.
ARTICLE VI
EVENTS OF DEFAULT; REMEDIES
Section 6.01 Events of Default. Any one or more of the following
-----------------
events shall constitute an Event of Default:
(a) if the Owner shall default in the making of any payment of all or
any part of the principal of, interest on, or other amount or charge due under
this Loan Agreement, whether at the stated maturity thereof or at any date fixed
for payment by acceleration, by notice of prepayment or otherwise, and the
continuance of such default for a period of two Business Days after the due date
therefor;
(b) if the Owner shall default in the performance or observance of any
covenant contained in Sections 5.02, 5.03, 5.10 and 5.12 of this Loan Agreement,
and the continuance of such default for a period of 30 days after written notice
thereof by the Lender;
<PAGE>
-9-
(c) if the Owner shall default in the performance or observance of any
covenant contained in Article V hereof (other than Sections 5.01, 5.02, 5.03,
5.10 and 5.12 of this Loan Agreement);
(d) if any representation or warranty made by the Owner herein, in any
Security Document or in any document or certificate furnished by the Owner in
connection herewith or therewith or pursuant hereto or thereto shall at any time
prove to have been false, incorrect or misleading in any material respect at the
time made or deemed to be made;
(e) a decree or order of a court or agency or supervisory authority
having jurisdiction for the appointment of a conservator or receiver or
liquidator in any insolvency, readjustment of debt, marshalling of assets and
liabilities or similar proceedings, or for the winding-up or liquidation of its
affairs, shall have been entered against the Owner and such decree or order
shall have remained in force undischarged or unstayed for a period of sixty (60)
days;
(f) The Owner shall consent to the appointment of a conservator or
receiver or liquidator in any insolvency, readjustment of debt, marshalling of
assets and liabilities or similar proceedings of or relating to such party or of
or relating to all or substantially all of such party's property;
(g) The Owner shall admit in writing its inability to pay its debts
generally as they become due, file a petition to take advantage of any
applicable insolvency or reorganization statute, make an assignment for the
benefit of its creditors, or voluntarily suspend payment of its obligations; or
(h) if an Event of Default as defined in the Mortgage shall occur and
be continuing.
Section 6.02 Enforcement of Remedies. After an Event of Default shall
-----------------------
have occurred and be continuing, then and in every such case the Lender may
exercise any or all of the rights and powers and pursue any and all of the
remedies pursuant to this Article and any of the other Security Documents, and
to the extent permitted by applicable law, may, provided the Lender pursuant to
Section 6.03 hereof shall have declared the unpaid principal amount of the Term
Loan immediately due and payable, take possession of all or any part of the
Collateral and may exclude the Owner and all Persons claiming under it wholly or
partly therefrom.
Section 6.03 Acceleration of Term Loan. Upon the occurrence and
-------------------------
during the continuance of an Event of Default hereunder, the Lender may declare
the unpaid principal amount of the Term Loan, together with accrued interest
thereon to be immediately due and payable, upon which declaration such principal
amount and such accrued interest shall immediately become due and payable
without further act or notice of any kind.
<PAGE>
-10-
Section 6.04 Specific Remedies. Upon the occurrence and during the
-----------------
continuance of an Event of Default and provided that the Lender pursuant to
Section 6.03 hereof shall have declared the unpaid principal amount of the Term
Loan immediately due and payable:
(a) At the request of the Lender, the Owner shall promptly execute and
deliver to the Lender such instruments and other documents as the Lender may
deem necessary or advisable to enable the Lender or an agent or representative
designated by the Lender, at such time or times and place or places as the
Lender may specify, to obtain possession of all or any part of the Collateral to
which possession the Lender shall at the time be entitled hereunder. If the
Owner shall for any reason fail to execute and deliver such instruments and
documents after such request by the Lender, the Lender may obtain a judgment
conferring on the Lender the right to such possession immediately and requiring
the Owner to deliver such instruments and documents to the Lender, to the entry
of which judgment the Owner hereby specifically consents.
(b) The Lender may proceed to enforce the rights of the Lender by
directing payment to it of all monies payable under any agreement or undertaking
constituting a part of the Collateral, by proceedings in any court of competent
jurisdiction for the appointment of a receiver or for sale of all or any part of
the Collateral possession to which the Lender shall at the time be entitled
hereunder or for foreclosure of such Collateral, and by any other action, suit,
remedy or proceeding authorized or permitted by this Loan Agreement or by law or
by equity, and may file such proofs of claim and other papers or documents as
may be necessary or advisable in order to have the claims of the Lender asserted
or upheld in any bankruptcy, receivership or other judicial proceedings.
(c) The Lender shall be entitled to set-off against and withdraw all
amounts constituting a part of the Collateral and to apply the same as follows:
First: To the payment of all reasonable expenses and charges, including the
expenses of any taking, attorney's fees, court costs and other expenses or
advances made or incurred by the Lender in connection with the
ascertainment or protection of its rights and the pursuance of its remedies
hereunder or under any of the Security Documents (including, without
limitation, the reasonable fees and disbursements of counsel);
Second: To the payment of all amounts due to the Lender in respect of
taxes, indemnities, fees, expenses, premiums, purchase of liens or
otherwise under the provisions hereof or under any of the Security
Documents;
Third: To the payment of interest on the Serial Loans and Term Loan, pro
rata, in accordance with their respective outstanding balances;
<PAGE>
-11-
Fourth: To the payment of principal on the Serial Loans and the Term Loan,
pro rata, in accordance with their respective outstanding balances;
Fifth: To the payment of any amount due and owing under the Other Loans,
pro rata, in the event of an acceleration of the principal amount of such
Other Loans; and
Sixth: To the payment of any surplus thereafter remaining to the Owner or
whomsoever may be lawfully entitled thereto.
(d) Without limiting the foregoing, the Lender, its assigns and its
legal representatives shall have all the remedies of a secured party under
applicable law and such further remedies as from time to time may hereafter be
provided pursuant to such law for a secured party. In exercising its power of
sale, the Lender shall be entitled to add to the Term Loan any and all of the
Lender's expenses. In exercising its power of sale under this Loan Agreement,
the Lender may sell such portion of the Collateral or any part thereof, either
as one unit or in separate units, all as the Lender may in its discretion elect;
and the Lender may so sell the aforesaid properties, rights and interests or any
part thereof either separately from or together with the whole or any part of
other property which may constitute security for any obligation with respect to
the Term Loan, all as the Lender may in its discretion elect.
Section 6.05 Rights and Remedies Cumulative. Each and every right,
------------------------------
power and remedy herein specifically given to the Lender under this Loan
Agreement shall be cumulative and shall be in addition to every other right,
power and remedy herein specifically given or now or hereafter existing at law,
in equity or by statute, and each and every right, power and remedy whether
specifically herein given or otherwise existing may be exercised from time to
time and as often and in such order as may be deemed expedient by the Lender,
and the exercise or the beginning of the exercise of any power or remedy shall
not be construed to be a waiver of the right to exercise at the same time or
thereafter any other right, power or remedy. No delay or omission by the Lender
in the exercise of any right, remedy or power or in the pursuance of any remedy
shall impair any such right, power or remedy or be construed to be a waiver of
any default on the part of the Owner or to be an acquiescence therein.
Section 6.06 Restoration of Rights and Remedies. In case the Lender
----------------------------------
shall have proceeded to enforce any right, power or remedy under this Loan
Agreement by foreclosure, entry or otherwise, and such proceedings shall have
been discontinued or abandoned for any reason or shall have been determined
adversely to the Lender, then and in every such case the Owner and the Lender
shall be restored to their former positions and rights hereunder with respect to
the Collateral, and all rights, remedies and powers of the Lender shall continue
as if no such proceedings had been taken.
<PAGE>
-12-
Section 6.07 Waiver of Past Defaults. Any past default hereunder
-----------------------
with respect to the Term Loan or its consequences may be waived by the Lender.
Upon any such waiver, such default shall cease to exist, and any Event of
Default arising therefrom shall be deemed to have been cured, for every purpose
of this Loan Agreement; but no such waiver shall extend to any subsequent or
other default or impair any right consequent thereon.
ARTICLE VII
MISCELLANEOUS PROVISIONS
Section 7.01 Amendment. This Loan Agreement may be amended from time
---------
to time by written agreement signed by the parties hereto.
Section 7.02 Severability. If any provision of this Loan Agreement
------------
is held to be in conflict with any applicable statute or rule of law or is
otherwise held to be unenforceable for any reason whatsoever, such circumstances
shall not have the effect of rendering the provision in question inoperative or
unenforceable in any other case or circumstance, or of rendering any other
provision or provisions herein contained invalid, inoperative, or unenforceable
to any extent whatsoever. The invalidity of any one or more phrases, sentences,
clauses or Sections of this Loan Agreement contained, shall not affect the
remaining portions of this Loan Agreement, or any part thereof.
Section 7.03 Notices. All demands, notices and communications
-------
hereunder shall be in writing, personally delivered or mailed by certified mail-
return receipt requested, and shall be deemed to have been duly given upon
receipt (a) in the case of the Lender, at the following address: c/o JH
Management Corporation, Room 6/9, One International Place, Boston, Massachusetts
02110-2624, (b) in the case of the Owner, at the following address: United
House, 14-16 Nelson Street, Douglas, Isle of Man, or at other such address as
shall be designated by such party in a written notice to the other parties.
Section 7.04 Consent to Jurisdiction. Any legal suit, action or
-----------------------
proceeding against the Owner arising out of or relating to this Loan Agreement,
or any transaction contemplated hereby, may be instituted in any federal or
state court in The City of New York, State of New York and the Owner hereby
waives any objection which it may now or hereafter have to the laying of venue
of any such suit, action or proceeding, and the Owner hereby irrevocably submits
to the jurisdiction of any such court in any such suit, action or proceeding.
The Owner hereby irrevocably appoints and designates CT Corporation System,
having an address at 1633 Broadway, New York, New York, its true and lawful
attorney-in-fact and duly authorized agent for the limited purpose of accepting
servicing of legal process and the Owner agrees that service of process upon
such party shall constitute personal service of process on the Owner. The Owner
shall maintain the designation and appointment of such authorized agent until
all amounts payable under this Loan Agreement shall have been paid in full. If
such agent shall cease to so act, the Owner shall immediately designate and
appoint another such agent
<PAGE>
-13-
satisfactory to the Lender and shall promptly deliver to the Lender evidence in
writing of such other agent's acceptance of such appointment.
Section 7.05 Captions. The captions or headings in this Loan
--------
Agreement are for convenience only and in no way define, limit or describe the
scope or intent of any provisions or sections of this Loan Agreement.
Section 7.06 Governing Law. This Loan Agreement shall be governed by
-------------
and interpreted in accordance with the laws of the State of New York, without
giving effect to the principles of conflicts of law.
Section 7.07 No Partnership. Nothing herein contained shall be
--------------
deemed or construed to create a partnership or joint venture among the parties
hereto and the services of each party shall be rendered as an independent
contractor and not as agent for any other party.
Section 7.08 Counterparts. This Loan Agreement may be executed in
------------
any number of counterparts and by different parties hereto on separate
counterpart, each of which shall be deemed to be an original. Such counterparts
shall constitute one and the same agreement.
Section 7.09 Survival. The representations, covenants and agreements
--------
contained in or made pursuant to this Loan Agreement in respect of either party
hereto shall survive the execution and delivery of this Loan Agreement and shall
continue in effect so long as such party's obligations hereunder remain
outstanding.
Section 7.10 Integration. This Loan Agreement and the Schedule and
-----------
Exhibits hereto constitute the entire agreement and understanding between the
parties hereto with respect to the subject matter hereof and supersedes all
prior agreements, understandings or representations pertaining to the subject
matter hereof, whether oral or written. There are no warranties,
representations or other agreements between the parties in connection with the
subject matter hereof except as specifically set forth or incorporated herein.
Section 7.11 Reproduction of Documents. This Loan Agreement and all
-------------------------
documents relating thereto, including, without limitation, (a) consents, waivers
and modifications which may hereafter be executed, (b) documents received by any
party at the closing, and (c) financial statements, certificates and other
information previously or hereafter furnished, may be reproduced by any
photographic, photostatic, microfilm, micro-card, miniature photographic or
other similar process. The parties agree that any such reproduction shall be
admissible in evidence as the original itself in any judicial or administrative
proceeding (whether or not the original is in existence and whether or not such
reproduction was made in the regular course of business) and that any
enlargement, facsimile or further reproduction of such reproduction shall
likewise be admissible in evidence.
<PAGE>
-14-
Section 7.12 Successors and Assigns; Assignment. This Loan Agreement
----------------------------------
shall be binding upon and inure to the benefit of the Owner and the Lender and
their respective successors and assigns. The Owner shall not have the right to
assign its rights hereunder or any interest herein without the prior written
consent of the Lender. Subject to Section 2.09 hereof, the Lender, at its sole
option, shall have the right to assign this Loan Agreement, the Serial Notes,
the Security Documents and any of its rights and interest hereunder and
thereunder.
Section 7.13 General Interpretive Principles. For purposes of this
-------------------------------
Loan Agreement except as otherwise expressly provided or unless the context
otherwise requires:
(a) the defined terms in this Loan Agreement shall include the plural
as well as the singular, and the use of any gender herein shall be deemed to
include any other gender;
(b) accounting terms not otherwise defined herein have the meanings
assigned to them in accordance with generally accepted accounting principles as
in effect on the date hereof;
(c) references herein to "Articles", "Sections", "Subsections",
"paragraphs", and other subdivisions without reference to a document are to
designated Articles, Sections, Subsections, paragraphs and other subdivisions of
this Loan Agreement;
(d) a reference to a Subsection without further reference to a Section
is a reference to such Subsection as contained in the same Section in which the
reference appears, and this rule shall also apply to paragraphs and other
subdivisions;
(e) the words "herein", "hereof", "hereunder" and other words of
similar import refer to this Loan Agreement as a whole and not to any particular
provision; and
(f) the term "include" or "including" shall mean without limitation by
reason of enumeration.
Section 7.14 Effective Date of Transaction. Notwithstanding the fact
-----------------------------
that this Loan Agreement is dated as of __________ 1, 1995, the transactions set
forth herein shall not be effective until the Closing Date.
<PAGE>
-15-
IN WITNESS WHEREOF, the Owner and the Lender have caused this Loan
Agreement to be duly executed and delivered by their respective officers
thereunto duly authorized all as of the day and year first above written.
CALIFORNIA PETROLEUM TRANSPORT
CORPORATION, as Lender
By:________________________________
Name:______________________________
Title:_____________________________
CALPETRO TANKERS (BAHAMAS I) LIMITED,
as Owner
By:________________________________
Name:______________________________
Title:_____________________________
<PAGE>
SCHEDULE 1
DEFINED TERMS USED IN THE LOAN AGREEMENT
"Act" means the United States Securities Act of 1933, as amended.
"Acceptable Replacement Charter" means any replacement charter which
satisfies each of the following requirements: (i) the charter is a bareboat
charter and requires that the charterer thereunder "gross up" charterhire
payments to indemnify and hold the Holders of the Securities harmless from any
withholding tax imposed on the charterhire payments or on the payments on the
Securities; (ii) the charterhire payments payable during the non-cancelable term
of such replacement charter, after giving effect to (1) any "gross up" of such
amounts as a result of any withholding tax on such charterhire payments, (2) the
receipt of the Termination Payment and (3) all fees and expenses incurred in
connection with the rechartering of the Vessel, provide sufficient funds for the
payment in full when due of (A) the outstanding principal balance of the Term
Loan and interest thereon in accordance with the revised schedule of principal
payments, that is applicable upon termination of the related Initial Charter,
(B) the amount of Recurring Fees and Taxes for such Vessel, (C) the amount of
Management Fees and Technical Advisor's Fees for such Vessel, (D) the amount of
fees and expenses of the Indenture Trustee, the Collateral Trustee and the
Designated Representative allocable to such Vessel and (E) an amount at least
equal to 30% of the estimated amounts, on a per annum basis, referred to in
clauses (B), (C) and (D) above for miscellaneous or unexpected expenses; and
(iii) the Rating Agencies shall have confirmed in writing to the Trustee that
the terms and conditions of such proposed charter will not result in the
withdrawal or reduction of the then current ratings of the Term Mortgage Notes.
"Affiliate" means with respect to any Person, any other Person directly or
indirectly controlling, controlled by or under direct or indirect common control
with such specified Person. For the 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 or otherwise; and the terms
"controlling" and "controlled" have meanings correlative to the foregoing.
"Assignment of Charter" means the assignment between the Owner and the
Lender, as amended from time to time in accordance with the terms thereof,
together with the documents contemplated thereby, pursuant to which the Owner
assigns to the Lender all of its right, title and interest in, to and under the
Initial Charter.
"Assignment of Earnings and Insurances" means the assignment between the
Owner and the Lender, as amended from time to time in accordance with the terms
thereof, pursuant to which the Owner assigns to the Lender all of its right,
title and interest in, to and under the freights and hires (as well as any
charters entered into after the Closing Date) with respect to the Vessel.
"Assignment of Guarantee" means the assignment between the Owner and the
Lender, as amended from time to time in accordance with the terms thereof,
pursuant to which the
<PAGE>
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Owner assigns to the Lender all of its right, title and interest in, to and
under the Chevron Guarantee.
"Assignment of Management Agreement" means the assignment between the Owner
and the Lender, as amended from time to time in accordance with the terms
thereof, pursuant to which the Owner assigns to the Lender all of its right,
title and interest in, to and under the Management Agreement to secure its
obligations under the Loan Agreements.
"Assignment of Purchase Agreement" means the assignment between the Owner
and the Lender, as amended from time to time in accordance with the terms
thereof, pursuant to which the Owner assigns to the Lender all of its right,
title and interest in, to and under the Purchase Agreement to secure its
obligations under the Loan Agreements.
"Business Day" means any day other than a Saturday, a Sunday or a day on
which banking institutions in New York, New York, or in the city and state where
the Trustee's principal offices are located, are authorized or are obligated by
law, executive order or governmental decree to be closed.
"Capital Stock" means, with respect to any Person, any and all shares,
interests, participations, rights in, or other equivalents (however designated
and whether voting or non-voting) of, such Person's capital stock, whether
outstanding on the Closing Date or issued after the Closing Date, and any and
all rights, warrants or options exchangeable for or convertible into such
capital stock.
"Chevron" means Chevron Corporation, a Delaware corporation.
"Chevron Guarantee" means the guarantee of the obligations of the Initial
Charterer under the Initial Charter given by Chevron dated ____________ 1, 1995.
"Closing Date" means __________ 1, 1995.
"Code" means the United States Internal Revenue Code of 1986 and the
corresponding provisions of any successor statute.
"Collateral" means (i) an assignment of the Initial Charter, (ii) a
mortgage on the Vessel, (iii) an assignment of the earnings and insurances on
the Vessel, (iv) an assignment of the Chevron Guarantee, (v) an assignment of
the Management Agreement relating to the Vessel, (vi) an assignment of the
Purchase Agreement, (vii) the pledge of the shares of the Owner by Owner's
shareholder and (viii) a blanket security interest on all of the assets of the
Owner now existing or hereafter created, together with all income and proceeds
thereof.
"Collateral Trust Agreement" means the collateral trust agreement, dated as
of the date hereof, among the Lender, the Collateral Trustee and the Trustee.
<PAGE>
-3-
"Collateral Trustee" means Chemical Trust Company of California, not in its
individual capacity but solely as indenture trustee under the Collateral Trust
Agreement.
"Commencement Date" means the date on which the Vessel is accepted by the
Initial Charterer under the Initial Charter.
"Compulsory Acquisition" means requisition for title or other compulsory
acquisition of the Vessel (otherwise than by requisition for hire), capture,
seizure, detention or confiscation of the Vessel by any other government or by
Persons acting or purporting to act on behalf of any government or governmental
authority.
"Default Period" means the period commencing the date any payment hereunder
was due to but not including the date such payment is paid in full.
"Default Rate" means a rate per annum for each day during the Default
Period until such payment shall be paid in full equal to 1.50% above LIBOR at
the commencement of such period.
"Event of Default" means an Event of Default under Section 6.01 of the Loan
Agreement.
"First Principal Payment Date" means ______________________, the Payment
Date immediately succeeding the Payment Date on which the Serial Loans are paid
in full.
"Governmental Approval" means any authorization, consent, approval,
license, franchise, lease, ruling, permit, tariff, rate, certification,
exemption, filing or registration by or with any Governmental Authority relating
to the ownership of the Collateral or to the execution, delivery or performance
of the Loan Agreement or any Security Document.
"Governmental Authority" means the federal government, any state or other
political subdivision thereof, and any entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to government
and any other governmental entity with authority over the Owner or operation of
the Vessels.
"Holder" means the Person in whose name a Security is registered in the
related securities register.
"Indentures" means the Indenture, dated as of _______ 1, 1995 between the
Owner and the Trustee pursuant to which the Term Mortgage Notes will be issued
and the Indenture, dated as of _______ 1, 1995 between the Lender and the
Trustee pursuant to which the Serial Mortgage Notes will be issued.
"Initial Charter" means with respect to each Vessel, the Bareboat Charter,
dated _________, between the Initial Charterer and the Owner.
"Initial Charterer" means Chevron Transport Corporation, a Liberian
corporation.
<PAGE>
-4-
"Interest Rate" shall have the meaning assigned to such term in Section
2.02 of the Loan Agreement.
"Issue of One Debenture" means each Issue of One Debenture between the
Owner and the Lender, as amended from time to time in accordance with the terms
thereof, pursuant to which the Owner grants to the Lender a security interest in
all of its assets.
"Law" means any statute, law, rule, regulation, ordinance, order, code,
policy or rule of common law, now or hereafter in effect, and any judicial or
administrative interpretation thereof by a Governmental Authority or otherwise,
including any judicial or administrative order, consent decree or judgment.
"Lender" means California Petroleum Transport Corporation, a corporation
organized under the laws of the State of Delaware, together with its successors
and assigns.
"LIBOR" means the rate calculated on the basis of the offered rates for
deposits in dollars for a one-month period which appear on the Reuters Screen
LIBO Page as of 11:00 A.M., London time, on the date that is two London Banking
Days preceding the date of calculation. If at least two such offered rates
appear on the Reuters Screen LIBO Page, LIBOR will be the arithmetic mean of
such offered rates (rounded to the nearest .0001 percentage point). If, at any
time of determination, the Reuters Screen LIBO Page is not available, LIBOR will
be calculated as the average (rounded upward, if necessary, to the next higher
1/16 of 1%) of the respective ratio per annum at which deposits in dollars for a
one month period are offered to each of three reference banks in the London
interbank market at approximately 11:00 A.M., London time, on the date that is
two London Banking Days preceding the date of calculation. Each of the Initial
Charterer and the Collateral Trustee (as assignee of the Owner) will select a
reference bank and the third reference bank will be selected by the Initial
Charterer and the Collateral Trustee together or, failing agreement, by the
previously selected reference banks together.
"Lien" means any mortgage, lien (statutory or other), charge, pledge,
security interest, encumbrance, claim, hypothecation, assignment for security,
deposit arrangement or preference or other security agreement of any kind or
nature whatsoever. For purposes of the Loan Agreement, a Person shall be deemed
to own subject to a Lien any property which it has acquired or holds subject to
the interest of a vendor or lessor under any conditional sale agreement, capital
lease or other title retention agreement.
"Loan Agreement" means this Term Loan Agreement, dated as of ________ __,
1995, between the Owner and the Lender.
"Loan Agreements" means, collectively, this Loan Agreement and the Serial
Loan Agreement, dated the date hereof, between the Owner and the Lender wherein
the Lender makes the Serial Loans to the Owners.
<PAGE>
-5-
"London Banking Day" means any day on which dealings in deposits in United
States dollars are carried on in the London interbank market and on which
commercial banks are open for domestic and international business (including
dealings in United States dollar deposits) in London and New York.
"Loss Date" means the date which is 90 days after the occurrence of a Total
Loss of the Vessel.
"Management Agreement" means the agreement, dated the Closing Date, among
the Owner, the Manager and the Technical Adviser.
"Manager" means the Person performing the duties of the Manager under the
Management Agreement, initially P.D. Gram & Co. ans.
"Mortgage" means, with respect to the Vessel, the first preferred ship
mortgages on the Vessel granted by the Owner to the Lender, as amended from time
to time in accordance with the terms of such Mortgage.
"Optional Termination Date" means the [8th, 10th, 12th or 14th] [9th, 11th,
13th or 15th] [10th, 12th, 14th or 16th] [11th, 13th or 15th] anniversary of the
Commencement Date.
"Other Owners" means Calpetro Tankers (Bahamas II) Limited, Calpetro
Tankers (Bahamas III) Limited and Calpetro Tankers (IOM) Limited.
"Other Loans" means each of the loans from California Petroleum Transport
Corporation to each of the Other Owners made on the Closing Date, having an
aggregate initial principal amount of $__________.
"Owner" means CalPetro Tankers (Bahamas I) Limited, a company organized
under the laws of The Commonwealth of the Bahamas.
"Payment Date" means each ________ and ______________ commencing
___________ 1995.
"Person" means an individual, a partnership, a corporation, a joint
venture, an unincorporated association, a joint-stock company, a trust, or other
entity or a government or any agency or political subdivision thereof.
"Purchase Agreement" means the Vessel Purchase Agreement, dated as of
_________________, between the Owner and the Initial Charterer wherein the Owner
purchases the Vessel from the Initial Charterer.
"Rating Agencies" means Moody's Investors Service, Inc., Standard & Poor's
Rating Group and Duff & Phelps Credit Rating Co.
<PAGE>
-6-
"Recurring Fees and Taxes" means any registration fees and tonnage taxes
necessary to maintain the documentation of the Vessel under the laws of the
registry or port of documentation of the Vessel, any periodic fees necessary to
maintain the corporate status of the Owner, any filing or other fees necessary
to maintain the status of the Owner as a reporting company under the United
States Securities Exchange Act of 1934, as amended (the "Exchange Act") and to
comply with any covenants of the Owner under the Mortgage, any fees and expenses
(including the cost of insurance required by the Mortgage and not maintained by
the charterer under the charter to which such Vessel is then subject) necessary
to comply with any covenants under the Mortgage, any other fees and expenses
contemplated to be paid pursuant to the Management Agreement which the Manager
certifies to the Collateral Trustee are qualified to be paid thereunder and any
accounting or other professional fees and other expenses, including any fees and
expenses of the Rating Agencies, incurred in connection with the foregoing. In
addition, Recurring Fees and Taxes will include the Owner's pro rata portion of
the fees and expenses, including any accounting, administrative or other
professional fees, necessary to maintain the registration of the Notes under the
United States Securities Act of 1933, as amended to maintain the corporate
status of the Lender and the status of the Lender as a reporting company (if
necessary) under the Exchange Act, to pay any facilitation or management fees
and to comply with any covenants under the Indentures or the Collateral
Agreement.
"Registration Jurisdiction" means the jurisdiction in which the Vessel is
or will be registered.
"Requirement of Law" means, as to any Person, the certificate of
incorporation and by-laws or partnership agreement or other organizational or
governing documents of such Person, and, any Law applicable to or binding upon
such Person or any of its properties or to which such Person or any of its
properties is subject.
"Restricted Payment" means any of the following: (i) the declaration or
payment of any dividend or any other distribution on Capital Stock of the Owner
or any payment made to the direct or indirect holders (in their capacities as
such) of Capital Stock of the Owner (other than dividends or distributions
payable solely in Capital Stock or in options, warrants or other rights to
purchase Capital Stock, (ii) the purchase, redemption or other acquisition or
retirement for value of any Capital Stock of the Owner and (iii) the making of
any loans or advances to any Affiliate of the Owner.
"Securities" means, collectively, the Term Mortgage Notes and the Serial
Mortgage Notes.
"Security Documents" means the Loan Agreement, the Mortgage, the Assignment
of Charter, the Assignment of Earnings and Insurances, the Assignment of
Guarantee, the Assignment of Management Agreement and the Issue of One
Debenture, collectively.
"Serial Loans" shall have the meaning assigned to such term in the
Preliminary Statement of this Loan Agreement.
<PAGE>
-7-
"Serial Mortgage Notes" means the Serial First Preferred Term Mortgage
Notes which will mature serially from _____________, 1996 to _____________, 2006
in the initial aggregate amount of $167,500,000 issued by the Lender
concurrently with the issuance of the Term Mortgage Notes.
"Technical Adviser" means the person performing the duties of the Technical
Adviser under the Management Agreement, initially Barber Ship Management Group.
"Term Loan" shall have the meaning assigned to such term in the Preliminary
Statement of this Loan Agreement.
"Term Mortgage Notes" means __% First Preferred Mortgage Notes Due 2015 in
the initial aggregate amount of $117,900,000 issued by the Lender concurrently
with the issuance of the Serial Mortgage Notes.
"Termination Date" means the date on which the Initial Charter is
terminated by the Initial Charterer pursuant to the terms thereof.
"Termination Payment" means the payment made by the Initial Charterer
pursuant to the Initial Charter in the event the Initial Charterer elects to
terminate the Initial Charter on any Optional Termination Date.
"Total Loss" means either (a) an actual or constructive or compromised or
arranged total loss of the Vessel, (b) a Compulsory Acquisition of the Vessel or
(c) if so declared by the Initial Charterer at any time and in its sole
discretion a requisition for hire of the Vessel for a period in excess of 180
days.
"Total Loss Proceeds" means all compensation, damages and other payments
(including insurance proceeds other than certain liability insurance proceeds)
received by the Trustee from any Person, including any governmental authority,
with respect to or in connection with a Total Loss.
"Trustee" means Chemical Trust Company of California, not in its individual
capacity but solely as indenture trustee under the Indentures.
"Vessel" shall have the meaning assigned to such term in the Preliminary
Statement of this Loan Agreement.
<PAGE>
EXHIBIT 4.14
================================================================================
COLLATERAL TRUST AGREEMENT
Among
CALIFORNIA PETROLEUM TRANSPORT CORPORATION
CALPETRO TANKERS (BAHAMAS I) LIMITED
CALPETRO TANKERS (BAHAMAS II) LIMITED
CALPETRO TANKERS (IOM) LIMITED
CALPETRO TANKERS (BAHAMAS III) LIMITED
CHEMICAL TRUST COMPANY OF CALIFORNIA,
as Collateral Trustee
CHEMICAL TRUST COMPANY OF CALIFORNIA
as Serial Indenture Trustee
and
CHEMICAL TRUST COMPANY OF CALIFORNIA
as Term Indenture Trustee
Dated as of __________ __, 1995
================================================================================
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
PREAMBLE............................................................................... 1
<CAPTION>
ARTICLE ONE
DEFINITIONS AND CERTAIN OTHER GENERAL PROVISIONS
<C> <S> <C>
1.01 Definitions............................................................. 5
1.02 Limitation of Rights.................................................... 17
1.03 Effectiveness of Collateral Agreement................................... 17
<CAPTION>
ARTICLE TWO
ENFORCEMENT NOTICE; EXERCISE
OF REMEDIES; DETERMINATIONS
PRIOR TO ENFORCEMENT
<C> <S> <C>
2.01 Enforcement Notice...................................................... 18
2.02 General Authority of the Collateral Trustee Over the Collateral......... 18
2.03 Right To Initiate Judicial Proceedings.................................. 20
2.04 Exercise of Powers; Instructions........................................ 20
2.05 Remedies Not Exclusive.................................................. 21
2.06 Waiver and Estoppel..................................................... 21
2.07 Determinations Prior to Enforcement..................................... 22
2.08 Limitation on Collateral Trustee's Duty in Respect of Collateral........ 22
2.09 Limitation by Law....................................................... 22
<CAPTION>
ARTICLE THREE
THE TRUST ACCOUNTS; DISTRIBUTIONS
<C> <S> <C>
3.01 The Trust Accounts...................................................... 23
3.02 Investment of Funds Deposited in Trust Accounts......................... 26
3.03 Payment Dates........................................................... 27
3.04 Application of Moneys in the Collateral Account......................... 33
3.05 Collateral Trustee's Calculations....................................... 34
</TABLE>
i
<PAGE>
<TABLE>
<CAPTION>
ARTICLE FOUR
AGREEMENTS WITH COLLATERAL TRUSTEE
Page
----
<C> <S> <C>
4.01 Delivery of Secured Instruments and Security Documents.................. 35
4.02 Information as to Loan Agreements and Indenture Trustees................ 35
4.03 Compensation and Expenses............................................... 35
4.04 Stamp, Excise and Other Similar Taxes................................... 36
4.05 Filing Fees, Etc........................................................ 36
4.06 Indemnification......................................................... 36
4.07 Representations and Warranties; Further Assurances...................... 37
4.08 Other Agreements of California Petroleum................................ 38
4.09 Lien for Fees ......................................................... 39
<CAPTION>
ARTICLE FIVE
RELEASES; NON-DISTURBANCE
<C> <S> <C>
5.01 Releases................................................................ 39
5.02 Non-Disturbance......................................................... 39
<CAPTION>
ARTICLE SIX
THE COLLATERAL TRUSTEE
<C> <S> <C>
6.01 Acceptance of Trust..................................................... 40
6.02 Exculpatory Provisions.................................................. 40
6.03 Delegation of Duties.................................................... 41
6.04 Reliance by Collateral Trustee.......................................... 41
6.05 Limitations on Duties of Collateral Trustee............................. 42
6.06 Moneys To Be Held in Trust.............................................. 43
6.07 Resignation and Removal of the Collateral Trustee....................... 43
6.08 Status of Successor Collateral Trustee.................................. 44
6.09 Merger of the Collateral Trustee........................................ 45
6.10 Co-Trustee; Separate Trustee............................................ 45
6.11 Treatment of Payee or Indorsee by Collateral Trustee;
Representatives of Secured Parties...................................... 47
6.12 No Bankruptcy Petition Against California Petroleum......................47
</TABLE>
ii
<PAGE>
<TABLE>
<CAPTION>
ARTICLE SEVEN
MISCELLANEOUS
Page
----
<C> <S> <C>
7.01 Notices................................................................. 47
7.02 No Waivers.............................................................. 48
7.03 Amendments, Supplements and Waivers..................................... 48
7.04 Headings................................................................ 49
7.05 Severability............................................................ 49
7.06 Successors and Assigns.................................................. 49
7.07 Governing Law........................................................... 50
7.08 Counterparts............................................................ 50
7.09 Termination............................................................. 50
7.10 No Liability to Other Secured Parties................................... 51
7.11 Immunities of Incorporators, Officers,
Directors and Stockholders of California
Petroleum............................................................... 51
7.12 Designated Representative............................................... 51
SIGNATURES ............................................................. 52
</TABLE>
iii
<PAGE>
COLLATERAL TRUST AGREEMENT ("Collateral Agreement"), dated as of __________
__, 1995 among CALIFORNIA PETROLEUM TRANSPORT CORPORATION, a Delaware
corporation ("California Petroleum"), CHEMICAL TRUST COMPANY OF CALIFORNIA, as
Collateral Trustee, CHEMICAL TRUST COMPANY OF CALIFORNIA, as Serial Indenture
Trustee, CALPETRO TANKERS (BAHAMAS I) LIMITED, CALPETRO TANKERS (BAHAMAS II)
LIMITED, CALPETRO TANKERS (IOM) LIMITED, CALPETRO TANKERS (BAHAMAS III) LIMITED,
and CHEMICAL TRUST COMPANY OF CALIFORNIA, as Term Indenture Trustee.
W I T N E S S E T H:
WHEREAS, capitalized terms used herein shall have the respective
meanings set forth or referred to in Article One hereof;
WHEREAS, California Petroleum, the Serial Indenture Trustee and solely
for purposes of the Trust Indenture Act, Chevron, are entering into the Serial
Indenture pursuant to which California Petroleum, as agent for, and on behalf
of, the Owners, will issue Serial Mortgage Notes in the aggregate principal
amount of $168,500,000, and California Petroleum and the Term Indenture Trustee
are entering into the Term Indenture pursuant to which California Petroleum, as
agent for, and on behalf of, the Owners, will issue Term Mortgage Notes in the
aggregate principal amount of $117,900,000;
WHEREAS, California Petroleum is entering into a Serial Loan Agreement
and a Term Loan Agreement with each Owner pursuant to which California Petroleum
will loan to such Owner an allocable amount of the proceeds of the sale of the
Serial Mortgage Notes and the Term Mortgage Notes, respectively, in order to
facilitate the acquisition of the Vessels by the Owners and the charter of the
Vessels to Chevron Transport;
WHEREAS, each Owner, in order to secure its obligations to California
Petroleum under its Serial Loan Agreement and Term Loan Agreement, is entering
into a Mortgage, an Assignment of Initial Charter, an Assignment of Earnings and
Insurances, an Assignment of Initial Charter Guarantee, an Assignment of
Management Agreement and an Issue of One Debenture;
WHEREAS, Chevron is entering into the Initial Charter Guarantees;
<PAGE>
WHEREAS, in order to further secure the obligations of each Owner to
California Petroleum under its respective Serial Loan Agreement and Term Loan
Agreement, all of the issued and outstanding shares of each Owner have been
pledged to California Petroleum pursuant to the Stock Pledges;
WHEREAS, in order to secure its obligations under the Serial Indenture
and the Term Indenture, California Petroleum is entering into this Collateral
Agreement pursuant to which California Petroleum is assigning and pledging to
the Collateral Trustee all of its right title and interest in, to and under all
of the Security Documents, whether now existing or arising hereafter, as
described herein; and
WHEREAS, the Serial Indenture and the Term Indenture each provides
that a condition to its effectiveness is the execution and delivery of a
collateral trust agreement substantially in the form of this Collateral
Agreement;
GRANTING CLAUSE
NOW, THEREFORE, in consideration of the mutual promises contained
herein and to provide for the equal and ratable security of each Secured Party
with respect to the Secured Obligations owed to it and in consideration of the
premises and of the covenants in the Indentures and in the Notes and of the
purchase of the Notes by their holders, and of the sum of $1 paid to California
Petroleum by the Collateral Trustee at or before the delivery of this Collateral
Agreement, the receipt and sufficiency of which is hereby acknowledged,
California Petroleum has granted, bargained, sold, assigned, transferred,
conveyed, mortgaged, pledged, granted a security interest in and confirmed, and
California Petroleum does hereby grant, bargain, sell, assign, transfer, convey,
mortgage, pledge and grant a security interest in and confirm to the Collateral
Trustee, its successors and assigns, in trust for the equal and ratable security
and benefit of the Indenture Trustees for the benefit of holders from time to
time of Secured Obligations, a first priority security interest in and first
Lien on all estate, right, title and interest of California Petroleum in, to and
under the following described property, rights and privileges, whether now owned
or existing or hereafter acquired or arising and regardless of where located,
which collectively, including all property specifically subjected to the Lien of
this Collateral Agreement by the terms hereof, by any supplement or amendment
hereto, are included within the Trust Estate, subject to the other terms and
conditions of this Collateral Agreement:
(1) Each Vessel, in accordance with the terms and conditions of the
related Mortgage and Assignment of Mortgage;
2
<PAGE>
(2) Each Initial Charter, in accordance with the terms and conditions of
the related Assignment of Initial Charter and Collateral Assignment of Initial
Charter;
(3) Each Initial Charter Guarantee, in accordance with the terms and
conditions of the related Assignment of Initial Charter Guarantee and Collateral
Assignment of Initial Charter Guarantee;
(4) Each Management Agreement, in accordance with the terms of the
related Assignment of Management Agreement;
(5) Each Vessel Purchase Agreement, in accordance with the terms of the
related Assignment of Vessel Purchase Agreement;
(6) Each Assignment of Earnings and Insurances;
(7) Each Issue of One Debenture;
(8) The Pledged Stock, in accordance with the Stock Pledge;
(9) Each Loan Agreement;
(10) Any additional security agreement, assignment or mortgage document
entered into by any Owner from time to time in connection with such Owner's Loan
Agreements;
(11) All rights of California Petroleum to receive payments of any kind,
to execute any election or option or to give or receive any notice, consent,
waiver or approval under or in respect of any of the foregoing documents and
instruments;
(12) All the charterhire, tolls, rents, issues, profits, products,
revenues and other income (including sales proceeds) of the property subjected
or required to be subjected to the Lien of this Collateral Agreement, and all of
the estate, right, title and interest of California Petroleum in and to the same
and every part of said property;
(13) All moneys and securities, including the Trust Accounts and any
Permitted Investments, now or hereafter paid or deposited or required to be paid
or deposited to or with the Collateral Trustee by or for the account of
California Petroleum or otherwise pursuant to any term of any Security Document,
and held or required to be held by the Collateral Trustee hereunder;
(14) All requisition proceeds with respect to any Vessel or any part
thereof (to the extent of California Petroleum's interest therein pursuant to
the terms of the Mortgage) and all insurance proceeds with respect to any Vessel
or any part thereof
3
<PAGE>
(to the extent of California Petroleum's interest therein pursuant to the terms
of the Mortgage);
(15) Any Acceptable Replacement Charter or other charter assigned to
California Petroleum pursuant to the Assignment of Earnings and Insurances; and
(16) All income, payments and proceeds of the foregoing.
HABENDUM CLAUSE
TO HAVE AND TO HOLD the aforesaid property unto the Collateral
Trustee, its successors and assigns, in trust for the equal and ratable benefit
and security of each Secured Party with respect to the Secured Obligations owed
to it and for the uses and purposes and subject to the terms and conditions set
forth in this Collateral Agreement.
It is expressly agreed that anything contained in this Collateral
Agreement to the contrary notwithstanding, California Petroleum shall remain
liable under the Security Documents to perform all of the obligations assumed by
it under any of those documents, all in accordance with and pursuant to the
terms and provisions of those documents, and the Collateral Trustee and the
Secured Parties shall have no obligation or liability under the Security
Documents by reason of or arising out of the assignment under this Collateral
Agreement, nor shall the Collateral Trustee or the Secured Parties be required
or obligated in any manner to perform or fulfill any obligations of California
Petroleum under or pursuant to the Security Documents or, except as expressly
provided in this Collateral Agreement, to make any payment, or to make any
inquiry as to the nature or sufficiency of any payment received by it, or
present or file any claim, or take any action to collect or enforce the payment
of any amounts which may have been assigned to it or to which it may be entitled
at any time or times.
As between the holders of the Serial Mortgage Notes, on the one hand,
and the holders of the Term Mortgage Notes, on the other hand, it is hereby
agreed that the following property included in the Trust Estate shall be held by
the Collateral Trustee hereunder for the equal and ratable benefit of the
holders of the Secured Obligations other than the holders of the Serial Mortgage
Notes at the times and under the circumstances set forth below:
From and after the satisfaction and payment in full of all of an
Owner's obligations under and pursuant to a Serial Loan Agreement, the
Collateral relating to such Vessel including, without limitation, (i) the
related Initial Charter (including any Termination Payment made
thereunder), (ii) any amounts received under the related Security Documents
in connection with the
4
<PAGE>
occurrence of a Total Loss with respect to such Vessel, (iii) any amounts
received under the related Security Documents in connection with the
exercise of any remedies thereunder and (iv) all payments under the related
Term Loan Agreement by the related Owner.
AND IT IS HEREBY COVENANTED, DECLARED AND AGREED by California Petroleum
that all the Secured Obligations are to be secured and that all the Trust Estate
is to be held, subject to the further covenants, conditions, uses and trusts
herein set forth, and California Petroleum, for itself and its successors and
assigns, does hereby covenant and agree to and with the Collateral Trustee and
its successors in said trust for the benefit of those who shall hold the Secured
Obligations or any of them, as set forth herein.
ARTICLE ONE
DEFINITIONS AND CERTAIN OTHER GENERAL PROVISIONS
Section 1.01 Definitions. (a) The following terms, as used herein,
have the following respective meanings:
"Acceptable Replacement Charter" means any replacement charter which
satisfies each of the following requirements: (i) the charter is a bareboat
charter and requires that the charterer thereunder "gross up" charterhire
payments to indemnify and hold the holders of the Term Mortgage Notes harmless
from any withholding tax imposed on the charterhire payments or on the payments
of the Term Mortgage Notes, (ii) the charterhire payments payable during the
non-cancellable term of such replacement charter, after giving effect to (1) any
"gross up" of such amounts as a result of any withholding tax on such
charterhire payments, (2) the receipt of the Termination Payment and (3) all
fees and expenses incurred in connection with the recharter of the Vessel,
provide sufficient funds for the payment in full when due of (A) the Allocated
Principal Amount of the Term Mortgage Notes for the related Vessel and interest
thereon in accordance with the revised schedule of sinking fund and principal
payments, that is applicable upon termination of the related Initial Charter,
(B) the amount of Recurring Fees and Taxes for such Vessel, (C) the amount of
Management Fees and Technical Advisor's Fees for such Vessel, (D) the amount of
fees and expenses of the Indenture Trustee, Trustee Fees and Designated
Representative's Fee allocable to such Vessel and (E) an amount at least equal
to 30% of the estimated amounts, on a per annum basis, referred to in clauses
(B), (C) and (D) above for miscellaneous or unexpected expenses and (iii) the
Rating Agencies shall have confirmed in writing to the Indenture Trustee that
the terms and conditions of such proposed charter will not result in the
withdrawal or reduction of the then current ratings of the Term Mortgage Notes.
5
<PAGE>
"Affiliate" means with respect to any Person (the "relevant Person")
(i) any other Person that directly, or indirectly through one or more
intermediaries, controls the relevant Person (a "Controlling Person") or (ii)
any Person (other than the relevant Person) which is controlled by or is under
common control with a Controlling Person. As used herein, the term "control"
means possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of a Person, whether through the
ownership of voting securities, by contract or otherwise.
"Allocated Principal Amount" means (i) when used with reference to the
Serial Mortgage Notes relating to any Vessel at any time, an aggregate principal
amount of outstanding Serial Mortgage Notes equal to the aggregate principal
amount of Serial Loans of the related Owner then outstanding and (ii) when used
with reference to the Term Mortgage Notes relating to any Vessel at any time, an
aggregate principal amount of outstanding Term Mortgage Notes equal to the
aggregate principal amount of the Term Loans of the related Owner then
outstanding, plus any payment of principal, if any, on such Term Loans since the
last date on which payment of principal on the Term Mortgage Notes was made.
"Applicable Secured Parties" means (i) at any time when an Enforcement
Notice delivered by the Serial Indenture Trustee is in effect and no Enforcement
Notice delivered by the Term Indenture Trustee is in effect, the Majority Serial
Noteholders, (ii) at any time when an Enforcement Notice delivered by the Term
Indenture Trustee is in effect and no Enforcement Notice delivered by the Serial
Indenture Trustee is in effect, the Majority Term Noteholders and (iii) at any
time when an Enforcement Notice delivered by both the Serial Indenture Trustee
and the Term Indenture Trustee are in effect, the Majority Noteholders.
"Assignment of Earnings and Insurances" means, for each Vessel, the
Assignment of Earnings and Insurances, dated the date hereof, between the
related Owner and California Petroleum, as the same may be amended from time to
time.
"Assignment of Guarantee" means, for each Initial Charter Guarantee,
the Assignment of Guarantee, dated the date hereof, between the Owner of the
related Vessel and California Petroleum, as the same may be amended from time to
time.
"Assignment of Initial Charter" means, for each Initial Charter, the
Assignment of Initial Charter, dated the date hereof, between the Owner of the
related Vessel and California Petroleum, as the same may be amended from time to
time.
"Assignment of Management Agreement" means, for each Management
Agreement, the Assignment of Management Agreement, dated the date hereof,
between the Owner of the related Vessel and California Petroleum, as the same
may be amended from time to time.
6
<PAGE>
"Assignment of Mortgage" means, for each Mortgage, the Assignment of
Mortgage between California Petroleum and the Collateral Trustee, as the same
may be amended from time to time.
"Assignment of Vessel Purchase Agreement" means, for each Vessel, the
Vessel Purchase Agreement Assignment, dated the date of the Vessel Purchase
Agreement for such Vessel, between the related Owner and California Petroleum.
"Authorized Officer" of any Person means the President of such Person.
"Bankruptcy Code" means the United States Bankruptcy Code of 1978, as
amended.
"Business Day" means any day except a Saturday or a Sunday or other
day on which commercial banks are authorized by law to close in New York City or
in the city and state where the Collateral Trustee's principal offices are
located.
"Casualty Account" means the account established and maintained by the
Collateral Trustee pursuant to Section 3.01(f).
"Charter Event of Default" means, for each Initial Charter, each of
the events designated as a default in Clause 17 of such Initial Charter.
"Charterhire" means, for each Initial Charter, the scheduled payments
of charterhire thereunder.
"Chevron" means Chevron Corporation, a Delaware corporation.
"Chevron Transport" means Chevron Transport Corporation, a Liberian
corporation.
"Closing Date" means ____________, 1995.
"Collateral" means the property in which the Collateral Trustee, in
its own right or as assignee of California Petroleum, is granted a Lien from
time to time under any Security Document, which lien or security interest has
not been released in accordance with the terms hereof or thereof.
"Collateral Account" means the account established and maintained by
the Collateral Trustee pursuant to Section 3.01(g).
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"Collateral Assignment of Initial Charter" means for any Initial
Charter, the Collateral Assignment of Initial Charter, dated the date of the
related Initial Charter, between California Petroleum and the Collateral
Trustee, as amended from time to time.
"Collateral Assignment of Guarantee" means, for any Initial Charter
Guarantee, the Collateral Assignment of Guarantee, dated the date of the related
Initial Charter, between California Petroleum and the Collateral Trustee, as the
same may be amended from time to time.
"Collateral Trustee" means Chemical Trust Company of California, in
its capacity as trustee under this Collateral Agreement, or any other Person
acting from time to time as trustee hereunder.
"Compulsory Acquisition" means requisition of title or other
compulsory acquisition of any Vessel (otherwise than by requisition for hire),
capture, seizure, condemnation, destruction, detention or confiscation of such
Vessel by any government or by persons acting or purporting to act on behalf of
any governmental authority.
"Default" means any Event of Default or any event or condition which,
with the giving of notice or lapse of time, or both would constitute an Event of
Default.
"Designated Representative" means the Person designated by California
Petroleum pursuant to the Designated Representative Agreement, dated the date
hereof, between California Petroleum and CalPetro Holdings Limited to be
California Petroleum's representative under Section 10.11 of the Serial
Indenture and Section 9.11 of the Term Indenture, respectively, and Section 7.12
hereof. Initially the Designated Representative is CalPetro Holdings Limited.
"Designated Representative's Fee" means the fee received by the
Designated Representative as compensation for its services during the period
from the Closing Date until the third anniversary of the Closing Date, in an
amount equal $15,000 per annum, from the third anniversary to the eighth
anniversary, in an amount equal to $20,000.00 per annum, from the eighth
anniversary to the thirteenth anniversary, in an amount equal to $25,000 per
annum, from the thirteenth anniversary to the eighteenth anniversary, in an
amount equal to $30,000 per annum, and thereafter in an amount equal to $35,000
per annum, payable semi-annually in arrears.
"Distribution Date" means each date fixed by the Collateral Trustee
for a distribution to the Secured Parties of funds, if any, held in the
Collateral Account pursuant to clause (i) of the first paragraph of Section
3.01(g) or the second paragraph
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of Section 3.01(g), which shall be the date from time to time determined by the
Collateral Trustee or requested by the Applicable Secured Parties.
"Enforcement Notice" means a notice delivered or deemed delivered to
the Collateral Trustee pursuant to Section 4.10 of the Term Indenture or the
Serial Indenture stating that an Indenture Event of Default under such Indenture
has occurred and is continuing.
"Equity Account" means the account established and maintained by the
Collateral Trustee pursuant to Section 3.01(e).
"Equity Remainder" means, for any Vessel on the applicable Payment
Date for so long as the Initial Charter with respect to such Vessel remains in
effect, the positive difference, if any, between (a) $100,000 and (b) the sum of
(i) the Management Fee and the Technical Advisor's Fee for such Vessel deposited
into the Operating Account on such Payment Date and the immediately preceding
Payment Date, (ii) the aggregate amount of Recurring Fees and Taxes for such
Vessel deposited into the Operating Account on such Payment Date and the
immediately preceding Payment Date and (iii) the allocable portion of the fees
and expenses of the Indenture Trustee, the Collateral Trustee and the Designated
Representative. On and after the termination of such Initial Charter, the
"Equity Remainder" for such Vessel on the applicable Payment Date shall be zero.
"Equity Transfer Date" means the Payment Date scheduled to occur on
__________ of each year, commencing _________ __, 1996.
"Exchange Act" means the United States Securities Exchange Act of
1934, as amended.
"Indenture Event of Default" has the meaning ascribed to the term
"Event of Default" in the Serial Indenture or the Term Indenture.
"Indenture Trustees" means the Serial Indenture Trustee and the Term
Indenture Trustee, collectively.
"Indentures" means the Serial Indenture and the Term Indenture,
collectively.
"Initial Charter" means, for each Vessel, the bareboat charter between
the related Owner and Chevron Transport dated the Closing Date, as the same may
be amended from time to time.
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"Initial Charter Guarantee" means, for any Vessel, the Guarantee
together with the consent to assignment of guarantee, dated the date of the
related Initial Charter, given by Chevron to the related Owner in connection
with the related Initial Charter.
"Initial Charter Period" means for any Initial Charter the period from
the date of commencement of such Initial Charter to the expiration or earlier
termination of such Initial Charter pursuant to the terms and conditions
thereof.
"Initial Charterer" means, for each Initial Charter, Chevron Transport
as the Charterer thereunder, and any permitted successor or assignee thereof.
"Initial Revenue Account" means the account established and maintained
by the Collateral Trustee pursuant to Section 3.01(a).
"Issue of One Debenture" means, for each Owner, the Issue of One
Debenture, dated the Closing Date, between such Owner and California Petroleum,
as the same may be amended from time to time.
"Lien" means with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset.
For the purposes of this Collateral Agreement, a Person shall be deemed to own
subject to a Lien any asset which it has acquired or holds subject to the
interest of a vendor or lessor under any conditional sale agreement, capital
lease or other title retention agreement relating to such asset.
"Loan Agreements" means the Serial Loan Agreements and the Term Loan
Agreements, collectively.
"Majority Noteholders" means the holders of a majority in aggregate
principal amount of the Outstanding Notes.
"Majority Serial Noteholders" means at any time the holders of Serial
Mortgage Notes then Outstanding having an aggregate principal amount in excess
of 50% of the aggregate principal amount of all such Serial Mortgage Notes then
Outstanding.
"Majority Term Noteholders" means at any time the holders of Term
Mortgage Notes then Outstanding having an aggregate principal amount in excess
of 50% of the aggregate principal amount of all such Term Mortgage Notes then
Outstanding.
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"Management Agreement" means, for each Owner, the Management
Agreement, dated the Closing Date, among such Owner, the Manager and the
Technical Advisor, as the same may be amended from time to time.
"Management Fee" means the sum of (i) for each Vessel, an annual fee
payable to the Manager, semi-annually in arrears, which shall be an amount equal
to $13,625 per annum during the period from the Closing Date to the third
anniversary of the Closing Date plus (ii) a fee of $3,000 per annum, payable
annually in arrears, during such three-year period. Thereafter, the Management
Fee shall increase by an amount equal 4% per annum.
"Manager" means, for any Management Agreement, P.D. Gram & Co. a.s.,
or any other Person acting from time to time as Manager thereunder.
"Moody's" means Moody's Investors Service, Inc.
"Mortgage" means, for each Vessel, the First Preferred Ship Mortgage
or Statutory Mortgage and Deed of Covenants for such Vessel, as applicable,
dated the date of the related Initial Charter, between the related Owner and
California Petroleum and assigned by California Petroleum to the Collateral
Trustee, as the same may be amended from time to time.
"Mortgage Event of Default" means, for any Mortgage, each of the
events designated as an "Event of Default" in Section 5.01 of such Mortgage.
"Noteholders" means at any time the holders of the Outstanding Serial
Mortgage Notes and the Outstanding Term Mortgage Notes, collectively.
"Notes" means the Serial Mortgage Notes together with the Term
Mortgage Notes.
"Operating Account" means the account established and maintained by
the Collateral Trustee pursuant to Section 3.01(d).
"Outstanding" means, when used with respect to Secured Obligations,
any Secured Obligations then or theretofore issued or incurred by California
Petroleum, except Secured Obligations or portions thereof which have been paid
or defeased (including without limitation, through a covenant defeasance);
provided that, for purposes of determining the parties constituting the Majority
Noteholders, the Majority Serial Noteholders, the Majority Term Noteholders or
the Applicable Secured Parties for purposes of any action to be taken hereunder,
Secured Obligations held by California Petroleum or any Affiliate thereof, any
Owner or any Affiliate thereof, or Chevron or any Affiliate thereof, shall be
disregarded and deemed not to be Outstanding (except that, in determining
whether the Collateral Trustee shall be
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protected in relying upon any request, demand, authorization, direction, notice,
consent or waiver, only Secured Obligations which the Collateral Trustee knows
to be so held shall be so disregarded).
"Owner" means CalPetro Tankers (Bahamas I) Limited, in the case of the
Vessel m.t. Samuel Ginn, CalPetro Tankers (Bahamas II) Limited, in the case of
the Vessel m.t. Condoleezza Rice, CalPetro Tankers (IOM) Limited, in the case of
the Vessel m.t. Chevron Mariner, or CalPetro Tankers (Bahamas III) Limited, in
the case of the Vessel m.t. William E. Crain.
"Payment Date" means each _____ and _____, commencing ______, 1995.
"Permitted Investments" means any of the following:
(a) direct general obligations of, or obligations fully and
unconditionally guaranteed as to the timely payment of principal and interest
by, the United States or any agency or instrumentality thereof, provided such
obligations are backed by the full faith and credit of the United States,
Federal Housing Administration debentures, FHLMC senior debt obligations or FNMA
senior debt obligations, but excluding any of such securities whose terms do not
provide for payment of a fixed dollar amount upon maturity or call for
redemption;
(b) federal funds, certificates of deposit, time and demand deposits
and banker's acceptances (having original maturities of not more than one year)
of any bank or trust company incorporated under the laws of the United States or
any state thereof, provided that the short-term debt obligations of such bank or
trust company at the date of acquisitions thereof have been rated at least "A-1"
or "P-1" by Standard & Poor's and Moody's, respectively;
(c) commercial paper (having original maturities of not more than one
year) rated at least "A-1" or "P-1" by Standard & Poor's and Moody's,
respectively; or
(d) guaranteed investment contracts, investment agreements or similar
agreements rated at least "AA" or "Aa" by Standard & Poor's, Moody's or Duff &
Phelps, respectively, that are treated as indebtedness for United States federal
income tax purposes.
"Person" means an individual, a corporation, a partnership, an
association, a trust or any other entity or organization, including a government
or political subdivision or an agency or instrumentality thereof.
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"Pledged Stock" means all of the issued and outstanding capital stock
of each Owner, including any additional or substitute shares of capital stock of
any such Owner now owned or hereafter acquired by California Tankers Investments
Limited issued at any time or from time to time.
"Rating Agencies" means Moody's, Standard & Poor's and Duff & Phelps
Credit Rating Co.
"Recurring Fees and Taxes" means, for any Vessel, any registration
fees and tonnage taxes necessary to maintain the documentation of the Vessel
under the laws of the registry or port of documentation of the Vessel, any
periodic fees necessary to maintain the corporate status of the related Owner,
any filing or other fees necessary to maintain the status of such Owner as a
reporting company under the Exchange Act and to comply with any covenants of
such Owner under the related Mortgage, any fees and expenses (including the cost
of insurance required by the related Mortgage and not maintained by the
charterer under the charter to which such Vessel is then subject) necessary to
comply with any covenants under the related Mortgage, any other fees and
expenses contemplated to be paid pursuant to the Management Agreement which the
Manager certifies to the Collateral Trustee are qualified to be paid thereunder
and any accounting or other professional fees and other expenses including any
fees and expenses of the Rating Agencies incurred in connection with the
foregoing. In addition, each Owner's Recurring Fees and Taxes will include a
pro rata portion of the fees and expenses, including any accounting,
administrative or other professional fees, necessary to maintain the
registration of the Notes under the Securities Act, to maintain the corporate
status of California Petroleum and the status of California Petroleum as a
reporting company (if necessary) under the Exchange Act, to pay any facilitation
or management fees and to comply with any covenants under the Indenture or this
Collateral Agreement.
"Second Revenue Account" means the account established and maintained
by the Collateral Trustee pursuant to Section 3.01(b).
"Secured Instruments" means, at any time, (i) the Serial Indenture and
the Outstanding Serial Mortgage Notes and (ii) the Term Indenture and the
Outstanding Term Mortgage Notes.
"Secured Obligations" means at any time, without duplication, each of
the following (to the extent not satisfied or terminated):
(i) all obligations of California Petroleum in respect of the
principal of and interest on the Serial Mortgage Notes;
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(ii) all obligations of California Petroleum in respect of the
principal of, premium, if any, and interest on the Term Mortgage Notes;
(iii) all sums payable by California Petroleum to the Collateral
Trustee and to the Secured Parties hereunder and under the Collateral
Assignments of Charter, the Collateral Assignments of Guarantee and the
Assignments of Mortgage, including Trustee Fees;
(iv) the performance and observance by California Petroleum of each
other term, covenant and other provision to be performed and observed by it
hereunder, under the Collateral Assignments of Charter, the Collateral
Assignments of Guarantee and the Assignments of Mortgage, or under the
Secured Instruments;
(v) all amendments, modifications, renewals, extensions and
replacements of any of the foregoing, in each case whether now outstanding
or hereafter arising.
The Secured Obligations shall include any and all interest, costs, fees and
expenses which accrue on or with respect to any of the foregoing in accordance
with the provisions of the applicable Secured Instrument, whether before or
after the commencement of any case, proceeding or other action relating to the
bankruptcy, insolvency or reorganization of California Petroleum and any such
interest, costs, fees and expenses that would have accrued thereon or with
respect thereto in accordance with the provisions of the applicable Secured
Instrument but for the commencement of any such case, proceeding or other
action.
"Secured Party" means each holder from time to time of the Secured
Obligations (including without limitation any assignees of such holders).
"Securities Act" means the United States Securities Act of 1933, as
amended.
"Security Documents" means, for each Vessel and the Owners, the Loan
Agreements, the Mortgage, the Assignment of Initial Charter, the Assignment of
Earnings and Insurances, the Assignment of Initial Charter Guarantee, the
Assignment of Management Agreement, the Issue of One Debenture, the Stock
Pledge, the Assignment of Vessel Purchase Agreement, and any additional security
agreement, assignment or mortgage document entered into by any Owner from time
to time in connection with such Owner's Loan Agreements.
"Security Interests" means the Liens created in the Collateral
pursuant to this Collateral Agreement and pursuant to each other Security
Document.
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"Serial Indenture" means the Serial Indenture dated as of __________
__, 1995 among California Petroleum, the Serial Indenture Trustee, and, solely
for purposes of the Trust Indenture Act, Chevron, as the same may be amended
from time to time.
"Serial Indenture Trustee" means Chemical Trust Company of California
or any other Person from time to time acting as the trustee under the Serial
Indenture.
"Serial Loan Agreement" means, for any Owner, the Serial Loan
Agreement dated as of __________ __, 1995 between such Owner and California
Petroleum, as the same may be amended from time to time.
"Serial Loans" has, for any Owner, the meaning set forth in the Serial
Loan Agreement entered into by such Owner.
"Serial Mortgage Notes" has the meaning set forth in the Serial
Indenture.
"Sinking Fund Reserve Account" means the account established and
maintained by the Collateral Trustee pursuant to Section 3.01(h).
"Standard & Poor's" means Standard & Poor's Ratings Group.
"Stipulated Loss Value" means, for any Vessel on any date, the amount
specified in the related Initial Charter as the "Stipulated Loss Value" for such
date, which amount will be at least sufficient to redeem in full the Allocated
Principal Amount of Notes for such Vessel.
"Stock Pledge" means the Stock Pledge Agreement, dated the Closing
Date, between California Tankers Investments Limited and California Petroleum,
as the same may be amended from time to time.
"Subsidiary" means, with respect to any Person, any corporation or
other entity of which securities or other ownership interests having ordinary
voting power to elect a majority of the board of directors or other persons
performing similar functions are at the time directly or indirectly owned by
such Person.
"Technical Advisor" means, for each Management Agreement, Barber Ship
Management ans, or any other Person acting from time to time as Technical
Advisor thereunder.
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"Technical Advisor's Fee" means, for each Vessel, an annual fee
payable to the Technical Advisor, semi-annually in arrears, which shall be an
amount equal to $10,000 per annum during the period from the Closing Date to the
third anniversary of the Closing Date. Thereafter, the Technical Advisor's Fee
will be increased by an amount equal to 4% per annum.
"Term Indenture" means the Term Indenture dated as of __________ __,
1995 between California Petroleum and the Term Indenture Trustee, as the same
may be amended from time to time.
"Term Indenture Trustee" means Chemical Trust Company of California or
any other Person from time to time acting as the trustee under the Term
Indenture.
"Term Loan" has, for any Owner, the meaning set forth in the Term Loan
Agreement entered into by such Owner.
"Term Loan Agreement" means, for any Owner, the Term Loan Agreement
dated as of __________ __, 1995 between such Owner and California Petroleum, as
the same may be amended from time to time.
"Term Mortgage Notes" has the meaning set forth in the Term Indenture.
"Termination Account" means the account established and maintained by
the Collateral Trustee pursuant to Section 3.01(c).
"Termination Payment" means the payment that Chevron Transport is
required to make pursuant to Clause 2(a) of the applicable Initial Charter if
Chevron Transport elects to terminate the Initial Charter for any Vessel on a
specified termination date.
"Total Loss" means (a) an actual or constructive or compromised or
arranged total loss of a Vessel, (b) a Compulsory Acquisition of a Vessel or (c)
if so declared by Chevron Transport at any time and in its sole discretion, a
requisition for hire of the Vessel for a period in excess of 180 days.
"Trust Accounts" means the Initial Revenue Account, the Second Revenue
Account, the Termination Account, the Operating Account, the Equity Account, the
Casualty Account, the Collateral Account and the Sinking Fund Reserve Account.
"Trust Estate" means the property rights and privileges described in
the Granting Clause in this Collateral Agreement.
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"Trust Funds" means the funds deposited in the Trust Accounts.
"Trust Indenture Act" means the United States Trust Indenture Act of
1939, as amended.
"Trustee Fees" means all fees, costs and expenses of the Collateral
Trustee of the types described in Sections 4.03, 4.04, 4.05 and 4.06.
"UCC" means the Uniform Commercial Code as in effect on the date
hereof in the State of New York or any other applicable jurisdiction.
"Vessel Purchase Agreement" means, for any Vessel, the Vessel Purchase
Agreement, dated the Closing Date between Chevron Transport and the related
Owner.
"Vessels" means, collectively, the four Suezmax-size tankers to be
acquired by the Owners and chartered to Chevron Transport pursuant to the
Initial Charters.
(b) The words "hereof", "herein" and "hereunder" and words of similar
import when used in this Collateral Agreement refer to this Collateral Agreement
as a whole and not to any particular provision of this Collateral Agreement, and
Article, Section and subsection references are to this Collateral Agreement
unless otherwise specified.
Section 1.02 Limitation of Rights. Nothing in this Collateral
Agreement or in the Secured Instruments, expressed or implied, is intended or
shall be construed to confer upon or give to any Person other than the
Collateral Trustee and the Secured Parties any right, remedy or claim under or
by reason of this Collateral Agreement or any covenant, condition or stipulation
herein contained, and all the covenants, stipulations, promises and agreements
in this Collateral Agreement, the Collateral Assignments of Charter, the
Collateral Assignments of Guarantee and the Assignments of Mortgage by or on
behalf of California Petroleum shall be for the sole and exclusive benefit of
the Collateral Trustee and the Secured Parties.
Section 1.03 Effectiveness of Collateral Agreement. This Collateral
Agreement shall become effective simultaneously with the earlier of the
effectiveness of the Term Indenture or the effectiveness of the Serial
Indenture. All references herein to the "date hereof" or other similar language
shall mean the date of the effectiveness hereof and not the date appearing on
the cover or the caption of this Collateral Agreement (which date is for
identification purposes only).
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ARTICLE TWO
ENFORCEMENT NOTICE; EXERCISE
OF REMEDIES; DETERMINATIONS
PRIOR TO ENFORCEMENT
Section 2.01 Enforcement Notice. (a) An Enforcement Notice shall become
effective upon receipt thereof (or deemed receipt thereof) by the Collateral
Trustee. An Enforcement Notice, once effective, shall remain in effect unless
and until it is cancelled as provided in subsection 2.01(c).
(b) So long as an Enforcement Notice is in effect, subject to the
provisions of Sections 2.04(b) and (c), the Collateral Trustee shall exercise
the rights and remedies provided in this Collateral Agreement, the Collateral
Assignments of Charter, the Collateral Assignments of Guarantee and the
Assignments of Mortgage. The Collateral Trustee is not empowered to exercise
any remedy hereunder unless an Enforcement Notice is in effect.
(c) The applicable Indenture Trustee (acting on the instructions of the
Majority Serial Noteholders or the Majority Term Noteholders, as the case may
be) shall be entitled to cancel any Enforcement Notice theretofore given by it
by delivering a written notice of cancellation to the Collateral Trustee (i)
before the Collateral Trustee takes any action to exercise any remedy with
respect to the Collateral or (ii) thereafter, if the Collateral Trustee believes
that all actions it has taken to exercise any remedy or remedies with respect to
the Collateral can be reversed without undue difficulty or is reasonably assured
that it is adequately indemnified for any loss incurred by the Collateral
Trustee resulting from such reversal.
(d) As soon as practicable after, but in any event within three Business
Days of, its receipt of any Enforcement Notice, the Collateral Trustee shall
give notice thereof to California Petroleum and the Indenture Trustees. As soon
as practicable after, but in any event within three Business Days of, the
cancellation of any Enforcement Notice pursuant to subsection (c) above, the
Collateral Trustee shall give notice thereof to California Petroleum and the
Indenture Trustees.
Section 2.02 General Authority of the Collateral Trustee Over the
Collateral. California Petroleum hereby irrevocably constitutes and appoints
the Collateral Trustee and any officer or agent thereof, with full power of
substitution, as its true and lawful attorney-in-fact with full power and
authority in the name of California Petroleum or in its own name, from time to
time in the Collateral Trustee's discretion, so long as any Enforcement Notice
is in effect, to take any and all appropriate action directed by the Applicable
Secured Parties and to execute any and all documents and instruments which may
be necessary or desirable to carry out the
<PAGE>
terms hereof and accomplish the purposes hereof and, without limiting the
generality of the foregoing or any of the rights conferred on the Collateral
Trustee, whether in its own right or as assignee of California Petroleum,
pursuant to the other Security Documents, California Petroleum hereby gives the
Collateral Trustee the power and right on its behalf, without notice to or
further assent by California Petroleum, so long as any Enforcement Notice is in
effect, to do the following (to the extent the Collateral Trustee is directed to
do so by the Applicable Secured Parties):
(i) to ask for, demand, sue for, collect, receive and give acquittance
for any and all moneys due or to become due upon, or in connection with,
the Collateral;
(ii) to receive, take, endorse, assign and deliver any and all checks,
notes, drafts, acceptances, documents and other negotiable and non-
negotiable instruments taken or received by the Collateral Trustee as, or
in connection with, the Collateral;
(iii) to commence, prosecute, defend, settle, compromise, compound or
adjust any claim, suit, action or proceeding with respect to, or in
connection with, the Collateral;
(iv) to sell, transfer, assign or otherwise deal in or with the
Collateral or any part thereof as fully and effectively as if the
Collateral Trustee were the absolute owner thereof;
(v) to do, at its option and at the expense and for the account of
California Petroleum, at any time or from time to time, all acts and things
which the Collateral Trustee shall deem necessary or advisable to protect
or preserve the Collateral and to realize upon the Collateral;
(vi) to extend the time of payment of any or all of the Collateral and
to make any allowance and other adjustments with reference thereto; and
(vii) to exercise any of the remedies set forth in the Security
Documents;
provided that the Collateral Trustee shall give California Petroleum not less
than thirty days prior written notice of the time and place of any sale or other
intended disposition of any Collateral. California Petroleum agrees that such
notice constitutes "reasonable notification" within the meaning of Section 9-
504(3) of the UCC.
To the extent payments are received under the Initial Charters and
applied in accordance with the Collateral Agreement, no default shall occur
under the Loan Agreements.
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Section 2.03 Right To Initiate Judicial Proceedings. If an Enforcement
Notice is in effect, the Collateral Trustee, subject to the provisions of
Section 2.04(b) and (c), (i) shall have the right and power to institute and
maintain such suits and proceedings as it may deem appropriate to protect and
enforce the rights vested in it by this Collateral Agreement and each Security
Document and (ii) may either after entry, or without entry, proceed by suit or
suits at law or in equity to enforce such rights and to foreclose upon the
Collateral and to sell all or, from time to time, any of the Collateral under
the judgment or decree of a court of competent jurisdiction.
Section 2.04 Exercise of Powers; Instructions. (a) All of the powers,
remedies and rights of the Collateral Trustee as set forth in this Collateral
Agreement may be exercised by the Collateral Trustee in respect of any Security
Document as though set forth in full therein and all of the powers, remedies and
rights of the Collateral Trustee set forth in any Security Document may, subject
to Sections 2.04(b) and (c), be exercised from time to time as herein and
therein provided.
(b) Subject to Section 2.04(c), the Applicable Secured Parties shall have
the right, by one or more instruments in writing executed and delivered to the
Collateral Trustee, to direct the time, method and place of conducting any
proceeding for any right or remedy available to the Collateral Trustee, or of
exercising any trust or power conferred on the Collateral Trustee, or for the
appointment of a receiver, or to direct the taking or the refraining from taking
of any action authorized by any Security Document; provided that (i) such
direction shall not conflict with any provisions of law, of any Security
Document or, if applicable, the Indentures and (ii) the Collateral Trustee shall
be adequately secured and indemnified as provided in Section 6.04(d). Upon the
delivery of any such instrument to the Collateral Trustee, the Applicable
Secured Parties delivering such instrument shall deliver a copy thereof to
California Petroleum and the Indenture Trustees. Following receipt of any such
instrument the Collateral Trustee shall have the right in its discretion to take
any action or omit to take any action which it deems proper and which is not
inconsistent with such direction. The Collateral Trustee shall have no duty to
take or refrain from taking any action unless explicitly required herein or as
instructed in writing as provided herein.
(c) Notwithstanding anything to the contrary contained herein or in
any Security Document, so long as any Serial Mortgage Notes are Outstanding, if
the Allocated Principal Amount of Serial Mortgage Notes relating to a Vessel has
been paid in full and an Enforcement Notice has been delivered under the Term
Indenture as a result of (i) a default under any Acceptable Replacement Charter
or other charter relating to such Vessel or (ii) a Mortgage Event of Default
relating to such Vessel, the Collateral Trustee may not pursue any remedies
which the Collateral Trustee otherwise would be entitled to exercise pursuant to
this Article with respect to any Initial Charter that has not reached its first
optional termination date and that is not then in default, including amounts
paid or payable thereunder, and the related Security Documents.
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Section 2.05 Remedies Not Exclusive. (a) No remedy conferred upon or
reserved to the Collateral Trustee hereunder and under the Collateral
Assignments of Charter, the Collateral Assignments of Guarantee and the
Assignments of Mortgage is intended to be exclusive of any other remedy or
remedies, but every such remedy shall be cumulative and shall be in addition to
every other remedy conferred in any Security Document or now or hereafter
existing at law or in equity or by statute.
(b) No delay or omission by the Collateral Trustee to exercise any right,
remedy or power hereunder or under any other Security Document shall impair any
such right, remedy or power or shall be construed to be a waiver thereof, and
every right, power and remedy given by any Security Document to the Collateral
Trustee may, subject to Sections 2.04(b) and (c), be exercised from time to time
and as often as may be deemed expedient by the Collateral Trustee.
(c) If the Collateral Trustee shall have undertaken to enforce any right,
remedy or power under any Security Document and such enforcement shall have been
discontinued, stayed, enjoined or abandoned for any reason or shall have been
determined adversely to the Collateral Trustee in any related judicial
proceedings, then California Petroleum, the Collateral Trustee and the Secured
Parties shall, subject to any determination in such proceeding, severally and
respectively be restored to their former positions and rights hereunder with
respect to the Trust Estate and in all other respects, and thereafter all
rights, remedies and powers of the Collateral Trustee shall continue as though
no such action had been taken.
(d) All rights of action and of asserting claims upon or under the
Security Documents may be enforced by the Collateral Trustee without the
possession of any Secured Instrument or instrument evidencing any Secured
Obligation or the production thereof at any trial or other proceeding relative
thereto, and any suit or proceeding instituted by the Collateral Trustee shall
be, subject to Sections 6.05(c) and 6.10(b)(ii), brought in its name as
Collateral Trustee and any recovery of judgment shall be held and applied as
part of the Trust Estate.
Section 2.06 Waiver and Estoppel. (a) California Petroleum, to the
extent it may lawfully do so, (i) agrees that it will not at any time, in any
manner whatsoever, claim or take the benefit or advantage of any appraisement,
valuation, stay, extension, moratorium, turnover or redemption law, or any law
permitting it to direct the order in which the Collateral shall be sold, now or
at any time hereafter in force, which may delay, prevent or otherwise affect the
performance or enforcement of any Security Document, (ii) hereby waives all
benefit or advantage of all such laws and covenants and (iii) agrees that it
will not hinder, delay or impede the execution of any power granted to the
Collateral Trustee, in its own right or as assignee of California Petroleum, in
any Security Document but will suffer and permit the execution of every such
power as though no such law were in force.
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(b) California Petroleum, to the extent it may lawfully do so, on behalf
of itself and all who claim through or under it, including, without limitation,
the Owners, any and all subsequent creditors, vendees, assignees and lienors,
waives and releases all rights to demand or to have any marshalling of the
Collateral upon any sale, whether made under any power of sale granted in any
Security Document or pursuant to judicial proceedings or upon foreclosure or any
enforcement of any Security Document and consents and agrees that all the
Collateral may at any such sale be offered and sold as an entirety.
(c) California Petroleum waives, to the extent permitted by applicable
law, presentment, demand, protest and any notice of any kind (except notices
explicitly required under any Security Document) in connection with the Security
Documents and any action taken by the Collateral Trustee with respect to the
Collateral.
Section 2.07 Determinations Prior to Enforcement. Except as otherwise
specifically provided herein, the Indenture Trustees shall have the exclusive
authority to direct the conduct of the Collateral Trustee with respect to (i)
any written request under any Security Document for consent or approval with
respect to any matter or thing relating to any Collateral or any other Person's
obligations with respect thereto or (ii) any nonperformance by any Person of any
covenant or any breach of any representation or warranty thereof set forth in
any Security Document.
Section 2.08 Limitation on Collateral Trustee's Duty in Respect of
Collateral. Beyond its duties as to the custody thereof expressly provided
herein or in any Security Document and to account to the Secured Parties and
California Petroleum for moneys and other property received by it under any
Security Document, the Collateral Trustee shall not have any duty to California
Petroleum or to the Secured Parties as to any Collateral in its possession or
control or in the possession or control of any of its agents or nominees, or any
income thereon or as to the preservation of rights against prior parties or any
other rights pertaining thereto. The Collateral Trustee shall be deemed to have
exercised reasonable care in the custody of the Collateral in its possession if
the Collateral is accorded treatment substantially equal to that which it
accords its own property.
Section 2.09 Limitation by Law. All rights, remedies and powers provided
herein may be exercised only to the extent that the exercise thereof does not
violate any applicable provision of law, and all the provisions hereof are
intended to be subject to all applicable mandatory provisions of law which may
be controlling and to be limited to the extent necessary so that they will not
render this Collateral Agreement invalid, unenforceable in whole or in part or
not entitled to be recorded, registered or filed under provisions of any
applicable law.
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ARTICLE THREE
THE TRUST ACCOUNTS; DISTRIBUTIONS
Section 3.01 The Trust Accounts. (a) There is hereby established and,
at all times hereafter until the earlier of the payment in full of the Secured
Obligations under the Serial Indenture or the termination of the trusts created
by this Collateral Agreement, there shall be maintained with the Collateral
Trustee at the corporate trust office of the Collateral Trustee, a trust account
(the "Initial Revenue Account") in the name and under the control of the
Collateral Trustee for the benefit of the Indenture Trustees for the benefit of
holders of the Serial Mortgage Notes and the Term Mortgage Notes equally and
ratably into which there shall be deposited, until the first termination date
under each Initial Charter any Charterhire payments under such Initial Charter.
(b) There is hereby established and, at all times hereafter until the
trusts created by this Collateral Agreement shall have terminated, there shall
be maintained with the Collateral Trustee at the corporate trust office of the
Collateral Trustee, a trust account (the "Second Revenue Account") in the name
and under the control of the Collateral Trustee for the benefit of the Term
Indenture Trustee for the benefit of holders of the Term Mortgage Notes equally
and ratably into which there shall be deposited for each Vessel (i) if the
Initial Charter relating to such Vessel is terminated, any Charterhire payments
under any Acceptable Replacement Charter or other charter for such Vessel and
(ii) if the Initial Charter relating to such Vessel continues in effect after
the Allocated Principal Amount of the Serial Mortgage Notes relating to such
Vessel have been paid in full, any Charterhire payments under such Initial
Charter.
(c) There is hereby established and, at all times hereafter until the
trusts created by this Collateral Agreement shall have terminated, there shall
be maintained with the Collateral Trustee at the corporate trust office of the
Collateral Trustee, a trust account (the "Termination Account") in the name and
under the control of the Collateral Trustee for the benefit of the Term
Indenture Trustee for the benefit of holders of the Term Mortgage Notes equally
and ratably into which there shall be deposited for each Vessel, if the related
Initial Charter is terminated at the option of the Initial Charterer, the
Termination Payment payable under such Initial Charter. Any net proceeds from
the sale, if any, of a Vessel for which the related Initial Charter has reached
its first optional termination date, any insurance proceeds or other payments
received by the Collateral Trustee in connection with the occurrence of a Total
Loss to any Vessel whose related Initial Charter has reached its first optional
termination date, and any funds transferred from the Casualty Account or the
Collateral Account, provided in each case all Liens of the Serial Indenture
shall have been released, shall be deposited into the Termination Account to be
used along with the related Termination Payment (and any excess amounts referred
to in the next
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succeeding sentence arising from previous Vessel sales and remaining in the
Termination Account) in connection with the related mandatory redemption, if
any, of Term Mortgage Notes pursuant to Section 10.1(d) of the Term Indenture.
The excess, if any, relating to such Vessel over the amount necessary to pay all
amounts due and payable in connection with such related mandatory redemption,
shall be disbursed by the Collateral Trustee, to the extent necessary on each
succeeding Payment Date, to make payments designated to be made from the
Termination Account on such Payment Date pursuant to this Section 3.01(c),
Section 3.03(b) or (c), or Section 3.04 as the case may be.
Any Termination Payment deposited into the Termination Account shall
be disbursed by the Collateral Trustee (i) if a notice of mandatory redemption
is delivered by the Owners as a result of such termination, in accordance with
Section 10.1(d) of the Term Indenture or (ii) if a notice of mandatory
redemption is not delivered by the Owners as a result of such termination, to
the extent necessary on each succeeding Payment Date, to make payments
designated to be made from the Termination Account on such Payment Date pursuant
to Section 3.03(b) or (c), as the case may be.
(d) There is hereby established and, at all times hereafter until the
trusts created by this Collateral Agreement shall have terminated, there shall
be maintained with the Collateral Trustee at the corporate trust office of the
Collateral Trustee, a trust account (the "Operating Account") in the name and
under the control of the Collateral Trustee into which the Collateral Trustee
shall deposit for each Vessel, pursuant to Section 3.03(a), (b) or (c), as the
case may be, for the applicable Payment Date, the Recurring Fees and Taxes, the
Management Fee and the Technical Advisor's Fee. Funds deposited into the
Operating Account on each Payment Date will be disbursed by the Collateral
Trustee (i) from time to time, to pay the Recurring Fees and Taxes for each
Vessel as such amounts become due and payable upon presentation of invoices
therefor pursuant to the Management Agreement, (ii) to pay the Management Fee
for each Vessel to the Manager and (iii) to pay the Technical Advisor's Fee for
each Vessel to the Technical Advisor; provided that the Management Fee and the
Technical Advisor's Fee shall be payable only to the extent that the funds
remaining in the Operating Account after any such payment would be sufficient to
pay the Recurring Fees and Taxes for the applicable period.
(e) There is hereby established and, at all times hereafter until the
trusts created by this Collateral Agreement shall have terminated, there shall
be maintained with the Collateral Trustee at the corporate trust office of the
Collateral Trustee, a trust account (the "Equity Account") in the name and under
the control of the Collateral Trustee into which the Collateral Trustee shall
deposit, pursuant to Section 3.03(a), (b) or (c), as the case may be, for each
Equity Transfer Date, the Equity Remainder, if any, for each Vessel. Any
balance remaining in the Equity Account after payment in full of all of the
Secured Obligations shall be disbursed promptly thereafter to the Owners, pro
rata.
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(f) There is hereby established and, at all times hereafter until the
trusts created by this Collateral Agreement shall have terminated, there shall
be maintained with the Collateral Trustee at the corporate trust office of the
Collateral Trustee, a trust account (the "Casualty Account") in the name and
under the control of the Collateral Trustee into which there shall be deposited,
pursuant to the provisions of the related Security Documents, any insurance
proceeds or other payments in connection with the occurrence of a Total Loss to
any Vessel then subject to an Initial Charter that has not reached its first
optional termination date. Amounts deposited in the Casualty Account will be
disbursed by the Collateral Trustee in accordance with Section 11.1(b) of the
Serial Indenture and Section 10.1(c) of the Term Indenture, respectively. All
such amounts paid with respect to a Vessel that has reached its first optional
termination date and any balance remaining in the Casualty Account upon the
release of all Liens of the Serial Indenture will be deposited into the
Termination Account.
(g) There is hereby established and, at all times hereafter until the
trusts created by this Collateral Agreement shall have terminated, there shall
be maintained with the Collateral Trustee at the corporate trust office of the
Collateral Trustee, a trust account (the "Collateral Account") in the name and
under the control of the Collateral Trustee into which there shall be deposited
from time to time (i) the cash proceeds of any sale of, or other realization
upon, all or any part of the Collateral upon the exercise by the Collateral
Trustee of any of the rights and remedies described in Article Two upon receipt
of an Enforcement Notice and (ii) any other amount received by the Collateral
Trustee pursuant to any of the Security Documents for which this Collateral
Agreement does not specify another Trust Account into which such amount is to be
deposited.
While an Enforcement Notice is in effect, all moneys which are
required by any Security Document to be delivered to the Collateral Trustee or
which are received by the Collateral Trustee or any agent or nominee of the
Collateral Trustee in respect of the Collateral, whether in connection with the
exercise of the remedies provided in any Security Document or otherwise, shall
be deposited in the Collateral Account and held by the Collateral Trustee as
part of the Trust Estate and applied in accordance with the terms of this
Collateral Agreement; provided that any moneys received by the Collateral
Trustee for deposit in any other Trust Account which are received pursuant to
the Security Documents relating to any Initial Charter that is not then in
default and that has not reached its first optional termination date, including
amounts paid or payable thereunder, shall be deposited in such other Trust
Account and applied in accordance with the provisions applicable to such other
Trust Account; provided further that notwithstanding anything in this Section
3.01(g) to the contrary, all such moneys relating to Collateral with respect to
which the Lien of the Serial Indenture has been released shall be deposited in
the Termination Account and applied in accordance with the terms of this
Collateral Agreement.
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Any net proceeds from the sale, if any, of a Vessel for which the
related Initial Charter has been terminated that are in excess of the amount
necessary to pay all amounts due and payable in connection with the related
mandatory redemption, shall be deposited into the Termination Account in
accordance with Section 3.01(c).
Upon the release of all Liens of the Serial Indenture, any balance
remaining in the Collateral Account shall be transferred to the Termination
Account.
(h) There is hereby established and, at all times hereafter until the
trusts created by this Collateral Agreement shall have terminated, there shall
be maintained with the Collateral Trustee at the corporate trust office of the
Collateral Trustee, a trust account (the "Sinking Fund Reserve Account") in the
name and under the control of the Collateral Trustee for the benefit of the Term
Indenture Trustee for the benefit of holders of the Term Mortgage Notes equally
and ratably into which there shall be deposited from time to time pursuant to
Section 3.03(b) or (c), as the case may be, for each Payment Date that is not a
sinking fund redemption date or a date for the final payment of principal on the
Term Mortgage Notes, an amount, if any, equal to one-half of the aggregate
sinking fund redemption amount or amount of principal due and payable on the
Term Mortgage Notes on the next succeeding Payment Date. Any balance remaining
in the Sinking Fund Reserve Account after payment in full of all of the Secured
Obligations shall be disbursed promptly thereafter to the Owners, pro rata.
(i) Any income received by the Collateral Trustee with respect to the
balance from time to time standing to the credit of any Trust Account, including
any interest or capital gains on Permitted Investments, shall remain, or be
deposited, in such Trust Account. All cash amounts on deposit from time to time
in the Trust Accounts, together with any Permitted Investments from time to time
made with amounts on deposit therein as provided herein shall constitute part of
the Collateral. The deposit or holding of such amounts in any Trust Account
shall not constitute payment of the Secured Obligations until applied to such
Secured Obligations as provided herein. The parties to this Collateral
Agreement agree that all income from Permitted Investments shall be income of
the Owners, to be held by the Collateral Trustee pursuant to the Collateral
Agreement.
Section 3.02 Investment of Funds Deposited in Trust Accounts. Amounts on
deposit in the Trust Accounts shall be invested and re-invested from time to
time in such Permitted Investments as the Collateral Trustee shall determine in
its sole discretion, which Permitted Investments shall be held in the name and
be under the control of the Collateral Trustee. In order to provide the
Collateral Trustee, for the benefit of the Secured Parties, with a perfected
security interest in any Permitted Investment, each Permitted Investment shall
be either:
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(A) evidenced by negotiable certificates or instruments, or if non-
negotiable then issued in the name of the Collateral Trustee, which
(together with any appropriate instruments of transfer) are delivered to,
and held by, the Collateral Trustee or any agent thereof in the State of
New York;
(B) in book-entry form and issued by the United States or any agency
thereof and backed by the full faith and credit of the United States, and
subject to pledge under applicable state law and Treasury regulations and
as to which (in the opinion of counsel to the Collateral Trustee)
appropriate measures shall have been taken for perfection of the Security
Interests; or
(C) shares, registered in the name of the Collateral Trustee, of
mutual funds or money market funds which invest solely in Permitted
Investments of the kind described in clauses (A) and (B) above.
In the absence of gross negligence or willful misconduct, the Collateral Trustee
shall not be responsible for any loss resulting from any such investment.
Section 3.03 Payment Dates.
(a) On each Payment Date on or prior to ____, 2003, the Collateral
Trustee shall withdraw funds from the Initial Revenue Account and then from the
Equity Account (except for clause (vii) below) and make the payments set forth
below in the following order, in each case to the extent funds are available
after the preceding payment has been made in full:
(i) to deposit into the Operating Account the amount of the Recurring
Fees and Taxes then due and payable for each Vessel, or which will become
due and payable prior to the next succeeding Payment Date;
(ii) to pay all interest then due and payable on the Serial Mortgage
Notes to the holders of the Serial Mortgage Notes, ratably in the
proportion that the amount of such payment then due under each such Serial
Mortgage Note bears to the aggregate amount of the payments then due under
all such Serial Mortgage Notes;
(iii) if such Payment Date is the maturity date for any Serial
Mortgage Notes, to pay the aggregate amount of principal then due and
payable on such Serial Mortgage Notes to the holders of such Serial
Mortgage Notes, ratably in the proportion that the amount of such principal
then due under each such Serial Mortgage Note bears to the aggregate amount
of such principal then due under all such Serial Mortgage Notes;
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(iv) to pay all interest then due and payable on the Term Mortgage
Notes to the holders of the Term Mortgage Notes, ratably in the proportion
that the amount of such payment then due under each such Term Mortgage Note
bears to the aggregate amount of the payments then due under all such Term
Mortgage Notes;
(v) to pay to the Indenture Trustees, the Collateral Trustee and the
Designated Representative, respectively, the fees and expenses then due and
payable under the Indentures to the Indenture Trustees, under the
Collateral Agreement to the Collateral Trustee and the Designated
Representative's Fee;
(vi) to deposit into the Operating Account the Management Fee and the
Technical Advisor's Fee then due and payable for each Vessel; and
(vii) if such Payment Date is an Equity Transfer Date, to the extent
funds are available, to deposit the Equity Remainder for each Vessel into
the Equity Account.
After the foregoing payments have been made, the Collateral Trustee
shall invest (and reinvest, as applicable) any balance remaining in the Initial
Revenue Account and the Equity Account in Permitted Investments that will mature
on or before the next succeeding Payment Date.
(b) On each Payment Date that occurs after __________ __, 2003 and
on or before __________ __, 2006, the Collateral Trustee shall withdraw funds
from the Initial Revenue Account, the Second Revenue Account, the Termination
Account, the Sinking Fund Reserve Account, the Equity Account, or the applicable
combination of the foregoing indicated below, as the case may be, and make the
payments set forth below in the following order, in each case to the extent
funds are available in the applicable Trust Accounts after the preceding payment
has been made in full:
(i) deposit into the Operating Account the amount of the Recurring
Fees and Taxes then due and payable, or which will become due and payable
prior to the next succeeding Payment Date for each Vessel then subject to
an Initial Charter through its first optional termination date, first from
the Initial Revenue Account and then from the Equity Account, in each case
to the extent of the funds available therein;
(ii) to pay first from the Initial Revenue Account and then from the
Equity Account, in each case to the extent of the funds available therein,
all interest then due and payable on the Serial Mortgage Notes to the
holders of the Serial Mortgage Notes, ratably in the proportion that the
amount of such payment then due under each such Serial Mortgage Note bears
to the aggregate amount of the payments then due under all such Serial
Mortgage Notes;
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(iii) if such Payment Date is the maturity date for any Serial
Mortgage Notes, to pay from the Initial Revenue Account and then from the
Equity Account, in each case to the extent of the funds available therein,
the aggregate amount of principal then due and payable on such Serial
Mortgage Notes to the holders of such Serial Mortgage Notes, ratably in the
proportion that the amount of such principal then due under each such
Serial Mortgage Note bears to the aggregate amount of such principal then
due under all such Serial Mortgage Notes;
(iv) to pay first from the Initial Revenue Account and then from the
Equity Account, in each case to the extent of the funds available therein,
all interest then due and payable on the Allocated Principal Amount of Term
Mortgage Notes for each Vessel then subject to an Initial Charter through
its first optional termination date to the holders of the Term Mortgage
Notes, ratably in the proportion that the amount of such payment then due
under each such Term Mortgage Note bears to the aggregate amount of the
payments then due under all such Term Mortgage Notes;
(v) to deposit into the Operating Account the amount of the Recurring
Fees and Taxes then due and payable, or which will become due and payable
prior to the next succeeding Payment Date for each Vessel after the first
optional termination date for the related Initial Charter, first from the
Second Revenue Account, then from the Termination Account and then from the
Equity Account, in each case to the extent of the funds available therein;
(vi) to pay first from the Second Revenue Account, then from the
Termination Account and then from the Equity Account, in each case to the
extent of the funds available therein, all interest then due and payable on
(A) the Allocated Principal Amount of the Term Mortgage Notes for each
Vessel subject to an Initial Charter after the first optional termination
date thereof and (B) on the Allocated Principal Amount of the Term Mortgage
Notes for each Vessel not subject to an Initial Charter to the holders of
the Term Mortgage Notes, ratably in the proportion that the amount of such
payment then due under each such Term Mortgage Note bears to the aggregate
amount of the payments then due under all such Term Mortgage Notes;
(vii) (A) if such Payment Date is a sinking fund redemption date or a
date for the payment of principal on the Term Mortgage Notes, to pay first
from the Sinking Fund Reserve Account, then from the Second Revenue
Account, then from the Termination Account and then from the Equity
Account, in each case to the extent of the funds available therein, the
aggregate sinking fund redemption amount or amount of principal then due
and payable on the Term Mortgage Notes, ratably, in the case of payment due
on maturity, in the proportion that the amount of such payment then due
under each such Term Mortgage Note bears to the aggregate amount of the
payment
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then due under all such Term Mortgage Notes and (B) if such Payment Date is
not a sinking fund redemption date or a date for the payment of principal
on the Term Mortgage Notes, to deposit into the Sinking Fund Reserve
Account first from the Second Revenue Account, then from the Termination
Account and then from the Equity Account, in each case to the extent of the
funds available therein, an amount, if any, equal to one-half of the
aggregate sinking fund redemption amount or amount of principal due and
payable on the Term Mortgage Notes on the next succeeding Payment Date;
(viii) to pay first from the Initial Revenue Account and then from
the Equity Account, in each case to the extent of the funds available
therein, to the Indenture Trustees, the Collateral Trustee and the
Designated Representative, respectively, the portion of the aggregate
amount of the fees and expenses then due under the Indentures to the
Indenture Trustees, under the Collateral Agreement to the Collateral
Trustee and the Designated Representative's Fee, calculated by multiplying
the aggregate amount of such fees and expenses by a fraction, the numerator
of which is the number of Vessels then subject to Initial Charters through
their respective first optional termination date and the denominator of
which is the total number of Vessels then subject to a Mortgage;
(ix) to pay to the Indenture Trustees, the Collateral Trustee and the
Designated Representative, respectively, first from the Second Revenue
Account, then from the Termination Account and then from the Equity
Account, in each case to the extent of the funds therein, the portion of
the aggregate amount of the fees and expenses then due under the Indentures
to the Indenture Trustees, under the Collateral Agreement to the Collateral
Trustee and the Designated Representative's Fee, calculated by multiplying
the aggregate amount of such fees and expenses by a fraction, the numerator
of which is the number of Vessels after the first optional termination date
for the respective Initial Charters and the denominator of which is the
total number of Vessels then subject to a Mortgage;
(x) to deposit into the Operating Account first from the Initial
Revenue Account and then from the Equity Account, to the extent of the
funds available therein, the Management Fee and the Technical Advisor's Fee
then due and payable for each Vessel then subject to an Initial Charter
through its first optional termination date;
(xi) to deposit into the Operating Account first from the Second
Revenue Account, then from the Termination Account and then from the Equity
Account, in each case to the extent of the funds available therein, the
Management Fee and the Technical Advisor's Fee then due and payable for
each Vessel after the first optional termination date for the related
Initial Charter;
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(xii) if such Payment Date is an Equity Transfer Date, to withdraw
from the Initial Revenue Account, to the extent funds are available, and to
deposit into the Equity Account the Equity Remainder for each Vessel then
subject to an Initial Charter through its first optional termination date;
and
(xiii) if such Payment Date is an Equity Transfer Date, to withdraw
first from the Second Revenue Account in each case to the extent of the
funds available therein, and to deposit into the Equity Account the Equity
Remainder for each Vessel after the first optional termination date for the
related Initial Charter.
After the foregoing payments have been made, the Collateral Trustee
shall invest (and reinvest, as applicable) any balance remaining in each of the
Initial Revenue Account (if such Payment Date is not the date upon which the
Serial Mortgage Notes are paid in full), the Second Revenue Account, the Equity
Account, the Termination Account and the Sinking Fund Reserve Account in
Permitted Investments that will mature on or before the next succeeding Payment
Date.
On the final maturity date for the Serial Mortgage Notes, after all
payments have been made in full to the holders of the Serial Mortgage Notes, the
Collateral Trustee will transfer any balance remaining in the Initial Revenue
Account to the Second Revenue Account.
(c) On each Payment Date after ________, 2006, the Collateral Trustee
shall withdraw funds first from the Sinking Fund Reserve Account (only in the
case of clause (iii)(A) below), then from the Second Revenue Account, then from
the Termination Account and then from the Equity Account, in each case to the
extent of the funds available therein:
(i) to deposit into the Operating Account the Recurring Fees and Taxes
then due and payable for each Vessel, or which will become due and payable
prior to the next succeeding Payment Date;
(ii) to pay all interest then due and payable on the Term Mortgage
Notes to the Holders of the Term Mortgage Notes, ratably in the proportion
that the amount of such payment then due under each Term Mortgage Note
bears to the aggregate amount of the payments then due under all such Term
Mortgage Notes;
(iii) (A) if such Payment Date is a sinking fund redemption date or a
date for the payment of principal on the Term Mortgage Notes, to pay the
aggregate sinking fund redemption amount or amount of principal then due
and payable on the Term Mortgage Notes, ratably, in the case of payment due
on maturity, in the proportion that the amount of such payment then due
under each such Term Mortgage Note bears to the aggregate amount of the
payment
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then due under all such Term Mortgage Notes and (B) if such Payment Date is
not a sinking fund redemption date or a date for the payment of principal
on the Term Mortgage Notes, to deposit into the Sinking Fund Reserve
Account an amount, if any, equal to one-half of the aggregate sinking fund
redemption amount or amount of principal due and payable on the Term
Mortgage Notes on the next succeeding Payment Date;
(iv) to pay to the Term Indenture Trustee, the Collateral Trustee and
the Designated Representative, respectively, the fees and expenses then due
and payable under the Term Indenture to the Term Indenture Trustee and
under the Collateral Agreement to the Collateral Trustee, and the
Designated Representative's Fee;
(v) to deposit into the Operating Account, the Management Fee and the
Technical Advisor's Fee then due and payable for each Vessel; and
(vi) if such Payment Date is an Equity Transfer Date, to the extent
funds are available, to deposit the Equity Remainder for each Vessel into
the Equity Account.
After the foregoing payments have been made, the Collateral Trustee will invest
(and reinvest, as applicable) any balance remaining in each of the Sinking Fund
Reserve Account, the Second Revenue Account, the Equity Account and the
Termination Account in Permitted Investments that will mature on or before the
next succeeding Payment Date. If so directed by California Petroleum and if no
Indenture Event of Default has occurred and is continuing, the Collateral
Trustee will purchase Term Mortgage Notes in the open market from funds, if any,
available in the Sinking Fund Reserve Account, provided that (a) the purchase
price of such Term Mortgage Notes is less than 100% of the principal amount
thereof plus accrued and unpaid interest to the date of such purchase and (b)
such Term Mortgage Notes are used to satisfy California Petroleum's sinking fund
obligations on the Term Mortgage Notes on the next succeeding Payment Date.
(d) On each Payment Date occurring after the date on which each
Vessel either (i) has been sold, (ii) is subject to an Acceptable Replacement
Charter or (iii) is subject to an Initial Charter for which the last optional
termination date has occurred and has not been exercised, the Collateral Trustee
shall if so directed by California Petroleum disburse excess funds contained in
the Second Revenue Account and Termination Account to the Owners, pro rata in
proportion to the amount of such funds deposited in such Trust Accounts in
respect of such Owner's Vessel. For purposes of this Section 3.03(d), amounts
contained in the Second Revenue Account and Termination Account shall on any
date of determination be deemed excess funds to the extent, if any, that
charterhire payments under all Initial Charters and Acceptable Replacement
Charters then in effect during the non-cancellable term of such charters, after
giving effect to (1) any "gross up" of such amounts as a result of
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any withholding tax on such charterhire payments, (2) the amounts then held in
the Termination Account, (3) the amounts then held in the Second Revenue Account
and (4) all fees and expenses, if any, incurred but unpaid in connection with
the recharter of the Vessels, provide sufficient funds for the payment in full
when due of (A) sinking fund payments and payments of principal and interest on
the then Outstanding Term Mortgage Notes in accordance with the revised schedule
of sinking fund and principal payments that is applicable on such date of
determination, (B) the amount of Recurring Fees and Taxes for all such Vessels,
(C) the amount of Management Fees and Technical Advisor's Fees for all such
Vessels, (D) the amount of fees and expenses of the Indenture Trustees, the
Collateral Trustee and the Designated Representative and (E) an amount at least
equal to 30% of the estimated amounts, on a per annum basis, referred to in
clauses (B), (C) and (D) above for miscellaneous or unexpected expenses.
Section 3.04 Application of Moneys in the Collateral Account. Any moneys
held by the Collateral Trustee in the Collateral Account pursuant to clause (i)
of the first paragraph of Section 3.01(g) or the second paragraph of Section
3.01(g) shall, to the extent available for distribution (it being understood
that the Collateral Trustee may liquidate Permitted Investments prior to
maturity in order to make a distribution pursuant to this Section 3.04), be
distributed by the Collateral Trustee on each Distribution Date in the following
order of priority:
First: to the Collateral Trustee for any due and unpaid Trustee Fees
and fees due to the Indenture Trustees and then to all reasonable expenses
and charges, including the expenses of any taking, attorney's fees, court
costs and other expenses or advances made or incurred by or on behalf of
the Collateral Trustee in connection with the ascertainment or protection
of its rights and the pursuance of its remedies hereunder or under any of
the Security Documents (including, without limitation, the reasonable fees
and disbursements of counsel);
Second: to the Indenture Trustees in an amount equal to the due and
unpaid interest on the Serial Mortgage Notes and Term Mortgage Notes
Outstanding for payment of such due and unpaid interest and, if such money
shall be insufficient to pay all such amounts in full, then ratably to the
applicable Indenture Trustees in proportion to the due and unpaid amounts
thereof on such Distribution Date;
Third: to the Indenture Trustees in an amount equal to the due and
unpaid principal on the Serial Mortgage Notes and Term Mortgage Notes
Outstanding for payment of such due and unpaid principal and, if such money
shall be insufficient to pay all such amounts in full, then ratably to the
applicable Indenture Trustees in proportion to the due and unpaid amounts
thereof on such Distribution Date;
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Fourth: to each of the Indenture Trustees in an amount equal to all
other sums which constitute Secured Obligations then due and payable and,
if such moneys shall be insufficient to pay such sums in full, then ratably
to the Indenture Trustees in proportion to such sums; and
Fifth: any surplus to the Owners or their successors or assigns or to
whomsoever may be lawfully entitled to receive the same or as a court of
competent jurisdiction may direct.
Any moneys held by the Collateral Trustee in the Collateral Account
pursuant to clause (ii) of the first paragraph of Section 3.01(g) shall be
applied by the Collateral Trustee to the purposes for which they were paid or
held pursuant to the applicable provisions of the Security Documents.
In the case of an Event of Default under the Term Indenture, any
moneys held by the Collateral Trustee in the Termination Account shall be
applied by the Collateral Trustee as set forth above in subparagraphs First
through Fourth (with any excess deposited into the Termination Account),
provided that no such funds shall be paid to the Serial Indenture Trustee for
its benefit or for the benefit of holders of the Serial Mortgage Notes.
Section 3.05 Collateral Trustee's Calculations. In making the
determinations and allocations required by this Article Three, the Collateral
Trustee may rely upon information supplied by the Indenture Trustees as to
amounts payable with respect to Secured Obligations arising under or with
respect to the Indentures or the Notes issued thereunder, and the Collateral
Trustee shall have no liability to California Petroleum or any of the Secured
Parties for actions taken in reliance on such information. All distributions
made by the Collateral Trustee pursuant to this Article Three shall (subject to
any decree of any court of competent jurisdiction) be final, and the Collateral
Trustee shall have no duty to inquire as to the application of any amounts so
distributed. However, if at any time the Collateral Trustee determines that an
allocation or distribution previously made pursuant to this Article Three was
based on a mistake of fact, the Collateral Trustee may in its discretion, but
shall not be obligated to, adjust subsequent allocations and distributions
thereunder so that, on a cumulative basis, the Secured Parties receive the
distributions to which they would have been entitled if such mistake of fact had
not been made.
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ARTICLE FOUR
AGREEMENTS WITH COLLATERAL TRUSTEE
The Indenture Trustees and California Petroleum agree as follows:
Section 4.01 Delivery of Secured Instruments and Security Documents.
California Petroleum shall deliver to the Collateral Trustee true and complete
copies of all Secured Instruments in effect as of the date this Collateral
Agreement shall become effective, and shall deliver to the Collateral Trustee,
promptly upon the execution thereof, a true and complete copy of each Secured
Instrument and all amendments, modifications or supplements to any Secured
Instrument entered into after such time. California Petroleum shall deliver to
the Collateral Trustee the counterpart of each Security Document marked "Secured
Party's Original".
Section 4.02 Information as to Loan Agreements and Indenture Trustees.
The Indenture Trustees shall deliver to the Collateral Trustee, on the date this
Collateral Agreement becomes effective and from time to time upon request of the
Collateral Trustee, a list setting forth as of a date not more than 30 days
prior to the date of such delivery, the aggregate unpaid principal amount of the
Serial Loans and the Term Loan for each Owner under the related Loan Agreements
and the name and address of the Indenture Trustees. In addition, each Indenture
Trustee shall promptly notify the Collateral Trustee of any change in the
identity of such Indenture Trustee.
Section 4.03 Compensation and Expenses. California Petroleum shall on
demand pay or reimburse the Collateral Trustee for (i) reasonable compensation
to the Collateral Trustee, to the extent permitted by law (which shall not be
limited by any provision of law in regard to compensation of fiduciaries or of a
trustee of an express trust), for its services hereunder in administering the
Trust Estate and (ii) all of the reasonable costs and expenses of the Collateral
Trustee (including, without limitation, the reasonable compensation and expenses
and disbursements of its counsel and of all agents and other persons not
regularly in its employ) (A) in connection with the preparation, execution and
delivery of this Collateral Agreement or the other Security Documents, any
waiver or consent thereunder, any modification or termination thereof, or any
Default or alleged Default; (B) if an Indenture Event of Default occurs, in
connection with such Indenture Event of Default and collection, bankruptcy,
insolvency and other enforcement proceedings relating thereto; (C) in connection
with the administration or protection of the Trust Estate, the sale or other
disposition of any Collateral or the preservation, protection or defense of the
Collateral Trustee's rights under the Security Documents or in and to the Trust
Estate; or (D) in connection with any removal pursuant to subsection 6.07(a).
In addition, California Petroleum agrees to indemnify the Collateral Trustee
against, and reimburse it for, the net amount of taxes (after taking account of
any deduction, credit or other tax reduction or benefit available by reason of
the imposition of any such tax)
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in any jurisdiction in which the Collateral Trustee would not otherwise be
subject to tax except by reason of its acting as mortgagee or secured party (and
not as owner or operator) under any Security Document (directly or through
agents, separate trustees or co-trustees); provided that such indemnification
for taxes (a) shall apply only (i) in respect of taxes attributable to the
performance of the Collateral Trustee's obligations as Collateral Trustee
hereunder and (ii) to the extent that the Collateral Trustee, using reasonable
efforts, shall have been unable to avoid or minimize the same as contemplated by
Section 6.10 and (b) shall in no event cover any federal, state, local or other
taxes imposed upon the Collateral Trustee with respect to or measured by its net
income or profits. The obligations of California Petroleum under this Section
4.03 shall survive the termination of the other provisions of this Collateral
Agreement (provided that such obligations shall no longer be secured by any Lien
on the Collateral).
Section 4.04 Stamp, Excise and Other Similar Taxes. California Petroleum
shall indemnify and hold harmless the Collateral Trustee from and against any
present or future claim for liability for any stamp, documentary, excise,
recording, transfer or any other similar tax and any penalties or interest with
respect thereto, which may be assessed, levied or collected by any jurisdiction
in connection with any Security Document, any Secured Obligations, the Trust
Estate or any Collateral or the sale or other disposition thereof. The
obligations of California Petroleum under this Section 4.04 shall survive the
termination of the other provisions of this Collateral Agreement (provided that
such obligations shall no longer be secured by any Lien on the Collateral).
Section 4.05 Filing Fees, Etc. California Petroleum shall upon demand pay
or reimburse the Collateral Trustee for any and all costs and expenses in
respect of any and all search, filing, recording and registration and similar
fees, taxes, charges, costs and expenses in connection with the filing,
recording, registration, perfection or termination of any Security Document, any
financing statement or other document relating thereto, or any Lien contemplated
or perfected thereby and all costs and expenses for any Lien, financing
statement, title or other similar search relating to the Collateral, California
Petroleum, any Owner or any other Person owning or holding any Collateral or any
interest therein. The obligations of California Petroleum under this Section
4.05 shall survive the termination of the other provisions of this Collateral
Agreement (provided that such obligations shall no longer be secured by any Lien
on the Collateral).
Section 4.06 Indemnification. (a) California Petroleum shall indemnify,
and hold harmless the Collateral Trustee from and against any and all
liabilities, obligations, losses, damages, penalties, judgments, actions, suits,
proceedings, reasonable costs and expenses (including reasonable fees and
disbursements of counsel) of any kind whatsoever which may be incurred by the
Collateral Trustee in connection with any investigative, administrative or
judicial proceeding (whether or not the Collateral Trustee is designated a party
to such proceeding) relating to the Trust Estate, the
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Collateral, the Security Documents or the Secured Instruments, provided that the
Collateral Trustee shall not have the right to be indemnified hereunder for its
own negligence or bad faith as determined by a court of competent jurisdiction.
In any suit, proceeding or action brought by the Collateral Trustee under or
with respect to any contract, agreement, interest or obligation constituting
part of the Collateral for any sum owing thereunder, or to enforce any
provisions thereof, California Petroleum agrees to save, indemnify and keep the
Collateral Trustee harmless from and against all expense, loss or damage
suffered by reason of any defense, setoff, counterclaim, recoupment or reduction
of liability whatsoever of California Petroleum thereunder, arising out of a
breach by California Petroleum of any obligation thereunder or arising out of
any other agreement, indebtedness or liability at any time owing to or in favor
of California Petroleum or its successors from California Petroleum, and all
such obligations of California Petroleum shall be and remain enforceable against
and only against California Petroleum and shall not be enforceable against the
Collateral Trustee.
(b) In addition to, but without duplication of, its obligations under
subsection (a) above, California Petroleum shall indemnify and hold harmless the
Collateral Trustee from and against any and all losses, damages and expenses
incurred by the Collateral Trustee as a result of any oil or other environmental
damage resulting from the operation of any Vessel, including, without
limitation, any liability under the Oil Pollution Act of 1990, as amended, or
the laws of any other jurisdiction relating to oil spills.
(c) The agreements in this Section 4.06 shall survive the termination
of the other provisions of this Collateral Agreement.
Section 4.07 Representations and Warranties; Further Assurances. Whether
or not an Enforcement Notice is then in effect, California Petroleum will, from
time to time, execute, deliver, file and record any statement, assignment,
instrument, document, mortgage, agreement or other paper and take any other
action, (including, without limitation, any filings of financing or continuation
statements under the UCC) that from time to time may be necessary or desirable,
or that the Collateral Trustee, any Indenture Trustee or the Majority
Noteholders may request, in order to create, preserve, perfect, confirm or
validate the Security Interests or to enable the Collateral Trustee and the
Secured Parties to obtain the full benefits of this Agreement, or to enable the
Collateral Trustee to exercise and enforce any of its rights, powers and
remedies hereunder with respect to any of the Collateral. The Collateral
Trustee shall be entitled to withdraw from the Operating Account amounts
sufficient to pay the costs of, or incidental to, any recording or filing of any
financing or continuation statement, assignment, instrument, document, mortgage,
agreement or other paper concerning the Collateral. If at any time California
Petroleum shall refuse to sign promptly any financing or continuation statement,
California Petroleum also hereby authorizes the Collateral Trustee to sign and
to file such financing or continuation statement without the signature of
California Petroleum to the extent permitted by
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applicable law. California Petroleum agrees that a photographic, photostatic or
other reproduction of any Security Document or any Mortgage or of a financing
statement is sufficient as a financing statement.
Section 4.08 Other Agreements of California Petroleum. (a) California
Petroleum will not change (A) the location of its chief executive office or
chief place of business, (B) the counties where it keeps or holds any Collateral
in its possession at any time or any records relating to the Collateral or (C)
the number of counties in the Commonwealth of Massachusetts in which it has a
place of business unless, in each case, it shall have given the Collateral
Trustee prior notice thereof and (at its own cost and expense) delivered an
opinion of counsel with respect thereto prior to taking such action in customary
form confirming the continued validity and perfection under the UCC (to the
extent such Security Interests may be perfected under the UCC) of the Security
Interests granted hereby (which opinion may contain such exceptions and
assumptions as are customary in a legal opinion of such type). California
Petroleum shall not in any event change the location of any Collateral in its
possession at any time if such change would cause the Security Interests in such
Collateral to lapse or cease to be perfected unless prior to taking such action
it shall have taken such actions as may be necessary to prevent such lapse in
perfection or failure to be perfected.
(b) California Petroleum will not dispose of any Collateral in its
possession at any time or create, incur or suffer to exist any Lien with respect
to any Collateral.
(c) California Petroleum will, promptly upon request, provide to the
Collateral Trustee all information and evidence it may reasonably request
concerning the Collateral to enable the Collateral Trustee to enforce the
provisions of this Collateral Agreement.
(d) California Petroleum will at all times do nothing to impair the
rights of the Collateral Trustee and the Secured Parties in and to the
Collateral.
(e) California Petroleum will permit the Collateral Trustee, the
Indenture Trustees or any agent designated by any of them, from time to time
during normal business hours, to inspect, audit, check and make abstracts from
California Petroleum's books, records and other papers relating to the
Collateral.
(f) If any Collateral is at any time in the possession or control of
any warehouseman, bailee or any agent or processor of California Petroleum,
California Petroleum shall notify such warehouseman, bailee, agent or processor
of the Security Interest created under the Security Documents and to hold all
such Collateral for the account of the Collateral Trustee subject to the
instructions of the Collateral Trustee.
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(g) Except as otherwise provided herein, California Petroleum will
not amend any Security Document without the prior written consent of the
Collateral Trustee as instructed by the Indenture Trustees or the Applicable
Secured Parties.
Section 4.09 Lien for Fees. Notwithstanding anything to the contrary
herein, the Collateral Trustee shall have a Lien upon the Collateral ranking
junior to the Lien of the Noteholders, but senior to all other liens, if any, to
the extent of Trustee Fees payable and unpaid. The Collateral Trustee shall not
institute any suit in equity, action at law or other judicial or administrative
proceeding seeking the enforcement of such Lien until after the Notes have been
paid in full.
ARTICLE FIVE
RELEASES; NON-DISTURBANCE
Section 5.01 Releases. (a) In connection with the termination of the
Liens created by the Security Documents in whole or in part or in connection
with any disposition of Collateral permitted hereby or by any Security Document,
the Collateral Trustee will at the request of California Petroleum as promptly
as practicable release from the Lien created by the Security Documents (x) all
the Collateral (in connection with a termination of all of the Security
Interests) or (y) the relevant Collateral and deliver such Collateral that is in
its possession to California Petroleum and execute and deliver such documents,
certificates or other instruments as California Petroleum shall reasonably
request to evidence the termination of the Security Interests or the release of
such Collateral, as the case may be. Any such request shall be in writing
signed by California Petroleum, shall describe the property to be released in
reasonable detail, and shall state that such release is or will be in accordance
with the Secured Instruments and the Security Documents. Each release
instrument to be delivered pursuant to any provision of this Collateral
Agreement shall be in such form as is reasonably requested by California
Petroleum and, where appropriate, shall be in recordable form or, in the case of
UCC Termination Statements, in the statutorily-prescribed form.
Section 5.02 Non-Disturbance. So long as no Charter Event of Default
shall have occurred and be continuing under any Initial Charter, Acceptable
Replacement Charter or other charter, the Security Interest of the Collateral
Trustee in such Initial Charter, Acceptable Replacement Charter or other charter
and the related Vessel created hereby shall be subject to the rights, if any, of
Chevron Transport under such Initial Charter or the charterer under such
Acceptable Replacement Charter or other charter, as the case may be.
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ARTICLE SIX
THE COLLATERAL TRUSTEE
Section 6.01 Acceptance of Trust. The Collateral Trustee, for itself and
its successors, hereby accepts the trust created by this Collateral Agreement
upon the terms and conditions hereof.
Section 6.02 Exculpatory Provisions. (a) The Collateral Trustee shall
not be responsible in any manner whatsoever for the correctness of any recitals,
statements, representations or warranties, except its own, in the Security
Documents. The Collateral Trustee makes no representations as to the value or
condition of the Trust Estate or any part thereof, or as to the title of
California Petroleum or any Owner thereto or as to the security afforded by any
Security Document, or as to the validity, execution (except its own execution),
enforceability, legality or sufficiency of any of the Security Documents or the
Secured Obligations, and the Collateral Trustee shall incur no liability or
responsibility in respect of any such matters. The Collateral Trustee shall not
be responsible for insuring the Collateral or for the payment of taxes, charges
or assessments or discharging of liens upon the Collateral or otherwise as to
the maintenance of the Collateral, except that if the Collateral Trustee takes
possession of any Collateral, the Collateral Trustee shall use reasonable care
in the preservation of the Collateral in its possession.
(b) The Collateral Trustee shall not be required to ascertain or inquire
as to the performance by California Petroleum or any Owner of any of the
covenants or agreements contained in any Security Document or Secured
Instrument. Whenever it is necessary, or in the opinion of the Collateral
Trustee advisable, for the Collateral Trustee to ascertain the amount of Secured
Obligations then held by Secured Parties, the Collateral Trustee may rely on
certificates of the Serial Indenture Trustee or the Term Indenture Trustee, as
the case may be, with respect to Secured Obligations arising under or with
respect to the Serial Indenture and the Term Indenture, respectively, and the
Notes issued thereunder.
(c) The Collateral Trustee shall be under no obligation or duty to take
any action hereunder or under any Security Document unless the Collateral
Trustee shall have received security or indemnity satisfactory to it against the
costs, expenses and liabilities, including any applicable taxes, which might be
incurred thereby.
(d) Notwithstanding any other provision of this Collateral Agreement or
any other Security Document, the Collateral Trustee, in its individual capacity,
shall not be personally liable for any action taken or omitted to be taken by it
in accordance with the Security Documents except for its own negligence or bad
faith.
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(e) The Collateral Trustee shall have the same rights with respect to any
Secured Obligation held by it as any other Secured Party and may exercise such
rights as though it were not the Collateral Trustee hereunder, and may accept
deposits from, lend money to, and generally engage in any kind of banking or
trust business with California Petroleum, any Owner, Chevron Transport or
Chevron, as if it were not the Collateral Trustee.
Section 6.03 Delegation of Duties. The Collateral Trustee may execute any
of the trusts or powers hereof and perform any duty hereunder either directly or
by or though agents or attorneys-in-fact. The Collateral Trustee shall be
entitled to advice of counsel and other experts concerning all matters
pertaining to such trusts, powers and duties. The Collateral Trustee shall not
be responsible for the negligence or misconduct of any agents or attorneys-in-
fact selected by them in good faith without negligence.
Section 6.04 Reliance by Collateral Trustee. (a) Whenever in the
administration of the Security Documents the Collateral Trustee shall deem it
necessary or desirable that a factual matter be proved or established in
connection with the Collateral Trustee taking, suffering or omitting any
actions, such matter (unless other evidence in respect thereof is herein
specifically prescribed) may be deemed to be conclusively proved or established
by a certificate of an Authorized Financial Officer of California Petroleum
delivered to the Collateral Trustee, and such certificate shall be full warrant
to the Collateral Trustee for any action taken, suffered or omitted in reliance
thereon, subject, however, to the provisions of Section 6.05.
(b) The Collateral Trustee may consult with counsel and other experts, and
any opinion of counsel or written opinion from such other expert shall be full
and complete authorization and protection in respect of any action taken or
suffered by it under any Security Document in accordance therewith. The
Collateral Trustee shall have the right at any time to seek instructions
concerning the administration of the Security Documents from any court of
competent jurisdiction.
(c) The Collateral Trustee may rely, and shall be fully protected in
acting, upon any resolution, statement, certificate, instrument, opinion,
report, notice, request, consent, order, bond or other paper or document which
it has no reason to believe to be other than genuine and to have been signed or
presented by the proper party or parties or, in the case of cables, facsimile
transmissions and telexes, to have been sent by the proper party or parties. In
the absence of negligence or bad faith, the Collateral Trustee may conclusively
rely, as to the truth of the statements and the correctness of the opinions
expressed therein, upon any certificates or opinions furnished to the Collateral
Trustee and conforming to the requirements of any Security Document.
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(d) The Collateral Trustee shall not be under any obligation to exercise
any of the rights or powers vested in the Collateral Trustee by this Collateral
Agreement (including, without limitation, Article Three) and the other Security
Documents, at the request or direction of the Indenture Trustees or the Majority
Noteholders pursuant to this Collateral Agreement or otherwise, unless the
Collateral Trustee shall have been provided adequate security and indemnity
against the costs, expenses and liabilities which may be incurred by it in
connection therewith, including such reasonable advances as may be requested by
the Collateral Trustee.
(e) Upon any application or demand by an Owner (except any such
application or demand which is expressly permitted to be made orally) to the
Collateral Trustee to take or permit any action under any of the provisions of
any Security Document, such Owner shall furnish to the Collateral Trustee a
certificate of an Authorized Officer of such Owner stating that all conditions
precedent, if any, provided for in any relevant Security Document or any Secured
Instrument relating to the proposed action have been complied with, and in the
case of any such application or demand as to which the furnishing of any
document is specifically required by any provision of a Security Document
relating to such particular application or demand, such additional document
shall also be furnished.
(f) Any opinion of counsel may be based, insofar as it relates to factual
matters, upon a certificate of an appropriate Authorized Officer or
representations made by an appropriate Authorized Officer in a writing delivered
to the Collateral Trustee.
(g) In any case in which the Collateral Trustee shall be required or
permitted to determine whether any proceeds or avails of the sale or other
disposition of any property shall be allocated to the Collateral Account or
another Trust Account, or otherwise to make any determination as to the extent
to which the Lien created by any Security Document secures any Secured
Obligations, the Collateral Trustee is authorized, at the cost and expense of
the Trust Estate and without any direction from, or requirements for consent of
or authorization by, the Indenture Trustees or the Applicable Secured Parties,
to institute proceedings in a court of competent jurisdiction for the obtaining
of any authoritative determination of such matter. If the Collateral Trustee
institutes any such proceeding, it shall give prompt written notice thereof to
California Petroleum and the Indenture Trustees and shall afford each of them
opportunity to participate in such proceeding.
Section 6.05 Limitations on Duties of Collateral Trustee. (a) Unless an
Enforcement Notice is in effect, the Collateral Trustee shall be obligated to
perform such duties and only such duties as are specifically set forth in the
Security Documents, and no implied covenants or obligations shall be read into
any Security Document against the Collateral Trustee. If and so long as an
Enforcement Notice is in effect, the Collateral Trustee shall, subject to the
provisions of subsection 2.04(b), exercise the rights and powers vested in it by
the Security Documents, and shall not
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be liable with respect to any action taken by it, or omitted to be taken by it,
in accordance with the direction of the Indenture Trustees.
(b) Except as herein otherwise expressly provided, the Collateral Trustee
shall not be under any obligation to take any action which is discretionary with
the Collateral Trustee under the provisions of any Security Document except upon
the written request of the Applicable Secured Parties. The Collateral Trustee
shall make available for inspection and copying by any Indenture Trustee each
certificate or other paper furnished to the Collateral Trustee by California
Petroleum under or in respect of any Security Document or any of the Collateral.
(c) No provision of any Security Document shall be deemed to impose any
duty or obligation on the Collateral Trustee to perform any act or acts or
exercise any right, power, duty or obligation conferred or imposed on it, in any
jurisdiction in which it shall be illegal, or in which the Collateral Trustee
shall be unqualified or incompetent, to perform any such act or acts or to
exercise any such right, power, duty or obligation.
Section 6.06 Moneys To Be Held in Trust. All moneys received by the
Collateral Trustee under or pursuant to any provision of any Security Document
(except Trustee Fees) shall be held in trust for the purposes for which they
were paid or are held.
Section 6.07 Resignation and Removal of the Collateral Trustee. (a) The
Collateral Trustee may at any time, by giving written notice to California
Petroleum, the Owners, the Manager and the Indenture Trustees, resign and be
discharged of the responsibilities hereby created, such resignation to become
effective upon (i) the appointment of a successor Collateral Trustee by
California Petroleum, (if no Enforcement Notice is then in effect) or the
Applicable Secured Parties (if an Enforcement Notice is then in effect), (ii)
the acceptance of such appointment by such successor Collateral Trustee and
(iii) if no Enforcement Notice is then in effect, the approval of such successor
Collateral Trustee evidenced by one or more instruments signed by the Indenture
Trustees, which approval shall not unreasonably be withheld. If no successor
Collateral Trustee shall be appointed and shall have accepted such appointment
within 60 days after the Collateral Trustee gives the aforesaid notice of
resignation, the resigning Collateral Trustee or any Indenture Trustee may apply
to any court of competent jurisdiction to appoint a successor Collateral Trustee
to act until such time, if any, as a successor Collateral Trustee shall have
been appointed as provided in this Section 6.07. Any successor so appointed by
such court shall immediately and without further act be superseded by any
successor Collateral Trustee appointed as provided in this Section 6.07.
California Petroleum, at the direction of the Owners, (if no Enforcement Notice
is then in effect) or the Applicable Secured Parties (if an Enforcement Notice
is then in effect) may, at any time upon giving 10 days' prior written notice
thereof to the Indenture Trustees, remove the Collateral Trustee and California
Petroleum, at the direction of the Owners, (if no Enforcement
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Notice is then in effect but subject to the approval referred to in clause (iii)
of the first sentence hereof) or the Applicable Secured Parties (if an
Enforcement Notice is then in effect) may appoint a successor Collateral Trustee
such removal to be effective upon the acceptance of such appointment by the
successor. Any Collateral Trustee shall be entitled to Trustee Fees to the
extent incurred or arising, or relating to events occurring, before or in
connection with such resignation or removal.
(b) If at any time the Collateral Trustee shall resign or be removed,
whether pursuant to subsection 6.07(a) or otherwise, or otherwise become
incapable of acting, the powers, duties, authority and title of the predecessor
Collateral Trustee shall be terminated and cancelled without any other formality
(except as may be required by applicable law) other than the appointment and
designation of a successor pursuant to subsection 6.07(a) and delivery, by the
Person or Persons who shall have appointed or procured the appointment of such
successor, of notice thereof, duly acknowledged by such successor, to the
predecessor, California Petroleum, the Owners, the Manager and the Indenture
Trustees. Such notice of appointment and designation shall be full evidence of
the right and authority to make the same and of all the facts therein recited,
and the Security Documents shall vest in such successor, without any further
act, deed or conveyance, all the estates, properties, rights, powers, trusts,
duties, authority and title of its predecessor; but such predecessor shall,
nevertheless, on the written request of the Applicable Secured Parties, the
Indenture Trustees, California Petroleum, the Manager, the Owners or the
successor, and at the expense of California Petroleum, execute and deliver an
instrument transferring to such successor all the estates, properties, rights,
powers, trusts, duties, authority and title of such predecessor under the
Security Documents and shall deliver all Collateral held by it or him or its or
his agents to such successor. Should any mortgage, conveyance or other
instrument in writing from California Petroleum be required by any successor
Collateral Trustee for more fully and certainly vesting in such successor the
estates, properties, rights, powers, trusts, duties, authority and title vested
or intended to be vested in the predecessor Collateral Trustee any and all such
mortgages, conveyances and other instruments in writing shall, on request of
such successor, be executed, acknowledged and delivered by California Petroleum.
If California Petroleum shall not have executed and delivered any such mortgage,
conveyance or other instrument within 10 days after it received a written
request from the successor Collateral Trustee to do so, or if an Enforcement
Notice is in effect, the predecessor Collateral Trustee may execute the same on
behalf of California Petroleum. California Petroleum hereby appoints any
predecessor Collateral Trustee as its agent and attorney to act for it as
provided in the next preceding sentence.
Section 6.08 Status of Successor Collateral Trustee. Every successor
Collateral Trustee appointed pursuant to Section 6.07 shall be a bank or trust
company in good standing and having power to act as Collateral Trustee
hereunder, incorporated under the laws of the United States of America or any
State thereof or the District of Columbia and having its principal corporate
trust office within the 48 contiguous States and shall also have capital,
surplus and undivided profits of not less
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than $10,000,000, if there be such an institution with such capital, surplus and
undivided profits willing, qualified and able to accept the trust hereunder upon
reasonable or customary terms.
Section 6.09 Merger of the Collateral Trustee. Any corporation into which
the Collateral Trustee may be merged, or with which it may be consolidated, or
any corporation resulting from any merger or consolidation to which the
Collateral Trustee shall be a party, shall be Collateral Trustee under the
Security Documents without the execution or filing of any paper or any further
act on the part of the parties hereto.
Section 6.10 Co-Trustee; Separate Trustee. (a) If at any time or times it
shall be necessary or prudent in order to conform to any law of any jurisdiction
in which any of the Collateral shall be located, or to avoid any violation of
law or imposition on the Collateral Trustee of taxes by such jurisdiction not
otherwise imposed on the Collateral Trustee, or the Collateral Trustee shall be
advised by counsel, satisfactory to it, that it is necessary or prudent in the
interest of the Secured Parties, or the Majority Noteholders or the Indenture
Trustees shall in writing so request, or the Collateral Trustee shall deem it
desirable for its own protection in the performance of its duties under any
Security Document, the Collateral Trustee, the Indenture Trustees and California
Petroleum as shall be necessary or prudent shall execute and deliver all
instruments and agreements necessary or proper to constitute another bank or
trust company, or one or more persons approved by the Collateral Trustee and
California Petroleum, either to act as co-trustee or co-trustees of all or any
of the Collateral under any of the Security Documents, jointly with the
Collateral Trustee originally named herein or therein or any successor
Collateral Trustee, or to act as separate trustee or trustees of any of the
Collateral. If California Petroleum shall not have joined in the execution of
such instruments and agreements within 10 days after it receives a written
request from the Collateral Trustee to do so, or if an Enforcement Notice is in
effect, the Collateral Trustee may act under the foregoing provisions of this
subsection 6.10(a) without the concurrence of California Petroleum and execute
and deliver such instruments and agreements on behalf of California Petroleum.
California Petroleum hereby appoints the Collateral Trustee as its agent and
attorney to act for it under the foregoing provisions of this subsection 6.10(a)
in either of such contingencies.
(b) Every separate trustee and every co-trustee, other than any successor
Collateral Trustee appointed pursuant to Section 6.07, shall, to the extent
permitted by law, be appointed and act and be such, subject to the following
provisions and conditions:
(i) all rights, powers, duties and obligations conferred upon the
Collateral Trustee in respect of the custody, control and management of
moneys, papers or securities shall be exercised solely by the Collateral
Trustee or any agent appointed by the Collateral Trustee;
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(ii) all rights, powers, duties and obligations conferred or imposed
upon the Collateral Trustee under the relevant Security Document or
Documents shall be conferred or imposed and exercised or performed by the
Collateral Trustee and such separate trustee or separate trustees or co-
trustee or co-trustees, jointly, as shall be provided in the instrument
appointing such separate trustee or separate trustees or co-trustee or co-
trustees, except to the extent that under any law of any jurisdiction in
which any particular act or acts are to be performed the Collateral Trustee
shall be incompetent or unqualified to perform such act or acts, or unless
the performance of such act or acts would result in the imposition of any
tax on the Collateral Trustee which would not be imposed absent such joint
act or acts, in which event such rights, powers, duties and obligations
shall be exercised and performed by such separate trustee or separate
trustees or co-trustee or co-trustees;
(iii) no power given by any Security Document to, or which it is
provided herein or therein may be exercised by, any such co-trustee or co-
trustees or separate trustee or separate trustees, shall be exercised
hereunder or thereunder by such co-trustee or co-trustees or separate
trustee or separate trustees except jointly with, or with the consent in
writing of, the Collateral Trustee, anything contained in any Security
Document to the contrary notwithstanding;
(iv) no trustee hereunder shall be personally liable by reason of any
act or omission of any other trustee hereunder; and
(v) California Petroleum and the Collateral Trustee, at any time by an
instrument in writing executed by them jointly, may accept the resignation
of or remove any such separate trustee or co-trustee and, in that case by
an instrument in writing executed by them jointly, may appoint a successor
to such separate trustee or co-trustee, as the case may be, anything
contained herein to the contrary notwithstanding. If California Petroleum
shall not have joined in the execution of any such instrument within 10
days after it receives a written request from the Collateral Trustee to do
so, or if an Enforcement Notice is in effect, the Collateral Trustee shall
have the power to accept the resignation of or remove any such separate
trustee or co-trustee and to appoint a successor without the concurrence of
California Petroleum, California Petroleum hereby appointing the Collateral
Trustee its agent and attorney to act for them in such connection in such
contingency. If the Collateral Trustee shall have appointed a separate
trustee or separate trustees or co-trustee or co-trustees as above
provided, the Collateral Trustee may at any time, by an instrument in
writing, accept the resignation of or remove any such separate trustee or
co-trustee and the successor to any such separate trustee or co-trustee
shall be appointed
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by California Petroleum and the Collateral Trustee, or by the Collateral
Trustee alone pursuant to this subsection 6.10(b).
Section 6.11 Treatment of Payee or Indorsee by Collateral Trustee;
Representatives of Secured Parties. (a) The Collateral Trustee may treat the
registered holder or, if none, the payee or indorsee of any promissory note or
bond evidencing a Secured Obligation as the absolute owner thereof for all
purposes and shall not be affected by any notice to the contrary, whether such
promissory note or bond shall be past due or not.
(b) Any Person (other than the Indenture Trustees) which shall be
designated as the duly authorized representative of one or more Secured Parties
to act as such in connection with any matters pertaining to this Collateral
Agreement or the Collateral shall present to the Collateral Trustee such
documents, including, without limitation, opinions of counsel, as the Collateral
Trustee may reasonably require, in order to demonstrate to the Collateral
Trustee the authority of such Person to act as the representative of such
Secured Parties.
Section 6.12 No Bankruptcy Petition Against California Petroleum.
The Collateral Trustee hereby covenants and agrees that, prior to the date which
is one year and one day after the payment in full of all outstanding Notes, it
will not institute against, or join any other Person in instituting against,
California Petroleum any bankruptcy, reorganization, arrangement, insolvency or
liquidation proceeding or other similar proceeding under the laws of the United
States or any state of the United States.
ARTICLE SEVEN
MISCELLANEOUS
Section 7.01 Notices. Unless otherwise specified herein, all notices,
requests, demands or other communications given to California Petroleum, the
Collateral Trustee or either Indenture Trustee shall be given in writing or by
telex or facsimile transmission (i) if to California Petroleum or the Collateral
Trustee, to such party at its address or telex or facsimile transmission number
specified on the signature pages hereof or any other address or telex or
facsimile transmission number which such party shall have specified as its
address or telex or facsimile transmission number for the purpose of
communications hereunder, by notice given in accordance with this Section 7.01
to the party sending such communication, (ii) if to either of the Indenture
Trustees, to it at its address specified in or pursuant to the relevant
Indenture or specified from time to time by written notice to the Collateral
Trustee, (iii) if to any Owner, to it at its address specified in or pursuant to
the Loan Agreements and (iv) if to the Manager, to it at its address specified
in or pursuant to
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<PAGE>
the Management Agreement. Each such notice, request or other communication
shall be effective (a) if given by telex, when such telex is transmitted to the
number specified in or pursuant to this Section and the appropriate answerback
is received, (b) if given by mail, 72 hours after such communication is
deposited in the mails with first class postage prepaid, registered or certified
mail, return receipt requested, addressed as aforesaid, (c) if given by
facsimile transmission, when such facsimile is transmitted to the facsimile
transmission number specified in or pursuant to this Section and telephonic
confirmation of receipt thereof is received or (d) if given by any other means,
when received at the address specified in or pursuant to this Section 7.01;
provided that any notice, request or demand to the Collateral Trustee shall not
be effective until received by the Collateral Trustee at the office designated
by it pursuant to this Section 7.01.
Section 7.02 No Waivers. No failure on the part of the Collateral
Trustee, any co-trustee, any separate trustee, either Indenture Trustee or any
Secured Party to exercise, no course of dealing with respect to, and no delay in
exercising, any right, power or privilege under any Security Document shall
operate as a waiver thereof nor shall any single or partial exercise of any such
right, power or privilege preclude any other or further exercise thereof or the
exercise of any other right, power or privilege.
Section 7.03 Amendments, Supplements and Waivers. (a) With the written
consent of the Indenture Trustees, the Collateral Trustee and California
Petroleum may, from time to time, enter into written agreements supplemental
hereto for the purpose of curing any ambiguity or correcting or supplementing
any provision contained herein or in any Security Document which may be
defective or inconsistent with any other provision contained herein or therein;
or making such other provisions in regard to matters or questions arising under
this Collateral Agreement or under any Security Document as they may deem
necessary or desirable and which shall not adversely affect the interests of the
Secured Parties;
(b) With the written consent of the Indenture Trustees, the
Collateral Trustee and California Petroleum may, from time to time, enter into
written agreements supplemental hereto for the purpose of adding to or waiving
any provision of this Collateral Agreement or changing in any manner the rights
of the Collateral Trustee, the Secured Parties or California Petroleum
hereunder; provided that no such supplemental agreement shall unless signed or
consented to by the Majority Noteholders:
(i) amend, modify or waive any provision of this Section 7.03;
(ii) change the definition of "Applicable Secured Parties,"
"Outstanding," "Majority Noteholders", "Majority Serial Noteholders,"
"Majority Term Noteholders" or "Secured Obligations" or the number
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<PAGE>
or percentage of Secured Parties required to take any action under any
Security Document;
(iii) amend, modify or waive any provision of Section 3.01, 3.02, 3.03
or 3.04 of this Collateral Agreement or change the definition of any
defined term used in any of such Sections; or
(iv) except as otherwise specifically provided herein, agree to the
release of all or substantially all of the Collateral.
Any such supplemental agreement shall be binding upon California Petroleum,
the Indenture Trustees, the Secured Parties and the Collateral Trustee and their
respective successors. The Collateral Trustee shall not enter into any such
supplemental agreement unless it shall have received a certificate of an
Authorized Financial Officer of California Petroleum and an opinion of counsel
to the effect that such supplemental agreement will not result in a breach of
any provision or covenant contained in any of the Secured Instruments.
(c) Amendments of Security Documents. The Indenture Trustees (so
long as no Enforcement Notice shall be in effect) or the Applicable Secured
Parties (so long as an Enforcement Notice shall be in effect) shall have the
exclusive authority to direct the Collateral Trustee to amend, supplement or
waive any provision of any Security Document, without any consent or approval
of, or prior notice to, any other Secured Party; provided, however, that no such
amendment, supplement or waiver shall affect the right of any Secured Party not
consenting thereto to equal and ratable security with respect to Collateral to
the extent and for the periods contemplated by this Collateral Agreement or
effect a release of Collateral which would otherwise not be permitted under the
provisions of this Collateral Agreement.
(d) Nothing in this Section 7.03 shall limit or impair the rights of
California Petroleum set forth in Article V.
Section 7.04 Headings. The table of contents and the headings of Sections
and subsections have been included herein for convenience only and should not be
considered in interpreting any of the Security Documents.
Section 7.05 Severability. Any provision of this Collateral Agreement
which is prohibited or unenforceable in any jurisdiction shall, to the fullest
extent permitted by law, not invalidate the remaining provisions hereof, and any
such prohibition or unenforceability of any provision in any jurisdiction shall
not affect the enforceability of such provision in any other jurisdiction.
Section 7.06 Successors and Assigns. This Collateral Agreement shall be
binding upon each of the parties hereto and shall inure to the benefit of each
of the parties hereto and each of the Secured Parties and their respective
successors and
49
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assigns, and nothing herein is intended or shall be construed to give any other
Person any right, remedy or claim under, to or in respect of this Collateral
Agreement or any Collateral.
Section 7.07 Governing Law. THE PROVISIONS OF THIS COLLATERAL AGREEMENT
CREATING A TRUST FOR THE BENEFIT OF THE HOLDERS OF THE SECURED OBLIGATIONS AND
SETTING FORTH THE RIGHTS, DUTIES, OBLIGATIONS AND RESPONSIBILITIES OF THE
COLLATERAL TRUSTEE HEREUNDER SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK, EXCEPT AS OTHERWISE REQUIRED BY
MANDATORY PROVISIONS OF LAW.
Section 7.08 Counterparts. This Collateral Agreement may be signed in any
number of counterparts with the same effect as if the signatures thereto and
hereto were upon the same instrument.
Section 7.09 Termination. (a) Upon (i) receipt by the Collateral Trustee
from each Indenture Trustee of a written notice stating that all of the Secured
Obligations arising under or in connection with the Indentures and the Notes
issued thereunder have been paid or deemed paid in full (which notice shall be
signed by each Indenture Trustee promptly following the payments contemplated in
this clause (i)) and (ii) the payment in full of all amounts payable to the
Collateral Trustee hereunder (exclusive of any contingent or unliquidated claims
for indemnification or reimbursement), the Liens created by the Security
Documents shall terminate forthwith and all right, title and interest of the
Collateral Trustee in and to the Trust Estate and the Collateral shall revert
and be released to California Petroleum, its successors and assigns.
(b) Upon the termination of the Collateral Trustee's security interests
and the release of the Collateral in accordance with subsection 7.09(a), the
Collateral Trustee will promptly at California Petroleum's written request, (i)
execute and deliver to California Petroleum such documents as California
Petroleum shall reasonably request to evidence the termination of such security
interest or the release of the Collateral and (ii) deliver or cause to be
delivered to California Petroleum all property of California Petroleum then held
by the Collateral Trustee or any agent thereof.
(c) This Collateral Agreement shall terminate when the security interests
granted under the Security Documents have terminated and the Collateral has been
released.
(d) Nothing herein shall be construed to prevent the Collateral Trustee
from releasing Collateral in accordance with the terms of any applicable
Security Document.
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(e) Anything in this Collateral Agreement to the contrary notwithstanding,
the trust created hereunder shall expire not later than the expiration of 21
years after the death of the last to survive of all descendants of George
Pataki, Governor of New York State, living on the date hereof.
Section 7.10 No Liability to Other Secured Parties. None of the
Secured Parties shall incur any liability to any other Secured Party with
respect to any decision or determination permitted or required to be taken or
made by it in its capacity as a Secured Party hereunder and the existence or
exercise of any right by the Majority Noteholders or the Applicable Secured
Parties to take any action or make any determination hereunder shall not impose
on any Secured Party taking or failing to take any such action or exercise such
right any duty or liability to any other Secured Party with respect thereto or
to any of the Collateral affected thereby.
Section 7.11 Immunities of Incorporators, Officers, Directors and
Stockholders of California Petroleum. No recourse under or upon any
obligation, covenant or agreement contained in this Collateral Agreement, or in
the Indentures, or in any Note, or under any judgment obtained against
California Petroleum, or by the enforcement of any assessment or by any legal or
equitable proceeding by virtue of any constitution or statute or otherwise or
under any circumstances, under or independent of this Collateral Agreement,
shall be had against (i) any incorporator, officer, director or stockholder,
past, present or future, of California Petroleum, or of any successor
corporation, or (ii) any trustee, parent, affiliate, officer, director or
stockholder, past, present or future, of any stockholder of California
Petroleum, either directly or through California Petroleum, or otherwise, and
any and all personal liability of every name and nature whether at law or in
equity, or by constitution or by statute or otherwise, of any such incorporator,
officer, director or stockholder to respond by reason of the non-payment of any
stock or any act of omission or commission on his part or otherwise, for the
payment for or to the holder of any Secured Obligation or otherwise, of any sum
that may remain due and unpaid upon any Secured Obligation, is hereby expressly
waived and released as a condition of and consideration for the execution of
this Collateral Agreement.
Section 7.12 Designated Representative. For purposes of this
Collateral Agreement, all notices, requests, demands or other communications to
be given by California Petroleum hereunder may be given by California
Petroleum's Designated Representative. Notice of the appointment of any
successor Designated Representative shall be given to the Collateral Trustee and
shall be in writing signed by California Petroleum and acknowledged by such
designated representative. The parties hereto shall be entitled to rely upon
any such notices, requests, demands and other communications given by the
Designated Representative as though the same had been given by California
Petroleum.
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IN WITNESS WHEREOF, the parties hereto have caused this Collateral
Agreement to be duly executed (by their respective authorized officers in the
case of corporate parties) as of the day and year first written above.
CALIFORNIA PETROLEUM TRANSPORT CORPORATION
By __________________________________________________
Title:
CALPETRO TANKERS (BAHAMAS I) LIMITED
By __________________________________________________
Title:
CALPETRO TANKERS (BAHAMAS II) LIMITED
By __________________________________________________
Title:
CALPETRO TANKERS (IOM) LIMITED
By __________________________________________________
Title:
CALPETRO TANKERS (BAHAMAS III) LIMITED
By __________________________________________________
Title:
52
<PAGE>
CHEMICAL TRUST COMPANY OF CALIFORNIA,
as Collateral Trustee
By __________________________________________________
Title:
CHEMICAL TRUST COMPANY OF CALIFORNIA,
as Serial Indenture Trustee
By __________________________________________________
Title:
CHEMICAL TRUST COMPANY OF CALIFORNIA,
as Term Indenture Trustee
By __________________________________________________
Title:
53
<PAGE>
EXHIBIT 4.15
______________________________________________________________________________
______________________________________________________________________________
California Petroleum Transport Corporation
and
CalPetro Tankers (Bahamas I) Limited
___________________________________
ISSUE OF ONE DEBENTURE
Dated ________ __, 1995
___________________________________
________________________________________________________________________________
________________________________________________________________________________
<PAGE>
Table of Contents
Page No.
ARTICLE I
DEFINITIONS............................. 1
ARTICLE II
COVENANT TO PAY........................... 1
Section 2.1. Covenant to Pay............................................ 1
ARTICLE III
MORTGAGE, CHARGE AND ASSIGNMENT................... 2
Section 3.1. Charge..................................................... 2
Section 3.2. Legal Securities........................................... 3
Section 3.3. Conversion of Floating Charge.............................. 3
Section 3.4. Negative Pledge............................................ 3
Section 3.5. New Accounts............................................... 3
ARTICLE IV
PRESERVATION OF SECURITY....................... 3
Section 4.1. Continuing Security........................................ 3
Section 4.2. Waiver of Defenses......................................... 4
Section 4.3. Immediate Recourse......................................... 5
Section 4.4. Preservation of Rights..................................... 5
Section 4.5. Additional Security........................................ 5
Section 4.6. Certificate................................................ 5
Section 4.7. Discharge.................................................. 5
Section 4.8. Registration............................................... 5
Section 4.9. Lender's Power's With Respect to Security Assets........... 5
Section 4.10. Calls...................................................... 6
Section 4.11. Delegation By Lender....................................... 6
Section 4.12. Further Assurances......................................... 6
Section 4.13. Redemption of Prior Mortgages.............................. 6
Section 4.14. Power of Attorney.......................................... 6
Section 4.15. Avoidance of Payments...................................... 7
Section 4.16. Powers to Lend............................................. 7
<PAGE>
-2-
ARTICLE V
DEALINGS WITH SECURITY ASSETS...................... 8
Section 5.1. Day to Day Business......................................... 8
Section 5.2. Charged Accounts............................................ 8
Section 5.3. Deposit of Proprietary Rights............................... 8
Section 5.4. Liability to Perform........................................ 8
ARTICLE VI
ENFORCEMENT.............................. 9
Section 6.1. When Security Becomes Enforceable........................... 9
Section 6.2. Enforcement of Security..................................... 9
Section 6.3. Remedies, Waivers and Consents.............................. 9
ARTICLE VII
RECEIVER................................ 9
Section 7.1. Appointment and Powers of Receiver.......................... 9
Section 7.2. Comply with Instructions.................................... 12
Section 7.3. Removal and Remuneration.................................... 12
Section 7.4. Lender May Exercise Receiver's Powers....................... 12
Section 7.5. No Liability As Mortgagee In Possession..................... 12
Section 7.6. Protection Of Third Parties................................. 12
Section 7.7. Expenses.................................................... 13
Section 7.8. Indemnity................................................... 13
ARTICLE VIII
APPLICATION OF PROCEEDS........................ 13
Section 8.1. Order of Application........................................ 13
Section 8.2. Suspense Accounts........................................... 14
ARTICLE IX
MISCELLANEOUS PROVISIONS........................ 14
Section 9.01. Amendment................................................... 14
Section 9.02. Severability................................................ 14
Section 9.03. Notices..................................................... 14
Section 9.04. Consent to Jurisdiction..................................... 14
Section 9.05. Captions.................................................... 15
Section 9.06. Governing Law............................................... 15
Section 9.07. No Partnership.............................................. 15
Section 9.08. Counterparts................................................ 15
<PAGE>
-3-
Section 9.09. Survival.................................................... 15
Section 9.10. Integration................................................. 15
Section 9.11. Reproduction of Documents................................... 15
Section 9.12. Successors and Assigns; Assignment.......................... 16
Section 9.13. General Interpretive Principles............................. 16
<PAGE>
This Issue of One Debenture, dated ________ __, 1995 (the
"Debenture"), from CalPetro Tankers (Bahamas I) Limited, a company organized
under the laws of The Commonwealth of the Bahamas (the "Owner") to California
Petroleum Transport Corporation, a corporation organized under the laws of the
State of Delaware (the "Lender") is issued pursuant to Clause __ of the
Memorandum of Association and Article 32 of the Articles of Association of the
Owner passed at the meeting of the Directors held on the __ day of _________,
1995.
PRELIMINARY STATEMENT
The Owner has requested that the Lender make two loans to the Owner:
one in the aggregate principal amount equal to $____________ (the "Term Loan")
and one in the aggregate principal amount equal to $____________ (the "Serial
Loan" and, collectively with the Term Loan, the "Loans"). The Loans will be
made pursuant to the terms and conditions of two Loan Agreements, each dated as
of the date hereof, each between the Lender and the Owner. The net proceeds of
the Serial Loan and the Term Loan will be used by the Owner to acquire the m.t.
_________ (the "Vessel") from Chevron Transport Corporation (the "Initial
Charterer"). The Vessel will be bareboat chartered to the Initial Charterer
pursuant to the Bareboat Charter (the "Initial Charter"), dated as of the date
hereof, between the Owner and the Initial Charterer. As collateral security for
its obligations under the Loan Agreements, the Owner will assign, pledge,
mortgage and grant the Lender a security interest in, inter alia, the Vessel,
the Initial Charter, the earnings and insurances of the Vessel and will grant
this debenture in favor of the Lender.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements herein contained and of other valuable consideration, receipt of
which is hereby acknowledged, the Owner and the Lender hereby agree as follows:
ARTICLE I
DEFINITIONS
Capitalized terms used in this Debenture shall have the meanings
assigned to such terms in Schedule 1 to this Debenture, and the definitions of
such terms shall be equally applicable to both the singular and plural forms of
such terms.
ARTICLE II
COVENANT TO PAY
Section 2.1. Covenant to Pay. The Owner hereby covenants and agrees
---------------
to pay and discharge each sum owing under the Term Obligations and the Serial
Obligations as and when the same shall fall due, whether at maturity, by
acceleration or otherwise; provided, however, the Lender, and any subsequent
assignee or transferee of this Debenture, hereby agrees
<PAGE>
-2-
that the Owner has and shall have no personal liability or obligation with
respect to the payment of the Term Obligations or the Serial Obligations, and
that the Term Obligations and the Serial Obligations are payable solely from the
proceeds received by the Lender (or the Lender's successors and assigns) from
the Lender's right, title and interest in and to the collateral granted to the
Lender hereunder and under the other Security Documents.
ARTICLE III
MORTGAGE, CHARGE AND ASSIGNMENT
Section 3.1. Charge. As continuing security for the Term Obligations
------
and the Serial Obligations, equally and ratably, the Owner hereby:
(a) conveys, transfers and assigns absolutely to and unto the Lender all
rights of the Owner in and to the Current Receivables by way of fixed
security;
(b) mortgages, charges and assigns, and agrees to mortgage, charge and
assign to the Lender all present and future rights of the Owner in and
to all freehold or leasehold property of the Owner and all other
estates or interests therein together with all trade fixtures and fixed
plant and machinery now and for the time being thereon, by way of a
fixed charge;
(c) mortgages, charges and assigns, and agrees to mortgage, charge and
assign, to the Lender all rights now owned or hereafter acquired in and
to the goodwill, franchises, patent rights, copyrights, trademarks and
other intangible Assets of the Owner by way of filed charge;
(d) mortgages, charges and assigns, and agrees to mortgage, charge and
assign, to the Lender all rights relating to the aforesaid property
specified in Sections 3.1(a), (b) and (c) including, inter alia,
negotiable instruments, legal and equitable charges, reservations of
property rights, rights of action, collection, recovery or security,
rights of tracing and unpaid vendor's liens and similar and associated
rights, by way of fixed legal mortgage and charge; and
(e) mortgages and charges in favor of the Lender all rights of the Owner
now owned or hereafter acquired in and to all other Assets for the time
being of the Owner not subject to the fixed securities created by
Sections 3.1(a), (b), (c) and (d) wheresoever situate (including, inter
alia, all undertakings and businesses of the Owner) by way of a
floating charge and the Owner shall not be at liberty to create any
mortgage or charge on any of the securities created by this Section
3.1(e) and no lien shall in any case or in any manner arise on or
affect any part of the said securities in priority to or pari passu
with all charges hereby created, it being the intention that the Owner
shall have no power, without the written
<PAGE>
-3-
consent of the Lender, to part with or dispose of any part of the said
securities except by way of sale in the ordinary course of its business;
provided, however, that upon the unconditional payment and satisfaction of the
Serial Obligations, the rights of the Lender hereunder will secure solely and
exclusively the Term Obligations;
provided further, that upon the unconditional payment and satisfaction of the
Term Obligations the rights of the Lender hereunder will terminate and the
Lender will at the direction, cost and expense of the Owner release or reassign
to the Owner all remaining rights of the Lender in and to the balance of the
Security Assets.
Section 3.2. Legal Securities. The Owner will forthwith at the
----------------
request of the Lender execute a legal mortgage, charge or assignment over all or
any of the Security Assets subject to or intended to be subject to any fixed
security hereby created in favor of the Lender in such form as the Lender may
reasonably require.
Section 3.3. Conversion of Floating Charge. The Lender may at any
-----------------------------
time by notice to the Owner convert the floating charges hereby created into a
specific charge as regards any Assets specified in the notice which the Lender
shall consider to be in danger of being seized or sold under any form of
distress, attachment, execution or other legal process or to be otherwise in
jeopardy and (whether or not this security has become enforceable) may at any
time appoint a Receiver (as defined in Section 7.1 hereof) thereof.
Section 3.4. Negative Pledge. The Owner shall not, without the prior
---------------
written consent of the Lender, permit the sale, transfer, assignment lease or
other disposition of any Security Asset, or any Encumbrance or other right in or
over any Security Asset to subsist, arise or be created, other than such
Encumbrance as is created by this Debenture.
Section 3.5. New Accounts. If the Lender receives or is deemed to be
------------
affected by notice whether actual or constructive of any subsequent Encumbrance
or other interest affecting any Security Asset or the proceeds of sale thereof,
the Lender may open a new account or accounts for the Owner. If the Lender does
not open a new account it shall nevertheless be treated as if it had done so at
the time when it received or was deemed to have received notice and as from that
time all payments made to the Lender shall be credited or be treated as having
been credited to the new account and shall not operate to reduce the amount for
which this Debenture is security.
ARTICLE IV
PRESERVATION OF SECURITY
Section 4.1. Continuing Security. The security constituted by this
-------------------
Debenture shall be a continuing security and shall not be satisfied by any
intermediate payment or
<PAGE>
-4-
satisfaction of the Term Obligations and the Serial Obligations but shall secure
the ultimate balance of the Term Obligations and the Serial Obligations;
provided, however, that, in the event that the Serial Obligations are satisfied
and paid in full pursuant to the terms and conditions of the Serial Loan
Agreement, this Assignment will be security solely and exclusively for the Term
Obligations. The security hereby given shall be in addition to and shall not be
discharged, released, prejudiced or otherwise affected by any other security or
Encumbrance now or hereafter held by the Lender for the Term Obligations or the
Serial Obligations.
Section 4.2. Waiver of Defenses. The obligations of the Owner under
------------------
this Debenture and this security shall not be discharged, released, prejudiced
or otherwise affected by any act, omission or circumstance which but for this
provision might so operate or otherwise release or discharge the Owner from the
Term Obligations or the Serial Obligations, or the security created under this
Debenture including without limitation and whether or not known to or
discoverable by the Owner or the Lender:
(a) any time, indulgence, waiver, consent or other relief granted to or
composition with the Owner or any other Person;
(b) the taking, variation, extension, compromise, renewal or release of, or
refusal or neglect to perfect or enforce, any rights under the Term
Loan Agreement, the Serial Loan Agreement, this Debenture, any Security
Document or any other guarantee, agreement or obligation or any right
against, or any security granted by, the Owner or any other Person;
(c) any irregularity, invalidity or unenforceability of any obligation of
the Owner under the Term Loan Agreement, the Serial Loan Agreement, any
Security Document, this Debenture or any other guarantee, of any
government or authority (whether of right or in fact) purporting to
reduce or otherwise affect any such obligation to the intent that such
obligation and this security shall remain in full force and this
Debenture shall be construed accordingly as if there were no such
irregularity, unenforceability, invalidity, law or order;
(d) any legal limitation, disability, incapacity or other circumstance
relating to the Owner, any guarantor or any other Person;
(e) any defect in or invalidity or inadequacy of the constitution or
incorporation or borrowing powers of the Owner or of its board of
directors, executive committee or other equivalent of analogous body or
in the authorization, execution or delivery of the Term Loan Agreement,
the Serial Loan Agreement, any Security Document, this Debenture or any
other guarantee, agreement or obligation; or
(f) any supplement, amendment or modification to the terms of the Term Loan
Agreement, the Serial Loan Agreement, this Debenture, any other
Security Document or any other guarantee, agreement or obligation.
<PAGE>
-5-
Section 4.3. Immediate Recourse. The Owner waives any right it may
------------------
have of first requiring the Lender to proceed against or claim payment from the
Owner or enforce the Term Loan Agreement, the Serial Loan Agreement, any
Security Documents or other guarantee, agreement or obligation before enforcing
this Debenture.
Section 4.4. Preservation of Rights. Until the Term Obligations and
----------------------
the Serial Obligations have been irrevocably paid and discharged in full, the
Lender may:
(a) refrain from applying or enforcing any other security, money or right
held or received by the Lender in respect of the Term Obligations or
the Serial Obligations or apply and enforce the same in such manner
and order as the Lender sees fit; and
(b) hold in a suspense account (without liability to pay interest thereon)
any moneys received or on account of this Debenture by way of a
partial payment.
Section 4.5. Additional Security. This Debenture shall be in
-------------------
addition to and shall not in any way be prejudiced by any other security now or
hereafter held by the Lender.
Section 4.6. Certificate. A certificate of the Lender setting forth
-----------
the amount due from the Owner in respect of the Term Obligations and/or the
Serial Obligations shall, in the absence of manifest error, be prima facie
evidence of such amount.
Section 4.7. Discharge. Where any discharge (whether in respect of
---------
the Term Loan Agreement, the Term Obligations, the Serial Loan Agreement, the
Serial Obligations, this Debenture, or any other guarantee, agreement,
obligation or security or otherwise) is made in whole or in part or any
arrangement is made on the faith of any payment, security or other disposition
which is avoided or must be repaid on bankruptcy, liquidation, winding-up,
dissolution or otherwise, this security and the obligations of the Owner under
this Debenture shall continue as if there had been no such discharge or
arrangement.
Section 4.8. Registration. The Owner hereby agrees to arrange for
------------
this Debenture, any Security Asset or any agreement, document or instrument
relating thereto to be registered with or notified to any Person to preserve or
perfect the Lender's security in any Security Asset.
Section 4.9. Lender's Power's With Respect to Security Assets. The
------------------------------------------------
Lender may without demand or notice to the Owner being required at any time
after this security becomes enforceable exercise at its discretion (in the name
of the Owner or otherwise) and without any further consent or authority by the
Owner, any right which may be exercised by the Person in whose name any Security
Asset is registered or who is the holder thereof under the terms thereof or
otherwise including, but without limitation, all the powers given to trustees by
statute in respect of securities or property subject to a trust; provided,
however, that until the
<PAGE>
-6-
security hereby constituted becomes enforceable, the Lender shall procure that
the rights attached to each such Security Asset are exercised in such manner as
the Owner shall direct so long as the same is not inconsistent with any term of
the Term Loan Agreement, the Serial Loan Agreement or this Debenture and account
to the Owner for any sum or other distribution paid in respect of such Security
Asset.
Section 4.10. Calls. The Owner will for so long as the Term
-----
Obligations and the Serial Obligations remain outstanding pay all sums which may
become due in respect of the Security Assets and in the event of default the
Lender may if it thinks fit make such payments on behalf of the Owner. Any sums
so paid by the Lender shall be immediately due and payable by the Owner to the
Lender without demand or notice being required.
Section 4.11. Delegation By Lender. The Lender may at any time and
--------------------
from time to time delegate by power of attorney or in any other manner to any
Person or Persons all or any of the rights and discretions which are for the
time being exercisable by the Lender under this Debenture in relation to any
Security Asset. Any such delegation may be made upon such terms (including power
to sub-delegate) and subject to such regulations as the Lender may think fit.
The Lender shall not be in any way liable or responsible to the Owner for any
loss or damage arising from any act, default, omission or misconduct on the part
of any such delegate or sub-delegate.
Section 4.12. Further Assurances. The Owner shall at its own expense
------------------
execute and deliver all such agreements, documents and instruments and do all
such assurances, acts and things as the Lender may require for perfecting or
protecting this security over any Security Asset or for facilitating the
realization of such property and in the exercise of all rights vested in the
Lender or in any sub-delegate as aforesaid. The Owner shall in particular
execute all transfers, conveyances, assignments and assurances of such property
whether to the Lender or its nominees and give all notices, orders and
directions which the Lender may think expedient and, for the purposes of this
Section, a certificate in writing by the Lender to the effect that any
particular assurance, act or thing required by it is reasonably required shall
be conclusive evidence of such fact in favor of all third parties.
Section 4.13. Redemption of Prior Mortgages. The Lender may at any
-----------------------------
time after the security hereby constituted has become enforceable redeem any
prior Encumbrance against any Security Asset or procure the transfer thereof to
itself and may settle and pass the accounts of the prior Encumbrances. Any
accounts so settled and passed shall be conclusive and binding on the Owner. All
principal moneys, interest, costs, charges and expenses of and incidental to
such redemption and transfer shall be immediately due by the Owner to the Lender
without notice or demand being required.
Section 4.14. Power of Attorney. (a) The Owner hereby by way of
-----------------
security irrevocably nominates, constitutes and appoints the Lender and every
Receiver of any Security Asset appointed hereunder and every such delegate or
sub-delegate as aforesaid, each of them acting alone or jointly with any other
of them, to be its attorney (the "Attorney") and on its
<PAGE>
-7-
behalf and in its name or otherwise to sign under seal or otherwise and deliver
all such agreements, documents and instruments and do all such assurances, acts
and things which the Owner ought to do but fails to do under the covenants and
provisions contained in the Indenture or this Debenture (including without
prejudice to the generality of the foregoing to make any demand upon or give any
notice or receipt to any Person owing moneys to the Owner and to execute and
deliver any charges, legal and equitable generally in its name and on its behalf
to exercise all or any of the rights conferred by or pursuant to this Debenture
or by statute on the Attorney and (without prejudice to the generality of the
foregoing) to sign under seal or otherwise and deliver and otherwise perfect any
assurance, agreement, instrument or act which the Attorney may deem proper in or
for the purpose of exercising any of such rights.
(b) The Owner hereby ratifies and confirms and agrees to ratify and
confirm any such Attorney described in Section 4.14(a).
Section 4.15. Avoidance of Payments. No assurance, security or
---------------------
payment which may be avoided under any enactment relating to bankruptcy, and no
release, settlement or discharge given or made by the Lender on the faith of any
such assurance, security or payment, shall prejudice or affect the right of the
Lender to enforce the security created by or pursuant to this Debenture in
respect of the full extent of the moneys thereby secured. The Lender shall be at
liberty at its absolute discretion to retain the security so created as security
for the Term Obligations and Serial Obligations, equally and ratably, for a
period of seven months in the case of fixed security and thirteen months in the
case of floating security after the Term Obligations and Serial Obligations
shall have been paid in full, notwithstanding any release, settlement, discharge
or arrangement given or made by the Lender on or as a consequence of, such
termination of liability. If at any time within the period of six months in the
case of fixed security and twelve months in the case of floating security after
such termination a petition shall be presented to a competent court for an order
for the winding up of the Owner or the Owner shall commence to be wound up
voluntarily, the Lender shall be at liberty, notwithstanding as aforementioned,
to continue to retain such security or any part thereof for and during such
further period as the Lender in its absolute discretion shall determine. The
Owner agrees that such security shall be deemed to have been and to have
remained held by the Lender as and by way of security for the payment to the
Lender of all or any sums which are now or may become due and owing to the
Lender under the Term Loan Agreement, the Serial Loan Agreement and the rest of
the Security Documents.
Section 4.16. Powers to Lend. The Lender may advance money on the
--------------
security of any Security Asset for the purpose of defraying any costs, charges,
losses and expenses which shall be paid or incurred by it in relation to this
Debenture (including the remuneration of any Receiver) or which the Lender
anticipates may be paid or incurred in the exercise of the rights vested in it
or for all other purposes of this Debenture or any of them and the Lender may
advance such moneys at such rates of interest and generally on such terms and
conditions as it shall think fit.
<PAGE>
-8-
ARTICLE V
DEALINGS WITH SECURITY ASSETS
Section 5.1. Day to Day Business. For so long as the security hereby
-------------------
constituted shall not have become enforceable, the Owner may in the ordinary
course of trading (a) for the purpose of getting in and realizing any Current
Receivable compromise, settle, release or otherwise dispose any thereof,
including any Encumbrance or other security relating thereto, save that nothing
in this Section 5.1 shall be construed so as to permit the Owner to sell, factor
or discount any Current Receivable and, (b) acquire, deal in and dispose of any
Security Asset specified in Section 3.1(b) other that pursuant to the applicable
terms of the Term Loan Agreement and the Serial Loan Agreement.
Section 5.2. Charged Accounts. The Owner shall cause all sums
----------------
hereafter received or recovered by or for it in respect of any Current
Receivable to be directly credited to a separate and distinct account as the
Lender may from time to time designate and, if called upon to do so by notice in
writing from the Lender, shall execute an absolute assignment of any such
Current Receivable in favor of the Lender, all at the cost of the Owner. Until
the security hereby constituted is fully discharged in accordance with the terms
hereof, the Owner shall not be entitled to withdraw any sum standing to the
credit of any such account established as aforesaid without the prior written
consent of the Lender.
Section 5.3. Deposit of Proprietary Rights. The Owner shall, if the
-----------------------------
Lender so requires, deposit with the Lender all certificates and other documents
of title or evidence of ownership in relation to the patents and rights referred
to in Section 3.1(c).
Section 5.4. Liability to Perform. Notwithstanding any other
--------------------
provision herein contained to the contrary, the Owner shall remain liable to
observe and perform all of the respective conditions and obligations assumed by
it in respect of each Security Asset and the Lender shall be under no obligation
by reason of this Debenture, nor shall the Lender be required in any manner, to
perform or fulfil any obligation of the Owner in respect of any Security Asset
or to make any payment or make any enquiry as to the maturity, amount, nature or
sufficiency of any rental, interest, proceeds, payments or receipts received by
it or them or the Owner or to present or file any claim or take any other action
or give any notice to collect, exercise or enforce the payment of any amount or
the taking up of any rights or property to which the Owner may have been or to
which it may be now or hereafter entitled thereunder at any time.
<PAGE>
-9-
ARTICLE VI
ENFORCEMENT
Section 6.1. When Security Becomes Enforceable. The security hereby
---------------------------------
conferred shall become immediately enforceable and the floating charge created
by this Debenture shall be deemed to have crystallized and the power of sale and
other powers conferred by statute as varied or amended by this Debenture shall
be immediately exercisable (i) if the Owner fails to meet the Term Obligations
and the Serial Obligations in the manner specified in Section 2.1 or (ii) upon
and after the occurrence of any Event of Default as defined in the Term Loan
Agreement or the Serial Loan Agreement. After this security has become
enforceable, the Lender may in its discretion enforce all or any part of this
security, and exercise all or any rights of enforcement hereby granted, in such
manner as the Lender sees fit.
Section 6.2. Enforcement of Security. For the purposes of all powers
-----------------------
implied by statute the Term Obligations and the Serial Obligations shall be
deemed to have become due and payable on the date hereof and any statutory
restrictions on the power of sale and restrictions on the right of consolidation
shall not apply to this security.
Section 6.3. Remedies, Waivers and Consents. No delay or omission of
------------------------------
the Lender in exercising any right under this Debenture shall impair or be
construed as a waiver of such right nor shall any single or partial exercise of
any such right preclude any further exercise thereof or the exercise of any
other right. The rights provided in this Debenture are cumulative and not
exclusive of any rights provided by law, agreement or otherwise. Any waiver and
any consent by the Lender under this Debenture must be in writing and may be
given subject to any conditions thought fit by the Lender . Any waiver or
consent shall be effective only in the instance and for the purpose for which it
is given.
ARTICLE VII
RECEIVER
Section 7.1. Appointment and Powers of Receiver. At any time after
----------------------------------
this security becomes enforceable the Lender may without further notice appoint
in writing under its hand any one or more Person(s) to be a receiver or receiver
and manager (hereinafter each called "a Receiver") as the Lender at its sole
discretion may see fit of any Security Asset in like manner in every respect as
if the Lender had become entitled under statute to exercise the power of sale
thereby conferred. Every Receiver so appointed shall, in addition to any powers
conferred by statute or common law, have and be entitled to exercise all rights
to do any or all of the following things:
(a) Take Possession. Enter upon and take immediate possession of, get in
---------------
and collect any Security Asset and undertake any works of demolition,
building, reconstruction, repair or decoration thereon;
<PAGE>
-10-
(b) Sell Assets. Subject to any necessary consent or approval of any
-----------
judicial, administrative, governmental or other regulatory body, office
or agency, sell, convert into money and realize any Security Asset by
public auction or private contract, dispose of, grant options and other
rights in respect of and exercise all other rights conferred on an
owner under any statute, at common law or otherwise, in respect of any
Security Asset and generally in such manner and on such terms (which
may consist wholly or partly of shares or securities of any company or
body corporate) as the Receiver shall think fit and transfer, convey,
assign or grant an assurance of the same in the name and on behalf of
the Owner. Without prejudice to the generality of the foregoing, the
Receiver may do any of these things for a consideration consisting of
cash, debentures or other obligations, shares or other valuable
consideration in cash or in any other form whatsoever and any such
consideration may be payable in a lump sum or by installments spread
over such period as the Receiver may think fit;
(c) Compromise. Settle, adjust, refer to arbitration, compromise and
----------
arrange any claims, accounts, disputes, questions and demands with or
by any Person who is or claims to be a creditor of the Owner or
relating in any way to any Security Asset;
(d) Borrow and Create Security. Borrow or raise money and secure the
--------------------------
repayment thereof and interest thereon by mortgaging, sub-mortgaging or
otherwise charging any Security Asset or this Debenture (whether or not
in priority to the sums and obligations secured by this Debenture) in
such manner and on such terms as the Receiver shall think fit;
provided, however, that:
(i) no Receiver shall exercise such right without first obtaining the
written consent of the Person appointing him and the Lender shall not
incur any responsibility to the Owner or any other Person by reason
of giving or refusing its consent, whether directly or subject to any
limitation or condition; and
(ii) no Person lending such money shall be concerned to enquire as to the
existence of such consent or the terms thereof or as to the propriety
or purpose of the exercise thereof or to see to the application of
any money so borrowed or raised;
(e) Employ Agents. Employ solicitors, managers, agents and others as the
-------------
Receiver shall deem necessary;
(f) Receipts. Give valid receipts and discharges for all moneys and claims
--------
and execute all assurances and things which may be proper or desirable
for realizing any Security Assets;
<PAGE>
-11-
(g) Consideration. Receive or pay any consideration in cash or other
-------------
valuable consideration and so that the same may be receivable or payable either
immediately or at a later time and in a lump sum or by installments spread over
such period as the Receiver shall think fit;
(h) Dealings. Generally to deal with and effect any transaction or
--------
arrangement of any kind whatsoever in respect of any Security Asset;
(i) Legal Proceedings. Settle, arrange, compromise and submit to
-----------------
arbitration any accounts, claims, questions or disputes whatsoever which may
arise in connection with any Security Asset or in any way relating to the
security constituted by this Debenture, to bring, take, defend, compromise,
submit to and discontinue any actions, suits, arbitration or proceedings
whatsoever whether civil or criminal in relation to the matters aforesaid, to
enter into, complete, disclaim, abandon or disregard, determine or rectify all
or any of the outstanding agreements or arrangements of the Owner in any way
relating to or affecting the Security Assets or any part thereof and to allow
time for payment of any debts either with or without security as the Receiver
shall think expedient;
(j) In Owner's Name. Generally at his option to use the name of the Owner
---------------
in the exercise of all or any of the rights hereby conferred;
(k) Exercise of Rights. Exercise, or permit the Owner or any nominee of
------------------
the Owner to exercise, any rights incident to the ownership of any Security
Asset in such manner as the Receiver may think fit and in particular (as regards
shares, stock and securities) any voting rights conferred by the same and (as
regards securities) any rights of enforcing the same by foreclosure, sale or
otherwise;
(l) Corporate Transfers. Transfer any Security Asset to any other company
-------------------
or body corporate, whether or not formed or acquired for the purpose;
(m) Carry on Business. Generally manage and carry on and conduct any of
-----------------
the undertakings and businesses of the Owner;
(n) Calls. Make calls, conditionally or unconditionally, on the members of
-----
the Owner in respect of all or any part of its uncalled capital with such and
the same rights of enforcement as are conferred by the Memorandum of Association
and Articles of Association of the Owner upon its directors in this respect;
(o) General Powers. Sign under seal or otherwise and deliver all such
--------------
agreements, documents and instruments and do all such other acts and things as
the Receiver may consider desirable or necessary for realizing any Security
Asset or incidental or conducive to any of the matters or rights conferred on a
Receiver under or by virtue of this Debenture and to exercise in relation to any
Security Asset all such
<PAGE>
-12-
rights as the Receiver should be capable of exercising if the Receiver
were the beneficial owner of the same; and
(p) Moneys received by Receiver. All moneys received by a Receiver shall
---------------------------
after providing for the matters specified by any law be applied by him
in or towards satisfaction of this Debenture and thereafter of any
other incumbrance of which he shall have notice and thereafter the
Receiver shall pay the residue of the moneys received by him to the
Owner.
Section 7.2. Comply with Instructions. Any Receiver shall in the exercise
------------------------
of the Receiver's rights conform to any regulations and directions from time to
time made and given by the Person appointing him but so that no Person dealing
with the Lender or any Receiver shall be concerned to enquire whether the
Receiver has so conformed to any such regulations or directions.
Section 7.3. Removal and Remuneration. The Lender may from time to time
------------------------
by writing under its hand remove any Receiver appointed by it and may whenever
it may deem it expedient appoint a new Receiver in the place of any Receiver
whose appointment may for any reason have terminated and may from time to time
fix the remuneration of any Receiver appointed by it.
Section 7.4. Lender May Exercise Receiver's Powers. All or any of the
-------------------------------------
rights which are conferred by this Debenture (either expressly or impliedly)
upon a Receiver of any Security Asset may be exercised after the security hereby
created becomes enforceable by the Lender in relation to any Security Asset
without first appointing a Receiver of the same or notwithstanding the
appointment of a Receiver of the same.
Section 7.5. No Liability As Mortgagee In Possession. The Lender shall
---------------------------------------
not nor shall any Receiver appointed as aforesaid by reason of the Lender or the
Receiver entering into possession of any Security Asset be liable to account as
mortgagee in possession or be liable for any loss or realization or for any
default or omission for which a mortgagee in possession might be liable. Every
Receiver duly appointed by the Lender shall be deemed to be the agent of the
Owner for all purposes and shall as such agent be deemed to be in the same
position as a Receiver duly appointed by a mortgagee under statute. The Owner
alone shall be responsible for its agreements, obligations, acts, omissions,
defaults and losses and the Lender shall not incur any responsibility therefor
(either to the Owner or to any other Person whatsoever) by reason of appointing
such Receiver or for any other reason whatsoever. Every such Receiver and the
Lender shall be entitled to all the rights, privileges and immunities by statute
conferred on mortgagees and receivers when such receivers have been duly
appointed.
Section 7.6. Protection Of Third Parties. No purchaser, mortgagee or
---------------------------
other Person dealing with the Lender or the Receiver or the agents of the Lender
or the Receiver shall be concerned to enquire whether any of the Term
Obligations or Serial Obligations are due or owing, the right which the Lender
or the Receiver is purporting to exercise has become
<PAGE>
-13-
exercisable or any money remains due under this Debenture, as to the propriety
or regularity of the actions of the Lender or such Receiver, or to see to the
application of any money paid to the Lender or to such Receiver.
Section 7.7. Expenses. All costs, charges and expenses incurred and all
--------
payments made by the Lender or any Receiver appointed hereunder in the exercise
in good faith of any right hereby conferred whether or not occasioned by any
act, neglect or default of the Lender or such Receiver shall bear interest from
the date of the same being incurred or becoming due at the Default Rate. The
amount of all such costs, charges, expenses and payments and all interest
thereon and all remuneration payable hereunder shall be payable by the Owner on
demand. All such costs, charges, expenses and payments shall be paid and charged
as between the Lender and the Owner on the basis of a full indemnity and not on
the basis of party and party or any other kind of taxation.
Section 7.8. Indemnity. Each of the Lender and every Receiver, attorney,
---------
manager, agent or other Person appointed by the Lender hereunder shall be
entitled to be indemnified out of the Security Assets in respect of all
obligations, costs, charges and expenses incurred and payments made by such
Person in good faith in the execution or purported execution of any right vested
in such Person pursuant hereto and against all actions, proceedings,
obligations, costs, claims and demands in respect of any matter or thing done or
omitted in anyway relating to any Security Asset and the Lender and any such
Receiver may retain and pay all sums in respect of the same out of any moneys
received under the rights hereby conferred.
ARTICLE VIII
APPLICATION OF PROCEEDS
Section 8.1. Order of Application. Any moneys received by the Lender
--------------------
pursuant to this Debenture or under the powers hereby conferred shall after the
security hereby constituted shall have become enforceable but subject to the
payment of any claims having priority to this security be applied for the
following purposes and in the following order of priority (but without prejudice
to the right of the Lender to recover any shortfall from the Owner):
(a) in satisfaction of or provision for all costs, charges and expenses
incurred and payments made by the Lender or any Receiver appointed
hereunder and of all remuneration due hereunder with interest on such
costs, charges, expenses and payments at the Default Rate;
(b) in or towards payment of interest on the Term Obligations and Serial
Obligations, pro rata, in accordance with their respective outstanding
balances;
(c) in or towards payment of principal on the Term Obligations and Serial
Obligations, pro rata, in accordance with their respective outstanding
balances;
<PAGE>
-14-
(d) in payment of the surplus (if any) to the Owner or other Person
entitled thereto.
Section 8.2. Suspense Accounts. Any moneys received under the rights
-----------------
hereby conferred may, at the discretion of the Lender, be placed in a suspense
account and kept there for so long as the Lender thinks fit.
ARTICLE IX
MISCELLANEOUS PROVISIONS
Section 9.01. Amendment. This Debenture may be amended from time to time
---------
by written agreement signed by the parties hereto.
Section 9.02. Severability. If any provision of this Debenture is held to
------------
be in conflict with any applicable statute or rule of law or is otherwise held
to be unenforceable for any reason whatsoever, such circumstances shall not have
the effect of rendering the provision in question inoperative or unenforceable
in any other case or circumstance, or of rendering any other provision or
provisions herein contained invalid, inoperative, or unenforceable to any extent
whatsoever. The invalidity of any one or more phrases, sentences, clauses or
Sections of this Debenture contained, shall not affect the remaining portions of
this Debenture, or any part thereof.
Section 9.03. Notices. All demands, notices and communications hereunder
-------
shall be in writing, personally delivered or mailed by certified mail-return
receipt requested, and shall be deemed to have been duly given upon receipt (a)
in the case of the Lender, at the following address: c/o JH Management
Corporation, Room 6/9, One International Place, Boston, Massachusetts 02110-
2624, (b) in the case of the Owner, at the following address: United House, 14-
16 Nelson Street, Douglas, Isle of Man, or at other such address as shall be
designated by such party in a written notice to the other parties.
Section 9.04. Consent to Jurisdiction. Any legal suit, action or
-----------------------
proceeding against the Owner arising out of or relating to this Debenture, or
any transaction contemplated hereby, may be instituted in any federal or state
court in The City of New York, State of New York and the Owner hereby waives any
objection which it may now or hereafter have to the laying of venue of any such
suit, action or proceeding, and the Owner hereby irrevocably submits to the
jurisdiction of any such court in any such suit, action or proceeding. The
Owner hereby irrevocably appoints and designates CT Corporation System, having
an address at 1633 Broadway, New York, New York, its true and lawful attorney-
in-fact and duly authorized agent for the limited purpose of accepting servicing
of legal process and the Owner agrees that service of process upon such party
shall constitute personal service of such process on the Owner. The Owner shall
maintain the designation and appointment of such authorized agent until all
amounts payable under this Debenture shall have been paid in full. If such
agent shall cease to so act, the Owner shall immediately designate and appoint
another such agent satisfactory to the Lender
<PAGE>
-15-
and shall promptly deliver to the Lender evidence in writing of such other
agent's acceptance of such appointment.
Section 9.05. Captions. The captions or headings in this Debenture are
--------
for convenience only and in no way define, limit or describe the scope or intent
of any provisions or sections of this Debenture.
Section 9.06. Governing Law. This Debenture shall be governed by and
-------------
interpreted in accordance with the laws of the [Commonwealth of the Bahamas]
[Isle of Man], without giving effect to the principles of conflicts of law.
Section 9.07. No Partnership. Nothing herein contained shall be deemed or
--------------
construed to create a partnership or joint venture among the parties hereto and
the services of each party shall be rendered as an independent contractor and
not as agent for any other party.
Section 9.08. Counterparts. This Debenture may be executed in any number
------------
of counterparts and by different parties hereto on separate counterpart, each of
which shall be deemed to be an original. Such counterparts shall constitute one
and the same agreement.
Section 9.09. Survival. The representations, covenants and agreements
--------
contained in or made pursuant to this Debenture in respect of either party
hereto shall survive the execution and delivery of this Debenture and shall
continue in effect so long as such party's obligations hereunder remain
outstanding.
Section 9.10. Integration. This Debenture and the Schedule and Exhibits
-----------
hereto constitute the entire agreement and understanding between the parties
hereto with respect to the subject matter hereof and supersedes all prior
agreements, understandings or representations pertaining to the subject matter
hereof, whether oral or written. There are no warranties, representations or
other agreements between the parties in connection with the subject matter
hereof except as specifically set forth or incorporated herein.
Section 9.11. Reproduction of Documents. This Debenture and all documents
-------------------------
relating thereto, including, without limitation, (a) consents, waivers and
modifications which may hereafter be executed, (b) documents received by any
party at the closing, and (c) financial statements, certificates and other
information previously or hereafter furnished, may be reproduced by any
photographic, photostatic, microfilm, micro-card, miniature photographic or
other similar process. The parties agree that any such reproduction shall be
admissible in evidence as the original itself in any judicial or administrative
proceeding (whether or not the original is in existence and whether or not such
reproduction was made in the regular course of business) and that any
enlargement, facsimile or further reproduction of such reproduction shall
likewise be admissible in evidence.
<PAGE>
-16-
Section 9.12. Successors and Assigns; Assignment. This Debenture shall be
----------------------------------
binding upon and inure to the benefit of the Owner and the Lender and their
respective successors and assigns. The Owner shall not have the right to assign
its rights hereunder or any interest herein without the prior written consent of
the Lender. The Lender, at its sole option, shall have the right to assign this
Debenture, the Serial Loan Agreement, the Term Loan Agreement, the Security
Documents and any of its rights and interest hereunder and thereunder.
Section 9.13. General Interpretive Principles. For purposes of this
-------------------------------
Debenture except as otherwise expressly provided or unless the context otherwise
requires:
(a) the defined terms in this Debenture shall include the plural as well as
the singular, and the use of any gender herein shall be deemed to include any
other gender;
(b) accounting terms not otherwise defined herein have the meanings
assigned to them in accordance with generally accepted accounting principles as
in effect on the date hereof;
(c) references herein to "Articles", "Sections", "Subsections",
"paragraphs", and other subdivisions without reference to a document are to
designated Articles, Sections, Subsections, paragraphs and other subdivisions of
this Debenture;
(d) a reference to a Subsection without further reference to a Section is a
reference to such Subsection as contained in the same Section in which the
reference appears, and this rule shall also apply to paragraphs and other
subdivisions;
(e) the words "herein", "hereof", "hereunder" and other words of similar
import refer to this Debenture as a whole and not to any particular provision;
and
(f) the term "include" or "including" shall mean without limitation by
reason of enumeration.
<PAGE>
-17-
IN WITNESS WHEREOF this Debenture has been executed by the Owner the day
and year first above written.
SIGNED, SEALED and DELIVERED )
as a Deed and Debenture )
by )
for and on behalf of )
CALPETRO TANKERS (BAHAMAS I)
LIMITED )
in the presence of:- )
SIGNED by )
for and on behalf of )
CALIFORNIA PETROLEUM TRANSPORT
CORPORATION )
in the presence of:- )
<PAGE>
SCHEDULE 1
DEFINED TERMS USED IN THE DEBENTURE
"Assets" means, in relation to any person, the whole or any part of its
business, undertaking, property and assets and includes, without limitation, any
right to receive revenues.
"Assignment of Earnings and Insurances" means the assignment between the
Owner and the Lender, as amended from time to time in accordance with the terms
thereof, pursuant to which the Owner assigns to the Lender all of its right,
title and interest in, to and under the freights and hires (as well as any
charters entered into after the Closing Date) with respect to the Vessel to
secure its obligations under the Loan Agreements.
"Assignment of Guarantee" means the assignment between the Owner and the
Lender, as amended from time to time in accordance with the terms thereof,
pursuant to which the Owner assigns to the Lender all of its right, title and
interest in, to and under the Chevron Guarantee to secure its obligations under
the Loan Agreements.
"Chevron" means Chevron Corporation.
"Chevron Guarantee" means the guarantee of the obligations of the Initial
Charter given by Chevron.
"Closing Date" means ________ __, 1995.
"Current Receivables" means (a) all obligations of the trade debtors of the
Owner due or owing to the Owner on account of the prevailing debit balances of
the present book debts of the Owner and (b) all rights relating to the aforesaid
property specified in paragraph (a), including, inter alia, negotiable
instruments, legal and equitable charges, reservations of property rights,
rights of action, collection, recovery or security, rights of tracing an unpaid
vendor's liens and similar and associated rights (and each reference to a
"Current Receivable" shall be construed as a reference to the whole or any part
of any one or more of them).
"Encumbrance" means any encumbrance and includes any mortgage, charge
(whether fixed or floating, pledge, lien, hypothecation, title retention or
other security agreement or security interest of any kind whatsoever and
howsoever arising and any equivalent or analogous interest to any of the
foregoing.
"Event of Default" means an Event of Default under Section ____ of the Loan
Agreement.
"Guarantee" means any guarantee and also includes any indemnity, any other
form of assurance against financial loss and any other contingent obligation or
other obligation in respect of the payment of, or indemnity against the
consequences of default in the payment of, any indebtedness of any person or the
performance of any obligation by any person (and each reference to the act of
guaranteeing shall be construed accordingly).
<PAGE>
-2-
"Initial Charter" means with respect to each Vessel, the Bareboat Charter,
dated
as of ________ 1, 1995, between the Initial Charterer and the Owner.
"Initial Charterer" means Chevron Transport Corporation.
"Issue of One Debenture" means each Issue of One Debenture between the
Owner and the Lender, as amended from time to time in accordance with the terms
thereof, pursuant to which the Owner grants to the Lender a security interest in
all of its assets.
"Person" means an individual, a partnership, a corporation, a joint
venture, an unincorporated association, a joint-stock company, a trust, or other
entity or a government or any agency or political subdivision thereof.
"Right" means any right (actual or contingent, present or future) expressed
to be created under any agreement, law or directive, or arising by operation of
law and includes any power, authority, discretion, privilege, remedy, title or
interest arising under, by reason of, or in connection therewith.
"Security Assets" means all of the present and future assets of the Owner,
including, inter alia, the Current Receivables (and each reference to a
"Security Asset" shall be construed as a reference to the whole or any part of
any one or more of them).
"Security Documents" means the Loan Agreement, the Mortgage, the Assignment
of Charter, the Assignment of Earnings and Insurances, the Assignment of
Guarantee, the Assignment of Management Agreement, the Issue of One Debenture,
collectively.
"Serial Loan Agreement" the Loan Agreement, dated as of _______ 1, 1995
between the Lender and the Owner pursuant to which the Lender will make the
Serial Loan to the Owner.
"Serial Obligations" means the payment, performance or obligations of any
kind or nature whatsoever of the Owner under and pursuant to the Serial Loan
Agreement, any Security Document and any instrument, agreement or document
referred to therein.
"Term Loan Agreement" means the Loan Agreement, dated as of _______ 1, 1995
between the Owner and the Lender pursuant to which the Lender makes the Term
Loan to the Owner.
"Term Obligations" means the payment, performance or obligations of any
kind or nature whatsoever of the Owner under and pursuant to the Term Loan
Agreement, any Security Document and any instrument, agreement or document
referred to therein.
"Trustee" means Chemical Trust Company of California.
<PAGE>
Exhibit 5.1
March 10, 1995
California Petroleum Transport Corporation
c/o JH Management Corporation
Room 6/9
One International Place
Boston, Massachusetts 02110-2624
California Petroleum Transport Corporation Serial First Preferred
Mortgage Notes, Registration Statement on Forms S-3, S-1 and F-1
----------------------------------------------------------------
Dear Sirs:
We have acted as counsel to California Petroleum Transport Corporation
(the "Registrant") in connection with the registration under the Securities Act
of 1933, as amended (the "Act"), of California Petroleum Transport Corporation
Serial First Preferred Mortgage Notes (the "Notes") and the related preparation
and filing of a Registration Statement on Forms S-3, S-1 and F-1 (the
"Registration Statement"). The Notes are issuable in series under the Serial
Indenture (the "Serial Indenture") to be executed among the Registrant and
Chemical Trust Company of California (the "Trustee") as trustee. The Serial
Indenture will be substantially in the form filed as an Exhibit to the
Registration Statement. This opinion is rendered pursuant to Item 601(5) of
Regulation S-K promulgated by the Securities and Exchange Commission.
In rendering this opinion letter, we have examined the form of the
Serial Indenture filed as an Exhibit to the Registration Statement, the
Registration Statement and such records and other documents as we have deemed
necessary and relevant. As to matters of fact, we have examined and relied upon
representations or certifications of officers of the Registrant or public
officials. We have assumed the authenticity of all documents submitted to us as
originals, the genuineness of all signatures, the legal capacity of natural
persons and the conformity to the originals of all documents submitted to us as
copies. We have assumed that all parties, other than the Registrant, had the
corporate power and authority to enter into and perform all obligations
thereunder. As to such parties, we also have assumed the due authorization by
all requisite corporate action, the due execution and delivery and the
enforceability of such documents.
<PAGE>
California Petroleum Transport Corporation
March __, 1995
Page 2.
In rendering this opinion letter, we express no opinion as to the laws
of any jurisdiction other than the federal laws of the United States and the
laws of the State of New York. We do not express any opinion on any issue not
expressly addressed below.
Based upon and subject to the foregoing, it is our opinion that:
1. When the Serial Indenture has been duly authorized by all
necessary action and duly executed and delivered by the parties thereto, the
Serial Indenture will be a legal and valid obligation of the Registrant,
enforceable against it in accordance with its terms, except as enforceability
may be limited by (a) bankruptcy, insolvency, liquidation, receivership,
moratorium, reorganization or other similar laws affecting the rights of
creditors and (b) general principles of equity, whether enforcement is sought in
a proceeding in equity or at law.
2. When the Serial Indenture has been duly authorized by all
necessary action and duly executed and delivered by the parties thereto and the
Notes have been duly issued, executed and authenticated in accordance with the
provisions of the Serial Indenture and sold and delivered as contemplated in the
Registration Statement and the prospectus delivered in connection therewith, the
Notes will be legally and validly issued and outstanding, fully paid and non-
assessable, and the holders of the Notes will be entitled to the benefits of the
Serial Indenture.
This opinion letter is rendered for the sole benefit of the addressee
hereof, and no other person or entity is entitled to rely hereon. Copies of
this opinion letter may not be furnished to any other person or entity, nor may
any portion of this opinion letter be quoted, circulated or referred to in any
other document, except as provided below.
We hereby consent to the filing of this opinion letter as an Exhibit to
the Registration Statement, and to the use of our name in the prospectus
included in the Registration Statement under the heading "Legal Matters",
without admitting that we are "experts" within the meaning of the Act and the
rules and regulations thereunder with respect to any part of the Registration
Statement including this Exhibit.
Very truly yours,
Thacher Proffitt & Wood
By /s/ Thacher Proffitt & Wood
<PAGE>
Exhibit 10.2
================================================================================
[NAME OF OWNER]
- and -
CHEVRON TRANSPORT CORPORATION
-------------------------
BAREBOAT CHARTER
-------------------------
================================================================================
<PAGE>
TABLE OF CONTENTS
Page No.
1. Vessel to be Chartered ................................................ 1
2. Period of Charter ..................................................... 1
3. Time and Place of Delivery ............................................ 1
4. Charterers' right in respect of the Vessel ............................ 3
5. Use and Trade of Vessel ............................................... 3
6. Documentation and House Flag .......................................... 4
7. Maintenance and Operation ............................................. 4
8. Redelivery and Status ................................................. 7
9. Use of Vessel and Payment of Hire ..................................... 8
10. Mortgage............................................................... 9
11. Insurance.............................................................. 10
12. Total Loss, Requisition for Title, Capture, Seizure.................... 13
13. Requisition for Hire................................................... 14
14. Liens; Notice on Vessel................................................ 15
15. Salvage................................................................ 15
16. General Average........................................................ 16
17. Default; Remedies...................................................... 16
18. Termination............................................................ 19
19. Payments on Termination................................................ 19
20. Assignment and Sub Charter............................................. 19
21. Indemnity.............................................................. 20
<PAGE>
- 2 -
22. Purchase Option....................................................... 22
23. General............................................................... 22
24. Definitions........................................................... 25
<PAGE>
BAREBOAT CHARTER
THIS BAREBOAT CHARTER (hereinafter called the "Charter") made as of
____ day of ___________, 1995 BY and BETWEEN ___________________________,
(hereinafter called "Owners") and Chevron Transport Corporation (hereinafter
called "Charterers").
WITNESSETH AND IT IS HEREBY AGREED as follows:
1. Vessel to be Chartered
----------------------
Owners hereby let and demise and Charterers hereby hire the m.t. _________
(hereinafter called the "Vessel"), Official No. _______, of about ___ gross tons
and ___ deadweight tons, built in 199_ in _____), together with all her engines,
boilers, machinery, masts, anchors, cables, rigging, tackle, apparel, furniture,
electronics, small boats, and all her other appurtenances, whether aboard or
removed from the Vessel, together with any and all additions, improvements
and/or replacements which may hereafter be made to, on or in the Vessel.
2. Period of Charter
-----------------
(a) This Charter shall be for a period of twenty (20) years from the
Commencement Date. Charterers shall have the option of terminating this Charter
on an Optional Termination Date. Charterers shall give Owners (i) non-binding
notice of their intent to exercise such option, determined on a good faith
basis, at least 12 months prior to such Optional Termination Date and (ii)
irrevocable notice of such exercise 9 months prior to such Optional Termination
Date, if such Optional Termination Date is the first of the Optional Termination
Dates, or 7 months prior to such Optional Termination Date, if such Optional
Termination Date is subsequent to the first such Optional Termination Date, and
shall pay the applicable Optional Termination Amount on or prior to such
Optional Termination Date.
(b) Should the Vessel be upon a voyage otherwise than under requisition for
hire at the time when the charter of the Vessel would (but for the provisions of
this clause) have terminated, the Charter Period shall be extended for such
additional time as may be necessary for the completion of such voyage. The
Charter Period shall also be extended for such additional time as may be
necessary to bring the Vessel to a port of redelivery as hereinafter provided in
Clause 8 hereof. During any such extension, hire shall be paid pro-rata on a
daily basis (assuming a 365-day year) at the rate in force before the
commencement of such extension.
3. Time and Place of Delivery
--------------------------
(a) On the Commencement Date, Charterers shall unconditionally accept
delivery of the Vessel under this Charter simultaneously with delivery to and
acceptance of the Vessel by Owners under the Purchase Agreement "as is, where
is", in whatsoever condition the Vessel may be at the time of such delivery.
Owners shall have no obligation whatsoever to deliver the Vessel to Charterers
except upon the simultaneous delivery and acceptance referred to above. Such
simultaneous delivery and acceptance shall take place at the location specified
<PAGE>
- 2 -
for delivery in the Purchase Agreement and are referred to herein as "Delivery
of the Vessel". On Delivery of the Vessel, Charterers shall execute and deliver
to Owners a Certificate of Acceptance.
(b) OWNERS MAKE NO REPRESENTATION, WARRANTY OR GUARANTEE OF ANY KIND,
EXPRESS OR IMPLIED, STATUTORY OR OTHERWISE, AS TO THE TITLE, SEAWORTHINESS,
CONDITION, VALUE, EQUIPMENT DESIGN, OPERATION, MERCHANTABILITY OR FITNESS FOR
USE OF THE VESSEL FOR ANY PARTICULAR PURPOSE OR AS TO THE ELIGIBILITY OF THE
VESSEL FOR ANY PARTICULAR TRADE OR ANY OTHER REPRESENTATION, WARRANTY OR
GUARANTEE WITH RESPECT TO THE VESSEL AND NONE SHALL BE IMPLIED FROM THIS
CHARTER; PROVIDED, HOWEVER, THAT OWNERS WARRANT THAT OWNERS HAVE AND SHALL
RETAIN WHATEVER TITLE TO THE VESSEL THAT OWNERS RECEIVE FROM CHARTERERS SUBJECT
ONLY TO THE MORTGAGE, THIS CHARTER AND LIENS AND ENCUMBRANCES WHICH CHARTERERS
ARE OBLIGATED TO DISCHARGE OR SATISFY. CHARTERERS HEREBY WAIVE AS AGAINST
OWNERS AND THE VESSEL, ALL REMEDIES, WARRANTIES NOT EXPRESSED IN SUBCLAUSE (b)
OF THIS CLAUSE 3 OR LIABILITIES, EXPRESS OR IMPLIED, ARISING BY LAW OR OTHERWISE
WITH RESPECT TO OWNERS' TITLE THERETO OR THE PHYSICAL CONDITION OF THE VESSEL AT
THE TIME OF DELIVERY TO CHARTERERS INCLUDING, BUT NOT LIMITED TO (i) ANY IMPLIED
WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE, (ii) ANY
IMPLIED WARRANTY ARISING FROM COURSE OF PERFORMANCE, COURSE OF DEALING OR USAGE
OF TRADE, (ii) ANY OBLIGATION, LIABILITY, RIGHT, CLAIM OR REMEDY FOUNDED IN
STRICT LIABILITY IN TORT AND (iv) ANY OBLIGATION, LIABILITY, RIGHT, CLAIM OR
REMEDY FOR LOSS OR DAMAGE TO THE VESSEL. The acceptance by Charterers of the
Vessel under this Charter shall constitute conclusive proof, as between Owners
and Charterers, that the Vessel is seaworthy, and otherwise in the condition
required by this Charter, in good working order and repair and without defect or
inherent defect in title, seaworthiness, condition, design, operation or fitness
for use, whether or not discoverable by Charterers as of the date of such
tender, and generally in all respects satisfactory to Charterers.
(c) Charterers warrant that upon Delivery of the Vessel to them the Vessel
shall be in Charterers' custody and under its control.
<PAGE>
- 3 -
4. Charterers' right in respect of the Vessel
------------------------------------------
Owners hereby assign to Charterers, for the duration of the Charter Period,
except during periods when an Event of Default shall have occurred and be
continuing and except in respect of a Total Loss (unless Charterers shall have
made all payments required by Clause 12 hereof in respect of a Total Loss)
without representation, warranty or covenant of any kind, effective upon
delivery of the Vessel to Charterers, the right to enforce and exercise all
rights of warranty, guaranty and indemnity which Owners may have in respect of
the Vessel or otherwise directly against the Builder or any manufacturer of any
part of the Vessel. Charterers shall be entitled to take such action in the
name of Owners against the Builder or any manufacturer of any part of the Vessel
in relation to the terms of purchase of, the condition of or any patent
infringement or alleged patent infringement in relation to the Vessel or any
part thereof as Charterers see fit but subject to Owners being indemnified and
secured to its satisfaction by Charterers against all losses, costs, damages and
expenses thereby incurred or to be incurred. If as a result of any such action
any moneys are received from the Builder or any such other manufacturer of the
Vessel as aforesaid the same shall be received by Charterers. Charterers shall
use diligence to assert and enforce all such rights which have a material effect
upon the value of the Vessel.
5. Use and Trade of Vessel
-----------------------
(a) Charterers shall have full use of the Vessel and may employ the Vessel
worldwide (within Institute Warranty Limits) in the carriage of suitable lawful
merchandise. In no event shall Charterers carry on board the Vessel nuclear
fuels or radioactive products; provided, however, with the prior written consent
of Owners, Charterers may carry on board the Vessel radioisotopes used or
intended to be used for any industrial, agricultural, medical or scientific
purposes.
(b) Charterers undertake not to employ the Vessel or suffer the Vessel to
be employed otherwise than in conformity with the terms of the instruments of
insurance (including any warranties expressed or implied therein) without first
obtaining the consent to such employment from their insurers, protection and
indemnity clubs and underwriters and complying with such requirements as to
extra premium or otherwise as the insurers may prescribe.
(c) Charterers also undertake not to employ the Vessel or suffer her
employment in any trade or business which is forbidden by the law of any country
to which the Vessel may sail or is otherwise illicit or in carrying illicit or
prohibited goods.
(d) As to those trades in which the Vessel is employed, Charterers shall
comply with any and all requirements regarding financial responsibility or
security in respect of oil or other pollution damage as required by any
government, any state or other political subdivision thereof, or any entity
exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government and any other governmental entity with
authority over Owners or Charterers, as the case may be, or ownership, use and
operation of
<PAGE>
- 4 -
the Vessel (whether or not such requirement has been lawfully imposed or not) to
enable the Vessel, without penalty or charges, lawfully to enter, remain at, or
leave any port, place, territorial or contiguous waters of any country, state or
municipality in performance of this Charter without delay. Charterers shall make
and maintain all arrangements for security bond or otherwise as may be necessary
to satisfy such requirements at Charterers' sole liability and expense and
Charterers shall indemnify Owners against any and all losses, damages, claims,
expenses or liabilities incurred by reason of Charterers failure to comply with
this Clause 5(d).
(e) Charterers shall enter and maintain the Vessel under the TOVALOP Scheme
or under any similar compulsory schedule during the Charter Period.
6. Documentation and House Flag
----------------------------
(a) Charterers agree that it shall, throughout the Charter Period, maintain
the documentation of the Vessel under the laws of the Registration Jurisdiction
at Owners' cost and expense; provided, however, in the event that the costs and
expenses of maintaining such documentation are in excess of $10,000 per annum,
then Charterers shall either (i) pay all amounts in excess of $10,000 per annum
or (ii) cooperate with the Owner to change the registry or port of documentation
of the Vessel. Owners agree to do all such things whatsoever and execute and
deliver all such documents whatsoever to enable Charterers to maintain such
documentation. Charterers will not change the registry or port of documentation
of the Vessel without the prior written consent of Owners which consent shall
not be unreasonably withheld, or do or suffer or permit to be done anything
which will injuriously affect the documentation of the Vessel as a vessel
documented under the laws and regulations of the Registration Jurisdiction. If
Charterers change the registry or port of documentation of the Vessel,
Charterers shall, at time of redelivery, if Owners so request and at Charterers'
expense, change the registry and port of documentation back to that of the
Registration Jurisdiction.
(b) Charterers shall have the right to re-name the Vessel, to paint the
Vessel in their own colors, install and display their funnel insignia and fly
their own house flag.
7. Maintenance and Operation
-------------------------
(a) Except as provided in Clause 20, the Vessel shall during the Charter
Period be in the full possession and at the absolute disposal for all purposes
of Charterers and under their complete control in every respect. Charterers
hereby covenant and agree with Owners that during the Charter Period (and
subject to the provisions of Clause 13):
(i) Charterers will at their expense maintain the Vessel, her
machinery, cargo handling equipment, boilers, appurtenances
and spare parts in a good state of repair and in efficient
operating condition in accordance with good commercial
maintenance practice commensurate with other vessels in
Charterers' fleet of similar size and trade, ordinary wear
and tear excepted; and
<PAGE>
- 5 -
(ii) Charterers will at their expense keep the Vessel with
unexpired classification in accordance with the highest
classification of the American Bureau of Shipping (or such
other classification society as shall previously have been
approved in writing by Owners) and other required
certificates in force and shall make any improvement or
structural changes or acquire any new equipment necessary to
comply with the requirements of such classification; and
(iii) Charterers shall be at liberty to fit any additional
equipment required for the services of Charterers, beyond
that on board at the commencement of this Charter, such work
to be done at Charterers' expense and on their time, and
such equipment may be removed by Charterers at their cost
and on their time at any time (provided, however, that such
removal does not adversely affect the class or seaworthiness
of the Vessel) prior to the expiration or any other
termination of the Charter. The Vessel is to be redelivered
to Owners in the same condition and class as that in which
she is delivered by Owner, ordinary wear and tear excepted
and any additional equipment that cannot be or is not so
removed shall become the property of Owners; and
(iv) Charterers shall not permit the Vessel to proceed to any
port which is then subject to a prohibition by the
government of the Registration Jurisdiction or the national
government of the port in question; and
(v) in the event of hostilities in any part of the world
(whether war be declared or not) Charterers will not employ
the Vessel nor suggest her employment in carrying any goods
which are declared contraband nor suffer her to enter or
trade to any zone which is declared a War Zone by the War
Risks Insurers unless Charterers have made arrangements with
the said insurers for the payment of such additional
premiums as said insurers may require to maintain the
relevant insurances in force or in any zone in respect of
which the War Risks Insurers have withdrawn cover for the
Vessel; and
(vi) Charterers will not use the Vessel in any manner or for any
purpose excepted from any insurance policy or policies taken
out in compliance with Clause 11 hereof or for the purpose
of carriage of goods of any description excepted from the
said insurance policy or policies and shall not do or permit
to be done anything which could reasonably be expected to
invalidate any of the said insurance policy or policies; and
<PAGE>
- 6 -
(vii) Charterers will not use the Vessel in any manner or for
any purpose or trade or permit or suffer to be done any act
which will prejudice Owners' ownership of the Vessel or any
part thereof.
(b) During the Charter Period, Charterers shall at their own expense
or by their own procurement man, victual, navigate, operate, supply, fuel and
repair the Vessel whenever required and shall, as between themselves and Owners,
be responsible for all charges and expenses of every kind and nature whatsoever
incidental to their use and operation of the Vessel under this Charter,
including any foreign, general, municipal, value added or other taxes except
that Charterers shall not be responsible for Owners' documentation costs under
clause 6(a) or for Owner Taxes. During the Charter Period, the master, officers
and crew of the Vessel shall be engaged and employed by Charterers and shall
remain Charterers' servants, navigating, managing and working the Vessel on
behalf of and at the risk of Charterers.
(c) As between themselves and Owners, Charterers shall also be
responsible for any charges and expenses incidental to the use and operation of
the Vessel while under requisition for hire, during the Charter Period. The
foregoing provision of this sub-clause shall be without prejudice to the rights
of Owners and Charterers against other parties in respect of any such charges or
expenses. Charterers shall, subject to the prior written approval of Owners
(such approval not to be unreasonably withheld), be entitled to take action in
the name of Owners against other parties in respect of such charges or expenses.
If as a result of any such action any moneys are received the same shall be
recovered by Charterers.
(d) Charterers shall make no changes in the structure of the Vessel
nor major changes in her machinery, appurtenances, spareparts or boilers without
in each instance first securing the written approval of Owners, which approval
shall not be unreasonably withheld. Provided that if any such changes are
required to meet classification society requirements, applicable regulations
and/or any relevant laws Owners shall not withhold such approval and Charterers
shall not be obliged to reinstate the Vessel to its condition prior to the
making of such changes.
(e) Charterers shall drydock the Vessel and clean and paint her
underwater parts in accordance with good commercial practice, but not less than
as may be required by the American Bureau of Shipping or such other
classification society as provided in 7(a)(ii) to maintain the Vessel's highest
classification. Charterers shall give Owners not less than seven (7) days prior
notice of their intention to drydock the Vessel, such notice to specify the
intended time and place of drydocking.
(f) Owners (or such persons as they shall appoint or authorize) shall
have the right at any time on reasonable notice, and in a manner which shall not
interfere with the Vessel's trading requirements to inspect or survey the Vessel
in order to ascertain the condition of the Vessel and to satisfy themselves that
the Vessel is being properly repaired and maintained in accordance with the
provisions of this Charter. Inspection or survey in drydock shall be made only
when the Vessel is in drydock under the provisions of sub-clause (e) of this
Clause.
<PAGE>
- 7 -
However, Owners shall have the right to require the Vessel to be drydocked for
inspection, if Charterers are not docking her at the required classification
intervals. The costs incurred in respect of such drydocking and any inspection
or survey made under this sub-clause shall be paid by Charterers to Owners. All
repairs as shall be shown to be required by any inspection or survey shall be
made at Charterers' expense and shall be completed within a reasonable period of
time or such other period as is specified by the relevant classification society
referred to in Clause 7(a)(ii). Time taken in respect of inspection, survey or
repairs shall form part of the Charter Period. Charterers shall whenever
requested, on reasonable notice, permit Owners to inspect the Vessel's log books
and furnish Owners promptly with full information regarding any casualties or
other damage to the Vessel.
(g) Owners shall not be liable for any expense in repairing or
maintaining the Vessel or be liable to supply a vessel or any part thereof in
lieu if the Vessel or any part thereof is lost, damaged, rendered unfit for use,
confiscated, seized, requisitioned, restrained or appropriated and the Charter
Hire payable in respect of the Vessel shall continue to be payable
notwithstanding loss or damage (not amounting to a Total Loss) to the Vessel or
any part thereof (and notwithstanding that the Vessel or any part thereof is
rendered unfit for use or is requisitioned for hire). In the event of a Total
Loss the provisions of Clause 12 shall apply;
(h) Charterers shall not have or be deemed to have any authority to
pledge Owners' credit for any purpose, including any maintenance overhauls,
replacements, repairs and modification of the Vessel.
8. Redelivery and Status
---------------------
(a) Unless the Vessel suffers a Total Loss or Charterers purchase the
Vessel pursuant to Clause 22, Charterers shall at the end of the Charter Period
redeliver the Vessel to Owners at a safe and ice-free port or a place selected
by Charterers within the Vessel's trading limits (within 10 steaming days from a
recognized loading area) or at such other safe port as shall be agreed between
the parties but Charterers shall not be deemed to warrant the safety of such
port once redelivery has occurred. The Vessel shall be redelivered to Owners
free and clear of all mortgages, liens, claims, charges and encumbrances which
Charterers are obligated to discharge or satisfy and in the same or as good
structure, state and condition as those in which she was delivered, ordinary
wear and tear alone excepted. The time of redelivery shall be the time when the
Vessel is tendered for redelivery in class without outstanding requirements or
recommendations to enable the Vessel to proceed without delay and free of cargo
(other than slops).
(b) At or about the time of redelivery a survey shall, if Owners so
require, be made to determine the condition and fitness of the Vessel, her
machinery and equipment. In that event, Charterers and Owners shall each
appoint surveyors to be present at such survey and the surveyors present shall
determine and state the repairs or work necessary to place the Vessel at the
date of redelivery in the structure, state and condition required by sub-clause
(a) of this Clause. In the event that the Vessel has been dry-docked within 30
months prior to
<PAGE>
- 8 -
redelivery and Charterers certify in writing to Owners that, to the best of
their knowledge, the Vessel has had no bottom touching since such dry-docking,
such survey may be conducted while the Vessel is afloat. Owners may require a
diver's survey of the Vessel. Charterers shall bear all expenses of any such
survey. Charterers shall at their expense make all such repairs and do all such
work so found to be necessary before redelivery or at Owners' option shall
discharge their obligations hereunder by payment to Owners of a sum sufficient
to provide, at the prices current at the time of redelivery, for the work and
repairs necessary to place the Vessel in such structure, state and condition.
The Charter Period shall be extended until the completion of any such repairs
and work found to be necessary or the payment of the amounts described in this
Clause 8(b).
(c) The provisions of this Clause shall be subject to the provisions of
sub-clause (b) of Clause 13 hereof where the Vessel is under requisition for
hire at or until the end of the Charter Period.
(d) An inventory of consumable stores on board the Vessel shall be made by
Charterers in conjunction with Owners on delivery and again on redelivery of the
Vessel. Charterers and Owners shall respectively take over and pay for all
bunkers, lubricating oil, water and unbroached provisions, paints, oils, ropes
and other consumable stores remaining in the Vessel on delivery and redelivery
at the market prices current at the port of delivery or redelivery but
Charterers shall not be required to pay for lubricating oil in the Vessel's
system or for stores included in the Vessel's specification or for stores
arranged and put on board by Charterers' at their own expense or by the Builder
at its own expense.
(e) The Vessel upon redelivery shall have her survey cycles up to date and
class certificates valid for at least six (6) calendar months. Notwithstanding
the provisions of this Clause 8, Charterers shall ensure that Vessel shall have
been dry-docked within 30 months prior to redelivery.
9. Use of Vessel and Payment of Hire
---------------------------------
(a) Charterers shall have the use of all equipment (which expression
includes cabin, crew and galley equipment, navigational aids and technical
equipment, furnishings, furniture and fittings and spare and replacement parts)
that is the property of Owners on board at the time of Delivery of the Vessel or
title to which is acquired by Owners pursuant to the Purchase Agreement; and the
same, or their substantial equivalent, shall be returned to Owners on redelivery
in good order and condition, ordinary wear and tear alone excepted. Charterers
shall from time to time during the Charter Period replace at their expense such
items of equipment as shall be so damaged or worn as to be unfit for use. Such
replaced equipment shall become part of the Vessel and title to such replaced
equipment shall vest in and the same shall belong to Owners.
<PAGE>
- 9 -
(b) Any hired equipment placed on the Vessel by Charterers may be removed
by Charterers prior to the expiration of the Charter Period. If so requested by
Owners, Charterers shall assist in transfer of equipment hire agreements to
Owners or their nominee, but Charterers shall not be required to guarantee or
assume any other liability with respect to a transferee's performance under said
hire agreements.
(c) During the Charter Period, the Charterer shall pay, without offset or
deduction, whether or not Vessel is under arrest, Charter Hire for the use and
hire of the Vessel at the times and in the amounts indicated on Schedule 1
attached hereto and made a part hereof. Unless otherwise notified by Owners,
all payments of Charter Hire and other amounts payable by Charterers to Owners
hereunder shall be made to an account nominated by Owners at _________________
(or to such other account as Owners may from time to time nominate) and shall be
made by wire transfer of immediately available funds.
(d) During any extension of the Charter Period, the rate of hire shall be
calculated on the basis of the then current Charter Hire rate converted to a
daily rate using a 365 days year and shall be payable on expiration of such
extension.
(e) Time of payment shall be of the essence. If the date of payment is a
date upon which Owners' nominated bank is not open for business, payment shall
be made on the first preceding Business Day. Payment of sums due under the
provisions of this Charter shall be made (by close of business New York Federal
Reserve Bank) by wire transfer to Owners' nominated bank and receipt of such
wire transfer by such bank by 10:00 a.m. New York time on the due date for
payment (in accordance with all the provisions of this Charter) shall constitute
timely payment by the payer of the amount authorized by such cable or telex to
be paid even though the payee's account be not credited until after such due
date and the payer shall not be liable for any delays or errors committed by
such bank in processing payment instructions transmitted properly on behalf of
the Charterers.
(f) If any payment of Charter Hire hereunder shall not be paid when due
Owners shall be entitled in addition to call for interest thereon at the rate of
interest per annum equal to the Default Rate from and including the due date to
the date of actual payment (after as well as before judgment) parts of a day
being treated as complete days and Charterers shall thereupon forthwith pay the
same to Owners.
10. Mortgage
--------
(a) Charterers agree that the financing of the Vessel will be secured by
the Charter on the Vessel and assignments of Owners' right, title and interest
under, in and to this Charter. Charterers shall execute and deliver all such
documents, opinions, reports, and agreements listed on Exhibit A attached
hereto.
(b) Charterers agree that this Charter and any other charters permitted
under Clause 20(a) hereof shall always be subordinated in all respects to the
Mortgage.
<PAGE>
- 10 -
(c) Owners agree that the Mortgage and any other mortgage hereinafter
placed on the Vessel by Owners will contain a provision to the effect that
throughout the Charter Period, so long as no Event of Default shall have
occurred and be continuing and so long as Charterers shall have performed their
obligations hereunder, Charterers shall be entitled to quiet enjoyment of the
Vessel.
11. Insurance
---------
(a) Insurance Obligations - Charterer shall, at its own expense,
---------------------
provide and maintain the following insurance and shall ensure
that the value of the Vessel as stated in any valued policy is
equal to the amount insured thereunder:
(i) hull and machinery insurance for an amount not less than the
Stipulated Loss Value of the Vessel as per American
Institute Hull Clauses (June 2, 1977) and the American Hull
Insurance Syndicate's Liner Negligence Clause (June 2,
1977). Such insurance shall include navigation limit
adequate for the vessel's trade and exclude collision
liability.
(ii) protection & indemnity insurance on a full entry basis with
an International Group P&I Club. Such insurance shall
include, but not be limited to, coverage for injuries to or
death of masters, mates and crew; full (4/4ths) collision
liabilities and pollution liabilities imposed by federal and
state laws as well as TOVALOP liabilities (if applicable).
Such insurance shall be unlimited as per International Group
P&I Club rules except for pollution liabilities which shall
be limited to $700 million or the maximum pollution limit
offered by and through the P&I Clubs of the International
Group.
(iii) Hull War Risk Insurance for an amount not less than the
Stipulated Loss Value of the Vessel as per American
Institute Hull War Risks and Strikes Clauses 12/1/77 and the
American Hull Insurance Syndicate's Addendum April 1, 1984
(War Risks). Such insurance shall apply to all areas where
the Vessel trades.
(b) Insurance Practice
------------------
Charterers have, prior to the signing of this Charter, outlined to
Owners the insurance arrangements at present in force in relation to its fleet
(which arrangements shall apply to the Vessel on and after the date of delivery
of the Vessel). Owners hereby confirm their acceptance of such arrangements as
complying with Charterers' obligations under the preceding sub-clause (a)
(subject to adjustment thereof in the light of changes in market practice and in
<PAGE>
- 11 -
accepted tanker practice). Charterers undertake not to alter such arrangements
in a manner that is in material breach of any other provision of this Charter or
otherwise materially adverse to Owners without first notifying Owners and
obtaining their written approval, such approval not to be unreasonably withheld.
(c) Loss payable and notice of Cancellation
---------------------------------------
(i) Unless Owners shall have given their prior written consent,
all insurances effected pursuant to Clause 11(a)(i) and
(iii) shall contain a loss payable and notice of
cancellation clause in the following form:
"LOSS PAYABLE AND NOTICE OF CANCELLATION CLAUSE"
(A) Until ________________________________ ("Owners") shall
have notified underwriters to the contrary:
(1) all recoveries up to the Stipulated Loss Value
hereunder in respect of a total loss or
constructive or compromised or agreed or arranged
total loss shall be paid in full to Owners without
any deduction or deductions whatsoever; and
(2) all other recoveries shall be paid in full to
Chevron Transport Corporation ("Charterers") or to
its order without any deduction or deductions
whatsoever; and
(B) Owners shall be advised:
(1) if any Hull and Machinery insurer cancels or give
notice of cancellation of any insurance or entry
at least ten (10) days before such cancellation is
to take effect; and
(2) if any hull War Risks insurer cancels or gives
notice of cancellation of any insurance or entry
at least seven (7) days before such cancellation
is to take effect; and
(3) of any default in the payment of any Hull and
Machinery premium or call or failure to renew any
such insurance or entry ten (10) days prior to the
<PAGE>
- 12 -
date of renewal thereof; and
(4) of any default in the payment of any War Risks
premium or call or failure to renew any such entry
seven (7) days prior to the date of renewal
thereof."
(ii) Unless Owners shall have given their prior written consent,
all insurance and entries effected pursuant to Clause
11(a)(ii) shall contain a loss payable and notice of
cancellation clause in the following form:
"LOSS PAYABLE AND NOTICE OF CANCELLATION CLAUSE
At the request of the Owners and with the consent of the
Charterers, the protection and indemnity club managers may
in their discretion, agree:
(a) to pay Owners, or to their order, any recovery the
Charterers are entitled to receive from the funds of
the P&I Club in respect of any liability, costs or
expenses incurred by the Charterers on receipt of
notice from the Owners that the Charterers are in
default under the Charter; and
(b) to give the Owners ten (10) days' notice that insurance
in the P&I Club in respect of the Vessel is to cease;
and
(c) to give the Owners ten (10) days' notice of the P&I
Club's intention to cancel the insurance of the
Charterers by reason of their failure to pay when due
and demanded any sum due from them to the P&I Club.
(d) Information as to insurances
----------------------------
Charterers shall give Owners and its insurance advisers such
information as to the insurances taken out or being or to be taken out in
compliance with Charterers' obligations under the foregoing provisions of this
Clause or as to any other matter which may be relevant to such insurances as
Owners or their advisers may reasonably request.
(e) Charterers Option to Self-Insure
--------------------------------
Notwithstanding anything to the contrary herein contained in Clause
11, Charterers shall have the right to self-insure against the risks described
in Clause 11(a).
<PAGE>
- 13 -
12. Total Loss, Requisition for Title, Capture, Seizure
---------------------------------------------------
(a) If a Total Loss shall occur, this Charter and the obligation of
Charterers to pay Charter Hire hereunder shall continue and be payable as set
forth herein until Charterers have complied with this Clause 12. Charterers
shall forthwith notify Owners of the facts and circumstances of such Total Loss
and Charterers shall, on the date which is 90 days after the Total Loss (the
"Loss Date"), pay to Owners the amount determined pursuant to paragraph (b)
below. Charterers shall give Owners at least 15 days prior notice in writing of
the Loss Date. On the Loss Date, Charterers shall pay such amount to Owners, and
thereupon this Charter shall terminate and Charter Hire payable hereunder shall
cease.
(b) The amount payable on any such Loss Date shall be the sum of (i) any
deficiency between (A) the Stipulated Loss Value in relation to the period in
question calculated by the application of Schedule 2 and (B) all insurance
proceeds for damage to or loss of the Vessel and amounts paid by any
governmental authority in connection with any requisition, seizure or forfeiture
actually received in hand by Owners or the Mortgagee prior to or on such Loss
Date; and (ii) all Charter Hire accrued (on a daily basis) but unpaid hereunder
to such Loss Date and any other sums due under any provisions of this Charter,
together with interest thereon at the Default Rate from the date upon which any
such Charter Hire or other sums was due until the date upon which the
calculations are made for the purposes of this Clause which date shall be the
Loss Date. The foregoing obligations of Charterers under this Clause 12 shall
apply regardless of whether or not any moneys are payable under the insurances
effected in compliance with Clause 11 hereof in respect of the Vessel,
regardless also of the amount payable thereunder, regardless also of the cause
of the Total Loss and, regardless of whether or not any of the said compensation
shall be payable. This Charter shall terminate upon the fulfillment by
Charterers of their obligations under this subclause.
(c) If Charterers shall have made a payment to Owners pursuant to the
foregoing provisions of sub-clause (b) of this Clause and Owners shall
subsequently receive any insurance monies or other compensation contemplated
under such Clause (b) the same shall be immediately applied first towards
repayment to Charterers of the amount of any such payment and second (to the
extent that the further insurance monies or compensation shall exceed the
amounts paid by Charterers and so repaid by Owners) to Charterers.
(d) Charterers shall be liable for any loss of any part of or damage to the
Vessel (other than a Total Loss in which event the foregoing provisions of this
clause shall apply) during the Charter Period from whatsoever cause such loss or
damage may arise, unless the same shall have been caused by the negligence or
wilful act of Owners, their servants or agents (except where Charterers or their
servants and agents are acting as agents of Owners). In the event of repairable
damage to the Vessel or any part thereof or loss of part of the Vessel, Owners
shall, subject to their prior right to retain any sums which may be due from
Charterers to Owners under the terms of this Charter, make payment to Charterers
of moneys received under the insurances effected in compliance with Clause 11
upon Charterers furnishing evidence satisfactory to Owners that all such damage
has been made good or repaired or repairs have been
<PAGE>
- 14 -
put in hand.
(e) For the purpose of this Clause 12, insurers shall be deemed to have
admitted a claim either on the date that they inform Owners that the claim is
admitted or upon the date that they make payment to Owners even though no claim
has ever been admitted.
(f) Owners shall, upon the request of Charterers, promptly execute such
documents as may be required to enable Charterers to abandon the Vessel to
insurers and claim a constructive total loss provided that Owners shall be
entitled by notice in writing to Charterers to require that the Vessel shall not
be abandoned and that a partial loss only shall be claimed, in which case this
Charter shall terminate as from the date of the event giving rise to such loss
and any insurance payments in respect of the partial loss shall be paid to
Owners. Save as aforesaid, any moneys payable by insurers for a partial loss
shall be paid to Charterers and Owners shall, at the request and expense of
Charterers, take or procure to be taken all such reasonable steps as Charterers
may require for the recovery of such moneys.
13. Requisition for Hire
--------------------
(a) If the Vessel is requisitioned for hire by any governmental or other
competent authority during the Charter Period, then unless and until following
such requisition the Vessel becomes a Total Loss, this Charter shall continue in
full force and effect for the remainder of the Charter Period (and Charterers
shall be fully responsible for due compliance with all its obligations under (i)
Clause 11 and (ii) the other provisions of this Charter, other than those which
Charterers are unable to comply with solely by virtue of the aforesaid
requisition for hire); provided, however, that if Charterers shall duly comply
with all of their obligations under this Charter save as aforesaid, Charterers
shall be entitled to all requisition hire paid to Owners or to Charterers by
such governmental or other competent authority or by any person acting by the
authority of the same on account of such requisition during the Charter Period.
(b) Should the Vessel be under requisition for hire at or until the end of
the Charter Period:
(i) Charterers shall, if they are prevented by reason of the
requisition from redelivering the Vessel under sub-clause
(a) of Clause 8 hereof, be relieved from their obligation so
to do, provided that if the party requisitioning the Vessel
does not at the end of the period of requisition redeliver
the Vessel to Owners at such place as Owners shall request,
Charterers shall upon the written request of Owners use
their best endeavors to redeliver the Vessel in accordance
with sub-clause (a) of Clause 8;
<PAGE>
- 15 -
(ii) after such release Charterers shall be given a reasonable
opportunity of removing any such additional or hired
equipment as is referred to in sub-clause (b) of Clause 9
hereof on the terms referred to in that sub-clause;
(iii) notwithstanding any other provision of this Charter,
Charterers shall be under no liability to Owners in respect
of the structure, state or condition of the Vessel insofar
as such structure, state or condition is due to the manner
in which she has been used or treated or to any events which
have occurred during the period of such requisition.
14. Liens; Notice on Vessel
-----------------------
(a) Charterers will not suffer, nor permit to be continued, any lien or
encumbrance incurred by them or their agents, which might have priority over the
title and interest of Owners in the Vessel. Charterers shall indemnify and hold
Owners harmless against any lien of whatsoever nature arising upon the Vessel
during the Charter Period while she is under the control of Charterers, and
against any claims against Owners arising out of or in relation to the operation
of the Vessel by Charterers. Should the Vessel be arrested by reason of claims
or liens arising out of her operation hereunder by Charterers, Charterers shall
at their own expense take all reasonable steps to secure that within a
reasonable time the Vessel is released and at their own expense put up bail to
secure release of the Vessel.
(b) Charterers will fasten to the Vessel in a conspicuous place and will
keep so fastened during the Charter Period a notice reading as follows:
"This Vessel is the property of and is registered in the name of
__________________________; she is under charter by demise to and
operated by ______________________________ and neither Charterers nor
the Master nor any servant or agent thereof has any authority
whatsoever to contract on behalf of Owners or to pledge Owners' credit
or to involve Owners in any liability whatsoever"
or in such other form as Owners may reasonably require from time to time.
15. Salvage
-------
All salvage and all proceeds from derelicts shall be for Charterers'
benefit and the cost of repairing damage occasioned thereby shall be borne by
Charterers.
<PAGE>
- 16 -
16. General Average
---------------
General Average, including Owners' portion, if any, shall be payable
by Charterers. General Average, if any, shall be adjusted according to the York-
Antwerp Rules 1974, as amended 1990, or any subsequent modification thereof
current at the time of the casualty.
17. Default; Remedies
-----------------
(a) If during the term of this Charter:
(i) Charterers shall make default for two Business Days in any
payment in respect of Charter Hire due under the terms of
this Charter.
(ii) Charterers shall fail for a period of thirty (30) Business
Days after written notice thereof has been given to
Charterers by Owners to perform and observe any of the
covenants, conditions, agreements or stipulations on the
part of Charterers to be performed or observed contained
herein (other than sub-clause (a)(i) and (v) of this
Clause).
(iii) Charterers cease doing business as a going concern or
generally cease to pay their debts as they become due or
any proceedings under any bankruptcy or insolvency laws are
instituted against Charterers or if a receiver or trustee is
appointed for Charterers or for any of their assets or
properties, and such proceeding is not dismissed, vacated or
fully stayed within sixty (60) days.
(iv) Charterers shall create or suffer to exist any mortgage,
charge, pledge or other like encumbrance over the Vessel or
any part thereof not created or caused by Owners or by
persons claiming by, through or under Owners or shall have
abandoned the Vessel. The foregoing provisions shall not
apply to any notice of abandonment which Charterer's may
give to insurers under the provisions of Clause 12.
(v) Charterers fail to comply with any of their obligations as
to insurance contained in Clause 11.
(vi) Charterers shall within thirty (30) days of any scheduled
date of redelivery hereunder fail to provide adequate bail
or security when required so to do in respect of any
maritime lien, possessory lien or statutory right in rem
which may be acquired over the Vessel
<PAGE>
- 17 -
not created or caused by Owners or by persons claiming by,
through or under Owners in order to prevent the Vessel being
arrested, impounded or seized or if any such lien, right or
claim over the Vessel is exercised by the arrest,
attachment, detention, impounding or seizure of the Vessel
under any distress execution or other process, or any
distress or execution is levied thereon, and Charterers fail
to use their best endeavors to procure the release of the
Vessel therefrom within thirty (30) days of any scheduled
date of redelivery hereunder.
THEN AND IN ANY SUCH EVENT Owners may, by written notice to
Charterers, declare this Charter to be in default and Owners may:
(a) (i) Upon written demand, cause Charterers at Charterers' expense
to, and Charterers shall promptly, redeliver the Vessel or cause the
Vessel to be redelivered, with all reasonable dispatch to Owners and
in the condition required by the terms of Clause 8 as if the Vessel
were being redelivered at the expiration of the Charter Period, and
all obligations of Charterers under said Clause 8 shall apply to such
redelivery, or (ii) Owners or their agent, at Owners' option, without
further notice, may, but shall be under no obligation to, retake the
Vessel wherever found, whether upon the high seas or in any port,
harbor, or other place and irrespective of whether Charterers, any
subcharterer or any other Person may be in possession of the Vessel,
all without prior demand and without legal process, and for that
purpose Owners or their agent may enter upon any dock, pier or other
premises where the Vessel may be and may take possession thereof,
without Owners or their agent incurring any liability by reason of
such retaking, whether for the restoration of damage to property
caused by such retaking or otherwise. The exercise by Owners of their
remedies under this subparagraph (a) shall be without prejudice, and
in addition, to any of Owners' other remedies referred to below.
(b) Owners or their agent may sell the Vessel at public or private
sale, with or without notice to Charterers, advertisement or
publication, as Owners may determine, or otherwise may dispose of,
hold, use, operate, charter (whether for a period greater or less than
the balance of what would have been the Charter Period in the absence
of the termination of Charterers' rights to the Vessel) to others or
keep the Vessel idle, all on such terms and conditions and at such
place or places as Owners may determine and all free and clear of any
rights of Charterers and of any claim of Charterers in admiralty, in
equity, at law or by statute, whether for loss or damage or otherwise,
and without any duty to account to Charterers.
<PAGE>
- 18 -
(c) Charterers shall be liable for any and all Charter Hire payable
under this Charter before, during or after the exercise of any of the
foregoing remedies and for all reasonable costs including all legal
fees and any other costs and expenses whatsoever incurred by Owners by
reason of the occurrence of any default or by reason of the exercise
by Owners of any remedy hereunder, including, without limitation, all
costs and expenses incurred by Owners in connection with any retaking
of the Vessel and, upon the redelivery or retaking of the Vessel in
accordance with this Clause 17, the placing of the Vessel in the
condition and seaworthiness required by the terms of Clause 8 hereof
and including interest on overdue Charter Hire.
(d) Each and every right, power and remedy herein given to Owners
shall be cumulative and shall be in addition to every other right,
power and remedy herein given or now or hereafter existing at law, in
equity, admiralty or by statute and each and every power and remedy
whether herein given or otherwise existing may be exercised from time
to time and as often and in such order as may be deemed expedient by
Owners, and the exercise or the beginning of the exercise of any
right, power or remedy shall not be construed to be a waiver of the
right to exercise at the same time or thereafter any other power or
remedy. No delay or omission of Owners to exercise any right or power
vested in it hereunder shall impair such right or power or be
construed as a waiver of or as acquiescence in any default by Owners
or be deemed a waiver of any right arising out of any future default
or of any past default. In the event Owners at any time agree to
waive any such right or power, such waiver shall be revocable by
Owners at any time and the right or power shall henceforth be again
exercisable as though there had been no such waiver unless the Event
of Default has been cured. In the event Owners shall have proceeded
to enforce any right or pursue any power under this Charter and such
proceedings shall have been discontinued or abandoned for any reason,
or shall have been determined adversely to Owners, then and in every
such case Charterers and Owners shall be restored to their former
positions and rights hereunder with respect to the property subject or
intended to be subject to this Charter and all rights, remedies and
powers of Owners shall continue as if no such proceedings had been
taken.
(e) The rights and powers of Owners and the obligations of Charterers
under this Clause 17 shall be effective and enforceable regardless of
the pendency of any proceeding which has or might have the effect of
preventing Owners or Charterers from complying with the terms of this
Charter. No express or implied waiver by Owners of any default shall
in any way be, or be construed to be a waiver of any further or
subsequent default.
<PAGE>
- 19 -
18. Termination
-----------
In the event (a) the Charterers shall exercise the option granted to them
pursuant to Section 2(a) and Charterers shall have remitted to Owners an amount
equal to the Optional Termination Amount, (b) a Total Loss shall have occurred
and Charterers shall have remitted to Owners the amounts described in Clause
12(b) or (c) Charterers shall have remitted to Owners the amounts described in
Clause 19, then, notwithstanding anything to the contrary contained herein, the
Charter shall continue with respect to Charterers' obligation to pay such amount
to Owners and shall terminate on (x) the date which is 367 days after the date
on which such amounts have been remitted to Owners or the Owners' assignee or
(y) if (i) Charterers commence a voluntary case under any applicable bankruptcy,
insolvency, or other similar law now or hereafter in effect, (ii) a receiver,
liquidator, assignee, custodian, trustee or sequestrator (or other similar
official) is appointed for Charterers or for any substantial part of their
property, (iii) Charterers generally fail to pay their debts as they become due
or (iv) Charterers make a general assignment for the benefit of creditors, the
expiration of the period during which any payment made by or on behalf of
Charterers may be avoided under any applicable bankruptcy, insolvency,
creditors' rights or similar laws.
19. Payments on Termination
-----------------------
Whether or not Owners shall have exercised, or shall thereafter at any time
exercise, any options, rights or remedies under Clause 17, upon or as a
consequence of a breach of contract by Charterers amounting to repudiation by
Charterers of this Charter, Owners may immediately require Charterers to pay to
Owners, and Charterers shall pay to Owners as liquidated damages for loss of a
bargain and not as a penalty, an amount equal to (i) the sum of (A) the
Stipulated Loss Value in relation to the period in question calculated by the
application of Schedule 2, (B) all outstanding accrued and unpaid Charter Hire
and (C) any other amounts due to Owners under this Charter on or prior to the
date of payment and (ii) interest thereon (as well after as before judgment) at
the Default Rate from the date such amounts were payable to the actual date of
payment.
Charterers shall not be entitled to any part of the net proceeds of the
Vessel (if any) whether by way of rebate of Charter Hire or otherwise.
20. Assignment and Sub Charter0.0.40.
--------------------------
(a) Charterers may not assign all or part of their rights and obligations
under this Charter nor may they charter the Vessel by demise to any other entity
without the prior written consent of Owners, such consent, subject always to the
Vessel being maintained and insured to the same standards as are adopted by
Charterers in respect of the vessels owned by them, not to be unreasonably
withheld; provided, however, that Charterers may assign their rights and
obligations hereunder to a corporation more than 50% of which is owned, directly
or indirectly, by Chevron Corporation so long as Charterers remain responsible
as principals for the due fulfillment of this Charter and provide such
assurances of responsibility to Owners as
<PAGE>
- 20 -
they may reasonably request.
(b) Charterers may otherwise charter the Vessel without the prior consent
of Owners provided that Charterers remain responsible as principals (or appoint
another person to be responsible in their stead) for navigating and managing the
Vessel throughout the period of such charter and for defraying all expenses in
connection with the Vessel throughout such period or substantially all such
expenses other than those directly incidental to a particular voyage or to the
employment of the Vessel during that period.
(c) Owners may not transfer or assign to any other person or entity all or
part of its rights or obligations under this Charter (except to the Lender
pursuant to the Assignment of Charter and the reassignment of this Charter to
the Collateral Trustee under the Assignment of Assignment of Charter
(collectively, the Assignment of Charter and the Assignment of Assignment of
Charter shall be referred to as the "Security Assignment")) unless such
transferee or assignee also assumes the obligations of Owners under the related
Security Documents and Charterers shall have given its prior written consent to
such assignment and assumption, which consent shall not be unreasonably
withheld. In addition, any transfer of Owners' interest in this Charter (other
than the Security Assignment) may only be effected by surrender of this Charter
and its reissuance by Charterers to such Owners' assignee or transferee.
21. Indemnity
---------
(a) Charterers hereby indemnify Owners and shall keep Owners fully
indemnified at all times whether during the currency of this
Charter or at any time in respect of events arising during the
currency of this Charter against:
(i) All costs and expenses of operating and maintaining the
Vessel and of operating, maintaining and replacing all parts
including (but without prejudice to the generality of the
foregoing) all fuel, oil, port charges, fees, taxes, levies,
fines, penalties, charges, insurance premiums, victualing,
crew, navigation, manning, operating and freight expenses
and all other outgoings whatsoever payable by Owners or
Charterers in respect of the possession or operation of the
Vessel or any part thereof, or the purchase, ownership,
delivery, chartering, possession and operation, import to or
export from any country, return, sale or disposition of the
Vessel or any part thereof or upon the hire, receipts or
earnings arising therefrom (other than Owners Taxes or
documentation costs except as otherwise provided in Clause
6(a)) which shall be promptly paid by Charterers;
<PAGE>
- 21 -
(ii) All liabilities, claims, proceedings (whether civil or
criminal), penalties, fines or other sanctions, judgements,
charges, taxes, impositions, liens, salvage, general
average, costs and expenses whatsoever which may at any time
be made or claimed by Charterers or any employee, servant,
agent or sub-contractor, passenger, owner, shipper,
consignee and receiver of goods or any third party
(including governments or other authorities) or by their
respective dependents arising directly or indirectly in any
manner out of the design, construction, possession,
management, repair, certification, manning, provisioning,
supply or servicing of the Vessel (whether at sea or not) or
the chartering thereof hereunder whether such liability,
claims, proceedings, penalties, fines, sanctions, judgments,
charges, taxes, impositions, liens, salvage, general
average, cost or expenses may be attributable to any defect
in the Vessel or the design, construction, testing or use
thereof or from any maintenance, service, repair, overhaul
or otherwise and regardless of when or where the same shall
arise and whether or not the Vessel or the relevant part
thereof is in the possession or control of Charterers (other
than Owners Taxes or documentation costs except as otherwise
provided in Clause 6(a)); and
(iii) Charterers accept all liability for oil or other
pollution damage resulting from Charterers' operation of the
Vessel under this Charter and agree to promptly indemnify
and hold Owners harmless from and against any and all
losses, damages and expenses which Owners may incur as a
result of any oil or other pollution damage resulting from
Charterers' operation of the Vessel under this Charter,
including, but not limited to, Owners' liability under the
Oil Pollution Act of 1990, as amended, and/or the laws of
any other jurisdiction relating to oil spills.
(iv) Owners shall use good faith efforts to notify Charterers
promptly of any tax for which it may seek indemnity.
Charterers shall, subject to the prior written approval of
Owners (such approval not to be unreasonably withheld), be
entitled to take action in the name of Owners at Charterers'
expense against any taxing authority in respect of any taxes
for which Charterers have indemnified such Owners, and
Owners agree to reasonably cooperate with Charterers in
taking such action. If as a result of any such action any
moneys are received that are attributable to such
indemnified taxes (including any interest thereon paid by
such taxing authority) the same shall be recovered by
Charterers.
<PAGE>
- 22 -
(b) Without prejudice to its generality, the provisions of this sub-
clause shall extend to claims of persons (including governments or other bodies
whether corporate or otherwise) who have suffered or allege that they have
suffered loss, damage or injury in connection with any thing done or not done by
the Vessel, including in connection with any oil or other substance emanating or
threatening to emanate from the Vessel and shall extend to levies, impositions,
calls, or contributions on or required to be made by Owners during or in respect
of the Charter Period.
(c) If any obligation of Charterers under the foregoing sub-clause or
under subclause (d) below shall not be discharged when due, Charterers shall on
demand forthwith pay to Owners not only the amount of such obligation but also
interest thereon at the Default Rate from the date Owners paid the same to the
date of reimbursement by Charterers (after as well as before judgment)
(d) In the event of the Vessel becoming a wreck or obstruction to
navigation, Charterers shall indemnify Owners against all losses, costs, damages
and expenses which Owners may in consequence thereof incur including those
incurred in respect of the removal or destruction of the wreck or obstruction
under statutory or other powers.
22. Purchase Option
---------------
(a) On ________, 2015, so long as this Charter has not earlier
terminated and no Event of Default has occurred and is continuing and all
payments due hereunder have been paid in full, Charterers shall have the right
to purchase the Vessel at a purchase price equal to $1.00. Charterers shall give
Owners at least 90 days prior written notice of its election to purchase the
Vessel on ________, 2015.
(b) Owners agree to do all such things whatsoever and execute and
deliver all such documents whatsoever to enable Charterers to register title to
the Vessel in the name of Charterers or its designee.
(c) Charterers shall pay all fees, taxes (other than Owner Taxes),
costs and expenses which may become payable as a result of or in connection with
this Clause 22.
23. General
-------
(a) Charterers shall give to Owners all such information as Owners may
reasonably request with regard to the performance by Charterers of their
obligations hereunder.
(b) Charterers shall pay all expenses (including legal and other
costs) incurred by Owners in connection with the enforcement of any rights
conferred upon Owners by this Charter or in or incidental to any action brought
by Owners to recover any hire or other payments due hereunder or for breach of
any covenant, agreement, condition or stipulation herein contained or to recover
possession of the Vessel or any part thereof whether any such
<PAGE>
- 23 -
action proceeds to judgment or not. Owners shall pay all expenses (including
legal and other costs) incurred by Charterers in connection with the enforcement
of any rights conferred upon Charterers against Owners by this Charter.
(c) No failure or delay on the part of Owners in exercising any power or
right hereunder shall operate as a waiver thereof nor shall any single or
partial exercise of any such right or power preclude any other or further
exercise of any such right or power.
(d) This Charter shall not be varied in its terms by an oral agreement or
representation or otherwise than by an instrument in writing of even date
herewith or subsequent hereto executed by all the parties hereto or by their
duly authorized representatives.
(e) If any term or provision of this Charter or the application thereof to
any person or circumstance shall to any extent be invalid or unenforceable, the
remainder of this Charter or application of such term or provision to persons or
circumstances other than those as to which it is already invalid or
unenforceable shall not be affected thereby and each term and provision of this
Charter shall be valid and be enforceable to the fullest extent permitted by
law.
(f) The title to the Clauses and sub-clauses of this Charter shall not in
any way affect the interpretation thereof; the terms defined in this Charter
have the meanings assigned to them in this Charter and include the plural as
well as the singular, and the use of any gender herein shall be deemed to
include the other gender.
(g) Any demand, consent, record, election or notice required or permitted
to be given under this Charter shall be in writing and sent by recorded or
registered letter or telefax (and in the case of telefax confirmed by recorded
or registered letter) addressed as follows:
(i) If to Owners to:
United House
14-16 Nelson Street
Douglas, Isle of Man
Fax No:
-----------------------
Attention:
--------------------
(ii) If to Charterers to:
Chevron House
11 Church Street
Hamilton, Bermuda HM111
Fax No:
------------------------
Attention:
---------------------
<PAGE>
- 24 -
or in case to such other person or address or addresses or telefax number as any
party may notify in writing to the other parties hereto. Any such notice shall
be deemed to have reached the party to whom it is addressed (in the case of
notice given by letter) five (5) days after despatch by first class pre-paid
post (airmail if from abroad) or (in the case of notice given by telefax) when
confirmed by a correct transmission report when despatched and for this purpose
confirmation by letter of notice given by telefax, shall be disregarded.
(h) This Charter shall be governed by and construed and performance
thereof shall be determined in accordance with the federal laws of the United
States of America and the laws of New York. The obligations, rights and
remedies of the parties hereunder shall be determined in accordance with such
laws, without giving effect to principles of conflicts of law.
(i) All matters of difference between the parties hereto (other than
as herein expressly provided to the contrary and other than in respect of any
action by Owners for possession of the Vessel) shall be referred to arbitration
in New York by an arbitrator to be agreed between Owners and Charterers or in
default of such agreement within 30 days to be nominated by the President for
the time being of the Society of Maritime Arbitrators.
(j) Where it is provided in this Charter that in default of agreement
a matter is to be determined by an expert under this sub-clause, the same shall
be determined by such person, firm, corporation or body as may be agreed between
Owners and Charterers (or in default of agreement as may be nominated by the
Chairman for the time being of the Baltic and Mercantile Shipping Exchange) who
shall be deemed to act as expert and not as arbitrator and whose determination
shall be final and binding on the parties.
(k) All payments (other than payments pursuant to Clauses 21(a)(i) and
21(a)(ii) and documentation costs for Owners' account pursuant to Clause 6(a))
made to Owners shall be made without deduction for or on account of any present
or future taxes (including value added, turnover, sales and use taxes), levies,
imposts, duties, deduction, withholdings and other charges of whatsoever nature
(collectively, "Charges") unless such deduction is required by law. If such
deduction is required by law (i) the sum payable by Charterers shall be
increased as may be necessary so that, after making all required withholdings
and deductions (including those applicable to additional sums payable under this
Clause 23(k)), Owners shall receive an amount equal to the sum that Owners would
have received had no such withholdings and deductions been made and (ii) as
required by applicable law Charterers shall withhold or deduct the amount
required and pay such amount to the relevant taxing or other governmental
authority. If any Charges paid by Charterers are recoverable by Owners from
such taxing or other governmental authority, Charterers shall be entitled to the
same rights provided in Clause 21(a)(iv). Owners shall consult with Charterers
and use reasonable efforts to agree to a method of avoiding or minimizing any
such deduction that is not in breach of applicable law or governmental
regulation or of any of the financing documents entered into with the Mortgagee
and which will leave the parties in substantially the same contractual relation
as is herein contained. Without limiting the generality of the foregoing, the
Owners shall take any lawful action to the extent necessary to prevent or avoid
the imposition of any taxes, including any withholding taxes with respect to
<PAGE>
- 25 -
Charter Hire, by any taxing jurisdiction (including the Registration
Jurisdiction, except with respect to any taxes included in documentation costs
for Owners' account pursuant to Clause 6(a) hereof), including changing its
jurisdiction of incorporation or residence; provided however, that it shall not
be required to take, or fail to take, any action (x) if in the opinion of
counsel such act or failure to act would violate applicable law or (y) if in the
reasonable opinion of Owners the actions necessary to avoid or prevent
imposition of such taxes would be unduly burdensome. For purposes of clause (y)
of the immediately preceding sentence a requirement to change the jurisdiction
of the Owners' incorporation or residence shall not be treated as unduly
burdensome.
(l) If any provision of this Charter shall be, or shall be rendered,
unenforceable in whole or in part (which for the purposes of this Clause shall
include being contrary to an official code or order for the time being in force
to which either of the parties hereto is required by law to have regard and the
contravention or the continued contravention of which could be considered or be
made unlawful) Owners and Charterers shall use their best endeavors to agree an
amendment or amendments to the terms of this Charter which would result in this
Charter as so amended being fully enforceable and achieving substantially the
same result (both financially and otherwise) so far as concerns Owners and
Charterers as this Charter in its executed form would have achieved if the same
had been fully enforceable. If Owners and Charterers are unable to agree to such
an amendment or amendments then either party may by notice request that an
arbitrator be appointed pursuant to the provisions to Clause 23(i) to determine
whether an amendment or amendments which would achieve the result set out above
are possible, and he shall be asked to specify them and the terms of this
Charter shall be amended accordingly.
(m) The indemnities of Owners by Charterers contained in this Charter
shall continue in full force and effect (in respect of events occurring during
the currency of this Charter) notwithstanding the termination of the charter of
the Vessel, the repudiation by Charterers of this Charter or the expiration of
the charter period by effluxion of time or otherwise.
(n) Charterers and Owners agree that for United States tax purposes
this Charter is intended to be a financing arrangement and not a true lease, and
Charterers and Owners further agree to file their respective tax returns and
reports consistent with such intention. This Charter shall be in registered
form within the meaning of section 163(f) of the United States Internal Revenue
Code of 1986, as amended, and Owners shall provide Charterers upon request, any
forms or reports reasonably requested by Charterers to evidence such position,
specifically including United States Internal Revenue Service Form W-8 or any
successor form.
24. Definitions
-----------
"Assignment of Charter" means the Assignment of this Charter by Owners as
collateral for the Owners obligations to the Lender.
<PAGE>
- 26 -
"Assignment of Assignment of Charter" means the assignment of this Charter
by the Lender to the Collateral Trustee as security for the Lender's obligations
under the Indentures.
"Builder" means _____________________.
"Business Day" means any day other than a Saturday, a Sunday or a day on
which banking institutions in New York, New York, or in the city and state where
the Mortgagee's principal offices are located, are authorized or are obligated
by law, executive order or governmental decree to be closed.
"Certificate of Acceptance" means the certificate executed by Charterers on
the Commencement Date indicating Charterers' acceptance of the Vessel under this
Charter.
"Charter Hire" means the charter hire payable by Charterers for the use and
possession of the Vessel payable at the times and in the amounts set forth on
Schedule 1 attached hereto and made a part hereof.
"Charter Period" means the period of time from the Commencement Date to the
expiration or earlier termination of this Charter, pursuant to the provisions
hereof.
"Collateral Trustee" means Chemical Trust Company of California, not in its
individual capacity but solely as collateral trustee under the Collateral Trust
Agreement, dated as of ____________ 1, 1995, among the Lender, the Collateral
Trustee and the Trustee.
"Commencement Date" means the date on which the Vessel is accepted by
Owners under the Purchase Agreement and by Charterers under this Charter.
"Compulsory Acquisition" means requisition for title or other compulsory
acquisition of the Vessel (otherwise than by requisition for hire), capture,
seizure, condemnation, destruction, detention or confiscation of the Vessel by
any government or by persons acting or purporting to act on behalf of any
government or governmental authority.
"Default Rate" means a rate per annum equal to the sum of 1.50% and LIBOR
as of the commencement of such period.
"Event of Default" means an event described in sub-clauses (a)(i) through
(a)(vi) of Clause 17.
"Indentures" means the Indenture, dated as of _______ 1, 1995 between the
Lender and the Trustee pursuant to which the Term Mortgage Notes will be issued
and the Indenture, dated as of ________ 1, 1995 between the Lender and the
Trustee pursuant to which the Serial Mortgage Notes will be issued.
<PAGE>
- 27 -
"Institute Warranty Limits" means the Institute Warranties as defined by
the Institute of London Underwriters.
"Lender" means California Petroleum Transportation Corporation, a
corporation organized under the laws of the State of Delaware.
"LIBOR" means the rate calculated on the basis of the offered rates for
deposits in dollars for a one-month period which appear on the Reuters Screen
LIBO Page as of 11:00 A.M., London time, on the date that is two London Banking
Days preceding the date of calculation. If at least two such offered rates
appear on the Reuters Screen LIBO Page, LIBOR will be the arithmetic mean of
such offered rates (rounded to the nearest .0001 percentage point). If, at any
time of determination, the Reuters Screen LIBO Page is not available, LIBOR will
be calculated as the average (rounded upward, if necessary, to the next higher
1/16 of 1%) of the respective ratio per annum at which deposits in dollars for a
one month period are offered to each of three reference banks in the London
interbank market at approximately 11:00 A.M., London time, on the date that is
two London Banking Days preceding the date of calculation. Each of Charterers
and Owners (or Owners' assignee) will select a reference bank and the third
reference bank will be selected by Charterers and Owners (or Owners' assignee)
together or, failing agreement, by the previously selected reference banks
together.
"London Banking Day" means any day on which dealings in deposits in United
States dollars are carried on in the London interbank market and on which
commercial banks are open for domestic and international business (including
dealings in United States dollar deposits) in London and New York.
"Mortgage" means the Mortgage, dated the date hereof, between Owners and
the Mortgagee or any other mortgage relating to the financing of the Vessel by
Owners.
"Mortgagee" means the Lender and any successor thereto or any other
mortgagee of the Vessel.
"Optional Termination Amount" means the amount indicated below with respect
to the Optional Termination Dates:
Optional Termination Date Optional Termination Amount
------------------------- ---------------------------
____________, 200_ $___________
____________, 200_ $___________
____________, 200_ $___________
[____________, 200 ] $___________
"Optional Termination Date" means the [8th, 10th, 12th or 14th] [9th, 11th,
13th or 15th] [10th, 12th, 14th or 16th] [11th, 13th or 15th] anniversary of the
Commencement Date.
<PAGE>
- 28 -
"Owner Taxes" means any income, franchise or equivalent tax, imposed upon
or measured by the net income, stated capital or earned surplus of an Owner by
any federal, state, local or other taxing authority of any jurisdiction
worldwide, or any tax imposed pursuant to Section 887 of the United States
Internal Revenue Code of 1986, as amended, or any taxes that result from the
willful misconduct or gross negligence of an Owner or from the inaccuracy or
breach of any representation, warranty or covenant of an Owner contained in any
of Clauses 6(a), 20, 21(a)(iv), 23(k) or 23(n) of this Charter or in any
document furnished in connection with such Clauses by an Owner, or any taxes
that would not have been imposed but for the failure of any Owner (a) to provide
to Charterers (for filing by Charterers with the taxing jurisdiction imposing
such taxes or retention in Charterers' records) upon Charterers' timely request
such certifications, information, documentation or reports concerning such
Owner's identity, jurisdiction of incorporation or residency, or connection with
such taxing jurisdiction or (b) to promptly file upon Charterers' timely request
such reports or returns (which shall be prepared with reasonable care in
accordance with Charterers' written instructions) claiming (or availing itself
of) any applicable extensions or exemptions (to the extent that timely notice
thereof is provided by Charterers); provided that Owner Taxes shall not include
any such tax imposed on any amount that is (i) an indemnity or reimbursement of
an Owner, (ii) an operating or maintenance expense, or (iii) a tax for which
Charterers are otherwise liable under this Charter; and provided further that
Owner Taxes shall not include any such tax imposed by any government,
jurisdiction or taxing authority other than the United States Federal government
solely as a result of the location of the Vessel or the Vessel's use by
Charterers.
"Person" means an individual, a partnership, a corporation, a joint
venture, an unincorporated association, a joint-stock company, a trust, or other
entity or a government or any agency or political subdivision thereof.
"P&I Club" means a protection and indemnity association.
"Purchase Agreement" means the Vessel Purchase Agreement, dated as of
_______, 1995, between Owners and Charterers.
"Registration Jurisdiction" means the [Republic of Liberia] [Commonwealth
of the Bahamas].
"Security Documents" means all of the agreements executed and delivered by
Owners to the Lender as collateral security for Owners' obligations to the
Lenders.
"Serial Mortgage Notes" means the Serial First Preferred Term Mortgage
Notes which will mature serially from _____________, 1996 to _____________, 2006
in the initial aggregate amount of $167,500,000 issued by the Lender
concurrently with the issuance of the Term Mortgage Notes.
"Stipulated Loss Value" means, as of any date, the amount corresponding to
such date as indicated on Schedule 2 hereto and made a part hereof.
<PAGE>
- 29 -
"Term Mortgage Notes" means __% First Preferred Mortgage Notes Due 2015 in
the initial aggregate amount of $117,900,000 issued by the Lender concurrently
with the issuance of the Serial Mortgage Notes.
"Total Loss" means either (a) actual or constructive or compromised or
arranged total loss of the Vessel, (b) Compulsory Acquisition of the Vessel or
(c) if so declared by Charterers at any time and in their sole discretion a
requisition for hire of the Vessel for a period in excess of 180 days. Any
actual loss of the Vessel shall be deemed to have occurred at 1200 hours
Greenwich Mean Time (GMT) on the actual date on which the Vessel was lost or in
the event of the date of the loss being unknown then the actual total loss shall
be deemed to have occurred at 1200 hours GMT on the day next following the day
on which the Vessel was last heard of. A constructive total loss shall be
deemed to have occurred at 1200 hours GMT on the earliest of: 1) the date that
notice of abandonment of the Vessel is given to the insurers provided a claim
for total loss is admitted by the insurers, or 2) if the insurers do not admit
such a claim, at the date and time GMT at which a total loss is subsequently
adjudged by a competent court of law or arbitration tribunal to have occurred,
or 3) the date that a report is rendered by one or more experts in marine
surveying and vessel valuation (said experts to be appointed by Charterers at
their expense and approved by Owners, such approval not to be unreasonably
withheld) concluding that salvage, repair and associated costs in restoring the
Vessel to the condition specified in Clause 7 exceed the Vessel's fair market
value in sound condition.
"TOVALOP Scheme" means the Tankers Owners Voluntary Agreement concerning
Liability for Oil Pollution dated January 7, 1969, as amended.
"Trustee" means Chemical Trust Company of California, not in its individual
capacity but solely as indenture trustee under the Indentures or any successor
trustee thereunder.
<PAGE>
IN WITNESS WHEREOF the parties have caused this Charter to be signed the
------------------
date and year first above written.
[NAME OF OWNER]
By:
-----------------------
Name:
---------------------
Its:
----------------------
CHEVRON TRANSPORT CORPORATION
By:
-----------------------
Name:
---------------------
Its:
----------------------
<PAGE>
Exhibit 10.4
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
CalPetro Holdings Limited, Designated Representative
California Petroleum Transport Corporation
-------------------------------------------
Designated Representative Agreement
-------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
This Designated Representative Agreement, dated as of December 1, 1994
(the "Agreement"), among California Petroleum Transport Corporation (the
"California Petroleum"), a corporation organized under the laws of the State of
Delaware, and CalPetro Holdings Limited (the "Designated Representative"), a
company organized under the laws of the Kingdom of Norway.
PRELIMINARY STATEMENT
Concurrently herewith, California Petroleum is (a) entering into
an Indenture (the "Serial Indenture"), dated as of the date hereof, among
California Petroleum, Chemical Trust Company of California, as trustee (the
"Serial Indenture Trustee") and, solely for purposes of the Trust Indenture Act
of 1939, as amended, Chevron Corporation ("Chevron") pursuant to which
California Petroleum is issuing certain mortgage notes (the "Serial Mortgage
Notes") in the aggregate principal amount of $__________, (b) entering into an
Indenture (the "Term Indenture"), dated as of the date hereof, between
California Petroleum and Chemical Trust Company of California, as trustee (the
"Term Indenture Trustee") pursuant to which California Petroleum is issuing
certain mortgage notes (the "Term Mortgage Notes") in the aggregate principal
amount of $__________ and (c) entering into a Collateral Trust Agreement (the
"Collateral Agreement"), dated as of the date hereof, among California
Petroleum, the Serial Indenture Trustee, the Term Indenture Trustee and
Chemical Trust Company of California, as collateral trustee (the "Collateral
Trustee"). California Petroleum desires to engage the Designated
Representative to perform certain obligations, provide certain notices and
furnish certain consents for and on behalf of California Petroleum under and
pursuant to the Serial Indenture, the Term Indenture and the Collateral
Agreement.
The Designated Representative is willing obligations, provide such
notices and furnish such consents for and on behalf of California Petroleum
pursuant to this Agreement upon the terms and subject to the conditions set
forth herein.
NOW, THEREFORE, in condideration of the mutual covenants and
agreements herein contained and of other good and valuable consideration, the
receipt of which is hereby acknowledged, California Petroleum and the Designated
Representative hereby agree as follows:
ARTICLE I
DEFINITIONS
Capitalized terms used in this Agreement and not otherwise defined
herein shall have the meanings assigned to such terms in the Collateral
Agreement.
ARTICLE II
DUTIES OF THE DESIGNATED REPRESENTATIVE
Section 2.01 Appointment of Designated Representative.
California Petroleum hereby appoints the Designated Representative and the
Designated Representative hereby accepts
<PAGE>
its appointment as the designated representative of California Petroleum under
the Serial Indenture, the Term Indenture and the Collateral Agreement.
Section 2.02 Responsibilities of the Designated Representative.
The Designated Representative hereby covenants and agrees with California
Petroleum that the Designated Representative shall or shall cause its designee
to do the following:
(a) Prepare and file, or cause to be prepared and filed, the
annual financial statements and annual tax returns of California Petroleum, if
required;
(b) Prepare and file any and all information, documents and
reports required in order to comply with Section 13 or 15(d) of the Exchange
Act;
(c) Pursuant to Section 3.3 of the Serial Indenture, appoint a
Serial Indenture Trustee in the manner described in Section 5.9 of the Serial
Indenture so that there shall at all times be an indenture trustee under the
Serial Indenture;
(d) Pursuant to Section 3.3 of the Term Indenture, appoint a Term
Indenture Trustee in the manner described in Section 5.9 of the Term Indenture
so that there shall at all times be an indenture trustee under the Term
Indenture;
(e) Pursuant to Sections 3.5(a), (b) and (c) of the Serial
Indenture and Sections 3.5(a), (b) and (c) of the Term Indenture, file with the
Serial Indenture Trustee and the Term Indenture Trustee, respectively, the
annual reports, information, documents and reports described therein;
(f) Pursuant to Section 3.5(d) of the Serial Indenture and
Section 3.5(d) of the Term Indenture, file with the Serial Indenture Trustee
and the Term Indenture Trustee, respectively, the certificate described therein;
(g) Pursuant to Section 10.5 of the Serial Indenture and Section
9.5 of the Term Indenture, provide to the Serial Indenture Trustee and the Term
Indenture Trustee, respectively, the Officer's Certificates and Opinions of
Counsel described therein;
(h) Pursuant to Section 11.2 of the Serial Indenture and Section
10.2 of the Term Indenture, provide to the Serial Indenture Trustee and the
Term Indenture Trustee, respectively, the notices described therein;
(i) Pursuant to Section 10.4 of the Term Indenture, (i) provide
to the Term Indenture Trustee the written statements described therein and (ii)
deliver to the Term Indenture Trustee the purchased or otherwise acquired
Mortgage Notes in satisfaction of the mandatory sinking fund payment in the
manner described therein;
(j) Pursuant to Sections 12.2(a) and (b) of the Serial Indenture
and Sections 11.2(a) and (b) of the Term Indenture, provide to the Serial
Indenture Trustee and the Term Indenture Trustee, respectively, the Opinions of
Counsel described therein;
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<PAGE>
(k) Pursuant to Sections 12.4(b) and (d) of the Serial Indenture
and Sections 11.4(b) and (d) of the Term Indenture, provide to the Serial
Indenture Trustee and the Term Indenture Trustee, respectively, the requests
and Opinions of Counsel described therein;
(l) Pursuant to Section 3.03(d) of the Collateral Agreement,
direct the Collateral Trustee to disburse funds to the Owners as described
therein;
(m) Pursuant to Section 5.01 of the Collateral Agreement, provide
to the Collateral Trustee the requests described therein; and
(n) Pursuant to Section 6.07(a) of the Collateral Agreement,
appoint a successor collateral trustee in the manner described therein.
Section 2.03 Designated Representative to Act as
-----------------------------------
Attorney-in-Fact of California Petroleum. California Petroleum hereby
- ----------------------------------------
constitutes the Designated Representative, and its successors and assigns, its
true and lawful attorney, irrevocably, with full power in its own name, in the
name of its agents or nominees or in the name of California Petroleum or
otherwise, to execute any and all documents, instruments, agreements and
applications for and on behalf of California Petroleum relating to or in
connection with the performance by the Designated Representative of the
responsibilities described in Section 2.02 hereof.
ARTICLE IV
GENERAL PROVISIONS REGARDING
THE DESIGNATED REPRESENTATIVE
Section 4.01 No Duties Except As Specified in Agreement or
---------------------------------------------
Instructions. (a) The Designated Representative shall have no duty or
- ------------
obligation to make or advance any payment, register, record, or otherwise take
or refrain from taking any action under, or in connection with, any document
contemplated hereby to which the Designated Representative is a party, except
as expressly provided by the terms of this Agreement or expressly agreed to in
writing by the Designated Representative and California Petroleum. No implied
duties or obligations shall be read into this Agreement against the Designated
Representative.
(b) Under no circumstances shall the Designated Representative be
liable for (i) California Petroleum's obligations under the Serial Indenture,
the Term Indenture, the Collateral Agreement or any of the Security Documents
or (ii) the validity or sufficiency of the Term Indenture, the Serial
Indenture, the Collateral Agreement or any of the Security Documents. The
Designated Representative shall not assume any liability, duty or obligation to
any Person, other than as expressly provided for herein.
(c) The Designated Representative shall have no duty to conduct
any affirmative investigation, other than as specifically set forth in this
Agreement, as to the any other party's performance of its obligations under the
Serial Indenture, the Term Indenture, the Collateral Agreement or any other
Security Document.
-3-
<PAGE>
(d) No provision of this Agreement shall be construed to relieve
the Designated Representative from liability for its own grossly negligent
action, its own grossly negligent failure to act or its own willful misconduct.
The duties and obligations of the Designated Representative shall be determined
solely by the express provisions of this Agreement and the Designated
Representative shall not be liable except for the performance of its respective
duties and obligations as specifically set forth in this Agreement. No implied
covenants or obligations shall be read into this Agreement against the
Designated Representative and, in the absence of bad faith on the part of the
Designated Representative, the Designated Representative may conclusively rely,
as to the truth of the statements and the correctness of the opinions expressed
therein, upon any certificates or opinions furnished to the Designated
Representative and conforming to the requirements of this Agreement.
(e) The Designated Representative may consult with counsel and
any advice or opinion of counsel shall be full and complete authorization and
protection in respect of any action taken or suffered or omitted by it
hereunder in good faith and in accordance with such advice or opinion of
counsel.
(f) The right of the Designated Representative to perform any
discretionary act enumerated in this Agreement shall not be construed as a
duty, and the Designated Representative shall not be answerable for other than
its gross negligence or willful misconduct in the performance of such act, and
the delivery hereunder to the Designated Representative, of any notice,
document or report shall not give rise to an affirmative obligation on the part
of the Designated Representative to take any action with respect thereto,
except as otherwise expressly provided herein.
Section 4.02 Resignation of Designated Representative. The
----------------------------------------
Designated Representative may resign its duties at any time upon 60 days prior
written notice to California Petroleum, the Serial Indenture Trustee, the Term
Indenture Trustee and the Collateral Trustee. The Designated Representative
may only be removed by California Petroleum with cause upon 60 days prior
written notice to the Designated Representative, the Serial Indenture Trustee,
the Term Indenture Trustee and the Collateral Trustee. In the event of the
resignation or removal of the Designated Representative, a successor designated
representative shall be appointed by California Petroleum. California
Petroleum shall give the Serial Indenture Trustee, the Term Indenture Trustee
and the Collateral Trustee notice of the successor designated representative's
acceptance of such appointment and shall cause such successor to execute any
and all documents requested by California Petroleum to evidence such
successor's acceptance of all of the obligations of the Designated
Representative pursuant to this Agreement.
Section 4.03 Indemnification. California Petroleum shall
---------------
indemnify the Designated Representative and its successors and assigns, and
hold them harmless against and from, any and all liabilities, obligations,
losses, damages, taxes, penalties, claims, actions, suits, costs, expenses
(including legal fees and expenses) of any kind and nature whatsoever
(collectively, "Expenses") which may be imposed on, incurred by or asserted at
any time against the Designated Representative (whether or not indemnified
against by other parties) in any way relating to or arising out of this
Agreement, the Serial Indenture, the Term Indenture, the Collateral Agreement
or any Security Document; provided, however, that California Petroleum shall
not be required to indemnify the Designated Representative for Expenses arising
or
-4-
<PAGE>
resulting from its own willful misconduct or gross negligence or for expenses
arising from the Designated Representative's failure to perform the duties
specifically set forth in this Agreement expressly agreed to in writing by the
Designated Representative and California Petroleum.
Section 4.04 Compensation. (a) As compensation for its services
------------
hereunder, the Designated Representative shall receive a fee (the "Designated
Representative's Fee"), payable semi-annually in arrears on each Payment Date as
provided in Section 3.03 of the Collateral Agreement equal to $15,000 per annum
for the period from March __, 1995 to but not including March __, 1998.
Thereafter the Designated Representative's Fee shall increase each year by an
amount equal to 4%.
(b) Whenever any payment to the Designated Representative under
this Agreement shall be due on a day other than a Business Day, the date of
payment thereof shall be extended to the next succeeding Business Day, unless
such extension would cause payment to be made in the next succeeding calendar
month, in which case such date shall be advanced to the next preceding Business
Day.
ARTICLE V
MISCELLANEOUS PROVISIONS
Section 5.01 Amendment. This Agreement may be amended from time
---------
to time by written agreement signed by the parties hereto upon the written
consent of the parties hereto.
Section 5.02 Severability. If any provision of this Agreement
------------
is held to be in conflict with any applicable statute or rule of law or is
otherwise held to be unenforceable for any reason whatsoever, such
circumstances shall not have the effect of rendering the provision in question
inoperative or unenforceable in any other case or circumstance, or of rendering
any other provision or provisions herein contained invalid, inoperative, or
unenforceable to any extent whatsoever. The invalidity of any one or more
phrases, sentences, clauses or Sections of this Agreement contained, shall not
affect the remaining portions of this Agreement, or any part thereof.
-5-
<PAGE>
Section 5.03 Notices. All demands, notices and communications
-------
hereunder shall be in writing, personally delivered or mailed by certified
mail-return receipt requested, and shall be deemed to have been duly given upon
receipt (a) in the case of the Designated Representative, at the following
address: Bryggegaten 5, Aker Brygge, P.O. Box 1803 VIKA, 0123 Oslo, Norway, (b)
in the case of California Petroleum, at the following address: c/0 J H
Management Corporation, Room 6/9, One International Place, Boston,
Massachusetts 02110-2624, or at other such address as shall be designated by
such party in a written notice to the other parties.
Section 5.04 Captions. The captions or headings in this
--------
Agreement are for convenience only and in no way define, limit or describe the
scope or intent of any provisions or sections of this Agreement.
Section 5.05 Governing Law. This Agreement shall be governed by
-------------
and interpreted in accordance with the laws of the State of New York, without
giving effect to the principles of conflicts of law.
Section 5.06 No Partnership. Nothing herein contained shall be
--------------
deemed or construed to create a partnership or joint venture among the parties
hereto and the services of each party shall be rendered as an independent
contractor and not as agent for any other party.
Section 5.07 Counterparts. This Agreement may be executed in
------------
any number of counterparts and by different parties hereto on separate
counterpart, each of which shall be deemed to be an original. Such
counterparts shall constitute one and the same agreement.
Section 5.08 Survival. The representations, covenants and
--------
agreements contained in or made pursuant to this Agreement in respect of either
party hereto shall survive the execution and delivery of this Agreement and
shall continue in effect so long as such party's obligations hereunder remain
outstanding.
Section 5.09 Integration. This Agreement and the Schedule and
-----------
Exhibits hereto constitute the entire agreement and understanding between the
parties hereto with respect to the subject matter hereof and supersedes all
prior agreements, understandings or representations pertaining to the subject
matter hereof, whether oral or written. There are no warranties,
representations or other agreements between the parties in connection with the
subject matter hereof except as specifically set forth or incorporated herein.
Section 5.10 Reproduction of Documents. This Agreement and all
-------------------------
documents relating thereto, including, without limitation, (a) consents,
waivers and modifications which may hereafter be executed, (b) documents
received by any party at the closing, and (c) financial statements,
certificates and other information previously or hereafter furnished, may be
reproduced by any photographic, photostatic, microfilm, micro-card, miniature
photographic or other similar process. The parties agree that any such
reproduction shall be admissible in evidence as the original itself in any
judicial or administrative proceeding (whether or not the original is in
existence and whether or not such reproduction was made in the regular course
of business) and that any enlargement, facsimile or further reproduction of
such reproduction shall likewise be admissible in evidence.
-6-
<PAGE>
Section 5.11 General Interpretive Principles. For purposes of
-------------------------------
this Agreement except as otherwise expressly provided or unless the context
otherwise requires:
(a) the defined terms in this Agreement shall include the plural
as well as the singular, and the use of any gender herein shall be deemed to
include any other gender;
(b) accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with generally accepted accounting
principles as in effect on the date hereof;
(c) references herein to "Articles", "Sections", "Subsections",
"paragraphs", and other subdivisions without reference to a document are to
designated Articles, Sections, Subsections, paragraphs and other subdivisions
of this Indenture;
(d) a reference to a Subsection without further reference to a
Section is a reference to such Subsection as contained in the same Section in
which the reference appears, and this rule shall also apply to paragraphs and
other subdivisions;
(e) the words "herein", "hereof", "hereunder" and other words of
similar import refer to this Indenture as a whole and not to any particular
provision; and
(f) the term "include" or "including" shall mean without
limitation by reason of enumeration.
-7-
<PAGE>
IN WITNESS WHEREOF, the Designated Representative and California
Petroleum have caused this Indenture to be duly executed and delivered by their
respective officers thereunto duly authorized and their respective seals, duly
attested, to be hereunto affixed, all as of the day and year first above
written.
CALPETRO HOLDINGS LIMITED, as Designated Representative
By:
-----------------------------------------
Name:
---------------------------------------
Title:
--------------------------------------
CALIFORNIA PETROLEUM TRANSPORT CORPORATION
By:
-----------------------------------------
Name:
---------------------------------------
Title:
--------------------------------------
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<PAGE>
Exhibit 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectus
constituting part of this Registration Statement on Form S-3 Amendment No. 1 of
our report dated February 25, 1994, except as to the restated earnings per share
amounts included under the caption "Selected Financial Data of Chevron" of this
Form S-3 Amendment No. 1, which is as of May 11, 1994, relating to the financial
statements of Chevron Corporation included in its Annual Report on Form 10-K for
the year ended December 31, 1993. Such report is included in Chevron's Current
Report on Form 8-K dated October 28, 1994. We also consent to the incorporation
by reference of our report on the Financial Statement Schedules which appears on
page 35 of Chevron Corporation's 1993 Annual Report on Form 10-K. We also
consent to the incorporation by reference of our report dated February 28, 1995,
which appears on page FS-13 of Chevron's Current Report on Form 8-K dated March
10, 1995. We also consent to the reference to us under the heading "Experts" in
such Prospectus.
PRICE WATERHOUSE LLP
San Francisco, California
March 10, 1995
<PAGE>
Exhibit 23.3
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
We consent to the incorporation by reference in the Prospectus constituting part
of this Registration Statement on Form S-3 Amendment No. 1 of our report dated
February 15, 1994, relating to the combined balance sheets of the Caltex Group
of Companies as of December 31, 1993 and 1992 and the related combined
statements of income, retained earnings and cash flows and related supporting
schedules for each of the years in the three year period ended December 31,
1993, which report appears in Chevron Corporation's Annual Report on Form 10-K
for the year ended December 31, 1993. We also consent to the reference to our
firm under the heading "Experts" in such Prospectus.
KPMG PEAT MARWICK LLP
Dallas, Texas
March 10, 1995
<PAGE>
Exhibit 23.4
CONSENT OF INDEPENDENT ACCOUNTANTS
----------------------------------
We hereby consent to the use in the Prospectus constituting part of this
Registration Statement on Forms S-3, S-1 and F-1 of our report dated February
28, 1995, relating to the balance sheet of California Petroleum Transport
Corporation, which appears in such Prospectus. We also consent to the reference
to us under the heading "Experts" in such Prospectus.
/s/ Price Waterhouse LLP
PRICE WATERHOUSE
Boston, Massachusetts
March 10, 1995
<PAGE>
EXHIBIT 23.5
CONSENT OF INDEPENDENT ACCOUNTANTS
----------------------------------
We hereby consent to the use in the Prospectus constituting part of this
Registration Statement on Forms S-3, S-1 and F-1 of our reports dated February
28, 1995, relating to the balance sheets of CalPetro Tankers (Bahamas I)
Limited; CalPetro Tankers (Bahamas II) Limited; CalPetro Tankers (Bahamas III)
Limited and CalPetro Tankers (IOM) Limited, which appear in such Prospectus. We
also consent to the reference to us under the heading "Experts" in such
Prospectus.
/s/ Price Waterhouse
PRICE WATERHOUSE
Chartered Accountants
Douglas
Isle of Man
British Isles
March 10, 1995
